Advice and Opinion

Property developers shoulder infrastructure planning in South Africa

Marna van der Walt, CEO of Excellerate Property Services.

Infrastructure planning has become an inextricable part of property investment, development and management in South Africa, says Marna van der Walt, CEO of Africa’s leading integrated property solutions provider, Excellerate Property Services.

“When embarking on new real estate developments, we cannot take for granted the existence of infrastructure needed for crucial electricity, water, roads and other services; nor can we assume that infrastructure will be provided by anyone but the private property developer,” says van der Walt.

She notes that while there are countries – mainly in established and developed economies – that take a forward-thinking approach to infrastructure development and planning, this is not the case in South Africa and it is even less so in many other African countries.

“When investing in a new property development, it is important to understand that you cannot wait on government to put the required infrastructure in place. For developers this means an added role -and an added cost – when doing business here. It also requires being more resourceful,” reports van der Walt.

She adds that while South Africa, and several other countries across the African continent, such as Kenya and Ghana, represent appealing opportunities for real estate development and investment, it is important for investors have a full picture when it comes to infrastructure.

Van der Walt points to the electricity crisis in South Africa as a clear example:

The power crisis is indisputably detrimental for business. For smaller retailers especially, blackouts result in spoilt stock, the inability to trade, and heightened security risk. Generators are expensive and cannot run in some mall environments. Plus, generator power comes at a high cost – at the very least an excessive five-times that of Eskom electricity. UPS units don’t support power for long, often only providing enough juice to shut down systems safely.

“Load shedding is cutting retail turnovers, and there’s no easy way around it. This puts the retailer’s ability to pay rent under pressure which, in turn, puts the property owner under pressure – and the negative knock-ons continue,” explains van der Walt.

“While there is no clear solution for the immediate electricity crisis from government, nor a dependable plan for the future, property developers, owners and managers are having to find answers to support businesses during blackouts.”

Van der Walt is seeing great examples of innovation mushrooming across South Africa, from affluent Sandton to the township of Vosloorus.

“Shopping centres are turning to alternative energy sources. Many malls are switching to solar energy solutions, covering roofs in solar panels, and even using the panels for shading,” notes van der Walt.

These initiatives are having big impacts. However, it isn’t only electrical infrastructure that is falling short.

“More and more, we’re seeing neighbours working together in precincts like Sandton, Braamfontein, Illovo and Randburg,” points out van der Walt. “Here, different property owners are coming together and using private precinct managers provide cleaning, refuse removal, security and other services. You could say they are creating their own small municipalities.”

Van der Walt is conscious that it isn’t always possible to collaborate in this way to create all the infrastructure we need. “However it is important for our marketplaces – be they malls or business districts – to work together, consider the issues and face our infrastructural challenges head-on.”

“If the property industry wants infrastructure that works for us and for tenants’ businesses, we have to shoulder its planning,” says van der Walt.