Durban’s CBD is emerging as a top demand node for investors in Kwa-Zulu Natal.
The latest property to change hands, according to a November 8 press release, is landmark Westwalk Arcade building, which was recently sold for R10,75 million to a private investor by Billy Latham, JHI Real Estate investment broker.
“The hard core city centre has done a complete turn-about,” comments Latham. “Many landlords panicked 3 years ago when properties were traded at discount prices. However, since then the city has grown into a vibrant shopping and office node with a very positive economy”.
|Office space previously tenanted by large corporates is now occupied by small entrepreneurs, all of whom provide necessary services to the city market such as modeling schools, dress-making, weddings and function dress wear, teaching facilities and so on.|
Such is the case in Westwalk Arcade, which is 95% let. The property that links Smith and West Streets comprises 27 shops totaling 1 387 sm including well known retailers such as American Swiss, Foschini, Ideals, and West Walk Jewellers, which has been trading there for over 15 years. Above the shops is a seven storey office block of 4 800 sm tenanted by entrepreneurial type tenants.
JHI has been appointed to manage the property adding to their significant inner city portfolio under management, which reflects a profile of low vacancy levels.
Latham comments that just as the nature of tenant has changed so has the profile of the buyer. “The city centre is attracting the type of investor who has long-term vision and is not risk averse.”
He says that many investors will improve properties and contribute to the rejuvenation of the node where there is value. “Tenants are also participating in this upgrade”. An example of this is Standard Bank, on the corner of Smith and Broad Streets, which has replaced a marginal retailer and radically upgraded the shop space contributing to a smarter road-front image.
However, there has not been the high level of conversion from office to residential that is being witnessed in other cities. This is compounded by the fact that there are far fewer suitable properties relative to the Johannesburg or Pretoria CBD. Both factors have somewhat hindered the radical regeneration of the city.
“Properties in the hard core inner city are largely zoned General Commercial, which does allow for residential use on a portion of the improvements,” comments Latham. “However, feedback from investors interested in doing residential conversions report that they are reluctant to put offers in on properties due to a lack of clearly stated policy with regard to rezoning,” he says.
“iTrump are doing a remarkable job in terms of improving the inner city nodes and will reportedly address each proposal on its merit. Naturally, the residential component needs to be acceptable in terms of reasonable living standards. So there is good opportunity for conversion to residential but at present it is ‘project specific’ as opposed to there being a blanket policy.”
Latham adds that he would like to see a stated policy on the issue, with a degree of flexibility, as the government grants for conversion to affordable residential are a big incentive to investors and developers. He believes that if this were resolved there would be a marked increase in the rejuvenation and upgrade of city centre properties.