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Building-sa.co.za

  Building Contractors & Property Developers Who Deliver On Time, Every Time, Exactly As Promised

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Building - Build, Extend or Renovate An Office Block

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We set out to design office buildings of excellence, which achieve and enhance the financial returns required by our clients.

Building - About CGT & Moving Tips

Build Or Extend An Office Block

When you build with us YOU DON'T HAVE TO WORRY OR WONDER about the quality of the service, workmanship, or finished project. You can also rest assured that once you've moved into your office complex, we will always be around to help you with the unexpected problems associated with any new building. And, when needed, we'll be here to build for you again.

 

 Office Block Building

You don't have to be all that big or smart to own your own office block. You can purchase a freehold stand with a relevantly small deposit, build to your exact specifications, and finance the whole lot. So you'll be:

  • putting your rent payments into bond payments. 

  • saving the rent escalation each year, and 

  • benefiting from the capital growth of your own property.

There's an old proverb, 'First impressions are the most lasting'; there's also a saying, 'There's no second chance at a first impression'. And this is so, so true when it comes to the office space your firm occupies. Not only is it your place of work, but it is also your face to the world, and of course, your clients. Your building says a lot about who you are. That first impression of your firm can make or break numerous transactions that should have come your way. 

Building your own office premises enables you to have total control over your corporate image. From custom designing to suit your needs, and the full choice of finishes and fittings that portray your style and pocket to your signage, private gardens, or entertainment areas for important clients. 

You can gain prestige in more ways than one. And, of course you do all this while saving thousands in office rentals each year.

Take a look at some figures below. These are fictitious figures but they're quite relevant in many ways. Use them as a guideline to make some comparisons to your actual 'today' office rental circumstances.

COMPARISON OF BOND REPAYMENTS TO RENTALS

BOND ASSUMPTIONS

Purchase Price: 

R525.000

Equity (20%)

R105.000

Bond (80%)

R420.000

Interest Rate

17%

A short note on the 17% interest rate

This rate can easily be bettered in South Africa today - but this was the going rate not so long ago. And with our volatile interest rates may just be back before you know it. See also Finance All Your Needs. 

Period

20 years

RENT ASSUMPTIONS

Rental Area

250M2

Office Rental

R25 per M2

Rental Escalation 

12%

Covered Parking

4 @ R100 per month

Open Parking

4 @ R50 per month

Total Rent Paid

R5.922.000

Total Bond Paid

R1.460.000

Total Savings

R4.462.000

RESALE VALUE OF PROPERTY

Assuming 12% increase in value per annum over 20 years

You are better off by

R5.064.000

R9.526.000

A short note on the 12% resale value increase assumption

Over the last 30 years or so, this country has experienced Sharpeville, the Soweto riots, declining gold prices, an oil crisis, plummeting Rand values, and total political transformation (to name but a few). Yet the growth rate in property values has endured all this and increased on average by 12% per annum. And will in all probability do so for the next 30 years.

Do the above facts and figures shock you? That's a lot of money. These facts and figures clearly show just how beneficial owning your own office block can be when compared to renting.

There is of course the other side of the coin. That is, you're the landlord. Now check the above figures and observe what a great investment you, as a landlord, would be making if you put up an office block.

As they say, 'We rest our case - the figures speak for themselves.'

If you wish to do some calculations for your own current office rental circumstances you can do so on our calculator page. To go to the calculator simply click on Loan Calculator link under the flag at the top of the page.

Office Rental Market

If you should wish to go into the office rental market you should carefully examine the underlying trends that drive the property market. 

In the office market, modern trends require matching hi-tech office space, capable of catering to the needs of technology. Concepts such as restructuring and outsourcing is busy creating a demand for smaller office premises. The dawn of the so-called virtual office also underpins an emerging pattern of smaller office space.

The office market has continued to see a strong exodus to the leafy, landscaped office parks of the decentralized nodes. Recent research indicates that, on average, there is more than four years' supply of office space in South Africa's major CBDs. And this is not only to blame on perceptions of city "crime and grime," but on growing, ever changing lifestyle trends. Office tenants or owners prefer an attractive park environment for an office location. This includes security, safe and ample parking and close proximity to amenities. A survey in the Durban CBD only a short while ago, indicated that those tenants who were planning to decentralize would do so regardless of whether the city council actually managed to abolish crime and grime in the downtown area.

Existing rental differentials between office space in the city centre and up market decentralized space can be as much as R30/m2 gross and, not surprisingly, this is prompting a careful reconsideration of the desirability of city centre office space. The economic fundamentals are such that downtown activity has picked up slightly in recent months, helped by a commitment to urban rejuvenation on the part of both business and local government. However, there appears little hope of any drastic turnarounds from the decay. Rather, these CBDs will have to transform themselves into mixed-use nodes catering for the emerging petit bourgeoisie.

Examples in the Johannesburg CBD include the 5 000 m EDS lease in the Southern Life building and the R400m ABSA office development. But, despite current more positive sentiment, office market players will and should be cautious of any CBD for several years to come.

In an attempt to try and reverse this urban decay in South Africa some tax breaks are to be introduced later during 2004. Financial incentives are to be offered under a plan for municipalities to demarcate Urban Development Zones (UDZs). It is expected that tax breaks will be provided through a change in the Income Tax Act, which is expected to go through Parliament in about October, 2004. Essentially these tax breaks will amount to a 20% tax depreciation allowance over five years to developers refurbishing buildings in these UDZs.

We hope this short section briefly demonstrates our experience and vision to ensure you quality commercial and industrial developments tailored to your needs, both now and in the future. 

It's what we like to call 'package deal' construction.

 
Building With 100% Satisfaction Guaranteed

Only once in a long, long while will you find as much support as we offer. If you've been wading through hundreds of newspapers looking for a building contractor to help you develop an office block and simply getting nowhere, why not give us a try.

You may just experience enormous benefits.

Building With NHBRC Protection

Building With MBA Protection

And while we actually don't deal in land, you could do well in contacting us if you should have some commercial land for sale - we may just have a prospective client looking for land on which to build an office block.

Our expert advice is only a phone call, fax or e-mail away -

Tel: (011) 453 4401           Cell: 084 303 8179            Fax: 086 640 4667 

E-mail: info@building-sa.co.za

 

Do you own a piece of land, would like to develop it, but don't have the funds or expertise? Click here to learn about our Joint Property Development Scheme.

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