Eswatini National Provident Fund’s GM: Finance and Business Development Futhie Thembe.

The number 1 problem that is prevalent these days is parastatals building their own office accommodation causing an oversupply of office space in the country. Secondly, our Government being cash strapped is also a challenge as it often results to no payments or delayed payments from SMEs (Tenderprenuership)”

Photo Credit: https://enpf.co.sz/ | Original Interview Published In Eswatini Property Review Issue 9

Thank you for joining us to shed some light on the local property industry and your future aspirations as a Fund…

You are welcome and it’s an honour for us to feature in the country’s premier property publication.

Eswatini National Provident Fund (ENPF) has a wide range of commercial property investments, specifically, what are the types of commercial property that you are invested in?

The Fund is mainly invested in commercial and residential properties, whose investments are found in all the regions of the Kingdom. Speaking specifically about investments in the commercial space, the Fund is invested in the following classes: offices, found predominantly in Mbabane and Manzini, this being the most active cities countrywide. We also have an industrial property, which is rented out to our long-standing tenant Macmillan Education Eswatini. We are also found in the leisure space, Happy Valley Hotel, which is one of the main tourist attraction hotspots in the country. The Happy Valley investment is 100% owned by the Fund. The Fund also plays in the retail space through partnership with other entities, i.e., Bhunu Mall, which we have partnered with TibiyoTakaNgwane and RMS Manzini. The Fund owns 37½% share of this investment. Through IDCE, we own 62% of the largest shopping centre in Eswatini, Swazi Plaza/Corporate Place.

The recently passed Sectional Titles Act also comes in the form commercial property, is the Fund looking at investing in commercial property Sectional Title?

The Fund is excited about the passing of the long-awaited sectional title act, we are indeed looking at being a major player in this space. Our main participation in this regard will be in the form of allowing the public to buy and own space in our commercial properties.

Commercial property has been one of the sectors that has been hit hard by the COVID-19 pandemic, how has it affected you?

As alluded by yourself, commercial property has indeed been one of the hardest-hit sectors during the pandemic. Retailers and hotels were forced to close their doors for more than half of the year, while tenants failed to honour their rental obligations. The impact this has had,

Particularly to our commercial real estate, is far reaching than the global financial crisis

experienced in 2008/09. In the leisure business, you will recall that in March last year, the Government Eswatini initiated a partial lockdown to control the spread of the Covid-19 scourge, which saw a restriction in the number of people in one conference room to only 20 people. Such restrictions saw companies postponing or cancelling events and conferences. COVID-19 also came with a lot of restrictions in the movement from one place to another because of roadblocks. Borders were also locked down which meant that tourists from outside the country were restricted from entering the kingdom, all the above immediately drove down travel and tourism for business and pleasure and thus affected the turnover of the establishment. This business has still not recovered because of the current restrictions in global travel from one country to another. In the retail space, all nonessential businesses were closed when COVID-19 started. During this period, people could no longer meet, work in offices, eat out, shop, or socializes they used to. The world moved rapidly from business as usual to cautious travel, office closures and being mandated to work from home. These affected our retail businesses immensely since in the retail we have restaurants, gyms, and shops. In December 2020, when the 2nd wave hit, the Government of Eswatini introduced the 6pmCurfew, which affected the retail businesses i.e., restaurants, gyms, etc. Our investment properties were also not spared; in our bid to be a responsible landlord, we offered a COVID-19 rental relief to our tenants, both in the commercial and residential space. The relief was in the form of both discounts and rental deferrals. We have also seen a great exodus of our tenants who were put out of business by the lockdown -they could no longer honour their rentals such that we are currently sitting with high rental debtors.

From your commercial property portfolio which includes office space, shopping centres, (retail), leisure and others, which offering produces the biggest yield, and why?

Before the pandemic, leisure and retail were both offering the biggest yield. During the pandemic, Bhunu Mall is currently the only business that has been resilient throughout. The main reason being that it is ideally located in the hub of Eswatini, and it enjoys proximity to the bus rank. Another contributing factor is that it is one of the oldest malls in Eswatini with long serving tenants.

What challenges do you come across as commercial property investors in the country?

The number 1 problem that is prevalent these days is parastatals building their own office accommodation causing an oversupply of office space in the country. Secondly, our Government being cash strapped is also a challenge as it often results to no payments or delayed payments from SMEs (Tenderprenuership). These kinds of businesses occupy a high percentage of our office space, which subsequently also makes them fail to meet their rental obligations. Of late, we are also seeing shopping centres mushrooming closer to residential places and taking away business from the city centre.

What advantages doe’s commercial property offer compared to residential property in the country?

Commercial property offers more potential income than residential properties. This is because in commercial property your customers are usually business-owners or companies which have more financial ability than families and individuals for residential properties. Commercial properties are used for businesses and are usually used for up to 10 hours per day, yet residential properties are used by tenants 24/7, and therefore, are more prone to wear and tear.

We have witnessed in the past ENPF providing financial assistance/lending to entities such Eswatini Housing Board, does the Fund still do that, and is that part of the company’s strategy going forward?

Yes, the Fund still provides financial assistance to local entities including, EHB and local municipal councils etc. The Fund’s investment strategy is that every Emalangeni invested locally builds a better Eswatini. Our goal as the Fund is to grow the market investments that deliver measurable social and environmental benefits alongside financial returns.

In your own analysis locally, which is the better investment between commercial and residential


In the COVID-19 era, both commercial and residential properties have been hit hard by the pandemic. However, I still believe commercial property investment is much more profitable than residential investment. With commercial investment you offer a white box to tenants while in residential property, there is a lot involved i.e., Fittings to the house (stoves,etc), and these become expensive to maintain. For commercial properties, you can charge much higher rents per square foot undesirable properties, because the tenants are generating revenue from the property. You may be able to reduce your expenses by offering modest discount on the rent in exchange fora triple net lease. Having argued the above, one must be cognizant that for commercial properties to be profitable, they need to be in prime location such as in at the heart of a city or in a central business district. This is not to say location is not important for residential properties. The proximity of a resident property to important facilities like groceries, shopping malls, etc. is important but it does not affect the value of a residential property as much as it would for commercial properties.

What opportunities do you see in the local commercial property sector going forward?

Development of shopping centres closer to the people, closer to residential places and in other regions away from the Mbabane –Manzini corridor.

What is the normal (typical) yield return (%) year on year of commercial property in the country?

Yields from commercial property in Eswatini ranges from 5% to 11%. The key factor affecting returns is obviously the location of the property – if it is prime location then the landlord can charge higher rentals and may get long term lease tenants. The age of the building also affects yields – the older the building, the lower the net yield because of higher maintenance works.

ENPF’s commercial property portfolio is mostly locally invested, are we likely to see the Fund venturing into international commercial property investment?

The Fund is invested indirectly in international commercial property through investments that it has with Fund Managers. The investment mandate that the Fund has with its Fund

Managers is well diversified and includes property unit trusts.

How much does commercial property contribute to the overall investment portfolio of ENPF?

The Fund’s commercial properties contribute13% of the Fund’s overall investment portfolio. (Here I have included only the offices and excluded retail and leisure business, which we classify as local unlisted investments)

Futhie, it has been a pleasure, thank you once again for your time.

It’s been a pleasure.

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