Historically the real estate development market in South africa has been vibrant. Coverage the current world economic slump begin to take hold back in September 2008, it drained the confidence out of many investors and the nose-dived coupled with general finances. But with the signs of economic recovery beginning to take hold again, what prospects are there for becoming bitten in the commercial property markets?
When industrial and commercial property prices reached another low, it signaled two things. Firstly that the market was severely depressed and was likely in which to stay that way for several years, but as well that the bottom of the trough were definitily reached and that the greatest out, was up. While using market having stabilized at its new low, it meant that the glut of distressed properties that are already pouring in had stopped, and at a time laws of supply and demand in operation, with the excess of supply far outstripping demand, prices remained depressed.
However, explored 12 months has seen the indications of recovery taking place in the commercial 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 an illustration of the current optimistic outlook. With economic forecasts being positive, albeit slow-moving, and prices being under they are, now is a good time invest in. As confidence returns to the economy, the potential for new letting agreements is booming and properties are once again beginning to move, creating a slow but steady rise in prices and rates. Usually forecast that this trend continues slowly but surely, depleting the supply surplus may eventually trigger a new bout of property development taking situation.
Current thinking is until this may well lead to an industrial property boom in 2014/15. Of course with such a long gestation period for new developments to find final fruition, the process needs staying kicked off now. Feasibility studies, surveys, finance – all of those things end up being in place before actual construction can start to show up.
All in all this will finally be a very positive time for property development. Industrial property investors have every reason to be cautiously optimistic, as simple to medium term prospects are looking very positive, kent ridge residence and it is now time to speculate and develop.