12 March 2006
INDICATORS
 
THERE is a jolly good reason why industrial property remains a favourite among investors. The sector has recorded 65% growth in rental income over the past two years, helping to make listed property the best-performing asset class on the JSE.

KwaZulu-Natal was the standout province, with mushrooming investment projects increasing the demand for rented industrial property. The latest eProp rental barometer meter indicates 100% growth in the province since 2004.

“The basic economic fundamentals in the province are very strong,” said Marc Schneider, eProp research director. “A whole range of channels are opening up, including the ports.”

Schneider said new industrial space has been in short supply, which has had a positive effect on existing investments. “Where there isn’t that supply, naturally you get prices being pushed up.”

Demand is particularly strong in Durban, although the provincial capital, Pietermaritzburg, is also experiencing an upsurge. Schneider says the proposed corridor between Durban and Johannesburg in terms of the government’s Accelerated and Shared Growth Initiative strongly suggests Pietermaritzburg will continue to reap huge benefits.

Further demand is likely as a result of the Dube Trade Port project announced by Premier S’bu Ndebele last month. It involves developing a world-class integrated logistics platform at La Mercy, north of Durban. The project will open up “a whole range of enterprises and opportunities for some of the surrounding towns like Stanger”, said Schneider.

“It’s probably one of the best projects in South Africa from an investment point of view.”

Rated by fund managers Catalyst as the listed property sector’s top-rated performer, Redefine Income Fund is tapping the potential in KwaZulu-Natal. In a joint venture with Hyprop Investments, Redefine developed the 28000m² South Coast Mall at Shelley Beach at a cost of Rl92-million.

“Our objective at Redefine lies in finding innovative ways of achieving growth,” said CEO Brian Azizollahoff . “Growth by acquisition is really challenging with prices of investment property unrealistically high, so we will be looking for other avenues of expansion such as development.” — Futhi Ntshingila and Don Robertson