During December 2022, SA’s All Property capitalisation rate showed a marginal change, up by five basis points to 8.3% – despite a weakening in bond yields, both short and longer dated.
At the fiftieth percentile, the All Property cap rate was 9.5% as at December 2022, according to the MSCI South Africa Annual Property Index which tracked the performance of 1 971 independently valued real estate assets worth R369 billion.
Since 2000, the median SA All Property cap rate maintained an average spread of 150 basis points over the ten-year bond yield. The median All Property cap rate’s current premium to the risk-free rate suggests that commercial real estate may be relatively expensive relative to a medium-term risk-free rate.
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