MD of Vukile Property Fund, Itumeleng Mothibeli, who is also the recently appointed president of the SA Property Owners Association, (Sapoa) says that his mission for the next five years is to promote SA as a prime property investment destination.
Speaking to Business Day, Mothibeli, who stepped into his new role in the beginning of September, said he aimed to create an environment with strong, positive risk-adjusted returns, regulatory certainty for ease of doing business, and responsible property owners who prioritised broader values beyond just financial gains.
Sapoa, representing major listed property companies such as Growthpoint, Emira and Vukile, states that property performance is heavily influenced by the macroeconomic environment.
Increased GDP fosters business confidence and demand for office space, boosts consumer spending, benefits retailers and shopping centres and drives the need for more industrial and logistics facilities.
There’s a lot more political will to find sustainable solutions ... given the positive sentiment around the GNU, the ground that we’re currently transversing is fertile for progressive discussions
— Itumeleng Mothibeli, Sapoa president
“We are encouraged by the decrease in interest rates, as this directly correlates with increasing property prices, whether it is listed property or directly owned. Interest rate levels also directly impact the affordability of funding for property transactions and the financial viability of property developments and redevelopments,” Mothibeli said.
The trends shaping the property sector, according to Mothibeli, include technological advancements, with proptech innovations streamlining processes, enhancing operational efficiencies and reshaping how properties are bought, sold, managed and more.
“Convenience is another driving force, seen in the rise of neighbourhood, convenience and open-air shopping centres and there is a heightened demand from consumers for fresh, organic produce and health-conscious offerings, which is dictating what kind of shops they want at these centres,” he said.
Meanwhile the property association is advocating for regulatory policy certainty in SA to ensure that investors feel confident about making long-term property investments.
Some of the outstanding issues Mothibeli pointed to in the property sector were the management of municipalities and the fact that municipalities had significant rights to change certain regulations to increase tariffs and municipal valuations.
“Rates and taxes growing at levels higher than our top lines, being rental. Then there are the challenges of certainty of supply of state, provincial and municipal services and goods, and in most instances many property owners have had to intervene and invest in supplying the services that we are already paying municipalities and SOEs for ourselves,” Mothibeli said.
The association’s CEO report indicates that one of the legal challenges it is facing involves the draft budget for the 2022/23 financial year, where the eThekwini municipality proposed a 100% increase in rates randage for vacant land. This abrupt rise is highly detrimental to property developers.
Following these discussions, the eThekwini municipal manager committed to addressing the doubling of vacant land rates in the 2023/24 budget process and assured Sapoa members they would not pay the increased rates in the meantime. However, when the draft budget was released in April 2023, it showed only a 15% reduction in rates for vacant land, with planned increases of 5% in the following two years, contradicting the municipality’s earlier assurances to Sapoa and its members.
He said that the rates and taxes growth issue required improvement, and was encouraged by the dialogue between the private and public sectors focused on identifying critical issues that were detrimental to the growth of the property industry.
“It looks like we’re moving in the right direction. There’s a lot more political will to find sustainable solutions and I think this current environment and, given the positive sentiment around the GNU, the ground that we’re currently transversing is fertile for progressive discussions,” he said.
Other issues highlighted in the report include dilapidated and empty buildings that lead to a lack of investment in certain areas and further decay, and the planning and the development approval processes in municipalities that are delayed due to several reasons.
“Our vision is to actively and responsibly represent our members’ property interests and ensure that property investment in SA is viable and sustainable and will grow into the future. Property is multidisciplinary and it has a vast range of stakeholders. Part of our strategy over the next five years is to … communicate what property is about, effectively — the value, the employment and the significant impact to the GDP that property brings,” he said.
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