Growing public sector investment is adding a new dimension to the property market, with major initiatives taking place in a number of provinces.

Property analysts says the remainder of 2002 is expected to be a period of significant public sector investment, with positive spinoffs for the property market.

Russell Inggs, head of Nedbank Property Finance, says Johannesburg inner city regeneration includes the 90000m² Constitution Hill project in Braamfontein and the Nelson Mandela bridge, from Braamfontein to Newtown.

Proposed industrial development zones at Johannesburg International Airport and the City Deep container terminal are focused on boosting the manufacturing and industrial sectors.

In Cape Town, the city of Cape Town and the Western Cape provincial government are putting R267m into completing the unfinished freeway flyovers on Cape Town's Foreshore.

The move is aimed at alleviating traffic congestion into the city centre, mindful of the planned Cape Town Convention Centre another initiative partly funded by the public sector due to open in August next year.

Other examples of public sector initiatives include the Rosslyn auto-cluster project in northwest Pretoria and the Coega industrial development zone in Port Elizabeth.

'For the SA commercial and industrial property sector, the goal will be to identify sectors and nodes that offer the best rental growth, the best potential for net lease escalations and the most appropriate yields.'

He says it is expected that commercial and industrial property investors will keep a sharp eye on rentals, lease escalations and operating-cost escalations that should come under pressure due to the economic environment and the prevailing oversupply in some nodes.

Decelerating commercial development activity in saturated nodes, already seen over the past 12 months, should be a feature of the market in 2002 and go some way towards an improved supply and demand balance.

'New investment options in different nodes, like the Johannesburg city centre, or sectors like the residential property market, are expected to emerge, while public sector megaprojects kickstart investment attention in surrounding areas,' says Inggs.