FEATURE
The big trend in the Mother City is mixed-use developments , based on the perceived future demand for these types of setups . Several developments are planned for the Foreshore and Harbour areas , with completion estimated within the next decade . Gross rentals achieved in the city vary from R90-R120 / m ², with an ever-present growth in demand .
1.15 % in the 1st quarter of 2018 .
Samuel Seeff , chairman of the Seeff Property group , warns that investors should pay attention to the market : “ While property barometers point to improvement ahead , they still tell the story of a flat market which largely favours buyers . Recovery is usually first felt in the primary urban Gauteng ( Johannesburg / Pretoria ) areas and thereafter in the coastal and other inland metros . This seems to be what we are beginning to see from the latest property market data .”
By looking at building statistics , it ’ s possible to paint a picture of growth and demand in certain areas and sectors . Absa ’ s Residential building statistics were published in May , and do just that . According to Jacques du Toit , property analyst for Absa Home Loans , divergent trends were evident in levels of building activity in the South African market for new housing in the first quarter of 2018 .
The report looks at residential property in three categories : Houses of < 80m ², Houses of ≥80m ², and Flats and townhouses . According to the report , the number of new housing units reported as being completed was lower in each of the three categories of housing in the first three months of the year , which resulted in a combined decline of 25 % y / y , or 2 547 units , to a total of 7 652 units over this period . The segments of houses smaller than 80m ² and flats and townhouses showed a contraction of 37 % y / y and 27,4 % y / y respectively in the first quarter of the year .
The Western Cape and Gauteng were the clear leaders in new residential properties being completed , accounting for 43 % and 35.2 % of the national total , respectively . According to the report , the number of new housing units for which building plans were approved , increased by 17,1 % year-on-year ( y / y ), or 2 245 plans , to 15 233 plans in the period January to March this year . “ This growth was largely the result of trends in plans approved for houses smaller than 80m ², which showed growth of 33 % y / y , and plans approved for flats and townhouses , which increased by 14,7 % y / y in the first quarter of the year ,” Du Toit comments .
Looking at Lightstone ’ s annual inflation research , freehold properties are seeing a slowdown in value growth , while sectional title growth is increasing . Freehold has seen a 3 % growth in March of 2018 , down from 3.8 % and 3.5 % in January and February respectively . Sectional title , on the other hand , has seen steady growth in value , sitting at 4.2 % in March - up from 4 % and 4.1 % in January and February . It ’ s also interesting to note that , since the third quarter of 2017 , sectional title properties have seen growth from 3.7 %, while freehold has declined from 4.7 %.
Commercial
While residential property remains a popular option for investors , many are itching to diversify their portfolios . The commercial sector - primarily consisting of offices and retail properties - can be a dynamic and profitable market . Let ’ s look at the latest figures and stand-out performers .
In 2017 , more than 300,000m ² of retail accommodation was completed ( in-
cluding refurbishments and extensions ). At the same time , it ’ s important to note that retail trade sales for the same period was poor , reflecting a clear consumer concern for economic growth . The report explains , however , that these indicators are expected to improve throughout 2018 , with factors like household credit extension showing signs of improvement and offering consumers some relief .
The report divides retail property into five categories : neighbourhood , community , small regional , regional , and super regional . There is a clear pattern in trading density growth , as at Q3 2017 . Super regional centres saw a decline of 5.6 % and regional of -0.7 %. Small regional saw an increase of 0.7 %, community saw an increase of 0.1 , and neighbourhood an increase of 0.9 %.
According to Spire Property Management ’ s Executive Director , Sean Paul , neighbourhood retail centres that are situated within residential nodes are more resilient to market swings than others : “ They are very attractive from a convenience point of view . Consumers living in the nearby suburbs will frequent their local centre on an almost daily basis to purchase household goods and groceries , to enjoy a meal at their local restaurant or socialise over a cup of coffee , and make use of other services offered such as a laundromat or hair dresser .”
These centres also tend to be more attractive to tenants , as rent is generally much lower than those in larger centres . “ These centres often operate on a gross rental structure rather than a turnover based structure . This is appealing to entrepreneurs and small business owners who can be daunted by the high costs associated with renting retail space in a large shopping centre , and also like the certainty of fixed rentals for budgeting purposes ,” Paul explains .
According to the JLL Q4 2017 Retail Market report , small regional shopping centres continue to outperform other types of retail centres . The report notes that retail vacancy rates rose across the board , with small regional centres seeing a decline in vacancies . Annualised trading density growth for these centres took a knock , but remain marginally positive .
14 JUNE / JULY 2018 SA Real Estate Investor Magazine