SONA 2019 positive for property sector says experts
MAIN IMAGE: Clockwise from left: Berry Everitt (CEO Chas Everitt), Samuel Seeff (chairman Seeff), Leo Mlambo (president National Property Forum), Rudi Botha (CEO Betterbond), John Jack (CEO Galetti Corporate Real Estate) and Gerhard Kotze (MD RealNet).
President Cyril Ramaphosa’s second State of the Nation address (SONA) still left the industry with some uncertainties, most notably what will happen with the expropriation of property without compensation, but overall his address were welcomed by experts as positive news for the property sector, especially the emphasis on economic growth, investor confidence and job creation.
Eskom’s latest failure to meet the national power demand comes only days after Ramaphosa’s address where he announced plans for this state-owned entity. This week’s return of countrywide blackouts (which could be with us for another two months) has cast a sombre shadow over the immediate prospects for economic growth while the crisis with the national power utility remains unresolved.
Nonetheless, overall the president’s SONA 2019 was widely met with appreciation and praise, also from local property experts. Here’s what they had to say:
Berry Everitt, CEO of the Chas Everitt International property group, says the State of the Nation address dealt with all the economic and social issues that are currently of concern to the real estate industry, including the need to rebuild investor and consumer confidence in SA, stimulate economic growth, accelerate job creation and eliminate widespread corruption.
“It was inspiring to hear how much progress there has been in the past year in reaching the R1,3-trillion investment target set by President Ramaphosa, in rebuilding sustainable relationships between government, labour and business, in restoring the credibility of institutions like the NPA and SARS and in addressing gender-based violence and other critical social issues in SA.”
He says they are excited by the announcement of several initiatives that will not only reduce the social housing shortage but significantly increase the number of South Africans who are able to build their own homes and/or enter the formal housing market – if they come to fruition.
These initiatives, he says, include the release of state-owned land for housing development and at the same time, expanding the People’s Housing Programme, which provides serviced stands to households and housing collectives that are prepared to build their own homes, and to set up a Human Settlements Development Bank to leverage private sector investment in new housing.
Everitt also says the special presidential task force on reducing the constraints on the establishment of new businesses – and especially small businesses – could be a real game changer in enabling more South Africans to earn enough to buy their own homes.
Samuel Seeff, chairman of the Seeff Property Group found President Ramaphosa’s SONA 2019 very positive and one of hope and said further that he was particularly encouraged by the investment successes, and firm stance and proposed action to deal with corruption and maladministration including prosecution and the recovery of funds and assets.
“The progress around governmental cost-cutting and the state structure and administration, management of the state-owned entities (SOEs), and in particular the proposal around dealing with the Eskom crisis should be very positive for the economy,” he said further.
“For now though, we should note that there is no “magic bullet” and economic recovery is likely to be gradual, simply because there is much to be done,” he said further. On the back of this, Seeff said they expect the property market will continue to trade fairly flat with mostly sideways activity during the early part of this year.
Leo Mlambo, president of the National Property Forum (NPF) says they were also largely encouraged by the President’s SONA address.
“On the issue of EWC the President was very clear about the responsibility to the growth of our economy we have when the issue of land is tackled. Despite the scaremongering we believe the government will approach this in a manner that will not destabilise our economy and industry,” Mlambo continues.
He says they saw opportunities in Ramaphosa’s reference to government-owned land that could be used for urban development and says this could be used as a tool for transformation which is a priority.
The Housing Development Agency will also construct an additional 500,000 housing units in the next five years, and an amount of R30 billion will be provided to municipalities and provinces to enable them to fulfil their respective mandates.
The NPF also applauds the establishment of a Human Settlement Bank.
Mlambo expresses concerned about the country’s power generation capacity as this impacts on future developments and property investments – specifically the unbundling of Eskom should not lead to the privatisation of the power utility as they fear this would lead to an increase in electricity tariffs further burdening the previously disadvantaged.
“Whilst we applaud the President on this business focussed address, we would urge our government to create incentives for new investors in our property market and encourage BEE involvement in property ownership and investment.”
Rudi Botha, CEO of bond originator BetterBond, says President Ramaphosa and his team have “openly addressed and taken action on things that make potential investors nervous, such as a previous lack of clear policy direction in mining and land ownership, rampant corruption and the near-collapse of state-owned enterprises like Eskom”.
He says they are particularly pleased by the establishment of the new R100bn National Infrastructure Fund to leverage private investment into the revitalization of existing infrastructure and the development of new roads, hospitals and schools, etc. This will create thousands of jobs.
He says also exciting is the establishment of a special presidential commission on the Fourth Industrial Revolution. “The aim is to ensure that young South Africans will not be left behind in fields like IoT (internet of things), AI (artificial intelligence) and robotics, and will have all the skills and qualifications necessary to thrive – and become the homeowners and property investors of the future.”
John Jack, CEO of Galetti Corporate Real Estate, believes that the focus on investment and plans to boost the economy is long-awaited news that will bolster the entire real estate sector. ‘’Last night’s SONA has been very well-received, particularly by the real estate sector which has for some time needed a positive shot in the arm. The positive outlook will have a knock-on effect throughout the industry.’’
Gerhard Kotzé, MD of the RealNet estate agency group, highlighted several initiatives and projects mentioned in the SONA that could be positive for the property sector going forward. This includes, besides those mentioned above, the intention to hold a second Investment Summit later this year to specifically seek funding for urgent provincial development projects.
“However, the President also took the opportunity to announce the date of the election, and we will have to wait and see whether his government will have the necessary majority after 8 May to implement all these plans,” Kotze ends.