Cape Town CBD Survives Tough Economy with Strong Growth and Investment
From greylisting to a weak economy and the ongoing chaos caused by the Eskom crisis, good economic news in South Africa is hard to come by nowadays – unless you’re in Cape Town.
Despite the huge challenges still facing South Africa’s economy as a whole, the Cape Town region, and the CBD in particular, have managed to not only survive the storm but also report excellent growth. This is especially true where property developments are concerned.
In this article, we share our insights about the local commercial space market along with recent data that supports the optimism that property agents, developers and landlords in the Mother City are currently showing.
Here’s how the city has managed to prosper in the face of adversity and lay an excellent economic foundation for the future.
Cape Town continues to buck national trends for the better
In recent years, it seems like every negative statement about South Africa could be ended with the words “except in Cape Town “. While there’s no doubt that there’s always room to improve, it’s also true that the Mother City has made huge strides in a variety of areas that set the metro apart from its competitors, attracting investors and residents from all corners of the world.
The Western Cape currently boasts the following economic and social achievements which are best in class for any South African province:
- An unemployment rate of 20.9% which is significantly lower than Gauteng’s 34% and 31% in KZN.
- Clean audits from the Auditor General, providing objective evidence that the province is well governed and financially sound.
- A stable and resilient economy with growth of 1.9% percent in 2023.
- A wave of new commercial property developments that have transformed the city’s skyline and given rise to a new league of premier commercial properties for a new class of Cape entrepreneurs and business owners.
All eyes on the CBD as new developments continue to soar
Cape Town’s city centre was always a clean and convenient place to work, but the downtown area has never looked as modern or highly developed as it does today.
Last year alone, 28 new commercial property developments were added to the city’s stock of impressive real estate. Of these, 13 buildings are currently valued in excess of 2.5 billion.
Once the developments are complete, they will add much needed office and hotel space to the Cape Town CBD, which attracts business visitors from around the world, as well as entrepreneurs and semigrants from Gauteng and other provinces.
Some of the new hotel developments expected to open soon include The Rockefeller, The Capital 15 on Orange, and the Old Bank.
Renewed business confidence underpins the CBD’s unstoppable rise
Seeing the ubiquitous cranes and construction crews in the CBD area is a huge source of stimulation for property investors, but every financial analyst will tell you there needs to be powerful data to support the long-term growth prospects in any market.
- Recent studies that include the city of Cape Town’s Business Confidence Index and the CCID’s annual survey, all point to a highly satisfied and optimistic community of business people in the downtown district and bode extremely well for the financial future of buildings in the area.
- Retail business confidence in the CBD is at its highest point since the pandemic , with 87.5 percent of commercial businesses in the downtown area saying that they felt confident and satisfied with business conditions in the third quarter of 2023.
This figure, which reached a high of 90% in the second quarter, seems to be fluctuating around an extremely high level and indicates newfound confidence in the city’s economic performance as it recovers from the COVID-19 lockdown and the work from home trend continues to recede.
The retail sector, which is the most visible aspect of commercial activity in the CBD at street level, continues to report healthy occupancy rates. At present, 1 163 out of 2 981 commercial entities in the CBD are retail establishments.
Finally, from a return on investment point of view, property owners have reason to celebrate as valuations in the downtown area continue to soar.
CBD buildings were valued at R43.8 billion for the period ended 2019 against just R12.2 billion in 2016/17.
If this trend continues – and all indications are that it will – a virtuous cycle of excellent returns, fuelled by low vacancy rates, could set up the perfect conditions for a prosperous and modern CBD for decades to come.
Cape Town competes with the world’s best
Recent media reports reveal that large corporations from around the world are choosing the Mother City as their southern African headquarters, with others opting to relocate to Cape Town even if they don’t have a large business footprint in South Africa.
Panasonic led the charge pre-pandemic with its innovation centre in Century City and other multinationals have followed suit. Recently, Amazon, Johnson and Johnson, Thompson Reuters, and KPMG have all invested in major premises, giving a powerful vote of confidence to Cape Town and its future as an economic hub.
Remote working, coupled with the city’s reputation for being a tech forward and creative destination with a local population that is highly educated are creating the perfect opportunity for Cape Town to prosper both today and in the future.
The best time to be in Cape Town is always right now
The best way is with Commercial Space
As the Mother City’s success story continues, entrepreneurs are scrambling to be part of a sustainable and modern African future in the Western Cape.
If you’re in the market for a Cape Town commercial office, now is the time to snap one up before the supply of office premises becomes even tighter. To view our portfolio of premier office space in the Cape peninsula, contact our team of area specialists today.
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Meta Description: The CBD is reaping the fruits of steady improvement and development with 28 new developments nearing completion. Here’s why the city’s future looks so bright.
