Fran Teagle, Broll Property Group’s Director of Commercial Broking for Gauteng, points out enterprising South African property developers are still closing deals despite the global economic downturn.

“While there has been a virtual cessation of speculative development, new developments for which tenants have been secured are proceeding,” notes Teagle.

“Innovative developers are offering tenant incentives such as higher fit-out allowances or rent-free periods. In this way they are still able to present an attractive deal, while ensuring that reductions in the actual rentals are minimised,” explains Teagle.  She points out, however, that when a good strong tenant is sourced, landlords tend to take a longer-term view and will be open to negotiating a rental to secure this kind of tenant.

In this economic climate, Teagle explains, tenants are seeking to reduce their costs and are consequently downsizing.  The result is an increased number sublets are coming onto the market, adding to the rising vacancies. “If landlords are prepared to assist their existing tenants temporarily, it could help relieve this dynamic,” says Teagle.

Teagle notes that an opportunity in the market looks likely to develop as a result of land owners experiencing difficulty in obtaining funding, at reasonable rates, for new developments. “A number of land parcels coming to the market. Whilst land owners of zoned commercial property are currently asking high prices, it is expected that land prices will come down as holding costs mount,” says Teagle.

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