JOHANNESBURG – South Africa’s property sector contributed R191.4 billion to the economy in 2012 – with residential property leading the pack.
The residential property sector contributed R104 billion to South Africa’s economy and the country’s fiscus benefited to the tune of R20.1 billion in taxes – extending to transfer taxes in property transactions and monthly rates and taxes.
This was revealed by the Property Sector Charter Council on Tuesday, in the release of its 14-month long research to gauge the size of economic activity in the country and the contribution of the property sector. Using research from Statistics South Africa, the council pegs the overall size of the property sector (including different sectors) at R4.9 trillion.
Investment Property Databank (IPD) compiled the research. Executive director Stan Gaurran describes residential property as having a “bigger slice of cake”. It also has an upper hand compared with the non-residential property sector. The value of property transactions, referred to as ‘direct expenditure’ in the research, sees the residential property industry come in at just over 46 billion, while the non-residential property industry records just over R43.9 billion.
Source: Property Sector Charter Council. A breakdown of the property sector and contribution to the economy.
A total of 234 419 residential property transactions valued at R172 billion were recorded. High value properties (R700 000 to R1.5 million) constituted the bulk of the transactions.
While the residential sector dominates in its contribution to the economy, the non-residential industry (commercial property) trumps that of the residential property industry in terms of the value of taxes to the national fiscus. Commercial properties in 2012 contributed R25.3 billion to the fiscus, while the residential property industry injected R20.1 billion.
Despite commercial property sector regarded as being under pressure at the moment due to the state of the economy, shrinking investments and speculative developments, the non-residential property sector seems crucial for the economy.
Life cycle of properties
The research also measures the life cycle of properties, from their construction to their demolition and investments into refurbishing properties. When properties in South Africa underwent refurbishments and upgrades, the economy benefited by R6.8 billion and taxes for the fiscus stood at R1.1 billion.
Hailed as the first comprehensive research into South Africa’s property sector, The Property Sector Charter Council CEO Portia Tau-Sekati says the research it is important to gauge as “no reliable figures have existed on the size and impact of the sector”.
Tau-Sekati says the research provides a valuable understanding of the sector and creating a body of knowledge about the property sector and “foster(s) a consistent understanding of the sector for measurement and evaluation”.
She says South Africa’s property industry is big and that there should be enough opportunity for transformation to take place in the sector. The council will launch a report analysing the transformation aspect of the property sector and various Broad-Based Black Economic Empowerment tools in place.