A Cape Town vs Hong Kong Comparison
In many respects, Cape Town and Hong Kong are similar. Both are surrounded by mountains and sea, both are relatively expensive compared to surrounding cities, and both are seen as innovation and tech hubs, attracting plenty of start-ups.
Their unique topography helps to create incredible cityscapes, as they are limited the ways they can grow. Forcing them to mould around mountains and bodies of water. This is certainly one of the reasons these cities are so beautiful. Not only does this enable residents to have a disproportionately large access to natural beauty in the form of mountain peaks, forests, and sea views, but it also helps create some very interesting and distinct neighbourhoods. One of the other effects that this has is that it drives up property prices because of the scarcity of available land. In the case of Cape Town, this has led to some incredible properties, because it allows for neighbourhoods that are sandwiched in between sheer mountain faces and the gorgeous Atlantic. In some neighbourhoods, views of the city centre are hidden but it is still within a couple minutes’ drive. Giving residents the convenience of city life but having the freshness of country living, especially with the clean air being blown in from the Atlantic.
Despite these similarities, Cape Town and Hong Kong are very different in other ways. Firstly, Cape Town has a much smaller population than Hong Kong, at around 4.7 million compared to Hong Kong’s 7.5 million. While the Cape Town metropolitan area is more than double the size of Hong Kong’s, at around 2445 km ² (Hong Kong is around 1106km².) Hong Kong is far more densely populated than Cape Town. Although you probably didn’t need to see any calculations to know that. This difference in density is clearly visible to anyone who has seen pictures of the two cities. Because of Cape Town’s lower population, the houses are typically much larger than the apartments in Hong Kong. Many houses have private gardens too. Another thing you will notice about Cape Town are its many parks and open public spaces. The city is set up to support a very active and healthy lifestyle, with plenty of trails, promenades, and hiking routes.
Another big difference between these two cities is the price of housing. While Cape Town is relatively more expensive than other cities in South Africa, it is still much cheaper than Hong Kong. The average rental price of apartments in Cape Town is 67% less than similar apartments in Hong Kong. The price difference is even more extreme when it comes to purchasing properties, where in Cape Town investors get 90% more for their money (per m²) compared to Hong Kong.
When comparing property in different countries, and even different cities within the same country, it can be difficult to get comparable information. This is because the cost of living can be drastically different. To effectively compare cities, we must look at the cost-of-living differences in conjunction with the differences in house prices. This difference can actually be a huge advantage for people purchasing property in a cheaper city. They can easily outcompete the people living and working in the cheaper city because salaries are usually kept in line with the cost of living. With the rise of remote working, this opens the potential for what I am going to call lifestyle arbitrage. People can work in cities with the high cost of living and commensurate salaries but live in a cheaper city. This of course only applies if you can make the time zone difference work and are able to work remotely. Luckily, there are other ways to take advantage of Cape Town’s relatively cheap property.
This arbitrage works just as well if you are considering buying a holiday home or a home to retire too. For example, if salaries are 100% higher in city A than city B, if you save 10% of your income in city A, it will be worth 20% of the income of a similar job in city B. And since one of the key factors driving housing prices are income levels, you will be able to purchase a comparably better house than you would be able to in city A. To find about more on the relative cost of living in different cities I would recommend checking out Numbeo.com.
Of course, if you are wanting to purchase a property now in the hopes of retiring to it one day, or plan to use it as a holiday home, it is important to look at the returns it will generate. The only thing better than owning a luxury foreign property is owning a foreign luxury house with a good return. Did you know that on average, the yield of properties in Cape Town are four times that of properties in Hong Kong.
