'Still hope for PE's CBD'

Posted On Thursday, 13 March 2003 10:01 Published by eProp Commercial Property News
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Estate agents and property valuers in Port Elizabeth are optimistic that with current developments such as the Coega IDZ, business will return to the central business district, thereby making it vibrant again.

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Currently there is an exodus of business from the CBD to areas including Greenacres, Walmer Park, the William Moffet Expressway and others.

The property valuers were responding to the below-market value sale last week of one of Port Elizabeth?s landmarks, the Trust Bank building in Govan Mbeki Avenue.

The eight-storey building, which had been on the market for more than six months, went under the hammer for R1,5-million. It was bought by Quantum Leap 56 "as an investment".

Vincent Moss, regional manager of Aucor South, the auctioning company, yesterday said the replacement value of the building was R4-million.

He disputed the figure of R30-million quoted by an Afrikaans daily newspaper. Mr Moss said since it was mostly a glass building, it could not be valued at R30-million.

Mr Moss said the building stayed on the market for a long time because "no one was interested" in it.

He said auctioning was the best way of disposing of the building.

Mr Moss said with the building of new law courts in North End, the buyers of the Trust Bank building anticipated that it would be heavily utilised by attorneys as offices, since it was close to the courts.

He said the value of property and rentals in the central business district and North End was "very low". Property was expensive from Cape Road to the William Moffet Expressway.

Mr Moss said although people were moving away from the CBD and North End because of high crime, tenants would return and the area would revive.

"With the advent of the Coega IDZ development now a reality, there is no doubt North End and the CBD will pick up again. In fact, from July, North End will be busy," he said.

He said currently land was costing from R6 per square metre in North End while in the William Moffet Expressway area it sold from R40 per square metre.

Property valuer Neil McLaggan said although he personally did not believe that people were leaving the CBD because of crime, that perception prevailed with many people.

He said the other problem was parking and accessibility. "Until this perception is removed, we will still continue to have the problem of people leaving the CBD," he said.

Mr McLaggan said because there were no tenants, investors were sceptical to buy property in the CBD.

Phillip Bowman, who has been in the property business in Port Elizabeth for 36 years, said yesterday the other problem was that maintenance costs were very high.

He believes the Trust Bank was sold vastly below the market price.

"The rentals in the CBD and North End are very low but the maintenance costs are high.

"This brings down the potential investment value of the property,? he said, adding that the Trust Bank building was well positioned for future growth. He also cited the development of the nearby new law courts.

"This is going to produce demand for offices in that area. I think auctioning it was the best way and it fetched a good price," he said.

Mr Bowman called on the metro council to bring back tenants to the CBD and welcomed Mayor Nceba Faku?s vision of revitalising the CBD.

Another well-known Port Elizabeth property valuer, Mike Sheffer, said property prices were low in the CBD because the buildings were not maintained.

He described the purchasing price of the Trust Bank as "a good buy. It is due to low demand," he said.

Mr Sheffer said in future demand for property in the CBD would certainly go up.

"We hope the demand will increase and this will result in the increase in rentals and things will turn around. It's the normal property trend.

"At the moment there is lack of business,? he said, adding that there was an oversupply of office space.

"The more vibrant the economy gets, hopefully this will attract more business. It will take time, but it will happen''.

Last modified on Thursday, 26 June 2014 18:23

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