How Property Brokers performed in 2019
Respondents perceive financial pressure to be the strongest driver of owner-serviced commercial property sales and movement.
Over the years, the commercial real estate sector has been well reviewed and observed by many. From the actions of the year 2019 a sample of how commercial property brokers in the six major metros of South Africa has been projected. The focus of the survey is on the key drivers of movement and sales activity in owner-serviced properties, with results showing financial pressure as the biggest single driver especially for the 4th quarter of 2019.
“We don’t have a significant history yet to see what a good level of financial pressure related selling is and what a bad level is, but the recent readings appear significant and have been rising,” said FNB’s Property Strategist, John Loos.
Detailing how the survey has been carried out, FNB’s Commercial Property Finance asked their respondents for their perception of the major drivers of movement and sales activity in the owner serviced segment.
“They estimate the percentage of movement and sales that they believe would take place for a particular reason. But the total percentage of all the reasons can add up to far more than 100%, because businesses can be perceived to be selling or relocating for more than one reason. It isn’t an exact science but gives a broad picture, and what comes out of it is that the highest percentage of owner occupiers are perceived to be selling or relocating influenced by financial constraints/pressures, i.e. 47.11% in the 4th quarter 2019 survey, up from 39.5% and 46.8% in the 2nd and 3rd quarters of 2019 respectively.”
This would appear to be very significant, and is followed by relocating to a place with better transport, logistics and commuter nodes (28.18%), relocating to be closer to the business’ particular market’’ (24.24%), and looking for bigger or better premises (16.79%).
“Accompanying this rise in selling motivated by financial pressure, we have begun to see a further selling reason advanced which may also point to the financial pressure-related impact of a weak economy. Here we refer to the percentage of respondents citing the closure of a business as a motive for selling. This percentage is still low, but has risen from 1.4% in the 2nd quarter 2019 survey to 8.8% by the 4th quarter of 2019,” said Loos.
These high perceived percentages of financial pressure-related sales and movement in the Owner-Serviced Property Market, after 2 quarters of increase, appear reflective of the impact economic stagnation in recent years, and tie in with .recent trends in other key economic data releases.