Commercial property market: Growth on a modest-to-moderate pace in 2015

BY TAI CHISHAKWE - NOVEMBER 11, 2014

Despite a dismal economic outlook, the Eastern Cape commercial property market should still see growth at a modest-to-moderate pace in the coming year and landlords in the non-residential real estate space as well as the construction industry could see some good returns, local agents said.

“The economic forecast is a little concerning, nevertheless, we do believe that commercial property will still give good returns and be in great demand” said Mark Connett, Managing Director at Just Commercial in Port Elizabeth.

Braddin Ley, Principal at East London’s Property Choice, agreed saying that; “The general economic growth of the nation has been slow for the 2014 period and is forecasted to be gradual again in 2015 with a slight recovery.”

Ley said that government expenditure in the public sector has continued predominantly by way of infrastructure improvements such as water and sanitation services and public road works.

“The contribution of these government developments delivers a healthy and assertive boost for public fixed investors,” he said.

The realtors were cautious but positive about 2015 surpassing the growth seen in 2014.

“We believe 2015 will be a testing year but we still predict growth,” said Connett.

Ley said; “There is worthy motivation that the 2015 season should see a strong hold on property power!”

He said that some notable developments in the East London area include the Science and Technology Park in the East London IDZ “which continues to show investment growth with the launch of an encompassing facility to engage in development solutions in the commercial and industrial fields.”

Ley also said that; “The Baywest Shopping Mall Centre and Master Plan expansion currently under way in Port Elizabeth is a significant contributor to growth. The development is focused around the province’s growing retail sector.  Thus there are some positive outlooks thanks to these large-scale developments.”

The MBDA and large-scale catalytic projects  

In the Nelson Mandela Bay area, the Mandela Bay Development Agency’s (MBDA), large-scale urban renewal projects, particularly in the Port Elizabeth CBD and the city’s Baakens River Valley area, are expected to boost the local commercial property market – and the local economy.

“We believe that this precinct, together with the adjacent Historic Inner City and Port Marina Precinct can become a dynamic and trendy place that would promote the economic growth of the Metro,” said Dorelle Sapere, ‎Planning and Development Manager at the MBDA.

“Based on a strategy of tourism and real estate, we see its potential of becoming a hub that promotes all things uniquely Eastern Cape - manufacturing, food, mohair, biomes and the cultural richness of the people of the metro. The aim is to make the precinct accessible to all the people of the Metro and to showcase all their cultures.”

She said that the MBDA was investing around R36 million in the current phase of development in the valley.

“The Tramways Building (the focal point in the Baakens River Valley rejuvenation drive) should be completed by June 2015,” Sapere said.

PE’s construction industry was also benefiting from such projects.

“The MBDA has made a policy decision that all our construction projects will have a minimum of 30% of the work being awarded to SMMEs,” explained Sapere.

She also said that the MBDA’s work, including the revamping of the PE CBD, the Uitenhage CBD, the upgrading of Kings Beach (Humewood) and the revitalisation of Helenvale, would boost the Nelson Mandela Bay’s commercial property market.

“For most of the Agency’s life the focus has been on the rejuvenation of the heart of the city, the CBD and Central. The city centre is the heart of any city. When that dies, the city collapses,” described Sapere.

“We’ve seen a significant increase in activity (rentals) and occupancy in many commercial buildings in and around the CBD. The trend has shifted to Hostel or Student accommodation.

“The biggest indicator of confidence is in the lending market, in the banks. The banks are now starting to loosen up funding, particularly on building that they would never have touched before our upgrades in the CBD. Our surveys indicate that property owner confidence is rising and they themselves re-invest in those buildings.”

 

Photo Caption: Dorelle Sapere, Planning and Development Manager at the MBDA