ANGELA RIVERS: Load-shedding threatens affordable housing market

Every sector of the economy is affected by load-shedding, but it is those with limited resources who are the most calamitously affected. As the providers of most of the affordable housing in the inner city of Johannesburg, the Johannesburg Property Owners & Managers Association (JPOMA) is made aware on a daily basis of the knock-on effect of extended power cuts on the community and on business in the city. The energy crisis is changing how we manage property issues, and we are pooling our resources to try help our landlord members navigate this increasingly complex issue.

The alternative energy solutions that many homeowners across SA are investing in now are not always suitable for our market of affordable inner-city housing. Quite a few of our members have investigated the solar options that are increasingly in demand, but due to the limited roof space of the typical multistorey inner-city building, it is not a viable solution for most buildings. To run all the systems needed in a high-rise building in the city, you need a generator and lots and lots of diesel, and this in itself is becoming extortionately expensive. Lifts, water pumps, fingerprint-access and other essential security systems can’t be seen as nice-to-haves in a high-rise building, and landlords have no choice but to fork out more and more to keep their tenants safe.

Dire situations

As one example, the Johannesburg landmark building Ponte City in Berea was last year forced to spend about R1.4m on diesel to run the generators needed to keep lifts, water pumps and security systems in the 54-storey building operational during times when the power was off due to load-shedding. This is not money that is in any way recoverable from tenants — not even in Sandton, but certainly not in the affordable-housing market.

At Jewel City, the Divercity mixed-use development abutting the Maboneng Precinct, which created a node of excellence within the city, the situation is equally dire. We have learnt that it clocked 1,100 hours of load-shedding last year, which required them to spend an astronomical R2.7m on diesel supplies and generator maintenance. It is evident that not even the most robust budget can accommodate this level of overspending sustainably.

And imagine the plight of the smaller landlords — people who are trying their best, but who simply have no way to afford an outlay of this magnitude. Some of our members have gone the inverter route, but in these high levels of load-shedding, we hear from them that the batteries are depleted within six months, repeatedly needing expensive replacements. So those are not a sustainable solution either.

What we are seeing is that tenants are now calling for affordable housing that also happens to come with the luxury of alternative energy, which is quite simply an impossible situation. Applications for accommodation now come standard with queries about what load-shedding workarounds are in place. It’s a very relevant question for a tenant, but a very difficult one for landlords, who do not want to pass the costs of alternative energy solutions on to tenants — not when the cost of living is already so high. The next step is tenants defaulting on rent, because they cannot make ends meet.

Landlords also come under pressure from existing tenants, and we’ve unfortunately seen an increase in crime and vandalism in buildings during times when there is no electricity. Some tenants are taking advantage of load-shedding and using the opportunity to rob each other. It is becoming increasingly difficult to navigate and juggle the obligation of landlords to protect their tenants against crime while also protecting their property against being damaged.

Ripple effect

The energy crisis is in the process of changing the value proposition in the property market. For an owner an investment in any alternative energy solution now becomes a way to make their property more desirable. A few years ago it was Wi-Fi, and now if you can boast a load-shedding solution, your property will immediately become more marketable. But the cost of supplying Wi-Fi to a building and the cost of uninterrupted power supply during load-shedding to each tenant are quite different propositions ...

In the end, the knock-on effect on the entire community of Johannesburg is circling bigger and bigger. Disgruntled tenants who move out of a residential building plagued by load-shedding affects the microeconomy as businesses in the area lose their regular clients. A small business such as a restaurant or coffee shop that cannot afford to run a generator during load- shedding will typically not operate at all during down time — and lose all income while still needing to pay staff. The shop owners are also tenants and when they cannot afford to pay their rent because their businesses are struggling, it merely adds to the ripple effect.

In a recent members’ meeting, someone noted that in Johannesburg the real unemployment rate is now north of 50%. The official national figure is about 33%. We can see its disheartening effect in the inner city of Johannesburg, and it is only going to get worse until some affordable, accessible and sustainable energy solution is found. JPOMA is keen to work with the new administration to find ways to work around the national energy crisis. We trust they are up for the challenge.

• Rivers is general manager of the Johannesburg Property Owner & Managers Association.