Shopping malls cannot simply close overnight, says Growthpoint CEO
‘Economic conditions have been extremely weak and now we are being hit with a hurricane of challenges
Shopping-centre owners, their tenants and customers have entered uncharted territory following the announcement of a three-week nationwide lockdown this week, as efforts to fight Covid-19 intensify.
The pandemic, which has engulfed parts of the world, is gaining momentum in SA. Confirmed cases of infection jumped to over 400 on Monday afternoon.
On Monday night, President Cyril Ramaphosa made the announcement that all South Africans would have to stay at home from midnight on Thursday 26 March to April 16. The state will provide details about how people will be able to acquire essential foodstuffs and medicines.
The announcement will rock the commercial property industry, which is in crisis as the economy suffers through a recession.
SA's R450bn listed property sector is suffering as landlords battle to grow rentals in a constrained environment. SA’s economy, which has hardly grown in the past decade, recently slipped into its second recession in two years.
The FTSE/JSE SA listed property index, which includes the 20 largest and most liquid property stocks, has lost more than 54% in the year to date.
Property landlords have warned that many South Africans rely on malls for their survival and any lockdown needs to take this into account.
Estienne de Klerk, the SA CEO of Growthpoint Properties, the country's largest real-estate company, said on Monday before Ramaphosa's announcement that an outright shutdown of shopping malls would threaten the wellbeing of millions of South Africans.
De Klerk, who is also the chair of the SA Reit Association, said that whatever measures are taken to fight the pandemic should accommodate the needs of the most vulnerable citizens.
“In an SA context, shopping centres provide essential services for millions of people and these people’s needs have to be accommodated whatever decisions the government makes,” he said.
In some countries facing full lockdowns, people have been able to buy goods for a week or a month and store them. “We live in a developing country where people buy enough to survive on a daily basis,” De Klerk said.
De Klerk said the SA Reit Association and the SA Property Owners Association had engaged with the national government as well as the department of public works over the weekend.
He said Growthpoint and other listed funds were committed to helping tenants and customers as much as possible through this unprecedented time for the economy.
He said the Covid-19 pandemic could not have been more poorly timed for the commercial property sector.
“Economic conditions have been extremely weak and now we are being hit with a hurricane of challenges. As a collective, we as property owners will do our utmost to help. First and foremost the majority of people need access and confidence in the retail system,” De Klerk said.
South Africans would need to be educated about drastic changes in shopping, including where and what they could buy, De Klerk said.
“There is a lot of goodwill to see the economy through this difficult period. We are waiting for our president to update us. The big concern for businesses is how long this will last for. We said at our results presentation less than two weeks ago that we were operating in our toughest environment in decades and then our world changed overnight after the president's speech,” De Klerk said.