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#BizTrends2021: Property trends - it's not all doom and gloom
According to Stats SA, the South African economy recently saw an increase of 1.2% during the second quarter of 2021. This is a 19.3% increase from last year when the economy was hit by a hard lockdown. While the economy is still 1.4% smaller than it was before the pandemic, it is a bigger increase than expected.
As we look closely at the property market, we remember how it was hit quite extensively by the pandemic. However, a closer look shows that the property market is expected to show more growth despite the pandemic. Here are some trends that we expect to see during the last few months of the year:
Township and rural development
The recent looting in Gauteng and KwaZulu-Natal affected township and rural development, almost erasing decades of growth and development. What lies ahead now is rebuilding, which has already commenced. Shopping centres were no doubt at the forefront of this destruction, which has affected employment figures in South Africa and, fortunately, Nthoese Development was not affected by the civil unrest. We still see a demand in rural and township investment as an alternative opportunity for the retail market and will be launching another development, Setsing Mall, to be situated in Qwa Qwa in the Free State. Township and rural economies must be a key focus in contributing to job creation and creating further economic growth.
The rental housing market
The rental market has been in crisis since the start of the Covid-19 pandemic and, right now, it is at levels that it has not reached since the 2008 recession. Vacant apartments and tenants in arrears are quite high. While there are plenty of tenants requiring rental units, very few can afford them. And with the difficulty of finding quality tenants, we can expect more vacancies for the rest of the year.
We’ve been in a buyers' market since the second half of 2020, with the interest rate at an all-time low. This has allowed many to purchase residential housing, something that we will continue to see until the last quarter of 2021, when we anticipate a sellers’ market.
The commercial property market is undoubtedly one of the worst hit by the Covid-19 pandemic, and this is mainly driven by the office space market, followed by the retail property market, and the least hit, the industrial market. As it stands, the commercial property market is in a weaker state than the overall economy of South Africa, and as the year progresses, we expect no change. While many are back at the office, most companies are still working from home and this will probably be the case until the second half of 2022.