CCID report highlights significant economic growth in Cape Town’s CBD

Other key economic sectors that drive the economy of Cape Town’s inner city – business tourism, hospitality, events and retail – also saw a strong rebound.

Here are the most important conclusions from the latest edition of the prestigious ranking Central City Report 2023 – Year in Review (SCCR)published annually by the Cape Town Central City Improvement District (CCID). The results of the 12th edition – issued to Cape Town business and property leaders on Wednesday 14 August 2024 – reflect the state of the Cape Town inner-city economy during the previous year.

Last year, a total of 30 property developments or redevelopments were recorded: nine were completed (worth over R1 347 billion); eight were under construction (worth over R2 228 billion); 10 were in the planning phase (worth over R2 610 billion) and three were proposed (worth over R1 100 billion).

Twelve residential developments (40%) are residential developments, followed by mixed-use developments (which are a mix of commercial and residential), indicating that strong demand for inner-city accommodation is continuing. Residential developments are set to add thousands of new units to the residential property market in the Cape Town CBD.

CBD economy on the rebound

Research contained in the 80-page SCCR 2023 report – a must-have for investors, developers and business owners looking to invest in South Africa’s most economically profitable city centre – shows that 2023 was the year that Cape Town’s central business district “definitely” recovered from the COVID-19 pandemic, according to Rob Kane, chair of the CCID board.

Kane says: “It is clear from the report that the Cape Town CBD, unlike its counterparts elsewhere in South Africa and many other places around the world, has clearly recovered from the pandemic, with the growth and stability seen in 2022 continuing into 2023.

“This bodes well for the future of Cape Town and its CBD,” says Kane. “The most important indicator of investor confidence is the steady increase in the overall official value of all properties in the inner city, which has risen from R6 billion in 2006 to R42.8 billion in 2023, according to the City of Cape Town Property Valuation.”

Kane says that in addition to impressive growth in the construction sector, other key economies that drive business and investment in the Cape Town central business district also performed well, including business tourism, hospitality, events and retail.

At least 10 of the 17 business sectors operating in Cape Town’s central business district recorded growth in 2023, with the overall number of business entities increasing by 186, from 3,116 in 2022 to 3,302 in 2023.

The five sectors with the highest number of positive results were: retail, general business and head offices, ICT, telecommunications and call centres, finance, investment, insurance and banking, and artistic studies.

Retail is proving resilient

One key business sector, retail – which accounts for 1,305 of the 3,302 businesses operating in Cape Town’s central business district – has once again expanded its presence in 2023, with the opening of over 62 new retail outlets.

Despite ongoing economic challenges and periodic power outages, retailer confidence in Cape Town’s central business district, as measured by the quarterly CCID report Business Confidence Indexalso grew steadily in 2023. At the end of the year, an impressive 93.0% of surveyed retailers said they were “satisfied” with current business conditions.

According to Cape Town State of the Country Report 2023Total retail space (in m²) available in Cape Town’s central business district in 2023 was 262,815 m², slightly down from 271,209 m² recorded at the end of 2022.

At the same time, the total retail area occupied by CCID in the central business district in 2023 amounted to 247,023 m², which is a slight decrease of just over 11,000 m² compared to 258,024 m² recorded in 2022.

The total retail vacancy rate in the Cape Town CBD – 15,792 m² – was just under 6.0% of the total available retail space. In 2022, the total vacancy rate was 4.9%.

“The higher vacancy rate is partly due to a decrease in the total available retail space due to the redevelopment of the retail space on Strand St, specifically the R200 million The Mutual shopping complex,” Kane notes.

Other key SCCR findings include:

• In its assessment of the commercial sector, the report notes that 2023 saw new demand for office space in Cape Town’s central business district, which resulted in a decline in the vacancy rate;
• The office vacancy rate in Cape Town’s central business district was 10.2% at the end of 2023, an improvement from 13.3% recorded in 2022 and 16.1% recorded in 2021;
• The central business district continues to hold the largest share (+39.4%) of total office space in Cape Town, according to the SA Property Owners’ Association (Sapoa).

Unique features of the report include:

• Real estate investment map showing 30 locations of completed investments, current construction sites, as well as planned and proposed projects;
• Overview of the most resilient economic sectors in 2023;
• Report on the tourism economy and hotel occupancy in 2023, as well as an overview of the eventing economy and city centre parking;
• Top 10 factors influencing city centres around the world;
• A section showing how the four constituencies making up the 1.6km² geographic footprint of the CCID performed in 2023 in terms of business, real estate, economy and living trends;
• Deep Dive Into CCID’s Annual Online Survey Results Housing Survey which explores why people live in the central business district.