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One couldn’t possibly be too careful. Three years into recovery and the European crisis hanging over us like a Sword of Damocles, with media reports this month of bankers calling the bottom of their credit impairment cycle as their book growth is starting to create renewed increases in portfolio provisions, some are looking out for the next recession while others may just want to turn cautious naturally.

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If not in South Africa, where does future expansion lie for the Johannesburg-based real-estate investment company Resilient, which has a local market capitalization of 11 billion Rand?

Despite the World Economic Downturn South Africa has continued to successfully build and fill new shopping centres with both tenants and shoppers. Resilient has been at the forefront zeroing in on non-metropolitan shopping malls outside of the major urban nodes. Towns like Tzaneen, Rustenburg and Klerksdorp come to mind.

Resilient also holds strategic interest in Jabulani Mall in Soweto (55%), Highveld Mall in Emalahleni (60%), 70% of the I'langa Mall in Nelspruit and 60% of the Mall of the North in Polokwane . The firm also owns the Diamond Pavilion in Kimberley and the Tzaneng Mall in Tzaneen. Resilient holds 12.9% of the Capital Property Fund, 22.0% of the Fortress Income Fund – B and 18.6% of New Europe Property Investments plc. It also owns Property Index Tracker Managers, the company that manages the Proptrax exchange traded funds.

Now Resilient is looking to Nigeria for its future. This may have some people worried to see a big player like Resilient apparently ‘abandoning’ the local market. But looking offshore is nothing new to Resilient. Back in 2007 it was involved in the establishment of New European Property Investments, seeing shopping malls being built all over central Europe. The fund was initially listed on the London Stock Exchange, but went on to acquire a secondary listing on the JSE in 2009.

But looking locally, Patrick Cairns for Moneyweb writes: “Resilient's strategy of managing shopping centres outside of the major centres in South Africa has been a very successful one. By focusing on under-serviced areas, the group has tapped into a growth story that has delivered excellent returns.”

Some would say this is due to a variety of reasons: for one, the reduced competitive playing field in small town retail nodes. Secondly shoppers in these towns are less likely to be debt-laden in comparison to their counterparts in urban areas. Increased levels of government social spending have also given more buying power to rural dwellers.This translates into a consumer group with high levels of disposable income available to use at Resilient's shopping centres.

So what’s changed? According to The Citizen’s Micel Schnehage, Resilient’s Director Des de Beer explained that it’s the firm’s struggle with local government. “(Resilient) is hampered by extensive bureaucracy and red tape, resulting in expensive delays.” He went on to state that the era for Resilient to develop non-metro malls was over.

What seems to have been the last straw was the loss of documents pertaining to the Mafikeng Mall by local authorities, 17 times at that! “They’re not accountable to anyone so they don’t really care," said de Beer to the Citizen. It is painfully obvious why some suggest that the facilitation fee (read bribe) was not paid over. Kudos to Resilient if this is indeed the case?

Apparently a partnership with the Sasol pension fund will result in the continuation of the development of malls in Secunda and Bergersfort.

But why Nigeria? Better yields is the short answer. De Beer is expecting returns of greater than 10%, and in dollars too. Resilient believes there is a sincere intention in Nigeria to see the country raised up and that officials are largely positive ‘facilitators’ of that process (excuse the pun). One may wonder if the company is being naive but recent reports of land being donated to developers to ensure development takes place certainly shows intent.

The Financial Mail reports that Resilient Property Income Fund Ltd plans to spend more than 1 billion rand building 10 shopping malls in Nigeria.  The malls, 10,000 square meters and 15,000 square meters in size, will be built over the next three years in the capital, Abuja, and the city of Lagos respectively, the main commercial hubs. Shoprite, Africa’s largest food retailer, will be the major tenant.

Bloomberg reports that Standard Bank Group Ltd, Africa’s biggest lender, and construction company Group Five Ltd. (GRF) are also partners in the deal.

The FM reports that De Beer would like to list the shopping centre fund in Nigeria once it reaches the right critical mass. This would be a similar approach to Resilient’s entry into Romania back in 2007 through New Europe Property.

One can’t help being a little concerned that if a big local player has chosen to go fishing elsewhere what are South Africa’s prospects as far as foreign investment goes? Time will tell.

It seems Africa’s gain is South Africa’s loss. Then again, a rather ingenious strategy of playing reverse psychology with the local property/retail market in order to dissuade competition in SA’s untapped rural markets, could also be at play?

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According to a recent report by Jones Lang LaSalle (JLL), focusing on Johannesburg, the commercial market is “beginning to favour landlords in the prime office accommodation as they are beginning to achieve asking gross rentals and reduced vacancies albeit limited speculative completions”.

The graph below shows the ratio of unlet new office space to total new space. The general trend has been one reflecting a lowering ratio, however in the case of Durban and Johannesburg, the ratio has increased. In Durban's case it is more a function of new space being absorbed into the mainstream market, whereas in Joburg's case the amount of new space on the market (just over 358,000m²) has increased to its highest level since Q3 2009. With the ratio of unlet new space at just under 60% - whilst not that high by historical perspective - could still negatively impinge on the overall vacancy rate going forward.

According to JLL nevertheless, investors are still conservative in committing to new speculative developments due to uncertainty, suggesting that speculative developments represent about 36% of the pipeline in the next 2 years. With all the committed construction activity in the Johannesburg area, office stock is expected to reach over 8,6 million m² in 2012 and 8.8 million m² in 2013.

JLL indicates that Sandton and Bryanston continue to be nodes of choice for office accommodation where heightened activity was noted during Q1 2012. Large deals in the market during in this period are the take up of over 16,000m² by the law firm CLA Cliff Dekker in Sandton and the 3,000m² office lease by Huawei Technologies SA in Bryanston.

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