THE growing South African economy is expected to drive commercial property development strongly for the rest of the decade.

First National Bank (FNB) property economist John Loos said yesterday that commercial building activity would be a focus area for developers, while growth in residential building activity would taper off but remain positive.

Building statistics released by Statistics SA yesterday show the value of building plans passed by larger municipalities during the first 11 months of last year increased 53% year on year to R62,46bn.

Loos said FNB was expecting annual economic growth of 4%-5% for the rest of the decade. He said this would spur on commercial property development.

“Already we have seen a decline in office and industrial property vacancies and strong economic growth is bound to eat further into the vacancies,” Loos said. “This should drive strong new development going forward.”

He said in terms of actual building space the building of houses larger than 80m² had increased 27,4% year on year for the first 11 months of last year. In terms of building space, the building of townhouses and flats had increased a “massive 50,5%”.

Loos said nonresidential property, office and banking space building showed a 69,7% growth rate in area.

He said year-on-year growth in area of building plans passed for the first 11 months of last year increased 10,7% in houses smaller than 80m², 12% for houses larger than 80m² and 29,8% in flats and townhouses.

“If you look at building plans passed, there is still positive growth for residential property development and a lot of this activity is the flats and townhouse market,” said Loos.

But he said as far as commercial property development was concerned, growth in the square metres of building plans passed for the same period increased 47,9% for offices.

Gauteng will also be the province seeing the most development in all property sectors this year.

Loos said that in terms of value, building plans passed rose 60,3% year on year for the first 11 months of last year in Gauteng.

Western Cape and KwaZulu-Natal came in second and third with 47,5% and 36,1%.

Property economist Erwin Rode shared Loos’s optimism for commercial property development.

“We’re in a happy situation in this country in that nonresidential property or commercial construction is set to take over from residential property construction as the main driver of fixed investment in buildings,” said Rode.