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SAPOA raises concern over the President's SONA regarding foreign land ownership

The implementation of restricting foreign land ownership will reduce foreign investor confidence in South Africa.


The South African Property Owners Association (SAPOA) has raised concern over South African President Jacob Zuma’s announcement during his State of the Nation Address (SONA) on Thursday 12 February 2015 regarding restrictions on foreign land ownership.

During President Zuma’s SONA to a joint sitting of Parliament, he stated that land ownership by foreigners will be prohibited. The President’s statement raises concern about the possible impact on foreign land ownership of property companies, game farms as well as foreign investments in hotels in South Africa.

“Foreigners will not be allowed to own land in South Africa,” said President Zuma. He added that foreigners would instead be eligible for long-term leases. “In this regard, the Regulation of Land Holdings Bill will be submitted to Parliament this year,” he noted.

The ANC’s proposed reforms regarding land ownership is a great concern, believes SAPOA. The ANC Secretary General GwedeMantashe said last month that there should be “a ceiling on land ownership”.

Mantashe said that if legislation were passed, “its application retrospectively is an issue which will be tested constitutionally. The government must pass the law and test it constitutionally. It must comply with constitutional requirement.”

“The ANC has committed that land will be returned to our people and the government must move with the necessary speed to put legislation in place to effect this,” said Mantashe.

“The implementation of such a policy would reduce foreign investor confidence in South Africa, affecting the economy as a whole,” highlights Neil Gopal, Chief Executive Officer of SAPOA.

“The issue of land reform proposals in South Africa is nothing new,” says Gopal. “As the issue escalates, it has the potential to hamper investor confidence in the country and curb foreign direct investment flows. Foreign investment in property boasts benefits for the commercial property industry, and with such proposals put forward, the industry falls prey to negative knock-on effects,” adds Gopal.

SAPOA feels that the change in policy is not justified. “South Africa’s property market is best served by a policy framework which offers investors certainty of land tenure, the promotion of domestic and foreign investment and which supports the allocation of land to its highest and best use on a sustainable basis,” explains Gopal.

While we support initiatives to redress the injustices of the past in a balanced manner, we don’t believe such land reforms will be positive as the policy is discriminatory and will most likely impede foreign direct investment and job creation,” adds Gopal.

“I do not believe that the Deeds Registries is in any position to provide reliable or accurate information on the actual extent of foreign land ownership in South Africa. Until we know this, one cannot implement policy changes,” says Gopal.

“We would like to engage with government with the view of jointly finding solutions to this matter,” concludes Gopal.

Of further concern is the plan to do away with the willing buyer willing seller principle. “Section 25 of the SA Constitution enshrines the right to property. No law may permit arbitrary deprivation of property.” Says Gopal.

“It is critical that South Africa navigates through the sensitivities of land reform with greater vision to ensure that the injustices of the past are dealt with and that economic stability continues to be reinforced” added Gopal.

Dr Andrew Golding, chief executive of the Pam Golding Property group:

“Every time this issue rears its head, it further serves to erode confidence in the country as an investment destination – mainly as a consequence of issues of uncertainty. And while nationally this is still a proposal, the fact is that by its very nature it erodes foreign direct investment appetite, and potential investors who may be weighing up South Africa versus a number of other destinations will potentially simply choose to invest elsewhere.

“Certainly it is worth reiterating that the level of foreign buyers of residential property in South Africa is so insignificant relative to the total market, but more importantly, the benefits of foreign investment in property in this country and the knock-on effect of that investment far outweigh any perceived negative.

“Leasehold is not a conventional South African methodology and would require significant understanding and implementation of dramatic changes to current property practice, not to mention the question of whether or not this is a Constitutional issue as well.”