Business is bouncing back far quicker in Cape Town than in Joburg – helped along by the July unrest

Business Insider SA
Cape Town business Johannesburg
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  • Skilled workers are ditching Johannesburg for Cape Town in search of a better work-life balance.
  • This semigration trend, although not new, has been strengthened by the ability to work remotely during the pandemic and the devastating July unrest that tore through parts of Gauteng and KwaZulu-Natal.
  • Entrepreneurs are choosing to set up shop in Cape Town, helping the city's battered commercial property sector rebound, with increased activity in office, retail, and industrial properties.
  • Johannesburg, meanwhile, ranks lowest of all South Africa's metros, and that's unlikely to change in 2022, according to FNB property strategist, John Loos.
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Cape Town's office, retail, and industrial properties are bouncing back from the coronavirus-induced downturn a lot quicker than Johannesburg's, owing, in part, to a boom in semigration fuelled by the July unrest.

Small towns in the Western Cape have witnessed an explosion of interest since the onset of the pandemic and associated lockdown restrictions which forced South Africans out of the office and into remote-work scenarios. Coastal towns, particularly those close to Cape Town, have become especially popular, attracting a flurry of home buyers from Gauteng and KwaZulu-Natal in 2020.

This semigration trend, whereby families move from Gauteng to the Western Cape in search of a better lifestyle or work-life balance, is nothing new. And the recent shift towards remote work – with hybrid work models touted as the new normal – removed a major obstacle to semigration.

But Cape Town's attractiveness received a major boost in 2021 due to the July unrest that ripped through parts of Gauteng and KwaZulu-Natal, destroying businesses, and leaving more than 300 people dead.   

"Our expectation was that these events would play into the hands of the Western Cape, following hot on the heels of another positive event in the form of a surge in remote working in lockdowns, which would also make some people think of relocating South-Westwards," writes FNB property strategist, John Loos, as part of the 2021 FNB Property Broker Survey, published on Wednesday.

"And so, not surprisingly, we have seen talk of, and data-driven indications, that 'semigration' to the Western Cape has been strong once again."

This trend has not only been positive for the residential property market but has also hastened the rebound of commercial spaces, as entrepreneurs set up shop in Cape Town. Skilled semigrants also bring "wealth that translates into consumer purchasing power" which drives economic performance in Cape Town.

Cape Town's office market has shown the highest activity ratings in 2021 among South Africa's six major metros. FNB's Property Broker Survey defines "activity" as indications of interest in buying or selling – inquiries or viewings related to potential buying or listing – through to actual transaction levels.

See also | Offices aren't filling up yet – and Joburg is emptier than Cape Town

Nelson Mandela Bay tops retail property activity rankings, followed closely by Cape Town. Despite the unrest, industrial activity in eThekwini Metro remains the highest, followed by Nelson Mandela Bay, and Cape Town.

Cape Town outperforms all other metros – across office, retail, and industrial properties – when it comes to the perceived increase in activity levels compared with six months prior.

"Cape Town features strongly in the activity ratings, but is only the top rated region in the Office Market," notes Loos.

"However, when we view how brokers perceive the direction of the market, there was a clearly stronger perception of the City of Cape Town region being on a strengthening sales activity path in all three major commercial property markets in 2021."

The opposite is true for Johannesburg, which recorded the lowest activity ratings among office spaces and second lowest – only just ahead of Tshwane – in retail and industrial properties.

Activity in office and retail spaces in Johannesburg have also shown the steepest decline out of all the metros.

Where Cape Town scores 53.75 on the office space activity index, Johannesburg sits at negative 47.75. In retail, Cape Town scores 46.43, while Johannesburg records a negative 34.54.

The only area in which Johannesburg hasn’t recorded a negative score on the index is in the industrial sector. But none of the metros have, and only Nelson Mandela Bay's meagre increase is lower than Johannesburg's.

"The world's greatest gold rush ever has long since been fading, the very event that Joburg was built on," notes Loos.

"It is not perceived as a major lifestyle city, and improving communications technology enables more highly skilled and affluent people to live and work elsewhere. In the way of modern services sectors, for instance the so-called Tech Sectors, it seems to get stiff competition from Cape Town too. Jozi's challenge is to find its new big competitive advantage."

(Compiled by Luke Daniel)

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