Business Monitor International


South Africa Real Estate Report

Published 19 August 2014

  • 70 pages
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$1,295.00
South Africa Real Estate Report

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...

Table of Contents

BMI Industry View
7
SWOT
9
Political
11
Economic
12
Business Environment
13
Industry Forecast
14
Office
14
Table: Forecast Rents (ZAR per m2/month)
15
Table: Forecast Net Yield, 2011-2018 (%)
15
Retail
15
Table: Forecast Rents (ZAR per m2/month)
16
Table: Forecast Net Yield, 2011-2018 (%)
16
Industrial
17
Table: Forecast Rents, 2014 (ZAR per m2/month)
17
Table: Forecast Net Yield, 2011-2018 (%)
17
Construction And Infrastructure Forecast Scenario
18
Table: Construction And Infrastructure Industry Data (South Africa 2012-2017)
18
Table: Construction And Infrastructure Industry Data (South Africa 2018-2023)
19
Macroeconomic Forecasts
27
Economic Analysis
27
Table: Real GDP Growth, % chg q-o-q, SAAR
27
Table: SOUTH AFRICA - ECONOMIC ACTIVITY
32
Industry Risk Reward Ratings
33
Middle East And Africa Risk/Reward Ratings
33
Table: Middle East And Africa Real Estate Risk/Reward Ratings
33
Market Overview
34
Johannesburg
35
Cape Town
35
Durban
35
Office
35
Table: Terms Of Rental Contract/Leases, H213
36
Table: Historic Rents, 2012-2014 (ZAR per m2/month)
37
Table: Net Yield, 2014-2015 (%)
37
Retail
37
Table: Terms of Rental Contract/ Leases, H213
39
Table: Historic Rents, 2012-2014 (ZAR per m2/month)
39
Table: Forecast Net Yield, 2014-2015 (%)
40
Industrial
40
Table: Terms of Rental Contract/Leases, H213
40
Table: Historic Rents, 2012-2014 (ZAR per m2/month)
41
Table: Forecast Net Yield, 2014-2015 (%)
41
Competitive Landscape
42
Company Profile
45
Aveng
45
Group Five
47
Liberty Properties
49
Murray & Roberts Group
51
Orion Real Estate
53
Pam Golding Properties Group
55
SA Corporate Real Estate Fund
56
Seeff Properties
58
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 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.

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