How polls impact commercial property sector

John Jack is the chief executive of Galetti Corporate Real Estate. Picture: Supplied

John Jack is the chief executive of Galetti Corporate Real Estate. Picture: Supplied

Published May 28, 2024



With South Africans taking to the polls on May 29, South Africans are cautiously optimistic that sense prevails and we can all get back to business.

A new system will allow millions of South Africans the opportunity to vote on three ballot papers: the national compensatory ballot, the regional ballot and the compensatory ballet.

The new system was introduced to allow independent candidates to contest the general election at provincial and national levels, without upsetting the balance of seat allocation in the National Assembly. While this sounds confusing, in practicality, you can just go ahead and vote for your party as planned.

In the five years since the last general election, South Africa has undergone massive change. Citizens have battled the Covid-19 pandemic, the load-shedding crisis, sub-standard municipal service delivery and a weakened economy because of high unemployment levels and rocketing inflation.

Every vote cast in 2024 has the potential to make a significant impact on whether things improve in the country.

In a commercial property context, elections have a significant impact on buying and investment behaviour and municipal service delivery.

The build-up to elections can create widespread uncertainty among prospective property investors. Major commercial landlords wait to see the outcome of the 2024 elections before making any further property purchases or investments. Sellers may also choose to hold their property off the market in the hope that they could achieve better pricing, given a positive election outcome.

The strength of the rand will also be impacted by elections this month, compounded by the Monetary Policy Committee (MPC) making its next interest rate decision on May 30, the day after the elections.

While the MPC’s decisions are not directly influenced by political factors, interest rates remain the greatest determiner of market activity and their announcement on will be closely monitored by the industry at large. The overall sentiment is that the announcement will be a rate hold.

On a regional level, a change in leadership for the country’s various municipalities will impact service delivery levels towards the commercial buildings within the area.

A mismanaged municipality can result in decreased property values, a loss in investor confidence, higher vacancies and landlords and tenants alike needing to spend more on private services such as refuse removal or alternative water and energy systems in case of outages.

With the rise of independent candidates, due to the new three-ballot voting system, we may start to see more “local heroes” elected to govern struggling municipalities, leaders who are acutely aware of the service delivery issues facing their community.

The new, independent leaders might be more willing to accept help from the private sector in the form of infrastructure investment, as seen in the City of Cape Town. More public/private partnerships can speed up the return of capital investments to underperforming municipalities, reduce expenses on the fiscus and improve the rate of recovery.

It’s clear that new blood is needed in critical business nodes to restore investor confidence in the country’s ability to deliver on its abundant economic potential. Johannesburg is a case in point.

While the stakes are high, the 2024 elections will be a tipping point for South Africa, with many citizens no longer willing to accept the failure to deliver on oft-repeated promises of improvement.

Regardless, once the elections are concluded, the focus will again shift to stabilising the economy, efforts that should translate to higher activity in the property market.

John Jack is the chief executive of Galetti Corporate Real Estate.

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