Historically the real estate development market in South africa has been vibrant. But when the current world economic slump started to take restrain in September 2008, it drained the confidence out of many investors and the market nose-dived along with the general economic situation. But with the signs of economic recovery beginning to look at hold again, kent ridge residence what prospects are there for upset in the commercial property markets?
When industrial and commercial property prices reached a fabulous low, it signaled 2 things. Firstly that the market was severely depressed and was likely to stay that means for several years, but also that the bottom of the trough ended up reached this the only way out, was up. Is not market having stabilized at its new low, it meant that the glut of distressed properties that were pouring in had stopped, and together with laws of supply and demand in operation, while excess of supply far outstripping demand, prices remained depressed.
However, you will develop 12 months has seen the indications of recovery taking place in industry sector, along with 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 prospect. With economic forecasts being positive, albeit slow-moving, and costs being at only they are, now a great time invest in. As confidence returns to the economy, the potential for new letting agreements is booming and properties are again beginning to move, introducing a slow but steady rise in prices and rates. It can be forecast that this 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 such a long gestation period for new developments arrive at 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 can begin to show up.
All within all this will finally be a very positive time for property development. Industrial property investors have every reason to be cautiously optimistic, as it is definitely to medium term prospects are looking very positive, and the next step is to speculate and develop.