The 3 Biggest Property Trends for Cape Town in 2017

The Cape Town Property Market has continued to show stability during 2016. Here are some of the most significant property trends for Cape Town in 2017, as well as the associated implications for developers, owners and occupiers.

1. Increased residential development and reconversions

A concept interior of the new Radisson Blu Hotel and Residence by Signatura, situated in Triangle House in Cape Town CBD. Expect similar reconversions of commercial to residential property in Cape Town during 2017. Image Credit – Signatura.

 

It is no surprise that the residential property market in Cape Town has outperformed all other sectors in 2016, with Lightstone estimating the average year/year capital appreciation on Cape Town property at 5% higher than the national average. The continued demand for convenience and compact urban living has resulted in a number of upmarket apartment developments situated in main commercial nodes such as the CBD, V&A Waterfront and Woodstock. The reconversion of Triangle House in Cape Town CBD into premium apartments and hotel accommodation is a prime example, as well as other mixed-use developments underway in Woodstock. Expect similar conversions to take place in these nodes throughout 2017, as well as the completion of new mixed use ‘lifestyle’ developments such as The Silo District in the V&A Waterfront. This trend may have a significant influence on vacancy levels, with office users having moved to alternative accommodation.

Key market indicators from our latest Cape Town Office Market Report in association with JLL

Key market indicators from our latest Cape Town Office Market Report in association with JLL

 

As suggested by the figures above from our latest Q3 Office Market Report, the trend could also see the current tenant driven market becoming landlord-driven next year. The trend is further supported by office vacancies continuing to reduce evident in the Cape Town office market maintaining the lowest overall vacancy rate for office space in the country at 7,6%.

2. Further Growth in the Serviced Office Sector

With the supply of Grade A and P commercial property decreasing and office rentals in most instances now almost 30% higher than in 2012, entrepreneurs and start-ups are finding increased value in serviced office or co-working space. Low-risk commitment, flexibility and collaborative benefits offered by these providers are some of the main driving factors. There are reportedly as many as 13 serviced office providers in Cape Town alone, with new market entrants competing head-on with established brands in the industry. Competition in the Cape Town market is expected to increase further in 2017 as the supply of premium office solutions become increasingly limited.

Key statistics from our latest Cape Town Office Market Report in association with JLL indicating an upward trend in rentals overall, as well as limited supply of premium grade commercial property

Key statistics from our latest Cape Town Office Market Report in association with JLL indicating an upward trend in rentals overall, as well as limited supply of premium grade commercial property.

 

Consolidation and Less Speculative New Developments

Across industries, companies are finding increased value in consolidating their industrial and commercial property requirements into innovative new mixed-use developments or solutions. The trend is becoming increasingly evident among large retailers, distributors and logistics operators who find it more beneficial to consolidate their operations for increased efficiency and effectiveness. Expect more companies to consolidate their commercial and industrial properties throughout 2017. Furthermore, both our Office and Industrial market report suggests that developers are taking a more conservative approach to new supply for 2017 with fewer property developments planned on risk. The trend is in line with that of the Johannesburg market and reflects a more cautious outlook by property developers and listed funds in 2017.

Richmond Park by Atterbury

An artist impression of the new retail and industrial development Richmond park along the N7 by Atterbury. Tenants and logistics operators are increasingly finding value in consolidating their operations, with similar trends being witnessed in the Gauteng property market. Image credit – Atterbury.

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