Tax relief set to vindicate ApexHi's CBD buys.

Posted On Wednesday, 05 March 2003 10:01 Published by eProp Commercial Property News
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PROPERTY loan stock company ApexHi Properties is already counting the gains that will flow from the tax relief directed at property investors in older central business districts (CBDs).

Brian AzizollahoffApexHi is one of the prominent investors that have taken huge positions in the less popular nodes across the country, replacing institutions that are dumping investment properties in these nodes.

ApexHi recently boosted its portfolio with the acquisition of 18 highyielding properties worth R122m in Braamfontein and in the Johannesburg CBD.

In a move meant to stop urban decay in older CBDs like the Johannesburg city centre, Finance Minister Trevor Manuel announced tax incentives for reinvestment in selected underdeveloped areas in his budget speech last week.

Property owners who refurbish their properties within the selected centres will be entitled to a 20% straight-line depreciation allowance over five years. New developments in these areas will receive a 20% write-off in the first year, and 5% a year for 16 years.

ApexHi MD Brian Azizollahoff says the announcement has been well received, and acknowledges the need for a managed process to regenerate urban areas.

"Manuel's announcement is a step in the right direction, which could benefit owners of properties in the CBDs," says Azizollahoff. He says the announcement regarding the changes to tax payable on interest will also benefit investors in ApexHi and other income funds.

The tax rate on interest income has been cut from 25% to 18%, and tax will be payable only on interest earned over and above R10000, while pensioners are taxed only on interest earned above R15000.

The group's property portfolio reflects a total of 209 buildings valued at about R2,1bn. Up to 74 buildings out of this portfolio are highyielding, CBD-based properties valued at R1,1bn.

Azizollahoff says the future tenant profile of the CBDs is set to undergo a dramatic change. "Trends have shifted, and a new regime of tenant has emerged," he says.

"ApexHi's advantage is that we have kept close to the changes, and we have a number of planned interventions dedicated to reviving the CBD, which will be bolstered with the new tax incentive scheme."

There is consensus in the industry that incentives directed towards investing in CBDs will boost urban regeneration.

Property economist Francois Viruly says that the relief is a component of the budget that is pivotal to the commercial property market.

Jonathan Smith of property consultants Courtwell Consulting says the tax relief bodes well for intuitive owners and developers.

Last modified on Tuesday, 06 May 2014 13:09

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