Growthpoint bets on KZN investment after 2021 unrest as economy looks up

Growthpoint Properties is positive about investing big in KwaZulu-Natal (KZN) as the province shows signs of recovery after the 2021 unrest, followed by devastating floods in 2022.

Clearly the economy has started lifting and along with that they are starting to see some green shoots in KZN, says Estienne de Klerk, CEO of Growthpoint Properties SA.

The group is South Africa's biggest property company and also has a big international portfolio.

They have a lot of office space in Umhlanga Ridge, which is all fully let at this point, de Klerk notes. Growthpoint also owns shopping centres and hospitals in this commercial area.

Earlier this month, Growthpoint broke ground on Tecoma Park, a R392 million warehouse development in Cornubia City.

De Klerk also highlights development opportunities for logistics at Durban Port, and an increasing demand for student housing in the city.

"We've commenced developing purpose-built student accommodation of about 2,500 beds at the entrance to the Howard College campus of Natal University, which will be ready in 2027."

The Growthpoint SA CEO says, from a security perspective, the group is increasingly looking at investing in real estate precincts, where they can have an influence on the environment that is created in and around their property. This is especially in light of some of South Africa's metros, including Durban, not maintaining the infrastructure necessary to provide services.

"So it is not just about an isolated building in a specific area but more about grouping your assets and having influence on things like how clean the environment is, how secure it is, and being able to affordably provide those services given that unfortunately many of our metros are not as functional as we'd like them to be. And the reality is that  Durban's gone through quite a difficult time, other than the issues around COVID and riots and so on..."

They go where their clients want to be, de Klerk says.

"We're a service provider and ultimately we invest in that market to obtain attractive returns, and if you're in a market where demand is growing, then typically what would happen is rentals would firm and off the back off that we'll get better returns off the investments were making."

De Klerk is also optimistic about the current cycle of interest rate cuts continuing.

For more insight into the commercial property space, listen to the interview audio at the top of the article