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<\/a>FNB forecasts further rate cuts in the first half of 2025, but the extent to which this will stimulate growth, particularly in the interest-sensitive residential sector, is yet to be seen.<\/p>\n\n\n\n
Improvements in key service delivery areas, such as electricity supply and logistics, offered a glimmer of hope in late 2024. <\/p>\n\n\n\n
The elimination of load shedding and progress in transportation infrastructure are expected to impact economic growth positively.<\/p>\n\n\n\n
However, recent data releases have cast a shadow over this optimism.<\/p>\n\n\n\n
“Some macro-fundamentals underpinning the property market appear ‘fragile’ of late,” said Loos.<\/p>\n\n\n\n
The fragility stems from several factors, including:<\/p>\n\n\n\n
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- Slowing GDP growth:<\/strong> South Africa’s third-quarter GDP growth slowed further, raising concerns about the strength of the economic recovery.<\/li>\n\n\n\n
- Weakening high-frequency indicators:<\/strong> Key indicators like new passenger vehicle sales and manufacturing new sales orders have shown signs of decline, suggesting a less robust start to 2025.<\/li>\n\n\n\n
- Global market uncertainty:<\/strong> Financial markets have grown increasingly cautious about the global economic and inflation outlook, particularly in light of the impending Trump presidency and its potential impact on trade and inflation.<\/li>\n\n\n\n
- Rising bond yields:<\/strong> South African Government’s long bond yields, a key influence on property capitalisation rates, have experienced a sudden uptick.<\/li>\n\n\n\n
- Rand depreciation:<\/strong> The South African Rand has weakened significantly against the US dollar, adding to the sense of uncertainty.<\/li>\n<\/ul>\n\n\n\n
Despite these challenges, FNB forecasts a mild strengthening in commercial property net operating income and capital value growth in 2025. <\/p>\n\n\n\n
However, Loos said these gains will unlikely outpace inflation, resulting in real declines.<\/p>\n\n\n\n
Loos emphasises that “moderate and mild, at best,” will likely characterise the near-term outlook for the South African property market.<\/p>\n\n\n\n
He said that the ability of the property market to weather these headwinds and achieve even modest growth will depend on several factors, including:<\/p>\n\n\n\n
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- The pace and extent of interest rate cuts;<\/li>\n\n\n\n
- The impact of the Trump presidency on global trade and inflation;<\/li>\n\n\n\n
- The South African government’s ability to address structural economic challenges and foster investor confidence.<\/li>\n<\/ul>\n\n\n\n
As the year unfolds, Loos said that it will be crucial to monitor these factors closely to gauge the true trajectory of the South African commercial property market.<\/p>\n\n\n\n
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- Weakening high-frequency indicators:<\/strong> Key indicators like new passenger vehicle sales and manufacturing new sales orders have shown signs of decline, suggesting a less robust start to 2025.<\/li>\n\n\n\n