Double market trend boosts sectional title developments

07-11-2005

The valuation fraternity has long observed the fact that owner-occupiers are generally prepared to pay more for properties than professional investors. Rode & Associates' CEO Erwin Rode says the current increase in the conversion of buildings into sectional title office and industrial space, is a sign that developers have also noted this tendency and are cashing in on it.

Many developers are now riding the current wave of private property investors entering the market.

"For more than 30 years, the shopping, office and industrial markets have been dominated by institutional investors. They have had the edge because they could buy for cash, while the high interest rates made it impossible for private investors to enter the market; they were thus price setters."

In fact, developers are currently in the enviable position that they have a double trend in the market-place to exploit: firstly, the increasing number of private investors entering the market, and, secondly, the fact that owner-occupiers are prepared to pay more than pure investors for smaller, digestible chunks of buildings that they can also use as premises from which to operate their businesses."

Rode says that with the economic growth prospects remaining upbeat, the demand for premises from owner-occupiers will continue.

"For these entrepreneurial investors, sectional title is an elegant solution, so we are likely to continue to see an increase in these conversions."