Real Estate Investor Magazine South Africa December 14/ January 15 | Page 23

upfront

Andrew Konig,
CEO, Redefine Properties

Adrian Goslett,
CEO, RE/MAX Properties

Even Real Estate Investment Trusts, such as Redefine
Properties, are expected to show more growth in
2015. Redefine’s full year results for 2014, ahead of
guidance, have delivered 8.5% distribution growth.
It’s diversified asset base and relentless pursuit of cost
efficiencies strongly position it to actively pursue it’s
strategy of delivering sustained value to shareholders;
in 2015, even with an upward interest rate cycle,
disproportionate increases in administered prices and
a lacklustre trading environment.
“Our operating environment is likely to pose
challenges, but also create opportunities. By executing
our strategic priorities, we are well positioned to deliver
good growth despite the challenges. Redefine’s growth
in distributable income per share for 2015 is anticipated
between 7% and 7.5%,” Konig says.
Redefine’s vacancies remained essentially unchanged
at 5.5% with 86% tenant retention. Benefiting from
strict cost controls in the face of the unrelenting
increases in administered services like rates, utilities and
electricity, Redefine’s operating costs net of recoveries
were 18.8% of contractual income. The improvement
from last year’s 20.1% stems from internalisation of
electricity recoveries.
“Containing the rise in debt costs is a priority,” says
Konig. In line with its capital management strategy,
Redefine reduced its already conservative loan-tovalue ratio of 37.0%, down from 39.9% in 2013. The
average cost of funding remained largely stable at 8.2%.
Interest rates are fixed on 78.3% of borrowings for an
average period of 3.5 years. This is above its 75% target
and improved from 65.9% in the prior year.

2014 Has seen a marked improvement in property
sales, with the last couple of months characterised by
demand outstripping supply in certain metro areas.
Goslett expects a continued steady improvement in the
property market in 2015, with house prices in metro
areas rising due to lack of supply.
Interest rates are expected to increase in the first
half of 2015, but this will not have any real negative
impact on buying patterns. Inflationary pressure will
dictate where this ends. It seems we are a long way
from controlling our debt.
Affordable housing is now big business and it’s a
market that is set to see exponential growth. Gated
communities too are still on the rise. Homes with lower
maintenance requirements will continue to be popular,
mainly due to increased utility/municipal costs which
are placing additional pressure on consumers’ pockets.
Consumer sentiment towards property-related
legislation will influence buying patterns in 2015, as
will land reform and to whom it will apply.
The rental market has seen good growth this past
year, with demand also outstripping supply in certain
areas close to CBDs. In the year ahead, a fair number
of consumers will continue with the struggle to
meet deposit requirements and show the necessary
affordability levels in order to gain access to finance.
Over the long term, property has proven to be a
solidly performing asset and shall be a core component
of any investment portfolio. The crux is for buyers and
sellers to understand trading conditions for the the
market. Then, tailor both their behaviour, as well as
their buying and selling decisions accordingly.

www.reimag.co.za

December 14 / January 15 SA Real Estate Investor

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