Commercial Real Estate South Africa Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The Report Covers the Commercial Real Estate Market in South Africa and is Segmented by Type (office, Retail, Industrial and Logistics, and Hospitality) and by Key Cities (Johannesburg, Cape Town, Durban, Port Elizabeth, and Other Cities). The Report Offers Market Size and Forecast Value in USD for all the Above Segments.

Commercial Property South Africa Market Size

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South Africa Commercial Real Estate Market Summary
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Study Period 2020-2029
Base Year For Estimation 2023
Market Size (2024) USD 9.62 Billion
Market Size (2029) USD 16.09 Billion
CAGR (2024 - 2029) 10.84 %
Market Concentration Low

Major Players

South Africa Commercial Real Estate Market Major Players

*Disclaimer: Major Players sorted in no particular order

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Commercial Property South Africa Market Analysis

The South Africa Commercial Real Estate Market size in terms of Equal-10.84 is expected to grow from USD 9.62 billion in 2024 to USD 16.09 billion by 2029, at a CAGR of 10.84% during the forecast period (2024-2029).

  • Before the COVID-19 pandemic, the commercial real estate sector faced difficulties. These were likely to last for a while due to changes in work practices brought on by the pandemic. These were to also probably worsen as the impact of "shadow vacancies" became more evident, leading to an increase in the number of vacant properties. Many businesses wanted to downscale their physical workplaces in favor of the smaller office spaces required for hybrid workforces.
  • On the plus side, most urban centers are demanding affordable residential housing. Since many of these pre-existing commercial buildings have services, repurposing them is generally simple and affordable. This tendency is already well established in many cities, and as more offices fall empty in the upcoming months and years, it will pick up speed.
  • Aside from saving money, repurposing a building also eases the burden on governments, which are already under strain to provide services and utilities. The fact that these converted buildings are already situated within cities further reduces the need for inhabitants to commute, decreasing traffic and the strain on public transportation infrastructure.
  • While the current state of the global economy is putting pressure on investors in most segments of the domestic real estate market, Makhosini Ndlovu, product head at FNB Commercial Property Finance, claims that those who have invested in student housing continue to see strong returns.
  • Yields remain very good for some universities, such as the University of Cape Town (UCT). Regardless of how many approvals are given for the construction of student housing near UCT, domestic and international demand for study opportunities will likely maintain demand for housing in the upcoming years.

Commercial Property South Africa Market Trends

Increasing office space demand in South Africa

South Africa has seen its historically robust office fundamentals erode significantly over the last year. Vacancy rates have steadily risen as corporate consolidations and the rise in work-from-home result in more space being given up in the market. At the end of the second quarter of 2022, Johannesburg had the highest office vacancy rate across all major metropolitans.

The vacancy rate of office real estate increased across all major markets in South Africa between the first quarter of 2021 and the first quarter of 2022. Pretoria and the Surrounds had the lowest vacancy rate of 12.1 percent in 2022. Johannesburg, on the other hand, had the highest share of vacant office space at over 19 percent. Office demand dynamics have shifted considerably as many corporates continue to scale down on space requirements in line with the new work-from-home and the office rotational hybrid model.

Office demand dynamics have continued to soften as corporates look to scale down on space requirements in line with new work-from-home and office rotational hybrid models. The net effect is that office foot count has declined significantly from pre-pandemic levels. While office fundamentals are expected to continue softening over the foreseeable future, qualifying tenants may find great opportunities to secure favorable long-term lease arrangements.

South Africa Commercial Real Estate Market - Vacancy rate of office space in South Africa in percentage, by metro, in 1st quarter 2021 and 1st quarter 2022

Increased Industrial Segment Growth Creating Opportunities for the Market

The prime industrial property had the lowest investment yield among different commercial real estate types in Cape Town, South Africa, in the first quarter of 2022. Yield measures the expected return of an investment property and is calculated as the annual rental income divided by the property value. Investors expected a return on investment of 8.25 percent for prime industrial properties, while for rental housing, this figure was 9.5 percent.

According to JLL data, Pretoria and the Surrounds and Cape Town were the South African markets with the lowest average vacancy rate for industrial real estate in the first quarter of 2022. During that quarter, approximately 4.9 percent of industrial real estate was vacant. In Johannesburg, this share was slightly higher at 4.95 percent.

The prime industrial property had the lowest investment yield among different commercial real estate types in Cape Town, South Africa, in the first quarter of 2022, according to Knight Frank data. Yield measures the expected return of an investment property and is calculated as the annual rental income divided by the property value. Investors expected a return on investment of eight percent for prime industrial properties, while for rental housing, this figure was 9.5 percent.

According to Knight Frank, the industrial property sector was the only one that experienced an increase in prime rents in Cape Town, South Africa, between 2020 and 2022. From 5.5 USD in the first quarter of 2020, the monthly square meter rent of industrial space grew to 6.9 USD in the first quarter of 2022. Rental rates for retail space, on the other hand, halved during the period.

South Africa Commercial Real Estate Market- Vacancy rate of industrial real estate in South Africa, in percentage, by metro, in 1st quarter 2022

Commercial Property South Africa Industry Overview

The South African commercial real estate market is fragmented with the presence of local and global players. Developers are more inclined to spend money on reinventing property rather than building on new land. Some of the country's major commercial real estate players include Growthpoint Properties, Amdec Group, Pam Golding Properties, Excellerate JHI, and Chas Everitt Property Group.

It is also noted that South Africans are migrating to invest in properties outside Africa, mostly in Europe, due to its robust economy and growth. South Africa's REIT sector is outperforming in terms of returns to investors. There is a need for investment in all sectors to foster further development in commercial real estate in South Africa.

Commercial Property South Africa Market Leaders

  1. Growthpoint Properties

  2. Amdec Group

  3. Pam Golding Properties

  4. Excellerate JHI

  5. Chas Everitt Property Group

*Disclaimer: Major Players sorted in no particular order

South Africa Commercial Real Estate Market Concentration
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Commercial Property South Africa Market News

  • November 2023: WeWork South Africa is accelerating its expansion plans as the rise in popularity of hybrid work sees a boost in demand for flexible office spaces.
  • September 2023: Instant Group, a flexible workspace marketplace, has acquired property advisor PSA to broaden its reach and grow its business across Africa.

Commercial Property South Africa Market Report - Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS AND DYNAMICS

    1. 4.1 Current Economic Scenario and Consumer Sentiment

    2. 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for the Commercial Real Estate Sector

    4. 4.4 Insights on Existing and Upcoming Projects

    5. 4.5 Insights on Interest Rate Regime for General Economy, and Real Estate Lending

    6. 4.6 Insights on Rental Yields in Commercial Real Estate Segment

    7. 4.7 Insights on Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 4.8 Insights on Public-private Partnerships in Commercial Real Estate

    9. 4.9 Insights on Real Estate Tech and Startups Active in Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)

    10. 4.10 Impact of COVID-19 on the Market

    11. 4.11 Market Dynamics

      1. 4.11.1 Drivers

        1. 4.11.1.1 Urbanization and Population growth

        2. 4.11.1.2 Foreign direct investments

      2. 4.11.2 Restraints

        1. 4.11.2.1 Economic uncertainity

        2. 4.11.2.2 Regulatory environment

      3. 4.11.3 Opportunities

        1. 4.11.3.1 Urban Renewal and development

        2. 4.11.3.2 Retail and shopping ceters

    12. 4.12 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.12.1 Bargaining Power of Suppliers

      2. 4.12.2 Bargaining Power of Consumers / Buyers

      3. 4.12.3 Threat of New Entrants

      4. 4.12.4 Threat of Substitute Products

      5. 4.12.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Type

      1. 5.1.1 Office

      2. 5.1.2 Retail

      3. 5.1.3 Industrial and Logistics

      4. 5.1.4 Hospitality

    2. 5.2 By Key City

      1. 5.2.1 Johannesburg

      2. 5.2.2 Cape Town

      3. 5.2.3 Durban

      4. 5.2.4 Port Elizabeth

      5. 5.2.5 Other Key Cities

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Market Concentration

    2. 6.2 Company Profiles

      1. 6.2.1 Growthpoint Properties

      2. 6.2.2 Amdec Group

      3. 6.2.3 PAM Golding Properties

      4. 6.2.4 Excellerate JHI

      5. 6.2.5 Chas Everitt Property Group

      6. 6.2.6 API Property Group

      7. 6.2.7 De Lucia Group

      8. 6.2.8 Legaro Property Development

      9. 6.2.9 Devmark Property Group (Pty) Ltd.

      10. 6.2.10 Rabie Property Group (Pty) Ltd.*

    3. *List Not Exhaustive
    4. 6.3 Other Companies

  7. 7. FUTURE OF THE MARKET

  8. 8. APPENDIX

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Commercial Property South Africa Industry Segmentation

Commercial real estate (CRE) is only used for business-related activities or to offer a workspace, as opposed to being utilized as a residence, which would fall under the residential real estate category. Most frequently, renters lease commercial real estate to conduct businesses that generate cash.

The report covers the commercial real estate market in South Africa and is segmented by type (office, retail, industrial and logistics, and hospitality) and by key cities (Johannesburg, Cape Town, Durban, Port Elizabeth, and other cities). 

The report offers market size and forecast value in USD for all the above segments.

By Type
Office
Retail
Industrial and Logistics
Hospitality
By Key City
Johannesburg
Cape Town
Durban
Port Elizabeth
Other Key Cities
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Commercial Property South Africa Market Research FAQs

The South Africa Commercial Real Estate Market size is expected to reach USD 9.62 billion in 2024 and grow at a CAGR of 10.84% to reach USD 16.09 billion by 2029.

In 2024, the South Africa Commercial Real Estate Market size is expected to reach USD 9.62 billion.

Growthpoint Properties, Amdec Group, Pam Golding Properties, Excellerate JHI and Chas Everitt Property Group are the major companies operating in the South Africa Commercial Real Estate Market.

In 2023, the South Africa Commercial Real Estate Market size was estimated at USD 8.58 billion. The report covers the South Africa Commercial Real Estate Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the South Africa Commercial Real Estate Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.

South Africa Commercial Property Industry Report

Statistics for the 2024 South Africa Commercial Real Estate market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. South Africa Commercial Real Estate analysis includes a market forecast outlook to for 2024 to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.

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Commercial Real Estate South Africa Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)