The South African Real Estate Investment Trust (REIT)  sector is poised for growth in 2025 driven by improving investor sentiment and property fundamentals, rising consumer confidence and falling interest rates. According to the SA REIT Association December and January Chart Books, the sector is expected to deliver strong income returns of c.8%-9%.

Itumeleng Mothibeli, Chairperson of the SA REIT Research Committee and Managing Director of Vukile Property Fund Southern Africa commented:

“With the economic recovery, lower interest rates and robust demand for commercial property—particularly in the retail,  industrial and logistics sectors - we anticipate growth in the REIT sector this year. Our members are consistently reporting improvements in property fundamentals and the quality of earnings.” 

“Township, urban and rural malls will continue to show resilience, while demand for logistics and warehousing space will remain strong. In the office sector, vacancies are falling as demand increases for smaller, high-quality spaces with features like co-working spaces,  wellness facilities and smart technology are a draw card for tenants.”

Despite the economy’s prolonged stagnation in 2024, Nedbank forecasts modest growth of 1.4% in 2025 and 1.8% in 2026. However, the bank expects fewer interest rates this year

Nicky Weimar, Nedbank Group Economist commented: “Growth will be driven mainly by firmer consumer spending, supported by rising real incomes, subdued inflation, modestly lower interest rates and the withdrawals of contractional savings through the two-pot retirement fund system.

“Commercial property mortgages are recovering while home loans continue to slow. Nedbank expected both the commercial and residential property markets to improve moderately as the year progresses.”

Weimar stressed that the rapidly changing global landscape would probably deliver stickier global inflation and fewer US interest rate cuts, pointing to high-for-longer risk-free rates and continued US dollar strength. Against this backdrop, the South African Reserve Bank is likely to remain cautious. 

Attached and below is the press release with all the information. See link to download images and Nicky’s presentation: https://we.tl/t-MoZM6DrwJ6 - also in this link is the SA REIT Sustainability Disclosure Guide which was launched last year. 

Feel free to reach out if you have any further questions or if you'd like to arrange interviews with the SA REIT Association or Nedbank CIB.