PROPERTY: Cape's Commercial Property Remains Stable
Recent Western Cape Business News
Commercial office vacancy rates have remained stable over the past year in the Cape Town CBD, according to property group Colliers International’s Office Barometer 2009 report. The stability is due to limited office developments in the past 12 months.
“The CBD remains the most important business node in the metropole,” says Sanett Uys, director at Colliers International Property and Facilities Management (Pty) Ltd. “There are several substantial office developments planned for the city that will start to come online from 2011.
“The Century City office node has come under pressure, vacancies in the area remain high and with the current economic conditions the area is not as popular as before, but the variety of retail offerings in the area is still strong.”
“The South African property market was not hit as hard as some of the other international markets, but a number of factors are going to inhibit a turnaround until 2010,” says Uys. “Chief among these are ongoing power shortage problems, weak household demand and the global downturn.”
There is good news ahead. Uys says a number of factors will stimulate growth and drive the upward swing towards 2010.
“Our property market’s exposure to foreign investment is limited, liquidity is restricted since South African banks don’t lend easily, and our property fundamentals are still strong.
“Economists are predicting a turnaround in 2010, with economic growth bouncing back to 5,3%. Inflation is on a downward trend and the forecast for 2009 is 7,3%, which will encourage further interest rate cuts. However, throughout the different market sectors, we are seeing retrenchments in all the major sectors of the economy. In addition, the latest figures from Stats SA show the South African retail market is in recession and economists are predicting that the worst is yet to come.”
Colliers believes 2009 will be an interesting year, with the economic downturn continuing to impact on the property market.
“Capitalisation rates should continue to soften as sellers start to realise the true market value of their properties,” she says.
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