At R534-billion, retail property in South Africa carries
BUYING INTO SOUTH the highest value in the property sector; this is followed by office properties at R357-billion
and industrial properties at R281-billion. Hotels and other property account for R94-billion of the market value.
A key finding of the Property Sector Charter Council’s research shows that formal residential property still accounts for nearly three quarters of property owned in South Africa,
with the sector having grown from an estimated R3-trillion to R3.9-trillion over a four-year period.
Real estate investment trusts (REITs) have been found to be another important component in the South African property market.
These investment vehicles hold a combined market capitalisation of more than R422-billion; with more than 25 countries across the world using a similar REIT model,
BUYING INTO SOUTH nearly 45% of the FTSE/JSE SAPY Index earnings attracted by these investment vehicles come from outside of South Africa.
Add to this South African REITs’ (SA REITs’) exposure to global markets, and their continued popularity in Europe, Australia and the Far East,
and it is clear that these companies and trusts make the South African market relevant
to international investors while cementing the idea that Africa is indeed an investment destination.
Although this is positive, it should be noted that the current trend
of SA REITs investing outside of South Africa will likely continue for the foreseeable future,
as international markets have higher GDP growth rates than those seen at home.
While growth is slow and global risk factors are elevated, the world economy continues to provide a supportive platform for South Africa to expand trade and investment.
With world economic growth at its highest level since 2014 and continuing to gather pace,
South Africa continues to attract investors who are looking for opportunities outside of their traditional investment baskets.
Combine this with the attractiveness of emerging markets and South Africa is a great candidate for investment.
There are, however, challenges. PARTNERING FOR GROWTH While current business confidence could be described as cautiously optimistic,
many investors are waiting to see whether there will be resolutions around policy uncertainty and how structural changes will be implemented.
The property sector is not just a result of the outcome of the state of the economy, but it is a catalyst for economic growth in South Africa.
A recent report from PwC indicated that worldwide growth in the property industry until 2020 will largely be driven by developments resulting from far-reaching economic and social changes.
For more information: ฮานอยพัฒนา