Property owners must call for good business environment

Tshwane - Property owners in South Africa need to start talking about how to advocate for a business environment that is conducive to investment, growth and success in a constructive way, according to Mike Deighton, president of the South African Property Owners Association (Sapoa).

For the first time in more than 10 years, the industrial sector’s base rental growth has dipped below inflation in recording an annualised growth of 4.0% for the six months ended June 2015, according to Sapoa's latest Industrial Vacancy Report.

The 2.0% bi-annual base rental growth resulted in what Sapoa regards as a reasonable capital growth of 1.4%.

The report found that the fact that the full base rental growth isn’t filtering through to capital growth means that valuers are taking a slightly more bearish view of the sector’s future earnings.

As at June 2015, the national industrial vacancy rate as recorded by IPD was 4.0%. While this is virtually unchanged from the 3.9% recorded six months prior, it is down significantly from the 6% level of 2009/10.

For the year ending June 2015, property operating costs were virtually unchanged on a year-on-year growth basis, posting a 0.5% decline over the period, Sapoa Operating Cost Report for the year ended June 2015.

The industrial sector saw the largest increase during the period, namely 2.9% y/y followed by the office and retail sectors with +0.2% and -1.8% respectively.

When expressed as a percentage of gross rental, operating costs have improved somewhat on a three year view.

The property industry is, therefore, faced with huge challenges as a result of the impact of legislation, said Deighton at a meeting Sapoa had with key government stakeholders in Tshwane on Thursday.

“Relationships play a strategic role in bringing together key stakeholders in our vision as a country. Education is a fundamental step needed to flood our society with great young talent," said Deighton.

For Deighton, who is also the managing director of Tongaat Hulett Development, the four important pillars for Sapoa are relationships, education, advocacy and leadership.

"Leadership is required in our country. It is what is needed right now to take this country forward,” he said.

At the meeting Sapoa members raised concerns around stimulating green industrial development, improvement of transport routes and the delay in approval processes, with capacity problems from the city being a key issue.

Councillor Subesh Pillay, MMC of Economic Development and Planning of the City of Tshwane, addressed the concerns. He said there are several major interventions that the city will implement to create efficiency and fast-track processes, especially the inner city regeneration.

“The vision for the City of Tshwane is to be a liveable, resilient and inclusive city… where citizens are partners in development," said Pillay.

The current population in the city is close to four million people and is expected to rise to about 8.5 million by 2055.

The city envisages some challenges, including additional infrastructure for water, sewage, solid waste, electricity and transport.