Private property developers who invest in the demarcated Urban Development Zones (UDZs) in Cape Town, and who meet the conditions of SARS, qualify for tax incentives until March 2030 with the deadline having been recently extended, says the City of Cape Town.

The UDZ encourages the private sector to invest in and develop commercial and residential properties in inner-city areas served by public transport services. Administered by SARS, the incentive programme is supported by National Treasury.

“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,” says the City’s Deputy Mayor and Mayoral Committee Member for Spatial Planning and Environment, Alderman Eddie Andrews.

“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,” notes Mayoral Committee Member for Economic Growth, Alderman James Vos.

The municipality has declared UDZs in a section of the CBD 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 tax savings for investing in the following types of developments:

• 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.

According to the City’s stats, the UDZ has resulted in significant tax rebates between 2006 and 2025 with up to 2 057 claims to the value of nearly R6.7 billion with the value of new construction amounting to R747 million.