FNB has released the continuation of its fourth quarter 2020 results of their FNB Commercial Property Broker Survey which includes a sample of commercial property brokers in and around the six major metros of South Africa.
Given the strong focus on the ‘owner occupied’ property segment, a pre-requisite in selecting broker respondents is that they deal in owner-serviced properties with a portion of their dealings in the developer or investor markets as well as in the listed sector.
In the recent report, FNB deals with questions relating to the perceived balance or imbalance between demand and supply of properties being transacted in the main markets. The 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 the perceptions of whether demand exceeds supply.
The key themes that have emerged from these results are:
- The industrial property market is still perceived to be the strongest of the three major commercial property sectors.
- A weak perceived demand-supply balance in all three property classes has continued in the fourth quarter survey.
- With industrial property, it appears to be that the three major coastal areas (Cape Town, Nelson Mandela Bay, and eThekwini) are where the relative market strength lies, with Gauteng metro regions being the area of relative weakness with Johannesburg being especially weak.
- Greater Johannesburg comes out with the weakest demand-supply balance readings in all three major property sectors.
- Given a major bias towards ‘oversupply’ in all three major commercial property markets, FNB expects that 2021 will see a continuation of a decline in average values on commercial property, following their view that this was the case in 2020 (MSCI annual data not yet available for 2020).
- The office property sector is seen as the weakest of the three major property classes, with a significant proportion of survey respondents perceiving many companies to be re-assessing their office space requirements considering the successful lockdown-related remote working period.