South Africa: Out Of Africa: South African Capital In CEE

Last Updated: 31 October 2017
Article by Janco Jordaan

Anyone following the real estate market and the flow of capital in this sector has most likely, in some way or another, come across a party with a South African origin or flavour. If you haven't you surely will, soon! And here's why.

South Africa has a substantial property sector, with 24 companies listed on the Johannesburg Stock Exchange (JSE) as real estate investment services (REIS), and 37 other companies listed as real estate investment trusts (REITs). Together these 61 companies form the real estate sector on the JSE and have a market cap totalling ZAR 770 billion, or approximately €49.8 billion.1 Currently, opinions are that a peak has been reached and that the market in South Africa is becoming saturated with a large amount of oversupply and little growth to fill the same, some even calling the status quo a property bubble.2,3

Although a saturated market or a potential bubble might in some circumstances be enough to force shareholders and managers to look abroad, for the case in point, it might be worth considering a bigger rationale.

What is driving South African real estate investment out of South Africa?

From my perspective the bigger rationale can be divided into a push and a pull.

The Push

The push being that in little more than a period of a year, South Africa has seen its third minister of finance and a credit rating downgrade to 'junk status' by Fitch Ratings and Standard and Poor's. Consequently, the economy has been growing below 1% since mid-2015, experienced negative growth of 0.3% in Q4 of 2016 and -0.6% in Q1 of 2017 - resulting in a technical recession. Although the economy bounced back to the positive side in Q2 of 2017, the cost of debt is still relatively high.4

Along with the political turmoil and sluggish economic growth, South Africa has stringent exchange control legislation in place. It's imposed with the idea to control outflow of local currency and preserve foreign currency reserves, but it results in regulatory barriers to cross-border cash flow, and a lack of liquidity.

A combination of all the above-mentioned factors is creating uncertainty and is, in my opinion, forcing South African corporates to look abroad for a) diversification and b) risk hedging.

South African capital in CEE: where and why?

The Pull

Some obvious attractions for South African capital to Central and Eastern Europe (CEE) are:

  • stable currencies and the opportunity to hedge the ZAR, one of the most volatile currencies.5
  • access to cheaper debt
  • yields north of 5%6
  • well-educated workforces and,
  • the safety of the EU regulatory structure.

However, apart from the very competitive yields, the above is true for the EU as whole and perhaps even for countries on other continents. Surely this alone did not justify the approximately €3 billion of South African investment in the Traditional Shopping Centre 'TSC' segment in CEE during 2016, so what is the real pull?7

From a macroeconomic perspective the CEE region is doing well. In general, with the exception of Slovenia, the public debt-to-GDP ratio for CEE countries is relatively low or declining. These countries have seen a sharp rise in minimum wages in recent years, which is set to continue in the remainder of 2017, ranging up to 10%.8  And unemployment is on the decline for the region. Since 2012, unemployment in Hungary has dropped from 10.9% to 4% in 2017, and in Bulgaria unemployment is down from 12.3% to 6.4%. In Slovakia, it's down to 8.3% from 14% for the same period.9 In short, what this equates to is a region that is home to a growing number of consumers with more disposable income on a monthly basis.

Along with the abovementioned factors, the TSC segment in CEE is on the rise, as opposed to the reportedly saturated market in South Africa. An increase in rent prices of as much as €27 /sqm/month within three years, occupancy levels of 100% along with waiting lists being drawn up for some prime properties evidences this.

A final motivator for choosing CEE as opposed to the rest of the EU is the percentage of online transacting. In Western European countries, online transacting has become almost the new normal. Whereas in Eastern European countries, online transaction levels are growing, but remain relatively low.10


South African Capital entering CEE is backed by experienced shareholders and managed by world-class property companies. Together they have built the South African TSC segment to become the 6th largest in the world, with a floor area covering 23 million square meters.11 These eager to hedge risk and diversification-seeking shareholders and companies have identified and set their target on CEE. This is a trend likely to continue, and it might very well be that South African corporates in other sectors will follow suit.


1 As at 31 July 2017. ( 2 3 The Great African capital migration: exploring trends impacting real estate capital flows in Sub-Saharan Africa, Capital Markets Research by JLL, October 2016. 4 Stats SA. 6 7 Taking into account capital invested into countries not (yet) part of the European Union: Serbia, Macedonia. 8 CEE Real Estate Investment Compass 2017, prepared by Colliers International and CMS. 9 CEE Banking Sector Report, Raiffeisen Research, June 2017. 10 CEE Real Estate Investment Compass 2017, prepared by Colliers International and CMS. 11 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.