In a subdued economic environment with muted investments in metros’ inner cities, Cape Town’s central business district is bucking the trend with more than R7 billion worth of property investments in 2023.
This is according to the latest findings by the Cape Town Central City Improvement District (CCID) – a not-for-profit private-public company that operates in the traditional central business district (CBD) of the Mother City.
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The findings in the CCID’s State of Cape Town Central City report 2023 show that property investments doubled from 2022 – a sign that the city has rebounded from the economic pressures since the pandemic.
The Rubik mixed-use building in Loop Street in Cape Town. Image: CCID
Turning the post-Covid corner
A total of 30 property developments or redevelopments were recorded in 2023, of which nine were completed (worth more than R1.3 billion), eight were under construction (valued at over R2.2 billion), 10 were in the planning phase (worth more than R2.6 billion), and three were proposed (around R1.1 billion).
Listen/read: Cape Town’s CBD is booming with property development activity
The R7.3 billion in investments includes the Rubik, a mixed-use skyscraper valued at R600 million and designed to resemble the Rubik’s Cube, the Neighbourgood 84 Harrington (R180 million) and the world’s tallest aparthotel to be constructed from hempcrete blocks, and The Barracks, a R150 million heritage development in Bree Street.
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In 2023, 12 property developments (40%) were residential buildings, and the rest were mixed-use buildings for commercial and residential purposes.
The overall property value in Cape Town’s central city is estimated to be R42.8 billion (according to the City of Cape Town’s 2022 property evaluation) – up from R12.2 billion in 2016/17.
CCID chair Rob Kane says the R7.3 billion investment amount in 2023 is extraordinary, considering that the area the CCID is mandated to manage is only 1.6km2 in size. This shows the Cape Town CBD has turned the “post-Covid corner”.
“It is evident that Cape Town, unlike its South African counterparts, has rebounded after the pandemic. This bodes well for the future of Cape Town and its CBD,” he notes.
The Barracks – a mixed-use building in Bree Street, Cape Town, that was completed in 2023. Image: Carmen Lorraine
Residential scene
The new residential property developments in the CBD take the total number of residential units to 7 188, with an average selling price of sectional title properties at around R1.58 million – a 7.2%-increase from 2022.
A survey among central city residents shows that 47% of participants choose the CBD to be close to work, while 39% say they select the area for its cosmopolitan lifestyle. Thirty percent of participants say they regard the CBD as a safe environment with good entertainment and cultural options.
Other notable figures from the survey are:
- 41% of respondents say they come from elsewhere in the country;
- 82% of respondents indicated they are happy living in the CBD;
- 62% say they eat out at least twice a week;
- 51% describe themselves as digital nomads who can work from anywhere in the world; and
- 28% indicate they have lived in the central city for more than 10 years.
Altogether 2 767 of the CBD’s residential units are located in so-called Precinct One, also known as the Foreshore. The new One Thibault, previously an office block occupied by Standard Bank employees, was recently completed. It is a mixed-use building valued at R500 million and adds an extra 428 residential units to the area.
New residential developments in the Foreshore currently under construction include Zeeland Pier, valued at R200 million, in Heerengracht. A mixed-use development is proposed for Mechau Street and a residential apartment block in DF Malan Street.
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In Precinct Three, home to Company’s Garden, parliament and the legal chambers, the R1.15 billion The Fynbos luxury apartment development is currently under construction, comprising 689 units over 24 floors. In 2023, 235 units were sold during the development phase.
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Central city economics
In 2023, 62 new retail outlets opened their doors. Retail confidence in the central city has steadily climbed with 93% of retailers surveyed saying they are satisfied with current business conditions.
The total vacancy rate of retail space in the CBD was 6% – an increase from the 4.9% recorded in 2022. According to Kane, the higher vacancy rate can partly be explained by a drop in the available retail space with the new R200 million development on nearby Strand Street currently under construction.
New retail outlets that opened in 2023 include 15 bars and clubs, 11 health and beauty shops, nine superettes, eight clothing and shoe shops, five coffee shops and three new art galleries.
There are currently 1 305 businesses (2022: 1 243) operating in the central city, including 147 restaurants, 120 clothes and shoe outlets, 100 takeaways, 91 coffee shops and cafés, and 78 bars and clubs.
According to the CCID’s report, there was also a decline in office vacancy rates in 2023 (10.2% at the end of 2023, compared to 13.3% in 2022 and 16.1% in 2021). The Cape Town CBD still has the largest portion (close to 40%) of the total office space in the city.
City releases more land
The City of Cape Town’s Mayoral Committee has approved the release of land for a mixed-use development in Rondebosch East in the southern suburbs of Cape Town. There will now be a public participation process for the proposed sale of seven hectares of city-owned land on the corner of Kromboom Road and Seventh Avenue.
The city announced in a statement that the land has a potential yield of 800 residential units within a mixed-use development, including affordable housing, open market housing, public open space, and retail opportunities.
Engagement with national government is ongoing for the release of “well-located mega-properties” in Cape Town. These properties could yield approximately 100 000 affordable housing units. They include several military bases, and portions of the Parliamentary Village, the city says.
In this regard, Cape Town Mayor Geordin Hill-Lewis and Minister of Public Works and Infrastructure Dean Macpherson will conduct site visits on Thursday (15 August).
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