The property industry is fighting to save its sector-focused black economic empowerment (BEE) charter.
The industry developed and published its sector-focused transformation blueprint in 2006. The rules of the black economic empowerment (BEE) game changed when the broad-based BEE codes of good practice were made law in February 2007. The codes were designed to reign supreme over all BEE implementation. A few charters would be allowed to earn a status equal to the codes under stringent conditions laid out in section 9 of the codes.
The property industry submitted its charter to the department of trade & industry (DTI) in August last year. The DTI rejected it as inadequate. The industry had not properly followed the section 9 requirements, says DTI chief director of BEE Nomonde Mesatywa. The DTI sent the charter back to the industry for readjustment.
If the industry fails to earn section 9 status, its charter will default to section 12 status, meaning it will be a simple guideline with no legal status.
The SA Property Owners Association (Sapoa) is gunning for section 9 status for the property charter. Says Sapoa transformation committee chairman Musa Ngcobo: " It will encourage established companies to think about BEE during disposals of assets and will encourage development in previously disadvantaged areas."
The industry claims that the generic scorecard does not address its unique challenges. It cites among others, uniqueness in the regular sale of assets that takes place in large property portfolio owners. It argues that this feature should be emphasised in its BEE scorecard as it represents an amazing chance to create black property owners.
The importance of the sale of assets element is already visible. A number of listed property funds have come up with enterprise development initiatives that feed from the sale of asset element. These include a joint venture established in 2007 by Redefine. The joint venture, called Mergence Africa Property Fund, is 51%-owned by BEE group Mergence Africa and 40% by Redefine. It was launched with a R230m portfolio. Redefine's sister company also runs a similar initiative with black property player Dijalo Property Services.
The industry is concerned that if the property charter disappears, such initiatives will dry up.
