FNB on outlook for SA’s commercial property market in 2022

South Africa's commercial property market is facing a challenging year ahead in 2022, as the economy continues to recover from the effects of the COVID-19 pandemic. John, a property expert, predicts that the economy will see positive but slow growth this year, with GDP levels expected to return to pre-pandemic levels. However, despite this recovery, the commercial property sector is likely to face rising vacancy rates, particularly in office spaces, and a slow correction in property values. The structural changes brought about by the pandemic, such as the rise of remote work, are expected to have a lasting impact on the sector. Companies are reevaluating their office space needs, leading to a potential shift towards more flexible work arrangements and decreased demand for traditional office space. This shift, combined with ongoing economic challenges, points towards a long road to recovery for the commercial property market. The sector may see consolidation and repurposing of office spaces into residential or alternative uses as companies adapt to the new normal and seek to reduce costs. While rental reversion rates have decreased in response to oversupply, the market is likely to see a continued decline in the share of office space in the overall property stock, signaling a fundamental shift in the industry. It may take several years for the office market to stabilize, but it is expected to be significantly smaller in comparison to previous decades.