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Cape Town CBD emerging as South Africa strongest residential growth node

Posted On Friday, 04 April 2014 13:58 Published by
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Cape Town’s inner city is emerging as one of SA’s strongest residential growth nodes‚ with the combined rand value of all CBD property sales increasing by a whopping 72% last year.

 Rob Kane

The total value of apartment sales in the CBD increased from R145m in 2012 to R249m last year‚ according to the CCID's second annual state of the Cape Town central city report.

That is way ahead of the average 20% recovery in sales volumes and values recorded across South Africa's housing market for the year to January (First National Bank figures).

The CCID report showed that the number of apartments that changed hands in Cape Town's inner city increased from 132 in 2012 to 163 last year. Buyers forked out R1.428m on average last year‚ which translated into an average cost of R17‚500/m².

The highest price fetched for a CBD residential property last year was R4.925m ( R23‚452/m²).

The report‚ which provides a comprehensive outline of the economic performance and property investment trends of the Cape Town CBD‚ noted that the number of permanent residents in the inner city swelled from an estimated 1‚500 in 2010 to 5‚286 last year.

There has been a particularly strong increase in first-time buying since the beginning of last year‚ mostly young professionals in their 20s and 30s who work in the city.

CCID chairman Rob Kane said on Thursday the strong surge in residential property sales underscored the extent to which the CBD had succeeded in positioning itself as a true 24/7 live‚ work and play hub.

The strong investment flow into residential bricks and mortar has been supported by the upswing of what he referred to as the CBD's night-time economy. Historically‚ much of the market belonged to the young and trendy‚ serviced by the bars and clubs across just a handful of city blocks along the CBD's historic Long Street.

While this area remains as popular as always‚ he said there had been a significant shift towards other precincts following increased investment in mixed-use commercial and retail developments.

Commercial and retail development worth R5bn is either under way or in the pipeline‚ including key projects such as Old Mutual Properties and First Rand's R1.6bn Portside office development on the Foreshore‚ the R690m expansion of the Cape Town International Convention Centre‚ and Netcare's new Christiaan Barnard Memorial Hospital in DF Malan Street.

"Increased investment into the city has invigorated previously low-key parts of towns‚ which has prompted the rise of new entertainment venues and the advent of public events such as food markets and open-air music concerts‚ which is bringing increasing numbers of Capetonians to town.''

Mr Kane said the CBD's value proposition is another major draw card for residential property buyers. "At nearby Mouille Point and the V&A Waterfront‚ apartments will set buyers back around R50‚000/m²‚ more than double what one will pay in the central city.''

He said the rise of inner city living had already created a shortage of stock‚ which would no doubt see the return of residential developers who exited the city when the global credit crisis hit property markets in 2008.

Though the CBD caters mostly to middle-and upper-middle-income residents‚ Mr Kane said there was great potential to add more affordable housing stock to the market through the conversion of old C-grade offices and underutilised municipal land and buildings.

"The Good Hope Centre on the fringes of the central city is an ideal example of a property that could be flattened and redeveloped into affordable housing opportunities.''

Mr Kane believed the inner city was poised for a residential development wave that could see the CBD's 3‚500 sectional title apartments double within three years.

Last modified on Monday, 07 April 2014 11:54
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