Commercial property sector ‘needs a helping hand’
THE GOVERNMENT and the banks need to understand that if the commercial property sector is not helped to emerge from its current backwater, it could take the entire economy down to a new low.
This is the view of Tony Clarke, managing director of Rawson Properties.
“There has recently been considerable focus on and media publicity about the resi- dential sector, and the latest data does indicate that it is leading the property world out of the recession,” he said.
“However, the commercial sector still lags far behind, with high levels of vacancies, defaulting tenants and regular landlord liquidations.”
Clarke said that, as a first step, the banks could look at extending the length of commercial bonds. At present most are signed for periods of 10 years, but bonds of 15 or 20 years, as in the residential sector, could ease the situation for hard-pressed landlords and prove more profitable to the banks in the long term.
On the gover nment side, said Clarke, the Sars tax legislators could look at giving bigger depreciation allowances and tax write-offs.
They could also study the merits of mortgage insurance to help landlords cover bond payment shortfalls if their tenants defaulted – as is now often done in the residential sector.
“It is encouraging that the big private equity property owners are finding ways of standing by their tenants through the current double-dip downturn, but smaller landlords frequently do not have the resources to do this – and more will inevitably go under if not assisted in some way,” said Clarke.
“It can be disastrous for any area when one or more buildings stand vacant and neglected as a result of tenant and landlord failures. We must not let this happen.”
He said state help might be needed as the commercial sector was in a “potentially crippling situation”.