The Johannesburg metropolitan area has been the worst performer when it comes to property market activity and this trend is set to continue in 2022, according to the fourth quarter FNB commercial property broker survey.
The report, which looks at broker perceptions of buying/selling market activity by major commercial property classes, shows that the three major coastal metros of Cape Town, Nelson Mandela Bay and Ethekwini all outperformed Gauteng in 2021.
Market activity, gauged on a scale of one to 10, 10 being the strongest activity level, measures everything from indications of interest in buying or selling property to actual transactions.
The three classes of commercial property surveyed were office, industrial and retail, and metros in Gauteng recorded low market activity across all of them.
“Johannesburg’s reading is hardly surprising. High vacancy rates in its northern nodes probably aren’t encouraging to investors at the moment,” FNB property economist John Loos said.
Gauteng was set to be the weaker major regional market in South Africa with the Cape Town region expected to be the commercial property outperformer in 2022, Loos said.
Cape Town was top-rated in the office class, with eThekwini and Nelson Mandela Bay taking the top spots in the industrial class and retail class, respectively.
Adding to Gauteng’s woes, Loos said, is the fact that Johannesburg is not viewed as a major lifestyle city and data has shown strong semigration to Cape Town and surrounds.
“Improving communications technology enables more highly skilled and affluent people to live and work elsewhere,” he said.
Data analytics group Lightstone Properties believes that the trend towards Cape Town can mostly be attributed to a move away from crime-and-grime and towards a slower, safer, quality lifestyle in the small to large towns.
Lightstone data shows that most of those moving are in the 49 to 64 age group, and most of them are relocating to the Western Cape from Gauteng.
The 36 to 49 age group makes up the second-largest category to semigrate and the Western Cape is also their preferred destination. According to real estate agency Leadhome, semigration refers to the process in which professionals, individuals or families decide to move to different, more affordable parts of the country or back to their native homes.
Loos said the Western Cape was likely to be increasingly popular for new business start
ups, given that it’s where an increasing number of skilled and entrepreneurial people want to be.
“In the way of modern services sectors, for instance the so-called tech sectors, it [Johannesburg] seems to get stiff competition from Cape Town too. Jozi’s challenge is to find its new big competitive advantage,” he said.
Anathi Madubela is an Adamela Trust business reporter at the M&G.