by In2assets  |   March 1, 2021

Outlook on the Commercial and Industrial Market

In the midst of difficult times, it is even harder to predict and gauge the medium to long-term future of the property market.

“The current economic and political environment can only be described as the toughest he has ever experienced”, says Rainer Stenzhorn of In2assets, one of the national leading players in the Commercial and Industrial property industry. The impact of the Covid-19 pandemic on the entire world has negatively impacted almost every business and industry, including property prices all over the world.

A variety of other factors have also severely impacted the South African Market including inconsistent power supply, as well as massive business closures, liquidations, vacancies, and low to no rental recoveries. Commercial banks are tightening the criteria on property finance and refinancing of interest-based loans becoming the norm. A glimmer of positivity remains a relative long period of the lowest interest rate in many years in this country. Many first-time homebuyers are now flooding the low to medium residential market preferring buying to renting.

In2assets however remains bullish in respective of certain properties and experiencing some of the strongest demand ever with a forecast to maintain the same into the 2nd quarter of 2021. In particular in respect of properties related to certain manufacturing sectors as well as supply chain driven warehousing, import and export facilities as well as container handling facilities. The demand for logistic warehousing, courier and transport companies as well as distribution centers remains strong as e-commerce shopping and online sales have drastically escalated month to month over the past few years, particularly since lockdown comments Stenzhorn further.

Consequently, there is a growing demand for quality logistics space with emphasis on stock holding requirements. While the logistics and warehousing segment has not been immune to the effects of the global pandemic, there is great opportunity for new-generation distribution hubs and warehousing facilities. The nation-wide lockdown brought the construction industry almost to a standstill. Passive national and local government growth initiatives coupled with consistent load-shedding and excessive property rates further add to the agony of the property industry. Due to massive vacancies in office space, this property sector has experienced the most severe down-turn and we, unfortunately, do not foresee this to recover even on the medium to long term. Some office block owners are even considering high-cost conversion into residential apartments but there exists a variety of other challenges in making this possible

“There is no doubt that the industrial property sector is the best-placed sector to sustain its’s value or even grow through and post Covid-19. However, investors will need to be wise and choose the best niches within the sector to gain maximum benefit through the medium to long term”, concludes Stenzhorn.

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