Strong start to the year for commercial property market in Durban but economy needs a boost

There has been continued momentum in the Durban commercial property market in the first few months of 2016 with several new enquiries emerging since December 2015 for letting and a number of sizeable industrial space currently in active negotiations.

Strong start to the year for commercial property market in Durban but economy needs a boost

There has been continued momentum in the Durban commercial property market in the first few months of 2016 with several new enquiries emerging since December 2015 for letting and a number of sizeable industrial space currently in active negotiations.

This is according to commercial property specialists, In2assets who today released their first overview on the local commercial market for 2016. Prime rental values have remained steady until March 2016 at approximately R50 - R 65 per square metre in the traditional established industrial precincts of Durban. However, this headline rate is expected to decrease during 2016 as the economy is under pressure and evidence of high vacancies materialises. Construction preparations have started on the old Clairwood Racecourse which will be developed into a new R 1 Billion logistic park which will spark further vacancies in the industrial Durban South Basin. 

Furthermore, there are more signs of development-related activity in all sectors of the market, most notably in the Mixed-Use sectors around Gateway, while the appetite for investment in alternative sectors such as purpose-built student accommodation is also becoming increasingly evident.

Activity in the hotel development sector has considerable slowed down and it is expected that international hotel operators lost appetite due to the fall on the Rand value. Demand for prime industrial properties has been particularly strong in the first two months of 2016 with very strong interest in national corporates looking at relocation options to the Durban market as well as international logistic firms trying to secure a footprint in the Durban harbour precinct. 

Marketing Director at In2assets Rainer Stenzhorn says, “The first two months of the year have been active in all sectors of the commercial property market however, we expect a flood of industrial properties to hit the market soon initiated by big development pockets for industrial space predominantly north of Durban. 

Since the economy is slow it is expected that all new developments such as Cornubia Business park north of Umhlanga and the new Clairwood Logistic Park will create huge voids within in the traditional industrial nodes, creating high vacancies and decimation of value. Plans of the Durban Municipality to rejuvenate the inner city has been received by investors and property owners as the right move.  This new energy has found support by recent property acquisitions such as 30 Masonic Grove, known as Lincoln House, a building which is situated right next to the Durban High Court which was sold for R 10.2 Million by In2assets in February 2016.

“Due to the present economic climate we more and more experience demand for urgent disposal of properties due to distress of property owners who either consider total disposal alternatively down-scaling and relocating to smaller premises. We strongly believe that this tendency may result in more frequent releases of exciting properties that have not been in the market for a long period of time allowing rousing opportunities for investors and end-users. Notwithstanding the negativity in the market we can still report strong demand and appetite from investors who desperately seek good properties to invest in. Therefore, the right answer to any astute property owner is to assess existing portfolios and work on disposal strategies, comments Stenzhorn by ending his statements.  

Posted by In2Assets