SA property market grows to R5.8trn

Cape Town - The South African property sector is worth R5.8trn according to results from the latest study undertaken to determine the size of the country’s property sector.

The Property Sector Charter Council released a reviewed market size estimation this week that provides a snapshot of the South African Property Sector using figures from the financial year 2014/2015.  

It reveals the property sector’s size at R5.3trn with a further R520bn land officially zoned for commercial and residential development. The study was compiled by MSCI for the Property Sector Charter Council.

This report builds on baseline research that measured the size of the property market in SA at a massive R4.9trn at the end of 2010. It shows a meaningful increase of nearly R1trn in four years.

The study also supplements the Property Sector Charter Council  SA Property Sector Economic Impact Report that estimates the property sector’s contribution to GDP at a significant R191.4bn in 2012 in terms of annual income and expenditure flows generated by the sector and a R46.5bn contribution to the fiscus.

The research is part of a larger project by the council, which provides a point of departure against which various transformation charter imperatives can be assessed.

CEO of the Property Sector Charter Council, Portia Tau-Sekati says: “For a sector this big and this important it is crucial to have a hub of knowledge that consolidates information to support a common and consistent understanding of the sector.”
Tau-Sekati explains that by regularly updating this research the council also creates a measure of the effect of property cycles on the sector’s value, which can be significant.

Commercial property carries a value of around R1.3trn, up from some R780bn, with almost R790bn held by corporates, R300bn held by Reits, R130bn by unlisted funds, and R50bn by life and pension funds.

Of this, retail property has the highest value at R534bn (R340bn in 2012) followed by office properties at R357bn and industrial properties at R281bn. Hotels and other property accounted for R94bn in value.

A key finding of the latest research shows that formal residential property still accounts for nearly three-quarters of property owned in South Africa, and grew from an estimated R3trn at the end of 2010 to R3.9trn. For the first time, it also considered informal residential property, although it has no value, which was quantified by the number of households provided by the Department of Human Settlements.

Undeveloped urban land zoned for development remained unchanged around R520bn (1.1% of total land in SA).

The public sector contributed a total of R237bn, of which around R102bn is estimated to be in the hands of the Department of Public Works, R66bn held by SA’s 19 largest state-owned enterprises, and R69bn owned by metros and selected local municipalities.

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