The March draconian lockdowns and other policies put a damper on all business activities. How is the economy doing now?
South Africa is the second-largest economy in Africa. Despite its highly developed infrastructure and extensive mineral wealth, it’s ranked as low in equalities for its residents. Only 40% of the 58 million inhabitants live in formal housing. The rest are housed in tribal settings and township shacks. Pre-COVID-19 unemployment stood at 30%. Notwithstanding the inequality existing in the country, South Africa has a vibrant real estate market comprising over 6.5 million homes valued at over $3 trillion, with more than 250,000 residential home sales in 2019. The real estate market, like that in New Zealand, has many similarities to how real estate is conducted in the United States.
The March arrival of the COVID-19 virus in the country has turned real estate on its head as the government has imposed one of the more draconian lockdowns and stay-at-home policies in the world. Since March, people may only leave their homes for essential foods and medical supplies. Only essential service workers carrying permits may travel any distance before being confronted with an army-manned roadblock. There are no train or bus services, all international and domestic air travel is canceled, and a national evening curfew exists. As of June 1, this has seemingly worked as the country has only 14,000 active cases and 650 deaths, but the cost to individuals through job losses and the country’s economy has yet to be counted.
No Real Estate Closings
Real estate may only be carried out virtually via Zoom, virtual tours, virtual listings, social media, and other related technology. This has not been easy due to the poor quality of internet services in many parts of the country. Fortunately, many foreign-based real estate groups are represented, like Keller Williams, RE/MAX, Century 21, ERA, Harcourts, and Engle & Volkers. They are introducing some of the tech products available in their countries of origin to the local market.
Since March, there have been no real estate closings in residential, commercial, industrial or agriculture sectors as the Deeds Registry Office has been closed. This has been severe for the over 50,000 commission-based agents and brokers who have had no income. The government announced a risk-based opening of the economy with five levels of risk for various industries. On May 1, the country moved from the maximum risk Level 5 to Level 4. Sadly, real estate was earmarked to open at Level 2 which meant a long wait for the industry to open real estate offices and meet clients one-on-one. As of June 1; however, the country moved to Level 3. Real estate and the Deeds Registry office may open with strict protocols.
One of the positives to emerge has been the unification of organizations representing residential, commercial, industrial real estate, as well as business brokers and auctioneers into one national body. The National Property Professionals Council will represent the industry in all matters pertaining to the sector. The industry has come together, which bodes well for the future as the industry recovers from the enforced standstill.
Peter Gilmour is REAL Trends chief foreign correspondent and Chairman Emeritus and co-founder of RE/MAX of Southern Africa.