Commercial property experts gather to discuss trends and challenges

The panel comprised self-employed political and economic analyst, JP Landman; property economist and head of Property Studies at the University of Cape Town, Professor Francois Viruly; and Chief Investment Officer of Stanlib Direct Property Investments, Amelia Beattie.

The contraction of the economy

A major trend and concern the panel noted was the contraction of the economy, on both a national and international level. The fundamental issues that led to the global crisis are still present, argued Viruly, and the result is a global economy that remains in turmoil. Landman concurred and pointed out that the global property scene has changed dramatically in the past three months, with events that seemed unthinkable coming to pass. He cited France and Germany's slumps as examples. With a rise in interest rates globally, South Africa is sure to follow, he warned.

Feeding into this is the continued contraction of rental growth numbers, as well as unsecured lending - particularly in the retail sector - which is placing significant stress on the economy, Beattie contended. This battle is playing out primarily in cities, she asserted, and it is here that the property sector will fail or succeed.

"There is a good understanding within the National Treasury of the importance of cities," added Viruly. "Over 60% of South Africa is an urbanised population and there is a growing realisation that if our cities fail, South Africa as a country cannot succeed. As a result, the property sector's most important role going forward is to ensure growth."

Filling the skills deficit through a comprehensive skills plan developed by industry bodies and government is the surest way to achieve this growth, Beattie pointed out. There is currently a shortage of town planners, inspectors and valuers, and industry bodies have a responsibility to collaborate with government to build the necessary capacity to effectively sell the South African property sector to investors both locally and internationally.

The panel agreed on the need to sell not only the South African story, but the wider African tale, but differed on the approach. Landman advised the industry to look at local investors, first and foremost, and forget about trying to entice foreign investors to our shores. "If locals buy property, foreigners will too. However, it's necessary to create an attractive and inviting investment environment for local investors. Once we have achieved that, international investors will follow."

Focusing on South Africa's role within the continental growth story is vital

Focusing on South Africa's role within the continental growth story is vital, argued Viruly. Africa is growing at 5.5% and as it continues to expand, South Africa needs to ensure it is not left behind. "Six cities the equivalent size of Johannesburg are currently in the process of being built on the rest of the continent," he proclaimed, making it necessary to determine what South Africa's unique selling point is. Simply being the gateway into Africa may no longer be enough going forward.

The property sector needs to start thinking more creatively about deal-making and how international partners can be brought in, Beattie stated. "The fundamentals of the property industry in South Africa are strong - it is an ethical and transparent sector with active participation, good returns on rentals and valuable property - how the story is framed becomes key."

"This forum has become a key event on the commercial property calendar," says Improvon's Developments Executive, Stefano Contardo. "As an industry it's imperative that we continuously track trends and keep a finger on the economic pulse and forums of this nature are a valuable platform for sharing expert knowledge."