South Africa recorded the highest property returns in local currency among all global markets in 2024 according to SAPOA’s latest Global Property Investment Trends Report compiled in collaboration with MSCI.

Highlighted during a high-level webinar, Eileen Andrew, Vice President at MSCI, said that while the global real estate sector is regaining ground after the recent high-interest rate environment, recovery is far from uniform.

“Global real estate is recovering—but not everywhere, and not equally,” she said. “In some markets, particularly parts of Europe, we are seeing income growth lead the rebound. But others, including North America, are still lagging due to persistent capital value declines and wider macroeconomic pressures.”

In contrast, South Africa is showing stronger signs of resilience driven largely by improved income fundamentals and relative market stability. Andrew explained that rising income returns were the primary contributor to South Africa’s outperformance, particularly in the industrial and retail sectors.

The report, based on MSCI’s global real assets index data, tracks total return, income return, and capital growth on standing investments across more than 30 countries. While most regions showed recovery in 2024, the pace differed widely. Europe emerged as the global leader, supported by reduced capital declines and better income performance with countries like Portugal and The Netherlands reporting strong capital growth, although their income returns were notably lower than those in Southern Africa and parts of the Nordic region.

Andrew emphasised that the dispersion in recovery across regions highlights the importance of local context and asset selection. “We are not looking at a rising tide that lifts all boats. Asset and market selection have never been more critical.”

Sector performance also showed shifting dynamics. Globally, hotel and industrial properties were among the best-performing assets in 2024, while offices continued to underperform—now consistently ranked at the bottom across most countries. Even in major global cities like London, Paris, and Frankfurt, offices have struggled under the weight of high vacancies, compressed rental yields, and structural demand changes.

“The office sector continues to struggle,” Andrew noted. “We are seeing yield adjustments start to materialise, particularly in gateway cities, but some markets may still have further to fall.”

South Africa, in contrast, has shown strength in both the retail and industrial segments. Net operating income has improved year-on-year, supporting stronger total returns despite modest capital growth. This performance, Andrew explained, suggests that South African investors are managing assets more efficiently and are benefiting from improving rental dynamics.

“For South African investors, this is a moment to stay focused on fundamentals,” Andrew said. “What we are seeing is that income-focused strategies—especially in sectors like industrial and alternative assets—are not only defensible but increasingly attractive.”

The report also pointed to the rise of alternative real estate sectors—data centres, healthcare, and seniors housing—as key sources of future rental growth. Globally, these segments are now outpacing traditional sectors in terms of performance. Andrew encouraged South African investors and developers to begin factoring these alternative asset classes into their forward-looking strategies.

While macroeconomic uncertainty continues to cast a long shadow—particularly around interest rates, inflation, and geopolitical stability—Andrew said the worst of the property market correction appears to be over.

“The return profile is stabilising. We are moving into a phase where real estate must prove its value in a complex, multi-asset investment context. For South Africa, the challenge is not just keeping pace—it’s positioning for the future.”