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Emira office portfolio shows increase in vacancies

Posted On Wednesday, 22 December 2010 02:00 Published by eProp Commercial Property News
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Listed property unit trust Emira Property Fund has seen an increase in rentals remain flat in the six months to December.

James TempletonIn a tough trading environment with rising vacancies and struggling tenants, listed property unit trust Emira Property Fund has seen an increase in rentals remain flat in the six months to December.

Speaking to Business Day yesterday, CEO James Templeton said Emira’s vacancies had risen in the past few months, since the start of the financial year in July, as a result of tougher than expected economic conditions, "which seem to have taken all economists by surprise".

He said that the weakness had been mainly in the office portfolio, specifically in Cape Town and Johannesburg.

In the financial year to June "on leases that we were renewing we managed to get an average increase of 7% from the leases that tenants signed, while on new leases we were down 5%, giving an overall increase of … 3,3% for the year", he said.

In the five months to December, Emira experienced an increase of only 0,5% on renewals, but on new leases the increase was flat with no growth.

"In other words, tough conditions coupled with higher vacancies, a competitive market, hikes in rates and electricity charges have resulted in growth in income slowing from 3,3% in the 12 months to June to 0,4% in the five months year-to-date of our current financial year."

However, he said the fund was optimistic next year would be a better year for the property sector due to improving retail sales, which were already picking up as a result of low interest rates.

"Economists believe the retail sector will lead us out of the current down cycle.

"Industrial has remained relatively resilient despite the strong rand and office seem like they will be the last to recover, which is similar to the last cycle."

Mr Templeton said that in the meantime, Emira continued to take advantage of the "very competitive contractor market, where building contractors have significantly reduced the fees charged, to grow and expand our portfolio by investing further capital in our existing portfolio".

Stanlib property franchise head Keillen Ndlovu said that retaining a tenant was generally better for property companies as they saved on paying brokers fees and commissions for bringing in a new tenant.

Last modified on Monday, 21 April 2014 08:52

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