Business Monitor International


South Africa Real Estate Report

Published 11 March 2014

  • 70 pages
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  • Includes 3 free updated quarterly reports
 
$1,295.00
South Africa Real Estate Report

BMI View: We believe that the real estate sector in South Africa will remain stable throughout 2014 because of a lack of change in the supply demand dynamic and enough new projects in the pipeline to satisfy strong demand. Net yields will remain consistent in all sectors, and we will see only a couple changes in rental rates. The sector does face some headwinds in the forms of faltering macroeconomic conditions, a volatile currency, and inflation concerns, but the country is still one of the brightest commercial real estate prospects in the region.

South Africa's economic prospects have deteriorated amid rapid currency depreciation and rising tensions in the critical mining sector. We are forecasting real GDP growth of 3.3% for 2014, with risks weighted firmly to the downside. Poor economic growth affects the sector as it dampens both property fundamentals and capital markets, putting downwards pressure upon tenant retentions, rental growth, yields, development activity, financing and asset values.

In general, demand is stable as South Africa due to its position as an attractive regional base, resulting in high occupancy rates and increasing rents. Nevertheless the development pipeline remains well below pre-2010 levels before the country hosted the World Cup. As such, we expect favourable absorption-completion dynamics will buoy the leasing sector in the short term, but unless development activity picks up this indicator will serve as a hindrance to long term growth.

With the construction sector still in a period of stagnant growth, we see few opportunities to lift the industry out of the quagmire. For real estate firms with a higher dependence on the construction side, the risks are greater than for those with a portfolio of leasable space, as the slowdown in the project pipeline will go some way to rectifying the imbalanced supply and demand dynamics.

Recent Developments

  • The International Council of Shopping Centres (ICSC) has announced a

Table of Contents

BMI Industry View
7
SWOT
9
Political
10
Economic
11
Business Environment
12
Industry Forecast
13
Office
14
Table: Forecast Rents (ZAR per m2/month)
14
Table: Forecast Net Yield, 2011-2018 (%)
14
Retail
14
Table: Forecast Rents (ZAR per m2/month)
15
Table: Forecast Net Yield, 2011-2018 (%)
15
Industrial
16
Table: Forecast Rents, 2013 (ZAR per m2/month)
16
Table: Forecast Net Yield, 2011-2018 (%)
16
Construction And Infrastructure Forecast Scenario
17
Table: South Africa Construction And Infrastructure Industry Data 2011-2016
17
Table: South Africa Construction And Infrastructure Industry Data 2017-2022
18
Macroeconomic Forecast
26
Economic Analysis
26
Table: Real GDP Growth, % chg q-o-q, SAAR
26
Table: South Africa - Economic Activity
31
Industry Risk Reward Ratings
32
Middle East And Africa Risk/Reward Ratings
32
Table: Middle East And Africa Real Estate Risk/Reward Ratings
32
South Africa - Risk/Reward Ratings
32
Market Overview
35
Johannesburg
35
Cape Town
36
Durban
36
Office
36
Table: Terms Of Rental/Contract Leases, H212
37
Table: Historic Rents, 2012-2013 (ZAR per m2/month)
38
Table: Net Yield, 2012-2013 (%)
38
Retail
38
Table: Terms of Rental Contract/ Leases, H212
40
Table: Historic Rents, 2012-2013 (ZAR per m2/month)
40
Table: Net Yield, 2012-2013 (%)
41
Retail Sales Indicators
41
Table: Retail Sales Indicators, 2010-2017
41
Industrial
41
Table: Terms of Rental Contract/Leases, H212
42
Table: Historic Rents, 2012-2013 (ZAR per m2/month)
42
Table: Net Yield, 2012-2013 (%)
43
Competitive Landscape
44
Company Profile
46
Aveng
46
Group Five
48
Liberty Properties
50
Murray & Roberts Group
52
Orion Real Estate
54
Pam Golding Properties Group
56
SA Corporate Real Estate Fund
57
Seeff Properties
59
Wilson Bayly Holmes-Ovcon
60
Demographic Forecast
62
Table: South Africa's Population By Age Group, 1990-2020 ('000)
63
Table: South Africa's Population By Age Group, 1990-2020 (% of total)
64
Table: South Africa's Key Population Ratios, 1990-2020
65
Table: South Africa's Rural And Urban Population, 1990-2020
65
Methodology
66
Industry Forecast Methodology
66
Sources
67
Risk/Reward Ratings Methodology
67
Table: Real Estate Risk/Reward Ratings Indicators
69
Table: Weighting Of Indicators
70

The South Africa Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's South Africa Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in South Africa.

Key Benefits

  • Benchmark BMI's independent real estate industry forecasts for South Africa to test other views - a key input for successful budgeting and strategic business planning in the South African real estate market.
  • Target business opportunities and risks in South Africa through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

BMI Industry View

Summary of BMI's key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.

Market Overview

Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors.

Market Analysis

Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.

Industry Forecast Scenario

Historical data series (2010-2012) and forecasts to end-2018 for the domestic real estate industry and for the local and global finance industry. Indicators include:

Real Estate: Office, retail and industrial real estate yields for all major cities (%); short-term forecasts on minimum and maximum real estate rental prices by sub-sector (US$ per square metre, and local currency per square metre)

Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%)

Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$)

Business Environment Ratings

BMI's Real Estate Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.

The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses.

The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc