rode ch 1 state of prop market jj · pdf filerodeplan specialises in town and regional...
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Editor-in-chiefErwin G. Rode
EditorJohn S. Lottering
Survey administratorNicole Maytham
AdvertisingLynette Smit
012-664 4159
SubscriptionsJuwayra Januarie
021-946 2480
Annual subscription:
4 issues: R5.100,00 (excl. VAT)
Published byRode & Associates (Pty) Ltd.
Reg. No: 2009/005600/07
PO Box 1566, Bellville 7535
Tel. 021-946 2480
Fax 021-946 1238
E-mail: [email protected]
Website: www.rode.co.za
Cover illustrationKonrad Rode
082 44 66 526
www.capetowncartoonist.com
PrintingRSAM Printers
082 418 4878
© Rode & Associates (Pty) Ltd., December 2014. All rights reserved. No part of this publicationmay be reproduced, stored in a retrieval system, or transmitted in any form or by any means,electronic, mechanical, photocopying, recording or otherwise, without the prior permissionof the publisher. While all reasonable precaution is taken to ensure the accuracy of information,Rode & Associates (Pty) Ltd. shall not be liable to any person for inaccurate information oropinions contained in this publication. Portions of this report may be reproduced for legitimateacademic or review purposes provided due attribution is cited.
Vol. 25 no. 4
Erwin G. Rode(editor-in-chief)
John S. Lottering(editor)
iRode’s Report 2014:4
Property is constantly in the limelight and
investors are searching for meaningful,
property-specific information. This makes
a compelling argument for finely-targeted
advertising in the Rode’s Report on the SA
Property Market. This independent analysis
is one of the most widely-read publications
of its kind.
Target audience: Rode’s Report is targeted
at investors and property practitioners such
as property developers, property managers,
landlords, merchant banks, commercial banks
and non-residential property brokers.
Continued exposure: A quarterly publication,
Rode’s Report is used as a reference source
with a long shelf life.
Rates and special advertising offers: Take
advantage of Rode’s special advertising offer:
a “first-timer” offer of 10% less on our list
price. Normal rates appear on the Rode
website.
Advertise on Rode’s website: For an
extension of your marketing, also con-
sider an advertisement on the Rode
website.
Telephone012 664 4159
Websitewww.rode.co.za
As one of the largest independent property valuation firms in South Africa, Rode & Associates offers the propertyindustry:
• Real estate economics and research – based on statistical models and regularcountrywide surveys, which feed three research publications and over 5000 propertytime series covering more than two decades
• Property valuation – including residential, commercial, industrial, agricultural andspecialised properties such as hotels, hospitals, dormitories, self-storage facilities,airports, and the like.
• Property consultancy – which includes forecasts, overviews, and expert analyses forcorporates, government departments and private clients
• Town and regional planning – which covers land-use control, spatial planning andintegrated development plans, and which holistically incorporates property demandand supply, social, economic, political and environmental factors.
Based in Cape Town, Rode serves clients from all over South Africa and Namibia (Windhoek only).
GROUNDBREAKING RESEARCH
Over the years, Rode's research has led to groundbreaking property models and methodologies. This includesthe regular, rigorous surveying of market rental levels and capitalization rates through the expert-panel methodof polling to provide more uniform and realistic market valuations. Other breakthroughs include:• A unique econometric model to forecast the South African real estate market• The statistical determination of standard capitalization rates• Property demand forecasts•The estimation of market rentals in shopping centres and for industrial premises of
various sizes• Special methodologies to value income-producing properties• The development of regression models to estimate the capitalization rates of office
properties, industrial properties and shopping centres• The application of multiple regression techniques to value houses Rode's Valu-
ation Method – also known as the opportunity cash flow (OCF) method – to valueincome-producing properties
• A further refinement to the valuation of land with residential township potential usingthe direct-comparison method
• A further refinement to the valuation of bare dominiums.
Property consultancyReal estate valuationsReal estate economics
Town and regional planning
RodePlan specialises in town and regional planning to foster pathways to facilitatesustainable development. This includes:• Land-use control: rezoning, subdivision, departure, consent use, removal of title
restrictions, zoning schemes• Spatial planning: spatial development frameworks (SDFs) and plans (SDPs)• Indicator development: (land markets, land identification, -acquisition and -release)• Research: (spatial planning and implementation, housing delivery programmes and
projects)• Governmental integrated development planning (IDP): (process and products),
supported by a geographic information system (GIS).
RodePlan focuses on town and development planning processes and products at macro, meso and micro level.RodePlan considers an in-depth understanding of the social, economic, political and environmental elementsthat underpin present-day society as fundamental to an SDF and to Housing Sector Plans in order for planningand implementation to complement economic growth and development.
Rode also advises private clients on the development potential of specific properties and/or land disposalstrategies. This is done in collaboration with our expertise as property economists. RodePlan's clients includeproperty owners, developers, engineering companies and government institutions e.g. Engen Petroleum Limited,Urban LandMark, Gauteng Provincial Government Department of Economic and Development Planning, Cape WinelandsDistrict Municipality, Bergrivier Municipality, Umoya Energy (Proprietary) Limited, G7 Renewable Energies (Pty) Ltd, Plan 8(Pty) Ltd, South Africa Mainstream Renewable Power Developments (Pty) Ltd, Solairedirect (SA), Ignite AdvisoryServices (Pty) Ltd and Aurecon.
Recent appointments include: To obtain land-use rights for more than 10 renewable energy facilities in theWestern-, Eastern- and Northern Cape and for all provincially operated borrow pits in the Western Cape.
As one of South Africa's largest valuation firms, Rode annually values property portfolioswhich include shopping centres, agricultural property, residential, commercial andindustrial property. Rode also undertakes municipal property valuations, as well asspecialized valuations such as hotels, hospitals, bare dominiums, airports, etc.
Rode's property valuation services are underpinned by the rigorous surveying of, interalia, market rental levels and capitalization rates. Rode's valuation services also relyextensively on techniques such as regression models, as well as the opportunity cashflow (OCF) method. This ensures uniform and realistic market valuations, and is Rode'scompetitive edge.
SHOPPING CENTRES
In the retail field, Rode is considered South Africa's premier shopping-centre valuer due to the firm's techniqueof calculating market rentals and standard capitalization rates. The firm regresses actual rental rates of recentlysigned leases against their floor area size to determine the relationship between the market-rental rate and floorarea. The latter is a useful tool which landlords can employ to their advantage when negotiating renewals.
FARM VALUATIONS
Rode's agricultural valuation department specialises in the valuation of farms and smallholdings, and understandsthe value-drivers within this sector.
SPECIALIST PROPERTIES
Rode Valuations has done pioneering research on a number of specialist-property typologies, and we regardourselves as leading valuers with respect to hospitals, self-storage facilities, hotels, retirement villages, baredominiums (leased fee estates in American parlance) and airports.
Rode Consult provides forecasts, overviews and expert opinions for corporates, governmentdepartments and private clients on a wide range of property issues. Recent outputsinclude:
• Writing a macro overview of the South African housing market for the nationalDepartment of Housing
• Producing demand forecasts for specific office nodes and flats markets• Producing forecasts of rental levels using econometric modelling• Analysing property portfolios• Producing long-term forecasts of property values in South Africa• Development of a comprehensive policy framework for the identification and release
of land for human settlements• Analysing the property market in Bloemfontein and other Free State towns• Acting as expert witness in arbitration and litigation• Consulting for spatial and development planners and economists.
RODE'S REPORT ON THE SOUTH AFRICAN PROPERTY MARKET
Rode’s Report analyses and reports on most sectors of the property market. It covers,among others, trends and levels of rentals and standard capitalization rates by propertytype, grade, node/ township, the listed real estate market, and building constructioncosts and building activity. Quarterly updated; print or electronic version.
RODE'S SOUTH AFRICAN PROPERTY TRENDS
Trends is aimed at general managers with strategic decision-making power and property investment analysts who are involvedin asset allocation and viability studies. It offers a statistically-based analysis and forecast by property type of all key indicators
affecting the property market, and it covers all the major metropolitan areas to providea complete framework for property investment planning. The forecasts include thosefor standard capitalization rates, prime industrial and office rentals, office vacancies,building cost and the property cycle. Biannual CD publication.
RODE'S RETAIL REPORT ON SOUTH AFRICA
Rode's Retail Report contains analyses and reports on retail property, including shop
rentals, operating expenses and escalation rates. It also contains data on new shopping
centres, mooted developments and extensions to existing centres. Quarterly CD
publication.
RODE'S TIME SERIES DATABASE
Rode updates and rents out approximately 5 000 property time series, which offer
property researchers and analysts a unique opportunity to analyse sub-markets – from
office, industrial and residential rentals to capitalization rates and house prices covering
more than two decades. A Pro and a Lite database is available. The main difference
between the Pro and the Lite database is that the former contains the disaggregated
or nodal data. Electronic publication on CD, updated quarterly.
RODE'S SALES
This is an online database that analyses and reports on actual commercial and industrial property sales, as well
as vacant land sales. It is specifically designed with a view to assist anyone who has to determine the capitalization
rates of income-producing non-residential properties, or the market value of vacant land. It is meant to be
complementary to Rode’s Report, of which the quarterly surveys are opinion-based.
RODE'S GROWTH POINTS
Target market: CEOs, general management, fund investment managers, analysts
• Identifies areas of growth and stagnation in order to direct investment strategy
• Nine South African cities are included: Johannesburg, Pretoria, Cape Town, Durban,
Port Elizabeth, East London, Bloemfontein, Nelspruit, Polokwane
• Updated biennially
• Price on enquiry
• Tel: (+27) (0)21 946 2480
• Fax: (+27) (0)21 946 1238
• E-mail: [email protected]
• Postal address: PO Box 1566, Bellville 7535, Cape Town, South Africa
• Physical address: 11 De Villiers Street, Sunray (near c.o. Maree St), Bellville, Cape Town
• GPS: 33°53'58,5"S; 18°38'14,5"E
Rode staff
Erwin RodeBA, MBA (Stell): CEO
John S LotteringBCom(Finance)(UWC), BComHons(Econ)(UWC),MCom(Econ) (UWC)
Berchtwald RodeBA (Stell), MTRP (UOFS)
Juliana DommisseBEconHons (Stell)
Karen E ScottBComHons (Stell), BComHons (UCT)
Monique VernooyBTech(QS) (Cape Tech), NDREES (UNISA)
Tobi RetiefBA (Stell), NDREES (UNISA)
Madeniah JappieBScHons (Property Studies) (UCT)
Stephan van der WaltMA (Stell)
Marlene TighyBSc (Wits) Hons (OR) (RAU), MBL (UNISA), Pr Sci Nat
Janelle Van HarteParalegal (School of Paralegal Studies)
Biancé JohnsonJournalism (City Varsity)
Lynette Smit
Elizma Hawksley
Juwayra Januarie
Abigail Van Wyk
Nicole Maytham
Bianca Stears
Samantha Harkers
Rode’s Report 2014:4 Rode staffviii
Contents
State of the property market
State of the property market in quarter 3 of 2014 1
Capitalization rates
Office capitalization rates feeling the pressure 4
How to estimate capitalization rates – anywhere 15
Listed property
Firming yields driving prices up 18
Office rentals, operating expenses, and officedemand & vacancies
Rental growth decelerates in tandem with rising vacancy rates 22
See-thru office buildings are proliferating in the suburbs 37
Industrial rentals and vacancies and industrialstand valuesA third consecutive quarter of contracting output 56Stand values contracting in real terms 82
Residential market
Declining flat vacancies should bode well for rentals 105
House prices being buoyed by a softening in bank lending policies 120
Building activity & building costs
Despite improved sentiment too early to suggest residential building sector out of woods 126
Rode’s Report 2014:4 Contentsix
Tables
Table 1.1: The property market at a glance 1
Table 2.1: Prime industrial leaseback escalation rates 6
Table 2.2: Survey of capitalization rates: office buildings 8
Table 2.3: Change in capitalization rates: office buildings 9
Table 2.4: Survey of capitalization rates: industrial buildings 10
Table 2.5: Change in capitalization rates: industrial buildings 10
Table 2.6: Survey of capitalization rates (%): shopping centres 11
Table 2.7: Change in capitalization rates (%): shopping centres 13
Table 2.8: Survey of capitalization rates (%): street-front shops 13
Table 2:9: Change in capitalization rates (%): street-front shops 14
Table 4.1: Asset class performance total returns (including income yield
and capital returns) 18
Table 4.2: Growth in distributions for half-and full-year period ended
August 2014 19
Table 4.3: Total return on listed property funds to October 2014 20
Table 5.1: Pioneer office rentals 25
Table 5.2.: Market rental rates for office buildings 26
Table 5.3: Standard deviation of market rental rates for office buildings 29
Table 5.4: Typical rent-free period in months 31
Table 5.5: Market parking rentals 32
Table 5.6: Office rental escalation rates on new leases (%) 35
Table 5.7: Escalation rates on operating costs 36
Table 6.1: Estimated natural vacancy rate vs current actual vacancy rate 37
Table 6.2: Sapoa office vacancy factors (%) 41
Table 6.3: Sapoa office stock (m2) 48
Table 7.1: Pioneer rental rates for new, state-of-the-art industrial
developments during quarter 2014:2 58
Table 7.2: Mean prime industrial market rentals 59
Table 7.3: Standard deviation from mean prime industrial market
rentals 69
Table 7.4: Predominant market escalation rates (%) for industrial leases 81
Table 7.5: Indicative operating expenses for industrial buildings 81
Table 8.1: Mean market values for industrial stands 84
Table 8.2: Standard deviation for industrial stands 94
Table 9.1: Gross-income yields (%): Flats 107
Table 9.2: Flat rentals: standard-quality block of flats 109
Rode’s Report 2014:4 Tablesx
Tables
Table 9.3: Flat rentals: upmarket-quality block of flats 115Table 10.1: Gross-income yields (%) on houses by price class 122Table 10.2: Gross-income yields (%) of townhouses by price class 124Table 11.1: New non-residential buildings (private sector) (m2) 128Table 11.2: New residential buildings (private sector) (m2) 128
Rode’s Report 2014:4 xi
Annexures
Annexure 1
Glossary of property terms and abbreviations I
Annexure 2
Technical background to the Rode surveys IX
Annexure 3
How to interpolate industrial rental rates and land values XII
Annexure 4
Approximate building cost rates as at July 2014 XIII
Annexure 5
Monthly forecast of Haylett by MFA XXIII
Annexure 6
Absa Home Building-cost Index XXIV
Annexure 7
BER Building Cost Index XXV
Annexure 8
Prime overdraft rate at month-end (%) XXVI
Rode’s Report 2014:4 Annexuresxii
Panellist codes
Code Company Telephone number
ABA Abacus Divisions 0123455555
ACU Acumen Properties 0312662003
AH Alex Thornhill Properties 0538326889
AI Aida Pretoria 0123483720
AN Annenberg Real Estate 0214657780
AP API Property Group Cape Town 0215515379
AP API Property Group Gauteng 0112341144
AR Ash Brook Investments 71 0832301611
ASA ASAP Property Agents 0126431938
AV 5th Avenue Properties 0112346111
AW Watprop 0118870473
AY Alpine Estates 0114537600
BA Brammer Ross & Shapcott 0118734903
BC Barclay Miller & Associates (Pty) Ltd 0118035821
BG Batting Properties 0437220649
BHP Blue Horison Properties 88 0116014038
BM Jones Lang LaSalle 0115072200
BQ Brightridge Properties 0114502080
BR Broll Property Group - Illovo 0114414108
BR Broll Property Group 0114414000
BR Broll Property Group (Pty) Ltd 0114414794
BR Broll Retail 0114414412
BS Penthouse Real Estate 0116726251
BW Buschow Properties 0845103119
BZ Bales and Associates 0216838877
CB Centurion Letting & Sales 0126536180
CBP Camalb 0118645050
CC CCI Properties CC 0828211214
CE Cenprop Real Estate 0333471200
CF Cathy Cordier Eiendomme 0562121518
CI City Property Administration 0113783223
CI City Property Administration 0123198811
Rode’s Report 2014:4 Panellist codesxiv
CI City Property Administration (JHB) 0119783200
CI City Property Administration 0123198811
CL Cleomic Property Consultants 0117061591
CQ Connaught Properties (Pty) Ltd 0117252780
CIR Circle Properties 0219813263
CR Colliers International 0117832111
CS Chase & Sons 0164213170
DDN Diamond Properties North 0219481199
DD Diamond Properties 0214340001
DE Dedekind Real Estate 0366372297
DG DG Ladegaard Real Estate 0169339633
DK Direct @ Home Estates 0186320269
DL Delta Real Estate 0219302343
DN David Newham Property Management 0219480934
DQ Deskay Real Estate 0437811099
DV Dan Viljoen Estates 0116832345
DW Divaris Property Brokers 0215311551
EB ERA Ermelo 0178192398
EB Era Sun Kuruman 0537123503
ED Edric Trust 0514489431
EF Eagle Properties 0123313165
EH Ermelo Homenet 0178192880
EI Eris Property Group 0123490900
EK Ellenberger & Kahts 0514301511
EM Property Management & Rental Specialist CC 0217901991
EQV Equity Valuers 0514305655
ER Associated Brokers 0437260501
ES Eli Ströh Edms Bpk 0152873300
EV Engel & Völkers Commercial Properties 0123467777
FLP Freeline Properties 0217900066
FN Fine & Country Bethlehem 0583032333
FO Fosprops Properties/Homenet 0357898583
GB Galetti Knight Frank Cape Town 0214186308
GB Galetti Knight Frank Gauteng 0117831195
GE Gustrouw Estates (Pty) Ltd 0218547220
GIN Ginyan Commercial 0215594575
GH Gradion Property Investmens 0843938627
Panellist codesxvRode’s Report 2014:4
GO Pam Golding 0448746619
GO Pam Golding Commercial 0437054040
GI Growthpoint 0119446090
GI Growthpoint Properties Limited 0119446281
GR Grove Properties 0218520111
GT Black Pepper Properties 0116431909
GV G. Spargo and Associates 0448860001
GW Goldswain Investments 0437222876
GY Guy de la Porte Property Solutions 0217948879
HE Homelet Grahamstown 0466222839
HH Hendrik Tryhou Property Consultants 0137441671
HK Huurkor 0124008600
HN Harcourts Excellence 0184687089
HN Harcourts Jana-Marie Real Estate 0155161526
HP Horizon Capital (PTY)Ltd 0214258586
HS Harcourts Summerton Edelson 0415811768
IK Ikon Property Group 0214259496
IP Investpro 0437263116
IPM IPMS Pty (Ltd) iBhayi Property Management Services 0413655442
JH JHI Properties 0214177878
JL Just Letting Randburg/Northcliff 0117932757
JL Just Letting Potchefstroom 0182931858
JL Just Letting City Bowl 0214233344
JL Just Letting Tygerberg 0219100226
JL Just Letting Uitenhage 0419924316
JL Just Letting 0145928100
JP John Price Estates 0415833903
JR J Margolius & Associates (Pty) Ltd 0214344702
KB Key Properties 0123484800
KE Keydom Real Estate 0132826187
KI Kitchings Agencies 0419229870
LA Landlords “We do Rentals” 0219751770
LH Leader Homes 0538313955
LZ Life Residential 0214243969
MAS Massyn Acquisitions 0123452576
ME Mendace Properties 0828998304
MEA Meadow Star investments 85 (Pty) Ltd 0116014001
Panellist codesxviRode’s Report 2014:4
MH Merchant Trust Properties 0116094945
MI Platinum Global 0514474711
ML Mindry Properties CC 0317834307
MO Moolman Group of Companies 0152914700
MO Moolman Group Property Management 0123617970
MP Monarch Rentals (Pty) Ltd 0118494211
MPR Millar’s Properties 0123420527
MR Marder Properties 0114531220
MUL Multi Properties 0448746707
MW Mc William Murray Realty 0312674800
NE Newbridge Property Services 0219139131
NH Netwater Properties 0113261614
NR National Real Estate 0514059933
NRG SA National Realtors Group Commercial 0415822608
OB Only Rentals: City Bowl 0214225113
OB Only Rentals Kempton Park 0113917284
OD Oudtshoorn Eiendomme 0442725895
OF Omnicron Commercial Financial Services 0219142616
PA Pace Property Group 0112175959
PC Propco (1985) (Pty) Ltd 0312090161
PF Permanent Trust Property Group 0219819756
PF Permanent Trust Property Group 0214418800
PH President Estate & General Agents (Pty) Ltd 0118738707
PJ Profile Property Solutions 0333472786
PL Pears Property Consultants (Pty) Ltd 0217623474
PN Propergation Estates 0219146444
PPI Portfolio Property Investments 0315664605
PQ Pro-Net Estates 0132433113
PS Property Scene Real Estate 0357923217
PU Pulse Property Managers 0437000327
QP Share-List Property 0317647101
QU Quadrant Properties 0115309840
QV Boyd Valuations 0861111789
RA Real Estate & Property Services 0878081578
RD Redefine Income Fund 0112830028
REW Real Estate @ Work 0836328011
RF Rent-A-Flat 0117891007
Panellist codesxviiRode’s Report 2014:4
RM Remax Kuruman 0537123123
RO Reef Property Consultants 0116821827
RON Ronprop 0217126417
RQ Platinum Properties 0357891376
RR Realnet Southern Suburbs 0217611847
RS Rawson Properties Milnerton 0215587102
RY Rita Stipec Properties 0152954537
RZ Oriprops 0137546562
SC Stockton Property Consultants 0114259857
SF Seeff Durbanville & Brackenfell 0219755290
SF Seeff Commercial Randburg 0114763536
SJ Smart Properties 0413741131
SN Selection Estates 0867555545
SO Stockland Property Group 0835565564
SQ Steer & Company 0214261026
SWI Swindon Property Services 0214220778
SX Status-Mark 0116680100
TC Parker Properties 0116153531
TG Theo Goosen Estate Agents 0152959014
TH Trevor Hosiosky Investment Properties 0118035545
TR Trafalgar Property Services 0112145200
TR Trafalgar Property Management 0437266066
TR Trafalgar Property Services 0123265963
TR Trafalgar Property & Financial Services 0313017017
TR Trafalgar Property Services Southern Suburbs 0214105500
WD Webprop 0219100180
WFI Warehouse Finders 0796936818
WK Wakefields Property Management (Pty) Ltd 0312047400
ZB Sotheby’s International Realty PE 0413630168
ZB Lew Geffen Sotheby’s Commercial Services 0214183658
ZC SBI Property 0114851087
ZE Zenith Properties 0562123207
ZZ Anonymous
Panellist codesxviiiRode’s Report 2014:4
Acknowledgements
The writers of Rode's Report express their sincere thanks to:
1. Sapoa, for use of the basic data from their office vacancy surveys, which
we analysed further.
2. Medium-Term Forecasting Associates (MFA) of Stellenbosch, for the use
of their monthly forecast of building-input costs (Haylett), as well as
their leading indicator of building activity. Also for their kind permission
to publish the Bureau for Economic Research’s building-cost index, to
which they hold the marketing rights.
3. Absa for the use of their home-building-cost index.
4. Davis Langdon, an AECOM company, for the use of their building cost
data for various building types.
5. Nicole Maytham, who manages the surveys and compiles the annexures
and Lynette Smit and Juwayra Januarie for their technical assistance.
6. All the panellists who so kindly gave of their time and expertise in
responding to our surveys. The complete list of panellists who contribute
to the RR, together with their codes, appears on the following page.
For each of the survey tables in the RR you will find, listed against every
node or area, the codes for all the panellists who contributed information
this quarter.
7. Ken Gardner, who has the task of making sure that all gross grammar
mistakes are corrected.
8. The JSE Securities Exchange, Statistics South Africa and the Bond Exchange
of South Africa for the use of their data.
9. Other property practitioners throughout South Africa, experts in their
fields, too numerous to mention individually. Without the generous
assistance of these professionals, much of our research would be
impossible.
AcknowledgmentsxxRode’s Report 2014:4
Foreword
Dear Reader
Welcome to the fourth issue of Rode’s Report on theSouth African Property Market (RR) for 2014, whichreports on surveys conducted in the third quarter of2014.
As usual, we report on movements of a number of criticalproperty variables, ranging from capitalization rates,rentals, escalation rates, land values, and operating costsfor the non-residential property market, to changes inhouse prices and flat rentals in the residential property market.
If you want to communicate with a specific niche market, you can contactLynette Smit on 082-323 5799 for RR advertising rates.
Biancé Johnson and Lynette Smit are in charge of expanding our survey panel.Their job is to give you access to the opinions of as many property expertsas possible. We appeal to all market participants, who feel they have whatit takes to become an RR panellist, to please contact Biancé on 021-946 2480or Lynette on 082-323 5799 – it’s for the benefit of everyone in the industry.As a panellist you will also get invaluable exposure.
Readers are again reminded of our website – www.rode.co.za – which containsinteresting and relevant property-related articles, most of which are publishedin our monthly e-newsletter, to which readers can subscribe through ourwebsite. It’s free of charge.
Enjoy the holidays!
Sincerely
John S. LotteringEditor
November 2014
ForewordxxiRode’s Report 2014:4
Rode’s Report 2014:4 State of the property market 1
Chapter 1: State of the property market
State of the property market in quarter 3 of 2014 The following are the significant findings or conclusions made in this issue of Rode’s Report:
Office rental growth decelerates in tan-dem with rising vacancy rates
House prices are buoyed by a softeningin bank lending policies
Declining flat vacancies should bodewell for rentals
Quantitative overview of the property market
Table 1.1 provides a snapshot of how the property market has performed over the past four quarters by comparing the latest information (quarter 2014:3) with that col-lected a year earlier.
Table 1.1 The property market at a glance at quarter 2014:3*
% growth on four quarters earlier (on smoothed data) Nominal Real**
A-grade CBD office rentals Johannesburg 5,1 -3,5Pretoria 8,2 -0,6Durban 1,0 -7,1Cape Town 7,9 -0,8
A-grade decentralized office rentals National decentralized 3,0 -5,3 Sandton CBD 5,2 -3,3Randburg Ferndale -3,5 -11,3 Brooklyn/Waterkloof (Pta) 4,3 -4,1 Hatfield 3,4 -5,0Berea (Durban) -7,6 -15,1La Lucia Ridge 4,8 -3,7Claremont (CT) 10,0 1,1 Tyger Valley 5,4 -3,1
Rode’s Report 2014:4 State of the property market 2
Office rentals
On the back of upward trending office va-cancy rates, the growth in national decen-tralized office rentals has been losing steam. In the third quarter of 2014, market rentals for grade-A multi-tenanted office space could — on a weighted national basis — only record growth of 3%. With in-contract escalation rates at about 8%, many a landlord is already experiencing downward rental reversions on the expiry of leases, and this is set to continue una-bated.
A look at the regions, shows the strongest growth in market rentals in Cape Town de-centralized (+6%). This is followed by Pre-toria and Durban, where market rentals are on average up by 5% and 3% respectively. In Johannesburg decentralized, market rentals remained at roughly their previous-year levels. In the third quarter of 2014, building costs are expected to have accel-erated to roughly 9%. This implies that across the regions it has become less via
ble to erect new office buildings in the ab-sence of secure long-term leases well above market levels. This trend can be ex-pected to continue for many quarters, if not years.
Industrial market
Prospects for the industrial property market remain daunting, especially when consider-ing the continued struggles of the manu-facturing sector.
Surprisingly, in the third quarter of 2014, market industrial rentals in the Cape Penin-sula and Port Elizabeth were actually able to show growth of roughly 9%. On the East Rand, market-related industrial rentals for prime space were up by 4% while on the Central Witwatersrand and in Pretoria, rentals showed moderate growth of only 2%. Over the same period, building costs are estimated to have grown at about 9%. This implies that on the East Rand, the Central Witwatersrand and in Pretoria, in-
Table 1.1 (continued) The property market at a glance at quarter 2014:3*
% growth on four quarters earlier (on smoothed data)
Nominal Real**Prime industrial rentals (500-m² units)
National 3,0 -5,4
Central Witwatersrand 1,9 -6,3
East Rand 4,2 -4,3
Durban metro 1,8 -6,4
Cape Peninsula 8,8 0,0
Flat rentals (standard quality, all sizes)
National 4,6 0,2
Johannesburg metro 3,0 -3,2
Pretoria metro 3,0 -3,2
Durban metro 4,5 -1,8
Cape Town metro 2,9 -3,3 * Unless otherwise specified** Nominal values deflated by BER Building Cost Index; however, flat rentals are deflated using the Consumer Price
Index.
Rode’s Report 2014:4 State of the property market 3
dustrial rentals continued to contract in re-al terms. In the Cape Peninsula and Port Elizabeth, nominal rentals were at least able to show growth in line with building-construction inflation.
The house market
In general, nominal house prices continue to show decent — consumer-inflation beat-ing —growth.
In November 2014, the yearly growth in nominal national house prices ranged be-tween 7% and 8%, depending which index you use. Naturally, one of the only logical explanations for the resilience of house prices seems to be lenders that have sof-tened their lending criteria as the worst of the panic post 2008 is receding. Allegedly, banks are in some instances again lending as much as 100% of the market value of existing housing stock. Evidence of lender generosity also comes in the form of the strong growth in the value of new residen-tial mortgages granted. Since the second quarter of 2013, the yearly growth in the nominal value of new residential mortgages granted has increased at an average yearly rate of about 16%. Add to this the fact that
little new residential construction has taken place over the past five years, and we come close to explaining this phenomenon.
Flat rentals
On a national basis, in the third quarter of 2014, flat and house rentals were up by about 5%, while rentals for townhouses could only muster growth of 3%. The dif-ferences in growth rates can be ascribed to differences in new supply being added to the stock. Clearly, townhouses (in gated communities) are where most new supply is being added. This trend reflects both a change in lifestyle and security concerns.
Some good news for investors in the buy-to-let flat market is the decline in flat va-cancies in recent quarters, with a current vacancy factor of only 3% nationally. This improvement in demand naturally bodes well for market rentals of flats.
A 23-year analysis of flat vacancies shows that the vacancy risk for owners of flats is quite low compared to landlords of office buildings. This low-risk characteristic of residential properties does mean that a specialist apartment-owning fund would probably be well received on the JSE.
Rode’s Report 2014:4 Standard capitalization rates 4
7
8
9
10
11
12
13
14
90 92 94 96 98 00 02 04 06 08 10 12 14
Regional shopping centresIndustrial leasebacksDecentralized offices
National capitalization ratesby property type
Source of data: Rode's Time Series
%
7
8
9
10
11
12
13
90 92 94 96 98 00 02 04 06 08 10 12 14
PretoriaCape PeninsulaDurbanCentral Witwatersrand
Capitalization ratesRegional shopping centres
Source of data: Rode's Time Series
%
8
9
10
11
12
13
14
90 92 94 96 98 00 02 04 06 08 10 12 14
Cape PeninsulaDurbanPretoriaCentral Witwatersrand
Capitalization ratesPrime industrial leasebacks
Source of data: Rode's Time Series
%
Chapter 2: Capitalization rates
Office capitalization rates feeling the pressure
Written by John S. Lottering
While capitalization rates on shopping cen-tres and industrial property are going no-where slowly, those on office property now seem to be feeling the pressure of rising vacancy rates.
Capitalization rates are the property equiv-alent of the forward earnings yield of shares. When they rise — holding constant market rentals and operating costs — mar-ket values drop, and vice versa. Hence, the current slight increases in office capitaliza-tion rates — discussed later in the chapter — do not come as good news to owners of directly-held office property. This is espe-cially so when considering that the growth in market rentals continues to moderate due to rising vacancy rates.
Shopping centres
As for shopping-centre capitalization rates, those of regional centres countrywide stayed at roughly their previous-quarter levels. In the third quarter of 2014, inves
tors in regional shopping centres required a net income return of between 7,5% and 8,0% to induce them to buying or selling regional centres. Those interested in buy-ing or selling community centres were hap-py to do so at forward net income yields ranging between 8% and 9%, while capi-talization rates on neighbourhood centres stood at between 9% and 10%.
Prime industrial leasebacks
Rode’s Report 2014:4 Standard capitalization rates 5
8
9
10
11
12
13
14
15
90 92 94 96 98 00 02 04 06 08 10 12 14
Sandton CBDParktownRosebankMidrand
Capitalization ratesPrime Johannesburg decentralized offices
Source of data: Rode's Time Series
%
Smoothed
9
10
11
12
13
14
15
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
BryanstonRivoniaSunninghillRandburg
Capitalization ratesPrime Johannesburg decentralized offices
Source of data: Rode's Time Series
%
Smoothed
8
9
10
11
12
13
14
15
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
BrooklynHatfieldCenturionMidrand
Capitalization ratesPrime Pretoria decentralized offices
Source of data: Rode's Time Series
%
Smoothed
In the reporting quarter, capitalization rates on industrial leasebacks in the major industrial agglomerations showed no major changes from the previous quarter. Our respondents were of the opinion that inves-tors in prime industrial property (with a leaseback covenant) required a minimum net income yield of between 8% and 9%.
Prime offices
The reader will notice that most office-building graphs below show an uptick for two consecutive quarters. It is always dan-gerous to arrive at definitive conclusions on short-term movements in economic varia-bles; however, as we can explain the uptick with regard to ever-rising vacancies, and because this is the second uptick in as many quarters, we now have the courage to raise a red flag.
Johannesburg decentralized
The biggest risk to capitalization rates in Johannesburg decentralized remains office vacancy rates that are edging north (see Chapter 6). This might persuade property investors to think twice before compressing capitalization rates further.
In fact, during the reporting quarter capitalization rates in most of the Johannesburg decentralized office nodes were marginally up when compared to their previous-quarter levels. Nonetheless, capitalization rates on grade-A multi-
tenanted office property in Johannesburg decentralized still ranged between 8,7% (in Sandton) and 10,5% (in Randburg). Note that these yields reflect standard capitali-zation rates, which we define as being based on market rentals (see definitions on p.I in the annexure section).
Pretoria decentralized
Office vacancy rates in Pretoria decentral-ized are also moving in the wrong direction (see Chapter 6). This might explain why capitalization rates in most of the Pretoria decentralized office nodes have ticked up over the past two quarters. Even so, inves-tors in prime office property were still will-ing to buy or sell at forward net income re-turns of between 9,5% and 10%.
Durban decentralized
During the reporting quarter, Grade-A of-fice property capitalization rates in the Durban decentralized of La Lucia / Um-hlanga Ridge, Westway and Essex Terrace
Rode’s Report 2014:4 Standard capitalization rates 6
8
9
10
11
12
13
14
15
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Umhlanga RidgeWestwayEssex TerraceBerea
Capitalization ratesPrime Durban decentralized offices
Source of data: Rode's Time Series
%
Smoothed
8
9
10
11
12
13
14
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
ClaremontTyger ValleyCentury CityWestlake
Capitalization ratesPrime Cape Town decentralized offices
Source of data: Rode's Time Series
%
Smoothed
0
4
8
12
16
20
84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Leaseback escalationConsumer inflation
Leaseback escalationvs
Consumer inflation
Smoothed
%
Source of data: Rode's Time Series; Stats SA
were all able to firm slightly. This was in contrast to Berea where capitalization rates weakened (increased). Standard capitaliza-tion rates on grade-A multi-tenanted office property in Durban decentralized ranged between 8,5% (in La Lucia / Umhlanga Ridge) and 10% (in Berea).
Cape Town decentralized
Over the past two quarters, capitalization rates on grade-A multi-tenanted office property in Cape Town decentralized also edged up slightly. Nonetheless, during the reporting quarter capitalization rates still stood at 9%.
Leaseback escalation rates
In the third quarter of 2014, the average leaseback escalation rate remained at 7,9% (see Table 2.1). As the reader might know by now, the escalation rate is in the-ory an attempt by the market to forecast the average growth in market rentals until the expiry of the lease. However, this at-tempt is seldom successful, as the ineffi-cient property market is simply not good at forecasting.
This concludes our analysis of capitalization rates. The capitalization-rate tables follow.
Table 2.1 Prime industrial leaseback escalation rates
Quarter 2014:3
Mean SD N Change:
2014:2 less 2014:1 Broker-contributor codes
7,90 0,40 13 7,90 BM, BW, CR, EK, IPM, MW, NRG, PC, QP
QU, RO, RR, TH
Please note that figures referred to in the text may differ from the raw data in the tables ow-ing to smoothing on our part
Rode’s Report 2014:4 Standard capitalization rates 7
Interpretation tip: It is dangerous to rely on one quarter’s figure, as it may be an outlier owing to small sample sizes. Instead, consider the trend or contemplate using the average of at least two quarters for a more accurate assessment. For this reason, the graphs accompanying this article are smoothed.
A standard capitalization rate (colloquially referred to as a cap rate) is the expected net oper-ating income for year 1, assuming the entire building is let at open-market rentals, divided by the purchase price. This calculation ignores VAT, transfer duty and income tax, and assumes a cash transaction. All references in Rode’s Report to “cap rates” and “capitalization rates” mean “stand-ard capitalization rates”.
Capitalization rates for CBDs (excluding the Cape Town CBD) are of little use because when office properties are sold, they are invariably converted to flats.
The high standard deviation from the mean capitalization rate for office and industrial properties in some nodes, as reported in the accompanying capitalization rate tables, is in-dicative of the uncertainty prevailing in these nodes or areas. With few sales taking place, the evidence on ruling capitalization rates is thin and opinions vary more than in the more popular areas. This means that the income-producing property market has become even more inefficient in these nodes — which makes the valuation of these properties a rather hazardous exercise.
We are indebted to our expert capitalization rate panel, comprising major owners and lead-ing brokers who know their market segments intimately. This survey would not be possible without their invaluable contributions. Codes of those panellists who supplied information for this quarter's survey appear in the tables on the following pages. An explanation of the con-tributor codes can be found on p. xiv.
Rode’s Report 2014:4 Standard capitalization rates 8
Table 2.2 Survey of capitalization rates (%)
Office buildings Means for quarter 2014:3
Best location Grade A:
Multi-tenant Grade A: Leaseback
Grade B: Multi-tenant
Grade C: Multi-tenant
Mean SD n Mean SD n Mean SD n Mean SD nJohannesburg CBD 10,4 0,4 6 10,1 0,9 6 11,6 0,4 6 12,7 0,4 5 Braamfontein 10,2 0,2 6 10,1 0,9 6 11,1 0,6 6 12,5 0,4 5 Parktown 10,0 0,3 5 9,9 0,6 5 11,1 0,6 5 12,8 0,1 2Rosebank 9,2 0,3 5 9,0 0,5 5 9,9 0,9 5 10,7 0,8 4 Sandton CBD 8,8 0,2 6 8,4 0,5 6 9,7 0,4 6 11,7 0,0 2 Rivonia 9,8 0,4 5 9,6 0,7 5 10,6 0,6 5 12,6 0,0 2 Bryanston 9,4 0,2 5 9,3 0,6 5 10,4 0,4 5 11,7 0,4 3Sunninghill 9,8 0,4 5 9,6 0,7 5 10,4 0,6 5 12,0 0,3 3 Randburg Ferndale 10,5 0,0 4 10,7 0,7 5 11,5 0,3 5 13,0 0,0 3 Midrand 10,1 0,2 6 9,8 0,6 6 11,0 0,6 6 12,2 0,5 3 Germiston CBD 11,3 - 1 11,3 0,1 3 12,7 0,0 3 13,5 0,0 3 Pretoria CBD 10,1 0,2 5 9,7 0,3 5 11,5 0,4 5 12,4 0,4 5 Hatfield 9,8 0,2 4 9,6 0,3 4 10,6 0,4 4 11,4 0,6 4 Brooklyn 9,4 0,2 4 9,0 0,1 4 10,5 0,5 4 11,0 0,7 4Centurion 9,8 0,2 4 9,4 0,1 4 10,7 0,2 4 12,4 0,0 2Menlyn/Lynnwood 9,2 0,4 4 9,1 0,1 4 10,3 0,4 4 11,0 0,7 4 Vaal Triangle 10,2 0,0 3 10,2 0,1 3 11,5 0,2 3 12,5 0,4 3 Nelspruit 10,1 0,1 3 9,7 0,2 3 11,0 0,3 4 12,7 0,2 3 Polokwane 10,1 0,1 3 9,8 0,0 3 11,2 0,1 3 12,1 0,0 2Durban CBD 10,4 0,4 4 10,0 0,0 4 11,3 0,5 4 13,2 0,3 3 Berea 10,2 0,1 3 9,9 0,0 3 11,1 0,1 3 12,7 0,2 2 Essex Terrace 8,9 0,3 2 9,4 0,2 2 10,4 0,2 2 12,0 0,0 2 Westway 8,3 0,1 3 8,4 0,3 3 9,4 0,3 3 12,0 0,0 2 La Lucia / Umhlan-ga Ridge
8,5 0,4 6 8,3 0,4 6 9,8 0,4 6 11,3 0,5 3
Pietermaritzburg 10,5 0,2 3 10,1 0,1 3 11,8 0,2 3 13,4 0,3 3 Cape Town CBD 8,8 0,4 10 8,5 0,5 9 9,5 0,6 8 10,4 0,7 8 Bellville CBD - - - 9,7 0,4 3 10,2 0,1 3 11,2 0,6 3 Bellville Tyger Val-ley
9,2 0,3 4 9,2 0,4 4 9,8 0,2 4 10,0 0,0 2
Century City 8,8 0,3 6 8,7 0,2 5 9,4 0,3 5 - - - Westlake 8,8 0,2 4 8,7 0,1 3 9,0 0,0 2 - - - Claremont 9,1 0,3 4 9,0 0,4 4 9,4 0,1 4 - - - Port Elizabeth 9,8 0,3 5 9,5 0,3 5 11,0 0,0 5 12,6 0,4 5 East London 9,2 0,1 2 9,2 0,0 2 11,0 0,0 2 13,4 0,2 2 Bloemfontein CBD 9,7 0,4 6 9,7 0,3 5 11,2 0,2 6 12,6 0,3 6 n = Number of respondents — = Not available – fewer than two respondents SD = See Glossary of terms and abbreviations in Annexure 1.
Rode’s Report 2014:4 Standard capitalization rates 9
Table 2.3 Change in capitalization rates (% points)
Office buildings Means for quarter 2014:3 less quarter 2014:2
Best location Grade A:
multi
Grade A: Lease-back
Grade B: multi
Grade C: multi
Broker & owner contributors
Johannesburg CBD 0,1 0,3 0,3 0,3 BM, PC, QU, REW, SF, TH Braamfontein 0,0 0,3 0,2 0,3 BM, PC, QU, REW, SF, TH Parktown 0,3 0,3 0,3 0,1 BM, PC, QU, SF, TH Rosebank 0,2 0,4 0,2 0,2 BM, PC, QU, SF, TH
Sandton CBD 0,1 0,2 0,3 0,0 BM, PC, QU, REW, SF, TH Rivonia 0,4 0,4 0,5 0,0 BM, PC, QU, SF, TH Bryanston 0,1 0,3 0,3 0,0 BM, PC, QU, SF, TH Sunninghill 0,4 0,4 0,5 0,0 BM, PC, QU, SF, TH Randburg Ferndale 0,0 0,3 0,1 0,0 BM, PC, QU, SF, TH Midrand 0,1 0,2 0,1 -0,1 AW, BM, PC, QU, SF, TH Germiston CBD - 0,0 0,0 0,0 QU, PC, TH Pretoria CBD 0,1 -0,1 0,1 0,1 BM, MAS, PC, QU, TH Hatfield 0,0 -0,1 -0,1 -0,1 BM, PC, QU, TH Brooklyn -0,1 -0,2 -0,1 -0,2 BM, PC, QU, TH Centurion 0,1 0,0 0,1 0,0 BM, PC, QU, TH Menlyn/Lynnwood 0,0 0,0 0,0 0,0 BM, PC, QU, TH Vaal Triangle 0,0 0,0 0,0 0,0 PC, QU, TH Nelspruit 0,0 0,0 0,0 0,1 BM, PC, QU, TH Polokwane 0,0 0,0 0,0 0,0 PC, QU, TH Durban CBD 0,3 0,0 -0,1 -0,4 BM, MW, PC, QU, TH Berea 0,0 0,0 0,0 0,2 PC, QU, TH Essex Terrace 0,3 -0,2 -0,2 0,0 PC, QU Westway 0,1 -0,4 -0,4 0,0 MW, PC, QU La Lucia Ridge 0,3 0,0 0,1 0,3 BM, MW, PC, QU, REW, THPietermaritzburg -0,4 0,0 0,0 0,0 PC, QU, TH Cape Town CBD 0,1 0,0 0,0 0,1 BM, DD, FLP, GR, HP, PC,
QU, REW, RR, TH Bellville CBD 0,0 0,2 0,2 0,0 GR, PC, QU Bellville Tyger- 0,0 0,0 0,0 0,0 BM, GR, PC, QU ValleyCentury City 0,0 0,0 0,0 - BM, GR, HP, PC, QU, RR Westlake -0,1 -0,1 0,0 - HP, PC, QU, RR Claremont -0,1 0,0 -0,1 - GR, PC, QU, RR Port Elizabeth 0,0 0,1 0,0 0,0 IPM, NRG, PC, QU, TH East London 0,1 0,0 0,0 -0,2 PC, QUBloemfontein CBD 0,0 -0,1 0,0 0,0 BW, CC, EK, PC, QU, TH NB: The number of broker/owner codes does not necessarily match the sample size as indicated by the n in the table on page 8. This is so because several of our owner contributors wish to remain anonymous, but we do not show multiple ZZ codes in the table.
Rode’s Report 2014:4 Standard capitalization rates 10
Table 2.4 Survey of capitalization rates (%)
Industrial buildings Means for quarter 2014:3
Best location Prime leaseback (AAA Tenant)
Prime quality non-leaseback
Secondary quali-ty building
Prime industrial park
Mean SD n Mean SD n Mean SD n Mean SD n Central Wits 8,7 0,6 8 9,4 0,5 7 10,6 0,5 7 9,8 0,9 7 West Rand 9,2 0,5 6 9,7 0,5 5 10,8 0,4 5 10,1 0,9 6 East Rand 8,7 0,7 8 9,3 0,6 7 10,5 0,3 7 9,8 0,6 7 Far East Rand 9,3 0,3 6 10,1 0,2 5 11,1 0,4 6 10,5 0,8 6 Pretoria 9,0 0,0 5 9,8 0,2 5 10,7 0,2 5 9,8 0,5 5 Vaal Triangle 9,4 0,1 4 10,1 0,3 3 11,3 0,4 4 10,8 0,2 3 Nelspruit 9,5 0,0 4 9,9 0,0 3 10,7 0,2 3 10,0 0,6 4 Polokwane 9,7 0,2 4 10,0 0,0 3 11,1 0,0 3 10,6 0,1 3 Durban 8,4 0,3 8 9,0 0,3 7 10,0 0,5 6 9,3 0,4 8 Pietermaritz-burg
9,0 0,3 5 9,5 0,4 4 11,0 0,0 3 10,1 0,7 4
Cape Peninsula 8,6 0,3 7 9,1 0,3 6 10,1 0,2 6 9,1 0,5 7 Port Elizabeth 9,3 0,2 6 9,8 0,3 5 11,5 0,5 6 9,7 0,5 6 East London 9,8 0,2 3 10,5 0,0 2 11,4 0,5 3 10,2 0,0 2 Bloemfontein 9,4 0,3 6 10,4 0,4 4 11,5 0,4 7 10,9 0,6 5 n = Number of respondents — = Not available – fewer than two respondents SD = See Glossary of terms and abbreviations in Annexure 1.
Table 2.5 Change in capitalization rates (% points)
Industrial buildings Means for quarter 2014:3 less quarter 2014:2
Best location Prime
leaseback Prime non-leaseback
Secondary quality building
Prime In-dustrial
park
Broker & owner
contributors
Central Wits 0,0 0,2 0,2 0,1 BM, GT, PC, QU, REW, RO, SF, TH
West Rand 0,2 0,4 0,1 0,2 BM, GT, PC, QU, SF, TH East Rand 0,0 -0,1 0,1 0,2 BM, GT, PC, QU, REW, RO,
SF, TH Far East Rand 0,0 0,1 0,2 0,1 BM, GT, PC, QU, RO, SF TH Pretoria 0,0 0,0 0,0 0,0 BM, GT, MAS, PC, QU, TH Vaal Triangle 0,1 0,3 0,1 -0,3 BM, GT, PC, QU, TH Nelspruit 0,0 0,0 0,0 0,0 GT, PC, QU, TH Polokwane 0,0 0,0 0,0 0,0 GT, PC, QU, TH Durban 0,2 0,2 0,2 0,0 BM,GT, MW, PC, QP, QU,
TH NB: The number of broker/owner codes does not necessarily match the sample size as indicated by the n in table 2.4. This is so because several of our owner contributors wish to remain anonymous, but we do not show multiple ZZ codes in the table.
Rode’s Report 2014:4 Standard capitalization rates 11
Table 2.5 (continued) Change in capitalization rates (% points)
Industrial buildings Means for quarter 2014:3 less quarter 2014:2
Best location Prime
leaseback Prime non-leaseback
Secondary quality building
Prime In-dustrial
park
Broker & owner
contributors
Pietermaritzburg 0,0 0,0 0,0 0,0 BM, GT, PC, QU, TH Cape Peninsula -0,2 -0,2 0,0 0,0 BM, GR, GT, PC, QU, RR, Port Elizabeth -0,1 0,0 0,4 -0,3 BR, GT, IPM, NRG, PC QV,
TH East London 0,0 0,0 0,0 0,0 BM, GT, PC, QU Bloemfontein -0,1 -0,1 -0,1 -0,2 BM, BW, CC, EK, GT, PC,
QU, TH NB: The number of broker/owner codes does not necessarily match the sample size as indicated by the n in table 2.4. This is so because several of our owner contributors wish to remain anonymous, but we do not show multiple ZZ codes in the table.
Table 2.6 Survey of capitalization rates (%): shopping centres
Means for quarter 2014:3
Best location Super regional Regional Community
Mean SD n Mean SD n Mean SD n Witwatersrand 7,0 0,3 5 7,4 0,4 5 8,3 0,5 5 Pretoria 7,3 0,2 4 8,0 0,1 3 8,5 0,3 4 Vaal Triangle 7,6 0,3 3 8,0 0,0 3 9,2 0,2 3 Nelspruit 7,5 0,0 3 8,0 0,0 3 9,0 0,0 3 Polokwane 7,7 0,0 3 8,1 0,0 3 9,1 0,0 3 Durban 7,4 0,3 3 8,0 0,2 3 9,1 0,2 3 Pietermaritzburg 7,6 0,1 3 8,1 0,0 3 9,2 0,0 3 Cape Town 7,2 0,5 7 7,5 0,4 8 8,4 0,4 7 Port Elizabeth 8,1 0,6 4 8,6 0,5 5 9,6 0,3 5 East London - - - - - - 9,0 0,3 3Bloemfontein 7,8 0,0 2 8,3 0,1 3 9,2 0,1 6 Platteland - - - - - - 9,5 0,2 3Townships - - - - - - 9,4 0,1 4n = Number of respondents — = Not available SD = See Glossary of terms and abbreviations in Annexure 1.
Rode’s Report 2014:4 Standard capitalization rates 12
Table 2.6 (continued) Survey of capitalization rates (%): shopping centres
Means for quarter 2014:3
Best location Neighbourhood Local convenience Retail warehouse
Mean SD n Mean SD n Mean SD n Witwatersrand 9,6 0,2 5 10,4 0,3 4 9,7 0,2 4 Pretoria 9,7 0,2 5 10,5 0,3 5 9,8 0,1 4 Vaal Triangle 10,0 0,0 3 10,9 0,2 3 10,0 0,2 3 Nelspruit 10,0 0,0 3 10,8 0,0 3 9,9 0,1 3 Polokwane 10,2 0,1 3 10,9 0,1 3 9,9 0,1 3 Durban 9,8 0,1 3 10,6 0,1 3 9,7 0,0 3 Pietermaritzburg 10,3 0,2 3 10,9 0,0 3 9,9 0,1 3 Cape Town 9,1 0,4 8 9,8 0,4 6 9,4 0,6 7 Port Elizabeth 10,2 0,4 5 11,0 0,2 5 10,2 0,4 5 East London 10,2 0,1 2 10,9 0,3 2 10,8 0,1 2 Bloemfontein 10,0 0,0 6 10,8 0,2 6 10,7 0,7 5 Platteland 10,4 0,1 3 11,2 0,1 3 10,8 0,2 3 Townships 10,4 0,2 5 10,6 0,1 4 10,4 0,2 3 n = Number of respondents — = Not available SD = See Glossary of terms and abbreviations in Annexure 1.
Table 2.7 Change in capitalization rates (% points): shopping centres
Means for quarter 2014:3 less quarter 2014:2
Best location Super
regional Regional
Commu-nity
Broker & owner contributors
Witwatersrand -0,10 -0,10 -0,20 BM, PC, QU, REW, SF, TH
Pretoria -0,10 -0,20 0,00 BM, MAS, PC, QU, TH
Vaal Triangle -0,40 0,00 -0,30 PC, QU, TH
Nelspruit 0,00 0,00 0,00 PC, QU, TH
Polokwane 0,00 0,00 0,00 PC, QU, TH
Durban -0,10 -0,30 -0,20 PC, QU, TH
Pietermaritzburg 0,00 0,00 0,00 PC, QU, TH
Cape Town -0,20 -0,40 -0,20 BM, DD, FLP, GR, PC, QU, REW, RR, TH
Port Elizabeth 0,20 0,20 0,20 IPM, NRG, PC, QU, TH
East London - - -0,30 BM, PC, QU
Bloemfontein 0,00 0,00 -0,10 BM, BW, CC, EK, PC, QU, TH
Platteland - - 0,00 GR, PB, QU
Townships - - 0,10 GR, PC, QU, REW, TH
Rode’s Report 2014:4 Standard capitalization rates 13
Table 2.7 (continued) Change in capitalization rates (% points): shopping centres
Means for quarter 2014:3 less quarter 2014:2
Best location Neighbour-
hood
Local conven-
ience
Retail warehouse
Broker & owner contributors
Witwatersrand 0,0 0,0 0,0 BM, PC, QU, REW, SF, TH
Pretoria 0,0 0,0 0,0 BM, MAS, PC, QU, TH
Vaal Triangle 0,0 -0,3 -0,2 PC, QU, TH
Nelspruit 0,0 0,0 0,0 PC, QU, TH
Polokwane 0,0 0,0 0,0 PC, QU, TH
Durban 0,0 0,0 0,0 PC, QU, TH
Pietermaritzburg 0,0 0,0 0,0 PC, QU, TH
Cape Town -0,1 -0,4 -0,3 BM, DD, FLP, GR, PC, QU, REW, RR, TH
Port Elizabeth 0,2 0,2 0,2 IPM, NRG, PC, QU, TH
East London 0,1 0,3 -0,1 BM, PC, QU
Bloemfontein 0,0 0,1 0,0 BM, BW, CC, EK, PC, QU, TH
Platteland 0,0 -0,1 0,0 GR, PB, QU
Townships -0,3 0,0 -0,1 GR, PC, QU, REW, TH
Table 2.8 Survey of capitalization rates (%): street-front shops
Means for quarter 2014:3
Best location Metro CBD Decentralised
Mean SD n Mean SD n Witwatersrand 11,00 0,50 5 10,70 0,20 5 Pretoria 10,70 0,00 3 10,60 0,10 3 Vaal Triangle 10,90 0,00 3 10,70 0,00 3 Nelspruit 10,90 0,10 3 10,70 0,10 3 Polokwane 10,80 0,00 3 10,60 0,00 3 Durban 10,90 0,60 4 10,80 0,30 4 Pietermaritzburg 10,70 0,10 3 10,70 0,00 3 Cape Town 9,20 0,80 7 9,10 1,00 6 Port Elizabeth 10,80 0,70 6 10,70 0,40 5 East London 10,70 0,60 2 10,80 0,20 2 Bloemfontein 10,80 0,40 6 10,40 0,20 5 n = Number of respondents — = Not available SD = See Glossary of terms and abbreviations in Annexure 1.
Rode’s Report 2014:4 Standard capitalization rates 14
Table 2.9 Change in capitalization rates (% points): street-front shops
Means for quarter 2014:3 less quarter 2014:2 Best location Metro CBD Decentralised Broker & owner contributors
Witwatersrand 0,4 0,0 PC, QU, REW, SF, TH
Pretoria 0,0 0,0 PC, QU, TH
Vaal Triangle 0,0 0,0 PC, QU, TH
Nelspruit 0,0 0,0 PC, QU, TH
Polokwane 0,0 0,0 PC, QU, TH
Durban 0,3 -0,3 PC, QU, REW, TH
Pietermaritzburg 0,0 0,0 PC, QU, TH
Cape Town 0,0 -0,7 DD, FLP, GR, PC, QU, RR, TH
Port Elizabeth 0,1 0,0 DD, IPM, NRG, PC, QU, TH
East London 0,6 0,2 PC, QU
Bloemfontein -0,1 0,0 BW, EK, PC, QU, REW, TH
Rode’s Report 2014:4 Capitalization rate equations 15
Chapter 3: Capitalization-rate equations
How to estimate capitalization rates – anywhere
Updated by John S. Lottering
This chapter provides the reader with a handy, updated tool to estimate the market capitalization rates of various property types anywhere in South Africa, provided the user is confident about the subject property’s gross market-rental rate.
As the reader will see below, market-rental rates are amazingly successful in explain-ing the level of capitalization rates. On re-flection, though, this should not be all that surprising, considering that all the good and bad news pertaining to a property is encapsulated in the ruling market-rental rate. Here we think of rental-level drivers such as:
Location
Risk (examples of varying risk profilesare a leaseback compared with a multi-tenanted property; the robustness ofthe covenant)
Grade/age
An important risk factor typically not re-flected in a rental, is the design of the building, as it affects its ability to be re-let. Here one thinks of purpose-built buildings.
Thus, the moderately strong relationship between market-rental rates and capitali-zation rates allows the researcher to build a regression model with which to estimate the levels of capitalization rates.
Office-building equation
In our regression analysis of office build-ings, we use the market capitalization rates (dependent variables) and gross market-rental rates (predictors) of grades A, B and C buildings in the areas surveyed by Rode’s Report (RR).
The source of the national equation given below is this issue of RR. The regression is based on 59 observations in mainly decen-tralized nodes.
The updated equation is:
office capitalization rate % = 13,657 – (0,0369*gross rental)
where
gross rental = the gross market rental rate per rentable m2 per month for grades A, B or C office buildings in quarter 2014:3.
The correlation coefficient r = -0,8. The standard error (SE) is 0,6 and n = 59.
Readers should note that it is not advisable to use this function for gross market-rental rates that fall much outside the range of R38/m²/month to R162/m²/month
Rode’s Report 2014:4 Capitalization rate equations 16
Example:
If the gross office rental is R60 per rent-able m2 per month, then the capitaliza-tion rate is:
office capitalization rate %=13,657 – (0, 0369*60) = 11,4%
Industrial-property equation
This national equation expresses the rela-tionship between the capitalization rates and gross market rental rates of prime stand-alone non-leasebacks, secondary stand-alone industrial buildings, and indus-trial parks.
The gross market rental rates are those applicable to 1 000-m2 units. The source of the data is this issue of Rode’s Report. The industrial-regression equation, which is based on 33 observations, includes all pri-mary and secondary industrial cities.
The updated equation is:
industrial capitalization rate % = 13,164 – (0,094*gross rental)
where:
gross rental = the gross market rental per rentable m2 per month as in quarter 2014:3 for stand-alone prime non-leaseback or prime industrial parks or stand-alone secondary industrial space of 1 000 m2, located in primary and sec-ondary industrial cities.
The correlation coefficient r = -0,8. The standard error (SE) is 0,4 and n = 33.
It is not advisable to use this function for gross market rental rates that fall much outside the range of R20/m²/month to R45/m²/month. Also, remember to use the rental rate applicable to a notional area of 1 000 m² (even if the actual floor area is completely different).
Example:
If the gross industrial rental for a 1000 m² building, located in a primary or sec-ondary industrial city, is R20 per renta-ble m2 per month, then the capitaliza-tion rate is:
industrial cap rate % = 13,164 – (0,094*20)= 11,3%.
Warning: To guard against volatility in the latest survey data, the reader is advised also to consult the regression equation and its applicable rental rate in the previous issue of RR, and to consider using a two-quarter average capitalization rate (unsurveyed) if necessary.
Rode’s Report 2014:4 Capitalization rate equations 17
Rode’s Report 2014:4 Listed property 18
-40
-20
0
20
40
60
80
5
6
7
8
9
10
11
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Long-bond yieldREIT yieldREIT price
Growth in listed property pricesvs
Change in yields
Pric
e gr
owth
(%;
y-o-
y)
Change
inyields
(%-points; y-o-y)
Source of data: JSE; SARB
Chapter 4: Listed property
Firming yields driving prices up Written by John S. Lottering
Since the beginning of the year, the net-income yields on listed property funds have been following those on long bonds south. The result of this has in recent months been an acceleration in the yearly growth of listed property funds’ prices.
The accompanying graph shows the gener-ally known robust correlation between long-bond and listed-property yields.1It al
1 Similar to bonds, a listed property portfolio is, in one sense, nothing but a bundle of lease contracts, which by their nature lend a strong degree of predictability to future earnings. However, it is a fair assumption that the cash flow of listed property will grow — albeit moderately — in contrast to that of bonds. Thus, the risk and growth prospects tend to cancel one another out, and investors, therefore, see them as close sub-stitutes.
so shows how yields on both have firmed by just under 100 basis points since the beginning of the year and how this has supported listed property prices (see shad-ed area of graph). In fact, such has been the recovery in listed property prices that it has also resulted in listed property provid-ing the best total returns among the tradi-tional asset classes. For the year ended Oc-tober 2014, the total return on SA listed property was 19%. This was followed by equities (+11%), bonds (+9%) and cash (+6%) (see Table 4.1).
For now, a boon to the listed property sec-tor must be the fall in international crude oil prices. This is so because weaker oil prices usually mean lower inflation pres-sures, which in turn augur well for bond prices, thereby pushing down yields.
Table 4.1 Asset class performance
Total returns (income yield plus capital return) October 2014
month-to-date 12-month periodEquities 1,0% 10,6%Bonds 3,4% 9,0%SA Listed Property 6,8% 19,4%Cash 0,5% 5,7%Source: Catalyst Fund Managers
Rode’s Report 2014:4 Listed property 19
-5
0
5
10
15
20 2
4
6
8
10
12
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Distribution growth: rolling 12 monthsNational dec. vacancy rate
r²=-0,8
Distribution growth: PLSvs
National decentralized office vacancy rate
Dis
trib
utio
n gr
owth
(%)
Source of data: SAPOA; SA Reit Association (via Grindrod Asset Management)
Vacancy
rate(%
)
Table 4.2
Growth in distributions for half-and full-year ended August 2014
Company Distribution growth (%) Period
Fountainhead Property Trust 6,9% Full year Redefine Properties 8,5% Full year Redefine International PLC 2,9% Full year Octodec Investments 11,5% Full year Rebosis Property Fund 8,1% Full year Dipula Income Fund - A 5,0% Full year Dipula Income Fund - B 11,3% Full year Delta Property Fund 23,1% Half year
Growth in distributions for half-and full-year ended September 2014 Arrowhead Properties - A 11,0% Full year Arrowhead Properties - B 25,7% Full year Vukile Property Fund 7,8% Half year Source: Financial results of the various listed property funds
Despite a tough market, many funds are still able to declare impressive growth in distributions. As Table 4.2 shows, for the half- and full-year periods ended August and September 2014, a number of funds were still able to report very robust — con-sumer inflation beating — growth in distri-butions.
For now, the biggest hindrances to income stream prospects remain jaded non-residential property fundamentals and dis-proportionate increases in administered prices. On the other hand, income streams will continue to benefit from contractual rentals that are escalating at between 8% and 9%. However, market rentals have been showing growth below contractual escalation rates for a number of years now, hence negative reversions to market upon the expiry of leases, will become more common.
The graph which follows shows, for exam-ple, the very strong — r²=0,8 — negative relationship between the growth in distri-butions of listed funds and national decen-tralized office vacancy rates. Note how this relationship has since the end of 2012 bro-ken down (shaded area of graph).
The direct explanation for the breakdown is that offices make up a smallish proportion of the total listed-property stock. Indirect reasons are that funds are able to improve their cash flows by buying in directly-held property portfolios at yield-enhancing pric-es. Another is increased exposure to off-shore listed holdings.
Table 4.3 shows the individual performances of listed property funds for different periods to the end of October 2014 (ex S.A. Reit Association).
This concludes our chapter on listed prop-erty.
Rode’s Report 2014:4 Listed property 20
Table 4.3 Total return (%) on listed property funds
to October 2014 Individual stock performance
1 year 3 years
Acucap 14,7 16,9Arrowhead A 25,4 - Arrowhead B 28,4 - Ascension A 27,3 - Ascension B 13,1 - Capital 28,5 21,0Delprop -2,4 -Dipula A 9,0 14,8 Dipula B 3,0 25,0 Emira 16,7 19,1Fairvest 14,7 12,3Fortress A 25,4 21,4 Fortress B 67,5 49,7 Fountainhead 9,0 12,6Growthpoint 12,0 20,4Hospitality A 14,1 18,4 Hospitality B -35,1 -11,6 Hyprop 37,1 28,7Investec Prop 9,9 22,1 Octodec 16,4 22,9Rebosis 7,7 14,1Redefine 4,3 17,4Resilient 56,3 41,5SA Corporate 25,2 21,5 Sycom 21,7 18,1Synergy A 16,3 - Synergy B 11,8 - Texton 7,1 19,1Tower 4,7Vukile 14,6 17,0
Total return includes income yield and capital return. Source: S.A. Reit Association (via Grindrod Asset Management)
Rode’s Report 2014:4 Office rentals 22
-5
0
5
10
15
20 2
4
6
8
10
12
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Rental growthVacancy rate
Growth in market rentalsvs
Vacancy rates(National decentralized)
r=-0,7 (up to 3-qtr lag)
Ren
tal gr
owth
(%;
y-o-
y)
Vacancy
rate(%
)
Source of data: Rode's Time Series; Sapoa
200180160140
120
100
80
60
40
2096 98 00 02 04 06 08 10 12 14
ParktownRosebankRivoniaSandton CBD
Nominal Johannesburg decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
160
140
120
100
80
60
4096 98 00 02 04 06 08 10 12 14
ParktownRosebankRivoniaSandton CBD
Real Johannesburg decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
Chapter 5: Office rentals
Rental growth decelerates in tandem with rising vacancy rates
Written by John S. Lottering
On the back of upward pressure on office vacancy rates, the growth in national de-centralized office rentals has been losing steam. In the third quarter of 2014, market rentals for grade-A multi-tenanted office space could — on a weighted national basis — only record growth of 3%.
A look at the regions, shows the strongest (+6%) growth in market rentals in Cape Town decentralized. This was followed by Pretoria and Durban where market rentals were on average up by 5% and 3% respec-tively. In Johannesburg decentralized, market rentals remained at roughly their previous-year levels. In the third quarter of 2014, building costs are expected to have accelerated to roughly 9%. This implies that across the regions it has become less viable to erect new office buildings. This statement assumes that one can build a new office building overnight; that is, we ignore the fact that typically it takes a few years to erect a new building and that the
ratio of market rentals to building costs could change drastically over such a long period.
Zooming in on Johannesburg decentralized, shows contracting market rentals in Park-town (-5%), Randburg Ferndale (-4%) and Bryanston (-1%). In Rivonia rentals were at their previous-year levels while in Illovo
Rode’s Report 2014:4 Office rentals 23
200180160140
120
100
80
60
40
2096 98 00 02 04 06 08 10 12 14
Randburg FerndaleBryanstonIllovoSandton CBD
Nominal Johannesburg decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
160
140
120
100
80
60
4096 98 00 02 04 06 08 10 12 14
Randburg FerndaleBryanstonIllovoSandton CBD
Real Johannesburg decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
200
100
80706050
40
30
20
1096 98 00 02 04 06 08 10 12 14
CenturionBrooklyn/WaterkloofHatfieldMenlyn
Nominal Pretoria decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
110
100
90
80
70
60
5096 98 00 02 04 06 08 10 12 14
CenturionBrooklyn/WaterkloofHatfieldMenlyn
Real Pretoria decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
140
120
100
80
60
40
2096 98 00 02 04 06 08 10 12 14
BereaLa Lucia Ridge Westway
Nominal Durban decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
rentals showed growth of 3%. Sandton (+5%) again showed the strongest growth, in spite of its ballooning vacancies. Never-theless, the growth in rentals in Sandton is decelerating (see Chapter 6), so do we expect fundamentals eventually to govern this node as well.
During the reporting quarter, the Pretoria decentralized office node of Menlyn (+9%) recorded the best growth in rentals. In Centurion, market rentals showed growth of 7%, while in the office nodes of Brook-lyn/Waterkloof and Hatfield, rentals grew at moderate rates of 4% and 3% respec-tively. Barring Brooklyn/Waterkloof, prime office vacancy rates in these nodes remain in the double digits. The result of this might, naturally, be downward pressure on rentals.
With reference to the real-rental graph, no-tice how Hatfield – once the premium Pre-toria node – has been losing ground since 2011.
In the Durban decentralized office node of Berea (-6%), market rentals were again lower than what they were a year ago. Of course, the poor performance of rentals in Berea is not unexpected given this node’s very high vacancy rate. In the reporting quarter, the grade-A office vacancy rate in Berea stood at 26% (see Chapter 6). In La Lucia / Umhlanga, rentals were up by 5%, while rentals in Westway showed growth of roughly 7%.
Rode’s Report 2014:4 Office rentals 24
110
100
90
80
70
60
5096 98 00 02 04 06 08 10 12 14
BereaLa Lucia Ridge Westway
Real Durban decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
140
120
100
80
60
40
96 98 00 02 04 06 08 10 12 14
Tyger ValleyClaremontCentury City
Nominal Cape Town decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
140
120
100
80
60
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Tyger ValleyClaremontCentury City
Real Cape Town decentralized grade-A office rentals
R/m
²(l
og s
cale
)
Smoothed
Source of data: Rode's Time Series
In the reporting quarter, the Cape Town decentralized office node of Claremont (+10%) was a fleeting star – ‘fleeting’ be-cause it is continuing to lose ground rela-tive to the other nodes (see the real-rental graph). In Century City, rentals were up by 8%, while rentals in Tyger Valley showed growth of 5%. Real rentals in Century City have also been trekking north in recent years, implying the increased viability — holding operating costs and capitalization rates constant — of developing new office space in this node.
Pioneer rentals
Table 5.1 shows the difference between pioneer rentals and grade-A market rent-als. Often pioneer-rental levels represent leases signed on newly erected buildings, and these then reflect today’s building costs rather than market rentals, as devel-opers naturally expect an immediate fair return on their development costs. None-theless, pioneer rentals can still be used as a rough indication of prospects for future market-rental growth.
This concludes our section on office rentals. The office-rental tables follow.
Recap: nominal versus real rentals
The term “nominal” refers to money rentals, whereas the term “real” refers to nominal less infla-tion.
Rode mostly deflates nominal rentals with the Bureau for Economic Research’s Building Cost In-dex (BER BCI) to arrive at real rentals. The rationale for using building costs as deflator is the substitution principle and because building costs can serve as a proxy for the replacement costs. To illustrate, why would you buy a property at R110 when you could have it built (replaced) for R100? When rentals are low relative to replacement costs, the upside potential for rentals is great and vice versa. Thus, high real rentals (relative to previous periods) may be an indication of a market that is vulnerable to a downswing, and low real rentals indicate great upside potential.
Rode’s Report 2014:4 Office rentals 25
Grateful thanks to our expert panellists for the information they supply. Codes of the brokers and landlords who contributed to this quarter's survey appear in the table on p. 26. An ex-planation of the codes can be found on p. xiv.
Table 5.1
Pioneer office rentals
Highest gross nominal market rental rate achieved
Rands per rentable m², gross leases (excl VAT)
During quarter 2014:3
PioneerNormal
grade A Difference %
Johannesburg dec. 200 108 85%
Pretoria dec. 170 115 48%
Durban dec. 170 112 52%
Cape Town dec. 145 107 36%
Rode’s Report 2014:4 Office rentals 26
Table 5.2 Market rental rates for office buildings
Quarter 2014:3 Rands per rentable m² per month, gross leases (excl VAT)
Grade A+
meanGrade Amean
Grade Bmean
Grade Cmean
Broker contributor codes
Johannesburg CBD 108,00 79,17 62,50 38,33 QU, RX, SF, ZZ Braamfontein 95,00 81,25 71,25 41,67 QU, REW, RX, SF, ZZ Sandton CBD 195,42 161,50 117,60 94,00 AR, AW, BM, QU, REW, RX,
SF, ZZDunkeld West 130,50 116,25 92,50 80,50 AR, AW, BM, QU, RX, SF, ZZWierda Valley 147,50 114,08 100,12 87,00 AR, BM, QU, RX, ZZ Randburg Ferndale 88,88 75,88 70,50 64,75 AR, BM, QU, RX, SF, ZZ Rivonia 107,50 98,25 79,60 72,50 AR, BM, QU, RX, SF, ZZ Rosebank 171,67 127,50 95,83 81,50 AR, AW, BM, QU, RX, SF, ZZIllovo 162,50 124,38 103,75 81,00 AR, AW, QU, RX, ZZ Illovo Boulevard 142,50 126,00 113,33 88,33 AR, AW, BM, QU, ZZ Chislehurston 124,17 109,83 106,67 85,00 AR, BM, QU, RX, ZZ Parktown 110,50 93,12 84,00 75,00 AR, BM, QU, SF, ZZ Richmond/Milpark 80,00 85,00 72,50 65,25 AR, QU, RX, ZZ Bedfordview 151,00 119,17 95,00 84,17 AR, BHP, BM, MEA, MR, QU,
RX, ZZBruma 140,00 104,50 84,17 73,00 AR, BM, MEA, MR, QU, RX,
ZZMeadowbrook 55,00 48,00 40,00 35,00 MRWoodmead 117,50 108,50 84,60 82,50 AR, BM, MR, QU, RX, ZZ Sunninghill 100,50 90,40 80,00 73,67 AR, BM, QU, RX, SF, ZZ Bryanston/Epsom 141,00 117,25 97,50 91,25 AR, AW, BM, QU, RX, ZZ Fourways 131,90 107,50 91,00 79,75 AR, AW, BM, QU, RX, ZZ Houghton 117,50 101,17 91,25 85,50 AR, BM, QU, ZZ Melrose Arch 200,83 167,50 140,00 N/A AR, BM, QU, RX, ZZ Hyde Park 127,50 108,33 98,75 81,65 AR, BM, QU, ZZ Eastgate/Kramerville 103,00 80,00 58,00 54,00 AR, MR, QU Ormonde 88,50 78,50 67,25 62,50 AR, QUMidrand 124,50 95,70 79,62 69,60 AR, AW, BM, MR, QU, RX, ZZContantia Kloof (Roo- 125,00 120,00 - - AR, BR depoort)Hendrik Potgieter Cor 95,00 90,00 79,50 70,75 AR, QU ridorPretoria CBD - 90,00 80,00 70,00 AI, EV, ZZ Lynnwood Glen 157,00 112,50 102,50 95,00 EV, ZZ Lynnwood 135,00 108,50 96,67 67,50 AI, EV, ZZ Lynnwood Manor 155,00 95,00 75,00 65,00 ZZ Lynnwood Ridge 160,00 128,50 92,50 90,00 EV, ZZ Faerie Glen 115,00 117,50 - - EV, ZZ Val de Grace - 75,00 100,00 - EV, ZZ Menlyn 168,33 145,67 116,67 110,00 AI, EV, ZZ Menlo Park (Brooks St) - 129,00 110,00 - EV, ZZ Brooklyn/Waterkloof 160,00 145,00 125,00 - EV, ZZ Nieuw Muckleneuk 199,00 143,50 120,00 - EV, ZZ Hatfield 175,00 127,50 103,33 - AI, EV, ZZ Centurion 139,75 123,33 105,00 - AI, EV, ZZ Highveld Technopark 115,00 108,33 82,50 - AI, EV, MAS, ZZ Sunnyside 145,00 95,00 80,00 - ZZFor definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.
Rode’s Report 2014:4 Office rentals 27
Table 5.2 (continued) Market rental rates for office buildings
Quarter 2014:3 Rands per rentable m² per month, gross leases (excl VAT)
Grade A+
meanGrade Amean
Grade Bmean
Grade Cmean
Broker contributor codes
Arcadia - 115,00 90,00 85,00 EV, ZZMurrayfield - - 72,00 - ZZNelspruit 142,50 122,50 95,00 75,00 HH, RZPolokwane 127,50 110,00 88,75 72,50 ES, MOBloemfontein CBD 117,50 104,33 83,33 65,00 BW, CC, EK Westdene 127,50 119,00 85,00 71,67 BW, CC, EK Durban CBD - 75,00 55,00 37,50 MW, PPI, QP Durban Berea - 92,50 70,00 62,50 MW, PPI, QP Essex Terrace 122,50 112,50 93,33 76,67 MW, PPI, QP Westway 141,25 127,50 110,00 100,00 ACU, MW, PPI, QP La Lucia Ridge 153,33 130,00 120,00 115,00 MW, PPI, QP Westville 132,50 111,67 96,67 81,67 MW, PPI, QP Pinetown 92,50 82,50 70,00 55,00 QP, PPIHillcrest-Kloof (Upper Highway)
127,50 105,00 92,50 80,00 QP, PPI
Port Elizabeth CBD 70,00 55,00 40,00 26,50 NRG, TR Greenacres : Parks - - - -Greenacres: Single - - - -Walmer Park 1, 2 & 3 - 90,00 75,00 50,00 NRG South End - - 65,00 55,00 IPM, NRG Humewood 137,50 100,00 - - IPM, NRGCape Road 100,00 87,50 70,00 50,00 IPM, NRG, TR East London - 60,00 50,00 40,00 BG, DQ, ER, GO, GW, IP Southernwood - 60,00 45,00 35,00 BG, DQ, ER, GO, GW, IP Berea/Vincent 115,00 90,00 65,00 40,00 BG, DQ, ER, GO, GW, IP Cape Town CBD 169,17 120,00 90,00 65,00 FLP, GB, HP, SWI, ZB Sea Point 125,00 95,00 75,00 60,00 GB V&A Portswood Ridge 175,00 145,00 95,00 - FLP, GB, ZB Granger Bay 162,50 125,00 - - FLP, GB, ZB Salt River 60,00 60,00 50,00 45,00 GB, PL Woodstock 77,50 65,00 55,00 52,50 GB, PL, ZB Observatory 110,00 100,00 85,00 55,00 GBMowbray - 75,00 77,50 55,00 GB, SWI, ZB Kenilworth (Racecourse) 111,67 96,67 90,00 - FLP, GB, HP, PL, SWI, ZB Rondebosch/Newlands 145,00 113,33 90,00 70,00 FLP, GB, SWI, ZB Wynberg - 95,00 64,75 55,00 FLP, GB, SWI, ZB Westlake 133,33 104,50 90,00 - FLP, GB, HP, PL, SWI, ZB Tokai 130,67 98,33 - 75,00 FLP, HP, GB, SWI, ZB Claremont Lower* - 95,00 85,00 - FLP, PL, ZB Claremont Upper 153,00 133,33 85,00 75,00 FLP, GB, PL, SWI, ZB Hout Bay - 102,50 77,50 57,50 FLP, GB Noordhoek (Sun Valley) - - - -Pinelands 120,00 117,50 100,00 - FLP, HP, ZB Athlone - - - -Milnerton - 85,00 77,50 - GB, SWIPanorama - - - -Table View / Parklands - 85,00 90,00 70,00 PL, SWI For definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.
Rode’s Report 2014:4 Office rentals 28
Table 5.2 (continued) Market rental rates for office buildings
Quarter 2014:3 Rands per rentable m² per month, gross leases (excl VAT)
Grade A+
meanGrade Amean
Grade Bmean
Grade Cmean
Broker contributor codes
Century City 150,00 135,00 107,50 - GB, HP, SWI, ZB Maitland - - 40,00 35,00 GBGoodwood (N1 City) 100,00 95,00 80,00 75,00 GB Tygerberg Hills 124,00 105,00 90,00 80,00 GB, NE, ZB Bellville CBD 120,00 100,00 73,33 56,33 GB, SWI, ZB Tyger Valley area 135,00 112,50 90,00 77,50 GB, NE, PN, SWI, ZB Durbanville 120,00 96,67 70,00 - GB, NE, SWI Airport - - - -Kuils River - - - -Somerset West Town - - - -Somerset West Mall area - - - -
Strand - - - -Gordon’s Bay - - - -George general 95,00 65,00 50,00 32,50 GV Fairview Office Park - 37,50 GV * Claremont Lower: east of Main RoadFor definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.
Rode’s Report 2014:4 Office rentals 29
Table 5.3 Standard deviation of market rental rates for office buildings
Quarter 2014:3 Grade A+ Grade A Grade B Grade C
Johannesburg CBD - R8,25 R11,37 R19,29Braamfontein - R4,15 R16,35 R17,00 Sandton CBD R9,18 R9,43 R9,22 R3,74Dunkeld West R8,72 R4,15 R5,00 R5,55Wierda Valley R8,90 R3,23 R6,02 R3,00Randburg Ferndale R7,91 R3,13 R5,10 R3,56Rivonia R7,36 R10,80 R8,52 R8,29Rosebank R8,50 R8,94 R10,17 R6,65Illovo R12,50 R14,62 R12,93 R7,87Illovo Boulevard R8,29 R10,20 R4,71 R6,24 Chislehurston R3,12 R5,92 R6,24 R0,00Parktown R11,43 R4,80 R6,63 R6,12Richmond/Milpark - R4,08 R3,54 R0,25Bedfordview R20,59 R15,12 R10,35 R5,34Bruma R0,00 R5,10 R5,34 R2,45Meadowbrook - - - -Woodmead R7,36 R8,89 R8,16 R2,50Sunninghill R5,10 R3,83 R4,47 R6,34Bryanston / Epsom Downs R7,11 R7,60 R7,50 R8,01 Fourways R6,36 R8,94 R3,94 R0,43Houghton R3,54 R3,06 R5,45 R0,50Melrose Arch R15,32 R17,50 - - Hyde Park R5,40 R13,12 R10,83 R3,35Eastgate/Kramerville - R0,00 R2,00 R1,00Ormonde - R1,50 R2,25 R2,50Midrand R9,80 R5,29 R4,14 R4,08Hendrik Potgieter Corridor R5,00 - R0,50 R0,75 Pretoria CBD R23,17 R21,93 R17,24 R14,97Lynnwood Glen - R5,00 R5,00 R7,07Lynnwood - R17,50 R17,50 -Lynnwood Manor R10,00 R11,50 R8,50 R2,50 Lynnwood Ridge - - - -Faerie Glen - R3,50 R7,50 -Val de Grace - R12,50 - - Menlyn - - - -Menlo Park (Brooks St) R4,71 R7,59 R9,43 - Brooklyn/Waterkloof - R29,00 R20,00 -Nieuw Muckleneuk - R5,00 R0,00 -Hatfield - R3,50 R0,00 -Centurion - R7,50 R9,43 -Highveld Technopark R9,75 R13,12 R10,80 -Sunnyside R0,00 R11,79 R2,50 -Arcadia - - - -Murrayfield - R15,00 R5,00 -Nelspruit CBD R2,50 R2,50 R0,00 -Polokwane R2,50 R0,00 R1,25 R2,50Bloemfontein CBD R7,50 R7,59 R2,36 R0,00Westdene R2,50 R7,87 R0,00 R4,71Durban CBD - R5,00 R0,00 R7,50Durban Berea - R7,50 R5,00 R2,50 For definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.
Rode’s Report 2014:4 Office rentals 30
Table 5.3 (continued) Standard deviation of market rental rates for office buildings
Quarter 2014:3 Grade A+ Grade A Grade B Grade C
Essex Terrace R22,50 R17,50 R9,43 R8,50 Westway R9,60 R7,50 R0,00 -La Lucia Ridge R16,50 R8,16 R5,00 - Westville R12,50 R8,50 R4,71 R6,24Pinetown R7,50 R7,50 R10,00 R10,00Hillcrest-Kloof (Upper Highway) R7,50 R5,00 R7,50 R10,00 Port Elizabeth CBD - R5,00 R0,00 R1,50Greenacres : Parks - - - - Greenacres: Single - - - - Walmer Park 1, 2 & 3 - - - - South End - - - - Humewood R12,50 R10,00 - -Cape Road R20,00 R12,50 R4,08 - Cape Town CBD R6,56 R21,30 R3,54 R3,54Sea Point - - - - V&A Portswood Ridge R10,00 R20,00 - - Granger Bay R2,50 R5,00 - - Salt River - R5,00 - - Woodstock R2,50 R0,00 R4,08 R2,50Observatory - - - -Mowbray - - R2,50 -Kenilworth (Racecourse) R4,71 R2,36 - - Rondebosch/Newlands R4,08 R9,43 R5,00 -Wynberg - R0,00 R9,23 -Westlake R9,43 R8,92 - -Tokai R4,92 R8,50 - -Claremont Lower* - - - - Claremont Upper R10,77 R9,43 R10,00 R5,00 Hout Bay - R7,50 R7,50 R2,50 Noordhoek (Sun Valley) - - - - Pinelands - R2,50 - -Athlone - - - -Milnerton - - R7,50 -Panorama - - - -Table View / Parklands - - - - Century City R10,80 R10,80 R9,01 - Maitland - - - -Goodwood (N1 City) - - - - Tygerberg Hills R4,00 R5,00 - - Bellville CBD - - R2,36 R4,50 Tyger Valley area R10,80 R7,50 R6,12 R2,50 Durbanville - R2,36 - -Airport - - - -Kuils River - - - - Somerset West Town - - - - Somerset West Mall area - - - - Strand - - - -Gordon’s Bay - - - - George general - - - - Fairview Office park - - - - *Claremont Lower: east of Main RoadFor definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.
Rode’s Report 2014:4 Office rentals 31
Table 5.4Typical rent-free period in months
Average periods on offer in quarter 2014:3 Mean SD Mean SD
Johannesburg CBD 2,0 0,8 Durban CBD 2,3 0,5 Braamfontein 1,8 0,8 Durban Berea 1,5 0,5 Sandton CBD 1,6 2,0 Essex Terrace 0,8 0,2 Dunkeld West 1,7 0,9 Westway 0,8 0,8 Wierda Valley 1,0 - La Lucia Ridge 1,5 0,5 Randburg Ferndale 1,5 0,5 Westville 0,5 - Rivonia 2,0 1,0 Pinetown 2,0 1,0Rosebank 1,0 0,0 Hillcrest-Kloof-Upper Highway 1,2 0,8 Illovo 1,0 0,0 Port Elizabeth 1,7 0,9 Illovo Boulevard 1,0 0,0 Port Elizabeth dec. 1,0 - Chislehurston 1,0 - East London - -Parktown 1,5 0,5 East London dec. - -Richmond/Milpark 1,0 - Cape Town CBD 0,8 0,4 Bedfordview 1,0 0,0 Sea Point 1,0 0,0Bruma 1,0 0,0 V&A Portswood Ridge 1,0 0,0 Meadowbrook 1,0 - Granger Bay 1,0 0,0Woodmead 1,5 0,5 Salt River 1,0 0,0Sunninghill 2,0 1,0 Woodstock 1,0 0,0Bryanston/Epsom 1,7 0,9 Observatory 1,0 0,0Fourways 1,3 0,5 Mowbray 1,0 0,0Houghton 1,5 0,5 Kenilworth (Racecourse) 0,8 0,4 Melrose Arch 0,7 0,5 Westlake 1,0 0,0 Hyde Park 0,7 0,5 Tokai 0,8 0,4 Eastgate/Kramerville 1,7 0,5 Claremont Lower* 0,8 0,4 Ormonde 1,5 0,5 Claremont Upper 0,7 0,5Midrand 1,5 0,5 Hout Bay 1,0 0,0Hendrik Potgieter Corr. 1,5 0,5 Noordhoek (Sun Valley) 1,2 0,4 Pretoria CBD 2,5 0,8 Pinelands 1,0 0,0 Lynnwood Glen 2,0 1,0 Athlone 1,0 - Lynnwood 3,0 - Milnerton 0,7 0,5Lynnwood Manor 2,5 0,5 Panorama 1,0 - Lynnwood Ridge 3,0 - Rondebosch/Newlands 1,0 - Faerie Glen 3,0 - Wynberg 1,0 - Val de Grace 3,0 - Table View / Parklands 1,0 - Menlyn 3,0 - Century City 0,5 0,5 Menlo Park (Brooks St) 2,0 1,0 Maitland 1,0 - Brooklyn/Waterkloof 3,0 - Goodwood (N1 City) 1,0 - Nieuw Muckleneuk 3,0 - Tygerberg Hills / Plattekloof 1,0 0,0 Hatfield 3,0 - Bellville CBD 1,0 0,0Centurion 2,5 0,5 Tyger Valley area 1,0 0,6 Highveld Technopark 2,0 1,0 Durbanville 1,0 - Sunnyside 1,8 0,8 Airport 1,0 -Arcadia 3,0 - Kuils River 1,0 -Murrayfield 3,0 - Somerset West Town 1,0 - Nelspruit CBD 0,8 0,2 Somerset West Mall area 1,0 - Polokwane 1,0 0,0 Strand 1,0 - Bloemfontein CBD 0,7 0,5 Gordon’s Bay 1,0 - Westdene 0,7 0,5 George - -*Claremont Lower: east of Main RoadSD: See Glossary of terms and abbreviations in Annexure 1.
Rode’s Report 2014:4 Office rentals 32
Table 5.5 Market parking rentals
Monthly parking rands per bay per month (excl. VAT)
As in quarter 2014:3Covered reserved parking Under
shade net
Open-air
parking Gr A+ Gr A Gr B Gr C
Johannesburg CBD 750 737 542 412 300 250Braamfontein 600 613 525 475 365 300Sandton CBD 903 745 600 492 413 363Dunkeld West 656 582 444 383 365 276Wierda Valley 667 545 507 425 363 263Randburg Ferndale 505 423 344 288 285 212Rivonia 550 456 394 417 319 235Rosebank 734 610 480 392 380 300Illovo 667 570 450 385 368 304Illovo Boulevard 681 590 490 427 396 310Chislehurston 617 523 465 488 336 255Parktown 525 513 390 350 340 291Richmond/Milpark 377 332 317 308 241 196Bedfordview 600 527 465 398 336 266Bruma 457 495 383 364 292 251Meadowbrook - - - - - -Woodmead 575 480 415 363 336 255Sunninghill 560 489 417 390 325 256Bryanston / Epsom Downs 596 488 436 405 373 269Fourways 595 540 422 347 341 257Houghton 575 513 410 300 344 275Melrose Arch 900 750 675 600 400 300Hyde Park 813 555 436 425 355 285Eastgate/Kramerville - 450 425 350 300 230Ormonde - 490 400 350 300 235Midrand 513 450 390 366 320 246Hendrik Potgieter Corri-dor
475 450 380 300 280 220
Pretoria CBD 560 500 435 - - 300Lynnwood Glen 500 460 415 - 375 250Lynnwood 480 470 540 - 367 266Lynnwood Manor - 480 400 - 350 200Lynnwood Ridge 750 625 525 - 425 375Faerie Glen 600 525 439 - 420 288Val de Grace - 300 300 - 350 200 Menlyn 677 570 519 - 446 432Menlo Park (Brooks St) - 550 415 - 400 290 Brooklyn/Waterkloof 650 600 525 - 438 350Nieuw Muckleneuk 650 550 475 - 425 363Hatfield 515 460 427 - 368 298Centurion 500 513 451 - 397 276Highveld Technopark 540 503 480 - 330 233Sunnyside 700 - 400 350 - 200Arcadia - 575 500 350 400 200Murrayfield - - - - - -
Rode’s Report 2014:4 Office rentals 33
Table 5.5 (continued) Market parking rentals
Monthly parking rands per bay per month (excl. VAT) As in quarter 2014:3Covered reserved parking Under
shade net
Open-air
parkingGr A+ Gr A Gr B Gr C
Nelspruit 425 375 278 220 180 120Polokwane 445 373 300 225 235 165Bloemfontein CBD 325 325 245 225 222 130Westdene 373 353 288 248 233 143 Durban CBD 1.100 850 688 600 450 -Durban Berea 800 625 550 500 350 - Essex Terrace 800 600 538 475 375 350 Westway 725 650 583 500 350 450La Lucia Ridge 725 700 625 550 500 425 Westville 700 600 525 500 450 400Pinetown 700 650 550 500 450 400Hillcrest-Kloof (Upper Highway) 575 550 475 400 375 300
Port Elizabeth CBD - - - - - -Greenacres : Parks 500 400 400 350 - 265 Greenacres: Single 500 450 400 350 - 250 Walmer Park 1, 2 & 3 500 375 300 250 - 250 South End - 450 300 250 - 150 Humewood 475 400 300 - - 225Cape Road 500 450 350 300 300 275 Cape Town CBD 1.150 1.067 1.100 900 650 700 Sea Point - 750 - - 650 500 V&A Portswood Ridge - 1.740 - - 750 650 Granger Bay - 1.100 - - 750 650 Salt River - - 600 - 500 400 Woodstock - - 550 - 500 400Observatory - - 650 - 500 400Mowbray - - 575 - 425 325Kenilworth (Racecourse) 900 600 - - 475 425 Rondebosch/Newlands 1.100 733 - - 500 450Wynberg - - 500 - 450 400Westlake 600 583 - - - 483Tokai 683 - - - - 550Claremont Lower* 750 750 - - 550 450 Claremont Upper 1.090 967 450 - 917 550 Hout Bay - - - - - - Noordhoek (Sun Valley) - - - - - - Pinelands 800 725 - - - 425Athlone - - - - - -Milnerton - - - - - - Panorama - - - - - -Table View / Parklands - - - - - - Century City 833 725 700 - - 550 Maitland - - - - - -Goodwood (N1 City) - - - - - - Tygerberg Hills 650 - - - 450 250 Bellville CBD 600 500 425 - - -
Rode’s Report 2014:4 Office rentals 34
Table 5.5 (continued) Market parking rentals
Monthly parking rands per bay per month (excl. VAT) As in quarter 2014:3 Covered reserved parking Under
shade net
Open-air
parkingGr A+ Gr A Gr B Gr C
Tyger Valley area - 733 565 - 400 313 Durbanville - 700 - - - 250 Airport - - - - - - Kuils River - - - - - - Somerset West Town - - - - - - Somerset West Mall area - - - - - - Strand - - - - - - Gordon’s Bay - - - - - - George general 250 200 200 150 - - Fairview Office Park - - - - - - *Claremont Lower: east of Main Road
Rode’s Report 2014:4 Office rentals 35
Table 5.6 Office rental escalation rates on new leases (%) Average escalation rate on net rentals for quarter 2014:3
Mean Mean Johannesburg CBD 8,8 Westdene 8,5 Braamfontein 8,8 Durban CBD 8,5 Sandton CBD 8,8 Durban Berea 8,5 Dunkeld West 8,8 Essex Terrace 8,5 Wierda Valley 8,9 Westway 8,5 Randburg Ferndale 8,8 La Lucia Ridge 8,7 Rivonia 8,8 Westville 8,7 Rosebank 8,6 Pinetown 8,8 Illovo 8,6 Hillcrest-Kloof (Upper Highway) 9,0 Illovo Boulevard 8,6 Port Elizabeth 7,8 Chislehurston 8,8 Port Elizabeth dec. 8,0 Parktown 8,8 Cape Town CBD 8,3 Richmond/Milpark 9,0 Sea Point 8,5 Bedfordview 9,1 V&A Portswood Ridge 8,0 Bruma 8,9 Granger Bay 8,0 Meadowbrook 9,0 Salt River 8,0 Woodmead 9,0 Woodstock 8,0 Sunninghill 9,0 Observatory 8,0 Bryanston / Epsom Downs 8,6 Mowbray 9,0 Fourways 8,6 Kenilworth (Racecourse) 8,7 Houghton 9,0 Rondebosch/Newlands 9,0 Melrose Arch 8,8 Wynberg 7,5 Hyde Park 8,8 Westlake 8,5 Eastgate/Kramerville 9,0 Tokai 9,0 Ormonde 9,0 Claremont Lower* - Midrand 8,7 Claremont Upper 9,5 Hendrik Potgieter 9,4 Hout Bay 8,0 Pretoria CBD 9,5 Noordhoek (Sun Valley) - Lynnwood Glen 9,0 Pinelands 9,0 Lynnwood 9,5 Athlone - Lynnwood Manor 9,0 Milnerton 8,0 Lynnwood Ridge 9,0 Panorama - Faerie Glen 9,0 Table View / Parklands - Val de Grace 9,0 Century City 8,8 Menlyn 9,5 Maitland 8,0 Menlo Park (Brooks St) 9,0 Goodwood (N1 City) 8,0 Brooklyn/Waterkloof 9,0 Tygerberg Hills/Plattekloof 8,0 Nieuw Muckleneuk 9,0 Bellville CBD 8,0 Hatfield 9,0 Tyger Valley area 8,2 Centurion 8,5 Durbanville 9,0 Highveld Technopark 9,0 Airport - Sunnyside 9,0 Kuils River - Arcadia 9,0 Somerset West Town - Murrayfield 9,0 Somerset West Mall area - Nelspruit 8,0 Strand - Polokwane 9,0 Gordon’s Bay - Bloemfontein CBD 8,0 George 8,0 *Claremont Lower: east of Main Road
Rode’s Report 2014:4 Office rentals 36
Table 5.7 Escalation rates on operating costs (%)
Node 2014:3 Node 2014:3 Johannesburg CBD 9,0 Durban CBD 9,0 Braamfontein 9,4 Durban Berea 9,0 Sandton CBD 9,5 Essex Terrace 9,0 Dunkeld West 9,0 Westway 8,5 Wierda Valley 9,3 La Lucia 9,0 Randburg Ferndale 9,0 Westville 9,0 Rivonia 9,0 Pinetown 9,0 Rosebank 9,0 Hillcrest-Kloof (Upper Highway) 9,0 Illovo 8,8 Empangeni - Illovo Boulevard 8,8 Richards Bay - Chislehurston 9,0 Port Elizabeth CBD 7,2 Parktown 9,0 Port Elizabeth dec 8,0 Richmond/Milpark 9,3 Cape Town CBD 9,0 Bedfordview 9,1 Sea Point - Bruma 9,0 V&A Portswood Ridge - Meadowbrook 9,3 Granger Bay - Woodmead 9,3 Salt River - Sunninghill 9,3 Woodstock - Bryanston/Epsom 8,8 Observatory 8,0 Fourways 8,8 Mowbray - Houghton 9,3 Kenilworth (Racecourse) 8,7 Melrose Arch 9,0 Westlake 9,0 Hyde Park 9,0 Tokai - Eastgate/Kramerville 9,3 Claremont Lower* 9,0 Ormonde 9,3 Claremont Upper 9,0 Midrand 8,80 Hout Bay - Hendrik Potgieter Corridor 9,3 Noordhoek (Sun Valley) 9,0 Pretoria CBD 10,1 Pinelands - Lynnwood Glen 11,0 Athlone - Lynnwood 10,0 Milnerton 9,0 Lynnwood Manor 10,0 Panorama - Lynnwood Ridge 10,0 Rondebosch/Newlands - Faerie Glen 10,0 Wynberg - Val de Grace 10,0 Table View / Parklands - Menlyn 10,0 Century City - Menlo Park (Brooks St) 10,0 Maitland - Brooklyn/Waterkloof 10,0 Goodwood (N1 City) - Nieuw Muckleneuk 10,0 Tygerberg Hills 8,0 Hatfield 10,0 Bellville CBD - Centurion 11,0 Tyger Valley area 8,5 Highveld Technopark 9,7 Durbanville 9,0 Sunnyside 10,0 Airport - Arcadia 10,0 Kuils River - Murrayfield 10,0 Somerset West Town - Nelspruit 11,5 Somerset West Mall area - Polokwane 10,0 Strand - Bloemfontein 10,2 Gordon's Bay - Westdene 11,0 George 8,0 *Claremont Lower: east of Main Road
Rode’s Report 2014:4 Office demand and vacancies 37
Chapter 6: Office demand and vacancies
See-thru office buildings are proliferating in the suburbs
Written by John S. Lottering & Erwin Rode
See-thru is a term invented by the Ameri-cans in the early 1980s when the US was afflicted by a high office-vacancy rate – empty buildings with glass facades, allow-ing passers-by to see straight through the walls.
Back to the future, and vacancies in both Pretoria and Johannesburg decentralized are also rising ominously. This is due to a combination of weak demand and strong growth in office developments since 2012. As a result, overall vacancy rates in these regions are now well above their “natural” rates. You could say these office areas are
the victims of their own success.
The notion of a ‘natural vacancy rate’ (NVR) is borrowed from the theory of the non-accelerating inflation rate of unem-ployment (NAIRU), a widely used concept in economics. NAIRU is defined as the rate of unemployment at which inflation is nei-ther accelerating nor decelerating. Similar-ly, the NVR is seen as the vacancy rate at which rents are stable. In other words, when actual vacancy rates drop below the NVR the growth in rentals accelerates, while a vacancy rate above the NVR means decelerating, if not downright declining, rentals.
Table 6.1 Estimated natural vacancy rate vs current actual vacancy rate
Natural vacancy rate Current vacancy rate
(2014Q3) Johannesburg dec. 8,1%* 9,9%
Pretoria dec. 7,3%* 11,3%
Durban dec. 5,4%* 5,8% Cape Town dec. 5,6%* 5,8% Johannesburg CBD 9,9%* 13,5%
Pretoria CBD 4,5%* 9,0%
Durban CBD 10,7%* 14,0%
Cape Town CBD 8,8%* 11,7%
*Significant at 5% level
Rode’s Report 2014:4 Office demand and vacancies 38
Using annual data on real rental growth and vacancy rates (covering the period 1990 to 2004) Sanderson et al (2006)1 es-timated NVRs for 36 cities globally using the following equation:
ΔRentst= α - βVRt
Where:
ΔRentst is the change in real rents,
α is the rental growth when there isno vacant space (when VR (vacancyrate) = 0),
β is the amount by which rents fallwhen the vacancy rate increases byone percentage point,
VRt is the vacancy rate.
When supply and demand are in balance, rents will be stable (that is, showing no growth) and vacancy rates will be given by:
VR=α/β
This is defined as the natural vacancy rate – the vacancy rate where the market is inequilibrium.
Sanderson et al further note that because the property market is characterised by frictions that tend to impede the process of market clearing,2 vacancy rates will not be zero in equilibrium. This is so because it takes time for tenants to find a property as well as for landlords to find occupiers.
Using annual data on real rental growth and vacancy rates 3 (covering the period
1 Sanderson, B. et al (2006). National Vacancy Rates in Global Office Markets, Journal of Property Investment and Finance, 24 (6) 2 In economics, market clearing is a simplifying assumption made by new classical economics that in any given market, prices and resulting volumes always adjust up or down to such an extent that quantity supplied at the market-clearing price equals the quantity demanded at the market-clearing price.3 Data on nominal grade-A market rentals was sourced from Rode’s database, prime (grades A & B combined) vacancy rates from Sapoa and an index of building costs (to deflate nominal rentals) from the Bureau for Economic Research, University of Stellen-bosch.
1980 to 2013), and employing the same methodology as Sanderson et al, we esti-mated (using econometric modelling) NVRs for the decentralized office markets of Jo-hannesburg, Pretoria, Durban and Cape Town, as well as for their respective CBDs. Our findings are summarized in Table 6.1.
Evident from the table is how current va-cancy rates in Johannesburg and Pretoria decentralized are well above their NVRs, which implies the (strong) possibility of de-celerating growth in rentals in these re-gions. Since about 2012, office vacancy rates in Cape Town and Durban decentral-ized have been able to move south, which explains why their current vacancy rates are close to their natural levels.
Sanderson et al (2006) also make the in-teresting point that differences in NVRs across markets can be explained by char-acteristics of demand and supply. They note that the two main factors affecting demand elasticity are locational preference and search costs with, for example, the stronger the locational preference the more inelastic the demand and the lower the NVR. As for supply, it is affected mainly by landlords’ willingness to move rents and the speed at which stock can be added to the market. For example, the harder it is to add stock to the market, the more inelastic the supply and the higher the NVR.
The stronger locational preference for the decentralized office areas instead of the old metropolitan CBDs would explain why the NVRs of the decentralized regions are gen-erally lower than those of the CBDs. The fact that supply is more elastic in the de-centralized areas 4 relative to the CBDs, might also explain why the NVRs in the de-centralized office areas are lower (see Ta-ble 6.1).
In the rest of the chapter we look at cur-rent trends in office vacancy rates.
4 Because of the shorter gestation period of new buildings
Rode’s Report 2014:4 Office demand and vacancies 39
0
5
10
15
20
25
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Sandton & environsRosebankParktownRivonia
Vac
anc
y (%
)
Decentralized Johannesburg office vacanciesGrade A+, A and B combined
Source of data: Rode's Time Series; Sapoa
0
4
8
12
16
20
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
BryanstonIllovoMidrandRandburg
Vac
anc
y (%
)
Decentralized Johannesburg office vacanciesGrade A+, A and B combined
Source of data: Rode's Time Series; Sapoa
0
4
8
12
16
20
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
BrooklynPretoria Eastern SuburbsCenturionHatfield/ Hillcrest
Vac
ancy
(%
)
Decentralized Pretoria office vacanciesGrade A+, A and B combined
Source of data: Rode's Time Series; Sapoa
-4
-3
-2
-1
0
1
2
3
4
-20
-15
-10
-5
0
5
10
15
20
03 04 05 06 07 08 09 10 11 12 13 14
Office demandCoincident business cycle indicator
r²=0,6 (1-qtr lag)
Growth in office demandvs
Growth in the Composite Coincident Business Cycle Indicator
Source of data: SAPOA; SARB; Rode calculations
Gro
wth
in
office
dem
and
(%;
y-o-
y)
Grow
thin
businesscycle
indicator(%
; y-o-y)
Nationally, during the third quarter of 2014, decentralized vacancy rates again edged up from their previous-quarter lev-els. The fact that the demand for office space is following the business cycle south is of course a sufficient explanation for the rise in suburban vacancy rates.
The corresponding graph shows the robust relationship between changes in office de-mand and changes in the SARB Composite Coincident Business Cycle Indicator, with the latter explaining as much as 60% of the change in the former (r² = 0,6 when lagged by one quarter).
A look within Johannesburg decentralized shows an uptick in vacancy rates in Sandton from 13% in the previous quarter to 15% in the reporting quarter. As shown by the bars in the graph which follows, grades A & B vacancy rates in Sandton are now at previous historic highs. Similar to Sandton, office vacancy rates in Rosebank (9%), Randburg (12%) and Illovo (10%) also increased somewhat during the report-ing quarter.
In the nodes of Rivonia (20%), Parktown (9%), Bryanston (7%) and Midrand (6%), vacancy rates at least managed to stay at their previous-quarter levels.
Good news in Pretoria decentralized is that in most of its office nodes vacancy rates were actually slightly lower when compared to their previous-quarter levels. The only exception, which stands out very clearly, is the Highveld Technopark & Extensions node where the vacancy rate jumped by as much as 10 percentage points to 19%. Note from the corresponding graph how vacancy rates in most of the Pretoria de-centralized office nodes have in recent years moved past their previous historic highs.
The premier Durban decentralized office node of La Lucia / Umhlanga remains prac-tically fully let with its very low vacancy rate of 3%. This is followed by Westville, where vacancy rates are currently standing at 6% and the Berea with the much higher vacancy rate of 16%. It is evident that the erea has progressively fallen out of favour
Rode’s Report 2014:4 Office demand and vacancies 40
0
4
8
12
16
20
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
WestvilleBereaLa Lucia/ Umhlanga
Vac
ancy
(%
)
Decentralized Durban office vacanciesGrade A+, A and B combined
Source of data: Rode's Time Series; Sapoa
0
5
10
15
20
25
30
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
PinelandsRondebosch/NewlandsClaremontCentury CityV&A Waterfront
Vac
anc
y (%
)
Decentralized Cape Town office vacanciesGrade A+, A and B combined
Source of data: Rode's Time Series; Sapoa
0
10
20
30
40
50
III IV I II III IV I II III IV I II III IV I II III IV I II III
2009 2010 2011 2012 2013 2014
GreenacresNewton ParkWalmer/Fairview
Vac
ancy
(%
)Decentralized Port Elizabeth office vacancies
Grade A+, A and B combined
Source of data: Rode's Time Series; Sapoa
since 2009. Presumably this can be as-cribed to the decision-takers’ homes having migrated to the new north.
In the reporting quarter, vacancy rates in Cape Town decentralized ranged between a high of only 7% in Claremont and low of only 1% in the V&A Waterfront.
Capitol Commercial Properties surveys the Tyger Valley area (north of the N1). Ac-cording to its figures (see www.propertysite.co.za ), the vacancy rates for grades A+, A and B properties as in November 2014 were 7%, 6% and 6% respectively.
The Port Elizabeth decentralized office node of Greenacres was, during the reporting quarter, the only node where vacancy rates increased when compared to the previous quarter. In Newton Park, vacancy rates remained the same, while in Walmer/Fairview they managed to de-crease ever so slightly.
This chapter is concluded by the office-vacancy factors and office-stock tables sourced from Sapoa.
Rode’s Report 2014:4 Office demand and vacancies 41
Table 6.2 Sapoa Office vacancy factors(%)
Grades A+, A & B September
2013 December
2013 March 2014
June 2014
September2014
JohannesburgBedfordviewGrade A+ - - - - -Grade A 11,8 10,6 10,9 9,4 8,9Grade B 17,2 17,2 16,3 14,7 16,0Total 13,7 12,9 12,8 11,2 11,3 BraamfonteinGrade A+ - - - - -Grade A 15,7 17,9 17,7 16,1 17,1Grade B 15,5 13,4 14,1 13,4 6,7Total 15,7 16,0 16,2 15,0 13,1 Bryanston / Epsom Downs Grade A+ - - - - -Grade A 7,5 8,7 6,9 7,7 7,5Grade B 9,2 6,8 3,1 5,9 5,9Total 7,6 8,5 6,7 7,6 7,4 Bruma Grade A+ - - - - -Grade A 4,7 15,4 5,2 5,2 3,3Grade B 21,0 35,6 31,1 31,9 29,6Total 14,7 27,9 20,9 21,3 20,1 CBD JohannesburgGrade A+ 0,0 0,0 0,0 0,0 -Grade A 0,0 0,0 1,0 0,0 2,9Grade B 24,5 21,6 18,6 21,4 20,8Total 14,5 11,4 11,7 13,5 13,5 Constantia Kloof BasinGrade A+ - - - - -Grade A 3,8 4,7 4,6 11,7 11,7Grade B 9,4 8,7 11,4 11,9 12,5Total 4,2 4,9 5,1 11,7 11,8 Fourways Grade A+ - 0,0 0,0 0,0 0,0Grade A 17,2 15,6 15,6 14,6 18,8Grade B 0,0 0,0 0,0 0,0 0,0Total 16,5 14,0 14,0 13,1 16,9 Houghton/KillarneyGrade A+ - - - - -Grade A 3,5 1,9 3,8 4,5 6,9Grade B 0,8 - 0,0 - 100,0 Total 2,8 1,9 3,7 4,5 8,8 Hyde Park /Dunkeld Grade A+ - - - - -Grade A 24,6 28,3 20,4 22,9 17,7Grade B 9,3 13,2 6,7 5,8 6,7Total 14,7 18,6 11,6 11,2 10,2 Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 42
Table 6.2 (continued) Sapoa office vacancy factors (%)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
Illovo Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 1,4 1,6 1,3 10,6 11,2Grade B 6,2 5,5 7,5 5,7 4,4 Total 2,0 2,1 2,0 9,4 9,7 Melrose/Waverley Grade A+ 3,2 3,2 1,4 4,7 4,6Grade A 1,8 1,2 3,1 3,5 2,4 Grade B 2,1 3,2 3,0 3,0 3,0Total 2,7 2,7 2,0 4,2 4,0
Midrand Grade A+ 1,8 1,8 1,8 1,8 1,8Grade A 6,7 6,8 6,3 6,3 6,3 Grade B 5,1 7,3 9,9 9,9 9,9Total 4,7 5,6 6,5 6,5 6,5 MilparkGrade A+ - - - - -Grade A 0,0 0,0 0,0 0,0 0,0 Grade B 7,1 7,3 5,3 3,2 3,7 Total 6,2 6,3 4,6 2,8 3,2 MorningsideGrade A+ - - - - -Grade A 7,7 4,9 1,7 12,1 6,5
Grade B - - 40,9 40,9 13,1
Total 7,7 4,9 4,2 6,9 ParktownGrade A+ - - - - -Grade A 3,4 3,7 1,2 4,8 4,7 Grade B 11,6 14,3 12,0 11,7 11,9 Total 8,7 10,7 8,4 9,3 9,2 Randburg Grade A+ - - - - -Grade A 5,4 7,9 8,7 8,7 7,4 Grade B 15,3 10,1 10,1 10,1 12,8Total 14,1 9,8 9,9 9,9 12,1 RivoniaGrade A+ Grade A 18,2 18,3 18,3 15,3 15,2 Grade B 16,3 19,8 20,1 21,8 21,7 Total 16,9 19,4 19,6 19,9 19,7 RosebankGrade A+ - - - - 0,0Grade A 7,8 6,2 2,8 4,0 9,1Grade B 3,7 4,1 2,8 5,5 11,7 Total 5,6 5,1 2,8 4,6 8,6 Sandton & Environs Grade A+ 2,6 10,6 13,6 12,7 7,5Grade A 9,5 15,9 17,1 15,8 20,7 Grade B 12,3 7,0 5,0 5,0 7,4Total 8,5 13,0 14,2 13,2 15,0
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 43
Table 6.2 (continued) Sapoa office vacancy factors (%)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
SunninghillGrade A+ - - - - -Grade A 9,9 9,9 11,3 12,2 12,0Grade B - - - - 1,9Total 9,9 9,9 11,3 12,2 8,3 Woodmead Grade A+ - - - - -Grade A 6,7 6,6 4,8 4,5 10,1Grade B 28,4 28,4 28,4 28,4 28,4Total 7,8 7,6 5,9 5,6 11,0 Cresta/Blackheath to Randpark Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 6,8 5,8 2,7 2,7 2,7Grade B 24,7 19,3 19,8 14,5 12,2Total 7,6 6,1 5,2 4,0 3,5 Greenstone/Edenvale/ Modderfontein Grade A+ - - - - 0,0Grade A 1,7 4,9 4,9 2,2 0,0Grade B 43,2 46,0 46,0 46,0 -Total 13,0 15,9 15,9 14,0 2,2 Newtown Grade A+ - - - - -Grade A 0,0 0,0 0,0 0,0 0,0Grade B 44,5 42,5 42,5 43,7 43,7Total 20,1 19,2 19,2 19,7 18,7
Cape Town Bellville (incl. Tyger V)Grade A+ - - - - -Grade A 6,9 7,5 7,6 6,6 5,7Grade B 13,1 12,5 10,2 11,1 11,1Total 8,7 8,9 8,4 8,0 7,4 CBD Cape Town Grade A+ 0,0 0,0 - 36,5 36,5Grade A 11,3 10,6 6,7 7,2 10,0Grade B 13,7 13,7 11,8 11,9 10,2Total 12,5 12,3 10,1 11,8 11,7 Century CityGrade A+ 0,0 0,0 0,0 0,0 0,0Grade A 5,9 5,7 7,5 6,0 6,6Grade B 7,4 7,4 2,9 0,2 0,8Total 5,9 5,7 6,5 5,0 5,6 ClaremontGrade A+ - - - - -Grade A 4,3 3,8 16,8 1,7 1,7Grade B 16,7 16,8 4,9 14,1 12,1Total 9,8 9,6 10,9 8,2 7,1 Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 44
Table 6.2 (continued) Sapoa Office vacancy factors(%)
Grades A+, A & B September
2013 December
2013 March 2014
June 2014
September2014
Pinelands Grade A+ - - - - -Grade A 3,9 3,2 1,3 1,3 1,6Grade B 3,8 3,2 13,9 13,9 12,0Total 3,8 3,2 3,2 3,2 3,2 Rondebosch/NewlandsGrade A+ - - - - -Grade A 6,2 9,7 10,0 9,2 8,2Grade B 3,2 1,9 1,9 1,3 2,5Total 5,3 7,5 7,7 7,0 6,6 V&A Waterfront Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 1,8 6,0 1,8 1,5 0,9Grade B 35,4 33,6 0,0 0,0 0,0Total 3,7 5,6 1,3 1,1 0,6
Durban Berea
Grade A+ Grade A 8,1 7,3 7,9 8,2 7,3Grade B 14,8 13,5 20,0 25,7 25,7Total 11,1 10,1 13,4 16,1 15,7 BallitoGrade A+ 0,0 0,0 0,0 0,0 0,0Grade A 19,2 14,6 14,7 15,0 12,4Grade B 7,4 8,4 7,3 7,0 4,2Total 13,8 11,3 11,0 11,1 8,7 Hillcrest/GillitsGrade A+ 9,9 9,9 5,2 7,6 9,2Grade A 2,6 0,2 0,3 0,3 5,7Grade B 4,3 3,7 3,7 3,7 2,7Total 4,4 2,9 2,0 2,5 5,5 CBD Durban Grade A+ - - - - -Grade A 20,5 20,1 20,1 20,1 20,1Grade B 12,6 12,8 12,8 12,8 8,5Total 16,0 16,0 16,0 16,0 14,0 Umhlanga / La LuciaGrade A+ 2,1 2,1 2,1 2,1 2,1Grade A 3,0 3,0 3,0 3,0 3,0Grade B 3,3 3,3 3,3 3,3 3,7Total 3,0 3,0 3,0 3,0 3,0 WestvilleGrade A+ - - - - -Grade A 3,5 5,2 4,2 6,4 6,7Grade B 9,8 7,1 4,4 5,6 4,9Total 7,0 6,3 4,3 6,0 5,7
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 45
Table 6.2 (continued) Sapoa office vacancy factors (%)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
Pretoria Arcadia
Grade A+ - - - - -Grade A 10,9 11,2 6,0 4,8 5,4Grade B 1,5 3,5 3,6 6,5 6,5Total 8,1 8,4 5,1 5,4 4,0 BrooklynGrade A+ - - - - -Grade A 8,0 6,5 7,3 9,9 9,2Grade B 7,8 4,6 4,6 4,2 5,8Total 8,0 6,1 6,7 8,2 8,3 CBD PretoriaGrade A+ - - - - -Grade A 1,8 1,8 1,8 1,3 1,3Grade B 9,4 8,9 13,7 17,8 19,7Total 7,6 7,2 10,8 12,4 9,0 CenturionGrade A+ - - - - -Grade A 8,0 8,3 7,6 10,3 9,8Grade B 20,0 21,1 21,9 21,3 19,8Total 14,1 14,6 15,0 16,2 15,1
Hatfield/Hillcrest Grade A+ - - - - -Grade A 11,7 12,1 8,5 11,1 9,9Grade B 14,3 10,7 9,5 13,3 12,7Total 13,1 11,3 9,0 12,3 11,5 Highveld Technopark Grade A+ - - - - -Grade A 5,2 5,0 14,6 8,4 21,5 Grade B 10,3 15,0 12,2 11,7 12,0Total 6,5 7,7 13,9 9,3 19,0 MenlynGrade A+ - - - - -Grade A 6,9 5,5 6,7 10,8 11,0Grade B 11,4 8,7 7,4 9,1 7,5Total 8,1 6,3 6,9 10,3 9,7 Pretoria Eastern Suburbs Grade A+ - - - - -Grade A 10,9 9,7 12,0 10,3 8,8Grade B 12,2 11,9 12,1 12,1 12,0Total 11,4 10,5 12,0 11,1 10,3 Lynnwood Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 4,8 7,9 7,7 9,2 9,2Grade B 10,8 5,4 5,1 4,5 5,4Total 7,3 5,4 5,3 5,5 5,6
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 46
Table 6.2 (continued) Sapoa office vacancy factors (%)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
Port Elizabeth Greenacres Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 0,0 1,7 1,7 1,7 3,1Grade B 3,3 18,1 18,1 18,8 23,8
Total 2,7 14,7 14,7 15,3 19,3
Newton Park Grade A+ 4,8 4,8 4,8 4,8 4,8Grade A 0,0 0,0 0,0 0,0 0,0Grade B 11,3 11,3 33,5 33,5 33,5
Total 5,1 5,1 9,4 9,4 9,4 Central / Park Drive Grade A+ - - - - -Grade A - - - - -Grade B 19,3 30,6 30,3 31,1 30,3Total 19,3 30,6 30,3 31,1 30,3 Walmer/FairviewGrade A+ - - - - -Grade A 25,5 25,5 25,5 25,5 25,5Grade B 20,8 20,8 13,5 24,7 13,2Total 24,5 24,5 23,0 25,4 22,9
Johannesburg central Grade A+ 0,0 0,0 0,0 0,0 -Grade A 4,4 5,0 5,9 5,0 6,7Grade B 23,1 20,0 17,9 20,2 18,9Total 14,7 12,4 12,6 13,8 13,4 Johannesburg decentralized Grade A+ 2,1 6,3 7,8 7,9 4,6Grade A 7,5 8,9 8,4 9,3 11,0Grade B 11,6 11,5 10,7 10,8 11,3Total 8,2 9,4 9,0 9,6 10,3 Pretoria decentralizedGrade A+ 0,0 0,0 0,0 0,0 0,0Grade A 8,1 7,7 9,4 9,3 12,3Grade B 12,7 11,8 11,3 12,0 11,7Total 9,7 9,2 10,1 10,3 11,3 Durban decentralized Grade A+ 4,6 4,6 2,8 3,7 4,4Grade A 4,3 4,3 4,2 4,7 4,7Grade B 9,4 7,6 7,2 8,9 8,5Total 5,9 5,3 5,0 6,0 5,8 Cape Town decentralized Grade A+ 0,0 0,0 1,5 0,0 0,0Grade A 5,6 6,0 6,6 5,0 4,8Grade B 11,9 11,5 7,8 9,6 9,2Total 6,8 7,0 6,8 6,0 5,8 Source of data: Sapoa
Johannesburg
Rode’s Report 2014:4 Office demand and vacancies 47
Table 6.2 (continued) Sapoa office vacancy factors (%)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
National summaries National decentralized Grade A+ 2,0 5,7 7,2 7,3 4,3Grade A 7,2 8,0 8,2 8,5 10,1Grade B 11,7 11,5 10,6 11,1 11,3Total 8,3 8,9 8,9 9,2 9,9 National CBDs Grade A+ 0,0 0,0 0,0 5,9 6,8Grade A 7,9 8,1 7,8 7,2 9,0Grade B 17,9 15,7 15,2 17,2 15,8Total 14,8 13,5 13,0 14,7 13,8
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 48
Table 6.3 Sapoa office stock (m²)
Grades A+, A & B
September 2013
December 2013
March 2014
June 2014
September 2014
Johannesburg Bedfordview
Grade A+
Grade A 134.857 133.204 133.204 133.204 139.963
Grade B 69.794 69.794 69.794 69.794 69.794
Total 204.651 202.998 202.998 202.998 209.757 Braamfontein
Grade A+
Grade A 226.121 226.121 226.121 226.121 226.121Grade B 163.438 163.438 163.438 163.438 139.838
Total 389.559 389.559 389.559 389.559 365.959
Bryanston / Epsom Downs
Grade A+
Grade A 517.859 532.749 533.984 533.984 533.984Grade B 30.578 35.361 34.984 34.984 34.984
Total 548.437 568.110 568.968 568.968 568.968 Bruma
Grade A+
Grade A 33.664 33.664 33.664 33.664 30.164Grade B 54.458 54.458 51.701 51.701 52.741
Total 88.122 88.122 85.365 85.365 82.905 CBD Johannesburg
Grade A+ 24.000 24.000 20.000 44.000Grade A 588.166 588.166 548.166 507.379 612.166Grade B 882.798 680.410 886.798 948.201 887.414
Total 1.494.964 1.292.576 1.454.964 1.499.580 1.499.580 Constantia Kloof Basin
Grade A+
Grade A 289.178 289.178 290.795 312.795 312.795Grade B 21.743 21.743 21.743 21.743 21.743
Total 310.921 310.921 312.538 334.538 334.538 Fourways
Grade A+ 10.000 10.000 10.000 10.000Grade A 144.526 144526 144.526 144.526 144.526Grade B 6.500 6.500 6.500 6.500 6.500
Total 151.026 161.026 161.026 161.026 161.026 Houghton/Killarney
Grade A+
Grade A 83.398 105.008 102.908 105.008 104.863Grade B 31.700 2.100 2.230
Total 115.098 105.008 105.008 105.008 107.093
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 49
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September 2014
Hyde Park / Dunkeld
Grade A+
Grade A 36.170 37.570 37.570 34.270 34.367
Grade B 66.178 66.178 66.178 74.533 74.533
Total 102.348 103.748 103.748 108.803 108.900
Illovo
Grade A+ 10.300 10.300 10.300 10.300 10.300
Grade A 164.655 164.655 164.655 165.782 165.782
Grade B 27.164 27.164 27.164 27.164 27.164
Total 202.119 202.119 202.119 203.246 203.246
Melrose/Waverley
Grade A+ 92.000 92.000 92.000 92.000 116.000
Grade A 33.878 33.878 33.878 33.878 33.878
Grade B 19.697 19.697 19.697 19.697 16.697
Total 145.575 145.575 145.575 145.575 166.575
Midrand
Grade A+ 167.404 167.404 167.404 167.404 167.404
Grade A 193.733 221.046 221.046 221.046 221.046
Grade B 224.483 236.992 236.992 236.992 236.992
Total 585.620 625.442 625.442 625.442 625.442
Milpark
Grade A+
Grade A 27.900 27.900 27.900 27.900 27.900
Grade B 175.526 175.526 175.526 175.526 175.526
Total 203.426 203.426 203.426 203.426 203.426
Morningside
Grade A+
Grade A 80.256 66.056 64.925 77.425 64.925
Grade B 4.400 4.400 4.400
Total 80.256 66.056 69.325 81.825 69.325
Parktown
Grade A+
Grade A 122.176 116.791 113.091 116.791 125.876
Grade B 217.880 223.265 223.265 223.265 214.180
Total 340.056 340.056 336.356 340.056 340.056
Randburg
Grade A+
Grade A 52.167 52.167 52.167 52.167 52.167
Grade B 347.060 338.769 338.769 338.769 345.269
Total 399.227 390.936 390.936 390.936 397.436
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 50
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September 2014
Rivonia
Grade A+
Grade A 83.391 83.391 83.391 83.391 83.391
Grade B 191.851 191.851 191.901 192.603 192.603
Total 275.242 275.242 275.292 275.994 275.994
Rosebank
Grade A+ 67.000
Grade A 132.673 132.673 199.673 207.449 137.883
Grade B 144.949 151.612 151.612 153.112 168.391
Total 277.622 284.285 351.285 360.561 373.274
Sandton & Environs Grade A+ 329.921 381.421 403.421 443.421 446.071
Grade A 928.172 843.546 844.346 836.346 846.354
Grade B 286.615 252.909 249.757 249.757 241.080
Total 1.544.708 1.477.876 1.497.524 1.529.524 1.533.505
Sunninghill
Grade A+
Grade A 346.059 341.415 359.044 359.653 222.543
Grade B 126.849
Total 346.059 341.415 359.044 359.653 349.392
Woodmead
Grade A+
Grade A 356.299 356.299 358.070 384.773 358.341
Grade B 17.800 17.800 17.800 17.800 17.800
Total 374.099 374.099 375.870 402.573 376.141
Cresta/Blackheath to Rand Park
Grade A+ 75.000 75.000 75.000 75.000 75.000
Grade A 51.999 51.999 51.999 51.999 51.999
Grade B 36.330 36.330 35.537 35.537 35.537
Total 163.329 163.329 162.536 162.536 162.536
Green-stone/Edenvale/ Grade A+ 16.400
Grade A 51.908 52.655 52.655 52.665 36.255
Grade B 19.367 19.367 19.367 19.367
Total 71.275 72.022 72.022 72.032 52.655
Newtown
Grade A+
Grade A 61.859 61.859 61.859 61.859 61.859
Grade B 50.900 50.900 50.900 50.900 50.900
Total 112.759 112.759 112.759 112.759 112.759
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 51
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September 2014
Cape Town Bellville (incl. Tyger Valley)
Grade A+
Grade A 378.638 378.638 366.263 366.263 369.763
Grade B 148.148 148.148 162.441 162.441 162.441
Total 526.786 526.786 528.704 528.704 532.204
CBD Cape Town
Grade A+ 12.500 12.500 52.000 52.000
Grade A 318.668 318.668 257.472 300.554 313.054
Grade B 473.861 473.861 547.557 515.535 515.535
Total 805.029 805.029 805.029 868.089 880.589
Century City
Grade A+ 7.000 7.000 7.000 7.000 7.000
Grade A 222.867 230.312 211.618 222.181 225.394
Grade B 28.969 28.969 47.663 36.563 39.563
Total 258.836 266.281 266.281 265.744 271.957
Claremont
Grade A+
Grade A 58.036 58.036 50.036 50.036 50.036
Grade B 46.586 46.586 54.586 54.586 54.586
Total 104.622 104.622 104.622 104.622 104.622
Pinelands
Grade A+
Grade A 208.468 208.468 194.475 194.475 187.475
Grade B 19.957 19.957 33.950 33.950 33.950
Total 228.425 228.425 228.425 228.425 221.425
Rondebosch/ Newlands
Grade A+
Grade A 70.254 70.254 70.254 70.254 70.254
Grade B 28.077 28.077 28.077 28.077 28.077
Total 98.331 98.331 98.331 98.331 98.331
V&A Waterfront
Grade A+ 34.500 34.500 18.000 18.000 18.000
Grade A 39.071 39.071 65.055 65.055 65.055
Grade B 6.298 6.298 6.298 6.298 6.298
Total 79.869 79.869 89.353 89.353 89.353
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 52
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
Durban Berea
Grade A+
Grade A 39.999 39.999 39.999 39.999 39.999
Grade B 33.397 33.303 33.303 33.303 33.303
Total 73.396 73.302 73.302 73.302 73.302
Ballito
Grade A+ 3.632 3.632 3.632 3.632 3.632
Grade A 18.141 18.441 18.441 18.341 18.341
Grade B 7.496 7.496 7.496 7.796 7.796
Total 29.269 29.569 29.569 29.769 29.769
Hillcrest/Gillits
Grade A+ 5.467 5.467 5.467 5.467 5.467
Grade A 16.548 16.548 16.548 16.548 15.148
Grade B 6.402 6.402 6.402 6.402 6.402
Total 28.417 28.417 28.417 28.417 27.896
CBD Durban
Grade A+
Grade A 151.063 151.063 151.063 151.063 163.562
Grade B 192.256 192.256 192.256 192.256 179.757
Total 343.319 343.319 343.319 343.319 343.319
Umhlanga / La Lucia
Grade A+ 4.706 4.706 4.706 4.706 4.706
Grade A 239.710 239.710 239.710 239.710 242.610
Grade B 28.652 28.652 28.652 28.652 25.752
Total 273.068 273.068 273.068 273.068 273.068
Westville
Grade A+
Grade A 84.894 84.394 84.394 83.519 84.394
Grade B 105.305 105.492 105.492 105.492 105.492
Total 190.199 189.886 189.886 189.011 189.886
Arcadia
Grade A+
Grade A 173.639 156.526 156.530 156.530 156.530
Grade B 74.870 92.783 92.820 93.540 93.540
Total 248.509 249.309 249.350 250.070 365.820
Brooklyn
Grade A+
Grade A 181.702 182.602 183.470 168.020 175.520
Grade B 53.555 53.555 54.390 72.224 64.724
Total 235.257 236.157 237.860 240.244 240.244
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 53
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September2014
Pretoria CBD Pretoria
Grade A+
Grade A 97.467 97.467 97.480 134.580 134.580
Grade B 297.790 303.790 303.830 275.052 275.052
Total 395.257 401.257 401.310 409.632 619.932
Centurion
Grade A+
Grade A 203.849 215.983 202.470 195.740 201.820
Grade B 210.073 209.335 218.640 223.130 223.130
Total 413.922 425.318 421.110 418.870 424.950
Hatfield/Hillcrest
Grade A+
Grade A 122.082 119.636 118.330 118.330 118.330
Grade B 153.984 156.484 156.540 156.690 156.690
Total 276.066 276.120 274.870 275.020 275.020
Highveld Technopark
Grade A+
Grade A 323.568 332.068 328.700 328.700 383.734
Grade B 120.535 122.489 126.870 126.870 117.640
Total 444.103 454.557 455.570 455.570 501.374
Menlyn
Grade A+
Grade A 235.440 246.704 228.730 228.048 228.048
Grade B 89.786 89.896 111.920 117.320 117.320
Total 325.226 336.600 340.650 345.368 351.418
Pretoria Eastern Suburbs
Grade A+
Grade A 220.793 219.743 151.520 151.570 153.272
Grade B 138.349 138.349 138.390 139.550 139.550
Total 359.142 358.092 289.910 291.120 292.822
Lynnwood
Grade A+ 30.400 30.400 30.400 30.400 30.400
Grade A 70.819 70.030 72.560 74.271 74.271
Grade B 113.333 115.333 115.370 115.970 102.670
Total 214.552 215.763 218.330 220.641 221.141
Source of data: Sapoa221141
Rode’s Report 2014:4 Office demand and vacancies 54
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September 2014
Port Elizabeth Greenacres
Grade A+ 3.545 3.545 3.545 3.545 3.545
Grade A 9.753 9.753 9.753 9.753 9.753
Grade B 53.056 53.056 53.056 53.056 53.056
Total 66.354 66.354 66.354 66.354 66.354
Newton Park
Grade A+ 16.621 16.621 16.621 16.621 16.621
Grade A 967 967 967 967 967
Grade B 1.500 1.500 3.514 3.514 3.514
Total 19.088 19.088 21.102 21.102 21.102
Central / Park Drive
Grade A+
Grade A
Grade B 8.541 8.542 8.541 8.542 8.541
Total 8.541 8.542 8.541 8.542 8.541
Walmer/Fairview
Grade A+
Grade A 20.007 20.007 20.007 20.007 20.007
Grade B 5.471 5.471 5.471 5.471 5.471
Total 25.478 25478 25.478 25.478 25.478
Johannesburg Central Johannesburg central
Grade A+ 24.000 24.000 20.000 44.000
Grade A 814.287 814.287 774.287 733.500 838.287
Grade B 1.046.236 843.848 1.050.236 1.111.639 1.027.252
Total 1.88.4523 1.682.135 1.844.523 1.889.139 1.865.539
Source of data: Sapoa
Rode’s Report 2014:4 Office demand and vacancies 55
Table 6.3 (continued) Sapoa office stock (m²)
Grades A+, A & BSeptember
2013 December
2013 March 2014
June 2014
September 2014
Decentralized Johannesburg decentralized
Grade A+ 67.4625 73.6125 758.125 798.125 908.175
Grade A 4.152.898 4.108.350 4.191.471 4.256.696 4.016.982
Grade B 2.204.011 2.159.654 2.159.125 2.167.582 2.255.751
Total 7.031.534 7.004.129 7.108.721 7.222.403 7.180.908
Pretoria decentralized
Grade A+ 30.400 30.400 30.400 30.400 30.400
Grade A 1.531.892 1.543.292 1.442.310 1.421.209 1.491.525
Grade B 954.485 978.224 1.014.940 1.045.294 1.015.264
Total 2.516.777 2.551.916 2.487.650 2.496.903 2.672.789
Durban decentralized
Grade A+ 13.805 13.805 13.805 13.805 13.805
Grade A 399.292 399.092 399.092 398.117 400.492
Grade B 181.252 181.345 181.345 181.645 178.745
Total 594.349 594.242 594.242 593.567 593.921
Cape Town decentralized
Grade A+ 41.500 41.500 25.000 25.000 25.000
Grade A 977.334 984.779 957.701 968.264 967.977
Grade B 278.035 278.035 333.015 321.915 324.915
Total 1.296.869 1.304.314 1.315.716 1.315.179 1.317.892
Source of data: Sapoa
Rode's Report 2014:4 Industrial rentals and vacancies 56
-20
-15
-10
-5
0
5
10
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Manufacturing outputElectricity available for distribution
r=0,6 (for zero & 1-qtr lag)
Growth in output produced by manufacturing sectorvs
Growth in electricity available for distribution
Gro
wth
(%;
y-o-
y)
Source of data: Stat SA
32
36
40
44
48
52
56
60
2007 2008 2009 2010 2011 2012 2013 2014
Expansion
Contraction
Inde
x
Source of data: BER
Kagiso Purchasing Managers' Index(Seasonaliy adjusted)
Chapter 7: Industrial rentals and vacancies
A third consecutive quarter of contracting output
Written by John S. Lottering
Prospects for the industrial property market remain daunting, especially when consider-ing the continued struggles of the manu-facturing sector.
In the third quarter of 2014, output pro-duced by the manufacturing sector con-tracted (-3%; quarter-on-quarter annual-ized) for the third consecutive quarter. De-spite weak domestic and foreign demand conditions for manufactured goods, another hindrance to the manufacturing sector is the energy supply constraints. During No-vember 2014, Eskom again asked large industrial companies to cut their electricity usage due to the grid being under threat following several plant failures. The corre-sponding graph shows the reliance of the manufacturing sector, which is also the country’s third largest sector by output produced, on electricity available for distri-bution.
On the other hand, a ray of hope for the industrial property market is the Kagiso Purchasing Managers’ Index (PMI). After
being able to improve for a number of months, the Index ― seen as a leading in-dicator of business conditions in the manu-facturing sector ― moved into expansion-ary territory (a reading above 50) in No-vember 2014.
Surprisingly, in the third quarter of 2014 market industrial rentals in the Cape Penin-sula and Port Elizabeth were actually able to show growth of roughly 9%. The re-bound in Port Elizabeth could possibly be ascribed to the rebound in the auto manu-facturing sector after the conclusion of the strikes. However, the reason behind the super Cape Town performance is not obvi-ous.
On the East Rand, market-related industrial rentals for prime space were up by 4% while on the Central Witwatersrand and in Pretoria, rentals showed moderate growth of only 2%. SA’s industrial heartland is evi-dently struggling.
Rode's Report 2014:4 Industrial rentals and vacancies 57
50454035
30
25
20
15
10
594 96 98 00 02 04 06 08 10 12 14
Port Elizabeth Central WitwatersrandEast RandDurbanCape Peninsula
Nominal prime industrial rentals (500-m² units)
Smoothed
R/m
²(l
og s
cale
)
Source of data: Rode's Time Series
32
28
24
20
16
1294 96 98 00 02 04 06 08 10 12 14
Port Elizabeth Central WitwatersrandEast RandDurbanCape Peninsula
Real prime industrial rentals (500-m² units)2005 rands
Smoothed
R/m
²(l
og s
cale
)
Source of data: Rode's Time Series; BER BCI
In the third quarter of 2014, building costs are estimated to have grown at about 9%. This implies that on the East Rand, the Central Witwatersrand and in Pretoria, in-dustrial rentals continued to contract in re-al terms, which is another way of saying that new developments based on current market rentals and building costs have be-come less viable.
In the Cape Peninsula and Port Elizabeth, nominal rentals were at least able to show growth in line with building-cost inflation.
In Table 7.1 we examine pioneer industrial rentals, which provide a quick-and-dirty prognosis for the medium-term direction of industrial rentals. Often, pioneer rental lev-els represent leases signed on newly erect-ed pre-let buildings, and these of course reflect today’s building costs (in contrast to market rentals), as developers naturally expect a fair return on their development costs.
The remainder of this chapter includes:
the summary rental-change table,
mean prime industrial rentals bytownship,
the standard deviations from thesemean rentals,
indicative operating costs, and
the predominant escalation rates.
This concludes our section on industrial rentals and vacancies. Note that the industrial tables follow
Rode's Report 2014:4 Industrial rentals and vacancies 58
The reference to real means that nominal prices have been deflated (i.e. adjusted for infla-tion). In this chapter, industrial rentals are deflated by the Bureau for Economic Research’s Building Cost Index (BER BCI). By using building costs as a deflator, the reader can interpret the graphs from a developer’s point of view, i.e. they can serve as a proxy for the viability of new developments over time, holding constant capitalization rates and operating expenses.
The industrial rental tables contain regression parameters in order to allow readers to interpolate rental rates for area sizes other than those given in the tables. These parameters are necessary because the relationship between rental rates and floor area is not linear. For more details on how to use these equations, refer to Annexure 3 on annexure-page XII.
Readers are reminded that the vacancy figures in the graph above are not actual vacancy percentages, but rather graduations on a 0-9 vacancy scale. For more information, see the notes to the industrial tables on p.79. Furthermore, the vacancies are for all the unit sizes (250 m², 500 m², 1.000 m², 2.500 m² and 5.000 m²) combined, as surveyed by Rode. In reality, vacancies could differ across the different-sized units.
Table 7.1
Pioneer rental rates
for new, state-of-the-art industrial developments
during quarter 2014:3 Highest gross rental rates achieved (1000-m² units)
Rands per rentable square m² (excl VAT)
Pioneer Normal prime Difference (%)
Central Witwatersrand 75 37 103% West Rand 55 35 57% East Rand 65 39 67% Durban 65 44 48% Cape Peninsula 70 36 94% Bloemfontein 45 31 45%
Rode's Report 2014:4 Industrial rentals and vacancies 59 Tab
le 7
.2
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
50,0
0
50,7
8
53,5
0
59,2
5
47,3
3
1,8
3,9
05
0,0
07
0,1
0
37,4
0
37,5
0
34,2
5
32,2
5
30,4
0
2,2
4,0
55
-0,0
75
-0,9
8
45,3
3
46,5
0
45,5
0
43,8
0
43,5
0
2,0
3,9
39
-0,0
19
-0,8
3
39,3
3
39,5
0
39,6
7
39,0
0
39,2
5
4,0
3,6
90
-0,0
02
-0,4
6
43,3
3
43,5
0
41,0
0
43,5
0
42,0
0
3,0
3,8
04
-0,0
07
-0,3
3
39,3
3
37,5
0
35,0
0
35,0
0
33,5
0
3,0
3,9
37
-0,0
51
-0,9
5
33,2
5
35,0
0
34,3
3
35,2
5
31,6
7
2,7
3,6
06
-0,0
12
-0,3
3
35,2
5
38,0
0
38,6
7
37,3
3
35,6
7
3,0
3,6
12
-0,0
00
-0,0
1
30,6
7
28,5
0
27,5
0
26,5
0
27,0
0
2,5
3,6
31
-0,0
43
-0,8
9
30,5
0
28,3
3
27,3
3
26,0
0
25,3
3
2,0
3,7
31
-0,0
60
-0,9
8
28,7
5
28,0
0
26,6
7
25,3
3
27,5
0
2,3
3,4
79
-0,0
25
-0,6
2
33,6
7
31,6
0
30,0
0
29,2
0
28,6
0
2,1
3,7
89
-0,0
53
-0,9
7
33,2
5
32,6
7
30,6
7
29,3
3
28,3
3
1,5
3,8
21
-0,0
56
-0,9
9
33,6
7
35,5
0
36,5
0
35,5
0
34,0
0
2,0
3,5
44
0,0
02
0,0
6
27,0
0
26,0
0
25,3
3
24,0
0
22,6
7
3,0
3,6
13
-0,0
57
-0,9
9
34,0
0
32,8
0
31,0
0
30,0
0
31,1
7
1,8
3,6
99
-0,0
34
-0,8
3
27,6
7
25,5
0
22,5
0
21,0
0
21,0
0
1,5
3,8
35
-0,0
98
-0,9
6
31,2
0
30,4
0
28,8
0
26,4
0
28,1
4
3,0
3,6
88
-0,0
46
-0,8
4
26,5
0
26,0
0
24,5
0
25,0
0
26,0
0
5,0
3,3
09
-0,0
10
-0,3
6
20,0
0
20,3
3
20,3
3
19,0
0
20,0
0
5,0
3,0
60
-0,0
10
-0,4
2
45,6
0
45,4
0
46,2
0
44,0
0
43,7
5
2,0
3,9
15
-0,0
16
-0,7
9
43,0
0
42,8
3
42,5
0
42,0
0
42,0
0
2,6
3,8
10
-0,0
09
-0,9
8
41,5
0
41,0
0
40,5
0
37,0
0
37,0
0
1,2
3,9
84
-0,0
44
-0,9
4
Cen
tral W
itw
ate
rsran
d
Cam
bri
dge P
ark
Wynberg
Pro
per
Str
ijdom
Park
Kya S
and
Cla
yville
/Olifa
nts
fonte
in
Chlo
ork
op
Am
alg
am
Cro
wn M
ines
Industr
ia
Booysens/B
ooysens
Reserv
e/O
phir
ton
Villa
ge M
ain
/Villa
ge D
eep/N
ew
Centr
e
Benro
se
Ste
ele
dale
/Ele
ctr
on/T
ulisa P
ark
Aero
ton
Devla
nd/N
ancefield
Cle
vela
nd/H
eri
otd
ale
New
lands/M
art
indale
Kew
/Wynberg
East
Bra
mle
y V
iew
/Lom
bard
y W
est
Marl
boro
Halfw
ay H
ouse:
hi-
tech s
trip
Halfw
ay H
ouse:
Ric
hard
s D
rive
Com
merc
ia
Kra
merv
ille
/Eastg
ate
Ext1
2 &
Ext1
3
61,2
5
56,6
0
55,2
0
52,6
0
50,5
0
1,5
4,4
30
-0,0
60
-0,9
8
Rode's Report 2014:4 Industrial rentals and vacancies 60 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
46,5
0
47,5
0
49,0
0
49,0
0
50,3
3
1,5
3,7
09
0,0
25
0,9
6
54,0
0
53,5
0
55,8
0
56,4
0
55,3
3
1,8
3,9
14
0,0
13
0,7
2
47,5
0
46,2
5
42,7
5
42,7
5
43,6
7
2,2
4,0
20
-0,0
32
-0,8
0
39,2
5
39,2
5
37,7
5
37,7
5
38,4
0
1,5
3,7
25
-0,0
11
-0,6
6
46,7
5
46,7
5
46,2
5
45,7
5
42,5
0
2,1
4,0
15
-0,0
28
-0,8
4
45,0
0
46,6
7
45,6
7
52,5
0
51,0
0
1,5
3,5
25
0,0
50
0,8
7
58,0
0
55,5
0
53,0
0
53,0
0
55,0
0
2,0
4,1
41
-0,0
19
-0,6
3
34,0
0
33,7
5
32,0
0
31,2
5
28,0
0
1,5
3,8
84
-0,0
61
-0,9
4
33,0
0
32,3
3
29,6
7
29,0
0
27,3
3
2,0
3,8
52
-0,0
64
-0,9
8
33,0
0
32,3
3
30,0
0
28,6
7
27,3
3
1,5
3,8
65
-0,0
65
-0,9
9
32,3
3
31,0
0
28,6
7
28,0
0
26,6
7
1,8
3,8
21
-0,0
64
-0,9
8
25,2
0
26,5
0
25,0
0
24,5
0
24,0
0
2,2
3,3
84
-0,0
23
-0,7
6
34,0
0
34,0
0
31,8
0
31,0
0
32,5
7
1,0
3,6
50
-0,0
23
-0,6
9
56,7
5
53,2
0
52,2
0
50,2
0
49,8
0
1,0
4,2
51
-0,0
42
-0,9
6
30,6
7
29,0
0
28,3
3
25,6
7
25,0
0
1,5
3,8
11
-0,0
70
-0,9
9
29,2
5
29,2
5
28,2
5
27,5
0
26,2
5
2,5
3,5
92
-0,0
37
-0,9
7
34,0
0
34,3
3
34,0
0
31,0
0
30,3
3
1,8
3,7
98
-0,0
44
-0,9
1
26,0
0
26,0
0
26,0
0
24,0
0
- 2,0
-
- -
37
,77
3
7,8
3
37
,03
3
6,0
3
34
,71
2
,1
32,0
0
30,0
0
28,0
0
28,0
0
25,0
0
3,0
3,8
61
-0,0
73
-0,9
6
50,0
0
46,0
0
45,0
0
43,0
0
42,5
0
1,5
4,1
71
-0,0
51
-0,9
5
39,0
0
39,0
0
37,0
0
36,6
7
36,0
0
3,3
3,8
28
-0,0
29
-0,9
5
30,5
0
28,0
0
25,0
0
22,5
0
20,0
0
1,8
4,1
92
-0,1
40
-1,0
0
Centu
rion
Lin
bro
Park
Wesco P
ark
/Eastg
ate
Ext3
, Ext1
1,
Ext6
, Ext8
/Malb
oro
Nort
h (
New
)
City D
eep
Nort
h R
idin
g
Sam
rand C
entu
rion
Barb
eque D
ow
ns
Selb
y E
xt
12/1
3/1
5/1
9/2
0/2
4/C
ity
West
Selb
y E
xt
5/1
0/1
4/1
8
Selb
y E
xt
11
Selb
y E
xt
3/4
/6
Denver
(Old
)
Denver
(New
)
Kyala
mi Busi
ness P
ark
Reuven
Selb
y (
Old
)/Selb
y E
xt2
/Park
Centr
al
Robert
sham
Ford
sburg
/Mayfa
ir
Cen
tral W
itw
ate
rsran
d
West
Ran
d
Lea G
len
Honeydew
X19,
20,
21 &
22
Sto
rmill
Cham
dor
Facto
ria
32,5
0
31,5
0
28,5
0
25,0
0
21,5
0
2,0
4,2
91
-0,1
40
-0,9
8
Rode's Report 2014:4 Industrial rentals and vacancies 61 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
27,5
0
26,0
0
23,5
0
20,0
0
20,0
0
2,0
3,9
77
-0,1
19
-0,9
8
30,0
0
30,0
0
20,0
0
20,0
0
18,0
0
1,0
4,4
36
-0,1
86
-0,9
1
34,0
0
31,0
0
27,0
0
23,5
0
21,5
0
1,0
4,3
95
-0,1
57
-1,0
0
32,5
0
32,5
0
31,7
5
27,5
0
23,2
5
2,0
4,1
56
-0,1
11
-0,9
2
40,5
0
39,0
0
36,0
0
36,0
0
36,0
0
2,0
3,9
09
-0,0
41
-0,8
8
48,1
7
47,0
0
47,1
7
46,1
7
46,2
5
1,5
3,9
41
-0,0
13
-0,9
1
38
,52
3
7,0
8
35
,02
3
3,2
0
30
,43
2
,0
37,1
2
36,0
0
36,5
0
35,7
5
36,0
0
2,6
3,6
54
-0,0
09
-0,7
2
48,1
2
47,1
2
46,5
0
46,1
2
46,2
0
2,0
3,9
40
-0,0
13
-0,9
1
40,0
0
40,0
0
38,5
0
38,3
3
37,6
2
1,3
3,8
12
-0,0
22
-0,9
5
43,0
0
44,2
0
42,8
8
42,5
7
38,5
7
2,1
3,9
78
-0,0
34
-0,7
7
46,0
0
45,5
6
44,1
4
42,4
3
41,2
9
1,9
4,0
46
-0,0
38
-0,9
9
36,0
0
35,6
0
34,8
0
33,8
0
34,6
0
1,8
3,6
76
-0,0
17
-0,8
4
39,1
2
39,8
0
36,8
8
35,0
0
33,5
0
2,3
4,0
11
-0,0
58
-0,9
6
36,2
9
36,2
9
37,0
0
35,2
9
33,2
9
2,8
3,7
61
-0,0
27
-0,7
9
38,0
0
37,5
0
35,5
0
35,3
3
34,0
0
2,5
3,8
42
-0,0
37
-0,9
7
37,6
7
37,5
0
36,6
7
38,1
2
37,3
0
4,1
3,6
22
0,0
00
0,0
1
39,4
3
39,4
3
39,0
0
37,1
4
37,2
2
4,1
3,8
13
-0,0
24
-0,9
3
41,9
4
42,2
9
41,2
5
40,7
1
42,0
0
2,8
3,7
62
-0,0
05
-0,3
7
37,2
5
35,5
0
31,7
5
30,7
5
29,5
0
1,5
4,0
48
-0,0
80
-0,9
7
35,0
0
30,0
0
32,5
0
27,5
0
27,3
3
2,0
3,9
53
-0,0
77
-0,8
7
35,3
3
33,0
0
30,3
3
31,0
0
21,0
0
2,0
4,3
95
-0,1
44
-0,8
5
44,7
1
44,1
4
44,0
0
44,2
0
42,4
3
2,8
3,8
75
-0,0
13
-0,8
1
30,5
0
29,5
0
27,5
0
27,5
0
26,0
0
1,0
3,6
92
-0,0
51
-0,9
6
Randfo
nte
in:
Delp
ort
on/
Aure
us
Boltonia
Roodepoort
: Technik
on/M
anufa
cta
Industr
ia N
ort
h
Robert
ville
Laserp
ark
West
Ran
d
East
Ran
d
Ela
ndsfo
nte
in
Tunney/G
reenhills
Henville
Meadow
bro
ok/W
ilbart
Sunnyro
ck
Rustivia
/Activia
Park
Eastleig
h
Sebenza E
xt
14
Spart
an E
xt
16 (
Sebenza L
ink)
+
Ext
1,3
,7
Isando
Isando 3
Jet
Park
Alr
ode &
Xs
Alr
ode S
outh
Alb
ert
on
Aero
port
/ Spart
an E
xt
2
Delv
ille
Roodekop
31,5
0
30,5
0
29,2
5
28,7
5
28,8
3
1,6
3,6
08
-0,0
31
-0,9
3
Rode's Report 2014:4 Industrial rentals and vacancies 62 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
31,5
0
31,7
5
31,0
0
30,5
0
30,6
7
2,0
3,5
24
-0,0
12
-0,8
7
43,3
3
42,8
6
41,4
3
41,3
3
40,8
3
2,1
3,8
78
-0,0
20
-0,9
5
29,0
0
28,6
0
26,8
0
26,6
0
25,8
0
1,2
3,5
87
-0,0
40
-0,9
6
34,3
3
34,0
0
33,0
0
31,0
0
30,8
6
2,6
3,7
69
-0,0
41
-0,9
7
27,5
0
27,5
0
25,2
5
24,7
5
22,0
0
2,4
3,7
37
-0,0
72
-0,9
4
37,1
7
36,8
3
35,8
3
33,3
3
32,6
7
1,9
3,8
92
-0,0
48
-0,9
7
45,8
8
45,8
8
44,1
2
42,1
4
41,5
7
1,9
4,0
43
-0,0
37
-0,9
7
58,0
0
58,0
0
57,2
9
57,2
9
55,5
6
1,8
4,1
37
-0,0
13
-0,8
8
49,0
0
49,0
0
48,5
7
47,5
7
45,8
9
2,3
4,0
20
-0,0
21
-0,9
2
40
,27
4
0,0
9
38
,89
3
8,2
2
37
,19
2
,3
33,6
0
33,0
0
32,6
0
31,2
0
31,2
0
2,2
3,6
65
-0,0
27
-0,9
7
33,6
0
32,6
0
31,6
0
31,2
0
30,7
5
2,8
3,6
65
-0,0
29
-0,9
7
27,5
0
27,5
0
25,0
0
25,0
0
24,0
0
2
3,5
84
-0,0
48
-0,9
3
30,0
0
30,0
0
25,0
0
25,0
0
23,5
0
1,3
3,8
90
-0,0
87
-0,9
2
27,8
3
27,8
3
27,1
7
25,6
7
23,0
0
2,5
3,6
95
-0,0
61
-0,9
1
31,3
3
32,2
5
30,3
3
29,6
7
28,3
3
2,2
3,6
76
-0,0
38
-0,9
1
27,5
0
27,0
0
24,0
0
23,0
0
21,6
7
2,3
3,7
84
-0,0
83
-0,9
8
35,2
5
35,5
0
35,0
0
33,0
0
30,0
0
1,0
3,8
85
-0,0
53
-0,8
9
31
,26
3
1,0
8
29
,46
2
8,4
2
27
,13
2
,1
30,0
0
30,0
0
30,0
0
30,0
0
25,0
0
3,0
3,7
00
-0,0
48
-0,7
1
30,0
0
30,0
0
30,0
0
30,0
0
25,0
0
2,0
3,7
00
-0,0
48
-0,7
1
30,0
0
27,5
0
33,0
0
- -
3,0
-
- -
32,5
0
30,0
0
32,5
0
27,0
0
- 3,0
-
- -
45,0
0
40,0
0
36,5
0
- -
2,0
-
- -
38,0
0
38,0
0
38,0
0
- -
3,0
-
- -
35,0
0
45,0
0
45,0
0
45,0
0
45,0
0
4,0
3,3
08
0,0
64
0,6
9
25,0
0
25,0
0
25,0
0
23,0
0
23,0
0
2,0
3,4
22
-0,0
34
-0,8
9
Wadeville
: In
dustr
ial zonin
g
Route
24/
Meadow
dale
Germ
isto
n S
/ In
dustr
ies E
Dri
ehoek/
Industr
ies W
Knig
hts
Spart
an P
roper
Founders
Vie
w
Longm
eadow
Pom
ona/
Kem
pto
n p
ark
EastR
an
d
Far E
ast
Ran
d
Boksburg
Nort
h &
East
Benoni South
New
Era
/ Vulc
ania
Nuffie
ld
Fulc
rum
Apex
La B
oré
Bra
kpan
More
hill Ext
8 B
enoni
Far E
ast
Ran
d
Mitchell S
t Pre
tori
a I
ndustr
ial Tow
nship
Koedoespoort
W
altlo
o/
Despatc
h
Silvert
on/
Silvert
ondale
Sam
cor
Park
Sunderl
and R
idge
Herm
ansta
d
Kir
kney
25,0
0
25,0
0
25,0
0
23,0
0
23,0
0
2,0
3,4
22
-0,0
34
-0,8
9
Rode's Report 2014:4 Industrial rentals and vacancies 63 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
55,0
0
55,0
0
55,0
0
50,0
0
50,0
0
3,0
4,2
39
-0,0
39
-0,8
9
55,0
0
55,0
0
52,5
0
51,5
0
48,3
3
2,0
4,2
57
-0,0
43
-0,9
5
55,0
0
55,0
0
50,0
0
45,0
0
40,0
0
1,0
4,6
59
-0,1
11
-0,9
7
30,0
0
30,0
0
30,0
0
30,0
0
25,0
0
2,0
3,7
00
-0,0
48
-0,7
1
40,0
0
38,0
0
38,0
0
- -
3,0
-
- -
25,0
0
25,0
0
25,0
0
25,0
0
20,0
0
2,0
3,5
84
-0,0
59
-0,7
1
20,0
0
20,0
0
20,0
0
20,0
0
15,0
0
3,0
3,4
66
-0,0
76
-0,7
1
32,0
0
30,0
0
29,8
3
25,0
0
25,0
0
2,0
3,9
71
-0,0
90
-0,9
5
36
,00
3
5,2
9
35
,30
3
3,4
0
31
,94
2
,4
- -
- -
- -
37,7
5
31,0
0
25,0
0
20,0
0
18,0
0
3,5
4,9
98
-0,2
52
-0,9
9
41,0
0
35,0
0
26,0
0
20,0
0
19,0
0
3,0
5,2
24
-0,2
76
-0,9
8
40,0
0
31,0
0
25,0
0
20,0
0
18,0
0
2,5
5,1
13
-0,2
67
-0,9
9
30,0
0
27,5
0
25,0
0
20,0
0
18,0
0
2,0
4,4
05
-0,1
77
-0,9
9
30,0
0
28,0
0
25,0
0
20,0
0
18,0
0
3,0
4,4
26
-0,1
80
-0,9
9
39,0
0
37,5
0
30,0
0
25,0
0
21,0
0
2,0
4,9
06
-0,2
17
-0,9
9
- -
- -
- -
- -
-
37
,55
3
2,0
0
26
,09
2
1,0
0
18
,89
2
,6
43,5
0
40,0
0
38,0
0
35,5
0
34,0
0
3,0
4,2
01
-0,0
80
-0,9
9
43,5
0
40,5
0
38,5
0
35,5
0
34,0
0
3,0
4,2
19
-0,0
82
-1,0
0
41,0
0
38,0
0
36,5
0
35,0
0
31,0
0
4,5
4,1
75
-0,0
84
-0,9
7
62,5
0
58,0
0
55,0
0
51,5
0
44,0
0
2,5
4,7
39
-0,1
08
-0,9
7
47
,62
4
4,1
2
42
,00
3
9,3
8
35
,75
3
,2
49,0
0
49,0
0
47,5
0
45,7
5
44,2
5
2,0
4,1
04
-0,0
36
-0,9
7
40,0
0
40,0
0
37,6
7
37,0
0
36,2
5
1,5
3,8
94
-0,0
36
-0,9
6
43,0
0
43,0
0
41,7
5
41,7
5
40,5
0
2,2
3,8
74
-0,0
19
-0,9
4
Hennopspark
X15 &
X7
Gate
way
Lytt
leto
n M
anor
X4/X
6
Pre
tori
a N
ort
h
Silvert
ondale
X1
Bri
ts
Kle
rksoord
Rossly
n
Preto
ria
Po
lok
wan
e
Lebow
akgom
o
Superb
ia
Industr
ia
Ladin
e
Futu
ra
Labori
a
Magna V
ia
Seshego
Po
lok
wan
e
Nels
pru
it
Nels
pru
it E
ast
Nels
pru
it W
est
Rocky's
Dri
ft
Riv
ers
ide P
ark
Nels
pru
it
Du
rb
an
Spri
ngfield
Park
Mayville
Phoenix
Nort
h C
oast
Rd /
Bri
ard
ene
49,3
3
49,3
3
47,7
5
47,0
0
45,5
0
2,5
4,0
59
-0,0
28
-0,9
7
Rode's Report 2014:4 Industrial rentals and vacancies 64 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
56,2
5
53,7
5
50,2
5
50,2
5
48,2
5
1,5
4,2
84
-0,0
48
-0,9
5
40,6
7
40,6
7
39,3
3
40,0
0
38,2
5
2,0
3,8
09
-0,0
18
-0,8
4
42,0
0
41,5
0
42,0
0
41,7
5
42,5
0
2,7
3,7
09
0,0
04
0,5
3
45,7
5
45,7
5
44,5
0
43,7
5
42,5
0
2,4
3,9
71
-0,0
25
-0,9
7
47,0
0
47,0
0
46,2
5
45,0
0
45,0
0
2,1
3,9
51
-0,0
17
-0,9
6
46,2
5
48,2
5
47,0
0
45,0
0
44,2
5
2,9
3,9
82
-0,0
21
-0,7
5
40,0
0
38,0
0
37,0
0
37,0
0
37,0
0
3,0
3,7
96
-0,0
23
-0,8
3
48,2
5
47,0
0
46,0
0
46,5
0
42,7
5
3,1
4,0
59
-0,0
33
-0,8
7
47,7
5
44,5
0
43,5
0
40,5
0
38,7
5
2,9
4,2
30
-0,0
67
-0,9
9
35,0
0
35,0
0
35,0
0
33,0
0
30,0
0
6,0
3,8
55
-0,0
49
-0,8
7
35,0
0
35,0
0
35,0
0
34,3
3
33,3
3
2,7
3,6
51
-0,0
16
-0,8
8
40,3
3
38,3
3
38,3
3
35,6
7
37,3
3
2,7
3,8
48
-0,0
30
-0,8
1
41,5
0
40,0
0
37,5
0
41,0
0
42,3
3
2,0
3,6
30
0,0
10
0,2
6
47,5
0
47,5
0
51,6
7
48,3
3
45,6
7
2,0
3,9
37
-0,0
09
-0,2
4
45,0
0
45,0
0
46,5
0
44,0
0
37,5
0
1,5
4,1
33
-0,0
52
-0,7
3
42,5
0
42,5
0
40,0
0
37,5
0
34,0
0
2,0
4,1
96
-0,0
76
-0,9
6
42,5
0
40,0
0
40,0
0
37,5
0
34,0
0
5,5
4,1
27
-0,0
67
-0,9
6
34,0
0
34,0
0
34,1
7
32,5
0
30,8
3
5,5
3,7
24
-0,0
32
-0,8
8
52,0
0
49,0
0
47,7
5
47,0
0
45,0
0
2,1
4,1
74
-0,0
43
-0,9
7
50,3
3
50,0
0
49,7
5
47,0
0
45,1
2
2,1
4,1
41
-0,0
37
-0,9
4
37,6
7
37,6
7
39,7
5
39,7
5
37,7
5
3,2
3,5
99
0,0
07
0,3
1
45,7
5
45,7
5
44,5
0
44,0
0
43,2
5
1,7
3,9
38
-0,0
20
-0,9
7
47,5
0
47,5
0
41,5
0
35,0
0
39,0
0
3,0
4,3
86
-0,0
93
-0,8
5
45,0
0
44,0
0
41,3
3
39,3
3
37,3
3
4,0
4,1
68
-0,0
64
-0,9
9
46,0
0
46,0
0
43,5
0
42,5
0
40,0
0
3,5
4,1
03
-0,0
47
-0,9
6
Bri
ard
ene I
ndustr
ial Park
Um
geni Rd/
Sta
mfo
rd H
ill
Um
bilo/
Sydney R
d/
Gale
St
Jacobs
Mobeni
Pro
specto
n
Ithala
Industr
ial Esta
te
Pin
eto
wn C
entr
al
New
Germ
any
Isip
ingo
Rossburg
h/
South
Coast
Rd
Edw
in S
wale
s D
rive
Gle
n A
nil
Bri
ckfield
Rd
Veru
lam
Canela
nds
Tongaat
New
Westm
ead/
Mahogany
Westm
ead
Mari
ann P
ark
/ South
mead
Maxm
ead
Rin
gro
ad I
ndustr
ial Park
Avoca/
Red H
ill/
Nort
hgate
Falc
on P
ark
Riv
er
Hors
e V
alley B
usin
ess
Mount
Edgecom
be
61,5
0
61,5
0
57,7
5
57,2
5
53,3
3
2,2
4,3
90
-0,0
47
-0,9
5
Rode's Report 2014:4 Industrial rentals and vacancies 65 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
B
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
48,3
3
48,3
3
44,3
3
44,3
3
44,3
3
1,5
4,0
62
-0,0
34
-0,8
6
55,0
0
54,0
0
51,0
0
49,3
3
46,6
7
2,5
4,3
19
-0,0
55
-0,9
9
40,0
0
40,0
0
37,5
0
34,0
0
34,0
0
6,0
4,0
65
-0,0
65
-0,9
6
57,5
0
50,0
0
50,0
0
51,2
5
50,0
0
2,7
4,1
69
-0,0
32
-0,6
4
24,6
7
24,6
7
23,0
0
23,0
0
23,5
0
4,2
3,3
20
-0,0
22
-0,7
3
39,3
3
38,3
3
37,6
7
34,3
3
26,6
7
2,2
4,3
74
-0,1
17
-0,8
9
45
,43
4
4,7
4
43
,62
4
2,5
5
40
,67
2
,7
22,0
0
24,0
0
20,0
0
20,0
0
18,0
0
4,0
3,2
58
-0,0
35
-0,5
2
24,0
0
24,0
0
22,0
0
22,0
0
22,0
0
3,0
3,1
99
-0,0
11
-0,3
8
24,0
0
24,0
0
22,0
0
22,0
0
24,0
0
3,0
3,1
08
0,0
05
0,1
8
23
,33
2
4,0
0
21
,33
2
1,3
3
21
,33
3
,3
40,0
0
40,0
0
- -
- 2,0
-
- -
45,0
0
45,0
0
45,0
0
45,0
0
45,0
0
1,0
-
- -
48,7
5
47,0
0
45,2
5
42,6
7
- 2,0
-
- -
44,2
0
42,6
0
43,2
5
42,5
0
40,0
0
3,5
3,9
35
-0,0
26
-0,8
6
43,3
3
42,6
7
42,6
7
45,0
0
45,0
0
4,0
3,6
54
0,0
18
0,7
8
40,0
0
38,7
5
38,0
0
34,0
0
35,0
0
3,0
3,9
85
-0,0
53
-0,9
2
31,3
3
32,0
0
31,0
0
30,5
0
31,0
0
6,0
3,5
04
-0,0
09
-0,6
3
- -
- -
- -
- -
-
47,3
3
42,3
3
40,6
7
35,0
0
35,0
0
3,0
4,4
18
-0,1
05
-0,9
7
29,0
0
29,0
0
29,0
0
26,5
0
25,0
0
4,0
3,6
82
-0,0
52
-0,9
1
32,5
0
32,5
0
32,5
0
32,5
0
30,0
0
2,0
3,6
12
-0,0
21
-0,7
1
- -
- -
- -
- -
-
36,6
7
36,6
7
36,6
7
35,0
0
35,0
0
2,5
3,7
15
-0,0
19
-0,8
9
35,0
0
35,0
0
35,0
0
35,0
0
35,0
0
2,0
3,5
55
0,0
00
-
Um
bogin
twin
i/ S
outh
gate
South
gate
Industr
ial Park
Hib
iscus I
ndustr
ial Park
Um
geni Park
Ham
mers
dale
Cato
Rid
ge
Du
rb
an
Geo
rg
e
Georg
e C
entr
al
Tam
sui In
dustr
ia
Pacaltsdorp
Industr
ia
Geo
rg
e
Cap
e P
en
insu
la
Vik
ing P
lace
Glo
sderr
y
Paard
en E
iland/
Metr
o
Monta
gue G
ard
ens
Marc
oni Beam
Killa
rney G
ard
ens
Racin
g P
ark
Atlantis
Woodsto
ck/
Salt R
iver/
Observ
ato
ry
Ath
lone 1
& 2
Lansdow
ne N
eri
ssa
Sand I
ndustr
ia
Ott
ery
Hills
tar
Ott
ery
Sunset
Die
p R
iver
45,0
0
44,5
0
43,3
3
45,0
0
45,0
0
2,0
3,7
82
0,0
02
0,1
5
Rode's Report 2014:4 Industrial rentals and vacancies 66 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
45,0
0
45,0
0
45,0
0
45,0
0
45,0
0
2,0
3,8
07
0,0
00
0,0
0
25,0
0
25,0
0
25,0
0
25,0
0
- -
- -
-
40,7
5
40,0
0
39,3
3
41,5
0
43,0
0
3,0
3,5
73
0,0
20
0,6
9
45,0
0
45,0
0
45,0
0
45,0
0
- 3,0
-
- -
43,3
3
40,0
0
38,7
5
36,6
7
30,0
0
2,5
4,3
78
45,0
0
45,0
0
37,5
0
35,0
0
35,0
0
1,0
4,3
63
47,5
0
42,5
0
41,0
0
37,5
0
30,0
0
3,0
4,6
29
40,0
0
40,0
0
35,0
0
35,0
0
35,0
0
2,0
3,9
73
49,0
0
44,0
0
41,0
0
40,5
0
35,0
0
1,0
4,4
17
35,0
0
30,5
0
27,5
0
26,5
0
25,0
0
2,0
4,0
96
37,3
3
35,6
7
32,6
7
31,0
0
27,5
0
2,5
4,1
75
40,0
0
38,3
3
36,6
7
36,0
0
- 1,5
-
35,3
3
34,3
3
30,6
7
28,6
7
26,5
0
2,5
4,1
26
38,0
0
35,0
0
32,5
0
30,0
0
28,0
0
2,0
4,1
84
- -
- -
- -
-
39,6
7
36,6
7
35,3
3
33,6
7
31,0
0
1,5
4,0
89
34,6
7
32,6
7
29,6
7
28,6
7
26,5
0
1,5
4,0
21
31,0
0
31,0
0
31,6
7
28,0
0
27,3
3
1,7
3,7
28
29,0
0
29,0
0
27,5
0
26,5
0
27,0
0
1,0
3,5
40
37,0
0
35,0
0
33,3
3
31,6
7
30,0
0
1,7
3,9
83
38,0
0
35,6
7
34,6
7
31,6
7
29,0
0
1,5
4,1
25
30,0
0
30,0
0
28,0
0
28,0
0
27,0
0
1,0
3,6
07
31,6
7
30,0
0
28,0
0
26,3
3
25,0
0
2,0
3,8
90
37,5
0
34,0
0
32,5
0
29,0
0
28,0
0
1,5
4,1
52
39,5
0
37,0
0
36,0
0
30,0
0
30,0
0
1,0
4,2
43
-0,1
08
-0,9
4
-0,0
99
-0,9
3
-0,1
37
-0,9
6
-0,0
52
-0,8
6
-0,0
98
-0,9
6
-0,1
06
-0,9
6
-0,0
99
-0,9
9
- -
-0,0
99
-0,9
9
-0,1
00
-1,0
0
- -
-0,0
76
-0,9
9
-0,0
87
-0,9
9
-0,0
48
-0,8
6
-0,0
31
-0,9
0
-0,0
68
-1,0
0
-0,0
87
-0,9
9
-0,0
36
-0,9
4
-0,0
79
-1,0
0
-0,0
98
-0,9
9
-0,1
01
-0,9
6
- -
- -
- -
- -
-
Elfin
dale
Monw
ood/
Philip
pi East
Retr
eat/
Ste
enberg
Capri
corn
Park
Maitla
nd
Ndabeni
Air
port
Eppin
g 1
& 2
WP P
ark
Els
ies R
iver
(excl, C
entr
al Park
)
Paro
w B
eaconvale
Tygerb
erg
Busin
ess P
ark
Paro
w I
ndustr
ia
Paro
w E
ast
Bellville
Oakdale
Bellville
Stikla
nd/
Kaym
or
Bellville
Tri
angle
Bellville
South
/ Sacks C
ircle
Kra
aifonte
in
Bra
ckenfe
ll I
ndustr
ia
Everi
te B
rackenfe
ll
Kuils R
iver
Bla
ckheath
Saxenburg
Industr
ial Park
Okavango P
ark
Fir
gro
ve
The I
nte
rchange (
Som
ers
et)
-
- -
- -
- -
- -
Rode's Report 2014:4 Industrial rentals and vacancies 67 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
- -
- -
- -
- -
-
- -
- -
- -
- -
-
39
,44
3
8,0
1
36
,31
3
4,1
3
31
,51
2
,2
27,5
0
27,5
0
26,2
5
26,2
5
25,7
5
2,5
3,4
45
28,1
7
25,6
7
22,7
5
20,7
5
20,7
5
4,5
3,9
11
28,7
5
24,8
3
26,2
5
26,0
0
26,0
0
4,0
3,4
08
33,0
0
45,5
0
21,0
0
21,0
0
21,0
0
3,5
4,8
26
45,0
0
45,0
0
45,0
0
40,0
0
- 0,0
-
-0,0
23
-0,9
3
-0,1
08
-0,9
6
-0,0
20
-0,4
4
-0,2
20
-0,7
5
- -
15,0
0
15,0
0
15,0
0
15,0
0
15,0
0
4,0
2,7
08
27,5
0
27,5
0
27,5
0
25,5
0
26,0
0
1,5
3,4
66
22,2
5
22,2
5
22,2
5
21,0
0
20,0
0
4,0
3,3
23
27,5
0
27,5
0
27,5
0
22,2
0
21,1
0
3,0
3,9
19
41,2
5
47,5
0
40,0
0
- -
1,5
-
35,0
0
35,0
0
37,5
0
35,0
0
32,5
0
3,5
3,6
98
50,0
0
50,0
0
50,0
0
- -
1,0
-
0,0
00
-
-0,0
26
-0,8
4
-0,0
36
-0,9
0
-0,1
00
-0,9
1
- -
-0,0
21
-0,4
9
- -
31
,05
3
1,8
5
29
,78
2
5,4
1
23
,44
2
,9
38,0
0
30,0
0
30,0
0
20,0
0
- 1,0
-
30,0
0
28,0
0
25,0
0
25,0
0
25,0
0
1,0
3,7
10
28,0
0
25,0
0
20,0
0
20,0
0
16,0
0
2,0
4,2
83
Str
and H
alt
Bro
adla
nds
Cap
e P
en
insu
la
Po
rt
Elizab
eth
Deal Part
y
Nort
h E
nd
Kors
ten/
Neave/
Sid
well/
Sydenham
South
End W
alm
er
Uitenhage:
Volk
sw
agen a
rea/N
els
on
Mandela
Bay L
ogis
tics P
ark
Uitenhage:
Hella/K
ruis
rivie
r
Str
uandale
Mark
man T
ow
nship
Pers
evera
nce
Walm
er
Gre
enbushes
Fair
vie
w
Po
rt
Elizab
eth
East
Lo
nd
on
Arc
adia
Gate
ly/W
oodbro
ok
Wilsonia
Bra
ely
n
30,0
0
28,0
0
25,0
0
20,0
0
14,0
0
1,0
4,8
37
- -
-0,0
62
-0,8
8
-0,1
74
-0,9
6
-0,2
46
-0,9
6
Rode's Report 2014:4 Industrial rentals and vacancies 68 Tab
le 7
.2 (
co
nti
nu
ed
)
Mean
prim
e in
du
str
ial m
arket
ren
tals
as in
qu
arte
r 2
01
4:3
(R
/m
² p
.m.;
gro
ss l
ease;
excl
VA
T)
Area s
ize l
eased
in
m²
Vacan
cy
a
b
r
25
0
50
0
1.0
00
2
.50
0
5.0
00
39,0
0
30,0
0
25,0
0
- -
1,0
-
- -
30,0
0
30,0
0
25,0
0
23,0
0
- 1,0
-
- -
32
,50
2
8,5
0
25
,00
2
1,6
0
18
,33
1
,2
46,6
7
43,3
3
36,6
7
27,5
0
22,0
0
2,0
5,3
37
-0,2
59
-0,9
9
46,6
7
41,6
7
39,3
3
26,0
0
20,0
0
2,0
5,5
15
-0,2
88
-0,9
7
39,3
3
36,6
7
30,5
0
25,3
3
20,0
0
2,0
4,9
72
-0,2
27
-0,9
9
36,3
3
31,6
7
28,3
3
23,3
3
18,0
0
2,5
4,8
62
-0,2
25
-0,9
9
26,5
0
23,5
0
21,1
7
20,3
3
15,0
0
2,5
4,2
13
-0,1
68
-0,9
5
24,0
0
22,2
5
20,8
3
17,0
0
13,2
5
2,5
4,2
95
-0,1
93
-0,9
7
45,6
7
42,3
3
38,0
0
30,6
7
30,0
0
1,5
4,6
84
-0,1
54
-0,9
8
Nort
hend
Chis
elh
urs
t
East
Lo
nd
on
Blo
em
fon
tein
Hilto
n
East
End
Harv
ey R
oad
Old
Industr
ial
Ham
ilto
n:
Mill St
Ham
ilto
n:
G L
ubbe S
t
Esto
ir
Blo
em
fon
tein
3
9,2
1
35
,71
3
0,6
9
24
,05
1
8,8
5
2,1
Rode's Report 2014:4 Industrial rentals and vacancies 69 Tab
le 7
.3
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
8,1
6
6,7
6
6,8
4
8,1
7
6,1
3
4,5
9
2,5
0
2,5
9
2,2
8
4,0
3
4,4
2
1,8
9
1,8
0
3,1
9
3,7
7
2,7
5
2,7
5
3,4
5
4,0
0
3,7
7
4,7
1
6,5
0
4,0
0
9,5
0
9,2
0
0,9
4
0,5
0
0,0
0
0,0
0
1,5
0
3,0
3
0,0
0
0,9
4
3,1
9
2,3
6
4,2
1
2,8
3
3,4
0
2,4
9
1,7
0
4,1
9
3,5
0
2,5
0
1,5
0
2,9
4
2,6
9
1,2
5
0,9
4
1,4
1
1,7
0
1,9
2
1,6
3
0,9
4
0,4
7
5,0
2
3,6
8
1,9
6
2,6
1
1,6
0
1,8
5
1,3
0
1,7
0
1,2
5
1,8
9
1,2
5
2,6
2
0,5
0
1,5
0
2,5
0
1,4
1
2,1
6
2,9
4
2,0
5
1,4
1
1,7
0
3,4
2
2,3
2
2,2
8
2,6
1
4,3
7
3,0
9
0,5
0
0,5
0
1,0
0
1,0
0
3,7
1
2,5
8
1,6
0
1,8
5
4,5
5
1,5
0
0,0
0
0,5
0
3,0
0
4,0
0
4,0
8
4,5
0
4,5
0
5,3
5
6,1
2
2,5
8
2,8
7
3,4
3
2,7
4
3,0
3
2,9
4
3,0
8
2,5
0
2,4
5
2,7
6
Cen
tral W
itw
ate
rsran
d
Cam
bri
dge P
ark
Wynberg
Pro
per
Str
ijdom
Park
Kya S
and
Cla
yville
/Olifa
nts
fonte
in
Chlo
ork
op
Am
alg
am
Cro
wn M
ines
Industr
ia
Booysens/B
ooysens R
eserv
e/O
phir
ton
Villa
ge M
ain
/Villa
ge D
eep/N
ew
Centr
e
Benro
se
Ste
ele
dale
/Ele
ctr
on/T
ulisa P
ark
Aero
ton
Devla
nd/N
ancefield
Cle
vela
nd/H
eri
otd
ale
New
lands/M
art
indale
Kew
/Wynberg
East
Bra
mle
y V
iew
/Lom
bard
y W
est
Marl
boro
Halfw
ay H
ouse:
hi-
tech s
trip
Halfw
ay H
ouse:
Ric
hard
s D
rive
Com
merc
ia
3,5
0
4,0
0
4,5
0
5,0
0
5,0
0
AP,
BR,
GT,
MR
, Q
U
AP,
AW
, G
T,
MR,Q
U
AP,
AW
, BM
, BR,
GT,
QU
AP,
BM
, BR,
GB,
GT,
QU
AP,
GT,
QU
AP,
GT,
QU
AP,
BR,
GT,
QU
AP,
BR,
GT,
QU
AP,
GT,
QU
AP,
BR,
GT,
QU
AP,
BR,
GT,
QU
AP,
BR,
GT,
MR
, Q
U,
RO
AP,
GT,
QU
, RO
AP,
GT,
QU
AP,
BR,
QU
AP,
BR,
GT,
MR
, Q
U,
RO
AP,
GT,
QU
AP,
AW
, BM
, G
T,
MR,
QU
GT,
QU
AP,
BM
, BR,
GT,
QU
AP,
AW
, BR,
GT,
MR
, Q
U
AP,
AW
, BR,
GT,
MR
, Q
U
AP,
QU
Rode's Report 2014:4 Industrial rentals and vacancies 70 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
5,4
5
6,6
5
5,1
5
3,0
1
1,6
6
1,5
0
2,5
0
1,0
0
1,0
0
3,6
8
3,6
7
2,0
6
3,8
2
3,8
8
3,7
3
3,2
8
3,0
3
2,2
8
2,2
8
1,8
9
AP,
BM
, BR,
GT,
MR
, Q
U
AP,
GT,
QU
AP,
BM
, BR,
GT,
MR
, Q
U
AW
, G
T,
MR,
QU
2,5
9
2,5
9
2,2
8
2,2
8
2,8
7
3,4
2
3,4
2
4,1
5
3,7
7
2,5
0
0,0
0
2,3
6
3,3
0
2,5
0
1,0
0
7,0
0
4,5
0
5,0
0
5,0
0
-
3,5
4
3,3
4
4,2
4
4,3
2
4,2
4
3,7
4
3,0
9
2,8
7
2,9
4
3,3
0
3,7
4
3,0
9
3,2
7
2,4
9
3,3
0
3,6
8
2,9
4
1,8
9
1,6
3
2,3
6
5,1
9
5,6
5
6,4
0
6,7
5
7,0
5
2,9
7
2,9
7
2,9
9
3,1
0
3,9
9
6,0
6
5,9
1
6,7
3
5,3
1
4,5
8
3,3
0
1,4
1
1,2
5
0,9
4
1,6
3
1,3
0
1,3
0
1,0
9
1,8
0
2,5
9
1,4
1
1,7
0
5,6
6
6,4
8
7,1
3
- -
- -
-
AP,
BM
, BR,
GT,
QU
AP,
BR,
GT,
QU
AP,
BM
, BR,
GT,
QU
AP,
QU
AP,
BR,
GT,
QU
AP,
BR,
QU
AP,
BR,
QU
AP,
BR,
QU
AP,
BR,
GT,
MR
, Q
U,
RO
AP,
BM
, BR,
MR,
QU
, RO
AP, AW
, G
T,
MR,
QU
AP,
BR,
QU
AP,
BR,
MR,
QU
AP,
GT,
QU
QU
- -
- -
- Q
U
5,0
0
4,0
0
3,0
0
3,0
0
2,5
0
AP,
QU
Kra
merv
ille
/Eastg
ate
Ext1
2 &
Ext1
3
Centu
rion
Lin
bro
Park
Wesco P
ark
/Eastg
ate
Ext3
, Ext1
1,
Ext6
,
Ext8
/Malb
oro
Nort
h (
New
)
City D
eep
Nort
h R
idin
g
Sam
rand C
entu
rion
Barb
eque D
ow
ns
Selb
y E
xt
12/1
3/1
5/1
9/2
0/2
4/C
ity W
est
Selb
y E
xt
5/1
0/1
4/1
8
Selb
y E
xt
11
Selb
y E
xt
3/4
/6
Denver
(Old
)
Denver
(New
)
Kyala
mi Busin
ess P
ark
Reuven
Selb
y (
Old
)/Selb
y E
xt2
/Park
Centr
al
Robert
sham
Ford
sburg
/Mayfa
ir
West
Ran
d
Lea G
len
Honeydew
X19,
20,
21 &
22
Sto
rmill
4,2
4
4,2
4
2,1
6
2,3
6
2,0
0
AP,
GT,
QU
Rode's Report 2014:4 Industrial rentals and vacancies 71 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
4,5
0
2,0
0
3,0
0
2,5
0
0,0
0
7,5
0
6,5
0
6,5
0
5,0
0
3,5
0
2,5
0
2,0
0
1,5
0
0,0
0
0,0
0
AP,
QU
AP,
QU
AP,
QU
- -
- -
-
6,0
0
7,0
0
3,0
0
3,5
0
1,5
0
2,5
0
2,5
0
3,2
5
2,5
0
1,7
5
4,5
0
6,0
0
4,0
0
4,0
0
4,0
0
3,3
4
1,8
3
2,2
7
2,9
7
4,1
5
AP
AP,
QU
AP,
QU
AP,
QU
AP,
BM
, BR,
GT,
QU
3,2
2
4,2
4
5,0
2
5,5
6
6,2
4
2,6
2
3,3
7
4,3
6
5,5
6
5,8
6
5,1
7
5,1
7
4,8
0
5,4
6
5,8
3
3,3
9
4,9
4
5,2
5
5,3
9
5,0
7
2,7
3
2,5
4
2,8
5
3,5
4
4,2
3
3,3
5
3,3
8
3,2
5
2,8
4
2,5
8
3,8
5
3,9
2
2,3
2
2,8
7
3,3
9
1,4
8
1,5
8
2,6
2
2,4
9
4,2
2
2,0
0
2,5
5
3,5
0
3,5
4
3,4
2
2,4
9
2,6
5
2,6
7
2,4
7
2,8
7
4,0
7
4,0
7
3,3
8
5,3
6
4,2
6
2,6
5
3,5
7
3,4
2
3,9
2
4,2
7
4,9
2
2,5
0
4,8
7
5,3
6
4,7
2
3,0
0
5,0
0
2,5
0
2,5
0
2,4
9
Cham
dor
Facto
ria
Randfo
nte
in:
Delp
ort
on/A
ure
us
Boltonia
Roodepoort
: Technik
on/M
anufa
cta
Industr
ia N
ort
h
Robert
ville
Laserp
ark
East
Ran
d
Ela
ndsfo
nte
in
Tunney/G
reenhills
Henville
Meadow
bro
ok/W
ilbart
Sunnyro
ck
Rustivia
/Activia
Park
Eastleig
h
Sebenza E
xt
14
Spart
an E
xt
16 (
Sebenza L
ink)
+ E
xt1
,3,7
Isando
Isando 3
Jet
Park
Alr
ode &
Xs
Alr
ode S
outh
Alb
ert
on
0,2
4
4,2
4
2,3
6
0,0
0
0,0
0
AP,
BM
, BR,
GT,
ME,
MH
, Q
U,
RO
AP,
BM
, BR,
GT,
ME,
MH
, Q
U,
RO
AP,
AT,
BR,
GT,
ME,
MH
, Q
U,
RO
AP,
AT,
BM
, BR,
GT,
ME,
MH
, Q
U,
RO
AP,
BM
, BR,
ME,
MH
, Q
U,
RO
AP, G
T,
QU
, RO
AP,
BM
, BR,
GT,
ME,
MH
, Q
U,
RO
AP,
BR,
ME,
QU
, R
O
AP,
BR,
ME,
QU
, R
O
AP,
AT,
BR,
GT,
ME,
MH
, Q
U,
RO
AP,
BM
, BR,
GT,
ME,
QU
, RO
AP,
AT,
BM
, BR,
GT,
ME,
QU
, RO
AP,
BM
, G
T,
QU
AP,
BM
, G
T,
QU
AP,
QU
Rode's Report 2014:4 Industrial rentals and vacancies 72 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
3,4
1
3,6
0
4,1
7
3,2
8
3,5
4
4,5
0
3,5
0
2,5
0
2,5
0
2,0
0
3,5
0
4,5
0
3,7
0
4,1
5
3,4
4
1,6
6
2,0
5
4,0
0
3,5
7
3,4
5
2,9
2
2,9
5
2,7
2
2,9
2
2,4
8
3,2
9
3,5
6
2,2
3
2,4
2
2,2
3
3,0
4
3,2
1
3,8
3
3,7
9
3,8
3
4,3
3
4,3
3
2,7
7
3,2
7
3,4
6
2,2
7
1,9
5
2,2
7
2,5
6
2,8
7
2,5
7
2,5
7
1,2
7
2,1
0
2,5
0
3,7
4
3,7
4
3,7
7
3,8
1
3,7
7
4,1
7
4,1
7
3,5
0
2,8
2
3,7
8
AP, BM
, BR,
GT,
MH
, Q
U,
RO
AP,
RO
AP,
BM
, G
T,
QU
AP,
BM
, G
T,
QU
AP,
AT,
GT,
ME,
QU
, R
O
AP,
BR,
QU
, RO
AP, BM
, BR,
GT,
QU
, R
O
AP,
QU
, R
O
AP,
BR,
ME,
QU
, R
O
AP,
BR,
GT,
ME,
MH
, Q
U,
RO
AP,
BM
, BR,
GT,
ME,
QU
, RO
AP,
BM
, BR,
GT,
ME,
QU
, RO
1,6
2
1,9
0
1,6
2
0,9
8
0,9
8
1,9
6
2,2
4
1,3
6
2,3
2
2,5
9
2,0
4
2,0
4
0,0
0
0,0
0
1,4
1
0,0
0
0,0
0
0,0
0
0,0
0
1,5
0
1,8
4
1,8
4
1,1
8
1,7
0
1,0
0
4,5
0
3,6
3
3,8
6
1,2
5
2,3
6
2,5
0
3,0
0
1,0
0
2,0
0
2,3
6
0,2
5
0,5
0
0,0
0
- -
AP, BM
, BR,
GT,
QU
, R
O
AP,
BR,
GT,
QU
, R
O
AP,
QU
, R
O
AP,
QU
AP,
GT,
QU
AP,
BM
, G
T,
QU
AP,
BM
, Q
U
AP,
QU
Aero
port
/Spart
an E
xt
2
Delv
ille
Roodekop
Wadeville
: In
dustr
ial zonin
g
Route
24/M
eadow
dale
Germ
isto
n S
/Industr
ies E
Dri
ehoek/I
ndustr
ies W
Knig
hts
Spart
an P
roper
Founders
Vie
w
Longm
eadow
Pom
ona/K
em
pto
n P
ark
Far E
ast
Ran
d
Boksburg
Nort
h &
South
Benoni
New
Era
/Vulc
ania
Nuffie
ld
Fulc
rum
Apex
Labore
Bra
kpan
More
hill Ext
8 B
enoni
Preto
ria
Mitchell S
t -
- -
- -
AP
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Rode's Report 2014:4 Industrial rentals and vacancies 74 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
1,5
0
0,0
0
0,0
0
0,5
0
2,0
0
HH
, RZ
1,5
0
0,5
0
0,5
0
0,5
0
2,0
0
HH
, RZ
1,0
0
0,0
0
0,5
0
0,0
0
1,0
0
HH
, RZ
2,5
0
0,0
0
0,0
0
1,5
0
4,0
0
HH
, RZ
3,6
7
3,6
7
4,3
3
2,5
9
1,3
0
1,6
3
1,6
3
2,0
5
2,1
2
3,0
3
4,1
2
4,1
2
2,0
5
2,0
5
0,8
7
4,1
9
4,1
9
2,2
8
2,1
2
1,5
0
5,4
5
4,1
5
2,8
6
2,8
6
4,0
9
0,9
4
0,9
4
0,9
4
3,5
4
2,0
5
5,1
0
5,1
7
5,1
0
2,0
5
2,5
0
3,7
7
3,7
7
2,8
7
2,1
7
2,5
0
2,1
2
2,1
2
3,0
3
0,0
0
0,0
0
4,1
5
2,0
5
2,1
2
0,0
0
1,3
0
- -
- -
-
4,0
9
2,1
2
2,1
2
2,6
9
4,8
2
4,5
5
0,8
7
1,5
0
0,8
7
2,5
9
- -
- -
-
0,0
0
0,0
0
0,0
0
0,9
4
2,3
6
ML,
QP
PC,
PPI
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
PC
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
PPI
ML,
PC,
PPI
3,3
0
4,7
1
4,7
1
3,3
0
3,7
7
3,5
0
5,0
0
2,5
0
1,0
0
2,0
5
Nels
pru
it
Nels
pru
it E
ast
Nels
pru
it W
est
Rocky’s
Dri
ft
Riv
ers
ide P
ark
Du
rb
an
Spri
ngfield
Park
Mayville
Phoenix
Nort
h C
oast
Rd/B
riard
ene
Bri
ard
ene I
ndustr
ial Park
Um
geni Rd/S
tam
ford
Hill
Um
bilo/S
ydney R
d/G
ale
St
Jacobs
Mobeni
Pro
specto
n
Ithala
Industr
ial Esta
te
Pin
eto
wn C
entr
al
New
Germ
any
Kw
a D
ebeka I
ndustr
ial Park
Isip
ingo
Rossburg
h/S
outh
Coast
Rd
Edw
in S
wale
s D
rive
Gle
n A
nil
2,5
0
2,5
0
6,2
4
5,3
1
3,3
0
ML,
PC,
PPI
ML,
PC,
PPI
ML,
PC,
PPI
Rode's Report 2014:4 Industrial rentals and vacancies 75 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
i ze l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
10,0
0
10,0
0
8,5
0
6,0
0
2,5
0
2,5
0
2,5
0
0,0
0
2,5
0
4,0
0
2,5
0
0,0
0
0,0
0
2,5
0
4,0
0
PC,
PPI
PC,
PPI
PC,
PPI
4,9
0
4,9
0
4,2
5
2,0
4
1,1
8
3,0
8
1,0
0
1,7
9
2,1
2
3,5
4
3,3
0
3,5
6
3,3
4
2,1
2
1,6
0
2,0
5
2,0
5
3,0
3
3,0
3
1,7
9
3,7
7
3,7
7
2,8
7
5,3
4
4,9
2
2,5
0
2,5
0
1,5
0
- 4,0
0
2,4
5
1,4
1
1,8
9
3,3
0
5,2
5
4,0
0
4,0
0
1,5
0
2,5
0
0,0
0
4,9
7
4,9
7
4,2
1
4,4
9
1,2
5
5,0
0
5,0
0
5,0
0
5,8
9
5,1
4
6,2
4
6,2
4
3,3
0
3,3
0
3,3
0
0,0
0
1,4
1
2,9
4
0,9
4
1,2
5
5,0
0
5,0
0
2,5
0
4,0
0
4,0
0
2,5
0
5,0
0
5,0
0
1,2
5
0,0
0
0,4
7
0,4
7
1,4
1
1,4
1
1,5
0
0,9
4
1,2
5
2,0
5
3,3
0
2,3
6
ML,
PC,
PPI
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
PC,
PPI
ML,
PC,
PPI
PC,
PPI
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI
ML,
PC,
PPI
PC,
PPI
ML,
PC,
PPI
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
Bri
ckfield
Rd
Veru
lam
Canela
nds
Tongaat
New
Westm
ead/M
ahogany
Westm
ead
Mari
ann P
ark
/South
mead
Maxm
ead
Rin
gro
ad I
ndustr
ial Park
Avoca/R
ed H
ill/
Nort
hgate
Falc
on P
ark
Riv
er
Hors
e V
alley B
usin
ess E
sta
te
Mount
Edgecom
be
Um
bogin
twin
i/South
gate
South
gate
Industr
ial Park
Hib
iscus I
ndustr
ial Park
Um
geni Park
Ham
mers
dale
Cato
Rid
ge
Geo
rg
e
Georg
e C
entr
al
- -
- -
-
Rode's Report 2014:4 Industrial rentals and vacancies 76 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
- -
- -
-
- -
- -
-
- -
- -
-
0,0
0
0,0
0
0,0
0
0,0
0
-
6,5
0
6,2
8
4,5
5
3,3
0
-
5,7
1
4,3
6
4,6
6
2,5
0
-
2,3
6
3,3
0
3,3
0
0,0
0
-
PL
AN
, G
B
AN
, G
B,
GIN
, RR
AN
, G
B,
GIN
, PL,
RR
AN
, G
B,
GIN
8,6
6
6,5
0
7,0
4
1,0
0
- AN
, G
B,
GIN
, RR
1,2
5
0,8
2
0,8
2
0,5
0
- AN
, G
B,
GIN
- -
- -
-
7,5
9
3,7
7
3,3
0
0,0
0
- AN
, G
B,
RR
1,0
0
1,0
0
1,0
0
1,5
0
- AN
, G
B
2,5
0
2,5
0
2,5
0
2,5
0
- AN
, G
B
- -
- -
-
2,3
6
2,3
6
2,3
6
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
-
0,0
0
2,8
7
2,3
6
0,0
0
-
0,0
0
0,0
0
0,0
0
0,0
0
-
- -
- -
-
3,7
7
3,0
8
3,3
0
1,5
0
-
0,0
0
0,0
0
0,0
0
- -
2,3
6
4,0
8
2,1
7
6,2
4
-
0,0
0
0,0
0
2,5
0
0,0
0
-
2,5
0
2,5
0
1,0
0
2,5
0
-
Tam
sui In
dustr
ia
Pacaltsdorp
Industr
ia
Cap
e P
en
insu
la
Vik
ing P
lace
Glo
sderr
y
Paard
en E
iland/M
etr
o
Monta
gue G
ard
ens
Marc
oni Beam
Killa
rney G
ard
ens
Racin
g P
ark
Atlantis
Woodsto
ck/S
alt R
iver/
Observ
ato
ry
Ath
lone 1
& 2
Landsdow
ne N
eri
ssa
Sand I
ndustr
ia
Ott
ery
Hills
tar
Ott
ery
Sunset
Die
p R
iver
Elfin
dale
Monw
ood/P
hilip
pi East
Retr
eat/
Ste
enberg
Capri
con P
ark
Maitla
nd
Ndabeni
Air
port
Eppin
g 1
& 2
5,0
0
0,0
0
0,0
0
0,0
0
-
AN
, G
B,
RR
AN
, G
B
AN
, G
B,
PL,
RR
AN
, G
B,
PL
GB
AN
, G
B,
PL,
RR
GB,
PL,
RR
AN
, D
D,
GB,
PL,
RR
AN
, D
D,
GB
DD
, G
B
AN
, G
B
Rode's Report 2014:4 Industrial rentals and vacancies 77 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
1,0
0
4,0
0
6,0
0
5,5
0
- AN
, G
B
5,0
0
2,5
0
2,5
0
1,5
0
- AN
, D
D
0,4
7
0,9
4
2,0
5
2,1
6
2,5
0
AN
, D
D,
GR
1,6
3
1,2
5
2,3
6
1,0
0
- AN
, D
D,
GB
0,4
7
0,9
4
0,9
4
0,9
4
1,5
0
AN
, D
D,
GB
2,0
0
0,0
0
0,5
0
0,0
0
- D
D,
GB
- -
- -
-
0,4
7
2,3
6
2,0
5
2,6
2
1,0
0
AN
, D
D,
GB
1,2
5
2,0
5
1,7
0
0,9
4
0,5
0
AN
, D
D,
GB
1,0
0
1,4
1
3,8
6
1,6
3
2,0
5
AN
, D
D,
GB
1,0
0
1,0
0
0,5
0
1,5
0
- AN
, G
B
1,4
1
2,1
6
2,8
7
2,3
6
0,0
0
AN
, D
D,
GB
1,6
3
0,9
4
2,0
5
2,8
7
1,0
0
AN
, D
D,
GB
- -
- -
- AN
2,8
7
1,6
3
0,8
2
1,2
5
0,0
0
AN
, D
D,
GB
0,5
0
1,0
0
2,5
0
1,0
0
2,0
0
AN
, D
D
0,5
0
2,0
0
1,0
0
- -
AN
, G
B
- -
- -
-
- -
- -
-
- -
- -
-
- -
- -
-
WP P
ark
Els
ies R
iver
(excl. C
entr
al Park
)
Paro
w B
eaconvale
Tygerb
erg
Busin
ess P
ark
Paro
w I
ndustr
ia
Paro
w E
ast
Bellville
Oakdale
Bellville
Stikla
nd/K
aym
or
Bellville
Tri
angle
Bellville
South
/Sacks C
ircle
Kra
aifonte
in
Bra
ckenfe
ll I
ndustr
ia
Everi
te B
rackenfe
ll
Kuils R
iver
Bla
ckheath
Saxonburg
Industr
ial Park
Okavango
Fir
gro
ve
The I
nte
rchange (
Som
ers
et
West)
Str
and H
alt
Bro
adla
nds
East
Lo
nd
on
Arc
adia
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
BG
, D
Q,
ER
, G
O,
GW
, IP
Rode's Report 2014:4 Industrial rentals and vacancies 78 Tab
le 7
.3 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
prim
e in
du
str
ial m
arket
ren
tals
as in
20
14
:3
Area s
ize l
eased
in
m²
Co
ntr
ibu
tor c
od
es
25
0
50
0
1.0
00
2
.50
0
5.0
00
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
0,0
0
BG
, D
Q,
ER
, G
O,
GW
, IP
BG
, D
Q,
ER
, G
O,
GW
, IP
BG
, D
Q,
ER
, G
O,
GW
, IP
BG
, D
Q,
ER
, G
O,
GW
, IP
BG
, D
Q,
ER
, G
O,
GW
, IP
2,5
0
2,5
0
1,2
5
1,2
5
1,7
5
5,3
3
3,3
0
2,7
5
2,7
5
2,7
5
1,2
5
3,4
2
1,2
5
- -
12,0
0
24,5
0
- -
-
- -
- -
-
- -
- -
-
- -
- 0,5
0
-
IPM
, N
RG
IPM
, N
RG
, TR
IPM
, N
RG
, TR
IPM
, N
RG
IPM
IPM
IPM
, N
RG
0,2
5
0,2
5
0,2
5
1,0
0
0,0
0
- -
- -
1,1
0
3,7
5
2,5
0
5,0
0
- -
- -
7,5
0
5,0
0
2,5
0
IPM
, N
RG
IPM
, N
RG
IPM
, N
RG
, TR
IPM
, N
RG
Gate
ly/W
oodbro
ok
Wilsonia
Bra
ely
n
Nort
hend
Chis
elh
urs
t
Po
rt
Elizab
eth
Deal Part
y
Nort
h E
nd
Kors
ten/N
eave/S
idw
ell/S
ydenham
South
End W
alm
er
Uitenhage:
Volk
sw
agen a
rea/N
MBLP
Uitenhage:
Hella/K
ruis
rivie
r
Str
uandale
Mark
man T
ow
nship
Pers
evera
nce
Walm
er
Gre
enbushes
Fair
vie
w
- -
- -
- IP
M
Blo
em
fon
tein
2,3
6
2,3
6
2,3
6
2,5
0
0,0
0
BW
, C
C,
EK
2,3
6
4,7
1
4,1
9
4,0
0
- BW
, C
C,
EK
0,9
4
2,3
6
3,1
9
3,4
0
- BW
, C
C,
EK
2,6
2
2,3
6
4,7
1
4,7
1
- BW
, C
C,
EK
1,5
0
1,5
0
2,7
8
3,3
0
0,0
0
BW
, C
C,
EK
1,0
0
0,2
5
3,1
2
2,1
6
1,2
5
BW
, C
C,
EK
Hilto
n
East
End
Harv
ey R
oad
Old
Industr
ial
Ham
ilto
n:
Mill St
Ham
ilto
n:
G L
ubbe S
t
Esto
ir
1,7
0
2,0
5
1,4
7
0,9
4
- BW
, C
C,
EK
Rode's Report 2014:4 Industrial rentals and vacancies 79
Notes to the industrial rental tables
1. The rentals are the achievable or market rates for the quarter shown in the table heading,and apply to industrial and warehouse space for the area sizes indicated. The rentals are theaverages of the rates as per our panels of experts in the various cities.
2. The rental rates assume gross leases, market escalation rates and leases of 3 to 5 years.
3. In terms of a gross lease, the tenant in a stand-alone building typically pays only for hisrefuse removal, water and electricity, as well as internal maintenance and increases in ratesand taxes. He provides and pays for his own security. All other expenses are for theaccount of the landlord. In a park the tenant pays, in addition to his gross rental, his prorata share of security costs, security lighting and landscaping.
4. The rental rates also apply to the office portion, where this is less than 1% of the totalbuilding area. For larger office portions, the office rental is, as a rule of thumb, about 15%of the industrial rental rate.
5. Prime space is space that is easily lettable because it satisfies each of the followingprerequisites:
a. • generally in a good condition;
b. • satisfactory macro access (i.e. access to freeway);
c. • satisfactory micro access (i.e. from street to building);
d. • proper loading facilities;
e. • eaves >4,0m (excluding micro/mini units);
f. • on ground level;
g. • adequate three-phase electrical power;
h. • clear spans.
The eight conditions above are prerequisites for space to be considered prime. However, a building may possess additional enhancements that could improve lettability through increasing the size of the potential tenant pool. Such enhancements could include suffi-cient office accommodation, adequate parking, sprinkler systems, masonry up to sill height, adequate floor loadings, roof insulation, sufficient yardspace and a good location (as opposed to access).
6. Secondary space is space which is not classifiable as prime because it does not satisfy alleight prerequisites for prime space listed above. Such space is typically old buildings orstructures which have been haphazardly renovated. They would have poor access, too littleyardspace or office accommodation, inadequate goods lifts, no three-phase power andobsolete electrics and ablution facilities. Such space is often (but not exclusively) found inhighly urbanised areas.
Rode's Report 2014:4 Industrial rentals and vacancies 80
7. Vacancy scale for industrial townships. The vacancy levels are based on a scale of 0 to 9 asshown below:
0 1 2 3 4 5 6 7 8 9
Nil Low Medium High
The scale should be interpreted as follows:
0 = no vacancy
1 = ‘low–’ vacancy;
2 = ‘low’ vacancy
3 = ‘low+’ vacancy
4 = ‘medium–’ vacancy;
5 = ‘medium’ vacancy
6 = ‘medium+’ vacancy
7 = ‘high–’ vacancy;
8 = ‘high’ vacancy
9 = ‘high+’ vacancy
where: low = <1 vacancy;
medium = 1 - 2 vacancy;
high = >2 vacancy.
8. For notes on how to use a regression equation in order to interpolate a rental rate, seeAnnexure 3.
Rode's Report 2014:4 Industrial rentals and vacancies 81
Table 7.4 Predominant market escalation rates (%)
for industrial leases Average as in quarter 2014:3
5-year leases Mean SD N
Central Witwatersrand 8,3 0,6 10West Rand 8,0 0,0 8East Rand 8,6 0,6 13Far East Rand 7,8 0,4 8Pretoria 8,7 0,9 3Polokwane 9,0 0,0 2Nelspruit - - -Durban 8,5 0,5 5Cape Peninsula 8,1 0,2 5Bloemfontein 8,3 0,5 3Notes:
1. These are the averages of the predominant — i.e. most often achieved — market escalation rates as reportedby our panel of experts.
Table 7.5 Indicative operating expenses
for industrial buildings As in quarter 2014:3 in rands per m² per month
Stand-alone Park
R/m² SD N R/m² SD NCentral Witwatersrand 7,44 1,95 9 9,89 3,14 9 West Rand 6,04 1,11 7 8,04 2,33 7 East Rand 8,95 5,92 11 8,77 1,77 12 Far East Rand 5,50 0,96 7 7,00 2,56 7 Pretoria 8,00 1,41 3 11,67 1,25 3Polokwane 14,50 7,50 2 17,50 7,50 2Nelspruit - - - - - -Durban 11,10 1,62 5 17,75 5,36 4Cape Peninsula 6,30 1,72 5 10,20 2,87 5 Bloemfontein 7,75 0,75 2 7,00 - 1Notes: The operating expenses are estimates for the past 12 months and are as per our expert panellists in the various cities. The following items are included:
stand-alone buildings: rates and taxes and insurance (incl. Sasria) and
park buildings: as above, plus security, security lighting, landscaping and management.
Rode's Report 2014:4 Industrial stand values 82
2,000
1,500
1,000
500400
300250200
150
100
5092 94 96 98 00 02 04 06 08 10 12 14
Port Elizabeth Central WitwatersrandEast RandDurbanCape Peninsula
Nominal industrial stand values (1.000-m² stands)
Smoothed
R/m
²(l
og s
cale
)
Source of data: Rode's Time Series
1,000900800700
600
500
400
300
200
10092 94 96 98 00 02 04 06 08 10 12 14
Port Elizabeth Central WitwatersrandEast RandDurbanCape Peninsula
Real industrial stand values (1.000-m² stands)2005 rands
Smoothed
R/m
²(l
og s
cale
)
Source of data: Rode's Time Series
Deflated by BER BCI (2005=100)
Chapter 8: Industrial stand values
Stand values contracting in real terms
Written by John S. Lottering
The market values for industrial stands in the country’s major industrial conurbations again showed modest growth, below that of building-cost inflation.
In the third quarter of 2014, stand values on the Central Witwatersrand (+7%) were able to show the strongest growth. This was followed by Durban (+5%), Port Eliza-beth (+4%) and the East Rand (+3%). In.the Cape Peninsula (-2%), the market values for industrial stands were slightly lower when compared to a year ago. Over the same period, building costs are esti-mated to have shown growth of about 9%.
This implies that in all of the regions men-tioned earlier, stand values contracted in real terms.
Given that the growth in the market values of stands tends to track the growth in mar-ket rentals, strong growth in the market values of industrial stands can only be ex-pected on the back of strong growth in rentals.1 For now, however, the current weakness in the manufacturing sector does not bode well for the demand for industrial space to rent and, consequently, rentals.
1 Note, however, that the relationship is not linear as stand value is a residual item in a viability study. A given rise in market rentals results in a non-proportional rise in stand value.
Rode's Report 2014:4 Industrial stand values 83
The remainder of this chapter includes market values for level, serviced stands in named industrial townships. The industrial-land-value tables contain regression pa-rameters in order to allow readers to inter-polate land values for area sizes other than those given in the tables. This is necessary because the relationship between price and square meterage is not linear.
For more details on how to use these equa-tions, refer to Annexure 3 (annexure-page XII).
This concludes our chapter on industrial stand values.
PS: If you do not understand a term used in this article, please consult the Glossary (Annexure 1)
Rode's Report 2014:4 Industrial stand values84
Rode's Report 2014:4 Industrial stand values85
Rode's Report 2014:4 Industrial stand values86
Rode's Report 2014:4 Industrial stand values87
Rode's Report 2014:4 Industrial stand values88
Rode's Report 2014:4 Industrial stand values89
Rode's Report 2014:4 Industrial stand values0
Rode's Report 2014:4 Industrial stand values1
Rode's Report 2014:4 Industrial stand values2
Rode's Report 2014:4 Industrial stand values3
Rode's Report 2014:4 Industrial stand values 94 T
ab
le 8
.2
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
250,0
0
175,0
0
125,0
0
25,0
0
75,0
0
112,5
0
125,0
0
130,0
0
0,0
0
12,5
0
50,0
0
25,0
0
AP,
QU
AP,
QU
AP,
QU
37,5
0
50,0
0
19,0
0
58,1
2
40,8
2
61,3
5
61,8
5
132,3
0
82,1
9
82,1
9
73,6
4
60,0
0
AP,
BM
, G
T,
QU
AP,
BM
, BR,
GT,
MR
, Q
U
AP,
BM
, BR,
GT,
QU
100,0
0
58,5
0
76,5
0
-
150,0
0
200,0
0
225,0
0
250,0
0
100,0
0
125,0
0
150,0
0
150,0
0
102,7
4
102,7
4
70,7
1
0,0
0
70,7
1
77,2
8
62,3
6
50,0
0
AP,
BR,
QU
AP,
BR,
QU
AP,
BR,
QU
AP,
BR,
QU
AP,
BR,
QU
40,8
2
40,8
2
96,0
1
0,0
0
40,8
2
23,5
7
7,0
7
0,0
0
25,0
0
75,0
0
75,0
0
64,8
1
12,5
0
12,5
0
0,0
0
25,0
0
5,0
0
5,0
0
27,7
9
0,0
0
- -
- -
50,0
0
50,0
0
50,0
0
37,5
0
0,0
0
25,0
0
25,0
0
0,0
0
40,0
0
50,0
0
50,0
0
62,5
0
Cen
tral W
itw
ate
rsran
d
Cam
bri
dge P
ark
Wynberg
Pro
per
Str
ijdom
Park
Kya S
and
Cla
yville
/Olifa
nts
fonte
in
Chlo
ork
op
Am
alg
am
Cro
wn M
ines
Industr
ia
Booysens/B
ooysens R
eserv
e/O
phir
ton
Villa
ge M
ain
/Villa
ge D
eep/N
ew
Centr
e
Benro
se
Ste
ele
dale
/Ele
ctr
on/T
ulisa P
ark
Aero
ton
Devla
nd/N
ancefield
Cle
vela
nd/H
eri
otd
ale
New
lands/M
art
indale
Kew
/Wynberg
East
Bra
mle
y V
iew
/Lom
bard
y W
est
Marl
boro
Halfw
ay H
ouse:
hi-
tech s
trip
37,5
0
37,5
0
84,9
8
40,8
2
AP,
BR,
QU
, RO
AP,
BR,
GT,
QU
, R
O
AP,
BM
, G
T,
QU
AP,
QU
AP,
MR,
QU
, RO
AP
AP,
QU
AP,
QU
AP,
BR,
QU
AP,
MR,
QU
Rode's Report 2014:4 Industrial stand values 95Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
0,0
0
12,5
0
88,9
8
77,2
8
75,0
0
75,0
0
40,8
2
62,3
6
550,0
0
550,0
0
600,0
0
600,0
0
100,0
0
100,0
0
0,0
0
23,5
7
75,0
0
125,0
0
200,0
0
129,4
4
- -
- -
AP,
BR,
QU
AP,
BR,
QU
AP,
QU
AP,
GT,
QU
AP,
BM
, BR,
GT,
QU
QU
62,3
6
47,1
4
42,4
9
73,4
8
BM
, BR,
GT,
QU
, R
O
100,0
0
100,0
0
100,0
0
75,0
0
0,0
0
25,0
0
35,3
6
74,8
3
12,5
0
12,5
0
37,5
0
37,5
0
94,2
8
84,9
8
47,1
4
0,0
0
AP,
BM
, Q
U
AP,
BR,
GT,
MR
, Q
U
AP,
MR,
QU
AP,
BR,
QU
25,0
0
25,0
0
0,0
0
25,0
0
50,0
0
50,0
0
75,0
0
100,0
0
84,9
8
84,9
8
81,6
5
50,0
0
29,4
4
29,4
4
18,8
6
12,5
0
47,1
4
47,1
4
37,7
1
7,5
0
225,0
0
250,0
0
- -
25,0
0
0,0
0
37,5
0
-
50,0
0
50,0
0
50,0
0
87,5
0
12,5
0
25,0
0
37,5
0
75,0
0
AP,
BR,
GT,
QU
AP,
QU
AP,
BR,
QU
AP,
BR,
QU
, RO
AP,
BR,
QU
, RO
AP,
QU
BR,
QU
AP,
BR,
QU
AP,
QU
Halfw
ay H
ouse:
Ric
hard
s D
rive
Com
merc
ia
Kra
merv
ille
/Eastg
ate
Ext1
2 &
Ext1
3
Centu
rion
Lin
bro
Park
Wesco P
ark
/Eastg
ate
Ext3
, Ext1
1,
Ext6
,
Ext8
/Malb
oro
Nort
h (
New
)
City D
eep
Nort
h R
idin
g
Sam
rand C
entu
rion
Barb
eque D
ow
ns
Selb
y E
xt
12/1
3/1
5/1
9/2
0/2
4/C
ity W
est
Selb
y E
xt
5/1
0/1
4/1
8
Selb
y E
xt
11
Selb
y E
xt
3/4
/6
Denver
(Old
)
Denver
(New
)
Kyala
mi Busin
ess P
ark
Reuven
Selb
y (
Old
)/Selb
y E
xt2
/Park
Centr
al
Robert
sham
Ford
sburg
/Mayfa
ir
- -
- -
Rode's Report 2014:4 Industrial stand values 96Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
100,0
0
100,0
0
78,0
0
125,0
0
AP,
QU
25,0
0
25,0
0
125,0
0
100,0
0
AP,
QU
40,0
0
40,0
0
45,0
0
40,0
0
AP,
QU
10,0
0
10,0
0
0,0
0
12,5
0
AP,
QU
150,0
0
175,0
0
175,0
0
175,0
0
AP,
QU
- -
- -
AP
- -
- -
AP
- -
- -
AP
100,0
0
100,0
0
135,0
0
150,0
0
AP,
QU
115,0
0
112,5
0
75,0
0
75,0
0
AP,
QU
- -
- 102,7
4
BM
, G
T,
QU
71,6
9
71,6
9
25,0
0
100,6
9
70,7
1
82,9
2
43,3
0
86,6
0
97,9
8
97,9
8
80,0
0
94,2
8
97,9
8
97,9
8
97,9
8
80,0
0
80,0
0
0,0
0
0,0
0
48,9
9
94,2
8
94,2
8
117,8
5
94,2
8
AP,
GT,
ME,
QU
AP,
BQ
, M
E,
QU
, RO
AP,
BQ
, M
E,
QU
AP,
BQ
, M
E,
QU
AP,
BQ
, M
E,
QU
AP,
BQ
, M
E,
QU
64,9
5
64,9
5
82,9
2
82,9
2
40,0
0
40,0
0
40,0
0
63,2
5
West
Ran
d
Lea G
len
Honeydew
X19,
20,
21 &
22
Sto
rmill
Cham
dor
Facto
ria
Randfo
nte
in:
Delp
ort
on/A
ure
us
Boltonia
Roodepoort
: Technik
on/M
anufa
cta
Industr
ia N
ort
h
Robert
ville
Laserp
ark
East
Ran
d
Ela
ndsfo
nte
in
Tunney/G
reenhills
Henville
Meadow
bro
ok/W
ilbart
Sunnyro
ck
Rustivia
/Activia
Park
Eastleig
h
Sebenza E
xt
14
Spart
an E
xt
16 (
Sebenza L
ink)
+ E
xt1
,3,7
50,0
0
50,0
0
23,5
7
40,8
2
AP,
ME,
QU
AP,
ME,
QU
, RO
AP,
ME,
QU
, RO
Rode's Report 2014:4 Industrial stand values 97Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
47,1
4
47,1
4
81,6
5
94,2
8
82,9
2
82,9
2
70,7
1
94,2
8
47,1
4
70,7
1
63,2
5
96,9
5
0,0
0
0,0
0
37,7
1
37,2
7
50,0
0
50,0
0
25,0
0
25,0
0
35,3
6
35,3
6
12,5
0
47,1
4
300,0
0
250,0
0
200,0
0
100,0
0
80,0
4
37,5
0
45,8
8
21,6
5
100,0
0
50,0
0
50,0
0
0,0
0
AP,
BQ
, M
E,
QU
AP,
BM
, BQ
, M
E,
QU
AP,
BM
, BQ
, M
E,
QU
, R
O
AP,
BM
, G
T,
QU
AP,
GT,
QU
AP,
QU
, SF
AP,
QU
AP,
QU
, SF
AP,
QU
23,5
7
35,3
6
41,0
1
63,8
5
100,0
0
50,0
0
50,0
0
41,4
6
43,3
0
43,3
0
45,8
8
21,6
5
25,0
0
25,0
0
27,2
4
54,4
9
0,0
0
0,0
0
0,0
0
0,0
0
75,0
0
75,0
0
88,3
9
89,2
7
150,0
0
150,0
0
100,0
0
100,0
0
AP,
BM
, Q
U
AP,
QU
, R
O
AP,
QU
, R
O
AP,
QU
, R
O
AP,
QU
, R
O
AP,
ME,
QU
AP,
ME,
QU
75,0
0
125,0
0
50,0
0
48,9
9
58,3
1
60,0
0
37,4
2
65,5
0
AP,
BM
, BR,
GT,
ME,
QU
AP,
BM
, BR,
GT,
ME,
QU
, RO
71,6
9
71,6
9
131,2
3
95,8
1
18,8
6
18,8
6
26,2
5
4,7
1
Isando
Isando 3
Jet
Park
Alr
ode &
Xs
Alr
ode S
outh
Alb
ert
on
Aero
port
/Spart
an E
xt
2
Delv
ille
Roodekop
Wadeville
: In
dustr
ial zonin
g
Route
24/M
eadow
dale
Germ
isto
n S
/Industr
ies E
Dri
ehoek/I
ndustr
ies W
Knig
hts
Spart
an P
roper
Founders
Vie
w
Longm
eadow
Pom
ona/K
em
pto
n P
ark
Far E
ast
Ran
d
Boksburg
Nort
h &
South
Benoni
New
Era
/Vulc
ania
0,0
0
0,0
0
50,0
0
50,0
0
AP,
GT,
QU
, RO
AP,
QU
, R
O
AP,
RO
Rode's Report 2014:4 Industrial stand values 98Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
- -
- -
AP
- -
- -
AP
- -
- 81,9
7
AP,
BM
, G
T
- -
- -
AP
- -
- -
- -
-
- -
-
- -
-
- -
-
- 0,0
0
-
- -
-
- AP
- AP
-
- M
AS
- AI,
AP,
MAS
-
- -
-
- -
-
- -
-
- -
-
- AP
- AP
- AP
- AP
200,0
0
200,0
0
70,0
0
200,0
0
AI,
AP,
MAS
- -
-
- -
-
- -
-
Nuffie
ld
Fulc
rum
Apex
Labore
Bra
kpan
More
hill Ext
8 B
enoni
Preto
ria
Mitchell S
t
Pre
tori
a I
ndustr
ial Tow
nship
Koedoespoort
Waltlo
o/D
espatc
h
Silvert
on/S
ilvert
ondale
Sam
cor
Sunderl
and R
idge
Herm
ansta
d
Kir
kney
Hennopspark
X15 &
X7
Gate
way
Lytt
leto
n M
anor
X4/X
6
Pre
tori
a N
ort
h
Silvert
ondale
X1
Bri
ts
- -
-
- AP
- M
AS
- AP
-
Rode's Report 2014:4 Industrial stand values 99Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
- -
- -
AP
- -
- -
AP
- -
- -
- -
- -
- -
- -
ES,
MO
- 0,0
0
- -
ES,
MO
- -
- -
- -
- -
- -
- -
ES
- -
- -
- -
- -
- -
- -
100,0
0
50,0
0
50,0
0
- H
H,
RZ
175,0
0
100,0
0
170,0
0
- H
H,
RZ
0,0
0
0,0
0
100,0
0
100,0
0
ML,
PC,
PPI
0,0
0
0,0
0
250,0
0
200,0
0
ML,
PC,
PPI
100,0
0
100,0
0
75,0
0
75,0
0
ML,
PC,
PPI
150,0
0
150,0
0
0,0
0
0,0
0
ML,
PC,
PPI
250,0
0
0,0
0
150,0
0
100,0
0
ML,
PC,
PPI
250,0
0
0,0
0
0,0
0
250,0
0
ML,
PPI
0,0
0
0,0
0
500,0
0
250,0
0
ML,
PC,
PPI
Kle
rksoord
Rossly
n
Po
lok
wan
e
Lebow
akgom
o
Superb
ia
Industr
ia
Ladin
e
Futu
ra
Labori
a
Magna V
ia
Seshego
Nels
pru
it
Nels
pru
it E
ast
Nels
pru
it W
est
Rocky's
Dri
ft
Riv
ers
ide P
ark
Du
rb
an
Spri
ngfield
Park
Mayville
Phoenix
Nort
h C
oast
Rd/B
riard
ene
Bri
ard
ene I
ndustr
ial Park
Um
geni Rd/S
tam
ford
Hill
Um
bilo/S
ydney R
d/G
ale
St
Jacobs
75,0
0
- 100,0
0
100,0
0
ML,
PC,
PPI
Rode's Report 2014:4 Industrial stand values 100Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
175,0
0
175,0
0
350,0
0
550,0
0
ML,
PPI
350,0
0
350,0
0
500,0
0
600,0
0
ML,
PPI
- -
- -
205,4
8
205,4
8
81,6
5
108,0
1
141,4
2
141,4
2
141,4
2
124,7
2
- -
- -
75,0
0
75,0
0
0,0
0
50,0
0
50,0
0
100,0
0
100,0
0
150,0
0
0,0
0
0,0
0
100,0
0
200,0
0
0,0
0
0,0
0
175,0
0
250,0
0
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
PPI
ML,
PC,
PPI
ML,
PC,
PPI
ML,
PC,
PPI
ML,
PPI
0,0
0
0,0
0
100,0
0
50,0
0
25,0
0
50,0
0
25,0
0
125,0
0
25,0
0
50,0
0
0,0
0
125,0
0
ML,
PC,
PPI
ML,
PC,
PPI
ML,
PC,
PPI
- -
- -
84,9
8
94,2
8
124,7
2
205,4
8
100,0
0
294,3
9
300,9
2
227,3
0
0,0
0
0,0
0
47,1
4
47,1
4
100,0
0
150,0
0
150,0
0
150,0
0
- -
- -
0,0
0
0,0
0
50,0
0
250,0
0
- -
- -
Mobeni
Pro
specto
n
Ithala
Industr
ial Esta
te
Pin
eto
wn C
entr
al
New
Germ
any
Kw
a D
ebeka I
ndustr
ial Park
Isip
ingo
Rossburg
h/S
outh
Coast
Rd
Edw
in S
wale
s D
rive
Gle
n A
nil
Bri
ckfield
Rd
Veru
lam
Canela
nds
Tongaat
New
Westm
ead/M
ahogany
Westm
ead
Mari
ann P
ark
/South
mead
Maxm
ead
Rin
gro
ad I
ndustr
ial Park
Avoca/R
ed H
ill/
Nort
hgate
Falc
on P
ark
Riv
er
Hors
e V
alley B
usin
ess E
sta
te
0,0
0
0,0
0
0,0
0
0,0
0
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
PPI
ML,
PC,
PPI
PC
ML,
PC,
QP
Rode's Report 2014:4 Industrial stand values 101Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
100,0
0
100,0
0
329,9
8
294,3
9
525,0
0
525,0
0
150,0
0
225,0
0
175,0
0
100,0
0
100,0
0
-
ML,
PC,
PPI
ML,
PC,
PPI
ML,
PC,
PPI
- -
- -
- -
- -
- -
0,0
0
9,4
3
50,0
0
50,0
0
47,1
4
47,1
4
PPI
ML
ML,
PC,
PPI,
QP
ML,
PC,
PPI,
QP
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
250,0
0
- -
-
100,0
0
100,0
0
- -
400,0
0
400,0
0
- -
0,0
0
150,0
0
- -
62,3
6
62,3
6
- -
DD
, G
B
AN
, D
D,
GB
DD
, G
B
DD
, G
B,
GIN
AN
, D
D,
GB,
GIN
- -
- -
- -
- -
Mount
Edgecom
be
Um
bogin
twin
i/South
gate
South
gate
Industr
ial Park
Hib
iscus I
ndustr
ial Park
Um
geni Park
Ham
mers
dale
Cato
Rid
ge
Geo
rg
e
Georg
e C
entr
al
Tam
sui In
dustr
ia
Pacaltsdorp
Industr
ia
Cap
e P
en
insu
la
Vik
ing P
lace
Glo
sderr
y
Paard
en E
iland/M
etr
o
Monta
gue G
ard
ens
Marc
oni Beam
Killa
rney G
ard
ens
Racin
g P
ark
Atlantis
Woodsto
ck/S
alt R
iver/
Observ
ato
ry
Ath
lone 1
& 2
-
- -
- AN
Rode's Report 2014:4 Industrial stand values 102Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
GB
- -
- -
25,0
0
50,0
0
100,0
0
- AN
, G
B,
PL
500,0
0
- -
- AN
, D
D
- -
- -
- -
- -
50,0
0
50,0
0
- -
AN
, G
B
200,0
0
200,0
0
- -
AN
, G
B
- -
- -
75,0
0
100,0
0
75,0
0
100,0
0
AN
, G
B
150,0
0
150,0
0
200,0
0
250,0
0
AN
, G
B
0,0
0
0,0
0
0,0
0
0,0
0
AN
, G
B
- -
- -
- -
- -
150,0
0
150,0
0
200,0
0
125,0
0
AN
, G
B
Landsdow
ne N
eri
ssa
Sand I
ndustr
ia
Ott
ery
Hills
tar
Ott
ery
Sunset
Die
p R
iver
Elfin
dale
Monw
ood/P
hilip
pi
Retr
eat/
Ste
enberg
Capri
corn
Park
Maitla
nd
Ndabeni
Air
port
Eppin
g 1
& 2
WP P
ark
Els
ies R
iver
(excl. C
entr
al Park
)
Paro
w B
eaconvale
Tygerb
erg
Busin
ess P
ark
Paro
w I
ndustr
ia
Paro
w E
ast
Bellville
Oakdale
Bellville
Stikla
nd/K
aym
or
Bellville
Tri
angle
75,0
0
75,0
0
0,0
0
50,0
0
AN
, G
B
Rode's Report 2014:4 Industrial stand values 103Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
50,0
0
0,0
0
0,0
0
50,0
0
AN
, G
B
100,0
0
100,0
0
150,0
0
150,0
0
AN
, G
B
25,0
0
25,0
0
125,0
0
0,0
0
AN
, G
B
100,0
0
100,0
0
150,0
0
75,0
0
AN
, G
B
0,0
0
0,0
0
- -
AN
, G
B
50,0
0
50,0
0
50,0
0
75,0
0
AN
, G
B
125,0
0
125,0
0
125,0
0
100,0
0
AN
, G
B
- -
- -
AN
- -
- -
AN
- -
- -
- -
- -
- -
- -
- -
- -
IPM
- -
- -
IPM
- -
- -
IPM
- -
- -
- -
- -
IPM
- -
- -
IPM
- -
- -
IPM
- -
- -
IPM
Bellville
South
/Sacks C
ircle
Kra
aifonte
in
Bra
ckenfe
ll I
ndustr
ia
Everi
te B
rackenfe
ll
Kuils R
iver
Bla
ckheath
Saxonburg
Industr
ial Park
Okavango
Fir
gro
ve
The I
nte
rchange (
Som
ers
et
West)
Str
and H
alt
Bro
adla
nds
Po
rt
Elizab
eth
Deal Part
y
Nort
h E
nd
Kors
ten/N
eave/S
idw
ell/S
ydenham
South
End W
alm
er
Uitenhage:
Volk
sw
agen a
rea/N
MBLP
Uitenhage:
Hella/K
ruis
rivie
r
Str
uandale
Mark
man T
ow
nship
Pers
evera
nce
- -
- -
IPM
Rode's Report 2014:4 Industrial stand values 104Tab
le 8
.2 (
co
nti
nu
ed
)
Sta
nd
ard
devia
tion
fro
m m
ean
market
valu
es f
or s
ervic
ed
an
d level in
du
str
ial sta
nd
s
in q
uarte
r 2
01
4:3
(R
/m
² e
xcl
VA
T)
Area s
ize i
n m
²
Co
ntr
ibu
tors
1.0
00
2
.00
0
5.0
00
1
0.0
00
- -
- -
IPM
100,0
0
100,0
0
125,0
0
137,5
0
IPM
, N
RG
- -
- -
IPM
4,7
1
10,8
0
0,0
0
0,0
0
BW
, C
C,
EK
9,4
3
21,6
0
5,6
6
- BW
, C
C,
EK
- -
- -
BW
, EK
0,0
0
7,5
0
0,0
0
2,5
0
BW
, EK
5,0
0
0,0
0
0,0
0
0,0
0
BW
, EK
0,0
0
0,0
0
2,5
0
5,0
0
BW
, EK
Walm
er
Gre
enbushes
Fair
vie
w
Blo
em
fon
tein
Hilto
n
East
End
Harv
ey R
oad
Old
Industr
ial
Ham
ilto
n:
Mill St
Ham
ilto
n:
G L
ubbe S
t
Esto
ir
0,0
0
0,0
0
5,0
0
2,5
0
BW
, EK
Rode’s Report 2014:4 Flats market 105
180
170
160
150
140
130
120
110
100
90
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
FlatsHousesTownhouses
National residential rentals
Inde
x (2
004Q
1=10
0)
Source of data: Rode's database
180
170
160
150
140
130
120
110
100
902004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
JohannesburgPretoriaDurbanCape Town
Movement in nominal flat rentals (all sizes)(based on matched pair methodology)
Inde
x (2
004
Q1=
100)
Source of data: Rode's database
0
4
8
12
16
20
24
0
1
2
3
4
5
6
90 92 94 96 98 00 02 04 06 08 10 12 14
Flat rentalFlat vacancy rate
Growth in flat rentalsvs
Flat vacancy rates(National)
r²=0,6
Gro
wth
in
flat
rent
als
(%;
yo-y
)
Flatva
cancyrate
(%; y
-o-y)
Source of data: Rode's database
Chapter 9: Flats market
Declining flat vacancies should bode well for rentals
Written by John S. Lottering
On a national basis, in the third quarter of 2014, flat and house rentals were up by about 5%, while rentals for townhouses could only muster growth of 3%.
Consumer inflation (excluding owners’ equivalent rent) was 6% over the same period. This implies that — on a national basis — residential rentals were again una-ble to grow in real terms. An analysis of the flat-rental performance of the large metropolises shows the strongest growth in Durban (+5%). In Johannesburg, Pretoria and Cape Town, flat rentals could only manage growth of 3%.
Some good news for investors in the buy-to-let flat market is the decline in flat vacancies in recent quarters. This improvement in demand naturally bodes well for market rentals, given the very strong inverse relationship between flat vacancy rates and the growth in rentals. The corresponding graph shows that over the period between 1990q1 and 2014q3, changes in flat vacancy rates explained as much as 60% of the change in the growth in flat rentals.
With reference to the right-hand scale, note how low flat vacancies generally are − at a current factor of only about 3%. How-ever, everything is relative, and the dis-concerting thing is that flat vacancies have been trending up since the early 1990s, when they were close to zero. The secular rise in vacancies over such a long period can probably be ascribed to growing com-petition from townhouses. Nevertheless, from an investment point of view, the va-cancy risk for owners of flats is quite low compared to those who own office build-ings. This low-risk characteristic of residen-
Rode’s Report 2014:4 Flats market 106
tial properties does mean that a specialist apartment-owning fund would probably be well received on the JSE.
Income yields of flats
Table 9.1 summarizes the gross-income yields of flats. Net-income yields are the residential-property equivalent of non-residential property’s capitalization rates. As a rule of thumb, to convert gross in-come yields to net, deduct 1,5 percentage points from gross.
This deduction takes into account operating expenses such as insurance and mainte-nance, as well as assessment rates.
The flat-rental data tends to be erratic. Therefore, all rentals in the accompany-ing graphs have been smoothed, and readers are advised to focus on the over-all trends.
This section is concluded by the flat-rental tables that follow. ■
The previous graphs give only a very broad picture of trends in the flats market, since the rentals reflected are averages of many different suburbs within the particular metropolitan areas. Keep in mind that all analyses were done on standard-quality flat units. Readers re-quiring more details are directed to the many tables, starting on p. 109, of specific rental levels in the various suburbs for the various grades of flats.
Rode’s Report 2014:4 Flats market 107
Table 9.1
Gross-income yields (%): Flats
Standard quality Quarter 2014:3
Bachelor 1-
Bedroom
2-
Bedroom
3-
Bedroom
Eastern Cape
Port Elizabeth
- Summerstrand /Humewood /South End 10,3 5,6 6,0 6,4
- Walmer 7,2 7,6 9,0 11,2
- Central / North End 17,5 15,7 14,2 13,7
- Newton Park 12,7 11,4 9,2 9,7
- Kabega 10,6 17,1 13,8 10,5
- Algoa Park 7,7 14,4 12,0 12,0
Uitenhage
- Uitenhage 9,4 10,0 9,1 8,8
Free State
Bloemfontein
- Bloemfontein CBD 16,6 9,8 7,2 -
- Westdene - 8,0 12,0 -
- Willows 14,3 8,4 8,4 12,9
- Navalsig - 11,6 9,0 -
- Arboretum - 9,8 9,2 -
Gauteng
- East Rand
Kempton Park
- Croydon - - 8,7 9,4
Boksburg
- Ravenswood - - 8,0 8,9
Rode’s Report 2014:4 Flats market 108
Table 9.1 (continued)
Gross-income yields (): Flats Standard quality
Quarter 2014:3
Bachelor
1-
Bedroom
2-
Bedroom
3-
Bedroom
Alberton
- Verwoerd Park - - 10,0 10,6
Benoni
- Lakefield - - 10,2 9,8
- Westdene - - 9,2 10,6
- Farrarmere - - 7,9 8,1
- Morehill - - 10,3 9,4
- Rynfield - - 9,8 10,7
- Northmead - - 8,2 10,7
- Crystal Park - 9,2 9,2 8,6
- Western Extension - 10,6 10,6 9,7
- Centurion
- Pierre van Ryneveld - - 7,9 7,5
- Kloofsig / Lyttelton Manor / Doringkloof 9,3 9,6 7,8 9,8
- Highveld and Extensions - - 9,0 7,8
- Clubviews/Eldoraigne - - 10,6 -
- Rooihuiskraal / The Reeds - - 8,9 8,8
- Valhalla - - 7,8 8,9
Western Cape
- Tyger Valley / Durbanville 9,8 8,0 9,2 7,9
Rode’s Report 2014:4 Flats market 109T
ab
le 9
.2
Fla
t ren
tals
: sta
nd
ard
un
its
Averag
e r
an
ds p
er m
on
th a
s a
t q
uarte
r 2
01
4:3
Bach
elo
r
1-B
ed
ro
om
2
-Bed
ro
om
3
-Bed
ro
om
B
roker
con
trib
uto
rs
SD
S
D
Mean
S
D
Mean
S
D
Mean
R2
.65
1
Mean
R3
.45
3
R4
.27
9
R5
.09
1
R2.7
50
R350
R3.3
00
R346
R4.1
67
R351
R4.7
50
R1.0
61
CI,
CQ
, PU
R3.2
50
- R3.4
00
- R4.0
50
- -
- PU
R3.0
50
- R3.6
00
- R4.1
50
- R4.5
00
- PU
- -
- -
- -
- -
- -
- -
- -
-
R3.6
25
R530
R4.2
50
R354
R5.0
00
R0
R6.2
50
-
R354
JL,
RF,
TR
- -
- -
- -
- -
R3.5
00
- R4.5
00
- R5.5
00
R0
R6.5
00
- JL
, TR
R2.5
25
R318
R3.1
38
R1.2
55
R3.4
00
R424
R3.7
13
R1.2
13
R4.0
50
R636
R4.4
25
R1.7
17
R2.2
50
R495
R3.1
50
R636
R4.1
50
R495
R4.9
50
R1.2
02
BS,
JL,
NH
R4.9
00
R1.1
31
BS,
JL,
NH
, TR
R4.7
50
R354
BS,
JL
- -
- -
- -
- -
R2.8
00
- R4.6
00
- R6.0
00
- R7.0
00
- BS
Jo
han
nesb
urg
averag
e
City (
incl. J
oubert
Park
/Bra
am
fonte
in/
Hillb
row
/Bere
a/P
ark
tow
n)
Yeoville
/Bellevue/H
ighla
nds
Jeppesto
wn/F
ord
sburg
/Malv
ern
/
Kensin
gto
n/L
ore
ntz
ville
Nort
h-E
aste
rn S
uburb
s (
incl. K
ew
/
Cyrild
ene/F
airm
ount/
Waverley/
Lyndhurs
t/Bra
mle
y/S
avoy)
Mara
isburg
/Cro
sby/B
rixto
n
Meld
ene (
Melv
ille
, W
estd
ene,
Auckla
nd P
ark
)
Rosebank/K
illa
rney/I
llovo
Gre
ensid
e/V
icto
ry P
ark
/ Em
mare
ntia/
Lin
den/P
ark
vie
w/
Park
hurs
t
Randburg
: Fern
dale
/Fonta
ineble
au
Randburg
& S
uburb
s
Win
dsor:
East/
West
Cra
ighall/C
raig
hall P
ark
Sandto
n:
Nort
h &
Far
Nort
h (
incl.
Bry
ansto
n /
Fourw
ays/L
onehill/
Dougla
sdale
)
Sandto
n:
South
to C
entr
al (i
ncl.
Sandow
n/R
ivonia
/Morn
ingsid
e/
Sunnin
ghill/
Kyala
mi)
- -
- -
- -
- -
Rode’s Report 2014:4 Flats market 110T
ab
le 9
.2 (
co
nti
nu
ed
)
Fla
t ren
tals
: sta
nd
ard
un
its
Averag
e r
an
ds p
er m
on
th a
s a
t q
uarte
r 2
01
4:3
Bach
elo
r
1-B
ed
ro
om
2
-Bed
ro
om
3
-Bed
ro
om
B
roker
Mean
S
D
Mean
S
D
Mean
S
D
Mean
S
D
- -
R3.5
00
- R4.5
00
- -
con
trib
uto
rs
- TR
R2.2
00
- R3.5
50
- R3.8
00
- -
- PU
R1.4
00
- R1.7
50
- R2.2
00
- R2.9
00
- D
V
- -
- -
R2.1
00
- R2.3
90
- R2.8
90
- R2.7
80
- PH
R1.5
80
- R1.8
60
- R2.0
80
- R2.9
20
- PH
- -
- -
- -
- -
- -
R3.1
90
- R3.3
20
- -
- PH
R2
.58
3
R2
.95
0
R3
.58
3
R4
.12
5
R2.7
00
R141
R2.9
00
R141
R3.5
50
R71
R3.8
50
R71
HK,
TR
R2.3
33
R153
R2.5
33
R153
R3.1
67
R208
R4.0
00
R2.7
25
R393
R3.1
00
R265
R3.5
00
R141
R4.7
00
R2.7
67
R58
R3.0
00
R0
R3.3
50
R150
R3.7
50
R2.4
50
R71
R2 9
33
R115
R3.7
33
R58
R4.0
50
R0
CI,
HK,
TR
R141
CI,
HK,
TR
R354
CI,
HK,
TR
R71
CI,
HK,
TR
R2.9
50
R212
R3.2
00
R141
R4.2
00
R0
R5.1
50
R354
HK,
TR
Bedfo
rdvie
w
Old
South
(in
cl. R
osett
enville
/
Turf
fonte
in/K
enilw
ort
h)
New
South
(in
cl. S
outh
dale
/Mondeor/
Gle
nvis
ta/L
inm
eyer)
Germ
isto
n a
verag
e
Prim
rose
Germ
isto
n C
& S
Germ
isto
n S
outh
- s
uburb
s
Els
burg
Preto
ria
averag
e
Akasia
Pre
toria N
ort
h/D
ora
ndia
/Flo
rauna
Annlin/W
onderb
oom
/Sin
oville
/Monta
na
Die
Moot/
Queensw
ood
Silvert
on/M
eyers
park
/La M
onta
gne
Easte
rn s
uburb
s (
Menlo
Park
/Ashle
a
Gard
ens/a
ll L
ynnw
oods/D
ie W
ilgers
/
Faeri
e G
len/G
ars
fonte
in/P
reto
riuspark
/
Consta
ntia/W
ate
rklo
of
Gle
n/
Era
sm
usklo
of)
Gro
enklo
of/
Bro
okly
n/m
ost
Wate
rklo
ofs
/
Monum
entp
ark
/Era
sm
usra
nd
R3.4
00
R566
R3.7
75
R601
R4.6
50
R212
R5.2
50
R212
HK,
TR
Rode’s Report 2014:4 Flats market 111T
ab
le 9
.2 (
co
nti
nu
ed
)
Fla
t ren
tals
: sta
nd
ard
un
its
Averag
e r
an
ds p
er m
on
th a
s a
t q
uarte
r 2
01
4:3
Bach
elo
r
1-B
ed
ro
om
2
-Bed
ro
om
3
-Bed
ro
om
B
roker
con
trib
uto
rs
Mean
S
D
Mean
S
D
Mean
S
D
Mean
S
D
R3.1
50
R495
R3.5
50
R212
R4.2
00
R141
R4.6
50
R212
HK,
TR
R2.5
88
R317
R3.2
38
R939
R4.1
38
R945
R4.1
33
R2.7
75
R492
R3.2
50
R686
R4.0
38
R499
R4.2
83
R2.6
25
R544
R3.2
13
R841
R3.9
63
R599
R4.1
50
R2.3
50
R50
R2.7
17
R58
R3.3
17
R126
R3.9
83
R2.4
00
R100
R2.6
67
R58
R3.1
33
R208
R3.8
67
R1.9
50
R212
R2.2
50
R71
R2.7
00
R283
R30300
R231
CI,
HK,
PU
, TR
R126
CI,
HK,
PU
, TR
R218
CI,
HK,
PU
, TR
R189
CI,
HK,
TR
R153
CI,
HK,
TR
R424
HK,
TR
- -
- -
- -
- -
R3
.39
6
R3
.69
6
R4
.73
0
R5
.76
8
- -
- -
- -
R4.9
00
- ASA
- -
- -
- -
- -
R3.5
25
R247
R3.7
75
R318
R4.5
25
R35
R6.0
75
R601
ASA,
CB
R3.3
50
- R3.7
50
- R4.5
75
R106
R5.7
75
R35
ASA,
CB
R3.5
40
- R3.8
00
- R5.1
50
R495
R6.1
00
- ASA,
CB
R3.3
50
- R3.7
50
- R5.0
25
R530
R6.3
25
R672
ASA,
CB
R3.3
50
- R3.5
50
- R4.5
50
- R5.5
60
R3.3
50
- R3.5
50
- R4.5
50
- R5.5
50
- CB
- CB
R2
.99
8
R3
.58
5
R4
.37
1
R5
.16
5
South
-easte
rn s
uburb
s (
Ela
rduspark
/
Win
gate
Park
/More
leta
park
/Pie
rre v
an
Ryneveld
/Wate
rklo
of)
Sunnysid
e
Arc
adia
Pre
toria C
entr
al
Pre
toria W
est
Kw
aggasra
nd/W
est
Park
Ela
ndspoort
/Danville
Att
eri
dgeville
/Laudiu
m
Cen
turio
n A
verag
e
Pie
rre v
an R
yneveld
Irene
Klo
ofs
ig/
Lytt
leto
n M
anor/
Doringklo
of/
Zw
art
kop
Hig
hveld
and E
xte
nsio
ns
Clu
bvie
ws/
Eld
ora
igne/
Wie
rda P
ark
/
Cra
nebro
ok/
Bro
nberr
ick/
Rooih
uis
kra
al N
ort
h
Rooih
uis
kra
al/
The R
eeds
Heuw
elo
ord
Valh
alla
Du
rb
an
avera
ge
Upper
hig
hw
ay:
Klo
of/
Hillc
rest
R3.4
00
- R3.6
00
- R4.2
00
- R5.5
00
- W
K
Rode’s Report 2014:4 Flats market 112T
ab
le 9
.2 (
co
nti
nu
ed
)
Fla
t ren
tals
: sta
nd
ard
un
its
Averag
e r
an
ds p
er m
on
th a
s a
t q
uarte
r 2
01
4:3
1-B
ed
ro
om
3
-Bed
ro
om
B
roker
con
trib
uto
rs
Bach
elo
r
Mean
S
D
Mean
S
D
SD
M
ean
S
D
R35
R0
2-B
ed
ro
om
Mean
R4.2
25
R35
- TR,
WK
- -
-
R0
R141
R636
- W
K
R707
TR,
WK
R106
R0
R177
- TR,
WK
R212
R601
R4.4
50
R4.3
00
R4.6
25
R4.8
75
R177
R177
TR,
WK
- -
-
- -
-
R389
R318
R601
-
-
- TR,
WK
R2.6
75
R2.6
00
R3.0
00
R2.9
25
R3.1
50 - -
R3.0
25
R3.3
00
-
R3.5
00
R3.3
50
R3.4
00
R3.5
00
R3.8
25 - -
R3.6
25
R3.8
50
R495
- -
R4.4
25
R4.3
25
R742
R4.8
50
R6.0
00
R5.0
00
R5.5
00
R5.8
75 - -
R4.5
00
R5.0
00
R707
TR,
WK
R3.0
00
- R3.6
50
R212
R3.9
75
R318
R4.5
00
- TR,
WK
R2
.88
5
R3
.44
2
R4
.39
3
R5
.54
6
R4.7
50
R354
R6.0
50
R212
R7.3
50
R212
R8.9
00
Pin
eto
wn a
rea/Q
ueensburg
h
Westv
ille
are
a
Centr
al C
ity (
incl. L
ow
er
Bere
a)
Bere
a /
Morn
ingsid
e /
Gle
nw
ood
South
and N
ort
h B
each
Durb
an N
ort
h/L
a L
ucia
/Um
hla
nga
Nort
h (
Dolp
hin
) Coast/
Ballito
Montc
laire/Y
ellow
wood P
ark
Blu
ff a
rea/D
urb
an S
outh
Durb
an S
outh
/Am
anzim
toti/W
arn
er
Beach a
rea
Cap
e T
ow
n a
verag
e
Cam
ps B
ay/C
lift
on/B
antr
y B
ay
Sea P
oin
t R3.5
00
- R4.5
00
- R5.6
00
- R6.7
00
R141
SQ
, TR
- TR
Gre
en P
oin
t/Thre
e A
nchor
Bay
R3.9
50
R150
R3.7
33
R2
854
R6.3
67
R709
R8.2
50
R354
PF,
SQ
, TR
R4.1
83
R29
R4.8
75
R320
R6.4
63
R1.0
09
R9.1
67
R3.8
33
R473
R5.1
83
R539
R6.4
25
R106
R8.2
50
R289
JL,
SQ
, TR
R354
SQ
, TR
- -
- -
- -
R3.7
67
R153
R4.3
50
R304
R379
R7.8
17
R3.2
67
R306
R3.9
83
R144
R265
R6.6
50
R3.0
83
R189
R3.7
00
R361
R212
R4.9
00
-
R275
PF,
SQ
, TR
R495
PF,
SQ
, TR
R141
SQ
, TR
- -
R3.9
50
- -
- -
PF
R3.0
00
R0
R3.4
63
R189
R568
R5.5
00
City B
ow
l (e
xclu
din
g H
iggovale
)
City C
entr
e
Wate
rfro
nt
Rondebosch/R
osebank/C
lare
mont
Kenilw
ort
h/W
ynberg
/Plu
mste
ad
Muiz
enberg
/ Kalk
Bay/
Fis
h H
oek
Hout
Bay
Milnert
on/S
anddrift
Table
vie
w/
Park
lands
R3.1
00
R100
R3.5
33
R252
-
R6.2
33
R4.8
00
R4.1
50
R4.9
50
R4.3
25
R3.9
00
R100
R4.6
67
R0
LA,
PF,
RS,
TR
R153
LA,
PF,
RS,
TR
Rode’s Report 2014:4 Flats market 113T
ab
le 9
.2 (
co
nti
nu
ed
)
Fla
t ren
tals
: sta
nd
ard
un
its
Averag
e r
an
ds p
er m
on
th a
s a
t q
uarte
r 2
01
4:3
1-B
ed
ro
om
3
-Bed
ro
om
B
roker
con
trib
uto
rs
Bach
elo
r
Mean
S
D
Mean
S
D
SD
M
ean
S
D
R141
R212
2-B
ed
ro
om
Mean
R4.5
00
R0
R115
LA,
TR
- -
- -
TR
- -
- -
TR
R35
R212
R0
R3.1
00
R1.8
00
R2.0
00
R3.1
75
R2.4
33
R58
R3.6
50
R2.1
00
R2.3
00
R3.8
50
R3.0
67
R115
R2.8
00
R2.9
50
R4.5
00
R3.6
00
R173
R5.4
33
R3.8
00
R3.5
00
R5.5
50
R4.3
00
R71
LA,
TR
R173
LA,
SQ
, TR
R3.0
00
R0
R3.2
33
R252
R3.9
67
R208
R4.5
67
R503
LA,
SQ
, TR
R2.5
67
R115
R3.1
00
R100
R4.1
00
R115
R4.7
67
R2.0
33
R153
R2.5
75
R250
R3.5
00
R245
R4.3
00
R2.0
00
R0
R2.3
17
R176
R3.1
17
R126
R4.0
83
R2.2
00
R337
R2.7
13
R347
R3.3
25
R310
R4.8
33
R1.9
33
R115
R2.4
83
R104
R3.1
00
R100
R4.6
50
R252
LA,
PF,
RS,
TR
R173
LA,
PF,
RS,
TR
R144
GE,
LA,
TR
R289
GE,
LA,
SQ
, TR
R350
GE,
LA,
TR
R2
.47
9
R2
.77
9
R3
.67
9
R4
.72
0
R3.1
83
R161
R3.7
50
R354
R4.8
33
R577
R6.8
00
R1.3
11
SJ,
TR,
ZB
R3.1
67
R153
R3.2
25
R389
R4.3
00
R778
R7.0
00
R2.4
50
R354
R2.9
00
R141
R3.4
00
R141
R4.0
00
- SJ,
TR,
ZB
R0
SJ,
TR
R2.6
50
- R2.8
00
- R4.1
00
R424
R4.8
00
- SJ,
TR
R2.5
00
- R2.9
00
- R4.2
00
R283
R4.8
00
R2.2
00
- R2.5
00
- R3.0
00
- R3.4
00
- SJ,
TR
R141
SJ,
TR
R1.6
00
- R1.8
00
- R2.5
00
- R3.5
00
- SJ
R2
.89
6
R3
.31
6
R4
.04
1
R5
.00
8
R2.6
00
- R3.0
00
- R3.9
00
- R4.5
00
- TR
R2.7
00
- R3.2
00
- R3.8
00
- R4.3
00
- TR
Blo
uberg
/Melk
bos
Ath
lone
Mitchell's
Pla
in
Pin
ela
nds
Bro
okly
n/R
ugby/M
aitla
nd
Monte
Vis
ta/
Goodw
ood/
Paro
w/
Bellville
Centr
al
Tyger
Valley a
rea/
Durb
anville
Bra
ckenfe
ll/
Kuils R
iver
Som
ers
et
West
Str
and
Gord
on's
Bay
Po
rt
Eli
za
beth
averag
e
Sum
mers
trand/H
um
ew
ood/S
outh
End
Walm
er
Centr
al/
Nort
h E
nd
New
ton P
ark
Weste
ring
Kabega
Alg
oa P
ark
East
Lo
nd
on
averag
e
South
ern
wood/Q
uig
ney B
each/C
BD
Bere
a
Am
alinda
R2.7
00
- R3.2
00
- R3.8
00
- R4.3
00
- TR
Rode’s Report 2014:4 Flats market 114.
T
ab
le 9
.2 (
co
nti
nu
ed
)
Fla
t ren
tals
: sta
nd
ard
un
its
Averag
e r
an
ds p
er m
on
th a
s a
t q
uarte
r 2
01
4:3
1-B
ed
ro
om
2
-Bed
ro
om
3
-Bed
ro
om
B
roker
Bach
elo
r
Mean
S
D
Mean
S
D
Mean
S
D
Mean
S
D
- -
-
con
trib
uto
rs
- TR
R115
R58
R200
R58
R189
R264
R236
R71
R173
R191
R247
R144
Gonubie
Park
Blo
em
fon
tein
averag
e
Blo
em
fonte
in
Westd
ene
Willo
ws
Navals
ig
Arb
ore
tum
R3.0
00
R2
.26
2
R2.0
67
R2.5
33
R2.5
17
R2.3
65
R1.9
00
R141
R3.5
00
R2
.66
8
R2.6
33
R2.7
25
R2.6
50
R2.6
83
R2.6
50
R577
R4.0
00
R3
.58
1
R3.0
00
R4.0
11
R3.8
00
R3.4
17
R3.7
67
R874
R5.0
00
R4
.17
7
R3.6
00
R4.3
00
R3.9
00
R4.4
00
R4.1
25
- ED
, EK,
MI
- ED
, EK,
MI
- ED
, EK,
MI
R141
ED
, EK,
MI
R884
ED
, EK,
MI
Rode’s Report 2014:4 Flats market 115Ta
ble
9.3
Flat
ren
tals
: u
pm
arke
t u
nit
s A
vera
ge
ran
ds
per
mon
th a
s at
qu
arte
r 2
01
4:3
1-B
edro
om
2-B
edro
om
3-B
edro
omB
roke
rco
ntr
ibu
tors
an
S
SD
SM
ean
S
D
Mea
n
SD
Bac
hel
or
Mea
n
R3
.01
9
D
Me
R4
.41
6R
5.8
06
R6
.21
0
--
R5.0
00
5.
R6.5
00
6-
-TR
--
--
--
--
R3.5
00
-R4.5
00
- R6.0
00
-R7.5
00
-JL
--
R5.0
00
- R6.4
00
-R7.5
00
-TR
R4.1
75
R4.0
00
-JL
, TR
R424
BS,
JL,
NH
, TR
R3.6
00
R2.3
00
R71
BS,
JL,
NH
, TR
R141
BS,
JL
-
R460
R5.7
50
R707
R4.0
00
-R3.7
50
R424
R3.3
00
--
R354
R6.5
00
R0
R5.4
00
R354
R4.6
50
R424
R4.2
50
- -
-
-R8.0
00
R964
R6.2
00
R71
R5.9
50
R354
R4.9
00
--
R3.0
00
-R5.6
25
R884
R6.8
50
R495
R8.0
00
-BS,
TR
--
R5.8
00
- R7.2
00
--
-TR
--
- -
R8.7
00
--
TR
-
--
--
--
--
Joh
ann
esb
urg
ave
rag
e
Nort
h-E
aste
rn S
uburb
s (i
ncl
. Kew
/
Cyr
ilden
e/Fa
irm
ount/
Wave
rley
/ Ly
ndhurs
t/Bra
mle
y/Sav
oy)
Mar
ais
burg
/Cro
sby/
Brixt
on
Mel
den
e (M
elvi
lle,
Wes
tden
e, A
uck
land P
ark
)
Rose
ban
k/Kill
arn
ey/I
llovo
Gre
ensi
de/
Vic
tory
Par
k/Em
mar
entia/
Linden
/Par
kvie
w/
Pa
rkhurs
t
Ran
dburg
: Fe
rndal
e/Fo
nta
ineb
leau
Ran
dburg
& S
uburb
s
Win
dso
r: E
ast
/Wes
t
Cra
ighal
l/Cra
ighall
Par
k
San
dto
n:
Nort
h &
Far
Nort
h (
incl
.
Bry
anst
on/F
ourw
ays/
Loneh
ill/
Dougla
sdal
e)
San
dto
n:
South
to C
entr
al (
incl
.
San
dow
n/R
ivonia
/Morn
ingsi
de/
Sunnin
ghill
/Kya
lam
i)
Bed
ford
view
Old
South
(in
cl.
Rose
tten
ville
/
Turf
fonte
in/K
enilw
ort
h)
New
South
(in
cl.
South
dale
/Mondeo
r/
Gle
nvi
sta/
Linm
eyer
) R1.5
75
-R2.7
00
R1.1
31
R3.4
00
R1.5
56
R3.4
00
-D
V,
TR
Rode’s Report 2014:4 Flats market 116Ta
ble
9.3
(co
nti
nu
ed)
Flat
ren
tals
: u
pm
arke
t u
nit
s A
vera
ge
ran
ds
per
mon
th a
s at
qu
arte
r 2
01
4:3
1-B
edro
omB
ach
elor
2
-Bed
room
3
-Bed
room
Bro
ker
con
trib
uto
rs
Mea
nM
ean
S
D
SD
M
Mea
n
SD
M
ean
S
D
R5
.65
0-
R5.6
50
-PH
R2
.27
0 -
R2.2
70
R2
.66
7-
R2.8
00
-R2.5
40
R3
.30
4-
R3.8
30
- R2.8
50
--
-PH
--
--
--
-
--
--
- --
--
R2
.50
0R
2.7
00
R3
.40
0R
.38
00
--
--
--
--
-R2.7
00
- R3.4
00
-R3.8
00
-TR
R2.5
00 -
--
--
--
-
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
Ger
mis
ton
ave
rag
e
Prim
rose
Ger
mis
ton C
& S
Ger
mis
ton S
outh
- s
uburb
s
Els
burg
Pre
tori
a av
erag
e
Aka
sia
Pret
oria
Nort
h/D
ora
ndia
/Flo
rauna
Annlin
/Wonder
boom
/Sin
ovi
lle/M
onta
na
Die
Moot/
Quee
nsw
ood
Silv
erto
n/M
eyer
spar
k/La
Monta
gne
Eas
tern
suburb
s (M
enlo
Par
k/Ash
lea
G
arden
s/al
l Ly
nnw
oods/
Die
Wilg
ers/
Fa
erie
Gle
n/G
arsf
onte
in/P
reto
riusp
ark
/
Const
antia/
Wat
erkl
oof
Gle
n/
Era
smusk
loof)
Gro
enkl
oof/
Bro
okl
yn/m
ost
Wate
rklo
ofs
/
Monum
entp
ark/
Era
smusr
and
South
-east
ern s
uburb
s (E
lard
usp
ark
/
Win
gat
e Par
k/M
ore
leta
par
k/Pie
rre
van
Ryn
evel
d/W
ater
kloof)
Sunnys
ide
Arc
adia
Pre
toria
Cen
tral
Pre
toria
Wes
t -
--
--
--
-
Rode’s Report 2014:4 Flats market 117Ta
ble
9.3
(co
nti
nu
ed)
Flat
ren
tals
: u
pm
arke
t u
nit
sA
vera
ge
ran
ds
per
mon
th a
s at
qu
arte
r 2
01
4:3
Bac
hel
or1
-Bed
room
2
-Bed
room
3
-Bed
room
Bro
ker
con
trib
uto
rs
SD
M
ean
Mea
n
SD
M
ean
S
D
Mea
n
SD
--
--
--
-
--
--
--
-
--
--
--
-
R2.5
00
R.3
400
R3.8
00
-
R3
.58
8R
4.9
86
R6
.26
4-
--
R4.3
00
-R5.2
00
-ASA
--
- - -
R2.7
00
R4
.13
3 - --
--
--
R3.6
25
-R5.5
00
R707
R8.0
50
R2.7
58
ASA,
CB
R3.6
00
R106
R4.0
00
-R4.2
00
-R4.9
50
R212
R6.0
50
R71
ASA,
CB
R3.7
00
R495
R6.0
00
R707
ASA,
CB
R3.6
00
R636
ASA,
CB
R3.5
00
R3.5
00
R283
R6.5
50
-R6.0
00
-R6.0
00
-CB
-CB
R3
.27
0R
6.8
85
R3.7
00
-R6.5
00
-W
K
R3.0
00
R212
R5.5
00
-TR,
WK
R3.5
00
-R7.0
00
-W
K
R3.1
50
R566
R7.2
50
R1.0
61
TR,
WK
R3.1
50
-R8.0
00
-TR,
WK
R3.1
00
-TR,
WK
R4.0
00
-W
K
Kw
aggas
rand/W
est
Par
k
Ela
ndsp
oort
/Dan
ville
Att
erid
gev
ille/
Laudiu
m
Sunnys
ide
Cen
turi
on
Ave
rag
e
Pie
rre
van R
ynev
eld
Iren
e
Klo
ofs
ig/
Lytt
leto
n M
anor/
Doringkl
oof/
Zw
art
kop
Hig
hve
ld a
nd E
xten
sions
Clu
bvi
ews/
Eld
ora
igne/
Wie
rda
Park
/ Cra
neb
rook/
Bro
nber
rick
/ Rooih
uis
kraa
l N
ort
h
Rooik
ruis
kraal
/ The
Ree
ds
Heu
wel
oord
Val
hal
la
Du
rban
ave
rag
e
Upper
hig
hw
ay:
Klo
of/
Hill
cres
t
Pin
etow
n a
rea/
Quee
nsb
urg
h
Wes
tvill
e ar
ea
Cen
tral City
(incl
. Lo
wer
Ber
ea)
Ber
ea /
Morn
ingsi
de
/ G
lenw
ood
South
and N
ort
h B
each
Durb
an N
ort
h/L
a Lu
cia/
Um
hla
nga
Nort
h (
Dolp
hin
) Coast
/Bal
lito
-
-R4.4
00
-R4.2
00
-R4.0
00
-R4.0
00
R4
.20
6-
R4.1
50
R0
R3.7
25
-R4.5
00
R71
R4.4
25
R71
R4.2
50
R141
R4.2
50
-R5.7
50
--
-R4.8
50
-R5.3
00
-R5.0
00
-R5.0
00
R5
.12
0-
R5.2
00
R177
R4.3
50
-R5.0
00
R247
R5.4
00
-R5.8
00
R354
R5.4
75
-R7.0
00
--
R742
R8.0
00
-R15.0
00
--
-
Rode’s Report 2014:4 Flats market 118Table 9.3 (continued)
Flat rentals: upmarket units
Average rands per month as at quarter 2014:3
1-Bedroom
2-Bedroom
3-Bedroom
Broker
contributors
SD
SD
Mean
SD
Mean
SD
- -
- -
WK
Bachelor
Mean
R3.000
R3.000
-
Mean
R3.750
R3.800
-
R4.500
R4.500
-
R5.000
R5.000
- WK
R3.250
- R4.500
R5.500
R3.800
-
-
- WK
R3.648
R4.425
R5.961
R7.815
R6.400
R849
R8.000 R2.121 R11.500 R3.536 R16.500 R2.121 SQ, TR
- -
- -
- -
-
R5.500
R0
R0 R10.000
- R15.000
- PF , SQ, TR
R5.200
R265
R451
R8.400
R566 R10.000
- JL, SQ, TR
R4.950
R636
R8.125
R177
R9.750 R1.061 SQ, TR
R5.000
- R9.000
- R15.000
- TR
R4.500
R608
R7.250 R1.256 R10.000
R0 PF, SQ, TR
R4.400
R141
R6.000
R707
R4.375
R530
R141
R8.000 R1.414 SQ, TR
R9.500
R707 SQ, TR
- -
-
R3.525
R320
R939
- -
R6.750 R1.061 LA, PF, RS, TR
R3.388
R295
R816
R764 LA, PF, RS, TR
R3.600
R265
R566
R566 LA, PF, TR
R2.550
- -
- TR
R2.650
- -
R3.900
R141
R354
R2.983
R29
-
R6.000
R6.033
R6.000
R6.500
R5.117
R4.800
R5.000 -
R4.050
R4.000
R4.400
R3.050
R3.950
R4.750
R3.433
R0 -
R664
R283
R707 -
R574
R200
R141 - -
R354
R115
R7.600 -
R5.225
R5.000
R6.100
R4.050
R4.650
R6.250
R4.400
R265
R6.667
R7.600
R5.050
R5.650
R7.750
R5.400
- TR
R354 LA, TR
R173 LA, SQ, TR
Montclaire/Yellowwood Park
Bluff area/Durban South
Durban South/Amanzimtoti/W
arner Beach
area
Cape Town average
Camps Bay/Clifton/Bantry Bay
Sea Point
Green Point/Three Anchor Bay
City Bowl (excluding Higgovale)
City Centre
Waterfront
Rondebosch/Rosebank/Claremont
Kenilworth/W
ynberg/Plumstead
Muizenberg/ Kalk Bay/ Fish Hoek
Hout Bay
Milnerton/Sanddrift
Tableview/Parklands
Blouberg/Melkbos
Athlone
Mitchell's Plain
Pinelands
Brooklyn/Rugby/Maitland
Monte Vista/Goodwood/Parow/Bellville
Central
R3.133
R115
R3.683
R388
R4.917
R629
R5.800
R346 LA, SQ, TR
Rode’s Report 2014:4 Flats market 119Table 9.3 (continued)
Flat rentals: upmarket units
Average rands per month as at quarter 2014:3
1-Bedroom
2-Bedroom
3-Bedroom
Broker
contributors
Bachelor
Mean
SD
SD
Mean
SD
Mean
SD
R0
R231
R403
R58
R289
R408
R0 LA, PF, SF, TR
R354 LA, PF, SF, TR
R289
R289
R577
R289
R0
R289
R3.000
R2.533
R2.667
R2.667
R2.833
R289
Mean
R3.867
R2.950
R3.667
R3.500
R3.500
R0
R0
R707 GE, LA, TR
R866 GE, LA, TR
R257 GE, LA, TR
R354
R283
R283
R177
R0
R212
R1493 SJ, ZB
R1061 SJ
- -
-
R318
R318
R354
R212
R247
R0
R141
R177
R141
- -
-
- SJ
- SJ
- SJ, TR
- SJ
- SJ
- -
- -
TR
- -
- -
TR
- -
- -
TR
- -
- -
TR
- -
- -
NR
- -
- -
NR
- -
- -
NR
- -
- -
NR
Tyger Valley area/Durbanville
Brackenfell/Kuils River
Somerset West
Strand
Gordon's Bay
Port Elizabeth average
Summerstrand/Humewood/South End
Walmer
Central/North End
Newton Park
Westering
Kabega
Algoa Park
East London average
Southernwood/Quigney Beach/CBD
Berea
Amalinda
Gonubie Park
Bloemfontein Average
Bloemfontein
Westdene
Willows
Navalsig
Arboretum
R2.610
R3.250
R2.975
R2.500
R2.675
R2.650
R2.600
R1.850
R2.938
R2.600
R3.200
R2.800
R3.200
R2.666
R2.700
R2.800
R2.570
R2.600 -
-
R3.066
R4.000
R3.800
R2.750
R3.075
R3.025
R2.975
R2.200
R3.670
R3.600
R4.500
R3.200
R3.500
R3.200
R3.375
R3.350
R2.900
R3.200 -
-
R4.963
R4.000
R4.833
R4.667
R4.500
R3.563
R4.700
R4.650
R3.250
R3.450
R3.500
R3.400
R2.500
R4.792
R4.200
R6.200
R4.500
R4.500
R3.914
R3.800
R4.000
R3.960
R3.900 -
-
R7.500
R4.750
R7.000
R6.000
R5.783
R4.320
R7.600
R6.250
R3.500
R3.800
R3.850
R3.850
R3.000
R5.277
R4.800
R6.800
R4.950
R4.800
R4.459
R4.400
R4.700
R4.200
R4.550 -
-
Rode’s Report 2014:4 House market 120
-10
0
10
20
30
40
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
AbsaFNBLightstone
Growth in national house pricesAbsa vs FNB vs Lightstone
Gro
wth
(%;
y-o-
y)
Source of data; Absa; FNB; Lightstone
-20
-10
0
10
20
30
40
50
-60
-40
-20
0
20
40
60
80
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
House pricesNew mortgages
Growth in national house pricesvs
Growth in value of new residential mortgages granted
r²=0,6
Gro
wth
in
hous
e pr
ices
(%;
y-o-
y)
Grow
thin
valueof
mortgag
esgranted
(%; y-o-y
)
Source of data: Absa; SARB
Chapter 10: House market
House prices being buoyed by a softening in bank lending policies
Written by John S. Lottering
In general, nominal house prices continue to show decent — consumer-inflation beating —growth.
In October 2014, the yearly growth in nominal national house prices ranged between 7% and 9%, depending on which index you use; at least the three indices are now converging.
Naturally, one of the only logical explanations for the resilience of house prices seems to be lenders that have softened their lending requirements. Allegedly, banks are again lending as much as 100% of the market value of houses being mortgaged.
Evidence of lender generosity also comes in the form of the strong growth in the value of new residential mortgages granted. Since the second quarter of 2013, the yearly growth in the nominal value of new residential mortgages granted has increased at an average yearly rate of about 16%. The corresponding graph shows the pretty strong relationship between the growth in house prices and the growth in new loans granted. Evident also is how the acceleration in the growth of new loans granted since the beginning of 2012, has supported the growth in house prices.
For now, however, there remain more factors likely to dampen the growth in house prices. Consider here:
Still-high household debt-to-disposable income levels. The ratio of debt-to-disposable income of households has decreased since 2009 but the ratio remains uncomfortably high at 74%. There is good reason to believe that this
Rode’s Report 2014:4 House market 121
-80
-40
0
40
80
120
-20
-10
0
10
20
30
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
MortgagesBusiness cycle leading indicator
Growth in value of new residential mortgages grantedvs
Growth in composite leading business cycle indicator
Gro
wth
in
valu
e of
mort
gages
gra
nted
(%;
y-o-
y)
Grow
th in business cycle indicator
(%; y-o-y)
Source of data: SARB
r=0,7 (up to a lag of 4 months)
factor will have a more pronouncedeffect on the ‘affordable’ segment ofthe market. SA banks’ willingness togrant 100% mortgage bonds in thissegment in order to ‘do the rightthing’ is a high-risk strategy, whichreminds one of the recent sub-prime debacle in the USA.
Feeble consumer confidence levels,which might affect the willingness ofhouseholds to make substantialfinancial commitments such asbuying a house.
The disproportionate increases inadministered prices, whichnegatively affect affordability.
Jaded economic activity and itslikely damper on growth inemployment and disposable income.Also, the government service’semployee-appointment spree willcome to end as the fiscus is undersevere pressure.
Thus it comes as no surprise that the leading business cycle indicator of the SARB is losing momentum. Since the beginning of the year, this indicator has either been contracting or showing no growth. The outcome of this — as the corresponding graph shows — might mean more downward pressure on the growth in new mortgages granted.
Residential income yields
Tables 10.1 and 10.2 summarize the gross-income yields on houses and townhouses. As a rule of thumb, to convert gross income yields to net, the reader should deduct 1½ percentage points from gross. This deduction takes into account operating expenses such as insurance and maintenance, as well as assessment rates. Nevertheless, net yields, as determined by the market via the market value and the net market rental the residential property commands, can be used as a rough guide to the state of the respective segments’ prospects. Thus, in a relatively efficient marketplace, the higher the yield, the worse the expected growth in income streams and/or the higher the perceived risk of the location.
This chapter is concluded by the gross-income yields tables.
Rode’s Report 2014:4 House market 122
Table 10.1 Gross-income yields (%) of houses by price class
Quarter 2014:3
Low Middle High Eastern Cape Port Elizabeth - Summerstrand/Humewood 5,6 11,4 9,2 - Walmer (to 8th avenue) 5,7 7,8 7,9 - Upper Walmer 5,6 5,8 6,4 - Central / North End / Sydenham 13,1 8,5 7,2 - Fernglen/Framesby 7,3 6,2 6,6 - Westering 7,4 7,7 6,3 - Algoa Park 14,4 10,2 6,9 - Kabega 10,3 11,3 7,7 - Malabar II 13,3 10,0 9,3
Uitenhage - Uitenhage 7,7 6,8 6,0
Free State Bloemfontein - Houses north of Mandela Blvd 6,3 5,7 5,5 - Houses south of Mandela Blvd 7,4 6,8 8,1 - Langenhoven Park 7,8 7,3 6,2 - Ehrlich Park 10,7 - -
Rode’s Report 2014:4 House market 123
Table 10.1 (continued) Gross-income yields (%) of houses by price class
Quarter 2014:3Low Middle High
Gauteng Pretoria - Akasia 5,3 4,4 5,0 - Pretoria North / Dorandia / Florauna 6,9 8,0 9,3 - Annlin/Wonderboom/Sinoville/Montana 8,1 6,5 10,0 - Die Moot / Queenswood 10,5 9,5 12,8 - Eastlynne/Eersterust 9,0 10,4 7,5 - Silverton / Meyerspark / La Montagne 7,0 7,1 6,3 - Eastern Suburbs 6,0 7,7 10,0 - Groenkloof/Brooklyn / most Waterkloofs 7,5 10,3 12,8 - South Eastern Suburbs 6,7 10,6 14,2 - Sunnyside 7,9 10,7 5,5 - Arcadia 9,0 9,6 7,3 - Pretoria Central 16,0 12,3 7,7 - Pretoria West 11,7 11,4 10,7 - Kwaggarand / West Park 7,7 6,0 7,1 - Elandspoort/Danville 8,0 7,6 9,3
Centurion - Kloofsig / Lyttelton Manor / Doringkloof 14,7 12,4 5,1 - Clubviews/Eldoraigne 8,8 8,5 8,9 - Rooihuiskraal / The Reeds 8,2 7,8 7,9 - Heuweloord 8,3 8,8 9,7
Benoni
Lakefield - - -Westdene - - -Farrarmere 7,4 7,8 8,7Morehill 7,2 7,4 6,3Rynfield 6,6 7,2 7,8Northmead 7,5 7,6 6,8Crystal Park - 9,4 7,2Western Extension 8,6 9,2 8,4
Boksburg
Boksburg 13,0 8,5 6,4
Rode’s Report 2014:4 House market 124
Table 10.2 Gross-income yields (%) of townhouses by price class
Quarter 2014:3Low Middle
Eastern Cape Port Elizabeth - Summerstrand/Humewood / South End 8,3 8,7 - Walmer/Charlo/Fairview/Lorraine 8,2 8,2 - Newton Park / Fernglen / Sunridge Park 7,2 7,6 - Westering / Hunter's Retreat 7,4 7,4 - Algoa Park 8,0 8,0 - Kabega 9,0 7,4 - Malabar II 8,7 10,1
Uitenhage - Uitenhage 9,1 8,5
Free State Bloemfontein - Houses north of Mandela Blvd 6,8 4,6 - Houses south of Mandela Blvd 7,0 5,4 - Langenhoven Park 6,9 6,4
Gauteng Benoni - Lakefield 9,6 6,0 - Westdene 9,0 5,3 - Farrarmere 7,2 7,2 - Morehill 8,0 6,9 - Rynfield 10,3 6,9 - Northmead 8,0 5,6 - Crystal Park 9,5 9,4
Boksburg Boksburg 8,2 8,0
Rode’s Report 2014:4 House market 125
Table 10.2 (continued) Gross-income yields (%) of townhouses by price class
Quarter 2014:3Low Middle
Centurion - Pierre van Ryneveld 8,1 8,8 - Irene 8,5 12,8 - Kloofsig / Lyttelton Manor / Doringkloof 8,3 11,3 - Highveld and Extensions 7,9 8,8 - Clubviews / Eldoraigne / Wierda Park 7,4 8,9 - Rooihuiskraal / The Reeds 7,2 9,6 - Heuweloord 8,3 7,7 - Valhalla 9,0 8,3
Rode’s Report 2014:4 Building activity and building costs 126
10
20
30
40
50
60
70
80
90
100
01 02 03 04 05 06 07 08 09 10 11 12 13 14
Business confidenceInsufficient demand for work
Residentail building contractors: Business confidencevs
Constraints to residential contractors: Insufficient demand for work
r²=-0,9
Inde
x(v
aryi
ng b
etw
een
0 an
d 10
0)
Source of data: BER Building & Construction Survey
-40
-20
0
20
40
60
0
20
40
60
80
100
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Residential GFCFBusiness confidence
r=0,8 (up to 1-qtr lag)
Business confidence: residential contractorsvs
Growth in real value of residential buildings completed
Gro
wth
in
valu
e of
res
iden
tial
bui
ldin
gs c
ompl
eted
(%;
y-o-
y)
Business
confidence(G
ross % rating satisfactory)
Source of data: BER Building & Construction Survey; SARB
Chapter 11: Building activity and building costs
Despite improved sentiment too early to suggest residential building sector out of woods
Written by John S. Lottering
On the back of an improvement in the de-mand for residential building work, busi-ness sentiment amongst residential con-tractors has been able to improve.
The corresponding graph shows the very robust (r²=-0,9) inverse relationship be-tween residential contractors’ rating of in-sufficient demand for building work as a constraint, and their rating of business conditions. Evident from the graph is how since about 2012 fewer respondents have rated insufficient demand for building work as a constraint and how their sentiment levels have since then also improved. In fact, for the first time in more than six years the majority (58%) of residential contractors surveyed by the BER1 were during the third quarter of 2014 satisfied with prevailing business conditions. Note, however, that the majority of respondents still rate insufficient demand for building work as a constraint2.
Nonetheless, a look at quantitative statis-tics related to the residential building-construction industry suggests that now might still be too soon to surmise that the sector is out of the woods.
1 Bureau for Economic Research 2 The BER also asked contractors to rate if a shortage of skilled labour and inadequate supply of building materials are constraints.
The graph which follows shows the historic positive relationship between residential contractors’ business confidence and the real value of residential buildings complet-ed. The shaded area shows how, since the second half of 2013, the relationship be-tween the two variables has broken down with sentiment levels improving while the growth in residential building activity has been decelerating. In recent quarters, the real value of residential buildings put in place, has actually been contracting.
Rode’s Report 2014:4 Building activity and building costs 127
10
20
30
40
50
60
70
80
90
100
01 02 03 04 05 06 07 08 09 10 11 12 13 14
Business confidenceInsufficient demand for work
Non-residential building contractors: Business confidencevs
Constraints to non-residential contractors: Insufficient demand for work
r²=-0,9
Inde
x(v
aryi
ng b
etw
een
0 an
d 10
0)
Source of data: BER Building & Construction Survey
-60
-40
-20
0
20
40
60
80
100
0
20
40
60
80
100
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Real value completedBusiness confidence
r=0,6 (up to 1-qtr lag)
Business confidence: non-residential contractorsvs
Growth in real value of non-residential buildings completed
Gro
wth
in
valu
eof
non
-res
iden
tial
bui
ldin
gs c
ompl
eted
(%;
y-o-
y)
Business
confidence(G
ross % rating satisfactory)
Source of data: BER Building & Construction Survey; SARB
-20
0
20
40
60
80
100
-60
-40
-20
0
20
40
60
80
90 92 94 96 98 00 02 04 06 08 10 12 14
Tendering competitionNon-residential plans passed
Gro
ss %
ra
ting
ten
dering
com
petition
kee
ner
Tendering competition (non-residential)vs
Growth in the square meterage of non-residential plans passed
smoothed r=-0,6
Grow
thin
planspassed
(%; y-o-y)
Source of data: BER Building & Construction Survey; Stats SA
-5
0
5
10
15
20
25
01 02 03 04 05 06 07 08 09 10 11 12 13 14
BER BCIHaylett (Work Group 181)
BER BCI vs HaylettGrowth over the previous year
% c
hange o
n p
revio
us
year
Source of data: BER; JBCC CPAP Haylett formula
Similar to the residential sector, a slight improvement in demand conditions — see shaded area of graph — has also lifted business sentiment levels amongst contrac-tors. However, in the third quarter of 2014 a small majority (55%) of the contractors surveyed still rated business conditions as being unsatisfactory. The majority (64%) also rated insufficient demand for building work as a constraint.
After showing strong growth for most of 2012 and 2013, the real value of non-residential buildings completed, has also contracted in recent quarters.
Tables 11.1 and 11.2 summarise more key quantitative statistics related to the building-construction industry. Evident from these tables is how the contractions in building activity — as measured by the square meterage of space completed — occurred across all residential and non-residential property types.
With regard to building costs, preliminary data available for the second and third quarters of 2014 shows an acceleration in yearly building-cost inflation. Given the poor performance of building activity, we suspect that the acceleration in building costs (overall tender prices) has primarily been due to contractors having to pass on building-input cost increases, as opposed to its having been due to a moderation in tendering competition. This is allowing contractors some leeway to stretch their profit margins.
The corresponding graph, for example, shows the inverse relationship between the growth in the square meterage of non-residential plans passed and non-residential tendering competition. Note how in recent quarters the growth in plans passed has decelerated and how tendering competition has intensified. In the third quarter of 2014, the majority of non-residential contractors rated tendering competition as keener when compared to a year ago.
Rode’s Report 2014:4 Building activity and building costs 128
In the third quarter of 2014, the BER Build-ing Cost Index (BCI) — a measure of pre-contract non-residential prices and which includes the profit margin of contractors —
is expected to have shown growth of about 9%. Over the same period, the Haylett In-dex — a measure of building-input prices — showed growth of about 7%.
Table 11.1
New non-residential buildings (private sector) (m²)
% change on a year earlier
Offices Shopping space Industrial buildings Total
12 months ended September 2014 (% change on a year earlier)
Completed -32,1 -33,3 -1,9 -20,4
6 months ended September 2014 (% change on a year earlier)
Completed -32,9 -9,4 14,8 -7,3
Source of data: Stats SA
Table 11.2
New residential buildings (private sector) (m²)
% change on a year earlier
Houses
Flats & townhouses Total Smaller than 80
m² Larger than 80
m²
12 months ended September 2014 (% change on a year earlier)
Completed -11,2 -12,4 -5,6 -10,5
6 months ended September 2014 (% change on a year earlier)
Completed -15,8 -7,1 -7,6 -8,7
Source of data: Stats SA
The BER Building Cost Index (BCI) measures pre-contract non-residential prices and as such includes the profit margin of contractors. This Index is one of the best indicators of the health of the building industry. If it accelerates faster than input costs, then contractors are stretching their profit margins, and vice versa.
The Haylett Index is a measure of all input costs in the building industry, especially material and labour costs.
Annexures
Rode’s Report 2014:4 Annexure 1 I
Glossary of property and related terms
and abbreviations
Arithmetic mean: The most often used measure of central tendency, it is the simple average of a number of observations. Mathematically, it is equal to the sum of all values divided by the number of observations. For example, the arithmetic mean of 6 and 7 is (6+7)/2. The arithmetic mean of 6, 7 and 8 is (6+7+8)/3; and so forth. Outlier observations may unduly affect the mean. In the Rode publications all references to the mean refer to the arithmetic mean, unless otherwise specified. See also geometric mean and median.
Besa: Bond Exchange of South Africa.
BER BCI: Bureau for Economic Research Building Cost Index. Measures pre-contract non-residential building-construction prices and as such it includes the profit margin of contractors. This index is one of the best indicators of the health of the building-construction industry. If it accelerates faster than input costs (Haylett Index), then contractors are stretching their profit margins as a result of sufficient work, and vice versa.
Building construction: the construction of buildings like houses, office blocks, factories, shopping centres, schools, hospitals. See also civil construction.
Bulk: The market value of office and shopping-centre land is generally expressed as the value per bulk square metre. Bulk square metres refer to the
gross building area (GBA) of a building. According to The Sapoa Method for Measuring Floor Areas in Commercial and Industrial Buildings, GBA covers: “The entire building area, but it excludes patios, plant boxes, sunscreening, escape stairs, machine rooms, parking (basements or above ground), lift motor rooms, service rooms, caretakers’ flats, etc. GBA is mainly used by planning consultants in order to plan and execute a building in accordance with the permissible Floor Area Ratio (F.A.R) as derived from the zoning of the property. GBA is fixed for the life of the building but it should be noted that different local authorities may interpret the National Building Regulations, which regulate the F.A.R definition, in a slightly different manner.”
Standard capitalization rate: It is the expected net operating income for year 1, assuming the entire building is let at open-market rentals, divided by the purchase/ transaction price, normally expressed as a percentage. This calculation ignores VAT, transfer duty and income tax, and assumes a cash transaction (in contrast to a paper-based sale).
CBD: Central business district or downtown. This is an area of concentrated high economic activity. The user may want to differentiate between the metropolitan CBD (e.g. the Johannesburg CBD) and a decentralized CBD (like the Sandton CBD).
Civils: colloquial for civil construction.
Rode’s Report 2014:4 Annexure 1 II
Civil construction: the construction of physical infrastructure like roads, bridges, dams, the laying of storm water pipes, electricity and water reticulation. See also building construction.
Cyclical trend: A short-term growth path of an economic variable. Normally refers to the business cycle, as distinct from a secular trend.
Dec: Decentralized. A Rode abbreviation. Town and regional planners differentiate between local decentralization (from the metropolitan CBD to the suburbs) and regional decentralization (to outlying areas of the country).
Deflation: Deflation occurs when prices are declining over time. This is the opposite of inflation and could be catastrophic. When the inflation rate (by some measure) is negative for a period, the economy is in a deflationary period. See also disinfla-tion.
Deseasonalized: Seasonal fluctuations have been removed. In the case of retail sales, this is essential in order to be able to compare sales pertaining to different months of the year, as opposed to comparing sales of one quarter or month with the same quarter or month a year earlier.
Discount rate: The rate used to express an expected future cash stream in present-value terms. In most instances, the discount rate is equal to the hurdle rate. Mathematically, the hurdle rate of a property is the sum of its market capitalization rate and the expected constant growth rate of its cash flow in perpetuity.
Disinflation: Disinflation occurs when the inflation rate is declining over time. See also deflation.
Escalation rate: The rate by which a rental is hiked once a year in terms of a lease. The ruling market escalation rate can be seen as an attempt by the market to forecast the growth in market rentals over the duration of the lease, but this attempt is obviously rarely successful. Thus it is important to differentiate between an escalated rental and a market rental.
Forward (income) yield: A bourse term, hence it is typically applied to listed properties. In the non-listed property market, its approximate equivalent is the capitalization rate. It represents the expected net income of year 1 (the following 12 months) divided by the current price/value. It stands to reason that existing leases would largely determine the net income of year 1. See also historic (income) yield.
Fundamental value (FmV): It is a subjective value based on the investor’s own, subjective forecast of rentals and maybe the investor’s unique or different in-house discount rate/capitalization rate. A FmV higher than the objective market value (MV) is a buy signal to an investor.
The calculation of the FmV is especially indicated where the economy, or property market, changes gear, e.g. a secular change in inflation rate or the real-rental cycle bottoming out. These are instances where any market is notoriously poor at forecasting trends.
An alternative term is intrinsic value.
Geometric mean: A measure of central tendency calculated by multiplying the series of numbers and taking the nth root of the product, where n is the number of items in the series. The geometric mean is defined only for sets of positive numbers. For example, the geometric mean of 6 and 7 is the square root of (6*7). The geometric mean of 6, 7 and 8 is the cube root of
Rode’s Report 2014:4 Annexure 1 III
(6*7*8); and so forth. See also arithmetic mean and median.
Geometric mean return: It is also called the time-weighted rate of return or the average compounded rate of return. It is calculated by taking the geometric mean of a portfolio’s subperiod returns. Where there is a great variance in subperiod returns, this is a better return measure than the arithmetic mean return. Unlike the internal rate of return, it is not influenced by the timing and weights of money-flows.
Haylett index: A measure of the movement of all input costs in the building industry, especially material and labour costs. Designed to recompense the building contractor for in-contract rises in input costs. Official designation: JBCC CPAP Haylett Formula (Work Group 180). Does not include profit margins for contractors.
Historic or trailing (income) yield: A bourse term, hence it is typically applied to listed properties. It represents the net income of year 0 divided by the current price/value. See also forward (income) yield. In a market of rising net incomes the historic yield would be expected to be lower than the forward yield.
Hurdle rate: The minimum total return (income yield plus expected capital appreciation) required by potential investors to induce them to invest in a property. Also known as the required rate. As such this is normally the correct rate to use when doing discounted cash flow (DCF) analyses. This is a similar concept to a company’s cost of capital, and it is not to be confused with the cost of money (say, overdraft interest rate). One way of measuring the total return on an investment, ex post or ex ante, is the internal rate of return (IRR) method.
See also discount rate.
Index: Describes the method of standardizing the base for comparative data in a time series, usually equating the initial measure to 100 and then expressing all other data in exact relation to that
base, e.g. the index for office rentals in any year by comparison with a base-year value of 100 might stand at 90 or 110, indicating a fall or rise of 10% respectively.
Industrial-building grades:
• Prime: An industrial property in whichspace is easily lettable because itsatisfies each of the followingprerequisites:
a. Generally in a good condition;
b. Satisfactory macro access (i.e.access to freeway);
c. Satisfactory micro access (i.e. fromstreet to building);
d. Proper loading facilities;
e. Eaves >4 m (excluding micro/ miniunits);
f. Wide clear span of trusses (fewinternal pillars);
g. On ground level;
h. Adequate three-phase electricalpower.
The eight conditions above are prerequisites for space to be considered prime. However, a building may possess additional enhancements that could improve lettability through increasing the size of the potential tenant pool.
Such enhancements could include sufficient office accommodation, ade-quate parking, sprinkler systems, masonry up to sill height, adequate floor loadings, roof insulation, sufficient yard space and a good location (as opposed to access).
Comparative grading of industrial and office space
Industrial Offices
Prime + A
Prime B
Prime - C
Secondary D
Rode’s Report 2014:4 Annexure 1 IV
• Secondary: This is industrial spacewhich is not classifiable as primebecause it does not satisfy all eightprerequisites for prime space listedabove. Such space is typically oldbuildings or structures, which havebeen haphazardly renovated. It wouldhave poor access, too little yard spaceor office accommodation, inadequategoods lifts, no three-phase power andobsolete electrics and ablution facilities.Such space is often (but notexclusively) found in highly urbanisedareas.
Industrial park: An industrial park is a multi-tenanted complex of industrial buildings, typically surrounded by a security fence with access control and possibly some greenery.
Initial yield: The first year’s expected net operating income (based on existing leases and other income reasonably expected) divided by the purchase price. Therefore the initial yield and the capitalization rate are only the same in those rare cases where a building is let at open-market rentals.
Internal rate of return (IRR): A performance measurement that takes cognisance of the time-value of money. Technically, it is that rate which equates the inflows with the outflows of a cash flow. Also known as the money-weighted rate of return because the timing and weights of the money-flows influence the return. See also geometric mean return.
JSE: JSE Securities Exchange South Africa.
Leaseback: A fully repairing and insuring lease (tenant pays all operating costs) for 10 years or longer (with typically 5-yearly rent reviews or fixed annual escalations) with a tenant with a strong covenant.
Lessee: A person or other entity to whom space is rented under a lease. A tenant.
See also lessor.
Lessor: One who rents space to another under a lease. A landlord. See also lessee.
Market rental: The most probable rental that a voluntary, informed and prudent lessee will pay a voluntary, informed and prudent lessor in a normal open-market (arms-length) transaction, when neither party is under any compulsion to rent or let, other than their normal desire to transact.
As per IVS 2011 – the estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion
Market value: Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. Source: International Valuation Standards Committee, 2003
The MV is an objective value in that the crucial value determinants are largely derived from the marketplace. See also price and fundamental value.
As per IVS 2011 – the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
Mean: See arithmetic mean; median; geometric mean.
Median: Midpoint of a series of observations when arranged in order of magnitude. Thus it is a measure of central tendency that divides the data set into halves. Less affected by outlier observa-
Rode’s Report 2014:4 Annexure 1 V
tions than the arithmetic mean. For example, the median of 5, 6, 7, 8, 9 is 7. And for 5, 9, 15, 16, 17, 21, 23 the median is 16. See also geometric and arithmetic mean.
Metro: Metropolitan.
MFA: Medium-Term Forecasting Associates, construction economists located in Stellenbosch.
n: Number of respondents.
N/A: Not available — fewer than two respondents.
NNN lease: Also known as a triple-net
lease. A fully repairing and insuring lease (tenant pays all operating costs). The commonest example is a Leaseback.
Office building grades defined by quality of finishes and facilities:
• Grade A: Generally not older than 10years, unless renovated; prime location;high-quality finishes; adequate on-siteparking; air-conditioning. Commands agross market rental as indicated in theaccompanying table.
• Grade B: Generally 10 to 20 years old,unless renovated; accommodation tomodern standards; prime location; air-conditioning; on-site parking. Commandsa gross market rental as indicated in theaccompanying table.
• Grade C: Generally 20 to 30 years old,unless renovated; in fairly goodcondition, although finishes are not up tomodern standards; good location; mayhave on-site parking; unlikely to becentrally air-conditioned; commands agross market rental as indicated in theaccompanying table.
• Grade D: A building reaching the end ofits functional life; old and in poorcondition; near the bottom of the rentalrate range; typically no air-conditioningand no on-site parking; may have goodlocation.
These grades might be further sub-divided into sub-grades, viz. A+, A-, B+, B-, C+ or C-.
Office demand: Office stock less office space vacant (space on the market for renting irrespective of whether there is still a valid lease over the space). In other words, demand is office space occupied.
Office stock: Total rentable office space.
Office take-up: Change in office demand. Where take-up is positive, it can also be called the growth in demand.
Office vacancies: This is the floor area available for leasing at any given time, irrespective of whether there is still a valid lease over the space. Often expressed as a percentage of the stock in rentable m².
Operating costs: See outgoings.
Opportunity cash flow (OCF): A valuation term introduced by Rode. The OCF quantifies the amount gained or foregone by the landlord in that the property is either over rented or under rented. More precisely, for each lease and the space that such a tenant occupies, it is, until expiry of such a lease, the present value (PV) of the contractual rental less the open-market rental (as at the valuation date) escalating at the open-market escalation rate (as at the valuation date).
Outgoings (operating costs): In the case of office buildings, the following items are included under total gross outgoings, irrespective of who pays for these:
• Cleaning.
• Repairs & maintenance.
• Common-area electricity & water (nottenant’s own).
• Security.
• Management (excluding head officeoverheads).
• All leasing expenses: broker’s commission and in-house payroll, advertising, tenant installations &
Rode’s Report 2014:4 Annexure 1 VI
• relocations (unless recovered), buy-outs,etc.
• Municipal tax.
• Insurance (fire & SASRIA). In the case ofself-insurance, the market averageshould be included.
• Refuse & sewerage less recoverableamount.
• External & common area repairs &maintenance.
• Audit fees.
The following items are excluded:
• VAT.
• Head office overheads.
• Tenant’s own electricity and water.
• Tenant installations/relocationsrecovered.
• Internal maintenance.
• Recoverable refuse & sewerage.
Price: The amount actually paid for an asset. Not the same as market value, because special circumstances may have applied when the transaction was concluded.
PLS: Property loan stock, also known as variable loan stock (VLS) (type of listed property fund).
PUT: Property unit trust (type of listed property fund).
Reit: A reit is an entity that invests
primarily in real estate and qualifies for special tax status in that there is single taxation at the end-investor (not the fund) level. Source: Lehman, Robert W. & Howard, Roth S. Global Real Estate Investment Trust Report 2010: Against all odds. Ernst & Young.
Rental:
• Basic rental (base rental in the USA):A set amount used as a minimum rentin a lease which also employs apercentage of turnover or otherallocation for additional rent.
• Gross rental: The total rental payableby the tenant, excluding VAT, thetenant’s own electricity and watercharges, but including other operatingcosts recovered by the landlord (if any),as well as promotion expenses payableby the tenant in the case of shoppingcentres. See also rental, net.
• Net rental: The amount payable by thetenant, excluding VAT and excludingoperating costs recovered by thelandlord (if any). See also rental,gross.
• Nominal rental: This has a dualmeaning:
o Firstly, it refers to rentals where theanalyst or valuer assumes noincentives like a rent-free period,free relocation, cash upfront, orbalance-of-installation allowance. Italso excludes amortisation oftenant-installation costs.
o Secondly, it can also mean actualrental values (i.e. not deflated). Seealso rental, real.
• Pioneer rental: The highest rentalactually achieved – and could be aonce-off outlier deal; hence “pioneer” isnot “market”. The difference betweenpioneer and the highest market rentalsmay be used as a blunt tool to gaugethe prospects for market rental growthin the short term. If the differential ispositive, it is an indication of growthprospects in the node. If the differentialis negative, it is an indication thatlandlords are finding it difficult to findnew tenants at the going market rentalrate.
• Real rental: Deflated rental, typicallyobservations (values) over time (a timeseries) from which the relevantinflation has been removed. See alsorental, nominal.
Rent-free period: No rent is payable by
Rode’s Report 2014:4 Annexure 1 VII
the tenant for an initial portion of the term of a lease. It is offered by a landlord as a rental concession to attract tenants.
Required rate: see hurdle rate.
Retail price: In the context of property syndication, this means the price at which a property-holding company’s shares are sold to the public or the price at which these shares trade. See also wholesale value.
RR: Rode's Report on the South African Property Market, a quarterly journal for the professional property practitioner.
Sapoa: South African Property Owners Association.
SARB: South African Reserve Bank (viz. the central bank)
Secular trend: A long-term growth path of an economic variable, around which there might be short-term (business cycle) or other fluctuations. See also cyclical trend.
Shopping centre configurations:
• Mall: Typically enclosed with commonwalkway between two facing strips ofstores. This is the design mode forsuper regional, regional and mostcommunity shopping centres.
• Strip centre: Is an attached row ofstores or service outlets managed as acoherent retail entity, with on-siteparking, usually located in front of thestores. Store-fronts may be connectedby open canopies, but there are noenclosed walkways linking the stores.Store configuration is either a straightline, “L” or “U” shaped. This is thedesign mode for most neighbourhood,convenience and value (power) centres.
Shopping centre types:
• Super regional: More than 100.000rentable m² of shop space; substantial
comparison-shopping; principal tenants are three or more major department stores; more than 250 shops. Examples are: Eastgate and Sandton City (Johannesburg); Menlyn Park (Pretoria); Gateway (Durban metro); Canal Walk (Cape metro).
• Regional: 30.000 to 100.000 rentablem² of shop space; principal tenant(s) areone or more major department stores;approximately 40 to 250 shops.Examples are: Westgate, Fourways Mall,Cresta (Johannesburg); Brooklyn Mall(Pretoria); The Pavilion (Durban metro);Sanlam Centre in Parow, Tyger Valley,Kenilworth (Cape metro); Greenacres(Port Elizabeth); Mimosa Mall(Bloemfontein); Vincent Park ShoppingCentre (East London).
• Community: 10.000 to 30.000 rentablem² of shop space; principal tenant istypically a variety store (e.g. Clicks) or adiscount department store (e.g. Dion orGame); approximately 30 to 60 shops.Examples are: Sunnypark (Pretoria);Musgrave Centre (Durban); MiddestadMall in Bellville, Meadowridge, GoodwoodMall, Constantia Village (Cape metro);Constantia Centre (Port Elizabeth);Brandwag Centre (Bloemfontein);Beacon Bay Retail Park (East London).
• Neighbourhood: 3.000 to 10.000 rentable m² of shop space; principaltenant is a supermarket; 15 to 40 shops.
• Convenience: 300 to 1.200 rentable m²of shop space; principal tenant is a caféor grocer like Kwik Spar; 5 to 15 shops.
• Retail warehouse: Stand-alone; singletenant; >10.000m²; air-conditioned, noceiling, warehouse-like finishes, e.g.Makro, Hypermarket, Game, Dion.
• Value centre: Multi-tenanted stripcentre; >10.000m²; warehouse typefinishes in order to deliver lower pricesto consumers.
Smoothing: Removal of shorter-term
Rode’s Report 2014:4 Annexure 1 VIII
20
30
40
50
60
70
80
90
93 94 95 96 97 98 99 00 01 02
A graphic portrayal of a rental time series
Quarterly frequency
R/m
² p
er
month
fluctuations in a time series, by e.g. moving averages, exponential smoothing, or curve fitting.
Standard deviation (SD): A measure of dispersion in a set of data. For instance, assume a normal distribution of observations and a mean of R10 and an SD of R1,50. This means there is a 68% chance the values will lie between R10 - R1,50 = R8,50 and R10 + R1,50 = R11,50.
Stats SA: Statistics South Africa, South African government’s statistics department. Previously known as Central Statistical Services (CSS) and even earlier as the Department of Statistics.
Time series
A set of observations for the same variable at different times (see graph). The intervals or frequencies may be of any length, e.g. years or quarters for national-income or property data, monthly for prices, and weekly, daily, or even minute-by-minute for stock exchange prices.
Total return: Normally measured over a year, in which case it is the income yield
for the applicable year (net income in year 1 divided by the purchase price or value in year 0) plus the change in capital value over that year. Also known as the combined return because it combines the income yield and capital return in one measure.
Triple-net lease: see NNN lease.
VAT: value-added tax.
Wholesale value: In the context of property syndication, this means the estimated price that a share or shares of a syndicated property-holding company would fetch (excluding winding-up costs) should the holding company be dissolved and the underlying property sold as a normal, non-syndicated property. See also retail price.
Year-growth: Percentage by which figures have changed compared to the same month, quarter or year of the previous year.
Year 0: Refers to the year ended at the present time.
Year 1: Refers to the period from year 0 to the end of the first year thereafter.
References:
1. International Council of ShoppingCentres
2. Sapoa
3. Bureau of Market Research, Universityof South Africa
4. International Valuation Standards Committee, 2003
Rode’s Report 2014:4 Annexure 2 IX
Technical background to the Rode surveys Rode has been surveying the crucial variables of the property market in South Africa since the beginning of 1988 using the expert-panel method. Broadly speaking, the researcher has two potential approaches available to him. These are:
o Track actual transactions, like therental levels of lettings or thecapitalization rates at which sales areconcluded. Valuers (appraisers) callthese ‘comparables’.
o The expert-panel method of surveying,in which the surveyor regularly asks thesame individual members of the panelfor their expert opinions, which in turnwill of course be based on actual dealsof which the panellists are aware.
The cons of tracking actual transactions are:
o A paucity of transactions in most nodes,making statistical inferences impossible.
o Hence the danger of relying on outlierdata (mainly the result of smallsamples)
o Dated transactions
o The cost
o The unwillingness of the parties toreport the details of individual deals.
In contrast, through the expert-panel method of research, most of the above cons of the actual-transactions approach are addressed through opinion surveys. This results in cheaper, more accurate and timely information. Sample size is still (and will always be) a problem in some of the less active nodes, but to a lesser extent.
Below we give the reader some insight in our survey approach to determine the levels of the various property variables:
Capitalization rate: The Rode capitalization rate panel consists of two categories of panellist — major owners, and leading investment brokers who know their market segments intimately. This means that the latter's knowledge is based on actual sales. The question put to these carefully chosen panellists is:
Owners: “In your opinion, what is presently the capitalization rate at which your organization is equally happy to buy or sell the properties in the cities below? (Assume a typical location and a cash sale, rather than paper.). For leasebacks, assume the escalation rate reported by you in this questionnaire.”
Brokers: “In your opinion, what is presently the most prevalent capitalization rate at which the following properties are sold/bought in the cities indicated below (assume a cash sale rather than paper)? For leasebacks, assume the escalation rate reported by you in this questionnaire.”
Escalation rate (for industrial leasebacks). The question put to the panellists is:
Owners: “In your opinion, what is the current prevalent (i.e. most often achieved) market escalation rate for prime industrial leasebacks (assume the market capitalization rate you provided in this questionnaire)?”
Brokers: “In your opinion, what is the current prevalent (i.e. most often achieved)
Rode’s Report 2014:4 Annexure 2 X
market escalation rate for prime industrial leasebacks (assume the market capitalization rate you provided in this questionnaire)?”
Hurdle rate: The question put to landlord panellists is:
“In your opinion, what is presently the minimum expected internal rate of return or hurdle rate (%) at which your organization will acquire the following property types in the cities indicated on the right. (Assume a time horizon of 5 years)?”
The question is asked in respect of three property types: office buildings, industrial leasebacks and regional shopping centres.
Respondents are asked to supply two hurdle rates, one rate for "buy" and one rate for "develop on spec".
Office rentals: The Rode office rental survey asks respondents to supply average market rentals by grade (grades A+, A, B & C) for a specific office node.
The question put to the panellists is:
“In your opinion, what is presently the nominal gross achievable/market rental (not asking rent, not escalated contractual rents, not exceptional deals) per rentable m² excluding VAT?” The questionnaire also asks for the typical rent-free period in months, the gross current-year operating costs per rentable m² and the predominant escalation rate on net & gross rentals, and operating costs.
‘Nominal’ rental means the panellist has to assume no incentives like a rent-free period.
We ask the panellists to assume office lettings of 250m² in the case of grades A+, A & B and 150m² in the case of grade C
(150m² in smaller towns for all office grades); occupation within 3 months, a lease period of 4 years and an average position within the building.
Land values: The question put to developers or brokers is:
Office bulk: In your opinion, what is the market value (R/bulk m²)* of a vacant stand with an average location in the following nodes?
a. The bulk that is legally permissibleand economically viable.
Shopping centre bulk: In your opinion, what is the market value (R/bulk m²)a of vacant stands appropriately zonedb and with the necessary bulk for the following shopping centres?
a. The bulk that is legally permissibleand economically viable.
b. Assume that these stands are readyfor construction and that the majorexternal infrastructure investmentsthat municipalities normally forcethe developer to pay for are alreadyin place. That is, external roads, off-ramps, bridges, new electricalsubstations, and the like, are inplace.
Filling-station land: In your opinion, what is the market value of an average-sized, filling station sitea, with a pump-potential of 350.000 litres per month?
a. Site is defined as the unimprovedland, with services to its borders,and appropriately zoned.
Industrial rentals: The question put to panellists is:
“In your opinion, what are the current gross achievable/market rentals per m² for prime industrial buildings for the townships and
Rode’s Report 2014:4 Annexure 2 XI
lease sizes indicated below?”
Respondents are asked to assume that the office portion (if any) is less than 10% of the total area. The assumed floor area sizes are: 250m², 500m², 1.000m², 2.500m² and 5.000m². Respondents are also asked to fill in their vacancy estimate for prime industrial space, using a scale of 0 to 9. See the table below for detail on the vacancy scale.
Vacancy scale for industrial townships
<10% 10 – 20% >20%
0
Nil
1 2 3
Low
4 5 6
Medium
7 8 9
High
Thus, the reported vacancies do not represent percentages.
Industrial land values: The question put to panellists is:
“In your opinion, what are the current
market values per m² for vacant, serviced levelled land in the townships and for the stand sizes indicated below? Where land is only leased, provide the rent per m² per month. Exclude transfer costs and VAT. Provided you are well informed, please give us your opinion even though you might not have concluded a sale for the exact sizes shown in the spreadsheet attachment.”
The information is required for stand sizes of 1.000m², 2.000m², 5.000m² and 10.000m².
Flat rentals: The question put to panellists is:
“In your opinion, what are the current market rentals (not asking rent) for new lettings for uncontrolled standard and upmarket flats in the following categories and areas? The rental data required is for unfurnished flats, excluding water and electricity. Parking is typically included.”
Respondents are asked to provide rentals for bachelor, 1-, 2- and 3-bedroom units. Note that the flat rentals are not quoted per m².
Rode’s Report 2014:4 Annexure 3 XII
How to interpolate industrial rental rates and land values The industrial rental and land value tables in the body of the RR contain regression equations in natural log (ln) form in order to allow the reader to interpolate rental rates or industrial land values for area sizes other than those given in the tables. (All references below are to the industrial rental tables. However, they also apply mutatis mutandis to the industrial land value table.)
The regression equations are in natural log (ln) form because the relationship between the rental rates and area sizes leased, is curvilinear. This means that the rental rate for area sizes other than those quoted cannot be calculated by straight linear interpolation. In order to calculate the rental rate for an area size other than those quoted, use the following equation from the tables:
ln Y = a + b(ln X) where: ln Y = the natural log of the rental rate, i.e. the value which we want to calculate. ln X = the natural log of the applicable floor area in m² for which we want to calculate the market rental rate.
Note that a and b are given in the table. The coefficient of determination r2 is an indication of the goodness of fit of the urve, i.e. how much confidence we can put
in the interpolation we want to perform. An r2 close to 1 is a good fit.
An example:
Interpolate a rental rate for an area size other than those quoted in the table — e.g. for an area of 750 m². Use your financial calculator and proceed as follows:
Assume the following equation: ln Y = 3,8855 — (0,2263(ln X)) where X = 750 m².
Step 1: Calculate the natural log of X, viz. the floor area for which you want to interpolate the market rental rate. The natural log of a floor area of 750 m² is 6,6201 (use the ln key of your financial calculator).
Thus:ln Y = 3,8855 — (0,2263(6,6201))
= 3,8855 — 1,4981 = 2,3874
Step 2: In order to calculate Y, get the exponential of ln Y (viz. of 2,3874) by using the ex key on your financial calculator. The answer is R10,89 per m².
Rode’s Report 2014:4 Annexure 4 XIII
Approximate building cost rates as at second quarter 2014 Source: Property and construction handbook, Davis Langdon, an AECOM company.
The following, unless otherwise stated, is a list of approximate building cost rates per m² of construction area for various building types in the Gauteng region. The rates represent the average expected building cost rates for 2013. It is stressed that these rates are purely of an indicative nature and should be used with circumspection, as they are dependent upon a number of assumptions.
The area of the building expressed in m² is equivalent to the ‘Construction Area’ where appropriate, as defined in the ‘Method for Measuring Floor Areas in Buildings, First Edition’ (effective from 1st August 2005), published by the South African Property Owners Association (SAPOA).
It is recommended that a quantity surveyor be consulted to calculate a more accurate replacement value of a building, which can be updated thereafter using the BER Building Cost Index.
The rates below include P & G but exclude in-contract escalations, professional fees and VAT. For the calculation of replacement costs, for insurance purposes, the following should also be included:
An allowance for demolition costs;
Professional fees;
In-contract building cost escalation (Haylett);
Loss of interest;
An escalation of the contract price to the end of the insurance period; and
Loss of income.
Rode’s Report 2014:4 Annexure 4 XIV
Johannesburg Building type Rates include the cost of appropriate building services, e.g. air-conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and VAT.
Offices 1. Low-rise office park development with standard
specification /m² R7.600
2. Low-rise prestigious office park development /m² R12.000 3. High-rise tower block with standard specification /m² R12.000 4. High-rise prestigious tower block /m² R15.000
Note: Office rates exclude parking and include appropriate tenant allowances incorporating carpets, wallpaper, louvre drapes, partitions, lighting, air-conditioning and electrical reticulation.
Parking 1. Parking on grade including integral landscaping and
ground preparation /m² R540 2. Structured parking /m² R3.000 3. Parking in semi-basement /m² R4.500 4. Parking in basement /m² R5.500
Retail 1. District centre /m² R8.500 2. Regional centre /m² R11.600 3. Strip shopping /m² R9.300
Note: The above rates include the cost of tenant requirements and specifications of national chain stores. Retail costs vary considerably depending on the tenant mix and sizing of the various stores.
Residential 1. RDP housing /m² R1.800 2. Low cost housing /m² R3.900 3. Simple lo-rise apartment block /m² R7.900 4. Economic duplex townhouse /m² R8.100 5. Prestige apartment block /m² R16.800 6. Private dwelling houses:
Economic /m² R4.100 Standard /m² R5.600 Middle Class /m² R6.500 Luxury /m² R9.400 Exclusive /m² R14.000 Exceptional (‘Super luxury’) /m² R43.100
8. Outbuildings /m² R4.100
Rode’s Report 2014:4 Annexure 4 XV
9. Carport (shaded): Single /no R280 Double /no R268
10. Carport (covered): Single /no R440 Double /no R400
11. Swimming pool Not exceeding 50kl /no R3.500 Exceeding 50kl and not exceeding 100kl /no R6.700
12. Tennis court Standard /no R5.500 Floodlit /no R10.000
Hotels
1. Budget /key R989.800 2. Mid-scale /key R1.644.600 3. Luxury /key R2.909.300
Note: Hotel rates exclude allowances for furniture, fittings and equipment (FF&E).
Studios 1. Studios: dancing, art exhibitions, etc. /m² R15.300
Conference Centres 1. Conference centre to international standards /m² R24.900
Retirement Centres 1. Dwelling house
middle class /m² R6.300 luxury /m² R8.900
2. Apartment block middle class /m² R6.500 luxury /m² R10.200
3. Community centre middle class /m² R8.600 luxury /m² R12.600
Schools
1. Primary school /m² R5.850 2. Secondary school /m² R6.450
Major unit rates 1. Basement excavation /m² R88 2. Foundation excavation /m² R131 3. Imported structural fill /m² R294
Rode’s Report 2014:4 Annexure 4 XVI
4. Concrete in pad footing (25Mpa) /m² R1.315
5. Concrete in wall (32Mpa) /m² R1.175
6. Concrete in suspended slab /m² R1.235
7. Formwork to slab soffit /m² R131
8. Formwork to side and soffit of beam /m² R289
9. Precast wall panel architectural with sand blast finish /m² R825
10. Reinforcement in beam /t R10.450
11. Structural steel in beam /t R30.490
12. Structural steel in truss /t R30.290
13. Aluminium frames window 6.5mm clear glass /m² R3.150
14. Aluminium panel curtain wall system(including /m² R3.640
Structural system)
15. Steel stud partition (framing) /m² R104
16. Plasterboard 13mm thick to partition /m² R52
17. Suspended mineral fibre ceiling tile /m² R167
18. Paint on plaster board wall /m² R37
19. Ceramic tiles to wall /m² R520
20. Non-slip vinyl to wet areas /m² R347
21. Anti-static carpet tile to office and admin areas /m² R472
22. Anti-static broadloom carpet to office and admin areas /m² R1.299
23. Aluminium framed shopfront /m² R2.265
Cape Town Building type Rates include the cost of appropriate building services, e.g. air-conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and VAT.
Offices 1. Low-rise office park development with standard
specification /m² R8.740
2. Low-rise prestigious office park development /m² R13.800 3. High-rise tower block with standard specification /m² R13.800 4. High-rise prestigious tower block /m² R17.250
Note: Office rates exclude parking and include appropriate tenant allowances incorporating carpets, wallpaper, louvre drapes, partitions, lighting, air-conditioning and electrical reticulation.
Parking 1. Parking on grade including integral landscaping and
ground preparation /m² R620
Rode’s Report 2014:4 Annexure 4 XVII
2. Structured parking /m² R3.450 3. Parking in semi-basement /m² R5.175 4. Parking in basement /m² R6.325
Retail 1. District centre /m² R9.775 2. Regional centre /m² R13.340 3. Strip shopping /m² R10.695
Note: The above rates include the cost of tenant requirements and specifications of national chain stores. Retail costs vary considerably depending on the tenant mix and sizing of the various stores.
Residential 1. RDP housing /m² R2.070 2. Low cost housing /m² R4.485 3. Simple lo-rise apartment block /m² R9.085 4. Economic duplex townhouse /m² R9.315 5. Prestige apartment block /m² R19.320 6. Private dwelling houses:
Economic /m² R4.715 Standard /m² R6.440 Middle Class /m² R7.475 Luxury /m² R10.810 Exclusive /m² R16.100 Exceptional (‘Super luxury’) /m² R49.570
8. Outbuildings /m² R4.715 9. Carport (shaded):
Single /no R322 Double /no R308
10. Carport (covered): Single /no R508 Double /no R460
11. Swimming pool Not exceeding 50kl /no R4.025 Exceeding 50kl and not exceeding 100kl /no R7.705
12. Tennis court Standard /no R6.325 Floodlit /no R11.500
Hotels
1. Budget /key R1.069.300 2. Mid-scale /key R1.891.300 3. Luxury /key R3.200.200
Rode’s Report 2014:4 Annexure 4 XVIII
Note: Hotel rates exclude allowances for furniture, fittings and equipment (FF&E).
Studios 1. Studios: dancing, art exhibitions, etc. /m² R17.600
Conference Centres 1. Conference centre to international standards /m² R28.640
Retirement Centres 1. Dwelling house
middle class /m² R7.245 luxury /m² R10.235
2. Apartment block middle class /m² R7.475 luxury /m² R11.730
3. Community centre middle class /m² R9.890 luxury /m² R14.490
Schools
1. Primary school /m² R6.850 2. Secondary school /m² R7.600
Major unit rates 1. Basement excavation /m² R101
2. Foundation excavation /m² R151
3. Imported structural fill /m² R338
4. Concrete in pad footing (25Mpa) /m² R1.515
5. Concrete in wall (32Mpa) /m² R1.355
6. Concrete in suspended slab /m² R1.420
7. Formwork to slab soffit /m² R151
8. Formwork to side and soffit of beam /m² R332
9. Precast wall panel architectural with sand blast finish /m² R950
10. Reinforcement in beam /t R12.010
11. Structural steel in beam /t R35.060
12. Structural steel in truss /t R34.840
13. Aluminium frames window 6.5mm clear glass /m² R3.620
14. Aluminium panel curtain wall system (including /m² R4.185
structural system)
15. Steel stud partition (framing) /m² R120
16. Plasterboard 13mm thick to partition /m² R60
17. Suspended mineral fibre ceiling tile /m² R192
Rode’s Report 2014:4 Annexure 4 XIX
18. Paint on plaster board wall /m² R42
19. Ceramic tiles to wall /m² R598
20. Non-slip vinyl to wet areas /m² R399
21. Anti-static carpet tile to office and admin areas /m² R543
22. Anti-static broadloom carpet to office and admin areas /m² R1.494
23. Aluminium framed shopfront /m² R2.605
Durban Building type Rates include the cost of appropriate building services, e.g. air-conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and VAT.
Offices 1. Low-rise office park development with standard
specification /m² R8.360
2. Low-rise prestigious office park development /m² R13.200 3. High-rise tower block with standard specification /m² R13.200 4. High-rise prestigious tower block /m² R16.500
Note: Office rates exclude parking and include appropriate tenant allowances incorporating carpets, wallpaper, louvre drapes, partitions, lighting, air-conditioning and electrical reticulation.
Parking 1. Parking on grade including integral landscaping and
ground preparation /m² R595 2. Structured parking /m² R3.300 3. Parking in semi-basement /m² R4.950 4. Parking in basement /m² R6.050
Retail 1. District centre /m² R9.350 2. Regional centre /m² R12.760 3. Strip shopping /m² R10.230
Note: The above rates include the cost of tenant requirements and specifications of national chain stores. Retail costs vary considerably depending on the tenant mix and sizing of the various stores.
Residential 1. RDP housing /m² R1.980 2. Low cost housing /m² R4.290 3. Simple lo-rise apartment block /m² R8.690 4. Economic duplex townhouse /m² R8.910
Rode’s Report 2014:4 Annexure 4 XX
5. Prestige apartment block /m² R18.480 6. Private dwelling houses:
Economic /m² R4.510 Standard /m² R6.160 Middle Class /m² R7.150 Luxury /m² R10.340 Exclusive /m² R15.400 Exceptional (‘Super luxury’) /m² R47.410
8. Outbuildings /m² R4.510 9. Carport (shaded):
Single /no R308 Double /no R295
10. Carport (covered): Single /no R484 Double /no R440
11. Swimming pool Not exceeding 50kl /no R3.850 Exceeding 50kl and not exceeding 100kl /no R7.370
12. Tennis court Standard /no R6.050 Floodlit /no R11.000
Hotels 1. Budget /key R1.022.000 2. Mid Scale /key R1.809.100 3. Luxury /key R3.200.200
Note: Hotel rates exclude allowances fot furniture, fittings and equipment (FF&E)
Studios 1. Studios: Dancing, art exhibitions, etc. /m² R16.830
Conference Centres 1. Conference centre to international standards /m² R27.390
Retirement centres 1. Dwelling house
Middle class /m² R6.930 Luxury /m² R9.790
2. Aparment block Middle class /m² R7.150
Luxury /m² R11.220
3. Community centre Middle class /m² R9.460 Luxury /m² R13.860
Rode’s Report 2014:4 Annexure 4 XXI
Schools 1. Primary school /m² R6.500 2. Secondary school /m² R7.200
Major unit rates 1. Basement excavation /m² R96 2. Foundation excavation /m² R145 3. Imported structural fill /m² R324 4. Concrete in pad footing (25Mpa) /m² R1.450
5. Concrete in wall (32Mpa) /m² R1.295
6. Concrete in suspended slab /m² R1.355 7. Formwork to side and /m² R145 8. Formwork to side and soffit of beam /m² R318 9. Precast wall panel architectural with sand blast finish /m² R910 10. Reinforcement in beam /t R11.490 11. Structural steel in beam /t R33.540 12. Structural steel in truss /t R33.320 13. Aluminium frames window 6.5mm clear glass /m² R3.465 14. Aluminium panel curtain wall system (including /m² R4.005
structural system)15. Steel stud partition (framing) /m² R115 16. Plasterboard 13mm thick to partition /m² R57 17. Suspended mineral fibre ceiling tile /m² R184 18. Paint on plaster board wall /m² R40 19. Ceramic tiles to wall /m² R572 20. Non-slip vinyl to wet areas /m² R381 21. Anti-static carpet tile to office and admin areas /m² R520 22. Anti-static broadloom carpet to office and admin areas /m² R1.429 23. Aluminium framed shopfront /m² R2.490
Rode’s Report 2014:4 Annexure 4 XXII
Notes
1. Regional variations: Construction costs normally vary between the different provinces ofSouth Africa. Costs in the Western Cape and KwaZulu-Natal, specifically upper classresidential, for example, are generally significantly higher than Gauteng due to the demandfor this accommodation. Rates have therefore been based on data received from theGauteng province, where possible. However, specific costs for any region can be given uponrequest from any Davis Langdon office in that region.
2. Value added tax (VAT): As the majority of developers are registered vendors in the propertyindustry, any VAT paid by them on commercial property development is fully recoverable.Therefore to reflect the net development cost, VAT has not been allowed for in the aboverates. Should the gross cost (i.e. after VAT inclusion) be required, then VAT at the rulingrate (currently 14%) should be added to all the above rates.
Cognisance should be taken however, of the effect of VAT on cash flow over a time period.This will vary according to the payment period of the individual vendor but in all cases willadd to the capital cost of the project to the extent of interest on the VAT outstanding for theVAT cycle of the particular vendor.
3. For guidance with regard to the cost of buildings rated under the Green Star South Africarating tool system, see the latest edition of the Davis Langdon publication entitled “QuickGuide to Green Design Attributes.”
Rode’s Report 2014:4 Annexure 5 XXIII
Mon
thly
for
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Build
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(Feb
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Fore
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Sep
tem
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2014 F
ore
cast
dat
e:
Sep
tem
ber
2014
20
12
20
13
20
14
20
15
20
16
20
17
20
18
Mon
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dex
% c
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Ind
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% c
hIn
dex
%
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Ind
ex
% c
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Ind
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% c
hIn
dex
%
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Ind
ex%
ch
Jan
6,3
422,9
447,3
5,8
475,9
6,4
508,0
6,7
6,7
54
6,8
571,7
5,4
599,1
4,8
Feb
6,5
427,5
450,0
5,3
482,8
7,3
513,7
6,4
6,4
54
6,4
575,1
5,2
600,9
4,5
Mar
5,7
429,5
456,5
6,3
488,3
7,0
517,0
5,9
5,9
55
6,4
577,3
4,9
602,6
4,4
Ap
r 431,1
5,8
459,5
6,6
488,2
6,2
519,9
6,5
6,5
55
6,4
581,4
5,1
606,5
4,3
May
432,7
6,2
458,0
5,8
489,5
6,9
522,7
6,8
6,8
55
6,4
582,4
4,8
607,8
4,4
Jun
434,2
6,0
460,1
6,0
492,2
7,0
524,8
6,6
6,6
55
6,1
583,6
4,8
609,1
4,4
Jul
436,9
5,7
465,2
6,5
496,0
6,6
526,2
6,1
6,1
55
6,0
584,4
4,8
610,8
4,5
Au
g
5,5
436,9
467,0
6,9
498,1
6,7
530,4
6,5
6,5
56
5,9
587,5
4,6
613,7
4,5
Sep
438,2
5,4
470,0
7,3
503,2
7,1
536,1
6,5
6,5
56
5,9
594,3
4,7
619,6
4,3
Oct
439,5
5,3
471,3
7,2
505,1
7,2
539,2
6,7
6,7
57
5,8
596,9
4,7
623,2
4,4
Nov
441,4
5,3
471,8
6,9
505,8
7,2
540,1
6,8
6,8
56
5,4
597,1
4,9
625,2
4,7
Dec
442,9
5,3
472,7
6,7
507,0
7,3
541,4
6,8
6,8
57
5,4
598,0
4,8
626,7
4,8
Avg
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Rode’s Report 2014:4 Annexure 6 XXIV
Absa home building-cost index 2000 = 100
Quarter Index
% change on
previous year
Quarter Index
% change on
previous year
1998:4 84,0 9,1% 2006:4 227,0 11,2%
1999:1 84,2 5,7% 2007:1 230,8 10,7%
1999:2 86,6 5,2% 2007:2 236,7 11,9%
1999:3 89,4 7,1% 2007:3 240,1 9,2%
1999:4 92,2 9,7% 2007:4 245,1 7,9%
2000:1 96,1 14,1% 2008:1 253,6 9,9%
2000:2 99,4 14,8% 2008:2 256,2 8,2%
2000:3 101,5 13,5% 2008:3 258,9 7,8%
2000:4 103,0 11,7% 2008:4 262,2 7,0%
2001:1 105,3 9,5% 2009:1 264,6 4,3%
2001:2 107,5 8,1% 2009:2 273,4 6,7%
2001:3 111,4 9,7% 2009:3 277,7 7,3%
2001:4 116,0 12,6% 2009:4 277,6 5,9%
2002:1 118,9 13,0% 2010:1 286,9 8,5%2002:2 122,1 13,6% 2010:2 294,4 7,7%2002:3 126,7 13,8% 2010:3 296,1 6,7%2002:4 131,8 13,7% 2010:4 302,2 8,8%2003:1 137,3 15,5% 2011:1 303,0 5,6%2003:2 143,1 17,2% 2011:2 302,5 2,8%2003:3 149,0 17,6% 2011:3 312,0 5,4%2003:4 156,4 18,7% 2011:4 319,1 5,6%2004:1 163,8 19,3% 2012:1 320,0 5,3%2004:2 170,2 18,9% 2012:2 320,9 5,9%2004:3 175,3 17,6% 2012:3 323,5 3,8%2004:4 180,2 15,2% 2012:4 328,7 3,0%2005:1 185,8 13,4% 2013:1 336,6 5,2%2005:2 192,1 12,9% 2013:2 344,4 7,3%2005:3 198,2 13,0% 2013:3 351,3 8,6%2005:4 204,2 13,3% 2013:4 352,6 7,3%2006:1 208,4 12,1% 2014:1 359,0 6,6%2006:2 211,6 10,1% 2014:2 373,3 8,4%2006:3 219,8 10,9% 2014:3 379,4 8,0%Source: ABSA. Calculated from Absa home mortgage data, viz. value of houses to be built divided by number of m².
:
Rode’s Report 2014:4 Annexure 7 XXV
BER Building Cost Index (non-residential tender prices)
2005=100
First quarter Second quarter Third quarter Fourth
quarter Average
2008 135,4 147,0 141,2 157,5 145,3 % ch 18,9 10,6 14,9 13,8 14,4 2009 138,7 151,0 140,9 145,6 144,0 % ch 2,4 2,7 -0,2 -7,6 -0,9 2010 145,7 144,8 142,0 142,4 143,7 %ch 5,1 -4,1 0,8 -2,2 -0,2 2011 140,8 149,2 147,8 156,7 148,6 %ch -3,4 3,0 4,1 10,0 3,4 2012 153,3 156,1 161,4 164,9 158,9 %ch 8,9 4,6 9,2 5,2 6,9 2013 171,0 165,7 170,8 170,5 169,5 %ch 11,5 6,1 5,8 3,4 6,6 2014 177,5 184,4 184,1%ch 3,8 11,3 7,8Source: This table is an extract of the Building Cost Report of Medium-Term Forecasting Associates, P.O. Box 7119, Stellenbosch, 7600, Tel. 0218838152, and is published with their permission. The last few months are always subject to change.
Rode’s Report 2014:4 Annexure 8XXVI
Prime overdraft rate at month-end (%)
(proxy for trends in mortgage rates*)
Year
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Year
1991
21
,0
21
,0
21
,0
20
,0
20
,0
20
,0
20
,0
20
,0
20
,0
20
,3
20
,3
20
,3
20,3
1992
20
,3
20
,3
20
,3
19
,3
19
,3
19
,3
18
,3
18
,3
18
,3
18
,3
17
,3
17
,3
18,8
1993
17
,3
16
,3
16
,3
16
,3
16
,3
16
,3
16
,3
16
,3
16
,3
16
,3
15
,3
15
,3
16,2
1994
15
,3
15
,3
15
,3
15
,3
15
,3
15
,3
15
,3
15
,3
16
,3
16
,3
16
,3
16
,3
15,6
1995
16
,3
17
,5
17
,5
17
,5
17
,5
17
,5
18
,5
18
,5
18
,5
18
,5
18
,5
18
,5
17,9
1996
18
,5
18
,5
18
,5
19
,5
20
,5
20
,5
19
,5
19
,5
19
,5
19
,3
20
,3
20
,3
19,5
1997
20
,3
20
,3
20
,3
20
,3
20
,3
20
,3
20
,3
20
,3
20
,3
19
,3
19
,3
19
,3
20,0
1998
19
,3
19
,3
18
,3
18
,3
18
,3
22
,3
24
,0
25
,5
25
,5
24
,5
23
,5
23
,0
21,8
1999
22
,0
21
,0
20
,0
19
,0
19
,0
18
,0
17
,5
16
,5
16
,5
15
,5
15
,5
15
,5
18,0
2000
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14
,5
14,5
2001
14
,5
14
,5
14
,5
14
,5
14
,5
13
,8
13
,5
13
,5
13
,0
13
,0
13
,0
13
,0
13,8
2002
14
,0
14
,0
15
,0
15
,0
15
,0
16
,0
16
,0
16
,0
17
,0
17
,0
17
,0
17
,0
15,8
2003
17
,0
17
,0
17
,0
17
,0
17
,0
15
,5
15
,5
14
,5
13
,5
12
,0
12
,0
11
,5
15,0
2004
11
,5
11
,5
11
,5
11
,5
11
,5
11
,5
11
,5
11
,0
11
,0
11
,0
11
,0
11
,0
11,3
2005
11
,0
11
,0
11
,0
10
,5
10
,5
10
,5
10
,5
10
,5
10
,5
10
,5
10
,5
10
,5
10,6
2006
10
,5
10
,5
10
,5
10
,5
10
,5
11
,0
11
,0
11
,5
11
,5
12
,0
12
,0
12
,5
11,2
2007
12
,5
12
,5
12
,5
12
,5
12
,5
13
,0
13
,0
13
,5
14
,0
14
,0
14
,0
14
,5
13,2
2008
14
,5
14
,5
14
,5
15
,0
15
,0
15
,5
15
,5
15
,5
15
,5
15
,5
15
,5
15
,0
15,1
2009
15
,0
14
,0
13
,0
13
,0
11
,0
11
,0
11
,0
10
,5
10
,5
10
,5
10
,5
10
,5
10,8
2010
10
,5
10
,5
10
,0
10
,0
10
,0
10
,0
10
,0
10
,0
9,5
9
,5
9,0
9
,0
9,8
2011
9,0
9
,0
9,0
9
,0
9,0
9
,0
9,0
9
,0
9,0
9
,0
9,0
9
,0
9,0
2012
9,0
9
,0
9,0
9
,0
9,0
9
,0
8,5
8
,5
8,5
8
,5
8,5
8
,5
8,7
2013
8,5
8
,5
8,5
8
,5
8,5
8
,5
8,5
8
,5
8,5
8
,5
8,5
8
,5
8,5
2014
9,0
9
,0
9,0
9
,0
9,0
9
,0
9,3
9
,3
9,3
Source: SARB
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