Re­tail prop­erty still a good bet de­spite de­pre­ci­at­ing rand and weak­ened SA econ­omy

Weekend Argus (Saturday Edition) - - PROPERTY -

ALTHOUGH South Africa faces on­go­ing eco­nomic chal­lenges and in­fla­tion keeps creep­ing up, shops are decked in fes­tive dec­o­ra­tions in the lead-up to the hol­i­day sea­son, and the re­tail prop­erty sec­tor seems to have weath­ered the ef­fects of the sub­dued econ­omy bet­ter than one may have thought, says Nor­man Raad, chief ex­ec­u­tive of Broll Auc­tions and Sales.

“Out­ly­ing ur­ban shop­ping cen­tres are pop­ping up and new de­vel­op­ments are un­der con­struc­tion through­out the coun­try. Demon­strat­ing their re­silience, it seems that re­tail­ers are rein­vent­ing them­selves to sur­vive in this dif­fi­cult pe­riod. En­ter­pris­ing new busi­nesses are re­plac­ing older ones and land­lords who tend to look solely at the bot­tom line may be com­pro­mis­ing them­selves in the short term by ac­cept­ing non-na­tional re­tail­ers to take up space in their cen­tres.

“We have seen stress on the land­lords through a di­rect con­se­quence of the fall­out from El­ler­ines and African Bank. While this stress has ob­vi­ously been passed on to the land­lords, there has been a quick move to re­place ten­ants if a rental re­ver­sion agree­ment – with a down­wards re­vi­sion in rental rate – can­not be ne­go­ti­ated and reached.”

Raad says although it would ap­pear that there are more re­tail­ers who may fal­ter, in all like­li­hood the mar­ket will pro­duce new busi­nesses to adapt to these tough eco­nomic times. How­ever, hav­ing ex­pe­ri­enced huge growth and es­ca­la­tions over the years, the re­tail sec­tor has slowed and is not an­tic­i­pated to en­joy sim­i­lar growth over the next few years.

“The de­pre­ci­at­ing rand has had a sig­nif­i­cant ef­fect on SA con­sumers, who are feel­ing the pinch. While re­tail­ers have to pass on the cost, in rel­a­tive terms con­sumer spend has con­tracted by about 40 per­cent. With­out in­di­ca­tion of short and medi­umterm eco­nomic growth, to­gether with un­em­ploy­ment and in­fla­tion, the fun­da­men­tals in­di­cate a tough re­tailer en­vi­ron­ment.”

Bradley Stephens, man­ag­ing di­rec­tor of Broll Auc­tions and Sales, says in the cur­rent mar­ket knowl­edge­able in­vestors are seiz­ing op­por­tu­ni­ties to ac­quire strate­gi­cally well-po­si­tioned re­tail and other com­mer­cial prop­er­ties with a view to the fu­ture.

“At our auc­tion on Novem­ber 24 of 22 prime com­mer­cial prop­er­ties sit­u­ated around the coun­try, sev­eral prop­er­ties in key lo­ca­tions stand out. These in­clude Vic­to­ria Mall in Hout Bay with a gross let­table area (GLA) of 1 323m² with 53 park­ing bays on one of the key routes through the sub­urb.”

A re­tail prop­erty in a busy trad­ing area op­po­site a taxi rank in Pre­to­ria CBD is ten­anted by KFC on a 10- year lease. The 1 774m² prop­erty is on a cor­ner site with very high traf­fic vol­umes and vis­i­bil­ity.

Other prop­er­ties to go on auc­tion in­clude a 2 052m² de­vel­op­ment site in Ox­ford Road, Park­wood in Jo­han­nes­burg – in a grow­ing node close to Rose­bank Gau­train Sta­tion, Rose­bank Mall and Rose­bank com­mer­cial hub. With the sub­urbs of Mel­rose, Rose­bank, Sax­on­wold and Parkview in the im­me­di­ate vicin­ity, Stephens says this site would be ideal for the de­vel­op­ment of med­i­cal suites or pro­fes­sion­als’ con­sult­ing rooms.

In the Pine­town CBD in KwaZulu-Na­tal, a five-storey of­fice build­ing with a GLA of 7 292m² is close to all ameni­ties in­clud­ing banks and Knowles Superspar Cen­tre, with easy ac­cess to the M13.

Fur­ther prop­er­ties to be auc­tioned in­clude two in­dus­trial prop­er­ties in Midrand, Gaut­eng, 1 504m² of ware­hous­ing with of­fices in Jet Park, Jo­han­nes­burg, and in Pre­to­ria, re­tail prop­er­ties of 530m² and 1 949m² plus three mixed-use re­tail and res­i­den­tial prop­er­ties and a 3 690m² de­vel­op­ment site.

The bal­ance of prop­er­ties in­clude a 4 811m² eight-storey build­ing in Dur­ban CBD, a four-storey 3 453m² of­fice build­ing in Ermelo in Mpumalanga, a two- storey, 3 280m ² of­fice build­ing in Or­monde and a prime 2 853m² of­fice build­ing on a cor­ner in Foun­tain­bleau, Jo­han­nes­burg, and 900m² of fully let re­tail and flats in Oden­daal­srus in the Free State.

Call Stephens on 087 700 8269 or 082 443 7731 or e- mail bstephens@broll.co.za.

GO­ING: Vic­to­ria Mall in Hout Bay is one of sev­eral re­tail cen­tres up for auc­tion on Tues­day.

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