Real Estate Securitisation: Viable Method of Finance in South Africa?

Securitisation has long since been an important factor in international finance markets. This finance method that became popular in the United States of America during the early 1980ís is still very much in its infant stages of development in South Africa. The initial objective of this paper is not only to provide an explanation of the mechanics of securitisation but also to evaluate the present development of securitisation in South Africa to determine the level of progress of securitisation as a method of finance. The crux of this paper is however to determine if securitisation can act as a viable alternative to traditional methods of funding property. To obtain an answer to this question the author investigated the current South African legislative environment to establish if it supports securitisation as a property finance tool. The next step involved the evaluation of the different elements of the securitisation framework to establish if real estate securitisation is a viable method of financing real estate in South Africa. Ultimately the author found that except for some limiting conditions, the South African regulatory environment does indeed support real estate securitisation. There is however room for improvement in the existing legislation.