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BACKGROUND 3.1. A Brief Overview of Johannesburg’s Property Market

According to a recent research project by the Property Sector Charter Council, the South African property market is valued at US$ 403 million (Africa Property News 2016), with the formal residential property market accounting for almost three quarters (see Figure 1). According to the Centre for Affordable Housing Finance in Africa (CAHF) (2015: 1): Every year, as new houses or residential properties are built (whether by government or the private sector, and whether for ownership or for rent), as existing properties are traded, or as old properties are converted into new uses, the size and composition of the residential property market changes. The property market is complex and segmented. Certainly understanding Johannesburg’s property market requires more than a brushstroke approach. This section suggests some broad themes that have emerged from the research undertaken for this project. However, these are neither cast as definitive nor comprehensive. The property sector can be divided into a number of categories (Ball et al 1998: 43): • Commercial property (including retail, office, industrial and others); • Residential property (including the formal housing market); and • Public sector property (property that is owned and operated by the public sector). In order to understand the property market one needs to understand the macro-economy. Broadly, the macro-economy and property market are intricately interlinked. Although the property market reflects trends in the macro-economy, these are usually expressed later in the property market (Keogh 1994: 60; Barras 1994: 186). As Hui and Zheng contend: “The volatility spillover effect between real estate markets and stock markets or overall economy has been well-documented in the economic literature” (2012: 85).


Transit corridors & the private sector

Property markets are segmented and this segmentation means that there are no uniform responses to the macro-economy amongst all property types. Brueggeman and Fisher argue that poor economic prospects for a specific property type does not necessarily extend to all other property sub-sectors (cited in Hui and Zeng 2012: 85). However Hui and Zheng caution that volatility and spillover effects between property types are not as yet fully explored, casting doubt as to the extent to which one property type is impermeable to a poor economy (2012: 86). The point is that even though general conclusions cannot easily be drawn on the state of the property market, the City needs to track this because of its potential impact on the City’s ability to realise its own strategic planning processes. City policy and interventions are happening within a wider context, which affects the ability of the City to effectively manage spatial change. Current property trends have important implications for the viability of attracting commercial property to the Corridors. For example, SAPOA has conducted detailed analysis of commercial property trends in the first half of 2016, which the City should take into account when developing policy. SAPOA highlights the following office vacancy trends: • Office market trends suggest that the flat economic growth is a threat to a buoyant office market sector, although the office sector is in ‘recovery phase’. • Business confidence is pessimistic which means that capital allocation is going to be very selective.

Transit corridors & the private sector


Transit Corridors and the Private Sector: Incentives, Regulations and the Property Market  

Part of the Spatial Transformation through Transit-Oriented Development in Johannesburg research series. Published by the South African Rese...