It should be understood that many companies were vacating the CBD to establish their corporate offices out of town because of higher rentals resulting from high demand CBD space and limited space.
The other reason was as a result of foreigners coming from countries like China, Nigeria and India to establish clothing and retail shops here. They targeted space in the CBD – offering higher rentals, which the locals could not afford to counter. I remember the Affirmative Action Group complaining last year that foreigners were invading space in the CBD and that rentals were very high. If the city reviews the CBD Development Plan 22, by incorporating the mentioned suburbs, there will be new dynamics in the market. The incumbent CBD will be decongested, and there will be more space. Demand for space will therefore fall – pushing rentals downwards.
Property owners in the targeted suburbs will have to apply for change of use permits for them to legally accommodate companies seeking to establish corporate offices and to move from charging residential rates to commercial rates. But that must not be confused for an increase in rentals. This is because companies are legally supposed to pay commercial rates because of their intensified use.
We can’t call it a rental increase, because the companies will be moving from expensive offices in the present CBD to relatively cheaper properties in these suburbs.
As the rates paid by occupants of CBD properties are channelled towards social housing developments, the growth in the CBD implies that more revenue will be now collected for that purpose. This should bring sanity in the property market and rentals will certainly go down.
Post published in: Business