The conversion of former office buildings into residential ones is taking off, especially in central business districts, according to Joel Rosen, MD at Prime Residential, who has himself been involved in a number of these conversions.
"There are currently a large number of office vacancies, especially in some areas of Johannesburg. With fewer new commercial tenants entering the market, there is often no other option but to look at alternative ways to make these investments work for you," says Rosen.
3 key factors giving rise to the office-to-apartment trend
- Commercial property sector under pressure - vacancy rates increasing.
- Young professionals looking to live closer to work.
- Mid-market residential property also gaining favour with young professionals.
These residential properties have become an attractive asset class that delivers better returns than commercial properties, Rosen says.
These three trendy residential buildings used to be offices 94 on Main
Formerly known as the Gauteng Provincial Treasury's Matlotlo House, this building on Johannesburg's iconic Main Street used to be owned by Redefine Properties before being acquired by Redcon Property Management and subsequently converted into apartments.
The building is a hit with young professionals employed by banks in the area or who like being close to the nearby courts, Chattergoon says.
Rand President lies in an urban node Rosen believes has much potential, even though it is not in Johannesburg's main business heart.
In Randburg "there is a high vacancy in B-grade office space, a very high demand for residential rentals and it is ideally situated for those working in Randburg and Sandton, with excellent access to public transport," says Rosen. "These sorts of areas are where the real opportunity lies."
267 on Surrey
267 on Surrey also forms part of Prime's residential property portfolio. The building was a commercial property before being turned into apartments.
Working with people who have real experience in conversions, who know the markets, and who understand how to maximise investment returns with the right finance is the key to making developments [like 267 on Surrey] work, according to Gary Palmer, CEO of Paragon Lending Solutions.