Durban hit by commercial land shortage

06 Nov 2012

The greater Durban area is reportedly experiencing a shortage of land zoned for commercial use with a growing and steady demand for property rentals.

With prime at 8.5 percent, it is possible to find good industrial land in upcoming areas, at anything from R500 to R2 500 per square metre.

According to David Hitch of the Rawson Property Group, it also takes time to find suitable premises for tenants and even when the rezoning of land in some areas has been identified as suitable, it is often time consuming.

“The market is now ideal for buyers looking to get in on the ground floor while prices are still low and purchases of unzoned properties will be worth substantially more once the rights are in place.”

Hitch’s commercial operation takes in the whole of the greater Durban area.

He explains that currently, there are relatively few companies looking to buy large industrial spaces or to establish themselves in big new premises.

“We are in touch with several and are working steadily to meet their specifications.”

Hitch says in general, prices are now well off their 2007 peaks and investors looking for bargain opportunities should be investigating the many good opportunities open to them now, particularly in areas such as Cornubia (a new commercial trade zone near the King Shaka Airport) and Cato Ridge – the challenge is finding stable tenants who will commit to long leases.

Rental demand is particularly strong for premises measuring between 400 to 2 000 square metres, with a shortage of suitable space that tenants are looking for.

This shortage has caused rents to stabilise over the last two years and annual increases of up to 5 percent are now generally accepted.

In River Horse and Briardene, rentals are pitched at around R55 per square metre, from R30 to R40 per square metre in Pinetown and R30 to R38 per square metre in Jacobs and Mobeni.

Those looking to invest in industrial land, which could have a promising future, should also be looking at the old airport, he says.

“The government’s plan to turn this into a ‘badly needed’ container harbour, with its own dry dock and rail link to a new container depot at Cato Ridge, means that within five to eight years, land here could be prime industrial property.”

On general commercial property in Durban, he says right now is the time to buy.

With prime at 8.5 percent, it is possible to find good industrial land in upcoming areas, at anything from R500 to R2 500 per square metre.

He adds that within the next five to 10 years these prices will seem ludicrously low – because the current big dip in the economy, although the most serious we have experienced since the 1930s, will not last forever.

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