Property Clocks are a means of illustrating the property cycle in simple graphical terms. There are many property clocks around and they differ vastly depending on the segment of the market they are depicting.
One of the simplest and best property clocks I have found is the Jones Lang La salle industrial property clock. It is not easy in these times to place a marker on the clock, showing exactly where we are in the market , given the turbulent times in Europe and their potential to influence the world.
In South Africa, and more particularly, Cape Town Industrial Property, I would suggest we are in the second quadrant i.e. in the bottoming market or tenant favourable market, i.e. where there is no speculative construction, vacancies are above equilibrium and rentals are still moving sideways.
There are subsets of the market however that are quite bouyant, such as the demand for good tenanted industrial property investments, which currently outstrips supply. The reasons for this are quite simple, interest rates are low and unless a property has potential vacancies owners are holding them tightly.
If they sell a property, the chances are they will not be able to fund a new property on as favourable terms as before. Markets are volatile and good industrial properties with long term leases are considered safe income producing investments with good growth potential.
I believe it will still be a while before vacancies start to fall significantly and rents start to rise. Watch this space…..
Guy de la Porte is a specialist in Cape Industrial Property.