A South African commercial property investment pack shows what a building earns. It rarely shows what the building costs to keep, and the net figure can hide that. At Broll's 22 October auction, one Sandton lot's own numbers fit a net income of about R2,06 million or, on our arithmetic, one of at most about R1,11 million.
The lot is 3 5th Street in Wynberg, Sandton, on the corner of Arkwright Avenue. Property Wheel's preview of the sale describes 2 637m² of retail, light-industrial and storage space on a 3 887m² erf. An anchor tenant has been there for more than 14 years, alongside other tenants, antenna income and a 35kWp solar installation.
The three numbers in the pack
Broll's own listing for the lot gives:
- Gross annual rental of approximately R2,14 million.
- Annual recoveries of approximately R1,03 million.
- Net annual income of approximately R2,06 million.
The Property Wheel preview rounds the last two to R1 million and R2 million.
Recoveries are the costs a landlord passes back to tenants, typically rates, utilities and a share of running costs. The listing does not say whether the R1,03 million sits inside the R2,14 million or on top of it. That one missing line decides what income you are bidding on.
Two readings of three numbers
Our arithmetic below uses the approximate figures in Broll's listing. It is not Broll's.
| Reading 1: recoveries on top | Reading 2: recoveries inside gross, matching costs | |
|---|---|---|
| Total income | About R3,17 million | R2,14 million |
| Base rent | R2,14 million | About R1,11 million |
| Running costs | About R1,11 million | At least about R1,03 million |
| Net income | R2,06 million | At most about R1,11 million |
| Running costs per m² a year, on 2 637m² | About R421 | At least about R391 |
In the first reading, the numbers add up. The building costs about R1,11 million a year to run, and tenants pay back about R1,03 million of it. The landlord carries roughly R80 000 itself.
That recovery is a promise in a lease. If the 14-year anchor leaves, or renegotiates on renewal, a large share of the cost stays behind with the owner. The net income falls by more than the lost rent.
In the second reading, the numbers do not add up. Unless the tenants are paying back more than the building costs, R1,03 million of recoveries means the building costs at least that much to run. Take that out of R2,14 million and the net is at most about R1,11 million, not R2,06 million. The net figure would then leave out the costs the recoveries pay for.
On that reading, this is not a cheap building to run. What changes is how much income you are actually buying, and on a price set off the net, the gap is close to half.
What does a commercial property investment pack leave out?
A commercial property investment pack leaves out the spending that has not happened yet. Operating costs in a pack are usually historical, what was paid last year. They are not what the roof, the electrical board or the solar inverter will need next year.
A building where a tenant has been in place for 14 years has had 14 years of wear in the same space. Nothing in the listing or the preview tells you when the roof was last done or what condition the services are in. A low running cost can mean a well-run building. It can also mean deferred maintenance that the next owner inherits on transfer day.
The solar installation cuts both ways. Broll says it "may assist with electricity costs", which would lower what the recoveries have to cover. It also has a service life and a replacement cost, and neither appears in a net income figure.
Municipal charges move too. Tariffs went up again in July, which we covered in what the July 2026 increases did. Whether those increases land on the landlord or the tenants depends on the leases, which a buyer should read before the hammer falls.
The Durban lot shows the opposite problem
The same catalogue includes a multi-storey mixed-use building in the Durban CBD, with direct access from Beatrice Street. It has 123 mini-industrial units and four ground-floor shops in about 5 552m² on a 668m² erf. The preview gives gross annual income of R4,85 million at 60% occupancy. Broll's listing gives the same R4,85 million and 60%, and no running costs at all.
A building that is 40% empty still has to be secured, cleaned, insured, lit and maintained across the whole floor area. The vacant warehouse and penthouse the preview mentions are upside for an owner who can let them. Until then, the owner pays to keep them.
Where the maintenance number comes from
The cost an investment pack leaves out has to be priced by somebody who knows what the building needs. After nine centres changed hands, the same question arrived on the new owners' desks: who maintains it, and at what cost?
Arabella Infrastructure Solutions is a Johannesburg-based building maintenance and construction company that prices the maintenance an investment pack leaves out, from contractors who would actually do the work. A buyer gets a scope and a number before the bid, not after transfer. What that covers is set out for property owners and investors.
On Monday
If you are looking at either lot, ask Broll for the full income and expense schedule, not the summary. The catalogue is on Broll's own site. For the Wynberg property, the broker Broll names is Jason Raad (jraad@broll.com). Ask three questions in writing:
- Are the recoveries inside the gross rental or on top of it?
- What are the anchor tenant's lease expiry and recovery terms?
- What was spent on the roof, electrical and solar systems in the last three years?
The answers turn three numbers into a building you can price. Bring them to a contractor before 22 October.
