Economic slump can create opportunities for investors

THE CURRENT economic situation in South Africa harks back to those of 1998, 2001 and 2009, when everyone was talking about the slump, and how we needed to jump our investment ships, says Norman Raad, chief executive officer of Broll Auctions and Sales.

“But during those times investors with smart money were looking for opportunities and making savvy property acquisitions, while the pessimistic were panicking and selling.”

Raad believes if you are able to raise money to buy now, you will look back and enjoy the profits of the challenges we are facing in the market today.

He says: “My advice is to focus on the position and quality of a property when you are deciding to invest. Every property has a value and those that are well-positioned will usually get better and be more in demand.”

He suggests even if investors can only afford properties on the periphery, they should not stay out of the market.

“Divest yourself of properties that are vacant and a cash burden, and buy better properties that will show resilience even through the next economic slump, which will definitely occur. Bear in mind that nothing lasts forever, including the bad times.”

Raad says there are properties on Broll’s national auction this month, which will be held at noon on July 19 at the Wanderers Club in Joburg, which show potential in the hands of new owners with vision.

Two of these are the Riviera Hotel, on the Vaal River in Vereeniging, and a large warehouse facility with adjacent land in Meadowdale, Johannesburg.

The former Southern Sun hotel is situated on the water’s edge, and offers magnificent views from every room, he says.

Ideal for conferencing or business and private functions, the retreat overlooks the Riviera golf course and is only 30 minutes from Joburg. One building needs repairs “The hotel is ideal for family getaways and the present owners’ decision to retire to the coast unlocks an opportunity for a potential buyer.

“The replacement cost for a new hotel is anything from R1.2 million per key – that is, the cost per room – upwards, depending on the size and star rating. The expectations are we will achieve half this price at the auction, making this property extremely attractive to investors.”

Set on 2.5318 hectares, the hotel has 91 rooms, five conference rooms and extended supporting facilities. He says the hotel’s potential is unlimited as it can easily be converted to apartments or a student campus as each unit is sectionalised.

Raad says the other highprofile property on offer is the well-positioned Tiger Brands warehouse on a 4.5681 hectare corner site in Meadowdale.

Comprising a gross lettable area (GLA) of 12 585m², the large warehouse facility includes ancillary offices, storerooms and transformer rooms and exterior, covered loading docks.

“This property has great exposure to the highway and is well located, being close to all airports and with highway access, and incorporates land for extra developable bulk. While the replacement cost for the warehouse is close to R8 000/m2, the anticipated price will be closer to R5 000/ m2.”

Raad says a number of listed funds have turned to the auction process to market their properties. These vary from commercial office, retail and industrial space to vacant land, he says.

Land comprising 4.717 hectares on Malibongwe Drive in North Riding, ideal for residential development, showrooms or a distribution warehouse, will also be on auction.

Among other properties going on auction are an Art Deco block with nine floors of retail and offices in Marshalltown, Johannesburg; vacant development sites in Sandton, Fourways, Midrand, Boksburg, Springs and Elandsfontein; a car showroom and workshops in Roodepoort; a mixed-use property in Austerville in Durban; and office blocks in Bedfordview, the Pretoria central business district and Port Elizabeth.

For details call Bradley Stephens on 087 700 8269 or 082 443 7731 or email bstephens@broll.co.za