In the light of significant increases in the prices of affordable accommodation close to the Cape Town CBD and a cycle of increasing rental costs, certain developers have stepped up to the plate by providing viable alternatives for new housing opportunities in the ‘peri-CBD’ areas.
Nearly 40% of Cape Town’s population reside in the Metro-South East Integration Zone (MSEIZ). This has one of the highest densities in the city – above 100 units/ha – and is home to the largest concentration of people considered in the most vulnerable group.
City of Cape Town Mayoral Committee Member for Transport and Urban Development, Brett Herron admits that it is the job of the City to mitigate against a trend where tenants who have lived their entire lives in suburbs are threatened with displacement by increasing property prices or displacement for other reasons. The slow roll out of a complex social housing regime is frustratingly slow, but hopefully the City’s plans will shortly break ground. “The provision of affordable housing opportunities in and around the city centre, in Woodstock and Salt River will be a good start” he says.
While government interventions have been aimed at individuals and households earning less than R15 000 per month, in general, the income group between R15 000 – R30 000 per month has come off second best. Into this gap, a number of projects have been launched, notably the MSEIZ in the Woodstock – Obervatory Main Road strip.
Chairman of Rawson Developers, Bill Rawson and Managing Director, Carl Nortje are experienced in the provision of appropriate housing opportunities to help address shortages.
Nortje says that the company has refined the concept of the secure, compact lifestyle apartment in areas close to the CBD where, by all accounts, sales and rentals of new apartments have been brisk: “We encourage buyers to come on board at an early stage of the project. For example, at the Premier on the Main Road in Newlands, there have been returns of up to 25% per annum on a two bedroom apartment since project launch to handover. It is a particular favourite for buyers who have family at UCT”.
Development in the Urban Development Zone (UDZ) area of Observatory Main Road particularly excites Rawson. Here, potential exists for not only great Return On Investment, but also sustainable income for the investor. “The UDZ is a system whereby tax relief is obtained on capital invested in income-earning property in a designated area. This means, as long as your dwelling is earning rent, you may claim a portion of your purchase price as a tax rebate annually over a set period, as long as you are earning income from 100% occupation”, he explains.
Advice to the market
Compare prices per m² in the ‘peri-CBD’ against those of the CBD.
Statistics collated by Rawson indicate that new developments in the MSEIZ southern suburbs are on average 20% cheaper than those in the CBD.
Check for easy access to nodal routes in and out of the City – CBD, N2, M5, Airport, etc. and availability or soon-to-be availability of public transport, such as MyCiTi
Investigate the growth potential of the investment. Returns way above those offered by other financial investments have been achieved.
For those buyers looking to accommodate students in the family, or are professionals who work at these places: ease of access to large institutions of higher learning, including UCT, Medical School and the various colleges of Rosebank and Rondebosch is a big consideration.
Quality – the project should not only look good, but should offer quality finishes even for standard options - and a seamless handover to the client.
Active security is a non-negotiable.
According to Herron, an imminent roll-out of Phase 2A of the MyCiTi service to Wynberg and Claremont is central to the MSEIZ. “This will greatly enhance the potential of living in Observatory, enjoying its vibrant lifestyle and commuting to the CBD” says Nortje.
Herron says that the City would like to see that private sector implements its vision. This means that the public and private sector will have to adapt its approach to spatial planning and urban development. “A more compact city with higher densities and more efficient/mixed land use”, he notes.
By Gareth Griffiths