East London in good shape, offering a quality lifestyle.

East London in good shape, offering a quality lifestyle.

Investpro Property focuses on retail, industrial and retail letting, commercial property portfolio and management, and (more recently) property development, predominately in the Border area - East London, Mthatha to Port Alfred, and Queenstown. Investpro Property's Robin Knott shares his opinions about the optimism for the region with South Africa Property Review. "There are many wealthy people in Eastern Cape," he says. "East London was the wealthiest per capita by individual unit a few years ago, when Nelspruit took over. Many wealthy people from the Transkei came to settle and invest in East London, which serves as a supply base for the Transkei. East London is a busy and economically active city, especially over the past 10 years. This is largely because of its proximity to the Transkei, which has plenty of fertile land for development; both local and national government are showing a keen interest in the Transkei. In East London itself, there is very little available level land for development. East London is expanding northwards along the Gonubie River. It remains a better investment prospect for commercial and residential property development than its neighbour Port Elizabeth. Property valuations in East London are about 20 to 30% higher than Port Elizabeth; what you get in East London for R3-million will cost you about R2,5-million in Port Elizabeth. Also, East London is obviously a lot cheaper than Cape Town and Johannesburg. "The difficult thing for the East London residential property market is the ability to raise finance. There is a huge demand for properties in the lower-income type of development, and there are plenty of buyers. Offers are being made and accepted, but people are battling to get the necessary finance. The requirements from the banks regarding income are pretty high, presenting a bit of a stumbling block for the residential market in that sector. "While there is difficulty in obtaining the necessary finance for buyers, the demand for rental properties is increasing, which obviously pushes rental prices up - and when rental prices get too high, people find it's not worth buying again. Then developers start developing, and so the property cycle continues. We find there is a big demand for rentals in the R5 000 to R10 000 category, and you can still get a good two-bedroom accommodation at that price."
Transkei development benefits East London
"The highway to Durban is going to be very crucial and beneficial for East London," says Knott. "The bypass through Mthatha and Butterworth may take a few years to complete, but the roads are fantastic now. There's a lot of money being pumped into the Transkei for infrastructure, although it's mostly social grant-given, and there is an influx of migrant labour and money. The growth potential is big. Mthatha already boasts 13 Spar outlets, four Shoprite stores and three Pick n Pay stores. This is not hurting East London - it is helping the region. "The motoring industry in East London and Mthatha has grown. Many companies are basing their head offices here rather than in Port Elizabeth; this is helping East London to grow." "East London has been quite resilient to the recession, mostly because the economy in the city and surrounds is government driven - is the administrative hub for the Eastern Cape. There are many government employees here who are spending money and investing locally, which has helped to drive up house prices. "East London remains a popular place to live in, invest in and do business in. It offers a good quality of life and some excellent schools. The quality of life here is very different to that of hustling, bustling metropolis that is Johannesburg."