Real Estate Investor Magazine South Africa August 2013 | Page 16
COVER STORY
true in the property development sector.
Although there are a number of other factors
such as location, population, catchment area and
a local economy, strategic public infrastructure
investment can stimulate development in the
medium and long term. A case in point is the
Gautrain, where commercial nodes around the
Gautrain’s stations have seen intensive mixeduse redevelopment taking place in the immediate
areas around the stations. Proximity to the
Gautrain stations has been a major component
of the demand for office space in the areas close
to the stations,” comments Paul Barrow of The
Barrow Group.
According to Courtwell Consulting, while
government has in recent years announced
several infrastructural upgrades, the roll-out
of the entire programme seems to remain very
slow. “Unless government employs more skilled
decision-makers within its ranks – a process
which in itself will take several years – the
implementation of its ambitious infrastructure
plans will be thwarted by the lack of skilled
personnel,” comments Smith. “This means that
infrastructural roll-out could remain very slow
for at least five years to come which will, in turn,
curtail our private sector’s ability to establish and
grow new nodes. Our private sector can, however,
anticipate eventual infrastructural roll-out by
building land banks of virgin land surrounding
the intended roll-out areas and, as time and funds
permit, procuring the necessary town planning
and development rights, so they are ready to act
when new infrastructure comes on stream.”
“When looking at the nodes around the Gautrain
stations and the impact this recent infrastructure
development had on property prices, we observed
that when combined with an already positive buoyant
market, new infrastructure had a positive effect and
that these areas outperformed the surrounding areas
when comparing price per square metre. But in other
areas, the infrastructure development did not translate
into the same outperformance. Property investors
should therefore evaluate all the other factors that will
interact with the new infrastructure development
when making investment decisions,” cautions PaulRoux de Kock, Analyst Director: Lightstone.
3. Urbanisation
The fast-growing middle class is quickening the
trend to rapid urbanisation across Africa, and
the influx of people into the cities not only poses
major challenges for authorities, but will also
significantly alter the urban landscape.
14
August 2013 SA Real Estate Investor
The Barrow Group believes that rapid
urbanisation offers great opportunities for
property development as the influx of people
generates greater commercial activity which
then drives the demand for retail, industrial
and commercial office space. “However, other
pressures arise in managing growing populations
in confined urban areas,” says Barrow. “Improved
public infrastructure and facilities are needed
to handle both the growth and densification
of the urban population. Decisive and positive
government involvement in the provision of
adequate baseline infrastructure and services is
needed to provide a stable economic setting in
which property development in the private sector
can flourish.”
Coutwell Consulting notes that the most recent
census conducted in 2011 indicates that the rate
of urbanisation locally – especially within the
greater Johannesburg and Cape Town precincts
- is of such significance that this mega trend has
been underestimated by a long shot.
“From the available statistics, it is immediately
evident that Gauteng is the most attractive
economic destination in South Africa, followed by
the Western Cape, and that our largest population
group consists of children. As urbanisation
continues, therefore, more children will reside in
and near the economic hubs. They will require
housing, schooling and tertiary education. This
creates an obvious opportunity for commercial
landlords to develop private schools and colleges
and to encourage the establishment and housing
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