The average size and cost of property in Cape Town as the city shows major growth

 ·30 Dec 2022

New property investment in Cape Town’s Central City worth in excess of R5.7 billion was recorded in spite of the tight economy and huge pressure on the construction and other sectors caused by the pandemic.

This is the key finding of the latest edition of the State of Cape Town Central City Report – A Year in Review (SCCR), published by the Cape Town Central City Improvement District (CCID). The 10th edition of the report reflects on the economic climate in the CBD across the previous year.

A total of 28 property developments came on stream last year. This includes 13 completed developments or redevelopments worth in excess of R2.5 billion, 12 projects that were under construction worth in excess of R1.7 billion and three projects in the planning phase worth in excess of R1.5 billion.

Five of the 13 completed property investments are either hotels or aparthotels, which have already opened. These include the aparthotel The Rockefeller (R500 million), Hotel Sky (R400 million), aparthotel BlackBrick Cape Town (R107 million), The Capital 15 on Orange (R20 million) and the Old Bank Hotel (value to be confirmed).

Of the projects still under construction, more than half were commercial buildings, with commercial property owners – having borne the brunt of the Covid-induced Work From Home and hybrid work trends – moving swiftly to reimagine existing workplaces to make them more attractive and people-friendly. Only two commercial buildings were completed.

CBD growth

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, says CCID Board Chairman Rob Kane.

Kane says: “The resounding message emanating from this report on the CBD’s economic performance remains positive: the Cape Town inner city once again proved itself resilient in the face of economic hardship and uncertainty caused by the pandemic.”

The myriad residential and mixed-use properties coming onto the CBD property market indicate that agile developers are confident there is a market for buyers, says Kane.

Among other key findings in the report are that:

  • The all-important retail sector – which makes up 1 163 of the 2 981 entities doing business in the CBD – remained stable, despite lagging economic conditions. A total of 81 new stores opened in the Central City last year, with 44 closing down, resulting in an overall increase of 37 retail entities.
  • Retail confidence in the CBD rebounded and continued in 2022, with the majority of retailers surveyed in the CCID’s quarterly Business Confidence Index indicating they were “satisfied” with current business conditions;
  • The total volume of retail space in the Cape Town CBD amounted to 271,040 m². This is an 0.3 % increase on 2020 following the completion of new developments.
  • The total vacancy rate of retail space in the Cape Town CBD – 26,747 m² – amounted to 9.9 % of the total retail space available. This is less than the vacancy rate in 2020, which was 11.5 %.

The most significant indicator of investor confidence in the Cape Town Central City 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 R43.8 billion in 2018/19, according to the City of Cape Town’s property evaluation.

In its assessment of the commercial sector, the report notes that CT CBD office vacancy rates increased from 14.6 % in 2020 to 16.1%, which is slightly higher than the national average of 16 %, prompting inner-city landlords to repurpose vacant space.

Office space in the CBD available for rent increased by 14,936 m², due to a 14,306 m² increase in A-grade office space.

Nevertheless, the Cape Town CBD offered the city’s most competitively priced premium office space at R195 per m².

Other features in the report include:

  • An overview of the most resilient CBD economic sectors, including Business Process Outsourcing – which created over 5,000 international jobs in the year under review – the film industry, the knowledge and eventing economies, and the art economy;
  • A property investment map detailing the 28 locations of completed developments, current construction sites as well as those of planned projects;
  • A special section on the four precincts that make up the CCID’s 1.6 square kilometres geographic footprint with respect to business, property and living trends and how they fared;

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. All data contained in the SCCR only pertains to property and business in the CCID’s 1.6 k m² footprint.

Other averages and ranges across the spectrum (as per PropStats)

  • Average size across all units sold: 71.0 m² (vs 69.0 m² previously)
  • Average R/m²: R39 102/m² (vs R31 000/m² previously – year-on-year increase of 26.1 %)
  • Average price sold against listed price:  -7.6 % (vs -10.7 % previously)


Read: Workers are returning to the office – and it’s causing headaches for landlords

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