Russians Boost South Africa’s Luxury Real Estate
‘South Africa... lacks the legal hassle of foreign property purchasing found in other countries...’
Published: August 20, 2014 (Issue # 1825)
CAPE TOWN, South Africa — Nestled incongruously in the hill overlooking a sheltered cove, dusted with white sands and lined on three sides by mountain peaks, looms a 20th-century castle.
Rimmed with turrets and punctuated by a high central tower, the edifice is a replica of the Lichtenstein Castle, a historic neo-Gothic fortress built on a cliff in southern Germany in the mid-1800s.
Cape Town’s version, completed in 1998 and known to locals simply as “the Castle,” boasts 12 bedrooms, a swimming pool, and a banquet hall lined with stained-glass windows and suits of armour. The property, overlooking the city’s Hout Bay, contains a helipad and a natural waterfall, and is accessible only by a helicopter or the private mountain road.
One of the most famous real estate landmarks in Cape Town, the Castle used to be a guest house and popular venue for wedding receptions.
Now, it is owned by a Russian.
Though the realtors that closed the deal in 2012 refused to divulge the identity of the new owners, they told West Cape News that the residence was sold to a “high-profile” Russian businessman for $2.2 million.
The Castle isn’t the only piece of prime real estate to be scooped off the Cape Town market by Russians. Local real estate agents say wealthy Russian buyers have purchased numerous other multi-million-dollar homes along the city’s picturesque coast in the last several years, tapping into the region’s mix of sun, sea and mountains.
“They [Russians] like lifestyle properties,” said Brendan Miller, head of South Africa’s Atlantic seaboard at Sotheby’s International Realty, a luxury global real estate agency. High-end beachfront and seaside houses ranging from 10 million to 40 million South African rand ($950,000 to $3.8 million) are in the highest demand from Russian clients, Miller said.
Foreign interest in South African real estate, in fact, is reaching a peak, which economists say is being partly driven by a weakened local currency that has boosted major global currencies’ buying power.
The South African rand has been depreciating since mid-2011, according to economic data analysis center CEIC, making residential real estate here much cheaper for foreign currency earners. A report published by South African lender First National Bank, or FNB, last month found that housing prices in South Africa are down 21.7 percent in euro terms and 19.4 percent in dollar terms compared with the end of 2010. While the Russian ruble has also slid against these currencies, its depreciation has been slower.
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