Asset
The commercial property magazine with substance Issue 30 | April 2015
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Asset Magazine • Issue 30
Cover Story |
40 years of enduring success Issue 30 • Asset Magazine
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See Broll 40th anniversary cover story from page 24
Pulse Retail Summit Women & crowdfunding Global GreenTag seminar presentations Rodger Warren opinion article Simon Henstra dissertation 4
Asset Magazine • Issue 30
M
P
In this
ISSUE#30 In this issue we interview:
Malcolm Horne & Jonathan Broll - Broll Property Group
Paul Olivier & Phakamile Ngqumshe - Jeffares & Green Elton Bosch - NUS Consulting The award winning Eris FM team Errol Diamond - Diamond Properties Robin Lockhart-Ross - Nedbank Property Finance The team from Titanium Window Tint Sean Tompkins & Mark Walley - RICS
Issue 30 • Asset Magazine
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> Corporate and Investment Banking
MAURITIUS
SOUTH AFRICA
GHANA
Hyprop Investments Ltd SOUTH AFRICA USD 100 million
Attacq Ltd ZAR 1.084 billion
Term funding
Term funding
Redefine Properties Ltd ZAR 1.5 billion
RMB Westport USD 37 million
NIGERIA
Term funding
Circle Mall and Business Centre
West Hills Mall Ltd USD 45 million
Zambia Investments Ltd, Rockcastle Global Real Estate and Horizon Corporation
West Hills Mall
ZAMBIA
USD 33 million Makuba Mall and Kafubu Mall
They call it Africa. We call it home. Successfully financing this level of development isn’t just proof of our expertise and experience in the African real estate market. Nor is it simply proof of our cross-border capabilities in tailoring solutions for our clients’ needs. These accomplishments demonstrate our commitment to building a stronger Africa. This is why, where others call us a bank, our clients call us a partner for growth on this continent we call home. Authorised financial services and registered credit provider (NCRCP15). The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). Moving Forward is a trademark of The Standard Bank of South Africa Limited. SBSA 190509.
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Asset Magazine • Issue 30
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LAYING THE FOUNDATIONS FOR AFRICA’S SKYLINES.
For more information visit www.standardbank.co.za/cib
Issue 30 • Asset Magazine
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Fluxmans Know Property Law Property can be the most important investment you make. It can also be the most challenging. That’s why it makes sense to have the best legal minds looking after your interests. With its team of dedicated experts, Fluxmans are leaders in the field of commercial property law, covering all aspects including sales, purchases, options, leases, developments, joint ventures, finance, and all related conveyancing work.
For commercial property expertise, speak to Fluxmans.
ALWAYS AT YOUR SERVICE Telephone : (011) 328-1700 | Telefax: (011) 880-2261 Web: www.fluxmans.com
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Asset Magazine • Issue 30
Publisher Tony Korsten Mobile 083 410 0144 Office 011 640 1684 Email tony@assetmag.co.za
Project co-ordinator & accounts Hilda Korsten Mobile 072 678 1679 Office 011 640 1684 Email hilda@assetmag.co.za
Sales Gary Allen Mobile 082 455 8180 Office 011 640 1634 Email gary@assetmag.co.za
Editor Claire Cole Mobile 082 353 7929 Office 011 425 5814 Email claire@assetmag.co.za
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THE ASSET TEAM
Design & Layout Christine Isted Mobile 082 570 3284
christine@assetmag.co.za
121225
zoom in to read THE STATUE OF LIBERTY - NYC, USA
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WHAT UNDERLINES THE VALUE OF ICONIC PROPERTIES: LOCATION, LOCATION, LOCATION?
zoom in to read NAA GLOBAL WINNER:
BEST IN SHOW - MARKETING & PR 2014
The value and pitfalls in property trading may not be obvious. We aim to provide you with the best advice and support garnered through years of experience. We have established the ideal platform for you to buy or sell property in an environment that delivers faster results and reduced risk. With High Street Auctions you will be dealing with the market leader. Our investments focus on effective marketing activities, organised transaction processes, advice from seasoned property experts, a world class auctioneer and premier auction events providing you with the best combination of factors for success. Call us today to see how we can assist you in maximising your opportunities on buying or selling property or visit us at our next auction event. Bid with confidence because we only submit the highest bid on auction day!
www.highstreetauctions.com 3rd Floor, 160 Jan Smuts Ave, Rosebank, Gauteng, 2196, South Africa PO Box 704, Parklands, 2121 | Tel: 011 684 2707 I Fax: 086 674 3446
HIGH STREET
Issue 30 • Asset Magazine
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Asset contact details.................................................................. 7 Contents................................................................................... 10 Look for our advertisers in this issue....................................... 10 Editor’s note – Claire Cole........................................................ 12 Newsstand. See back copies over the last year and also subscribe................................................................... 13 Asset News Hub....................................................................... 16 Asset Rate card 2015............................................................... 18 Asset Property Directory 2015................................................. 19 In the spotlight. Hyperlapse photography................................ 20 Book Review. Property Rental & Eviction. The Landlords Guide, by Cilna Steyn....................................... 22 Cover Story Staying relevant in a changing market. Broll celebrates 40 years of enduring success. We interview Jonathan Broll & Malcolm Horne........................ 26 Q & A Sessions Robin Lockhart-Ross - Executive Head of Nedbank Property Finance...................................................................... 42 Davis & Andrew Kisuule – Titanium Window Tint Pretoria....... 52 Paul Olivier & Phakamile Ngqumshe – Jeffares & Green......... 82 Elton Bosch – MD at NUS Consulting...................................... 96 Andre Klopper, Floris Binneman & Clement Lechokgohla – Eris facilities management team............................................ 116 Sean Tompkins and Mark Walley – Royal Institute of Chartered Surveyors (RICS) including RICS Africa Summit... 130 Errol Diamond – MD at Diamond Properties.......................... 122
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Asset Magazine • Issue 30
Features Are Skyscrapers a curse? Opinion piece by Rodger Warren .. 62
Abland
Tall Buildings 2014 in Review .................................................. 70 Sporty Mazda2 set to ruffle feathers, by Henrie Geyser ......... 72 The fifth generation Subaru Outback is now available in South Africa ......................................................................... 78 Women & Crowdfunding. Opinion piece by Hilda Lunderstedt ............................................................... 90
Abreal
Pulse Retail Summit ............................................................. 105 Simon Henstra, winner of the UCT Corobrik Student Architect Award ....................................................... 110 ArchDaily 2015 Building Of The Year Award Winners ........... 114 Launch of Global GreenTag in South Africa .......................... 140
Oilgro
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P R O P E R T Y
F U N D
Issue 30 • Asset Magazine
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CHARLIE BRAVO #419
Look for our advertisers
FAIRLLOP PROPERTY DEVELOPERS LIMITED
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igh Street Auctions you will be dealing with the market leader. Our investments focus on effective marketing activities, organised transaction processes, Nigeria Mozambique from seasoned property experts, a world class auctioneer and premier auction events provides you with the best combination of factors for success.
Fluxmans KnowNEED PropertyBETTER Law
SPACE?
Call us today to see how we can assist you in maximising your opportunities on buying or selling property or visit us at our next auction event. Bid with confidence because we only submit the highest bid on auction day!
of real can owledge cated
Property can be the most important investment you make. It can also be the most challenging. www.highstreetauctions.com That’s why it makes sense to have the best legal minds looking after your interests.
Abreal
3rd Floor, 160 Jan Smuts Ave, Rosebank, Gauteng, 2196, South Africa
With its team of dedicated experts, Fluxmans are leaders in the field011 of commercial PO Box 704, Parklands, 2121 | Tel: 684 2707 property I Fax: 086 674 3446 law, covering all aspects including sales, purchases, options, leases, developments, joint If you need less space, more space or just better ventures, finance, and all related conveyancing work. space, contact Redefine Properties today. We have the place you need to work smarter. To view our portfolio, go to www.redefine.co.za or call 0860DEFINE.
/cib Moving Forward ors in all weather,
TM
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t weight polyconcrete
5803 – 4/14
OFFICE | INDUSTRIAL | RETAIL
Oilgro
TORIC NEWTOWN PRECINCT : : NEWTOWN JUNCTION 2014/04/24 5:49 PM For commercial property expertise, that the Newtown cultural precinct has been undergoing some Fluxmans. and revitalisation over the last few years. Included in this,speak and toadding
ation and vibrancy, is Newtown Junction, which opened in October was designed to be sustainable, retain and restore historical precincts history, but also to create a space relevant to those who city today – in short, the vision was to connect the past, present
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Asset Magazine • Issue 30
GIS TECHNOLOGY FOR ADVANCED GEO-SPATIAL ANALYSES • Retail Studies
s a shopping centre, office space, and a Planet Fitness gym. A Telephone : (011) 328-1700 | Telefax: (011) 880-2261 ay bridge links Newton Junction with Museum Africa and the Market Web: www.fluxmans.com ties are another exciting and prestigious project in the precinct ay, and that Igneous Concrete is pleased to be involved in as well and e news updates.
Uys & White, appointed for Newtown Junction were inspired to use ndard items, but with some custom changes to the design to better PRT18554_Generic_Business 2 ating. Our standard Elongated Organic Ottoman Day (asAdvert.indd seen below) he final design.
INCORPORATING
Market Studies
ALWAYS AT YOUR SERVICE
PropertyAd_03_A4.indd 1
We’re not landlords. We’re people.
LEADERS IN ECONOMIC & REAL ESTATE MARKET INSIGHT
2014-02-26 08:39:55 AM
• Centre Repositioning • Consumer Surveys Special Projects • Mixed Use Developments • Inclusionary Housing Projects • Economic Impact Assessments Africa & Far East • Real Estate Feasibility Studies • Economic Assessments • Socio-Economic Surveys • Impact Assessments
HEAD OFFICE (Gauteng) Tel +27 12 460 7009 Fax +27 12 346 5883 Cell +27 82 898 8667 hein@demacon.co.za www.demacon.co.za Gauteng | Western Cape |Free State North West | Vaal Triangle
2015
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Editor’s Note The African continent remains a place of great promise. One only needs to have listened to the number of comments in this regard at the recently-held RICS conference (which we cover in this issue) to hear the optimism.
Claire Cole
Yes, there are risks. Yes, things are different and there is a lot of work to be done. Some countries are still grappling with their own issues, and will not be investment-ready for some time.
Yet others are stepping up, indicating that they want to do what it takes to be attractive to investors and to be places where people want to do business. If they lead the way and live up to their potential, others can follow in time. On a different note, thank you to all those who have been visiting our recently-launched Asset News Hub and have given us your comments. If you haven’t seen this exciting new addition to our news platform yet, go to http://newshub.assetmag.co.za/svw1 and take a look.
LEADERS IN ECONOMIC & REAL ESTATE MARKET INSIGHT INCORPORATING
GIS TECHNOLOGY FOR ADVANCED GEO-SPATIAL ANALYSES Market Studies • Retail Studies • Centre Repositioning • Consumer Surveys Special Projects
Happy reading!
• Mixed Use Developments • Inclusionary Housing Projects
Claire,
• Economic Impact Assessments Africa & Far East • Real Estate Feasibility Studies
Editor
• Economic Assessments
Find us on
• Socio-Economic Surveys • Impact Assessments
HEAD OFFICE (Gauteng) Tel +27 12 460 7009 Fax +27 12 346 5883 Cell +27 82 898 8667 hein@demacon.co.za www.demacon.co.za Gauteng | Western Cape |Free State North Vaal Triangle IssueWest 30 •| Asset Magazine
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A year’s collection of back copies. Click on covers to read. 5 in 01 e 2 ? ac pl ate ur st o yo al E inf ok e ore bo n R to ica r m th Afr E fo on m uth ER H st So La in ICK L is
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the commercial property magazine with substance Issue 26 • October 2014
Cover Story |
Calling all investors the city of Durban is open for business
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the commercial property magazine with substance
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Cover Story |
Rose McClement
BUSINESS/PARTNERS
Can hotel accomodation have more luxe for less?
launches its new identity and strives to make entrepreneurship the most aspirational human endeavour of all.
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Boulders Lodge unveils its new look
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Asset news hub
Asset News Hub is Asset Publishing’s new and visually exciting content curation and news aggregation portal. News, feeds and social content are automatically updated into our hub and it is suitable for viewing on any device. The format is bold and pictorially appealing. The big and colourful panels draw in readers.
Click here to catch up with the latest news
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Asset Magazine • Issue 30
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Electronic Building Glass Tinting • Advanced permanent electronic PVD glass coating • No films, No bubbles, No cracking, No peeling • Maximum heat deflection and benchmark UV protection • Maximum clarity from inside, full privacy from outside
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Issue 30 • Asset Magazine
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No se ea cr in rs e a ic ye pr n 3 i
Profile & Prices 2015 ce en er nf Co
the commercial property magazine with substance Issue 25 • September 2014
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launches its new identity and strives to make entrepreneurship the most aspirational human endeavour of all.
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Boulders Lodge unveils its new look
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South Africa`s only dedicated digital commercial property magazine.
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Hyperlapse Photography
Stunning cities in hyperlapse
W
itness the urban life of four stunning metropolises through the lens of Rob Whitworth with these “Vimeo Staff Pick” hyperlapse videos. From the unexplored urban life of the North Korean capital Pyongyang to the towering skyline of Dubai, each video explores an incredible sequence of daily living in cities across the planet, including video’s from Kuala Lumpur and Shanghai.
www.robwhitworth.co.uk
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Issue 30 • Asset Magazine
Book Review
Property Rental & Eviction | The Landlord’s Guide by Cilna Steyn
The book covers important legal aspects of rental property management and the eviction process, written in layman’s language for the South African rental property industry. Loaded with tools and smart tips from legal experts, including handy DIY templates.
About the Author Cilna Steyn obtained her LLB Degree from the University of South Africa in 2007. She is an admitted attorney with right of appearance in the High Court. As co-founding partner of the property litigation firm Steyn & Steyn Attorneys in 2008, Cilna started specialising in Eviction Law from the outset. Recently, the firm was incorporated to become SSLR Incorporated, with Cilna as one of its directors.
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She has been serving on the panel of experts for the Law Society of South Africa’s Legal Education and Development division (LEAD) since 2011 and presents annual seminars throughout South Africa on behalf of LSSA: LEAD, lecturing attorneys on eviction procedures and rental claims. Cilna has been featured in a number of magazine and newspaper articles and has appeared on radio and TV. She furthermore attends to regular training engagements with TPN (Tenant Profile Network) and other training venues for groups of rental agents and private landlords on issues related to landlordtenant disputes. A+
Cilna Steyn
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innovators in all weather, light weight polyconcrete
REVITALISATION OF HISTORIC NEWTOWN PRECINCT : : NEWTOWN JUNCTION It is no secret at this stage that the Newtown cultural precinct has been undergoing some sensational redevelopment and revitalisation over the last few years. Included in this, and adding to Johannesburg's regeneration and vibrancy, is Newtown Junction, which opened in October last year. The development was designed to be sustainable, retain and restore historical landmarks to preserve the precincts history, but also to create a space relevant to those who work, live and travel in the city today – in short, the vision was to connect the past, present and future. Newtown Junction includes a shopping centre, office space, and a Planet Fitness gym. A walkway and historic railway bridge links Newton Junction with Museum Africa and the Market Theatre – who's new facilities are another exciting and prestigious project in the precinct which is currently underway, and that Igneous Concrete is pleased to be involved in as well and hope to report on in future news updates. The landscape architects, Uys & White, appointed for Newtown Junction were inspired to use one of our existing and standard items, but with some custom changes to the design to better suite their vision for the seating. Our standard Elongated Organic Ottoman (as seen below) was the starting point for the final design.
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The design of this bench was customised to include closed ends with large radii on all corners, and thus completed as a more “solid” form. Eight of the, now titled Rectangular Pebble Benches, were manufactured in our “soot” shade, and are placed all around the fountains found in the center of the open ground floor of the shopping centre.
Further to the above discussed custom benches, Igneous also supplied the Planet Fitness gym in the centre with benches for its branches, in varying colours chosen by each club. The Newtown Junction branch opted for a custom colour; a vibrant orange which suites its surroundings and atmosphere well.
Although our proud involvement in one of the vital components in the precinct revitalisation has now been completed, we are currently in production with other products soon to be included in the new COSAC building being developed by the Market Theatre. We at Igneous Concrete are both delighted and honoured to be involved in the development and regeneration of this iconic area, and all the heritage it is intertwined with. zoom in to read
Visit our website: www.igneous.co.za Our mailing address is: info@igneous.co.za Copyright © 2015 Igneous Concrete, All rights reserved.
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Cover Story
Staying relevant in a chang
a lifetime’s work but an exciting jo 26 26
Asset Asset AssetMagazine Magazine Magazine ••• Issue Issue Issue30 30 29
ging market -
ourney
Interviewed by Tony Korsten Written by Claire Cole Photographs by Michael Glenister
Issue Issue 30 29 •• Asset Asset Magazine Magazine
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Cover Story
F
orty years ago, Jonathan Broll opened Broll Real Estate in a one-roomed office in The Strand Tower on Strand Street, Cape Town. He never imagined that the company that is Broll Property Group today, would become what is probably the largest service provider to the commercial property industry in South Africa, with substantial representation in Africa, too. “There was no grand plan at the time. I was 27 years old, married with one child and another on the way. The construction company I had been working for had gone into liquidation, and I was unemployed with about R500 in the bank,” he tells Asset magazine. “I had always had an interest in property, and this prompted me to start my own business.” That was in 1975, before computers, photocopiers, faxes and e-mails – when the height of technology was the IBM ‘golf ball’ typewriter. “We did property management, but not in the same way as we understand it today. This was mainly rent collection, and it was physical collection, knocking on people’s doors mostly at night. For the first year it was mainly residential – I picked up my first mandate for a commercial property after about a year – and the only opportunities for me
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to collect rent were in the areas that established companies didn’t want to do the work in,” he says. It wasn’t an easy time to be in business. Jonathan recalls that some eighteen months after the business started, and just as cash flow was picking up, the Soweto riots broke out in June 1976. “It was a difficult time for a small, struggling company. For the next six months after the riots broke out we didn’t do a single deal – not one!” he comments. “We were a very small business then and we had to manage our cash flow very carefully. In those early days for any business, cash flow was everything, and I also had to live off the business. But gradually things started to improve and we grew our cash flow. I tapped into the contacts and networks that I had, and we started to reach milestones.” “I remember at the time there were several so-called large, established proper management companies who most probably weren’t even aware of my existence until at least five years had gone by. Today, some of those companies no longer even exist, and Broll has long since surpassed those that remain. After operating for 15 years in Cape Town, Broll went national and opened
a Johannesburg office. The move was more of an organic decision to grow with a client than anything else at the time. “Allan Gray, our major corporate client, bought a building called Benmore Gardens in Johannesburg. They said we could either go national with them or lose them as a client in Cape Town, so we opened our Johannesburg office,” Jonathan says. Within about five years, that office became Broll’s national head office. From there, things grew by leaps and bounds. The company ventured over the border 15 years ago, opening its first office in Namibia some 25 years into the life of the business. Today, Broll Property Group operates in 21 African countries and has major offices all across the continent. It has expanded its offerings and service lines, opened offices where there is potential in the market, and helped empower people to fill the required roles.
Adapt with the market – or die Broll’s Group CEO, Malcolm Horne, puts the company’s success down to two main reasons – the quality of its people in the business and the drive and passion that they have to remain relevant and value adding in an ever changing market. “What Broll Property
Group has done very well over the years is adapt its business and service offerings – it has never stagnated and it continues to evolve and adapt,” he says. “It is important to be aware of the trends in the market, not to be complacent embracing change at all times. Understanding what value and where you can add value remains not negotiable in the drive to offer superior service to our clients,” he adds. While in the early days of the business, the whole property sector was quite different, Malcolm believes that Broll’s offering was still market leading at the time. “The property industry 40 years ago was quite immature, and as the sector developed, we developed with it and stayed relevant,” he notes. Issue 30 • Asset Magazine
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Cover Story
This view is echoed in Jonathan’s comments about the way business has always been done. “We always tried to exceed our clients’ expectations. We also never lost sight of the fact that whilst we had to collect rent from the tenants and were therefore sitting on the landlords’ side of the table, the tenants were the reason for our existence. We were careful to cultivate our relationships not only with our clients but with their tenants as well, because it’s ultimately the tenants who pay the rent,” he points out. Today, Broll’s client base is diverse, varying from investors and occupiers of space who are contracted clients with international first world expectations regarding their property needs, increasingly recognising that they don’t have the expertise or knowledge of the property market, and are therefore appointing professionals to assist them with their office needs. Yet this, and several other aspects of the business, are relatively new service lines. “We have never limited ourselves in the growth of the business and in what opportunities we were prepared to take on,” says Jonathan. “We have also been very nimble – we change the business model as the market, technologies or the business environment changes. We believe that if the rate of change within a company
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isn’t faster than the rate of change in the general economy, you won’t last long,” he elaborates.
Success isn’t an accident While it’s important to be agile and respond to market changes, it is equally important to provide a consistently high standard of service. This is another area in which Broll has excelled. “We’ve found that during the past 40 years, South Africa has gone through five major recessions or depressions in the economy. Yet each time we’ve come through it – and we have increased our market share during each of those recessions.” He believes that while it is easy for anyone to offer property management services in boom times, experience and expertise will always win in hard times. “Each time, when the economy recovered, we were well positioned to continue our growth and expansion,” he notes. Malcolm, who has been with the company since 2003, has seen the growth and development of Broll Property Group over the years, and believes that there are three key events that helped take the company to where it is today. “The first was when Jonathan Broll partnered with Alan Wallace, who was a broker. Alan had a tremendous influence in that to a large extent, he developed the transactional side of the business. He and Jonathan
CHARLIE BRAVO #419-15
NEED BETTER SPACE?
If you need less space, more space or just better space, contact Redefine Properties today. We have the place you need to work smarter. To view our portfolio, go to www.redefine.co.za or call 0860DEFINE.
OFFICE | INDUSTRIAL | RETAIL
We’re not landlords. We’re people. Issue 30 • Asset Magazine
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Cover Story
had different but very complementary temperaments, and they each brought their unique qualities to the mix.” “The second was when Allan Gray gave Jonathan the ultimatum that he would lose them as a client if the company didn’t come to Johannesburg. In effect, because of the good service they had received, a client pushed us to open an office in Johannesburg and it wasn’t easy, because it was an unknown market. I know that Jonathan made huge sacrifices, coming up from Cape Town for two weeks out of every month to run the Johannesburg office until an MD was appointed.” The third event was Broll Property Group’s acquisition of Anglo American Property Services in 2001. “That really put us on the map – we opened the Durban office, we had the platform and the economies of scale in property management, and suddenly it brought the Broll brand to the fore,” he says. When Malcolm took over as CEO in 2010, the company was already well set on its current trajectory. Part of its vision included broadening its line of service offerings and expanding its presence in other African countries. Nevertheless, his leadership has helped cement Broll’s position as a leader in the market over the past
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five years. “I think we have been very steadfast in focusing on our vision, but it has been hard work to convert that vision into reality. At the same time, property markets have matured as well, especially the market in South Africa,” he notes. While offering a diverse range of professional services to meet many different client needs, he points out that the company has remained very clear on its mandate as a service provider, making sure never to compete with its clients and but to ensure that it is able to add value to their businesses.
Building an evolving business Today, with assets under management now exceeding R125 billion, Broll Property Group’s services include asset management, auctioneering, property broking, corporate real estate services, facilities management, project management, property management, research, retail leasing and consultancy, and valuation and advisory services. The auctions and facilities management services are the most recent additions, with the auction service having been launched just a few months ago. With certain of the newer service lines, Malcolm points out that international trends and models have helped play a role, as with the previously mentioned example of Barclays and Absa’s
THE BROLL REPORT 2014 / 2015
broll.com
Click here to read the report
Issue 30 • Asset Magazine
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Cover Story requirements for corporate real estate services. “Our association with CBRE in that respect has been very helpful – we have had a lot of exposure to the models of service providers at an international level. Previous models in South Africa were largely focused on property management with perhaps a little leasing on the side, but we saw that there were bigger opportunities. We went ahead and invested in the infrastructure to capitalise on those opportunities, and equipped our service teams to do the work. Aspects like the corporate real estate business take time, but you have to be patient, understand what you want to achieve and stick to it, not doubting yourself,” he elaborates. With the occupier market coming to maturity in South Africa, and occupiers needing to be far more professionally catered for than ever before, Broll’s
timing on this service line has been just right. “I think a lot of businesses in South Africa didn’t see the maturing of this market taking place, so a few landlords got a surprise when they realised that tenant services are professionalising, but we were fortunate enough to have clients that understood the value of the service, and who embraced this change in the market. Our clients helped us break through a lot of barriers and had an important role to play in the creation of these new service lines fully understanding the value that they could ultimately derive from these services,” he says. All this growth could very well translate into a large, cumbersome organisation where clients get ‘lost’ and individual attention diminishes. In order to continue giving clients the personalised service they have come to expect,
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Asset Magazine • Issue 30
2003
2004
Ghana office opened
1990
• CBRE affiliate agreement signed
Frst expansion into Africa Broll Namibia
1980’s
• Nigeria office opened
Johannesburg head office opens
1975
Further growth in Cape Town
Founded in Cape Town
Broll Property Group Timeline
2006
2014
• Broll Mozambique (March)
2013
• Broll Auctions and Sales (January)
Purchase of WSP Facilities Management
2012
Zambia commenced 1 March
2010
More than just making sure that it is possible to cater to new needs developing in the market, it has been important to remain up to date with changes in the structure of the market itself. As Jonathan points out, this business is as much a knowledgebased business today as any other. “People only really want to pay you for your knowledge of the market, your research, experience and expertise. Many routine real estate services are now digitised and just about anybody can offer them, so there’s no differentiation between us and our competitors when it comes to those. It’s the extra value-add that people are looking for, and are prepared to pay
• Asset management – new specialised service line (this falls under Investor Services) • Rwanda office opened • Indian Ocean office opened • East Africa office opened (Kenya, Uganda and Tanzania)
2007
SA service lines expanded
Malawi office opened
Part of the requirement for new service lines has come from a rapidlyevolving technological environment within buildings themselves. Building information management, life cycle management and green building have all become important parts of creating and maintaining a building over the past decade or so. In fact, many of today’s disciplines didn’t even exist ten
or fifteen years ago. It is important for any company that wants to remain at the forefront of its game to be able to meet the needs for services in these fields.
• Broll turns 40 (January)
Malcolm says that the company operates with a very flat management structure and a hands-on approach with clients. “Client relationships are critical and we like the heads of our divisions to be at the coal face. Each division is like its own business in the sense that they are very focused on client needs and on their specific offerings.” He goes on to say that the hands-on, personalised service approach has been part of Broll’s success right from the early days.
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for,” he comments. “You also have to develop more and more specialised services with a company, because clients are looking for one-stop services – they want to be able to have one company meet their full spectrum of property needs. That means one has to increase the depth of one’s skills and experience,” he adds.
Africa beckons, but SA still ripe with opportunities Broll Property Group has steadily expanded beyond the borders of South Africa, and is now well established across the continent. Yet South Africa continues to be a market full of opportunities – more so than many would often have expected. “If you had asked me a few years ago whether we felt there was much more potential in the local market I have said possibly not, but the South African market is so strong that it has surprised many of us. Just a few years ago, our African operations made up about 26% of our income and the vision was to grow this contribution to 50%. What has transpired in fact is that the contribution from Africa has reduced to about 14% in spite of accelerated growth in our African operations, as a result of growth in - purely on the back
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of growth in the South African market, and the key to our growth has been diversification of our service offerings,” Malcolm comments. “It’s become clear that one shouldn’t underestimate the South African market, and I think the key to that is the diversification of offerings. A lot of the businesses where we’ve created new service lines are still in their infancy, and while we’ve managed to grow turnover in those areas across the board, there is still a lot of room to play,” he adds. Having said that, all of Broll’s service lines are being developed into the African countries that it serves, as the markets in various different countries will also require them as they develop.“We are supporting those service lines into Africa, which is strategically important for us. We have worked hard to create our African platform, which not many other service providers have done, and it has already proved a large advantage to us when vying for new business. Ultimately, we would like to see one brand and one service line running across our entire African business,” he elaborates. Continued on page 40
Quotes from
Employees
Kathy Hale (Centre Manager) and Nigel Hale (Portfolio Executive) “When we joined Broll in November 1993, the Port Elizabeth office had opened earlier that year and Broll only had Property Management and Broking Divisions. We had joined a family business with Jonathan Broll and Alan Wallace at the helm, Cape Town was the head office with small offices in JHB and Durban. However we knew immediately they wanted Broll to grow and it has; from a family business into the African leader in the Property Services Industry without losing touch of the individuals that make Broll special. To be part of this journey and to contribute to it has been wonderful; but what really stands out over the years is from the bottom to the top, the fantastic calibre and contribution of the people of Broll, our fellow “Brollies”, who have made it all happen - plus to add to that - we have fun doing it !!”
Berry le Grange (Assistant Accountant: Group Finance) “I started at Broll on 1 November 1979 as the messenger and at that time we had a staff contingency of plus minus 8 people. At that time Broll’s main focus was residential and retail (on a small scale) management. Broll as a company grew rapidly and we moved from The Strand Towers to The Terraces (where we are today). I have since moved to a position as Assistant Accountant. Other than property management, Broll also encompassed transactional business (broking), valuations and retail management. I am proud to be associated with Broll Property Group, I am one of the longstanding employees.”
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Paula Cooper (Divisional Director: Property Management, Sundry Gauteng) “I have found that happiness is the key to success. If you love what you do for a living you will succeed and over the years I have been with Broll, the company culture and brand has been consistently such that whether one is a CEO or a tea lady, passion for the task at hand makes for a fulfilling life and work experience.”
Louise Phele (Admin Manager, West Africa - Broll Property Group) “I started working for Broll on 1 September 2009 as tenant administrator and was promoted to a lease administrator within six months and from there it was no looking back. I still remember when I started working for Broll, I had very basic computer skills and NO property experience. I was then one of three people selected for the mentorship programme which was a huge opportunity because I had the chance to work in all different divisions, portfolios and this was when I came to the realisation that admin is where my passion lies. I thoroughly enjoy what I do, it is hard work, very challenging and fulfilling. I am now working on the West Africa portfolio. Working for Broll is an honour, being associated with them, priceless. The company and management has been very good to me and I will advise anyone to consider making a career out of property. I always talk to our young black school leavers and advise them on this, because this is where I think they can be successful. If you are a go getter, then property is where you should be. You must be prepared to work hard.”
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Africa Marco Wenk (Managing Director, Broll Namibia) “Broll’s inspirational journey and tremendous growth over the past 12 years has not come without facing many challenges along the way. Our success could not have been achieved without a meaningful purpose, strong values and a highly motivated team who continuously strive to create value for our clients. I am extremely proud to have been able to play my part in contributing to Broll’s unbelievable growth over the years and am confident that the Broll Property Group will only go from strength to strength. “
Group CEO, Malcolm Horne on the opening of Broll Mozambique “Broll Property Group has entered into a joint venture with Turconsult Limitada in Mozambique in line with the Group’s expansion strategy into Africa and the Indian Ocean Islands. Coupled with our affiliation with CBRE, Broll can now take advantages of the many opportunities in this exciting and emerging market to represent local and the many international clients the Group represents with their full package of property services offered to the industry. We are committed, excited and ready to establish ourselves in Mozambique where we believe there are excellent prospects for the Group and our JV partner.”
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Developing talent is a necessity All this points to the need to develop excellence in the various service lines so that this platform can be used to its full advantage. The work of the Broll Academy, which has been in existence for many years but which has also adapted as the market changed, can make a difference here. The major focus of the Academy’s work these days is to assist employees in developing their practical skills in a hands-on fashion. This has relevance not just in South Africa, where skills development is just about an imperative in every business, but in other parts of Africa, too. While the skills and level of qualifications in certain disciplines in other countries can be excellent, often there are practical skills needed to bridge gaps – especially as the market evolves. With the opportunities for growth that Broll has seen even just in recent years, it is important to keep developing a pipeline of talent to meet the demand for skilled professionals in the industry. “In all businesses, it is key to train talented young people and bring them up through the organisation,” comments Jonathan. “They are the leadership of tomorrow. You have to make sure that you bring in interns and young graduates, give them the appropriate training and mentoring and impart your knowledge and expertise to them. The young people of today will be the leaders in ten years’ time and we need to take cognisant of that,” he adds.
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A challenging but exciting journey ahead Broll Property Group’s objectives for the next five years seem clear. “We’re well on our way to internationalising our service offering across Africa, and it would be nice not just to be compared with the best in Africa, but with the best in the world,” says Malcolm. “I believe that as Africans we can lead. We often underestimate the value that we can add, the tenacity we have, our knowledge and our practical skills – often more so than companies in first world markets because our markets are a lot more difficult. We can learn from the developed world but we can also deliver a meaningful contribution to the developed markets,” he goes on. In the next five years we will be consolidating our footprint across Africa, developing it to a point that if any company has commercial property needs on the African continent, we are able to service them in all countries,” says Jonathan. Although it is easy to talk about Africa as a single entity, the reality is that each and every country has its own unique market conditions and challenges, so the journey going forward will be to get to grips with the dynamics of each of the markets that Broll operates in, in order to offer the best service. That’s not an overnight journey. “If you want to offer advice in those markets you have to make sure you understand them and can talk to them professionally. Ideally, what we’d like to achieve is to be able to offer the same standard of service in each country. Our service is what we pride ourselves on and that is exactly why we are working hard to make sure that our service line specialisation is first world, first class and the best in the market. That’s a lifetime’s work,” he concludes. A+
CEO Broll Property Group Issue 30 • Asset Magazine
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Interview with Robin Lockhart-Ross
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Interviewed and written by Claire Cole Photographs by Michael Glenister
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Interview with Robin Lockhart-Ross
R
obin Lockhart-Ross has come into the position of Executive Head of Nedbank Property Finance at an interesting time for property and for Nedbank. His appointment from 1 November 2014 followed the early retirement of Frank Berkeley. Shortly afterwards, Nedbank’s Corporate and Capital clusters were merged, resulting in some internal restructuring and the inclusion of Nedbank Property Finance in Nedbank’s new CIB cluster. Asset magazine had the opportunity to talk to him about his views on the property market and what he hopes to achieve in his new position.
‘Getting to know you’ Rob, as most of his colleagues know him, grew up in Durban. He spent most of his childhood there and studied at what is now the University of KwaZulu-Natal. He is a chartered accountant by training, but says that he originally wanted to be a lawyer. “I studied subjects like Roman Law, Constitutional Law and Public International Law as part of my B.Comm, but around about the time I was finishing my degree, there was a lot of talk about making oneself exportable. I converted my qualification to a CA, but after that I specialised in tax and immediately made myself unexportable!” he laughs. During the course of his career, he worked as a tax manager for PriceWaterhouseCoopers in Cape Town, and as group tax manager for the Tongaat-Hulett Group which owned most of the sugar cane land to the north of Durban at the time and was planning to develop it. These development plans were hampered following a previous landmark court case (the Receiver of Revenue vs Natal Estates) which held that any development profits made by a landowner would be taxable. “My job was to restructure the group and make it tax effective for Tongaat-Hulett to start developing properties at scale,” Rob recalls. This ultimately resulted in the creation of Moreland Developments (which has subsequently been renamed Tongaat-Hulett Properties), where he spent several years as financial director. It was during this time that Moreland Developments developed the residential estates at Umhlanga Ridge, Mount Edgecombe Golf Course Estate and Zimbali, the Umhlanga new town centre and the La Lucia Ridge Office Estate, and a variety of industrial properties like Riverhorse Valley and Briardene. “It was an enormously exciting and pioneering time, and was very rewarding,” he comments.
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Interview with Robin Lockhart-Ross
After about seven years in this role, Rob moved on to join BoE Corporate, which at the time was headed up by Mike Brown (Nedbank’s current Chief Executive). He joined the property division there as head of credit and risk, where he stayed (apart from a brief secondment to head up NBS Home Loans) until the merger of Nedbank, BoE, Nedcor Investment Bank and the Cape of Good Hope Bank to form the current Nedbank Group. He held the position of head of risk for Nedbank Corporate Property Finance for some 12 years until Frank Berkeley’s retirement at the end of August last year.
In it for the long run Although it is still early days in his new position, Rob comes to the job with years of experience in property finance and a thorough knowledge of the clients and properties on Nedbank Property Finance’s books. He has also gained a sound knowledge of the property market overall during the course of his career. “One of the things I keep saying to staff and colleagues when we go on road shows and to clients when we host our forums, is that the enemy in the property industry is not the Reserve Bank for hiking interest rates, or the government for its lack of policy guidance, or Eskom for not keeping
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the lights on – the real enemy is the short term view,” Rob comments. “If one takes a short term view in this industry, nobody is going to do anything worthwhile, and our clients wouldn’t realise many of the lucrative development opportunities out there,” he elaborates. Fortunately, he adds, property is an industry of optimists. “It is extraordinary how robust, resilient and resourceful property developers and investors are, and how optimistic! Very little fazes them, they roll with the punches and bounce back.”
Newtown Junction, Johannesburg
Rob adds that Nedbank’s approach is also one of taking the long term view and that this is something which differentiates the bank in the market. “We take a ‘through-the-cycle’ view and we’ve stayed in the market fairly consistently through good times and bad. Some of our competitors have turned the lending taps on and off, but we believe that if you want to be in the commercial property game, you’ve got to stay in the market for a sustained period of time, and you can’t substantially change your propensity to
lend,” he points out. “Obviously you’ve got to vary your credit appetite and your pricing according to market conditions, and we make sure we lend to clients with financial proven substance and proven track records,” he says. Because of this approach, Nedbank now has approximately 40% market share in commercial property finance. Although concern is sometimes raised about Nedbank being overweight in commercial property lending, Rob points out that one has to look at a Issue 30 • Asset Magazine
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bank’s aggregate exposure to property, inclusive of residential, and that Nedbank is probably underweight in residential lending. He also notes that the bank has a commercial property finance book of quite extraordinary credit quality, with low credit loss and arrear ratios. “Judging not only by our book growth but also by debt servicing, recoveries and bad debts, the property industry as a whole has held up remarkably well over the past five years” he says. He points out that whereas GDP growth for South Africa last year was under 2%, the recently released IPD statistics showed total returns of 12.9% for commercial property in 2014. “That’s a reflection of the optimists in this industry – they’re seeing beyond the current difficulties,” he comments. What excites him and the team at Nedbank Property Finance is assisting those optimists to realise development opportunities by providing funding and advisory services. “The exciting part is keeping close to clients and getting involved in their projects. It’s sometimes easy to get bogged down in the process of banking. What we like to do is take our staff out to visit our clients’ developments a couple of times a year, so that they can see what they
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have helped to finance, and it’s always a great experience for everyone,” Rob says.
Where to next? There’s no doubt that Nedbank Property Finance has had a very successful run of it in recent years. Around the middle of last year, NPF’s book exceeded R100 billion in value for the first time – a target that the division had set itself to reach by the end of 2015. “Notwithstanding this growth, the challenge now is to keep up that momentum in an environment where there are a lot of obstacles to growth in the property sector,” he comments. “Although interest rates will probably stay flat, there are infrastructure constraints, power issues, lack of capacity, increasing rates and taxes, and rising administrative costs. Some sectors have substantial vacancies and there is potential oversupply looming in some nodes, so none of that is really conducive to rapid growth. Nevertheless, the commercial property market does carry on growing,” he adds. The expectation is that NPF’s growth path will be flatter than it has been over the past two years, but Rob and his team have set their sights on
achieving double digit book growth on a sustainable basis through to 2020. “We have seen a lot of growth in the last two years lending into listed property and into retail,” he points out. The listed sector has undergone massive changes in the past decade, and particularly in the last two or three years. “Investor appetite, particularly institutional appetite, for listed fund paper is quite extraordinary,” he says. That is both good and bad news for NPF, because while all that business activity generates demand for funding, many of the listed funds now have their own ratings and can source funding on the debt capital markets as an alternative to bank lending. “We also lent quite aggressively into shopping centres during 2013 and 2014,” Rob says. NPF has funded developments such as the massive new Mall of Africa in Midrand, Forest Hill in Centurion, Bay West Mall in Port Elizabeth, the new BT Ngebs Mall in Mthatha and Newtown Junction in downtown Johannesburg. He comments that NPF will probably be more cautious in funding retail going forward. There is probably limited space left for new regional or super-regional centres in the country but there is
Forest Hill, Centurion
Bay West Mall, Port Elizabeth
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still massive demand in the rural areas and former townships, although these opportunities come with an element of risk, so it is crucial that developers in these markets have established track records and that the developments are well supported by the major retail chains. “The small neighbourhood centres have mostly done well, and there will always be a place for these. It’s the middle tier of shopping centres – the ones that used to be dominant in their areas until a bigger regional centre got developed nearby – that one needs to watch closely,” Rob adds. He says that the office sector is the most concerning at present, given that some of the most popular nodes around the country are experiencing an oversupply of stock and higher vacancies. These include Sandton, Cape Town and Umhlanga. As a result, NPF is only lending on tenant-driven office developments at present. For a handful of larger clients such as the property funds, they would be prepared to lend on spec, although the number of such developments is lessening as speculative developments become riskier. “We do believe that there’s a window of opportunity in residential property at the moment,” Rob says. “We’re seeing a number of high-rise sectional title schemes taking shape around
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Sandton and Rosebank that are driven by living closer to places of work and entertainment. We’re happy to support some of those schemes if they are substantially pre-sales driven, and if they are being developed at manageable scale, because the window of opportunity on residential can close quickly,” he adds. “Another area in which we see good potential for the next year or two is industrial property,” he notes. Much of the industrial development over the past decade has been warehousing, logistics and distribution facilities rather than large factories – driven largely by growing retail demand. As this development has progressed, certain obvious logistics nodes have emerged around areas such as Waterfall, Germiston and Longmeadow.
An exciting, but different, future Looking ahead, Rob agrees with those in the industry who believe that one of the biggest drivers of growth going forward will be transport hubs and corridors. There is already evidence of the transformation that functioning public transport routes can have in areas such as Rosebank, Johannesburg. “Fifteen years ago Rosebank was full of problem buildings – tenants had fled and buildings were run down. The area wasn’t in great shape. Not long after the Gautrain
station was put in there, the area started to turn around. Hyprop has refurbished Rosebank Mall, Redefine is busy developing a residential block – there’s new life in the area,” he notes. He believes that mixed use nodes with live, work, play, learn and pray components will follow as a result of the changes in development patterns that transport corridors, among other things, will bring. In addition to maintaining NPF’s leadership position in terms of market share, Rob says he’d like the division to play a greater “thought leadership” role in the industry, too. Part of this will involve finding ways of sharing the bank’s intellectual property with clients, but it goes further than that. Nedbank sponsors a number of respected industry events like the Green Building Council of South Africa’s annual convention and the South African Council of Shopping Centres’ annual congress. It also sponsored the first ever REIT conference last year. “Green building is very important for us, and it’s something we have always tried to take a leadership position on,” he comments. Nedbank has recently funded the development of a rating tool for existing buildings,, known as the Existing Buildings Performance Rating Tool, and has sponsored some of the previous
Mall of Africa, Midrand rating tools developed by the GBCSA, too. Although green building hasn’t gained that much traction in the market as yet, we can see it’s coming. It hasn’t really been seen as an economic necessity, and valuers haven’t been applying lower cap rates and expense ratios to green buildings simply because they haven’t seen their performance yet,” Rob explains. “Three or four years on, one can prove the operational efficiencies and at that stage it’s easier to ask a premium for your green building. That said, people are taking it a lot more seriously, and certainly the big corporates are insisting on their buildings being green.” Looking at the big picture, taking NPF to the next level is not just about the rands and cents. It’s about taking that longer term view, being open for business in a way that mitigates risk, encourages growth and ensures prudent investment, and contributing to debate and discussion in a way that promotes a better built environment. That’s enough to keep anyone busy! A+ Issue 30 • Asset Magazine
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Interview with Titanium Window Tint
Interviewed by Tony Korsten and Claire Cole Written by Claire Cole Photographs by Michael Glenister
The Kisuule family L to R Back: Andrew, David L to R front: Davis, Jane. 52
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Interview with Titanium Window Tint
T
itanium window tinting is something different. It’s an entirely new way to tint glass for cars and buildings, based on Russian space shuttle technology. Individuals and companies now have an alternative method of tinting glass which will provide them with a high performance, permanent tinted solution. The technology is relatively new in South Africa, and tinting services are provided to customers by Titanium Window Tint based in Montana Pretoria. We spoke to the founders and owners of this family business to find out more. From a technical point of view, the process of titanium window tinting involves the use of a titanium cathode process developed by Russian scientists in the 1950s. The original intention of the tint was to allow cosmonauts to see out of the space shuttle windows whilst protecting the interior from the harsh solar radiation out in space. The process continues to be used today by NASA and various other parties, and was used on the Mir Space Station. Interestingly enough, one of the Russian scientists involved in developing the process came to live in South Africa several years ago. Davis Kisuule, a physiotherapist in private practice in Pretoria – an entrepreneur for almost two decades at that stage – picked up a leaflet about titanium tinting in a car dealership several years ago. “I was looking to have my car windows tinted at the time but not with the dark visually limiting type of offerings
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Interview with Titanium Window Tint
that I had seen so far, so I decided to go and investigate. The owner of the business and I ended up having a long conversation about the technology,” he recalls. When he went home and told his family that he was going to start a business doing the same thing one day, they didn’t take him seriously at first. But everyone loved the elegance the tint added to the car, and the heat reduction of the car’s interior even when parked in the sun. “I knew from the start that this was something I wanted to look at trying, so we talked about setting up a franchise. I have always been a person who likes to try new things and this looked like a good opportunity to set up something for the future,” Davis says. Before becoming a self-employed physiotherapist, he worked for government for several years. Although he intends to continue his physiotherapy practice for the meantime, this business presented an opportunity to build something that his family could get involved in running and which could be a new avenue for him to explore. In March 2014, after spending a number of months assembling the equipment, getting initial staff trained, and getting the premises ready, Davis
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and his family opened Titanium Window Tint Pretoria in Montana. “When we first started we focused primarily on cars, but soon we realised that we could extend the offering to owners of buildings, and we’ve done several of these successfully. Our biggest challenge is really to build an understanding about what the product is. Many people think in terms of a laminating process or think that we can take the product to them. Our process requires that the glass is put though a fairly large machine to do the tinting, so we need to do it at our factory premises,” he says. Having said that, it is possible to tint fairly sizeable pieces of glass, using the machine which was custom designed and built for them by the same engineer who designed the process. Titanium is the hardest natural metal known to man. This extremely hard metal is permanently placed into the surface structure of glass by means of sputtering – the removal of surface atoms (vaporization) by a momentum transfer process from bombarding energetic atom sized particles. In an extreme vacuum and in the absence of any other atomic particles, a titanium cathode is excited by electrically vapourizing atomic particles of the titanium and bombarding these
excited atoms onto the glass anode (window pane). The effect of this is the titanium coating will not fade, bubble, become matted or flake, and can only be scratched off by scratching the glass itself. Davis’s son, Andrew, says that different shades of tint can be achieved. The tinting of car windows is completely legal as long as the tint doesn’t exceed the required legal maximum percentage allowed. Glass for buildings whether for internal or external use can be tinted as required by the user. The tint has received certification by the National UVR/UVB testing laboratory ( Photobiology Laboratory) for having an in-vitro sun protection factor (SPF) of greater than 50 (SPF50+).
“Because I come from a medical background, I like to be scientific about the way I do things and I believe it is important to have the credibility that SABS approval will give the product,” Davis says. Request was made to SABS to test the product for heat deflection. SABS is in the process of acquiring the technology which is hoped to enable them to conduct the test. “I am sure my product will pass with flying colours if or when the test becomes available,” he comments. One of the benefits of using titanium window tinting for buildings is its excellent sun control properties. The number of green building designs making use of high performance glass to control solar glare and heat gain is on the rise, and a product like this offers a wonderful alternative to some Issue 30 • Asset Magazine
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Interview with Titanium Window Tint of the others on the market. “One of the features of titanium tinted glass is that its mirror-finish effect allows people inside a building to see out easily, but people outside cannot easily see in,” comments Andrew. “It provides almost total privacy. It can also be used as one-way glass for things like market research facilities, police interrogation rooms or even in reception areas where people inside a workshop want to see reception, but perhaps visitors to the business don’t need to see through into the workshop,” he adds. Although the official figures regarding heat reduction still have to come out of the SABS testing process, titanium tinted glass certainly offers a dramatic reduction in heat gain, as informal tests of the temperatures inside cars with and without the tint, which were parked in the sun, have shown. It can be applied in various shades (preferably during the building stage before glass is put into the window frames)
Titanium Glass tinting offers you the following: 1. Improved building performance: The titanium tint selectively reflects a portion of incoming solar radiation, limiting HEAT, UVA and UVB penetration into the building, potentially decreasing the need for air-conditioning and making your building more energy efficient, while allowing a good amount of natural visible light through. Titanium Window Tint Pretoria has undergone the South African UVA/UVB standardisation laboratory testing which it has passed with excellence in accordance with The Cancer Association of South Africa’s (CANSA). This certifies glass tinted by Titanium Window Tint Pretoria as one additional product to mitigate exposure to skin cancer causing factors. The next stage is currently underway whereby CANSA will finalise their accreditation based on the certification by the standardisation lab. It has also undergone SABS light transmittance standardisation testing in relation to vehicular glass. (SANS 1193) Presently awaiting SABS to acquire glass heat reduction testing equipment for standardisation testing of our product. 2. Visual harmonisation: Titanium – coated glass offers better harmonisation with spandrels, metal / aluminium panels, wood, extrusions and other building materials. Titanium coating offers generous levels of visible light and offers colour neutrality where necessary. The titanium tint provides a bold, crisp exterior
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Interview with Titanium Window Tint
appearance, along with a dynamic building surface that changes to reflect the colour of the sky, the passing of clouds and the different times of day. 3. Privacy: Titanium coating makes it possible to see out, while restricting prying eyes from outside, in order to preserve privacy during the day. The product can be tailor-made to provide for one-way looking glass, as used in police stations (for identification parades purposes etc). 4. Glare Control: Titanium coating affects visible light transmittance. It allows just the right amount of natural light into a building, while at the same time reducing glare and the need for window blinds and other interior shading devices. 5. Affordability: It is applicable to any type of glass 4mm thickness upwards, making it available to the man on the street. TWT Pretoria caters for any building type ranging from social facilities and housing to corporate buildings. The benefits of using titanium tinted glass in a building are several. While it is entirely possible to remove glazing from existing windows for tinting, this takes extra time so the ideal time to tint the glass is prior to installation. Customers just need to deliver the glass to Titanium Window Tint’s premises and the tint will be carried out to their desired specifications. “We are really keen to expand our services into the corporate environment and look at providing titanium tinted glass to commercial and industrial customers,” says Davis. The company has already successfully done windows for several residential projects, but the potential to offer a high performance product to a market in which the environmental performance of buildings is becoming increasingly important, is excellent. We see ourselves being big players in the next few years as far as contributing to the beautification of our built environment, the reduction of the country’s power consumption, and contribution to the health of our clientele by mitigating carcinogenic factors. A+ For more information, please visit www.titaniumwindowtintpta.co.za, e-mail us at info@titaniumwindowtintpta.co.za or call the workshop at 078 363 5882.
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The History of Titanium Titanium was discovered in Cornwall, Great Britain, by William Gregor in 1791 and named by Martin Heinrich Klaproth for the Titans of Greek mythology. The element occurs within a number of mineral deposits, principally rutile and ilmenite, which are widely distributed in Earth’s crust and lithosphere, and it is found in almost all living things, rocks, water bodies, and soils.
Martin Heinrich Klaproth
Titanium can be alloyed with iron, aluminium, vanadium, and molybdenum, among other elements, to produce strong, lightweight alloys for aerospace (jet engines, missiles, and spacecraft), military, industrial process (chemicals and petro-chemicals, desalination plants, pulp, and paper), automotive, agri-food, medical prostheses, orthopedic implants, dental and endodontic instruments and files, dental implants, sporting goods, jewelry, mobile phones, and other applications. A+ Source
Wikipedia -http://en.wikipedia.org/wiki/Titanium
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Opinion piece by Rodger Warren
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received an intriguing tweet from The Economist, on my twitter timeline, one morning: ‘Towers of Babel: Is there such a thing as a skyscraper curse?’ Perhaps, a question posed as a result of my articles on the advantages of vertical cities, and the benefits of compact cities versus the postmodern urban sprawl mythology or urbanism. The tweeted article focused more on the economic time period, and the possible greed of property developers, rather than on the fundamentals of urban planning. It triggered debates from historical periods; when the world’s first skyscrapers were built and the effect these had on the economic situation of the time - a topic still hotly debated: Are there positive or negative effects during and after these builds or is it predominantly ego based?
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Opinion piece by Rodger Warren
Most of the tallest buildings in the world are located in the US. These skyscrapers were originally built in the United States of America as a symbol of economic strength - based on their increasing global business operations from the 1890’s. However, the popularity of tall buildings has recently decreased, not only in the US. These buildings seem to have lost their symbol of power, wealth and importance due to the postmodern urban planning methodology that favours urban sprawl. And thus suburban living has instead become more attractive. However, in developing countries tall buildings are still attractive because these countries are striving towards ‘announcing themselves’ in the global business world. They are familiar with the negative effects that urban sprawl has on city management, and of the higher costs involved in both monetary value and in time spent, to be able to be part of the economy. And besides skyscrapers are distinctive landmarks! Studies concluded by academics, such as; Jason Barr, showed that in the 1920’s, property developers added four to six extra floors to their buildings just so that these buildings could stand out in the skyline. But is it safe to suggest that the world is in a skyscraper boom? According to The Economist, nearly 100 buildings taller than 200 meters were constructed during 2014. This poses an interesting question: Are these buildings predominantly built at a time when the world economy is at its lowest point? According to the table below, it undoubtedly seems like it.
Table Published in “The Economist” 28 March 2015
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Zoom in to read.
Some researchers even suggest that the ability of most market indicators to predict severe business cycle changes are weak compared to the skyscraper index. For more than 80 years research has been done on the business dynamics and economics of skyscraper. More recently, it was found that skyscraper development helps to kick start stock markets. But the construction of recordbreaking skyscrapers also triggers subsequent stock returns that could lead to over-confidence. One must consider that most of these skyscrapers are planned during the peak economic cycles and completed when the economic cycle is in its downward spiral. A typical skyscraper project does not happen overnight. It takes at least 36 months for the zoning process, another approximately 30 months for the planning and preconstruction period and then at least 36 months to construct. This means that a skyscraper project will take approximately nine years from inception to completion. Two well known skyscrapers in South Africa, The Carlton Centre and The Ponte were built in the 1970’s, during the Oil Shock period. This period was known as the 1970’s Stagflation. Economists explain stagflation as a situation in which the inflation rate of a country is high, the economic growth rate begins to slow down, and the unemployment rate remains high. This happens when the productive capacity of an economy is reduced by an unfavourable supply stock, such as; oil – meaning there is a short supply of oil and thus the oil price is increased for all oil importing countries.
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Opinion piece by Rodger Warren
Centurion Symbio City
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In the next decade a few skyscrapers have been planned for South Africa. But it seems as if South Africa is entering a stagflation period caused by a power shortage, power price increases and the poor political economy of the country. The impact is such that with the supply commodity raising the prices and the economy slowing down, production becomes more costly and less profitable. In this case the oil price offers South Africa some reprieve. Another cause for stagflation is the inappropriate macroeconomic policies. The most prevalent of these are the government’s policies pertaining to the excessive regulations of goods and labour markets, as well as the central bank’s management of inflation; not permitting the excessive growth of the money supply. It seems as if history is indeed repeating itself and South Africa is in a state of stagflation. Let me qualify this statement: South Africa needs a certain amount of electricity every day in order to be productive. And it is required to pay whatever the price is, for this electricity, or it will cease to function. Meanwhile the government’s macroeconomic policy is flaming this situation by not allowing private energy providers to generate and sell electricity in the open market. It would, however, appear that there is certainty about fundamental economic and geographic trends. Ongoing discussions debate whether well located skyscraper would reduce the pressures on the natural resources and provide
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Opinion piece by Rodger Warren
inhabitants with an enjoyable living environment. Academic research papers concluded that integrating the skyscraper with its surrounding urban landscape requires a holistic perspective that emphasizes the knowledge transfer and the integration thereof with the overall design, to achieve harmony. Proper integration could lead to improved air circulation, resourcing conservation reduction in waste and in operating costs with fewer infrastructures and less strain on the local infrastructure and increase the quality of living. But are skyscrapers profitable and economical? Current costs indicate that an 80 storey building costs 64% more to construct than a 3 storey
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building, ‘Pentad Quantity Surveyors’. Conversely the land usage for a typical 3 storey building is Far (Floor Area Ratio) 0.6 and Coverage (Footprint of Building) Maximum 50%. This equates to 6,000m² (square meters) on a hectare of land with an average floor plate of 1,667m2. This building will occupy approximately 353 occupants. An 80 storey building on the same parcel of land will equate to Far (Floor Area Ratio) 10 and Coverage (Footprint of Building) Maximum 50%. This equates to 100,000m² (square meters) on a hectare of land with an average floor plate of 1,250m2. This building will occupy approximately 5882 occupants. The occupancy is calculated
at a ratio of one occupant for every 17m2. In order to accommodate the same occupants in 3 storey buildings will take up approximately 16.5 hectares, with a huge increase in road surfaces and bulk services. We are not even addressing the matter of maintenance on these road and services. Just for interest sake, elevators in 100 storey buildings are the fastest mode of transport around. What makes this very important is the fact that these buildings are built in close proximity to public transport hubs with good feeder systems. The elevators and sky lobbies may seem expensive, but when compared to 100,000 occupants
entering the 16.5 hectare area, each in their own vehicle, plus the cost of fuel, and the time lost due to congestion and not to forget the CO2 emissions, they don’t seem that costly after all. There are many economic factors that play a role when deciding whether or not to build a skyscraper. And yet in other developing countries skyscraper construction has had many a positive impact. Perhaps skyscrapers are not the perceived curse, but a stepping stone towards developing the growth of a country. A+
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Tall Buildings 2014 in Review
CTBUH 2014
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Year in Review
o view report Issue 30 • Asset Magazine
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Mazda2
Sporty MaZDa2 set to ru Seven years ago it won the South African Car of the Year title as well as the most prestigious and sought after international title of World Car of the Year so the newly launched Mazda2 has big boots to fill. Not only has it got to live up to historic achievements, but the small Mazda is also squaring up to the some of the toughest, most battle-hardened veterans of the intensely competitive B-segment hatchback war including the Opel Corsa, Ford Fiesta, Kia Rio, Hyundai i20 and VW Polo. Having cut the umbilical cord with Ford the Japanese brand has already shaken off the shackles of the low marketing handicap it suffered from under Ford’s watch and has already made waves with introduction of its allnew Mazda3 and Mazda6 and the addition of a few new variants to its CX-5 range. The slightly longer and roomier Mazda2 comes to the market in six derivatives and a choice of manual or automatic transmission and petrol or diesel engines (all 1.5 litre) priced from R188 000 to R259 900. The new Mazda2 immediately impresses with its sharply-creased, sporty lines, low black grill, gaping air intakes, slit-eyed headlights and cocky stance. The nifty new exterior is also nicely matched by a classy cabin that brims with fancy kit and even the entry level version comes standard with aircon, CD player, steering wheel controls and trip computer.
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uffle the opposition By Henrie Geyser, Asset’s motoring editor
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Mazda2
The more expensive variants have a touchscreen, Bluetooth connectivity, powered windows and mirrors, leather trim on the steering wheel and gear-lever and the top of the range model diesel has disc brakes all round, stability control and satellite navigation, All the derivatives are enriched with Skyactiv technologies (including the body, chassis, transmission and engine) to make the car as frugal as possible, all of which (the maker claims) translates into fuel consumption of between 4.4 litres and 5.5 litres per 100 kilometres.
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The look and feel of the black and chrome finished living quarters are decidedly upmarket and very much on par or better than that offered by its main opposition. The steering wheel and driver seat are adjustable and finding a comfortable position poses no problem. We recently spent a week in the company of the R211 300 1.5 Dynamic Auto model and warmed to its comfortable cabin (although the rear seating is far from cavernous), the handily-positioned switches and knobs and the quick and easy fold-flat rear seats which can increase the cargo space by quite a margin in seconds.
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Mazda2
The repositioned gear lever falls easy to hand. The steering is on the pleasingly light side but it is a good match for the car’s performance although it tends to become a big vague when you push it to its limits. The new Mazda2 is certainly not a hot hatch although it is more than adequately enthusiastic when you feed it big spoonfuls of high octane. Output is given as 82kW and 145Nm which Mazda says makes it good for a zero to double digit speed in 8.7 seconds. The auto shift on our test car was well matched to the power output. In commuter traffic the car feels light, quiet and composed. It is a comfortable (for the front-seaters) open road cruiser and handles the corners with poise. Competitors in this segment have a variety of impressive individual good features which range from ride quality, good cabin insulation, flexible seating, sporty yet frugal threecylinder engines, smart onboard technology, plus average to good warranties and service plans. The new Mazda2 has some of these plus other good features but its two outstanding come-ons are its appealing looks and unlimited distance, three-year warranty. When you weigh up all the latest Mazda2 has to offer it presents an option which simply cannot be ignored by anyone shopping around in this segment of the market. A+
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Subaru Outback
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he fifth generation Outback is now available through Subaru’s dealer network (since mid March), with fans of the latest iteration of the world’s most complete allrounder able to choose from three models. Each one offers a different Boxer® powerplant, but the same drivetrain: the latest version of Subaru’s Symmetrical All Wheel Drive™ system mated to the acclaimed Lineartronic™ CVT. Another common thread is the level of cabin sophistication, ambience, and roominess. Sleeker styling, a more assertive grille and bigger wheels convey the message on the outside. Pricing starts at R479 000 for the 2,5 litre version, which is powered by an uprated version of the 2.5-litre Boxer engine, now producing 129kW and 235Nm thanks to a number of internal and external changes. Fuel consumption has benefited hugely, with overall consumption plummeting to 7.7 litres per 100 km. This is followed by a 2.0-litre turbodiesel – the only compression-ignition Boxer engine in the world - and priced at R529 000. While peak power and torque remain at 110kW and 350Nm respectively, the torque peak starts lower down and continues further up the rev range. Consumption has improved to 6.3 litres per 100 km.
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Subaru Outback
The flagship of the range is the Outback 3.6R-S, with the smooth , 3.6-litre H6 e lusty, free-revving powerplant is a heady 191kW, with torque of 350Nm. Despite With improvements in key areas, the latest Outback continues to evolve, meetin clean-burning engines, low friction drivertrains, and exceptional safety standard
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engine under its aluminium bonnet. Power output of this e these numbers, it requires just 9.9 litres per 100 km. ng environmental requirements with increasingly ds. A+
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Interview with Jeffares & Green
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Keeping quality at the core of an evolving business Interviewed by Tony Korsten Written by Claire Cole Photographs by Michael Glenister
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Interview with Jeffares & Green
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effares & Green is a long-standing name in engineering and environmental consulting, having been established in 1922. The company has grown over the years both in terms of the number and variety of services it offers, and in its geographic footprint. Although it is not the biggest consultancy in South Africa, it certainly competes with the best. Paul Olivier was recently elected to take over as MD of the company, whilst Phakamile (Phaks) Ngqumshe takes over from Paul as branch manager of the head office in Sunninghill. Both men have had long careers with Jeffares & Green and are well placed to take the organisation forward in their respective capacities. Dynamic leaders to take J&G forward Paul has been with the firm for 30 years, and became managing director with effect from 1 March 2015. A civil engineer by profession, he has played more than just the role of an engineer in the company. In 1993 he was instrumental in founding Dynatest Africa – a specialist pavement engineering and equipment company jointly owned by Jeffares & Green and Dynatest International. “In the early 1990s, pavement management systems were becoming very well known to the various roads authorities,” Paul tells Asset magazine. Pavement management systems for roads and airports were, in fact, the subject of his master’s degree in 1990. He got to
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know about Dynatest International – which was manufacturing sophisticated road testing equipment and pavement management analysis software – through a former employee of Jeffares & Green who was working for Dynatest in the USA. At the time, the company had a head office in Denmark where it was founded, and offices in the UK and USA. Paul saw the opportunity to use such technology in South Africa. “The City of Johannesburg was looking to implement a pavement management system. In a joint operation between Jeffares & Green, Dynatest and the CSIR, we implemented the system for the City,” he explains. “Following that, we started looking at setting up a business in southern Africa and started Dynatest Africa,” he adds. Dynatest Africa, of which Paul has been CEO since its founding, serves not just the area we tend to regard as southern Africa, but everywhere in Africa south of the equator. It has been involved in implementing road management systems in Angola and Australia, among others. Further to this, and also under the Jeffares & Green umbrella, Paul helped start Specialised Road Technologies – a specialist pavement surveillance and asphalt testing company – in 1997. The thinking behind this was to make it feasible to own and operate the highly sophisticated and expensive equipment. “We realized that in the first
Ncala Dam Mozambique
Metolong span
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place, the equipment is so specialized that you need to have dedicated people operating it and making that their focus. Also, the equipment is so costly that for any single company to purchase it is very difficult – so we put together a number of companies who provided funding which made it affordable. We could then run a substantial amount of equipment and provide testing services to the whole of South Africa and our neighbouring countries,” he elaborates. In 2002 Paul was elected to the EXCO of Jeffares & Green and in 2004 appointed as regional director responsible for the northern provinces. With his appointment as MD, Phaks now takes over the reins from him as regional director, and has become a member of J&G’s executive committee. Phaks will also continue to serve as a director of Transportation & Traffic Technology Africa and has taken over from Paul as a board member of Specialised Road Technologies. Phaks joined J&G in 1996 as a junior technician at the Pietermaritzburg office (after receiving a study bursary from the firm in 1994). After a year in the design office, he was transferred to site and while there he decided to further his studies and go to university. He completed his civil engineering degree at Wits in 2002. On the progress of his career with the firm he says: “My story is quite a strange one because I didn’t actually apply to work for J&G. They reached out to me while looking for candidates as part of a student drive. They supported me through technikon and once I started working, I looked at where other people with my qualifications were in the organisation and realised that that wasn’t going to be enough for me in the long run. At the same time, there were people
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in the organisation who had st about going to university. Tho throughout my career – helped getting impatient as youngste how to do things the right way completed an Accelerated De a programme in which potenti accelerated training.
He says that the culture of doi resonates with him on a perso reasons that he has remained date. “It’s difficult being a prev sometimes – you don’t always job on merit or because of the “I’ve always felt that with J&G do.” It is feeling valued for his part of an equity quota that re
50 Victoria Road, Clifton
tarted encouraging me to think ose same people have supported me d me keep a level head when I was ers sometimes do, and showed me y.” Between 2006 and 2008, Phaks evelopment Programme within J&G – ial managers are identified and given
ing things right is something that onal level, and is one of the biggest with J&G throughout his career to viously disadvantaged individual s know if someone is offering you a e colour of your skin,” he comments. G, quality is at the core of what we s actual contribution and not just as eally makes the difference for him. Issue 30 • Asset Magazine
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Interview with Jeffares & Green
Growing as a company whilst facing industry challenges J&G has grown significantly over the past 30 years, from offering just a few basic professional services to having in the order of 25 different disciplines within the company. A good example of one of these is the environmental discipline. Paul explains: “About ten years ago, there was a great deal of focus in all new infrastructure projects on conducting environmental impact assessments. It became an important part of every project, so we developed that expertise in-house.” Similarly, the company started a water division in the mid-1990s which has turned out to be highly successful – so much so that it was awarded the entire build, operate and transfer concession for the whole of KwaZulu-Natal province, which ran for some ten years. “We built a very strong team of water experts from that and today, we’re working on a variety of projects including feasibility studies for projects such as the Mzimvubuwater supply, irrigation and hydro-electric power scheme, and the rehabilitation of the Nacala Dam in Mozambique,” Paul comments. J&G conducts most of its work for both private clients and the Government. What has changed in recent years, however, is that the Public
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Finance Management Act has stopped professional firms from being directly appointed by government or its agencies, and now requires that all work is secured by tender. Paul and Phaks point out that while this does open up the process, making it possible for smaller companies to get a foot in the door, the problem is that everything is now about price – and this doesn’t always guarantee the best work. “This is presenting a challenge from a skills point of view,” Paul notes. “Mentoring young engineers and developing skills is a key part of our business, but with the tendering system, one tends to find that young engineers don’t get the level of mentoring that they would have ten or fifteen years ago because of the extreme pressure to deliver projects within typically a low price. One of our core values is quality, and another is experience – and those are things we’re not prepared to compromise on. We do understand that Government and Treasury are looking at ways to improve the tendering process so that we can address some of these issues, though,” he says. Phaks adds: “The current tender process certainly has its drawbacks for everyone. Some of the pricing we’ve seen has been, in our opinion, rather on the low side. We have also heard comments made by some clients about
the quality of the work that they are getting even from some of the large and respected firms. Effectively, what is happening is that because tenders are awarded on price, the guys tender low and then do the bare minimum on the job. It’s not just affecting training, but the quality of the work that is being done as a whole.” Furthermore, Paul points out that even where experienced people are still carrying out the design work, there is little or no opportunity to value engineer a project – to really examine the solution and see how it can be improved to lower the construction cost. “One can do a quick design and it will be fine for 20 or 30 years, but perhaps more could have been done to bring down construction costs, and our costs are relatively small compared to the cost of construction. The client ultimately gets the real benefit of that,” he comments. J&G’s approach to this is simple. “We don’t chase every job, we tender for what we believe is the right price, and we do the right engineering. We’re not chasing the bottom line all the time,” Paul says.
Baywest Although there have been changes in management, he comments that having been on the executive committee for some 12 years, he has already been very much a part of the management of the company, and that J&G is more or less where it wants to be today. The plan is to expand the company’s services and footprint across South Africa as well as into certain other southern African countries, as there are good opportunities over the borders. “We will have to make some changes over time because any business has to do that to survive, but we will stick to our core values,” Paul says. Phaks adds: “During the course of my career here, I’ve really come to believe that quality is at the core of what we do. I believe that is one of the things that makes us unique and I’d like to continue giving our clients that quality and level of service that they have always had from us,” he concludes. A+
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Women & Crowd Funding
Women & Crowd Funding By Hilda Lunderstedt, Non-Executive Board Member and Business Investor
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he modern woman is very different from that of previous generations. We will probably never revert to the roles and lives our mothers and grandmothers lived. The hunger for learning and information, the eagerness to learn, the responsibility that women take for their own lives and financial success is unlike anything that has gone before. Even though our present day lives are very different, some things remain the same. Women still have many roles to fulfil and at the same time, are striving for balance and meaning in their lives. Family and friends are very important, but equally so are our careers and financial success. Many women choose to take the entrepreneurial route and start their own businesses where they can manage their own time, work load and how they spend their days. The new world sees women’s lives intertwined between their business and personal lives. In this fast changing world, women are single for longer (either by choice or divorce), they decide when, and if, they will have children (and that might be at a much later age than our parents). Women decide the life they want and are willing to do what is needed to create that life.
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Women & Crowd Funding
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Independent women, and I include myself in this, want to take care of ourselves (mostly because we have to), our children and our families. We now understand that we need to expand our knowledge and we need to learn about business, and the complicated issues around money and investing in order to create wealth and generational prosperity. We are willing to learn, if someone will teach us. The property, banking, financial and investment industries have been, and still are, very male-dominated and these environments are not very female-oriented. Although more women are entering the arena, there is still a long way to go to balance the numbers between male and female. I would say that for most women, the world of investments is scary and many women feel intimidated. They never were taught what conversations to have around money and investing. In general, women do not like high risk investments, neither will they risk all their available capital or savings in one investment. It is a wellknown fact that women are typically cautious when they invest. Real estate crowdfunding is a superb opportunity for women to invest in property and build a property portfolio. It is a natural behaviour of women to collaborate, to do things together, which limits the risk and offers a feeling of support. All of these aspects are satisfied by the opportunities in crowdfunding. Taking into consideration the typical model of property investment, such as finding a deal, negotiations, dealing with tenants and the amount of capital that has to be invested, it is sometimes more hassle than it is worth. If it is a hassle when the property is in your area, imagine the scale of the inconvenience when you want to invest in another country! This is enough to put most people, and particularly women, off investing in real estate. Property is still the place where many of the wealthy make their money and keep it, and every person should have property in their portfolio. Wealthy people always have a team managing their investment portfolio and seldom go it alone, yet most of us try to do our investments by ourselves and think we will succeed. With crowdfunding, each investor will have the same opportunity – that is, a dedicated team of property experts to source, negotiate, raise capital and maintain the investment.
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Women & Crowd Funding
The benefits to consider of taking the crowdfunding route would be: • You own the property with other investors; you are not alone in the deal therefore much less capital is required. • You can spread your investment portfolio further over many properties instead of having all your money tied up into one or a few. • The income that is generated and paid is after costs and you know what dividends you will get. • One of the biggest benefits is the time saving factor. Nobody has time to travel the world searching for properties to invest in. Unless you are on the ground all the time, there is no way you will get the best deals. The time you save looking for deals, the money you save on travel costs and the costs of your mistakes will make the crowd funding option the best decision you can make. • Utilising the know-how of experts in the property field, means you can benefit when they source the Once you have found the right crowdfunding partner, real estate crowdfunding investing therefore creates what is probably the safest way for today’s women (of any age) to invest in properties all over the world, with the aim of building a global property portfolio and doing so in strong currencies. This is real wealth creation and currency protection, especially if you are in a market where currencies fluctuate heavily or where there is political instability. Because crowdfunding seems to be the way of the future, we predict that there will be many players entering the market in future. So, as with anything else, you have to have your own internal processes in place and most importantly, you need to look at the track record of the team behind the crowdfunding platform. Look at what their experience is and what money their previous deals generated for investors. Look at what their infrastructure is and how their properties will be managed. Decide what your investment requirements are, e.g. do you want to earn dividends or income, high returns (which might mean higher risk), etc? Start small and grow your portfolio over time. Make sure that your structures are in place so that when the opportunity you like comes along, you can act swiftly. A+
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The 3rd Annual
AFRICA
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AFRICA’S MOST SENIOR REAL ESTATE MEETING Pan-African Equity & Debt Markets • Retail • Office • Hospitality & Tourism • Logistics • Residential 1
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Interview with Elton Bosch
Politics holding up progress in the energy market Interviewed by Tony Korsten Written by Claire Cole
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o say that the electricity supply situation in South Africa is in trouble would be an understatement. As we enter our 20th year of democracy without new power stations having been brought online, and with rolling blackouts a regular feature of our lives yet again, the economy is losing billions of rands and businesses and individuals are desperate to find solutions to the problem. We spoke to Elton Bosch at NUS Consulting, about the problems we’re facing and how the complexity of the power market makes solutions less than straightforward. NUS is an international consulting firm employing over 350 employees in 17 offices around the globe, managing over $5 billion in energy expenditure per annum. NUS provides consumers with a wide range of services including invoice processing, payment data feed, NUSdirect, procurement, risk management, budgeting and carbon emissions monitoring, reporting and compliance. For over 80 years, consumers have relied on NUS as an independent and trusted advisor specialising in the provision of energy management and sustainability solutions.
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Photograph by Ton
In regulated markets, tariffs determine your entire energy bill. In deregulated markets, tariffs and ancillary charges (i.e., non-commodity costs) make up anywhere between 40 and 60 percent of your energy bill. Managing these costs is difficult because most local utilities offer a variety of different tariffs and both tariffs and non-commodity charges are constantly changing. There are no laws requiring a utility to offer you the most cost effective rate option or to inform you that a facility is eligible for an exemption for all, or part, of certain non-commodity charges. NUS’s analysis and optimisation services ensure businesses are not overpaying for their energy requirements. If that sounded fairly straightforward, now it gets more complicated... “To put that in context, we have over 2,400 different rates for electricity in South Africa, and what many people don’t realise is that every single council operates under its own bylaws and sets their own tariffs,” Elton tells Asset magazine. “People are always complaining about Eskom – and although it’s fair to say that Eskom has serious issues that need to be put right – many people are in fact losing out because of the way decisions are made at the local council level.” Unlike many countries throughout the world, South Africa operates in a regulated energy market. As such, traditional national suppliers, Eskom and Municipalities, continue to operate in a mostly opaque marketplace controlling much of the country’s electricity pricing. He goes on to explain that although we may hear via the media that electricity tariffs have gone up by a certain percentage approved by the National Energy Regulator (NERSA), local municipalities have the right to mark up those tariffs because they essentially operate as ‘business units’ – so the NERSA approved rate is only the minimum possible increase. “If I asked you what the electricity price increase was last year, you’d probably say between 8 and 12% because that’s what we heard in the media, and that’s what NERSA approves Eskom to charge councils as bulk purchases. But we had a client last year who saw a 113% increase on one of their line items!” he points out.
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Interview with Elton Bosch
“How successfully is NERSA regulating and policing the local supply authorities?” Elton asks. “NERSA cannot only focus on Eskom, this focus needs to be filtered down into the local supply authorities, including engaging private parties in providing expertise in the structuring of these rates and tariffs, that’s where consumers are getting hurt,” he comments. To put it simply, municipalities are offsetting the losses they make from those who don’t pay for their power usage by recouping the money from those who do pay. The consequences or impact of mismanagement are too often rectified by altering tariffs and/or the end-consumer billing. So whilst Eskom’s unpopularity is probably justified, there isn’t enough recognition of how much of the problem lies with the local councils. Unfortunately for us, we still have some of the lowest electricity prices in the world, which makes future price hikes unavoidable. With power supply constantly under pressure and pricing only likely to go one way, electricity consumers at the commercial and individual level are all looking at alternatives. And in a country with abundant sunlight and open space, the obvious question is why we’re not moving faster in the realm of green alternatives. Elton believes that a good deal of the problem lies in the fact that the local electricity market is still too regulated, and that there’s too much state
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intervention. Eskom, after all, is still a parastatal, whereas across most of Europe, the UK, the USA and Australia (to mention a few), the energy market is deregulated and the prices of power is therefore determined on the open market. “One of the biggest problems with green energy is, how do we plug it into the national grid?” asks Elton. “Reticulation is just one of the important concerns. Another is the current cost of green energy when compared to our current ‘brown’ mix,” he says. Even if we were to look at large scale solar or wind farms, the problem is that one either has to use the power close to the source (which means they have to be close to a major city), or install expensive infrastructure to get the power to the end user, which once again puts the price up. It’s not an easy problem to find a solution for. In the case of South Africa, it is not the fact that the market has remained regulated that is the problem. It is that for a significant period of time Eskom has suffered from a lack of investment as well as poor execution relating to the limited investments made during this period. In short, there is no perfect solution – it is a question of solid long range planning, strong leadership or management, and execution. Like all things, there are structure benefits and drawbacks to each of the possible market structures – regulated or deregulated. In truth, both will work or fail depending upon how
well the government and industry work, plan and implement together. “Let’s be honest – we had 20 years of warning that there were problems coming. In 1997 the Minister of Energy was warned that we would run out of power, and in 2008 we did! Now we’re in the same boat again, but probably worse off since the economy has grown and we’re under even more pressure,” Elton says. “The onus is now on the private sector to make plans as best they can to cope with the situation.” He’s cautious about believing that the commercial property sector will drive renewable energy use, however, simply because with the amount of power that
most commercial operations draw, it’s very difficult to keep completely off the grid. “If you’re a business using R6 million a year in electricity, the scale of the solar installation together with the supporting battery backup supply would be enormous – and prohibitive for most,” he notes. He believes that the big drive towards green energy will come from the residential market, where the costs are becoming more affordable and a real difference can be made in terms of energy use during peak periods. While most commercial operations have fairly flat patterns of power usage, the residential Issue 30 • Asset Magazine
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market has morning and evening spikes which put pressure on the power grid. However, once again government needs to get its act together with regard to the rebates that it was offering on things like solar installations – which seem to have been suspended and not reinstated, and very little clarity has been provided on the situation. It would also require a substantial overhaul of our grid system, since most of our meters are old and are unable even to read time of use, let alone record to allow people to ‘feed power back’ into the grid. “Smart metering in a smart grid is a great idea. In Australia, for example, when we take on a client we appoint a smart metering company at the same time. They fit a meter onto the incoming supply, supplied by the electricity supplier. We get the same data as the energy supplier gets and can use that to build a profile of the client’s load and usage and help them to optimise their procurement. The suppliers love it because we more or less do their jobs for them,” comments Elton. While many commercial operations are trying to plan their power use, using the time-of-use structures in place, and also have generator sets in place to help keep operations running, it’s clear that a great deal more thought needs
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to go into how to structure our energy market so that it works better for both commercial and residential users. “We have plenty of people telling us what the problems are, but no one really coming up with solutions,” Elton says. “There still remains a large underlying area of ineffectiveness and inefficiency, when it comes to the basics that needs to be simultaneously addressed and would also benefit from the proper and fullscale implementation of the solution. We need to get it right the first time! And build a culture of stopping to actually fix the problems,” he adds. It’s not impossible to achieve radical change if the administration is prepared to back it. Elton cites the example of Germany, where the government went on a massive drive some seven years ago to provide rebates for people who moved to green energy. “In the space of seven years it forced an equilibrium in the market, to the point where they are shutting down coal fired power stations because it’s no longer viable or necessary to run them,” he says. “Furthermore, we’ve seen that the price of energy this year is so low that for the first time in decades, people are locking into seven and eight year contracts with energy providers. Prices have been so volatile that for years, contracts have only been for a year or two at the maximum.”
Smart Meter “It’s an ideal situation,” he goes on. “Suppliers know what their demand is and how to build for it, and the customers know that they have their supply secured and what the price of their power is. It’s perfect for growth and forecasting.” Leaving aside the fact that the market in Germany is deregulated and that politicians in Europe tend to treat their roles as civil servants more seriously than certain others do, achieving something like that in South Africa would be as close to a perfect solution as we could want – both for our constrained power
grid and our economic growth. The only thing holding us back, it seems, is the state’s control of the energy market and its failure to either deliver what is needed or move towards deregulation. “In my opinion, politics is a massive issue holding us back,” says Elton. “It’s about people not being accountable and taking responsibility for what their role is in the industry.” A+
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Pulse Retail Summit
Fresh insights for those in from the Pulse Retail Sum In mid-February, Word4Word Marketing hosted the first Pulse Retail Summit in Pretoria. The purpose of the event was to give shopping centre industry members some new and different insights into shopping centre trends as well as broader retail and business trends. Asset magazine takes a look at some of the highlights from the day.
It’s all about the experience Ian Watt, a doyen of the retail industry, confirmed what many of the speakers at the international conferences have been saying over the past year – that shopping centres are becoming less about just shopping and more about having an experience. Across Europe, the USA and the Middle East, those centres that are doing well, that are drawing in customers, are
those that offer something that internet shopping can’t give the customer. Social experiences, family experiences and entertainment are where it’s at.
“Retailers and landlords are now just a p of the supply chain,” Ian commented. “Th need to put in the effort and think out of box when coming up with ideas for shop ping centres, and spend their money in th right places so that customers feel good their spaces and want to return,” he said
Good examples of malls that have taken concept of the customer experience and made it their own are the Mall of the Emir ates which has a ski slope, and Dubai Ma with its aquarium. Adding these attractio has translated into longer dwell time at these centres and has given them an edge over their competitors. Dubai Mall
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n retail mmit
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Dream Place
A dream come true – made with tech! DreamWorks Animation, the global family entertainment brand, entered the retail space last year with its interactive DreamPlace – a unique digital experience for the whole family that takes visiting Santa to a whole new level. DreamPlace is a 2,000-square-foot holiday cottage constructed at shopping centres, that combines the latest technology with magical storytelling from hits such as Shrek, Madagascar and How to Train Your Dragon. Tapping into DreamWorks Animation’s stable of artists, storytellers and innovators, DreamPlace enables children to experience an unforgettable visit to the North Pole.
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Amy Alter, executive at DreamWorks Animation: Retail & Entertainment, explained that the objective of the experience is ultimately to increase footfall and customer engagement in a shopping centre by providing a memorable experience. The first DreamPlace was launched in July last year at a shopping centre at Glendale Galleria, California, and was an instant hit. 92% of guests who visited the first DreamPlace said that they came just for the experience – some from as far as two hours’ drive away. A number of retailers around the DreamPlace reported double digit increases in retail sales and footfalls were up on previous years.
DreamPlace can be refreshed or reconfigured for other occasions throughout the year, such as Halloween or the Chinese New Year.
Are you ahead of the curve? We live in a world of volatility, uncertainty, complexity and ambiguity – VUCA for short. Apparently, this is a widely used term – and it’s one that Abdullah Verachia, CEO of MVA Strategy Consulting, advised delegates to keep in mind as he looked at some of the current and future trends that are likely to shape the business environment in the next five years. “Your competitive advantage will only keep you going for a short while and your competitors don’t even necessarily come from your sector any more,” he said. Which car manufacturer would have regarded Google as possible competitor five years ago? Yet plans for a self-driving car are already underway at the technology company. In fact, technology is driving most of the change in our world and is affecting all sectors and societies. Thinking outside of the box and going beyond customer expectations are no longer optional – they are necessary for survival. Unique and different partnerships can provide a point of differentiation – as in the case of Uber, the app-driven taxi and driver service.
Uber in fact only owns an app, not a single taxi – it’s the partnership that makes the system work. The use of data and analytics is also increasing in importance by the day. But devices like store cards and loyalty systems are not delivering what’s needed any longer. The innovators are finding ways to make loyalty systems relevant to consumers using new technology. A great example is that of French retail real estate investment company Klépierre, which together with technology company DigitasLBi Labs, have created Inspiration Corridor to illustrate the opportunities for unique shopping experiences in malls. An infra-red camera analyses individual visitors as they enter the Inspiration Corridor, thanks to body scanning technology.
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Inspiration Corridor by DigitasLBi Paris & Klepierre
Click on video window to play, wait a few seconds to download
Time: 2:05
A selection from a database of products and catalogues of partner brands presented in the shopping centre is then made available to the visitor. Customers walk through the corridor to select their favourite products on the screens. Upon leaving, they can synchronise their product selection on their KlĂŠpierre mobile application. They can then geo-localise all the pre-selected products within the shopping centre.
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Tailoring everything to the individual is now more possible than ever before, and in a world where consumers are demanding this kind of attention, it is becoming a trend. Starbucks, for example, now has an app which enables customers to select and order their desired coffee via an app before getting to the store.
Connecting with the customers, giving them a reason to have faith in your brand and to believe that it offers them something that meets their unique needs, is driving most innovation today. Business models are having to adapt to embrace this, along with rapidly changing technology – and while this can seem overwhelming, it can also be tremendously exciting. A+
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Corobrik Student Awards
represented U of the yea
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Simon Henstra
UCT at the Corobrik Student Architect ar awards and was awarded first prize.
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Corobrik Student Awards
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t the University of Cape Town Awards Ceremony, first prize of R8 000 was presented to Simon Henstra, second prize of R6 000 went to Ina du Toit and third prize of R4 000 was won by Anthon Bernard. An additional prize of R5 000 for the best use of clay masonary was awarded to Brent Carele. Henstra’s thesis is entitled Inner-city palimpsest: building the city above the city. His dissertation emerged from a fascination with the rich urban and architectural fabric of dense inner-cities, and the layered palimpsest, and strong sense of character as a result of the Simon Henstra piecemeal evolution of the city over time. There is a vast amount of airspace above the existing city which is being underutilised and underdeveloped. The strategy proposes that existing buildings are extended upwards and outwards and by transfering the development rights of the neighbouring erven unlocks and utilises the existing unused airspace. By utilising the underutilised existing airspace in the city, the project ads residential density to the city and contibutes a new public realm and public facilities which is an asset to its surroundings and neighbours. It unlocks a new realm above the ground plane and explores the relationship between vertically and cross-programming. Lastly, its physical resolution represents and contributes to the timeous evolutionary palimpsest that is the city’s urban fabric. A+
Click here to view his dissertation
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2015 Building of the Year
The 14 Stories Behind the 2015 Building of the Year Award Winners
W
ith our annual Building of the Year Awards, over 30,000 readers narrowed down over 3,000 projects, selecting just 14 as the best examples of architecture that ArchDaily has published in the past year. The results have been celebrated and widely shared, of course, usually in the form of images of each project. But what is often forgotten in this flurry of image sharing is that every one of these 14 projects has a backstory of significance which adds to our understanding of their architectural quality. Some of these projects are intelligent responses to pressing social issues, others are twists on a well-established typology. Others still are simply supreme examples of architectural dexterity. A+
Click here to view the winners
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Interview with Eris FM Team
Setting a new facilities manageme
Interviewed by Tony Korste
From L to R: Lobogang Nape – Graduate Intern | Andre Klopper – National Facilities Manager
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w standard in ent at 102 Rivonia Rd
en | Written by Claire Cole
r | Floris Binneman – Account Executive | Clement Lechokgohla – Property Services Manager
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n 2014 the South African Facilities Management Association (SAFMA) launched the FM of the Year Award and the award for FM Excellence. The first awards were handed out at an awards ceremony at the Protea Hotel Fire and Ice in Melrose Arch on 19 February this year. The award for Facilities Management Excellence, in recognition of a notable contribution to the enhancement and promotion of best practice in the field of Facilities Management, was presented to Eris Property Group (Pty) Ltd for their 102 Rivonia Road project. Asset magazine spoke to the FM team from Eris about what sets this project apart and makes it a benchmark for future facilities management success stories. This team includes André Klopper (National Facilities Manager), Floris Binneman (Account Executive) and Clement Lechokgohla (Property Services Manager) – all of whom had, and continue to have, specific roles to play in the design and maintenance of the building from an operational perspective. 102 Rivonia Road is the new home of EY (formerly Ernst & Young), and the building has garnered much attention for its striking design and its prime location in the heart of Sandton. While it has been fairly widely reported that the building was completed on a fast-track schedule and set new benchmarks in
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construction (despite various setbacks including transport and metalworkers strikes), what is less widely known is that a remarkable new precedent was set for involving members of the team who are often only brought in for commissioning a building – such as the facilities management team – in the design and planning right from the outset. “One of the issues that we almost always face in FM is that facilities managers get involved at the end of the construction process,” points out André. “With this project, we were involved right from the early design stages. We had the opportunity to sit with the developers, the architects, the engineers and other members of the professional team and give our input from an FM point of view. We got to understand what their various design philosophies and rationales were so that we could plan for and manage the building accordingly, and in turn, they implemented many of the things that we advised should be included.” From the facilities management point of view, it was a learning curve for everyone in several respects. Not only was it new to be included in the design stages, but it was also one of the first buildings that the team had been involved in which was designed to be Green Star SA rated from the start (the building has a 4 Star Green Star SA
rating). This also meant balancing the traditional FM requirements with many of the requirements of an environmentally friendly building. “There were one or two unique things that we recommended that really paid off,” André goes on. “One of these is a cold room for storing wet waste from facilities like the restaurants. It’s just a small room which is air conditioned down to about 13 degrees, but it allows us to store wet waste for longer without worrying about the smell and it gives us more time to sort it properly. The result is that there are far fewer waste pickups, and with the costs saved on this, the facility has paid itself off in the first year.” One of the other things that the team put a lot of thought into was the waste management system. Although many buildings have fairly well organised waste management, the team took it a step further and engaged with tenants in the building before they took up space, asking them to sort their office waste into the four or five main waste streams so that when it reached the waste storage, far less sorting had to be done. The FM team sorts the waste further so that by the time the refuse service comes to pick it up, there is very little going into landfill sites. 102 Rivonia Road consists of two towers – one of which is occupied by
Server room for BMS
Generator
Low voltage room
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Fire sprinkler system pump room
9000 litres bulk diesel tank
EY and the other by several other tenants. It has therefore been important to obtain tenant buy-in for many of the initiatives that the team put in place. For example, a building user’s guide (humorously referred to as the BUG) has been painstakingly assembled together with the environmental consultants to help guide tenants upfront with respect to green building principles and what the team requires them to do from a sustainability point of view. It even goes into details on what kinds of public transport alternatives are available around Sandton. The BUG’s purpose, in essence, is to give tenants an idea of everything in and around the building that could have an environmental impact. “We engage with the tenants upfront, before they start their fit-outs, and have a detailed discussion about sustainability because it is important for the integrity of the building and the way it was developed. So far, without exception, every single tenant has bought into the idea and they are all trying to be as green as possible,” André comments. To a large extent, it is easier to implement sustainable measures in a new building than in an existing building, but as Floris points out, that doesn’t mean that some of the lessons learned here can’t be used in existing properties. “There are certainly drives in some of
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the property funds to take the lowhanging fruit. There are the obvious things like bringing down electricity usage and finding better ways to manage a building, and one can do things like start using green chemicals for the cleaning. If only ten percent of your funds’ tenants do it, it might not necessarily get you a rating but it helps set a trend for every tenant that follows. With every revamp or new tenant installation you progressively get a greener building, so eventually you can have a 20-year old building that is performing far better.” With the evolution of building management technologies and green building, facilities management has become a far more exciting and multi-faceted job than it was a decade ago. Clement, who started out with Eris in the service department and who is currently the precinct facilities manager at 102 Rivonia Road, says that the FM function gives one appreciable scope to make suggestions for improving the way things are done, and to save landlords money as well as making more environmentally responsible decisions. Floris points out that from a property management perspective, one of the biggest benefits of the FM team having been involved in the design process, and continually engaging with tenants, is that it is far easier than normal to gain
a 360 degree view of what is happening in the building and to make decisions when things need fixing or problems need addressing. The team is so well integrated in the first place, and the fact that the Eris FM team is looking after the precinct as a whole, the building envelopes and shared services, as well as acting as an ‘internal’ facilities manager for the majority of the tenants, means that things can happen quickly and smoothly. André notes that being able to carry out the facilities management for the precinct itself as well for many of the tenants really allows the FM team to exercise the holistic approach that it wants to with respect to sustainability and effective building management. Furthermore, Floris adds that with the range of services that they offer to the building’s tenants (which go far beyond basic FM and even extend to buying stationery in some cases), it is possible for those clients to focus solely on their business without having to worry about their premises. 102 Rivonia Road represents a milestone when it comes to having a well integrated, multi-tenanted building. For its green building aspects as well as for the forward-thinking way in which the FM team was involved in the design right from the start, the building sets an example that makes it a worthy winner of the SAFMA award. A+
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Australia presents compelling investment opportunities Interviewed by Tony Korsten and written by Claire Cole
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D
iamond Properties in Cape Town is one of the few privately-owned brokerages to have remained in business for 20 years. With a head office in Green Point and another in Tyger Valley, the business has grown to offer leasing and sales services and property management to all sectors of the property market over the years. While many readers in the Western Cape may know about Diamond Properties, what is probably less well known is that its founder, Errol Diamond, has been living and building a thriving property investment business in Sydney, Australia, for almost a decade. He told Asset magazine a little bit about his story. “In addition to our other lines of business, one of the things that Diamond Properties had done in the Western Cape over a number of years was to buy and refurbish properties that the listed companies wouldn’t be interested in, and we have built up quite a nice portfolio of properties in the Cape Town market,” he says. “Then, ten years ago, I thought about investigating the potential for offshore investment opportunities.” He had contacts in Australia, so he decided to look at setting up a business there. His first thought was to acquire a property management business and an agency similar to Diamond Properties in Cape Town, which could then manage properties in an Australian portfolio as they were acquired. Having tried to get it off the ground with various players in the market, he eventually decided that what was needed was for him to be hands-on with the business there, as he could leave his South African office in trusted hands back home. So, he packed up his family, moved to Sydney and got stuck into establishing Diamond Properties as a serious player in that market.
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Although it took some work to find the right lenders, Errol managed to secure some non-recourse funding to purchase property, and set about acquiring a small convenience retail centre which had a supermarket as an anchor tenant. “I approached a group of South African investors. I sent out an e-mail to a number of contacts that I thought would be interested on a Saturday afternoon. By Sunday morning we were oversubscribed,” he tells Asset magazine. The numbers clearly stacked up, and the fact that Diamond Properties took a stake helped to make a compelling case for investment. Although the market has had its ups and downs – and not long after the first investment the cost of money compared to yields made it difficult to buy good assets – with some cautious investing and perseverance, Errol and his team have built up a small but good quality portfolio. “We decided to focus on the small, neighbourhood convenience shopping centres as our business model. There is a massive middle income market in Australia, and people tend to earn well,” he explains. “We spent time getting to know the retail market, focusing on the smaller centres – the kind that have a 126
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A selection of Australian properties in S
Sydney
supermarket anchor and shops like a butcher and a hairdresser, where people know their customers by name. Those centres tend to trade well,” he adds.
Broadmeadow shopping centre
Newtown Central
The global financial crisis in 2008 and varying market conditions didn’t always make it easy to find assets that stacked up, but in recent years a number of good assets have become available and Diamond Properties now has seven convenience shopping centres in its portfolio, amounting to approximately Aus$120 million of assets under management. These centres are all generating good income and capital growth for its investors – and while the investment provides them with a good currency hedge, the respectable yields that have been generated have also proven attractive to local Australian investors in recent years. “We are currently able to benchmark about a 10% return per annum, after all costs, for our investors,” Errol says. He says that the business is currently focused on the Sydney market only, but that he is investigating other Australian cities including Brisbane and Melbourne. He believes that for South Africans looking to invest offshore, this opportunity presents Issue 30 • Asset Magazine
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a compelling investment story. “The returns are good, it’s a first-world market with a stable economy and a very compliant society. Historically, people tended to invest in Australia because they had family or some other ties there, but we’re seeing investors with no ties whatsoever coming in purely because they see good returns and the investment provides a currency hedge,” he elaborates. At present, Diamond Properties investor base in Australia is made up of approximately 70% South Africans – mostly high net worth individuals. The investment requirement is a minimum of Aus$100,000 (which some choose to assemble as a group of investors), and the investment is ringfenced or allocated to a specific property rather than spread across a fund. “We outsource the property management, do the due diligence, the capital and debt raising, we set up all the structures and all the time we liaise with our investor group,” Errol says. “Our investors are generally sophisticated investors – they like the fact that we are investing ourselves, that we are managing the process, and that it’s non-recourse lending,” he adds. He also points out that part of the key to having built a successful portfolio is to be patient and wait for the right deals at the right time. “If we do one deal a year, or even if we have to wait three years, so be it. It’s got to be right – we’re very conservative and we don’t rush and when we find the right deal, the numbers speak for themselves,” he says. A+
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Jewells Plaza
Green Point Shopping Village Issue 30 • Asset Magazine
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RICS Africa Summit 2015
Focus on African real e
The time is ripe for Africa to leapf
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estate at RICS Summit
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he RICS (Royal Institution of Chartered Surveyors) Africa 2015 Summit in Johannesburg, South Africa, brought together professionals, academics and industry leaders to examine the future vision for Africa’s real estate market. The well-attended, high-energy event on 25 March 2015 was RICS’s first international conference on the continent. A common thread throughout the presentations and discussions was the recognition that Africa is taking its place on the world stage in terms of real estate, infrastructure and construction. There was a clear sense that RICS can play an important role in helping countries build consistent standards where needed, albeit with a definite focus on collaboration with existing bodies and governments. “We’re really focused on looking at how we can support education and training in many markets,” said Dr Sean Tompkins, global chief executive of RICS in the UK, and Mark Walley managing director, EMEA, speaking to Asset magazine ahead of the summit. “We are seeing constant recognition that global capital flows are picking up and the world has an abundance of capital looking for homes at the moment. In real estate, what we’re seeing is that investors are diversifying and going into regional locations, and we are seeing a greater demand for standards and professions in those areas,” Sean commented. “We are supporting that with all the work we’ve been doing on standards, on seeing how we can help become part of an effort to train and educate the real estate, construction and infrastructure professions in those markets.” RICS President Louise Brooke-Smith told the participants at the summit that she has been championing RICS partnerships in Africa and that it was appropriate to hold the conference in the city with the largest GDP in the region.
Mark Walley
Photograph by Tony Korsten
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“We’re seeking to spread best practice wherever we find it,” said Louise. The aim was to share experiences with open minds in a spirit of partnership. While several participants, including emerging market economist Kganya Kgare from Stanlib, stressed the divergences within the continent, all acknowledged that consistent standards would go a long way to addressing challenges. Whereas inflation in East Africa is well within target and the Kenyan Shilling is very stable, with 6 percent growth expected in 2015, inflation in Nigeria is expected to accelerate from the middle of the year and interest rates are at an all-time high, said Kgare.
Louise Brooke-Smith President of RICS “We’ve evolved into a truly international body. By 2020, the majority of our membership will be from countries other than the UK,” she said. Sean and Mark backed this up, saying that RICS is growing at a rate of between 6,000 and 6,500 new members a year in addition to its 118,000 qualified members. Asia takes the lion’s share of that number, with over 30,000 members, and there are currently some 1,500 in the continent of Africa.
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Among the topics examined was the future economic sustainability for southern Africa. Africa’s economic growth is predicted to outpace all other continents in the next five years, with forecasts showing that four of the world’s 10 fastest-growing national economies will be on this continent. The panellists looked at investment sources, risk and the vital ingredients underpinning ongoing momentum. One conclusion was that commercial property is one of the darlings of the market in countries such as Ghana, Kenya and South Africa. RICS is most active in these three countries, along with Nigeria and Tanzania. “These are the most attractive markets for us to be involved in,” said Mark,
Delegates at the Summit
adding that this was a way to start understanding the far larger continent of Africa. “We have already had fantastic cooperation with all of the local professional bodies that we’ve talked to,” he went on. For example, a memorandum of understanding is already in place with the Ghana Institute of Surveyors and efforts are underway to establish a RICS office in the country. Speakers Martin Brühl (Fellow of the RICS); Jones Lang LaSalle Global Director, EMEA Corporate Solutions Vincent Lottefier; and Francois Viruly (FRICS) debated key markets, drivers, trends and opportunities. Brühl, who is RICS President Elect and Head of
International Investment Management, Union Investment Real Estate, stated that there are investors who ‘think that Africa is the new Asia’. Again, the need for benchmarking and adequate data was mentioned. Viruly, of University of Cape Town’s Department of Construction Economics and Management, identified Kenya, Rwanda, Ghana, Mozambique and Zambia as possible markets for new investors. Urban development, planning and land use was another topic of discussion. “Spatial transformation is an evolutionary animal,” said Johannesburg town planner and Manager, Ekurhuleni Metro, Itumeleng Nkoane. He called for a mix
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of the ‘first and second’ (formal and informal) economies. “As planners, we cannot industrialise in the same way as Europe and America… Living in a sustainable environment is not only about living in a beautiful environment, but about survival. There should be a shift from being development controllers to being development facilitators.” RICS President Louise Brooke-Smith agreed that planning is a balancing act, citing the increasing neighbourhood approach to planning and commercialism even in developed countries such as Britain. However, she identified ‘a massive skills gap’ in two areas: there are not enough skilled professionals in the built environment and there is a lack of data and information. Co-panellists Nkoane and James Dadson, Chief Lands Officer, Ghana Land Commission, agreed, with Nkoane saying not enough young people are encouraged to go into the built environment as a career in South Africa. Dadson said since investors come in primarily to make profit, African governments should position themselves to absorb investors in a way that benefits society. A common theme throughout the conference was the importance of infrastructure as a core factor in sustaining growth. In a session on ‘The African
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economic engine’, the question was asked what infrastructure sub-Saharan Africa needs to be truly globally competitive. Dale Ramsden, Founder and Managing partner, RMP Westport, said the ‘supply and demand mismatch’ in West African countries such as Ghana, Nigeria and Angola creates opportunities. While RICS can be a huge help in drawing up standards, African countries often wrongly ‘get a bad rap’: “There are planning standards and approval processes. You have to be patient and things will happen. Do proper traffic impact studies, don’t take short cuts and embrace the community.” In these countries, urban planning is a challenge, there is an emotional attachment to land and a strong demand for A-grade real estate. There are opportunities in the fact that there is a massive retail shortage and limited competition, but challenges in that the debt market needs to be grown, delivery is an issue and there is a lack of qualified rentals. Strong local partnerships, market knowledge, a zero tolerance of corruption and having the necessary equity in place are key. RICS Senior Vice President Amanda Clack noted: “In an ideal world, you start with planning. In reality, each
Kganya Kgare, Stanlib country in Africa starts from a different place.” She also noted that the absence of adequate infrastructure can cost African countries two percentage points in terms of GDP growth per year. One of the reasons China is successfully investing in infrastructure development in countries such as Nigeria is that it is willing to take the extra risk, speakers felt. Chinese companies tend to take a long-term view based on a model linking infrastructure and realestate development. This risk will be reduced by increased transparency and a zero tolerance of corruption across the region, the panel agreed. Data points are also key to de-risking – and this is an area where RICS can play a role.
Debunking several myths about his continent, Broll Keyna CEO Jonathan Yach (Member of the RICS), described himself as a ‘proud afro-optimist’ and said, “Africa is probably one of the most connected of continents, and this is driving growth.” While social instability poses a risk throughout Africa, corruption needs to be dealt with country by country and democratic governance must be encouraged, opportunities lie in the continent’s young, well-informed and rapidly more urbanised people. Enhanced electrification is also opening up opportunity and scope. “This continent Africa is redefining itself through its real estate,” he said. Issue 30 • Asset Magazine
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RICS Africa Summit 2015
“Standardised valuation practices around Africa will increase transparency,” said Amelia Beattie, CIO of Stanlib and President of the South Africa Property Owners Association, adding that she had seen interest in South Africa and Africa increasing ‘significantly’ over the past two to three years. “The capital is out there. Our biggest challenge is to find investable opportunities to put the money in. “The international market is looking for a much more significant investment base. We should learn as an industry to work together and to bring these opportunities to the world.” One of the major areas of work for RICS in the past few years has been on developing an international measurement standard for offices – something that it recently finalised. As Mark pointed out, there can be up to a 24% variance in figures on an area measurement if one looks at all the way it could be calculated, using the various different measurement standards that have been current until now. This new standard represents a milestone. “We are now looking at retail and residential, at construction measurement standards, and I think the big one that the outside world needs to see is on ethics,” he commented.
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Sean added: “It’s really up to the professions to deal with that because ultimately someone has to enforce things in the market, and it’s hard for governments to take that role. It’s an interesting challenge – governments aren’t particularly good at regulating markets, so in many cases they have encouraged the professions to regulate themselves. They have to put a level of faith in professionals to see that others do things the right way and that they will call out those who don’t, but you have to create the right market conditions for people to do that,” he elaborated.
Panel discussion He further remarked that if one is looking for trends, he firmly believes that in Africa, there is an opportunity to leapfrog the stages of development that other countries and markets have gone through, and use the knowledge that is out there to master-plan cities in a completely different way from what has been done in the past. “There are some things that have to take place – for example, it is important to get clarity about land issues such as title and ownership,” he said.
Mark added that there is also not enough international talent to do all the work that needs doing, so the development of local young talent will be critical to the success of African countries going forward. “It’s really about how education and knowledge are one of the key fundamentals that will facilitate this growth in the next ten years. After that, what will be important are standards and adopting professionalism, and doing it at a global level so that investors recognise it,” he commented. A+
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Global Green Tag
The launch of Global GreenTag The launch of Global GreenTag, South Africa’s formal recognition at a series of CPD and manufacturer seminars was a great success with over 400 people attending the four events. Recognition was by the Green Building Council of South Africa (GBCSA). The Cape Town event was held at the SANRAL Western Region Green Star Building (Winelands Auditorium) on the 25th February and the Johannesburg event at EY’s 102 Rivonia Road, Sandton Green Star Rated Building on the 26th February 2015. The CPD Presentations were entitled “Enhanced Green Building Ratings using Product Certification and Life Cycle Assessment”
Links to download presentations from seminar:
1
Introducing Green Star SA Interiors Tool and Materials Category, by Lesley Sibanda, Technical Coordinator at the Green Building Council of South Africa.
Click here
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2
Global GreenTag and its Relevance to Green Building and Interiors Rating Tool, by David Baggs, GreenTag Program Director at Global GreenTag International Pty Ltd.
Click here
3
Greening interiors in South Africa - Pilot Projects, by Marloes Reinink, Sustainable Building Consultant at Solid Green Consulting Green Star SA AP New Buildings, Interior, Existing Building Performance
Click here
4
Sustainable Ceiling Solutions for Green Buildings, by Jeremy Sumeray, Head of Sustainability EMEA, Armstrong
Click here
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The End
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