Real Estate Investor Magazine South Africa Real Estate Investor Magazine - June 2017 | Page 18

FEATURE ARTICLE
Paardevlei, Athlone, Bellville and Philippi are four
areas identified for the City’s TOD projects, while
the Foreshore Freeway Precinct is set to receive a
significant facelift to free up prime City-owned land
for development. This is to address Cape Town’s
affordable housing needs and traffic congestion
problems due to high vehicle volumes. Plans are also
underway to upgrade the CBD’s transport hub to
serve the needs and demands of commuters.
Property development in CPT
According to Joint CEO of Knight Frank, Tony
Galetti, property development in Cape Town is going
through an interesting period of structural change ‒
change that he believes will create opportunity for
some landlords, while leaving other in its wake.
“Firstly, from a residential point of view, Cape
Town has a net inflow of people relocating to the
region, largely for lifestyle reasons, as well as the city’s
proven track record of good governance,” says Galetti.
This, Galetti maintains, has created a massive
demand for residential accommodation in the city.
“Developers have risen to the occasion, and there
are approximately 2 500 new residential apartments
coming on stream in the CBD region, including
Seapoint, Salt River, Woodstock and Observatory.
There is good demand in these nodes, and the prices
are buoyant ‒ so buoyant that a lot of people can’t
afford to purchase them, so are forced to look at
outlying areas.”
When it comes to commercial property in South
Africa, Galetti highlights a structural change in the
demands for commercial space across the country:
“As people want better work spaces, and the green
building revolution continues, there is increasing
pressure on B Grade commercial properties to either
have their premises upgraded, or, alternatively, to sell
them to developers to be converted into mixed use or
full use residential buildings”.
Galetti cites Salt River and Woodstock as two
areas where this has steadily happened over the last
10 years. He attributes this to the shrinking of the
clothing industry in the region, which has led to larger
commercial buildings becoming obsolete. “These have
been converted into trendy residential apartments,
both driving up property prices as well as slowly
gentrifying the region. This has also created an ideal
live/work scenario for many people, who would prefer
to work close to home, so the demand for commercial
space in these nodes are equally strong, once again
keeping prices buoyant.”
Investors look to the North
“Bellville has seen a dramatic increase in vacant
commercial space over the last two years ‒ from
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JUNE 2017 SA Real Estate Investor
approximately 100 000m 2 of vacant commercial space
in January of 2015, to approximately 200 000m 2
vacant commercial space currently in the market.
There has also been no real movement of rentals,
which, considering inflation, means rentals are
decreasing,” explains Galetti.
According to Galetti, the reasons for this include
outdated buildings and a lack of redevelopment.
“Most of the buildings in Bellville are quite old and,
in general, the market is moving towards greener
more efficient buildings. However, the rentals aren’t
high enough to justify landlords redeveloping their
buildings, which creates a double-edged sword. As a
result, this has created a very flat market.”
Just up the road from Bellville, however,
Tygervalley is doing the complete opposite. According
to Galetti, this node is showing strong demand for
both commercial and residential property, with new
commercial buildings being built and tenanted at
competitive high rentals. “As the area is growing, so
too is the social and recreational aspect, which is a
more attractive offer for those wanting to move there
for work life balance.”
Galetti’s take on the northern suburbs is optimistic:
“If we consider the growth of the northern suburbs
in general, including greater Durbanville, Paarl and
Stellenbosch, as well as the ever-worsening traffic in
and around the Cape Town CBD, perhaps the time
is now for residential developers to be considering
purchasing some of the vacant buildings in Bellville
and redeveloping them into trendy apartments, but
at a more affordable price point than Salt River and
Woodstock.”
THE FOUR MAIN OBJECTIVES FOR
TOD ARE TO CREATE A CITY WHERE
• Urban space is compact and well connected;
• Developments are conducive to economic and social
efficiency;
• Residents have easy access to affordable and efficient
transport;
• Living and breathing becomes easier as shorter travel
distances reduce carbon emissions.
Plans underway for the Voortrekker Road
Corridor
Jacques Labuschagne, Western Cape Portfolio Manager
for TUHF, a commercial property financier focusing
on urban regeneration, maintains that it is the well-
defined requirement for densification in the city that is
underpinning current opportunities in the CT property
market. “The ability to add density to a site adds
considerable value to the investor and the area alike.
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