FNB’s Commercial Property Broker Survey for 2020’s fourth quarter saw all three major commercial property sectors (industrial, retail, and office) show slight increases in perceived market activity levels.
The percentage of respondents perceiving business conditions to be satisfactory declined in the fourth quarter survey to a weak 21%, down from 31% in the previous quarter. This follows the mild third quarter increase as South Africa emerged from the hard lockdown.
When FNB asked brokers for their ratings of market activity levels on a scale of 1 to 10, they noted that the group of respondents were most upbeat (or least pessimistic) about the industrial and warehouse market. This property market’s fourth quarter activity rating rose slightly from 4.64 in the prior quarter to 4.68 in the fourth quarter.
The Retail Property Activity rating also increased from 3.37 to 3.59 over the same two quarters. The office market rating remaining the weakest of the three, but it rose slightly from 2.97 to 3.32.
The Near-Term Expectations Indices of Property Market Activity, which reflects broker near-term expectations, saw the respondents being least optimistic about office property which recorded a mild positive of +12 while the industrial property market recorded a stronger +19. The retail sector response was unexpected with brokers posting the strongest response in this sector – +27.
In all three major property markets, brokers witnessed the negative economic impact of the Covid-19 lockdowns which are still a major influence on their near-term market activity expectations.
However, the lockdown related ‘Zoom Boom’ phenomenon in the office sector (and its potential ‘work-from-home’ implications) continued to overshadow the recession’s impact, playing a major role in the brokers’ continued pessimism about this market. The impact of online retail in the retail property sector is seen as far less significant than the ‘work from home’ impact.
The broker survey interviews 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, the City of Cape Town, and Nelson Mandela Bay.
A pre-requisite in selecting these broker respondents is that they deal in owner-serviced properties with a portion of these dealings in the developer or investor markets as well as in the listed sector.
This report focuses on the part of the survey where respondents were asked to rate their perceptions of the buyers and sellers’ market activity levels on a scale of 1 to 10 with 10 being the strongest activity level rating.