SA’s commercial property market has outperformed all global peers in 2024, recording the highest local currency returns despite uneven recovery trends in the international real estate sector.
This is according to the Global Property Investment Trends Report by the SA Property Owners Association (Sapoa), compiled with Morgan Stanley Capital International (MSCI), which tracks total return, income return and capital growth on standing investments across more than 30 countries — and positions SA as a surprising outperformer.
“Global real estate is recovering — but not everywhere, and not equally. In some markets, particularly parts of Europe, we’re seeing income growth lead the rebound. But others, including North America, are still lagging due to persistent capital value declines and broader macroeconomic pressures,” said MSCI vice-president Eileen Andrew at a Sapoa webinar last week.
In contrast, SA’s performance stands out. The report shows that the country delivered the highest local-currency property returns globally in 2024, supported by improved income fundamentals and a relatively stable market environment.
Andrew noted that rising income returns were the key driver of SA’s outperformance, particularly in the industrial and retail sectors. “It shows that despite economic headwinds, the fundamentals are holding and in some cases improving,” she said.
Adding to signs of renewed investor confidence, the SA Reit Association reported last month that the listed property sector’s market capitalisation has surpassed R250bn — its highest level since January 2020.
This marked a significant rebound for a sector that lost favour during the Covid-19 pandemic, when office landlords were hit hard by shifting work patterns and falling demand.
While most regions saw some recovery in 2024, progress was uneven. Europe led the rebound, with Portugal and the Netherlands showing strong capital growth — though income returns still trailed those in Southern Africa and parts of the Nordics.
Andrew pointed out that this divergence highlights the growing importance of market and asset selection in global property investing. “We’re not looking at a rising tide lifting all boats. Investors must be increasingly selective,” she said.
Globally, industrial and hotel assets led the recovery, while the office sector continued to drag down overall performance. In major cities such as London, Paris and Frankfurt, offices remain under pressure from high vacancies, weaker rental yields and long-term demand shifts.
Meanwhile, SA’s industrial and retail segments have proved more resilient. Improved tenant retention, stronger rental escalations and operational efficiencies have supported higher income returns, even as capital growth remains modest, according to the report.
“For SA investors, this is a moment to stay focused on fundamentals…. income-focused strategies — especially in sectors such as industrial and alternative assets — are not only defensible but increasingly attractive,” Andrew said.
Sector performance revealed changing trends last year. Globally, hotels and industrial properties ranked among the top performers, while offices remained the weakest, consistently placing at the bottom across most markets.
Even in key global cities such as London, Paris and Frankfurt, the office sector has been weighed down by high vacancy rates, reduced rental yields, and fundamental shifts in demand.
“Though macroeconomic risks remain — from interest rate uncertainty to geopolitical tensions — the worst of the property market correction appears to be behind us.
“The return profile is stabilising. For SA, the real challenge is not just to keep pace with global shifts — but to position smartly for the future,” Andrew said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.