State of the Property Market

Office rentals Nationally, lacklustre economic activity coupled with low business sentiment continues to undermine the demand for office space to rent; the result of which has been vacancy rates that are unable to drop and market rentals that are showing sub-CPI growth. In the second quarter of 2014, market rentals for prime office space could — on a national basis — only show yearly growth of about 3%. A look at the regional picture shows no growth — on average — in market rentals in Durban decentralized, while in Johannesburg and Pretoria, decentralized rentals recorded growth of 2%. Cape Town decentralized was the star performer, with its growth in market rentals of 5%. In the reporting quarter, building costs are expected to have shown growth of about 4%, implying that Cape Town was also the only region where real rentals were — albeit only marginally — able to show growth. Industrial market The prevailing underperformance of the manufacturing and retail sectors of the economy does not bode well for the demand for manufacturing and warehouse space to rent. The likely out-come of this is, naturally, continued modest growth in industrial market rentals. During the second quarter of 2014, market industria l rentals in the Cape Peninsula and on the East Rand were still able to show fairly decent yearly growth of 6%. On the Central Witwaters-rand and in Durban, however, rentals could only put together growth of roughly 3%