BMI View: Prospects for commercial real estate in South Africa remain mixed. While sub-sectors such asretail continue to perform well, a sluggish economy and a lack of supply of premium city centre propertiesmay halt growth for commercial real estate in the short and medium term. In the longer term, the growth ofthe sector will remain highly correlated with economic growth in the country.
South Africa's commercial real estate has returned a modest but encouraging 7.4% return between 2013 and2014. The uptick in performance growth can be attributed to an improved capital growth of 3.1% comparedto the 2.2% recorded for the last 6 months of 2013. The growth in capital growth was underpinned by animproving base rental growth and a firming in the rental yield.