Cape Town’s Property Market Soars: Surging Demand for CBD Commercial and Residential Spaces in 2023 according to latest Report
The Cape Town CBD experienced a significant rebound in 2023, emerging from economic challenges with a surge in property investments. The demand for commercial and residential space in the city centre was met by new investments totalling an estimated R7.285 billion, more than double the amount recorded in 2022. These figures come from the latest State of Cape Town Central City Report 2023 – A Year in Review (SCCR), published by the Cape Town Central City Improvement District (CCID).
Rob Kane, CCID chairperson and CEO of Boxwood Property Fund, described this investment as extraordinary, especially for an area of just 1.6 km² in a country facing economic difficulties. He emphasized that this growth would enhance the Cape Town CBD’s reputation as South Africa’s most successful inner city, contributing significantly to economic growth and the dynamic mix of the area.
The prestigious SCCR details 30 developments, including residential, commercial, mixed-use, retail, aparthotel, and parastatal projects, completed, under construction, or proposed in 2023. Among these are key developments that are reshaping the Cape Town Central City skyline. Notable projects include the R600 million mixed-use skyscraper, The Rubik, designed to resemble a Rubik’s Cube; Neighbourgood 84 Harrington (R180 million), the world’s tallest aparthotel built from hempcrete blocks; and The Barracks, a R150 million Heritage development in Bree Street.
Commercial Developments
Commercial development in the CBD was robust, with five new commercial-only developments and seven mixed-use projects that include office space. This surge in office space, coupled with a decline in office vacancy rates, indicates renewed interest driven by the Central City’s economic recovery and a trend of employees returning to the workplace. Kane also highlighted the innovative approaches taken by Cape Town landlords to create appealing work environments that entice workers back to the office.
The SCCR data revealed an improvement in office vacancy rates across Cape Town, with the city recording the lowest office vacancy rate of 7.5% among major municipalities—the lowest since 2019. Despite this improvement, the CBD still holds one of the highest vacancy rates in the metropole, although rates in all office grades except B-grade improved beyond pre-pandemic levels.
Residential Boom
On the residential front, persistent demand for additional units in the Central City led to 12 new residential property investments in 2023, along with additional units in seven mixed-use developments and three aparthotels. Nine developments were completed last year, valued at R1.347 billion. Among these, three were residential builds worth R280 million, with two more under construction. Notable completed residential projects include The Carrington (R70 million) and The Tokyo (R150 million) in Loop Street, as well as Vida d’Chette (R60 million) on the Foreshore.
Six more residential buildings are in the planning phase, with a combined value of R915 million. The planning phases also include two finalized mixed-use buildings, another under construction, and four more in planning or proposal stages. A particularly exciting upcoming project is Mama Shelter Africa, an international hotel brand set to reimagine the old City Park building into branded residences, office, and retail space.
Residential sales in the CBD reached a new peak in 2023, with the total number of apartments increasing to 7,188, up from 6,827 in 2022 and 5,791 in 2021. The average purchase price of sectional title properties also saw a 7.2% increase, reaching R1.58 million compared to R1.47 million in 2022.
Kane concluded by affirming that the CCID’s partnership with the City of Cape Town and the South African Police Service (SAPS) ensures the Central City remains the country’s most economically sound city centre. With its top governance ranking and booming property sector, Cape Town continues to be an exceptionally attractive investment destination.
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