It will be some time before South Africa’s lockdown is completely lifted, but even when that point is reached, the commercial property sector will still face challenges, says FNB’s John Loos.
For the retail sector, a portion of consumers might be cautious of venturing into crowded places for some time because of virus concerns. Malls might, therefore, battle to bring back foot traffic.
“In addition, a deep recession can mean a more financially cautious consumer for a while (driven by fear and uncertainty), meaning a higher saving rate and lower consumer spend rate.”
On the restaurant side, opening online orders and deliveries, but not sitdowns, could cause a permanent change in consumer behaviour. This goes against the sit-down restaurant sector and is more in favour of takeaways and deliveries, he says.
The office market has already been under pressure, especially in large parts of Gauteng, with high and rising vacancy rates. Now, many office employees have been forced to adapt by working remotely using technology which has been around for a while.
“The trend towards greater remote working was already on its way slowly, but this crisis may have sped it up, which may exert additional downward pressure on office space demand in the near future,” Loos says.
Hotels and the hospitality sector could be under “severe pressure” for quite some time. “I think the world of webinars will take a slice out of hotels, conferences and events venues’ revenues on a permanent basis.
Online meetings will reduce expensive business travel and many may be uneasy about getting on a plane in a hurry, at least until the virus has been properly resolved.”