Upturn in inquiries or industrial space heralds a recovering market
WITH the festive season over and J a n u a r y we l l u n d e r way, s o me media reports reflect increased business confidence in South Africa in general, coupled with growing anticipation about the World Cup.
JHI chief executive, Marna van der Walt, is cautiously optimistic and reports that in the first few weeks of trading this year, the company’s industrial brokers have seen a significant upturn in inquiries for space.
“Although this trend has not e x t e n d e d t o t h e o f f i c e s e c t o r, i t heralds a positive signal for the property market. However, this must be vi ewed re al i s t i c al l y a g ai nst t he backdrop of a constrained retail sector and contraction in household spending, which directly affects the manufacturing sector. The proposed electricity price hikes – still much under debate – would also negatively affect confidence, especially in manufacturing,” she says.
“ On t he ot her hand al t hough banks have to some extent amended their residential lending criteria, some banks still require up to 20 percent deposits from investors entering the commercial market, which is of concern. But unlike in 2009, when the recession caught many off guard, this year there seems to be a general preparedness to boldly face the challenges ahead.
A further reduced interest rate in the first quarter or first half of the year would be welcome, particularly i f c o n s u me r s p e n d i n g r e mai n s sluggish.
However, it seems interest rates may start rising in the last quarter of the year, which may put a damp- ener on economic recovery.”
On an upbeat note, Van der Walt says investment opportunities in the commercial property market do exist, particularly in areas that will be positively affected by infrastructural developments such as the Gautrain and BRT routes.
“The general consensus is that major opportunities will present themselves in the industrial sector and the recent indication by the Department of Trade and Industry that it will review the policy on industrial development zones may lead to increased investor incentives. In addition, the infrastructural improvements in host cities for the World Cup have added value to these areas, which will help boost market sentiment and investor confidence.”
She says though the World Cup will not have an immediate effect on commercial property, a successful tournament will bode well for the creation of investment opportunities towards the end of the year and in the following two years as a result of increased business confidence. Unfor t unately, oppor t unities for retail investments will remain low in the immediate future as listed prices are still too high.
Va n d e r Wal t s ay s i nve s t o r s should provide tenants with more incentives in 2010.
“Lower rentals and an increase in tenant installation allowances are some of the incentives which JHI is recommending that landlords implement to attract and retain tenants.
Call JHI on 011 911 8000 or e-mail firstname.lastname@example.org.