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Focusing on the green shoots: why there’s reason for hope in SA’s commercial property sector in 2023
It was renowned South African writer, Alan Paton who said, “South Africa is a place where you despair on Monday and hope on Tuesday”. He said this in 1985, and in a completely different context. But, more than 40 years later, as we navigate interesting times, the quote comes quite powerfully to mind.
As lights switch on and off and political pendulums swing, there are a number of reasons to despair at the moment. I won’t dwell on them. Instead, I’d like to focus on trends in the real estate industry that give me reason to “hope on Tuesday”.
A year of green shoots
The Covid-19 pandemic had commercial real estate against the ropes, but over the past year, we’ve seen distinct green shoots of progress. Perhaps one of the most encouraging signs has been the strong recovery in foot traffic at major shopping centres as people once more physically engage with retail spaces.
In fact, recent data has shown that mall foot traffic in some areas has recovered to, and in some cases, exceeded pre-Covid levels. For our clients, this is a promising sign for 2023. When the Broll Property Management team joined property professionals on a South African Council of Shopping Centres (SACSC) tour to the United States and Mexico earlier this year, it was gratifying to see innovation around spaces such as open-air malls and immersive experiences.
Sustainability means survival
Tied to this is a trend that I see as being perhaps the greatest reason for hope: a very decisive shift in the way corporates have embraced sustainability over the past year. As businesses grapple with protracted loadshedding and a scarcity of water in some areas, it’s clear that environmental, social and corporate governance (ESG) is no longer a nice-to-have to bolster your annual report. These principles have become mandatory for survival.
And, it’s heartening to see the resilience and adaptability with which many South African businesses have risen to the challenge. While the vast majority of our energy still comes from coal, the uptake in renewable energy over the past year has been significant, with some reports pointing to a clear boom in solar installations. One report shows South Africa accounted for 56% of solar photovoltaic installations across African utility-scale plants; commercial, industrial, agriculture, and mining sites, and households by the end of last year.
Recognising how much the market needs to embrace and succeed at sustainability, we’ve launched an Energy, Water and Sustainability division to assist clients with navigating the sustainability journey - whether it’s working out how to ensure buildings are optimised to be energy efficient; sourcing and funding sustainability initiatives; or navigating the complex regulatory environment.
Find partners who can add value for the long journey ahead
This brings me to a third trend that I see continuing into 2023: an increasing reliance on long-term partnerships to weather troubled times. While many predictions point to an easing in global inflation next year, South Africans are expected to have to weather a tough 2023. This means as we see in every sector, being cost-effective and searching for cost-effective partners is going to be a defining attribute of businesses that remain resilient in 2023.
We’re finding that it means operating at two speeds: on the one hand, capitalising on quick wins and prioritising the short-term work that will help our clients weather the storm; while also maintaining a long-term sustainability strategy. Simply put, in 2023, I expect more clients to look for partnerships that deliver value, and maintain those relationships for the long-haul, because ultimately a load shared is a load halved.
So there is, I believe, a significant reason to hope on Tuesday.
Malcolm Horne is the Group CEO of the Broll Property Group, a leading commercial property company whose reach extends from South Africa across 15 Sub-Saharan African countries and into the Indian Ocean Islands.