TIMING is the most crucial factor for those looking to make money in the commercial property industry, and many investors seem to have got it wrong, according to the latest Nedbank Property Finance quarterly research.

This is partly because of the complexity of the local property sector, with various nodes registering different stages in the property cycle at any one time.

Nedbank property finance head Russell Inggs says the SA Property Information Exchange (Sapix) index illustrates just how different trends in various nodes and sectors can be.

This index has reflected significant total return differentials across the country and across sectors.

It shows that in 1999 the retail property sector registered a total return of 18,5% in Gauteng, 12,3% in Western Cape, 20,7% in KwaZulu-Natal and 9,5% in other regions.

Office property registered a 7,5% total return in Gauteng, 12,2% in Western Cape, 2,9% in KwaZulu-Natal and 6,1% in other regions.

These substantial differentials occur despite the fact that nodes and sectors all operate within the same macroeconomic environment.

Inggs says the best time to start new commercial and industrial property developments is when the economic cycle reaches its nadir, a point where many investors are often least receptive to the idea of new investment.

Caution on the part of local property investors has tended to see development projects going ahead as the macroeconomic cycle moves towards its peak and completed as the economy begins its cyclical slowdown, he says.

Property investors have become extra cautious as many were caught with their pants down during the market turmoil of 1998 and many have not yet come back to the market.

Inggs says volatile interest rates, sharper competition for debt financing and concern about sustainability of demand have contributed to a heightened need to consider the timing of property developments.

Some nodes are changing rapidly and this emphasises the need for careful timing, he says. 'Consider, for example, how Braamfontein has developed a strong nongovernmental organisation and educational component, and how Sandton's business district is becoming the financial service node of Johannesburg, if not SA.

'Other examples include Century City in Cape Town and Umhlanga in Durban, which are both seeing an influx of corporate office users,' says Inggs.

Unlike other investment instruments, investors have to take a relatively long-term view on property against a background of volatile movement in short-term indicators.

'Whereas the relationship between macroeconomic indicators and the property cycle remains clear, it is at a micro level that the analysis of timing is most crucial,' says Inggs.