With the Department of Public Works and Infrastructure (DPWI) having around 29 000 land parcels and some 93 000 buildings or structures on its books, the South African Property Owners Association (Sapoa) is hoping the department’s newly appointed minister, Patricia de Lille, comes up with a plan to unlock opportunities within its massive property portfolio.
Speaking to Moneyweb on the sidelines of the Sapoa Convention in Cape Town last week, Sapoa CEO Neil Gopal said the association is looking to build a closer working relationship with the expanded department under De Lille.
“We welcome the appointment of minister De Lille. We believe she is well suited to this role and we intend to work closely with her as she fully understands the commercial principles behind this portfolio to effectively achieve government’s wider socio-economic mandate.”
Gopal added that Sapoa, as the voice of the commercial property sector in SA, had already built a strong working relationship with De Lille when she was mayor of the City of Cape Town.
“The DPWI as well as the Cooperative Governance and Traditional Affairs Department, which is responsible for municipalities under Dr Nkosazana Dlamini-Zuma, are critical departments for the commercial property sector to operate and prosper.
“Minister De Lille’s department is the custodian of thousands of buildings covering millions of square metres of floor space across the country, which runs into billions of rand.”
“While the department is one of the biggest property owners in the country, not all of it is ‘sexy’, with many buildings in a dilapidated state,” says Gopal. “Some of these properties are in strategic locations such as city CBDs that could unlock commercial development value and other opportunities.
“Government is sitting on a lot of properties that could generate annuity income for it. It could be a win-win for the government and the property sector if these opportunities are unlocked.”
Gopal cited the work he had done in his previous job in the 1990s at what is now the Passenger Rail Agency of SA (Prasa). He said property projects alongside rail land had seen rail subsidies by government being reduced by millions of rand at the time due to income generated from property development.
“It is not rocket science,” he says. “With those developments, we effectively helped reduce the burden on the taxpayer. With no real economic growth in SA at the moment, we need some innovative thinking to unlock growth. Without stronger GDP growth, the property industry will continue to struggle.”
Sapoa’s leadership has already interacted with De Lille a few times since her appointment, including last week on the sidelines of the Sapoa Convention.
Ipeleng Mkhari, in her outgoing Sapoa presidential speech at the convention, said that she was happy to hear from minister De Lille about her keenness around public-private partnerships (PPPs) to unlock opportunities and new infrastructure within the DPWI’s property portfolio.
“We want to engage with both the public works and cooperative governance departments on matters that affect our industry,” she said. “With cooperative governance, for example, we are really concerned about the unsustainable increases in property rates by municipalities across the country over the years.”
Mkhari noted that rates and taxes represented the highest escalating cost element for the commercial property industry after electricity.
* Moneyweb sent questions to De Lille regarding her meeting with Sapoa and her plans for her department, but had not received a response by the time of publication.
This author was a guest of Sapoa at the 2019 convention.