DEVMARK PROPERTY GROUP
D’Aria Kitchen
DEVMARK PROPERTY GROUP
Buoyant Devmark Celebrates Flurry of International Awards PRODUCTION: Manelesi Dumasi
Currently developing a range of top-quality property including the Klein D’aria Private Residential Estate, The Plettenberg Manor, The Galleria in Tyger Valley, Langebaarn Manor and many more, Devmark Property Group is celebrating all that has been achieved over the past 29 years. Founder and CEO, Hein Ehlers talks to Enterprise Africa about how choosing to be brave rather than scared has helped the company come through the tough times in South Africa. www.enterprise-africa.net / 3
INDUSTRY FOCUS: PROPERTY
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2018 has been an extremely positive year for leading property developer, Devmark Property Group. In October, the Cape Town-based company was lauded at the African Property Awards, coming away with three trophies: Best Residential Development and Best Development Marketing for The Plettenberg Manor, as well as Best Single Unit Residential Development for Klein D’Aria Private Estate. For 29 years, Devmark has been developing fantastic properties around the Western Cape and, thanks to an unwavering culture of excellence, the company is today regarded as one of the country’s industry-leaders. Founder and CEO, Hein Ehlers was also recognised for his contribution to the industry, being selected as Top CEO of the Year for 2018 by the International
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Association of Top Professionals (IAOTP). These awards capped off an amazing year for the company and Ehlers tells Enterprise Africa that there is feeling of pride at Devmark. “We’re absolutely thrilled with our three African Property Awards. It confirms our maxim of always striving for excellence in every aspect of our developments. Our success rests on the shared philosophy of providing an exceptional and comprehensive service to all our clients. “Our people work extremely hard conceptualising these developments and there is a lot of effort that goes into making sure the development makes sense in terms of flow and layout. Then you have to think about the modelling of it and the marketing – everything is done with the highest level of professionalism. For me, there’s a great
sense of gratitude that all of the energy and effort has been acknowledged. Internally, the people who have put the hard yards into making this work are feeling very positive.” Regarding Ehlers personal achievement, President of IAOTP Stephanie Cirami said the choice was not hard. “Choosing Ehlers for this award was an easy decision for our panel to make. He is a brilliant and talented leader in property development and financial management. He was exactly what we were looking for and we know we will be seeing more outstanding things from this man.” BUSY BREAKING GROUND Some of Devmark’s most notable recent projects include residential developments Fairhaven, Heerenzicht, Oak Park, Glen Beach Terraces, Whale
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Rock, Montego Bay and many more. The company has also developed some of the country’s finest retirement villages at Cle Du Cap, Legato, Villa Cortona, La Vie Est Belle and Onrus Manor to name just a few. Right now, Devmark is working on impressive range of projects to add to these lists including a large mixed-use space north of Cape Town and a number of significant retirement projects. The mixed-use development, in
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Tyger Valley, will consist of commercial, residential, and retail space and is a project that Ehlers expects to keep the company busy for the next decade. “It’s land that belonged to the City of Cape Town. Many years ago, there was a proposal call and we were shortlisted and eventually awarded the contract. We entered into an agreement with the City to buy the land from them and we subsequently rezoned everything, and we are just about
// WITH ITS COASTAL LOCATION AND EXCELLENT SECURITY, PLETTENBERG MANOR WILL OFFER RESIDENTS DIRECT ACCESS TO A PRIVATE BEACH, BEAUTIFUL HIKING TRAILS, BIRD HIDES FOR BIRDWATCHERS, AND BOWLING GREENS – ALL ON THE ESTATE //
ready to begin development. “It’s a mixed-use scheme and central to it will be an athletics stadium and a velodrome. The velodrome has been converted into an international event venue in partnership with Big Concerts. They are going to remodel the velodrome into a multi-use venue and they will also manage and operate it, bringing many concerts and much activity to the Western Cape. At capacity, it will hold around 14,000 people. “There will also be a substantial residential component of 500-700 units. We will have a lot of commercial office space, a medical facility, a fourstar business class hotel and a retail component. The retail component will take up around 12,000m2 and that will be added to existing retail units on site, taking the total retail space to 18,000m2.”
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This project, estimated to be worth R6.2 billion, will be rolled out in first quarter of 2019 when the residential component will be launched and work will begin on the first of 7500m2 A-grade offices, the 11,000m2 hotel, and the 6500m2 medical centre. Further east, in Plettenberg Bay, which Ehlers describes as his second home, Devmark has broken ground on the second phase at its exclusive retirement resort, the award-winning Plettenberg Manor. “It is one of the prime coastal resorts of South Africa. With its coastal location and excellent security, Plettenberg Manor will offer residents direct access to a private beach, beautiful hiking trails, bird hides for birdwatchers, and bowling greens – all on the estate. A shuttle service will make getting around easy and convenient. Not only does this development promise to offer an excellent return on investment, but also the perfect lifestyle.” Retirement property is becoming an increasingly important part of the Devmark business and its eight completed retirement villages have
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been extremely well-received by the market. Ehlers confirms that there are more to come. “We are completing another retirement village in Somerset West, and we are busy with Langebaarn Manor which is around 180 units,” he says. “We also have projects in the northern and eastern regions of South Africa. Our pipeline for retirement property is probably close to around 1000 units right now – it’s one of our key areas of expertise, where we are one of the leading developers in the country, certainly in the Western Cape.” In typically innovative fashion, after getting into the retirement property industry many years ago, Devmark is now finding new opportunities in the sector. In the future, the company will look to develop healthcare facilities on or close to its retirement sites to bring added value to its property. The plan is to develop and open seven hospitals over the next few years, as Ehlers explains. “We have teamed up with Samaritan Health and we will fulfil the development role for them while retaining the property. We have negotiated a
transaction where we will have a minority stake in the Samaritan Health business. This was born out of the work we have done with retirement villages as the care facilities and assisted care facilities have become a big part of what we do. We hope to roll out seven over the next three years and the first one will probably be in Malmesbury where we will open a 120 bed sub-acute hospital.” All of the company’s activity in this sphere will come under the new division, Devmark Health Holdings. DEVMARK INTERNATIONAL? Work with care facilities and assisted care facilities across Devmark’s retirement villages in South Africa has spurred the company to look further afield for opportunities. In South Africa, most companies that reach a certain size and capacity will quickly look to the continent for expansion opportunities but Ehlers and Devmark have no interest in growing into Africa. Rather, prospects in Europe are where the company sees potential. “In the UK, we are about to complete our first transaction where we
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are acquiring a care facility,” says Ehlers. “We aim to set up a care management business where we own the properties across the UK and the Netherlands. We are contracting some of the largest operators in these markets – we are not really interested in trying to change the daily operation of the businesses. “We have conducted studies in South Africa and the Netherlands, and we are finalising the same study in the UK, to understand that there are significant numbers of people who are part of the ‘baby boomer’ generation who will all retire in the next 10-15 years. We believe that quite a number of those people will end up in care and assisted care facilities – the Netherlands has an estimated 2.4 million and, we are still waiting for the research, but we believe the UK has between eight and 10 million, so there is a big market there. “We first want to acquire enough facilities to have a substantial business and when we have a clear understanding, we want to start developing our own facilities. We are not rushing – it will take at least two years to build a thorough understanding. It’s
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INDUSTRY FOCUS: PROPERTY
difficult enough trying to develop in Johannesburg when you are based in Cape Town so we certainly will not be rushing,” he adds. Just last year, various market research and businesses development organisations recommended that successful SA companies look beyond the country’s borders for significant growth opportunities in order to mitigate against the weak economic backdrop in South Africa. Lacking confidence, corruption, political uncertainty and shortages of water, as well as massive unemployment, continue to drive negative feeling in the economy, and business over a range of markets could be the perfect extenuation. However, despite economic conditions, Ehlers remains positive about the future in South Africa. “I have the philosophy of ‘when everybody’s scared you become brave’,” he says. “There are always opportunities.
When people start sitting on their hands land becomes cheaper and competition becomes less. Without being overoptimistic, there is still enough opportunity and we can see that through the developments we are rolling out now and the pipeline that we have.
“Property projects take years to get out of the ground so if you don’t start now, by the time there is an upturn, you’ll be caught behind. “We have gone through our challenges politically but we have a good strong president now and I am
Hein Ehlers
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DEVMARK PROPERTY GROUP
// I HAVE THE PHILOSOPHY OF ‘WHEN EVERYBODY’S SCARED YOU BECOME BRAVE’. THERE ARE ALWAYS OPPORTUNITIES. WHEN PEOPLE START SITTING ON THEIR HANDS LAND BECOMES CHEAPER AND COMPETITION BECOMES LESS //
the demand, so we identified that as an opportunity and it took us quite a long time to get the right land, and even longer to get it rezoned. It is our first project in affordable housing, but we are hoping to get more projects online soon.” The project is located in Belville, just north of Cape Town and so far Devmark has completed 250 units with the next 460 set to be started imminently. “It’s a combination of rental stock, social housing and open market stock,” says Ehlers. It’s a market where the company can make a real difference and one where the South African government is keen to offer support. “The government does make land available for projects like this and we believe we can make a significant impact in making stock available, assisting government and making rental property available,” says Ehlers.
“The challenge is getting the rights” he admits, “it is incredibly bureaucratic and takes an extraordinary amount of time, especially in the Western Cape, and especially in the Metropolitan area. We have a DA-led government and they are very scared to make any mistakes as they are seen as the best-run metro in South Africa. It creates a massive amount of red-tape and that means everything takes a massive amount of time. This is not unique to our country, it is a universal problem. “The affordable housing shortage will not slow because of the recession, people will not stop retiring because of recession so we are blessed in the sense that we have very large projects that have all been de-risked. They will keep us busy for quite some time and it’s a function of looking for opportunities in niche markets.”
confident that he will pull our economy out of the trouble it was left in – it’s like taking a bankrupt business and trying to resuscitate it, it’s a mammoth task he has on his hands, it will take time, but all the signs are positive.” DIVERSIFICATION Traditionally, Devmark has developed property for the top end of the market. Properties in its residential estates and retirement villages can sell for millions of Rand. But Ehlers says that one of the company’s key strengths is being able to spot gaps in the market. So, diversifying slightly from its core at the high-end of the market, Devmark recently took the decision to develop in the affordable space. Its project in Cape Town marks the company’s first venture into affordable housing space and Ehlers says, while the process can be difficult, it’s a market that offers significant opportunity. “What we have done successfully in the past is identify a gap in the market where believe there is long-term opportunity,” he says. “The affordable housing market in South Africa has a shortage of about two million units. All of the developers collectively in South Africa could never supply all of
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// WE DID A RESIDENTIAL DEVELOPMENT ON THE ATLANTIC COAST CALLED CLIFTON TERRACES IN A PRIME RESIDENTIAL AREA. BACK THEN, WE WERE SELLING THOSE UNITS FOR R1.5 MILLION WHEREAS TODAY THEY ARE PROBABLY WORTH R40 MILLION //
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29 YEARS AND COUNTING The special work completed, and underway, by Devmark is in keeping with everything the company has done in the past. Always dedicated to exceptional and comprehensive service for clients, Devmark has become known for its expertise since Ehlers established the company in 1989. He explains that, in the early days, Devmark was rooted in the development of retail property. “I was with the Pepkor Group where I was part of the executive group. I identified an opportunity in the establishment and development of convenient shopping centres in the northern areas of Cape Town. I specifically started the company with the sole purpose of developing convenience retail shopping centres.”
In the beginning, the company was called Devprop Projects and the name Devmark was used for marketing the business with residential property. It eventually became so dominant in the industry that the company adopted the name Devmark in 1995. “When we really got going in the residential space was just before the first democratic elections and people didn’t really know where things would go. You had to be brave or scared so we decided to be brave and it worked out pretty well. “Two flagship developments for us in the early stages were a retirement village called Cle Du Cap in Cape Town’s southern suburbs, and we did a residential development on the Atlantic coast called Clifton Terraces in
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We are proud to be a supplier to Devmark Group a prime residential area. Back then, we were selling those units for R1.5 million whereas today they are probably worth R40 million.” After almost three decades in business, Devmark now employs a highly skilled workforce of almost 100 people and, when the project portfolio is big, the company engages hundreds of subcontractors providing opportunities for many different local businesses. DEVELOPING FOR THE FUTURE Right now, the major projects that will keep Devmark busy, alongside its expansion in Europe, are the acclaimed Klein D’aria Private Residential Estate – a 22 luxury home development in Durbanville – and various retirement villages across the country. “Klein D’aria is very interesting as it’s on a wine estate and that is very unique. It’s a wine estate that sits within the urban area – you cross the street from the wine estate and you’re in a residential area,” says Ehlers. “We are planning a retirement village in Constantia – we have the rights under appeal with the Cape metro. The Langebaarn Manor retirement village will be completed in 2019, and we also have one in the northern part of the country in an area called White River. There, we are developing a retirement village with a step-down sub-acute hospital on the site. The Galleria development in Tyger Valley will also take up a lot of our focus as we begin with the revamp of the velodrome and the hotel and offices. There are a lot of things that we will be looking to get off the ground in the first part of the new year.” And after 29 years with the business, and a history before Devmark in the corporate world, Ehlers remains exhilarated and energised by the opportunities in the industry. Asked about a succession plan for Devmark he says
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that any change is long way off, but the company is perfectly positioned for any transition. “Two of my sons work in the business and both of my daughters as well. We have other very talented people in the business who doing extremely well so it is not definitely going to be passed to my family. At this stage, it could be anybody. “We have a young management team who are extremely wellqualified academically and they have now gained a lot of experience. Certainly, they all have the ability to take the business to the next level – there’s no doubt about that,” he says. Now is an exciting time for the company, and as it approaches its 30th birthday, it has never been stronger. Regarded among the Western Cape’s premier developers,
continually growing its influence across South Africa, building an international business, diversifying into new sectors – and doing all of these things with quality in mind – award-winning Devmark is the perfect example to follow for those looking for inspiration. “By drawing upon the group’s collective knowledge and expertise, we hope that Devmark will continue to grow and prosper,” Ehlers concludes.
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DECEMBER 2018