There’s no denying it, 2020 has been one crazy year! We’ve all had many challenges to overcome – socially and economically – and many businesses have been forced to innovate and move online in order to stay afloat. At Gunston Strandvik, we’ve experienced a challenging and interesting year to say the least. Like many other property professionals, we’ve had to navigate this new world and do our best to overcome the many obstacles that have stood in our way.
As the year draws to a close, we thought we’d share some of our thoughts, opinions and insights into how the pandemic has affected us, the economy, the property industry, and how we intend to move forward into 2021.
On the 17th of November 2019, the first Covid-19 case was confirmed in Wuhan, China. Little did we know that this new strain of coronavirus would quickly take the world by storm and change the way we do life and business. As the virus continued to spread and devastate countries, many leaders took on different approaches. Some countries took a more gentle approach, and other countries, like South Africa, went into hard lockdown, and at this point it is still unclear which approach has been and will continue to be the most effective. But what we do know is that the hard lockdown had a devastating effect on the economy as a whole. Some industries, like the property industry, were harder hit than others.
On March 27, 2020, South Africa went into a hard lockdown that lasted 5 weeks. It was like nothing we’ve ever experienced before. The property market took a dive with no transactions being registered at the Deeds Office during that time and a ban on all commercial activities by property practitioners. Literally the inflow and outflow of business was cut-off. But as we approached level 3 lockdown and the restrictions started to ease up slightly, we experienced a surprising turn of events.
Despite the many challenges faced by the Deeds Office, like continued and sporadic closures due to COVID-19 cases, and delayed transactions, we actually saw some record numbers in the property industry, particularly in bond approvals.
The reason? We believe that we have the SARB interest rate cuts, pent up demand, and the move to remote working from home are primarily to thank! And despite predictions suggesting that the property market would fall by 5% to 14.5% in 2020, we saw an increase of 1.5% in July.
As for the commercial property industry, the same cannot be said. According to a recent article published on Property24, “South Africa’s office market has seen high vacancy rates for a while now and it has only been exacerbated by the impact of the Covid-19 pandemic.”
According to Ulrik Strandvik, Managing Director of Gunston Strandvik Attorneys, commercial property owners will have to navigate this rental space with poise. “Many commercial property owners will have to negotiate with their tenants in order to meet their needs. With shop owners seeing less feet through the door, they are likely to demand that their leases be extended on a nominal or ‘no increase’ basis. In many cases, it is better to have a trustworthy tenant paying less, than no tenant at all.” says Strandvik. Commercial Landlords will also need to consider other alternatives for their space, such as converting the space to mixed use with residential, commercial and retail aspects.
Looking forward into 2021
At this point, it would be naive to say that we know what 2021 will hold for South Africa. But we do know what we hope for.
For one, as property professionals, we hope to see a move towards an entirely electronic system that allows for transactions to take place no matter what. With the Electronic Communications and Transactions Act in place, we believe that this can soon be a reality if the correct urgency is lobbied.
As for the economy as a whole, we hope to see South Africa becoming more of a choice investment opportunity for the global market. “It is encouraging to see the government take action against corruption. Although much more is needed it is sending the right messages to the international community”, says Strandvik. South Africa has so much to offer as an investment destination. We are of the opinion that this will become more of a reality if our government focuses, amongst others, on improving our internal processes and ease of doing business in South Africa.
As for the foreseeable future, we know that businesses need to move more and more of their processes online. From internal communication with staff to external marketing using online platforms like press offices, social media and blogs, and even communication with clients and contractors – almost everything needs to be able to be done online. Business owners need to be prepared for what may come. We for one have enjoyed navigating the world of online training, which has proven to be most engaging and fun and we plan to do more of this in the future, together with face-to-face sessions, should it be appropriate.
A final observation from the Gunston Strandvik team, is the resilience of South Africans. We have seen clients, colleagues, friends and network partners facing extreme difficulties, but despite this they have knuckled down and did what they could in the circumstances. The energy and hunger to do business after level 3 was tangible. As South Africans, we have faced extreme difficulties before, and there will be difficulties to come. However, we at Gunston Strandvik believe that, as we face these difficulties with hunger, humility and a regard for our fellow South Africans, we will grow from strength to strength.
From us here at Gunston Strandvik, we’d like to say a huge thank you to all of our clients, colleagues and network partners for your patience and continued support over this time. We are grateful to each and every one of you for choosing us and sticking with us, and we look forward to tackling the new year together.