In 2011, the property market delivered modest annual returns of 10.4% after 2010's mini-recovery of 13.4%. After flat growth in the first half of 2011, results in the second six-months improved slightly.
IPD has tracked the commercial property market's highs and lows for over 17 years, showing investors and analysts which sectors of the market are recovering, stagnant or backsliding.
Its findings for the first half of 2012 will show how sluggish local economic conditions and uncertain global economic circumstances have impacted the current state of South Africa's investment property market.
The global economic outlook is unstable with the world's major economies subdued and, the Eurozone specifically, in turmoil. Locally, prospects for GDP (Gross Domestic Product) are in free-fall and consumer confidence is at its lowest in 12 years. Challenging property fundaments show soft demand and spiralling operating costs are stifling commercial property returns.
On the other hand, the further drop in interest rates, reasonable access to finance and South African property's reputation of remaining resilient in challenging times may together prop up property returns.
The results examine the essentials of property demand and supply: vacancies, rentals, values and more. They also post warning signs about where the most risk is in the market, and highlight market leading performance within different regions, sectors and property types.
Stan Garrun, MD of IPD SA comments, "The South African commercial property sector has traditionally approached a challenging economic environment by sticking to property fundamental basics and innovating with smart strategies to deliver performance. These results will prove how successful fund managers have been in overcoming the challenges to create better value for their clients. After all, investors need properties to be profitable, regardless of where the market is in the property cycle."
The SAPOA/IPD Property Index is the decisive standard for measuring property returns. The transparency it provides for commercial property has consistently added to the credibility of this asset class. It is the quintessential resource for local and international investors considering commercial property investment in South Africa.
