The economy of the Cape Town CBD remained stable in 2020 despite Covid-19, with the official nominal value of all property set at R43.8 billion by the City of Cape Town – and at least 31 new developments worth more than R6.9 billion in the pipeline.
This is the key finding of the special Covid edition of the annual State of Cape Town Central City Report 2020 – A year in review (SCCR), published by the Cape Town Central City Improvement District (CCID).
Data in the ninth edition of the annual report shows steady confidence in the development potential of the CBD, said CCID board chairperson Rob Kane.
“The Cape Town CBD once again proved its resilience in a very tough year. While some businesses have closed, many others have survived the first Covid year and it is very encouraging to note that investor and property development interest in the city centre remains steady,” said Kane.
Of the 31 new developments (recently completed, currently underway, planned or proposed in the CBD), five were completed in 2020 (conservatively estimated value R972 million), 15 were under construction in 2020 (conservatively estimated value R2.9 billion), nine were in the planning phase (conservatively estimated value R2 billion) and two were proposed (conservatively estimated value R860 million).
Key developments include Abland’s P-grade skyscraper 35 Lower Long (valued at R500 million), Ryan Joffe Properties’s The Rockefeller at Harbour Place (valued at R500 million), and WBHO’s Hotel Sky (valued at R400 million).
Since the report was published, the conversion of commercial building One Thibault, which has been an iconic feature of the Cape Town skyline for decades, into a mixed-use office and residential development (valued at R500 million) has confirmed the trend of repurposing commercial buildings.
In spite of Covid’s crushing of the tourism sector and the knock-on effect on the Central City’s visitor and eventing economies, most Central City hotels pulled out all the stops in 2020 to get domestic guests through their doors, CCID said. Two hotels were among the developments in 2020, namely the R400 million Hotel Sky development and the Old Bank Hotel. Two aparthotels, WINK Foreshore (valued at R75 million) and Urban Oasis in the East City, were completed in 2020.
The commercial property market remains resilient in 2021, with the continued conversion of office buildings into mixed-use developments or residential developments. “This indicates a flexibility in the sector,” said Kane.
Data on the residential property sector shows innovative offerings, coupled with low-interest rates, continued to attract investor interest in the prospect of living in a successful downtown regardless of the effects of Covid-19 on the economy.
“Developers have responded with accommodation offering flexibility, ease of use and affordability,” said Kane.
The key trend to emerge was the focus on community, with property buyers becoming members of the development’s “club”, rather than simply owners or tenants, and co-living and co-working spaces being the order of the day.
Of the 15 developments under construction in the CBD in 2020, at least nine were residential developments valued at R2.07 billion.
The median price of apartments sold in the Central City in 2020 was R1.65 million, which is less than the R1.8 million median price reached in 2019. The most sales were recorded in the R20,000-R29,999/m² price band.
“The distribution of sales across the various price bands shifted from the most being recorded in the R30,000-R39,999/m² category in both 2018 and 2019 to the lower band in 2020. This can be attributed to the price correction in the national residential housing market in recent years which has brought house prices in line with prevailing economic realities,” Kane said.
In 2020, the median price of R1.65 million for sectional title units represents an 8.3% decline relative to the median price achieved in 2019, which was R1.8 million. In 2020, 130 units were sold compared with 174 the previous year.
“There was a significant increase in available rental stock in 2020 as repeated lockdowns and subsequent travel restrictions impacted the tourism and eventing industry. This prompted numerous units, which were previously available as short-term lets such as AirBnB, being added to the long-term rental pool,” said Kane.
Flexible residential living options came to the fore in 2019 but were cemented in 2020 thanks to the weak economy and the Covid-19 factor. Property developers remained agile in their offering, with many presenting buyers and investors with an option to meet their needs.
Very few new developments are purely residential or commercial. Generally, “mixed-use” means there is some commercial activity on street level or in the building itself.
Of the 15 developments under construction in 2020, nine were solely residential with three categorised as “mixed-use”.
The Harri, a R70 million residential property development with 48 studios and lofts in the East City, joined a slew of other CBD properties going the aparthotel route in 2020, including WINKS (Foreshore), Urban Oasis and BlackBrick Cape Town.
Other well-known CBD developments that are already operating as aparthotels include The Onyx and the Radisson Blu Hotel & Residence (both on the Foreshore), and the Pepperclub.
Aparthotels allow property owners to tap into the property market and the hospitality market. They can choose to live in their unit when they need or choose to do so, and then add it to an existing pool of units should they wish to rent it out.
One of the interesting trends to emerge in 2020 was the club concept, with property investors not only having access to co-living and co-working spaces but becoming members of the development’s “club”.
Three developments to initiate this trend in the Cape Town Central City were BlackBrick Cape Town in Precinct 2 (under construction) and Neighbourgood East City and Neighbourgood Reserve -the latter under construction in 2020 and the former planned.
BlackBrick Cape Town offers a combination of three interlinked uses, namely residential, hospitality and club membership benefits, which include use of a rooftop clubhouse and bar, workspaces, boardroom and café. Prices for units start at R895,000 with apartment sizes ranging from 23 m² to 36 m² .
The unique Neighbourgood portfolio offers members the option to rent fully furnished co-living suites with fixed monthly costs and flexible lease terms (from R5,950 to R10,950 per month) with access to communal spaces, free commercial-grade WiFi, shared work and kitchen spaces, Kane said.
Members have access to facilities at other Cape Town properties in the portfolio, with organised community events open to all members, too.