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Sandton is booming

The Sandton central business district (CBD) achieved a rental growth of 16% during the fourth quarter of 2011, Rode’s report on the South African Property Market found.

Sandton’s CBD reported declining vacancy rates and improving demand for grade-A office space, indicating that Sandton could be leading a recovery in the grade-A office market.

However, the Rode report noted that other office regions performed poorly, as vacancy rates did not decrease and there was mostly nominal rental growth – below building cost inflation of 14%.
Meanwhile, the report found that Pretoria showed the best yearly growth for industrial rentals with an 8% growth, compared with rental growth of between 2% and 3% for the Central Witwatersrand, the Cape Peninsula and Durban.

The fourth quarter of 2011 indicated a possible improvement in investment demand for industrial and office properties as capitalisation rates on these property types strengthened marginally, said Rodes property economist Erwin Rode.

“One should not read too much into this, considering that office and industrial vacancy rates are still stubbornly refusing to drop, while rentals are finding it difficult to beat inflation. This, naturally, does not augur well for capital-growth prospects,” he added.

Meanwhile, the Rode report found that the housing market continued to be “stuck in a rut”, despite record low interest rates.

“It seems that neither households, nor mortgage providers are taking the bait of low borrowing costs,” he concluded.



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