FEW locations in downtown Johannesburg better illustrate the pace of change in post-apartheid South Africa than Eloff Street. This thoroughfare is the most sought-after address in the South African version of the Monopoly board game. But in reality, it has lost much of its allure for investors.

The metamorphosis is perhaps the most vivid example of the demographic changes brought by the country's political transition. Downtown Johannesburg is fast becoming the business and shopping centre of choice for black residents of Soweto, the sprawling township south-west of the city. But demand for office space has fallen sharply over the past five years, with an average vacancy rate of 25 per cent.

"This trend has led to an abundance of CBD (central business district) space, a decline in market rentals and a general deterioration of these areas." says Mr Banus van der Walt, managing director of Sanlam Properties, one of South Africa's biggest property investors. Income from office rentals has slumped, although business from Sowetans has partly sustained rentals for central retail sites.

The influx of shoppers and street traders has radically changed the character of the city's precincts and it has been accompanied by a steady rise in crime. Traditional medicines and fresh vegetables line the pavements outside the head offices of the biggest mining houses, legal chambers and commercial banks.

These institutions can ill afford to vacate their downtown premises, but their foreign clients and trading partners stay elsewhere. Anglo American Property Services, a subsidiary of the country's biggest company, recently reported losses of about 340 million rand (Pounds 45 million sterling) from inner-city commercial property during the past two years. The group has responded by putting assets worth 900 million rand up for sale, mostly in Johannesburg.

THE disposals are likely to boost the capitalisation rate for central Johannesburg office buildings above last year's 11.8 per cent. The move reflects a broader shift in sentiment, particularly among institutions. Property has lagged the performance of other investment classes in recent years.

"The deterioration is indicative of investors perceiving investments in all property types more negatively. The general slow-down in economic activity this year may also albeit erroneously make investors anticipate lower income or rental increases," writes Erwin Rode, editor of the South African Property Market Survey.

The bearish sentiment is not shared by new developers or the South African Chamber of Business, which argues that the demographic pressures which have triggered the exodus of many white-owned businesses to the suburbs will also drive the city's recovery.

While higher vacancies and sluggish rental growth in central Johannesburg will bring painful losses for institutions, the time may be ripe to re-rate inner-city properties. By taking the medicine now, growth off a re-rated lower base should be steady over the next five to 10 years," says Colliers RMS, a property broker.

Outside the city centre, there has been a steady growth in demand for new offices, and hence rentals. The number of greenfield developments and suburban business parks has mushroomed, in part to absorb the exodus of blue-chip clients from the congested and crime-ridden city centre.

The catalyst for much of this migration has been the introduction of electronic trading at the Johannesburg Stock Exchange. Brokers and other financial institutions have seized the opportunity to relocate.

One of the fastest-growing new business districts is the satellite city of Sandton, about 10 km north of Johannesburg, while the combined business and residential districts of Parktown, Rosebank, Illovo and Wierda Valley account for the bulk of this year's growth in office rentals.

BRUMA, an eastern suburb which borders the motorway route to Johannesburg International Airport, has also emerged as a developers' favourite. However, demand may be tailing off. National vacancy levels for A and B grade offices increased from 8.9 per cent at the end of last year to 9.3 per cent in the first quarter, although the market for new developments remains buoyant.

The highest pioneer rental in the March quarter - a measure used by economists to predict the future growth potential of a new site - was R65 per square metre, a premium of 41 per cent on the average rental for top- grade office space.

Analysts forecast that the differential between downtown and decentralised rentals will continue to grow. This may encourage institutions with a high level of personnel to remain in the city centre.

Retailers hope that employees will not reserve their shopping for the suburbs. Several high street chains have expanded their downtown operations, led by Edgars, the fashion group, which recently launched a flagship store on the ground floor of a half-empty office block.

Its Eloff Street address is no longer a prime location for the houses and hotels required to win at Monopoly, but it could become a good place to sell board games.