Commercial property going up for auction
While capital flight is understandable, given SA’s economic woes, commercial property is trending as an attractive asset class, says Broll Property Group auctioneer Ish Hendricks.
He has been in the auctioneering business for 20 years and says commercial property auctions are hitting levels last seen in 2008, the year of the great financial meltdown.
“Demand is high, driven mainly by established property owners and family businesses, which are playing an acquisition game. Astute buyers are looking to the medium- and long-term and investing now for the next generation.”
It was not only the commercial sector that was highly active, said Kenneth O’Connor, managing member of East London’s O’Connor Auctioneers.
“With many people struggling to survive, selling homes or business premises is often the last resort, and it opens opportunities for cash-flush investors.”
He said instead of property owners forcing themselves into a fire sale, a better solution was realistically reviewing their financial situation regarding bonds or other financial commitments.
“If outlook shows that it will be impossible to keep going, then sell. If a bond is not paid then banks have to send a letter of demand, followed by a summons and then a warrant of attachment. That normally takes three months.”
He said after that the owner has no say in the future of the home or commercial property, with the lender often taking whatever price is bid, and if there is a shortfall it could leave the previous owner still indebted.
On August 26, Broll will be auctioning a commercial property in the heart of the Mthatha CBD. The owner, Hendricks said, had decided to sell but would lease back a portion of the property.
“Right now many companies are eager to dispose of their noncore assets, unlocking the value. The Mthatha sale is a good example of this strategy.
“On the other hand, experienced investors are jostling to invest in commercial property, building up portfolios in a buyers’ market.”
Right now many companies are eager to dispose of their noncore assets, unlocking the value. The Mthatha sale is a good example of this strategy