All over the world, inner cities are transforming into highly sought after residential areas where ‘sky space’ comes at a premium and this may well be one of the best options for savvy investors in 2006.

Barak Geffen Executive Director of Sotheby’s International Realty, operated by Lew Geffen says one of the ‘stock’ picks for 2006 could be to put a nest egg into the CBD baskets of Johannesburg and especially downtown Cape Town.

“If you look at any major cities throughout the world, CBD space comes at a premium, attracts big money and experiences sustained growth – SA will go the same way.”

He says as the heady heights in property growth over the past few years start to slow in 2006 investors are going to have to hold on to property for longer to obtain anything near the returns of 2004.

“This makes the fact that inner city space can often double up as either commercial or residential highly advantageous.

“My advice to investors for 2006 would be to invest in inner city space, but not to be too hasty to sell it, it’s definitely a longer term hold.

“Cities are in a constant state of growth – so you would be doing well even to invest in areas on the outskirts of commercial districts.”

He said a recent report in the Economist put the average price of Manhattan apartments at $1.3-milllion and as South Africa continued to grow and develop globally, its cities would grow and downtown space would also become more limited and sought after.

Geffen says the rejuvenation of the inner cities are already underway in the wake of commercial “character space” developments such as the Old Mutual building in Cape Town and Corner House in Johannesburg being converted into new multi-use developments, which incorporate recreational facilities and residential spaces.

“Living in such developments is now regarded as a secure, convenient and a very trendy option.

“Added to this is the beauty and historic character of the inner city areas as well as relative affordability which has given young investors of all races ‘a foot in the door’ and will continue to spur investment.”

“Buying entire buildings, including smaller ones, where growth or urban renewal is most likely to occur would be first prize, but purchasing single apartments in some older blocks with useable structures that can be cosmetically modernised is the affordable option.” 

“Comprehensive research via commercial and residential development brokers needs to be done by the less experienced investors to capitalise on these opportunities.”