Durban city centre.
By Serphin Moodley
The human, social and economic impact of the July 2021 unrest have been significant in KwaZulu-Natal (KZN).
Adding to the complexity has been the April 2022 floods in the province which exacerbated the challenges of repairing infrastructure and getting KZN fully operational.
And then there has been the rise of the so-called “construction mafia” that has seen a criminal element holding construction sites to ransom and demanding builders use only their people to cover a portion of the local procurement requirement.
It hardly comes as a surprise then that recovery has been slow, with individuals, local companies and multinationals opting not to rebuild their damaged properties in Durban.
Furthermore, it has become more expensive over the past 12 months to put up new buildings in the province. This can be attributed to the shortage of materials and continually increasing steel prices.
On the upside, however, TUHF is seeing new investors take up the opportunity to establish themselves in the industrial area surrounding the CBD. This speaks volumes to the resilience of the inner-city property market.
Three major trends, and the fact that new companies are establishing themselves in the Durban CBD, could see KZN experience increased investment despite the perceived risk.
Firstly, micro-units are still popular, as people are downsizing because of the economic impacts of the Covid-19 pandemic.
Secondly, many are looking for more communal living areas with their families instead of staying on the outskirts of the city.
And finally, there is a short supply of quality student residential offerings in and around Durban. With the city becoming a hotspot for tertiary education, there will be a growing need to house out-of-towners around the universities.
The regrettable events of the past 12-months have certainly given some investors reason to pause, but these three trends have not subsided and the demand for affordable inner-city housing remains on the rise. The urbanisation of the CBD is expanding beyond Durban property.
Urban densification is a national imperative for South Africa. It has been for some time, and KwaZulu-Natal is no exception. This is why TUHF has been expanding our offering in the province. We’ve recently extended our financing footprint in the Durban South Basin to include Seaview, Clairwood, Wentworth, and the industrial area of Jacobs, as well as additional parts of Durban North, Phoenix, the Bluff, and Montclair.
These communities were selected based on the potentially high demand for affordable housing investment.
Post-pandemic and post-unrest economic impacts are not the only risks that need to be discussed when it comes to inner-city property investment.
Some investors are cautious about the commercial property industry in the CBD due to subdued performance in recent years. Lack of service delivery in the inner cities has also become a deterrent. Though some municipalities are performing better than others, we’re seeing some degree of lack of delivery in all our funding areas.
This means investors are increasingly cautious about investing in urban densification or regeneration projects because, without reliable basic services, it’s harder to attract tenants and retain them
In many instances, especially in KZN, the communities have taken matters into their own hands, coming together, and using their own funds to repair infrastructure like roads. People are bouncing back despite the government’s inability to effectively manage recovery in the province.
Even so, as the country seeks to rebuild communities and recover economically following the major political and health events of the last two years, collaboration on urban densification is key to ensuring inclusivity and sustainability.
It is essential to take a long-term view of the opportunities. Entrepreneurs can capitalise on the new normal trends spurred by the pandemic.
For example, provisioning units with work-from-home capability has become more important. Reliable Wi-Fi is becoming non-negotiable in development. Good lighting, good ventilation, cost-saving approaches to utilities and other facilities that are conducive to productivity are also important for property entrepreneurs who want to attract reliable tenants.
* Sershin Moodley is the TUHF regional manager for KZN and Free State.
BUSINESS REPORT