C Martin: Transformation in the property industry seminar

9 March 2009

Programme Director
Departmental officials
Ladies and gentlemen

Thanks so much for this opportunity to address you today. This seminar is
the very first of its kind in the Eastern Cape and thus represents a historic
moment since the formation of our democratic government in 1994. This event
also serves as a runner up to our very first Provincial Property Summit in the
Eastern Cape, which is going to be held later this year.

I am sure that everyone in this gathering is aware that as a collective,
government is the single biggest landlord, tenant and client of the property
industry in South Africa. The Eastern Cape has the most state land of all the
nine provinces in South Africa a staggering 6,1 million rand representing 37%
of all state land.

On the other side all of you present today represent an important part of
the organised formation for property owners in South Africa. It is therefore
valuable that we meet today to discuss issues of common interest, challenges
and critical issues facing the property industry in the Eastern Cape.

The Provincial Department of Public Works is tasked with the custodial role
of managing immovable assets of the state on behalf of the provincial
government and its thirteen user departments. Many strides have been achieved
since 1994 to transform the immovable asset portfolio of the state, but much
more work needs to be done in this regard.

In 1994 the whole nation turned its back on apartheid and set out to reverse
its negative effects. The transformation of our society and our economy became
government’s main focus to entrench democracy, cultivate patriotism, alleviate
poverty, and promote growth and empowerment.

The Constitution, the Restitution of Land Rights Act, the Black Economic
Empowerment Legislation and the Property Transformation Charter were among
fundamental efforts to do away with the leftovers of apartheid land ownership
and land use patterns.

The Property Transformation Charter, states, among others that, noting the
challenges facing the sector, many of which are inherited from our history,
“we, the parties to this charter, commit ourselves to actively promote a
vibrant, transformed and growing property sector that provides adequate
services to the domestic economy, reflects the South African nation as a whole,
and contributes to the establishment of an equitable society.”

We intend to achieve this by promoting the development, growth and
transformation of this industry such that there will be increased investment in
the sector, increased accessibility for property ownership and development,
enhanced entrepreneurial and skills development, as well as employment equity
and substantial change in the racial and gender composition of ownership,
control and management in the sector.

Programme Director,

I would like to be upfront and clearly state that I am not happy at all with
the pace and performance of transformation and empowerment of Black Economic
Empowerment (BEE) entities in the industry, especially in the Eastern Cape.
This is a concern which I share with the National Minister, Mr Geoff Doidge.
The Department currently leases 84 premises from landlords in the Eastern Cape.
In the current financial year the department spent R89 million on rental; which
are to be increased to R126 million in the 2009/2010 financial year. Only 27%
of our land lords are BEE entities. This represents 21 black landlords, of
which only two are black women. Of the 84 landlords, only four are women. This
is a clear indication that we need to focus on the participation of women as
landlords in the property industry. Much work still needs to be done to ensure
that all the verbal commitments are translated to solid work.

However, let me be frank in reporting to you that I have received
satisfactory feedback from my senior management that a large number of our
current landlords have already embraced the transformation of the property
industry. Allow me to thank them for their commitment to the equal distribution
of opportunities in property industry.

Once again, the current past of transformation of the property industry is
unacceptable. The 2007 Polokwane resolutions of the African National Congress
(ANC) are very clear that the state should prioritize the transformation of the
property industry to advance those who were previously disadvantaged.

As government we will now begin to use our muscle to drive increasing
participation by black and women owned businesses so that they are rapidly able
to gain experience in leasing and facilities management, a critical entry point
to the sector and one that does not require major capital resources.

The current state in the Eastern Cape is unacceptable and is not in line
with our developmental objectives and as a caring government for those who
calculate amongst the poorest of the poor. I want an alternation in the current
state by of which 50% of our landlords should be black at the end of the
2009/10 financial year. This will be a performance output which will be
included in the performance agreements of the property management at Head
Office and at Regional level.

As it will be shown later in presentations from Public Works, we as a
government has policies like the Property Incubator Programme in place to make
sure that we transform the property industry.

However, I would like to call on the property sector, including the
financial institutions and their role in providing access to finance, to work
with government on initiatives meant to grow this sector. Our commitment is
clear and we will establish concrete interventions that support
empowerment.

These will be based, among others, on lease renewals, new leases, minimum
participation goals and longer leases that support empowerment. We need to work
together to remove obstacles that are encountered by black people, women and
youth in participating in this industry. If we talk of transformation of the
property industry, we need substantial change in the racial and gender
composition of ownership, control and management and enhance the participation
of black people, including black women and designated groups in this exciting
and vibrant property sector.

Remember, together we can do more.

Thank you.

Issued by: Department of Public Works, Eastern Cape Provincial
Government
9 March 2009