rode ch 1 state of prop market jj · pdf filerodeplan specialises in town and regional...

Editor-in-chiefErwin G. Rode

EditorJohn S. Lottering

Survey administratorNicole Maytham

AdvertisingLynette Smit

012-664 4159

SubscriptionsJuwayra Januarie

021-946 2480

Annual subscription:

4 issues: R5.100,00 (excl. VAT)

Published byRode & Associates (Pty) Ltd.

Reg. No: 2009/005600/07

PO Box 1566, Bellville 7535

Tel. 021-946 2480

Fax 021-946 1238

E-mail: [email protected]

Website: www.rode.co.za

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082 44 66 526

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© Rode & Associates (Pty) Ltd., December 2014. All rights reserved. No part of this publicationmay be reproduced, stored in a retrieval system, or transmitted in any form or by any means,electronic, mechanical, photocopying, recording or otherwise, without the prior permissionof the publisher. While all reasonable precaution is taken to ensure the accuracy of information,Rode & Associates (Pty) Ltd. shall not be liable to any person for inaccurate information oropinions contained in this publication. Portions of this report may be reproduced for legitimateacademic or review purposes provided due attribution is cited.

Vol. 25 no. 4

Erwin G. Rode(editor-in-chief)

John S. Lottering(editor)

iRode’s Report 2014:4

mailto:[email protected]

http://www.rode.co.za

http://www.capetowncartoonist.co.za







Property is constantly in the limelight and

investors are searching for meaningful,

property-specific information. This makes

a compelling argument for finely-targeted

advertising in the Rode’s Report on the SA

Property Market. This independent analysis

is one of the most widely-read publications

of its kind.

Target audience: Rode’s Report is targeted

at investors and property practitioners such

as property developers, property managers,

landlords, merchant banks, commercial banks

and non-residential property brokers.

Continued exposure: A quarterly publication,

Rode’s Report is used as a reference source

with a long shelf life.

Rates and special advertising offers: Take

advantage of Rode’s special advertising offer:

a “first-timer” offer of 10% less on our list

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Advertise on Rode’s website: For an

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As one of the largest independent property valuation firms in South Africa, Rode & Associates offers the propertyindustry:

• Real estate economics and research – based on statistical models and regularcountrywide surveys, which feed three research publications and over 5000 propertytime series covering more than two decades

• Property valuation – including residential, commercial, industrial, agricultural andspecialised properties such as hotels, hospitals, dormitories, self-storage facilities,airports, and the like.

• Property consultancy – which includes forecasts, overviews, and expert analyses forcorporates, government departments and private clients

• Town and regional planning – which covers land-use control, spatial planning andintegrated development plans, and which holistically incorporates property demandand supply, social, economic, political and environmental factors.

Based in Cape Town, Rode serves clients from all over South Africa and Namibia (Windhoek only).

GROUNDBREAKING RESEARCH

Over the years, Rode's research has led to groundbreaking property models and methodologies. This includesthe regular, rigorous surveying of market rental levels and capitalization rates through the expert-panel methodof polling to provide more uniform and realistic market valuations. Other breakthroughs include:• A unique econometric model to forecast the South African real estate market• The statistical determination of standard capitalization rates• Property demand forecasts•The estimation of market rentals in shopping centres and for industrial premises of

various sizes• Special methodologies to value income-producing properties• The development of regression models to estimate the capitalization rates of office

properties, industrial properties and shopping centres• The application of multiple regression techniques to value houses Rode's Valu-

ation Method – also known as the opportunity cash flow (OCF) method – to valueincome-producing properties

• A further refinement to the valuation of land with residential township potential usingthe direct-comparison method

• A further refinement to the valuation of bare dominiums.

Property consultancyReal estate valuationsReal estate economics

Town and regional planning

RodePlan specialises in town and regional planning to foster pathways to facilitatesustainable development. This includes:• Land-use control: rezoning, subdivision, departure, consent use, removal of title

restrictions, zoning schemes• Spatial planning: spatial development frameworks (SDFs) and plans (SDPs)• Indicator development: (land markets, land identification, -acquisition and -release)• Research: (spatial planning and implementation, housing delivery programmes and

projects)• Governmental integrated development planning (IDP): (process and products),

supported by a geographic information system (GIS).

RodePlan focuses on town and development planning processes and products at macro, meso and micro level.RodePlan considers an in-depth understanding of the social, economic, political and environmental elementsthat underpin present-day society as fundamental to an SDF and to Housing Sector Plans in order for planningand implementation to complement economic growth and development.

Rode also advises private clients on the development potential of specific properties and/or land disposalstrategies. This is done in collaboration with our expertise as property economists. RodePlan's clients includeproperty owners, developers, engineering companies and government institutions e.g. Engen Petroleum Limited,Urban LandMark, Gauteng Provincial Government Department of Economic and Development Planning, Cape WinelandsDistrict Municipality, Bergrivier Municipality, Umoya Energy (Proprietary) Limited, G7 Renewable Energies (Pty) Ltd, Plan 8(Pty) Ltd, South Africa Mainstream Renewable Power Developments (Pty) Ltd, Solairedirect (SA), Ignite AdvisoryServices (Pty) Ltd and Aurecon.

Recent appointments include: To obtain land-use rights for more than 10 renewable energy facilities in theWestern-, Eastern- and Northern Cape and for all provincially operated borrow pits in the Western Cape.

As one of South Africa's largest valuation firms, Rode annually values property portfolioswhich include shopping centres, agricultural property, residential, commercial andindustrial property. Rode also undertakes municipal property valuations, as well asspecialized valuations such as hotels, hospitals, bare dominiums, airports, etc.

Rode's property valuation services are underpinned by the rigorous surveying of, interalia, market rental levels and capitalization rates. Rode's valuation services also relyextensively on techniques such as regression models, as well as the opportunity cashflow (OCF) method. This ensures uniform and realistic market valuations, and is Rode'scompetitive edge.

SHOPPING CENTRES

In the retail field, Rode is considered South Africa's premier shopping-centre valuer due to the firm's techniqueof calculating market rentals and standard capitalization rates. The firm regresses actual rental rates of recentlysigned leases against their floor area size to determine the relationship between the market-rental rate and floorarea. The latter is a useful tool which landlords can employ to their advantage when negotiating renewals.

FARM VALUATIONS

Rode's agricultural valuation department specialises in the valuation of farms and smallholdings, and understandsthe value-drivers within this sector.

SPECIALIST PROPERTIES

Rode Valuations has done pioneering research on a number of specialist-property typologies, and we regardourselves as leading valuers with respect to hospitals, self-storage facilities, hotels, retirement villages, baredominiums (leased fee estates in American parlance) and airports.

Rode Consult provides forecasts, overviews and expert opinions for corporates, governmentdepartments and private clients on a wide range of property issues. Recent outputsinclude:

• Writing a macro overview of the South African housing market for the nationalDepartment of Housing

• Producing demand forecasts for specific office nodes and flats markets• Producing forecasts of rental levels using econometric modelling• Analysing property portfolios• Producing long-term forecasts of property values in South Africa• Development of a comprehensive policy framework for the identification and release

of land for human settlements• Analysing the property market in Bloemfontein and other Free State towns• Acting as expert witness in arbitration and litigation• Consulting for spatial and development planners and economists.

RODE'S REPORT ON THE SOUTH AFRICAN PROPERTY MARKET

Rode’s Report analyses and reports on most sectors of the property market. It covers,among others, trends and levels of rentals and standard capitalization rates by propertytype, grade, node/ township, the listed real estate market, and building constructioncosts and building activity. Quarterly updated; print or electronic version.

RODE'S SOUTH AFRICAN PROPERTY TRENDS

Trends is aimed at general managers with strategic decision-making power and property investment analysts who are involvedin asset allocation and viability studies. It offers a statistically-based analysis and forecast by property type of all key indicators

affecting the property market, and it covers all the major metropolitan areas to providea complete framework for property investment planning. The forecasts include thosefor standard capitalization rates, prime industrial and office rentals, office vacancies,building cost and the property cycle. Biannual CD publication.

RODE'S RETAIL REPORT ON SOUTH AFRICA

Rode's Retail Report contains analyses and reports on retail property, including shop

rentals, operating expenses and escalation rates. It also contains data on new shopping

centres, mooted developments and extensions to existing centres. Quarterly CD

publication.

RODE'S TIME SERIES DATABASE

Rode updates and rents out approximately 5 000 property time series, which offer

property researchers and analysts a unique opportunity to analyse sub-markets – from

office, industrial and residential rentals to capitalization rates and house prices covering

more than two decades. A Pro and a Lite database is available. The main difference

between the Pro and the Lite database is that the former contains the disaggregated

or nodal data. Electronic publication on CD, updated quarterly.

RODE'S SALES

This is an online database that analyses and reports on actual commercial and industrial property sales, as well

as vacant land sales. It is specifically designed with a view to assist anyone who has to determine the capitalization

rates of income-producing non-residential properties, or the market value of vacant land. It is meant to be

complementary to Rode’s Report, of which the quarterly surveys are opinion-based.

RODE'S GROWTH POINTS

Target market: CEOs, general management, fund investment managers, analysts

• Identifies areas of growth and stagnation in order to direct investment strategy

• Nine South African cities are included: Johannesburg, Pretoria, Cape Town, Durban,

Port Elizabeth, East London, Bloemfontein, Nelspruit, Polokwane

• Updated biennially

• Price on enquiry

• Tel: (+27) (0)21 946 2480

• Fax: (+27) (0)21 946 1238

• E-mail: [email protected]

• Postal address: PO Box 1566, Bellville 7535, Cape Town, South Africa

• Physical address: 11 De Villiers Street, Sunray (near c.o. Maree St), Bellville, Cape Town

• GPS: 33°53'58,5"S; 18°38'14,5"E

Rode staff

Erwin RodeBA, MBA (Stell): CEO

John S LotteringBCom(Finance)(UWC), BComHons(Econ)(UWC),MCom(Econ) (UWC)

Berchtwald RodeBA (Stell), MTRP (UOFS)

Juliana DommisseBEconHons (Stell)

Karen E ScottBComHons (Stell), BComHons (UCT)

Monique VernooyBTech(QS) (Cape Tech), NDREES (UNISA)

Tobi RetiefBA (Stell), NDREES (UNISA)

Madeniah JappieBScHons (Property Studies) (UCT)

Stephan van der WaltMA (Stell)

Marlene TighyBSc (Wits) Hons (OR) (RAU), MBL (UNISA), Pr Sci Nat

Janelle Van HarteParalegal (School of Paralegal Studies)

Biancé JohnsonJournalism (City Varsity)

Lynette Smit

Elizma Hawksley

Juwayra Januarie

Abigail Van Wyk

Nicole Maytham

Bianca Stears

Samantha Harkers

Rode’s Report 2014:4 Rode staffviii

Contents

State of the property market

State of the property market in quarter 3 of 2014 1

Capitalization rates

Office capitalization rates feeling the pressure 4

How to estimate capitalization rates – anywhere 15

Listed property

Firming yields driving prices up 18

Office rentals, operating expenses, and officedemand & vacancies

Rental growth decelerates in tandem with rising vacancy rates 22

See-thru office buildings are proliferating in the suburbs 37

Industrial rentals and vacancies and industrialstand valuesA third consecutive quarter of contracting output 56Stand values contracting in real terms 82

Residential market

Declining flat vacancies should bode well for rentals 105

House prices being buoyed by a softening in bank lending policies 120

Building activity & building costs

Despite improved sentiment too early to suggest residential building sector out of woods 126

Rode’s Report 2014:4 Contentsix

Tables

Table 1.1: The property market at a glance 1

Table 2.1: Prime industrial leaseback escalation rates 6

Table 2.2: Survey of capitalization rates: office buildings 8

Table 2.3: Change in capitalization rates: office buildings 9

Table 2.4: Survey of capitalization rates: industrial buildings 10

Table 2.5: Change in capitalization rates: industrial buildings 10

Table 2.6: Survey of capitalization rates (%): shopping centres 11

Table 2.7: Change in capitalization rates (%): shopping centres 13

Table 2.8: Survey of capitalization rates (%): street-front shops 13

Table 2:9: Change in capitalization rates (%): street-front shops 14

Table 4.1: Asset class performance total returns (including income yield

and capital returns) 18

Table 4.2: Growth in distributions for half-and full-year period ended

August 2014 19

Table 4.3: Total return on listed property funds to October 2014 20

Table 5.1: Pioneer office rentals 25

Table 5.2.: Market rental rates for office buildings 26

Table 5.3: Standard deviation of market rental rates for office buildings 29

Table 5.4: Typical rent-free period in months 31

Table 5.5: Market parking rentals 32

Table 5.6: Office rental escalation rates on new leases (%) 35

Table 5.7: Escalation rates on operating costs 36

Table 6.1: Estimated natural vacancy rate vs current actual vacancy rate 37

Table 6.2: Sapoa office vacancy factors (%) 41

Table 6.3: Sapoa office stock (m2) 48

Table 7.1: Pioneer rental rates for new, state-of-the-art industrial

developments during quarter 2014:2 58

Table 7.2: Mean prime industrial market rentals 59

Table 7.3: Standard deviation from mean prime industrial market

rentals 69

Table 7.4: Predominant market escalation rates (%) for industrial leases 81

Table 7.5: Indicative operating expenses for industrial buildings 81

Table 8.1: Mean market values for industrial stands 84

Table 8.2: Standard deviation for industrial stands 94

Table 9.1: Gross-income yields (%): Flats 107

Table 9.2: Flat rentals: standard-quality block of flats 109

Rode’s Report 2014:4 Tablesx

Tables

Table 9.3: Flat rentals: upmarket-quality block of flats 115Table 10.1: Gross-income yields (%) on houses by price class 122Table 10.2: Gross-income yields (%) of townhouses by price class 124Table 11.1: New non-residential buildings (private sector) (m2) 128Table 11.2: New residential buildings (private sector) (m2) 128

Rode’s Report 2014:4 xi

Annexures

Annexure 1

Glossary of property terms and abbreviations I

Annexure 2

Technical background to the Rode surveys IX

Annexure 3

How to interpolate industrial rental rates and land values XII

Annexure 4

Approximate building cost rates as at July 2014 XIII

Annexure 5

Monthly forecast of Haylett by MFA XXIII

Annexure 6

Absa Home Building-cost Index XXIV

Annexure 7

BER Building Cost Index XXV

Annexure 8

Prime overdraft rate at month-end (%) XXVI

Rode’s Report 2014:4 Annexuresxii

Panellist codes

Code Company Telephone number

ABA Abacus Divisions 0123455555

ACU Acumen Properties 0312662003

AH Alex Thornhill Properties 0538326889

AI Aida Pretoria 0123483720

AN Annenberg Real Estate 0214657780

AP API Property Group Cape Town 0215515379

AP API Property Group Gauteng 0112341144

AR Ash Brook Investments 71 0832301611

ASA ASAP Property Agents 0126431938

AV 5th Avenue Properties 0112346111

AW Watprop 0118870473

AY Alpine Estates 0114537600

BA Brammer Ross & Shapcott 0118734903

BC Barclay Miller & Associates (Pty) Ltd 0118035821

BG Batting Properties 0437220649

BHP Blue Horison Properties 88 0116014038

BM Jones Lang LaSalle 0115072200

BQ Brightridge Properties 0114502080

BR Broll Property Group - Illovo 0114414108

BR Broll Property Group 0114414000

BR Broll Property Group (Pty) Ltd 0114414794

BR Broll Retail 0114414412

BS Penthouse Real Estate 0116726251

BW Buschow Properties 0845103119

BZ Bales and Associates 0216838877

CB Centurion Letting & Sales 0126536180

CBP Camalb 0118645050

CC CCI Properties CC 0828211214

CE Cenprop Real Estate 0333471200

CF Cathy Cordier Eiendomme 0562121518

CI City Property Administration 0113783223


Rode’s Report 2014:4 Panellist codesxiv

CI City Property Administration (JHB) 0119783200


CL Cleomic Property Consultants 0117061591

CQ Connaught Properties (Pty) Ltd 0117252780

CIR Circle Properties 0219813263

CR Colliers International 0117832111

CS Chase & Sons 0164213170

DDN Diamond Properties North 0219481199

DD Diamond Properties 0214340001

DE Dedekind Real Estate 0366372297

DG DG Ladegaard Real Estate 0169339633

DK Direct @ Home Estates 0186320269

DL Delta Real Estate 0219302343

DN David Newham Property Management 0219480934

DQ Deskay Real Estate 0437811099

DV Dan Viljoen Estates 0116832345

DW Divaris Property Brokers 0215311551

EB ERA Ermelo 0178192398

EB Era Sun Kuruman 0537123503

ED Edric Trust 0514489431

EF Eagle Properties 0123313165

EH Ermelo Homenet 0178192880

EI Eris Property Group 0123490900

EK Ellenberger & Kahts 0514301511

EM Property Management & Rental Specialist CC 0217901991

EQV Equity Valuers 0514305655

ER Associated Brokers 0437260501

ES Eli Ströh Edms Bpk 0152873300

EV Engel & Völkers Commercial Properties 0123467777

FLP Freeline Properties 0217900066

FN Fine & Country Bethlehem 0583032333

FO Fosprops Properties/Homenet 0357898583

GB Galetti Knight Frank Cape Town 0214186308

GB Galetti Knight Frank Gauteng 0117831195

GE Gustrouw Estates (Pty) Ltd 0218547220

GIN Ginyan Commercial 0215594575

GH Gradion Property Investmens 0843938627

Panellist codesxvRode’s Report 2014:4

GO Pam Golding 0448746619

GO Pam Golding Commercial 0437054040

GI Growthpoint 0119446090

GI Growthpoint Properties Limited 0119446281

GR Grove Properties 0218520111

GT Black Pepper Properties 0116431909

GV G. Spargo and Associates 0448860001

GW Goldswain Investments 0437222876

GY Guy de la Porte Property Solutions 0217948879

HE Homelet Grahamstown 0466222839

HH Hendrik Tryhou Property Consultants 0137441671

HK Huurkor 0124008600

HN Harcourts Excellence 0184687089

HN Harcourts Jana-Marie Real Estate 0155161526

HP Horizon Capital (PTY)Ltd 0214258586

HS Harcourts Summerton Edelson 0415811768

IK Ikon Property Group 0214259496

IP Investpro 0437263116

IPM IPMS Pty (Ltd) iBhayi Property Management Services 0413655442

JH JHI Properties 0214177878

JL Just Letting Randburg/Northcliff 0117932757

JL Just Letting Potchefstroom 0182931858

JL Just Letting City Bowl 0214233344

JL Just Letting Tygerberg 0219100226

JL Just Letting Uitenhage 0419924316

JL Just Letting 0145928100

JP John Price Estates 0415833903

JR J Margolius & Associates (Pty) Ltd 0214344702

KB Key Properties 0123484800

KE Keydom Real Estate 0132826187

KI Kitchings Agencies 0419229870

LA Landlords “We do Rentals” 0219751770

LH Leader Homes 0538313955

LZ Life Residential 0214243969

MAS Massyn Acquisitions 0123452576

ME Mendace Properties 0828998304

MEA Meadow Star investments 85 (Pty) Ltd 0116014001

Panellist codesxviRode’s Report 2014:4

MH Merchant Trust Properties 0116094945

MI Platinum Global 0514474711

ML Mindry Properties CC 0317834307

MO Moolman Group of Companies 0152914700

MO Moolman Group Property Management 0123617970

MP Monarch Rentals (Pty) Ltd 0118494211

MPR Millar’s Properties 0123420527

MR Marder Properties 0114531220

MUL Multi Properties 0448746707

MW Mc William Murray Realty 0312674800

NE Newbridge Property Services 0219139131

NH Netwater Properties 0113261614

NR National Real Estate 0514059933

NRG SA National Realtors Group Commercial 0415822608

OB Only Rentals: City Bowl 0214225113

OB Only Rentals Kempton Park 0113917284

OD Oudtshoorn Eiendomme 0442725895

OF Omnicron Commercial Financial Services 0219142616

PA Pace Property Group 0112175959

PC Propco (1985) (Pty) Ltd 0312090161

PF Permanent Trust Property Group 0219819756

PF Permanent Trust Property Group 0214418800

PH President Estate & General Agents (Pty) Ltd 0118738707

PJ Profile Property Solutions 0333472786

PL Pears Property Consultants (Pty) Ltd 0217623474

PN Propergation Estates 0219146444

PPI Portfolio Property Investments 0315664605

PQ Pro-Net Estates 0132433113

PS Property Scene Real Estate 0357923217

PU Pulse Property Managers 0437000327

QP Share-List Property 0317647101

QU Quadrant Properties 0115309840

QV Boyd Valuations 0861111789

RA Real Estate & Property Services 0878081578

RD Redefine Income Fund 0112830028

REW Real Estate @ Work 0836328011

RF Rent-A-Flat 0117891007

Panellist codesxviiRode’s Report 2014:4

RM Remax Kuruman 0537123123

RO Reef Property Consultants 0116821827

RON Ronprop 0217126417

RQ Platinum Properties 0357891376

RR Realnet Southern Suburbs 0217611847

RS Rawson Properties Milnerton 0215587102

RY Rita Stipec Properties 0152954537

RZ Oriprops 0137546562

SC Stockton Property Consultants 0114259857

SF Seeff Durbanville & Brackenfell 0219755290

SF Seeff Commercial Randburg 0114763536

SJ Smart Properties 0413741131

SN Selection Estates 0867555545

SO Stockland Property Group 0835565564

SQ Steer & Company 0214261026

SWI Swindon Property Services 0214220778

SX Status-Mark 0116680100

TC Parker Properties 0116153531

TG Theo Goosen Estate Agents 0152959014

TH Trevor Hosiosky Investment Properties 0118035545

TR Trafalgar Property Services 0112145200

TR Trafalgar Property Management 0437266066

TR Trafalgar Property Services 0123265963

TR Trafalgar Property & Financial Services 0313017017

TR Trafalgar Property Services Southern Suburbs 0214105500

WD Webprop 0219100180

WFI Warehouse Finders 0796936818

WK Wakefields Property Management (Pty) Ltd 0312047400

ZB Sotheby’s International Realty PE 0413630168

ZB Lew Geffen Sotheby’s Commercial Services 0214183658

ZC SBI Property 0114851087

ZE Zenith Properties 0562123207

ZZ Anonymous

Panellist codesxviiiRode’s Report 2014:4

Acknowledgements

The writers of Rode's Report express their sincere thanks to:

1. Sapoa, for use of the basic data from their office vacancy surveys, which

we analysed further.

2. Medium-Term Forecasting Associates (MFA) of Stellenbosch, for the use

of their monthly forecast of building-input costs (Haylett), as well as

their leading indicator of building activity. Also for their kind permission

to publish the Bureau for Economic Research’s building-cost index, to

which they hold the marketing rights.

3. Absa for the use of their home-building-cost index.

4. Davis Langdon, an AECOM company, for the use of their building cost

data for various building types.

5. Nicole Maytham, who manages the surveys and compiles the annexures

and Lynette Smit and Juwayra Januarie for their technical assistance.

6. All the panellists who so kindly gave of their time and expertise in

responding to our surveys. The complete list of panellists who contribute

to the RR, together with their codes, appears on the following page.

For each of the survey tables in the RR you will find, listed against every

node or area, the codes for all the panellists who contributed information

this quarter.

7. Ken Gardner, who has the task of making sure that all gross grammar

mistakes are corrected.

8. The JSE Securities Exchange, Statistics South Africa and the Bond Exchange

of South Africa for the use of their data.

9. Other property practitioners throughout South Africa, experts in their

fields, too numerous to mention individually. Without the generous

assistance of these professionals, much of our research would be

impossible.

AcknowledgmentsxxRode’s Report 2014:4

Foreword

Dear Reader

Welcome to the fourth issue of Rode’s Report on theSouth African Property Market (RR) for 2014, whichreports on surveys conducted in the third quarter of2014.

As usual, we report on movements of a number of criticalproperty variables, ranging from capitalization rates,rentals, escalation rates, land values, and operating costsfor the non-residential property market, to changes inhouse prices and flat rentals in the residential property market.

If you want to communicate with a specific niche market, you can contactLynette Smit on 082-323 5799 for RR advertising rates.

Biancé Johnson and Lynette Smit are in charge of expanding our survey panel.Their job is to give you access to the opinions of as many property expertsas possible. We appeal to all market participants, who feel they have whatit takes to become an RR panellist, to please contact Biancé on 021-946 2480or Lynette on 082-323 5799 – it’s for the benefit of everyone in the industry.As a panellist you will also get invaluable exposure.

Readers are again reminded of our website – www.rode.co.za – which containsinteresting and relevant property-related articles, most of which are publishedin our monthly e-newsletter, to which readers can subscribe through ourwebsite. It’s free of charge.

Enjoy the holidays!

Sincerely

John S. LotteringEditor

November 2014

ForewordxxiRode’s Report 2014:4

http://www.rode.co.za/

http://rode.co.za/node/5259




http://rode.co.za/?q=node/91

Rode’s Report 2014:4 State of the property market 1

Chapter 1: State of the property market

State of the property market in quarter 3 of 2014 The following are the significant findings or conclusions made in this issue of Rode’s Report:

Office rental growth decelerates in tan-dem with rising vacancy rates

House prices are buoyed by a softeningin bank lending policies

Declining flat vacancies should bodewell for rentals

Quantitative overview of the property market

Table 1.1 provides a snapshot of how the property market has performed over the past four quarters by comparing the latest information (quarter 2014:3) with that col-lected a year earlier.

Table 1.1 The property market at a glance at quarter 2014:3*

% growth on four quarters earlier (on smoothed data) Nominal Real**

A-grade CBD office rentals Johannesburg 5,1 -3,5Pretoria 8,2 -0,6Durban 1,0 -7,1Cape Town 7,9 -0,8

A-grade decentralized office rentals National decentralized 3,0 -5,3 Sandton CBD 5,2 -3,3Randburg Ferndale -3,5 -11,3 Brooklyn/Waterkloof (Pta) 4,3 -4,1 Hatfield 3,4 -5,0Berea (Durban) -7,6 -15,1La Lucia Ridge 4,8 -3,7Claremont (CT) 10,0 1,1 Tyger Valley 5,4 -3,1


Office rentals

On the back of upward trending office va-cancy rates, the growth in national decen-tralized office rentals has been losing steam. In the third quarter of 2014, market rentals for grade-A multi-tenanted office space could — on a weighted national basis — only record growth of 3%. With in-contract escalation rates at about 8%, many a landlord is already experiencing downward rental reversions on the expiry of leases, and this is set to continue una-bated.

A look at the regions, shows the strongest growth in market rentals in Cape Town de-centralized (+6%). This is followed by Pre-toria and Durban, where market rentals are on average up by 5% and 3% respectively. In Johannesburg decentralized, market rentals remained at roughly their previous-year levels. In the third quarter of 2014, building costs are expected to have accel-erated to roughly 9%. This implies that across the regions it has become less via

ble to erect new office buildings in the ab-sence of secure long-term leases well above market levels. This trend can be ex-pected to continue for many quarters, if not years.

Industrial market

Prospects for the industrial property market remain daunting, especially when consider-ing the continued struggles of the manu-facturing sector.

Surprisingly, in the third quarter of 2014, market industrial rentals in the Cape Penin-sula and Port Elizabeth were actually able to show growth of roughly 9%. On the East Rand, market-related industrial rentals for prime space were up by 4% while on the Central Witwatersrand and in Pretoria, rentals showed moderate growth of only 2%. Over the same period, building costs are estimated to have grown at about 9%. This implies that on the East Rand, the Central Witwatersrand and in Pretoria, in-

Table 1.1 (continued) The property market at a glance at quarter 2014:3*

% growth on four quarters earlier (on smoothed data)

Nominal Real**Prime industrial rentals (500-m² units)

National 3,0 -5,4

Central Witwatersrand 1,9 -6,3

East Rand 4,2 -4,3

Durban metro 1,8 -6,4

Cape Peninsula 8,8 0,0

Flat rentals (standard quality, all sizes)

National 4,6 0,2

Johannesburg metro 3,0 -3,2

Pretoria metro 3,0 -3,2

Durban metro 4,5 -1,8

Cape Town metro 2,9 -3,3 * Unless otherwise specified** Nominal values deflated by BER Building Cost Index; however, flat rentals are deflated using the Consumer Price

Index.


dustrial rentals continued to contract in re-al terms. In the Cape Peninsula and Port Elizabeth, nominal rentals were at least able to show growth in line with building-construction inflation.

The house market

In general, nominal house prices continue to show decent — consumer-inflation beat-ing —growth.

In November 2014, the yearly growth in nominal national house prices ranged be-tween 7% and 8%, depending which index you use. Naturally, one of the only logical explanations for the resilience of house prices seems to be lenders that have sof-tened their lending criteria as the worst of the panic post 2008 is receding. Allegedly, banks are in some instances again lending as much as 100% of the market value of existing housing stock. Evidence of lender generosity also comes in the form of the strong growth in the value of new residen-tial mortgages granted. Since the second quarter of 2013, the yearly growth in the nominal value of new residential mortgages granted has increased at an average yearly rate of about 16%. Add to this the fact that

little new residential construction has taken place over the past five years, and we come close to explaining this phenomenon.

Flat rentals

On a national basis, in the third quarter of 2014, flat and house rentals were up by about 5%, while rentals for townhouses could only muster growth of 3%. The dif-ferences in growth rates can be ascribed to differences in new supply being added to the stock. Clearly, townhouses (in gated communities) are where most new supply is being added. This trend reflects both a change in lifestyle and security concerns.

Some good news for investors in the buy-to-let flat market is the decline in flat va-cancies in recent quarters, with a current vacancy factor of only 3% nationally. This improvement in demand naturally bodes well for market rentals of flats.

A 23-year analysis of flat vacancies shows that the vacancy risk for owners of flats is quite low compared to landlords of office buildings. This low-risk characteristic of residential properties does mean that a specialist apartment-owning fund would probably be well received on the JSE.

Rode’s Report 2014:4 Standard capitalization rates 4

7

8

9

10

11

12

13

14

90 92 94 96 98 00 02 04 06 08 10 12 14

Regional shopping centresIndustrial leasebacksDecentralized offices

National capitalization ratesby property type

Source of data: Rode's Time Series

%

7

8

9

10

11

12

13

90 92 94 96 98 00 02 04 06 08 10 12 14

PretoriaCape PeninsulaDurbanCentral Witwatersrand

Capitalization ratesRegional shopping centres


%

8

9

10

11

12

13

14

90 92 94 96 98 00 02 04 06 08 10 12 14

Cape PeninsulaDurbanPretoriaCentral Witwatersrand

Capitalization ratesPrime industrial leasebacks


%

Chapter 2: Capitalization rates

Office capitalization rates feeling the pressure

Written by John S. Lottering

While capitalization rates on shopping cen-tres and industrial property are going no-where slowly, those on office property now seem to be feeling the pressure of rising vacancy rates.

Capitalization rates are the property equiv-alent of the forward earnings yield of shares. When they rise — holding constant market rentals and operating costs — mar-ket values drop, and vice versa. Hence, the current slight increases in office capitaliza-tion rates — discussed later in the chapter — do not come as good news to owners of directly-held office property. This is espe-cially so when considering that the growth in market rentals continues to moderate due to rising vacancy rates.

Shopping centres

As for shopping-centre capitalization rates, those of regional centres countrywide stayed at roughly their previous-quarter levels. In the third quarter of 2014, inves

tors in regional shopping centres required a net income return of between 7,5% and 8,0% to induce them to buying or selling regional centres. Those interested in buy-ing or selling community centres were hap-py to do so at forward net income yields ranging between 8% and 9%, while capi-talization rates on neighbourhood centres stood at between 9% and 10%.

Prime industrial leasebacks


8

9

10

11

12

13

14

15

90 92 94 96 98 00 02 04 06 08 10 12 14

Sandton CBDParktownRosebankMidrand

Capitalization ratesPrime Johannesburg decentralized offices


%

Smoothed

9

10

11

12

13

14

15

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

BryanstonRivoniaSunninghillRandburg

Capitalization ratesPrime Johannesburg decentralized offices


%

Smoothed

8

9

10

11

12

13

14

15

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

BrooklynHatfieldCenturionMidrand

Capitalization ratesPrime Pretoria decentralized offices


%

Smoothed

In the reporting quarter, capitalization rates on industrial leasebacks in the major industrial agglomerations showed no major changes from the previous quarter. Our respondents were of the opinion that inves-tors in prime industrial property (with a leaseback covenant) required a minimum net income yield of between 8% and 9%.

Prime offices

The reader will notice that most office-building graphs below show an uptick for two consecutive quarters. It is always dan-gerous to arrive at definitive conclusions on short-term movements in economic varia-bles; however, as we can explain the uptick with regard to ever-rising vacancies, and because this is the second uptick in as many quarters, we now have the courage to raise a red flag.

Johannesburg decentralized

The biggest risk to capitalization rates in Johannesburg decentralized remains office vacancy rates that are edging north (see Chapter 6). This might persuade property investors to think twice before compressing capitalization rates further.

In fact, during the reporting quarter capitalization rates in most of the Johannesburg decentralized office nodes were marginally up when compared to their previous-quarter levels. Nonetheless, capitalization rates on grade-A multi-

tenanted office property in Johannesburg decentralized still ranged between 8,7% (in Sandton) and 10,5% (in Randburg). Note that these yields reflect standard capitali-zation rates, which we define as being based on market rentals (see definitions on p.I in the annexure section).

Pretoria decentralized

Office vacancy rates in Pretoria decentral-ized are also moving in the wrong direction (see Chapter 6). This might explain why capitalization rates in most of the Pretoria decentralized office nodes have ticked up over the past two quarters. Even so, inves-tors in prime office property were still will-ing to buy or sell at forward net income re-turns of between 9,5% and 10%.

Durban decentralized

During the reporting quarter, Grade-A of-fice property capitalization rates in the Durban decentralized of La Lucia / Um-hlanga Ridge, Westway and Essex Terrace


8

9

10

11

12

13

14

15

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Umhlanga RidgeWestwayEssex TerraceBerea

Capitalization ratesPrime Durban decentralized offices


%

Smoothed

8

9

10

11

12

13

14

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

ClaremontTyger ValleyCentury CityWestlake

Capitalization ratesPrime Cape Town decentralized offices


%

Smoothed

0

4

8

12

16

20

84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Leaseback escalationConsumer inflation

Leaseback escalationvs

Consumer inflation

Smoothed

%

Source of data: Rode's Time Series; Stats SA

were all able to firm slightly. This was in contrast to Berea where capitalization rates weakened (increased). Standard capitaliza-tion rates on grade-A multi-tenanted office property in Durban decentralized ranged between 8,5% (in La Lucia / Umhlanga Ridge) and 10% (in Berea).

Cape Town decentralized

Over the past two quarters, capitalization rates on grade-A multi-tenanted office property in Cape Town decentralized also edged up slightly. Nonetheless, during the reporting quarter capitalization rates still stood at 9%.

Leaseback escalation rates

In the third quarter of 2014, the average leaseback escalation rate remained at 7,9% (see Table 2.1). As the reader might know by now, the escalation rate is in the-ory an attempt by the market to forecast the average growth in market rentals until the expiry of the lease. However, this at-tempt is seldom successful, as the ineffi-cient property market is simply not good at forecasting.

This concludes our analysis of capitalization rates. The capitalization-rate tables follow.

Table 2.1 Prime industrial leaseback escalation rates

Quarter 2014:3

Mean SD N Change:

2014:2 less 2014:1 Broker-contributor codes

7,90 0,40 13 7,90 BM, BW, CR, EK, IPM, MW, NRG, PC, QP

QU, RO, RR, TH

Please note that figures referred to in the text may differ from the raw data in the tables ow-ing to smoothing on our part


Interpretation tip: It is dangerous to rely on one quarter’s figure, as it may be an outlier owing to small sample sizes. Instead, consider the trend or contemplate using the average of at least two quarters for a more accurate assessment. For this reason, the graphs accompanying this article are smoothed.

A standard capitalization rate (colloquially referred to as a cap rate) is the expected net oper-ating income for year 1, assuming the entire building is let at open-market rentals, divided by the purchase price. This calculation ignores VAT, transfer duty and income tax, and assumes a cash transaction. All references in Rode’s Report to “cap rates” and “capitalization rates” mean “stand-ard capitalization rates”.

Capitalization rates for CBDs (excluding the Cape Town CBD) are of little use because when office properties are sold, they are invariably converted to flats.

The high standard deviation from the mean capitalization rate for office and industrial properties in some nodes, as reported in the accompanying capitalization rate tables, is in-dicative of the uncertainty prevailing in these nodes or areas. With few sales taking place, the evidence on ruling capitalization rates is thin and opinions vary more than in the more popular areas. This means that the income-producing property market has become even more inefficient in these nodes — which makes the valuation of these properties a rather hazardous exercise.

We are indebted to our expert capitalization rate panel, comprising major owners and lead-ing brokers who know their market segments intimately. This survey would not be possible without their invaluable contributions. Codes of those panellists who supplied information for this quarter's survey appear in the tables on the following pages. An explanation of the con-tributor codes can be found on p. xiv.


Table 2.2 Survey of capitalization rates (%)

Office buildings Means for quarter 2014:3

Best location Grade A:

Multi-tenant Grade A: Leaseback

Grade B: Multi-tenant

Grade C: Multi-tenant

Mean SD n Mean SD n Mean SD n Mean SD nJohannesburg CBD 10,4 0,4 6 10,1 0,9 6 11,6 0,4 6 12,7 0,4 5 Braamfontein 10,2 0,2 6 10,1 0,9 6 11,1 0,6 6 12,5 0,4 5 Parktown 10,0 0,3 5 9,9 0,6 5 11,1 0,6 5 12,8 0,1 2Rosebank 9,2 0,3 5 9,0 0,5 5 9,9 0,9 5 10,7 0,8 4 Sandton CBD 8,8 0,2 6 8,4 0,5 6 9,7 0,4 6 11,7 0,0 2 Rivonia 9,8 0,4 5 9,6 0,7 5 10,6 0,6 5 12,6 0,0 2 Bryanston 9,4 0,2 5 9,3 0,6 5 10,4 0,4 5 11,7 0,4 3Sunninghill 9,8 0,4 5 9,6 0,7 5 10,4 0,6 5 12,0 0,3 3 Randburg Ferndale 10,5 0,0 4 10,7 0,7 5 11,5 0,3 5 13,0 0,0 3 Midrand 10,1 0,2 6 9,8 0,6 6 11,0 0,6 6 12,2 0,5 3 Germiston CBD 11,3 - 1 11,3 0,1 3 12,7 0,0 3 13,5 0,0 3 Pretoria CBD 10,1 0,2 5 9,7 0,3 5 11,5 0,4 5 12,4 0,4 5 Hatfield 9,8 0,2 4 9,6 0,3 4 10,6 0,4 4 11,4 0,6 4 Brooklyn 9,4 0,2 4 9,0 0,1 4 10,5 0,5 4 11,0 0,7 4Centurion 9,8 0,2 4 9,4 0,1 4 10,7 0,2 4 12,4 0,0 2Menlyn/Lynnwood 9,2 0,4 4 9,1 0,1 4 10,3 0,4 4 11,0 0,7 4 Vaal Triangle 10,2 0,0 3 10,2 0,1 3 11,5 0,2 3 12,5 0,4 3 Nelspruit 10,1 0,1 3 9,7 0,2 3 11,0 0,3 4 12,7 0,2 3 Polokwane 10,1 0,1 3 9,8 0,0 3 11,2 0,1 3 12,1 0,0 2Durban CBD 10,4 0,4 4 10,0 0,0 4 11,3 0,5 4 13,2 0,3 3 Berea 10,2 0,1 3 9,9 0,0 3 11,1 0,1 3 12,7 0,2 2 Essex Terrace 8,9 0,3 2 9,4 0,2 2 10,4 0,2 2 12,0 0,0 2 Westway 8,3 0,1 3 8,4 0,3 3 9,4 0,3 3 12,0 0,0 2 La Lucia / Umhlan-ga Ridge

8,5 0,4 6 8,3 0,4 6 9,8 0,4 6 11,3 0,5 3

Pietermaritzburg 10,5 0,2 3 10,1 0,1 3 11,8 0,2 3 13,4 0,3 3 Cape Town CBD 8,8 0,4 10 8,5 0,5 9 9,5 0,6 8 10,4 0,7 8 Bellville CBD - - - 9,7 0,4 3 10,2 0,1 3 11,2 0,6 3 Bellville Tyger Val-ley

9,2 0,3 4 9,2 0,4 4 9,8 0,2 4 10,0 0,0 2

Century City 8,8 0,3 6 8,7 0,2 5 9,4 0,3 5 - - - Westlake 8,8 0,2 4 8,7 0,1 3 9,0 0,0 2 - - - Claremont 9,1 0,3 4 9,0 0,4 4 9,4 0,1 4 - - - Port Elizabeth 9,8 0,3 5 9,5 0,3 5 11,0 0,0 5 12,6 0,4 5 East London 9,2 0,1 2 9,2 0,0 2 11,0 0,0 2 13,4 0,2 2 Bloemfontein CBD 9,7 0,4 6 9,7 0,3 5 11,2 0,2 6 12,6 0,3 6 n = Number of respondents — = Not available – fewer than two respondents SD = See Glossary of terms and abbreviations in Annexure 1.


Table 2.3 Change in capitalization rates (% points)

Office buildings Means for quarter 2014:3 less quarter 2014:2

Best location Grade A:

multi

Grade A: Lease-back

Grade B: multi

Grade C: multi

Broker & owner contributors

Johannesburg CBD 0,1 0,3 0,3 0,3 BM, PC, QU, REW, SF, TH Braamfontein 0,0 0,3 0,2 0,3 BM, PC, QU, REW, SF, TH Parktown 0,3 0,3 0,3 0,1 BM, PC, QU, SF, TH Rosebank 0,2 0,4 0,2 0,2 BM, PC, QU, SF, TH

Sandton CBD 0,1 0,2 0,3 0,0 BM, PC, QU, REW, SF, TH Rivonia 0,4 0,4 0,5 0,0 BM, PC, QU, SF, TH Bryanston 0,1 0,3 0,3 0,0 BM, PC, QU, SF, TH Sunninghill 0,4 0,4 0,5 0,0 BM, PC, QU, SF, TH Randburg Ferndale 0,0 0,3 0,1 0,0 BM, PC, QU, SF, TH Midrand 0,1 0,2 0,1 -0,1 AW, BM, PC, QU, SF, TH Germiston CBD - 0,0 0,0 0,0 QU, PC, TH Pretoria CBD 0,1 -0,1 0,1 0,1 BM, MAS, PC, QU, TH Hatfield 0,0 -0,1 -0,1 -0,1 BM, PC, QU, TH Brooklyn -0,1 -0,2 -0,1 -0,2 BM, PC, QU, TH Centurion 0,1 0,0 0,1 0,0 BM, PC, QU, TH Menlyn/Lynnwood 0,0 0,0 0,0 0,0 BM, PC, QU, TH Vaal Triangle 0,0 0,0 0,0 0,0 PC, QU, TH Nelspruit 0,0 0,0 0,0 0,1 BM, PC, QU, TH Polokwane 0,0 0,0 0,0 0,0 PC, QU, TH Durban CBD 0,3 0,0 -0,1 -0,4 BM, MW, PC, QU, TH Berea 0,0 0,0 0,0 0,2 PC, QU, TH Essex Terrace 0,3 -0,2 -0,2 0,0 PC, QU Westway 0,1 -0,4 -0,4 0,0 MW, PC, QU La Lucia Ridge 0,3 0,0 0,1 0,3 BM, MW, PC, QU, REW, THPietermaritzburg -0,4 0,0 0,0 0,0 PC, QU, TH Cape Town CBD 0,1 0,0 0,0 0,1 BM, DD, FLP, GR, HP, PC,

QU, REW, RR, TH Bellville CBD 0,0 0,2 0,2 0,0 GR, PC, QU Bellville Tyger- 0,0 0,0 0,0 0,0 BM, GR, PC, QU ValleyCentury City 0,0 0,0 0,0 - BM, GR, HP, PC, QU, RR Westlake -0,1 -0,1 0,0 - HP, PC, QU, RR Claremont -0,1 0,0 -0,1 - GR, PC, QU, RR Port Elizabeth 0,0 0,1 0,0 0,0 IPM, NRG, PC, QU, TH East London 0,1 0,0 0,0 -0,2 PC, QUBloemfontein CBD 0,0 -0,1 0,0 0,0 BW, CC, EK, PC, QU, TH NB: The number of broker/owner codes does not necessarily match the sample size as indicated by the n in the table on page 8. This is so because several of our owner contributors wish to remain anonymous, but we do not show multiple ZZ codes in the table.


Table 2.4 Survey of capitalization rates (%)

Industrial buildings Means for quarter 2014:3

Best location Prime leaseback (AAA Tenant)

Prime quality non-leaseback

Secondary quali-ty building

Prime industrial park

Mean SD n Mean SD n Mean SD n Mean SD n Central Wits 8,7 0,6 8 9,4 0,5 7 10,6 0,5 7 9,8 0,9 7 West Rand 9,2 0,5 6 9,7 0,5 5 10,8 0,4 5 10,1 0,9 6 East Rand 8,7 0,7 8 9,3 0,6 7 10,5 0,3 7 9,8 0,6 7 Far East Rand 9,3 0,3 6 10,1 0,2 5 11,1 0,4 6 10,5 0,8 6 Pretoria 9,0 0,0 5 9,8 0,2 5 10,7 0,2 5 9,8 0,5 5 Vaal Triangle 9,4 0,1 4 10,1 0,3 3 11,3 0,4 4 10,8 0,2 3 Nelspruit 9,5 0,0 4 9,9 0,0 3 10,7 0,2 3 10,0 0,6 4 Polokwane 9,7 0,2 4 10,0 0,0 3 11,1 0,0 3 10,6 0,1 3 Durban 8,4 0,3 8 9,0 0,3 7 10,0 0,5 6 9,3 0,4 8 Pietermaritz-burg

9,0 0,3 5 9,5 0,4 4 11,0 0,0 3 10,1 0,7 4

Cape Peninsula 8,6 0,3 7 9,1 0,3 6 10,1 0,2 6 9,1 0,5 7 Port Elizabeth 9,3 0,2 6 9,8 0,3 5 11,5 0,5 6 9,7 0,5 6 East London 9,8 0,2 3 10,5 0,0 2 11,4 0,5 3 10,2 0,0 2 Bloemfontein 9,4 0,3 6 10,4 0,4 4 11,5 0,4 7 10,9 0,6 5 n = Number of respondents — = Not available – fewer than two respondents SD = See Glossary of terms and abbreviations in Annexure 1.

Table 2.5 Change in capitalization rates (% points)

Industrial buildings Means for quarter 2014:3 less quarter 2014:2

Best location Prime

leaseback Prime non-leaseback

Secondary quality building

Prime In-dustrial

park

Broker & owner

contributors

Central Wits 0,0 0,2 0,2 0,1 BM, GT, PC, QU, REW, RO, SF, TH

West Rand 0,2 0,4 0,1 0,2 BM, GT, PC, QU, SF, TH East Rand 0,0 -0,1 0,1 0,2 BM, GT, PC, QU, REW, RO,

SF, TH Far East Rand 0,0 0,1 0,2 0,1 BM, GT, PC, QU, RO, SF TH Pretoria 0,0 0,0 0,0 0,0 BM, GT, MAS, PC, QU, TH Vaal Triangle 0,1 0,3 0,1 -0,3 BM, GT, PC, QU, TH Nelspruit 0,0 0,0 0,0 0,0 GT, PC, QU, TH Polokwane 0,0 0,0 0,0 0,0 GT, PC, QU, TH Durban 0,2 0,2 0,2 0,0 BM,GT, MW, PC, QP, QU,

TH NB: The number of broker/owner codes does not necessarily match the sample size as indicated by the n in table 2.4. This is so because several of our owner contributors wish to remain anonymous, but we do not show multiple ZZ codes in the table.


Table 2.5 (continued) Change in capitalization rates (% points)

Industrial buildings Means for quarter 2014:3 less quarter 2014:2

Best location Prime

leaseback Prime non-leaseback

Secondary quality building

Prime In-dustrial

park

Broker & owner

contributors

Pietermaritzburg 0,0 0,0 0,0 0,0 BM, GT, PC, QU, TH Cape Peninsula -0,2 -0,2 0,0 0,0 BM, GR, GT, PC, QU, RR, Port Elizabeth -0,1 0,0 0,4 -0,3 BR, GT, IPM, NRG, PC QV,

TH East London 0,0 0,0 0,0 0,0 BM, GT, PC, QU Bloemfontein -0,1 -0,1 -0,1 -0,2 BM, BW, CC, EK, GT, PC,

QU, TH NB: The number of broker/owner codes does not necessarily match the sample size as indicated by the n in table 2.4. This is so because several of our owner contributors wish to remain anonymous, but we do not show multiple ZZ codes in the table.

Table 2.6 Survey of capitalization rates (%): shopping centres

Means for quarter 2014:3

Best location Super regional Regional Community

Mean SD n Mean SD n Mean SD n Witwatersrand 7,0 0,3 5 7,4 0,4 5 8,3 0,5 5 Pretoria 7,3 0,2 4 8,0 0,1 3 8,5 0,3 4 Vaal Triangle 7,6 0,3 3 8,0 0,0 3 9,2 0,2 3 Nelspruit 7,5 0,0 3 8,0 0,0 3 9,0 0,0 3 Polokwane 7,7 0,0 3 8,1 0,0 3 9,1 0,0 3 Durban 7,4 0,3 3 8,0 0,2 3 9,1 0,2 3 Pietermaritzburg 7,6 0,1 3 8,1 0,0 3 9,2 0,0 3 Cape Town 7,2 0,5 7 7,5 0,4 8 8,4 0,4 7 Port Elizabeth 8,1 0,6 4 8,6 0,5 5 9,6 0,3 5 East London - - - - - - 9,0 0,3 3Bloemfontein 7,8 0,0 2 8,3 0,1 3 9,2 0,1 6 Platteland - - - - - - 9,5 0,2 3Townships - - - - - - 9,4 0,1 4n = Number of respondents — = Not available SD = See Glossary of terms and abbreviations in Annexure 1.


Table 2.6 (continued) Survey of capitalization rates (%): shopping centres


Best location Neighbourhood Local convenience Retail warehouse

Mean SD n Mean SD n Mean SD n Witwatersrand 9,6 0,2 5 10,4 0,3 4 9,7 0,2 4 Pretoria 9,7 0,2 5 10,5 0,3 5 9,8 0,1 4 Vaal Triangle 10,0 0,0 3 10,9 0,2 3 10,0 0,2 3 Nelspruit 10,0 0,0 3 10,8 0,0 3 9,9 0,1 3 Polokwane 10,2 0,1 3 10,9 0,1 3 9,9 0,1 3 Durban 9,8 0,1 3 10,6 0,1 3 9,7 0,0 3 Pietermaritzburg 10,3 0,2 3 10,9 0,0 3 9,9 0,1 3 Cape Town 9,1 0,4 8 9,8 0,4 6 9,4 0,6 7 Port Elizabeth 10,2 0,4 5 11,0 0,2 5 10,2 0,4 5 East London 10,2 0,1 2 10,9 0,3 2 10,8 0,1 2 Bloemfontein 10,0 0,0 6 10,8 0,2 6 10,7 0,7 5 Platteland 10,4 0,1 3 11,2 0,1 3 10,8 0,2 3 Townships 10,4 0,2 5 10,6 0,1 4 10,4 0,2 3 n = Number of respondents — = Not available SD = See Glossary of terms and abbreviations in Annexure 1.

Table 2.7 Change in capitalization rates (% points): shopping centres

Means for quarter 2014:3 less quarter 2014:2

Best location Super

regional Regional

Commu-nity


Witwatersrand -0,10 -0,10 -0,20 BM, PC, QU, REW, SF, TH

Pretoria -0,10 -0,20 0,00 BM, MAS, PC, QU, TH

Vaal Triangle -0,40 0,00 -0,30 PC, QU, TH

Nelspruit 0,00 0,00 0,00 PC, QU, TH

Polokwane 0,00 0,00 0,00 PC, QU, TH

Durban -0,10 -0,30 -0,20 PC, QU, TH

Pietermaritzburg 0,00 0,00 0,00 PC, QU, TH

Cape Town -0,20 -0,40 -0,20 BM, DD, FLP, GR, PC, QU, REW, RR, TH

Port Elizabeth 0,20 0,20 0,20 IPM, NRG, PC, QU, TH

East London - - -0,30 BM, PC, QU

Bloemfontein 0,00 0,00 -0,10 BM, BW, CC, EK, PC, QU, TH

Platteland - - 0,00 GR, PB, QU

Townships - - 0,10 GR, PC, QU, REW, TH


Table 2.7 (continued) Change in capitalization rates (% points): shopping centres

Means for quarter 2014:3 less quarter 2014:2

Best location Neighbour-

hood

Local conven-

ience

Retail warehouse


Witwatersrand 0,0 0,0 0,0 BM, PC, QU, REW, SF, TH

Pretoria 0,0 0,0 0,0 BM, MAS, PC, QU, TH

Vaal Triangle 0,0 -0,3 -0,2 PC, QU, TH

Nelspruit 0,0 0,0 0,0 PC, QU, TH

Polokwane 0,0 0,0 0,0 PC, QU, TH

Durban 0,0 0,0 0,0 PC, QU, TH

Pietermaritzburg 0,0 0,0 0,0 PC, QU, TH

Cape Town -0,1 -0,4 -0,3 BM, DD, FLP, GR, PC, QU, REW, RR, TH

Port Elizabeth 0,2 0,2 0,2 IPM, NRG, PC, QU, TH

East London 0,1 0,3 -0,1 BM, PC, QU

Bloemfontein 0,0 0,1 0,0 BM, BW, CC, EK, PC, QU, TH

Platteland 0,0 -0,1 0,0 GR, PB, QU

Townships -0,3 0,0 -0,1 GR, PC, QU, REW, TH

Table 2.8 Survey of capitalization rates (%): street-front shops


Best location Metro CBD Decentralised

Mean SD n Mean SD n Witwatersrand 11,00 0,50 5 10,70 0,20 5 Pretoria 10,70 0,00 3 10,60 0,10 3 Vaal Triangle 10,90 0,00 3 10,70 0,00 3 Nelspruit 10,90 0,10 3 10,70 0,10 3 Polokwane 10,80 0,00 3 10,60 0,00 3 Durban 10,90 0,60 4 10,80 0,30 4 Pietermaritzburg 10,70 0,10 3 10,70 0,00 3 Cape Town 9,20 0,80 7 9,10 1,00 6 Port Elizabeth 10,80 0,70 6 10,70 0,40 5 East London 10,70 0,60 2 10,80 0,20 2 Bloemfontein 10,80 0,40 6 10,40 0,20 5 n = Number of respondents — = Not available SD = See Glossary of terms and abbreviations in Annexure 1.


Table 2.9 Change in capitalization rates (% points): street-front shops

Means for quarter 2014:3 less quarter 2014:2 Best location Metro CBD Decentralised Broker & owner contributors

Witwatersrand 0,4 0,0 PC, QU, REW, SF, TH

Pretoria 0,0 0,0 PC, QU, TH

Vaal Triangle 0,0 0,0 PC, QU, TH

Nelspruit 0,0 0,0 PC, QU, TH

Polokwane 0,0 0,0 PC, QU, TH

Durban 0,3 -0,3 PC, QU, REW, TH

Pietermaritzburg 0,0 0,0 PC, QU, TH

Cape Town 0,0 -0,7 DD, FLP, GR, PC, QU, RR, TH

Port Elizabeth 0,1 0,0 DD, IPM, NRG, PC, QU, TH

East London 0,6 0,2 PC, QU

Bloemfontein -0,1 0,0 BW, EK, PC, QU, REW, TH

Rode’s Report 2014:4 Capitalization rate equations 15

Chapter 3: Capitalization-rate equations

How to estimate capitalization rates – anywhere

Updated by John S. Lottering

This chapter provides the reader with a handy, updated tool to estimate the market capitalization rates of various property types anywhere in South Africa, provided the user is confident about the subject property’s gross market-rental rate.

As the reader will see below, market-rental rates are amazingly successful in explain-ing the level of capitalization rates. On re-flection, though, this should not be all that surprising, considering that all the good and bad news pertaining to a property is encapsulated in the ruling market-rental rate. Here we think of rental-level drivers such as:

Location

Risk (examples of varying risk profilesare a leaseback compared with a multi-tenanted property; the robustness ofthe covenant)

Grade/age

An important risk factor typically not re-flected in a rental, is the design of the building, as it affects its ability to be re-let. Here one thinks of purpose-built buildings.

Thus, the moderately strong relationship between market-rental rates and capitali-zation rates allows the researcher to build a regression model with which to estimate the levels of capitalization rates.

Office-building equation

In our regression analysis of office build-ings, we use the market capitalization rates (dependent variables) and gross market-rental rates (predictors) of grades A, B and C buildings in the areas surveyed by Rode’s Report (RR).

The source of the national equation given below is this issue of RR. The regression is based on 59 observations in mainly decen-tralized nodes.

The updated equation is:

office capitalization rate % = 13,657 – (0,0369*gross rental)

where

gross rental = the gross market rental rate per rentable m2 per month for grades A, B or C office buildings in quarter 2014:3.

The correlation coefficient r = -0,8. The standard error (SE) is 0,6 and n = 59.

Readers should note that it is not advisable to use this function for gross market-rental rates that fall much outside the range of R38/m²/month to R162/m²/month


Example:

If the gross office rental is R60 per rent-able m2 per month, then the capitaliza-tion rate is:

office capitalization rate %=13,657 – (0, 0369*60) = 11,4%

Industrial-property equation

This national equation expresses the rela-tionship between the capitalization rates and gross market rental rates of prime stand-alone non-leasebacks, secondary stand-alone industrial buildings, and indus-trial parks.

The gross market rental rates are those applicable to 1 000-m2 units. The source of the data is this issue of Rode’s Report. The industrial-regression equation, which is based on 33 observations, includes all pri-mary and secondary industrial cities.

The updated equation is:

industrial capitalization rate % = 13,164 – (0,094*gross rental)

where:

gross rental = the gross market rental per rentable m2 per month as in quarter 2014:3 for stand-alone prime non-leaseback or prime industrial parks or stand-alone secondary industrial space of 1 000 m2, located in primary and sec-ondary industrial cities.

The correlation coefficient r = -0,8. The standard error (SE) is 0,4 and n = 33.

It is not advisable to use this function for gross market rental rates that fall much outside the range of R20/m²/month to R45/m²/month. Also, remember to use the rental rate applicable to a notional area of 1 000 m² (even if the actual floor area is completely different).

Example:

If the gross industrial rental for a 1000 m² building, located in a primary or sec-ondary industrial city, is R20 per renta-ble m2 per month, then the capitaliza-tion rate is:

industrial cap rate % = 13,164 – (0,094*20)= 11,3%.

Warning: To guard against volatility in the latest survey data, the reader is advised also to consult the regression equation and its applicable rental rate in the previous issue of RR, and to consider using a two-quarter average capitalization rate (unsurveyed) if necessary.

Rode’s Report 2014:4 Listed property 18

-40

-20

0

20

40

60

80

5

6

7

8

9

10

11

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Long-bond yieldREIT yieldREIT price

Growth in listed property pricesvs

Change in yields

Pric

e gr

owth

(%;

y-o-

y)

Change

inyields

(%-points; y-o-y)

Source of data: JSE; SARB

Chapter 4: Listed property

Firming yields driving prices up Written by John S. Lottering

Since the beginning of the year, the net-income yields on listed property funds have been following those on long bonds south. The result of this has in recent months been an acceleration in the yearly growth of listed property funds’ prices.

The accompanying graph shows the gener-ally known robust correlation between long-bond and listed-property yields.1It al

1 Similar to bonds, a listed property portfolio is, in one sense, nothing but a bundle of lease contracts, which by their nature lend a strong degree of predictability to future earnings. However, it is a fair assumption that the cash flow of listed property will grow — albeit moderately — in contrast to that of bonds. Thus, the risk and growth prospects tend to cancel one another out, and investors, therefore, see them as close sub-stitutes.

so shows how yields on both have firmed by just under 100 basis points since the beginning of the year and how this has supported listed property prices (see shad-ed area of graph). In fact, such has been the recovery in listed property prices that it has also resulted in listed property provid-ing the best total returns among the tradi-tional asset classes. For the year ended Oc-tober 2014, the total return on SA listed property was 19%. This was followed by equities (+11%), bonds (+9%) and cash (+6%) (see Table 4.1).

For now, a boon to the listed property sec-tor must be the fall in international crude oil prices. This is so because weaker oil prices usually mean lower inflation pres-sures, which in turn augur well for bond prices, thereby pushing down yields.

Table 4.1 Asset class performance

Total returns (income yield plus capital return) October 2014

month-to-date 12-month periodEquities 1,0% 10,6%Bonds 3,4% 9,0%SA Listed Property 6,8% 19,4%Cash 0,5% 5,7%Source: Catalyst Fund Managers


-5

0

5

10

15

20 2

4

6

8

10

12

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Distribution growth: rolling 12 monthsNational dec. vacancy rate

r²=-0,8

Distribution growth: PLSvs

National decentralized office vacancy rate

Dis

trib

utio

n gr

owth

(%)

Source of data: SAPOA; SA Reit Association (via Grindrod Asset Management)

Vacancy

rate(%

)

Table 4.2

Growth in distributions for half-and full-year ended August 2014

Company Distribution growth (%) Period

Fountainhead Property Trust 6,9% Full year Redefine Properties 8,5% Full year Redefine International PLC 2,9% Full year Octodec Investments 11,5% Full year Rebosis Property Fund 8,1% Full year Dipula Income Fund - A 5,0% Full year Dipula Income Fund - B 11,3% Full year Delta Property Fund 23,1% Half year

Growth in distributions for half-and full-year ended September 2014 Arrowhead Properties - A 11,0% Full year Arrowhead Properties - B 25,7% Full year Vukile Property Fund 7,8% Half year Source: Financial results of the various listed property funds

Despite a tough market, many funds are still able to declare impressive growth in distributions. As Table 4.2 shows, for the half- and full-year periods ended August and September 2014, a number of funds were still able to report very robust — con-sumer inflation beating — growth in distri-butions.

For now, the biggest hindrances to income stream prospects remain jaded non-residential property fundamentals and dis-proportionate increases in administered prices. On the other hand, income streams will continue to benefit from contractual rentals that are escalating at between 8% and 9%. However, market rentals have been showing growth below contractual escalation rates for a number of years now, hence negative reversions to market upon the expiry of leases, will become more common.

The graph which follows shows, for exam-ple, the very strong — r²=0,8 — negative relationship between the growth in distri-butions of listed funds and national decen-tralized office vacancy rates. Note how this relationship has since the end of 2012 bro-ken down (shaded area of graph).

The direct explanation for the breakdown is that offices make up a smallish proportion of the total listed-property stock. Indirect reasons are that funds are able to improve their cash flows by buying in directly-held property portfolios at yield-enhancing pric-es. Another is increased exposure to off-shore listed holdings.

Table 4.3 shows the individual performances of listed property funds for different periods to the end of October 2014 (ex S.A. Reit Association).

This concludes our chapter on listed prop-erty.


Table 4.3 Total return (%) on listed property funds

to October 2014 Individual stock performance

1 year 3 years

Acucap 14,7 16,9Arrowhead A 25,4 - Arrowhead B 28,4 - Ascension A 27,3 - Ascension B 13,1 - Capital 28,5 21,0Delprop -2,4 -Dipula A 9,0 14,8 Dipula B 3,0 25,0 Emira 16,7 19,1Fairvest 14,7 12,3Fortress A 25,4 21,4 Fortress B 67,5 49,7 Fountainhead 9,0 12,6Growthpoint 12,0 20,4Hospitality A 14,1 18,4 Hospitality B -35,1 -11,6 Hyprop 37,1 28,7Investec Prop 9,9 22,1 Octodec 16,4 22,9Rebosis 7,7 14,1Redefine 4,3 17,4Resilient 56,3 41,5SA Corporate 25,2 21,5 Sycom 21,7 18,1Synergy A 16,3 - Synergy B 11,8 - Texton 7,1 19,1Tower 4,7Vukile 14,6 17,0

Total return includes income yield and capital return. Source: S.A. Reit Association (via Grindrod Asset Management)

Rode’s Report 2014:4 Office rentals 22

-5

0

5

10

15

20 2

4

6

8

10

12

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Rental growthVacancy rate

Growth in market rentalsvs

Vacancy rates(National decentralized)

r=-0,7 (up to 3-qtr lag)

Ren

tal gr

owth

(%;

y-o-

y)

Vacancy

rate(%

)

Source of data: Rode's Time Series; Sapoa

200180160140

120

100

80

60

40

2096 98 00 02 04 06 08 10 12 14

ParktownRosebankRivoniaSandton CBD

Nominal Johannesburg decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


160

140

120

100

80

60

4096 98 00 02 04 06 08 10 12 14

ParktownRosebankRivoniaSandton CBD

Real Johannesburg decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


Chapter 5: Office rentals

Rental growth decelerates in tandem with rising vacancy rates


On the back of upward pressure on office vacancy rates, the growth in national de-centralized office rentals has been losing steam. In the third quarter of 2014, market rentals for grade-A multi-tenanted office space could — on a weighted national basis — only record growth of 3%.

A look at the regions, shows the strongest (+6%) growth in market rentals in Cape Town decentralized. This was followed by Pretoria and Durban where market rentals were on average up by 5% and 3% respec-tively. In Johannesburg decentralized, market rentals remained at roughly their previous-year levels. In the third quarter of 2014, building costs are expected to have accelerated to roughly 9%. This implies that across the regions it has become less viable to erect new office buildings. This statement assumes that one can build a new office building overnight; that is, we ignore the fact that typically it takes a few years to erect a new building and that the

ratio of market rentals to building costs could change drastically over such a long period.

Zooming in on Johannesburg decentralized, shows contracting market rentals in Park-town (-5%), Randburg Ferndale (-4%) and Bryanston (-1%). In Rivonia rentals were at their previous-year levels while in Illovo


200180160140

120

100

80

60

40

2096 98 00 02 04 06 08 10 12 14

Randburg FerndaleBryanstonIllovoSandton CBD

Nominal Johannesburg decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


160

140

120

100

80

60

4096 98 00 02 04 06 08 10 12 14

Randburg FerndaleBryanstonIllovoSandton CBD

Real Johannesburg decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


200

100

80706050

40

30

20

1096 98 00 02 04 06 08 10 12 14

CenturionBrooklyn/WaterkloofHatfieldMenlyn

Nominal Pretoria decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


110

100

90

80

70

60

5096 98 00 02 04 06 08 10 12 14

CenturionBrooklyn/WaterkloofHatfieldMenlyn

Real Pretoria decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


140

120

100

80

60

40

2096 98 00 02 04 06 08 10 12 14

BereaLa Lucia Ridge Westway

Nominal Durban decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


rentals showed growth of 3%. Sandton (+5%) again showed the strongest growth, in spite of its ballooning vacancies. Never-theless, the growth in rentals in Sandton is decelerating (see Chapter 6), so do we expect fundamentals eventually to govern this node as well.

During the reporting quarter, the Pretoria decentralized office node of Menlyn (+9%) recorded the best growth in rentals. In Centurion, market rentals showed growth of 7%, while in the office nodes of Brook-lyn/Waterkloof and Hatfield, rentals grew at moderate rates of 4% and 3% respec-tively. Barring Brooklyn/Waterkloof, prime office vacancy rates in these nodes remain in the double digits. The result of this might, naturally, be downward pressure on rentals.

With reference to the real-rental graph, no-tice how Hatfield – once the premium Pre-toria node – has been losing ground since 2011.

In the Durban decentralized office node of Berea (-6%), market rentals were again lower than what they were a year ago. Of course, the poor performance of rentals in Berea is not unexpected given this node’s very high vacancy rate. In the reporting quarter, the grade-A office vacancy rate in Berea stood at 26% (see Chapter 6). In La Lucia / Umhlanga, rentals were up by 5%, while rentals in Westway showed growth of roughly 7%.


110

100

90

80

70

60

5096 98 00 02 04 06 08 10 12 14

BereaLa Lucia Ridge Westway

Real Durban decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


140

120

100

80

60

40

96 98 00 02 04 06 08 10 12 14

Tyger ValleyClaremontCentury City

Nominal Cape Town decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


140

120

100

80

60

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Tyger ValleyClaremontCentury City

Real Cape Town decentralized grade-A office rentals

R/m

²(l

og s

cale

)

Smoothed


In the reporting quarter, the Cape Town decentralized office node of Claremont (+10%) was a fleeting star – ‘fleeting’ be-cause it is continuing to lose ground rela-tive to the other nodes (see the real-rental graph). In Century City, rentals were up by 8%, while rentals in Tyger Valley showed growth of 5%. Real rentals in Century City have also been trekking north in recent years, implying the increased viability — holding operating costs and capitalization rates constant — of developing new office space in this node.

Pioneer rentals

Table 5.1 shows the difference between pioneer rentals and grade-A market rent-als. Often pioneer-rental levels represent leases signed on newly erected buildings, and these then reflect today’s building costs rather than market rentals, as devel-opers naturally expect an immediate fair return on their development costs. None-theless, pioneer rentals can still be used as a rough indication of prospects for future market-rental growth.

This concludes our section on office rentals. The office-rental tables follow.

Recap: nominal versus real rentals

The term “nominal” refers to money rentals, whereas the term “real” refers to nominal less infla-tion.

Rode mostly deflates nominal rentals with the Bureau for Economic Research’s Building Cost In-dex (BER BCI) to arrive at real rentals. The rationale for using building costs as deflator is the substitution principle and because building costs can serve as a proxy for the replacement costs. To illustrate, why would you buy a property at R110 when you could have it built (replaced) for R100? When rentals are low relative to replacement costs, the upside potential for rentals is great and vice versa. Thus, high real rentals (relative to previous periods) may be an indication of a market that is vulnerable to a downswing, and low real rentals indicate great upside potential.


Grateful thanks to our expert panellists for the information they supply. Codes of the brokers and landlords who contributed to this quarter's survey appear in the table on p. 26. An ex-planation of the codes can be found on p. xiv.

Table 5.1

Pioneer office rentals

Highest gross nominal market rental rate achieved

Rands per rentable m², gross leases (excl VAT)

During quarter 2014:3

PioneerNormal

grade A Difference %

Johannesburg dec. 200 108 85%

Pretoria dec. 170 115 48%

Durban dec. 170 112 52%

Cape Town dec. 145 107 36%


Table 5.2 Market rental rates for office buildings

Quarter 2014:3 Rands per rentable m² per month, gross leases (excl VAT)

Grade A+

meanGrade Amean

Grade Bmean

Grade Cmean

Broker contributor codes

Johannesburg CBD 108,00 79,17 62,50 38,33 QU, RX, SF, ZZ Braamfontein 95,00 81,25 71,25 41,67 QU, REW, RX, SF, ZZ Sandton CBD 195,42 161,50 117,60 94,00 AR, AW, BM, QU, REW, RX,

SF, ZZDunkeld West 130,50 116,25 92,50 80,50 AR, AW, BM, QU, RX, SF, ZZWierda Valley 147,50 114,08 100,12 87,00 AR, BM, QU, RX, ZZ Randburg Ferndale 88,88 75,88 70,50 64,75 AR, BM, QU, RX, SF, ZZ Rivonia 107,50 98,25 79,60 72,50 AR, BM, QU, RX, SF, ZZ Rosebank 171,67 127,50 95,83 81,50 AR, AW, BM, QU, RX, SF, ZZIllovo 162,50 124,38 103,75 81,00 AR, AW, QU, RX, ZZ Illovo Boulevard 142,50 126,00 113,33 88,33 AR, AW, BM, QU, ZZ Chislehurston 124,17 109,83 106,67 85,00 AR, BM, QU, RX, ZZ Parktown 110,50 93,12 84,00 75,00 AR, BM, QU, SF, ZZ Richmond/Milpark 80,00 85,00 72,50 65,25 AR, QU, RX, ZZ Bedfordview 151,00 119,17 95,00 84,17 AR, BHP, BM, MEA, MR, QU,

RX, ZZBruma 140,00 104,50 84,17 73,00 AR, BM, MEA, MR, QU, RX,

ZZMeadowbrook 55,00 48,00 40,00 35,00 MRWoodmead 117,50 108,50 84,60 82,50 AR, BM, MR, QU, RX, ZZ Sunninghill 100,50 90,40 80,00 73,67 AR, BM, QU, RX, SF, ZZ Bryanston/Epsom 141,00 117,25 97,50 91,25 AR, AW, BM, QU, RX, ZZ Fourways 131,90 107,50 91,00 79,75 AR, AW, BM, QU, RX, ZZ Houghton 117,50 101,17 91,25 85,50 AR, BM, QU, ZZ Melrose Arch 200,83 167,50 140,00 N/A AR, BM, QU, RX, ZZ Hyde Park 127,50 108,33 98,75 81,65 AR, BM, QU, ZZ Eastgate/Kramerville 103,00 80,00 58,00 54,00 AR, MR, QU Ormonde 88,50 78,50 67,25 62,50 AR, QUMidrand 124,50 95,70 79,62 69,60 AR, AW, BM, MR, QU, RX, ZZContantia Kloof (Roo- 125,00 120,00 - - AR, BR depoort)Hendrik Potgieter Cor 95,00 90,00 79,50 70,75 AR, QU ridorPretoria CBD - 90,00 80,00 70,00 AI, EV, ZZ Lynnwood Glen 157,00 112,50 102,50 95,00 EV, ZZ Lynnwood 135,00 108,50 96,67 67,50 AI, EV, ZZ Lynnwood Manor 155,00 95,00 75,00 65,00 ZZ Lynnwood Ridge 160,00 128,50 92,50 90,00 EV, ZZ Faerie Glen 115,00 117,50 - - EV, ZZ Val de Grace - 75,00 100,00 - EV, ZZ Menlyn 168,33 145,67 116,67 110,00 AI, EV, ZZ Menlo Park (Brooks St) - 129,00 110,00 - EV, ZZ Brooklyn/Waterkloof 160,00 145,00 125,00 - EV, ZZ Nieuw Muckleneuk 199,00 143,50 120,00 - EV, ZZ Hatfield 175,00 127,50 103,33 - AI, EV, ZZ Centurion 139,75 123,33 105,00 - AI, EV, ZZ Highveld Technopark 115,00 108,33 82,50 - AI, EV, MAS, ZZ Sunnyside 145,00 95,00 80,00 - ZZFor definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.



Table 5.2 (continued) Market rental rates for office buildings


Grade A+

meanGrade Amean

Grade Bmean

Grade Cmean


Arcadia - 115,00 90,00 85,00 EV, ZZMurrayfield - - 72,00 - ZZNelspruit 142,50 122,50 95,00 75,00 HH, RZPolokwane 127,50 110,00 88,75 72,50 ES, MOBloemfontein CBD 117,50 104,33 83,33 65,00 BW, CC, EK Westdene 127,50 119,00 85,00 71,67 BW, CC, EK Durban CBD - 75,00 55,00 37,50 MW, PPI, QP Durban Berea - 92,50 70,00 62,50 MW, PPI, QP Essex Terrace 122,50 112,50 93,33 76,67 MW, PPI, QP Westway 141,25 127,50 110,00 100,00 ACU, MW, PPI, QP La Lucia Ridge 153,33 130,00 120,00 115,00 MW, PPI, QP Westville 132,50 111,67 96,67 81,67 MW, PPI, QP Pinetown 92,50 82,50 70,00 55,00 QP, PPIHillcrest-Kloof (Upper Highway)

127,50 105,00 92,50 80,00 QP, PPI

Port Elizabeth CBD 70,00 55,00 40,00 26,50 NRG, TR Greenacres : Parks - - - -Greenacres: Single - - - -Walmer Park 1, 2 & 3 - 90,00 75,00 50,00 NRG South End - - 65,00 55,00 IPM, NRG Humewood 137,50 100,00 - - IPM, NRGCape Road 100,00 87,50 70,00 50,00 IPM, NRG, TR East London - 60,00 50,00 40,00 BG, DQ, ER, GO, GW, IP Southernwood - 60,00 45,00 35,00 BG, DQ, ER, GO, GW, IP Berea/Vincent 115,00 90,00 65,00 40,00 BG, DQ, ER, GO, GW, IP Cape Town CBD 169,17 120,00 90,00 65,00 FLP, GB, HP, SWI, ZB Sea Point 125,00 95,00 75,00 60,00 GB V&A Portswood Ridge 175,00 145,00 95,00 - FLP, GB, ZB Granger Bay 162,50 125,00 - - FLP, GB, ZB Salt River 60,00 60,00 50,00 45,00 GB, PL Woodstock 77,50 65,00 55,00 52,50 GB, PL, ZB Observatory 110,00 100,00 85,00 55,00 GBMowbray - 75,00 77,50 55,00 GB, SWI, ZB Kenilworth (Racecourse) 111,67 96,67 90,00 - FLP, GB, HP, PL, SWI, ZB Rondebosch/Newlands 145,00 113,33 90,00 70,00 FLP, GB, SWI, ZB Wynberg - 95,00 64,75 55,00 FLP, GB, SWI, ZB Westlake 133,33 104,50 90,00 - FLP, GB, HP, PL, SWI, ZB Tokai 130,67 98,33 - 75,00 FLP, HP, GB, SWI, ZB Claremont Lower* - 95,00 85,00 - FLP, PL, ZB Claremont Upper 153,00 133,33 85,00 75,00 FLP, GB, PL, SWI, ZB Hout Bay - 102,50 77,50 57,50 FLP, GB Noordhoek (Sun Valley) - - - -Pinelands 120,00 117,50 100,00 - FLP, HP, ZB Athlone - - - -Milnerton - 85,00 77,50 - GB, SWIPanorama - - - -Table View / Parklands - 85,00 90,00 70,00 PL, SWI For definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.



Table 5.2 (continued) Market rental rates for office buildings


Grade A+

meanGrade Amean

Grade Bmean

Grade Cmean


Century City 150,00 135,00 107,50 - GB, HP, SWI, ZB Maitland - - 40,00 35,00 GBGoodwood (N1 City) 100,00 95,00 80,00 75,00 GB Tygerberg Hills 124,00 105,00 90,00 80,00 GB, NE, ZB Bellville CBD 120,00 100,00 73,33 56,33 GB, SWI, ZB Tyger Valley area 135,00 112,50 90,00 77,50 GB, NE, PN, SWI, ZB Durbanville 120,00 96,67 70,00 - GB, NE, SWI Airport - - - -Kuils River - - - -Somerset West Town - - - -Somerset West Mall area - - - -

Strand - - - -Gordon’s Bay - - - -George general 95,00 65,00 50,00 32,50 GV Fairview Office Park - 37,50 GV * Claremont Lower: east of Main RoadFor definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.



Table 5.3 Standard deviation of market rental rates for office buildings

Quarter 2014:3 Grade A+ Grade A Grade B Grade C

Johannesburg CBD - R8,25 R11,37 R19,29Braamfontein - R4,15 R16,35 R17,00 Sandton CBD R9,18 R9,43 R9,22 R3,74Dunkeld West R8,72 R4,15 R5,00 R5,55Wierda Valley R8,90 R3,23 R6,02 R3,00Randburg Ferndale R7,91 R3,13 R5,10 R3,56Rivonia R7,36 R10,80 R8,52 R8,29Rosebank R8,50 R8,94 R10,17 R6,65Illovo R12,50 R14,62 R12,93 R7,87Illovo Boulevard R8,29 R10,20 R4,71 R6,24 Chislehurston R3,12 R5,92 R6,24 R0,00Parktown R11,43 R4,80 R6,63 R6,12Richmond/Milpark - R4,08 R3,54 R0,25Bedfordview R20,59 R15,12 R10,35 R5,34Bruma R0,00 R5,10 R5,34 R2,45Meadowbrook - - - -Woodmead R7,36 R8,89 R8,16 R2,50Sunninghill R5,10 R3,83 R4,47 R6,34Bryanston / Epsom Downs R7,11 R7,60 R7,50 R8,01 Fourways R6,36 R8,94 R3,94 R0,43Houghton R3,54 R3,06 R5,45 R0,50Melrose Arch R15,32 R17,50 - - Hyde Park R5,40 R13,12 R10,83 R3,35Eastgate/Kramerville - R0,00 R2,00 R1,00Ormonde - R1,50 R2,25 R2,50Midrand R9,80 R5,29 R4,14 R4,08Hendrik Potgieter Corridor R5,00 - R0,50 R0,75 Pretoria CBD R23,17 R21,93 R17,24 R14,97Lynnwood Glen - R5,00 R5,00 R7,07Lynnwood - R17,50 R17,50 -Lynnwood Manor R10,00 R11,50 R8,50 R2,50 Lynnwood Ridge - - - -Faerie Glen - R3,50 R7,50 -Val de Grace - R12,50 - - Menlyn - - - -Menlo Park (Brooks St) R4,71 R7,59 R9,43 - Brooklyn/Waterkloof - R29,00 R20,00 -Nieuw Muckleneuk - R5,00 R0,00 -Hatfield - R3,50 R0,00 -Centurion - R7,50 R9,43 -Highveld Technopark R9,75 R13,12 R10,80 -Sunnyside R0,00 R11,79 R2,50 -Arcadia - - - -Murrayfield - R15,00 R5,00 -Nelspruit CBD R2,50 R2,50 R0,00 -Polokwane R2,50 R0,00 R1,25 R2,50Bloemfontein CBD R7,50 R7,59 R2,36 R0,00Westdene R2,50 R7,87 R0,00 R4,71Durban CBD - R5,00 R0,00 R7,50Durban Berea - R7,50 R5,00 R2,50 For definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.



Table 5.3 (continued) Standard deviation of market rental rates for office buildings

Quarter 2014:3 Grade A+ Grade A Grade B Grade C

Essex Terrace R22,50 R17,50 R9,43 R8,50 Westway R9,60 R7,50 R0,00 -La Lucia Ridge R16,50 R8,16 R5,00 - Westville R12,50 R8,50 R4,71 R6,24Pinetown R7,50 R7,50 R10,00 R10,00Hillcrest-Kloof (Upper Highway) R7,50 R5,00 R7,50 R10,00 Port Elizabeth CBD - R5,00 R0,00 R1,50Greenacres : Parks - - - - Greenacres: Single - - - - Walmer Park 1, 2 & 3 - - - - South End - - - - Humewood R12,50 R10,00 - -Cape Road R20,00 R12,50 R4,08 - Cape Town CBD R6,56 R21,30 R3,54 R3,54Sea Point - - - - V&A Portswood Ridge R10,00 R20,00 - - Granger Bay R2,50 R5,00 - - Salt River - R5,00 - - Woodstock R2,50 R0,00 R4,08 R2,50Observatory - - - -Mowbray - - R2,50 -Kenilworth (Racecourse) R4,71 R2,36 - - Rondebosch/Newlands R4,08 R9,43 R5,00 -Wynberg - R0,00 R9,23 -Westlake R9,43 R8,92 - -Tokai R4,92 R8,50 - -Claremont Lower* - - - - Claremont Upper R10,77 R9,43 R10,00 R5,00 Hout Bay - R7,50 R7,50 R2,50 Noordhoek (Sun Valley) - - - - Pinelands - R2,50 - -Athlone - - - -Milnerton - - R7,50 -Panorama - - - -Table View / Parklands - - - - Century City R10,80 R10,80 R9,01 - Maitland - - - -Goodwood (N1 City) - - - - Tygerberg Hills R4,00 R5,00 - - Bellville CBD - - R2,36 R4,50 Tyger Valley area R10,80 R7,50 R6,12 R2,50 Durbanville - R2,36 - -Airport - - - -Kuils River - - - - Somerset West Town - - - - Somerset West Mall area - - - - Strand - - - -Gordon’s Bay - - - - George general - - - - Fairview Office park - - - - *Claremont Lower: east of Main RoadFor definitions, see Glossary of terms and abbreviations in Annexure 1 or visit www.rode.co.za.



Table 5.4Typical rent-free period in months

Average periods on offer in quarter 2014:3 Mean SD Mean SD

Johannesburg CBD 2,0 0,8 Durban CBD 2,3 0,5 Braamfontein 1,8 0,8 Durban Berea 1,5 0,5 Sandton CBD 1,6 2,0 Essex Terrace 0,8 0,2 Dunkeld West 1,7 0,9 Westway 0,8 0,8 Wierda Valley 1,0 - La Lucia Ridge 1,5 0,5 Randburg Ferndale 1,5 0,5 Westville 0,5 - Rivonia 2,0 1,0 Pinetown 2,0 1,0Rosebank 1,0 0,0 Hillcrest-Kloof-Upper Highway 1,2 0,8 Illovo 1,0 0,0 Port Elizabeth 1,7 0,9 Illovo Boulevard 1,0 0,0 Port Elizabeth dec. 1,0 - Chislehurston 1,0 - East London - -Parktown 1,5 0,5 East London dec. - -Richmond/Milpark 1,0 - Cape Town CBD 0,8 0,4 Bedfordview 1,0 0,0 Sea Point 1,0 0,0Bruma 1,0 0,0 V&A Portswood Ridge 1,0 0,0 Meadowbrook 1,0 - Granger Bay 1,0 0,0Woodmead 1,5 0,5 Salt River 1,0 0,0Sunninghill 2,0 1,0 Woodstock 1,0 0,0Bryanston/Epsom 1,7 0,9 Observatory 1,0 0,0Fourways 1,3 0,5 Mowbray 1,0 0,0Houghton 1,5 0,5 Kenilworth (Racecourse) 0,8 0,4 Melrose Arch 0,7 0,5 Westlake 1,0 0,0 Hyde Park 0,7 0,5 Tokai 0,8 0,4 Eastgate/Kramerville 1,7 0,5 Claremont Lower* 0,8 0,4 Ormonde 1,5 0,5 Claremont Upper 0,7 0,5Midrand 1,5 0,5 Hout Bay 1,0 0,0Hendrik Potgieter Corr. 1,5 0,5 Noordhoek (Sun Valley) 1,2 0,4 Pretoria CBD 2,5 0,8 Pinelands 1,0 0,0 Lynnwood Glen 2,0 1,0 Athlone 1,0 - Lynnwood 3,0 - Milnerton 0,7 0,5Lynnwood Manor 2,5 0,5 Panorama 1,0 - Lynnwood Ridge 3,0 - Rondebosch/Newlands 1,0 - Faerie Glen 3,0 - Wynberg 1,0 - Val de Grace 3,0 - Table View / Parklands 1,0 - Menlyn 3,0 - Century City 0,5 0,5 Menlo Park (Brooks St) 2,0 1,0 Maitland 1,0 - Brooklyn/Waterkloof 3,0 - Goodwood (N1 City) 1,0 - Nieuw Muckleneuk 3,0 - Tygerberg Hills / Plattekloof 1,0 0,0 Hatfield 3,0 - Bellville CBD 1,0 0,0Centurion 2,5 0,5 Tyger Valley area 1,0 0,6 Highveld Technopark 2,0 1,0 Durbanville 1,0 - Sunnyside 1,8 0,8 Airport 1,0 -Arcadia 3,0 - Kuils River 1,0 -Murrayfield 3,0 - Somerset West Town 1,0 - Nelspruit CBD 0,8 0,2 Somerset West Mall area 1,0 - Polokwane 1,0 0,0 Strand 1,0 - Bloemfontein CBD 0,7 0,5 Gordon’s Bay 1,0 - Westdene 0,7 0,5 George - -*Claremont Lower: east of Main RoadSD: See Glossary of terms and abbreviations in Annexure 1.


Table 5.5 Market parking rentals

Monthly parking rands per bay per month (excl. VAT)

As in quarter 2014:3Covered reserved parking Under

shade net

Open-air

parking Gr A+ Gr A Gr B Gr C

Johannesburg CBD 750 737 542 412 300 250Braamfontein 600 613 525 475 365 300Sandton CBD 903 745 600 492 413 363Dunkeld West 656 582 444 383 365 276Wierda Valley 667 545 507 425 363 263Randburg Ferndale 505 423 344 288 285 212Rivonia 550 456 394 417 319 235Rosebank 734 610 480 392 380 300Illovo 667 570 450 385 368 304Illovo Boulevard 681 590 490 427 396 310Chislehurston 617 523 465 488 336 255Parktown 525 513 390 350 340 291Richmond/Milpark 377 332 317 308 241 196Bedfordview 600 527 465 398 336 266Bruma 457 495 383 364 292 251Meadowbrook - - - - - -Woodmead 575 480 415 363 336 255Sunninghill 560 489 417 390 325 256Bryanston / Epsom Downs 596 488 436 405 373 269Fourways 595 540 422 347 341 257Houghton 575 513 410 300 344 275Melrose Arch 900 750 675 600 400 300Hyde Park 813 555 436 425 355 285Eastgate/Kramerville - 450 425 350 300 230Ormonde - 490 400 350 300 235Midrand 513 450 390 366 320 246Hendrik Potgieter Corri-dor

475 450 380 300 280 220

Pretoria CBD 560 500 435 - - 300Lynnwood Glen 500 460 415 - 375 250Lynnwood 480 470 540 - 367 266Lynnwood Manor - 480 400 - 350 200Lynnwood Ridge 750 625 525 - 425 375Faerie Glen 600 525 439 - 420 288Val de Grace - 300 300 - 350 200 Menlyn 677 570 519 - 446 432Menlo Park (Brooks St) - 550 415 - 400 290 Brooklyn/Waterkloof 650 600 525 - 438 350Nieuw Muckleneuk 650 550 475 - 425 363Hatfield 515 460 427 - 368 298Centurion 500 513 451 - 397 276Highveld Technopark 540 503 480 - 330 233Sunnyside 700 - 400 350 - 200Arcadia - 575 500 350 400 200Murrayfield - - - - - -


Table 5.5 (continued) Market parking rentals

Monthly parking rands per bay per month (excl. VAT) As in quarter 2014:3Covered reserved parking Under

shade net

Open-air

parkingGr A+ Gr A Gr B Gr C

Nelspruit 425 375 278 220 180 120Polokwane 445 373 300 225 235 165Bloemfontein CBD 325 325 245 225 222 130Westdene 373 353 288 248 233 143 Durban CBD 1.100 850 688 600 450 -Durban Berea 800 625 550 500 350 - Essex Terrace 800 600 538 475 375 350 Westway 725 650 583 500 350 450La Lucia Ridge 725 700 625 550 500 425 Westville 700 600 525 500 450 400Pinetown 700 650 550 500 450 400Hillcrest-Kloof (Upper Highway) 575 550 475 400 375 300

Port Elizabeth CBD - - - - - -Greenacres : Parks 500 400 400 350 - 265 Greenacres: Single 500 450 400 350 - 250 Walmer Park 1, 2 & 3 500 375 300 250 - 250 South End - 450 300 250 - 150 Humewood 475 400 300 - - 225Cape Road 500 450 350 300 300 275 Cape Town CBD 1.150 1.067 1.100 900 650 700 Sea Point - 750 - - 650 500 V&A Portswood Ridge - 1.740 - - 750 650 Granger Bay - 1.100 - - 750 650 Salt River - - 600 - 500 400 Woodstock - - 550 - 500 400Observatory - - 650 - 500 400Mowbray - - 575 - 425 325Kenilworth (Racecourse) 900 600 - - 475 425 Rondebosch/Newlands 1.100 733 - - 500 450Wynberg - - 500 - 450 400Westlake 600 583 - - - 483Tokai 683 - - - - 550Claremont Lower* 750 750 - - 550 450 Claremont Upper 1.090 967 450 - 917 550 Hout Bay - - - - - - Noordhoek (Sun Valley) - - - - - - Pinelands 800 725 - - - 425Athlone - - - - - -Milnerton - - - - - - Panorama - - - - - -Table View / Parklands - - - - - - Century City 833 725 700 - - 550 Maitland - - - - - -Goodwood (N1 City) - - - - - - Tygerberg Hills 650 - - - 450 250 Bellville CBD 600 500 425 - - -


Table 5.5 (continued) Market parking rentals

Monthly parking rands per bay per month (excl. VAT) As in quarter 2014:3 Covered reserved parking Under

shade net

Open-air

parkingGr A+ Gr A Gr B Gr C

Tyger Valley area - 733 565 - 400 313 Durbanville - 700 - - - 250 Airport - - - - - - Kuils River - - - - - - Somerset West Town - - - - - - Somerset West Mall area - - - - - - Strand - - - - - - Gordon’s Bay - - - - - - George general 250 200 200 150 - - Fairview Office Park - - - - - - *Claremont Lower: east of Main Road


Table 5.6 Office rental escalation rates on new leases (%) Average escalation rate on net rentals for quarter 2014:3

Mean Mean Johannesburg CBD 8,8 Westdene 8,5 Braamfontein 8,8 Durban CBD 8,5 Sandton CBD 8,8 Durban Berea 8,5 Dunkeld West 8,8 Essex Terrace 8,5 Wierda Valley 8,9 Westway 8,5 Randburg Ferndale 8,8 La Lucia Ridge 8,7 Rivonia 8,8 Westville 8,7 Rosebank 8,6 Pinetown 8,8 Illovo 8,6 Hillcrest-Kloof (Upper Highway) 9,0 Illovo Boulevard 8,6 Port Elizabeth 7,8 Chislehurston 8,8 Port Elizabeth dec. 8,0 Parktown 8,8 Cape Town CBD 8,3 Richmond/Milpark 9,0 Sea Point 8,5 Bedfordview 9,1 V&A Portswood Ridge 8,0 Bruma 8,9 Granger Bay 8,0 Meadowbrook 9,0 Salt River 8,0 Woodmead 9,0 Woodstock 8,0 Sunninghill 9,0 Observatory 8,0 Bryanston / Epsom Downs 8,6 Mowbray 9,0 Fourways 8,6 Kenilworth (Racecourse) 8,7 Houghton 9,0 Rondebosch/Newlands 9,0 Melrose Arch 8,8 Wynberg 7,5 Hyde Park 8,8 Westlake 8,5 Eastgate/Kramerville 9,0 Tokai 9,0 Ormonde 9,0 Claremont Lower* - Midrand 8,7 Claremont Upper 9,5 Hendrik Potgieter 9,4 Hout Bay 8,0 Pretoria CBD 9,5 Noordhoek (Sun Valley) - Lynnwood Glen 9,0 Pinelands 9,0 Lynnwood 9,5 Athlone - Lynnwood Manor 9,0 Milnerton 8,0 Lynnwood Ridge 9,0 Panorama - Faerie Glen 9,0 Table View / Parklands - Val de Grace 9,0 Century City 8,8 Menlyn 9,5 Maitland 8,0 Menlo Park (Brooks St) 9,0 Goodwood (N1 City) 8,0 Brooklyn/Waterkloof 9,0 Tygerberg Hills/Plattekloof 8,0 Nieuw Muckleneuk 9,0 Bellville CBD 8,0 Hatfield 9,0 Tyger Valley area 8,2 Centurion 8,5 Durbanville 9,0 Highveld Technopark 9,0 Airport - Sunnyside 9,0 Kuils River - Arcadia 9,0 Somerset West Town - Murrayfield 9,0 Somerset West Mall area - Nelspruit 8,0 Strand - Polokwane 9,0 Gordon’s Bay - Bloemfontein CBD 8,0 George 8,0 *Claremont Lower: east of Main Road


Table 5.7 Escalation rates on operating costs (%)

Node 2014:3 Node 2014:3 Johannesburg CBD 9,0 Durban CBD 9,0 Braamfontein 9,4 Durban Berea 9,0 Sandton CBD 9,5 Essex Terrace 9,0 Dunkeld West 9,0 Westway 8,5 Wierda Valley 9,3 La Lucia 9,0 Randburg Ferndale 9,0 Westville 9,0 Rivonia 9,0 Pinetown 9,0 Rosebank 9,0 Hillcrest-Kloof (Upper Highway) 9,0 Illovo 8,8 Empangeni - Illovo Boulevard 8,8 Richards Bay - Chislehurston 9,0 Port Elizabeth CBD 7,2 Parktown 9,0 Port Elizabeth dec 8,0 Richmond/Milpark 9,3 Cape Town CBD 9,0 Bedfordview 9,1 Sea Point - Bruma 9,0 V&A Portswood Ridge - Meadowbrook 9,3 Granger Bay - Woodmead 9,3 Salt River - Sunninghill 9,3 Woodstock - Bryanston/Epsom 8,8 Observatory 8,0 Fourways 8,8 Mowbray - Houghton 9,3 Kenilworth (Racecourse) 8,7 Melrose Arch 9,0 Westlake 9,0 Hyde Park 9,0 Tokai - Eastgate/Kramerville 9,3 Claremont Lower* 9,0 Ormonde 9,3 Claremont Upper 9,0 Midrand 8,80 Hout Bay - Hendrik Potgieter Corridor 9,3 Noordhoek (Sun Valley) 9,0 Pretoria CBD 10,1 Pinelands - Lynnwood Glen 11,0 Athlone - Lynnwood 10,0 Milnerton 9,0 Lynnwood Manor 10,0 Panorama - Lynnwood Ridge 10,0 Rondebosch/Newlands - Faerie Glen 10,0 Wynberg - Val de Grace 10,0 Table View / Parklands - Menlyn 10,0 Century City - Menlo Park (Brooks St) 10,0 Maitland - Brooklyn/Waterkloof 10,0 Goodwood (N1 City) - Nieuw Muckleneuk 10,0 Tygerberg Hills 8,0 Hatfield 10,0 Bellville CBD - Centurion 11,0 Tyger Valley area 8,5 Highveld Technopark 9,7 Durbanville 9,0 Sunnyside 10,0 Airport - Arcadia 10,0 Kuils River - Murrayfield 10,0 Somerset West Town - Nelspruit 11,5 Somerset West Mall area - Polokwane 10,0 Strand - Bloemfontein 10,2 Gordon's Bay - Westdene 11,0 George 8,0 *Claremont Lower: east of Main Road

Rode’s Report 2014:4 Office demand and vacancies 37

Chapter 6: Office demand and vacancies

See-thru office buildings are proliferating in the suburbs

Written by John S. Lottering & Erwin Rode

See-thru is a term invented by the Ameri-cans in the early 1980s when the US was afflicted by a high office-vacancy rate – empty buildings with glass facades, allow-ing passers-by to see straight through the walls.

Back to the future, and vacancies in both Pretoria and Johannesburg decentralized are also rising ominously. This is due to a combination of weak demand and strong growth in office developments since 2012. As a result, overall vacancy rates in these regions are now well above their “natural” rates. You could say these office areas are

the victims of their own success.

The notion of a ‘natural vacancy rate’ (NVR) is borrowed from the theory of the non-accelerating inflation rate of unem-ployment (NAIRU), a widely used concept in economics. NAIRU is defined as the rate of unemployment at which inflation is nei-ther accelerating nor decelerating. Similar-ly, the NVR is seen as the vacancy rate at which rents are stable. In other words, when actual vacancy rates drop below the NVR the growth in rentals accelerates, while a vacancy rate above the NVR means decelerating, if not downright declining, rentals.

Table 6.1 Estimated natural vacancy rate vs current actual vacancy rate

Natural vacancy rate Current vacancy rate

(2014Q3) Johannesburg dec. 8,1%* 9,9%

Pretoria dec. 7,3%* 11,3%

Durban dec. 5,4%* 5,8% Cape Town dec. 5,6%* 5,8% Johannesburg CBD 9,9%* 13,5%

Pretoria CBD 4,5%* 9,0%

Durban CBD 10,7%* 14,0%

Cape Town CBD 8,8%* 11,7%

*Significant at 5% level


Using annual data on real rental growth and vacancy rates (covering the period 1990 to 2004) Sanderson et al (2006)1 es-timated NVRs for 36 cities globally using the following equation:

ΔRentst= α - βVRt

Where:

ΔRentst is the change in real rents,

α is the rental growth when there isno vacant space (when VR (vacancyrate) = 0),

β is the amount by which rents fallwhen the vacancy rate increases byone percentage point,

VRt is the vacancy rate.

When supply and demand are in balance, rents will be stable (that is, showing no growth) and vacancy rates will be given by:

VR=α/β

This is defined as the natural vacancy rate – the vacancy rate where the market is inequilibrium.

Sanderson et al further note that because the property market is characterised by frictions that tend to impede the process of market clearing,2 vacancy rates will not be zero in equilibrium. This is so because it takes time for tenants to find a property as well as for landlords to find occupiers.

Using annual data on real rental growth and vacancy rates 3 (covering the period

1 Sanderson, B. et al (2006). National Vacancy Rates in Global Office Markets, Journal of Property Investment and Finance, 24 (6) 2 In economics, market clearing is a simplifying assumption made by new classical economics that in any given market, prices and resulting volumes always adjust up or down to such an extent that quantity supplied at the market-clearing price equals the quantity demanded at the market-clearing price.3 Data on nominal grade-A market rentals was sourced from Rode’s database, prime (grades A & B combined) vacancy rates from Sapoa and an index of building costs (to deflate nominal rentals) from the Bureau for Economic Research, University of Stellen-bosch.

1980 to 2013), and employing the same methodology as Sanderson et al, we esti-mated (using econometric modelling) NVRs for the decentralized office markets of Jo-hannesburg, Pretoria, Durban and Cape Town, as well as for their respective CBDs. Our findings are summarized in Table 6.1.

Evident from the table is how current va-cancy rates in Johannesburg and Pretoria decentralized are well above their NVRs, which implies the (strong) possibility of de-celerating growth in rentals in these re-gions. Since about 2012, office vacancy rates in Cape Town and Durban decentral-ized have been able to move south, which explains why their current vacancy rates are close to their natural levels.

Sanderson et al (2006) also make the in-teresting point that differences in NVRs across markets can be explained by char-acteristics of demand and supply. They note that the two main factors affecting demand elasticity are locational preference and search costs with, for example, the stronger the locational preference the more inelastic the demand and the lower the NVR. As for supply, it is affected mainly by landlords’ willingness to move rents and the speed at which stock can be added to the market. For example, the harder it is to add stock to the market, the more inelastic the supply and the higher the NVR.

The stronger locational preference for the decentralized office areas instead of the old metropolitan CBDs would explain why the NVRs of the decentralized regions are gen-erally lower than those of the CBDs. The fact that supply is more elastic in the de-centralized areas 4 relative to the CBDs, might also explain why the NVRs in the de-centralized office areas are lower (see Ta-ble 6.1).

In the rest of the chapter we look at cur-rent trends in office vacancy rates.

4 Because of the shorter gestation period of new buildings


0

5

10

15

20

25

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Sandton & environsRosebankParktownRivonia

Vac

anc

y (%

)

Decentralized Johannesburg office vacanciesGrade A+, A and B combined


0

4

8

12

16

20

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

BryanstonIllovoMidrandRandburg

Vac

anc

y (%

)

Decentralized Johannesburg office vacanciesGrade A+, A and B combined


0

4

8

12

16

20

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

BrooklynPretoria Eastern SuburbsCenturionHatfield/ Hillcrest

Vac

ancy

(%

)

Decentralized Pretoria office vacanciesGrade A+, A and B combined


-4

-3

-2

-1

0

1

2

3

4

-20

-15

-10

-5

0

5

10

15

20

03 04 05 06 07 08 09 10 11 12 13 14

Office demandCoincident business cycle indicator

r²=0,6 (1-qtr lag)

Growth in office demandvs

Growth in the Composite Coincident Business Cycle Indicator

Source of data: SAPOA; SARB; Rode calculations

Gro

wth

in

office

dem

and

(%;

y-o-

y)

Grow

thin

businesscycle

indicator(%

; y-o-y)

Nationally, during the third quarter of 2014, decentralized vacancy rates again edged up from their previous-quarter lev-els. The fact that the demand for office space is following the business cycle south is of course a sufficient explanation for the rise in suburban vacancy rates.

The corresponding graph shows the robust relationship between changes in office de-mand and changes in the SARB Composite Coincident Business Cycle Indicator, with the latter explaining as much as 60% of the change in the former (r² = 0,6 when lagged by one quarter).

A look within Johannesburg decentralized shows an uptick in vacancy rates in Sandton from 13% in the previous quarter to 15% in the reporting quarter. As shown by the bars in the graph which follows, grades A & B vacancy rates in Sandton are now at previous historic highs. Similar to Sandton, office vacancy rates in Rosebank (9%), Randburg (12%) and Illovo (10%) also increased somewhat during the report-ing quarter.

In the nodes of Rivonia (20%), Parktown (9%), Bryanston (7%) and Midrand (6%), vacancy rates at least managed to stay at their previous-quarter levels.

Good news in Pretoria decentralized is that in most of its office nodes vacancy rates were actually slightly lower when compared to their previous-quarter levels. The only exception, which stands out very clearly, is the Highveld Technopark & Extensions node where the vacancy rate jumped by as much as 10 percentage points to 19%. Note from the corresponding graph how vacancy rates in most of the Pretoria de-centralized office nodes have in recent years moved past their previous historic highs.

The premier Durban decentralized office node of La Lucia / Umhlanga remains prac-tically fully let with its very low vacancy rate of 3%. This is followed by Westville, where vacancy rates are currently standing at 6% and the Berea with the much higher vacancy rate of 16%. It is evident that the erea has progressively fallen out of favour


0

4

8

12

16

20

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

WestvilleBereaLa Lucia/ Umhlanga

Vac

ancy

(%

)

Decentralized Durban office vacanciesGrade A+, A and B combined


0

5

10

15

20

25

30

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

PinelandsRondebosch/NewlandsClaremontCentury CityV&A Waterfront

Vac

anc

y (%

)

Decentralized Cape Town office vacanciesGrade A+, A and B combined


0

10

20

30

40

50

III IV I II III IV I II III IV I II III IV I II III IV I II III

2009 2010 2011 2012 2013 2014

GreenacresNewton ParkWalmer/Fairview

Vac

ancy

(%

)Decentralized Port Elizabeth office vacancies

Grade A+, A and B combined


since 2009. Presumably this can be as-cribed to the decision-takers’ homes having migrated to the new north.

In the reporting quarter, vacancy rates in Cape Town decentralized ranged between a high of only 7% in Claremont and low of only 1% in the V&A Waterfront.

Capitol Commercial Properties surveys the Tyger Valley area (north of the N1). Ac-cording to its figures (see www.propertysite.co.za ), the vacancy rates for grades A+, A and B properties as in November 2014 were 7%, 6% and 6% respectively.

The Port Elizabeth decentralized office node of Greenacres was, during the reporting quarter, the only node where vacancy rates increased when compared to the previous quarter. In Newton Park, vacancy rates remained the same, while in Walmer/Fairview they managed to de-crease ever so slightly.

This chapter is concluded by the office-vacancy factors and office-stock tables sourced from Sapoa.


Table 6.2 Sapoa Office vacancy factors(%)

Grades A+, A & B September

2013 December

2013 March 2014

June 2014

September2014

JohannesburgBedfordviewGrade A+ - - - - -Grade A 11,8 10,6 10,9 9,4 8,9Grade B 17,2 17,2 16,3 14,7 16,0Total 13,7 12,9 12,8 11,2 11,3 BraamfonteinGrade A+ - - - - -Grade A 15,7 17,9 17,7 16,1 17,1Grade B 15,5 13,4 14,1 13,4 6,7Total 15,7 16,0 16,2 15,0 13,1 Bryanston / Epsom Downs Grade A+ - - - - -Grade A 7,5 8,7 6,9 7,7 7,5Grade B 9,2 6,8 3,1 5,9 5,9Total 7,6 8,5 6,7 7,6 7,4 Bruma Grade A+ - - - - -Grade A 4,7 15,4 5,2 5,2 3,3Grade B 21,0 35,6 31,1 31,9 29,6Total 14,7 27,9 20,9 21,3 20,1 CBD JohannesburgGrade A+ 0,0 0,0 0,0 0,0 -Grade A 0,0 0,0 1,0 0,0 2,9Grade B 24,5 21,6 18,6 21,4 20,8Total 14,5 11,4 11,7 13,5 13,5 Constantia Kloof BasinGrade A+ - - - - -Grade A 3,8 4,7 4,6 11,7 11,7Grade B 9,4 8,7 11,4 11,9 12,5Total 4,2 4,9 5,1 11,7 11,8 Fourways Grade A+ - 0,0 0,0 0,0 0,0Grade A 17,2 15,6 15,6 14,6 18,8Grade B 0,0 0,0 0,0 0,0 0,0Total 16,5 14,0 14,0 13,1 16,9 Houghton/KillarneyGrade A+ - - - - -Grade A 3,5 1,9 3,8 4,5 6,9Grade B 0,8 - 0,0 - 100,0 Total 2,8 1,9 3,7 4,5 8,8 Hyde Park /Dunkeld Grade A+ - - - - -Grade A 24,6 28,3 20,4 22,9 17,7Grade B 9,3 13,2 6,7 5,8 6,7Total 14,7 18,6 11,6 11,2 10,2 Source of data: Sapoa


Table 6.2 (continued) Sapoa office vacancy factors (%)

Grades A+, A & BSeptember

2013 December

2013 March 2014

June 2014

September2014

Illovo Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 1,4 1,6 1,3 10,6 11,2Grade B 6,2 5,5 7,5 5,7 4,4 Total 2,0 2,1 2,0 9,4 9,7 Melrose/Waverley Grade A+ 3,2 3,2 1,4 4,7 4,6Grade A 1,8 1,2 3,1 3,5 2,4 Grade B 2,1 3,2 3,0 3,0 3,0Total 2,7 2,7 2,0 4,2 4,0

Midrand Grade A+ 1,8 1,8 1,8 1,8 1,8Grade A 6,7 6,8 6,3 6,3 6,3 Grade B 5,1 7,3 9,9 9,9 9,9Total 4,7 5,6 6,5 6,5 6,5 MilparkGrade A+ - - - - -Grade A 0,0 0,0 0,0 0,0 0,0 Grade B 7,1 7,3 5,3 3,2 3,7 Total 6,2 6,3 4,6 2,8 3,2 MorningsideGrade A+ - - - - -Grade A 7,7 4,9 1,7 12,1 6,5

Grade B - - 40,9 40,9 13,1

Total 7,7 4,9 4,2 6,9 ParktownGrade A+ - - - - -Grade A 3,4 3,7 1,2 4,8 4,7 Grade B 11,6 14,3 12,0 11,7 11,9 Total 8,7 10,7 8,4 9,3 9,2 Randburg Grade A+ - - - - -Grade A 5,4 7,9 8,7 8,7 7,4 Grade B 15,3 10,1 10,1 10,1 12,8Total 14,1 9,8 9,9 9,9 12,1 RivoniaGrade A+ Grade A 18,2 18,3 18,3 15,3 15,2 Grade B 16,3 19,8 20,1 21,8 21,7 Total 16,9 19,4 19,6 19,9 19,7 RosebankGrade A+ - - - - 0,0Grade A 7,8 6,2 2,8 4,0 9,1Grade B 3,7 4,1 2,8 5,5 11,7 Total 5,6 5,1 2,8 4,6 8,6 Sandton & Environs Grade A+ 2,6 10,6 13,6 12,7 7,5Grade A 9,5 15,9 17,1 15,8 20,7 Grade B 12,3 7,0 5,0 5,0 7,4Total 8,5 13,0 14,2 13,2 15,0

Source of data: Sapoa




2013 December

2013 March 2014

June 2014

September2014

SunninghillGrade A+ - - - - -Grade A 9,9 9,9 11,3 12,2 12,0Grade B - - - - 1,9Total 9,9 9,9 11,3 12,2 8,3 Woodmead Grade A+ - - - - -Grade A 6,7 6,6 4,8 4,5 10,1Grade B 28,4 28,4 28,4 28,4 28,4Total 7,8 7,6 5,9 5,6 11,0 Cresta/Blackheath to Randpark Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 6,8 5,8 2,7 2,7 2,7Grade B 24,7 19,3 19,8 14,5 12,2Total 7,6 6,1 5,2 4,0 3,5 Greenstone/Edenvale/ Modderfontein Grade A+ - - - - 0,0Grade A 1,7 4,9 4,9 2,2 0,0Grade B 43,2 46,0 46,0 46,0 -Total 13,0 15,9 15,9 14,0 2,2 Newtown Grade A+ - - - - -Grade A 0,0 0,0 0,0 0,0 0,0Grade B 44,5 42,5 42,5 43,7 43,7Total 20,1 19,2 19,2 19,7 18,7

Cape Town Bellville (incl. Tyger V)Grade A+ - - - - -Grade A 6,9 7,5 7,6 6,6 5,7Grade B 13,1 12,5 10,2 11,1 11,1Total 8,7 8,9 8,4 8,0 7,4 CBD Cape Town Grade A+ 0,0 0,0 - 36,5 36,5Grade A 11,3 10,6 6,7 7,2 10,0Grade B 13,7 13,7 11,8 11,9 10,2Total 12,5 12,3 10,1 11,8 11,7 Century CityGrade A+ 0,0 0,0 0,0 0,0 0,0Grade A 5,9 5,7 7,5 6,0 6,6Grade B 7,4 7,4 2,9 0,2 0,8Total 5,9 5,7 6,5 5,0 5,6 ClaremontGrade A+ - - - - -Grade A 4,3 3,8 16,8 1,7 1,7Grade B 16,7 16,8 4,9 14,1 12,1Total 9,8 9,6 10,9 8,2 7,1 Source of data: Sapoa


Table 6.2 (continued) Sapoa Office vacancy factors(%)

Grades A+, A & B September

2013 December

2013 March 2014

June 2014

September2014

Pinelands Grade A+ - - - - -Grade A 3,9 3,2 1,3 1,3 1,6Grade B 3,8 3,2 13,9 13,9 12,0Total 3,8 3,2 3,2 3,2 3,2 Rondebosch/NewlandsGrade A+ - - - - -Grade A 6,2 9,7 10,0 9,2 8,2Grade B 3,2 1,9 1,9 1,3 2,5Total 5,3 7,5 7,7 7,0 6,6 V&A Waterfront Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 1,8 6,0 1,8 1,5 0,9Grade B 35,4 33,6 0,0 0,0 0,0Total 3,7 5,6 1,3 1,1 0,6

Durban Berea

Grade A+ Grade A 8,1 7,3 7,9 8,2 7,3Grade B 14,8 13,5 20,0 25,7 25,7Total 11,1 10,1 13,4 16,1 15,7 BallitoGrade A+ 0,0 0,0 0,0 0,0 0,0Grade A 19,2 14,6 14,7 15,0 12,4Grade B 7,4 8,4 7,3 7,0 4,2Total 13,8 11,3 11,0 11,1 8,7 Hillcrest/GillitsGrade A+ 9,9 9,9 5,2 7,6 9,2Grade A 2,6 0,2 0,3 0,3 5,7Grade B 4,3 3,7 3,7 3,7 2,7Total 4,4 2,9 2,0 2,5 5,5 CBD Durban Grade A+ - - - - -Grade A 20,5 20,1 20,1 20,1 20,1Grade B 12,6 12,8 12,8 12,8 8,5Total 16,0 16,0 16,0 16,0 14,0 Umhlanga / La LuciaGrade A+ 2,1 2,1 2,1 2,1 2,1Grade A 3,0 3,0 3,0 3,0 3,0Grade B 3,3 3,3 3,3 3,3 3,7Total 3,0 3,0 3,0 3,0 3,0 WestvilleGrade A+ - - - - -Grade A 3,5 5,2 4,2 6,4 6,7Grade B 9,8 7,1 4,4 5,6 4,9Total 7,0 6,3 4,3 6,0 5,7





2013 December

2013 March 2014

June 2014

September2014

Pretoria Arcadia

Grade A+ - - - - -Grade A 10,9 11,2 6,0 4,8 5,4Grade B 1,5 3,5 3,6 6,5 6,5Total 8,1 8,4 5,1 5,4 4,0 BrooklynGrade A+ - - - - -Grade A 8,0 6,5 7,3 9,9 9,2Grade B 7,8 4,6 4,6 4,2 5,8Total 8,0 6,1 6,7 8,2 8,3 CBD PretoriaGrade A+ - - - - -Grade A 1,8 1,8 1,8 1,3 1,3Grade B 9,4 8,9 13,7 17,8 19,7Total 7,6 7,2 10,8 12,4 9,0 CenturionGrade A+ - - - - -Grade A 8,0 8,3 7,6 10,3 9,8Grade B 20,0 21,1 21,9 21,3 19,8Total 14,1 14,6 15,0 16,2 15,1

Hatfield/Hillcrest Grade A+ - - - - -Grade A 11,7 12,1 8,5 11,1 9,9Grade B 14,3 10,7 9,5 13,3 12,7Total 13,1 11,3 9,0 12,3 11,5 Highveld Technopark Grade A+ - - - - -Grade A 5,2 5,0 14,6 8,4 21,5 Grade B 10,3 15,0 12,2 11,7 12,0Total 6,5 7,7 13,9 9,3 19,0 MenlynGrade A+ - - - - -Grade A 6,9 5,5 6,7 10,8 11,0Grade B 11,4 8,7 7,4 9,1 7,5Total 8,1 6,3 6,9 10,3 9,7 Pretoria Eastern Suburbs Grade A+ - - - - -Grade A 10,9 9,7 12,0 10,3 8,8Grade B 12,2 11,9 12,1 12,1 12,0Total 11,4 10,5 12,0 11,1 10,3 Lynnwood Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 4,8 7,9 7,7 9,2 9,2Grade B 10,8 5,4 5,1 4,5 5,4Total 7,3 5,4 5,3 5,5 5,6





2013 December

2013 March 2014

June 2014

September2014

Port Elizabeth Greenacres Grade A+ 0,0 0,0 0,0 0,0 0,0Grade A 0,0 1,7 1,7 1,7 3,1Grade B 3,3 18,1 18,1 18,8 23,8

Total 2,7 14,7 14,7 15,3 19,3

Newton Park Grade A+ 4,8 4,8 4,8 4,8 4,8Grade A 0,0 0,0 0,0 0,0 0,0Grade B 11,3 11,3 33,5 33,5 33,5

Total 5,1 5,1 9,4 9,4 9,4 Central / Park Drive Grade A+ - - - - -Grade A - - - - -Grade B 19,3 30,6 30,3 31,1 30,3Total 19,3 30,6 30,3 31,1 30,3 Walmer/FairviewGrade A+ - - - - -Grade A 25,5 25,5 25,5 25,5 25,5Grade B 20,8 20,8 13,5 24,7 13,2Total 24,5 24,5 23,0 25,4 22,9

Johannesburg central Grade A+ 0,0 0,0 0,0 0,0 -Grade A 4,4 5,0 5,9 5,0 6,7Grade B 23,1 20,0 17,9 20,2 18,9Total 14,7 12,4 12,6 13,8 13,4 Johannesburg decentralized Grade A+ 2,1 6,3 7,8 7,9 4,6Grade A 7,5 8,9 8,4 9,3 11,0Grade B 11,6 11,5 10,7 10,8 11,3Total 8,2 9,4 9,0 9,6 10,3 Pretoria decentralizedGrade A+ 0,0 0,0 0,0 0,0 0,0Grade A 8,1 7,7 9,4 9,3 12,3Grade B 12,7 11,8 11,3 12,0 11,7Total 9,7 9,2 10,1 10,3 11,3 Durban decentralized Grade A+ 4,6 4,6 2,8 3,7 4,4Grade A 4,3 4,3 4,2 4,7 4,7Grade B 9,4 7,6 7,2 8,9 8,5Total 5,9 5,3 5,0 6,0 5,8 Cape Town decentralized Grade A+ 0,0 0,0 1,5 0,0 0,0Grade A 5,6 6,0 6,6 5,0 4,8Grade B 11,9 11,5 7,8 9,6 9,2Total 6,8 7,0 6,8 6,0 5,8 Source of data: Sapoa

Johannesburg




2013 December

2013 March 2014

June 2014

September2014

National summaries National decentralized Grade A+ 2,0 5,7 7,2 7,3 4,3Grade A 7,2 8,0 8,2 8,5 10,1Grade B 11,7 11,5 10,6 11,1 11,3Total 8,3 8,9 8,9 9,2 9,9 National CBDs Grade A+ 0,0 0,0 0,0 5,9 6,8Grade A 7,9 8,1 7,8 7,2 9,0Grade B 17,9 15,7 15,2 17,2 15,8Total 14,8 13,5 13,0 14,7 13,8



Table 6.3 Sapoa office stock (m²)

Grades A+, A & B

September 2013

December 2013

March 2014

June 2014

September 2014

Johannesburg Bedfordview

Grade A+

Grade A 134.857 133.204 133.204 133.204 139.963

Grade B 69.794 69.794 69.794 69.794 69.794

Total 204.651 202.998 202.998 202.998 209.757 Braamfontein

Grade A+

Grade A 226.121 226.121 226.121 226.121 226.121Grade B 163.438 163.438 163.438 163.438 139.838

Total 389.559 389.559 389.559 389.559 365.959

Bryanston / Epsom Downs

Grade A+

Grade A 517.859 532.749 533.984 533.984 533.984Grade B 30.578 35.361 34.984 34.984 34.984

Total 548.437 568.110 568.968 568.968 568.968 Bruma

Grade A+

Grade A 33.664 33.664 33.664 33.664 30.164Grade B 54.458 54.458 51.701 51.701 52.741

Total 88.122 88.122 85.365 85.365 82.905 CBD Johannesburg

Grade A+ 24.000 24.000 20.000 44.000Grade A 588.166 588.166 548.166 507.379 612.166Grade B 882.798 680.410 886.798 948.201 887.414

Total 1.494.964 1.292.576 1.454.964 1.499.580 1.499.580 Constantia Kloof Basin

Grade A+

Grade A 289.178 289.178 290.795 312.795 312.795Grade B 21.743 21.743 21.743 21.743 21.743

Total 310.921 310.921 312.538 334.538 334.538 Fourways

Grade A+ 10.000 10.000 10.000 10.000Grade A 144.526 144526 144.526 144.526 144.526Grade B 6.500 6.500 6.500 6.500 6.500

Total 151.026 161.026 161.026 161.026 161.026 Houghton/Killarney

Grade A+

Grade A 83.398 105.008 102.908 105.008 104.863Grade B 31.700 2.100 2.230

Total 115.098 105.008 105.008 105.008 107.093



Table 6.3 (continued) Sapoa office stock (m²)


2013 December

2013 March 2014

June 2014

September 2014

Hyde Park / Dunkeld

Grade A+

Grade A 36.170 37.570 37.570 34.270 34.367

Grade B 66.178 66.178 66.178 74.533 74.533

Total 102.348 103.748 103.748 108.803 108.900

Illovo

Grade A+ 10.300 10.300 10.300 10.300 10.300

Grade A 164.655 164.655 164.655 165.782 165.782

Grade B 27.164 27.164 27.164 27.164 27.164

Total 202.119 202.119 202.119 203.246 203.246

Melrose/Waverley

Grade A+ 92.000 92.000 92.000 92.000 116.000

Grade A 33.878 33.878 33.878 33.878 33.878

Grade B 19.697 19.697 19.697 19.697 16.697

Total 145.575 145.575 145.575 145.575 166.575

Midrand

Grade A+ 167.404 167.404 167.404 167.404 167.404

Grade A 193.733 221.046 221.046 221.046 221.046

Grade B 224.483 236.992 236.992 236.992 236.992

Total 585.620 625.442 625.442 625.442 625.442

Milpark

Grade A+

Grade A 27.900 27.900 27.900 27.900 27.900

Grade B 175.526 175.526 175.526 175.526 175.526

Total 203.426 203.426 203.426 203.426 203.426

Morningside

Grade A+

Grade A 80.256 66.056 64.925 77.425 64.925

Grade B 4.400 4.400 4.400

Total 80.256 66.056 69.325 81.825 69.325

Parktown

Grade A+

Grade A 122.176 116.791 113.091 116.791 125.876

Grade B 217.880 223.265 223.265 223.265 214.180

Total 340.056 340.056 336.356 340.056 340.056

Randburg

Grade A+

Grade A 52.167 52.167 52.167 52.167 52.167

Grade B 347.060 338.769 338.769 338.769 345.269

Total 399.227 390.936 390.936 390.936 397.436





2013 December

2013 March 2014

June 2014

September 2014

Rivonia

Grade A+

Grade A 83.391 83.391 83.391 83.391 83.391

Grade B 191.851 191.851 191.901 192.603 192.603

Total 275.242 275.242 275.292 275.994 275.994

Rosebank

Grade A+ 67.000

Grade A 132.673 132.673 199.673 207.449 137.883

Grade B 144.949 151.612 151.612 153.112 168.391

Total 277.622 284.285 351.285 360.561 373.274

Sandton & Environs Grade A+ 329.921 381.421 403.421 443.421 446.071

Grade A 928.172 843.546 844.346 836.346 846.354

Grade B 286.615 252.909 249.757 249.757 241.080

Total 1.544.708 1.477.876 1.497.524 1.529.524 1.533.505

Sunninghill

Grade A+

Grade A 346.059 341.415 359.044 359.653 222.543

Grade B 126.849

Total 346.059 341.415 359.044 359.653 349.392

Woodmead

Grade A+

Grade A 356.299 356.299 358.070 384.773 358.341

Grade B 17.800 17.800 17.800 17.800 17.800

Total 374.099 374.099 375.870 402.573 376.141

Cresta/Blackheath to Rand Park

Grade A+ 75.000 75.000 75.000 75.000 75.000

Grade A 51.999 51.999 51.999 51.999 51.999

Grade B 36.330 36.330 35.537 35.537 35.537

Total 163.329 163.329 162.536 162.536 162.536

Green-stone/Edenvale/ Grade A+ 16.400

Grade A 51.908 52.655 52.655 52.665 36.255

Grade B 19.367 19.367 19.367 19.367

Total 71.275 72.022 72.022 72.032 52.655

Newtown

Grade A+

Grade A 61.859 61.859 61.859 61.859 61.859

Grade B 50.900 50.900 50.900 50.900 50.900

Total 112.759 112.759 112.759 112.759 112.759





2013 December

2013 March 2014

June 2014

September 2014

Cape Town Bellville (incl. Tyger Valley)

Grade A+

Grade A 378.638 378.638 366.263 366.263 369.763

Grade B 148.148 148.148 162.441 162.441 162.441

Total 526.786 526.786 528.704 528.704 532.204

CBD Cape Town

Grade A+ 12.500 12.500 52.000 52.000

Grade A 318.668 318.668 257.472 300.554 313.054

Grade B 473.861 473.861 547.557 515.535 515.535

Total 805.029 805.029 805.029 868.089 880.589

Century City

Grade A+ 7.000 7.000 7.000 7.000 7.000

Grade A 222.867 230.312 211.618 222.181 225.394

Grade B 28.969 28.969 47.663 36.563 39.563

Total 258.836 266.281 266.281 265.744 271.957

Claremont

Grade A+

Grade A 58.036 58.036 50.036 50.036 50.036

Grade B 46.586 46.586 54.586 54.586 54.586

Total 104.622 104.622 104.622 104.622 104.622

Pinelands

Grade A+

Grade A 208.468 208.468 194.475 194.475 187.475

Grade B 19.957 19.957 33.950 33.950 33.950

Total 228.425 228.425 228.425 228.425 221.425

Rondebosch/ Newlands

Grade A+

Grade A 70.254 70.254 70.254 70.254 70.254

Grade B 28.077 28.077 28.077 28.077 28.077

Total 98.331 98.331 98.331 98.331 98.331

V&A Waterfront

Grade A+ 34.500 34.500 18.000 18.000 18.000

Grade A 39.071 39.071 65.055 65.055 65.055

Grade B 6.298 6.298 6.298 6.298 6.298

Total 79.869 79.869 89.353 89.353 89.353





2013 December

2013 March 2014

June 2014

September2014

Durban Berea

Grade A+

Grade A 39.999 39.999 39.999 39.999 39.999

Grade B 33.397 33.303 33.303 33.303 33.303

Total 73.396 73.302 73.302 73.302 73.302

Ballito

Grade A+ 3.632 3.632 3.632 3.632 3.632

Grade A 18.141 18.441 18.441 18.341 18.341

Grade B 7.496 7.496 7.496 7.796 7.796

Total 29.269 29.569 29.569 29.769 29.769

Hillcrest/Gillits

Grade A+ 5.467 5.467 5.467 5.467 5.467

Grade A 16.548 16.548 16.548 16.548 15.148

Grade B 6.402 6.402 6.402 6.402 6.402

Total 28.417 28.417 28.417 28.417 27.896

CBD Durban

Grade A+

Grade A 151.063 151.063 151.063 151.063 163.562

Grade B 192.256 192.256 192.256 192.256 179.757

Total 343.319 343.319 343.319 343.319 343.319

Umhlanga / La Lucia

Grade A+ 4.706 4.706 4.706 4.706 4.706

Grade A 239.710 239.710 239.710 239.710 242.610

Grade B 28.652 28.652 28.652 28.652 25.752

Total 273.068 273.068 273.068 273.068 273.068

Westville

Grade A+

Grade A 84.894 84.394 84.394 83.519 84.394

Grade B 105.305 105.492 105.492 105.492 105.492

Total 190.199 189.886 189.886 189.011 189.886

Arcadia

Grade A+

Grade A 173.639 156.526 156.530 156.530 156.530

Grade B 74.870 92.783 92.820 93.540 93.540

Total 248.509 249.309 249.350 250.070 365.820

Brooklyn

Grade A+

Grade A 181.702 182.602 183.470 168.020 175.520

Grade B 53.555 53.555 54.390 72.224 64.724

Total 235.257 236.157 237.860 240.244 240.244





2013 December

2013 March 2014

June 2014

September2014

Pretoria CBD Pretoria

Grade A+

Grade A 97.467 97.467 97.480 134.580 134.580

Grade B 297.790 303.790 303.830 275.052 275.052

Total 395.257 401.257 401.310 409.632 619.932

Centurion

Grade A+

Grade A 203.849 215.983 202.470 195.740 201.820

Grade B 210.073 209.335 218.640 223.130 223.130

Total 413.922 425.318 421.110 418.870 424.950

Hatfield/Hillcrest

Grade A+

Grade A 122.082 119.636 118.330 118.330 118.330

Grade B 153.984 156.484 156.540 156.690 156.690

Total 276.066 276.120 274.870 275.020 275.020

Highveld Technopark

Grade A+

Grade A 323.568 332.068 328.700 328.700 383.734

Grade B 120.535 122.489 126.870 126.870 117.640

Total 444.103 454.557 455.570 455.570 501.374

Menlyn

Grade A+

Grade A 235.440 246.704 228.730 228.048 228.048

Grade B 89.786 89.896 111.920 117.320 117.320

Total 325.226 336.600 340.650 345.368 351.418

Pretoria Eastern Suburbs

Grade A+

Grade A 220.793 219.743 151.520 151.570 153.272

Grade B 138.349 138.349 138.390 139.550 139.550

Total 359.142 358.092 289.910 291.120 292.822

Lynnwood

Grade A+ 30.400 30.400 30.400 30.400 30.400

Grade A 70.819 70.030 72.560 74.271 74.271

Grade B 113.333 115.333 115.370 115.970 102.670

Total 214.552 215.763 218.330 220.641 221.141

Source of data: Sapoa221141




2013 December

2013 March 2014

June 2014

September 2014

Port Elizabeth Greenacres

Grade A+ 3.545 3.545 3.545 3.545 3.545

Grade A 9.753 9.753 9.753 9.753 9.753

Grade B 53.056 53.056 53.056 53.056 53.056

Total 66.354 66.354 66.354 66.354 66.354

Newton Park

Grade A+ 16.621 16.621 16.621 16.621 16.621

Grade A 967 967 967 967 967

Grade B 1.500 1.500 3.514 3.514 3.514

Total 19.088 19.088 21.102 21.102 21.102

Central / Park Drive

Grade A+

Grade A

Grade B 8.541 8.542 8.541 8.542 8.541

Total 8.541 8.542 8.541 8.542 8.541

Walmer/Fairview

Grade A+

Grade A 20.007 20.007 20.007 20.007 20.007

Grade B 5.471 5.471 5.471 5.471 5.471

Total 25.478 25478 25.478 25.478 25.478

Johannesburg Central Johannesburg central

Grade A+ 24.000 24.000 20.000 44.000

Grade A 814.287 814.287 774.287 733.500 838.287

Grade B 1.046.236 843.848 1.050.236 1.111.639 1.027.252

Total 1.88.4523 1.682.135 1.844.523 1.889.139 1.865.539





2013 December

2013 March 2014

June 2014

September 2014

Decentralized Johannesburg decentralized

Grade A+ 67.4625 73.6125 758.125 798.125 908.175

Grade A 4.152.898 4.108.350 4.191.471 4.256.696 4.016.982

Grade B 2.204.011 2.159.654 2.159.125 2.167.582 2.255.751

Total 7.031.534 7.004.129 7.108.721 7.222.403 7.180.908

Pretoria decentralized

Grade A+ 30.400 30.400 30.400 30.400 30.400

Grade A 1.531.892 1.543.292 1.442.310 1.421.209 1.491.525

Grade B 954.485 978.224 1.014.940 1.045.294 1.015.264

Total 2.516.777 2.551.916 2.487.650 2.496.903 2.672.789

Durban decentralized

Grade A+ 13.805 13.805 13.805 13.805 13.805

Grade A 399.292 399.092 399.092 398.117 400.492

Grade B 181.252 181.345 181.345 181.645 178.745

Total 594.349 594.242 594.242 593.567 593.921

Cape Town decentralized

Grade A+ 41.500 41.500 25.000 25.000 25.000

Grade A 977.334 984.779 957.701 968.264 967.977

Grade B 278.035 278.035 333.015 321.915 324.915

Total 1.296.869 1.304.314 1.315.716 1.315.179 1.317.892


Rode's Report 2014:4 Industrial rentals and vacancies 56

-20

-15

-10

-5

0

5

10

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Manufacturing outputElectricity available for distribution

r=0,6 (for zero & 1-qtr lag)

Growth in output produced by manufacturing sectorvs

Growth in electricity available for distribution

Gro

wth

(%;

y-o-

y)

Source of data: Stat SA

32

36

40

44

48

52

56

60

2007 2008 2009 2010 2011 2012 2013 2014

Expansion

Contraction

Inde

x

Source of data: BER

Kagiso Purchasing Managers' Index(Seasonaliy adjusted)

Chapter 7: Industrial rentals and vacancies

A third consecutive quarter of contracting output


Prospects for the industrial property market remain daunting, especially when consider-ing the continued struggles of the manu-facturing sector.

In the third quarter of 2014, output pro-duced by the manufacturing sector con-tracted (-3%; quarter-on-quarter annual-ized) for the third consecutive quarter. De-spite weak domestic and foreign demand conditions for manufactured goods, another hindrance to the manufacturing sector is the energy supply constraints. During No-vember 2014, Eskom again asked large industrial companies to cut their electricity usage due to the grid being under threat following several plant failures. The corre-sponding graph shows the reliance of the manufacturing sector, which is also the country’s third largest sector by output produced, on electricity available for distri-bution.

On the other hand, a ray of hope for the industrial property market is the Kagiso Purchasing Managers’ Index (PMI). After

being able to improve for a number of months, the Index ― seen as a leading in-dicator of business conditions in the manu-facturing sector ― moved into expansion-ary territory (a reading above 50) in No-vember 2014.

Surprisingly, in the third quarter of 2014 market industrial rentals in the Cape Penin-sula and Port Elizabeth were actually able to show growth of roughly 9%. The re-bound in Port Elizabeth could possibly be ascribed to the rebound in the auto manu-facturing sector after the conclusion of the strikes. However, the reason behind the super Cape Town performance is not obvi-ous.

On the East Rand, market-related industrial rentals for prime space were up by 4% while on the Central Witwatersrand and in Pretoria, rentals showed moderate growth of only 2%. SA’s industrial heartland is evi-dently struggling.


50454035

30

25

20

15

10

594 96 98 00 02 04 06 08 10 12 14

Port Elizabeth Central WitwatersrandEast RandDurbanCape Peninsula

Nominal prime industrial rentals (500-m² units)

Smoothed

R/m

²(l

og s

cale

)


32

28

24

20

16

1294 96 98 00 02 04 06 08 10 12 14


Real prime industrial rentals (500-m² units)2005 rands

Smoothed

R/m

²(l

og s

cale

)

Source of data: Rode's Time Series; BER BCI

In the third quarter of 2014, building costs are estimated to have grown at about 9%. This implies that on the East Rand, the Central Witwatersrand and in Pretoria, in-dustrial rentals continued to contract in re-al terms, which is another way of saying that new developments based on current market rentals and building costs have be-come less viable.

In the Cape Peninsula and Port Elizabeth, nominal rentals were at least able to show growth in line with building-cost inflation.

In Table 7.1 we examine pioneer industrial rentals, which provide a quick-and-dirty prognosis for the medium-term direction of industrial rentals. Often, pioneer rental lev-els represent leases signed on newly erect-ed pre-let buildings, and these of course reflect today’s building costs (in contrast to market rentals), as developers naturally expect a fair return on their development costs.

The remainder of this chapter includes:

the summary rental-change table,

mean prime industrial rentals bytownship,

the standard deviations from thesemean rentals,

indicative operating costs, and

the predominant escalation rates.

This concludes our section on industrial rentals and vacancies. Note that the industrial tables follow


The reference to real means that nominal prices have been deflated (i.e. adjusted for infla-tion). In this chapter, industrial rentals are deflated by the Bureau for Economic Research’s Building Cost Index (BER BCI). By using building costs as a deflator, the reader can interpret the graphs from a developer’s point of view, i.e. they can serve as a proxy for the viability of new developments over time, holding constant capitalization rates and operating expenses.

The industrial rental tables contain regression parameters in order to allow readers to interpolate rental rates for area sizes other than those given in the tables. These parameters are necessary because the relationship between rental rates and floor area is not linear. For more details on how to use these equations, refer to Annexure 3 on annexure-page XII.

Readers are reminded that the vacancy figures in the graph above are not actual vacancy percentages, but rather graduations on a 0-9 vacancy scale. For more information, see the notes to the industrial tables on p.79. Furthermore, the vacancies are for all the unit sizes (250 m², 500 m², 1.000 m², 2.500 m² and 5.000 m²) combined, as surveyed by Rode. In reality, vacancies could differ across the different-sized units.

Table 7.1

Pioneer rental rates

for new, state-of-the-art industrial developments

during quarter 2014:3 Highest gross rental rates achieved (1000-m² units)

Rands per rentable square m² (excl VAT)

Pioneer Normal prime Difference (%)

Central Witwatersrand 75 37 103% West Rand 55 35 57% East Rand 65 39 67% Durban 65 44 48% Cape Peninsula 70 36 94% Bloemfontein 45 31 45%

Rode's Report 2014:4 Industrial rentals and vacancies 59 Tab

le 7

.2

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

50,0

0

50,7

8

53,5

0

59,2

5

47,3

3

1,8

3,9

05

0,0

07

0,1

0

37,4

0

37,5

0

34,2

5

32,2

5

30,4

0

2,2

4,0

55

-0,0

75

-0,9

8

45,3

3

46,5

0

45,5

0

43,8

0

43,5

0

2,0

3,9

39

-0,0

19

-0,8

3

39,3

3

39,5

0

39,6

7

39,0

0

39,2

5

4,0

3,6

90

-0,0

02

-0,4

6

43,3

3

43,5

0

41,0

0

43,5

0

42,0

0

3,0

3,8

04

-0,0

07

-0,3

3

39,3

3

37,5

0

35,0

0

35,0

0

33,5

0

3,0

3,9

37

-0,0

51

-0,9

5

33,2

5

35,0

0

34,3

3

35,2

5

31,6

7

2,7

3,6

06

-0,0

12

-0,3

3

35,2

5

38,0

0

38,6

7

37,3

3

35,6

7

3,0

3,6

12

-0,0

00

-0,0

1

30,6

7

28,5

0

27,5

0

26,5

0

27,0

0

2,5

3,6

31

-0,0

43

-0,8

9

30,5

0

28,3

3

27,3

3

26,0

0

25,3

3

2,0

3,7

31

-0,0

60

-0,9

8

28,7

5

28,0

0

26,6

7

25,3

3

27,5

0

2,3

3,4

79

-0,0

25

-0,6

2

33,6

7

31,6

0

30,0

0

29,2

0

28,6

0

2,1

3,7

89

-0,0

53

-0,9

7

33,2

5

32,6

7

30,6

7

29,3

3

28,3

3

1,5

3,8

21

-0,0

56

-0,9

9

33,6

7

35,5

0

36,5

0

35,5

0

34,0

0

2,0

3,5

44

0,0

02

0,0

6

27,0

0

26,0

0

25,3

3

24,0

0

22,6

7

3,0

3,6

13

-0,0

57

-0,9

9

34,0

0

32,8

0

31,0

0

30,0

0

31,1

7

1,8

3,6

99

-0,0

34

-0,8

3

27,6

7

25,5

0

22,5

0

21,0

0

21,0

0

1,5

3,8

35

-0,0

98

-0,9

6

31,2

0

30,4

0

28,8

0

26,4

0

28,1

4

3,0

3,6

88

-0,0

46

-0,8

4

26,5

0

26,0

0

24,5

0

25,0

0

26,0

0

5,0

3,3

09

-0,0

10

-0,3

6

20,0

0

20,3

3

20,3

3

19,0

0

20,0

0

5,0

3,0

60

-0,0

10

-0,4

2

45,6

0

45,4

0

46,2

0

44,0

0

43,7

5

2,0

3,9

15

-0,0

16

-0,7

9

43,0

0

42,8

3

42,5

0

42,0

0

42,0

0

2,6

3,8

10

-0,0

09

-0,9

8

41,5

0

41,0

0

40,5

0

37,0

0

37,0

0

1,2

3,9

84

-0,0

44

-0,9

4

Cen

tral W

itw

ate

rsran

d

Cam

bri

dge P

ark

Wynberg

Pro

per

Str

ijdom

Park

Kya S

and

Cla

yville

/Olifa

nts

fonte

in

Chlo

ork

op

Am

alg

am

Cro

wn M

ines

Industr

ia

Booysens/B

ooysens

Reserv

e/O

phir

ton

Villa

ge M

ain

/Villa

ge D

eep/N

ew

Centr

e

Benro

se

Ste

ele

dale

/Ele

ctr

on/T

ulisa P

ark

Aero

ton

Devla

nd/N

ancefield

Cle

vela

nd/H

eri

otd

ale

New

lands/M

art

indale

Kew

/Wynberg

East

Bra

mle

y V

iew

/Lom

bard

y W

est

Marl

boro

Halfw

ay H

ouse:

hi-

tech s

trip

Halfw

ay H

ouse:

Ric

hard

s D

rive

Com

merc

ia

Kra

merv

ille

/Eastg

ate

Ext1

2 &

Ext1

3

61,2

5

56,6

0

55,2

0

52,6

0

50,5

0

1,5

4,4

30

-0,0

60

-0,9

8


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

46,5

0

47,5

0

49,0

0

49,0

0

50,3

3

1,5

3,7

09

0,0

25

0,9

6

54,0

0

53,5

0

55,8

0

56,4

0

55,3

3

1,8

3,9

14

0,0

13

0,7

2

47,5

0

46,2

5

42,7

5

42,7

5

43,6

7

2,2

4,0

20

-0,0

32

-0,8

0

39,2

5

39,2

5

37,7

5

37,7

5

38,4

0

1,5

3,7

25

-0,0

11

-0,6

6

46,7

5

46,7

5

46,2

5

45,7

5

42,5

0

2,1

4,0

15

-0,0

28

-0,8

4

45,0

0

46,6

7

45,6

7

52,5

0

51,0

0

1,5

3,5

25

0,0

50

0,8

7

58,0

0

55,5

0

53,0

0

53,0

0

55,0

0

2,0

4,1

41

-0,0

19

-0,6

3

34,0

0

33,7

5

32,0

0

31,2

5

28,0

0

1,5

3,8

84

-0,0

61

-0,9

4

33,0

0

32,3

3

29,6

7

29,0

0

27,3

3

2,0

3,8

52

-0,0

64

-0,9

8

33,0

0

32,3

3

30,0

0

28,6

7

27,3

3

1,5

3,8

65

-0,0

65

-0,9

9

32,3

3

31,0

0

28,6

7

28,0

0

26,6

7

1,8

3,8

21

-0,0

64

-0,9

8

25,2

0

26,5

0

25,0

0

24,5

0

24,0

0

2,2

3,3

84

-0,0

23

-0,7

6

34,0

0

34,0

0

31,8

0

31,0

0

32,5

7

1,0

3,6

50

-0,0

23

-0,6

9

56,7

5

53,2

0

52,2

0

50,2

0

49,8

0

1,0

4,2

51

-0,0

42

-0,9

6

30,6

7

29,0

0

28,3

3

25,6

7

25,0

0

1,5

3,8

11

-0,0

70

-0,9

9

29,2

5

29,2

5

28,2

5

27,5

0

26,2

5

2,5

3,5

92

-0,0

37

-0,9

7

34,0

0

34,3

3

34,0

0

31,0

0

30,3

3

1,8

3,7

98

-0,0

44

-0,9

1

26,0

0

26,0

0

26,0

0

24,0

0

- 2,0

-

- -

37

,77

3

7,8

3

37

,03

3

6,0

3

34

,71

2

,1

32,0

0

30,0

0

28,0

0

28,0

0

25,0

0

3,0

3,8

61

-0,0

73

-0,9

6

50,0

0

46,0

0

45,0

0

43,0

0

42,5

0

1,5

4,1

71

-0,0

51

-0,9

5

39,0

0

39,0

0

37,0

0

36,6

7

36,0

0

3,3

3,8

28

-0,0

29

-0,9

5

30,5

0

28,0

0

25,0

0

22,5

0

20,0

0

1,8

4,1

92

-0,1

40

-1,0

0

Centu

rion

Lin

bro

Park

Wesco P

ark

/Eastg

ate

Ext3

, Ext1

1,

Ext6

, Ext8

/Malb

oro

Nort

h (

New

)

City D

eep

Nort

h R

idin

g

Sam

rand C

entu

rion

Barb

eque D

ow

ns

Selb

y E

xt

12/1

3/1

5/1

9/2

0/2

4/C

ity

West

Selb

y E

xt

5/1

0/1

4/1

8

Selb

y E

xt

11

Selb

y E

xt

3/4

/6

Denver

(Old

)

Denver

(New

)

Kyala

mi Busi

ness P

ark

Reuven

Selb

y (

Old

)/Selb

y E

xt2

/Park

Centr

al

Robert

sham

Ford

sburg

/Mayfa

ir

Cen

tral W

itw

ate

rsran

d

West

Ran

d

Lea G

len

Honeydew

X19,

20,

21 &

22

Sto

rmill

Cham

dor

Facto

ria

32,5

0

31,5

0

28,5

0

25,0

0

21,5

0

2,0

4,2

91

-0,1

40

-0,9

8


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

27,5

0

26,0

0

23,5

0

20,0

0

20,0

0

2,0

3,9

77

-0,1

19

-0,9

8

30,0

0

30,0

0

20,0

0

20,0

0

18,0

0

1,0

4,4

36

-0,1

86

-0,9

1

34,0

0

31,0

0

27,0

0

23,5

0

21,5

0

1,0

4,3

95

-0,1

57

-1,0

0

32,5

0

32,5

0

31,7

5

27,5

0

23,2

5

2,0

4,1

56

-0,1

11

-0,9

2

40,5

0

39,0

0

36,0

0

36,0

0

36,0

0

2,0

3,9

09

-0,0

41

-0,8

8

48,1

7

47,0

0

47,1

7

46,1

7

46,2

5

1,5

3,9

41

-0,0

13

-0,9

1

38

,52

3

7,0

8

35

,02

3

3,2

0

30

,43

2

,0

37,1

2

36,0

0

36,5

0

35,7

5

36,0

0

2,6

3,6

54

-0,0

09

-0,7

2

48,1

2

47,1

2

46,5

0

46,1

2

46,2

0

2,0

3,9

40

-0,0

13

-0,9

1

40,0

0

40,0

0

38,5

0

38,3

3

37,6

2

1,3

3,8

12

-0,0

22

-0,9

5

43,0

0

44,2

0

42,8

8

42,5

7

38,5

7

2,1

3,9

78

-0,0

34

-0,7

7

46,0

0

45,5

6

44,1

4

42,4

3

41,2

9

1,9

4,0

46

-0,0

38

-0,9

9

36,0

0

35,6

0

34,8

0

33,8

0

34,6

0

1,8

3,6

76

-0,0

17

-0,8

4

39,1

2

39,8

0

36,8

8

35,0

0

33,5

0

2,3

4,0

11

-0,0

58

-0,9

6

36,2

9

36,2

9

37,0

0

35,2

9

33,2

9

2,8

3,7

61

-0,0

27

-0,7

9

38,0

0

37,5

0

35,5

0

35,3

3

34,0

0

2,5

3,8

42

-0,0

37

-0,9

7

37,6

7

37,5

0

36,6

7

38,1

2

37,3

0

4,1

3,6

22

0,0

00

0,0

1

39,4

3

39,4

3

39,0

0

37,1

4

37,2

2

4,1

3,8

13

-0,0

24

-0,9

3

41,9

4

42,2

9

41,2

5

40,7

1

42,0

0

2,8

3,7

62

-0,0

05

-0,3

7

37,2

5

35,5

0

31,7

5

30,7

5

29,5

0

1,5

4,0

48

-0,0

80

-0,9

7

35,0

0

30,0

0

32,5

0

27,5

0

27,3

3

2,0

3,9

53

-0,0

77

-0,8

7

35,3

3

33,0

0

30,3

3

31,0

0

21,0

0

2,0

4,3

95

-0,1

44

-0,8

5

44,7

1

44,1

4

44,0

0

44,2

0

42,4

3

2,8

3,8

75

-0,0

13

-0,8

1

30,5

0

29,5

0

27,5

0

27,5

0

26,0

0

1,0

3,6

92

-0,0

51

-0,9

6

Randfo

nte

in:

Delp

ort

on/

Aure

us

Boltonia

Roodepoort

: Technik

on/M

anufa

cta

Industr

ia N

ort

h

Robert

ville

Laserp

ark

West

Ran

d

East

Ran

d

Ela

ndsfo

nte

in

Tunney/G

reenhills

Henville

Meadow

bro

ok/W

ilbart

Sunnyro

ck

Rustivia

/Activia

Park

Eastleig

h

Sebenza E

xt

14

Spart

an E

xt

16 (

Sebenza L

ink)

+

Ext

1,3

,7

Isando

Isando 3

Jet

Park

Alr

ode &

Xs

Alr

ode S

outh

Alb

ert

on

Aero

port

/ Spart

an E

xt

2

Delv

ille

Roodekop

31,5

0

30,5

0

29,2

5

28,7

5

28,8

3

1,6

3,6

08

-0,0

31

-0,9

3


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

31,5

0

31,7

5

31,0

0

30,5

0

30,6

7

2,0

3,5

24

-0,0

12

-0,8

7

43,3

3

42,8

6

41,4

3

41,3

3

40,8

3

2,1

3,8

78

-0,0

20

-0,9

5

29,0

0

28,6

0

26,8

0

26,6

0

25,8

0

1,2

3,5

87

-0,0

40

-0,9

6

34,3

3

34,0

0

33,0

0

31,0

0

30,8

6

2,6

3,7

69

-0,0

41

-0,9

7

27,5

0

27,5

0

25,2

5

24,7

5

22,0

0

2,4

3,7

37

-0,0

72

-0,9

4

37,1

7

36,8

3

35,8

3

33,3

3

32,6

7

1,9

3,8

92

-0,0

48

-0,9

7

45,8

8

45,8

8

44,1

2

42,1

4

41,5

7

1,9

4,0

43

-0,0

37

-0,9

7

58,0

0

58,0

0

57,2

9

57,2

9

55,5

6

1,8

4,1

37

-0,0

13

-0,8

8

49,0

0

49,0

0

48,5

7

47,5

7

45,8

9

2,3

4,0

20

-0,0

21

-0,9

2

40

,27

4

0,0

9

38

,89

3

8,2

2

37

,19

2

,3

33,6

0

33,0

0

32,6

0

31,2

0

31,2

0

2,2

3,6

65

-0,0

27

-0,9

7

33,6

0

32,6

0

31,6

0

31,2

0

30,7

5

2,8

3,6

65

-0,0

29

-0,9

7

27,5

0

27,5

0

25,0

0

25,0

0

24,0

0

2

3,5

84

-0,0

48

-0,9

3

30,0

0

30,0

0

25,0

0

25,0

0

23,5

0

1,3

3,8

90

-0,0

87

-0,9

2

27,8

3

27,8

3

27,1

7

25,6

7

23,0

0

2,5

3,6

95

-0,0

61

-0,9

1

31,3

3

32,2

5

30,3

3

29,6

7

28,3

3

2,2

3,6

76

-0,0

38

-0,9

1

27,5

0

27,0

0

24,0

0

23,0

0

21,6

7

2,3

3,7

84

-0,0

83

-0,9

8

35,2

5

35,5

0

35,0

0

33,0

0

30,0

0

1,0

3,8

85

-0,0

53

-0,8

9

31

,26

3

1,0

8

29

,46

2

8,4

2

27

,13

2

,1

30,0

0

30,0

0

30,0

0

30,0

0

25,0

0

3,0

3,7

00

-0,0

48

-0,7

1

30,0

0

30,0

0

30,0

0

30,0

0

25,0

0

2,0

3,7

00

-0,0

48

-0,7

1

30,0

0

27,5

0

33,0

0

- -

3,0

-

- -

32,5

0

30,0

0

32,5

0

27,0

0

- 3,0

-

- -

45,0

0

40,0

0

36,5

0

- -

2,0

-

- -

38,0

0

38,0

0

38,0

0

- -

3,0

-

- -

35,0

0

45,0

0

45,0

0

45,0

0

45,0

0

4,0

3,3

08

0,0

64

0,6

9

25,0

0

25,0

0

25,0

0

23,0

0

23,0

0

2,0

3,4

22

-0,0

34

-0,8

9

Wadeville

: In

dustr

ial zonin

g

Route

24/

Meadow

dale

Germ

isto

n S

/ In

dustr

ies E

Dri

ehoek/

Industr

ies W

Knig

hts

Spart

an P

roper

Founders

Vie

w

Longm

eadow

Pom

ona/

Kem

pto

n p

ark

EastR

an

d

Far E

ast

Ran

d

Boksburg

Nort

h &

East

Benoni South

New

Era

/ Vulc

ania

Nuffie

ld

Fulc

rum

Apex

La B

oré

Bra

kpan

More

hill Ext

8 B

enoni

Far E

ast

Ran

d

Mitchell S

t Pre

tori

a I

ndustr

ial Tow

nship

Koedoespoort

W

altlo

o/

Despatc

h

Silvert

on/

Silvert

ondale

Sam

cor

Park

Sunderl

and R

idge

Herm

ansta

d

Kir

kney

25,0

0

25,0

0

25,0

0

23,0

0

23,0

0

2,0

3,4

22

-0,0

34

-0,8

9


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

55,0

0

55,0

0

55,0

0

50,0

0

50,0

0

3,0

4,2

39

-0,0

39

-0,8

9

55,0

0

55,0

0

52,5

0

51,5

0

48,3

3

2,0

4,2

57

-0,0

43

-0,9

5

55,0

0

55,0

0

50,0

0

45,0

0

40,0

0

1,0

4,6

59

-0,1

11

-0,9

7

30,0

0

30,0

0

30,0

0

30,0

0

25,0

0

2,0

3,7

00

-0,0

48

-0,7

1

40,0

0

38,0

0

38,0

0

- -

3,0

-

- -

25,0

0

25,0

0

25,0

0

25,0

0

20,0

0

2,0

3,5

84

-0,0

59

-0,7

1

20,0

0

20,0

0

20,0

0

20,0

0

15,0

0

3,0

3,4

66

-0,0

76

-0,7

1

32,0

0

30,0

0

29,8

3

25,0

0

25,0

0

2,0

3,9

71

-0,0

90

-0,9

5

36

,00

3

5,2

9

35

,30

3

3,4

0

31

,94

2

,4

- -

- -

- -

37,7

5

31,0

0

25,0

0

20,0

0

18,0

0

3,5

4,9

98

-0,2

52

-0,9

9

41,0

0

35,0

0

26,0

0

20,0

0

19,0

0

3,0

5,2

24

-0,2

76

-0,9

8

40,0

0

31,0

0

25,0

0

20,0

0

18,0

0

2,5

5,1

13

-0,2

67

-0,9

9

30,0

0

27,5

0

25,0

0

20,0

0

18,0

0

2,0

4,4

05

-0,1

77

-0,9

9

30,0

0

28,0

0

25,0

0

20,0

0

18,0

0

3,0

4,4

26

-0,1

80

-0,9

9

39,0

0

37,5

0

30,0

0

25,0

0

21,0

0

2,0

4,9

06

-0,2

17

-0,9

9

- -

- -

- -

- -

-

37

,55

3

2,0

0

26

,09

2

1,0

0

18

,89

2

,6

43,5

0

40,0

0

38,0

0

35,5

0

34,0

0

3,0

4,2

01

-0,0

80

-0,9

9

43,5

0

40,5

0

38,5

0

35,5

0

34,0

0

3,0

4,2

19

-0,0

82

-1,0

0

41,0

0

38,0

0

36,5

0

35,0

0

31,0

0

4,5

4,1

75

-0,0

84

-0,9

7

62,5

0

58,0

0

55,0

0

51,5

0

44,0

0

2,5

4,7

39

-0,1

08

-0,9

7

47

,62

4

4,1

2

42

,00

3

9,3

8

35

,75

3

,2

49,0

0

49,0

0

47,5

0

45,7

5

44,2

5

2,0

4,1

04

-0,0

36

-0,9

7

40,0

0

40,0

0

37,6

7

37,0

0

36,2

5

1,5

3,8

94

-0,0

36

-0,9

6

43,0

0

43,0

0

41,7

5

41,7

5

40,5

0

2,2

3,8

74

-0,0

19

-0,9

4

Hennopspark

X15 &

X7

Gate

way

Lytt

leto

n M

anor

X4/X

6

Pre

tori

a N

ort

h

Silvert

ondale

X1

Bri

ts

Kle

rksoord

Rossly

n

Preto

ria

Po

lok

wan

e

Lebow

akgom

o

Superb

ia

Industr

ia

Ladin

e

Futu

ra

Labori

a

Magna V

ia

Seshego

Po

lok

wan

e

Nels

pru

it

Nels

pru

it E

ast

Nels

pru

it W

est

Rocky's

Dri

ft

Riv

ers

ide P

ark

Nels

pru

it

Du

rb

an

Spri

ngfield

Park

Mayville

Phoenix

Nort

h C

oast

Rd /

Bri

ard

ene

49,3

3

49,3

3

47,7

5

47,0

0

45,5

0

2,5

4,0

59

-0,0

28

-0,9

7


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

56,2

5

53,7

5

50,2

5

50,2

5

48,2

5

1,5

4,2

84

-0,0

48

-0,9

5

40,6

7

40,6

7

39,3

3

40,0

0

38,2

5

2,0

3,8

09

-0,0

18

-0,8

4

42,0

0

41,5

0

42,0

0

41,7

5

42,5

0

2,7

3,7

09

0,0

04

0,5

3

45,7

5

45,7

5

44,5

0

43,7

5

42,5

0

2,4

3,9

71

-0,0

25

-0,9

7

47,0

0

47,0

0

46,2

5

45,0

0

45,0

0

2,1

3,9

51

-0,0

17

-0,9

6

46,2

5

48,2

5

47,0

0

45,0

0

44,2

5

2,9

3,9

82

-0,0

21

-0,7

5

40,0

0

38,0

0

37,0

0

37,0

0

37,0

0

3,0

3,7

96

-0,0

23

-0,8

3

48,2

5

47,0

0

46,0

0

46,5

0

42,7

5

3,1

4,0

59

-0,0

33

-0,8

7

47,7

5

44,5

0

43,5

0

40,5

0

38,7

5

2,9

4,2

30

-0,0

67

-0,9

9

35,0

0

35,0

0

35,0

0

33,0

0

30,0

0

6,0

3,8

55

-0,0

49

-0,8

7

35,0

0

35,0

0

35,0

0

34,3

3

33,3

3

2,7

3,6

51

-0,0

16

-0,8

8

40,3

3

38,3

3

38,3

3

35,6

7

37,3

3

2,7

3,8

48

-0,0

30

-0,8

1

41,5

0

40,0

0

37,5

0

41,0

0

42,3

3

2,0

3,6

30

0,0

10

0,2

6

47,5

0

47,5

0

51,6

7

48,3

3

45,6

7

2,0

3,9

37

-0,0

09

-0,2

4

45,0

0

45,0

0

46,5

0

44,0

0

37,5

0

1,5

4,1

33

-0,0

52

-0,7

3

42,5

0

42,5

0

40,0

0

37,5

0

34,0

0

2,0

4,1

96

-0,0

76

-0,9

6

42,5

0

40,0

0

40,0

0

37,5

0

34,0

0

5,5

4,1

27

-0,0

67

-0,9

6

34,0

0

34,0

0

34,1

7

32,5

0

30,8

3

5,5

3,7

24

-0,0

32

-0,8

8

52,0

0

49,0

0

47,7

5

47,0

0

45,0

0

2,1

4,1

74

-0,0

43

-0,9

7

50,3

3

50,0

0

49,7

5

47,0

0

45,1

2

2,1

4,1

41

-0,0

37

-0,9

4

37,6

7

37,6

7

39,7

5

39,7

5

37,7

5

3,2

3,5

99

0,0

07

0,3

1

45,7

5

45,7

5

44,5

0

44,0

0

43,2

5

1,7

3,9

38

-0,0

20

-0,9

7

47,5

0

47,5

0

41,5

0

35,0

0

39,0

0

3,0

4,3

86

-0,0

93

-0,8

5

45,0

0

44,0

0

41,3

3

39,3

3

37,3

3

4,0

4,1

68

-0,0

64

-0,9

9

46,0

0

46,0

0

43,5

0

42,5

0

40,0

0

3,5

4,1

03

-0,0

47

-0,9

6

Bri

ard

ene I

ndustr

ial Park

Um

geni Rd/

Sta

mfo

rd H

ill

Um

bilo/

Sydney R

d/

Gale

St

Jacobs

Mobeni

Pro

specto

n

Ithala

Industr

ial Esta

te

Pin

eto

wn C

entr

al

New

Germ

any

Isip

ingo

Rossburg

h/

South

Coast

Rd

Edw

in S

wale

s D

rive

Gle

n A

nil

Bri

ckfield

Rd

Veru

lam

Canela

nds

Tongaat

New

Westm

ead/

Mahogany

Westm

ead

Mari

ann P

ark

/ South

mead

Maxm

ead

Rin

gro

ad I

ndustr

ial Park

Avoca/

Red H

ill/

Nort

hgate

Falc

on P

ark

Riv

er

Hors

e V

alley B

usin

ess

Mount

Edgecom

be

61,5

0

61,5

0

57,7

5

57,2

5

53,3

3

2,2

4,3

90

-0,0

47

-0,9

5


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

B

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

48,3

3

48,3

3

44,3

3

44,3

3

44,3

3

1,5

4,0

62

-0,0

34

-0,8

6

55,0

0

54,0

0

51,0

0

49,3

3

46,6

7

2,5

4,3

19

-0,0

55

-0,9

9

40,0

0

40,0

0

37,5

0

34,0

0

34,0

0

6,0

4,0

65

-0,0

65

-0,9

6

57,5

0

50,0

0

50,0

0

51,2

5

50,0

0

2,7

4,1

69

-0,0

32

-0,6

4

24,6

7

24,6

7

23,0

0

23,0

0

23,5

0

4,2

3,3

20

-0,0

22

-0,7

3

39,3

3

38,3

3

37,6

7

34,3

3

26,6

7

2,2

4,3

74

-0,1

17

-0,8

9

45

,43

4

4,7

4

43

,62

4

2,5

5

40

,67

2

,7

22,0

0

24,0

0

20,0

0

20,0

0

18,0

0

4,0

3,2

58

-0,0

35

-0,5

2

24,0

0

24,0

0

22,0

0

22,0

0

22,0

0

3,0

3,1

99

-0,0

11

-0,3

8

24,0

0

24,0

0

22,0

0

22,0

0

24,0

0

3,0

3,1

08

0,0

05

0,1

8

23

,33

2

4,0

0

21

,33

2

1,3

3

21

,33

3

,3

40,0

0

40,0

0

- -

- 2,0

-

- -

45,0

0

45,0

0

45,0

0

45,0

0

45,0

0

1,0

-

- -

48,7

5

47,0

0

45,2

5

42,6

7

- 2,0

-

- -

44,2

0

42,6

0

43,2

5

42,5

0

40,0

0

3,5

3,9

35

-0,0

26

-0,8

6

43,3

3

42,6

7

42,6

7

45,0

0

45,0

0

4,0

3,6

54

0,0

18

0,7

8

40,0

0

38,7

5

38,0

0

34,0

0

35,0

0

3,0

3,9

85

-0,0

53

-0,9

2

31,3

3

32,0

0

31,0

0

30,5

0

31,0

0

6,0

3,5

04

-0,0

09

-0,6

3

- -

- -

- -

- -

-

47,3

3

42,3

3

40,6

7

35,0

0

35,0

0

3,0

4,4

18

-0,1

05

-0,9

7

29,0

0

29,0

0

29,0

0

26,5

0

25,0

0

4,0

3,6

82

-0,0

52

-0,9

1

32,5

0

32,5

0

32,5

0

32,5

0

30,0

0

2,0

3,6

12

-0,0

21

-0,7

1

- -

- -

- -

- -

-

36,6

7

36,6

7

36,6

7

35,0

0

35,0

0

2,5

3,7

15

-0,0

19

-0,8

9

35,0

0

35,0

0

35,0

0

35,0

0

35,0

0

2,0

3,5

55

0,0

00

-

Um

bogin

twin

i/ S

outh

gate

South

gate

Industr

ial Park

Hib

iscus I

ndustr

ial Park

Um

geni Park

Ham

mers

dale

Cato

Rid

ge

Du

rb

an

Geo

rg

e

Georg

e C

entr

al

Tam

sui In

dustr

ia

Pacaltsdorp

Industr

ia

Geo

rg

e

Cap

e P

en

insu

la

Vik

ing P

lace

Glo

sderr

y

Paard

en E

iland/

Metr

o

Monta

gue G

ard

ens

Marc

oni Beam

Killa

rney G

ard

ens

Racin

g P

ark

Atlantis

Woodsto

ck/

Salt R

iver/

Observ

ato

ry

Ath

lone 1

& 2

Lansdow

ne N

eri

ssa

Sand I

ndustr

ia

Ott

ery

Hills

tar

Ott

ery

Sunset

Die

p R

iver

45,0

0

44,5

0

43,3

3

45,0

0

45,0

0

2,0

3,7

82

0,0

02

0,1

5


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

45,0

0

45,0

0

45,0

0

45,0

0

45,0

0

2,0

3,8

07

0,0

00

0,0

0

25,0

0

25,0

0

25,0

0

25,0

0

- -

- -

-

40,7

5

40,0

0

39,3

3

41,5

0

43,0

0

3,0

3,5

73

0,0

20

0,6

9

45,0

0

45,0

0

45,0

0

45,0

0

- 3,0

-

- -

43,3

3

40,0

0

38,7

5

36,6

7

30,0

0

2,5

4,3

78

45,0

0

45,0

0

37,5

0

35,0

0

35,0

0

1,0

4,3

63

47,5

0

42,5

0

41,0

0

37,5

0

30,0

0

3,0

4,6

29

40,0

0

40,0

0

35,0

0

35,0

0

35,0

0

2,0

3,9

73

49,0

0

44,0

0

41,0

0

40,5

0

35,0

0

1,0

4,4

17

35,0

0

30,5

0

27,5

0

26,5

0

25,0

0

2,0

4,0

96

37,3

3

35,6

7

32,6

7

31,0

0

27,5

0

2,5

4,1

75

40,0

0

38,3

3

36,6

7

36,0

0

- 1,5

-

35,3

3

34,3

3

30,6

7

28,6

7

26,5

0

2,5

4,1

26

38,0

0

35,0

0

32,5

0

30,0

0

28,0

0

2,0

4,1

84

- -

- -

- -

-

39,6

7

36,6

7

35,3

3

33,6

7

31,0

0

1,5

4,0

89

34,6

7

32,6

7

29,6

7

28,6

7

26,5

0

1,5

4,0

21

31,0

0

31,0

0

31,6

7

28,0

0

27,3

3

1,7

3,7

28

29,0

0

29,0

0

27,5

0

26,5

0

27,0

0

1,0

3,5

40

37,0

0

35,0

0

33,3

3

31,6

7

30,0

0

1,7

3,9

83

38,0

0

35,6

7

34,6

7

31,6

7

29,0

0

1,5

4,1

25

30,0

0

30,0

0

28,0

0

28,0

0

27,0

0

1,0

3,6

07

31,6

7

30,0

0

28,0

0

26,3

3

25,0

0

2,0

3,8

90

37,5

0

34,0

0

32,5

0

29,0

0

28,0

0

1,5

4,1

52

39,5

0

37,0

0

36,0

0

30,0

0

30,0

0

1,0

4,2

43

-0,1

08

-0,9

4

-0,0

99

-0,9

3

-0,1

37

-0,9

6

-0,0

52

-0,8

6

-0,0

98

-0,9

6

-0,1

06

-0,9

6

-0,0

99

-0,9

9

- -

-0,0

99

-0,9

9

-0,1

00

-1,0

0

- -

-0,0

76

-0,9

9

-0,0

87

-0,9

9

-0,0

48

-0,8

6

-0,0

31

-0,9

0

-0,0

68

-1,0

0

-0,0

87

-0,9

9

-0,0

36

-0,9

4

-0,0

79

-1,0

0

-0,0

98

-0,9

9

-0,1

01

-0,9

6

- -

- -

- -

- -

-

Elfin

dale

Monw

ood/

Philip

pi East

Retr

eat/

Ste

enberg

Capri

corn

Park

Maitla

nd

Ndabeni

Air

port

Eppin

g 1

& 2

WP P

ark

Els

ies R

iver

(excl, C

entr

al Park

)

Paro

w B

eaconvale

Tygerb

erg

Busin

ess P

ark

Paro

w I

ndustr

ia

Paro

w E

ast

Bellville

Oakdale

Bellville

Stikla

nd/

Kaym

or

Bellville

Tri

angle

Bellville

South

/ Sacks C

ircle

Kra

aifonte

in

Bra

ckenfe

ll I

ndustr

ia

Everi

te B

rackenfe

ll

Kuils R

iver

Bla

ckheath

Saxenburg

Industr

ial Park

Okavango P

ark

Fir

gro

ve

The I

nte

rchange (

Som

ers

et)

-

- -

- -

- -

- -


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

- -

- -

- -

- -

-

- -

- -

- -

- -

-

39

,44

3

8,0

1

36

,31

3

4,1

3

31

,51

2

,2

27,5

0

27,5

0

26,2

5

26,2

5

25,7

5

2,5

3,4

45

28,1

7

25,6

7

22,7

5

20,7

5

20,7

5

4,5

3,9

11

28,7

5

24,8

3

26,2

5

26,0

0

26,0

0

4,0

3,4

08

33,0

0

45,5

0

21,0

0

21,0

0

21,0

0

3,5

4,8

26

45,0

0

45,0

0

45,0

0

40,0

0

- 0,0

-

-0,0

23

-0,9

3

-0,1

08

-0,9

6

-0,0

20

-0,4

4

-0,2

20

-0,7

5

- -

15,0

0

15,0

0

15,0

0

15,0

0

15,0

0

4,0

2,7

08

27,5

0

27,5

0

27,5

0

25,5

0

26,0

0

1,5

3,4

66

22,2

5

22,2

5

22,2

5

21,0

0

20,0

0

4,0

3,3

23

27,5

0

27,5

0

27,5

0

22,2

0

21,1

0

3,0

3,9

19

41,2

5

47,5

0

40,0

0

- -

1,5

-

35,0

0

35,0

0

37,5

0

35,0

0

32,5

0

3,5

3,6

98

50,0

0

50,0

0

50,0

0

- -

1,0

-

0,0

00

-

-0,0

26

-0,8

4

-0,0

36

-0,9

0

-0,1

00

-0,9

1

- -

-0,0

21

-0,4

9

- -

31

,05

3

1,8

5

29

,78

2

5,4

1

23

,44

2

,9

38,0

0

30,0

0

30,0

0

20,0

0

- 1,0

-

30,0

0

28,0

0

25,0

0

25,0

0

25,0

0

1,0

3,7

10

28,0

0

25,0

0

20,0

0

20,0

0

16,0

0

2,0

4,2

83

Str

and H

alt

Bro

adla

nds

Cap

e P

en

insu

la

Po

rt

Elizab

eth

Deal Part

y

Nort

h E

nd

Kors

ten/

Neave/

Sid

well/

Sydenham

South

End W

alm

er

Uitenhage:

Volk

sw

agen a

rea/N

els

on

Mandela

Bay L

ogis

tics P

ark

Uitenhage:

Hella/K

ruis

rivie

r

Str

uandale

Mark

man T

ow

nship

Pers

evera

nce

Walm

er

Gre

enbushes

Fair

vie

w

Po

rt

Elizab

eth

East

Lo

nd

on

Arc

adia

Gate

ly/W

oodbro

ok

Wilsonia

Bra

ely

n

30,0

0

28,0

0

25,0

0

20,0

0

14,0

0

1,0

4,8

37

- -

-0,0

62

-0,8

8

-0,1

74

-0,9

6

-0,2

46

-0,9

6


le 7

.2 (

co

nti

nu

ed

)

Mean

prim

e in

du

str

ial m

arket

ren

tals

as in

qu

arte

r 2

01

4:3

(R

/m

² p

.m.;

gro

ss l

ease;

excl

VA

T)

Area s

ize l

eased

in

m²

Vacan

cy

a

b

r

25

0

50

0

1.0

00

2

.50

0

5.0

00

39,0

0

30,0

0

25,0

0

- -

1,0

-

- -

30,0

0

30,0

0

25,0

0

23,0

0

- 1,0

-

- -

32

,50

2

8,5

0

25

,00

2

1,6

0

18

,33

1

,2

46,6

7

43,3

3

36,6

7

27,5

0

22,0

0

2,0

5,3

37

-0,2

59

-0,9

9

46,6

7

41,6

7

39,3

3

26,0

0

20,0

0

2,0

5,5

15

-0,2

88

-0,9

7

39,3

3

36,6

7

30,5

0

25,3

3

20,0

0

2,0

4,9

72

-0,2

27

-0,9

9

36,3

3

31,6

7

28,3

3

23,3

3

18,0

0

2,5

4,8

62

-0,2

25

-0,9

9

26,5

0

23,5

0

21,1

7

20,3

3

15,0

0

2,5

4,2

13

-0,1

68

-0,9

5

24,0

0

22,2

5

20,8

3

17,0

0

13,2

5

2,5

4,2

95

-0,1

93

-0,9

7

45,6

7

42,3

3

38,0

0

30,6

7

30,0

0

1,5

4,6

84

-0,1

54

-0,9

8

Nort

hend

Chis

elh

urs

t

East

Lo

nd

on

Blo

em

fon

tein

Hilto

n

East

End

Harv

ey R

oad

Old

Industr

ial

Ham

ilto

n:

Mill St

Ham

ilto

n:

G L

ubbe S

t

Esto

ir

Blo

em

fon

tein

3

9,2

1

35

,71

3

0,6

9

24

,05

1

8,8

5

2,1


le 7

.3

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

8,1

6

6,7

6

6,8

4

8,1

7

6,1

3

4,5

9

2,5

0

2,5

9

2,2

8

4,0

3

4,4

2

1,8

9

1,8

0

3,1

9

3,7

7

2,7

5

2,7

5

3,4

5

4,0

0

3,7

7

4,7

1

6,5

0

4,0

0

9,5

0

9,2

0

0,9

4

0,5

0

0,0

0

0,0

0

1,5

0

3,0

3

0,0

0

0,9

4

3,1

9

2,3

6

4,2

1

2,8

3

3,4

0

2,4

9

1,7

0

4,1

9

3,5

0

2,5

0

1,5

0

2,9

4

2,6

9

1,2

5

0,9

4

1,4

1

1,7

0

1,9

2

1,6

3

0,9

4

0,4

7

5,0

2

3,6

8

1,9

6

2,6

1

1,6

0

1,8

5

1,3

0

1,7

0

1,2

5

1,8

9

1,2

5

2,6

2

0,5

0

1,5

0

2,5

0

1,4

1

2,1

6

2,9

4

2,0

5

1,4

1

1,7

0

3,4

2

2,3

2

2,2

8

2,6

1

4,3

7

3,0

9

0,5

0

0,5

0

1,0

0

1,0

0

3,7

1

2,5

8

1,6

0

1,8

5

4,5

5

1,5

0

0,0

0

0,5

0

3,0

0

4,0

0

4,0

8

4,5

0

4,5

0

5,3

5

6,1

2

2,5

8

2,8

7

3,4

3

2,7

4

3,0

3

2,9

4

3,0

8

2,5

0

2,4

5

2,7

6

Cen

tral W

itw

ate

rsran

d

Cam

bri

dge P

ark

Wynberg

Pro

per

Str

ijdom

Park

Kya S

and

Cla

yville

/Olifa

nts

fonte

in

Chlo

ork

op

Am

alg

am

Cro

wn M

ines

Industr

ia

Booysens/B

ooysens R

eserv

e/O

phir

ton

Villa

ge M

ain

/Villa

ge D

eep/N

ew

Centr

e

Benro

se

Ste

ele

dale

/Ele

ctr

on/T

ulisa P

ark

Aero

ton

Devla

nd/N

ancefield

Cle

vela

nd/H

eri

otd

ale

New

lands/M

art

indale

Kew

/Wynberg

East

Bra

mle

y V

iew

/Lom

bard

y W

est

Marl

boro

Halfw

ay H

ouse:

hi-

tech s

trip

Halfw

ay H

ouse:

Ric

hard

s D

rive

Com

merc

ia

3,5

0

4,0

0

4,5

0

5,0

0

5,0

0

AP,

BR,

GT,

MR

, Q

U

AP,

AW

, G

T,

MR,Q

U

AP,

AW

, BM

, BR,

GT,

QU

AP,

BM

, BR,

GB,

GT,

QU

AP,

GT,

QU

AP,

GT,

QU

AP,

BR,

GT,

QU

AP,

BR,

GT,

QU

AP,

GT,

QU

AP,

BR,

GT,

QU

AP,

BR,

GT,

QU

AP,

BR,

GT,

MR

, Q

U,

RO

AP,

GT,

QU

, RO

AP,

GT,

QU

AP,

BR,

QU

AP,

BR,

GT,

MR

, Q

U,

RO

AP,

GT,

QU

AP,

AW

, BM

, G

T,

MR,

QU

GT,

QU

AP,

BM

, BR,

GT,

QU

AP,

AW

, BR,

GT,

MR

, Q

U

AP,

AW

, BR,

GT,

MR

, Q

U

AP,

QU


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

5,4

5

6,6

5

5,1

5

3,0

1

1,6

6

1,5

0

2,5

0

1,0

0

1,0

0

3,6

8

3,6

7

2,0

6

3,8

2

3,8

8

3,7

3

3,2

8

3,0

3

2,2

8

2,2

8

1,8

9

AP,

BM

, BR,

GT,

MR

, Q

U

AP,

GT,

QU

AP,

BM

, BR,

GT,

MR

, Q

U

AW

, G

T,

MR,

QU

2,5

9

2,5

9

2,2

8

2,2

8

2,8

7

3,4

2

3,4

2

4,1

5

3,7

7

2,5

0

0,0

0

2,3

6

3,3

0

2,5

0

1,0

0

7,0

0

4,5

0

5,0

0

5,0

0

-

3,5

4

3,3

4

4,2

4

4,3

2

4,2

4

3,7

4

3,0

9

2,8

7

2,9

4

3,3

0

3,7

4

3,0

9

3,2

7

2,4

9

3,3

0

3,6

8

2,9

4

1,8

9

1,6

3

2,3

6

5,1

9

5,6

5

6,4

0

6,7

5

7,0

5

2,9

7

2,9

7

2,9

9

3,1

0

3,9

9

6,0

6

5,9

1

6,7

3

5,3

1

4,5

8

3,3

0

1,4

1

1,2

5

0,9

4

1,6

3

1,3

0

1,3

0

1,0

9

1,8

0

2,5

9

1,4

1

1,7

0

5,6

6

6,4

8

7,1

3

- -

- -

-

AP,

BM

, BR,

GT,

QU

AP,

BR,

GT,

QU

AP,

BM

, BR,

GT,

QU

AP,

QU

AP,

BR,

GT,

QU

AP,

BR,

QU

AP,

BR,

QU

AP,

BR,

QU

AP,

BR,

GT,

MR

, Q

U,

RO

AP,

BM

, BR,

MR,

QU

, RO

AP, AW

, G

T,

MR,

QU

AP,

BR,

QU

AP,

BR,

MR,

QU

AP,

GT,

QU

QU

- -

- -

- Q

U

5,0

0

4,0

0

3,0

0

3,0

0

2,5

0

AP,

QU

Kra

merv

ille

/Eastg

ate

Ext1

2 &

Ext1

3

Centu

rion

Lin

bro

Park

Wesco P

ark

/Eastg

ate

Ext3

, Ext1

1,

Ext6

,

Ext8

/Malb

oro

Nort

h (

New

)

City D

eep

Nort

h R

idin

g

Sam

rand C

entu

rion

Barb

eque D

ow

ns

Selb

y E

xt

12/1

3/1

5/1

9/2

0/2

4/C

ity W

est

Selb

y E

xt

5/1

0/1

4/1

8

Selb

y E

xt

11

Selb

y E

xt

3/4

/6

Denver

(Old

)

Denver

(New

)

Kyala

mi Busin

ess P

ark

Reuven

Selb

y (

Old

)/Selb

y E

xt2

/Park

Centr

al

Robert

sham

Ford

sburg

/Mayfa

ir

West

Ran

d

Lea G

len

Honeydew

X19,

20,

21 &

22

Sto

rmill

4,2

4

4,2

4

2,1

6

2,3

6

2,0

0

AP,

GT,

QU


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

4,5

0

2,0

0

3,0

0

2,5

0

0,0

0

7,5

0

6,5

0

6,5

0

5,0

0

3,5

0

2,5

0

2,0

0

1,5

0

0,0

0

0,0

0

AP,

QU

AP,

QU

AP,

QU

- -

- -

-

6,0

0

7,0

0

3,0

0

3,5

0

1,5

0

2,5

0

2,5

0

3,2

5

2,5

0

1,7

5

4,5

0

6,0

0

4,0

0

4,0

0

4,0

0

3,3

4

1,8

3

2,2

7

2,9

7

4,1

5

AP

AP,

QU

AP,

QU

AP,

QU

AP,

BM

, BR,

GT,

QU

3,2

2

4,2

4

5,0

2

5,5

6

6,2

4

2,6

2

3,3

7

4,3

6

5,5

6

5,8

6

5,1

7

5,1

7

4,8

0

5,4

6

5,8

3

3,3

9

4,9

4

5,2

5

5,3

9

5,0

7

2,7

3

2,5

4

2,8

5

3,5

4

4,2

3

3,3

5

3,3

8

3,2

5

2,8

4

2,5

8

3,8

5

3,9

2

2,3

2

2,8

7

3,3

9

1,4

8

1,5

8

2,6

2

2,4

9

4,2

2

2,0

0

2,5

5

3,5

0

3,5

4

3,4

2

2,4

9

2,6

5

2,6

7

2,4

7

2,8

7

4,0

7

4,0

7

3,3

8

5,3

6

4,2

6

2,6

5

3,5

7

3,4

2

3,9

2

4,2

7

4,9

2

2,5

0

4,8

7

5,3

6

4,7

2

3,0

0

5,0

0

2,5

0

2,5

0

2,4

9

Cham

dor

Facto

ria

Randfo

nte

in:

Delp

ort

on/A

ure

us

Boltonia

Roodepoort

: Technik

on/M

anufa

cta

Industr

ia N

ort

h

Robert

ville

Laserp

ark

East

Ran

d

Ela

ndsfo

nte

in

Tunney/G

reenhills

Henville

Meadow

bro

ok/W

ilbart

Sunnyro

ck

Rustivia

/Activia

Park

Eastleig

h

Sebenza E

xt

14

Spart

an E

xt

16 (

Sebenza L

ink)

+ E

xt1

,3,7

Isando

Isando 3

Jet

Park

Alr

ode &

Xs

Alr

ode S

outh

Alb

ert

on

0,2

4

4,2

4

2,3

6

0,0

0

0,0

0

AP,

BM

, BR,

GT,

ME,

MH

, Q

U,

RO

AP,

BM

, BR,

GT,

ME,

MH

, Q

U,

RO

AP,

AT,

BR,

GT,

ME,

MH

, Q

U,

RO

AP,

AT,

BM

, BR,

GT,

ME,

MH

, Q

U,

RO

AP,

BM

, BR,

ME,

MH

, Q

U,

RO

AP, G

T,

QU

, RO

AP,

BM

, BR,

GT,

ME,

MH

, Q

U,

RO

AP,

BR,

ME,

QU

, R

O

AP,

BR,

ME,

QU

, R

O

AP,

AT,

BR,

GT,

ME,

MH

, Q

U,

RO

AP,

BM

, BR,

GT,

ME,

QU

, RO

AP,

AT,

BM

, BR,

GT,

ME,

QU

, RO

AP,

BM

, G

T,

QU

AP,

BM

, G

T,

QU

AP,

QU


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

3,4

1

3,6

0

4,1

7

3,2

8

3,5

4

4,5

0

3,5

0

2,5

0

2,5

0

2,0

0

3,5

0

4,5

0

3,7

0

4,1

5

3,4

4

1,6

6

2,0

5

4,0

0

3,5

7

3,4

5

2,9

2

2,9

5

2,7

2

2,9

2

2,4

8

3,2

9

3,5

6

2,2

3

2,4

2

2,2

3

3,0

4

3,2

1

3,8

3

3,7

9

3,8

3

4,3

3

4,3

3

2,7

7

3,2

7

3,4

6

2,2

7

1,9

5

2,2

7

2,5

6

2,8

7

2,5

7

2,5

7

1,2

7

2,1

0

2,5

0

3,7

4

3,7

4

3,7

7

3,8

1

3,7

7

4,1

7

4,1

7

3,5

0

2,8

2

3,7

8

AP, BM

, BR,

GT,

MH

, Q

U,

RO

AP,

RO

AP,

BM

, G

T,

QU

AP,

BM

, G

T,

QU

AP,

AT,

GT,

ME,

QU

, R

O

AP,

BR,

QU

, RO

AP, BM

, BR,

GT,

QU

, R

O

AP,

QU

, R

O

AP,

BR,

ME,

QU

, R

O

AP,

BR,

GT,

ME,

MH

, Q

U,

RO

AP,

BM

, BR,

GT,

ME,

QU

, RO

AP,

BM

, BR,

GT,

ME,

QU

, RO

1,6

2

1,9

0

1,6

2

0,9

8

0,9

8

1,9

6

2,2

4

1,3

6

2,3

2

2,5

9

2,0

4

2,0

4

0,0

0

0,0

0

1,4

1

0,0

0

0,0

0

0,0

0

0,0

0

1,5

0

1,8

4

1,8

4

1,1

8

1,7

0

1,0

0

4,5

0

3,6

3

3,8

6

1,2

5

2,3

6

2,5

0

3,0

0

1,0

0

2,0

0

2,3

6

0,2

5

0,5

0

0,0

0

- -

AP, BM

, BR,

GT,

QU

, R

O

AP,

BR,

GT,

QU

, R

O

AP,

QU

, R

O

AP,

QU

AP,

GT,

QU

AP,

BM

, G

T,

QU

AP,

BM

, Q

U

AP,

QU

Aero

port

/Spart

an E

xt

2

Delv

ille

Roodekop

Wadeville

: In

dustr

ial zonin

g

Route

24/M

eadow

dale

Germ

isto

n S

/Industr

ies E

Dri

ehoek/I

ndustr

ies W

Knig

hts

Spart

an P

roper

Founders

Vie

w

Longm

eadow

Pom

ona/K

em

pto

n P

ark

Far E

ast

Ran

d

Boksburg

Nort

h &

South

Benoni

New

Era

/Vulc

ania

Nuffie

ld

Fulc

rum

Apex

Labore

Bra

kpan

More

hill Ext

8 B

enoni

Preto

ria

Mitchell S

t -

- -

- -

AP

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le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

1,5

0

0,0

0

0,0

0

0,5

0

2,0

0

HH

, RZ

1,5

0

0,5

0

0,5

0

0,5

0

2,0

0

HH

, RZ

1,0

0

0,0

0

0,5

0

0,0

0

1,0

0

HH

, RZ

2,5

0

0,0

0

0,0

0

1,5

0

4,0

0

HH

, RZ

3,6

7

3,6

7

4,3

3

2,5

9

1,3

0

1,6

3

1,6

3

2,0

5

2,1

2

3,0

3

4,1

2

4,1

2

2,0

5

2,0

5

0,8

7

4,1

9

4,1

9

2,2

8

2,1

2

1,5

0

5,4

5

4,1

5

2,8

6

2,8

6

4,0

9

0,9

4

0,9

4

0,9

4

3,5

4

2,0

5

5,1

0

5,1

7

5,1

0

2,0

5

2,5

0

3,7

7

3,7

7

2,8

7

2,1

7

2,5

0

2,1

2

2,1

2

3,0

3

0,0

0

0,0

0

4,1

5

2,0

5

2,1

2

0,0

0

1,3

0

- -

- -

-

4,0

9

2,1

2

2,1

2

2,6

9

4,8

2

4,5

5

0,8

7

1,5

0

0,8

7

2,5

9

- -

- -

-

0,0

0

0,0

0

0,0

0

0,9

4

2,3

6

ML,

QP

PC,

PPI

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

PC

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

PPI

ML,

PC,

PPI

3,3

0

4,7

1

4,7

1

3,3

0

3,7

7

3,5

0

5,0

0

2,5

0

1,0

0

2,0

5

Nels

pru

it

Nels

pru

it E

ast

Nels

pru

it W

est

Rocky’s

Dri

ft

Riv

ers

ide P

ark

Du

rb

an

Spri

ngfield

Park

Mayville

Phoenix

Nort

h C

oast

Rd/B

riard

ene

Bri

ard

ene I

ndustr

ial Park

Um

geni Rd/S

tam

ford

Hill

Um

bilo/S

ydney R

d/G

ale

St

Jacobs

Mobeni

Pro

specto

n

Ithala

Industr

ial Esta

te

Pin

eto

wn C

entr

al

New

Germ

any

Kw

a D

ebeka I

ndustr

ial Park

Isip

ingo

Rossburg

h/S

outh

Coast

Rd

Edw

in S

wale

s D

rive

Gle

n A

nil

2,5

0

2,5

0

6,2

4

5,3

1

3,3

0

ML,

PC,

PPI

ML,

PC,

PPI

ML,

PC,

PPI


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

i ze l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

10,0

0

10,0

0

8,5

0

6,0

0

2,5

0

2,5

0

2,5

0

0,0

0

2,5

0

4,0

0

2,5

0

0,0

0

0,0

0

2,5

0

4,0

0

PC,

PPI

PC,

PPI

PC,

PPI

4,9

0

4,9

0

4,2

5

2,0

4

1,1

8

3,0

8

1,0

0

1,7

9

2,1

2

3,5

4

3,3

0

3,5

6

3,3

4

2,1

2

1,6

0

2,0

5

2,0

5

3,0

3

3,0

3

1,7

9

3,7

7

3,7

7

2,8

7

5,3

4

4,9

2

2,5

0

2,5

0

1,5

0

- 4,0

0

2,4

5

1,4

1

1,8

9

3,3

0

5,2

5

4,0

0

4,0

0

1,5

0

2,5

0

0,0

0

4,9

7

4,9

7

4,2

1

4,4

9

1,2

5

5,0

0

5,0

0

5,0

0

5,8

9

5,1

4

6,2

4

6,2

4

3,3

0

3,3

0

3,3

0

0,0

0

1,4

1

2,9

4

0,9

4

1,2

5

5,0

0

5,0

0

2,5

0

4,0

0

4,0

0

2,5

0

5,0

0

5,0

0

1,2

5

0,0

0

0,4

7

0,4

7

1,4

1

1,4

1

1,5

0

0,9

4

1,2

5

2,0

5

3,3

0

2,3

6

ML,

PC,

PPI

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

PC,

PPI

ML,

PC,

PPI

PC,

PPI

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI

ML,

PC,

PPI

PC,

PPI

ML,

PC,

PPI

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

Bri

ckfield

Rd

Veru

lam

Canela

nds

Tongaat

New

Westm

ead/M

ahogany

Westm

ead

Mari

ann P

ark

/South

mead

Maxm

ead

Rin

gro

ad I

ndustr

ial Park

Avoca/R

ed H

ill/

Nort

hgate

Falc

on P

ark

Riv

er

Hors

e V

alley B

usin

ess E

sta

te

Mount

Edgecom

be

Um

bogin

twin

i/South

gate

South

gate

Industr

ial Park

Hib

iscus I

ndustr

ial Park

Um

geni Park

Ham

mers

dale

Cato

Rid

ge

Geo

rg

e

Georg

e C

entr

al

- -

- -

-


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

- -

- -

-

- -

- -

-

- -

- -

-

0,0

0

0,0

0

0,0

0

0,0

0

-

6,5

0

6,2

8

4,5

5

3,3

0

-

5,7

1

4,3

6

4,6

6

2,5

0

-

2,3

6

3,3

0

3,3

0

0,0

0

-

PL

AN

, G

B

AN

, G

B,

GIN

, RR

AN

, G

B,

GIN

, PL,

RR

AN

, G

B,

GIN

8,6

6

6,5

0

7,0

4

1,0

0

- AN

, G

B,

GIN

, RR

1,2

5

0,8

2

0,8

2

0,5

0

- AN

, G

B,

GIN

- -

- -

-

7,5

9

3,7

7

3,3

0

0,0

0

- AN

, G

B,

RR

1,0

0

1,0

0

1,0

0

1,5

0

- AN

, G

B

2,5

0

2,5

0

2,5

0

2,5

0

- AN

, G

B

- -

- -

-

2,3

6

2,3

6

2,3

6

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

-

0,0

0

2,8

7

2,3

6

0,0

0

-

0,0

0

0,0

0

0,0

0

0,0

0

-

- -

- -

-

3,7

7

3,0

8

3,3

0

1,5

0

-

0,0

0

0,0

0

0,0

0

- -

2,3

6

4,0

8

2,1

7

6,2

4

-

0,0

0

0,0

0

2,5

0

0,0

0

-

2,5

0

2,5

0

1,0

0

2,5

0

-

Tam

sui In

dustr

ia

Pacaltsdorp

Industr

ia

Cap

e P

en

insu

la

Vik

ing P

lace

Glo

sderr

y

Paard

en E

iland/M

etr

o

Monta

gue G

ard

ens

Marc

oni Beam

Killa

rney G

ard

ens

Racin

g P

ark

Atlantis

Woodsto

ck/S

alt R

iver/

Observ

ato

ry

Ath

lone 1

& 2

Landsdow

ne N

eri

ssa

Sand I

ndustr

ia

Ott

ery

Hills

tar

Ott

ery

Sunset

Die

p R

iver

Elfin

dale

Monw

ood/P

hilip

pi East

Retr

eat/

Ste

enberg

Capri

con P

ark

Maitla

nd

Ndabeni

Air

port

Eppin

g 1

& 2

5,0

0

0,0

0

0,0

0

0,0

0

-

AN

, G

B,

RR

AN

, G

B

AN

, G

B,

PL,

RR

AN

, G

B,

PL

GB

AN

, G

B,

PL,

RR

GB,

PL,

RR

AN

, D

D,

GB,

PL,

RR

AN

, D

D,

GB

DD

, G

B

AN

, G

B


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

1,0

0

4,0

0

6,0

0

5,5

0

- AN

, G

B

5,0

0

2,5

0

2,5

0

1,5

0

- AN

, D

D

0,4

7

0,9

4

2,0

5

2,1

6

2,5

0

AN

, D

D,

GR

1,6

3

1,2

5

2,3

6

1,0

0

- AN

, D

D,

GB

0,4

7

0,9

4

0,9

4

0,9

4

1,5

0

AN

, D

D,

GB

2,0

0

0,0

0

0,5

0

0,0

0

- D

D,

GB

- -

- -

-

0,4

7

2,3

6

2,0

5

2,6

2

1,0

0

AN

, D

D,

GB

1,2

5

2,0

5

1,7

0

0,9

4

0,5

0

AN

, D

D,

GB

1,0

0

1,4

1

3,8

6

1,6

3

2,0

5

AN

, D

D,

GB

1,0

0

1,0

0

0,5

0

1,5

0

- AN

, G

B

1,4

1

2,1

6

2,8

7

2,3

6

0,0

0

AN

, D

D,

GB

1,6

3

0,9

4

2,0

5

2,8

7

1,0

0

AN

, D

D,

GB

- -

- -

- AN

2,8

7

1,6

3

0,8

2

1,2

5

0,0

0

AN

, D

D,

GB

0,5

0

1,0

0

2,5

0

1,0

0

2,0

0

AN

, D

D

0,5

0

2,0

0

1,0

0

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AN

, G

B

- -

- -

-

- -

- -

-

- -

- -

-

- -

- -

-

WP P

ark

Els

ies R

iver

(excl. C

entr

al Park

)

Paro

w B

eaconvale

Tygerb

erg

Busin

ess P

ark

Paro

w I

ndustr

ia

Paro

w E

ast

Bellville

Oakdale

Bellville

Stikla

nd/K

aym

or

Bellville

Tri

angle

Bellville

South

/Sacks C

ircle

Kra

aifonte

in

Bra

ckenfe

ll I

ndustr

ia

Everi

te B

rackenfe

ll

Kuils R

iver

Bla

ckheath

Saxonburg

Industr

ial Park

Okavango

Fir

gro

ve

The I

nte

rchange (

Som

ers

et

West)

Str

and H

alt

Bro

adla

nds

East

Lo

nd

on

Arc

adia

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

BG

, D

Q,

ER

, G

O,

GW

, IP


le 7

.3 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

prim

e in

du

str

ial m

arket

ren

tals

as in

20

14

:3

Area s

ize l

eased

in

m²

Co

ntr

ibu

tor c

od

es

25

0

50

0

1.0

00

2

.50

0

5.0

00

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

0,0

0

BG

, D

Q,

ER

, G

O,

GW

, IP

BG

, D

Q,

ER

, G

O,

GW

, IP

BG

, D

Q,

ER

, G

O,

GW

, IP

BG

, D

Q,

ER

, G

O,

GW

, IP

BG

, D

Q,

ER

, G

O,

GW

, IP

2,5

0

2,5

0

1,2

5

1,2

5

1,7

5

5,3

3

3,3

0

2,7

5

2,7

5

2,7

5

1,2

5

3,4

2

1,2

5

- -

12,0

0

24,5

0

- -

-

- -

- -

-

- -

- -

-

- -

- 0,5

0

-

IPM

, N

RG

IPM

, N

RG

, TR

IPM

, N

RG

, TR

IPM

, N

RG

IPM

IPM

IPM

, N

RG

0,2

5

0,2

5

0,2

5

1,0

0

0,0

0

- -

- -

1,1

0

3,7

5

2,5

0

5,0

0

- -

- -

7,5

0

5,0

0

2,5

0

IPM

, N

RG

IPM

, N

RG

IPM

, N

RG

, TR

IPM

, N

RG

Gate

ly/W

oodbro

ok

Wilsonia

Bra

ely

n

Nort

hend

Chis

elh

urs

t

Po

rt

Elizab

eth

Deal Part

y

Nort

h E

nd

Kors

ten/N

eave/S

idw

ell/S

ydenham

South

End W

alm

er

Uitenhage:

Volk

sw

agen a

rea/N

MBLP

Uitenhage:

Hella/K

ruis

rivie

r

Str

uandale

Mark

man T

ow

nship

Pers

evera

nce

Walm

er

Gre

enbushes

Fair

vie

w

- -

- -

- IP

M

Blo

em

fon

tein

2,3

6

2,3

6

2,3

6

2,5

0

0,0

0

BW

, C

C,

EK

2,3

6

4,7

1

4,1

9

4,0

0

- BW

, C

C,

EK

0,9

4

2,3

6

3,1

9

3,4

0

- BW

, C

C,

EK

2,6

2

2,3

6

4,7

1

4,7

1

- BW

, C

C,

EK

1,5

0

1,5

0

2,7

8

3,3

0

0,0

0

BW

, C

C,

EK

1,0

0

0,2

5

3,1

2

2,1

6

1,2

5

BW

, C

C,

EK

Hilto

n

East

End

Harv

ey R

oad

Old

Industr

ial

Ham

ilto

n:

Mill St

Ham

ilto

n:

G L

ubbe S

t

Esto

ir

1,7

0

2,0

5

1,4

7

0,9

4

- BW

, C

C,

EK


Notes to the industrial rental tables

1. The rentals are the achievable or market rates for the quarter shown in the table heading,and apply to industrial and warehouse space for the area sizes indicated. The rentals are theaverages of the rates as per our panels of experts in the various cities.

2. The rental rates assume gross leases, market escalation rates and leases of 3 to 5 years.

3. In terms of a gross lease, the tenant in a stand-alone building typically pays only for hisrefuse removal, water and electricity, as well as internal maintenance and increases in ratesand taxes. He provides and pays for his own security. All other expenses are for theaccount of the landlord. In a park the tenant pays, in addition to his gross rental, his prorata share of security costs, security lighting and landscaping.

4. The rental rates also apply to the office portion, where this is less than 1% of the totalbuilding area. For larger office portions, the office rental is, as a rule of thumb, about 15%of the industrial rental rate.

5. Prime space is space that is easily lettable because it satisfies each of the followingprerequisites:

a. • generally in a good condition;

b. • satisfactory macro access (i.e. access to freeway);

c. • satisfactory micro access (i.e. from street to building);

d. • proper loading facilities;

e. • eaves >4,0m (excluding micro/mini units);

f. • on ground level;

g. • adequate three-phase electrical power;

h. • clear spans.

The eight conditions above are prerequisites for space to be considered prime. However, a building may possess additional enhancements that could improve lettability through increasing the size of the potential tenant pool. Such enhancements could include suffi-cient office accommodation, adequate parking, sprinkler systems, masonry up to sill height, adequate floor loadings, roof insulation, sufficient yardspace and a good location (as opposed to access).

6. Secondary space is space which is not classifiable as prime because it does not satisfy alleight prerequisites for prime space listed above. Such space is typically old buildings orstructures which have been haphazardly renovated. They would have poor access, too littleyardspace or office accommodation, inadequate goods lifts, no three-phase power andobsolete electrics and ablution facilities. Such space is often (but not exclusively) found inhighly urbanised areas.


7. Vacancy scale for industrial townships. The vacancy levels are based on a scale of 0 to 9 asshown below:

0 1 2 3 4 5 6 7 8 9

Nil Low Medium High

The scale should be interpreted as follows:

0 = no vacancy

1 = ‘low–’ vacancy;

2 = ‘low’ vacancy

3 = ‘low+’ vacancy

4 = ‘medium–’ vacancy;

5 = ‘medium’ vacancy

6 = ‘medium+’ vacancy

7 = ‘high–’ vacancy;

8 = ‘high’ vacancy

9 = ‘high+’ vacancy

where: low = <1 vacancy;

medium = 1 - 2 vacancy;

high = >2 vacancy.

8. For notes on how to use a regression equation in order to interpolate a rental rate, seeAnnexure 3.


Table 7.4 Predominant market escalation rates (%)

for industrial leases Average as in quarter 2014:3

5-year leases Mean SD N

Central Witwatersrand 8,3 0,6 10West Rand 8,0 0,0 8East Rand 8,6 0,6 13Far East Rand 7,8 0,4 8Pretoria 8,7 0,9 3Polokwane 9,0 0,0 2Nelspruit - - -Durban 8,5 0,5 5Cape Peninsula 8,1 0,2 5Bloemfontein 8,3 0,5 3Notes:

1. These are the averages of the predominant — i.e. most often achieved — market escalation rates as reportedby our panel of experts.

Table 7.5 Indicative operating expenses

for industrial buildings As in quarter 2014:3 in rands per m² per month

Stand-alone Park

R/m² SD N R/m² SD NCentral Witwatersrand 7,44 1,95 9 9,89 3,14 9 West Rand 6,04 1,11 7 8,04 2,33 7 East Rand 8,95 5,92 11 8,77 1,77 12 Far East Rand 5,50 0,96 7 7,00 2,56 7 Pretoria 8,00 1,41 3 11,67 1,25 3Polokwane 14,50 7,50 2 17,50 7,50 2Nelspruit - - - - - -Durban 11,10 1,62 5 17,75 5,36 4Cape Peninsula 6,30 1,72 5 10,20 2,87 5 Bloemfontein 7,75 0,75 2 7,00 - 1Notes: The operating expenses are estimates for the past 12 months and are as per our expert panellists in the various cities. The following items are included:

stand-alone buildings: rates and taxes and insurance (incl. Sasria) and

park buildings: as above, plus security, security lighting, landscaping and management.

Rode's Report 2014:4 Industrial stand values 82

2,000

1,500

1,000

500400

300250200

150

100

5092 94 96 98 00 02 04 06 08 10 12 14


Nominal industrial stand values (1.000-m² stands)

Smoothed

R/m

²(l

og s

cale

)


1,000900800700

600

500

400

300

200

10092 94 96 98 00 02 04 06 08 10 12 14


Real industrial stand values (1.000-m² stands)2005 rands

Smoothed

R/m

²(l

og s

cale

)


Deflated by BER BCI (2005=100)

Chapter 8: Industrial stand values

Stand values contracting in real terms


The market values for industrial stands in the country’s major industrial conurbations again showed modest growth, below that of building-cost inflation.

In the third quarter of 2014, stand values on the Central Witwatersrand (+7%) were able to show the strongest growth. This was followed by Durban (+5%), Port Eliza-beth (+4%) and the East Rand (+3%). In.the Cape Peninsula (-2%), the market values for industrial stands were slightly lower when compared to a year ago. Over the same period, building costs are esti-mated to have shown growth of about 9%.

This implies that in all of the regions men-tioned earlier, stand values contracted in real terms.

Given that the growth in the market values of stands tends to track the growth in mar-ket rentals, strong growth in the market values of industrial stands can only be ex-pected on the back of strong growth in rentals.1 For now, however, the current weakness in the manufacturing sector does not bode well for the demand for industrial space to rent and, consequently, rentals.

1 Note, however, that the relationship is not linear as stand value is a residual item in a viability study. A given rise in market rentals results in a non-proportional rise in stand value.

Rode's Report 2014:4 Industrial stand values 83

The remainder of this chapter includes market values for level, serviced stands in named industrial townships. The industrial-land-value tables contain regression pa-rameters in order to allow readers to inter-polate land values for area sizes other than those given in the tables. This is necessary because the relationship between price and square meterage is not linear.

For more details on how to use these equa-tions, refer to Annexure 3 (annexure-page XII).

This concludes our chapter on industrial stand values.

PS: If you do not understand a term used in this article, please consult the Glossary (Annexure 1)

Rode's Report 2014:4 Industrial stand values84

Rode's Report 2014:4 Industrial stand values 94 T

ab

le 8

.2

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

250,0

0

175,0

0

125,0

0

25,0

0

75,0

0

112,5

0

125,0

0

130,0

0

0,0

0

12,5

0

50,0

0

25,0

0

AP,

QU

AP,

QU

AP,

QU

37,5

0

50,0

0

19,0

0

58,1

2

40,8

2

61,3

5

61,8

5

132,3

0

82,1

9

82,1

9

73,6

4

60,0

0

AP,

BM

, G

T,

QU

AP,

BM

, BR,

GT,

MR

, Q

U

AP,

BM

, BR,

GT,

QU

100,0

0

58,5

0

76,5

0

-

150,0

0

200,0

0

225,0

0

250,0

0

100,0

0

125,0

0

150,0

0

150,0

0

102,7

4

102,7

4

70,7

1

0,0

0

70,7

1

77,2

8

62,3

6

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0

AP,

BR,

QU

AP,

BR,

QU

AP,

BR,

QU

AP,

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QU

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QU

40,8

2

40,8

2

96,0

1

0,0

0

40,8

2

23,5

7

7,0

7

0,0

0

25,0

0

75,0

0

75,0

0

64,8

1

12,5

0

12,5

0

0,0

0

25,0

0

5,0

0

5,0

0

27,7

9

0,0

0

- -

- -

50,0

0

50,0

0

50,0

0

37,5

0

0,0

0

25,0

0

25,0

0

0,0

0

40,0

0

50,0

0

50,0

0

62,5

0

Cen

tral W

itw

ate

rsran

d

Cam

bri

dge P

ark

Wynberg

Pro

per

Str

ijdom

Park

Kya S

and

Cla

yville

/Olifa

nts

fonte

in

Chlo

ork

op

Am

alg

am

Cro

wn M

ines

Industr

ia

Booysens/B

ooysens R

eserv

e/O

phir

ton

Villa

ge M

ain

/Villa

ge D

eep/N

ew

Centr

e

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se

Ste

ele

dale

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on/T

ulisa P

ark

Aero

ton

Devla

nd/N

ancefield

Cle

vela

nd/H

eri

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New

lands/M

art

indale

Kew

/Wynberg

East

Bra

mle

y V

iew

/Lom

bard

y W

est

Marl

boro

Halfw

ay H

ouse:

hi-

tech s

trip

37,5

0

37,5

0

84,9

8

40,8

2

AP,

BR,

QU

, RO

AP,

BR,

GT,

QU

, R

O

AP,

BM

, G

T,

QU

AP,

QU

AP,

MR,

QU

, RO

AP

AP,

QU

AP,

QU

AP,

BR,

QU

AP,

MR,

QU

Rode's Report 2014:4 Industrial stand values 95Tab

le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

0,0

0

12,5

0

88,9

8

77,2

8

75,0

0

75,0

0

40,8

2

62,3

6

550,0

0

550,0

0

600,0

0

600,0

0

100,0

0

100,0

0

0,0

0

23,5

7

75,0

0

125,0

0

200,0

0

129,4

4

- -

- -

AP,

BR,

QU

AP,

BR,

QU

AP,

QU

AP,

GT,

QU

AP,

BM

, BR,

GT,

QU

QU

62,3

6

47,1

4

42,4

9

73,4

8

BM

, BR,

GT,

QU

, R

O

100,0

0

100,0

0

100,0

0

75,0

0

0,0

0

25,0

0

35,3

6

74,8

3

12,5

0

12,5

0

37,5

0

37,5

0

94,2

8

84,9

8

47,1

4

0,0

0

AP,

BM

, Q

U

AP,

BR,

GT,

MR

, Q

U

AP,

MR,

QU

AP,

BR,

QU

25,0

0

25,0

0

0,0

0

25,0

0

50,0

0

50,0

0

75,0

0

100,0

0

84,9

8

84,9

8

81,6

5

50,0

0

29,4

4

29,4

4

18,8

6

12,5

0

47,1

4

47,1

4

37,7

1

7,5

0

225,0

0

250,0

0

- -

25,0

0

0,0

0

37,5

0

-

50,0

0

50,0

0

50,0

0

87,5

0

12,5

0

25,0

0

37,5

0

75,0

0

AP,

BR,

GT,

QU

AP,

QU

AP,

BR,

QU

AP,

BR,

QU

, RO

AP,

BR,

QU

, RO

AP,

QU

BR,

QU

AP,

BR,

QU

AP,

QU

Halfw

ay H

ouse:

Ric

hard

s D

rive

Com

merc

ia

Kra

merv

ille

/Eastg

ate

Ext1

2 &

Ext1

3

Centu

rion

Lin

bro

Park

Wesco P

ark

/Eastg

ate

Ext3

, Ext1

1,

Ext6

,

Ext8

/Malb

oro

Nort

h (

New

)

City D

eep

Nort

h R

idin

g

Sam

rand C

entu

rion

Barb

eque D

ow

ns

Selb

y E

xt

12/1

3/1

5/1

9/2

0/2

4/C

ity W

est

Selb

y E

xt

5/1

0/1

4/1

8

Selb

y E

xt

11

Selb

y E

xt

3/4

/6

Denver

(Old

)

Denver

(New

)

Kyala

mi Busin

ess P

ark

Reuven

Selb

y (

Old

)/Selb

y E

xt2

/Park

Centr

al

Robert

sham

Ford

sburg

/Mayfa

ir

- -

- -


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

100,0

0

100,0

0

78,0

0

125,0

0

AP,

QU

25,0

0

25,0

0

125,0

0

100,0

0

AP,

QU

40,0

0

40,0

0

45,0

0

40,0

0

AP,

QU

10,0

0

10,0

0

0,0

0

12,5

0

AP,

QU

150,0

0

175,0

0

175,0

0

175,0

0

AP,

QU

- -

- -

AP

- -

- -

AP

- -

- -

AP

100,0

0

100,0

0

135,0

0

150,0

0

AP,

QU

115,0

0

112,5

0

75,0

0

75,0

0

AP,

QU

- -

- 102,7

4

BM

, G

T,

QU

71,6

9

71,6

9

25,0

0

100,6

9

70,7

1

82,9

2

43,3

0

86,6

0

97,9

8

97,9

8

80,0

0

94,2

8

97,9

8

97,9

8

97,9

8

80,0

0

80,0

0

0,0

0

0,0

0

48,9

9

94,2

8

94,2

8

117,8

5

94,2

8

AP,

GT,

ME,

QU

AP,

BQ

, M

E,

QU

, RO

AP,

BQ

, M

E,

QU

AP,

BQ

, M

E,

QU

AP,

BQ

, M

E,

QU

AP,

BQ

, M

E,

QU

64,9

5

64,9

5

82,9

2

82,9

2

40,0

0

40,0

0

40,0

0

63,2

5

West

Ran

d

Lea G

len

Honeydew

X19,

20,

21 &

22

Sto

rmill

Cham

dor

Facto

ria

Randfo

nte

in:

Delp

ort

on/A

ure

us

Boltonia

Roodepoort

: Technik

on/M

anufa

cta

Industr

ia N

ort

h

Robert

ville

Laserp

ark

East

Ran

d

Ela

ndsfo

nte

in

Tunney/G

reenhills

Henville

Meadow

bro

ok/W

ilbart

Sunnyro

ck

Rustivia

/Activia

Park

Eastleig

h

Sebenza E

xt

14

Spart

an E

xt

16 (

Sebenza L

ink)

+ E

xt1

,3,7

50,0

0

50,0

0

23,5

7

40,8

2

AP,

ME,

QU

AP,

ME,

QU

, RO

AP,

ME,

QU

, RO


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

47,1

4

47,1

4

81,6

5

94,2

8

82,9

2

82,9

2

70,7

1

94,2

8

47,1

4

70,7

1

63,2

5

96,9

5

0,0

0

0,0

0

37,7

1

37,2

7

50,0

0

50,0

0

25,0

0

25,0

0

35,3

6

35,3

6

12,5

0

47,1

4

300,0

0

250,0

0

200,0

0

100,0

0

80,0

4

37,5

0

45,8

8

21,6

5

100,0

0

50,0

0

50,0

0

0,0

0

AP,

BQ

, M

E,

QU

AP,

BM

, BQ

, M

E,

QU

AP,

BM

, BQ

, M

E,

QU

, R

O

AP,

BM

, G

T,

QU

AP,

GT,

QU

AP,

QU

, SF

AP,

QU

AP,

QU

, SF

AP,

QU

23,5

7

35,3

6

41,0

1

63,8

5

100,0

0

50,0

0

50,0

0

41,4

6

43,3

0

43,3

0

45,8

8

21,6

5

25,0

0

25,0

0

27,2

4

54,4

9

0,0

0

0,0

0

0,0

0

0,0

0

75,0

0

75,0

0

88,3

9

89,2

7

150,0

0

150,0

0

100,0

0

100,0

0

AP,

BM

, Q

U

AP,

QU

, R

O

AP,

QU

, R

O

AP,

QU

, R

O

AP,

QU

, R

O

AP,

ME,

QU

AP,

ME,

QU

75,0

0

125,0

0

50,0

0

48,9

9

58,3

1

60,0

0

37,4

2

65,5

0

AP,

BM

, BR,

GT,

ME,

QU

AP,

BM

, BR,

GT,

ME,

QU

, RO

71,6

9

71,6

9

131,2

3

95,8

1

18,8

6

18,8

6

26,2

5

4,7

1

Isando

Isando 3

Jet

Park

Alr

ode &

Xs

Alr

ode S

outh

Alb

ert

on

Aero

port

/Spart

an E

xt

2

Delv

ille

Roodekop

Wadeville

: In

dustr

ial zonin

g

Route

24/M

eadow

dale

Germ

isto

n S

/Industr

ies E

Dri

ehoek/I

ndustr

ies W

Knig

hts

Spart

an P

roper

Founders

Vie

w

Longm

eadow

Pom

ona/K

em

pto

n P

ark

Far E

ast

Ran

d

Boksburg

Nort

h &

South

Benoni

New

Era

/Vulc

ania

0,0

0

0,0

0

50,0

0

50,0

0

AP,

GT,

QU

, RO

AP,

QU

, R

O

AP,

RO


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

- -

- -

AP

- -

- -

AP

- -

- 81,9

7

AP,

BM

, G

T

- -

- -

AP

- -

- -

- -

-

- -

-

- -

-

- -

-

- 0,0

0

-

- -

-

- AP

- AP

-

- M

AS

- AI,

AP,

MAS

-

- -

-

- -

-

- -

-

- -

-

- AP

- AP

- AP

- AP

200,0

0

200,0

0

70,0

0

200,0

0

AI,

AP,

MAS

- -

-

- -

-

- -

-

Nuffie

ld

Fulc

rum

Apex

Labore

Bra

kpan

More

hill Ext

8 B

enoni

Preto

ria

Mitchell S

t

Pre

tori

a I

ndustr

ial Tow

nship

Koedoespoort

Waltlo

o/D

espatc

h

Silvert

on/S

ilvert

ondale

Sam

cor

Sunderl

and R

idge

Herm

ansta

d

Kir

kney

Hennopspark

X15 &

X7

Gate

way

Lytt

leto

n M

anor

X4/X

6

Pre

tori

a N

ort

h

Silvert

ondale

X1

Bri

ts

- -

-

- AP

- M

AS

- AP

-


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

- -

- -

AP

- -

- -

AP

- -

- -

- -

- -

- -

- -

ES,

MO

- 0,0

0

- -

ES,

MO

- -

- -

- -

- -

- -

- -

ES

- -

- -

- -

- -

- -

- -

100,0

0

50,0

0

50,0

0

- H

H,

RZ

175,0

0

100,0

0

170,0

0

- H

H,

RZ

0,0

0

0,0

0

100,0

0

100,0

0

ML,

PC,

PPI

0,0

0

0,0

0

250,0

0

200,0

0

ML,

PC,

PPI

100,0

0

100,0

0

75,0

0

75,0

0

ML,

PC,

PPI

150,0

0

150,0

0

0,0

0

0,0

0

ML,

PC,

PPI

250,0

0

0,0

0

150,0

0

100,0

0

ML,

PC,

PPI

250,0

0

0,0

0

0,0

0

250,0

0

ML,

PPI

0,0

0

0,0

0

500,0

0

250,0

0

ML,

PC,

PPI

Kle

rksoord

Rossly

n

Po

lok

wan

e

Lebow

akgom

o

Superb

ia

Industr

ia

Ladin

e

Futu

ra

Labori

a

Magna V

ia

Seshego

Nels

pru

it

Nels

pru

it E

ast

Nels

pru

it W

est

Rocky's

Dri

ft

Riv

ers

ide P

ark

Du

rb

an

Spri

ngfield

Park

Mayville

Phoenix

Nort

h C

oast

Rd/B

riard

ene

Bri

ard

ene I

ndustr

ial Park

Um

geni Rd/S

tam

ford

Hill

Um

bilo/S

ydney R

d/G

ale

St

Jacobs

75,0

0

- 100,0

0

100,0

0

ML,

PC,

PPI


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

175,0

0

175,0

0

350,0

0

550,0

0

ML,

PPI

350,0

0

350,0

0

500,0

0

600,0

0

ML,

PPI

- -

- -

205,4

8

205,4

8

81,6

5

108,0

1

141,4

2

141,4

2

141,4

2

124,7

2

- -

- -

75,0

0

75,0

0

0,0

0

50,0

0

50,0

0

100,0

0

100,0

0

150,0

0

0,0

0

0,0

0

100,0

0

200,0

0

0,0

0

0,0

0

175,0

0

250,0

0

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

PPI

ML,

PC,

PPI

ML,

PC,

PPI

ML,

PC,

PPI

ML,

PPI

0,0

0

0,0

0

100,0

0

50,0

0

25,0

0

50,0

0

25,0

0

125,0

0

25,0

0

50,0

0

0,0

0

125,0

0

ML,

PC,

PPI

ML,

PC,

PPI

ML,

PC,

PPI

- -

- -

84,9

8

94,2

8

124,7

2

205,4

8

100,0

0

294,3

9

300,9

2

227,3

0

0,0

0

0,0

0

47,1

4

47,1

4

100,0

0

150,0

0

150,0

0

150,0

0

- -

- -

0,0

0

0,0

0

50,0

0

250,0

0

- -

- -

Mobeni

Pro

specto

n

Ithala

Industr

ial Esta

te

Pin

eto

wn C

entr

al

New

Germ

any

Kw

a D

ebeka I

ndustr

ial Park

Isip

ingo

Rossburg

h/S

outh

Coast

Rd

Edw

in S

wale

s D

rive

Gle

n A

nil

Bri

ckfield

Rd

Veru

lam

Canela

nds

Tongaat

New

Westm

ead/M

ahogany

Westm

ead

Mari

ann P

ark

/South

mead

Maxm

ead

Rin

gro

ad I

ndustr

ial Park

Avoca/R

ed H

ill/

Nort

hgate

Falc

on P

ark

Riv

er

Hors

e V

alley B

usin

ess E

sta

te

0,0

0

0,0

0

0,0

0

0,0

0

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

PPI

ML,

PC,

PPI

PC

ML,

PC,

QP


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

100,0

0

100,0

0

329,9

8

294,3

9

525,0

0

525,0

0

150,0

0

225,0

0

175,0

0

100,0

0

100,0

0

-

ML,

PC,

PPI

ML,

PC,

PPI

ML,

PC,

PPI

- -

- -

- -

- -

- -

0,0

0

9,4

3

50,0

0

50,0

0

47,1

4

47,1

4

PPI

ML

ML,

PC,

PPI,

QP

ML,

PC,

PPI,

QP

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

250,0

0

- -

-

100,0

0

100,0

0

- -

400,0

0

400,0

0

- -

0,0

0

150,0

0

- -

62,3

6

62,3

6

- -

DD

, G

B

AN

, D

D,

GB

DD

, G

B

DD

, G

B,

GIN

AN

, D

D,

GB,

GIN

- -

- -

- -

- -

Mount

Edgecom

be

Um

bogin

twin

i/South

gate

South

gate

Industr

ial Park

Hib

iscus I

ndustr

ial Park

Um

geni Park

Ham

mers

dale

Cato

Rid

ge

Geo

rg

e

Georg

e C

entr

al

Tam

sui In

dustr

ia

Pacaltsdorp

Industr

ia

Cap

e P

en

insu

la

Vik

ing P

lace

Glo

sderr

y

Paard

en E

iland/M

etr

o

Monta

gue G

ard

ens

Marc

oni Beam

Killa

rney G

ard

ens

Racin

g P

ark

Atlantis

Woodsto

ck/S

alt R

iver/

Observ

ato

ry

Ath

lone 1

& 2

-

- -

- AN


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

GB

- -

- -

25,0

0

50,0

0

100,0

0

- AN

, G

B,

PL

500,0

0

- -

- AN

, D

D

- -

- -

- -

- -

50,0

0

50,0

0

- -

AN

, G

B

200,0

0

200,0

0

- -

AN

, G

B

- -

- -

75,0

0

100,0

0

75,0

0

100,0

0

AN

, G

B

150,0

0

150,0

0

200,0

0

250,0

0

AN

, G

B

0,0

0

0,0

0

0,0

0

0,0

0

AN

, G

B

- -

- -

- -

- -

150,0

0

150,0

0

200,0

0

125,0

0

AN

, G

B

Landsdow

ne N

eri

ssa

Sand I

ndustr

ia

Ott

ery

Hills

tar

Ott

ery

Sunset

Die

p R

iver

Elfin

dale

Monw

ood/P

hilip

pi

Retr

eat/

Ste

enberg

Capri

corn

Park

Maitla

nd

Ndabeni

Air

port

Eppin

g 1

& 2

WP P

ark

Els

ies R

iver

(excl. C

entr

al Park

)

Paro

w B

eaconvale

Tygerb

erg

Busin

ess P

ark

Paro

w I

ndustr

ia

Paro

w E

ast

Bellville

Oakdale

Bellville

Stikla

nd/K

aym

or

Bellville

Tri

angle

75,0

0

75,0

0

0,0

0

50,0

0

AN

, G

B


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

50,0

0

0,0

0

0,0

0

50,0

0

AN

, G

B

100,0

0

100,0

0

150,0

0

150,0

0

AN

, G

B

25,0

0

25,0

0

125,0

0

0,0

0

AN

, G

B

100,0

0

100,0

0

150,0

0

75,0

0

AN

, G

B

0,0

0

0,0

0

- -

AN

, G

B

50,0

0

50,0

0

50,0

0

75,0

0

AN

, G

B

125,0

0

125,0

0

125,0

0

100,0

0

AN

, G

B

- -

- -

AN

- -

- -

AN

- -

- -

- -

- -

- -

- -

- -

- -

IPM

- -

- -

IPM

- -

- -

IPM

- -

- -

- -

- -

IPM

- -

- -

IPM

- -

- -

IPM

- -

- -

IPM

Bellville

South

/Sacks C

ircle

Kra

aifonte

in

Bra

ckenfe

ll I

ndustr

ia

Everi

te B

rackenfe

ll

Kuils R

iver

Bla

ckheath

Saxonburg

Industr

ial Park

Okavango

Fir

gro

ve

The I

nte

rchange (

Som

ers

et

West)

Str

and H

alt

Bro

adla

nds

Po

rt

Elizab

eth

Deal Part

y

Nort

h E

nd

Kors

ten/N

eave/S

idw

ell/S

ydenham

South

End W

alm

er

Uitenhage:

Volk

sw

agen a

rea/N

MBLP

Uitenhage:

Hella/K

ruis

rivie

r

Str

uandale

Mark

man T

ow

nship

Pers

evera

nce

- -

- -

IPM


le 8

.2 (

co

nti

nu

ed

)

Sta

nd

ard

devia

tion

fro

m m

ean

market

valu

es f

or s

ervic

ed

an

d level in

du

str

ial sta

nd

s

in q

uarte

r 2

01

4:3

(R

/m

² e

xcl

VA

T)

Area s

ize i

n m

²

Co

ntr

ibu

tors

1.0

00

2

.00

0

5.0

00

1

0.0

00

- -

- -

IPM

100,0

0

100,0

0

125,0

0

137,5

0

IPM

, N

RG

- -

- -

IPM

4,7

1

10,8

0

0,0

0

0,0

0

BW

, C

C,

EK

9,4

3

21,6

0

5,6

6

- BW

, C

C,

EK

- -

- -

BW

, EK

0,0

0

7,5

0

0,0

0

2,5

0

BW

, EK

5,0

0

0,0

0

0,0

0

0,0

0

BW

, EK

0,0

0

0,0

0

2,5

0

5,0

0

BW

, EK

Walm

er

Gre

enbushes

Fair

vie

w

Blo

em

fon

tein

Hilto

n

East

End

Harv

ey R

oad

Old

Industr

ial

Ham

ilto

n:

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Ham

ilto

n:

G L

ubbe S

t

Esto

ir

0,0

0

0,0

0

5,0

0

2,5

0

BW

, EK

Rode’s Report 2014:4 Flats market 105

180

170

160

150

140

130

120

110

100

90

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

FlatsHousesTownhouses

National residential rentals

Inde

x (2

004Q

1=10

0)

Source of data: Rode's database

180

170

160

150

140

130

120

110

100

902004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

JohannesburgPretoriaDurbanCape Town

Movement in nominal flat rentals (all sizes)(based on matched pair methodology)

Inde

x (2

004

Q1=

100)


0

4

8

12

16

20

24

0

1

2

3

4

5

6

90 92 94 96 98 00 02 04 06 08 10 12 14

Flat rentalFlat vacancy rate

Growth in flat rentalsvs

Flat vacancy rates(National)

r²=0,6

Gro

wth

in

flat

rent

als

(%;

yo-y

)

Flatva

cancyrate

(%; y

-o-y)


Chapter 9: Flats market

Declining flat vacancies should bode well for rentals


On a national basis, in the third quarter of 2014, flat and house rentals were up by about 5%, while rentals for townhouses could only muster growth of 3%.

Consumer inflation (excluding owners’ equivalent rent) was 6% over the same period. This implies that — on a national basis — residential rentals were again una-ble to grow in real terms. An analysis of the flat-rental performance of the large metropolises shows the strongest growth in Durban (+5%). In Johannesburg, Pretoria and Cape Town, flat rentals could only manage growth of 3%.

Some good news for investors in the buy-to-let flat market is the decline in flat vacancies in recent quarters. This improvement in demand naturally bodes well for market rentals, given the very strong inverse relationship between flat vacancy rates and the growth in rentals. The corresponding graph shows that over the period between 1990q1 and 2014q3, changes in flat vacancy rates explained as much as 60% of the change in the growth in flat rentals.

With reference to the right-hand scale, note how low flat vacancies generally are − at a current factor of only about 3%. How-ever, everything is relative, and the dis-concerting thing is that flat vacancies have been trending up since the early 1990s, when they were close to zero. The secular rise in vacancies over such a long period can probably be ascribed to growing com-petition from townhouses. Nevertheless, from an investment point of view, the va-cancy risk for owners of flats is quite low compared to those who own office build-ings. This low-risk characteristic of residen-


tial properties does mean that a specialist apartment-owning fund would probably be well received on the JSE.

Income yields of flats

Table 9.1 summarizes the gross-income yields of flats. Net-income yields are the residential-property equivalent of non-residential property’s capitalization rates. As a rule of thumb, to convert gross in-come yields to net, deduct 1,5 percentage points from gross.

This deduction takes into account operating expenses such as insurance and mainte-nance, as well as assessment rates.

The flat-rental data tends to be erratic. Therefore, all rentals in the accompany-ing graphs have been smoothed, and readers are advised to focus on the over-all trends.

This section is concluded by the flat-rental tables that follow. ■

The previous graphs give only a very broad picture of trends in the flats market, since the rentals reflected are averages of many different suburbs within the particular metropolitan areas. Keep in mind that all analyses were done on standard-quality flat units. Readers re-quiring more details are directed to the many tables, starting on p. 109, of specific rental levels in the various suburbs for the various grades of flats.


Table 9.1

Gross-income yields (%): Flats

Standard quality Quarter 2014:3

Bachelor 1-

Bedroom

2-

Bedroom

3-

Bedroom

Eastern Cape

Port Elizabeth

- Summerstrand /Humewood /South End 10,3 5,6 6,0 6,4

- Walmer 7,2 7,6 9,0 11,2

- Central / North End 17,5 15,7 14,2 13,7

- Newton Park 12,7 11,4 9,2 9,7

- Kabega 10,6 17,1 13,8 10,5

- Algoa Park 7,7 14,4 12,0 12,0

Uitenhage

- Uitenhage 9,4 10,0 9,1 8,8

Free State

Bloemfontein

- Bloemfontein CBD 16,6 9,8 7,2 -

- Westdene - 8,0 12,0 -

- Willows 14,3 8,4 8,4 12,9

- Navalsig - 11,6 9,0 -

- Arboretum - 9,8 9,2 -

Gauteng

- East Rand

Kempton Park

- Croydon - - 8,7 9,4

Boksburg

- Ravenswood - - 8,0 8,9


Table 9.1 (continued)

Gross-income yields (): Flats Standard quality

Quarter 2014:3

Bachelor

1-

Bedroom

2-

Bedroom

3-

Bedroom

Alberton

- Verwoerd Park - - 10,0 10,6

Benoni

- Lakefield - - 10,2 9,8

- Westdene - - 9,2 10,6

- Farrarmere - - 7,9 8,1

- Morehill - - 10,3 9,4

- Rynfield - - 9,8 10,7

- Northmead - - 8,2 10,7

- Crystal Park - 9,2 9,2 8,6

- Western Extension - 10,6 10,6 9,7

- Centurion

- Pierre van Ryneveld - - 7,9 7,5

- Kloofsig / Lyttelton Manor / Doringkloof 9,3 9,6 7,8 9,8

- Highveld and Extensions - - 9,0 7,8

- Clubviews/Eldoraigne - - 10,6 -

- Rooihuiskraal / The Reeds - - 8,9 8,8

- Valhalla - - 7,8 8,9

Western Cape

- Tyger Valley / Durbanville 9,8 8,0 9,2 7,9

Rode’s Report 2014:4 Flats market 109T

ab

le 9

.2

Fla

t ren

tals

: sta

nd

ard

un

its

Averag

e r

an

ds p

er m

on

th a

s a

t q

uarte

r 2

01

4:3

Bach

elo

r

1-B

ed

ro

om

2

-Bed

ro

om

3

-Bed

ro

om

B

roker

con

trib

uto

rs

SD

S

D

Mean

S

D

Mean

S

D

Mean

R2

.65

1

Mean

R3

.45

3

R4

.27

9

R5

.09

1

R2.7

50

R350

R3.3

00

R346

R4.1

67

R351

R4.7

50

R1.0

61

CI,

CQ

, PU

R3.2

50

- R3.4

00

- R4.0

50

- -

- PU

R3.0

50

- R3.6

00

- R4.1

50

- R4.5

00

- PU

- -

- -

- -

- -

- -

- -

- -

-

R3.6

25

R530

R4.2

50

R354

R5.0

00

R0

R6.2

50

-

R354

JL,

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- -

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- -

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00

- R4.5

00

- R5.5

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, TR

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R1.2

55

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00

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13

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50

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25

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17

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50

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02

BS,

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00

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31

BS,

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, TR

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- -

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- R4.6

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Jo

han

nesb

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incl. J

oubert

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/Bra

am

fonte

in/

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row

/Bere

a/P

ark

tow

n)

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sburg

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/

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gto

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ville

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h-E

aste

rn S

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s (

incl. K

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/

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ount/

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y/S

avoy)

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isburg

/Cro

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rixto

n

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ene (

Melv

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, W

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nd P

ark

)

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illa

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llovo

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ry P

ark

/ Em

mare

ntia/

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den/P

ark

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w/

Park

hurs

t

Randburg

: Fern

dale

/Fonta

ineble

au

Randburg

& S

uburb

s

Win

dsor:

East/

West

Cra

ighall/C

raig

hall P

ark

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n:

Nort

h &

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h (

incl.

Bry

ansto

n /

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ays/L

onehill/

Dougla

sdale

)

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n:

South

to C

entr

al (i

ncl.

Sandow

n/R

ivonia

/Morn

ingsid

e/

Sunnin

ghill/

Kyala

mi)

- -

- -

- -

- -


ab

le 9

.2 (

co

nti

nu

ed

)

Fla

t ren

tals

: sta

nd

ard

un

its

Averag

e r

an

ds p

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on

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s a

t q

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elo

r

1-B

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ro

om

2

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ro

om

3

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ro

om

B

roker

Mean

S

D

Mean

S

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S

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- -

R3.5

00

- R4.5

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con

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- TR

R2.2

00

- R3.5

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R1.4

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50

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00

- R2.9

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- D

V

- -

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- R2.3

90

- R2.8

90

- R2.7

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R1.5

80

- R1.8

60

- R2.0

80

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20

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- -

- -

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- -

- -

R3.1

90

- R3.3

20

- -

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R2

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3

R2

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R3

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3

R4

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5

R2.7

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R141

R2.9

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R141

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HK,

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R2.3

33

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67

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R2.7

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67

R58

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50

R150

R3.7

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50

R71

R2 9

33

R115

R3.7

33

R58

R4.0

50

R0

CI,

HK,

TR

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CI,

HK,

TR

R354

CI,

HK,

TR

R71

CI,

HK,

TR

R2.9

50

R212

R3.2

00

R141

R4.2

00

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50

R354

HK,

TR

Bedfo

rdvie

w

Old

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(in

cl. R

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/

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fonte

in/K

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h)

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(in

cl. S

outh

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/Mondeor/

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ta/L

inm

eyer)

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isto

n a

verag

e

Prim

rose

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isto

n C

& S

Germ

isto

n S

outh

- s

uburb

s

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burg

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ria

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e

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Pre

toria N

ort

h/D

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/Flo

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/Monta

na

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ood

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on/M

eyers

park

/La M

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gne

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Park

/Ashle

a

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ens/a

ll L

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oods/D

ie W

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/

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e G

len/G

ars

fonte

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reto

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/

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ntia/W

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n/

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sm

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of)

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Wate

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ofs

/

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entp

ark

/Era

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R3.4

00

R566

R3.7

75

R601

R4.6

50

R212

R5.2

50

R212

HK,

TR


ab

le 9

.2 (

co

nti

nu

ed

)

Fla

t ren

tals

: sta

nd

ard

un

its

Averag

e r

an

ds p

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r

1-B

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ro

om

2

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ro

om

3

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ro

om

B

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con

trib

uto

rs

Mean

S

D

Mean

S

D

Mean

S

D

Mean

S

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R3.1

50

R495

R3.5

50

R212

R4.2

00

R141

R4.6

50

R212

HK,

TR

R2.5

88

R317

R3.2

38

R939

R4.1

38

R945

R4.1

33

R2.7

75

R492

R3.2

50

R686

R4.0

38

R499

R4.2

83

R2.6

25

R544

R3.2

13

R841

R3.9

63

R599

R4.1

50

R2.3

50

R50

R2.7

17

R58

R3.3

17

R126

R3.9

83

R2.4

00

R100

R2.6

67

R58

R3.1

33

R208

R3.8

67

R1.9

50

R212

R2.2

50

R71

R2.7

00

R283

R30300

R231

CI,

HK,

PU

, TR

R126

CI,

HK,

PU

, TR

R218

CI,

HK,

PU

, TR

R189

CI,

HK,

TR

R153

CI,

HK,

TR

R424

HK,

TR

- -

- -

- -

- -

R3

.39

6

R3

.69

6

R4

.73

0

R5

.76

8

- -

- -

- -

R4.9

00

- ASA

- -

- -

- -

- -

R3.5

25

R247

R3.7

75

R318

R4.5

25

R35

R6.0

75

R601

ASA,

CB

R3.3

50

- R3.7

50

- R4.5

75

R106

R5.7

75

R35

ASA,

CB

R3.5

40

- R3.8

00

- R5.1

50

R495

R6.1

00

- ASA,

CB

R3.3

50

- R3.7

50

- R5.0

25

R530

R6.3

25

R672

ASA,

CB

R3.3

50

- R3.5

50

- R4.5

50

- R5.5

60

R3.3

50

- R3.5

50

- R4.5

50

- R5.5

50

- CB

- CB

R2

.99

8

R3

.58

5

R4

.37

1

R5

.16

5

South

-easte

rn s

uburb

s (

Ela

rduspark

/

Win

gate

Park

/More

leta

park

/Pie

rre v

an

Ryneveld

/Wate

rklo

of)

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e

Arc

adia

Pre

toria C

entr

al

Pre

toria W

est

Kw

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nd/W

est

Park

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/Danville

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eri

dgeville

/Laudiu

m

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turio

n A

verag

e

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rre v

an R

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Klo

ofs

ig/

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leto

n M

anor/

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of/

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art

kop

Hig

hveld

and E

xte

nsio

ns

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bvie

ws/

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ora

igne/

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rda P

ark

/

Cra

nebro

ok/

Bro

nberr

ick/

Rooih

uis

kra

al N

ort

h

Rooih

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kra

al/

The R

eeds

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elo

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Valh

alla

Du

rb

an

avera

ge

Upper

hig

hw

ay:

Klo

of/

Hillc

rest

R3.4

00

- R3.6

00

- R4.2

00

- R5.5

00

- W

K


ab

le 9

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co

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ed

)

Fla

t ren

tals

: sta

nd

ard

un

its

Averag

e r

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ds p

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s a

t q

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4:3

1-B

ed

ro

om

3

-Bed

ro

om

B

roker

con

trib

uto

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Bach

elo

r

Mean

S

D

Mean

S

D

SD

M

ean

S

D

R35

R0

2-B

ed

ro

om

Mean

R4.2

25

R35

- TR,

WK

- -

-

R0

R141

R636

- W

K

R707

TR,

WK

R106

R0

R177

- TR,

WK

R212

R601

R4.4

50

R4.3

00

R4.6

25

R4.8

75

R177

R177

TR,

WK

- -

-

- -

-

R389

R318

R601

-

-

- TR,

WK

R2.6

75

R2.6

00

R3.0

00

R2.9

25

R3.1

50 - -

R3.0

25

R3.3

00

-

R3.5

00

R3.3

50

R3.4

00

R3.5

00

R3.8

25 - -

R3.6

25

R3.8

50

R495

- -

R4.4

25

R4.3

25

R742

R4.8

50

R6.0

00

R5.0

00

R5.5

00

R5.8

75 - -

R4.5

00

R5.0

00

R707

TR,

WK

R3.0

00

- R3.6

50

R212

R3.9

75

R318

R4.5

00

- TR,

WK

R2

.88

5

R3

.44

2

R4

.39

3

R5

.54

6

R4.7

50

R354

R6.0

50

R212

R7.3

50

R212

R8.9

00

Pin

eto

wn a

rea/Q

ueensburg

h

Westv

ille

are

a

Centr

al C

ity (

incl. L

ow

er

Bere

a)

Bere

a /

Morn

ingsid

e /

Gle

nw

ood

South

and N

ort

h B

each

Durb

an N

ort

h/L

a L

ucia

/Um

hla

nga

Nort

h (

Dolp

hin

) Coast/

Ballito

Montc

laire/Y

ellow

wood P

ark

Blu

ff a

rea/D

urb

an S

outh

Durb

an S

outh

/Am

anzim

toti/W

arn

er

Beach a

rea

Cap

e T

ow

n a

verag

e

Cam

ps B

ay/C

lift

on/B

antr

y B

ay

Sea P

oin

t R3.5

00

- R4.5

00

- R5.6

00

- R6.7

00

R141

SQ

, TR

- TR

Gre

en P

oin

t/Thre

e A

nchor

Bay

R3.9

50

R150

R3.7

33

R2

854

R6.3

67

R709

R8.2

50

R354

PF,

SQ

, TR

R4.1

83

R29

R4.8

75

R320

R6.4

63

R1.0

09

R9.1

67

R3.8

33

R473

R5.1

83

R539

R6.4

25

R106

R8.2

50

R289

JL,

SQ

, TR

R354

SQ

, TR

- -

- -

- -

R3.7

67

R153

R4.3

50

R304

R379

R7.8

17

R3.2

67

R306

R3.9

83

R144

R265

R6.6

50

R3.0

83

R189

R3.7

00

R361

R212

R4.9

00

-

R275

PF,

SQ

, TR

R495

PF,

SQ

, TR

R141

SQ

, TR

- -

R3.9

50

- -

- -

PF

R3.0

00

R0

R3.4

63

R189

R568

R5.5

00

City B

ow

l (e

xclu

din

g H

iggovale

)

City C

entr

e

Wate

rfro

nt

Rondebosch/R

osebank/C

lare

mont

Kenilw

ort

h/W

ynberg

/Plu

mste

ad

Muiz

enberg

/ Kalk

Bay/

Fis

h H

oek

Hout

Bay

Milnert

on/S

anddrift

Table

vie

w/

Park

lands

R3.1

00

R100

R3.5

33

R252

-

R6.2

33

R4.8

00

R4.1

50

R4.9

50

R4.3

25

R3.9

00

R100

R4.6

67

R0

LA,

PF,

RS,

TR

R153

LA,

PF,

RS,

TR


ab

le 9

.2 (

co

nti

nu

ed

)

Fla

t ren

tals

: sta

nd

ard

un

its

Averag

e r

an

ds p

er m

on

th a

s a

t q

uarte

r 2

01

4:3

1-B

ed

ro

om

3

-Bed

ro

om

B

roker

con

trib

uto

rs

Bach

elo

r

Mean

S

D

Mean

S

D

SD

M

ean

S

D

R141

R212

2-B

ed

ro

om

Mean

R4.5

00

R0

R115

LA,

TR

- -

- -

TR

- -

- -

TR

R35

R212

R0

R3.1

00

R1.8

00

R2.0

00

R3.1

75

R2.4

33

R58

R3.6

50

R2.1

00

R2.3

00

R3.8

50

R3.0

67

R115

R2.8

00

R2.9

50

R4.5

00

R3.6

00

R173

R5.4

33

R3.8

00

R3.5

00

R5.5

50

R4.3

00

R71

LA,

TR

R173

LA,

SQ

, TR

R3.0

00

R0

R3.2

33

R252

R3.9

67

R208

R4.5

67

R503

LA,

SQ

, TR

R2.5

67

R115

R3.1

00

R100

R4.1

00

R115

R4.7

67

R2.0

33

R153

R2.5

75

R250

R3.5

00

R245

R4.3

00

R2.0

00

R0

R2.3

17

R176

R3.1

17

R126

R4.0

83

R2.2

00

R337

R2.7

13

R347

R3.3

25

R310

R4.8

33

R1.9

33

R115

R2.4

83

R104

R3.1

00

R100

R4.6

50

R252

LA,

PF,

RS,

TR

R173

LA,

PF,

RS,

TR

R144

GE,

LA,

TR

R289

GE,

LA,

SQ

, TR

R350

GE,

LA,

TR

R2

.47

9

R2

.77

9

R3

.67

9

R4

.72

0

R3.1

83

R161

R3.7

50

R354

R4.8

33

R577

R6.8

00

R1.3

11

SJ,

TR,

ZB

R3.1

67

R153

R3.2

25

R389

R4.3

00

R778

R7.0

00

R2.4

50

R354

R2.9

00

R141

R3.4

00

R141

R4.0

00

- SJ,

TR,

ZB

R0

SJ,

TR

R2.6

50

- R2.8

00

- R4.1

00

R424

R4.8

00

- SJ,

TR

R2.5

00

- R2.9

00

- R4.2

00

R283

R4.8

00

R2.2

00

- R2.5

00

- R3.0

00

- R3.4

00

- SJ,

TR

R141

SJ,

TR

R1.6

00

- R1.8

00

- R2.5

00

- R3.5

00

- SJ

R2

.89

6

R3

.31

6

R4

.04

1

R5

.00

8

R2.6

00

- R3.0

00

- R3.9

00

- R4.5

00

- TR

R2.7

00

- R3.2

00

- R3.8

00

- R4.3

00

- TR

Blo

uberg

/Melk

bos

Ath

lone

Mitchell's

Pla

in

Pin

ela

nds

Bro

okly

n/R

ugby/M

aitla

nd

Monte

Vis

ta/

Goodw

ood/

Paro

w/

Bellville

Centr

al

Tyger

Valley a

rea/

Durb

anville

Bra

ckenfe

ll/

Kuils R

iver

Som

ers

et

West

Str

and

Gord

on's

Bay

Po

rt

Eli

za

beth

averag

e

Sum

mers

trand/H

um

ew

ood/S

outh

End

Walm

er

Centr

al/

Nort

h E

nd

New

ton P

ark

Weste

ring

Kabega

Alg

oa P

ark

East

Lo

nd

on

averag

e

South

ern

wood/Q

uig

ney B

each/C

BD

Bere

a

Am

alinda

R2.7

00

- R3.2

00

- R3.8

00

- R4.3

00

- TR

Rode’s Report 2014:4 Flats market 114.

T

ab

le 9

.2 (

co

nti

nu

ed

)

Fla

t ren

tals

: sta

nd

ard

un

its

Averag

e r

an

ds p

er m

on

th a

s a

t q

uarte

r 2

01

4:3

1-B

ed

ro

om

2

-Bed

ro

om

3

-Bed

ro

om

B

roker

Bach

elo

r

Mean

S

D

Mean

S

D

Mean

S

D

Mean

S

D

- -

-

con

trib

uto

rs

- TR

R115

R58

R200

R58

R189

R264

R236

R71

R173

R191

R247

R144

Gonubie

Park

Blo

em

fon

tein

averag

e

Blo

em

fonte

in

Westd

ene

Willo

ws

Navals

ig

Arb

ore

tum

R3.0

00

R2

.26

2

R2.0

67

R2.5

33

R2.5

17

R2.3

65

R1.9

00

R141

R3.5

00

R2

.66

8

R2.6

33

R2.7

25

R2.6

50

R2.6

83

R2.6

50

R577

R4.0

00

R3

.58

1

R3.0

00

R4.0

11

R3.8

00

R3.4

17

R3.7

67

R874

R5.0

00

R4

.17

7

R3.6

00

R4.3

00

R3.9

00

R4.4

00

R4.1

25

- ED

, EK,

MI

- ED

, EK,

MI

- ED

, EK,

MI

R141

ED

, EK,

MI

R884

ED

, EK,

MI

Rode’s Report 2014:4 Flats market 115Ta

ble

9.3

Flat

ren

tals

: u

pm

arke

t u

nit

s A

vera

ge

ran

ds

per

mon

th a

s at

qu

arte

r 2

01

4:3

1-B

edro

om

2-B

edro

om

3-B

edro

omB

roke

rco

ntr

ibu

tors

an

S

SD

SM

ean

S

D

Mea

n

SD

Bac

hel

or

Mea

n

R3

.01

9

D

Me

R4

.41

6R

5.8

06

R6

.21

0

--

R5.0

00

5.

R6.5

00

6-

-TR

--

--

--

--

R3.5

00

-R4.5

00

- R6.0

00

-R7.5

00

-JL

--

R5.0

00

- R6.4

00

-R7.5

00

-TR

R4.1

75

R4.0

00

-JL

, TR

R424

BS,

JL,

NH

, TR

R3.6

00

R2.3

00

R71

BS,

JL,

NH

, TR

R141

BS,

JL

-

R460

R5.7

50

R707

R4.0

00

-R3.7

50

R424

R3.3

00

--

R354

R6.5

00

R0

R5.4

00

R354

R4.6

50

R424

R4.2

50

- -

-

-R8.0

00

R964

R6.2

00

R71

R5.9

50

R354

R4.9

00

--

R3.0

00

-R5.6

25

R884

R6.8

50

R495

R8.0

00

-BS,

TR

--

R5.8

00

- R7.2

00

--

-TR

--

- -

R8.7

00

--

TR

-

--

--

--

--

Joh

ann

esb

urg

ave

rag

e

Nort

h-E

aste

rn S

uburb

s (i

ncl

. Kew

/

Cyr

ilden

e/Fa

irm

ount/

Wave

rley

/ Ly

ndhurs

t/Bra

mle

y/Sav

oy)

Mar

ais

burg

/Cro

sby/

Brixt

on

Mel

den

e (M

elvi

lle,

Wes

tden

e, A

uck

land P

ark

)

Rose

ban

k/Kill

arn

ey/I

llovo

Gre

ensi

de/

Vic

tory

Par

k/Em

mar

entia/

Linden

/Par

kvie

w/

Pa

rkhurs

t

Ran

dburg

: Fe

rndal

e/Fo

nta

ineb

leau

Ran

dburg

& S

uburb

s

Win

dso

r: E

ast

/Wes

t

Cra

ighal

l/Cra

ighall

Par

k

San

dto

n:

Nort

h &

Far

Nort

h (

incl

.

Bry

anst

on/F

ourw

ays/

Loneh

ill/

Dougla

sdal

e)

San

dto

n:

South

to C

entr

al (

incl

.

San

dow

n/R

ivonia

/Morn

ingsi

de/

Sunnin

ghill

/Kya

lam

i)

Bed

ford

view

Old

South

(in

cl.

Rose

tten

ville

/

Turf

fonte

in/K

enilw

ort

h)

New

South

(in

cl.

South

dale

/Mondeo

r/

Gle

nvi

sta/

Linm

eyer

) R1.5

75

-R2.7

00

R1.1

31

R3.4

00

R1.5

56

R3.4

00

-D

V,

TR


ble

9.3

(co

nti

nu

ed)

Flat

ren

tals

: u

pm

arke

t u

nit

s A

vera

ge

ran

ds

per

mon

th a

s at

qu

arte

r 2

01

4:3

1-B

edro

omB

ach

elor

2

-Bed

room

3

-Bed

room

Bro

ker

con

trib

uto

rs

Mea

nM

ean

S

D

SD

M

Mea

n

SD

M

ean

S

D

R5

.65

0-

R5.6

50

-PH

R2

.27

0 -

R2.2

70

R2

.66

7-

R2.8

00

-R2.5

40

R3

.30

4-

R3.8

30

- R2.8

50

--

-PH

--

--

--

-

--

--

- --

--

R2

.50

0R

2.7

00

R3

.40

0R

.38

00

--

--

--

--

-R2.7

00

- R3.4

00

-R3.8

00

-TR

R2.5

00 -

--

--

--

-

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

Ger

mis

ton

ave

rag

e

Prim

rose

Ger

mis

ton C

& S

Ger

mis

ton S

outh

- s

uburb

s

Els

burg

Pre

tori

a av

erag

e

Aka

sia

Pret

oria

Nort

h/D

ora

ndia

/Flo

rauna

Annlin

/Wonder

boom

/Sin

ovi

lle/M

onta

na

Die

Moot/

Quee

nsw

ood

Silv

erto

n/M

eyer

spar

k/La

Monta

gne

Eas

tern

suburb

s (M

enlo

Par

k/Ash

lea

G

arden

s/al

l Ly

nnw

oods/

Die

Wilg

ers/

Fa

erie

Gle

n/G

arsf

onte

in/P

reto

riusp

ark

/

Const

antia/

Wat

erkl

oof

Gle

n/

Era

smusk

loof)

Gro

enkl

oof/

Bro

okl

yn/m

ost

Wate

rklo

ofs

/

Monum

entp

ark/

Era

smusr

and

South

-east

ern s

uburb

s (E

lard

usp

ark

/

Win

gat

e Par

k/M

ore

leta

par

k/Pie

rre

van

Ryn

evel

d/W

ater

kloof)

Sunnys

ide

Arc

adia

Pre

toria

Cen

tral

Pre

toria

Wes

t -

--

--

--

-


ble

9.3

(co

nti

nu

ed)

Flat

ren

tals

: u

pm

arke

t u

nit

sA

vera

ge

ran

ds

per

mon

th a

s at

qu

arte

r 2

01

4:3

Bac

hel

or1

-Bed

room

2

-Bed

room

3

-Bed

room

Bro

ker

con

trib

uto

rs

SD

M

ean

Mea

n

SD

M

ean

S

D

Mea

n

SD

--

--

--

-

--

--

--

-

--

--

--

-

R2.5

00

R.3

400

R3.8

00

-

R3

.58

8R

4.9

86

R6

.26

4-

--

R4.3

00

-R5.2

00

-ASA

--

- - -

R2.7

00

R4

.13

3 - --

--

--

R3.6

25

-R5.5

00

R707

R8.0

50

R2.7

58

ASA,

CB

R3.6

00

R106

R4.0

00

-R4.2

00

-R4.9

50

R212

R6.0

50

R71

ASA,

CB

R3.7

00

R495

R6.0

00

R707

ASA,

CB

R3.6

00

R636

ASA,

CB

R3.5

00

R3.5

00

R283

R6.5

50

-R6.0

00

-R6.0

00

-CB

-CB

R3

.27

0R

6.8

85

R3.7

00

-R6.5

00

-W

K

R3.0

00

R212

R5.5

00

-TR,

WK

R3.5

00

-R7.0

00

-W

K

R3.1

50

R566

R7.2

50

R1.0

61

TR,

WK

R3.1

50

-R8.0

00

-TR,

WK

R3.1

00

-TR,

WK

R4.0

00

-W

K

Kw

aggas

rand/W

est

Par

k

Ela

ndsp

oort

/Dan

ville

Att

erid

gev

ille/

Laudiu

m

Sunnys

ide

Cen

turi

on

Ave

rag

e

Pie

rre

van R

ynev

eld

Iren

e

Klo

ofs

ig/

Lytt

leto

n M

anor/

Doringkl

oof/

Zw

art

kop

Hig

hve

ld a

nd E

xten

sions

Clu

bvi

ews/

Eld

ora

igne/

Wie

rda

Park

/ Cra

neb

rook/

Bro

nber

rick

/ Rooih

uis

kraa

l N

ort

h

Rooik

ruis

kraal

/ The

Ree

ds

Heu

wel

oord

Val

hal

la

Du

rban

ave

rag

e

Upper

hig

hw

ay:

Klo

of/

Hill

cres

t

Pin

etow

n a

rea/

Quee

nsb

urg

h

Wes

tvill

e ar

ea

Cen

tral City

(incl

. Lo

wer

Ber

ea)

Ber

ea /

Morn

ingsi

de

/ G

lenw

ood

South

and N

ort

h B

each

Durb

an N

ort

h/L

a Lu

cia/

Um

hla

nga

Nort

h (

Dolp

hin

) Coast

/Bal

lito

-

-R4.4

00

-R4.2

00

-R4.0

00

-R4.0

00

R4

.20

6-

R4.1

50

R0

R3.7

25

-R4.5

00

R71

R4.4

25

R71

R4.2

50

R141

R4.2

50

-R5.7

50

--

-R4.8

50

-R5.3

00

-R5.0

00

-R5.0

00

R5

.12

0-

R5.2

00

R177

R4.3

50

-R5.0

00

R247

R5.4

00

-R5.8

00

R354

R5.4

75

-R7.0

00

--

R742

R8.0

00

-R15.0

00

--

-

Rode’s Report 2014:4 Flats market 118Table 9.3 (continued)

Flat rentals: upmarket units

Average rands per month as at quarter 2014:3

1-Bedroom

2-Bedroom

3-Bedroom

Broker

contributors

SD

SD

Mean

SD

Mean

SD

- -

- -

WK

Bachelor

Mean

R3.000

R3.000

-

Mean

R3.750

R3.800

-

R4.500

R4.500

-

R5.000

R5.000

- WK

R3.250

- R4.500

R5.500

R3.800

-

-

- WK

R3.648

R4.425

R5.961

R7.815

R6.400

R849

R8.000 R2.121 R11.500 R3.536 R16.500 R2.121 SQ, TR

- -

- -

- -

-

R5.500

R0

R0 R10.000

- R15.000

- PF , SQ, TR

R5.200

R265

R451

R8.400

R566 R10.000

- JL, SQ, TR

R4.950

R636

R8.125

R177

R9.750 R1.061 SQ, TR

R5.000

- R9.000

- R15.000

- TR

R4.500

R608

R7.250 R1.256 R10.000

R0 PF, SQ, TR

R4.400

R141

R6.000

R707

R4.375

R530

R141

R8.000 R1.414 SQ, TR

R9.500

R707 SQ, TR

- -

-

R3.525

R320

R939

- -

R6.750 R1.061 LA, PF, RS, TR

R3.388

R295

R816

R764 LA, PF, RS, TR

R3.600

R265

R566

R566 LA, PF, TR

R2.550

- -

- TR

R2.650

- -

R3.900

R141

R354

R2.983

R29

-

R6.000

R6.033

R6.000

R6.500

R5.117

R4.800

R5.000 -

R4.050

R4.000

R4.400

R3.050

R3.950

R4.750

R3.433

R0 -

R664

R283

R707 -

R574

R200

R141 - -

R354

R115

R7.600 -

R5.225

R5.000

R6.100

R4.050

R4.650

R6.250

R4.400

R265

R6.667

R7.600

R5.050

R5.650

R7.750

R5.400

- TR

R354 LA, TR

R173 LA, SQ, TR

Montclaire/Yellowwood Park

Bluff area/Durban South

Durban South/Amanzimtoti/W

arner Beach

area

Cape Town average

Camps Bay/Clifton/Bantry Bay

Sea Point

Green Point/Three Anchor Bay

City Bowl (excluding Higgovale)

City Centre

Waterfront

Rondebosch/Rosebank/Claremont

Kenilworth/W

ynberg/Plumstead

Muizenberg/ Kalk Bay/ Fish Hoek

Hout Bay

Milnerton/Sanddrift

Tableview/Parklands

Blouberg/Melkbos

Athlone

Mitchell's Plain

Pinelands

Brooklyn/Rugby/Maitland

Monte Vista/Goodwood/Parow/Bellville

Central

R3.133

R115

R3.683

R388

R4.917

R629

R5.800

R346 LA, SQ, TR

Rode’s Report 2014:4 Flats market 119Table 9.3 (continued)

Flat rentals: upmarket units

Average rands per month as at quarter 2014:3

1-Bedroom

2-Bedroom

3-Bedroom

Broker

contributors

Bachelor

Mean

SD

SD

Mean

SD

Mean

SD

R0

R231

R403

R58

R289

R408

R0 LA, PF, SF, TR

R354 LA, PF, SF, TR

R289

R289

R577

R289

R0

R289

R3.000

R2.533

R2.667

R2.667

R2.833

R289

Mean

R3.867

R2.950

R3.667

R3.500

R3.500

R0

R0

R707 GE, LA, TR

R866 GE, LA, TR

R257 GE, LA, TR

R354

R283

R283

R177

R0

R212

R1493 SJ, ZB

R1061 SJ

- -

-

R318

R318

R354

R212

R247

R0

R141

R177

R141

- -

-

- SJ

- SJ

- SJ, TR

- SJ

- SJ

- -

- -

TR

- -

- -

TR

- -

- -

TR

- -

- -

TR

- -

- -

NR

- -

- -

NR

- -

- -

NR

- -

- -

NR

Tyger Valley area/Durbanville

Brackenfell/Kuils River

Somerset West

Strand

Gordon's Bay

Port Elizabeth average

Summerstrand/Humewood/South End

Walmer

Central/North End

Newton Park

Westering

Kabega

Algoa Park

East London average

Southernwood/Quigney Beach/CBD

Berea

Amalinda

Gonubie Park

Bloemfontein Average

Bloemfontein

Westdene

Willows

Navalsig

Arboretum

R2.610

R3.250

R2.975

R2.500

R2.675

R2.650

R2.600

R1.850

R2.938

R2.600

R3.200

R2.800

R3.200

R2.666

R2.700

R2.800

R2.570

R2.600 -

-

R3.066

R4.000

R3.800

R2.750

R3.075

R3.025

R2.975

R2.200

R3.670

R3.600

R4.500

R3.200

R3.500

R3.200

R3.375

R3.350

R2.900

R3.200 -

-

R4.963

R4.000

R4.833

R4.667

R4.500

R3.563

R4.700

R4.650

R3.250

R3.450

R3.500

R3.400

R2.500

R4.792

R4.200

R6.200

R4.500

R4.500

R3.914

R3.800

R4.000

R3.960

R3.900 -

-

R7.500

R4.750

R7.000

R6.000

R5.783

R4.320

R7.600

R6.250

R3.500

R3.800

R3.850

R3.850

R3.000

R5.277

R4.800

R6.800

R4.950

R4.800

R4.459

R4.400

R4.700

R4.200

R4.550 -

-

Rode’s Report 2014:4 House market 120

-10

0

10

20

30

40

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

AbsaFNBLightstone

Growth in national house pricesAbsa vs FNB vs Lightstone

Gro

wth

(%;

y-o-

y)

Source of data; Absa; FNB; Lightstone

-20

-10

0

10

20

30

40

50

-60

-40

-20

0

20

40

60

80

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

House pricesNew mortgages

Growth in national house pricesvs

Growth in value of new residential mortgages granted

r²=0,6

Gro

wth

in

hous

e pr

ices

(%;

y-o-

y)

Grow

thin

valueof

mortgag

esgranted

(%; y-o-y

)

Source of data: Absa; SARB

Chapter 10: House market

House prices being buoyed by a softening in bank lending policies


In general, nominal house prices continue to show decent — consumer-inflation beating —growth.

In October 2014, the yearly growth in nominal national house prices ranged between 7% and 9%, depending on which index you use; at least the three indices are now converging.

Naturally, one of the only logical explanations for the resilience of house prices seems to be lenders that have softened their lending requirements. Allegedly, banks are again lending as much as 100% of the market value of houses being mortgaged.

Evidence of lender generosity also comes in the form of the strong growth in the value of new residential mortgages granted. Since the second quarter of 2013, the yearly growth in the nominal value of new residential mortgages granted has increased at an average yearly rate of about 16%. The corresponding graph shows the pretty strong relationship between the growth in house prices and the growth in new loans granted. Evident also is how the acceleration in the growth of new loans granted since the beginning of 2012, has supported the growth in house prices.

For now, however, there remain more factors likely to dampen the growth in house prices. Consider here:

Still-high household debt-to-disposable income levels. The ratio of debt-to-disposable income of households has decreased since 2009 but the ratio remains uncomfortably high at 74%. There is good reason to believe that this


-80

-40

0

40

80

120

-20

-10

0

10

20

30

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

MortgagesBusiness cycle leading indicator

Growth in value of new residential mortgages grantedvs

Growth in composite leading business cycle indicator

Gro

wth

in

valu

e of

mort

gages

gra

nted

(%;

y-o-

y)

Grow

th in business cycle indicator

(%; y-o-y)

Source of data: SARB

r=0,7 (up to a lag of 4 months)

factor will have a more pronouncedeffect on the ‘affordable’ segment ofthe market. SA banks’ willingness togrant 100% mortgage bonds in thissegment in order to ‘do the rightthing’ is a high-risk strategy, whichreminds one of the recent sub-prime debacle in the USA.

Feeble consumer confidence levels,which might affect the willingness ofhouseholds to make substantialfinancial commitments such asbuying a house.

The disproportionate increases inadministered prices, whichnegatively affect affordability.

Jaded economic activity and itslikely damper on growth inemployment and disposable income.Also, the government service’semployee-appointment spree willcome to end as the fiscus is undersevere pressure.

Thus it comes as no surprise that the leading business cycle indicator of the SARB is losing momentum. Since the beginning of the year, this indicator has either been contracting or showing no growth. The outcome of this — as the corresponding graph shows — might mean more downward pressure on the growth in new mortgages granted.

Residential income yields

Tables 10.1 and 10.2 summarize the gross-income yields on houses and townhouses. As a rule of thumb, to convert gross income yields to net, the reader should deduct 1½ percentage points from gross. This deduction takes into account operating expenses such as insurance and maintenance, as well as assessment rates. Nevertheless, net yields, as determined by the market via the market value and the net market rental the residential property commands, can be used as a rough guide to the state of the respective segments’ prospects. Thus, in a relatively efficient marketplace, the higher the yield, the worse the expected growth in income streams and/or the higher the perceived risk of the location.

This chapter is concluded by the gross-income yields tables.


Table 10.1 Gross-income yields (%) of houses by price class

Quarter 2014:3

Low Middle High Eastern Cape Port Elizabeth - Summerstrand/Humewood 5,6 11,4 9,2 - Walmer (to 8th avenue) 5,7 7,8 7,9 - Upper Walmer 5,6 5,8 6,4 - Central / North End / Sydenham 13,1 8,5 7,2 - Fernglen/Framesby 7,3 6,2 6,6 - Westering 7,4 7,7 6,3 - Algoa Park 14,4 10,2 6,9 - Kabega 10,3 11,3 7,7 - Malabar II 13,3 10,0 9,3

Uitenhage - Uitenhage 7,7 6,8 6,0

Free State Bloemfontein - Houses north of Mandela Blvd 6,3 5,7 5,5 - Houses south of Mandela Blvd 7,4 6,8 8,1 - Langenhoven Park 7,8 7,3 6,2 - Ehrlich Park 10,7 - -


Table 10.1 (continued) Gross-income yields (%) of houses by price class

Quarter 2014:3Low Middle High

Gauteng Pretoria - Akasia 5,3 4,4 5,0 - Pretoria North / Dorandia / Florauna 6,9 8,0 9,3 - Annlin/Wonderboom/Sinoville/Montana 8,1 6,5 10,0 - Die Moot / Queenswood 10,5 9,5 12,8 - Eastlynne/Eersterust 9,0 10,4 7,5 - Silverton / Meyerspark / La Montagne 7,0 7,1 6,3 - Eastern Suburbs 6,0 7,7 10,0 - Groenkloof/Brooklyn / most Waterkloofs 7,5 10,3 12,8 - South Eastern Suburbs 6,7 10,6 14,2 - Sunnyside 7,9 10,7 5,5 - Arcadia 9,0 9,6 7,3 - Pretoria Central 16,0 12,3 7,7 - Pretoria West 11,7 11,4 10,7 - Kwaggarand / West Park 7,7 6,0 7,1 - Elandspoort/Danville 8,0 7,6 9,3

Centurion - Kloofsig / Lyttelton Manor / Doringkloof 14,7 12,4 5,1 - Clubviews/Eldoraigne 8,8 8,5 8,9 - Rooihuiskraal / The Reeds 8,2 7,8 7,9 - Heuweloord 8,3 8,8 9,7

Benoni

Lakefield - - -Westdene - - -Farrarmere 7,4 7,8 8,7Morehill 7,2 7,4 6,3Rynfield 6,6 7,2 7,8Northmead 7,5 7,6 6,8Crystal Park - 9,4 7,2Western Extension 8,6 9,2 8,4

Boksburg

Boksburg 13,0 8,5 6,4


Table 10.2 Gross-income yields (%) of townhouses by price class

Quarter 2014:3Low Middle

Eastern Cape Port Elizabeth - Summerstrand/Humewood / South End 8,3 8,7 - Walmer/Charlo/Fairview/Lorraine 8,2 8,2 - Newton Park / Fernglen / Sunridge Park 7,2 7,6 - Westering / Hunter's Retreat 7,4 7,4 - Algoa Park 8,0 8,0 - Kabega 9,0 7,4 - Malabar II 8,7 10,1

Uitenhage - Uitenhage 9,1 8,5

Free State Bloemfontein - Houses north of Mandela Blvd 6,8 4,6 - Houses south of Mandela Blvd 7,0 5,4 - Langenhoven Park 6,9 6,4

Gauteng Benoni - Lakefield 9,6 6,0 - Westdene 9,0 5,3 - Farrarmere 7,2 7,2 - Morehill 8,0 6,9 - Rynfield 10,3 6,9 - Northmead 8,0 5,6 - Crystal Park 9,5 9,4

Boksburg Boksburg 8,2 8,0


Table 10.2 (continued) Gross-income yields (%) of townhouses by price class

Quarter 2014:3Low Middle

Centurion - Pierre van Ryneveld 8,1 8,8 - Irene 8,5 12,8 - Kloofsig / Lyttelton Manor / Doringkloof 8,3 11,3 - Highveld and Extensions 7,9 8,8 - Clubviews / Eldoraigne / Wierda Park 7,4 8,9 - Rooihuiskraal / The Reeds 7,2 9,6 - Heuweloord 8,3 7,7 - Valhalla 9,0 8,3

Rode’s Report 2014:4 Building activity and building costs 126

10

20

30

40

50

60

70

80

90

100

01 02 03 04 05 06 07 08 09 10 11 12 13 14

Business confidenceInsufficient demand for work

Residentail building contractors: Business confidencevs

Constraints to residential contractors: Insufficient demand for work

r²=-0,9

Inde

x(v

aryi

ng b

etw

een

0 an

d 10

0)

Source of data: BER Building & Construction Survey

-40

-20

0

20

40

60

0

20

40

60

80

100

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Residential GFCFBusiness confidence

r=0,8 (up to 1-qtr lag)

Business confidence: residential contractorsvs

Growth in real value of residential buildings completed

Gro

wth

in

valu

e of

res

iden

tial

bui

ldin

gs c

ompl

eted

(%;

y-o-

y)

Business

confidence(G

ross % rating satisfactory)

Source of data: BER Building & Construction Survey; SARB

Chapter 11: Building activity and building costs

Despite improved sentiment too early to suggest residential building sector out of woods


On the back of an improvement in the de-mand for residential building work, busi-ness sentiment amongst residential con-tractors has been able to improve.

The corresponding graph shows the very robust (r²=-0,9) inverse relationship be-tween residential contractors’ rating of in-sufficient demand for building work as a constraint, and their rating of business conditions. Evident from the graph is how since about 2012 fewer respondents have rated insufficient demand for building work as a constraint and how their sentiment levels have since then also improved. In fact, for the first time in more than six years the majority (58%) of residential contractors surveyed by the BER1 were during the third quarter of 2014 satisfied with prevailing business conditions. Note, however, that the majority of respondents still rate insufficient demand for building work as a constraint2.

Nonetheless, a look at quantitative statis-tics related to the residential building-construction industry suggests that now might still be too soon to surmise that the sector is out of the woods.

1 Bureau for Economic Research 2 The BER also asked contractors to rate if a shortage of skilled labour and inadequate supply of building materials are constraints.

The graph which follows shows the historic positive relationship between residential contractors’ business confidence and the real value of residential buildings complet-ed. The shaded area shows how, since the second half of 2013, the relationship be-tween the two variables has broken down with sentiment levels improving while the growth in residential building activity has been decelerating. In recent quarters, the real value of residential buildings put in place, has actually been contracting.


10

20

30

40

50

60

70

80

90

100

01 02 03 04 05 06 07 08 09 10 11 12 13 14

Business confidenceInsufficient demand for work

Non-residential building contractors: Business confidencevs

Constraints to non-residential contractors: Insufficient demand for work

r²=-0,9

Inde

x(v

aryi

ng b

etw

een

0 an

d 10

0)

Source of data: BER Building & Construction Survey

-60

-40

-20

0

20

40

60

80

100

0

20

40

60

80

100

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Real value completedBusiness confidence

r=0,6 (up to 1-qtr lag)

Business confidence: non-residential contractorsvs

Growth in real value of non-residential buildings completed

Gro

wth

in

valu

eof

non

-res

iden

tial

bui

ldin

gs c

ompl

eted

(%;

y-o-

y)

Business

confidence(G

ross % rating satisfactory)

Source of data: BER Building & Construction Survey; SARB

-20

0

20

40

60

80

100

-60

-40

-20

0

20

40

60

80

90 92 94 96 98 00 02 04 06 08 10 12 14

Tendering competitionNon-residential plans passed

Gro

ss %

ra

ting

ten

dering

com

petition

kee

ner

Tendering competition (non-residential)vs

Growth in the square meterage of non-residential plans passed

smoothed r=-0,6

Grow

thin

planspassed

(%; y-o-y)

Source of data: BER Building & Construction Survey; Stats SA

-5

0

5

10

15

20

25

01 02 03 04 05 06 07 08 09 10 11 12 13 14

BER BCIHaylett (Work Group 181)

BER BCI vs HaylettGrowth over the previous year

% c

hange o

n p

revio

us

year

Source of data: BER; JBCC CPAP Haylett formula

Similar to the residential sector, a slight improvement in demand conditions — see shaded area of graph — has also lifted business sentiment levels amongst contrac-tors. However, in the third quarter of 2014 a small majority (55%) of the contractors surveyed still rated business conditions as being unsatisfactory. The majority (64%) also rated insufficient demand for building work as a constraint.

After showing strong growth for most of 2012 and 2013, the real value of non-residential buildings completed, has also contracted in recent quarters.

Tables 11.1 and 11.2 summarise more key quantitative statistics related to the building-construction industry. Evident from these tables is how the contractions in building activity — as measured by the square meterage of space completed — occurred across all residential and non-residential property types.

With regard to building costs, preliminary data available for the second and third quarters of 2014 shows an acceleration in yearly building-cost inflation. Given the poor performance of building activity, we suspect that the acceleration in building costs (overall tender prices) has primarily been due to contractors having to pass on building-input cost increases, as opposed to its having been due to a moderation in tendering competition. This is allowing contractors some leeway to stretch their profit margins.

The corresponding graph, for example, shows the inverse relationship between the growth in the square meterage of non-residential plans passed and non-residential tendering competition. Note how in recent quarters the growth in plans passed has decelerated and how tendering competition has intensified. In the third quarter of 2014, the majority of non-residential contractors rated tendering competition as keener when compared to a year ago.


In the third quarter of 2014, the BER Build-ing Cost Index (BCI) — a measure of pre-contract non-residential prices and which includes the profit margin of contractors —

is expected to have shown growth of about 9%. Over the same period, the Haylett In-dex — a measure of building-input prices — showed growth of about 7%.

Table 11.1

New non-residential buildings (private sector) (m²)

% change on a year earlier

Offices Shopping space Industrial buildings Total

12 months ended September 2014 (% change on a year earlier)

Completed -32,1 -33,3 -1,9 -20,4


Completed -32,9 -9,4 14,8 -7,3

Source of data: Stats SA

Table 11.2

New residential buildings (private sector) (m²)

% change on a year earlier

Houses

Flats & townhouses Total Smaller than 80

m² Larger than 80

m²


Completed -11,2 -12,4 -5,6 -10,5


Completed -15,8 -7,1 -7,6 -8,7

Source of data: Stats SA

The BER Building Cost Index (BCI) measures pre-contract non-residential prices and as such includes the profit margin of contractors. This Index is one of the best indicators of the health of the building industry. If it accelerates faster than input costs, then contractors are stretching their profit margins, and vice versa.

The Haylett Index is a measure of all input costs in the building industry, especially material and labour costs.

Annexures

Rode’s Report 2014:4 Annexure 1 I

Glossary of property and related terms

and abbreviations

Arithmetic mean: The most often used measure of central tendency, it is the simple average of a number of observations. Mathematically, it is equal to the sum of all values divided by the number of observations. For example, the arithmetic mean of 6 and 7 is (6+7)/2. The arithmetic mean of 6, 7 and 8 is (6+7+8)/3; and so forth. Outlier observations may unduly affect the mean. In the Rode publications all references to the mean refer to the arithmetic mean, unless otherwise specified. See also geometric mean and median.

Besa: Bond Exchange of South Africa.

BER BCI: Bureau for Economic Research Building Cost Index. Measures pre-contract non-residential building-construction prices and as such it includes the profit margin of contractors. This index is one of the best indicators of the health of the building-construction industry. If it accelerates faster than input costs (Haylett Index), then contractors are stretching their profit margins as a result of sufficient work, and vice versa.

Building construction: the construction of buildings like houses, office blocks, factories, shopping centres, schools, hospitals. See also civil construction.

Bulk: The market value of office and shopping-centre land is generally expressed as the value per bulk square metre. Bulk square metres refer to the

gross building area (GBA) of a building. According to The Sapoa Method for Measuring Floor Areas in Commercial and Industrial Buildings, GBA covers: “The entire building area, but it excludes patios, plant boxes, sunscreening, escape stairs, machine rooms, parking (basements or above ground), lift motor rooms, service rooms, caretakers’ flats, etc. GBA is mainly used by planning consultants in order to plan and execute a building in accordance with the permissible Floor Area Ratio (F.A.R) as derived from the zoning of the property. GBA is fixed for the life of the building but it should be noted that different local authorities may interpret the National Building Regulations, which regulate the F.A.R definition, in a slightly different manner.”

Standard capitalization rate: It is the expected net operating income for year 1, assuming the entire building is let at open-market rentals, divided by the purchase/ transaction price, normally expressed as a percentage. This calculation ignores VAT, transfer duty and income tax, and assumes a cash transaction (in contrast to a paper-based sale).

CBD: Central business district or downtown. This is an area of concentrated high economic activity. The user may want to differentiate between the metropolitan CBD (e.g. the Johannesburg CBD) and a decentralized CBD (like the Sandton CBD).

Civils: colloquial for civil construction.

Rode’s Report 2014:4 Annexure 1 II

Civil construction: the construction of physical infrastructure like roads, bridges, dams, the laying of storm water pipes, electricity and water reticulation. See also building construction.

Cyclical trend: A short-term growth path of an economic variable. Normally refers to the business cycle, as distinct from a secular trend.

Dec: Decentralized. A Rode abbreviation. Town and regional planners differentiate between local decentralization (from the metropolitan CBD to the suburbs) and regional decentralization (to outlying areas of the country).

Deflation: Deflation occurs when prices are declining over time. This is the opposite of inflation and could be catastrophic. When the inflation rate (by some measure) is negative for a period, the economy is in a deflationary period. See also disinfla-tion.

Deseasonalized: Seasonal fluctuations have been removed. In the case of retail sales, this is essential in order to be able to compare sales pertaining to different months of the year, as opposed to comparing sales of one quarter or month with the same quarter or month a year earlier.

Discount rate: The rate used to express an expected future cash stream in present-value terms. In most instances, the discount rate is equal to the hurdle rate. Mathematically, the hurdle rate of a property is the sum of its market capitalization rate and the expected constant growth rate of its cash flow in perpetuity.

Disinflation: Disinflation occurs when the inflation rate is declining over time. See also deflation.

Escalation rate: The rate by which a rental is hiked once a year in terms of a lease. The ruling market escalation rate can be seen as an attempt by the market to forecast the growth in market rentals over the duration of the lease, but this attempt is obviously rarely successful. Thus it is important to differentiate between an escalated rental and a market rental.

Forward (income) yield: A bourse term, hence it is typically applied to listed properties. In the non-listed property market, its approximate equivalent is the capitalization rate. It represents the expected net income of year 1 (the following 12 months) divided by the current price/value. It stands to reason that existing leases would largely determine the net income of year 1. See also historic (income) yield.

Fundamental value (FmV): It is a subjective value based on the investor’s own, subjective forecast of rentals and maybe the investor’s unique or different in-house discount rate/capitalization rate. A FmV higher than the objective market value (MV) is a buy signal to an investor.

The calculation of the FmV is especially indicated where the economy, or property market, changes gear, e.g. a secular change in inflation rate or the real-rental cycle bottoming out. These are instances where any market is notoriously poor at forecasting trends.

An alternative term is intrinsic value.

Geometric mean: A measure of central tendency calculated by multiplying the series of numbers and taking the nth root of the product, where n is the number of items in the series. The geometric mean is defined only for sets of positive numbers. For example, the geometric mean of 6 and 7 is the square root of (6*7). The geometric mean of 6, 7 and 8 is the cube root of

Rode’s Report 2014:4 Annexure 1 III

(6*7*8); and so forth. See also arithmetic mean and median.

Geometric mean return: It is also called the time-weighted rate of return or the average compounded rate of return. It is calculated by taking the geometric mean of a portfolio’s subperiod returns. Where there is a great variance in subperiod returns, this is a better return measure than the arithmetic mean return. Unlike the internal rate of return, it is not influenced by the timing and weights of money-flows.

Haylett index: A measure of the movement of all input costs in the building industry, especially material and labour costs. Designed to recompense the building contractor for in-contract rises in input costs. Official designation: JBCC CPAP Haylett Formula (Work Group 180). Does not include profit margins for contractors.

Historic or trailing (income) yield: A bourse term, hence it is typically applied to listed properties. It represents the net income of year 0 divided by the current price/value. See also forward (income) yield. In a market of rising net incomes the historic yield would be expected to be lower than the forward yield.

Hurdle rate: The minimum total return (income yield plus expected capital appreciation) required by potential investors to induce them to invest in a property. Also known as the required rate. As such this is normally the correct rate to use when doing discounted cash flow (DCF) analyses. This is a similar concept to a company’s cost of capital, and it is not to be confused with the cost of money (say, overdraft interest rate). One way of measuring the total return on an investment, ex post or ex ante, is the internal rate of return (IRR) method.

See also discount rate.

Index: Describes the method of standardizing the base for comparative data in a time series, usually equating the initial measure to 100 and then expressing all other data in exact relation to that

base, e.g. the index for office rentals in any year by comparison with a base-year value of 100 might stand at 90 or 110, indicating a fall or rise of 10% respectively.

Industrial-building grades:

• Prime: An industrial property in whichspace is easily lettable because itsatisfies each of the followingprerequisites:

a. Generally in a good condition;

b. Satisfactory macro access (i.e.access to freeway);

c. Satisfactory micro access (i.e. fromstreet to building);

d. Proper loading facilities;

e. Eaves >4 m (excluding micro/ miniunits);

f. Wide clear span of trusses (fewinternal pillars);

g. On ground level;

h. Adequate three-phase electricalpower.

The eight conditions above are prerequisites for space to be considered prime. However, a building may possess additional enhancements that could improve lettability through increasing the size of the potential tenant pool.

Such enhancements could include sufficient office accommodation, ade-quate parking, sprinkler systems, masonry up to sill height, adequate floor loadings, roof insulation, sufficient yard space and a good location (as opposed to access).

Comparative grading of industrial and office space

Industrial Offices

Prime + A

Prime B

Prime - C

Secondary D

Rode’s Report 2014:4 Annexure 1 IV

• Secondary: This is industrial spacewhich is not classifiable as primebecause it does not satisfy all eightprerequisites for prime space listedabove. Such space is typically oldbuildings or structures, which havebeen haphazardly renovated. It wouldhave poor access, too little yard spaceor office accommodation, inadequategoods lifts, no three-phase power andobsolete electrics and ablution facilities.Such space is often (but notexclusively) found in highly urbanisedareas.

Industrial park: An industrial park is a multi-tenanted complex of industrial buildings, typically surrounded by a security fence with access control and possibly some greenery.

Initial yield: The first year’s expected net operating income (based on existing leases and other income reasonably expected) divided by the purchase price. Therefore the initial yield and the capitalization rate are only the same in those rare cases where a building is let at open-market rentals.

Internal rate of return (IRR): A performance measurement that takes cognisance of the time-value of money. Technically, it is that rate which equates the inflows with the outflows of a cash flow. Also known as the money-weighted rate of return because the timing and weights of the money-flows influence the return. See also geometric mean return.

JSE: JSE Securities Exchange South Africa.

Leaseback: A fully repairing and insuring lease (tenant pays all operating costs) for 10 years or longer (with typically 5-yearly rent reviews or fixed annual escalations) with a tenant with a strong covenant.

Lessee: A person or other entity to whom space is rented under a lease. A tenant.

See also lessor.

Lessor: One who rents space to another under a lease. A landlord. See also lessee.

Market rental: The most probable rental that a voluntary, informed and prudent lessee will pay a voluntary, informed and prudent lessor in a normal open-market (arms-length) transaction, when neither party is under any compulsion to rent or let, other than their normal desire to transact.

As per IVS 2011 – the estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion

Market value: Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. Source: International Valuation Standards Committee, 2003

The MV is an objective value in that the crucial value determinants are largely derived from the marketplace. See also price and fundamental value.

As per IVS 2011 – the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Mean: See arithmetic mean; median; geometric mean.

Median: Midpoint of a series of observations when arranged in order of magnitude. Thus it is a measure of central tendency that divides the data set into halves. Less affected by outlier observa-

Rode’s Report 2014:4 Annexure 1 V

tions than the arithmetic mean. For example, the median of 5, 6, 7, 8, 9 is 7. And for 5, 9, 15, 16, 17, 21, 23 the median is 16. See also geometric and arithmetic mean.

Metro: Metropolitan.

MFA: Medium-Term Forecasting Associates, construction economists located in Stellenbosch.

n: Number of respondents.

N/A: Not available — fewer than two respondents.

NNN lease: Also known as a triple-net

lease. A fully repairing and insuring lease (tenant pays all operating costs). The commonest example is a Leaseback.

Office building grades defined by quality of finishes and facilities:

• Grade A: Generally not older than 10years, unless renovated; prime location;high-quality finishes; adequate on-siteparking; air-conditioning. Commands agross market rental as indicated in theaccompanying table.

• Grade B: Generally 10 to 20 years old,unless renovated; accommodation tomodern standards; prime location; air-conditioning; on-site parking. Commandsa gross market rental as indicated in theaccompanying table.

• Grade C: Generally 20 to 30 years old,unless renovated; in fairly goodcondition, although finishes are not up tomodern standards; good location; mayhave on-site parking; unlikely to becentrally air-conditioned; commands agross market rental as indicated in theaccompanying table.

• Grade D: A building reaching the end ofits functional life; old and in poorcondition; near the bottom of the rentalrate range; typically no air-conditioningand no on-site parking; may have goodlocation.

These grades might be further sub-divided into sub-grades, viz. A+, A-, B+, B-, C+ or C-.

Office demand: Office stock less office space vacant (space on the market for renting irrespective of whether there is still a valid lease over the space). In other words, demand is office space occupied.

Office stock: Total rentable office space.

Office take-up: Change in office demand. Where take-up is positive, it can also be called the growth in demand.

Office vacancies: This is the floor area available for leasing at any given time, irrespective of whether there is still a valid lease over the space. Often expressed as a percentage of the stock in rentable m².

Operating costs: See outgoings.

Opportunity cash flow (OCF): A valuation term introduced by Rode. The OCF quantifies the amount gained or foregone by the landlord in that the property is either over rented or under rented. More precisely, for each lease and the space that such a tenant occupies, it is, until expiry of such a lease, the present value (PV) of the contractual rental less the open-market rental (as at the valuation date) escalating at the open-market escalation rate (as at the valuation date).

Outgoings (operating costs): In the case of office buildings, the following items are included under total gross outgoings, irrespective of who pays for these:

• Cleaning.

• Repairs & maintenance.

• Common-area electricity & water (nottenant’s own).

• Security.

• Management (excluding head officeoverheads).

• All leasing expenses: broker’s commission and in-house payroll, advertising, tenant installations &

Rode’s Report 2014:4 Annexure 1 VI

• relocations (unless recovered), buy-outs,etc.

• Municipal tax.

• Insurance (fire & SASRIA). In the case ofself-insurance, the market averageshould be included.

• Refuse & sewerage less recoverableamount.

• External & common area repairs &maintenance.

• Audit fees.

The following items are excluded:

• VAT.

• Head office overheads.

• Tenant’s own electricity and water.

• Tenant installations/relocationsrecovered.

• Internal maintenance.

• Recoverable refuse & sewerage.

Price: The amount actually paid for an asset. Not the same as market value, because special circumstances may have applied when the transaction was concluded.

PLS: Property loan stock, also known as variable loan stock (VLS) (type of listed property fund).

PUT: Property unit trust (type of listed property fund).

Reit: A reit is an entity that invests

primarily in real estate and qualifies for special tax status in that there is single taxation at the end-investor (not the fund) level. Source: Lehman, Robert W. & Howard, Roth S. Global Real Estate Investment Trust Report 2010: Against all odds. Ernst & Young.

Rental:

• Basic rental (base rental in the USA):A set amount used as a minimum rentin a lease which also employs apercentage of turnover or otherallocation for additional rent.

• Gross rental: The total rental payableby the tenant, excluding VAT, thetenant’s own electricity and watercharges, but including other operatingcosts recovered by the landlord (if any),as well as promotion expenses payableby the tenant in the case of shoppingcentres. See also rental, net.

• Net rental: The amount payable by thetenant, excluding VAT and excludingoperating costs recovered by thelandlord (if any). See also rental,gross.

• Nominal rental: This has a dualmeaning:

o Firstly, it refers to rentals where theanalyst or valuer assumes noincentives like a rent-free period,free relocation, cash upfront, orbalance-of-installation allowance. Italso excludes amortisation oftenant-installation costs.

o Secondly, it can also mean actualrental values (i.e. not deflated). Seealso rental, real.

• Pioneer rental: The highest rentalactually achieved – and could be aonce-off outlier deal; hence “pioneer” isnot “market”. The difference betweenpioneer and the highest market rentalsmay be used as a blunt tool to gaugethe prospects for market rental growthin the short term. If the differential ispositive, it is an indication of growthprospects in the node. If the differentialis negative, it is an indication thatlandlords are finding it difficult to findnew tenants at the going market rentalrate.

• Real rental: Deflated rental, typicallyobservations (values) over time (a timeseries) from which the relevantinflation has been removed. See alsorental, nominal.

Rent-free period: No rent is payable by

Rode’s Report 2014:4 Annexure 1 VII

the tenant for an initial portion of the term of a lease. It is offered by a landlord as a rental concession to attract tenants.

Required rate: see hurdle rate.

Retail price: In the context of property syndication, this means the price at which a property-holding company’s shares are sold to the public or the price at which these shares trade. See also wholesale value.

RR: Rode's Report on the South African Property Market, a quarterly journal for the professional property practitioner.

Sapoa: South African Property Owners Association.

SARB: South African Reserve Bank (viz. the central bank)

Secular trend: A long-term growth path of an economic variable, around which there might be short-term (business cycle) or other fluctuations. See also cyclical trend.

Shopping centre configurations:

• Mall: Typically enclosed with commonwalkway between two facing strips ofstores. This is the design mode forsuper regional, regional and mostcommunity shopping centres.

• Strip centre: Is an attached row ofstores or service outlets managed as acoherent retail entity, with on-siteparking, usually located in front of thestores. Store-fronts may be connectedby open canopies, but there are noenclosed walkways linking the stores.Store configuration is either a straightline, “L” or “U” shaped. This is thedesign mode for most neighbourhood,convenience and value (power) centres.

Shopping centre types:

• Super regional: More than 100.000rentable m² of shop space; substantial

comparison-shopping; principal tenants are three or more major department stores; more than 250 shops. Examples are: Eastgate and Sandton City (Johannesburg); Menlyn Park (Pretoria); Gateway (Durban metro); Canal Walk (Cape metro).

• Regional: 30.000 to 100.000 rentablem² of shop space; principal tenant(s) areone or more major department stores;approximately 40 to 250 shops.Examples are: Westgate, Fourways Mall,Cresta (Johannesburg); Brooklyn Mall(Pretoria); The Pavilion (Durban metro);Sanlam Centre in Parow, Tyger Valley,Kenilworth (Cape metro); Greenacres(Port Elizabeth); Mimosa Mall(Bloemfontein); Vincent Park ShoppingCentre (East London).

• Community: 10.000 to 30.000 rentablem² of shop space; principal tenant istypically a variety store (e.g. Clicks) or adiscount department store (e.g. Dion orGame); approximately 30 to 60 shops.Examples are: Sunnypark (Pretoria);Musgrave Centre (Durban); MiddestadMall in Bellville, Meadowridge, GoodwoodMall, Constantia Village (Cape metro);Constantia Centre (Port Elizabeth);Brandwag Centre (Bloemfontein);Beacon Bay Retail Park (East London).

• Neighbourhood: 3.000 to 10.000 rentable m² of shop space; principaltenant is a supermarket; 15 to 40 shops.

• Convenience: 300 to 1.200 rentable m²of shop space; principal tenant is a caféor grocer like Kwik Spar; 5 to 15 shops.

• Retail warehouse: Stand-alone; singletenant; >10.000m²; air-conditioned, noceiling, warehouse-like finishes, e.g.Makro, Hypermarket, Game, Dion.

• Value centre: Multi-tenanted stripcentre; >10.000m²; warehouse typefinishes in order to deliver lower pricesto consumers.

Smoothing: Removal of shorter-term

Rode’s Report 2014:4 Annexure 1 VIII

20

30

40

50

60

70

80

90

93 94 95 96 97 98 99 00 01 02

A graphic portrayal of a rental time series

Quarterly frequency

R/m

² p

er

month

fluctuations in a time series, by e.g. moving averages, exponential smoothing, or curve fitting.

Standard deviation (SD): A measure of dispersion in a set of data. For instance, assume a normal distribution of observations and a mean of R10 and an SD of R1,50. This means there is a 68% chance the values will lie between R10 - R1,50 = R8,50 and R10 + R1,50 = R11,50.

Stats SA: Statistics South Africa, South African government’s statistics department. Previously known as Central Statistical Services (CSS) and even earlier as the Department of Statistics.

Time series

A set of observations for the same variable at different times (see graph). The intervals or frequencies may be of any length, e.g. years or quarters for national-income or property data, monthly for prices, and weekly, daily, or even minute-by-minute for stock exchange prices.

Total return: Normally measured over a year, in which case it is the income yield

for the applicable year (net income in year 1 divided by the purchase price or value in year 0) plus the change in capital value over that year. Also known as the combined return because it combines the income yield and capital return in one measure.

Triple-net lease: see NNN lease.

VAT: value-added tax.

Wholesale value: In the context of property syndication, this means the estimated price that a share or shares of a syndicated property-holding company would fetch (excluding winding-up costs) should the holding company be dissolved and the underlying property sold as a normal, non-syndicated property. See also retail price.

Year-growth: Percentage by which figures have changed compared to the same month, quarter or year of the previous year.

Year 0: Refers to the year ended at the present time.

Year 1: Refers to the period from year 0 to the end of the first year thereafter.

References:

1. International Council of ShoppingCentres

2. Sapoa

3. Bureau of Market Research, Universityof South Africa

4. International Valuation Standards Committee, 2003

Rode’s Report 2014:4 Annexure 2 IX

Technical background to the Rode surveys Rode has been surveying the crucial variables of the property market in South Africa since the beginning of 1988 using the expert-panel method. Broadly speaking, the researcher has two potential approaches available to him. These are:

o Track actual transactions, like therental levels of lettings or thecapitalization rates at which sales areconcluded. Valuers (appraisers) callthese ‘comparables’.

o The expert-panel method of surveying,in which the surveyor regularly asks thesame individual members of the panelfor their expert opinions, which in turnwill of course be based on actual dealsof which the panellists are aware.

The cons of tracking actual transactions are:

o A paucity of transactions in most nodes,making statistical inferences impossible.

o Hence the danger of relying on outlierdata (mainly the result of smallsamples)

o Dated transactions

o The cost

o The unwillingness of the parties toreport the details of individual deals.

In contrast, through the expert-panel method of research, most of the above cons of the actual-transactions approach are addressed through opinion surveys. This results in cheaper, more accurate and timely information. Sample size is still (and will always be) a problem in some of the less active nodes, but to a lesser extent.

Below we give the reader some insight in our survey approach to determine the levels of the various property variables:

Capitalization rate: The Rode capitalization rate panel consists of two categories of panellist — major owners, and leading investment brokers who know their market segments intimately. This means that the latter's knowledge is based on actual sales. The question put to these carefully chosen panellists is:

Owners: “In your opinion, what is presently the capitalization rate at which your organization is equally happy to buy or sell the properties in the cities below? (Assume a typical location and a cash sale, rather than paper.). For leasebacks, assume the escalation rate reported by you in this questionnaire.”

Brokers: “In your opinion, what is presently the most prevalent capitalization rate at which the following properties are sold/bought in the cities indicated below (assume a cash sale rather than paper)? For leasebacks, assume the escalation rate reported by you in this questionnaire.”

Escalation rate (for industrial leasebacks). The question put to the panellists is:

Owners: “In your opinion, what is the current prevalent (i.e. most often achieved) market escalation rate for prime industrial leasebacks (assume the market capitalization rate you provided in this questionnaire)?”

Brokers: “In your opinion, what is the current prevalent (i.e. most often achieved)

Rode’s Report 2014:4 Annexure 2 X

market escalation rate for prime industrial leasebacks (assume the market capitalization rate you provided in this questionnaire)?”

Hurdle rate: The question put to landlord panellists is:

“In your opinion, what is presently the minimum expected internal rate of return or hurdle rate (%) at which your organization will acquire the following property types in the cities indicated on the right. (Assume a time horizon of 5 years)?”

The question is asked in respect of three property types: office buildings, industrial leasebacks and regional shopping centres.

Respondents are asked to supply two hurdle rates, one rate for "buy" and one rate for "develop on spec".

Office rentals: The Rode office rental survey asks respondents to supply average market rentals by grade (grades A+, A, B & C) for a specific office node.

The question put to the panellists is:

“In your opinion, what is presently the nominal gross achievable/market rental (not asking rent, not escalated contractual rents, not exceptional deals) per rentable m² excluding VAT?” The questionnaire also asks for the typical rent-free period in months, the gross current-year operating costs per rentable m² and the predominant escalation rate on net & gross rentals, and operating costs.

‘Nominal’ rental means the panellist has to assume no incentives like a rent-free period.

We ask the panellists to assume office lettings of 250m² in the case of grades A+, A & B and 150m² in the case of grade C

(150m² in smaller towns for all office grades); occupation within 3 months, a lease period of 4 years and an average position within the building.

Land values: The question put to developers or brokers is:

Office bulk: In your opinion, what is the market value (R/bulk m²)* of a vacant stand with an average location in the following nodes?

a. The bulk that is legally permissibleand economically viable.

Shopping centre bulk: In your opinion, what is the market value (R/bulk m²)a of vacant stands appropriately zonedb and with the necessary bulk for the following shopping centres?

a. The bulk that is legally permissibleand economically viable.

b. Assume that these stands are readyfor construction and that the majorexternal infrastructure investmentsthat municipalities normally forcethe developer to pay for are alreadyin place. That is, external roads, off-ramps, bridges, new electricalsubstations, and the like, are inplace.

Filling-station land: In your opinion, what is the market value of an average-sized, filling station sitea, with a pump-potential of 350.000 litres per month?

a. Site is defined as the unimprovedland, with services to its borders,and appropriately zoned.

Industrial rentals: The question put to panellists is:

“In your opinion, what are the current gross achievable/market rentals per m² for prime industrial buildings for the townships and

Rode’s Report 2014:4 Annexure 2 XI

lease sizes indicated below?”

Respondents are asked to assume that the office portion (if any) is less than 10% of the total area. The assumed floor area sizes are: 250m², 500m², 1.000m², 2.500m² and 5.000m². Respondents are also asked to fill in their vacancy estimate for prime industrial space, using a scale of 0 to 9. See the table below for detail on the vacancy scale.

Vacancy scale for industrial townships

<10% 10 – 20% >20%

0

Nil

1 2 3

Low

4 5 6

Medium

7 8 9

High

Thus, the reported vacancies do not represent percentages.

Industrial land values: The question put to panellists is:

“In your opinion, what are the current

market values per m² for vacant, serviced levelled land in the townships and for the stand sizes indicated below? Where land is only leased, provide the rent per m² per month. Exclude transfer costs and VAT. Provided you are well informed, please give us your opinion even though you might not have concluded a sale for the exact sizes shown in the spreadsheet attachment.”

The information is required for stand sizes of 1.000m², 2.000m², 5.000m² and 10.000m².

Flat rentals: The question put to panellists is:

“In your opinion, what are the current market rentals (not asking rent) for new lettings for uncontrolled standard and upmarket flats in the following categories and areas? The rental data required is for unfurnished flats, excluding water and electricity. Parking is typically included.”

Respondents are asked to provide rentals for bachelor, 1-, 2- and 3-bedroom units. Note that the flat rentals are not quoted per m².

Rode’s Report 2014:4 Annexure 3 XII

How to interpolate industrial rental rates and land values The industrial rental and land value tables in the body of the RR contain regression equations in natural log (ln) form in order to allow the reader to interpolate rental rates or industrial land values for area sizes other than those given in the tables. (All references below are to the industrial rental tables. However, they also apply mutatis mutandis to the industrial land value table.)

The regression equations are in natural log (ln) form because the relationship between the rental rates and area sizes leased, is curvilinear. This means that the rental rate for area sizes other than those quoted cannot be calculated by straight linear interpolation. In order to calculate the rental rate for an area size other than those quoted, use the following equation from the tables:

ln Y = a + b(ln X) where: ln Y = the natural log of the rental rate, i.e. the value which we want to calculate. ln X = the natural log of the applicable floor area in m² for which we want to calculate the market rental rate.

Note that a and b are given in the table. The coefficient of determination r2 is an indication of the goodness of fit of the urve, i.e. how much confidence we can put

in the interpolation we want to perform. An r2 close to 1 is a good fit.

An example:

Interpolate a rental rate for an area size other than those quoted in the table — e.g. for an area of 750 m². Use your financial calculator and proceed as follows:

Assume the following equation: ln Y = 3,8855 — (0,2263(ln X)) where X = 750 m².

Step 1: Calculate the natural log of X, viz. the floor area for which you want to interpolate the market rental rate. The natural log of a floor area of 750 m² is 6,6201 (use the ln key of your financial calculator).

Thus:ln Y = 3,8855 — (0,2263(6,6201))

= 3,8855 — 1,4981 = 2,3874

Step 2: In order to calculate Y, get the exponential of ln Y (viz. of 2,3874) by using the ex key on your financial calculator. The answer is R10,89 per m².

Rode’s Report 2014:4 Annexure 4 XIII

Approximate building cost rates as at second quarter 2014 Source: Property and construction handbook, Davis Langdon, an AECOM company.

The following, unless otherwise stated, is a list of approximate building cost rates per m² of construction area for various building types in the Gauteng region. The rates represent the average expected building cost rates for 2013. It is stressed that these rates are purely of an indicative nature and should be used with circumspection, as they are dependent upon a number of assumptions.

The area of the building expressed in m² is equivalent to the ‘Construction Area’ where appropriate, as defined in the ‘Method for Measuring Floor Areas in Buildings, First Edition’ (effective from 1st August 2005), published by the South African Property Owners Association (SAPOA).

It is recommended that a quantity surveyor be consulted to calculate a more accurate replacement value of a building, which can be updated thereafter using the BER Building Cost Index.

The rates below include P & G but exclude in-contract escalations, professional fees and VAT. For the calculation of replacement costs, for insurance purposes, the following should also be included:

An allowance for demolition costs;

Professional fees;

In-contract building cost escalation (Haylett);

Loss of interest;

An escalation of the contract price to the end of the insurance period; and

Loss of income.

Rode’s Report 2014:4 Annexure 4 XIV

Johannesburg Building type Rates include the cost of appropriate building services, e.g. air-conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and VAT.

Offices 1. Low-rise office park development with standard

specification /m² R7.600

2. Low-rise prestigious office park development /m² R12.000 3. High-rise tower block with standard specification /m² R12.000 4. High-rise prestigious tower block /m² R15.000

Note: Office rates exclude parking and include appropriate tenant allowances incorporating carpets, wallpaper, louvre drapes, partitions, lighting, air-conditioning and electrical reticulation.

Parking 1. Parking on grade including integral landscaping and

ground preparation /m² R540 2. Structured parking /m² R3.000 3. Parking in semi-basement /m² R4.500 4. Parking in basement /m² R5.500

Retail 1. District centre /m² R8.500 2. Regional centre /m² R11.600 3. Strip shopping /m² R9.300

Note: The above rates include the cost of tenant requirements and specifications of national chain stores. Retail costs vary considerably depending on the tenant mix and sizing of the various stores.

Residential 1. RDP housing /m² R1.800 2. Low cost housing /m² R3.900 3. Simple lo-rise apartment block /m² R7.900 4. Economic duplex townhouse /m² R8.100 5. Prestige apartment block /m² R16.800 6. Private dwelling houses:

Economic /m² R4.100 Standard /m² R5.600 Middle Class /m² R6.500 Luxury /m² R9.400 Exclusive /m² R14.000 Exceptional (‘Super luxury’) /m² R43.100

8. Outbuildings /m² R4.100

Rode’s Report 2014:4 Annexure 4 XV

9. Carport (shaded): Single /no R280 Double /no R268

10. Carport (covered): Single /no R440 Double /no R400

11. Swimming pool Not exceeding 50kl /no R3.500 Exceeding 50kl and not exceeding 100kl /no R6.700

12. Tennis court Standard /no R5.500 Floodlit /no R10.000

Hotels

1. Budget /key R989.800 2. Mid-scale /key R1.644.600 3. Luxury /key R2.909.300

Note: Hotel rates exclude allowances for furniture, fittings and equipment (FF&E).

Studios 1. Studios: dancing, art exhibitions, etc. /m² R15.300

Conference Centres 1. Conference centre to international standards /m² R24.900

Retirement Centres 1. Dwelling house

middle class /m² R6.300 luxury /m² R8.900

2. Apartment block middle class /m² R6.500 luxury /m² R10.200

3. Community centre middle class /m² R8.600 luxury /m² R12.600

Schools

1. Primary school /m² R5.850 2. Secondary school /m² R6.450

Major unit rates 1. Basement excavation /m² R88 2. Foundation excavation /m² R131 3. Imported structural fill /m² R294

Rode’s Report 2014:4 Annexure 4 XVI

4. Concrete in pad footing (25Mpa) /m² R1.315

5. Concrete in wall (32Mpa) /m² R1.175

6. Concrete in suspended slab /m² R1.235

7. Formwork to slab soffit /m² R131

8. Formwork to side and soffit of beam /m² R289

9. Precast wall panel architectural with sand blast finish /m² R825

10. Reinforcement in beam /t R10.450

11. Structural steel in beam /t R30.490

12. Structural steel in truss /t R30.290

13. Aluminium frames window 6.5mm clear glass /m² R3.150

14. Aluminium panel curtain wall system(including /m² R3.640

Structural system)

15. Steel stud partition (framing) /m² R104

16. Plasterboard 13mm thick to partition /m² R52

17. Suspended mineral fibre ceiling tile /m² R167

18. Paint on plaster board wall /m² R37

19. Ceramic tiles to wall /m² R520

20. Non-slip vinyl to wet areas /m² R347

21. Anti-static carpet tile to office and admin areas /m² R472

22. Anti-static broadloom carpet to office and admin areas /m² R1.299

23. Aluminium framed shopfront /m² R2.265

Cape Town Building type Rates include the cost of appropriate building services, e.g. air-conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and VAT.






ground preparation /m² R620

Rode’s Report 2014:4 Annexure 4 XVII

2. Structured parking /m² R3.450 3. Parking in semi-basement /m² R5.175 4. Parking in basement /m² R6.325



Residential 1. RDP housing /m² R2.070 2. Low cost housing /m² R4.485 3. Simple lo-rise apartment block /m² R9.085 4. Economic duplex townhouse /m² R9.315 5. Prestige apartment block /m² R19.320 6. Private dwelling houses:


8. Outbuildings /m² R4.715 9. Carport (shaded):

Single /no R322 Double /no R308




Hotels

1. Budget /key R1.069.300 2. Mid-scale /key R1.891.300 3. Luxury /key R3.200.200

Rode’s Report 2014:4 Annexure 4 XVIII

Note: Hotel rates exclude allowances for furniture, fittings and equipment (FF&E).

Studios 1. Studios: dancing, art exhibitions, etc. /m² R17.600


Retirement Centres 1. Dwelling house

middle class /m² R7.245 luxury /m² R10.235

2. Apartment block middle class /m² R7.475 luxury /m² R11.730

3. Community centre middle class /m² R9.890 luxury /m² R14.490

Schools

1. Primary school /m² R6.850 2. Secondary school /m² R7.600

Major unit rates 1. Basement excavation /m² R101

2. Foundation excavation /m² R151

3. Imported structural fill /m² R338

4. Concrete in pad footing (25Mpa) /m² R1.515


6. Concrete in suspended slab /m² R1.420

7. Formwork to slab soffit /m² R151

8. Formwork to side and soffit of beam /m² R332

9. Precast wall panel architectural with sand blast finish /m² R950

10. Reinforcement in beam /t R12.010

11. Structural steel in beam /t R35.060

12. Structural steel in truss /t R34.840

13. Aluminium frames window 6.5mm clear glass /m² R3.620

14. Aluminium panel curtain wall system (including /m² R4.185

structural system)

15. Steel stud partition (framing) /m² R120

16. Plasterboard 13mm thick to partition /m² R60

17. Suspended mineral fibre ceiling tile /m² R192

Rode’s Report 2014:4 Annexure 4 XIX

18. Paint on plaster board wall /m² R42

19. Ceramic tiles to wall /m² R598

20. Non-slip vinyl to wet areas /m² R399

21. Anti-static carpet tile to office and admin areas /m² R543

22. Anti-static broadloom carpet to office and admin areas /m² R1.494

23. Aluminium framed shopfront /m² R2.605

Durban Building type Rates include the cost of appropriate building services, e.g. air-conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and VAT.






ground preparation /m² R595 2. Structured parking /m² R3.300 3. Parking in semi-basement /m² R4.950 4. Parking in basement /m² R6.050



Residential 1. RDP housing /m² R1.980 2. Low cost housing /m² R4.290 3. Simple lo-rise apartment block /m² R8.690 4. Economic duplex townhouse /m² R8.910

Rode’s Report 2014:4 Annexure 4 XX

5. Prestige apartment block /m² R18.480 6. Private dwelling houses:


8. Outbuildings /m² R4.510 9. Carport (shaded):

Single /no R308 Double /no R295




Hotels 1. Budget /key R1.022.000 2. Mid Scale /key R1.809.100 3. Luxury /key R3.200.200

Note: Hotel rates exclude allowances fot furniture, fittings and equipment (FF&E)

Studios 1. Studios: Dancing, art exhibitions, etc. /m² R16.830


Retirement centres 1. Dwelling house

Middle class /m² R6.930 Luxury /m² R9.790

2. Aparment block Middle class /m² R7.150

Luxury /m² R11.220

3. Community centre Middle class /m² R9.460 Luxury /m² R13.860

Rode’s Report 2014:4 Annexure 4 XXI

Schools 1. Primary school /m² R6.500 2. Secondary school /m² R7.200

Major unit rates 1. Basement excavation /m² R96 2. Foundation excavation /m² R145 3. Imported structural fill /m² R324 4. Concrete in pad footing (25Mpa) /m² R1.450


6. Concrete in suspended slab /m² R1.355 7. Formwork to side and /m² R145 8. Formwork to side and soffit of beam /m² R318 9. Precast wall panel architectural with sand blast finish /m² R910 10. Reinforcement in beam /t R11.490 11. Structural steel in beam /t R33.540 12. Structural steel in truss /t R33.320 13. Aluminium frames window 6.5mm clear glass /m² R3.465 14. Aluminium panel curtain wall system (including /m² R4.005

structural system)15. Steel stud partition (framing) /m² R115 16. Plasterboard 13mm thick to partition /m² R57 17. Suspended mineral fibre ceiling tile /m² R184 18. Paint on plaster board wall /m² R40 19. Ceramic tiles to wall /m² R572 20. Non-slip vinyl to wet areas /m² R381 21. Anti-static carpet tile to office and admin areas /m² R520 22. Anti-static broadloom carpet to office and admin areas /m² R1.429 23. Aluminium framed shopfront /m² R2.490

Rode’s Report 2014:4 Annexure 4 XXII

Notes

1. Regional variations: Construction costs normally vary between the different provinces ofSouth Africa. Costs in the Western Cape and KwaZulu-Natal, specifically upper classresidential, for example, are generally significantly higher than Gauteng due to the demandfor this accommodation. Rates have therefore been based on data received from theGauteng province, where possible. However, specific costs for any region can be given uponrequest from any Davis Langdon office in that region.

2. Value added tax (VAT): As the majority of developers are registered vendors in the propertyindustry, any VAT paid by them on commercial property development is fully recoverable.Therefore to reflect the net development cost, VAT has not been allowed for in the aboverates. Should the gross cost (i.e. after VAT inclusion) be required, then VAT at the rulingrate (currently 14%) should be added to all the above rates.

Cognisance should be taken however, of the effect of VAT on cash flow over a time period.This will vary according to the payment period of the individual vendor but in all cases willadd to the capital cost of the project to the extent of interest on the VAT outstanding for theVAT cycle of the particular vendor.

3. For guidance with regard to the cost of buildings rated under the Green Star South Africarating tool system, see the latest edition of the Davis Langdon publication entitled “QuickGuide to Green Design Attributes.”

Rode’s Report 2014:4 Annexure 5 XXIII

Mon

thly

for

ecas

t of

in-c

ontr

act

bu

ildin

g

cost

s (H

ayle

tt f

orm

ula

) W

ork

gro

up 1

80 L

um

p S

um

Dom

estic

Build

ings

(Feb

ruar

y 1991 =

100)

Fore

cast

fro

m:

Sep

tem

ber

2014 F

ore

cast

dat

e:

Sep

tem

ber

2014

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Mon

thIn

dex

% c

h

Ind

ex

% c

hIn

dex

%

ch

Ind

ex

% c

h

Ind

ex

% c

hIn

dex

%

ch

Ind

ex%

ch

Jan

6,3

422,9

447,3

5,8

475,9

6,4

508,0

6,7

6,7

54

6,8

571,7

5,4

599,1

4,8

Feb

6,5

427,5

450,0

5,3

482,8

7,3

513,7

6,4

6,4

54

6,4

575,1

5,2

600,9

4,5

Mar

5,7

429,5

456,5

6,3

488,3

7,0

517,0

5,9

5,9

55

6,4

577,3

4,9

602,6

4,4

Ap

r 431,1

5,8

459,5

6,6

488,2

6,2

519,9

6,5

6,5

55

6,4

581,4

5,1

606,5

4,3

May

432,7

6,2

458,0

5,8

489,5

6,9

522,7

6,8

6,8

55

6,4

582,4

4,8

607,8

4,4

Jun

434,2

6,0

460,1

6,0

492,2

7,0

524,8

6,6

6,6

55

6,1

583,6

4,8

609,1

4,4

Jul

436,9

5,7

465,2

6,5

496,0

6,6

526,2

6,1

6,1

55

6,0

584,4

4,8

610,8

4,5

Au

g

5,5

436,9

467,0

6,9

498,1

6,7

530,4

6,5

6,5

56

5,9

587,5

4,6

613,7

4,5

Sep

438,2

5,4

470,0

7,3

503,2

7,1

536,1

6,5

6,5

56

5,9

594,3

4,7

619,6

4,3

Oct

439,5

5,3

471,3

7,2

505,1

7,2

539,2

6,7

6,7

57

5,8

596,9

4,7

623,2

4,4

Nov

441,4

5,3

471,8

6,9

505,8

7,2

540,1

6,8

6,8

56

5,4

597,1

4,9

625,2

4,7

Dec

442,9

5,3

472,7

6,7

507,0

7,3

541,4

6,8

6,8

57

5,4

598,0

4,8

626,7

4,8

Avg

. 4

34

,55

,7

46

2,5

6

,4

49

4,4

6

,9

52

6,6

6

,5

55

8,6

6

,1

58

5,8

4

,9

61

2,1

4

,5

Sou

rce:

This

tab

le i

s an e

xtra

ct o

f th

e Bui

ldin

g Cos

t Rep

ort

of

Med

ium

-Ter

m F

ore

cast

ing A

ssoci

ate

s, P

O B

ox

7119,

Ste

llenbosc

h,

7600,

Tel

. 0218838152,

and i

s publis

hed

with t

hei

r per

mis

sion.

Rode’s Report 2014:4 Annexure 6 XXIV

Absa home building-cost index 2000 = 100

Quarter Index

% change on

previous year

Quarter Index

% change on

previous year

1998:4 84,0 9,1% 2006:4 227,0 11,2%

1999:1 84,2 5,7% 2007:1 230,8 10,7%

1999:2 86,6 5,2% 2007:2 236,7 11,9%

1999:3 89,4 7,1% 2007:3 240,1 9,2%

1999:4 92,2 9,7% 2007:4 245,1 7,9%

2000:1 96,1 14,1% 2008:1 253,6 9,9%

2000:2 99,4 14,8% 2008:2 256,2 8,2%

2000:3 101,5 13,5% 2008:3 258,9 7,8%

2000:4 103,0 11,7% 2008:4 262,2 7,0%

2001:1 105,3 9,5% 2009:1 264,6 4,3%

2001:2 107,5 8,1% 2009:2 273,4 6,7%

2001:3 111,4 9,7% 2009:3 277,7 7,3%

2001:4 116,0 12,6% 2009:4 277,6 5,9%

2002:1 118,9 13,0% 2010:1 286,9 8,5%2002:2 122,1 13,6% 2010:2 294,4 7,7%2002:3 126,7 13,8% 2010:3 296,1 6,7%2002:4 131,8 13,7% 2010:4 302,2 8,8%2003:1 137,3 15,5% 2011:1 303,0 5,6%2003:2 143,1 17,2% 2011:2 302,5 2,8%2003:3 149,0 17,6% 2011:3 312,0 5,4%2003:4 156,4 18,7% 2011:4 319,1 5,6%2004:1 163,8 19,3% 2012:1 320,0 5,3%2004:2 170,2 18,9% 2012:2 320,9 5,9%2004:3 175,3 17,6% 2012:3 323,5 3,8%2004:4 180,2 15,2% 2012:4 328,7 3,0%2005:1 185,8 13,4% 2013:1 336,6 5,2%2005:2 192,1 12,9% 2013:2 344,4 7,3%2005:3 198,2 13,0% 2013:3 351,3 8,6%2005:4 204,2 13,3% 2013:4 352,6 7,3%2006:1 208,4 12,1% 2014:1 359,0 6,6%2006:2 211,6 10,1% 2014:2 373,3 8,4%2006:3 219,8 10,9% 2014:3 379,4 8,0%Source: ABSA. Calculated from Absa home mortgage data, viz. value of houses to be built divided by number of m².

:

Rode’s Report 2014:4 Annexure 7 XXV

BER Building Cost Index (non-residential tender prices)

2005=100

First quarter Second quarter Third quarter Fourth

quarter Average

2008 135,4 147,0 141,2 157,5 145,3 % ch 18,9 10,6 14,9 13,8 14,4 2009 138,7 151,0 140,9 145,6 144,0 % ch 2,4 2,7 -0,2 -7,6 -0,9 2010 145,7 144,8 142,0 142,4 143,7 %ch 5,1 -4,1 0,8 -2,2 -0,2 2011 140,8 149,2 147,8 156,7 148,6 %ch -3,4 3,0 4,1 10,0 3,4 2012 153,3 156,1 161,4 164,9 158,9 %ch 8,9 4,6 9,2 5,2 6,9 2013 171,0 165,7 170,8 170,5 169,5 %ch 11,5 6,1 5,8 3,4 6,6 2014 177,5 184,4 184,1%ch 3,8 11,3 7,8Source: This table is an extract of the Building Cost Report of Medium-Term Forecasting Associates, P.O. Box 7119, Stellenbosch, 7600, Tel. 0218838152, and is published with their permission. The last few months are always subject to change.

Rode’s Report 2014:4 Annexure 8XXVI

Prime overdraft rate at month-end (%)

(proxy for trends in mortgage rates*)

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year

1991

21

,0

21

,0

21

,0

20

,0

20

,0

20

,0

20

,0

20

,0

20

,0

20

,3

20

,3

20

,3

20,3

1992

20

,3

20

,3

20

,3

19

,3

19

,3

19

,3

18

,3

18

,3

18

,3

18

,3

17

,3

17

,3

18,8

1993

17

,3

16

,3

16

,3

16

,3

16

,3

16

,3

16

,3

16

,3

16

,3

16

,3

15

,3

15

,3

16,2

1994

15

,3

15

,3

15

,3

15

,3

15

,3

15

,3

15

,3

15

,3

16

,3

16

,3

16

,3

16

,3

15,6

1995

16

,3

17

,5

17

,5

17

,5

17

,5

17

,5

18

,5

18

,5

18

,5

18

,5

18

,5

18

,5

17,9

1996

18

,5

18

,5

18

,5

19

,5

20

,5

20

,5

19

,5

19

,5

19

,5

19

,3

20

,3

20

,3

19,5

1997

20

,3

20

,3

20

,3

20

,3

20

,3

20

,3

20

,3

20

,3

20

,3

19

,3

19

,3

19

,3

20,0

1998

19

,3

19

,3

18

,3

18

,3

18

,3

22

,3

24

,0

25

,5

25

,5

24

,5

23

,5

23

,0

21,8

1999

22

,0

21

,0

20

,0

19

,0

19

,0

18

,0

17

,5

16

,5

16

,5

15

,5

15

,5

15

,5

18,0

2000

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14

,5

14,5

2001

14

,5

14

,5

14

,5

14

,5

14

,5

13

,8

13

,5

13

,5

13

,0

13

,0

13

,0

13

,0

13,8

2002

14

,0

14

,0

15

,0

15

,0

15

,0

16

,0

16

,0

16

,0

17

,0

17

,0

17

,0

17

,0

15,8

2003

17

,0

17

,0

17

,0

17

,0

17

,0

15

,5

15

,5

14

,5

13

,5

12

,0

12

,0

11

,5

15,0

2004

11

,5

11

,5

11

,5

11

,5

11

,5

11

,5

11

,5

11

,0

11

,0

11

,0

11

,0

11

,0

11,3

2005

11

,0

11

,0

11

,0

10

,5

10

,5

10

,5

10

,5

10

,5

10

,5

10

,5

10

,5

10

,5

10,6

2006

10

,5

10

,5

10

,5

10

,5

10

,5

11

,0

11

,0

11

,5

11

,5

12

,0

12

,0

12

,5

11,2

2007

12

,5

12

,5

12

,5

12

,5

12

,5

13

,0

13

,0

13

,5

14

,0

14

,0

14

,0

14

,5

13,2

2008

14

,5

14

,5

14

,5

15

,0

15

,0

15

,5

15

,5

15

,5

15

,5

15

,5

15

,5

15

,0

15,1

2009

15

,0

14

,0

13

,0

13

,0

11

,0

11

,0

11

,0

10

,5

10

,5

10

,5

10

,5

10

,5

10,8

2010

10

,5

10

,5

10

,0

10

,0

10

,0

10

,0

10

,0

10

,0

9,5

9

,5

9,0

9

,0

9,8

2011

9,0

9

,0

9,0

9

,0

9,0

9

,0

9,0

9

,0

9,0

9

,0

9,0

9

,0

9,0

2012

9,0

9

,0

9,0

9

,0

9,0

9

,0

8,5

8

,5

8,5

8

,5

8,5

8

,5

8,7

2013

8,5

8

,5

8,5

8

,5

8,5

8

,5

8,5

8

,5

8,5

8

,5

8,5

8

,5

8,5

2014

9,0

9

,0

9,0

9

,0

9,0

9

,0

9,3

9

,3

9,3

Source: SARB

*A

ve

rag

e m

ort

ga

ge

ra

tes f

or

ne

w b

on

ds a

re,

on

av

era

ge

, b

elo

w t

he

pri

me

ov

erd

raft

ra

te.

Ind

ivid

ua

l m

ort

ga

ge

ra

tes w

ill

de

pe

nd

on

th

e c

red

itw

ort

hin

ess o

f th

e m

ort

ga

go

r.

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