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Reports confirm Cape Town as business relocation destination

A recently released FNB report with insights into the key drivers behind the sales and movement of commercial property owner-occupiers is a clear sign of the times – and one from which the Western Cape is perfectly positioned to benefit.

So says Brent Townes, Commercial Property Chief Operating Officer for Lew Geffen Sotheby’s International Realty in Cape Town, adding that semigration is already driving the relocation of not only families, but also businesses to the region with increased demand for business premises already being seen.

“According to the report, the primary reason for moving premises in the fourth quarter of 2022 was financial constraints (31.68%) which don’t come as a surprise, however, what is notable is that the second most commonly cited reason was to relocate to an area with more reliable utilities and municipal services (23.10%).

“In 2019 and 2020, the percentage of sellers relocating premises for better service delivery hovered between 9% and 12% but in 2021 the percentage spiked to a high of 16.9% and by mid-2022 it reached 24.2%, dropping only fractionally in the fourth quarter.”

Nationally, the motivational ranking is as follows: Financial pressure (31.68%), the need for more reliable utilities (23.10%), bigger/better premises (22.10%), moving closer to market (22.00%). better transport access/logistics (18.40%) and downscaling to smaller premises (3.70%).

Another recent report by the Auditor-General revealed that only 41 out of SA’s 257 municipalities received clean audits and also found that many municipalities are not prioritising spending on critical infrastructure maintenance, resulting in service delivery failures.

And, considering 22 of the 41 municipalities with clean audits are in the Western Cape, Townes expects the migration of businesses to the province to increase rather than abate any time soon.

“Cape Town not only has a high service delivery rating, it also experiences less loadshedding than the rest of the country and, with the local government on track with their scheme for commercial property owners to supply own solar generated power back to the local grid, the future is certainly looking brighter here in the Cape.”

This is already evidenced by the fact that in coastal metros, motivation to sell due to financial pressure is lower than inland metros, with Cape Town at 19,9% as opposed to the low 30%’s of upcountry cities.

Therefore, Townes believes that the Mother City is once again marching to its own drum with the two main motivations in Cape Town for selling being to move to better or bigger premises and for better transport access.

That said, neither objective is always easily achieved: “Those looking to upgrade their premises in central sought after areas or transport logistics will be faced with a major challenge: there is very little available stock as owner occupier buildings are usually tightly held.

“There is no more available space for development in and around the city and for exports, Cape Town harbour and the airport are already busy and congested.

“This has led to new development on the Northern and Western Suburbs which is ongoing with rapid expansion on the N & logistics corridor and as far up the coast as Saldanha where South Africa’s first free port is being developed.”

And, whereas utilities and service delivery is ranked second nationally, Townes has it down in fifth place in Cape Town.

“We already have less loadshedding thanks to hydro-electricity from the Steenbras Dam and not only are solar power generation from businesses imminent, there are also tax breaks on solar and, within 12 months Koeberg will be back online.”

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