Stellenbosch cutting ties with Eskom | What it means for the local property market

South Africans have become accustomed to frequent bouts of loadshedding, but if there is one thing well-run cities and towns have, it is access to uninterrupted electricity (and good internet connectivity).

Cumulative load shedding in 2020 is estimated to have been 23% worse than in 2019, despite a 9% decrease in real GDP, "costing the country’s economy R500 million per stage per day, and the Western Cape’s economy R75 million per stage per day". Restructuring Eskom continues to be a major concern, as outlined in President Ramaphosa's 2021 State Of the Nationa Address.

Ramaphosa says Eskom’s tariff path will also have to be restructured as South Africans continue to grapple with the high cost of electricity. However, recent changes to the Electricity Regulation Act have started to open the door for new renewable energy generation, which allows for an increasingly decentralised system of energy generation and distribution to mitigate the risk of load shedding in South Africa.

Local authorities now have the option to become self-sufficient in the production of energy.  

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As a result, Stellenbosch Municipality announced towards the end of January 2021 that it wants to cut ties with Eskom by undertaking a study to determine the viability of alternative means of power. This will include solar and wind power provided by Independent Power Producers, as well as methane mining and energy that is produced by individual households and businesses and fed back into the grid. 

Minister of Finance and Economic Opportunities, David Maynier says through the Municipal Energy Resilience (MER) Project, the Western Cape government will be supporting the Stellenbosch Municipality. “The fact is that load shedding continues to severely impact businesses and the economy in the Western Cape. I look forward to our continued efforts to do everything we can to support other municipalities to participate in the growing green energy sector so that together we can create a more energy resilient future in the Western Cape." 

Berry Everitt, CEO of the Chas Everitt International says these plans to become the first town in SA to produce its own ‘green’ power and eliminate loadshedding will have a major impact on the area's property market.

This three bedroom, two bathroom home in Nooitgedacht Estate, Stellenbosch, is surrounded bymountain views and has lovely parks. It is selling for R3.15 million - click here to view.

Everitt notes that one of the biggest effects of the Covid-19 pandemic is the rapid rise in corporate acceptance of full-time remote working, which has freed large numbers of people all over the world to ‘de-urbanise’ from big cities to smaller centres where they hope to enjoy a better quality of life.

“If Stellenbosch is able to offer a life without loadshedding, that will be a big attraction for those making this kind of move from Cape Town and even Johannesburg,” says Everitt.

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Maria de Villiers, principal of the Chas Everitt franchise in Stellenbosch, says remote workers may no longer need to live within easy reach of an office, but they do still need good internet connectivity and a reliable power supply, and the towns that can provide these will obviously reap the most benefits from the de-urbanisation trend - including an increased demand for real estate, a higher property rates base and a gain in intellectual capital.

Being independent of Eskom would also make Stellenbosch attractive to more manufacturing and high-tech companies, which currently struggle with loadshedding even more than individual homeowners. This would increase employment in the town, boost the local authority’s resources even more and enable the provision of even better services to residents, she says.

Meanwhile, the residential property market in Stellenbosch is already recovering well from the dual blows dealt last year by the national lockdown in the second quarter and the decline in demand for local student accommodation as Stellenbosch University - like many other tertiary institutions - adapted many of its courses to online teaching and remote learning.

This 51sqm apartment in Stellenbosch Central, Western Cape, has one bedroom and bathroom. It is on the market for R850 000 - click here to view.

“The town is already popular among Capetonians and semigrants from other provinces due to its picturesque location, proximity to an international airport and growing reputation as the centre of technological innovation in SA,” says De Villiers.

“It also helped that home sellers became more willing to negotiate in the light of the pandemic, and we have seen average sale price of family homes decline from R4,5 million at the start of 2020 to around R3.7 million currently.”

Meanwhile, De Villiers notes that students are returning to campus and the demand for sectional title units has also been boosted by the lower interest rates, which have cut monthly bond repayments by 30% and encouraged many young professionals and executives already resident here to buy their own homes rather than continue to rent. This is reflected in a slight increase in the average price of such units from around R1.35 million at the start of 2020 to R1.4 million currently.

What is more, she says, the average age of homeowners in Stellenbosch is dropping, with 71% of all recent sales being made by owners over the age of 50 and 68% of purchases being made by people under 50 (26% aged 18 to 35 and 42% aged 36 to 50).