Redefine Properties has warned that disruptions to water supply in Gauteng far outweigh the effects of load-shedding.
The outages pose a greater threat to business operations and could lead to commercial buildings becoming uninsurable, it says.
The real estate investment trust (Reit), which has a portfolio valued at about R100bn, has earmarked capital expenditure of more than R200m to install new water tanks that will guarantee water supply for up to five days at its Gauteng properties.
The decline in SA’s water infrastructure has resulted in prolonged water shortages across the province. Gauteng’s water supply issues stem from a nine-year delay in the Lesotho Highlands Water Project Phase 2 and are worsened by a rising population. Until the project is completed in 2029, the province will face periodic water outages as demand surpasses supply.
The situation has been worsened by weak billing and revenue collection, insufficient prioritisation of budgets for maintenance by municipal councils, and a lack of qualified staff.
Speaking to Business Day on Tuesday, Johann Nell, head of development and industrial asset management at Redefine, said the company’s buildings had experienced the effect of water outages from Sandton to Bedfordview lately, and more so in the East Rand and other areas where ageing infrastructure was prevalent.
“When we are experiencing major outages in our offices and our retail centres, it’s worse than load-shedding in that staff go home; you can’t switch on a generator,” said Nell. “If you don’t have capacity to supply yourself, you have to close down the building for occupational health and safety purposes.”
Insurance claims could be affected if firefighting equipment and sprinkler systems were found not to be in place and compliant with legislation.
Day zero
Inland properties make up about 60% of its SA portfolio, with Gauteng accounting for about 50% of that.
Nell said the lack of communication from local authorities on whether a day zero was looming hampered businesses from adequately preparing themselves, unlike in Cape Town in recent years.
“Who knows, maybe we are very close to a day zero,” said Nell, “but the way we have taken it on board is to expand our water security.”
Boasting a R29bn market capitalisation on the JSE, Redefine owns retail, industrial, offices, logistics and self-storage in SA and Poland. At end-February, its property assets under management were valued at R100.4bn.
Redefine properties typically consume about 6,000 kilolitres (kl) of water daily and currently have water backup systems installed that hold 6,300kl.
Group sustainability project manager Victor Mathey said that to achieve a five-day buffer at current water consumption levels, Redefine needed an additional 38,000kl. The installation of new water tanks would guarantee sufficient capacity during an outage.
“We are finding that outages are in the range of about five days and in some cases longer than that,” said Mathey. “We have some capacity installed already but we need to expand on that to get to our five-day window.”
Hurried interventions
Mathey said Redefine was rolling out a substantial smart metering project that evaluates bulk water consumption and identifies leaks to proactively attend to them, to ensure that its assets are water efficient.
The hurried water security interventions come as pundits have warned of further water outages in Gauteng as Rand Water grapples with inferior capacity and failing infrastructure.
Moreover, the Lesotho Highlands Water Project, which provides critical water supply to regions countrywide, is scheduled for big maintenance over six months, beginning in September, interrupting supply. Authorities have said the Vaal River system and the Sterkfontein Dam were expected to have enough water in storage for the period.
As Redefine also pursues borehole licences to beef up its capacity, Nell said that the insurance worthiness of its assets was a big worry compounding Gauteng’s challenge of the security of drinkable water.
He said that in the past the group would link the fire sprinkler and fire hydrant systems in a development to the municipal network’s fire system supply. However, when frequent outages increase and the water pressure in these connections decreases, buildings become more vulnerable and may not be covered by insurance.
“Beyond potable water security, a major concern is the insurability of our assets, he said. “Given the outages and the drop in water pressure in these lines, buildings become at risk and potentially uninsurable.
“Fire systems and fire hydrant systems need sufficient water backup so that we can ensure our buildings remain protected and insurable,” said Nell.
As part of the installation rollout, Redefine said it had also included water pressure meters in its buildings that would be regularly monitored to identify any pressure drops.
Redefine shares were unmoved at R47 on Tuesday, having risen 8% since the start of the year.
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