There is a growing trend of businesses opting to move away from office parks into residential areas. This may seem unconventional, but there are certain financial benefits for SME’s to make this move.
“With the by-laws considered, yes, buying or renting office space in a residential area makes financial sense”, says Attie Anderson, Head of FNB Commercial Property Finance.
Anderson takes a look at some key considerations that a business has to take into account when deciding to buy or rent office space in a residential area.
What must one consider in terms of where to buy?
The biggest consideration is access to the property.
- Are the access and exit points adequate for the expected visitors to the premises?
- Is the site in close proximity to major routes?
- How will peak hour traffic affect access to the premises?
What are the stumbling blocks with owning commercial property in a residential space?
Residential areas are prone to traffic stacking during peak times, especially close to schools and residents may complain about the rate of activity. In residential areas, sufficient parking space may also be limited.
What are the legislative considerations?
One needs to ensure that the zoning of the property caters for the specific business to be operated thereon. The zoning of the property attaches to the property itself, and not to the owner thereof. In some cases you may require special permission from the local authority (“consent use”).
Consent use is normally granted to the owner of the property, with certain strict conditions to be adhered to. This consent use may not be transferred to subsequent owners (consent use therefore attaches to the owner, not the property).
How are rates and taxes calculated?
Rates are calculated in accordance with the rates policy of the Council in which jurisdiction the property is situated. Properties with business zoning are calculated at a higher tariff than residential properties.
The valuation of the property is normally multiplied by the tariff and divided by 12 to obtain the monthly rates applicable to that property. The valuation of the property will normally differ from area to area.
Is it good to rent or own this type of property?
It is always better to own property in a good area as it will appreciate in value and as you grow it might be an asset that you will either rent out or sell at a reasonable profit.
What types of businesses are best suited for residential areas?
A look at the sector suggests that professionals such as doctors, dentists, accountants and real estate agents seem to move more to residential areas. Other industries that seem to benefit are beauty salons, printing franchises and smaller service providers such as plumbers and electricians.
“The decision to go into a residential area must be one that looks at the long term strategy of the business and its growth prospects, but on the whole, it is clear that there is merit in exploring office space in a residential area” concludes Anderson.
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Off The Beaten Track
What Tourism Month means in South Africa and how Mango Airlines is focusing on local opportunities.
This September, being Tourism Month, we have so much to talk about in South Africa, and so many people to engage with, both domestically and abroad. We are privileged to be able to leverage a broad range of destinations – arguably world-class in nature, and they expand way beyond a beautiful mountain, and an ecosystem of game.
The vast majority of leisure tourists, however, remain attracted to the Mother City and various Safari destination, while business tourists tend to stick to hub cities for short durations of time before departing again.
“There is a golden opportunity to expand on the same offerings – while not detracting from them in any way. Our responsibility is to drive tourism into new areas, really emphasising the differentiators that are incredibly attractive to local and international tourists,” said Benediction Zubane, Head of Marketing at Mango Airlines.
“Often tourists visit one of the more well-known sites in an area, and are completely unaware of the other features and destinations close by. We’re seeing a lot of success in township tourism which goes to show how diversifying can really drive new tourism opportunities,” explained Zubane.
According to Statistics South Africa survey on Tourism and Migration, nearly 3.5 million international travellers visited South Africa in August 2017. Top numbers were tourists from USA, UK, Germany, France and The Netherlands, with African visitors primarily coming from SADC countries. Zubane added, “This means there is vast opportunity to begin engaging with travellers in new countries across the globe. We need to become our own best ambassador, talking-up our famous and lesser known destinations, proudly showcases our uniqueness. We should also be tourists in our own country and start exploring the wonders of the Rainbow Nation.”
Mango is passionate about helping its SMEs and entrepreneurial community to successfully overcome the unique challenges facing the tourism industry: “There has never been a more opportune time for small businesses and entrepreneurs to benefit positively from tourism in South Africa, and we hope to celebrate alongside our SME community as they fly high – both literally and figuratively,” he concludes.
FNB Receives 50 Million US-Dollars To Accelerate SME Development
First National Bank puts their focus on SME development in South Africa.
First National Bank (FNB) has received 50 million US-dollars from the DEG – Deutsche Investitions- und Entwicklungsgesellschaft to deploy towards small and medium enterprise (SME) development in South Africa.
DEG is a development finance institution whose mission is to promote private-sector enterprises in developing and emerging-market countries as a contribution to sustainable growth and improved living conditions.
Mike Vacy-Lyle, CEO of FNB Business says: “The new line of funding contributes to our ongoing efforts to accelerate our contribution to SME development in South Africa. We believe that SMEs are key to stimulating sustainable economic growth and job creation. Our intervention in SME development is not only limited to funding, we also invest heavily to improve capacity and supplier development capabilities in small businesses.”
FNB continues to pioneer products and services that have taken the angst out of South Africa’s entrepreneurs, from providing free instant accounting services to online documents reservation services, and forming public-private partnerships to digitise the registration of businesses.
“Our message to entrepreneurs is that we remain committed to providing meaningful solutions to help them grow. We have exciting developments that will take us further in our journey, all aimed at advancing the SME agenda by taking the anguish out of doing business,” concludes Vacy-Lyle.
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