One gets a sense of a number of interesting trends by observing supply trends across the commercial property sector in SA. In this edition our focus is on the coastal Metros of Cape Town and Durban.

At a National level the anticipation of commercial demand is highlighted in the strong level of planning activity (+2 500 000m²) taking place in 2005, being the highest across all sectors over the five year period, and 52% up on 2004, which marked the resurgence of planned supply. In terms of actual supply, the growth is much less dramatic being 6% up on 2005 and in fact for offices the supply is down 19% on 2004, which is not surprising given that the rental levels required to make new developments feasible remains marginal at best. The Western Cape is the exception, where the supply of new office space has picked up on 2004, no doubt attributable to the rapid improvement in office vacancy figures over the year.

This applies equally to the Cape Town Metro, which accounts for a large proportion (+80%) of office supply. An interesting observation is that the proportion of Industrial supply in Cape Town is lower than the case offices retail and offices, but that the overall ratio of commercial supply has increased over the past five years.

The East Coast of KZN is seeing a strong growth in commercial planning and supply activity. Clearly a fair proportion of office planning activity that took place over the past few years is now being implemented.

Durban is seeing an increasing proportion of Provincial industrial supply; last year over 90% of completions took place in the Metro. For the office and retail markets, the ratio is closer to 50% currently, but clearly this vacillates quite significantly over time.

In conclusion, we can to some extent gauge from the supply trends that industrial property cycle is still strengthening with the office sector gearing up for growth. Retail supply across SA has been very steady over the past five years. Our next edition will cover Gauteng and secondary markets.