Less talk, more action, say experts
Industry seeks more than promises from president
DELIVERED a few years back it might have been highly welcomed but last week’s State of the Nation Address (Sona) by President Cyril Ramaphosa was met with great caution.
A disenchanted property industry, some of who say they have not seen the market this bad in decades – had one thing to say to Ramaphosa: “A little less conversation and a little more action, please.”
Ramaphosa’s promise of “cranes and yellow equipment” being an everyday sight once again only slightly moved developers and thoe in the construction and real estate industries.
FNB commercial property economist John Loos says: “Words will not change much. We need action more than words. There is no quick fix. For anyone to sit up and take notice there will have to be some concrete deliverables.”
Herschel Jawitz, chief executive of Jawitz Properties, agrees that for confidence to be restored, South Africans need to see action.
Optimistic by nature, many in the property industry welcomed some pronouncements but most called for action. (See pages 1 and 6.)
Both the construction and development industries, having survived some tough battles in the past two years, are less excited by the promises.
Deon van Zyl, chairman of the Western Cape Property Development Forum, says these industries have been in a state of crisis because of “bureaucracy and red tape”.
“Neither the government nor the private sector can provide new buildings or infrastructure if statutory approvals are not aligned.
“It’s wonderful to hear that water-use licences will now be issued within 90 days but what about planning, environmental, heritage and building-plan approvals that take years? And what about proactive infrastructure provision by local authorities that are holding back investment?”
The economic downturn hit the construction industry particularly hard and last year many established, large and JSE-listed construction businesses downsized and or even shut up shop.
Peter Jäck, chairman of building refurbishment company Indawo, says while Sona focused on turning the economy around, without immediate actionable initiatives, the construction industry was unlikely to return to being the job creation engine it was just a few years ago.
“The past two years have been the most difficult I have navigated in my 37 years in the business.
“The industry can return to profitability in 2020 but it needs a concerted effort from industry players, corporate South Africa and the government.”
Jawitz says in terms of bank lending, interest rates and property prices, the current residential market offered the best buying opportunities since 2008.
“However, the lack of confidence to think and invest in residential property in the long term is holding the market back, rather than affordability. The residential market is in a crisis of confidence.”
Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says Sona “lacked substance and will do little to boost domestic or international investor confidence”.
“We’re in the same place economically as last year and the president is talking about the same things. Load shedding is crippling the economy, corruption continues to plague the government, our public service wage bill is bloated, crime is rampant, the youth need employment and our economic outlook is dire.
“The speech also failed to allay investor concerns about the future of private land ownership.”
Mike Greeff, chief executive of Greeff Christie’s International Real Estate, feels expropriation without compensation was not as clearly addressed as “I would have liked”.
“However, it is a positive to note that 40 000 hectares of state land has been released; and a further 700 000ha will be released in the coming year … It is comforting to know that, for now, our privately-owned land is safe and this could be a bonus for international real estate investors.”
Geffen, however, feels the expropriation bill “borders on insanity while the government sits on nearly 2 million hectares of state land” that could be used for redistribution before touching privately owned property.
“The 44 000ha of state land released was a veritable trickle in the greater scheme of things. But, very ambitiously, we’re being told 700 000ha will be released in the coming year, which will be an administrative impossibility.”
Samuel Seeff, chief executive of Seeff Properties, feels the market is well poised for growth but “needs urgent stimulus, including further interest-rate cuts and a reversal of the transfer duty and capital gains tax hikes which, rather than generate higher taxes for the government, have only served to frustrate the upper end of the market”.