Commercial sales activity weakens

Commercial sales activity weakens

Private Property South Africa
Sarah-Jane Meyer

The FNB Property Broker Survey for the second quarter of 2023 showed that optimism is waning when it comes to near-term property sales activity. Expectations for all three major property classes – industrial, offices and retail - turned to a ‘declining sales activity bias’.

The FNB Commercial Property Broker Survey surveys a sample of commercial property brokers in and around South Africa’s six major metros - City of Joburg and Ekurhuleni (Greater Johannesburg), Tshwane, eThekwini, City of Cape Town and Nelson Mandela Bay.

Respondents were asked to indicate what their expectations were of sales activity levels in the six months following the survey. They were asked whether they expected a decline, an increase or no change in activity levels.

“It’s interesting to note that industrial property – which until very recently outperformed the other two classes - was the one most brokers strongly voted as ‘declining sales activity'," says FNB Commercial Property strategist John Loos.

“Demand for this class of property has been the strongest for some time, and perhaps the respondents see very limited upside potential off its present high base. Brokers possibly believe that the industrial market can no longer maintain its high levels of performance in such a weak economy when interest rates have risen so far, and its all-important manufacturing sector is in a bad way.”


Loos says that stock shortages remain a key factor in influencing near-term sales expectations in the industrial market. However, this factor has been overtaken by ‘economic and political uncertainty’ as the major influence.

“The general state of the economy was felt by most respondents to be the most significant challenge in all three property markets. The weak economy, load shedding and interest rate hiking have become, by far, the main factors in broker expectations,” he says.

Interest rate hiking has recently begun to feature very prominently as a factor driving near-term sales expectations. In the struggling office market, where most respondents cited a weakening in sales activity as a near-term expectation, the ongoing challenge of increased remote working - compared with the pre-Covid 19 period - seems to be largely forgotten.

From brokers working in the retail property market, there was little mention of the online retail challenges held to be significant following the pandemic.

A decline in the optimism level in all three property classes from the prior quarter is not too surprising, given a host of negative economic factors, including a weak economy, ongoing load shedding and rising interest rates.

Writer: Sarah-Jane Meyer

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