FIFI PETERS: The South African Property Owners Association, Sapoa, today (Wednesday, July 13, 2021) convened a briefing to update the nation and investors about what has happened to its shopping malls and other properties in light of the recent riots. Eight hundred stores have been looted and around 100 malls have been either burnt or damaged by the civil unrest. Sapoa estimates that the overall loss to eThekwini’s GDP alone currently stands at R20 billion.
To discuss this further I am joined by Neil Gopal, the CEO of Sapoa. Neil, thanks so much for your time. Is this R20 billion and counting?
NEIL GOPAL: Sorry. The line is very bad. Is this R20 billion?
FIFI PETERS: Is this R20 billion and counting – or is this the final figure that’s expected to register?
NEIL GOPAL: No, not at all, because the situation is very fluid on the ground. Malls that are being looted or have been looted are then being looted once again, and they’re being stripped of everything from solar panels to glass doors to Trellidoors. And it’s very difficult for people to get down on the ground – particularly the property owners – to estimate the damage. We can estimate it, but that figure is changing on a daily basis.
FIFI PETERS: And how about Gauteng? Correct me if I’m wrong – this figure relates to eThekwini. But what about the damage that’s been done to Gauteng in terms of estimates?
NEIL GOPAL: Again, very difficult to estimate. Obviously there are a lot more shopping centres and malls in Gauteng, so one would expect, if this continues at the rate that it is, it would be a lot more in rand value in terms of damage than KwaZulu-Natal, KZN.
FIFI PETERS: There are a lot of questions about cover. Inasmuch as we know, a lot of large companies are covered with Sasria (SA Special Risks Insurance Association). Perhaps you can give us the detail from your members’ point of view. Are they adequately covered to cover the cost of these losses?
NEIL GOPAL: Well, I would think so. I’m not privy to the policies as such, but I would think that a lot of them are covered by these type of incidents. Whether Sasria has adequate funds is another story. So we would need to understand that carefully.
And secondly, in terms of the payments and how quickly they can make those payments, we need some comfort levels on that.
FIFI PETERS: Media reports are saying that Sasria says that so far it does have the funds. But, as you do say, time will tell. Neil, it seems that the property sector has been hard done by. As landlords you guys had to kind of stand up and give rental relief to a lot of your tenants who were impacted by the Covid-19 lockdowns and couldn’t make rent because of a fall in sales. While doing so, many landlords in the country continued to pay their rates and taxes and be good corporate and government citizens. And now this happens to you. What are you calling on government to do to assist you this time around?
NEIL GOPAL: Well, we’ve made it very clear – and we haven’t changed our stance on this – we want the President to deploy many, many more soldiers down on the ground – 2 500, 3 000, 5 000 just doesn’t cut it. This is no longer looting and rioting. This seems to have the hallmarks of an attempted coup in the country. When people are destroying cellphone towers, when people are blowing up reservoirs and attacking other infrastructure in the country, these are hallmarks of a coup or an attempted coup. I want to put that out there.
Secondly, as I said, we can’t afford to have 2 500/3 000 soldiers resolve this matter. We need to go back up to Level 5 because we were there last year; the blueprint exists. Crime rates were at zero. Everybody was in the house, communities were in their houses, so we need to get back there; and soldiers were deployed last year. So we can get there. It’s senseless calling the army to a shopping centre which has already been looted or burnt down. We need to stop the people from actually getting to the shopping centres to cause all this destruction.
FIFI PETERS: Hold on. Neil, in terms of Level 5, what aspects of Level 5 are you calling on government to bring back now?
NEIL GOPAL: Well, we think people should stay at home and the army should be deployed – 100 000 or whatever it takes – to keep people in their houses, regardless of whether it’s in urban or rural areas. This should potentially be maybe just KZN and Gauteng. Maybe it borders on a state of emergency, which some people are calling for. In terms of Level 5 people were allowed in small batches to go out and get their essential goods like food. And that’s still fine.
The danger we have here, and it is already at breaking point, is that the distribution centres have all been burnt down. So where they’ve kept the food and the medication has been burnt down. The highways are no-go areas. And then the last point of the value chain, which is the shopping centres, they have been burnt down.
So the question is how we food to people, because that’s the next big worry for us in the next 48 hours; the shelves are already getting empty.
FIFI PETERS: I imagine that you’re saying bring back tighter restrictions on movements until law and order is restored.
NEIL GOPAL: Yes, most definitely. We cannot continue down this path. With this level of destruction it’s very easy to break something down. It’s very, very difficult to build it up again. We think that some of these shopping centres may take more than two years to rebuild. That’s not an assumption that the investors and the owners actually want to go back and rebuild it. I think we need to be very wary and cognisant of the mindset that everybody’s going to go back in and rebuild everything. People may just decide, hang on, ‘I can’t assume further risk because I don’t have a guarantee that this isn’t going to happen in another two or three years’ time’.
So I do see capital flight. I do see investor confidence significantly waning, and I do think that some property owners are going to give up and not go back and rebuild.
FIFI PETERS: The one element there is the insurance cover for some, but do you think that government needs to be part of that rebuild financially?
NEIL GOPAL: Most definitely. I really do think government needs to start playing its part as well because, as you said, last year the landlords and shopping-centre owners bore the brunt of Covid-19. The municipalities demanded their fair share of property rights and taxes, which every property owner paid, regardless of the fact that that shopping centre was 80% empty and they weren’t trading, regardless of the fact that the landlords gave close to R6 billion worth of rental relief to their tenants. This was basically the last straw that broke the camel’s back.
We really didn’t need all of this. It’s going to be very difficult to recover from this – very, very difficult.
FIFI PETERS: Agreed. Neil, thanks so much for your time. Inasmuch as it’s popular, as a potential Level 5 lockdown may seem for a lot of people in terms of restoring the law and order, I completely hear your arguments and the point being made there. Neil Gopal, CEO of Sapoa.