How Cape Town’s Urban Development Zone (UDZ) Drives Urban Renewal
Private developers who invest in the demarcated Urban Development Zones (UDZs) in Cape Town and meet the conditions of the South African Revenue Service will now qualify for tax incentives until March 2030. Read more below:
The Urban Development Zone encourages the private sector to invest in and develop commercial and residential properties in inner-city areas served by public transport services. The UDZ is administered by SARS and is an incentive programme supported by the National Treasury.
The tax incentive has recently been extended until 31 March 2030.
‘This initiative is extremely important to attract private investment in areas that would usually not benefit from investment, and as a result are struggling from urban deprivation and decay. The tax savings encourage investments to spur regeneration, improvement, and an overall upliftment in the quality of life for those who work and live in these areas. The City is grateful for the extension of this incentive. It also aligns with the Mayor’s Urban Regeneration Programme and our efforts to improve Cape Town’s overall resilience and creating a City of Hope for all,’ said the City’s Deputy Mayor and Mayoral Committee Member for Spatial Planning and Environment, Alderman Eddie Andrews.
‘This is a major win for Cape Town’s inner-city revival. The extension of the UDZ tax incentive to 2030 gives us more time and space to drive investment into areas that need it most. I’ve seen first-hand how this incentive turns empty or underused buildings into housing, business hubs, and vibrant mixed-use spaces. This decision supports our mission to build a more inclusive, liveable, and economically active Cape Town,’ said the Mayoral Committee Member for Economic Growth, Alderman James Vos.
The City has declared UDZs in a section of the central business district in the vicinity of the Cape Town station, Maitland, Parow, and along Voortrekker Road and parts of Bellville; and along Klipfontein Road in Athlone.
Businesses that fall within a UDZ can benefit from significant tax savings for investing in the following types of development:
- Building, extending, improving an entire building, or adding to it
- Building, extending, improving or adding to a building where the applicable floor area is 1 000m² or more
- Building, extending, improving or adding to low-cost housing
- Purchasing such a building or part of such a building from a developer
The UDZ incentive started in 2003 with many extensions being motivated by the City’s Urban Planning and Design Department that annually reports on the success and use of the incentive. Detailed interviews are in process with property developers and claimants to determine the ease of applications and processing; as well as the general perception and use of the incentive.
The City’s annual report to SARS and National Treasury to be submitted by the end of September 2025 will contain a confirmation of the request for geographic expansion. Any interested company or individual can contact us at Ca**********@**********ov.za to request and interview.
According to the City’s statistics, the UDZ has resulted in significant tax rebates for the period 2006 to now:
- Up to 2 057 applications have been submitted with claims to the value of nearly R6,7 billion
- The value of new constructions amounted to R747 million
- The value of new acquisitions amounted to over R2,8 billion
- The value of refurbishments amounted to nearly R2,3 billion
- The value of improvements amounted to R612 million
- The value of extensions amounted to R238 million
‘The numbers speak for themselves. I want to encourage the private sector to make use of this incentive and help us improve these areas,’ said Alderman Andrews.
Visit the City’s website for more information: capetown.gov.za/work and business/doing-business-in-the-city/business-support-and-guidance/urban-development-zones
The incentive supports other initiatives that are part of the City’s Ease of Doing Business Programme. The UDZ extends and forms part of a range of new initiatives that aim to promote economic development in the City’s spatially targeted areas, such as the recently launched 76 Economic Area Profiles: capetown.gov.za/work and business/planning-portal/spatial-analysis-and-research/economic-area-profiles.
