In segmenting its market by sector and client base the top echelon of Absa CPF's market layer is reserved for what the bank lists as its key accounts.
These are the bank's top CPF clients, all of which are household names in the SA property market.
National manager Mike Mortimer describes his client base as "the top end of the unlisted commercial property market, being individuals and companies with a strong entrepreneurial drive".
"We actively engage with these top developers and investors, and provide a specialist service that brings us their regular business," he says.
Adds the general manager of key accounts and listed sector Lisa Forshey: "Once we have decided that you are a key account, the size of the loan doesn't really matter."
For Forshey and Mortimer it is client service that differentiates Absa from the other banks. "When it comes to funding, we attempt to meet our clients' needs for flexibility and tailor-make offerings as far as possible," says Mortimer.
"For the top clients they need to have consultants who understand their business almost as well as they do," he says, adding that none of his consultants looks after more than seven clients.
It's clearly a competitive market and "there isn't a serious player who we don't know about and who isn't on our radar screen as a potential future client," he says.
The book value of the key accounts division is about R7,5bn (June 2007) and income growth has been strong in recent years - 80% of earnings derive from interest income, while 20% is from fees and non-annuity income.
As expected, the book is clean with no bad debts to speak of. "We know our client book very well and are always looking out for early warning signs," Mortimer says.
Absa CPF refines the client list every six months and often customers move up to the key accounts division when they reach a certain size and require more specialist services. There are other advantages, Mortimer believes, that Absa has over many of its competitors.
"For one, through our links with Barclays we are far more au fait with the international markets and can offer our customers global exposure, should they require it," he says. "Secondly, we have a national footprint and our consultants are not only sectoral experts but are also very aware of regional trends."
There are discernible regional differences in the commercial property market, Mortimer notes. "The concept of mixed-use development, for example, is far more developed in KwaZulu Natal and the Western Cape."
One of the key projects funded by Absa - the Arbour Town development in Amanzimtoti, south of Durban - fits this description. Phase 1 of the retail, residential and light industrial project, developed by the Keystone Group, will cost R2bn, while the total project value will ultimately rise to R5bn.
"This project makes a lot of commercial sense as the south of Durban has been fairly neglected while the north, around Umhlanga and Ballito, has enjoyed a lot of investment," says Mortimer.
Similarly, numerous mixed-use developments are planned for the Cape Town CBD. "Despite the success of Melrose Arch, mixed use projects are still largely at an infant stage in Gauteng as the bigger market still allows for a sector-centric approach," says Mortimer.
But the urban "live, work and play" concept that is sweeping Europe and America has reached SA and is gaining significant momentum.
Another national trend that has emerged over the past few years is the development of more formalised retail centres in the so-called urban townships. Absa has funded a number of township malls including the Protea Gardens retail centre in Soweto, one of the first examples of such a centre, and more recently, the Billion Group's Mdantsane centre near East London.
The bank is also actively involved in the funding of numerous substantial industrial developments and envisages substantial growth taking place in this sector, driven in part by the infrastructure spending boom.
"Furthermore, office space is coming off a quiet period of oversupply in many nodes across the country, and we are now witnessing a renewed period of development," he says.
