Real Estate Investor Magazine South Africa April 2018 - 100th Issue! | Page 18

COVER STORY
on farm land. The trend has obviously got burning. It should
concern all South Africans and government. While the frus-
trations are understandable‚ we cannot tolerate a situation in
this country where it is a free-for-all.”
Free falling
Researchers at the Agricultural Business Chamber (Ag-
biz) Wandile Sihlobo, Theo Boshoff, and Sifiso Ntombela.
recently published a paper exploring hypothetical scenarios
for the land issue. The land grab scenario, they say, would
mean that: “Aside from human rights violations becoming
commonplace, employment would decline, production would
fade and imports would rise, leading to high levels of food
insecurity…This scenario would rank poorly from both an
economic and a legal point of view.”
Cas Coovadia, MD of Banking Association SA (Basa)
adds to the dystopian outlook by explaining that expropria-
tion without compensation would erode property rights and
would mean that land could no longer serve as collateral for
loans. Chris Hattingh, a researcher at the Free Market Foun-
dation, warns that: “As soon as the first property is seized,
foreign investors will cease their operations and local inves-
tors will look for every possible avenue to get their businesses
and property out of the country before it is taken from them.”
Neil Gopal, CEO of the South African Property Own-
ers Association (SAPOA) raised his concerns as well, stating
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APRIL/MAY 2018 SA Real Estate Investor Magazine
WHAT ABOUT THE MONEY?
If land expropriation without compensation is
implemented in full force, banks stand to lose billions.
Focusing purely on agricultural land, Cas Coovadia, MD
of Basa, explains that public and private sector loans to
the agricultural sector totals roughly R162b.
At its heart, banks depend on property rights to secure
collateral. Once the inherent value of property is taken
away - due to the fact that today’s owner could be
forced to give up the property without being paid for it
- banks will have no choice but to stop lending money
for property purchases.
Pieter Niehaus, director and head of real estate at Nor-
ton Rose Fulbright SA, explains that: “The owner of the
expropriated land would lose the rights of ownership
and occupation of the land and the bank would lose its
security for the repayment of the loan.”