Real Estate Investor Magazine South Africa May/ June 2020 | Page 4

EDITORIAL VIEW JOHANN RUPERT Before versus After COVID-19 - Lessons from the past to apply in the future We decided to focus this issue on lockdown solutions for real estate investors and practitioners who can use this info today. REI have coined this issue our LOCKDOWN SURVIVAL GUIDE for the real estate industry to assist them through these challenging and changing times. This issue is crammed full of insights and principles on how to survive and thrive through COVID-19. Real estate along with the travel and hospitality industry stands to be greatly impacted by the COVID-19 pandemic. While the market has been stimulated through interest rate cuts, lower prices and stimulus to attract buyers - affordability remains a key concern for buyers and sellers alike in residential and commercial markets who are all suffering defaults in rents. Banks have offered debt payment holidays on bonds and retail commercial landlords are offering rental relief and discounts to their tenants. Carl Coetzee of Betterbond says, “both buyers and sellers are concerned about whether they will be able to transact in the coming months, while buyers in particular are asking questions about the stance banks are likely to take around lending money for home loans.”  While the economic recovery from lockdown is likely to be slow, it’s important that the banks continue lending money in a responsible manner as a means of stimulating the property sector. He says, “Whatever the economic situation, people still need accommodation, which means there will be buyers and sellers looking to finance these transactions.” A sector that was also particularly hard hit is the listed property sector. At the moment, its three biggest constituents are Growthpoint (23%), NEPI Rockcastle (15%) and Fortress REIT (9%). This index is down 47% since mid-January and an eye-watering 66% since its highs at the end of 2017. Investors might look at this index and ask whether the present rout presents an opportune time to invest. According to Jean-Jacques Duyvene de Wit, Asset Manager at Prescient Investment Management, when buying property - EMAIL [email protected] INTERVIEWS tv REItv whether it be commercial or residential property – one often hears that the three most important factors are location, location and location! When considering an investment in listed property, whilst one can look through to individual property locations, we tend to look at valuations, sentiment, economics and financial conditions. Duyvene-de Wit says that valuation driven investors who can stomach volatility will probably be interested in property at current valuations. Contrarian investors will be looking at the negative sentiment and will most likely be looking to buy bargains. Investors averse to volatility, who prefer to have economic growth as a tailwind, will probably be deploying their capital elsewhere whilst waiting for the right opportunity. For retail investors, investment in listed property becomes particularly rewarding when you invest using a tax-free savings account. Real Estate Investment Trust (REIT) distributions are normally treated as income in the hands of investors and taxed at their marginal rates. If you invest through a tax-free savings account, those distributions are tax exempt. Bottom-line is that business and the real estate investment environment are transforming from their old ways into new ways after COVID-19 (AC) into South Africa 2.0. We know the current situation won’t last forever and is a massive opportunity to reconnect and refocus ourselves and our businesses, so don’t miss the opportunity of a huge crisis. Plan for the worst outcome, expect the best and prepare for surprise. Now is the time to reengineer your business and now is the time to make the impact as you will never have another opportunity like this. Stay safe and successful investing. NEALE PETERSEN EDITOR-IN-CHIEF “ JOSEP BORRELL “ T he coronavirus in conjunction with a lengthy lockdown has caused panic and uncertainty in the global economy. How we treat this time will determine our futures when we fully emerge from lockdown and return to business after COVID-19 (AC). It won’t be the same again. COVID-19 will reshape our world. We don’t know when the crisis will end. But we can be sure that by the time it does, our world will look very different. FaceBook LIVE REAL ESTATE RADIO PodCasts SA Real Estate Investor Magazine MAY/JUNE 2020 3