Cape Town has emerged as Africa’s leading technology hub over the past 5-10 years, having both incubated and welcomed many local and international technology companies. As one of the most competitive and fast-moving industries, companies and businesses who operate in this sector have to grow and innovative on a continuous basis. Why are so many tech companies based in Cape Town? We investigate this trend, with supporting data from The City of Cape Town (enabled by Wesgro) and our own experience in advising tech companies on their location strategies.
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Cape Town has quality and affordable tech talent.
Supplied by City of Cape Town and Wesgro
According to the City of Cape Town, the availability of software developers and engineers are 40-50% less expensive compared to other country markets. With some of the continent’s top universities, colleges and schools located in the Western Cape, companies find themselves close to educated and able candidates seeking the opportunity to work in the sector.
2. Cape Town offers significant support to the tech industry.
Supplied by City of Cape Town and Wesgro
According to research by Ventureburn in association with FNB, Clifftop Colony and Qurio, most South African startups are based in the Western Cape supporting the idea of “Silicon Cape”. According to the data, 59% of South African startups are based in Cape Town, followed by Gauteng (29%), then KwaZulu–Natal (5%). This supports the notion that highly mobile tech entrepreneurs choose “lifestyle cities” to start their businesses in, similar to that of San Francisco’s Silicon Valley. It is estimated that the tech sector on average one high growth creates 200 direct jobs in the city alone, with most tech entrepreneurs, directors or CEOs aged 25 – 35. Through various networking opportunities, access to local Venture Capital firms and facilities such as over 25 co-working spaces makes Cape Town an attractive location for tech entrepreneurs.
3. Cape Town appeals to both international and local companies, with a focus on lifestyle.
Supplied by City of Cape Town and Wesgro
With a comparable lifestyle to other international technology hubs such as Silicon Valley or Seattle, both start-up and established companies in the sector have invested into Cape Town as their Africa or even EMEA headquarters. There are a number of different focus areas falling under the ‘tech sector umbrella’. The broad categories of technology businesses are as follow:
- IT, Cloud and Web Services or Support
- Web, App and Software Development
- E-commerce
- Business, Process and Outsourcing (BPO)
- Industry Specific Platforms or Solutions
- Fintech (payment portal and blockchain-driven platforms)
- Digital or Technology Consulting
- Digital Media, Marketing and Advertising
- Online Education
4. What locations and property types work best?
There are a variety of needs and considerations that are relevant in the location strategy of Cape Town-based tech companies. We give examples based on our insights and work in advising companies in this sector:
Office Parks & Gated Developments
Best fit for IT, Cloud, Web services, Development, BPOs, Support Operations or e-commerce.
Often operating around the clock and servicing customers in multiple time zones around the world, office parks and gated developments are a great fit for companies who need to accommodate staff at all hours of the day. With most office parks situated in accessible locations close to public transport hubs and supported with ample parking, these gated developments are not only accessible but also mostly offer 24-security as standard which is a value proposition to staff working into the late hours of the night. Furthermore, fibre internet access is usually a standard offering with gated developments, as well as ample parking ratios. Proximity to amenities are also important such as restaurants, convenience store offerings and coffee shops which are usually included in the development.
Examples include:
Non-traditional or creative-style properties
Best fit for digital media, marketing, advertising and online education.
With the physical work environment and tangibles becoming a greater priority for companies prioritizing alignment between office environment and company culture, non-traditional properties or heritage buildings are often an appealing solution. With developers recently giving more attention to the revival or refurbishment of heritage buildings, the options for companies who resonate with a non-traditional corporate environment are plentiful. These work spaces are also more conducive to flexible working trends and the need to accommodate resources on flexible work arrangement being especially evident in the sector of the industry. Growing companies often start out with a serviced office solution, scaling into a space of their own which can be further customized.
Examples include:
- Touchstone House
- 1 North Wharf Square
- 11 Adderley Street
High-rise or premier grade buildings
Best fit for digital / technology consulting and fintech
Blending the positioning of traditional services firms, companies who consult or offer sophisticated financial solutions resonate with premier-grade properties in an effort to communicate trust and confidence in their service offering. A trend in the industry is evident where tenants seek smaller and efficient premier-grade space, supported by activity-based work environments and flexible work arrangements to accommodate the demanding schedules of consultants.
Examples include:
- Portside
- Pier Pace
- The Towers
