Commercial property set for lift-off as South Africa exits the grey list

South Africa’s removal from the FATF grey list has triggered a long-awaited resurgence in confidence — and the commercial property sector is positioned to be one of the biggest winners. After two years of scrutiny, tight compliance, and global hesitation, investors finally have a clearer runway.

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“This announcement shows that South Africa is back on the radar of global investors,” says John Jack, CEO of Galetti Corporate Real Estate. “It restores credibility and lowers perceived risk, both of which are critical for property investment and development. This is a pivotal moment for investors looking to capitalise on reawakening market sentiment.”

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Background to Renewed Optimism

‍When South Africa was grey-listed in February 2023, the international reaction was swift

• borrowing costs rose,
• cross-border transactions slowed,
• and global funders grew cautious.

Over 18 months, a coordinated effort by government, regulators and the private sector introduced major reforms, from beneficial-ownership transparency to stricter oversight of sectors such as real estate, law, and financial services.

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“These collective efforts have paid off,” says Jack. “The delisting shows South Africa can meet international standards. The benefits of that coordination will now ripple through the economy, starting with property.”

A stronger climate for investment

‍South Africa’s improved risk rating changes the investment equation overnight. Access to finance becomes easier. Foreign capital faces fewer barriers. Deal timelines shorten.

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“This means a more favourable environment for businesses and investors, particularly in capital-intensive sectors like commercial property,” Jack explains.

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He expects renewed infrastructure focus across logistics, ports and transport, fundamentals that support sustainable commercial property performance.

With global investors re-engaging, established nodes such as Johannesburg’s northern suburbs, Cape Town’s CBD and Waterfront, and Durban’s logistics corridor are expected to see increased demand.

Commercial sector already showing strength

‍Despite years of shocks, the sector has shown impressive resilience.

• Industrial, logistics and mixed-use assets have outperformed expectations.
• Inflation is stabilising.
• Interest rates have moderated.
• Energy reliability is improving.

The SAPOA Office Vacancy Report Q1 2025 shows vacancies easing, with prime-grade space strengthening to 6.8%, confirming a sector on the rebound.

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“The market is on an upward trajectory, and the timing of South Africa’s delisting could amplify that momentum,” says Jack. “We expect renewed appetite for income-producing assets and development opportunities aligned with tenant demand and sustainability.”

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Why now is the time to invest

‍Exiting the grey list doesn’t eliminate all challenges, but it removes one of the biggest brakes on sentiment.

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“The benefits will take time to filter through, but they create an enabling environment for deal-making,” Jack says. “We’re already seeing strong interest in well-located commercial assets offering secure income and long-term growth. This is the right mix for investors.”

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Leasing markets are strengthening as hybrid models settle. The PayProp Rental Index shows tenant arrears at a national low of 16.9%, improving the stability of income flows.

Well-positioned commercial hubs near transport, amenities and residential demand, areas like Houghton, Hatfield and Century City are attracting sharp interest from both private and institutional buyers.

Summation

‍South Africa’s grey-list exit marks a critical turning point. Confidence is rising. Capital is loosening. Commercial nodes are strengthening. And investors are edging back into a market that offers both yield and long-term upside.

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“We anticipate the commercial segment will remain highly active as investors move to capitalise on the positive momentum,” concludes Jack. “Auctions provide a transparent and efficient way to acquire these quality assets while sentiment is rising.”

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For investors who’ve been waiting on the sidelines, the window has opened and the smart money is already moving.

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