HEIBERG ESTATES NEWSLETTER: APRIL 2025

Dear Property Partners 

Since reporting so much positive news in our previous March Heiberg Estates Newsletter, who could have predicted the rapid turn-around in not only our own economy, but also in the worldwide economy directly caused by President Trump’s trade war announcements over the past few weeks. This causing a ripple effect on the worldwide supply chain, whilst stormy winds heading towards a potential worldwide recession, are on the increase. Our comprehensive export market with around a third of our exports to the USA, could potentially take a huge knock in the next few months to come. There are widespread responses to the Trump trade war, to urgently diversify our export markets as soon as possible in order to mitigate the adverse effects of the US tariffs. Alternative markets in Africa, Asia, Europe, and the Middle East are now being investigated. The 31% tariff imposed on South Africa, effectively nullifies the benefits South Africa previously had under the African Growth and Opportunity Act (AGOA) that provided duty-free access to the US market, and our export-dependent industries are being challenged. Potentially thousands of jobs across our fragile economy could be at risk and appetite once again lessening with the increasing uncertainties to invest in our SA Property Market. But on the flipside and looking much closer, the African Continental Free Trade (AFCFTA) can provide alternative markets to expand our exports and improve trade on our own Continent from the existing 15% to a potential 25%.

It is common knowledge that general positive business sentiment is one of the key pillars in our property market, and with the latest shocks, our rand tumbling against foreign currencies with a historic low against the US Dollar, which inevitably will cause renewed increases in our inflation rate with also lower economic growth, will have ongoing negative ripple effects throughout our fragile economy. Taking all recent relevant factors into account, it is highly unlikely that we can soon again expect the SA Reserve Bank to further cut our still very high interest rate. Lower than initial expected economic growth is now predicted at only around 1% this year, whilst at this stage prospects for next year are not expected to be much better. Our general Real Estate Market environment is again visibly under renewed pressure and less positive, as investors struggle to assess what the impact of the latest economic developments in SA and abroad, will have on their own finances and with further repercussions on affordability to invest in the SA Property Market.

Some of the latest interesting facts and statistics:

• Latest information released regarding our construction industry after the three consecutive interest rate cuts since September 2024, shows it had a positive impact where the private sector in the past two quarters spent around 17% more on building projects than the previous year and around 86% higher than two years ago – an impressive turn around. This hopefully to be continued, especially looking at creating sustainable jobs where this industry is one of the biggest job providers and where it has a tenfold higher ability to create jobs than the rest of our economy. This in turn having a positive impact on people’s ability to invest in property – and this also so necessary in order to broaden our very limited existing tax base.
• Looking at our Commercial Market, the Office Market that has been under so much downward pressure for the past few years, especially after Covid-19, has indeed picked up moderately as people return to a Corporate Environment. However, the huge oversupply relative to demand of empty standing Office Blocks, remains and many buildings are being converted into residential units. Heiberg Estates has recently listed two amazing back-to-back Office Blocks with a perfect address on Church Square for any investors that might be interested in converting into residential units – the link: PRETORIA CBD – TWO-IN-ONE BUILDING PACKAGE INVESTMENT OPPORTUNITY OVERLOOKING CHURCH SQUARE! – Heiberg Estates
• There are reports that there is a slight decline in the demand for Retail properties, whilst the Industrial property sector still remains to be the strongest in recent sales activities and with the lowest national vacancy rates recorded over the past few years.
• A recent Lightstone Property Report points out that sectional title house prices have experienced positive growth of 4.5% recorded in February 2025, whilst freehold house prices recorded an increase of 3.4%.
• As mentioned, Industrial property continues to outperform the Retail and Office markets, with a total return recorded at 15.2% for last year.
• Retail property came in as the second best with a total return of 11.7%, with continued strong performance noted amongst smaller format and convenience retail properties.
• Despite an ongoing underperforming Office market, it still picked up to a noticeably improved total return of 8.9%, which is the best performance since 2017.  
• As reported by ooba, the overall purchase price paid nationally rose to R1.66m in the first quarter of this year – an increase of +2.2% and a more robust increase of +4.5% from year-to-year levels.
• Bond application volumes and the total value of bonds granted via ooba Home Loans have recovered by approximately 18% since the end of 2023, whilst the value of bonds granted has risen by 22.3%.
• In Pretoria house price increases recorded in March 2025 increased by +1.21% versus the +1.17% recorded in Johannesburg.

We were all so hopeful that 2025 would be a much better year all around with a higher economic growth rate and with high hopes that interest rates would be cut further to incentivize and boost property investors appetite and confidence. All of a sudden global risks have emerged from the change in US Presidency and the US radical shift in global policy, easing into a worldwide trade war. Our Rand is at risk and there is a balancing act between local and foreign pressures that our government must navigate and try to rebuild investor confidence in our own economy – and in our property market. The impact on our fragile economy, the ongoing rifts in our political spheres causing more uncertainties across all fronts, coupled with so many other headwinds as referred to above, is for sure not good for our property market.

Property investors prefer predictability and a stable economy to be confident and make informed property investment decisions. Prices are expected to move sideways, it will remain a Buyer’s market whilst more than ever Sellers need to pitch their property prices at being market-related in this continuing price-sensitive and very competitive property market. With the latest developments and unexpected changes in our economic conditions, especially also since lately there are talks of potential interest rate increases later this year, it could drive stronger demand for rental properties. Strategically it is always wise for property investors to focus on long-term value and capital growth, rather than short term speculation.

Yes, buyers are active but more selective than ever before amidst our SA Property Market’s continued resilience and adapting to economic shifts – this clearly illustrated by the fact that South African Investment Property posted the highest annual returns since 2015, leading the way amongst real estate markets globally. As stated by a recent IOL Property Report, the MSCI SA Property Annual Index (being sponsored by ABSA) in the twelve months ending 31 December 2024, local investment property still produced a total return of 11.5%, comprising of an income return of 8.4% and a positive capital growth of 3.0%.

At this stage with scenarios changing virtually overnight, we shall have to adopt a wait-and-see attitude, but we shall remain cautious optimistic as great opportunities will always present itself in our SA Property Market!  Please don’t hesitate to contact your Heiberg Estates Team that remain to be on 24/7 standby for you, or look at our website:

With best and warm regards

Yours sincerely Bambie & Heiberg Estates Team