Property Experts Weigh in on SONA

Property Experts Weigh in on SONA

Sona 2019 Positive and Full of Hope for Economy and Property

President Cyril Ramaphosa’s SONA 2019 (state of the nation address) was very positive, and one of hope and taking the next steps towards his “new dawn” and economic renewal. Samuel Seeff, chairman of the Seeff Property Group says that, ahead of the address, the group also noted with encouragement that business confidence had stabilised.

Seeff said further that he was particularly encouraged by the investment successes, and firm stance and proposed action to deal with corruption and maladministration including prosecution and the recovery of funds and assets.

The progress around governmental cost-cutting and the state structure and administration, management of the SOEs, and in particular the proposal around dealing with the Eskom crisis should be very positive for the economy, he said further.

The focus on economic growth sectors including the ocean economy, tourism and so on, are all positives, and we note with encouragement the news of a significant gas find off the coast of Mossel Bay.

On the issue of land, the proposal to use state owned land for redistribution and other proposals including a Human Settlements Bank are all noted.

Seeff said further that the group is encouraged by the stability that seems to be returning to the economy and currency, the rand currently standing at around R11.58/USD, R14.28/EUR and R16.23/GBP, notably better than at the height of the Zuma-administration.

Our message is indeed, Mr President, we are “watching this space”, and looking forward to a renewed growth path, he said further.

For now though, we should note that there is no “magic bullet” and economic recovery is likely to be gradual, simply because there is much to be done. On the back of this, the property market will continue to trade fairly flat with mostly sideways activity during the early part of this year.

The “must buy and must sell” market, generally below R1,5m (up to R3m depending on the area), will remain active and well-priced properties will sell within a reasonable timeframe.

The second market, i.e. those with discretionary money who do not have to buy or sell, are likely to continue waiting and watching how things unfold as we lead up to the National Election which has now been confirmed for Wednesday, the 8th May.

That said, Seeff’s advice to buyers and sellers, is that there is no reason to wait if you need to, or want to sell. Price growth has remained fairly subdued, and the lending landscape remains positive. While it may be riskier now, you could ultimately see greater returns.

Sellers though, will need to keep their price expectations in check if they want to transact right now. There are no guarantees, and Seeff concludes that if you need to, or want to sell, be sure to consider all serious offers.

Source: Seeff Properties


 

Several Initiates That Could Be Positive for the Property Sector

Gerhard Kotzé, MD of the RealNet estate agency group, says the SONA highlighted several initiatives and projects that could be positive for the property sector going forward.

These include:
*The imminent restructuring of Eskom to prevent its collapse and ensure that all the plans for accelerating economic growth and employment are not wrecked by a critical energy shortage;
*The intention to hold a second Investment Summit later this year to specifically seek funding for urgent provincial development projects;
*The establishment of a presidential task team to identify and remove the barriers to new business formation and the employment it creates;
*The plans to pursue the business development and export opportunities presented by the new African Free Trade Area;
*The extension of the Youth Employment Tax Incentive for another 10 years;
*The planned release of large tracts of well-located State land for housing development;
*More investment in labour-intensive sectors such as agriculture and tourism, as well as in science and technology initiatives that will educate and prepare SA youth for the digital future;
*The commitment to build 500 000 new social housing units over the next five years;
*The establishment of a R100bn National Infrastructure Fund to leverage investment in the much-needed repair and development of SA’s roads, railways and health and education facilities;
*A commitment to fight the culture of non-payment for essential services; and
*The establishment of a specific unit to follow up on all the evidence presented to the Zondo Commission about corruption, institute prosecutions and reclaim assets and money stolen from the public purse.

  “However, the President also took the opportunity to announce the date of the election, and we will have to wait and see whether his government will have the necessary majority after 8 May to implement all these plans.”


 

Highlights of SONA for Real Estate Market

Rudi Botha, CEO of SA’s leading bond originator BetterBond, says the SONA was very wide ranging and covered a huge number of initiatives, but that there were definitely some highlights for the real estate market.
    “Essentially, higher home ownership and the increased personal wealth that this brings is dependent on three things: investor confidence, economic growth and job creation, and the SONA made it clear that President Ramaphosa and his team have been working very hard to increase all three.
   “They have openly addressed and taken action on things that make potential investors nervous, such as a previous lack of clear policy direction in mining and land ownership, rampant corruption and the near-collapse of State-Owned Enterprises like Eskom. They have also been very open to working with the private sector to accelerate the implementation of many new projects that will stimulate economic growth and job creation.
   “And looking ahead, we are particularly pleased by the establishment of the new R100bn National Infrastructure Fund to leverage private investment into the revitalization of existing infrastructure and the development of new roads, railways, dams, harbours, hospitals and schools – as well as the provision of urgently needed student housing at tertiary institutions. Thousands of jobs will be created in the process.”
   In addition, he says, the establishment of the new Human Settlements Development Bank has real potential to solve SA’s social housing shortage within a few years, especially if its plans are integrated with those to release large tracts of State-owned land in strategic urban locations for housing development, and to recapacitate local authorities and rebuild local infrastructures.
   “We also applaud the high-level plan to reduce the level of economic concentration in SA so that small businesses can compete on a more equal basis and create millions more jobs in agriculture, tourism, the oceans economy and other entrepreneurial sectors.
    “Also exciting are all the measures being taken to ensure that SA will be positioned as a global competitor in a digital future, including the establishment of a special Presidential Commission on the Fourth Industrial Revolution. The aim is to ensure that young South Africans will not be left behind in fields like IoT, AI and robotics, and will have all the skills and qualifications necessary to thrive – and become the homeowners and property investors of the future.”
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Sona Speech Promises Rebuilding Investor and Consumer Confidence
Berry Everitt, CEO of the Chas Everitt International property group, says that the very detailed State of the Nation Address dealt with all of the economic and social issues that are currently of concern to the real estate industry, including the need to rebuild investor and consumer confidence in SA, stimulate economic growth, accelerate job creation and eliminate widespread corruption.
   “It was inspiring to hear how much progress there has been in the past year in reaching the R1,3-trillion investment target set by President Ramaphosa, in rebuilding sustainable relationships between government, labour and business, in restoring the credibility of institutions like the NPA and SARS and in addressing gender-based violence and other critical social issues in SA.
    “The President also shared what was being done to try to solve the Eskom crisis and to ensure that the perpetrators of corruption not only fce real consequences for their actions, but ate forced to return money stone from the ‘public purse’.     
   “However, the SONA was also very optimistic and forward looking, and we are excited by the announcement of several initiatives that will not only reduce the social housing shortage but significantly increase the number of South Africans who are able to build their own homes and /or enter the formal housing market – if they come to fruition.”
    These initiatives, he says, include the release of State-owned land in strategic locations that are close to work opportunities for housing development that will be integrated with the provision of all necessary transport, schooling and health facilties. “We assume this initiative will run alongside plans for more than 500 000 new social housing units to be built over the next five years, and for R30bn to be spent on fixing, improving and expanding municipal infrastructures.
   “At the same time, government intends to expand the People’s Housing Programme, which provides serviced stands to households and housing collectives that are prepared to build their own homes, and is to set up a Human Settlements Development Bank to leverage private sector investment in new housing.
   “Meanwhile the special presidential task force on reducing the constraints on the establishment of new businesses – and especially small businesses – could, we think, be a real game changer in enabling more South Africans to earn enough to buy their own homes. Small business is after all the major engine of job creation, and jobs plus confidence in the future are the foundation stones of a healthy property sector.”
 
 SOURCE: Chas Everett
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