Affordable housing: The demand for affordable housing, especially in locations close to areas of employment, is fast outpacing the supply of the same. While many developers have taken to converting older office buildings to residential apartments in the last decade, the number of buildings available (and suitable) for conversion is fast dwindling. In addition to supply-side pressures driving demand, the continually rising interest rates are currently acting as a deterrent to home ownership and impacting on the disposable income of households, thus enhancing the demand for affordable housing. Developers are acting on this demand and increasingly gravitating toward assets positioned in the lower to mid-income ranges. However, we expect that demand will continue to outstrip supply over the short to medium term.
Lifestyle estate rather than just security and gated communities: Gated and security estates became exceedingly popular in South Africa in the 90s as a solution to rising safety concerns. While the demand for security remains as high as ever, households are increasingly looking for estates that offer a lifestyle component in addition to safety. Developers of larger master-planned estates are increasingly focused on providing leisure and recreational amenities within their developments and giving just as much attention to the lifestyle of the estate as the security. These types of lifestyle components include F&B offerings, well-designed communal green spaces, co-working spaces, etc.
Precinct developments: Mixed-use precincts, combining residential, commercial and retail spaces, have gained popularity in South Africa. Previous development strategies focusing on single asset developments within an isolated sphere are progressively being replaced by a wider and more holistic view with developers cognizant of the added value given by precinct development. These developments aim to create vibrant and self-sustaining communities where residents can live, work and access various amenities within close proximity – the true embodiment of live, work and play.
Sustainable and eco-friendly features: There is an increasing focus on sustainability and environmental certifications in real estate projects. Energy-efficient buildings, water-saving technologies and environmentally conscious design elements are becoming more prevalent in new developments. The demand for these is partially driven by the need for self-sustained energy provision and also by increasing awareness of environmental considerations from commercial and residential occupiers alike. An example of one such development is The Fynbos, Cape Town which is Africa’s first biophilic building and is set for completion in 2024.
Semigration: Data from StatsSA mid-year population census shows the extent of semigration within South Africa and clearly illustrates the exodus of households from inland cities towards coastal areas. While Gauteng remains a top recipient of inbound migration of households, the more interesting trend is the move of households to the coastal provinces of KwaZulu-Natal and the Western Cape. Cape Town specifically has been a popular area for relocation with households attracted by the growing employment opportunities and stable infrastructure offered. According to the latest StatsSA publications, the Western Cape is projected to receive more than 460,000 migrants over the period 2021-2026. The influx and resultant demand for housing have driven house prices in Cape Town to record highs.
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