Semigration, better governance, and lifestyle factors have placed the Western Cape on an entirely different plane to the rest of the country.
This, says Brent Townes, commercial property chief operating officer for Lew Geffen Sotheby’s International Realty in Cape Town, is further bolstering the commercial sector which “continues to grow despite the recent interest rate hikes, current energy crisis and floundering economy”.
There has, therefore, been a “sharp increase” in turnover from March to August, compared to the same period last year.
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“In terms of commercial property sales, we’ve seen a 266% increase in units sold, and in the rental arena a 75% rise in leases signed. And this growing market activity is showing no signs of abating.
“We are also seeing growth across all sectors, with the retail property market proving to be one of the more resilient property sectors coming out of the pandemic. The main driver of this is the return of local and international tourism to the city.”
Citing the latest JLL Cape Town Real Estate Overview, Townes says that, although neither arrivals numbers nor hotel performance metrics have reached their pre-pandemic level, hotel occupancy rates “virtually doubled across all property types in Cape Town during the first half of 2022, compared to the same period last year”.
There is no doubt that the office market bore the brunt of the pandemic with a massive over-supply of stock countrywide by the end of lockdown, but he notes that there has been considerable activity in Cape Town this year, especially in certain nodes.
“The areas in which we are seeing the most movement are precincts like Century City, Westlake, and Tygervalley because they are essentially live/work/play hubs that require little or no travel time and offer the convenience of an array of on-site amenities.
“That said, the CBD has definitely come back to life and, as Cape Town has avoided the urban degradation associated with the other major metros, we are likely to see ongoing investment in new development and the upgrading of C-grade buildings.”
All round, he says interest is predominantly centred around newer or higher quality office space in primary locations, including commercial nodes like Claremont and Newlands which are growing largely due to the popularity of residential property in the area which is being fuelled by semigration.
Townes adds that, during the past 12 months, 56% of the sales in the top 12 commercial areas – which represent 80% of the city’s commercial property value – were office or business premises, followed by industrial at 38% and retail at 4.7%.
“Freehold properties represent two thirds of the value but only one third of transactions whilst sectional title is the inverse with the average sale price in each sector being R12.75 million and R4.388m respectively.”
He says the growing demand for retail properties is “very evident with around 10% of their enquiries now being for retail or mixed-use spaces”.
FNB Property Sector strategist, John Loos, believes that this shift in relative share of the development market move away from Gauteng towards the Western Cape and to a lesser degree KZN, points towards a longer term ‘economy shift’ towards the coastal regions.
“It would appear that the Western Cape currently marches to a very different economic beat to the rest of the country, with the bulk of the country’s economy experiencing more significant economic and property market pressures.”