Millionaires flooding to Cape Town

Henley & Partners’ BRICS Wealth Report predicts that Cape Town is set to experience a marked increase in millionaires in the coming decade.

The report forecasts promising growth on South Africa’s horizon, with a 60% expansion of wealth per capita by 2033.

Part of the key to South Africa’s future prosperity will be the influx of high-net-worth (HNW) individuals into the country.

Currently estimated at 37,400, the number of millionaires in South Africa is expected to rise sharply in the coming decade. Cape Town will lead the way.

Home to 7,400 millionaires in 2023, Cape Town’s millionaire population is set to increase by a striking 85% over the next ten years – reaching 13,500 in 2033.

The influx of HNW individuals speaks to Cape Town’s growing popularity as a retirement destination for immigrants from Europe, Russia, the UK, and the rest of Africa.

In addition, Cape Town is experiencing a large volume of ‘semigration’, with HNW South Africans flooding in from other parts of the country – especially Johannesburg and Pretoria.

Cape Town’s natural beauty has always made it a holiday destination for South Africans. However, the current influx may point to deeper structural factors that set the city apart.

One such factor is public goods provision, especially as load-shedding and water conditions worsen.

In FNB’s property insights note, property strategist John Loos identified municipal and utilities service reliability as a key theme for property markets in 2024. This comes as rising rates and tariffs pressure net property operating income.

Municipal rates and utility tariffs continue to rise at rates well above general inflation, a further source of pressure on net property operating income. 

“People will continue to move to areas where things work, resulting in semigration for household and business activities,” Loos said.

Beyond load-shedding and water supply, semigration is driven by the broader concerns of corruption, crime and deteriorating infrastructure in the major Northern cities.

Renowned economist Dawie Roodt said people see and experience this deterioration and are voting with their feet by moving to the Western Cape.

He pointed to the party divide that isolates Cape Town from Gauteng as the primary driver of semigration.

“Most of the provinces and municipalities run by the ANC are mismanaged. The DA is not always doing a great job, but they are dramatically better than the ANC,” Roodt said.

The benefit to Cape Town’s property market is reflected in the city’s house price inflation, which has shown strong growth in recent months.

The Western Cape saw the strongest growth in house price inflation among the three major regions in South Africa.

According to the Pam Holding Residential Property Index, Cape Town is the only major metro housing market where prices have stabilised rather than declined.

Meanwhile, Gauteng cities are falling behind with poor economic growth and diminished property markets.

Growthpoint South Africa CEO Estienne de Klerk has described the current property market in Gauteng as being plagued by high vacancy rates, largely due to poor service delivery from local municipalities.

“The reality is you need economic growth. Growth at these pedestrian levels is making it a bit difficult, and Gauteng – no doubt – is disproportionately weak compared to the coastal areas,” said De Klerk.