New proposals on land 'unfriendly to white foreigners'

Johannesburg - Proposals to restrict foreign land ownership in South Africa and to require all landowners, including foreigners, to divulge their race, risk creating the impression of a country hostile to white-skinned foreigners. That was the verdict this week among estate agents and property analysts who reacted with dismay to recommendations contained in a government-commissioned report on foreign land ownership.

South Africa does not record the nationality of landowners so the exact extent of foreign ownership is unknown. The report estimated the amount of land in foreign hands at 3 per cent nationally, with higher levels in coastal areas, around Cape Town and Durban particularly.

Despite their relatively small numbers, foreigners are often blamed for rising residential property prices, which shot up by 14.5 per cent in real terms between 2000 and 2006, according to ABSA bank, but now appear to be levelling off.

Estate agents' claims that the increase is mostly fuelled by demand from the new black middle class have done little to dispel the perception of moneyed foreigners outbidding locals.

One of the recommendations this week from the panel of experts appointed by the ruling African National Congress (ANC) to examine the issue was to introduce new disclosure requirements for all landowners in order to get a better picture of ownership patterns.

The details sought would include nationality, race and gender.

While some analysts found merit in monitoring land ownership among South Africa's various racial groups as a measure of post-apartheid land reform, the proposals to require foreigners to also disclose their race caused consternation.

Would an Indian foreigner be deemed a more palatable investor than a white foreigner, the Citizen newspaper wondered?

"It does have very negative connotations," said property economist Erwin Rode. "It creates the impression of a country unfriendly to foreigners, especially foreigners with white skin."

Other recommendations in the report include a two-year moratorium on foreigners buying state land and an outright ban on foreigners owning land in protected areas such as some coastal and border areas.

A further proposal aims at ending the proliferation of ritzy golf resorts and game farms, popular with foreign investors, by making them subject to ministerial approval.

"I think it (the report) is wrong," Niel Cronje, head of the Pretoria franchise of Engel & Voelkers estate agency said, talking up the trickle-down effect of foreign investment. "We need to understand we are not locked away in the bottom of a continent, we are part of the global economy."

The panel's chair Professor Shadrack Gutto defended the recommendations as "more or less the middle ground compared with the reality on the ground in the world."

Other countries, like Australia, have strict limits on foreign land ownership, he pointed out.

"There are countries that only operate leases (for foreign owners) or that require you to have a local partner - we didn't go that far."

One of the main aims of the report is to spur the state's land reform programme, he said.

The government plans to begin buying up vast tracts of land to meet its objective of putting 30 per cent of land in the hands of black citizens by 2014.

In order to fend off competition from investors for that land the report recommends ministerial approval be sought for the disposal of land that could be used towards land reform.

How would a buyer know whether the land he was eyeing was earmarked for use in land reform?

"This will require the state to be more proactive in identifying those areas," Gutto said triumphantly.

Whatever the state decides with regard to foreign land ownership it should act fast, said Cronje.

"One of the first questions people ask is, how secure are my property rights? At moment there is a lot of speculation and its having a negative effect on foreign investment."

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