Despite a year of great political and economic uncertainty, compounded by the worst drought in 100 years, the City of Cape Town has continued to attract investment.
About R24 billion of investment has, conservatively, been committed to the Cape Town central city since the start of 2017. This includes developments that opened their doors during 2017 (R3.5 billion), as well as those currently under construction (R4.5 billion), in the planning stage (R1.63 billion) or proposed (R14.2 billion). This is a step up from the R16.232 billion of investment recorded in 2016.
These figures are taken from The State of the Cape Town Central City Report which is published by the Cape Town Central City Improvement District (CCID) and reflects on the economic climate in the CBD.
The figures recorded are conservative as the researchers only include confirmed values for developments. “Not all developers are prepared to reveal the estimated values of the projects with which they are involved. Hence, the actual figure would be higher than stated,” says Rob Kane, chairperson of the CCID.
With the City of Cape Town’s last official property valuation, released for the 2016/17 financial year, reflecting a value at the time of over R30.6 billion, the new investments listed in the report at R23.9 billion could see official property valuations in the CBD doubling within the next five to ten years. In 2012, when the first report was published, just ten new developments were listed – the 2017 report now lists 48, Kane adds.
Commercial property has held its own over the past year in the central city, with the 2017 report reflecting vacancies at 9.9%, while retail vacancies across the CBD stood at only 7% for the year under review.
The report also indicates that residential property remains strong in the central city, with those transferred during 2017 averaging R2.8 million per unit (up 18.5% year-on-year from R2.3 million during 2016). In terms of R/m², the 2017 report reflects an average of R41 287/m² (versus R33 921/m² during 2016).
“This is a year-on-year increase in R/m² of 21.72%,” says Kane. “However, we must also take into account that the average size of units has decreased. The central city, as it gains in popularity, is following the same trend reflected in popular cities across the globe: residents are settling on smaller living spaces so that they can be part of a vibrant downtown.”