South Africa

Demand for retail space has been on the rise Our FNB 1st quarter 2022 FNB Property Broker Survey has pointed to a recent increase in demand for retail space to rent, as perceived by the brokers surveyed. This turnaround for the better, from a retailer and landlord point of view, appears to reflect the normalization in economic activity and societal interaction in recent times, with Covid-19 having faded as a threat, and lockdown regulations having largely disappeared, resulting in greater rates of new business formation and perhaps expansion. We ask respondents the question as to whether they believe vacancy rates have increased, decreased or remained the same over 6 months prior? Out of the responses we create an index by allocating a +1 score to an “increased” response, a zero to an “unchanged” response and a negative -1 to a “declined” response. The scale of the “Index for direction of change in average vacancy rates over the past 6 months” is thus from +100 to -100. A score of +100 would imply that 100% of respondents perceived an increase in vacancy rates over the past 6 months and -100 would imply 100% of respondents perceiving a decline, while a zero level would mean that those providing an “increased” response equals those responding with a “declined” response. The Retail Property Sector’s Index level has recently moved sharply into negative (improving) territory. It had been hovering not far from zero for the prior 5 quarters, with the prior quarterly reading being slightly in declining territory to the tune of -12.5. Then, in the 1st quarter of 2022, this reading shot to -72.8, reflecting a widespread broker perception of declining retail vacancy rates, stronger even than the Industrial Property reading. Retail’s improvement has been largely about the Covid-19 threat receding. A normalization in economic activity and social interaction, i.e., the way we live, work and play, has been well under way in 2021/early-2022 to date. Lockdown regulations have all …

The StatsSA release of February 2022 preliminary monthly tourism statistics show the Hotel Sector to be really battling to fully recover from the harsh Covid-19-related lockdown shock back in 2020. This is despite year-on-year growth appearing to be impressive. On a year-on-year growth rate basis, total Hotel Sector income was a very strong 175%, slightly slower than the 177.6% rate for January, but these growth rates have limited significance given that this income was coming off a very low base when compared with 2020/early-2021 “lockdown” levels. Lockdown restrictions over the 2020/21 summer period had still been quite severe during the “2nd wave” of Covid-19, still creating a very low base off which the February 2022 year-on-year growth in hotel income comes. Given the abnormalities created in growth rates by the low lockdown base, it makes more sense to view total revenue value, and compare it to the comparable month back in early-2020, a pre-COVID 19 month. We then see a more accurate picture of a Hotel Sector whose income is still under severe pressure. Total Hotel Industry Income in February 2022 was still -33.9% below the income for February 2020, the last month prior to the 2020 lockdown announcement in March of that year. Hotel income growth does continue to outpace the growth in income in both the “Guest House and Guest Farm” category as well as “Camp Sites and Caravan Parks”, with the former category under longer term pressure while the latter category having already recovered far earlier during the post-lockdown phase. Going further to view occupancy rates, in February 2022, the national hotel occupancy rate was 35.5%, still well-below the 53.9% rate for February 2020. It isn’t only a low occupancy rate that still constrains hotel income. It is a more constrained client financial environment too, and the average hotel income per stay night in February 2022, despite significant post-lockdown recovery, was still -23.1% down on the February 2020 …