Property prices hit by EU crisis
06 July 2012 | The Citizen
Not so in the case of the Eurozone where a state of crisis is fast becoming ‘‘situation normal’’.
Globally, the property market has borne the brunt of negative economic conditions for some time now and if recent reports are anything to go by, the market still has a way to go before it could be described as ‘‘healthy’’ once more says David Teasedale of Park Village Auctions.
‘‘Indeed, reports indicate that confidence in the South African property and construction sectors is fading. In addition to negative economic conditions, factors such as regulations, red tape, lack of a skilled workforce and demand shortages are being cited as the primary constraints to doing business in South Africa’s property and construction sectors.’’
Teasedale explains that the reduction in property demand and new builds has impacted on most sectors, and while government’s infrastructure upgrade is supposedly on track, there is no clear indication when projects will be launched, which is compounding concerns about future market prospects.
‘‘The fact that construction costs have increased significantly of late has also triggered a shift towards consolidation with owners and landlords improving their current assets to appear more attractive to potential tenants or clients as opposed to financing new properties.’’
Teasedale has witnessed this trend first hand. He explains that established owners across the board are increasingly improving their existing properties in a bid to retain and attract tenants as the cost of financing new builds is off putting.
On a more positive note, property fund reports that because most privately held South African property and construction companies have focussed predominantly on the local market and limited themselves to international exposure they have been relatively shielded from the poor performance of the global sector.
What is more is that as is the case with most markets, while some segments struggle others thrive. For example, according to Teasedale, demand for PVA’s tenanted property in Joburg’s CBD remains robust.
Parcelled properties in the CBD which feature a combination of residential and retail components are also proving popular with investors as are buildings which have scope to be converted into residential accommodation.
In terms of other market characteristics, activity in the R500 000 to two million rand bracket is reportedly picking up significantly but some sellers are still apparently being unrealistic. Vacant land is also proving difficult to move given the associated high holding, construction and re- zoning costs and difficulties relating to electrical supply.
For further info, contact Park Village Auctions on 011-789-4375 or go to www.parkvillageauctions.co.za.
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