OUTSOURCING of property, rather than outsourcing of property management
services, could gain an increasing foothold in South African corporate life
in the next few years, says Ian Watt, managing director of Old Mutual
Properties.
"This will be in line with a trend fast emerging in Europe," he says. "It is
being driven by a desire by corporates to unlock the value of their property
portfolios and raise funds for broader restructuring by tapping into
investor appetite for real estate," he says.
"Coupled with this trend is a realization that property is a real business
requiring in-depth management and specialist skills to avoid loss of value."
Watt says that this is illustrated by one recent transaction in Paris, where
a partnership between a real estate company and a corporate owner will
redevelop and manage three city buildings to be occupied by the corporate on
long leases.
"The value of big property outsourcing deals in Europe from January 2001 has
exceeded EUR16,5 billion (R155 billion). The deals have been struck by large
organizations like Deutsche Post, British Telecom, France Telecom,
Carrefour, Marks & Spencer and Barclays."
"Nevertheless, the move by European corporates to give up ownership of the
roofs over their heads will take some time before it makes a dent in
owner-occupation figures. It is estimated some 70% of corporate buildings
there are owner-occupied as against 30% in the United States."
"What is happening in Europe is part of a drive by companies to ensure their
property strategy supports their corporate strategy. That is particularly
true for fast-moving companies which need to occupy premises on a flexible
basis."
Watt says speculation in South Africa that institutions are about to
initiate a wave of outsourcing of their property management functions
overlooks this European trend and its underlying potential and also what has
been happening in local and international markets in recent years.
"Some institutions prefer to owner-manage assets. They believe that's the
way to get the most value out of their assets. Others delegate to managing
agents."
"But all players in the industry recognize this is an age of specialization.
That recognition has led, on the one hand, to the assembly by some companies
of multi-disciplined professional teams working for external and internal
clients, and on the other, to project-based partnerships."
"In our case, Old Mutual Properties offers property management, asset
management, development and project management, facilities management
consulting, financing, valuations, leasing strategies and other value- added
services. Three years ago we added Corporate Real Estate Services as a
focused service aimed at the user market as distinct to the investor
market."
"Our aim is to look at real estate as a vehicle that is important in company
strategy to achieving objectives and managing growth."
"Our clients for some of these services range locally from the likes of
Eskom and the Airports Company of South Africa to the University of Cape
Town and the Canal Walk shopping centre in Cape Town. Internationally, we
are providing facilities management, leasing, marketing and operational
support services to investors in the Middle East and the Ukraine."
"Locally, we have struck up partnerships with service providers to ensure
the best for our clients."
"Our international assignments also place an emphasis on partnerships rather
than outsourcing. This entails the manager, institutional or other,
providing the overall service and harnessing specialized skills for an
appropriate need. These are real partnerships where manager and service
provider work together for a common objective."
Watt says multi-disciplinary teams with in-depth skills and experience will
continue to be major players in the market.
"What we will see is a greater use of these skills, even by competitors. The
driver will always be the need to make the most of the asset and to tap into
the best skills available to do that."
Publisher: Cape Business News
Source: Cape Business News
OUTSOURCING of property, rather than outsourcing of property management services, could gain an increasing foothold in South African corporate life in the next few years, says Ian Watt, managing director of Old Mutual Properties.
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