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 .
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 .
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 .
SOURCE TUHF Limited
SA Real Estate Investor Magazine OCTOBER / NOVEMBER 2020 19
quality real estate
portfolios in Africa
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.
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,
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
SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2020