Daily Archives: March 6, 2025

Cape Town opens electricity grid to energy traders after successful pilot

The City of Cape Town is opening its electricity grid to private electricity sales and trading following the conclusion of a successful year-long electricity ‘wheeling’ pilot project.

Wheeling allows participants to buy electricity directly from Independent Power Producers or licenced energy traders using existing municipal grid infrastructure.

Over 562 800 kWhs of power has already been generated and wheeled across the City’s grid between private sector energy traders during the pilot phase.

On average, a home in South Africa uses around 4,500 kWh per year so 562,800 kWh would be enough to power approximately 125 homes for a year.

“In this next phase, the City will promote the scaling up of power trading across our electricity grid between qualifying private sellers, based on bilateral and multi-lateral trading agreements,” said mayor Geordin Hill-Lewis.

“This is the start of a changing role for municipalities in the energy space. If we consider what has been generated just in the pilot, when we scale it up, the numbers get absolutely huge so it is important that we get it right. Thank you to our City teams and private partners who have shown again that Cape Town is leading the efforts to change the energy regime,” the mayor said.

Cape Town’s wheeling pilot phase included three wheeling participants (traders), three generators and three off-takers:

  • Trader (trades the generated energy over the City’s grid)
  • Generator (generator of the wheeled energy)
  • Off-taker (receiver of the wheeled energy)

Trader: Enpower Trading
Generator: FairBridge Mall, Brackenfell
Off-taker: Shoprite Head Office, Brackenfell

Trader: Etana Energy
Generator: Constantia Shopping Mall
Off-taker: Growthpoint Properties, City Centre

Trader: Equites Property Fund
Generator: Equites Property Fund Limited, Parow Industria
Off-taker: APF Portside, City Centre

Equites Property Fund said that the transfer of electrons from its generation site in Parow Industria to the off-taker on the Foreshore enabled the company to advance its sustainability objectives.

“We are excited about the prospect of expanding our wheeling capacity beyond the pilot to serve multiple off-takers and look forward to the moderation of wheeling tariffs to encourage greater participation in this transformative initiative,” said Equites Property Fund head of Sustainability, Irshaad Wadvalla.

“By successfully delivering renewable power to Shoprite Checkers over the past year, we have shown that energy wheeling and trading is not just viable but essential to diversifying South Africa’s power supply. We commend the City of Cape Town in paving the way for energy security and economic growth and look forward to continued collaboration in expanding renewable energy access,” said Enpower Trading CEO, James Beatty.

The average salary in South Africa’s real estate industry

The average salary in South Africa’s real estate industry is R960,000 per annum according to Macdonald & Company’s annual ‘Salary, Rewards and Sentiments’ survey report.

That dataset excludes salaries for those respondents who are in the graduate/assistant level.

Taking all salaries into account, the real estate recruitment specialists estimate the median average to be $31,765 annually (R582,000), or approximately $2,650 per month (R48,500).

The data, collected among 11,400 professionals, including 2,024 in South Africa, found that local professionals were also paid R84,000 in bonuses from 2024-25 with two-thirds awarded a pay rise, and a 10% increase on average.

In South Africa, the real estate investment market recovered at the end of 2024, with transaction volumes reaching R34.3 billion, a 21% increase from the previous year.

This growth was driven by large-scale transactions and a favourable interest rate environment, Macdonald & Company said.

“However, confidence from our survey respondents is relatively low, with only 37% of respondents expressing optimism about the economy over the next 12 months.”

A large proportion of employees (61%) are likely to move jobs in 2025, indicating a dynamic job market driven by the search for better compensation, the report found.

However, according to the hiring specialist, recruiting skilled candidates remains a significant challenge for hiring managers in real estate, with three-quarters of employers reporting difficulty in attracting individuals with the necessary skills.

“With an average base salary of R960,000 and bonus of R84,000, the job market is dynamic, with six in ten hiring managers looking to grow their teams this year, highlighting the ongoing challenges to recruit skilled candidates. Despite a significant recovery in the real estate investment market, economic confidence remains uncertain, but more upbeat than in previous years,” said Julie Teague, managing director, South Africa.

Overall, global real estate salaries have seen a modest increase, with the average salary reaching $79,410, a 4.0% rise compared to the previous year.

Approximately two-thirds of employees globally received a pay raise. The rate of increase varies across regions, with the U.K. experiencing a significant year-on-year rise in salary with an average 6.7% uplift, following the lowest increase back in 2023-2024 (0.4%).

The US and Southeast Asia saw an average uplift of 6.6%, Europe at 8.1%, South Africa with 8.9%, and the Middle East region seeing the most significant average uplift of 11.2%.

Annual pay reviews or cost of living/inflation adjustments are the most common reasons for salary increases. For annual pay reviews, the average salary increase was 6.1%, promotions saw an uplift of 12.8%, and moving jobs resulted in an average 14.4% increase.

Concerns about the cost of living and inflation have led to a notable proportion of employees (20.5%) receiving pay increases as a cost of living/inflation adjustment. This figure represents an increase from 16% the previous year.

The global inflation rate in 2024 was 5.8% and is expected to decline to 4.3% in 2025 (Statista).

Of those surveyed in real estate who cited that their pay was increased to account for the cost of living/inflation, the average pay rise was 4.4%, and for annual pay reviews, it was 6.1%.

Combined, the average increase is 5.7% in line with global inflation. This suggests that many employers continue to address the impact of inflation on their staff.

Work-life balance continues to outrank salary level as the most important factor in a role. Three-quarters of employees in real estate are offered some level of flexibility in the location and/or hours they can work.

However, there is a slight increase in the number of days organisations are mandating a return to the office.

Despite this, 76% say they have some level of flexibility in their workplace, including flexible hours and where they can work.

Globally, confidence in real estate is on an upward trajectory. After a subdued 2024, this year sees renewed confidence, with 57% confident in the primary asset class they work with.

Leading the charge, saying they are confident or very confident this year are those that work with data centres (83%), industrial/logistics/IOS (69%), and infrastructure (68%).

Financial strain across South Africa’s income groups

A study by debt management service, DebtBusters, shows that upper-middle-income South Africans earning more than R420,000 per year are experiencing significant financial distress.

Despite relatively stable salaries, these individuals are spending an overwhelming 74% of their take-home pay on servicing debt— the highest percentage across all income groups.

The study, which examined data from various income brackets, highlights the increasing financial pressure faced by South African households.

On average, consumers allocate 68% of their income towards debt repayments, with high-income earners bearing the greatest burden.

The DebtBusters Q4 2024 report shows that high-income earners face a debt-to-income ratio of 187%, meaning they owe nearly double their annual earnings.

Major contributors to this debt are home loans and vehicle financing, which make up a significant portion of their monthly repayment commitments.

In contrast, individuals earning between R240,000 and R420,000 annually have a debt-to-income ratio of 137%, while lower-income groups are facing even more severe financial challenges.

The study also sheds light on how South Africans across various income brackets allocate their spending beyond debt repayments:

-Top Earners (R420,000+): The largest proportion of non-debt income is spent on medical aid and insurance, accounting for 13% of their disposable income.

-Middle-Income Earners (R10,000–R20,000): This group dedicates 31% of their income to housing costs, the highest proportion across all income bands.

-Low-Income Earners (Under R5,000): Individuals in this group spend more than 50% of their disposable income on groceries, while only 9% is allocated to accommodation.

Consumers have faced significant increases in the cost of living over the last decade.

Inflation has surged by 144%, petrol prices have risen by 172%, and electricity tariffs from Eskom have jumped by 235%, while salaries have only grown by 98%, making it difficult for many households to maintain financial stability.

Benay Sager, executive head of DebtBusters, commented: “The disparity between income growth and rising living costs is alarming. This has forced many South Africans to cut back on essential expenses, such as housing and groceries, to make ends meet.”

The study also reveals a concerning trend regarding retirement savings. Only individuals in the top two income bands allocate any portion of their income to long-term savings, leaving lower-income groups with little ability to save for retirement.

“The recent changes to the two-pot retirement system are a step in the right direction, but there is still much work to be done to educate South Africans about the importance of long-term savings,” Sager said.

Average property price in South Africa breaches R1.6 million mark

For the first time, the average house purchase price in South Africa has surpassed R1.6 million, according to alternative home financier Sentinel Homes.

This marks an almost 1000% increase from 1994, some thirty odd years ago, when homes averaged just R150,000.

The trend of rising house prices is expected to persist, with current conditions making it more expensive to build new properties than to trade in existing ones, said Renier Kriek, managing director of the company.

“In 2024, typical for pre-election uncertainty, people held off large capital acquisitions such as buying a house,” he said.

Prospective property buyers and sellers had hoped for steeper interest rate cuts earlier in the year. However, the South African Reserve Bank only made incremental reductions of 0.25% in September and November 2024. Despite a further cut of 25 basis points in January 2025, from 7.75% to 7.5%, Kriek argued that this is still not enough.

“Ideally, the rate should be a further 100 to 150 basis points lower to reduce borrowing costs, stimulate the economy, and boost job creation. This would also benefit the real estate market.”

However, recent interest rate cuts, coupled with the formation of South Africa’s Government of National Unity (GNU), have created a five-year high in consumer confidence.

A survey conducted by Lightstone among estate agents indicated an optimistic outlook for 2025, with 86% of respondents expecting to meet their sales targets, a significant increase from 73% in 2024.

“The residential real estate market is influenced by emotion in addition to economics and therefore has a more intensely cyclical pattern than if it were strictly governed by logic,” Kriek said.

Life changes such as marriage, starting a family, or children leaving home occur regardless of economic downturns. “These life cycles continue unabated, and the only logical conclusion is that there’s pent-up demand building in the system during times of lower volumes,” he added.

While the desire for property transactions remains constant, people tend to wait for positive signals before acting in tough economic times. Now that these signals have emerged, all the pent-up demand has been unleashed, resulting in a sharp shift in the residential property cycle.

This is reflected in a 16.2% year-on-year increase in home loan applications in December 2024, according to bond originator Ooba.

“The trend of escalating house prices will continue because it’s currently more expensive to build new stock than to trade in old stock,” said Kriek. “Obviously, the higher the demand for old stock, the steeper the price increases and the less affordable houses will become for most South Africans.”

Over the past 70 years, property prices have become increasingly detached from salary growth, both in South Africa and abroad. The value of property is rising faster than wages, which explains why the average house price (in multiples of salary) is much higher today than in the past.

Kriek predicts a continued reduction in property sizes, including smaller erven and a rise in micro-apartments.

“We will likely continue to see reducing property sizes, which means smaller even and increasing numbers of micro-apartments. Developers will also continually increase the amenities included in new estates and sectional schemes, to differentiate the smaller newly built apartments and houses and increase their desirability and competitiveness. Think padel courts, coffee shops, childcare centres, and restaurants.”