Authorities scare off developers
Johannesburg – Inefficient and corrupt local authorities make it increasingly difficult for large property companies to invest in new property developments in South Africa.
More and more companies are seeking opportunities elsewhere in order to expand their portfolios. As a result less and less is being spent in South Africa and sorely needed job creation cannot take place.
Marc Wainer, chief executive of Redefine Properties, the second-biggest listed property company in the country, said the company is not turning its back on South Africa, but is investing only in areas unencumbered by bureaucracy and corruption.
“At this stage we would rather buy buildings than develop, because delays in the developmental process make development non-viable and negatively impact returns.”
He said Redefine would have liked to spend much more and contribute to job creation, but that is simply not possible.
The company has already spread its wings internationally through its stake in Redefine International, which has exposure to retail and office properties in Britain and Germany as well as a stake in the Australian company Cromwell.
Norbert Sasse, chief executive of Growthpoint, the biggest property company on the JSE, said his company is focusing largely on redeveloping properties with existing rights and is therefore not embroiled in municipal procedures.
“The issues currently in the spotlight relate more to new property developments.”
He said Growthpoint is however affected by poor services, which are a growing source of concern. “We are paying more and more in property tax and service fees and receiving less in services.”
The company therefore has no option but to provide the services itself and bear the additional associated costs.
Sasse said Growthpoint, which owns 50% of the V&A Waterfront in Cape Town, will however continue to invest in South Africa.
Growthpoint also has a foreign subsidiary, Growthpoint Properties Australia (Goz), with a significant property portfolio in Australia.
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