Opportunity in a time of Covid-19

There’s a well-known French saying that goes like: “With every misfortune comes good fortune”. Every industry faces challenges that must be overcome to survive and prosper. The property industry is no different, and it has certainly had its fair share of challenges. This thriving industry was first battered by the drought which started six years ago. The entire local economy was affected, with doomsday talk of Day Zero, the day when all taps would run dry.

Drought followed by Pandemic

This three-year drought proved a real blow for all businesses, not least in the property sector. By 2018, rains had returned, and businesses gradually started to return to solvency. However, by early 2020, new storm clouds were gathering on the horizon with talk of a dreaded virus. In March 2020, just when Capetonians thought the water crisis was safely behind them, Covid-19 was declared a global pandemic. Lockdown followed almost immediately. While the property sector may have weathered the drought, this pandemic threatened to sink the entire local and global economy. Property turned from a seller’s to a buyer’s market virtually overnight and a struggle to survive ensued.

Innovation as a Survival Strategy

As the Covid storm raged, the property industry, including buyers and sellers, battened down the hatches, and all sectors did their best to ride out the storm. Job losses, reduced incomes, and lower salaries became the norm. What ensued, was the paralysis of the housing market and related sectors, affecting homeowners, landlords, tenants, lawyers, deeds office and the banks. The rug had been pulled from beneath everyone’s feet, leaving virtually no room for manoeuvrability.

Misfortune turns to Good Fortune

One example of how to turn misfortune into good fortune. He knew that no aid would be forthcoming, as with the water crisis. Given his limited resources, and negligible overdraft facilities, he realised a survival strategy had to be devised. The most important component of his enterprise was his personnel, including several family members. He suspended all outstanding office rental and other payments but opted to keep paying wages and salaries for as long as he could.

With sales non-existent, Harold was forced to reduce his worker’s incomes and consolidate his other businesses such as his restaurant. With a limited overdraft and short-term liquidity, the challenges were clear. Communication was key, and Harold conducted meetings and negotiations with various landlords regarding rentals. He realised they were all in the same boat, and through regular communication, they granted him leeway, allowing him to continue his operations for the duration of the lockdown.

A Break in the Clouds

When the first major lockdown began to ease, Harold’s several websites and property portals started to receive a stream of enquiries from prospective buyers requesting viewings and information. Like the Chinese characters, he realised that crisis and opportunity were two sides of the same coin. After an urgent Zoom management meeting, the Jawitz team decided to segment their stock into two basic categories.

1. Urgent sellers
2. Empty homes where sellers were not in residence or had already emigrated, presented no health risks. In this case, agents would unlock the home, remain in the car allowing potential buyers to view the property in safety. Before locking up and leaving, the home would be filmed to create a virtual showhouse to show other potential buyers.

Despite the Covid limitations, he knew that their future survival would be assured, provided his team grasped the opportunity for future sales. Members of his team pooled their talents, promoting sales, and using a creative combination of promotional tools. These included websites, high-level photography, drone technology, and virtual video tours of the properties on offer. Given the Internet’s global reach, another benefit of virtual videography and digital marketing was that overseas buyers with capital began to respond. These buyers could see that this area of the Cape was a treasure trove of natural beauty, offering good value, especially with international currencies. Increased market share and rising sales were proof that this strategy was working.

Low Interest Rates – a new Opportunity for First Time Buyers

During Covid-19, homeowners were selling properties at around 30% below market value. This, coupled with low interest rates of around 7.5%, created a new breed of buyers and sales started to pick up. This opened up a whole new market, including many first-time buyers who now qualified on the basis of affordability. As Harold points out: “The greatest gift that Covid-19 gave to South Africa, was the lowest interest rate ever, in the past 56 years. This has clearly revealed the pent-up demand from our less fortunate citizens to acquire adequate, affordable housing and relief from overcrowded living. It would be tragic to allow this rare window of opportunity to slip away

The structuring of our entire financial system is geared to rewarding often fickle foreign investors who benefit from some of the highest returns globally. He feels this is unsustainable, being to the detriment of every South African and entrepreneur. His view is simple: “High prices are preventing the previously disadvantaged from entering the property market, and simply adding to their hardship. It also leads to the growth of squatter camps, land invasions, crime, and all the ills that accompany poverty.

High prices have also retarded the growth of a huge secondary economic development thus preventing the silent, disenfranchised majority from becoming proud stakeholders and productive citizens. This was the dream of such visionary leaders as former President Mandela. To capitalise on this opportunity requires a united, informed and motivated private sector standing together and taking the lead.

Dreaming Big Together

If Mandela’s legacy can be combined with the eco-living vision of Sir David Attenborough, there is at least the possibility of moving from a dystopian to a more utopian style of life in this beautiful country.

The solution to disasters such as drought, and the pandemic, is to move away from fear and towards being proactive and creative, as demonstrated by Jawitz Properties in the Southern Peninsula. It is totally within our grasp to create and re-define a desirable, affordable housing market. The benefits include job creation, lower crime and suffering, more peace, healthier living in an environment where communities are uplifted.

In creating awareness of new opportunities, the property industry needs visionary leadership and participation from the fiscus and the corporate sector. The drought, followed by Covid-19, was a blessing in disguise. Let us capitalise on this window of opportunity and re-awaken the vision of Mandela and Attenborough and together, re-imagine the property sector.

Courtesy of PrivateProperty | Robert Metcalfe