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Real estate, construction asks to be opened up at Level 4

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About 70-80% of the real estate industry faces disaster if trading remains paused - part of a dire situation its members find themselves in after a month of the anti-Covid19 national lockdown.

About 70-80% of the real estate industry faces disaster if trading remains paused – part of a dire situation its members find themselves in after a month of the anti-Covid19 national lockdown.

Just how badly the industry is suffering is contained in submissions made by industry heads and the newly-formed National Property Practitioners Council (NPPC), to motivate reopening.

Comments were called for by a government task team after having released a draft Schedule of Services as part of the Covid-19 Risk Adjusted Strategy, to try to re-stimulate the economy.

Last Thursday President Rhamaphosa outlined a Five Level reopening of the economy with a total lockdown at Level 5. This Friday sees the country move to Level 4, which opens up a few more industries. 

The draft framework anticipates however that the real estate and construction sectors only again open fully in Level 2, with no date given for when that could be.

Laying bare its devastation, the real estate sector contends if not allowed to start operating by Friday not only would it suffer economic fatalities and its 5% contribution to the GDP be lost, but so too would industries relying on it to function be hard hit.

Employees have already left the industry and belief is this “will now rapidly accelerate.”

The government is warned real estate firms will be forced to close and go out of business, resulting in collateral damage to ancillary industries, with more than 50% of retail banking assets generated by real estate, and supply chain linkages including conveyancers, valuers, property and facilities managers, tradesmen etc. all of whom are at risk should the industry not be permitted to operate.

Many property practitioners are already at high risk of liquidation and destitution as they have been without an income for months following the closure of the deeds office, says NPPC chairperson Vuyisa Mutshekwane.

The deeds office is proposed to open for selected services in Level 4 however the NPPC has requested clarity on whether this will include property transfers. 

Recommendations have also been made by the NPPC as to how the sector could implement virus spread risk mitigation strategies.

Mutshekwane says “our first priority is to ensure the safety of practitioners and clients and we have proposed various methods that would ensure that.”

The construction industry fares no better.

In a submission made on Monday by Horizon Capital, MD David Sedgwick argues: “Continued closure of this sector would cause “further harm to an industry and sector already on its knees. 

“Most construction companies have a ‘no-work no-pay’ policy. As mass employers, it justifies the importance of having this sector up-and-running and is critical for the industry’s sustainability and the protection of workers’ livelihoods, not only now, but beyond Covid-19.

“If the industry is barred from operating under Level 4, we fear there may be no jobs to go back to when we reach levels 2 and 3,” Sedgwick contends.

Already the construction sector has suffered a vast number of liquidations, while business rescue applications from major construction firms include listed players such as Group 5 and Basil Read to other unlisted players such as NMC, he says.

But it was not only the Covid-19/lockdown impact causing the SA Property industry to crumble.

Before Covid-19 the industry was undergoing one of its worst years, with some experts saying they had not seen the market as slow and as low throughout the 30 years they’d been selling. 

Then an expected Moody’s downgrade to junk status, Covid-19 crisis and lockdown delivered a final blow. Nevertheless, the industry visualises redemption if allowed to return to work on Level 4.

This weekend the real estate sector submitted further: “Many agents in the real estate industry have already been without income for three months. It normally takes time to sell a home – from obtaining a mandate to sell, to marketing and obtaining an offer, after which home loan approval must be given, then processing by the Deeds Office. 

It is a lengthy process, taking as much as four months to conclude. 

“The closure of the Deeds Office has meant some estate agents have been without income since February. All real estate agents have been in lockdown for more than a month, making it nigh impossible to engage new clients effectively or adding properties to portfolios. 

“Had an agent manage sold a property on the first-day post-lockdown, it means another two months (at least) before they receive commission. As estate agents are full commission earners they are unable to claim UIF.”

Government has yet to indicate its final framework for Level 4.


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