Real Estate Investor Magazine South Africa March 2013 | Page 43

REI Commercial

Eskom Hikes Will Cripple
Repo Rate Remains At 5%
Commercial Property Industry

SA Property Sector Worth Trillions

Eskom is desperately seeking a total 16%
per year tariff hike over the next five years
which may cripple South Africa’s commercial
property sectors, already facing increased
operating costs.
The State-owned supplier of South Africa’s
power, has applied for a 16% annual electricity
tariff increase for the next f ive years. If
approved, the new tariffs come into effect
next year and cover the period between April
2014 and March 2018. Business organisations,
the City of Cape Town, trade unions and a
host of civil society organisations attended
Nersa’s hearings on Eskom’s tariff application,
to oppose its request for an average annual
increase of 16% over five years.
During the public hearings, businesses and
civil society asked Nersa to scrutinise Eskom’s
desired R47 billion equity returns.

The South African property sector is worth a
whopping R4.9 trillion according to a new study
undertaken to discover the size of the country’s
property sector.
T his Proper t y Sector Cha r ter Counci l
commissioned research is the first study of its
kind in South Africa.
CEO of the Property Sector Charter Council,
Portia Tau-Sekati says: “The research creates
a hub of knowledge about the property sector,
consolidating information and developing a
common and consistent understanding. By
determining the size of the South African
property sector, we are moving towards a proper
baseline measure to assess market size and its
components, the scale of different services and
activities within the sector and ultimately BEE
transformation figures in line with the Property
Sector Code scorecard.”

South Africa’s Reserve Bank Monetary Policy
Committee (MPC) decided to keep the repo
rate at 5%, citing concerns about the weak rand,
rising inflation and labour conflicts.
R e ser ve Ba n k G over nor Gi l l Ma rc us
said the monetary policy stance remains
accommodative and appropriate, with the real
policy rate remaining slightly negative. Further
accommodation at this stage is constrained by
the upside risks to the inflation outlook.
“The MPC has therefore decided to keep the
repurchase rate unchanged at 5%,” Marcus said.
There had been no discussion of a rate cut or rise
during the meeting of the MPC, noted Marcus.
South Africa’s growth was fragile as well as
“below potential”, noted the MPC.

Valuable Input

Gary Palmer, CEO,
Paragon Lending
“High operating costs
and the lack of new major
industrial developments
are the biggest threats
to growth in this sector.
There is, however, demand
for upgraded operational
facilities and convenient
access to key transport
nodes to reduce fuel costs.”

www.reimag.co.za

Amanda Stops, CEO,
South African Council
of Shopping Centres

Dawie Verryne, CEO,
Korbitec

David Reid, Broker,
JHI Properties

“Prudent shopping
centre development
needs sufficient
population and income
in a local trade area,”
explains Stops. “The
market must be
sustainable with
adequate supporting
households and enough
disposable income.”

“Whilst growth has
been unremarkable,
the sluggishness of
the industry has given
key players a chance to
rethink their systems and
processes – something
that is likely to accelerate
the market’s growth in
years to come.”

“In the long run, if
the business location
proves over time to
be a bad one, sound
advice is to rather
get out sooner than
later – if you are an
owner-occupier put
the property on the
market.”

Peter Collins, Broker,
JHI Properties
“Gauteng is the economic
powerhouse of SA
generating more than
40% of the GDP of RSA:
Johannesburg ????)??????????????????)????????????????)??????????????????)????????????t()5????????M?I????????%9YMQ=H((??((0