The impact of tourism on Cape Town’s commercial and industrial real estate
The City of Cape Town has recently added “Best City in the World” in the 2025 Telegraph Travel Awards to its long list of accolades. With its natural beauty, advanced infrastructure and array of attractions, it’s not surprising that the awards keep rolling in for the Mother City. 3Cube Property Solutions takes a close look at the impact of Cape Town’s tourism on commercial and industrial property owners in the city.
The impact of tourism on property values
Anyone looking to rent or buy a home in various parts of Cape Town can tell stories of not only the cost but also of the difficulty in finding suitable accommodation, which is in short supply. The same picture is seen in the industrial and commercial property sphere.
BusinessTech recently reported that South Africa’s office rentals have surpassed pre-COVID levels as the work-from-home trend continues to reverse. While this is being seen in all South African metros, it is especially true of the Mother City. According to the Rode Report from Q1 2025, Cape Town has been leading the post-pandemic recovery. The report cites the V&A Waterfront and Claremont as being areas with particularly high demand for office space. Naturally, high demand means higher prices.
The resurgence in office demand is closely tied to Cape Town’s thriving tourism sector. High visitor numbers boost the hospitality and retail economy, creating spillover demand for premium office space. For example, Growthpoint has revitalised historic buildings on Kloof Street into a mixed-use hub, integrating office spaces occupied by Travelstart, Mushroom Media and Workshop 17.
Record numbers of tourists have spurred demand for hotel expansions as well as new retail and restaurant spaces in key tourist zones – but this is far from the only way that commercial and industrial property owners can capitalise on Cape Town’s ongoing tourist boom. The logistics and warehousing sectors benefit from a growing need to store and distribute various goods, which boosts the upward trajectory of industrial property values.
A case in point is Cape Crusader Logistics opening a dedicated 20 000 square meter warehousing facility in Parow Industrial. Designed for high-performance logistics, the centre is laid out to accommodate high-volume container unpacks and efficient truck dispatch operations.
Job creation and new developments
As far back as 2023, Cape Town had rebounded from pandemic pressure with a boom in property investments and developments. The resultant surge of new property investments totalled an estimated R7.285 billion according to the Cape Town Central City Improvement District (CCID).
In December 2024, Cape Town’s CBD enjoyed a bumper tourist season, with unprecedented demand for hotels, leisure activities and short-term accommodation. 2025 is set to be no different, and throughout the year, factors like the cruise tourism surge, conferences and events are driving tourism and resultant job creation in the city.
In terms of new developments in the tourism sector, the V&A Waterfront is set for a major expansion, with R20 billion to be invested in phases over the next 15-20 years. The plan involves adding 440 000 square metres to the attraction’s current 614 000 square metres. It is envisioned that the new precinct will include residential space and cultural amenities, while simultaneously creating a new leisure destination for swimming, walking and water-based activities.
Various developments are coming to Cape Town in the more immediate future. A new super-luxury hotel, Quay 7 Hotel, is projected to open in 2026, boasting 142 rooms and six serviced apartments.
Potential challenges for local businesses
Calling a popular city home also comes with its challenges. The influx of tourists and digital nomads into Cape Town is driving up accommodation and rental prices, making it challenging for Capetonians to find homes – and equally tough for small businesses to find affordable premises. Public infrastructure in various parts of Cape Town also comes under added pressure as a result of tourism, with traffic congestion being part of life throughout the city.
Looking globally: Tourism’s impact on other cities
The Cape Town case is not unique. Many cities around the world have reaped significant benefits from tourism. A classic example is Dubai, where tourism has helped diversify the economy away from oil, positioning the gulf nation as a luxury and events destination.
On the flip side, a growing number of cities in the world are experiencing challenges created by tourism. Cape Town is no stranger to the impacts of high numbers on its infrastructure. Similarly, Kyoto, Japan and Venice, Italy are just two examples of cities where the influx of tourists causes severe congestion on city buses and other infrastructure that was originally intended for the use of local residents.
Denmark’s capital, Copenhagen has found a revolutionary way to reap the benefits of tourism while managing the needs of both locals and tourists. Rikkie Holm Petersen, director of marketing for Wonderful Copenhagen, recently shared details about CopenPay, the city’s new tourism programme. “You pay for experiences in Copenhagen by doing an action,” Petersen explains. “For example, you could go on a kayak tour for free by collecting litter in our canals.”
If your business needs help finding the right premises to allow you to capitalise on Cape Town’s ongoing tourism boom, get in touch with 3Cube Property Solutions.