The South African Property Owners Association (SAPOA) commissioned the services of Urban-Econ Development Economists to embark on an analysis of the commercial private property industry in the Mpumalanga province, with specific reference to the City of Mbombela Local Municipality.
The analysis of the commercial private property sector in the City of Mbombela forms part of a series of comparable reports formerly published by SAPOA. These include analysis of the role and value of the commercial private property sector in the Western Cape (2010), KwaZulu Natal (2015) and the Gauteng Province (2016).
The research was aimed at:
- Highlighting the economic value of the sector within the Mpumalanga Province, with specific reference to the City of Mbombela Local Municipality.
- Investigating if and why there are certain misconceptions in relation to the application process.
- Interrogating the Ordinances against SPLUMA.
- Emphasising the responsibilities of all stakeholders regarding private property development.
- Identifying any shortcomings in the application process.
The information-gathering and consultation process consisted of private and public-sector interviews with the Department of Economic Development, Department of Rural Development and Land Reform, Statistics South Africa, Mpumalanga Province – COGTA and the City of Mbombela Land Use Management and Building Control respectively.
The Role and Impact of the Commercial Property Sector in Mpumalanga Province analysis provides context in terms of the economic contribution and scope of the commercial private property sector in the Mpumalanga Province and analyses development application case studies as a means of linking processing timeframes to economic performance.
According to the research, the dynamics surrounding the application processes such as timely submissions and approvals are factors directly impacting the economic value of the private commercial property sector within the City of Mbombela and the Mpumalanga Province. Any development constitutes an injection into the local economy. When this development is delayed, its impact and multiplier effect on the economy will also be delayed. This amounts to economic losses equal to the injection that would have been added by the development. The economic losses are clearly reflected in the provincial Gross Domestic Product, employment, income and provincial Tax.
Regarding the Gross Domestic Product, the research showed that the private property sector contributed approximately R237 billion to the national economy, with construction contributing approximately R152 billion and property management R84 billion. In terms of Mpumalanga Province, approximately R14 billion consists of private property sector activities of R9 billion is attributed to property construction and 3.9 billion to property management activities. On the other hand, the private property sector in the City of Mbombela contributes approximately R2.8 billion the local economy of which 1.8 billion to property management activities.
On a provincial level, the private property sector in the Mpumalanga Province employs just over 135 000 people of which 96% of these jobs is attributed to property construction and 4% to property management activities. The City of Mbombela has roughly 26 000 people employed in the private property sector of which 95% is within property construction and 5% is occupied in the property management sub-sector.
In terms of provincial tax, the private property sector has contributed rough R425 million of which 44% was from property construction and 56% from property management activities. The tax generated in the City of Mbombela in 2016 was R101 million with 40.5% from property construction and 59.5% from property management. The contributions made by the industry shows that there is significant activity within the sector, and therefore it is critical that all factors contributing to delays within the development application process be mitigated. According to the research, a single application delay can potentially lead to an economic loss of up to R70 000 per day in new business sales, R27 000 per day in GDP contributions, four employment opportunities per month and R 13 500 in income per day.
According to the SAPOA President Mr Peter Levett: “Based on the analysis of the economic value of the commercial property sector in the City of Mbombela, it is evident that the contribution made by the sector is growing in the municipality, but when developments are delayed, its impact and multiplier effect on the economy will also be delayed. This amounts to economic losses equal to the injection that would have been added by the development,”.
SAPOA and the City of Mbombela have agreed to set up a joint forum to engage further with the intention of finding resolve to some of the impediments.