Now is the perfect opportunity to become a value investor in commercial property and to ditch the generalist market investor approach. 

This is according to Tony Bales of commercial investment broking specialists, Bales Delaporte.

“For the past three years, most commercial properties have shown good capital and income appreciation and many investors took to purchasing any available commercial property.”

However, this will not be the case moving forward, cautions Bales. 

“The market has changed and wise investors are seeking out properties in specific locations with specific fundamentals – properties that offer an investment that will grow at an above average rate.  Enter the age of value investing.”

Bales advises that what is value for one investor may not be value for another. 

“A passive investor may offload a property to one who has the capacity, time and inclination to develop it and unlock the potential value.  Investors all have different profiles, such as knowledge, size, skills, etc. thus ensuring constant value arbitrage in the commercial property market.” 

“The key here,” says Bales, “is to understand exactly what is value for oneself. The greatest value investor of all time, Warren Buffett, did not buy any technology shares during the boom in the late 1990’s – a move for which he faced mayor criticism.  However, his actions were well rewarded in the end as today he is one of the wealthiest people in the world.”

According to Bales, another aspect to understand is that of internationalisation. 
 
“Investors must see the value concept as one that has no borders.  For example, there has been talk of international investors pursuing the purchase of the V & A Waterfront at yields of 4.5 %.  What may seem overpriced to South Africans might be value for international players.  Conversely, when the US dollar strengthens, we must expect the SA property market to offer less value than more developed countries and hence investors will move funds to those countries that offer them more perceived value.”

“It’s simple,” says Bales, “we are part of the international economy and can not ignore the fact – it affects our commercial property market and the concept of value.”

Bales concludes that the most successful commercial property investors in the next 24 months are going to be those focused, knowledgeable players who exploit the concept of value investing.  “As Warren Buffett says, be a property analyst, not a market analyst.”

For more information please contact Bales Delaporte on 0861 332 562 or visit www.balesdelaporte.co.za

Ends

 
Bales Delaporte
Contact:  Tony Bales
083 675 3773           www.balesdelaporte.co.za