Navigating the Peaks and Valleys: Reflections on 2023 in the Property Industry and a Glimpse into the Future

It would seem that every year gets shorter and the issues get larger. And so it has been with the year 2023. Loadshedding and a year of rising interest rates has placed the property industry under pressure. It has been reported that over 1200 businesses closed their doors and what this means for the property industry is rising vacancies. The REITs industry is under pressure with many trading at deep discounts to their LTVs.

But on the flipside we have also had highs. Most significantly, winning the Rugby World Cup. This event galvanized the nation. It cut across colour, age and gender. As a united force we willed the team to win. This showed, that despite our differences, we were still able to find a common goal. It is with this hope that we go forward into the new year. If you have been around long enough, you are fully aware that the economy and by definition, property, is cyclical. Just as much as the good times come to an end, so do the bad times.

With high vacancies in certain areas, most significantly office space in Sandton, this may well be the opportunity to repurpose. It may also be an opportunity to redress apartheid spatial planning and create an opportunity to create affordable residential accommodation close to where people work. And with sufficient levels of residential space, other opportunities will arise. Schools, clinics, food, entertainment all need a place to operate from, when residential space is on their doorstep. Opportunities in the form of hospitality has already shown value in Cape Town. The French-based hospitality group, Accor, have rebranded two hotels under their own banner and announced the development of a new hotel on the old Christiaan Barnard site in Bree Street.

The other opportunity that has great potential is technology. With technology so much more can be managed within the property industry. Security, access control, letting, sales, facilities management are all areas that have already been positively influenced by technology and this will grow exponentially. Certain property owners have already been creating new products such as serviced office space, short lets and community experiences for office space, using technology as the backbone.

Don’t get me wrong, next year is going to be a tough year. With a national and provincial election planned, the political landscape is going to be interesting, to say the least. With coalitions being formed, and broken, and reformed, it is hard to predict who the real kingmakers will be and how the chips will finally fall.

It is said that in the period 1910 onwards, the islands making up New York had a huge problem with horse manure. These islands, such as Manhattan, had grown in population size and with it, transportation of people and goods with horse drawn carriages increased, as did the horse manure. The city fathers were at their wits end as to how to solve the problem to ship the manure off the streets and off the islands. In the end, the solution came in a very different form. The invention of the combustion engine. So often this is the case. The solution to a problem does not come from solving the immediate problem.

This will be the challenge for the property industry going forward. Not to solve the immediate problem but to find new solutions in repurposing and re-imagining. We look forward to 2024……with all its challenges.