Cape Town CBD Experiences R3 Billion Property Development Surge

Cape Town Central Business District (CBD) has displayed a remarkable economic upswing, with property development investments crossing a staggering R7.29 billion in 2023, as documented by the newly released State of Cape Town Central City Report 2023 (SCCR). The Cape Town Central City Improvement District (CCID) highlights this as a robust indicator of investors' faith in the CBD's potential, showing a rise of R3.73 billion from the past year.

Demonstrating remarkable resilience, the inner-city economy has seen a strong resurgence across several domains, including business tourism, hospitality, eventing, and retail sectors. The 12th edition of SCCR sheds positive light on the economic vitality experienced by downtown Cape Town over the past year, reflecting a distinct turnaround from the challenges posed by the COVID-19 pandemic.

The latest SCCR conveys that 2023 was a pivotal year for the Cape Town CBD's resurgence, emphasized by CCID board chairperson Rob Kane. He celebrates the city's unique ability to rebound more robustly than its local and global counterparts.

In a significant nod to the property sector, the CBD saw a total of 30 new developments, with 12 being residential projects aimed at meeting the ongoing demand for inner-city living. These developments are expected to supplement the residential market with thousands of new units.

This optimistic trajectory is mirrored in the overall official value of all property within the inner city, having escalated from R12.2 billion in 2016/17 to a remarkable R42.8 billion in 2023. This signifies not only the construction sector's remarkable growth but also underlines gains in other key areas driving business and investments into the Cape Town CBD.

Business sectors, too, have recorded expansion, with at least 10 out of the 17 professional divisions in the CBD marking growth. The total number of business entities also soared, climbing by 186 to reach 3,302 in 2023. Among these, retail, corporate head offices, ICT, finance and artistic endeavors were top performers.

The retail sector particularly flourished in 2023, witnessing the launch of over 62 new outlets in the CBD, despite prevalent economic strains and utility challenges. The year-end figures also saw a significant confidence boost among retailers, as per the CCID's Business Confidence Index, with 93.0% expressing satisfaction with the prevailing business conditions.

As per the latest SCCR, Cape Town's CBD retail spaces saw a small contraction in total volume to 262,815 m², yet the occupancy rate remained healthy with a minor dip. The vacancy rate conversely rose slightly to just under 6.0%, attributed partially to The Mutual's substantial R200 million development on Strand Street.

The report also notes a revived demand for office space in the CBD, positively impacting the office vacancy rate, decreasing from 13.3% in 2022 to 10.2% in 2023. Cape Town's CBD retains the lion's share of office spaces in the city, solidifying its position as a commercial hub.