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Aug 20, 2007:
Property developers in all fields – commercial, retail, industrial and residential – are likely to be able to cash in on an increased demand for rental space in the next two to three years.
"I agree with what Dr Azar Jammine said at the recent Nedbank economy review talks. I think that the monetary authorities may have to accept that the previous inflation targets are no longer totally realistic and that a median figure of 6% to 7% will now be the reality – for at least one year," says Timothy Irvine, regional director of Nedbank Corporate Property Finance (Cape).
"This means that the recent 0,5% interest rate hike was necessary and towards the end of this year the rate could well be increased further with inflationary pressures now so strong.
"This will have a slight dampening effect on property purchasing and will lead to a stronger demand for rental space, especially on the industrial and commercial side."
Richard Edwards, manager of new business at Nedbank Corporate Property Finance (Cape), says office vacancies in the Cape Town CBD, Tyger Valley and Century City are down to low single digit percentages – the lowest in ten years – and growing demand is likely to lead to rental hikes of 15% to 20% by mid-2008.
He said a similar trend has raised industrial rentals at Montague Gardens, Paarden Eiland and Airport Industria by some 15% over the last year and led to new developments. Further from Cape Town, particularly in the Helderberg Basin and the Boland, industrial premises now on average are renting out at approximately R35/sq m.
"All in all, those launching well-positioned commercial and industrial projects now are, I believe, timing their projects well," Edwards said.
