AFRICREST PROPERTIES: Kings of Conversion – Office to Residential

Africrest Properties is more focused than ever before as it develops at an unprecedented rate converting vacant office buildings into residential developments.

Recognised as the conversion experts in South Africa, the company’s portfolio includes impressive estates like The Landmark, The Legacy and The Eclipse amongst many other. At each property, formerly a drab and vacant office park, Africrest’s reinvigoration has resulted in some of the brightest and best accommodation in Gauteng, designed to be attractive, safe, and community-centric.

Director Grant Friedman tells Enterprise Africa: “We have had an extremely busy 12 months in terms of acquisition and growth. Since February 2024, we have completed four developments and 1,200 apartments in total. Currently, we have 10 developments under construction, totalling 3,000 apartments. We have found the demand for our product has skyrocketed. We build to rent, this asset class is known as Muti Family Housing (where one landlord owns and manages the entire estate) and in South Africa that is a relatively new asset class that is gaining traction. We have found that we can build thousands of apartments in safe and secure estates and then tenant them with great returns.

“Over the last five years, Africrest has converted more office buildings to apartments in South Africa than any other company. However, we have found many opportunities recently in greenfield developments which are now about 30% of our development pipeline.

“We have seen how over the last two years institutional investors, banks, and pension funds have become excited to invest and finance the Multi Family asset class. This is due to the highly predictable returns one can achieve from the asset class.”

He adds that the in-house property management team has grown to over 160 people and is extremely passionate about making sure that the tenants’ experience is remarkable.

SUSTAINABLE GROWTH

Traditionally, Africrest has made investments in Johannesburg, typically within a 10km radius to their HQ in Sandton. By adding what is now recognised as classic Africrest flair – great design, hotel-like amenities, and unrivalled security – the buildings are long-lasting assets that add value to their surrounding neighbourhoods.

“We are a private company, and we don’t have large external shareholders putting us under pressure,” says Friedman. “With us, every transaction we do is for that property. It’s not because we have to grow at a certain percentage for our shareholders. We only do projects that we believe will be great developments for our tenants. We are very tenant centric. Unless the development is in a strong business node, close to retail and amenities and unless it lends itself to being a great place to live, we are not going to do it.”

Simultaneously, Africrest is reducing its exposure in the commercial property market and selling traditional office assets so that it can pursue its passion in the Multi Family residential space. The Africrest estates offers resort-style living – packed with amenities and located within major work nodes.

“Africrest’s properties are located in superb locations, the buildings are beautiful, we spend a lot of money on amenities such as swimming pools, fully equipped gyms, A-grade business centres, cafes, cinema rooms, landscaped gardens etc. We are really trying to create an amazing living experience for tenants,” says Friedman.

BUILDING GREAT THINGS

Africrest has enjoyed notable success over the past decade, riding out economic and property cycles thanks to a finger on the market pulse and the financial stability to invest and improve while others could not.

The company has made investments into energy security and sustainability at all of its developments, most notably with centralised heat pumps. Today, ground source heating systems are being explored and Africrest hopes to be the first developer in Johannesburg to install such technology. This, combined with world class amenities, make for a highly defensible portfolio.

“We have kept our team almost the same – architects, project managers, construction companies etc – when small mistakes have been made, we have all learned together. When we take on the next project, we all know how to move forward in the best way,” Friedman states.

The current focus for the ambitious team is across several developments. Each is at a different stage, and Africrest is always trying to improve, promising that the current projects will all be better than the last.

“We truly love what we’re doing and we love providing a great residential leasing experience,” Friedman reiterates. “For us, the future sees us developing great estates. If that is two or five developments next year, it doesn’t matter. All that matters is that we develop great projects – that is our passion. We have no long-term plans to list or sell, we just want to create a very strong business. We now directly employ over 170 people and they are all helping us to achieve this.”

In the future, the plans remain the same: acquire in great locations, build efficiently and effectively with a tried and tested team, and bring delight to tenants. This is where Africrest is in its prime, and this is how the company will further advance its already valuable reputation.

“We have strong financials and we are well capitalised. When we want to buy something, we can execute within hours. This makes companies looking to dispose of their properties want to deal with us as they can do a deal knowing it will conclude swiftly without any hassle.” Friedman concludes.

“Our goal is to continue creating incredible estates that our tenants love to live in and that we can be proud to say we developed and own”