Real Estate Investor Magazine South Africa Real Estate Investor Magazine March 2018 | Page 19

FEATURE ARTICLE
manager and Cape regional head adds: "A contained sit-
uation for a few months will not impact the longterm de-
sirability of living in Cape Town, but a prolonged situation
would temporarily impact sentiment and valuations in the
short term.”
Rental shifts
With the Western Cape declared a disaster area, property
insiders predict future problems, should taps run dry. Res-
idential rental properties, in particular, are seeing a change
of pace.
Paul Stevens, Chief Executive of Just Property, says that
some large companies are encouraging their Cape Town-
based staff to stay with friends and families in Gauteng and
work remotely until the pressure on the water supply lifts.
"We may see an impact on rental properties up-country if
this trend develops,” he says.
Rowan Alexander of Alexander Swart Properties says that
he’s seen many developers who are adjusting their products
to properties with smaller gardens, requiring less mainte-
nance. “These changes have been positively accepted by the
market, which realises that water scarcity is the new norm in
Cape Town. Both owner occupiers and investor buyers have
responded positively to smaller, lower maintenance gardens,”
he adds.
Dorah Modise, chief executive of the Green Building
Council of South Africa says that they have seen a change in
how people think about water: “The fact that Day Zero now
has a date that is within a few months, even if it has been
postponed, urges most of us to act, irrespective of location.”
John Loos, FNB Household and Property Sector Strategist,
emphasises that the drought isn't the only thing affecting the
Cape Town market: "Take into account that after a number of
years of strong price growth, affordability is a problem in Cape
Town and that dampens the market. This is already reflected
in our recent first time buyers report as this category feels af-
fordability challenges first.”
He does agree, however, that a ”lack of water is bad for an
economy and means a negative impact on job creation and
household income. This then filters through to dampening the
sentiment in the property demand. So, my guess would be that
it will have a negative impact via the economic impact. There
could maybe already be such an impact in agricultural areas
outside the Cape Metro.”
It’s too soon, however, to predict what could happen to the
property market a few months down the line - especially with
an ever-shifting day zero.
The property market, as a part of the economy as a whole, is
largely dependent on sentiment. With a revitalised presidency
and increased competency regarding the management of Day
Zero, South Africans have reason to be optimistic.
STEINHOFF AND FRIENDS
Of course, corruption wasn’t limited to the Presi-
dency. In December, millions of South Africans were
affected by the effective crash of Steinhoff shares.
At the time of writing, the embattled international
retailer suffered yet another blow, when the Am-
sterdam Enterprise chamber ruled in a case brought
by Andreas Seifert’s OM Handels and MW Handels
businesses that Steinhoff should amend its accounts
for 2016.
The scandal shone light on the private sector, and
how seemingly easy it can be to get away with
inaccurate accounting. Shortly after Steinhoff CEO,
Markus Jooste’s resignation, US-based Viceroy
released a damning report that eventually saw
almost 90% of the company’s value being wiped off
the board.
In early 2018, the REIT-markets went on the defen-
sive, amidst rumours that a large listed property
fund on the JSE was next in line to be targeted by
the infamous short-sellers. Several funds pushed
their reports forward, in a bid to reassure sharehold-
ers.
In February, a report by 36One Asset Management
was leaked amongst the investment community,
suggesting that the Resilient group of companies -
including Resilient, Nepi Rockcastle, Greenbay, and
Fortress have been using questionable accounting
methods.
In the first few weeks of the year, the companies’
share prices fell by as much as 27% .
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