The latest launch is 117 on Strand, near De Waterkant, a 17-storey development being marketed exclusively by Pam Golding Properties. It’s billed as a “cosmopolitan, mixed-use development” with 117 apartments, three floors of premium grade offices, two floors of retail, a new branch of a major health club chain, and plenty of underground parking. Prices start from R2.6 million for a 59m2 one-bedroom apartment, with the most expensive, a 187m2 three-bedroom home for R11.2 million, including VAT.
According to Laurie Wener, senior executive developments, Cape region at Pam Golding, the demand for residential units at these levels is limited only by the shortage of stock. Since 2003, he says, when the Mutual Heights development in Darling Street was launched, there has been capital growth of around 800% in the city centre.
Off the back of its reputation for great food and lifestyle, the CBD is now the most-visited destination for visitors to South Africa. More people want to live in the city centre, as happens in major cities across the world. The long- and short-term let market is also buoyant, with an increasing number of apartments available through services such as AirBnB.
Also taking shape is the Sentinel, a 17-storey mixed-use development, on the corner of Loop and Leeuwen streets. Marketed by Dogon Group Properties, 95% of the apartments were sold out within four months of the launch, punted as ideal for the lucrative short-term letting market. The entry-level apartments (42m2 with an 8m2 balcony), were priced at R2.1 million.
The company is also marketing Urban on Bree, with 28 studio and one-bedroom apartments from R1.8 million, and Greenwich Square in Bennett Street, with 27 apartments ranging from R3.3 million.
Right at the top end is the redevelopment of the former Safmarine House, an office building in Riebeeck Street. The Radisson Blu Hotel and Residences has 166 residential units, including six penthouses on the 18th floor offering panoramic city views. The most expensive is on the market for R13 million.
Currently going through planning approval processes is a 19-storey mixed-use development with 294 apartments in Buitengracht Street, which is being fiercely opposed by the Bo-Kaap Civic and Ratepayers’ Association as inappropriate in size and scale for the area and a threat to the unique culture of the Bo-Kaap.
As prices rise in the CBD itself, developments in Woodstock continue to bring massive change – and resistance to gentrification – in an area described in one international travel guide as “the Brooklyn of Cape Town”, a reference to this once gritty New York borough now popular with urban professionals.
The Ironworks, a new development on the corner of Sir Lowry and Ravenscraig Roads, has pitched 136 apartments from R1.3 million. The developers describe Woodstock as a “vibrant, multi-cultured and friendly village-within-a-city” conveniently situated within a kilometre of the CBD, with “some of Cape Town’s most beautiful and original Victorian and red brick architecture”. Move-in date is set for early 2018.
A major drawcard for investors in these developments is the Urban Development Zone tax incentives, introduced in 2003 to promote the regeneration of inner cities. The beneficiaries are those who purchase directly from the developer with the intention of renting out the property. The purchasers can reduce their taxable income, as the UDZ incentive provides for a depreciation allowance spread over 11 years of 55% of the purchase price in a new development or 30% if an existing building is improved.
Many of these apartments will be available for rent. In the CBD currently, typical rentals are around R9 000 for a studio, R10 000 to R15 000 for one bedroom, and R16 000 to R25 000 for a two-bedroom apartment. At these levels, living in the city is increasingly beyond the reach of the majority of people commuting into the city centre daily.