The global property scene has changed dramatically in the past three months, with property sectors in countries such as France and Germany suffering a noticeable slump and interest rates rising worldwide. Although South Africa is usually a step behind these global trends, the country is sure to follow. Already there is a distinct lack of positive movement in the growth rate.
South Africa remains in a state of economic limbo as there is no real party to challenge the ANC and its policies, which have in recent years been seen to encourage consumers to go into debt in order to purchase property and other consumables. At least year’s Property Trends Forum, I spoke about the need for a political party on the left to stabilise the economy. I maintain this view, and feel there is a good chance that organisations such as the National Union of Metalworkers of South Africa (NUMSA) could act as a catalyst for the formation of a political party on the left – ultimately the political fight needs to take place between the left and the right, instead of the current stand-off between the ANC and DA.
Historically, the private sector has been known to intervene and challenge unjust policies, as it did after the 1976 Soweto Uprisings. In the past few years it has assisted with agricultural land reform, as well as skills development, and will continue to play a large role in the expansion of the industry. The ingenuity of the private sector should never be underestimated. In fact, it is this ingenuity that has seen South Africa become the leading outsourcing market for UK companies.
While business process outsourcing may be an area the country is excelling in in terms of attracting investors, mining legislation and uncertainty in the small business sector – particularly in relation to black economic empowerment (BEE) policies – remain the largest deterrents to foreign investors. South Africa’s economy, after all, is underpinned by the mining industry and is likely to remain this way for some time. Likewise, BEE is not going anywhere, so it will become necessary to circumvent these obstacles by re-imagining and adapting the existing policies to make them more investor-friendly.
However, while pursuing worthwhile investment into the South African economy and property portfolio should remain a priority, the country needs to be wary of falling into the trap of chasing foreign investment to the exclusion of local investors. The long-standing pattern has been that if local financiers buy, foreign investors will be sure to follow.
It is therefore imperative for the industry, with both private sector and government players, to create an inviting and enabling environment for investors on home shores. As it stands, this is not the case in South Africa so the next step becomes to look internally and work on ways to ‘sweep our own doorstep clean’ and resolve this source of conflict. Ultimately, we have the potential to build a powerful commercial property industry.