It is almost unheard of for residential accommodation in a CBD to exceed R20 000/m2, but the Cape Town Central City, an area of 1,62km² – excluding neighbouring suburbs such as De Waterkant and the V&A Waterfront, where prices are even higher – is achieving these prices. (Because of the blurring of neighbourhoods, the average price of properties being sold in these areas is added to the average prices sold in the CBD.)
This causes the value of CBD properties to be quoted closer to the R3m or even the R4m mark, says Rob Kane, chairman of the Cape Town Central City Improvement District (CCID). “Right now we’re sitting at the R1,92m average sales price per unit,” Kane says, noting that of the 50 properties sold during the first quarter of 2015, eight were still below the R1m mark and came in at an average of R17 596/m2. Apartments are also getting smaller. Today the average size is 44m2, but this is expected to decrease.
Dave Russell, the director of consulting firm Baker Street Properties, says the Cape Town CBD’s large units of more than 100m2 are being bought and subdivided. “The rate per square metre may well start to climb towards R35 000 in order to reconfigure existing office space into residential,” says Russell, “and the average size of the unit will be between 40m2 and 50m².” But Kane says that if buyers are going to continue to buy for R1m, they will have to make do with less: apartments in the 32m2 range.
With all the residential development taking place, corporates have cottoned on to the global trend of residents trading their suburban homes for apartments in CBDs, where amenities and job opportunities are close at hand. The 15-storey Touchstone House on Bree Street is one such corporate and retail development, expected to be complete by October this year.
“The rate of development in the Cape Town CBD seems to be setting us apart from the other CBDs in South Africa,” says Kane. “We’d obviously like to attribute this to the work the CCID and other partners in the City of Cape Town have done to turn the CBD around over the past 15 years. The city has also been extremely proactive in creating important infrastructure, such as a new transportation system that links the CBD to the rest of the city. As a result we’ve been able to attract new investor confidence back to our downtown, and we’d like to thank investors for sharing in our vision and voting with their money.”
According to Craig Armstrong, regional director of developer FWJK, final costs of the sectional title office development are below R19 000/m2 and include three parking bays per 100/m². The developer is confident that no comparable sectional title A-grade office premises exist in Cape Town currently.