Rising confidence in property development sparks increased capital investment

Sentiment has improved in South Africa’s property development sector compared to a year ago, and capital is more active, says Landseer Collen, the director and architect at BPAS Architects. 

“There is a sense that institutional capital, which largely sat on the sidelines, is carefully beginning to re-engage. But investors are more selective, too. They are looking for quality assets that can withstand economic, infrastructure and governance pressures.”

The multidisciplinary architecture and interior design firm says the property sector is entering 2026 in a steadier position than it has been in some time, but much more realistically.

It says over the past five years, the industry has been operating in survival mode, dealing with the aftershocks of the Covid19 pandemic, rising interest rates, load shedding and grey-listing. That period forced a lot of caution and sometimes paralysis, it says. 

Looking back on 2025, it is clear that it was a year of strong momentum, said Rabie Property Developers. It said the momentum was driven by real demand and continued confidence in their developments.

“During the year, we recorded over 700 new development sales with a total value of R2 billion, reflecting solid growth from previous years. When combined with a further R400 million in resales, the numbers paint a clear picture of a market that remains active, resilient, and confident in its continued growth.” 

The sector has matured significantly in the last decade, says Collen. He says that development used to be driven by expansion and sprawl. “Today it is about efficiency, adaptability and specialisation. Logistics, data infrastructure, mixed-use developments and green-certified buildings are becoming the standard.” 

According to BPAS Architects, the biggest challenge remains the deterioration of municipal infrastructure.

“Water reliability, waste management and road maintenance are central to asset value and operational viability. In many cases, developers step in where municipalities fall short, which directly affects costs and feasibility,” Collen says.

With that said, he says there are real positives. “The strong performance of South African REITs in 2025 has restored confidence and provided a much-needed tailwind for the sector. We are also seeing renewed momentum in specific niches like high-spec logistics, data centres and specialised mixed-use developments.” 

He adds that one of the most promising opportunities lies in the refurbishment and repositioning of existing assets.

“Retrofitting buildings to be more energy-independent, water-secure and technologically enabled is becoming a major value driver. While the Western Cape continues to stand out, we are also seeing opportunities emerge in secondary cities where yields can justify the additional risk.”

Asked whether the property development sector has reached its full potential, the firm says not yet. It says the local sector has enormous potential, but it is currently constrained by systemic inefficiencies.

“We have world-class designers, experienced developers, sophisticated financiers and strong underlying demand, yet delivery is often slowed by infrastructure and governance challenges.” 

What needs to change is how we approach development itself, Collen says.

“We must stop replicating old models and start designing for the realities of the future. That means deeper integration of technology, smarter use of tools like Building Information Modelling (BIM) and AI to reduce costs and speed up delivery, and far stronger public-private collaboration.

“Most importantly, buildings should no longer be treated as isolated objects. They need to be designed as part of a broader urban system. They should be connected, resilient and responsive to how cities actually function. If we can achieve that shift, the sector can move much closer to where it should be.” 

The economic impact of a healthy property development sector is substantial, says BPAS Architects.

It says the sector creates jobs across the construction value chain and, critically, delivers the infrastructure that enables small businesses, service industries and global firms to operate effectively.

“Well-designed, efficient cities reduce the overall cost of doing business and improve economic competitiveness at a national level.” 

Purchasing in a new development also offers benefits for first-time buyers, as these projects typically include VAT in the price, which removes transfer duty entirely, and often includes a package inclusive of bond and transfer attorney fees, says Samuel Seeff, chairman of the Seeff Property Group.

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