A conference on black property practitioners has revealed that black property practitioners face mounting challenges, including inadequate access to financial resources and exorbitant land costs.
These were cited as the reasons for the persisting skewed patterns in the property sector. The KwaZulu-Natal government has since introduced the long-term leasehold ownership model to bridge the inequalities.
The programme is carried by the Dube Trade Port Special Economic Zone, a provincial government-owned entity that manages about 3 000 hectares of land in infrastructure projects.
It was set up with key responsibilities of promoting international and local trade, among others.
According to Andile Mnguni, the Dube Trade Port investment property head the leasehold ownership model will be used as a vehicle to make access to land for the black majority equitable and fair.
“The leasehold model can facilitate access to land, launching numerous commercially viable industrial projects by eliminating the need for property developers having to buy land upfront. This include reducing the capital requirements to initiate the deals, whilst still meeting the criteria needed to enable commercial banks and to find these notarial leasehold developments,” said Mnguni.
He explained the notarial leasehold contracts allowed investors to access land developable over long periods without the need to purchase it outright and ensure the property owner a stable revenue.
“Dube Trade Port Special Economic Zone has also been working in tandem with development finance institutions like Ithala Development Finance Corporation Limited and KZN Growth Fund here in KwaZulu-Natal together with some of South Africa’s development finance institutions and large commercial banks, to secure funding for emerging property developers developing within our precinct,” said Mnguni.
A progress report by the KZN Department of Human Settlements painted a grim picture where it emerged that it was an uphill battle for black people keen on entering the property sector.
According to the report, financial, legal, and administrative bottlenecks stand in their way. It further said, the commercial direct property ownership is dominated by mainly institutional investors, collective investment schemes, listed property entities and the government being the largest commercial player in KwaZulu-Natal.
“The commercially driven activities surrounding property including development, management and sales rests largely in white owned hands,” noted the report.
The report also states that only 15 emerging black property developers have leases with the government. Out of those, 14 are males while only one is a female. In the 178 government leases, 37 were with white businesses and 79 were Indian.
