Commercial Property Predictions and Insights – What’s Trending in 2025?
By John Jack, CEO of Galetti
We believe that the current momentum will boost the industry’s performance into the New Year. Here are our top five predictions for 2025:
Western Cape Dominance
The Western Cape continues to dominate across all asset classes with Cape Town’s office sector recording its lowest vacancy rate in 15-years this year. There’s very little space available and with demand on an all-time high, prices are higher and yields are greater.
It will be interesting to see how this plays out, and ramps up next year as demand continues to outstrip supply.
Formal Return to the Office
The latest Rodes Report (Q3: 24) highlighted a decrease in office vacancy rates to 13.3% (down by 1.1% year-on-year), with Cape Town and Durban driving the recovery.
Companies like Nedbank and Vodacom are reinstating mandatory return to work protocols and we expect more companies to follow suit. We have noted also more enquiries for office space and bigger footprints, and there is also more activity taking place in the coworking space.
There are also strong signs of growth in Johannesburg, particularly in areas like Waterfall and Rosebank as the reverse semigration (and reverse emigration) trend continues.
REITs Continue to Rise
Following a few challenging years, REITs fought back with property stocks surging by more than 50%. In 2025, we expect REITs to continue their strong rebound, although at a steadier pace.
Reinvention of Spaces
We expect to see more suburban property conversions, unused retail spaces and even cinemas being converted into offices to accommodate demand – particularly in the Western Cape. These investments will also benefit the construction sector which has been one of the hardest hit since the pandemic.
Public-Private Sector Partnerships
In 2025, more public-private partnerships will help bridge the gaps where government falls short.
In the past, private developers in Johannesburg were building their own roads and even installing their own sewerage and water plants but this cannot continue. There needs to be more collaboration and I do believe that the government is open to more collaboration to deliver positive growth in 2025.
With reduced interest rates in play and a few more rate cut announcements on the cards, we believe that the industry will work together to drive further momentum and restore the sector to its former glory.