Since 2013, the demand for sectional title units in Cape Town’s central city has increased exponentially – with a correspondent increase in property values that shows no signs of abating.
At a recent Cape Town City Improvement District (CCID) business breakfast it was announced that the nominal value of all property in the CBD is close to R31 billion, and about R12 billion worth of property is currently under construction, including commercial and residential space.
In 2011/12 the total value of property in the CBD was R21.5bn and this increased to R23.7bn in 2014/15,which translates into a solid 10.2% increase.
“There are 57 residential complexes in the central city, an area bounded by the harbour and Nelson Mandela Boulevard, Buitengracht, Buitensingel and Canterbury Street. During 2016, 228 units were sold here for a total of R533 million. By comparison, in 2015, the total value of the 185 units sold was R376m, and in 2013 a total R249m was paid for the 163 units sold,” says Brendan Miller, principal for the City Bowl and Atlantic seaboard at Lew Geffen Sotheby’s International Realty, who was citing the CCID’s latest research figures.
“In 2013, the average unit price was R1.428m. This increased to R2.03m in 2015 and the average price of units in 2016 was R2.33m. The average price a square metre has increased even more markedly – from R17 500/m2 in 2013 to R33 921 in 2016″.
“The rental market is also thriving, and in December 2016 there were 116 units available for rent at an average rental of R10 608 for bachelor units, R15 081 for one-bedroom flats, R22 290 for units with two bedrooms, and R27 500 for three bedroom apartments.”
A significant number of construction projects were completed in the central city in the past few months, increasing the amount of residential and commercial space. These include Signatura’s R1bn conversion of the old Triangle House in Riebeek Street into the Radisson Blu Hotel & Residence complex, which opened in April. Construction of the R20m mixed use 4 Loop Street is under way, and under construction are Urban on Bree in Loop Street and The Sentinel in Leeuwen Street – two residential projects due for completion this year.
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says that most of the new developments in the central city are in the precinct bordered by Buitengracht, Nelson Mandela Boulevard, Christiaan Barnard Street, Hertzog Boulevard, and Adderley and Riebeek streets.
“This is because this precinct lies largely outside the Heritage Protection Overlay Zone that covers most of the central city to the southwest of Hertzog Boulevard, which means greenfield development has been able to take place on land reclaimed from the sea in the 1930s”.
“For decades previously, the Foreshore was cut off from the CBD by the vast parking lots that dominated the area and from the harbour by the freeways to the northeast. Although periodic development had taken place, it is only since 2003, with the opening of the Cape Town International Convention Centre (CTICC) and the 19-floor Westin Cape Town Hotel that this area has seen a significant turnaround.”
According to the CCID The State of Cape Town Central City Report 2016: ”This precinct is fast becoming home to a high concentration of skyscrapers including office and residential blocks, with 50% of all residential units sold in 2016 in this part of the city”.
“The Foreshore Freeway Precinct project looks to develop 6ha of city land that lie between unfinished elevated freeways that have been a highly debated part of the CBD since the 1970s. In 2016, the City’s Transport and Urban Development Authority (TDA) invited developers, investors and property consortia to propose viable solutions in particular to address congestion and related accessibility issues as well as the incorporation of much needed affordable housing. At the time of going to print, six potential projects had been chosen and were awaiting public comment.”
The precinct bordered by Buitengracht and Adderley, Riebeek and Wale streets has the greatest mix of commercial, retail, leisure, educational and residential venues in the greater CBD. It houses 51% of the CBD’s retail and 50% of its educational institutions. It also has a strong, developing night-time economy, which has in particular seen the growth of Bree Street as a popular entertainment strip over the past few years, and contains 30.5% of the CBD’s residential complexes.
Several mixed development projects over the years have combined the preservation of heritage with contemporary architecture – among these Mandela Rhodes Place and Taj Cape Town in St Georges Mall and, more recently, the Twinell Building between Loop and Long streets.
The East City precinct has four large-scale corporate offices and houses 24% of the CBD’s residential population, due to the conversion of disused office space during the property boom in the mid-2000s.
Miller says property values in the CBD were stunted between the 2008 global recession and 2013, when developers again began to look at the area as a profitable investment prospect.
“Since 2014, however, the central city has become a true live, work, play destination, which is reflected in the value of residential property that is now proving to be an excellent long-term investment. All four precincts within the CBD are experiencing solid growth, and as traffic congestion becomes increasingly bad across Greater Cape Town, investing in sectional title in the downtown area is an excellent way to get a foothold in one of the strongest markets in the country,” says Miller.