The CEO of the Property Sector Charter Council (PSCC), Portia Tau-Sekati, has urged the South African property industry to pick up the pace of transformation.
She made the call on Wednesday at the release of the PSCC’s 2016/2017 State of Transformation Report at the Wanderers Club in Johannesburg.
“The South African property sector is making reasonable efforts towards transformation, but it needs to pick up the pace,” she said, noting that the PSCC’s latest report had shown the property sector achieved an average Broad-based Black Economic Empowerment (BBBEE) recognition of Level 4 in terms of the Property Sector Code. This, she said, was at the same level as the previous report, but reflected a slight drop within the same recognition level.
Measuring transformation in the property industry, the PSCC’s new research sampled 106 companies, including institutional investors, large private property owners, collective investment schemes and listed property entities. The council noted that while the sample of the study may be small, it believed that the research adequately reflects the industry outlook, by covering the large companies that dominate the sector.
Tau-Sekati said the mandate of the PSCC is to drive the sector’s transformation and ensure that everyone plays a part and makes their contribution. She notes: “Inclusive participation is necessary for economic growth that includes all previously disadvantaged individuals and secures their meaningful participation in the mainstream economy.”
The sector’s transformation, under the Property Sector Code gazetted in 2012, is measured on eight elements. The PSCC’s research reveals areas of outperformance, but more areas of underperformance.
The eight elements of the Property Sector Code, and the performance according to the PSCC’s 2016/2017 State of Transformation Report, are shown below:
• Employment Equity ==> 32.0%
• Economic Development ==> 38.0%
• Management Control ==> 57.0%
• Skills Development ==> 65.7%
• Ownership ==> 80.2%
• Preferential Procurement ==> 83.7%
• Enterprise Development ==> 105.6%
• Social-Economic Development ==>117.2%
Commenting, the PSCC said critical intervention was required with regards to the Employment Equity and Economic Development elements, while a more concerted effort was needed in relation to Skills Development and Management Control. On the elements of Ownership and Preferential Procurement, it said while this was still below target, it was a reasonable performance by the sector. It lauded the overall excellent performance of the sector in terms of the Enterprise Development and Social-Economic Development elements of the scorecard.
Tau-Sekati said: “Management Control, Employment Equity and Skill Development are interrelated, so it is unsurprising that the underperformance of the three elements comes as a package. This trio of low performers shows an under-representation of black people and black women in all levels of management, including real board participation.”
The PSCC added in its media statement: “The lack of performance in skills development, as it stands now, will perpetuate the present transformation scenario. It is critical that enterprises in the property sector adequately invest in skills. This must be strongly linked to Employment Equity, which is the lowest scoring element against set target.”
Tau-Sekati advised: “The sector needs to promote skills development at a sectoral level rather than on a company level. This needs to be done in collaboration with academic institutions to build a curriculum that meets current and future needs.”
Meanwhile, the PSCC noted that although the achievement of the Economic Development element of the Property Sector Code remained low against its set targets, there were “some bright lights”, as a result of reasonable efforts undertaken by most of the sector’s development companies.
“Developing shopping centres in townships and some rural areas is a leading example,” said Tau-Sekati. She pointed out that targets in this area might not be sufficiently focused on the poorest areas of the country, which were completely under-resourced.
“It would seem the property sector is targeting investment opportunities at areas with relatively high income. We hope the future direction will lead the sector into the areas where development is needed the most,” Tau-Sekati concluded.
The PSCC’s latest State of Transformation Report was released at an event sponsored by Standard Bank.
Jonas Malebye, Standard Bank’s Head of Investment Banking in South Africa, said the event held substantial value for the property sector. “Standard Bank is proud to sponsor this event that enhances the knowledge base of the sector, contributes to its growth and benefits all participants,” he said.