Against the backdrop of the pandemic, institutional real estate investors have had to adopt different measures to drive returns and remain ahead of the curve. This trend has been reflected not only in the global real estate market but also across Africa.
Below, we look at 4 key ways that Growthpoint, one of Africa’s largest institutional real estate player, has managed to do this.
- Greater focus on alternative real estate
Growthpoint launched its newest REIT named Growthpoint Student REITs on January 28 2022. This product is the first South African unlisted Purpose Built Student Accommodation (PBSA) REIT and the third of Growthpoint’s specialist, unlisted alternative REIT.
According to Growthpoint, the Student REIT has acquired a R2 billion seed portfolio with 5,000 modern beds. Although Growthpoint is a listed company, the new student accommodation REIT is unlisted and according to Growthpoint, ‘this gives investors exposure to direct real estate that tends to be driven by long-term fundamentals rather than listed real estate volatility driven by short-term sentiment’.
- Repurposing of Real Estate
According to the South African Property Owners Association, vacancy levels in the South African office market climbed to an all time high of 16% in 18 years in Q4 2021. This resulted in a decline in rents by up to 4% for Grade A offices during the same period according to the Rode Report.
As such office landlords across South Africa are now reassessing their portfolio. As one of South Africa’s largest landlords with approximately 1.7million sqm of office space, Growthpoint has adopted measures such as residential conversions to deal with surplus space. A recent example has been the R200m residential conversion of its Riverwoods office park in St Andrews, Bedfordview, in a joint venture with Setso Property Fund (49%) and in collaboration with BlackBrick Hotels.
- The Green Agenda
Growthpoint currently owns the biggest portfolio of green-certified buildings in South Africa, presently comprising 102 properties and an additional 10 buildings at the V&A. As such, as sustainability and ESG related issues become more mainstream, Growthpoint has been at the forefront of future-proofing its assets to ensure long term business sustainability.
This has been evidenced by key initiatives such as their target towards having all Growthpoint corporate offices operating at net-zero carbon by 2030 and to have all its buildings achieving net zero carbon status by 2050.
- The Industrial Offering
Growthpoint’s industrial portfolio continued to outperform other sectors, reporting steady escalations with renewal success. As such, the company has remained focused on modernizing its logistics portfolio, including the adoption of data centers. At present, the company is on track to complete the first globally connected data center for NTT. Set to launch in April 2022, the center will include 6,000sqm of IT space and feature high-end offices with an NTT technology experience Lab.
As a key market stakeholder, Growthpoint’s initiatives towards building resilience are a clear indicator on how African real estate has adapted against the backdrop of the pandemic. As indicated in this article, we expect 2022 will be a record year for the real estate market in Africa where the theme of resilience will continue to filter through the sector.
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