Residential property shortage in Cape Town CBD - PGP
According to the Pam Golding Property (PGP) group, the Cape Town central city area has become a residential destination of choice catering for a broad range of purchasers, but there are acute shortages.
© Pipop Boosarakumwadi – 123RF.com
"Ongoing redevelopment and transformation of Cape Town's central city was spearheaded by the conversion from office to residential of certain iconic, landmark buildings, including Mutual Heights and Cartwrights Corner, to name just two," says Dr Andrew Golding, chief executive of the Pam Golding Property (PGP) group.
"Both these buildings sold out within weeks of the launch which demonstrated the enormous pent-up demand for central city living and sparked off a trend which at its height saw the launch of Mandela Rhodes Place in 2006. Since then the heart of the city has become a thriving hub pulsing with life and activity, embraced by an increasing groundswell of new residents, investors, the business sector and visitors and tourists from around the globe," says Golding.
The central city area caters for a wide range of buyers, with studios priced from R700,000 to R1.1m, one bedroom apartments from just under R1m to just over R2m, and two bedroom units from an entry level of around R1.2m up to R3m and R4m. While the most active market is in the price bracket from about R1m to R2.5m, luxury penthouses and other exceptional properties can fetch prices as high as R10m.
Acute shortage
"Anything and everything below R2.5m is in high demand," says PGP agent, Bridgit Shiffer, "with new listings in the central city often selling within a week. There is an acute shortage of units available to purchase and stock levels have virtually dried up. This is due to a lack of new developments coming to market over the past five to seven years following the market slowdown in 2008, with further pressure on supply resulting from an influx of buyers from Johannesburg and Durban seeking lock-up-and-go apartments either as accommodation for their university-going children or for use later on."
"The market for accommodation in the area has also become more affluent as there has been a marked improvement in the urban environment, for example security and community initiatives. Prices which buyers are prepared to pay for apartments have certainly edged upwards in recent years," says PGP agent Peter Spencer.
"Underscoring the investment credentials of the central city are some interesting statistics. In 2013 with total sales of R246m in the city centre (across all agencies), the average selling price was R1.43m. This increased to an average price of R1.77m in 2014 against a backdrop of total market sales of R400m, which has further rapidly increased to an average selling price of R1.967m for the period to the end of May 2015, with total market sales of R151m for this five-month period. It is emphasised that these sales have been limited by the shortage of stock, with the surge in pricing illustrating the growing desirability of the central city location," Spencer says.
