PROGRESS REPORT ON THE PROPERTY SECTOR CHARTER

Presentation to Portfolio Committee on Public Works22 May 2012

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PROPERTY SECTOR - SCOPE

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• Property Sector– Residential Property Industry

• Houses• Flats, Clusters, Town Houses etc

– Commercial Property Industry• Office Property Industry• Industrial Property industry• Retail Property Industry• Leisure Property Industry

PROPERTY SECTOR - SCOPE

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PROPERTY SECTOR UNIVERSE

COMMERCIAL RESIDENTIAL INDUSTRY

OFFICES

INDUSTRIAL

RETAIL

LEISURE

COMMERCIAL RESIDENTIAL PROPERTY

PRIVATE RESIDENTIAL PROPERTY

FORMAL RESIDENTIAL

INFORMAL RESIDENTIAL

HOUSE

TOWNHOUSES/FLATS

CLUSTERS

PROPERTY CHARTER - SCOPE

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• Property Sector - Segments– Property Owners

• Institutions• Private• Property Loan Stock Association - PLSA• Association of Property Unit Trust Companies - APUT

– Property Services• Facility Managers• Property Managers• Brokers• Estate Agents

– Professionals• Valuers

– Regulators– Government– Nedlac

PROPERTY CHARTER – COUNCIL MEMBERS • Organisations/Associations

– Government• NDPW – National Department of Public Works

– Regulators• SACPVP – SA Council of Property Valuers Profession• EAAB – Estate Agency Affairs Board

– Owners• PLSA – Property Loan Stock SA• APUTS – Association of Property Unit Trust Stock

– Professionals• SABTACO – SA Black Technical Association Career• BPVA – Black Property Valuers Association• BPVA – Black Professional Valuers Association

– Estate Agents• IEASA – Institute of Estate Agencies of SA• NPF– National Property Forum

– Women• AWIP – Association of Women in Property• WNP- Women Network Properties

– Others• SAIBPP – SA Institute of Black Property Practitioners• SAFMA – SA Facility Managers Association• SAPOA – SA property Owners• SACSC – SA Council of Shopping Centers 5

PROPERTY SECTOR

• Sector Size– Second biggestafter mining —During the 5% growth,

1.5% was attributedto property

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• Values

PROPERTY SECTOR- VALUE

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SETTING UP AND GAZZETING OF PROPERTY

SECTOR CHARTER

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PROPERTY CHARTER – process• Initial stages- Phase 1 (Dec 03-Dec 04)– Set up structures – to initiate the process– The late Min Stella Sigcau launched the property charter process – July

2005– Pulled all property Stakeholders together– Discussion Started around the scorecard– Initial drafting of the charter

• Secondary Stage – Phase 2 (Jan 05-Dec 05)– Further consultation– Setting up of steering committee team– Drafting of the charter– Signing of Charter – March 2006– All stakeholders agreed in the formation of the Property Charter Council

and signing of the constitution – October 2007– Property Sector Charter under section 12 of B-BBEE Act was published –

October 2007– Property Charter Section 12 was gazetted – November 2007– Property Charter published under section 9(5) Oct 2010

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2007 All stakeholders agreed in the formation of the property charter

council and signing of the constitution Gazetted under Section 12 All stakeholders agreed in the formation of the property charter

council PSCC office set up Council & board appointed

Appointed CEO

2010 Gazetted under section 9(5) Opened for public comments & analysis period

2011 Analysis of public commentary

2012 Adjusted the targets to 6-10 targets Gazetted under section 9(1)

PROCESS FOR GAZETTING

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OBJECTIVES OF THE PROPERTY SECTOR

CHARTER

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Increase brand recognition and build PSCC as a respected authority

Execute the enabling model for the implementation of PSTC by stakeholders

Establish an efficient, effective & compliant PSCC organization

Develop an effective & efficient communication strategy both internally & externally

Develop information management capacityCapacitate the organization with support staff

KEY STRATEGIC OBJECTIVES OF 2012

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GORVENING STRUCTURES OF

PROPERTY SECTOR CHARTER

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PROPERTY CHARTER – Governance

• Corporate Governance • Council members

– All signatories of the constitution and gazetted Property Charter

– Schedule meetings» Twice a year (dates agreed a year in advance)

• Board Members– Appointed by the council– Representative of different segments of the sector– Scheduled meetings

» Once a quarter (4 times a year) – dates agreed a year in advance

• Exco Members– Appointed by the board (5 members)– Support the CEO with operational issues– Scheduled meetings

» Once a month (12 times a year) – dates agreed a year in advance

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PROPERTY SECTOR CHARTERCOUNCIL COMPOSITION

Composition and Seats of the Charter Council

Stakeholder Representing Number of Seats

Independent Chairperson 1

Nedlac/ Organised Indirect Stakeholders

Women

5Youth

Labour

Communities

Public SectorAll tiers of Govt.

5SOEs

Regulatory

EAAB

2SACPVP

Other relevant interest groups participating in the property sector as decided by the Council.

e.g Users 12 associations 1 Seat per association

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THE PROPERTY CHARTER BOARD COMPOSITION

Composition and Seats of the Charter Council

Stakeholder Representing Number of Seats

Chairperson Chairperson of the board 1

Nedlac/ Organised Indirect Stakeholders

Women

1

Youth

Labour

Communities

Disabled

Public SectorNDPW

2Ministry

Property Services

Facility Managers

3

Property Managers

Brokers

Estate Agents

Professionals

Owners

Institutions

4Private

PLSA

APUT

Regulatory

EAAB

2SACPVP

Women in Property

WNP

1AWIP

2 additional independent members Independent Members 2

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GOVERNANCE STRUCTURE

COUNCIL MEMBERS

BOARD MEMBERS

EXCO

CEO

COMMITTEES

Twice a year

Quarterly/Bi-Monthly

Month

project

MEETING FREQUENCY

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UNDERSTANDINGPROPERTY SECTOR CODE

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Ownership - 20 points

Preferential Procurement - 20 pts

Enterprise Development - 15 pts

Employment Equity - 15 pts

Skill Development -15 pts

Control -10 pts

SED -5 pts

CODES OF GOOD PRACTICE

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CODE OF GOOD PRACTICE• These are the DTI Codes adopted in terms of the

Generic Score Card;• The sectors that do not have a Sector

Transformation Charter use these;• Sectors that have Sector Transformation Charters

have to use sector code.• They are allowed to deviate to accommodate sector

specific issues;• Deviations have to be discussed and agreed with

DTI. 20

Code 000: Generic CodesCode 000: Generic Codes

ELEMENT PROPERTY SECTOR CODE

CODES OF GOOD

PRACTICE

Ownership 20 points 20 points

Management control 10 points 10 points

Employment Equity 15 points 15 points

Skills Development 15 points 15 points

Preferential Procurement 20 points 20 points

Enterprise Development 10 points 15 points

Socio-Economic Development 2 points 5 points

Economic Development 15 points

TOTAL 107 10021

Code 000: Generic Codes

•This is a comparison of Generic Codes with Property Sector Specific Codes – illustrating deviations – e.g.

– Enterprise Development;– Economic Development.

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DEVIATIONS:DEVIATIONS:ECONOMIC DEVELOPMENTECONOMIC DEVELOPMENT

CRITERIA

WEIGHTING POINTS

COMPLIANCE TARGET

Disposal of assets to B-BBEE enterprise (Level 1-3) as a % of total asset disposal (private)

8 35%

Development Investment in under-resourced areas as a % of total annual investment

7 10%

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IMPLICATIONSPROPERTY SECTOR CODE

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– Every operation under the defined scope has to comply– Obligated to use the Property Sector Code Scorecard– No need to do 2 scorecards

Only the Property Sector Charter will be recognisedEffective immediately – i.e. no transition period

– Need to use Accredited Verification Agencies or Accredited Auditors (Accredited by IRBA for BBBEE verification or SANAS)

Analyse your status– Inception meeting explain the process– Identify the required information – Gather information– Analyse the information– Coupled with interviews and other methods of verification– Use the methodology to arrive at a status level

IMPLICATION OF GAZETTING UNDER Sec 9(1)

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LEVEL BBBEE SCORE- property

charter/codes

WEIGHTING

Level 1 ≥ 100 points 135%

Level 2 ≥ 85 but <100 125%

Level 3 ≥ 75 but <85 110%

Level 4 ≥65 but <75 100%

Level 5 ≥ 55 but <65 80%

Level 6 ≥ 45 but <55 60%

Level 7 ≥ 40 but <45 50%

Level 8 ≥ 30 but <40 10%

Not compliant

<30 0%

Where any enterprise is in excess of 50% owned by black people, the BBBEE Status of that enterprise will be at the level immediately above the level at which its actual score is evaluated

BBBEE STATUS MATRIX

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BASELINE & ANNUAL REPORTING

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BASELINE SURVEYBASELINE SURVEY What is a baseline Survey

– Survey designed to establish current status of the property sector in terms of transformation

Objectives– Gives us base from where we are stating– Highlight area of focus and where PSCC can support– Monitor and report on progress– Generate industry and sector reports with authentic trends

Tools– DTI IT portal accessed via internet– Portal has questionnaires - based in line with the Codes of

Good Practice for Broad-Based Black Economic Empowerment – Portal is linked to all registered verification agencies

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ANNUAL REPORTINGANNUAL REPORTING

• Reporting is a gazettes function of all Sector Code– Frequency – annual main report

• Quarterly – smaller reports

– Role – Monitor the trend – progress or lack thereof

– Standardized Format – determined by DTI– Reports circulation

• Line Ministry• The DTI• PSCC Council members

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Advocacy Work• With the gazetting of the Property Charter Codes in

terms of Section 9 (1) of the BBBEE Act, DPW in partnership with the Charter Council shall roll-out road-shows aimed at training and promotion on the property charter Codes – from August 2012; and

• Advocacy work will further target broader formal beneficiary organisations beyond current Charter Council representatives;

• Public Sector workshops on the implementation and alignment of state programmes with the Property Charter and related property transformation policies will be held with all spheres of Government and State Owned Enterprises (SOEs).

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Government processes & alignment• In support of the transformation of the industry

through Property Sector Charter and internal BBBEE provisions, DPW has:- Developed and implemented a Property Management

Strategy on BBBEE, Job Creation, and Poverty Alleviation:• DPW empowerment programme to support transformation.

- Developed the Property Incubator Programme (PIP) as an enterprise development programme:

• Creating protected environment for emerging property enterprises with work opportunities, training, mentorship and access to finance.

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…Government processes & alignment contd

- Developed Green Building Framework as part of growing the industry, entrenching international best practice, and ensuring sustainable environmental principles in the sector:

• Using state immovable assets to contribute to government’s effort to reduce carbon emissions.

- Develop a Small Towns Development Strategy to ensure an inclusive property industry and improve economic activity:

• Identifying opportunities for empowerment for emerging property enterprises, cooperatives, job creation, etc.

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WAYFORWARD• PSCC:

– Discuss the gazetting of the Charter in the forthcoming June Council meeting;

– Agree on communication strategy:• Launch of the Charter;• Roadshows to Provinces.

• DPW:– Finalise the training manual for Government Department (all

spheres) and state entities;– Begin roadshows;– Position the Department of report on the performance of the

public sector; and– Continue to participate actively in the PSCC.

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THE END

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THANK YOU