Rode’s State of the Property Market
On the non-residential front, the office market is still battling in places, but solace is to be found in the industrial property market, which is still in fifth gear. Anecdotal evidence suggests that the residential property market was still growing at a firm pace in the first two months of 2005, which is what we expect it to do for the remainder of the year, albeit not at the same tempo as in 2004.
All indications are that the focus will shift from residential to non-residential property over the next few years. Notwithstanding this, the residential property market is expected to lose steam only slowly. Hence, next year will probably be a good year for property all round.
Non-residential property’s market values increased further in the second quarter of 2004, driven mainly by the continued rerating of property by investors.
Conditions in the non-residential property market improved further in the first quarter of 2004, with the majority of property indicators showing that an upswing in real rentals must be close.
On the whole, conditions in the non-residential property market seem to be improving. Evidence of this can be found in the continued decline of standard capitalization rates as well the healthy office take-up recorded in especially the decentralized office nodes. However, by the end of 2003, there was still no recovery in the real rentals of office and industrial buildings.
Finally! Non-residential property appears to be over the worst. The best evidence of this can be found in the decline of standard capitalization rates in quarter 2003:3, which was noticed for all non-residential property types, except industrials.
On average, the majority of our non-residential property indicators for quarter 2003:2 still pointed to a market under siege. As for residential property, house prices were still firmly nestled in their upswing, whilst real flat rentals were consolidating.
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