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energy|platinum|sustainable|solutions

Rising energy costs, rates and taxes worry property owners

20th March 2019

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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South African Property Owners Association (Sapoa) members have expressed concern about matters that may affect the sustainability of their assets in South Africa and the association is taking every effort to help its members tackle the various challenges they face, Sapoa president Ipeleng Mkhari says.  

Speaking at a media lunch on Tuesday, in Johannesburg, she indicated that Sapoa members’ key concerns were centred around the sustainability of their assets and investments in properties, especially in a difficult economy.

Members are particularly concerned about the high cost of electricity, which is set to rise even further when Eskom implements the tariff increases recently approved by the National Energy Regulator of South Africa.

Moreover, load-shedding could further negatively impact on the sustainability of property owners’ assets.

Mkhari stated that load-shedding would not affect its bigger members in the short term, as they have prepared for such occurrences, but, in the long run, load-shedding will become a significant challenge for members.

Another cause for concern was increasing rates and taxes. Over a decade, rates and taxes have increased by nearly 10% a year, Sapoa CEO Neil Gopal pointed out.

Mkhari lamented that this created a highly imbalanced relationship between the asset owners and their contribution to the fiscus.

She emphasised that while these entities were eager to contribute to the fiscus, as it engendered working municipalities, which in turn engendered working cities, these rates and taxes needed to be reasonable to ensure that was sustainable for property owners.

To a lesser degree, there were also concerns about land expropriation. Mkhari noted that while this presented many challenges, there were positive signs.

She posited that the “texture” of the conversation around land expropriation was starting to change, with participants more willing and less confrontational. For example, she pointed to the recent land handover by Anglo American Platinum as an example of this, especially as it was a big corporate willingly handing over land without coercion.

As part of measures to find solutions to the challenges facing its members, Sapoa is facilitating discussions with relevant stakeholders in the private and public sectors.

Meanwhile, Sapoa pointed out that, as a result of these concerns, its members were considering whether to retain assets in South Africa or whether to seek opportunities abroad that may offer a more profitable and viable option.

Gopal highlighted that the shift to offshore property investment was a worrying trend for the association.

To better understand this shift, Sapoa plans to survey its members about their investment plans in South Africa, to measure their confidence in the country.   

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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