South Africa Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
The South African property market was less impacted by the global financial crisis relative to most regions around the globe. The resilience of the market was boosted by the 2010 football World Cup, which provided significant stimulus to the sector, and the surge in international visitors had a positive impact on the retail and hotel sub-sectors in the country. However, the property sector has weakened following the completion of the World Cup and despite a still reasonably strong economy.
At the margin, the commercial real estate sector will benefit from new projects, which will lift overall rental rates. However, it does not seem the World Cup has had a substantial medium- to long-term impact on the commercial real estate sector. It has undoubtedly provided the impetus for substantial investment in new sporting and transportation infrastructure which, in turn, will contribute positively to the overall business environment in South Africa. However, take up in commercial office space in South Africa has been relatively low in 2010. Net take up of prime office space in Q410 was actually negative in comparison to the previous year.
Yields have also remained relatively flat in the retail sub-sector in South Africa. Retail sales figures show growth of 9.92% year-on-year (y-o-y) for the first quarter of 2011, though rentals have remained flat. A more robust consumer may provide an opportunity for landlords to increase rental rates, but vacancy levels have remained little changed, which currently counters this opportunity. This is particularly evident in second-tier centres. South Africa is still in an urbanisation phase, with a number of newer high-density trading areas being developed or recently completed. This will inevitably put some pressure on street frontages in quieter areas.
The residential sector softened in February 2011. Standard Bank’s median house price fell to a 1.5% y-oy growth rate in February from 2.3% y-o-y in January. Even though interest rates are historically the lowest in three decades and household disposable income has been growing over 2010, the residential sector is struggling. High levels of debt and uncertainties about employment security are dampening demand. According to SEEFF, a major player in the housing market in South Africa, tightening credit from the major banks has also resulted in a more cautious home buyer in South Africa. The South African economy has continued its recovery – BMI forecasts 3.5% growth in 2011 and 4.0% in 2012. The overall picture for the economy is one of moderate growth. The rebound of the consumer sector will be a key driver, but headline growth is likely to be reined in by rising imports.
The South African property market was less impacted by the global financial crisis relative to most regions around the globe. The resilience of the market was boosted by the 2010 football World Cup, which provided significant stimulus to the sector, and the surge in international visitors had a positive impact on the retail and hotel sub-sectors in the country. However, the property sector has weakened following the completion of the World Cup and despite a still reasonably strong economy.
At the margin, the commercial real estate sector will benefit from new projects, which will lift overall rental rates. However, it does not seem the World Cup has had a substantial medium- to long-term impact on the commercial real estate sector. It has undoubtedly provided the impetus for substantial investment in new sporting and transportation infrastructure which, in turn, will contribute positively to the overall business environment in South Africa. However, take up in commercial office space in South Africa has been relatively low in 2010. Net take up of prime office space in Q410 was actually negative in comparison to the previous year.
Yields have also remained relatively flat in the retail sub-sector in South Africa. Retail sales figures show growth of 9.92% year-on-year (y-o-y) for the first quarter of 2011, though rentals have remained flat. A more robust consumer may provide an opportunity for landlords to increase rental rates, but vacancy levels have remained little changed, which currently counters this opportunity. This is particularly evident in second-tier centres. South Africa is still in an urbanisation phase, with a number of newer high-density trading areas being developed or recently completed. This will inevitably put some pressure on street frontages in quieter areas.
The residential sector softened in February 2011. Standard Bank’s median house price fell to a 1.5% y-oy growth rate in February from 2.3% y-o-y in January. Even though interest rates are historically the lowest in three decades and household disposable income has been growing over 2010, the residential sector is struggling. High levels of debt and uncertainties about employment security are dampening demand. According to SEEFF, a major player in the housing market in South Africa, tightening credit from the major banks has also resulted in a more cautious home buyer in South Africa. The South African economy has continued its recovery – BMI forecasts 3.5% growth in 2011 and 4.0% in 2012. The overall picture for the economy is one of moderate growth. The rebound of the consumer sector will be a key driver, but headline growth is likely to be reined in by rising imports.
Contents
Executive SummarySWOT Analysis
South Africa Real Estate SWOT
South Africa Economic SWOT
South Africa Business Environment SWOT
Real Estate Market Overview
Table: South Africa’s Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, US$)
Table: South Africa’s Real Estate Market – Net Yields, 2010 And 2011 (%)
Table: South Africa’s Real Estate Market – Terms Of Rental Contract/Lease, Mid-2010
Industry Forecast Scenario
Real Estate Outlook
Table: South Africa’s Real Estate Market – Rentals, 2010-2012 (m²/month, US$)
Table: South Africa’s Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Construction And Infrastructure Outlook
Table: South Africa Construction And Infrastructure Industry Data, 2007-2015
Table: South Africa Construction And Infrastructure Industry Data
Macroeconomic Outlook
South Africa – Economic Activity, 2008-2015
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Middle East And Africa Real Estate/Construction Business Environment Ratings
South Africa’s RECBER
South Africa’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Middle East & Africa, Annual FDI Inflows
Table: Trade And Investment Ratings
Table: South Africa – Top Export Destinations, 2001-2008 (US$mn)
Competitive Landscape
Company Monitor
Aveng
ERA Real Estate South Africa
Group Five
Liberty Properties
Murray & Roberts Group
Orion Real Estate
Pam Golding Properties Group
SA Corporate Real Estate Fund
Seeff Properties
Wilson Bayly Holmes-Ovcon
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
Sources 62 Skip to top