Iafrica - Land ownership: There's more to come

Government may have backtracked on recent threats of controlling foreign land ownership in the country, but concerns have been raised as to what else may be in the pipeline, as well as the impact of the comments on foreign investment.

Steve Powell and Mike Ryan of internationally-owned but locally-based Kingfisher Developments say it's not the first time government has threatened to restrict foreign land ownership, only to subsequently retract the comments, as this happened some nine months ago.

They add: "Government needs to be careful about what this signals to foreigners, both as investors and contributors towards a growing economy, as well as the tourist market which may well be sensitive to a policy of this nature."

Owned by the 'super-rich'

This follows comments made by government communications head Themba Maseko, who said last week that South Africans could wake up one day and find that only "foreign nationals and the super-rich" had access to their coastline, adding there "is need for us to come up with a regulatory framework for how the sale of land should be managed".

Asked whether this marked the first step towards regulating the foreign ownership of land in South Africa, Maseko replied, "this may be the first legal instrument government is putting on the table as a way of opening the discussion about the sale of land to foreigners in this country."

Before the end of the week, however, Maseko had changed his tune, stating that "South Africa has no plans to limit the sale of coastal land to foreigners", while Environmental Affairs and Tourism Minister Marthinus van Schalkwyk reiterated that the draft Integrated Coastal Management Bill would not restrict foreign purchases of coastal land.

The first legislation

So what then does the new bill mean? The Integrated Coastal Management Bill, which for the next three months will be open for public comment, gives legal effect to the white paper for sustainable coastal development of 2000 and will replace the old Seashore Act and the Control of Dumping at Sea Act.

According to Van Schalkwyk, "this is the first piece of legislation that gives authority to control illegal structures through issuing of repair and removal notices. This will help government ensure that the ecological integrity of the coastal zone is not compromised."

This is no bad thing, say Powell and Ryan: "We believe it is fair to be concerned about limiting the public’s access to South Africa’s coastline", but added the proposed framework "should not limit foreigners any more than locals. The issue is purely making sure beaches are accessible to all and protecting the coastline is government’s responsibility".

There's more to come

However, Maseko's retraction is unlikely to be the end of the story. A panel of experts (Pefol), commissioned by government in 2004 to open discussion on the issue, found that it was "imperative to start a process of developing a comprehensive policy on foreign ownership of land".

Key recommendations by the panel in their report released in February 2006 proposed immediate initial measures to assist government in regulating the registration records in respect of foreign ownership of land.

The report added, "there is very strong public opinion and perception, as manifest in the public hearings convened by the Pefol that an unregulated ownership of land and landed property, such as housing, by foreigners contributes significantly to the lack of readily available and affordable land for land reform."

The good news

This is not true, according to Pam Golding Properties group chief executive, Dr Andrew Golding, who says, "the reality is that less than one percent of property owners in South Africa are foreigners".

He also doesn’t agree with government’s belief that foreigners push up the prices of these properties, noting that "foreigners pay the market price and the prices which truly reflect market value".

"On top of that foreign direct investment contributes enormously to the economy and to job creation."

However, Golding does see Maseko's retraction as excellent news, saying "government has clarified that they have no intention to restrict foreigners".

"(T)here have been no significant quantitative measures by government to find out exactly how many foreigners own property in South Africa", nor have there been any steps taken against foreigners. Until there is a move towards those measures, Golding does not believe there will be any significant developments.

Article by: Thamar Houliston - www.iafrica.com