Com­mer­cial prop­erty in­vest­ments yield higher rental re­turns

Weekend Argus (Saturday Edition) - - PROPERTY -

MANY prop­erty in­vestors in the Western Cape are switch­ing to com­mer­cial prop­erty be­cause it al­most al­ways gives a 10 to 12 per­cent rental re­turn from the out­set, ac­cord­ing to Marc Vladislavich, the co-fran­chisee with Liz Grim­beek for a Raw­son Prop­erty Group Cape Town com­mer­cial fran­chise.

“Com­mer­cial prop­erty rents are on aver­age 4 to 5 per­cent higher than those for res­i­den- tial prop­erty and of­ten the leases are longer term. The sec­ond rea­son for favour­ing this in­vest­ment chan­nel is that in the Western Cape, as a re­cent TPN credit bureau re­port has shown, ten­ant be­hav­iour is now sat­is­fac­tory and re­li­able.”

He says the lat­est TPN Re­port shows that by the end of last year, 87 per­cent of Western Cape com­mer­cial ten­ants were in good stand­ing with their land­lords, and 64 per­cent were pay­ing right on time. “Only 5 per­cent did not pay at all and the re­main­ing 31 per­cent ei­ther paid late or paid par­tially. It should be noted that the 5 per­cent of non-pay­ers is 2 per­cent be­low the national aver­age.”

In the Western Cape, said Liz Grim­beek, the best rental per­for­mances con­formed to the national aver­age. Ten­ants in the R50 000 plus a month cat­e­gory had proved to be the most re­li­able pay­ers, whereas those be­low the R10 000 bracket tended to be the most er­ratic.

She says this in­di­cates that small and start-up busi­nesses are less able to with­stand the tough eco­nomic con­di­tions of the last few years. How­ever, the de­mand for premises smaller than 300m re­mains strong, and re­plac­ing a ten­ant here is sel­dom dif­fi­cult and is usu­ally achieved within three to four months.

“We can rent out many small fac­to­ries or ware­houses very quickly, es­pe­cially units that are in se­cu­rity es­tates and have their own of­fice space.

“The best per­form­ers in the Raw­son rental man­age­ment port­fo­lio are units in Cen­tury City, Mon­tague Gar­dens and Paar­denei­land.”

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