By Liad Hadar, Director at Hadar Incorporated, Specialist Property Law Firm
This article first appeared in Asset Magazine’s December 2024/January 2025 edition

As 2024 draws to a close, the South African real estate market presents a fascinating mix of triumphs, obstacles and emerging opportunities. Reflecting on this dynamic year allows me (us) to assess where the property sector stands and what lies ahead.

In this article, I share my personal experiences from what I’ve seen, heard and acted on as a legal partner to property owners and also some insight from my exposure to the market at large.

At the outset, I want to thank Tony Korsten and his team for continuing to provide an exceptional platform for me and other property industry players to share views and add value to the ecosystem, hopefully uplifting and helping each other to realize the great potential in our beautiful country, South Africa.

My summary of the most significant developments in 2024:

Market Performance Highlights

Residential Market Trends

The continued demand for affordable housing dominated the market with new developments flourishing in urban peripheries (examples being Africrest, IHS Housing, Divercity and numerous others), which includes the creation and development of the South African Multifamily Residential Rental Association (SAMRRA).

Luxury property sales rebounded in key areas like Sandton, Cape Town (in particular!) and Umhlanga, driven by foreign investment and lifestyle migrations as South Africans continue to try balance work/life requirements.

I believe that the residential asset class will continue to grow given its importance to South Africans and the need to provide our people with the security of homes and the quality of life that we all work hard toward.

Commercial Real Estate

Office vacancies remained a challenge in traditional business districts due to the continued oversupply but there was growth in mixed-use developments combining work, residential, and retail/leisure spaces.

The pressure from this asset class has pushed REITs and other property owners to become more creative and innovative, which I believe will lead to greater value for commercial tenants and their respective employees.

Industrial and Logistical Properties

A continued high performer in the industry, the stability and growth within this asset class remained strong. Many REITs, particularly Fortress Real Estate Investments, continued to focus on its specialized growth, with the likes of Inospace dominating growth within the smaller subsection of this asset class.

Retail Properties

Despite economic pressure, community-focused retail centres performed well, while larger malls adapted by incorporating experiential offerings and green spaces. The smaller retail centres have proven to be consistent in their performance over several years, with predictability being a valued assurance for the owners and investors.

Given our close relationship with numerous retail property owners, including working with the exceptional Sandton City and Nelson Mandela Square teams, I can testify to an impressive performance by top operators within the retail space and a strong continued uptick in tenant performance within such quality assets.

Other highlights in the year have been the complete overhaul at the famous Fourways Mall under the expert management of Flanagan & Gerard. I’m excited to see and experience the advancement of this property in the coming year, my prediction being that it will become a top performing asset in the country.

Without having any favourites, I’m particularly passionate about this space having become entrenched within it since Covid and having learnt about the intricacies of the art of tenant mixes, spatial planning and protecting/enhancing the retail property asset value.

Legal and Regulatory Shifts

New Legislation and Policies

There have been changes in zoning laws to encourage densification and affordable housing development.

Renewable energy incentives have been further expanded for property developers, spurred by South Africa’s energy crisis.

Continued debates on land reform policy created uncertainty, impacting investment in agricultural and rural properties but without any immediate implementation expected at present.

Impact of Interest Rates

Interest rate fluctuations significantly influenced property affordability and financing reshaping transaction patterns in both the residential and commercial sectors. The recent interest rate cuts have been a very welcomed reprieve for property owners in the country, with many believing that further cuts should follow.

Challenges Faced in 2024

Economic Pressures

High inflation and rising costs for construction materials affected new developments, while load-shedding strained business operations and increased operating expenses.

Shifts in Buyer Behaviour

With tighter budgets, buyers sought innovative solutions like shared ownership, long-term rentals and energy-efficient properties.

Compliance Overheads

Stricter regulations around environmental and social governance (ESG) added compliance layers but created new standards for responsible property development.

Success Stories of the Year

Innovation in Property Development

Developers who embraced renewable energy solutions and modular construction techniques saw significant gains in both sustainability and cost efficiency.

Revitalization of Urban Spaces

Initiatives in urban regeneration, such as the revitalization of Johannesburg’s inner city and the growth of “live-work-play” precincts, including Africrest and others within other suburbs, gained big momentum.

Technological Integration

Digital property transaction platforms streamlined processes, increasing efficiency and transparency in property deals.

Opportunities for 2025

Green Real Estate Investments

The rising demand for energy-efficient homes and commercial properties is an area for growth, particularly with government incentives for renewable energy projects.

Affordable Housing Initiatives

Public-private partnerships could address the housing deficit while offering profitable opportunities for investors.

Technology in Real Estate

Blockchain for title deeds and AI-powered market analysis could redefine the landscape for property transactions and management.

Cross-Border Investments

With currency fluctuations creating favourable conditions for foreign buyers, South African property remains attractive to international investors whilst South African investments into foreign countries continues to stay in demand as a hedge against the Rand, particularly for REITs.

Conclusion

The real estate sector in 2024 was marked by resilience and adaptability in the face of economic and regulatory challenges.

As we step into 2025, the industry has ample opportunity to innovate, lead in sustainability and shape a more inclusive and dynamic property landscape.

From our point of view, as legal partners to numerous property owners, we feel that legal (and other) professionals have a crucial role in steering these developments, ensuring compliance, facilitating deals, and helping clients seize opportunities in this evolving market.

I look forward to continued growth and work within the developing South African property industry and to help in my own way to shape, strengthen and assist the critical players.