#Budget2019: Look forward to more property investments
Gerhard Kotzé, MD of the RealNet estate agency group, says: “According to today’s Budget announcement, SA can look forward to a lot more high-rise housing developments in and around its major metros as part of government’s integrated strategy to prepare for the future and provide affordable accommodation for a rapidly urbanizing population.
“This is exciting news as it has the potential to bring thousands of people within easier reach of the jobs and amenities that urban centres offer, while saving on transport and making better use of existing infrastructure and services. It will also be much easier and more cost effective for government and its private sector partners to upgrade and densify existing water, power, communications and public transport networks than to lay miles of new pipelines, roads and cables.
“Also very positive from the real estate and housing point of view is the news that R14,7bn of government spending has been re-prioritised to give grants for the improvement and upgrading of existing informal settlements, that R30,5bn is to be given to SANRAL to spend on non-toll roads and that the Development Bank and Infrastructure Fund will disburse more than R500bn over the next few years on water supply, solar geyser, student housing and other infrastructure projects – and hope to leverage much more than that as they develop public-private partnerships with both local and foreign investors.”
Government is obviously hoping, he says, that such projects will be the key to the economic and employment growth that SA so urgently needs to achieve, along with the stabilization of its State-Owned Enterprises. “And on that score we are also very encouraged by today’s announcement that SA’s taxpayers (via the government) are not going to be held accountable for Eskom’s R419bn debt – and that bailouts will probably also not be forthcoming for other SOEs like SAA, the SABC, Denel. Instead they will be required to reconfigure themselves into profitable entities and take on private sector partners where necessary.
“This plan will hopefully also please the international ratings agencies and save SA from being downgraded to junk status. Consequently, even though this was a relatively sombre Budget, we would say that it is likely to prove positive for the real estate sector in the longer-term. In the interim, the good news is that lower inflation means that there is less likelihood of an interest increase next month.”