Rode’s property news
Retail property’s popularity continues to amaze. The expected increase in shopping centre space for 2004 is already at a healthy 198.000m² and growing.
Limited rental stock in two cities has been cited as one of the reasons why flat rentals have shown a remarkable recovery over the past year. The latest Rode’s Report indicates a whopping 30% increase in rental growth for Port Elizabeth, while Durban is hot on the Friendly City’s heels with an increase of 20%.
Office space take-up around the country has exploded, indicating that the worst is over for this property class.
Buy-to-let investors and houses in upmarket suburbs are most at risk should the South African economy be hit by an external shock that causes interest rates to be bumped up.
It seems as if the window of opportunity for listing directly-held, non-residential property is closing fast. The reason for this is that unlisted properties’ market rating relative to listed property could further improve in months to come, and this will take some of the attraction of listing away.
When it comes to non-residential property, industrials have not been the place to be, especially over the last decade.
Offices in South Africa’s suburbs are in growing demand, yet are still not commanding higher real rentals, the latest issue of Rode’s Report shows.
Underdog Port Elizabeth is fast catching up with the industrial rentals of other cities. Since 1999, the city’s industrial rentals have grown relatively faster than those of the other main industrial conurbations.
The tide seems to be turning for non-residential directly-held property, with capitalization rates continuing to decline (improve) in the last quarter of 2003. This confirms the turnaround noticed in the previous quarter, say property economists Rode & Associates in their latest quarterly Rode’s Report publication.
The tide seems to be turning positive for capitalization rates — and thus for property values.
The property market’s expectations regarding the total returns it can earn on non-residential property are unrealistically high and out of touch with what can reasonably be expected in the present lower-inflation environment.
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