SA's real estate market sees 63.5% investment growth in 2018

Office investment dominated with R10.3 billion invested in over 58 properties

March 20, 2019

​JOHANNESBURG, 19 March 2019 – JLL Sub-Saharan Africa today released its 2018 Investment Review, an annual analysis of investment activity in the South African commercial real estate market assessing key trends observed from investment sales data. Investment activity recovered notably year-on-year, with transaction activity reaching R19 billion from just R11.6 billion in 2017. This is partly attributed to a marked improvement in investor confidence on the back of Cyril Ramaphosa’s appointment as President of South Africa.

Zandile Makhoba, Head of Research for Sub-Saharan Africa at JLL, noted: “While the growth in real estate investments displays improved confidence in the South African real estate market, 2019 may start off a bit slower in terms of activity with national elections takin place in May. Additionally, the industry needs greater clarity on the land reform policy and this may also delay potential transactions in the year ahead, as investors await the decision on land repatriation without compensation.” 

Geographically, Gauteng dominated investment activity, as seen in previous years, with total investments of R11.3 billion in 2018 from R3.1 billion in 2017. However, while Gauteng saw investments more than double in comparison to 2017, the opposite was true in other provinces with the Western Cape recording a marginal 15.0% year-on-year increase in investments to R5.7 billion. The remaining provinces, including KwaZulu-Natal, saw declines across the board.

In contrast to previous years, the retail sector recorded a 7.4% decline in total investment in 2018. Instead investment growth was dominated by the office sector which recorded R10.3 billion in sales, almost triple the value recorded in the previous year. The average value per square metre for office was R12,233 in 2018, compared to a value of R11,360 in 2017, an increase of 8%.

Notes:

The data for this report was sourced from publicly available announced media reports, research by Real Capital Analytics (RCA) and the annual reports of the listed sector, among other sources. The total transactions reported do not reflect market activity completely but present a majority of activity in which listed and unlisted major funds have either acquired or disposed of commercial real estate assets, with the section of smaller sales excluded due to lack of data.