City developments in demand

MIXED-USE developments, microunits and aparthotels continue to mushroom in the Cape Town city centre as demand increases for these types of residential property offerings.

The desire for flexible and livework-and-play lifestyles is so strong that, despite the construction sector coming under significant strain last year, development continued, states the State of Cape Town Central City Report 2020.

The report, which was researched and published by the Cape Town Cape Town Central City Improvement District (CCID), says innovative residential offerings in the city centre, coupled with low interest rates, continued to attract investor interest due to the prospect of living in a vibrant, successful downtown.

“Intent on luring young, upwardly mobile professionals and visitors to buy or rent in the central city, developers responded with accommodation offering flexibility, ease of use and affordability, adding huge value to the CBD’s property investment and hospitality offering.

“The key trend to emerge in 2020 was the focus on community, with investors becoming members rather than simply owners or tenants, and co-living and co-working spaces being the order of the day.”

Micro-living emerged as a dominant residential property trend, with most such homes being incorporated into mixed-use developments.

These micro-homes are attracting young professionals seeking urban lifestyles and investors looking to let them out in the short term. Long-let tenants have also been snapping them up due to the fact that they do not need to pay

transfer duties.

According to the report, nine of the 15 developments under construction last year were solely residential, with three categorised as mixed-use.

Aparthotels – which allow property owners to live in their units when they choose to and then rent them out for hospitality purposes – are also in demand.

Despite interest in home ownership in the Cape Town city centre, residential property values and rentals suffered last year, with apartment prices and unit sales “dropping sharply”.

“The median price of apartments sold in the central city in 2020 was R1.65 million; this is less than the R1.8m median price reached in 2019 and the peak of R2.1m reached in 2018.

“Unit sales also dropped – from 174 in 2019 to 130 in 2020.”

In a joint statement in the report, Rob Kane and Tasso Evangelinos, CCID’s chairperson and chief executive, respectively, say the past year has been one of the most testing in recent history and that, like most downtowns globally, the Cape Town city centre has “received a battering”.

However, they say Cape Town’s CBD remains “an excellent investment node” for residential and commercial property investment.

Survey results also shed interesting light on the profile of residents living in the Cape Town city centre. The report reveals that:

• Nearly 40 % of resident have lived in the central city for three years or fewer.

• Survey respondents were evenly split between owner-occupiers (46.6%) and tenants (46.1%).

• Owners who rented out their accommodation accounted for just 7.4% of the respondents.

• While in 2019, 66.7% of the ownto-rent properties were rented out on a short-term basis, last year this fell to just 26.7% as lockdowns resulted in fewer foreign and local tourists.

• 45.6% of respondents were South Africans, originally from outside the Western Cape; 33.3% were Capetonians while 13.3% were from overseas.

• The largest percentage (28.2%) of respondents were 25 to 34 years old, while 23.1% were middle aged (35 to 44 years).

• Just over 6% were retirees.

• The majority (74.4%) of CCID residents did not have children.

MIXED-USE developments, like The Fynbos in Upper Bree Street, are in demand in the Cape Town central city.