Commercial market ‘performing well’
THE COMMERCIAL property market is doing well despite the fact that the economy is still experiencing sluggish growth, having slowed to 2.6 percent in the third quarter, and against the backdrop of historically low interest rates, says Marna van der Walt, chief executive of JHI property services group.
However, she says investor confidence is being eroded by strikes and negative perceptions such as those created around Walmart’s rethinking of the Massmart deal.
“Current key drivers of the commercial market are infras t r u c t u r a l d eve l o p m e n t – including the Gautrain stations and their positive effect on sur- rounding areas – and government initiatives such as the new multi-billion-rand tax incentive programme launched by the Department of Trade and Industry. This is designed to boost investment and job creation in manufacturing.
“The historically low interest rates are likely to foster increased positive sentiment and help stimulate increased c o n s u me r r e t a i l s p e n d i n g , which in turn has spin-offs for manufacturers. Generally the forecast for South Africa’s retail sector is upbeat, although it is highly competitive as successful new shopping centres will lead to the demise of underperforming centres.The trend towards ‘green’ buildings is gathering pace and major national tenants like Nestlé are relocating to new ‘green’ buildings,” says Van der Walt.
JHI is involved in a pilot project incorporating 50 existing buildings, where cost-effective greening projects are being implemented. Tenants, particularly small businesses, are hard hit by electricity tariff hikes, so more ”greening” is expected to take place.
Van der Walt believes the effects of the recession will decrease in 2011, although high unemployment will still affect retailers. Office rentals should begin stabilising, with vacancy levels easing by the end of next year. JHI expects the upliftment of various CBDs around the country to continue.
“Looking further north into Africa, JHI is exploring launching a dedicated JHI office in Zimbabwe,” says Van der Walt.
She expects the implementation of the Consumer Protection Act in April will affect commercial landlords, who will need to ensure that the wording of lease agreements is in plain and understandable language.
“The act also introduces constraints on direct marketing which will prohibit brokers from canvassing for tenants, which has implications for landlords regarding the rental of vacant space.”