Selling off the roof over their heads.

Posted On Monday, 24 February 2003 10:01 Published by
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The outsourcing of property, rather than the outsourcing of property management services, could gain an increasing foothold in SA corporate life in the next few years, according to some market analysts.
The outsourcing of property, rather than the outsourcing of property management services, could gain an increasing foothold in SA corporate life in the next few years, according to some market analysts.

This would be in line with a trend emerging in Europe, says Ian Watt, MD of Old Mutual Properties. He says it is being driven by a desire by corporations to unlock the value of their property portfolios and raise funds for broader restructuring by tapping into investor appetite for property.

'Coupled with this trend is a realisation that property is a real business requiring in-depth management and specialist skills to avoid loss of value.'

The value of property outsourcing deals in Europe from January 2001 has exceeded à 16,5bn. The deals have been struck by large organisations like Deutsche Post, British Telecom, France Telecom, Carrefour, Marks & Spencer and Barclays.

Nevertheless, Watt says the move by European corporations to give up ownership of the roofs over their heads will take some time before it makes a dent in owner-occupation figures. It is estimated about 70% of buildings in Europe are owner-occupied, as against 30% in the US.

'What is happening in Europe is part of a drive by companies to ensure their property strategy supports their corporate strategy. That is particularly true for fastmoving companies that need premises on a flexible basis.'

Watt says speculation in SA that institutions are about to initiate a wave of outsourcing of their property management functions overlooks this European trend and its underlying potential, as well as what has been happening in local and international markets in recent years.

'Some institutions prefer to owner-manage assets. They believe that is the way to get the most value out of their assets. Others delegate to managing agents. But all players in the industry recognise this is an age of specialisation. That recognition has led, on the one hand, to the assembly by some companies of multidisciplined professional teams working for external and internal clients, and on the other, to project-based partnerships.'

Watt says multidisciplinary teams with in-depth skills and experience will continue to be major players in the market.

'What we will see is a greater use of these skills, even by competitors. The driver will always be the need to make the most of the asset and to tap into the best skills available to do that,' he says.

Business Day


Publisher: Business Day
Source: Business Day

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