Real Estate Investor October 2020 October/November 2020 - Page 30

COVER STORY

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years after democracy , the dawning of a new era , underprivileged ( majority black ) South Africans from disadvantaged communities still find themselves at the bottom of the country ’ s developmental hierarchy of priorities . What the affluent class know to be fundamental and basic in SA , the majority deems a luxury . Something as important as a roof , that which nobody cannot live without , the disadvantaged people of South Africa fight for every other day against the authorities across the country in the form of forced removals .
These are the inequalities that the government ’ s inability to resolve the land question leave us in as a country . They factor greatly in the government ’ s inability to boost and grow the economy . The economic under performance in the country is gaining more strength due to the pandemic and the status of land reform in SA is not making it any easier .
Land Reform
Land reform has been on our tongues for quite a while now , it ’ s been in the government ’ s pipeline for a long time and transformation regarding land is being said to be made but there is no evidence for it . This is concerning , not only because land is referred to as the only asset that would set the people of South Africa free economically , but also because the instability and indecisiveness from our government about who owns what land isn ’ t affording the country the investor confidence and the economic growth it needs .
Business Leadership South Africa CEO , Busisiwe Mavuso believes that thriving through poverty , unemployment and the terrible inequalities among South Africans begins at consolidating and finalising the land reform question which she believes is more of a political incompetence issue in the South African government .
“ The land issue is not an economic process issue , it is a social justice process issue ,” Mavuso says . In her presentation at the Free Market Foundation ’ s virtual event titled Turning Disaster Into an Opportunity she pointed out how the South African government has failed to provide a solution to the social imprisonment of South Africans by not attending to and consolidating the land question .
While Mavuso is for the growth of businesses in the country , she however , points out the importance of structural reform in terms of business development . She says structural reform is central to the notion of dealing with the “ triple challenges ” which are the microcosms of the current anxiety and confusion regarding the land question . In essence , she says sorting out the land question is the way to the freedom of many disadvantaged South Africans .
But there has not been much clarity as to when and how the South African government intends to bring the recommendations of the 25th section of the constitution to life . Since the word of mouth has been going around about land expropriation without compensation and occupying the land , many South Africans have just been occupying land with no clarity as to what the section really means . The different political opinions about land expropriation also mounts a lot of weight on the interpretation of the notion of land expropriation without compensation and land occupation . As a result , South Africans are trapped in the hole of different ideas and opinions in one den .
And according to Mavuso , the indecisiveness and inefficiency in advancing the entails of section 25 continues to be an obstruction to the economic development , transformation , and human development in South Africa . This , she says , is because “ our unique history as a country of dispossession and the triple challenges of poverty , inequality and unemployment require strengthening and spreading of property ownership .”
Amendment of the Constitution
While the constitution provides for the expropriation of land without compensation in particular and / or exceptional circumstances , there is still a growing concern between government and various political parties that the constitution should be amended for the proper advancement of land reform .
But Head of Legal ( policy and research ) at the Free Market Foundation , Martin van Staden believes that the constitution should not be amended or changed .
“ The reason the constitution should not be changed is because it already provides for land reform quite generously , precisely section 25 provides that people who had their land dispossessed should be able to claim that land back ,” process which he believes has been inefficient .
Property rights
According to van Staden , the 18th constitutional amendment bill i . e . the land expropriation without compensation bill , goes against what the South African bill of rights advocates for .
“ The expropriation without compensation bill goes against the founding values of the country , as section one of the constitution says South Africa is committed to the advancement of human rights and freedoms of the people of South Africa . And what government does is undermining and establishing an invested right to compensation ,” He says .
“ Government needs to strengthen property rights in South Africa .”
10 OCTOBER / NOVEMBER 2020 SA Real Estate Investor Magazine
DEVELOPMENTS Breaking Boundaries Leading inner-city real estate sector Despite the reputations of our inner cities as run-down and dangerous. Regenerative property projects in these areas continue to capture the attention of the media, investors and tenants alike. Some local initiatives have even received international acclaim for their innovative use of neglected spaces to create thriving pockets in areas where many once feared to tread. I f thoughtfully planned and developed, disused inner-city buildings have unlimited potential to not only generate profits, but to enrich the lives of urban dwellers by becoming centres of commerce, culture, and community. Many institutions and organisations, including TUHF Limited, have been gearing and in full force working with government to try and lure investors into realizing the potential business success that lies behind these unused and abandoned buildings. At a TUHF Inner City Property Conference, the vision of which was to share thoughts and expertise of the best and the brightest about the fields of urban regeneration, property investment and urban planning, various experts like Professor Francois Viruly focused on the growth and deteriorating state of the property market in a broader perspective. The property economist with over twenty years of experience in advising public and private entities, and Associate Professor and Director of the Urban Real Estate Research Unit at the University of Cape Town (UCT) outlined the state of the inner city property market as a whole, as well as the trends that affect the ways our inner city spaces are being used today. The year’s Top Trend: Co-Living In a period characterised by stubbornly high unemployment, a lack of safe, affordable housing opportunities, and a slow retail sector, Professor Viruly’s most exciting ideas for real transformation hinged on a trend that has already proven popular in major metros across South Africa and internationally. A way of solving these social issues, he argues, may be found in the formation of integrated neighbourhoods featuring buildings designed for spatial economy, variety, and convenience. 24 OCTOBER/NOVEMBER 2020 SA Real Estate Investor Magazine Co-living – intentional communities that provide shared affordable living spaces and facilities to people with similar interests and values. The have emerged as the year's top trend, ranked in pole position as a prospect for both investors and developers alike. increases are sitting at only around 4%. This applies to all sectors, from retail and industrial to office and residential,” Viruly said. Economic Stimulation by Night Drawing on notable examples like Amsterdam, Viruly suggests that without a vibrant night-time economy such as 24 hour hair dressers and retail shops, regenerative efforts can only go so far. He says developing such an economy will be vital in drawing in tenants and creating sustainable and diverse business-friendly neighbourhoods. “Already, some of South Africa’s most exciting dining and nightlife opportunities exist in our urban areas, and this trend is set to only continue, with lower rents and mixed working and living spaces proving attractive to innovative businesses ready to cash in on a young middle-class audience with rising disposable income,” He adds. “A legacy of Apartheid land policies means that many in South Africa have little inter-generational knowledge in the areas of buying, selling and managing property, and though programmes and incentives exist to help them break into the sector through funding, education and mentorship.” Legal and municipal red-tape presents another frustration for would-be investors The release of land for development is a slow process and involves fulfilling multiple procurement requirements, not to mention dealing with zoning and time delays, and inefficient municipal billing systems. If these can be successfully navigated by aspiring entrepreneurs with the grit to succeed, however, the sky is the limit. “TUHF Limited is and has always been about unearthing this potential, and that applies to both the properties we finance and the people we support,” concludes CEO and Co- founder of TUHF Limited, Paul Jackson. What is holding property entrepre- neurs back? SOURCE TUHF Limited The opportunities for exponentially faster and grander growth in our inner cities are tantalising, but several hurdles remain for South Africa’s entrepreneur class as it gets a handle on this often-overlooked property segment. Professor Viruly’s talk threw several of these into sharp focus. For additional information, please contact: Sayuri Naidoo Marketing Manager: TUHF Limited T: (010) 595 9045 E: sayurin@tuhf.co.za “It’s no surprise that tenants are eager to experience the convenience of mixed-use spaces for themselves. When housing, public services, transportation options and work opportunities are nearer to the places where we live and raise our families, the knock-on effect can create astounding changes in local economies. Smaller living spaces become practical, rentals and transport are more affordable, and much-needed spending power goes back into the pockets of residents, who go on to use it to support local businesses,” He says. Viruly believes that retailers operating in these same buildings get much more of the vital foot-traffic they need to thrive, and investors enjoy the rise in property values that inevitably follows when a good mix of variable and fixed tenants is established. Prospects for the future look good as the market stabilizes Professor Viruly shared further research conducted by the Urban Real Estate Research Unit (UCT) which showed a promising downward trend in CBD office vacancy rates in most major South African metros, although a depressed economy also means that increases in rents have in addition slowed somewhat (to its lowest rate since 2015). “Where rental increases of up to 8% were possible in the past, it’s essential in today’s economy for property owners to keep their operational costs in check. Today’s average rental SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2020 25