According to reports, there appears to be an increase in the demand for residential property in the central business district (CBD) of Cape Town, as well as other major cities around South Africa.
At the annual Cape Town Central City Improvement District (CCID) business breakfast, the CCID released its year in review for 2014 of the state of the CBD in Cape Town. Among the results, it was noted that there is an increase in the number of people moving and looking to move into the CBD.
Carola Koblitz, communications manager for Cape Town CCID, said: “[For the CCID,] perhaps the most exciting thing that’s been happening in the CBD over the past two years, is the return of a residential community, and of course with it, a steep demand in residential property.”
She added: “People want the 24/7 downtown lifestyle and it’s not just in Cape Town. This is part of an international trend that is seeing people give up the green pastures of suburbia in exchange for smaller properties, close to where they work, in order to spend less time in traffic and transport, and a better quality and quantity of life outside of work.”
Cost savings
Koblitz told Justmoney that one of the reasons that people are increasingly looking at moving into the CBD is cost savings. “Particularly in terms of transport costs. But we also say, time is money and this less time spent in traffic also results in more time being productive in other ways.”
According to Koblitz, while you might pay more for a smaller property in the Cape Town CBD than you would pay in outlying areas, many people are willing to compromise on space in order to acquire the cosmopolitan lifestyle.
Koblitz added: “Property prices in the Cape Town Central City (the traditional CBD) may be more expensive than in outer lying suburbs, but it is not yet as expensive as in surrounding areas such as the Atlantic Seaboard or the City Bowl. Transportation costs would obviously be less if you are living and working in the CBD, but overall if you are travelling somewhere by bus, train or taxi the costs per km would be identical irrespective of where you lived!”
There are many lifestyle differences that come with living in the CBD. “Apart from the benefits we’ve already covered in terms of spending less time and money on transport, the buzz of a vibrant downtown is certainly a benefit the CBD has over the suburbs! Suburban living is very different to a downtown lifestyle,” said Koblitz.
She noted: “A downtown lifestyle is about walking out of your front door on any day of the week and encountering a vibrant café society lifestyle at street level, wonderful public spaces to enjoy such as The Company’s Garden, being able to stroll around the streets visiting and shopping at the numerous bespoke shops. Spending a morning browsing books at a venue like the Book Lounge, and then strolling home afterwards. As I say, it’s a very different lifestyle.”
Cape Town
Koblitz revealed: “Because of the demand for property in the CBD right now, property rentals at the moment in the CBD are at a premium because there is such a shortage of rental stock. Property sales prices, I believe, are still at this stage competitive with other nodes but people do need to realise that they will pay more per square meter in the CBD for an apartment than they will for a house further out of town.
“[For example,] R1 million can buy you a sizeable house somewhere out of town, but may only buy you a studio or 1-bedroomed flat in town. However, people who want the downtown lifestyle (the convenience of being close to both work and home, the after-hour vibes, the amenities) would be prepared to make this sacrifice on size.”
According to the CCID ‘The State of Cape Town Central City Report – 2014: A Year in Review’, “from 2005 to 2014, the Cape Town CBD’s residential property component has shown significant growth. This is largely due to the increased attractiveness of the urban environment the Central City offers, as well as [an] increase in investor confidence.”
In 2014, there were 191 residential properties sold in the CBD, which had a total sales value of R296 million.
The average size of a residential unit in the CBD is 80.73 square metres (m2), at an average price of R19 227.85 per m2.
According to the CCID, “Overall, apartments stayed on the market for an average of 109.27 days.
“However, of those, 71.72% (137 properties) sold within 90 days, with an average of just 26.42 days on the market, demonstrating that well-priced residential units in the CBD continue to be snapped up.”
Melissa Cullen, assistant portfolio manager at Steer & Co, revealed: “When a flat comes up as available in the CBD, we normally advertise for an average of 1.5 weeks and do an average of two viewings before we let the flat. This is the case for good secure flats in Upper Buitenkant Street in Oranjezicht, Welgemeend Street in Gardens as well as in Tamboerskloof. Flats on the Atlantic Seaboard are also snatched up quickly as most persons looking will settle for Green Point/Sea Point if there is nothing available in the CBD.”
Cullen added: “Two bedrooms are the most sought after but the least available. Bachelor flats are often available and get taken quickly by students/single working professionals.
“The average applicant looking for accommodation in the CBD is a couple in their late twenties [or] early thirties, both earning between R 15 000 and R 27 000 each, wanting a two bedroom for more space, require secure parking and want something safe and secure that is trendy and in a good position.”
The CCID reported, that according to Property24, the average monthly residential rentals in the CBD for 2014, were as follows:
· Studio or bachelor accommodation – R7 500 per month
· One bedroom apartment – R12 889 per month
· Two bedroom apartment – R17 438 per month
· Three bedroom apartment – R27 250 per month
Property prices in South Africa’s top CBDs
The most expensive residential property for purchase currently available on Property24 for the Cape Town City Centre is on the market for R24 million*. It is a three bedroom apartment with an Erf (the size of land marked off for building) size of 341m2.
In comparison, the most expensive property currently listed on Property24 for the Johannesburg central area is a four bedroom house on the market for R3 500 000*.
While you can buy a two bedroom apartment with modern finishes for R1 990 000* in Durban Central, that will require little to no work, depending on your style and preferences.
Cheapest CBD properties
The cheaper properties available in the CBD appear to be older apartments and buildings that are in need of some TLC. For those who are looking to buy these lower priced properties, they may not have the additional funds necessary to update or improve some of the fittings and finishes.
These difference indicate the difference in the popularity and desirability of living in these regions, as well as the difference in the type of people and lifestyles that are present in these areas.
It appears that the Cape Town CBD is the most popular of South Africa’s CBDs for residential property at present, considering price and lack of availability. However, at the CCID presentation, it was noted that Johannesburg is currently embarking on similar initiatives that the CCID and others are undertaking in Cape Town.
The cheapest property currently available in the Cape Town City Centre according to Property24, is on the market for R790 000*. It has an Erf size of 33m2, with one bedroom and one bathroom.
Cape Town also has a lot of new residential developments that are going up, catering for the increase in demand for residential property in the CBD.
In Johannesburg, the cheapest property available for purchase in the CBD is a small bachelor apartment for R130 000*.
For about R100 000 more you can get a slightly bigger apartment, however, some work may still need to be done to it. For example, there is a bachelor style apartment for sale in Johannesburg central for R220 000*.
In Durban Central there are properties available on the market for as little as R100 000*. However, these are very small, with an Erf size of 42m2.
For R250 000* you can get an apartment with a smaller Erf size of 35m2, but it requires less work than the above property and appears more picturesque. However, for those wanting a home, you may still want to do some work to the inside of the flat before moving in.
Rentals in a CBD
For rentals in the Cape Town City Centre, the cheapest apartments appears to be for R5 000 per month*.
When looking at the cost of rentals, it is important to double check that the price listed is either monthly or daily, as some of the more upmarket apartments are rent out purely on a cost per day basis, but these properties are usually for holiday purposes.
For a more expensive rental on a monthly basis, Property24 has a two bedroom apartment listed for R40 000 per month*.
Durban Central, by comparison, has a bachelor apartment available for as little as R1 865 per month*. The most expensive property currently listed for rental on Property24 for the Durban area, is a three bedroom apartment for R16 000 per month*.
There are a number of properties listed on the Property24 website that are available for rental in Johannesburg Central. The cheapest range from about R1 410* to the low two thousands for a bachelor apartment.
The most expensive apartment currently available to rent in Johannesburg Central is a two bedroom apartment for R8 500 per month*.
Property websites
For those looking to rent or buy in a CBD, the properties appear to be snapped up very quickly once they are placed on the market. There are a number of websites and services that are available to help make the search easier.
In addition to the various real estate agency websites, such as Pam Golding, Rawsons, Re/Max and Chase Everitt, there are also websites that allow you to enter in price bracket, type, area and the number of bedrooms and bathrooms you are wanting, to help refine your search and cut out any of the properties that you would not be interested in.
These include Property24, IOL Property, iKhaya, and SA Hometraders.
*All prices and listings accurate at time of publication.
To read ‘The cost of properties in the CBD’, click here.