The continued look at the 4th quarter 2020 results from the FNB Commercial Property Broker Survey, which surveys a sample of commercial property brokers in and around the 6 major metros of South Africa takes a look at the perceived balance and imbalance between the demand and supply of the properties being transacted in the main markets.
Market “strength” refers to a relatively strong demand level relative to supply, and vice versa for market “weakness”. These questions include estimates of average times of properties on the market prior to sale, as well as perceptions of whether demand exceeds supply or vice versa.
Key themes that emerge from the results are:
- The Industrial Property Market is still perceived to be the strongest of the 3 major commercial property sectors, i.e. Industrial, Retail, and Office.
- However, a very weak perceived demand-supply balance in all 3 property classes has continued in the 4th quarter survey.
- In the area of Industrial Property, it appears to be that the 3 coastal metros, i.e. Cape Town, Nelson Mandela Bay, and Ethekwini, are where the relative market strength lies, with Gauteng metro regions being the area of relative weakness, Johannesburg being especially weak.
- Greater Johannesburg comes out with the weakest demand-supply balance readings in all 3 major property sectors.
- Given a major bias towards “oversupply” in all 3 major commercial property markets, we remain of the expectation that 2021 will see a continuation of a decline in average values on commercial property, following our view that this was the case in 2020 (MSCI annual data not yet available for 2020).
- The Office Property Sector is seen as the weakest of the 3 major property classes, with a significant proportion of survey respondents perceiving many companies to be re-assessing their office space requirements in light of the successful lockdown-related remote working period.
