But no recovery in the industrial sector
Broll Auctions and Sales’ property auctions have been progressively well attended throughout the year with success directly linked to the quality of properties taken to auction, says chief executive Norman Raad.
“The most recent auction, for example, was successful in terms of confirmed sales, but it called for more pre- and post-auction negotiating than normal. Highlights were the sale of Liberty Gardens in Bruma and offices in Kyalami Business Park. Both were purchased by owner-occupiers – but only after the sellers became more realistic about pricing.”
Raad says the industrial sector has not shown any signs of recovery, as small and medium-size manufacturing businesses continue to feel the full effects of the struggling economy.
“Smaller industrial property prices have, in fact, dropped in value. Property owners are having to reduce rentals for struggling tenants as finding a replacement could take months or years in some areas.
“As a result, the industrial market is being supported by larger multinational storage and logistics companies. South Africa has lost tremendous ground when it comes to manufacturing, because many goods can now be imported at lower cost. What we have seen is an emerging market for the smaller tradesman industry – fitters, carpenters, electricians and iron mongers willing to rent alongside one another in smaller workshops.
“While the retail sector is facing massive headwinds, smaller retail centres are well positioned to capitalise during these difficult times, as they are predominantly occupied by niche businesses catering for a captive market.
“Larger centres are – and will always be – in demand, but stock is limited and sellers, few.”
Raad observes that the commercial sector is looking to reinvent itself, as massive oversupply is slowing demand. Offices are being converted into residential dwellings, hotels and storage.
“The demand for offices is different across all demographics, but we have seen multiple consolidations across major companies, leaving huge vacancies in outlying towns, which now find it challenging to fill the space in the current economy.
“Owner-occupiers are the one sign of life in the sector, as the chief executives are always looking to save costs, move closer to staff and their homes and stay away from traffic congestion in cities.
“Cape Town and Durban remain an anomaly in the current economy. The commercial market in Cape Town, in particular, has seen massive growth in values with buildings suitable for residential conversion attracting the most aggressive bidding.”
Sunday Tribune Auctions