INDUSTRY OVERVIEW
The future of secured communities inSOUTH AFRICA
Predicting the future is far from an exact science, but the one thing we can be sure of is that secured communities must adapt to keep up with changes‘ beyond the wall’.
In trying to decipher the future of secured communities, there is much to consider. Regulators will soon require HOAs to address matters that were previously the responsibility of government, and to find business models to address them adequately. This might seem targeted and burdensome, but HOAs – when they take over the running of a community – inherit a slew of assets, but also significant risks and responsibilities. So the time has come for some serious introspection, and for HOAs to look at ways to guard the communities they govern.
The days when an HOA’ s management and board could sit back as mere custodians of the status quo are fast coming to an end. It’ s time to go beyond managing operations and assets inside the walls of these developments. As an industry, we constantly need to research and evaluate the future, as best we can – we must take heed of the signs on the horizon, and read the‘ writing on the wall’.
Local government and HOAs
The relationship between local government and HOAs is not a new topic. Many have tried to separate them in the past, more from a convenience point of view.‘ Experts’ have tried to prevent legislative interference in their perfect models, but let’ s stop lying to ourselves and our stakeholders. Change is not coming – it’ s here! Those who wish to dig in their heels or stick their heads in the sand will be hurt most. We would like to argue that we merely administer common funds for common services, and have little effect on anything outside the gates. And – we insist – they dare not intervene inside our hallowed walls. With this attitude, it is easy to predict growing tension between most HOAs and local government. Already there is conflict about rates, taxes, traffic, security vs SAPS, and the list goes on...
Between 1990 and 2010, many developers built aesthetically pleasing estates specifically to hand over to an HOA, and then moved on to new territory – a strategy that has had some dramatic consequences. With many of these developments now standing as a castle on a hill among the surrounding community, the true cost of separation is starting to become obvious. The driving force of this type of development, and the cost of aesthetic commonage, is rapidly becoming dwarfed by the cost of security, governance and compliance with external pressures.
It is clear that separation by means of a fence or a wall alone cannot adequately address the issues. As property values‘ beyond the wall’ decline, they affect the property values, aesthetic values and lifestyle values of the luxury estates in their midst. This is leading to proposed legislation that will attempt to level the playing fields once more.
And that’ s the big question. Is this the only way to ensure a property holds its value, has security of utilities, safety and good quality amenities? It probably still is, for now.
We have to change some paradigms and ways of managing developments. We need to protect ourselves, both from governance inadequacies inside the gates, and also on a macro level. This onus cannot be placed on the smaller developments; it must be championed by the old dogs – the communities that have seen it all play out before, and have somehow survived and even prospered. Careful investigation of these cases can serve as a reference for how the new model could evolve. This is of value not only to home owners and HOAs, but also to developers. The very nature of property in South Africa has been captured by a model that still holds risk if we do not address the growing property tensions outside our gates.
The big picture
The fact that it is possible to participate in the management of the local area surrounding a development is not new; it is already implemented by mega developers. The problem starts when the developer exits, and the HOA becomes an island. This island often elects leaders that are popular but not skilled in governance, business or sustainability. Furthermore, many fall prey to the illusion of elitism, and believe in keeping the gates closed for status, rather than recognising the uprising starting‘ outside the castle’. All through history, castles have been stormed. No matter their form, or the legitimacy of the attack, it will come. In the same way that the best way to protect your house from
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