Property Charter set on R4.9 trillion landscape

The Property Sector Charter Council (PSCC) has set its eye on transforming a universe that is worth a whopping R4.9 trillion.

The figure was made known for the first time yesterday following the release of a study undertaken by the council to determine the scale of its universe. The study comes to clarify the parameters of the PSCC whose charter was gazetted in June this year.

The charter seeks to ensure participation of black people to the tune of 25% of the total value associated with the property industry within the next five years. This target relates to ownership where applicable and the charter also come with specific targets for property service provision which include sub sectors like estate agency and property management.

The study conducted by IPD SA was described as work in progress. It suggested that nearly two thirds of property owned in South Africa, estimated at R3.0 trillion, is residential. Commercial property carries a value of about R780 billion. Undeveloped land zoned for development equates to R520 billion. Publicly owned property – including national, provincial and local government as well as state-owned enterprise – totals around R570 billion.

PSCC CEO Portia Tau-Sekati said “The research creates a hub of knowledge about the property sector, consolidating information and developing a common and consistent understanding”

“By determining the size of the South African property sector, we are moving towards a proper baseline measure to assess market size and its components, the scale of different services and activities within the sector and ultimately BEE transformation figures in line with the Property Sector Code scorecard”.

Establishing the scope of the property sector is important for an accurate overview of the South African economy, taking into account that in 2009 the property sector contributed 8.3% of SA’s Gross Domestic Product (GDP), according to a South African Property Owners Association (SAPOA) research report “The Economic Impact of the Property Sector in South Africa”.

 The figures in the study provide a snapshot that reflects the status in the property sector at the base date of December 2010.

It added that only around 1% of land in South Africa is urban and residential, according to the research. Over 73% of land is South Africa is natural pasture. Around 12% of land is agricultural, and about the same portion comprises nature conservations and reserves.

Of the R780 billion commercial property in South Africa, the research reports corporate property accounts for R600 billion, including investment property of R120 billion held by South Africa’s listed property sector. Further investment property, held by life and pension funds and private equity funds, totals R180 billion.

Retail property has the highest value of the commercial property sectors in South Africa at R340 billion, followed by office properties at R228 billion and industrial properties at R187 billion. Representing a small comparative value of R25 billion is hospitality, leisure and ‘other’ property.

For publicly owned property, the study used available information, which reflects R342 billion of property held by provincial government, R188 billion by national government, R37 billion by local government and R6 billion by state-owned enterprises.

Tau-Sekati said “Besides being a benchmark to monitor and evaluate the progress of transformation of the sector each year, this study marks the beginning of an ongoing research process, which will update information on the property sector annually. The study is a useful tool for understanding the South African property market and its dynamics. It is working progress and we hope to build a better and clearer picture of our industry. We welcome information sharing with the industry in terms of studies undertaken which could further refine our data and shine light on the mechanisms of the sectors component parts.”




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