WHEN asked to describe the most important feature of a good property investment, an oft-repeated catchphrase among property pundits is “location, location, location”. However, pundits are often referring to what would be called a good area rather than the access to that area. But property economist Francois Viruly, of Viruly Consulting, says location in property is also a function of how accessible that location is via transport routes and whether it has infrastructure linked to it.
Viruly says the severe traffic congestion, which is getting worse every year as the number of cars on the roads increases, particularly in Johannesburg, could soon negatively affect property values for all property types, including retail, office and residential property.
New office blocks, for instance, and large regional shopping centres in congested areas are becoming increasingly less accessible for office workers and shoppers, who may spend several hours trying to reach these destinations.
The solution may lie in the creation of more mixed-use developments where people can live, work and play in the same area.
“The issue is you can have a lot of land which cannot be developed because of poor infrastructure and accessibility.
“As accessibility changes, the lack of attractiveness of a site changes with that. You put a road in and it produces a good area and it changes the highest and best use land can be put to. At the same time, the deterioration of infrastructure and accessibility has the potential to destroy property value at its worst or otherwise it shifts the type of use of a property.”
Viruly says with a good transport system, a piece of land that was ideal for commercial use could become ideal for residential use.
Historically, the trend of decentralisation in office and residential nodes in Johannesburg was blamed on a combination of crime and grime.
But Viruly says one of the critical issues was the failure of the public transport system in Johannesburg in the 1970s-80s, as well as a lack of parking facilities in the central business district (CBD).
These factors pushed many companies out of the Johannesburg CBD. Similar problems are now developing in the decentralised nodes, while access to Johannesburg’s CBD is less congested.
“The dilemma for a commercial property is whether the accessibility of your employees to the building is more important than the accessibility of a client.
“I could well imagine one of the reasons why many of the major banks are still in the CBD is because of the transport accessibility. It is relatively easier to get to the CBD than to get transport to Sandton.”
He says the transport problems in Johannesburg are starting to “influence where people live and the desire of people to get home, work and play much closer”.
“Where you used to criss-cross the city for home and play, it has now become too cumbersome from a financial and time point of view. Transport is a cost and time issue.”
Viruly says transport-related problems have the potential to alter the “catchment areas” of shopping centres.
“Johannesburg is the city worst hit by traffic congestion. It could negatively affect the viability of office parks and regional shopping centres.
“Where a shopping centre could count on a relatively big trading catchment area, I think transport problems may well reduce the size of the catchment area as shoppers trade off the travel time against convenience.”
Viruly says that while a lot of commentators have said that the new shopping centre and commercial developments in Soweto would encourage people to remain in Soweto, the traffic congestion problems could still make them decide to move out.
Pace Property Group MD David Green says that residential property prices could rise in heavily congested areas as employees decide they would “rather live closer to the work place to avoid the traffic”.
“It is not always to say it will have a negative impact on residential values. But if you look at an area like Dainfern, residential property values have declined because of the perception of a difficult traffic situation.”
