Everything in life has a season and the commercial real estate market is no exception. While SA’s economy was stuck in a seemingly endless winter of corruption with poor service delivery, cost of living increases, load shedding, and a junk status credit rating, as spring arrives, there are new shoots of optimism promising better times ahead.
The emerging positive sentiment has been driven by a few factors including the continuing absence of load shedding, a strong Rand, the formation of the Government of National Unity (GNU) and a highly anticipated interest rate cut in September 2024.
Record turnouts on the auction floor
SA’s economic landscape is starting to bloom with the buds of 2024’s positive sentiment starting to show fruit. “Nowhere is this more apparent than witnessing the record turnouts and competitive bidding we have witnessed at our auctions recently. South Africans are keen to get on with business and do deals; the time has never been better to buy or sell commercial property,” says Norman Raad, CEO of Broll Auctions and Sales.
Broll Auctions and Sales have 37 commercial properties going to auction on the 16th of October 2024 including the historic Radium Beer Hall, one of Johannesburg’s oldest ‘watering holes’ still in operation with a rich history dating back to 1929 when it was a tearoom and illicit shebeen.
“This sale gives the new owner the opportunity to take the Radium into yet another century for future generations to continue to enjoy its vibe and offering,” says Raad.
In Johannesburg, the fully let sectional title, green-star rated P-Grade office block, Illovo Edge, has strong returns from highly sought after tenants. In Pretoria, the well-established Sterland Mall in Arcadia offers an outstanding opportunity for an investor to use its current configuration for redevelopment in a high-density residential node.
“Off the back of a successful corporate disposal of 11 buildings in the Johannesburg CBD sold at our last auction, we have another offering of 10 assorted properties located nationally at vastly reduced mandates, unlocking excellent value.” These include 88 on Field and Pine Parkade in Durban Central, as well as three pieces of valuable vacant land, adjacent to the Kingsmead Cricket Stadium which are being disposed of by the SABC.
Other assets to come under the hammer in the Western Cape include a fuel site and operations in Kuilsriver, and a stunning ex-motor showroom for sale on Oudtshoorn’s bustling N2.
Retail and office sector show recovery
According to stats recently released by SAPOA the number of vacancies in the office sector has once again decreased for 9 quarters running nationally. The data for Q3 2024 showed a decrease to 13.6%, which is 3.1% below the high point for office vacancies – greener pastures ahead for this hard-hit sector as South Africans go physically back to the office.
All signs point to a growth phase for the retail sector with positive rental reversions in the retail space.
“The much-anticipated interest rate cut lies ahead of us, and there are still three months of brisk business trade where decisions must be reached before the yearend break, which can help to speed up a sale. Demand for retail centres increases ahead of the November to January peak spending period as demand for tourism and hospitality properties by investors seeking to capitalise on this demand,” notes Raad.
The changing of the political guard and improved financial outlook are translating into increased interest and investment in the commercial real estate market with activity starting to bloom. Coinciding with this increase in positivity is the physical change of season in SA as we head into spring which, historically, always bodes well for the real estate market.
Data points to a clear increase in demand during the spring and summer periods. “Studies have shown that this seasonal boom period drives higher sales volumes, increased demand means properties are on the market for a shorter period of this competitive period and can lead to increased average sales prices.”
“There has never been a better time to plant the seeds to future wealth by investing in commercial property right now. The combination of a favourable investment climate, economic reforms, and improved stability is creating a positive outlook for the commercial real estate market, buyers who get invested now will reap the rewards of their investment in the future.”
To view any of the properties mentioned or for a full list of the assets going on auction at The Wanderers Club in Illovo, contact the Broll Auctions and Sales team on 087 700 8289 or visit their website.
