No parking

Posted On Monday, 27 March 2006 02:00 Published by eProp Commercial Property News
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More cars on the road means more trouble finding parking

 

Property-Housing-ResidentialThe booming economy and increased car sales have put pressure on parking space at South Africa's office parks and shopping malls.

In Sandton - one of South Africa's main financial services and shopping hubs - six parking bays have been set aside for each 100m² of office space rented, up from four in the recent past, said Anton Prinsloo of Gensec Property Services. Gensec has a diversified property portfolio with R12-billion under management.

The reason is that more executives are using private vehicles, and there is more demand for parking from visitors and clients, caused in part by the lack of good public transport services.

Another reason for the increase in the number of parking spaces required is the increasing use of open-plan offices, which means more people can be accommodated.

The demand for expensive parking space is creating a headache for landlords and property managers. If tenants cannot get enough convenient parking, they look for property elsewhere.

In the Johannesburg CBD, Gensec has a 18,000m² B-grade office building which has only 50 parking bays. At some of its buildings a shuttle service has been introduced to transport executives to their offices from nearby parking.

"This requires a new mindset ... but tenants seem quite happy with the arrangement," said Prinsloo.

"It is now either impractical or far too costly to construct parking ramps or try to provide underground parking in built-up areas."

Michael du Toit, also of Gensec, said that parking demand has risen to between six and eight vehicles per 100m² at new shopping centres such as the East Rand Mall. As a result, office parks being built near existing high-density commercial areas are being developed with ample parking space.

Parking facilities are also a substantial generator of cash, estimated at about 15% of total income - and growing - at some developments, said Jason Cooper, a manager at JHI Real Estate.

And the crisis is likely to get worse. In the most optimistic forecast of total new vehicle sales for 2006, Ronnie Watson, chief executive of WesBank, expects volumes to rise by 17% on last year to a whopping 725,000 units for the year.

This compares with 618,011 last year, including sales by vehicle importer Associated Motor Holdings. Watson also believes sales will reach one million by 2010.

The factors supporting Watson's forecast include the growth of the black middle class. Blacks now make up 35% of WesBank's R70-billion finance book and represent 38% of all new business written.

"It is estimated that four million people have entered the middle-class sector since 1994, but this represents only 10% of the population, so there is still substantial growth potential," said Watson. Women also account for a large portion of the finance book, representing 28.5% compared with only 13.6% in 2001.

Another market force is "youth" - those under 35 years old. In 2001, they made up 19% of WesBank's book, but now represent 42%.

The reason for this, said Watson, is that younger people tend to change cars more often than old "fuddy duddies".

Cars are also seemingly becoming more affordable.

WesBank has observed that while the finance required for a vehicle purchase has risen by 35% between 2001 and 2005, the average instalment has only increased by 5.6%.

In real terms, excluding the impact of inflation, the cost of a vehicle has decreased significantly during this period. The average vehicle instalment is R2,919 at present.

Despite this, Brand Pretorius, chairman of McCarthy Motor Holdings, recently commented that motor car prices in the country are still too high.

Over the past few years Watson has been one of the most bullish in forecasting vehicle sales and because of rapid growth has been one of the most accurate. His forecast is based on the continued growth of the economy and the ?open? market which allows for new entrants. At present, there are over 1,000 models and derivatives available.

"The motor industry now contributes 7.4% to South Africa's GDP. For this reason, the motor industry is the third largest and most expanding sector in the South African economy, indicating the underlying transformation and normalisation of the local economy," added Watson.

Exports of fully built-up vehicles will also accelerate this year by about 15% to over 200,000 from the 139,000 exported last year worth R20-billion.

Last modified on Tuesday, 27 May 2014 08:35

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