First registration of agricultural real estate at the Deeds Office has risen by only 10% since 1999 following a busy five-year period between 1994 and 1999 when 30% of all agricultural property was first registered.
According to Lightstone, approximately 60% of current agricultural property stock was initially registered at the Deeds Office prior to South Africa’s first democratic elections in 1994.
Head of Digital at Lightstone, Hayley Ivins-Downes, says non-commercial registrations grew off a lower base and followed a ‘gentler’ but more sustained growth than agricultural, slowing during the mid-2000s while the highest proportion of commercial registrations have taken place since 1994.
The greater number of first registrations of commercial real estate results in more transfer volumes than in non-commercial and agricultural (see graph below).
Transaction volume increases and declines tell a clear story, but average value fluctuations need to be treated with some caution: single year spikes in average prices are almost certainly attributable to the property stock type makeup of the transactions, for example, a year dominated by small farm transfers followed by a year dominated by a large farming operation transfer.
When a trend becomes apparent, such as the sustained decline in commercial prices, it may be more indicative of less stock activity because of the pandemic than of actual value decline. Ivins-Downs says, however, that overall, there has been little value growth realised in these markets.
The pandemic dampened agricultural property market activity levels substantially, although volumes had been falling since 2014. Commercial and non-commercial activity levels continued to see uneven growth.
Volumes are the highest in Gauteng with provinces and large metropolitans skewed towards commercial activity while rural provinces naturally had more agricultural activity.
90% of commercial sample (where the sector is known) falls within one of eight sectors. Ivins-Downes says analysis of this eight-sector sample over the past ten years shows transaction volumes are highest in the industrial sector, followed by retail and then office.
While average values were reasonably volatile across the years in most sectors, it is notable that office prices were steadily growing until Covid-19 when they plummeted – although volumes increased in 2021, reversing the negative volume trend possible as no longer wanted office space was sold off to other sectors. However, the small volume of 2022 year-to-date office sector sales do show a promising price recovery.
Considering the same volume (not price) component of the information as above but limited to the last five years and split between metropolitan focused provinces (Gauteng, Western Cape, and KwaZulu-Natal) against rural focused provinces (the other six provinces), Ivins-Downes says we see roughly 75% of property transfers in all the commercial sectors are within the metropolitan provinces.
“Sector share of activity has largely remained static, with some notable exceptions: the medical sector’s small share of activity swelled in metropolitan areas but declined in non-metropolitan areas in 2020, while hotel activity in rural areas increased its share of activity at the same time and restaurants are seeing a strong contribution to activity in 2022 year-to-date, although it is unknown if it is positive renewal or negative selloff”, she concludes.
