In spite of a slow economy and political uncertainty in South Africa, the Cape Town CBD continues to outperform other cities when it comes to new developments and demand for commercial and residential property.

According to the recently released CCID State of the City report, which is compiled annually by the city’s urban improvement agency, new investment in the CBD to the value of R 8 billion or more is expected over the next few years.  Between 2004 and 2014, the value of property in the CBD jumped from R 6 billion to almost R 24 billion – a clear sign of investor confidence and demand for commercial space.

A city rejuvenated

For those who live or work in central Cape Town, the transformation of the CBD is no secret – and the pace at which it has taken place is extremely reassuring at a time when some experts are questioning South Africa’s attractiveness as an investment destination.

By bucking the bad-news trend, Cape Town is continuing its rise as an economic hub, providing new, and exciting opportunities for local entrepreneurs as well as foreign investors.

Is the growth sustainable?

Following the sharp depreciation of the Rand over the past year and the looming threat of ratings downgrades, South Africa’s economic performance has remained modest.  While some economists are predicting flat growth or even a mild recession, the one sector that is performing extremely well is property.

Major cities, including Johannesburg and Cape Town, are experiencing a shortage of quality properties for sale, which is driving prices higher at a time when businesses and consumers are tightening their belts.  This has caused some experts to ask – can the boom last forever?

With a weak Rand and the existing trend of strong foreign investment in Cape Town, the answer may be “yes”.  It’s impossible to predict the future, and depending on South Africa’s economic performance there may come a time when demand starts to drop, but in the current situation it seems likely that Cape Town will continue to see strong demand and healthy investment in its CBD.

A need for premium office space

When the CBD property boom began, some sceptics questioned the need for more office space in a city centre with average levels of occupancy – if there were still existing buildings that still didn’t have enough tenants, who was going to move into the new ones?

The answer seems to be simple – the old buildings in central Cape Town simply don’t cater for A-grade corporate clients, and that’s where a lot of demand seems to be coming from.

By investing in premier office space and linking the old CBD area with the Foreshore, Cape Town is in a position to welcome corporates, law firms, and specialised companies that would usually look to the waterfront, Century City or other developments as locations for their premises.

Looking forward

With R 8 billion in property investments scheduled to take place over the next few years, and new projects still in the pipeline, it’s a fair bet that the growth seen in Cape Town’s CBD is set to continue.

Will new investment continue to pour in at the same rate as it did over the past decade?  The answer will depend on South Africa’s economy, Cape Town’s reputation for strong governance, and the ever-changing political landscape of South Africa.  As things stand, there is great reason to be optimistic.

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