Real Estate Investor Magazine South Africa Dec/January 2020 | Page 22

COVER FEATURE
entirely, landlords are under pressure to fill these spaces. But, at
the same time, they are becoming more selective about which
tenants they decide to secure. This has given rise to a different
tenant mix with smaller retailers.”
Kalyan is of the view that the era of new super regional malls
is largely over, with the focus shifting to community centres
located within densely populated suburban nodes that provide
the convenience factor and a sense of community with ample
parking and high levels of security. “These developments are
expected to be more resilient across the consumer spend
environment.”
Standard Bank REF is underpinned by deep, trusted
relationships with partners and clients. This allows it to tailor
its solutions to suit the needs of individual clients. Further
to that, REF has the ability to structure holistic solutions by
collaborating with other parts of the bank. “This collaboration
with corporate finance, mergers and acquisitions, the
commercial bank and the wealth divisions gives us the ability
to leverage our real estate skill set to offer unique solutions.”
Another common theme in the retail sector and beyond is
value add. Retail centres are, for example, undergoing revamps
and reconfigurations to provide varied entertainment and
experiences for visitors in the face of slowing retail sales and
tenant pressure. Meanwhile, in the office and residential
sectors, developers are enhancing assets with sustainable
elements that offer savings on water or electricity to meet
changing consumer demands and behaviour, which ultimately
improves overall returns. “Another common theme in the retail
sector and beyond is value add. Retail
centres are, for example, undergoing
revamps and reconfigurations to provide
varied entertainment and experiences for
visitors in the face of slowing retail sales
and tenant pressure. “
Kalyan explains that when reviewing potential financing
opportunities, Standard Bank undertakes a rigorous evaluation
process that considers underlying fundamentals of the asset.
“Solid long-term prospects for the real estate investment are
particularly important as well as the quality of the tenants.
It is our view at Standard Bank that a quality book is more
important than writing volumes of business.” Armed with an executive management team with a
collective 200 years in the commercial real estate banking
sector, and local market intelligence across the Africa regions
in which it operates, Standard Bank REF is well equipped to
provide financial and non-financial support to players who
identify areas of growth on the continent.
“Kalyan is of the view that the era of
new super regional malls is largely over,
with the focus shifting to community
centres located within densely populated
suburban nodes that provide the
convenience factor and a sense of
community with ample parking and high
levels of security.”
Meanwhile, in the office sector, multinationals and larger
corporates are consolidating into newly-completed ‘landmark’
head office buildings with attractive rental rates. In addition,
new distribution centres are allowing bigger companies to
consolidate into new, high-spec buildings located close to
transport hubs. Kalyan says that in this regard, there are a
number of opportunities available in the market for investors
and financiers.
While vacancies have plagued some areas of the market,
the industrial sector has proved resilient with vacancies in
decline from 2016 to 2019. This area has managed to achieve
rental growth of 4.6% over the past 12 months. Standard
Bank is of the view that there are further development gaps
for high quality logistics spaces in key nodes but cautions that
constraints in South Africa’s electricity supply could negatively
impact manufacturers and result in vacancies.
Despite challenges in key regions across the continent,
Standard Bank Real Estate Finance (REF) still believes that certain
areas of the retail market hold promise for investors. It however
requires a renewed approach that factors in market idiosyncrasies
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and considers whether there are strong property fundamentals.
DECEMBER/JANUARY 2020 SA Real Estate Investor Magazine
About Standard Bank Group
Standard Bank Group is the largest African bank by assets with a
unique footprint across 20 African countries. Headquartered in
Johannesburg, South Africa, we are listed on the Johannesburg
Stock Exchange, with share code SBK, and the Namibian Stock
Exchange, share code SNB.
Standard Bank has a 156-year history in South Africa and
started building a franchise outside southern Africa in the early
1990s.
Our strategic position, which enables us to connect Africa
to other select emerging markets as well as pools of capital in
developed markets, and our balanced portfolio of businesses,
provide significant opportunities for growth.
The group has more than 53 000 employees, approximately
1 200 branches and over 9 000 ATMs on the African continent,
which enable it to deliver a complete range of services across
personal and business banking, corporate and investment
banking and wealth management.
Headline earnings for 2018 were R27.9 billion (about USD2.1
billion) and total assets were R2.1 trillion (about USD148
billion). Standard Bank’s market capitalisation at 31 December
2018 was R289 billion (USD20 billion).
The group’s largest shareholder is the Industrial and
Commercial Bank of China (ICBC), the world’s largest bank,
with a 20,1% shareholding. In addition, Standard Bank Group
and ICBC share a strategic partnership that facilitates trade and
deal flow between Africa, China and select emerging markets.
For further information, go to http://www.standardbank.com