Property Investment Bargain for Big Players in SA

Property Investment Bargain for PIC

An article in Business Day reports that the lower property prices and spiraling interest rates have created investment opportunities for big players, such as the Public Investment Corporation (PIC).

At the 40th annual convention of commercial property association SAPOA, held at the Cape Town International Convention Centre, head of PIC property investments, Wayne van der Vent said that this was “almost an ideal market” for the acquisition of property assets. The property will be acquired for the Government Employees Pension Fund, which PIC manages.

In recent months, the commercial property market, especially the listed sector has literally been hammered and the PIC has been a “cash buyer”. Van der Vent said that life has been easier “in that we are moving from a seller’s to a buyer’s market”.

The PIC is said to be implementing an aggressive growth strategy to build up its property portfolio to between 5% and 8% of the value of the pension fund in the next three to five years. Currently worth R20bn, the property portfolio accounts for about 2% of the fund’s total assets of R750bn and the growth planned would take the property portfolio to about R75bn.

Even though the market is deemed favourable, van der Vent indicated that the PIC’s focus on “returns” meant that it was not prepared to “pay any price”. The PIC had to “leverage changes” in South Africa, such as transformation and green building initiatives. Van der Vent noted that the listed property sector has not seen enough transformation and that the government had been “pushing for transformation around property ownership”.

While this was important, transformation has to occur elsewhere in the sector, not just at the board level. “There must be enterprise development. New property managers must be given an opportunity. I don’t think we’ve been creative enough about empowerment. Ownership is one aspect of transformation”.

The information in this article is courtesy of Nick Wilson (“South Africa: PIC Hunts Property Investment Bargains”, Business Day, 30 May 2008).

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