A RARE opportunity, and "possibly unique on the African continent", awaits exploitation by property investors in Cape Town's CBD, says property economist Wendy Hartshorne, private client consultant to Collins Commercial Properties.

Compared with most other cities on the continent, Cape Town's CBD was thriving, Collins said, and demand for retail space in particular was such that there was a definite shortage. Well-priced office space was also being taken up at a rate not seen for some years.

"These factors have combined to create a demand for space at a level which should encourage owners of older buildings to take a long and hard look at the economic opportunities now being seen for the professional refurbishment of those picturesque historical buildings that are found in Cape Town and nowhere else," Hartshorne suggested.

"Currently there is virtually no new office or retail space being opened up in Cape Town's CBD, which, when allied to the present spate of demands for this type of space, means that owners of older buildings can afford to upgrade their buildings to great advantage and with considerable cost effectiveness.

"Owners, and potential property investors, are extremely fortunate in the Western Cape in that 'old and historical' is seen as an attractive feature where in other cities, old and particularly the 'ancient monument' nomenclature is generally regarded as a disadvantage.

With rentals hardening, owners of old and traditionally styled buildings can afford to have a look at upgrading and refurbishing."

Hartshorne said that construction of new commercial buildings was now costing between R3 000 and R 4000 a square metre, plus the cost of the land and the demolition of the existing improvements before new construction could commence.

"Upgrading and refurbishment, in most cases," Hartshorne said, "would cost not much more than R1 500 a square metre to bring most buildings up to A-grade standard depending on whether the building was already air-conditioned and the state of the existing finishes and elevators.

"If a building lacked parking and none was available in the immediate vicinity, this would have to be taken into account and, as some investors had already done, it often paid to purchase a building and convert it to parking space because parking had become an extremely profitable property investment," she said.

"The major advantages of converting old buildings in Cape Town was that most of them are aesthetically pleasing, or can be made so with some cosmetic attention. Conversions and upgrades are generally faster and less disruptive so that investors can expect a quicker return.

In several cases, Hartshorne said, tenants had been so attracted to old buildings that they were prepared to negotiate with owners for lease terms that allowed for the tenant to undertake restoration to suit personal aesthetic requirements, as had happened recently with the Phoenix Hotel which had become an light industrial building but the new tenant had restored it to its former glory as a "lovely traditional boutique hotel".

Several far-sighted investors had already recognised these opportunities and were prepared to invest in buildings with vacancy factors as high as 35% in order to capitalise on current conditions by upgrading and refurbishing and at the same time "hiking" rentals by as much as 50% in certain cases.

Hartshorne predicted that with the province taking up the space in the old Syfrets building in Wale Street and an agreement over the adjacent BOE, Bank of Good Hope, old Reserve Bank and Rhodes buildings apparently imminent, the current wave of upgrading of older buildings by investors could increase in momentum.

"Old Cape Town offers investors such unusual and attractive opportunities to capitalise on our architecture, that we can expect the city to present an image of historical attraction unrivalled on the sub-continent."