Steve Brookes, CEO of Balwin Properties, shares why he believes the legacy of lockdown will drive demand for integrated communities for years to come.
For the first time since the global financial crisis in 2008, we are seeing a significant uptake in demand for retail residential mortgages and with the prime lending rate currently at a 57-year low, there has never been a better time to buy property.
This is the viewpoint of Steve Brookes, Chief Executive of Balwin Properties, who adds that Covid had a lot to do with this as it has brought a new perspective to the way we live and work.
'Growth is fragile, but trends showing us something interesting'
“Much has been said about how this clamour for bonds is because of record-low interest rates and pent-up demand due to the lockdown,” explains Brookes, “although I agree with analysts cautioning that this growth is fragile, especially in the current economic environment, the trends are showing us something interesting”.
“Work From Home (WFH) has become the new buzzword as lockdown showed us that businesses can operate with a remote workforce and that working from home has become a reality for your average office worker. This change in work environment has dramatically evolved the way home buyers evaluate prospective properties. Where it used to be the kitchen and bathroom that influenced the final purchase decision, these days fibre connectivity, leisure amenities and a greener footprint are top of the list.”
Brookes adds that considering the overall savings of WFH, many corporates are considering continuing this policy on at least a part-time basis and are gearing themselves accordingly, especially in light of a possible second wave of the pandemic. A concept that many South Africans can support as they too have become frustrated with the traffic, road conditions, and time spent commuting.
'Integrated communities where residents can work, live, and play'
In addition to WFH, integrated communities where residents can work, live, and play in a single node or estate is becoming increasingly popular, as seen in the successful development of Waterfall.
“Homebuyers are increasingly more discerning, expecting green areas with dog parks, and running or bicycle tracks and facilities that cater to social interaction such as gyms, swimming pools, and restaurants within walking distance from their homes,” says Brookes.
The legacy of lockdown will drive demand for integrated communities for years to come. A higher discretionary spend also plays a role, as households save on transport costs, car insurance and – importantly - have more time on their hands not being stuck in traffic.
As with Cape Town’s city centre, this integrated community concept will soon spill over into the upmarket central business districts of Sandton, Waterfall, Rosebank, and Fourways, as office space is converted into apartments and new, affordable high-rises are developed. By “developing up,” shopping centre landlords are aiming to secure their target market through adding rooftop apartments and possible healthcare or educational facilities to their malls.
As South Africa’s largest sectional title developer, we have seen record sales in October this year against a monthly average of units primarily driven by the favourable interest rate. Incidentally, the previous record was set in March this year, just before lockdown, when we sold 802 units. These numbers support the argument that it is the need for an integrated lifestyle, underpinned by lower interest rates, that is driving demand.
'Reduction in bond rate based on the green footprint of apartments'
In March this year, Balwin announced the launch of an Eco Home Loan in partnership with Absa. The product provides qualifying homeowners with a reduction in their bond rate based on the green footprint of their apartments, as certified by the International Finance Corporation’s EDGE green building programme and endorsed by the Green Building Council South Africa. Since this announcement, First National Bank and Nedbank have concluded similar agreements with the company.
South Africans have always been innovative at dealing with challenges, and what we are seeing now is how 2020 will go down in history as a Rubicon year for both businesses and individuals in the property sector. The demand for integrated communities may be driven by a low interest rate cycle, but in an era where work-from-home is a reality, it will continue to have a demonstrable impact on how homeowners choose to live.
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