THE ECONOMIC IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Sponsored by

Dr. Douw BoshoffUniversity of Pretoria, Department of Construction Economics

THE ECONOMIC IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Sponsored byKey findings of this study include

Non-residential real estate contributed approximately R174 billion to economic activity, or

5.15% of all economic activity in South Africa during 2013

The contribution to gross domestic product (GDP) in 2013 by non-residential real estate is

approximately R81 billion, or 2.4% of the total GDP in South Africa.

Non-residential real estate supports approximately 212 000 permanent jobs in South

Africa, or 1.5% of all employment in the country as at the end of 2013.

There was a total of approximately R6.5 billion in taxes generated by non-residential real

estate during 2013.

THE ECONOMIC IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

THE ECONOMIC IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Rent Asset valuation P = R/ i

Price (R)

2

1

Market for space D(R, Econ.) = S

Stock (sq m)

Construction sector P = f(C)

3

4

Stock adjustment

S = C/d

Construction (m2)

Figure 1: Diagrammatic FDW-model

THE ECONOMIC IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Economic Activity – sum of activity in each sector

Gross Domestic Product – value added by each sector

Job creation

Taxes on products and production

Direct, Indirect and Induced Impact

Economic impact – Not physical impact

Emphasis of the study

THE ECONOMIC IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

National non-residential real estate

Provincial analysis

Property type analysis

Current and historical impact

Short term forecasting

Emphasis of the study

CURRENT IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Non-residential as % of total Buildings completed as % of national

CURRENT IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Economic Activity

Office and banking space – R41.5 Billion

Shopping space – R38.5 Billion

Industrial and warehouse space - R43 Billion

Other non-residential – R11 Billion

Additions and alterations – R40 Billion

CURRENT IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Gross Domestic Product

Office and banking space – R19.3 Billion

Shopping space – R18 Billion

Industrial and warehouse space – R20 Billion

Other non-residential – R5.2 Billion

Additions and alterations – R18.6 Billion

CURRENT IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Employment created

Informal – 42 960

Semi- & unskilled – 38 341

Skilled – 98 520

Highly skilled – 32 449

Formal – 169 311

Total – 212 270

CURRENT IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Net Taxes generated

Office and banking space – R1.55 Billion

Shopping space – R1.44 Billion

Industrial and warehouse space – R1.6 Billion

Other non-residential – R413 Million

Additions and alterations – R1.49 Billion

SHORT TERM FORECASTED IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Economic Activity and GDP

Economic activity - R7.8 Billion additional activity

GDP – R3.67 Billion additional contribution

SHORT TERM FORECASTED IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Additional jobs to be created

13 065 additional jobs to be created

SHORT TERM FORECASTED IMPACT of the COMMERCIAL REAL ESTATE SECTOR on the SOUTH AFRICAN ECONOMY

Nett taxes to be generated

R20.8 Million in Nett taxes to be generated

THANK YOU