/ 3 February 2025

‘Expropriation Act will create development opportunities’

We discuss how it is almost impossible to deal with collusion once and for all
Developers believe the new legislation could stimulate economic activity

South Africa is experiencing a significant boost in appetite from developers that is unlikely to be quelled by the controversial Expropriation Act, which President Cyril Ramaphosa signed more than a week ago.

This was the view of local developers and marketers who work closely with major domestic and international developers.

Some of them believe that the law will create opportunities to unlock land for development and pave the way for urban renewal in cities such as Durban, Cape Town and Johannesburg, where dilapidated buildings stand in the way of progress.

The Expropriation Act opens the door for the government to expropriate property for “nil” compensation, but only under certain conditions, with the caveat that doing so is clearly “in the public interest” after having negotiated a fair market value price with landowners who have recourse to resist the process in court.

Rainmaker marketing director Stefan Botha said the law should not change the demand for development.

Botha has worked with developers on projects such as the upmarket Zimbali Lakes on the KwaZulu-Natal North Coast, Riverfields precinct in Kempton Park, The Pearls Umhlanga and Salta Sibaya, as well the R2 billion Club Med resort in Tinley Manor — which opens to international tourists in July 2026 — and Shongweni’s R15 billion Westown development, which opens next month.  

“We are fortunate to work with some of the leading developers within the country and the last 12 months have seen a significant boost in development appetite. We are seeing significant land parcels being unlocked, throughout key areas of SA, for uses such as industrial, residential, commercial and tourism,” said Botha. 

“In our opinion, we don’t see the Land Expropriation [Act] changing this. It seems clear around the fact that expropriation without compensation can only take place when it is ‘just and equitable and in the public interest to do so’. 

“In most cases we are seeing the positive impact to the economy of development in terms of job creation, SMME growth, community upliftment and other, municipal, benefits such as rates’ income. 

“It would seem likely that this [Act] would not impact any land-owners who have intent to develop and uplift, and we thus don’t see this impacting the forecasts of developers or their ability to do what they do best,” he said.

Botha added that the South African Reserve Bank’s 25 basis point interest rate decrease announced on Thursday would provide further impetus for the property market.

“We are predicting a very positive year ahead for the property market across various sectors and areas of the country,” he said.

Other projects Botha is involved in include The Bridge precinct development in Stellenbosch, that is estimated will contribute R60 billion to the local economy, and the Sibaya Coastal Precinct development, which will be underway for at least 10 to 15 years.

Ubuntu Design Group founder and CEO Wandile Mthiyane, who was chosen as one of 200 Obama Young Leaders for 2019 for his work producing affordable housing, said the Act is “a crucial step” in addressing South Africa’s historical land inequalities.

“The fact remains that white South Africans, who make up less than 10% of the population, own approximately 72% of the country’s land, while black South Africans, who are the majority, directly own only 4%,” he said.

“This law creates a legal framework for equitable land reform by allowing the government to expropriate land in the public interest, especially land that is abandoned, environmentally hazardous or held purely for speculation.”

He said that, from an investor’s perspective, concerns over property rights are understandable “but it is important to note that the law is not a blanket policy of expropriation without compensation”.

“Instead, it provides guidelines on when compensation may be nil, ensuring fairness and legal oversight. This structured approach promotes long-term stability, rather than uncertainty, as opposed to past land reform failures that lacked proper execution,” Mthiyane said.

“The fear of a total land grab is misleading and unfounded. The Expropriation Act does not override constitutional protections for property rights but instead ensures land reform happens within a clear legal framework,” he said.

“Homeowners are protected because expropriation targets specific land cases — such as abandoned land or land used solely for speculative purposes — not occupied residential properties. 

“Instead of harming property development, this law expands opportunities by making underutilised land available for housing and economic projects that benefit a broader segment of society.”

Mthiyane said that, for developers, the Act presented new opportunities to be part of a more inclusive housing and land ownership model, partnering with the state to accelerate land-use efficiency and economic transformation.

“This law represents a necessary correction of historical injustices while maintaining economic and legal order. The debate should not be about whether land reform should happen but how it can be implemented efficiently to benefit all South Africans.

“Developers, investors and businesses that embrace this transition will find themselves on the right side of history, driving inclusive growth, rather than resisting change,” Mthiyane said.

Ongama Mtimka, acting director of the Raymond Mhlaba Centre for Governance and Leadership at Nelson Mandela University, agreed that the law has “positive aspects” regarding economic activity, especially in cities, as it allows the state to expropriate bad buildings if property owners refuse to sell or renovate them.

“If you look at properties in downtown major cities, you’ll find that a lot of those have been allowed to be dilapidated and have become dens of thieves and criminality, drug abuse and sexual violence,” he said.

“A lot of these buildings in cities have got untapped potential. In Nelson Mandela Bay, there’s a beachfront that is underdeveloped because Transnet is holding land and is not moving when it comes to allowing the city to have waterfront development,” he said.

He added that in major cities such as Cape Town, Johannesburg and Durban, there were many properties that could be unlocked to develop social housing and affordable housing.

“That would stimulate economic activity, as opposed to stifling it,” Mtimka said.