Rode’s Report 2021:1

www.rode.co.za

Industrial market the cream of the crop • Residential building activity showing some green shoots • House prices continue to shine • Flat vacancies may have peaked for now • Ghost buildings spook o ce market Rode’s Report 2021:1 i Rode’s Report on the South African Property Market 2021:1

Erwin G. Rode Vol. 32 no. 1 (editor-in-chief) Kobus Lamprecht (editor)

Editor-in-chief Published by Erwin G. Rode Rode & Associates (Pty) Ltd. Reg. No: 2009/005600/07 Editor PO Box 1566, Bellville 7535 Kobus Lamprecht Tel. 021 946 2480 Survey administrator Cell. 071 410 7978 Samantha Harkers-Kies Fax 021 946 1238 Advertising E-mail: [email protected] Lynette Smit Website: www.rode.co.za 021 946 2480/082 323 5799 Cover illustration Subscriptions Konrad Rode Juwayra Januarie 082 446 6526 021 946 2480/061 017 0973 www.capetowncartoonist.com Annual digital subscription: 4 issues: R5.450 (excl. VAT)

© Rode & Associates (Pty) Ltd., April 2021. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. While all reasonable precaution is taken to ensure the accuracy of information, Rode & Associates (Pty) Ltd. shall not be liable to any person for inaccurate information or opinions contained in this publication. Portions of this report may be reproduced for legitimate academic or review purposes provided due attribution is cited. Rode Services PROPERTY CONSULTANCY • REAL ESTATE VALUATIONS • REAL ESTATE ECONOMICS • TOWN AND REGIONAL PLANNING Overview

As one of the large independent property valuation firms in , Rode & Associates offers the property industry:

• Real estate economics and research – based on statistical models and regular countrywide surveys, which feed three research publications and over 5000 property time series covering more than three decades • Property valuation – including retail, residential, commercial, industrial, ag- ricultural and specialised properties such as hotels, hospitals, dormitories, self-storage facilities, airports, and the like • Property consultancy – which includes forecasts, overviews, and expert anal- yses for corporates, government departments and private clients • Town and regional planning – which covers spatial planning and land use management and property market assessments for human settlement development.

Based in , Rode serves clients from all over South Africa and Namibia (Windhoek only).

GROUNDBREAKING RESEARCH

Over the years, Rode’s research has led to groundbreaking property models and methodologies. This includes the regular, rigorous surveying of market rental levels and capitalization rates through the expert-panel method of polling to provide more uniform and realistic market valuations. Other breakthroughs include:

• A unique econometric model to forecast the South African real estate market • The statistical determination of standard capitalization rates • Property demand forecasts • The estimation of market rentals in shopping centres and for industrial premises of various sizes • Special methodologies to value income-producing properties • The development of regression models to estimate the capitalization rates of office properties, industrial properties and shopping centres • The application of multiple regression techniques to value houses • Rode’s Valuation Method – also known as the opportunity cash flow (OCF) method – to value income- producing properties • A further refinement to the valuation of land with residential township potential using the direct- comparison method • A further refinement to the valuation of bare dominiums. RodePlan

SPATIAL AND DEVELOPMENT PLANNERS AND PROPERTY ECONOMISTS

RodePlan specialises in strategic planning, land development, land audits and property research. This work is often supported by geographic information systems (GIS). A discussion of our expertise follows below.

1. Land development: rezoning, subdivision, departure, consent use, removal of title restrictions, land use management schemes (all SPLUMA related) and applications in terms of the Subdivision of Agricultural Land Act, 1970 2. Strategic planning: spatial development frameworks (SDFs), urban develop- ment research 3. Human settlement development: human settlement plan, housing sector plan 4. Property market research: determine highest and best use of land; indicator development and monitoring; identification, acquisition and release of land; state of the property market report 5. Municipal integrated development plans (IDPs) 6. Land audits.

RodePlan considers an in-depth understanding of the social, economic, political and environmental elements that underpin present-day society as fundamental to land development in order to complement economic growth and urban restructuring. We develop and apply scenarios and strategies to inform land development and land-use management.

RodePlan also advises private clients on the development potential of specific properties and/or land disposal strategies. This is done applying our expertise as property economists. RodePlan’s clients include property owners, developers, engineering companies and government:

Government: Provincial Government, Provincial Government, Cape Winelands District Municipality, Bergrivier Municipality, Saldanha Bay Municipality, Stellenbosch Municipality

Engineering companies and Independent Power Producers (IPPs): Umoya Energy (Proprietary) Limited, G7 Renewable Energies (Pty) Ltd, Plan 8 (Pty) Ltd, South Africa Mainstream Renewable Power Developments (Pty) Ltd, Solairedirect (SA), Windlab Systems (Pty) Ltd, Ventusa Energy, African Clean Energy Developments (Pty) Ltd, Enertrag South Africa (Pty) Ltd, Nadeson Consulting Services, Aurecon, Mott MacDonald, JG Afrika, EAS Infrastructure Engineers, JPCE Specialist Consulting Engineers

Property owners and developers: Engen Petroleum Limited, Bundi Adventures, Balwin Properties

Other: Ignite Advisory Services (Pty) Ltd, Pricewaterhouse Coopers (PWC), Urban LandMark.

Recent appointments include:

• Co-author of the national IDP Guide, 2020 • Town planner for the Greater Human Settlement Project • Town planner for the design of Public Transport Facilities, Area 3, • To determine the highest and best use for two municipal-owned properties in Klapmuts, Stellenbosch Municipality • To obtain land development rights for the West Coast Integrated Waste Management Facility • To obtain land use rights for renewable energy facilities in the Western and Northern Cape • To obtain land use rights for all provincially operated borrow pits in the Western Cape as part of the provincial regravelling programme • To complete a land audit and land assessment of municipal-owned vacant land in the Saldanha Bay municipal area • To draft the Stellenbosch Municipality Urban Development Strategy and Integrated Human Settlement Plan • To participate as spatial planner to complete a peer review of the route alignment for the Wynberg segment of the IRT Phase 2A (Cape Town)

Rode Valuations

As one of South Africa’s large valuation firms, Rode annually values property portfolios which include shopping centres, agricultural property, residential, commercial and industrial property. Rode also undertakes municipal property valuations, as well as specialized valuations such as hotels, hospitals, bare dominiums, airports, etc. Rode has been the annual overall top performer in the pmr.africa awards since 2016.

Rode’s property valuation services are underpinned by the rigorous surveying of, inter alia, market rental levels and capitalization rates. Rode’s valuation services also rely extensively on techniques such as regression models, as well as the opportunity cash flow (OCF) method. This ensures uniform and realistic market valuations and is Rode’s competitive edge.

SHOPPING CENTRES

In the retail field, Rode is considered South Africa’s premier shopping-centre valuer owing to the firm’s technique of calculating market rentals and standard capitalization rates. The firm regresses actual rental rates of recently signed leases against their floor area size to determine the relationship between the market-rental rate and floor area. The latter is a useful tool which landlords can employ to their advantage when negotiating renewals.

FARM VALUATIONS

Rode’s agricultural valuation department specialises in the valuation of farms and smallholdings and understands the value-drivers within this sector.

SPECIALIST PROPERTIES

Rode Valuations has done pioneering research on several specialist-property typologies, and we regard ourselves as leading valuers with respect to hospitals, self-storage facilities, hotels, retirement villages, bare dominiums (leased fee estates in American parlance) and airports. Rode Consult

Rode Consult renders property-related research services to the public and private sectors.

As consultants, Rode & Associates are often called upon to do difficult tasks. So, for instance in 1990 Rode analysed and forecast the property market in Maseru for the Lesotho National Development Corporation (LNDC). This project involved, inter alia, forecasting demand trends in Maseru.

Studies often utilise econometric analysis to forecast trends.

Examples of other assignments include:

• Compiling a macro overview of the South African housing market for the national Department of Housing; • Demand forecasts for specific office nodes, industrial townships, and flats markets; • Forecasts of rental levels using econometric modelling; • Property-portfolio analysis; • Long-term forecasts of property values in South Africa; • An analysis of the property market in towns and municipalities; • Acting as anexpert witness in arbitration and litigation; • Assessment of market potential for commercial property ventures such as new or existing office com- plexes, retail centres, light industrial nodes, etc. To do this, property market indicators are identified and analyzed, e.g. supply and demand analysis (type & size), rentals (R/m²), selling prices, escalation rates (%), vacancies (%), take-up rates (%). • Advisory services to implement the Government Immovable Asset Management Act, Act 19 of 2007 (GIA- MA); • Research to determine the highest and best use for unused and underutilised government immovable assets.

Major recent clients of the division include: the City of Cape Town, the Western Cape Government, the Auditor-General of South Africa (AGSA), engineering firms and property developers. Rode Publications

RODE’S REPORT ON THE SOUTH AFRICAN PROPERTY MARKET

Rode’s Report analyses and reports on most sectors of the property market in the metropolitan areas and some secondary cities. It covers, inter alia, rental levels per m² by property type, grade, size and node/township; capitalization rates by type of property, grade and location; building costs by type; building activity; etc. It excludes the retail property market. The publication is updated quarterly and available only in digital format.

RODE’S RETAIL REPORT ON SOUTH AFRICA

Rode’s Retail Report reports on the state of the retail property market by analysing the most recent retail sales and trading-density statistics. Retail property information includes street-front shop rentals per m² by size for about 120 street-front micro-locations in six metropolitan areas. The publication also reports on developments of new shopping centres and major extensions to existing shopping centres. The publication is updated quarterly and available only in digital format.

RODE’S SOUTH AFRICAN PROPERTY TRENDS

Trends contains forecasts of various property variables like rentals and capitalization rates by city, six years into the future. The forecasts are updated every six months using econometric models and cover the major South African metropolitan areas, thus giving a complete framework for property investment planning and viability studies. The publication is updated semi-annually and is available only in digital format.

TIME SERIES LITE

Use Rode’s reliable historical data to aid your research, strategic decision- making and presentations. This digital database provides online access to more than 2 000 property-related time series – many going back more than three decades. The database includes key property time series like capitalization rates, and office and industrial rentals. The data covers all metropolitan areas and some secondary cities. It is updated quarterly and available only in digital format.

TIME SERIES PRO

This is an extension of Rode’s Time Series Lite database and contains about 6 000 property-related time series – many going back more than three decades. A must for the serious property analyst. Time Series is updated quarterly and available only in digital format. Contact us

• Tel: (+27) (0)21 946 2480 • Cell: (+27) (0)82 323 5799 • Fax: (+27) (0)21 946 1238 • E-mail: [email protected] • Postal address: PO Box 1566, Bellville 7535, Cape Town, South Africa • Physical address: 11 De Villiers Street, Sunray (near c.o. Maree St), Bellville, Cape Town • GPS: 33°53’58,5”S; 18°38’14,5”E • Web address: www.rode.co.za Rode’s Report 2021:1 vii Rode staff

Rode staff

Erwin Rode BA, MBA (Stell): CEO Kobus Lamprecht BCom (NWU), BComHons and MCom (NWU) Berchtwald Rode BA (Stell), MTRP (UOFS) Juliana Dommisse BEconHons (Stell) Marlene Tighy BSc (Wits) Hons (OR) (RAU), MBL (UNISA), Pr Sci Nat Monique Vernooy BTech(QS), NDREES (Unisa), MSc (UCT) Binty Britz BA (Stell), MLPM (UOFS) Stephan van der Walt MA (Stell) Samantha Harkers-Kies ND: HRM (CPUT) Lynette Smit Elizma Hawksley Juwayra Januarie Abigail van Wyk Shimonay Jonas Rode’s Report 2021:1 viii Contents

Contents

State of the property market State of the property market in quarter 1 of 2021 1

Capitalization rates Capitalization rates of industrial and retail property improve 4 How to estimate capitalization rates - anywhere 16

Listed property Listed property prices continue to recover 19

Office rentals, operating expenses, and office demand & vacancies The wilting office market 22 Ghost buildings spook office market 57

Industrial rentals and vacancies and industrial stand values Industrial market the cream of the crop 64 Stand values decline again 101

Residential market Flat vacancies may have peaked for now 130 House prices continue to shine 163

Building activity & building costs Residential building activity showing some green shoots 166 Rode’s Report 2021:1 ix Tables

Tables

Table 1.1: Rental performance as at quarter 2021:1 3 Table 2.1: Prime industrial leaseback escalation rates 9 Table 2.2: Survey of capitalization rates: Office buildings 10 Table 2.3: Change in capitalization rates: Office buildings 11 Table 2.4: Survey of capitalization rates: Industrial buildings 12 Table 2.5: Change in capitalization rates: Industrial buildings 12 Table 2.6: Survey of capitalization rates: Shopping centres 13 Table 2.7: Change in capitalization rates: Shopping centres 14 Table 2.8: Survey of capitalization rates: Street‐front shops 15 Table 2.9: Change in capitalization rates: Street‐front shops 15 Table 4.1: Total returns on listed property funds: First two months of 2021 and past 12 months 20 Table 4.2: Change in distributions for half‐ and full‐year periods ended December 2019/20 21 Table 5.1: Pioneer office rentals 26 Table 5.2: Market rental rates for office buildings 27 Table 5.3: Standard deviation of market rental rates for office buildings 31 Table 5.4: Typical rent-free period in months 35 Table 5.5: Market parking rentals 39 Table 5.6: Office rental escalation rates on new leases 43 Table 5.7: Escalation rates on operating costs 47 Table 5.8: Typical gross outgoings for prime office buildings 51 Table 6.1: Sapoa office vacancy factors 62 Table 7.1: Pioneer industrial rentals 68 Table 7.2: Mean prime industrial market rentals 69 Table 7.3: Standard deviation from mean prime industrial market rentals 82 Table 7.4: Predominant market escalation rates for industrial leases 97 Table 7.5: Indicative operating expenses for industrial buildings 98 Rode’s Report 2021:1 x Tables

Table 8.1: Sensitivity of land value to changes in rent 102 Table 8.2: Mean market values for industrial stands 103 Table 8.3: Standard deviation for industrial stands 116 Table 9.1: Flat vacancies by city 131 Table 9.2: Flat rentals: Standard units 133 Table 9.3: Flat rentals: Upmarket units 143 Table 9.4: Flat: Parking rentals 152 Table 11.1: New non‐residential buildings 169 Table 11.2: New residential buildings 169 Rode’s Report 2021:1 xi Annexures

Annexures

Annexure 1

Glossary of property terms and abbreviations I

Annexure 2

Technical background to the Rode surveys XII

Annexure 3

How to interpolate industrial rental rates and land values XIV

Annexure 4

Approximate building cost rates by AECOM XV

Annexure 5

Monthly forecast of Haylett by BER XXI

Annexure 6

BER Building Cost Index XXII

Annexure 7

Prime overdraft rate at month-end (%) XXIII Rode’s Report 2021:1 xii Panellist codes

Panellist codes

Code Company Telephone number

ABA Abacus Divisions 0123455555 AC Auction Central 0108804750 ACU Acumen Properties 0825574768 AI Aida 0123483720 AIR Airport Property 0213801111 AN Annenberg Property Group 0214657780 ANV ANVIL Property Smith 0872348000 AP API Property Group/OfficePlace 0112341144 AP API Property Group/OfficePlace 0126440522 AP API Property Group/OfficePlace 0219112906 ARN Arnie Katz Realty 0413731333 AS Airspace SA 0614725023 AV 5th Avenue Properties 0112346111 AWP Andrew Wood Properties 0832363848 AX Avron Properties cc t/a Montague Gardens Property 0215520001 BCR Bedfordview Commercial Rentals (Pty) Ltd 0114500588 BD Bruce McWilliams Industries 0413961400 BLA Black Pepper Properties 0114631909 BON Bonnins Estates 0312668446 BR Broll Property Group 0514303008 BR Broll Property Group 0114414108 BR Broll Property Group 0413635559 BR Broll Property Group 0114414288 BVF Boshoff Visser Property Group 0448732801 CA Chas Everitt 0219154800 CAP CapProp 0837845895 CAR Carleon Properties 0117891007 CBR CBRE Excellerate 0119118259 CHR Chris Batting Properties 0435551002 CIR Circle Properties 0219813263 COE Commercial Exchange 0114677870 COM Commercial Space 0216805380 COR Core Property Group 0217972552 CPP Cornerstone Property Partners 0729640962 CPS 3Cube Property Solutions 0102860777 CR Colliers International 0117832111 CRE Commercial Realtor of Excellence 0824413754 CRI CRI Properties 0123467777 DE Dedekind Real Estate 0366372297 DN David Newham Property Management 0219480934 DOR Dormehl Phalane Property Group Pietermaritzburg 0333425129 DT Deltahof 0826022777 DW Divaris Property Brokers 0215311551 Rode’s Report 2021:1 xiii Panellist codes

ED Edric Trust 0514489431 EK Ellenberger & Kahts 0514301511 ENV Engel & Völkers 0119293096 EQV Equity Valuers 0514300907 ERA ERA Sun Properties 0437404556 ERE Empire Real Estate 0310300999 ES Eli Ströh 0152873300 ETC Etchells and Young Property Brokers 0117915134 EXH Executive Homes 0114855019 FO Fosprops Properties/Homenet 0357724011 GAM Granite Asset Management 0861177770 GB Galetti Corporate Real Estate 0117831195 GB Galetti Corporate Real Estate 0214186308 GI Growthpoint Properties 0119446449 GI Growthpoint Properties 0119446073 GPI Gradion Property Investments 0110387100 GR Grove Properties 0834561924 GRV Garden Route Valuers 0448747404 GW Goldswain Investments 0437222876 HN Harcourts Patrick & Co 0333423340 HN Harcourts Maritz 0126530386 HOU House of Realtors 0798008413 HP Horizon Capital 0214258586 IK Ikon Property Group 0214259496 IKP Ikon/Phoenix Consultants 0825625547 IPC IPC/Rob Lopes Rentals 0413630000 JA Jawitz Properties 0217945500 JHI Excellerate Real Estate Services t/a JHI 0115373800 JLL Jones Lang LaSalle 0115072200 JUS Just Property Amanzimtoti 0319037434 JUS Just Property Winelands (Paarl) 0218721487 JUS Just Property Atlantic Seaboard 0212017007 JUS Just Property 0218546372 KEL Kellaprince Properties Nelspruit 0137544400 LA Landlords "We do Rentals" 0219751770 LIB Liberty 2 Degrees 0114485687 LIV Live Commercial Real Estate 0214393903 LJ LU JACK 0825746747 MAF Mafadi Western Cape 0210013410 MAS Massyn Acquisitions 0123452576 ME Mendace Properties 0828998304 MO Moolman Group of Companies 0152914700 MPR Millar's Properties 0123420527 MPV Masisizane Property Valuations 0834693555 MR Marder Properties 0114531220 MUL Multi Properties 0448746907 MY Mike Shefer Estates 0413738676 Rode’s Report 2021:1 xiv Panellist codes

NAN Nangate Investments 0824113839 NE Newbridge Property Services 0219139131 NET Networth Group 0152988141 NEX Nexus Property Group 0214183911 NH Netwater Properties 0113261614 NR National Real Estate 0514059990 NRG SA National Realtors Group Commercial 0415822608 OMN Omnigro 0212762000 ORI Oriprops 0137546562 OS Osher Property Solutions 0824668989 OSO Office Space Online 0115933111 PC Propco (1985) 0315691334 PES Paarden Eiland Spargo Properties 0827835784 PF Permanent Trust Property Group 0219819756 PF Permanent Trust Property Group 0214418800 PFP Profile Property 0333472786 PG Pam Golding Properties Nelspruit 0137542300 PH President Estate & General Agents 0118738707 PHP Platinum Hill Properties 0214244242 PLA Platinum Global 0514474711 PM PDL Property Management 0137527333 PN Propergation Property Solutions 0219146444 PPG Pulse Property Group 0437000327 PPI Portfolio Property Investments 0824944555 PPR Parallel Property 0110837171 PPS Protea Properties 0842087668 PR Property Fellas 0721796440 PRI Prime Property Musgrave 0316120786 PRS ProperSell 0117816281 PRU Properties R US 0218632046 PVN Property Valuations Namibia 0026461241100 PW Property Window 0538311319 PWO Property World 0215550105 PX Pillay Properties 0216857710 QU Quadrant Properties 0115309840 RA Real Estate & Property Services 0110271400 REA RealFMG 0118071760 REW Real Estate @ Work 0836328011 RIZ Rize Property Professionals 0835567257 RK Renprop 0114636161 RM Remax Living 0214331555 RO Reef Property Consultants 0114501700 RR RealNet Premier 0217610328 RS Rawson Properties Paarl 0218728385 RS Rawson Properties Berea 0313093385 Rode’s Report 2021:1 xv Panellist codes

SC Stockton Property Consultants 0114259857 SCM Sotheby's Commercial 0217012446 SE Stipec Eiendomskonsultante 0152954537 SF Seeff 0218642948 SF Seeff Polokwane 0152971140 SF Seeff Commercial 0319031234 SH Share‐List Property 0317647101 SHA Shanprop Real Estate 0318801770 SHP Shalan Properties 0836527341 SPI Spire Property Solutions 0216854020 SQ Steer And Company 0214261026 SR Sancus Realty 0218899759 SS Six Squared Property Consultants 0823872234 SUM Summerton Edelson Commercial 0415811768 SWI Swindon Property Brokers 0112686315 SWI Swindon Property Brokers 0824056940 SWI Swindon Property Brokers 0214220778 TE Trust & Estate Co. 0026461231224 TG Theo Goosen Estate Agents 0152959014 TH Trevor Hosiosky Investment Properties 0118035545 TI Torva Property Investments 0117835370 TR Trafalgar 0413656840 TR Trafalgar 0123265963 TR Trafalgar 0313017017 TR Trafalgar 0112145200 TR Trafalgar 0437266066 TR Trafalgar 0214105531 TR Trafalgar 0431250125 TR Trafalgar 0214105500 VAR Vartrust Real Estate 0871354450 WD Webprop 0219100180 WHF Warehouse Finder 0860009531 WK Wakefields 0317090213 WP Watprop 0118870473 ZZ Anonymous Real Estate Content That REI-lly Matters & You Can Trust

         

            

         

   Rode’s Report 2021:1 xvii Acknowledgements

Acknowledgements

The writers of Rode's Report (RR) express their sincere thanks to:

1. SAPOA, for use of the basic data from its office vacancy and office stock surveys, which we analysed further. 2. The Bureau for Economic Research (BER) for the use of its building‐cost data (BER BCI). 3. AECOM for the use of its building‐cost data for various building types. 4. All the panellists who so kindly gave of their time and expertise in responding to our surveys. The complete list of panellists who contribute to the RR, together with their codes, appears on p. xii. For each of the survey tables in the RR you will find, listed against every node or area, the codes for all the panellists who contributed information this quarter. 5. Loraine West, who has the task of making sure the grammar and style are up to scratch. 6. Other property practitioners throughout South Africa, experts in their fields, too numerous to mention individually. Without the generous assistance of these professionals, much of our research would be impossible. 7. Samantha Harkers‐Kies, who manages the surveys and compiles the annexures, and Lynette Smit and Juwayra Januarie for their technical assistance. 8. The JSE Securities Exchange and Statistics South Africa for the use of their data. Rode’s Report 2021:1 xviii Foreword

Foreword

Dear Reader

Welcome to the first issue of Rode’s Report on the South African Property Market (RR) for 2021. This report shows that the office market remains the riskiest due to a swelling vacancy rate as a result of the work-from-home trend and an oversupply built during the last few years when the economy was already tanking. On the positive side, industrial property is still standing tall due its superior fundamentals, while house prices are performing better than expected.

As usual, we report on the movements of several critical property variables, ranging from capitalization rates, market rentals, operating costs, escalation rates and land values to house prices.

If you want to communicate with a specific niche market, you can contact Lynette Smit on 082 323 5799 for RR advertising rates.

Lynette and Samantha Harkers-Kies are in charge of expanding our survey panel. We appeal to all market participants who feel they have sufficient property-market knowledge to become a panellist, to please contact Lynette or Samantha on tel. 021 946 2480 — it’s for the benefit of everyone in the industry. As a panellist you will also get invaluable exposure.

Enjoy the read!

Kobus Lamprecht Editor

6 April 2021 Advertise in Rode’s Report

IT’S WHERE YOUR MARKET GOES SITE-SEEING

Property is constantly in the limelight and investors are searching for meaningful, property-specific information. This makes a compelling argument for finely-targeted advertising in the Rode’s Report on the SA Property Market. This independent analysis is one of the most widely-read publications of its kind.

ADVERTISE YOUR SERVICES AND PRODUCTS TO EXCELLENT EFFECT

• Target audience: Rode’s Report is targeted at independent analysis of the property market targeted at property practitioners, e.g. property developers, property managers, landlords, merchant and commercial banks, non-residential property brokers, estate agents, valuers, quantity surveyors etc. • Continued exposure: A quarterly publication, Rode’s Report is used as a reference source with a long shelf life. • Rates: If you advertise for four consecutive quarters, you will receive a 20% discount off standard advertising rates. Normal rates appear on our rates card.

• Advertise on Rode’s website: For an extension of your marketing, also consider an advertisement on the Rode website.

BOOKINGS AND MORE INFORMATION

Cellphone: 082 323 5799 Landline: 021 946 2480 E-mail: [email protected] Website: www.rode.co.za Rode’s Report 2021:1 1 State of the Property Market

Chapter 1: State of the property market State of the property market in quarter 1 of 2021

The listed property market continued its decreased by 5% in the first quarter of 2021 end-of-year recovery in the first quarter of compared to the first quarter of 2020, 2021 as shown by the improvement in thereby declining for the third consecutive the share prices of JSE-listed companies, quarter. Grade‐A nominal rentals decreased albeit from a low base. Fundamentally, by 8% in Cape Town and 7% in industrial property is still in the best position − the worst declines of the major cities. compared to the other non-residential Rentals edged lower in Pretoria. This implies property types, which suffer from a large that no major city managed to record above‐ supply overhang. The office market remains inflation rental growth. the riskiest. The next few years will likely continue to see A summary of the main findings by property low construction of new offices and a sharp type follows. rise in the conversion of older office space, where financially feasible. This implies that Quantitative overview of the property green shoots are likely to emerge from a market supply perspective in a few years’ time, but strong growth in demand will also be needed Table 1.1 on the next page provides a for the sector to regenerate. snapshot of how the property market has performed over the past four quarters by Industrial market comparing the latest information (quarter 2021:1) with data collected a year earlier. The industrial market is the cream of the crop due to its few speculative Office market developments, low vacancies and recovering rental growth. In the first quarter of 2021 It is hard to be a plant in an office these days, nominal rentals for prime space of 500 m² plagued by a pest called Covid‐19. At least on a national level grew by 1% year on year. the plant’s roots are not dead, but it needs its This is better than the 0,5% growth achieved caretakers back in the office to apply much‐ in 2020, but still well below the 5% rental needed water and fertilizer. growth of 2019. The slow rental growth Rode’s office market survey for the first shows that the industrial market is also quarter of 2021 indicates that the worst fears feeling the effect of the weak economy, have come true for landlords, with market although accompanied by less pain than the rentals dropping further due to a swelling office and retail property markets. oversupply as many workers continue to work away from the office. Nationally, Nominal rentals for prime industrial space of rentals for decentralized grade‐A space 500 m² grew by 3% and 2% in Durban and Rode’s Report 2021:1 2 State of the Property Market

Central respectively, while been declining in real terms (after deducting growing by 1% in the East Rand. The demand consumer inflation) since 2016. for industrial property is slowly recovering However, there are early signs that in Cape Town, but rentals remain about the market is starting to cool, with prices 1% lower than in the first quarter of essentially trending sideways since 2020. December on a month‐on‐month basis. This could be because the interest rate impact is Interestingly, several of Rode’s survey starting to fade, while unemployment and respondents noted a strong demand for salary cuts start to play more of a role in smaller properties as companies scale curbing demand growth. After all, we know down, which is indicative of still difficult from rigorous research that the growth in operating conditions. Indeed, manufacturing house prices is positively correlated with the production and retail sales in January 2021 economy. This brings us to the crucial were still lower compared to January 2020, question: when will short‐term interest rates be normalized again? A bloodbath is awaiting which means the recovery from last year’s us somewhere in the future. lows still has a long way to go. As for the flats market, the news is that Residential market flat vacancies may have peaked, as the latest Rode data indicates an improvement in House prices in South Africa remain buoyant, vacancy rates to 12% in the first quarter of with nominal price growth reaching about 4% 2021 from a high of 12,9% in the fourth in February 2021 compared to February 2020 quarter of 2020. However, vacancy rates are due to the interest rate bonanza. This implies still well above the 9,2% average of 2020. that so far in 2021 house prices have High vacancy rates have put enormous surprisingly outpaced consumer inflation, pressure on rentals, which should continue in which averaged 3% in the first two months. the short term as tenants remain under This is very encouraging as house prices have significant financial pressure.  Rode’s Report 2021:1 3 State of the Property Market

Table 1.1 Rental performance as at quarter 2021:1 % change from four quarters ago (on smoothed data) Nominal Real* A‐grade decentralized office rentals CBD ‐6,2 ‐5,9 Rosebank ‐2,7 ‐2,4 Ferndale ‐8,2 ‐7,9 Brooklyn/ ‐5,0 ‐4,7 Menlyn 1,0 1,3 La Lucia/Umhlanga Ridge ‐0,6 ‐0,3 Westville 0,5 0,8 Claremont Upper ‐2,0 ‐1,7 Century City ‐9,1 ‐8,8 Prime industrial rentals (500‐m² units) Central Witwatersrand 1,6 1,8 East Rand 1,3 1,6 Durban 3,2 3,5 ‐0,8 ‐0,5 *Nominal values deflated by BER Building Cost Index (2016 = 100) Rode’s Report 2021:1 4 Standard capitalization rates

Chapter 2: Capitalization rates Capitalization rates of industrial and retail property improve

Kobus Lamprecht

Capitalization rates of directly held, industrial Nationally, the capitalization rates were 10,6% and retail property both decreased for grade‐A multi‐tenanted decentralized (improved) compared to the end of 2020, office properties, 9,8% for prime industrial which indicates that the worst is over for leasebacks and 8,9% for regional shopping these sectors. The same cannot be said about centres respectively (see the chart). Looking at the office sector, which remains the riskiest the bigger picture, the cap‐rates are still above property type, given its high cap rates. This pre‐pandemic levels for all non‐residential reflects the severe oversupply of offices and property types. concerns over the long-term impact of the work-from-home trend. Below, we first briefly discuss the outlook for capitalization rates, followed The industrial market is fundamentally in the by the movement in capitalization rates best position due to its low vacancies and for the different non-residential property recovering rental growth. The slightly lower types. retail cap rate means brokers are starting to turn more positive on the retail sector, perhaps due to a less‐restrictive trading environment Cap rate outlook after the end of the second wave. This could change if there were a third or even fourth Interest rates in general can affect the wave. income yields investors expect on property in three ways, viz. (1) the substitution A positive factor that could have put principle (alternative, long‐term investments downward pressure on cap rates is lower like 10‐year bonds experience a change in long‐term local bond yields as our survey was yields), (2) changes in the cost of financial completed in February. However, bonds yield gearing (shorter‐term interest rates), and (3) lifted again in March as discussed below. changes in the market’s rating of listed National capitalization rates by property type property funds like REITs. These factors can all 14 affect the profitability of purchasing directly‐ 13 Regional shopping centres held properties, but the market’s rating of Industrial leasebacks 12 Decentralized offices REITs (as argued above) is especially important 11 as REITs are big buyers of institution‐quality % 10 directly‐held properties, and a poor rating of

9 REITs (high forward yields) means these funds Smoothed 8 want to pay less for the same expected cash

7 stream (thereby raising capitalization rates of 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source of data: Rode's Time Series directly‐held properties). Rode’s Report 2021:1 5 Standard capitalization rates

The outlook for the growth in income streams prospects. Another contributor to lower yields from directly‐held non‐residential property was the fact that the domestic fiscal situation continues to be marred by poor property did not worsen as much as feared due to fundamentals, such as above‐average vacancy higher‐than‐expected revenue, notably from rates and, therefore, weak rentals. This should mining through a boom in commodity prices, generally impact capitalization rates negatively such as precious metals and iron ore. This in the next year or two, meaning cap rates will lower movement in bond yields put downward tend to rise, holding all other factors constant. pressure on cap rates.

As explained above, another predictor of However, bond yields moved sharply higher capitalization rates is long‐bond yields. SA’s again in March, following rising US long bond long‐term bond yield (10 years and more) rose yields, as some investors fear that inflation sharply to 11,3% in April 2020 at the start of might rear its head in the USA. In other the Covid‐19 pandemic, as shown in the chart. words, investors require a higher return to Yields have moved lower since that shock, compensate them for higher expected with consistent decreases between November inflation. If the trend is sustained, rising bond and February 2021 as investors became more yields could pile more pressure on cap rates confident about global economic growth later this year.

Source: IHS Markit Rode’s Report 2021:1 6 Standard capitalization rates

Office capitalization rates cap rates in Sandton and Rosebank did not worsen further in the first quarter of 2021 but South Africa were still well above pre‐pandemic levels.

Office capitalization rates of grade‐A Capitalization rates Johannesburg decentralized grade-A offices 15 multi‐tenanted properties in South Africa Smoothed decentralized averaged 10,6% in the first 14 Bryanston quarter of 2021, unchanged from the fourth Sunninghill quarter of 2020. This means cap rates are 13 Randburg

12 stabilizing at higher levels after averaging %

9,9% in 2019 and 10,4% in 2020. Below we 11 delve into the regional cap rate trends. 10

Johannesburg 9 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Office capitalization rates of grade‐A Source of data: Rode's Time Series multi‐tenanted properties in Johannesburg decentralized edged up to about 10,7% in In the first quarter, capitalization rates the first quarter of 2021. This is about on grade‐A multi‐tenanted properties in 1 percentage point (or 100 basis points) Johannesburg decentralized ranged from higher than in Cape Town, where cap rates 9,6% in Sandton to as high as 12% in are the lowest. Randburg/Ferndale. The cap rates of most nodes had not changed much from the high The two accompanying graphs show which fourth‐quarter levels, as shown in the two decentralized nodes in Johannesburg are charts. Nodes where cap rates continue not investors’ favourites (the nodes with to move higher include Sunninghill and the highest capitalization rate). They Randburg/Ferndale. are Randburg, Sunninghill, and . Of course, there are others, but The differences in capitalization rates can be these are the ones that stand out on the two used as a guide to the market’s perception of graphs. these nodes. The higher the capitalization rate, the worse the expected growth in Capitalization rates income streams and/or the higher the Johannesburg decentralized grade-A offices 15 Smoothed perceived risk of the node (or individual 14 property).

13 Thus, risk and expected growth in rentals are 12

% intimately linked. We also see this link in the 11 way rating agencies like Standard & Poor’s 10 evaluate the creditworthiness of countries Sandton CBD 9 Parktown (high economic growth reduces risk of default Rosebank Midrand 8 even when the debt‐to‐GDP ratio is high). 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source of data: Rode's Time Series Pretoria The accompanying graph confirms – if confirmation was needed – that the top office Our respondents believe investors currently nodes in Johannesburg are Sandton CBD and require a minimum net income return of Rosebank, but not shown in the graph is that 10,5% to induce them to buy or sell prime the third top node is Waterfall. Interestingly, multi‐tenanted office properties in Pretoria Rode’s Report 2021:1 7 Standard capitalization rates decentralized.1 This is unchanged from the from the high levels reached towards the end fourth quarter of 2020. On a nodal level, of last year. cap rates are the lowest in Brooklyn and Menlyn/Lynnwood. However, on the other Cape Town side of the spectrum is Hatfield, which has the highest cap rate, in line with its high vacancy Grade‐A capitalization rates in Cape Town rate. decentralized averaged 9,8% in the first quarter of 2021 – in line with fourth‐quarter Capitalization rates Pretoria decentralized grade-A offices 2020 levels. This sideways move is surprising 15 Smoothed given the weakening trend in rentals and 14 Brooklyn Hatfield rising vacancy rates (see Chapter 5 and 6). 13 Centurion Midrand However, looking at the bigger picture, cap 12 rates are still well above 2019 levels of about % 11 9%, which corresponds with the weaker

10 fundamentals.

9 Capitalization rates Cape Town decentralized grade-A offices 8 14 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Smoothed

Source of data: Rode's Time Series 13

Durban 12

11 % The average capitalization rate for 10 grade‐A Durban decentralized office property Claremont 9 Tyger Valley decreased to 11,6% from 11,7% at the Century City Westlake end of 2020. Despite the slight improvement, 8 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 cap rates remained the highest of the major Source of data: Rode's Time Series cities after rising sharply last year, as shown in the chart. Industrial capitalization rates

Capitalization rates Durban decentralized grade-A offices 15 In the first quarter of 2021, capitalization Smoothed La Lucia/Umhlanga Ridge 14 Westway rates on industrial leasebacks in the country’s Esse x Te rrace 13 Berea major industrial areas were slightly lower compared to the fourth quarter of 2020, 12

% which is in line with the better fundamentals 11 of the sector, such as slightly increasing rental 10 growth amid low vacancies (see Chapter 7).

9

8 Our respondents believe investors in 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source of data: Rode's Time Series prime industrial property (with a leaseback covenant) required a minimum net income The top node of La Lucia/Umhlanga stands yield of 9,8% in the country’s top cities and out with the lowest cap rate, which is slightly nodes. In today’s market, this is not a bad worse compared to the fourth quarter. Cap return, provided the tenant is of a AAA rates in Berea and Westway declined slightly quality, considering that government bond

1 Note that we report on standard capitalization rates. These assume the property is let at market-related rentals as distinct from escalated contractual rentals, which may be far higher than market levels. See the Glossary (Annexure 1). Rode’s Report 2021:1 8 Standard capitalization rates yields (10 years and over) stood at about Rode’s survey results show that capitalization 10% on average in March 2021. rates of regional shopping centres in the first quarter of 2021 edged lower compared Regionally, cap rates in Central to the fourth quarter, after weakening Witwatersrand, Durban and Pretoria substantially in 2020 due to the negative averaged between 9,4% and 10%, all slightly impact of virus‐related trading restrictions. better than at the end of 2020. Cap rates This means brokers are starting to turn more remained the lowest in Cape Town at 9,1%. positive on the retail sector. Durban saw the biggest improvement in cap rates over the quarter, which corresponds We found that, nationally, the cap with its superior rental growth as discussed in rates for the smaller community and Chapter 7. neighbourhood centres averaged 9,8% and 10,1% respectively, both lower compared Capitalization rates to the fourth quarter of 2020. The smaller Prime industrial leasebacks centres are generally perceived as less risky 13 as consumers generally try to shun larger Cape Town 12 Durban centres with crowds due to the risk of Pretoria Central Witwatersrand contracting Covid‐19. This trend may change 11

% again as Covid‐19 dissipates over the medium

10 term.

9 Rode’s discussion on the performance of

8 retail sales and trading densities, as well as 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source of data: Rode's Time Series vacancy rates by shopping centre size, is provided in our sister publication Rode’s Retail Report. Shopping centre capitalization rates Leaseback escalation rates The chart shows the capitalization rate trend of regional shopping centres in the Table 2.1 shows that the average leaseback major conurbations. Regional centres are the escalation rate (on new or renegotiated second‐largest type of shopping centre and leases) was 7,3% in the first quarter of 2021. have 50 000 to 100 000 m² rentable space The standard deviation of 0,6 percentage (see Annexure 1 for shopping centre points suggests escalation rates vary between definitions). 6,7% and 7,9% (let’s make that 7%−8%). The escalation rate is lower than the 7,6% average Capitalization rates of 2020, which is an indication that the Regional shopping centres 13 market expects lower market rental growth

12 over the lease period. There is anecdotal

11 evidence that some leases are now signed

10 with escalation rates as low as 5%. % 9 The escalation rate is an (often unsuccessful) 8 attempt by the market to forecast the Pretoria 7 Cape Town Central Witwatersrand average growth in market rentals until the Durban 6 expiry of the lease. Note that we define a 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source of data: Rode's Time Series leaseback as a lease agreement with a prime Rode’s Report 2021:1 9 Standard capitalization rates tenant and which has, inter alia, a term at the (high) building costs and land value at the inception of 10 years or longer. These leases time of negotiating the lease – and which is are typically triple net (NNN), which means only by chance equal to the ruling market the tenant pays for all operating costs, rents at the inception of the lease. This is including maintenance on the inside. especially true in the current market, where new developments based on market‐rental The initial rental on a new custom‐built rates are hardly viable. property with a long lease and a single tenant should never be accepted as reliable market This concludes our analysis of capitalization evidence. This is so because the developer and escalation rates. The capitalization rate would insist on an initial net yield that reflects tables follow.

Table 2.1 Prime industrial leaseback escalation rates Quarter 2021:1 Change Mean SD N Panellist codes 2021:1 less 2020:4 7,3 0,6 24 ‐0,0% ARN,BR,BVF,COE,DOR,EK,EQV,GRV,MAF,MAS, ME,MPV,MUL,PC,PF,PJ,PPR,PVN,REA,REW,RK, SH,SHP,SUM,TE,TG,TH,WHF Interpretation tip: It is dangerous to rely on one quarter’s figure, as it may be an outlier owing to small sample sizes. Instead, consider the trend or contemplate using the average of at least two quarters for a more accurate assessment. For this reason, the graphs accompanying this article are smoothed.

A standard capitalization rate (colloquially referred to as a cap rate) is the expected net operating income for year 1, assuming the entire building is let atmarket open‐rentals, divided by the purchase price. This calculation ignores VAT, transfer duty and income tax, and assumes a cash transaction (not paper). All references inRode’s Report to “cap rates” and “capitalization rates” mean “standard capitalization rates”.

Capitalization rates for CBDs (excluding the Cape Town CBD) are of little use because when office properties are sold, they are invariably converted to flats.

The high standard deviation from the mean capitalization rate for office and industrial properties in some nodes, as reported in the accompanying capitalization rate tables, is indicative of the uncertainty prevailing in these nodes or areas. With few sales taking place, the evidence on ruling capitalization rates is thin and opinions vary more than in the more popular areas. This means the income‐producing property market has become even more inefficient in these nodes, which makes the valuation of these properties a rather hazardous exercise.

We are indebted to our expert capitalization rate panel, comprising major owners and leading brokers who know their market segments intimately. This survey would not be possible without their invaluable contributions. Codes of those panellists who supplied information for this quarter's survey appear in the tables on the following pages. An explanation of the contributor codes can be found on p. xii. Rode’s Report 2021:1 10 Standard capitalization rates

Table 2.2 Survey of capitalization rates (%) Office buildings Means for quarter 2021:1 Grade A: Grade A: Grade B: Grade C: Best location Multi‐tenant Leaseback Multi‐tenant Multi‐tenant Mean SD n Mean SD n Mean SD n Mean SD n Johannesburg CBD 12,2 0,5 6 10,9 0,6 7 12,6 0,4 7 13,7 0,2 5 11,4 0,3 5 10,6 0,4 4 12,3 0,3 5 13,7 0,5 4 Parktown 11,3 0,1 3 10,7 0,4 3 12,3 0,2 3 13,2 0,2 2 Rosebank 10,0 0,7 4 9,2 0,8 4 10,5 0,6 4 11,3 0,9 3 Bedfordview 10,9 0,9 2 10,4 0,4 2 ‐ ‐ ‐ 12,3 ‐ 1 Sandton CBD 9,5 0,6 6 9,1 0,7 6 10,4 0,5 5 11,3 0,8 4 Rivonia 10,6 0,4 3 10,3 0,4 3 11,2 0,9 3 13,1 0,7 2 Bryanston 10,4 0,4 4 10,2 0,4 3 10,8 0,5 4 12,3 0,4 2 Sunninghill 11,4 0,2 2 10,5 0,3 2 12,0 0,1 2 13,1 0,1 2 Randburg Ferndale 12,1 0,6 2 11,3 0,2 2 12,2 0,1 2 13,3 0,3 2 Waterfall 9,9 0,3 2 9,6 0,4 2 ‐ ‐‐ ‐ ‐‐ Midrand 10,6 0,7 5 10,3 0,3 4 11,1 0,6 5 11,5 0,9 4 CBD 14,1 0,6 2 12,1 0,9 2 14,0 0,1 2 14,8 0,4 2 Pretoria CBD 11,8 0,6 2 10,7 0,3 2 12,0 0,7 3 12,8 0,8 2 Hatfield 10,7 0,5 3 10,1 0,5 3 10,8 0,6 4 11,3 0,9 4 Brooklyn 10,3 0,6 4 10,1 0,5 3 10,5 0,4 4 11,1 0,7 4 Centurion 10,4 0,5 6 10,3 0,5 3 11,1 0,8 5 11,6 0,9 5 Nieuw Muckleneuk 10,4 0,6 3 10,0 ‐ 1 10,0 ‐ 1 11,7 0,5 3 Menlyn/Lynnwood 10,0 0,4 5 9,8 0,2 3 10,6 0,7 5 11,4 0,4 3 Vaal Triangle 12,4 0,3 2 11,5 0,5 2 12,9 0,2 2 13,5 0,3 2 Nelspruit 10,5 0,9 7‐‐‐ 10,5 0,8 7 12,0 0,0 6 Polokwane 11,2 0,9 3 10,4 0,4 2 12,2 0,2 2 12,7 0,7 2 Durban CBD 11,3 1,0 3 10,9 0,4 2 11,9 0,6 3 13,7 0,2 2 Berea 11,5 ‐ 1 11,0‐ 1 12,3 ‐ 1 12,7 0,2 2 Essex Terrace ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Westway 11,5 ‐ 1 11,5‐ 1 12,5 ‐ 1 12,5 ‐1 La Lucia Ridge 10,9 0,1 3 10,2 0,4 2 11,5 ‐ 1 12,1 0,1 2 Pietermaritzburg 10,4 0,4 4 10,2 0,3 4 ‐ ‐ ‐ 11,9 0,7 3 Cape Town CBD 9,5 0,5 6 9,2 0,6 6 10,6 1,5 4 10,8 0,6 3 Bellville CBD 10,5 0,1 2 9,7 0,5 2 10,8 ‐ 1 11,6 0,1 2 Bellville Tyger Valley 9,9 0,1 2 9,5 0,2 3 10,0 ‐ 1 11,2 0,3 2 Century City 9,6 0,5 5 9,3 0,2 4 10,2 0,6 3 10,6 0,4 3 Westlake 10,0 0,0 2 9,9 0,1 2 10,5 0,5 2 11,3 ‐1 Claremont 9,9 0,3 3 9,7 0,2 3 10,5 0,5 2 11,3 0,1 2 Port Elizabeth CBD 10,5 0,3 4 10,3 0,4 4 11,4 0,6 4 12,3 0,8 4 Port Elizabeth dec. 10,7 0,1 3 10,3 0,5 3 12,2 0,2 3 13,1 0,1 3 East London CBD 10,0 ‐ 1 10,5 ‐ 1 12,0 ‐ 1 14,0 ‐ 1 East London dec. 11,0 ‐ 1 12,0 ‐ 1 13,0 ‐ 1 15,0 ‐ 1 Bloemfontein CBD 9,7 0,5 4 9,7 0,5 4 10,6 0,8 4 11,4 0,4 4 Bloemfontein dec. 9,6 0,4 4 9,6 0,4 4 11,1 0,5 4 11,4 0,4 4 George Central 9,8 0,4 4 10,1 0,3 3 10,3 0,4 4 10,5 0,4 3 George dec. 10,3 0,8 2 10,0 ‐ 1 10,0 0,0 2 10,3 0,3 2 Windhoek 9,3 0,3 2 9,1 0,1 2 10,0 0,0 2 10,3 0,3 2 n = Number of respondents ‐ = Not available or fewer than two respondents SD = See Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 11 Standard capitalization rates

Table 2.3 Change in capitalization rates (% points) Office buildings Means for quarter 2021:1 less quarter 2020:4 Grade A: Grade A: Grade B: Grade C: Best location Multi‐ Lease‐ Multi‐ Multi‐ Panellist codes tenant back tenant tenant Johannesburg CBD 0,2 0,0 0,2 0,3 COE,CR,QU,REA,REW,TH,WHF Braamfontein 0,0 ‐0,1 0,1 ‐0,3 CR,QU,REA,REW,TH Parktown 0,1 ‐0,1 0,1 ‐0,6 QU,REW,TH Rosebank 0,0 ‐0,1 0,0 ‐0,4 CR,QU,TH,WHF Bedfordview ‐0,6 ‐0,1 ‐ ‐0,2 TH,WHF Sandton CBD ‐0,1 ‐0,1 0,0 ‐0,2 CR,QU,REW,TH,WHF,WP Rivonia 0,0 0,0‐0,4 0,4 QU,TH,WHF Bryanston 0,0 0,4‐0,1 0,3 CR,QU,TH,WHF Sunninghill 0,2 0,1 0,3 0,3 QU,TH,WHF Randburg Ferndale 0,3 0,4 0,3 0,4 QU,TH,WHF Waterfall 0,0 0,0‐‐ QU,TH Midrand 0,2 0,0‐0,2‐0,3 CR,MAS,QU,TH,WHF Germiston CBD 0,4 0,4 0,2 0,6 QU,TH,WHF Pretoria CBD 0,2 0,2 0,2 0,2 CRI,QU,TH,WHF Hatfield 0,0 0,3 0,0 ‐0,3 CRI,QU,TH,WHF Brooklyn 0,0 0,4 0,0 ‐0,3 CRI,QU,TH,WHF Centurion 0,0 0,0‐0,3‐0, 2 CR,CRI,MAS,QU,TH,WHF Nieuw Muckleneuk 0,0 0,0 0,0 0,2 CRI,QU,TH Menlyn/Lynnwood 0,0 0,3 0,0 0,1 CR,CRI,QU,TH,WHF Vaal Triangle ‐0,1 0,0 0,0 0,0 QU,TH Nelspruit 0,0 ‐ 0,0 0,1 KEL,MPV,ORI,PG,PM,QU,TH Polokwane ‐0,1 ‐0,1‐0,2‐0,1 QU,TG,TH Durban CBD ‐0,2 ‐0,5 0,2 1,0 CR,QU,TH,WHF Berea ‐0,7 ‐0,5 0,2 0,2 QU,TH Essex Terrace ‐ ‐ ‐ ‐ Westway ‐0,3 ‐0,3 0,3 0,3 QU La Lucia Ridge 0,3 0,0 0,3 0,0 QU,TH,ZZ Pietermaritzburg ‐0,2 0,0 ‐ 0,1 DOR,PJ,QU,TH Cape Town CBD 0,0 0,1 0,6 0,2 CR,HP,PF,QU,TH,WHF Bellville CBD 0,1 ‐0,2 0,2 0,4 QU,TH Bellville Tyger Valley 0,3 0,2 0,0 ‐0,2 PF,QU,TH Century City ‐0,1 ‐0,1 0,3 ‐0,1 CR,HP,PF,QU,TH Westlake 0,0 0,1 0,5 0,0 HP,QU Claremont ‐0,1 0,0 0,5 ‐0,1 HP,QU,TH Port Elizabeth CBD ‐0,3 0,3 0,0 0,0 ARN,BR,QU,SUM Port Elizabeth dec. ‐0,4 0,3 0,1 0,4 ARN,QU,SUM East London CBD ‐0,3 ‐0,3 ‐0,3 0,0 QU East London dec. ‐0,3 ‐0,3 ‐0,3 0,0 QU Bloemfontein CBD 0,0 0,0 0,0 0,0 EK,EQV,NR,QU Bloemfontein dec. 0,0 0,0 0,0 0,0 EK,EQV,NR,QU George Central 0,1 0,2 0,0 0,1 BVF,GRV,MUL,QU George dec. 0,5 0,0 0,0 0,3 GRV,MUL Windhoek 0,3 0,1 0,0 0,3 PVN,TE Rode’s Report 2021:1 12 Standard capitalization rates

Table 2.4 Survey of capitalization rates (%) Industrial buildings Means for quarter 2021:1 Prime leaseback Prime quality Secondary quality Prime industrial Best location (AAA Tenant) non‐leaseback building Park Mean SD n Mean SD n Mean SD n Mean SD n Central Wits 9,7 0,4 8 10,0 0,5 7 11,3 0,7 8 10,3 0,4 8 West Rand 9,6 0,4 6 10,4 0,3 6 11,2 0,6 6 10,6 0,4 5 East Rand 9,4 0,4 7 10,2 0,4 7 10,9 0,8 7 10,2 0,3 7 Far East Rand 10,0 0,5 4 10,5 0,4 4 11,6 0,4 3 10,9 0,5 3 Pretoria 9,8 0,3 5 10,0 0,3 5 10,8 0,5 5 10,2 0,2 4 Vaal Triangle 10,6 0,1 2 10,9 0,4 2 11,8 0,3 2 11,0 0,5 2 Nelspruit ‐ ‐ ‐ 10,0 0,2 7 11,6 0,2 7 9,7 0,3 7 Polokwane 10,2 0,5 2 10,5 0,1 2 11,6 0,1 2 10,2 0,2 2 Durban 9,3 0,5 5 9,6 0,4 5 10,8 0,5 5 10,4 0,3 4 Pietermaritzburg 9,7 0,2 5 9,9 0,3 5 10,7 0,4 5 10,3 0,3 4 Cape Town 9,0 0,5 6 9,4 0,5 7 10,0 0,6 6 9,7 0,4 6 Port Elizabeth 9,9 0,3 4 10,2 0,2 5 11,1 0,4 5 10,1 0,3 5 East London 10,3 0,0 2 10,8 0,5 2 11,7 0,6 2 10,7 0,5 2 Bloemfontein 10,7 0,3 4 10,3 0,2 3 11,8 0,4 4 10,7 0,3 4 George 9,8 0,2 4 9,9 0,1 4 10,6 0,4 5 10,2 0,2 5 Windhoek 8,9 0,1 2 9,1 0,1 2 9,4 0,4 2 9,8 0,3 2 n = Number of respondents ‐ = Not available – fewer than two respondents SD = See Glossary of terms and abbreviations in Annexure 1.

Table 2.5 Change in capitalization rates (% points) Industrial buildings Means for quarter 2021:1 less quarter 2020:4 Prime Secondary Prime Prime Best location non‐ quality Industrial Panellist codes leaseback leaseback building park Central Wits ‐0,2 ‐0,1 ‐0,1 0,0 COE,CR,QU,REA,REW,SHP,TH,W West Rand ‐0,1 0,0 0,1 0,0 CR,QU,REW,SHP,TH,WHF East Rand ‐0,2 ‐0,1 0,1 0,0 CR,PPR,QU,REW,SHP,TH,WHF Far East Rand ‐0,4 ‐0,1 0,0 ‐0,3 QU,SHP,TH,WHF Pretoria 0,0 0,0 0,0 0,1 CR,MAS,QU,TH,WHF Vaal Triangle ‐0,1 ‐0,1 ‐0,1 ‐0,1 QU,TH Nelspruit ‐ 0,5 0,1 0,0 KEL,MPV,ORI,PG,PM,QU,TH Polokwane ‐0,1 ‐0,1 ‐0,1 ‐0,1 TG,TH Durban ‐0,4 ‐0,2 0,0 0,0 CR,PC,QU,REA,TH Pietermaritzbur ‐0,2 ‐0,2 ‐0,3 ‐0,2 CR,DOR,PJ,QU,TH Cape Town ‐0,1 ‐0,1 ‐0,1 0,0 CR,HP,NEX,PES,PF,QU,TH,WHF Port Elizabeth 0,0 0,0 0,0 ‐0,2 ARN,BR,QU,SUM,TH East London 0,2 0,1 ‐0,2 0,0 QU,TH Bloemfontein 0,0 0,0 ‐0,1 0,0 EK,EQV,QU,TH George ‐0,1 0,0 ‐0,2‐0,1 BVF,GRV,MUL,QU,TH Windhoek ‐0,1 0,1 0,4 ‐0,3 PVN,TE Rode’s Report 2021:1 13 Standard capitalization rates

Table 2.6 Survey of capitalization rates (%): Shopping centres Means for quarter 2021:1 Super‐regional Regional Small regional Community Best location Mean SD n Mean SD n Mean SD n Mean SD n Witwatersrand 8,6 0,2 3 9,2 0, 3 10,1 0, 3 10,2 0,6 3 Pretoria 8,4 0,3 3 8,7 0, 5 9,2 0, 5 9,5 0,5 5 Vaal Triangle 9,5 ‐ 1 10,2 0, 2 10,5 0, 2 10,8 0,2 2 Nelspruit ‐ ‐ ‐ 8,4 0, 8 8,4 0, 8 8,8 0,6 8 Polokwane 10,0 0,3 2 10,2 0, 2 10,4 0, 2 10,6 0,4 2 Durban 8,7 0,5 3 9,3 0, 3 9,9 0, 3 10,1 0,1 3 Pietermaritzburg 9,2 0,2 4 9,4 0, 4 9,3 0, 4 9,6 0,6 5 Cape Town 8,2 0,7 5 8,3 0, 5 9,1 0, 5 9,3 0,3 5 Port Elizabeth‐ 9,0 0,3 4 9,2 0, 5 9,5 0, 4 9,7 0,5 5 Uitenhage 8 6 East London 9,8 0,0 2 10,0 0, 2 10,4 0, 2 11,0 0,6 2 Bloemfontein 9,2 0,2 3 9,7 0, 4 10,0 0, 3 9,8 0,5 5 Platteland 10,1 0,2 2 10,4 0, 2 10,5 0, 2 10,5 0,1 3 Townships 9,6 0,1 2 10,1 0, 2 10,6 0, 2 10,8 0,0 2 George 9,0 0,4 4 9,1 0, 4 9,7 0, 5 9,9 0,6 5 Windhoek 8,9 0,1 2 9,1 0, 2 9,1 0, 2 9,4 0,4 2 n = Number of respondents ‐ = Not available SD = See Glossary of terms and abbreviations in Annexure 1.

Table 2.6 (continued) Survey of capitalization rates (%): Shopping centres Means for quarter 2021:1 Big box/Retailer Neighbourhood Local convenience Best location warehouse Mean SD n Mean SD n Mean SD n Witwatersrand 10,4 0,9 3 11,6 0,7 3 10,0 0,3 4 Pretoria 9,7 0,5 5 10,5 0,5 5 9,9 0,1 5 Vaal Triangle 11,3 0,5 2 11,5 0,3 3 10,2 0,2 3 Nelspruit 9,4 0,6 8 10,3 0,5 8 9,8 0,4 8 Polokwane 10,9 0,7 3 11,5 0,3 3 10,3 0,2 3 Durban 10,8 0,8 4 11,0 0,6 4 10,4 0,4 4 Pietermaritzburg 10,1 0,6 5 10,5 0,6 5 10,1 0,2 5 Cape Town 9,4 0,4 5 9,9 0,3 6 9,5 0,4 6 Port Elizabeth‐ 10,1 0,6 5 10,4 0,4 5 10,0 0,5 5 Uitenhage East London 10,8 0,4 2 11,3 0,6 3 10,5 0,4 3 Bloemfontein 10,1 0,5 5 10,6 0,7 5 10,4 0,3 5 Platteland 10,7 0,7 4 11,1 1,1 4 10,6 0,1 3 Townships 10,9 0,7 3 11,6 0,4 3 10,9 0,1 3 George 9,9 0,5 6 10,7 0,7 6 10,2 0,6 5 Windhoek 9,4 0,4 2 9,4 0,4 2 9,4 0,4 2 n = Number of respondents ‐ = Not available SD = See Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 14 Standard capitalization rates

Table 2.7 Change in capitalization rates (% points): Shopping centres Means for quarter 2021:1 less quarter 2020:4 Super Small Commu‐ Best location Regional Panellist codes regional regional nity Witwatersrand 0,0 0,0 0,0 0,0 COE,QU,REW,TH Pretoria 0,0 0,0 ‐0,1 0,1 MAS,QU,REW,TH,WHF Vaal Triangle ‐0,3 ‐0,1 0,0 ‐0,1 QU,REW,TH Nelspruit ‐ 0,0 0,1 0,1 K EL,MPV,ORI,PG,PM,QU,REW, TH Polokwane 0,0 ‐0,1 ‐0,1 ‐0,1 QU,REW,TH Durban ‐0,2 0,2 ‐0,2 ‐0,4 QU,REW,TH,WHF Pietermaritzburg 0,0 0,0 ‐0,3 ‐0,2 DOR,PJ,QU,REW,TH Cape Town ‐0,3 ‐0,3 ‐0,3 ‐0,3 MAF,PF,QU,REW,TH,WHF Port Elizabeth‐ 0,2 ‐0,3 ‐0,3 ‐0,2 ARN,QU,REW,SUM,TH Uitenhage East London 0,2 ‐0,1 ‐0,2 ‐0,5 QU,REW,TH Bloemfontein 0,0 0,1 ‐0,1 ‐0,4 EK,EQV,QU,REW,TH Platteland 0,0 ‐0,1 ‐0,1 0,1 BVF,EQV,MAS,QU,TH Townships ‐0,2 0,0 0,1 ‐0,2 QU,REW,TH George ‐0,1 ‐0,2 ‐0,5 ‐0,3 BVF,GRV,MUL,QU,REW,TH Windhoek ‐0,1 0,1 0,1 0,4 PVN,TE

Table 2.7 (continued) Change in capitalization rates (% points): Shopping centres Means for quarter 2021:1 less quarter 2020:4 Big box/ Neighbour‐ Local Best location Retailer Panellist codes hood convenience warehouse Witwatersrand 0,1 0,0 ‐0,1 COE,QU,REW,TH Pretoria 0,0 0,0 0,0 MAS,QU,REW,TH,WHF Vaal Triangle ‐0,1 ‐0,3 0,0 QU,REW,TH Nelspruit 0,1 0,1 0,1 KEL,MPV,ORI,PG,PM,QU, REW,TH Polokwane ‐0,5 ‐0,3 0,0 QU,REW,TH Durban ‐0,3 ‐0,6 0,2 QU,REW,TH,WHF Pietermaritzburg ‐0,3 ‐0,3 ‐0,1 DOR,PJ,QU,REW,TH Cape Town ‐0,3 ‐0,4 ‐0,3 MAF,PF,QU,REW,TH,WHF Port Elizabeth‐ ‐0,2 ‐0,1 ‐0,3 ARN,QU,REW,SUM,TH Uitenhage East London ‐0,3 ‐0,5 ‐0,2 QU,REW,TH Bloemfontein ‐0,2 ‐0,2 ‐0,2 EK,EQV,QU,REW,TH Platteland 0,3 0,0 ‐0,2 BVF,EQV,MAS,QU,TH Townships ‐0,7 ‐0,4 ‐0,4 QU,REW,TH George ‐0,3 ‐0,2 0,1 BVF,GRV,MUL,QU,REW,TH Windhoek 0,4 0,4 0,4 PVN,TE Rode’s Report 2021:1 15 Standard capitalization rates

Table 2.8 Survey of capitalization rates (%): Street‐front shops Means for quarter 2021:1 Metro CBD Decentralized Best location Mean SD n Mean SD n Johannesburg 11,5 0,4 5 11,4 0,4 5 Pretoria 10,9 0,6 5 10,9 0,5 5 Vaal Triangle 12,3 0,4 3 12,4 0,7 3 Nelspruit 12,0 0,1 8 11,0 0,8 8 Polokwane 11,2 0,9 3 11,3 0,2 3 Durban 11,4 0,4 4 11,3 0,4 4 Pietermaritzburg 11,2 0,6 6 10,6 1,0 5 Cape Town 11,1 0,1 4 10,7 0,6 5 Port Elizabeth 11,4 0,5 6 10,9 0,9 6 East London 11,4 0,1 3 12,2 0,4 3 Bloemfontein 10,9 0,8 5 11,2 0,6 5 George 10,6 1,0 6 11,1 1,0 6 Windhoek 9,3 0,3 2 9,0 0,0 2 n = Number of respondents ‐ = Not available SD = See Glossary of terms and abbreviations in Annexure 1.

Table 2.9 Change in capitalization rates (% points): Street‐front shops Means for quarter 2021:1 less quarter 2020:4 Best location Metro CBD Decentralized Panellist codes Johannesburg 0,0 0,0 COE,QU,REW,TH,WHF Pretoria 0,3 0,1 MAS,QU,REW,TH,WHF Vaal Triangle ‐0,1 0,0 QU,REW,TH Nelspruit 0,0 0,1 KEL,MPV,ORI,PG,PM,QU,REW,TH Polokwane 0,1 0,1 REW,TG,TH Durban 0,1 ‐0,2 QU,REW,TH,WHF Pietermaritzburg 0,1 ‐0,1 DOR,PJ,QU,REW,SHA,TH Cape Town 0,0 0,0 MAF,PF,QU,REW,TH Port Elizabeth ‐0,3 ‐0,1 ARN,BR,QU,REW,SUM,TH East London 0,5 ‐0,4 QU,REW,TH Bloemfontein 0,1 0,2 EK,EQV,QU,REW,TH George ‐0,2 0,1 BVF,GRV,MUL,QU,REW,TH Windhoek 0,3 0,0 PVN,TE Rode’s Report 2021:1 16 Capitalization rate equations

Chapter 3: Capitalization rate equations How to estimate capitalization rates – anywhere

Kobus Lamprecht

This chapter provides the reader with a build a regression model with which to handy, updated tool to estimate the market estimate the capitalization rate. capitalization rates of office and industrial properties anywhere in South Africa, An important risk factor typically not provided the valuer is confident about reflected in a rental is the design of the the subject property’s gross market rental building, as it affects its ability to be re‐let. rate. Here one thinks of purpose‐built buildings.

As the reader will see below, in this Office building equation cross‐sectional study,1 market rental rates are amazingly successful in explaining In our regression analysis of office the level of capitalization rates. On buildings, we use the market capitalization reflection, though, this should not be all rates (dependent variables) and gross that surprising, considering that all the market rental rates (predictors or good and bad news pertaining to a independent variables) of grade A, B and C property is encapsulated in the ruling buildings in the areas surveyed by Rode’s market rental rate. Here we think of rental‐ Report (RR). The source of the national level drivers such as: equation given below is this issue of RR. The regression is based on 51 observations  Location in decentralized nodes.  Typology (offices vs industrial property vs shopping centres, etc.) The updated equation is:  Risk (examples of varying risk profiles office capitalization rate % = 13,636 – are a leaseback compared with a multi‐ (0,023* gross rental) tenanted property; the robustness of the covenant) where:  Grade/age. gross rental = the market gross rental Thus, the moderately strong relationship rate per rentable m2 per month for between market rental rates and grade A, B or C office buildings in quarter capitalization rates allows the researcher to 2021:1.

1 A cross-sectional analysis is a type of observational study that analyses data from a population, or a representative of subset, at a specific point in time. This is in contrast to longitudinal analyses, for instance using historical trends to do forecasts. Rode’s Report 2021:1 17 Capitalization rate equations

The r‐squared = 0,71 (which means the The updated equation is: level of market rentals explains 71% of industrial capitalization rate % = 13,169 the variation in capitalization rates, – (0,0609 * gross rental) without controlling for other predictors). The standard error (SE) is 0,62 and where: n = 51. gross rental = the gross market rental per Readers should note that it is not advisable rentable m2 per month as in quarter 2021:1 to use this function for gross market rental for prime non‐leaseback or secondary rates that fall much outside the range of industrial space of 1 000 m2, located in R65/m²/month to R183/m²/month. primary and secondary industrial cities.

Example: The r‐squared = 0,72 (which means market rental levels explain 72% of the variations If the market gross office rental rate in capitalization rates, without controlling 2 is R150 per rentable m per month, for other predictors). The standard error then the office capitalization rate % (SE) is 0,42 and n = 14. is:

= 13,636 – (0,023 * 150) It is not advisable to use this function for = 10,1%. gross market rental rates that fall much outside the range of /m²/month to R64/m²/month. Also, remember to use the Industrial property equation rental rate applicable to a notional floor area of 1 000 m² (even if the subject This national equation expresses the property’s actual floor area is completely relationship between the capitalization different). rates and gross market rental rates of prime non‐leasebacks and secondary Example: industrial buildings. Please note, the gross market rental rates are those applicable to If the gross industrial rental for a 1 000‐ 1 000‐m2 units. The source of the data is m² building, located in a primary or this issue of Rode’s Report. secondary city, is R50 per rentable m2 per month, then the industrial The industrial regression equation, which is capitalization rate % is: based on 14 observations, includes most major primary and secondary industrial = 13,169 – (0,0609 * 50) cities. = 10,1%. 

Warning: To reduce volatility in the latest survey data, the reader is advised also to consult the regression equation and its applicable rental rate in the previous issue of RR, and to consider using a two‐ quarter average capitalization rate (unsurveyed) if necessary. Rode’s Report 2021:1 18 Capitalization rate equations

Office unsurveyed capitalization rate

14,5 y = -0,023x + 13,636 13,5 r² = 0,7 12,5

11,5

10,5

Capitallization rate rate (%) Capitallization 9,5

8,5 60 90 120 150 180 Gross market rental (R/m2/month)

Industrial unsurveyed capitalization rate

12,0

11,5 y = -0,0609x + 13,169 11,0 r² = 0,7

10,5

10,0

Capitalization rate rate (%) Capitalization 9,5

9,0 25 30 35 40 45 50 55 60 65

Gross market rental (R/m2/month) Rode’s Report 2021:1 19 Listed property

Chapter 4: Listed property Listed property prices continue to recover Kobus Lamprecht

Listed property prices at the end of March The company financial results released in the were 5% higher than at the end of 2020, fourth quarter of 2020 and the first quarter of boosted by prospects of better global 2021 surprised by not being as poor as economic growth and better‐than‐expected expected by the market, but distributions company results. Prices were up 26% were still scarce. Where distributions were compared to the end of March 2020, when paid to shareholders, the payout was much the start of the pandemic in South Africa lower than in the previous comparable caused havoc in equity markets. The recent period. Several companies delayed their gains in the Listed Property Index (SAPY) have decision on whether to distribute money to led to a sharp pullback in yields as shown in shareholders. This is illustrative of a still tough the chart, but yields in February were still operating environment and uncertainty close to 8% (calculated on historical about Covid‐19, especially as the First‐World net income), which is decent compared countries will only reach herd immunity to other asset classes. However, before towards the end of 2021. In Third‐World getting too excited, one must bear in mind countries such as South Africa, herd immunity that the past year’s net income is a poor will probably only be reached in 2022. So, indicator of next year’s income, considering the Covid‐19 effect is far from over, not the growing vacancies. This statement applies to mention South Africa’s other growth especially to office buildings, which are constraints, notably the dire fiscal situation. suffering from a double whammy, namely the work‐from‐home trend and poor GDP Listed property versus other asset classes growth. The total return1 of the SA REITs Index (which

Yearly change in listed property prices vs excludes property developers and non‐SA Yearly change in listed property yields 12 REITs) decreased by 38% in 2020 as prices and

SAPY yield (%-points; y-o-y) hnei yields in Change SAPY price 8 distributions of listed property declined,

4 according to SA REIT Association data.

0 However, for the first two months of 2021 the 80 -4 total return lifted to 6,9%. 40

0 Equities performed the best at the beginning -40 (%; y-o-y) Change in price of 2021 with a total return of 11,4%, boosted -80 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 by global stimulus measures (a polite word for Source of data: JSE

1 Income yield plus capital return Rode’s Report 2021:1 20 Listed property

the Fed’s repeated massive money printing not sustainable and one wonders when the using thin air) and hopes about an economic bubble will burst. In South Africa, bonds and recovery due to the widespread use of cash delivered a derisory total return of 0,8% vaccines. This type of financial engineering by and 0,6% respectively for the first two months the Fed and other central banks is of course of 2021.

Table 4.1 Total returns on listed property funds First two months of 2021 and past 12 months Performance of individual stocks Jan‐Feb 2021 12 months to Feb 2021 Accelerate 22,2% ‐35,3% Arrowhead‐A ‐6,0% 0,5% Arrowhead‐B 17,7% 4,2% Delta 0,0% ‐16,7% Dipula‐A ‐20,5% ‐37,3% Dipula‐B ‐1,9% ‐25,9% Emira 21,6% ‐22,5% Equites 5,4% 16,1% Fairvest ‐1,1% 15,1% Fortress‐A ‐0,1% ‐7,9% Fortress‐B ‐16,3% ‐28,0% Growthpoint 8,8% ‐12,4% Hyprop 10,4% ‐27,0% Indluplace 3,9% 4,3% Investec Property Fund 1,6% ‐12,9% Liberty 2D 12,5% ‐5,2% Octodec 4,1% ‐36,6% Rebosis‐B ‐22,7% ‐45,2% Redefine 24,6% ‐23,6% Resilient 5,4% ‐16,7% SA Corporate 5,8% 1,4% Safari ‐9,5% ‐2,3% Spear ‐8,9% ‐34,9% Stor‐Age ‐2,2% 11,5% Texton 22,9% ‐19,5% Tower ‐10,4% ‐29,3% Vukile ‐5,5% ‐43,4% Source: SA REIT Association; Bridge Fund Managers Rode’s Report 2021:1 21 Listed property

In Table 4.2 we show the change in Its distribution per share fell by only 5% in distributions of various SA listed property the second half of 2020. Fairvest owns companies for the half‐ and full‐year periods shopping centres in low-income areas, which ended December 2020. have proved resilient during the pandemic as consumer spending was supported by Surprisingly, seven out of the eleven assistance in the form of grants and the companies shown in the table rewarded Covid-19 TERS benefit. These shopping shareholders with a dividend. However, centres are also less impacted by online distributions were significantly lower than shopping than urban centres. Fairvest’s loan- in 2019. The lack of distributions can to-value ratio (gearing) was only 32% in the be attributed to companies bolstering their second half of 2020, while its portfolio balance sheets – not to mention preserving vacancy rate declined to only 3,8%. working capital. This is illustrative of a still tough operating environment and In sum, the latest financial results of listed property companies indicate that companies uncertainty about Covid‐19, especially as the are still under significant pressure, although virus will still be around in the short term in some instances not as dire as previously before vaccines are used all over the feared. The outlook for the sector has world. Encouragingly, metrics, such as rent improved compared to 2020 (as was to be collections, recovered to more than 90% in expected), but we are without a doubt not recent months for most companies, while out of the woods yet, due to the weak loan‐to‐value ratios have been brought under economy and as herd immunity against control through asset sales. Covid‐19 will probably only be reached in South Africa in 2022. Besides, property The company that performed the best in the fundamentals, such as vacancy rates and latest reporting period was Fairvest. rentals, are still under huge pressure. 

Table 4.2 Change in distributions for half‐ and full‐year periods ended December 2019/20 Distribution change Distribution change Company Period 2019 2020 Attacq 11,1% ‐* Half‐year Emira 1,7% ‐29,8% Half‐year Fairvest 5,1% ‐5,1% Half‐year Fortress‐A 3,9% ‐* Half‐year Fortress‐B ‐3,4% ‐* Half‐year Growthpoint 0,2% ‐44,8% Half‐year Hyprop ‐19,9% ‐** Half‐year L2D 0,7% ‐46,5% Full year Nepi Rockcastle 6,6% ‐38,2% Half year Resilient 1,6% ‐24,4% Half‐year SACorp ‐9,9% ‐52,9% Full year Texton ‐ ‐** Half‐year * No distribution. ** Deferred decision on whether distribution will be paid. Source: Financial results of the various listed property funds Rode’s Report 2021:1 22 Office rentals

Chapter 5: Office rentals The wilting office market

Kobus Lamprecht

It is hard to be a plant in an office these days, significant change from the pandemic‐ and plagued by a pest called Covid‐19. At least the lockdown‐driven level of 38%, but it shows plant’s roots are not dead, but it needs a lot that the trend is here to stay. It will not make of water and fertilizer and its caretakers back sense for many companies to go back to in the office when the pest is completely traditional ways and fully work from the under control. Yes, it needs time to recover. office.

Rode’s office market survey for the first The next few years will likely see continued quarter of 2021 indicates that the worst fears very low construction of new offices and a have come true for landlords, with rentals sharp rise in the conversion of older office dropping further due to a swelling space, where financially feasible. This implies oversupply. The large and growing amount of that green shoots are likely to emerge from a available space is giving tenants the upper supply perspective in a few years’ time, but hand in lease negotiations, leading to benefits strong demand will also be needed for the such as tenant installation allowances, cash sector to turn over a new leaf. payments, longer rent‐free periods, and much lower rentals. Below we provide an update on the recent South African rental trends. Note that all Nationally, rentals for decentralized grade‐A changes in rentals are calculated using a two‐ space decreased by 5% year on year in the quarter weighted moving average (that is, we first quarter of 2021, declining for the third smoothed the data). consecutive quarter. Of course, declining market rentals as opposed to escalating National rentals contractual rentals help tenants only at the time of reverting to market rentals – unless As noted above, nationally, nominal market the tenant can negotiate a rental remission rentals for grade‐A office space in before the renewal date. We have also noted decentralized nodes (outside the CBDs) that rental escalation rates on new leases decreased by 5% in the first quarter of 2021 continue to move lower, while parking rentals compared to a year ago, according to Rode’s are also declining in some nodes due to the office market survey. In real terms, rentals lack of demand. also fell by 5% as building‐cost inflation (BER BCI) remained stable. In this environment, landlords need to evaluate the role of the office as some Rentals in the major decentralized nodes tenants will be lost forever due to the trend to work from home, or anywhere. South In the first quarter of 2021, grade‐A nominal African businesses predict that in 2023 a third rentals decreased by 8% in Cape Town and 7% of their staff (33%) will still be working from in Johannesburg compared to the first home, according to a survey conducted in quarter of 2020 ̶ the worst declines of the September and October 2020 by Willis major cities. Rentals edged lower in Pretoria. Towers Watson, a leading global advisory, This implies that no major city managed to broking and solutions company. This is not a record above‐inflation rental growth. Rode’s Report 2021:1 23 Office rentals

Nominal decentralized grade-A office rentals 160 Note that when we use building costs as a Smoothed 140 deflator, we look at the movement of rentals 120 over time from a developer’s point of view.

100

Real Johannesburg decentralized 80 grade-A office rentals 320 R/m² Smoothed Parktown (log scale) 280 Rosebank 60 Pretoria Rivonia 240 Johannesburg Sandton CBD Durban 200 Cape Town 40 00 02 04 06 08 10 12 14 16 18 20 160

Source of data: Rode's Time Series R/m² (log scale) 120 It was a bloodbath in Johannesburg, with decentralized grade‐A rentals falling by 7% 80 00 02 04 06 08 10 12 14 16 18 20 year on year as mentioned above, after Sourceofdata: Rode's Time Series declining by 5% in the previous quarter due to high and rising vacancies. The decentralized Declining real rentals indicate that new vacancy rate for grades A and B office space developments are becoming less viable, combined rose to 14,8% in the fourth quarter, holding all other factors constant. Reflecting pushing the average for 2020 to 13,9%, up this reality, new developments and building significantly from the 12% average for the plans in the pipeline have declined sharply full 2019, based on Rode’s calculations of on a national level (see Chapter 11 for more SAPOA data. Office sector vacancy rates are information regarding building activity). discussed in Chapter 6.

Nominal Johannesburg decentralized grade-A office rentals 200 The nominal rentals of all major nodes were Smoothed lower compared to a year ago, as shown in 160 the charts. 120

80

Rentals dropped by 13% in Rivonia, a node R/m² where roughly a fifth of rentable grade A and scale)(log Randburg Ferndale B office space was vacant at the end of 2020. Bryanston Illovo In other nodes, rentals fell mostly by between 40 Sandton CBD 5% and 10%, such as Randburg/Ferndale 00 02 04 06 08 10 12 14 16 18 20 (‐8%), Sandton (‐6%), Illovo (‐6%), Bryanston Sourceofdata: Rode's Time Series (‐6%) and Parktown (‐5%). Rentals in Real Johannesburg decentralized grade-A office rentals 350 Rosebank held up well, declining by “only” Smoothed Randburg Ferndale 300 Bryanston 3%. 250 Illovo Sandton CBD 200 Nominal Johannesburg decentralized grade-A office rentals 150 200 Smoothed

160 R/m²

(log scale) (log 100

120

50

R/m² 80 00 02 04 06 08 10 12 14 16 18 20 (log scale) Parktown Sourceofdata: Rode's Time Series Rosebank Rivonia Sandton CBD 40 In Pretoria decentralized, nominal rentals fell 00 02 04 06 08 10 12 14 16 18 20

Source of data: Rode's Time Series by only 1% in the first quarter of 2021 Rode’s Report 2021:1 24 Office rentals compared to a year ago. However, this grade‐A rentals fell by 1% compared to the was the fifth consecutive quarterly decline. first quarter of 2020. This is quite a resilient This implies that rentals continued to decline performance compared to the large declines in real terms after adjusting for building‐cost seen in other major SA nodes. Its grade‐A inflation. Nominal rentals fell sharply vacancy rate was only 6% at the end of 2020, in Brooklyn/Waterkloof in line with rising which perhaps tells the story. vacancies, while edging lower in other nodes, such as Hatfield. Nominal Durban decentralized grade-A office rentals 160 Smoothed 140 Nominal Pretoria decentralized 120 grade-A office rentals 200 Smoothed 100 160

80

120 R/m² (log scale) 60

Berea

R/m² 80 La Lucia Ridge

(log scale) Westville Centurion 40 Brooklyn/Waterkloof 00 02 04 06 08 10 12 14 16 18 20 Hatfield Menlyn Sourceofdata: Rode's Time Series

40 00 02 04 06 08 10 12 14 16 18 20 Real Durban decentralized Source of data: Rode's Time Series grade-A office rentals 240 Smoothed

Real Pretoria decentralized 200 grade-A office rentals 220 Smoothed 160 200

180 R/m²

(log scale) 120 160

Berea La Lucia Ridge

R/m² 140 Westville (log scale) (log

80 120 Centurion 00 02 04 06 08 10 12 14 16 18 20 Brooklyn/Waterkloof Hatfield Sourceof data: Rode's Time Series Menlyn 100 00 02 04 06 08 10 12 14 16 18 20 Nominal Cape Town decentralized Source of data: Rode's Time Series grade-A office rentals 180 Smoothed 160

140

Durban decentralized grade‐A rentals appear 120 to have recovered somewhat in the first 100 quarter of 2021 after falling in the second half 80 R/m² of 2020, but we wait for more data to (log scale) determine clear trends, as our sample size is 60 Tyger Valley much smaller for Durban compared to the Claremont Century City 40 other major cities. The largest node by far in 00 02 04 06 08 10 12 14 16 18 20 Durban is La Lucia Ridge/Umhlanga, where Sourceofdata: Rode's Time Series

How to interpret a log vertical scale (y axis) on a graph

Most of the graphs in Rode’s Report show the natural logs of the data on the y axis. When two lines on a vertical log scale run parallel, it means the two (rental) series are growing or declining at the same rate. A log scale is especially important to judge relative growth rates when the lines are far apart. (The horizontal axis is called the x axis.) Rode’s Report 2021:1 25 Office rentals

Real Cape Town decentralized grade-A office rentals eventual market rental growth should the 300 Smoothed deus ex machina come down from the skies 250 and generate sustainable growth in the SA economy. 200

R/m² Pioneer rental levels often represent

(log scale) 150 leases signed on newly erected on‐demand

Tyger Valley buildings like leaseback developments, and Claremont Century City 100 these rentals inevitably reflect today’s 00 02 04 06 08 10 12 14 16 18 20 building costs as developers naturally expect Source of data: Rode's Time Series a fair initial yield on their development costs. Typically, the lease is signed before building In the first quarter of 2021, Cape Town construction starts. decentralized office rentals decreased by 8% year on year in nominal terms, following Thus, when the economy eventually climbs their 6% decline in the fourth quarter of 2020. out of its current lethargy, market rentals will This implies that rentals fell sharply in real shoot up to levels closer to these pioneer terms. The declines were evident in most rentals. nodes, with large declines seen in Tyger Valley and Century City, as shown in the chart. Note in Table 5.3 that the standard deviations The Mother City’s decentralized vacancy rate are higher than under normal market for all grades except grade C weakened conditions. We ascribe this to the extreme substantially in 2020, ending the year at 9,5% market uncertainty about what the market from about 5% at the end of 2019. rental average should be in a node. We expect Pioneer rentals standard deviations to become smaller as it becomes clear where rentals will settle as Table 5.1 shows the difference between uncertainty subsides. pioneer rentals and grade-A market rentals as in the first quarter of 2021. This the reader This concludes our section on office rentals. can use as a rough indication of prospects for The office rental tables follow. 

Recap: nominal versus real rentals

The term “nominal” refers to money rentals, whereas the term “real” refers to nominal less inflation.

Rode mostly deflates nominal rentals using the Bureau for Economic Research’s Building Cost Index (BER BCI) to arrive at real rentals. The rationale for using building costs as deflator is the substitution principle and because building costs can serve as a proxy for replacement costs. To illustrate, why would you buy a property at R110 when you could have it built (replaced) for R100? When rentals are low relative to replacement costs, the upside potential for rentals is great and vice versa. Thus high real rentals (relative to previous periods) may be an indication of a market that is vulnerable to a downswing, and low real rentals indicate great upside potential. Rode’s Report 2021:1 26 Office rentals

Our sincere thanks to our expert panellists for the information they supplied. Codes of the brokers and landlords who contributed to this quarter's survey appear in the table on p. 27. An explanation of the codes can be found on p. xii.

Table 5.1 Pioneer office rentals Highest gross nominal market rental rate achieved Quarter 2021:1 Rands per rentable m², gross leases (excl. VAT) Normal Inferred Pioneer grade A mean growth potential Johannesburg dec. 250 142 76% Pretoria dec. 185 147 26% Durban dec. 175 145 21% Cape Town dec 255 139 84% Rode’s Report 2021:1 27 Office rentals

Table 5.2 Market rental rates for office buildings Quarter 2021:1 Rands per rentable m² per month, gross leases (excl. VAT) Grade Grade Grade Grade A+ A B C Panellist codes mean mean mean mean Johannesburg CBD ‐ 93,00 80,83 53,33 BR,CBR,COE,CR,GB,JLL,REA Braamfontein ‐ 107,50 95,80 70,00 AP,BR,CBR,CR,GB,JLL Sandton CBD 215,22 167,41 122,48 97,50 AP,AV,BR,CBR,COE,CR,GB,JHI,JLL, LIB,MR,REA,SHP,SWI,WHF,WP 152,00 141,25 110,94 92,00 AV,BR,CBR,CR,JLL,MR,SHP,SWI,WHF 155,00 140,42 115,00 94,17 AP,BR,CBR,COE,CR,GB,JLL,SHP,SWI, WHF Randburg Ferndale 102,40 88,00 71,00 53,10 BR,CBR,GB,JLL,NH,PRS,WHF Rivonia 112,14 105,00 86,25 73,56 AP,AV,BR,CBR,COE,CR,GB,JLL,MR, SHP,WHF Rosebank 233,86 182,50 131,50 99,17 AV,BR,CBR,CR,GB,JHI,JLL,MR,SHP, SWI,WHF Illovo 206,82 156,50 121,39 100,00 AV,BR,CBR,CR,GB,JHI,JLL,MR,SHP, SWI,WHF Illovo Boulevard 199,29 155,63 121,00 110,00 AV,BR,CBR,CR,GB,JLL,MR,SWI,WHF 165,00 150,00 124,00 95,00 AP,BR,CBR,JLL,SWI,WHF Parktown 147,00 125,71 102,14 78,33 AV,BR,CBR,CR,JHI,JLL,MR,WHF Richmond/ ‐ 102,50 83,33 73,25 AV,BR,CBR,GB Bedfordview 138,00 123,93 102,81 82,86 AP,BCR,BR,CBR,CR,JHI,JLL,SS,WHF Bruma 123,33 97,00 83,67 77,00 AP,BR,CBR,CR,JLL,SS,WHF 140,00 129,44 106,11 80,94 AP,AV,BR,CBR,CR,GB,JLL,SHP,WHF, WP Sunninghill 103,57 96,88 81,75 70,06 AP,AV,BR,CBR,CR,GB,JLL,MR,REA, SHP,WHF Bryanston/Epsom 177,92 146,67 114,58 89,29 AP,AV,BR,CBR,CR,GB,JHI,JLL,MR, Downs SHP,SWI,WHF,WP 159,44 139,55 105,00 85,29 AP,AV,BR,CBR,CR,GB,GPI,JHI,JLL, REA,SHP,WHF Houghton 169,17 144,29 108,33 101,67 AP,AV,BR,CBR,CR,JLL,MR,WHF Melrose Arch 221,43 191,25 146,00 120,00 AP,AV,BR,CBR,CR,GB,JLL,MR,SWI, WHF Hyde Park 157,50 148,33 120,94 100,00 AP,AV,BR,CBR,CR,JHI,JLL,MR,WHF Eastgate/Kramerville 146,25 127,50 105,00 78,00 AP,CBR,CR,GB,JLL,WHF Ormonde 90,00 ‐ 77,50 55,00 BR,CBR,JLL Midrand 160,33 119,50 92,00 68,11 AP,BR,CBR,CR,GB,JHI,JLL,REA,RK, WHF,WP Hendrik Potgieter 150,00 118,33 95,00 80,00 AP,BR,CBR,RA Corridor (incl. Ruimsig) Waterfall 203,63 175,60 ‐ ‐ AP,BR,CBR,CR,GB,JLL,RK,WP Waverley/Bramley 154,17 142,00 113,50 95,00 AP,AV,BR,CBR,CR,JLL,MR 125,00 ‐ 103,50 87,50 CBR,GB,JLL Morningside 136,67 119,50 104,00 89,17 AP,CBR,COE,CR,GB,JLL,MR,REA,SWI Greenstone 137,50 130,00 120,00 82,50 AP,CBR,GB,JLL,SS For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 28 Office rentals

Table 5.2 (continued) Market rental rates for office buildings Quarter 2021:1 Rands per rentable m² per month, gross leases (excl. VAT) Grade Grade Grade Grade A+ A B C Panellist codes mean mean mean mean East Rand Germiston ‐ ‐‐‐ Benoni CBD ‐ ‐ 50,00 45,00 SS Benoni dec. ‐ ‐ 85,00 75,00 SS Benoni (Lakeside Mall ‐ ‐ ‐ ‐ area) Boksburg CBD ‐ ‐ ‐ ‐ Boksburg North ‐ ‐ ‐ ‐ Springs ‐ ‐‐‐ Pretoria CBD ‐ 97,50 84,00 65,00 AP,CRI 175,00 135,00 103,33 86,25 AP,CRI,GB,WHF Lynnwood 182,50 143,75 106,67 80,80 AP,CRI,GB,HN,WHF 183,75 156,25 110,00 86,67 AP,CRI,GB,HN,WHF 166,67 138,75 103,33 81,67 AP,CRI,GB,WHF 153,33 128,75 110,00 80,00 AP,CRI,GB,WHF Val de Grace ‐ ‐ 112,50 100,00 AP,CRI Menlyn 198,50 173,75 127,50 101,67 AP,CRI,GB,WHF Menlo Park/ Hazelwood 190,00 158,33 130,00 98,33 AP,GB,WHF Brooklyn/Waterkloof 181,25 151,25 126,67 100,00 AP,CRI,GB,WHF Nieuw Muckleneuk 171,67 145,00 127,50 97,50 AP,CRI,GB Hatfield/Hillcrest 178,33 137,50 115,00 80,00 AP,CRI,GB,WHF Centurion 177,00 149,00 122,00 90,00 AP,CRI,GB,MAS,WHF Highveld Technopark 175,00 138,75 113,33 96,67 AP,CRI,GB,WHF Sunnyside ‐ ‐ ‐ 62,50 AP,CRI Arcadia ‐ ‐ 91,67 75,00 ABA,AP,CRI Route 21 Corp. Park 140,00 128,80 118,33 100,00 ABA,AP,CRI,GB,WHF Silver Lakes/ 165,00 144,60 133,00 108,33 AP,CRI,GB,HN,WHF Nelspruit CBD ‐ ‐ 105,00 72,50 KEL,MPV,ORI,PG,PM Nelspruit dec. 175,00 155,00 110,00 85,00 KEL,MPV,ORI,PG,PM Polokwane 166,67 120,93 88,75 73,33 ES,MO,SF,TG Bloemfontein CBD ‐ 112,00 85,00 73,33 BR,EK,EQV Westdene 133,75 116,25 87,40 77,75 BR,EK,EQV,NR,PLA Durban CBD ‐ ‐ 90,00‐ WHF Durban Berea 155,00 125,00 90,00‐ SWI,WHF Essex Terrace 145,00 135,00 110,00‐ SWI,WHF Westway 155,00 138,33 120,00 ‐ ACU,SWI,WHF La Lucia Ridge 165,00 153,75 137,50 ‐ SWI,WHF Westville CBD 155,00 135,00 130,00 ‐ ACU,WHF Pinetown ‐ ‐‐‐ For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 29 Office rentals

Table 5.2 (continued) Market rental rates for office buildings Quarter 2021:1 Rands per rentable m² per month, gross leases (excl. VAT) Grade Grade Grade Grade A+ A B C Panellist codes mean mean mean mean Hillcrest‐Kloof 160,00 145,00 120,00 ‐ WHF (Upper Highway) Umhlanga 193,75 159,17 130,00‐ SWI,WHF,ZZ Ballito ‐ ‐ ‐ ‐ Point Waterfront ‐ ‐ ‐ ‐ Port Elizabeth CBD ‐ 70,63 61,25 48,75 ARN,BR,SUM,TR Greenacres: Parks 105,00 97,50 89,38 68,33 ARN,BR,SUM,TR Greenacres: Single 91,67 81,67 78,75 66,25 ARN,BR,SUM,TR Walmer Park 1, 2 & 3 118,00 103,00 88,00 78,75 ARN,BR,MY,SUM,TR South End ‐ 85,00 78,33 52,50 ARN,BR,SUM Humerail/Humewood 131,25 112,50 95,00 81,67 ARN,BR,SUM,TR Newton Park/Cape Road 108,00 91,00 78,00 68,68 ARN,BR,IPC,MY,SUM,TR East London CBD ‐ ‐ 70,00 60,00 CAP,ERA,GW,TR Southernwood ‐ 80,00 75,00 53,50 CAP,ERA Berea ‐ 122,50 95,00 80,00 CAP,ERA,TR Chiselhurst ‐ 110,00 83,50 70,00 CAP,ERA Beacon Bay 135,00 125,00 105,67 98,50 CAP,ERA,TR Vincent ‐ 125,00 106,67 95,00 CAP,ERA,TR Cape Town CBD 182,50 150,50 105,00 88,75 AN,CA,CR,HP,PF,PHP,SPI,TR,ZZ 163,33 148,75 118,75 106,67 AN,CR,PF,TR,WHF Waterfront: 212,50 178,75 ‐ ‐ AN,CR,PHP,SPI Portswood Ridge Waterfront: Silo 217,50 188,33 ‐ ‐ AN,CR,PHP,SPI District Granger Bay 180,00 175,00 150,00 130,00 AN,CR Gardens 170,00 150,00 130,00 100,00 AN Salt River 107,50 100,00 80,00 70,00 CR,DN,WHF Woodstock 165,00 135,00 102,50‐ CR,SPI Observatory/ 142,50 137,50 111,67 90,00 COR,CR,DN,GB Park Mowbray 170,00 155,00 116,67‐COR,CR,GB Kenilworth (Racecourse) 145,00 121,67 102,50 ‐ COR,CR,GB 165,00 154,84 118,33 100,00 COR,CR,DW,GB,SPI,TR Newlands 216,67 178,75 150,00‐COR,CR,GB,SPI Wynberg ‐ 140,00 105,00 95,00 COR,CR,GB Westlake 165,00 150,00 121,58 ‐ COR,CR,GB,HP Tokai ‐ ‐ 105,00 84,50 COR,CR Claremont Lower* 210,00 162,50 141,67 ‐ COR,CR,GB,SPI Claremont Upper 211,67 166,67 140,00 100,00 COR,CR,GB,SPI *Claremont Lower: east of Main Road For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 30 Office rentals

Table 5.2 (continued) Market rental rates for office buildings Quarter 2021:1 Rands per rentable m² per month, gross leases (excl. VAT) Grade Grade Grade Grade A+ A B C Broker contributor codes mean mean Mean mean ‐ ‐ 90,00‐ CR Noordhoek (Sun Valley) ‐ ‐ ‐ ‐ Pinelands/Golf Park ‐ 118,00 98,33 82,50 COR,CR,DW,GAM,GB,HP Athlone ‐ ‐ ‐ ‐ 150,00 122,50 100,00 90,00 CR,WHF Panorama ‐ 155,00 ‐‐ CR /Parklands ‐ ‐ 110,00‐ CR Century City 182,00 148,33 120,00 110,00 CR,HP,NE,PF,SPI,WHF Maitland 140,00 112,50 95,00 72,50 CR,WHF Goodwood ( City) 130,00 122,50 97,50 85,00 CR,PF Hills/ Plattekloof 157,50 145,00 120,00 110,00 CR,NE,WHF Bellville CBD 95,00 90,00 82,50 80,00 CR,DN,OMN,PF,WHF Tyger Valley area 153,33 125,36 109,17 98,33 CA,CR,DN,NE,PF,PN,SPI,WHF 125,00 117,50 93,75 90,00 CR,DN,NE,PF,WHF ‐ ‐ ‐ 80,00 CR Airport ‐ 120,00 90,00 52,50 CR,WHF ‐ ‐ ‐ ‐ 90,00 80,00 62,50‐CR,OMN,PF Paarl 142,50 121,25 92,50 68,75 CR,MAF,PRU,SF Wellington ‐ 110,00 70,00 50,00 SF Stellenbosch The Vineyard ‐ ‐ ‐ ‐ Technopark ‐ ‐ ‐ ‐ Other ‐ ‐ ‐ ‐ Helderberg Gordon’s Bay ‐ ‐ ‐ ‐ CBD ‐ ‐ 95,00‐ OMN Somerset Mall area ‐ ‐ ‐ ‐ Strand ‐ ‐ ‐ ‐ George Central 146,67 120,00 80,00 65,00 BVF,GRV,MUL George dec. 110,00 90,00 73,33 58,33 BVF,GRV,MUL Pietermaritzburg Core CBD ‐ ‐ 85,00 75,00 DOR,HN,PJ Peripheral CBD ‐ ‐ 96,67 80,00 DOR,HN,PJ Pietermaritzburg dec. 155,00 135,00 116,67 90,00 DOR,HN,PJ Richards Bay ‐ ‐ ‐ ‐ Empangeni ‐ ‐ ‐ ‐ Windhoek 200,00 167,50 147,50 107,50 PVN,TE For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 31 Office rentals

Table 5.3 Standard deviation of market rental rates for office buildings Quarter 2021:1 Rands per month Grade A+ Grade A Grade B Grade C Johannesburg CBD ‐ 5,10 13,97 7,99 Braamfontein ‐ 8,90 9,83 3,54 Sandton CBD 10,10 16,50 14,34 8,19 Dunkeld West 23,15 28,15 16,20 2,45 Wierda Valley 5,00 14,89 10,27 1,86 Randburg Ferndale 16,40 7,48 8,00 6,09 Rivonia 7,49 9,13 10,32 6,58 Rosebank 20,26 14,36 10,26 9,75 Illovo 19,46 15,98 10,61 0,00 Illovo Boulevard 20,60 17,58 10,20 ‐ Chislehurston 7,07 8,16 4,90 4,08 Parktown 9,27 12,08 10,30 10,27 Richmond/Milpark ‐ 8,90 8,50 5,75 Bedfordview 31,08 12,24 7,85 7,49 Bruma 17,00 7,48 3,94 5,10 Woodmead 21,88 12,79 14,68 12,12 Sunninghill 7,89 7,04 7,91 9,92 Bryanston/Epsom Downs 17,85 18,18 16,89 8,63 Fourways 15,17 23,01 17,18 11,30 Houghton 15,66 20,60 11,79 6,24 Melrose Arch 12,16 23,82 8,60 ‐ Hyde Park 7,50 13,74 18,20 ‐ Eastgate/Kramerville 10,83 8,29 7,75 6,78 Ormonde ‐ ‐ ‐ ‐ Midrand 19,03 11,50 16,91 15,08 Hendrik Potgieter Corridor (incl. 12,25 6,24 4,08 5,00 Ruimsig) Waterfall 19,38 27,27 ‐ ‐ Waverley/Bramley 17,12 10,30 9,17 10,00 Constantia Kloof 5,00 ‐ 11,50 7,50 Morningside 27,49 20,16 18,89 7,86 Greenstone 16,01 7,07 8,16 17,50 East Rand Germiston ‐ ‐ ‐ ‐ Benoni CBD ‐ ‐ ‐ ‐ Benoni dec. ‐ ‐ ‐ ‐ Benoni (Lakeside Mall area) ‐ ‐ ‐ ‐ Boksburg CBD ‐ ‐ ‐ ‐ For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 32 Office rentals

Table 5.3 (continued) Standard deviation of market rental rates for office buildings Quarter 2021:1 Rands per month Grade A+ Grade A Grade B Grade C Boksburg North ‐‐‐‐ Springs ‐‐‐‐ Pretoria CBD ‐ 12,50 14,00 0,00 Lynnwood Glen 14,72 4,08 4,71 13,86 Lynnwood 2,50 12,44 4,71 7,11 Lynnwood Manor 15,56 25,83 0,00 8,50 Lynnwood Ridge 9,43 7,40 4,71 6,24 Faerie Glen 9,43 2,17 7,07 4,08 Val de Grace ‐ ‐ 12,50 ‐ Menlyn 7,02 6,50 4,33 6,24 Menlo Park/Hazelwood 4,08 8,50 7,07 10,27 Brooklyn/Waterkloof 2,17 12,44 4,71 0,00 Nieuw Muckleneuk 10,27 10,80 2,50 2,50 Hatfield/Hillcrest 18,41 2,50 11,18 4,08 Centurion 30,59 22,89 20,64 10,00 Highveld Technopark 18,71 10,83 4,71 4,71 Sunnyside ‐ ‐ ‐ 2,50 Arcadia ‐ ‐ 6,24 0,00 Route 21 Corp. Park 17,68 11,48 6,24 10,00 Silver Lakes/Die Wilgers 12,25 12,19 10,30 8,50 Nelspruit CBD ‐ ‐ 0,00 0,00 Nelspruit dec. 0,00 0,00 0,00 0,00 Polokwane 22,48 13,41 15,56 10,27 Bloemfontein CBD ‐ 2,00 4,71 10,27 Westdene 12,93 8,20 7,01 5,93 Durban CBD ‐‐‐‐ Durban Berea ‐‐‐‐ Essex Terrace ‐ ‐ ‐ ‐ Westway ‐4,71 ‐‐ La Lucia Ridge ‐ 1,25 7,50 ‐ Westville CBD ‐0,00 ‐‐ Pinetown ‐‐‐‐ Hillcrest‐Kloof (Upper Highway) ‐‐‐‐ Umhlanga 6,25 6,56 0,00 ‐ Ballito ‐‐‐‐ Point Waterfront ‐‐‐‐ Port Elizabeth CBD ‐ 2,72 4,15 8,93 Greenacres: Parks 5,00 4,33 7,58 8,50 Greenacres: Single 8,50 6,24 7,40 8,20 Walmer Park 1, 2 & 3 11,66 11,66 10,30 14,31 For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 33 Office rentals

Table 5.3 (continued) Standard deviation of market rental rates for office buildings Quarter 2021:1 Rands per month Grade A+ Grade A Grade B Grade C South End ‐ 10,80 10,27 2,50 Humerail/Humewood 11,39 8,29 6,12 14,34 Newton Park/Cape Road 16,91 10,20 8,12 9,17 East London CBD ‐ ‐ 5,00 4,08 Southernwood ‐ ‐ 0,00 3,50 Berea ‐ 7,50 4,08 5,00 Chiselhurst ‐ ‐ 1,50 10,00 Beacon Bay ‐ 5,00 14,06 16,50 Vincent ‐ 5,00 13,12 20,00 Cape Town CBD 27,20 21,49 10,80 5,45 Sea Point 17,00 12,44 5,45 12,47 Waterfront: Portswood Ridge 22,50 17,46 ‐ ‐ Waterfront: Silo District 15,21 8,50 ‐ ‐ Granger Bay ‐ 15,00 ‐ ‐ Gardens ‐‐‐‐ Salt River 2,50 8,16 8,16 ‐ Woodstock ‐ 5,00 2,50 ‐ Observatory/Black River Park 37,50 29,47 32,74 ‐ Mowbray ‐ 5,00 12,47 ‐ Kenilworth (Racecourse) ‐ 11,79 2,50 ‐ Rondebosch ‐ 17,91 20,14 ‐ Newlands 12,47 13,40 30,00 ‐ Wynberg ‐ ‐ 17,80 ‐ Westlake ‐ 16,96 8,90 ‐ Tokai ‐ ‐ 5,00 9,50 Claremont Lower* ‐ 27,50 20,95 ‐ Claremont Upper 8,50 9,43 0,00 ‐ Hout Bay ‐‐‐‐ Noordhoek (Sun Valley) ‐‐‐‐ Pinelands/Golf Park ‐ 14,35 2,36 7,50 Athlone ‐‐‐‐ Milnerton ‐ 2,50 0,00 ‐ Panorama ‐‐‐‐ Table View/Parklands ‐‐‐‐ Century City 14,70 12,47 19,15 ‐ Maitland ‐ 12,50 5,00 2,50 Goodwood (N1 City) ‐ 2,50 2,50 ‐ Tygerberg Hills/Plattekloof 7,50 10,80 10,00 ‐ Bellville CBD ‐ 30,21 2,50 0,00 *Claremont Lower: east of Main Road For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 34 Office rentals

Table 5.3 (continued) Standard deviation of market rental rates for office buildings Quarter 2021:1 Rands per month Grade A+ Grade A Grade B Grade C Tyger Valley area 4,71 23,08 13,04 2,36 Durbanville 5,00 14,79 10,83 0,00 Mitchells Plain ‐‐‐‐ Airport ‐ ‐ ‐ 7,50 Khayelitsha ‐‐‐‐ Kuils River ‐ ‐ 7,50 ‐ Paarl 2,50 2,17 10,31 6,50 Wellington ‐‐‐‐ Stellenbosch The Vineyard ‐‐‐‐ Technopark ‐‐‐‐ Other ‐‐‐‐ Helderberg Gordon's Bay ‐‐‐‐ Somerset West CBD ‐‐‐‐ Somerset Mall area ‐‐‐‐ Strand ‐‐‐‐ George Central 9,43 0,00 0,00 4,08 George dec. 21,60 10,80 6,24 2,36 Pietermaritzburg Core CBD ‐ ‐ 10,80 4,08 Peripheral CBD ‐ ‐ 9,43 0,00 Pietermaritzburg dec. 4,08 7,07 4,71 0,00 Richards Bay ‐‐‐‐ Empangeni ‐‐‐‐ Windhoek 0,00 17,50 17,50 17,50 For definitions, see Glossary of terms and abbreviations in Annexure 1. Rode’s Report 2021:1 35 Office rentals

Table 5.4 Typical rent‐free period in months Average periods on offer in quarter 2021:1 Mean SD Johannesburg CBD 1,2 0,4 Braamfontein 1,1 0,3 Sandton CBD 2,5 1,4 Dunkeld West 1,4 0,5 Wierda Valley 1,4 0,5 Randburg Ferndale 2,0 1,2 Rivonia 1,7 0,8 Rosebank 1,9 1,1 Illovo 1,6 0,7 Illovo Boulevard 1,2 0,4 Chislehurston 1,3 0,6 Parktown 1,8 0,8 Richmond/Milpark 1,0 0,0 Bedfordview 1,6 0,5 Bruma 1,4 0,5 Woodmead 1,8 0,8 Sunninghill 2,1 1,3 Bryanston/Epsom Downs 1,7 0,6 Fourways 2,0 1,0 Houghton 1,4 0,5 Melrose Arch 1,5 0,6 Hyde Park 1,5 0,5 Eastgate/Kramerville 1,2 0,4 Ormonde 1,0 0,0 Midrand 2,5 1,2 Hendrik Potgieter Corridor (incl. Ruimsig) 1,1 0,2 Waterfall 1,7 0,7 Waverley/Bramley 1,4 0,5 Constantia Kloof 1,0 0,0 Morningside 1,7 1,0 Greenstone 1,4 0,5 East Rand Germiston ‐ ‐ Benoni CBD 2,0 ‐ Benoni dec. 1,0 ‐ Benoni (Lakeside Mall area) ‐ ‐ Boksburg CBD ‐ ‐ Boksburg North ‐ ‐ Springs ‐ ‐ Pretoria CBD 1,0 0,0 Lynnwood Glen 1,3 0,5 Rode’s Report 2021:1 36 Office rentals

Table 5.4 (continued) Typical rent‐free period in months Average periods on offer in quarter 2021:1 Mean SD Lynnwood 1,0 0,0 Lynnwood Manor 1,3 0,4 Lynnwood Ridge 1,0 0,0 Faerie Glen 1,3 0,5 Val de Grace 1,0 0,0 Menlyn 1,3 0,5 Menlo Park/Hazelwood 1,0 0,0 Brooklyn/Waterkloof 1,0 0,0 Nieuw Muckleneuk 1,0 0,0 Hatfield/Hillcrest 1,0 0,0 Centurion 1,3 0,4 Highveld Technopark 1,0 0,0 Sunnyside 1,0 0,0 Arcadia 1,0 0,0 Route 21 Corp. Park 1,0 0,0 Silver Lakes/Die Wilgers 1,0 0,0 Nelspruit CBD 1,0 0,0 Nelspruit dec. 1,0 0,0 Polokwane 2,5 2,1 Bloemfontein CBD 5,8 4,9 Westdene 5,8 4,9 Durban CBD 1,0 ‐ Durban Berea 1,0 0,0 Essex Terrace 1,0 ‐ Westway 1,0 1,0 La Lucia Ridge 2,0 ‐ Westville CBD ‐ ‐ Pinetown ‐ ‐ Hillcrest‐Kloof (Upper Highway) ‐ ‐ Umhlanga 2,0 ‐ Ballito ‐ ‐ Point Waterfront ‐ ‐ Port Elizabeth CBD 1,1 0,2 Greenacres: Parks 1,0 0,0 Greenacres: Single 1,0 0,0 Walmer Park 1, 2 & 3 1,4 0,8 South End 1,0 0,0 Humerail/Humewood 1,0 0,0 Newton Park/Cape Road 1,5 0,8 East London CBD 1,4 1,6 Southernwood 2,0 ‐ Rode’s Report 2021:1 37 Office rentals

Table 5.4 (continued) Typical rent‐free period in months Average periods on offer in quarter 2021:1 Mean SD Berea 1,3 0,5 Chiselhurst 3,0 ‐ Beacon Bay 1,4 0,4 Vincent 1,3 0,5 Cape Town CBD 2,4 1,0 Sea Point 2,0 0,7 Waterfront: Portswood Ridge 2,2 0,8 Waterfront: Silo District 2,2 0,8 Granger Bay 2,0 0,8 Gardens 1,5 0,5 Salt River 2,0 1,0 Woodstock 2,3 0,8 Observatory/Black River Park 1,5 0,9 Mowbray 1,5 0,9 Kenilworth (Racecourse) 1,5 0,9 Rondebosch 2,0 0,9 Newlands 1,8 1,0 Wynberg 1,6 0,8 Westlake 1,7 0,8 Tokai 1,8 0,9 Claremont Lower* 1,8 1,0 Claremont Upper 1,9 0,9 Hout Bay 2,0 1,0 Noordhoek (Sun Valley) 2,0 1,0 Pinelands/Golf Park 1,6 0,7 Athlone 2,0 1,0 Milnerton 2,0 1,0 Panorama 2,0 1,0 Table View/Parklands 2,0 1,0 Century City 2,4 0,8 Maitland 2,0 1,0 Goodwood (N1 City) 2,0 0,8 Tygerberg Hills/Plattekloof 2,3 0,8 Bellville CBD 5,3 5,7 Tyger Valley area 3,7 4,4 Durbanville 4,8 5,6 Mitchells Plain 2,0 1,0 Airport 2,3 0,9 Khayelitsha 2,0 1,0 Kuils River 2,0 0,8 *Claremont Lower: east of Main Road Rode’s Report 2021:1 38 Office rentals

Table 5.4 (continued) Typical rent‐free period in months Average periods on offer in quarter 2021:1 Mean SD Paarl 1,8 1,0 Wellington 2,0 0,8 Stellenbosch The Vineyard ‐ ‐ Technopark ‐ ‐ Other ‐ ‐ Helderberg Gordon's Bay ‐ ‐ Somerset West CBD 2,0 ‐ Somerset Mall area ‐ ‐ Strand ‐ ‐ George Central 1,7 0,9 George dec. 1,7 0,9 Pietermaritzburg Core CBD 1,0 0,0 Peripheral CBD 1,0 0,0 Pietermaritzburg dec. 1,0 0,0 Richards Bay ‐ ‐ Empangeni ‐ ‐ Windhoek 0,0 ‐ Rode’s Report 2021:1 39 Office rentals

Table 5.5 Market parking rentals Rands per bay per month (excl. VAT) as in quarter 2021:1 Covered reserved parking Shade Open‐ Gr A+ Gr A Gr B Gr C net air Johannesburg CBD ‐ 835 712 526 420 381 Braamfontein ‐ 792 685 533 533 408 Sandton CBD 1.101 915 772 598 580 470 Dunkeld West 800 750 606 572 503 423 Wierda Valley 836 703 613 514 470 390 Randburg Ferndale 513 429 400 375 360 282 Rivonia 663 608 532 446 404 320 Rosebank 1.036 882 708 563 536 444 Illovo 957 798 651 605 544 451 Illovo Boulevard 944 791 638 587 574 474 Chislehurston 878 780 596 500 509 399 Parktown 808 700 540 495 440 350 Richmond/Milpark 667 575 525 400 325 300 Bedfordview 575 558 538 500 483 396 Bruma 550 544 520 500 414 349 Woodmead 693 624 529 436 419 330 Sunninghill 609 560 479 424 368 311 Bryanston/Epsom Downs 814 708 569 495 448 365 Fourways 733 657 530 468 418 321 Houghton 850 765 580 500 579 463 Melrose Arch 1.162 1.131 990 825 670 503 Hyde Park 796 692 583 550 519 411 Eastgate/Kramerville 625 600 513 394 428 270 Ormonde ‐ ‐ 750 350 388 300 Midrand 785 672 546 427 432 330 Hendrik Potgieter 600 500 317 295 270 212 Corridor (incl. Ruimsig) Waterfall 1.013 876 ‐ ‐ 610 585 Waverley/Bramley 808 700 602 545 513 378 Constantia Kloof 650 600 575 563 484 353 Morningside 827 711 597 511 455 353 Greenstone 670 575 570 513 455 371 East Rand Germiston ‐ ‐ ‐ ‐ ‐ ‐ Benoni CBD ‐ ‐ 400 350 300 300 Benoni dec. ‐ ‐ ‐ ‐ ‐ ‐ Benoni (Lakeside Mall ‐ ‐ ‐ ‐ ‐ ‐ area) Rode’s Report 2021:1 40 Office rentals

Table 5.5 (continued) Market parking rentals Rands per bay per month (excl. VAT) as in quarter 2021:1 Covered reserved parking Shade Open‐ Gr A+ Gr A Gr B Gr C net air Boksburg CBD ‐ ‐ ‐ ‐ ‐ ‐ Boksburg North ‐ ‐ ‐ ‐ ‐ ‐ Springs ‐ ‐ ‐ ‐ ‐ ‐ Pretoria CBD ‐ 800 650 425 575 550 Lynnwood Glen 723 640 633 627 528 458 Lynnwood 767 678 517 438 444 359 Lynnwood Manor 827 750 550 425 425 350 Lynnwood Ridge 723 633 560 430 450 330 Faerie Glen 683 604 518 383 440 359 Val de Grace ‐ 600 525 450 315 300 Menlyn 930 750 650 600 450 450 Menlo Park/Hazelwood 850 675 550 425 425 375 Brooklyn/Waterkloof 880 658 577 453 437 365 Nieuw Muckleneuk 875 617 550 425 400 367 Hatfield/Hillcrest 825 633 550 450 467 375 Centurion 900 708 615 518 490 391 Highveld Technopark 617 578 498 455 433 361 Sunnyside ‐ ‐ ‐ 465 465 410 Arcadia ‐ 810 725 500 700 600 Route 21 Corp. Park 550 517 427 380 363 275 Silver Lakes/Die Wilgers 650 625 450 360 400 346 Nelspruit CBD ‐ ‐ 425 475 275 175 Nelspruit dec. 500 480 450 465 325 175 Polokwane 525 407 303 263 255 188 Bloemfontein CBD ‐ 340 307 243 249 143 Westdene 427 367 307 273 306 162 Durban CBD ‐ 900 900 ‐ ‐ ‐ Durban Berea 650 550 450 ‐ 500 ‐ Essex Terrace ‐ 700 ‐ ‐ 575 ‐ Westway 650 650 350 ‐ 575 550 La Lucia Ridge 750 725 700 ‐ ‐ ‐ Westville CBD 650 567 ‐ ‐ ‐ 500 Pinetown ‐ ‐ ‐ ‐ ‐ ‐ Hillcrest‐Kloof (Upper 350 ‐ ‐ ‐ ‐ ‐ Highway) Umhlanga 875 825 700 ‐ ‐ ‐ Ballito ‐ ‐ ‐ ‐ ‐ ‐ Point Waterfront ‐ ‐ ‐ ‐ ‐ ‐ East London CBD ‐ 600 475 303 475 375 Southernwood ‐ 450 375 300 550 450 Rode’s Report 2021:1 41 Office rentals

Table 5.5 (continued) Market parking rentals Rands per bay per month (excl. VAT) as in quarter 2021:1 Covered reserved parking Shade Open‐ Gr A+ Gr A Gr B Gr C net air Berea 600 475 388 283 350 325 Chiselhurst ‐ 425 375 325 375 450 Beacon Bay 600 550 500 500 550 500 Vincent 600 550 500 500 450 450 Port Elizabeth CBD ‐ 325 300 150 300 238 Greenacres: Parks 400 383 350 238 345 292 Greenacres: Single 425 400 233 225 267 208 Walmer Park 1, 2 & 3 383 343 228 208 278 201 South End 325 275 200 100 267 200 Humerail/Humewood 500 438 236 217 350 275 Newton Park/Cape Road 500 450 350 138 300 242 Cape Town CBD 1.530 1.443 1.317 1.100 900 750 Sea Point 1.350 1.300 1.150 850 743 670 Waterfront: Portswood 1.600 1.600 ‐ ‐ 1.200 1.000 Ridge Waterfront: Silo District 1.733 1.725 ‐ ‐ 1.200 1.000 Granger Bay 1.575 1.550 1.200 1.000 1.000 900 Gardens 1.300 1.200 1.000 800 800 700 Salt River 1.000 925 550 400 300 ‐ Woodstock 1.350 1.333 900 450 610 ‐ Observatory/Black River ‐ 1.050 550 400 1.000 850 Park Mowbray ‐ 1.100 ‐ ‐ 1.000 800 Kenilworth (Racecourse) ‐ 900 ‐ ‐ 600 400 Rondebosch ‐ 1.200 ‐ ‐ 1.075 875 Newlands ‐ 1.550 ‐ ‐ 1.075 850 Wynberg ‐ 1.200 ‐ ‐ ‐ ‐ Westlake ‐ 875 ‐ ‐ 875 675 Tokai ‐ 900 ‐ ‐ ‐ ‐ Claremont Lower* ‐ 1.200 ‐ ‐ 1.200 900 Claremont Upper 1.750 1.350 ‐ ‐ 1.300 885 Hout Bay ‐ ‐ ‐ ‐ ‐ ‐ Noordhoek (Sun Valley) ‐ ‐ ‐ ‐ ‐ ‐ Pinelands/Golf Park ‐ 1.100 ‐ ‐ 750 525 Athlone ‐ ‐ ‐ ‐ ‐ ‐ Milnerton ‐ 1.075 500 400 300 100 Panorama 900 ‐ 750 ‐ 550 350 Table View/Parklands ‐ ‐ ‐ ‐ ‐ ‐ Century City 1.217 1.100 833 805 715 579 Maitland 700 700 500 300 300 200 *Claremont Lower: east of Main Road Rode’s Report 2021:1 42 Office rentals

Table 5.5 (continued) Market parking rentals Rands per bay per month (excl. VAT) as in quarter 2021:1 Covered reserved parking Shade Open‐ Gr A+ Gr A Gr B Gr C net air Goodwood (N1 City) 800 800 750 ‐ 500 450 Tygerberg Hills/Plattekloof 900 893 750 485 515 493 Bellville CBD 703 663 615 540 480 330 Tyger Valley area 913 845 718 675 598 450 Durbanville 850 775 665 555 475 340 Mitchells Plain ‐ ‐ ‐ ‐ ‐ ‐ Airport 800 800 600 400 300 200 Khayelitsha ‐ ‐ ‐ ‐ ‐ ‐ Kuils River ‐ ‐ ‐ ‐ ‐ 200 Paarl 583 500 350 250 325 214 Wellington ‐ 500 400 200 500 150 Stellenbosch The Vineyard ‐ ‐ ‐ ‐ ‐ ‐ Technopark ‐ ‐ ‐ ‐ ‐ ‐ Other ‐ ‐ ‐ ‐ ‐ ‐ Helderberg Gordon's Bay ‐ ‐ ‐ ‐ ‐ ‐ Somerset West CBD ‐ ‐ ‐ ‐ ‐ 600 Somerset Mall area ‐ ‐ ‐ ‐ ‐ ‐ Strand ‐ ‐ ‐ ‐ ‐ ‐ George Central 400 308 253 183 158 110 George dec. 317 293 212 167 143 110 Pietermaritzburg Core ‐ ‐ 355 323 353 243 CBD Peripheral CBD ‐ ‐ 317 283 343 270 Pietermaritzburg dec. 610 515 415 352 360 287 Richards Bay ‐ ‐ ‐ ‐ ‐ ‐ Empangeni ‐ ‐ ‐ ‐ ‐ ‐ Windhoek 950 900 750 575 500 400 Rode’s Report 2021:1 43 Office rentals

Table 5.6 Office rental escalation rates on new leases (%) Average escalation rate on net rentals for quarter 2021:1 Mean Johannesburg CBD 7,5 Braamfontein 7,8 Sandton CBD 7,7 Dunkeld West 7,6 Wierda Valley 7,9 Randburg Ferndale 7,7 Rivonia 7,7 Rosebank 7,7 Illovo 7,7 Illovo Boulevard 7,7 Chislehurston 7,9 Parktown 7,9 Richmond/Milpark 7,9 Bedfordview 7,8 Bruma 7,9 Woodmead 7,6 Sunninghill 7,7 Bryanston/Epsom Downs 7,7 Fourways 7,8 Houghton 7,9 Melrose Arch 7,8 Hyde Park 7,9 Eastgate/Kramerville 7,9 Ormonde 7,9 Midrand 7,5 Hendrik Potgieter Corridor (incl. Ruimsig) 7,9 Waterfall 7,6 Waverley/Bramley 7,8 Constantia Kloof 8,0 Morningside 7,9 Greenstone 7,9 East Rand Germiston ‐ Benoni CBD 7,0 Benoni dec. 8,0 Benoni (Lakeside Mall area) ‐ Boksburg CBD ‐ Boksburg North ‐ Springs ‐ Pretoria CBD 8,0 Lynnwood Glen 7,7 Lynnwood 8,0 Lynnwood Manor 8,0 Lynnwood Ridge 8,0 Rode’s Report 2021:1 44 Office rentals

Table 5.6 (continued) Office rental escalation rates on new leases (%) Average escalation rate on net rentals for quarter 2021:1 Mean Faerie Glen 8,0 Val de Grace 8,0 Menlyn 8,0 Menlo Park/Hazelwood 8,0 Brooklyn/Waterkloof 8,0 Nieuw Muckleneuk 8,0 Hatfield/Hillcrest 8,0 Centurion 7,5 Highveld Technopark 8,0 Sunnyside 8,0 Arcadia 7,7 Route 21 Corp. Park 7,5 Silver Lakes/Die Wilgers 8,0 Nelspruit CBD 6,5 Nelspruit dec. 7,0 Polokwane 6,4 Bloemfontein CBD 7,0 Westdene 7,3 Durban CBD 7,0 Durban Berea 7,5 Essex Terrace 8,0 Westway 7,0 La Lucia Ridge 7,5 Westville CBD 6,0 Pinetown ‐ Hillcrest‐Kloof (Upper Highway) ‐ Umhlanga 7,5 Ballito ‐ Point Waterfront ‐ Port Elizabeth CBD 6,5 Greenacres: Parks 6,5 Greenacres: Single 6,5 Walmer Park 1, 2 & 3 6,8 South End 6,5 Humerail/Humewood 6,6 Newton Park/Cape Road 6,9 East London CBD 7,3 Southernwood 7,0 Berea 7,5 Chiselhurst 7,0 Beacon Bay 7,5 Vincent 7,5 Rode’s Report 2021:1 45 Office rentals

Table 5.6 (continued) Office rental escalation rates on new leases (%) Average escalation rate on net rentals for quarter 2021:1 Mean Cape Town CBD 7,2 Sea Point 7,7 Waterfront: Portswood Ridge 7,8 Waterfront: Silo District 7,8 Granger Bay 7,7 Gardens 7,5 Salt River 8,0 Woodstock 7,9 Observatory/Black River Park 7,3 Mowbray 7,3 Kenilworth (Racecourse) 7,3 Rondebosch 7,5 Newlands 7,5 Wynberg 7,4 Westlake 7,3 Tokai 8,0 Claremont Lower* 7,5 Claremont Upper 7,5 Hout Bay 7,8 Noordhoek (Sun Valley) 8,0 Pinelands/Golf Park 7,2 Athlone 8,0 Milnerton 8,0 Panorama 8,0 Table View/Parklands 8,0 Century City 7,3 Maitland 8,0 Goodwood (N1 City) 7,8 Tygerberg Hills/Plattekloof 7,4 Bellville CBD 7,6 Tyger Valley area 7,5 Durbanville 7,4 Mitchells Plain 8,0 Airport 8,0 Khayelitsha 8,0 Kuils River 7,6 Paarl 7,5 Wellington 7,7 Stellenbosch The Vineyard ‐ Technopark ‐ Other ‐ *Claremont Lower: east of Main Road Rode’s Report 2021:1 46 Office rentals

Table 5.6 (continued) Office rental escalation rates on new leases (%) Average escalation rate on net rentals for quarter 2021:1 Mean Helderberg Gordon's Bay ‐ Somerset West CBD 7,0 Somerset Mall area ‐ Strand ‐ George Central 6,7 George dec. 6,7 Pietermaritzburg Core CBD 7,3 Peripheral CBD 7,3 Pietermaritzburg dec. 8,0 Richards Bay ‐ Empangeni ‐ Windhoek 7,0 Rode’s Report 2021:1 47 Office rentals

Table 5.7 Escalation rates on operating costs (%) for quarter 2021:1 Mean Johannesburg CBD 8,5 Braamfontein 8,3 Sandton CBD 8,0 Dunkeld West 7,9 Wierda Valley 7,9 Randburg Ferndale 7,8 Rivonia 7,9 Rosebank 8,0 Illovo 7,9 Illovo Boulevard 8,1 Chislehurston 8,3 Parktown 8,3 Richmond/Milpark 8,4 Bedfordview 8,2 Bruma 8,1 Woodmead 7,6 Sunninghill 7,6 Bryanston/Epsom Downs 7,9 Fourways 8,3 Houghton 7,9 Melrose Arch 8,1 Hyde Park 8,1 Eastgate/Kramerville 8,1 Ormonde 8,2 Midrand 8,0 Hendrik Potgieter Corridor (incl. Ruimsig) 8,1 Waterfall 8,0 Waverley/Bramley 7,9 Constantia Kloof 8,3 Morningside 8,0 Greenstone 8,0 East Rand Germiston ‐ Benoni CBD 7,0 Benoni dec. 8,0 Benoni (Lakeside Mall area) ‐ Boksburg CBD ‐ Boksburg North ‐ Springs ‐ Pretoria CBD 8,0 Lynnwood Glen 8,7 Lynnwood 8,0 Lynnwood Manor 8,0 Rode’s Report 2021:1 48 Office rentals

Table 5.7 (continued) Escalation rates on operating costs (%) for quarter 2021:1 Mean Lynnwood Ridge 8,0 Faerie Glen 8,0 Val de Grace 8,0 Menlyn 8,7 Menlo Park/Hazelwood 8,0 Brooklyn/Waterkloof 8,0 Nieuw Muckleneuk 8,0 Hatfield/Hillcrest 8,0 Centurion 7,5 Highveld Technopark 8,0 Sunnyside 8,0 Arcadia 8,0 Route 21 Corp. Park 7,5 Silver Lakes/Die Wilgers 8,0 Nelspruit CBD 8,0 Nelspruit dec. 8,0 Polokwane 7,5 Bloemfontein CBD 7,7 Westdene 7,7 Durban CBD 9,0 Durban Berea 8,5 Essex Terrace 8,0 Westway 7,0 La Lucia Ridge 7,5 Westville CBD 6,0 Pinetown ‐ Hillcrest‐Kloof (Upper Highway) ‐ Umhlanga 7,5 Ballito ‐ Point Waterfront ‐ Port Elizabeth CBD 9,3 Greenacres: Parks 9,0 Greenacres: Single 8,5 Walmer Park 1, 2 & 3 8,7 South End 8,8 Humerail/Humewood 9,3 Newton Park/Cape Road 8,8 East London CBD 8,0 Southernwood 9,0 Berea 9,0 Chiselhurst 9,0 Beacon Bay 9,0 Vincent 9,0 Rode’s Report 2021:1 49 Office rentals

Table 5.7 (continued) Escalation rates on operating costs (%) for quarter 2021:1 Mean Cape Town CBD 7,4 Sea Point 7,5 Waterfront: Portswood Ridge 7,7 Waterfront: Silo District 7,7 Granger Bay 7,5 Gardens 7,5 Salt River 8,0 Woodstock 7,8 Observatory/Black River Park 7,0 Mowbray 7,0 Kenilworth (Racecourse) 7,0 Rondebosch 7,3 Newlands 7,3 Wynberg 7,2 Westlake 7,0 Tokai 8,0 Claremont Lower* 7,3 Claremont Upper 7,3 Hout Bay 7,8 Noordhoek (Sun Valley) 8,0 Pinelands/Golf Park 7,0 Athlone 8,0 Milnerton 8,0 Panorama 8,0 Table View/Parklands 8,0 Century City 7,3 Maitland 8,0 Goodwood (N1 City) 7,8 Tygerberg Hills/Plattekloof 7,0 Bellville CBD 7,5 Tyger Valley area 7,3 Durbanville 7,2 Mitchells Plain 8,0 Airport 8,0 Khayelitsha 8,0 Kuils River 7,5 Paarl 7,5 Wellington 8,0 Stellenbosch The Vineyard ‐ Technopark ‐ Other ‐ *Claremont Lower: east of Main Road Rode’s Report 2021:1 50 Office rentals

Table 5.7 (continued) Escalation rates on operating costs (%) for quarter 2021:1 Mean Helderberg Gordon's Bay ‐ Somerset West CBD 7,0 Somerset Mall area ‐ Strand ‐ George Central 7,3 George dec. 7,0 Pietermaritzburg Core CBD 7,3 Peripheral CBD 7,3 Pietermaritzburg dec. 8,0 Richards Bay ‐ Empangeni ‐ Windhoek 8,5 Rode’s Report 2021:1 51 Office rentals

Table 5.8 Typical gross outgoings for prime office buildings As reported by brokers R/rentable m² per month: quarter 2021:1 MeanSD n Johannesburg CBD 11,33 0,94 3 Braamfontein 12,50 1,80 4 Sandton CBD 34,23 10,40 13 Dunkeld West 25,80 3,54 5 Wierda Valley 25,57 4,20 7 Randburg Ferndale 24,17 2,29 6 Rivonia 23,19 3,69 8 Rosebank 31,57 4,37 7 Illovo 33,14 5,79 7 Illovo Boulevard 33,67 6,10 6 Chislehurston 26,80 4,79 5 Parktown 28,00 5,10 5 Richmond/Milpark 24,38 3,70 4 Bedfordview 24,64 4,32 7 Bruma 20,80 5,75 5 Woodmead 30,54 6,78 10 Sunninghill 26,36 5,86 7 Bryanston/Epsom Downs 30,17 6,51 9 Fourways 26,64 4,68 7 Houghton 29,50 3,32 5 Melrose Arch 35,00 7,07 6 Hyde Park 31,50 4,90 5 Eastgate/Kramerville 22,50 5,59 4 Ormonde 27,50 2,50 2 Midrand 29,36 7,86 7 Hendrik Potgieter Corridor (incl. 24,73 1,41 4 Ruimsig) Waterfall 37,25 11,20 8 Waverley/Bramley 26,25 4,15 4 Constantia Kloof 22,50 2,50 2 Morningside 22,08 3,03 6 Greenstone 21,50 3,86 6 East Rand Germiston ‐ ‐ ‐ Benoni CBD ‐ ‐ ‐ Benoni dec. ‐ ‐ ‐ Benoni (Lakeside Mall area) ‐ ‐ ‐ Boksburg CBD ‐ ‐ ‐ Boksburg North ‐ ‐ ‐ Springs ‐ ‐ ‐ Pretoria CBD 21,00 1,00 2 Lynnwood Glen 26,17 1,65 3 Rode’s Report 2021:1 52 Office rentals

Table 5.8 (continued) Typical gross outgoings for prime office buildings As reported by brokers R/rentable m² per month: quarter 2021:1 MeanSD n Lynnwood 21,63 4,05 4 Lynnwood Manor 24,63 4,66 4 Lynnwood Ridge 22,83 4,01 3 Faerie Glen 22,83 4,01 3 Val de Grace 20,00 0,00 2 Menlyn 26,17 4,40 3 Menlo Park/Hazelwood 22,83 4,01 3 Brooklyn/Waterkloof 22,83 4,01 3 Nieuw Muckleneuk 22,17 4,55 3 Hatfield/Hillcrest 24,50 3,49 3 Centurion 24,63 4,66 4 Highveld Technopark 24,50 3,49 3 Sunnyside 26,00 6,00 2 Arcadia 21,00 1,00 2 Route 21 Corp. Park 26,13 3,81 4 Silver Lakes/Die Wilgers 22,88 4,13 4 Nelspruit CBD 35,00 0,00 5 Nelspruit dec. 35,00 0,00 5 Polokwane 21,75 2,38 4 Bloemfontein CBD 22,00 2,16 3 Westdene 25,67 3,30 3 Durban CBD 15,00‐1 Durban Berea 15,00 ‐ 1 Essex Terrace ‐ ‐ ‐ Westway 40,00 ‐ 1 La Lucia Ridge ‐ ‐ ‐ Westville CBD 35,00 ‐ 1 Pinetown ‐ ‐ ‐ Hillcrest‐Kloof (Upper Highway) ‐ ‐ ‐ Umhlanga ‐ ‐ ‐ Ballito ‐ ‐ ‐ Point Waterfront ‐ ‐ ‐ Port Elizabeth CBD 10,50 0,50 2 Greenacres: Parks 15,50 2,50 2 Greenacres: Single 10,50 0,50 2 Walmer Park 1, 2 & 3 14,00 1,00 2 South End 10,25 0,25 2 Humerail/Humewood 25,00 5,00 2 Newton Park/Cape Road 22,50 2,50 2 Rode’s Report 2021:1 53 Office rentals

Table 5.8 (continued) Typical gross outgoings for prime office buildings As reported by brokers R/rentable m² per month: quarter 2021:1 MeanSD n East London CBD 19,90 0,10 2 Southernwood 19,80 ‐ 1 Berea 19,80 ‐ 1 Chiselhurst 19,80 ‐ 1 Beacon Bay 19,80 ‐ 1 Vincent 19,80 ‐ 1 Cape Town CBD 25,60 3,38 5 Sea Point 25,00 4,08 3 Waterfront: Portswood Ridge 29,33 0,94 3 Waterfront: Silo District 26,00 4,32 3 Granger Bay 30,00 0,00 2 Gardens 20,00 ‐ 1 Salt River 25,00 5,00 2 Woodstock 26,00 3,94 4 Observatory/Black River Park 21,67 6,24 3 Mowbray 20,67 7,36 3 Kenilworth (Racecourse) 20,00 8,16 3 Rondebosch 25,75 8,90 4 Newlands 26,25 9,60 4 Wynberg 21,75 6,65 4 Westlake 20,67 7,36 3 Tokai 25,00 5,00 2 Claremont Lower* 22,25 6,94 4 Claremont Upper 25,00 7,91 4 Hout Bay 25,00 4,08 3 Noordhoek (Sun Valley) 25,00 5,00 2 Pinelands/Golf Park 20,88 6,39 4 Athlone 25,00 5,00 2 Milnerton 25,00 5,00 2 Panorama 25,00 5,00 2 Table View/Parklands 25,00 5,00 2 Century City 25,60 3,26 5 Maitland 25,00 5,00 2 Goodwood (N1 City) 25,00 5,00 2 Tygerberg Hills/Plattekloof 24,00 4,32 3 Bellville CBD 22,25 5,93 4 Tyger Valley area 24,00 3,42 6 Durbanville 25,00 3,54 4 *Claremont Lower: east of Main Road Rode’s Report 2021:1 54 Office rentals

Table 5.8 (continued) Typical gross outgoings for prime office buildings As reported by brokers R/rentable m² per month: quarter 2021:1 MeanSD n Mitchells Plain 25,00 5,00 2 Airport 25,00 5,00 2 Khayelitsha 25,00 5,00 2 Kuils River 22,20 5,69 3 Paarl 17,63 8,60 4 Wellington 25,00 5,00 2 Stellenbosch The Vineyard ‐ ‐ ‐ Technopark ‐ ‐ ‐ Other ‐ ‐ ‐ Helderberg Gordon's Bay ‐ ‐ ‐ Somerset West CBD 21,18 ‐ 1 Somerset Mall area ‐ ‐ ‐ Strand ‐ ‐ ‐ George Central 21,33 1,89 3 George dec. 20,67 0,94 3 Pietermaritzburg Core CBD 23,33 1,89 3 Peripheral CBD 24,33 0,47 3 Pietermaritzburg dec. 21,00 1,41 3 Richards Bay ‐‐‐ Empangeni ‐‐‐ Windhoek ‐‐‐ Our heartfelt thanks to the companies that contributed to the office- market survey. By clicking on their logos, you will learn more about these panellists. Trust & Estate Co. Rode’s Report 2021:1 57 Office demand and vacancies

Chapter 6: Office demand and vacancies Ghost buildings spook office market

Kobus Lamprecht

Visiting an empty office building can shock tenants further reduce their office space and scare you at the same time, especially requirements as leases come up for renewal. when entering a basement. A year after the To add insult to injury, escalated rentals will pandemic started in South Africa in March on renewal typically be reduced to the lower 2020, the damage is real with the office market levels. Rode’s six‐year forecast of market haunted by emptier buildings. “To let” office vacancy rates and rentals, as well as signs are aplenty as companies reduce their other property‐related variables, is provided office space or do not use offices at all as they in our sister publication Rode’s SA Property find their employees can work from home or Trends. somewhere else. A positive for landlords is that the office In the two years before the pandemic, the market is looking better from a new‐supply national decentralized vacancy rate for all perspective as space under construction is at grades except grade C hovered just above record lows, as shown in the chart. Office 10%, ending 2019 at an already high 10,6%, building plans passed are also continuing to according to Rode’s calculations based decline sharply (see Chapter 11), but we on SAPOA data. A year later, at the end of expect few of these plans will become 2020, the vacancy rate worsened to 13% ‘buildings completed’ any time soon. We also (the highest this century), which means believe grades B and C office space will be Covid‐19 has exacerbated the sector’s woes. increasingly converted to mostly residential An important point is that although many space, but also other uses like educational, premises are standing empty or are under‐ medical, storage and so forth ̶ but only used, a high percentage is still encumbered by where it is financially feasible. However, the a lease that will only run out over the next supply of space is only one side of the coin – few years. Thus, from a cash‐flow point of the market also needs a strong demand view, landlords will feel the aftershocks of recovery to see sustainable growth in real Covid‐19 in the years to come. Turning to rentals, which seems very distant at this 2021, vacancies will rise even more as stage.

Source: SAPOA Rode’s Report 2021:1 58 Office demand and vacancies

Vacancy rates on a national level (including Cape Town CBD) have been high at above 10% since 2010. The accompanying chart shows national vacancy rates since 2000 for respectively Low business confidence does not bode well decentralized and CBD office space (grades A for office demand and B combined). Decentralized vacancy rates averaged 13% in the fourth quarter of 2020, In the first quarter of 2021, only 35% up from 12,3% in the third quarter. Vacancy of respondents surveyed by the BER were rates averaged 12% for the whole of 2020, up satisfied with prevailing business conditions. significantly from the 10,5% average of 2019, This was down from the 40% in the fourth and are moving further away from their quarter and means close to seven out 8,5% long‐term average, as shown in the of ten senior executives expressed their dissatisfaction with prevailing business chart. This is a result of an oversupply due to conditions, up from six previously. weak demand coupled with a strong rise in stock levels, which have almost tripled from Firms are, therefore, likely to be hesitant the beginning of 2000 (see chart). A long‐term to expand their premises or hire new vacancy rate of grades A and B combined employees. In fact, many companies are of 8,5% has an important implication when reducing their office space and the number of valuing prime office buildings. It is dead employees, while also signing shorter leases. wrong to assume that even if an office building is near fully let at the time of Below we highlight the trends in the major valuation this will persist in perpetuity. cities.

24 National office vacancy rate Vacancy rates in the major cities Combined grades A & B 20 National CBD vacancy rate National decentralized vacancy rate The Johannesburg decentralized vacancy rate Decentra lized va cancy rate avg since 2000 16 for grades A and B office space combined in

12 the fourth quarter of 2020 increased to 14,8% (%)

Vacancy rate Vacancy from 14,1% in the third quarter, as shown in 8 Table 6.1. This has been the highest vacancy 4 rate since at least 2000.

0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Decentralized Johannesburg office vacancies Grade A+, A and B combined Source of data: SAPOA; Rode calculations 25

The rule is that the older the building (the 20 lower the grade), the higher the typical 15 vacancy factor. This is especially a problem at 10

present as tenants in grades C and B tend (%) Vacancy to upgrade to A because market rentals of 5 Sandton & environs Rosebank A‐grade are so low in real terms. Parktown Rivonia 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 CBD vacancy rates also worsened in the Source of data: Rode's Time Series; Sapoa fourth quarter, taking the average for 2020 to 12,6% ̶ up from 11,5% in 2019. In contrast Vacancy rates averaged 13,9% in 2020, up to decentralized space, CBD vacancy rates significantly from the 12% average in the Rode’s Report 2021:1 59 Office demand and vacancies previous year. Many nodes saw sharp which left its headquarters in Sunninghill for increases over 2020, such as Illovo (26% at Waterfall. Developer Africrest announced in the end of 2020 versus 15% at end 2019), January that it would convert this building of Bedfordview (25% from 9%) and Rivonia (20% almost 30 000 m2 into 700 apartments ̶ from 10%). We highlight some of the changes which is about 8% of the total office space in in the larger nodes in the text that follows. Sunninghill ̶ which will support vacancy rates. Sunninghill’s vacancy rate was 21% in the Sandton’s average vacancy rate for grade B fourth quarter of 2020. and higher remained high at about 16% in the fourth quarter of 2020, pushed up by a On the positive side, a few smaller nodes saw sky‐high grade‐B vacancy rate of close to 30%. vacancy rates improve over 2020, namely In contrast, new grade‐A+ space is the most Greenstone, Morningside (both to 10% at the popular with a vacancy rate of about 10%.1 end of 2020) and Houghton/Killarney (to 7%). On the positive side, office developments Always be mindful that in smaller nodes under construction are extremely low. vacancy rates can easily have big fluctuations Besides, Sandton is likely to get more and if one or two large tenants move in or out. more residential space instead of office space, firstly as older vacant offices are Decentralized Johannesburg office vacancies Grade A+, A and B combined converted and secondly to bring workers 30 Bryanston/Epson Downs closer to their jobs. 25 Illovo Midrand Randburg 20 Rosebank’s vacancy rate increased to 14,3% from 12,6% in the third quarter. New office 15 space under construction has a very high (%) Vacancy 10 pre‐let rate, which signals still‐strong demand 5 for new space in this node, but then again 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 some of the deals could have been signed Source of data: Rode's Time Series; Sapoa before the pandemic started. In fact, grade A+ space had a vacancy rate of 8% versus closer The Pretoria decentralized vacancy rate of to 20% for grades A and B space combined. grades A and B offices combined remained at Co‐working businesses are also feeling the 10,6% in the fourth quarter of 2020. Vacancy pain, with Redefine, a large REIT, reporting rates averaged just above 10% in 2020, in line in February that US office‐sharing giant with the average of 2019, implying that the WeWork had reduced its occupancy in its Jacaranda City is performing better than the Rosebank Link building to 62%, while at the three other major cities, where vacancy rates 155 West Street building (in Sandton) it only averaged much higher in 2020 compared to occupies 26% of the building. 2019. The vacancy rate of the Waterfall node remained stable at 4,5%, the lowest in Highveld Technopark, the largest Johannesburg, despite a large amount of new decentralized node in the administrative space that came on line over the last few capital, representing about a fifth of office years. This is as the new space was mostly stock, saw its vacancy rate worsen to fully let. 10,5% from 8,8% in the fourth quarter. Vacancy rates also worsened in Brooklyn/ Waterfall has attracted many companies Nieuw Muckleneuk//Waterkloof from other nodes. A good example is PwC, (to 16%) and Menlyn/Faerie Glen/Ashlea

1 For a definition of grade A+ see Annexure 1. Rode’s Report 2021:1 60 Office demand and vacancies

Gardens (to 15%). In contrast, the vacancy increased to 10,5% at the end of 2020 with rate of Lynnwood/Menlo Park/Persequor about a quarter of grade A+ space vacant. Park/Hazelwood fell to 6% from 10%. Vacancy However, it must be said that Umhlanga/ rates were the lowest in the small office La Lucia is performing relatively better than nodes of Arcadia (1,9%) and Silver Lakes/The the other major nodes in the country, such Willows (5,1%). The vacancy rate in Hatfield – as Sandton and Rosebank, where vacancy once the top node in the Jacaranda city – rates average higher. The vacancy rate of Westville, the second-largest decentralized remains the highest in the city at about 17%, node, increased slightly to 9,4%, while despite decreasing recently as shown in the Berea’s rose further to about 14%. Ballito’s chart. vacancy rate jumped to 14%, the highest since 2017. The vacancy rate of the smaller Pretoria’s CBD also saw its vacancy rate node of Hillcrest/Gillitts averaged only 4%. weaken to 4,5% from 3,2%, which is still A positive for Durban vacancy rates is that relatively low. The CBD’s relatively low there is currently no office space under vacancies can be ascribed to the large construction. presence of government‐related tenants and the conversion of office space to residential. Decentralized Durban office vacancies Grade A+, A and B combined 20 One can only wonder whether the Westville Berea government’s policy to rein in expenditure Umhlanga/La Lucia 16 will eventually lead to a decline in space hired by government departments. 12

Decentralized Pretoria office vacancies 8 Grade A+, A and B combined (%) Vacancy 24 Brooklyn/Niew Muckleneuk/Groenkloof/Waterkloof P retoria O ther Easte rn Suburbs/Route 21 4 Centurion CBD 20 Hatfield/Hillcrest

0 16 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source of data: Rode's Time Series; SAPOA 12

Vacancy (%) Vacancy 8 The vacancy rate of Cape Town decentralized

4 worsened to 9,5% from 7,8% in the third quarter, but remains the lowest of the major 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 cities, albeit marginally. Vacancy rates Source of data: Rode's Time Series; SAPOA averaged 7,2% for the whole of 2020, up from 5% in 2019. Vacancy rates in Durban decentralized averaged 10,4% in the fourth quarter of 2020, On a nodal level, several nodes saw very up compared to 9,5% in the previous quarter. sharp vacancy rate increases, like Century Looking at the bigger picture, vacancy rates City (to 19,2%), Claremont (to 13,9%) and have averaged 9,5% over the entire 2020, up the V&A Waterfront (to 6%), as shown in the chart. The vacancy rates of Pinelands/Black from the 8,2% in 2019. River Office Park were the lowest in Cape Town at about 4%. Office space (including On a nodal level, it is clear from the chart that the CBD) of about 20 000 m2 was under vacancies are – unsurprisingly ̶ on an upward construction at the end of 2020 quarter and trend. The vacancy rate of Umhlanga/La is only about 30% pre-let, according to Lucia, the major decentralized office node, SAPOA data, which remains a concern, Rode’s Report 2021:1 61 Office demand and vacancies especially as some of this is Century City tourism will make a comeback in a year or and the CBD. The vacancy rate of the CBD two after a disastrous 2020 and poor start to worsened to 14%, the highest since the 2021. The proviso is of course the general second quarter of 2003. availability of vaccines, which will take time.

Decentralized Cape Town office vacancies Decentralized Port Elizabeth office vacancies Grade A+, A and B combined Grades A and B combined 30 50 Greenacres Rondebosch/Newlands Claremont Ne wto n P a rk 25 Century City Walmer/Fairview 40 V&A Waterfront

20 30

15

20 Vacancy (%) Vacancy 10 (%) Vacancy

10 5

0 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source of data: Rode's Time Series; SAPOA Source of data: Rode's Time Series; Sapoa

However, the medium‐term outlook is In the fourth quarter of 2020, vacancy rates positive as the city should increasingly attract in Port Elizabeth decentralized averaged companies, even multinationals, due to its 13,1%, up from 12% in the third quarter as good lifestyle and passable service delivery, vacancies rose in Greenacres (see chart). while the drought problem of previous years Walmer/Fairview still stands out with the is also out of the way. It is also likely that lowest vacancy rate (6,3%). Rode’s Report 2021:1 62 Office demand and vacancies

Table 6.1 SAPOA office vacancy factors (%) Grades A+, A & B December March June September December 2019 2020 2020 2020 2020 Johannesburg Bedfordview 9,2 10,5 13,1 21,8 24,6 Braamfontein 14,1 14,1 18,0 15,2 16,2 Bruma 10,6 11,5 11,6 13,0 14,0 Bryanston/Epson Downs 9,5 9,1 11,3 15,7 15,6 CBD Johannesburg 10,9 11,1 12,6 12,2 11,6 Constantia Kloof 4,8 3,8 5,8 7,0 6,7 Cresta/Blackheath/ 6,8 6,8 6,9 8,1 13,9 Fourways 9,7 13,0 12,6 13,6 14,3 Greenstone 10,7 13,8 12,3 13,9 9,7 Houghton/Killarney 9,1 8,9 11,9 8,3 6,9 Hyde Park/Dunkeld 7,7 9,2 10,8 11,1 15,0 Illovo 14,9 18,4 22,4 22,4 26,1 Melrose/Waverley 9,1 9,8 13,9 10,0 11,9 Midrand 16,4 16,7 16,3 17,5 17,9 Milpark 5,9 5,6 5,6 6,8 6,5 Morningside 13,3 13,1 21,1 17,9 10,4 Newtown 5,9 5,9 5,9 5,9 5,9 Parktown 14,8 18,3 16,0 18,2 18,2 Randburg 6,8 6,9 10,6 7,6 9,0 Rivonia 9,8 14,0 15,3 19,0 20,3 Rosebank 18,3 18,5 11,2 12,6 14,3 Sandton 15,9 16,3 17,0 16,1 15,9 Sunninghill 17,4 18,7 19,2 17,3 20,9 Waterfall 4,2 4,0 4,4 4,4 4,5 Woodmead 8,1 8,7 10,4 9,0 11,7 Cape Town Bellville 4,4 4,8 4,5 5,6 6,1 CBD Cape Town 10,2 11,3 12,2 13,4 14,3 Central (Pinelands & Black River 1,9 1,9 2,6 3,9 4,4 Office Park) Century City 8,3 10,6 12,9 14,8 19,2 Claremont 7,9 6,6 8,4 12,6 13,9 Rondebosch/Newlands 1,9 2,3 6,7 7,6 7,6 Waterfront 4,9 2,3 2,4 2,7 6,0 Durban Ballito 7,7 7,6 8,0 11,7 14,2 Berea 9,5 10,8 12,7 12,7 13,9 CBD Durban 20,8 22,1 22,5 21,8 22,5 Hillcrest/Gillitts 4,2 9,3 9,7 4,3 3,9 Umhlanga/La Lucia 9,7 8,1 10,1 9,1 10,5 Westville 7,4 6,5 8,5 9,1 9,4 Pretoria Arcadia 3,3 3,7 3,7 3,7 1,9 Brooklyn/Nieuw Muckleneuk/ 8,2 9,2 10,9 13,4 16,0 Groenkloof/Waterkloof Rode’s Report 2021:1 63 Office demand and vacancies

Table 6.1 SAPOA office vacancy factors (%) Grades A+, A & B December March June September December 2019 2020 2020 2020 2020 CBD Pretoria 3,1 3,3 3,2 3,2 4,5 Centurion CBD 11,6 13,0 11,8 12,1 11,5 Hatfield/Hillcrest 20,4 18,7 18,1 17,1 16,9 Highveld Technopark & 10,7 9,3 8,8 8,8 10,5 Extensions Lynnwood/Menlo Park/ 9,0 9,3 9,7 9,5 5,8 Persequor Park/Hazelwood Menlyn/FaerieGlen/Ashlea 7,9 10,7 11,3 15,4 15,3 Gardens Pretoria other Eastern Suburbs/ 5,8 5,5 5,6 5,3 5,6 Route 21 Silver Lakes/The Willows 7,2 5,0 5,0 5,2 5,1 Port Elizabeth Central/Park Drive 11,6 11,6 11,6 11,6 11,6 Greenacres 10,4 10,4 10,4 10,3 15,8 Humerail 9,1 9,1 9,1 8,8 16,0 Newton Park 10,8 10,8 10,8 26,0 10,8 Walmer/Fairview 6,3 6,3 6,3 6,3 6,3 Major cities Johannesburg central 11,5 11,7 13,7 12,8 12,5 Johannesburg decentralized 12,2 13,0 13,6 14,1 14,8 Pretoria decentralized 9,8 10,0 9,9 10,6 10,6 Durban decentralized 8,8 8,1 9,9 9,5 10,4 Cape Town decentralized 4,9 5,3 6,3 7,8 9,5 Port Elizabeth decentralized 9,7 9,7 9,7 12,0 13,1 South Africa National decentralized 10,6 11,1 11,7 12,3 13,0 National CBDs 11,1 11,7 12,9 12,7 13,1 Source of data: Rode calculations based on SAPOA data Rode’s Report 2021:1 64 Industrial rentals and vacancies

Chapter 7: Industrial rentals and vacancies Industrial market the cream of the crop

Kobus Lamprecht

The industrial market is recovering, with feeling the effect of the weak economy, albeit nominal rentals in the first quarter of 2021 not so much as the office and retail property growing by 1% year on year amid continued markets. The key driver of industrial property low vacancies, according to Rode’s industrial is the performance of the manufacturing survey data. This is better than the 0,5% and retail sectors. The manufacturing sector growth achieved in 2020, but still well below underpins the demand for industrial space for the 5% rental growth of 2019. The industrial manufacturing production purposes, while the market is on a better footing than the office retail sector underpins the demand for and retail property markets, where the warehouse space and manufacturing. oversupply is more severe and nominal rentals have declined. The resilience of industrial The manufacturing sector has recovered property can be attributed to the largely non- somewhat after the second‐quarter 2020 speculative nature of industrial developments. collapse, supported by the relaxation of lockdown restrictions. However, looking at the No doubt, the strong and growing demand for bigger picture, manufacturing production still logistics, boosted by the growing popularity of fell by 5% year on year in the second half of online retail, is also boosting the demand for 2020 and 3% in January 2021, according to larger warehouses. Interestingly, several of Stats SA. A recovery is also evident in the Absa Rode’s survey respondents have also noted a Purchasing Managers’ Index (PMI) depicted in strong demand for smaller properties as the chart. Encouragingly, the first two monthly companies scale down, which is indicative of PMI data points for 2021 were both above the still difficult operating conditions. Indeed, neutral level of 50 index points, which implies manufacturing production and retail sales in that the sector is still in expansion territory. January 2021 were still lower compared to Delving into the drivers of the PMI, the Business January 2020, which means the recovery from Activity Index also lifted to above 50 points in last year’s lows still has a long way to go. February, while the New Sales Order Index reached its best level since October 2020. Below we first discuss the major factors However, the Employment Index remains well influencing the market before delving deeper below the neutral level. into the rental performance of major industrial conurbations. The outlook for the sector has improved due to prospects of better global economic growth in Major factors impacting the industrial market the second half of 2021 thanks to economic stimulus measures and expected wide‐scale Nominal industrial market rentals in South Covid‐19 vaccinations. It is likely that economic Africa in the first quarter of 2021 increased by growth will still be held back in the second about 1% compared to the first quarter of 2019. quarter by a resurgence of Covid‐19, as we have This implies that rentals increased slightly in already seen in Europe and India in March, due real terms as building‐cost inflation (BER BCI) to the slow pace of vaccinations and new was close to zero per cent. The slow rental mutations of the virus. Growth is generally growth shows that the industrial market is also expected to accelerate later in 2021 and into Rode’s Report 2021:1 65 Industrial rentals and vacancies

2022 due to successful vaccine roll‐outs. But  Strongly growing online retail sales. don’t hold your breath as this is much more Online retail sales made up 1,4% of total than a Covid‐19 recession. retail sales, according to the findings of World Wide Worx’s Online Retail in The global economic growth improvement will South Africa 2019 study. In the US and support the demand for exports. However, the China this number is closer to 20%. This sector’s recovery will be hampered by percentage should rise significantly in electricity supply disruptions and a shortage of 2020 and 2021 as consumers prefer raw materials. The slow roll‐out of vaccines will online shopping due to the coronavirus also hold back economic growth, with herd pandemic. immunity in South Africa likely achieved only in 2022. Another factor to consider is changes in

ABSA Purchasing Managers' Index business confidence as measured by the (Seasonally adjusted) 65 RMB/BER Business Confidence Index. The Expansion 60 accompanying graph shows the strong inverse correlation between industrial property 55 vacancies (national) and business confidence. 50 Naturally, business decision makers can be Index 45 expected to be hesitant to expand production

40 Contraction capacity or storage space by renting more 35 space when they are dissatisfied with prevailing

30 business conditions. The “r²=0,7” shown in 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21

Source of data: BER; ABSA the graph implies that about 70% of the change in industrial property vacancies can be The retail sector has also performed better of explained by changes in business confidence late, but both second‐half 2020 and January levels, with a lag of about one year. However, 2021 sales were still down about 4% year on if one were to include additional determinants year. We are not upbeat about the prospects of vacancies in a regression model, the for the sector over the short term due to the contribution of business confidence to weak state of consumer finances and the industrial vacancies would be lower than the potential impact of a third or even fourth 70%. Covid‐19 wave. The medium‐term outlook is relatively better. Rode’s national vacancy factor increased further to about 2,9 points in the first quarter As mentioned above, a positive for the of 2021, which is up only slightly from the industrial market is the ever‐growing demand pre‐pandemic level of 2,6 points in the first for new‐generation warehouse or distribution quarter and still well below the peak of space. The drivers are: 2001. The 2,9 points are considered ‘low’ on Rode’s vacancy scale of 1‐9, implying  Modern racking systems that make that less than 5% of industrial property stacking heights of more than 12 was vacant at the time. Therefore, we are metres possible, thus requiring a new continuing to see rising vacancy rates from a generation of warehouses. This has the low level. Vacancy rates for office, retail and potential of making many existing residential property have seen larger increases distribution centres outdated. However, over the past year, which showcases the it is technically possible to increase the resilience of industrial property in these trying eaves height of existing buildings. times. Rode’s Report 2021:1 66 Industrial rentals and vacancies

Rode's industrial vacancy factor (national) vs average contractual rental escalation rates of RMB/BER Business Confidence Index 100

Business Confidence Index Confidence Business new leases in general in Table , with some r² = 0,7 (4-quarter lag) 7.4 80 survey respondents indicating rates of as low as 60

40 6% in Cape Town, Durban and the East Rand 3.5

20 and even 5% in Polokwane. 3.0

0 2.5

2.0 Rentals for prime space of 500 m² grew by 3% (1-9)

1.5 Vacancy factor Vacancy scale Business confidence smoothed and 2% in Durban and Central Witwatersrand 1.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 respectively, while growing by 1% in the East Source of data: Rode's Time Series; BER Rand. In Durban, the demand for industrial space is exceeding supply in areas close to the Vacancies have increased due to relatively low port, such as Jacobs and Mobeni, where rental business confidence, among other factors. In growth for property across all sizes tracked by the first quarter of 2021, only 35% of Rode increased by around 7% on average respondents surveyed by the BER were satisfied compared to the first quarter of 2020. Tenants with prevailing business conditions. This means want to be close to the port, especially close to seven out of ten senior executives manufacturing and logistics companies. Rentals expressed their dissatisfaction with prevailing have also been quite resilient in Central Wits business conditions. The slightly higher vacancy and the East Rand, where vacancies are rates have led to a slowdown in market rental generally still seen to be quite low (less than growth compared to 2019 when growth was 5%), according to Rode’s survey results. close to 5%, as can be seen in the chart.

Change in prime industrial rentals The demand for industrial property is slowly vs Industrial property vacancies recovering in Cape Town, but nominal rentals National 3.5 remain about 1% lower than the first quarter of r²=0,6 3.0 Vacancy scale 2020. The Mother City has seen its vacancy smoothed 2.5 (1-9) factor move above level 3 on the Rode scale 2.0

25 Rentals 1.5 of 1‐9 (i.e. higher than about 5%) since the Vacancy factors 20 1.0 15 third quarter of 2020, which has maintained 10 downward pressure on rentals. 5

(%; y-o-y) (%; 0 Change in rentals in Change -5 Nominal prime industrial rentals -10 (500-m² units) 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 70 Source of data: Rode's Time Series 60 Smoothed 50

Rental performance 40

30

As stated above, nominal industrial market R/m² (log scale) 20 rentals in the first quarter of 2021 increased by Cape Town Durban about 1% compared to the first quarter of 2019. East Rand Central Witwatersrand This implies that rentals increased slightly in 10 real terms as building‐cost inflation (BER BCI) 00 02 04 06 08 10 12 14 16 18 20 Sourceof data: Rode's Time Series was close to zero per cent. The slow rental growth shows that the industrial market is Note in the graph that the East Rand and also feeling the impact of the weak economy, Central Witwatersrand have the lowest rental albeit not so much as the office and retaillevels 1 of the four conurbations shown. The property markets. Also note the weaker exceedingly high rental levels in Durban over

1 Levels as distinct from growth rates Rode’s Report 2021:1 67 Industrial rentals and vacancies time could possibly be ascribed to one expect an immediate fair income return on developer who dominates the supply side and their development costs. who possibly is not supplying enough to the market at present. Thus, these rentals are an early indicator of the eventual level market rentals will reach Real prime industrial rentals (500-m² units) once demand catches up with supply in the 2016 rands 60 wake of hoped‐for renewed economic growth Smoothed 56 sometime in the future.

52 Operating expenses are also an important 48 factor to consider when assessing the R/m² (log scale) 44 profitability or viability of a property (see Table

40 Cape Town 7.5). Note, as always, that gross operating Durban East Rand expenses exclude utility charges like electricity, Central Witwatersrand 36 00 02 04 06 08 10 12 14 16 18 20 refuse removal, water and sanitation, which are

Source of data: Rode's Time Series; BERBCI always for the account of the tenant.

As a yardstick of potential future growth in The remainder of this chapter includes: market rentals, we compare pioneer rentals  mean prime industrial rentals by township; with prevailing market rentals for prime  the standard deviations from these mean industrial premises of 1 000 m² as in the first rentals; quarter of 2021 (see Table 7.1 on the next  indicative operating costs; and page). Pioneer rental levels often represent  the predominant escalation rates. (long) leases signed on newly erected on‐ demand buildings, and these rentals then This concludes our section on industrial rentals reflect today’s building costs (in contrast to and vacancies. Note that our industrial tables today’s market rents), as developers naturally follow. 

The reference to real means that nominal prices have been deflated (that is, adjusted for inflation). In this chapter, industrial rentals are deflated by the Bureau for Economic Research’s Building Cost Index (BER BCI). By using building costs as a deflator, the reader can interpret the graphs from a developer’s point of view, that is they can serve as a proxy for the viability of new developments over time, holding constant capitalization rates and operating expenses.

The industrial rental tables contain regression parameters to allow readers to interpolate rental rates for area sizes other than those given in the tables. These parameters are necessary because the relationship between rental rates and floor area is not linear. For more details on how to use these equations, refer to Annexure 3 on annexure page XIV.

Readers are reminded that the vacancy figures in the graph above are not actual vacancy percentages, but rather graduations on a 1-9 vacancy scale. For more information, see the notes to the industrial tables on p. 95. Furthermore, the vacancies are for all the unit sizes (250 m², 500 m², 1 000 m², 2 500 m² and 5 000 m²) combined, as surveyed by Rode. In reality, vacancies could differ across the different-sized units. Rode’s Report 2021:1 68 Industrial rentals and vacancies

Table 7.1 Pioneer industrial rentals Highest gross nominal market rental rate achieved (1 000 m² units) Quarter 2021:1 Rands per rentable m², gross leases (excl. VAT) Normal prime Inferred growth Pioneer mean potential Central Witwatersrand 85 51 66% West Rand 85 43 98% East Rand 75 50 50% Durban 85 63 34% Cape Peninsula 105 52 100% Table 7.2 Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Central Witwatersrand Cambridge Park 65,00 65,00 63,60 60,80 61,00 2,9 4,325 ‐0,026 0,89 Wynberg Proper 50,50 49,19 45,67 43,44 39,50 3,8 4,383 ‐0,081 0,97 Strijdom Park 54,00 53,15 53,10 49,43 48,40 2,7 4,216 ‐0,039 0 ,91 West 51,49 49,93 48,92 49,50 46,63 3,1 4,084 ‐0,027 0, 79 Kya Sand East 56,67 52,50 48,33 50,00 47,50 ‐ 4,290 ‐0,051 0,76 Lanseria Corporate Estate 57,50 55,00 55,00 55,00 52,50 ‐ 4,172 ‐0,024 0,78 Cosmo Business Park 60,00 58,00 56,50 55,00 57,50 ‐ 4,176 ‐0,018 0,46 Mostyn Park 62,50 60,00 55,00 55,00 55,00 ‐ 4,360 ‐0,044 0,77 69 Clayville/Olifantsfontein 54,00 56,00 57,00 57,67 50,13 3,0 4,117 ‐0,016 0,11 Chloorkop 53,83 50,00 47,43 50,00 48,25 2,4 4,101 ‐0,027 0,46 Amalgam 45,00 45,00 45,00 41,50 40,00 ‐ 4,064 ‐0,043 0,83 Crown Mines 40,00 40,00 40,00 37,50 36,50 ‐ 3,890 ‐0,033 0,83 Industria 37,50 32,50 32,50 30,00 27,50 ‐ 4,102 ‐0,092 0,93 Booysens/Booysens Reserve/ 35,00 30,00 30,00 29,00 28,00 ‐ 3,847 ‐0,062 0,77

Ophirton Industrial rentalsandvacancies Village Main/Village Deep/New 30,50 30,50 30,50 30,50 30,50 ‐ 3,418 ‐ ‐ Centre ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ /Electron/ 47,00 42,50 40,00 36,50 35,00 ‐ 4,370 ‐0,097 0,98 45,75 45,75 45,00 43,75 41,25 1,5 4,023 ‐0,033 0,85 Devland/Nancefield 37,50 35,00 32,50 30,00 30,00 ‐ 4,045 ‐0,07 9 0,95 Cleveland/ 35,00 35,00 35,00 30,00 30,00 ‐ 3,931 ‐0, 063 0,79 Newlands/Martindale 52,50 52,50 50,00 47,50 42,50 ‐ 4,372 ‐0,0 69 0,89 Kew/Wynberg East 48,33 45,83 43,00 39,50 37,60 3,0 4,354 ‐0,08 6 1,00 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Bramley View/Lombardy West 37,50 35,00 32,50 30,00 30,00 ‐ 4,045 ‐0,079 0,95 Marlboro 42,50 42,50 40,00 40,00 37,50 ‐ 3,984 ‐0,041 0,88 Halfway House: hi‐tech strip 63,17 62,33 61,14 60,29 59,80 3,0 4,248 ‐0,019 0,98 Halfway House: Richards Drive 60,58 57,43 57,83 57,21 55,00 4,0 4,232 ‐0,026 0,80 Corporate Park (Midrand) 60,00 60,00 60,00 60,00 60,00 3,0 4,09 4 ‐ ‐ Commercia 55,00 53,60 52,80 52,60 52,00 1,1 4,093 ‐0,017 0,89 Kramerville/Eastgate Ext12 & Ext13 79,50 69,00 65,00 63,00 62,00 2,3 4,744 ‐0,076 0,83 Linbro Park 65,43 63,50 63,80 63,17 62,70 2,7 4,237 ‐0,012 0,76 Wesco Park/Eastgate Ext3, Ext11, 64,63 61,50 51,67 49,33 47,33 1,2 4,768 ‐0,110 0,92 70 Ext6, Ext8/Malboro North (New) City Deep 52,00 51,40 48,00 48,60 48,00 1,8 4,098 ‐0,028 0,74 North Riding/Hoogland 62,20 60,13 60,10 57,60 58,60 1,8 4,240 ‐ 0,022 0,79 Samrand Centurion 71,33 69,33 65,75 71,67 69,33 3,7 4,253 ‐0,002 0,00 69,20 67,80 66,50 65,10 64,90 1,6 4,355 ‐0,022 0,96 Selby Ext 12/13/15/19/20/24/ 37,50 37,50 37,50 35,00 35,00 ‐ 3,792 ‐0,028 0,79

City West Industrial rentalsandvacancies Selby Ext 5/10/14/18 40,00 40,00 40,00 37,50 37,50 ‐ 3,846 ‐0, 026 0,79 Selby Ext 11 37,50 37,50 37,50 37,50 37,50 ‐ 3,624 ‐ ‐ Selby Ext 3/4/6 40,00 40,00 40,00 40,00 40,00 ‐ 3,689 ‐ ‐ Denver (Old) 30,00 30,00 30,00 30,00 30,00 ‐ 3,401 ‐ ‐ Denver (New) 40,00 40,00 39,33 38,33 38,33 ‐ 3,787 ‐0,017 0,91 70,00 70,00 67,50 67,50 67,50 ‐ 4,326 ‐0 ,014 0,73 Reuven 45,00 45,00 40,00 40,00 40,00 ‐ 4,057 ‐0,046 0,73 Selby (Old)/Selby Ext2/Park Central 35,67 36,33 34,67 34,00 37,33 1,2 3,550 0,003 0,01 40,00 40,00 40,00 37,50 37,50 ‐ 3,846 ‐0,026 0,79 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 /Newtown ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Waterfall 73,50 73,50 73,50 73,50 69,00 5,0 4,401 ‐0,017 0,50 Lords View 63,00 63,00 63,00 63,00 66,50 ‐ 4,055 0,014 0,50 Central Witwatersrand 53,86 52,36 51,33 50,23 49,06 2,6 West Rand Lea Glen 38,00 37,50 34,50 33,00 32,00 1,8 3,987 ‐0,062 0,96 Honeydew X19/20/21/22 57,25 57,25 55,75 53,00 53,00 1,4 4,227 ‐0,031 0,91 Stormill 43,60 43,60 42,00 42,00 42,00 1,3 3,855 ‐0,015 0,73 Chamdor 34,33 34,00 34,00 29,00 27,36 1,3 4,028 ‐0,082 0,86 71 Factoria 50,00 50,00 45,00 46,00 35,00 ‐ 4,530 ‐0,104 0,73 Krugersdorp: Delporton 30,00 28,00 25,00 20,00 20,00 ‐ 4,254 ‐0 ,152 0,95 Randfontein: Aureus 35,00 30,00 30,00 22,00 22,00 ‐ 4,462 ‐0,16 5 0,91 Boltonia 38,50 38,50 36,00 35,00 33,50 ‐ 3,934 ‐0,049 0,95 : Technikon/ 41,75 36,67 36,67 31,67 26,25 2,0 4,523 ‐0,142 0,93 Manufacta

Industria North 41,00 38,50 36,00 33,50 31,00 ‐ 4,220 ‐0,092 1, 00 Industrial rentalsandvacancies Robertville 43,00 42,00 39,80 39,71 39,00 1,3 3,934 ‐0,033 0,89 Laserpark 58,75 57,75 57,43 54,00 52,57 3,0 4,296 ‐0,039 0,94 West Rand 46,03 45,30 43,03 41,14 38,26 1,8 East Rand Elandsfontein 42,13 41,44 40,43 39,22 37,67 2,7 3,949 ‐0,037 0, 98 Tunney/Greenhills 59,27 57,98 56,48 55,44 54,90 2,0 4,221 ‐0,02 6 0,97 Henville 42,80 42,80 42,00 40,60 40,00 1,3 3,904 ‐0,025 0,94 Hughes 56,50 54,63 52,25 51,56 51,25 2,2 4,204 ‐0,033 0,89 Bartletts 53,29 51,33 50,00 50,00 50,00 1,0 4,068 ‐0,020 0,72 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Lilianton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Meadowbrook/Wilbart 60,71 61,44 57,56 56,13 55,94 1,5 4,300 ‐0, 034 0,84 Sunnyrock 55,60 55,09 55,00 54,43 53,00 1,3 4,100 ‐0,014 0,86 Rustivia/Activia Park 45,33 45,17 44,64 43,29 42,57 2,0 3,945 ‐ 0,022 0,95 Eastleigh 49,31 45,50 45,50 42,42 41,50 2,1 4,184 ‐0,055 0,93 Sebenza Ext 14 50,25 48,13 47,11 47,38 48,17 2,5 3,964 ‐0,013 0 ,36 Spartan Ext 16 (Sebenza Link) + Ext 47,88 47,63 47,00 46,69 46,63 2,4 3,920 ‐0,010 0,93 1/3/7 Isando 50,00 49,83 49,08 47,75 48,46 3,0 3,990 ‐0,014 0,77 72 Isando 3 51,60 52,60 50,95 48,70 49,73 2,5 4,068 ‐0,020 0,65 Jet Park 53,54 52,68 52,50 51,54 51,36 2,6 4,054 ‐0,014 0,96 Alrode & Xs 42,20 42,25 38,50 38,50 37,42 1,4 3,986 ‐0,043 0,84 Alrode South 43,60 41,80 41,90 39,50 38,58 2,9 3,994 ‐0,040 0,9 5 Alberton 36,88 35,63 32,88 32,88 34,80 2,0 3,719 ‐0,025 0,36 Aeroport/Spartan Ext 2 53,40 53,20 54,17 53,00 50,60 3,3 4,072 ‐0,015 0,49

Delville 35,17 35,17 32,50 32,50 32,50 4,0 3,728 ‐0,031 0,73 Industrial rentalsandvacancies Roodekop 39,75 38,17 35,83 35,83 34,83 3,8 3,903 ‐0,042 0,89 Wadeville: Industrial zoning 43,44 41,25 40,19 37,94 36,31 2,6 4,090 ‐0,058 0,99 Route 24/Meadowdale 51,10 51,80 50,73 49,56 50,56 2,7 3,989 ‐0, 009 0,44 Germiston S/Industries E 36,38 36,38 35,63 35,63 34,00 2,0 3,71 5 ‐0,020 0,79 Driehoek/Industries W 40,10 40,10 39,50 39,10 38,10 1,5 3,791 ‐ 0,017 0,90 Knights 42,50 42,50 40,83 39,17 35,83 1,0 4,082 ‐0,056 0,89 Spartan Proper 50,63 50,75 50,38 44,25 44,50 2,3 4,244 ‐0,053 0,80 Founders View 61,00 60,50 58,17 56,17 52,00 1,5 4,414 ‐0,052 0, 92 Longmeadow 65,00 65,78 64,40 64,15 63,00 2,6 4,247 ‐0,012 0,75 Pomona/Kempton Park 60,45 60,95 60,73 60,82 60,17 3,1 4,116 ‐0, 002 0,13 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Gosforth Park 67,21 64,90 64,79 64,07 63,06 3,0 4,299 ‐0,018 0, 88 S&J Industrial Estate 63,13 63,13 63,13 63,13 64,64 1,0 4,106 0,006 0,50 East Rand 51,43 50,87 49,90 48,82 48,39 2,3 Far East Rand Boksburg North & East 44,78 43,89 42,17 40,00 38,63 2,0 4,092 ‐ 0,051 0,99 Benoni South 40,40 42,00 39,00 35,40 34,20 2,3 4,111 ‐0,067 0,8 6 New Era/Vulcania 35,00 32,50 32,50 30,00 27,50 3 ,0 3,966 ‐0,074 0,94 Nuffield 37,50 32,50 30,00 27,50 27,50 3,0 4,147 ‐0,103 0,90 Fulcrum 29,00 30,00 27,50 27,50 27,50 4,0 3,519 ‐0,025 0,57 73 Apex 43,50 43,25 41,60 41,00 39,00 3,2 3,978 ‐0,036 0,93 Labore Brakpan 30,00 30,00 25,00 20,00 20,00 3,0 4,333 ‐0,162 0 ,92 Morehill Ext 8 Benoni 40,67 40,33 36,67 32,67 32,00 2,0 4,231 ‐ 0,092 0,95 Far East Rand 40,50 39,96 37,88 35,33 34,14 2,5 Pretoria Charlotte Maxeke 45,00 35,00 30,00 30,00 25,00 1 ,0 4,680 ‐0,172 0,89

Pretoria Industrial Township 40,00 35,00 30,00 30,00 25,00 1,0 4,446 ‐0,142 0,92 Industrial rentalsandvacancies Koedoespoort 54,33 45,00 36,67 31,67 26,50 1,7 5,265 ‐0,234 0,9 9 Waltloo/Despatch 53,33 45,00 45,00 42,50 40,00 2 ,0 4,382 ‐0,082 0,85 Silverton/Silvertondale 53,33 47,50 40,00 40,00 32,50 2,3 4,796 ‐0,151 0,93 Samcor Park 55,00 50,00 45,00 40,00 35,00 2,0 4,831 ‐0,148 1,00 55,00 55,00 55,00 55,00 50,00 1,0 4,163 ‐0,025 0,50 Hermanstad 45,00 35,00 30,00 30,00 25,00 1,0 4,680 ‐0,172 0,89 Kirkney 37,00 35,00 32,00 28,00 22,00 2,0 4,576 ‐0,167 0,93 Hennopspark X15 & X7 65,00 62,50 62,50 60,00 52,50 1,0 4,531 ‐0,062 0,80 Gateway 63,67 58,33 52,50 51,67 51,67 2,3 4,503 ‐0,070 0,82 Rode’s Report Table 7.2 (continued) Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Lyttelton Manor X4/X6 75,00 60,00 60,00 55,00 55,00 1,0 4,749 ‐ 0,092 0,76 45,00 30,00 25,00 20,00 20,00 ‐ 5,136 ‐0,265 0,8 9 Silvertondale X1 52,50 47,50 42,50 40,00 32,50 2,5 4,783 ‐0,148 0,96 Klerksoord 35,00 35,00 31,00 28,00 25,00 3,0 4,247 ‐0,118 0,95 Rosslyn 40,00 40,00 40,00 40,00 38,00 2,0 3,773 ‐0,014 0,50 Centurion 67,50 65,00 62,50 55,00 55,00 2,0 4,644 ‐0,077 0,94 Pretoria 54,14 48,40 43,92 41,58 38,12 1,9 Polokwane Lebowakgomo ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 74 Superbia 43,50 42,50 34,00 30,00 24,00 2,0 4,940 ‐0,202 0,96 Industria 50,00 42,50 37,50 30,50 26,00 1,0 5,102 ‐0,216 1,00 Ladine 41,50 40,00 33,50 25,00 25,00 1,0 4,852 ‐0,197 0,93 Futura 38,00 35,00 30,00 30,00 ‐ 2,0 ‐ ‐ ‐ Laboria 46,00 42,67 35,00 41,00 36,00 1,0 4,151 ‐0,066 0,48 Magna Via 57,00 53,33 49,00 55,00 50,00 2,0 4,163 ‐0,028 0,28

Seshego ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Industrial rentalsandvacancies Polokwane 46,73 44,08 37,09 37,18 32,20 1,5 Nelspruit Nelspruit East 55,00 42,50 36,50 35,00 ‐ 2,0 ‐ ‐ ‐ Nelspruit West 45,00 50,00 41,50 42,50 45,00 1,0 3,948 ‐0,021 0 ,13 Rocky's Drift 41,50 45,00 37,50 40,00 ‐ 2,0 ‐ ‐ ‐ Riverside Park 65,00 57,50 52,50 55,00 55,00 2,0 4,375 ‐0,048 0 ,50 Nelspruit 51,63 48,75 42,00 43,13 50,00 1,8 Durban Springfield Park 69,40 68,00 64,25 62,50 61,25 3 ,0 4,481 ‐0,044 0,96 Mayville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Phoenix ‐ ‐ ‐ 51,50 51,50 2,5 ‐ ‐ ‐ Chris Hani Rd (North Coast/ 70,00 70,00 66,67 65,67 64,00 2,3 4,431 ‐0,032 0,93 Briardene) Briardene Industrial Park 75,00 71,25 68,75 64,25 61,75 2,3 4,6 74 ‐0,065 1,00 Umgeni Rd/Stamford Hill 61,67 60,00 58,33 56,67 ‐ 3,7 ‐ ‐ ‐ Umbilo/Sydney Rd/Magwaza 52,50 52,50 52,50 52,50 52,50 4,0 3,961 0,000 0,00 Maphalala St (Gale) Jacobs 59,33 60,00 60,00 56,67 57,00 3,8 4,202 ‐0,019 0,65 Mobeni 60,00 60,00 60,00 56,67 56,67 3,5 4,234 ‐0,023 0,79 75 Prospecton 65,00 65,00 61,67 58,33 58,33 3,0 4,422 ‐0,043 0,92 Ithala Industrial Estate 62,50 62,50 62,50 62,50 60,00 6,0 4,202 ‐0,011 0,50 Pinetown Central 56,50 56,50 56,50 56,50 56,50 4,5 4,034 ‐ ‐ New Germany 59,00 59,00 59,00 59,00 59,00 4,0 4,078 ‐ ‐ Isipingo ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rossburgh/South Coast Rd 58,00 58,00 58,00 61,00 61,00 2,5 3,938 0,020 0,79

Edwin Swales Drive ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Industrial rentalsandvacancies Glen Anil 70,00 70,00 68,75 65,00 65,00 3,5 4,423 ‐0,030 0,89 Felix Dlamini Rd (Brickfield) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Verulam ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Canelands ‐ ‐ ‐ 55,00 55,00 3,0 ‐ ‐ ‐ Tongaat ‐ ‐ ‐ 38,00 38,00 2,0 ‐ ‐ ‐ New Westmead/Mahogany 62,00 62,00 62,00 62,00 62,00 3,0 4,127 ‐ ‐ Westmead 62,00 62,00 62,00 62,00 62,00 4,0 4,127 ‐ ‐ Mariann Park/Southmead ‐ 55,00 55,00 55,00 ‐ 1,0 ‐ ‐ ‐ Maxmead 65,00 65,00 62,00 62,00 62,00 2,0 4,275 ‐0,018 0,73 Ringroad Industrial Park 65,00 65,00 62,00 62,00 ‐ 2,0 ‐ ‐ ‐ Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Avoca/Red Hill/Northgate 70,00 70,00 70,00 65,00 62,50 2,0 4,493 ‐0,040 0,83 Falcon Park 62,50 62,50 62,50 ‐ ‐ 2,0 ‐ ‐ ‐ Riverhorse Valley Business Estate 80,00 77,50 76,75 73,25 72,00 3,5 4,576 ‐0,035 0,98 Mount Edgecombe 71,25 71,25 69,50 66,25 65,00 3,5 4,467 ‐0,034 0,94 Umbogintwini/Southgate ‐ ‐ ‐ 50,00 50,00 2,0 ‐ ‐ ‐ Southgate Industrial Park 67,00 66,00 63,50 60,00 60,00 1,5 4,440 ‐0,042 0,95 Umgeni Park 65,00 65,00 65,00 62,00 62,00 3,5 4,290 ‐0,019 0,79 Hammarsdale 46,50 46,50 42,67 42,67 42,67 3,5 4,023 ‐0,034 0,73 Cato Ridge 50,00 50,00 50,00 46,67 47,67 2,0 4,045 ‐0,022 0,67 76 Ballito ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dube Tradeport ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cornubia 83,33 80,00 76,67 70,67 70,67 3,0 4,752 ‐0,060 0,96 Durban 65,95 65,00 63,22 59,87 59,37 3,1 Ladysmith Ezakheni/Pieters ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Danskraal 20,00 17,00 12,00 10,00 8,00 3,0 4,706 ‐0,310 0,98 Industrial rentalsandvacancies Nambiti 20,00 17,00 12,00 10,00 8,00 3,0 4,706 ‐0,310 0,98 Colenso ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ladysmith 20,00 17,00 12,00 10,00 8,00 3,0 Cape Town Viking Place 62,50 57,50 50,00 50,00 47,50 1,0 4,598 ‐0,089 0,8 8 Glosderry ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Paarden Eiland/Metro 61,57 59,63 57,29 57,50 54,83 4,1 4,306 ‐0 ,035 0,91 Montague Gardens 64,11 60,40 57,30 57,30 54,89 4,4 4,402 ‐0,047 0,90 Marconi Beam 60,13 56,88 55,50 53,00 49,33 4,7 4,433 ‐0,061 0,9 7 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 53,75 49,38 46,00 44,00 40,00 5,8 4,483 ‐0,09 2 0,98 Racing Park 43,00 39,00 38,00 35,00 35,00 6,0 4,113 ‐0,068 0,92 Atlantis 40,00 40,00 35,00 37,50 35,00 6,0 3,918 ‐0,042 0,58 Woodstock/Salt River/Observatory ‐ 67,50 57,50 ‐ ‐ 4,0 ‐ ‐ ‐ Athlone 1 & 2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lansdowne Nerissa 60,00 60,00 60,00 ‐ ‐ ‐ ‐ ‐ ‐ Sand Industria ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ottery Hillstar 67,50 65,00 62,50 ‐ ‐ ‐ ‐ ‐ ‐ Ottery Sunset 70,00 70,00 60,00 ‐ ‐ ‐ ‐ ‐ ‐ 77 Diep River 75,00 70,00 63,33 65,00 65,00 5,5 4,535 ‐0,046 0,64 Elfindale 65,00 65,00 65,00 ‐ ‐ ‐ ‐ ‐ ‐ Monwood/Philippi 75,00 ‐ ‐ 40,00 ‐ ‐ ‐ ‐ ‐ Retreat/Steenberg 65,00 65,00 65,00 ‐ ‐ ‐ ‐ ‐ ‐ Capricorn Park 62,50 65,00 65,00 58,33 ‐ 5,0 ‐ ‐ ‐ Maitland 51,25 46,00 45,67 44,00 40,75 2,7 4,275 ‐0,066 0,90

Ndabeni 62,00 59,00 56,00 54,40 52,50 1,6 4,416 ‐0,054 0,98 Industrial rentalsandvacancies Epping 1 & 2 59,13 57,22 54,38 50,71 55,00 3,6 4,257 ‐0,035 0,53 WP Park 62,50 57,50 50,00 50,00 47,50 1,0 4,598 ‐0,089 0,88 Elsies River (excl. Central Park) ‐ 47,00 ‐ 44,50 ‐ 2,0 ‐ ‐ ‐ Parow Beaconvale 50,00 48,33 47,50 45,00 42,50 3 ,5 4,208 ‐0,052 0,97 Tygerberg Business Park 50,00 45,00 40,00 40,00 50,00 1,0 3,901 ‐0,014 0,02 Parow Industria 50,00 50,00 47,50 45,00 45,00 2,0 4,153 ‐0,042 0,92 Parow East 47,50 45,00 45,00 45,00 ‐ 2,0 ‐ ‐ ‐ Bellville Oakdale 52,50 45,00 40,00 37,50 35,00 ‐ 4,633 ‐0,129 0,95 Bellville Stikland/Kaymor 55,83 55,00 51,43 47,50 46,00 3,5 4,426 ‐0,071 0,97 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Bellville Triangle 50,00 45,00 43,00 41,25 40,00 2,0 4,264 ‐0,070 0,92 Bellville South/Sacks Circle 48,75 47,00 47,00 44,00 47,50 2,8 3,958 ‐0,016 0,26 42,50 40,00 38,50 37,50 37,50 1,0 3,955 ‐0,041 0,8 7 Industria 57,00 53,20 51,20 50,00 47,00 3,3 4,351 ‐ 0,058 0,96 Everite Brackenfell 55,00 52,33 50,67 48,33 51,00 2,5 4,152 ‐0, 030 0,59 Kuils River 47,50 45,00 40,00 40,00 40,00 1,0 4,164 ‐0,060 0,78 Blackheath 49,25 46,33 42,75 40,25 41,50 1,5 4,225 ‐0,063 0,84 Saxenburg Industrial Park 59,00 55,67 55,50 51,25 48,00 1,5 4,4 42 ‐0,066 0,95 Okavango 58,60 53,17 52,40 50,20 56,67 3,0 4,103 ‐0,016 0,10 78 Brackengate/Icon Business Park 65,00 63,33 62,50 60,33 63,00 2,0 4,243 ‐0,015 0,43 Paarl 63,00 53,75 48,33 43,13 38,33 2,0 4,996 ‐0,159 0,99 Wellington 55,00 45,00 41,67 37,50 33,75 2,0 4,797 ‐0,152 0,96 Contermanskloof 65,00 63,33 60,00 58,75 57,50 2,0 4,401 ‐0,042 0,96 Rivergate 63,33 62,17 59,60 59,00 57,50 2,5 4,323 ‐0,032 0,96 Airport Ind (north of sewerage ‐ 67,00 67,50 67,50 67,50 3,5 ‐ ‐ ‐

farm) Industrial rentalsandvacancies Airport Ind (west of Borcherds ‐ 62,50 75,00 75,00 ‐ 4,0 ‐ ‐ ‐ Quarry) Airport Ind (east of Borcherds ‐ ‐ ‐ ‐ ‐ 4,0 ‐ ‐ ‐ Quarry) Durbanville Industrial Park 70,00 63,00 57,00 55,00 55,00 1,0 4,652 ‐0,080 0,85 Northgate Industrial Park 86,50 81,50 72,50 63,50 62,50 1,7 5,116 ‐0,119 0,97 Cape Town 58,07 55,25 52,38 49,59 48,88 3,3 Helderberg The Interchange ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Helderberg Industrial Park/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Broadlands Gants ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Somerset Business Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Georges Park/Onverwacht ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Mansfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Firgrove Industrial Estate ‐ 60,00 60,00 ‐ ‐ ‐ ‐ ‐ ‐ Strand Halt ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Helderberg ‐ ‐ ‐ ‐ ‐ ‐ 79 Stellenbosch Plankenbrug ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Devon Valley ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Tenantville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Klapmuts ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Stellenbosch ‐ ‐ ‐ ‐ ‐ ‐

Port Elizabeth Industrial rentalsandvacancies Deal Party 39,17 36,25 35,63 32,33 30,00 5,3 4,140 ‐0,085 0,98 North End 38,75 35,00 32,50 32,50 30,50 4,0 4,019 ‐0,072 0,88 Korsten/Neave/Sidwell/ 31,88 30,00 30,00 32,25 32,25 3,4 3,345 0,014 0,20 Sydenham South End Walmer 53,33 50,00 46,67 42,50 42,50 2 ,5 4,415 ‐0,081 0,95 Uitenhage: Volkswagen 30,00 30,00 31,67 31,67 31,67 3,7 3,286 0,021 0,73 area/NMBLP Uitenhage: Hella/Kruisrivier 25,00 26,67 26,67 26,67 26,67 4,7 3,156 0,016 0,47 Struandale 40,00 36,25 35,00 35,00 35,00 2,7 3,860 ‐0,039 0,65 Table 7.2 (continued) Rode’s Report Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Markman Township 30,00 30,00 31,67 31,67 31,67 5 ,2 3,286 0,021 0,73 Perseverance 35,00 35,00 33,17 32,50 32,50 3,0 3,719 ‐0,029 0,8 6 Walmer 60,00 60,00 51,67 50,00 46,67 2,0 4,605 ‐0,090 0,92 Greenbushes 51,67 49,38 48,88 48,13 46,25 3,0 4,114 ‐0,032 0,93 Fairview 73,75 73,75 70,00 63,33 58,33 2,6 4,790 ‐0,083 0,93 Port Elizabeth 44,41 42,43 39,29 38,38 37,06 3,5 East London Arcadia 45,00 40,00 35,00 30,00 28,00 3,0 4,695 ‐0,163 0,99 Gately/Woodbrook 45,00 35,00 32,00 28,00 25,00 3,0 4,755 ‐0,183 0,96 80 Wilsonia 40,00 38,00 32,00 30,00 25,00 4,0 4,560 ‐0,154 0,96 Braelyn 40,00 37,00 32,00 ‐ ‐ 3,0 ‐ ‐ ‐ Northend 40,00 37,00 32,00 ‐ ‐ 3,0 ‐ ‐ ‐ Chiselhurst 45,00 36,00 34,00 ‐ ‐ 3,0 ‐ ‐ ‐ Meisies Halt 55,00 52,00 36,00 35,00 30,00 3,0 5,166 ‐0,210 0,9 0 Beacon Bay Industrial ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

IDZ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Industrial rentalsandvacancies West Bank Industrial Area 45,00 35,00 32,00 28,00 25,00 4,0 4,7 55 ‐0,183 0,96 East London 44,38 38,75 33,13 30,20 26,60 3,3 Bloemfontein Hilton 45,75 42,25 35,50 26,00 25,50 3,3 5,062 ‐0,219 0,96 East End 43,25 41,50 34,75 32,33 25,50 3,7 4,749 ‐0,171 0,94 Harvey Road 39,50 39,20 28,75 32,00 27,50 3,3 4,331 ‐0,119 0,71 Old Industrial 42,25 37,00 34,50 27,33 22,00 5,0 4,945 ‐0,212 0,97 Hamilton: Mill St 35,33 32,00 28,25 26,00 24,67 4,3 4,216 ‐0,12 1 0,97 Hamilton: G Lubbe St 34,00 32,67 28,00 26,67 24,00 5,2 4,185 ‐0 ,118 0,96 Rode’s Report Table 7.2 (continued) Mean prime industrial market rentals as in quarter 2021:1 (R/m² p.m.; gross lease; excl. VAT) Area size leased in m² Vacancy a b r² 2021:1 250 500 1.000 2.500 5.000 Estoire 46,00 46,25 43,50 39,33 38,33 2,8 4,241 ‐0,070 0,93 Quaggafontein 55,00 55,00 59,00 59,50 45,00 2,8 4,295 ‐0,043 0,21 Bloemfontein 41,69 39,48 35,28 32,82 27,84 3,9 George George Central 41,67 35,00 31,67 26,67 25,00 3,0 4,638 ‐0,170 0 ,98 Tamsui Industria 42,33 37,67 32,33 27,33 26,00 3,0 4,676 ‐0,171 0,98 Pacaltsdorp Industria 37,67 31,50 31,00 28,33 26,33 2,7 4,177 ‐ 0,107 0,92 George 40,56 35,13 31,67 27,44 25,78 2,9

Pietermaritzburg 81 Willowton 34,17 37,00 32,75 33,33 29,33 4,2 3,879 ‐0,054 0,59 Mkondeni/Shortts Retreat 40,00 41,00 36,25 31,67 28,33 6,7 4,43 8 ‐0,126 0,93 Camps Drift 70,00 52,00 46,67 43,33 36,67 6,7 5,225 ‐0,192 0,92 Pietermaritzburg Central 70,00 63,33 56,67 51,67 40,00 4,7 5,22 7 ‐0,174 0,95 Rosedale/Allandale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Howick 35,00 30,00 30,00 25,00 20,00 3,0 4,516 ‐0,172 0,93

Pietermaritzburg 49,81 47,29 41,07 38,85 31,92 5,4 Industrial rentalsandvacancies Lower Umfolozi Empangeni ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lower Umfolozi ‐ ‐ ‐ ‐ ‐ ‐ Windhoek North 67,50 62,50 55,00 47,50 45,00 4,0 5,005 ‐0,143 0,99 Lafrenz 67,50 62,50 55,00 45,00 45,00 4,0 5,048 ‐0,151 0,95 South 80,00 75,00 62,50 57,50 50,00 2,5 5,265 ‐0,158 0,98 Prosperita 67,50 65,00 55,00 50,00 44,00 4,0 5,046 ‐0,147 0,98 Windhoek 70,63 66,25 56,88 50,00 46,00 3,6 Table 7.3 Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m² Panellist codes 2021:1 250 500 1.000 2.500 5.000 Central Witwatersrand Cambridge Park 5,00 3,81 4,22 2,64 2,92 AP,CPS,JLL,REA,SHP,WP Wynberg Proper 8,77 5,91 5,10 6,6 1 7,90 AC,AP,CPS,CR,GB,JLL,OS,SHP,WP Strijdom Park 2,07 3,16 5,72 3,33 4,78 AP,CBR,CPS,CR,GI,JLL,OS, SHP,SS,WHF,WP Kya Sand West 4,69 5,29 4,42 3,26 4,18 AP,CBR,CPS,CR,JLL,OS,RA,SHP,WHF Kya Sand East 8,50 7,50 8,50 10,00 12,50 AP,CPS,JLL Lanseria Corporate Estate 7,50 5,00 5,00 5,00 2,50 AP,JLL Cosmo Business Park ‐ 0,00 1,50 ‐ 2,50 AP,CPS

Mostyn Park 7,50 5,00 0,00 0,00 0,00 AP,JLL 82 Clayville/Olifantsfontein 9,30 3,00 3,56 2,62 11,24 AP,CR,GI,JL L,SHP Chloorkop 6,72 5,98 6,41 6,12 5,43 AC,AP,CPS,JLL,MR,OS,PPR,SHP,WHF Amalgam 0,00 0,00 0,00 3,50 5,00 AP,JLL Crown Mines 5,00 5,00 5,00 2,50 1,50 AP,JLL Industria 7,50 2,50 2,50 0,00 2,50 AC,AP,JLL Booysens/Booysens Reserve/ ‐ ‐ ‐ ‐ ‐ AP Industrial rentalsandvacancies Village Main/Village Deep/New 4,50 4,50 4,50 4,50 4,50 AP,JLL Centre Benrose ‐ ‐ ‐ ‐ ‐ JLL Steeledale/Electron/Tulisa Park 2,00 2,50 0,00 1,50 ‐ AP,GB,JLL Aeroton 1,30 1,30 0,00 2,17 2,17 AP,CR,GI,SS,WHF Devland/Nancefield 2,50 0,00 2,50 5,00 5,00 AP,JLL Cleveland/Heriotdale ‐ ‐ ‐ ‐ ‐ GB Newlands/Martindale 7,50 7,50 10,00 12,50 17,50 AP,CR Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m² Panellist codes 2021:1 250 500 1.000 2.500 5.000 Kew/Wynberg East 7,99 7,86 9,14 9,27 10,63 AP,CR,GB,JLL,OS,WP Bramley View/Lombardy West 2,50 0,00 2,50 5,00 5,00 AP,JLL Marlboro 7,50 7,50 10, 00 10,00 12,50 AP,JLL Halfway House: hi‐tech strip 6,96 6,37 5,28 5,12 3,54 AP,CPS,CR,GI,JLL,OS,SHP,SWI,WP Halfway House: Richards Drive 3,42 4,44 3,67 3,34 0,00 AP,CPS,GI,JLL,OS,SHP,SWI,WP Corporate Park (Midrand) 0,00 0,00 0,00 0,00 0,00 CPS,WP Commercia 5,25 5,75 6,18 6,25 6,54 AP,CPS,JLL,SHP,SWI Kramerville/Eastgate Ext 12 & Ext 13 8,41 7,35 6,45 8,12 9,80 AP,CPS,CR,JLL,OS,SHP

Linbro Park 5,78 4,90 5,19 4,81 5,37 AC,AP,AV,CPS,GB,GI,JLL,OS, PPR,SHP,SS, 83 SWI,WP Wesco Park/Eastgate Ext 3, Ext 11, 11,41 10,01 4,71 3,30 3,30 AP,GI,JLL,SHP Ext 6, Ext 8/Malboro North (New) City Deep 7,48 7,47 6,03 6,62 6,78 AP,GB,GI,JLL,PPR,RA North Riding/Hoogland 2,32 0,22 0,20 2,24 3,72 AP,CPS,JLL,RA,SHP,SWI,WHF Samrand Centurion 3,86 3,30 3,77 3,86 1,70 AC,CPS,SHP,SWI Industrial rentalsandvacancies Barbeque Downs 3,82 5,31 4,90 3,17 3,17 AP,CPS,JLL,SHP,SWI,WP Selby Ext 12/13/15/19/20/24/City 2,50 2,50 2,50 0,00 0,00 AP,JLL West Selby Ext 5/10/14/18 0,00 0,00 0,00 2,50 2,50 AP,JLL Selby Ext 11 2,50 2,50 2,50 2,50 2,50 AP,JLL Selby Ext 3/4/6 5,00 5,00 5,00 5,00 5,00 AP,JLL Denver (Old) 0,00 0,00 0,00 0,00 0,00 AP,JLL Denver (New) 3,56 3,56 4,50 5,91 5,91 AP,GB,JLL Kyalami Business Park 5,00 5,00 2,50 2,50 2,50 AP,JLL Reuven ‐ ‐ ‐ ‐ ‐ AP Selby (Old)/Selby Ext2/Park Central 4,92 4,19 5,25 5,66 5,25 AP,JLL,RA Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m² Panellist codes 2021:1 250 500 1.000 2.500 5.000 Robertsham 5,00 5,00 5,00 2,50 2,50 AP,JLL Fordsburg/Newtown ‐ ‐ ‐ ‐ ‐ Waterfall 1,50 1,50 1,50 1,50 6,48 AP,JLL,SWI Lords View ‐ ‐ ‐ ‐ 3,50 CBR,JLL West Rand Lea Glen 2,00 0,50 0,50 0,00 1,00 AP,JLL,SHP Honeydew X19, 20, 21 & 22 4,49 4,49 2,59 2,12 2,12 AP,JLL,SHP,W HF Stormill 3,61 2,73 3,32 2,45 3,08 AP,CPS,CR,JLL,SHP,WHF

Chamdor 4,19 1,00 4,53 1,00 2,03 AC,AP,CPS,GI,RA,WHF 84 Factoria ‐ ‐ ‐ ‐ ‐ AP Krugersdorp: Delporton ‐ ‐ ‐ ‐ ‐ AP Randfontein: Aureus ‐ ‐ ‐ ‐ ‐ AP Boltonia 3,50 3,50 6,00 7,00 8,50 AP,JLL Roodepoort: Technikon/Manufacta 6,26 2,36 2,36 2,36 5,85 AP,CPS,JLL,WHF Industria North 4,00 1,50 1,00 3,50 6,00 AP,JLL Robertville 4,43 4,65 6,34 6,02 7,14 AC,AP,CPS,CR,JLL,SHP,WHF Industrial rentalsandvacancies Laserpark 5,54 5,52 6,97 4,96 5,47 AP,CPS,CR,JLL,REA,SHP,WHF,WP East Rand Elandsfontein 2,80 1,72 2,69 3,39 2,69 AC,CPS,GB,JLL,ME,OS,PPR, SHP,SS,WHF Tunney/Greenhills 7,85 5,40 7,47 4,69 8,03 AC,AP,CPS,GB,ME,MR,P PR,REA,SHP,SS, SWI,WHF Henville 1,72 1,72 1,90 3,01 3,16 CPS,ME,PPR,SHP,WHF Hughes 7,30 5,79 5,02 4,27 4,21 AP,CPS,GB,ME,MR,PPR,RA,SS,WHF Bartletts 6,69 5,06 4,08 3,1 6 3,54 AP,CPS,ME,MR,PPR,SS,WHF Lilianton ‐ ‐ ‐ ‐ ‐ Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m² Panellist codes 2021:1 250 500 1.000 2.500 5.000 Meadowbrook/Wilbart 4,95 4,12 4,09 3,95 5,12 AP,CPS,JLL,ME,MR,PPR,SHP,SWI,WHF Sunnyrock 3,93 4,08 4,63 4,40 5,89 AP,CPS,JLL,ME,MR,OS,PPR,SHP,SS,SWI, WHF Rustivia/Activia Park 1,49 1,46 0,69 1,75 2,32 AP,CPS,JLL,ME,PPR,SHP,WHF Eastleigh 5,47 2,36 3,10 3,54 3,91 AP,CPS,JLL,ME,PPR,SHP,SWI,WHF Sebenza Ext 14 6,80 4,81 5,55 5,83 5,40 AC,CPS,JLL,ME,MR,PPR,SHP,SS,SWI Spartan Ext 16 (Sebenza Link) + 3,37 3,35 2,08 2,49 2,50 CR,JLL,MR,PPR,SHP,SS,SWI,WHF Ext 1, 3, 7 Isando 5,42 5,68 5,98 6,37 6,16 AP,CBR,CPS,CR,GB,JLL,ME,MR,PPR ,RA, 85 SHP,SS,SWI,WHF Isando 3 3,98 4,65 5,47 6,62 6,7 7 AP,CBR,CPS,CR,JLL,ME,MR,PPR,SHP,SWI, WHF Jet Park 8,19 7,60 7,97 7,83 7,49 AC,AP,CBR,CPS,CR,GB,JLL,ME,MR ,OS, PPR,RA,SHP,SS,SWI,WHF Alrode & Xs 3,12 3,34 5,35 5,35 5,00 AP,CBR,JLL,SHP,SS,WHF Alrode South 2,71 4,45 3,95 5,97 6,66 AP,CBR,JLL,SHP,SWI,WHF Alberton 2,07 2,72 1,88 1,88 2,64 AP,CBR,JLL,SHP,WHF Industrial rentalsandvacancies Aeroport/Spartan Ext 2 2,06 1,94 2,54 2,45 3,93 CPS,GI,JLL,ME,MR,SWI,WHF Delville 2,25 2,25 2,04 2,04 2,04 AP,CPS,PPR Roodekop 3,26 4,56 4,49 4,49 5,01 AP,CPS,JLL,PPR,SHP,WHF Wadeville: Industrial zoning 4,13 3,31 3,20 4,08 4,35 AP,CPS,GB ,JLL,PPR,SHP,SS,WHF Route 24/Meadowdale 5,61 5,62 4,69 3,92 4,90 AC,AP,CBR,CPS,JLL, ME,MR,PPR,SHP,SS, SWI,WHF Germiston S/Industries E 2,86 2,86 2,72 2,72 2,14 AP,CBR,JLL,PP R,SS,WHF,ZZ Driehoek/Industries W 1,43 1,43 2,45 2,50 4,29 AP,CPS,GB,PPR,SS ,WHF Knights 9,35 9,35 10,07 7,73 6,56 AP,CPS,PPR Spartan Proper 3,81 4,05 4,66 2,77 3,24 AP,CPS,JLL,ME,PPR,SHP,S WI,WHF Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m² Panellist codes 2021:1 250 500 1.000 2.500 5.000 Founders View 1,83 2,14 3,67 4,49 2,76 AP,CPS,ME,PPR,SHP,SWI Longmeadow 7,07 6,53 5,68 6,44 6,09 AC,AV,CBR,CPS,CR,JLL,ME,MR,PPR,RA, SHP,SS,SWI,ZZ Pomona/Kempton Park 6,43 6,56 6, 61 7,53 8,11 AP,CBR,CPS,CR,JLL, ME,MR,PPR,SHP,SS, SWI,WHF Gosforth Park 4,32 1,80 4,91 4 ,25 3,92 AP,CBR,CPS,JLL,ME,MR,PPR,SHP S&J Industrial Estate 2,07 2,07 2,07 2,07 2,49 AP,CBR,JLL,ME,MR,PPR,WHF Far East Rand

Boksburg North & East 2,39 2,85 3,16 4,16 4,00 AP,CPS,JLL,MR,PP R,RA,SHP,SS,SWI,WHF 86 Benoni South 3,56 2,61 2,00 2,87 2,14 AC,AP,CPS,JLL,SHP,SS,WHF New Era/Vulcania 5,00 2,50 2,50 4,08 2,50 AC,AP,CPS Nuffield 7,50 7,50 5,00 2,50 2,50 AP,CPS Fulcrum 1,00 0,00 2,50 2,50 2,50 AP,CPS Apex 5,41 5,40 4,50 3,74 3,74 AP,CPS,MR,SS,WHF Labore Brakpan ‐ ‐ ‐ ‐ ‐ CPS Morehill Ext 8 Benoni 8,22 8,18 10,27 10,21 10,23 AP,CPS,WHF Industrial rentalsandvacancies Pretoria Charlotte Maxeke ‐ ‐ ‐ ‐ ‐ AP Pretoria Industrial Township ‐ ‐ ‐ ‐ ‐ AP Koedoespoort 3,30 5,00 6,24 6,24 6,50 AP,HN,WHF Waltloo/Despatch 2,36 5,00 5,00 2,50 0,00 AP,HN,WHF Silverton/Silvertondale 2,36 7,50 10,00 0,00 2,50 AP,HN,WHF Samcor Park ‐ ‐ ‐ ‐ ‐ AP Sunderland Ridge ‐ ‐ ‐ ‐ ‐ AP Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Hermanstad ‐ ‐ ‐ ‐ ‐ AP Kirkney ‐ ‐ ‐ ‐ ‐ AP Hennopspark X15 & X7 5,00 2,50 2,50 0,00 2,50 AP,WHF Gateway 4,50 4,71 2,50 4,71 4,71 AP,MAS,WHF Lyttelton Manor X4/X6 ‐ ‐ ‐ ‐ ‐ AP Pretoria North ‐ ‐ ‐ ‐ ‐ AP Silvertondale X1 2,50 7,50 2,50 0,00 2,50 AP,WHF Klerksoord ‐ ‐ ‐ ‐ ‐ AP

Rosslyn ‐ ‐ ‐ ‐ ‐ AP 87 Centurion 7,50 5,00 2,50 5,00 5,00 AP,WHF Polokwane Lebowakgomo ‐ ‐ ‐ ‐ ‐ Superbia 1,50 2,50 1,00 5,00 ‐ MO,TG Industria 0,00 2,50 2,50 2,50 ‐ MO,TG Ladine 1,50 5,00 3,50 ‐ ‐ MO,TG Futura ‐ ‐ ‐ ‐ ‐ MO Industrial rentalsandvacancies Laboria 1,00 2,05 0,00 6,38 ‐ MO,NET,TG Magna Via 3,00 2,36 4,00 5,00 ‐ ES,MO,NET,TG Seshego ‐ ‐ ‐ ‐ ‐ Nelspruit Nelspruit East 0,00 0,00 0,00 0,00 ‐ KEL,MPV,ORI,PG,PM Nelspruit West 0,00 0,00 0,00 0,00 0,00 KEL,MPV,ORI,PG,PM Rocky’s Drift 0,00 0,00 0,00 0,00 ‐ KEL,MPV,ORI,PG,PM Riverside Park 0,00 0,00 0,00 0,00 0,00 KEL,MPV,ORI,PG,PM Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Durban Springfield Park 5,24 4,95 3,77 5,59 7,40 BON,CPP,PC,WHF,ZZ Mayville ‐ ‐ ‐ ‐ ‐ Phoenix ‐ ‐ ‐ 6,50 6,50 CPP,PC Chris Hani Rd (North Coast) / 4,08 4,08 2,36 3,30 4,32 BON,CPP,PC Briardene Briardene Industrial Park 7,91 4,15 4,15 6,26 5,40 BON,CPP,PC,W HF Umgeni Rd/Stamford Hill 6,24 4 ,08 4,71 6,24 ‐ CPP,PC,WHF Umbilo/Sydney Rd/Magwaza 7,50 7,50 7,50 7,50 7,50 PC,WHF 88 Maphalala St (Gale) Jacobs 0,94 0,00 0,00 4,71 4,12 CPP,JUS,PC,WHF,ZZ Mobeni 0,00 0,00 0,00 4,71 4,71 CPP,JUS,PC,WHF Prospecton 0,00 0,00 2,36 6,24 6,24 CPP,JUS,PC,WHF Ithala Industrial Estate 2,50 2,50 2,50 2,50 5,00 PC,WHF

Pinetown Central 1,50 1,50 1,50 1,50 1,50 PC,WHF Industrial rentalsandvacancies New Germany 1,00 1,00 1,00 1,00 1,00 PC,WHF Isipingo ‐ ‐ ‐ ‐ ‐ Rossburgh/South Coast Rd ‐ ‐ ‐ 1,00 1,00 PC,WHF Edwin Swales Drive ‐ ‐ ‐ ‐ ‐ Glen Anil 3,54 3,54 4,15 3,54 4,08 BON,CPP,PC,WHF Felix Dlamini Rd (Brickfield) ‐ ‐ ‐ ‐ ‐ Verulam ‐ ‐ ‐ ‐ ‐ Canelands ‐ ‐ ‐ ‐ ‐ PC Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Tongaat ‐ ‐ ‐ ‐ ‐ PC New Westmead/Mahogany ‐ ‐ ‐ ‐ ‐ PC Westmead 0,00 ‐ ‐ ‐ ‐ PC,ZZ Mariann Park/Southmead ‐ ‐ ‐ ‐ ‐ PC Maxmead ‐ ‐ ‐ ‐ ‐ PC Ringroad Industrial Park ‐ ‐ ‐ ‐ ‐ PC Avoca/Red Hill/Northgate 5,00 5,00 5,00 5,00 2,50 PC,WHF Falcon Park 2,50 2,50 2,50 ‐ ‐ PC,WHF

Riverhorse Valley Business Estate 6,12 5,59 4,66 4,66 3,08 BON, CPP,PC,WHF 89 Mount Edgecombe 5,45 5,45 6,58 5,45 3,54 BON,CPP,PC,WHF Umbogintwini/Southgate ‐ ‐ ‐ ‐ ‐ PC Southgate Industrial Park 5,00 4,00 1,50 ‐ ‐ JUS,PC Umgeni Park ‐ ‐ ‐ ‐ ‐ PC,WHF Hammarsdale 8,50 8,50 8,81 8,81 8,81 PC,SH,WHF Cato Ridge 5,00 5,00 5,00 6,24 7,13 PC,SH,WHF Ballito ‐ ‐ ‐ ‐ ‐ Industrial rentalsandvacancies Dube Tradeport ‐ ‐ ‐ ‐ ‐ Cornubia 8,50 7,07 6,24 0,94 0,94 CPP,PC,WHF Ladysmith Ezakheni/Pieters ‐ ‐ ‐ ‐ ‐ Danskraal ‐ ‐ ‐ ‐ ‐ DE Nambiti ‐ ‐ ‐ ‐ ‐ DE Colenso ‐ ‐ ‐ ‐ ‐ Cape Town Viking Place 7,50 7,50 5,00 5,00 2,50 AN,DN Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Glosderry ‐ ‐ ‐ ‐ ‐ Paarden Eiland/Metro 3,54 2,60 2,12 4,33 5,67 AN,AX,CR,CRE,GB,L IV,PES,WHF Montague Gardens 2,92 3,53 4,52 5,16 5,28 AN,AX,CR,CRE,DN,DW,GB,HOU,LIV,SPI,WHF Marconi Beam 5,01 5,75 5,57 5,76 7,34 AN,AX,CR,CRE,DN,GB,LIV,WH F Killarney Gardens 3,31 1,93 1,80 1,77 0,00 AN,AX,CR,CRE,DN,GB,N EX,WHF Racing Park 2,12 2,35 5,55 0 ,00 0,00 AX,CR,CRE,DN,WHF Atlantis ‐ ‐ ‐ 2,50 ‐ AN,CR Woodstock/Salt River/Observatory ‐ 12,50 12,50 ‐ ‐ AN,CR

Athlone 1 & 2 ‐ ‐ ‐ ‐ ‐ 90 Lansdowne Nerissa ‐ ‐ ‐ ‐ ‐ SCM Sand Industria ‐ ‐ ‐ ‐ ‐ Ottery Hillstar 2,50 5,00 2,50 ‐ ‐ CR,SCM Ottery Sunset ‐ ‐ ‐ ‐ ‐ SCM Diep River 8,16 10,80 2,36 ‐ ‐ AN,CR,DW,SCM Elfindale ‐ ‐ ‐ ‐ ‐ SCM Monwood/Philippi ‐ ‐ ‐ ‐ ‐ CR,TR Industrial rentalsandvacancies Retreat/Steenberg ‐ 0,00 ‐ ‐ ‐ CR,SCM Capricorn Park 2,50 0,00 0,00 9,43 ‐ AN,CR,SCM Maitland 4,15 3,74 5,96 8,00 3,77 AN,AX,CR,DN,TR,WHF 5,10 2,00 2,00 1,20 2,50 AN,AX,CR,CRE,LIV,NEX Epping 1 & 2 3,02 4,78 5,83 4,16 6,32 AN,CR,DN,DW,GAM,LIV,NEX,PHP,SPI,WHF WP Park 7,50 7,50 5,00 5,00 2,50 AN,DN Elsies River (excl. Central Park) ‐ 13,00 ‐ 10,50 ‐ AN,CR Parow Beaconvale 5,00 4,71 5,59 4,08 2,50 AN,CR,DN,LIV Tygerberg Business Park ‐ ‐ ‐ ‐ 10,00 AN,DN Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Parow Industria 6,12 6,12 4,33 0,00 0,00 AN,CR,DN,PF Parow East 2,50 5,00 5,00 5,00 ‐ AN,DN Bellville Oakdale 2,50 0,00 0,00 2,50 ‐ DN,PF Bellville Stikland/Kaymor 6,07 7,56 6,93 8,54 7,35 AN,CR,DN,PF,SPI,WD,WHF Bellville Triangle 3,54 3,54 2,12 4,15 4,08 AN,DN,PF,WHF Bellville South/Sacks Circle 5,45 6,78 9,22 6,63 10,31 AN,CR,CR E,DN,PF,PHP,WHF Kraaifontein 2,50 5,00 3,50 2,50 2,50 AN,CR,DN Brackenfell Industria 4,00 2,23 3,71 3,16 2,45 AN,CR,DN,PF,WD,W HF

Everite Brackenfell 0,00 2,05 4,19 4,71 1,00 AN,CR,DN,WHF 91 Kuils River 2,50 0,00 0,00 0,00 ‐ AN,CR,DN Blackheath 2,59 1,89 2,77 1,09 2,50 AN,CR,DN,PF,WHF Saxenburg Industrial Park 5,35 3,30 2,87 2,17 ‐ AN,CR,CRE,PF Okavango 4,88 6,84 6,71 7,08 2,36 AN,CR,DN,PF,WD,WHF Brackengate/Icon Business Park 0,00 2,36 5,59 3,68 3,00 AN,CR,DN,PHP,WHF Paarl 2,16 4,15 6,24 3,25 2,36 CR,MAF,PRU,SF Wellington 5,00 5,00 2,87 2,50 1,25 CR,MAF,SF Industrial rentalsandvacancies Contermanskloof 0,00 2,36 4,08 5,45 7,50 AN,CR,LIV,WHF Rivergate 2,36 2,91 3,26 1,00 2,50 AN,AX,CR,CRE,PHP,WHF Airport Ind (north of sewerage farm) ‐ 8,04 7,50 7,50 7,50 CR,P HP,WHF Airport Ind (west of Borcherds ‐ 7,50 0,00 ‐ ‐ CR,DW,PHP Quarry) Airport Ind (east of Borcherds ‐ ‐ ‐ ‐ ‐ LIV Quarry) Durbanville Industrial Park ‐ ‐ ‐ ‐ ‐ WHF Northgate Industrial Park 1,50 6,50 7,50 1,50 2,50 CRE,GB,WHF Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m² Panellist codes 2021:1 250 500 1.000 2.500 5.000 Helderberg The Interchange ‐ ‐ ‐ ‐ ‐ Helderberg Industrial Park/Broadlands ‐ ‐ ‐ ‐ ‐ Gants ‐ ‐ ‐ ‐ ‐ Somerset Business Park ‐ ‐ ‐ ‐ ‐ Georges Park/Onverwacht ‐ ‐ ‐ ‐ ‐ Mansfield ‐ ‐ ‐ ‐ ‐ Firgrove Industrial Estate ‐ ‐ ‐ ‐ ‐ AN

Strand Halt ‐ ‐ ‐ ‐ ‐ 92 Stellenbosch Plankenbrug ‐ ‐ ‐ ‐ ‐ Devon Valley ‐ ‐ ‐ ‐ ‐ Tenantville ‐ ‐ ‐ ‐ ‐ Klapmuts ‐ ‐ ‐ ‐ ‐ Port Elizabeth Deal Party 5,14 4,15 3,70 2,05 4,08 ARN,BR,SUM,TR Industrial rentalsandvacancies North End 4,15 0,00 2,50 4,33 6,18 ARN,BR,SUM,TR Korsten/Neave/Sidwell/Sydenham 2,07 4,08 6,12 0,25 0,25 ARN,BR, SUM,TR South End Walmer 6,24 8,16 6,24 2,50 2,50 ARN,BR,SUM Uitenhage: Volkswagen area/NMBLP 0,00 0,00 2,36 2,36 2,36 ARN,BR,SUM Uitenhage: Hella/Kruisrivier 0,00 2,36 2,36 2,36 2,36 ARN,BR,SUM Struandale 0,00 1,25 0,00 0,00 0,00 ARN,BR,SUM Markman Township 0,00 0,00 2,36 2,36 2,36 ARN,BR,SUM Perseverance 2,50 2,50 2,90 2,04 2,04 ARN,BR,SUM Walmer 4,08 4,08 4,71 4,08 6,24 ARN,BR,SUM,TR Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Greenbushes 10,27 9,42 9,68 10,81 12,44 ARN,BR,SUM,TR Fairview 9,60 9,60 0,00 4,71 10,27 ARN,BR,SUM,TR East London Arcadia ‐ ‐ ‐ ‐ ‐ CAP Gately/Woodbrook ‐ ‐ ‐ ‐ ‐ CAP Wilsonia ‐ ‐ ‐ ‐ ‐ CAP Braelyn ‐ ‐ ‐ ‐ ‐ CAP Northend ‐ ‐ ‐ ‐ ‐ CAP

Chiselhurst ‐ ‐ ‐ ‐ ‐ CAP 93 Meisies Halt ‐ ‐ ‐ ‐ ‐ CAP Beacon Bay Industrial ‐ ‐ ‐ ‐ ‐ IDZ ‐ ‐ ‐ ‐ ‐ West Bank Industrial Area ‐ ‐ ‐ ‐ ‐ CAP Bloemfontein Hilton 3,77 4,55 3,91 2,00 0,50 BR,EK,EQV,NR

East End 4,92 4,39 3,19 1,70 0,50 BR,EK,EQV,NR Industrial rentalsandvacancies Harvey Road 5,32 8,45 5,45 1,41 1,50 BR,EK,EQV,NR,PLA Old Industrial 3,34 4,06 4,27 1,70 1,41 BR,EK,EQV,NR Hamilton: Mill St 4,11 3,39 2,05 0,82 0,47 BR,EK,EQV,NR Hamilton: G Lubbe St 4,90 3,68 2,45 1,25 0,82 BR,EK,EQV Estoire 1,41 4,66 5,41 7,36 6,24 BR,EK,EQV,NR Quaggafontein ‐ ‐ 9,00 9,50 ‐ BR,EQV George George Central 2,36 0,00 2,36 6,24 8,16 BVF,GRV,MUL Tamsui Industria 2,05 2,05 2,05 5,56 6,98 BVF,GRV,MUL Table 7.3 (continued) Rode’s Report Standard deviation from mean prime industrial market rentals as in 2021:1 Area size leased in m²

Panellist codes 2021:1 250 500 1.000 2.500 5.000 Pacaltsdorp Industria 2,05 3,50 2,94 4,71 6,13 BVF,GRV,MUL Pietermaritzburg Willowton 1,18 1,41 2,77 2,36 0,94 DOR,HN,PJ,SHA Mkondeni/Shortts Retreat 3,54 6,48 2,17 2,36 2,36 DOR,HN,PJ,SHA Campsdrift 15,00 3,08 2,36 2,36 2,36 DOR,HN,PJ,SHA Pietermaritzburg Central 0,00 2 ,36 2,36 2,36 10,00 DOR,HN,PJ Rosedale/Allandale ‐ ‐ ‐ ‐ ‐ Howick ‐ ‐ ‐ ‐ ‐ PJ

Lower Umfolozi 94 Empangeni ‐ ‐ ‐ ‐ ‐ Windhoek North 7,50 2,50 0,00 2,50 5,00 PVN,TE Lafrenz 7,50 2,50 0,00 5,00 5,00 PVN,TE South 0,00 5,00 2,50 7,50 5,00 PVN,TE Prosperita 2,50 0,00 0,00 5,00 4,00 PVN,TE Industrial rentalsandvacancies Rode’s Report 2021:1 95 Industrial rentals and vacancies

Notes to the industrial rental tables

1. The rentals are the achievable or market rates for the quartershow n in the table heading, and these apply to industrial and warehouse space for the area sizes indicated. The rentals are the means (averages) of the rates as per our panels of experts in the various cities.

2. The rental rates assume gross leases, market escalation rates and leases of 3 to 5 years.

3. In terms of a gross lease, the tenant in a stand‐alone building typically pays for only his utilities, like refuse removal, water, sewerage and electricity, as well as internal maintenance and maybe increases in rates and taxes. He provides and pays for his own security. All other expenses are for the account of the landlord. In a park, the tenant pays, in addition to his gross rental, his pro rata share of security costs, security lighting and landscaping.

4. The rental rates also apply to the office portion, where this i s less than 10% of the total building area. This means we quote ‘through rates’. (See Glossary – Annexure 1 .) For larger office portions, the office rental is, as a rule of thumb, about 150% of the industrial rental rate.

5. Prime space is space that is easily lettable because it satisfies each of the following quality criteria: a. Generally, in a good condition b. Satisfactory macro‐access (i.e. access to freeway) c. Satisfactory micro‐access (i.e. from street to building) d. Proper loading facilities e. Eaves >6,0 m (excluding micro‐/mini‐units) f. On ground level g. Adequate three‐phase electrical power h. Wide clear span of trusses (few internal pillars) i. Roof insulation.

However, a building may have additional enhancements that could improve lettability by increasing the size of the potential tenant pool. Such enhancements could include sufficient office accommodation, adequate p arking, sprinkler systems, masonry up to sill height, adequate floor loadings and sufficient yard space.

6. Secondary space is space that is not classifiable as prime buse ecait does not satisfy all nine prerequisites for prime space listed above. Such space is typically old buildings or structures that have been haphazardly renovated. They would have poor access, t oo little yard space or office accommodation, inadequate goods lifts, no three‐phase power and obsolete electrics and ablution facilities. Such space is often (but not exclusively) found in highly urbanised areas.

7. Vacancy scale for industrial nodes. The vacancy levels are based on a scale of 1 to 9 as shown below:

1 2 3 4 5 6 7 8 9 Low Medium High Rode’s Report 2021:1 96 Industrial rentals and vacancies

The scale should be interpreted as follows:

1 = low‐ vacancy 2 = low vacancy 3 = low+ vacancy 4 = medium‐ vacancy 5 = medium vacancy 6 = medium+ vacancy 7 = high‐ vacancy 8 = high vacancy 9 = high+ vacancy

Where: low = <5% vacancy; medium = 5%‐10% vacancy; high = >10% vacancy.

Please note that with effect from quarter 2 of 2019 we have changed the percentages corresponding with the vacancy factors. The previous percentages were:

low = <10% vacancy medium = 10‐20% vacancy high = >20% vacancy.

8. For notes on how to use a regression equation to interpolate a rental rate, see Annexure 3. Rode’s Report 2021:1 97 Industrial rentals and vacancies

Table 7.4 Predominant market escalation rates (%) for industrial leases Average as in quarter 2021:1 5‐year leases Mean SD n Central Witwatersrand 7,35 0,44 14 West Rand 7,69 0,41 10 East Rand 7,53 0,80 17 Far East Rand 7,72 0,58 9 Pretoria 6,25 0,25 2 Polokwane 6,38 0,96 4 Nelspruit 6,25 0,00 5 Durban 7,10 0,66 5 Ladysmith ‐ ‐ ‐ Lower Umfolozi ‐ ‐ ‐ Cape Peninsula 7,36 0,67 14 Helderberg 7,00 ‐ 1 Stellenbosch ‐ ‐ ‐ Port Elizabeth 6,50 0,50 4 East London 6,00 ‐ 1 Bloemfontein 6,88 0,22 4 George 6,83 0,85 3 Pietermaritzburg 7,50 0,50 4 Windhoek 7,00 1,00 2 Notes: 1. These are the averages of the predominant — i.e. most often achieved — market escalation rates as reported by our panel of experts. 2. SD = standard deviation (see Glossary). Rode’s Report 2021:1 98 Industrial rentals and vacancies

Table 7.5 Indicative operating expenses for industrial buildings As in quarter 2021:1 in rands per m² per month Stand‐alone Park R/m² SD n R/m² SD n Central Witwatersrand 10,46 2,97 10 12,11 2,09 12 West Rand 9,39 1,76 8 11,72 1,25 9 East Rand 7,84 1,15 14 11,11 2,92 14 Far East Rand 6,99 1,02 7 10,31 1,77 8 Pretoria 18,00 2,94 3 17,67 5,25 3 Polokwane 14,00 0,82 3 17,88 1,43 4 Nelspruit 9,00 0,00 5 12,00 0,00 5 Durban 12,00 3,27 3 22,00 0,00 2 Ladysmith ‐ ‐ ‐ ‐ ‐ ‐ Lower Umfolozi ‐ ‐ ‐ ‐ ‐ ‐ Cape Peninsula 8,90 1,70 10 9,64 2,42 11 Helderberg 12,00 ‐ 1 15,00 ‐ 1 Stellenbosch ‐ ‐ ‐ ‐ ‐ ‐ Port Elizabeth 7,75 0,75 2 8,75 1,75 2 East London 25,00 ‐ 1 21,00 ‐ 1 Bloemfontein 22,33 2,05 3 21,33 2,62 3 George 8,33 1,70 3 10,67 1,89 3 Pietermaritzburg 11,33 0,47 3 13,50 1,47 3 Windhoek 26,25 8,75 2 23,00 7,00 2 Notes: The operating expenses are estimates for the past 12 months and are as per our expert panellists in the various cities. The following items are included: stand‐alone buildings: rates and taxes and insurance (incl. Sasria) and park buildings: as above, plus security, security lighting, landscaping and management. Our heartfelt thanks to the companies that contributed to the industrial- market survey. By clicking on their logos, you will learn more about these panellists. Trust & Estate Co. Rode’s Report 2021:1 101 Industrial stand values

Chapter 8: Industrial stand values Stand values decline again

Kobus Lamprecht

Stand or land values tend to track industrial also headed lower in Port Elizabeth and rental trends, which implies that poor Pretoria. In the Central Witwatersrand, market‐rental growth translates into very nominal stand‐value growth was 1% ̶ the poor stand‐value growth, and strong market‐ best of the major industrial conurbations. rental growth results in very strong stand‐ value growth. These changes are calculated on smoothed data. Note also, the y‐scale (vertical scale) of The explanation for this leveraging effect of the graphs is in log form. The advantage of rentals on stand values is demonstrated in this is that we can now reliably compare the the pro forma viability study depicted in growth rates of the cities with each other. It Table 8.1. It shows how land values so happens the cities’ stand values run are estimated using the land residual virtually parallel, meaning their trends (developers’) approach. Note the sensitivity (growth rates) have been about the same of stand values to changes in market rentals. since about 2009. The principle is the same as financial gearing. Nominal industrial stand values (1000-m² stands) 2,000 Smoothed Stand‐value performance 1,000 800 Nominal stand values have recovered 600 500 somewhat since the lows around the middle R/m² 400 (log scale)(log 300 of 2020, but in the first quarter of 2021 were Cape Town 200 Durban still down by 1% compared to a year ago. This East Rand implies that real stand values also remain Central Witwatersrand 100 in negative territory after adjustment for 00 02 04 06 08 10 12 14 16 18 20 Source of data: Rode's Time Series building‐cost inflation (BER BCI). Stand values tend to track rentals as explained above and Real industrial stand values (1000-m² stands) therefore we expect stand values to start 2016 rands 2,000 showing positive growth soon – provided 1,600 1,400 rental growth is sustained in coming quarters 1,200 Smoothed 1,000

(see Chapter 7). 800

R/m² 600 Nationally, the stand‐value decline in nominal scale)(log 400 Cape Peninsula terms at the beginning of 2021 can largely be Durban East Rand attributed to the poor performance in Cape Deflated by BER BCI (2016=100) Central Witwatersrand 200 Town and the East Rand, where stand values 00 02 04 06 08 10 12 14 16 18 20 fell by 2% and 1% respectively. Stand values Source of data: Rode's Time Series Rode’s Report 2021:1 102 Industrial stand values

Table 8.1 Sensitivity of land value to changes in rent A simplistic viability study Scenario % change A B Market rent year 1 (net) R10 R12 +20% Capitalization rate 10% 10% MV on completion (net rent capitalized) R100 R120 +20% Construction costs ‐ ‐R60 +0% Profit margin* ‐R17 ‐R20 +18% Max value of land/stand† R23 R40 +74% * Assuming a constant profit margin of 20% of cost ( construction costs plus land costs) † Thus, land value is a residual item in this viability study: it is the maximum the developer can afford to pay for the land.

The remainder of this chapter includes larger tracks take longer to sell out once market values for level, serviced stands in serviced, which dramatically pushes up the named industrial areas. The tables showing risk to the developer, which in turn means the industrial land values contain regression present value per ha of larger tracks will be parameters to allow readers to interpolate lower ̶ holding all other factors constant – land values for area sizes other than those because of the time value of money and the given in the tables. This is necessary because higher risk (resulting in a higher discount the relationship between price and square rate). metreage is not linear. For more details on how to use these nexure Normally, the larger an industrial stand, the equations, refer to An 3 (annexure cheaper the stand value per square metre, page XIV). but we find this is not always the case, most This concludes our chapter on industrial likely due to a shortage or an oversupply in stand values.  certain size categories. However, in the case of virgin land with industrial‐development PS: If you do not understand a term used in potential, one would expect a huge difference this article, please consult the Glossary in the value per ha depending on extent: (Annexure 1). Rode’s Report 2021:1 Table 8.2 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Central Witwatersrand Cambridge Park 1.517 1.300 1.410 1.400 1,0 7,392 ‐0,018 0,08 Wynberg Proper 1.550 1.200 1.000 1.000 1,0 8,606 ‐0,192 0,87 Strijdom Park 1.260 1.313 1.100 1.083 1,1 7,746 ‐0,083 0,76 Kya Sand West 888 900 890 864 2,0 6,880 ‐0,012 0,47 Kya Sand East 500 500 500 500 ‐ 6,215 ‐ ‐ Lanseria Corporate Estate ‐ ‐ 1.100 1.000 ‐ ‐ ‐ ‐ Cosmo Business Park ‐ 1.000 780 750 ‐ ‐ ‐ ‐ 103 Mostyn Park 1.000 950 950 900 ‐ 7,174 ‐0,040 0,86 Clayville/Olifantsfontein 650 650 650 645 1,4 6,498 ‐0,003 0,58 Chloorkop 920 875 813 770 2,6 7,363 ‐0,078 1,00 Amalgam 1.500 1.500 1.500 ‐ 1,0 ‐ ‐ ‐ Crown Mines 1.500 1.500 1.500 1.500 3,0 7,313 ‐ ‐ Industria 1.200 1.200 1.200 1.200 ‐ 7,090 ‐ ‐ Booysens/Booysens Reserve/Ophirton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Village Main/Village Deep/New Centre ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Benrose 700 700 700 700 ‐ 6,551 ‐ ‐

Steeledale/Electron/Tulisa Park 1.000 1.000 1.000 1.000 ‐ 6,908 ‐ ‐ Industrial stand values Aeroton 1.250 1.250 1.250 1.250 5,0 7,131 ‐ ‐ Devland/Nancefield 1.200 1.200 1.200 800 ‐ 8,214 ‐0,152 0,58 Cleveland/Heriotdale 600 600 600 600 7,0 6,397 ‐ ‐ Newlands/Martindale 800 800 800 800 ‐ 6,685 ‐ ‐ Kew/Wynberg East 1.500 1.000 1.000 1.000 1,0 8,234 ‐0,152 0,58 Bramley View/Lombardy West 500 500 500 500 ‐ 6,215 ‐ ‐ Rode’s Report 2021:1 Table 8.2 (continued) Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Marlboro 350 380 350 350 1,5 5,977 ‐0,012 0,09 Halfway House: hi‐tech strip 1.100 1.100 1.050 1.000 1,1 7,312 ‐0,043 0,90 Halfway House: Richards Drive 1.050 1.050 1.000 950 1,4 7,280 ‐0,045 0,90 Corporate Park (Midrand) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Commercia 750 755 775 788 1,3 6,463 0,022 0,97 Kramerville/Eastgate Ext 12 & Ext 13 1.650 1.650 1.675 1.450 1,1 7,752 ‐0,046 0,48 Linbro Park 1.450 1.450 1.500 1.400 2,3 7,344 ‐0,008 0,08 Wesco Park/Eastgate Ext 3, Ext 11, Ext 6, 2.000 1.500 1.500 1.000 ‐ 9,378 ‐0,260 0,85 104 Ext 8/Malboro North (New) City Deep 1.050 1.050 1.027 1.010 1,7 7,086 ‐0,018 0,92 North Riding/Hoogland 1.133 1.133 1.100 1.067 1,3 7,229 ‐0,027 0,90 Samrand Centurion 1.100 1.100 1.100 1.100 3,0 7,003 ‐ ‐ Barbeque Downs 1.500 1.500 1.500 1.500 ‐ 7,313 ‐ ‐ Selby Ext 12/13/15/19/20/24/City West 1.500 1.500 1.500 1.500 1,0 7,313 ‐ ‐ Selby Ext 5/10/14/18 1.000 1.000 1.000 1.000 ‐ 6,908 ‐ ‐ Selby Ext 11 1.000 1.000 1.000 1.000 ‐ 6,908 ‐ ‐ Selby Ext 3/4/6 1.000 1.000 1.000 1.000 ‐ 6,908 ‐ ‐

Denver (Old) 450 450 450 450 9,0 6,109 ‐ ‐ Industrial stand values Denver (New) 700 700 700 700 ‐ 6,551 ‐ ‐ Kyalami Business Park 1.500 1.500 1.500 1.500 ‐ 7,313 ‐ ‐ Reuven 1.500 1.500 1.500 1.500 ‐ 7,313 ‐ ‐ Selby (Old)/Selby Ext 2/Park Central 1.000 1.000 1.000 1.000 ‐ 6,908 ‐ ‐ Robertsham 1.500 1.500 1.500 1.500 ‐ 7,313 ‐ ‐ Fordsburg/Newtown ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report 2021:1 Table 8.2 (continued) Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Waterfall ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lords View 1.000 1.000 1.000 1.000 ‐ 6,908 ‐ ‐ Central Witwatersrand 1.109 1.078 1.061 1.009 2,1 West Rand Lea Glen ‐ ‐ ‐ ‐ ‐ ‐ ‐ Honeydew Ext 19, 20, 21 & 22 1.800 1.500 1.250 850 2,0 9,658 ‐0,309 0,95 Stormill 955 940 905 875 3,0 7,132 ‐0,039 0,98 Chamdor 433 400 388 290 1,0 7,173 ‐0,155 0,80 105 Factoria 800 700 600 500 ‐ 8,067 ‐0,199 0,99 Krugersdorp: Delporton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Randfontein: Aureus 360 360 225 225 1,0 7,636 ‐0,246 0,84 Boltonia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Roodepoort: Technikon/Manufacta 800 700 600 600 ‐ 7,562 ‐0,131 0,91 Industria North 1.200 1.200 1.200 1.200 ‐ 7,090 ‐ ‐ Robertville 920 907 867 843 1,9 7,104 ‐0,040 0,98 Laserpark 1.210 1.113 1.038 1.050 1,1 7,516 ‐0,064 0,84 West Rand 913 863 768 770 1,6

East Rand Industrial stand values Elandsfontein 750 830 788 750 1,1 6,720 ‐0,008 0,03 Tunney/Greenhills 1.150 1.137 1.060 1.000 1,4 7,496 ‐0,063 0,95 Henville 840 830 766 710 1,0 7,270 ‐0,075 0,94 Hughes 1.188 1.200 1.200 1.190 1,6 7,079 0,001 0,02 Bartletts 1.190 1.190 1.120 1.120 1,4 7,308 ‐0,032 0,84 Lilianton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Meadowbrook/Wilbart 1.140 1.100 1.060 1.000 1,0 7,419 ‐0,055 0,98 Sunnyrock 1.125 1.100 1.000 950 1,1 7,574 ‐0,078 0,97 Rustivia/Activia Park 880 880 846 778 1,1 7,159 ‐0,052 0,82 Eastleigh 1.030 1.030 970 930 1,0 7,278 ‐0,047 0,92 Sebenza Ext 14 1.000 1.000 900 850 1,0 7,459 ‐0,077 0,92 Spartan Ext 16 (Sebenza Link) + Ext 1,3,7 1.070 1.070 920 890 1,0 7,630 ‐0,092 0,90 Isando 1.000 1.000 945 888 1,3 7,292 ‐0,053 0,89 Isando 3 1.180 1.040 976 944 1,0 7,689 ‐0,093 0,92 Jet Park 1.300 1.300 1.229 1.133 1,1 7,604 ‐0,060 0,87 106 Alrode & Xs 900 940 783 717 1,2 7,629 ‐0,113 0,83 Alrode South 860 850 733 683 1,2 7,529 ‐0,108 0,94 Alberton 988 988 913 863 1,2 7,346 ‐0,063 0,92 Aeroport/Spartan Ext 2 1.250 1.300 1.180 1.100 1,0 7,597 ‐0,062 0,75 Delville 550 ‐ ‐ ‐ ‐ ‐ ‐ ‐ Roodekop 650 670 600 490 1,6 7,380 ‐0,122 0,77 Wadeville: Industrial zoning 760 790 710 570 1,9 7,552 ‐0,124 0,74 Route 24/Meadowdale 1.200 1.117 1.080 1.060 1,9 7,430 ‐0,052 0,91

Germiston S/Industries E 650 700 700 700 1,0 6,309 0,028 0,58 Industrial stand values Driehoek/Industries W 750 775 775 775 1,0 6,546 0,012 0,58 Knights 650 ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Spartan Proper 1.096 1.070 974 944 1,4 7,491 ‐0,070 0,97 Founders View 1.200 1.200 1.150 1.075 1,7 7,436 ‐0,048 0,86 Longmeadow 1.450 1.463 1.437 1.344 1,8 7,579 ‐0,039 0,83 Pomona/Kempton Park 1.163 1.163 1.063 1.050 2,3 7,426 ‐0,052 0,88 Rode’s Report 2021:1 Table 8.2 (continued) Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Gosforth Park 1.250 1.230 1.250 1.178 1,5 7,273 ‐0,020 0,51 S&J Industrial Estate 1.296 1.283 1.238 1.238 5,9 7,324 ‐0,023 0,91 East Rand 1.046 1.060 1.000 944 1,5 Far East Rand Boksburg North & East 850 743 700 730 2,1 7,156 ‐0,066 0,63 Benoni South 550 533 517 490 2,0 6,645 ‐0,048 0,97 New Era/Vulcania 500 500 500 500 ‐ 6,215 ‐ ‐ Nuffield 650 650 650 650 ‐ 6,477 ‐ ‐ 107 Fulcrum 450 450 500 500 ‐ 5,717 0,055 0,84 Apex 760 760 710 720 2,7 6,848 ‐0,030 0,74 Labore Brakpan ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Morehill Ext 8 Benoni 725 725 725 725 1,0 6,586 ‐ ‐ Far East Rand 702 660 639 657 2,2 Pretoria Charlotte Maxeke 600 550 500 400 ‐ 7,568 ‐0,166 0,93 Pretoria Industrial Township 600 550 500 400 ‐ 7,568 ‐0,166 0,93 Koedoespoort 1.000 1.000 930 755 1,0 7,756 ‐0,116 0,78

Waltloo/Despatch 930 920 875 635 1,0 7,935 ‐0,151 0,71 Industrial stand values Silverton/Silvertondale 880 845 705 615 2,0 7,925 ‐0,161 0,96 Samcor Park 1.000 1.000 900 750 1,0 7,805 ‐0,124 0,85 Sunderland Ridge 750 755 700 610 3,5 7,268 ‐0,089 0,82 Hermanstad 600 600 550 500 ‐ 6,985 ‐0,081 0,90 Kirkney 350 350 350 300 2,0 6,285 ‐0,058 0,58 Hennopspark Ext 15 & Ext 7 1.350 1.350 1.350 1.225 1,0 7,477 ‐0,036 0,58 Gateway 1.100 1.100 1.100 1.067 1,0 7,088 ‐0,012 0,58 Rode’s Report 2021:1 Table 8.2 (continued) Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Lyttelton Manor Ext 4/Ext 6 910 890 890 890 1,0 6,864 ‐0,008 0,58 Pretoria North 650 650 500 450 ‐ 7,746 ‐0,177 0,92 Silvertondale X1 1.000 800 750 650 2,5 8,052 ‐0,171 0,93 Klerksoord 350 350 300 150 3,0 8,353 ‐0,341 0,73 Rosslyn 550 550 550 450 2,0 6,866 ‐0,075 0,58 Centurion 1.175 1.175 1.175 1.175 1,0 7,069 ‐ ‐ Pretoria 884 873 825 733 1,6 Polokwane Lebowakgomo ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 108 Superbia ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Industria ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Ladine ‐ 700 ‐ ‐ 3,5 ‐ ‐ ‐ Futura ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Laboria ‐ ‐ 350 ‐ 1,5 ‐ ‐ ‐ Magna Via 925 893 890 900 2,7 6,892 ‐0,011 0,40 Seshego ‐ ‐ ‐ ‐ 4,0 ‐ ‐ ‐ Polokwane 925 816 710 900 2,0

Nelspruit Industrial stand values Nelspruit East ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Nelspruit West 450 450 450 450 ‐ 6,109 ‐ ‐ Rocky’s Drift 450 430 430 450 1,0 6,087 ‐ ‐ Riverside Park 1.185 1.185 1.185 1.375 2,0 6,665 0,056 0,58 Nelspruit 784 782 782 870 1,8 Durban Springfield Park 2.500 2.000 2.000 2.000 1,3 8,331 ‐0,084 0,58 Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Mayville ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Phoenix ‐ ‐ ‐ ‐ 2,0 ‐ ‐ ‐ Chris Hani Rd (North Coast/Briardene) 2.500 2.500 2.000 2.000 1,0 8,655 ‐0,117 0,84 Briardene Industrial Park 2.500 2.500 2.000 2.000 1,3 8,655 ‐0,117 0,84 Umgeni Rd/Stamford Hill ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Umbilo/Sydney Rd/Magwaza Maphalala St ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ (Gale) Jacobs 1.867 1.633 1.633 1.633 1,0 7,835 ‐0,050 0,58 Mobeni ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ 109 Prospecton ‐ ‐ ‐ 1.600 1,0 ‐ ‐ ‐ Ithala Industrial Estate ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pinetown Central ‐ ‐ 1.500 1.500 1,0 ‐ ‐ ‐ New Germany ‐ ‐ 1.500 1.500 1,0 ‐ ‐ ‐ Isipingo ‐ ‐ 1.200 ‐ 2,0 ‐ ‐ ‐ Rossburgh/South Coast Rd ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Edwin Swales Drive ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Glen Anil 2.250 2.100 2.150 1.800 2,0 8,280 ‐0,080 0,70

Felix Dlamini Rd (Brickfield) ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Industrial stand values Verulam ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Canelands ‐ ‐ 1.000 1.000 4,0 ‐ ‐ ‐ Tongaat ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ New Westmead/Mahogany ‐ ‐ 1.600 ‐ 1,0 ‐ ‐ ‐ Westmead ‐ ‐ 1.600 ‐ 1,0 ‐ ‐ ‐ Mariann Park/Southmead ‐ ‐ 1.400 1.400 3,0 ‐ ‐ ‐ Maxmead ‐ ‐ 1.800 ‐ 1,0 ‐ ‐ ‐ Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Ringroad Industrial Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Avoca/Red Hill/Northgate 2.500 2.500 2.500 ‐ ‐ ‐ ‐ ‐ Falcon Park ‐ ‐ ‐ ‐ 1,0 ‐ ‐ ‐ Riverhorse Valley Business Estate 3.000 3.000 2.500 2.500 1,5 8,685 ‐0,096 0,84 Mount Edgecombe 2.400 2.400 2.400 2.083 1,7 8,175 ‐0,053 0,58 Umbogintwini/Southgate ‐ ‐ 1.500 1.500 2,0 ‐ ‐ ‐ Southgate Industrial Park ‐ ‐ 1.750 1.700 1,0 ‐ ‐ ‐ Umgeni Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Hammarsdale ‐ 1.000 1.000 600 4,7 ‐ ‐ ‐ 110 Cato Ridge ‐ ‐ ‐ 800 4,7 ‐ ‐ ‐ Ballito ‐ ‐ ‐ 850 4,0 ‐ ‐ ‐ Dube Tradeport ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kingsburgh ‐ 1.500 1.525 1.650 1,5 ‐ ‐ ‐ Cornubia 2.700 2.700 2.350 2.350 4,7 8,418 ‐0,073 0,84 Durban ‐ ‐ ‐ ‐ 2,0 Ladysmith Ezakheni/Pieters ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Danskraal ‐ ‐ 100 80 2,0 ‐ ‐ ‐ Industrial stand values Nambiti ‐ ‐ 100 80 ‐ ‐ ‐ ‐ Colenso ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ladysmith ‐ ‐ 100 80 2,0 Cape Town Viking Place 2.500 2.500 2.000 2.000 1,0 8,655 ‐0,117 0,84 Glosderry ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Paarden Eiland/Metro 2.725 2.500 2.300 2.333 1,0 8,377 ‐0,071 0,85 Rode’s Report 2021:1 Table 8.2 (continued) Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Montague Gardens 2.100 2.050 2.020 1.975 1,1 7,822 ‐0,025 0,98 Marconi Beam 2.210 2.100 2.000 1.800 ‐ 8,290 ‐0,084 0,95 Killarney Gardens 1.813 1.775 1.567 1.250 1,0 8,641 ‐0,158 0,88 Racing Park 1.050 925 875 600 5,5 8,497 ‐0,218 0,84 Atlantis 350 350 350 300 6,0 6,285 ‐0,058 0,58 Woodstock/Salt River/Observatory 5.000 5.000 ‐ ‐ 2,0 ‐ ‐ ‐ Athlone 1 & 2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lansdowne Nerissa ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sand Industria ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 111 Ottery Hillstar ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ottery Sunset ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Diep River ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Elfindale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Monwood/Philippi ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Retreat/Steenberg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Capricorn Park 1.500 1.500 1.400 1.400 1,0 7,570 ‐0,036 0,84 Maitland 1.850 1.850 1.750 1.700 3,3 7,810 ‐0,040 0,92

Ndabeni 2.050 2.050 2.000 2.000 1,0 7,718 ‐0,013 0,84 Industrial stand values Epping 1 & 2 2.000 2.000 2.250 2.500 1,5 6,870 0,101 0,91 WP Park 1.750 2.000 2.520 2.500 1,0 6,326 0,168 0,91 Elsies River (excl. Central Park) 1.000 1.000 900 ‐ 1,0 ‐ ‐ ‐ Parow Beaconvale 1.550 1.450 1.400 1.400 1,0 7,628 ‐0,043 0,84 Tygerberg Business Park 1.800 1.700 1.550 ‐ ‐ ‐ ‐ ‐ Parow Industria 1.700 1.600 1.533 1.600 1,0 7,617 ‐0,029 0,48 Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Parow East ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bellville Oakdale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bellville Stikland/Kaymor 1.760 1.725 1.767 1.733 1,7 7,483 ‐0,002 0,04 Bellville Triangle 1.550 1.500 1.500 1.400 2,0 7,612 ‐0,038 0,81 Bellville South/Sacks Circle 1.548 1.528 1.548 1.438 1,0 7,531 ‐0,026 0,55 Kraaifontein 1.300 1.250 1.200 900 1,0 8,209 ‐0,144 0,76 Brackenfell Industria 1.800 1.800 1.800 1.767 1,5 7,547 ‐0,007 0,58 Everite Brackenfell 1.825 1.800 1.800 1.767 1,0 7,593 ‐0,012 0,85 Kuils River 1.200 1.150 1.000 900 1,0 7,999 ‐0,129 0,98 112 Blackheath 917 900 833 800 1,0 7,262 ‐0,063 0,97 Saxenburg Industrial Park 1.625 1.625 1.550 ‐ 1,0 ‐ ‐ ‐ Okavango 1.867 1.867 1.800 1.750 1,5 7,745 ‐0,030 0,92 Brackengate/Icon Business Park 2.350 2.350 2.350 2.350 2,8 7,762 ‐ ‐ Paarl 1.200 1.100 950 800 3,5 8,310 ‐0,174 0,98 Wellington 1.100 900 600 500 2,0 9,474 ‐0,356 0,99 Contermanskloof 1.700 1.900 1.500 1.500 3,0 8,066 ‐0,082 0,53 Rivergate 2.500 2.200 1.800 1.600 3,0 9,188 ‐0,197 1,00

Airport Ind (north of sewerage farm) 2.300 2.300 2.300 2.300 2,0 7,741 ‐ ‐ Industrial stand values Airport Ind (west of Borcherds Quarry) 2.300 2.300 2.300 2.300 2,0 7,741 ‐ ‐ Airport Ind (east of Borcherds Quarry) 2.350 2.150 2.150 ‐ 2,0 ‐ ‐ ‐ Durbanville Industrial Park 1.400 1.400 1.300 1.300 ‐ 7,520 ‐0,039 0,84 Northgate Industrial Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cape Town 1.814 1.770 1.678 1.688 1,8 Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m²Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Helderberg The Interchange ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Helderberg Industrial Park/Broadlands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Gants ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Somerset Business Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Georges Park/Onverwacht ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Mansfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Firgrove Industrial Estate ‐ 1.100 950 850 7,0 ‐ ‐ ‐

Strand Halt ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 113 Helderberg ‐ ‐ ‐ ‐ ‐ Stellenbosch Plankenbrug ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Devon Valley ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Tenantville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Klapmuts ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Stellenbosch ‐ ‐ ‐ ‐ ‐ Port Elizabeth Deal Party 700 675 650 650 2,3 6,774 ‐0,033 0,91 Industrial stand values North End 700 700 783 725 2,3 6,347 0,030 0,33 Korsten/Neave/Sidwell/Sydenham 650 650 650 650 3,0 6,477 ‐ ‐ South End Walmer 850 850 850 825 1,1 6,828 ‐0,011 0,58 Uitenhage: Volkswagen area/NMBLP 300 325 325 325 8,0 5,522 0,030 0,58 Uitenhage: Hella/Kruisrivier 225 250 250 250 6,0 5,177 0,040 0,58 Struandale 575 550 550 550 4,3 6,455 ‐0,017 0,58 Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Markman Township 175 180 243 245 5,0 3,959 0,171 0,88 Perseverance 350 350 350 350 4,5 5,858 ‐ ‐ Walmer 800 775 775 775 3,0 6,757 ‐0,012 0,58 Greenbushes 425 425 425 425 3,3 6,052 ‐ ‐ Fairview 1.075 1.133 1.083 1.083 3,0 7,028 ‐0,004 0,03 Port Elizabeth 580 572 571 558 3,8 East London Arcadia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Gately/Woodbrook ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 114 Wilsonia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Braelyn ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Northend ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Chiselhurst ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Meisies Halt ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Beacon Bay Industrial ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ IDZ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ West Bank Industrial Area ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

East London ‐ ‐ ‐ ‐ ‐ Industrial stand values Bloemfontein Hilton ‐ ‐ 450 450 2,0 ‐ ‐ ‐ East End 800 950 750 673 2,5 7,473 ‐0,100 0,49 Harvey Road ‐ ‐ 550 550 2,0 ‐ ‐ ‐ Old Industrial ‐ ‐ 350 350 4,0 ‐ ‐ ‐ Hamilton: Mill St ‐ ‐ 500 500 1,0 ‐ ‐ ‐ Hamilton: G Lubbe St ‐ ‐ 500 500 1,0 ‐ ‐ ‐ Table 8.2 (continued) Rode’s Report 2021:1 Mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) Area size in m² Land availabi‐ a b r² 1.000 2.000 5.000 10.000 lity Estoire ‐ ‐ 675 600 5,0 ‐ ‐ ‐ Quaggafontein ‐ ‐ 850 950 7,0 ‐ ‐ ‐ Bloemfontein 800 950 615 593 3,0 George George Central 483 433 387 375 2,5 6,938 ‐0,112 0,96 Tamsui Industria 473 427 408 385 4,5 6,722 ‐0,084 0,95 Pacaltsdorp Industria 443 403 373 360 4,0 6,698 ‐0,090 0,97 George 467 421 389 373 3,7 Pietermaritzburg 115 Willowton 610 610 595 500 3,7 6,988 ‐0,078 0,68 Mkondeni/Shortts Retreat 550 520 498 410 6,0 7,138 ‐0,117 0,86 Camps Drift 500 447 417 383 4,3 6,961 ‐0,110 0,98 Pietermaritzburg Central 600 550 500 450 2,0 7,242 ‐0,122 0,99 Rosedale/Allandale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Howick 500 450 400 350 3,0 7,263 ‐0,151 0,99 Pietermaritzburg 553 521 502 425 4,3 Lower Umfolozi

Empangeni ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Industrial stand values Lower Umfolozi ‐ ‐ ‐ ‐ ‐ Windhoek North 2.025 1.900 1.675 1.400 1,5 8,725 ‐0,157 0,96 Lafrenz 1.975 1.750 1.625 1.300 4,5 8,758 ‐0,168 0,93 South 2.900 2.650 2.225 1.975 1,5 9,159 ‐0,170 1,00 Prosperita 2.350 2.175 1.950 1.525 1,5 9,026 ‐0,178 0,92 Windhoek 2.313 2.119 1.869 1.550 2,3 Rode’s Report Table 8.3 Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1 2021:1 (R/m² excl. VAT) Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Central Witwatersrand Cambridge Park 224,85 163,30 113,43 108,01 AP,REA,SHP Wynberg Proper 50,00 200,00 0,00 0,00 AP,OS,SHP Strijdom Park 120,00 113,88 81,65 62,36 AP,CBR,SHP,WHF,WP Kya Sand West 64,95 70,71 78,74 70,60 AC,AP,CBR,SHP,WHF Kya Sand East ‐ ‐ ‐ ‐ AP Lanseria Corporate Estate ‐ ‐ ‐ ‐ AP 116 Cosmo Business Park ‐ ‐ ‐ ‐ AP Mostyn Park ‐ ‐ ‐ ‐ AP Clayville/Olifantsfontein 0,00 0,00 0,00 5,00 AP,SHP Chloorkop 188,68 90,14 54,49 21,60 AP,OS,PPR,RA,SHP Amalgam ‐ ‐ ‐ ‐ AP Crown Mines ‐ ‐ ‐ ‐ AP Industria ‐ ‐ ‐ ‐ AP Booysens/Booysens Reserve/Ophirton ‐ ‐ ‐ ‐

Village Main/Village Deep/New Centre ‐ ‐ ‐ ‐ Industrial Benrose ‐ ‐ ‐ ‐ AP Steeledale/Electron/Tulisa Park ‐ ‐ ‐ ‐ AP

Aeroton ‐ ‐ ‐ ‐ AP stand values Devland/Nancefield ‐ ‐ ‐ ‐ AP Cleveland/Heriotdale ‐ ‐ ‐ ‐ AP Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1 (R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Newlands/Martindale ‐ ‐ ‐ ‐ AP Kew/Wynberg East ‐ ‐ ‐ ‐ AP,OS Bramley View/Lombardy West ‐ ‐ ‐ ‐ AP Marlboro 150,00 120,00 150,00 150,00 AP,RA Halfway House: hi‐tech strip 100,00 100,00 50,00 0,00 AP,SHP Halfway House: Richards Drive 50,00 50,00 0,00 ‐ AP,SHP

Corporate Park (Midrand) ‐ ‐ ‐ ‐ 117 Commercia 0,00 5,00 25,00 37,50 AP,SHP Kramerville/Eastgate Ext 12 & Ext 13 150,00 150,00 175,00 50,00 AP,SHP Linbro Park 50,00 50,00 109,54 122,47 AC,AV,OS,PPR,SHP,WP Wesco Park/Eastgate Ext 3, Ext 11, Ext 6, ‐ ‐ ‐ ‐ AP Ext 8/Malboro North (New) City Deep 40,82 40,82 52,49 64,81 AP,GI,RA North Riding/Hoogland 47,14 47,14 81,65 94,28 AP,SHP,WHF Samrand Centurion ‐ ‐ ‐ ‐ SHP

Barbeque Downs ‐ ‐ ‐ ‐ AP Industrial Selby Ext 12/13/15/19/20/24/City West ‐ ‐ ‐ ‐ AP Selby Ext 5/10/14/18 ‐ ‐ ‐ ‐ AP

Selby Ext 11 ‐ ‐ ‐ ‐ AP stand values Selby Ext 3/4/6 ‐ ‐ ‐ ‐ AP Denver (Old) ‐ ‐ ‐ ‐ AP Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Denver (New) ‐ ‐ ‐ ‐ AP Kyalami Business Park ‐ ‐ ‐ ‐ AP Reuven ‐ ‐ ‐ ‐ AP Selby (Old)/Selby Ext2/Park Central ‐ ‐ ‐ ‐ AP Robertsham ‐ ‐ ‐ ‐ AP Fordsburg/Newtown ‐ ‐ ‐ ‐

Waterfall ‐ ‐ ‐ ‐ 118 Lords View 0,00 0,00 0,00 0,00 AP,CBR West Rand Lea Glen ‐‐‐‐ Honeydew Ext 19, 20, 21 & 22 ‐ ‐ ‐ 400,00 AC,AP Stormill 45,00 60,00 45,00 25,00 AP,WHF Chamdor 23,57 0,00 30,64 10,00 AP,RA,WHF Factoria ‐ ‐ ‐ ‐ AP Krugersdorp: Delporton ‐ ‐ ‐ ‐ Randfontein: Aureus 10,00 10,00 25,00 25,00 AP,WHF Industrial Boltonia ‐‐‐‐ Roodepoort: Technikon/Manufacta ‐ ‐ ‐ ‐ AP Industria North ‐ ‐ ‐ ‐ AP stand values Robertville 56,57 51,85 23,57 8,29 AP,GI,SHP,WHF Laserpark 156,20 224,65 129,30 118,32 AP,REA,SHP,WHF,WP Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 East Rand Elandsfontein 151,66 128,84 101,86 82,22 ME,PPR,REA,SHP,SWI,WHF Tunney/Greenhills 100,00 73,41 73,03 104,08 ME,MR,PPR,SHP,SWI,WHF Henville 37,42 24,49 86,16 120,00 ME,PPR,SHP,SWI,WHF Hughes 54,49 70,71 70,71 48,99 AP,ME,PPR,SHP,WHF Bartletts 48,99 48,99 74,83 74,83 AP,ME,PPR,SHP,WHF Lilianton ‐ ‐ ‐ ‐ 119 Meadowbrook/Wilbart 101,98 89,44 80,00 114,02 ME,PPR,SHP,SWI,WHF Sunnyrock 108,97 70,71 0,00 61,24 ME,SHP,SWI,WHF Rustivia/Activia Park 67,82 67,82 32,62 41,67 ME,PPR,SHP,SWI,WHF Eastleigh 87,18 87,18 40,00 74,83 AP,ME,PPR,SWI,WHF Sebenza Ext 14 200,00 200,00 100,00 50,00 ME,SWI Spartan Ext 16 (Sebenza Link) + Ext 1,3,7 252,19 252,19 74,83 66,33 AP,ME,PPR,SWI,WHF Isando 115,47 141,42 84,11 54,49 CBR,ME,MR,SHP,SWI,WHF Isando 3 172,05 80,00 38,78 46,30 AP,ME,SHP,SWI,WHF Jet Park 141,42 141,42 69,99 47,14 AP,ME,MR,PPR,SHP,SWI,WHF Alrode & Xs 70,71 43,20 47,14 23,57 SHP,SWI,WHF Industrial Alrode South 99,33 108,01 84,98 47,14 SHP,SWI,WHF Alberton 134,05 134,05 170,93 198,04 PPR,SHP,SWI,WHF stand values Aeroport/Spartan Ext 2 50,00 109,54 172,05 228,04 AP,PPR,SHP,SWI,WHF Delville ‐ ‐ ‐ ‐ AP Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Roodekop 148,32 132,66 94,87 20,00 AP,PPR,SHP,SWI,WHF Wadeville: Industrial zoning 124,10 86,02 80,00 60,00 AP,PPR,SHP,SWI,WHF Route 24/Meadowdale 63,25 195,08 74,83 101,98 ME,MR,PPR,SHP,SWI,WHF Germiston S/Industries E 108,01 100,00 100,00 100,00 AP,PPR,WHF Driehoek/Industries W 40,82 25,00 25,00 25,00 AP,PPR,WHF Knights 100,00 ‐ ‐ ‐ AP,PPR Spartan Proper 121,10 124,90 22,45 33,82 ME,PPR,SHP,SWI,WHF 120 Founders View 187,08 187,08 111,80 43,30 AP,PPR,SHP,SWI Longmeadow 40,00 45,34 81,01 156,67 AV,ME,MR,PPR,RA,SHP,SWI Pomona/Kempton Park 96,01 96,01 108,25 212,13 AC,ME,MR,PPR,SHP,SWI Gosforth Park 61,24 21,60 40,82 104,97 AP,ME,MR,PPR,SHP S&J Industrial Estate 71,16 73,61 21,65 21,65 AP,ME,MR,PPR,SHP Far East Rand Boksburg North & East 63,25 71,89 61,24 81,24 AP,MR,PPR,RA,SHP,WHF Benoni South 141,42 154,56 131,23 113,43 AP,SHP,WHF New Era/Vulcania ‐ ‐ ‐ ‐ AP Industrial Nuffield ‐ ‐ ‐ ‐ AP Fulcrum ‐ ‐ ‐ ‐ AP Apex 29,44 29,44 29,44 74,83 AC,AP,MR,PPR,WHF stand values Labore Brakpan ‐ ‐ ‐ ‐ Morehill Ext 8 Benoni 75,00 75,00 75,00 75,00 AP,WHF Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Pretoria Charlotte Maxeke ‐ ‐ ‐ ‐ AP Pretoria Industrial Township ‐ ‐ ‐ ‐ AP Koedoespoort 0,00 0,00 70,00 45,00 AP,HN,WHF Waltloo/Dispatch 70,00 80,00 25,00 115,00 AP,WHF Silverton/Silvertondale 102,31 45,00 5,00 35,00 AP,HN,WHF

Samcor Park ‐ ‐ ‐ ‐ AP 121 Sunderland Ridge 50,00 45,00 50,00 40,00 AP,WHF Hermanstad ‐ ‐ ‐ ‐ AP Kirkney ‐ ‐ ‐ ‐ AP Hennopspark Ext 15 & Ext 7 150,00 150,00 150,00 25,00 AP,WHF Gateway 81,65 81,65 81,65 47,14 AP,MAS,WHF Lyttelton Manor Ext 4/Ext 6 90,00 110,00 110,00 110,00 AP,WHF Pretoria North ‐ ‐ ‐ ‐ AP Silvertondale X1 ‐ ‐ ‐ ‐ AP,HN Industrial Klerksoord ‐ ‐ ‐ ‐ AP Rosslyn ‐ ‐ ‐ ‐ AP

Centurion 75,00 75,00 75,00 75,00 AP,WHF stand values Polokwane Lebowakgomo ‐ ‐ ‐ ‐ Superbia ‐ ‐ ‐ ‐ MO,TG Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Industria ‐ ‐ ‐ ‐ MO,TG Ladine ‐ 0,00 ‐ ‐ MO,TG Futura ‐ ‐ ‐ ‐ MO,TG Laboria ‐ ‐ ‐ ‐ MO,TG Magna Via 25,00 9,43 10,00 ‐ MO,NET,TG Seshego ‐ ‐ ‐ ‐ MO

Nelspruit 122 Nelspruit East ‐ ‐ ‐ ‐ Nelspruit West 0,00 0,00 0,00 0,00 KEL,MPV,ORI,PG,PM Rocky's Drift ‐ ‐ ‐ ‐ MPV Riverside Park 0,00 0,00 0,00 0,00 KEL,MPV,ORI,PG,PM Durban Springfield Park ‐ ‐ ‐ 0,00 BON,CPP,PC,WHF Mayville ‐ ‐ ‐ ‐ PC Phoenix ‐ ‐ ‐ ‐ PC Chris Hani Rd (North Coast/Briardene) ‐ ‐ ‐ ‐ BON,PC Industrial Briardene Industrial Park ‐ ‐ ‐ ‐ BON,PC,WHF Umgeni Rd/Stamford Hill ‐ ‐ ‐ ‐ PC Umbilo/Sydney Rd/Magwaza Maphalala St ‐ ‐ ‐ ‐ PC stand values (Gale) Jacobs 286,74 188,56 188,56 188,56 AWP,PC,WHF Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Mobeni ‐ ‐ ‐ ‐ PC,WHF Prospecton ‐ ‐ ‐ ‐ PC,WHF Ithala Industrial Estate ‐ ‐ ‐ ‐ Pinetown Central ‐ ‐ ‐ ‐ PC New Germany ‐ ‐ ‐ ‐ PC Isipingo ‐ ‐ ‐ ‐ PC Rossburgh/South Coast Rd ‐ ‐ ‐ ‐ PC 123 Edwin Swales Drive ‐‐‐‐ Glen Anil 250,00 294,39 350,00 ‐ BON,PC,WHF Felix Dlamini Rd (Brickfield) ‐ ‐ ‐ ‐ PC Verulam ‐ ‐ ‐ ‐ Canelands ‐ ‐ ‐ ‐ PC Tongaat ‐‐‐‐ New Westmead/Mahogany ‐ ‐ ‐ ‐ PC Westmead ‐ ‐ ‐ ‐ PC Mariann Park/Southmead ‐ ‐ ‐ ‐ PC Maxmead ‐ ‐ ‐ ‐ PC Industrial Ringroad Industrial Park ‐ ‐ ‐ ‐ Avoca/Red Hill/Northgate ‐ ‐ ‐ ‐ WHF stand values Falcon Park ‐ ‐ ‐ ‐ WHF Riverhorse Valley Business Estate ‐ ‐ 0,00 ‐ BON,CPP,PC,WHF Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Mount Edgecombe 400,00 400,00 400,00 510,45 BON,CPP,PC,WHF Umbogintwini/Southgate ‐ ‐ ‐ ‐ PC Southgate Industrial Park ‐ ‐ 250,00 200,00 JUS,PC Umgeni Park ‐ ‐ ‐ ‐ Hammarsdale ‐ ‐ ‐ 0,00 PC,SH,WHF Cato Ridge ‐ ‐ ‐ 200,00 PC,SH,WHF Ballito ‐ ‐ ‐ ‐ PC 124 Dube Tradeport ‐ ‐ ‐ ‐ Kingsburgh ‐ ‐ 125,00 ‐ JUS,SF Cornubia 200,00 200,00 521,22 521,22 CPP,PC,WHF Ladysmith Ezakheni/Pieters ‐ ‐ ‐ ‐ Danskraal ‐ ‐ ‐ ‐ DE Nambiti ‐ ‐ ‐ ‐ DE Colenso ‐ ‐ ‐ ‐ Cape Town Viking Place ‐ ‐ ‐ ‐ AN Industrial Glosderry ‐ ‐ ‐ ‐ Paarden Eiland/Metro 227,76 308,22 308,22 235,70 AN,AX,DN,PES,PHP stand values Montague Gardens 100,00 111,80 256,12 356,20 AN,AX,DN,GB,PHP,WHF Marconi Beam ‐ ‐ ‐ ‐ AX Killarney Gardens 113,88 147,90 309,12 50,00 AN,AX,DN,WHF Racing Park 150,00 75,00 125,00 ‐ AX,DN Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Atlantis ‐ ‐ ‐ ‐ AN Woodstock/Salt River/Observatory ‐ ‐ ‐ ‐ AN Athlone 1 & 2 ‐ ‐ ‐ ‐ Landsdowne Nerissa ‐ ‐ ‐ ‐ Sand Industria ‐ ‐ ‐ ‐ Ottery Hillstar ‐ ‐ ‐ ‐ Ottery Sunset ‐‐‐‐ 125 Diep River ‐ ‐ ‐ ‐ Elfindale ‐‐‐‐ Monwood/Philippi ‐ ‐ ‐ ‐ Retreat/Steenberg ‐ ‐ ‐ ‐ Capricorn Park 100,00 100,00 0,00 0,00 AN,SCM Maitland 350,00 350,00 250,00 200,00 AN,AX Ndabeni 50,00 50,00 0,00 0,00 AN,AX Epping 1 & 2 500,00 500,00 250,00 0,00 AN,PHP WP Park ‐ ‐ ‐ ‐ AN Elsies River (excl. Central Park) ‐ ‐ ‐ ‐ AN Industrial Parow Beaconvale 50,00 50,00 0,00 ‐ AN,DN Tygerberg Business Park 0,00 100,00 150,00 ‐ AN,DN stand values Parow Industria 81,65 163,30 124,72 100,00 AN,DN,PF Parow East ‐‐‐‐ Bellville Oakdale ‐ ‐ ‐ ‐ Bellville Stikland/Kaymor 205,91 178,54 169,97 205,48 AN,DN,PF,WD,WHF Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Bellville Triangle 147,20 81,65 0,00 100,00 AN,DN,WHF Bellville South/Sacks Circle 87,27 84,47 115,19 138,63 AN,DN,HOU,PF,PHP,WHF Kraaifontein 100,00 150,00 200,00 ‐ AN,DN Brackenfell Industria 122,47 122,47 122,47 169,97 AN,DN,PF,WHF Everite Brackenfell 108,97 122,47 122,47 169,97 AN,DN,PF,WHF Kuils River 100,00 50,00 0,00 ‐ AN,PF

Blackheath 117,85 108,01 62,36 ‐ AN,DN,PF 126 Saxenburg Industrial Park 225,00 225,00 150,00 ‐ AN,DN Okavango 449,69 449,69 496,66 250,00 AN,PF,WHF Brackengate/Icon Business Park 150,00 150,00 150,00 150,00 AN,PHP,WD,WHF Paarl ‐ ‐ ‐ ‐ MAF,SF Wellington ‐ ‐ ‐ ‐ MAF,SF Contermanskloof ‐ ‐ ‐ ‐ WHF Rivergate ‐ ‐ ‐ ‐ AN Airport Ind (north of sewerage farm) ‐ ‐ ‐ ‐ PHP Airport Ind (west of Borcherds Quarry) ‐ ‐ ‐ ‐ PHP Industrial Airport Ind (east of Borcherds Quarry) 50,00 150,00 150,00 ‐ DN ,PHP Durbanville Industrial Park ‐ ‐ ‐ ‐ WHF

Northgate Industrial Park ‐ ‐ ‐ ‐ stand values Helderberg The Interchange ‐ ‐ ‐ ‐ Helderberg Industrial Park/Broadlands ‐ ‐ ‐ ‐ Gants ‐ ‐ ‐ ‐ Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Somerset Business Park ‐ ‐ ‐ ‐ Georges Park/Onverwacht ‐ ‐ ‐ ‐ Mansfield ‐ ‐ ‐ ‐ Firgrove Industrial Estate ‐ ‐ ‐ ‐ AN Strand Halt ‐ ‐ ‐ ‐ Stellenbosch

Plankenbrug ‐ ‐ ‐ ‐ 127 Devon Valley ‐‐‐‐ Tenantville ‐ ‐ ‐ ‐ Klapmuts ‐ ‐ ‐ ‐ Port Elizabeth Deal Party 0,00 25,00 0,00 0,00 ARN,BR,SUM North End 100,00 100,00 102,74 75,00 ARN,BR,SUM Korsten/Neave/Sidwell/Sydenham 50,00 50,00 50,00 50,00 ARN,SUM South End Walmer 0,00 0,00 0,00 25,00 ARN,SUM Uitenhage: Volkswagen area/NMBLP ‐ 54,01 54,01 54,01 ARN,BR,SUM Industrial Uitenhage: Hella/Kruisrivier 25,00 40,82 40,82 40,82 ARN,BR,SUM Struandale 75,00 50,00 50,00 50,00 ARN,SUM Markman Township 25,00 20,00 75,87 74,50 ARN,BR,SUM stand values Perseverance 0,00 0,00 0,00 0,00 ARN,SUM Walmer 50,00 25,00 25,00 25,00 ARN,SUM Greenbushes 25,00 25,00 25,00 25,00 ARN,SUM Fairview 75,00 102,74 117,85 117,85 ARN,BR,SUM Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 East London Arcadia - - - - Gately/Woodbrook - - - - Wilsonia - - - - Braelyn - - - - Northend - - - - Chiselhurst - - - -

128 Meisies Halt - - - - Beacon Bay Industrial - - - - IDZ - - - - West Bank Industrial Area - - - - Bloemfontein Hilton ‐ ‐ ‐ ‐ BR East End 50,00 ‐ ‐ 61,28 BR,EK,EQV Harvey Road ‐ ‐ ‐ ‐ BR Old Industrial ‐ ‐ ‐ ‐ BR Hamilton: Mill St ‐ ‐ ‐ ‐ BR Industrial Hamilton: G Lubbe St ‐ ‐ ‐ ‐ BR Estoire ‐ ‐ 25,00 50,00 BR,EQV stand values Quaggafontein ‐ ‐ 100,00 ‐ BR,EQV George George Central 47,14 47,14 80,55 75,00 BVF,GRV,MUL Rode’s Report Table 8.3 (continued) Standard deviation from mean market values for serviced and level industrial stands in quarter 2021:1

(R/m² excl. VAT) 2021:1 Area size in m² Panellist codes 1.000 2.000 5.000 10.000 Tamsui Industria 55,58 52,49 65,62 65,00 BVF,GRV,MUL Pacaltsdorp Industria 41,90 36,82 55,58 40,00 BVF,GRV,MUL Pietermaritzburg Willowton 53,54 14,14 93,94 40,82 DOR,HN,PJ,SHA Mkondeni/Shortts Retreat 40,82 21,60 41,46 42,43 DOR,HN,PJ,SHA Camps Drift 0,00 4,71 12,47 23,57 DOR,HN,PJ

Pietermaritzburg Central ‐ ‐ ‐ ‐ PJ 129 Rosedale/Allandale ‐ ‐ ‐ ‐ Howick ‐ ‐ ‐ ‐ PJ Lower Umfolozi Empangeni ‐ ‐ ‐ ‐ Windhoek North 175,00 300,00 325,00 300,00 PVN,TE Lafrenz 125,00 150,00 275,00 200,00 PVN,TE South 400,00 650,00 575,00 625,00 PVN,TE Prosperita 150,00 325,00 350,00 275,00 PVN,TE Industrial stand values Rode’s Report 2021:1 130 Flats market

Chapter 9: Flats market Flat vacancies may have peaked for now Kobus Lamprecht

Flat vacancy rates in South Africa declined to Rentals are under pressure due to the 12% in the first quarter of 2021 from a high of oversupply of flats, linked to huge increases 12,9% in the fourth quarter of 2020, according in new rental stock in 2018 and especially to Rode’s residential survey data, summarized 2019 (see chart) and weakening demand as in Table 9.1 and shown in the chart. Vacancy the weak economy hit tenant finances. rates are still well above the 9,2% average of Furthermore, the rental market has been hit 2020, despite the improvement. by some financially sound tenants who chose to rather purchase flats or houses as the High vacancy rates have led to weaker rental monthly cost of owning versus renting is growth. Official data from Stats SA show that closer to equilibrium due to the sharp decline nominal flat‐rental growth in the fourth in interest rates. The shift of flats to long‐term quarter of 2020 slowed further to 1,7% contracts that were focused on the short compared to a year earlier (see chart) − the term, linked to tourism, have exacerbated the weakest growth since at least 2009. Using situation, especially in certain areas of Cape PayProp data, rental growth was even lower Town. at 0,2%. Rode’s Report 2021:1 131 Flats market

On a city level, vacancy rates in all the major 18%) and Port Elizabeth (to 8%). Several of cities remain north of 10%. Encouragingly, Rode’s respondents noted that there are vacancy rates have improved in several cities, many applicants that apply to rent, but do not including Cape Town (to 12%), Durban (to qualify after credit checks.

Table 9.1 Flat vacancies by city (%) Average for all grades (standard & upmarket combined) City 20Q4 21Q1 Johannesburg 13,0% 13,4% Pretoria 14,2% 15,1% Cape Town 17,4% 12,1% Durban 19,0% 18,3% East London 5,2% 9,0% Port Elizabeth 11,0% 8,0% Bloemfontein 6,3% 5,3% Stellenbosch 10,3% 10,3% George 8,3% 3,0% National (smoothed) 12,9% 12,0% Source of data: Rode’s Time Series

SA flats completed since 2010 m² 300.000

200.000

100.000

0 10Q1 10Q3 11Q1 11Q3 12Q1 12Q3 13Q1 13Q3 14Q1 14Q3 15Q1 15Q3 16Q1 16Q3 17Q1 17Q3 18Q1 18Q3 19Q1 19Q3 20Q1 20Q3

Source: Stats SA Rode’s Report 2021:1 132 Flats market

A positive for the oversupplied market is that We believe flat vacancy rates will remain at new completions have declined by 50% in elevated levels in the short term as more 2020, mostly due to the lockdown bringing tenants run into financial difficulties. More activity to a halt in the second quarter of Covid‐19 waves later in 2021 will also mean the year, as shown in the chart. Activity has some short‐term rental stock (think Airbnb) recovered since that collapse, but it was still will remain on the long‐term market as the about 20% lower in the second half 2020 tourism sector takes longer to recover, but compared to the second half of 2019. this may change in a year or two when herd Developers are also planning to build less, as immunity is reached. can be seen in Chapter 11. The sharp decline in new developments is a positive for the market, which could According to TPN, vacancies are high across ultimately put the market on a better footing the board but are the worst at the high‐end when demand eventually improves over segment of the residential market (rent of the medium term. However, here we must >R25 000/month), with 21% vacant in the consider the potential negative impact of the fourth quarter of 2020 as shown in the pie conversion of vacant office space to flats due chart. The sweet spot for buy‐to‐rent buyers to the headwinds the office sector is facing is the segments of R7 000 to R12 000 and (see Chapter 5 and 6). The struggles of the R3 000 to R7 000 rent per month as these hospitality sector are also leading to the segments have vacancies of ‘only’ 10,3% and conversion of such accommodation to flats. 11,3% respectively. Note that vacancies in Spear, a REIT, revealed in March that its 15 on the highest‐ and lowest‐priced segments are Orange Hotel in Cape Town will be converted catastrophic. The message remains the same, to hybrid accommodation, which will now stay in the middle of the road. have 50 apartments out of a total of 130 rooms. Of course, conversions will not happen overnight and will not significantly boost the supply of apartment stock any time soon. In the tables that follow, we show the specific rental levels in the suburbs for the various grades of flats. Please note that the flat-rental data tend to be erratic due to the small sample size. Therefore, readers are advised to use an average of at least the last two quarters to obtain the latest rental rate. Rode’s Report Table 9.2 Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Johannesburg R3.901 ‐ R5.116 ‐ R6.554 ‐ R6.900 ‐ City Central R2.850 R190 R3.550 R4.833 R236 R5.617 R440 COE,EXH,PPG,TI,VAR /Bellevue/Highlands R3.562 R87 R4.000 R442 R4.638 R565 R5.650 R460 COE,EXH,NAN,PPG /Fordsburg/ R3.000 R408 R3.500‐ R4.500 ‐ R6.000‐ COE,EXH,VAR Malvern/Kensington North‐Eastern Suburbs R4.200 R1.300 R4.750 R750 R5.750 R750 R6.50 0 R1.000 COE,EXH Maraisburg/Crosby/Brixton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Meldene (Melville, Westdene, ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ) Killarney/Illovo ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 133 Greenside/Victory Park/ R7.200 ‐ R7.500 ‐ R8.100 ‐ R8.500 ‐ TR /Linden Parkhurst/Parkview ‐‐‐‐ R9.500 ‐ ‐ ‐TR Rosebank ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Randburg: Ferndale/ R3.450 R50 R4.633 R660 R6.460 R408 R7.200‐ CAR,COE,PRS,TI,VAR Fontainebleau Randburg & Suburbs ‐ ‐ ‐ ‐ R8.900 ‐ ‐ ‐ PRS Windsor: East/West R3.500‐ R4.000‐ R5.800 ‐ ‐ ‐TI / R7.000 ‐ R7.750 ‐ R8.300 ‐ R9.000 ‐ TR Sandton: North & Far North R4.667 R1.247 R7.167 R236 R8.733 R205 R10.000‐ COE,TR,VAR Sandton: South to Central R4.850 R1.650 R7.125 R125 R8.875 R125 R11.000 ‐ COE,TR Bedfordview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Old South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

New South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Waterfall ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ CBD Maboneng R3.000 ‐ R4.000 ‐ R4.500 ‐ R5.000 ‐ COE Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Melrose Arch ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Melrose (excluding Melrose Arch) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Parktown ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston R2.255 ‐ R3.500 ‐ R4.382 ‐ R5.903 ‐ Primrose R2.200 ‐ R4.050 ‐ R5.077 ‐ R7.800 ‐ PH Germiston Central & South R2.310 ‐ R2.950 ‐ R3.687 ‐ R4.005 ‐ PH Germiston Southern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Elsburg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Witfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 134 Benoni R3.450 ‐ R4.014 ‐ R5.400 ‐ R7.444 ‐ Benoni Central ‐ ‐ R3.300 ‐ R5.000 ‐ R6.500 ‐ SC Lakefield ‐ ‐ R4.100 ‐ R5.300 ‐ R10.500 ‐ SC Westdene ‐ ‐ R4.100 ‐ R5.300 ‐ R10.500 ‐ SC Farrarmere ‐ ‐ R4.200 ‐ R6.500 ‐ R8.100 ‐ SC Morehill R3.300 ‐ R4.200 ‐ R5.800 ‐ R6.500 ‐ SC Rynfield R3.600 ‐ R4.700 ‐ R5.500 ‐ R6.600 ‐ SC Northmead ‐ ‐ ‐ ‐ R5.600 ‐ R6.300 ‐ SC Crystal Park ‐ ‐ ‐ ‐ R5.200 ‐ R6.000 ‐ SC Mackensie Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Western Extension ‐ ‐ R3.500 ‐ R4.400 ‐ R6.000 ‐ SC Boksburg Boksburg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Kempton Park Croydon ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Pretoria R3.417 ‐ R4.089 ‐ R5.415 ‐ R6.614 ‐ R3.200 ‐ R3.800 ‐ R4.700 ‐ ‐ ‐ TR Pretoria North/Dorandia/Florauna ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Annlin/Wonderboom/Sinoville/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montana Die Moot/Queenswood ‐ ‐ R4.800 ‐ R6.300 ‐ ‐ ‐ MPR East Lynne/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Silverton/Meyerspark/ ‐ ‐‐ ‐ ‐ ‐R6.000 ‐ TR La Montagne

East (Menlo Park/Ashlea Gardens/ ‐ ‐ ‐ ‐ R7.000 ‐ ‐ ‐ MPR 135 all Lynwoods/Die Wilgers/Faerie Glen// Constantia/ / ) Pretorius Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Groenkloof/Brooklyn/Most ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Waterkloofs/Erasmusrand Monument Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ South Eastern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sunnyside R3.225 R225 R3.917 R5.033 R47 R6.750 R250 MPR,PPG,TR Arcadia R3.617 R347 R4.325 R460 R5.283 R210 R6.817 R225 MPR,PPG,TR Pretoria Central ‐ ‐ R4.325 R325 R5.200 ‐ R6.350 ‐ PPG,TR Pretoria West ‐ ‐ R3.000 ‐ ‐ ‐ ‐ ‐ TR

Kwaggasrand/West Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Elandspoort/Danville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ / ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Hatfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Centurion Pierre van Ryneveld ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Irene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ /Lyttelton Manor/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ / Highveld and extensions ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ //Wierda Park/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cranebrook/Bronberrick/ North

Rooihuiskraal/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 136 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Valhalla ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Polokwane Eduanpark/Welgelegen ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bendor/Bendor extension 1 ‐ ‐ ‐ ‐ R9.000 ‐ R12.000 ‐ SF Ster Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flora Park/Fauna Park/Capricorn ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Polokwane Central/Hospitaal Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Annadale ‐ ‐ R4.500 ‐ R5.500 ‐ ‐ ‐SF Penina Park/Ivy Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Durban R3.779 ‐ R5.782 ‐ R6.855 ‐ R10.398 ‐ Upper highway: Kloof/Hillcrest ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Pinetown area/Queensburgh R3.375 R375 R4.625 R625 R5.875 R375 R7.200 ‐ TR,WK Flats market Westville area ‐ ‐R6.900 ‐ R7.800 ‐ ‐ ‐TR Central City R4.000 ‐ R5.400 ‐ R6.500 ‐ ‐ ‐TR Berea/Morningside/Glenwood R4.200 ‐ R5.700 ‐ R6.800 ‐ ‐ ‐ TR South and North Beach R4.000 ‐ R5.500 ‐ R6.500 ‐ ‐ ‐TR Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Durban North ‐ ‐ R6.300 ‐ R6.800 ‐ ‐ ‐ TR La Lucia/Greater Umhlanga ‐ ‐ R8.000 ‐ R10.000 ‐ R15.000 ‐ TR North (Dolphin) Coast/Ballito ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montclaire/Yellowwood Park R3.750 ‐ R5.250 ‐ R6.250 ‐ ‐ ‐ TR Bluff R3.750 ‐ R5.250 ‐ R6.250 ‐ ‐ ‐ TR Amanzimtoti/Warner Beach ‐ ‐ R6.050 ‐ R6.750 ‐ R8.995 ‐ TR Cape Town R5.340 ‐ R6.653 ‐ R8.342 ‐ R12.348 ‐ /Clifton/Bantry Bay ‐ ‐ R13.000 ‐ R15.750 R2.250 .250 R9.750 JUS,PF Sea Point/Green Point/Three R6.983 R24 R8.317 R931 R11.817 R866 R16.000 R2.500 JUS,PF,SQ

Anchor Bay 137 (excl. Higgovale) R6.000 ‐ R7.500 ‐ R8.250 R1.250 R10.333 R1.650 LA,PX,SQ City Centre R6.500 R0 R8.500 ‐ ‐ ‐ ‐ ‐ PF,SQ Waterfront ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Woodstock/Observatory R4.200 ‐ R6.242 R1.922 R9.000 R2.000 ‐ ‐ LA,PX,SQ Rondebosch/Rosebank/Claremont R6.000 R0 R7.950 R675 R9.000 R408 R12.000 ‐ JA,PF,SQ Kenilworth/Wynberg/Plumstead R5.200 R515 R6.050 R8.413 R658 R9.500 ‐ JA,LA,PF,PX,SQ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ // R4.800 ‐ R6.000 R500 R7.500 ‐ R9.000 ‐ JA,SQ Hout Bay R7.000 ‐ R7.500 R1.000 R9.900 R1.600 R20.000 ‐ JUS,PF Century City R7.000 ‐ R8.500 ‐ R11.950 ‐ R15.000 ‐ PWO Milnerton Sanddrift ‐ ‐R6.100 ‐ R8.500 ‐ ‐ ‐ PF Milnerton Royal Ascot ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Milnerton Burgundy Estate ‐ ‐ ‐ ‐ R8.000 ‐ ‐ ‐ LA Flats market Tableview ‐ ‐ ‐ ‐ R8.500 ‐ ‐ ‐ SQ Parklands/Sandown/Sunningdale ‐ ‐ ‐ ‐ R6.975 R225 ‐ ‐ LA,PPG Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor ‐Bedroom ‐Bedroom ‐Bedroom

1 2 3 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Athlone ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Garlandale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rondebosch East/Crawford ‐ ‐ ‐ ‐ R7.500 ‐ ‐ ‐ PX Mitchells Plain ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montana/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pinelands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Brooklyn/Rugby/Maitland ‐ ‐ ‐ ‐ R7.000 ‐ ‐ ‐ SQ 138 Monte Vista/Goodwood/ Parow/ R4.000 ‐ R4.800 R572 R6.900 R490 ‐ ‐ LA,PF,SQ Bellville Central Tyger Valley area ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Durbanville R5.200 ‐ ‐ ‐ R8.000 ‐ ‐ ‐ LA Brackenfell/Kuils River R4.250 R550 R5.500 ‐ R6.475 R275 R8.500 ‐ CIR,LA Somerset West R6.000 R1.000 R7.075 R1.425 R8.875 R1.625 R10.500 R 2.000 JUS,MAF Strand R4.850 ‐ R5.000 ‐ R6.375 R125 R7.000 ‐ JUS,LA Gordon's Bay R4.250 ‐ R5.698 R203 R6.175 R75 ‐ ‐ JUS,LA Kraaifontein (excl. Buh‐Rein) ‐ ‐ ‐ ‐ R5.800 ‐ ‐ ‐ LA Buh‐Rein Estate ‐ ‐ ‐ ‐ R6.150 ‐ R8.500 ‐ LA Paarl R4.275 R449 R5.175 R563 R6.500 R1.008 R8.825 R1.842 JUS,LA,MAF,PRU,RS Wellington R3.200 ‐ ‐ ‐ ‐ ‐ ‐ ‐ SQ

Stellenbosch Flats market Cloetesville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Onder Papegaaiberg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Simonswyk ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Idas Valley ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Uniepark ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Krigeville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dalsig ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kleingeluk ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Paradyskloof ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Klein Welgevonden ‐ ‐ ‐ ‐ R7.800 ‐ R9.500 ‐ SR Nuutgevonden ‐ ‐ ‐ ‐ R7.000 ‐ R9.500 ‐ SR Nooitgedacht Village ‐ ‐ ‐ ‐ R8.500 ‐ R12.000 ‐ SR Campus – Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Campus – West ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 139 Campus – North ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ La Colline ‐ ‐ ‐ ‐ R6.500 ‐ R10.000 ‐ SR George R3.900 ‐ R4.492 ‐ R6.229 ‐ R8.393 ‐ Heather Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Heatherlands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ King George Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dormehl's Drift ‐ ‐ ‐ ‐ R6.250 ‐ R8.000 ‐ GRV George South R3.700 R100 R4.350 R150 R5.900 R100 R8.250 R1.250 BVF,GRV George Central R3.900 R100 R4.475 R275 R5.900 R100 R8.250 R1.250 B VF,GRV Bo‐Dorp R4.100 R100 R4.650 R150 R6.875 R625 R8.875 R1.625 BVF,GRV Denver Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Loerie Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Protea Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Parkdene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Borcherds ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lawaaikamp ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ballot's View ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Herolds Bay (excl. Oubaai) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Oubaai ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Port Elizabeth R3.533 ‐ R4.367 ‐ R5.480 ‐ R6.020 ‐ Summerstrand/Humewood/ R3.700 ‐ R5.400 ‐ R6.900 ‐ R7.900 ‐ TR South End Walmer R4.000 ‐ R4.300 ‐ R6.300 ‐ ‐ ‐ IPC,TR Central/North End R2.900 ‐ R3.400 ‐ R4.800 ‐ R5.200 ‐ IPC,TR Newton Park ‐ ‐ ‐ ‐ R5.600 ‐ ‐ ‐ TR Westering ‐ ‐ ‐ ‐ R5.500 ‐ R6.700 ‐ TR

Kabega ‐ ‐ ‐ ‐ R5.558 R42 R6.400 ‐ IPC,TR 140 Algoa Park ‐ ‐ ‐ ‐ R3.500 ‐ R3.900 ‐ TR Lorraine ‐ ‐ ‐ ‐ R5.600 ‐ ‐ ‐ IPC Sherwood ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Fairview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East London R3.400 ‐ R4.343 ‐ R5.692 ‐ R6.335 ‐ Southernwood/Quigney Beach/ CBD R3.400 ‐ R4.307 R141 R5.288 R232 R6.058 R312 ERA,PPG,TR Berea ‐ ‐ ‐ ‐ R7.650 ‐ ‐ ‐ TR Cambridge/Amalinda/Haven Hills ‐ ‐ R3.920 ‐ R4.500 ‐ R6.000 ‐ TR Beacon Bay ‐ ‐ ‐ ‐ R6.200 ‐ R7.500 ‐ ERA Gonubie ‐ ‐R4.875 ‐ R5.480 R20 ‐ ‐ ERA,TR Cove Rock ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Nahoon ‐ ‐ ‐ ‐ R6.050 ‐ ‐ ‐ TR

Vincent ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Kimberley R3.900 ‐ R5.500 ‐ R6.900 ‐ R7.600 ‐ Albertynshof R3.500 ‐ R5.500 ‐ R6.500 ‐ R7.000 ‐ PW Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Belgravia R3.500 ‐ R5.500 ‐ R6.500 ‐ R7.000 ‐ PW New Park R3.500 ‐ R5.500 ‐ R6.500 ‐ R7.000 ‐ PW Eltoro Park R4.500 ‐ R5.500 ‐ R7.500 ‐ R8.500 ‐ PW Hillcrest R4.500 ‐ R5.500 ‐ R7.500 ‐ R8.500 ‐ PW Bloemfontein Bloemfontein CBD R2.850 ‐ R3.300 ‐ R3.900 ‐ ‐ ‐ PLA Westdene R3.000 ‐ R3.900 ‐ R4.700 ‐ R5.800 ‐ PLA Willows R2.800 ‐ R3.150 ‐ R3.800 ‐ R4.400 ‐ PLA Navalsig R2.800 ‐ R3.150 ‐ R3.800 ‐ R4.400 ‐ PLA

Arboretum R3.000 ‐ R3.850 ‐ R4.500 ‐ R5.800 ‐ PLA 141 Langenhovenpark R3.300 ‐ R4.000 ‐ R4.400 ‐ R6.500 ‐ PLA Bainsvlei ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Universitas ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pentagon Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pietermaritzburg R3.560 ‐ R4.663 ‐ R5.817 ‐ R7.050 ‐ Woodlands/Northdale/Bombay ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Heights/Orient Heights/ Allandale Chase Valley/Oak Park/Chasedene/ ‐ ‐ R4.800 R100 R6.600 R0 R8.150 R50 DOR,HN Northern Park Wembley/Clarendon ‐ ‐ R5.475 R25 R6.650 R150 R8.200 R200 DOR,HN Pietermaritzburg City R3.750 R250 R4.000 R0 R5.100 R100 R6.400 R400 DOR,HN Prestbury R3.500 ‐ R4.350 R150 R5.550 R250 R6.300 R0 DOR,HN Pelham/Scottsville/Richmond Crest/ R3.400 R100 R4.350 R550 R5.450 R250 R6.650 R150 DOR,HN Flats market Bisley Hayfields/Lincoln Meade/ Bellevue/ ‐ ‐ R5.000 R0 R5.550 R150 R6.600 R100 DOR,HN The Meadows Rode’s Report Table 9.2 (continued) Flat rentals: Standard units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes 2021:1 Mean SD Mean SD Mean SD Mean SD Vanderbijlpark Vanderbijlpark Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark CE R3.420 ‐ R4.250 ‐ R4.750 ‐ ‐ ‐ DT Vanderbijlpark SE ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark SW ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark CW ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 142 Flats market Table 9.3 Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Johannesburg City Central R2.900 ‐ ‐ ‐ R7.000 ‐ ‐ ‐ TI,VAR Yeoville/Bellevue/Highlands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Jeppestown/Fordsburg/Malvern/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kensington North‐Eastern Suburbs ‐ ‐ R7.500 ‐ R9.500 ‐ R13.000 ‐ EXH Maraisburg/Crosby/Brixton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Meldene (Melville/Westdene/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Auckland Park) Killarney/Illovo R6.200 ‐ R7.500 ‐ R8.300 ‐ ‐ ‐ TR Greenside/Victory Park/ R8.200 ‐ R8.900 ‐ R9.400 ‐ ‐ ‐ TR 143 Emmarentia/Linden Parkhurst/Parkview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rosebank ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Randburg: Ferndale/ Fontainebleau R4.875 R75 R5.425 R75 R6.917 R514 R7.700 CAR,PPG,PRS Randburg & Suburbs R4.850 R350 R5.400 R400 R8.950 R1.950 ‐ ‐ CAR,PRS,TR Windsor: East/West ‐ ‐ R5.050 R950 R6.550 R450 ‐ ‐ TI,VAR Craighall/Craighall Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sandton: North & Far North R7.000 ‐ R8.000 ‐ ‐ ‐ ‐ ‐ TR Sandton: South to Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bedfordview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Old South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ New South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Waterfall ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ CBD Maboneng ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Houghton Estate ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom t codes Panellis 2021:1 Mean SD Mean SD Mean SD Mean SD Melrose Arch ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Melrose (excluding Melrose Arch) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Parktown ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston Primrose ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston Central & South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston Southern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Elsburg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Witfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Benoni ‐ ‐ R4.550 ‐ R5.750 ‐ R7.740 ‐ 144 Benoni Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lakefield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Westdene ‐ ‐ R5.000 ‐ ‐ ‐ ‐ ‐ SC Farrarmere ‐ ‐ R4.700 ‐ ‐ ‐ R8.500 ‐ SC Morehill ‐ ‐R4.500 ‐ ‐ ‐ R8.500 ‐ SC Rynfield ‐ ‐ ‐ ‐ R6.300 ‐ R7.000 ‐ SC Northmead ‐ ‐ ‐ ‐ R6.000 ‐ R8.500 ‐ SC Crystal Park ‐ ‐ ‐ ‐ R5.500 ‐ R6.200 ‐ SC Mackensie Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Western Extension ‐ ‐ R4.000 ‐ R5.200 ‐ ‐ ‐ SC Boksburg Boksburg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Kempton Park Flats market Croydon ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pretoria Akasia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pretoria North/Dorandia/Florauna ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Annlin/Wonderboom/Sinoville/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montana Die Moot/Queenswood ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East Lynne/Eersterust ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Silverton/Meyerspark/La Montagne ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East (Menlo Park/Ashlea Gardens/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ all Lynwoods/Die Wilgers/Faerie Glen/Garsfontein/Constantia/ Waterkloof Glen/Erasmuskloof) Pretorius Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Groenkloof/Brooklyn/Most ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 145 Waterkloofs/Erasmusrand Monument Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ South Eastern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sunnyside ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Arcadia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pretoria Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pretoria West ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kwaggasrand/West Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Elandspoort/Danville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Atteridgeville/Laudium ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Hatfield ‐ ‐ R4.500 ‐ ‐ ‐ ‐ ‐ TR Centurion Flats market Pierre van Ryneveld ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Irene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kloofsig/Lyttelton Manor/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Doringkloof/Zwartkop Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Highveld and extensions ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Clubview/Eldoraigne/Wierda Park/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cranebrook/ Bronberrick/ Rooihuiskraal North Rooihuiskraal/The Reeds ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Heuweloord ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Valhalla ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Polokwane Eduanpark/Welgelegen ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bendor/Bendor extension 1 ‐ ‐ ‐ ‐ R8.200 ‐ ‐ ‐ SF 146 Ster Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flora Park/Fauna Park/Capricorn ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Polokwane Central/Hospitaal Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Annadale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Penina Park/Ivy Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Durban R4.308 ‐ R6.628 ‐ R8.250 ‐ R17.475 ‐ Upper highway: Kloof/Hillcrest ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pinetown area/Queensburgh R4.000 ‐ R5.750 ‐ R7.000 ‐ ‐ ‐ TR Westville area ‐ ‐R7.275 ‐ R8.000 ‐ ‐ ‐ TR Central City R4.500 ‐ R6.000 ‐ R7.000 ‐ ‐ ‐ TR Berea/Morningside/Glenwood R4.600 ‐ R6.500 ‐ R7.500 ‐ ‐ ‐ TR South and North Beach R4.750 ‐ R6.500 ‐ R8.000 ‐ ‐ ‐ TR Durban North ‐ ‐ R6.750 ‐ R8.000 ‐ ‐ ‐ TR Flats market La Lucia/Greater Umhlanga ‐ ‐ R9.000 ‐ R15.000 ‐ R25.000 ‐ TR North (Dolphin) Coast/Ballito ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montclaire/Yellowwood Park R4.000 ‐ R5.750 ‐ R7.000 ‐ ‐ ‐ TR Bluff R4.000 ‐ R5.750 ‐ R7.000 ‐ ‐ ‐ TR Amanzimtoti/Warner Beach ‐ ‐ R7.000 ‐ R8.000 ‐ R9.950 ‐ TR Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Cape Town R6.642 ‐ R8.663 ‐ R13.480 ‐ R18.196 ‐ Camps Bay/Clifton/Bantry Bay ‐ ‐ ‐ ‐ R20.583 R8.257 ‐ ‐ JUS,PF,PPG,SQ Sea Point/Green Point/Three Anchor R8.450 R550 R12.000 R3.240 R16.333 R6.142 R32.750 R19.250 JUS,PF,SQ Bay City Bowl (excl. Higgovale) ‐ ‐ ‐ ‐ R15.500 ‐ ‐ ‐ SQ City Centre R6.900 ‐ R8.750 ‐ R11.800 ‐ ‐ ‐ SQ Waterfront ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Woodstock/Observatory ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rondebosch/Rosebank/Claremont R6.875 R1.125 R8.750 R250 R11.750 R250 R14.000 ‐ JA,SQ Kenilworth/Wynberg/Plumstead R6.500 ‐ R6.800 ‐ R9.000 ‐ R10.500 ‐ JA 147 Grassy Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Muizenberg/Kalk Bay/Fish Hoek ‐ ‐ R8.000 ‐ R10.000 ‐ R15.000 ‐ JA Hout Bay ‐ ‐ R11.200 ‐ R22.000 ‐ R38.000 ‐ JUS Century City R7.500 ‐ R11.000 ‐ R14.500 ‐ R18.500 ‐ PWO Milnerton Sanddrift ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Milnerton Royal Ascot ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Milnerton Burgundy Estate ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Tableview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Parklands/Sandown/Sunningdale ‐ ‐ ‐ ‐ R10.500 ‐ ‐ ‐ LA Bloubergstrand ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Melkbosstrand ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Athlone ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Garlandale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Rondebosch East/Crawford ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Mitchells Plain ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bishop Lavis ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montana/Belhar ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pinelands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Brooklyn/Rugby/Maitland ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Monte Vista/Goodwood/Parow/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bellville Central Tyger Valley area ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Durbanville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Brackenfell/Kuils River ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Somerset West R7.000 ‐ R7.600 ‐ ‐ ‐ R11.675 ‐ JUS Strand R6.250 ‐ R7.250 ‐ R9.750 ‐ R17.750 ‐ JUS Gordon's Bay R5.000 ‐ R5.750 ‐ R7.900 ‐ R10.125 ‐ JUS Kraaifontein (excl. Buh‐Rein) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Buh‐Rein Estate ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 148 Paarl R4.950 R450 R6.250 R795 R8.133 R450 R11.833 R1.841 JUS,MAF,RS Wellington ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Stellenbosch Cloetesville ‐‐‐‐‐‐‐‐ Onder Papegaaiberg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Simonswyk ‐‐‐‐‐‐‐‐ Idas Valley ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Uniepark ‐‐ ‐‐ ‐‐ ‐ ‐ Krigeville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dalsig ‐‐ ‐‐ ‐‐ ‐‐ Kleingeluk ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Paradyskloof ‐‐‐‐‐‐‐‐ Klein Welgevonden ‐ ‐ ‐ ‐ ‐ ‐ R10.000 ‐ SR Flats market Nuutgevonden ‐‐ ‐‐ ‐‐ ‐‐ Nooitgedacht Village ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Campus – Central ‐‐ ‐‐ ‐‐ ‐‐ Campus – West ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Campus – North ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ La Colline ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ George Heather Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Heatherlands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ King George Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dormehl's Drift ‐ ‐ ‐ ‐ R9.000 R0 R10.500 ‐ BVF,GRV George South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ George Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bo‐Dorp ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 149 Denver Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Loerie Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Protea Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Parkdene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Borcherds ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lawaaikamp ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ballot's View ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Herolds Bay (excl. Oubaai) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Oubaai ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Port Elizabeth Summerstrand/Humewood/South End ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Walmer ‐ ‐ R5.500 ‐ R6.850 ‐ ‐ ‐IPC Central/North End ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Newton Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Westering ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kabega ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Algoa Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Lorraine ‐ ‐ ‐ ‐ R7.500 ‐ ‐ ‐IPC Sherwood ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Fairview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East London Southernwood/Quigney beach/CBD ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ PPG Berea ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cambridge/Amalinda/Haven Hills ‐ ‐ ‐ ‐ R7.200 ‐ ‐ ‐ TR Beacon Bay ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Gonubie ‐ ‐ ‐ ‐ ‐ ‐ R8.500 ‐ ERA Cove Rock ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Nahoon ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 150 Vincent ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bloemfontein Bloemfontein CBD ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Westdene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Willows ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Navalsig ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Arboretum ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Langenhovenpark R3.450 ‐ R4.200 ‐ R5.400 ‐ R6.950 ‐ PLA Bainsvlei ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Universitas ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pentagon Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kimberley ‐ ‐ ‐ ‐ ‐ ‐ R8.800 ‐ Flats market Albertynshof ‐ ‐ ‐ ‐ ‐ ‐ R8.000 ‐ PW Belgravia ‐ ‐ ‐ ‐ ‐ ‐ R8.000 ‐ PW New Park ‐ ‐ ‐ ‐ ‐ ‐ R8.000 ‐ PW Table 9.3 (continued) Rode’s Report Flat rentals: Upmarket units Average rands per month as at quarter 2021:1 Bachelor 1‐Bedroom 2‐Bedroom 3‐Bedroom Panellist codes Mean SD Mean SD Mean SD Mean SD 2021:1 Eltoro Park ‐ ‐ ‐ ‐ ‐ ‐ R10.000 ‐ PW Hillcrest ‐ ‐ ‐ ‐ ‐ ‐ R10.000 ‐ PW Pietermaritzburg R4.000 ‐ R5.900 ‐ R7.133 ‐ R8.467 ‐ Woodlands/Northdale/Bombay ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Heights/Orient Heights/Allandale Chase Valley/Oak Park/Chasedene/ ‐ ‐ R5.350 R50 R6.900 R100 R9.050 R550 DOR,HN Northern Park Wembley/Clarendon ‐ ‐ R6.800 R0 R8.200 R200 R9.300 R200 DOR,HN Pietermaritzburg City ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Prestbury ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 151 Pelham/Scottsville/Richmond Crest/ R4.000 ‐ R5.250 ‐ R6.200 ‐ R7.100 ‐ HN Bisley Hayfields/Lincoln Meade/ Bellevue/ ‐ ‐ R5.850 ‐ R6.400 ‐ R7.000 ‐ HN The Meadows Vanderbijlpark Vanderbijlpark Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark CE ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark SE ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark SW ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark CW ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Rode’s Report Table 9.4 Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Johannesburg City Central ‐ ‐ ‐ ‐ ‐ ‐ R530 ‐ PPG Yeoville/Bellevue/Highlands R300 ‐ ‐ ‐ ‐ ‐ ‐ ‐ PPG Jeppestown/Fordsburg/Malvern/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kensington North‐Eastern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Maraisburg/Crosby/Brixton ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Meldene (Melville, Westdene, Auckland ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Park) Killarney/Illovo ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 152 Greenside/Victory Park/ Emmarentia/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Linden Parkhurst/Parkview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rosebank ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Randburg: Ferndale/Fontainebleau R100 ‐ R200 ‐ ‐ ‐ ‐ CAR,PPG Randburg & Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Windsor: East/West ‐ ‐ R200 ‐ ‐ ‐ ‐ ‐ TI Craighall/Craighall Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sandton: North & Far North ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sandton: South to Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bedfordview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Old South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market New South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Waterfall ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ CBD Maboneng ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Houghton Estate ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Melrose Arch ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Melrose (excluding Melrose Arch) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Parktown ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston Primrose ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston Central & South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Germiston Southern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Elsburg ‐ ‐‐ ‐ ‐ ‐ ‐ ‐ Witfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 153 Benoni Benoni Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lakefield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Westdene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Farrarmere ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Morehill ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rynfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Northmead ‐ ‐‐ ‐ ‐ ‐ ‐ ‐ Crystal Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Mackensie Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Western Extension ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Boksburg Flats market Boksburg ‐ ‐‐ ‐ ‐ ‐ ‐ ‐ Kempton Park Croydon ‐ ‐‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Pretoria Akasia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pretoria North/Dorandia/Florauna ‐ ‐ R250 ‐ R350 ‐ ‐ ‐ TR Annlin/Wonderboom/Sinoville/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montana Die Moot/Queenswood ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East Lynne/Eersterust ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Silverton/Meyerspark/La Montagne ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East (Menlo Park/Ashlea Gardens/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ all Lynwoods/Die Wilgers/Faerie Glen/ 154 Garsfontein/Constantia/Waterkloof Glen/Erasmuskloof) Pretorius Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Groenkloof/Brooklyn/Most ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Waterkloofs/Erasmusrand Monument Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ South Eastern Suburbs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sunnyside R200 R20 ‐ ‐ ‐ ‐ ‐ ‐ PPG,TR Arcadia R200 R20 ‐ ‐ ‐ ‐ ‐ ‐ PPG,TR Pretoria Central R200 R20 ‐ ‐ ‐ ‐ ‐ ‐ PPG,TR Pretoria West ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kwaggasrand/West Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Elandspoort/Danville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Atteridgeville/Laudium ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Hatfield ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Centurion Pierre van Ryneveld ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Irene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kloofsig/Lyttelton Manor/Doringkloof/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Zwartkop Highveld and Extensions ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Clubview/Eldoraigne/Wierda Park/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cranebrook/Bronberrick/Rooihuiskraal North Rooihuiskraal/The Reeds ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 155 Heuweloord ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Valhalla ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Polokwane Eduanpark/Welgelegen ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bendor/Bendor extension 1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ster Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flora Park/Fauna Park/Capricorn ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Polokwane Central/Hospitaal Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Annadale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Penina Park/Ivy Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Durban R266 ‐ R338 ‐ R394 ‐ ‐ ‐ Upper highway: Kloof/Hillcrest ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Pinetown area/Queensburgh R225 ‐ R300 ‐ R375 ‐ ‐ ‐ TR Westville area R300 ‐ R375 ‐ R425 ‐ ‐ ‐ TR Central City R275 ‐ R350 ‐ R400 ‐ ‐ ‐ TR Berea/Morningside/Glenwood R300 ‐ R350 ‐ R400 ‐ ‐ ‐ TR Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD South and North Beach R275 ‐ R350 ‐ R375 ‐ ‐ ‐ TR Durban North R300 ‐ R375 ‐ R425 ‐ ‐ ‐ TR La Lucia/Greater Umhlanga ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ North (Dolphin) Coast/Ballito ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montclaire/Yellowwood Park R225 ‐ R300 ‐ R375 ‐ ‐ ‐ TR Bluff R225 ‐ R300 ‐ R375 ‐ ‐ ‐ TR Amanzimtoti/Warner Beach ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cape Town R398 ‐ R580 ‐ R793 ‐ R675 ‐ Camps Bay/Clifton/Bantry Bay R800 ‐ R900 ‐ R1.250 ‐ R1.000 ‐ PF,PPG Sea Point/Green Point/ R785 ‐ R900 ‐ R950 R150 R975 ‐ PF,SQ 156 City Bowl (excl. Higgovale) R400 ‐ ‐ ‐ ‐ ‐ ‐ ‐ SQ City Centre ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Waterfront ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Woodstock/Observatory ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rondebosch/Rosebank/Claremont ‐ ‐ ‐ ‐ R800 ‐ ‐ ‐ SQ Kenilworth/Wynberg/Plumstead ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Grassy Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Muizenberg/Kalk Bay/Fish Hoek ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Hout Bay ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Century City R450 ‐ R500 ‐ R800 ‐ R600 ‐ PWO Milnerton Sanddrift ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Milnerton Royal Ascot ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Milnerton Burgundy Estate ‐ ‐ ‐ ‐ R800 ‐ ‐ ‐ LA Flats market Tableview ‐ ‐ ‐ ‐ R660 ‐ ‐ ‐ SQ Parklands/Sandown/Sunningdale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bloubergstrand ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Melkbosstrand ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Athlone ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Garlandale ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rondebosch East/Crawford ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Mitchells Plain ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bishop Lavis ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Montana/Belhar ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pinelands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Brooklyn/Rugby/Maitland ‐ ‐ ‐ ‐ R600 ‐ ‐ ‐ SQ

Monte Vista/Goodwood/ Parow/ ‐ ‐ ‐ ‐ R550 ‐ ‐ ‐ SQ 157 Bellville Central Tyger Valley area ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Durbanville R150 ‐ ‐ ‐ ‐ ‐ ‐ ‐ LA Brackenfell/Kuils River R200 ‐ ‐ ‐ R750 ‐ ‐ ‐ CIR Somerset West ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Strand ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Gordon's Bay ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kraaifontein (excl. Buh‐Rein) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Buh‐Rein Estate ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Paarl R200 R0 R300 R0 R700 R100 R400 R100 JUS,RS Wellington ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Stellenbosch Cloetesville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Onder Papegaaiberg ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Simonswyk ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Idas Valley ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Uniepark ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Krigeville ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dalsig ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kleingeluk ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Paradyskloof ‐ ‐ ‐ ‐ R500 ‐ ‐ ‐ SR Klein Welgevonden R190 ‐ ‐ ‐ ‐ ‐ ‐ ‐ SR Nuutgevonden ‐ ‐R500 ‐ ‐ ‐ ‐ ‐ SR Nooitgedacht Village ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Campus – Central ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 158 Campus – West ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Campus – North ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ La Colline ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ George Heather Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Heatherlands ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ King George Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Dormehl's Drift ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ George South ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ George Central ‐ ‐ ‐ ‐ R475 R25 ‐ ‐ BVF,GRV Bo‐Dorp ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Denver Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Loerie Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Protea Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Parkdene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Borcherds ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Lawaaikamp ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ballot's View ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Herolds Bay (excl. Oubaai) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Oubaai ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Port Elizabeth Summerstrand/Humewood/South End ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Walmer ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Central/North End ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Newton Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 159 Westering ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Kabega ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Algoa Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Lorraine ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Sherwood ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Fairview ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ East London Southernwood/Quigney beach/CBD R150 ‐ ‐ ‐ R520 ‐ ‐ ‐ TR Berea ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cambridge/Amalinda/Haven Hills ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Beacon Bay ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Gonubie ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Cove Rock ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Nahoon ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vincent ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Bloemfontein Bloemfontein CBD ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Westdene ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Willows ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Navalsig ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Arboretum ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Langenhovenpark ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bainsvlei ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Universitas ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pentagon Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 160 Kimberley Albertynshof ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Belgravia ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ New Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Eltoro Park ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Hillcrest ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Pietermaritzburg ‐ ‐ R313 ‐ R396 ‐ ‐ Woodlands/Northdale/Bombay Heights/ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Orient Heights/Allandale Chase Valley/Oak Park/Chasedene/ ‐ ‐ R370 R0 R470 R0 R445 R5 DOR,HN Northern Park Wembley/Clarendon ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Flats market Pietermaritzburg City ‐ ‐ R335 R5 R450 R0 R405 R5 DOR,HN Prestbury ‐ ‐ R50 R3 R310 R10 DOR,HN Pelham/Scottsville/Richmond Crest/ Bisley ‐ ‐ R270 R10 R345 R5 R15 DOR,HN Rode’s Report Table 9.4 (continued) Flat: Parking rentals Average rands per month as at quarter 2021:1

Open Covered Lockup Basement 2021:1 Panellist codes Mean SD Mean SD Mean SD Mean SD Hayfields/Lincoln Meade/Bellevue/ ‐ ‐ R278 R3 R3 R343 R3 DOR,HN The Meadows Vanderbijlpark Vanderbijlpark Central ‐ ‐ R72 ‐ R50 ‐ ‐ ‐ DT Vanderbijlpark CE ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark SE ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark SW ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Vanderbijlpark CW ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 161 Flats market Our heartfelt thanks to the companies that contributed to the residential- market survey. By clicking on their logos, you will learn more about these panellists. Rode’s Report 2021:1 163 House market

Chapter 10: House market House prices continue to shine

Kobus Lamprecht

House prices in South Africa remain buoyant, Below we briefly discuss the drivers of changes with nominal price growth reaching about 4% in house prices, before looking at how interest in February 2021 compared to February 2020, rate cuts and the economy will affect the based on FNB data. This implies that so far in housing market. 2021 house prices have surprisingly outpaced consumer inflation, which averaged 3% in the Drivers of changes in house prices first two months. This is very encouraging as house prices have been declining in real terms, House prices correlate well with the value of after deducting consumer inflation, since 2016. residential mortgages granted, with r² = 0,5, as So, is this sustainable? shown in the chart. The nominal value of residential mortgages granted jumped by 33% The house price resilience can be attributed to year on year in 2020, boosted by a second‐half record‐low interest rates, which fell by 300 surge. This was accompanied by house‐price basis points from the end of 2019, which growth of close to 4% year on year at the end suddenly made houses more affordable for of the year, which was sustained in the first marginal buyers. Tenants who could afford two months of 2021. With an increase of 33% to do so switched from renting to owning, in residential mortgages, one could justifiably which negatively impacted the rental market. wonder why the growth in house prices was Another postulated reason for the strong not higher than 4%. The answer is of course house prices is that unemployment in 2020 that there are also other drivers of house had less of an impact on higher‐income prices, like household incomes, for one. workers working from home, which meant that they could still be active in the market despite With reference to the chart, the spike in the pandemic. How sustainable are these mortgage loans in 2010 can also be attributed ultra‐low interest rates, considering the to a drastic lowering of prime interest rates. In medium‐term outlook for the economy? We 2009, the prime rate still averaged 11,7%, live in uncertain times. dropping to 9,8% in 2010. However, note that it was a sharp spike, with mortgage bonds There are early signs that the market is starting granted plummeting into negative territory in to cool, with prices essentially trending 2011 but rising again to more normal territory sideways since December on a month‐on‐ in 2012 onwards even though interest rates month level. This could be because the interest stayed on the new‐low level of about 9%. This rate impact is starting to fade, while rising analysis suggests that the current boomlet in unemployment across a wider spectrum of house prices cannot be assumed to be workers is also starting to play a role. After all, sustainable. we know from rigorous research that the economy is positively correlated with the The second chart shows the change in house growth in house prices. prices by house‐value band since 2015 using Rode’s Report 2021:1 164 House market data from Lightstone. It reveals some normal nomenclature for this price class is interesting trends, notably the lower the price ‘affordable’.1 We ascribe this sharp growth to band, the higher the price growth. Over the first‐time buyers entering the market as past five years, the standout in terms of house record‐low interest rates and 100% loan‐ price growth has been houses worth less than to‐value mortgage bonds make buying R250 000 (low value band), although year‐on‐ property more affordable. Buyers in this price year growth has now tapered off. segment are sensitive to interest rate changes. However, the impact of lower interest rates is

Change in national house prices (FNB) also filtering through to the more expensive vs properties (high and luxury value bands as Change in value of new mortgage loans 50 80 defined by Lightstone), which struggled over r²=0,5

40 60 the past few years, but grew at between 3%

hnei e ortgageloans m in new Change and 4% in February. 30 40 %; y-o-y) (% 20 20 Turning to the outlook for the housing market, a significantly correlated variable of 10 0

(% ; y-o-y) residential mortgages granted is the leading 0 -20 Change house in prices business cycle indicator of the SARB, with

-10 -40 r² = 0,5. This indicator reflects early stirrings House prices Mortgage loans (smoothed) in the economy, thus confirming that the -20 -60 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 fundamental driver of house prices is the Source of data: FNB; SARB economy. This indicator rose strongly in the last few months of 2020 and in early 2021 in Noteworthy is that houses worth between line with the boom in mortgages granted, as R250 000 and R700 000 have seen faster shown in the chart. The rise was mostly price growth over the past few years, with related to strong commodity prices and growth of 5,7% in February. Lightstone dubs increases in job advertisements (components this the “mid” price segment, but we can also of the index). The risk is to the downside due argue that this could be included in the to the cyclical nature of commodity prices and lower end of the market. In any case, the the poor outlook for employment.

1 Affordable to whom? Nevertheless, this euphemism has caught on in the Anglo-Saxon world. Rode’s Report 2021:1 165 House market

Change in value of new residential mortgages granted vs 3) The SA fiscal cliff, which will be a Change in composite business cycle leading indicator 30 r²=0,5 constraint on economic growth for many Change in business cycle indicator cycle business in Change 20 years to come. 120

10 (%; y-o-y)

anted 80 r 0 4) The high and rising ratio of household debt 40 tgages g tgages r -10 to disposable income. This ratio was 75% 0

(%; y-o-y) -20 in the fourth quarter of 2020, up from 73% -40 Mortgage loans (smoothed) in the fourth quarter of 2019. This is a sure Business cycle leading indicator

Change in value of mo of value in Change -80 sign that the consumer is under pressure – 98 00 02 04 06 08 10 12 14 16 18 20 Source of data: SARB as is to be expected.

In the medium term, we expect the growth in 5) Rising unemployment, worsened by the the value of mortgages granted to be slow as impact of Covid-19. The expanded effective demand from borrowers will be unemployment rate increased to 43% in impeded by several factors: the fourth quarter of 2020 from 39% in 1) A weak, junk‐rated economy. The the fourth quarter of 2019. Job prospects economy recovered in the second half of in the medium term are poor, given 2020, after the sharp second‐quarter fall, expectations of slow economic growth but still declined by 7% in 2020. The and the overpopulated SOEs and public economy is expected to grow only slowly sector, whose salary bill will have to be over the medium term, negatively shorn. impacted on the domestic front by cyclical factors (such as the escalating SA fiscal crisis) and structural problems (like the 6) Rising utility costs that erode disposable quality of education and too few taxpayers incomes and the competitiveness of the relative to the total population). The other SA industry. Think electricity (Eskom is in problem is that any sharp economic dire need of capital) and fuel prices growth will be constrained by electricity (assuming the rand will weaken and the oil supply disruptions – unless the capacity price will increase in the medium term). In constraint can be miraculously overcome February, energy regulator Nersa agreed in a few years’ time through a drastic to Eskom increasing its tariff by 15,6% for increase in ‘green’ energy. But note that if the 2021/22 financial year starting 1 April. by ‘green’ energy we mean mostly solar systems, the sun does not shine during In sum, thanks to the interest rate bonanza, evening peaks. the housing market has surprised on the upside during the pandemic. However, there 2) A positive for South Africa is better global are early signs that the market is starting to economic growth prospects due to the cool as the interest rate impact is possibly expected widespread roll‐out of vaccines starting to fade and unemployment and against Covid‐19, but domestically the roll‐ salary cuts start to play more of a role in out is expected to be slow. In any event, it curbing demand growth. And then the crucial is likely that the damage done to the world question: when will short‐term interest rates economy by the Covid‐19 restrictions will be normalized again? A bloodbath is awaiting take time to repair. us somewhere in the future. Rode’s Report 2021:1 166 Building activity and building costs

Chapter 11: Building activity and building costs Residential building activity showing some green shoots

Kobus Lamprecht

Building activity in the property sector has the pandemic. Residential activity should improved somewhat since the lockdown‐ continue to perform relatively better, but the induced collapse in April and May 2020 but prospect of house prices cooling and interest remains at low levels. It is clear from all rates eventually rising could hamper building the data discussed in this chapter that activity growth as some projects are shelved residential building activity is recovering or stalled. Rode’s six‐year forecast of building much faster than in the non‐residential sector activity is provided in our sister publication from the lows reached in the second quarter Rode’s SA Property Trends. of 2020. This makes sense as residential market fundamentals, like house prices and Our detailed discussion of trends in rentals, still managed to show growth in 2020, building activity and building‐construction while non‐residential market fundamentals, cost follows. particularly for office and retail property, were worse off. Building activity

Indeed, building plans passed for office and To analyse building activity, we delve deeper retail property fell the most over the six into the SARB’s measure of gross fixed capital months ended December 2020. In contrast, formation (GFCF), building‐construction data industrial plans passed have seen less of a from Stats SA and building sector data from decline, which adds up as this sector has the BER at Stellenbosch University. proved quite resilient due to its superior property fundamentals, like low vacancy The SARB’s measure of GFCF reflects the real rates. The fact that industrial properties are value of bricks and mortar being put in place seldom erected speculatively, and the firm in a given period like a quarter or a year. GFCF demand for warehousing boosted by sharply in the non‐residential sector rose by 1% in the growing online retail sales, no doubt have fourth quarter of 2020 compared to the helped. third quarter but was still down significantly compared to 2019 levels, as seen on the We expect non‐residential activity to chart. The 25% decrease for the full 2020 was generally still be under pressure in the short the fourth consecutive calendar‐year decline term due to weak property fundamentals, and the largest since at least 1960, beating before recovering in a few years’ time with the 18% drop recorded in 1992. faster economic growth and higher business confidence levels. However, do not expect As for the residential sector, building activity fireworks as it will take a while for activity to in the fourth quarter increased by 7% from recover properly after the turmoil in 2020 due the third quarter, but also still remains well to an economy that is also weak for structural below 2019 levels. The full‐year decline of reasons, which were evident long before 21% was the third in a row and also the worst Rode’s Report 2021:1 167 Building activity and building costs since at least 1960. The figure suggests that amounting to R25 million being put in place in the residential sector has seen less of a 2020, R50 million in 2019 and R25 million in decline in activity than the non‐residential 2018 (see the figure). sector. Thus the ‘buildings completed’ statistic is Growth in real gross fixed capital formation Residential vs non-residential a lagging indicator – it reflects conditions 60 and expectations in the property market 40 that existed up to two or three years earlier.

20 This is especially true of non‐residential

0 building construction. In contrast, GFCF

Growth reflects a more recent occurrence and is, (%; y-o-y) (%; -20 therefore, less of a lagging indicator as it -40 Non-re side ntia l reflects only R25 million in 2020 in the Residential -60 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 example above.

Source of data: SARB With this as background, we now turn to Tables 11.1 and 11.2, which reflect building plans passed and buildings completed per square metre as reported by local government institutions (ex Stats SA).

Non‐residential buildings completed fell by 36% in the six months to January 2021 compared to the same period a year ago, as shown in Table 11.1. Please note this period excludes the months of April and May Source: Rode & Associates when the strict lockdown brought activity to a standstill. This indicates that although there has been some recovery, activity levels Compare this statistic with buildings are still very low and below pre‐pandemic completed, which reflect, at the date of completion, the total building cost expected levels (before Q2 2020), as shown in the at the time the building plans were passed by chart. Shopping and office space completed the municipality, which could be a few years both fell by around 40% over the past six earlier. For instance, a building worth R100 months, while industrial space (‐33%) also million completed in 2020 could reflect GFCF declined. Rode’s Report 2021:1 168 Building activity and building costs

Source: Stats SA

Looking at potential future non-residential to be hindered by delays at the municipal activity, plans passed in square metres offices, which are not yet operating at declined by 38% in the six months to January maximum capacity. 2021. Office plans passed declined by 65% as it does not make sense to build new offices Residential buildings completed declined given the oversupply and the fact that by 27% in the six months to January 2021, the work-from-home trend is here to stay. as shown in Table 11.2. Completed flats and Plans passed to construct retail (-52%) and townhouses dropped by 37%. Noteworthy industrial space (-27%) also declined. Even is that residential activity already exceeded so, few of these ‘plans passed’ buildings will the pre‐pandemic level of the first quarter become ‘buildings completed’ in the medium of 2020 at the end of last year, which term as decision makers are discouraged indicates that it is recovering much faster by poorly performing property fundamentals. than non‐residential activity. This makes The data shows that the plans passed fell sense as residential market fundamentals, the most for the sectors struggling under a like house prices and rentals, still managed severe oversupply, namely office and retail to show growth in 2020, while non‐ property. In contrast, industrial plans passed residential market fundamentals were worse fell the least, which makes sense as it is off. Residential building plans passed fundamentally the strongest non-residential increased by 3% over the same period, property type, given its low vacancy rate which confirms that developers regard the and non-speculative nature. It must also be residential sector to be more viable than the mentioned that approval rates are continuing non‐residential sector. Rode’s Report 2021:1 169 Building activity and building costs

Source: Stats SA

Table 11.1 New non‐residential buildings (private sector) (m²) Shopping ial Offices Industr Total space buildings Six months to January 2021 (year‐on‐year % change) Completed ‐41,4% ‐40,0% ‐32,5% ‐35,7% Plans passed ‐65,3% ‐51,7% ‐27,3% ‐38,2% Source of data: Stats SA

Table 11.2 New residential buildings (private sector) (m²) Smaller than Larger than Flats & Total 80 m² 80 m² townhouses Six months to January 2021 (year‐on‐year % change)

Completed ‐11,1% ‐19,1% ‐37,4% ‐26,7% Plans passed ‐19,7% 7,8% 2,3% 3,2% Source of data: Stats SA Rode’s Report 2021:1 170 Building activity and building costs

We now turn to more recent data provided Turning to the residential sector, a net 48% by the BER in its first‐quarter 2021 building of respondents reported lower activity in the survey released in March. A net 83% of first quarter of 2021 compared to a year respondents indicated that non‐residential ago (see chart). This was worse than the activity was lower compared to the first fourth‐quarter figure of 33%, but a much quarter of 2020. This is better than the 88% better performance compared to the 74% in in the fourth quarter of last year (see chart), the third quarter of 2020. This is in line with but still a very weak reading. the data from SARB and Stats SA discussed above, which shows the residential sector is recovering at a faster rate from last year’s woes.

Building‐construction costs

Tender prices (BER BCI), which include input costs (like labour and materials) and the profit margin of contractors, were unchanged in the first quarter of 2021 compared to the first quarter of 2020. The BER noted that tendering competition is at record levels amid a lack of work, putting downward pressure on building‐cost inflation. Historical BCI data is provided in Annexure 6.

Rode’s six‐year forecast of building activity and building‐construction costs, as well as other property‐related variables, is provided in our sister publication Rode’s SA Property Trends.  Annexures Rode’s Report 2021:1 I Annexure 1 Glossary of property and related terms and abbreviations

Arithmetic mean: The most often used (basements or above ground), lift motor measure of central tendency. It is the rooms, service rooms, caretakers’ flats, etc. simple average of several observations. GBA is mainly used by planning consultants in Mathematically, it is equal to the sum of all order to plan and execute a building in values divided by the number of observations. accordance with the permissible Floor Area For example, the arithmetic mean of 6 and 7 is Ratio (F.A.R) as derived from the zoning (6+7)/2. The arithmetic mean of 6, 7 and 8 is of the property. GBA is fixed for the life (6+7+8)/3; and so forth. Outlier observations of the building but it should be noted may unduly affect the mean. In the Rode that different local authorities may interpret publications all references to the ‘mean’ or the National Building Regulations, which ‘average’ refer to the arithmetic mean, unless regulate the FAR definition, in a slightly otherwise specified. See also geometric mean different manner.” The market value of and median. office and shopping‐centre land is generally expressed as the value per bulk square BER BCI: Bureau for Economic Research metre. Building Cost Index. Measures pre‐contract non‐residential building‐construction prices Bulk head‐lease: A lease that is signed with and as such it includes the profit margin of one party, which then sublets the space to contractors. This index is one of the best other tenants. indicators of the health of the building‐ construction industry. If it accelerates faster Capitalization rate: see Standard than input costs (measured by the Haylett Capitalization rate Index), then contractors are stretching their profit margins as a result of sufficient work, CBD: Central business district or downtown. and vice versa. This is an area of concentrated high economic activity. The user may want to differentiate Building construction: the construction of between the metropolitan CBD (e.g. the buildings like houses, office blocks, factories, Johannesburg CBD) and a decentralized CBD shopping centres, schools, hospitals. See also (like the Sandton CBD). civil construction. Civils: colloquial for civil construction. Bulk: Bulk square metres refer to the gross building area (GBA) of a building. According to The Sapoa Method for Measuring Floor Civil construction: the construction of Areas in Commercial and Industrial Buildings, physical infrastructure like roads, bridges, GBA covers: “The entire building area, but it dams, the laying of storm water pipes, excludes patios, plant boxes, sun‐screening, electricity and water reticulation. See also escape stairs, machine rooms, parking building construction. Rode’s Report 2021:1 II Annexure 1

Cluster housing [trosbehuising]: Attached or Disinflation: Disinflation occurs when the detached residences grouped together in a inflation rate is declining over time. See also community, normally secured by a fence and a deflation. (guarded) gate. In the stricter sense of the word, to be called cluster housing, a complex Duet house: Two attached single‐family has to have common recreation areas like a houses on one stand registered in terms of the swimming pool or private nature area. This Sectional Titles Act, which means the two units layout normally results in a higher density than are sold and bought separately. would be attained through a conventional subdivision layout. Tenure could be either Escalation rate: The rate by which a rental is full title (managed by a homeowners’ hiked once a year in terms of a lease. The ruling association) or sectional title (managed by market escalation rate can be seen as an a body corporate). See also Estate housing. attempt by the market to forecast the growth in market rentals over the duration of the Cyclical trend: A short‐term growth path of an lease, but this attempt is obviously rarely economic variable. Normally refers to the successful. Thus, it is important to differentiate business cycle, as distinct from a secular trend. between an escalated rental and a market rental. Dec: Decentralized. A Rode abbreviation. Town and regional planners differentiate Estate housing [landgoedbehuising]: It is between local decentralization (from the similar to Cluster housing, except that metropolitan CBD to the suburbs) and regional common‐area leisure facilities are not a decentralization (to outlying areas of the requirement of the definition; not necessarily country). upmarket, although it does have an upmarket flavour. Deflation: Deflation occurs when prices are declining over time. This is the opposite of Forward (income) yield: A bourse term, hence inflation and could be catastrophic. When the it is typically applied to listed properties. inflation rate (by some measure) is negative for In the non‐listed property market, its a period, the economy is in a deflationary approximate equivalent is the capitalization period. See also disinflation. rate. It represents the expected net income of year 1 (the following 12 months) divided by the Deseasonalized: Seasonal fluctuations have current price/value. It stands to reason that been removed. In the case of retail sales, this is existing leases would largely determine the net essential in order to be able to compare sales income of year 1. See also historic (income) pertaining to different months of the year, as yield. opposed to comparing sales of one quarter or month with the same quarter or month a year Freehold title: The owner of the land enjoys earlier. free ownership in perpetuity (no land rental payable to a landlord) and can use the land for Discount rate: The rate used to express an any purpose, albeit in accordance with the expected future cash stream in present‐value local regulations. Cf. Leasehold. terms. In most instances, the discount rate is equal to the hurdle rate. Mathematically, the Full title (FT): The house or other type of hurdle rate of a property is the sum of its building is part of an Estate or Cluster scheme market capitalization rate plus the expected and is built on a separate erf registered at constant growth rate of its cash flow in the Deeds Office. The scheme is governed perpetuity. by a homeowners’ association rather than a Rode’s Report 2021:1 III Annexure 1 sectional title body corporate. Thus, the term GBCSA: Green Building Council of South Africa. is used to distinguish it from Sectional title (ST). In theory, full‐title homes could be built Haylett index: A measure of the movement on Leasehold or Freehold land, although the of all input costs in the building industry, former is unlikely in SA. It is, therefore, wrong most significantly material and labour costs. to call ‘full title’ ‘freehold’, when it could in fact Other costs include plant and fuel. Designed to be full title on leasehold land; also, most, if not recompense the building contractor for all, sectional title schemes are built on free‐ in‐contract rises in input costs. Does not hold land. include profit margins for contractors. Official designation: CPAP Haylett Formula (Work Fundamental value (FmV): It is a subjective Group 180 & 181). Work Group 180 covers value based on the investor’s own, subjective lump‐sum domestic buildings and Work forecast of rentals and maybe the investor’s Group 181 entails industrial and commercial unique or different in‐house discount rate/ buildings. The Haylett index published in Medium‐Term capitalization rate. An FmV higher than the RR is obtained from the Forecasting Associates more objective market value (MV) is a buy (MFA). signal to an investor. Historic or trailing (income) yield: A bourse The calculation of the FmV is especially term, hence it is typically applied to listed indicated where the economy, or property properties. It represents the net income of market, changes gear, e.g. a secular change in year 0 divided by the current price/value. See inflation rate or the real‐rental cycle bottoming also forward (income) yield. In a market of out. These are instances where any market is rising net incomes, the historic yield would notoriously poor at forecasting trends. be expected to be lower than the forward yield. An alternative term is intrinsic value. Hurdle rate: The minimum total return Geometric mean: A measure of central (income yield plus expected capital tendency calculated by multiplying the series of appreciation) required by potential investors numbers and taking the nth root of the product, to induce them to invest in a property. Also where n is the number of items in the series. The known as the required rate. As such this is geometric mean is defined only for sets of normally the correct rate to use when doing positive numbers. For example, the geometric discounted cash flow (DCF) analyses. This is a mean of 6 and 7 is the square root of (6*7). The similar concept to a company’s cost of capital, geometric mean of 6, 7 and 8 is the cube root of and it is not to be confused with the cost (6*7*8); and so forth. See also arithmetic mean of money (say, overdraft interest rate). One total and median. way of measuring the return on an investment, ex post or ex ante, is the internal rate f discount Geometric mean return: It is also called the o return (IRR) method. See also time‐weighted rate of return or the average rate. compounded rate of return. It is calculated by taking the geometric mean of a portfolio’s Index: Describes the method of standardizing subperiod returns. Where there is a great the base for comparative data in a time series, variance in subperiod returns, this is a better usually equating the initial measure to 100 return measure than the arithmetic mean and then expressing all other data in exact return. Unlike the internal rate of return, it is not relation to that base. For instance, the index influenced by the timing and weights of for office rentals in any year by comparison money‐flows. with a base‐year value of 100 might stand at Rode’s Report 2021:1 IV Annexure 1

90 or 110, indicating a fall or rise of 10% adequate floor loadings and sufficient yard respectively. space.

Inclusionary housing: A housing programme Secondary: This is industrial space which is not that, through conditions attached to land‐ classifiable as prime because it does not satisfy use rights approvals, requires private all nine prerequisites for prime space listed developers to dedicate a certain percentage of above. Such space is typically old buildings or new housing developments to low‐income structures, which have been haphazardly and low‐middle‐income households, or to renovated. It would have poor access, too households that may not otherwise afford to little yard space or office accommodation, live in those developments. inadequate goods lifts, no three‐phase power and obsolete electrics and ablution facilities. Source: City of Johannesburg, Inclusionary Such space is often (but not exclusively) found in Housing: Proposed Amendments, 2 August highly urbanised areas. 2018 Comparative grading nomenclature ial‐building grades Industr : of industrial and office space Prime: An industrial property (including Industrial Offices warehouses and distribution centres) in which Prime + A space is easily lettable because it satisfies each Prime B of the following prerequisites: Prime ‐ C Secondary D a. Generally, in a good condition; b. Satisfactory macro access (i.e. access to Industrial park: An industrial park is a multi‐ freeway); tenanted complex of industrial buildings, c. Satisfactory micro access (i.e. from typically surrounded by a security fence with street to building); access control and possibly some greenery. d. Proper loading facilities; e. Eaves >6 m (excluding micro/ mini Initial yield: The first year’s expected net units); operating income (based on existing leases f. Wide clear span of trusses (few internal and other income reasonably expected) pillars); divided by the purchase price. Therefore, the g. On ground level; initial yield and the capitalization rate are only h. Adequate three‐phase electrical the same in those rare cases where a building power. is let at open‐market rentals. i. Roof insulation Internal rate of return (IRR) [interne The nine conditions above are pre‐ rentabiliteit]: A performance measurement requisites for space to be considered prime. that takes cognisance of the time‐value of However, a building may possess additional money. Technically, it is that rate which enhancements that could improve lettability equates the inflows with the outflows of a cash through increasing the size of the potential flow. Also known as the money‐weighted rate tenant pool. of return because the timing and weights of the money‐flows influence the return. Cf. Such enhancements could include sufficient geometric mean return. office accommodation, adequate parking, sprinkler systems, masonry up to sill height, JSE: JSE Securities Exchange South Africa. Rode’s Report 2021:1 V Annexure 1

Labour tenant: A person who works on a The MV is an objective value in that the commercial farm in exchange for the right to crucial value determinants are largely derived live on that farm without compensation, as from the marketplace. See also price and well as the right to work a portion of that farm fundamental value. for himself. Mean: See arithmetic mean; median; Leaseback: A fully repairing and insuring lease geometric mean. (tenant pays all operating costs) for 10 years or longer (with typically 5‐yearly rent reviews Median: Midpoint of a series of observations or fixed annual escalations) with a tenant with when arranged in order of magnitude. Thus, it a strong covenant. is a measure of central tendency that divides the data set into halves. Less affected by Leasehold land: The leaseholder (landlord) outlier observations than the arithmetic mean. grants the Lessee a long lease on the land (in For example, the median of 5, 6, 7, 8, 9 is 7. And South Africa, typically 40‐99 years), in for 5, 9, 15, 16, 17, 21, 23 the median is 16. Cf. exchange for which the tenant pays a rent geometric and arithmetic mean. stream to the landlord. At expiry of the lease, the land (together with the improvements) Metro: Metropolitan. reverts to the leaseholder. This type of tenure is not common in South Africa, but since 1994 MFA: Medium‐Term Forecasting Associates, the government seems to prefer it when building‐construction economists located in disposing of state land. Cf. Freehold. Stellenbosch.

Lessee: A tenant to whom space or land is n: Number of respondents. rented under a lease. Cf. Lessor. N/A: Not available — fewer than two Lessor: A landlord that lets space to another respondents. under a lease. Cf. Lessee. NNN lease: Also known as a triple‐net lease. A Market rental: The estimated amount for fully repairing and insuring lease (tenant pays which a property would be leased on the all operating costs). The commonest example valuation date between a willing lessor and is a Leaseback. a willing lessee on appropriate lease terms in an arm’s length transaction, after proper Office‐building grades defined by quality of marketing and where the parties had each finishes and facilities (not location): acted knowledgeably, prudently and without compulsion. [Source: International Valuation  Grade A+: Generally, new, top‐quality, Standards, 2020] modern buildings; ample parking; a pace‐ setter in establishing rentals, a prestigious Market value: The estimated amount for which lobby finish. A minimum 4‐star rating by a property should exchange on the date of GBCSA is a prerequisite. valuation between a willing buyer and a willing  Grade A: Generally, not older than 10 years, seller in an arm's‐length transaction, after unless renovated; high‐quality finishes; proper marketing wherein the parties had each adequate on‐site parking; air‐conditioning. acted knowledgeably, prudently, and without  Grade B: Generally, 10 to 20 years old, unless compulsion. [Source: International Valuation renovated; accommodation to modern Standards, 2020] standards; air‐conditioning; on‐site parking. Rode’s Report 2021:1 VI Annexure 1

 Grade C: Generally, 20 to 30 years old, unless Node: In real estate, a node is an area of renovated; in fairly good condition, although intensified commercial activity, including finishes are not up to modern standards; may shops and offices. In South Africa, industrial have some on‐site parking; unlikely to be townships are also often called nodes, centrally air‐conditioned. although this practise is not recommended.  Grade D: A building reaching the end of its functional life but can be used for storage; old Office demand: Office stock less office space and in poor condition; near the bottom of the vacant (space on the market for renting rental rate range; typically, no air‐ irrespective of whether there is still a valid conditioning and no on‐site parking; may lease over the space). In other words, demand have good location. is office space occupied.

These grades might be further sub‐divided into Office stock: Total rentable office space. sub‐grades, viz. A‐, B+, B‐, C+ or C‐ for purposes of fine‐tuning market rental rates. Office take‐up: Change in office demand. Where take‐up is positive, it can also be called In every issue of Rode’s Report (RR), we reflect the growth in demand. rentals for the following sub‐grades: Office vacancies: This is the floor area A+ Reported in RR tables available for leasing at any given time, A Reported in RR tables irrespective of whether there is still a valid A‐ lease over the space. Often expressed as a B+ percentage of the stock measured‐ in rentable B Reported in RR tables m². B‐ C+ Operating costs: See outgoings. C Reported in RR tables C‐ Opportunity cash flow (OCF): A valuation term introduced by Rode. The OCF quantifies the Sub‐grades not reported on, can be amount gained or foregone by the landlord in established by straight‐line interpolation. that the property is either over rented or under rented. More precisely, for each lease and the This schema has been appearing in Rode’s space that such a tenant occupies, it is, until Report since 1995. At a later stage, Sapoa expiry of such a lease, the present value (PV) of (following the Australian example) changed the contractual rental less the open‐market the name of grade A+ to P grade (for ‘premium’). rental (as at the valuation date) escalating at As the reader will see, the P‐name does not fit in the open‐market escalation rate (as at the with the above schema, and for this reason, we valuation date). did not follow the Sapoa nomenclature. Outgoings (gross operating costs): In the The vigilant reader will notice that, in contrast case of office buildings, the following items to Sapoa, we do not include ‘location’ as a are included under total gross operating determinant of grading. Our point of departure expenses, irrespective of who pays for these: is that the grading should only reflect quality of finishes and facilities. However, location does of  Rates & taxes course play a role in determining market rental  Cleaning of common areas rates, which is why we in RR we report on  External and common‐area repairs and market rental rates by node (and grade). maintenance (normalized, i.e. averaged) Rode’s Report 2021:1 VII Annexure 1

 Common‐area electricity Rental:  Security  Management fee (excluding head office  Basic rental (base rental in the USA): A set overheads) amount used as a minimum rent in a  All leasing expenses: broker’s commission lease which also employs a percentage of and in‐house payroll, advertising, net tenant turnover or other allocation for additional alteration costs (normalized) rent.  Installation or relocation expenses (unless recovered), buyouts, etc.  Gross rental: The total rental payable  Insurance (fire & SASRIA). In the case of self‐ by the tenant, excluding VAT, the tenant’s insurance, the market average should be own electricity and other utility charges, included but including other operating costs (see  Audit fees Outgoings) recovered by the landlord, such as rates and taxes. In the case of case of THE FOLLOWING ITEMS ARE EXCLUDED: shopping centres, promotion expenses are included in the gross rental. See also rental, .  Head office overheads net  Tenants’ own electricity, water, refuse and  Net rental: The amount payable by the sewage tariffs tenant, excluding VAT and excluding  Recovered tenant alterations or operating costs recovered by the landlord installations. (if any). See also rental, gross.  VAT.  Nominal rental: This has a dual meaning: Price: The amount actually paid for an asset. o Firstly, it refers to rentals where Not the same as market value, because special the analyst or valuer assumes no circumstances may have applied when the incentives like a rent‐free period, free transaction was concluded (cf. the definition relocation, cash upfront, or of market value). o balance‐of‐installation allowance. It also excludes amortisation of tenant‐ PLS: Property loan stock, also known as installation costs. variable loan stock (VLS) (type of listed o Secondly, it can also mean actual rental property fund). (historic) values (i.e. not deflated). See also rental, real. PUT: Property unit trust (type of listed property fund). (historic) Parking types:

REIT: A REIT is an entity that invests primarily  Detached open parking: parking bay is in real estate and qualifies for special tax detached from the main building and with status in that there is single taxation at the no cover. end‐investor (not the fund) level. The Dutch  Detached shade‐net parking: parking bay is term ‘fiscale beleggingsinstelling’ (FBI) stresses detached from the main building with the tax characteristic. The FBI is the world’s shade‐net cover. oldest fiscally transparent investment structure for property (since 1969). Source:  Detached covered parking: parking bay is https://www.vastgoedmarkt.nl, detached from the main building and has published 16/11/2017. a solid roof. Rode’s Report 2021:1 VIII Annexure 1

 Structured parking: parking forms Sapoa: South African Property Owners inherently part of a structure (Associafortion. instance, the main building). It could be in the basement, in an abutting parkade or SARB: South African Reserve Bank (viz. the on the rooftop (where it could be open or central bank) covered). Sectional title: A type of property ownership method whereby ‘sections’ of a building, or a • Pioneer rental: The highest rental achieved complex of buildings, are created to allow for – and could be a once‐off outlier deal; each ‘section’ of the building to be individually hence “pioneer” is not “market”. The owned. In Australia it is known as ‘strata title’, difference between pioneer and the and in North America and Europe as ‘condo‐ highest market rentals may be used as a minium’ (condo) (also, Eigentumswohnung in blunt tool to gauge the prospects for Germany). market rental growth in the short term. If the differential is positive, it is an Secular trend: A long‐term growth path of an indication of growth prospects in the node. economic variable, around which there might If the differential is negative, it is an be short‐term (business cycle) or other indication that landlords are finding it fluctuations. See also cyclical trend. difficult to find new tenants at the asking rental rate. Shopping‐centre configurations:

 Real rental: Deflated rental, typically  Mall: Typically enclosed with common observations (values) over time (a time walkway between two facing strips of series) from which the relevant inflation stores. This is the design mode for super has been removed. See also rental − regional, regional and most community nominal. shopping centres.

Perpetual vacancy – see Vacancy – long‐term.  Strip centre: Is an attached row of stores or service outlets managed as a coherent Rent‐free period: No rent is payable by the retail entity, with on‐site parking, usually tenant for an initial portion of the term of a located in front of the stores. Storefronts lease. It is offered by a landlord as a rental may be connected by open canopies, but concession to attract tenants. Measure the there are no enclosed walkways linking the rent‐free period at the start of beneficial stores. Store configuration is either a occupation. straight line, “L” or “U” shaped. This is the design mode for most neighbourhood, Required rate of return: see hurdle rate. convenience and value (USA: power) centres. Retail price: In the context of property syndication, this means the price at which a  Street‐front shop: as the name implies, a property‐holding company’s shares are sold to shop that fronts on the street. In the UK the public or the price at which these shares known as a high‐street shop. trade. See also wholesale value. Shopping centre types: RR: Rode's Report on the South African Property Market, a quarterly journal for the  Super regional: More than 100.000 professional property practitioner. rentable m²; more than 250 stores; Rode’s Report 2021:1 IX Annexure 1

comparison and specialised shopping very near Polokwane); Brandwag Centre important; widest possible tenant mix (Bloemfontein); Beacon Bay Retail Park with at least seven anchor tenants; large (East London). entertainment component such as cinema, electronic games, ice rinks. Examples are:  Neighbourhood: 5.000‐12.000 rentable Mall of Africa (Johannesburg); Menlyn Park m²; 25‐50 stores; anchor tenant is well‐ (Pretoria), The Pavilion (Durban); Canal known food retailer ‐ could also be a Walk (Cape Town). combination of two food retailers; other tenant types are convenience retailers, such as a pharmacy, butchery, hairdresser,  : 50.000‐100.000 rentable m²; Regional dry cleaner, liquor store; hardware store, 150‐250 stores; anchors in most cases two small clothing stores, restaurants and large supermarkets (more than 5.000 m²) takeaways, independent stores run by or one large supermarket (8.000 m²); residents. Examples are: Kyalami on Main significant entertainment component like (Johannesburg); Jean Avenue (Pretoria), cinema, electronic games/games arcade. Plattekloof Village (Cape Town). Examples are: Mall of the South (Johannesburg); Forest Hill (Pretoria);  Local convenience: 1.000‐5.000 rentable Tyger Valley and N1 City Mall (Cape Town); m²; 5‐25 stores; caters mainly for daily milk Loch Logan Waterfront (Bloemfontein); and bread purchases; the principal tenant Hemingways (East London); Garden Route is a café or grocer like Kwik Spar/OK Mall (George). MiniMark; could include takeaway foods, local restaurants, DVD stores, banks and  Small regional: 25.000‐50.000 rentable ATM facilities. Examples are: Kenilworth m²; 75‐150 stores; generally serves as Corner (Cape Town); Amalinda Square larger community centre; some of these (East London). centres also address needs of a specific market segment; anchor tenant is large  Lifestyle centre: 15.000‐50.000 rentable supermarket (bigger than approximately m²; not a popular format in South Africa; 4.000 m²); up to two or three food anchors role is to offer a unique retail shopping and can be on offer in one centre; focus of entertainment experience in a relaxed and the tenant mix is on comparative shopping attractive environment. Characteristics in clothing and household items; are: a variety of dining options, inviting entertainment mainly focused on cinemas. public spaces including fountains and Examples are: La Lucia Mall (Durban); street furniture, an upmarket tenant mix. Walmer Park (Port Elizabeth); Mimosa Mall Examples are: Lynnwood Bridge (Pretoria); (Bloemfontein); Langeberg Mall (Mossel The Palms Décor and Lifestyle Centre

Bay). (Woodstock, Cape Town) and Cape Quarter (Waterkant, Cape Town) and Willowbridge  Community: 12.000‐25.000 rentable m²; (South) in Tyger Valley (Cape Town). 50‐150 stores; offers a wider tenant mix  Retail warehouse (big‐box retailer): than a neighbourhood centre; anchor Stand‐alone; one or two tenants; 2.000‐ tenant one or two large supermarkets 15.000 m²; air‐conditioned, no ceiling, bigger than 2.500 m²; Dis‐Chem and warehouse‐like finishes, e.g. Makro, Clicks are popular tenants; some might Builders Warehouse and Game. have cinemas; Examples are: Cosmo Mall (Johannesburg); Middestad Mall  Value centre: Multi‐tenanted strip centre; (Cape Town); Mall@Lebo (Lebowakgomo, 10.000‐50.000 m²; warehouse type finishes Rode’s Report 2021:1 X Annexure 1

to deliver lower prices to consumers. Time series/data series [tydreeks]: A set Examples are Capegate Value Centre (Cape of observations for the same variable at Town); Fourways Crossing (Johannesburg); regular intervals (see graph). The intervals or Moffet Retail Park (Port Elizabeth). frequencies may be of any length, e.g. years or quarters for national‐income or property data, Smoothing: Removal of shorter‐term monthly for prices, and weekly, daily, or even fluctuations in a time series, by e.g. moving minute‐by‐minute for stock exchange prices. averages, exponential smoothing, or curve fitting. Total return: Normally measured over a year, in which case it is the income yield Standard capitalization rate: It is the expected for the applicable year (net income in year 1 net operating income for year 1, assuming the entire building is let at open‐market rentals, divided by the purchase price or value in divided by the purchase/ transaction price, year 0) plus the change in capital value over normally expressed as a percentage. This that year. Also known as the combined return calculation ignores VAT, transfer duty and because it combines the income yield and income tax, and assumes a cash transaction (in capital return in one measure. contrast to a paper‐based sale). Town house [meenthuis]: A modern town Standard deviation (SD): A measure of house has a small footprint on multiple floors. dispersion in a set of data. For instance, In the UK it is known as a terraced house. Town assume a normal distribution of observations houses are often found in cluster complexes. and a mean of R10 and an SD of R1,50. This Historically, it was the (small) house of the means there is a 68% chance the values landed gentry in town. Cf. in tuishuis/ will lie between R10‐R1,50=R8,50 and dorpshuis, a small house in town where R10+R1,50=R11,50. farmers used to stay for Nagmaal Stats SA: Statistics South Africa, South (Communion). African government’s statistics department. Previously known as Central Statistical Services Triple‐net lease: see NNN lease. (CSS) and even earlier as the Department of Statistics. Vacancy – long‐term, also called perpetual vacancy. Mathematically, when capitalizing Through rate: Where a property consists of (turning an income stream into a current various components (for example office and capital amount), the implicit assumption is that industrial space) the through [rental] rate is the the income stream will extend into perpetuity. weighted average rental rate of these Thus, when capitalizing, the valuer should components. assume a perpetual vacancy, even if the A graphic portrayal of a rental time series Quarterly frequency building is currently fully let, because the 90 building will have vacancies from time to time.

80 The perpetual vacancy (measured in gross market rents) must be deducted from the first 70 year’s market‐related income before 60 capitalizing. The ‘first year’ could be Year_1, 50 Year_6 or Year_11, etc, depending on when 40 capitalization (in perpetuity) of the cash R/m² per month

30 stream takes place. Of course, where there is a long‐term lease on the whole building with a 20 93 94 95 96 97 98 99 00 01 02 strong covenant, the long‐term vacancy would Rode’s Report 2021:1 XI Annexure 1 only apply from the end of the long lease and Wholesale value: In the context of property would, therefore, be low at the valuation date. syndication, this means the estimated price that a share or shares of a syndicated property‐ Vacancy – short‐term. Where the current holding company would fetch (excluding vacancy is higher than the estimated perpetual winding‐up costs) should the holding company vacancy, the difference must be subtracted be dissolved, and the underlying property sold from the capitalized amount (note: after as a normal, non‐syndicated property. See also capitalizing). This implies the valuer must retail price. estimate how long it will take to fill the short‐ term excess vacant space. Year‐on‐year (y‐on‐y) growth: Rate by which a figure has changed compared to a year earlier. VAT: value‐added tax. Year 0: Refers to the year ended at the present WALE: Weighted average lease to expiry. A time (the valuation date). metric to gauge the risk of a portfolio of properties going vacant. Measured in Year 1: Refers to the period from year 0 to the years. end of the first year thereafter.

References: 1. International Council of Shopping Centres 2. Bureau of Market Research, University of South Africa 3. Sapoa 4. International Valuation Standards, 2020 Rode’s Report 2021:1 XII Annexure 2 Technical background to the Rode surveys

Rode has been surveying the crucial always be) a problem in some of the less variables of the property market in South active nodes, but to a lesser extent. Below Africa since the beginning of 1988 using the we give the reader some insight in our expert‐panel method. Broadly speaking, the survey approach to determine the levels of researcher has two potential approaches the various property variables: available to him. These are: Capitalization rate: The Rode o Track actual transactions, like the rental capitalization rate panel consists of two levels of lettings or the capitalization categories of panellist — major owners, and rates at which sales are concluded. leading investment brokers who know their Valuers (appraisers) call these market segments intimately. This means that ‘comparables’. the latter's knowledge is based on actual sales. The question put to these carefully chosen o The expert‐panel method of surveying, in panellists is: which the surveyor regularly asks the same individual members of the panel Owners/Brokers: “In your opinion, what is for their expert opinions, which in turn presently the capitalization rate at which your will of course be based on actual deals of organization is equally happy to buy or sell the which the panellists are aware. properties in the cities below? (Assume a typical location and a cash sale, rather than The cons of tracking actual transactions are: paper.). For leasebacks, assume the escalation o A paucity of transactions in most nodes, rate reported by you in this questionnaire.” making statistical inferences impossible. o Hence the danger of relying on outlier Escalation rate (for industrial lease‐backs): data (mainly the result of small samples) The question put to the panellists is: o Dated transactions o The cost Owners/Brokers: “In your opinion, what is the o The unwillingness of the parties to report current prevalent (i.e. most often achieved) the details of individual deals. market escalation rate for prime industrial leasebacks (assume the market capitalization In contrast, through the expert‐panel rate you provided in this questionnaire)?” method of research, most of the above cons of the actual‐transactions approach are Office rentals: The Rode office rental survey addressed through opinion surveys. This asks respondents to supply average market results in cheaper, more accurate and timely rentals by grade (grades A+, A, B & C) for a information. Sample size is still (and will specific office node. Rode’s Report 2021:1 XIII Annexure 2

The question put to the panellists is: Thus, the reported vacancies do not represent percentages. “In your opinion, what is presently the nominal gross achievable/market rental (not Industrial land values: The question put to asking rent, not escalated contractual rents, panellists is: not exceptional deals) per rentable m² excluding VAT?” The questionnaire also asks “In your opinion, what are the current for the typical rent‐free period in months, market values per m² (NOT asking price, the gross current‐year operating costs per NOT exception deals) for vacant, serviced rentable m² and the predominant escalation levelled stands in the industrial nodes rate on net & gross rentals, and operating and for the stand sizes indicated below? costs. Exclude transfer costs and VAT. Provided you are well informed, please give us your ‘Nominal’ rental means the panellist has to opinion even though you might not have assume no incentives like a rent‐free period. concluded a sale for the exact sizes.”

Industrial rentals: The question put to The information is required for stand sizes panellists is: of 1’000 m², 2’000 m², 5’000 m² and 10’000 m². “In your opinion, what are the current gross achievable/market rentals per m² (NOT asking Flat rentals: The question put to panellists rent, NOT exception deals, NOT escalated is: contractual rents) for prime industrial buildings for the industrial nodes and floor‐ “In your opinion, what are the current area sizes indicated below? (Exclude VAT.)” market rentals (not asking rent) for new The assumed floor area sizes are: 250 m², lettings for uncontrolled standard and 500 m², 1 000 m², 2 500 m² and 5 000 m². upmarket flats in the following categories Respondents are also asked to fill in their and areas? The rental data required is for vacancy estimate for prime industrial space, unfurnished flats, excluding water and using a scale of 1 to 9. See the table below for electricity. Parking is typically included.” detail on the vacancy scale. Respondents are asked to provide rentals Vacancy scale for industrial nodes for bachelor, 1‐, 2‐ and 3‐bedroom units. <5% 5 – 10% >10% 1 2 3 4 5 6 7 8 9 Note that the flat rentals are not quoted Low Medium High per m². Rode’s Report 2021:1 XIV Annexure 3 How to interpolate industrial rental rates and land values

The industrial rental and land value tables put in the interpolation we want to perform. in the body of the RR contain regression An r2 close to 1 is a good fit. equations in natural log (ln) form in order to allow the reader to interpolate rental rates An example: or industrial land values for area sizes other than those given in the tables. (All references Interpolate a rental rate for an area size below are to the industrial rental tables. other than those quoted in the table — e.g. However, they also apply mutatis mutandis for an area of 750 m². Use your financial to the industrial land value table.) calculator and proceed as follows:

The regression equations are in natural log Assume the following equation: (ln) form because the relationship between the rental rates and area sizes leased, is ln Y = 3,8855 — (0,2263 (ln X)) where X = 750 curvilinear. This means that the rental rate m². for area sizes other than those quoted cannot be calculated by straight linear Step 1: interpolation. In order to calculate the rental Calculate the natural log of X, viz. the floor rate for an area size other than those area for which you want to interpolate the quoted, use the following equation from the market rental rate. The natural log of a floor tables: area of 750 m² is 6,6201 (use the ln key of your financial calculator). ln Y = a + b(ln X), where: Thus: ln Y = the natural log of the rental rate, i.e. the value which we want to calculate. ln X = ln Y = 3,8855 — (0,2263 (6,6201)) the natural log of the applicable floor area in = 3,8855 — 1,4981 m² for which we want to calculate the = 2,3874 market rental rate. Step 2: Note that a and b are given in the table. The In order to calculate Y, get the exponential of coefficient of determination r2 is an ln Y (viz. of 2,3874) by using the ex key on indication of the goodness of fit of the your financial calculator. The answer is curve, i.e. how much confidence we can R10,89 per m². Rode’s Report 2021:1 XV Annexure 4 Approximate building cost rates as at 1 July 2020

Source: AECOM AFRICA PROPERTY AND CONSTRUCTION COST GUIDE 2020/21

This section provides a list of approximate inclusive building cost rates for various building types in South Africa.

Rates are current to 1 July 2020, and therefore represent the average expected building cost rates for 2020. It must be emphasised that these rates are indicative only, and should be used circumspectly, as they are dependent on upon several assumptions. The area of the building expressed in m² is equivalent to the ‘Construction Area’ where appropriate, as defined in the ‘Method for Measuring Floor Areas in Buildings, Second Edition’ (effective from 7 November 2007), published by the South African Property Owners Association (SAPOA).

Construction cost normally vary between the different provinces of South Africa. Costs in parts of the Western Cape and KwaZulu‐Natal, specifically upper‐class residential, for example, are generally significantly higher than in Gauteng. Rates have, therefore, been based on data received from Gauteng, where possible. Be mindful that cost differences between provinces at a given point in time are not constant, and may vary over time due to differences in supply and demand or other factors.

Rates include the cost of appropriate building services, e.g. air‐conditioning, electrical, etc. but exclude costs of site infrastructure development, parking, any future escalation, professional fees and value‐added tax (VAT). Rode’s Report 2021:1 XVI Annexure 4

Building rates Rates include the cost of appropriate building services, e.g. air‐conditioning, but exclude costs of site infrastructure development, parking, any future escalation, loss of interest, professional fees and VAT. Offices 1. Low‐rise office park development with standard /m² R8.500 – R10.400 specification 2. Low‐rise prestigious office park development /m² R10.900 – R16.200 3. High‐rise tower block with standard specification /m² R12.200 – R16.200 4. High‐rise prestigious tower block /m² R16.200 – R20.400 Note: Office rates exclude parking and include appropriate tenant allowances incorporating carpets, wallpaper, louvre drapes, partitions, lighting, air‐conditioning and electrical reticulation. Parking 1. Parking on grade, including integral landscaping and ground preparation /m² R550 – R750 2. Structured parking /m² R4.100 – R4.500 3. Parking in semi‐basement /m² R4.500 – R6.200 4. Parking in basement /m² R4.800 – R8.500 Retail 1. Local convenience centres (not exceeding 5.000m²) /m² R8.300 – R10.900 2. Neighbourhood centres (5.000m² ‐ 12.000m²) /m² R9.000 – R11.600 3. Community centres (12.000m² ‐ 25.000m²) /m² R9.900 – R12.700 4. Minor regional centres (25.000m² ‐ 50.000m²) /m² R10.900 – R13.500 5. Regional centres (50.000m² ‐ 100.000m²) /m² R11.600 – R14.000 6. Super regional centres (exceeding 100.000m²) /m² R12.200 – R15.800

Note: Super regional centres and regional centres are generally inward trading with internal malls, whereas convenience, neighbourhood and community centres are generally outward trading with no internal malls. Retail rates include the cost of tenant requirements and specifications of national chain stores. Retail costs vary considerably depending on the tenant mix and sizing of the various stores. Industrial Industrial warehouse, including office and change facilities within the structure area: 1. Steel frame, steel cladding and roof sheeting (light‐duty) /m² R4.100 – R6.200 2. Steel frame, brickwork to ceiling, steel cladding above /m² R4.800 – R6.900 and roof sheeting (heavy‐duty) 3. Administration offices, ablution and change room block /m² R7.800 – R10.000 4. Cold storage facilities /m² R14.600 – R20.800 Residential 1. Site services to low‐cost housing stand (250m² ‐ 350m²) /site R53.000 – R85.000 2. RDP housing /m² R2.500 – R2.700 3. Low‐cost housing /m² R3.200 – R5.500 4. Simple low‐rise apartment block /m² R7.700 – R10.700 5. Economic duplex townhouse /m² R7.700 – R11.000 Rode’s Report 2021:1 XVII Annexure 4

6. Prestige apartment block /m² R15.000 – R22.000 7. Private dwelling houses:  Economic /m² R5.900  Standard /m² R7.300  Middle Class /m² R8.800  Luxury /m² R12.300  Exclusive /m² R19.500  Exceptional (‘Super luxury’) /m² R28.500 – R59.000 8. Outbuildings:  Standard /m² R5.500  Luxury /m² R7.800 9. Carport (shaded):  Single /no. R4.700  Double /no. R9.500 10. Carport (covered):  Single /no. R7.400  Double /no. R14.500 11. Swimming pool:  Not exceeding 50kl /no. R93.000  Exceeding 50kl and not exceeding 100kl /no. R165.000 12. Tennis court:  Standard /no. R550.000  Floodlit /no. R680.000 Hotels 1. Budget /key R660.000 – R1.060.000 2. Mid‐scale (3 Star) /key R1.060.000 – R1.590.000 3. Upper‐scale (4 Star) /key R1.590.000 – R2.230.000 4. Luxury (5 Star) /key R2.230.000 – R3.180.000 Note: Hotel rates include allowances for furniture, fittings and equipment (FF&E). Studios 1. Studios: dancing, art exhibitions, etc. /m² R14.600 – R20.800 Conference Centres 1. Conference centre to international standards /m² R27.000 – R34.000 Retirement Centres 1. Dwelling houses :  middle class /m² R8.700  luxury /m² R12.200 2. Apartment block :  middle class /m² R8.900  luxury /m² R13.800 Rode’s Report 2021:1 XVIII Annexure 4

3. Community centre :  middle class /m² R11.700  luxury /m² R17.100 4. Frail care /m² R13.800 Schools 1. Primary school /m² R6.900 – R8.000 2. Secondary school /m² R8.300 – R8.800 Hospitals 1. District hospital /m² R28.500 Note: Hospital rates exclude allowances for furniture, fittings and equipment (FF&E). Stadiums 1. Stadium to PSL standards /seat R36.000 – .000 2. Stadium to FIFA standards /seat R83.000 – R109.000 3. Stadium pitch to FIFA standards /pitch R23.500.000 – R27.500.000 Prisons 1. 1.000 Inmate prison /inmate R617.000 – R656.000 2. 500 Inmate prison /inmate R656.000 – R735.000 3. High/maximum security prison /inmate R980.000 – R1.300.000 Infrastructure airport development costs Rates exclude any future escalation, loss of interest, professional fees, VAT and ACSA direct costs. Apron stands (incl. associated infrastructure) 1. Code F stand (85m long x 80m wide = /m² R5.400 6.800m²) 2. Code E stand (80m long x 65m wide = /m² R5.700 5.200m²) 3. Code C stand (56m long x 40m wide = /m² R7.200 2.240m²) Taxi lanes (incl. associated infrastructure) 1. Code F taxi lane (101m wide) /m R180.000 2. Code E taxi lane (85m wide) /m R150.000 3. Code C taxi lane (49m wide) /m R90.000 Service roads 1. Service road (10m wide) /m R18.000 2. Dual carriage service road (15m wide) /m R23.000 Taxi ways (incl. associated infrastructure) 1. Code F taxi way (70m wide) /m R130.000 Runways (incl. associated infrastructure) 1. Code F runway (3.885m long x 60m wide = /m R300.000 233.100m²) Rode’s Report 2021:1 XIX Annexure 4

Parking (excl. bulk earthworks) 1. Structured parking /bay R200.000 2. Basement parking /bay R300.000 Perimeter fencing/ Security gates 1. Perimeter walls with perimeter intrusion /m R9.000 detection (PIDS) Terminal & other buildings (excl. bulk earthworks, external site & services works) 1. Terminal building (excl. terminal building /m² R30.500 baggage & X‐ray) 2. Pier terminal building (excl. telescopic air /m² R32.000 bridges, seating & aircraft docking system) 3. Telescopic air bridges /unit R12.000.000 4. Aircraft Docking System /unit R1.750.000 Building services The following rates are for building services (mechanical and electrical), which are applicable to typical building types in the categories indicated. Rates are dependent on various factors related to the design of the building and the requirements of the system.

In particular, the design, and therefore the cost of air‐conditioning, can vary significantly depending on the orientation, shading, extent and type of glazing, external wall and roof construction.

Electrical installation 1. Office buildings — standard installation /m² R700 – R1.000 2. Office buildings — sophisticated installation /m² R1.000 – R1.300 3. Office buildings — UPS, substations, standby /m² R450 – R650 generators 4. Residential /m² R650 – R1.000 5. Shopping centres /m² R1.000 – R1.300 6. Hotels /m² R1.100 – R1.500 7. Hospitals /m² R1.500 – R2.100 Electronic installation 1. Offices — standard installation /m² R400 – R550 2. Offices — sophisticated installation /m² R550 – R800 3. Residential /m² R350 – R525 4. Shopping centres /m² R800 – R1.000 5. Hotels /m² R750 – R1.000 6. Hospitals /m² R800 – R1.100 Note: Electronic installation include access control, CCTV, public address, fire detection, data installation, WiFi, CATV, PABX (Private Automatic Branch Exchange) and Building Management Systems (BMS). Fire protection installation 1. Sprinkler system including hydrants and hose reels (excluding void sprinkler) /m² R275 – R375 Rode’s Report 2021:1 XX Annexure 4

Air‐conditioning installation 1. Ventilation to parking/services areas /m² R300 – R475 2. Office buildings: console units /m² R800 – R1.100 3. Office buildings: console/split units /m² R950 – R1.400 4. Office buildings: package units /m² R1.275 – R1.900 5. Office buildings: central plant /m² R1.600 – R2.400 6. Residential: split units /m² R950 – R1.400 7. Shopping centres: split units /m² R1.050 – R1.500 8. Shopping centres: package units /m² R1.275 – R1.900 9. Shopping centres: evaporative cooling /m² R800 – R1.200 10. Hotels: public areas /m² R1.600 – R2.400 11. Hospitals: central plant /m² R2.100 – R3.300 12. Hotels: console units /key R20.000 – R27.500 13. Hotels: split units /key R27.500 – R42.000 14. Hotels: central plant /key R55.000 – R80.000 15. Hospitals: operating theatres /theatre R525.000 – R850.000

Notes

1. Regional variations: Construction costs normally vary between the different provinces of South Africa. Costs in the Western Cape and KwaZulu‐Natal, specifically upper class residential, for example, are generally significantly higher than Gauteng due to the demand for this accommodation.

2. Value added tax (VAT): As the majority of developers are registered vendors in the property industry, any VAT on commercial property development is fully recoverable. Therefore, to reflect the net development cost, VAT should be excluded. Should the gross cost (i.e. after VAT inclusion) be required, the VAT at the ruling rate (currently 15%) should be added.

Awareness must be made of the effect that VAT has on cash flow over a period of time. This will vary according to the payment period of the individual vendor. However, in all cases, it will add to the capital cost of the project to the extent of interest on outstanding VAT for the VAT cycle of the vendor.

3. For guidance with regard to the cost of buildings rated under the Green Star South Africa rating tool system, see the latest edition of the AECOM publication entitled “Quick Guide to Green Design Attributes.” Rode’s Report 2021:1 Monthly forecast of in‐contract building costs (Haylett formula)

Work group 180 Lump Sum Domestic Buildings (December 2016 = 100)

Forecast date: March 2021

2020 2021 2022 2023 2024 2025 Month Index % ch Index % ch Index % ch Index % ch Index % ch Index % ch Jan 113,3 4,8 118,8 4,9 124,3 4,6 129,9 4,5 136,1 4,7 142,0 4,4 Feb 109,0 3,9 113,8 4,4 118,4 4,0 123,4 4,3 129,1 4,6 135,3 4,8 XXI Mar 110,4 5,1 113,1 2,4 119,1 5,3 124,3 4,4 130,2 4,7 136,3 4,7 Apr 111,0 5,3 112,5 1,4 117,7 4,7 123,0 4,5 128,8 4,7 134,7 4,6 May 111,2 5,4 112,4 1,1 118,2 5,2 123,5 4,5 129,2 4,6 135,0 4,5 Jun 111,1 4,8 112,9 1,6 118,2 4,7 123,3 4,3 129,1 4,7 135,1 4,6 Jul 111,6 4,0 114,1 2,2 119,0 4,3 124,1 4,4 129,9 4,7 135,8 4,5 Aug 111,9 4,8 115,0 2,8 119,5 3,9 125,0 4,6 130,8 4,6 136,6 4,5 Sep 112,7 4,5 116,1 3,0 120,8 4,1 126,5 4,7 132,3 4,6 138,2 4,4 Oct 112,8 3,8 117,1 3,8 112,2 3,5 126,8 4,6 132,7 4,7 138,6 4,4 Nov 112,7 3,4 117,1 3,9 121,7 3,9 127,4 4,6 133,3 4,6 139,3 4,5 Annexure 5 Dec 112,9 4,0 116,9 3,5 121,8 4,2 127,4 4,7 133,4 4,7 139,4 4,5 Avg. 114,6 3,0 120,3 4,9 125,7 4,6 131,6 4,7 137,6 4,5 143,7 4,5 Source: Bureau for Economic Research (BER)

Rode’s Report 2021:1 XXII Annexure 6

BER Building Cost Index (non‐residential tender prices)

2016 = 100

First Second Third Fourth Average quarter quarter quarter quarter 2013 81,6 79,1 82,5 82,1 81,3 % ch 11,6 6,0 7,2 4,1 7,2 2014 81,0 88,8 90,9 92,8 88,4 % ch ‐0,7 12,2 10,1 13,0 8,6 2015 94,6 91,4 93,7 93,7 93,3 % ch 16,7 3,0 3,0 0,9 5,6 2016 92,1 97,3 103,2 98,8 97,9 % ch ‐2,6 6,5 10,2 5,5 4,9 2017 102,4 103,0 105,5 104,7 103,9 % ch 11,2 5,8 2,2 5,9 6,1 2018 110,2 109,7 111,6 110,3 110,5 % ch 7,7 6,6 5,8 5,4 6,3 2019 113,2 114,9 113,9 115,7 114,4 % ch 2,7 4,7 2,1 4,9 3,6 2020 116,1 115,6 118,5 114,5 116,2 % ch 2,6 0,6 4,0 ‐1,0 1,5 2021 116,2 % ch 0,0 Source: The data is from the Building Cost Report of the Bureau for Economic Research (BER), tel. 021 808 9780, and is published with its permission. Rode’s Report 2021:1 Prime overdraft rate at month‐end (%) (proxy for trends in mortgage rates*)

un Jul Aug Sep Oct Nov

Year Jan Feb Mar Apr May J Dec Year 1995 16,25 17,50 17,50 17,50 17,50 17,50 18,50 18,50 18,50 18,50 18,50 18,50 17,90 1996 18,50 18,50 18,50 19,50 20,50 20,50 19,50 19,50 19,50 19,25 20,25 20,25 19,52 1997 20,25 20,25 20,25 20,25 20,25 20,25 20,25 20,25 20,25 19,25 19,25 19,25 20,00 1998 19,25 19,25 18,25 18,25 18,25 22,25 24,00 25,50 25,50 24,50 23,50 23,00 21,79 1999 22,00 21,00 20,00 19,00 19,00 18,00 17,50 16,50 16,50 15,50 15,50 15,50 18,00 2000 14,50 14,50 14,50 14,50 14,50 14,50 14,50 14,50 14,50 14,50 14,50 14,50 14,50 2001 14,50 14,50 14,50 14,50 14,50 13,75 13,50 13,50 13,00 13,00 13,00 13,00 13,77 2002 14,00 14,00 15,00 15,00 15,00 16,00 16,00 16,00 17,00 17,00 17,00 17,00 15,75 2003 17,00 17,00 17,00 17,00 17,00 15,50 15,50 14,50 13,50 12,00 12,00 11,50 14,96

2004 11,50 11,50 11,50 11,50 11,50 11,50 11,50 11,00 11,00 11,00 11,00 11,00 11,29 XXIII 2005 11,00 11,00 11,00 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,63 2006 10,50 10,50 10,50 10,50 10,50 11,00 11,00 11,50 11,50 12,00 12,00 12,50 11,17 2007 12,50 12,50 12,50 12,50 12,50 13,00 13,00 13,50 14,00 14,00 14,00 14,50 13,17 2008 14,50 14,50 14,50 15,00 15,00 15,50 15,50 15,50 15,50 15,50 15,50 15,00 15,13 2009 15,00 14,00 13,00 13,00 11,00 11,00 11,00 10,50 10,50 10,50 10,50 10,50 11,71 2010 10,50 10,50 10,00 10,00 10,00 10,00 10,00 10,00 9,50 9,50 9,00 9,00 9,83 2011 9,00 9,00 9,00 9,00 9,00 9,00 9,00 9,00 9,00 9,00 9,00 9,00 9,00 2012 9,00 9,00 9,00 9,00 9,00 9,00 8,50 8,50 8,50 8,50 8,50 8,50 8,75 2013 8,50 8,50 8,50 8,50 8,50 8,50 8,50 8,50 8,50 8,50 8,50 8,50 8,50 2014 9,00 9,00 9,00 9,00 9,00 9,00 9,25 9,25 9,25 9,25 9,25 9,25 9,13 2015 9,25 9,25 9,25 9,25 9,25 9,25 9,50 9,50 9,50 9,50 9,75 9,75 9,42 2016 10,25 10,25 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,50 10,46 2017 10,50 10,50 10,50 10,50 10,50 10,50 10,25 10,25 10,25 10,25 10,25 10,25 10,38 2018 10,25 10,25 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,00 10,25 10,25 10,08

2019 10,25 10,25 10,25 10,25 10,25 10,25 10,00 10,00 10,00 10,00 10,00 10,00 10,13 Annexure 7 2020 9,75 9,75 8,75 7,75 7,25 7,25 7,00 7,00 7,00 7,00 7,00 7,00 7,71 2021 7,00 7,00 7,00 Source: IHS Markit *Individual mortgage rates will depend on the creditworthiness of the mortgagor.