Investing in commercial property

17 December 2003

Foreign investors, mainly from the UK, Ireland and Germany, are increasingly buying South African commercial property as a medium- to long-term investment, according to business information service I-Net Bridge.

According to Peter Golding, chief executive officer of Golding Commercial Properties (GCP), a subsidiary of the Pam Golding Properties group, GCP has been receiving ongoing inquiries for commercial property investments of late.

Golding told I-Net Bridge that investors are currently looking for commercial properties in South Africa with capital ranging from about R10-million to R200-million to invest.

A notable example cited by Golding is that of a “big German financial institution” wanting to invest $20-million (about R128-million) in prime commercial property for a closed end fund.

Golding says investors are seeking quality stock and tenant credibility, with a preference for a single, prime commercial A-grade property with a 10-year lease with a branded corporate.

And, says Golding, it’s Cape Town which is attracting the most interest.

“With its high appeal and tremendous international exposure, Cape Town continues to be seen in an extremely positive light by potential offshore investors who perceive tremendous capital growth in the property market”, Golding told I-Net Bridge.

What about the costs? Put simply, that is “not the issue”, he says.

Chris Immelman, the head of Golding Commercial Properties’ leasing and sales division, told I-Net Bridge that the demand for quality commercial stock in Cape Town “presents an opportunity for corporates who own their own buildings to consider the benefits of undertaking a corporate sale and leaseback, thereby unlocking capital which can then potentially be better utilised in business.”

Golding says that while the national market is currently characterised by a lack of available, quality stock opportunities also exist in centres such as Johannesburg, Bloemfontein, Durban and Port Elizabeth.

The high demand for residential property in the Boland and Overberg region of the Western Cape is also having a positive impact on the commercial property market in the area.

Immelman says the surge in demand for homes in the Helderberg Basin in areas such as Stellenbosch, Gordon’s Bay, Somerset West and Paarl is boosting the demand for commercial property, particularly for the lease and sale of office and retail space.

Eugene Muntingh, GCP regional sales manager, says overseas investors are also expressing an interest in this area, with UK and German buyers wishing to invest in fully tenanted property from R5-million upwards.

SouthAfrica.info reporter