Report shows rebound in central city

The 11th edition of the State of Cape Town Central City Report was presented recently.

The Cape Town CBD has shown strong recovery with property investment in the inner city in 2022 exceeding R3.555 billion and the retail, hospitality and eventing sectors all being in a phase of regeneration.

These were the key findings of the State of Cape Town Central City Report 2022 – A Year in Review (SCCR), published annually by the Cape Town Central City Improvement District (CCID).

The report reflects the economic climate in the city centre during the previous year and was presented to business and property stakeholders at a function at the Cape Town International Convention Centre recently.

Residential property put in a strong show with an line-up of cutting-edge developments, while rentals also performed well post-Covid.

Of the 22 property developments that came on stream in 2022, with a net worth of R3.555 billion, eight were residential builds conservatively estimated to be worth R1.65 billion.

The CCID chairperson, Rob Kane, said 2022 was a year of stabilisation and rebuilding.

He said the city centre had seen people return to work, and had also seen good growth in the hospitality, retail and event sectors.

He said the new developments, which were either completed last year, under construction, planned or proposed – added to the ongoing vibrancy and economic stability of the Cape Town CBD, which continued to open its doors to an increasing number of national and international visitors, including digital nomads, solo travellers, and so-called “semigrants” from other provinces.

Research economist Sandra Gordon presented the 11th edition of the report, which showed that the 22 new developments are set to add thousands of new residential units to the central city.

In 2022, the number of residential units in town was 6 827, up from 5 791 recorded at the end of 2021 and 4 954 at the end of 2020.

One residential building was completed last year – Neighbourgood Reserve, a R75 million residential development, while four others, with a combined value of R1.480 billion, were under construction. They include Fleetway House – now called Vida d’Chette, a R60 million development which offers flexible and shared letting on the Foreshore; and the R150 million Tokyo and R70 million The Carrington on Loop Street.

However, the stand-out residential build is the R1.2 billion development going up in Upper Bree Street called The Fynbos. Set to become Africa’s first biophilic building, The Fynbos incorporates nature in its design by offering occupants of each unit a “garden experience”. Thirty species of trees and 20 species of shrubs will be incorporated in the façade of the building.

Three mixed-use developments were under construction:

  • The former Standard Bank on Thibault Square will become One Thibault, a R500 000 million office-block conversion with the residential component offering both aparthotel and Airbnb-type accommodation;
  • The Barracks, the R150 million Bree Street development that will see 70 micro-units floating on top of an 18th century former warehouse and military barracks; and
  • The Rubik, a mixed-use build valued at R600 million which will have premium residential units above 5 000 square metres of P-grade office space in a sleek skyscraper destined to change the city’s skyline.

The most significant indicator of investor confidence in the Cape Town CBD 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 R42.9 billion in 2022, according to the City of Cape Town’s property evaluation.

At least 10 of the 17 sectors that operate in the Cape Town CBD experienced growth in 2022 with the number of business entities overall increasing by 135, from 2 981 in 2021 to 3 116 in 2022.

The top five sectors that recorded a positive output were the retail; legal services; medical practices; general corporates and head offices; and architecture, engineering, and surveying sectors.

More than 80 new retail outlets opened their doors in 2022, bringing the total number of retailers back to pre-Covid levels, with six more retail entities operating than in 2019, before Covid hit.

Keynote speaker Tim Harris, chairperson of the interim SA Tourism Board, said the city centre was always at the core of what the city was trying to achieve. “We are strong if our CBD is strong.”

He said property owners need to be more concerned with the usage of the space and the roads around it, so that everyone works together to shape the city CBD.

Other key findings in the SCCR:

  • In its assessment of the commercial sector, the report noted that the CBD still has the largest share (+39.5 %) of the total office space in the city, as measured by the SA Property Owners’ Association (SAPOA).
  • In recent years, the CBD had the city’s most competitively priced premium-grade office space but by the end of 2022, it had lost this position to Century City. The CBD still has the second largest percentage of P-grade office space – 29.8 % in total compared to 35.1 % in Century City.
  • The office vacancy rate in the Cape Town CBD at the end of 2022 was 13.3 %, an improvement from the 16.1 % recorded in 2021.