But there are other worries about for commercial property owners; V&A Waterfront update

As the debt crisis at Dubai World caused panic on world markets last week, local property players' hopes were raised that they would be able to acquire a stake in the Cape Town V&A Waterfront.

Media speculation has been rife that local investors are lining up to benefit from the potential sale of the Dubai stake in Cape Town's V&A Waterfront.

Growthpoint Properties (JSE:GRT) Ltd, South Africa's largest listed property company in terms of market capitalization, admitted this week that it was definitely interested should any of Dubai's stake in the Waterfront become available, but executive director Estienne de Klerk is not convinced this is going to happen.

"The V&A is a world class asset and Growthpoint would be interested," says de Klerk, but cautions that "Dubai World have not at any stage indicated that they are seeking to dispose of the stake." On Monday, a Dubai World official reportedly "totally rejected" speculation that it is considering relinquishing any of its South African assets, especially not cheaply.

From a personal perspective De Klerk doesn't believe Dubai World's woes would have any material impact on the local property market. If anything local investors would gladly snap up what Dubai World sheds.

When asked to comment on recent figures indicating that the South African economy had emerged from recession, De Klerk indicated that commercial property was not out of the woods yet. "We generally believe the commercial property sector lags the general economy by 6-12 months and we don't expect demand to firm in the short term. Should the growth in the economy continue, Growthpoint is well positioned to benefit from the resulting increase in demand."

De Klerk's sentiments echo figures from the latest Rode Report on the SA Property Market which indicated little or no growth in commercial property rentals for the 2nd quarter of 2009. The report's findings were a serious blow to real estate punters who have been professing to an increasingly brisk upswing in both the commercial and residential property markets.

The nervous edge to all that is property and market speculation (for better or worse) seems to have increased rather than ebbed in the wake of the 2008 global credit crunch. Perhaps it is prudent to adopt a ‘wait-and-see' attitude, not only on the outcome of the Dubai issue, but also on any fairytale recovery in the local property market.

Article by: Leoni Kok - www.realestateweb.co.za