January 26, 2005

By Dirk De Vynck

Cape Town - The international operations of Old Mutual Properties (OMP), a property service and asset management company, had the potential to outgrow the local business, Ian Watt, executive director of OMP's international developments, said yesterday.

Other than Africa, where OMP has been involved for many years, the group has branched out to the Middle East, India and eastern Europe in partnership with other players.

Watt said its partnership in the Middle East with the Savola Group, the largest supermarket group in the region, had grown to the development of 14 shopping centres.

These centres had a development value of around R7.5 billion, which was similar to the value of the local assets OMP had under management.

The joint venture with Savola is held through a new company called United Properties, which operates as a property development and property management company.

In India, OMP has a joint partnership, ICS Infrastructure Group, and is providing services to eight parties. The focus of the projects is on mixed-use developments, including the development of 10 shopping centres.

Watt said the Indian commercial property market was quite fragmented.

It was growing fast, driven by the strong economic performance and the size of the market.

This would see the development of more than 200 shopping centres in the next five years, while India's growth as the hub for offshoring would lead to the erection of many commercial buildings.

In the Ukraine, OMP has recently completed a project with US investors for the conversion of a department store into a shopping centre. Watt said this relationship would expand into other areas of eastern Europe.

"One of the biggest challenges of doing business in eastern Europe was trying to establish who the owners of properties were."

OMP has sold an estimated R3 billion worth of properties, which it managed on behalf of its Old Mutual parent, over the last few years.

This has led to the Old Mutual property asset base under its management dropping from about 600 properties seven years ago to just under 300 at present.

Although Old Mutual is still OMP's biggest single client in South Africa, it also offers services to the rest of the local property fraternity.