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Rising CBD property values a barrier to affordable housing

May 22, 2017

About R16.2 billion worth of investment in property has been committed to the central city since 2012, according to the Cape Town Central City Improvement District (CCID).

The latest State of Cape Town Central City Report, says that between 2012 and 2016 there was investment worth in the region of R4.486 billion, with another R4.32 billion in current construction and another R7.426 billion in the pipeline – taking the form of proposed development or projects in planning phases.

“We use the term ‘conservatively’ as we base our calculations only on developments for which we have been able to confirm investment values. Sometimes the costs of developments announced have not yet been revealed by developers, and thus the numbers we publish in the report are only those that have appeared somewhere in the public domain,” says Rob Kane, chairperson of the CCID.

The CBD has seen a 77% increase in property values, according to the City of Cape Town’s official property valuations, from R23.7 billion in 2014/15 to R30.6 billion in 2016/17. The total valuation could reach R42 billion by 2019, taking the amount of current and proposed development into account.

Kane believes that the confidence and continued development in the CBD also has knock-on effects for the immediate surrounds, such as the Culemborg area and V&A Waterfront, while the City’s Foreshore Freeway project has sparked excitement around the possibility of successful public-private partnerships and brings much-needed affordable housing to the central city.

“We have a substantial workforce in the CBD that commutes many hours a day to get to work and spends up to 40% of their income just on transportation. The values of private property in the CBD, even of underutilised commercial buildings, are now such that it has become difficult for private developers to construct affordable housing, but a public-private partnership could very successfully enable this to finally occur.”

The CCID estimates that there is a residential population approaching 7 000 in the central city, and believes that number could grow to around 12 000 by 2019.

Currently, the residential rental market within the CBD itself remains unaffordable to many of those who work in the city. The report cites 116 residential units available to rent, a significant increase over the previous year largely as result of rental units being released in the 169-apartment Radisson Blu in Riebeek Street.

The average monthly rentals, based across 36 CBD blocks and including furnished and unfurnished apartments, were as follows – R10 608 for a bachelor/studio apartment, R15 000 for a one-bedroomed unit, R22 290 for a two-bedroomed unit, and R27 500 for a three-bedroomed one.

With 82 educational institutions in and around the CBD there is also high demand for student housing with seven buildings dedicated to this market. Rentals range from R2 850 to share a double room and R6 000 a month for a studio apartment.

Last modified on Monday, 22 May 2017 13:40
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