The second quarter 2024 FNB Commercial Property Broker Survey, which is based on the perception of brokers shows that South Africa's commercial property market is weaker than the first quarter, and lacks any strong direction, with the elections playing a role, with some aspirant property investors taking a “wait-and-see” approach.
“It is possible that there is some lagged negative impact still feeding into the market from those earlier rate hikes,” said property sector strategist at FNB Commercial Property Finance, John Loos.
“This election was arguably a more closely-watched event than previous elections, due to opinion polls having correctly pointed to the ruling ANC majority being set to drop sharply to below 50% (its popular vote percentage turned out to be just above 40%), raising the question as to who its coalition partner in Government would be.”
The City of Cape Town is perceived to have the strongest activity with Gauteng in decline.
Loos said the findings of the survey show that the three metros in Gauteng have declined in business activity. At the weak end of the six major metros in South Africa was Ekurhuleni (Greater Johannesburg), with the lowest retail activity rating of 3.52, the lowest office rating of 3.15, and the second lowest industrial rating of 5.52.
Cape Town is seen as the strongest metro for sales activity, particularly in the Retail and Office Markets. In contrast, Greater Johannesburg exhibits the weakest activity ratings across Retail, Office, and Industrial Markets.
“City of Cape Town shows the highest ratings in two of the three major commercial property markets, 6.19 in the Retail Market, and 5.13 in the Office Market, while its solid 5.93 in its Industrial Market was second only to eThekwini’s 6.23 rating," said Loos.
Activity Levels by Property Class
The survey reveals mixed activity levels across different property sectors:
Industrial and Warehouse Market: The activity rating dropped to 5.27 from 5.59 in the previous quarter, well below the peak of 6.35 at the end of 2022.
Retail Property Market: There was a slight increase in the activity rating to 4.41 from 4.36, still lower than the multi-year high of 4.9 at the end of 2023.
Office Property Market: The activity rating declined to 3.54 from 3.72, significantly below the peak of 4.29 in 2023.
The FNB Commercial Property Broker Survey is a sample of commercial property brokers in and around the six major metros of South Africa, the City of Joburg and Ekurhuleni (Greater Johannesburg), Tshwane, eThekwini, the City of Cape Town and Nelson Mandela Bay.
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