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South Africa mirrors global demand for warehousing

03 Oct 2024 - by -
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South Africa’s only real estate investment trust (REIT) focused on logistics warehousing, Equites Property Fund, reports strong growth in demand for warehousing.It says in its 2024 annual report, there has been growth of about 31% in market rentals for South African A-grade logistics facilities over the past four years.In his foreword, chief executive officer Andrea Taverna-Turisan writes that “the demand remains robust for first-generation properties linked to sustainability, sought after by both local and multinational entities across various sectors such as B2B, B2C, 3PL, and everything in between”.During the year under review, the company undertook upwards of 300 000 square metres of development work.Internationally, Grand View Research values the global warehousing market at over $1 trillion, predicting that it will grow at a compound annual rate of 8.1% to 2030. Growth is being driven by e-commerce expansion and increasing globalisation and supply chain complexity.Demand for cold storage warehousing is growing fastest of all segments due to increased consumption of perishable foods such as fruits, vegetables, and dairy products, as well as the compliance with increasingly stringent food safety regulations.Nordic Development Fund-financed research by EEP Africa identified a number of factors driving the demand for cold storage in southern Africa. These include increases in fruit exports driven by South Africa and regional government interventions.On the back of government action, a drive to meet local and export demand, and a need to adapt to climate change, there is a growing interest in cold chain infrastructure and solutions.At present the warehousing operations are geared for exports, but local food insecurity and growing demand are supporting expansion in local and intra-regional operations.The report identifies Zimbabwe and Zambia as alternative investment destinations to South Africa for investment in cold chain warehousing due to the existing maturity and strength of SA operations. Boniface Abudho, Africa research analyst at Knight Frank, says the continent’s warehousing and logistics sector is being transformed by the establishment of major industrial corridors.Knight Frank estimates that rail and road projects valued at $400 billion are under way throughout the continent. The implementation of these projects is expected to promote intercontinental trade in Africa.The establishment of special economic zones (SEZs) is also supporting the demand for warehousing. It is estimated that there are about 240 SEZs in 47 of 54 countries in Africa, out of a global total of over 5 000. ER

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