SA property sector is going backwards on transformation
The commercial property sector is ahead of the pack, while the residential sector is a laggard
The pace of transformation in SA’s R5.8-trillion property industry is extremely slow‚ with the sector achieving an average overall broad-based black economic empowerment (BBBEE) recognition on the lower end of level 4.
The Property Sector Charter Council released its 2016-17 State of Transformation Report‚ as well as its latest study into the size of the sector, on Wednesday.
Council CEO Portia Tau-Sekati said: "While the entire property industry achieved a BBBEE recognition of level 4 under the BEE codes‚ which is the same level as our previous report‚ we have regressed as an industry with a lower rating within that recognition level.
"With the new BEE codes coming in‚ we clearly have a lot of work to do in terms of transformation of the sector."
Tau-Sekati cited employment equity‚ economic development‚ skills development and management control as areas within the Property Sector BEE Code‚ where the industry was "not doing well at all".
She described the sector’s performance on employment equity as "disastrous".
The industry’s transformation‚ under the Property Sector Code gazetted in 2012‚ is measured on eight elements: ownership‚ management control‚ employment equity‚ skills development‚ preferential procurement‚ economic development‚ enterprise development‚ and socioeconomic development.
In the latest transformation report‚ the PSCC says it sampled 106 companies‚ including institutional investors‚ large private property owners‚ collective investment schemes and listed property entities.
Areas of excellence were enterprise development and socioeconomic development‚ where the sector scored 105.6% and 117.2% respectively‚ against the targeted weighting.
However‚ the report says critical intervention is needed in the areas of employment equity and economic development‚ which scored 32% and 38%‚ respectively.
In terms of skills development and management control‚ the PSCC said a more concerted effort was required‚ with the report showing the sector scored 65.7% and 57% respectively.
For ownership and preferential procurement, the sector scored 80.2% and 83.7%‚ respectively.
The PSCC said in these two areas the sector had shown a reasonable performance‚ but it was still below target.
Tau-Sekati said: "Management control‚ employment equity and skills development are interrelated‚ so it is unsurprising that the underperformance of these three elements comes as a package…. This trio of low performers shows an underrepresentation of black people and black women in all levels of management‚ including real board participation."
The poor performance on skills development was worrying, she said, as it also affects future transformation of management control.
"It is critical that enterprises in the property sector adequately invest in skills. This must also be strongly linked to employment equity‚ which is the lowest-scoring element against the sector’s set target," she said.
"The sector needs to promote skills development at sectoral level rather than on a company level. This needs to be done in collaboration with academic institutions‚ to build a curriculum that meets the current and future needs of the industry."
Speaking at the report’s release‚ Izak Petersen‚ chairman of the South African Real Estate Investment Trust Association‚ said there was no doubt SA needed to transform‚ not just in the property sector‚ but also in addressing land ownership.
"We have a long way to go‚ but black businesspeople also need to work hard to form brilliant companies ourselves to bolster transformation of the sector."
Tau-Sekati said the commercial property sector was leading transformation in the overall property industry‚ while the residential sector was lagging behind.
Of SA’s 41‚000 registered estate agents‚ she said only about 10% were black‚ highlighting the urgent need for transformation in the residential property sector.