Cape Town continues to enjoy its status as the favoured South African market in which overseas property investors conduct business. The central business district has witnessed the growth of its resident population from about 1500 to nearly 6000 in the last four years. As a result, major retailers such as Pick ‘n Pay and Spar, along with tourism-related enterprises, have been able to sustain commercial success in the upmarket locale.
Adding to this growth, the new Bus Rapid Transport system (MyCiTi) has made commercial space along the main transport routes greatly sought after. The benefits extend to neighbouring Woodstock as the CBD undergoes renewal and expansion past capacity, with promising returns for investors who read the trend and acted accordingly. The IPD South Africa Biannual Property Indicator, released in September, showed the property sector returned a total of 7.4% on investment for the first six months of 2014, mainly via rental yield growth. This represents a 90-basis point improvement over the preceding December’s 6.5% biannual total return; and signifies the sector’s outperformance of both investment bonds (2.0%) and consumer price inflation (5-6%).
Industry analysts listed revenue increase from offshore investments, fixed property portfolio, and control of expenditure as significant factors in listed property counters’ achieving a weighted average growth of 12.6% for the year ended June 2014. This was well ahead of the predicted 8%.
A visible trend reflective of global real estate developments is the rising prominence of real estate investment trusts (REITS), introduced in South Africa last year. Nedbank Corporate Property Finance has stated that South Africa leans towards generalist REITs comprising a mixture of industrial, office and retail exposure; while capital growth opportunities exist also in trusts investing purely in individual property types. Investors looking towards commercial real estate via REITs will benefit from the fact that the long-term trusts are structured to be of medium-low risk owing to diversification by geographic region and property grade.
South Africa is becoming increasingly recognised as the cream of the crop by the global business process outsourcing industry. Overseas companies looking to get involved by off-shoring business processes to Cape Town will locate plenty of opportunities for finding space with developed infrastructure as well as experienced specialists to provide advice. Over the past four years, five of the world’s largest customer service operators – Capita, Infosys, Webhelp Group, Serco and WNS – have set up call centre operations in South Africa, joining others such as Aegis, Genpact, Mindpearl and Teleperformance already in the country. This trend represents sustained sizeable investment from a number of large, non-SA corporations and signals confidence in the human resources, regulatory framework and commercial property of the country. Facilities and premises, technology, cost base, an existing talent pool, language and time zone compatibility are top factors cited in the attracting of multinational organisations to a destination key in the global BPO market. The possession of these, coupled with the determination of government and the domestic BPO industry, ensure South Africa will remain among the top of global outsourcing destinations for the future.