Real Estate Investor Magazine South Africa February/March 2019 | Page 44

Broll progressively
banks on SA and its
people
Notwithstanding tough economic conditions in South
Africa, Broll Property Group is investing in its people,
focusing on real transformation in the company and providing
best-in-class service to its clients, to entrench its position as a
Pan-African leader in commercial property services.
That’s the word from Sean Berowsky, Head of Broking at
Broll, who says the group’s progressive edge not only comes
from its almost 45 year track record in the industry, but its
focus on people.
“People are at the heart of our business and our passion,
together with experience, industry insight, networks and
service offering is what sets Broll apart and gives us the
competitive edge, even in tougher economic times,” he said.
While Berowsky is cautiously optimistic about South
Africa’s economic fortunes in 2019, he says challenges
around state owned enterprises (SOEs) such as Eskom and
uncertainty around the expropriation without compensation
(EWC) land debate will continue to put a dampener on
business confidence.
These broader macro-economic issues have been negatively
impacting the property sector, which has had to grapple with
its own challenges last year, particularly around share price rout
of many of South Africa’s JSE-listed Real Estate Investment
Trusts (REITs).
“It has been well documented that 2018 was one of the
toughest trading years for most of the listed REITs. This was
due in the main to continued anaemic GDP growth, rental
reversion and the long and still unknown outcome of the
FSCA (Financial Services Conduct Authority) investigations
into the Resilient Group of companies, which has had an
obvious investor lack of confidence effect on the sector,” says
Berowsky.
“For 2019, we are all routing for stable elections, a reasonable
solution to the crisis in many SOEs, a benign interest rate
cycle and heaps of economic growth. Perhaps getting all that
may be a tad optimistic, so we do remain cautious,” he adds.
With the elections around the corner and likely to take
place in the first half of 2019, the EWC debate has come to
the fore as one of the hot-button issues.
Says Berowsky: “One of the overarching South African
challenges is the expropriation of land debate and the current
negative impact it has on investor confidence, which cascades
down to cautious valuations on pricing real estate assets.
Conversely, having the issue resolved in a manner which
creates confidence for the long term deployment of investor
capital will have the exact opposite effect in this sector.”
He says EWC, while it remains unresolved, causes capital
ADVERTORIAL
to be invested where there is policy certainty, in countries
like Mauritius, which is attracting a lot of South African
investment.
On wider African assets outside of South Africa, he says
that a stable currency and political environment will be the
best indicators to lure external capital in the real estate sector.
Any instability, particularly in these two areas, will have the
opposite effect.
Back on the local commercial property market, Berowsky
says: “Current trading conditions remain tough, with pricing
of assets under pressure due to persistent low economic
growth, the recent uptick in the interest rate cycle and reducing
occupier demand, particularly in the office and retail sectors.”
In terms of property trends and opportunities, he notes
that retail is set to continue to be impacted negatively by
ecommerce with some retail asset vacancies and re-pricing
of assets, however, ecommerce also presents benefits for the
logistics sector.
A big trend that was already revealing itself in the market is
the explosion of co-working or flexi-space in the office sector,
led by the likes of WeWork and Regus in the South African
market. Berowsky says he expects to see established landlord’s
creating in-house brands in the co-working space, coupled
with more private players.
“This could result in shorter leases becoming the new norm,
which will provide opportunities for entrepreneurial investors
and occupiers to take advantage of market opportunities. In
addition, student housing in certain locations remains buoyant,
but is slowing in other parts where there are too many units
available,” he explains. 
 Broll is set to become a wholly black owned South African
company in the next few months and we are looking forward
to the opportunities that being a level 1 BEE contributor may
unlock. We have been transforming our company within the
group for many years and the potential upcoming transaction
allows us to finally achieve our full transformation in a very
meaningful manner.
Established in 1975, Broll Property Group is a proudly
South African company, which today has over 2100 staff in
21 offices and operating in 17 African countries. Total assets
under management across Broll’s South African and Sub
Saharan operations exceed 41 million square metres and is
valued at some R220 billion. Broll is a multiple award-winning
privately owned and independent group with a Level 2 BEE
rating. It first ventured beyond South Africa’s borders 16
years ago and has further expansions of its service lines and
geographic presence planned.