Diversification makes the Renprop Difference

During the past five years the South African commercial property market has been in the doldrums. This is according to Mike Walters, Divisional Head of Renprop Commercial. “Although we did not reach the same lows that Europe and the US did in 2008, we have also not seen the same level of recovery as the US is currently seeing,” he says.

On a macro level, Southern Africa is still attracting multinational investment as a launch pad for the continent. But, says Walters, it’s anyone’s guess as to how long will this last now that Nigeria has taken over the top position.  

“In the listed property sector, the larger players have capital and are acquiring. There are bound to be some mergers, more listings and some consolidation of the smaller funds. Good industrial stock is hard to find, and if it is well tenanted, it will sell at attractive yields to the right investors. “However,” says Walters, “funding still remains a problem for the small and medium investor looking to bulk up, as the banks are still tight unless the risk profile is extremely low. The office sector, remains slow with lots of empty space available and asset managers throwing all sorts of promotions and incentives at the brokers, especially if the buildings have been empty for a while or there is a risk that they will be.”

Walters points out that there are also a number of external factors that have an influence over the market. “South Africa’s political scenario, the exchange rate, petrol price and repo rate all affect consumer confidence, businesses and the markets. These factors all play a role in influencing tenants’ businesses, landlords’ attitudes and investors.”  

Trends in the micro commercial space have also shifted, with technology making the process of finding a suitable property much easier. “From our perspective,” says Walters, “this makes the task of listing quality properties an administration exercise that we have to do. That said, online property listings across a variety of portals have become one of the strongest lead generators for our business.”

When asked how economic changes and a shift in trends have affected Renprop Commercial’s approach to marketing property, Walters notes that when he took over the management of this business division during 2010, he made a concerted effort to reduce the division’s reliance on the office market and spread the focus to the industrial side of the business, especially in Gauteng’s East and West Rand. “The shift in focus has enabled us to endure this difficult climate, and in fact grow.  Over the last two years we have refined our offering, focused our resources into growing the commercial division and want to ensure we can accommodate our clients’ needs quickly. We continually strive to improve our turnaround time, customer service and build relationships. More direction toward technology marketing and the reduction of the brokers’ administration loads have also allowed them to spend more time building relationships and doing deals.”

Walters expands further saying that growth in the Renprop Commercial Division will come from two sources: growing market share in Gauteng and establishing partnerships with existing brokers or broker organisations in other centres. “The focus will now need to shift to gaining market share and growing the business in the other major South African economic hubs. We believe this is possible by working hard, using our initiative and being innovative. Renprop Commercial now services the entire Gauteng area from the South of Johannesburg to Pretoria and from the East Rand to West Rand and everything in between. And although Gauteng is the economic hub of South Africa, and our focus remains here, we plan to build relationships in other centres which are more user-friendly and are showing signs of increased demand.”

Walters says that Renprop Commercial’s plans for growth into other regions stems from the need, in today’s economic climate, to be constantly aware of where individuals are looking to move to, live and build their businesses. “There are the many efficient towns and cities in our country with considerate, working councils and local authorities with competitive rates and taxes as well as incentives for developers. It is in many of these locations that investors want to be, and it is in these kinds of areas where we are looking to expand our business.”

Walters says that even with the plans for growth, the company’s core principles remain the same. “We are area experts focusing on building long term relationships and approach each client with sound knowledge, expertise and enthusiasm.  Renprop Commercial Brokers are equipped and supported to undertake all leasing and/or sales transactions across the office, industrial and retail sectors. We have made sure that each area has one commercial property expert who will act as a point of contact providing a comprehensive commercial property solution.”

Walters says that South Africa’s commercial property market will remain weak and vulnerable in the future unless something is done about the unsustainable levels of rates increases, disregard for repairs and improvements to basic infrastructure, high and ever increasing unemployment and electricity costs, low growth rate, corruption and maladministration.

Going forward, Walters says that in order to grow the business, he continually focuses on two key areas: efficient delivery and continuous renewal to ensure that Renprop Commercial has a sustainable and successful model. “We are constantly re-engineering ourselves to make sure we are deliver excellent customer service and attract the right types of people. We currently have a great team of senior entrepreneurial property experts and we continually strive to retain and further grow our team.”

For more information about becoming a Renprop commercial broker contact Mike Walters on 011 463 6161 or mike@renprop.co.za.