Commercial Rental Monitor 2023 Q1

Despite economic and policy challenges, South Africa’s commercial property sector is navigating a difficult business environment. Confidence has declined due to factors such as load shedding, regulatory uncertainty, and a struggling government, while rising interest rates and inflation exacerbate the pressure. Nevertheless, there has been a modest recovery in the number of commercial tenants in good standing to 72.53%, albeit still below pre-pandemic levels. Retail tenants encounter the greatest obstacles in their recovery, while the industrial sector demonstrates resilience.

Escalating municipal costs burden landlords and drive down rental escalations. Despite these challenges, commercial property owners actively support local communities and infrastructure. Regional disparities exist, with the Western Cape enjoying lower rates and taxes and experiencing the highest rental escalations and tenants in good standing at 82.62%. Overall, the commercial property sector remains steadfast and dedicated to South Africa’s economic success.