Cape Town’s CBD bounces back with billions worth of investment
The Cape Town CBD’s post-Covid economy is on the rebound with property investment in the inner city exceeding R3.5 billion last year.
The retail, hospitality, and eventing sectors are also in stages of regeneration, a Cape Town Central City Improvement District (CCID) report, released on Wednesday, reveals.
A total of 22 property developments or redevelopments were recorded last year, four of which were completed and are worth more than R170m.
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Twelve were under construction – with a value of more than R3.085bn, five were in the planning phase, and worth in excess of R300 million, and one project was proposed, the State of Cape Town Central City Report 2022 – A Year in Review states.
Of the 22 projects, eight were residential buildings that are set to add thousands of new units to the Cape Town CBD’s highly competitive property market. Six were commercial, four were mixed-use, two were retail buildings and one was a parastatal.
After a gruelling couple of years under the spectre of Covid-19, Western Cape Premier Alan Winde says the Cape Town and Western Cape economies have clawed their way back, largely thanks to their citizens and the private sector.
“Their grit, tenacity, resourcefulness, and resilience shone through this difficult time, ensuring our province and the Mother City endured.”
However, an even bigger challenge faces this resilience – the energy crisis, which, he says, has emerged as the “most significant threat to our recovery and potential”.
“But as the Western Cape Government, we cannot simply look elsewhere to others for solutions while the situation worsens, leaving livelihoods and development in the dark, dragging down all we have achieved since the pandemic. We have stepped up and stepped in to intervene, ploughing vast resources into mitigating the impact of ceaseless power cuts to keep crucial services running.”
CCID board chairperson Rob Kane says it is clear from the results of the report that the Cape Town CBD has put Covid firmly behind it, and is experiencing regrowth and stability.
“With the construction sector regaining its pre-Covid momentum, and the total value of property investment in the Cape Town Central City to be conservatively estimated at R3.55bn, it bodes well for further growth and investment in the economic hub of the Mother City.”
The most significant indicator of investor confidence in the Cape Town central city is the sustained growth in the overall official value of all property in the CBD of more than R12.2bn in 2016/17 to R42.9bn in 2022, according to the City of Cape Town’s property evaluation.
Sectors that have experienced a resurgence in Cape Town
In addition to the construction sector showing an “impressive” post-Covid recovery, Kane says other key economies that drive business and investment into the Cape Town CBD, namely the hospitality, retail, and event sectors, were also all on the rebound by the end of 2022.
At least 10 of the 17 sectors that operate in the Cape Town CBD experienced growth in 2022, with the number of business entities overall increasing by 135, from 2,981 in 2021 to 3,116 last year.
The top five sectors that recorded a positive output were:
- retail
- legal services
- medical practices
- general corporates and head offices
- architecture, engineering, and surveying
The key economic sector, namely retail – which makes up 1,243 of the 3,116 entities doing business in the Cape Town CBD – increased its footprint in 2022 with more than 80 new retail outlets opening their doors, the report reveals. This sector has recovered steadily since the onset of the pandemic, and in 2022, the total number of retailers had returned to pre-Covid levels, with six more retail entities operating than in 2019, before Covid hit.
Despite power cuts and other economic challenges, Kane says retail confidence in the Cape Town CBD, as measured in the CCID’s quarterly Business Confidence Index, also rose steadily in 2022, with 83.3 percent of retailers surveyed indicating they were “satisfied” with current business conditions at the end of the year.
He adds: “In 2022, there was a steady improvement in the total retail vacancy rate as footfall returned to town and new retailers opened their doors.”
The central city in numbers
The 3,116 entities doing business in the Cape Town Central City operate in the following categories and sub-categories:
Why live in Cape Town?
Home to a cosmopolitan community, the Cape Town Central City – known to Capetonians simply as “town” – has thousands of residents. Every year, in a dipstick survey, the CCID gauges their living habits, likes and dislikes and investment preferences.
Despite the big work-from-home disruption brought on by the pandemic in 2020, the main reason people live in the Central City remains proximity to the workplace. Other reasons offered by survey respondents in 2013 remain in the top six cited by respondents in 2022 – entertainment options and access to other neighbourhoods – but have been bumped down the list by the appeal of the “downtown lifestyle” and the fact that the CBD is perceived as a “safe” environment.
These are the results of the first survey in 2012 compared to those of the 2022 survey:
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