The recent highest single rise in the repo rate in nearly 20 years is likely to drive investor movement towards Cape Town which is currently seeing the strongest rental growth of the major industrial conurbations and is widely regarded as a well-run city and largely free of national tenders.
This is according to Brent Townes, Commercial Property COO for Lew Geffen Sotheby’s International Realty in Cape Town, who said: “Nominal rentals for prime industrial space of 500 m² grew by 7.2% year on year in Cape Town during the second quarter of 2022, remaining above pre‐Covid levels, as the demand for space exceeds supply.
Townes said that capitalisation rates are declining in Cape Town due to the growing demand which is driving up prices. “The city traditionally trades from 0.75% to 1% below the national cap rates but in in Cape Town we currently have specific dynamics at play. “Exporters are also being impacted by port container congestion and cold room access and securing a DC/logistics chain is problematic as zoned vacant land parcels of sufficient size are simply not available which will drive radial expansion along the N7.
The total value of freehold property sold increased by 5% and the average selling price by 66% and with sectional title units, the average selling price increased by a nominal R4.02%.
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