There has been an upswing in the commercial property sector in the Cape Town CBD over the past year compared to other big city centres such as Joburg and Durban, with more businesses taking up office space.
Hotel accommodation has also seen some growth boosted by financial investments in new hotels or by the upgrading of existing hotels, according to a recently released study by the Cape Town Central City Improvement District (CCID).
The report showed more than R23.954 billion in investment had been committed in property developments in the CBD since the start of 2017, up from the R16.232 million in 2016.
These included new developments as well as those that are either under construction, proposed or in the planning stages.
Commercial property held its own reflecting vacancies at 9.9%, while retail vacancies across the CBD stood at 7% .
Recently the Tsogo Sun SunSquare and StayEasy hotels as well as the new Radisson Blu hotels opened their doors, adding to the list of hotel accommodation.
Other hotels such as the Capetonian and Cape Sun have undergone refurbishments.
On the commercial side, the Cape Town Convention Centre has expanded and Pier Place has been upgraded.
CCID chairperson Rob Kane said the growth indicated, despite economic pressure on the country, central Cape Town continued to attract investors and maintain confidence in the property marketplace across commercial, retail and residential sectors.
He said the R23.9bn was a conservative figure as not all developers divulged the actual value of their investments.
Developments in the pipeline include mixed-use projects such as Zero2One Tower, Harbour Arch and the Foreshore project.
In addition, there’s one on 35 Lower Long Street, the 24-storey Roggebaai Place, The Harrington, Twinell, The Modern, the Cape Town station mixed-use development, the Murray& Roberts building and Cullinan Square.
Kane said the investments could see official property valuations in the CBD increase to over R60bn within the next five to 10 years.
UCT’s Nedbank Urban Real Estate Research Unit spokesperson Professor Francois Viruly attributed the commercial strength to the fact that in Cape Town very few buildings were developed on a speculative basis and they tended to respond to the specific demands of clients.
Developments such as the V&A Waterfront and Century City, for example, were responsible for close to half of the new take-up in the market, he added.
“But what we are seeing is a considerable amount of movement in the market rather than new take-up of space. Generally investors are seeing more opportunities in the residential than commercial sectors of the market.
“In Cape Town, this has included the conversion of commercial or office space to residential units,” Viruly said.
He said the CBD continued to offer a mixed-use environment which combined work, home, play and education, and this played a role in increasing the demand for retail and residential space.
However, e-retailing was beginning to have an impact on the property market and this resulted in the increase in logistics or warehousing space rather than retail space.
Meanwhile, traffic congestion was also starting to impact on the catchment areas of shopping centres and had tended to favour smaller neighbourhood shopping centres.