Where to invest in property right now: Cape Town or Joburg?

 ·10 Dec 2017

When it comes to a choice between purchasing property in Johannesburg or Cape Town, which city fares best from an investment perspective?

Both are major growth hubs in the country for property investment. While the Mother City has traditionally been a more attractive option for investors, not everyone is drawn to coastal living.

Some investors, in fact, have their sights set further north, cottoning on to the fact that developments in Johannesburg are likely to offer them more bang for their buck. It is, after all, known as the City of Gold and is situated a stone’s throw away from the South Africa’s administrative capital, Pretoria.

The general perception is that properties in Johannesburg are cheaper than those in Cape Town, but offer better value for money since they attract good rental returns and growth on investment.

Peet Strauss of Pam Golding Properties said there are various factors that make property purchases in either city a good investment.

“The trend in the Johannesburg market is more towards an income model while the Cape Town market has bigger capital growth potential. Properties in Johannesburg are relatively cheap, compared to Africa and the rest of the world, even South African standards,” said Strauss.

Not only is Johannesburg affordable, he said, but it consistently shows good rental returns – a trend that has been continuing for a while.

“One can buy for a bit cheaper than anywhere else, and rent for a bit higher. A savvy purchaser would buy now especially if they’re not planning on selling again and long-term income is their basis for investment,” he added.

However, if you’d like to sell in four or five years for a return on your investment, then Strauss advised you to set your sights on Cape Town.

Wherever you decide to buy, it’s crucial to stick to traditional areas where there are new developments over a stretch of time and not just a “flicker” of activity. In Johannesburg, Strauss said there are pockets of value in areas like Rosebank, Sandton, Melrose Arch and Fourways.

There’s a spike in South African property investors seeking out urban mixed-use developments as more and more South Africans are looking for peace of mind that comes with added security and convenience of amenities.

This surge across our major cities is called new urbanism, where everything you need is within easy reach in walkable neighbourhoods where you live, work, socialize, shop, and more, without facing daily commutes and endless traffic.

“The ‘new urban’ concept, where lifestyle meets real estate, really resonated with the Johannesburg market, which is why Melrose Arch has been so successful. It’s a walkable precinct, with all daily needs within walking distances – offices, restaurants, shops, hotels, banks, medical services, health clubs, entertainment, and so much more,” said Nicholas Stopforth, MD of Amdec Property Development.

Units in Melrose Arch are priced from R2.25 million, while  a single bedroom apartment in a development like Melrose Arch is likely to attract rental income of around R20,000 a month.

Read: How long first-time buyers hold on to property for in SA


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