On the 27th of February, Parliament passed a motion (brought by the EFF) calling for the expropriation of land without compensation. This controversial move of land reform, has local property owners as well as investors worried. Regrettably, it has also cast a shadow on the otherwise positive few weeks since Jacob Zuma’s resignation.

For commercial property investors the pressing question is, will expropriation without compensation become a reality. Will properties other than farms be affected?

Land Reform: necessary compensation or echoes of Zimbabwe?

SA’s past land reform programme has been fraught with problems with less than 2% of rural land owned by black South Africans, and only 7% of urban land.

The history of land in South Africa, with indigenous people having been removed from their traditional homes, is a source of strong feelings – but returning land haphazardly to those who lost it could trigger a major investment panic.

Critics of land reform don’t need to look far to find an example of just how wrong the process can go: Zimbabwe’s land reform experiment ended in economic disaster.

With this in mind, President Ramaphosa has been assuring investors and the public in general that any land reform measures undertaken by his government will be sensible, legal and not economically damaging.

Land reform policy – still in the planning stage

Parliament may have passed a motion in favour of expropriation without compensation, but the actual details of the ANC’s land reform policy have not yet been released.

  • Before any laws can be passed, the constitution will have to be amended. Depending on public opinion, this could be a lengthy process.
  • The next stage would be drafting a land reform law and having it passed through parliament, which could take anything from months to years.
  • At this stage, the only type of property mentioned in connection with land reform has been agricultural property. Residential and commercial properties may be off the radar.

As things stand, commercial property owners may not have great reason to worry – but vigilance is key. By staying updated on the latest property legislation, property buyers and sellers place themselves in the best position to make decisions.

For more information on commercial properties in the Cape Town area, feel free to contact our team of specialists today.