Author Archives: Staff Writer

Joburg leads as investors flock to office conversions

Nearly one in five office property purchases in South Africa is now geared toward residential or mixed-use conversion, new data shows.

Nowhere is this trend more visible than in Johannesburg, where 38.1% of office transactions involve planned conversions, according to the latest FNB Property Broker Survey.

These projects are not only breathing life into outdated commercial stock—they’re helping correct a long-standing oversupply, noted John Loos, senior property economist for Commercial Property Finance at FNB.

While COVID-19 may have accelerated the shift, South Africa’s office sector faced challenges well before 2020. The rise of remote and hybrid work during lockdowns merely highlighted existing vulnerabilities.

Advances in technology, digitisation of records, and flexible work practices had already begun eroding demand for traditional office setups.

Even as the hype around working from home (WFH) has moderated, the workplace landscape has permanently changed. Many employees never returned full-time, and businesses have become leaner and more digitally enabled – shrinking the footprint needed to operate.

South Africa’s sluggish economic growth since the early 2010s only compounded this structural shift, limiting the growth of formal employment and stifling long-term demand for commercial office space.

From a low of 9.2% in 2014, national office vacancy rates climbed to 18.2% in 2021/22 following hard lockdowns. By 2024, the rate had declined to 15.8% – still elevated, but clearly improving.

Data from Rode shows a similar trajectory: average A+, A, and B-grade vacancies dropped from nearly 18% in early 2022 to 12.8% by Q1 2025.

However, the recovery remains uneven, said Loos. Coastal decentralised markets – particularly Cape Town and Durban – are performing better, with vacancies just above 8%, partly due to growing demand from the call centre sector.

By contrast, Gauteng metros remain under pressure: Johannesburg posted a 14.1% vacancy rate in Q1 2025, while Pretoria came in at 13.4%.

Market sentiment supports these figures. In FNB’s Q2 2025 survey, 57% of property brokers said supply still exceeds demand. While that’s still a majority, it marks a big improvement from the record 98.4% who said the same in Q2 2021.

One of the strongest indicators of market correction is the plunge in new office development. Just 82,942 square metres were completed in 2024 – an 86% drop from 2019, and a full 90% down from the 2013 peak.

This supply-side slowdown is complemented by rising affordability. Inflation-adjusted rentals have dropped 16.5% since 2020, while real capital values per square metre are down 25.9% since their 2016 high, based on MSCI data adjusted for GDP inflation.

This shift has made office properties more appealing to both tenants and value-seeking investors.

The FNB Property Broker Survey began tracking buyer motivations in Q1 2025 and found that:

-43% were buying for their own business use
-36.4% for rental investment
-19.3% for residential or mixed-use conversions

This trend is particularly strong in Johannesburg, where conversions drive 38.1% of transactions. Nelson Mandela Bay follows at 17.1%, with Tshwane at 14.9%. In contrast, Cape Town (4.6%) and eThekwini (1.3%) have seen little conversion activity—likely because their office fundamentals remain healthier.

But these disparities may also point to untapped opportunity. Cape Town’s City Bowl, for instance, continues to face significant residential pressure. Repurposing underused office space there could help ease housing demand.

As FNB property economist John Loos noted that an important mechanism for absorbing excess office space is unlikely to be needed in the future, suggesting that conversions may slow as equilibrium returns.

With demand permanently lowered by shifting work patterns, tepid economic growth, and rapid digitisation, the sector is moving toward a more sustainable footing – driven by reduced development, lower costs, and the strategic repurposing of space.

Conversions, particularly in Gauteng, have emerged as one of the most effective tools in restoring balance. The future of the office market may well depend on how quickly and creatively it continues to adapt to these lasting changes.

Cape Town’s real estate bus rolls on, leaving first-time buyers on the curb

Cape Town has seen property prices surge by 160% since 2010, making it increasingly difficult for young buyers to secure homes near central employment hubs, reports Bloomberg.

A lack of inherited wealth, combined with the need to support extended families, is pushing many out of reach of desirable neighbourhoods and while banks and the city government are introducing homeownership initiatives, experts agree the main issue remains: too little housing in prime locations.

“Born Frees of all races are finding it harder to buy property because the closer you get to economic activity, the more expensive it is—even studio apartments are going for 1 million rand and more in Cape Town,” said Mfundo Mabaso, head of home and structured lending at FNB.

Banks are stepping in with solutions like 100% home loans and co-signatory mortgages for groups of up to 12 people. Standard Bank reports that home loans for under-35s average around R1.2 million, enough to buy only a small studio in the City Bowl.

The structural problem is a shrinking supply. With Table Mountain and the Atlantic Ocean enclosing much of Cape Town’s high-demand urban land, opportunities for new developments are few and far between.

To address this, the City of Cape Town has released various parcels of inner-city land for affordable housing projects and established a Development Charges Fund to subsidize infrastructure costs. The city is also fast-tracking building approvals and promoting alternative construction methods.

“This model has big potential to help solve Cape Town’s housing shortage,” Eddie Andrews, head of spatial planning and environment affairs in the mayor’s office told Bloomberg. He noted that “the fundamental reason why well-located housing is unaffordable … is because there is not enough housing supply on the market.”

Developers like Balwin Properties have expanded their focus on the Cape Town property market by developing a range of affordable apartments, targeting the growing middle-income market. These apartments offer a combination of affordability, high-quality standards, and lifestyle amenities.

Cape Town’s residential property market however, continues to lead the country, with home price growth of 8.7%, significantly above the national average of 5.2%, according to the latest data from Lightstone.

The Mother City remains far ahead of metropolitan rivals like Johannesburg and Durban, where price increases have hovered closer to 2%.

And this, even as South Africa faces economic challenges with the Western Cape showing remarkable resilience. While housing markets in many other regions remain flat or show modest gains, Cape Town’s continues to post strong returns.

For the seventh year in a row, Cape Town has outperformed all other regions in residential price growth. According to FNB’s Property Barometer, homes along the coast tend to appreciate faster, but Cape Town’s rate of 6.2% still stands out, well above the 1.8% and 1.9% seen in Johannesburg and Durban respectively.

The Western Cape accounted for 38% of national real estate transaction value last year despite having just 11% of the population, said Arnold Maritz, co-principal at Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs.

The Western Cape’s economy is a key driver of the region’s property boom. Stats SA reports the province’s average household income at R407,000, a substantial margin above Gauteng’s R300,000, and nearly 50% higher than the national mean.

Not only does the region boast lower unemployment than the national average, but its formal job sector grew 3.1% in 2024, compared to the national figure of 1.2%.

Unlike other regions that rely heavily on a few sectors, Cape Town’s economy is more diversified. Financial services make up a healthy portion of GDP, but the city has also cultivated a growing tech sector, which is expanding at a rate of 8% per year.

In 2024, more than R14.7 billion was invested into Cape Town’s green economy, according to a joint report by Wesgro and the City of Cape Town. This injection of capital not only boosts employment but helps attract skilled professionals from across the country.

Stats SA data shows a net migration of 92,000 working-age adults to the Western Cape in the past two years, the majority of whom hold tertiary qualifications and work in professional roles.

Cape Town’s well-managed infrastructure continues to play a central role in its property appeal. The city consistently ranks higher than other metros in service delivery.

These services translate into real economic benefits. According to the Bureau for Economic Research, Cape Town workers deliver 15% higher productivity per hour compared to counterparts in other cities, due in part to fewer infrastructure disruptions.

With a R12.6 billion infrastructure budget for 2024/25, the city is investing heavily in the future. This includes R2.3 billion for alternative energy and R4.1 billion for transport upgrades.

Cape Town’s luxury market is booming, often led by international buyers. “In our office, buyers with budgets exceeding R15 million have become the norm rather than the exception,” said Maritz.

“We repeatedly see clients inquiring about specific properties, only to learn they were sold within days – sometimes hours – of listing. The speed at which quality stock moves in these neighbourhoods is remarkable.”

Buyers are drawn not only by potential capital appreciation of 8–10% annually and rental yields of up to 5.5%, but also by the lifestyle, proximity to top schools, and the overall quality of life.

Home loan data shows differences in buyer profiles and affordability in SA

Data from ooba Home Loans covering January to May 2025 shows a positive trend in home purchases, with rising incomes among loan applicants in most regions in the country.

Five out of nine provinces recorded year-on-year growth in average monthly gross income per applicant, signalling renewed strength in the residential property sector.

Tshwane led the pack with a 16.8% increase, pushing average monthly income to R78,099. The Eastern Cape followed with a 9.5% rise to R73,052. Meanwhile, the Western Cape maintained the highest average income at R82,797 but saw a slight 2.3% decline compared to the same period last year.

Nationally, average applicant income grew 2.4% to R68,039, reflecting steady demand amid changing market dynamics, said Rhys Dyer, CEO of the ooba Group.

“The affordability of housing is often measured by comparing house prices to household income with a lower ratio generally indicating greater affordability as the household could potentially afford a larger portion of the home’s price with their income,” Dyer said.

Price-to-income ratios highlight affordability challenges in key regions.

The Western Cape recorded the highest ratio at 28.6, meaning homes cost nearly 29 times the average monthly income of applicants. KwaZulu-Natal (24.8), Eastern Cape (24.7), Johannesburg (24.5), and Free State (23.3) followed, all showing slight declines in affordability.

However, affordability improved in Tshwane, Gauteng South & East, and Mpumalanga, where income growth outpaced rising home prices.

When looking at bond repayments relative to income, Limpopo emerged as the most affordable region, with repayments averaging 17.9% of gross income. The average bond size there was R1,294,535, with monthly repayments of R13,142 against an average income of R73,371.

Other regions such as Gauteng South & East, Tshwane, and Mpumalanga saw repayments around 20.3% of income, while Johannesburg’s stood slightly higher at 21.4%.

The Western Cape recorded the highest instalment-to-income ratio at 23.3%, driven by the province’s significantly larger average bond size of R1,901,806.

Regarding buyer demographics, the Eastern Cape had the oldest average buyer age at 42 years, likely influenced by secondary or holiday home purchases.

Limpopo’s first-time buyers were the oldest on average at 37.4 years, whereas the Western Cape attracted the youngest first-time buyers, averaging 34.2 years, despite having the highest average purchase price for first-time buyers at R1.75 million.

Dyer attributed the younger buyer profile in the Western Cape partly to a strong buy-to-let market. Investment demand there accounted for 30.5% of applications, more than double the national average of 12.6%.

Gauteng South & East housed the youngest overall buyers at 38.8 years and offered the second most affordable homes, although with relatively lower incomes averaging R53,655 per month.

“The interplay between income growth, purchase price trends and regional buyer profiles, coupled with a quick succession of interest rate cuts, underscores the potential for broader recovery and the transformation in the property sector; one that presents greater opportunities for buyers across the country,” Dyer concluded.

Boost for Joburg as historic investment aims to improve municipal services

African Development Bank Group has approved a R2.5 billion corporate loan to the City of Johannesburg Metropolitan Municipality, marking the bank’s first direct lending to a subnational entity in Africa.

The transaction will finance critical infrastructure projects in electricity, water, sanitation, and solid waste management, directly benefiting over six million residents in South Africa’s economic powerhouse.

“The approval marks a transformative moment for municipal financing across Africa, operationalizing the African Development Bank’s Guidelines for Subnational Finance for the first time, the bank said.

The funding will exclusively support trading services infrastructure that generates revenue, ensuring sustainable debt repayment, while addressing urgent challenges in service delivery, it noted.

“By directly financing Johannesburg, we are unlocking a scalable model for subnational lending that enables multi-sectoral infrastructure delivery and positions the Bank as a trusted partner in driving sustainable, inclusive urban development across Africa,” said the bank’s VP for Private Sector, Infrastructure & Industrialization, Solomon Quaynor.

The loan will finance over 100 ‘carefully selected’ projects across four sectors: upgrading distribution networks, installing smart meters, expanding renewable energy capacity, and connecting 3,200 new households to the grid; rehabilitating aging pipelines, upgrading treatment facilities, and reducing water losses from 46% to 37%; and improving landfill compliance, expanding recycling facilities, and enhancing waste collection services.

The city contributes 16% to the country’s GDP and serves as a gateway for investment across the continent, however, it faces significant infrastructure challenges, with annual electricity losses of 30% for the past three years and water losses of 46.1%.

The project is expected to create 2,869 jobs during construction and substantially improve service reliability for millions of residents.

An additional $1.5 million grant through the Bank’s Urban and Municipal Development Fund is being sought to support municipal reforms, governance and climate-resilient planning initiatives.

The bank said it has also approved a $474.6 million loan for South Africa’s Infrastructure Governance and Green Growth Programme (IGGGP), marking a milestone in the country’s transition toward a sustainable, low-carbon economy.

This IGGGP is the second phase of the bank’s support for South Africa’s Just Energy Transition. It builds on the success of the $300 million Energy Governance and Climate Resilience Programme, approved in 2023, which delivered key reforms that bolstered financial stability and increased renewable energy capacity.

Structured around three interconnected pillars: enhancing energy security through power sector restructuring, supporting a low-carbon and just transition, and improving transport efficiency – the IGGGP is designed to accelerate South Africa’s green transformation and promote inclusive, resilient growth.

The IGGGP also places strong emphasis on green industrialisation, skills development, and job creation, including support for electric vehicle manufacturing and green hydrogen production.

Recent estimates from the IMF show that South Africa’s Just Energy Transition could boost the country’s GDP growth by 0.2 to 0.4 percentage points annually between 2025 and 2030.

This financing includes targeted grant components to promote energy efficiency initiatives and advance rail sector reforms.

Key priorities include accelerating vertical separation and establishing an investment framework to revitalize South Africa’s freight and logistics systems.

The African Development Bank’s support forms part of the $2.78 billion international financing package that includes $1.5 billion from the World Bank, €500 million from Germany’s KfW, up to $200 million from Japan’s JICA, and an expected $150 million from the OPEC Fund.

Hyprop sells 50% stake in Hyde Park Corner

Hyprop Investments, a JSE-listed real estate investment trust (REIT) specialising in dominant retail assets, has entered into an agreement to sell a 50% undivided stake in Hyde Park Corner, one of Johannesburg’s premier shopping centres, for R805 million.

The transaction was signed on 30 June 2025 with MEP SPV 3 Proprietary Limited, a wholly owned subsidiary of Millennium Equity Partners, a private equity real estate firm based in Johannesburg.

In addition to the sale, Hyprop has granted MEP SPV 3 the option to acquire the remaining 50% share in the future. The agreement includes both put and call options, allowing either party to initiate the transfer of full ownership under agreed conditions.

The asset, located in Sandton at the intersection of Jan Smuts Avenue and William Nicol Drive, spans over 38,000m² of gross lettable retail space and houses 118 stores. With a footfall of approximately 3.5 million annually, Hyde Park Corner is considered a flagship property in Hyprop’s South African portfolio.

Hyprop’s current portfolio includes some of South Africa’s most prominent retail centres, such as Canal Walk, Capegate, Clearwater Mall, Hyde Park Corner, Rosebank Mall, Rosebank Precinct Offices, Somerset Mall, Table Bay Mall, The Glen, and Woodlands Boulevard in Pretoria.

The REIT has a market capitalisation of roughly R17 billion and a property portfolio valued around R40 billion.

Hyprop noted that the deal is in line with its broader strategy to rebalance its capital allocation, with a greater focus on assets in the Western Cape and Eastern Europe, and a shift toward larger regional malls rather than mid-sized centres.

Proceeds from the transaction will be used to reduce debt, support asset management projects, expand solar energy initiatives, and pursue growth opportunities within the company’s core operations.

The Hyde Park transaction reinforces the company’s pivot toward markets and assets that align with its long-term vision, while still maintaining a strong presence in key economic nodes.

Investor confidence follows performance – and it’s in Cape Town

As South Africa’s economy continues to struggle under slow growth and structural challenges, Cape Town’s property market stands apart – delivering consistent returns that outpace national averages and defying concerns of a post-pandemic slowdown.

According to Lightstone, national house prices rose 5.2% in the year to January 2025, while properties in the Western Cape surged by 8.7%. Cape Town has now outperformed the national property market for seven consecutive years.

Even among South Africa’s coastal cities, where average growth is 5%, Cape Town leads with 6.2% – more than triple Johannesburg’s 1.8% and well ahead of Durban’s 1.9%.

Arnold Maritz, co-principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs, had observed this concentration of investment first-hand.

“According to Stats SA, the Western Cape accounted for 38% of national real estate transaction value last year despite having just 11% of the population,” he said. “This concentration of capital spoke volumes about where investors were placing their confidence.”

Cape Town’s strong property performance is backed by robust economic fundamentals. According to Stats SA, the Western Cape now boasts an average household income of R407,000 – 36% higher than Gauteng’s R300,000 and nearly 50% above the national average.

Formal sector jobs in the province grew 3.1% in 2024, compared to just 1.2% nationally, while unemployment sat at 23.4% – well below the national average.

Unlike Johannesburg’s economy, which remains heavily dependent on finance and manufacturing, Cape Town offers a more balanced mix: financial services contribute 22% to provincial GDP, while the city’s tech sector is growing at 8% annually, and green economy investments reached R14.7 billion in 2024, according to Wesgro.

This growth attracted skilled migrants. Stats SA data showed the Western Cape gained 92,000 working-age adults over two years—68% of whom held tertiary qualifications, with 42% in professional or managerial roles.

ServiceCape TownNational Average
Water Supply Reliability98%76%
Electricity Availability94%68%
Waste Collection99%82%
Road Maintenance91%63%

Service delivery remains one of Cape Town’s strongest selling points. Compared to national benchmarks, the city continues to outperform:

These efficiencies translate into real economic savings. Businesses in Johannesburg reportedly spent 18% more on backup power, and transport costs were 22% higher due to infrastructure challenges.

Cape Town workers, meanwhile, were found to be 15% more productive per hour (Bureau for Economic Research).

The City of Cape Town committed R12.6 billion to infrastructure for the 2024/25 financial year, with R2.3 billion earmarked for alternative energy and R4.1 billion for transport upgrades.

The resilience of Cape Town’s property sector is perhaps most evident in its luxury segment. Three recent sales on Constantia’s Rhodes Drive – each over R40 million – reflected investor expectations of 8–10% annual capital growth, rental yields of 4.5–5.5%, and the benefits of rand-denominated hard assets.

Maritz noted how luxury buyers are becoming increasingly common: “In our office, buyers with budgets exceeding R15 million had become the norm rather than the exception,” he said.

“We repeatedly saw clients inquiring about specific properties, only to learn they were sold within days – sometimes hours – of listing. The speed at which quality stock moved in these neighbourhoods was remarkable.”

Emerging markets like the Northern Suburbs showed 12% price growth in 2024, while mixed-use developments commanded an 18% yield premium over single-use properties, according to JLL South Africa.

While some analysts have questioned whether the market could maintain such momentum, the fundamentals remain strong. FNB projected annual price growth of 7–9%, with the prime segment reaching as high as 10–12%.

In high-demand areas such as Constantia, Claremont, and Bishopscourt, Lightstone data indicated gross yields of 5.5–6.2%.

Cape Town’s property market continues to attract capital, skills, and investor confidence – making it one of South Africa’s few economic outliers in a challenging national environment.

SA households brace for above-inflation municipal rate hikes from July

South African households are set to pay significantly more for essential municipal services from Monday, 1 July 2025, as new tariffs come into effect with the start of the municipal financial year.

The increases affect electricity, water, sanitation, refuse removal, and property rates, with most of the hikes well above inflation.

Despite public objections and some revisions, the majority of rate increases were approved as municipalities contend with rising operational costs, ageing infrastructure, and widening revenue gaps.

Municipalities are under mounting pressure. Eskom’s bulk electricity tariffs have gone up, water boards have increased their charges, and infrastructure maintenance backlogs are weighing heavily on city budgets.

The situation is compounded by low revenue collection, rising debt levels, and a dependence on national government transfers. Some cities, like Cape Town, have adopted progressive tariff models that shift more of the financial burden onto higher-income households.

Here’s how the four major metros stack up for the 2025/26 municipal year:

ServiceJohannesburgCape TowneThekwiniTshwane
Electricity+12.7%+7.2%+12.7%+10.2%
Water & Sanitation+13.9%+4.5%+12.9%+13.0%
Refuse Removal+6.6%+7.4%+7.0%+4.6%
Property Rates+4.6%+8.0%+6.5%-4.0%

The headline electricity increases don’t tell the full story. Eskom’s new Retail Tariff Plan (RTP) – now partially in effect – introduces fixed daily charges alongside per-kilowatt-hour usage.

While designed to better reflect infrastructure costs, the plan has caused household bills to spike, particularly for low-usage customers.

Analysts warn that electricity bills could rise between 30% and 80% for many households over the next three years, far exceeding the 26.1% increase approved by NERSA for the period. Municipalities, being Eskom customers themselves, are expected to pass these higher costs on to residents.

For property owners, increased rates mean higher monthly payments, whether homes are bonded or paid off. Tenants will also feel the pressure as landlords factor rising utilities and municipal charges into rent increases.

This adds further strain to household budgets, especially for middle- and lower-income families already struggling with food inflation, rising transport costs, and higher interest rates.

Municipalities are walking a tightrope between raising revenue and maintaining public goodwill. While these increases are essential for sustaining services and infrastructure, they come at a difficult time for residents—many of whom feel they’re paying more but getting less.

Petrol and diesel price hike for motorists on Wednesday

South African motorists should brace for a significant increase in fuel prices this week, with both petrol and diesel set to rise sharply from Wednesday, July 3, according to the latest figures from the Central Energy Fund (CEF).

The upcoming hike follows four months of price declines and reflects the combined impact of global oil market volatility, Middle East tensions, and a weaker rand.

Consumers are advised to fill up before midnight Tuesday to avoid higher pump prices.

Petrol prices will increase by over 50 cents per litre, while diesel users will face even sharper rises.

Expected Fuel Price Adjustments (From July 3):

-Petrol 93 +52c/litre
-Petrol 95 +55c/litre
-Diesel 0.05% +84c/litre
-Diesel 0.005% +82c/litre

The diesel hike is expected to ripple through the economy. As the primary fuel for freight, taxis, and agriculture, diesel’s unregulated retail pricing means final costs will vary – but logistics providers and farmers are likely to pass on the added expense.

This could result in higher prices for food and essential goods in the coming weeks.

The primary driver behind the increase is the recent military escalation in the Middle East. On 13 June, Israel launched missile strikes on Iran in a bid to disrupt its nuclear program.

Iran retaliated, targeting Tel Aviv, followed by further escalations involving U.S. airstrikes and Iranian attacks on American bases in Qatar.

Though a ceasefire has since been reached and oil has returned to pre-conflict levels of $68 per barrel, the market is still recovering from the supply shock.

At the height of the conflict, analysts feared oil prices could soar as high as $130 per barrel.

During the conflict, the South African rand weakened against the US dollar, briefly spiking fuel import costs.

Though the currency has since stabilized to around R17.78/USD, it remains a key factor in the pricing equation.

In addition, recent increases to government fuel levies – 16 cents per litre for petrol and 15 cents for diesel – continue to place upward pressure on domestic fuel prices.

This mid-winter hike is expected to strain household budgets and business transport costs. While short-term relief may depend on currency strength and global oil stability, further geopolitical tensions could quickly reverse any gains.

SA commercial property confidence dips amid economic, political headwinds

Business confidence among South Africa’s commercial property brokers declined notably in the second quarter of 2025, ending a three-quarter streak of improvement.

The drop, revealed in the latest FNB Commercial Property Broker Survey, reflects rising market caution amid persistent economic weakness and heightened political and geopolitical uncertainty.

According to the survey, the percentage of brokers describing business conditions as “satisfactory” dropped from 55% in Q1 to 40% in Q2.

The findings are based on responses from brokers operating in South Africa’s six major metros: Johannesburg, Ekurhuleni, Tshwane, Cape Town, eThekwini, and Nelson Mandela Bay.

All three major commercial property sectors experienced a decline in sales activity:

-Industrial and warehouse property slipped from 5.69 to 5.59.
-Retail property dropped from 4.79 to 4.47.
-Office property fell from 4.95 to 4.67.

These declines reversed the modest gains recorded in the first quarter and suggest rising concern among brokers, investors, and tenants.

The survey was conducted in May 2025, shortly after the South African Reserve Bank (SARB) paused its interest rate cutting cycle in March, following three consecutive 25 basis point reductions.

Although the bank resumed rate cuts in late May, the temporary pause introduced uncertainty and may have contributed to the drop in confidence.

Several other matters have weighed on sentiment:

Political instability: Internal tensions within the Government of National Unity over budget negotiations have raised doubts about the coalition’s longevity.

Geopolitical risks: Relations with the United States have deteriorated sharply. US president Donald Trump’s accusations of human rights violations and anti-Western posturing led to the closure of USAID’s operations in South Africa and threats of increased tariffs on South African exports.

Weak economic growth: South Africa’s GDP grew by just 0.1% in Q1 2025, down from 0.4% in Q4 2024. Manufacturing continues to struggle, with the PMI’s new sales orders index falling to 38.3 in May — well below the neutral 50 mark, signalling contraction.

Despite current weakness, FNB remains cautiously optimistic about the second half of 2025. It expects full-year commercial property sales activity to outperform that of 2024, supported by a combination of easing monetary policy and improving macroeconomic indicators.

Inflation held steady at 2.8% in May, below SARB’s 3–6% target range, creating room for further interest rate cuts.

Leading indicators are showing momentum: SARB’s business cycle leading indicator rose 4.1% year-on-year in March, and new passenger vehicle sales surged 30.3% in May.

Residential mortgage demand grew by 16.2% year-on-year by the end of 2024, though early 2025 data is still pending.

FNB has revised its GDP growth forecast for 2025 to 1.1%, more than double the 0.5% recorded in 2024. It believes this improved growth outlook will help support a gradual recovery in commercial property sales.

Adding to this cautiously positive view is the continued decline in vacancy rates across all three major property classes – typically a sign of strengthening rental markets and potential investor appeal.

While Q2 2025 marked a setback in both confidence and activity in the commercial property sector, FNB expects a mild rebound in the months ahead.

City council eases building rules to fast-track development in Cape Town

The City of Cape Town has approved significant amendments to the Municipal Planning By-law (MPBL), aimed at accelerating development and making it easier to build – particularly in areas of high housing demand.

In a speech to Council on 26 June, mayor Geordin Hill-Lewis stated that the new land-use rights would make it possible for many more people to transition from informal settlements to dignified, affordable rental accommodation.

“We pledged to kick affordable housing delivery into high gear. And that’s what this legislative change does. These by-law changes will support and enable new micro-developers to deliver affordable housing in townships, informal, and lower-income suburbs at a far faster rate,” he said.

Key Changes

Among the most notable changes is the introduction of new “incentive overlay zonings” (IOZs) that offer enhanced development rights in priority areas targeted for mixed-use growth and supported by public transport. These focus areas include Athlone, Maitland, Parow/Elsies River, Bellville, and Diep River.

The updated by-law complements a broader suite of initiatives under the Mayoral Priority Programme for Affordable Housing and Land Release, including:

Support for micro-developers: Pre-approved building plans and development charge discounts through a new incentive fund.

Land release: More land will be released for affordable housing during this term than over the past decade, with 12,000 well-located units planned near the CBD and other strategic parts of the metro.

Discounted land sales: New Land Discount Guidelines allow city-owned land to be significantly discounted to enable more viable social housing developments—a national first.

Utility discounts: Social housing projects will benefit from reduced water, electricity, and property rate bills, another pioneering move in South Africa.

The revised MPBL also empowers the City to act swiftly against developers who continue illegal construction despite receiving stop-work orders.

“This new addition not only allows the City to impound the developer’s movable property, but also that of the property owners and contractor involved in the illegal work – this is to close any loopholes. By adding this provision we trust that those who ignore the Municipal Planning By-law and notices issued in terms of the National Building Regulations and Building Standards Act will think twice before doing so,” said Eddie Andrews, deputy mayor and Mayoral Committee member for Spatial Planning and Environment.

Further amendments include clearer regulations for renewable energy installations such as solar panels and wind turbines. The revised by-law also introduces updated definitions to keep pace with modern development trends – covering terms such as “electric vehicle charging station,” “micro wind turbine,” and “structure-mounted energy system.”

The City conducted an extensive 90-day public engagement process, which included in-person and online meetings, and input from residents, professionals, internal departments, and other government spheres.

Summary of Key MPBL Amendments

New rectification chapter: Provides a fair, faster, and more affordable alternative to legal review for irregular planning decisions.

Incentive Overlay Zonings (IOZs): Enhanced rights to support cost-effective development in five priority areas.

New use rights under Residential Zoning (R1): These include affordable rental flats (up to 8 units plus a dwelling house, or 12 units without one), supplementary dwellings, and places of instruction – subject to conditions.

Illegal construction enforcement: Under Section 135, the City may impound movable property when stop-work orders are ignored.

Updated definitions: New and revised terms related to energy, transport, and residential types.

Emergency housing renamed: Now called “temporary disaster housing,” Section 68 enables swift relocation of displaced residents without lengthy public participation, provided legal standards are met.

Digital communication: Section 111 now allows email as the default method of contacting interested parties, with alternatives for those without email access.

The new by-law will come into effect on the date specified in its official promulgation and forms part of a five-year review process since the last revision in 2019.