Residential Estate Industry Journal 4 - Page 70

MANY LUXURY RESIDENTIAL DEVELOPMENTS FIND THEMSELVES OUTCLASSED OR ILL-EQUIPPED IN COMPARISON TO NEWER DEVELOPMENTS is board leadership and, in my view, the board is MEYERSDAL ECO ESTATE Some developments are faced with very real challenges. pressures, balancing what we want today versus what we might require in future. A decision must be made to invest some of the capital As I am sure you recognise, the effects of the short- reserves into rejuvenation of facilities, or new facilities termist phenomenon can be troubling to those seeking that add value to the lifestyle of those who invested in to save themselves for prosperity. For those looking to the principal vision of the estate. This requires careful survive to the next month while enjoying the spoils of consideration of several legal, financial, governance and their work, it is easier to adapt to change. In the face other commercial problems in order to ensure that the of these pressures, more and more the lifestyle benefits capital invested truly delivers its desired outcome, and associated with staying in a luxury estate become even to keep the capital balance on a level where it could be more important. The lifestyle benefits of property and rebuilt or be deemed sufficient for future requirements. associated facilities become the only release in a very I will continue to focus on these and related issues, the pressures to deliver these lifestyle facilities, a long- because I recognise that although much of the financial and business community agrees on the need for a long-term safety net. If what we are seeking to protect in the future does not include the benefits of a fully functioning estate, we will be protecting a lifestyle with uncertain economic climate. To this degree, amongst term approach must be used to ensure both security in investment while being able to deliver those much needed lifestyle benefits. This is a difficult balancing act, to leverage benefits today against long-term security. little to offer the changing needs of future investors. The fear of failure must not overshadow the very reality Many luxury residential developments find themselves should rather fear not acting. The latter has in history outclassed or ill-equipped in comparison to newer developments. This can lead to a sudden devaluation of property and an exit strategy by strong investors. Ensuring a development stays abreast with trends and changing lifestyles is imperative. During periods where the strategy deviates from the long-term trajectory, uncertainty prevails. In such cases, the HOA must act to of what would happen if one does not act, and one proven to be the downfall of many companies where the capital reserves have no value once the opportunity to shape the future has passed. In summary, I must admit that neither the bank balance nor the lifestyle is the winner alone – they must co- exist, and be continually evaluated so as to ensure ensure that the owners’ interests are effectively served. that one does not overshadow the other. Asset managers like an HOA have a key role to play, Francois Schoeman which is why they must engage actively with companies on the key governance factors that support long-term, sustainable financial performance. Chief among these VAL DE VIE management’s first line of defence against short-term