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Oct 01, 2007:
After discussing the impact that economic and social drivers have on the property market in South Africa, property economist Francois Viruly of Viruly Consulting takes a look at how technological factors affect it. By Kara Michaels
Viruly says "technology and the environment" is the single biggest issue in the property market. "We used to think that increasing the value of a property was achieved by rezoning it from residential to commercial," he says.
"This is partly true. However, the biggest value in housing at the moment is whether electricity is available or not.
"The second biggest issue is the environmental issues of our land. The point I'd like to make here is that more and more developers are not looking at Greenfields anymore. Currently, the name of the game is renovation. To renovate is quicker and easier and yields better returns."
Viruly predicts that the state will be the biggest property player in the next 10 years.
"The other point to bear in mind is who owns the Brownfields in South Africa. Brownfields are a state-owned enterprise. I'm taking the view that the state will be biggest property player in the next 10 years because it owns this land which is developable.
"It's a lot easier to find land around railway tracks or a harbour to develop. The Greenfields out there pose a lot more difficulty."
Viruly points out that many people are still unconcerned about environmental issues. "They say 'who cares' and that 'environmental issues can wait', but they are wrong in this regard," he says.
"We live in a world where we don't know where a company is owned. A UK company has to report on financial, social and environmental factors and the leases and properties that it will take up are influenced by these factors. So if we want to attract foreign companies we need to move in this particular direction."
Viruly also points out that the Gautrain is making a big impact on the property market, especially as far as offices are concerned. "More people are making career decisions on where their offices are. They will for instance not work for a particular company if it means travelling for two hours.
"Offices are effectively moving closer and closer to where people live. This is where the townships play a role as we move into the future of the property market." – Kara Michaels
