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Public sector can do more to transform property sector - report

Jun 19 2017 18:18

Cape Town - The public sector is not taking the active lead in transformation of the property sector that is expected of it, according to the latest research released by the Property Sector Charter Council (PSCC).

The PSCC did point out, however, that it was based on limited submissions by the public sector.

The research shows that the commercial property sector leads the progress in transformation, while the residential property sector is lagging behind, with a very limited number of BBBEE certificates submitted.

All in all, the property sector achieved an average BBBEE recognition of Level 4.  

READ: Transformation of property sector 'essential'

The PSCC report concludes that the South African property sector is making reasonable efforts towards transformation, but it needs to pick up pace. The launch of the PSCC 2015-2016 State of Transformation Report for the Property Sector coincides with the gazetting of the Amended Property Sector Code.

The PSCC’s research shows that the commitment to transformation varies across the sector. The commercial property sector leads the progress in transformation.

On the other hand, the residential property sector is lagging behind, with a very limited number of BBBEE certificates submitted.

The mandate of the PSCC is to drive the sector’s transformation and ensure that everyone plays a part and makes their contribution, according to PSCC CEO Portia Tau-Sekati.

“Inclusive participation is necessary for economic growth that includes all previously disadvantaged individuals and secures their meaningful participation in the mainstream economy,” she said.

Amended Code

She regards the BBBEE recognition of Level 4 as reasonable based on the previous scorecard. She added, however, that the sector will have to work harder to retain Level 4 based on the new BBBEE recognition scores.

“The Amended Property Sector Code applies the lessons learned on the sector’s transformation journey so far, including the findings of the latest research. It addresses some of the previous gaps and aligns other legislation and policies to ensure that transformation in the property sector continues at the required pace,” said Tau-Sekati.

PSCC’s new research sampled 72 companies, which it says may be a small sample, but it adequately reflects the industry outlook by covering the large companies that dominate the sector. This includes institutional investors, large private property owners, collective investment schemes, listed property entities and government.

READ: 'Radical economic transformation needs a blueprint'

The PSCC’s research found enterprise development and social-economic development to have shown an excellent performance. Ownership and preferential procurement were still below target but with a reasonable performance. The report found, howver, that more focus is required in the areas of skills development, management control, employment equity and economic development.    

“Management control, employment equity and skills development are interrelated, so it is unsurprising that the underperformance of the three elements comes as a package. It is difficult to achieve one of these three key imperatives without another," explained Tau-Sekati.

Under-representation

It shows an under-representation of black people and black women in all levels of management, including real board participation.

“You need to have black people and women in management and invest their talent to achieve skills development targets. By the same token, you need to invest in skills management to achieve your targets for talented black management in the future. It is critical that enterprises in the property sector adequately invest in skills development,” she said.

She added that there are pockets of excellence in the reporting companies, but this has not translated to success at sectoral level.

“The sector needs to promote skills development at a sectoral level rather than on a company level. This needs to be done in collaboration with academic institutions to build a curriculum that meets current and future needs,” she advised.

While Economic Development is the lowest scoring element against its set targets, there are some bright lights as a result of reasonable efforts undertaken by most of the sector’s larger companies.

“Developing shopping centres in townships and some rural areas is a leading example,” said Tau-Sekati.

“While it makes business sense that the property sector targets investment opportunities at areas with relatively high income, we hope the future direction will lead the sector to match this with a portion of investment into the poorest areas, those that are completely under-resourced, and where development is needed the most.”

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