Retail, office and industrial property markets are oversupplied, FNB survey finds
CAPE TOWN - ALL THREE major commercial property sectors - retail, industrial and office - remained oversupplied in the first quarter of this year, although the oversupply was noticeably less in the industrial property market, according to the latest Property Broker Survey from First National Bank (FNB).
Brokers in the office and retail property markets perceived, on average, a rise in the average time of properties on the market prior to sales, with a slightly declining average time on market bias only in the industrial property sector, FNB Commercial Property Finance sector strategist John Loos said in the survey yesterday.
The broker group perception was tilted strongly towards the existence of an oversupply, and this was most severely the case in the office property market.
As many as 96.6 percent of respondents in the office sector pointed to an oversupply, 90 percent in retail property and 54.8 percent in the industrial property sector.
The oversupplied bias in all three major markets was reflective of the deep recessionary conditions of the economy, said Loos.
One of the “casualties” of an oversupplied market was a sharp decline in investment in the building of new commercial space, which was bad for the building sector but necessary to restore some demand-supply balance, he said.
For the 12 months to January, square metres of industrial space new building plans passed were at 63.7 percent of the 20-year average level.
Square metres of retail space plans passed were at only 44.2 percent of the 20-year average for the sector.
Square metres of office space plans passed were at 23.9 percent of the 20-year average level.
“The oversupplied market leads us to continue to expect weak new building activity in 2021, along with further decline in average property values,” said Loos.
Greater Johannesburg was perceived to be noticeably the weakest property market in all three property classes, said Loos.