A total of 13 property developments or redevelopments valued at more than R2.5 billion 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 Cape Town Central City in 2021 – either completed, under construction or in the planning phase – valued collectively and conservatively at R5.717 billion.
The value of developments under construction in 2021 is R1.732 billion, while those in the planning phase are conservatively estimated to be worth more than R1.5 billion.
These are some of the key findings of the latest State of Cape Town Central City Report 2021 – A Year in Review (SCCR), published by the Cape Town Central City Improvement District (CCID). The 10th edition of the report – presented to the Cape Town business community at a breakfast in the Central City on 14 September – reflects on the economic climate in the CBD across the previous year.
Data in the annual report – which is a sought-after investment tool that is indispensable to investors, developers and retailers seeking to invest in the most successful and dynamic city centre in South Africa –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.
Kane says: “With the overall value of all Cape Town Central City property set at R43.8 billion 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 R1 billion, all of which opened last year. Also completed were three residential developments worth more than R895 million, including the residential complex 16 on Bree (R860 million), and three mixed-use developments worth more than R523 million, including Foreshore Place (R373 million).
“The myriad residential and mixed-use properties coming onto the CBD property market indicate 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 stand-out 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 key mixed-use developments in 2021 that were under construction were The Rubik (R500 million) and One Thibault (R500 million).
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 (R80 million) – offering fully furnished units with flexible letting options, convenience and exceptional amenities – and Neighbourgood Reserve (R75 million), 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 the CBD last year, 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 R1.28 million in 2020 to R1.7 million in 2021.
“There was a significant increase in available rental stock in 2020 as repeated lockdowns impacted 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 roll-out 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 key findings of the report were:
- Office space available for rent in the CBD increased by 14 936 m² during 2021, due to a 14 306 m²increase 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 per 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 %.
Kane says: “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.”