South African Residential Market Sees Mixed Recovery
News: The price index for a medium-sized apartment in South Africa rose by 0.2% year-on-year in the 12 months to Q213, according to Property Showrooms. The growth rate dropped from 2.86% in Q1 and 3.33% in Q412. Demand is said to be rising in the residential sector, with more people entering the mortgage market and more building plans approved in H113.
BMI View: Commercial real estate is dependent on a healthy macroeconomic environment. South Africa's economic prospects have deteriorated amid rapid currency depreciation and rising tensions in the critical mining sector. We forecast real GDP growth of 2.3% in 2013 and 3.3% in 2014, with risks weighted firmly to the downside. Poor economic growth affects the sector as it dampens both property fundamentals and capital markets, p utting downwards pressure on tenant retentions, rental growth, yields, development activity, financing and asset values.