South Africa’s commercial property landscape is shifting, as a combination of weak economic growth, elevated interest rates and a sector still recovering from the shocks of recent years has created a tougher playing field.
However, this was certainly not an unworkable one, said John Loos, the senior economist at FNB Commercial Property Finance. He said that for developers and businesses with the right finance partner, significant opportunities still exist.
“Despite the weak economy, we’re still seeing growth-provided you know where to look,” Loos explains.
“However, success in commercial property is no longer just about accessing capital; it’s about working with a finance provider who understands where the market is heading and has the confidence to back you,” Loos said.
This philosophy is said to have seen FNB Commercial Property Finance consistently grow its commercial mortgage advances in recent years, at a healthy 15.4% year-on-year rate according to the most recent SARB data.
This is very strong compared to the average market advance growth of just 4.9% over the same period, and reinforces the effectiveness of FNB Commercial Property Finance’s approach, given that real economic growth has been below 1% over the past two years.
These strong growth figures demonstrate the difference between a purely product lending approach versus one built on strategic partnerships, said Makhosini Ndlovu, head of product at FNB Commercial Property Finance.
Offering key attributes that should be considered when looking for a commercial property finance partner, Ndlovu said not all asset classes have the same underlying risk, and not all lenders keep up.
Right now, industrial property, affordable student housing and rural retail centres are showing resilience. Offices, less so.
“A good finance partner doesn’t blindly follow past patterns, they help you pivot towards areas with real momentum.”
FNB’s year-on-year advances growth of more than three times the market average signals a willingness to lend, even in difficult times, and is based on careful risk management and long-term thinking.
“When others paused during difficult times, we stuck to our commitment to back viable clients. For example, we kept lending in KZN during the unrest, and we’re one of the few lenders currently actively funding commercial properties in the Eastern Cape,” Ndlovu said.
The financial institution said commercial property finance was not just about funding, but about foresight and partnership. It said in a market shaped by uneven demand and economic pressure, businesses and developers need more than a loan offer – they need partners who understand where growth is happening, who can structure deals with precision and who are willing to stay invested for the long haul.
Meanwhile, Heartwood Properties, a commercial property development and investment company listed on the Cape Town Stock Exchange (CTSE), has released its audited financial results for the 2025 financial year, reporting a solid operational and financial performance despite a challenging environment for listed property.
It said its gross portfolio value was R401 million (growth of 6.4% from 2024).
The net asset value was R150 million (growth of 6.4% from 2024)
Net asset value per share was R1.09 (growth of 6.9% from 2024)
The loan-to-value ratio was 52% (reduced from 54% in 2024)
The vacancy rate was less than 1%.
“We’re very pleased with our results in a fairly tough market,” said John Whall, CEO of Heartwood Properties.
“What’s most important to note is that we’re set up for a lot of growth. We’ve refinanced our portfolio on much more favourable terms, and the benefits are really going to flow through the business in the current financial year. We’re also in the final stages of securing substantial equity funding, which will position us to move decisively on a strong pipeline of developments.”
A key strategic move during FY2025 was to secure a major parcel of serviced and zoned industrial land at The Bridge, a mixed-use development outside Stellenbosch, for a major warehouse development.
This is the largest land deal secured by the company to date, and comes at a time when well-located, development-ready land is in extremely short supply, particularly in Cape Town.
Heartwood Properties said it has established a growing presence in the Cape Town market, supported by a robust network of quality tenants.
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