Historically the property development market in South africa has been vibrant. Even so the current world economic slump began to take restrain in September 2008, it drained the confidence involving many investors and the nose-dived along with general economic climate. But with the signs of economic recovery beginning to take hold again, what prospects are there for becoming bitten in the industrial property area?
When industrial and commercial property prices reached your own low, it signaled a couple of things. Firstly that the market was severely depressed and was likely in which to stay that way for several years, but that the bottom of the trough are already reached in which the very best out, was up. With the market having stabilized at its new low, it meant how the glut of distressed properties that were being pouring in had stopped, and with the laws of supply and demand in operation, while excess of supply far outstripping demand, prices remained depressed.
However, the last 12 months has seen the warning signs of recovery taking place in the commercial sector, and with property prices still artificially low, it has begun to stimulate demand, as property development speculators are one again sensing the opportunity of making good short to medium term returns on new investments.
Office properties in particular are an illustration of the current optimistic outlook. With economic forecasts being positive, albeit slow-moving, and prices being as low as they are, now a great time purchaser. As confidence returns to the economy, possibly new letting agreements is booming and properties are much more beginning to move, kent ridge hill residence introducing a slow but steady rise in prices and rates. It is forecast this specific trend continues slowly but surely, depleting the supply surplus that eventually trigger a new bout of property development taking place.
Current thinking is this kind of may well lead to an industrial property boom in 2014/15. Of course with this long gestation period kids developments arrive at final fruition, the process needs always be kicked off now. Feasibility studies, surveys, finance – all of those things end up being in place before actual construction will start to be fulfilled.
All within all this is now a very positive time for property development. Industrial property investors have every reason in order to cautiously optimistic, as simple to medium term prospects are looking very positive, and this is the time to speculate and develop.