THE real estate index on the JSE Securities Exchange SA has a long way to go to achieving its empowerment objectives.

The draft property charter, which was released last week and included targets and scorecards, aims to place 25% of SA’s property industry in black hands within five years. As it stands, only two of the 27 listed property unit trusts and property loan-stock companies on the index have concluded empowerment deals.

As far as ownership targets are concerned, the property industry steering committee would like to see companies selling a quarter of their shareholdings within five years. The two early starters are listed property loan stock company Spearhead and listed property unit trust Capital Property Fund.

About 26% of Spearhead is owned by black economic empowerment groups and black individuals, while Cyril Ramaphosa’s Shanduka group owns about 5% of Capital.

There is talk that at least four or five other listed property funds and companies are considering their own empowerment deals.

Because it is early days yet, no one knows what the costs are for the sector as a whole.

A big challenge is ensuring that empowerment deals do not dilute earnings and do not pre-judice their existing unit holders.

Companies also have to ensure that the deals are broadly based rather than benefiting just the elite few.

This is a tricky business, so it is expected that most companies will adopt a slow and steady pace when it comes to transformation. It is likely that most of will opt for selling small chunks of their businesses at a time.

This means we could see multiple smaller empowerment deals rather than a few large deals.

One factor favouring the listed property sector is its close ties to financial institutions. Most of the financial institutions, including banks, own large interests in listed property funds. That means finding finance for empowerment deals should be simple.