A bold move by Cape Town to ‘break free’ from Eskom will have a great impact on its property values.
Following President Cyril Ramaphosa’s announcement to ‘fix the fundamentals’ at last week’s SONA address, the breakaway from Eskom through alternate energy sources and the speeding up of licences to generate more than 1MW of power, shows clear signs of hope for the Commercial Real Estate industry.
The property sector has been at the mercy of Eskom and new measures being put in place will see growth in real estate values in the long-run. Welcoming both local and global independent sustainable power producers into the market will boost market confidence and see significant investments into South Africa. The question is, how fast can this happen, and can we afford to wait?
Uninterrupted power supply to Cape Town through the creation of its own power generation will see small businesses relocating from Johannesburg to Cape Town, while larger Johannesburg-based businesses would have already put plans in place to generate their own power”. Based on this, the prediction is a land price increase towards areas like Atlantis as a commercial hub.
The Real Price of Power Cuts
The replacement of equipment and increased maintenance due to power cuts is costing the industry. Increasingly, landlords are moving towards being sustainable and self-sufficient. If you are not making your portfolio sustainable then you are behind the curve. Today, tenants want to know if a property is equipped with a generator, solar power etc. and this has become a key selling point.
In addition, the news of Moody’s growth forecast down from 1 percent to 0.7 percent has once again placed a negative sentiment on South Africa. There is a lot pressure on the market and there isn’t a lot of growth to drive the market. We are seeing upward pressure on interest rates and a reduction of 25 basis points has very little impact on the industry.
Landlords want to see a clear decrease in interest rates. 100 points, for instance, will have a big impact on the industry. Landlords still have debt to service – regardless of whether they have a tenant or not.
Signs of Hope post-SONA
There are two additional key take-outs from President Cyril Ramaphosa’s SONA address to consider:
Land Expropriation: To a large degree, land expropriation has no impact on large commercial property owners, nor does it concern them. Where there is plans to develop land, we do not foresee it being taken away and don’t believe that there is any reason to panic”.
Infrastructure Investments: Talk of a smart city, a new university and a major dam to name a few will provide a much-needed boost for both the construction sectors.
That said this has been in the pipeline for years at Lanseria and is 'nothing new' he said.
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Homeowners have been urged to test their security systems as a matter of urgency and to pay particular attention to the battery backup systems. The message comes from an armed response company, as South Africa finds itself in the midst of wide-spread load shedding once again.
“Many people are under the incorrect assumption that their home alarm system is deactivated when the power supply is interrupted. However, if you have a stable and correctly programmed system coupled with a battery that is in good condition, it will continue to protect the premises during a power outage - regardless if the outage is because of load shedding or not,” says Charnel Hattingh, national marketing and communications manager at Fidelity ADT.
The only time it may not function correctly is if there is a technical issue, or the battery power is low. “Most modern alarm systems have a back-up battery pack that activates automatically when there is a power failure,” she says.
She adds that there are a number of practical steps that can be taken to ensure security is not compromised during any power cuts.
Some of these include ensuring the alarm system has an adequate battery supply, that all automated gates and doors are secured and, lastly, to remain vigilant and report any suspicious activity to your security provider or the police.
With the added inconvenience of the lights going out at night due to power cuts, candles and touch-lights are handy alternatives. Hattingh says home and business owners should consider installing Light Emitting Diode (LED) technology, which is integrated into the alarm system’s wiring and automatically switches on for a maximum of 15 minutes when there is a power outage.
“If there is an additional battery pack, the small, non-intrusive LED lights can stay on for the duration of the power outage - or a maximum of 40 hours without draining the primary alarm battery,” she explains.
The most important tips to remember about being prepared for a power cut are:
1. Your alarm system must have an adequate battery supply. Batteries should be checked regularly.
2. Alarms should be checked during extended power outages to keep systems running.
3. Power cuts can impact on fire systems and fire control systems, so these must be checked regularly.
4. The more frequent use of gas and candles can increase the risk of fire and home fire extinguishers should be on hand.
5. Above all, remain vigilant during a power cut; be on the look-out for any suspicious activity and report this to your security company or SAPS immediately.
“Because of load shedding, there might also be a higher than usual number of alarm activation signals received by security companies and their monitoring centres,” says Hattingh.
“This could lead to a delay in monitoring centre agents making contact with customers. You can assist by manually cancelling any potential false alarms caused by load shedding, and thus help call centre agents in prioritising the calls needing urgent attention.”
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