17 Sep 2012
While new commercial building activity east of Pretoria continues unabated, resistance to traffic congestion, long commutes and high office rentals is driving the trend for repurposed properties in the city’s residential heartland.
That’s according to Rob Ketjen, chairman of real estate group Harcourts SA, who says rezoned office space in traditionally residential suburbs such as Brooklyn, Hatfield, Hillcrest, Hazelwood, and parts of New Mucklenieuk and Arcadia, has become a popular niche market investment vehicle.
There is ongoing demand from the legal and medical fraternities as well as entrepreneurs wanting convenient, upmarket yet affordable offices close to their homes, he says. “This is ensuring strong buying and rental take-up of quality single and multiple home conversions.”
According to Ketjen, the Pretoria Municipality is positively disposed towards granting business rights to homes in areas where traffic volumes are high, and those on busy corners. Such properties are selling for up to R3.5 million depending on location, before additional money is spent on converting them into offices.
The quality of the conversion will then dictate the rental, which can be as high as R95 per square metre a month. Particularly sought-after in this category, he says, is office space ranging in size from around 200 square metres to 500 square metres, and in price from R65 per square metre to R85 per square metre.
According to commercial property specialist, Dennis Hamer of Harcourts Pretor in Pretoria, new building activity is a strong indicator that the country is emerging from the recessionary conditions of the last few years.
The local commercial sector has experienced positive growth during the first six months of the year, particularly in areas such as Menlyn, where prime new office space, at a cost of up to R140 per square metre is enjoying steady take-up by large corporates and head offices, he says.
Although certain areas in Centurion are experiencing an oversupply of office space at the moment, he says it is encouraging to see increasing demand in other locations, particularly those conveniently located to the Gautrain.
Accompanying the unflagging construction of new office buildings in the east was a parallel trend for new residential development, Hamer notes. This was supportive of demand by office park employees wanting to live closer to their places of work.
Traffic is playing a major role in terms of driving outbound movement from the city, as a result of which areas such as Faerie Glen, Mooikloof and Equestria, which was an agricultural suburb called Willows until recently, are now home to large-scale, high security new residential development, he says.
With ongoing commercial development on the cards, he is expecting residential building activity, which slowed on the back of the recession, to start gaining momentum again.
According to Irene Prinsloo, residential specialist at Harcourts Pretor, demand is high for townhouses in the modern suburbs flanking the Menlyn business hub, both by young professionals and investors.
Particularly sought-after are freestanding townhouses ranging in price from R550 000 to around R1 million, which are being bought by young professionals and investors. Stack units, which are available from as little as R460 000, are also moving well, she says.
Commenting on the high number of commercial vacancies in Europe at the moment as well as those in certain parts of Pretoria, Ketjen says South African investors needed to focus on buying the right properties in the right places in order to reduce the risk of becoming casualties in the event of any over-supply.
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