Rapidly increasing demand and limited land availability have made Cape Town and Durban appealing investment destinations
In the vibrant economic landscape of South Africa, the cities of Cape Town and Durban have emerged as two of the most investable logistics and industrial markets on the continent [1]. The surge in demand for well-located industrial and logistics facilities in these key hubs can be attributed to several key factors.
Firstly, the proximity to major transport infrastructure plays a crucial role. Both cities offer strategic access to significant ports, with Durban boasting the largest container port in Africa and Cape Town specializing in fruit and perishable exports [1][3]. This strategic location enables businesses to minimize transport time and costs, a vital consideration in today's fast-paced global economy.
Secondly, the limited and constrained industrial land supply, particularly in Cape Town, creates pressure on rents and drives demand for high-quality facilities in well-located areas such as Montague Gardens and Arterial road corridors [1].
The growing sectors of e-commerce, cold chain, and temperature-sensitive logistics also contribute to this demand. Increasing demand for temperature-controlled warehousing, last-mile delivery, and pharma distribution in South Africa supports the need for modern, well-located logistics facilities that enable operational efficiency and integrated supply chains [1][2].
A strong labor pool and operational support are also favoured by businesses. Locations offering access to local labor forces with appropriate skills, as well as reliable municipal services and clear zoning, are preferred since they reduce risk and enable efficient shift patterns and wage cost management [1].
Ongoing improvements and investments in logistics infrastructure further amplify the attractiveness of these locations for industrial logistics users. Projects like the Bayhead Road Rehabilitation near Durban port and investments in digitally enhanced supply chains and freight infrastructure make these locations even more appealing [3][2].
In Durban, triple net rentals for A-grade distribution centers currently range between R105/m2-R110/m2, with further rental escalation likely if supply remains constrained. Rentals and vacancies in Cape Town's industrial sector are on the rise due to a period of semigration, constrained industrial land, and a flight to quality [1]. Facilities in lower-risk zones in both cities command higher rentals and lower incentives.
Climate risk is now a key factor in asset valuation and investment due diligence. Assets that embed mitigation strategies early attract stronger investor interest and pricing premiums. This shift towards real estate investment is not just about property, but about strategic alignment between business operations, infrastructure resilience, and long-term investment performance [1].
In conclusion, the combination of strategic port access, constrained land supply, growth of specialized logistics needs (e.g., cold chain), skilled labor access, and infrastructure upgrades underpin the robust demand for well-situated industrial and logistics properties in these key South African hubs [1][2][3].
- The demand for well-located industrial and logistics facilities in Cape Town and Durban, key logistics and industrial markets in South Africa, is driven by the proximity to major transport infrastructure, such as ports, which enable businesses to minimize transport costs and time.
- The limited industrial land supply, particularly in Cape Town, increases the demand for high-quality facilities in well-located areas like Montague Gardens and Arterial road corridors, as well as growing sectors like e-commerce, cold chain, and temperature-sensitive logistics.
- Businesses prefer locations that offer access to local skilled labor forces, reliable municipal services, and clear zoning, as these factors reduce risk and enable efficient operations.
- Investments in logistics infrastructure improvements, such as digitally enhanced supply chains and freight infrastructure, as well as the shift towards real estate that aligns with business operations and long-term investment performance, make these locations even more appealing for industrial logistics users.
