Earlier this year, Lighthouse Properties reported that 43% of homeowners who sell their properties in Gauteng, purchase another property in a different province, and of this percentile, 36% are buying in Cape Town and the Western Cape.
This semigration is believed to be underpinning Cape Town’s resilient property market as skilled workers, entrepreneurs, and big corporates migrate in favour of the metropole to find work, set up businesses, and relocate their offices.
“With the outlook for tourism on the up, and positive data released by Western Cape promotion and investment agency, WESGRO, Cape Town will lead the recovery of the property sector across all assets”, says Quintin Rossi, CEO of JSE-listed Spear REIT, who attributes this recovery largely to semigration, as an increase in buyer activity has been noted in the residential property sector as people move from Gauteng and KwaZulu-Natal.
Rossi says that although the Russia-Ukraine war means the global economic outlook remains difficult to navigate, Cape Town’s property sector is fast-tracking its recovery. During Spear’s pre-close investor presentation, Rossi pointed out that Cape Town’s office, retail, and industrial occupation rates are showing a healthy bounce-back as the return-to-work trend continues and companies begin to focus on growth and recovery.
The REIT, who has 32 properties within its regionally specialised R4.6 billion portfolio, showed a close on 94% occupation rate between March 2021 to end February 2022.
Apart from the obvious lure of the Mother City, semigrants are said to be in search of safety and security, lower pollution, and a better quality of life, and South Africa has some unique factors that support the trend:
The civil unrest
Recent commentary from FNB Property Sector Strategist, John Loos, attributed the civil unrest and looting in KwaZulu-Natal (and other regions of South Africa in July last year) as an important factor for businesses to relocate. Many people who were sitting on the fence, have now accelerated their plans.
The Western Cape and Cape Town’s municipal districts have earned a reputation of being well-run and effectively administrated. Maintaining current infrastructure and rolling out future projects, such as current efforts to reduce its reliance on Eskom, make a great investment case for the region. The Western Cape government’s policy is to ensure that the city and province have the necessary infrastructure and technology to support business and investment to the region.
Top international companies such as Johnson & Johnson, Microsoft, and Reuters have set up facilities in Cape Town. Following suit, US retail giant, Amazon will be the anchor tenant at the Cape Town-based R4.5 billion residential and commercial property development expected to create 5 239 jobs in the construction phase alone. Western Cape – based South African tech companies have continued to attract international investment with Fintech firm Clickatell announcing an additional R 1.3 billion capital raise via the international investor market to further boost its growth ambitions on the African Continent.
The Western Cape has established itself not only as a top international tourism destination but as an economically viable investment case for tech firms, green energy companies as well as South African and foreign families seeking to re-establish themselves. The result brings benefits across the residential, retail, commercial and industrial real estate sectors of the province.