The Mother City shines: Cape Town's prominent position in the World Cities Prime Residential Index

The Mother City features prominently in the World Cities Prime Residential Index.

Despite economic and geopolitical uncertainty, with rental values outpacing capital growth in the first half of 2025, prime residential markets across the globe have continued to demonstrate resilience. 

This is according to Savills World Cities Prime Residential Index, which showed that while capital values rose by a modest 0.7% across the 30 cities monitored in the index, prime residential rents increased by 2%, reflecting a growing investor preference for income-generating assets and a shift in tenant behaviour amid ongoing market volatility.

“Despite a slowdown from the 2.2% growth recorded in 2024, capital values remained in positive territory, with 60% of cities posting gains in the first half of the year,” comments Kelcie Sellers, associate director, Savills World Research.

“Most markets with price falls only saw slight declines. Cities with negative price growth were primarily the larger cities where residential property can be more costly to obtain, such as London, Paris, Shanghai and Los Angeles.”

Tokyo leads the Index with 8.8% growth in the first half of this year, driven by a chronic shortage of new stock and resilient demand from both domestic and international buyers. Capital values are forecast to rise by a further 6% to 7.9% over the second half of the year.

Berlin, Dubai, and Seoul each posted growth exceeding 5%, driven by constrained development pipelines and robust buyer sentiment.

The lifestyle appeal of Cape Town attracts buyers, says Dr Andrew Golding, chief executive of the Pam Golding Property group, which is Savills’ exclusive residential real estate partner in Africa: “The Savills Index notes that cities with strong lifestyle appeal, such as Amsterdam, Cape Town, Lisbon and Sydney, saw positive growth, buoyed by low levels of prime stock and sustained international interest.

"The lifestyle-driven nature of these markets continues to attract buyers, many of whom are less sensitive to short-term economic fluctuations. This sustained level of demand is likely to support further price growth.”

Looking ahead, Savills forecasts average capital value growth of 1.5% across the Index in the second half of this year, with Cape Town, Seoul and Tokyo expected to lead the way with anticipated growth of 6% to 7.9%.

Prime residential rents across the 30 global markets have proven even more resilient, with 23 out of the 30 cities in the Savills index recording rental growth in the first half, reflecting the continued global demand for top-tier rentals in key destinations.

Tokyo again leads the charge in prime residential rental growth by city in the first half.

This was driven by limited supply and strong demand, prime residential rents in the city increased by 7.8% in the first six months of the year and by 13.5% year-on-year.

Cape Town experienced strong rental growth of 6.5%, driven again by a shortage of prime rental properties and high demand, as well as market stability following the 2024 elections.

In Europe, while rental growth is slightly more muted than in other regions, there is still an overarching trend towards price stabilisation. The highest rental price increases were seen in Berlin (6.3%), Amsterdam (2.6%), Rome (1.4%) and Lisbon (1.3%).

Almost all markets that experienced declines during the first half of the year are located in China, with six-month growth ranging from -0.2% in Beijing to -1.8% in Guangzhou. Falls come amid weak demand and high supply.

“For the remainder of 2025, we expect rental growth of, on average, 1% across the 30 cities we monitor, reflecting a general sense of cautious positivity,” comments Kelcie Sellers.

Earlier this month, Statistics South Africa(Stats SA) data showed that the annual national residential property price inflation was 5.2% in March 2025, an increase from a revised 5.1% in February 2025.

The residential property price index (RPPI) increased by 0.5% month-on-month in March 2025. The main contributors to the 5,2% annual national inflation rate were Western Cape (9.5% and contributing 3.7 percentage points) and Gauteng (1.7% and contributing 0.6 of a percentage point)

Earlier this year, Cape Town’s central business district (CBD) saw its business confidence sentiment lift to reach its highest point in about five years.

According to the Cape Town Central City Improvement District’s (CCID) Q1 2025 Business Confidence Survey-based on responses from 293 businesses in its inner-city footprint, a remarkable 94.8 % of respondents were satisfied with current conditions.

This was up from 91.6 % the previous quarter. In addition, two-thirds (66.1 %) of respondents believe the economic environment in the city centre has improved over the past year, signalling a positive shift in local economic conditions.

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