PROPERTY: Annual Conference To Identify Solutions To Global Fallout
Recent Western Cape Business News
The aptly titled The world has changed – new agendas, new realities for real estate, the 7th Annual IPD/SAPOA Property Investment Conference to be held in Cape Town later this month is set to find solutions to the impact of global economic meltdown on property investments.
To do this, property specialists from both SA and abroad, and from an array of property disciplines, will converge for the industry’s most high-powered series of brainstorming sessions. Investors – and would-be investors – in the commercial and industrial property sectors will be keen to hear what the Conference’s speakers have to say.
CB Richard Ellis international director Nick Axford will be presenting his analysis of the global property investment environment at the Conference’s first session, entitled The Changing Landscape. As head of the global property consultancy’s research and consulting division for Europe, the Middle East and Africa, Axford’s view that good old-fashioned property management is well worth heeding.
“The world has indeed now changed. Property values will be driven primarily by the traditional fundamentals: occupier demand, supply, and rental movements,” explains Axford, arguing that the result will involve a back-to-basics shift for investors. “Rather than expecting a rising market and falling yields to generate value, investors will utilize active management techniques as the best way to drive performance.”
Another impact of the global recession is the upward shift of risk premiums across all asset classes – and how property investors should manage this trend.
“In the property industry, rising risk premiums have converged with a re-pricing of debt and stubborn building cost inflation,” says Old Mutual Investment Group Property Investments managing director Ben Kodisang. “This both negatively impacts viabilities and severely constricts access to capital.”
The net result, he believes, is that the commercial and industrial property industry in SA is being forced to review how to prospect for – and acquire – capital. “As a community, our ability to understand and adapt to these changes will profoundly influence our success going into, and beyond, 2010.”
Kodisang is scheduled to delve into the issue of debt in the Conference’s second session, Capital and Growth, with a particular emphasis on how these factors affect property investment decision-making.
Listed property won’t escape scrutiny at the Conference. “Historically, many property companies did not disclose their true gearing levels and leveraged positions. They also made the mistake of focusing on business other than rent-producing properties,” says Pangbourne Group executive director Craig Hallowes, who will take part in the Conference fourth session, an assessment of Changing Markets.
“I think disclosure and focus will be key going forward. But I also believe that analysts and asset managers – who have really gotten projections horribly wrong in the last few years – to use that disclosed data resourcefully.”
Hallowes believes that the property investment sector can expect aggressive acquisitions as the sector steadily emerges from the credit crisis. “We’re not yet through the trouble, but mortgages are becoming more prevalent, unsecured debt is more plentiful, and insurance companies are still very active. Some creative financing has even begun to appear on the horizon,” he says.
The Conference will be held at The Pavilion Conference Centre in Cape Town on 30-31 July, 2009.
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