JHI investment consultant Selwyn Sharon recently sold a sectional title unit in Dunkley House, off Dunkley Square in Gardens, for R1.3 million.
Although commercial property in general continues to experience the impact of the economic downturn, the Western Cape region of national property management company JHI reports that activity is still taking place despite this.
Over the past year this region of the company concluded lease transactions for more than 76 500 m2 of commercial space worth close to R210 million.
Marius Basson, Western Cape regional director for JHI and a Capetonian who recently returned to the region after eight years at head office in Johannesburg, says there are some positive indicators.
“We recently concluded four transactions for new and renewed leases for office and light industrial space worth about R49.5 million, and leasing, sales and investment consultant Selwyn Sharon has just sold a sectional title unit in Dunkley House, off Dunkley Square in Gardens, for R1.3 million.
“It is true that office vacancies in Cape Town remain relatively high and many new developments are on hold as developers sit out the tough times, but the Mother City with its buzzing city centre retains an air of expectancy. This is a dynamic city where a series of new 4 and 5 Star hotel developments have recently opened, such as the Taj, 15 on Orange, Coral International and One&Only.”
Basson says progress on infrastructural improvements such as the Koeberg interchange and Hospital Bend is positive, as is the expansion of Cape Town International Airport.
“The completion of the Cape Town Stadium has had a marked effect on an already rejuventated area, stimulating interest in the property market in the vicinity of the stadium. We also expect many of the international visitors who visit during the Soccer World Cup will probably not have had much, if any, exposure to South Africa, including Cape Town. It is said that the first tranche of such visitors, who have already bought tickets to the event, includes a high percentage of Americans – most of whom have probably never visited South Africa. We hope this will lead to increased tourism, with economic spin-offs.”
Selwyn Sharon says the city fringes, including revitalised areas of Woodstock from The Boulevard through to The Palms in Sir Lowry Road, continue to arouse interest in commercial property.
“More businesses want to be close to the city with easy access without being right in the city centre, so there will be more enquiries for these peripheral areas. Already the city is moving outwards towards Wembley Square in Gardens, and a new building is going up next to this shopping centre.”
Basson says another area which continues to evolve is Century City. This area has undergone rapid growth over the past decade, with several commercial and residential developments being built.
“It’s become a major growth node with a trend towards businesses moving into the area to a pleasant working environment, far less traffic congestion and a prime shopping hub within easy reach of good residential areas – which is of benefit to employees, particularly given fluctuating fuel costs. We expect this area will continue to expand and over the next five years even more businesses will move to the area.”
He says there are good opportunities for commercial property investors at present.
“In a downturn investors are more inclined to seek well located properties – which always come up trumps and have sound potential for good returns in the future. Investors are looking for secure, tenanted properties with at least a 10 per cent net return. Although many rentals have increased by 8-10 per cent over the past year, due to high vacancies rental rates are negotiable. Landlords are also prepared to refurbish offices and offer rent-free settling-in allowances for long term tenants,” says Basson.
Call Marius Basson on 021 446 4634 or Selwyn Sharon on 021 417 7878.
