Read more
‘Interest rate reductions, with further mild cuts expected, appear to be the primary driver behind improved investor sentiment and increased sales activity.’
Picture: iStock
The property sales activity survey by FNB has shown that there have been a lot of sales in the commercial property space in the first quarter of 2025.
The bank has attributed the surge to interest rate cuts.
John Loos, senior economist at FNB commercial property finance, says sales activity ratings improved in all three major commercial property markets (Office, Industrial, and Retail).
ALSO READ: Commercial property confidence increases, but still perceived as weak
He says the survey assesses a sample of commercial property brokers in and around City of Johannesburg and Ekurhuleni (Greater Johannesburg), Tshwane, eThekwini, City of Cape Town, and Nelson Mandela Bay.
“This report focuses on the section of the survey where respondents rate their perception of the buying and selling market’s (not the rental market) activity levels on a scale of 1 to 10, with 10 being the strongest activity level rating.”
For the first time in recent years, the office market recorded a sales activity rating slightly higher than the retail market.
Loos adds that broker perceptions indicate that the industrial and office property markets strengthened compared to six months prior.
“Interest rate reductions, with further mild cuts expected, appear to be the primary driver behind improved investor sentiment and increased sales activity.”
Industrial and Warehouse Property Market increased from 5.11 in the previous quarter to 5.69.
The retail property market increased for the second consecutive quarter, from 4.57 to 4.79.
Office Property Market rebounded from 4.55 to 4.95, marking the third consecutive quarter of increase.
ALSO READ: SA’s six most popular provinces where people want to live
He adds that they asked respondents their level of satisfaction regarding business conditions in the space.
“In the 1st quarter of 2025, the percentage of respondents who viewed conditions as satisfactory rose noticeably from 46% in the previous quarter to 55%, marking the third consecutive quarter of increase.
“This further rise in business confidence comes from a survey conducted in February 2025, following the South African Reserve Bank’s (Sarb) 25-basis-point interest rate cut in January — the third in a series of rate cuts that began in September 2024.”
For the first time since early 2023, the percentage of brokers perceiving business conditions as “satisfactory” has risen above 50%, indicating that the majority now hold a positive outlook.
However, Loos says the rebound in property broker business confidence slightly outperforms business confidence in the broader economy.
While interest rate cuts are believed to have played a key role in boosting confidence, some mild economic growth in late 2024 may have also contributed.
“Following a -0.1% quarter-on-quarter contraction in GDP in the 3rd quarter of 2024, GDP growth turned positive at 0.6% in the year’s final quarter.”
ALSO READ: South Africans optimistic about investing in residential property — survey
Loos says Industrial Property Market continues to be perceived as the strongest sector, thanks to historically lower vacancy rates and stronger investment returns.
The sector benefits from growth in warehousing and logistics, fuelled by the rise of e-commerce.
However, a recessionary Manufacturing Sector challenges the manufacturing segment of industrial property.
Regarding the Office Property Market, he says it showed recovery from a low base, supported by declining vacancy rates, repurposing of older office spaces into residential units, and renewed investor interest due to lower interest rates.
“Retail Property Market continues to face challenges but has shown mild improvement. While brokers rate it the weakest among the three sectors, sales activity is upward.”
“We anticipate mild economic acceleration and higher property sales activity in the near term, driven by continued global and local interest rate cuts in 2025.
“However, new global risks have emerged, particularly due to changes in US trade policy under President Trump.
“Increased US import tariffs on certain countries and threats of additional tariffs could lead to a global trade war, potentially derailing economic growth and fuelling inflation.
“Interest rate hikes could follow if inflation rises again, impacting global and local investor sentiment. These are key risks to our forecasts,” said Loos.
Download our app