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Industrial Property Investments – A Certain Asset in Uncertain Times

17th August 2017 by Tony Bales

Industrial Property Investments – A Certain Asset in Uncertain Times.

The uncertainty of global markets currently haunts investors. The certainty of income streams on industrial property is comforting for commercial and industrial property investors. The industrial real estate sector in South Africa has been the best-performing real estate industry during the last year, as recent MSCI statistics show. The MSCI further reports that at an industry level, industrial property was the top-performing sector during the year. A total return of 13.6% has been achieved, outperforming retail at 12.6%. The office sector continued to struggle on the back of subdued capital growth. It was a tough hit in 2016, with a total return of 7.6%. The graph below confirms the excellent performance of industrially focussed funds.

Industrial Property Investments

Tony Bales of Epping Property adds that various tenants are feeling the squeeze, and interest rates are probably at the bottom of their cycle. On the whole, income streams from industrial property investments have held up well in South Africa. The Epping Industrial Property Index indicates the strong growth in rental income and the low levels of vacant space to let.

“Investors have been reluctant to sell their income-producing property assets. These assets are currently showing their resilience to downturns. The listed real estate sector has been one of the best-performing sectors on the JSE in the last few years. Also, companies have continued to increase net incomes year-on-year. Rental growth should continue in this sector for some years, albeit at a slightly reduced rate.”

According to Bales, property assets that do not show a positive cash flow have been put under severe pressure. Vacant land and vacant buildings are proving harder to sell in the current market – even if purely because financiers are taking a far more conservative approach. Making sure one’s industrial lease contracts are correctly structured is important to lock in those cashflows.

“With the global turmoil likely to last longer than initially anticipated, commercial and industrial property investors need to plan accordingly. Tenants wanting longer leases should be taken seriously. Whatever can be done to enhance the medium-term certainty of income streams will improve a property’s value. It is this certainty that many current investors (and financiers) are seeking.”

“Conversely, value investors are circling like vultures on any opportunity that may show uncertainty and so a perceived reduced price. These investors often have the cash and knowledge to re-position and re-tenant buildings and hence add significant value.”

“Add certainty to one’s income streams, and more value will automatically follow,” concludes Bales.

The Ultimate Guide on How to Invest in Industrial Property

Industrial Property Investments – A Certain Asset in Uncertain Times

Mob: +27 76 111 0000

Tel: +27 21 531 0026

E-mail: info@eppingproperty.co.za


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Testimonials

Tafelberg Furnishers

Following a fire at our Epping factory, we decided to reconfigure the business differently and sell the Epping property. Epping Property secured us an excellent transaction to a solid purchaser. We would highly recommend Epping Property as experienced, trustworthy industrial property dealmakers.

Management, Tafelberg Furnishers

Epping Property
2020-01-16T16:01:19+02:00

Management, Tafelberg Furnishers

Following a fire at our Epping factory, we decided to reconfigure the business differently and sell the Epping property. Epping Property secured us an excellent transaction to a solid purchaser. We would highly recommend Epping Property as experienced, trustworthy industrial property dealmakers.
https://www.eppingproperty.co.za/testimonials/management-tafelberg-furnishers/

AVI Ltd

During November we were a little stuck in finding an appropriate warehouse to relocate to. Epping Property did an extensive search in all the central industrial areas. They eventually found our suitable premises and negotiated a deal that both ourselves and the landlord were very happy with.

Management, AVI Ltd

Epping Property
2017-05-08T11:48:22+02:00

Management, AVI Ltd

During November we were a little stuck in finding an appropriate warehouse to relocate to. Epping Property did an extensive search in all the central industrial areas. They eventually found our suitable premises and negotiated a deal that both ourselves and the landlord were very happy with.
https://www.eppingproperty.co.za/testimonials/management-avi-ltd/

Growthpoint Properties

Epping Property reliably assists us in keeping our portfolio in the Central Industrial areas of Cape Town tenanted with good, solid businesses. We can highly recommend anyone looking to rent or to buy property in Epping to deal with the experienced Epping Property team.

Management, Growthpoint Properties

Epping Property
2017-05-08T11:48:51+02:00

Management, Growthpoint Properties

Epping Property reliably assists us in keeping our portfolio in the Central Industrial areas of Cape Town tenanted with good, solid businesses. We can highly recommend anyone looking to rent or to buy property in Epping to deal with the experienced Epping Property team.
https://www.eppingproperty.co.za/testimonials/director-edge-properties/

Truworths Limited

We are exceptionally happy with the purchase of both 22 and 26 Bertie Avenue in Epping. It makes 100% sense for our company to have secured this location. We will now be expanding the warehousing and distribution side of our business onto the properties. Thank you.

Management, Truworths Limited

Epping Property
2017-05-08T11:49:17+02:00

Management, Truworths Limited

We are exceptionally happy with the purchase of both 22 and 26 Bertie Avenue in Epping. It makes 100% sense for our company to have secured this location. We will now be expanding the warehousing and distribution side of our business onto the properties. Thank you.
https://www.eppingproperty.co.za/testimonials/management-truworths-limited/
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