SA - best performing commercial real estate in world

South Africa had the best performing real estate market in the world in 2003. Research has just published results of its annual survey which showed that property investments in South Africa showed an actual total return of 15.1% last year.

South African commercial real estate outperformed sixteen other major countries to lead's - 'Worldwide Commercial Real Estate Performance Ranking 2003'.
With South Africa's industrial vacancy rates dropping to 6.6% and strong consumer spending evident due to low interest rates, the industrial market showed a 17.5% total return, marginally ahead of the retail market at 17.4%.

The office sector, still struggling with overcapacity in some areas, lagged at 8.5%. According to IPD South Africa, the All Property Income Return for South Africa showed 11%, with capital values increasing by 4.1%, the strongest recorded since 1997.

Australia, with 13% total return computed from Property Council of Australia's Investment Performance Index for 2003, showed the retail market leading at 16.9%, closely followed by the industrial market at 15.2% and the office market at 6.9%.

Low US interest rates
"Low interest rates contributed to over US$210 billion invested directly into US and European commercial real estate in 2003. Even though interest rates are starting to rise, institutional and private investors are still being drawn to the higher yield income produced by commercial real estate investments worldwide compared to lower yield fixed interest securities", says

The boom in house prices worldwide, also fuelled by low interest rates, continues to encourage homeowners, now with increased home equity, to feel confident and spend. This spending has contributed to retail real estate investments worldwide showing double-digit annual total returns. With increased consumer and investment spending, improved factory floor orders are reflected by high total returns for industrial real estate worldwide.

Worldwide commercial real estate performance ranking - Source:

Ranking Country Total Return % 2003 Country Source
1 South Africa 15.1 IPD South Africa
2 Australia 13.0 Property Council of Australia
3 Ireland 12.7 IPD/SCS
4 United Kingdom 10.9 IPD
5 Portgual 9.5 Imometrica/IPD
7 Canada 8.2 ICREIM/IPD
8 Hong Kong 8.2 Hong Kong Government
9 France 8.0 IPD France
10 Spain 7.9 IPD Spain

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