Semigration Unpacked: The Numbers Behind Cape Town’s Magnetic Popularity

Semigration has been a media buzzword for several years, and with the sheer number of people moving to the Western Cape from other provinces, it doesn’t show any signs of slowing down. As Cape Town sees its population swell with business owners and high net worth individuals, semigration has gone from a curiosity to a powerful demographic trend.

As far as the commercial property sector is concerned, more Cape Town residents with money to spend can only be a good thing for the local economy and the future of Cape Town office space rentals and sales.

While most Capetonians are vaguely aware that the city is growing, understanding the exact numbers behind the wave of movement to the province is essential before we can make any predictions about its impact on the real estate market.

In this article we take a deep dive into one of the most significant movements of wealth within South Africa’s borders over the past few decades. Read on to find out exactly how many people are moving to Cape Town and surrounds, who they are, and what their presence could mean for the province’s economic future.

Semigration by the numbers

It’s no secret that the Western Cape has gained a reputation for being the place to live in South Africa. More recently, it’s also considered to be one of the best places to do business. While these social trends are encouraging, it’s important to put numbers behind them so that we can answer, these key questions:

1. Exactly how many people are migrating to Cape Town from other parts of South Africa and why?
2. What are the key demographic features – including age – of the new migrants to the Western Cape and to Cape Town in particular?
3. Are they moving to Cape Town seeking jobs or as investors?

Typically, this type of demographic information can be obtained from the national census. However, since semigration is such a modern trend, it’s unlikely that even the most recent census would pick up the presence of the Mother City’s affluent new residents.

Fortunately, we have the most recent data at our disposal as we look deeper into the phenomenon of semigration.

Where does semigration originate and why are people moving?

The first question many Capetonians have about the exciting wave of new residents who now call the city home is: where are they from? To provide an answer in sufficient detail, we went looking for the latest data.

Lightstone’s property market research is one of the most trusted information sources in the real estate industry. The organisation’s recent property transfer data provides some interesting insights into the pattern of migration to the Western Cape from other provinces:

9 out of 10 of the country’s top suburbs are now in the Western Cape

3 317 people moved to the province in 2022, 1 639 moved to Gauteng and 822 to KZN

The majority of semigrants are 49 to 64 years old, with the second biggest group being 36-49.

Both these cohorts overwhelmingly chose the Western Cape as their new home last year.

46% of semigrants are willing to downsize but still increase their investment when buying property in the Western Cape.

With detailed information about the precise number and type of potential property buyers moving to Cape Town, it’s possible to start making some educated guesses about their impact on the commercial property

A city for seasoned professionals

One of the most striking features of the statistics above is the age bracket of semigrants. Most of them appear to be professionals in the mid to late stages of their careers with an above- average level of wealth.

They are also likely to be well-connected and experienced after several decades of continuous activity in their field of expertise.

Statistics relating to the residential property buying habits of semigrants can provide insights for those of us in the commercial property market.

Assuming that some of these new residents are retired or semi-retired, they may be looking to  leverage their experience by starting anew or relocating a business to the Western Cape, and may also be willing to buy commercial premises once their enterprise gets off the ground.

For property developers in the CBD an influx of mature business owners with an intention to invest in the long term couldn’t come at a better time.

The changing property landscape in downtown Cape Town:  ideal for SMEs

Cape Town’s central business district has undergone a total transformation over the past few decades, and in the wake of the pandemic and work from home policies, the district has been evolving once again.

As companies implemented flexible working policies, some businesses moved to downsize their office space while other buildings shifted from a commercial-only to a mixed-use model incorporating residential and retail spaces.

This trend may have been worrying to some in the commercial property market at first, but as the pandemic has eased and people return to the office, the redevelopment of commercial buildings means that there is less premium office space available

With both occupancy rates and valuations rising, a new surge of interest in Cpae Town commercial properties is moving the market upward

An interesting new trend in the Cape Town commercial property market which favors investments by semigrants is micro-office space.

Small office units, typically under 200 m² in size, have recently been developed with the needs of small to medium size businesses in mind. This mirrors the trend in the CBD towards micro apartments, reflecting a need for affordability in a market that has seen record high valuations in recent years.

• Micro offices are certainly available to rent, but developers envisage business owners as their final buyers.
• Instead of renting an office space for decades with not much to show for it other than tax savings in the form of deductible, monthly expenses, a small business owner can invest in a micro-office space and expect a healthy capital appreciation over the years.

The recently redeveloped Wale Street Chambers are a prime example of micro-office spaces that appeal to locals and semigrants alike. Several other buildings are following suit, with the supply of small, stylish offices set to increase in the years to come.

For people moving to the Western Cape in the mid to late years of their  careers, a micro-office space may be an ideal investment, offering them premium office space with a modern design close to all the CBD’s main amenities, while also giving owners the ability to cash out in a decade or two when they decide to retire.

Municipal rate cuts: the cherry on top for Cape Town’s relocation appeal

Property owners in South Africa’s big cities have been seeing the effects of rising municipal rates for years – and in  many parts of the country, residents are hard-pressed to see what their money is paying for.

Service delivery failures, dangerous roads filled with potholes, and ongoing electricity supply problems are causing many semigrants to choose the Western Cape due to the province’s superior service delivery track record.

This year, Cape Town is not only one of the best run municipalities in the country but is also the only major metro to announce a reduction in municipal rates.

• The Mother City will lower rates by 1.1% while other metros including Johannesburg and Tshwane have announced increases of 2% and 5% respectively. eThekwini tops the list with a whopping 8.9% rates hike announced for 2023.
• Cape Town’s ability to balance its municipal budget has put the city in a favorable financial position and allowed it to implement rate cuts, bucking the national trend.

This relief from high municipal rates is in sharp contrast to other cities in the country where both the state of infrastructure and government finances are looking increasingly fragile.

Cape Town’s stability and fiscal sustainability are getting a vote of confidence from property investors and the wave of relocations looks set to continue into 2023 and beyond.

Join the semigration movement with a premium commercial property investment

If you’re a semigrant looking to trade the daily headaches of crime, grime, and poor services for a superior quality of life, our team would love to help you relocate your business to the Mother City.

The Commercial Space team has been matching businesses of all sizes with the ideal premises to suit their needs across the Cape Peninsula. Contact us today to begin the next stage of your business journey in magnificent Cape Town.