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JLL South Africa releases research reviewing commercial real estate transactions
The latest research from JLL South Africa shows that commercial property investment activity in South Africa slowed down in 2014, with the overriding contributing factor being the low supply of investment properties.
Covering the years 2011 to 2014, with specific reference to the office, industrial and retail sectors, the report focuses primarily on major transactions. According to the report, the total purchase of office, industrial and retail properties by listed Real Estate Investment Trusts (REITs) declined by 43.7% to an estimated R13.8 billion. In line with the overall decline in transaction value, the total number of investment transactions declined from 148 to 112.
Zandile Makhoba, Head of Research, South Africa at JLL, says, "2014 was a prime example of unfavourable economic conditions: GDP growth slowed, the economy saw credit rating downgrades, currency weakness and rising inflation, all working against investor confidence in the economy. Given these conditions, it is not surprising that commercial property investment activity slowed. It is important to note that more than a shortage of buyers, the slowdown was mainly as a result of a decline in willing sellers of commercial properties in the prevailing climate. Holding cash is a disinvestment in a high inflation and weak currency environment and with fewer options for alternative investments, investors are preferring to hold the value in property assets."
Key outtakes from the report include:
Notes to Editors:
The report reviewed investment activity in the country's commercial real estate market, analysing key trends from investment data sales. Data was sourced from publicly available media reports, research by Real Capital Analytics (RCA) and listed sector annual reports, among other sources.
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Head: Research, South Africa