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REBOSA looking to transform industry

25 Sep 2013

Real estate business organisation REBOSA says it is ready to start tackling some of the challenges facing the sector.

As an industry, real estate is grappling with a number of challenges, not least of which is the introduction of around ten new pieces of legislation that affect their businesses quite dramatically.

Chief executive officer, Roy Leigh says one of the most immediate tasks on REBOSA’s agenda is the Property Sector Charter (PSCC), an integral component of BEE legislation that is to be enacted in the next year. He says their task is to work with their members, stakeholders and government to find a workable solution with legislative measures that will give effect to meaningful transformation that enables rather than hampers the sustainability and growth of the sector.

As an industry, real estate is grappling with a number of challenges, not least of which is the introduction of around ten new pieces of legislation that affect their businesses quite dramatically.

Leigh says the prolonged economic downturn and low mortgage lending landscape has of course had a significant impact on the industry with overall sales volumes, agent numbers and the GDP contribution down by about 40 percent since 2007/8.

He says the real challenge therefore is how do they adapt and incorporate all of these new measures while still sustaining, never mind growing their current businesses to accommodate the aspirations of the previously disadvantaged. The reality is a global and national market that is growing slowly or in a decline with an outlook that is, at least for the foreseeable future, rather uninspiring, he adds.

While fully supportive of the need for transformation, Leigh says there are a number of priorities that need to be debated and resolved. The first is what level of turnover is appropriate for an estate agent to fall under the definition of an exempt micro entity (EME). Under the previous Codes of Good Practice (BEE guidelines), an EME had to have a turnover of less than R2.5 million, a Qualifying Small Entity (QSE) less than R35 million and a Large Entity, a turnover in excess of this. Government proposes raising this to R10 million for an EME and to R50 million for a QSE.

While there is overwhelming support for transformation, it needs to be borne in mind that about 80 percent of real estate businesses are in effect small to medium sized enterprises; quite often one and two-man operations. Raising the level will have a significant impact, he says.

The Code of Good Practice covers six essential elements – Ownership, Management control and Employment Equity, Skills Development, Preferential Procurement and Enterprise Development, Socio-Economic Development and Economic Development and, while still ‘just codes of good practice’, the real fear is that these become mandatory. This will be a significant challenge for small and medium-sized businesses that more than likely will have to close their doors as they just do not have the resources to handle such onerous obligations.

Leigh says rather than introducing what amounts to a top-down approach to transformation, REBOSA would urge a bottom-up approach.

For most sellers and buyers, transformation unfortunately ranks as a rather low priority; they are more concerned with the selling and buying of a property and working with a professional estate agent that is credible and skilled. The job of an estate agent is also one that is vastly misunderstood, he says.

While government subsidies assist in drawing candidates to the industry and providing training, it needs to go much deeper than that.

School leavers are often attracted to the industry under the misguided notion that they can earn huge commissions for little effort. In fact, right now, the low levels of mortgage granting is severely impacting the financial position of estate agents and is certainly not conducive to attracting top class candidates to the industry, says Leigh.

Statistically, over 90 percent of all estate agents fail within the first year as they were not suited to the profession in the first instance, nor did they grasp what it takes to succeed. Leigh says they need to develop a culture that recognises that estate agents are entrepreneurs and not mere wage earners. For transformation to succeed in delivering sustainable long-term outcomes, the focus should rather be on attracting graduates who have a strong entrepreneurial flair. 

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