The companies in South Africa that are now being liquidated the most

According to recently released statistics from Statistics South Africa (Stats SA), the overall number of liquidations fell by 1.6 percent in May 2022 as compared to the same month the previous year.

According to the statistics organization, voluntary liquidations dropped by eight cases while forced liquidations rose by five cases. In the first five months of 2022 compared to the first five months of 2021, there were 8.9% fewer liquidations overall.

The difference in percentage between March and May 2021 and March and May 2022 was -10.1%. From 138 in April and 182 in March, there were a total of 188 liquidations in May.

788 liquidations have been made in total so far, down from 788 in 2021.

The commerce, catering, and lodging industries are still having trouble after the epidemic, and there were also a lot of closures in the financial, insurance, real estate, and business services sectors during the reporting period.

Despite a post-Covid recovery in South Africa's hospitality industry from a low foundation, the Bureau for Economic Research (BER) stated in a research report on Monday (27 June) that neither hotels nor restaurants had completely returned to normal.

The second quarter had excellent activity growth in the hospitality industry for the third consecutive quarter, but at a somewhat slower rate than in the first, according to the BER.

The very low levels of a year ago, when few people traveled or went out to eat because of Covid-19 worries and limitations, the association claimed, are the cause of the unusually high year-over-year increase rates for activity.

The BER also cited Stats SA statistics that revealed persistently low hotel room occupancy rates and actual restaurant income that was still 35% below pre-pandemic levels.

Activity in commercial real estate

Only the industrial property market's activity rating increased during the second quarter of the 2022 FNB Commercial Property Broker Survey, while two of the three major commercial property sectors—office and retail—saw drops in perceived market sales activity levels.

In the second quarter poll, fewer respondents who were brokers reported that they thought business conditions were good. According to John Loos, a property sector strategist at FNB Commercial Property Finance, this fall follows a preceding growing trend, which has been holding steady at a moderate level.

According to him, this is indicative of an economy still struggling to completely recover from the extremely severe recession that occurred in 2020 as well as current pressure from rising interest rates.

Brokers continue to express the highest optimism over the industrial and warehouse property market when asked to rate market activity levels on a scale of 1 to 10. The second quarter 2022 activity rating for the industrial property market increased from 6.2 in the previous quarter to 6.35.

Over the same two quarters, the retail property activity rating dropped from 4.87 to 4.60. The market activity rating for office properties remained the lowest.

According to Loos, rising interest rates may have started to decrease market optimism. Disruptions in global supply chains have been a factor in rising inflationary pressures, and more recently, the war in Ukraine and the ensuing sanctions and boycotts against Russia have made the issue worse, according to the analyst.

As a result, the SARB has increased interest rates by 125 basis points since late 2021, and another 100 basis points of increases are anticipated this year, according to Loos.

A sample of commercial property brokers in and around South Africa's six largest metropolises, including Tshwane, Ethekwini, City of Cape Town, and Nelson Mandela Bay, are surveyed for the FNB Commercial Property Broker Survey.

According to Loos, this survey answer provides a view of business confidence in the commercial real estate sector, which may be beginning to mirror the recent trend in business confidence for the whole economy, which has been declining since a few quarters ago.

The second quarter of 2022's RMB-BER Business Confidence Index revealed a comparable 42 percent of survey respondents from all sectors of the economy expressing satisfaction with business conditions, which was a decline from the first quarter's 46 score.

Additionally, FNB questioned brokers about whether they noticed a reduction, rise, or no change in their level of activity from six months prior.

Even the industrial and warehouse market appeared to be losing pace in the second quarter of 2022's report. According to Loos, “this suggests that the respondents who saw a rise in activity during the previous six months precisely matches those who felt a decline.”

While the office property market gave a slightly positive score, the retail sector gave a slight negative reading.

As a result, “these indices in all three markets hint to very little activity growth momentum having been seen of late,” the strategist added. “Interest rate hikes this year may have been the major cause of demand growth running out of steam.”

The number of commercial tenants in good standing decreased somewhat in the first quarter of 2022 compared to the previous quarter as a result of low business confidence, which continues to have a significant negative impact on the market for commercial real estate.

Tenants who have paid their rent in whole and on time at the end of each month are those who are in good standing, according to the most recent TPN Credit Bureau Commercial Rental Monitor.

According to TPN's statistics, even while the first quarter of 2022 shows a slight improvement over the last quarter of 2021, more than 10% of commercial tenants made no payments toward their rental costs in the first quarter of this year, highlighting the severity of their financial difficulties.