Cape Town’s World Class Infrastructure Means Excellent Commercial Space Rentals
Decades ago, anyone who predicted that Cape Town would become South Africa’s leading commercial destination would be sure to receive a few raised eyebrows – especially from the business community in Gauteng.
But over the past few years, along with several other unthinkable scenarios that have unfolded in South Africa, the Mother City has emerged as a sought-after destination for business owners from other provinces as well as foreign countries.
Going beyond luxury homes and tourism to attract serious commercial investors, Cape Town is proving that it’s always impossible until it’s done.
Infrastructure draws business investment to CT’s island of stability
Fifteen years of load shedding, the state capture era, and an unpredictable pandemic that exposed the vulnerabilities of every province and city have turned the tables on Cape Town’s former reputation as a great holiday and retirement destination with a slow business sector.
The city’s superior service delivery is drawing major business investment at a time when other metros are struggling to revive their economies.
Reliable municipal services, including clean water and electricity and functioning transportation infrastructure, are essential for a growing economy that attracts businesses and investors.
While other parts of the country seem to be failing to deliver even the most basic services, Cape Town is the exception – and the service delivery gap between the Mother City and other metros is only increasing.
The Western Cape has built a reputation for excellent service delivery over the past few years, with half of the municipalities that received a clean audit from the Auditor General last year located in the province.
Critically, the frequency of load shedding in Cape Town is significantly lower than in other major cities in South Africa, and this is set to decrease further as the city’s independent energy plans kick in during this decade.
If service delivery is a driver of relocation, then for business owners in search of commercial property, Cape Town is truly a semigration magnet.
The city offers many of the benefits of relocating to a first world destination without the immense cost involved when leaving South Africa with the Rand at all-time lows. Chief among these is the business confidence that comes with operating in a stable environment.
Stability lays the foundation for long-term success – and rentals provide proof
The continued interest in Cape Town from investors and entrepreneurs is excellent news for the commercial property sector.
As we reported in our previous post about the province’s above average economic growth, many of the factors desirable to business owners are already present and working well in Cape Town.
Office vacancy trends are already showing superior performance to those of other provinces and this trend is said to accelerate as the number of business owners moving to Cape Town increases.
Rode’s State of the SA Property Market Report for the fourth quarter of 2022 shows the Mother City leading others by a wide margin.
- Cape Town grade-A nominal rentals rose by 16% in Q4 2022 compared to Q4 2021.
- By contrast, grade-A decentralized office space ticked up by just 4.8% in Johannesburg and 2% in Durban. Pretoria recorded a 5.3% drop in rentals.
- Of all metros, only Cape Town delivered inflation beating rental returns for the year ended Q4 2022.
Overall, increased interest in the western cape will mean a wave of new businesses opening, creating jobs and adding to the province’s already impressive GDP.
From a commercial property point of view, we can expect an increase in occupancy rates and a rising tide of commercial space valuations, giving developers extra incentives to undertake new projects.
As the CBD and surrounding areas are fast approaching saturation, developers have turned to the west coast, and Saldanha Bay with fresh industrial, light industrial, and commercial office parks springing up by the year.
In time, we may see a large metropolitan economy in Cape Town with a net inflow of skilled workers and flourishing, high-tech future-looking industries that will set the province further apart from its peers.
Ready to invest in SA’s most promising city? We’re ready to help
As a business owner, you’ve probably heard a lot of good news about Cape Town in recent years. If you’re keen to relocate your business and family to the Western Cape, the Commercial Space team is here to support you.
Our agents have years of experience in sourcing industrial and commercial properties in the Cape Peninsula to suit the exact needs of your business. Contact us today to get started.
