PROPERTY: Commercial Tenants Seek Value for Money
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While the first two months of 2010 have seen an upturn in the number of commercial property enquiries received, tenants remain in cost control mode and as a result tend to be reluctant to commit to major changes, says Marna van der Walt, CEO of JHI property services company.
“Under the current still constrained economic trading conditions there is a drive among tenants towards value-offering commercial space. Key imperatives for property owners/landlords are ensuring that rentals are collected promptly and that vacant space is kept under control.
“Now that we have completed the first quarter of 2010, on reflecting on the same period in 2009 it is evident that at this time last year prospects were extremely bleak whereas currently there is life in the marketplace, albeit in a weak and still recovering economy. The success of any business is determined by its positioning in the market – whatever the prevailing trading conditions – and this is brought home by the reality that the commercial property industry will have to contend with a tough market for the remainder of 2010 and even through to the start of 2011.”
Van der Walt says although capital growth will be slow, there are opportunities for specific buildings to be turned around and with focused plans, value can be unlocked. “We are pleased to report that with concerted and targeted marketing efforts JHI is achieving some successes regarding the movement of commercial space. It is a noteworthy achievement that in regard to most of the property portfolios we manage – in partnership with our clients and their asset managers - we in fact exceeded the property income return as reported in the SAPOA/IPD Property Index for 2009. We are currently busy working on a number of sound business prospects and with a stable and committed workforce are positioning ourselves to capitalise on the upturn.”
She says in terms of access to finance, greater flexibility and a better understanding of the risk in this market is being shown by the banks. Having said that, the banks are requiring a greater equity portion and lower loan to value ration and coupled with this, loans are more costly in terms of interest payable.
“Looking at the retail sector and in regard to shopping centres managed by JHI, in February (2010) we have noted that the best performing segment of this market has been pharmaceuticals, cosmetics and toiletries. Food and beverages are now out of negative growth and along with textiles, clothing and footwear are starting to show positive growth. On a more sobering note however, the surge in electricity and fuel costs this month (April 2010) are not helping consumers get out of the woods in terms of unavoidable, increased monthly expenses.
“Our view remains that the Soccer World Cup is a tremendous showcase for South Africa, including our infrastructure and ability to organise such an event. The spin-offs for us are to attract investors in the medium term, after successfully hosting this major event,” concludes van der Walt.
Business News Sector Tags: Property|