PROPERTY INDUSTRY SENTIMENT
Category General News
There'll always be interconnectedness between the different property sectors and insights gathered from some will shine a light on the state of the overall property market and the economy in general. SAPOA's Industry Sentiment Survey was sent to 25 prominent property sector corporations and funds countrywide. The responses from the 25 were weighted strongly from Gauteng - nearly 60% - then the Western Cape, followed by Kwazulu-Natal/Eastern Cape.
To paint an accurate picture of the Survey, two factors underpinned the responses: Firstly, the 25 respondents originated from different disciplines within the property landscape, the dominant areas being Developers / Property Owners / Asset Managers (41,33%); Consultant / professional (37,33%); and Property Managers / Facilities Managers (21,33%). Then, diving down even further, the sectors of the property industry in which they primarily operated, were Shopping Centres, Commercial Offices, Industrial / Logistics . . . with Residential at over 25% and retirement living at 12%.
Sentiment is a crucial factor in property. Clearly various local and global financial, political and social indicators inform that sentiment, particularly as regards residential property. Buying and selling property is as much a matter of emotion as it is investment and other considerations.
Questions posed to the 25 prominent property corporations / funds, were many and varied and some responses were surprising in their positivity, others less so. As Myles Wakefield, CEO of Wakefields Real Estate says, "Everybody in the property industry will agree the past year has, in the main, been a good one for residential property. The interest rates have fuelled much of that, particularly for first time homeowners, but few would argue that the steady sales during a pandemic of this nature, has taken us by surprise. We all acknowledge sentiment as a major driver of the market and the pandemic certainly affected sentiment, but in ways many of us would not have predicted."
Questions were asked around the respondents' view of the different property sector/s to be most affected over the next quarter: the dominant view by far was that commercial office space and hotel, tourism and leisure would be the most affected. Those were followed by shopping centres (21,33%). Only 6,6% felt residential would be affected and 4% for retirement living.
There was clear 'Yes' to the issue of interest rate rises - 76,06% saw it increasing while 22,54% believed it would remain the same, with very few believing there'd be a decrease. That's in line with most views on the future of the interest rate and as Wakefield says, "Slow and steady is likely and for most homeowners, manageable - it's certainly preferable to any one-off dramatic hike."
Many of the views about the next 12 months were a mixture of cautious positivity and retaining of the status quo. Nearly half the respondents felt economic growth would remain the same and close on 27% are convinced it will strengthen.
In terms of the impact of Covid-19 on businesses over the next quarter (such as easing of public health restrictions, return to office, etc) 72% believe it should start to improve. Over half the respondents also saw their staffing levels as remaining the same.
Questions were raised about the respondents' views on construction activity levels for the next 12 months in the residential component - 62.32% suggested it would rise and 60% foresaw a rise in the retirement sector.
To the question of how do you expect capital values to change for certain asset classes over the next 12 months, 43% predicted residential remaining the same, while 38,89% saw it increase. For retirement living, 42,03% suggested it would remain the same, and 47,83% saw it increasing.
The response from the 25 prominent property sector corporations and funds countrywide, to predictions about South Africa's economic growth was telling, even surprising: a negligible percentage saw growth as being significantly weaker, while 48% saw it remaining the same, and nearly 30% predicted it either strengthening or becoming significantly stronger. That's encouraging news.
Only time will tell, but clearly there's a great deal of work to be done, not only to make up for the lost ground of the past pandemic years, but to alter sentiment and build waning confidence. But as Wakefield says, "For the residential property industry, the absolute fact is South Africans are buying and selling residential property at a good rate - certainly that's our experience in KZN. It's been exciting for us to hand over the keys to the door to new and first time homeowners, and we've no reason to expect this momentum to change."
Author: Anne Schauffer
