Innovation trumps location
Covid-19 changes the face of the real estate industry
Rand Merchant Bank has cautioned real estate investors that the post-covid-19 industry will see innovation trump location in terms of investment value.
The company said it used to be location first, second and third when it came to picking a good property, but as a result of Covid-19, innovation is likely to be just as an important factor for years to come.
Riyaad Khan, a transactor in the real estate investment banking team at RMB, said the full extent of Covid-19 on South Africa’s real estate sector in the long term is unknown. “But what we do know is that old rules of property have evolved from location to location and innovation.”
He added that Covid-19 had accelerated certain trends, such as the adoption of work from home policies and the rapid rise in e-commerce, and has further highlighted the need to protect the integrity of supply chains.
“One of the stand-out trends likely to change the real estate sector is the innovative repurposing of obsolete, older spaces into new offerings.”
The recently released KPMG CEO Outlook, the results of a survey of 315 global corporate CEOS, points to a widespread desire to scale back on office space. Besides a widespread acceleration of digital investments, 68% of CEOS indicated they planned to downscale their firms’ office space.
Besides the cost reduction aspect, 72% of the CEOS saw benefit from remote working in terms of widening their talent pool.
Khan gave the example of property owners who are already repurposing properties – in particular The Atholl Yards development in Sandton – as an old office building was recently converted into quality and affordable residential rental units.
“In this case, an office building, which was vacant for a number of years, is now home to a community of young professionals on the doorstep of the Sandton CBD. There are similar examples in nodes such as Sunninghill and Randburg.”