Property buyers who invest in the Urban Development Zones such as the Taj residence in Cape Town are able to benefit from tax rebates.
Cape Town is said to be the country’s best inner-city renewal success story and the redevelopment of the CBD has led to real estate becoming sought after with significant capital appreciation potential.
Cape Town is said to be the country’s best inner-city renewal success story and the redevelopment of the CBD has led to real estate becoming sought after with significant capital appreciation potential.
Inner city renewal is a global trend and South Africa is still in the early phases of this, says Ian Slot, Seeff Atlantic Seaboard and City Bowl managing director.
He says that if one looks at what this did for property prices in world-class cities such London and New York and take into account the added tax incentive benefit, investing in Urban Development Zones (UDZ), property is a superb investment opportunity.
Slot explains that in an attempt to encourage renewed interest in the inner cities /CBDs of Cape Town, Johannesburg and Durban, government instituted tax incentives that allows buyers to offset up to 55 percent of the purchase price of a property.
This is in the form of an asset depreciation allowance against the purchase price over an 11 year period, provided the asset is used for own purposes which could be residential or business.
The residences at the Taj Cape Town are for sale directly from the developer, one of the qualifying criteria for the rebates.
Provided the unit is let out or used for business reasons, investors can claim twenty percent of the 55 percent allowance in the first year and thereafter 8 percent annually for the next ten years says Seeff agent, Jason Paans.
As an example, he says an investor who buys a studio unit for R2 995 million can effectively benefit from a tax rebate of approximately R1 647 250 over the 11-year period.
The studio one and two bedroom units are priced between R2 995 million and R6.35 million.
These are luxuriously furnished, serviced and include a living and dining area, fully equipped kitchenette and sit-out balconies that offer mountain or city views says Paans.
“Owners also benefit from the full scope of hotel facilities including a business centre, gym and spa and three restaurants as well as personalised services such as luxury transfers,” he says.
The Taj Cape Town is a luxury 5-star hotel and occupies two historic buildings, the South African Reserve Bank and the old BoE building formerly the Temple Chambers built in 1890.
The Taj Cape Town offers exclusive Residences for sale that qualify for UDZ tax incentives. Units are priced between R2 995 million and R6.5 million for one and two bedroom studio units.
Buyers in the CBD range from trendy young singles and professionals to young married couples looking for a convenient lock-up-and-go lifestyle, says Slot.
He says the central location of the CBD is a major consideration given the layout of Cape Town which is unique in the country.
Owners are close to main business areas and arterials that feed to other main business areas across the city and beaches such as Camps Bay and Clifton, leisure facilities including the V&A Waterfront.
“A further attraction for buyers is the renewal of the city, it is clean, safe and secure and everything is within walking distance,” says Slot.
For business travellers or those looking for a holiday home, the CBD offers an attractive alternative ensuring buyers and investors have full access to all the facilities offered by the hotel.
There are also added benefits such as luxury airport transfers and 2-hour free use of a boardroom in the hotel.
Asked about the Cape Town CBD market, Slot says growth and demand in the CBD is primarily driven by the successful inner city renewal.
“It has become quite trendy to own an apartment in the CBD and these are relatively affordable.”
He says apartments in the city are also in demand especially for those looking to rent. Rental prices vary depending on the size and facilities on offer.
Currently, there is enough stock to meet demand in the UDZ areas as demand is relatively low due to the slowing economy.
Slot adds that growth, demand and returns have slowed over the last 18 months but buyers can find real value in the city right now. – Denise Mhlanga
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