Page 3 - SAPOA Property News - Volume 1

MESSAGE FROM THE CEO
SAPOA
PROPERTY NEWS
3 The Landlords have offered rental relief to SMME tenants (with turnover of less R80 million) ranging between 60% and 100% rent discount for the month of of April We have offered the large retail tenants 70% discount on rent and operating costs provided they pay for utilities and and rates and and taxes Retail tenants have offered to pay only 20% of the rent (i e e e 80% discount on basic rent operating costs and and and rates and and and taxes) and and and for utilities Landlords have thus also been affected by the nationwide lockdown and have not received any assistance from government What do we get in in return in in an environment where businesses are filing for bankruptcy and a a a a marked increase in in unemployment? What you getting is Municipalities that have budgeted for salary increases Our direct approach to a a a number of Municipalities has not been well received with only 1 or 2 of them assisting with rates deferments Their business as usual approach concerning commercial property owners is a a cause of concern It is becoming increasingly clear that current situation is unsustainable
for the the private sector I hold the the view that it will become increasingly difficult to plan for the future as far as investments and property developments are concerned These arbitrary and ad-hoc decisions around property rates will lead to further value destruction a a a decrease in in in local and international investments which will be followed by a further contraction in economic activity To demand a a a bigger slice of a a a shrinking cake is what property rates increases amounts to last bit out of tax paying property owners municipalities should become more efficient address corruption and incentivise more investment through realistic rates and good service delivery There is a a a misconception that commercial property owners can go on absorbing these exorbitant increases forever They cannot and sadly it affects large and small business alike as it it makes its way into the pricing of goods and services Ultimately SA will pay a a a a a dear price as properties will lose value investments will continue to move offshore (coupled with our
desire to continue with property developments slowly diminishing) and this will give way to rapid urban decay (as is already the case) We will continue to to monitor the hotspots with regards to Property Rates abuses and will further actively warn the property industry to carefully consider investing or starting new developments in in Cities which abuse property rates Property Rates Revenue Increases
3 eThekwini 1 4 Tshwane
5 Ekurheleni 1 1 3 3 3 3 8% 8% 13 8% 8% Buffalo City Johannesburg Msunduzi Ekurheleni Mbombela Nelson Mandela Johannesburg Polokwane eThekwini Polokwane Polokwane Johannesburg Tshwane
eThekwini Buffalo City Mangaung Mbombela Cape Town
2018/19 2018/19 2019/20 2017/18 2018/19 2017/18 2019/20 2019/20 2017/18 2017/18 2018/19 2017/18 2017/18 2020/21* 2017/18 2017/18 2019/20 2018/19 If Municipalities want to attract further investments they should set an example by tackling corruption tackling their own own costs slim down bloated bureaucracy and stop insulting the public with salary increases in in times of a a a Disaster Instead of filling gaping municipal budgetary holes by squeezing the Municipality 2 Cape Town
6 Nelson Mandela 8 Mangaung 10 Msunduzi Averages
3 1 2017/18 4 8% 16 8% 13 3%
12 9% 16 0% 8 3%
15 4% 1 1 2018/19 10 0% 8 5% 45 7% 4 5% 15 5% 4 3%
23 3%
15 0% 1 1 1 2019/20 3 8% 5 0% -8 3%
20 0% 33 3%
11 8% 11 1%
2020/21 (see note 2)
15 1%
35 8% 2 21 7% Not available
6 2%
14 0% 14 4% 1 30 3%
22 4% 8 7% 6 0% 8 2%
45 7% 35 8% 33 3%
30 3%
23 3%
22 4% 21 7% 20 0% 16 8% 16 0% 15 5% 15 1%
14 4% 14 0% 13 3%
12 9% 11 8% 10 0% 1 Johannesburg 8 7% 1 8 7% 3 9% Not available
9 6%
Not available
3%
to 6%
3 3 3%
7 Buffalo City 9 Polokwane 11 Mbombela 9 5% 3%
to 6%
Difference 10 10 1%
10 10 3%
6 8% National Treasury Guidelines: Target
3%
to 6%
3%
to 6%
1 8 4% 5 0% 5 5 2%
5 5 9% CPI 5 3%
4 7% 4 3%
4 9% Notes 1 1 1 GV GV Year 2 2 2 2 *Increase is over original budget of prior year 3 3 Cape Town
previous GV GV was was 2016/17 - increase was was 22 3%