Office Cycle upswing in the wings?

This article is from the Newsletter that I receive from eprop.co.za

In general the amount of new development has come down or at least remained quite steady and the ratio of unlet space has remained fairly flat as shown in the first graph below. Over the past five quarters the ratio has come down quite noticeably for Durban and has broadly been flat for Cape Town, Pretoria and Johannesburg . The prognosis is that most markets are in line to experience balanced supply evidenced by lower new supply and a tapering off of vacancy rates on existing stock. This bodes well for perfomance into the medium term.

As per the second graph, the ratio of new development to total market stock shows a slight increase for Cape Town and Joburg. The highest ratio remains PE now approaching 12 percent with Pretoria at under 6 percent albeit having come down from over 12 percent 18 months previously. It is important to note that the OVS tracks committed new developments as opposed to planned/speculative schemes; that being said completed office developments in Durban was quite buoyant in 2010 and yet the ratio shown here does not reflect this. As such careful research is required to assess whether supply is taking place in other Durban nodes and if any risks exist to the take-up outlook.

If properly managed, SA's developmental challenges could well become a blessing in disguise, offering focus to delivery agents and hope to millions of people. Let's each play our part, no matter how big or small.

 

Gareth Shepperson