Developers such as Africrest Properties are leading the charge, turning spaces such as Epsom Downs into luxury apartments
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03 June 2025 – 05:00
by Noxolo Majavu
Africrest’s, The Prestige Property Building In Sandton, Johannesburg.
At first glance, Epsom Downs Office Park carries its corporate past. Nestled on the northern edge of Bryanston, its roads remain lined with familiar outlines of commercial buildings, a subdued relic of what once was a thriving business hub.
But drive past the entrance, and the façade begins to shift- half the structures are now under construction, their former boardrooms and reception halls yielding something altogether different: residential living.
This transformation isn’t unique to Epsom Downs. Across Johannesburg, the slow retreat of traditional spaces is accelerating as some property owners offload underperforming office properties. Developers, sensing an opportunity, are swiftly moving in to seize the opportunity, especially in high-demand precincts such as Sandton – snapping up idle spaces and repurposing them into luxury apartments for working professionals.
The pivot is reshaping the urban landscape, addressing housing needs and challenging the assumption about city life in Johannesburg.
The change did not occur overnight. It has been propelled by a confluence of economic forces and changing work habits. Even before the pandemic, SA’s commercial property sector was wobbling. An oversupply of offices meant vacancy rates crept upwards as new developments outpaced demand. The Covid-19 pandemic dramatically accelerated this trend, with remote and hybrid work models becoming the norm, leaving offices emptier.
According to the SA Property Owners Association (Sapoa), an industry body, office vacancies in Johannesburg swelled to an estimated 12.5% on average in 2019, and in the following years the situation worsened. By the first quarter of 2025, the vacancy rate hit 16.5%, the highest compared with other cities and almost three times that of Cape Town. The glut has pushed landlords to slash rents or face ruinously idle buildings.
Yet, demand for housing in Johannesburg has remained robust. The city’s population keeps growing and urbanising, fuelling appetite for well-located property. That’s especially so in the affordable and middle-income segments, where a chronic shortage is part of a nationwide backlog of more than 2-million homes.
Crucially, economic incentives have also aligned in favour of these conversions. SA’s sluggish economic growth in recent years has left few new corporate tenants to fill office towers while the city’s mismanagement has compounded the problems. Property investors looked on nervously as their commercial portfolios became less financially viable, forcing many to start offloading them.
Fortuitously, the timing coincided with low interest rates in the late 2010s and early pandemic that boosted residential buying and renting power. Prices for empty offices fell to bargain levels, and developers realised that buying old offices and converting them was cheaper than building an apartment block from scratch. Reusing an existing structure can save on construction costs, flipping the financial calculus.
The result has been a surge in turning desks into dining rooms and boardrooms in bedrooms. This trend has precedent: Johannesburg witnessed its first wave of office-to-housing conversion in the late 1990s. Hillbrow was a popular residential hub for corporate workers, offering convenience and a vibrant lifestyle close to work. As the area deteriorated, this market moved elsewhere.
Back then, when urban decay and corporate flight to Sandton and Rosebank left the CBD high-rises empty, some were repurposed into lofts and affordable flats as part of early postapartheid revitalisation. Now, 30 years later, the second, broader wave is in full swing – this time extending beyond the CBD into Johannesburg’s decentralised commercial nodes.
FNB’s latest property broker survey shows that more than 20.5% of office sales are for residential conversions, with the trend strongest in Johannesburg, where brokers estimated that nearly 40% of sales are driven by repurposing plans.
Developers large and small, are jumping in. Africrest Properties has emerged as one of Johannesburg’s biggest conversion specialists, snapping up old office parks in areas such as Sunninghill and turning them into sprawling apartment complexes. One building is almost complete, with some residents already moved in. Inside, motion-sensor lights now guide the way past grey apartment doors — once office spaces – marking a clear shift from commercial to residential living.
“We believe we are still at the beginning of the journey. We are nowhere near close to reaching saturation point. There is a huge amount of urbanisation and this pushes up demand for housing in prime locations,” said Africrest Properties Director Justin Blend.
Espom Downs Office Park, once owned by Emira Property Fund, was one of the five buildings with the highest vacancies in the Reit’s commercial portfolio, in which 31% of the building was unoccupied – an astonishing fall from grace for the real estate investment trust that held it up as key to its portfolio in 2013.
Africrest, whose executives are brothers Justin and Greg Blend as well as Grant Friedman, has emerged as one of Johannesburg’s biggest conversation specialists. Founded in 2012, Africrest’s portfolio has swollen to 4,000 apartments purely through such redevopments. It has 10 new estates in the pipeline that will bring the total to about 8,000 apartments over the next 18 months.
According to Blend, the vacancies in Johannesburg have been a great opportunity for Africrest as the occupancy levels are always above 95%, and they continue to lay about 10-million bricks monthly.
“Many of the listed Reits have realised that they are no longer able to attract large office users … every month they continue to own the property comes with massive holding costs. Therefore, they prefer to sell them sooner rather than later,” Blend said.
Established real estate giants are also on board. In 2022, Growthpoint, the country’s largest commercial fund, partnered on a R200m project to turn an office park in Bedfordview into an apartment block.
“Our approach favours the disposal of B- and C-grade office assets and considers all potential uses, including redevelopment and repurposing,” said Timothy Irvine, Growthpoint head of asset management. “Selling these properties to experienced counterparties who are well-positioned to unlock greater value through alternative uses is an ideal solution.”
Irvine said Growthpoint focused on selling noncore assets to streamline its office portfolio and reduce exposure to underperforming office areas as part of its broader strategy. It sold two office properties in 2024, and six more are being sold, including four that would be converted.
Irvine said Growthpoint was fully behind residential conversions — not just to cut excess office space, but also because they boost urban infrastructure, add in-demand housing closer to workplaces and help ease traffic by flipping the usual rush-hour flow.
Still, some developers believe the wave of distressed office property sales is nearing its end. Carel Kleynhans, CEO of Divercity, a firm behind redevelopments projects Barlow Park and Jewel City, said the office land loads are now choosing to hold onto their assets rather sell at steep discounts.
“There is nothing left to sell. Not every office building can be converted to residential,” said Kleynhans, adding that the valuations no longer made sense as landlords were within touching distance of their vacancy targets. They would rather sit on their empty building for another two years than sell at distressed prices, he said.
The end of fire sales signals that the office fundamentals might be improving soon, though it may take some time for it to catch up to the retail and industrial segments.
For property developers, the calculus is about profit. The arithmetic of conversations can be attractive. Acquiring an obsolete office block in Johannesburg often comes at a heavy discount, given high vacancy rates and few competing bidders. After purchase, conversion can cost less than equivalent construction, particularly since the basic structure, foundations and utility lines are already in place.
In addition, every office building removed from the commercial part by conversion helps tighten the supply of offices, which reduces overall vacancy and could stabilise office rents for the remaining stock.
No wonder the Absa 2024 MSCI property index, released in April, found that offices delivered a total return of 8.9% – the highest since 2017.
Rentals continue to hover above inflation for all three other sectors except the office class, according to the property index.
According to the FNB Property Broker Survey, the office market is expected to strengthen in 2025-27. This positive outlook is supported by broader macroeconomic trends, including FNB’s forecast of improved economic growth during that time.
Source: Business Live
