A number of sectors has seen a slow pace of transformation within their ranks. Few industries have however experienced as little transformation as the property sector. But with an exciting, passionate body of black property specialists driving the process, a ray of hope is shining through.
The South African Institute of Black Property Practitioners (SAIBPP) was officially launched in July 1996 and has envisioned itself to be a leader in the transformation of the property sector. As part of their mandate, SAIBPP is driven to make sure that previously disadvantaged individuals start reaping the rewards that are on offer in the country’s property industry.
BBQ spoke to property guru, Tshepo Matlala, the president of SAIBPP, about his own journey in the property industry and his hopes and aspirations for black property professionals going forward. Matlala, who started his career at JHI as a property manager and later broker, went on to become the assistant regional manager for Transnet Properties and soon founded MatReal Property Services—the sole owner of the Indite Property Fund of R178 million.
Matlala says, reflecting on his journey, the biggest start-up challenge when he entered the industry was without a doubt finance. “The way to overcome that was to get a group of people to be involved in the first purchase of our properties, so each person provided equity. For me, the breakthrough happened when I started my business, it was a consulting business. We used to consult on asset management, both to the private and public sector.
“We came across a property opportunity where we realised we could make good money, but that we didn’t have the finance. So we put together a team of people that were interested and trusted in us to invest in this opportunity. We stopped consulting at that time and decided to go full time into investing in property. The biggest challenge of consulting is your strain on time,” Matlala says.
Live everyday like it is your last day
Matlala says what characterises his leadership style and is also his motto in life, is live everyday like it is your last day. For Matlala, it is about waking up in the morning and asking what change he is going to effect today, not only to the business, but also to the people who work in the business. Still on the topic of leadership, Matlala says it is important to “get the best people”. He says once you get the best people, you become the conductor.
As Matlala explains, the property industry is complex, with many different niches and sectors. As Matlala explains, you get the residential market, industrial, commercial (including offices), retail and leisure markets. He says that looking at the stock exchange, the South African market has traditionally focused on commercial properties. Matlala says new and exciting developments on the residential property side is however coming to light.
“There is a shortage of houses across all provinces. The last census showed that we had 55 million people. Before that, we had 50 odd million people. Now these numbers increase because South Africa is quite cosmopolitan and people come here from around the continent and beyond. Those people need houses. So in my view, the next big thing is the residential market. But more than that, you can categorise the residential market and say you have the student accommodation, which is big. The number of students at tertiary institutions is huge. But the biggest market is on the rental side and student accommodation.
“But if you ask me on the retail side where the opportunities are, I will say the townships and rural areas. Before you couldn’t build a retail centre in a township and rural area, because as much as you have a number of black people, what those people did not have was capital, so they could not spend. What has happened and what has revolutionised the market is that the grant system came about. Now we have a lot of people all getting an income one way or another, either through a grant or work. So the black market has buzzed,” he says.
Matlala says when looking at Government, they remain the biggest manager of property. He says Government needs to identify non-strategic property assets and sell it to entrepreneurs. He says this responsibility should be taken up by the public sector as whole: national, provincial and local government. In his opinion, Government is the perfect tool given the size of its portfolio.
Transformation
Looking at transformation in the property industry, Matlala says there is still very little happening. He says what happened was that back in 1994, a number of big property companies recruited young black property practitioners—some who are highly skilled—who were meant to be trained, but never got anywhere.
Educating young black property professionals is a task Matlala would like to assign to Government. He says, once again, given the size of its portfolio in the property industry, Government needs to be the biggest educators of young black property professionals so that they can absorb them as they finish university. But presenting these suggestions to Government is nothing new, as Matlala states. “We have been talking to them for a while. I think they are starting to see things our way, but whether they will implement it is another thing.”
As Matlala has highlighted before, access to finance is one of the biggest hurdles to overcome in the industry. He says for many young black property professionals, the problem is still access to funds. This he says, is because of the model the banks use. As he explains, when you finance property you need capital and this is what most start-ups do not have. He says in other countries, they will often bank on your skills or years in the industry as equity and increase the level of debt they are willing to give you.
“Is it risky for the banks? I do not think so. I think it is much more risky for the banks to finance people who have the cash but do not have the skills when you can finance people that have the skills. International banks do it that way. Most of our South African banks do not. For me that is probably one of the ways that institutions can look at a model of financing that is successful for both themselves and the entrepreneurs,” he says.
On the topic of collaboration between the public and the private sector, Matlala says it is important and talks about enterprise development in this regard. He points out that we need to get the private sector realise that their own survival depends on the upcoming talent and says that for companies to last longer, they will need to inject talent.
Private sector
He says that when dealing with the private sector, the key will be to partner with skilled black people in order to create opportunities. “You need the private sector to employ young skilled talented black people to ensure their own survival. You also need SOE’s getting involved in the property market and funding entrepreneurs. If you dig up the South African landscape and you see where shopping malls are, where industrial centres are and where schools are, you will be able to see that there is a huge opportunity in the markets that are underserviced and I think that’s where the SOE’s should be involved.
“The Gauteng government just launched what they call the ‘township economy’. Most townships would be close to an industrial area. That is how it was designed, so there is no reason why a manufacturer cannot source the suppliers from the neighbouring township. As it becomes more lucrative, the nature of the economy would change in that particular area. We need to be much more innovative—as much as it benefits property players, it will benefit other entrepreneurs in the townships. It would make sure that the economy is driven in a different direction, but in a positive direction,” he says.
Property specialists have however not had the best reputation. Often being portrayed as ‘sharks’ or chancers, these often highly educated aspiring you businesspeople have yet to claim their true worth. Matlala says to break away from this stereotype, the answer has to be “education, education and education”, which sounds a bit like the well-known property saying: ‘location, location, location’.
Matlala says because there was no property courses or property qualifications in the past, people who went into the property market went there by chance and today you get all sorts of people ranging from lawyers, doctors, engineers, accountants, etc. “Now you get anyone who has a little bit of money and ingenuity in the property sector. What has happened is the property sector is now professionalised. You have property courses at universities so what you are going to see is a number of professional people entering the industry and because they are educated and because it is now professionalised you are going to see a level of service that is different.
“I think we are going in the right direction. Before, we did not have this and that is why you had that kind of stigma. It gives credibility to the industry when the people are professional and then all of a sudden you see things in a different light. The property industry is going that route as well and I think it is going to change in the future,” Matlala concludes.
