The Advantages of Owning or Leasing Industrial Property in South Africa
Category Newsletter: Ceo's Message
When occupying industrial property in South Africa, there is an option to either own or lease your facility. Each choice carries its own set of advantages and considerations. Let's break down the benefits of owning versus leasing industrial property in South Africa.
Long-Term Investment and Stability: Owning industrial property in South Africa offers long-term investment benefits. Purchasing a property allows businesses to gain an asset that can appreciate, providing potential financial returns. Ownership also provides stability and security, as businesses have control over their premises without the risk of rent increases or sudden lease terminations. Owning an industrial property can also serve as collateral for future financing needs, enabling businesses to access capital for expansion or additional strategic initiatives.
Flexibility and Scalability: Leasing industrial property offers and advantage of flexibility and scalability. Businesses are able to choose a property that aligns with their current needs and could potentially be scaled up or down as their future operations change. Leasing provides the opportunity to select locations that are strategically positioned for target markets or transportation/logistical infrastructure. Leasing additionally allows businesses to focus their capital on core operations, leaving room for investment and development in operational tools and their workforce. Businesses with international head offices sometimes view South Africa as being a high risk economy and prefer to lease as it offers an easier exit than having a substantial capital investment that may need to be disposed of later.
Reduced Maintenance and Operating Costs: Leasing industrial property relieves businesses of the burden of property maintenance and repair costs should it not be a triple-net lease. The responsibility for upkeep and facility management falls on the property owner or landlord, allowing tenants to concentrate business activities. This could be beneficial for small and medium-sized enterprises with limited resources. Leasing also provides cost certainty, as businesses can negotiate lease terms that include predictable rental payments, making it easier to budget and forecast expenses
Access to Specialised Facilities and Services: Leasing industrial property offers the opportunity to access specialised facilities and services that may otherwise be cost-prohibitive for businesses to develop on their own. Industrial parks and business complexes often offer shared amenities, security systems and common areas, providing added convenience and potential cost savings. Furthermore, leasing from established property owners or developers can provide access to their network of service providers, enabling beneficial networks for business growth.
Whether you opt to own or lease industrial property in South Africa depends on various factors, which include financial capacity, long-term and short-term goals, and operational requirements. Owning offers investment potential and stability, while leasing provides flexibility and access to specialised facilities. It is best to carefully assess your unique requirements before deciding on which path to take.
Author: Marder Properties
