SA’s property sector is still far too white‚ property council find
The pace of transformation in South Africa’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.
That’s the view of the CEO of the Property Sector Charter Council (PSCC)‚ Portia Tau-Sekati‚ speaking in Johannesburg on Wednesday during the release of the PSCC’s 2016/2017 State of Transformation Report‚ as well as its latest study into the size of the sector.
“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‚” she said.
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 went on to describe the sector’s performance on the employment equity element of the BEE as codes as being “disastrous”.
The industry’s transformation‚ under the Property Sector Code that was gazetted in 2012‚ is measured on eight elements‚ including Ownership‚ Management Control‚ Employment Equity‚ Skills Development‚ Preferential Procurement‚ Economic Development‚ Enterprise Development‚ and Socio-Economic Development.
In its latest transformation report‚ the PSCC said that it had sampled 106 companies‚ including institutional investors‚ large private property owners‚ collective investment schemes and listed property entities.
The report revealed the sector’s excellent performance in terms of Enterprise Development and Socio-Economic Development‚ scoring 105.6% and 117.2% respectively‚ against the targeted weighting. However‚ it said that critical intervention was needed in the property sector 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 by the sector was required‚ with the report showing the sector had scored 65.7% and 57% of the respective targets. On the ownership and preferential procurement elements‚ 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 under-representation of black people and black women in all levels of management‚ including real board participation.”
She added: “The lack of performance on the skills development side is concerning as it also has an impact on transformation of management control going forward… 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.
“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 event to release the report‚ Izak Petersen‚ Chairman of the SA Real Estate Investment Trust (SAREIT) Association‚ said there was no doubt SA needed to transform‚ not just in the property sector‚ but also in addressing the land ownership issue.
“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.”
Meanwhile‚ Tau-Sekati said the commercial property sector was leading transformation in the overall property industry‚ when compared to the residential sector that 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.