‘The industrial market, while still perceived to be the strongest in actual sales activity, has the weakest perception regarding direction.’
Confidence in commercial property in the fourth quarter slightly increased from 44% to 46%, marking the second consecutive quarter of an increase.
The FNB Commercial Property Broker Survey shows that this level of broker business confidence remains very weak, implying that 52% of respondents still perceive business conditions as unsatisfactory.
The survey, released on Tuesday, asks real estate agents, also known as brokers, about the current state of the commercial property market in South Africa.
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Property confidence increases due to interest rate cuts
John Loos, FNB’s Property Strategist, said the increase was noted after the second interest rate cut of 25 basis points by the South African Reserve Bank.
“The property broker business confidence rebound appears not too dissimilar to business confidence in the broader economy, as per the RMB-BER Business Confidence Index.
“The latter index came in at 45 [scale of 0 to 100] in the 4th quarter of 2024, up from 38 in the prior quarter.”
Still-weak property confidence level
Loos added that the still-weak confidence level suggests the broker and business community is not getting “overly optimistic” yet.
Respondents were asked to rate market activity levels on a scale of 1 to 10. The group’s average rating was higher in two of the three property classes than the previous quarter’s survey ratings.
He said the Retail Property Activity Rating increased from 4.26 in the third quarter of 2024 to 4.57 in the fourth quarter.
“This, too, is still down on its multi-year high of 4.9 reached at the end of 2023.”
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The office property market activity
The Office Property Market Activity Rating remained perceived as the weakest of the three markets in terms of sales activity, but only by a small margin.
Its rating increased to 4.55 from 4.15. “This latest rating now exceeds its previous post-Covid 19 high of 4.29, recorded in the third and fourth quarter of 2023, for the first time.”
The industrial market
“The industrial market, while still perceived to be the strongest in actual sales activity, has the weakest perception regarding direction.”
He said its fourth-quarter sales activity rating was the only one of the three markets to decline from the prior quarter, while it recorded the lowest positive index reading.
“Industrial property has seen the strongest performance of the three markets for some time in terms of actual perceived levels of sales activity, and perhaps of its high base, it is running out of scope to strengthen further.”
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