The South African property market, spanning both residential and commercial properties, has experienced significant fluctuations influenced by factors such as economic shifts, inflation, taxation, and local challenges such as load-shedding. Amidst these dynamics, the Western Cape’s industrial real estate sector has shown remarkable resilience and growth.
The Western Cape’s industrial real estate sector continued to show strong performance in Q2 2024. Cape Town’s industrial rental market saw a year-over-year growth of 4.9%, supported by a low vacancy rate of 3.5%. Specific areas, such as the Airport precinct and Parow, have limited available space, allowing landlords to command rents that are close to market highs, according to the Rode Report Q2 2024.
Typically, lower vacancy rates translate to rental growth. However, broader economic conditions could still lead to increased higher vacancies and softer rentals. Through strategic positioning and solid governance, Urban Growth remains committed to boosting demand and confidence within the property market, navigating challenges while seizing growth opportunities.
Urban Growth is a premier independent property investment company with over a decade in the property market. We specialise in large-scale logistics properties, specifically designed to meet supply chain demands. We work with a broad client base that includes both local companies and global corporations.
Following the recent 25-basis-point interest rate cut by the South African Reserve Bank, we anticipate a positive shift in consumer spending trends. This presents unique opportunities to capitalise on more favourable borrowing conditions. With a strategic, adaptable approach, we are positioned to maximise these economic shifts, continue attracting top-tier tenants, and enhance property value. We pride ourselves on focusing on key development areas to maintain high standards and keep a solid foothold in the industrial property market, notably within the Western Cape. We believe the Western Cape the best location for this specialised real estate sector. Below we highlight three important factors that contribute to this.
We closely monitor urbanisation trends in the Western Cape, largely driven by high rates of “in-migration”. According to the Provincial Economic Review and Outlook 2024, the number of economically active members of the population has grown by 19.6%, which is reportedly 1,241 million people, between 2015 and 2024. This makes the Western Cape a beacon of business potential and activity but also comes with potential setbacks in terms of increased demands, and we prepare for both sides of the coin.
Furthermore, a range of business industries is available in the Western Cape, from services, manufacturing, and agriculture, to name a few. Its prime proximity to ports enables it to be at the heart of international trade. Furthermore, well-maintained road and rail networks support regional trade.
The key driver of industrial property is the performance of the manufacturing and retail sectors. The manufacturing sector underpins the demand for industrial space for manufacturing production purposes, while the retail sector underpins the demand for warehouse or distribution space.
Online retail is a significant force driving growth in the industrial warehousing sector, largely due to the increasing need for modernised, high-capacity distribution facilities. Retailers are continuously reorganising their supply chains to respond to rising e-commerce demand. Centralised distribution hubs and modernised warehouses that allow for streamlined logistics are essential in this reconfiguration. Enhancing storage and distribution strategies allows retailers to increase efficiency and meet the quick turnaround demands of online consumers.
Urban Growth strives to follow rigorous sustainability practices which are on par with the Western Cape’s industrial property sector’s commitment to green building practices and sustainable energy solutions. We are committed to implementing eco-friendly solutions that keep our properties sustainably powered and ready for continuous operation.
We are committed to creating an A-grade industrial portfolio and have taken all our properties off the grid with our ongoing investments in solar projects. This includes our solar photovoltaic plant (PV) installed at a packaging manufacturer at the Somerset West Business Park, which has 1,880 solar panels. This approach not only minimises the effects of load-shedding but also enhances energy independent and business longevity.
Future forecasts: We also plan to provide off-grid water capabilities by 2025, which will not only benefit our tenants but also reduce water consumption.
Our strategic position within the Western Cape is supported by a bespoke property portfolio. It is one of a kind and includes tenants from large multinational and/or listed companies with strong financial ratings, including long-term triple net leases. It offers distribution warehouses and is specifically selected to benefit from the growing last-mile logistics needs of large corporations.
Importantly, our partnership with the Bastion Real Estate Partnership has been the catalyst for our ongoing success in the industrial property market.
Partnering with Bastion Real Estate Partnership offers several advantages:
Urban Growth’s mission is to develop spaces that foster growth and prosperity for both people and businesses alike. We aim to make principled decisions and cultivate and maintain long-term, partnership-driven investment approaches. Our team is driven by a steadfast responsibility and commitment to enhancing the economic value of our properties, prioritising eco-friendly practices that promote sustainable urban growth.
This includes valuable partnerships, such as our collaboration with the Bastion Real Estate Partnership, which enables us to offer high-quality industrial spaces. With this, our long-term vision is to build a R2 billion property portfolio that will offer access to the growing Western Cape industrial and logistics property sector. Together, we are building a future rich in opportunity and impact, set to exceed the needs of both our community and our partners.
If you’re an investor ready to make an impact, or founder looking for a place for your business to grow, contact us at info@urbangrowth.co.za for more info.
Unit 14, Urban Growth Park, 15 Jan van Riebeeck Drive, Paarl, Western Cape, 7646, South Africa
Unit 14, Urban Growth Park, 15 Jan van Riebeeck Drive, Paarl, Western Cape, 7646, South Africa
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