- Published on Thursday, 09 October 2008 09:27
While large parts of the world are gripped in the vice of near or full-blown recession, things are looking up for South Africa – and more specifically for Port Elizabeth in Nelson Mandela Bay, the fifth largest metro in the country.
According to Clem Sunter, chairman of the Anglo American Chairman’s Fund and scenario specialist, South Africa is the perfect place to sit out the global recession.
“We (South Africa) have the resource space,” he recently told Moneyweb. “I think the tourism space could be much bigger, and we’ve got a golden opportunity to market ourselves in 2010.
“The third space, which, for me, is the most lucrative, is the gateway space. Dubai is the gateway to the Middle East. It hasn’t got a drop of oil, but it has done fantastically well. Hong Kong is still the gateway into China . . . and a huge hive of activity.
“So we can be the gateway into a continent that’s opening up for business. You’ve got Angola growing at 16% per annum, Nigeria is now coming to the fore and Zambia has had the best stock market so far this year in Africa”.
Port Elizabeth, affectionately known as the Friendly City, is situated on the south-east seaboard of Africa. It is fast becoming one of the most sought-after destinations for work and play in the world.
Pristine land, an unrivalled moderate coastal climate, two harbours, good schools, growth in almost all sectors and a comfortable pace of living all add to its near perfection, attracting immense national and international investor interest.
“Compared to what Perth was like ten years ago,” says Australian real estate developer Ian McDonald from 4Front Investment Holdings, “PE is on the eve of a development leap.
“We have done thorough research over the past two years and have established that Port Elizabeth is the perfect location for our next project,” he says, referring to the state of the art Jutland Point, a thirteen-storey apartment block development that was recently launched in Port Elizabeth.
“We researched possible locations as well as market needs and Port Elizabeth turned out to be our answer,” says McDonald.
Port Elizabeth-based property broker Warren Jack, from the Warren Jack Property Group, agrees with Sunter’s sentiments. “Port Elizabeth is indeed opening up for business, so to speak. This kind of foreign investment is unprecedented for the city.
“The rate of investments, especially in the commercial and industrial sectors, is a very clear indication that Port Elizabeth is now moving into the ‘big league’. Investors from around the world are honing in on our city and the future looks very bright indeed.”
Jack, whose company markets Jutland Point along with other prime commercial and industrial developments, continues, “Port Elizabeth is not only in the sights of foreign investors, but also of leading businesses elsewhere in the country – especially those looking for blue-chip accommodation for company executives.
“We’ve seen that facilities such as Jutland Point (designed by Port Elizabeth architects Balshaw & Fogarty) are equally sought-after by buyers wanting to live here and investors.
“With prices ranging between R4 and R20 million, the first apartments – including two penthouses – were snapped up by international investors the moment the project was launched,” says Jack. “This gives us a good indication that we are offering the market what it is asking.”
According to Greg Kruger, from GGK Properties in KwaZulu-Natal, Port Elizabeth is in a similarly fortunate position to Richards Bay by having available industrial land near a port.
“While the residential market is quite slack countrywide, the industrial market is steadily growing, especially where clients can acquire industrial development land close to a harbour.”
He explains that in such cities, of which Port Elizabeth is one, industrial development feeds the need for residential properties, resulting in a huge positive ripple effect throughout the property market.
“With Richards Bay being the gateway to Mozambique, via the Maputo Corridor, this area is sure to show steady growth in the future.”
Jack says Port Elizabeth offers a gateway to the Garden Route (one of South Africa’s tourism hotspots) and is geographically the most central port between Johannesburg in Gauteng, Cape Town in the Western Cape and Durban in KwaZulu-Natal.
“It is therefore ideally positioned as a gateway to South Africa and beyond, into Africa.”
Looking at the KwaZulu-Natal south coast, says property developer Gerhard Grové, the picture is dramatically different. “This area is completely overstocked with residential properties.”
He says Port Elizabeth is an excellent place to look at when searching for investment possibilities. “Unlike the South Coast, Port Elizabeth has many sustainable industries, including the large vehicle manufacturing sector.”
Gert Snyman, from the P & H Development Group in Gauteng, says Port Elizabeth is undeniably in a very enviable position to have a demand for developments such as Jutland Point.
“The building and property industries up here have all but grinded to a halt. The only real demand at the moment is for low to medium-cost housing and even in this bracket buyers are battling to secure loans,” he says.
He says developers should capitalise on business people with concerns in Port Elizabeth who need to accommodate their delegates. “A development such as Jutland Point, with classy lock-up-and-go apartments, will be just what these corporates are looking for.”
Bloemfontein-based architect, Jan Coetzee, with involvement in developments around the country, including the Eastern Cape, says he is currently urging his clients to invest in Port Elizabeth for a number of reasons.
“In relative terms, I think Port Elizabeth lagged behind a bit when the rest of the country experienced huge growth in the property market over the past five or so years,” he says.
According to him, developers and investors should look at buying property in the region in order to capitalise on the corrective trend that should take place over the next couple of years as Port Elizabeth property prices are brought on par with the rest of the country.
Coetzee says a development such as Jutland Point will most certainly add huge value to the central part of Port Elizabeth. He adds that this sort of apartment style building is quite common in the United States, and he thinks most certainly an option to be explored more often in the country – especially with security in mind.
“With the industrial development at Coega and the fact that Port Elizabeth soon will have two harbours, the city enjoys wider exposure that many of the country’s big cities,” says Coetzee.
He also mentions industries in the Eastern Cape, like the motor manufacturers, as one of the stabilising factors, providing a steadier long-term economy in the region.
Sunter concluded: “I do think that South Africa actually has special circumstances, which means that we will probably have a softer landing than other countries during the hard-times scenario”.
Port Elizabeth – one of the host cities for the Soccer World Cup in 2010 – may very well be the place in South Africa to sit out the global recession, and should be included in every investment portfolio.
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