South Africa’s investment property has delivered the strongest performance in eight years according to the MSCI SA Biannual Property Index (Unfrozen) for H1 2025.

The index, which measures unlevered total returns of directly held property investments from one valuation to the next, tracked the performance of 1 639 property investments with a total capital value of R394.2 billion as at June 2025.

It shows that SA investment property delivered a total return of 5.3% for the period, comprising an income return of 4.1% and positive capital growth of 1.1%. The improvement in capital values was supported by steady base rental growth of 4.6% while the overall vacancy rate edged up only marginally to 7% – from 6.5% at the end of 2024.

On a 12-month rolling basis, the total return to June reached 11.8% – the highest since June 2017 – and significantly ahead of the MSCI Global Quarterly Index which returned 4.9% over the same period.

Industrial property remained the top-performing sector in H1 2025, delivering a total return of 6.1% with distribution centres and warehousing assets having performed particularly well.

The residential sector followed with a total return of 5.9%, driven by capital growth of 1.4%, the strongest among the major property sectors. Retail property achieved a total return of 5.3%, supported by the continued strong performance of smaller-format retail centres. Within the retail segment, community shopping centres recorded the highest capital growth among the subsectors, at 2.2% for the six-month period.

Although the office sector continued to lag other property types, it recorded its strongest annual total return since 2015. Within the sector, the divergence between prime and secondary assets persisted. Prime and A-grade offices led the recovery, achieving a biannual total return of 5.9% supported by improved vacancy rates. In contrast, secondary offices underperformed, delivering a total return of just 2.8%, weighed down by negative capital growth.