South African real estate needs the right capital for growth
South African real estate companies have emerged from a period of balance sheet repair with stronger liquidity, reduced leverage and improved operating fundamentals. In an article dated 15 October 2026, Andrew Robinson, Sector Head of Real Estate at Standard Bank Corporate and Investment Banking (CIB), explains why the sector's next phase is likely to involve selective capital deployment, consolidation, acquisitions and broader funding structures. The shift reflects improving market conditions and a renewed focus on sustainable growth opportunities.
South African real estate is entering a new phase of growth after several years in which property companies prioritised balance sheet repair, liquidity preservation and debt reduction.
According to Andrew Robinson, Sector Head of Real Estate at Standard Bank Corporate and Investment Banking (CIB), stronger financial positions are providing property companies with greater flexibility to deploy capital and pursue strategic opportunities.
During the past five years, rising interest rates, Covid-era disruptions, weak economic growth and changing occupier behaviour created significant pressure across both listed and unlisted property markets. Property owners responded by selling non-core assets, reducing leverage and focusing on resilience rather than expansion.
Those measures have resulted in stronger balance sheets, improved liquidity positions and more disciplined capital allocation across the sector. Operating fundamentals have also improved, while access to capital markets has become more supportive and transaction activity has started to increase.
Many listed real estate investment trusts entered the higher interest-rate environment with elevated debt levels. Management teams undertook disposal programmes, reduced leverage and extended funding maturities to strengthen financial positions and improve balance sheet quality.
Property valuations have subsequently stabilised and vacancy levels have improved across many segments of the market. Although interest rates remain above the exceptionally low levels experienced during the previous decade, investor attention is increasingly shifting towards earnings growth, portfolio repositioning and effective capital deployment.
Improving balance sheets and narrowing discounts to net asset value are creating additional scope for strategic transactions. As a result, mergers and acquisitions, portfolio acquisitions and broader industry consolidation are expected to play a more important role in the sector's next stage of development.
Growth is not expected to come exclusively from new developments. Portfolio aggregation, platform creation and targeted acquisitions are also expected to contribute as property owners seek opportunities aligned to their long-term strategies.
Investors are increasingly distinguishing between sectors supported by structural demand and those relying primarily on cyclical recovery. Demand remains strongest for segments linked to long-term trends, including logistics as well as selected parts of the living and convenience retail sectors.
At the same time, the boundaries between traditional real estate and infrastructure continue to evolve. Data centres, fibre infrastructure, energy assets and logistics networks are broadening the investment universe and creating new opportunities for capital deployment.
Funding structures are also becoming more diverse. While bank funding remains a key component of the capital stack, private capital, structured funding, equity and co-investment are playing a greater role, particularly in larger or more complex transactions.
Despite the improving outlook, risks remain. Property valuations continue to be sensitive to interest-rate movements, while infrastructure constraints can affect both development feasibility and operational performance. Increased competition for high-quality assets is also expected as transaction activity strengthens.
As the sector moves beyond balance sheet repair, disciplined capital allocation, strong governance and appropriate funding structures will remain important to supporting sustainable growth.
Access the original press release here
FAQs
How is the real estate capital mix changing?
Bank funding remains critical for established businesses and well-understood assets. Private capital, structured funding, equity and co-investment are becoming more relevant as property transactions become larger, more specialised or more complex, giving businesses a broader range of funding options.
Which areas of real estate are attracting investor interest?
Investor appetite is strongest in areas where demand is supported by longer-term structural trends. The article identifies logistics as a clear example and notes that parts of the living and convenience retail sectors are also attracting investor interest.
How could consolidation affect South African real estate?
Improved balance sheets and narrowing discounts to net asset value give property companies more room to consider strategic transactions. Mergers and acquisitions, portfolio purchases, platform creation and portfolio aggregation are likely to contribute to growth alongside selective new development.
Why have property company balance sheets improved?
Listed and unlisted property owners rationalised portfolios, sold non-core assets, reduced debt and prioritised liquidity and resilience. Many management teams also implemented disposal programmes and extended funding maturities, leaving property companies in stronger financial positions than they held several years earlier.
What is changing in South African real estate?
South African real estate is shifting from a period of defensive balance sheet repair towards growth, capital deployment and strategic repositioning. Property companies have reduced leverage, strengthened liquidity and extended funding maturities, while operating fundamentals and access to capital markets have improved.