The Luxury Effect hypothesizes a positive relationship between wealth and biodiversity within urban areas. Understanding how urban development, both in terms of socio-economic status and the built environment, affects biodiversity can contribute to the sustainable development of cities, and may be especially important in the developing world where current growth in urban populations is most rapid. We tested the Luxury Effect by analysing bird species richness in relation to income levels, as well as human population density and urban cover, in landscapes along an urbanization gradient in South Africa. The Luxury Effect was supported in landscapes with lower urbanization levels in that species richness was positively correlated with income level where urban cover was relatively low. However, the effect was reversed in highly urbanized landscapes, where species richness was negatively associated with income level. Tree cover was also positively correlated with species richness, although it could not explain the Luxury Effect. Species richness was negatively related to urban cover, but there was no association with human population density. Our model suggests that maintaining green space in at least an equal proportion to the built environment is likely to provide a development strategy that will enhance urban biodiversity, and with it, the positive benefits that are manifest for urban dwellers. Our findings can form a key contribution to a wider strategy to expand urban settlements in a sustainable way to provide for the growing urban population in South Africa, including addressing imbalances in environmental justice across income levels and racial groups.