With rich biodiversity, sprawling beaches, and a vibrant cityscape, it’s easy to see how Cape Town has become a well-known tourist destination both locally and internationally. Yet the bustling port city is also an economic force to be reckoned with, boasting a rapidly growing labor force that’s driving property developments and skyrocketing rental rates.
Cape Town has long been one of the top economic contributors to the overall $326 billion GDP of the South African economy. The coastal city is home to South Africa’s second-busiest airport, and the country’s top-rated university, the University of Cape Town. It also boasts numerous high profile tourist destinations such as Table Mountain, as well as some of the world’s largest sporting events, including the famous Cape Town Cycle Tour and the Comrades ultra-marathon.
The Port of Cape Town is the third largest container handling port in the country, with approved plans for a multibillion-rand upgrade to the facilities now set in motion. The largest three sectors in the city are wholesale and retail trade, catering, and accommodation; finance, insurance, real estate, and business services; and agriculture, forestry, and fishing.
Cape Town contains a labor force of around two million people, which means the city has the second largest number of people employed in South Africa and is responsible for over 61% of all employment in the Western Cape. In fact, the growing economy and high job potential has recently attracted many migrants looking for work.
The city contains four major commercial nodes and is a manufacturing base for several multinational companies such as Adidas and Johnson & Johnson. A variety of companies are headquartered here, representing a diverse array of industries that span everything from petrochemical companies to fashion designers.
Information Technology (IT) companies, including Amazon and Dimension Data, have also found great success in the bustling city, making it an important destination for South African professionals in this industry. Investors worldwide have touted Cape Town as a growing hub for both innovation and entrepreneurship, especially within the tech space.
According to Economic Performance Indicators, 16.4% more building plans were submitted to the City of Cape Town in the fourth quarter of 2017. And it’s easy to see why. With a staggering 4.23 million people living here, the “Mother City” is home to more people than some of America’s largest cities, including the City of Los Angeles. In fact, Cape Town is the second-most populated city in South Africa after Johannesburg.
In 2017, the city’s luxury real estate market earned recognition as the second-fastest growing in the world, outperforming a number of notable cities, including Seoul, Frankfurt, Paris, and Sydney. A combination of factors, which include increasing demand and unique supply restrictions, have contributed to the growing housing market in recent years.
According to the JLL Cape Town Office Market Report, 35,000 square meters were in the development pipeline by the end of 2017. They also noted a 6.9% vacancy rate which is down almost a percent year over year. The South African Property Owners Association believes that a sustained improvement in the office vacancy rate is dependent on the long-term strength of key economic drivers such as economic growth and business confidence. If recent investments in the city’s infrastructure and a growing interest in Cape Town’s economic potential from both domestic and international businesses is any indicator, we believe trends will remain positive for years to come.
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