Massive changes for Cape Town’s inner city and financial district

 ·19 Sep 2022

The Cape Town Central City Improvement District (CCID) has published its latest State of Cape Town Central City report, highlighting strong investment growth into new and future developments in the Mother City.

A total of 13 property developments or redevelopments valued at more than R2.5 billion were completed in the Cape Town CBD during 2021, despite rolling lockdown restrictions prompted by the pandemic, it said.

The 13 projects are part of a total of 28 property investments that came on stream in Cape Town Central City in 2021 – either completed, under construction or in the planning phase – valued collectively and conservatively at R5.717 billion.

The value of developments under construction in 2021 is R1.732 billion, while those in the planning phase are conservatively estimated to be worth more than R1.5 billion.

These are some of the key findings of the latest State of Cape Town Central City Report – A Year in Review (SCCR), published by the CCID.

Data in the annual report – which is a sought-after investment tool that is indispensable to investors, developers and retailers seeking to invest in the most successful and dynamic city centre in South Africa –shows sustained confidence in the development and business investment potential of the Central City, said CCID board chairman and CEO of Boxwood Property Fund, Rob Kane.

“With the overall value of all Cape Town Central City property set at R43.8 billion according to the City of Cape Town’s 2018/2019 property evaluation, it is clear that the Cape Town CBD remains one of the country’s top property investment destinations,” said Kane.

New developments and redevelopments completed in 2021 include five hotels/aparthotels – The Rockefeller, Hotel Sky, BlackBrick Cape Town, The Capital 15 on Orange and Old Bank Hotel – valued at more than R1 billion, all of which opened last year.

Also completed were three residential developments worth more than R895 million, including the residential complex 16 on Bree (R860 million), and three mixed-use developments worth more than R523 million, including Foreshore Place (R373 million).

“The myriad residential and mixed-use properties coming onto the CBD property market indicate that agile developers – many of whom reconfigured commercial space to accommodate a changing inner-city property climate – are confident that there is a market for buyers,” said Kane.

According to the report, the stand-out property trend in 2021 continued to be the conversion of office blocks into mixed-use developments to provide both commercial and residential space and offer buyers flexible living options as well as optimising on the co-living, co-working trend.

Two key mixed-use developments in 2021 that were under construction were The Rubik (R500 million) and One Thibault (R500 million).

Connected living, a trend that emerged in 2020, was still prevalent in 2021, with Neighbourgood, a neighbourhood-centric property development company setting the trend.

Neighbourgood is responsible for two Central City developments, namely the conversion of the old Townhouse Hotel into Neighbourgood East City (R80 million) – offering fully furnished units with flexible letting options, convenience and exceptional amenities – and Neighbourgood Reserve (R75 million), which has studio units, office space and a conference venue.

All units are for rent only, with “members” able to access communal spaces and attend events at other Neighbourgood properties in greater Cape Town.

According to the report, residential property rebounded in the CBD last year, with the number of residential buildings increasing from 69 in 2020 to 77 in 2021. The median price of apartments increased by 32.8%, from R1.28 million in 2020 to R1.7 million in 2021.

Harbour Arch, the R16 billion Amdec Group development in the Cape Town CBD falls just outside the CCID’s geographical footprint and is therefore excluded from the total value of new property investment in the inner city during 2021. All data contained in the SCCR 2021 pertains to property and business in the CCID’s 1.6 square kilometre footprint.

Cape Town approves R14 billion Foreshore development – despite objections

The 34-storey high-rise, ‘Foreshore Place’ – commonly thought of as ‘The Absa Building’ due to its signage – is coming to market and will be sold as a mixed-use building in the city’s new financial district, according to Galetti Corporate Real Estate.

The building is located in the Foreshore – Cape Town’s financial district with the offices of Standard Bank, FNB, Luno and many other well-known companies all within walking distance.

“People are placing increased value on lifestyle and convenience by opting for mixed-use developments that combine retail, residential and commercial all under one roof,” said Justine Adriaanzen, commercial real estate broker at Galetti Corporate Real Estate.

Foreshore Place offers 13 floors of dedicated office space, 11 floors of residential apartments, a retail floor, five floors of parking and an on-site multi-floor hotel that will be operated by an international hospitality brand.

“The design and mixture of offerings within Foreshore Place are very much driven by what millennial and Gen-Z workers consider to be important when choosing where to call home,” said Adriaanzen.

“With the influx of people moving to Cape Town from other parts of the country and space in the city at a premium, we knew that we had to be clever and creative about what we would offer to distinguish ourselves.”

Hence the provision of five floors of parking in a city where safe off-street parking is a luxury. Other priorities for convenience-driven tenants include air-conditioning, on-site laundry facilities, on-site stores, coffee shops and eateries, proximity to public transport as well as 24-hour access control and security.

Foreshore Place’s 10 residential floors comprise studios as well as one- and two-bedroom apartments, ranging in price from R1.1 million to R4.2 million.

Investment key to avoiding urban decay

Foreshore Place will form part of the Foreshore Precinct, a node designed to attract new investment and win residents and office workers back to the CBD. The Precinct will be the home of the new Cape Station Project: a 3,085-bed student accommodation development featuring a world-class public square.

“Cape Town is currently faced with a student accommodation shortage, and this new development will bring much-needed housing to these students, as well as foot traffic to retail stores in the area,” said Adriaanzen.

Interesting to note is that both Foreshore Place and The Station Project fall under the Urban Development Zone (UDZ). “This means that if you buy, say, five apartments in a UDZ zone, you can claim back 55% of the purchase price over 20 years,” she said.

Student Accommodation

South African Student Accommodation Impact Investments, an investment platform managed by Eris Property Group, recently raised R400 million to increase committed capital to over R1.2 billion.

The platform, South African Student Accommodation Impact Investments (SASAII), is now able to initiate new projects that, once developed, will provide beds for more than 12,000 students in tertiary institutions across the country.

Completed in November 2019, the platform’s first investment units on Park in Hatfield, Pretoria was a 988-bed student accommodation property developed and managed by Eris Property Group.

The new projects under construction are Units on Jorissen in Braamfontein, Johannesburg, which is targeting Wits University with 1,071 beds, and Units on Cape Station in Cape Town CBD, which is targeting the Cape Peninsula University of Technology and surrounding academic institutions with 3,085 beds.

Both projects are set to open in the 2024 academic year.

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