City centre shows resilience despite lockdown

Property investment of almost R14 billion underpins the Cape Town CBD’s resilience despite the effects of the Covid-19 pandemic.

While sales slowed down significantly during the national lockdown, which also shut and caused delays in the reopening of the Deeds Office, the pace of recovery in property sales has surprised market analysts and estate agents alike.

According to Alisdair Crofton, Rawson Property Group Cape Town CBD franchisee, “more first-time buyers and out-of-town investors are taking advantage of the record low interest rates. Sellers are also motivated to sell faster and are therefore less likely to push for top-end prices. There is a steady flow of sellers looking for valuations with reasons ranging from needing cash to selling investment properties in order to prop up a business for a while. The next six months moving into the first quarter of 2021 will be very interesting”.

Basil Moraitis, Western Cape regional manager for Pam Golding Properties, said they have noticed a 38% increase in listings coming to market when compared to the period before lockdown, which indicates that it is still very much a buyer’s market and consequently correctly pricing new listings is critical to success.

The latest edition of the State of Cape Town Central City Report 2019 – A Year in Review (SCCR) published by the Cape Town Central City Improvement District (CCID) earlier this month showed that the city centre “held its own quite remarkably” in the year under review, despite 2019 being “incredibly difficult”, according to CCID board chairperson, Rob Kane.

“Stakeholders and investors in the CBD have had to cope with the aftermath of the 2018 drought and subsequent water crisis, ongoing load-shedding and a tough economic climate.”

Though the coronavirus pandemic falls beyond the ambit of the SCCR report, a five-part section of the report is devoted to reflections on “Surviving Covid-19” by stakeholders.

Mr Kane said while the pandemic had damaged the city centre’s economy, the city was no stranger to crisis and it was well-placed to navigate a path to recovery.

The SCCR report shows that, according to the City of Cape Town’s 2018/2019 property evaluation, the value of Central City property stands at R44.124 billion, and that the total value of property investments in the central city – recently completed, under construction, proposed or planned – is R13.83 billion.

The report, presented by research economist Sandra Gordon, showed that Foreshore precinct has emerged as a key property investment node which is due, in part, to the expansion in 2018 of the Cape Town International Convention Centre (CTICC), which achieved a turnover of R277 million in 2018/2019.

Ms Gordon said seven developments were in various planning phases at the Foreshore, however, the number of developments that would materialise was yet to be seen because of the uncertainty caused by the pandemic.

The year under review also saw the art economy flourish, with Cape Town emerging as the art capital of Africa. Ms Gordon said there were 44 art studios and 29 galleries in the city centre, and that events such as First Thursdays and the Investec Art Fair showed that the city was reaffirming its place as the art capital of South Africa.

The report also showed that for the third consecutive year, Cape Town had the lowest overall vacancy rate of 7.3% of the country’s five largest metros. According to the SAPOA Office Vacancy Report (Q4 2019), the city’s vacancy rate compared favourably to that of Johannesburg (12.5 %) and was well below the national office vacancy rate of 11 %.

Ms Gordon said a new urbanism trend gained traction in South Africa in 2019 in spite of a sluggish housing market, increasing demand for downtown living in the city. This had prompted the re-imagining of precincts by developers into spaces where homeowners could live, work and play with easy access to work.

With affordability being an issue for many young professionals, developers were responding with a growing number of studio apartments and co-living units within mixed-use developments.

Also, with three new hotels opening in the city in 2019, several mixed-use developments and hotels either being constructed or in the pipeline, the CBD’s multi-layered visitor economy continued to expand in spite of a tight economy.

Ms Gordon said the East City was also growing, with Harrington Street attracting developments, the newest being The Harri.

The City of Cape Town representatives, Sub-council 16 chairperson Matthew Kempthorne and director of trade and investment Lance Greyling also announced the CBD business recovery plan, which would inject new life into the city, and would include an opportunity for businesses to work on pavements and in parking spaces.

Mr Kane said for a city to survive, people needed to come back to work, eat and play.

“Come back to town. The CBD is ready for you. We need you”.