BMI View: We believe that the real estate sector in South Africa will remain stable but the market will continue to face pressure in different forms. This includes tepid growth, faltering macroeconomic conditions, a volatile currency and inflation. BMI sees the South African economy posting moderate growth with real GDP expanding by just 2.2% in 2014. Despite these pressures, the real estate market in South Africa remains one of the most profitable and attractive in the region.
South Africa's economic prospects have weakened due to inflation, inability to address corruption and weakening foreign investor confidence. Foreign direct investment into South Africa dropped to USD4bn in 2012 from USD6bn in 2011, according to the latest data by the United Nations Conference on Trade and Development. In order to consolidate support for the upcoming election cycle, the ruling African National Congress has passed bills that set quotas for local ownership in the private security and mining industries. Ongoing labour disputes in the country's key mining industry have also adversely impacted economic growth. 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.
Demand remains high for spaces in Cape Town and Durban - South Africa's port cities. However, developers are failing to meet this demand because of the lack of available land space in these areas. In Cape Town's office sector, the vacancy rate is at its lowest due to high demand. Rental rate for smaller units are expected to increase marginally as the market is falling short on these sizes. In Durban, rental rates are rising across all sectors: office, retail and industrial due to inflation and the current supply not being able to meet increasing demand. Like Cape Town, smaller units are also more in demand than larger units in Durban. Durban is...
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.