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How Political Uncertainty and Global Trade Tensions Are Reshaping South Africa’s Commercial Real Estate Market

South Africa’s commercial real estate (CRE) sector is navigating turbulent waters in 2025, as a mix of local political uncertainty and escalating global trade tensions exert pressure on economic fundamentals. Yet, despite mounting challenges, industry experts suggest that opportunities still exist for strategic investors in this evolving environment.

The South African rand experienced notable volatility in April 2025, approaching historic lows against the US dollar due to investor anxiety over domestic political developments and international trade shifts. Compounding this, a 31% reciprocal trade tariff implemented by the United States has rattled confidence across Sub-Saharan Africa, including South Africa, signaling the fragility of global economic ties.

These developments have created a ripple effect in the broader economy, reflected by fluctuations in the JSE All Share Index and caution in investor sentiment. However, commercial real estate—a sector typically driven by long-term fundamentals—has shown resilience in the face of these shocks.

John Jack, CEO of Galetti Corporate Real Estate, points out that the CRE market is not just weathering the storm but also displaying signs of strength. "Vacancy rates are down, net operating income is up, and investor appetite is improving,” he said. “This is largely due to lower interest rates, a more stable energy supply, and clearer policy direction following the establishment of the Government of National Unity (GNU).”

While global trade headwinds may disrupt certain sectors, CRE is increasingly seen as a stable, income-generating asset class. In uncertain times, investors often seek refuge in tangible, cash-flow-producing properties, especially those with strong tenants and sound lease structures.

The broader commercial real estate market continues to benefit from high yields relative to other asset classes. Sectors like logistics, repurposed office spaces, and tourism-driven developments are particularly attractive, offering solid fundamentals and room for growth.

According to the MSCI South Africa Annual Property Index, direct real estate investments achieved an ungeared total return of 11.5% in 2024—the highest since 2015. This performance was underpinned by an 8.4% income return and 3.0% capital growth, highlighting the sector’s strength even during periods of heightened uncertainty.

Amid the volatility, Jack recommends a disciplined approach to navigating the market. “Keep an eye on macroeconomic indicators, use fixed-rate financing to hedge against rate volatility, and concentrate on high-demand locations. Flexibility in leasing strategies and diversification across asset types are also key.”

Despite short-term uncertainty, long-term prospects for commercial real estate in South Africa remain promising. Assets in well-located urban nodes, logistics parks, and mixed-use developments continue to attract capital.

Political uncertainty and trade disruption are undoubtedly reshaping South Africa’s economic landscape. But for seasoned investors, these shifts also create unique opportunities. The commercial real estate sector, underpinned by strong yields and resilient demand, is positioned not just to survive—but to thrive.

As South Africa adapts to the changing global and local environment, its CRE market stands as a beacon of relative stability and strategic potential.