Comair head office goes on auction

The Kempton Park head office of defunct airline Comair is set to go on auction next week.

In an emailed response to Moneyweb on Thursday, Van’s Auctioneers confirmed that the online auction of the 4 400m² property in Bonaero Park in Gauteng is scheduled to take place on 15 and 16 March.

Comair went into liquidation in June 2022 after the business rescue process the airline embarked on in 2020 failed to raise the necessary funding needed to keep it in the skies.

At the time it was believed that Comair’s exit from the market would deprive the industry of 40% of airline capacity, leaving remaining players like Lift, FlySafair, CemAir and state-owned South African Airways to pick up the slack.

ALSO READ: Govt unable to assist Comair as Ramaphosa places blame on ‘limited resources’

Comair owned and operated domestic carrier kulula.com and operated British Airways flights locally through the franchise agreement it had with owner International Airlines Group (IAG).

Bargain?

Its former head office is now in search of a new owner – but the state of the local office market is a concern for the auctioneers.

They say they have not received a reserve price for the property from the liquidators.

“Our [value] estimation is anything between R8 million and R12 million but the market for office buildings is rather depressed right now,” says Van’s Auctioneers.

Despite this, it notes that it has received expressions of interest from potential buyers of the property.

Local developers and property owners are battling elevated office vacancies as companies look to strike a balance between employees who prefer to work from home and those who have to be at the office.

Stanlib fund manager and head of property Nesi Chetty told Moneyweb that given the state of the office property sector, it may be harder to sell office properties located in industrial areas like Kempton Park.

ALSO READ: Comair asked to return their licence, might never fly again

He said buyers tend to gravitate towards centralised commercial areas like Sandton when looking for office space.

“We’re starting to see with the large property companies like Redefine and Growthpoint that the better-quality office rentals have been a lot firmer in the last 12 months, especially around the Sandton and Rosebank nodes and we’re seeing potentially a moderation in reversions,” he added.

“The offices in Kempton park and other areas are not A grade – they are typically B grade, and you might find that vacancies might be slightly higher in those buildings,” said Chetty.

“Unless a potential buyer is going to take a view that they can bring that vacancy down more aggressively, you’ll find that it’s not going to be able to be sold very close to book value, so it will be a discount on the market.”

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.