Rising capitalisation rates point to lower market values, says Rode

Posted On Thursday, 19 September 2002 02:00 Published by
Rate this item
(0 votes)
The continued rise of capitalisation rates in the property market is worrying property services company Rode
By Sibonelo Radebe

The continued rise of capitalisation rates in the property market is worrying property services company Rode.

The group says in its second-quarter review conditions in the nonresidential property market remained constrained in the second quarter. Higher vacancies are still creating pressure, particularly on office rentals.

'Particularly worrying though is the continuous upward trend, on a national basis, of capitalisation rates for all property types,' says the Rode review.

Capitalisation rates, the property equivalent of the forward earnings yields of equity, reflect investors' perceptions.

'As such, higher capitalisation rates mean lower market values,' says the report.

Rode's Dirk de Vynck says capitalisation rates for regional shopping centres in Cape Town and the Witwatersrand have experienced big hikes.

The upward surge in Durban's regional shopping centre capitalisation rates since the middle of last year could be the result of the completion of the Gateway shopping centre. However, this rise should be a temporary phenomenon, brought on by a temporary oversupply of regional shopping space.

'In time, the increase in consumer demand should mop up the oversupply (of retail space),' says De Vynck.

The review also touches on the listed property sector of the JSE Securities Exchange SA, saying property unit trusts have, during the second quarter of this year, recovered some of the losses incurred a few months ago.

However, the property loan stock market is still in the doldrums.

Business Day


Publisher: Business Day
Source: Business Day

Most Popular

Bentel Associates International scoops two awards at The African & Arabian Property Awards 2020

Oct 06, 2020
Marriott Hotel
The African Property Awards is a novelty awards scheme instituted to recognize and…

Inospace acquires its 26th business park

Oct 06, 2020
Rael Levitt
The record-low interest rate and favourable lending environment has spurred Inospace, a…

Iconic Sandton building given a facelift

Sep 23, 2020
3 Alice Lane Building
Since 2016 the City of Johannesburg has embarked on an ambitious programme to renovate…

Unprecedented buying activity in East London and Port Elizabeth housing markets

Oct 06, 2020
PE Sardinia Bay  smallholding
Since June this year, residential property sales have escalated in the Eastern Cape hubs…

Attacq’s client-centric approach stands it in good stead

Sep 22, 2020
Deloitte Waterfall City Aerial picture
Attacq Limited (“Attacq”), The South African-based REIT today announced its financial…

Please publish modules in offcanvas position.