Cape Town property still outperforms the rest

Posted On Monday, 30 October 2017 20:42 Published by
Rate this item
(0 votes)

A “lack of vigour” may be the best way to describe current performance across the full spectrum of property in South Africa.

Rode_Associates_CEO_Erwin_Rode

This is according to property economist and valuer Erwin Rode of Rode & Associates, publishers of the quarterly Rode’s Report on the South African Property Market.

Rode uses the phrase to describe the current state of the industrial-property market, where contractions in spending on durables are impacting the demand for locally manufactured goods – and, in turn, manufacturing production lines. The end of the second quarter marked the ninth consecutive quarter in which the consumption of durable goods had contracted, with a 2% contraction seen over the previous year.

Notes Rode: “At this point, these low levels of consumer confidence and the falling amounts of real credit being extended to households do not bode well for the outlook of spending on durables. Therefore, the manufacturing sector – usually one of the support pillars of the industrial property market – will continue to be negatively impacted by this spending environment.”

The situation did, however, appear to be slightly more buoyant in the Cape Peninsula where nominal market rentals for prime industrial space could muster growth of 9%.

Also affected by weak demand is office-rental growth. Overall, the only two geographical areas that could show yearly growth in market rentals were Durban decentralised (at 5%), followed by Cape Town decentralised (with only 3%). Johannesburg decentralised office rentals remained, on average, at roughly their previous-year level.

On the residential front, except for Cape Town, low sub-inflation growth in house prices is expected to continue for a few years. Meanwhile, Cape Town house prices are growing at roughly double the rate in the rest of the country, “but nobody can tell whether this outperformance is sustainable, considering the affordability ceiling”.

Meanwhile, nominal flat rentals across the country showed year-on-year growth of just 5%, with the strongest being shown in Durban (7%), followed by Pretoria and Johannesburg (both at
6%), and Cape Town (at 4%).

Last modified on Monday, 30 October 2017 20:54

Most Popular

Portugal ramps up its appeal for South Africans seeking EU citizenship

Feb 07, 2018
Porto view across Douro River
Foreigners - including South Africans, wanting to acquire freedom of movement for…

Celebrations as new Thavhani Mall taxi rank opens

Feb 01, 2018
Brandon Nesengani
Shoppers can now get to Thavhani Mall in a flash thanks to the brand new taxi rank that…

SA REITs deliver another year of double-digit growth in 2017

Feb 07, 2018
Izak Petersen SA REIT
The FTSE/JSE South African Listed Property Index (SAPY) achieved total returns of 17.2%…

Check your zoning rights before buying a residential property for business use

Feb 07, 2018
PJ Veldhuizen
How often do we see those adverts “perfect for home-office” or “ideal for business” on an…

Hilton Marks Opening of Hilton Cabo Verde Sal Resort

Feb 02, 2018
Ribbon Cutting hilton
Hilton Cabo Verde Sal Resort offers stunning ocean views, a stylish beach club and ample…

Please publish modules in offcanvas position.