While outgoing Reserve Bank governor, Gill Marcus, has once again downgraded South Africa’s growth outlook for this year to 1.5% from the previous estimate of 1.7%, it seems there are pockets of growth in the economy, including in the industrial property market, which seems to be shrugging off this sluggish news by starting to show signs of real growth.
This is according to Org Geldenhuys, Director of property development and management company, Abacus DIVISIONS. Said Geldenhuys: “We are witnessing a growing shortage of land for industrial development, pointing to the fact that more companies are looking to get into the manufacture market, or are looking to expand their enterprises. We can definitely see a lack of land becoming a problem, such is the demand – certainly in the greater Pretoria area.”
He said this recent upsurge in demand for industrial development is occurring, despite the fact that consumer spending and confidence is still “fragile”.
“It is a bit of a conundrum, “said Geldenhuys, “but the fact is that there is growing interest in industrial developments on the ground.”
This comes against the backdrop of the unsecured lender, Africa Bank Investments (ABIL), being bailed out by the Reserve Bank ABIL to the tune of R7billion. ABIL recently reported billions of Rands of losses as clients, in the lower echelons of the market, battled to service their debt. Plans are to strip ABIL into a good and a bad bank. The good bank will be recapitalised by a consortium of other banks and the Public Investment Corporation, and the bad bank, with an asset book worth R17 billion, is to be bought by the Reserve Bank for R7billion.
“Despite news like this – showing a definite softness in the economy – the industrial development market looks increasingly bullish, unlike the office property market, which is still seeing price pressures on rentals and high levels of vacancies.”