Magazine article Journal of Property Management

A Time of Transition

Magazine article Journal of Property Management

A Time of Transition

Article excerpt


A new view of South Africa

The Republic of South Africa is currently undergoing a transformation. Under the leadership of President Thabo Mbeki, who succeeded Nelson Mandela in 1994, the African National Congress (ANC) government is helping to create an investor-friendly environment by attracting foreign capital through privatization and insisting South African companies tender for big projects with foreign partners. Together with the private sector, President Mbeki is identifying ways to correct the economic imbalance that exists for certain population segments.

A Growing Economy

Under the ANC-led government, South Africa's economy has experienced a GDP growth every year since 1994. Inflation decreased from 7.4 percent in 1996 to 5.7 percent in 2001. However, inflation jumped to 14 percent in October mainly due to the depreciation of the rand (R), South Africa's form of currency, resulting from high import prices, especially crude oil.

Institutional Investment

During times of apartheid prior to 1994 life insurance companies and pension funds dominated the commercial property investment market. All major property developments were bought by these institutions, leaving few and mostly small properties to banks and private property investors. The buying spree resulted in a real estate asset class characterized by high risks and illiquidity.

The listed property (PUT-Property Unit Trust and PLS-Property Loan Stock) constitutes less than 1 percent of the Johannesburg Security Exchange USE) market capitalization. …

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