Industrial Rental Growth in the Western Cape outpaces Inflation. The Western Cape is known for its vibrant economy and scenic beauty. It is also becoming a hotspot for industrial growth. Recent data from industrial property experts at Epping Property indicates that the industrial rental market in this region is not just thriving but is outpacing the inflation rate. Industrial rental growth in the Western Cape for the last three years (as of mid-2024) has been 7.90% compounded.
Inflation has been a persistent concern globally, and the Western Cape has not been immune to its effects. As of June 2024, the annual inflation rate for goods stood at 5.1%, a slight decrease from the previous period. With global inflation declining, South Africa’s inflation is expected to drop even further.
The Rode Report on Q3, 2024 reports that for the whole of South Africa;
- Low Vacancies: The industrial property sector reported a vacancy rate of just 3.6%, well below the long-term average of 4.2%.
- Rental Growth: Rentals for industrial spaces (e.g., 500 m² units) grew by 6.9% year-on-year, with larger spaces (1,000 m²) experiencing an even higher increase of 7.4%.
- Demand Drivers: Growth is fueled by strong demand for logistics and warehouse facilities, driven by e-commerce and retail expansion, alongside limited speculative developments.
Industrial Rental Growth in the Western Cape from 2021 to 2024 has been 7.90%
The latest statistics published by Epping Property show that industrial rentals in the Western Cape in the last three years have grown 7.9% compounded. A key factor contributing to this growth trend is the demand for industrial real estate. Driven by strategic location, increased investment, and effective governance.
The growth in the industrial rental sector in the Western Cape can be attributed to several additional factors. E-commerce has driven a growing need for logistics and distribution centres, significantly boosting the industrial sector. The City of Cape Town remains proactive in addressing the energy crisis, aiming to mitigate its impact on businesses. Meanwhile, the area’s strong economic growth has made it a magnet for industrial companies and property development.
This trend shows no signs of slowing down. Predicted rate cuts starting in late 2024 will likely boost investor confidence, further energizing the industrial rental market. The Western Cape’s strategic location, with excellent access to ports and a well-connected road network, continues to draw businesses, fueling the demand for industrial space.
Looking at other periods, industrial rental growth in the Western Cape has been;
- 1980 to 2000 12.20%
- Since 1980 8.70%
- Since 2004 7.86%
- Since 2019 6.04%
- Since 2021 7.90%
From 2019 to 2021, growth slowed due to the global Covid pandemic. However, the past three years have seen a substantial recovery, says Epping Property.
Industrial rental growth in the Western Cape has outpaced inflation. This reflects the region’s economic strength and potential for sustained progress. It also highlights what is possible when industrial development aligns with strategic planning and investment.
Current trends create a solid foundation for investors and businesses to make intelligent decisions. Epping Property notes that the Western Cape’s resilience in overcoming economic challenges makes it a prime location for businesses needing industrial premises.