Cape Town is officially Africa’s leading digital city, and as a tech hub that provides more than 40000 jobs in the sector, its property market is reaping the rewards.
New developments are mushrooming to accommodate young individuals working in the creative and digital industries and the rental market, in particular, is benefiting from their lifestyles. Lock-up-and-go apartments are sought-after, as are developments that offer integrated living.
The State of Cape Town Central Report 2018, recently published by the Cape Town Central City Improvement District, affirms Cape Town’s status as the leading digital city in Africa, saying it is recognised as a hub for technology development and innovation.
It provides more jobs than other tech centres, such as Joburg (20000), Lagos in Nigeria (9000) and Nairobi in Kenya (7000). The report cites PWC research showing that 56% of emerging tech or tech-enabled companies are headquartered in the Western Cape, with the majority based in Cape Town.
In particular, it says the city has become a leader in mobile software, revenue management and payment processes over the past decade, with R4.7billion of foreign direct investment in software and IT services.
“The report says the ‘lifestyle of Cape Town promotes creativity, innovation and inspiration because of the mountains, ocean and nature. People are coming here to be creative and innovative. They’re drawn to it. There’s a tech culture that has boomed here, with technically innovative products’.”
A variety of factors attract start-ups to Cape Town, says Sumarie Roodt, chairperson of Silicon Cape, an NPO and ecosystem enabler for tech-enabled start-ups in the Cape region. The attraction of such entrepreneurs also means more investors.
Roodt says many entities choose the city as a base not only to serve the South African market, but also as a “platform to access the rest of the continent”. Its time zone also makes it well-aligned to key global business hubs, such as London.
“This means entities can operate key components of their business from Cape Town at lower comparative costs, while leveraging skilled resources and a familiar business culture or approach.”
In addition to the city providing access to skills through its internationally recognised tertiary institutions, Roodt says it offers a highly attractive lifestyle which enables it to attract and retain top-quality talent.
This lifestyle is a major contributing factor to Cape Town’s continued ranking as one of the world’s leading prime city housing markets. The Savills World Cities Prime Residential Index shows the city’s properties to have recorded 64.4% growth during the five-year period to June.
This growth rate was second only to Shenzhen in China, which saw 96.6% growth during the period. From the index results, Andrew Golding, chief executive of the Pam Golding Property Group, which has an association with Savills, says it is “clearly apparent” that, in global terms, prime Cape Town residential property offers “huge value for money within a worldclass city, internationally renowned for its exceptional lifestyle and natural beauty”.
Although the Cape Town premium market has been through a correction, he says this in line with the bulk of global prime city markets.
Developments cater for city demand
CONVENIENT Lock-up-and-go units are in demand by tech professionals who favour location over-size. Picture: Supplied
If the surge in developments in and around central Cape Town is anything to go by, Cape Town’s status as the continent’s leading tech city is having a positive impact on the local property market.
These developments offer smaller studio and one-bedroom apartments targeted at young individuals, most of who work in the creative and digital industries, says Rob Stefanutto, director and head of Dogon Group Developments.
“Many of the purchasers and tenants who work in the digital and creative industries purchase into these developments as they offer integrated living solutions with shops, food courts, laundromats, pools and entertainments areas.”
These properties not only allow them to live without leaving their homes too often but also offer the convenience of central city living with the use of MyCiTi and Uber transport, Stefanutto says. He says there is a great deal of interest in developments which offer lock-up-and-go apartments, with these professionals favouring location over the size of the property.
“People are looking more at location than square meterage. The average young professional prefers locations close to the city. The mountains and the beaches are always a major drawcard for buyers and tenants.”
As more people, especially youngsters with a lower level of income, are entering the property market, Ryan Greeff, director of Greeff Christie’s International Real Estate in the City Bowl and on the Atlantic and Western seaboards, agrees that they enter the rental market more than the sales market.
For reasons of safety, convenience and maintenance, the property types they tend to lean towards are sectional title blocks. “I think the nature of many tech-related jobs and positions requires quick and easy relocation. I find these professionals shy away from buying properties and settling in a specific city or area.”
Louise Varga, Pam Golding Properties area manager for Stellenbosch, Somerset West and Gordon’s Bay, says the tech industry has seen more people entering the rental market as they tend to not stay at the same company for long periods of time.
The property types in demand are varied and depend on an individual’s needs and life stage. “Sectional title, lock-up-and-go properties that require little maintenance are popular with young professionals. Those with families would seek some of the newer estates emerging in Stellenbosch, especially if their work involves travel during the week,” Varga says.
Pricing and travel times are, therefore, important considerations for these tenants and buyers when entering the local property market, says Luke Sweet-nam, Pam Golding Properties agent for Woodstock.
Tech professionals drawn to southern tip
NEW IN TOWN Many tech professionals who live and work in Cape Town are from other South African cities and foreign countries. Picture: Ibrahim Adabara
Only a small percentage of tech professionals looking to live in and around Cape Town are locals, estate agents report. Most of them are from other parts of the country and the world.
Pam Golding’s Louise Varga says a large number of these employees come from Europe, mostly due to collaboration with Stellenbosch University. In the experience of Greeff’s Ryan Greeff, most are from other cities, such as Durban and Joburg. They are commonly between the ages of 25 and 35 and male.
“They’re often involved in the engineering, media intelligence and tech industries.” Rob Stefanutto, director and head of Dogon Group Developments, says the bulk of interest for sales and rentals stems from Pretoria, Joburg, Bloemfontein and the Eastern Cape.
“They are generally recent graduates or young professionals, or older buyers who are purchasing for investment purposes.” In terms of where they are looking to live, he says Cape Town’s status as a tech hub is seeing an increase in rentals throughout the Atlantic seaboard, western seaboard and southern suburbs.
They also look to buy and rent in Century City, says Greeff. “Century City has become a business and tech hub of its own and has earned its reputation of being a young and vibrant area where rentals are more affordable in comparison to similar nodes, such as the Cape Town CBD.”
Stellenbosch and surrounds have become popular residential markets due to the proliferation of technology and blue chip companies in these areas, says Varga.
The decisions about where to live are largely price-driven, with many people looking for estates or sectional title developments such as Welgevonden, Bosman’s Crossing and Nuutgevonden in Stellenbosch. “Many also stay in nearby Somerset West on estates such as De Velde and Kelderhof.”
Pam Golding’s Luke Sweetnam says sectional title apartments and smaller, two- or three-bedroom semi-detached homes are also sought-after in areas such as Woodstock and Observatory. He says Woodstock has been identified as a creative industry hub and is close to the city centre and major suburbs.
This area offers competitive prices in terms of buying or renting a property. “But, as with Observatory, it is an area with a diverse buyer profile, with people of all ages looking to buy and rent.”
Start-up capital: African leader
FIRST Cape Town is a leading financial centre in sub-Saharan Africa. Picture: Supplied
The Greater Cape Town area has been recognised as the tech hub of Africa, with 450 to 550 tech start-ups closely linked to “some of the world’s largest tech companies who have made the decision to invest here”.
This was stated in the State of Cape Town Central Report by Beverley Schäfer, the then-Western Cape minister of Economic Opportunities, who is now the deputy speaker of the province’s deputy speaker. The city recently overtook Joburg as the top financial centre in sub-Saharan Africa in the Global Financial Centres Index, “proving it really is a city of opportunity”.
“Our goal is to become a global tech hub, while at the same time developing digital skills and empowering young people. The roll out of broadband technology across the city and the province is helping connect our citizens to each other and to opportunities, too.
“By embracing innovation and building resilience to climate change, Cape Town has the ability to become a world-class smart city,” Schäfer says.
Top occupants: Range of residents
RETAINED The Cape Town central city is home to numerous businesses and residential properties. Picture: Jan Zeppenfield
The Cape Town central city is home to 61 residential complexes, states the CCID’s State of Cape Town Central Report.
Within these complexes:
- 361 units were sold last year.
- The average square metre price of properties transferred (sold) last year was R35 431/m².
- The average price per unit was R2.1 million
- The average unit size was 76.6m².
The report shows the central city is also home to:
- 68 corporate and general offices.
- 201 finance, investment, insurance and banking offices.
- 117 ICT and telecoms businesses.
- 96 NGOs/NPOs and industry councils.
“During 2018, a total of 3 168 313 passengers boarded a MyCiTi bus within the Central City,” the State of Cape Town Central Report also says.
Many merits: City of opportunity
Some of Cape Town’s accolades last year, as listed in the State of the Central City report, include:
- Africa’s top City of Opportunity, placed 24th out of 30 of the world’s leading global centres of finance, commerce and culture (PwC).
- Number one African city for hosting international association meetings for the 10th consecutive year (International Congress and Convention Association).
- In March, the credit rating agency Moody’s changed its rating of the City of Cape Town from negative to stable due to the city’s management of the drought crisis.
- Named the World’s Leading Festival and Events Destination at the 2018 World Travel Awards.
- For the second consecutive year, Cape Town International Airport was named the best in Africa.
- Ranked 12th out of 15 World’s Best Cities in 2018, a favourite destination for international travellers (Travel & Leisure magazine).
- Named best-value long-haul holiday destination in the United Kingdom’s Post Office Travel Money 2018 Long Haul Holiday Report.
- University of Cape Town ranked 114th in the 2019 Best Global Universities Rankings and top university in Africa.
- City of Cape Town invited to submit a bid to host the World Rugby Sevens Series (South African Rugby Union).
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