Property damage warning for South Africans living in mixed-use developments

As mixed-use developments become increasingly popular in South Africa, experts warn that their complex shared infrastructure and insurance structures can create confusion over liability for property damage.

South Africa’s property market is entering a sustained growth phase, particularly where mixed-use developments are concerned.

In the last five years, these developments have surpassed the broader national property growth of approximately 6.5% by more than 43% in some cases.

Spurred by rising demand from local emigration trends, the growing popularity amongst international buyers, and a favourable interest rate environment, the growth trajectory is set to continue in 2026.

While mixed-use developments are currently experiencing renewed growth, the model is well established in South Africa.

From early projects such as Century City and Melrose Arch, mixed-use precincts evolved in response to congestion, security concerns and long commutes, introducing live-work-play environments in the urban landscape.

This long-term success confirms mixed-use property as a structural feature of local cities, rather than a short-term trend.

Santam’s chief underwriting officer, Thabo Twalo, explained that mixed-use, sectional schemes offer an attractive mix of residential, commercial, and recreational areas within a single development.

“This creates a vibrant and dynamic space that offers security, convenience, and lower maintenance costs,” Twalo said.

He pointed to examples such as Century City, Cape Town’s central business district, Tyger Waterfront, and the V&A Waterfront Marina, which have all seen price increases, with annual growth in the double digits.

Beyond convenience, security has become a major driver of buyers’ preference for mixed-use living, especially for younger South Africans.

Centralised access control, on-site surveillance, and managed precinct environments offer a level of safety and connectivity that closely aligns with the expectations of younger urban homeowners.

Despite rising prices in the sector, Absa’s latest Homeowners Sentiment Index (HSI) for the fourth quarter of 2025 showed that younger respondents (under 44) were far more confident than their older counterparts (over 55).

According to Twalo, South African Deeds Office data supports this, indicating that younger homeowners account for half of all property purchases.

He added that this younger demographic of buyers supports the growth of mixed-use, sectional title developments, where lifestyle options, convenience, security, and value are paramount.

Mixed-use living brings added risk and blurred responsibility

While mixed-use developments offer plenty of upsides, such as convenience and security, they also introduce complications and a plethora of potential risks for residents, owners and body corporates.

Modern mixed-use schemes often extend far beyond residential units, incorporating retail, offices, hotels and shared public amenities within a single precinct.

These diverse uses rely on common infrastructure and governance structures, which can complicate insurance responsibility when incidents occur and reinforce the need for clearly defined cover and specialist expertise.

As the sector’s popularity increases, Twalo stressed that it is crucial for owners and tenants to understand the intricacies of insurance claims for these types of properties.

“When something goes wrong in a sectional title – the roof leaks, floor cracks, a geyser bursts, or there’s a small fire – who is responsible for fixing the damage?” he asked.

With so many stakeholders involved, he said that ownership of issues can get “blurry”, which can cause tension between trustees, owners and occupants.

High-density design and shared building services can lead to claims in mixed-use developments escalating quickly.

Centralised plumbing, electrical systems, and vertical construction increase the likelihood that water, fire, or structural damage will affect multiple units or tenants at once, particularly as climate-related weather events intensify.

According to Twalo, the most common reasons for sectional title insurance claims are geyser-related issues and storm damage.

“With water shortages and the increased effects of climate change, claims for these types of issues are likely to only increase,” he said.

He explained that a body corporate will usually have adequate cover for all buildings within a sectional title scheme – whether the individual housing units or the common property areas – depending on the policy.

“This means that if your unit’s roof is damaged due to extreme wind conditions, the body corporate insurance pays toward the repair,” he said.

Body corporate pays – but owners still on the hook

Even though body corporates will typically pay for building damages, Twalo cautioned that the property’s owner is still responsible for initiating the claim.

When it comes to a tenant claim, it must go through the unit’s owner before being taken to the body corporate for processing.

“It must be signed off by a trustee or the managing agent. Owners should never claim directly from insurers. If an excess is due, the owner is responsible for paying it, according to the Sectional Title Act in South Africa,” Twalo said.

Importantly, Twalo added that the sectional title insurance cover only extends to the “brick and mortar” part of residential schemes and common property, not moveable contents. “These must be insured by section owners or their tenants.”

Well-located mixed-use developments typically benefit from stronger property value growth, driven by foot traffic, tenant diversity and sustained infrastructure investment.

As values rise, regular reassessment of insured amounts becomes critical, as stagnating valuations leave rapidly appreciating schemes materially underinsured.

Twalo added that sectional title unit owners are entitled to demand transparency regarding the scheme’s valuation figures.

“As a section owner, you can ask for the insured value of your property and request that this be increased – usually at the annual general meeting,” Twalo said.

“This request should come with a recommendation to the trustees to check that the value of the entire building is correct. Body corporate rules require that a scheme is never under-insured.”