Market expected to do better this year with rise in investor confidence
Commercial property worth more than R30billion was sold in Cape Town last year, and this figure may be surpassed this year if consumer and business confidence continues to rise following the election of the country’s new president.
Statistics released by Lightstone show commercial property worth R30.323bn was sold here last year.
Most of that figure was achieved from sales of property in the Voortrekker Road commercial node, which accounted for 25.8% of the total with sales to the value of R7.8bn.
The Cape Town CBD saw the second highest value of sales for 2017 with 23.4% of the total, amounting to R7.08bn. This year, however, the CBD node is leading the pack with property sales worth R386million – both cash and bonded.
So far in 2018, Lightstone says R1.183bn of commercial property has been sold in the Mother City, and can be broken into sales in the following nodes
CBD: R386m – 32.6%.
Table View: R209m – 17.7%.
Southern suburbs: R208m – 17.6%.
Atlantic Seaboard: R159m – 13.5%.
Voortrekker Road: R150m -12.7%.
Somerset West: R55m – 4.7%.
Northern suburbs: R16m – 1.4%.
In 2015 commercial property sales reached a total value of R19.051bn. In 2016 total sales reached R21.788bn. Last year’s more than R30bn total, plus improving sentiment and hopes for the economy, should see more commercial property sales concluded this year.
The resignation of former president Jacob Zuma last week has seen property players express their optimism that, along with economic recovery, the property market would also show improvement.
“We have seen quite fast movement over the past two weeks and we expect with Cyril Ramaphosa at the helm, there will be visible action towards cutting corruption and wasteful expenditure, and applying taxes for what they are intended, including bettering the lives of people and creating vital infrastructure necessary for economic development,” says Seeff Property Group chairman Samuel Seeff
“At the same time, we look forward to a return in confidence for the economy, investment and the property market.”
Along with all commentators who agree the change in leadership would bode well for country, Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says: “With Ramaphosa in the presidency I see the property market strengthening quickly in 2018. We’ll see far more activity, there will be more stock, and buyers will invest with much greater confidence than they’ve felt in a long time. We’ll also start seeing a price recovery across the country, with steady and stable growth the hallmark of the year.”
The political situation may also lead to interest rate cuts later in the year, says Paul Stevens, chief executive of Just Property.
“With the stabilising and strengthening of the rand our rate of inflation should start to decline, and this will hopefully lead to a rate cut. The next Monetary Policy Committee meeting is late in March, but I think cuts are only likely from the middle of the year.”
If they do come down, cuts will probably be conservative, he predicts, at around 25 basis points.
“I do not anticipate much more than 50 basis points during the year.”
Even small cuts will assist many buyers who have taken out bonds to purchase commercial property. Lightstone says this year bonded transactions account for R861m of the more than R1bn worth of commercial sales so far.