Despite economic pressures that led businesses in Sandton to downsize and shift to remote work, the area is far from slowing down, with Africa’s richest square mile steadily picking up again.
This is further boosted by the arrival of Growthpoint’s R1bn-plus Olympus Sandton development, a mixed- use residential and retail precinct that will make it an Olympic challenge for other office nodes to catch up to Sandton’s status as Africa’s leading financial district.
In the fourth quarter of last year, the SA Property Owners Association’s spatial analysis showed that office vacancies along Sandton Drive, Grayston Drive, and the block between Maude, Gwen and Protea were notably higher than the P&A grade vacancy rate of 12.7%.
The effect of Covid-19 led many businesses to either retrench or adopt hybrid models, causing high vacancies in Sandton. An oversupply of office space was largely driven by Greater Johannesburg, according to FNB’s fourth quarter of 2024 commercial property survey.
“The vacancies around Gauteng were due to the lack of visas being granted to foreign people who were working and living in SA over the past years and forced expatriates to leave the country,” said Growthpoint SA CEO Estienne de Klerk.
He noted that visa backlogs contributed to Gauteng’s residential and office slump over the past five years and expects government of national unity reforms to resolve these within two years, boosting demand for offices and housing as expatriates return.
According to De Klerk Sandton’s office market remains competitive due to the strong presence of large financial, legal, and other knowledge-intensive firms.
“While Covid-19 initially led to lower in-office headcounts, space reduction and subletting, office demand is rebounding with higher in-office headcounts, increased office space take-up and lower vacancies,” he said.
De Klerk said by late November 2024, Growthpoint’s trading update for the July to September quarter marked the first post-Covid period without any tenant space reductions.
The leading SA real estate investment trust owns the biggest office portfolio in Sandton (about 350,500m2 of gross lettable area), saw vacancies in this business node peak at nearly 29% (about 100,000m2), which it reduced by a third during its 2024 financial year.
Other ways in which Growthpoint is reducing its vacancies, include enhancing its portfolio to make it modern and appealing, such as Sandown Mews, and removing stock from the office market by strategically repurposing and disposing noncore office assets.
According to Neil Schloss, Growthpoint head of asset management, Olympus Sandton’s first 26-storey tower sold 170 of its 283 units — about 60% by number and 70% by value. The development is quickly nearing the presales target required to start construction.
Olympus Sandton development will feature two towers: a 26-storey residential tower as the first phase along Rivonia Road, followed by a second phase with a 16-storey tower to the east.
“The R1bn residential project, developed in partnership with Tricolt, is part of Sandton Summit, Growthpoint’s vision for SA’s premier walkable mixed-use precinct. The fully let Discovery head office, co-owned by Growthpoint (55%) and Zenprop (45%), serves as its iconic flagship,” Schloss, said.
Olympus penthouses are ideal for wealthy buyers, including investors and business professionals. The development will be located in the Sandton Summit precinct, anchored by the Discovery Head Office at the corner of Rivonia Road and Katherine Street.
Beyond the high-end market, the working class is increasingly moving to affordable rental apartments closer to and in Sandton. The recent Centre for Affordable Housing Finance in Africa report shows that multifamily rentals, once limited to the CBD, are now spreading to suburbs such as Morningside, Linden and Randburg.
“The demand for high-density apartments near workplaces is not a new concept. For decades, there has been significant interest in high-density apartment living among middle-to-higher income corporate employees in Johannesburg, particularly younger professionals in the early stages of their careers, as well as couples without children,” said FNB commercial property senior economist John Loos.
Loos pointed out Hillbrow as a prime example of this trend until the early 1990s, where many corporate workers lived. The appeal of high-density living lies in reduced commuting costs and easy access to vibrant retail, entertainment and dining, especially as traffic congestion worsens.
Mapping out the evolution of Sandton’s residential market, Loos noted that as Hillbrow declined the segment moved to Sandton. With its growth, better traffic and enhanced amenities, Sandton became appealing to higher-income individuals, leading to a rise in upscale residential developments.
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