URERU Seminar on November 9, 2023, featured an enlightening presentation by the Credit Executive from Nedbank Corporate and Investment Banking, Suleiman Titus, addressing the theme “Reflecting on the 2023 Property Market.”
In drawing parallels with the recent performance of the Springboks in the Rugby World Cup, it underscores the significance of resilience in shaping not just our humanity but our South African identity. A hashtag that encapsulates the spirit of 2023 could be #ResilienceMakesUsPropertyProfessionals, reminiscent of the enduring Clint Eastwood movie where South Africans face “The Good, The Bad, and the Ugly.”
On a positive note, Titus quoted Sandile Hlophe, a partner at EY, who reported “a surge in foreign direct investment in South Africa, reaching its highest levels since 2016”. The country clinched its fourth Rugby World Cup victory, Moody’s outlook is stable post the medium-term budget, and Redefine indicates a turnaround in property cycle performance.
However, amidst the positive developments, there are challenges that are not just bad but downright ugly. Peculiar weather patterns have caused widespread storm and hail damage, and global conflicts like the Ukraine war and Israel-Hamas tensions cast shadows on wheat and gas prices. Locally, persistent load shedding poses a substantial threat to property owners over the next five years.
Nedbank’s daily market snapshot reveals a mixed bag, with brent crude dropping and the rand hovering around R18.50 to the dollar. The daily outlook is subject to rapid change due to global events.
South Africa Inc. confronts unique challenges, including potential inflation relief, concerns about talent drain, and a skills shortage strangling the economy. Business closures, both in South Africa and internationally (e.g., WeWork filing for bankruptcy), directly impact the property market. With deteriorating infrastructure, economic growth is forecasted to weaken to 0.8% in 2023.
A detailed analysis of the property sector’s performance highlights varying capital growth and vacancy rates across different segments. Industrial multi-parks lead in capital growth, while the residential sector rebounds with reduced vacancy rates and accelerated base rental growth.
Notably, the Western Cape, encompassing areas like Cape Town and southern Cape towns like George, Mossel Bay, and Swellendam, defies property market trends with the rise of semi-gration and semi-urban living.
Titus quoted the words of Walt Disney, “the way to get started is to quit talking and begin doing.” Given the global and local challenges, there’s a call to return to basics. Titus predicts growth in sectors like food, shelter and safety, education, student accommodation, health, and retirement.
In conclusion, while acknowledging the challenges, it was a balanced outlook, and it was re-iterated that opportunities persist within the property sector. Success hinges on resilience, targeted sector focus, and a commitment to sustainable income.
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