SA needs a wake-up

Posted On Thursday, 05 April 2007 02:00 Published by
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SA has some hard work ahead to become a favoured destination for global property investors
06 April 2007

By Ian Fife

SA has some hard work ahead to become a favoured destination for global property investors, if its showing at the Mipim property conference in France in March is an indicator. (Mipim stands for Le Marche International des Professionnels de L'immobilier.)

With few exceptions, representatives of SA funds were swamped by 2 522 competing exhibitors from 82 other countries, vying for the attention of nearly 30 000 people. They each paid R12 500 to get into the world's greatest annual property investor gathering.

Norbert Sasse, CEO of listed first-time exhibitor Growthpoint, is now sold on Mipim as the place to attract some of the US$650bn (R5 trillion) that is crosssing borders into property investment each year. Growthpoint was one of 19 SA exhibitors this year.

"It's where SA property should be selling itself hard," he says - and he's mystified as to why our trade & industry department (DTI) pulled out of Mipim two years ago.

Growthpoint caught the eye. A special jury chose it and Triangle, Old Mutual's new unlisted fund, as finalists from more than 100 institutional funds. The five then competed in a "speed matching" competition, modelled on speed dating.

The other three finalists were from Scandinavia, German and Egypt. The jury chose the five for a combination of credible institutional structure, good returns and growth potential.

The lack of experience of Sasse and Triangle chief Colin Young in hard selling showed. They seemed to assume that their institutional status and performance would be enough to entice investors to SA.

Young mentioned that Old Mutual is listed in London, but failed to say it was in the FTSE 100. It was only when Sasse noted that Growthpoint's R20bn property portfolio was valued at an average of R8 000/m? - less than a quarter of European values and the key to SA property's real value, its recovery from decades of stagnation - that the audience of 100 VIPs started listening.

If I were a Western property investor listening to the five presentations, I would have chosen Aberdeen Asset Managers Plc's Pan Nordic fund. It has a slightly lower forward yield than Growthpoint, but the familiarity of a close, known European investment destination and expected near double-digit growth for the next few years. Yet Growthpoint and Triangle are likely to outperform Aberdeen's fund over the next decade.

Sasse picked up no investors. "A 10-minute presentation at a speed matching competition is no way to sell a listed fund," he says. But he will be back at Mipim on March 11 next year to make contact with investors, fund managers and potential offshore partners.

"It's an absolute must for SA and its cities - which want international exposure inward - and companies for outward investment, and to see what is happening in property," Sasse adds. "I can't understand why government pulled out. The SA stand was pathetic."

The DTI could not be reached for comment.

A few SA companies have been at Mipim for years. Old Mutual Properties' Ian Watt discovered Mipim and has successfully used it as a platform to build international business.

Other old hands include KwaZulu Natal residential developer Mark Taylor, CEO of Elan Group; the management of Tongaat property subsidiary Moreland; and property organisation Sapoa. Taylor says those exhibitors are determined to make a big impact next year.

Financial Mail

Publisher: I-Net Bridge
Source: I-Net Bridge

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