Joburg revival talk grows but property data contradicts it

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JEREMY MAGGS: Johannesburg’s inner city, I read, is once again being spoken about as a place of possibility, but the data still tells a tough story of weak property growth, negative sales and years of decay.

I think the question is whether Johannesburg is genuinely turning an order, or whether optimism is maybe running ahead of reality.

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Well, someone who’s in the middle of that debate is Hayley Ivins-Downes, who’s managing executive of real estate at Lightstone Property. She’s been with us on the programme before, and let’s see if we can do Johannesburg some justice here.

Hayley, we’ve heard the Johannesburg turnaround story before. Is there something genuinely different this time around, do you think?

HAYLEY IVINS-DOWNES: Jeremy, thank you. I think, it’s quite important just to say, from the start that there is a lot of sentiment, there are lots of articles and initiatives that are focused around Johannesburg at the moment.

I think with the polls looming in terms of the voting coming up, I think there’s a real drive to try and turn Johannesburg around.

If we’re just looking at property, it’s not a great picture. But I do think that, with some level of sentiment and hope it may bring some renewal and some vigour on that.

JEREMY MAGGS: Does your data support a real recovery or are we just seeing a few isolated signs of life?

HAYLEY IVINS-DOWNES: It’s still very isolated. What was really encouraging was the back end of last year, we actually started seeing an uptick in terms of our inflation within the Johannesburg area, which we hadn’t seen for the last two years, on that.

Johannesburg was pretty flat, sometimes negative, and we started seeing an uptick.

At the beginning of this year, we were actually all really positive around this year to come.

Unfortunately, not knowing what was ahead in terms of the conflict globally and the effect that that’s starting to have, and the talk around interest rates and that’s really put another dampener back on the property market again.

But we did see a glimmer of hope. Currently within certain locations you’re always going to see a difference.

Within Johannesburg and in Pretoria there are pockets where there is great activity and places to invest, but overall there’s still a bit of a negative flavour.

JEREMY MAGGS: The problem, of course, is the CBD of Johannesburg still lags the suburbs badly and we can’t underestimate the damage that crime, hijacked buildings, potholes, water failures and poor governance has done to investor confidence. We’d be naive if we parked that to one side.

HAYLEY IVINS-DOWNES: Yes, definitely. I think it’s going to take time to change that. But, I think that there is a view that this could be changed and there is a turnaround opportunity to do that.

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If we look at some of the activity just around the fact that old offices are being repurposed to affordable housing, that certainly brings in a dimension that is really helpful to what we’re needing within the environment and within what we need in the CBD to give people a property and places to live, which makes sense when offices, are not being utilised.

I think elements like that could really drive some of the change.

JEREMY MAGGS: But again, it is piecemeal though because residential conversions do sound encouraging, but they’re not happening at a scale that can really change the inner city. Acceleration is needed there before any marked difference is actually noted.

HAYLEY IVINS-DOWNES: Definitely. We do need a scale of change to be happening to see the change. Once again, our sense is that it’s going to take time.

JEREMY MAGGS: How important is this regeneration strategy in terms of affordable housing conversion, Hayley? Is it just a way to rescue stranded office stock, or do you think that there is genuine interest in what is emerging from that Phoenix?

HAYLEY IVINS-DOWNES: I do think that it will definitely make a difference. We’re not just seeing it in the CBD.

We’re seeing it in other suburbs in Johannesburg. I know within Sunninghill there are components of that happening, and it certainly helps address the issue of housing in the affordable market.

And you can see it just in terms of the informal housing that seems to be ballooning in areas around Johannesburg.

I think if we have a way to address some level of affordable housing, and if this is the way that we can do it, then it’s something that we should be looking at more of.

JEREMY MAGGS: And of course, success, Hayley, is predicated entirely on good city management. You did reference the fact that we have an election upcoming, we don’t have a date just yet, but what does the city need to fix first, in your opinion, if it wants property owners and investors to start believing again?

HAYLEY IVINS-DOWNES: Well, I think linking to that is the service delivery. It’s really just that the roads are fixed, that we can actually see a change happening on the ground.

That we’re not still fixing water, that we’re still dealing with some of the electricity issues, some of the service delivery that you’ve been paying for for years and you just don’t feel like it’s made any difference.

Listen/read: Infrastructure failure pushes Joburg towards day zero

You’re living in a property within an environment where you’re wanting to see some level of service delivery. You’re paying for it. I think, that for me, would be where, as an owner of property, that you can try to bring some level of impact. I think that should be where we’re  looking.

JEREMY MAGGS: If you look at Johannesburg right now, do you think we are at a genuine fork in the road? Or, as some naysayers might suggest, Hayley, that moment has already passed.

HAYLEY IVINS-DOWNES: I think we have an opportunity to address what is missing and to address the service delivery and to make a difference.

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But I think what we’re going to require is a collective effort between government and some private enterprises to try and work together, to try and bring the change that everybody would like to see.

JEREMY MAGGS: To what extent is the private sector and investment opportunity, as far as they’re concerned, still being held back? What are what are they waiting to see, apart from the broad suggestion of better service delivery, what else do they need?

HAYLEY IVINS-DOWNES: I just think that they need to see a change within government and that government is actually willing to get into the trenches and fix elements. I think as soon as we start some level of catalyst there, I think we’re going to see a lot more enterprises getting involved.

JEREMY MAGGS: Hayley Ivins-Downes, thank you very much indeed. She is the managing executive of real estate at Lightstone Property. I appreciate your time. Thank you.