Com­mer­cial mar­ket ‘per­form­ing well’

Weekend Argus (Saturday Edition) - - PROPERTY -

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.”

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