Predictions for the future of property
Office and retail developments expected to wane while demand for compact and secure living as well as buy-to-let to increase
THE NATIONWIDE lockdown and transformed lifestyles are going to dictate which property developments come to the fore in the months ahead as developers respond to changed demands.
Office developments are among those that could be sidelined, says FWJK chief executive Dave Williams-Jones, explaining that companies have overcome the difficulties previously associated with working from home. This could boost the remote working trend which was emerging pre-lockdown.
“We expect this trend to continue until such time as the economy moves from recession to positive growth.”
On the residential front, Williams-Jones expects more compact living and co-living-space residential living developments to come to the market.
Residential developments will always continue and there are constant new entrants into the market, says Rabie chief operating officer Colin Anderson.
“Demand and supply are as old as time and this market is the most resilient. Safety, security and convenience remain priorities and developers who can offer a great product at competitive prices will continue to do well.”
There has always been a high demand for buy-to-let investment property. Brad Morgan of Rawson Developers is confident the market for this type of offering will remain popular. Lowered interest rates mean that returns on investment in this arena are “now even better”.
Demand for super secure and convenient living is on the rise, the group says.
“Security estates and apartment blocks with excellent security and amenities in a good, central location will always be very sought after.”
Retail, however, has been under pressure for a long time, and with the added pressure on businesses and landlords as a result of lockdown, fewer such developments are expected, Anderson says.
“South Africa, in general, is overretailed in most metropoles. The neighbourhood centres are most likely to thrive, with regional centres taking a big knock in the long term.”
As the country moves out of lockdown, developers will have a better idea of how companies will approach the work-from-home concept and what
THE CHALLENGING Covid-19 situation has forced countless corporate entities globally to reassess workspaces.
Many are indicating a desire to downsize operations as an effort to cut expenditure in the short term.
Considering the inclusion of shared space offerings as part of the overall solution might provide corporate clients with the balance of space and tools their staff members need to work, while increasing flexibility and reducing the heavy fixed overheads of traditional offices.
Broll Property Intel’s latest research report Shared Workspace Snapshot looks at ways shared office providers in the Kenyan capital of Nairobi are helping to ensure key economic contributors can continue operating – with managed offices and other shared workspace models.
The report shows an increased need for plug-and-work models has been driving growth of shared workspaces in Kenya over the past 10 years. This impact this trend will have on traditional office space. However, Anderson says, in general, offices will remain preferred workplaces, whether this takes the form of more corporate set-ups or shared office space. is due to the appeal of flexible occupational terms compared with the often rigid nature of standard commercial lease terms.
Operators in Nairobi tend to offer serviced offices, co-working spaces only, or a hybrid model, with the majority of operators opting for the latter, says Jess Cleland, group managing director of Broll East Africa and Indian Ocean.
“Over the last decade, there has been a demand for co-working offices from local and international users. This has resulted in most operators focusing their business strategy to cater for the higher end of quality in terms of offering and location.
“With the ongoing travel restrictions, we have seen the immediate demand for shared workspaces has shifted from international to local users, especially smaller spaces.”
In the short term, the flexibility of shared workspace licences may lead to an initial reduction in occupation, as this is the first option to exit for some
“Uber headquarters – custombuilt campuses occupied by one large company – could be a thing of the past, but this should play out in the medium term.”
Now is the “perfect time” to reimagine office design, he says, adding that it would be worthwhile to ensure new developments are adaptable and flexible.
“Who knows when the next pandemic might strike?”
While the African hospitality industry is facing extraordinary and unprecedented challenges in light of the global pandemic, Wayne Troughton of HTI Consulting says development sentiment remains optimistic among most (57%) hotel owners as reported by operators on the continent.
“Despite closures and significant performance declines, long-term investment fundamentals for the sub-Saharan region remain positive despite significant short to mid-term challenges impacting the sector.”
Of the 219 hotel projects in the sub-Saharan African pipeline, he says a large proportion (68%) of them are proceeding as planned, with only 18% on hold for a limited period, and 13% on hold indefinitely.
“Concerns amongst hotel owners are, of course, still apparent and, for several, a ‘wait-and-see’ approach relates to factors such as uncertainty around travel ban lifts in various markets, how to restore guest confidence, and the impact of Covid-19 on hotel valuations.
Troughton says east Africa remains the region with the strongest hotel pipeline, followed by west and then southern Africa. companies due to the statutory requirement of fixed minimum lease terms in Kenya. In the longer term, it is anticipated that the interest in shared workspaces might rise, as tenants occupying shell and core spaces might downsize in favour of more flexible options.
“With the sudden forced adoption of agile working, many companies are rethinking requirements – both in terms of the size needed but also what activities their space should promote.
“In the long term, we expect there may be an increase in the overall take-up of shared office space, driven by a refocus from ‘cost of occupation’ to ‘cost of production’,” Cleland says.
“The world has been pushed onto a different trajectory and the same is true about the commercial property market. Shared workspaces offer a different approach to doing business, and although we don’t expect it to replace traditional leases entirely, we foresee many companies opting for a hybrid approach that delivers the best of both.”