R10 million property investment in Camps Bay vs Los Angeles – the winner is clear 

R10 million invested in a property in Los Angeles yielded a significantly higher return over the past decade than in Cape Town’s exclusive suburb of Camps Bay. 

This is largely due to the depreciation of the rand, with both properties growing at the same annual rate in US dollar terms. 

This was revealed by the director of Hurst & Wills, Lisa Bathurst, who conducted a study to compare South Africa’s best-performing property market to its international peers. 

Bathurst conducted the study based on the experience of one of their clients who bought a property in Camps Bay in 2013.

The study evaluated the return on investment of R10 million invested in Camps Bay, South Africa, compared to the same amount converted to USD and invested in Los Angeles, USA, in 2014. 

The analysis includes current property values, historical exchange rates, and rental yields to determine the more profitable investment.

Camps Bay is a prestigious suburb in Cape Town known for its scenic views, luxury properties, and proximity to the beach. The area attracts both local and international buyers, driving up property values.

Cape Town is the most expensive real estate market in all of Africa, with prime residential spaces valued at $5,600/m², according to Henley & Partner’s Africa Wealth Report.

It has benefitted from increased semigration from the country’s northern areas and foreign investment, with property in Cape Town providing exceptional value for money compared to other cities. 

In Cape Town, for example, $1 million will enable you to acquire a residential property of approximately 200 sqm. For comparison, the same price tag will only secure 33 sqm in New York, 34 sqm in London, 43 sqm in Paris, 44 sqm in Sydney and 17 sqm in Monaco.

On the other hand, Los Angeles is one of the most dynamic real estate markets in the United States, known for its diverse neighbourhoods and strong demand for residential properties. 

High-end areas like Beverly Hills, Santa Monica, and Hollywood Hills attract substantial investment.

While the Camps Bay property tripled in value over the past decade, it still produced a far worse return on investment than the investment in Los Angeles. 

The Los Angeles property outperformed the Camps Bay investment by 71.39% since 2014, largely due to the depreciation of the rand. 

Even though both properties appreciated at similar rates, the rand’s weakness effectively compounded the return on investment on the Los Angeles property.

With the R10 million converted to approximately USD 952,381 and considering a 5% annual property appreciation rate, the investment in Los Angeles would have grown to $1,550,959 by 2024. 

When converted back to rands at the exchange rate of R18/$, this amounts to R27,917,262. 

In contrast, a R10 million investment in Camps Bay property, appreciating at the same 5% annual rate, would have grown to R16,289,000.

When including rental yields, the Los Angeles property still outperforms that of Camps Bay. Again, this is largely due to the weakening of the rand. 

Bathurst’s calculations show the Camps Bay property would have yielded around R5 million in rental income over the past five years. 

The Los Angeles property would have generated R6.8 million in rental income over the same time period.

This outperformance of the Los Angeles property with regard to its value is shown in the graphic below.