Investment Review
South Africa 2019/2020

The economic impact of Covid-19 is expected to place downward pressure on rental levels and capital values across all market segments, and the trend is expected to persist over the short to medium term, as markets remain in a downturn phase. Despite this, the demand for warehouse and distribution space has remained resilient, boosted by retail driven e-commerce and supply chain diversification. Defensive sectors such as healthcare and logistics assets continue to garner interest, with active investors considering income stability, operation criticality and occupational density to be critical factors in mitigating asset-level risk.

Movement restrictions and new social distancing norms implemented in response to the Covid-19 pandemic, in addition to consumer preference and behaviour change, have seen more people pursuing online shopping alternatives, which has further strengthened e-commerce. While the value of transactions in 2020 slowed considerably when compared to the equivalent 2019 January-to-April period, investment sentiment in the industrial space has shown the most resilience. We anticipate retail driven warehousing and distribution space demand to expand over the short-to-medium term.