People want to live close to their jobs to avoid long commutes
Entrepreneurial tech hubs and modern working trends are reshaping some residential property markets as developments mushroom to support skilled workforces that live there.
It is a cycle playing out in cities throughout the world, and is starting to be seen in South Africa too: skilled technical employees leave booming tech hubs for remote life in quieter areas; companies follow the talent pool and establish new hubs for such employees; and more skilled workers move to work at these companies.
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New properties are then developed to meet the demand for homes and, over time, these areas are transformed.
To understand the impact that tech hubs have on local property markets, says Dr Sumarie Roodt, co-chairperson at Silicon Cape, one needs to understand that the primary purpose of a tech hub is to catalyse prosperity for tech entrepreneurs and businesses by creating an environment or ecosystem conducive to their growth and development.
In doing so, she says tech hubs encourage socio-economic development by stimulating investment into the environment, which will “naturally result in greater interest, demand, and evaluations for the local property market”.
“This comes as people begin to flock to the area, as they are attracted by the favourable working environment created by the tech hub. Tech workers will look for homes to own or rent, while businesses will do the same in a move to find new company headquarters.”
Cape Town and Stellenbosch are thriving examples of tech hubs catalysing property development. The Western Cape government has made clear its aim of elevating Cape Town to become Africa’s tech capital.
Currently, Cape Town is home to branches of multi-national companies and brands such as Amazon, Microsoft, Harvard University, Thomson Reuters, and Johnson & Johnson. Meanwhile, the university and tourist town of Stellenbosch has attracted the likes of Capitec, which has relocated its head office there.
Among the big names in these areas are a number of tech start-ups that specialise in software, data, internet, and other computer solutions.
Louis van Rooyen, property broker for Rawson Properties Somerset West Commercial, says Stellenbosch’s property market has been boosted by the number of people working in the Technopark business park. Since Stellenbosch is an expensive area for residential property, he says this boom has allowed for the creation of lifestyle estate developments like Sitari Country Estate, Acorn Creek, De Velde, and Paardevlei.
“These developments are ideally situated with easy access to Somerset West, Stellenbosch and Cape Town.
“We've also seen the R44 being upgraded in the past few years as a result of many people travelling from farflung areas of Cape Town to Technopark.”
These developments give people the opportunity to buy property closer to Technopark and Somerset West's business hub, and eliminate long commutes, Van Rooyen says.
“People want to limit the time they spend on the road so the closer they live to work, the better. That also has an impact on the demand for property in the area and explains why these new developments are sprouting up everywhere.”
Also the creation of tech hubs – and the increased numbers of people moving to an area – makes it easier to provide public transport on shorter routes, he says. Local public transport systems “will help stimulate the local community”.
“There will also be attention given to infrastructure development which should include the introduction of dedicated cycling lanes to help reduce carbon emissions. A quick cycle from home to the office is the healthier alternative.”
Although not strictly just a tech hub, the Dube TradePort Special Economic Zone on the north coast of Durban, and its continued development, is having a similar impact on surrounding property markets as more residential development takes place to meet the demand.
The past few years have seen the Umhlanga area transformed into a booming commercial hub and this is creating a growing need for homes nearby. Developers have been meeting this need with a number of new residential developments in and around the area.
The 2019 launch of the Cisco Edge Incubation Centre within the Dube TradePort further signifies government and business commitment to technological advancement as it aims to develop SMMEs as well as speed up their entry into the digital marketplace.
At the launch, Sihle Zikalala, the then-KZN MEC for economic development, tourism and environmental affairs, said the provincial government saw the centre playing an important role in developing people's capabilities in the areas of technology and innovation, and he hoped it would also assist with driving socio-economic development.
In September last year the Dube TradePort welcomed foreign investment of more than R3billion, and Roodt says the arrival of international tech companies in the country will lead to more development in middle and higher-income housing. This is because these businesses bring with them foreign investment and well-paid people looking for quality living.
“This is what we’re seeing in places like Tel Aviv, which has been dubbed the ‘Silicon Valley’ of the Middle East...
“This growth in demand is great for revitalising poorer communities which quickly turn into up-and-coming areas, as their more affordable property becomes sought after by individuals and businesses alike. In doing so, tech hubs help put communities on the map and improve the wealth of those living there.”
But she warns that developers and city planners need to be mindful of issues such as gentrification which could drive many long-time residents out of areas and homes that have been in their family for generations.