BMI View: We believe that the real estate sector in South Africa will remain stable , but there are downside risks to our forecasts as a result of macroeconomic headwinds affecting the sector. We believe that the most significant opportunities lie within the retail sector, although over the long term, there is significant opportunity for commercial real estate firms to cater to businesses setting up in South Africa with a view to expanding elsewhere on the continent.
Over the short term we are fairly pessimistic for the commercial real estate market. High inflation, low GDP growth and a slowdown in major trading partner China will all have an impact on the sector, whilst rising living costs and interest rates will affect personal consumption. This will lead to low growth in rental rates in the short term, and we would note that inflation means that the increases we do forecast risk being nominal rather than real. Rental rates across the board are being buoyed by a lack of available land, and a very small supply pipeline.
However, over the longer term we are more optimistic for the market. This is due to GDP growth remaining steady and South Africa's growing role as a base for development for the rest of the continent. We believe that international investors will be increasingly attracted by the countries developed REIT market, by far the most mature on the African continent, with some 30 REITs listed on the Johannesburg Stock Exchange. We see considerable scope for this form of investment to increase in the long term.
We are particularly optimistic for the retail real estate sub-sector, as there is considerable unmet demand in the country, as well as international retail interest. While demand will continue to be held hostage to inequality in the country and the large number of South Africans on low incomes, it is encouraging that modern retail formats are increasingly expanding outside the major cities.
We also believe that there is unmet potential in...
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.
- 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).
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.
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.
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 Rankings
BMI's Real Estate Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.
The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points.
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.