FT: How the world sees SA: Are too many people moving to Cape Town?

Key topics:Influx of migrants and foreigners is driving Cape Town’s housing crisisInfrastructure and services are strained by rapid population growthCity plans major investments, but gentrification and inequality persist.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Mary Holland.South Africa’s second city is at a crossroads: those flocking to live there are powering the economy, but also driving up house prices and exacerbating a strained market and local infrastructure. For a city surrounded by ocean and mountains, the expansionist path forwards is a complex oneIt’s 8am on a Friday in Cape Town, and the tidal pool at Saunders’ Rocks Beach in Sea Point is brimming with activity. With Lion’s Head as a backdrop, brave swimmers wade into the brisk 15C water, while others lounge on the sun-warmed rocks, soaking up the morning rays and sipping on takeaway flat whites. Once a quiet spot known only to locals, nowadays you’ll also likely hear a British or American accent. This is how the day typically starts for some who live along the Atlantic Seaboard, a coveted area wedged between the mountains and the ocean, where sea-facing mansions are carved into the cliffside. But too many people, it would seem, want a slice of it. Or at least in the eyes of locals. Though South Africa has been in the news as a country from which, according to Donald Trump, people are fleeing violence and discrimination, Cape Town, at least, is attracting some foreigners moving in the opposite direction. Last May, when South Africa announced a nomadic visa that allows remote workers to live and work in the country for up to three years, Cape Town residents erupted with frustration on social media. “Stop coming to South Africa,” said influencer Naledi Mallela on TikTok. While they’re blaming foreigners from Germany, the UK and US for significantly straining Cape Town’s housing market, that’s just one channel. Internal migration is another, as is short-term rentals and unregulated Airbnbs — there are some 25,800 active listings. All are driving up property and rental prices and contributing to housing shortages. The 2022 national census recorded Cape Town’s population at 4.77mn, reflecting a 27.6 per cent increase from 2011. As of 2024, it’s estimated to have risen to 4.97mn. In parallel, property prices rose around 160 per cent from 2010 to 2024. Average house price growth in 2024 was 8.5 per cent compared to the national average of 4.5 per cent, according to the Residential Property Price Index from November 2024.Capetonians are paying the price for it in a number of ways. While some frolic on the beach, others endure hours of gridlock on the N2 — the main highway leading into Cape Town. The INRIX now lists the city as the ninth most congested in the world. Residents in the historical, colour-filled neighbourhood of Bo-Kaap complain about gentrification. There have been reports of a shortage of healthcare professionals and, in informal settlements, overcrowding has become an even larger issue. The city’s sewage infrastructure also faces challenges such as spills, and many of its wastewater treatment plants are struggling to meet national standards. It’s largely a result of previous load shedding (electricity cuts) which impacted pump stations and wastewater treatment plants, but also vandalism and poor maintenance. But executive mayor Geordin Hill-Lewis, of the opposition party the Democratic Alliance, is bullish. With nearly R40 billion ($1.65bn) set aside for infrastructure projects in the coming years — which includes a R715mn sewer upgrade in the lower-income Cape Flats region, which aims to impact 300,000 households and a R7bn expansion of the MyCiti public bus service — the mayor says his plan is “the largest infrastructure investment pipeline of any city in the country by a mile”.Hill-Lewis has long rejected the idea that digital nomads are the reason for a soaring housing market. He believes the visa is a scapegoat, and the biggest driver of pressure is what South Africans call “semigration” — South Africans from other parts of the country flocking to Cape Town. And why wouldn’t they?“There’s [net] 100,000 people — middle-class families — who have moved from Gauteng [home to Johannesburg and Pretoria] to Cape Town over the past two years [and entered the property market],” says Hill-Lewis. “That is five times [more than] short term rentals.” It is a significant acceleration. Between 2011 and 2022, the Western Cape experienced a net gain of around 296,000 residents through interprovincial migration. Cape Town offers what a lot of places around the country don’t: reliable infrastructure, relative safety in the central city and some suburbs, and more economic opportunities. In his 2024 Budget speech, Hill-Lewis said 300,000 new jobs had been created since the start of his term in 2021. “Joburg has lost its shine,” says John Loos, property strategist and economist at FNB Commercial Property Finance. Loos adds that Cape Town is the fastest growing economy in the country, and the city recorded a 20.2 per cent increase in employment between 2014 and 2023. “Income growth of locals is also growing slightly better than Gauteng and other provinces,” says Loos. He also notes that the largest number of migrants flooding into the city are from other parts of South Africa and Africa. Despite the latter, he adds: “I think there’s probably too much emphasis placed on foreigners.”The property market mood is at times frantic. Real estate agent Donna Norgarb recently listed a R7mn (roughly £280,000) house in the well-to-do suburbs of Newlands and Rondebosch, where she had 20 people viewing it at once. One man, who briefly saw it for 15 minutes because he had to get to a rugby game, called during half-time and put in a cash offer. Many of the buyers? Joburgers. Over the past year, 20 per cent of her buyer inquiries in the sought-after Atlantic Seaboard and City Bowl regions have been from the greater Johannesburg and Pretoria area. The more valuable the property, the higher the tax. We deliberately balance those scales in favour of poorer neighbourhoodsExecutive mayor Geordin Hill-LewisSafety and security (in central areas) is a big driver. Phumlile Smith moved to Cape Town from Johannesburg five years ago. “You can’t ride your bike in Joburg unless you are in a walled-off estate,” says Smith. But such is the market gap between the two cities, she wasn’t able to find a comparable home for a similar price. Having owned a four-bedroom 1,200 sq m home with a pool near Lanseria in Johannesburg, she is now renting a smaller three-bedroom home a short drive from the central Cape Town neighbourhood of Rondebosch. She would have liked to have invested in property, but “I’m priced out of the market,” she says. Moving to the city has been great for her children, but she’s bothered by things beyond the property market. Namely, the city’s racial divide. Smith describes middle and upper class neighbourhoods in Johannesburg as “cosmopolitan and extremely diversely integrated. I can’t say I have experienced the same in Cape Town,” she says.Nevertheless, asset manager Zamazulu Zulu felt that she “needed to get out of Joburg”. She moved to Franschhoek, just outside Cape Town, four years ago. When she started looking seriously to purchase property, she quickly realised how expensive it is compared to Johannesburg and had to adjust her expectations, settling on a more modest home in a secure estate that needed a renovation. The benefit is that her taxes and levies in the Franschhoek area are less than what she was paying in Lanseria, where she previously lived. “Four years ago, it was already more than double what I’m paying now.” It’s far from the case for all Cape Town residents: rates and levies are exceedingly high in some areas. Kelly Skeen, an interior designer who moved from Johannesburg with her family in 2020, looked at around 50 houses and put offers on six before one got accepted. Though it is centrally located, it’s not her dream home. Not only did Skeen have to adjust her expectations, but she now pays a sewage charge of almost R1500, as well as more for water (where she lived in Rosebank, Johannesburg, she got up to 6.3 kilolitres free).“It’s not straightforward, but we are paying the city of Cape Town more than we paid the city of Joburg.” Skeen doesn’t regret her decision to relocate. On weekends she can take her kids to the beach and, though she misses parts of Johannesburg, there are lower levels of crime around where she lives, and she doesn’t have to deal with gripes like water cuts due to burst pipes that needed maintenance. “In some aspects you sacrifice,” she says, “but you also gain in other ways.” Hill-Lewis is unapologetic about rates (homes above R7mn could see an increase of more than 20 per cent in the 2025/26 Budget). “The more valuable the property, the higher the tax,” he says. “We deliberately balance those scales in favour of poorer neighbourhoods and invest more and more into them so that we can improve the quality of life there.” He says upwards of 75 per cent is spent in very poor, underserved neighbourhoods, citing water and sewer pipe replacements in Gugulethu and Delft, and expanding roadways such as Jip de Jager Drive in Belleville. “The city derives most of its income from property taxes, which by definition operates as a wealth tax,” says Hill-Lewis. Like much of South Africa, roughly 49 per cent of residents in the Western Cape live in townships, residential areas with high population densities and limited infrastructure. In Cape Town, these are on the outskirts of the city, requiring residents to travel vast distances to get to work. Hill-Lewis has a number of affordable housing initiatives under way, including releasing city land and developing more subsidised units across the city in central neighbourhoods such as the City Bowl, Bellville and Claremont.But some say Hill-Lewis is “cleaning up” a bit too much and there’s been criticism around his evictions, where informal settlers living around the city centre, namely along the premises of the Castle of Good Hope in November, were relocated. Unathi Ntame of the Economic Freedom Fighters (EFF), the radical South African and Black nationalist political party, says, “This is a government that continues to prioritise tourist attractions over the welfare of its most vulnerable residents.”Higher rates and taxes might be egregious for some locals, but for many foreigners from countries with stronger currencies, it’s a small price to pay to live in a city where you can go mountain hiking or take a dip in the ocean before work. “If this tax actually goes towards the city improving itself, we’re all for it,” says Veerta Motiani, an American interior designer who relocated to Cape Town seven years ago for her husband’s work. “As a foreigner, that’s what you need to be willing to give towards the city.” For residents who are coming with hard currency in euros or dollars or pounds — what they can afford in Cape Town is just incredible value for money compared to similar locations elsewhereGeordin Hill-LewisNorgarb has seen many more non-Africans relocating to Cape Town — currently around 6 per cent of her inquiries. Some are “swallows” — people who come for some of the year — who are now extending their season and also upgrading their homes. “They are spending more time here and rooting down,” says Norgarb. “What’s gone from a pied-à-terre situation is now: I want a house.” For the past few years, US-born casting director Kate Mack has split her time between Cape Town and New York. She, her South African husband and son escape the New York winter in their Bantry Bay home (which they also rent out when not there). “I fell in love with it,” says Mack, who would consider living here full-time if her family wasn’t so far away in the US. “I’m constantly answering questions from expats interested in moving here,” says Motiani, who shares updates about her home renovation on social media, where she has thousands of followers, many of whom are in the US. Most people sliding into her DMs are New Yorkers. They want to know, “What visa did you get? Who is your lawyer?” When Motiani first moved to the city for a two-year stint, her intention wasn’t to stay. But, she says: “It’s this small-town life. It just blew us away in every way. As our community grew, we were just like, this is it for us. So we ended up buying a home.” Their old Cape Dutch-style house is located on the slopes of Table Mountain. While prices here are considerably more expensive than other South African cities, it would have been impossible for them to afford somewhere like this in New York or LA, where they had previously lived.“For most of those residents — who are coming with hard currency in euros or dollars or pounds — what they can afford in Cape Town is incredible value for money compared to similar locations elsewhere,” says Hill-Lewis. He says that most foreigners aren’t competing with local buyers. “Most of those investors are purchasing at the very high end of the market.”But “it all filters down”, counters Norgarb. “It’s definitely upping the value.” She acknowledges that her children might struggle to buy property one day. But, she says, she also sees the positives.There is one benefit of the higher taxes: many of the people I spoke to acknowledge that the local government has provided decent public services. Though Zamazulu Zulu has heard people complain about issues with pipes and sewage, her experience has mostly been good. “I see the municipal workers cleaning up, sweeping the roads, trimming the trees when they’re overgrown,” says Zulu, who recounts seeing a pothole along a main road on her way out of Franschhoek. When she returned that same day it had been fixed. “In Joburg, I wasn’t used to that,” she says. “I’ve just seen potholes getting bigger and bigger and bigger.” House & Home unlockedDon’t miss our weekly newsletter, an inspiring, informative edit of the news and trends in global property, interiors, architecture and gardens. Sign up here.If the population continues to increase, the challenge for the government will be to maintain Cape Town’s infrastructure. It’s a city surrounded by ocean and mountains, so extending certain neighbourhoods or adding larger highways in some areas is out of the question.Hill-Lewis is acutely aware of congestion and pressure on infrastructure, but says that foot traffic is good for the economy. “Our number-one social crisis in South Africa is unemployment,” he says, citing figures upwards of 35 per cent. “If there is something that we can do that helps to bring further investment and jobs to the city, then we absolutely must do that.”For Hill-Lewis, an influx of investors is a good problem to have, helping to drive an economy facing challenges. “There are lots of other pressures and problems that all of the success brings,” he says. “But those pressures are much better to deal with than the ever worsening pressure that comes with a failing economy, growing poverty and unemployment.”© 2025 The Financial Times Ltd.

FT: How the world sees SA: Are too many people moving to Cape Town?

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