There has been a fair amount of expectation for office rental growth given improving vacancies and building costs. Certainly more recent trends for decentralized Johannesburg and based on the average of A&B grade asking rentals as recorded by the Sapoa Office Vacancy Survey (graph 1), indicate that the annual growth trend is approaching the 10% level. Annual growth of asking rentals for All Gauteng unweighted offices listed on eProp (graph 2) indicates a more moderate growth of around 3-4% at present.

Strong annual growth as per the OVS – generally at more than 10% - is registered for Braamfontein, Midrand, Milpark, Parktown, Rivonia, Sandton and Woodmead. Mediocre growth of around 5% is recorded for Hyde Park, Illovo, Rosebank and Sunninghill. Markets showing weak or negative growth include Bryanston, Constantia Kloof, Fourways, Melrose and Randburg. This is largely borne out by eProp data showing strong growth in places such as Germiston, Krugersdorp, Sandton/Sandown, Bryanston, Craighall, Edenvale, Illovo, Kempton Park, Kyalami, Sunninghill, Parktown North and Aukland Park. All of this suggests that some of the older nodes are beginning a revival process in relative terms, but the selection of nodes from an investment perspective ultimately requires incorporating an analysis and view of demand and supply.