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Predicting the Commercial Property trends of 2014

Predicting the Commercial Property trends of 2014

There were many changes in property prices and sales figures last year with some companies making record sales. Even though the best performing companies are yet to hit the sales levels they reached in November 2013, there is a general increase in the number of property sales. Commercial property trends indicate that the sales figures will continue to increase.

It is difficult to predict exactly what the future holds for commercial properties. However, there are some factors that can give us some insight on the commercial property trends we should expect.

Interest rates

In late December 2013, prime interest rate was 8.5% — the lowest it had been since 1973. However, the South Africa Reserve Bank increased this rate by 0.5% which might have an effect on the cost of financing commercial property development. However, this increase was somewhat marginal and most lenders had predicted it.

Property prices

Judging by the current commercial property trends, property values will continue to increase. Some properties are now significantly pricier than they were during the boom in November last year. With the demand for properties increasing and supply dwindling, the prices can go nowhere else but upwards.

New construction

Despite the increased demand for commercial properties, many developers had trouble securing financing for new developments. This reduced the pace of construction of new properties and any new properties were constructed at a higher cost. This means that property prices early during the year are expected to be higher than during the third and fourth quarters.

Access to finance

Financial institutions had tightened their lending criteria for commercial developments but their appetite for lending is increasing. More construction is therefore expected for 2014 which will reduce property prices.

 

 

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