The Savills Blog

Cape Town and Dubai residential markets remain strong despite falling oil prices

Boschendal Wine Farm, Western Cape

The residential property market in South Africa has shown extraordinary resilience given the general slowdown and uncertain domestic and global economic situation, believes Andrew Golding, CEO of Pam Golding Properties, a Savills associate with a network of 300 offices in sub-Saharan Africa. There are several pockets of buoyancy, led by South Africa’s Western Cape province.

"We’ve seen an influx of people relocating here from the north of the country, creating high demand for property," says Golding. "A large proportion of these buyers settle in the greater Cape Town area, making it the top-performing metro housing market.

"South Africa also attracts young professionals from the UK and Europe, especially those with IT skills and a sense of entrepreneurship," he adds. "They’re attracted by job opportunities and the outdoor life, but they also appreciate the value for money. Properties can be 10 times cheaper here than in their home cities."

Among other pockets of buoyancy is the Eastern Cape region, where major infrastructure investment is boosting economic activity, employment and property development in coastal cities such as Port Elizabeth and East London. Port Elizabeth, where the number of freehold properties has risen by 22 per cent in the past five years, is one of the least congested cities and likely to attract buyers taking advantage of its economic revival and relatively affordable property. Pam Golding Properties reports that local agents are already receiving more enquiries for prime property in the region.

In the Middle East, low oil prices have impacted on government spending on infrastructure and property development in the region. Significantly, there is also an indirect effect on the population’s buying confidence since a high proportion of residents in the Gulf states (Kuwait, Bahrain, Saudi Arabia, Qatar and the UAE) are directly employed in the public sector.

In the UAE, Dubai has fared better than most because its economy is less dependent on oil, which is only a small share of GDP. Instability in the Middle East has also benefited Dubai in terms of the Emirate being seen as a comparatively safe haven by investors from other Gulf states.

"Mid-market properties in Dubai – apartments and villas between approximately £200,000 and £800,000 – are doing relatively well," says David Godchaux, CEO of Core Savills in Dubai. "Newer types of development gaining interest in Dubai are lowerrise apartment buildings in attractive, lifestyle-led settings where residents can walk to amenities rather than getting in a car. We expect to see more of these in the future."

Further information

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