South Africa’s commercial property market is experiencing a recovery, driven largely by the growing demand for office space as companies across the country bring employees back to the office, Cape {town} Etc reports.
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This shift is providing a significant boost to the sector, which has faced numerous challenges in recent years.
In a recent media release, Geoff Jennett, CEO of Emira Property Fund, noted that South Africa’s listed property market has struggled for the past seven years.
He attributed the downturn to a combination of economic challenges, including high vacancy rates, the economic fallout from Covid-19 lockdowns, rising interest rates and ongoing issues like loadshedding and escalating utility costs.
Jennett pointed out that listed property shares have recently begun to show stronger performance, with real estate investment trust (REIT) returns up by more than 50% in 2024. He believes that this positive trend will gradually extend to the broader commercial property market.
One of the clearest signs of recovery can be seen in the Western Cape, where office spaces that were once vacant are now fully occupied. Jennett attributed this resurgence in part to the semigration trend, where people are relocating from other parts of South Africa to the Western Cape, seeking better opportunities and quality of life.
‘The Western Cape is seeing an influx of people, and that’s helping drive demand for office space,’ he said. However, Jennett emphasised that the rebound is not solely due to semigration.
Other factors, such as improved political sentiment following the establishment of the Government of National Unity, less frequent loadshedding, and the recent reduction in interest rates, have all contributed to a more positive economic outlook.
A significant factor in the recovery of office space demand is the growing number of companies now mandating a return to in-office work.
Corporate giants like Vodacom, Nedbank and Arena Holdings have reversed their work-from-home policies in 2024, requiring employees to return to physical offices. This marks a sharp contrast to the widespread remote work that became the norm during the Covid-19 pandemic.
BusinessTech states that over three-quarters of South African office workers now commute to their workplaces at least three days a week, and daily commuting is on the rise.
This shift is contributing to an increased need for office space, especially in Gauteng, which remains the economic heart of the country, though vacancy rates there remain high.
Jennett sees this as a key opportunity for the commercial property market, particularly in Gauteng, where the demand for office space is expected to grow as more companies adjust their policies to encourage or require in-office work.
‘Gauteng remains the hub of South Africa’s economy, and despite the higher vacancy rates, this is where the greatest opportunities lie as companies increase their office footprints,’ Jennett concluded.
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