Despite global economic uncertainties and SA’s sluggish growth, Johannesburg’s commercial property values have outperformed those of London and New York in the past decade, owing to limited foreign ownership and conservative valuations.
According to the Investment Property Databank Global Cities Report, released yesterday, capital value appreciation in Johannesburg hit 7,5% over the 10 years to last year, compared to 3,6% for New York, 2,2% for London and -0,1% for Munich over the same period.
Norbert Sasse, CEO of SA’s largest property group, Growthpoint, said because SA and its listed property sector had not experienced a financial crisis as its US and European counterparts had, it was sheltered from the global property crash.
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"SA listed property fared better than other global markets because we never experienced liquidity shortages. The local listed property sector continued to have access to funding and our properties have always been conservatively valued," Mr Sasse said.
Andrew Teixeira, a director of Capital Property Fund - one of the JSE’s top-performing property stocks - agreed with the report, saying rapidly growing nodes in Johannesburg such as Sandton and Rosebank had experienced capital value increases because of demand for A-grade space around Gautrain stations.
"I think capital rates are higher in Johannesburg, Durban and Cape Town, which is as a result of low vacancies, rental growth and demand for space especially in well located nodes such as the Sandton central business district," Mr Teixeira said.
He said there were many proposals for A-grade offices around the Sandton Gautrain station.
The Global Cities Report said growing investor appetite for rental income has seen Johannesburg outperform every global city outside SA over the past decade.
The commodity-driven cities of Australia, Canada and SA have benefited from the strong fundamental demand for real estate in these markets. Over a five-year period, Vancouver (2,5%) has seen the strongest capital value growth, with Johannesburg and Cape Town coming second and third.