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Buying and renting in Cape Town’s CBD

24 Nov 2014

The total value of apartment sales in Cape Town’s central business district (CBD) have increased from R145 million in 2012 to R249 million last year as a result of the demand for property in the area, as well as surrounding suburbs, exceeding the supply.

The most influential driver of the increased demand for property in the CBD area can be attributed to the turnaround of the volatile property market over the recent years.

This is according to David Rebe, CEO of Sandak-Lewin Property Trust, who says these statistics released by the Central City Improvement District (CCID) highlight the growing demand for sectional title property in the area going into 2014.

Rebe says sectional title properties in the CBD, as well as surrounding suburbs such as Gardens, Tamboerskloof, Vredehoek and Green Point, are being sold and let quicker than ever before, and as a result, property owners are cashing in on the booming rental accommodation market, as the demand allows them to maximise the rentals that they can charge.

He says the most influential driver of the increased demand for property in the CBD area can be attributed to the turnaround of the volatile property market over recent years. He explains that in 2007, before the global credit crisis hit the local property sector, the buy to-let investor disappeared from the market.

However, a few years later, the market started turning around again when investors realised that buying into the property market at the downward end of an upward cycle could provide promising returns, he says.

“As a result, more people are getting into the market, resulting in the demand exceeding the supply, thereby giving property owners who are selling or renting their property the power to increase sales and rental costs as they see fit.”

Accommodation outside the city centre is usually bigger and perhaps cheaper than in the CBD, however Rebe says factors contributing to the increase in sectional title owners include increased traffic congestion leading to longer travel time into the CBD from the suburbs, petrol price hikes, convenience, and 24-hour security, which most apartment blocks in the CBD and Cape Town area offer.

In some cases people have had to downscale in order to find accommodation which fits into their budget, which has led to an increase in demand for apartments in the area, he says.

Rebe says proof of this demand is the Ports Edge in the Waterfront. Here they have seen at least 50 properties being transferred each month, which was not the case two years ago. The rental market has increased in pace.

Now that the CBD property market is on an upward cycle, and the demand is outweighing the supply, Rebe says prices are likely to continue to increase. ”Property investors who have bought property in the CBD over the recent years are likely to reap the benefits of a good return.”

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