The recent unrest in South Africa has taken a huge toll on many of us, with violence, damage to property, and rioting having had an effect on the country and its population both physically and mentally.<\/p>\n
The unrest came in quick succession after the uncertainty caused by the COVID-19 pandemic, leaving much of the retail property sector in an indeterminate state. Many industries have been affected, with small businesses fearing that they\u2019ll not be able to recover from the damage and ransacking they\u2019ve been subject to, and larger corporations suffering a great deal of damage to shops, factories, and warehouses.
\nWith two \u201cblack swan\u201d events in a short period of time, what does it mean for the retail real estate industry, and what can we do to rebuild and prepare for further unforeseeable events?<\/p>\n
The restrictions put in place in response to the COVID-19 pandemic meant that many real estate businesses in the commercial sector were badly hit, as tenants were unable to trade and footfall to shops and malls significantly reduced.<\/p>\n
As shopper volume began to recover, the unrest presented problems of a different nature, as Jason McCormick, CEO of Exemplar REITail<\/a>, a rural and township retail real estate investment trust, explains:<\/p>\n \u201cThe impact of the looting was significant. 7 malls in our management portfolio were looted and damaged to varying degrees. We had to increase our security resources and put barriers in place to prevent further attacks on the rest of our portfolio.\u201d<\/span><\/p><\/blockquote>\n According to the South African Property Owners Association, as of 21st July 2021 the cost of the unrest is widespread.<\/p>\n In the retail sector, 161 malls suffered extensive damage, plus 11 warehouses, 8 factories, more than 200 liquor outlets and distributors and 200 shopping centres were looted and damaged. R1,5 billion worth of stock was stolen, lost, or damaged, as 3000 stores were ransacked. Overall, this accounts for a R20 billion impact on KwaZulu-Natal\u2019s GDP, and a R50 billion impact on the national GDP, as over 150,000 jobs are at risk and 40,000 businesses are affected.<\/p>\n For the property industry, this means there\u2019s a great deal of damage to be repaired, commercial tenants and leaseholders who may financially struggle, and a number of businesses being forced to close or downsize. This obviously means disruption to the property management sector, with short term recovery presenting a considerable bill, and the long term effects still to be seen.<\/p>\n The property industry is faced with a huge amount of work and investment to get the sector back to a stable position. As many businesses are quick to respond, some of the less badly damaged malls and properties have begun to reopen and start trading again with plans to redevelop and rebuild others well underway. However, looking to the future, the effects of the unrest have forced many businesses to revaluate their activities.<\/p>\n The extent of the damage as a result of the unrest is such that investors and property managers can\u2019t risk being subject to this kind of instability again, explains Jason.<\/p>\n \u201cWe\u2019ve got to be more circumspect about where we look to invest and until adequate measures are in place to guarantee that this isn\u2019t going to happen again we certainly have to be more careful about the assets we develop.\u201d<\/span><\/p><\/blockquote>\n Therefore, investments that deliver guaranteed ROI need to be prioritised. This is where PropTech comes in, as features such as scenario modelling can help to inform decisions on investments and business planning using data to predict the effects of different investments.<\/p>\n With an uncertain future, many people are looking to technology companies for the development of reliable ways in which outlier events such as COVID-19 and the recent unrest can be predicted. As AI and machine learning are becoming a major part of new tech developments, can they help to prepare us for further instabilities?<\/p>\n MRI\u2019s South Africa Managing Director Mark Fairweather comments,<\/p>\n \u201cI don\u2019t think AI and machine learning will ever take away what humans can do. I also don\u2019t think that it can predict complete outlier events like this in the short to medium term. The way we look at it is to say, let\u2019s try and bring AI first to take away a lot of the mundane that our analysts and human capital are doing at the moment \u2026”<\/p><\/blockquote>\n He goes on to say “when we survey our communities you\u2019ve got very highly qualified people doing things like data capture, running reports, crunching numbers all of those sorts of things to identify trends, then look at those trends and start to draw some analysis out of it. We want to free up expensive human resources to do the analysing and consume information rather than just raw data.\u201d<\/p>\n With this aim in mind, AI driven solutions such as MRI Contract Intelligence<\/a> lessen the burden on property management teams by automating many of the most time consuming tasks. With staff freed of less mindful work, they can focus on recovery and future of the company, helping to establish a more resilient and adaptable business.<\/p>\n
\nIt\u2019s not just retail – 113 components of communication infrastructure were significantly damaged, 1400 ATMS and 300 bank and post office outlets were vandalised.<\/p>\nHow can PropTech help?<\/h3>\n
Careful investment<\/h3>\n
Resilience<\/h3>\n