SA’s Property Market: The Only Game in Town While the Rest of the World Burns
As the global economy teeters on the brink of collapse, South Africa’s property market is laughing all the way to the bank. Despite interest rates through the roof and global markets in shambles, SA’s real estate market has defied gravity, delivering positive returns to investors.
"We’re not just insulated from the global downturn, we’re thriving in it," said Eileen Andrew, Vice President at MSCI, with a smug tone. "South Africa’s property market is the only game in town, and investors are taking notice."
Meanwhile, the rest of the world is reeling from the impact of high interest rates and bond yield movements. Global markets are experiencing a mass exodus from real estate, with office properties in major cities facing a perfect storm of decreasing valuations and increased vacancies. But not in SA, where property funds are raking it in, with returns surpassing those in global markets.
Infrastructure assets, such as social infrastructure, health, and education, are also hot commodities, attracting investors seeking stable returns amidst economic uncertainty. And with South Africa’s government struggling to deliver essential services, the scope for infrastructure investment is vast, offering real opportunities for property owners to cash in.
But don’t just take MSCI’s word for it. South African property funds are already investing abroad, with returns from markets like Poland, Hungary, the Czech Republic, Portugal, and Spain outperforming those in larger, more developed markets in Europe and the US.
And what about retail property? Ah, it’s been a real party in SA, with valuations becoming more realistic and trading density growth remaining positive on an inflation-adjusted basis. Meanwhile, office properties in SA are experiencing a mixed bag, with some nodes enjoying high demand while others struggle. But who needs office space when you can have industrial property, which continues to deliver strong performance driven by stable income growth and resilient asset values?
Global real estate performance and deal volumes are, of course, under pressure, but that’s just a minor speed bump for SA’s resilient property market. Investors are still seeing reasonable returns, although capital growth has slowed. But hey, who needs capital growth when you can have steady returns and a government that’s struggling to deliver essential services?
In conclusion, the South African property market is the best game in town, and investors would be foolish to ignore it. So, buckle up and get ready to cash in on the SA property boom while the rest of the world is stuck in the slow lane.
