Dearth of industrial land 'a hindrance to city's growth'

Posted On Tuesday, 10 January 2006 02:00 Published by
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A serious lack of available industrial property in Port Elizabeth could hinder expected boom times in the commercial property sector
By Johann Barnard

A serious lack of available industrial property in Port Elizabeth could hinder expected boom times in the commercial property sector.

First National Bank's property economist John Loos said pon Monday all indications were that this sector could enjoy a boom similar to that experienced in the residential property sector.

He predicted that fixed investment growth in non-residential property would reach 9% this year after growing last year at an estimated 7%.

This growth trend was expected to continue through until at least 2010.

"What is still perhaps necessary to unleash stronger fixed investment in the sector, however, is a greater degree of confidence by investors in the possibility that stronger economic growth is here to stay in the long term, and that the structural adjustments that have taken inflation lower, resulting in major interest rate reductions, are also of a more 'permanent nature'," he said in a research document.

His bullish sentiment is based largely on strong economic fundamentals, but particularly on the enormous growth in the value of building plans passed over the past two years.

He notes that this grew by 37% in 2004, and is estimated to have rocketed to as high as 70% growth last year.

Local property groups, however have expressed concern about the lack of available industrial property in Port Elizabeth.

Gary McWilliams of Bruce McWilliams Industries and the chairman of the city's chapter of the SA Property Owners' Association, said on Monday there was a huge shortage of warehousing and factory space. He said he had witnessed a strong pickup in demand in the second half of last year, which was expected to continue this year.

Demand for retail space was also showing strong signs, but office space was under less pressure, McWilliams said.

Aside from land in the Coega IDZ - confined to companies with a strong export bias - he said there was no land available and that the municipality was not releasing any new parcels of land. He estimated that the average timeframe for the rezoning of land for industrial use was anywhere between nine months and a year.

Delays in the development of new industrial land was even greater, as all the necessary services had to be provided before ground could be broken.

Sapoa's Hilton Stevens said that while no exact statistics were available, industry players had been seeing demand pressure from September last year.

FNB's Loos maintained that a much more stable economic climate in the country would serve to ward off a sudden slowdown, as had happened in the past.

Economists are predicting a slowdown in the economy this year, but Loos says that, should this fall from the expected 5% for last year to around 4% this year, it would still be sufficient to bolster the commercial property sector.

Nelson Mandela Bay municipal spokesman Lourens Schoeman said the IDZ, Uitenhage - particularly the Logistics Park - and Markman Industrial had been identified as areas where industries could expand.

Eastern Province Herald
Publisher: I-Net Bridge
Source: I-Net Bridge

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