South African Property Owners Association (SAPOA) recently reported a national vacancy rate of 14.9% for inner cities, while decentralised nodes showed a considerably lower vacancy rate of 9.7%. The Cape Town CBD vacancy rate is primarily a result of an oversupply of stock but moreover, tenants are trying to escape the traffic congestion, insufficient parking ratios and high running costs of the older city centre buildings.
This shift in demand has created an investment opportunity in decentralised office nodes such as the Southern Suburbs. The oversupply seen in the CBD has caused rentals to stagnate, while on the other hand, decentralised office nodes have shown stable rental growth. Decentralised nodes have also shown significantly lower vacancies than inner city rates in previous property cycles. Acquiring property in these superior growth nodes enables investors to achieve above average rentals and sustainable capital growth.
Horizon Capital recently completed the redevelopment of a spectacular building in the upmarket Southern Suburbs based Aintree Office Park. The extensive redevelopment converted the space to AAA-grade standards. Externally, waterproofing and repainting were commissioned and paid for by a healthy body corporate budget. Quality, modern finishes were installed throughout, including bathrooms, kitchens and stairwells. New modern bulk ceilings were incorporated and bathrooms were fitted with Caesar Stone vanities. The beautiful open plan space lends itself to a variety of tenant requirements which translated quickly to a fully let building, with four leases being signed in a matter of weeks. The finished product has a clean, modern feel with lots of natural light, providing an impressive corporate appeal.
With the increased supply of large developments taking place in Century City, the Durbanville corridor and the CBD, landlord bargaining power has been under pressure. With many commercial portfolios concentrated in these areas, investing in the Southern Suburbs also provides a unique opportunity for investors to diversify their portfolio. As a result of the limited supply in the Southern Suburbs, negotiated rentals and escalation rates remain favourable to the landlord.
With the ever increasing consciousness of the effect of human behaviour on the environment, people are constantly trying to reduce their emissions. The simplest way to do this is to work close to where you live. The leafy green residential environment provided by the Southern Suburbs creates the perfect backdrop to live, work and play within a smaller footprint.
Aintree is well-established, neatly maintained and offers 24 hour security, access control to each building and plenty of basement and open parking ensuring a healthy parking ratio. Fibre optic cables are also currently being laid for rapidly enhanced internet connections. Moreover, the building has its own generator with the capacity to keep the entire building running through loading shedding blackouts. The Park is conveniently positioned on the corner of Doncaster Road and Punters Way in Kenilworth and has excellent accessibility to the M5 Freeway. It is well located near many amenities and public transport links, and directly opposite the recently refurbished Kenilworth Centre shopping centre.
The newly refurbished, AAA-grade office space in Aintree Park is now fully let on long term leases to multinationals such as Old Mutual. The block is being sectionalised and has now become available for purchase on very attractive yields exclusively to Horizon Capital clients. The current economic climate offers a unique investment opportunity for investors interested in sectionalised units, which are secured by long term leases. Flexible purchase options from R5,5 million per section are on offer.
Horizon Capital currently has a vacancy rate of 2% for its ongoing management portfolios, well below the national averages. For further information phone John Witter on 021 425 8586.
