NOMPU SIZIBA: We’re still getting feedback from different stakeholders in the economy on President Cyril Ramaphosa’s State of the Nation address. The South African Institute of Black Property Practitioners was keeping a close eye on the president’s utterances around land and its development. Of course, the president announced the dispersal of some 700 000 hectares of government land, and made commitments to invest in issues like student accommodation. But, to get a sense of what caught their eye, and where they were hopeful for more detail, I’m joined on the line by Tholo Makhaola, the President of the South African Institute of Black Property Practitioners (SAIBPP).
Thanks very much, Tholo, for joining us. In terms of giving us some context, since democratic dispensation in 1994 what have your general observations been around transformation in the property landscape?
THOLO MAKHAOLA: Thank you very much for the opportunity. Just to give an idea of kind of how SAIBPP views property itself, SAIBPP is essentially a group which is responsible for advocacy and facilitation of increased and what we have to call meaningful involvement of black people in the commercial residential property sector, as well as the total environment and total environment practitioners.
So, essentially, we look at transformation sort of through our three pillars that have transformation, advocacy skills development and enterprise development. And in terms of transformation as far as the property sector is concerned, our view is that transformation has been extremely slow, and we just don’t feel that we’ve made the inroads that we would have liked to have made after 26 years of democracy.
NOMPU SIZIBA: Yes. In his Sona address, President Ramaphosa referred to funding being made available for the likes of student accommodation. What are your sentiments in this regard, and to what extent would your members be able to meaningfully participate in this space?
THOLO MAKHAOLA: Look, our feeling is that our members are perfectly positioned to meaningfully participate. I think what did encourage us is that a lot of the student accommodation spend that would be made would be in support of President Ramaphosa’s idea of the development of the TVET colleges, which essentially would be to the benefit of, for lack of a better phrase, previously disadvantaged areas. And I think he did mention some kind of what one might consider far-flung areas, which are now going to get those TVET colleges. And I think this presents the perfect opportunity for our membership to meaningfully participate. What we typically have always battled with – and we just want emphasise this point – is that access to funding is has always been …… in terms of our meaningful involvement.
And obviously with his announcement of a state-owned bank, we’re kind of hopeful that that might also assist us in being able to participate.
NOMPU SIZIBA: Just to give us a sense of your composition, what type of organisations or people are in the Institute of Black Property Practitioners?
THOLO MAKHAOLA: Like I said, we have essentially property practitioners in the residential and commercial [areas]. You get anyone from property developers to asset managers, and then we’ve got environment professionals – and essentially that’s kind of your architects, your engineers, quantity surveyors, who represent what we like to call the entire property development value chain.
So, within our membership we feel that we are kind of able to take an idea from gestation all the way to a complete property development, and be able to also manage those facilities as well.
NOMPU SIZIBA: Social housing is another area that the president highlighted – where there is a serious need, of course. But what do you think would be a win-win scenario in terms of the contractors that came on board, and money issues? And presumably commercial banks aren’t likely to come on board unless they’re able to see themselves making some money out of these kind of investments.
THOLO MAKHAOLA: Absolutely. One of the statements that we’ve made is we do really welcome this emphasis that the president has put on the creation of social housing. What we did note is that in the previous Sona, the president mentioned the formation of the Human Settlement Development Bank, and we realised that in this Sona there was a large silence on it. I’m not sure if it’s because we’re talking semantics here. I think when he spoke about the delivery of social housing now, he merely called it the “social housing programme”. So one would like to believe that this is kind within the ambit of that Human Settlements Development Bank, the details of which we still aren’t clear about – how the mechanics of that will work. And I think you are aware that’s kind in the social housing space. We do have the social housing resource authority, and the regulatory authority, which is …… and currently as it stands, black property developers are participating in that space through the likes of TUSK and the GPS.
So one is kind of hoping that you get more synergy and more clarity in terms of how these funding instruments are working cohesively together to assist us to achieve what it is that we’re trying to achieve.
NOMPU SIZIBA: You’ve welcomed Lanseria being identified as an emerging smart city. What sort of potential do you see in that area from a growth and development perspective? Just earlier I was listening to the parliamentary debate, and John Steenhuisen criticised the president, saying he talked about Lanseria being an emerging smart city, but we can’t even keep the lights on. There’s a point there but, assuming resources can be invested in that sort of thing, where would you get involved and what would you like to be doing in that area?
THOLO MAKHAOLA: The Lanseria development has been mooted for the past ten years, if I’m not mistaken. Over the past five years there was actually talk of a kind of infrastructure that that has kind of gone into that area as well, and I think this was kind of all in anticipation of this announcement that the president has now made.
So we see ourselves as being able to play a meaningful role. I think that’s not city development; it’s also one of the first obviously smart city developments, but which is also led by black developers. We are very encouraged by that.
Just to maybe emphasise the fact, I think we are concerned that we might have raised in terms of Lanseria is we need to accept that we do have an issue of our inner cities currently, which are not in good shape. So while we did welcome the idea of the Lanseria smart city development, we did also note the president’s silence with concern – the fact that there are no serious plans around how we’re going to deal with our current inner-city development.
NOMPU SIZIBA: So what do you think the way forward is in this regard because, like you say, you need a city-wide or a country-wide strategy without necessarily preferring one area over the other. But then also there’s the issue of resources – one step at a time.
THOLO MAKHAOLA: Yes. One of the other issues, really, that we’ve looked at is the idea that the land question – around that. Then obviously we’ve always …… land consumers as kind of unsteady leaning more towards food security, and not the idea of actually being able to accept for the real estate perspective …… So I think there are a lot of opportunities that do exist in greenfields developments also that we do.
NOMPU SIZIBA: Just on a broader level, with the economy still being in low-growth territory, especially on the back of constrained power supply in the short to medium term, what’s your outlook for the property sector in 2020?
THOLO MAKHAOLA: Look, our feeling is that there are still tough times ahead, but we are very optimistic. And I think one of things that our …… started as an advocacy group have tried to emphasise, is that we feel that the role of real estate and the role of property in terms of the development of the economy has really been underestimated. I think that if we could place a lot more emphasis on the potential – when we are talking in terms of jobs and opportunities – that property development itself could unleash if that were more focused, then we definitely could see better growth than we are seeing currently in the economy.
NOMPU SIZIBA: Some of the statements that were made in the Sona are then translated in the budget. From a budget perspective would you be quite excited if there were some money put aside under the infrastructure umbrella towards developing land and things like that?
THOLO MAKHAOLA: Absolutely. Like I say, definitely we are waiting with bated breath to hear exactly what it is. The president just mentioned that the minister of finance will elaborate on the state-owned bank and the mechanism around that, because we still feel that commercial banks, as they currently are, are a bit unfair – specifically to new entrants in property development as well as with their credit measures and the way that they currently are rating people. But we’d definitely be excited to have a good chunk set aside and ……
NOMPU SIZIBA: [Chuckling] Let’s see if that chunk is set aside. Thanks very much, Tholo, for your time.