Investec Property Group’s leasing supports positive listed property performance

Posted On Wednesday, 03 August 2005 02:00 Published by
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Investec Property Group concluded leasing deals valued at over R641 million for the first half of 2005

Investec Property Group concluded leasing deals valued at over R641 million for the first half of 2005, underpinning the rising income streams and growing returns of the listed property funds it manages.

Investec Property Group is asset manager for JSE-listed property funds Growthpoint Properties Limited and Metboard Properties Limited as well as unlisted property fund Tresso Trading.

During the first six month period of 2005 Investec Property Group concluded leases valued at R267 million on retail properties, R212 million on office buildings and R162 million on industrial premises. Together the deals represent over 345,000m² nationwide.

“The high demand and take-up during the second half of 2004 led to lower stock availability and increasing rentals during the first half of 2005,” said Steve Grupel, Head of Gauteng Leasing, Investec Property Group.

This shortage of space characterised the trend across all of South Africa’s major cities and reduced the total area let during the first half of 2005 to 345,400m² from 444,000m² during the corresponding six months of 2004. Despite this, higher rental rates resulted in comparable deal values for both periods (2005: R641 million and 2004: R646 million).

The bulk of leases concluded by Investec Property Group related to Gauteng property and comprised deals valued at R437 million (2004: R408 million) on 238,700m² (2004: 308,300m²), reflecting the strong increase in rental rates.

“In Gauteng retail continued to be the darling of the industry with rentals across the sector improving,” said Grupel. “While there are vacancies in the secondary retail market and underperforming nodes, even these are decreasing.”

In total, Investec Property Group concluded retail leases valued at R171 million over 48,000m² of retail space in Gauteng in 2005.

Industrial property was a strong contender in the province with leases valued at R119 million (2004: R88 million) concluded on 131,000m² (2004: 155,500m²).

Mandy Botha, industrial leasing consultant for Investec Property Group, Gauteng, explains that “the strong economy has led to smaller industrial and manufacturing concerns taking formal premises and other business expanding into larger premises. This has converted to a negligible 2% vacancy in the Gauteng industrial portfolio with waiting lists for space of between 100m² and 500m².”

The East Rand and South West of Johannesburg are experiencing the highest up-take of industrial space, with demand flowing through into the Midrand area.

The commercial property market in Gauteng is currently experiencing a shortage of A-grade office space. This is evident in the commercial leases concluded over only 59,500m² (2004:110,900m²), which achieved a substantial value of R147 million (2004: R181 million).

“Property is a leader in economic indicators and the confidence that business has in the sustainability and growth of the economy, specifically in light of the upcoming 2010 World Cup, is already evident in the property sector,” explained Grant Kirchmann, senior leasing consultant for Investec Property Group.

With enquiries for commercial space flowing in, this demand is being met by upgrading B- and C-grade property, some of which is already beginning to come on stream.

“The overall positive economic climate has increased business confidence and companies are in a better position to afford the higher rentals associated with A-grade property and sign longer leases,” elaborated Kirchmann.

Effective tenant retention is vital to maintaining property income streams and across all sectors in Gauteng deals in excess of R252 million represented renewals.

Investec Property Group has been highly successful in retaining existing tenants in the Western Cape with the portfolios under management experiencing very low vacancies.

“There was a notable reduction in the availability of stock during the first half of 2005, particularly for commercial and retail property,” commented David Stoll of Investec Property Group Cape Town.

In the Western Cape Investec Property Group concluded leases valued at R77 million over 69,500m² during the first half of 2005. This compares to R126 million on 78,500m² for the corresponding period in 2004, reflecting the shortage of available stock in the city.

In Investec Property Group’s KwaZulu-Natal office, which is also responsible for the border region and Eastern Cape, the value of leases concluded for the first six month period of 2005 was R84 million on retail properties (2004: R62 million), R23.7 million on office buildings (2004: R34,9 million) and R18,4 million on industrial buildings (2004: R14,9 million). Combined the deals represent 37,200m² (2004: 57,200m²).

“Lower stock levels led to increased rentals and despite less space being let during the first six months of 2005 compared to the same period in 2004, the value of leases concluded increased from R111,8 million to R126,7 million,” said Greg de Klerk of Investec Property Group Durban.

“Vacancies in the retail and industrial portfolios remain below 1% and, given the strong economy and low level of available stock, we expect rentals to continue rising, particularly in the retail and industrial sectors,” explained de Klerk.

Investec Property Group is successfully underpinning the income returns of its funds under management through strong and proactive leasing which, Grupel points out, is achieved with committed team-work. The country-wide network of external brokers active across all sectors, who work together with Investec Property Group’s leasing consultants, accounted for in excess of R100 million of the total deals concluded in the six month period. 

Publisher: Moneyweb
Source: Moneyweb

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