New route extentions to the East and West Rand, East of Pretoria and Soweto were announced last week and property investors should look at past experiences before assuming that proximity to a Gautrain station will guarantee investment success.
“While we have seen lots of commercial development around the Rosebank, Sandton and even Midrand stations, property owners have really been battling to find tenants for office blocks around the Hatfield station in Pretoria. Even dropping their rent substantially has not helped and some offices have been standing empty for three years,” he says.
An analysis of commuting patterns shows that the Rosebank, Sandton and Park stations are destination stations, while more trips originate from Hatfield, Pretoria, Centurion, Rhodesfield and to a lesser extent Midrand and Marlboro. The OR Tambo station is both destination and origin, being situated at the international airport.
This means that people live in and around Hatfield, Pretoria, Centurion and Rhodesfield stations, but spend their days around Sandton, Rosebank and Park station.
Property economist and professional valuer Erwin Rode said Hatfield has seen some urban decay in recent years. Police confirm that the crime rate in Hatfield has dropped over the last four years, but that has not convinced employers it is a good address.
The development node for office space has shifted over the last few years from Hatfield to neighbouring Brooklyn. He said this might be because rental prices for grade A office space have not increased much and therefore the market for grade B office space has been eroded. Tenants who used to rent B grade space in Hatfield have relocated to grade A space in Brooklyn.
Roelf Visser, director of accommodation at the nearby University of Pretoria says a lot of residential development is taking place around the Hatfield station, aimed at alleviating the acute shortage of student accommodation.
The university has 8 000 beds in total. About 2 800 of these are allocated for first year students; while up to 11 000 are expected at the campus next year. “Up to 70% of them want to be in residencies, because it is close,” said Visser.
In the immediate vicinity of Gautrain’s Hatfield station one developer is on site and hopes to complete 968 bachelor units in 2015. Another has bought land in Prospect Street for 700 units, the first phase of which will also be completed in 2015. Visser names plans for another 2 800 beds or units close to the station or within easy reach through existing bus routes.
“The demand is huge. Developers who get into the market now, won’t battle to find tenants,” said Visser.
Espach points out that the sharp increase in residential development around Hatfield station is not driven by the Gautrain and will strengthen the station’s position as a point of origin, rather than destination for travellers.
Gauteng MEC for roads and transport Ismail Vadi said the new Gautrain route specifics are still to be determined. “Even if we knew, we would not have made it public, to prevent speculation.” He said property values skyrocket the moment the detailed route is known.