Demand for properties soars in CBD
Cape Town -Post Covid-19, the Cape Town property market has experienced a sizzling boost in sales and interest, not just locally but internationally.
Real estate companies said the rising demand for housing in the city had resulted in higher property prices and a scarcity of available properties in sought-after locations. In addition, semigration had buoyed the high demand for properties in the price ranges of up to R15 million.
These included the Atlantic Seaboard, Cape Town City Centre, V&A Waterfront and the southern suburbs.
Pam Golding Properties Regional Head, Basil Moraitis, explained how the dynamics changed with more overseas interests in properties in the CBD and business hubs.
‘’Notably, in Cape Town, over the past few years, we have seen strong enquiries from local, upcountry and foreign buyers looking to invest in secure living on the water, around the V&A Waterfront and Promenade areas,“ said Moraitis.
“The lower to middle end of the market, up to around R8m, comprises mainly value-driven investors taking advantage of the weak rand and lower property prices.
“The larger two and three-bedroom apartments in the higher price ranges, up to R15m and upwards, are often a primary residential purchase.
“Others are seeking property here to enable them to up-scale in size and work from home.”
Dogon Group Properties agent Keagen James said, in some cases, the demand surpassed the available supply.
The Cape Town Central Improvement District (CCID)'s research showed, based on development projects under construction or planned, at least R3.2bn was expected to boost the economy.
The estimate excluded the R16-billion Harbour Arch development on the Foreshore and the R1.5-billion redevelopment of the Cape Town Station Forecourt, both of which were just outside the CCID’s geographical footprint.
CCID Chairperson Rob Kane said sales activity of residential units remained brisk in 2021 and 2022, and median sales prices rebounded from pandemic-induced lows with the ongoing conversion of buildings from commercial to residential and new-build residential properties showing a strong conviction among developers of ongoing demand.
‘’The recovery is already in full swing,“ said Kane.
The CCID’s State of Cape Town Central City Report 2021 stated a year in review showed the total value of property investment in the CBD was conservatively estimated at R5.717bn.
These included completed developments valued at R2.485bn.
Kane said the launch of several new property developments, such as the residential complex 16 on Bree, valued at R860m, and the half-commercial, half-residential building, One Thibault, valued at R500m, resulted in a surge in sales.
‘’Notwithstanding a tough economy, the CBD is in good shape’’, he said.
Kane said despite the first year of the pandemic, resident property sales in the CBD rose from 175 sales in 2019 to 349 sales in 2020, even though the construction sector was under significant strain.
In 2021, 750 units were sold, and the sales activity remained elevated at 649 in 2022, above the average sales recorded during the previous decade.
The current value of all property in the Central City, according to the City of Cape Town’s 2018/2019 property evaluation, was R43.8bn.
Kane noted: “The new buildings comprise a great mix of offices, apartments, hotels and retail, all of which will add value to those working and living in the CBD, not least of which is all the job creation we are seeing.”
A new biophilic property development in upper Bree Street, The Fynbos, was expected to offer 689 apartments on completion in December 2024.
James said apartment prices ranged from just over R1m for a studio to over R2m for a one-bedroom one and R4,9m for a two-bedroom apartment.
‘’The Fynbos represents an exciting step towards creating sustainable, nature-inspired urban spaces that prioritize the well-being of its inhabitants while regenerating the urban landscape,’’ he added.
However, there were fears that the rising inflation rate would continue to affect property prices and affordability.
James commented on this inflation prediction’s impact.
‘’Higher interest rates make mortgages more expensive, and thus more difficult for prospective buyers to purchase properties,’’ he said.
‘’Additionally, inflation has led to higher construction costs which results in increased prices for new properties.
“As a result, we are now increasing the prices of the remaining units at The Fynbos.
“We have had a surge of interest in The Fynbos from local and foreign investors which is very promising and indicates confidence in the development and the Cape Town economy as a whole’’.
Professor Francois Viruly, Property Economist at UCT, said the Cape Town property market was showing a strong performance in the higher segments, above R4m.
Viruly also said the higher inflation rate had resulted in households shifting to the rental market, which had also shown a strong performance.
The office market also showed a recovery, noted Kane.
“When the CBD recovery is compared with other business nodes, it is clear that we are doing well,” Kane added.
“We don’t have accurate stats yet, but the take-up of office space has been well above average in South Africa’’, he said.