According to the report, nominal rentals in the quarter (compared with the same period last year) grew 28%, compared with 19% in Durban, 16% in the Cape Peninsula and 11% in the Central Witwatersrand.
It was noted that while the growth was the highest during the quarter, rentals were still much lower than those of the other big industrial areas.
The report cited the example of rental for a new 2 500m² state-of- the-art industrial development in Port Elizabeth of R16,24/m², excluding VAT.
The same type of facility in the Central Witwatersrand was R20,57, in Durban it was R27,79 and in the Cape Peninsula was R19,71.
Rode also analysed industrial land values, which the report said had shown robust growth during the third quarter. "This was fuelled by low industrial vacancies, strong demand and growing rentals, as well as a claimed shortage of serviced industrial land," said Erwin Rode, CEO of Rode & Associates.
The real value of industrial stands in the central Witwatersrand grew 54%, followed by Port Elizabeth's 44% growth, and then Durban (14%) and the Cape Peninsula (25%).
The report noted that manufacturing was one of the sectors that was benefiting most from the depreciation of the rand.
Referring to the October Investec Purchasing Managers Index, the report said this sector had experienced an increase in seasonally adjusted sales orders, output, and employment.
"Continued rigour from the demand side, coupled with the high cost of constructing new industrial space, is expected to keep industrial rentals under pressure in the foreseeable future," Rode said.
Looking at the residential side of the market, he said growth in that market had accelerated in lower-priced neighbourhoods, including townships.
'The relatively stronger performance of lower-priced houses is confirmed by the FNB Residential Property Barometer for 2006:4, which shows that during the last year, houses priced under R500,000 performed much better than their more pricey counterparts," Rode wrote.
"This is the result of unaffordability, of course, as the middle- and upper-priced categories grew faster in the immediately preceding years."
"The upshot is that the best yields are still to be found in the lower-priced segment of the market".
Eastern Province Herald
Publisher: I-Net Bridge
Source: I-Net Bridge
