The Holistic Remedy to an Uncertain Future

Opportunities for investors in the office market

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World markets may have managed to stay afloat for eight years now, but, with growing volatility in Europe, China’s capricious economy, and swelling US debt, another global crash could be on the cards.

South Africa, despite political nerviness and downgrades of its credit ratings latterly, has succeeded in clawing its way from the depths of another technical recession. Most business owners, however, are no nearer loosening their belts. Far from it.

South Africa’s commercial property sector and landlords of office spaces are likewise seeing a sharp increase of tenants needing to downsize on office area and, where possible, sub-let disused or non-essential spaces to reduce monthly overheads and assist with cash flow.

Shared economy, collective success

The sharing (or collaborative) economy trend is hugely popular across the globe and quickly filtering into South Africa’s commercial property sector. It is a means for businesses to endure the sub-prime knock-on effect of a still friable economy, and for small, medium- and micro-sized enterprises (SMMEs) in particular to mature while overheads rise.

Executed and managed correctly the sharing economy works exceedingly well for all business types despite its relatively simple structure. So well, in fact, that a 2015 PwC report noted the global sharing economy to be worth $15 billion annually – a figure that is projected to climb sharply, to $335 billion by 2025. Celebrated sharing economy companies Airbnb, Uber, eBay, and Freelancer.com have over the last few years spawned hundreds more booming multi-million-dollar sharing enterprises.

This form of business ‘ecosystem’ – a distribution of amenities, services, rewards, and costs which are otherwise difficult to manage – is a sure-fire way for the continent’s SMMEs to revitalise markets and for property investors to attach to that success.

Where there is value

Southern Africa’s property sector – largely saturated on the commercial front as urban centre development continues to outpace demand – affords savvy buyers a medley of good buys and investment prospects.

Landlords are now able to make use of the more unusual, previously defunct, spaces – creating smaller and unique business milieus that are aesthetically attractive to young businesses and entrepreneurs, and, importantly, are cost effective and offer incredibly good value. This, of course, provides a good return on investment for landlords or developers.
Much like any business model, for this type of business ecosystem to succeed, members and service providers must be aligned and be incentivised to work together, as a unit. As per the sharing model developed by CCG, members should be motivated and remunerated by way of cross selling, supporting one another – sound in the knowledge that they will share in monthly or quarterly revenues via a trust or similar scheme.

As well as safeguarding company growth, creating employment, and promoting entrepreneurship, another distinct advantage of this holistic system is that small businesses have a captured audience, a target market on hand. The days of door-to-door sales pitches could be numbered, as might the financial and occupancy headaches of South Africa’s commercial property investors.

Capital Connect Group’s sharing model: Corporate Exchange

Capital Connect Group began roll-out of its Corporate Exchange hubs during September 2017. Corporate Exchange provides SMMEs the tangible assets and resources required for growth, and investment opportunities; particularly in the commercial property sector. The collaborative hubs, spread across northern Gauteng, are planned for the Western Cape and KwaZulu-Natal.

All levels of assistance are offered to CCG tenant members, entrepreneurs, and staff: from support for start-ups, and an incubator programme; to an accelerator programme (assisting with growth strategies or fast tracking business growth); to that of private equity for the more established entrepreneurs or businesses looking to enter a new phase.

By Ilan Kirkel

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