Wealthy foreigners buying expensive Western Cape properties

Foreign buyers are increasingly active in South Africa’s high-end property market, particularly in the Western Cape, where they pay significantly more than locals and dominate luxury purchases above R10 million.

The South African property market is showing encouraging signs of recovery, with real estate emerging as the second most popular asset class in the country.

According to the 2024 South African Investor and Banking Report, the Western Cape is at the centre of this promising trend.

“This is a significant development, as it reflects growing confidence in the stability and long-term returns offered by property,” said Lew Geffen Sotheby’s International Realty’s Claude McKirby.

While the Western Cape is a popular destination for South African locals, it is also favoured by foreigners who buy properties for investment and lifestyle purposes.

A Lightstone analysis revealed that the residential market’s combined foreign share has increased marginally since 2019. This analysis covers residential purchases from 2019 to 2024.

Importantly, this Lightstone analysis was limited to residential properties bought by natural persons with only one property per title deed.

“Over the past six years, we’ve seen a growing gap between what local buyers pay for property compared to foreign buyers,” said Hayley Ivins-Downes, managing executive of Lightstone’s real estate cluster.

“The data shows that in 2024, non-resident foreigners paid an average of just over R2.7 million, more than double the R1.2 million average paid by local purchasers.”

In comparison, foreigners with South African residency consistently bought property priced somewhere between these groups, with the average price being just under R2 million in 2024.

Interestingly, although foreign buyers with residency have historically bought more properties than those without, this trend has reversed in the last two years.

In 2023, foreigners without residency who bought property outnumbered foreign buyers with residency, a pattern which grew in 2024 to over 3.5% of transactions.

Conversely, the ratio of transactions from foreign buyers with residency dropped from 3.8% in 2019 to 3.3% in 2024.

At the same time, the proportion of foreign buyers without residency has increased from 2.9% to 3.7%. House sales to locals have drifted back marginally, from 93.3% to 93%.

The graph below shows the proportion of transactions from foreigners with and without South African residency from 2019 to 2024.

Preferred destinations of foreign buyers

Lightstone analysed three price bands: R3 million to R5 million, R5 million to R10 million, and above R10 million. It also examined three provinces: Gauteng, KwaZulu-Natal, and the Western Cape.

It found that the Western Cape was the preferred destination for foreign buyers, leading the way in the three price bands analysed.

The province accounted for just over 40% of transactions above R10 million, around 25% between R5 million and R10 million, and around 15% between R3 million and R5 million.

Scarborough, a seaside village on the edge of the Cape Point Nature Reserve, was the suburb with the highest proportion of foreign buyers in 2024.

This was followed by Chapman’s Peak, Bakoven, and De Waterkant. All 22 of the top suburbs were in the Western Cape.

Ivins-Downes pointed out that the higher the property’s value, the greater the percentage of foreign buyers. Notably, foreign buyers made up 40% of all purchases above R10 million in 2024.

“While foreign buyers remain a small segment of the market, their influence is clear in the high-end property space, especially in the Western Cape,” she said.

“As global interest in lifestyle and investment properties grows, this trend is likely to continue in key coastal areas,” she added.

The graph below shows the areas with the highest proportion of foreign buyers in 2023 and 2024, according to Lightstone.