Commercial property brokers believe the industrial market was still the firmest when compared with the retail and office sectors – the three are the major commercial property asset classes, according to FNB’s latest Property Broker Survey.
The survey showed that the brokers perceive there to be an oversupply of property on the market relative to demand in the retail and office property classes, but the industrial market was believed to be near to demand-supply balance.
The main areas of relative strength for industrial property appeared to be the three coastal metros: eThekwini, Nelson Mandela Bay and Cape Town, while Gauteng’s Greater Johannesburg region remains the weakest by a significant margin.
In terms of office property, all major metro regions were perceived to be heavily oversupplied, with the City of Cape Town the least oversupplied of these.
“Given the near-elimination in the bias towards “oversupply” in the industrial market, we remain of the expectation that this market will return positive growth in capital values in 2022,” said FNB commercial property sector strategist, John Loos.
Both the retail and office market remain oversupplied, and rising interest rates and signs of a slowing economy may have begun to weaken their demand, he said. This may have caused some renewed weakening in their market balances in the second quarter, after prior improvement, he said.
According to Loos, the office and retail property markets reflected weak economic times and structural challenges such as greater online retail, a financially constrained consumer, greater levels of remote work and improved efficiency in use of office space through hotelling of desk space.
BUSINESS REPORT