The real estate sector in South Africa is experiencing a significant downturn as a result of ongoing xenophobic attacks, a property expert, Bishop Trust Robert Atolagbe, has said.
Atolagbe, who spoke to hotnewsroundup.com via telephone from Johannesburg, noted that the industry is currently grappling with low returns across key segments, including property sales, rentals, and investments.
“At the moment, we are having very low response in the real estate sector in South Africa, whether in terms of buying, rental or investment,” he said.
He explained that the rental market has been particularly affected, as a large proportion of tenants in South Africa are foreigners who also operate small businesses such as shops and supermarkets.
“Foreigners are the ones who run the shops or supermarkets. If this protest against foreigners continues, it will adversely affect the sector. So many of the shops have closed because the owners are afraid, and that in a way has affected the real estate business due to low income in terms of rent,” Atolagbe added.
The expert further disclosed that property acquisition activities have slowed considerably, as routine processes such as property inspections by prospective buyers have declined.
“That practice is on the low side now,” he said, attributing the trend to safety concerns amid the unrest.
According to him, many shop owners have shut down operations over fears of looting during protests, further weakening commercial property demand.
He, however, noted that some business owners are closely monitoring developments, particularly ahead of the planned June 30 march and protests against foreigners. He added that the South African government has intensified security measures to ensure the demonstrations remain peaceful.
Atolagbe warned that if xenophobic attacks persist, the long-term consequences could include a sharp decline in foreign investment in South Africa’s property market.
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“In terms of property investment, there is the premium market in places like Cape Town or Durban, where investors come and buy property and go. But as we speak, there is delay in purchase by such investors. Banks are also delaying approval of bonds for prospective buyers as they adopt a wait-and-see approach,” he said.
He cautioned that investors may begin to divert capital to more stable destinations, including neighbouring Namibia and parts of West Africa, if the situation does not improve.
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