Is Cape Town Experiencing a Housing Crisis? – Moneyweb

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JIMMY MOYAHA: It’s Property Tuesday, and today we take a closer look at property investment to see if the figures still hold true.

While discussions about a housing crisis continue, we will assess the current property market to determine if it supports that narrative.

With me today is Lesego Majatladi, director at Gracht Asset Management, to further discuss this topic. It’s a pleasure to have you on the show, Lesego. Thank you for joining us.

Read: Cape Town CBD property boom reaches R12.8 billion

What factors are contributing to the housing crisis in Cape Town? We’ve received various reports on this issue, yet the property sales data indicates a boom. How do we reconcile the term ‘crisis’ with this situation?

LESEGO MAJATLADI: While I acknowledge there are housing challenges, every challenge also presents an opportunity.

Some civic groups and media outlets refer to it as a crisis, resulting in that classification.

This scenario encourages a dialogue about our current circumstances and potential solutions.

Ultimately, I foresee significant advancements in a decade, allowing us to look back on a reimagined city.

JIMMY MOYAHA: Lesego, let’s dive deeper into that opportunity. In Cape Town, where demand clearly outpaces supply leading to rising prices, what insights do you have?

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Concerns are mounting that Cape Town is becoming unaffordable for many South Africans, especially with increasing interest from international buyers.

In property investment, given its long-term nature, it’s crucial to recognize available opportunities, regardless of their geographic location.

LESEGO MAJATLADI: Absolutely. It’s natural for newcomers to Cape Town to focus on prime real estate.

This concentration on locations like the Atlantic Seaboard creates a shortage of opportunities, which inevitably drives prices higher.

However, we should seek prospects beyond the Atlantic Seaboard, particularly in and around the CBD.

I believe future value will emerge in those areas.

Residential properties along the Atlantic Seaboard are outliers, and we should not confine ourselves to them; rather, we need to examine other areas poised for growth in the city.

JIMMY MOYAHA: Lesego, what worries you about property investments at this moment? We know the property market cycles just like any other asset class.

LESEGO MAJATLADI: As a member of a team that has made considerable investments in the city, I remain optimistic about future prospects.

However, investing in the property itself is just one part of the equation; it is crucial to consider the neighborhood.

Part of our work involves collaborating with the city, other property owners, and developers; otherwise, you risk establishing an isolated project in uncertain times.

The focus should not only be on development but also on creating a cohesive precinct-wide approach that mitigates risks.

Identifying opportunities requires observing where groups are converging in their thoughts and strategies regarding real estate investments.

As such, a potential risk lies in diverging opinions that go against the prevailing market sentiment.

JIMMY MOYAHA: Before we wrap up, I’d love your thoughts on constructing an investment thesis for property.

We’ve seen various performance segments arise within commercial, residential, and mixed-use properties.

As a property investor, it’s important not just to acquire property, but to thoroughly understand the conditions around it.

Are you observing any specific trends within segments of the property market that seem to be outperforming others?

LESEGO MAJATLADI: We’re not quite there yet.

Nevertheless, a noteworthy trend in Cape Town CBD is the conversion of commercial properties into residential spaces, a trend that is fortunately emerging in Johannesburg as well.

Given the high demand for residential properties, there is often a lack of available land.

If land isn’t accessible, converting existing commercial properties becomes a practical solution.

This trend is expected to continue gaining traction.

Moreover, the industrial sector, especially for last-mile e-commerce storage, shows considerable promise.

Thus, these two segments deserve attention.

A potential area for future opportunity lies in data centers and their accompanying infrastructure requirements.

Read: Cape Town data center growth tests South Africa’s planning regulations

While it’s an intriguing avenue, we are currently focused on our project at Golden Acre, which involves residential conversions and retail.

Read: Golden Acre redevelopment enters retail phase

JIMMY MOYAHA: The property market is brimming with opportunities. Understanding these avenues and recognizing where your investments make sense is vital.

We’ll conclude our discussion here. Lesego Majatladi, director at Gracht Asset Management, has joined us to explore Cape Town’s property landscape and the ongoing boom.