Construction World August 2022

PROPERTY

TUHF IS OPTIMISTIC ABOUT RENEWED GROWTH IN KZN PROPERTY MARKETS Following the unrest in July 2021, the floodings earlier this year, and the continued threat of the ‘construction mafia’ in the province, the Durban CBD has been slow to recover. But this doesn’t mean property investors have lost their appetite for inner-city investing, according to Sershin Moodley, TUHF Regional

Manager for KZN and Free State. T he human, social and economic impact of the July 2021 unrest have been significant in Kwa-Zulu Natal (KZN). Adding to the complexity of the situation has been the April 2022 floodings in the province which only exacerbated the challenges of repairing infrastructure and getting KZN fully operational. And then there has been the rise of the so-called ‘construction mafia’ that has seen a criminal element holding construction sites to ransom and demanding builders use only their people to cover a portion of the local procurement requirement. It hardly comes as a surprise then that recovery has been slow, with individuals, local companies and multinationals opting not to rebuild their damaged properties within Durban. Furthermore, it has become more expensive over the

themselves in the Durban CBD, could see KZN experience increased investment despite the perceived risk,” says Moodley. “Firstly, micro-units are still popular, as people are downsizing because of the economic impacts of the COVID-19 pandemic. Secondly, many are looking for more communal living areas with their families instead of staying at the outskirts of the city. And finally, there is a short supply of quality student residential offerings in and around Durban. With the city becoming a hotspot for tertiary education, there will be a growing need to house out-of-towners around the universities.” “The regrettable events of the past 12-months have certainly given some investors reason to pause, but these three trends have not subsided and the

past 12-months to put up new buildings in the province. This can be attributed to the shortage of materials and the continually increasing steel prices. For instance, between this time last year and now, builders can pay substantially more for a ton of steel resulting in a significant knock-on effect. TUHF customers must now invest even more from their own pocket, leaving them with precious little wiggle room to cover any unforeseen costs. On the upside, however, TUHF is seeing new investors take up the opportunity to establish themselves in the industrial area surrounding the CBD. This speaks volumes to the resilience of the inner-city property market. “Three major trends, and the fact that new companies are establishing

AGILITY AND RESILIENCE IN EXECUTING A FOCUSED STRATEGY Just over two years ago the world was upended by the COVID-19 pandemic, an unprecedented global health crisis. Earlier this year, further geo-political upheaval in Europe through the Russian invasion of Ukraine has either directly or indirectly affected South Africans. The global effects of these shocks cannot be understated and require a heightened level of resilience and agility from businesses, their boards and financial and operational teams alike. By Raj Nana, Attacq CFO.

T he property sector was significantly affected by the various national lockdowns during the first 18 months of the pandemic. Around 50% of Attacq’s portfolio consists of retail (retail experience hubs) with the balance comprising office (collaboration hubs) and light industrial (logistics hubs). Our response was simple: keep our clients in business, keep our assets fully occupied and be proactive in managing these risks with our stakeholders. During this period, we assessed each client’s situation on a case-by-case basis and

difficult decision making. We could not predict the length and breadth of the pandemic and therefore acted prudently. We identified assets for disposal and executed on these in a short time frame. During this period, R2,8bn of assets were disposed of, and gearing reduced from 46,6% to 38%. Arenewedpost-Pandemicfocus Recently, the focus has shifted to income and yields. Much of the lease deal making during the pandemic was short term, with a view of not locking in low

provided R187m in total Covid-related relief. The silver lining was that most of our clients weathered the storm and our relationships with them are stronger than they have ever been. Since then, our retail valuations have stabilised and the most recent turnover performances show a marked improvement, exceeding pre pandemic performances. In addition, our other focus during this period was managing the balance sheet – ensuring we had a strong balance sheet together with a healthy liquidity position. Sometimes, this required

20 CONSTRUCTION WORLD AUGUST 2022