So why this “growth spurt” while other sectors are struggling? The listed sector’s success has been ascribed to the propensity of property companies in the listed property sector to be better off, better capitalised, and more available for expansion opportunities; while other sectors are too dependent on the activities in the broader context to lead any kind of significant growth in the market.
For example, high vacancy rates in office buildings and other commercial property have a direct impact on the slow-down of property development, although there are still prime commercial properties appearing in nodes across major centres like Sandton, Rosebank, Umhlanga, as well as the Cape Town City Bowl. Still, new commercial property development has slowed and is unlikely to pick up again anytime soon because of the banks’ healthy scepticism towards new speculative developments.
For investors in the listed property market who have secured their capital in the right places, the returns may only be realised long term, but they won’t be affected as intensely by the ups and downs of the bigger picture market. The current economic climate shows that it pays to go in at a medium-risk, long-term investment for consistent returns.
]]>Foutainhead Property Trust said the exclusivity had been extended to verify the proposed execution of sale by its’ newly appointed trustee, and that it complied with the Collective Investment Schemes Control Act and its trust deed. Fountainhead units lost 0.82% at the end of January 2013.
]]>In a short survey conducted by Ash Brook with its internal broker team, it was quite surprising to find that mostly on the whole, Ash Brooks’ clients were clearly separated on green benefits depending on the size of the business. Larger companies with a staff compliment of over 50 are more interested in building efficiencies (though they were still in the minority of about 20%), while smaller and medium sized businesses (<50 staff) interested in being in a green building was estimated between 5% - 10%.
While Ash Brook brokers use the many benefits of green buildings as a selling feature, such as grey water sewerage, the long term saving on energy costs through natural lighting or censored lighting, they’ve found that the vast majority of clients are still not up to date on what being green is about. The view is that while there’s been a plethora of information laid upon us by the media, businesses just aren’t that ready to adopt a green approach yet. Or is it perhaps that there’s very limited access to green buildings throughout Gauteng at large?
The survey revealed more than just the lack of knowledge of businesses out there. While some businesses are still finding their feet on understanding green issues, and given the limited supply of such buildings, the bottom line is just that, the bottom line. All Ash Brook brokers concurred that their clients bar none were first and foremost concerned with price. Green or not, if it makes the clients budget first, and meets their location and business image second, everything else afterwards is really just a bonus.
Given the small amount of green buildings available on the market, it will probably take quite some time before supply and demand is met at a price tag decent enough for businesses to take notice of. Until then it appears that being green will continue as a bit of an add on novelty when it comes to selling commercial property in the broking community.
]]>Despite the office vacancy percentage averaging out at 10%, Rapp believes that the vacancies are due to the economic cycle as opposed to the location of the properties. “We believe there is upside potential in the assets – in terms of being able to upgrade or revamp some of the bigger assets, improve the current vacancy position, and also in terms of rentals being charges”
Other large purchases in recent times include Redefine Properties purchase of 6 office buildings in Johannesburg and Cape Town for R 1 billion and Vunani Property Investment Fund’s purchase of office properties in Cape Town, Rustenburg and Port Elizabeth.
SAPOA (South African Property Owners Association) recently released their statistics for the third quarter of 2011. These show that office vacancies have decreased to 10.5% since the beginning of the year. However, their statistics also indicated an increase of 10% in office space vacancies compared to last year.
The CEO of the Vunani Property Fund, Mr Robert Kane, has said that it decided to break with the conservative strategy it adopted in response to lower rental expectations and budgets for the past three years after seeing some "solid opportunities in the office market". He, furthermore, stated that their research also showed that there were few comparable buildings available to current tenants should they decide to relocate.
Kane added that Vunani has finally established a footprint in the Foreshore Node in Cape Town. "In recent years, there have been a lot of developers quietly acquiring properties in the node, and it makes sense for the dominant landlords in the area to work together to enhance the street scape."
“The Green Building Council of South Africa welcomes SANS 10400 part XA, and applauds and congratulates the SABS and government for putting a stake in the ground for the first time in terms of minimum energy consumption requirements for new buildings and refurbishments,” says Braune.
Certain of these regulations have already been in place in many Western countries for decades now and it is anticipated that South Africa will be able to learn from these leading nations and hopefully avoid the 45 year learning curve to get to the same level of sustainable design.
SANS 10400 Part XA and SANS 204 (the previous standards) are both available online from the SABS website (www.sabs.co.za).
Companies can submit certificates of energy savings under the National Energy Act, 2008 Regulations on the allowance for energy efficiency savings (Government Gazette no. 34596) to SARS for a credit on their tax return. In order to qualify for the tax break, the companies have to register with the South African National Energy Development Institute and appoint a Measurement and Verification Professional to compile a report on the energy efficiency savings achieved. This report is then submitted to SARS to compute the energy tax rebate.
To assist you, we’ve provided the following guidelines:
There are many other factors which may arise but the basics laid out above should get you off to a successful move!
Energy efficiency and being energy efficient as an individual, family, household, company, community and country is practiced more so than ever. What started as a trend in countries such as Australia, has now influenced countries around the globe. Green buildings and the act of being energy efficient has become a standard for many companies offering office space around South Africa.
With certain banks now giving preference to developers planning or building green, the trend towards to environmentally friendly buildings marches on. More and more office premises will be offering the cost saving benefits as well as ensuring minimum disruption to the environment. South Africa, in particular, has jumped on to the Green bandwagon and how has a board member on the World Green Building Council.
When considering potential office space, important items on your checklist should be:
• Low wattage lighting
• Generator
• Double glazing on sun facing windows
• Energy efficient air-conditioning
• Energy saving lift systems
Although the initial perceptions may be of higher rentals (the truly green buildings are likely to have been recently built), bear in mind that the long term savings in respect of reduced energy costs will more than compensate; furthermore, there is the added benefit of feeling good about going Green!
While there appears to be a shortage of suitable “A Grade” stock of warehousing in units over 10,000 m2 , it does not appear to be the right time for investors to develop these on spec, as potential renters are apprehensive of entering into long term lease arrangements (7 to 10 years) which such developments normally require.
With the downward trend in the S.A. economy, many renters are moving towards smaller or “midi” units with a view to consolidation and avoiding long term lease agreements. Renter preference has also moved towards the secondary nodes (Midrand, Londmeadow, Modderfontein and Linbro Park being the most popular) because of lower rentals and other cost savings.
While gross rentals of R 58 / m2 are still achievable in the prime nodes (dependant on superior location and building specification), the general trend is towards softer rentals in all other grades and categories. The midi and mini sectors are particularly affected, mainly due to oversupply and mediocre manufacturing performance by the renters.
Vacancies for industrial property have increased slightly and are now estimated at 7%
Certain sectors in the industrial property market are going through a period of consolidation with largely fluctuating vacancies, less demand and stagnant rental. We project that most of the demand during the next twelve months will be driven by consolidation and physical relocation to other nodes.
The nodes adjacent to the Gautrain transport network (Sandton and Rosebank) are expected to see increased lessee demand, already evidenced by increasing enquiries.
The total office space available in Johannesburg increased to a total of 8,484,000 m2 with almost 97,000 m2 being completed during the third quarter. This is a 12% increase in new office space supply compared with 2010.
The completion of new office space Johannesburg may have a negative impact on the demand for office space in older buildings. According to SAPOA’s Office Vacancy Survey, Johannesburg has some 291,364 m2 under construction during Q3 of which some 55% is in the Sandton and Rosebank areas.
Rentals are going through a relative average increase of 6% during 2011 which is encouraging to investors. However, many present occupiers are focusing on consolidation and better space utilization before considering moving to secondary nodes in order to contain costs.
Office space vacancies have declined in Q3 to 10,5% since the beginning of the year and, although encouraging, the statistics also reflect an increase in office space vacancies of almost 10% compared to 2010. Vacancy statistics reflect largely varying rates between areas. Whereas Houghton, Milpark and Morningside have had a steady vacancy rate of below 6%, secondary nodes (such a Randburg and Johannesburg CBD) have vacancy rates as high as 15%
Demand for office space in Johannesburg is likely to be locally driven in the short to medium term with limited demand from international lessees.
While vacancy discrepancies between prime and secondary nodes are likely to fluctuate (especially for those occupiers relocating to secondary nodes), the overall vacancy rates in Johannesburg are likely to remain above 10% for the remainder of this year or until the economy improves.
Norbert Sasse, PLSA Chairman and CEO of Growthpoint Properties said: "Apart from the three-year or five-year horizon, the listed property sector has outpaced the All Share Index for six straight months in a row to August."
Over five years, the top-performing unit trust was Prudential Enhanced SA Property Tracker Fund A with cumulative total returns of 121%. The three-year rankings show that Prudential Enhanced SA Property Tracker Fund A again takes the top spot, with cumulative total returns of 67%.
Stanlib Property Income Fund A came in a close second, over both periods, with cumulative returns of 119% and 64%, respectively.
The results showcase the consistently high performance of the listed property sector in both the long and short terms.
PLSA is the representative umbrella body of the property loan stock sector comprised of voluntary members, with the weight of nearly all of the funds within the sector behind it.
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Incentives are under consideration to attract businesses from employment-intensive industries and services into industrial development zones, which have the potential to export, become part of global supply chains and competitive logistics hubs.
Funding for the package over the next three years will come from that contained in the available fiscal envelope.
Gordhan said the R25 billion would include R8 billion in tax incentives for recently approved projects in the area of industrial development, technology support and training. It would also include regulatory reform to assist small businesses, support for job creation and training projects and support to develop black businesses, including preferential procurement and finance facilities.
Added to this, export diversification would be encouraged, including forging new trade partnerships with fast growing emerging economies, while work would continue towards achieving regional integration in Sub-Saharan Africa.
Trade, investment and energy policies would also be aligned to support the transition to a green economy, including private-sector participation in South Africa’s renewable energy production program.
During a media briefing held ahead of the speech, the minister said the details of the package would be revealed by Minister of Trade and Industry Rob Davies soon.
The precinct is perhaps comparable to "The Waterfront" in Cape Town, which is also based on a European mixed precinct concept. Growthpoint has recently purchased this property in a joint venture with the PIC, for R9,7bn.
Ash Brook Commercial Properties has has a history of placing tenants in the offices at Melrose Arch, and have a well established relationship with the owners, Amdec. There is naturally limited office space available to let, and the pioneer rentals reflect this demand. Despite these conditions, the brokers at Ash Brook have managed to secure prime premises for blue chip clients, based on their in depth knowledge of the office space, as well as their long relationship with the owners.
For prime offices to let in Melrose Arch, kindly contact Ash Brook's head office in Bryanston, on 0861 6222 62
]]>This movement has moved into the commercial property sector and "green buildings" have become the current flavour of the month.
Banks, in particular, have jumped onto the green bandwagon and, besides ensuring that their own buildings are environmentally compliant, they are tending to favour green projects as far as their lending criteria are concerned.
Nedbank, in particular, has jumped onto this green bandwagon with vigour. They have recently been directly involved in six of the seven building projects that have been awarded Green Star SA Ratings by the GBCSA (the Green Building Council Of S.A.).
Recently interviewed, Frank Berkeley, managing executive of Nedbank Corporate Property Finance, said that it is estimated that buildings consume 40% of the world's energy through construction and ongoing operation. It is this reason that it is becoming increasingly important that future projects must protect themselves against rising energy costs and expensive retrofits.
It is estimated that the cost of building a Green office block would, typically, be about 5 -10% more expensive than a standard development but this differential would be re-couped from reduced operating costs, including electricity and water charges. In Cape Town, the Century City complex was able to recoup the additional costs within two years and this left the owners reaping the rewards of an environmentally sound, healthy building where clean air and water flows. There is, of course, the added benefit of increased rental income as more tenants are prepared to pay higher rentals for green premises.
Over time this will have an impact on values of green properties over conventional stock.
The "C" sector has strengthened substantially in that vacancy statistics have shown a decrease. Stock in the sector has also shown a decrease, mainly attributable to owners refurbishing in order to attract "A" sector clients.
This pattern is indicative that prime office space is still attracting the bulk of the market. This fact, together with the move to upgrade existing office space, appears to indicate that property owners are expecting the demand for prime office space to continue.
Although there are substantial committed development investments in the office space market (some 540 000 square meters have been approved in the past 12 months) the vacancy rate still appears to be a retarding factor to investment.
Lukesh Govender, head of FNB Commercial Property Finance has recently said: "Current market conditions can still be seen as an opportunity. However, high vacancy rates need to show a pattern of sustained improvement before we see additional investment activity. I believe we are seeing the beginning of a turning point from a national viewpoint"
Pretoria's main office areas include Brooklyn, Hatfield, Menlyn and further afield to Centurion. There have been numerous deals concluded in these areas, but from the Bryanston Head Office. It is materially more efficient (in terms of both time and costs) for the company, as well as the agents operating from the new offices. Ultimately, our clients are happier, and that makes us happier!
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