The size of the property market has increased by nearly R1 trillion in four years. With a further R520bn of land officially zoned for commercial and residential development, it looks set to grow

The South African property market is currently estimated at a value of R5.8 trillion, according to research released by the Property Sector Charter Council (PSCC) in July. It revealed the property sector’s size at R5.3 trillion with a further R520bn worth of land officially zoned for commercial and residential development.

A key finding of the latest research shows that formal residential property still accounts for nearly three-quarters of property owned in South Africa, and grew from an estimated R3 trillion at the end of 2010 to R3.9 trillion. For the first time, it also considered informal residential property, although it has no value, which was quantified by the number of households provided by the Department of Human Settlements.

Commercial property carries a value of around R1.3 trillion, up from some R780bn, with almost R790bn held by corporates, R300bn held by REITs, R130bn by unlisted funds, and R50bn by life and pension funds.

Of this, retail property has the highest value at R534bn (R340bn in 2012). South Africa has more than 2,000 shopping centres covering 23 million square metres according to Urban Studies. CEO of the PSCC Portia Tau-Sekati says that the value of the retail sector might increase as a result of the fact that recently completed shopping malls and those yet to be completed have not been included.

Office properties carry a value of R357bn (R228bn in 2012) and industrial properties of R281bn (R187bn in 2012). Hotels and other property accounted for R94bn in value (R25bn in 2012).

Tau-Sekati says: “For a sector this big and this important it is crucial to have a hub of knowledge that consolidates information to support a common and consistent understanding of the sector.” She explains that by regularly updating this research the council also creates a measure of the effect of property cycles on the sector’s value, which can be significant.

The study also supplements PSCC’s SA Property Sector Economic Impact Report. It estimates the property sector’s contribution to GDP at a significant R191.4bn in 2012 in terms of annual income and expenditure flows generated by the sector and a R46.5bn contribution to the fiscus.

The council’s research is based on contributions and figures from property analytics companies such as Lightstone and MSCI’s Investment Property Databank, the South African Property Owners Association and various government departments. The research is updated every two years by the PSCC.