NICK MORGAN & WYNAND HAYWOOD - Dynamic Duo LOCKDOWN SURVIVAL GUIDE - Opportunity ...
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LOCKDOWN
SURVIVAL GUIDE
WORKPLACES OF THE FUTURE
How Businesses will adapt Post Covid-19
PROPTECH DISRUPTION
Innovations for a New World Dynamic Duo
NICK MORGAN &
WYNAND HAYWOOD
MAY/JUNE 2020 R80.00 (Incl. VAT)
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MAY/JUNE 2020 #123
EDITORIAL
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EDITORIAL VIEW
JOHANN RUPERT
Before versus After
COVID-19 - Lessons
from the past to apply
in the future
T
he coronavirus in conjunction with a lengthy whether it be commercial or residential property – one often hears
lockdown has caused panic and uncertainty in that the three most important factors are location, location and
the global economy. How we treat this time will location! When considering an investment in listed property, whilst
determine our futures when we fully emerge from one can look through to individual property locations, we tend to
lockdown and return to business after COVID-19 (AC). It look at valuations, sentiment, economics and financial conditions.
won’t be the same again.
Duyvene-de Wit says that valuation driven investors who can
We decided to focus this issue on lockdown solutions for real stomach volatility will probably be interested in property at current
estate investors and practitioners who can use this info today. REI valuations. Contrarian investors will be looking at the negative
have coined this issue our LOCKDOWN SURVIVAL GUIDE for the sentiment and will most likely be looking to buy bargains. Investors
real estate industry to assist them through these challenging and averse to volatility, who prefer to have economic growth as a
changing times. This issue is crammed full of insights and principles tailwind, will probably be deploying their capital elsewhere whilst
on how to survive and thrive through COVID-19. waiting for the right opportunity.
Real estate along with the travel and hospitality industry stands to For retail investors, investment in listed property becomes
be greatly impacted by the COVID-19 pandemic. While the market particularly rewarding when you invest using a tax-free savings
has been stimulated through interest rate cuts, lower prices and account. Real Estate Investment Trust (REIT) distributions are
stimulus to attract buyers - affordability remains a key concern for normally treated as income in the hands of investors and taxed
buyers and sellers alike in residential and commercial markets who at their marginal rates. If you invest through a tax-free savings
are all suffering defaults in rents. Banks have offered debt payment account, those distributions are tax exempt.
holidays on bonds and retail commercial landlords are offering
rental relief and discounts to their tenants. Bottom-line is that business and the real estate investment
environment are transforming from their old ways into new ways
Carl Coetzee of Betterbond says,“both buyers and sellers are after COVID-19 (AC) into South Africa 2.0. We know the current
concerned about whether they will be able to transact in the situation won’t last forever and is a massive opportunity to
coming months, while buyers in particular are asking questions reconnect and refocus ourselves and our businesses, so don’t miss
about the stance banks are likely to take around lending money for the opportunity of a huge crisis.
home loans.”
Plan for the worst outcome, expect the best and prepare for
While the economic recovery from lockdown is likely to be surprise. Now is the time to reengineer your business and now
slow, it’s important that the banks continue lending money in a is the time to make the impact as you will never have another
responsible manner as a means of stimulating the property sector. opportunity like this.
He says,“Whatever the economic situation, people still need
accommodation, which means there will be buyers and sellers Stay safe and successful investing.
looking to finance these transactions.”
NEALE PETERSEN
A sector that was also particularly hard hit is the listed property EDITOR-IN-CHIEF
sector. At the moment, its three biggest constituents are
Growthpoint (23%), NEPI Rockcastle (15%) and Fortress REIT (9%).
JOSEP BORRELL
This index is down 47% since mid-January and an eye-watering
“
66% since its highs at the end of 2017. Investors might look at this
index and ask whether the present rout presents an opportune
time to invest.
COVID-19 will reshape our world. We
don’t know when the crisis will end. But
we can be sure that by the time it does,
our world will look very different.
“
According to Jean-Jacques Duyvene de Wit, Asset Manager at
Prescient Investment Management, when buying property -
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SA Real Estate Investor Magazine MAY/JUNE 2020 3
MASTER INVESTOR NICK MORGAN & WYNAND HAYWOOD
Opportunity in the N
ick Morgan and Wynand Haywood co-founded
Opportunity Private Capital 14 years ago sharing
only to institutional finance houses and very high net worth
individuals.”
Time of Uncertainty
a similar vision and combining their experience in
investment banking, property sales, marketing, project “We both agreed that the average middle-income Capital
structuring and development. This experience combined investor had no access or vehicle to leveraging or extracting
with their perceptiveness and ability to adapt has led the enormous value to be found from developing. There was a
to their success. Over the last 14 years this specialist gap to be explored in this sector.”
investment company has established a secure investment
Wynand Haywood & Nick Morgan structure for private individuals to earn high fixed returns
on capital investments to finance property developments. “Change is constant and
With their secure investment structure their clients are
NICHOLA LOOCK thriving and the Company is perfectly positioned to constantly increasing its
identify and take advantage of the Opportunity the current
and future property market will offer, a distant concept for pace. You have to keep
many during lockdown.
your attention on it to stay
NICK MORGAN relevant.”
Position: Co-founder & Managing Director This is when they founded Opportunity Private Capital,
Company: Opportunity Private Capital uniquely offering high yielding fixed asset-backed
investments to private individuals at a time when very few
Years company has operated: 14 years such alternatives existed.
Age: 50
“Our experience led us to identify that the best way to
Marital Status/Family: Married with 2 daughters offer our clients ultimate security in financing property
Books you are currently reading: The 10X Rule, developments was to continue without the use of institutional
Grant Cardone financing. Our developments are financed solely by our
private clients. There is no institutional finance involved
Role model: Gary player – high achiever, great therefore enabling our investors to hold all the security until
businessman, family man, fastidious about his health
& exemplary in most aspects of his life!
NICK MORGAN
Life motto: Never, ever give up.
10 Investment Tips
PROPERTY INVESTMENT
Wynand Haywood has always gravitated towards property 1. Stay focused, become very knowledgeable in
development. From 1994 he was an agent with Seeff
a particular sector of the real estate industry &
Properties, exposed to development sales. When he left
them in 1998 he ventured into various disciplines of property invest therein.
development including virtual reality, marketing, investment 2. Diversify within your chosen arena of knowledge
and development structuring, which all contributed to an with combination of capital generating and asset
in-depth understanding of the many aspects which influence building investments
property development.
3. Don’t panic & allow herd mentality to influence
“From 2004 I started to focus on developing projects your actions in market downturns. Fluctuations
myself -it was at this time that Nick and myself met up and are part of the long-term cycle.
Opportunity was born”. 4. Property is a long-term investment. Never forget
that.
Morgan spent almost a decade in the investment banking
sector, of which seven years he spent with HSBC Investment 5. The right time to buy property is when you can
Bank in London. He made the decision to leave investment afford to.
banking 15 years ago and go into the property sector, which CAPITAL INVESTMENT
he had always felt an affinity towards. 6. Stick to investments in regions that can sustain
“It’s being in this corporate environment that led me to get economic growth for the long term.
increasingly frustrated with being part of a global juggernaut. 7. Always establish what security you have for your
Panic, uncertainty and economic hardships serve as I wanted to be an architect for change. My drive was to be an
integral part of something that had a direct positive effect on
investment.
8. Do the investments have a historically consistent
unwanted unifiers for the world currently. Despite this, history the market - to add value in an arena that I could exercise an
element of creativity and control.”
track record.
has shown that opportunity is there for those that seek it. The It’s at this time that he met Haywood. Both were frustrated
9. Are the investments located in high demand
areas of their sector.
dynamic duo of Nick Morgan and Wynand Haywood continue with the lack of access for individuals to participate in the “big
cash” arena of property development finance. “Being able to
10. Does the investment product have solid
fundamentals in place.
to offer investment stability, security and opportunity. participate in such opportunities was traditionally accessible
4 MAY/JUNE 2020 SA Real Estate Investor Magazine SA Real Estate Investor Magazine MAY/JUNE 2020 5
MASTER INVESTOR NICK MORGAN & WYNAND HAYWOOD
For Morgan and Haywood, the crash emphasized the power
WYNAND HAYWOOD of stable and secure investments. At a time when most
would retract, the Opportunity Private Capital co-founders
Position: Co-founder monitored the markets and adapted their business model
accordingly for themselves and their clients.
Company: Opportunity Private Capital
Years company has operated: 14 years “We hit the Global Financial Crash head on! Even though
Age: 48 property sales and ownership in general suffered significant
stagnation, properties were still occupied. People still
Marital Status/Family: Married with 2 daughters required a roof over their heads, hence rentals continued.
Books you are currently reading: The Trigger – This demonstrated to us the underrated power and stability
David Icke of residential property in the lower-middle to middle income
sector.”
Role model: Jordan B. Peterson, in-depth knowledge
and understanding of most relevant topics with the “This insight has defined our direction and vision going
ability to communicate such in well-articulated way. forward. It might not always be sexy, but there is relative
investment safety with residential property in high demand
Life motto: Manage your perception
urban areas.”
It might not be the answer that most are looking for,
their investments mature. This is the perfect scenario in which but the answer to thriving in times of uncertainty is to
investors (a) get ALL the available security for their capital and offer stability. This is why the pair have worked towards
(b) get to participate in the value extracted from developing better access for more individuals to financial safety-nets.
by receiving high fixed annual returns. Our clients have Investments in residential developments, in hot spot areas,
averaged returns of 18% - 21% per annum consistently for offer this economic stability. An ideal which seems foreign
over half a decade.” during the Covid-19 pandemic.
With their focus on the future, they predict a shift towards “Thus, with a young population in this country,
the stability offered by fixed assets. “Contrary to what some anticipated growth of Sub-Saharan economies and the
The pair also offers entrepreneurs advice on not only
“The Coronavirus has getting businesses through the lockdown, but on how
commentators predict, we feel that investors may start
gravitating towards the relative safety of fixed assets. The
gravitation towards ‘working from home’, we see demand
for residential property increasing dramatically over the
to thrive in a difficult economy. “Change is constant and
illustrated that the economy constantly increasing its pace. You have to keep your attention
Coronavirus has illustrated that the economy and related
market investments are arguably fragile in times of crisis. Real
next decade - particularly in lower-middle to middle income
sector. Opportunities to fund and develop this need will
on it to stay relevant.” This requires planning the way forward
and related market and approaching hardships from different perspectives. These
estate offers a tangibility that investors will be drawn to.” abound.”
are the basic principles which has seen Opportunity Private
investments are arguably Capital successfully evolve and be well-positioned in the WYNAND HAYWOOD While to many security and stability allude to smaller
rewards, the co-founders of Opportunity Private Capital aim
current environment. 10 Investment Tips
fragile in times of crisis. Real PROPERTY INVESTMENT
to change this misconception. “We have been turning the
general perception, which assumes that high returns equal
“This is not a quick turn-around industry and you work with
estate offers a tangibility that a sea of variables which require daily focus. You must always
1. Be clear on your strategy, capital growth or yield
this will impact your investment area.
high risk, on its head! Our secure structures offer tangibility
to the security of investor capital. This gives our clients
stand in the shoes of your investor and buyer. Look through
investors will be drawn to.” their prism. Planning, planning, planning for any possible 2. Identify all possible impacts on area investing in comfort. The bonus of course are the high returns as private
individuals are getting to share in the upside of the value
surprise and the flexibility in your business to adapt within for next 5 -10 years.
being unlocked by developing.”
days. The long-term cycle of developments means you can 3. Triple check your tenant it will save you money &
potentially go through a ups and downswings in the market.
“We have founded and own a number of companies in the head ache down the road. The duo offers more than just secure fixed-asset backed
So plan for both.”
real estate industry and have hands-on experience in all the 4. Motivate your tenant to look after your investing. They offer something more valuable – certainty
different disciplines and facets of the residential sector. We investment and hope during difficult times. The pair continue to look
Solutions & opportunities during lockdown for gaps in the markets and to help individuals survive
enjoy being able to leverage our expertise and knowledge 5. Request access facility on your bond for saving
An already fragile economic environment has worsened economic crashes. Morgan and Haywood balance their
to the benefit of our clients and investments. We have over
drastically in a matter of months due to the Covid-19 and cash flow flexibility aspirations with the needs of their clients, just as they
a very long period developed financial and legal structures
lockdown. While the full effects on the property industry are CAPITAL INVESTMENT perfectly balance their partnership.
to successfully enable what we do with Opportunity Private
not ascertainable just yet, Morgan and Haywood continue to
Capital. Those that come along with us not only get a 6. Make sure you don’t need the cash prior to
remain hopeful and find opportunities where others only see “With the evolution of our current alternative investment
transparent understanding of their investment and how it repayment date on Contract.
obstacles. structure and the fusion of technology we aim to create our
manifests, but more importantly achieve significant financial
7. Ensure you understand every facet of the own business economy in which external macro influences
gain, consistently and predictably.” Morgan and Haywood
“With the new economic environment we find ourselves Contract do not fundamentally affect our business or our clients. To
have invaluable expertise and insight to share not only with
in, there will be sellers of properties and developments who 8. Check developer history and track record create an investment model where individuals can survive
their clients, but with investors and entrepreneurs struggling
would be more negotiable on their selling prices. Its times like economic shocks and in so doing, protect their financial
to operate during the lockdown. 9. Get references from other investors where
this that we harness the flexibility and capital power of our momentum. Basically, empowering the individual investor.
investor financing model to secure well-priced opportunities possible So, watch this space!”
Business survival during a crisis that may become available. Thus, our structure compliments 10. Don’t assume anything - ask all relevant
The Covid-19 pandemic is not the first blow to the global this environment as a vehicle for our clients to participate in questions.
community and economy, and it will not be the last. The and reap the rewards. The answer is in our name! We are in the SOURCE Opportunity Private Capital
Global Financial Crash (GFC) of 2008 was a period of panic perfect position to act on these opportunities with our clients”
where sales dried up and Banks were reluctant to lend money.
6 MAY/JUNE 2020 SA Real Estate Investor Magazine SA Real Estate Investor Magazine MAY/JUNE 2020 7
COVER STORY LOCKDOWN SURVIVAL
Real Estate 2.0 survival T
here is a lot of uncertainty and speculation around upwards. If this is done correctly, the seller will achieve the
how various sectors of the economy will perform once best result.
we fully emerge from the national lockdown and re-
post lockdown
turn to business as unusual. “For buyers, savvy property acquisitions are good
investments and in the current volatile economic
One sector of the economy that has been greatly impacted environment, increasingly so. There certainly is no better time
by the COVID-19 pandemic is the housing market along with to buy.
retail and office market sectors. While interest in the property
market has been stimulated through interest rate cuts, Debt holidays for residential bond holders
affordability remains a key concern for buyers and sellers alike. To assist bondholders South Africa’s major banks have
What to expect, trends & where to invest “The SA economy is in crisis and unfortunately politics
affects the economy,” says Dawie Roodt, economist for
introduced various measures to assist consumers who are
impacted financially by the coronavirus disaster and the
NEALE PETERSEN protracted lockdown. Most of the assistance comes in the
Efficient Group. For the last 10 years we have experienced form of three-month debt holidays on loans ranging from
crisis after crisis before Corona (BC) and were heading for mortgages to credit card balances. Some consumers will
a recession anyway as a result of mismanagement of the automatically receive these payment holidays, while others
economy resulting in unemployment highs in excess of 30%. have to apply to their banks.
He says: “Essentially state finance has collapsed. Financial assistance on offer at SA’s major banks
Expropriation without compensation will happen even it is during Covid-19 disaster
for symbolic reasons, which will result in property invasions. Absa
Poverty will soar and it will kill more people than corona while Individual customers who owe Absa money will be
business confidence is at record lows. We are still in for a in for invited to take an up to three-month repayment holiday,
a very rough ride, according to Roodt. Many are comparing regardless of the kind of loan or how much money those
the COVID-19 crisis to 1929 depression, Weimar Republic in customers earn. As of 01 April, ABSA will pre-screen
1933 and 2008 global financial crisis. The jury is still out which customers and send an SMS offering this capability
is worse, the question is what is the silver lining and positives to their customers who will be able to opt-in or out.
we can take from this crisis. Customers can contact ABSA using the following e-mail
address: bondrs@absa.co.za.
In the residential sector Adrian Goslett, Regional Director
and CEO of RE/MAX of Southern Africa, CEO RE/MAX SA Standard Bank
believes that interest rate cuts have stimulated interest among Standard Bank is offering all of its personal banking
residential buyers. This was revealed by an increase in online customers, and business clients who earn less than R20
houses searches according to Property24 during lockdown. million a year, a three-month debt holiday until the end
of June. Clients earning R7 500 or less and students will
It is unlikeIy that this peak in interest in property will result automatically receive the three-month holiday, while
in sales growth in the residential sector as few South Africans other banking clients can apply for the relief by contacting
are able to afford to make such a large investment at this time the bank. Standard Bank has offered various relief options
as the earning potential of many has been either directly or to assist homeowners towards meeting their financial
indirectly impacted as a result of COVID-19. “Cuts in interest obligations. To find out more emaildebtcarecentre@
rates are only likely to help consumers keep up with their debt standardbank.co.za or call 0860 123 000.
repayments rather than allow them to take on new debt,” says
Goslett. FNB
First National Bank (FNB) will be offering debt repayment
Affordability of property has increased. However, property holidays of up to three months to its customers, but strict
transactional costs are still too high. More distressed owners terms and conditions apply. Clients will need to contact
will be forced to sell and investors have an increase in the bank, and have a letter from their employer to show
delinquent tenants. Retail is under severe threat and could loss of income due to the novel coronavirus. Those
disappear or collapse. Less offices as a result of more people who are self-employed would need to submit financial
working remotely could impact the buying of residential statements. All FNB clients can email Collarr@fnb.co.za if
property in the future. they wish to apply or enquire about making repayment
arrangements.
If we do reach a point where too many homes enter the
market as a result of the shrinking economy and an inability Nedbank
to afford home loan repayments, the market will fall into a lull Nedbank is offering clients “individual solutions to
before correcting itself. “A flood of homes to the market will cashflow challenges” due to the coronavirus, which
lead to downward pressure on asking prices. Eventually prices includes halting debt repayments (or part thereof) for a
will drop to a point where buyers are incentivized to purchase “suitable” period. Alternatively, clients loan periods may
with
The expectations after lockdown as to how businesses
again, which could lead to the market rectifying itself through be extended or they could get more credit to manage
a possible housing boom later down the line,” Goslett explains. short term cashflow shortfalls. Contact Nedbank Home
is
survive and thrive remains to be seen, the bigger picture
Loans on 0860 553 573. However, due to high call
MD of digital auction platform BidX1, MC Du Toit’s volumes, clients are encouraged to e-mailHLCollections@
and
not looking good in the short-term. There will be winners
advice to sellers is when a fair offer is presented, it should Nedbank.co.za for assistance. Should clients want to
be considered, with the best offers being unconditional. “I enquire about a Moratorium/Payment Holiday, they are
losers and some will take more pain than others.
would advise against listing a property at a high price and able to e-mail MoratoriumRequest@Nedbank.co.za for
then negotiating down, but to rather list the property at an assistance.
opening bid, get buyers involved and negotiate the price
8 MAY/JUNE 2020 SA Real Estate Investor Magazine SA Real Estate Investor Magazine MAY/JUNE 2020 9
COVER STORY LOCKDOWN SURVIVAL
Property industry sees up to 35% workers who are usually office bound have had to get used
to forking out for the increased data costs and hardware Larger companies will try to better utilise their office space Spire Property Solutions, are offering free consultations
engagement increase during lock- necessary for them to do their jobs at home. The reality has by reducing the overall size of their workspaces, so reducing to both tenants and landlords looking for guidance on their
down: PropTech left many people across the country looking forward to the rental costs, while others may adopt more of a hybrid leases through the current crisis.
Upside of COVID-19 prospect of going back to a traditional office environment, model which sees most staff work from the office while the
“PropTech is not an adage to doing things the same way, where work is just work - and they don’t have to contend with remainder work remotely from spaces such as those offered “This too shall pass, as the saying goes, and when it does
it's a catalyst for how we transform an industry. The national pets nestling on their laptops, or children making sudden and by The Business Exchange. we do not want to be left in a position where landlords are left
lockdown has only propelled our actions, as we continue unwelcome appearances on Zoom calls. with large vacancies and being unable to service their debt
pioneering in creating interactive site maps, individualised Managing long-term risk will also become more obligations or pay staff because they have had to absorb all the
onsite sales platforms, rich video content and lead the social David Seinker, founder and CEO of The Business Exchange, important, so corporate companies can be expected to seek costs during this crisis. Equally and as importantly we do not
media scene with platforms like Facebook LIVE. Through these believes there will no returning to normal any time soon, if more flexibility in their lease terms. They may even look to want a scenario where businesses/tenants have to lay off staff
various digital avenues, lockdown has resulted in an increase ever. “The traditional office space as we once knew it, is now decentralise their head offices and possibly locate different or close their doors completely, losing their livelihoods,” says
of between 16% to 35% engagement across various property dead,” says the brain behind the company that provides departments at different addresses. Businesses of all sizes can Gregg Huntingford, CEO of Spire Property Solutions.
websites we manage, as well as an average of 126% increase serviced and flexible office space across the country. be expected to reduce lease investment and overall property
in engagement across the various social media platforms,” costs, including fit-out and furnishings going forward. “We need to ensure that there is a business home for
states Botha. “There are a number of reasons why this is so,” Seinker everyone to come back to. In order to get our economy back
4
explains. “Rather than a return to normal once this is over, on its feet as quickly as possible we need to cooperate, share
PropTech is the combination of property and technology corporates are going to have to entirely overhaul their the burden and ensure all parties’ survival, so Spire is working
working together to make the process of renting, sales, and thinking about office to accommodate a number of factors.” No more open plan with both landlords and tenants to assist with advice and
generating unique property experiences convenient, easier guidance on possible structured rental deals and long-term
1
and effortless. There is no ready-made solution when it comes survival strategies.”
to PropTech, however through the use of readily, and ever-
changing, available technologies and applications the potential The shrinking workforce The trend of the last few years for many businesses has been “After Corona (AC) and when lockdown is lifted we really need
to enhance the property market is endless. “We see this to put their employees in an open plan office space. While this to open up this economy fast, says Dawie Roodt. After Covid-19
period as a kickstart for the South African property market to may have looked good and been a clever use of floor space, it prepare for South Africa 2.0. the new future starts with a great
embrace these technologies and further digitize this industry. has meant that employees sit closer together and so are more attitude. Now is an opportunity to get mentally, physically and
Rainmaker Marketing has been at the forefront of innovation of Unfortunately, the human workforce is going to be a big exposed to the spread of germs. financially prepared. There are major opportunities for those
the property marketing industry and will continue to push the casualty of the Covid-19 lockdown. With so many businesses willing to change. It’s best to plan for the worst outcome, expect
boundaries of the traditional means,” ends Botha. making a lot less revenue than before, there have already “Before Covid-19 we already had a number of companies the best outcome and prepare for surprise.
been large-scale retrenchments across the board, and many enquire about private offices as opposed to open plan and
The practice of social distancing is not an easy feat for an companies will look to take up less space at their respective flexible space,” says Seinker. “Now, with Covid-19 and the As digital driven trends starting taking traction. We have
industry that mainly relies on personal engagement with head offices. heightened awareness around how easily germs spread, seen digital businesses such as Amazon and Zoom escalate to
clients and giving individuals tours of homes so they can many companies are going to have to rethink their open plan incredible highs never seen before. This is an indicator that the
get a feel for the area, the house and the lifestyle on offer. “Businesses will find themselves in a big office space with spaces and find ways to keep staff more separated from one fourth industrial revolution is starting to take shape. We need
Traditional, face-to-face means of communication have been an expensive lease, and not enough people to fill the desks,” another in order to lower the risk of the spread of infection.” to retool; reconnect & refocus our lives and businesses. Don’t
strained from the lead up to and even during the national Seinker predicts. Large companies will now seek to diversify miss a good crisis - Now is the opportunity to move with the
lockdown, resulting in consumers and property heavyweights and reduce risk, while also looking for smaller or serviced “While it will never again be ‘business as usual’, we can trends and to adapt, survive and thrive.
having to put their trust into the digital sphere. Through office spaces with flexible leases as opposed to five- to 10-year certainly adapt to the new normal through a combination
agreements. They will want spaces that offer other “nice-to-
SOURCES Efficient Group, RE/MAX of Southern Africa, BidX1,
technological advances made in South Africa, coupled with of innovative thinking and clever team management and
the affordable data solutions that are easier to obtain and have” services such as cleaning services, IT support and more, business scramble in order to accommodate the rapid change ABSA, Standard Bank, FNB, Nedbank, The Business Exchange,
the ever-growing popularity of social media; the connection built into the lease agreement. in office space requirements.” Spire Property Solutions
between the property market and potential purchasers has
2
been far-reaching.
“There is no getting around the fact that as South Africans,
Higher health and safety
expectations
“PropTech is not an
we like to view property first-hand and it will always be first-
prize to get a potential client to site or to a home. The national adage to doing things
lockdown has been a challenge for our economy, however,
I believe this has really encouraged industries, especially “Going forward, employees will expect cleaner offices and the same way, it’s a
property, to truly become more innovative. By utilizing better measures to ensure their safety,” says Seinker. “They will
PropTech and other digital tools, we have experienced first- also be apprehensive about touching surfaces that others catalyst for how we
hand how the property purchasing process can be enriched,” have touched before them.”
explains Stefan Botha, Director of Rainmaker Marketing. transform an industry.
Those who can afford it will look into automatic doors and
Commercial market - Is the traditional office space a
elevators that don’t require users to even press a button. Those The national lockdown
who can’t will need to provide hand sanitiser at all public touch
thing of the past?
Covid-19 and the South African lockdown have forced
points as people’s concerns about possible contamination will has only propelled our
be with us for a very long time going forward.
companies across the board to embrace strategies that allow actions.”
3
their employees to continue working, but from home. And
while this has been a relief for many, who no longer have to
face the daily traffic grind and can work in their pyjamas if Cost savings
they choose, for others the work-from-home alternative has
proven to be difficult and stressful.
“Businesses would have lost a lot of money during the
Parents have had to learn to juggle full-day parenting lockdown, and will have to look at how to trim their budgets
and home-schooling with their work demands, while other once employees return to work,” cautions Seinker.
10 MAY/JUNE 2020 SA Real Estate Investor Magazine SA Real Estate Investor Magazine MAY/JUNE 2020 11
TECHNOLOGY
How PropTech is disrupting P
roptech (like many other terms that end in “tech”) has Streamlined processes
become something of a fancy buzzword, which is With most property companies having to embrace remote
why it is useful to turn to an expert on the matter for work, they've also had to become more adept at using new
the property industry
a comprehensive definition. James Dearsley, co-founder technologies. This time of social and economic uncertainty
of Unissu, explains that proptech is “one small part of a also presents an opportunity for the property industry to
wider digital transformation [that] considers both the streamline processes, to embrace digital technologies more
technological and mentality change of the real estate widely, to rethink age-old ways of thinking and doing, and
industry”. In its simplest form, proptech is the application to strive more earnestly to ensure the client is at the heart of
And why it’s necessary during the Covid-19 of technology for new ways of conducting business in the
property sector, with the focus on efficiency and impact.
what we do.
pandemic & beyond The stats certainly support the role digital technology is
When the world emerges from the crisis, the companies
that stand out will be those who've leveraged these
playing in shaping various aspects of the sector. A global technologies to provide clients with the best possible
CARL COETZEE
survey conducted by KPMG in 2018 showed that 97% of products and services, amidst the limitations and uncertainty
the 270 respondents from 30 countries believed digital that prevailed.
innovations are influencing their businesses somewhat.
In South Africa too we’re adopting more PropTech solutions
in various parts of the sector and there’s every likelihood that a
“Proptech is the application
digital-first approach to property will become more pervasive
in the coming months and years, and particularly as we look
of technology for new ways
for innovative ways to strengthen and grow the industry
amidst the global Covid-19 pandemic. Proptech can help
of conducting business in
make the industry more efficient and more resilient, with the
purpose of driving more value for clients in the most relevant
the property sector, with
way. the focus on efficiency and
Here are some of the key ways in which digital technologies
are likely to impact the property market, many of which are
impact.”
already at play.
MD of the Rawson Property Group, Tony Clark says: “There’s
Data & analytics no doubt that we have needed to act quickly to continue to
Data is increasingly becoming the modern business’s most serve our customers in these challenging times. No matter
important and valuable asset. The ability to capture, interpret what is happening in the world, people still need a roof over
and analyse relevant information makes it easier to spot their heads, which will always mean that they need to be able
trends and make strategic decisions that have a positive to keep buying, selling and renting property. We have also
impact on the business at large. seen a rise in the urgency with which some of our clients are
needing assistance.”
Data effectively takes the guesswork out of decision-
making, which in the property sector can help decision- “The value of virtual show houses at the moment is
makers predict market fluctuations and plan accordingly, as obvious. It’s going to be some time before any of us will feel
well as take advantage of opportunities. And, as technology comfortable having dozens of strangers visiting our homes, so
becomes more sophisticated, it becomes easier to leverage enabling them to take a live, high-quality, virtual walkthrough
the tools needed to access and interpret the data. of our properties, and having an interactive experience with
our agents in real time, is essential,” says Clarke.
Consumer empowerment “More and more, we’re seeing buyers and sellers, landlords
The transparency and convenience that digital technology and tenants looking for property services that are adaptable
allows for means much of the power has shifted to consumers, to their personal circumstances. If the Coronavirus pandemic
which in turn means they are able to make more informed has done anything for our industry, it has shown us that sellers
decisions. and landlords will be demanding virtual solutions to ensure
that their interaction with the marketplace is as remote as
At the most basic level the nature of the interaction possible so as to preserve the safety element so desperately
between the agent and buyer has changed significantly as required while social distancing is commonplace,” says Clarke.
digital resources bring the information about properties closer
to them, helping them narrow their search and empower As a sector we need to be mindful of the impact
While it’s too soon to make accurate predictions on what the them with all the relevant information pertaining to their
search and interests. Having said that, the role estate agents
technology has on our business, but we also need to
embrace its power and potential for improving both business
impact of the lockdown and the global Covid-19 pandemic play in property transactions remain vital. operations and client experiences. Though only time will
tell, early indications are that those who are strategically
will have on the property market, it is sure to disrupt the While the digital tools help to make information more
readily available to the client, the agent offers advice and
embracing PropTech are likely to better weather the storms in
the coming years.
industry one way or another. And disruption, history teaches expertise that are invaluable in the home-buying process.
When clients are equipped with the right knowledge and
us, isn’t necessarily a bad thing. In fact, it’s often exactly what resources, they are able to make smarter decisions that
ultimately enhance the industry. SOURCES BetterBond, Unissu, KPMG &
an industry needs to bring about new opportunities. Rawson Property Group
12 MAY/JUNE 2020 SA Real Estate Investor Magazine SA Real Estate Investor Magazine MAY/JUNE 2020 13
Secure structures for our
RESIDENTIAL FINANCE PROPERTY DEVELOPMEN
P/A
%
21
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16 22 25
Life after Lockdown How to Invest & Secure Returns Surviving the Property
VILLAGE
What comes next for the residential NOUVEAU,
During this disruption, WC
investors need Pandemic SO
property market? With the first to look for vehicles which protect The lockdown has placed immense
quarter ending only five days and preserve their capital with pressure on the real estate industry
into the national lockdown, the structures that are geared to weather to find innovative ways to sell homes.
trends analysis depicted an ideal the fluctuations we are currently Though challenging, real estate agents
environment for homebuyers. experiencing. are finding digital ways to line up
deals.
TOP TRENDING FOR RESIDENTIAL ONLINE
P/A
Visit www.reimag.co.za for the latest updates online.
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SOUTHWARK VILLAGE, WC
Buy When There’s Blood On Deeds Office Reopening Planning to Sell? Don’t Exit
the Streets Various Deeds Offices around the Market Now
Due to fear and uncertainty, most country are permitted to open. This is If your home has already been
people end up selling when they very positive news for homeowners listed for sale, now is not the time
should be buying. But property whose concluded property sales can to take it off the market. Home
has always remained
2nd aFloor,
market that
Edward
now be2processed
Building, Edward
and proceeds buying has not stopped and is
Street,
bounces back with resilience. received. likely to pick up.
Bellville, 7530, Cape Town, South Africa
Reg: 2004/013672/07 SA Real Estate Investor Magazine MAY/JUNE 2020 15
INVESTOR INTELLIGENCE
Life after
levels of employment in particular, which means that major
1st Quarter disruptions in other sectors will have at least some impact
Jan - Mar on the property market. Having said that, property tends
2020 to be a far more resilient investment type than most. We’ve
Lockdown
seen equities being significantly affected, while property has
Quarter 1
Jan - Mar 2019
Quarter 1
Jan - Mar 2020
Quarter 1
Jan - Mar 2019
Quarter 1
Jan - Mar 2020
remained fairly stable.”
R1 225 490 R1 218 686 R944 260 R980 069
1200
-0,6% 3,8% “The question around the pandemic’s
38 impact on the property market
What comes next for the is an important one, as the real
1000 Average age of
bond applicants
estate market is keenly affected by
residential property market?
Approved bond Approved bond
R1 051 066 R1 099 225
800
(85.8%) (90,2%)
4,6%
600
Approved bond
R851 666
(90.2%)
5,9%
Approved bond
R902 026
(92.0%) 34 the overall health of the economy,
400
Deposit Deposit
Average age for
1st time
bond applicants
consumer confidence, & levels of
employment in particular.”
R174 424 R119 461 Deposit Deposit
(14,2%) (9,8%)
-31,0% R92 594 R78 043
200 (9.8%) (8,0%)
- 18,4%
Home loan
00 applications
are submitted
Dyer adds: “Whilst there will be some challenging times
Average purchase price Average purchase price
ahead for consumers, we don’t believe that the outlook for
to multiple
* banks, thus
for 1st time buyers ensuring a
property is all doom and gloom. The prime rate of interest is
significantly
better
Quarter 1 Quarter 1 Quarter 1 Quarter 1 chance of a
Jan - Mar Jan - Mar Jan - Mar Jan - Mar
2019 2020 2019 2020 2019 2020 2019 2020
competitive
approval at the lowest level it has been since 1973, with the prospect of
65.6% 68.8% 41,2% 41.1% 81.6% 83.4% Prime*
plus
Prime*
minus potential further rate cuts. For first time homebuyers the cost
0.11% -0.03%
of renting versus buying is now swinging very much in favour
Successful
bond approval
Additional
successful
Total ooba
approval rate
Average
interest rate
More than
8 out of 10 bonds
of buying, especially for properties below R1m, where there
rate by one bond approval processed by
bank rate by multiple
banks
*Current prime
lending rate = 7.75% ooba are
approved
is no transfer duty applicable. There are likely to be attractive
deals in the market as sellers who have been holding on for
Call ooba on 0860 00 66 22, visit www.ooba.co.za
some time to sell their properties are forced to reduce prices,
R
which should bolster demand in the property industry.
hys Dyer, CEO of ooba, says: “Over the past few
quarters, banks were more inclined to offer affordable
Buyer’s market
and accessible credit. ooba’s approval rate in Q1 20
“A situation where the supply of property exceeds the
increased by a further 1.8% since the first quarter of 2019,
demand for property, bodes well for those looking to
with over 83% of our homebuyers successfully securing a
purchase property since prices are generally lower in this type
home loan. The approval rate on applications looking for
of market. Add to that the fact that banks are open to offering
a 100% loan soared to 82.9% in Q1 20. During Q1 20 an
100% home loans to qualifying individuals,” says Coetzee.
unprecedented 61% of all applications received by ooba
were for 100% finance, up over 7% from Q1 19’s 57%. Banks
He adds: “The threshold on transfer duty was raised to R1
have been steadily reducing their deposit requirements,
million recently, meaning that transfer duty costs are lower
while at the same time reducing their interest rates as they
for buyers, and that it is speculated that interest rates will be
aggressively compete for a larger share of the home loan
dropped by at least a further 25 basis points later this week.
market.”
Now is a good time for investors to remain at least slightly
positive about the immediate future of property.”
The average interest rate that ooba achieved for
homebuyers in Q1 20 was 0.03% below prime, 14 basis points
Home Loan applications
cheaper than 0.11% above prime in Q1 19.
Given the complexities facing buyers in the year ahead, using
a home loan comparison service is more critical than ever
Dyer says: “Our optimistic outlook in Q1 for market
before. Prospective homeowners can use ooba’s services to
conditions for the rest of 2020 is now tempered with
shop around for the most competitive home loan from the
significant uncertainty as we wait to for the Covid-19
major lenders. By obtaining a home loan pre-qualification
lockdown to end and to understand how quickly the property
through a Bond Indicator or Qualified Buyers Certificate,
market can get back to ‘business as usual’. In just a few weeks
potential buyers will have a clear indication of their credit
of April, we have seen unprecedented financial distress, with
With the first quarter of 2020 ending only five days into the Covid-19 many South Africans facing job uncertainty and potential
score and credit profile, as well as a certificate outlining the
house price range they can afford.
national lockdown, the trends analysis depicted an ideal environment business failure and the economy likely to shrink significantly
over the remainder of the year.”
for homebuyers. Bank home loan approval rates on 100% finance “By pre-qualifying, prospective homebuyers can
confidently make an accurate price offer on their dream
Carl Coetzee, CEO of Betterbond adds: “The question
applications were at levels last seen more than 12 years ago. The around the pandemic’s impact on the property market is an
property knowing that obtaining bond finance is a mere
Average Purchase Price dropped by 0.6% making acquiring a new important one, as the real estate market is keenly affected by
formality,” concludes Dyer.
the overall health of the economy, consumer confidence, and SOURCE ooba home loans & Betterbond
home more affordable in the prevailing low interest rate environment.
16 MAY/JUNE 2020 SA Real Estate Investor Magazine SA Real Estate Investor Magazine MAY/JUNE 2020 17LEGAL
SARS sexy tax benefit ON S HOW
SATURDAYS
for property investors 11:00 - 16:00
How to qualify for Section 13 SEX
E
veryone knows that creating a financial bolbolt
holethole through property investment also enables
you to generate wealth and create a financial
legacy for your children to enjoy. Property investment is,
comparatively, a more robust financial move than plunging
your money into the stock market or similarly volatile
options. But did you know that SARS has a sexy tax benefit
for property investors?
What is Section 13 SEX of the Income Tax Act?
Basically, SARS wants to encourage investment and the
provision of rental homes into the market, so SEX13 allows
you to decrease your taxable income. A buy-to-let investor
can claim an allowance of 55% of the purchase price. are virtually paying for themselves from day one,” says CEO &
founder of Ryan’s Realty, Development Specialists, Ryan van
Heerden.
FERNDALE | RANDBURG
QUALIFYING CRITERIA
1. The unit must be new and unused, so buying direct An added incentive is the 12-month rental guarantee
offered to investors, making it an exceptionally secure
from a developer qualifies. investment. The unique “Wallet” system also ensures that Property demand in Randburg is high
2. Unit must be solely for the trade of the taxpayer, i.e. prepaid water & electricity are the last items to be settled if
it must be a rental unit. rent is short paid by a tenant.
due to the good value for money and
3. The taxpayer (or entity could be a trust or company)
accessibility to the Sandton CBD.
must own at least 5 rental units, all of which don’t
Location, location, location! The Base is surrounded
by a multitude of small to large businesses, corporations, 1 SMART HOME READY If you are looking for solid cashflow,
need to be purchased all at once, but the allowance universities, gyms, colleges, hospitals, plenty of shopping capital growth, and a sexy tax
4.
only kicks in once the 5th unit is acquired.
The unit must be in sunny South Africa.
centres and night life opportunities. The brand new, state-
of-the-art shopping mall, Ferndale on Republic, is just two
2 ENERGY EFFICIENT deduction, The Base ticks all the boxes.
minutes' drive away. While Sandton, Bryanston and Rosebank
is just a 15-minute drive, making it the perfect "Base" for 3 FIBRE CONNECTED Contact us today for your Info Pack.
Director of Accounting firm De Wet van Schalkwyk, young professionals, from which they can work, live and play.
1 BED R569k
Stephan van Schalkwyk explains:
The Base Apartments boast the latest in technology and
FROM
“Say you purchase 5 units @ R600,000 = R3,000,000
purchase value. SARS will allow 55% of the acquisition cost as design trends with Smart3 Living. These modern apartments 1 YEAR RENTAL GUARANTEE
an allowance against taxable income. So R3,000,000 x 55% = feature state-of-the-art keyless entry, high quality energy
R1,650,000 that SARS will allow you as a tax deduction over 20 efficient products and they will be Smart Home ready and SEX13 TAX BENEFIT
years. This totals R82,500 per annum for 20 years. So, if you are fibre connected.
N O T R A N S F E R COSTS
at the marginal income tax rate of 45%, then R37,125 is the tax
So, if you are looking for solid cashflow, capital growth, LOW LEVIES
saving every year…for 20 years.” Occupation expected end 2021.
and a sexy tax deduction, The Base ticks all the boxes. Contact
Ryans Realty today for more information. Only R10,000 to secure. T&Cs Apply. Contact us for more info.
The Base Apartments ticks all the boxes
The Base Apartments is a new residential development in
Ferndale, Randburg. It offers one-bedroom apartments from Contact Details:
R569,000, making it the perfect buy for investors looking for Ryan van Heerden, CEO & founder of Ryan’s Realty,
Development Specialists
solid cashflow and capital growth, as well as the opportunity
to benefit from the SEX13 tax deduction. +27 82 567 0735
ryan@ryansrealty.co.za
C O N TA C T U S N O W
www.ryansrealty.co.za
"The current high demand for one bed apartments in
Ferndale is expected to continue unabated for the foreseeable
future and rentals of around R5750 per month, excluding
www.thebase.joburg
082 567 0735
utilities, should be comfortably achievable as completion is ryan@ryansrealty.co.za
expected in the 4th Quarter of 2021. Levies are low and rent to
value is around 1% of the purchase price, so the apartments SOURCE Ryan’s Realty www.thebase.joburg
18 MAY/JUNE 2020 SA Real Estate Investor MagazineMANAGING
How to juggle a multitude
of responsibilities
The value of sub-metering in real estate
W
hether it’s modernising existing infrastructure, and manage utilities. The tenants will take control of their
building richer customer relationships or usage and spend which not only reduces the risk of non-
streamlining admin, sub-metering solutions are payment, but of them contesting charges. Instead of utility
increasingly recognised as powerful solutions in the real usage split across different users, tenants are only charged for
estate industry. what they use which makes a big difference. This means less
time spent managing complex tenant non-payment cases,
Their blend of reliable technology with accessible digital but also makes the way for far better relationship building.
tools and robust visibility has made them an invaluable
resource. Using modern and relevant sub-metering solutions, “Our sub-metering platform offers the real estate owner
real estate owners can improve how utilities are managed and access to an online dashboard that provides them with instant
controlled without impacting on tenant delight. insight into meters, reports and payments,” says Franze.
“This offers you exceptional visibility into meter status and
“As the owner of any slice of real estate, you’re expected to payments with reports that can be fine tuned to suit your
juggle a multitude of responsibilities, perfectly,” says Michael specific requirements. This layer of transparency is extremely
Franze, Managing Director at Citiq Prepaid. beneficial in terms of building tenant trust but it also assures
of far more granular insight into utilities and potential
“Mistakes can not only cost you time, but reputation and problems.”
tenant happiness. One area that often gives real estate owners
a headache because it always takes a lot more time than it Prepaid meters not only minimise admin and stress, but
should, is utilities. You have to ensure that bills are paid on maximise efficiency, transparency and payments. With Citiq
time, that the lights stay on, and that invoices are sent out Prepaid, real estate owners gain access to an ecosystem
on time. You have to do all this while managing the vagaries of prepaid meters, services, support and online data that
of municipality billing and tenant payments. Sub-metering are designed to streamline processes and transform utility
effectively solves all these problems in one.” management.
Investing into a reliable sub-metering system that’s easy to
use and install will immediately change the way you approach SOURCE Citiq Prepaid
20 MAY/JUNE 2020 SA Real Estate Investor MagazineYou can also read
