He says that if government decided to make large scale sales of its property and land holdings to the global market it could turn SA into a global player recognised by international property investors.
Chait, whose Property Partners acquired the mixed use development of Melrose Arch in December 2004, says that increasing the size of the commercial property market is a key factor needed to turn SA into a global property player.
The listed property sector has property worth about R55bn and SA institutions collectively control another R50bn worth of properties.
Government and parastatals control property and land worth about R300bn-R500bn, says Chait.
"Why are we one of the only countries in the world where the government owns its own properties? The properties should be sold and the money spent on infrastructure, social housing, health, welfare and education," he says.
Although government has made it clear it intends selling off large chunks of its property assets, Chait questions whether government has the ability to obtain the highest value for its properties by offering these to the local market.
If government sells its properties globally, it will stimulate the economy and encourage foreign direct investment.
These foreign direct investors could also be made to take broad-based black empowerment players as partners.
"As a result, there would be a massive transfer of international skills which would effectively make the South African property market a global player."
Chait says government needs to put together a task force and create a streamlined, fast-tracked sale of assets.
He says foreign investors want an on-the ground partner who understands the local property market.
Chait believes the entire commercial property sector could be 10 times its present size within five years
Marc Wainer, MD of property asset manager Madison, says there is some merit to Chait's argument but he says that, in the South African context, government regarded certain of its property assets as strategic. He says a task force consisting of the national public works department and private enterprises was formed about five years ago.
It talked about "privatisation" of government properties, but "this now seems to have gone on hold."
He says the jury is still out on whether government should own its properties or lease them.
"The real question is, is it cheaper for government to hold the asset or sell it and pay rent? Does government today have a need for money. If yes, is it more effective to sell?"
Norbert Sasse, CEO of Growthpoint, the largest property fund on the JSE, says he is not entirely sure whether there is a need for foreign investors to be the catalyst for the growth of the commercial property sector in SA.
"I think there is enough capacity in the local market. If government wanted to increase the size of the commercial property sector it could tap into the local market."
Sasse says that there is enough money in the South African commercial property investment market, but there is a shortage of skills on the physical development side of the market.
Attempts to obtain comment from the public works department were unsuccessful.
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
