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Africa Outlook

National
Real
Estate

NATIONAL REAL ESTATE

Keeping it in the family



National Real Estate in Bloemfontein currently manages over 12,000 residential properties in both the sectional title and property rental portfolios. It also manages more than 1,200 commercial properties and offers insurance services.

Writer Ian Armitage
Project manager James Mitchell

Some of the world's most instantly recognisable businesses are familyowned. News Corp, Benneton, L'Oréal, Playboy, Gucci, Carnival Cruise Lines, and car giant Ford Motor Co, are just a few. Globally, family businesses - defined loosely as a business in which a dominant family owns 51 percent of an enterprise - account for around 70-80 percent of all businesses and are acknowledged as the strategic backbone of most economies and a key source of growth.

Nowhere is this truer than in Africa - think of the likes of the Ackermans in South Africa, the Kenyattas in East Africa, and the Dangotes in West Africa. All of these have helped define the economies and the business environments of the regions in which they operate.

The du Toit family's business is doing the same. National Real Estate was established in 1933 in Bloemfontein. Over the years it has had some name and ownership changes and today it is run by the du Toits, who took over in 2003.

The company, which specialises in property management and related industries, is a market leader in the property industry in the Bloemfontein area.

"It is our mission to be totally committed in serving our customers in the most effective means possible," says CEO Marius du Toit. "Family businesses have indisputable defining qualities: individuals reporting to one another, confiding in one another, and growing the company together. It ultimately leads to speedier management. You cut down significantly on the red tape and you can make quick decisions. I think there are a lot of benefits. But there are also negatives. However, the benefits outweigh those."

The family approach seems to be working. Since taking over the business, National Real Estate grown by between 12 and 15 percent annually and continues to expand.

"My method of management is to pass responsibility onto even your lowest staff member because it makes them think and makes them part of the business. We want our people to feel empowered and feel like this is their business. We believe that sharing profitability of the company and the growth of the company is very important. It is a great incentive." Unusually – we've certainly not encountered it before – National Real Estate shows financial figures to all staff in monthly meetings. It give employees a valuable insight into the business and is a level of openness not common amongst business.

Again, that works.

"Even during the downturn we grew," says du Toit. "Our philosophy and approach had a lot to do with that.

"Also what we've found is that when the economy is bad, there is still opportunity out there – people always need somewhere to live. We have a broad portfolio and great service and what we have found is that in a recession the rental market grows, even if sales dip. I believe in giving a comprehensive property service. We have a sales side of the business and a lettings side. It is normally the case that when the economy is weak sales drop but more people tend to rent so it balances out. It makes the business easier to run than it would be if you had just one side of the property ladder."

National Real Estate in Bloemfontein currently manages over 12,000 residential properties in both the sectional title and property rental portfolios. It also manages more than 1,200 commercial properties and offers insurance services.

"We are very dominant here. We're by far the biggest in the Free State/ Northern Cape area," says du Toit.

Technology is central to National Real Estate's operations. According to du Toit, the company has spent a lot of time and money developing "the right systems".

"We believe that if you are not ahead or in front you lose out. In business today, technology grows so fast that as soon as you get behind it is very difficult to get back in front, especially on the cost side, and you start losing business and so forth.

"Technology is therefore vitally important, along with personal service to your clients. If you cannot back up your technology with actual delivery and great service there isn't much point in having it, and vice versa. You have to support your operations with the right technology and accounting systems. We believe in both sides – the best service you can offer and the best technology you can afford.

"We started about 10 years ago buying into a comprehensive property programme that covers the whole field: insurance, rental, sales, accounting, normal business functions and admin; everything goes into one system. Everything is there at the press of a button. You have to be comprehensive when it comes to this type of thing," he explains.

And the future is bright. This is National Real Estate's 80th year in business and it is showing no signs of slowing down. "I must be honest it wasn't in my family's name for all 80 years. We've been doing business since the late 60s with National Real Estate. There were once a few families and directors involved and eventually I've brought them out, taking control in 2003. I've been involved here for 45 years. The old folks that started the business have all gone and sold off and eventually I brought out the whole lot. I do believe that a family business is good. But it is only good if the youngsters come in and really buy into the business and believe in what they are doing. Otherwise you might as well get new blood in.

"Looking forward, there are two things – you have to sleep and you have to eat. As long as you are in business for one of those two things then there is always a market; people will always want somewhere to live and something to eat. We believe that staying in the property market is the way forward, continuing the way we operate, and as the population grows and the middle class in South Africa grows there is more demand for housing. With that the economy grows, commercial business grows – it has positive ramifications for a lot of industries.

"Ultimately, we believe in the future of South Africa. Sometimes the headlines are very negative. But if you look at the last 18 years, the business has grown, the market has grown, and the potential tenants and buyers has grown tremendously from five million to 50 million, so you can only imagine the potentially huge market there is in South Africa. It depends on the political side, but business-wise if you work hard and work smart there is always business."

The company is toying with the idea of expanding into other cities.

"We've looked at it many times and have toyed with it before," says du Toit. "It is always a possibility. But we've seen so many people opening new branches and burning their fingers because they can't manage it properly and it is very costly. Every city has its own vibe and you can't just walk in there and say 'it worked here, it'll work there'. That's not a good model. However, we are always looking at it. We can't rule it out."

What the future holds is unclear. What is clear is that South African family owned businesses generally outperform their non family-owned rivals.

To learn more visit www.nationalre.co.za