SA ‘a frontier for real estate growth’

28 May 2013

South Africa’s main centres – Johannesburg, Cape Town and Durban – have been pinpointed as part of Africa’s next frontier for commercial property growth by international real estate group Jones Lang LaSalle.

The three cities were among 20 in Africa identified by the firm, in a report released earlier this month, as catalysts for commercial property growth by retailers, corporates and investors.

South Africa was also identified as the continent’s only transparent real estate market.

“There is a high variation in real estate transparency, befitting the markedly different levels of development and infrastructure in Africa,” said global research director Jeremy Kelly.

“South Africa stands head and shoulders above the rest of the continent and has made steady improvement over the least two years, such that it now ranks as the 21st most transparent global real estate market.”

‘Africa’s strenghtening economies’

“Africa’s strengthening regional economies and improving operating environment, rapid urbanisation and emerging middle class consumerism present strong opportunities for established international retailers to expand their footprints and enter new markets,” Jone Lang LaSalle said.

Investment by retailers is the start of the process, as it encourages real estate developers to build better quality retail centres which in turn allows investors to witness the growing development cycle, according to Jones Lang LaSalle’s South African managing director, Mark Bradford.

“In South Africa, total commercial real estate investment volumes were US$4.5-billion over 2011 and 2012, of which $2.2-billion was focused on retail,” Bradford said.

Corporate outsourcing into Africa is also expected to grow and outsourcing hubs such as Johannesburg, Durban and Cape Town are predicted to benefit from the trend.

“Offshoring is an established business strategy that can help optimise productivity, labour resources and revenues through access to growth markets,” said Jones Lang LaSalle’s Europe, Middle East and Africa CEO, Christian Ulbrich.

“Although not without risks, financial services, consumer goods, pharmaceutical, telecoms and energy firms continue to target the African opportunity.”

SAinfo reporter