A study of the transformation of the value of the Cape Town central precinct since 1994 with specific reference to the effect on the retail and office market

Uys, Sanett (2007-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2007.

Thesis

ENGLISH ABSTRACT: Socially, politically and economically, Cape Town Central City is one of the most important urban areas in South Africa. Apart from the fact that it is historically and culturally the oldest and most cosmopolitan city in South Africa, the Central Business District (CBD)accommodates about 240 000 commuters every day, generates more than R133 million in rates every year, constitutes over 20% of the economic turnover of the entire metropolitan area and provides over a quarter of all jobs in the Cape Town metropolitan area. Major challenges facing the Cape Town central precinct in the mid-1990s included growing vacancies, the capital flight to decentralised business nodes, the loss of value in buildings and the municipal rate base, the decline in building refurbishments, the shortage of parking, badly managed public open spaces and a rise in general crime rates. Through the transformation and revitalisation of the Central City, traditional economic sectors, such as the financial and business services sector, have been retained while the retail sector, tourism, information and communication technologies, and the creative industries have all shown growth. The formation of the Cape Town Partnership (CTP) and the Central City Improvement District (CID) gave the Central City an opportunity to combat the decay. The successful implementation of quality urban management systems has led to the development of new buildings and the refurbishment / redevelopment or recycling of approximately 160 buildings and public open spaces. Vacancies have decreased while the cumulative investment in the Central City since 2000 amounted to approximately R14 billion. This includes the capital value of leases, new developments, upgrades and renewals of buildings, and purchasing buildings for investment purchases. Since the last Municipal Valuation, the value of property in the Central City has increased significantly. As a result, the municipal rates base of the area also increased. With the implementation of the new General Valuation in July 2007, the city increased its annual revenue in the form of rates by more than 65%. Improved property fundamentals, sustainable rentals, increases in new developments and greater diversity are the result of the increased value of properties in the Central City. Office rentals increased steadily since the first quarter of 1995, while capitalisation rates decreased dramatically since the first quarter of 2003. Vacancy rates also decreased over the same period. Retail rentals are still in an upward phase since 1999 and the forecast by property economist Erwin Rode states that office rentals should continue to increase over the next five years with an average of approximately 14,6%. The last major challenge facing the Central City is the ability of the different spheres of government to work together as a unit and in turn with civil society organisations, NGOs and the private sector to ensure the success of the Cape Town Metropolitan area.

AFRIKAANSE OPSOMMING: Die sentrale stad van Kaapstad is een van die belangrikste stedelike gebiede in Suid-Afrika wat maatskaplike, politieke en ekonomiese kwessies betref. Buiten die feit dat dit histories en kultureel die oudste en mees kosmopolitaanse stad in Suid-Afrika is, word die Sentrale Sakegebied (SSG) elke dag deur sowat 240 000 pendelaars besoek en genereer dit elke jaar meer as R133 miljoen in munisipale belasting. Die SSG verteenwoordig ook 20% van die ekonomiese omset van die hele metropolitaanse gebied en verskaf meer as 'n kwart van al die werkgeleenthede in die Kaapstadse metropolitaanse gebied. Die uitdagings wat die Kaapstadse sentrale gebied in die mid-1990's ervaar het, sluit in toenemende leegstande, kapitaalvlug na gedesentraliseerde sakenodusse, waardeverlies in geboue en in munisipale belastingbasis, afname in gebou-opkappings, tekort aan parkering, openbare oop ruimtes wat swak bestuur word, en 'n toename in algemene misdaadsyfers. Deur die transformasie en heroplewering van die sentrale stadsgebied kon tradisionele ekonomiese sektore soos die finansiële en sakedienstesektor behou word terwyl die kleinhandelsektor, toerisme, inligting- en kommunikasietegnologie, en die kreatiewe bedryfsrigtings almal groei aangetoon het. Die ontstaan van die Kaapstadse Vennootskap (KV) en die sentrale stadsverbeteringsdistrik (SSVD) het aan die sentrale stad 'n geleentheid gebied om die verval om te swaai. Die suksesvolle implementering van stedelike bestuurstelsels van gehalte het tot die ontwikkeling van nuwe geboue en die opknapping / herontwikkeling of herbenutting van sowat 160 geboue en openbare oop ruimtes gelei. Leegstande het aansienlik gedaal terwyl die kumulatiewe belegging in die sentrale stad sedert 2000 op sowat R14 miljard beraam word. Dit sluit in die kapitaalwaarde van huurkontrakte, nuwe ontwikkelings, opgraderings en die opknapping van geboue, en die koop van geboue vir beleggingsdoeleindes. Die waarde van eiendom in die sentrale stad het sedert die vorige Munisipale Waardasie beduidend toegeneem. As gevolg hiervan het die munisipale belastingbasis van die gebied ook toegeneem. Met die implementering van die nuwe Algemene Waardasie in Julie 2007 het die stad sy jaarlikse inkomste in die vorm van belasting met meer as 65% verhoog. Die toename in die waarde van eiendom in die sentrale stad het gelei tot verbeterde eiendomsfundamentele, volhoubare huurkontrakte, 'n toename in nuwe ontwikkelings en groter diversiteit. Kantoorhuur het sedert die eerste kwartaal van 1995 bestendig toegeneem terwyl kapitalisasiekoerse sedert die eerste kwartaal van 2003 dramaties gedaal het. Leegstandsyfers het ook oor dieselfde tydperk gedaal. Kleinhandelhuur is sedert 1999 steeds in 'n opswaaifase en die eiendomsekonoom Erwin Rode voorspel dat kantoorhuur oor die volgende vyf jaar gemiddeld met sowat 14,6% sal toeneem. Die laaste groot uitdaging vir sentrale stad is die vermoë van die verskillende sfere van die regering om as 'n eenheid saam te werk, en ook om met die burgerlike gemeenskapsorganisasies, NRO's en die private sektor saam te werk om die sukses van die Kaapstadse metropolitaanse gebied te verseker.

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