The South African property sector is worth a whopping R4.9 trillion, according to a new study to discover the size of the country’s property sector.

The Property Sector Charter Council commissioned Investment Property Databank (IPD) to carry out the study, the first of its kind in South Africa. IPD is a global information business, dedicated to the objective measurement of commercial real estate performance. As the world’s number one provider of real estate performance analysis for funds, investors, managers and occupiers, IPD offers a full range of services including research, reporting, benchmarking, conferences and indices. IPD operates in over 25 countries including most of Europe, the US, Canada, South Africa, Australia, New Zealand and Japan.

Chief executive of the Property Sector Charter Council, Portia Tau-Sekati says the research creates a hub of knowledge about the property sector, consolidating information and developing a common and consistent understanding.

“By determining the size of the South African property sector, we are moving towards a proper baseline measure to assess market size and its components, the scale of different services and activities in the sector, and ultimately BEE transformation figures in line with the Property Sector Code scorecard.”

Establishing the scope of the property sector is important for an accurate overview of the South African economy, taking into account that in 2009 the property sector contributed 8.3 percent of SA’s Gross Domestic Product (GDP), according to a South African Property Owners Association (Sapoa) research report, the Economic Impact of the Property Sector in South Africa.

The figures in the new study provide a snapshot that reflects the status in the property sector at the base date of December 2010.

Only around 1 percent of land in South Africa is urban and residential, according to the research. More than 73 percent of land in South Africa is natural pasture, about 12 percent is agricultural, and about the same portion comprises nature conservations and reserves.

The study shows that nearly two thirds of property owned in South Africa is residential, estimated at R3.0 trillion. Commercial property carries a value of some R780 billion. Undeveloped land zoned for development equates to R520bn. Publicly owned property – including national, provincial and local government as well as state-owned enterprise – totals around R570bn.

Currently, the research combines various studies that estimate the size of South Africa’s residential market. Although the number of housing units – formal and informal – vary in the source studies, from 13.1 million dwellings to 8m, value calculations are all estimated at similar levels of R3 trillion.

Of the R780bn commercial property in South Africa, the research reports corporate property accounts for R600bn, including investment property of R120bn held by South Africa’s listed property sector. Further investment property, held by life and pension funds and private equity funds, totals R180bn.

Retail property has the highest value of the commercial property sectors in South Africa at R340bn, followed by office properties at R228bn and industrial properties at R187bn. Representing a small comparative value of R25bn is hospitality, leisure and ‘other’ property.

For publicly owned property, the study used available information, which reflects R342bn of property held by provincial government, R188bn by national government, R37bn by local government and R6bn by state-owned enterprises.

Tau-Sekati says the significance of this research is far reaching.

“Besides being a benchmark to monitor and evaluate the progress of transformation of the sector each year, this study marks the beginning of an ongoing research process, which will update information on the property sector annually. The study is a useful tool for understanding the South African property market and its dynamics. It is work in progress and we hope to build a better and clearer picture of our industry. We welcome information sharing with the industry through studies undertaken that could further refine our data and shine a light on the mechanisms of the sector’s component parts.”