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Almost 20% of Growthpoint's office space is standing empty

15 September 2021 8:43 PM
Tags:
The Money Show
Bruce Whitfield
remote working
Growthpoint Properties
Norbert Sasse
Lockdown
COVID-19
office rentals

Group CEO Norbert Sasse discusses Growthpoint Properties' year-end results and the future of the office on The Money Show.

Growthpoint Properties' results for the year ended 30 June 2021 show a very healthy and stable business that delivered in "an unprecedented environment" says Group CEO Norbert Sasse.

Revenue grew by 6.2% during the period, resulting in R5.1 billion in distributable income.

At the same time distributable income decreased by 7.8%, but on a per share basis it fell 19.1% to 148.1 cents per share.

The Growthpoint group's property assets are valued at R152.8 billion.

Growthpoint said it achieved a 99.7% average rental collection rate for its South African portfolio, despite the economic fallout of the Covid-19 pandemic.

However the contraction of the economy has had a significant impact on the office sector.

It says vacancies rose from 15.4% to 19.9%, primarily in Gauteng and the Sandton area specifically, due to business failures, space downsizing and slow letting stemming from uncertainty.

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Bruce Whitfield interviews Group CEO Norbert Sasse.

The office vacancy story continues... Our ongoing concern really is the ongoing weakness in the domestic economy, more so than just the work-from-home dynamic which emerged off the back of Covid in March and April of 2020...

Norbert Sasse, Group CEO - Growthpoint Properties

It's certainly not a positive story - vacancies keep rising; our rentals are under pressure... There's no doubt in mind though that as things seem to be normalising... many of our staff and tenants are keen to return to the office or for their staff to return to the office.

Norbert Sasse, Group CEO - Growthpoint Properties

I think there's a renewed appreciation for the role that offices can play in nurturing culture and values, collaboration and leadership whilst obviously needing to recognise the desire for flexibility, so I think that's going to be an ongoing theme.

Norbert Sasse, Group CEO - Growthpoint Properties

While the bottom line is that demand will be negatively impacted says Sasse, the concern remains more about the weakness in the South African economy.

He does highlight some positives that have emerged, like improved tax collection off the back of the mining boom.

Certainly our Cape Town and Durban portfolios are doing considerably better than Gauteng.

Norbert Sasse, Group CEO - Growthpoint Properties

I do think there's going to be lasting impact but we don't see it ultimately as being 'the end of the office'.

Norbert Sasse, Group CEO - Growthpoint Properties

I think it [demand] is going to come back. We're already seen the likes of Discovery comment on the return to the office and the need to be vaccinated...

Norbert Sasse, Group CEO - Growthpoint Properties

Listen to the discussion in the audio below:




15 September 2021 8:43 PM
Tags:
The Money Show
Bruce Whitfield
remote working
Growthpoint Properties
Norbert Sasse
Lockdown
COVID-19
office rentals

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