A real opportunity to harness entrepreneurship, create sustainable jobs and contribute to economic recovery

Entrepreneurship for Economic Recovery Creates Sustainable Jobs

A real opportunity to harness entrepreneurship, create sustainable jobs and contribute to economic recovery

Towards a truly inclusive and transformed property sector

Deon Oberholzer, Group CEO of Gestalt

South Africa is home to a significant property market comprising of 7.4 million properties with an estimated value of nearly R6 trillion. The residential property market accounts for the majority of property assets in South Africa, with more than 6.6 million registered properties or 89% of the total property market, ranging from freehold properties, sectional titles, residential dwellings in private estates, to government-subsidised homes, and more. Government-subsidised properties account for a sizeable portion of 2 million or 30% of all residential properties. The property market is therefore a significant sector of South Africa’s economy and undoubtedly one of the key sectors that have the potential to contribute significantly towards economic recovery and job creation.

The pressing need for sustainable job creation

With South Africa’s unemployment rate having increased by 0.5% to its highest rate since 2008 and given the expanded definition of unemployed, which includes those who have stopped looking for work, our level of unemployment is now 46.6%. The youth unemployment rate is 66.5 per cent. These numbers necessitate a reflection on what President Cyril Ramaphosa articulated during the 2022 State of the Nation Address in which he stated that “government does not create jobs,” adding that ‘business creates jobs.. and  about 80 per cent of all the people employed in SA are employed in the private sector.” The key task of government, says Ramaphosa, “is to create the conditions that will enable the private sector — both big and small — to emerge, to grow, to access new markets, to create new products, and to hire more employees.”

While Rampaphosa’s statement should be read and understood in context, the role of the private sector does not negate the government’s role in pioneering programmes that drive job creation through investment in infrastructure, information communication technologies, healthcare, and other sectors. It is within this context that the property sector should embrace the opportunities provided within the Property Sector Code, whose aim is to achieve substantial change in the racial and gender composition of ownership, control and management and enhance the participation of black people, including black women and designated groups in the Property Sector.

Furthermore, the code aims to unlock obstacles to property ownership and participation in the property market for black people; facilitate the accessibility of finance for property ownership and property development; promote employment equity in the Property Sector and encourage diverse organisational cultures, and promote economic transformation in the Property Sector in order to enable meaningful participation of black people including women, amongst other objectives.

An opportunity for the property sector to do the right thing

It is therefore inevitable that the Property Sector should proactively seek opportunities to contribute towards transformation in a holistic manner, given the fact that a more inclusive industry that takes into account the diversity of its market and population dynamics, will propel its own growth and sustainability and thereby contribute to the greater good of society. Importantly, entrepreneurs and corporates in the sector should not fear B-BBEE as it is actually a positive instrument that helps the industry to fast-track strategic shifts that should be happening without being compelled by legislative requirements.

Transformation, therefore, should be embraced across all sectors of our economy to avoid creating an artificial society where an entrepreneur’s gender or skin tone determines the type of business they are in. Industries that have failed to champion change have created a new set of challenges for themselves including skills shortage, poor or lack of succession planning and the brain drain in key strategic roles.

Prepare yourself and comply or be compelled through legislation

According to the Amended Property Sector Codes (APSC) of 09 June 2017, there are three core groups of businesses in the property sector that have been identified in terms of B-BBEE, namely residential, commercial, and ‘other sectors’ within the property value chain. The ‘other sectors’ group consists of Property Development, Property Ownership and Property Services. The following types of business activities fall within the scope of the Property Services category: Property Management, Facility Management, Real Estate Brokers (Broking) and Estate Agents.

It is therefore foreseeable, that Property Practitioners will be required to undergo BEE verification at some point in their journey, from being Exempt Micro Enterprises (below R2,5 million turnover), to Qualifying Small Enterprises ((R2,5 million – R35 million turnover) whose status needs to be verified against a scorecard, and a generic company (R35 million and above turnover)  who needs to go through a full BEE audit.

From a legislative perspective, there is another curveball, with President Cyril Ramaphosa having declared 1 February 2022 as the date that the Property Practitioners Act 22 of 2019 (Practitioners Act) came into effect, thus bringing significant changes in the property sector. In the context of the PPA, the scope of legislation has been widened beyond traditional estate agents, to encompass bond originators, home owners’ associations, commercial property brokers, property developers and more. Importantly, all practitioners who earn commission from the sale or leasing of a property will be required to have a Fidelity Fund Certificate, with a further requirement to also be in possession of a valid tax clearance certificate and a BEE certificate.

Technically, the requirements for broad-based black economic empowerment are part of South Africa’s business dialogue, ownership, management control, skills development, enterprise and supplier development, socio-economic development, and economic development. Consequently, it is crucial for property practitioners, including estate agency principals and agents, to familiarise themselves with the Property Practitioners Act and the Property Charter requirements.

The good news is that property practitioners do not have to navigate the journey alone. Property practitioners should seek a strategic partner to help them unravel the complexities of B-BBEE to ensure that they achieve the highest possible empowerment score for the lowest investment. A credible, B-BBEE consultancy can help property practitioners to design sustainable business growth and transformation strategies in the spirit and the letter of B-BBEE to enhance the value for enterprises and beneficiaries, towards a fully transformed property sector.

As one takes a long-term view, which is what sustainability is about, there is strategic value in using B-BBEE as a catalyst towards transformation and the creation of a sustainable economy. If the transformation of the economy is not fast-tracked, the skewed socio-economic terrain and inequality could easily become dangerous and a ticking time bomb.