A 50 basis-point reduction in the repo and prime lending rates in 2024 is already making an impact on South Africa’s commercial property sector.
“The South African Reserve Bank’s decision to lower the interest rate across two consecutive Monetary Policy Committee meetings sends a positive signal to the market,” says John Jack, CEO of Galetti Corporate Real Estate.
Jack believes that the 50 basis-point cut for the year will provide some of the stimulus the industry needs.
“We’ve already seen an increase in commercial property enquiries and leasing activity following the September rate cut,” he notes, emphasising that the current market favours those committing to capital expenditure and business growth.
The anticipation surrounding November’s rate cut has also boosted the performance of South Africa’s listed property stocks.
“REITs have performed particularly well over the past two weeks thanks to improved investor sentiment and the market anticipating another rate cut,” he says. “The better our listed property funds perform, the more value they can distribute.”
While South Africa is currently on an upward trajectory, the market is expected to fluctuate and the window to leverage these rate cuts is limited.
