News from Nationlink

Optimism is high for all segments of Port Elizabeth property market in 2005 and especially for a pick-up in the commercial and industrial markets, which are still catching up on the residential sector.

Looking at the year ahead, Nationlink regional director Neil McLaggan forecasts sharply increased demand for industrial property coming from the engineering and related industries as the giant Coega deep-water harbour project advances to completion.

The residential market, he says, is expected to close 2004 marginally down on the demand levels set in the latter half of 2003 and the first half of this year, “but supply is still being outstripped by demand and is likely to do so throughout 2005”.

McLaggan, who describes Port Elizabeth as a “middle-management city” expects housing demand to edge up again in the new year when the majority of management transfers take place. Further influxes of Coega work-seekers are also expected and investor interest will be spurred along by high business confidence levels and the sheer volume of construction activity in the city.

He says stock shortages - a problem countrywide – will put prices under upward pressure, but this will be relieved somewhat as a large number of new units now in the delivery pipeline come on stream.

Cluster and estate developments, managed by homeowner associations, are likely to gain further popularity. The momentum of delivery, however, is likely to be interrupted later in 2005 due to the current cost of raw land, which has more than doubled in the region during the past year to between R800 000 and R1-million per hectare and is discouraging developers and builders from “re-stocking” as their projects sell out.

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Even so, says McLaggan - a former national president of the Institute of Estate Agents and a respected forecaster - a "rosy 2005" is to be expected, barring an unforeseen economic calamity necessitating a sharp increase in interest rates.

McLaggan’s son Duncan, who heads up the company's auction division and reports a “tremendous” year for this home sales method, shares his optimism.

He says 85 percent of homes listed for auction this past year by "non-distressed” sellers were sold, with more than half of those properties being sold for at least 20 percent more than the initial asking price. Non-distressed sellers he categorises as people selling on auction by choice rather than by reason of death, divorce or foreclosure.