Innovate, says Growthpoint boss

Growthpoint Properties SA CEO Estienne de Klerk says the country’s companies need to look beyond their traditional offerings to generate new revenue streams as the stagnant economy puts pressure on their ability to grow profits.

Growthpoint Properties SA CEO Estienne de Klerk says the country’s companies need to look beyond their traditional offerings to generate new revenue streams as the stagnant economy puts pressure on their ability to grow profits.

Speaking at the JSE SA Trade Connect on Wednesday, De Klerk said that while the operating landscape of companies based in SA had been dramatically disrupted by increased digital competition and escalating operating costs, among other things, businesses could still grow.

“The environment that we are in at the moment, we did foresee a couple of years ago. It wasn’t hard to see that there were challenges coming and we implemented quite a few strategies to try and provide for the load that we would be bearing in this environment,” he said.

IT WASN’T HARD TO SEE THAT THERE WERE CHALLENGES COMING AND WE IMPLEMENTED QUITE A FEW STRATEGIES

De Klerk said that even though Growthpoint established offshore operations, which have played a big part in lifting earnings, the property group realised that to cope with the deteriorating conditions in the local real estate sector, it had to “tweak” its strategy “around the edges”. It tapped into other areas that complement its main business, said De Klerk, adding that this was a reality that many other companies may need to embrace.

NICHE AREAS

Growthpoint, which holds a diversified property portfolio that earns rental income, is counting on its joint venture fund management business with Investec and the fee income from developing real estate for third parties to boost profits.

“What we have done is develop a few businesses like a fund management business that will target niche areas like health care and African real estate investment to attract institutional investors.

“We also have a business that used to just develop real estate for our own account.

“We’ve now broadened the mandate for that business to go and develop for third parties. We do that for fees,” he said.