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

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

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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.

The PSCC report concludes that the South African property sector is making reasonable efforts towards transformation but it needs to pick up the 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 says.

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,” says 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 the government.

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, however, 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,” explains Tau-Sekati.


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

The amended property codes recognise that the sector continues to reflect vast inequalities in the representation of women in general and black women in particular in ownership, control, management and in skilled professions in the sector. In acknowledgement of the cross-cutting nature of gender across all elements of BBBEE and its integral part in the transformation of the sector, the parties to this draft sector code commit to:

Enhance gender awareness in the workplace and promote a conducive and empowering environment for women in general;

Target skills development and employment equity for women, particularly in areas that are presently male-dominated;

Design targeted enterprise and supplier development programmes, which increase the participation of women as owners in business and property assets in the sector;

Identify barriers to black women’s advancement and design targeted programmes to increase the representation and the empowerment of black women in the sector as outlined in all elements of this draft aligned code; and

Promote policies on gender that address the above objectives.

“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 says.

She added that there are pockets of excellence in the reporting companies but this has not translated to success at a 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 the current and future needs,” she advises.

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,” says Tau-Sekati.

“While it makes business sense that the property sector targets investment opportunities at areas with a 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,” she adds.

Property education

It is time for South Africans to rethink property education and training if we want to get more young black people into the sector. An increasing number of black-owned companies have set up shop in the property sector, particularly in the provision of property services. However, property ownership remains underrepresented when it comes to transformation because of the capital-intensive nature of the asset class. Usually, mainly large commercial property companies have the resources to take advantage of most opportunities in this market.

The reality is that the commercial property sector remains relatively untransformed; preferential procurement points and enterprise development incentives set by sector codes are not enough to break down barriers to entry. The lack of a track record is often used as the pretext for not granting new black businesses an opportunity to participate. Although the public sector has created opportunities for new players, payments are routinely delayed, resulting in precarious cash flow for smaller and privately-owned businesses, which simply cannot afford the risk.

A 2016 study compiled for the Property Sector Charter Council revealed that the South African property sector is worth an astonishing R5.8-trillion, with commercial property making up about R1.3-trillion of the total. The bulk of this, almost R790 billion, is held by corporates, followed by real estate investment trusts with R300 billion, unlisted funds at R130 billion and life and pension funds at R50 billion.

As an asset class, property is long term and has the ability to provide both annuity income and a growth in capital value for the investor. When you consider the bricks and mortar aspect of property, there is a long value chain—from project conceptualisation, procurement of materials and construction, to property and facilities maintenance. The potential for job creation and enterprise development is significant. To grow black entrepreneurship, funding has to be made accessible. At present, it is extremely difficult to raise capital. But that is not the only challenge.

The sector is dominated by a handful of big players who are not adequately incentivised, or required, to open the space to emerging companies. What is more, the sector is conservative and risk-averse, with much emphasis placed on experience. This tends to penalise younger players trying to make inroads, whether in the entrepreneurial space or on the corporate ladder. Combined with this set of circumstances is the reality that most young black people have limited generational wealth and networks in property. These take decades to build.

Young people, in general, don’t always understand the depth of the sector and career opportunities that exist, particularly when one considers listed and unlisted commercial property. There are many facets to property, beyond estate agency and property valuations. Black youth, particularly in underresourced communities, need improved access to information, via the Internet or career days at schools for example, with the participation of companies and tertiary institutions.

South Africa needs a platform to create a greater sense of awareness and exposure to the promise of property as a sector. Industry bodies such as the Property Sector Charter Council, the Women’s Property Network and the South African Institute of Black Property Practitioners have already started with school initiatives to improve access to information.

More needs to be done along these lines. The current education system has focused more on theory and less on the practical skills required on the job. Tertiary institutions need to make provision for students to obtain solid work experience as a prerequisite for their qualification. Real-world case studies should also be part of the curriculum to make students aware of the challenges faced by the sector, particularly at an undergraduate level.

Students leaving tertiary institutions should be equipped to step into the sector with an innovative attitude that can shake up the industry and drive greater entrepreneurship. The market has placed more emphasis on experience and age over solid qualifications, which has done little to incentivise institutions to formalise their educational offerings, or to think out of the box to improve and change the status quo of the industry. Postgraduate qualifications in the built environment are aimed mainly at new entrants and don’t take into account the needs of young people already in the sector who have a burgeoning career in property and want to further their education. As a result, industry associations have had to fill some of the gaps with short courses.

The good news is that there are big opportunities out there. There has been little innovation from an IT perspective, other than apps connecting property buyers and sellers. We need technological improvements that can help landlords better manage their property portfolios by driving efficiencies; we need IT solutions that can have a significant impact on the bottom line. This could be a good entry point for black youth interested in the industry. Young people wanting to get into the sector need to identify companies where they can be interns or volunteer at to gain exposure.

Regarding skills development, the amended property codes enterprises in the sector are not adequately investing in skills development and consequently, there are limited levels of workplace development and continued professional training. There is also an insufficient number of structured and accredited training programmes or curricula in property-related professions.

The parties to the charter commit by gazetting the amended sector code to address the backlog in structured skills development. This programme will be designed in partnership with the sector, the SETA, the Estate Agency Affairs Board (“the EAAB”) the South African Council for the Property Valuers Profession (SACPVP) and any other sector regulatory bodies, academic institutions and the government.

Enterprises in the sector commit to achieving a number of targets that include a 5% of leviable expenditure of learning programmes, specified in the learning matrix for black people as a percentage of leviable amount and, in addition to the skills development levy; a 0.3% skills development expenditure on learning programmes, specified in the learning matrix for black employees with disabilities as a percentage of leviable amount; and a 2.5% of the total employees who are black people participating in learnerships, apprenticeships and internships.

In addition, enterprises in the sector will implement internships in terms of which academically qualified individuals work under supervision of qualified professionals to upgrade the professionalism in the sector; and focus on the recognition of prior learning to determine the level of competency in the sector and promote further development and training to improve the level of competency in the sector.

Xoliswa Daku, founder and CEO of the Daku Group of Companies, provides some insight on being a woman in property

What have been your personal challenges working within this industry?

Inequality across sectors remains the cornerstone challenge, leading to elements of discrimination based on gender and in most cases, having to fight for your space or to prove that you can do that work. With property being male-dominated, that was the test. Hence, it was critical for me to start at the bottom and gain enough knowledge and expertise in the sector whilst boosting my own knowledge to their advantage. I joined the sector with the knowledge of financing, legal restraints, business and market forecasting and project supervision, and my focus then was on practical experience.

What are the problems for women in general in the property industry, firstly in terms of getting into the industry and then advancing?

Firstly, for entry-level jobs, I still think they need exposure to the full property value chain so that they can first understand what it means. Further to that, being able to make the right choices based on the product that will yield great returns for them. A lot of exposure has been created around construction through women’s networks and getting into the property industry has been less of a focus as they saw that sector as being too risky and, indeed, without capital, not at all feasible for them. This then allowed the market to be limited to a few role players keeping deals amongst themselves. Even with listed entities, there’s still a problem of finding women on their boards, even of listed entities, 100% women-owned listed entities, or even entities led by us. With very limited women at the top, it’s difficult to grow the second layer of leadership in the sector. Global research indicates that companies with the most gender-diverse boards and leadership teams constantly outperform their industry average.

What were the challenges in starting your own company in the industry?

With the hands-on approach to developments, the challenge was finding the right resources. The first time became a huge battle, as the sector has limited skills in property. So, upskilling them on the other elements of the property development value chain was a must.

With no asset base, a risk has to be taken through investing your own money/assets to raise capital.

At the end, you must learn to develop alternative sustainable models for property acquisitions and investment.

What do women contribute in terms of a ‘competitive advantage’ in the property industry?

The analysts say that having at least 30% of women in leadership positions, or the “C-Suite”, adds 6% to the net profit margin. The sector must recognise that having more women in leadership will contribute to greater profits and better returns for investors. Women bring improved decision-making at the top, more creativity and innovation and better problem-solving abilities, stemming from greater cognitive diversity.


LINK : http://www.bbqonline.co.za/articles/diversifying-the-property-sector-24664.html

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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