 Good evening and welcome to episode 300 and I think it's 56 now of the Private Property Podcast. I'm your host Rosa Mandouma-Koumalo. Welcome to the Tuesday edition of the Private Property Podcast. If you're joining us for the first time, welcome to the family. You're tuned into the only daily property talk show in South Africa, helping you along your property journey. And my colleagues let me know it's episode 355. I always get shocked at the number. I think anything above 300 is a shock to the team and I as we keep counting. Well, welcome to it. You've been missing out on some incredible episodes. So do make sure that you go to our Facebook page or YouTube page to catch up on all the great episodes that you have missed out on. And to our regular viewers on Facebook, on Instagram, on YouTube, welcome to it. We of course are back every single evening. You and I have an appointment at 7pm Property Decisions. Now I know that so many of us, all of us actually didn't have access to Facebook and Instagram yesterday. And of course we're only coming to you on our YouTube page. And so many of you struggled with that one. I know I ended up even just going to sleep. You know, I was just like, you know what? I don't know is the way I need this thing. Let me sleep. I'll see it in the morning. Do let me know how did you survive, you know, the Facebook, Instagram, blackout and WhatsApp blackout. I know so many of you at home. We're unfortunately not able to watch us the way that you always are able to especially on our Facebook page. So do let me know how did you manage with not being plugged in as often as you generally are. Well, as you know, we're always in conversation with the great experts and shortly I'll be giving you a snapshot of what we're going to be looking at. And it's a first. Absolutely love talking about stuff that we haven't done, especially in South Africa. As it is a Tuesday, you can tune into the farming podcast with Umbali Moko that's going to be coming to you screens later on at 8pm. And you can catch the same show every single Thursdays at 8pm. And every Mondays and Fridays, Chad brings you the home shoppers show where he takes you through exquisite properties that you can find on www.privateproperty.co.za. And on Wednesdays, Esti Klassen brings you the first time home buyers show, which is always in conversation with people who've not only walked that first time home buying journey, but have gone on to grow their property portfolios from strength to strength. Well, as you know, yesterday was supposed to be the last day of us giving away the cash prize for our competition that we've been running on our Facebook page. But because all systems were down, we thought, you know what, we want to make things fair. And we're going to be announcing the potential lucky winner later on on the show this evening. And we've got 3,000 rands in the money bag. I really hope that the person who we are going to call out is watching and will be able to claim that 3,000 rands. Well, let's get started right here on the private property part cost of my son, Fusama Duma Kumar. This evening, we're looking at the future of leasing on online auction. We're probably wondering what is it? It's quite a mouthful. And we're going to be looking at exactly what it is, what is it not, and how it's going to, you know, find the man to be disrupt, particularly the office space as we know it right now in South Africa. And to help us get a good sense of what we're talking about. I'm joined by Ari Ben, who's the CEO at Auction Inc. Ari, good evening, and thank you so much for joining us on the show. Good evening, Zaman Tugwa. Thanks for having me. Always a pleasure to join you on the show. Thank you. It's always such a pleasure to have you on the show, Ari. I think let's get straight into it. When we talk about leasing on online auction, I know, you know, my viewers at home, this is the first time that they even sharing of this. It sounds like a bit of a mouthful. What exactly is it? What do we mean when we talk about leasing on online auction? So quite simply, what the concept entails is the ability for a tenant to bid online or office space. So generally speaking, a tenant would traditionally operate through a broker or directly with the landlord, and they would go through a traditional process of leasing. Whereas now for the first time in South Africa, and just a note here, this has been done before overseas. It's been done in Europe and it's been done very successfully in the United States. A tenant will view a property. If they like the property, they're already... And I mean, Ari, I'm sure people who are probably not particularly familiar with the office space, you know, from the business part, are wondering, okay, why would one even want to, you know, bid online per square meter for their office spaces? So is there a going sort of the conventional route? So what's the appeal to it? And why would even somebody perhaps who's got a business and maybe in the market for a new office space, why opt for this way of acquiring that office space? So I think that's a good question. I think to answer that question, it's important to understand why auctions themselves are so successful and have been for hundreds of years, really. So, you know, from the beginning of history, from the beginning of commerce, auction was used as a very efficient method of bringing the buyer and the seller to the table. It's a very efficient platform of benchmarking the value for an asset. It's been used successfully in the past for cattle, cars, property, artwork, anything of value. Auction is really the most effective and efficient method of sale. So when it comes to leasing, what we find is that the market's in a little bit of a precarious position currently, you know, with the advent of COVID-19 didn't help a situation where, you know, the industry was already under somewhat stress. Currently, the latency factor nationally is around 14%. And you've got to ask yourself a question, you know, can it continue like this? And where are we going with this? And just to get back to your question, why auction and what's the benefit and how does this all tie up? And I think the single best and most important benefit is that it really brings the client being the tenant and the landlord to the table in a transparent method and platform, which enables the price of the asset means is that currently nobody really knows what the true value of office space should be because we're in uncharted territory. So I would say the single most important benefit is the fact that it brings tenant and landlord to the table in a transparent platform, which will enable a tenant to potentially secure office space at a very competitive rate. You know, as you're talking about how we still don't quite have a good sense of the true value of office space, I was actually nodding along because it is one of those pressure points that often, you know, we think about, but now more than ever COVID has had us having to think and rethink it. I think prior to COVID, when we look at office space, you kind of took what were the market and we kind of figured if you're in area X or if you're square meter and nobody fully tested that, right? Because more often than not, there are certain players and I think even prior to the bullish building, and I'll make Santana an example, you know, prior to the bullish building in Santana where we didn't have as much option as we currently have on the market, what you'd find is you'd be wanting prime real estate for your offices because you're also sending a signal to the market. But what we've seen with COVID is that we're also rethinking how we're spending for office space. We're rethinking the ways that we want to maximize and optimize office space as much as possible and even rethinking the charge that oftentimes landlords give us per office space. I mean, I've seen some really great, we'll call it innovations that different landlords have come up with in terms of them even footing the bill when it comes to speaking the office to your needs, where we know that typically that would be something that you must kind of budget for. And so it's interesting to see the different ways that landlords are trying to still obviously have their office space be occupied because I think that's the big conundrum, right? With people office, but some of them wanting less space and optimizing that space as landlords, the conversation becomes, how do we then best maximize every square meter that we currently have? I mean, I think where do you kind of see, before we even look at the leasing and the online auction perspective, where do you see the office space going in South Africa, especially now with many businesses slowly going back to the office? From a global perspective, we've seen other big companies saying that they're going to say you can work from home indefinitely, but from a local context, where do you see the future of office space going? Great. So just before I answer that question, I don't profess to be an expert in office space leasing. Our forte at Auction Inc is sales and we do profess to be experts in sales. Our cancer however, firstly from a personal perspective, just looking at our organization, we've got around 35 employees, some work at the office, some work remotely to current. Thankfully, the numbers are quite low currently. So our offices particularly are open to all our staff. But it's quite interesting to see how in our environment, and our environment's not very, I mean, it's a sales environment, therefore collaboration is important. But what I've noticed is that those employees that come into the office are, A, more productive, be the collaborating, see that their well-being is much higher. Whereas if you're working remotely and you're somewhat isolated, you don't get those benefits. I'd be very interested to see a study on this exact topic to see what's working remotely has on the well-being of staff members. And for that matter, on the bottom line of the company, there are certain intertings, but I suspect that over the long term, companies are going to go back to work in an office setting. There's just nothing that can replace that human interaction. And from our interactions with brokers who are on the ground, this exercise that we're launching, we've had the benefits of interacting with a lot of brokers who are in the trenches. What we're seeing is that there's slowly but surely an uptick of demand for office space in specific nodes for specific pocket sizes. The smaller pocket sizes, I would say between 150 and 350 square meters, they're always going to be popular. At the end of the day, if you want to run a business effectively and efficiently, in my opinion, I believe that in the next two to three years, we're going to see a big rebound in office space. It might take a bit of time. As you clearly mentioned, even prior to COVID, in Samsung specifically, there was an oversupply of office space. But on the flip side, a lot of entrepreneurs and quite agile developers are redeveloping offices into residential units, which itself is taking some pressure of the office sector. It's taking a lot of vacant space. A friend of mine recently mentioned that between his firm and one other firm, 300 square meters of office space, just between those two companies have been taken offline and been converted to residential. I believe that landlords are reacting correctly. They're changing their service offerings. They're offering serviced offices, similar to WeWork. They're offering flexible deals. They're offering smaller pockets that appeal to a wider target market. All of this in combination, in my opinion, will result in a sector that will bounce back, but it may take some time. I am in conversation this evening with Ari Behn, who's a CEO at Auction Inc. We're looking at the future of leasing on online auction. And of course, we're going to go for a break and see who the potential winner of the 3,000 rands that is in the money bag as we wrap up an incredible competition that we have been running for the past few weeks here on the private property park, casted by South Ozamantungo Kemalo. Hope whoever the winner is, they are indeed watching us. Otherwise, Ari and I are going to take this cash prize and split it. We're actually joking about it off air that if the winner isn't watching, him and I are going to split the prize. But let's see who this evening's lucky winner of that 3,000 rands cash prize is. And the lucky winner there of that cash prize this evening is Umandla Mufu Geng. Umandla Mufu Geng this evening. That is the 3,000 rands this evening going to Umandla Mufu Geng. And of course, you have until the end of the show to claim that lucky cash prize. It is 3,000 rands. Umandla Mufu Geng. And we do hope that he is indeed watching us live. And if you're just joining us, I'm in conversation with Ari Behn, who is the CEO at Auction Inc. We're looking at the future of leasing on online auction, something that they're bringing on to the South African market for the first time. We've seen it in different regions, you know, in Europe and America and it's been very successful. And Ari, I want to hear from you when you look at, you know, this offering that you're bringing onto the market. It will take place in November. It will take place from the 9th to the 11th. We're taking non-office parks to auction various pockets within the office parks on behalf of quite a large listed fund. Now, in my opinion, we're going to achieve a very high level of success depending on how the market adopts it. We'll really dictate what the next two moves will be both for ourselves and any other competitors that will enter into this market. I believe that the market will eventually move more and more in this direction. However, having said that, South Africa is generally considered quite a later doctor of new technology. And that in itself provides an opportunity and a, well, it can make this thing take a lot longer to really gain traction nationwide. I do believe that in about two to three years, the traditional method of leasing will still be valid really because it's, there's just so many brokerage firms and qualified capable brokers out there. And that will never, that will never change. But over time, just like auction in the early days really took 10, 15 years to become a mainstream product. Today, if you look in Australia, over 90% of properties are sold via auction. So how long will it take for the same thing to happen with auction leasing? It's early days. I'm hoping it will take not very long, but things like this generally do take some time. But I'm excited to see how South Africa adopts this methodology. And Ariame, for any business owners who are potentially looking at participating in the auction, how do they then best prepare? Because we've spoken a lot about preparing for online auctions or even a conventional auction, the different do's and don'ts when you're going to be buying on auction. When we're now looking at leasing on auction, how does one best prepare for that? We've got very qualified agents on standby to assist. The second step would be to visit the premises. We've got, as mentioned, over nine office parks going on auction with over 33 different pockets available. So there's quite a lot of options available to browse. Once you've seen a place that's of interest to you, the recommendation is firstly understand the terms of the auctions. It's very simple. You're going to be bidding on the net value of the lease. So what that means is you've got the net and the gross. The net is purely the base rental. And that's what we're bidding on. So it's critical that you understand your own affordability. How long is it that you'd like to lease for? If you're a startup, perhaps you don't want to commit to longer than a year. Whereas if you're an established business, it does often make sense to sign a longer term lease. You get the benefits of security. You don't want to be moving around a lot. Once you've really done your calculations, you understand what your affordability levels are, you obviously want to rock up to the auction prepared. You need to understand what your upper limit is. Often with auctions, it can get quite exciting, passionate. You can get carried away a little bit. So it's important that you go into the exercise understanding what your upper limits and your affordability levels are. Having said that, the auction itself gives you that opportunity to potentially acquire the space for much less. So be prepared to be surprised. If you're bidding on space that is highly sought after, there may be a bit of competition. Whereas if you're the only person looking at that particular pocket, you may walk away with a steal. So really, if I can sum it up in three points, one is view the premises. Make sure you're in love with it. You see yourself working there long term. Two, make a connection with one of our agents. Ask as many questions as you like. And three, assess your affordability so that you know you can comfortably afford the rental. Now, Ari, I think one of the things that typically tend to happen with auctions is that we'll have, for instance, a reserve price and you're able to engage with the auction house that's running the particular auction. Do you foresee something like that happening where people can almost start a negotiation with you prior to the auction even taking place? Is that something that's going to be happening or possible for those who may want to participate in the auction? Look, the beauty of the auction is that, as mentioned, a benchmark to the value of the property. If we're doing deals before the auction, it kind of defeats the purpose. What we're trying to achieve here is that all clients will rock up on the day, put the best foot forward and let the process unfold. What on the day of the auction, where does negotiation kick in? I think that if, for example, a tenant is he misses the mark, he submits an offer that is just not realistic. Is it over? I believe no. That's where I believe there's an element of negotiation that can kick in. Perhaps the tenant can sign a longer term lease or some other variables can kick in. The objective here is to do the deal. The landlord is extremely committed to do the deal. We committed to do the deal. I believe that the tenants will be committed to do the deal. At the end of the table, the auction is just a mechanism and a catalyst to get the tenant and the landlord talking. I think it's such a great way to have them talk, right? Because more often than not, when we look at office space and the way that they get leased, the broker is always the one in the middle. They're always the middle man. Really is the landlord actually very close to a particular transaction unless, of course, they're handling it in-house. But you tend to find that with some of them, they don't actually handle it in-house. There's a broker that facilitates that process as much as possible. I think, you know, 12 years at home, of course, looking at the future of leasing on online auction. I'm in a conversation with Ari Beggs, CEO at Auction Inc. I'm even keen to find out from you at home if you are in business or perhaps working in an organization, is this a way of leasing an office space that you would consider? I think, as Ari was saying, so many of us are typically used to buying an auction, but not so much when it comes to leasing a particular property, particularly office space on auction. So it's still very, you know, it's new to our shores, but of course the concept isn't new to the market at large. Now, Ari, before I wrap up with you, I think for the people who want to potentially participate in the auction, you had mentioned that it's happening next month in November, how do they go about even accessing, you know, the different properties that are going to be on auction and really starting to get ready for the auction if they are of course in the market for new office space. Perfect. So if you'd like more information, you can visit our website at auctioninc.co.za. And just to let you know, the idea is not to replace brokers out there. This opportunity is open to all brokers to engage with us. Brokers still earn full commission and our objective is to just create opportunity and work with everybody. So you'll find us, you could work through agents in the, so as mentioned, the auctions in Brineston. So the Brineston commercial broker network is well informed about this new concept. So you can get in touch with any agents in the area. They're on standby to, you know, to assist alternatively come directly to us auctioning.co.za and we're just a click away. And of course, there being a click away and you know, I reassured some really great insights in the event where you're going to want to get office space this particular way. Ari, let's leave it there this evening. Thank you so much for joining us. I have something that's new that they're bringing to our shores, the future of leasing online auction. Of course, if you want to get in touch with them, we have shared the link to their website down here below, especially if you yourself are in the market for a, you know, for new office space and want to find different and competitively pressed ways to get office space. And that is one that you can certainly, you know, consider because we know that this is also that time of hours, not even time of year, but certainly that time where many of us are penny pinchers as much as possible in trying to find different ways where we can cut costs as much as possible. Well, that's where we're going to leave it this evening on the private property cost with myself. Unfortunately, we didn't have Umandla Mufugeng claiming his prize. If I'm correct, my colleague will also, you know, correct me because I was watching. The team has not let us know that Umandla Mufugeng is in fact watching. We're going to see how we're going to play around with this 3000. It's in the money bag. Unfortunately, the competition has come to an end this evening. And I mean, I was jokingly saying earlier that Ari and I are going to split the proceeds. But because we love sharing the money with you, of course, at home, we're going to find a way of making sure that we're able to open up a different way of giving away this 3000 rands. But we were wrapping up an incredible competition that we've run for the past few weeks. Of course, it started off with us wanting to reach one million followers on our Facebook page and you at home make that possible. And then we took it up a notch further where we pinned that post on our Facebook page and wanted to have. First, it was 10,000 comments and we reached it and exceeded it. And now we'd said 20,000 comments. And of course, because of your home, we have also reached that target. We're going to continue setting big, bold targets. And we know that you're going to make sure that we reach them and exceed them each and every single time. Well, that's where we're going to leave it here this evening with myself. I'll be back on your screens tomorrow evening at 7pm. It is Tuesday, so you can catch them by the knock or with the farming podcast at 8pm until then hoping you're staying home and staying safe.