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Cross-Sector Growth

Local realtors are seizing opportunities to expand through market diversification and global networks.

Specialist in-house services of agencies that traditionally spanned a single residential platform where commercial market activity was often viewed as a secondary interest has produced dedicated divisions in the fields of auctioneering and property development. The expansion towards fully fledged industrial and commercial divisions illustrates that markets change according to industry needs.

Additional exposure at international levels – owing to spin-offs from the tourism industry and investors diverting from global economic uncertainty – has motivated global connectivity within the residential sector. Cross-border partnerships have resulted in long-standing affiliations between local agencies and global networks operating across various market sectors.

Examples include the affiliation between Pam Golding Properties and Savills Property Group; between Anne Porter Properties and Knight Frank; and between Greeff Properties and Christie’s International Real Estate.

Specialist commercial services, on the other hand, are taking place across local as well as foreign platforms. Unlike a number of South African residential specialists who over time have extended their in-house services to the commercial sector, the Pam Golding Property Group entered this market in 2013 via a strategic business alliance with industry specialist 5th Avenue Properties.

5th Avenue Africa is marketing and leasing the Rani Towers in Maputo, Mozambique. This A-grade integrated development with panoramic sea views comprises offices, retail and accommodation within a central location close to schools and chambers of commerce


Said Pam Golding Property Group chief executive Andrew Golding: “As part of our aspirations to be a comprehensive property services provider, including commercial, and within the overall Savills global network, our strategy is to enter into strategic partnerships and wholly-owned opportunities within the commercial space wherever appropriate. One such strategic alliance was established in 2013 with 5th Avenue.”

A national commercial management agency, 5th Avenue is expanding its operations to the emerging markets of North, East and West Africa in a drive to service the needs of landlords in the office and retail sectors. Apart from its role as an individual residential service provider, Pam Golding Properties also facilitates the residential needs of employees of corporate occupiers.

Mark Latham, chief executive officer at 5th Avenue Properties, said this agreement offers an opportunity for two established industry specialists, who share a common brand, to develop and deliver key synergies under the Savills International Property banner. 5th Avenue’s experience in the global market means it is ideally placed to cater to the developing needs of emerging African markets, such as the oil and gas industries in Angola, as well as Ghana, Nigeria and, more recently, Mozambique. The two players’ joint areas of specialisation complement the growing need for corporate support in Africa, and the potential spin-off into the residential sector is facilitated through an African-based partnership across multiple platforms.

On the local front, cross-sector interests remain valuable in terms of stimulating broadened investment opportunities that should lead to notable successes within extensions of the residential sector.

Seeff Property Group, which in 2014 celebrated 50 years of industry participation, has for about 20 years expressed an aggressive involvement in the commercial sector, said group CEO Stuart Manning. “This has brought significant brokerages internally, both in Johannesburg and Cape Town, particularly in the fields of retail management and rentals,” said Manning. The company’s growing national footprint in this sector has resulted in a fully licensed operation with 200 outlets nationally.

The commercial division within Seeff Property Group, whose core business remains primarily in residential sales and rentals, complemented by development, agriculture and investment, had shown significant growth in turnover and exceptional broker performances since mid-2013, said Manning.

A major contributing factor is that good commercial brokers look to align themselves with best overall market opportunities. Changing markets and increased investment opportunities motivates realtors to aggressively head hunt the best investment brokers, whose institutional company experience is a valued commodity.

The number of top brokers who operate individually and who might previously have created brokerage houses or invested directly, is scaling down. As proven within the residential sector, said Manning, new legislation that either prevents or prohibits compliance poses a complex operating environment. The result is that brokers are attracted to commercial brands where both legal and financial expertise is offered on in-house.

Additional opportunities arising from internal industry changes have been noted over the past 10 years within private equity investment funds and by owners of property portfolios. Manning said traditional in-house management services are increasingly being outsourced to dedicated industry specialists. When viewed from a transactional perspective, this explains why the productivity levels of commercial brokers differ greatly from that of the residential sector.

Rawson Property Group’s commercial manager Leon Breytenbach, who has been closely involved in establishing the division within the group (its fourth) agreed that specialist brokers benefit from high levels of expertise of large brands. Most entrepreneurially minded individuals realise that establishing a brand is a time-consuming process that prohibits them, as successful brokers, from earning an income.

“Rawson Property Group provides this platform immediately, and the value added by a franchisor far exceeds royalty fees charged on every concluded deal as the new franchise has the ability to grow from day one,” said Breytenbach.

Recognition of the growing need for skilled professionals in the commercial and industrial sectors has led to the opening of 31 national franchises and the hiring of 135 staff members, and strong growth has been recorded since the opening of the first Rawson Property Group franchise in 2011, said Breytenbach.

Breytenbach said that upskilling and a broadened knowledge base is facilitated in-house basis for new franchisees, brokers and consultants – including residential agents – who cross over to the commercial and industrial sectors. The gathering of commercial and industrial data coupled with the building of valuable corporate relationships requires high levels of knowledge and industry experience in these sectors as compared with the residential sector, he added. The group’s all-encompassing strategy of diversifying away from a single-base residential agency that brought additional successes to the auctioneering and development divisions now extends throughout the commercial division.

Manning said global alliances to complement the group profile on international platforms remained a priority, with negotiations to facilitate cross-boundary transactions under way.

From an African-based-specialist perspective, Latham said, industry experience and in-depth is essential to operate within the valuable yet challenging African markets, where transparency and access to information is not always readily available. He said the corporate industry offers the ideal environment from where service providers such as 5th Avenue and the Pam Golding Property Group can leverage synergies under one banner, instead of fragmented operational structures.


Words: Anna-Marie Smith


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