Cape Town CBD values are still rising

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17/07/2007

Cape Town CBD expert Richard Boxford looks at why the inner city property market is bucking the slowdown trend and rising in value.

In my first column I discussed the emerging, re-generated city centre. In residential property terms Cape Town CBD is a very new environment. As such, it does not always neatly follow the property trends of other, more traditional residential areas.

A good example of this was the winter of 2005, historically the quietest season on the property calendar but one of the busiest quarters of 2005 in terms of sales in the CBD. City centre residential values are also rising faster and higher than many other established areas, with some investors seeing a 20% return on properties bought just twelve months ago. This distinct upward trend in the CBD market is surprising to many.

In 2006, CBD residential sales averaged R1.2m. In the first quarter of 2007 the average CBD sale was already close to R1.5m and the range of all sales in the city centre now reaches beyond the R2m upper ceiling that was indicative of sales in 2006. There are now very clearly more serious buyers who are looking to invest in city centre apartments priced between R2m and R3m. The increased value of sales is a very positive sign of increased confidence from buyers, who can see the city changing for the better.

City centre apartments that sell over R2m are mostly being purchased by South African clients, dispelling the popular perception that overseas clients are distorting the market. Investors in the city centre residential market remain a healthy mix of local young professionals, South African and overseas investors.

As confidence in the city continues to grow, it is likely that both headline values and values per square metre will continue to rise. Current growth over the last twelve months is running at around 20%. Clearly the city remains an investment market offering a reasonable return. Next month I will share the data regarding the demographics of the city centre which are emerging from the first city centre residential survey conducted by LIFE Residential.

Article from Property24