Big appetite for property ‘will keep prices up’

Posted On Thursday, 16 August 2007 02:00 Published by eProp Commercial Property News
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The Public Investment Corporation’s (PIC’s) intention to increase its property exposure will probably underpin property values in SA even in the event of a further increase in interest rates, says Angelique de Rauville, MD of Investec Listed Property Investments

Angelique de RauvilleDe Rauville says the PIC’s plan to move into the commercial property arena on such a large scale could also result in further delistings in the property sector.

She says this view is supported by the fact that the PIC made a “hard to refuse, very attractive offer” in its recent takeover bid for listed property loan stock company CBS Property Portfolio.

The PIC plans to delist CBS and use the company to increase its property platform. De Rauville says there is a possibility the PIC will make takeover bids for other listed property companies, particularly as quality property is hard to come by. She says direct fixed property is “very tightly held” by individuals and institutions and that listed property companies provide a more efficient mechanism for the PIC to obtain exposure to the property market.

David Green, MD of commercial and industrial property brokers Pace Property Group, believes the “very acquisitorial” PIC has a “substantial appetite for investment property”.

This will create more pressure on the “supply of investment property stock”.

Green says the market might see smaller listed property companies delisting to take advantage of fee savings and the ability to “move faster” in the entrepreneurial environment as delisting would enable quicker decision making. Delisting would allow these property companies to be more competitive than their listed property competitors.

Green says the PIC will be more aggressive on prices it is prepared to pay for property. However, the PIC will also be slower in finalising acquisitions because it needs to go through various internal approval processes, which tend to be “fairly lengthy”. Green says the PIC prefers fixed real estate investment to property developments.

Last modified on Wednesday, 23 April 2014 17:18

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