Listed property performance will drop this year - but will still offer good returns

While the commercial property sector is still in the doldrums, property companies operating on the JSE returned handsome dividends to investors last year with the sector achieving total returns of 36%. While market watchers don’t believe this year will be as good, it is still one industry sector that is shining as many others battle to claw their way out of the clutches of a prolonged global recession which was sparked with the collapse of Lehmann Brothers in 2008 and the ultimate rise of the sub-prime mortgage debacle.

Org Geldenhuys, managing director of property development and marketing company, Abacus DIVISIONS, said that most commercial property landlords will be "lucky" if they see their rentals increase this year. . "The commercial property market is stagnant. When it comes to rentals, we are not going to see much change this year. There may be pockets of excellence at certain office parks, or within certain property portfolios, but otherwise landlords will be hard-pressed to see their rentals increase."

Last year witnessed a stalwart performance from industrial and retail but property CEOs are predicting a much more muted growth this year of around 10-18%

But Geldenhuys said there would be continued weak demand in the office sector with rising municipal charges – including the high cost of electricity – playing havoc with "any recovery". "If Eskom does get its 16% electricity hike, per year, over the next three years, then we are going to see even more pressure being placed on the commercial property market. Businesses will be put at risk and we may even see a rash of rental defaulters."

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