JANICE HEALING

27 February 2005

DURBAN’S status as a top coastal site is driving residential sales, while the strategically placed deep-water port of Durban and the city’s solid growth numbers are contributing to success on the commercial side.

Gerhard Zeelie, the head of FNB Commercial Property Finance, says the Durban office market grew 15.6% last year, while the industrial sector rose by just under 20%.

"We are very bullish about the KwaZulu-Natal property market, particularly in Durban, where we believe both office and industrial sectors will continue to grow on the back of the buoyant business climate.

"KwaZulu-Natal as a whole makes up about 17% of our property financing activity while the Durban CBD and its surrounds account for 5.6% of what we do, which is sizeable and indicative of the strong demand for commercial property in the CBD," says Zeelie.

He adds that the recent introduction of legislation allowing for tax allowances for the rejuvenation of CBD areas will also start having a big impact on the Durban area.

With regards to the residential market, Absa senior economist Jacques du Toit says property prices in Durban jumped 33% in 2004 as a whole, while in the last quarter they rose 25.8%.

"We expect strong growth to continue to be a feature of the Durban residential sector, although we do not expect the price rises to be as high as last year. However, housing affordability will come under pressure as the increase in remuneration has been less than 10%, while house prices have risen more than 30%, and this will drive lower growth," says Du Toit.

He believes the fact that Durban is a coastal town is a bonus for the property market, adding that the trend is for many Gauteng residents to have holiday homes in Durban.

"If the economy grows faster at about 4%, it will be attained in the urban areas of the country, such as Durban, and this will drive regional growth," says Du Toit.

One of the biggest investments in the Durban property market has come from the Zimbali Coastal Resort, which lies 42km north of the city. The 728ha residential and "eco-resort" development encompasses a beach estate, coastal forest estate and golf estate and is owned by Moreland Developments — the property development arm of the Tongaat- Hulett group — and the Kuwait-based IFA Hotels & Resorts.

The direct foreign investment by IFA Hotels & Resorts in Zimbali over the next 10 years will be about R2.45-billion.

Moreland development director Neels Brink says property prices at Zimbali continue to increase as demand for real estate outstrips supply. Land prices range from R1-million to R4.5-million and completed villas from R3.2-million to R22-million.

He adds that less than 50% of the units are permanently occupied, with many serving as second homes for Gauteng residents. "The commuting trend is picking up and we find that many business people spend three days of the week in Johannesburg and spend the rest of the week at Zimbali with their family."

It’s time to break new ground