The macro economic fundamentals required for the commercial property market to really take off over the next five years are now in place, a factor which is already evidenced by the tremendous amount of interest being shown in both the listed property sector as well as in direct commercial property investments, reports Peter Golding, CE of Pam Golding Commercial, who is driving expansion into the Gauteng and Cape Town regions.

Commenting on increased activity in the Gauteng market, he says over the past 12 months since the launch of PGC's new operation in the region, the company has concluded a significant number transactions in this region at a total value in excess of R60 million. Most recent transactions include: the sale of the former Ozz Industries head office in Houghton for R6.3 million; the sale of a 5900sqm warehouse in Alrode and leased for 10 years to an engineering company at a capital value of R8 million; a three year lease of a 14 000sqm bottling warehouse in Alrode; the R15.5 million sale of a 22 000sqm warehouse in Brakpan (let to Mondi Carton Board); the sale of a block of 16 flats in Oakdene; and a 420sqm three-year lease of industrial space in Sunny Rock, Germiston to Pinclip Industries .

Further transactions just concluded by PGC in this region include the sale of a property in Highway Business Park to Power developments for the construction of their Johannesburg head office; the sub-lease of 500sqm to Telepassport in Woodmead; and the 500sqm five-year lease to Qatar Airways in Liberty's Sandton office tower.

Says Golding: "The market capitalisation of the JSE listed property sector has almost quadrupled over the past five years, and still has significant capacity for further growth. The problem for both listed property companies as well as private investors wanting to expand their portfolios or for first time investors, is the dire shortage of quality, existing office, retail or industrial income-producing properties currently on the market.

"Due to the high demand, both institutional, listed property companies as well as private vendors, are placing a premium on asking prices for properties they may be considering selling - for whatever reason. As a result, it's becoming more apparent that 'new' stock needs to be sourced from the corporate sector of the market, and we believe that many corporates have billions of rands worth of properties tied up that they may not necessarily need own, that could be securitised in a very effective way.

This would release vast amounts of capital that might be more effectively employed in the core business activities of these companies," says Golding.

He says due to the prevailing low and stable interest rate environment, many small to medium size companies are looking to own the premises they utilise as opposed to renting them. This is particularly prevalent in the office sector of the market, where there is a big demand for offices from 100-1000sqm, with the most popular areas - based on actual enquiries - being Houghton (Central Avenue), Rosebank and Woodmead. The bulk of enquiries are from financial services, legal, IT and marketing/advertising type companies.

PGC reports significant interest in the Johannesburg CBD - a trend which began some 12-18 months ago following many years of being the Cinderella of the SA property market - with investors looking at acquiring properties with a view to converting them into residential apartments. With the Cape Town CBD residential market reaching saturation point, investors are now setting their sights on Johannesburg and Pretoria.

Adds Golding: "In terms of the office letting market many of our enquiries are for start-up operations wanting small pockets of space from 50-150sqm and on short, one-year leases, which landlords are reluctant to consider.

In regard to industrial space, there is definitely a shortage of large, quality industrial space in the marketplace. Small to medium light industrial space available in limited supply and developers are demanding a premium for such space in developments such as Linbro Park and Long Meadow Business Estate."

For further information contact Alex Harper at Pam Golding Commercial on 011

301 0600.

Ends

Issued by Gaye de Villiers

Tel: 021 6837788 or 083 325 1939

On behalf of Pam Golding Commercial