A New Dawn on SA Property Perspective 2024
As the year passes its midpoint, business sentiment is on the rise.
2024 marked a milestone in South African democracy, with free and fair elections taking place for the seventh time since 1994 and a government of national unity (GNU) emerging to take the country in a new exciting direction.
At the same time, economists are projecting the current 1% growth rate to almost double in 2025, giving the business community as a whole and the commercial property sector particular reason to be optimistic about the next 12 to 18 months.
In this article, we take a closer look at the economic developments defining the country’s, current business climate, and what impact they may have on the future state of the commercial property market.
A new government brings new hope
The landmark election results, which came at the beginning of the second quarter, saw a major departure from the traditional trajectory of domestic politics. With the ANC now sharing power and multiple opposition parties and their voters having a sense of investment in the country’s future, business sentiment is starting to improve.
- As part of their report on Q2 2024, property market analysts at Rode noted that the possibility is quite strong that GDP growth will be revised upward for 2025, perhaps reaching an annual rate of 2% higher.
- This rate of growth may not seem hugely impressive compared to the global growth rate of 3.2% predicted for 2024, but it does indicate an improvement in sentiment and the potential for further economic expansion.
This is in stark contrast to the doom and gloom scenarios painted over the past few years.
Business and investor confidence in the new government, along with a strong improvement in Eskom’s ability to supply electricity are two major factors determining this optimistic growth scenario. If the GNU is able to deliver on its promises and Eskom continues to fortify and improve the electricity grid, economic growth could revert to levels last experienced in the 2010s.
The overall property market is also showing good signs, with Gen Z buyers entering the residential sector and high net worth individuals continuing to favour Cape Town as a place to work, live, and do business.
With these sentiments in mind, commercial property occupancies and rental returns are increasing in many parts of the country including Cape Town.
Cape Town commercial property remains a lucrative investment
The Rode report reveals several positive findings about the state of commercial property in the western Cape. With a decentralised rental growth of 5%, office space in the western Cape is among the best performing in the country. A notable mention should go to KZN, which has also seen a large increase in rentals.
However, the elephant in the room is still Gauteng which, despite having the largest provincial economy, is seeing anaemic growth and returns of under 2% at a time when inflation is pushing down real returns on virtually every financial investment.
Given the large capital expenditure involved in commercial property purchases, the positive growth rate in real terms displayed by the Western Cape is impressive enough to keep investors interested.
The CBD continues to attract new investment with a green twist
One of the features that makes Cape Town commercial property so attractive is the variety of office types and locations on offer throughout the city – from the ultra-modern offerings of Century City to the charms of the historic CBD and its totally redeveloped commercial buildings.
The city centre continues remarkable rejuvenation, with the 36 Hans Strijdom building serving as a prime example.
- The building, which is home to the innovative investment company Ninety One, is currently undergoing a total redevelopment with the aim of making the structure 100% carbon neutral.
- Innovative design features, including the removal of escalators and their replacement of spiral stairs and green energy sources are just some of the features that will make the building best in class when its renovations are completed.
Both new and renovated office buildings with modern designs that have the tastes of today’s commercial tenants in mind have already helped Cape Town landlords to achieve a low vacancy trend in the CBD over the past decade.
Projects like Ninety One underscore the confidence that investors have built up in the Cape Town commercial property market over the past 15 years. With the national economic outlook brightening, their excitement is only set to intensify in the years to come.
2024 could be the ideal time to join their ranks and acquire an investment property or secure a sought-after Cape Town office rental.
Take advantage of the rebounding property market with us
With both the national economic outlook and property market looking positive this year and beyond, many investors are shedding their hesitation to acquire Cape Town office space. With both good rental potential and capital appreciation, commercial property in Cape Town is seeing huge demand.
If you’re excited by the latest growth and occupancy statistics in the property market, we’d love to consult with you, understand your acquisition needs better, and help to match you with the ideal property that meets your budget and criteria.
For prospective tenants, we have a large portfolio of premier Commercial rental properties in the Cape Peninsula that will meet the needs of any up-and-coming business.
Contact our team today to start your commercial property journey with us.
