Apartheid in South Africa still Affecting Property Market

December 31 - Owning property creates wealth in one of the fastest ways, but generations of Black South Africans were denied that opportunity by apartheid legislation in the county.

Besides being able to own small areas in the former homelands, Black South Africans were not able to own property. Despite changes in the laws with the abolition of apartheid in 1994, this trend is continuing.

Black South Africans, today, own a very small percentage of South Africa's R2.12 trillion property market. They have also not broken into the commercial sector with very few Black South Africans selling real estate or owning property companies.

The International Property Data reports the South African residential property market being worth R2.12 trillion with 52% of that being residential real estate. The commercial sector accounts for 48% or R1.9 trillion.

For the past three years, the Property Charter has been under construction. Portia Tau-Sekati, CEO of the Property Sector Charter Council says that while more could be achieved, there are promising signs of transformation in the commercial property market.

She claims: "One of the reasons the commercial sector is faring better is that most players want to work with the Department of Public Works, which scrutinises BEE rankings."

The residential property market is not showing the same encouraging signs. Ms Tau-Sekati stated that: "Most companies in the residential market are family-owned businesses which do not do business with the government directly. But the industry has other dynamics that challenge it, such as the fact that it works on the 80-20 principle."

The 80-20 principle refers to the fact that 20% of businesses make 80% of the value in the South African real estate market.? At present, only 10% of South Africa's real estate agents are Black.

12/30/2010 11:17:00 PM