John Jack, the CEO of Galetti Corporate Real Estate, believes that another likely interest rate hike will significantly impact the commercial real estate sector in South Africa. The South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC) is set to meet next week (25 May), with many experts predicting a consecutive tenth interest rate since the start of the rate hike cycle in November 2021. Jack said that a further interest hike would add to the hurt real estate landlords are feeling, facing increased load shedding, vast vacancy rates and increased upkeep costs. Additionally, landlords are under increasing pressure to find alternative energy solutions, as load shedding is expected to hit stages 7 and 8 this year. Installing alternative power solutions is also highly costly, with landlords paying millions to install generators that can power high-rise office buildings during load shedding.
The most critical details in this text are that landlords work closely with tenants to ensure they can find a compromise and that there is a trend towards lease agreements in retail and manufacturing environments where the landlord covers the capital cost for solar panels and the inverter to power the building during the day, but the tenant pays for the batteries. Additionally, the private and public sectors are finding solutions to the energy crisis, such as the solar panel tax incentive announced by Finance Minister Enoch Godongwana in February and negotiating with banks and loan providers to secure more favourable property interest rates.
This article is originally posted in Businesstech.co.za
