Property investment of almost R14 billion underpins the Cape Town CBD’s resilience in the face of the devastating health and economic effects of the Covid-19 pandemic.
This is according to the findings of the latest edition of the State of Cape Town Central City Report 2019 – A Year in Review (SCCR) published on Wednesday by the Cape Town Central City Improvement District (CCID).
The bulk of the developments completed were made up of hotels including the Signature Lux, Capetonian Hotel, Gorgeous George and Labotessa. And of the upcoming ones set to be completed, six are mixed-use spaces – a defining trend for the city centre, outlined in the report.
The Central City “held its own quite remarkably” in the year under review, despite 2019 being “incredibly difficult”, says CCID Board chairperson Rob Kane.
The SCCR report shows that, according to the City of Cape Town’s 2018/2019 property evaluation, the value of Central City property stands at R44.124 billion, and that the total value of property investments in the Central City – recently completed, under construction, proposed or planned – is R13.83 billion.
This is broken down into:
- R1 045 000 000 – A conservative estimate of the value of property completed in the Central City during 2019 but which still has to be officially assessed by the City of Cape Town (7 projects);
- R3 730 000 000 - The value of property, conservatively estimated, that is under construction (14 projects);
- R5 196 000 000 – The value of property, conservatively estimated, that is currently in the planning phase (11 projects); and
- R3 860 000 000 – The value of property, conservatively estimated, that is currently proposed and is expected to begin construction within the next two years (6 projects)
Rise of mixed-use developments
The Foreshore precinct has emerged as a key property investment node which is due, in part, to the expansion in 2018 of the Cape Town International Convention Centre (CTICC), which achieved a turnover of R277 million in 2018/2019.
Add to this many of the developments under construction in the Central City (or in the planning pipeline) are so-called mixed-use developments. Two such developments, both of which are under construction in the Foreshore Precinct, are:
- The Rockefeller, which offers 420 apartments (ranging in size from 23 m2 to 44 m2) and retail space in a 19-storey building. Amenities include a communal club house, a laundry service, fibre and a gym.
- Foreshore Place, which offers 171 apartments – the majority of which are one-bedroom units (41.9 m2 to 51.7 m2) and studio apartments (23.9 m2 to 33.1 m2). The development includes 15 storeys of commercial office space. Amenities are more traditional and include a 24-hour concierge, security and high-speed fibre connectivity
Two further developments are solely residential, but are targeted at young professionals through competitive pricing and the range of amenities on offer:
- The Duke, in the Foreshore Precinct on Fountain Circle, is another multi-phase development that speaks to the need for competitively priced, luxury inner-city accommodation. The Duke offers 81 apartments, which range from studio to two-bedroom apartments (37 m2 to 66 m2). Amenities include a uniformed concierge service, high-speed fibre connectivity and a short-term rental-friendly key-drop/ collect system.
- The Harri in the East City has a slightly different product offering. The six-storey development includes 32 studio apartments varying in size from 24 m2 to 49 m2. There are also seven two-storey penthouse apartments varying in size from 87 m2 to 117 m2, each with a rooftop terrace. Each storey has a co-working and co-living space for the residents of the apartments on that floor. Amenities include free uncapped Wi-Fi, an onsite management team to organise tours and shuttles, innovative storage, a housekeeping service and a restaurant on the ground floor.
'Urbanism trend'
The report details the traction of a new urbanism trend gained in South Africa in 2019, in spite of a sluggish housing market, increasing demand for downtown living in the Central City.
This has prompted the re-imagining of precincts in the Central City by developers into spaces where homeowners can live, work and play in areas that provide a safe and secure environment with easy access to work. With affordability a major issue for many young professionals, developers are responding with a growing number of studio apartments and co-living units within mixed-use developments. In 2019, small apartments with shared amenities officially became hot property, giving first-time buyers the opportunity to enter the housing market in a desirable city centre.
Among other key findings in the report are that:
- For the third consecutive year, Cape Town had the lowest overall vacancy rate of 7.3 % of the country’s five largest metros. According to the SAPOA Office Vacancy Report (Q4 2019), the city’s vacancy rate compares very favourably to that of Johannesburg (12.5 %) and is well below the national office vacancy rate of 11 %.
- The Central City vacancy rate has continued its gradual decline from a peak of 11.8 % at the end of 2018 to 10.8 % at the end of 2019 – a decline of 15 127 m2 of space available for rent. This is at least partially attributable to the reduction in office space due to redevelopment during 2019.
- In 2019, the Central City residential market finally felt the effects of the economic and political headwinds which have dampened activity in the national and regional housing markets in recent years. The distribution of sales across the various price bands was similar to that seen in 2018, with the largest number of sales recorded in the R30 000 – R39 000/ m2 category. No sales were recorded in the top price bracket (more than R60 000/m2) last year, while two sales were recorded in 2018.
'Surviving Covid-19'
Though the coronavirus pandemic falls beyond the ambit of the SCCR report, a five-part section includes reflections by key stakeholders on “Surviving Covid-19”, including insights from Wesgro CEO Tim Harris, Economic Development Partnership CEO Andrew Boraine, HTI Consulting CEO Wayne Troughton, Economist Brian Kantor of Investec Wealth and Investment and Arthur Kamp, Chief Economist, Sanlam Investments. Kane acknowledges the “global devastation” Covid-19 has caused, noting that it “has damaged the Central City’s economy”.
“Stakeholders and investors in the CBD have had to cope with the aftermath of the 2018 drought and subsequent water crisis, ongoing load-shedding and a tough economic climate," says Kane.
But the economic performance of what is arguably South Africa’s most successful Central Business District means the Central City is well-placed to navigate a path to recovery, as detailed in the report, which highlights the CBD's four diverse economies at play:
- The Art Economy: with Cape Town firmly established as the art capital of Africa, the financial contribution of the creative sector to the Central City economy is undeniable;
- The Visitor Economy: with three new hotels opening in the Central City in 2019, several mixed-use developments and aparthotels either being constructed or in the pipeline, the CBD’s multi-layered visitor economy continued to expand in spite of a tight economy;
- The Night-time Economy – There is growing awareness of the potential of the Central City’s night-time economy, but it remains an unexplored resource. A recent research partnership between the City of Cape Town, the CCID and the University of Cape Town will provide a better understanding of the night-time economy of the Central City and how to better use the night as a resource for social and economic development; and
- The Knowledge and Eventing Economy – The Central City’s knowledge and eventing economy continues to expand every year, driving business into the region, as local and international visitors and business tourists stream into the CBD to attend official events and conventions in and around the public spaces in downtown Cape Town.
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