These are the findings, among others, of the recent Office Barometer 2009 report by JSE-listed property group Colliers International.

“The South African property market was not hit as hard as some of the other international markets, but a number of factors will inhibit a turnaround until 2010,” says Sanett Uys, director at Colliers International Property and Facilities Management (Pty) Ltd. “Chief among these are ongoing power shortage problems, weak household demand and the global downturn.”

There is good news ahead. Uys says a number of factors will stimulate growth and drive the upward swing towards 2010.
 
“Our property market’s exposure to foreign investment is limited, liquidity is restricted since South African banks don’t lend easily, and our property fundamentals are still strong.”

However, gross asking rentals for prime space in the Sandton CBD have moved sideways at R165m² over the last three quarters.

Sandton remains the main financial hub of South Africa, and offers a diversified tenant mix with the average sales price being R20 000m². Vacancies in the Johannesburg CBD declined from 15,1% in the third quarter of 2007 to 8,1% for the same period in 2008. Gross asking rentals of prime space in the CBD are rising, showing a significant increase of 23% over the last quarter. The proposed government precinct is attracting attention.

Prime office space in the Pretoria CBD is selling for R6000m², while office buildings in the decentralised nodes of Pretoria are achieving selling prices of R9 000m². Vacancy rates show a downward trend from the third quarter of 2007 to date.

“The main demand for space in the area is still driven by various government departments,” says Uys. “Most of the decentralised areas in Pretoria have an oversupply of space.”

Colliers believes 2009 will be an interesting year, with the economic downturn impacting the property market.

“Capitalisation rates should soften as sellers realise the true market value of their properties,” she says.