Don't price yourself out of the market

Posted On Monday, 23 August 2004 02:00 Published by eProp Commercial Property News
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Landlords need to be aware of developments trends to avoid pricing themselves out of the market.

Construction IndustryLandlords need to be aware of developments trends to avoid pricing themselves out of the market.

"New stock has a direct local impact on the strength of the letting market in a particular area," comments Neville Schaefer, CEO of Trafalgar, the national residential property group.

He adds that this is clearly illustrated in Johannesburg and Cape Town where there is a lot of new stock coming onto the market and is not being taken up, especially at the asking rentals.

"The demand for rental accommodation at the upper end of the market is generally weak as people are buying instead of renting. As the asking rentals for new stock are decreased by weak holders, tenants move from existing stock to live in new and, perceived, better accommodation. This has the effect of landlords with existing tenants not being able to increase their rentals for fear of their tenant moving to new accommodation."

The opposite is happening in East London and Port Elizabeth where buoyant economic conditions, particularly in the automotive industry, has resulted in a very strong letting market. "Also no new developments on any scale have come onto the market," says Schaefer.

An interesting situation is developing in Durban, where new developments are only starting to come onto the market, albeit not as many as Johannesburg or Cape Town. According to Schaefer, up until the last month or two, the letting market was very firm. However, the letting market slowed down considerably during July.

"We will have to wait and see if this is a result of new stock coming through, or due to the fact that July is traditionally a poor month."

Schaefer emphasizes that it is critical that landlords are aware of development trends so that they do not price themselves out of the market in times of high supply.

 

Last modified on Monday, 21 October 2013 20:43

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