Market Overview

2008 was not the best financial year for the commercial real estate market throughout the world; and the question being asked at the moment is whether fnancial markets will ever be the same? Colliers predicts probably not, but the reality is that they will continue to exist and function and will hence continue to take up space.

Good news is that the South Africa market was not hit as hard by the effect of the international turmoil. Why is this you may ask?

We believe there are four main reasons:

• The South African listed property sector is not real estate investment trust (REIT) compliant.
• The South African market’s exposure to foreign investment is limited.
• Liquidity is restricted - South African banks don't offer borrowings easily.
• South African property fundamentals are still strong

The South African economic growth is forecast to slow to 3.3% in 2009, owing to ongoing problems with power shortages, the continued weak household demand and the global downturn. economists are predicting a turnaround in 2010 with economic growth bouncing back to 5.3%. Inflation is showing a slight downward trend and the forecast for 2009 is 7.3%. This will encourage further interest rate cuts. However throughout the different sectors in the market we are seeing the number of jobs being negatively affected with retrenchments in all the major sectors of the economy.

In addition the latest statistics released by stats SA show that the South African retail market is now in a recession. Economists are predicting that the worst is yet to come.

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