Real Estate Investor Magazine South Africa April/ May 2020 | Page 12

COVER STORY
How to beat
COVID-19
Minimising the effects of coronavirus
on the real estate market
SIDIMA MFEKU
T
he existence of COVID-19 has threatened almost
every affected country’s economic stability which in
turn negatively impacts the performance of various
contributors to the economies of the world. This will definitely
backfire on the well-being of humans across the globe. The
seriousness of COVID-19 has seen various industry players
including influential personalities and business people
sharing thoughts and views about the future of social affairs
in the world. While most are sharing sentiments about future
health implications of COVID-19, some are concerned about
the financial impact of the virus in affected countries.
Recently, a number of countries have been discovered to
have citizens who may have caught the virus that originated
in China. American business magnate, software developer,
investor, and philanthropist, Bill Gates thinks that coronavirus
could hit Africa worse than it hit China, and that 10 million
people may die worldwide.
According to Microsoft founder, Bill Gates, this would
increase chances of a slowdown in trade and economic activity
as well as market action in response to the virus fear. Slowdown
in economic activity, global growth and trade forecasts will be
revised down sharply, and central bankers are responding by
cutting interest rates and adding liquidity. The injection of
liquidity will help to support the financial markets.
Managing close communities
In President Ramaphosa’s long awaited speech about
the country’s plan of action in dealing with the deadly
COVID-19, he invoked a 21-day lockdown, allowing no
unnecessary movement in and out of the country. In fact,
the lockdown prohibited the movement of residents, it
prohibited everyone from leaving their homes, except for
essential services providers and those leaving their homes
to buy food or to seek medical assistance.
Social and community gatherings are prevalent in South
Africa and nowhere more so than in the country’s 56 000
sectional title schemes and 530 000 individual homes
within homeowners’ associations.
Specialist community schemes attorney, Marina Constas
says trustees and directors of community schemes like
townhouse complexes, retirement villages and residential
estates must ensure that the measures implemented by
the President are complied with. As failure to do sowould
constitute a breach of their fiduciary duty.
What can we really do when a family of viruses that cause diseases in
animals has laboriously engulfed, and threatened the lives of humans?
Not only does this global pandemic threaten the health of civilians, but
it has adverse effects on the economy and long-term effects on the real
estate market.
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APRIL/MAY 2020 SA Real Estate Investor Magazine
She says living in close proximities to each other is not
ideal at the moment and moving around, leaving your
protective premises would be a risk of contracting a virus
in spaces where the masses are. Minimising the risk of the
spread of the virus is critical in order to avert a complete
crisis at national healthcare level. Immediate actions taken
talk to limiting contact among groups of people. She,
however says “in larger residential schemes, it is conceivable
that one hundred or more people could attend an annual
or special general meeting.”
COVID-19
Constas explains that the Sectional Titles Schemes
Management Act 8 of 2011 makes the provision for
situations where special or annual general meetings can
be avoided.
“Management Rule 17(9) states that the body corporate
does not have to hold a special general meeting to consider
a resolution, if all members waive the right to the meeting
and consent to the resolution in writing. Management rule
17(2) states that the body corporate is not obliged to hold
an annual general meeting, if, before or within one month
of the end of financial year, all members in writing waive
the right to the meeting and consent in writing to all the
motions,” she says.
Constas says that residents in community schemes
shoulder a great deal of responsibility to curb the spread of
infection within their walls.
“There is no doubt that this virus can be beaten. A robust
committee of trustees or directors who are proactive and
committed to this cause, working within the parameters of
the law, together with owners and occupants, can help to
make it happen,” says Constas.
What real estate investors need to do
In one way or the other, everyone will be impacted by Corona
virus, and the market mayhem it is creating. Real estate investors
who have invested in hard assets should feel a lot better than
those who are in stock markets. The stock market hurts when
you need to sell in a down market, like many investors are
experiencing now. Equally so, investing in the internationally
is not a definite answer to this economic security anymore,
with Covid-19 around. The world is experiencing the worst
economic phase, and international markets are going to take
a slight dive into volatility, this one is a trap for all.
However, people should not lose sight of the fact that this
is a virus and often cures and vaccines are created for viruses.
“My mom had polio when she was young and had to survive
in an iron lung. We have basically eradicated AIDS, and other
ailments over the years and this will be no different in the long
run,” says investor Robert Palano.
The global impact could be severe for years, however
investors and players in the sector should look at both the future
and the present. Palano says In the short run, real estate investors
should review their portfolio and consider the following:
How do I avoid risk?
How do I stabilize operations?
How do I position myself moving forward?
“In actuality, these are things I always think about to improve
my financial condition. This is more important now than ever
before. If you've invested in SFHs, I suggest you continue
to hold them. The retail market will soften due to fear of job
security. It won't disappear, but it could take longer to sell. You
might consider refinancing your current portfolio while rates
are down and either hoard the money for new opportunities,
SA Real Estate Investor Magazine APRIL/MAY 2020
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