Strong demand for office space in Cape Town

Category Editorial

For almost two years, the commercial real estate sector was significantly impacted by the pandemic with investor and landlord sentiment at an all-time low, but encouraging movement during the first quarter of 2022 in Cape Town is cause for cautious optimism, especially in certain nodes. 

A review of the transfers in Cape Town's Deeds Office during this period not only shows an uptick in activity, it also highlights certain high-value areas which experienced a noticeable increase in sales.

SEE: View the latest commercial properties to let

Measured against a total of 61 areas, 13 of these accounted for 79% of the value of all commercial transactions during Q1. Each area has different average values and cap rates depending not only on the area but also the property location, the quality of the building as well as the tenant covenants.

In our estimate and recent experience, the bulk of the transfers have shifted from a largely hands-off investor driven by yields, to owner-occupiers seeking to place an asset on their balance sheets and trade the difference between paying an escalating rental and owning their building.

He adds that what has been most surprising is the ongoing demand for offices to purchase rather than to rent, most notably in Century City, Lakeside and Durbanville with smaller units also being bought in the city.

Author: P244