In 2023, the Cape Town CBD experienced a significant turnaround, bouncing back from prolonged economic pressures with a surge in property investments, driven by a rising demand for both commercial and residential inner-city properties.
This heightened demand was accompanied by a wave of new property investments, amounting to an estimated R7.285 billion.
This figure is more than double the property investment value seen in 2022, according to the latest findings from the State of Cape Town Central City Report 2023 – A Year in Review (SCCR).
This annual report, published by the Cape Town Central City Improvement District (CCID), was launched in the city on 14 August 2024.
Rob Kane, CCID chairperson and CEO of Boxwood Property Fund, said: “This is an extraordinary investment for an area of only 1.6 km² in a country with a subdued economy. It will significantly increase the economic growth and dynamic mix of the Cape Town CBD and enhance its reputation as South Africa’s most successful inner city.”
The report highlights 30 residential, commercial, mixed-use, retail, aparthotel, and parastatal developments and redevelopments that were completed, under construction, in the planning phase, or proposed in 2023.
Among these were standout developments that have either transformed or are poised to transform the Cape Town Central City skyline.
Notable projects include The Rubik, a R600 million mixed-use skyscraper inspired by the Rubik’s Cube; Neighbourgood 84 Harrington (R180 million), the world’s tallest aparthotel constructed from hempcrete blocks; and The Barracks, a R150 million Heritage development on Bree Street.
"There were five new commercial-only developments in 2023, while seven mixed-use developments also include offices. This increased offering, coupled with a decline in office vacancy rates, reflects a renewed interest in office space driven by the economic recovery of the Central City and a trend towards employees returning to the workplace," said Kane.
“It also shows how resourceful and innovative Cape Town commercial landlords have been in creating pleasing work environments for tenants in a bid to entice workers back to the office.”
Data from the latest SCCR reveals that the improvement in office vacancy rates was observed across the metropole, with the city of Cape Town recording the lowest office vacancy rate of 7.5% among the major municipalities.
This is the lowest vacancy rate the city has seen since 2019, despite an increase in the real inflation-adjusted asking rate of commercial rentals across all office grades in 2023.
While the CBD has one of the highest office vacancy rates in the metropole, vacancy rates in all office grades, except B-grade, improved beyond pre-pandemic levels.
RESIDENTIAL BOOM
Ongoing demand for additional residential units in the Central City will be partially addressed by 12 new residential property investments made in 2023, along with additional residential units in seven mixed-use developments and three aparthotels.
Nine developments were completed last year, with a total value of R1.347 billion. Of these, three were residential builds valued at R280 million, with two more under construction.
The completed projects include two residential complexes in Loop Street in the inner city: The Carrington (R70 million) and The Tokyo (R150 million). The third development, Vida d’Chette (R60 million), offers flexible leasing on the Foreshore.
Six residential buildings are currently in the planning phase, with a combined value conservatively estimated at R915 million.
Additionally, two mixed-use buildings were finalized, with another under construction, and four in the planning or proposal stages.
One of the most anticipated mixed-use developments is Mama Shelter Africa, which will see the international hotel brand reimagine the old City Park building, transforming it into branded residences, as well as office and retail spaces, set to reignite investment in the hospitality and retail sectors.
RESIDENTIAL SALES
The report indicates that the total number of residential units in the CBD reached an all-time high of 7,188 apartments in 2023, up from 6,827 in 2022 and 5,791 in 2021.
The average purchase price of sectional title properties increased by 7.2% to R1.58 million, compared to R1.47 million in 2022.
“The CCID partners with the City of Cape Town and the South African Police Service (SAPS) to safeguard the Central City and ensure its status as the most economically sound city centre in the country. Cape Town’s top good governance ranking, coupled with the CBD’s booming property sector, make the Mother City an exceptionally attractive investment destination,” said Kane.
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