New property investment in the Cape Town CBD worth more than R5.7 billion was recorded last year in spite of the tight economy and huge pressure on the construction and other sectors caused by the pandemic.
This is the key finding of the latest edition of the 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 city on Wednesday morning – reflects on the economic climate in the CBD across the previous year.
A total of 28 property developments came on stream last year. This includes 13 completed developments or redevelopments worth more than R2.5bn, 12 projects that were under construction worth more than R1.7bn and three projects in the planning phase worth more than R1.5bn.
Five of the 13 completed property investments are either hotels or aparthotels (a type of hotel providing self-catering apartments as well as ordinary hotel facilities), which have already opened. These include the aparthotel The Rockefeller (R500m), Hotel Sky (R400m), aparthotel BlackBrick Cape Town (R107m), The Capital 15 on Orange (R20m) and the Old Bank Hotel (whose value could not be confirmed).
Of the projects still under construction in 2021, more than half were commercial buildings, with commercial property owners – having borne the brunt of the Covid-induced work-from-home and hybrid work trends – moving swiftly to reimagine existing workplaces to make them more attractive and people-friendly. Only two commercial buildings were completed last year.
SUSTAINED CONFIDENCE IN CBD
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 inner city, says CCID board chairperson Rob Kane.
Kane said: “The resounding message emanating from this 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.”
The myriad residential and mixed-use properties coming onto the CBD property market indicate that agile developers are confident there is a market for buyers, says Kane.
Among other key findings in the report are that:
· The all-important retail sector – which makes up 1 163 of the 2 981 entities doing business in the CBD – remained stable in 2021, despite lagging economic conditions. A total of 81 new stores opened in the central city last year, with 44 closing down, resulting in an overall increase of 37 retail entities.
· Retail confidence in the CBD rebounded in the final months of 2021, and has continued in 2022, with the majority of retailers surveyed in the CCID’s quarterly Business Confidence Index indicating they were “satisfied” with current business conditions.
· The total volume of retail space in the Cape Town CBD at end of 2021 amounted to 271 040m². This is a 0.3 % increase on 2020 following the completion of new developments.
· The total vacancy rate of retail space in the Cape Town CBD – 26 747m² – amounted to 9.9 % of the total retail space available. This is less than the vacancy rate in 2020, which was 11.5%.
VALUE OF PROPERTY
The most significant indicator of investor confidence in the Cape Town CBD is the sustained growth in the overall official value of all property in the CBD from more than R12.2bn in 2016/17 to R43.8bn in 2018/19, according to the City of Cape Town’s property evaluation.
In its assessment of the commercial sector, the report notes that Cape Town CBD office vacancy rates increased from 14.6 % in 2020 to 16.1 % in 2021, which is slightly higher than the national average of 16 %, prompting inner-city landlords to repurpose vacant space.
Office space in the CBD available for rent 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 per metre squared.
Other features in the report include:
· An overview of the most resilient CBD economic sectors in 2021, including business process outsourcing, which created over 5 000 international jobs in the year under review, the film industry, the knowledge and eventing economies, and the art economy.
· A property investment map detailing the 28 locations of completed developments, current construction sites as well as those of planned projects.
· A special section on the four precincts that make up the CCID’s 1.6km² geographic footprint with respect to business, property and living trends and how they fared in 2021.
· Highlights from the CCID’s annual online Residential Survey.
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 only pertains to property and business in the CCID’s 1.6km² footprint.
WATCH:
Looking for property in the Cape CBD: Visit the IOLProperty Portal