Johannesburg’s governance and infrastructure problems have left its commercial property market at least $12 billion behind Cape Town, offering one of the clearest indications yet of how municipal performance can shape investment within the same economy.
Cape Town’s commercial property market has pulled ahead of Johannesburg’s, with comparable office space now valued at roughly twice the price, according to a new study.
- Comparable office properties in Cape Town are valued at roughly twice those in Johannesburg, new research shows.
- Gmaven estimates that the pricing divide has left Johannesburg at least $12 billion behind its coastal rival.
- Infrastructure failures, unstable leadership and weak municipal finances have pushed businesses and investors towards better-performing cities.
- South Africa’s November local elections could determine whether Johannesburg begins reversing the decline.
Comparable office space in Cape Town is now valued at about twice the price of similar property in Johannesburg, according to research by Gmaven, the company behind one of Africa’s largest commercial real estate databases.
The study, examined 25,700 properties and more than 1,500 major transactions completed since 2020.
Although the total commercial property stock in each city is currently valued at around $22 billion, Gmaven estimates that Johannesburg’s properties would be worth at least $12 billion more if they attracted valuations comparable to those in Cape Town.
The finding means the divide is not simply about Cape Town having more buildings or a larger commercial property market. Instead, investors are attaching significantly different prices to similar assets in the two cities.
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“The cities share a currency, central bank, sovereign risk premium, tax system, and the same listed landlords,” Bloombergquoted Gmaven CEO Will Harris as saying.
“Their asset-value divergence offers an unusually revealing comparison of how municipal performance may influence market prices or economic performance within one economy.”
Poor governance leaves Johannesburg with $12 billion commercial property value gap [Gemini Generated Image]BI Africa
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Governance enters property prices
The divide reflects a wider movement of companies, investment and skilled workers away from Johannesburg towards South Africa’s coastal cities.
Johannesburg remains the country’s main commercial centre and contributes about 15 per cent of national economic output. However, its position has been weakened by unreliable water and electricity services, deteriorating roads, political instability and growing financial pressure.
The city has had nine mayors in about a decade, while repeated changes in governing coalitions have made it more difficult to maintain long-term infrastructure and investment programmes.
South Africa’s National Treasury recently temporarily withheld funds from Johannesburg and more than 60 other municipalities over persistent breaches of financial rules. The affected municipalities recorded R40.14 billion in irregular expenditure during the previous year.
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Business Leadership South Africa has described Johannesburg’s deterioration as a national economic risk, warning that failures in the country’s commercial capital could undermine South Africa’s broader recovery.
The problems have filtered directly into the property market. Companies have reduced office space, relocated operations or moved to decentralised business districts where electricity, water, security and transport services are more reliable.
Johannesburg’s office vacancy rate stood at 16.7 per cent at the end of 2024, after reaching 19.5 per cent in 2022. By comparison, Cape Town’s vacancy rate had fallen to 6.1 per cent by the final quarter of 2025.
Lower demand means Johannesburg landlords must offer cheaper rents and accept lower building valuations, particularly for older offices that need extensive upgrades.
Some owners are converting obsolete office blocks into apartments because residential use offers stronger returns than competing for a shrinking pool of corporate tenants.
Gmaven said Johannesburg commercial property no longer displays the stability traditionally associated with real estate because companies have effectively “voted with their feet”.
“Landlords cannot conjure up tenants, so owners have watched, largely helplessly, as value drained away,” the company said.
Johannesburg’s deteriorating infrastructure, governance challenges and weak service delivery are reshaping investment decisions in South Africa’s commercial property market.Google
Cape Town, meanwhile, is attracting a growing share of South Africa’s property investment, corporate expansion and skilled migration.
The city added more than 68,000 jobs during the final quarter of 2025, largely driven by finance, real estate, business services and the call-centre industry. Employment reached about 1.89 million, narrowing its employment gap with Johannesburg to the smallest on record.
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Major developments are also reinforcing the city’s position.
Amazon’s planned African headquarters forms part of a large mixed-use development, while construction is advancing on the R230 million Quay 7 Superyacht Marina at the V&A Waterfront.
The marina is scheduled to open in November 2026 and is part of the wider redevelopment of Cape Town’s waterfront economy. The investment shift is also visible in the strategies of South Africa’s biggest landlords.
Growthpoint Properties, the country’s largest listed real estate investment trust, has been reducing its relative exposure to Gauteng, the province that includes Johannesburg, while seeking stronger opportunities in coastal markets.
Its previous reporting showed that the Western Cape and KwaZulu-Natal were outperforming Gauteng because of stronger demand and more limited property supply.
Hyprop Investments has similarly moved more capital towards the Western Cape and Eastern Europe as it attempts to improve returns and reduce its exposure to weaker markets.
However, Cape Town’s success is creating pressures of its own. Strong migration and rising demand have pushed residential prices and rents higher, worsening an affordability crisis that increasingly affects middle-income residents as well as poorer households.
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Growing investment in Cape Town is widening the commercial property value gap between South Africa’s two biggest cities as businesses favour better-governed locations.BI Africa
Johannesburg’s decline will be a central issue when South Africans vote in local government elections on November 4, 2026.
President Cyril Ramaphosa confirmed the date earlier this year, setting up a major contest over the management of the country’s biggest municipalities.
The elections come after the African National Congress lost its national parliamentary majority in 2024 and amid increasing voter frustration over failing local infrastructure.
Harris said a credible change in leadership, followed by immediate improvements in administration and service delivery, could begin restoring investor confidence in Johannesburg.
A recovery would have significance beyond South Africa. African cities are preparing for rapid population growth, with the continent expected to account for roughly a quarter of the global population by 2050.
The contrast between Johannesburg and Cape Town therefore provides a warning about the financial consequences of weak city management.
It also shows that investors do not price buildings in isolation. Roads, water supplies, electricity networks, security, political stability and municipal finances can all determine whether capital remains in a city, or moves elsewhere.
“If Johannesburg does achieve a turnaround, that turnaround is almost a case study for what is possible throughout all other cities and towns in South Africa and indeed other countries across Africa,” Harris said.
