FNB bullish on commercial sites

THE strong growth in the prices of office and industrial properties is sustainable over the next two to three years, First National Bank’s (FNB’s) Commercial Property Finance unit said yesterday.

Speaking at a media briefing, FNB Commercial Property Finance head Gerhard Zeelie said the growth in values was underpinned by contributing factors that indicated stability and sustainability in the medium term.

Zeelie said the market growth was driven by consumer confidence, low interest rates, government tax incentives for starting up businesses, good investment opportunities and greater banking flexibility when it came to financing office and industrial property purchases.

He said there had been significant increases in office and industrial property values in the year to December last year.

A-grade office values increased 14,9% during this period, while B-grade office values increased 13%.

A-grade offices were situated in office nodes like Sandton, while B-grade offices were located in less popular office areas, like Parktown.

Zeelie said industrial property had shown stronger growth in values over the one year period.

Prime quality industrial space, which referred to new space such as distribution warehousing, had shown value increases of 20,9%, while industrial property parks showed increases of 20,8%.

Secondary quality industrial properties, which were properties in traditional or established industrial areas, showed the strongest growth with a 21,3% increase in values.

Zeelie said the office property market would continue to grow, but the industrial property market offered better investor opportunity.

Article by: Nick Wilson - www.businessday.co.za