South Africa Real Estate Report

Published 18 November 2014

  • 71 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...

BMI Industry View
7
SWOT
9
Political
11
Economic
12
Industry Forecast
13
Office
13
Table: Forecast Rental Costs, 2015-2016 (USD per square metre per month)
14
Table: Forecast Net Yields, 2015-2016 (%)
14
Retail
14
Table: Forecast Rental Costs, 2015-2016 (USD per square metre per month)
15
Table: Forecast Net Yields, 2015-2016 (%)
15
Industrial
15
Table: Forecast Rental Costs, 2015-2016 (USD per square metre per month)
16
Table: Forecast net yields %, 2015-2016
16
Construction and Infrastructure Forecast Scenario
17
Table: Construction And Infrastructure Industry Data (Peru 2012-2017)
17
Table: Construction And Infrastructure Industry Data (Peru 2018-2023)
18
Macroeconomic Forecasts
22
Economic Analysis
22
Table: Real GDP Growth, % chg q-o-q, SAAR
22
Table: Economic Activity (South Africa 2009-2018)
27
Industry Risk Reward Ratings
28
Middle East And Africa - Risk/Reward Index
28
Table: Middle East And Africa Real Estate Risk/Reward Index
28
South Africa - Risk/Reward Ratings
29
Market Overview
30
Johannesburg
31
Cape Town
31
Durban
32
Office
33
Table: Historical Rental Costs, 2013-2014, USD Per sq metre per month
34
Table: Historical Net Yields, 2013-2014, %
34
Table: Terms Of Rental Contract/Leases, H214
35
Retail
35
Table: Terms Of Rental Leases/Contracts - H214
38
Table: Rental Costs, 2013-2014, USD per square metre per month
38
Table: Net Yields, 2013-2014, %
39
Industrial
39
Table: Terms Of Rental Contracts/Leases, H214
40
Table: Rental Costs, 2013-2014 (USD per square metre per month)
40
Table: Net Yields
41
Competitive Landscape
42
Office
42
Retail
43
Industrial
43
Company Profile
44
Aveng
44
Group Five
46
Liberty Properties
48
Murray & Roberts Group
50
Orion Real Estate
52
Pam Golding Properties Group
54
SA Corporate Real Estate Fund
56
Seeff Properties
58
Wilson Bayly Holmes-Ovcon
60
Demographic Forecast
62
Table: Population Headline Indicators (South Africa 1990-2025)
63
Table: Key Population Ratios (South Africa 1990-2025)
63
Table: Urban/Rural Population & Life Expectancy (South Africa 1990-2025)
64
Table: Population By Age Group (South Africa 1990-2025)
64
Table: Population By Age Group % (South Africa 1990-2025)
65
Methodology
67
Industry Forecast Methodology
67
Sources
68
Risk/Reward Index Methodology
69
Table: Real Estate Risk/Reward Index Indicators
70
Table: Weighting Of Indicators
71

The South Africa Real Estate Report features BMI Research'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.

Industry Forecasts Outlook

Historic data series (2010-2013) and forecasts to end-2019 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 (USD per square metre and local currency per square metre).
  • Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
  • economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).

BMI’s Real Estate Risk Reward Index

BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.

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.

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.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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