Riding on the back of key infrastructural developments the KwaZulu-Natal commercial property is enjoying a sustained boom, according to Grant Visser, FNB Private Clients Regional Head in the province.
And he expects the buoyant property development to continue with the establishment of a new airport, development to the port of Durban and the construction of the 2010 FIFA World Cup™ Stadium.
“Sustained and significant investment in Durban as a key regional centre is providing a massive boost for local companies. While the immediate benefactors may be large building and infrastructure contractors, their extended supply chains are obviously seeing the results of these projects in many ways,” says Visser.
He says the boom for the building industry is likely to last, with the simultaneous 2010 Stadium and harbour widening projects acting as long term initiatives of strategic importance. “In terms of the port, its expansion coincides with free trade agreements, further expanding Durban as a key supply zone for the country and advancing the city’s economic status,” he says.
With the capacity of large developers spoken for by these major developments, Visser adds that small to medium contractors are well-positioned to stake a claim for peripheral projects. “The dynamic has changed. The big players are at the limits of their capacity, which opens opportunity for entrepreneurial construction businesses which have a unique opportunity to grow in status and stature as property developers must look elsewhere for delivery against their projects,” he says.
That said, Visser is not blind to the challenges faced by the province, which includes the impact of the countrywide electricity crisis as well as an oversupply of residential housing estates, particularly on the coast.
“Development has definitely turned away from the residential and towards the commercial. Property developers must be more circumspect and choose their projects wisely; considerable numbers of building plans have been approved by municipalities but will not get off the ground in the immediate future owing to the oversupply situation,” he says.
To the North and South of Durban, Visser says over-subscription of the residential property market is counterbalanced by opportunity in the commercial space. “Those looking to develop should focus on industrial and commercial park-type developments; there is little land for this purpose available, which means any space that does become available is taken up quickly and usually at a high price given the mechanics of supply and demand,” he explains.
A similar trend is emerging towards the Cato Ridge area as developers seek to meet demand for commercial ventures.
While the coastal boom may be limited to commercial property, there is an interesting new development, which has as its driver the same desire of Gauteng residents to enjoy country life KwaZulu-Natal style. Emerging as a new phase of demand are several areas of the Midlands, including Balgowan, Lions River, Nottingham Road, Mooi River and Underberg. Visser says interest from private buyers is at a high point. “From a farming point of view these areas are some of the richest in the country, offering a variety of uses including cattle, grain, trout and game farms,” he says.
“Development in the province over the past decade has been phenomenal and has yet to slow as demand for office parks, mini factories and warehouses continue to be strong. On the back of major projects and the growing stature of Durban as the choice port for import and export into South Africa bodes well for the medium and long term,” Visser concludes.