The MPB has remained in positive territory for the 9th consecutive quarter; this is significant in that the barometer looks at consecutive quarter on quarter performance, implying growth in the MPB since 2003 Q1.

The only factor negatively impacting the MPB was the heightened level of commercial (offices, retail and industrial) planning activity that occurred during the 1st quarter 2005 vs the 4th quarter 2004. This is so because the MPB is taken from the perspective of directly held existing commercial property investments, such that an increase in potential supply is negatively construed. The GDP position also had a negative impact, but not to the same extent it did in the 4th quarter.

The current final reading, as reflected in the graph below, is slightly down on that released about a month earlier. This is primarily owing to substantially more office planning activity coming through for February, as revised by Stats SA.

Going forward, it is anticipated that the MPB will gradually come down; this owing to a slow rise in inflation measures - notwithstanding lower building cost inflation - increased development activity, and possibly slight deterioration on the exchange rate.

eProp will also soon report on underlying business conditions when it distributes its Commercial Property Confidence Index in July/August. Since underlying fundamentals are crucial to the asset class’s investment outlook going forward, the responses could prove invaluable.

eProp Research
Marc Schneider
(011) 441-0377
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