Real Estate Investor Magazine July/ Aug 2020 July 2020 | Page 33

T
he SA Reserve Bank’s further reduction of the repo
rate in May, which saw the prime lending rate fall to
7.25%, is likely to provide much relief for existing and
potential homeowners, but also serves as an unprecedented
catalyst for investors aiming to snap up property. For those
with cash to spare in the COVID-19 economic crisis, there
are a variety of opportunities afoot in the current buyers’
market. However, knowing exactly where to invest within
the property safe haven asset class requires a great deal of
scrutiny, in order to achieve solid returns on investment.
With COVID-19 and the nationwide lockdown triggering
changes in the way many South Africans live and work, and
trends indicating an impending spike in demand for rental
property, investing in buy-to-let opportunities, now more
than ever, requires savvy insight and discerning choices,
particularly for those seeking quality tenants and ultimately
higher capital gains.
Living and overhead costs associated with stand-alone
properties have continued to rise, tipping the scales for
many South Africans towards downsizing to more centrally
located residences. Added to this, an increase in residential
rental demand has seen mixed-use precinct residential units
becoming the most potentially lucrative buy-to-let choice
for the savvy investor.
Managing Director of Amdec Property Developments,
Guy Gordon, believes that rental demand within the mixeduse
sector is only likely to accelerate in the current climate.
“Although market fluctuations and perceived volatility may
keep some investors on the fence for the foreseeable future,
investing in bricks and mortar remains a go-to safe haven
asset class, for a notably more stable return. In addition,
Government’s move to ease the nationwide lockdown to
Level 3 at the start of this month, will have come as welcome
relief for countless business and industry sectors in South
Africa, as the economy gradually begins to reopen.”
The South African Reserve Bank’s reduction of the repo
rate by an additional 50 basis points in May, from 4.25% to
3.75%, saw the prime lending rate fall from 7.75% to 7.25%.
This is the lowest that it’s been in close on 50 years, and
serves as an exceptional catalyst for property investment.
While lending rate cuts provide a great deal of relief for
existing homeowners in the current climate, they also
present a sterling opportunity for those who are weathering
the economic storm with capital to spare.
“Now, more than ever, the discerning investor should be
focusing on the basic fundamentals of property investment,”
says Gordon. “The Covid-19 crisis has emphasized the
importance of location, accessibility and convenience
in the investment equation, coupled with the need for
professionally managed properties where safety, security,
cleanliness and hygiene are paramount. This is where
mixed-use precincts like Melrose Arch come strongly to
the fore, representing an unparalleled value proposition
for tenants and investors alike, providing for arguably the
best option for occupational peace of mind and reliable
investment returns”.
The Melrose Arch mixed-use precinct in Johannesburg
has long been defined as the ultimate New Urban mode in
which to live, work and play. Prior to lockdown, this iconic
development was recognized for delivering long-term
capital growth and rental returns that were amongst the
highest in Johannesburg. Its proven desirability was further
exemplified during the height of the national lockdown,
with residents enjoying all the benefits of living, and being
able to exercise within an enclosed, access controlled, fully
secured, sanitized environment.
The convenience of having all daily amenities within
walking distance of one’s home, within a safe and secure
environment, certainly makes for a desirable quality of life
and enduring sense of well-being, but Gordon adds that
professional proactive property management, now more
than ever, will be a key differentiator for investors and
tenants looking for financial peace of mind going forward.
Gordon continues, “When the lockdown was announced
towards the end of March, we rapidly introduced physical
distancing and sanitization protocols, in line with
Government and World Health Organization’s guidance, to
protect our residents at One on Whiteley. Consequently, we
received a great deal of positive feedback from residents
whose quality of life has been comfortably preserved
despite the intense lockdown restrictions. The ability to walk
within the protected boundaries of Melrose Arch, meant
that residents could easily obtain groceries, pharmaceutical
supplies and all other essentials without having to get in
their car or leave their pristine mixed-use environment.”
Despite lockdown restrictions gradually tapering off,
investor preference will continue to favour developers and
property managers who implement appropriate physical
distancing, sanitization, and non-touch technologies as
standard, given that global health experts have cautioned
that COVID-19 prevention measures are likely to be
necessary for years to come.
There are moves afoot at One on Whiteley in Melrose
Arch, and at the Amdec Group’s Harbour Arch development,
currently under construction in Cape Town, to introduce
contactless palm-swipe technology to operate doors and
access-controlled areas, along with self-cleaning elevators,
and facial and number plate recognition. Gordon argues
that such additions are indispensable in ensuring the safety
of residents, and something that investors need to be
cognisant of before signing on the dotted line.
“The health and safety of our residents comes first, above
all else, and will come under increasing scrutiny as time
goes on. The COVID-19 crisis is reshaping the way people
choose to live, so buyers and tenants need to be far more
discerning before committing to a lease or bond. Mixeduse
developments such as One on Whiteley and Harbour
Arch represent the pinnacle of convenient, contemporary
modern living, making them an extremely attractive
proposition for savvy investors looking to take advantage of
the lowered interest rates and favorable lending conditions,”
concludes Gordon.
SOURCES Amdec Property Developments
SA Real Estate Investor Magazine JULY/AUGUST 2020 29