Real Estate Investor October 2020 October/November 2020 - Page 48

One of the most notable features of urbanisation to date must surely be the surge in popularity of gated residential estates , a phenomenon that has taken root across the globe . Now the COVID-19 pandemic is driving further changes to the way in which people choose to live . But what are the pull factors continuing to drive this world-wide trend ?
A mix of lifestyle features
Equally important are the community lifestyle elements that an estate can offer and the larger the estate , the more options for residents . They boast many highly attractive recreational and sporting features such as swimming pools , tennis and squash courts , green belts , gyms , riding paths , clubhouses and even golf courses . Residents can do a school run , fit in a quick fitness session or jog , all without venturing beyond the gates .
For homeowners , it ' s having everything they need within close proximity to where they live , that is essential for today ’ s full , pacey lifestyle .
Yet another advantage of living in a gated community is the extra privacy that it provides . As only residents and verified guests are permitted access , residents can enjoy their own space with little chance of intrusion by trespassers or strangers ringing their doorbells .
Eco-friendly living
Many developments are becoming eco-estates , protecting and preserving or rehabilitating the area ’ s local flora and fauna .
One of the key drawcards of the Westbrook suburban estate , located a mere 15km from the city centre , is its green elements . It offers a haven of eco-friendly living , with the benefits of being surrounded by nature within the estate . The 128-hectare development has 80 buildable hectares , but also boasts 48 hectares of open space designated to maintain the feel of a peaceful country setting with parks , wide pavements and green spaces .
A school on your doorstep
Amenities and security aside , one of the most appealing fringe benefits for families is to have access to quality education at a private school on or within easy reach of the estate . And South Africa is light years ahead with this trend as it attracts investors to the development and increases the capital appreciation of the estate home over the long term .
For instance , in Johannesburg ’ s Steyn City , families ’ educational needs are satisfied with an early learning centre , preparatory and college all within the estate . Or at Sitari Country Estate near Somerset West , a Curro school on the property caters to children from three months to Grade 12 .
Burgundy Estate , in the foothills of the Durbanville Hills , also offers access to private education for its residents . Preschool children attend Curro Castle or Zenith Montessori , with Riverside College providing independent schooling for children until Grade 12 . Westbrook also offers a compelling value-proposition to investors - a Curro school within its borders , catering for learners from Grade R to Grade 9 , with higher grades being phased in annually .
On a practical level , parents enjoy the convenience , but having a school inside your gated estate encourages an active lifestyle as children are able to walk or cycle safely to school .
Multi-generational living
The COVID-19 lockdown has sparked a growing trend towards multi-generational households in which adults from different generations of the same family live together , sharing costs . This is the way nearly one in five people in the United States and in Australia live . In November last year , Statistics SA said 32.2 % of homes in the property market housed multi-generational families , indicating the trend is on the rise here too .
This can also be attributed to rising unemployment rates and cultural customs . Another contributing factor is the high cost of living that makes it hard for young professionals to live on their own , compounded by growing concerns about the safety and isolation of elderly relatives .
These estates offer a richness in a community-type lifestyle where multiple generations can live , learn and play together , adding value to one another ’ s lives . It ’ s no surprise this mode of living is proving so popular .
SA Real Estate Investor Magazine OCTOBER / NOVEMBER 2020 19
AFRICA Resilience & quality real estate portfolios in Africa I f there is one thing property investors in Africa can be certain of during the Covid-19 pandemic, it is that nothing is 100% certain. While a measure of normality finally seems to be creeping back into global markets, property in Africa went into Covid-19 in a relatively uncertain state, and there can be no doubt that the pandemic has both intensified and prolonged this uncertainty. The impact of Covid-19 and the resulting lockdowns was felt to varying extents across the different property subsectors. Hospitality, retail and commercial offices were hard hit and many participants in these sectors are still struggling to find their way out of that impact zone. On the other hand, while the warehousing and logistics industries in most parts of the continent undoubtedly suffered and continue to suffer, the impact was not nearly as severe or as long-lasting. Furthermore, while residential property arguably took the lightest blow, the effect of Covid-19 on economies and incomes mean that demand for residential properties will likely be muted for some time. Given this mixed bag of consequences, prospective investors are asking which property sectors in Africa currently make for the most compelling investment cases. Unfortunately, there is no easy answer, particularly given that the continent, and indeed the world, has by no means seen the back of Covid-19 yet. Hospitality Sector Against this backdrop it is necessary to try to predict the likely demand, and altered requirements, for different types of property assets in the eventual post-Covid-19 world. Obviously, this will become a little easier as we progress through the pandemic, but there are a few assumptions we can make. For one, the hospitality sector will almost certainly recover, but it is likely to be a very slow process. At least until a vaccine is developed. The recovery is also likely to create very different hospitality and travel sectors, with a focus on investing in experiences rather than merely visiting destinations. Business travel will be very different in years to come, as the realisation sets in that remote business dealings are viable and much more cost-effective than physical travel. Office & Retail The retail and office sectors are also unlikely to ever return fully to what they once were. While the shift to remote working arrangements may not be as widespread as was initially predicted. The role of offices will change, 42 OCTOBER/NOVEMBER 2020 SA Real Estate Investor Magazine and organisations will probably require smaller spaces to house their remote workforces. Additionally, retail is set to undergo a similar shift, particularly on the back of the expected online shopping outbreak with the focus of physical retailers moving from pure shopping to entertainment and community-focused convenience. African residential industry Even residential property may be in for a transition. Given the greater focus on working from home, demand for homes close to workplaces and CBDs could well reduce, with more importance placed on proximity to family and lifestyle requirements like schools and leisure facilities. As is evident from all the above, any attempt to predict future African-property trends is little more than speculation. And this lack of certainty makes diversification even more important than normal for all but the most highly specialised of property investors. It is also worth considering that the economic impact of the pandemic has brought about a significant shift in funding models, especially in Africa. For one, in a higher-risk environment, we will no doubt see lower levels of gearing in play than we did previously. Debt has always been cheaper than equity, so investors have largely attempted to maximise the debt portion of their property finance deals. And until the second quarter of 2020, banks were open to higher levels of leverage. However, the lack of flexibility in debt-based finance makes it less appealing now for investors, developers and finance institutions alike. As a result, it is very likely that the equity-to-debt ratio of most African property finance transactions will shift from the typical 40:60 level of the past to something closer to 60% equity and 40% debt. This is not merely a risk avoidance strategy by the banks. Rather, it is a sound way of driving a much-needed investor focus on a smaller number of higher-quality investments. Given the circumstances, this is preferable to a far more dangerous shotgun approach of scooping up properties purely because they are cheap, and without regard for their long-term resilience and return potential. Put simply, investors in African property who are serious about building resilient portfolios for a post-Covid-19 world have to prioritise quality over quantity. They also need to be prepared to put their money where their mouths are when it comes to structuring their finance. SOURCE Property Finance Africa Gerhard Zeelie Nedbank CIB Divisional Executive: Property Finance Africa SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2020 43