Developers need confidence in the future
G
overnment made the controversial decision to only allow commencement of construction in alert level 2 of the lockdown. We spoke to Jacques van Embden, MD of Blok, a developer of urban properties, to get his take on the situation.
Q: Will the recent consecutive reduction in the interest rate be enough to stimulate the property market?
A: In isolation, no. It’ll take confidence in the government managing both the health challenges ahead and the stimulus packages to where they can have the biggest impact. It is, however, likely to mitigate the financial pressure on those who own property, which is vitally important to sustain a healthy market in the broader sense, not just for new developments. Strong collaboration between business and government will be required to nurture and rebuild an industry that employs a substantial number of people – from unskilled labour on site to highly skilled engineers.
Q: Will the consequences of the adverse market and economic conditions push prospective buyers into the rental market?
A: For those who remain gainfully employed and whose businesses are still operational, it will be more affordable to buy thanks to the rate cuts and suppliers bringing costs down in an effort to remain viable. And if you have access to financing, it is an excellent time to buy.
But others who are financially adversely affected will absolutely be forced to rent rather than own. Even though some may have buying power, they’ll adopt a conservative strategy because of uncertainty in the marketplace and may decide to shift their purchasing decisions to less financially risky or burdensome properties.
Q: Are there any other measures you think might help bring the property market back to where it was pre-lockdown?
A: Property is a long-term investment and making long-term investments requires confidence in the future. Success in this sector will depend on government continuing the well-communicated work done to date. Government needs to continue having a confident, steady hand in steering us through this crisis as we emerge to rebuild the economy and all industries negatively affected by Covid-19. There will certainly be bumps and challenges on the road ahead but the initial indications from our country’s leadership have sparked renewed hope that we’ll weather this crisis. For the development industry specifically, planning departments and government functions that impact our sector need to deliver efficiently as this will streamline the development life cycle, bring down the cost of developments, and increase the confidence of developers and investors to commit to projects.