property hype has left the building
27 March 2008
With strong rental demand, the commercial and industrial property market will remain a solidly performing investment for the foreseeable future, but the current climate is against the unrealistic speculator, says Cape Town broker Jonty de la Porte.
Experienced investors who have stuck to the basic fundamentals of property investment are very much still in the market but are more circumspect about what they are prepared to pay for properties.
De La Porte’s firm DLP Property Group was established in Milnerton exactly 10 years ago and has traded successfully through several ups and downs in the market. Before becoming an independent broker, he had successfully traded for other high profile firms in the city: ‘Initially, as a niche operation, we saw the DLP role as specialising in a concentrated area, so we chose the Milnerton, Century City, Montague Gardens region where we had also invested, and are still based. This has now changed, but it proved a very sound way in which to establish a reputation which we are proud of today.
DLP’s chosen area of activity has proved an enormous success with growth in the greater Milnerton area outstripping that of many comparable nodes.
But De La Porte says the passage of time lends a perspective to future predictions and it also advises current trade. ‘Nothing stays the same so brokers and investors are wise to study the cycles and try to predict the trends based on history. We have seen the Asian crises, the boom around 2004, and a whole bunch of little blips that have been a reaction to local and world events. The last 10 years have shown clearly that we are no longer a parochial parish. What happens in the rest of the world has a profound effect on South Africa, and our own internal convolutions reverberate in the world’s opinion of our viability as an economy.’
On the ground, he says, DLP is growing its footprint, with a positive attitude to the entire industry. Good deals are being done in Brackenfell, Epping, Airport Industria, Century City and Killarney.
‘We have strong demand, especially for industrial leases, but have also concluded more office and retail business in our expanded area of activity. The market is still buoyant despite Eskom’s ups and downs, interest rate hikes and the fallout from Polokwane, although we did notice quite a bit of apprehension at the very beginning of the year.’
What has followed, however, he says, is the encouraging rapid sellout of a land development in Brackenfell which has all the characteristics of Montague Gardens, with a large retail and residential market in close proximity.
De la Porte says however that ‘Current changes affecting the market, not least of which are a falling rand and a rising oil price, plus a proposed 60% hike in electricity tariffs suggest that we must be prudent and prepared for change.’