Johannesburg’s new gold belt

Johannesburg’s New Gold Belt

Whether you love or hate the idea of the vastly expensive Gautrain that’s set to cut through the nation’s busiest region, don’t ignore it from a property perspective. Land and property along the Gautrain route is set to become South Africa’s “new gold”. That is the forecast from John Loos, property strategist, in the FNB Commercial Property Finance market update for the third quarter. He said he believes mounting congestion “will limit the pace of both urban sprawl and the de-centralisation of commercial activity, and promote densification of prime existing locations”.

Traffic will continue to slow even out of peak hours, making it “far more difficult” to move around for business purposes. The result, said Loos, is that people should move closer to the commercial action and places of employment as well as to good transport infrastructure. This should lead to “an increasing amount of office location decisions” made on the same basis.

“I am of the view that the land/space along the new Gautrain route will become SA’s new gold, and we are already seeing investors respond logically, with recent announcements of high density office and residential developments in the likes of Rosebank.” Loos said Johannesburg residents can expect more of the same to follow. Many old buildings as well as office parks have insufficient parking. Loos said it looks as if the “parking constraint will deteriorate further”. Owners of well-placed parking garages could achieve some of the highest commercial property returns in the coming years, he said.

“All ships on a rising tide’ is probably an appropriate phrase at the present time of low vacancy rates. But their performance may not keep up with the nodes along the Gautrain corridor over the longer term,” he said of areas “away from the main decentralised action”. This is because the Gautrain “will provide a valuable high-quality public transport service at a time when commuting (and intra-day business travel) is becoming increasingly time-consuming and problematic”.

Authored By: Moneyweb, September 10, 2007