Search Property For Sale

Selling is an answer in tough times

Google+ Pinterest LinkedIn Tumblr +

Financial pressure forces higher numbers of commercial sales

Financial pressure and the search for more affordable solutions remain the biggest push factors for commercial property sellers throughout the country.

However, KwaZulu-Natal appears to be faring a little better than some of the other metros.

Relocation closer to their target market is the second biggest reason for selling, says FNB’s latest Property Insights report for Q3, which surveys a sample of commercial property brokers in the country’s six major metros.

“Focusing on the key drivers of movement and sales activity in owner-serviced properties, the survey results show financial pressure to be the biggest single driver, and this factor has become even more prominent in the Q3 2019 survey,” says the bank’s commercial property analyst, John Loos.

“We don’t have a significant history yet to see what a ‘good’ level of financial pressure-related selling is and what a ‘bad’ level is, but the recent level appears significant.”

Loos says financial pressure-related selling and relocation due to affordability has increased from 39.5% in the second quarter to 46.8% in the July to September period, “further indication of deterioration in the financial situation of business as a whole in this stagnating economy”.

Examining the selling reasons by region, the greatest level of pressure-related selling or relocation is Tshwane, with 56.8% of sellers listing their properties for these reasons. Cape Town (55.3%), Nelson Mandela Bay (52%) and greater Joburg (46.8%) are not far behind.

Warehouse sales are doing well with demand driven by small businesses expanding. Picture: Supplied

Survey respondents in the eThekwini metro perceive there to be a “far lower evel” of financial pressure-related property movement and sales in the “owner serviced” market, with 26%.

Nationally, the high perceived percentages of financial pressure-related sales and movement in the “owner serviced” market, along with the third quarter increase, appears to tie in with other key economic data releases, Loos says. This includes, most notably, accelerating growth in liquidation numbers, with the average year-on-year growth rate for total liquidations for Q2 and Q3 measuring 22.4%.

However, he says: “KwaZulu-Natal appears to be an interesting exception. Its low level estimate for financial pressure-related movement and sales ties in with brokers in that region also perceiving it to have the strongest commercial property markets of the major metros.”

Warehouse sales are “going very well” with demand driven by small businesses expanding and investing in commercial property, says Werner Willers, broker for Rawson Properties Durban South Commercial. The main reason pushing owners to sell is emigration.

“But there seem to be new owners ready to take their place and sales are going well.” He says the market is active and “sales happen quickly”, adding that professional landlords are also buying property to expand property portfolios. The new Cornubia industrial business hub is one area seeing rapid expansion due to the demand for industrial property and the shortage of new stock in other areas of Durban.

“This area is fast becoming the new preferred location in Durban because it is all new and well-managed in a secure central environment,” Willers says. Commercial properties in Morningside and Windermere are also sought after due to the revived interest in large restaurant chains and foot traffic returning to the area, says Michelle Burger, Pam Golding Properties’ area principal in Durban.

Furthermore, many homes zoned for commercial use are being sold and converted into restaurants, coffee shops or offices. “There is a trend to work-live-play.”

Share.

About Author