“Things get better. They do improve, and despite the hard economic climate, we are in good shape. We are not where we want to be, but we are grateful.”
These were the words of Rob Kane, the Central City Improvement District (CCID) chairperson, at the Cape Town International Convention Centre on Wednesday, where the CCID presented the annual State of the Central City report 2020 – a year in review.
This was the ninth edition of the report, published by the CCID. It incorporated the state of the CBD during the Covid-19 hard lockdown, which hit the country in March last year.
However, despite the lockdown, the report showed that the economy of the CBD remained stable in 2020, 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.
The report shows steady confidence in the development potential of the CBD, said Mr 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-19 year and it is very encouraging to note that investor and property development interest in the city centre remains steady.”
Mr Kane said one of the biggest economic challenges for the CBD was the exodus of office workers to work from home, however, he said, research shows that businesses will start a hybrid model, where people will spend time in the office and time at home.
“Research shows working from home takes a toll on productivity and businesses are worried about low morale and business growth. With employees working from home you can maintain your business, but you can’t make it thrive.”
Another challenge, he said, was the vaccination numbers, which need to increase to speed up travel to South Africa and revive the tourism industry, including the night entertainment economy in the CBD.
“Tomorrow we are likely to be off the UK travel list and hopefully we will see some improvement in travel. The first cruise liner is also due to arrive in November. These are big things for Cape Town and the economy.”
It was announced today that South Africa will be off the UK’s red list from Monday October 11.
This means people returning to England will no longer be required to quarantine.
The report also shows that of the 31 new developments which are either recently completed, currently under way, planned or proposed, five were completed in 2020 to the estimated value of R972m. Another 15 were under construction in 2020 to the estimated value of R2.9bn; nine were in the planning phase to the tune of R2bn and two were proposed, valued at an estimated R860m.
The projects which were completed, according to the report, included the 23-storey office block at 35 Lower Long Street valued at R500m; the 30-unit apart-hotel called Wink at Pierre Place valued at R75m; and the 10-storey residential building on Fountain Circle, The Duke, valued at R210m.
While new property developments were stalled in 2020, research economist Sandra Gordon, who presented the report, said the development of 35 Long Street changed the office market landscape for the CBD.
While about 14 080 m² of prime commercial space came on board in the CBD in 2020, the report shows that Century City still has the largest stock of prime office space in the Cape Metropole, with the central city coming second.
Meanwhile, the residential property market bore the brunt of the lockdown, with apartment prices and sales dropping sharply.
Since the report was published, the conversion of commercial building One Thibault, into a mixed-use office and residential development, valued at R500 million, has confirmed the trend of re-purposing commercial buildings.
The median price of apartments sold in the central city in 2020 was R1.65m, which is less than the R1.8m median price reached in 2019.
Ms Gordon said while many businesses had been impacted by the Covid-19 pandemic and had to close, they were seeing new businesses opening in the CBD, which showed that the market was on the move.
She said 475 businesses closed or relocated last year, but these only slightly outpaced the opening of new establishments.
The report showed that in 2020, there was a retail vacancy rate of 11.5%. The vacancy rate was 9.4% in 2019.
The travel and hospitality sector was the hardest hit by the pandemic, said Ms Gordon. “During last year, most hotels didn’t do too well. Undoubtedly, that will improve next year.”
She said that they didn’t have too much data as most hotels were close, however, the Foreshore was the space where most of the city’s big hotels were situated.
Two hotels also were among the developments in 2020, namely the R400m Hotel Sky and the Old Bank Hotel, previously the Nedbank building.
“Uncertainty remains extremely high, and we don’t know what the fourth wave holds, but the Cape Town CBD has remained resilient and we are seeing the green shoots of recovery,” said Ms Gordon.