Anticipated improvements are forecasted for the South African property market's demand and supply dynamics in the latter half of this year.
This projection aligns with expectations of decreasing interest rates and declining inflation rates, which are anticipated to stimulate investor activity.
John Loos, a property strategist at FNB commercial property finance, expressed optimism regarding South Africa's economic performance in the latter part of 2024.
However, other analysts and economists cautioned that the upcoming elections scheduled for May 29 are causing uncertainty in South African markets and the economy.
Loos anticipates an increase in investor demand-supply balances in the latter half of 2024. He attributed this expectation to interest rates stabilising since May 2023 and the anticipated downward adjustment in rates later in the year.
Additionally, global trends such as lower inflation and the expected decline in global interest rates, along with reduced occurrences of power outages in early 2024, point to a modest upturn in South Africa's domestic economic performance.
Loos elaborated that these factors could potentially bolster property investor demand and mitigate oversupply issues.
“We do expect an improvement in investor market demand-supply balances in the second half of 2024,” Loos said as FNB released its Commercial Property Finance Insights for the 2024 first-quarter period.
“The reason for this expectation lies in interest rates having moved sideways since May 2023, and with our expectation that the next move in rates will be down later in 2024.”
The planning activity for new buildings, as indicated by Stats SA building statistics, seems to largely reflect the comparative market balances of the three primary commercial sectors.
Analysis by FNB's commercial property finance division revealed that the industrial property market has shown the least decline in recent building planning levels compared to pre-Covid-19 levels, followed by the retail sector.
Conversely, the office market, already burdened by oversupply, exhibited the weakest planning levels.
Despite the industrial sector being perceived as the strongest among the three major commercial sectors and the City of Cape Town showing the most robust regional demand-supply equilibrium, there remains an overarching perception of oversupply relative to demand across all property markets.
The Greater Johannesburg region stands out as the weakest, with a significant surplus of supply over demand.
Regional disparities are notable in the retail property sector, with Cape Town and eThekwini experiencing demand outstripping supply, while Johannesburg and Tshwane in Gauteng face substantial oversupply challenges.
FNB's first-quarter 2024 Commercial Property Broker Survey, covering major metro regions like City of Joburg, Ekurhuleni, Tshwane, eThekwini, City of Cape Town, and Nelson Mandela Bay, indicated that Johannesburg and Tshwane exhibit the weakest demand-supply balance in office space.
The Nelson Mandela Bay region recorded the lowest balance among coastal metro regions, followed by eThekwini, while Cape Town appeared relatively balanced with only a slight negative reading.
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