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Factors Affecting Commercial Property Prices In South Africa

Factors Affecting Commercial Property Prices In South Africa

As expected, there are various factors that impact on property pricing across South Africa. However, the answer is more complex than what it may seem from a shallow perspective. This is according to Paul Stevens, who is the CEO of Just Property. “There are various factors at play, the most important being market conditions which affect so many elements including the cost of loans,” says Stevens.

The repurchase rate refers to the interest rate the South African Reserve Bank applies to the money it lends to banks. This rate is used to target inflation. As inflation rises, so will the interest rate. It also impacts the prime lending rate the banks set, which is applied to bonds. This has a direct impact on the value of both commercial and residential property in South Africa.

Buyer Profile Also Impacts On Property Pricing

Even though the interest rate might be an obvious contributing factor to property value, Stevens goes on to point to the profile of the buyers in areas that are less obvious, but equally significant in determining demand. It therefore impacts the value of your property.
“In some provinces,” Stevens says, “the highest growth in home buyers is centred on the young – these purchasers would be looking for properties that are markedly different from those prized by middle-aged and older buyers. While the home that a young buyer is seeking might be similar in size to the footprint a retiree may want, the areas they prefer would be very different.
Location also plays a significant role in the price of commercial property, tying in with supply and demand. This is especially relevant in commercial nodes and CBD districts of large towns such as Cape Town and Sandton. By knowing what impacts the price of commercial property, you are well on your way towards finding the best deals available to you.

Image courtesy of : Point

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