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Cape Town's property trends in 2024

by CCID 26 Mar 2024
Cape Town CBD cityscape

Property investment experts and developers are predicting a stable year of recovery for the Cape Town property scene.

This year is set to unleash a surge of pent-up property demand in Cape Town as global inflation stabilises, easing pressure on people’s pockets as interest rates slowly decline. Real Estate Investor Magazine adds this will fuel an upsurge in first-time buyers, looking to secure a home in more favourable economic times. COO of Thibault Investments Grant Elliott, who is also on the board of the Cape Town Central City Improvement District (CCID), foresees a stable year of recovery for the Cape Town CBD property scene. Here, he shares his top residential and commercial trends, alongside other industry experts.

1. Decreasing office vacancies

With fewer people working exclusively from home, there’ll be some stabilisation of the office market, according to Elliott. Dave Russell, Director: Commercial Division of Baker Street Properties, agrees, adding that the demand for office space means strong prospects for rental growth, which should hopefully prompt more office development, breaking the cycle of a depressed development pipeline. Rob Kane, CEO of Boxwood Property Fund and CCID board chairperson, says there is no doubt that good office accommodation will soon be in short supply. He says, “Vacancy trends picked up by the SA Property Owners’ Association (SAPOA) show that vacancies in town are dropping like a stone.”

2. Redevelopments favoured

It’s clear that tenants are favouring buildings that are new or have been renovated or redeveloped, says Kane. “Tenants are far more conscious of the quality of their work environment than before, and this desire for good quality spills out onto the street … landlords who have invested in the landscape surrounding their buildings by installing plant boxes, plant trees and creating outdoor cafes spilling onto the street have seen a return on this investment in the form of higher office rentals,” he says.

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The Onyx Aparthotel
The Onyx Aparthotel pool.

3. Return To the Office

With the pandemic well and truly behind us, corporates now expect employees to work from the office at least three days a week, on average. Rob Kane says the Cape Town CBD “seems to be top of the pile when it comes to people wanting to return to the office”. He says: “This is evident from the stats we are getting from Boxwood’s parking garages which are fuller now than they were pre-Covid-19, and there are new retail venues such as eateries and coffee shops opening up in town all the time. Our anecdotal evidence is that people are coming into the office three or four days a week. We have noted, however, that when they do come in, they want their own desk. The notion of desk sharing has not gained traction.”

Kane notes that the more “progressive” companies are encouraging their staff to come back to the office “which is ironic as much of the Covid-19 dialogue centred around progressive companies encouraging staff to Work From Home”.

4. A Call for space

Grant Elliott says large call centres, and the Business Process Outsourcing (BPO) sector as a whole, will continue to take up significant commercial space. Russell agrees, adding, “Demand from the BPO and e-commerce sectors has played a major part in reducing office vacancies from their highs during Covid-19. We are now back to, and in some cases, surpassing rental levels achieved pre-Covid-19.”

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Salt Food Market
SALT Food Market at The Box.

5. Stabilising semigration

The election may impact the movement of people, possibly prompting more activity in the Gauteng property market, depending on the results in that province. This could influence current semigration patterns. Russell says that in the last few years, he’s seen residential property prices and rentals increase due to semigration-driven demand. “I understand there has been significant rental growth for apartments in and around the Cape Town CBD in particular.”

6. Open to investment

Elliott says that 2024 will see a big trend of residential development and redevelopments, with CBD residential sales being predominantly investment-based.

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One Thibault
One Thibault Residence.

7. Many more beds

This year will also see a big focus on short-term stay offerings, including hotels and aparthotels. Several short-term stay developments have either been completed in the city centre (including Habitat at 132 Adderley) or are nearing completion (including The Rubik, a mixed-use block at 17 Loop Street). “The big one is the completion late last year of a 3 000-bed student accommodation development by ERIS at the Cape Town Station,” adds Elliott.

8. A big year for first-timer buyers

Should forecasts of a declining interest rate come to fruition as inflation stabilises, it’s likely many first-time buyers will pounce on the chance to get a foot on the ladder.

9. Price increases:

2024 will more than likely see property demand pick up, which will have a knock-on effect on house price growth. The current “good value” real estate opportunities have an expiry date as the market upswings.

Elliott concludes that the CCID will continue to provide sustained support to its partners across the city centre. “The CCID, by its nature as a public-private partnership, serves to secure, preserve and improve the streetscapes within its jurisdiction, through on-the-ground security, cleaning and maintenance, social work, and marketing the CBD as open for business.” Through these efforts, the CCID is helping to promote Cape Town’s Central City as a world-class destination that’s open for investment, which bolsters the CBD’s property scene.”

IMAGES: Carmen Lorraine. CCID

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