South Africa’s industrial real estate boom mirrors global trends as e-commerce, automation, and supply chain optimisation reshape warehousing needs. As a gateway to Africa, its ports, manufacturing hubs and proximity to rapidly growing regional markets make it an attractive destination for logistics companies seeking to tap into the continent’s potential.
For warehousing developers, expanding into provinces like KwaZulu-Natal, the Eastern Cape, and the North West may make strategic sense due to their growing industrial sectors and increasing demand for modern logistics solutions.
Let’s take a closer look at what makes these provinces attractive.
KwaZulu-Natal: Riding the Wave
KwaZulu-Natal (KZN), home to two of the busiest ports in Africa, is experiencing a robust demand for industrial real estate, particularly warehousing and distribution centres.
“In KZN, the harbour is driving the demand for industrial warehouses for storage and distribution,” Barry Reed of Just Property Action in Durban confirms.
The port handles a substantial volume of imports and exports, necessitating extensive warehousing facilities to efficiently manage the flow of goods.
Reed is optimistic about the future, pointing to significant developments like the privatisation of the container section at Durban harbour. “Increased efficiency will increase throughput, further amplifying the demand for industrial warehouses,” he says.
The anticipated improvements in port operations are expected to attract more logistics companies, intensifying the need for modern, well-equipped warehousing spaces.
There’s also significant warehousing on the “N3 corridor” around Shongweni, Hammarsdale, Cato Ridge and Camperdown. This is likely to become even more attractive with the upgrades being done to the N3.
Reed notes that the evolving needs of larger logistics companies are influencing warehouse design in the province. Greater height is now required for advanced racking systems as well as concrete-reinforced load-bearing yard spaces for container stacking. Modern warehouses must accommodate automated processes to enhance efficiency and meet the demands of large-scale logistics operations.
Eastern Cape: Infrastructure and e-commerce catalysts
The Eastern Cape benefits from strong automotive and manufacturing sectors, with hubs like the Coega Industrial Development Zone supporting automotive assembly and export – home to companies like Volkswagen and Mercedes-Benz – and government incentives that promote local manufacturing and exports. The province is witnessing a notable increase in industrial real estate demand, also propelled by the expansion of e-commerce since the pandemic.
Mark Connett of Just Property Port Elizabeth Commercial explains: “The rise of e-commerce, accelerated by changes in consumer behaviour, has led to increased demand for warehousing and logistics hubs. Efficient distribution centres are crucial for online retailers to meet delivery expectations.”
These retailers require sophisticated logistics networks to ensure timely deliveries, boosting demand for modern warehousing facilities.
Connett says that “major investments in ports, roads and industrial parks are attracting businesses that require such modern facilities.”
These include:
- Transportation networks: Proximity to major road links (N2) and having three ports in the province.
- The Coega Industrial Development Zone (IDZ): This world-class industrial park next to the Port of Ngqura boasts modern facilities, tax incentives and streamlined regulatory processes.
The Eastern Cape offers promising opportunities, including high investment yields with industrial properties yielding an average of 10% and newer facilities achieving around 8%. In addition, long-term tenants in logistics and manufacturing often sign extended leases providing steady rental income. But there are still challenges. Despite the investment in infrastructure mentioned above, many roads are in poor condition.
Investors must consider both the advantages of strategic location and the potential drawbacks of local infrastructure challenges.
North West: Navigating unique challenges
The industrial real estate market in Rustenburg is evolving, with rentals emerging as the preferred option for many businesses. According to Carol Scholtz of Just Property Beyond in Rustenburg, the limited availability of large industrial warehouses zoned for heavy industrial use has prompted companies to seek alternatives.
“Many companies are leaving for more affordable warehouses,” she explains, adding that most properties in the area are zoned for light industrial use, which suits businesses requiring functional, well-located spaces rather than heavy-duty facilities.
The demand for rentals is particularly strong for open-plan workshops and warehouses ranging from 300 to 1,000 sqm, which offer practical layouts and access for larger vehicles like links and super links. While newer industrial areas lack the 380 amps power supply needed for heavy industrial operations, these properties are well-suited to light industrial activities, meeting the needs of businesses looking for operational efficiency without the overhead of ownership.
Financing challenges have also influenced the trend toward rentals. Scholtz points out that “very few banks here understand commercial property applications, and loan approvals can take months”. With deposits of up to 30% often required, many businesses prefer renting to preserve their working capital. This has created opportunities for property owners, who benefit from steady rental income and long-term leases with reliable tenants. “Most owners are renting out their properties for income generation,” Scholtz notes, highlighting how the market is adapting to meet demand.
Broadening the focus
South Africa’s industrial real estate offers substantial opportunities beyond the traditional hubs. By expanding investigations beyond the Western Cape and Gauteng, investors can uncover untapped potential and diversify their portfolios. Each province offers distinct advantages, from strategic locations and infrastructure developments to sector-specific growth in industries.
Success in South Africa’s industrial real estate sector requires adaptability and a deep understanding of regional nuances. Engaging with local experts, such as local property professionals, and staying attuned to evolving market trends will equip investors to navigate challenges like zoning regulations, infrastructure constraints and financing complexities.
In a global landscape where e-commerce growth, supply chain optimisation and technological advancements are reshaping industrial needs, South Africa stands out as a gateway to the African continent. By considering opportunities across all provinces, investors can position themselves to take advantage of the increased demand for warehousing.
For more information on Just Property, please visit www.just.property. Follow Just Property on Facebook https://www.facebook.com/JustPropertySA/ and LinkedIn https://www.linkedin.com/company/just-property-group/.
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Author: Angelique Goodall from Paddington Station PR on behalf of Just Property.
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