Meshack Mabogoane
Prospects for major commercial property developments in emerging markets, or black areas, could increase dramatically once black local government has been legimitised.
A morass of technical hurdles, such as identifying owners of land and registration of title deeds, still remains to be cleared up. So, too, does the role of numerous community development forums (CDF) which arose in the wake of the collapse of community councils or black local authorities.
The lure of black areas is reinforced by feelings that developments in areas of high and historical investments are becoming saturated and generating lower returns (about 10 percent) in comparison with the vistas beckoning in black areas where returns are estimated to be worth some two percent higher.
Though some major developers have gone ahead with heavy investments to build substantial portfolios it will still be an uphill battle. The enormity of the task, says a black property developer, will require “innovative public sector directives” to offset the huge “social engineering that went into the making of black townships”.
He cites the potential role of the new Facilitation Act in cutting through red tape, a factor that has dampened the enthusiasm of property investors to move to black areas.
However, he warned against “artificial solutions” that do not take account of realities and reinforced the view that market forces should be supplemented, and not supplanted, by local and central legislative directives.
There is also the reverse prospect of suburban municipalities delaying applications for development in their own areas and directing them to areas of less density.
Malls in former white areas are becoming congested, pressure is mounting on transport and other facilities as non residents are drawn in; already 40 percent of Sandton shoppers are blacks from townships. Redirecting property developments would be a boon to both areas.
Even without these measures some headway has been made. Sanlam Properties seems to be leading the way. In the Gauteng area only it has put up two major shopping complexes: the 18 900m2 Dobsonville Shopping Centre near Soweto, opened in 1994 at a cost of R45-million and the 17 000m2 Daveyton Mall costing R44-million to be opened by month end.
Altogether the company’s national portfolio in all black areas, including coloured and Indian, is now
200 000m2 and worth R500-million. Major anchors like Pick ‘n Pay and franchised food outlets have been involved. Local entrepreneurs take up the remaining space.
These developments are motivated by hard business sense underpinned by extensive research, consultations with communities, (through the CDFs) social responsibility and their client base. Sanlam’s policy holders are 65 percent black. And “it is well known that investment in these areas has been neglected in the past,” says Banus van der Walt, managing director of Sanlam Properties.
“We see the lack of proper retail space as a business opportunity, but also as a chance to contribute to the social and economic upliftment of thousands of people.”
The private sector is geared to black townships’ revamp. “Many developers would like to see black townships becoming normal suburbs with all property facilities- shopping complexes, office blocks etcetera, sprouting up,” says Andre Viljoen of the SA Property Owners Association, Sapoa.
“There are many developers eager to move in. Already 11 medium-sized shopping centres — of between five to15 000m2 at an estimated average cost of R30-million — are known to us to be in the pipeline,” adds Viljoen.
And whether the rise of black-owned insurance companies, like African Life, a subsidiary of Real Africa Holdings, and Metrolife of New Africa Investments Limited, would unleash their financial resources for real property development in black areas is moot. African Life burnt its fingers with a project in Orlando West and caution is at a premium with black economic empowerment companies in the wake of recent hassles experienced by some.
But Thebe Properties, backed by the massive Thebe Holdings which has strategic investments in Safrican and other financial institutions, is geared for new township and other major property developments in black areas.
Though risks associated with violence have significantly gone down, says Viljoen, social and legal hurdles still need to be overcome.
“The biggest problem is land ownership. It is difficult to locate ownership and the registration of title deeds takes time. Also the process of consultation with local development forums (made up mainly of civics and business associations) can be lengthy and complicated, however necessary it has been. It took Sanlam 2,5 years to negotiate with such a forum in Dobsonville.”
There is also strong opposition from chambers of local traders which fear that outside (white) developers might snap up all the land. However, the imperative of having black partners, in the climate of black economic empowerment, makes nonsense of such fears. And major financial institutions have substantial black policy holders.
The key to unlocking real property vistas still depends mainly on the outcome of local political and social developments, including the infrastructural revamps that central government has recently promised are in the pipeline.
ANTENNA