Speech at the SAPOA Convention, Durban – 1998/05/24

SAPOA office bearers
Convention Delegates
Fellow guests
Ladies and gentlemen;

At the outset, we must thank the organisers for inviting us to join SAPOA in launching “Property Countdown to the Millennium”.

It gives us a window of opportunity to contribute to the agenda on the future of the property industry, so that we do not repeat the mistakes and reproduce the inequalities that derived from public and private policies and practices of the past. It affords us the opportunity to.

  • Reflect on the role of the commercial property industry within the South African economy.
  • Identify key issues and challenges for the future.

The critical role of the commercial property industry in our economy is highlighted by the 19 to 25 per cent of the country’s total Gross Domestic Fixed Investment that has gone into new investment in residential and non-residential properties over the past eight years.

Investment in property on this scale significantly contributes to the creation of jobs, both during construction and in the management; maintenance and servicing of completed properties, as well as the impact on ancillary industries, such as brick making, cement production, furniture making, and so on.

SAPOA members are responsible for a significant proportion of this impact on our economy, with their property asset base of more than R150 billion and their spending of approximately R5 billion per annum on building operating expenses, including the payment of municipal rates and taxes.

Given the scale of these operations, it becomes particularly important to address some key issues that, we believe, should be high on the agenda as our property industry prepares to enter the new millennium.

Our first comment on this agenda is the issue of ECONOMIC EMPOWERMENT.

We are all acutely aware of how, until very recently, apartheid’s discriminatory policies and practices shaped our economy, and of their legacy in the present racially distorted ownership and employment patterns. These patterns are particularly evident in the property industry.

Our people have, through the adoption of our new constitution, committed themselves actively to eradicate these historical imbalances.

The Bill of Rights contains a property clause, which both guarantees the rights of property owners, but, among other things, also exhorts the state to “take reasonable legislative and other measures, within its available resources, to foster conditions, which enable citizens to gain access to land on an equitable basis”.

Our first democratically elected government is committed to these objectives. It will, in line with our country’s constitution, use the procurement and disposal of goods, services and property by organs of state as a powerful tool to facilitate the empowerment of previously disadvantaged individuals and firms, in the economy at large and, more specifically, in the property and construction industries.

In the case of the property industry, policies of economic empowerment mean;

  • altering the skewed ownership and control patterns of property;
  • creating opportunities for and empowering previously disadvantaged individuals and firms, especially small, micro and medium enterprises through outsourcing and sub-contracting; and   empowering employees by ensuring equitable recruitment practices, adequate and appropriate training, a systematic transfer of skills and encouraging employee equity in property owning, management and services firms.

Even though the state, as legislator, consumer and investor, plays a very significant role in the property industry, it cannot on its own succeed in achieving those goals. The private sector also needs to play a role, by adopting, pioneering and championing policies aimed at redressing past inequalities.

Our second comment on the agenda for taking the property industry into the new millennium is the RE-

ALIGNMENT OF THE HISTORICALLY DISTORTED DEVELOPMENT AND DEVELOPMENT PATTERNS which characterise our physical landscape – in short de-racialising our cities, towns, villages and country side.

Apartheid policy developed black townships in locations significantly distant from our towns and cities. They effectively became dormitory towns, from where people commuted to their often-distant places of work, while they lived in areas with an extremely limited or non-existent social and economic infrastructure.

Partnerships between the public and private sectors are required to create much needed infrastructure in black townships, as well as in endeavours o link townships with city centres and other employment areas via development corridors. One such corridor includes Spoornet’s Baralink and the Department of Public Works’ NASREC development, in a co-operative initiative to link Soweto with the Johannesburg City centre and the greater metropolitan area.

Businesses have, in recent years, fled from most of our city centres. Various reasons have been offered for this flight, ranging from increased levels of crime, to international trends towards decentralisation and park-like work environments, and even to blatant racism and an inability of the part of business to adapt to the changing socio-economic and political environment.

Such movement threatens to leave us with under-utilised massive infrastructural investment in the buildings, roads, sewers, etc. that form the backbone of our city centres. We cannot afford to waste such resources or even to duplicate them elsewhere ad infinitum.

A clear vision for our city centres is required. Such a vision should not seek to romanticise and re-create the past glory associated with city centres. Instead, our African heritage, the competitive advantages which our city centres enjoy, current international trends in city centre renewal and the requirements associated with information age work and leisure environments should form the cornerstone of our vision for revitalising our city centres.

The key stakeholders in the property industry, both in the public and private sectors, must play a role in articulating the new vision, as well as in its realisation.

Government’s Spatial Development Initiatives (such as Lubombo, the Maputo Corridor, the West Coast initiative) also link disparate areas of Southern Africa and by providing environments conducive to investment, as well as employment and wealth creation, help reverse the racial fragmentation of our society created by apartheid and promote the balance development of the region of Southern Africa. These initiatives require vast investments in physical and social infrastructure, from both the public and private sectors.

When democracy made it possible for South Africa to dismantle the apartheid economic laager and enter the competitive global economy, there were both risks and benefits. If our property industry is to remain competitive, we will have to CONFORM WITH INTERNATIONAL BEST PRACTICE AND, wherever we enjoy competitive advantages, SET NEW STANDARDS FOR INTERNATIONAL BEST PRACTICE. This is our third contribution to the agenda for taking our property industry into the new millennium.

It is said that property investors and developers have always held their cards very close to their chest. While one cannot deny such investors and developers a competitive edge, a clear need exists for transparent, credible and freely available property industry benchmarks and statistics. This will ensure that our industry remains competitive internally, as well as become more open to foreign direct investment.

The world now demands environmental and user friendly, efficient and effective work environment, which enhance productivity. The property industry will have to invest in the creation of such working environments if they, the occupants of properties and our country are to become globally competitive. This must include the very important issue of sensitivity to the needs of the disabled and the elderly.

Our fourth and, for the purposes of this address, final comment on the agenda of your industry is the question of PUBLIC-PRIVATE SECTOR PARTNERSHIPS.

In accordance with its policies on reconstruction, development growth, employment and redistribution, government is constantly looking to create opportunities for the private sector to participate in the creation of the social and economic infrastructure, examples include such initiatives as the involvement of the private sector in the design, building, financing and operating of prisons, as well as the Maputo Corridor toll road project.

Public-private sector partnerships, in line with international trends on fiscal restraint, good governance and efficient and effective delivery, will increasingly be used in the creation of social and physical infrastructure. In the South African context such partnerships can and will also be utilised by government as a tool for economic empowerment.

Such an agenda, ladies and gentlemen, defines a set of challenges, to be met head-on by both the public and private sectors, if we are going to build a property industry, which can compete with the best in the world.

  • Ownership, control, employment and opportunity patterns must be de-racialised to ensure that new, previously excluded participants are drawn into the property industry on the basis of adding value to the sector.
  • We must ensure the development of buildings as working environments, which are environmentally sound, foster productive work and conform with international standards.
  • Partnerships between the various tiers of government, as well as between the private and public sectors must be forged to alter historically distorted development patterns, to revitalise our intercity areas and to meet the infrastructure needs of the disadvantaged black majority.
  • Apartheid cities and towns must be redeveloped so that they are economically viable, sustainable and can serve as internationally competitive locations for global business.
  • Public private Sector relationships must be redefined to assume a more co-operative (as opposed to adversarial) nature.

These challenges are certainly daunting, but they are not insurmountable. The reason for our optimism is that the South African property industry today, comprises men and women who have the ability to transcend our chequered past, and to place the industry at the centre of the global property map.

We look forward to a time when equity within the property industry will be achieved, so that we can move forward with a common national agenda. Until then and even once there, we look forward to travelling with you, constantly in search of ways to enhance opportunities and improve the quality of life of all South Africans – a journey which, we believe, will also result in a Renaissance within the property industry, not only in South Africa, but also in other parts of Africa.

I would also like to take this opportunity to express our appreciation for the co-operation that has and is taking place between SAPOA and the Government.

This has included such areas as land reform and redistribution, public works, the construction industry and local government.

We stand ready further to deepen this Cupertino in a mutually beneficial manner.

We wish you success in your deliberations during this annual convention. Let us begin the property countdown to the millennium by addressing the challenges and identifying the opportunities. Let us ensure that those opportunities are seized by individuals and firms in a manner that will result among other things in greater equity in ownership and control throughout the property industry.

I thank you very much.


Issued by: Office of the Deputy President T M Mbeki

 

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