Buoyant Commercial Property Amidst Economic Downtime
Real estate consulting firm JLL has released its Q3 South African market reports for the office markets in Cape Town, Durban and Johannesburg, as well as the industrial markets in Durban and Johannesburg, along with an outline of the South African retail market as a whole. Their analysis brings numerous figures and facts to the fore.
While South Africa’s economy has managed to exit its technical recession, growth is still anaemic in large part, which makes its presence known across various sectors. While dipped consumer and business causes industry decision makers to delay capital allocation decisions, there are various instances acting as proof of a rather robust demand for property rentals, decreasing vacancies and a growing marketplace for rentals.
Business And Financial Services Key Drivers Of Office Demand
There is also evidence that improved activity in business and financial services, acting as key drivers of office demand, has positively impacted the Durban and Cape Town office markets. Johannesburg, at present, is experiencing a short term oversupply of stock, with some rental contraction. It also appears that the gradual introduction of new accommodation might be key to getting to grips with the balancing act of demand and supply in this particular market.
When we take a closer look at the Johannesburg office market, it reveals a two-track trend that is unfolding. The first one is that healthy developer interest persists, however, the city is battling a high vacancy rate. In fact, Johannesburg recorded its highest vacancy rate at 12.6% for the second time in two consecutive quarters.
However, all is not lost. It is suggested that the current pressures will be rather short lived, as the city remains a sought after business hub in South Africa. Cape Town, on the other hand, has seen a welcomed declined in the vacancy rate of all major asset types, including Grade C accommodation. It’s an excellent indicator of overall business confidence in the city’s climate.
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