With industrial space proving to be one of the most resilient investment property assets this year, High Street Auctions Co. will bring nearly R900 million of these assets under the hammer at its final auction for the year, next week.
High Street Auctions’ director, Greg Dart, yesterday said the auction on November 28 will close out a turbulent 2024 in the property sector, and will likely usher in a more positive 2025.
Dart, echoing sentiments from First National Bank’s chief property strategist John Loos, said he believed that the distribution and logistics space, as well as the fulfilment space—driven by growth in e-commerce in South Africa—were where investors should focus their attention.
The industrial property market has performed well over the past year. The latest Rode report on the property market for the third quarter noted: “The industrial property market continues to perform well, with nominal rental growth accelerating further in the third quarter of 2024.”
The report found that average vacancies for industrial space stood at 3.6% in the third quarter, lower than the long-term average of 4.7%. Additionally, industrial rentals for 500 square metres increased by 6.9% year-on-year in the third quarter, up from 6.1% in the second quarter.
The FNB Commercial Property Broker Survey for the third quarter, which assessed property brokers at the six major metros of South Africa, indicated that brokers were most confident in the industrial and warehouse property space.
Among the properties to be auctioned next week is a 506 970 square metre vacant land parcel, to be sold as a lot or as seven subdivisions at KwaZulu-Natal’s Cato Ridge Logistics Hub and Dry Port. This presents an opportunity for developers to capitalise on South Africa’s busiest logistics corridor, linking the Port of Durban and Gauteng, said Dart.
Finance Minister Enoch Godongwana’s recent medium-term budget speech also promised to address bottlenecks at ports and upgrade rail infrastructure in collaboration with the private sector.
“The location is advantageous for businesses needing swift transport links to both Durban and Pietermaritzburg, making it a practical choice for distribution centres or industrial complexes,” said Dart.
The R18 billion Cato Ridge Development Project is expected to enhance the Durban port’s efficiency and create additional capacity by alleviating congestion in the Port Precinct and Durban CBD.
Future developments at Cato Ridge include a rail terminal capable of handling some 90 000 twenty-foot equivalent units per year, which will expand into a dry port inter-modal facility, a truck stop and staging facility, as well as further logistics parks and an industrial park.
Another property to be auctioned is a site at Beyers Ridge Distribution Park in Gauteng. This 239 105 square metre site is zoned for special use (light industrial, commercial, and residential) and is represented by three subdivisions, all with municipal services. The area is home to blue-chip companies and multinationals.
Dart said the warehouse and logistics segment of the market had remained stable during challenging times, driven by demand for warehousing and logistics space and the growth of e-commerce, and which is now beginning to penetrate the retail space due to a surge in demand for essential deliveries such as groceries.
The auction portfolio also includes tenanted student accommodation, tenanted industrial properties, apartment blocks, tenanted office buildings, and shopping centres with national tenants, such as the Ridge Terrace Shopping Centre in Weltevreden Park, Hanover Park Retail Centre in the Western Cape and Graskop Retail Centre.