20 December 2007
South African property companies need to plan for their futures now, while taking global factors into account and using such factors to their advantage, says property services company JHI’s chief executive, Marna van der Walt.
“The future is very different from the past, with globalisation playing an increasingly dominant role,” Van der Walt, who is also president of the South African Property Owners Association, said in a statement by JHI earlier this month.
“It is up to us, as an industry, to use globalisation to our advantage and for growth.”
According to JHI, there has been a marked contradiction between the listed property market in South Africa and that of the US and UK. Whereas the SA market showed growth of about 20% this year, the latter markets declined by between 20% and 40%.
A significant difference, and one the local property industry needs to harness, JHI says, is to realise that although the SA market has experienced such excellent growth, globalisation will start to have an increasing impact on local markets and companies.
Van Der Walt says that although property is a local asset, it operates in an environment that is influenced by global factors, such as the sub-prime crisis, the credit crisis, currency movements and growth cycles.
In addition, she says that international investors entering the local market have a different mindset and parameters, which also influence property pricing.
“We undoubtedly need to open our paradigm to globalisation – but that needs to be further defined,” she says. “We cannot look at it simply as the Western world – we need to face the reality that our competition of tomorrow will come from non-Western countries such as China, India and the Middle East.”
Van der Walt says the change in view is vital, as South Africa will be competing against those countries for skills, as well as for investment opportunities for world funds moving around the globe.
Unique challenges
“Yes, we’ve been experiencing excellent growth – and we continue to be poised for further growth,” she says, warning, however, that the industry faces uniquely South African constraints in realising its full potential.
“One just has to look at the issue of meeting local expectations on transformation, the gap between poverty and wealth, crime, uncertainty in the political environment and legislation such as foreign exchange constraints,” she says. “Added to these we have skills shortages, land issues, an absence of a clear Real Estate Investment Trust structure, infrastructure constraints such as electricity, transport and roads, and environment issues.”
Van der Walt calls for co-operation in the industry, asking all players to work together to address and eliminate the constraints inhibiting growth.
“We need to work together, first and foremost to make South Africa a strong market, before focusing on our own companies,” she says.
“Let’s partner with government associations, such as Johannesburg Property Company and Eskom, as well as co-industry players, including property funds and the listed sector, to ensure growth for our property market in a global market.”
SAinfo reporter
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