 Good evening and welcome to episode 362 of the Private Property Podcast. I'm your host, Uzaman Dunwoa Kumalo. It's a Thursday edition of the Private Property Podcast and for the first time, welcome to the family you're tuned into the leading property podcast in South Africa catering to your property needs. And all our regular viewers on Facebook and Instagram or of course if you listen to us on any of the other streaming platforms where there's Spotify or of course Apple Podcasts or if you get your major podcast, welcome to it. You are tuned into the Private Property Podcast myself Uzaman Dunwoa Kumalo where we're always tackling a hard property topic and making sure that we equip ourselves with as much knowledge to make better property decisions. And talking about equipping ourselves with the right knowledge, as you know, we're running a great competition on our Facebook page where we want to find out from you what have been some of the great nuggets and lessons that you have learned while watching the show and all you have to do to enter that competition where you send a chance of walking away with 500 Drans in cash is to share with us some of the lessons that you have learned and make sure that you tune in every single weekday at 7pm and of course stand a chance of walking away with the cash prize. And if you call your name, all you have to do to claim the money is to drop us a message down here below before the end of the show and you will walk away with the cash. And if the lucky winner doesn't claim their prize, we put the money right back in the money bag and it rolls on over to the following day. It's that simple if you want to send a chance of walking away with cash every single weekday right here on the private property podcast. That is all you have to do. And of course, you know that there are other great shows that you can tune into right here across private properties social media pages. As it is a Thursday, you can catch them by Lino. I've got on the farming podcast and she's on your screens every Thursdays and Tuesdays. And on Wednesdays, it's class and brings you the first time home buyers show where she's always in conversation with people who've gone not just from buying that first property but have grown their property portfolios from strength to strength. And of course, Mondays and Fridays, Chad brings you the home shoppers show with an incredible tour of exquisite properties that you can find on www.privateproperty.co.za. But those are the great shows you can tune into every single weekday at 8pm. Make sure that you follow us across our social media platforms on YouTube, on Facebook, on Instagram, on Twitter, on TikTok and LinkedIn. And you can follow myself as I'm doing my underscore K on Instagram as well as on Twitter. But this evening, we're looking at something that I know we don't talk about very often. I was saying this to my guest and it is one of those you know, topics that I know that so many of us want to be able to get good inside point because it just seems and feels so far removed from us often time, especially when we look at, especially when you're very concerned or consume a lot of stuff around residential property. And this evening, we're going to be looking at the retail and service sector markets. And I'm going to be in conversation with Luanda Krossa Lemajie. That's Krossa Lemajie who we're actually saying written her surname in such a way that I can better read it. So I do apologize for that Luanda. Luanda Krossa Lemajie was a commercial property specialist and she brings with her over 20 years of experience from investment banking and asset management from a diverse list of industries. And she has a national and a global network of clients which she brings to the property industry. And her key role is well supported through having a passion for property and being and being defined as a central property specialist. I wonder good evening and thank you so much for joining us on the show. Thank you. Thank you very much. Honoured to actually be part of this show. So one of the things Luanda shared with me off the edge that she hardly does interview and I think it's actually a disservice because somebody with her experience is somebody we need to be hearing more of. We often complain about not seeing a lot of black women in particular speaking out when it comes to real estate. So I'm already just going to do more interviews because we do need more of those voices in the mainstream media. And I'm sure that we're definitely going to be having her back on the show again. And Luanda to get to our conversation this evening. The good starting point is if you could give us sort of a general overview of the retail and service property market at the moment. Okay. So with retail real estate it's actually a market where investors look for properties that they can let out for rental, for these things to other businesses, manage them with a view of also buying them at the end. I mean we look at shopping centers are part of retail, supermarkets, pharmacies and petrol stations. That's like an overview of who plays in that space when we talk about retail. So yes there's more but I'm just telling just a few. And I think it's actually great that we're getting a good sense of what entails the market or the scope of the market because I know that some of you know some people at home probably don't have a good sense of we'll say how broad it is or what it essentially captures. Now can you just give us perhaps some of the key sort of concepts or misconceptions rather that we tend to find when it comes to the sector. All right. So as a country I mean South Africa we all know that we've been through a lot and as the pandemic wasn't enough we had to go through the looting as well in the middle of the year and as short as it was it seemed so long because it actually made such a huge impact because all the investors they started pulling out some of their investments in the country they started you know selling some of their properties and you know you know people who are passionate about their investments once they move away obviously you will find the facade that you find when you go to the city of Chaubert where you see dilapidated buildings but one thing that we don't realize is the lot of work that as a country we are putting into that area so that these misconceptions that you know people cannot invest in in South Africa they can be cleared and we give them more more more backup and more you know time to actually or maybe look at how best we can help them to bring their investments back into the country. Lorna I'm keen to hear your thoughts on South Africa's sort of commercial property and investment right now I mean especially just given how many years you've been in the industry and been able to track some of the trends can you just share with us some of your thoughts about commercial property investment in the country at the moment? Yes so investments as you know at this point in time it's a biased market so we see a lot of assets changing hands we see BE formed companies that are getting funds from like your state-owned entities and from your grants that are focusing in in in in commercial space and that on its own it's actually helping our BE consortiums to gain momentum in terms of investing in those assets however with all the focus that has happened in the past we've we we've sort of felt like especially as a BE consortium we've moved we had moved away from investing in commercial space because of the money issues we don't have proper companies backing up with funding in terms of that and also with the fear of the banks as well you know looking at the type of loan to value that the bank would offer in terms of the commercial properties because you know it takes so much it's not just one thing that they look at they look at what the rental income would be before they they loan you what is your loan to value to buy that property and what sort of a credit are they going to give you and sometimes they will tell you we have a senior debt that will give you but you still have to go to a private equity funder who can give you a shortfall so all those dynamics have been the ones driving you know the change of assets from a certain group to to the new upcoming property investors that are that are coming up in the country if you have just joined us this evening i'm in conversation with luanda who's a commercial property specialist as we look at retail and service sector markets and seeing all the love that we're getting on our facebook page we've got christine dichaba who's written us on facebook saying first time i'm here so she's one of our first she's the first time rather for for her to watch and tune into the show so welcome to the family of christine we know that you're going to enjoy your time with us and definitely be watching future episodes and i see a variety of parochia michelle volmarans as well as a woman see what you are who are sending those green hearts on our facebook page as we are in conversation talking retail and service sector markets and of course you know that we're also going to be announcing the lucky winner of that 500 grand in cash this evening and do hope that evil's name comes out is in fact watching this evening now luanda i think when we look at especially the you know the commercial property developments one of the things that we've realized is a lot of we'll see a lot of work sort of going digital and even you know some some companies moving from the bricks to mortar and trying to be sort of online and as much as possible i'm keen to hear your your your stance on you know the the shift firstly to sort of online and what that means to bricks and mortar you know commercial entities because we we know that oftentimes people do try citing that retailers are no longer going to need a physical store because we can increasingly just do online shopping as we're seeing with some retailers abroad but of course we're in a completely different context completely different market perhaps can you just share your insights on that all right fortunately for us as the people of South Africa we enjoy going out so there's no way that we're going to cut out the retail sector but what i am seeing the trends that's going on right now is the merging of the physical to the digital and it's working so beautifully because you as the shopper you get to decide how you want to shop and having those options because you know as South Africans we always you know spend so much money on transport going to the shopping mall you know going to the city to try and find you know a couple of things these days i see i mean a lot of scooters you know we're running around delivering at people's houses and you know it's it has opened a a different way of us like of shoppers to shop in their favorite stores i mean that for me is it's a win-win so we're not going to get rid of retail anytime soon because physical it will remain physical but it's how those stores will match their install with digital of course i will i want to see a quick break and we'll come back from the break room to continue our conversation i'm going to find out who this evening's lucky winner is i was going to walk away with that philander drained cash prize let's take a look who we're going to give away that philander drained cash prize to and that lucky winner this evening is steelo cj ronaldo steelo cj ronaldo i do hope that they're watching us uh do drop us a message down here below to claim that 500 rand in cash of course if he is not watching if they're not watching uh then it's going to roll on over to a thousand rand for tomorrow's show i am this evening in conversation with luanda hotel manager who's a commercial property specialist as we're looking at retail and service sector markets of course taking your comments and questions at home is to explore something that i know we don't uh ordinarily tackle but really need to get a good understanding of and i see a number of you at home watching anelda evitin also asking there if michelle volmarine is watching she is indeed watching anelda of course as she always does it reach single evening as serif in washington also dropping us a message down there benjamin moise as well as a point on the end and of course so many of your home polina of course tell me some of the gang at cindy stench i see they're on facebook page do keep their love coming i would absolutely love hearing from you i think when we then look at um you know luanda the criteria for investing in commercial property i mean we talk a lot on the show as i was saying we're on around you know residential property and and the viewers at home have a firm grasp of the criteria when we want to get financing for residential projects and different kinds of residential projects or uh properties what what is the criteria when we then sort of shift here and look at commercial property all right so the criteria always starts with your credit record and who is behind the the consortium and the experience that those people have within that sector and what i also typically see is that sometimes you have people who have such a great cause to set up a property business but they forget that you cannot run each and every aspect of it by itself so you have to have different experiences that helps you build that portfolio because the investors want to know who is managing that portfolio and that is the one thing that will give the investor comfort to actually invest in your in your portfolio and i think that that big thing around your credit score becomes so important because it is something that gets hopped on a lot as we talk about residential property and i think some people may have the perception that when we we do commercial uh that's not something that's going to be important but of course it is something that remains important regardless of the type of the asset class that you go into and and one of the things that i've observed no wonder is that we're we've seen particularly now during covid a number of office blocks sort of going for sale um or sometimes you know a particular space in an office block for instance uh whether let's say it's a hundred square meter in a particular office block it's now going for sale we know that there are businesses who sometimes buy the office space that they're going to be using as opposed to for instance renting it out what would your sort of insight or advice or overlook be that you'd like to share to business owners who are trying to make that decision of should they buy their office space versus sort of renting out or renting rather an office space to to use all right this point in time office space has been hit very hard and i mean with the change of physical um attending to your business you have an option to work from home and we see a lot of people have actually evolved with covid and you know their production has gotten so much higher and many of the companies are starting to think towards you know letting people work from home because it cuts a whole lot of costs for them and and also people are much more relaxed and they they they producing a lot more in that relaxed environment however for an investor we are i mean there was an article that i was reading which um was leading to giving South Africa at least three years before we can get back to the office space and you know we will be guided by the vaccine nation if we all decide and we all believe that i mean the country is doing very well in terms of the the vaccine that's the guidance that you know the office space will open up whether you know people are more comfortable to work in an environment where i mean if you've seen um offices before when they were like using very small desks and hot spots and the type of stuff so now we are very um scared to work next to you know sitting next to this person because we have to keep our social distancing but i'm quite hopeful that the office space will you know will get back will will gain its momentum in time but for now i see a lot of offices they are actually converting their their offices into residential homes some of them are converting them to low cost housing some are looking at doing conversions to student accommodation which have proved to you know to to to to make a lot more sense rather than just letting a building sit empty you have to have you have to think of innovative ways of making sure that it yields back the returns that you've put into it and and when we look at the you know that last bit that you've mentioned around the conversions because we are seeing this quite a lot uh you know in different particularly the different metros uh across the board what would be just your key do's and don'ts in the event where you're looking at the conversion so you've got an office clock and perhaps you're looking at whether you've been doing student accommodation or making it risky um any do's and don'ts that you'd like to highlight for us uh yeah i would like to say investors you know should not be hasty to do some of these conversions because they cost quite a lot of money as well so people have to think carefully of how best we can innovate their buildings rather than just you know running with a a certain rush i think this also opens up conversation with different areas of the market that would actually give guidance whether a certain conversion will make sense to your type of business because you know not all the buildings can be converted to student student housing not all of them can convert to residential so there's a lot that one would have to take into consideration before you're doing those those conversions and i think that's actually just quite a big one because one of the things that i certainly also noted is that you know some investors did a huge rush with your student accommodation sometimes without adequately understanding uh even the scope or how to properly convert your student accommodation and the minimum standards from universities and spent a lot of money you know converting a commune for instance or a normal house into a commune but unfortunately you find that sometimes those houses uh or those new buildings weren't compliant so i do agree with the sentiment that they need to do you know better work in in understanding where the market is before sort of rushing to the conversion and really just getting a sense of and we do apologize for that i see that the network was pulling a fast one on us uh as i was saying when we talk about maximizing real estate uh when we looked at and i'm keen to hear your thoughts when you look at the general trend of subletting a portion of a commercial property you know is that a growing trend is it not because some people have you know sometimes taken on more than they can chew and looking to potentially you know sublet various parts of their particular property so i've seen a lot of that in the industrial space where you have warehousing and you still have an office block i mean you look at a business like take a lot where they will need certain offices for certain you know work related portions that they that they're doing so subletting is very important because now most of those industrial properties i see them having like a mixture of um um of retailers within their premises and that also helps in a sense of the type of rental income that keeps rolling into your your your your your financials because it it focuses you and then it gives you an idea of which business is actually going to survive this this pandemic and you also as a as a landlord you get to understand your rentals a lot more better you know how to focus your business to yield the income that you require and i'm i'm keen to hear from you what you'd say are probably some really great and lucrative investment strategies for people who are looking to go particularly into commercial property that they should be aware of and potentially even make use of all right so one of the key things that i really enjoyed that i loved so much and it has been discontinued and i think for me this would be an outcry to um to to the government is your section 12 j i think section 12 j was actually very short lived and when people started opening their eyes to what section 12 j was all about um it was already taken away from from us though although you know when you have um some type of an incentive from the government that says to you um you can actually buy properties and this is how best we can help you especially with your returns with your bet with you know the contributions that you're putting in me it actually gives you a momentum i mean i mean one of the you know um key things i see is the the stock fails and i think you know with the stock fails if they were to coordinate you know so um you know their investments and look at how best they can um i mean they can buy properties they don't you know to start a commercial property portfolio you don't have to start by buying an acre of a property you can start with a small cafe around the corner um and then just when the cafe is doing well i mean especially you look at the um the townships you have those jobs that we used to buy fed cakes from and those jobs are not working anymore they used to be super markets but they left unattended because we are now running to to to the shopping malls i see great value in those because you can start with opening up a small cafe again that will actually speak to your people i mean the community around you you know exactly what it is that they need i mean if you live around the area you have a good sense of what would be something that is viable um within the community and maybe in the long run you can think about putting on like looking at the zoning of that um those shops look at how best you can position that those shops to actually build some low-cost housing on top of them and it's how you build that portfolio from zero to you know the best asset class that you could ever have and the more you invest in the property the better yield you get or the better return you get from when you like when you decide to sell the when you decide to sell the asset but taking more of your comments and questions on our social media pages we've got to all set sefiri washain saying i've seen conversions in and around joeburg ventilation compromise you smell sunlight bad so all the walkway wonder how they pass the structural and don't don't uh and i think you know sefiri we love but i get exactly what you're saying uh and i think maybe wonder if you can comment on some of the the corners that get cut because i've also gone into some buildings where you know they've done recent conversions and and the ventilation is one thing that i also always pick up uh the walls are always way too thin because oftentimes uh you know they use dry walling and so you're also hearing somebody who sort of five apartments down uh the hole from you as opposed to um the neighbor which i'm sure can be quite annoying some of the if you can just comment for that because i've i've seen it i'm glad somebody said it who isn't watching the show uh because it is unfortunately a thing that we we see with some of the converted buildings yeah trust me i've seen that as well and it's the most you know horrific thing because you worry about safety um and we forget that first impressions last if you have this little amount of money to put away to live in a low cost or a conversion or whatever all you want is to have that a sense of peace that says wow i've actually moved out from home this is my sacred space but a lot of new commerce they like cutting corners like you say they don't take ventilation into um into play they don't look at how best they can actually bring the sunlight in because some of them i've seen it's so dark you can barely even see you have to keep the artificial lights on um so i think when we create conversions one of the things i would love to say is that we need to think of ourselves if would it make sense for me to live in this place would i love to live in this place because once you start thinking about yourself before you you open it up to other people you because you are your best critic as well and you know exactly the kind of spaces that you will thrive in and we forget to take consideration that you know we have students students always want to be happy and exam time they should also still feel like there is that happiness in the a even though they are you know locked away in a room or something yeah no cutting corners it's a total no no uh and people need to follow process and also you know just to add that following process can only enhance the price of your property when you say no one wants to buy a building that is yet to fall i mean you you walk into these buildings and you're thinking okay this one is about to fall and yeah yeah no i heard those instances i think sometimes when i view some of the buildings there's a part of me that wishes i i had my heart my heart had on uh just in case there's anything that happens and i'm sure how unbearable it probably is then for people who live there and i think that the big thing there is for the land laws the property investors the property earners to have a fundamental grasp that low cost doesn't mean low quality and we need to be clear that we we can't be uh you're reducing costs at the expense of people's dignity where they live because you say you know your home is such a big thing it's such a loaded thing uh it isn't just a place where you know you're just sleeping and waking up so we cannot at any point when we're housing people you know exactly in safe we can't at any point when we're housing people uh you know compromise on their dignity and before i let you go luanda you know any predictions for the sector for the coming year well the predictions would be i mean um you know the great you know the great trends that i am seeing i mean i went to a conference in san city um the past two days and you know just looking at um south africa's economy i mean we're still a very young economy and there is no way that we have um used up all the space in you know in our country i believe there's still huge opportunities that we need to take advantage of so we must not just rush into the same space because the friends are talking about these investments but i just feel like as a country there's so much more to be done there is um the surfaces that are yet to be scratched and the more we read the more we understand the type of investment that you want to be involved in don't start anything until you know because there's great opportunities coming up digital is one of the key things that uh young people who are techno savvy can take advantage of um innovation i mean innovation is not only just um robots that are created but innovation is how you believe you can make a shoppers um shopping experience with their while um there's you know there's a whole lot of things that are coming up and i think we are actually going to to do better and as a country there's so many other opportunities that we can tap into you know you quoted that conference that you are attending a sensitive across two days if i remember correctly it's the the essay council of shopping centers that was hosting it it was it was just interesting to i mean i wasn't attending it but i've been following up on the you know developments in the in the conference and i think the big thing for us is of course making sure that regardless of where in the property sector we are we provide value to the customers and provide really good value good value for money make sure that we don't cut corners in which other aspect we're in within the sector because ultimately the customers are there right the customers are there and we need to do a really great job at servicing those customers as best as we can luanda we are going to leave it there this evening thank you so much for joining us on the show it's been a pleasure to have you with us you're welcome thank you thank you so much and that is luanda who is a commercial property specialist wrapping up this Thursday edition of the private property podcast with myself as i'm and don't walk malo unfortunately our winner ustilo cj rinaldo did not claim their price this evening and so we are going to be having a rollover uh the team has just sent me a quick question from oomins i'm going to squeeze it in actually i really like this vision i'm going to squeeze it in menzi and and that is amazing what is he's asking why is there no focus on replacing elevators during building conversions especially when they get busy at night and you hear and and you hear and you hear when they visit night and you can hear everything and you can't sleep at easel cost connections that's just a comment based on what we're seeing about the noise but the question there is why is there no focus on replacing elevators during the conversion if you can i know one of the reasons why but luanda if you can take the the left one because we do see this one a lot i mean a lot of the buildings that have elevators it's very old elevators and they still aren't doing a great job when it comes to looking after them all right so you guys know that elevators are a huge expense in the building and they come with the design and how are you going to get to the third floor because i mean i know myself um as as an athletic person that i am i hate working up those days and i'm not going to be wearing my heels working up those days so that's why i don't know to replace the elevators but it's actually also a very huge cost that has to be taken into consideration because putting in a new elevator it's in the millions yeah and that's literally why i think oftentimes elevators very high cost i mean to the point where you when you look at buying intersectional titles for instance that have elevators so you're looking at buildings versus those in the same area that don't have elevators you tend to find that the levy with the elevator no buildings is higher than the non elevators generally you know all all other facts sort of remaining or factors remaining the same and that's because of the the servicing of the elevator and you know specialists having to come in and give a compliance certificate regularly and i was a trustee in a building where we had an elevator and the number of times we have to constantly service it make sure that everything is up to date it's quite a high cost so replacing it is is not a conversation we we quickly have you kind of want to run it until the very very very very end and if it's still fixable we'd rather bring a technician in as opposed to buying a brand new one well we've overstayed our welcome uh luanda wanted to add there for a moment uh yeah i was actually gonna say you know as south africans who if you find an old um lift in your building please be happy that you have it at least i mean i've traveled overseas i've gone into buildings where you have to go to the fifth floor the elevator is not working um and yeah that is not a nice thing especially when you know that you have to go up those stairs every day and come down those stairs in case you know every day so yeah i think we have the best ones they very old the old buildings you still have those old elevators that work so that means some of these um uh brands that were putting elevators in the old buildings they did a very good job well that's exactly we're going to leave it this evening as i was saying earlier we have overstayed our welcome luanda thanks again for joining us on the show and that's it for myself was i'm going to walk tomorrow and the rest of the private property podcast team this evening will be back on your screens tomorrow at 7 p.m as it's a Thursday you can catch them by you on the farming podcast until then hope you stay home and stay safe bye