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COVID-19 Impacts on South Africa Real Estate

4/16/2020

Elaine Wilson 
Divisional Director Research 

 

Economy Overview 

As the number of COVID-19 cases continues to rise globally, South Africa imposed a strict 21-day lockdown on the country, effective midnight 26 March 2020 and now has been extended by a further 14-days, set to end 30 April 2020, in a bid to flatten the curve and minimise the effects on its already fragile healthcare system. For a country riddled with inequality and a high percentage of immune compromised individuals, the rapid response from Government to implement the lockdown was critical. However, the warranted decision comes at a cost of placing an already weak economy under further pressure with the projection of a contraction of between 2% and 4%. 

Retail Overview 

The retail sector in South Africa will be hit with serious ramifications amid the decisions to curb the spread of the pandemic. With all retailers deemed as non-essential services and goods not being able to trade during the 21-day lockdown period, both landlords and retailers find themselves in uncharted territory with many retailers refusing to pay rental for the duration of the lockdown, a trend seen throughout the globe. 

Industrial Overview 

With production slowdown in South Africa, an already struggling industrial sector is set to endure even hard times leaving already high vacancy levels more constrained. Due to the lockdown, rental growth is set to slow even further while business confidence is also likely to continue to fall. 

Office Overview 

The office market which is already going through a transformation, with an increase demand for serviced offices, open plan working environments and hot-desking, resulting in reduced office space per person, will have to wait and see what effects the lockdown brings, with many people optimally operating in a work from home situation, enforced by the lockdown. 

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