Transformation in limbo

Transformation is happening very slowly in property industry and on top of this, there is a general lack of skills entering the listed and unlisted property sectors, a panel discussion at the South African Property Owners’ Association (SAPOA) International Convention said on Wednesday.

Sapoa was established in 1966 by the leading and large property investment organizations to bring together all role players in the commercial property field and to create a powerful platform for property investors.

Today its members control about 90% of all commercial and combined portfolios in excess of R500bn.

Various talks occurred at the annual conference held at the Durban ICC last week, where it was discussed that broad-based black economic (BBBEE) empowerment had been successful at times but often the successes were not sustained.

The panelist discussion on the sector’s transformation followed the implementation of the new BBBEE codes of good practice which came into effect on May 1 this year.

The codes were instituted by the Department of Trade and Industry and have taken years to be devised.

The codes will be supplemented by the Property Sector Transformation Charter. In terms of the charter listed property companies operating in SA have half a year to review their BBBEE strategies and make changes so they can abide by the codes. Otherwise they could lose levels within BBBEE.

CEO of Emira Property Fund James Templeton spoke at the conference discussion in which he said he believed that the way property deals and not only who held senior roles at property companies, needed to be reassessed.

He did not want the sector to rely on just issuing shares to black beneficiaries in order to raise money, thereby diluting too many shares.

Some critics at the conference said that BBBEE needed to have been discussed in greater depth there. Further, companies should have had more time to prepare for the discussion.

Marius Muller, CEO of Pareto, an owner of various shopping centers which includes Cresta Mall in their portfolio, said transformation was nearly nonexistent in SA.

"There is little commitment to real transformation from the executive leadership of SA’s listed property sector and it’s time for a change in mind-set, or for new leaders that will make transformation a priority," he said at the conference.

"It’s time for us to be frank about the situation. The fact is that BBBEE executive directors make up just 15.7% of the leadership of the listed property sector. This is a clear indication of the slow pace of transformation at executive management level in the burgeoning listed property sector," he said.

Its outgoing president, Amelia Beattie, said property companies needed to support the specialized education of young people in property.

At the conference, Ms Beattie announced that Sapoa had raised R40m for its Bursary Fund to be rolled out over the next four years.
 
“Over the next four years, R40m has been approved for 100 bursary students,” said Beattie who is also head of Stanlib Direct Property Investments.

“We have surpassed our original 50 student goal,” she said.
 
SA Commercial Prop News learned that the money was raised through a contribution by the Services SETA (SSETA) after negotiations with SAPOA which took place over the last seven weeks.

Pamela Snyman who is a board member of the SSETA who represented the Chair of the SSETA at the Convention, said: “My wish and my goal is to see, through SAPOA, these students partaking in postgraduate degrees after the next four years”.
 
Snyman said the R40m would provide a strong boost to the education of future property professionals.

“We need skills today and we all need to stand up together and do something – we need to fly high and we need aspiration,” said Snyman.

The Sapoa bursary fund is five years old.
 
“About five years ago, the Sapoa Bursary Fund was initiated with the sole objective to create a fund in the commercial property industry for scholarships and bursaries for previously-disadvantaged individuals,” said Sapoa's Chief Executive Officer, Neil Gopal.
 
“These students are taken through a four year BSc degree, with the fund fully managed at the Sapoa head office, hence removing the intensive administrative matters out of our member’s hands. The students are then placed with member companies by Sapoa on completion of their degree,” Mr Gopal said.
 
One challenge is that some educational funds for property professionals have not attracted enough people let alone nonwhite students.

Many young talented people have seen more career growth possibilities in other industries such as financial services and engineering.

While SA’s listed property sector has grown aggressively over the past five years, and is currently worth about R500bn, it is only gaining attention from many investment groups recently. This may attract more people to pursue property studies as property companies get the potential to be among the biggest companies in SA, listed and unlisted.

We may also then not have young black talent choosing careers in banking instead of property.

Looking at transformation for people years into their careers, as it stands, research suggests that black executives that manage to reach executive level do not stay in the industry for very long.

A study by research index MSCI's South African research arm, IPD SA, recently found that of the 89 executive managers at JSE-listed property companies, as many as 75 executives or 84.3% were white. Black executives made up only 14 positions, with only one of them being female. The study excluded dually listed and internationally domiciled companies.

The South African Institute of Black Property Practitioners (SAIBPP) recently echoed the same sentiments, that more black people need to benefit from this growing sector.

Sapoa has also recognized there is a skills gap in the listed and unlisted property sectors in SA. As such, the organization has called for its members to say what skills they feel they lack and then Sapoa will help to develop specific skills.

Mike Deighton, incoming Sapoa president and MD of sugar products company Tongaat Hulett, spoke at the conference about how Sapoa had launched a skills survey and how it plans to gain information from the survey but that the survey needs more respondents.

So far only 37 have responded he said.

The panelist also included the likes of Mashilo Pitjeng: Director at TseboREAL Asset Management, Gary Fisher: Director at The Property Foundation, Bronwyn Corbett: COO at Delta Property Fund, and lastly Eusebius Mckaiser: Master of Ceremonies.