Outmigration underpins rebound in Cape Town property market

Spear REIT CEO Quintin Rossi attributes Cape Town’s property recovery largely to out-migration, as an increase in buyer activity has been seen in the residential property sector, people moving from Gauteng and KwaZulu-Natal to the Western Cape.

The Western Cape province could be the best performer in 2022. Experts base this expectation on the belief that the province’s ability to attract the skills and purchasing power of migrants, crucial for economic growth, has recently been improved. .

Earlier this year, Lighthouse Properties reported that 43% of owners selling their properties in Gauteng are buying another property in a different province, and of that percentile, 36% are buying in Cape Town and the Western Cape.

This out-migration is expected to support Cape Town’s resilient property market as skilled workers, entrepreneurs and large corporations migrate to the metropolis to find work, set up businesses and relocate offices.

“With the outlook for tourism on the rise and positive data released by the Western Cape promotion and investment agency, WESGRO, Cape Town will lead the recovery of the property sector across all assets.” That’s according to Quintin Rossi, CEO of listed property group JSE Spear REIT. Rossi attributes this recovery largely to out-migration, as an increase in buyer activity has been noted by the residential property sector as people move from Gauteng and KwaZulu-Natal to the Western Cape.

Rossi says that while the domestic global economic outlook and, more recently, the Russian-Ukrainian war, remain difficult to navigate, the city’s real estate sector is accelerating its recovery. He pointed out that office, retail and industrial occupancy rates in Cape Town are showing a healthy rebound as the return-to-work trend continues and businesses begin to focus on growth and expansion. reprise.

Spear, which has 32 properties in its R4.6 billion specialist regional portfolio, posted close to 94% occupancy between March 2021 and the end of February 2022, with a portfolio made up 100% in the Western Cape.

Besides the obvious lure of the mother city, emigrants are said to seek safety and security, less pollution and a better quality of life, and South Africa has unique factors that support this trend. ;

Disorders
A recent commentary by First National Bank property strategist John Loos attributed unrest and looting in KwaZulu-Natal and other parts of South Africa in July last year as another significant factor for the relocation of businesses. Many people who were sitting on the fence have now accelerated their plans.

Municipal management
The Western Cape and Cape Town Municipal Districts have earned a reputation for being well managed and efficiently administered. Maintaining current infrastructure and rolling out future projects, such as current efforts to reduce dependency on Eskom, makes a strong investment case for the region. It is the policy of the Western Cape government to ensure that the city and province have the infrastructure and technology necessary to support businesses and investment in the region.

International investment
The biggest international companies such as Johnson & Johnson, Microsoft and Reuters have set up facilities in Cape Town. In a similar vein, US retail giant Amazon will be the anchor tenant of the R4.5 billion Cape Town-based residential and commercial property development, which is expected to create 5,239 jobs in the phase alone. of construction. South African tech companies based in the Western Cape continued to attract international investment, with fintech firm Clickatell announcing an additional R1.3 billion capital raise via the international investor market to further boost its growth ambitions. growth on the African continent.

The Western Cape has established itself not only as a leading international tourist destination, but as an economically viable investment case for technology companies, green energy companies as well as South African and foreign families looking to reinstall. The result benefits the province’s residential, commercial, retail and industrial real estate sectors.