FNB has released its second quarter 2020 results for their Commercial Property Broker Survey which incorporates a sample of commercial property brokers in and around the six major metros of South Africa namely the 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-serviced’ market, a pre-requisite in selecting broker respondents is that they deal in owner-serviced properties with a portion of dealings in the developer or investor markets and the listed sector.
In this report, FNB Commercial Property Finance deals 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. These questions include estimates of average times of properties on the market (prior to sale) as well as the perceptions of whether demand exceeds supply or vice versa.
A cautionary note regarding the second quarter results; the Coronavirus-related lockdown disruptions to most of the property sector may have made it harder to provide accurate survey answers.
The key themes that emerged:
- The industrial property market appears to be the strongest of the three major commercial property sectors i.e. industrial, retail and office. However, the recent trend has been one of a perceived weakening demand-supply balance in all three property classes.
- It appears that the three coastal metros i.e. Cape Town, Nelson Mandela Bay and eThekwini are where the relative market strength lies, with Gauteng metro regions being in relative weakness, with Johannesburg being especially weak.
- Nelson Mandela Bay and eThekwini are perceived to be the strongest markets in industrial property while eThekwini and Cape Town are perceived to be the strongest in retail property. Cape Town’s office property market is perceived to be the strongest.
- On the weak side of the spectrum, the Gauteng metros are perceived to be where the general weakness has been recently, especially Greater Johannesburg.