Residential investors need to club together to gain scale before they can compete in the listed property sector, Octodec Investments MD Jeffrey Wapnick said last week at a tour of his fund’s inner city Pretoria properties.
Octodec owns residential property in the Johannesburg and Pretoria CBDs. It earns income of about R400m a year from these assets, with vacancies at 3%.
Wapnick said SA’s inner cities were in need of investment and care and Octodec and a few other firms could not provide this on their own. He hoped for more competition in the residential market.
"People are interested in residential property but I think we really need long-term competition. We see entrepreneurs and investors pop up, but they often struggle to find scale. These groups need to club together and make long-term investments in inner city buildings and their surrounds," he said.
Octodec’s residential property portfolio includes 9,500 apartments and serves 14,500 tenants. Octodec is one of a handful of property companies listed on the JSE that has exposure to residential property. Others include Indluplace Properties, SA Corporate Real Estate and Transcend.
There is a view in the commercial property industry that SA is now "over-shopped" with too many malls for too few people. Office landlords are also under pressure with stubborn vacancy levels. However, demand for affordable student housing is strong.
Wapnick said a potential opportunity for investors would be providing well-located housing in the inner city or new business nodes for professionals and entrepreneurs who come from other parts of Africa.