File picture: James White/Free Images
CAPE TOWN – Commercial property remains a viable and even lucrative investment, offering inflation-beating returns despite South Africa’s lacklustre economic growth and political instability.

This is the view of John Whall, chief executive of commercial property development company Heartwood Properties, which recently listed on the new 4 Africa Exchange.

Whall says the past few years have seen a plethora of new commercial property developments, primarily in Joburg and Cape Town’s business districts. “However, like with any investment opportunity, it’s important to understand the sector and the inherent risks to generate positive returns,” he says.

“Bear in mind that an investment into any commercial property typically involves a large capital outlay and is a long-term investment. It’s not enough to merely have sufficient capital for monthly bond repayments but adequate working capital to cover tenant installation expenses, planned maintenance and upgrades, as well as unpredicted costs including unforeseen repairs or economic downturns that could significantly raise bond rates and see tenants downgrading to smaller premises.”

He says property investment is ideally a long-term investment, as the longer you are invested, the better your return is likely to be, but this means your investment is not liquid in either the short or medium term.

“Bearing these risks in mind, it’s important to have a good understanding of the commercial property sector before deciding to make an investment. Investing in the right type of building in the right area is imperative.

“For those investors who are eager to reap the benefits of commercial property investment but who lack the requisite expertise required of this sector, one option is to invest in a listed commercial property company,” Whall says. Staff Reporter