The latest FNB Commercial Property Broker Survey has revealed that nearly 50% of property barons seeking to relocate are motivated by the desire to settle in cities that provide superior services. The survey also highlights the growing significance of water availability as a key factor influencing their decision.
The study sampled commercial property brokers in the six major metros of SA in the first quarter: the City of Joburg, Ekurhuleni, Tshwane, eThekwini, City of Cape Town and Nelson Mandela Bay.
Most of the surveyed cities are governed by coalitions, a phenomenon that has led to a decline in service delivery in most areas due to political deadlocks.
The survey findings indicate that for the fifth consecutive quarter the primary drivers of sales activity in the sector were the search for improved utilities and municipal services, such as electricity, water and well-maintained infrastructure.
John Loos, property strategist at FNB Commercial Property Finance, said that the role of SA’s mounting water issues and infrastructure shortcomings in the relocation decisions of sellers cannot be overlooked. This motivation accounted for nearly 43.7% of the sellers, which is nearly double the percentage of those motivated by financial pressures (just under 27%).
The motivation of selling to relocate to areas with better services “rose steadily in significance back in 2022, and then jumped sharply in the first-quarter 2023 survey. It has remained very prominent ever since,” Loos said.
“After that early 2023 surge, this motive’s significance has receded somewhat, and we had suspected that it could be due to a sentiment improvement resulting from decreased load-shedding as the year progressed.
“However, the renewed increase in prominence in this motive in the first-quarter 2024 survey suggests that the prior decline was perhaps not what we thought, and that the search for better services does indeed go beyond electricity, to water, infrastructure and other local government-related services.”
Johannesburg has experienced acute water shortages in recent months. Concern about water safety has also heightened after a cholera outbreak in Tshwane in 2023.
FNB data has previously shown strong movement from inland areas towards the Western Cape and some towns in the Eastern Cape. Property values in regions such as the Garden Route, Overberg and the West Coast have surpassed expectations, while the City of Joburg and Ekurhuleni “are among the worst performers” among SA’s largest 15 districts in terms of property volumes.
The 2022 Municipal Financial Sustainability Index by Ratings Afrika rates Midvaal in Gauteng and Saldanha Bay in the Western Cape as the two best-run municipalities in the country, with Cape Town once more emerging as the best-run metro.
The FNB study showed that when looking at regions, the greatest level of financial pressure-related selling or relocation is in the Gauteng metro regions, with Tshwane leading the pack, followed by Johannesburg.
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