Johannesburg - Commercial property owners, and tenants in particular, will bear the main brunt of the 31.3% electricity price hike approved by the National Energy Regulator (Nersa) last month.
The retail property sector will be worst impacted. The sector is already bleeding from rising vacancies, tenants in arrears with rentals, and retailers closing down, says Douw de Kock of the SA Property Owners Association (SAPOA), also group services manager of Broll.
He reckons a rise of more than 30% in electricity tariffs could result in shopping centres' monthly costs increasing by about R5/m². This will have a significant impact on affordability and mean that the monthly services bill for an average 48 000m² Johannesburg shopping centre could soar from R757 000 in June to R1.01m in July.
In the case of office buildings monthly costs could rise by about R4/m².
Electricity comprises the biggest operating expense for commercial property and represented 22.6% of operating expenses last December, according to a SAPOA report.
Rennie Property managing director Steve Rennie says property owners will simply pass the higher prices on to their tenants.
Erwin Rode, property valuer and economist at Rode & Associates, points out that store tenants cannot pay more than their turnovers and profit margins permit. Shopping centre owners will therefore not be able to blindly pass the expenses on to their tenants.
In the current circumstances the consumer is also in no condition to accept the extra burden. Rode therefore suspects that property owners will be forced to meet their tenants halfway.
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