Interest in property increases developer offerings

4th August 2017 By: Victor Moolman - Creamer Media Writer

An increase in land-controlling developers that are willing to sell turnkey solutions has been observed by residential and commercial property consultant Knight Frank.

Nonetheless, the company explains that developers would still prefer to sign long-term lease agreements with tenant companies that are likely to operate with profits during downturns.

Properties that are being built in Cape Town, and other parts of the country, are increasingly attracting buyers in the industrial and commercial property market.

Knight Frank Cape Town broking head Wesley Cowan highlights that, in Cape Town, there are several new developments taking place. The Atlantic Hills (N7), Richmond Park (N7), Montague Gardens (N7), Brackengate (R300, warehousing developments) and the lower Long street in the central business district (CBD) areas, “are all coming out of the ground”.

“With the property trends in the city and the influx of people moving to the Cape, the interest is positive across the board,” he says.

However, he states that companies that are looking to buy property in Cape Town should analyse their cash flow before making a decision. If the money that would be spent to buy a property could be used more effectively in the core business of a company, it would be better to rent a building.

“Sale leaseback transactions from previous years on larger portfolios are proof of the importance of core business investment,” he warns.

A leaseback transaction is an arrangement where the buyer purchases the property and the seller rents the property back from the buyer.

Continuing Challenges
Cowan points out that there are some challenges that the Cape Town CBD will continue to face despite more properties being built.

“The largest developments are happening in the CBD, with new office space being added there and the airport and N7 corridor are expanding with added warehousing,” he explains.

“Woodstock and Salt River are testament to maintaining tenants over the long term. Both areas are experiencing an increase in market value, owing to older industrial buildings that are being renovated,” he says.

He concludes that companies that are looking to buy, lease or even arrange for a sale leaseback agreement on property should do market research by contacting companies such as Knight Frank to find out which suburbs are showing the most growth and where the best value for money can be found.