3 Cape Town Commercial Property Trends in 2021 and Beyond

Hospitals and warehouses are becoming hot property around the world as the pandemic progresses – and that could be great news for Cape Town’s light industrial sector. Commercial property investors looking for signs of hope in the current market may want to focus on three specific areas showing excellent medium to long-term growth prospects.

Infrastructure and supply chain facilities, healthcare-related premises and (in the long term) tourism facilities are experiencing an uptick in interest from tenants and buyers alike.

In this article we take an in-depth look at these three commercial property trends as we seek to pinpoint the future drivers of growth In the Cape Town market in 2021 and beyond.

1. New infrastructure and supply chains

We’re all familiar with the powerful trend in favour of working from home that has accelerated since the beginning of the COVID-19 pandemic. This new style of working is having a strong effect on commercial property sales and leases.

While the end of Covid is (somewhere) in sight, the road to that destination will be far from smooth – and the safest way to return to work will probably be a hybrid office model that would allow employees to work from home if necessary.
This model, which is known as WFA or “work from anywhere”, may be the best compromise between safety and productivity.
To achieve this type of rapid and substantial change to the way we work, companies are investing rapidly in infrastructure to facilitate remote working.

Data centres are a prime example of this type of business activity, and the premises needed to house them are currently in high demand across the Cape peninsula.

These centres need to be located in a safe and resilient commercial property that is easily accessible by IT staff and maintenance crews. This is especially crucial because many cloud-based service providers promise their customers minimal downtime, and any technical errors that occur need to be dealt with immediately.

Cape Town industrial properties that have been vacant in recent years are experiencing a second life as data centres, making this category of commercial property especially lucrative in the short to medium term.

Another trend that many have enjoyed participating in since the first lockdown in 2020 is online shopping. This type of retail activity was popular even before COVID-19, and the large volume of online purchases taking place during the pandemic has caused retailers to rethink their supply chains.

When the pandemic finally ends it’s likely that many customers will continue to use convenient online shopping websites and apps. Both the convenience of home delivery and the psychological reassurance that comes with avoiding crowded shops make this an ongoing growth area.

Deliveries and warehousing have become essential in the order fulfilment process, giving businesses ample reason to invest in light industrial property across Cape Town which has a reputation for safety and stability.

The recent riots that affected KZN and Gauteng recently shone an unfortunate spotlight on the safety of warehousing facilities in some of South Africa’s most economically important provinces.
The Western Cape didn’t experience the same level of violence, and as companies reassess the location and security of their warehouses and logistics facilities, the Western Cape Province is likely to become a destination of choice for manufacturers and retailers alike.
Modern warehousing facilities are in the best position to meet the demands of retailers, particularly because they tend to have lower monthly operating costs. The expenses associated with maintaining a warehouse over the years can often amount to far more than the initial capital expenditure involved in the purchase.
Older facilities will need to be upgraded to match or at least approach the efficiency of their newer counterparts. This is especially true of solar power systems and water recycling facilities that reduce the usage of two resources that are rapidly becoming more expensive with each passing year.

2. Healthcare facilities

Countries around the world have faced a gruelling test during the pandemic, with healthcare systems in developed and developing countries alike straining under the pressure of a once in a lifetime global medical emergency.

South Africa is no exception in this regard. In the wake of COVID-19 there’s a powerful trend toward high tech facilities that can be set up relatively quickly and serve as many people as possible in a professional and hygienic manner.

Cities like Cape Town are expanding at an unprecedented rate, and the demand for medical premises on the outskirts of town is likely to increase substantially. The need to reverse apartheid-era town planning and provide quality healthcare to all citizens will provide an extra driver for growth in this sector.
Hospitals and clinics may be the first facilities that come to mind when we think about healthcare but there’s a huge support industry associated with the sector – and it represents prime tenants for light industrial facilities in Cape Town.
These include medical manufacturing facilities, medical warehouses, testing depots and logistics facilities used by ambulance providers.

COVID-19 has also brought home the realisation that vaccine availability is not equal across the world.

South Africa’s difficulties in securing sufficient vaccines in the early stages of the pandemic have prompted a new interest in local manufacturing facilities for pharmaceuticals.

We should all welcome this measure which will prepare our country to respond swiftly and effectively to future pandemics. The property sector should be doubly pleased because the facilities needed to manufacture vaccines and other medicines will need to be housed in commercial properties with easy access to transportation links. This presents another unique opportunity for industrial property investors in the Mother City.

3. Tourism

It may seem premature to be discussing the tourism industry at a time when international borders open and close unpredictably and large parts of the world’s population are still unvaccinated.

However, the tourism industry (which is known for its long-term investment planning) is capitalising on the current slow market for accommodation and entertainment facilities.

Every pandemic in history has ended eventually, and when COVID-19 is no longer a threat to travel safety there will be a strong impulse amongst consumers to do all the traveling they missed out on during the lockdown and stay-at-home months and years.
This phenomenon was clearly seen in the behaviour of UK tourists who seized the opportunity to book holidays in Greece, Spain and other southern European countries as soon as their country achieved a high vaccination rate and travel restrictions ended.

Hotel facilities, socially distanced accommodation like guest farms and wildlife retreats, and even restaurant facilities that are currently struggling to attract new tenants are all excellent long term investments – and they may be obtainable at extremely favourable prices.

Savvy commercial property investors with access to capital can find excellent deals in the current market, especially with the expertise of an experienced Commercial Space agent in their corner.

Invest in Key Commercial Property Trends

We’re invested in the future of Cape Town commercial property – you could be too!

The pandemic has put Cape Town to the test – and the city has proven to be resilient and optimistic throughout. As we look beyond the current challenges to a post-COVID future, our belief in the Mother City’s commercial industrial sector couldn’t be stronger.

To learn more about the commercial property investment opportunities available in Cape Town, contact the Commercial Space team today.