The total value of apartment sales in the Cape Town central business district (CBD) increased from R145 million in 2012 to R249 million last year as a result of the demand for property in the area – as well as surrounding suburbs – exceeding the supply. This is according to David Rebe, CEO of Sandak-Lewin Property Trust, who says that these statistics released by the Central City Improvement District (CCID) highlight the growing demand for sectional title properties in the area going into 2014.
Rebe says that sectional title properties in the CBD area, as well as surrounding suburbs such as Gardens, Tamboerskloof, Vredehoek and Greenpoint, are being sold and let quicker than ever before, and as a result property owners are cashing in on the booming rental accommodation market, as the demand allows them to maximise the rentals that they can charge.
He says that the most influential driver of the increased demand for property in the CBD area can be attributed to the turnaround of the volatile property market over the recent years. He explains that in 2007, before the global credit crisis hit local property sector, the buy to-let investor disappeared from the market. He says that however, a few years later, the market started turning around again when investors realised that buying into the property market at the downward end of an upward cycle could provide promising returns. “As a result, more people are getting into the market, resulting in the demand exceeding the supply, thereby giving property owners selling or renting their property the power to increase sales and rental costs as they see fit.”
Rebe says that despite the fact that accommodation outside the city centre is usually bigger and perhaps cheaper than in the CBD, other contributing factors to the increase in sectional title dwellers in the CBD include increased traffic congestion leading to longer travel time into the CBD from the suburbs, petrol price hikes, convenience and 24 hour security, which most apartment blocks in the CBD and Cape Town area offer. He adds that in some cases people have had to downscale in size in order to find accommodation which fits into their budget, which has led to an increase in demand for apartments in the area.
Rebe says proof of this demand is the Ports Edge in the Waterfront, where Sandak-Lewin Property Trust have assisted in tenanting almost 100 over the last few months. “Furthermore, we have seen at least 50 properties transferring each month in our portfolio, which was not the case two years ago. The rental market has definitely increased in pace.
“Now that the CBD property market is on an upward cycle and that the demand is outweighing the supply, prices are likely to continue to increase and property investors who have bought property in the CBD over the recent years are likely to reap the benefits of a good return.”