Warning number three

Saki Macozoma once more urges the industry to speed up black property ownership

Act positively to bring significant property ownership to black people, or social turmoil will achieve it negatively, Cyril Ramaphosa warned the 2000 SA Property Owners Association (Sapoa) congress. Fellow businessman Saki Macozoma said the same at the 2003 congress (Property May 30 2003).

Last week, at Sapoa's 40th birthday congress, held in Durban's international convention centre, Macozoma said it again because not much has changed despite the ongoing property boom.

"The extent to which blacks shared in that growth over the past three years is shameful," he noted.

Once more he urged property owners to be more creative in bringing black people into property. He emphasised that this could be done through education, particularly higher education and training colleges.

As before, Sapoa's leaders demonstrated their eagerness to achieve transformation. They pointed out all they were doing for change, from the recent signing of a property charter to the organisation's role in property education and the formation of a new property academy.

But the hard fact is that black property ownership - historically the touchiest subject in SA after the vote - is not growing fast enough to make sure that social unrest will be avoided.

Gensec Property Services national leasing manager Kura Chihota says only 3,6% of the equity listed on the JSE is in black hands - lower than the 4,1% of listed companies as a whole. "By the latest measure, Saki Macozoma's indictment is fair," says Chihota, a member of Sapoa's Gauteng executive.

But is there a practical way in which Sapoa can speed up ownership?

Most of SA's big property owners were not around to hear Macozoma's warning. There were more than 1 000 delegates at the congress, half of them newcomers attending for the first time. The rest were professionals, banks and other property service providers.

Insurers and pension funds dominated property ownership and Sapoa until the mid-1990s, when they started withdrawing as investors. The most successful of the entrepreneurs who replaced them have shown declining interest in Sapoa congresses.

This year, the top executives of SA's biggest developers, investors and fund managers, Atterbury, Zenprop, Abland, Investec and Madison among them, weren't there.

"Too busy," some said. "Besides, Sapoa congresses are boring."

They get more out of the annual Shopping Centre Council and International Property Databank conferences, two of a number of new organisations threatening to fragment the industry. Others are the SA Institute of Black Property Professionals and the Women's Property Network.

Another problem is that presidency of the organisation has tended to go to loyal workers on its executive. They have been competent organisers rather than leaders able to command a public presence and stir up awareness of vital national issues. But that may change with the election last week of Alex Phakathi as president. Phakathi is CEO of Pareto, the Eskom Pension Fund retail giant in which the Public Investment Corp has a minority stake. He has been outspoken in the past on behalf of the black professionals' demand for a bigger stake in property ownership.

Phakathi says Sapoa, under his leadership, will turn from lobbying government to lobbying property owners. "We will actively work with owner's organisations like the Property Loan Stock Association to ensure faster black ownership," he says. "The charter target of 25% black ownership will be our basic minimum."

Listed property is only about 10% of the total commercial property market, potentially broadening black ownership to 2,5% of the sector. The charter has also excluded the far bigger residential property subsector, which could more quickly increase black property wealth if it was championed by Sapoa.

"Residential property is not in our mandate," says Chihota, pointing to Sapoa's motto as the voice of commercial property.

One new delegate at the congress and a potential property leader is Bongani Khumalo, former Eskom deputy CEO and Transnet chairman, who is now chairman of Grey Global SA and EDS and a director of Anglo Platinum. He has bought a stake in JHI Real Estate, the 105-year-old property group, making it a black-owned company. "The charter should not become a tranquilliser," he warns. "It is a serious tool for transformation, a key enabler. You need innovators to challenge the incumbents to change. That way meaningful and sustainable solutions are found."

Another danger is that the few new black property owners will be assimilated into a property-owning elite, says Khumalo.

Phakathi wants to leave the SA Institute of Black Property Professionals, the Women's Property Network and other "special-purpose organisations" to promote ownership to their special interests and for Sapoa to have a co-ordinating role.

But Khumalo, a communications expert, sees Sapoa leaders spending much of their time on road shows to property owners. "They must communicate continually and with high visibility, making sure the industry hears specific proposals for change."

Article by: Ian Fife - http://free.financialmail.co.za