Real Estate Business Owners South Africa REBOSA AGM
Real Estate Business Owners South Africa REBOSA AGM 29 June 2015
CONTENT • Understanding transformation • BBBEE Act & Sector Codes • Application of current transformation and BBBEE • Revised Codes of Good practice • Changes to the Codes and implication to PSC • Amendment Bill and Verification process • Residential Industry Scorecard
UNDERSTANDING TRANSFORMATION Transformation is a mechanism by government using Broad based Economic empowerment to enable the participation of the previously marginalised in the main stream economy!
WHY IS TRANSFORMATION NECESSARY? • SA was forced to take steps to deal with its past in order to attempt to redress the inequalities in all spheres of life cause by the previous system of apartheid • One of these steps was the development of a strategy which would achieve economic transformation- to address inequalities • Transformation is a pragmatic growth strategy that aims to realise the country’s full economic potential by ensuring all citizen can participate in the mainstream of the economy – in a sustainable manner. All citizen means – Its people and their enterprises
SA DEMOGRAPHIC STATISTICS South African Population - estimates 2006/2011 79. 4% 79. 2% 8. 9% 2. 5%
SA POPULATION: GENDER SPLITS (2012) SA Population: Gender Split % 48% 52% Female Male
EXPECTED RESULTS OF TRANSFORMATION – BBBEE strategy emphasis: § Growth § Development – Well implemented BBBEE § sustainability § Profitability § Growth § Global competitiveness § Innovativeness
LEGAL AND COMMERCIAL STATUS • B-BBEE and Sector Codes do not impose legal binding obligation of any company to comply; BUT • B-BBEE is an important fact to be taken into account by any company conducting business in SA. • B-BBEE is an important consideration to successfully tender for Government and State Owned Entities contracts or in some instances to obtaining government licence and in Private Public Partnership (PPP).
WHO IS THE CUSTODIAN OF TRANSFORMATION • The DTI (Department Trade and Investment) is the custodian of transformation/Broad Based Black Economic Empowerment (BBBEE) • The DTI’s mandate – is to increase Trade and Investment in the country in order to allow the economy to grow • The DTI has four Mission statements of how they will achieve their mandate and one of them is : Grow the economy through Inclusive Participation • There a number of tools to drive Inclusive Participation and one of them • Broad Based Black Economic Empowerment (B-BBEE) • Women Empowerment Programmes • People with Disability Programme
BBBEE AS A TOOL OF TRANSFORMATION SED Skill Development Enterprise Development Preferential Procurement Employment Equity Management Control Ownership
BBBEE AS A TOOL OF TRANSFORMATION • BBBEE use 7 elements to drive transformation Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development Plus – Sector Code additional element – – – –
UNDERSTANDING TRANSFORMATION EQUITABLE ECONOMIC OPPORTUNITIES Ownership equity Management control THE OPPORTUNITY BARRIER Preferential procurement Enterprise development THE BUSINESS BARRIER Skills development THE SKILLS BARRIER Employment equity Socio Economic Development THE POVERTY BARRIER “Mainstream economy upper class” • Majority are white • Wealthy with economic choices • Business owners “Upper middle class & investors” • High income • Positive net asset value • Invest in shares • Majority are white “Entrepreneur middle class” • Self employed • Owner managed businesses • Small Medium & Micro Enterprises • Majority are white “The professional middle class” • Formal employment (Black Diamonds) • School leavers/graduates • Artisans/professionals “Second economy” • The majority are black • With no economic earning ability • No technical or tertiary skills • Dependant on grants (Unemployable) • Subsistence on land produce
BBBEE Act & SECTOR CODES
Introduction • The Broad-Based Black economic Empowerment Act 53 of 2003 (“BBBEE Act) provides the legislative framework for broad based black economic empowerment in SA. The “Generic” Codes of Good Practice and Sector Codes are issued under the B-BBEE.
BBBEE Sector Code • What are Sector Codes – Development of sector transformation strategy that uses the generic principles of BBBEE and accommodating specific nuances of your sector in order to make transformation more effective and meaningful. • Why are sector Codes important – The 7 elements of generic codes are critical and important but there also other elements beyond that the country needs to transform • Funding transformation – Financial Sector Charter • Access to connectivity – ICT Charter • Development in under-resourced area- Property Sector Charter
BBBEE Sector Code • 2009 – – Construction Sector Code Tourism Sector Code Forestry Sector Code Transport Sector Code • 2011 – Chartered Accountants Sector Codes • 2012 – ICT Sector Codes – Property Sector Code – Agri. BEE Sector Codes • 2013 – Financial Sector Codes • Sector Charter – Section 12 – MAC Sector Codes
BBBEE Sector Code • BBBEE Sector Codes – Bought into being by the BBBEE Act, No. 53 of 2003 – They are anchored under the generic codes – Establishment of Sector Codes needs to have as common factor • Use same principles • Use Same methodology • Use Same calculations • Use Same definitions – What Sector Codes are at liberty to change are: • Targets of the different elements • Weighting of the different elements • Adding a different/unique element/s
APPLICATION OF CURRENT TRANSFORMATION AND BBBEE
BBBEE as a toll of transformation • Company threshold OLD REVISED COGP – Large Entities – Qualifying Small Enterprise (QSE) – medium size entity – Exempted Micro Enterprises (EME) – Small entity LARGE ENTITIES R 35 M < QSE R 5 M-R 35 M EME <R 5 M Exempted
BBBEE as a tool of Transformation • BBBEE use 7 elements to drive transformation – Ownership – Management Control – Employment Equity – Skill Development – Preferential Procurement – Enterprise Development – Socio-Economic Development
Application Of BBBEE TO Large Entities ELEMENT DEFINITION QSE WEIGHTING BONUS POINTS OWNERSHIP Measures effective ownership by black people 20 3 MANAGEMENT CONTROL Measures effective control by black people 10 1 EMPLOYMENT EQUITY Measures initiatives intended to achieve equity in the workplace under the Act and the Employment Equity Act 15 3 SKILLS DEVELOPMENT Measures the extent to which employers carry out initiatives to develop the competencies of black employees 15 - PREFERENTIAL PROCUREMENT Measures the extent to which enterprises buy goods and services from BBBEE suppliers 20 - ENTERPRISE DEVELOPMENT Measures the extent to which enterprises carry out initiatives intended to assist and accelerate the development and sustainability of other enterprises 15 - SOCIO ECONOMIC DEVELOPMENT Measures the extent to which enterprises have implemented initiatives that promote access to the economy for black people 5 - SUB-TOTAL 100 7 TOTAL 100 107
APPLICATION OF BBBEE TO QSES ELEMENT DEFINITION QSE WEIGHTING BONUS POINTS OWNERSHIP Measures effective ownership by black people 25 3 MANAGEMENT CONTROL Measures effective control by black people 25 2 EMPLOYMENT EQUITY Measures initiatives intended to achieve equity in the workplace under the Act and the Employment Equity Act 25 2 SKILLS DEVELOPMENT Measures the extent to which employers carry out initiatives to develop the competencies of black employees 25 - PREFERENTIAL PROCUREMENT Measures the extent to which enterprises buy goods and services from BBBEE suppliers 25 - ENTERPRISE DEVELOPMENT Measures the extent to which enterprises carry out initiatives intended to assist and accelerate the development and sustainability of other enterprises 25 - SOCIO ECONOMIC DEVELOPMENT Measures the extent to which enterprises have implemented initiatives that promote access to the economy for black people 25 - 100 7 100 107 TOTAL Total of any 4 of the above
CHANGES TO THE CODES Its implication to PSC Weighting Points – QSE (now you do all Elements) Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev 25 25 Economic Development TOTAL 100 Do only 4 out of the 7 elements
REVISED CODES OF GOOD PRACTICE
Reason for Revision of Codes • The Generic scorecard adjusted in accordance with government key priorities – – – Job Creation Supplier Development Localisation Industrialisation Skill Development • We had to re-focus our effort based on the achievements and lack thereof
CHANGES TO THE CODES IMPLICATION TO THE PROPERTY SECTOR CODE
Sector Codes/ Property Sector Codes • Sector codes are extended until end Of October 2015 – Sector Codes/ Property Sector Code will be effective on the 1 November 2015 – All companies scoped under Property Sector Code – have additional 6 month transitional period to review and change your BBBEE strategies to take account of the aligned Property Sector Code
CHANGES TO THE CODES Its implication to PSC Elements to the Codes Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development TOTAL ✓ ✓ ✓ ✓ 8
CHANGES TO THE CODES Its implication to PSC Elements to the Codes Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development TOTAL Revised Codes ✓ ✓ ✓ ✓ ✓ 8 5 ✓ ✓
CHANGES TO THE CODES Its implication to PSC Elements to the Codes Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development TOTAL Revised Codes ✓ ✓ ✓ ✓ ✓ 8 5 ✓ ✓ Aligned PSC ✓ ✓ ✓ ✓ 7
CHANGES TO THE CODES Its implication to PSC • COGP company classification Old Codes Large entities New Codes R 35 M < R 50 M< QSE R 5 M-R 35 M R 10 M-R 50 M EME <R 5 M Exempted <R 10 M Exempted
CHANGES TO THE CODES Its implication to PSC • COGP company classification Old Codes Large entities New Codes R 35 M < R 50 M< QSE R 5 M-R 35 M R 10 M-R 50 M EME <R 5 M Exempted <R 10 M -Exempted • PSC company classification ALIGNED PSC THRESHOLD ASSET BASED COMPANIES PROPERTY COMMERCIAL SERVICES PROPERTY RESIDENTIAL SERVICES Above R 400 M Above 50 M Above R 35 M QSE R 80 M-R 400 M R 10 M-R 50 M R 2. 5 M – R 35 M EME Less than R 80 M LARGE ENTITIES BELOW R 10 M Less than R 2. 5 M
CHANGES TO THE CODES Its implication to PSC Weighting Points – Large Entities Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development TOTAL 20 10 15 15 20 10 2 15 107
CHANGES TO THE CODES Its implication to PSC Weighting Points – Large Entities Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development TOTAL 20 10 15 15 20 10 2 15 107 Revised Codes 25 19 20 40 5 109
CHANGES TO THE CODES Its implication to PSC Weighting Points – Large Entities Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development TOTAL 20 10 15 15 20 10 2 15 107 Revised Codes Aligned PSC 19 30 9 13 20 19 40 5 39 2 5 117 25 109
CHANGES TO THE CODES Its implication to PSC Weighting Points – QSE (now you do all Elements) Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev 25 25 Economic Development TOTAL 100 Do only 4 out of the 7 elements
CHANGES TO THE CODES Its implication to PSC Weighting Points – QSE (now you do all Elements) Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev Current PSC Revised Codes 25 25 25 100 15 30 5 Economic Development TOTAL
CHANGES TO THE CODES Its implication to PSC Weighting Points – QSE (now you do all Elements) Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev Current PSC Revised Codes 25 25 25 15 30 5 27 9 8 17 35 2 4 Economic Development TOTAL Aligned PSC 100 105
CHANGES TO THE CODES Its implication to PSC Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS Ownership Management Control Employment Equity Skill Development Enterprise Supplier Development ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ X X ✓ Socio-Economic Development ✓ ✓ ✓ X ✓ X ✓ ✓ X Internal Management PLSA/RIETS • Complex Structure X
CHANGES TO THE CODES Its implication to PSC Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS Ownership Management Control Employment Equity Skill Development Enterprise Supplier Development ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ X X ✓ Socio-Economic Development ✓ ✓ ✓ X ✓ X ✓ ✓ X Internal Management PLSA/RIETS • Complex Structure X
CHANGES TO THE CODES Its implication to PSC • 3 Priority Elements – Elements that require focus and concerted effort • Ownership – 40% of the “Net Value” targets must be realised • Skill Development – 40% of total weighting points • Enterprise and Supplier Development – – 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development – Failure to meet the minimum requirement of 40% • Discount of one level down from the total final level score
PSC Net Equity target YEAR Year 1 Year 2 PSC Target 40% threshold Schedule 10% 4% 20% 8% Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 40% 16% 60% 24% 80% 32% Year 9 100% 40%
CHANGES TO THE CODES Its implication to PSC • 3 Priority Elements – Elements that require focus and concerted effort • Ownership – 40% of the “Net Value” targets must be realised • Skill Development – 40% of total weighting points • Enterprise and Supplier Development – – 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development – Failure to meet the minimum requirement of 40% • Discount of one level down from the total final level score
Skill Development (19 points) CRITERIA Weighting points Compliance target SKILLS DEVELOPMENT EXPENDITURE ON ANY PROGRAM SPECIFIED IN THE LEARNING PROGRAMME MATRIX FOR BLACK PEOPLE AS A PERCENTAGE OF LEVIABLE AMOUNT Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a percentage of Leviable Amount 8 5% 3 0. 3% Number of black people participating in Learnerships, Apprenticeships and Internships as a percentage of total employees 4 2. 5% Number of unemployed black people participating in Learnerships, Apprenticeships and Internships as a percentage of total employees 4 2. 5% Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people with disabilities as a percentage of Leviable Amount LEARNERSHIPS, APPRENTICESHIPS AND INTERNSHIPS: 40% thresholds 19 7. 6
CHANGES TO THE CODES Its implication to PSC • 3 Priority Elements – Elements that require focus and concerted effort • Ownership – 40% of the “Net Value” targets must be realised • Skill Development – 40% of total weighting points • Enterprise and Supplier Development – – 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development – Failure to meet the minimum requirement of 40% • Discount of one level down from the total final level score
MEASUREMENT CATEGORY & CRITERIA WEIGHTING COMPLIANCE POINTS TARGETS PREFERENTIAL PROCUREMENT BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 2 80% B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 2 15% B-BBEE Procurement Spend from all Empowering Suppliers that are Exempted Micro-Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 2 15% B-BBEE Procurement Spend from all Empowering Suppliers that are at least 51% black owned Micro. Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 8 40% B-BBEE Procurement Spend from all Empowering Suppliers that are at least are 30% black womenowned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 4 12% Percentage of procurement spend with Black owned enterprises (level 1 -4) as a percentage of the total property services spend 6 40% 9. 6 10 2% of NPAT 4 5 1% of NPAT 2 SUPPLIER DEVELOPMENT Annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target. ENTERPRISE DEVELOPMENT Annual value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target.
CHANGES TO THE CODES Its implication to PSC • Enterprise and Supplier Development – Increased points from 35 to 40 points – Supplier development being the new element – The requirements for an “Empowering Supplier”- to meet 3 of the 4 conditions • Procure from local producers • 50% of Jobs created must be for black people • Use at least 25% transformation of local raw material/ New manufacturing/assembling/ packaging • Skills transfer - at least spend 12 days per annum of productivity in assisting QSE & EME • At least 85% of labour costs should be paid to South African employees by service industry entities – No preferential points will be obtained if a supplier does not comply with the above
CHANGES TO THE CODES Its implication to PSC • 3 Priority Elements – Elements that require focus and concerted effort • Ownership – 40% of the “Net Value” targets must be realised • Skill Development – 40% of total weighting points • Enterprise and Supplier Development – – 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development – Failure to meet the minimum requirement of 40% • Discount of one level down from the total final level score
B-BBEE CONTRIBUTOR STATUS Level One Level Two Level Three Level Four Level Five Level Six Level Seven Level Eight Non-Compliant CHANGES TO THE CODES Its implication to PSC • Discounting effect: • • Any entity that fails to meet threshold will be discounted one (1) level down Even if the entity fails to meet 2 of the threshold, it will only be discounted one (1) level down
CHANGES TO THE CODES Other Deviations
Ownership – Large Company OWNERSHIP INDICATOR Exercisable Voting Rights in the Enterprise in the hands of black Voting people Rights Exercisable Voting Rights in the Enterprise in the hands of black women ALL OTHER PROPERTY COMPANIES WEIGHTING COMPLIANCE POINTS TARGETS 5 25% + 1 vote 2 10% Economic Interest of black people in the Enterprise 5 25% Economic Interest of black women in the Enterprise 2 10% 4 3% Economic Interest Economic interest of the following black natural people in the measured entity: 1. black designated groups; 2. black Participants in Employee Ownership Schemes; 3. black beneficiaries of Broad based Ownership Schemes; or 4. black Participants in Co-operatives New entrants Net Equity 2 2% Schedule
Ownership - QSE WEIGHTING COMPLIANCE TARGETS POINTS MEASUREMENT CATEGORY & CRITERIA All Other Property companies Voting Rights Exercisable voting rights in the enterprise in hands of black people Exercisable voting rights in the enterprise in the hands of black women 5 25% + 1 vote 2 10% Economic interest Economic Interest of black people in the Enterprise 5 2 3 Economic Interest of black women in the Enterprise New entrants or Black Designated Groups 25% 10% 2% Realisation Points Net Value 10 Y 1 =10%; Y 2 =20%; Y 3 = 40%; Y 5 = 60% Y 7 = 80%; Y 9 = 100% TOTAL 27 27
Management Control – Large Company WEIGHTING POINTS MEASUREMENT CATEGORY CRITERIA BOARD PARTICIPATION: COMPLIANCE TARGETS Exercisable voting rights of Blacks members as a percentage of all Board members 2 50% Exercisable voting rights of Black female board members as a percentage of all Board members 1 25% Black Executive Directors as a percentage of all executive directors 2 50% Black Female Executive Directors as a percentage of all executive directors 1 25% OTHER EXECUTIVE MANAGEMENT Black Executive Management as a percentage of all executive Management 2 60% Black female executive Management as a percentage of all executive management 1 30% 9 TOTAL
Management Control - QSE WEIGHTING COMPLIANCE POINTS TARGET Exercisable voting rights of black board members as a percentage of all voting board members 4 50% Exercisable voting rights of black female board members as a percentage of all voting board members 2 25% Black executive management as a percentage of all executive managers 2 60% Black female executive management as a percentage of all executive managers 1 30% TOTAL 9 MANAGEMENT CONTROL INDICATOR Board participation Other executive management
Employment Equity– Large /QSE Companies WEIGHTING POINTS MEASUREMENT CATEGORY & CRITERIA COMPLIANCE TARGET Black practitioners as a percentage of total practitioners 4 50% Black female practitioners as a percentage of total practitioners Black people in management as a percentage of total Management Black female in Management as a percentage of total Management 3 50% 2 35% 1 18% Black people in administration as a percentage total administrators 1 30% Black females in administration as a percentage of total administrators 2 40% TOTAL 13
• CHANGES TO THE CODES Its implication to PSC Skill Development – Increased from 15 points to 20 points (PSC weighting 19 points) – Increased targets from 3% to 6% for COGP (PSC target is 5%) – Training can be done to both Internal and External sector participants • Enterprise and Supplier Development – Increased points from 35 to 40 points – Supplier development being the new element – The requirements for an “Empowering Supplier”- to meet 3 of the 4 conditions • Procure from local producers • 50% of Jobs created must be for black people • Use at least 25% transformation of local raw material/ manufacturing/assembling/ packaging New • Skills transfer - at least spend 12 days per annum of productivity in assisting QSE & EME • At least 85% of labour costs should be paid to South African employees by service industry entities – No preferential points will be obtained if a supplier does not comply with the above
Socio-Economic Development MEASUREMENT CATEGORY & CRITERIA Average Annual value of all socio-Economic Development Contribution made by measured entity as a percentage of the target WEIGHTING POINTS 2 COMPLIANCE TARGET 1 % of NPAT
CHANGES TO THE CODES Its implication to PSC • Scorecard points & Qualification criteria for awarding of B-BBEE status levels adjusted B-BBEE Contributor Status Current Qualification New Qualification Level One ≥ 100 points Level Two ≥ 85 but <100 points ≥ 95 but <100 points Level Three ≥ 75 but <85 points ≥ 90 but <95 points Level Four ≥ 65 but <75 points ≥ 80 but <90 points Level Five ≥ 55 but <65 points ≥ 75 but <80 points Level Six ≥ 45 but <55 points ≥ 70 but <75 points Level Seven ≥ 40 but <45 points ≥ 55 but <70 points Level Eight ≥ 30 but <40 points ≥ 40 but <55 points Non-Compliant <30 points <40 points
Annexure 1 TIMELINES June 2015 ACTIVITY W 1 W 2 W 3 W 4 W 1 July 2014 W 2 W 3 Aug 2015 W 4 W 1 W 2 W 3 Technical Comm workshop Done Submission of Input Done Consolidation of inputs Done Technical Comm Meeting Done Council Meeting approval & sign off on final draft PSC Done Meeting with DTI 1 st draft of aligned PSC Technical comm Meeting review DTI’s comments Done Meeting with DTI for Final Approval of the aligned PSC Done Gazette of aligned PSC under section 9 (5) – 60 days Analyse Public Inputs – 30 days Finalise the aligned PSC doc with public input Presentation to DTI for sign off the gazette Gazette the final document under 9 (1) Effective date of Aligned PSC Done Sept 2015 W 4 W 1 W 2 W 3 W 4 Oct 2015 W 1 W 2 W 3 W 4
AMENDMENT BILL & VERIFICATION PROCESS
KEY AMENDMENT TO B-BBEE ACT: COMMISION • Key Amendments to B-BBEE Act – Establish a B-BBEE commission (like Ombudsman)- its function • • Oversee and supervise compliance to the B-BBEE Act Investigate complaints Maintain a register of BBBEE transaction of specific threshold Deal with “Fronting Practices” – Defined as act/conduct that directly or indirectly undermines or frustrate the achievement of the B-BBEE objectives or the implementation of any provision of the BBBEE Act; • Misrepresentation of information or engaging in Fronting Practices may result in: – A fine and/or up to 10 Years imprisonment for individual or both; and – A company may be fined up to 10% of its annual turnover; – Any person convicted of an offence is banned from contracting with any organ of state for 10 years.
KEY AMENDMENT TO B-BBEE ACT: REPORTING • Enforce reporting obligation For Sector Codes including PSC • One of the mandate of PSCC is to Monitor & Evaluate the state of Transformation in the Property Sector • PSC 1 st Reporting – 2014 – Council sampled listed and large entities contribution 75% of the total sector value – Residential out of 6 estate agencies – Only 1 submitted a report – Response did not meet the expectation – In the future - Failure to report maybe enforced by commission directly • Importance of reporting on sector and for the codes – Understanding where we are and challenges enables intelligent discussion about where we are going
WHO QUALIFY TO DO YOUR BBBEE VERIFICATION • 2 Accrediting agencies – SANAS – accredited agency • Need have extension of Scope for sector Code – IRBA – accredited Auditors • Attended BBBEE MDP course
Verification Process • Verification agencies/ Auditors – Briefed about your requirement – Puts a plan • List of required documents • Sample interviews (Estate agents and/or Employees) • Apply methodology
BBBEE CERTIFICATE BBBEE Verification Company Name of Company Recognition Level Company Details Individual score Certificate Issue Date Certificate Expiry Date Sector compliance Certificate Seal SANAS accredited Agency
BBBEE CERTIFICATE ELEMENTS SCORE Ownership 21. 51 Management Control 9. 56 Employment Equity 6. 69 Skill Development 14. 8 Pref. Procurement 16. 31 Enterprise Development 11 Socio-Economic Development 10. 6 TOTAL 90. 47
CHANGES TO THE CODES Its implication to PSC B-BBEE Contributor Status Current Qualification Level One ≥ 100 points Level Two ≥ 85 but <100 points Level Three ≥ 75 but <85 points Level Four ≥ 65 but <75 points Level Five ≥ 55 but <65 points Level Six ≥ 45 but <55 points Level Seven ≥ 40 but <45 points Level Eight ≥ 30 but <40 points Non-Compliant <30 points Total 90. 47
CHANGES TO THE CODES Its implication to PSC • Scorecard points & Qualification criteria for awarding of B-BBEE status levels adjusted B-BBEE Contributor Status Current Qualification New Qualification Level One ≥ 100 points Level Two ≥ 85 but <100 points ≥ 95 but <100 points Level Three ≥ 75 but <85 points ≥ 90 but <95 points Level Four ≥ 65 but <75 points ≥ 80 but <90 points Level Five ≥ 55 but <65 points ≥ 75 but <80 points Level Six ≥ 45 but <55 points ≥ 70 but <75 points Level Seven ≥ 40 but <45 points ≥ 55 but <70 points Level Eight ≥ 30 but <40 points ≥ 40 but <55 points Non-Compliant <30 points <40 points
THANK-YOU QUESTIONS? ?
UNDERSTANDING THE PROPERTY SECTOR
SCOPE OF THE PROPERTY SECTOR • Commercial Property Industry – Office Property Industry – Industrial Property industry – Retail Property Industry – Leisure Property Industry • Residential Property Industry – Houses • Freehold • Lease – Community schemes • Flats, Clusters, Town Houses etc • Zoned land
The Size of the SA Property Sector South African property sector R 4. 9 trillion Non residential R 780 billion Residential R 3. 0 trillion Public R 570 billion Retail R 340 billion National R 188 billion Office R 228 billion Provincial R 342 billion Industrial R 187 billion Local R 37 billion Hospitality, leisure, other R 25 billion SOE R 6 billion Zoned urban land R 520 billion
The Size of the SA Property Sector • Review of the size of SA property sector: Result in 2015 est Increased by +20% est Increased by +30% ? ? • SOE has increased Government unknown Stable 2014 house Transactions in the residential market is R 5. 2 Billion
Residential Transactions • 2014 • R 52 Billion transaction • 5% average commission • R 2. 6 Million • An average transaction is R 560 K (with average cost of mid-price house at • R 810 k and the low-end house transaction is R 310 K. • The current housing market is driven by affordable housing in terms of sales. • According to EAAB • 62% of estate agencies have 1 -5 Estate Agents • 18% of estate agencies have 6 -10 Estate Agents
THE IMPACT OF THE SOUTH AFRICAN PROPERTY SECTOR ON THE NATIONAL ECONOMY RESEARCH REPORT 2013 Report released in May 2014
THE IMPACT OF THE SOUTH AFRICAN PROPERTY SECTOR ON THE NATIONAL ECONOMY Research Phases PHASE 1 • Measured the amount of existing stock in the country • “The size of the South African Property Sector” PHASE 2 • Measures Economic activity • “Impact of the South African Property Sector on the National Economy” PHASE 3 • Analyses transformation using the BBBEE tool with the 7+1 Property Sector Code elements • “State of transformation in the Property Sector” PHASE 2 Research elements in phase 1&2 were done in conjunction with Investment Property Databank (IPD)
THE IMPACT OF THE SOUTH AFRICAN PROPERTY SECTOR ON THE NATIONAL ECONOMY SOUTH AFRICAN PROPERTY SECTOR R 237. 8. Billion Direct Expenditure R 93. 3 Billion Non-Residential Property Industry R 43. 9 Billion Contribution GDP R 191. 4 Billion R 80. 8 Billion Total Taxes R 46. 5 R 25. 3 Billion TOTAL R 237. 8 Billion R 106. 1 Billion Residential Property Industry R 46. 0 Billion R 103. 7 Billion R 20. 1 Billion R 123. 8 Billion End of Cycle R 3. 3 Billion R 6. 8 Billion R 1. 1 Billion R 7. 9 Billion Note: All cost excluding VAT
National Estate Agents Stats 2011, 2012 & 2013 41110 41050 41150 41050 40763 40950 1 2 3 40850 40750 40650 1 2 3
Registered Estate Agents 41110 • There has been an increase of estate agents 2011 vs 2012 41050 41150 41050 40950 1 2 3 40763 40850 • There additional 347 estate agents in 2012 vs 2011| • There has been a decrease of estate agents 2012 vs 2013 of 60 estate agents 40750 40650 1 2 3
Which province/s drives the industry? 2011 Provincial split Comments • Gauteng, WC & KZN contribute 82% of the agents 2011 Provincial Split 24% • Gauteng has Half the of that split at 43% 15% r he Ot ap e C N. po po Lim ee St at e es t Fr W an al m pu M N. ga e ap C E. N KZ ap. C W Ga ut en g e 6% • Free State, Limpopo and N. Cape have the lowest share – total of 6% (3%, 2% and 1% respectively)
Which province/s drives the industry? 2012 Provincial Split 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 • Gauteng, WC and KZN have highest share – total of 81% (44%, 23% and 14% respectively) Gauteng W. Cape KZN E. Cape Mpumalanga N. West Free state Limpopo N. Cape other • Gauteng with a major share at 44% • Free State, Limpopo and N. Cape have the lowest share – total of 6% (3%, 2% and 1% respectively)
Which province/s drives the industry? 2013 Provincial split Comments • Gauteng, WC & KZN contribute 82% of the agents 18268 20000 18000 16000 • Gauteng has Half the of that split at 45% 14000 12000 9590 10000 8000 5857 6000 4000 1126 2000 2341 1263 641 1593 371 pe ga No Ca rth er m n al an ap pu M st er n C W Ea rth No e t es po po Lim St at e N Fr ee KZ e ap es t C W Ga ut en g 0 • Free State, NW, Limpopo and N. Cape have the lowest share – total of 6% (3%, 2% and 1% respectively)
Growth by Estate Agents • Gauteng gained additional 554 agents 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2011 r ot he KZ N ap e . C W Ga ut en g 2012 • W. Cape gained additional 8 agents • KZN lost 57 agents • All other reduced by 159 agents
2011 National Racial Split Indians Africans 6% Coloured 7% 1% Whites 87% • 86% of Estate Agents are white • 14% of Estate Agents are Black • African and Indians are the majority within the Black category (7% & 6% respectively) • KZN has better stats comparatively with whites EA=82% and Blacks=18 • WC has the worst stats comparatively with Whites EA=92% and Blacks=8%
2012 National Racial Split • 87% of Estate Agents are white • 13% of Estate Agents are Black Coloured Indians Africans 5% 1% 7% • African and Indians are the majority within the Black category (7% & 5% respectively) White 86% • Limpopo has better stats comparatively with whites EA=73% and Blacks=27% • WC has the worst stats comparatively with Whites EA=93% and Blacks=7%
2013 National Racial Split National • 86% of Estate Agents are white • 13% of Estate Agents are Black 7% 1% 5% • Limpopo has better stats comparatively with whites EA=73% and Blacks=23. 4% 86% African Coloured • African and Indians are the majority within the Black category (7% & 5% respectively) Indian White • WC has the worst stats comparatively with Whites EA=93% and Blacks=1%
National Gender split 2011 & 2012 Male 45% Female 55%
National Gender split 2013 44% 56% Female Male
National Gender Split- Principals 2011 vs 2012 8000 7000 6000 Males 56% Females 44% 5000 • However, there are more males as principals at 56% 4000 3000 2000 1000 0 • National there are more females in this industry at 55% 2011 2012
2011 Gender splits Principals Chart Title Blacks 8% White 92% Males Blacks 0% Whites 100%
2012 Gender splits Principals Female Males Blacks 8% Whites 92% Blacks 10% Whites 90%
National Gender Split Estate Agents, Interns & Attorneys 2011 vs 2012 2011/2012 Female 61% Male 39% • The gender split for this category is the same for both 2011 & 2012 at 61% whites and 39% Blacks
National Racial Split Estate Agents, Interns & Attorneys 2011 & 2012 2011/2012 Blacks 15% Whites 85% • The racial split for this category is the same for both 2011 & 2012 at 85% whites and 15% Blacks
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