Public sector investment a huge boost

Posted On Friday, 24 May 2002 10:01 Published by eProp Commercial Property News
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Spin-offs are expected to accelerate as government tackles urban regeneration projects, says a report.

Property-Housing-ResidentialGrowing public sector investment is adding a new dimension to the property market, says Nedbank Property Finance's report, released last week.

The direct effect of public sector investment on the property industry has accelerated as government tackles urban regeneration projects.

The report says public sector initiatives have mitigated the effects of a gloomy global picture as a result of the September 11 attacks in the US, the Zimbabwe syndrome, the escalating conflict in the Middle East and the world economic slowdown.

The report's authors expect significant spin-offs this year for the property market.

Prominent among these public sector initiatives is the Blue IQ project in Gauteng.

With its multibillion-rand budget, Blue IQ houses projects such as the R7bn Gauteng Rapid Rail Link, a 90000m² Constitution Hill project in Braamfontein and the regeneration of Newtown, which features the Nelson Mandela bridge from Braamfontein into Newtown.

The report also cites the proposed industrial development zones at Johannesburg International Airport and the City Deep container terminal, intended to boost the manufacturing and industrial sectors.

In Cape Town, the report points to the R267m pumped into completing the freeway flyovers on Cape Town's foreshore to alleviate traffic congestion in the city centre.

Other big public sector projects the report lists are the Rosslyn auto cluster project in northwest Pretoria, and the Coega industrial development zone in Port Elizabeth.

The report says this year began with the recognition that traditional, prime office and retail nodes might face oversupply.

As a result, says the report, developers and investors have started looking for new property opportunities in the residential property sector, and in smaller cities and towns.

Given that the exodus of businesses from Johannesburg's central business district has all but ended, focus has shifted to identifying new demand, new businesses and new tenants.

The report says activity in prime industrial nodes is expected to be steady during the coming year, with development in industrial estates such as Linbro Park and Longmeadow Estate.

The Route 24-Meadowdale node is likewise expected to see continuing demand, as are industrial developments in Centurion, like Highveld Techno Park.

Office market activity is likely to stay fixed on the prime nodes, especially in northern Johannesburg and Pretoria East.

There are expectations that the decentralised office market in smaller cities will see some growth this year; examples include Westdene in Bloemfontein, Newton Park in East London and Greenacres in Port Elizabeth.

The retail sector is expected to focus on developments driven by major national tenants, where long leases are in place.

'The bottom line is that 2002 is expected to see some easing of oversupply, allowing the market to move towards a more balanced position,' says the report. 

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