Is Cape Town Experiencing a Housing Crisis? – Moneyweb

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JIMMY MOYAHA: Welcome to Property Tuesday! Today, we’ll take a closer look at property investment and whether the current figures make sense.

Despite ongoing discussions surrounding a housing crisis, we’ll evaluate the present property market to see if it truly supports that narrative.

I am pleased to have Lesego Majatladi, director at Gracht Asset Management, with us today to discuss this further. Welcome to the show, Lesego. Thank you for joining!

Check out: Cape Town CBD property boom reaches R12.8bn

What factors are contributing to the housing crisis in Cape Town? Reports suggest various challenges. However, property sales data indicates a booming market. How does the term ‘crisis’ play into our understanding?

LESEGO MAJATLADI: While I acknowledge there are housing challenges, each challenge can also be seen as an opportunity.

Some community organizations and media outlets perceive this as a crisis, which informs their language.

This scenario opens up avenues for productive discussions about our current situation and possible solutions.

Ultimately, I foresee substantial improvements over the next decade, which will allow us to look back on a significantly transformed city.

JIMMY MOYAHA: Lesego, let’s explore that opportunity further. Given the property dynamics in Cape Town where demand overtakes supply, driving prices up, what insights do you have?

Read:
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Many worry that Cape Town is becoming increasingly unaffordable for local residents, especially with the rising interest from international buyers.

In the realm of property investment, particularly with its long-term perspective, we must evaluate all available opportunities, no matter where they are located.

LESEGO MAJATLADI: Indeed. People moving to Cape Town naturally gravitate toward premium real estate.

This trend in high-demand locations like the Atlantic Seaboard leads to a limited number of available options, which drives prices higher.

We should also consider opportunities outside the Atlantic Seaboard, especially in and around the CBD.

I believe that’s where we will see significant future value emerging.

I see residential properties on the Atlantic Seaboard as exceptions, and we shouldn’t only focus on them; we need to explore other growth areas in the city.

JIMMY MOYAHA: Lesego, what concerns do you hold about property investments at this moment? We acknowledge that property is cyclical, like any asset class.

LESEGO MAJATLADI: As part of a team that has invested extensively in the city, I’m hopeful about future opportunities.

However, investing in the asset alone is just one piece of the puzzle; understanding the surrounding community is equally important.

Our work largely involves collaboration with the city, fellow landlords, and developers; otherwise, we risk creating a project isolated from the surrounding context.

The focus should be not just on development but fostering a precinct-wide approach to property development, which helps reduce potential risks.

Identifying opportunities comes from observing where groups of people are aligning in their thoughts and strategies regarding real estate.

Thus, a potential risk arises from adopting contrarian views that diverge from the prevailing market sentiment.

JIMMY MOYAHA: Before we wrap up, I’d like to hear your thoughts on crafting an investment thesis for property.

Recently, we’ve seen distinct performance trends within commercial, residential, and mixed-use properties.

As a property investor, it’s crucial not only to buy real estate but also to grasp the surrounding circumstances.

Are you observing any specific trends in sectors of the property market that are excelling over others?

LESEGO MAJATLADI: We haven’t fully reached that point yet.

However, a clear trend is arising in the Cape Town CBD, and fortunately, it’s also appearing in areas like Johannesburg – the transformation of commercial properties into residential spaces.

Due to high demand for residential properties, there is often a shortage of available land.

In such cases, converting existing commercial properties becomes a viable alternative.

I believe this trend will continue to grow.

Moreover, the industrial sector, particularly regarding last-mile e-commerce storage, holds significant promise.

Thus, these two segments are worth keeping an eye on.

A prospective future opportunity, which still requires careful analysis, lies in data centers and the necessary infrastructure demands.

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

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

Read: Golden Acre redevelopment commences retail phase

JIMMY MOYAHA: The property market is brimming with opportunities. Understanding these possibilities and knowing where your investments fit is essential.

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