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Listed property has been one of the hardest hit sectors on the JSE over the past three years, with the onset of the coronavirus pandemic and ensuing lockdowns causing further pain for property owners. The value destruction has been evident with regular BizNews co-hosts Magnus Heystek and Piet Viljoen unpacking the pain felt by many in both the listed and unlisted property space. The sector has been thrown yet another curve ball, with widespread looting and vandalisation of property happening over many parts of South Africa with the hotspots being KZN and Gauteng.
Protesters are targeting shopping centres and malls, predominately in the rural areas of aforementioned provinces (video attached for ease of reference). Small businesses have been ravaged, property has vandalised to the Nth degree and inventory stolen as there seems to be a blatant disregard for law and order. An economy that was already struggling to claw its way back from the depths of darkness has taken a potential deadly blow. This will be the final straw for many small business owners who may not have the luxury of insurance policies and capital to fight back. Jobs will be lost and the unemployment rate is likely to further worsen – this country faces an armageddon-like battle.
My wife built a business over 6 years, today they took everything . Whole factory gone in 20 mins. We watched it live until they cut cameras.We will not be rebuilding, those jobs are gone . Hope sasria insurance can pay for all this, they better be reinsured.
— traderdan (@DanielAirey) July 13, 2021
The silence has been deafening from corporate South Africa but two listed property counters SA Corporate Real Estate and Tower Property Fund were the first to break the silence. Good on the management teams for being transparent with the market, whilst many may still be gauging the extent of the damage. SA Corporate Real Estate have 11 properties that have been vandalised over the chaos that has ensued over the past few days. Despite the property damage, which should be covered by Sasria, the inability for many businesses at the malls to continue operating and thus not create an income will without a doubt put pressure on rental collections. In the below interview with Francois Marais, chief executive of Safari Investments, he outlines the damage and vandalisation caused at three properties within his stable although he counts himself and his business as ‘lucky’.
Property counters such as Exemplar, which is controlled by the McCormick family, have a number of rural retail-based malls and shopping centres around the country and specifically in the KZN and Gauteng regions (a map of its portfolio attached for ease of reference). Exemplar is yet to release details on the extent of the damage to its properties.
South Africa has shown resilience through times of crisis on numerous occasions. We may turn the corner in time from this catastrophe but the job losses and further economic destruction will evident in an already growth-less macro environment. Small businesses will be the first to fall and one wonders how much more suffering property companies, listed and unlisted, will be able to take before they are the next to fall by the wayside. A sad reality.
- The trillion rand property collapse – Magnus Heystek
- Piet Viljoen – ‘Investing in SA residential property doesn’t make sense.’
- Low interest rates driving the residential property boom – Andrew Golding
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