OFFICE rentals were able to muster some growth even against the slow growth of the economy in the last quarter of the 2010, a report by Rode and Associates revealed.
Erwin Rode, property economist at the firm, said though the growth in office rentals was not vigorous, Johannesburg grew by 5percent, Durban grew by 4percent and Pretoria grew by 3percent.
The only exception, Rode said, was Cape Town where market decentralised (office buildings in suburbs) contracted by 4percent.
Rode said what was disappointing from an industrial property point of view was the weakness in the manufacturing sector (warehouse and factories) during the reporting quarter.
"This, given industrial property's reliance on strong manufacturing sector, could mean more downward pressure on market rentals," said Rode.
He said the best rental figures that could be achieved during the third quarter of 2010 came from Port Elizabeth, with only a modest one percent growth, followed by the Cape Peninsula which showed zero growth.
The report also revealed that capitalisation rates seem to be benefiting from mild inflation expectations, inflows of foreign portfolio capital and their positive impact on bond yields, hence required minimum income returns on substitute investments.
Capitalisation rates refer to income yields calculated as expected 12-month net income divided by the purchase price.
However, Rode said, "doubts about the sustainability of rises in market-rental growth, combined with rising municipal charges, are probably exerting a counter-balancing influence on capitalisation rates.
On residential property, nominal flat rentals in Durban, Cape Town and Bloemfontein were up by 3percent, roughly in line with the growth rate of consumer inflation (excluding housing). Johannesburg and Pretoria only enjoyed growth of one percent while Port Elizabeth contracted by a percent.
Rode added that in the housing market, affordability remained the biggest constraint to effective demand with the New Credit Act, job uncertainty, high levels of indebtedness and much steeper electricity tariffs playing a big role.
Rental figures keep on growing despite slow economy
OFFICE rentals were able to muster some growth even against the slow growth of the economy in the last quarter of the 2010, a report by Rode and Associates revealed.
Erwin Rode, property economist at the firm, said though the growth in office rentals was not vigorous, Johannesburg grew by 5percent, Durban grew by 4percent and Pretoria grew by 3percent.
The only exception, Rode said, was Cape Town where market decentralised (office buildings in suburbs) contracted by 4percent.
Rode said what was disappointing from an industrial property point of view was the weakness in the manufacturing sector (warehouse and factories) during the reporting quarter.
"This, given industrial property's reliance on strong manufacturing sector, could mean more downward pressure on market rentals," said Rode.
He said the best rental figures that could be achieved during the third quarter of 2010 came from Port Elizabeth, with only a modest one percent growth, followed by the Cape Peninsula which showed zero growth.
The report also revealed that capitalisation rates seem to be benefiting from mild inflation expectations, inflows of foreign portfolio capital and their positive impact on bond yields, hence required minimum income returns on substitute investments.
Capitalisation rates refer to income yields calculated as expected 12-month net income divided by the purchase price.
However, Rode said, "doubts about the sustainability of rises in market-rental growth, combined with rising municipal charges, are probably exerting a counter-balancing influence on capitalisation rates.
On residential property, nominal flat rentals in Durban, Cape Town and Bloemfontein were up by 3percent, roughly in line with the growth rate of consumer inflation (excluding housing). Johannesburg and Pretoria only enjoyed growth of one percent while Port Elizabeth contracted by a percent.
Rode added that in the housing market, affordability remained the biggest constraint to effective demand with the New Credit Act, job uncertainty, high levels of indebtedness and much steeper electricity tariffs playing a big role.
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