Navigating the real estate market in 2021

Many industries are piecing things back together again this year, as they try to recover from the effects of the pandemic or recreate themselves to remain relevant in a changing world. One industry that has been left unaffected to a great extent, and yet has had to re-create itself almost entirely in the same breath, is the real estate industry. As 2021 sets off, it’s important to understand just how the industry will shift gears in the months to come.

The biggest factor that will influence the industry is the fact that the public is in need of more guidance and advice than before. The uncertainty that still surrounds the economic landscape and the future of the world as it battles COVID-19 means that people are more cautious when it comes making real estate and investment choices. The role of property practitioners is thus more vital than ever in supporting the public through this period of recovery.

Property practitioners have a tough task ahead of them as they provide the public with confidence in their decisions, while also helping grow the market again so that that confidence is not misplaced. A vital part of this process, beyond the elbow grease and hard work that is already going into recuperating the industry, is the building of strong relationships with clients. Property practitioners may have acted as a “middle man” of sorts in many instances in the past, but their roles are being redefined as they provide more and more tailored services to those who are navigating the real estate landscape.

With the past year obliging so many industries to re-evaluate their way of doing business, the real estate industry has also sought out more streamlined solutions that put less strain on property practitioners while offering the public more efficient service. A big role player in this process is the adoption of Customer Relationship Management systems that allow property practitioners to enhance the way they interact with both existing and prospective clientele. This is especially of use when it comes to the rental market, where a rotating roster of clients needs to be connected with.

As a result of the continuing uncertainty and the weakness of the economy, the rental market is proving to be one of the most greatly affected. Where tenants are able to, 2021 will most likely find them choosing to continue renting where they currently are, opting for safety above prospects. Unfortunately, vacant rental properties could remain vacant for quite some time still as a result. This may be even more true for properties at the lower end of the price spectrum, as lower-income individuals have been some of the worst affected by the lockdown and TERS relief coming to an end.

As more and more tenants conduct research regarding their financial futures, many may also realise their rental amounts are almost the same as bond repayments would be, leading them to reconsider the possibility of becoming homeowners and bringing stability to their lives amid the storm. As more South Africans re-evaluate their futures, with considerations such as work-from-home options becoming more prevalent, many people are looking for homes that will better suit their changed lives, and renting may simply no longer be the answer to those plans.

All of this cements the necessity for property practitioners’ role in the months to come. If it is time for you to alter your real estate situation, enlist the guidance and advice of a trusted property practitioner to help you navigate whatever comes next.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Prospects for new businesses amid COVID-19 trends

With many businesses becoming casualties of the Coronavirus pandemic in the last few months, there are gaps opening up in the market for goods and services that were found in abundance before the pandemic started. Discovering these sweet spots in the market and capitalising on new business opportunities are not that easy, though.

You might be considering starting a new business or investing in commercial property to take advantage of new businesses popping up as the economy starts growing again post-pandemic. What, then, is the outlook like for starting a new business that can perform in the new gaps opening in the market? And what would the outlook be like for commercial property once the pandemic finally ends?

To answer these questions, there are essentially two things to consider:

  1. The trends that we see emerging from the pandemic.
  2. The projected trends for the commercial property market as the pandemic eventually dissipates.

What are some of the trends predicted post-pandemic?

While South Africa waits with bated breath to see how long COVID-19 infections will continue to increase, many people have been turning to alternative forms of services than they would normally use. For traditional retail stores and entertainment venues, the future may look somewhat hazy as it seems like the world is quickly trending towards relying on online alternatives.

It is said that necessity is the mother of invention. Nowhere is this clearer than when we consider how technological advances have been made during the pandemic. While in some instances, post-COVID-19 trends will revert back to ‘normal’, others have accelerated away from traditional trends, while some new trends are developing as well.


Naturally, when the lockdown started, all retail stores (apart from those selling essential goods) had to close for some time. Until the pandemic ends, most retail stores will not be operating at optimal levels, while e-commerce sites draw more and more traffic. As is, a large part of the retail industry can operate at ‘normal’ capacity (barring their duty to safety), but is hindered by the weakened economy.

For South Africa, the market trend, especially with a large portion of the population low-income earners, won’t shift considerably towards e-commerce for some time. Regardless, international trends seem to indicate that the retail market should start to stabilise and grow again from its losses during the pandemic, although e-commerce will grow significantly in affluent countries. As with most commercial industries, future success depends heavily on economic recovery.


The hospitality industry was one of the hardest hit sectors of the economy, which is clear from the many businesses, such as restaurants and hotels, that have gone under because of COVID-19. Even when at Stage 3 of the lockdown, when many of the establishments started opening up, many restaurants were still struggling because of the ban on alcohol that made up a large portion of their revenue. Places of accommodation were similarly restricted, as only business travel was allowed for a few months. Restrictions remain stringent on other forms of hospitality like casinos, cinemas, and entertainment complexes.

While things do not look very positive for the industry right now, the easing of restrictions and new opportunities in the form of market gaps may soon make new businesses a plausible, and possibly profitable, venture. This is largely due to the growth in local travel, since many South Africans are still wary of the limitations and hassles of international travel as long as COVID-19 remains a real threat.

Personal Care services

Similar to the state of affairs in the hospitality industry, those in personal care services (such as hairdressers/barbers, beauticians, and masseuses) were heavily restricted by the lockdowns that shackled the economy in the first few months of the pandemic. Apart from the sale of products, which contributed minimally to the losses of these organisations, revenue in this industry was non-existent for a couple of months and has forced the closure of some small businesses.

While these services have taken a big knock as a result of COVID-19 safety concerns and restrictions, the industry should make a full recovery once COVID-19 takes a bow. Those who will continue to stay at home to use their own hair clippers will be few and far between.

With many commercial businesses having closed down during the ongoing pandemic, it means that there are new opportunities for businesses to take their place to fill gaps in the market.

The bad news first

For those considering purchasing commercial property in order to capitalise on the influx of new business opportunities once the lockdown ends, forecasts indicate that the commercial property market is facing a three-year negative capital growth rate of -15% that will last until 2022. This means that moving immediately to procure properties that have been forfeited as a result of the COVID-19 pandemic may be a very risky move, with growth plausible only after around 5 years (even if inflation is ignored).

For many people, such an investment may be inconceivable; although, it does open up avenues for acquiring prime property from places of business that have not made it (or will not make it) out of the pandemic. Yet, it may take a long time before you start seeing any real returns on your investment in commercial property.

Another threat to commercial property values and purchases is the increasing advancement in technology. The movement towards online work and e-commerce is increasing. This means a smaller demand for office space and retail space (at least for non-essential goods) in the long run.

On to the good news

Conversely, for those who are considering investing in commercial property for their own benefit and use, the interest rates available on bonds right now make purchasing commercial property much more affordable. Naturally, as the market value of property decreases, property prices become cheaper. With commercial property taking a more significant knock than residential property as a result of the weakened economy, it could spell opportunity for those thinking of starting a new business.

If property has been an issue in your dream to start a new business, right now seems as good a time as any to enter your chosen market (at least when it comes to bond repayments). By purchasing commercial property before the economy starts growing again could also mean that you get a head start on your competitors that may emerge later.

COVID-19 also presents unique opportunities for new business owners as there is more room for starting smaller and upscaling your business as the economy starts growing. This means fewer overhead costs during the initial stages of your business’s trade and also that diminished national economic activity in the short run serves as a boon rather than an omen.

Ready to take the plunge?

If you have assessed the risks and feel like you are ready to start your own business to capitalise on a gap that is starting to form in the market, purchasing commercial property may be something you should consider. The first consideration to make, however, is that commercial property purchases are often much more restricted in terms of use and rights than residential property. Consulting your property attorney becomes a necessity to ensure that you are fully aware of the additional fees, levies and limitations that may apply to the property you are considering purchasing.

Capitalise on lower property prices and lower bond payments, and start that business you’ve always wanted to show to the world!


Industry Insights by SAP: The Global Impact of COVID-19 on the Professional Services Industry, 20 May 2020.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice.  Errors and omissions excepted (E&OE).

Working from home can work for you

As the old adage goes, change is as good as a holiday. But the way that the novel coronavirus has shaken up the world we live in, has, to the contrary, been extremely disruptive and stress-inducing. For many people, the disruption has come in the form of shifting from the traditional office space to working from home.

People who had been working flexi-hours or may have been self-employed and working from a home office might be very familiar with claiming business-related expenses from their personal income tax as a tax-deductible expense. For the everyday worker, though, the shift to working from home may incur costs that would not have been necessary had they been able to safely work from their traditional office. If the COVID-19 pandemic has meant that you need to work from home, you may be able to claim some of your business expenses back when submitting your next tax return.

What then are the prerequisites for filing a tax return that includes your home office expenses as a tax-deductible expense?

  • You need to have an agreement with your employer that allows you to work from home. Especially since working from home has been necessitated during the pandemic, some of these agreements may have been assumed without due communication. To cover your bases, have the agreement made in writing.
  • You need to spend at least 50% of your working hours working from your home office. Since the tax year runs from the start of March through to the end of February the following year, it means that 50% of your time spent working in the tax year must be from your home office. Generally speaking, the necessitated use of the home for work purposes during the COVID-19 pandemic makes this somewhat tricky because it would require you to work 6 months of the tax year in the home office if you were to make a full return to your business office’s premises later (based on maintaining the same hours). For instance, working 3 months from home and 9 from the office will disqualify you from claiming your home-office as a tax-deductible expense, as you would only have spent about 25% of your working hours from your home office.
  • Home office expenses are only tax-deductible if you have an area set aside exclusively for work purposes. Hammering away at your keyboard from your living room sofa, unfortunately, does not qualify you for a home office tax deduction. Makeshift offices or rooms that have a purpose apart from dedicated work do not qualify.
  • Additionally, your home office specifically has to be fitted out for the purpose of your work. If there are specific tools or equipment that your work requires, your home office has to be set up with these readily available.

What can you deduct as a business expense?

For anyone who earns more than 50% of their income from a traditional salary, pro-rated tax deductions can be made as it relates to interest on your home loan or rent, as well as the repair and maintenance of your home. That is to say that the tax-deduction is directly related to the portion of your property that is dedicated as a home office and is calculated as a percentage of the whole.

For anyone who earns more than 50% of their income from commission (or income other than that which is earned from a salary) can claim for the same expenses as mentioned above, but can also claim business-related expenses from commission-based activity.

What if you don’t qualify for a tax return on business expenses?

For those who do not qualify for a tax deduction on their home office space, it shouldn’t necessarily mean that you need to take on all of the burdens of your business-related expenses yourself. Where previously you could rely on company internet, for instance, now you would need to use more data per month and incur an additional cost.

The best solution in this regard would be to see if an agreement can be made with your employer to carry some of the costs by reimbursing you for the personal loss suffered. If done amicably, it could only serve to strengthen the relationship with your employer.
While the change brought about from the COVID-19 virus may not be as good as a holiday, it may well be able to pay for one once you are recompensed for your tax-deductible expenses.

Reference list


This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Surviving the disaster of job loss

As COVID-19 has ravaged the economy and stripped it bare of tens of thousands of jobs, there is a real threat to the livelihoods of many ordinary working South Africans. As happens during a time of economic recession, some businesses are unable to pay full salaries, have to scale down and have to let workers go in order to survive the results of stunted economic activity in their industry.

Job loss is never easy. When found in such a precarious position, one difficulty is knowing where one might find the resources to stay afloat and get ready to re-enter the job market. In any case, it is advisable to speak to a registered financial advisor regarding your best course of action as your circumstances require.

Below is an incomplete catalogue of the financial sources that you might be able to utilise during this time:

The Unemployment Insurance Fund (UIF) is specifically set up to aid in these kinds of situations, subject to a few conditions being met. If you had been formally employed, you will probably be a regular contributor to the fund (All employers are required by Labor Law to register themselves and their staff with the UIF and pay their monthly contributions). Apart from the UIF, there are other sources of funds you might consider accessing so that your financial difficulty doesn’t cause irreparable damage.

One of the first considerations when looking for funds is to see where money is still owed to you, and collect any outstanding funds. A common mistake that people make (not only those who are struggling financially) is to wave any money owed to them for the sake of avoiding conflict. While it may lead to some slightly awkward conversations, the place to start is with immediate family and friends. Not only are your family and friends people with whom you have an established rapport, but they are probably the ones most willing to want to help you out of your situation.
You might, however, have available funds or assets that you could free up. Start where that your money and assets act as a surplus to your needs. If you have money in an emergency fund – great, you’ve already planned well for a situation like this.

You might have funds in a savings account that has not been allocated towards a specific purpose and that might be something to consider, although some of these accounts may have a notice period with an exorbitant penalty fee for early withdrawal.

Medical aid saving accounts, although technically being an accessible source of funds, often requires two things – that you resign as a member of the scheme, and wait out the four-month period in which you can still make claims to your medical aid. Not only do you lose your long-term coverage in case of a health emergency, but you will also have to pay a late-joiner fee when joining again and you won’t be able to access the money with immediate effect.

One should be careful of taking out any loans in a time of unemployment or financial distress. Even though a loan might help you get back on your feet, it might be something that will weigh you down for a long time to come.

A vital rule to abide by is not to use funds from a credit facility in order to pay off debt. If you use credit to pay off credit, you’ll be accumulating two sets of interests on the money owed, which leaves you extremely vulnerable.

Lastly, accessing pension funds and other long-term investments should be your last consideration. Any funds that might affect your retirement or the futures of your dependents should, as far as possible, stay untouched. Re-accumulating the wealth necessary for retirement, as well as recuperating the value lost on the interest you would have received, is extremely difficult.

While there are a lot of options to consider when you do find yourself in a tricky financial situation, there are definitely some avenues that will work better for you than others. Knowing exactly what to do requires concentrated research. For this reason, consulting with a financial advisor can ease the process and set you in the right direction to get out with minimal damage.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Lockdown Tips: Simple steps to take control of your finances

The COVID-19 pandemic has spread across the globe and left economic destruction in its path. Now, more than ever, it is of utmost importance to take control of and manage your finances so that you can enter this time of uncertainty with the peace of mind you deserve. Follow these simple steps to take back control of your finances:

1. Keep an eye on your credit score

Due to COVID-19 and the nationwide lockdown, many South Africans’ financial situations and financial security have changed. This change can influence your credit score, which is why you need to keep an eye on it.

Why? Because by protecting your credit score, your chances of being accepted for the best deals on credit products will increase. It comes as no surprise that many credit providers are tightening their belts and lending criteria during this time, so make sure to put yourself in the best possible situation when it comes to credit.

2. Apply for credit as soon as possible, if you need it

As mentioned above, many credit providers are tightening their belts and has withdrawn numerous products from the market. If you need to apply for credit, we advise you to do this as soon as possible to secure the right product and price for said product.

3. Cut back on expenditure

It’s important to take the time to look at your income and outcome, especially in preparation for the coming months. To reduce your expenditure, you can either reduce an outgoing payment or delay it. An example of reducing your outgoing expenditure is cancelling a subscription that you no longer use or don’t use as often.

If you want to delay your outgoing expenditure, you can choose to put your payments on hold by taking a payment holiday. Applying for a mortgage payment holiday can significantly soften your financial blow during this crisis and luckily, most lenders are now offering this option.

Whatever plans and measures you put in place to manage your finances during this crisis, make sure to stay calm, collected and safe.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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