Whereas previously, electricity constraints were the reserve of only certain ‘earmarked’ developing areas within our metros, the situation is now a macro reality and suggests, in theory at least, that a focus on existing commercial property assets is more practical than greenfield projects – more especially if economic growth expectations come down.

If you have been receiving our newsletter for some time, you will be accustomed to our regular and cursory analysis of commercial property supply trends in South Africa. The latest year-to-date data covering up to November 2007 shows that for all retail, industrial and office completions, the ratio to the level of planning for the same period one year earlier, is running at roughly 60 per cent; since 2006 this ratio has been steadily growing and can be considered a reflection of the commercial property cycle.

Presently, office and industrial completions are up 132 per cent and 72 per cent respectively on the same y-t-d period 2006, and retail is marginally lower at 2.1 per cent. However on the planning side, both offices and industrial plans passed are actually down by 1.3 and 3.8 per cent respectively, with retail actually up by nearly 7 per cent. One expects that the ratio of completions to lagged planning will come down for retail; the lower office and industrial planning levels perhaps point towards the earlier mentioned supply constraints which are now expected to deteriorate further. By the same token, rental levels in existing buildings are likely to be additionally bolstered lending support to the stated hypothesis.