Cape Town CBD property development hits R7.285bn in 2023

Source: Supplied.

Other key economic sectors that drive the Cape Town inner-city economy – business tourism, hospitality, eventing and retail – also showed a strong rebound.

These are the main findings of the latest edition of the prestigious State of Cape Town Central City Report 2023 – A Year in Review (SCCR), published annually by the Cape Town Central City Improvement District (CCID). The findings of the 12th edition – released to Cape Town business and property leaders in Cape Town on Wednesday, 14 August, 2024 – reflect on the state of downtown Cape Town’s economy during the previous year.

A total of 30 property developments or redevelopments were recorded last year: nine were completed (worth more than R1,347bn); eight were under construction (worth more than R2,228bn); 10 were in the planning phase (worth more than R2,610bn) and three were proposed (worth more than R1,100bn).

Twelve property developments (40%) were residential builds, followed by mixed-use builds (which are a mix of commercial and residential), indicating that the strong demand for inner-city accommodation is ongoing. The residential developments are set to add thousands of new units to the Cape Town CBD’s residential property market.

CBD economy on the rebound

Research in the 80-page SCCR 2023 – which is indispensable to investors, developers and business owners seeking to invest in South Africa’s most economically successful city centre – shows that 2023 was the year the Cape Town CBD “decisively” turned the post-Covid corner, says CCID board chairperson, Rob Kane.

Says Kane: “It’s evident from the report that the Cape Town CBD, unlike its other South African counterparts and many around the world, has rebounded markedly post-pandemic, with the regrowth and stability it showed in 2022 continuing well into 2023.

“This bodes well for the future of Cape Town and its CBD,” says Kane. “The most significant indicator of investor confidence is the sustained growth in the overall official value of all property in the inner city which has increased from R6bn in 2006 to R42,8bn in 2023, according to the City of Cape Town’s property evaluation.”

Kane says apart from the construction sector’s impressive growth, other key economies that drive business and investment into the Cape Town CBD that also showed a strong performance were business tourism, hospitality, eventing and retail.

At least 10 of the 17 business sectors that operate in the Cape Town CBD experienced growth in 2023 with the number of business entities overall increasing by 186, from 3,116 in 2022 to 3,302 in 2023.

Of these, the top five that recorded a positive output were retail; general corporates and head offices; ICT, telecoms and call centres; finance, investment, insurance and banking and artistic studios.

Retail proves resilient

One of the key business sectors, namely retail – which makes up 1,305 of the 3,302 entities doing business in the Cape Town CBD – once again increased its footprint in 2023, with more than 62 new retail outlets opening their doors.

Despite ongoing economic challenges and rolling power cuts, retail confidence in the Cape Town CBD, as measured in the CCID’s quarterly Business Confidence Index, also rose steadily in 2023. By the end of the year, an impressive 93.0 % of retailers surveyed indicated they were “satisfied” with current business conditions.

According to the State of Cape Town Report 2023, the total volume (m²) of retail space available in the Cape Town CBD in 2023 amounted to 262,815m², marginally lower than the 271,209m² recorded at the end of 2022.

Meanwhile, the total retail space occupied across the CCID’s footprint in the CBD in 2023 amounted to 247,023m², a marginal decline of just over 11,000m² from the 258,024m² recorded in 2022.

The total vacancy rate of retail space in the Cape Town CBD – 15,792m² – amounted to just under 6.0 % of the total retail space available. In 2022, the total vacancy rate was 4.9%.

“The higher vacancy rate is caused, in part, by a decline in the total retail space available due to the redevelopment of retail space in Strand St, namely the R200m retail development, The Mutual,” Kane notes.

Other key findings in the SCCR include:

• In its assessment of the commercial sector, the report notes that there was fresh demand for office space in Cape Town CBD in 2023, leading to a decline in the office vacancy rate;
• The office vacancy rate in the Cape Town CBD at the end of 2023 was 10.2%, which is an improvement from the 13.3% recorded in 2022 and the 16.1% recorded in 2021;
• The CBD still has the largest share (+39.4 %) of the total office space in the city of Cape Town, as measured by the SA Property Owners’ Association (Sapoa).

Unique features of the report include:

• A property investment map detailing the 30 locations of completed developments, current construction sites as well as those of planned and proposed projects;
• An overview of the most resilient economic sectors in 2023;
• A report on the visitor economy and hotel occupancy rates in 2023, as well as an overview of the eventing economy and parking in the inner city;
• Top 10 factors affecting downtowns throughout the world;
• A section on how the four precincts that make up the CCID’s 1.6km² geographic footprint fared in 2023 with respect to business, property, economic and living trends; and
• A deep dive into the results of the CCID’s annual online dipstick Residential Survey which surveys why people live in the CBD.