PROPERTY: Nedbank 'Cautiously' Optimistic
Recent Western Cape Business News
MAKE no mistake, the global financial crisis is here in full force, and many sectors of the South African economy are feeling its effect. But Nedbank’s corporate property finance division in the Cape, remains cautiously optimistic.
The heady days of 2006/7, when property was all the rage and it seemed you just couldn’t go wrong, have certainly gone, he says. But those who know the market well are keeping a weather eye on the storm, battening down and protecting their assets until better times return.
“Everyone thinks they are an expert in property, and of course many are. But it is a brave sport, and an unforgiving one. If you get it wrong, or linger too long in an over-exposed position, you can get burnt. And sadly, some have been.”
Nedbank read the signs two years ago, and cut back its involvement in new residential developments, feeling the market was over-traded. “We corrected our balance sheet, made fewer loans and looked even more carefully at any we did make, whilst maintaining our strategic intent.”
Today, those who know the property market well are in a similar holding pattern, not undertaking much in the way of new development. They are putting their major efforts into making a success of existing developments, and holding tight to investments they may have made, for example in land.
Nedbank is by a substantial margin the leader, both nationally and in the Cape, in the field of corporate property finance, Thomas says. “We have built up a client base of astute and experienced people who know the business well, and we have dealt, in fact, with just about every major developer in the Cape.
“We tend to concentrate on them, as they account for so much of the major development, building up and buttressing their businesses, and at the same time adding a leavening of new clients as they arise. We look at each new project on its merits, asking ourselves: Does it make sense? Is it financially viable? Is there a market for it?
As to existing developments, if serious problems arise developers should consult their bankers as quickly as possible rather than let things get worse, he says. There is no way bankers want to step into the shoes of developers, but a problem shared in time, as partners, can often be solved.
With this ‘survival strategy’, Thomas is cautiously optimistic and confident as Nedbank confronts the immediate future. Nedbank has a clean portfolio, with no big losses. The journey may be difficult at times, but they will come safely through it.
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