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Sales of bigger properties herald an upswing in commercial sector

6 Nov 2013

Recent figures from national property analysts have indicated that a revival is taking place in middle-range properties in the South African commercial sector. The year-on-year upturn is generally estimated at around 25%.

Image: Free Digital Photos

This has certainly been the case at the Rawson Commercial franchises, said the national commercial manager, Leon Breytenbach.

"From mid-August to the end of October," said Breytenbach, "we saw a big uptick in commercial activity, especially in KwaZulu-Natal, where we now have nine commercial franchises, all operating very successfully. Our monthly turnover nationally in the third quarter of this year was 177% up on the same period last year. Not surprisingly, we are now experiencing a big upswing in demand from commercial property owners wanting Rawson Commercial to sell and rent out their properties.

Investors are also looking to partner with us - a few privately owned property funds having approached us in order to partner with them in finding the right commercial opportunities to invest in. These factors have also resulted in an upswing in demand for entrepreneurs and existing commercial brokers alike to operate within our commercial franchise model."

To date, said Breytenbach, Rawson Commercial has, since 2011, established 29 franchises and is now confident that it can sell and help establish another 12 in the year ahead.

Increased activity in the R2.5 million-plus category

Breytenbach said that they had been particularly pleased by the fact that there has been increased sales activity in the R2.5 million-plus category. Previously, he said, the focus had been on the less-expensive units, notably those in sectional title security parks suitable for commercial and industrial activity.

Some recent high price sales have been:

The sale of a 61-year-old 5000m² commercial building, in the hospitality sector, in Berea, KwaZulu-Natal. The purchase thereof, as well as the price eventually agreed to, is representative of the fact that there are all kinds of investors out there looking for unique commercial property investments, said the Rawson Commercial Kloof agent, Winston Sjouerman, who negotiated the deal.

The sale of six floors in a 14-floor building in the centre of Durban, sited between West and Smith Streets. Each floor is 100m² in size and each has additional mezzanine space. The sale price agreed was R12.9 million. The Rawson Commercial agent there, Peter Haskins, has also secured the mandate to tenant the building and has said that further sales of this size in the Durban CBD are likely because there is strong demand for properties there, most of which are now very reasonably priced.

Working from the offices of Rawson Blaauwberg's residential franchise, the new Rawson Commercial franchise, with Mike Abrahamse and Gary Vos as co-franchisees, has sold a 2500m² factory in Kilarney Gardens. This, too, is one of the bigger factories recently sold in the Greater Cape Town area. The price achieved was R11.4 million.

Action on the rental side, said Breytenbach, has also shown a big uptick, the figure now being 49% up year-on-year.

"The message to potential investors," he said, "is quite clear: get in now because sales and rents are rising by some 8% to 10% per annum."