"With 2.4% year-on-year growth in May, retail sales growth has still outperformed for the current year to date when compared to the same trading period last year. While retail has begun showing signs of saturation with some shopping centres 'stealing' from neighbourhood malls to offer something cheaper and more attractive in this very tight and consumer-driven market, astute investors are capitalising on opportunities in decentralised nodes in regions around the country," Raad says.
"Positively, the industrial sector has shown definite signs of growth with limited availability of good quality logistical warehouses and smaller mini-unit warehouses. In the office market, space is generally oversupplied, although the gap between new office rentals and existing commercial space is ultimately expected to narrow."
Generally, he says, there have been changes in the commercial sector with even greater emphasis on secure tenants and easily let, well-positioned properties.
The recent uptake of a diverse range of retail, industrial and office properties at multiple auctions held by Broll this year, Raad says, reflects sustained confidence in commercial property by both the listed property sector and private property investment market.
"Buyers are enjoying the current cycle of opportunities, with experienced investors buying highyielding assets as the commercial market and investors reinvent themselves - on a playing field with different rules.
"It is interesting to separate the listed property sector from the private property investment market, as they have different investment limitations in terms of acquisitions and growth. The funds are aggressively looking outside the borders for sound investments, as well as acquiring development firms in the different sectors to secure pipeline properties, as investment stock is as scarce as hen's teeth.
"We have also seen a number of the funds diversify into the residential market, searching for income and yield-enhancing residential units. The demand for student accommodation is also on the radar, but this investment decision depends largely on having management services "¦ that are experienced in dealing with the tenant."
Source: Business Day
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