By Roy Cokayne
Sandton - The Property Loan Stock Association (PLSA), which represents South Africa's listed property sector, is driving a process to get real estate investment trust (Reit) legislation passed in South Africa.
This would replace the current legislation governing the listed property sector.
PLSA chairman Norbert Sasse, who is the chief executive of Growthpoint, said yesterday that the association had met with the SA Revenue Service (Sars) three times, while a PLSA delegation had last week had a meeting with national treasury officials.
The PLSA had been trying to show Sars and the treasury the benefits of a Reit structure in South Africa. However, Sasse stressed that the process to get Reit legislation passed in South Africa would not be quick.
Sasse was speaking during a break at a conference organised by the PLSA on the theme: Towards a Reit Environment in South Africa.
Sam Zell, the founder of the US-based Equity Office Properties Trust and Equity Residential, said the focus in South Africa should be on creating a uniform structure that made understanding real estate equal to anywhere else in the world.
"If you want to play with the big boys, you've got to look like us," he said, noting that the Reit market in the US had grown from $6 billion (R41 billion) in 1992 to $350 billion today.
There were 216 Reits in the US but he believed this was 145 too many and there would be further consolidation.
Zell said the US market was large, so the focus had not been on markets outside the country. However, it would be hard for a US Reits to acquire a South African Reit unless there was a uniform structure.
Zell said Reits had led to the development of a fully-fledged capital market in real estate, which was something every other industry had been doing since the beginning of time. The success of Reits had also led to the real estate sector gaining more public attention.
Zell maintained that the foreign investment benefits of Reits far outweighed any loss in taxation. He found it strange that there was no housing in South Africa's capital market.
"I think South Africa would welcome any capital flowing into housing and if you create the vehicle, the capital will follow," he said.
About 30 countries had adopted Reit structures but, because of the transparency and simplicity of Reits, Zell believed it would lead to uniform international norms and create identical structures across national borders.
He predicted that in 20 years there would be uniform law and tax treatment of Reits and that huge Reits would cover various countries, allowing investors to participate in property markets across the world.