Land debate | Discussions around land, property and ownership


Portia Tau-Sekati | CEO | Property Sector Charter Council | Contributor | UNISA Graduate School of Business Leadership | mail me |

President Cyril Ramaphosa’s late night announcement on 31 July 2018 on the decision to amend Section 25 of the South African Constitution to clearly articulate land without compensation has driven the debate on land ownership into top gear. 

Urgent land audit

A report recently released by the Bureau for Food and Agricultural Policy (BFAP) calls for an urgent land audit to underpin future land reform decisions.

This would be a sound basis from which to start in order to understand what the current state is of both developed and undeveloped land.

From a property perspective, the Property Sector Charter Council – which consists of more than 21 bodies representing South Africa’s property sector – has already been involved in collating and developing research reports for a number of years in order to create a consistent understanding about the property sector.

A detailed scope of the distribution of property in South Africah was presented  as a masterclass at the Alumni Association of Unisa’s Graduate School of Business Leadership (SBL). The main purpose of the Property Sector Charter Council office is to enhance transformation by bringing together unique knowledge and characteristics of the sector in order to deepen meaningful participation of property participants in South Africa’s mainstream economy.

Property sector

Given that South Africa’s property sector holds assets worth R5.8 trillion and contributes significantly to the country’s gross domestic product (GDP), I believe that there is a great deal of statistics and facts from the sector, which could inform the process of land transformation.

The aim of the council’s research is to consolidate all available information and develop a hub of knowledge with common understanding of the sector for all participants. Certainly for transformation purposes and when applying a percentage to black ownership, it is critical to understand what the universe or total is. Ultimately, a thorough understanding of the sector will inform the development of sound legislation.

The property sector consists of commercial and residential property as well as public and zoned urban lands. The biggest is South African residential industry at R3.9 trillion made up of 6.1 million of properties and an approximate 543,000 household in informal settlements.

Urban property

Currently, the majority of township houses are still not registered at the Deeds Office.

With such a low proportion of the population having the benefit of formal property ownership, it is arguably a matter of time before the debate of expropriation may extend to urban property. The expropriation debate was never only about farm land.

While not as large as agricultural holdings, there is a reasonable portion of urban land that could be drawn into the debate, and after all, people are drawn into urban zoned land for mainly economic and social reasons.

Commercial property in South Africa is worth a staggering R1.3 trillion with retail accounting for R534 billion, R357 billion of office space, R281 billion for industrial property and R94 billion for hospitality and leisure. In the listed property sector there is an estimated 10% to 15% of black ownership with a reasonable amount of that portion owned by the likes of PIC. 

Public sector property

In terms of the public sector, property currently held by 19 state-owned enterprises (SoE) is worth R65.9 billion.

The top 5 SoEs in terms of value account for 89% of property holdings (R59 billion) with Transnet, Eskom, ACSA and PRASA as the largest contributors. A total of 75% of the SoE sector’s property holdings are owner-occupied with the balance held as investment properties.

Of 9 metropolitan and 10 local municipalities, property is held to the value of R69 billion.  The Department of Public Works holds R102 billion worth of property. Research has been undertaken to ascertain the market size of properties and not their effective use, which means that it is not clear the number of properties that might be unused or standing vacant.

The Council’s research into zoned urban land includes land to the total value of R520 billion. The total space occupied by buildings has been estimated at around 1 billion square metres, a land cost ratio of 15% with an applied rate per square metre of R3,500.

In conclusion

While the Council’s purpose in compiling the statistics of South Africa’s property was not undertaken for the purposes of the expropriation debate, some of the knowledge gleaned could certainly start guiding a discussion in this area.

Putting factual statistics on the table assists in providing a balance to the emotional views that understandably are a key factor in discussions around land, property and ownership.  However, legislative decisions that will have a long-term impact on our economy, can benefit from a process that begins with a thorough understanding of the landscape.




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