Observing growth, urban renewal
THE WESTERN Cape property market maintains its higherthan-average rate of property price inflation despite a gloomy outlook for most of the rest of the country.
“The numbers show that the Western Cape’s construction sector is outperforming national figures. In this region, the rolling average during 2014 found that the number of square metres approved for residential building plans increased by 22.5 percent, compared to the national figure of 9.2 percent. Over the same period, the number of square metres approved for non-residential building plans increased by 15.5 percent, compared to the national slowdown of 1.7 percent,” says Alan Winde, Western Cape Minister for Economic Opportunities.
“Cape Town has certainly become a place to work, play and stay, and the city continues to support this by creating an enabling environment,” says Councillor Gareth Bloor of the City of Cape Town.
“The growth in property prices and in new building projects in the Western Cape peaks in the southern suburbs, the Atlantic seaboard and in certain of the fast- growing CBD fringe areas in the metropole,” says Carl Nortje, managing director of Rawson Property Developers.
“Overall, the Western Cape has been the country’s shining property star with a 12 percent year-on-year rise to the first quarter 2016 as determined by IHS Global Insight, one of the world’s largest databases of global economic, financial and industry data.”
According to Lightstone Property, in April 2016 the annual national house price inflation was 5.23 percent. However, just over 10.7 percent was recorded on average across all pricing bands in the Cape Town Metropole.
Rawson and other developers have pursued the compact and convenient housing opportunity, especially in the Observatory precinct, which has been at the centre of urban renewal initiatives by the Observatory Improvement District, the Observatory Civic Association, and certain commercial developers.
“We acquired a couple of rundown warehouses directly across the road from Groote Schuur Hospital and the UCT Medical Campus with the intention of providing attractive, secure and easily accessible apartment living for young professionals and students,” says Nortje.
“Ninety percent of our first project, the Paragon, is already sold. Our construction teams are on the ground and we are aiming for completion and first occupancy by May 2017. Significant numbers of investors from Cape Town and Gauteng have spotted the value in the Observatory Main Road area – up to 50 percent of our buyers so far.”
“The urban development zone (UDZ) status of the suburb allows attractive income tax savings to investors over a fixed number of years. Supporting this attractive tax opportunity, the rental market is looking strong. This is one positive spinoff of the increasing costs of property ownership, caused by rising interest rates,” says Nortje.
He says Rawson’s latest Main Road Observatory development, Madison Place, will shortly break ground. Located along Trill Road, it is expected to appeal to owners and tenants.
Artist’s impression of Madison Place, Rawson Property Developers’ latest Observatory development.