What predicts commercial market recovery… GDP?

Tenant rental performance is strongly influenced by economic growth, as measured by GDP (Gross Domestic Product). But for the first time in a decade, the percentage of commercial property tenants in good standing has performed below GDP.

The ‘hard lockdown’ drop of -17.8% year-on-year in GDP is very much reflected in the corresponding sharp drop in the percentage of tenants in good standing during that quarter.

The fact that the tenant population’s payment performance has only partially recovered in the 3rd and 4th quarter is arguably reflected in the fact that GDP too has only partly improved.

Having witnessed 2 quarters of considerable, but not “full” recovery in the percentage of tenants in good standing, which coincides with 2 quarters of significant, although still negative GDP growth recovery by the final quarter of 2020, real GDP growth remained negative at -4.1% year-on-year.

With indicators pointing towards the pace of economic recovery slowing down after rebounding off a very low base, this could make the last stages to “full” recovery of pre-lockdown levels an arduous journey.

Please click here to read the full Commercial Rental Monitor for 2020 Q4


TPN Vacancy Survey Report Q1 2024

Residential rental vacancies in South Africa have reached historic lows, with the national vacancy rate decreasing to 4.42% in the first quarter of 2024, the lowest level since 2016. This trend is driven by high interest rates making homeownership un…

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