From the Desk of the MD - June 2018

In most of Africa, rain is a cause for celebration, as it has been recently in the Western Cape, where dry rivers have started to flow again and the storage dams that supply towns and cities have started to fill up after three years of severe drought.

The most recent reports indicate that the dams are now 26% full in total (although some of the smaller ones are already overflowing) and predictions are for at least a more "average" total winter rainfall this year, which will make a big difference to the wheat, fruit, wine and sheep farmers in the region - and to employment security in the areas surrounding Cape Town.

In the city itself, the heavy early-season storms have resulted in flooding and other damage in certain suburbs - as often used to be the case before the drought - while the city council along with the national Department of Water and Sanitation have warned that the supply dams will have to be at least 85% full before the current city-wide water restrictions can be lifted.However, most residents are really happy that they are not now facing "Day Zero" - a day when the city would have run out of water - and are hoping that if they get even a "normal" winter rainy season this year it will give the authorities enough time to get their alternative water-supply projects for Cape Town finished, so that the crisis of the past two years can be avoided in future. There are eight such projects currently under way, which together could add up to 330-million litres per day (MLD) to the city's water supply within the next 18 to 24 months.This would of course also be excellent news for Cape Town's real estate sector which, while still running ahead of the rest of SA, has definitely started to take strain due to the drought in recent months. The latest available figures from the FNB Property Barometer show, for example, that while the Western Cape saw house price growth of 50,4% in the five years to end-2017 (compared to 31,9% in KZN and 21,9% in Gauteng), the year-on-year growth rate was down to 4,4% in the last quarter of 2017 compared to 11,1% at the start of 2016.

One reason for this is that the flow of buyers keen to "semigrate" to the Western Cape from other provinces has slowed in the face of the severe water restrictions imposed due to the drought, and another is that existing local owners have been hesitant to upgrade to bigger properties. There have also been affordability challenges at the lower end of the market, often created by drought-related unemployment fears in the region's agricultural and industrial sectors.

Better water security for the City of Cape Town and the surrounding areas will obviously alleviate these problems and boost property sales, to the overall benefit of the regional economy. Meanwhile, we would recommend that Western Cape property owners make the most of whatever rainfall they do get this year and install rainwater storage tanks as soon as possible, as these are likely to remain "hot" items on homebuyer wish-lists for the foreseeable future...