Growthpoint Properties CEO Estienne de Klerk has raised concerns over uncertainty in property ownership, warning that the issue could hinder investment and development in the real estate sector.

The caution comes amid controversy surrounding the Expropriation Act, enacted in December 2024, which allows the government to expropriate property for nil compensation if deemed in the public interest.

“When thinking about the [construction] industry, what are the catalysts that drive the business? It is ultimately either developers or property investors on one side – the private sector companies – or, on the other side, government infrastructure spend that drives the activity in the sector,” De Klerk said at the 2025 National Construction Summit, in Ekurhuleni, on November 13.

He emphasised the importance of legal certainty for landowners and investors.

“Now, if you want to attract investors into the sector, you can't provide uncertainty in terms of land ownership. People must understand that if they buy a piece of land, they are going to own it, they can develop on it, they can put a lease in place and it will be a proper investment case. Certainly, that's the first thing: you need certainty on ownership,” De Klerk said.

Beyond ownership certainty, he highlighted the need for clear policy and a strong economic environment to stimulate demand.

“Then you need clear policy and you need a very good environment from an economic perspective because, ultimately, our business is driven by demand. So if companies are growing and they need more space for logistics, shopping centres or office buildings, that's when we do more business. That's ultimately when the sector grows,” De Klerk noted.

He said reliable municipal services and infrastructure also played a crucial role in real estate development.

“Another very big overlay here is, of course, municipalities. As citizens, we are very exposed to municipalities in terms of the services they provide. The reality is that, as property investors, when we hit the tarmac, often there’s no tarmac to be seen in these areas. We increasingly have to provide infrastructure ourselves, which is actually general municipal infrastructure. That is something we ask the municipalities for, and we put a lot of effort into discussions with them to try and provide additional support,” he lamented.

De Klerk noted that municipalities that provided certainty and efficiency were attracting the most investment.

“If you have certainty, good municipalities, and sound policies, you’ll see the good municipalities in this country attracting investment. The pension funds are very much supporting growth in the real estate sector. As interest rates come down, our cost of capital reduces. In other words, money becomes cheaper. The deals start working, and tenants can afford the rentals. Ultimately, that’s where the construction sector plays a huge role,” he said.

He warned that delays and cost overruns in construction could have significant financial implications.

“If construction is too expensive, takes too long or overruns, the expression ‘time is money’ is very real. For example, if you build a billion-rand project and it overruns by one month, the cost is directly around R9-million in interest, which either lowers the return to the investor or forces the tenant to pay higher rental,” De Klerk explained.

Highlighting South Africa’s position in the global economy, he stressed the need for greater competitiveness.

“As South Africans, we have to be competitive in the global markets. We are all interlinked in the global economy and our cost of capital is determined by how efficient we are as a country, how good our policy is and our ability to attract investment, not just for the private sector, but also for government. Over the past period, with all the volatility, it has been very difficult for the sector. But the sector is turning, and we are starting to see construction really bloom,” De Klerk said.