Bullish business boosts property market

Posted On Tuesday, 15 March 2005 02:00 Published by
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Both the commercial and residential sectors in uMhlathuze have recorded strong growth in the past year
Vibrant business activity in uMhlathuze is reflected in the surge in the property market, with both the commercial and residential sectors recording strong growth in the past year.

FNB Commercial Property Finance head Gerhard Zeelie says more than 90% of its financing deals in the Richards Bay area are for industrial, manufacturing and warehousing concerns, which is in line with the national trend.

"Of particular interest is the huge demand for industrial space and the more than 50% conversion rate of our deals," says Zeelie. "This tells me that Richards Bay is a real growth area."

Berdine Lang, manager of Pam Golding Properties in Northern KwaZulu-Natal, says the uptick in business activity has filtered through to the residential market, with house prices rising 60% last year.

Buyers of all races have been snapping up property.

"The Richards Bay residential market is different to many others because of the huge level of industrial activity. As business takes off and people's earning potential rises, they are more able to enter the property market. At the moment about 40% of our buyers are black," says Lang.

According to Lang, an average three-bedroom home with a double garage and pool will now cost between R850 000 and R900 000.

The future looks even brighter for this market, she says, because of the tourism potential of the region.

"Richards Bay has traditionally been known as an industrial site, but its proximity to Mozambique and the game reserves to the north, as well as Durban to the south, hold great potential for tourism and will foster further growth in the housing market, " says Lang.

However, the bullish view of the market is not shared by all property agents. One of those taking a more cautious line is Thomas Hodges of Seeff Properties. He believes the surge in house prices is not sustainable and that the market is headed for a turn.

"Our biggest category of buyers falls below the R650 000 mark, but the reality is that about 70% of our buyers cannot afford these high prices."

Hodges has already noticed that it is no longer a seller?s market in Richards Bay, commenting: "Sellers are not able to get their asking prices, and are beginning to lower their prices by between 10% and 20%".

"This, I believe, will prompt a gradual decline in house prices."

Business Times

Publisher: Business Day
Source: Inet Bridge

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