Property boom ‘will speed transformation’

The current strong demand for property should help property companies to implement the five-year property sector charter transformation targets.

First National Bank property strategist John Loos said yesterday that with strong demand for property and construction driving pricing power through much of the industry, it was now far more attractive to outsiders looking to get into the sector, either as owners, employers or employees.

Loos said the property sector’s strong performance was a strong marketing tool. “This stands in contrast to trying to attract new skills to stagnating sectors which already have an oversupply and lack any real appeal,” said Loos.

He said the property sector was booming and, as with the IT boom in the 1990s, demand was proliferating and supply was struggling to keep up.

“The supply side includes materials, skills and a variety of services related to property.” As a result of the supply constraints prices were driven up.

He said property and construction companies should find it easier to attract the necessary skills needed so they could conform to their charter targets.

“When a sector is stagnating it isn’t attractive for outsiders, and often it already has an oversupply of skills. Now we have an undersupply, which means there is more space for more people in the property sector and competition levels are lower, which allows opportunity for new entrants to find their feet.”

Mike Flax, CEO of JSE-listed property company Spearhead Property Holdings, said the company was finding “huge skills shortages of technical people such as engineers and project managers”.

“There is a lag effect in the market because they have to be trained,” said Flax.

He said the only option was for government to “incentivise” the return of the qualified building professionals living overseas.

Flax said it was easier now because of the property boom to attract people to university and technical courses. “Maybe in about five years you’ll see a good surplus of people coming from tertiary institutions.”

Andy Tondi, executive director and MD-designate of black empowerment property development company Kagiso Property Holdings, said that property was on a high.

He said that during “difficult times” companies focused on their bottom lines rather than on transformation.

Business Day -23 March 2006

Article by: Nick Wilson - www.netassets.co.za