Massive R3.6 billion development boom in Cape Town

A recent report shows that Cape Town CBD’s post-Covid economy is on the rebound, with property investment in the inner city in 2022 exceeding R3.555 billion while the retail, hospitality and eventing sectors are all experiencing major growth.

This is according to the latest edition of the State of Cape Town Central City Report 2022 – A Year in Review (SCCR), published annually by the Cape Town Central City Improvement District (CCID).

The findings of the 11th edition of the report – presented to Cape Town business and property leaders at a function in the city on Monday (21 August) – reflected on the economic climate in downtown Cape Town during the previous year.

A total of 22 property developments or redevelopments were recorded last year – four were completed (worth in excess of R170 million); 12 were under construction (worth in excess of R3.085 billion); five were in the planning phase (worth in excess of R300 million); and one project was proposed.

Of the 22 projects, eight were residential buildings – set to add thousands of new units to the Cape Town CBD’s highly competitive property market and indicating a strong demand for residential property – while six were commercial, four were mixed-use, two were retail buildings, and one was a parastatal.

Data from the SCCR shows that 2022 ushered in a new phase of regeneration, said Cape Town Central City Improvement District (CCID) board chairperson Rob Kane.

“It’s clear from the results of the report that the Cape Town CBD has put Covid firmly behind it and is experiencing regrowth and stability.

“With the construction sector regaining its pre-Covid momentum, and the total value of property investment in the Cape Town Central City to be conservatively estimated at R3.555 billion, it bodes well for further growth and investment in the economic hub of the Mother City,” said Kane.

The most significant indicator of investor confidence in Cape Town is the sustained growth in the overall official value of all property in the CBD of more than R12.2 billion in 2016/17 to R42.9 billion in 2022, according to the City of Cape Town’s property evaluation.

Kane noted that, apart from the construction sector showing an impressive post-Covid recovery, other key economies that drive business and investment into the Cape Town CBD, namely the hospitality, retail and event sectors, were also all on the rebound by the end of 2022.

At least 10 of the 17 sectors that operate in the Cape Town CBD experienced growth in 2022, with the number of business entities overall increasing by 135, from 2,981 in 2021 to 3,116 in 2022.

The top five sectors that recorded a positive output were the retail; legal services; medical practices; general corporates and head offices; and architecture, engineering, and surveying sectors.

The key economic sector, namely retail – which makes up 1,243 of the 3,116 entities doing business in the Cape Town CBD – increased its footprint in 2022 with more than 80 new retail outlets opening their doors.

“This sector has recovered steadily since the onset of the pandemic, and in 2022, the total number of retailers had returned to pre-Covid levels, with six more retail entities operating than in pre-Covid 2019,” said Kane.

Despite power cuts and other economic challenges, retail confidence in the Cape Town CBD, as measured in the CCID’s quarterly Business Confidence Index, also rose steadily in 2022, with 83.3 % of retailers surveyed indicating they were “satisfied” with current business conditions at the end of the year.

The report states that the total volume of retail space available in the Cape Town CBD at the end of 2022 amounted to 271,209 m², marginally above the 271,040 m² recorded at the end of 2021.

Meanwhile, the total retail space occupied in 2022 was 258,024 m², which was an increase of 13,731 m² (5.6 %) from the 244,293 m² recorded in 2021.

The total vacancy rate of retail space in the Cape Town CBD – 13,183 m² – amounted to just under 5% of the total retail space available. In 2021, it was 9.9 %.

“In 2022, there was a steady improvement in the total retail vacancy rate as footfall returned to town and new retailers opened their doors,” added Kane.

Read: One of the biggest malls in South Africa is getting a massive upgrade