revenue growth south african commercial The real estate industry still Get used to it under pressure in 2024 Unless the central bank begins cutting rates aggressively, finance costs will rise, executives at the country's two top companies said. property The organization announced this on Thursday.
commercial The real estate industry was one of the hardest hit by the pandemic, with some tenants deferring rent as government lockdowns closed offices and restricted shopping, hurting industry revenues and profits. gave.
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Read: SA Listed Property: The Highs, Lows and What Happens Next?
Although stock prices have recovered, property Companies are facing the dual predicament of an oversupply of office space and sharply rising financing costs due to rising interest rates.
Estien de Klerk, CEO of Growthpoint Properties south The African company spoke to Reuters on the sidelines of an event. property the meeting property While the fundamentals do appear to be stable and improving, “that doesn't mean things aren't tough.”
“In terms of distributions, this year and potentially still Next year, the industry will still “As we develop interest rate hedges into more expensive interest rate hedges, we may be hampered by interest rates accruing through our debt book,” he said.
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Distributable earnings per share (DIPS) – one of the key indicators underFalse financial performance of listed companies property sector – Part of property Companies such as Growth Point, the country's largest real estate group, and Redefine Properties, the second largest, have seen small gains or declines, largely due to high interest rates.
south The African Reserve Bank paused its rate hike cycle in July for the first time since November 2021. Economists expect interest rate cuts to resume as early as May this year.
The high interest rate environment also reduces real estate asset values.
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Listen: Sandton tydens beurtkrag aanhou redefining wil verkeersligte.
In a rising interest rate environment, 77.7% of Growthpoint's debt book is hedged, while domestic finance costs, including finance costs and income received on interest rate swaps, rose to R215 million in the year ended June 30. ($11.34 million) increase.
Redefine also has 77.1% of its total group debt hedged. Rising interest rates pushed the cost of debt up 110 basis points from 6% in 2022 to 7.1% in the year ended August 31.
Leon Kok, Redefine's chief operating officer, also told Reuters on the sidelines of the conference: property “From a performance perspective, there are definitely signs of bottoming out,” although power outages, municipal costs, water shortages and security remain key risks.
