Tide is turning for KwaZulu-Natal’s property market
Over the years, South Africa’s KwaZulu-Natal (KZN) province has faced numerous obstacles that have impeded its growth – including catastrophic floods and residents being subjected to service delivery challenges.
The accounting officer for province’s Department of Economic Development, Tourism and Environmental Affairs, Nhlakanipho Nkontwana, said that the garden province “has been engulfed by the seemingly intractable challenge of low economic growth leading to chronic unemployment, poverty and income inequality,” which is said to have left investors sceptical.
Despite this, property specialists are saying that the commercial and industrial property markets have surprised their doubters, showing evident and entrenched growth post-Covid (despite being from a relatively low base) that is predicted to take an even stronger upward trajectory in 2024.
Provincial head for FNB commercial property finance, Malusi Mthuli, has said that this positive assessment is a result of a steadily increasing number of large property finance deals that the company has concluded over the past year.
Despite a relatively challenging environment, “stakeholders in the region appear to be less wary of the market than has been the case in recent years, with many now proactively looking for good opportunities again,” said Mthuli.
“These strong deals point to buyers and developers having more confidence and optimism about the KZN market than has been the case since the pandemic,” he added.
Mthuli outlines that there is “continued growth in demand for industrial space translating into steadily increasing investment, particularly into well-located ‘flat land’, large industrial building developments and, particularly, industrial parks that incorporate significant storage capabilities.”
Contributing factors for this are problems facing Transnet, which has created a need from companies for longer storage periods of goods awaiting road transportation, boosting industrial tenants in the province.
Additionally, office spaces in the province are also seeing a post-Covid recovery – largely resulting from the business process outsourcing (BPO) sector. Global corporations have made substantial investments in setting up call centers in South Africa, with many being established in KwaZulu-Natal, especially in the Umhlanga area, thus greatly increasing demand.
According to Mthuli, the only area in KZN where the commercial office property market remains sluggish is the Durban CBD, where tenant quality and demand for sizeable spaces have seen a consistent decline in recent years. However, the low commercial demand in the CBD has seen developers springing to purchase offices to convert them into residential units or mixed-use spaces.
“The proven resilience and steady growth of both industrial property and commercial property in KZN over 2023 is a testament to the province’s significant value and importance as a key contributor to the South African economy,” concluded Mthuli.
Read: Things are looking up for Gauteng’s commercial property market
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