Historically the real estate development market in South africa has been vibrant. Even so the current world economic slump began to take hold back in September 2008, it drained the confidence coming from many investors and the market nose-dived along with the general economic situation. But with the signs of economic recovery beginning to adopt hold again, what prospects are there for upset in the commercial property market?
When industrial and commercial property prices reached a good solid low, it signaled 2 things. Firstly that the market was severely depressed and was likely to keep that opportunity for several years, but as well that the bottom of the trough was in fact reached of which the only way out, was up. While using market having stabilized at its new low, it meant how the glut of distressed properties that were pouring in had stopped, and that isn’t laws of supply and demand in operation, the actual excess of supply far outstripping demand, prices remained depressed.
However, the last 12 months has seen the signs and symptoms of recovery going on in sector sector, by means of property prices still artificially low, it 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 certainly one of the current optimistic outlook. With economic forecasts being positive, albeit slow-moving, and prices being as little as they are, now is an excellent time to buy. As confidence returns to the economy, the potential for new letting agreements is rising and properties are once again beginning to move, leading to a slow but steady rise in prices and kent ridge hill residences price rates. Is usually forecast this kind of trend continues slowly but surely, depleting the supply surplus which will eventually trigger a new bout of property development taking point.
Current thinking is until this may well lead a good industrial property boom in 2014/15. Keep in mind with such a long gestation period for new developments to go to final fruition, the process needs to get kicked off now. Feasibility studies, surveys, finance – all of the listed things end up being in place before actual construction can begin to be fulfilled.
All for all this is now a very positive time for property development. Industrial property investors have every reason in order to cautiously optimistic, as quick to medium term prospects are looking very positive, and it is now time to speculate and put.