6 October 2021: The Cape Town Central City remained a viable commercial and residential property investment node in 2020 with the total estimated value of developments completed totalling R972 million – despite the crushing impact of Covid-19 on the construction sector.
Investors continued to pour billions of rands into South Africa’s most successful Central Business District: the total estimated value of all developments in the completed, under construction, planned and proposed phases is valued conservatively at R6.7 billion.
This was one of the key findings of the ninth edition of the State of Cape Town Central City Report 2020 – A year in review Covid -19 edition (SCCR) economic report, published annually by the Cape Town Central City Improvement District (CCID) and released at a Business Breakfast in Cape Town on Wednesday.
Investor confidence in the Mother City’s downtown was on the rebound in 2020 despite challenges facing the Cape Town metropole as it grappled with the economic downturn brought on by the coronavirus pandemic and stringent lockdown regulations.
The overall official nominal value of all property in the Cape Town CBD according to the City of Cape Town’s 2018/2019 property evaluation, is R43.8 billion.
KEY COMMERCIAL DEVELOPMENT
In 2020, the key commercial development that changed the city’s skyline was Abland’s R500 million 35 Lower Long, which added 14 080 m²of prime office space to the Central City, bringing the total increase of office space in 2020 to just 15 180 m², with a total market stock of 1 038 707 m² in the fourth quarter of 2020, according to SAPOA’s Office Vacancy Report.
Within the Cape metropole, the Central City has the largest share (39.2 %) of total office space, followed by Bellville (21.4 %). With 14 080 m² of prime office space coming on board in the CBD in 2020, it now has the second largest stock of prime office space in the metropole (66 080 m² or 32.2 %) following Century City (69 310 m² or 33.7 %).
Other commercial developments completed in the Central City in 2020 according to the report include two aparthotels namely the R75 million WINK Foreshore and Urban Oasis in the East City. Two hotels were under construction in 2020: the R400 million Hotel Sky and the Old Bank Hotel – in spite of Covid-19 bringing the hospitality industry to its knees. Both have subsequently opened their doors to visitors.
Developers have also been influenced by the global urbanism trend which has seen people buying into mixed-use developments – that include both commercial and residential components –that meet their daily needs within walking distance. The development of the Absa building into Foreshore Place, which was under construction in 2020, is a case in point. The R373-million mixed-use complex has 11 floors of residential units above 15 floors of commercial space with retail outlets on the ground floor.
RESIDENTIAL LEADS THE WAY
The majority of the 15 developments under construction – with a total estimated value of R2.9 billion – in the Cape Town Central City in 2020 were residential, including two developments on the Foreshore, The Rockefeller at Harbour Place (R500 million) and 16 on Bree (R860 million).
The conversion of the Cape Town icon The Townhouse Hotel into Neighbourgood East City (R80 million) also made waves in 2020, with the hotel being repurposed into a neighbourhood-centric development offering short-, medium- and long-term fully furnished rental units only. Developers Neighbourgood are also in converting an Adderley St landmark into Neighbourgood Reserve, which will offer upmarket loft apartments to the rental market, buying into the global digital nomad visitor trend.
Construction of the R150 million heritage development, The Barracks, also began in 2020 following a decade of planning, proposals and permissions.
In terms of rentals, the SCCR revealed that, compared to other office nodes across the Cape metropole, the Central City, along with Bellville, is the most competitively priced business node for A-grade office space, charging a median price of rental – at R150 m² - in the A-grade market.
The office vacancy rate in the Cape Town CBD dropped from 10.8 % in 2019 to 14.6 % in 2020, the report revealed, with the average gross asking rental of R103 per m² remaining the same.
Released by Atmosphere Communication for Sharon Sorour-Morris, Communications manager, CCID
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