|
|
 |
|
Viewing report
|
|
|
|
South Africa Real Estate Report Q1 2012
Business Monitor International, Dec 2011, Pages: 60
As anticipated, South Africa's construction industry is experiencing a protracted lull following years of double-digit growth. With first half growth underperforming our already bearish outlook, we have further revised down real growth expectations to just 1% year-on-year (y-o-y) in 2011 and only marginally better at 2.7% in 2012. With the government still stalling on infrastructure contracts, we do not expect much of a bounce over the short term.
This will continue to hit domestic construction companies hard, with those that are the most internationally diverse likely to outperform over the coming quarters. With the construction sector firmly mired in a period of stagnant growth, we see few opportunities to lift the industry out of the quagmire. For real estate firms with a higher dependence on the construction side the risks are greater than those with a GLA portfolio, as the slowdown in the project pipeline will go some way to rectifying the imbalanced supply and demand dynamics, which currently characterise the sector.
South Africa has a well developed real estate investment trust (REIT) sector, which owns a significant amount of the prime office, retail and industrial property in South Africa. Liberty Property Fund (owned by the larger Liberty Holding Company) is a significant owner and developer in the retail and hotel property sectors in South Africa. The Top five REITS in South Africa are: Sycom Property Fund; Emira Property Fund; Liberty Property Fund; Capital Property Fund; and Fountainhead Property Trust. These property funds hold a mix of office, retail and industrial office space in South Africa. Their combined market capitalisation by September 2010 was EUR9,784mn.
Key opportunities in the real estate market include:
- The government is under pressure to improve the process of bidding for public-private partnerships (PPPs) as developers had complained it cost them too much to do so. The Independent Online reported in September 2011 that Wilson Bayly Holmes-Ovcon had described the process as ‘long and drawn-out' and had pointed out that PPPs were not a viable long-term solution to the country's problems with developing sound infrastructure. A commission has been established to improve the situation, including trying to reduce corruption and build up the necessary capabilities within the government itself.
Key risks to the real estate market are:
- Uncertain economic recovery and falling consumer confidence in the economy.
- Public sector investment has tailed off.
- A glut in supply has created an imbalance in supply and demand dynamics, placing increasing downwards pressure on rental yields.
Business Monitor International's South Africa Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on South Africa's Real Estate industry.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
