Apexhi Positioning Bodes Well For Current and Future Property Prospects

Posted On Tuesday, 27 November 2007 02:00 Published by eProp Commercial Property News
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ApexHi Properties Limited is well positioned to take advantage of the current buoyant property market. But perhaps more importantly, the company is also well protected against a potential downturn in the property cycle

Gerald LeissnerA growing economy has led to increased demand for space and reduced vacancies in all sectors of the property market, pushing
rentals upwards. The concern is that when demand increases, developers race to create new space, leading to an oversupply and a subsequent downturn in rentals again.

ApexHi CEO Gerald Leissner believes we are unlikely to see an oversupply for the next few years. “Building costs are rising sharply with feasibility rentals for new space as much as 50% in excess of current market rentals. There is also limited capacity at municipalities to approve plans,” he says.

In addition, ApexHi’s properties offer B and C grade space, where new developments are unlikely to compete. “In the office portfolio our primary tenant is government, where we are getting good rentals and satisfactory lease periods for large pockets of space. Large areas of space are not readily available for lease in almost all areas of the office market, which is placing pressure on larger tenants to renew existing leases, rather than relocate to new space,” he says.

In the retail market, which is expected to come under pressure due to a curbing of consumer spending as a result of increased interest rates, ApexHi is also well protected. Leissner says ApexHi’s retail centres are primarily aimed at the “commuter” market, a market with a limited debt profile, where customers buy for cash and are not really sensitive to increases in interest rates.

“Furthermore, in the event of the cycle turning, our lower rentals are not expected to fall as much as the high A grade rentals,” says Leissner.

Last modified on Tuesday, 22 April 2014 17:06

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