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Uncertainty over #LandExpropriation

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Experts say until the issue is resolved, country could see an increase in the sale of agricultural property

Land expropriation without compensation could see an increase in agricultural property being sold as farmers and property owners consider the potential outcomes of the policy.

The uncertainty that still surrounds the policy implementation, and the fact that buyers may not be keen to buy agriculture property until clarity is obtained, is not helping. The outcome though, may not be as dire as many farm owners expect.

There are many scenarios of what the eventual outcome of land expropriation without compensation will be, but Erwin Rode, of valuation firm Rode & Associates, says the question is how South African farmers perceive this threat and whether they are dumping farms.

“As no institution regularly tracks farmers’ confidence levels or farm prices, no one knows the answer. But it is likely that farmers in the northern and eastern provinces feel more exposed than those in the Western Cape,” he says.

Should dumping take place, Tobi Retief, a specialist farm valuer at Rode & Associates, believes the more successful farmers will use the opportunity to buy up more farms. A worst-case scenario, he says, could “seriously hobble” the country’s exports to the US. This is in terms of the African Growth and Opportunity Act (Agoa) which is applicable to eligible sub-Sahara African counties.

Rode explains that this could happen because the president of the US can withdraw eligibility for participation in this agreement when, for instance, a participating country does not promote certain aspects of the act (see box). 

“Given the expectations that have been generated among the ANC’s constituency, it seems likely that an ‘EWC Lite’ will be proposed. This could involve the expropriation without compensation of abandoned properties, properties where the owners have allowed non-owners to occupy, and/or not cultivate, the land for a long period, and unused or underused land,” he adds. 

This criteria could also include communal land. “Whether ‘EWC Lite’ would also attract the disapproval of the president of the US, is an open question, but its effect would certainly be less painful to commercial farmers,” Rode says.

At the moment, more farmers are willing to sell their properties, says Deon de Swardt, broker/ owner of Remax Oaktree in Stellenbosch. This is based largely on the uncertainty that surrounds the expropriation issue. 

It’s been business as usual in the Boland. Picture: Andrew Ingram/African News Agency (ANA) Archives

“While there haven’t been too many more listings in comparison to last year, many more valuations have been requested,” he says.

“Most farm owners are not optimistic about the situation. Some have mixed feelings about the matter and think that it’s more a political move to gain votes than anything else. The problem we’re facing is many eager sellers and no willing buyers as they fear the risks are too high.”

De Swardt says when buyers sell out of anxiety or panic, they are prepared to accept offers that are below the market value of their property. “The more frequently this occurs, the knock-on effect is that property values for that area drop as well.”

The threat to property ownership “certainly is a sensitive topic”, says Harcourts South Africa chief executive Richard Gray. And while it “undoubtedly influences” the temperature of the market, he says the agency has not been able to identify a frequency in the hesitancy to buy agricultural property directly related to land expropriation without compensation.

“The resurfacing of this issue in recent months has not allowed us enough time to gather sufficient data.” Gray adds: “It is difficult to make a prediction on the rate of the market going forward as we are not entirely sure of the implementation and details surrounding land expropriation without compensation.”

In the Boland, however, it has been business as usual, says Annien Borg, managing director for Pam Golding Properties there. Properties are being put on the market for the usual reasons, including family and personal situations changing, retirement, and change of property or business interests.

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