Office owners in Claremont, Cape Town's prime suburban central business district (CBD), have been given an unexpected boost from the city's frenzied conversion of offices to flats.
The suburb suffers from one of the highest office-vacancy rates in SA, with 23% of its space lying empty.
The former offices of Norwich Union contributed heavily to the oversupply when the company was absorbed into Fedsure a few years ago. (Fedsure was then taken over by Investec.)
Its 16,000 m² of offices are now being converted to expensive flats by local financier and developer Property Partners. About 6,000 m² have been sublet by Investec and the remaining 10,000 m² make up almost half the 24,000 m² vacancy in the CBD. But Investec's tenants will have to find new offices early next year, reducing the oversupply to a respectable 7,4%.
The flats have proved a success. Nearly 96% of the 201 units in the first of two buildings to be converted have sold out by word of mouth.
They have been renamed Intaba East and West.
Property Partners CEO Stuart Chait says the property industry, including other developers, bankers, agents, architects and quantity surveyors, lead the list of buyers.
"They see Claremont as a better bet than the Cape Town CBD for flat conversions because of the more stable rental market and the better leisure and retail infrastructure," he adds. "There is also less likelihood of oversupply as there are so few offices to convert. And prices per m² are the same."
Agents also expect office owners to immediately raise their asking rents back to levels similar to those of the Sandton CBD, with which they once vied for the title of most expensive in SA.
Financial Mail
Publisher: Financial Mail
Source: Financial Mail
