Thirteen property developments or redevelopments valued at more than R2.5bn were completed in the Cape Town CBD during 2021, despite rolling lockdown restrictions prompted by the pandemic
The 13 projects are part of a total of 28 property investments that came on stream in the Cape Town Central City in 2021 — either completed, under construction or in the planning phase — valued collectively and conservatively at R5.717bn. The value of developments under construction in 2021 is R1.732bn, while those in the planning phase are conservatively estimated to be worth more than R1.5bn.
These are some of the findings of the latest State of Cape Town Central City Report 2021 — A Year in Review, published by the Cape Town Central City Improvement District. The 10th edition of the report — presented to the Cape Town business community at a breakfast in the Central City on September 14 — reflects on the economic climate in the CBD across the previous year.
Data in the annual report shows sustained confidence in the development and business investment potential of the Central City, says CCID board chairman and CEO of Boxwood Property Fund, Rob Kane. Says Kane: “With the overall value of all Cape Town Central City property set at R43.8bn according to the City of Cape Town’s 2018/2019 property evaluation, it is clear that the Cape Town CBD remains one of the country’s top property investment destinations.”
He noted that while the CBD experienced a stable year in 2021, the global economic difficulties, which are still prevalent in 2022, were felt in various economic sectors. “But the resounding message of the report remains positive: the Cape Town Central City has once again proved resilient in the face of economic uncertainty.” New developments and redevelopments completed in 2021 include five hotels/aparthotels — The Rockefeller, Hotel Sky, BlackBrick Cape Town, The Capital 15 on Orange and Old Bank Hotel — valued at more than R1bn, all of which opened last year. Also completed were three residential developments worth more than R895m, including the residential complex 16 on Bree (R860m), and three mixed-use developments worth more than R523m, including Foreshore Place (R373m).
“The myriad residential and mixed-use properties coming to the Cape Town CBD property market indicates that agile developers — many of whom reconfigured commercial space to accommodate a changing inner-city property climate — are confident that there is a market for buyers,” says Kane. According to the report, the standout property trend in 2021 continued to be the conversion of office blocks into mixed-use developments to provide both commercial and residential space and offer buyers flexible living options as well as optimising on the co-living, co-working trend.
Two mixed-use developments in 2021 that were under construction were The Rubik (R500m) and One Thibault (R500m). Says Kane: “Thoughtfully designed developments with all-inclusive living and working spaces were the order of the day in 2021, with an added emphasis on creating a sense of community.” Connected living, a trend which emerged in 2020, was still prevalent in 2021, with Neighbourgood, a neighbourhood-centric property development company setting the trend. Neighbourgood is responsible for two Central City developments, namely the conversion of the old Townhouse Hotel into Neighbourgood East City (R80m) — offering fully furnished units with flexible letting options, convenience and exceptional amenities — and Neighbourgood Reserve (R75m), which has studio units, office space and a conference venue. All units are for rent only, with “members” able to access communal spaces and attend events at other Neighbourgood properties in greater Cape Town.
According to the report, residential property rebounded in Cape Town CBD in 2021, with the number of residential buildings increasing from 69 in 2020 to 77 in 2021. The median price of apartments increased by 32.8 % from R1.28m in 2020 to R1,.7m in 2021. “There was a large increase in available rental stock in 2020 as repeated lockdowns affected the tourism industry and brought about travel bans, resulting in short-term lets being added to the long-term rental pool. However, this trend was reversed in 2021 as the steady rollout of vaccinations and the ‘normalisation’ of the pandemic saw a rise in domestic tourism, which resulted in increased demand in the short-term rental market and the removal of at least some of these units from the long-term rental pool,” says Kane.
Other findings of the report were:
- Office space available for rent in the CBD increased by 14,936m² during 2021, due to a 14,306m² increase in A-grade office space. Nevertheless, the Cape Town CBD offered the city’s most competitively priced premium office space in Q4 2021 at R195/m².
- Asking office rentals remained unchanged during 2021, with minor downward adjustment in both P-grade and C-grade.
- The Cape Town CBD, which accounts for the largest share of office space in the Cape metro, saw its vacancy rate rise to 16.1 % by the end of 2021, slightly higher than the national average of 16.0%.
Says Kane: “The resounding message emanating from the report on the CBD’s economic performance in 2021 remains positive: the Cape Town inner city once again proved itself resilient in the face of economic hardship and uncertainty caused by the pandemic.”
NOTE: Harbour Arch, the R16bn Amdec Group development in the Cape Town CBD, falls just outside the CCID’s geographical footprint and is therefore excluded from the total value of new property investment in the inner city during 2021. All data contained in the SCCR 2021 pertains to property and business in the CCID’s 1.6km² footprint.
