- Every franchise in South Africa is owned and operated individually and independently.
- Lew Geffen Estates is just one of more than three dozen individually owned and operated franchises across South Africa.
- The business rescue application for Lew Geffen Estates, therefore, has no bearing on any other franchise in the country.
One of the five franchises in greater Johannesburg operating under license from Lew Geffen Sotheby's International is applying for business rescue.
According to a statement from Lew Geffen, chair of Lew Geffen Sotheby's International Realty (LGSIR), every franchise in South Africa is owned and operated individually and independently. The business rescue application involves just one franchise, namely Lew Geffen Estates (Pty) Ltd in Johannesburg, which was to be sold last year, but is still privately owned by Geffen and his wife Sandy.
Lew Geffen Estates, which has specialised in luxury residential property sales across the greater Johannesburg area over the past 38 years, is applying to be put in business rescue.
"The geographical footprint in which this estate agency has operated for the past 39 years comprises suburbs of mainly luxury properties in the north of Johannesburg. The turgid economy exacerbated by a year of Covid-19 had made for extremely difficult trading conditions and this has forced us to make some hard choices; ones that at the end of the day must be in the best interests of our staff and our clients," explains Geffen.
Geffen says Lew Geffen Estates is just one of more than three dozen individually owned and operated franchises across South Africa trading under the Lew Geffen Sotheby's International Realty brand. The Sotheby's International Realty master license agreement from the US is held in South Africa by Geffen International Realty Franchises (GIRF), the national Lew Geffen Sotheby's International Realty head office.
"The business rescue application for Lew Geffen Estates, therefore, has no bearing whatsoever on the operations of GIRF or any other LGSIR franchise in the country. Lew Geffen Sotheby’s International Realty in South Africa is in fact on an extremely sound financial footing," says Geffen.
"The Companies Act specifically provides for a company to be placed under business rescue if the board reasonably believes that the company is financially distressed, and that there appears to be a reasonable prospect of rescuing the company. That exactly where we are; in need of a period of calm and some expert assistance to rescue the company because we believe in our staff, our clients and the strength of our brand," he says.
"It is business as usual across the country at Lew Geffen Sotheby’s International Realty and will be the same at Lew Geffen Estates throughout the business rescue process."
Bedfordview
In June 2020 Lew Geffen Investments (Pty) Ltd went into voluntarily liquidation. It operated a single real estate office in Bedfordview in the east of Johannesburg. This liquidation only affected Lew Geffen Investments (Pty) Ltd and its Bedfordview operation.
At the time Geffen the Bedfordview office hadn't been performing optimally for a long time. When the Covid-19 pandemic hit, maintaining the business became unsustainable.
Geffen launched Lew Geffen Estates (Pty) Ltd in Johannesburg in 1982 and it was this business that negotiated the national licence some 20 years later to launch the Sotheby's International Realty brand in South Africa.
Later in June last year, Lew Geffen announced a deal with Savukazi Properties, owned by Hloniphizwe Mtolo, chair of the boards of the Shell companies in South Africa, and his wife, media personality Masechaba Mtolo. Savukazi Properties would trade under Lew Geffen Sotheby's International Realty brand as a franchise in Gauteng. This deal, has, however, fallen through.
FNB senior economist Siphamandla Mkhwanazi says the FNB estate agents survey shows that the residential property market grounded to the halt in the second quarter of 2020, but rebounded strongly in the third quarter, as many affording renters opted to buy property as opposed to renting. This drive was propelled by the aggressive reduction in interest rates, as well as declining property prices mainly in some "affluent suburbs".
He says data shows that demand remained strong into the fourth quarter of 2020, but it was losing steam. During the second quarter of 2020, a number of estate agents reported loss of income, which was exacerbated by the fact that a number of them needed to adapt to social distancing restrictions.
"Add to that rising private sales (directly from seller to buyer), with households searching for ways to cut or save on transaction costs. On the rental market, we are seeing vacancy rates continuing to rise, as demand has taken a massive knock due to the Covid-19 pandemic," says Mkhwanazi.
"The conflating of these suggest that there would be some pressure on market participants. Indeed, from what we can see, there is some level of consolidation taking place in the market, with activity concentrated among few agencies."