Regarding broker perceptions of national property investor demand relative to supply, 2 out of 3 major commercial property markets are perceived to be “under-supplied”. The Industrial and Retail Property Markets are perceived as having a demand that exceeds supply, while the Office Market remains significantly oversupplied.
We continue with the 4th quarter 2024 results of the FNB Commercial Property Broker Survey, which interviews a sample of commercial property brokers in and around the 6 major metros of South Africa, namely, City of Joburg and Ekurhuleni (Greater Johannesburg), Tshwane, eThekwini, City of Cape Town and Nelson Mandela Bay.
Given FNB Commercial Property Finance’s strong focus on the “Owner-Occupied” Property Segment, a pre-requisite in selecting broker respondents is that they deal in owner-serviced properties, but a portion will also have dealings in the developer or investor markets as well as in the listed sector.
In this report, we deal with questions relating to the perceived balance/imbalance between demand and supply of properties being transacted in the main markets. Market “strength” refers to a relatively strong demand level relative to supply, and vice versa for market “weakness”. These questions include estimates of average times of properties on the market prior to sale, as well as perceptions of whether demand exceeds supply or vice versa.
Key themes that emerge from the results are:
• Brokers perceive industrial property to be selling the fastest, followed by retail property and lastly office space.
• The brokers, on an aggregated basis, perceive average time on the market, prior to properties selling, to have declined in all 3 major commercial property markets in the 4th quarter 2024 survey.
• While the Industrial Property Market remains the strongest of the 3 major commercial property markets, the Retail Market has “narrowed the gap” considerably. Office Property remains perceived as the weakest market, albeit having lessened its oversupply in the recent years.
• A noticeable perceived national “undersupply” of property on the market relative to demand exists in the Retail and Industrial Markets, with the Office Market still perceived as significantly oversupplied.
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