Unpacking SONA 2025: The Impact on the Property Market
President Cyril Ramaphosa delivered his first State of the Nation Address (SONA) since the formation of the Government of National Unity (GNU) on 6 February. With all eyes on the president, he addressed the public, business leaders, and his political rivals, both domestic and international, on the present and future state of the country’s development.
With this year’s Budget Speech being postponed after the GNU failed to reach an agreement on proposed tax increases, political analysts, and the financial markets only have a state of the address to go by when assessing the current economic trajectory the country is on.
The SONA contained the usual mix of optimistic future plans, a brief update on the state of state-owned enterprises (including Eskom), and a short acknowledgment of the government’s somewhat controversial land policy, including the newly passed Expropriation Act.
While the president sought to allay investor concerns and paint a picture of efficient and socially oriented government policy, he largely skirted the land reform issue.
In this article, we take a brief look at the key points from this year’s SONA before turning to the critical issue of land reform: an area that has sparked concern in many quarters while other experts argue that the risks are overstated.
2025 SONA: Executive Summary
The State of the Nation Address serves to update citizens and stakeholders on the government’s activities. Ramaphosa followed the usual script in this year’s speech while covering a lot of ground.
After highlighting the cooperative efforts between the ANC, the DA, and other parties in the GNU, the president was quick to showcase some of the government’s achievements over the past 12 months. These included:
1. Improvement in Load Shedding
Eskom managed to go nearly nine months without implementing load shedding in 2024, beginning just before the April elections. While there had been a few brief incidents of blackouts, until February, the overall stability of the power grid had improved significantly. The relief was short-lived as mid-February saw multiple unit breakdowns at power stations across the country, triggering an immediate escalation to Stage 6 without warning. Fortunately, within five days, the situation improved, and load shedding was reduced to Stage 2.
2. Increased Efficiency at Home Affairs
Since Minister Leon Schreiber took over the Home Affairs portfolio, the department has effectively eliminated its once-massive backlog. This should result in faster processing times for visas, identity documents, and other government-issued certificates.
3. Introduction of Digital IDs
Continuing with Home Affairs reforms, the president announced that South Africans will soon be able to access government services through a biometric digital portal. This initiative, developed in collaboration with SARS and the Reserve Bank, aims to streamline identification processes. While no specific rollout timeline was given, Home Affairs will begin laying the groundwork over the next 12 months.
4. Infrastructure Investment and BEE Support
To boost economic growth to 3% GDP, the government plans to invest close to R1 trillion in infrastructure projects over the next few years. Additionally, increased spending will be directed towards BEE initiatives to stimulate economic participation and growth following two years of stagnation.
Economic impact: A good outlook if SONA goals are achieved
While the country’s economic performance remains weak, there are signs that growth could accelerate by the end of the decade.
- Analysts estimate that growth could reach 3% by 2030, effectively reducing the debt:GDP ratio which is currently at over 75% of GDP.
- The listed property sector which is still recovering from vacancies and the work from home trend would benefit greatly from robust GDP growth and may turn highly profitable as soon as this year.
- Improvements in load shedding and government efficiency overall could set the stage for stronger GDP and jobs growth for years to come.
These potential improvements in the economy could mark a turning point after years of anaemic, economic growth.
Cape Town has successfully weeded the challenges of the past few years with the commercial property market, reporting excellent growth, and declining vacancies since the end of the pandemic. The rising tied of improved GDP growth could bring even greater prosperity to the city, which has proven its resilience during tough times and will only continue to expand as the economy grows.
Property experts predict the Cape Town commercial market will expand during 2025 with an expectation of decreasing vacancies.
- Net operating income in the commercial property sector is expected to rise by 4.6%
- Capital appreciation per square meter is predicted to increase by between 3 to 4%, a figure slightly lower but still in line with the growth achieved in 2024.
While the economic outlook for the coming year looks far better than that of previous ones, several challenges still exist. Two of these include the recent diplomatic role with Donald Trump, and the newly announced ex expropriation act.
Political tensions building between SA and Donald Trump
While President Ramaphosa maintained an upbeat and optimistic tone throughout his SONA, his delivery stood in stark contrast to the recent diplomatic tensions between South Africa and the United States.
- US President Donald Trump, citing claims from conservative political groups in both South Africa and the US, has accused the South African government of attempting to dispossess farmers of their land.
- In response, Trump has begun the process of cutting aid funding to South Africa.
No matter how the situation is resolved, Trump’s hardline policy has put the country’s land laws in the spotlight.
Expropriation Act: Should Property Investors Be Concerned
The recently signed Expropriation Act, which became law earlier this month, replaces the apartheid-era Expropriation Act.
However, it has attracted controversy—particularly Section 25 which states that under certain circumstances, land may be expropriated with nil compensation.
- Legal experts have pointed out that expropriating land without compensation may directly violate Section 25 of the Constitution. Many politicians on the left, including those in the ANC and EFF, have long advocated for amending this section to allow for land redistribution without compensation.
- As a workaround, the Expropriation Act avoids explicitly stating “no compensation,” but the exact legal interpretation remains unclear.
Property owners concerned about the implications of the law—particularly whether they could lose land without proper compensation—should note that the legislation outlines specific instances in which this may occur, and experts have repeatedly mentioned that it’s unlikely to have a major effect on the property market as a whole.
We’ll keep our readers updated on the latest developments in the commercial property sector throughout the year; but there are still plenty of positives to appreciate from this year’s SONA.
Feeling positive about the property market in 2025? We are
The 2025 State of the Nation Address paints a hopeful outlook for economic recovery and business growth, mirrored by Cape Town’s declining commercial vacancy rates and stable property prices. If you’re considering an investment, now may be the perfect time to secure commercial property in the country’s most well-governed metro.
With decades of expertise in Cape Town’s office, retail, and light industrial sectors, the Commercial Space team is here to help you find the ideal premises for your business. Get in touch with us today to begin your search.
