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Property markets & Covid-19: Biggest Winners and Losers

The 2020 global economy has experienced a seismic shift in the past four months of the year due to the lockdown caused by the Covid-19 pandemic resulting in a multitude of job losses, companies scaling down or closing, and property for both the residential and commercial sectors, landlords have given their tenants rent holidays or deferments with all types of adjustments to keep afloat.

Despite the challenges businesses have faced in recent months, many new businesses are projected to survive and, in some cases, come out as industry leaders out of this pandemic.

Chairman of the Cape Town Central City Improvement District and CEO of Boxwood Property Fund, Rob Kane says “we need to work together to find ways to support one another as we can expect another three to five years of tough times ahead.”

Why it’s still worth investing in property

The property industry was hit hard by the first stages of lockdown – level 5 and 4 – and it’s clear that the industry will experience some knock-on effects long after the lockdown has been lifted, which will have many losers but also will see the emergence of some winners. Real estate remains a great way to grow financial independence.

Having been placed under isolation in the confines of our own homes for an extended period of time has prompted an increasing number of many homeowners to take a look at the way they live – not solely focusing on the economic aspects, given the recessionary environment, but also focusing on people asking themselves what it is that’s really important in their lives.

With the best guidance, planning, and knowledge, it’s an excellent time to snap up amazing properties on a bargain and rare-gem properties that may be high-risk in the current market but have the potential to produce incredible returns in the future.

The biggest upside in the entry-level residential sector to come out of the Covid-19 climate has been the 2% interest rate reduction. South Africa has seen a prime interest rate standing at 7.25% which represents a 47-year low.

Sell your home for the best price possible

What impact this will have on the real estate market in South Africa is yet to be seen as this is the major question. “We are already seeing more cash buyers – including investors, returning to the marketplace, capitalizing on opportunities to acquire value-for-money residential properties in the current buyers’ market, including those up to R1 million which require zero transfer duty” says Dr. Andrew Golding, chief executive of the Pam Golding Property group.

There has also been an increase in offshore investment, with South African investors moving into offshore assets and investing in property in countries such as the UK, Portugal, United States, Mauritius, and other European destinations. Many high-net-worth investors have lost confidence in the South African economy because of a slowdown in economic growth, leading to a downgrade to junk status. Many investors want to protect themselves against the volatile Rand, political uncertainty and an economy that has contracted more than 7% already.

It wouldn’t be accurate to look at the entirety of the real estate industry through a single lens as there are indications of success, despite the Covid-19 pandemic and lockdown restrictions.

There are clear winners in the digital economy, e-commerce and related property digital services to come out of Covid-19. Included in the success stories are aligned businesses such as data centres, warehousing and storage in the industrial sector as well as logistics assets for product delivery and supply chain.

For more insights in what potential home buyers will be looking for post-lockdown, read our blog post about the 4 features in homes that buyers will be looking at post-lockdown.

At MMR, we are committed to making your real estate dreams a success and help you find your new home. Contact us today and get the best advice on house buying in the best area for you. We look forward to hearing from you.

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