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Load shedding is here to stay, at least in the short to medium term, but there are hopes that Cape Town may be able to ease those woes through buying energy from independent power producers (IPPs).

According to Cape Town mayor Dan Plato, the City has been exploring this option for a while, but President Ramaphosa’s comments during his recent SONA address have shown buy-in from those at the top of the national food chain.

That will come as great news to the general public, because we’ve all grown weary of rolling blackouts and EskomSePush notifications, and it’s also good news for property owners and realtors.

IOL spoke with Galetti CEO, John Jack, who outlined why that is the case:

“The property sector has been at the mercy of Eskom and new measures being put in place will see growth in real estate values the long-run,” says Jack…

“Uninterrupted power supply to Cape Town through the creation of its own power generation will see small businesses relocating from Johannesburg to Cape Town, while larger Johannesburg-based businesses would have already put plans in place to generate their own power”. Based on this, Jack predicts a land price increase towards areas like Atlantis as a commercial hub.

If you have a few million Randelas lying around, it might be worth getting in on that action before the market reacts and prices rise.

Those changes will certainly have a more pronounced impact on commercial property values, rather than residential values, which are still feeling the pinch from the likes of the Day Zero scare.

In an excellent piece last week, the Financial Times outlined why that’s the case:

The effects of the drought were still being felt last year. In the third quarter of 2019, house prices in the Atlantic Seaboard area were down 7.1 per cent on the same period in 2018, according to First National Bank (FNB). This follows median price increases of up to 200 per cent over the decade 2008-2018 for Green Point, Sea Point and Waterfront.

“Before the water crisis, Cape Town was experiencing strong growth in property prices,” says Siphamandla Mkhwanazi, an FNB economist. He says a lot of demand in the Waterfront area came from wealthy outsiders, either from Johannesburg or overseas…

Cape Town’s luxury homes have been hardest hit, with prices dropping 30 per cent since mid-2017, according to Knight Frank. FNB analysis shows that in the second quarter of 2019, average prices across the city grew just 0.5 per cent year-on-year — at the time, annual inflation was at 4.4 per cent.

We can’t have it all. Read the rest of that FT article here.

Property value aside, if the City of Cape Town can get cracking with regards to those independent power producers, new power plants could be online within three years.

Get that right, and the taps not running dry, and we’re living the good life (also known as the basics of running water and power).

[sources:iol&ft]