Values of industrial stands in the East Rand and Cape Town outperform the rest

31-10-2017

Despite of the poor performance of industrial stand values in the country overall, due to declining economic confidence, those in the East Rand and Cape Peninsula still managed to enjoy real growth in the second quarter of 2017. This is according to the latest Rode’s Report on the state of the property market in South Africa.

Commenting on this, property valuer Erwin Rode notes: “Growth of 8% on the East Rand and 7% in the Cape Peninsula has outperformed increases in building costs of 6%. And while this growth can really only be described as marginal, it is nevertheless still growth compared to how other industrial areas in the rest of the country are performing.”

In contrast, Durban (at -3%) and Central Witwatersrand (at -2%) were both down when compared to a year ago, an expected result considering current economic circumstances.

Explains Rode: “Stand values on the whole tend to track industrial rentals, whose performance in turn is driven by the performance of key sectors relating to it, namely retail and manufacturing. While the underperformance of both these important sectors continues, it will continue to undermine the demand for industrial space to rent and, consequently, any growth in industrial rentals.

“We can only expect to see an improvement in the value of industrial stands countrywide on the back of a sustained recovery, first in retail and manufacturing, and then in turn on a new-found demand which will hopefully follow for industrial rentals.”