Foreign buyers in South Africa's Luxury Real Estate Market

Cape Town’s ‘the Castle’, an imitation of Germany’s Lichtenstein Castle, a historic neo-Gothic fortress, houses a banquet hall lined with armour suits and stained windows, 12 bedrooms and a swimming pool. With views over the city's Hout Bay, there is a helipad and natural waterfall, accessible only by a private mountain road or helicopter.

‘The Castle’ is one of the most famous real estate landmarks of Cape Town, formerly a guest house and popular wedding reception venue.

However, it has now closed a deal during 2012, sold to a ‘high-profile’ Russian businessman for $2.2million.

This is just one piece of prime real estate acquired from the Cape Town market by a Russian. It has been claimed by local real estate agents that affluent Russian buyers have also purchased numerous other multi-million-dollar homes along the city's coast over the last several years, moving into the region's blend of sun, mountains and sea.

Interest in Western Cape Residential Market

Estate agent, Pam Golding Properties have found that many South Africans still aspire to reside in ‘cosmopolitan’ Cape Town. This is as well as foreign buyers who are attracted to the favourable rand exchange rate.

The FNB Western Cape housing price index has reported that the average price for a house in the region has risen by 12.5% during the second quarter year-on-year.

An FNB survey of estate agents also found that the period for a house of the Western Cape to sell has decreased from an average of 13.7 weeks to 13.3 weeks.

Agents estimate that 81% of sellers are currently being requested to decrease their asking price, in comparison to 95% early last year.

The managing director of Pam Golding in Cape Town, believes the residential property market throughout South Africa is receiving intense interest. The market is enjoying what seems to be a continuing upturn, defying the economic constrictions said to be experienced by other sectors.

The areas within and surrounding the Western Cape, specifically the Cape Town metropolis, provide an intriguing sample of the whole country's housing market, resulting in the region often being considered as a national property barometer.

Despite the growth rate of Western Cape's property sales, FNB analysts claim it is second to Gauteng as the most affordable residential market.