Key Highlights
- North America: U.S. housing shows early signs of revival as mortgage rates hit an 11-month low (~6.49%) – spurring a 9% jump in loan applications reuters.com – and analysts suggest the worst of the slump may be over with inventory rising and prices stabilizing reuters.com. However, office markets remain stressed: national office vacancies have soared to record levels (over 20% empty nationwide, ~27% in San Francisco) reuters.com reuters.com, putting heavy pressure on commercial landlords.
- Europe: British home prices are falling at the fastest pace in 18 months as high inflation and rate uncertainty sap demand reuters.com. A key survey found widespread price declines in August and sliding buyer enquiries reuters.com – “the housing market is clearly feeling the effects of ongoing uncertainty,” noted RICS analyst Tarrant Parsons reuters.com. In commercial real estate, Europe’s investment activity is stuck in “zombieland” with decade-low deal volumes reuters.com. Stubbornly high borrowing costs and cautious investors have left many office towers and retail properties stranded with few buyers, one fund manager warned reuters.com. In the UK, a tax shock looms for big retail landlords: the British Retail Consortium says 400 large stores could close if a hefty business rates hike proceeds, as “a significant rise in rates…would force [stores] to raise prices, cut jobs, or even close” reuters.com.
- Asia-Pacific: China’s property crisis grinds on, but there are glimmers of restructuring progress. Embattled giant Evergrande received bids from state-backed firms for a majority stake in its property services arm reuters.com reuters.com, a unit valued around $1.3 billion, sending Evergrande’s stock soaring 25–40% in relief reuters.com reuters.com. Still, China’s overall housing market remains weak – new home sales and investment are forecast to keep falling this year reuters.com reuters.com, and experts at Fitch Ratings warn of “structural challenges…including demographic shifts, low affordability and high unsold inventory” ahead reuters.com. Elsewhere, governments are intervening: South Korea moved to cool Seoul’s housing by cutting mortgage LTV limits to 40% in wealthy districts and fast-tracking construction of new homes reuters.com reuters.com, an “extraordinary measure to…stimulate supply while also controlling demand,” officials said reuters.com.
- Middle East: Gulf real estate continues to sizzle. Dubai notched a record 51,000 home sales in Q2 – the first time quarterly transactions topped 50k – with total sales value up 41% from a year earlier gulfnews.com gulfnews.com. Prices in Dubai are now 21% above their last peak in 2014 gulfnews.com, driven by a wave of luxury developments and overseas buyers. Analysts say the market’s five-year rally reflects a “more stable and predictable environment” that’s increasingly end-user driven gulfnews.com gulfnews.com. In contrast, some developers in emerging markets are seeking lifelines – Egypt’s Emaar Misr just signed a massive $18.6 billion partnership to build a new Red Sea resort city, aiming to attract tourism and foreign investment to buoy a struggling economy reuters.com reuters.com.
- Latin America: Sky-high interest rates are still squeezing Latin American housing markets. Brazil’s benchmark rate remains near a 20-year high (~14.75%), stifling credit and draining mortgage funding great.report. Home sales and construction have been subdued under expensive financing, and Brazil is even exploring “bridge” loans to prop up housing credit great.report. But relief may be on the horizon – with inflation finally easing, analysts widely expect major economies like Brazil and Mexico to begin cutting rates by late 2025, a shift that could “unlock pent-up housing demand” after years of tightening great.report.
- Africa: Select markets show resilience despite economic hurdles. South Africa’s rental sector is on solid footing – only 16.9% of tenants are in arrears, the lowest delinquency rate on record rei.co.za. Landlords are benefiting from improved rent collection even as rent growth cools, a trend that “points to a rental market on solid ground,” according to PayProp’s head of data, Johette Smuts van Rooyen rei.co.za. Meanwhile, African nations are pushing big development bets: e.g. Nigeria’s housing deficit of ~28 million units is spurring new public-private building initiatives, and Egypt’s aforementioned “Marassi Red Sea” megaproject is expected to generate $100–200 million in annual tourism revenue once completed reuters.com reuters.com – underscoring ongoing appetite for real estate investment across the continent.
North America: Housing Hints of Recovery Amid Commercial Woes
In the United States, housing market indicators are cautiously improving after a prolonged slump. Mortgage costs have pulled back: the average 30-year fixed rate dipped to 6.49%, an 11-month low, after weak job data fueled expectations of Federal Reserve rate cuts reuters.com reuters.com. This gave a jolt to demand – new mortgage applications surged 9.2% last week to the highest level in over three years reuters.com. Both purchase and refinance activity jumped, suggesting some buyers are coming off the sidelines as financing eases. Home supply has been inching up and annual price growth leveling off, signs that “the housing market has been in a protracted slump” but that the worst may have passed reuters.com. Economists note affordability is still stretched, but the combination of moderating rates and more listings is slowly reviving transactions. Indeed, U.S. consumer inflation data for August showed a 0.4% rise in shelter costs – a driver of overall inflation – indicating rents and housing expenses remain high even as the Fed prepares to cut rates reuters.com reuters.com. An easing rate environment later this year could further bolster buyer confidence.
Commercial real estate, however, remains a trouble spot. Office vacancies across the U.S. have swollen to unprecedented levels – the national office vacancy rate hit roughly 20.7% in Q2 2025, the highest on record reuters.com. Major cities are grappling with empty towers due to remote work and corporate downsizing; San Francisco’s office vacancy has skyrocketed above 27%, from under 9% pre-pandemic reuters.com. This glut of space is eroding property values and straining landlords and banks. A recent analysis warned that nearly $290 billion in U.S. office mortgages come due by 2027 amid higher refinancing costs reuters.com reuters.com. Landlords facing debt “walls” and rising interest payments are resorting to concessions and even considering conversions of offices to apartments to stay afloat. The malaise extends to retail in some areas: U.S. mall vacancies and downtown storefront closures persist as consumer habits shift. Investors have grown more selective – there is a “flight to quality” towards modern office buildings with amenities, while older, half-empty buildings languish reuters.com. Overall, commercial property sales in North America are muted in 2025, and market watchers don’t foresee a rebound until credit conditions loosen. As one Moody’s analyst put it, the office sector’s problems appear “structural rather than temporary,” forcing a rethink of how to repurpose vacant real estate reuters.com reuters.com.
Europe: Housing Diverges as Policy Uncertainty Bites
European real estate presents a mixed picture, with residential markets softening in some countries while commercial sectors struggle to find footing. In the UK, after years of growth, housing prices are now sliding in many areas under the weight of high inflation and interest rates. A closely watched survey by the Royal Institution of Chartered Surveyors (RICS) showed British house prices in August had their most widespread declines since early 2024 reuters.com. The RICS house price balance – measuring surveyors reporting price drops versus gains – fell to –19, indicating far more respondents seeing price falls reuters.com. New buyer inquiries and sales have also fallen sharply, reaching their lowest levels in over a year reuters.com. “With buyer demand easing and agreed sales in decline, the housing market is clearly feeling the effects of ongoing uncertainty,” observed Tarrant Parsons, RICS’s head of research reuters.com. Would-be buyers face a toxic mix of economic stagnation, 6%+ mortgage rates, and talk of further Bank of England tightening, all of which have dented confidence. By contrast, UK rents continue to climb due to chronic supply shortages – RICS noted tenant demand far outpacing rental supply, pointing to further rent increases ahead reuters.com. Elsewhere in Europe, some housing markets are proving a bit more resilient (for example, France and Spain have seen modest price upticks in recent months), but overall sentiment is cautious. The European Central Bank (ECB) kept interest rates unchanged at 2% in its September meeting reuters.com and maintained that the eurozone economy is “in a good place” for now reuters.com. ECB President Christine Lagarde even remarked that inflation is roughly where they want it and growth is holding up reuters.com reuters.com. However, the ECB’s own forecasts see eurozone inflation dipping below 2% by next year reuters.com reuters.com – reinforcing expectations that European borrowing costs may have peaked. The mere prospect of eventual rate relief has started to stabilize mortgage markets in countries like Germany and Italy, but housing activity remains muted for the time being. In Germany, Europe’s largest economy, home prices have fallen year-on-year as buyers retreat and new construction slows under higher financing costs.
On the commercial side, Europe is grappling with a protracted real estate downturn that has defied hopes of recovery in 2025. Investment in offices, retail centers, and industrial properties is stuck at multi-year lows. Through the first half of the year, commercial property sales in Europe totalled just ~€48 billion – barely half the volume seen three years ago reuters.com. Cross-border investment into European real estate fell ~20% year-on-year in Q2 to the weakest level in a decade reuters.com. Would-be buyers are deterred by rising debt costs and uncertainty over property values, while sellers refuse to deeply discount assets, resulting in an illiquid stalemate. One fund executive, Sebastiano Ferrante of PGIM, bluntly described the situation as “zombieland…no recovery, stranded assets, no liquidity coming back” in parts of the market reuters.com. Office buildings are especially hard hit – vacancies have climbed in financial hubs like Frankfurt, where a prominent skyscraper (the Trianon) went insolvent and is being auctioned off in a test of investor appetite reuters.com. Even the once-hot data center segment has cooled as higher interest rates undercut valuations reuters.com. Nevertheless, certain niches still attract interest: well-located residential rental properties remain in demand (given Europe’s housing shortages), and sectors like logistics warehouses and hotels are seeing selective buying as investors bet on long-term trends reuters.com. To stimulate activity, some European regulators have discussed easing zoning rules or providing financing support for property redevelopment. The UK, for example, is toying with planning reforms to convert empty offices to housing more easily. Meanwhile, a looming policy change in Britain’s commercial sector has retailers on edge – the government is considering hiking property tax rates on large stores (over £500k rateable value) to fund small business relief reuters.com reuters.com. The British Retail Consortium warns this could tip hundreds of big-box shops into closure, potentially costing 100,000 jobs, unless softened reuters.com reuters.com. This underscores how government policy is now a key factor in Europe’s real estate outlook: fiscal decisions (taxes, subsidies) and central bank rates will heavily influence whether the market finds a bottom in the coming months.
Asia-Pacific: China’s Turbulence and Regional Market Moves
China’s real estate slump continues to dominate Asia’s property headlines. After years of breakneck growth, China’s housing sector remains mired in a severe correction – with falling home prices, shrinking sales, and developers in distress. The latest data show new-home prices still declining in many cities, albeit at a slower pace thanks to recent policy support reuters.com. A Reuters poll of economists forecasts a 3.8% drop in China’s home prices for 2025 (less of a fall than previously feared) and only a modest 0.5% slip in 2026 reuters.com. Property sales are expected to tumble ~7.5% this year, and real estate investment could shrink by 11% reuters.com reuters.com. The protracted downturn – now over four years long – has led to a wave of developer defaults and half-finished projects across the country reuters.com. To counter this, Beijing has unleashed a flurry of easing measures in recent weeks: down-payment requirements were slashed, mortgage rates were cut for both new and existing loans, and local governments rolled out incentives (like subsidies and tax breaks) to spur buying. These steps have provided a brief bump in buyer inquiries, but so far haven’t decisively turned the tide – consumer confidence remains shaky amid a weak economy and falling house values. Some analysts argue more forceful intervention is needed. Gao Yuhong, a director at credit rating agency Pengyuan, suggests the central government may need to directly step in by purchasing unsold homes and land to reduce the massive inventory overhang, estimating that “roughly 600–700 million square meters” of unsold housing (worth about ¥5 trillion) must be absorbed to restore a healthy market balance reuters.com. Fitch Ratings’ Lulu Shi likewise noted that China’s developers face “many structural challenges” ahead – from an aging population to the legacy of too much debt-fueled construction – which could delay a true housing turnaround until 2026 or later reuters.com.
Amid this turbulence, some bright spots have emerged in China’s property sector. In an encouraging sign, the liquidators of China Evergrande Group, once the nation’s top developer, reported receiving initial bids for Evergrande’s stake in its property management subsidiary reuters.com. Evergrande is trying to sell its 51% holding in Evergrande Property Services, a unit valued around HK$10 billion (~$1.3 billion) reuters.com reuters.com. News that state-backed companies were among the interested bidders sparked a rally – shares of Evergrande’s services arm surged as much as 40% in Hong Kong trading on Friday on hopes the business might find a stable new owner reuters.com reuters.com. “Under a liquidator’s auction, nothing firm will occur until at least November,” cautioned analyst David Blennerhassett, but the fact multiple offers were made suggests valuable pieces of Evergrande can still be salvaged reuters.com. Evergrande’s liquidators aim to finalize a deal by year-end and are separately seeking buyers for the parent company’s other crown jewel – its electric vehicle unit reuters.com. Similarly, another debt-laden developer, Country Garden, has been negotiating a restructuring of its $11 billion in offshore bonds. Last month Country Garden won support from a core group of bank creditors for a plan to slash its overseas debt by 78% reuters.com reuters.com. Though it remains under a liquidation petition, Country Garden is working to finalize its restructuring by end-2025 reuters.com. These developments indicate that while China’s property downturn is far from over, the government and state-owned firms are moving to prevent a disorderly collapse of major developers. Markets have taken note – property stocks in China bounced modestly in recent days on speculation that Beijing will roll out more aggressive stimulus, possibly including direct capital injections or support for housing demand in top cities.
Across the broader Asia-Pacific, real estate trends vary by country, often reflecting local policy choices. South Korea grabbed attention by unveiling measures to rein in Seoul’s red-hot housing market. Starting this week, authorities lowered the loan-to-value (LTV) cap to 40% (from 50%) for mortgages on homes in Seoul’s wealthiest districts like Gangnam reuters.com reuters.com. At the same time, the government plans to boost housing supply by tapping state-owned land and easing redevelopment rules reuters.com. “As concerns about an upswing in home prices remain latent in the metropolitan area, we need extraordinary measures to stimulate supply while also controlling demand,” officials said in a statement reuters.com. These dual actions – tighter credit in luxury enclaves, looser restrictions on new construction – aim to curb speculation while alleviating a housing shortage in greater Seoul. Early reactions from analysts suggest the impact could be limited unless interest rates fall; notably, the Bank of Korea kept its policy rate unchanged (at 3.5%) to avoid worsening the country’s household debt burden reuters.com. In Japan, the property market remains stable with modest price growth, underpinned by ultra-low interest rates. The Bank of Japan signaled it will hold rates near zero for now reuters.com, and land values in Tokyo and other major cities are ticking up slightly as foreign investor interest returns. Australia and New Zealand have seen a tentative housing rebound after significant price corrections – auction clearance rates in Sydney have improved, and Kiwi home prices rose month-on-month for the first time in nearly a year, helped by those central banks pausing rate hikes. Governments are also active: Australia is expanding a first-home buyer scheme and considering curbs on short-term rentals to improve affordability. Overall, Asia-Pacific real estate is a patchwork of different cycles, but a common thread is the influence of interest rate turns. As expectations grow that global rates have peaked, analysts predict more Asian markets will stabilize or pick up in 2024, provided that economic growth holds and policy support continues.
Middle East: Gulf Booms Contrast with Caution Elsewhere
The Middle East’s property landscape is led by a roaring Gulf region, even as other areas tread carefully amid economic challenges. Dubai’s real estate boom is perhaps the standout story globally this year. The emirate continues to smash records – the latest data confirms Q2 2025 was Dubai’s busiest quarter ever for home sales, with 51,000 residential transactions completed gulfnews.com. For context, that’s more than double the volume from just two years prior. Total property sales in the first half reached 94,000 units worth AED 268 billion (~$73 billion), up 41% year-on-year gulfnews.com. The rally spans both the mid-market and the ultra-luxury segment. In fact, high-end sales (>$10 million) hit a record in Q2 with 143 deals, as Dubai cements its status as a haven for the global rich gulfnews.com gulfnews.com. “The sustained growth in prices – now approaching five consecutive years – is a clear sign of a more stable and predictable market environment,” says Faisal Durrani, head of Middle East research at Knight Frank gulfnews.com. Dubai’s average home prices rose another 3.4% last quarter and are now 21.6% above the previous 2014 peak gulfnews.com. Notably, analysts observe the market is increasingly driven by “genuine” end-users rather than speculators; only ~5% of homes are flipped within 12 months now (versus 25% churn in the 2008 bubble), indicating more buyers are in it for the long term gulfnews.com. Factors fueling Dubai’s boom include its investor-friendly policies, a surge of foreign buyers (from Europeans to Asians seeking a safe haven), and the tailwind of a weak local currency (the UAE dirham’s peg to a softening US dollar makes Dubai property cheaper for many overseas investors). British buyers, for example, have flooded the market – UK investment in Dubai homes jumped 62% in Q2, making Britons the top foreign buyers, aided by a strong pound boosting their purchasing power great.report great.report. Dubai developers are capitalizing by launching ever more ambitious projects (waterfront communities, branded residences, even a Dubai “Moon” resort concept) and offering sweeteners like post-handover payment plans to entice buyers. There are some caution flags – after ~50% price growth since 2020, affordability is eroding for residents, and Knight Frank forecasts price increases will slow to single digits next year gulfnews.com. The IMF and others have advised UAE authorities to monitor leverage and speculative activity. But for now, Dubai’s property market is defying gravity, with momentum expected to carry through the rest of 2025 barring a major global downturn.
Elsewhere in the Middle East, Saudi Arabia and its neighbors are pursuing enormous development initiatives as part of broader economic transformation plans. Saudi’s flagship is the $500 billion NEOM mega-city and a host of new tourism projects along the Red Sea. This week, Saudi officials highlighted progress on The Line (NEOM’s futuristic linear city), saying major construction contracts have been awarded and initial infrastructure is underway. In Egypt, a notable deal was struck on Sept 7: Egypt’s Emaar Misr (an arm of Dubai’s Emaar Properties) joined with Saudi and UAE partners to develop a huge Red Sea resort city called “Marassi Red Sea.” The project, unveiled in Cairo with Egypt’s Prime Minister attending, is expected to draw up to £E£ 900 billion (~$18.6 billion) in investment over its lifespan reuters.com reuters.com. According to the developers, Marassi Red Sea will span a large coastal area and feature hotels, marinas, and entertainment, potentially generating $100–200 million in annual tourism revenue once fully operational reuters.com reuters.com. Egypt is hoping such foreign-funded projects can boost its tourism and real estate sectors at a time when the country faces a financial crunch and a devalued currency. In the Levant, markets are more subdued: Lebanon’s property market remains depressed amid its economic crisis, and Israel’s housing prices have cooled slightly due to interest rate hikes and political uncertainty. Turkey is coping with high inflation that has driven a frenzy of property buying as locals seek inflation hedges – housing prices in Istanbul are up sharply year-on-year in lira terms, although currency weakness makes them cheaper in dollar terms. Across the region, a key theme is sovereign wealth fund investment in real estate – Gulf SWFs are plowing oil wealth into domestic real estate (e.g. Qatar’s projects for the 2030 Asian Games, Abu Dhabi’s new urban developments) as well as high-profile international properties (from London skyscrapers to New York hotels).
Looking ahead, analysts say the Middle East’s real estate outlook will depend on oil prices (which affect Gulf liquidity), tourism flows, and each government’s policy choices. The UAE and Saudi Arabia appear committed to sustaining real estate growth as a pillar of their economies, even if that means managing the risks of rapid expansion. In Dubai, for instance, some expect a natural cooling or minor price correction (perhaps 10–15%) by 2026 to consolidate gains great.report – a healthy breather after the extraordinary post-pandemic surge. But few are predicting a severe bust at this stage, given tighter regulation and a more diversified demand base than in past cycles. For more vulnerable markets like Egypt, successful execution of big projects like Marassi and steady tourism recovery will be crucial to support property values. On balance, the Middle East enters late 2025 as a region of real estate contrasts – the Gulf cities riding high on investment inflows and bold development, while other countries focus on stability and incremental progress in the face of economic headwinds.
Latin America: High Rates Brake the Market, but Easing May Come
Latin America’s real estate markets have been navigating a challenging environment, largely due to very high interest rates aimed at taming inflation. In several major economies, policy rates sit at their highest levels in decades, making mortgages costly and real estate activity sluggish – yet there are early signs of a turning point on the horizon.
In Brazil, the region’s largest market, the central bank’s benchmark Selic rate is 14.75%, a level unseen in nearly 20 years great.report. This has sharply curtailed credit for homebuyers and developers. Brazilian banks rely heavily on savings deposits to fund home loans, but savers have been pulling money out to seek higher returns elsewhere, starving the mortgage market of liquidity. Housing sales and construction in Brazil have cooled as a result: new home sales in key cities were down in recent months, and builders report slower off-plan purchases. The government has tried to support the sector through subsidized lending programs (like Casa Verde e Amarela for low-income housing) and by considering a special “bridge financing” scheme to help banks maintain mortgage lending until rates fall great.report. Despite the pain now, optimism is growing that Brazil’s rate cycle will finally pivot. Inflation in Brazil has decelerated to about 5% – below earlier forecasts riotimesonline.com – and at its last meeting the central bank hinted at future cuts. Many economists predict Brazil will begin cutting rates by Q4 2025, potentially bringing the Selic down into single digits by 2026. Such moves would revive domestic demand and are eagerly anticipated by real estate stakeholders. “We expect relief ahead – rate cuts should unlock a lot of pent-up housing demand,” one analyst noted, as lower borrowing costs could entice first-time buyers who’ve been waiting on the sidelines great.report.
Elsewhere in Latin America, a similar story holds. Mexico has kept its policy rate above 11% all year, contributing to a slowdown in housing sales and construction investment. However, with Mexican inflation easing toward 4%, Banxico (Mexico’s central bank) is under pressure to start easing as well. A Reuters poll indicated Mexican rates could start falling in early 2026 if current trends hold reuters.com. Colombia actually paused its rate hiking cycle earlier and is already seeing tentative recovery signs – BBVA Research reports that Colombia’s housing market has “entered a recovery phase”, with building permits rising and non-subsidized home sales gaining momentum bbvaresearch.com. New home prices in Colombia are increasing, but at a rate below general inflation, suggesting improved affordability bbvaresearch.com. A persistent housing deficit (nearly 5 million homes needed) is underpinning demand in Colombia bbvaresearch.com, and the government is working with private builders on programs to boost social housing. Chile took the lead in cutting rates (slashing its key rate by 100 bps in July 2025) as inflation there cooled, which has started to stabilize Chile’s property market and support a pickup in home loan inquiries.
That said, Latin America’s real estate sectors are not out of the woods yet. Economic growth in the region is modest, and high construction costs (partly due to earlier currency devaluations) pose challenges for new development. In Argentina, a special case with inflation above 100%, the property market functions largely in cash or USD – transactions have slowed to a crawl except for opportunistic foreign buyers, given currency chaos and an uncertain election outcome. Peru and Chile face weak consumer confidence that’s holding back home purchases despite lower rates. And across the region, commercial real estate (like offices and retail) has seen little post-pandemic recovery – corporate tenants remain cautious, and international investors have pulled back.
However, the overarching expectation is that 2025–2026 will bring a gradual turnaround. “Latin America entered 2025 under a fog of tight financing and slow growth,” wrote one LatinFinance economist, “but the fog is starting to lift”. If the U.S. Fed cuts rates and global financial conditions loosen, capital flows to emerging markets could improve. Countries like Brazil, Chile, and Colombia have already proven their commitment to inflation control, so any easing cycle could quickly translate into renewed consumer and developer confidence. Real estate developers in the region are positioning for this by securing land and approvals now, anticipating better sales conditions once mortgages become affordable to the middle class again. In the interim, some innovative trends have emerged: for example, rent-to-own schemes and indexed payment plans are being offered by developers in Brazil to bridge the affordability gap while rates are high.
In summary, Latin America’s property markets are in a holding pattern due to punitive interest rates, but credible signs of inflation relief mean the tide should turn. The coming rate cuts – if delivered as expected in late 2025 – could mark the beginning of a new real estate upswing, as domestic buyers regain purchasing power and investment capital trickles back into the sector. Until then, activity will likely remain lukewarm, with bright spots mainly in segments supported by government incentives or unique local demand dynamics (such as the brisk luxury condo sales seen in Mexico’s coastal resort areas, driven by foreign buyers insulated from local rates). The next 12 months will be crucial to watch as a barometer of how quickly Latin America can shake off its interest-rate shackles and kickstart growth in construction and housing once more.
Africa: Resilience and Ambition in Equal Measure
Across Africa, real estate developments from the past two days highlight both the sector’s resilience in certain markets and the ambitious scale of projects aimed at future growth. In much of the continent, fundamental housing needs and urbanization trends continue to drive activity, even as economic volatility and high financing costs pose challenges.
Starting in South Africa, the latest rental market report brought a dose of encouraging news. The PayProp Rental Index for Q2 2025 shows that tenant health is at its strongest in years – only 16.9% of South African tenants were behind on rent in the quarter, the lowest arrears rate on record rei.co.za. This indicates that more renters are paying on time, bolstered by steady job recovery and relatively low inflation in South Africa through mid-2025. It’s a remarkable turnaround from the height of the pandemic when nearly a quarter of tenants were in arrears. “Record-low arrears on easing growth point to a rental market on solid ground,” noted Johette Smuts van Rooyen, head of data analytics at PayProp rei.co.za. In fact, average rent growth has cooled to about 5% year-on-year (from over 8% last year) as the market normalizes iol.co.za. But landlords’ cash flows are healthier now that fewer tenants are delinquent – the average amount owed by those in arrears fell to ~74% of one month’s rent, the best level in years rei.co.za. Analysts caution that high household debt (South African consumers spend over 50% of income on debt payments on average) could pose a risk if economic conditions worsen rei.co.za. For the moment, though, South Africa’s rental sector appears remarkably resilient, benefiting from prudent tenant vetting and a shift toward more affordable rentals. On the sales side, South Africa’s housing market is relatively flat: prices are inching up only in nominal terms, but low inventory in popular coastal cities (like Cape Town) has kept values firm. Spring usually brings a seasonal uptick in listings – and indeed some Cape Town suburbs are seeing bidding wars for well-priced family homes – yet overall transaction volumes remain moderate as interest rates (prime ~11.75%) are still high. The South African Reserve Bank is expected to hold rates steady at its next meeting, balancing inflation and growth concerns. Any hint of rate cuts in 2026 would likely improve buyer sentiment.
Elsewhere in Sub-Saharan Africa, the real estate narrative is often about growth amid constraints. In Nigeria, Africa’s most populous nation, the housing deficit is estimated around 20–28 million units great.report. Rapid urban population growth (Lagos alone adds hundreds of thousands of people yearly) has governments and developers scrambling to provide affordable homes. Over Sept 9–12, Lagos hosted the 24th Annual African Real Estate Conference, where officials highlighted efforts like the Nigerian government’s Mass Housing Programme and new financing models (including diaspora bonds and pension fund allocations) to fund housing construction naijapreneur.com. Private developers in Nigeria are also innovating with prefabricated homes and micro-mortgage schemes to reach low-income buyers. In Kenya, the government’s controversial housing levy – a plan to tax workers to fund housing – remains in debate, but Nairobi’s real estate sector is seeing investment in infrastructure-linked projects (such as along the new Nairobi Expressway corridor). East Africa’s hottest market is arguably Rwanda, where Kigali’s modern city planning and investor-friendly policies have led to a mini construction boom (from convention centers to planned satellite cities).
Northern Africa has made news with grand projects. Egypt, beyond the Marassi Red Sea deal mentioned earlier, is pressing ahead with its new administrative capital city – a massive development in the desert outside Cairo. Though financing has been a challenge due to Egypt’s debt crisis, the government just secured fresh commitments from Gulf allies to keep the new capital’s construction on track. Morocco is focusing on rebuilding and retrofitting housing after the tragic early September earthquake in the Atlas Mountains; thousands of homes were destroyed, and authorities announced plans on Sept 11 for a reconstruction fund and updated building codes to quake-proof structures. Meanwhile, Tunisia is courting Gulf investors for a mixed-use “Sports City” real estate project in Tunis, hoping to emulate Gulf-style integrated developments.
One theme across Africa is the pursuit of foreign investment and partnerships to drive real estate growth. The Egypt-Saudi-UAE collaboration on the Red Sea resort is one example reuters.com. Similarly, Ghana has been engaging Middle Eastern and Chinese investors for its affordable housing schemes. Ethiopia (despite internal conflicts) just inked a deal with a UAE firm to build a $500 million real estate complex in Addis Ababa, signaling optimism for the long term. These deals underscore that global capital sees opportunity in Africa’s demographic trends – the continent has the fastest urbanization rate in the world, which will require millions of new homes and commercial spaces in the coming decades.
Of course, challenges persist. Financing costs within Africa are steep: local mortgage rates can top 20–25% in countries like Nigeria and Ghana, effectively pricing out most would-be homeowners. Construction materials are often imported and expensive, and currency instability can deter investment. Political risk is also a factor – sudden regime changes or policy shifts (e.g. land reform debates in South Africa, or election unrest in Kenya) can freeze real estate activity temporarily. Nonetheless, the period of Sept 11–12 has shown that African real estate players are pressing forward – whether through improving operational fundamentals, as seen in South Africa’s rental market, or through visionary large-scale projects that aim to transform economies. As one African property developer at the Lagos conference put it, “The need for housing and modern infrastructure here isn’t a matter of debate – it’s a matter of action. Despite all the headwinds, that demand isn’t going away.”
Sources:
- Reuters – MBA: U.S. Mortgage Rates & Applications reuters.com reuters.com reuters.com; CPI: U.S. Inflation (Shelter Costs) reuters.com reuters.com; Commercial: U.S. Office Vacancy & CRE Crisis reuters.com reuters.com reuters.com
- Reuters – UK Housing: RICS Survey on Prices & Demand reuters.com reuters.com reuters.com; UK Retail Property: BRC on Business Rates reuters.com reuters.com
- Reuters – EU Commercial: European Property “Zombieland” Analysis reuters.com reuters.com reuters.com; ECB: Rate Decision & Lagarde Quotes reuters.com reuters.com reuters.com
- Reuters – China Evergrande: Bids for Property Services Unit reuters.com reuters.com reuters.com reuters.com; China Housing Poll: Price & Sales Outlook reuters.com reuters.com reuters.com reuters.com; Country Garden: Debt Restructuring Support reuters.com reuters.com
- Reuters – South Korea: Seoul Mortgage Tightening & Housing Supply reuters.com reuters.com
- Reuters – Dubai Market: Knight Frank Data on Sales & Prices gulfnews.com gulfnews.com gulfnews.com gulfnews.com gulfnews.com; Gulf Buyers: UK Investment in Dubai great.report great.report; Outlook: Projected Price Correction great.report
- Reuters – Egypt: Emaar Misr $18.6B Red Sea Project reuters.com reuters.com reuters.com
- Reuters – Brazil & LatAm: High Rates and Hopes of Easing great.report great.report; Colombia: Housing Recovery Signs bbvaresearch.com
- PayProp/REI – South Africa: Record-Low Tenant Arrears rei.co.za rei.co.za and Rental Market Trends iol.co.za
