The stronger rand has had a tremendous impact on confidence in the commercial property market, says property consultancy Abro Luntz.

Partner Rodney Luntz says there is activity across the board with nodal mid-sized shopping centres and office parks probably generating the most interest right now.

"Confidence in the market is running high. It's amazing what a stronger rand does for sentiment," says Luntz.

"Property is producing better returns than equities right now and most investors are factoring a drop in interest rates into their plans, which would allow for more effective gearing of deals, while rising building costs virtually guarantee good capital gains.

"There is still an overhang of unused space but my gut feel is that this will be steadily eroded, notably at the top end of the market, provided landlords keep their lease conditions reasonable."

He said that, notwithstanding the overhang, there is strong demand in specific market niches, most of which are now for the medium- to small- sized decentralised development.

This was opposed to the mega projects of the '70s and '80s which were mainly institutionally backed.

"Institutions are again sniffing around but most of the impetus is coming from private investors and developers, spurred on by a robust listed property sector, which is seemingly sorting out its problems."

There was debate about the respective structures of such companies, but be that as it may, they have become a significant market force and property paper is increasingly seen to be attractive relative to many other investment instruments, he said.