Business

Cape Town perceived highly while Gauteng weakens on property sales survey

When it comes to perception, Cape Town remains high on market sales activity perceptions while Gauteng’s metros are at the weak end of the spectrum.

The second quarter 2024 FNB Commercial Property Broker Survey, which is based on the perception of brokers shows the commercial property market is weaker than the first quarter, but what is worrying is its lack of strong direction. This can be attributed to multiple factors.

While many of the major metros show a decline, the City of Cape Town is perceived to have the strongest activity.

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Business activity declines in Gauteng

Property sector strategist at FNB Commercial Property Finance, John Loos says the findings of the survey show that the three metros in Gauteng have declined in business activity. At the weak end of the six major metros in South Africa was Ekurhuleni (Greater Johannesburg), with the lowest retail activity rating of 3,52, the lowest office rating of 3,15, and the second lowest industrial rating of 5,52.

“Ekurhuleni is followed by Tshwane with Industrial Rating of 4,04, and office rating of 3,19 retail rating of 3,70 were second lowest only to City of Joburg, thus reflective of a Gauteng region that is perceived as weaker than the major coastal metros,” says Loos.

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Cape Town remains the strongest

Loos says the findings of the survey are not surprising when it comes to Cape Town, as it shows the sales activity rating in the first half of the year was the highest in all major metros.

City of Cape Town shows the highest ratings in two of the three major commercial property markets, 6,19 in the Retail Market, and 5,13 in the Office Market, while its solid 5,93 in its Industrial Market was second only to eThekwini’s 6,23 rating.”

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The survey shows that the Western Cape region benefits from higher levels of investor confidence due to a widespread perception that it is provincial and many of its local governments are better functioning than many other parts of the country. “It has the additional advantage of not having a ‘messy’ coalition government arrangement either at city level or at broader Western Cape provincial level,” adds Loos.

Reasons for an overall decline

Loos says the broker business confidence remains very weak, which implies that a majority 70% of respondents still perceive business conditions as unsatisfactory. “It is possible that there is some lagged negative impact still feeding into the market from those earlier rate hikes,” he says.

The elections also played a role. Loos believes some aspirant property investors were using the “wait-and-see” approach as the survey was completed shortly before the elections.

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“This election was arguably a more closely-watched event than previous elections, due to opinion polls having correctly pointed to the ruling ANC majority being set to drop sharply to below 50% (its popular vote percentage turned out to be just above 40%), raising the question as to who its coalition partner in Government would be.”

Commercial Property Broker Survey

The FNB Commercial Property Broker Survey is a sample of commercial property brokers in and around the six major metros of South Africa, the City of Joburg and Ekurhuleni (Greater Johannesburg), Tshwane, eThekwini, the City of Cape Town and Nelson Mandela Bay.

“In this report, we focus on the part of the survey where we ask respondents to rate their perception of the buying/selling market’s (not rental market) activity levels on a scale of one to 10, 10 being the strongest activity level rating,” adds Loos.

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By Tshehla Cornelius Koteli