Unpacking the industrial sector and the role of increasing imports
Category Industrial News
Latest reports on South Africa's industrial sector reveals interesting findings relating to the transformation, expansion and modernisation of the sector in the upcoming years. Imports will play a primary role in this growth and this will drive up demand for logistics and warehouse properties. Unsurprisingly, Gauteng will receive the majority of the industrial pipeline as the market expands.
From 2008 to 2017, imports accounted for a phenomenal, 30% of the country's GDP. This was a marked increase from the previous decade, which saw it contribute 24% of GDP (1996 to 2007). In the next 10 years, imports are expected to follow this upward growth trajectory as global trade and strategic trade partners will motivate for the increase of goods and services into the country.
The main factor driving up the demand for industrial properties is imported consumer goods. Not only are these commodities rejuvenating the sector, but it is also having a positive effect on the economy as a whole. In fact, statistics show that retail and wholesale trade sales have had the biggest influence on the economy, with consumption of these goods accounting for more than 61% of GDP.
Growth, pressures and solutions
Over the past decade (2007-2017), the industrial sector has received a total of 14.5mil sqm of stock. Gauteng received the majority of this development, at 41%, and this was dominated by logistics and warehouse construction. The Western Cape and KwaZulu-Natal also saw a development boom, however, it was not at the extent of Gauteng. Respectively, the provinces received 26% and 19% of new industrial stock.
The next 10 years will follow a similar trajectory, defined by growing imports which will influence the demand for and development of industrial properties. However, with such growth comes the threat of pressure to existing infrastructure. Unfortunately, these pressures are already being identified in ports and airfreight terminals, which are often reported as operating at full capacity. While, trade activity has increased the use of trucks on the national road network, which is causing wear and tear to roads at faster rates.
The good news is that there are plans to combat these pressures. In particular, Gauteng is set to upgrade City Deep as a key sub-port from Durban to the northern provinces of the country. In addition, there are plans to develop the Ekurhuleni aerotropolis by upgrading the cargo terminals and ACSA (Airports Company SA) has established a business development unit to pursue new cargo routes. While the upgrade of road infrastructure will be managed by the provincial government and parastatals who will improve capacity for smoother trade activity.
Modern industrial properties at the forefront
The import industry's influence on the industrial sector has transformed it and changed the way it functions. Previously, industrial buildings required office features that accommodated a large number of employees. Today, this is not a popular requirement as office components have been significantly reduced to accommodate more machinery and technology use, which has ultimately replaced labour.
An example of a modern industrial property is a AAA grade warehouse to let in Anderbolt, Boksburg. Listed with 3CUBE Property Solutions, the warehouse is brand new with a generous power supply of 2MVA. A large yard space with multiple roller-shutter doors makes it easy to receive or dispatch goods.
With imports transforming the industrial sector, it will be interesting to see the full effect of this in the upcoming years.
To find out more about our listed industrial properties, speak to our helpful real estate agents today.
Author: 3CUBE Property Solutions