Laggard KwaZulu-Natal has potential for boom
KWAZULU-Natal has the potential to outperform Gauteng and Western Cape when it comes to house price growth over the next five to 10 years, says First National Bank property strategist John Loos.
In a report released last week, Loos says KwaZulu-Natal, which has tended to lag behind the other two provinces, will receive a boost from a number of factors, including its expected strong economic growth, its proximity to economic powerhouse Gauteng and its renewed popularity as a holiday destination.
KwaZulu-Natal is coming off a lower base than Western Cape and Gauteng, not only in its formal property market but also as far as its economy is concerned.
The Gauteng economy is going to be the powerhouse in SA over the long term.
I believe KwaZulu-Natals proximity to Gauteng will stand it in good stead. Its economy has very strong links with the Gauteng economy because a lot of its manufactured goods land up in the Gauteng market.
Loos says key transport infrastructure makes KwaZulu-Natal the gateway between Gauteng and the rest of the world.
He says several exciting industrial developments are planned for KwaZulu-Natal in the coming years, such as Dube Tradeport, which involves the relocation of Durban Airport to La Mercy, and the creation of an industrial zone around the new airport.
There is also redevelopment of the old airport for industrial use and already under way is the development of the Toyota Supply Park. The industrial developments planned for KwaZulu-Natal will boost the provinces growth potential significantly.
Even during the development phases of these projects there will be a positive impact on the overall economy.
Loos says residential land scarcity will increasingly become an issue, as was the case in Cape Town, because of the coastal nature of KwaZulu-Natal.
Land scarcity could become a bigger issue than in landlocked Gauteng. Gauteng can expand in all directions, but when you are on the coast you cant.
KwaZulu-Natal is also regaining its popularity as a holiday destination among people from inland provinces, he says.
There were a number of years in the 1980s and 1990s where it lost a bit of favour due in part to political instability and also perhaps due to some environmental deterioration, Loos says.
These days its accessibility is once again becoming a plus point given the transport route from Gauteng to the coast and I think its proximity is becoming more of a plus point. In a busier working world, people tend to take shorter holidays.
Property economist Erwin Rode, of Rode & Associates, says the greater Durban economy is dependent on industry whereas Cape Town is more diversified and more services oriented.
There is no doubt that manufacturing is doing well at the moment and it looks like we have been through the transition since 1994 with the reintegration of our economy.
It looks like the prospects are bright for industry and on that basis one must conclude that KwaZulu-Natal will probably do quite well.
He says Richards Bay is also a growth point again. We see it quite clearly in industrial rentals.
Article by: Nick Wilson - www.businessday.co.za