Prop­erty mar­ket out­look re­mains weak due to credit crunch

Weekend Argus (Saturday Edition) - - PROPERTY -

in­fla­tion in this sec­tor.

Flat rentals na­tion­ally also re­main rather flat.

“This is no sur­prise, in light of the per­sis­tent fi­nan­cial pres­sure that many house­holds are un­der,” says Rode.

In the sec­ond quar­ter of this year, nom­i­nal mar­ket rentals on flats grew by 5 per­cent and on houses by 4 per­cent, whereas mar­ket rentals on town­houses posted growth of only 3 per­cent.

With con­sumer in­fla­tion (ex­clud­ing hous­ing) of about 6 per­cent, this im­plies that in real terms res­i­den­tial rentals are still con­tract­ing.

Re­gion­ally, flat rentals in Cape Town ( at 5 per­cent) showed the strong­est growth. Dur­ban fol­lowed with rental growth of 2 per­cent and in Joburg and Pre­to­ria, rentals were only marginally higher, ris­ing by 1 per­cent.

Another key find­ing is the medi­ocre growth in the mar­ket rentals of of­fice space.

In the sec­ond quar­ter of this year, of­fice rentals in Joburg and Cape Town de­cen­tralised, on av­er­age, showed growth of 6 per­cent, and in Pre­to­ria de­cen­tralised rentals were up by 5 per­cent. Dur­ban de­cen­tralised was able to muster growth of only 4 per­cent.

“There is still no marked im­prove­ment in over­all of­fice va­cancy rates,” Rode says.

“This should be ex­pected given the lack­lus­tre de­mand for of­fice space in the wake of weak growth in the ser­vices sec­tor of the econ­omy, not to men­tion lack of busi­ness con­fi­dence. Nat­u­rally, the out­come of this has been medi­ocre growth in mar­ket rentals.”

Re­gard­ing the in­dus­trial prop­erty mar­ket, un­til there are sus­tained im­prove­ments in the man­u­fac­tur­ing and re­tail sec­tors, no magic should be ex­pected from the in­dus­trial prop­erty mar­ket, says Rode.

Dur­ing the quar­ter un­der re­view, rentals in the in­dus­trial ag­glom­er­a­tions of Dur­ban and Port El­iz­a­beth showed the strong­est growth (9 per­cent).

On the Cen­tral Wit­wa­ter­srand in­dus­trial rentals were up by 5 per­cent and on the East Rand by 0.4 per­cent.

I n t he Cape Penin­sula rentals con­tracted by 1 per­cent.

Over the same pe­riod, build­ing costs are ex­pected to have shown growth of roughly 11 per­cent.

This im­plies that in all of the men­tioned ar­eas rentals con­tracted in real terms.

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