While South Africa's CBDs fade, Cape Town’s inner city champions a property rebirth

Key topics:

• R9bn pipeline drives Cape Town CBD’s mixed-use urban revival

• Public-private partnerships restore safety, order, and investment

• Young buyers, digital nomads fuel strong demand for city living

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By Neale Petersen*

The Cape Town Central City has become a living case study for how long-term vision, public-private collaboration, and mixed-use development can spark a property-led urban revival.

In 2025, Cape Town’s CBD is not just recovering, it’s outperforming, with cranes on the skyline and confidence in the ground. In the current development pipeline, with a total value of R9.031 billion, there are seven mixed-use developments worth R4.72 billion. This reflects investor optimism and strong buyer demand, especially among a new generation of tenants, residents, and digital entrepreneurs who are reshaping how we live and work in inner cities.

Mixed-use projects power urban comeback

At the heart of this transformation is a deliberate shift toward mixed-use living. From One Thibault to The Barracks and newer developments like The Rubik, the Cape Town CBD has fully embraced the global “15-minute city” concept of walkable urban precincts where residents can live, work, shop, and relax – all within a few city blocks.

Leading the charge is the flagship R1.3 billion development, City Park, that blends hospitality, residential living, coworking, and entertainment spaces under one roof. These schemes aren’t only aesthetic or aspirational: they reflect what modern urban dwellers are demanding: flexibility, accessibility, and community.

Partnerships are key

Cape Town’s resurgence did not happen in a vacuum. The early 2000s saw the establishment of the Cape Town Partnership, followed by the Cape Town Central City Improvement District (CCID), a model of public-private partnership rarely seen in South Africa, but now widely credited with reversing the city’s urban decline.

According to Tim Harris, CCID board member and co-founder of Mission for Inner City Cape Town, the model was pivotal: “The creation of the CCID was a rare but highly successful model for South Africa. It proved that business, government, and property owners can work together to deliver a clean, safe, and functional inner city.”

This approach is now being replicated in greater Cape Town and new initiatives like The Mission taking placemaking to the next level. These efforts have restored law enforcement, urban cleanliness, and critical infrastructure that underpins investor and tenant confidence.

Residential demand driven by digital nomads

The CBD’s rejuvenation isn’t just commercial, it’s also residential. A growing segment of digital nomads, postgraduates, entrepreneurs, and young professionals are choosing to live in the city for its proximity to coworking spaces, walkability, and social amenities. This demographic has fuelled the demand for smaller, flexible, and centrally located apartments, often within mixed-use precincts.

Investor appetite remains strong, particularly in the short-term rental space. Airbnb and other platforms continue to drive buy-to-let investments, supported by rising tourism. In the 2023/24 financial year, Cape Town’s cruise sector alone contributed R1.5 billion to the local economy, providing a significant tailwind for CBD-based short-stay rentals.

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The youth factor

While affordability remains a challenge, the Western Cape has the highest price-to-income ratio at 28.6 and young South Africans are not sitting out the market. In fact, according to Lightstone and ooba Home Loans, buyers aged 20-35 accounted for nearly 30% of all property transactions in 2024, with 69% of these being first-time buyers.

“Although young people are entering the market later, they are still highly motivated,” says Rhys Dyer, CEO of ooba Home Loans. “We’re seeing more joint applications, delayed buying to save for deposits, and strong interest in centrally located buy-to-let opportunities, especially in Cape Town.”

This group also tends to spend more when they do buy, with the average purchase sitting close to
R1 million, boosted by the adjusted transfer duty threshold of R1.21 million, which enables tax-free entry for most CBD units.

Cape Town as a global benchmark

The Central City has defied the odds. Where many city centres are in decline, it has leveraged vision, collaboration, and urban innovation to build not just a better property market but a more liveable, competitive, and globally relevant city.

The next challenge? Scaling this momentum sustainably, ensuring the benefits reach more people, and helping other cities across South Africa do the same.

With the right mix of investment, leadership, and community engagement, Cape Town proves that urban transformation isn’t just possible; it’s profitable, liveable, and essential for South Africa’s economic future.

Lessons for other South African cities

The Cape Town CBD offers a roadmap for other metros looking to revitalise their urban cores. Here are the principal tenets other cities can emulate:

• Invest in mixed-use developments that blend retail, residential, and workspaces;

• Enable strong public-private partnerships focused on safety, infrastructure, and urban management;

• Prioritise placemaking and public realm improvements that make city centres attractive, inclusive, and walkable;

• Attract and retain youth and digital professionals through flexible housing and high-speed connectivity, and

• Revive heritage buildings to balance historical preservation with modern needs.

This article was first published in the State of Cape Town Central City Report 2024 – A year in review, published by the Cape Town Central City Improvement District.

*Neale Petersen is founder and content-in-chief of Real Estate Investor magazine.

This article was first published by Daily Friend and is republished with permission.