The Wale Street Chambers building in Cape Town has been rescaled by Klarey Property Group, the developers behind The Harri in the East City Precinct. Wale Street Chambers now includes 48 high-end apartments, offices and retail spaces.
There has been a trend across SA’s CBDs towards converting existing office spaces into residential units.
The State of Cape Town Central City Report 2021 found the value of developments under construction or in the planning phase was R3.2bn for last year alone, with much of the pipeline being residential projects.
The inner city construction boom, much of which involves residential conversions, has meant office stock levels in the CBD have been significantly reduced, driving up commercial property prices.
Those businesses which want to be based in the CBD are in a tricky position, particularly since fuel prices affect operational and rental costs.
The Wale Street Chambers building lies on the corner of Wale and Long streets in the heart of the Cape Town CBD and now includes bite-sized offices favoured by young professionals and investors.
The units, ranging in size from 112m² to 149m², are selling at a significant discount compared to the market price for offices in the CBD.
“The average selling price of commercial property in this price range is 22 000/m², so currently we are coming in at 20% cheaper than the market,” said Jeffrey Kleu, investor and developer for the Klarey Group.
“Instead of renting, you can buy and only pay on average R1 975 more per month on your mortgage over a 10-year period in some cases. At the end of year ten, a business’s purchase deposit of R500 000 could be worth as much as R4.4m as opposed to zero if renting,” he said.
Klarey Group requires a 10% deposit to secure a sectional title office, which will be included in the offer to purchase.
Owners can opt for a “grey box” or “white box”. With the white box option, they will be able to move their furniture in. The unit will be fibre-ready and will enable businesses to start working immediately.
With the grey box option, owners do their own floors and lighting, but the developers offer them a contribution towards selecting their own lights and flooring, enabling them to tailor their own office to a degree.
Parking bays are also for sale at R150 000 per bay, a rarity as some developments in the CBD don’t even offer vehicle space. Owners also have the option of renting more bays from the body corporate, while there is alternative parking available at the old Christiaan Barnard Hospital 200m away.
“Capital growth in an area like the CBD has seen an average of approximately 6.5% per annum, while rental returns are between 7 and 9%. This gives investors an annual return of between 13 and 15%, which is an excellent return,” Kleu said.