RACA Journal March 2026 RACA_Mar_2026 | Página 11

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BUSINESS

HOW SA’ S COMMERCIAL PROPERTY REVIVAL IS REVVING UP HVAC DEMAND

By Eamonn Ryan

After several years of muted performance, South Africa’ s commercial property sector is regaining its stride.

The pandemic-induced downturn, coupled with the remote work shift, had left office towers half-empty and retail centres subdued. But by late 2024, the tide had turned: investors, developers and tenants began fuelling a robust rebound across offices, retail and industrial spaces. This recovery has quickly translated into renewed demand for HVAC systems – from installations in new developments to large-scale retrofits that improve efficiency, comfort and sustainability.

According to the MSCI South Africa Property Index, sponsored by Absa, the commercial property market delivered an impressive 11.9 % total return for the year ending December 2024( the latest published) – the highest among 24 global markets tracked. Industrial real estate was the standout performer with 15.1 % returns, but even office property, long the laggard, posted a 9.4 % return, nearly double its figure of the prior year. Investment volumes surged to more than R27-billion, representing a 34 % jump over 2023, with the SA REIT Association forecasting continued momentum into 2025. They expect income returns of roughly 8 – 9 %, particularly in logistics, retail and industrial sectors.

On the ground, the retreat of remote work has been an important driver. While hybrid arrangements remain, the number of fully remote roles shrank from 4.3 % in 2023 to 3.7 % in 2024. This shift has placed greater pressure on employers to re-establish offices as attractive, functional environments. In Cape Town and Durban, office rental demand has already climbed past pre-COVID levels. Even Sandton, where vacancies hovered around 26 %, is showing early signs of stabilisation.

EVIDENCE OF AN HVAC UPTICK The revitalisation of commercial property is mirrored in the performance of the HVAC sector globally. Rooftop HVAC units, a mainstay of commercial buildings, generated nearly USD985-million in revenue in 2024, a figure projected to rise to USD1.35-billion by 2030, according to Grand View Research. The broader South African HVAC systems market was valued at USD517-million in 2024 and is forecast to reach USD775- million by 2033, growing at a compound annual rate of about 4.8 %, with commercial applications driving much of this expansion( Straits Research).

Perhaps the most striking figures come from the commercial airconditioning segment. Analysts at Mobility Foresights project that its value will nearly double, from USD2.8-billion in 2025 to USD5.3-billion by 2031, an annual growth rate of 10.9 %. On the services side, HVAC maintenance and upgrade revenues are also climbing: from USD1.63- billion in 2024 to an expected USD2.25-billion by 2030. Significantly, upgrade and replacement services are the fastest-growing segment, underscoring a push toward modernisation and energy efficiency.

These growth patterns are reinforced by the expansion of facility management services, which bundle HVAC and MEP( mechanical, electrical and plumbing) requirements. Commercial real estate alone accounted for 31 % of facility management demand in 2024, with energy-efficient HVAC services growing at a 10.8 % annual rate through 2030( Mordor Intelligence).

Several forces are converging to fuel this HVAC resurgence. At a macroeconomic level, infrastructure investment has surged: announcements in the first half of 2024 alone topped R793.7-billion, according to RACA Journal. Much of this is flowing into large-scale commercial, mixed-use and industrial projects. Prominent REITs are playing their part too: Growthpoint Properties committed R4.5-billion toward expansions at Cape Town’ s V & A Waterfront, while Attacq is

RACA Journal I March 2026 investing R1.7-billion into further developments at Waterfall City in Midrand( Reuters). These projects are designed around high standards of comfort, operational efficiency and sustainability – all of which depend on advanced HVAC installations.

Refurbishments also play a central role. Many office and retail landlords, eager to attract tenants back, are undertaking extensive upgrades. Modern HVAC systems are often the cornerstone of these improvements, delivering better air quality, lower energy use and compliance with green building certifications. For retail and logistics facilities, temperature control, ventilation and humidity management are essential for both customer comfort and operational efficiency, particularly as e-commerce drives demand for distribution hubs.

LOOKING AHEAD: TRENDS INTO 2026 The trajectory suggests that in 2026, the HVAC sector will not only have consolidated its recovery but will also be on a path of sustained growth. Four key trends stand out:

• Refurbishment and retrofits: Ageing office blocks and shopping centres are being repositioned with new HVAC systems designed to meet tenant expectations for comfort and energy efficiency. Green certification requirements are accelerating this trend.

• Smart and sustainable solutions: Rising electricity costs and environmental commitments are spurring adoption of smart HVAC controls, IoT-linked systems and integration with renewable energy sources such as solar. These technologies reduce operational expenses while enhancing user comfort.

• Service and maintenance growth: With a growing installed base, maintenance contracts and energy-optimisation services will account for an increasing share of sector revenues. Service providers who can combine technical expertise with digital monitoring solutions are particularly well placed.

• New precinct developments: Large-scale projects like the V & A Waterfront expansions and Waterfall City’ s rollouts will crystallise demand in the short term, providing showcases for advanced HVAC technologies.

South Africa’ s commercial property revival is about more than just numbers on a balance sheet. It reflects a reshaping of the country’ s built environment, with tenants, investors and developers all prioritising functionality, efficiency and sustainability. For the HVAC industry, this is an opportunity. Installations, retrofits and maintenance contracts are growing in both volume and sophistication, underpinned by broader economic momentum and shifting workplace expectations.

For 2026, it is clear that HVAC has not merely benefited from commercial property’ s resurgence – it has become integral to it. The sector is evolving from a background utility into a strategic enabler of healthier, greener and more resilient commercial spaces. In the years ahead, HVAC players that align with these trends will be at the forefront of South Africa’ s property and infrastructure renaissance. RACA

REFERENCES

1. MSCI South Africa Property Index. 2. https:// mobilityforesights. com / product / south-africa-automotive-lightweightmaterials-market www. refrigerationandaircon. co. za 9 business