Durbans warehouses - the best priced in Africa

Last week Deal Core wrote about the imminent interest rate increases and how auctioning a property can offer a lifeline to a distressed seller. 

This week Deal Core has been doing desk top research to establish how well priced warehousing is in Durban relative to other cities on the African continent. The good news is that we discovered that warehousing in Durban is the best priced across all the countries we researched. Whilst actual sales figures could not be accessed, all indications show that warehousing located within the Durban area offers exceptional value. This continues the theme of positive news about the property market in South Africa amidst the difficult economic times we are facing. 

Deal Core recently sold prime warehousing space in Durban’s most sought after industrial node of Westmead. We sold a 9000m² warehouse for R48 million and a 6000m² warehouse for R34 million. This translates into an average price of R5 400/m² of warehouse space, including land in a prime location and in good condition. 

With these statics at our disposal, a search for equivalent sized warehouse space in Lagos, Luanda, Windhoek, Maputo, Gaborone, Cairo and Nairobi ensued. This proved a difficult task. Large warehousing is either in very short supply, does not exist at all, or never gets put on the open market. 

In addition, property websites in these countries do not permit filtered searches so you have to trawl through hundreds of listings of mostly residential property. Furthermore, in an effort to ensure a comparison of like-for-like, the price comparison is broken down to square metre rates as listings for warehousing space close to 9000m² or even 6000m² could not be found. Finally, the condition and location of the properties searched for could not be ascertained with confidence in comparison to the Westmead properties.

Nigeria has recently over taken South Africa as the economic powerhouse on the continent. The question is what would you pay for approximately 9 000m² warehouse space in Lagos compared with the equivalent sized property in Westmead, Durban? The answer is an asking price of $10 million for 4800m² in the suburb of Ikeja. This translates into R120 million or R25 000/m². 

In Angola, the search was fruitless. There was no commercial listing for any warehouse space in Luanda. However, a 74m² apartment in Luanda was listed at $575 000. In what is widely regarded as the most expensive city in Africa, I guess it begs the question: Why waste your land on warehousing?

What about in Windhoek? A new industrial development called Brakwater has warehousing/industrial land listed at R2 100/m² bulk. This development could be likened to Keystone Industrial Park being developed in Hammarsdale which is currently selling bulk at R1 600/m². The difference is that Hammarsdale is only 30km from Africa’s largest port.

Maputo is a port city close to Gauteng and has often been seen to offer competition to the Port of Durban. We searched for warehousing in Maputo and whilst there were limited listings we found a 1200m² warehouse in Matola, just outside of Maputo, on offer for $1.2 million. This translates into R14.4 million or R12 000/m². 

In Gaborone, it was a difficult search, but we found a small warehouse of 130m² for R2.4 million. This translates into R18 461/m². We also found a 2750m² commercial building listed in Cairo for R27.9 million which translates into R10 145/m² which we compared with a small 600m² warehouse in Alexandria for R4,96 million  or R8 266/m². 

In Nairobi we were pleased to find new development of mini factory space been sold off plan for R3 790.72 per m². A 929m² existing warehouse is on the market for R6,2 million which equates to R6 673/m² and a 400m² warehouse for R5 million at a much higher price of R12 531/m².The largest warehouse we could find was 1 562m² with an asking price of R18,7 million or R11 971/m². 

The exchange rates used for the purpose of this exercise were those supplied on the day by ex.com. 

Whilst this data provides nothing more than a litmus test for prices across Africa, what it did was boost our confidence in the investment opportunities that are abound in Durban’s commercial property sector. The rapid development of new warehousing space in the Hammarsdale and Cato Ridge is a result of buoyant demand that exceeds the current supply in established nodes such as Westmead, Jacobs, Mobeni, Prospecton and Mount Edgecombe. 

This is good news for investors and end users alike. 

Durban offers Africa some of the cheapest and best located warehousing on the continent. So despite our current economic hardships, surely that is something to smile about?