The property industry, comprising residential and non-residential sectors, contributed R191.4 billion to the country’s economy in 2012 and a further R46.5bn to the fiscus through various direct and indirect taxes.
This was one of the major conclusions of a research report on the financial and economic impact of the property sector on the national economy, the first such study ever done on the country’s property industry.
The study was commissioned by the Property Sector Charter Council (PSCC) and followed the first-phase study that measured the size of the property market, which it estimated at R4.9 trillion. Both research phases were conducted by Investment Property Databank (IPD).
The residential sector accounted for R123.8bn of the total contribution by the property industry to the economy in 2012.
Of this, R103.7bn was the residential sector’s contribution to gross domestic product (GDP) and R20.1bn came from taxes.
The contribution by the non-residential sector was R106.2bn, of which R80.9bn was its contribution to GDP and R25.3bn in tax went to the fiscus.
The analysis in the latest report used the life cycle of a property, from original concept to its completion.
The total contribution to GDP of the end of cycle stage in 2012 was R6.8bn with R1.1bn being contributed to the fiscus.
The research also considered the financial revenues attributable to the existence of the property during its life cycle and looked at buildings from an “object” and an “investment asset” perspective.
Mashilo Pitjeng, the chairman of the PSCC’s research committee, said yesterday that the results from the first two phases of the research would be superimposed on the broad-based black economic empowerment (BEE) requirements of the sector.
He said the third phase of the research, which would measure and analyse transformation in the sector using the broad-based BEE tool with the eight elements contained in the property sector code of good practice, was under way and the transformation report on the sector would be released later this year.
“For us to be able to measure the level of transformation, we have to quantify the size of market where we expect that transformation to take place.”
Stan Garrun, the managing director of IPD South Africa, said the aim of the research was to create a consolidated body of knowledge about the property sector that would foster consistent understanding of the sector for measurement and evaluation.
He said this was unprecedented research because it had never been done before and nobody had ever known the total size and contribution of the property sector before.
Garrun said the property sector was a substantial industry although not it was not as big as mining, whose contribution to the country’s GDP was R270bn, excluding taxes, and retail, which contributed R203bn, excluding taxes.
Portia Tau-Sekati, the PSCC’s chief executive, said this research would give the council a true understanding of what the sector was about. She said one of the mandates of the PSCC was to monitor and evaluate transformation, or the lack of transformation.
Tau-Sekati said the PSCC would only introduce sensible intervention programmes in areas where transformation was not happening once it understood where the opportunities existed, such as in procurement and enterprise development, because of the size of the sector.
“In a sector as big and as important as property, there should be ample opportunity for transformation to take place,” she said.