Peri-urban areas have immense opportunities for investment in commercial properties, such as shopping complexes and warehouses for retailers, says 100% black-owned property development, management and investments company Akani Properties MD Zamani Letjane.

“We saw opportunities in the property sector, and coincidentally, we took over a client’s property portfolio, which was then administered under our retirement fund administration company. We then separated the properties and registered Akani Properties to develop and manage.”

Letjane notes that African-owned businesses are often excluded from the commercial properties market, as the property sector mainly comprises bigger, or white-owned, companies.

He says this is understandable, owing to the capital needed to build retail or commercial property; however, having a client that had investments in shopping complexes, particularly in a peri-urban area, enabled the company to make a start in the sector.

Akani Properties aims to invest in complexes, rather than malls, in peri-urban areas. The company is managing 22 properties in its property portfolio throughout South Africa.

The retail portfolio consists of shopping complexes – the majority of which comprise almost 90% national retailers as tenants – at an average of about

15 000 m2 in peri-urban areas.

Further, movement in malls has become restricted, owing to Covid-19, consequently, customers are wary of shopping in the big malls and prefer the accessibility and convenience of shopping complexes, says Letjane.

Akani Properties is investing in refurbishing or “resuscitating” its properties to make these more appealing to customers, as the designs for many of the complexes date back to the early 1980s.

The company is also installing solar panels to provide consistent electricity for tenants.

“We have decided to put up or equip all our buildings with solar panels, which will provide a discounted electricity rate for tenants, compared to what they currently pay. This will also enable them to enjoy continuous trading during power outages or load-shedding. We see a big difference in terms of our offerings to tenants,” explains Letjane.

 

Akani Properties is also aiming to acquire other opportunities to build new centres, outside the properties the company already manages.

Through the companies’ relationship with national retailers, Akani Properties can secure anchor tenants in current properties and future developments.

Akani Properties’ Autumn Leak Mall project in Zeerust, in the North West, involves building a retail centre of 20 000 m2. The retail centre is currently fully let.

Akani Properties sees an opportunity for a niche market in peri-urban areas that the majority of investors are not looking at. Most investors concentrate on the city centres, and we're concentrating on the peri-urban centres,” explains Letjane.

While there are other operational retailers, Akani Properties aims to complement the retail property sector of the peri-urban areas.

Meanwhile, the company has ventured into hospitality property as part of diversifying its portfolio of assets.

The key part of investing in the hospitality property sector is the location. Investors need to identify a proper location, have a proper analysis of the population and determine the potential for future guests, adds Letjane.

Akani Properties owns the Destiny Hotel and Radisson Blu OR Tambo, both in Kempton Park.

The company is also venturing into building hospitals. There are three areas, in Mpumalanga, and one area, in the North West, that the company is considering for the development of hospitals.

Further, the pandemic has had “an immense impact” on the retail industry and its stakeholders, with many tenants unable to pay the lease-agreed rent because of limited to no trading.

To support and assist tenants, Akani Properties has allowed tenants to negotiate the lease agreement contributions they were able to afford during the pandemic.

Prior to the pandemic, the commercial property sector was already on a slower economic recovery, and the unprecedented situation brought on by Covid-19 restrictions has added to the challenges of the sector.

However, there are opportunities for the sector to improve, particularly if investments are made in emerging potential markets, Letjane concludes.