Property Flash


March 17 2023

I recently was told that more than 90% of commercial property owners believe electricity loadshedding will worsen in 2023, as SA slips closer to being a failed state.

Property Flash was sent a survey conducted in March by the South African Property Owners Association (Sapoa), which showed that its members which are landlords are concerned about how rolling blackouts are costing their businesses millions of rand. Landlords are doing their best to shift to alternative power sources to be less reliant on Eskom. Eskom turns 100 this year and is failing South Africa and its businesses.

Sapoa conducted the survey as it looked to grant landlords another way with which to express their dismay over South Africa’s dire electricity supply situation. Rolling blackouts look set to be a permanent feature in South Africa.

The reality is that we need to wait a good five years before loadshedding really abates in this country. The private sector has been stopped by the government from reliably supplying power to the country. Estienne de Klerk, the SA CEO of SA’s largest real estate company, Growthpoint Properties said at a media presentation this week, that bad government regulations had created a terrible situation for South Africa, where electricity was not reliably supplied.

Maybe the ANC-led government will actually realise that it is incapable of running South Africa and that the pathetic failure to supply electricity cannot continue for another say five years without civil unrest. Yes, private groups will try to wean themselves off of the grid but this is extremely difficult for general citizens and many small and medium businesses.

In fact, companies like Growthpoint will find ways around SA’s embarrassing rolling blackouts. But even they cannot really get all of their buildings operating with off the Eskom grid power sources. There are only so many places that you can put solar panels on buildings.

De Klerk said Growthpoint which has assets worth around R174bn spread across five countries including SA, is more likely to invest in Cape Town than Gauteng largely because of the reliability of services in the Mother City, when it comes to investing. From a bigger picture strategy point of view, the group is expanding more aggressively abroad than it is at home. It owns stakes in Romanian, Polish, British and, of course, Australian assets. In fact, its investment in Growthpoint Australia is probably the best investment that the company has ever made, followed by buying half of the V&A Waterfront; the most prestigious real estate asset in Africa. Growthpoint’s stake is worth R9.2bn.

Capital flight is scary and when JSE Top 40 companies are battling to invest as much here as they really should, South Africans should be really fearful.

Something has to give.

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