Confidence in Cape Town is being written across its skyline.
Amazon.com has built a $250 million Africa headquarters at the foot of Table Mountain. Buyers are shelling out more than $3 million for each apartment near a planned billion-dollar expansion of the prized V&A Waterfront district, where Marriott International is set to open its most luxurious hotel on the continent.
For 250 years after the first ships of the Dutch East India Company landed at the Cape of Good Hope, the city remained at the center of South Africa's economy. Then, in 1886, the discovery of the world's largest gold field moved capital inland. Johannesburg was born and soon this coastal city was eclipsed.
Now, the pendulum is swinging again. Johannesburg suffers from stalled projects, corruption scandals and financial stress, while Cape Town is booming. Their changing fortunes reflect a broader restructuring of Africa's largest economy.
Growth in the Western Cape province, where Cape Town accounts for about 72% of output, is projected to outpace the national average in 2025. The city has the lowest unemployment rate of all metros in the country and added more jobs last year than any other major centre, helping fuel migration and boost property prices.
It has overtaken Johannesburg to become the South African city with the highest number of taxpayers.
Investors are “betting on the future,” DA Mayor Geordin Hill-Lewis told Bloomberg News. “The city has good public services and a stable, trustworthy government,” he said from the stands of the 55,000-seat stadium in Cape Town, which has hosted the HSBC SVNS rugby tournament and an Ed Sheeran concert.
“It has all the ingredients to make it an attractive place to live.”
concern over inequality
But even as capital, skilled workers and migrants flow across South Africa at an unmatched pace, inequality remains a central concern. After more than three decades of democratic rule, the country is still one of the most unequal regions in the world, and the townships – where apartheid governments forcibly relocated people of color – remain among the poorest, most violent and underserved.
In a 2023 report, the Center for Sustainable, Healthy and Learning Cities and Neighborhoods called Cape Town “deeply polarized and isolated”, noting that parts of the population lacked access to basic water and sanitation services. “Public services help reduce some of these inequalities, but their access and quality are also very uneven across the city,” the researchers said.
The imbalance is visible elsewhere too. Cape Town's political and business elite are disproportionately white compared to other major South African cities. Hill-Lewis, elected as national head of her party two months ago, rejected that criticism. “You need to elect a capable government, regardless of who the people are or what they look like,” he said.
In November, Helen Zille, the white former mayor of Cape Town, will lead the DA's bid to take control of Johannesburg. The party is leading in the polls and will likely rely on its track record in Cape Town, which, for all its problems, remains a rare bright spot in the South African economy.
It has a population of about 4.8 million, roughly the same as Johannesburg, and has a smaller budget, yet it spends almost twice as much on infrastructure investment and maintenance.
“Comparing Johannesburg and Cape Town, you would swear you were in two different countries,” said Busisiwe Mavuso, chief executive of Business Leadership South Africa, a major lobby group.
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Busisiwe Mavuso, CEO of Business Leadership SA.
Under the DA's leadership since 2006, Cape Town has benefited from policy certainty and is the only one of South Africa's eight largest metropolises to receive clean audits over the past three years. By contrast, Johannesburg has been ruled by unstable coalitions and 10 mayors over the past decade – including a DA – and is now at risk of losing state funding due to what the finance minister calls irresponsible spending.
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Its role as a financial center is gradually waning as ultra-wealthy South Africans, including business figures, increasingly base themselves in and around Cape Town, located more than 1 400 km to the south-west.
The coastal city is on track to overtake Johannesburg as Africa's center for millionaires by 2030, according to Henley & Partners' Africa Wealth Report, and its growing technology and startup ecosystem has earned it the nickname Silicon Cape.
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Yet the influx of money has also intensified the question of who really benefits from Cape Town's growth. Family offices and venture capitalists are flocking to the city, and business process outsourcing has emerged as a fast-growing industry, but manufacturing, a major source of jobs for low-skilled workers, continues to struggle. Many residents live concentrated in peripheral townships far from opportunity, while wealth is concentrated in a handful of affluent corridors.
Nevertheless, the city is one of the most visited major metros in the country and has attracted thousands of people in recent years, leading to a rapid increase in property values.
outsourcing boom
“This is one of the great cities in the world,” said Jason Locke, vice president for Africa at Nasdaq-listed outsourcing firm Concentrix Corp. The government “quickly recognized the potential and power of this industry to attract foreign direct investment to create jobs, economic wealth for the city and communities.”
Call centers alone provide approximately 70,000 mostly entry-level jobs, about three-fifths of the national total for the industry. Over the next decade, the city plans to increase the number of people working in fields such as legal and accounting by 200,000, according to Clayton Williams, CEO of CapeBPO, the city-funded industry body. Many of those jobs are held by young women of color, the most marginalized demographic.
Authorities are also looking at Cape Town as a premium location for conferences, film productions and luxury events. The city issued more than 3,000 permits for commercials, music videos and television series in the last fiscal year. Shahrukh Khan recently shot action and song sequences for a major Bollywood production.
Local authorities expect the growth in industries to help the Western Cape's economy grow by 49% to R1 trillion by 2035, with Cape Town contributing about three-quarters. This is more ambitious than Johannesburg's home province Gauteng, which aims to increase output by a quarter to R2.18 trillion over the same period.
Joburg remains the home of finance
Johannesburg remains home to Africa's largest stock exchange as well as major financial services and mining companies. It is the base of the three-city subcontinent, home to a quarter of South Africa's population and a third of the national economy.
“We don't have mountains, we don't have the sea, but we have 16.5 million people,” said Sthembiso Dlamini, CEO of the Gauteng Growth and Development Agency. “We still have a heartbeat for the economy.”
Cape Town is different from other centers of population, but the pace of activity is hard to ignore.
Amazon's new African headquarters was bustling with construction vehicles on a recent summer afternoon. Workers moved materials between sites for the new offices, cranes lifted glass panels into place, and landowners tended an indigenous garden built on land sacred to South Africa's San people, who trace their lineage back 100,000 years.
Across the street, new residences, offices and retail space are being built. These facilities will cater to the growing population, including people relocating from other South African cities, known locally as migration.
According to the mayor, based on consumer and address change data, approximately 100,000 families have moved to Cape Town in recent years. They include Tamara, a self-employed mother who relocated from Johannesburg with her husband and child in March. His decision was partly lifestyle driven.
It's wonderful to be able to walk to the park, walk to the library, walk to church, and walk to the woods. This is something we couldn't do in Kensington, Johannesburg, where the sounds of gunfire were part of the neighborhood's soundtrack.
Tamara, Cape Town resident
The contradiction is not straightforward. While violent crime is more widespread elsewhere in South Africa, Cape Town's gang culture means it records a higher murder rate than Johannesburg. An indication of the magnitude of such violence is that at least 26 people were killed in a recent weekend. City officials say they are constrained because law enforcement is typically the province of the national government.
These crimes are prevalent in poorer areas, a divide that provides another window into the extent of inequality.
The middle-class suburb of Muizenberg, with its historic houses, is a short drive from the disorderly low-rise blocks of Mitchells Plain, once reserved for mixed-race South Africans, and then on to Khayelitsha – one of the largest slums in the world according to the Cities Alliance. That township borders a barren stretch of coastline, where the wind blows sand from the bare dunes of acres of corrugated iron huts.
There are luxury wine estates just a few miles away.
“Cape Town is one of the most spatially unequal cities in the world,” said Ndifuna Ukwazi, an activist and legal organization advocating for affordable housing. “The legacy of the apartheid plan continues to dictate where people live, where jobs are located, and how much time residents spend commuting.”
Whether the city model continues to concentrate opportunity in a narrow area or provide broad-based prosperity remains an open question. Officials defend the budget as “pro-poor”, highlighting service-delivery gains from more efficient clinics to a functioning fire department compared to Johannesburg's lack of trucks.
City officials are now trying to wrest some control over passenger rail, ports and policing from the national government, which has generated optimism in some quarters.
“There is a lot that could still go right,” said Izaak Odendaal, chief investment strategist at Cape Town-based Symmetry, an investment manager backed by Old Mutual. Executives now need to “unlock the next level.”