Focus is on keeping tenants happy.

Posted On Wednesday, 19 February 2003 02:00 Published by eProp Commercial Property News
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It is essential to maximise earnings from each property.

Bruce KerswillActive property asset management is becoming increasingly important in the drive to achieve good investment performance.

Managers need to be close to the source of the income the tenants as well as the physical building itself.

'It costs several times more to attract a new tenant than to retain an existing one, which means the industry needs to focus on keeping tenants happy,' says Bruce Kerswill, MD of Spire Property Services Group.

'The accommodation must fulfil its function and the building must operate efficiently.

'Services such as security, cleaning and garden maintenance among others must be of a high standard and the building must be maintained in good physical condition.

'Combined with this, any vacant space needs to be actively marketed and we have incentivised our managers to keep our clients' buildings full.

'We take a long-term view and manage each property as a separate business from which earnings must be maximised.

'One of the major aspects is to recognise that, like any asset, properties have a distinct life cycle.

'A building has different characteristics and management requirements as it progresses through its life cycle.'

He says the philosophy of active asset management is well developed overseas but still relatively poorly developed in SA, as property management in this country often tends to be equated with collecting rentals.

'In countries like the UK, Canada and Australia a greater focus is placed on actively managing buildings that may be in difficulty due to changing trends in usage, fashion or in changing demographic patterns,' he says.

'By repositioning, refurbishing or redeveloping the building, the decline of the investment can be avoided and the building pushed back on to the life-cycle curve.

'It is often necessary to look beyond the building itself and to the wider area in which it is located. We are starting to see this in SA with the recent emergence of the city improvement district initiative.

'Active asset management is becoming increasingly important in order to maintain property assets at their revenueproducing peak,' Kerswill says.

Kerswill says the market is active in KwaZulu-Natal and is one of the few areas where rental growth is being experienced, particularly in industrial uses. He says there has been little economic growth in the Western Cape for some time and the market has been soft, but there are indications that it is firming. Traditionally, property in the region is in high demand and yields tend to be lower than in other areas.

One of the challenges in the industry is to maintain property assets at their productive peak.

Kerswill says to this end individual property assets are analysed in respect of area dynamics, market demand, historic performance and projected returns.

'Changing conditions in the SA property market require a new approach to the management of property assets. Commercial property in SA used to be the preserve of large institutions, but private investor demand is growing,' he says.

'Investors are demanding better performance and more transparency from property, as well as greater liquidity from property-based investments.'

Last modified on Monday, 26 May 2014 13:53

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