Can you afford property in Cape Town City Bowl?

According to recent statistics compiled by Lightstone, the average selling price of properties in the Cape Town City Bowl and surrounds, including  Green Point, Sea Point and De Waterkant is between R3 million and R5 million. Properties in areas such as Bantry Bay, Fresnaye and Camps Bay are averaging between R8 million to R16 million.

According to recent statistics compiled by Lightstone, the average selling price of properties in the Cape Town City Bowl and surrounds, including Green Point, Sea Point and De Waterkant is between R3 million and R5 million.

This is according to David Rebe, CEO of Sandak-Lewin Property Trust, who says these exorbitant prices, which are likely to escalate further, are keeping many property investors from buying in the City Bowl and Atlantic Seaboardneighbourhoods.

He says viable alternatives do however exist for property investors wanting to live in these areas, even if the price bracket is not within their budget.

“Properties in these areas are among the most sought after in Cape Town, mostly because the areas are located close to the City Bowl, public transport, as well as amenities such as the beach and a wide array of restaurants, cafés and bars,” says Rebe.

“Over the years house prices in these areas have increased significantly, so much so that it is no longer a feasible investment to buy property in the area.”

However, he says a viable alternative for property investors is to purchase property in up-and-coming suburbs outside the City such as Century City, where home loan repayments aren’t as high and property offers high yields, and continue to rent in the City Bowl and surrounds for lifestyle reasons.

“Rentals in these areas are also in high demand, so investors should be able to let out the property for a reasonable price,” says Rebe.

He says many Capetonians choose to live in the City Bowl and surrounding areas due to various lifestyle choices such as close proximity to work and limited traffic.

“Renting in the City Bowl and buying property in a more affordable suburb and surrounds allows one to live in the desired location while still making an investment in real estate in an area that has high rental returns. 

“For example, Woodstock and suburbs such as Century City have higher rental yields compared with the Atlantic Seaboard, due to the lower cost base of the properties coupled with high demand for rentals in the area,” says Rebe.

A three bedroom house in Century City priced at about R2 million will yield a rental return of approximately R20 000 per month or R240 000 per year, and with the annual loan payment of R225 000 over 20 years, generate a net cash outflow of R15 000.

“This is in comparison to a three bedroom house in Green Point worth R4 million, which also gives an annual rental return of R20 000 per month, that is R240 000 per year, but with an annual home loan payment of R450 000 per year over 20 years resulting in a net cash outflow of R210 000 per year.”

Rebe says despite not being able to buy property in the City Bowl and Atlantic Seaboard, property investors are still able to live an inner city lifestyle by buying property in surrounding suburbs and renting in the area that they choose to live in.

“This will enable investors to benefit from the lifestyle advantages that the city offers, as well as the rewards that property investments offer,” he says.