News from Durban - Durban's property sector booms

The city is in the midst of an industrial property boom and is experiencing a dramatic increase in demand for space

Durban is in the midst of an industrial property boom and is experiencing a dramatic increase in demand for space on the back of a strong economy.
Marc Schneider, research director of commercial property portal eProp, says that according to Statistics SA, industrial property planning levels have nearly doubled compared with 2004.

Schneider says that in the year to November, 234,000m² of industrial space was under planning, compared with 120,000m² for the corresponding period in 2004 and 100,000m² in 2003.

Schneider says the same trend is evident when studying the data on buildings completed.

He says 165,000m² of industrial space was completed in the year to November last year, compared with 145,000m² in the corresponding period in 2004 and 73,000m² in 2003.

Schneider says Durban has been one of the strongest regional economies in SA over the past two years.

"Manufacturing makes up a big part of the (Durban) economy," he says.

The strong growth in both the national and regional economy and Durban's location would continue to see industrial property developments being driven by strategic considerations as well as underlying property market fundamentals.

According to industry website, industrial asking rentals have grown nearly 5% on average in the past six months.

Northern industrial rentals, particularly in the Redhill and Springfield Park industrial nodes, appear to be highest.

Roger Perkin, MD of listed property unit trust Martprop, a dominant industrial property player in Durban, says that in the past year there has been a surge in new warehousing development in Durban. This was primarily as a consequence of strategic land brought on stream at a new industrial node, Riverhorse Valley, which straddles the N2.

Perkin says there are no new developments in the Redhill and Springfield Park areas as they are fully developed.

However, these two areas are benefiting from Riverhorse developments because they are the nodes most closely situated to Riverhorse, he says.

New developments are coming on stream at rentals of R30/m² (at Riverhorse Valley). That is having an obvious pull effect on rentals in the neighbouring nodes,? says Perkin.

He says Martprop has two industrial property develospments under way, one in Cape Town and the other in Durban.

We are seeing a lot of demand for further development in the warehousing base countrywide, including Durban.?

First National Bank economist John Loos says Durban's industrial vacancy rates are ?very low at the moment?.

"It is essential for Durban to expand its industrial capacity," says Loos.

He says that in the long-term Durban is a "very logical industrial hub" because it is home to the biggest harbour on the subcontinent, which makes it a logical place for exports.

Loos says the further development of the transport corridor between Durban and Gauteng means that Durban can supply Gauteng, the country's biggest economy, with a variety of manufactured goods.

(Durban is) a city that effectively kill two birds with one stone in the sense that it's a place where manufactured goods can be made for Gauteng and for the export market."

Moreland Developments - whose business is township development - says that as a land seller it would "absolutely agree" that Durban is experiencing a boom.

Moreland Developments director Mike Deighton says that over the past two years there has a been a massive increase in demand for both industrial and commercial space.

"The result is that rentals have reached a level that makes new industrial development extremely viable," says Deighton.

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