Industrial property leads in terms of SA property investment returns

16 November 2017

According to the latest MSCI's IPD South Africa Bi-annual Property Index, industrial property was the top performing sector in the country with a total return of 7.0% for the first six months of 2017. Despite tough economic conditions, this outperformance was driven mainly by a lower vacancy rate exhibited across the South African industrial property sector.

Greg Nafte, co-director of Nexus Property Group (NPG), says that in terms of property investment return potential in South Africa, "The top performing segments for the first half of this year were both from the industrial sector namely warehousing and light manufacturing, which produced total returns of 7.2% and 7.0% respectively. These good returns, in contrast to an otherwise low-growth economy, are expected to remain robust."

Nafte says that the news of the upcoming industrial property portfolio sale in Midrand brought about by the repositioning of a fund, therefore represents an exceptional investment opportunity. "The tenanted portfolio of seven A-grade industrial properties in Midrand - housing both blue-chip JSE listed company tenants and smaller local tenants - is for sale via private treaty.

"The sale of these seven properties, which consist of 84 different sized units - a balance of large units up to 6000m2, to smaller units of 275m2 - offers private investors a unique opportunity to acquire a rare accretive portfolio."

Nafte says that the buildings are well maintained, with a mix of smaller and larger tenants covering different industrial sectors. "The total portfolio through rental is R58.80/m generating gross monthly income of around R2 450 000, which equates to Gross Annual Income of roughly R30 680 000 (including contractual escalations).

Positioned in the gateway between Pretoria and the Johannesburg business districts of Sandton and Melrose, Nafte says that the properties are located in a growth area with very low vacancies. "This area also boasts new infrastructure and development, such as the Mall of Africa and the new PWC building," he adds.

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