South Africa's property sector at R4.9 trillion, research creates knowledge hub

CEO of the Property Sector Charter Council, Portia Tau-Sekati says, "The research creates a hub of knowledge about the property sector, consolidating information and developing a common and consistent understanding. By determining the size of the South African property sector, we are moving towards a proper baseline measure to assess market size and its components, the scale of different services and activities within the sector and ultimately BEE transformation figures in line with the Property Sector Code scorecard.

Establishing the scope of the property sector is important for an accurate overview of the South African economy, taking into account that in 2009, the property sector contributed 8.3% of South Africa's Gross Domestic Product (GDP), according to a South African Property Owners Association (SAPOA) research report 'The Economic Impact of the Property Sector in South Africa'.

Snapshot

The figures in the study provide a snapshot that reflects the status in the property sector at the base date of December 2010.

Only around 1% of land in South Africa is urban and residential, according to the research. Over 73% of land is South Africa is natural pasture. Around 12% of land is agricultural, and about the same portion comprises nature conservations and reserves.

The study shows nearly two thirds of property owned in South Africa, estimated at R3.0 trillion, is residential. Commercial property carries a value of some R780 billion. Undeveloped land zoned for development equates to R520 billion. Publicly owned property - including national, provincial and local government as well as state-owned enterprise - totals around R570 billion.

Currently, the research combines various studies that estimate the size of South Africa's residential market. While the number of housing units - formal and informal - vary in the source studies, from 13.1 million dwellings to 8 million, value calculations are all estimated at similar levels of R3 trillion.

Commercial property at R780 billion

Of the R780 billion commercial properties in South Africa, the research reports corporate property accounts for R600 billion, including investment property of R120 billion held by South Africa's listed property sector. Further investment property, held by life and pension funds and private equity funds, totals R180 billion.

Retail property has the highest value of the commercial property sectors in South Africa at R340 billion, followed by office properties at R228 billion and industrial properties at R187 billion. Representing a small comparative value of R25 billion is hospitality, leisure and 'other' property.

For publicly owned property, the study used available information, which reflects R342 billion of property held by provincial government, R188 billion by national government, R37 billion by local government and R6 billion by state-owned enterprises.

Significance far reaching

Tau-Sekati says, "Besides being a benchmark to monitor and evaluate the progress of transformation of the sector each year. This study marks the beginning of an ongoing research process, which will update information on the property sector annually. The study is a useful tool for understanding the South African property market and its dynamics. It is working progress and we hope to build a better and clearer picture of our industry. We welcome information sharing with the industry in terms of studies undertaken which could further refine our data and shine light on the mechanisms of the sectors component parts."

IPD is a global information business, dedicated to the objective measurement of commercial real estate performance. As the world's number one provider of real estate performance analysis for funds, investors, managers and occupiers, IPD offers a full range of services including research, reporting, benchmarking, conferences and indices. IPD operates in over 25 countries including most of Europe, the US, Canada, South Africa, Australia, New Zealand and Japan.

Contact the Property Sector Charter Council on +27 (0) 11 880 9918 for the full research document.