Demand for South Africa’s commercial property has overtaken supply across the industrial, office and retail sectors for the first time since 2019, according to FNB Commercial Property Finance’s third quarter 2025 property broker survey.
The report points to a broad strengthening in market fundamentals, supported by firmer business confidence, reduced financial strain on owner-occupiers and increased investment activity following lower interest rates.
“Financial pressure-related selling has fallen to its lowest level since 2019 at 15.2%, driven by late-2024 interest-rate cuts and improved business outlooks,” reads the survey.
Meanwhile, more businesses are selling to upgrade to larger or better premises, reaching a record high of 24.6% — a strong signal of operational expansion and renewed optimism in the sector, it says.
According to the index, industrial property remains the strongest segment, showing the most acute undersupply.
Industrial property remains the star performer, with the deepest supply shortages. Office, long the sector’s underachiever, has finally crossed into positive territory, buoyed by steady repurposing, improved affordability and declining vacancies in the major metros. Retail is also edging back into modest undersupply, reflecting a slow but durable recovery.
In a further boost for the sector, the latest global trends report of the South African Property Owners Association (Sapoa) shows the country delivered the highest total return — in local currency terms — across all markets tracked in the MSCI global quarterly property index and remains the only market to record positive capital growth since mid-2024.
“Amid uneven global property recoveries, South Africa has emerged as an outperformer. Office vacancies have improved since 2022, supported by controlled new supply and active portfolio management, while landlords have adapted quickly to shifting demand,” the Sapoa report notes.
The FNB survey points out that Cape Town’s dominance in the commercial property landscape remains firmly intact, with the latest “Regional market balance report” showing the Mother City as the country’s strongest metro.
The survey also flags eThekwini and Nelson Mandela Bay as markets where demand exceeds supply. Gauteng however, tells a different story: while Tshwane shows resilience in the industrial and retail segments, it continues to battle an oversupply of office space. Greater Johannesburg emerges as the weakest performer, weighed down by pronounced oversupply across all sectors, a trend that is sapping investor confidence in the province.
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.