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Guess where SA’s fastest growing wealth market is?

The North Coast corridor stretching from Durban to Ballito in KwaZulu-Natal is becoming a magnet for South Africa’s super rich.

The Durban-Umhlanga-Ballito corridor is the fastest growing wealth market in South Africa, according to the AfrAsia Bank SA Wealth Report for 2019 which came out on Wednesday.

The 6th edition of the report, published by Johannesburg-based New World Wealth, notes that in the 10-year period from 2008 to 2018 the region’s total wealth rose 25% from $43 billion to $54 billion.

It says the corridor is now home to 3 300 high-net-worth individuals (HNWIs), defined as those with investable assets of $1 million (around R14.1 million) or more.

The area also has 210 multi-millionaires – people with investable assets of at least $10 million (around R141 million).

Despite this growth trend, the region still lags Johannesburg and Cape Town in the stakes of super rich individuals. As SA’s economic hub, Johannesburg has just over five times as many HNWIs (16 600) as the North Coast corridor, while Cape Town has 7 100 – with the Western Cape’s Paarl-Franschhoek-Stellenbosch region highlighted as a separate node in the report with 2 800 HNWIs.

Source: AfrAsia Bank South Africa Wealth Report 2019

“Our research shows that over the last 10 years South Africa’s two main wealth markets, namely Johannesburg and Cape Town, have performed relatively poorly,” says Andrew Amoils, head of research at New World Wealth.

“Johannesburg has lost a large number of HNWIs to other parts of the country while more recently, Cape Town has been harmed by the drought which has hurt the city’s real estate market and deterred migration to the city,” he adds.

Read: Deflation hits upmarket Cape Town house prices

On the other hand, the report notes that Umhlanga has been the top performing residential market in South Africa over the past 10 years, with square metre prices in The Pearls luxury apartment complex now reaching similar levels to top apartments in Bantry Bay and Clifton in Cape Town.

“There has also been an uptick in prices in surrounding areas such as Ballito, La Lucia and Zinkwazi, most likely driven by the fact that many local and foreign tourists are now holidaying in northern KwaZulu-Natal due to the negative impact of the drought on Cape Town and the Western Cape,” it adds.

Read: New mega players in North Coast property boom

Estate agents have echoed similar sentiments about the property development boom on the North Coast. Carol Reynolds of Pam Golding Properties in Durban says ‘semigration’ to the coastal belt between Durban North and Ballito remains a recurring trend, especially by wealthy “Gautengers” seeking a better lifestyle.

Penthouse apartment fetches R30m

“Durban has won best lifestyle city in South Africa for the past few consecutive years according to the Mercer [2019 Quality of Living] Index, further underlining investor confidence in a province with a highly desirable lifestyle,” says Reynolds. “The Kzn North Coast region continues to attract an influx of home buyers – we recently sold a frontline penthouse apartment at The Pearls in Umhlanga for R30 million.”

According to the AfrAsia report, South Africa is still the largest wealth market in Africa and the 31st largest worldwide with total private wealth held by individuals of approximately $649 billion, of which about 42% or $275 billion is held by HNWIs.

The report notes that although Johannesburg is still the richest city in South Africa with its total wealth valued at $248 billion in 2018, this was only 9% up from a decade earlier when the city’s total wealth was estimated at $228 billion. Cape Town is the next richest city in SA with total wealth of $133 billion last year, 11% up from $120 billion in 2008.

Relatively ‘poor’ performance

“In some ways, the relatively poor performance of South Africa’s two main wealth markets mirrors the performance of its overall economy, which underperformed over the last decade, with World Bank data showing gross domestic product [GDP] per capita in dollar terms rising just 7% from $5 700 in 2008 to $6 100 in 2018, but down from a peak of $7 900 in 2011,” Mauritius-based AfrAsia Bank said in a statement.

The bank considers wealth to be a far better measure of the financial health of an economy than GDP.

“GDP is quite a static measure – it tends to only move slightly year on year,” says Ravi Teji, head of business development in Africa for AfrAsia Bank. “As a result, it is not a great gauge of the performance of an economy. The trouble with using GDP to measure the health of the economy is that a large portion of economic output often flows to the government, particularly in developing countries, resulting in little impact on the financial wealth of private citizens. GDP also counts items multiple times.”

He adds: “GDP also ignores the efficiency of the local banking sector as well as the impact of property prices and the stock market, both of which obviously have a big impact on private wealth.”

A day after the release of the AfrAsia Bank study Bloomberg reported of South Africa’s economy being “stuck in its longest downward cycle since 1945”.

Citing the South African Reserve Bank’s Quarterly Bulletin released on Thursday, Bloomberg stated that the economy entered its 67th month of a weakening cycle in June. It noted that this added to the risk that South Africa may fall into its second recession in a year.

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Ah, thanks Suren. Now I know which area to avoid at all costs.

Super rich. How to become one. Just follow the headlines. Standstill by Eskom and SAA for a start. Then carry on reading about VBS bank to municipalities. How to join is no secret. Super rich did call each other comrades. No more.

I wonder which JSE listed company put all their eggs in the Durban North Coast property market?

420 people in Cape Town worth R141 million? No way! Wealth is held in trusts and companies so not reflected here. Also R141m is not a fortune in a first world environment. A north London house, ski apartment in Verbier and a summer house in Majorca will cost a hell of a lot more. Fair enough this wealth excludes the primary residence but I am afraid the report is very inaccurate.

Take the val de vie estate-many people there alone are worth at least USD10m but the wealth is concealed to evade estate duty in trusts and other sleazy structures( insurance wrappers, offshore companies etc)

Hmm, are you sure about that? A lot of people buy with debt so not sure it’s so easy to spot a $10mm.. in fact a few of the folks I know that are liquid $1m – $10m would not look too different from any other professional, ourselves included… whilst some that are living here do it with cash and some with debt.

KZN northern regions’ development almost old news 😉

Not that the WCape is outdone, nor is development standing still. It’s merely that KZN was lagging the Cape the past decade, and the Cape reaching near the top in development nodes, and now that space constriction is getting extremely costly in CT Atlantic seaboard (and other Cape corridors). Natural for a larger chunk of investment money to flow to KZN (from Gauteng).

I compare the above to SA’s gold mining industry: Ghana is reported to outperform SA in gold production currently. SA gold mines have had its most profitable period behind it, with deeper reefs becoming too expensive to mine economically. SA (like the W/Cape) still bigger than Ghana (like KZN).

Simply makes sense.

And at least you can swim in the sea and suntan on beach without freezing-even in winter.

…or swim in pharmaceuticals or shyte as you do in Cape Town.

You can bet that the number of millionaires will be declining after the Tongaat Hullet meltdown.

Add on Steinhoff, Brait, Mediclinic, EOH, MTN, Sasol and you will see that SA portfolios have been hammered in Rands as for dollars…..

Lets see, Cape Town property market in decline , properties not being bought even at huge price cuts.
SOOO Reits and others who have money riding on North coast looking for new suckers. Tongaat in trouble mmm i smell a bubble.
OH and i have lived in Natal , very clicky people , good luck with that one – not my $ thanks.

The Cape Town bubble took years before it popped, and it is popping in a big way.

KZN has lots of catching up to do still.

I believe SA’s fastest growing wealth market is in fact Sydney, Australia.

If the super rich inhabit the North coast, how come Tongaat has failed??? Can only be fraud, mismanagement and share price manipulation in that case?

Your new correct heading should be: “Guess where SA’s fastest growing wealth market is? Anywhere that is not ruled by the ANC”. Period. Mauritius, UK, Channel Islands, Cyprus etc etc

@Pamplona. I agree. The ANC’s biggest export product, is wealthy South Africans including their skills and capital (I think it was originally “Sensei”s words 😉

MKD – we are externalising wealth (me) but even worse, we are externalising our wealth creators (soon to be me and my own)

Moneyweb, please don’t mention things like this so publicly, when the ANC finds out that stuff is working and people are creating wealth they will do everyone in their power to destroy it.

When I left SA in November 2008, the world wealth report recorded over 50,000 individuals in SA with USD 1M+. Now only 37,000?

In the mean time the population grew from 42m to 55m.

Sjoe!!

In fact, SA’s fastest growing wealth market is probably Sydney Australia

and the covert admission recently by “government” that our population is actually 81m

Just read a property owner on CT atlantic seabord getting a 3% gross and 1%
net return on a rental – wowee

I am trying to fathom why anyone in their right mind would invest in high value SA property when they should be getting their $’s out of here. Talk about stacking the deck chairs on the titanic. And crooked and inept estate agents keep talking the market up. Good luck

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