THE drop in building plans is a reflection of lower building activity nationwide and a shortage of commercial and industrial space could be brewing - making current offers of auction properties highly relevant says Roy Lazarus of Park Village Auctions.
Lazarus says that this scenario is dependant on numerous factors, not least of which is recovery in business prospects and economic activity.
Nonetheless, he says current demand for auctioned commercial and industrial property stems from discerning investors who have identified real opportunity for investment returns down the line.
"The results of our auction sales of commercial and industrial property show there is still solid interest, but there is an understandable hesitancy to commit in these tough times. For those with the foresight, however, and the patience to await the turnaround, there are bargains aplenty right now."
Lazarus quotes leading listed property experts as saying that property fundamentals in South Africa remain sound.
"A leading property analyst has said that new retail developments are likely to be limited by what he described as supply side constraints, which underscores my view that a slowdown in new development is creating a hidden build-up in demand, which should see values and returns increase in the medium term.
"Commentators also point to a disparity between rentals in existing and new retail space, and the view of at least one expert is that this provides upside potential for increases in rentals when leases in existing space come up for renewal.
"In terms of office space, there is an opportunity for refurbishment of existing well located buildings now available on the auction circuit.
"As for the industrial sector, infrastructure constraints are limiting new development and although tough business conditions have had their effect on vacancy levels, this sector too could see a fairly rapid turnaround in prospects.
"Opinions differ as to when all this will happen.
"Economists at the likes of FNB and Absa have indicated the first green shoots of a residential property recovery are perhaps appearing and although, of course, the growth cycles of the two sectors differ, recovery in one sector sets the stage for similar improvements in other sectors."
l Park Village Auctions' commercial and industrial property sale takes place in July on a date to be advised.
For further information go to www.parkvillageauctions.co.za