Demand for commercial and residential space in Cape Town’s City Centre was matched during 2023 with a surge of new property investments at an estimated R7.285 billion – more than double the value of property investment during 2022, according to the State of Cape Town Central City Report 2023 – A Year in Review.
The annual report, published by the Cape Town Central City Improvement District (CCID), details 30 residential, commercial, mixed-use, retail, aparthotel, parastatal developments and re-developments that were completed, under construction, or in the planning or proposed phase during the year.
“This is an extraordinary investment for an area of only 1.6 km² in a country with a subdued economy. It will significantly increase the economic growth and dynamic mix of the Cape Town CBD and enhance its reputation as South Africa’s most successful inner city,” comments Rob Kane, CCID chairperson and CEO of Boxwood Property Fund.
In the mix were stand-out developments that have changed, or are set to change, the Cape Town Central City skyline including the R600 million mixed-use skyscraper, The Rubik; Neighbourgood 84 Harrington (R180 million), the world’s tallest aparthotel to be constructed from hempcrete blocks; and The Barracks, a R150 million heritage development in Bree Street.
“There were five new commercial-only developments in 2023, while seven mixed-use developments also include offices. This increased offering coupled with a decline in office vacancy rates, reflects a renewed interest in office space driven by the economic recovery of the Central City and a trend towards employees returning to the workplace,” he says.
“It also shows how resourceful and innovative Cape Town commercial landlords have been in creating pleasing work environments for tenants in a bid to entice workers back to the office.”
Data in the SCCR shows an improvement in the metropole’s office vacancy rate with the City of Cape Town recording the lowest office vacancy rate of 7.5% among the major municipalities – the lowest recorded by the city since 2019 despite an increase in the real inflation-adjusted asking rate of commercial rentals across all office grades in 2023.
While the CBD has one of the highest office vacancy rates in the metropole, vacancy rates in all office grades in town, except B-grade, improved beyond pre-pandemic levels.
Persistent demand for additional residential units in the Central City will be somewhat alleviated by twelve new residential property investments made in 2023, and additional residential units in seven mixed-use developments and three aparthotels
Nine developments were completed in 2023, valued at R1.3 billion. Of these, three were residential builds valued at R280 million, with two more under construction. The completed builds include two residential complexes in the inner city in Loop Street, namely the R70 million apartment block The Carrington and The Tokyo (R150 million). The other development, Vida d’Chette (R60 million), provides flexible leasing on the Foreshore.
Six residential buildings are in the planning phase with a combined value of R915 million, conservatively estimated. Additionally, two mixed-use buildings were finalised, with another under construction and four in the planning or proposal phases.
One of the most exciting planned mixed-use developments is Mama Shelter Africa, which will see the international hotel brand reimagine the old City Park building and redevelop it into branded residences, and office and retail space set to reignite investment in the hospitality and retail sector.
The report reflects an increase in the total number of residential units in the CBD to an all-time high of 7 188 apartments in 2023, up from 6 827 in 2022 and 5 791 in 2021. The average purchase price of sectional title properties increased by 7.2 % to R1.58 million compared to R1.47 million in 2022.
“The CCID partners with the City of Cape Town and the South African Police Service (SAPS) to safeguard the Central City and ensure its status as the most economically sound city centre in the country. Cape Town’s top good governance ranking, coupled with the CBD’s booming property sector, make the Mother City an exceptionally attractive investment destination,” concludes Kane.
