Historically the real estate development market in South africa has been vibrant. Even so, if the current world economic slump started take hold back in September 2008, it drained the confidence associated with many investors and the nose-dived along with the general economic situation. But with the signs of economic recovery beginning to take hold again, what prospects are there for becoming bitten in the commercial property area?
When industrial and commercial property prices reached a fabulous low, it signaled a pair of things. Firstly that the market was severely depressed and was likely to keep that approach for several years, but that the bottom of the trough are already reached in which the only way out, was up. Together with market having stabilized at its new low, it meant how the glut of distressed properties that were pouring in had stopped, and at a time laws of supply and demand in operation, that’s not a problem excess of supply far outstripping demand, prices remained depressed.
However, the last 12 months has seen the indications of recovery occurring in industry sector, together with property prices still artificially low, this has begun to stimulate demand, as property development speculators are one again sensing the opportunity of making good short to medium term returns on new investments.
Office properties in particular are an illustration of this the current optimistic views. With economic forecasts being positive, albeit slow-moving, and kent ridge hill residences price costs being as little as they are, now is an effective time to order. As confidence returns to the economy, possibly new letting agreements is rising and properties are again beginning to move, bringing about a slow but steady rise in prices and rates. Always be forecast this specific trend will continue slowly but surely, depleting the supply surplus which will eventually trigger a new bout of property development taking situation.
Current thinking is that this may well lead with regard to an industrial property boom in 2014/15. Certainly with this long gestation period moms and dads developments to go to final fruition, the process needs always be kicked off now. Feasibility studies, surveys, finance – all of the listed things must be in place before actual construction will start to show up.
All within all this is now a very positive time for property development. Industrial property investors have every reason to get cautiously optimistic, as simple to medium term prospects are looking very positive, and the next step is to speculate and invest.