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Residents of Howick work together on Wednesday to clean up after looters ransacked shops in the town centre on Monday. PICTURE: NARINA EXELBY NARINA.EXELBY@GMAIL.COM
The aftermath of violence and looting in KZN. PICTURE: MOTSHWARI MOFOKENG AFRICAN NEWS AGENCY (ANA)
First, let the smoke clear
Property editor, Vivian Warby, talks to experts on possible fallout of unrest on the residential market COMMERCIAL PROPERTY HIT BY BONNY FOURIE bronwyn.fourie@inl.co.za SHOPPING malls and retail outlets in KwaZulu-Natal and Gauteng have suffered damage amounting to well over R10 billion over the first few days of unrest, looting and destruction, says Neil Gopal, chief executive of the South African Property Owners Association (Sapoa). Damage ranges from “excessive” to “total collapse” and some property owners may not ever be able to rebuild once the crisis is over. “Rebuilding may take two years, depending on the extent and size of the centre. Some landlords may, however, decide not to rebuild as the risk is too high for future incidents.” While Sapoa has not yet managed to carry out a financial assessment, Gopal estimates that the damage is “well beyond R10bn”. And the further tragedy is that owners have no measures left with which to protect their properties. “That is why we are appealing to the president to deploy as many soldiers as he can.” Meanwhile, the eThekwini Economic Development and Planning Committee (ECOD) says the looting and rioting has resulted in GDP loss of more than R20bn. This includes loss of stock worth more than R1.5bn and damage to property and equipment of R15bn. In addition, the crisis has negatively impacted more than 50 000 informal traders and more than 40 000 businesses – many of which may never come back. The ECOD also notes that more than 150 000 jobs are at risk and that almost 1.5 million people in the city are at home with no income due to the unrest.
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T IS too soon to say what the full impact of recent unrest in KwaZulu-Natal and Gauteng will have on residential property, although some shifts are anticipated. Samuel Seeff, chairperson of Seeff Property, says the outlook will “generally depend on how long it will take to quell the current violence”. “Obviously, the longer it takes for the government to bring it under control, the higher the risk to the economy and property.” Tony Clarke, managing director of Rawson Property Group, agrees the industry should be able to ride the wave but only if it is short-lived. He believes, however, if any sector will be affected, it will be the first-time home buyer, those aged between 28 and 35 years of age, who have been rising in numbers since low interest rates came into play. He says there may be a drop in these numbers as this younger cohort weighs up their options of moving abroad or staying in the country. Both Seeff and Clarke say, despite the unrest, the market continued to move this week
with sales recorded in Gauteng, KZN, and throughout the rest of the country. Clarke does not believe there will be a collapse in home prices in hot spots, although both say it is a wait-and-see game. Meanwhile, Alexa Horne, managing director of Dogon Group Properties, says if the Cape remains unscathed it might mean more people want to relocate to the province. She has already had a few calls this week from clients in Johannesburg looking to expedite their plans to move to Cape Town and from others enquiring about property. Denise Dogon, founder of Dogon Group Properties, says in the past year Gauteng buyers and people from other provinces made up a large percentage of their clients. The work-from-home trend has increased this. Seeff says they have not seen an increase in enquiries for Cape property as yet, “but bear in mind that Cape property is more expensive on a square metre basis compared to other parts of the country, so it is not as easy as simply upping and moving here”. He added that whether the
notable influx of semigration buyers from Johannesburg to the KZN North Coast will taper down because of the riots and violence, “we will need to wait to see what the fallout will be”. The agency bosses all describe South Africans as “highly resilient”. “The country has experienced previous periods of unrest – think of the 1980s before the new democracy of 1994 when civil unrest was a huge threat,” says Seeff. “We did not know whether we would be selling property again, interest rates soared to over 20%, yet the country bounced back and during the economic boom of 2000 to 2006, house prices rose by an average of 20% annually.” He added one aspect of the events of the past few days is the importance of communities putting contingency plans in place to protect their property and economies. The current interest rate is the lowest since the 1960s and continues to serve as a significant incentive to invest in property, hence some best activity in the market has been seen over the last three years. l Contact Vivian on vivian.warby@inl.co.za
