Downtown Johannesburg v Cape Town
How are sales and rental demand shaping up?
The Johannesburg CBD is on the rebound after many businesses moved their headquarters out of the centre of town and into Johannesburg’s newer business districts in Sandton and Rosebank.
Notable exceptions were the banks, mining houses and government departments, which employ significant numbers — people who are now interested in living in the area as its fortunes are beginning to turn.
According to Pam Golding Properties, Johannesburg CBD apartment prices range from R370,000 to R3.99m for penthouse apartments. In some prime buildings such as The Franklin in Pritchard Street, one-bedroom units are priced from between R900,000 and R1.995m compared with R665,000 to R750,000 for two-bedroom units in more ordinary buildings.
Seeff Properties markets apartments in the Johannesburg CBD in six existing developments on Marshall and Anderson streets, including Dogon Ashanti, Isibaya House and Mapungubwe Hotel Apartments. In these buildings, 40m2 bachelors start at about R400,000, while two-bedroom apartments (about 90m2) range from R800,000 to R1.4m — with R850,000 being the average.
“They are interesting as they offer CBD living in very secure apartments. They are close to the banks, which make up most of the tenants,” says Johannesburg CBD Seeff licensee Byron Cornish.
There has been a push to clean up portions of the Johannesburg CBD, mostly around Main Street where the mining houses are, says Cornish. “The street is one of the most beautiful in town, with coffee shops, walkways for pedestrians and great security.”
Cornish says there is a 50/50 split between buyers who want to live in the CBD and those looking to let out their apartments for a good yield. “Most investors are getting yields of about 9% and upwards for good opportunities in the CBD.
“The other 50% of owner/buyers are young professionals who work in the area. The average tenant stays for four years before moving on.”
Brian Goso, property consultant for Pam Golding Properties Johannesburg Central, says most residents are young professionals who work in the area and love the city vibe.
“There are also investors interested in the architectural history of the city and its buildings as well as expatriates working in the area who enjoy city living and its convenience.” In Cape Town, however, Pam Golding Properties research analyst Sandra Gordon says there is growing evidence of home owners opting to downsize — as apartment living allows an almost maintenance-free lifestyle, while offering security and convenience.
“The latest Pam Golding Properties Estate Agent Survey reveals that the most common reason for selling during the final quarter of 2017 was the desire to downsize — not because of financial pressures, but rather changes in family structure,” she says.
Unlike Cape Town, the Johannesburg CBD does not offer residents much in the way of nightlife. Nearby Braamfontein has restaurants and clubs, but these are not leading eat-out destinations.
Yet Goso says inner-city rejuvenation projects have seen thriving hubs such as the Maboneng Precinct make downtown Johannesburg an appealing place to call home. He says many residents who move still keep their apartments as an investment.
Transport route accessibility is another factor in the Johannesburg CBD’s favour. “You can connect to any direction in no time if you work out of the city. It is easily accessible as other residents use the Gautrain to Sandton, Rosebank and Pretoria,” says Goso.
Avoiding congestion is more than just a perk of Cape Town CBD living. “Rising utility and transport costs makes lock-up-and-go apartments attractive, especially to younger or first-time buyers who don’t want to spend extra on home maintenance,” says Gordon.
“With its excellent public transport — the MyCiti has an extensive network from the CBD — living in the city centre is a convenient option. As traffic congestion intensifies throughout Cape Town, more residents are willing to forgo larger plots or gardens to live closer to work.”
The water crisis may also soon be a reason for moving. “The city has confirmed that the CBD will be exempt from Day Zero so we are seeing increased interest in CBD apartments at the moment,” says Pam Golding Properties area manager Basil Moraitis. In downtown Cape Town in the vicinity of the
Foreshore, the current Culemborg node is being redeveloped as a precinct. The R10bn Harbour Arch development by Amdec will be Cape Town’s largest mixed-use residential development. Due for full completion in five years, it is an example of downtown “new urbanism”, incorporating sustainable and energy efficient technologies.
With a starting price of R2.5m VAT inclusive, options include studio, one, two and three-bedroom apartments. In addition to a residents’ pool and exercise area, there will be a roof garden. The development offers water-saving facilities and rainwater harvesting. “The new urbanism trend, which requires all your daily needs to be within walking distance, is well established and gaining significant traction in SA,” says Amdec’s head of development Nicholas Stopforth.