FEATURE ARTICLE
COMMERCIAL AND RETAIL PROPERTY
According to Linda Tshabalala , business development manager for the Commercial-Public Sector at Lightstone , points to specific trends in the business , retail , and industrial property markets for the year ahead :
Office space Even though businesses may experience internal growth and require additional space , the current trend indicates that office tenants and owners will rather endeavour to employ the services of working space specialists , encourage mobile offices rather than relocating to bigger office space .
Another external element that needs to be considered is the global trend of shrinking office sizes . In recent years companies have started moving away from individual offices and cubicles in favour of a more social work setting .
Minimalising work space has also played a part and as a result , many property managers and landlords are finding themselves leasing to a larger number of tenants , each utilising a smaller space with more employees . Medium-to-small businesses have also started leaning towards flexible leases and subdividing space to share risk and ultimately reduce monthly costs .
Retail
South Africa is the sixth most ‘ malled ’ country in the world . This is rather alarming considering the uncertain economic climate and all the different contributing factors that need to be considered for a shopping centre or mall to be successful and show financial conviction . The additional pressure on the
end consumer ’ s disposable income shows a decrease in foot traffic in shopping malls and ultimately the individual ’ s spend .
Stuttafords , River Island , Mango and other previously stable retailers have been forced to withdraw from the country , creating more and more vacancies in large shopping centres . This could be indicative of developers moving to smaller , nimbler ‘ strip malls ’ with much less gross leasable property ( GLA ) to fill .
Industrial
One of the only sectors to show resilience is the industrial zones . Developers are continuing to build on risk and are rewarded with a favourable uptake of tenants in spaces such as warehouses . Interestingly , the logistics industry seems to be the catalyst for the stability in the industry with many new high-tech warehouses catering specifically for this division .
A great example of this is Fortress Income Fund which is seen as a leader in this space after disposing most of its office portfolio and old industrial assets , to turn its focus on developing new high-tech warehouses aimed at the logistics sector .
Bond insight
The total number of registered bonds in 2017 YTD show a decrease compared to 2016 year-on-year . The City of Cape Town is the only municipality with a notable increase from 2016 and sustained growth of bonds registered to the value of just over R25bn as well as increased inflation of 9.5 % from 2016 . Bond data shows a decline in transactional activity in Johannesburg from 2016 , with a drop of 8.5 % in value .
The bottom line
While the economy trudges on and we all hold our breaths for the next bombshell , now is the time to find the right investment property . No matter where you decide to invest , the savvy buyer has many good options . “ There are going to be fewer buyers on the market , which means less competition for listings , and far less tolerance for overpriced homes ,” predicts
Clarke . Doing your homework and knowing which area works for you is essential in finding the right property to invest in .
SOURCES Lightstone , FNB , ooba , BetterBond , Rawson Property Group , RE / MAX , New World Wealth , PayProp , Nedbank
SA Real Estate Investor Magazine FEBRUARY 2018 13