City on the move
Sunday Tribune 09 August 2015
CITY ON THE MOVE
Winning the 2022 bid could cement Durban’s place on the tourism map
“You never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not before.”
And according to Edwin van Niekerk, director at Maxprop and SAPOA KZN Regional chairman, tis 2008 quote by American politician Rahm Emmanuel has never rung so true, as many challenges were facing the city and local economy.
Some of these included:
- Severe hardship and conspicuous inequality
- Social Discontent and unrest
- Economic squeeze causing unemployment, strained household and municipal finances
- Difficulties in rationing the provision of housing and free basic services
- Sluggish private investment and job
- Continuing urban segregation and fragmentation
- People forced to travel further than ever, on an unreliable and obsolete transport system.
- Many ordinary citizens anxious about the future
With these challenges, however, came an abundance of opportunities for property developers, Van Niekerk said.
“Creating a less divided more efficient city is already underway with the implementation of ‘Go Durban’, Durban’s integrated transport system. The Durban Chamber of Commerce hosted a recent update session on ‘Go Durban’, and the opportunities that this is going to present are enormous”
He said 2022 was not just a number anymore, but represented Durban’s bid for the Commonwealth Games.
“Like the 2010 world cup, this will create a focus point and a deadline which will fast-track infrastructure projects. It will put Durban firmly on the world stage and boost tourism once again, crating massive opportunities for the property industry.
“The recent plans for the Point development must be welcomed and will represent one of the biggest investment in Durban once they have come to fruition. An area that was once economically dead could become the jewel of Durban.”
Van Niekerk said that the current market found itself “in an interesting space”, with a lot of investor money waiting for opportunities, and a “severe lack of stock”.
“Rental are still too low to make new development attractive to the investor, and the demand in this sector is being driven by the end user.
As a result there is a lot of ‘brown fields’ redevelopment, and areas like Umbilo, Pinetown and New Germany are experiencing increased interest.
“There are a number of ‘green field’ developments available. In the west, Keystone and Ibuhbesi are selling land to the warehousing and logistics market. In the North Tongaat Hulett are steaming ahead with Cornubia, Ridgeside, New Town Centre to name a few.”
The property investor today will need to readjust his expectations as good property is trading at 9% and even 8% cap rates, Van Niekerk belies.
“On Greenfield projects a longer view may need to be taken and perhaps investors should look at the capital gain rather than focusing on the short term yield. Instead of using calculation like the capitalisation rate, also known as yield or return on investment, maybe the discounted cash flow or the (IRR) internal rate of return will give a more meaningful picture and a better investment decision.”
He said more than 70 factors had been identified in making the investment decision, which can be daunting for even the most seasoned investor. The expertise of a professional brokerage is essential and the advice and guidance you will receive will be invaluable, and best of all completely free to the buyer, as commission is paid by the seller.
He said Durban was, “without a doubt”, a city on the edge with 2022 looming and Go Durban Go in full swing.
“What a great place to be living in! Go Durban Go.”
Author: Edwin Van Niekerk