2018 looks set to be a year of changes. With fresh political leadership in South Africa a more optimistic feeling is clearly starting to emerge among investors and the business community. As far as commercial property is concerned, several changes are on the horizon this year – let’s take a look at what the new year may bring.
Uncertainty – the perfect buying opportunity?
It’s no secret that South Africa’s reputation as an investment hotspot has been through testing times over the past few years. It would seem however, that this is set to change in the near future.
The recent changing of the guard in the ANC, with pro-business Cyril Ramaphosa assuming the party’s presidency, has already had a good effect on the Rand. With a more stable outlook, investors are likely to double down on South African commercial property – and Cape Town is at the forefront of new office space.
Property investors who took a long-term view and invested for the future over the past few years may reap the rewards before long.
The billionaire investor Warren Buffett’s famous advice, “be fearful when others are greedy, and greedy when others are fearful” may sum up the commercial property sector’s future prospects.
As stability returns, properties purchased at competitive prices over the past few years may produce bumper returns – and it’s not too late to invest at a good price.
Commercial tenants requirements are changing – and so are buildings
Any property investor who is keen to realise a healthy return needs to ensure that the building they invest in will be an attractive prospect for dynamic tenants in the future.
Several trends in the way business is being done, as well as the changing face of retail, are having a major effect on the demand for commercial premises.
- Online shopping is forcing retailers to combine floor space and delivery processing – often under one roof.
- Telecommuting (working from home), on-demand meeting spaces, and shared office solutions are becoming increasingly popular as millennials enter the workforce.
- As companies decentralise, the floor space required by the average tenant is decreasing.
- Energy efficiency, environmental sustainability, and green office spaces are becoming crucial factors in marketing commercial space to tenants.
- WiFi access, fast internet, and teleconferencing facilities are becoming standard requests from commercial property tenants – and this trend will only increase in the future.
In order to stay competitive, commercial buildings will need to be smart, green, and offer flexible and compact office space.
While new buildings are often designed with these features in mind, older buildings may need to be redeveloped or renovated to stay relevant to the needs of tenants in the coming years and decades.
Shrinking floor space and shorter occupancy
A typical office building will also need to deal with a greater number of users, as floor space shrinks and more tenants occupy a single floor. At the same time, building owners will need to manage their cash flow and expenses carefully as short-term occupancy (anything from 6 months to a number of days or even hours) becomes the norm.
If you would like to take advantage of the investment opportunities that the commercial property sector has to offer, contact us today. Our extensive portfolio contains innovative buildings and office space throughout the greater Cape Town area.