Unlocking Cape Town's development potential
Category Property Tips
The development potential available in a growing city such as Cape Town (COCT) is a great boost for the property market. Cape Town remains the most rewarding market for investors and developers, driven by a robust demand which underpins excellent capital value growth.
The geographical limitations mean that there is only so much land available for development, making it difficult to expand, but creates an opportunity seized upon by the COCT for densification. COCT believes that more development potential can be unlocked within the city itself and has taken innovative steps to create more opportunities for investors and developers, including micro-developers. These include relaxing certain regulations/criteria to facilitate more efficiency, and reduce costs and effort for small developers.
This also offers huge opportunities for property owners who can unlock more value through development while investors can purchase properties for redevelopment. We have already seen quite a lot of new developments, big and small, over the last few years in various areas in the City including the Southern Suburbs, and now the COCT is introducing even more progressive opportunities aimed at alleviating the housing challenges.
While still subject to various regulations and compliance, these new regulations introduce more simplicity and convenience. Briefly, these include:
Subdivision - this allows a single property to be divided into two or more new, separate plots, each with its own title deed, creating new standalone properties for sale or development.
Second and Third Dwellings - these can now be added as an additional property right, requiring only building plan approval. However, a sectional title register is required to allow for separate ownership or sale of these units.
Sectional Title Developments - this allows a property to be developed into individual (up to three), privately-owned units with shared common areas, providing a flexible way to create small, multi-unit developments such as apartments or townhouses.
In addition to the above, the Urban Development Zone (UDZ) Tax Incentive has also been extended to 2030. This benefit, however, is only available to developers in certain designated zones as part of the government's long-term commitment to urban regeneration.
Read more about these here:
https://stbb.co.za/development-of-property/
Nonetheless, the possibilities outlined above for the COCT offer significant opportunities for property owners to unlock more value from their existing properties while investors could find opportunities for redevelopment or rental investments.
Please feel free to contact us if you would like to chat about your property aspirations, or discuss opportunities available in the current market.
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Author: Gina Meintjes
