Gauteng continues to attract the wealthy
As South Africa’s economic powerhouse, Gauteng remains home to half of the country’s high net worth individuals, and they continue to support the upper end of the residential property market in the province, which remains surprisingly resilient despite slow national economic indicators.
This is according to Rupert Finnemore, managing director of Pam Golding Properties’ Gauteng region. “New World Wealth noted in its Wealthiest City in the World Report published recently that Johannesburg remains the city with the largest number of US dollar millionaires in South Africa with some 17 600 out of a total of 40 400 nationally, adds Finnemore. “Pretoria has a further 2 600, which means that Gauteng is home to exactly half of South Africa’s high net worth individuals.
“These figures are not surprising, as we continue to see high levels of investment and growth across a number of centres in Gauteng, including the ‘Golden Mile’ of Sandton, which remains the undisputed financial capital of South Africa. Other growth nodes that are enjoying particularly impressive infrastructural, commercial and residential development include Fourways, Midrand, Menlyn in Pretoria East, and a number of others. These demonstrate that there remains strong confidence in numerous areas of the local economy.
“The province has a diverse and sturdy local economy and as such, the region continues to attract investment opportunities and wealthy industrialists not just from South Africa, but also from the African continent and around the world,” he points out.
Finnemore says that median house prices in the super-luxury residential property market have generally exceeded inflation during the past decade and Pam Golding Properties continues to observe ongoing interest in this level of the market, and particularly in freehold homes in traditionally upmarket suburbs. Sectional title apartment properties in areas such as central Sandton and homes in luxury estates are also proving increasingly popular.
Lightstone data suggests luxury home sales occur across a wide spread of residential suburbs. The top five suburbs for such sales during the past decade in the northern suburbs of Johannesburg are Westcliff, Hyde Park, Morningside, Sandhurst and Bryanston. New World Wealth’s recent annual top 10 SA residential estates for the wealthy placed the Steyn City estate, near Fourways in Johannesburg, in fourth place nationally.
“Besides the large amount of economic opportunity generated within the province, Gauteng’s outstanding education, health and other facilities continue to remain a draw card for local and foreign home buyers. Our private and international schools and a number of our private medical facilities are considered nothing short of world class, which only adds to the popularity of homes in upmarket suburbs.”
“Pam Golding Properties, which has a particularly strong presence in the upper end of the residential property market, is finding that its operations in Pretoria and the northern suburbs of Johannesburg, in particular, continue to perform well. Indeed, our Pretoria region reached new heights in the first half of 2016 by recording R760 million in sales.
“These strong performances, we believe, are in part due to the fact that the wealthy are looking for trusted property advice in the tighter economic environment that we are currently experiencing. Another positive development is that, while the overall numbers of millionaires have reduced in 2016 largely as a result of a reduction in the strength of the rand vis-à-vis the US dollar, new sources of wealth continue to be attracted and developed locally,” says Finnemore.
“We note, for instance, that the composition of the local millionaire population is shifting; the number of wealthy individuals from previously disadvantaged groups has risen strongly reaching 17 300 in 2015, which equates to 45% of the local millionaire population. New World Wealth anticipates that if black economic empowerment continues at current levels, this figure will increase to 80% of the total high net worth population by 2030.”
Interestingly, Lightstone data reveals that the age profile of wealthy buyers is also changing. Since 2005 there has been a shift towards younger buyers with the percentage of buyers aged between 55 and 64 declining from 57% in 2005 to just 12.5% in 2015, while the proportion of buyers aged 35 to 44 has risen from 15.6% in 2005 to 30% in 2015.
“A number of high net worth foreign investors continue to buy property locally. Certain wealthy foreign nationals, particularly from other African countries, are finding good opportunities available in the local buy-to-let investment market and purchase residential properties for that purpose. Others are spending much time conducting business operations from within South Africa and seek a local luxury residential home where they spend at least part of their year,” adds Finnemore.
According to New World Wealth, more than 1 500 African millionaires have moved to South Africa since 2007. Outstanding private schools for their children, secure luxury residential estates, business opportunities, weather and scenery were cited as some of the reasons these wealthy individuals moved to South Africa. The wealth intelligence company said that it expects more than 10 000 African millionaires to move to South Africa over the next decade, significantly boosting numbers.
“Pam Golding Properties is optimistic that the upper end of the Gauteng residential property market will remain relatively stable, particularly given the ongoing economic leadership of the province and the rapid development of many of its centres,” concluded Finnemore.