"It's very seldom that the private investor or syndicate will be offered such a complex as more often than not such properties are bought by institutional players. The man in the street very rarely has the chance to throw his hat in the ring for an offering this size at a public auction," says Mark Kleynhans of Auction Alliance.
"The complex is well let at the moment and the opportunity exists for a focused private buyer to manage the centre himself and so unlock further value."
Kleynhans says the commercial, retail and industrial offerings on auction next week are from the portfolio of Apex-Hi, an investment property group, one the main listed property funds on the JSE.
In general, these properties have a market value below R10m, and are well suited to the private investor and small syndicates.
"They offer a nice variety of commercial, retail and industrial investments as well as a wide geographical mix, being situated in Johannesburg and the East and West Rand.
"Being owned by a large property company, management and facilities management are currently outsourced, presenting the opportunity for a new entrepreneurial owner to radically reduce current overhead structures. Income and initial returns can be boosted by trimming expenses."
Current vacancies have not been reflected in stated income, a factor which Kleynhans says gives the opportunity ?down the line? for improved income when the vacancies are filled.
"Furthermore, the buildings have been well maintained and offer good value on the current market."
On offer is TML House in Hendrik Verwoerd Drive, Randburg, which is attracting good interest, largely from what Kleynhans describes as "shrewd buyers". These are buyers who recognise the opportunity for selling the building under sectional title either as offices or converted residential units.
Under the spotlight too are properties in the East Rand, where a big demand exists for small investment properties. Interestingly, it is from the residents of Boksburg, Benoni and Springs that most of the inquiries are originating. A few buildings in this region have blue-chip tenants such as the South African Revenue Service, Lubners and Nedbank, with leases in place.
Industrial property with investment potential is in demand as is evident from the especially strong interest being shown in freestanding properties in Wynberg.
Demand is being driven by growth in the industrial sector and the limited stock of new industrial land on the current market, a situation that Kleynhans says has spurred interest in old industrial nodes such as Wynberg.
There is much interest by corporates in 50 Fox Street in the mining house district of central Johannesburg, who plan to use the "grand old building with quality finishes" as a company head office.
Norman Raad of Auction Alliance says 50 Fox Street is one of few remaining old-style buildings in the area, and there have been quite a few inquiries about the property.
"Many investors are chasing buildings in central Johannesburg, especially those that have a strong ground-floor retail component and which historically were residential buildings," Kleynhans says.
"These buildings that originally were built as flats are in huge demand as there is minimal if any need for conversion into residential units, unlike former office blocks," he says.
The auction takes place at the Hyatt Hotel in Rosebank on Wednesday at 11am.
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
