The South African property sector is valued at R4.9 trillion with residential property accounting for R3.0 trillion according to a new research.
Interestingly, the research reveals that nearly two thirds of property owned in South Africa estimated at R3.0 trillion is residential.
Commissioned and released by the Property Sector Charter Council (PSCC), this is the first study of its kind in South Africa undertaken by the Investment Property Databank (IPD) and sponsored by the Public Investment Corporation.
The research aims to create a hub of knowledge about the property sector, consolidating information and developing a common and consistent understanding.
PSCC chief executive officer Portia Tau-Sekati explains that this is a starting point in understanding the size of the property sector in South Africa and this information will be reviewed and updated regularly going forward.
She points out that the information will be carried out in various phases which include market size measurement, listing the industries within the property sector, assessing the scale of different services and activities as well as determining the BEE transformation figures in line with the Property Sector Code scorecard.
Tau-Sekati says establishing the scope of the property sector is important for an accurate overview of the South African economy given that in 2009, the property sector contributed 8.3 percent of South Africa’s Gross Domestic Product, according to the South African Property Owners Association research report entitled ‘The Economic Impact of the Property Sector in South Africa’.
The research is presented to the industry as a working document as such, participation and collaboration to strengthen data contained and develop future updates is encouraged, says PSCC.
Research findings
The report providing a snapshot of the South African property sector as at the end of 2010 reveals that the overall sector value is R4.9 trillion.
Of that amount, non-residential property is valued at R780 billion. This includes retail (R340 billion), office (R228 billion), industrial (R187 billion) and hospitality, leisure and other accounted for R25 billion.
When viewed by owner category, the corporate listed sector accounts for R600 billion which includes investment property of R120 held by South Africa’s listed property sector and investment property (held by life and pension funds and private equity funds) is valued at R180 billion.
Non-residential property is valued at R780 billion. This includes retail (R340 billion), office (R228 billion), industrial (R187 billion) and hospitality, leisure and other accounted for R25 billion.
Interestingly, the research reveals that nearly two thirds of property owned in South Africa estimated at R3.0 trillion is residential.
According to the Affordable Land +Housing Data Centre which draws deeds data from the South African deeds registry and survey data from Statistics South Africa and other sources, the SA deeds registry includes a total of 6 million privately held residential properties.
Of these, about 3.5 million properties (58 percent) fall within affordable areas – these are areas where the average property value is less than R500k.
Information taken from the June 2004 Shisaka report entitled ‘Workings of Township Residential Property Markets’ notes that the value of properties in black townships is currently estimated at R68.3 billion, according to the research.
Public property is valued at R570 billion according to the research and this includes national (R188 billion), provincial R342 billion), local R37 billion and state owned enterprises (R6 billion).
Undeveloped land zoned for development equates to R520 billion and only 1.1 percent of land in South Africa is urban and residential.
Some 77.9 percent of the land is vegetation, agriculture (12.1 percent), nature reserve (4.5 percent), other (3.0 percent) and forest (1.4 percent).
The research reveals that the total space occupied by buildings was estimated to be around 1 billion square metres, a land cost ratio of 15 percent and a rate per square metre of R3 500 were applied.
Jess Cleland, research director at IPD SA explains that in terms of scope and methodology used in undertaking the research, IPD placed emphasis on the residential and commercial segments where there is the greatest activity.
IPD looked at value as primary measure, supplemented by size as well as split by property type and owner category where appropriate.
She points out that the challenges in putting together a report such as this one is the availability of up-to-date information in some cases.
For example, she notes information used to work out the value of local public property was taken from six of the country’s biggest municipalities’ annual reports and there was an added estimate of the remaining municipalities.
These included the City of Johannesburg, City of Cape Town, Ethekwini, Tshwane, Ekurhuleni and Buffalo City.
Attempts to undertake this research were made back in 2003 but there wasn’t any available information to get the study off the ground, according to Musa Ngcobo, chairperson of the PSCC research committee.
Ngcobo adds that a comprehensive report following this research is expected to be released in March 2013 and they welcome contributions from market leaders within each segment to enrich the data and accuracy of the report. – Denise Mhlanga
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