Property Industry Weighs in on SONA 2021
*Image sourced from The South African
As is expected after a year like no other, the primary focus of the President’s 2021 State of the Nation Address was the COVID-19 pandemic, and how it has ravaged the nation. “While it has caused significant damage through loss of life, just as drastic has been its effect on our economy and the rising levels of unemployment,” says John Jack, Galetti Corporate Real Estate CEO.
He adds: “I appreciated the President’s call for the prioritisation of economic recovery and economic reform and his description of the relationship between the public and private sector as ‘symbiotic.’ As a major employer, the property industry is crucial to this economic recovery.”
“The SONA delivered by President Cyril Ramaphosa was generally encouraging for the real estate sector”, says Gerhard Kotzé, MD of the RealNet estate agency group, as it outlined some practical and immediate responses to the economic devastation and employment loss that has been brought about by the Covid-19 pandemic.
“Obviously the most welcome news to emerge from the SONA for millions of South Africans is the extension of the special Covid-19 social grant for the next three months, and the extension of the TERS benefit for employees in those sectors that have not been able to operate at all due to the pandemic,” says Berry Everitt, CEO of the Chas Everitt International property group.
Consequently, he says, the next most important information contained in the speech was that about the progress the government is making with regard to obtaining and distributing sufficient vaccine doses to achieve ‘herd’ immunity and very low rates of Covid-19 infection, which will allow it to shift attention and direct more resources to achieving the objectives of the Economic Reconstruction and Recovery Plan (ERRP) that was created last year.
It was also impressive, Everitt says, to learn that the President’s annual investment conferences have now attracted almost R774bn of the five-year target of R1,2trn. “This indicates that SA is still an attractive investment option in global terms, and that there is still considerable positive sentiment among both local and foreign companies, despite the economic setbacks of the past few years.
“Such confidence among business leaders and consumers is a vital component of a healthy property market, as it leads to job creation and an increased demand for both residential and commercial property,” says Everitt.
Jack says that while the President called for South Africans to overcome poverty and joblessness together, this “cannot happen without direct support from our government in the form of subsidies for developers and struggling businesses in both the commercial and residential property sector.”
While the residential sector has seen occasional spikes in growth, aided by government subsidies to specific major developers, the commercial real estate is “floundering” according to Jack. He adds: “As the commercial real estate sector is underpinned by all forms of business, it should be a major target for growth and support. Of particular concern is the construction industry, a major enabler of infrastructure development, that has been in decline for the last five years with many major employers forced to downsize and liquidate.”
“Tax is a major concern for the President. The taxes paid by the property industry and the private sector at large have always been a much-needed injection of capital to government. But there’s only so much blood you can draw from a stone. A company cannot pay tax if it is not making a profit,” says Jack.
More standouts from SONA affecting real estate:
- The progress that is being made on achieving the sufficient, stable and sustainable power supply that is required to support all aspects of SA’s economic recovery and restore investor confidence.
- The progress that is being made with the support for local production and the large-scale revival of the manufacturing sector in order to create employment, reduce imports, boost exports and expand the country’s revenue base.
- The support being given to the agricultural sector and in particular thousands of new, smaller-scale farmers.
John Jack concludes: “At the Budget Speech on the 24th of February, I hope to hear of the government’s practical (with timelines) plan to allocate stimulus to focused sectors allowing for their growth and expansion.”