"At this stage, South African property investors can sit back and be thankful they did not have to endure the roller-coaster ride the developed economies took. The medium-term forecast for commercial property is one of stable, albeit slow, growth into the next year or so,” said Tony Bales, of commercial property deal makers Bales & Associates.

There seems to be an across the board consensus that despite the residential property market having gone flat and likely to remain so for perhaps another two years, commercial property is very much in recovery.

People like Bales believe that while local developers have been extremely quiet during the past 36 months, and are likely to remain so for another year or two, when demand for rental space does improve, it is likely to have a hugely positive influence on existing available space and will almost certainly hike up rentals with speed.

According to Jason Lee, head of Rawson Properties commercial franchise division, this will be a change from the historical path that follows recessions, which has been for the residential sector to trail blaze the recovery.

“I think the residential sector is likely to take longer to emerge from the present stable, no-growth situation but the prospects for commercial property are now looking good,” he says. Clearly the commercial sector has displayed greater resilience of late.

For many a financier, commercial property was always the primary selection, whereas residential property has practically never given yields above single digit levels. On the other hand double digit returns have been the standard in the commercial sector.

Tony Bales reflects that although the property market has experienced a tough environment of late, "looking back at the days when the prime interest rate hit 25,5% in 1997, the current situation we are dealing with is very mild".

Bales points out that while office, retail and industrial rental growth is under pressure and banks are not lending on favourable terms, at least interest rates are relatively low and the environment is stable and forecastable, in his opinion.

Over the last couple of years, the Johannesburg Securities Exchange listed property companies that are deeply committed to commercial portfolios outclassing and outpacing just about every other class, other than raw materials and precious metals.

On the subject of defaulting tenants in the commercial property sector, Lee refers to the Sheriff Auctions lists indicating that an examination of the same makes it clear that commercial properties do not feature heavily in them.“The number of commercial properties repossessed in the last year has been almost insignificant in relation to the massive inflow of this type of property on the residential side.” Said Lee.

This may be due to somewhat more sympathetic landlords currently. There definitely seems to be more understanding about tenant concerns and rental hikes. South African landlords have been able to assist and help their tenants through the last difficult year and will probably continue to do so in future.

Banks have traditionally been keen to partner commercial landlords because they can usually manage a 20% to 30% deposit and because banks can deal directly with them not through bond originators.

Lee says bonds are usually spread over relatively short periods. Banks usually stand to lose large sums if commercial property is sold as distressed stock on auction. They prefer to look at interest only facilities and even repayment holiday periods to assist the landlord rather than drop the axe.

Tony Bales brings us back to the big picture and points out that from hereonwards, the market is likely to see improvements rather than any deterioration of fundamentals. "Conversely, investors in the US, UK and Europe have had a disastrous 36 months, where huge value has been eroded off property portfolios and many banks are not in a position to lend at all."

So it seems that some of the big names in the industry agree that the future looks bright for commercial property in general and that those who have stuck it out thus far will reap a reward and those who get in now will not be disappointed.