Yael Geffen urges Government to re-open real estate sector now

The time for prevarication is over and the government needs to move now if the real estate industry is to navigate the COVID-19 storm and retain its significant economic position as a key contributor to South Africa’s annual Gross Domestic Product (GDP) and provider of upwards of 100 000 private-sector jobs.

So says Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, on the back of a second urgent real estate industry submission to the government last Friday detailing why realtors should be permitted to offer professional services under Level Four COVID-19 restrictions.

The submission by the organisation representing real estate business owners and addressed to the Ministers of Cooperative Governance and Traditional Affairs, Trade and Industry and Human Settlements, noted: “Estate agents in South Africa hold professional qualifications and are widely recognised as professionals, including by the South African Revenue Services… The exclusion of estate agents from this category is anomalous and without foundation.

“Estate agents in South Africa require far less direct physical interaction with members of the public than has ever been the case in the past and indeed, such interactions are in fact quite minimal… In current times, most property sales originate through the display of information online through property portals … This is not only a highly efficient way of doing business but also has the effect that it reduces, to a very significant degree, the need for direct physical interactions between estate agents and members of the public.”

A study by UCT’s Urban Real Estate Research Unit was attached to the submission, which alarmingly noted: “…Residential real estate transactions could be around 45% lower in 2020. This would result in a decline of R4,2 billion of commission lost with a multiplier impact of R 8,1 billion across the national economy.

“…Based on the survey, some 86 % of (1 550) respondents suggested that they would not be able to reopen if the lockdown of the sector carried on for more than one (more) month.

“…Some 43 % of the output value is generated through the acquisition of inputs. A further 55% of the value is derived through value-added (wages, profits, taxes, and incentives) and 2% through net taxes. The I-O tables also suggest that the real estate sector (from a gross value-added perspective) is responsible for 6% of total GDP.”

Geffen says time really is of the essence if the industry that facilitates the trade of fixed assets in South Africa valued at nearly R4 trillion, is to survive.

“Agents have already been in lockdown for six weeks during which time very few if any would have managed to secure even a fraction of the number of mandates that would have been the norm just six months ago.

“For an industry that is almost entirely commission-based, it’s now a crisis. Even if estate agents secure sales on the first-day post-lockdown, it’s likely to be at least another two months before they receive any commission from the transactions.

“The president is asking us to blindly accept decisions from a hastily constituted body of ministers in his so-called National Command Council, but they’re not accountable to anyone and won’t explain why they’re putting the livelihoods of 100 000 private sector employees on the line.

“It’s nonsensical and certainly isn’t in line with the leadership the President has shown in handling the COVID-19 pandemic thus far,” Geffen concludes.

“If this regulation does not change imminently our sector will be facing an entirely new crisis with dire consequences.”

RE/MAX of Southern Africa has made a similar plea to government. Read their view

Loading comments
More Market & Opinion articles
Market & Opinion
Should I fix the interest rate on my home loan?
05 Jun 2020
With interest rates being at a 50-year low, many South Africans might be contemplating whether now is the time to fix the interest rate on their home loan. Before going ahead with this decision, Adrian Goslett, Regional Director and CEO of REMAX of Southern Africa, strongly recommends that buyers carefully consider the various implications of this decision to ensure that they do not later come to regret it.
read more
Market & Opinion
Safety precautions when buying and selling
04 Jun 2020
In the interest of their own safety, those looking to buy or sell over this time should be aware of the following measures put in place by RE/MAX of Southern Africa to lower the risk of transmission:
read more