National property developer FWJK Developments have been appointed by current joint owners, Redefine Properties and Zenprop Property Holdings, to redevelop the existing 22 000m² office block at the corner of Fredman Drive and West street. The A-Grade building which is currently occupied by conglomerate Discovery Health will be sectionalised and a range of office suite sizes made available to the public for purchase at R27 500/m².
Karel Kerling, spokesperson for the developer FWJK, says the opportunity to purchase prime sectional title office space in Sandton Central this close to the Gautrain Station is unprecedented. “Historically, office space in Sandton has been held by property funds and other institutions from whom business owners leased their premises. Pockets of sectional title space such as Katherine and West were quickly snapped up by investors at prices north of R34 000/m² over two years ago.
The offering by FWJK is way under the current market prices and represents incredible value for money, particularly due to the prime location, he says.
Kerling says R100 million has been budgeted for the refurbishment and rebranding of the existing building in order to provide the latest energy saving and electrical technology, as well as to preserve its nodal status as a destination of choice for high-end tenants and businesses wishing to own their office accommodation.
Rhys Rocke, regional director of the developer FWJK announced a “South African first” whereby purchasers will be offered a 5-year interest only mortgage bond with no capital redemption payments required.
The loan will be offered at 80% finance requiring only a 20% deposit. “Offering investors and end-users in 16 Fredman the option to take an interest only loan will substantially reduce the monthly cash flow payments and will result in the effective rental income exceeding the bond payments by around 9% in the first year.
“The profit then grows through rental escalation while the interest repayments on the bond remain constant, only floating with the prime overdraft rate, which is on a downward trajectory.”
Rocke added that when refinancing after the 5-year term, investors could expect to realise around R7 000/m² profit through capital appreciation.
Rocke says the office growth within the Sandton Central node during the course of the last two years has been exponential with many new buildings coming on stream to lease, but with very few opportunities to own sectional title offices in the epicentre of Sandton.
“This has been evidenced by a strong sales take up of over 40% since the launch of 16 Fredman under a month ago,” says Rocke.
Refurbishment of the building will commence in March next year and the new office suites will be ready for occupation around the middle of 2018.
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