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Adapting to the changing real estate market: insights for 2023

The South African real estate sector will undergo substantial shifts in the coming year, and both investors and occupiers can maintain a competitive edge by staying informed of these changes.

As organisations increasingly need to control expenses while having more flexible budgets, the demand for subscription-based services and the bundling of services is growing. This method allows organisations to manage expenses better, making it easier to predict costs and deliver on budgets.

Also gaining momentum in 2023 is the privatisation of services, driven by a growing need for backup utility solutions; mergers, acquisitions, and partnerships; and increased regulation of replacement services. The move will likely lead to increased competition and innovation, which benefits organisations and consumers alike.

One of the most significant turnarounds expected in 2023 is the return to the office. Frequent load-shedding changes, limited backup power solutions in homes, and infrastructure connectivity issues during load-shedding are driving the office resurgence. The recovery is positive for landlords and office nodes, but it also comes with its challenges – rising operating costs and lower net income margins. This requires a strategic approach to office space and a focus on creating flexible and efficient workspaces.

These are growing solutions for clearly identified needs, but we are still operating amid tremendous uncertainty, which introduces challenges for the real estate market that are more complex. These include decreased spending power, a skills shortage, and talent leakage, and investment hesitation due to the macro environment and power insecurity. These challenges require prudent risk management and the benefit of technology and data analytics to enable even better-informed real estate decisions.

In the year ahead, the real estate market will also be working towards the factors that may drive growth and greater certainty, such as stable public infrastructure and utilities, predictable policy implementation, business confidence in the justice system, limited political disruption, and slowing real inflation and unemployment.

So, we can expect to see a two-pronged strategy in the property in 2023. First, de-risking in the face of challenges and change, then working to drive growth and take advantage of opportunities.

Being aware of the shifts ahead and being prepared to navigate them effectively will position investors and occupiers favourably. By focusing on risk management, technology use, and data analytics, organisations can ensure success in the changing real estate market in 2023.


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