Real Estate Investor Magazine South Africa Real Estate Investor Magazine - August 2017 | Page 42

Opportunity Knocks
Knowing which trends to follow
BY LANCE CHALWIN-MILTON
T
here’s the “big question” about property
investment that everyone seeking expert
guidance asks before opening their wallets,
which is: “What type of property is likely to deliver
the best return on investment?”
The answer is simple enough if you sell property in
volumes great enough to determine buyer trends, as
we do, and you stay on top of the latest industry data
and economic indicators.
Right now, based purely on number-crunching, the
answer would probably lean towards warehouse-type
industrial properties. This is underpinned by various
data sources, not least of all the IPD South African
Property Index for 2016 that noted industrial property
(with a total return of 13.6%) surpassed the traditional
frontrunner – retail – by 100 basis points.
But it’s only a fraction of the bigger question that
investors should be asking which affects all industry
players, from behemoth listed entities to REITs,
portfolio managers to private investors and that
answer is far more complicated.
The answer is complicated, because while in many
respects technology is making life infinitely simpler,
it’s also bringing about the most rapidly evolving
transformation in consumer behaviour the world has
ever seen. And while increasingly twitchy professional
trend forecasters update their predictions, then update
them again, the truth is nobody is quite sure what the
business landscape will look like 10 to 15 years from
now.
It’s a scary concept for any investor contemplating
the long game, but we’re not alone in this. It’s a global
investment challenge; not specific to South Africa.If
you’re a pessimist, you’d call that bad news.
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AUGUST 2017 SA Real Estate Investor
Not all doom and gloom
But on the flip side, the good news is we do at least
have some insight into where technology will take us
as we approach the early to mid-2020s – and consumer
lifestyle trends are already altering the built urban
environment to accommodate these technology-
driven changes.
So as one hand might remove a few opportunities
from traditional 20th century legacy of businesses that
have not been willing or able to move with the times,
the other will deliver a host of exciting new prospects
in the commercial and industrial real estate sectors.
The new millennium’s economic drivers influencing
commercial and industrial property buying patterns
are too numerous to mention, but all investors should
take note of a few stand-out trends I believe will be a
firm feature for years to come.
Mix it up as you work, play & stay
It’s predicted that by 2050, more than 1.3 billion
Africans will live in cities. It’s undeniable that we’re
already seeing rapid densification in South Africa’s
metros, with concurrent increases in traffic congestion
and longer commuter times.
This is the primary driver behind ever-growing
numbers of city dwellers opting to live close to their
places of work. From an investment opportunity
perspective, the rise of the mixed-use development is
undoubtedly the gift that’ll keep on giving.
In Johannesburg, Rosebank’s pedestrian friendly
environment is ideal for these developments, while
many areas of Cape Town also embody the global
trend of urban upcycling, including the CBD which
now has an estimated residential population of 7 000,
www.reimag.co.za