More homes and shops being built in Western Cape to meet people’s needs

New property development has decreased across the country, but the Western Cape is still seeing some demand. Picture: Jiyoung Kim/Pexels

New property development has decreased across the country, but the Western Cape is still seeing some demand. Picture: Jiyoung Kim/Pexels

Published Jun 22, 2023


The ground in the Western Cape should be vibrating with the amount of residential and commercial property development taking place, particularly in Cape Town.

As more South Africans semigrate to this region in search of better lifestyles, new properties are being built to meet their needs.

These include apartments and estates, as well as retail stores and warehousing to store products.

The most recent FNB/BER Building Confidence Index may have fallen from 33 in the first three months of 2023 to 28 in the second quarter, and building activity across the country may have dropped, but developers are still seeing demand for various properties in the Western Cape.

This is not to say that property development in this province has not also declined, because it has, but, rather, that it is still seeing – and meeting, needs for certain building types.

In Cape Town and the Western Cape, apartment living continues to be a growing sector, says Rabie director Miguel Rodrigues.

“In our portfolio, our apartments are in higher demand as it appeals to both the investor looking at renting the apartment out, as well as first-time homebuyers. Our freestanding houses in secure estates sell a little slower, firstly since they have a higher price tag, but also because they are not a typical investor product – even though we see a small number of investors taking the leap.”

While offices have been “a bit of a step-child” since 2020, in certain nodes such as Century City, there is a “very high demand for office space”.

“So much so, that we will be bringing new offices space onto the market in the next year to meet the demand.”

Rodrigues notes that more new developments are expected to be launched in the latter part of the year, as is normally the trend.

Dejane Steyl, head of marketing at Devmark Property Group, says there is a combination of residential, commercial, and retail development taking place in the Western Cape, particularly close to Cape Town.

“This is due to the massive influx of people semigrating from other areas in the country...Residential ‘lock-up and go’, low maintenance housing within secure estates is definitely most in demand.”

The Devmco Group is also seeing continued growth and demand for large-scale secure estates that are in well-located areas and offer “great amenities” both within the developments and in close proximity, says Brad Winstanley, portfolio manager for Devmco Group.

“Multi-generational estates tend to be the most popular in the current environment, particularly those that are part of a broader mixed-use precinct. This means families can live securely, within the same area, but still retain independence, and their needs are catered for within a stone’s throw of their homes.”

Although noting that the current economic environment does not support large-scale development across property sectors, he says there are pockets of activity in the market, particularly in the residential space.

“South Africa continues to bring to life world-class developments in various sectors, and offers opportunities for developers who are able to identify these niches in the current market.”

Student accommodation in the country is an alternative real estate sector that is recording development activity, states Engelbert Binedell, chief operating officer at Growthpoint Properties, which is currently working on “several” such developments.

Growthpoint Investment Partners, through Growthpoint Student Accommodation REIT, has invested in R1.5 billion worth of projects in the past 18 months, each of which is making “significant positive impacts in their local economies”.

“The two new student accommodation properties are being developed near the Tshwane University of Technology and the University of Johannesburg, which will add a further 1,610 beds for university students in the 2024 academic year,” he says.

Offices, warehouses and shopping centres

New commercial property development activity is muted though, and not at the levels of pre-Covid due to rising interest rates, cost of construction, and low business confidence – among other reasons, Binedell says. But this does not mean that there is no commercial property development taking place.

“The only traditional commercial property sector with notable development activity is the industrial sector where there is a demand for quality warehousing for distribution purposes.”

The manufacturing sector has slowed down due to the economic environment and load shedding, and rail infrastructure has deteriorated, resulting in “finished” products needing to be warehoused closer to consumers for distribution.

Binedell says there is also some development activity in retail, specifically neighbourhood shopping centres.

“Growthpoint’s development activity in the retail sector is focused on strategic upgrades and asset optimisation with projects underway including major updates to Vaal Mall and Bayside Mall.”

Healthcare is another sector where, through Growthpoint Healthcare REIT, development is set to take place this year. Expansion at Hillcrest Private Hospital in KZN is due to commence in July, with the addition of 50 beds, two theatres and consulting rooms, while development of a healthcare campus in Cornubia, KZN, will get underway later this year.

He says there is currently “very little need” for office property developments, however.

Broadly speaking across the country, Emira Property Fund is seeing some new warehousing and distribution development coming to market where there is specific demand, and a few smaller retail developments for certain under-served communities. But chief operating officer Ulana van Biljon, agrees that there is “very little in the way of new office development” given the general oversupply of space in this sub-sector.

While noting “a great need” for new, affordable residential rental stock, she says development of such property is slow due to feasibility challenges such as the weak economy and the negative impacts of load shedding, higher inflation, and interest rates that are driving up construction costs and placing consumers under strain.

“Emira is of the view that new development isn’t a viable growth avenue for our business in this market, and we are not actively pursuing any. It would take robust tenant commitment/s for us to consider a new development in any of our chosen South African investment sub-sectors right now.”