Real Estate Investor Magazine South Africa June 2018 | Page 46

INSIGHTS
The Big Disruptions in Property
Don’t get left behind
GARY PALMER
Gary Palmer is the CEO at
Paragon Lending Solutions
A
lmost every industry is facing
some form of disruption. Most of
the change has been linked to new
technologies like Artificial Intelligence
and Virtual Reality. But the real revolu-
tion is coming from completely new ways
of doing business.
Unsurprisingly, this is having a knock-
on effect on the property markets and,
more importantly, where smart investors
are putting their money.
How the digital revolution is
transforming business
We are living in a digital society, where the
virtual and physical worlds merge, and in
which everyone and everything is con-
nected. One of the biggest shifts in this
new digital economy has been the move
towards platform models.
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A platform is essentially a network
(digital or physical) that creates value by
facilitating connections and exchanges
between people for services, products or
information. Platforms have given rise to
businesses like Airbnb, Uber and Ama-
zon, and are also the foundation of what
Facebook and Twitter do. This means that
the large corporation is now the excep-
tion, rather than the rule. Companies are
forming alliances with smaller, more agile
companies to provide them with services,
rather than developing these in-house.
The result is a plethora of smaller com-
panies and consultants, (often referred to
as the gig economy) with very different
property needs.
Catering to this new business land-
scape means an increase in the need
for co-working space, short-term leases
and much smaller spaces. All these need
to be geared to meet the price points of
businesses which do not want to be tied
into long-term leases and who won’t pay
for anything other than what is absolute-
ly necessary. At the same time, tenants of
these spaces are looking for value-adds
such as superfast broadband access, gyms,
and social spaces in the building.
Rise of the green economy
The second influence that is shifting the
property landscape is the growing aware-
ness of climate change and a focus on
green technology and renewables in or-
der to address this. A recent example is
JUNE/JULY 2018 SA Real Estate Investor Magazine
how proprietors of big shopping centres
in Cape Town have had to amend their
thinking in line with the current water
crisis.
The evidence of the environmental
commitment can be seen in the rise in
the number of green buildings springing
up in the metropoles. These buildings are
designed to have a minimal impact on the
environment and make use of renewable
energy sources like wind and solar. Other
energy and water saving mechanisms are
used wherever possible and some even
include vertical and roof gardens where
the produce is served up in the building’s
cafeteria – producing only what is needed
for the residents and significantly cutting
down on the carbon footprint of the entire
building and its tenants. This is even ex-
tending to resource-intensive retail space
and in January 2017, Woolworths in Cla-
remont became the first local retail store to
receive the 5-star environmental rating by
the Green Building Council South Africa
(GBCSA).
Shifting workforce, shifting
residential requirements
It’s not just commercial property that is
experiencing significant change. As the
business world changes, the requirements
of the workforce are shifting too.
Growing pressure on personal income
means the population – particularly the
younger age groups – are looking for ac-
commodation which is close to work and