The property boom at Capricorn Park, in the Western Cape, has yielded astonishing results in the past two years, with experts confirming that land values had doubled during this period.
During this period, sales transactions for vacant land and leases, to the tune of R54-million have been completed, setting the wheels in motion for what is expected to be an explosive period for growth for the local economy.
Director at the Annenberg Property Group, Andries Louw shed some light on the nature of these developments, and how it was that the industry stood to benefit from them.
“This development may have taken a while to realize its potential but has proven its worth as an ideal location with sound investment potential as land value has doubled in the past two years alone,” said Louw.
“The park is now extremely well established with only six sites available to still be developed. These are owned by construction companies who are holding onto them in order to carry out turnkey projects,” added Louw.
“Launched over a decade ago and combining commercial and light industrial, Capricorn Park was brought to market to meet the growing popularity of secure parks, particularly with limited land available in the Southern areas of Cape Town where you could develop property to suit your own particular requirements.
“The desirability and success of Westlake, as well as the low vacancy levels in nearby industrial nodes such as Retreat, coupled with the demand from start-ups and small enterprises, were key drivers underpinning the development of Capricorn Park, which comprises mostly light industrial mini-unit parks. For example, it makes perfect sense for start-ups with special requirements, such as those in the food industry and seeking HACCP (Hazard Analysis & Critical Control Points) compliance, to acquire brand new units rather than invest considerable capital on older units – especially those with asbestos roofs, in order to achieve compliance.”
While the recent results have been extraordinary, this journey has not always been smooth sailing for the all the relevant stakeholders, especially following the global recession that was encountered towards the end of the last decade. But there has been a considerable resurgence during the past ten years.
“With the 2008 crash everything came to a halt. As Capricorn was still finding its feet and had not yet hit critical mass, the demand from new and small businesses dried up, leading to long term vacancies, reduced rental rates and declining land prices,” said Louw.
“Although Cape Town was experiencing a shortage of industrial zoned land at the time, Capricorn Park was then considered too far south, which outweighed the appeal of cheap land opportunities.
“As a result, we struggled to convince businesses further north to consider the area, as typically a client looking at Epping preferred to consider other areas such as Airport, Ndabeni and Parow, as they are in the same general vicinity,” he said.
However, in the face of adversity, greater opportunity presented itself, and well, here we are.
“In early 2015 I was approached by a developer who wanted to launch a mini-unit industrial park project. As he wasn’t familiar with the Cape Town industrial market he had no preconceived notion about any particular area and was open to suggestions.
“After compiling a list of all available sites in the relevant size range from 1 000 to 5 000sqm and the going rental rates in those areas, I realized what an obvious buy Capricorn Park represented at the time. You could acquire serviced industrial land for just R600 a square metre in a secure industrial park, compared with upwards of R1 000 per square metre in other areas – and not even within a secured park.
“Rentals in Capricorn were also similar to rentals in other areas, which meant you could achieve a higher return on your investment. This is when I realized that Capricorn Park was Cape Town’s ‘little Johannesburg’ where you could buy land cheaply yet achieve high rentals. Needless to say the developer bought a piece of land at this rate.”