Cape Town’s CBD is booming with property development activity.

Rob Kane, chair of the Cape Town Central City Improvement District, shares his insights on a Moneyweb podcast on why there are around 20 construction tower cranes in the city centre, and other achievements of arguably South Africa’s most successful city improvement district.

The Cape Town City Bowl and CBD seems to be on the up again post the Covid lull. The CBD is bustling with property development activity, and that’s the topic of this latest episode of The Property Pod.

A clear sign of an area booming on the property and development front is when you see lots of cranes in the sky. Cape Town’s CBD has some 20 cranes currently around.

The Cape Town Central City Improvement District or CCID, is a property sector-driven public-private partnership that’s doing great work to keep the CBD cleaner and safer, as well as attracting major investment into the city.

Besides being chair of the Cape Town CCID, Kane is also CEO of unlisted Boxwood Property Fund, which is based in the Mother City and is an investor in the CBD itself.

Highlights

“There are roughly 20 tower cranes in the city centre and, to be honest, I’d challenge anybody to find 20 tower cranes in one grouping anywhere else in the country. So I think you’re right. The city is doing well, and I think it’s a result of an awful lot of hard work by the city, and then also organisations like the City Improvement District, the CID. We [the CCID] collect additional levies from all the ratepayers, so we are privately funded, but we do work closely with the city.”

“The other key component is the confidence that people have had in the city centre, and they’re investing here – and that’s the 20 tower cranes that you see.”

“Just to give a bit of context, the rateable value of property in the city centre in 2006 was R6 billion. Last year it was R44 billion. Now that, year on year, is a huge increase – I can’t do that in my head, but you’re probably talking the order of 17% per annum compound growth.”

“At the moment, on top of the R44 billion, we’ve another R5.7 billion that is of development work that’s either in hand – and those are the 20 tower cranes you can see – or they’re about to start. So it’s an impressive figure in anybody’s language.”

“Most of it, almost all of it – I’m just running down a list I’ve got in front of me, and we specifically focus on investments in our chosen areas; so I’m just running down that list – that’s all within our area. And the CID operates within a very tight boundary, and that’s limited by the elevated motorway and by Buitengracht Street and then generally Orange Street. And then parliament is the other sort of area that it covers on the east precinct.”

“So it’s a very well-defined area in which we operate, and I guess it’s no secret or no surprise really that that’s where the investment is happening, because there’s confidence in the sensibility to manage [development in the area].”

Are most of these developments new property projects, or a mix between new and redevelopments, such as office-to-residential conversions and office-to-hotel conversions?

“It’s a very nice mix of conversions – a number of buildings that are being converted half into residential and the remaining half into offices. There are fully residential conversions and a lot of new build as well. So it’s quite a nice spread in terms of new build and using existing buildings, which is very healthy for the city.”

“It’s also a nice spread in terms of sector. So, we’ve got a lot of office developments going on and upgrades, plus a lot of residential. That brings in the retail and hospitality part; hotels and that sort of thing. So it’s a very, very nice mix.”

What role does the Cape Town CCID play in securing such investments into the CBD?

“We’ve been going about 20 years now, and initially the focus was just on safety and security. We’ve broadened that over time to really cover four areas.”

“One is safety and security – and that probably comprises just over half of our R97 million budget. We also do a lot of urban beautification and cleaning. So all the cleaners you see around our streets, those will be ours.”

“We are involved in social development – all those operations are 24 hours a day – and also marketing communications.

So we don’t actively promote development, but what we do is we provide an environment that’s conducive to development, and I think that’s the key.”

Is the CCID looking to expand its coverage area at some stage?

“We have a very good working relationship with the [V&A] Waterfront, and I think it’s a very competent organisation. In terms of expanding our boundaries, provided we can maintain our level of service, we’d be very happy to do that. So we would be amenable to extending our boundaries.

“What’s interesting is we started over 20 years ago. Since then, in the City of Cape Town, the greater city, there’ve been about another 43 CIDs that have started.”

“People have looked at this model and seen it works, and then they come to us and they will say, well, how does this go? How do you do this? So we’ve kind of germinated a lot of other very successful CIDs in the Cape area.”

CCID achievements

“There are a lot of achievements that are very visible when you walk around the city. It’s a kind of safe, clean area and there are lots of upgrades, lots of tower cranes. But there’s also another side to the CIDs. We have, 24 hours a day, social workers who are on the streets every day, trying to rehabilitate people and work with them.”

“Another step that’s not often known is that we employ directly and indirectly probably about 700 people. A lot of those, Suren, were formally homeless; they were sleeping on the street, and they now have an opportunity to, as you say, clean drains and do things like that.”

“I think it’s probably one of the best organisations I’ve ever been associated with, and an interesting thing is that all the people on the board are property owners, so we all have a lot to lose if the CID doesn’t work.”

“There’s a lot of commitment from the board members to get it right. I think that’s been a successful area.”

“It’s been great just to see the CID grow, and we’re always trying new things. One issue in Cape Town is the informal traders and the difficulty they have.”

“One, their trading kiosks are not very attractive and, two, there is just the transporting of those kiosks every morning and every evening. So we’ve just built a prototype of a kiosk that we are now testing on the corner of Long Street and Strand Street, and we’re trialling these things.”

“We’re [the CCID] doing an awful lot of things in the community that nobody really ever gets to hear about.”

“In addition to that, there is just the base level that we are working for; our stakeholders and the ratepayers. We’ve seen the benefits come in on that as Boxwood. We’ve done a number of developments [during] Covid that have been very successful and worked well.

“But just on a hard numbers basis, our revenues from parking are higher now than they were in 2019. And Suren, in the hard lockdown, standing in our parking garages was a very lonely place to be. There was not much going on in those parking garages.”

“The point is traffic volumes are up and parking revenues are up, so it means there is confidence in the city centre.”

As the current chair of the Cape Town CCID, what is your future vision for the Cape Town CBD, especially considering all that has been achieved thus far?

“I guess it’s quite a simple vision … as the CCID, we just want to continue giving a really good stable environment for investment. That’s the best thing that we can do. If we achieve that, then the city will grow very naturally.”

“And we will see the number of residential units that come into the city increase. I think in about a year’s time we’ll have 9 000 residential units in the city. Who could have imagined that five, 10 years ago?”

“I think provided we just keep doing those basics and we stick to our mandate the city will be successful and it’ll continue to be a good investment made. That’s really the measure of our success.”

“The residential triggers an awful lot of other activity … and then it just starts becoming a nicer place to live. More hotels are attracted to come into the area, that sort of thing.”