Resilient Returns: SA’s Commercial Property Market Weathers Political and Global Storms

• Despite political uncertainty and global tariffs, SA’s commercial real estate sector shows resilience and investor interest.
• Rate cuts, reduced loadshedding, and a stronger rand are driving property income growth and lower vacancies.
• CRE offers stability, strong yields, and long-term value—especially in logistics, tourism assets, and repurposed office space.

The commercial real estate sector in South Africa is once again being tested this time by a mix of local political uncertainty and mounting global trade pressure.

Earlier this month, the rand approached a historic low of R19.93 against the U.S. dollar on April 9, 2025, before recovering to R18.97 by April 14. Simultaneously, the JSE All Share Index experienced significant volatility, dropping from 89,950.79 on March 31 to 82,485.81 on April 9, before rebounding to 88,162.30 by April 14.

The catalyst? A 31% reciprocal trade tariff from the United States (effective April 9), that's sent shockwaves across emerging markets. It's a sharp departure from South Africa's average 7.6% tariff and effectively sidelines the benefits previously granted to Sub-Saharan African economies under AGOA. 

For Lesotho, where the textile and manufacturing sector makes up nearly 15% of GDP, a new 50% tariff could be devastating.

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That said, John Jack, CEO of Galetti Corporate Real Estate believes that “it's not all doom and gloom”.

“South Africa kicked off 2025 on a high note, driven by lower interest rates, a stronger rand, reduced loadshedding and a boost in investor confidence,” he says.

 “By mid-January, we saw solid traction, especially in the resources sector, which bolstered activity on the FTSE/JSE All Share Index. Fast-forward to now and we're seeing capital flow back into safe havens as risk-off behaviour takes hold,"

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As the year progressed, however, that momentum was tested.

Flight to Stability: Real Estate in Focus

Despite the volatility, commercial property is holding its ground—and may in fact be turning heads for the right reasons.

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"The local CRE market came back strong in late 2024," Jack notes. "Vacancies dropped, net operating income improved, and there was a clear uptick in investor appetite. This was helped along by rate cuts, easing inflation, more consistent energy supply, and the formation of the GNU."

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While global trade tensions will certainly disrupt some economic channels, Jack believes they also open the door for commercial real estate to shine:

"In periods like this, the smart money tends to chase yield and stability and that's exactly what the right property assets offer. They're long-term, income-generating and tend to outperform when the broader market feels uncertain."

He adds, "Not everyone is pulling their capital offshore. Many investors are simply re-evaluating and that creates opportunity."

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South Africa's real estate market continues to offer compelling yields particularly in sectors with tight fundamentals. With bricks-and-mortar assets offering both predictability and protection, CRE is increasingly being seen as a strategic hedge.

Staying Proactive in a Shifting Market

‍In a market like this, discipline matters. Jack outlines several strategies for investors and developers looking to stay ahead of the curve:

• Monitor macro indicators to time moves with precision.
• Diversify portfolios—think retail, mixed-use, healthcare, and logistics.
• Use fixed-rate debt to lock in costs while rates remain favourable.
• Target demand-driven nodes with long-term growth fundamentals.
• Don't ignore regional markets—there's smart value outside of the metros.
• Get flexible with leasing to keep income stable as tenant priorities evolve.

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"South Africa's CRE market has been through its fair share of storms. It's proven itself resilient, especially in the face of structural constraints.
Yes, short-term volatility might slow down certain deals or make tenants a bit more cautious, but the fundamentals are still there - particularly in logistics, repurposed office space, and tourism-driven assets” he concludes.

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