Advice and Opinion Media Statement News

SAIBPP: “The cost of SA CBD building hijackings too high”

The South African Institute of Black Property Practitioners (SAIBPP) has voiced its grave concern about the high cost of the continued “hijacking” of buildings in South Africa’s CBDs.

This act of criminality costs South Africa in many ways including violating the unknowing and desperate tenants trying to defend tenants in finding greener pastures in the CBDs; scaring would be investors away from the CBDs and forcing established businesses to migrate away thus leading to increased unemployment; limiting opportunities for previously disadvantaged property practitioners wanting to operate in the CBDs as funding institutions will be reluctant to provide funding towards inner city developments and increasing decay and elements of criminality in our world class cities.”

As the SAIBPP, we view this act of criminality as a direct attack on the transformation agenda as it creates yet another barrier to the already limited investment opportunities in inner city property developments,” says the organisation.

In a media statement, the SAIBPP went on to list its areas of contention, focused on the following pillars:

Legislative reform

Ownership – it entrenches the lack of property ownership by black people in the inner cities. The review of legislative framework is necessary as the requirements currently placed on the municipalities to find alternative accommodation for people illegally occupying buildings encourages criminality and further limits the potential of black property practitioners wanting to own property in the inner cities. Property hijackers abuse this legal loophole to illegally acquire buildings, and this reduces opportunities for honest, law-abiding players. This causes vulnerable unknowing ‘tenants’ to rent from criminals who have zero respect for the law and as such, the buildings are not compliant with the necessary Safety, Health, Environment, Risk, and Quality (SHERQ) requirements and the ‘tenants’ residing in these building become casualties as seen in the recent unfortunate death of innocent people in Johannesburg.

Management control – the lack of property ownership means that black property practitioners are excluded from opportunities to manage properties in the inner city, including rental administration, asset management, and facilities management.

Preferential procurement – “SAIBPP’s members continue to be marginalised as property development procurement opportunities continue to be taken up by a select few groupings of historically privileged players.”

Skills development – with ownership and management control of inner-city developments, we will continue to miss opportunities to empower and train the next generation of black property practitioners to take over inner city developments. 

Access to finance:

a) No financial institution will be interested in funding a ‘risky’ venture(s) in the inner cities. These building hijackings do not only affect the SAIBPP’s members’ ability to secure funding and threaten the viability of projects, but it also affects the entire value chain including municipalities (loss of revenue from rates and taxes). Professionals and consultants (no access to market opportunities), construction companies (‘construction mafias’), as well as property developers (no stock in the inner cities).

b) Should funding institutions decide to finance a development in the CBD, this will attract higher interest rates on black property practitioners who are already financially stretched.

c) There must be transparency in credit granting practises and legislative interventions that compel credit grantors to be lenient to B-BBEE compliant black property practitioners, once the requisite risk mitigation measures have been undertaken.

Spatial transformation and inclusive development

a) Building hijackings further pushes people out of the inner cities and forces black people to live in the peripheries of the cities, hence incurring exorbitant travelling costs and time to places of work.

b) A narrow focus on policies does not promote economic growth and revenue generation, at the expenses of both environmental and social justice.

c) Municipal by-laws pertaining to spatial planning and land development must have requirements, conditions, and procedures that require all planning permissions and approvals for any land development applications to be granted contingent on meeting redistribution and social transformation criteria.

d) Inner city land use and building approvals must be subject to compliance with B-BBEE requirements and legislation to ensure the inclusion of black practitioners and black-owned businesses in the spatial planning and land development value chain.

Property ownership and entrepreneurship

a) Building hijackings stifle black property ownership and entrepreneurship in the CBD.

b) Furthermore, lack of security of tenure results in conflicting claims to the physical possession or control of the properties.

c) One of the proposed solutions is that disposal of government property or land (particularly in the CBD) must prioritize B-BBEE participants and companies with majority black ownership, women, youth, and people with disabilities. Government (particularly municipalities) must adhere to supply chain processes specifically designed for the disposal and acquisition of property to fast-track black ownership and participation.

As SAIBPP, we want to see cities that work and are attractive for investment. We are willing and available to sit around the table with the municipalities to help craft a solution to this economic and transformation sabotage. We believe that a partnership and collaboration between public and private sector is necessary to find a sustainable solution to this rampant criminality, filth, and unstructured business practises in our cities. Innocent people continue to perish, and we call on law enforcement to act decisively against these kingpins.” 

Furthermore, we call on municipalities to decisively and intentionally design programs that will see the release of their properties (buildings and land) to B-BBEE compliant black property practitioners, who will offer safe and compliant buildings to South Africans. This will not only lead to job creation in the CBDs but will also enhance the aesthetic of the inner cities, lead to increased work opportunities for the property sector value chain, generate much needed municipal revenues, and attract investors and more businesses willing to operate from the CBDs.”

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Property Wheel.