Redefine Properties Sees Office Market Recovery and Industrial Demand Growth

Redefine Properties, a JSE-listed real estate investment trust (Reit), is optimistic about the recovery of South Africa's office market and growth in industrial demand. The company's CEO, Andrew König, stated that the 2026 financial year marked a turning point, with its South African portfolio showing its strongest operating metrics in five years. The company reduced office vacancies to 9.5% from 13% a year earlier, outperforming the national average vacancy rate of 11.8%.

The improvement in office vacancies is attributed to stronger demand and the quality of Redefine's portfolio. COO Leon Kok noted that all operating metrics are the best they have been since 2022, across occupancy, renewal reversions, retention rates, and renewal success rates. The recovery is particularly visible in Sandton, where Redefine's office vacancies have fallen to about 4.5%, suggesting demand is returning to Johannesburg's premier business district. However, older and less competitive buildings continue to face challenges.

Redefine's immediate target is to reduce office vacancies further to about 7%, though rental growth is only expected to improve meaningfully from 2028 as excess space is gradually absorbed. National office vacancies have declined from a peak of about 17% in mid-2022 to 11.8% in the third quarter of 2026, according to the South African Property Owners Association. Independent property analyst Keillen Ndlovu said several structural factors are supporting the recovery, including the absence of major new office developments and the conversion of obsolete buildings into residential accommodation.

The decline in overall office vacancies has also been helped by older B and C grade buildings being taken off the market and converted to residential, Ndlovu added. Markets like Cape Town and Durban were also boosted by increased demand for call centres (BPOs), and some of this is starting to spill over to Johannesburg. Ndlovu said Redefine had positioned itself well by disposing of weaker office buildings before the Covid pandemic and continuing to improve the quality of its portfolio.

Redefine's investment in greener and more energy-efficient properties has also helped to attract tenants increasingly concerned about operating costs. While offices are recovering, industrial property remains Redefine's strongest-performing segment and is likely to attract a growing share of capital allocation. The group's industrial portfolio vacancy rate stands at just 2.8%, with positive rental reversions reflecting strong tenant demand and limited supply of modern logistics and warehousing facilities.

The growth of e-commerce, logistics networks, and distribution infrastructure continues to support demand for industrial property, said Kok. Beyond South Africa, Poland is expected to remain an important contributor to Redefine's growth, particularly in retail and industrial properties. The country now contributes almost 29% of the group's distributable income, strengthening its exposure to an economy expected to outperform much of Europe.

Ndlovu said Poland remained attractive because of its stronger economic growth, low unemployment, and relatively liquid property market. König said the war in Ukraine has had little impact on the Polish economy, other than bringing more skilled people into economic activity through consumer spending.

Key points

• Redefine Properties expects office vacancies to decline further to 7% and rental growth to improve from 2028.
• Industrial property remains Redefine's strongest-performing segment with a 2.8% vacancy rate.
• Poland contributes 29% of Redefine's distributable income and is expected to remain a key growth driver.