Slowdown in South African house price growth

The slowdown in house price growth in South Africa continued in January 2012, as on a monthly basis the nominal price growth remained in negative territory, according to recent data from ABSA.

The average nominal price levels of houses in the various categories of the middle segment of the market were R664,400 for small homes (80m²-141m²), R995,000 for medium-sized homes (141m²-220 m²) and R1,559,800 for Large homes (221m²-400m²) in January 2012.

The ABSA report stated: “Having expanded by an estimated real 3% in 2011, the South African economy is forecast to grow by 2.8% in 2012. The lower growth expected this year will largely be the result of a slower pace of expansion projected for the world economy, which will impact South Africa’s export performance. A weaker rand exchange rate compared with last year will, however, provide some support to the country’s export earnings.”

South African real estate a good bet

Investors see Commercial Real Estate as a good bet

Despite our fragile economy, investors are bullish on the prospects for commercial real estate industry in South Africa, said respondents to a last year's poll by SA Commercial Prop News. As 2011 came to a close, some commercial real estate experts found promising signs in often troubled markets. Over the last two years, JSE listed property funds that are heavily committed to commercial portfolios have outperformed almost every other class other than precious metals and raw materials such as iron ore. Latest performance figures from listed property funds confirm that office portfolios have taken a harder knock from job losses and a slower economy than their industrial and retail counterparts. The Retail and Industrial market is gaining interest from investors amid a mixed bag of property-related economic fundamentals such as improvement in employment, infrastructure and business expansions. "Investors continue to view these sectors as an attractive play in delivering steady cash flows driven by solid rental demand," said David Louw, editor of SA Commercial Prop. "As a result, investors view these sector as a hotbed for further investment activity."