The property market in South Africa took an enormous knock when President Ramaphosa implemented a hard lockdown to slow the spread of COVID-19 in March 2020. Property entrepreneurs working with uMaStandi in townships around the country were not immune to the impact. But, with uMaStandi’s personal and hands-on support many were able to weather the storm. Two of our clients share their experience.
Athie Mathinise, whose second uMaStandi-funded development was 60% complete when the lockdown was announced, says: “I was starting to do marketing to get tenants in for occupation by 1 July 2020 when the announcement was made, and of course everything came to a sudden stop.”
“It was really difficult. First, the contractors couldn’t come on to the site to keep building. Then, there were delays in getting building supplies because both imports and local manufacturing were stopped. This also affected the prices as everything became very expensive. And, on top of all that, we had a lot of materials being stolen from the site because no one was allowed to be there to keep it secure.
“I also paid my contractor in advance when we heard lockdown was likely, thinking that I could help to keep him and his employees paid over the period, and that shot me in the foot. When we were able to start building again the contractor no longer had the funds to continue with the project.”
Athie found himself in an awkward position, to say the least, and took a personal loan to start buying the materials and finishings that were needed to complete the build, such as doors and toilets. But the loan’s interest rate was extremely high, and it added a lot of stress to an already challenging situation.
He then spoke to his portfolio manager at uMaStandi, who jumped into action immediately. “Nomfundo offered great support in finding cheaper contractors and materials and came with me to site visits to inspect the work and make sure everything was on track and to the right standard. uMaStandi also helped me to safeguard the materials on site,” Athie says.
“But,” he continues, “even more importantly they helped me to stay motivated. There was a time I felt like I had made mistakes and had to give up on the project, but the team at uMaStandi were very encouraging and helped me to keep going when I felt that way.”
Athie’s other, smaller property is also funded by uMaStandi, and was also affected by the hard lockdown. “Most of the tenants in that property were employed in hospitality, and of course that was one of the worst affected industries at the time. So, when they lost their jobs they couldn’t pay rent and I knew I had to do something to help them through such a tough time,” he says.
“How you treat tenants is very important. I worked with each of them to make a plan to pay what they could until they were back on their feet and uMaStandi supported that by renegotiating my loan payment terms as well, so that I could help them,” he concludes.
Both Atthie’s properties have recovered well – they are fully tenanted and collecting rent so that his repayments are also back on track.
Shumani Pharamela, another uMaStandi client, had just started building on his first project in Protea Glen, Soweto, when the lockdown was announced. All the Quantity Surveying and costing had been done, but the price increases in materials due to the lockdown threw all that work off course. “Prices increased by 10-15% on most of the materials we needed, and steel went up by as much as 30%,” he says. “So, we had to replan everything.”
Shumani says the uMaStandi team and his contractors were very proactive, working with him every day to look for opportunities to cut back or renegotiate prices. “Because we buy a lot of materials from local hardware stores and wholesalers, who either couldn’t get stock or had to increase their prices too much to come close to our budget, we were forced to go to the manufacturers for some materials to try to offset the increases,” he says.
“uMastandi extended my grace period by a few months to accommodate the delay in construction caused by the lockdown, and that really helped.
“We also had delays in delivery of the materials when the manufacturers and suppliers started to come back to work, as bigger projects and contractors took precedence,” he continues. “This had a knock-on effect to getting the construction going after lockdown lifted. The uMaStandi team and the project managers were very helpful and proactive in terms of planning for this and mitigating against it. They proactively advised me to apply for an increase on my loan, for example, knowing that the cost of materials would remain higher than we had planned.”
“We finally started building in June 2020 and the project is now complete and ready for tenanting,” Shumani concludes.
Both Athie and Shumani are extremely happy with the support they received from uMaStandi during such a difficult time, and are looking forward to expanding the property portfolios.