Cape Town - A report by the Cape Town Central City Improvement District (CCID) has revealed that the local property market has soared in value by nearly 40%, from R30628 billion in 2016/2017 to R42860bn in 2018/2019 - with 39 new developments worth in excess of R13.5bn in the pipeline.
CCID Board chairperson Rob Kane said: “While the overall value of properties is likely to change with the adjudication of objections in the City of Cape Town's current round of updating the general valuation roll, we are heartened by the increase in gross valuation for the Cape Town Central Business District (CBD). Combined with the developments under way or proposed, the overall picture shows confidence in the development potential in the central city.”
In the CCID’s report titled the "State of Cape Town Central City Report 2018 - A Year in Review" it stated that vacancy rates for commercial office space rose in the last year, with 30000m² of new office space coming on to the market. However, Cape Town continues to have the lowest office vacancy rates of South Africa's five largest metropolitan centres.
“In 2018, the median price of apartments sold in the CBD was R2.1 million, slightly higher than the median of R2m in 2017. After cooling slightly in 2017, as activity levels in the housing market adjusted to prevailing economic conditions, the completion of two new residential developments saw unit sales increase to 361 units in 2018, up from 316 in 2017.” Kane said that prices have run ahead of economic realities in recent years.
“Deteriorating affordability has shifted conditions from a seller’s to a buyer’s market, in which buyers are willing to wait for value to return to the market while sellers are no longer dictating prices.” The report suggests a revealing trend in terms of home ownership.
Nearly 60% of city dwellers own their properties, while nearly 25% are tenants in rental properties. The remaining 15% own their property and rent to tenants.
Former commercial buildings in the CBD converted to residential buildings include Triangle House, and the former Nedbank building on the Foreshore, recently launched as the Onyx. Rob Vanlierde of Smook Properties said: “The UDZ tax incentive for developers has meant that redeveloping older buildings or constructing new ones has become much more feasible. As properties have been developed over the last seven or so years, the city centre has become a more attractive area and therefore invited even more investment.”
Back in February, the City council received thousands of objections to municipal property valuation increases of more than a third on average, but in some cases as high as 100%.
Sandra Dickson from action group Stop CoCT said: “Though an impressive report, one cannot but come away from reading it that the CBD in Cape Town is the playing field of the elite. The rest of us living only kilometres away have zero benefit from this investment and expensive lifestyle the inner city has to offer. It begs the question regarding affordable housing in the CBD.”