Office and retail buildings expected to be sidelined while demand for secure and compact living rises
The nationwide lockdown and transformed lifestyles are going to dictate which property developments come to the fore as developers respond to changed demands.
Office developments are among those that might be sidelined, says FWJK chief executive Dave Williams-Jones, explaining that companies have overcome the difficulties associated with working from home. This could boost the remote working trend which was emerging pre-lockdown.
“We expect this trend to continue until such time as the economy moves from recession to positive growth.” On the residential front, Williams-Jones expects more compact living and co-living space type residential developments to come to the market. Residential developments will always continue and there are constant new entrants into the market, says Rabie chief operating officer Colin Anderson.
“Demand and supply are as old as time and I believe that this market is the most resilient. Safety, security and convenience remain top priorities and developers who can offer a great product at competitive prices will continue to do well.”
There has always been a high demand for buy-to-let investment property. Brad Morgan of Rawson Developers is confident that this type of offering will remain popular. Lowered interest rates mean returns on investment in this arena are “now even better”. The group also believes that demand for super-secure and convenient living is on the rise.
“Security estates and apartment blocks with excellent security and amenities in a good central location will always be very sought after.” Retail, however, has been under pressure for a long time, and with the added pressure on businesses and landlords as a result of lockdown, fewer such developments are expected, Anderson says.
“South Africa, in general, is over-retailed in most metropoles. The neighbourhood centres are most likely to thrive, with regional centres taking a big knock in the long term.”
As the country moves out of lockdown, developers will have a better idea of how companies will approach the work-from-home concept and what impact this trend will have on office space. However, Anderson believes that, in general, offices will remain preferred workplaces, whether this takes the form of more corporate set-ups or shared office space.
“Uber-headquarters – custom-built campuses occupied by one large company – could be a thing of the past but this should play out in the medium term.”
Now is the “perfect time” to re-imagine office design, he says, adding that it would be worthwhile to ensure new developments are adaptable and flexible.
While the African hospitality industry is facing extraordinary and unprecedented challenges in light of the pandemic, Wayne Troughton of HTI Consulting says development sentiment remains optimistic among most hotel owners (57%), as reported by operators on the continent.
“Despite closures and significant performance declines, long-term investment fundamentals for the sub-Saharan region remain positive despite significant short to mid-term challenges currently impacting the sector.” Of a total 219 hotel projects in the sub-Saharan African pipeline, he says a large proportion (68%) of them are proceeding as planned, with only 18% on hold for a limited period, and 13% on hold indefinitely.
“Concerns amongst hotel owners are, of course, still apparent and, for several, a waitand-see approach relates to factors such as uncertainty around travel ban lifts in various markets, how to restore guest confidence and the impact of Covid-19 on hotel valuations. Troughton says East Africa remains the region with the strongest hotel pipeline, followed by West and then southern Africa.