The listed property sector is expected to achieve earnings growth of up to 4% in 2025. 

Independent property analyst Keilleen Ndlovu said 2025 marked a normalised base and a new beginning for the sector after setbacks caused by the pandemic, higher interest rates and load-shedding.

“From negative growth of 3%-4% in 2024 [we expect] a positive earnings growth outlook of 3%-4% in 2025 on average,” he said, adding that almost all real estate investment trusts (Reits) and property companies were expected to achieve positive growth in earnings and dividends in 2025.

The sector, which includes residential, office and industrial — warehousing and logistics/distribution — is expected to be boosted by interest rate cuts, resulting in lower cost of funding and extra disposable income, less or no load-shedding, stabilising of the office market (off a low base and with employees returning to offices).

Moreover, a stable industrial property market and an improved retail sector boosted by lower interest rates, two-pot retirement system withdrawals and centres next to office nodes benefiting from employees returning to offices, will also lift the property industry’s performance, said Ndlovu.

This week, Redefine, Dipula Properties, Calgro M3, Balwin Properties and Equites reported a mixed bag of financial results with companies heavily exposed to the residential property market coming under pressure. 

Redefine, the owner of the Centurion, Cradlestone and East Rand malls, said profitability continued to improve across all regions, driven by improved occupancy and disciplined cost management. 

COO Leon Kok said the industrial and retail portfolio had performed well, while the office business had come under pressure.

“The retail sector showed a positive turnaround, recording the first positive lease renewal reversion in more than three years, at 0.4%, indicating improving tenant sentiment and the strength of dominant, well-located centres,” he said.

By contrast, the office portfolio remained challenging due to a national oversupply and constrained rental growth which placed pressure on renewal reversions. However, nodes such as Rosebank and parts of the Western Cape are seeing strong demand for P-grade (prime grade) space.

Kok said economic growth and political stability, along with clearer interest rate direction, would be key to unlocking rental growth in the office market.

Izak Petersen, CEO of Dipula Properties, which has 161 retail, office, industrial and residential properties across South Africa, predominantly in Gauteng, said, “We are seeing signs of recovery in the office sector and continued stability in our retail and industrial portfolios.”

The retail portfolio, which includes Alberton Crossing and Chilli Lane, reported steady vacancies at 6%. Vacancies in its offices portfolio, which generates 16% of Dipula’s income, ended the period at 19%, down from 23% in the prior interim period, showing clearer signs of recovery, Dipula said. 

“The office improvement is refreshing, however, there is still some way to go and the Johannesburg office market remains oversupplied and highly competitive,” said Petersen.

Ndlovu said in the office market vacancies are likely to stabilise and improve. However, rentals will only grow after a meaningful decline in vacancies. This would depend on the grade of properties as well as their location.

The “perennial outperformer, the industrial sector is still predicted to do well”, he said

Equites, which focuses on warehouses, said growing demand for prime logistics assets had exceeded supply over the past 12 months, with demand driven primarily by retailers investing in supply chain enhancement to remain competitive.

On the overall retail property industry, Ndlovu said lower interest rates would help boost consumer spending and the retail sector.

“Township and rural retail are likely to continue trading better. This market segment has a big informal economy and benefits from government aid such as social grants. The retail sector is seeing a good recovery across all shopping centre types,” he said.