It is difficult to see how inflation will reach 4.9% by 2009 as projected by Manuel, especially given an ‘expansionary’ budget and Eskom support, etc. On the expenditure side, Government’s desire to continue the fixed capital-formation spending trend acknowledges that energy intensive investments may be deferred. Nevertheless this should still translate into support for the expanded public works programme, further benefiting the built environment/property sector broadly. Mention of an improved national expenditure monitoring system should also be welcomed as this provides a better means of tracking success and failures.

An emphasis on supply side economics and barriers to export led growth goes to the heart of the national account deficit challenge: Among various incentives highlighted include a focus on assisting the businesses sector – a 1% reduction in corporate tax; an increase in the VAT threshold from R300K to R1million; and a tax incentive amounting to a 30 percent up-front deduction for SMME venture capital investments (50 percent for junior mining exploration) – all of which can spur company formation and demand for commercial space in particular. More direct issues for property come in the form of an extension to the Urban Development Zone incentive for a further five years; and with non-renewable energy consumption facing an additional levy of 2 cents per kilowatt/hour, this should be a strong incentive for the green building movement to at least make the 10 percent saving required to mitigate against the impact of the levy. A re-look at the low-cost housing supply environment is also on the cards.

Marc Schneider