It is time for South Africans to rethink real estate education and training if we want to get more young black people into the property sector.
By Jackline Okeyo: Head of Business Development and Operations at Nthwese Developments
An increasing number of black-owned companies have set up shop in the property sector, particularly in the provisions of property services. However, property ownership remains an under-represented when it comes to transformation because of the capital-intensive nature of asset-class. Usually, mainly large commercial property companies have the resources to take advantage of most opportunities in this market.
The reality is that the commercial property sector remains relatively untransformed; preferential procurement points and enterprise development incentives set by sector codes are not enough to break down barriers to entry.
Lack of track record is often used as the pretext for not granting new black businesses an opportunity to participate. Although the public sector has created opportunities for new players, payments are routinely delayed, resulting in precarious cash flow for smaller and privately owned businesses which simply cannot afford the risk.
The commercial property picture
A 2016 study compiled for the Property Sector Charter Council revealed that the South African property sector is worth an astonishing R5,8 trillion, with commercial property comprising approximately R1,3 trillion of the total. The bulk of this, almost R790 billion, is held by corporates, followed by Real Estate Investment Trusts (REITS) with R300 billion, unlisted funds at R130 billion, and life and pension funds at R50 billion.
As an asset class, property is long-term and has the ability to provide both annuity income and growth in capital value for the investor. When you consider the bricks and mortar aspect of property, there is a long value-chain – from project conceptualisation, procurement of materials, and construction, to property and facilities maintenance. The potential for job creation and enterprise development is significant.
To grow black entrepreneurship, funding has to be made accessible. At present, it is extremely difficult to raise capital.
But that is not the only challenge. The sector is dominated by a handful of big players that are not adequately incentivised, or required, to open the space up to emerging companies.
What is more, the sector is conservative and risk-averse, with much emphasis placed on experience. This tends to penalise younger players trying to make inroads, whether in the entrepreneurial space or on the corporate ladder.
Combined with this set of circumstances is the reality that most young black people have limited generational wealth and networks in real estate. These take decades to build.
Envisioning a career in real estate
Young people in general don’t always understand the depth of the sector and career opportunities that exist, particularly when you consider listed and unlisted commercial property.
There are many facets to real estate, beyond estate agency and property valuations. Black youth, particularly in under-resourced communities, need improved access to information, via the Internet or career days at schools for example, with the participation of companies and tertiary institutions. South Africa needs a platform to create a greater sense of awareness and exposure to the promise of real estate as a sector. Industry bodies such as the Property Sector Charter Council, the Women’s Property Network and the South African Institute of Black Property Professionals have already started with school initiatives to improve access to information. More needs to be done along these lines.
The current education system has focused more on theory, and less on the practical skills required on-the-job. Universities and technikons need to make provision for students to obtain solid work experience as a pre-requisite to their qualification. Real-world case studies should also be part of the curriculum, to make students aware of the challenges faced by the sector, particularly at an undergraduate level. Students leaving tertiary institutions should be equipped to step into the sector with an innovative attitude that can shake up the industry and drive greater entrepreneurship.
The market has placed more emphasis on experience and age, than solid qualifications, which has done little to incentivise people to formalise their educational offerings, or to think out of the box to improve and change the status quo of the industry.
Post-graduate qualifications in the built environment are aimed mainly at new entrants and don’t take into account the needs of young people already in the sector who have a burgeoning career in property and want to further their education. As a result, industry associations have had to fill some of the gaps with short courses.
A world of opportunity
The good news is that there are big opportunities out there. There has been little innovation from an IT perspective, other than apps connecting property buyers and sellers. These are just scratching the surface. We need technological improvements that can help landlords better manage their property portfolios by driving efficiencies; we need IT solutions that can have a significant impact on the bottom line. This could be a good entry point for black youth interested in the industry
Young people wanting to get into the sector need to identify companies where they can intern or volunteer, to gain exposure. The youth should not be too pre-occupied with looking for employment with big corporates, particularly early in their careers, even though the employee benefits are attractive. They could miss the opportunity to gain more hands-on experience and exposure to different aspects of the property business; these are the less tangible benefits that come from working in smaller companies which give employees greater exposure and relevant experience to different aspects of the industry.
We receive many emails from high school learners and university students asking for internship positions. While we are not able to accommodate all of them, we appreciate their initiative. They have done the research, and they want to gain experience through job shadowing. In a tough market, young people who are willing to learn vital skills by working for free demonstrate their commitment and the hard yards they are willing to put in.
It is encouraging to see more black graduates coming into the sector, but much still has to be done to support these individuals when they enter the corporate world. They need to be groomed for decision-making roles. Structured career development initiatives such as measurable skills training and mentorship programmes need to be put in place, and employment equity quotas with timelines must be imposed on the industry if significant transformation is to be achieved.
My advice for people interested in real estate in an economy that is coming under pressure from all sides, is to look for integrated developments that offer sustainable value-creation. Mixed-Use developments projects offering a combination of housing, industrial facilities for local businesses, schools, retail and healthcare facilities are likely to be more sustainable in under-resourced communities over the longer-term and will receive support from Government institutions. It’s about moving away from servicing consumers to helping capacitate communities.