Demand for conversion of residential to business properties is about to gather momentum once more says Roy Lazarus of Park Village Auctions. “Many of the country’s major cities are already characterised by belts of converted properties, usually on main roads, but it’s common knowledge that things have stalled on this front in recent years." This may well be changing due firstly, to rising transport costs which are forcing the pace on demand for properties in established areas.
“But it also has to do with the rising costs of new development and the red tape involved with municipal approvals and power supply issues, all of which are causing delays and frustration for developers. Other market drivers include position, security and problems in obtaining rezoning permissions, all of which spells out growing demand for existing residential properties going forward into 2012.”
And Park Village has already noticed an uptake in demand for properties in their portfolio which fit this bill. “Residential properties suitable for conversion for small business use in established areas, close to all amenities, with existing power supply are attracting a great deal of interest,” confirms Lazarus.
He adds that demand for well- priced residential properties which can be converted into businesses generally remains good in contrast to the rest of the market which remains in the doldrums.
Another major driver of the residential property/business conversion market in Gauteng is obviously the advent of the Gautrain. Properties suitable for business conversion in the corridors alongside the Gautrain route have benefitted from this factor, emulating what has taken place internationally.
“Moreover, with the advent of the new toll roads - which will in all likelihood, still come to pass in some form - we anticipate that demand for such properties will be given an additional boost, given that companies will be seeking ways of restricting travel costs by having their business base in centralised areas."
A further factor is the mushrooming of numerous small businesses and consultancies, partly as a result of BEE driven redundancies of skilled senior people, who then establish themselves independently.
Finally there’s the issue of the efficiency of auctions as a mechanism for creating a market in residential to business conversions. “Certainly in Park Village’s case, auctions are 100 percent transparent, there are no suspensive conditions, no hidden agendas, no buyers can delay the sale by ‘playing off’ against each other , the sale is brought to finality quickly and there are no hidden costs. These principles are true of any asset sold by auction and the open auction system is an extremely efficient mechanism of disposal.”
“This positive outlook is in spite of the fact that the economy is basically chugging along without any real fireworks. For those with the foresight and the correct advice and the opportunity, it’s a market that represents major upside potential,” concludes Lazarus.