The South African property industry needed to "respond positively" to government's initiative to earmark state-owned land for black economic empowerment companies, commercial property association Sapoa CEO Neil Gopal says.

This comes after Public Enterprises Minister Alec Erwin told Port Elizabeth's Property Investors Conference on Friday that government property worth about R2,5bn would be made available to the private sector.

Erwin said that at least 70% of this property would go to businesses that met the relevant empowerment requirements.

Properties to be put up for sale include agricultural and vacant land, as well as commercial and industrial properties.

"Government has come to the party; the private sector now needs to respond positively to this very bold initiative," Gopal said on Monday.

Government's strategy was in line with the property sector empowerment charter, which was signed in March this year, and Sapoa welcomed the move, he said.

"We believe that the process is well driven by minister Alec Erwin and will boost the objectives of the charter, meet the objectives of job creation, and level the playing fields as far as property ownership is concerned."

Gopal said that Sapoa's participation in the property charter process had been "inclusive and consultative, with both large players" and small, medium and micro enterprises being well represented.

Gopal said Sapoa members would "endeavour to work closely with government on this matter".

James Templeton, chairman of the Association of Property Unit Trusts, which represents property unit trusts listed on the JSE, said the initiative was yet another reason for listed property funds to enter into empowerment deals.

"We've stated all along there are an increasingly greater number of reasons to do BEE (black economic empowerment) deals nowadays."

Templeton said tenants were also looking for landlords with empowerment credentials because expenditure on empowerment companies earned points on the empowerment scorecards.

"If you are going to participate in the sale of land and assets by government, you have to have BEE partners.

"BEE credentials will put you ahead of someone who doesn't have BEE credentials," said Templeton.

But he said the empowerment levels that government required were "quite significant".

Templeton said that even listed property companies that had empowerment equity levels of 15% were going to "struggle" to meet the requirements.

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge