Property Developer October 2014 by SAPOA

Developer

PROPERTY

October 2014

Alexandra township mixed-use development

Paving the way for future investment

Repurposing industrial buildings

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Area review: Remotely on the rise

2014/09/16 1:06 PM

last word

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from the CEO

SPLUMA in the spotlight

In light of SAPOA’s continuous drive for the implementation of Section 60 of the Spatial Land Use Management Act (SPLUMA), SAPOA CEO Neil Gopal highlights the contribution that the commercial property sector will make should Section 60 be implemented

ith SAPOA’s strategic focus on ensuring that it is the voice of the commercial property sector coupled with its focus on strategic lobbying in an effort to find amiable solutions to issues, the organisation, with the support of its members, is continuing with its efforts regarding the implementation of Section 60 (2)(d) of the Spatial Land Use Management Act (SPLUMA) No 16 of 2013. As has already been highlighted and discussed at length, SAPOA’s current concern is the need for Section 60 which, if utilised, will remove the financial, economic and social hardship that is presently being experienced by the commercial property sector in terms of development of properties, creation of jobs and poverty alleviation, among other things. Without the publication of Section 60, the biggest problem that the commercial property sector faces is delay, which negatively affects the sector, the government and the economy. We believe that key imperatives, namely job creation and economic growth, will lead to the implementation of Section 60 of SPLUMA as well as the Act in its entirety, making a significant difference for our country. If developments are further delayed, job creation, both temporary and permanent, will be lost; a substantial and permanent tax base as well as investment will be lost; and development costs will rise, causing further concern and disgruntlement. Moreover, the implementation of Section 60 will lead to many partially developed townships coming to full fruition and shed desperately needed job opportunities. SAPOA highlighted three developments as case studies that are being hampered due to delays. In total, the three developments amount to R12-billion – a substantial figure that significantly illustrates the overall losses that will ensue in the future if these developments continue to be affected. Based on statistics, the overall impact of the construction sector to the national economy is tremendously large and positive. The building of civil-engineering structures, which forms part of infrastructure, accounts for more than a third (39%) of the economic activity recorded within the national construction sector. This is, however, not a representation of the commercial private property sector. The private sector is represented by the remaining 61% of the construction sector,

with the “building of complete constructions or parts thereof” being the major contributor (32,1%) of the construction sector overall. Thus approximately 61% of the national construction sector comprises of private construction activities. According to the National Development Plan 2030, which SAPOA supports, the construction and utilities sector created 828 000 jobs in 2010. Furthermore, it ranked the construction and utilities sector sixth out of nine sectors, ahead of agriculture, the Expanded Public Works Programme and mining. We have endeavoured to obtain information from our members with regards to the overall impact that non-implementation of SPLUMA has had and the inevitable jobs that may be created in the event that it is implemented. Based on an adequate sample of members’ responses, SAPOA can reveal that: l The total value of the reported development pipeline is in excess of R20-billion. l The reported job creation is in excess of 30 000 jobs. l The average completion period of this reported pipeline is approximately 24 months, which is an indication that approximately 50% of the value of the pipeline is lost per annum due to excessive planning periods. l The overall impact using the input-output analysis, including direct, indirect and induced impacts, is approximately R9,5-billion. l The overall impact on the GDP is estimated at approximately R3,3-billion, and job losses calculated at approximately 16 000 permanent jobs. l The inclusive figure in terms of job creation also includes temporary jobs during the construction phase of these projects, while the permanent are created mostly in the real estate sector. From the aforementioned results, it is evident that SPLUMA will vastly improve the development timeline of developers and, fundamentally, have a significant positive impact on the economic output, GDP and job creation in excess of the numbers mentioned because of the fact that the total number of developers in South Africa is large. On the contrary, it has come to our attention through the various beneficial forums established by the Department of Rural Development and

SAPOA CEO Neil Gopal

Land Reform that various provinces and municipalities have had challenges with the set implementation date for SPLUMA, which was 1 September 2014. These challenges result from issues such as lack of capacity and the fact that some provinces do not have by-laws in place. The suggested implementation date by provinces and municipalities for SPLUMA is 1 February 2015. It was suggested, which we are in support of, in principle that a Differentiation Model be considered, where most of the metropolitan municipalities can implement SPLUMA in its entirety on the set date as they do not have capacity problems and are better positioned to implement it. Furthermore, that it could serve as a cross-learning exercise, where the other municipalities would learn from the metropolitan municipalities in terms of implementation challenges and successes. However, should this not be a possibility, we are of the view that should a new date be set for municipalities’ readiness, such time should not be in the distant future as this would certainly not be in the best interests of the country. In light of the above recommendation we are of the view that Section 60 of SPLUMA should be prioritised and implemented as a matter of urgency because of the negative impact delays are having on the public and private sectors – and the country. Neil Gopal, CEO

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contents

Abreal

Oilgro

PROPERTY

Developer

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News Legal matters Interview: John Martin Face to face: Ipeleng Mkhari Hey, big sector! Remotely on the rise The modern industrial revolution Enter the agritropolis Cutting red tape in Gauteng to boost economic growth Property Development Programme 2014

Last word: Lings links SA’s missing economic piece

Introduction Participants Development projects Team leaders First winning team

Developer October 2014

PROPERTY

Abland

Alexandra township mixed-use development

Paving the way for future investment

Repurposing industrial buildings

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ON THE COVER Unlocking economic opportunities and promoting growth in township development

Area review: Remotely on the rise

2014/09/16 1:06 PM

FOR EDITORIAL ENQUIRIES email editorial@sapoa.org.za or managingeditor@sapoa.org.za. Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: sales@sapoa.org.za Editor in Chief Neil Gopal Editorial Advisor Jane Padayachee Managing Editor Mark Pettipher Editor Candace King Copy Editor Ania Rokita Production Editor Dalene van Niekerk Designer Dirk Knoesen Sales Riëtte Stevens Finance Susan du Toit Contributors Martin Ferguson, Eugenia Makgabo, Professor François Viruly DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material.

P R O P E R T Y

F U N D

Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com

e: david@rsalitho.co.za

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on record

New phase released for commercial and retail development in Umhlanga

Corobrik builds up social housing in eThekwini

rudent sourcing and selection of building materials, fittings and fixtures has delivered Lakehaven Phase II, a ground-breaking social housing project that will definitely raise the bar in this segment of the housing arena. Dirk Meyer, Managing Director of Corobrik, says that Corobrik is proud to have been associated with what is Durban’s third Greenfields project. Lakehaven Phase II has a proud lineage. Its Phase I predecessor received the coveted Social Housing Project of the Year 2011 Award from the Southern African Housing Foundation. “Lakehaven Phase II takes this a step further,” says Meyer. “Through the farsighted substitution of cheaper building materials with higher-quality building materials, First Metro Housing and construction, cost and project managers HDH have as good as redefined social housing and made it aspirational.” Lakehaven Phase I comprises 312 units. The second phase provides a further 280 units within 34 double-storey blocks of flats. Construction began in early 2013, and the first 88 units are already occupied. Selection of tenants for the remainder will begin shortly. A gated, security-controlled entrance and individual parking bays provide a step up for social housing. There are also plans to create a park, sports field and community hall. All upgrades were facilitated well within strict budgetary constraints and to meet strict objectives outlined by government. Mehmood Hoosen, HDH’s Principal Agent, points out that while costs were kept low, the end product was of a high standard. Lakehaven Phase II had definitely added value to the area. He says his company worked within strict parameters but enjoyed a great deal of flexibility when it came to overall design and choice of materials. “We may have started with a blank page but it was not straightforward,” he says. “We put together a project team and then work-shopped the project in terms of finishes. It was about finding the best products for the development. It came down to speaking to people like Corobrik to make the best choices.” According to Hoosen, the objective was to deliver a quality project through an improved choice of materials and top-notch workmanship. “When you look at housing delivery, you realise that these units are made available to tenants from low-income households who are paying minimal rent. For them, living in something similar would be unaffordable.,” he says. “We are able to provide a home that is much more than a rental unit while allowing them to have greater disposable income for a better lifestyle, and to fund important aspects such as education for their children.” In line with capital subsidies provided through the Institutional Subsidy and the Capital Restructuring Grant, social housing developments must adhere to strict principles that extend beyond construction. Government policy calls for the integrated provision of services, which involves the inclusion of social facilities in a location that is close to both cultural amenities and work opportunities. This approach also provides for better spatial planning and greening of the environment. First Metro Housing, Lakehaven’s developer, was established in December 1998 and is Durban’s foremost social housing company. As an independent Section 21 company, it is responsible for the development and management of social housing in the eThekwini region. Its primary purpose is the development of quality and affordable residential rental accommodation for low- to medium-income households. The company was awarded the KwaZulu-Natal Housing Developer of the Year Award in 2002 by the Institute for Housing in recognition of its pioneering efforts to provide sustainable accommodation for the lower- to middle-income rental market. In addition to aesthetic considerations, Hoosen says environmental concerns are top of the First Metro Housing agenda. In line with these, greening of the environment, planting of trees and the selection of building materials with low carbon footprints was important. Corobrik products were therefore well suited to the Lakehaven project. +27 (0)31 560 3111, Corobrik.co.za

n exciting mixed commercial portion of land ideal for commercial, retail and business park development is being made available by Tongaat Hulett Developments, the property development operator within the Tongaat Hulett stable. The new release forms part of the greater Cornubia development, a multi-billion-rand collaboration between the eThekwini Municipality and Tongaat Hulett. The first of its kind in KwaZulu-Natal, Cornubia is a fully integrated human settlement development. This opportunity, representing 85 000m² of commercial bulk, comprises five stands of varying sizes and is situated immediately to the north of the upmarket Mount Edgecombe Estate, forming part of the western expansion of Umhlanga Ridge.

Located adjacent to Investec’s new Cornubia Shopping Centre currently under construction, and the future Cornubia Town Centre, the site is expected to benefit from enhanced access as a result of interchange upgrades. The N2/ M41 interchange is currently under construction and the new Flanders/M41 interchange is scheduled to commence in September 2015, for completion in February 2017. Other arterial connections in the pipeline include a link to the Umhlanga Ridge Town Centre and the N2 via a further interchange on the N2 to the north of Gateway. In the heart of Durban’s northern development zone, the site is also located on the GO!Durban route, eThekwini’s integrated rapid public transport

Green light for SA’s largest ‘holistic housing development’

evelopers behind what will be South Africa’s largest mixed-use residential development, aimed at denting the country’s housing backlog of 2,3-million, recently announced the project’s green light at the fourth Affordable Housing Summit in Johannesburg during the month of August.

Speaking on the first day of the three-day Summit at Crowne Plaza, Nu-Way Housing Developments Executive Director Jordan Mann told delegates that the Coega Ridge development, adjacent to the Coega Industrial Development Zone (IDZ) on the outskirts of Port Elizabeth, had received the green light from the Department of Environmental

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on record

Group Five gets five green stars

O network, which will provide convenient access for staff and customers. Well-established businesses currently operating on Flanders Drive, which flanks the Cornubia Business Hub, include Sage, several motor dealerships (such as BMW and Kempster Ford), and Mt Edgecombe’s Virgin Active gym. “We are looking to sell this to prospective developers who would be able to construct suitable facilities for a range of end users,” explains Tongaat Hulett Developments’ Chief Executive Officer Mike Deighton. “We believe this represents up to a R3-billion investment opportunity for the right entity. This entity could ideally develop the entire

precinct, maximise the opportunity, and by acquiring early access to a highly attractive precinct likely to shape the future of the surrounding area, play a leading role in the expansion of Umhlanga Ridge over the next few years.” “The bulk earthworks contract has already commenced and is expected to be completed in November 2015,” says Karen Petersen, Development Director at Tongaat Hulett Developments. “Construction of internal services – roads, telecommunications, water, sewerage and electricity – is anticipated to start in October 2015.” +27 (0)31 560 1900, Thdev.co.za

Affairs. This, he said, paved the way for town planning to commence on the “holistic housing development” which will, upon completion, boast 40 000 housing units catering for all tenure groups, including subsided, rental, affordable and high-income housing. “This is all being planned in one area,” said Mann. “We want to break the mould of what’s been done in the past, where there is segregation based on income level. As families grow, they won’t have to move out of the area.” The project is about the same size as the township of Motherwell, which lies adjacent to the 3 200ha Coega Ridge site. Phase one would include up to 2 500 housing units and could begin within 24 months, pending the approval of the project’s town planning and the cooperation of stakeholders, said Mann. Planned to roll out over six to 10 years, the development has an overall value of more than R6-billion. It will also include

community facilities in addition to schools, a university, a technical college, a hospital, neighbourhood shopping centres, and a regional shopping centre spanning up to 110 000m², said Mann. Also included will be a light industrial area, a railway station, office parks and a sports academy. An up-market eco-estate with a golf course and a hotel are also in the pipeline. The project will cut the Nelson Mandela Bay metro’s housing backlog of 87 000 units by about 40%. At the height of construction, Mann said that up to 5 000 jobs per month would be created. “This is our flagship project and one we are very excited to announce,” said Mann. “Coega Ridge will essentially be a new satellite city and will go a long way to alleviating the massive housing backlog in the region. The phenomenal growth of the Coega IDZ, with projects in the pipeline such as the PetroSA refinery is seeing a massive need for mixeduse housing in the area.” +27 (0)11 789 3334, Nuway.co.za

ne of Attacq’s prime office properties in Waterfall City, the new Group Five Head Office, has been awarded a 5-Star Green Star SA Office Design v1 rating by the Green Building Council of South Africa. The building is one of only seven in Gauteng to receive this prestigious rating. It is also the first building in Waterfall City to receive a Green Star SA rating. “We are thrilled to achieve this landmark green rating for Group Five’s new head office in Waterfall City,” says Morne Wilken, Chief Executive Officer of Attacq. “The building is an asset to our built environment aesthetically, functionally, economically and environmentally. We believe that it is the first of many green ratings to come for Waterfall.” This leading green building was designed by LYT Architects and benefits from the sustainable design expertise of WSP Africa. The building will also be submitted for an As Built Green Star SA rating. The building was completed in January 2014 and was valued at R500-million on completion. Bulk earthworks for this 25 500m² headquarters began in July 2012. As one of the major construction companies in South Africa, Group Five is in the unique position to appreciate first-hand the benefits of green building, and further this movement in South Africa through its own business practices, ensuring a positive impact on our environment. It is therefore greatly significant that Attacq has developed this green building for Group Five. “This year marks our 40th year as a listed group on the stock exchange,” says Mike Upton, Chief Executive Officer of Group Five. “Over the 40 years the group has grown considerably and was eventually accommodated in six separate offices around Gauteng. We are absolutely elated to be able to move all of our employees from different locations in Gauteng to one central multi-purpose office complex in Waterfall City. Moving into the building this year has been greatly meaningful as it has resulted in cross-business collaboration, increased efficiencies and a faster decision-making process. We are proud to form part of the development of Waterfall and look forward to continue building a strong relationship with Attacq.” For Group Five, the new head office creates the foundation for greater efficiency through the consolidation of all its smaller offices into one building perfectly situated in Waterfall City. “The green building design, facilities and features applied to the new Group Five head office ensure its sustainability and efficient operation,” says Atterbury Property Developments Director Coenie Bezuidenhout, who is responsible for coordinating Waterfall City. “Besides having less impact on the environment, this building also has less impact on the bottom line because it is efficient, especially when it comes to energy and water.” The building is highly energy-efficient, from lighting to air handling. It is even equipped with a thermal storage system to reduce peak energy demand on the national grid. It is also water-efficient, with specialised water fixtures, xeriscape plants, rain-water capturing and an air-cooled chiller. Furthermore it is furnished with a zero-wastage fire-water system. Opposite a shopping centre with specialised parking spaces for lower-emission vehicles such as moped scooters and motorbikes, this non-smoking building features bicycle racks, showers and lockers. Besides comprising much recycled and responsibly sourced material, the building itself is designed to be as recyclable as possible in the future. Its reinforced steel has a recycling content of at least 90%, and it saved 30% of its total PVC content by replacement with other materials. About 50% of the timber in the building is either Forest Stewardship Council Certified or reused, or has a postconsumer recycle content. Furthermore, at least 20% of the materials that make up the building are sourced from within 400km of its site. The building also keeps its emissions low. This includes reducing gas emissions, sewerage outflows and light pollution. +27 (0)10 596 8892, Attacq.co.za

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Building begins at Romansbaai

uilding has commenced on the first homes at Romansbaai Beach and Fynbos Estate, a secure seafront development located on the Cape’s Whale Coast, about half an hour’s drive from Hermanus. Pam Golding Properties (PGP) has the exclusive mandate to market the development, which consists of a selection of 379 erven. Early buyers have already taken transfer of their properties, with the first homes now under construction. The unspoiled eco-estate, which spans 215ha, is only two hours away from Cape Town, making it the ideal spot for a weekend getaway or holiday home, as well as for a tranquil retirement or workfrom-home location. This broad appeal is reflected in the range of buyers to date, with PGP’s

Liviero rises to the challenge of Sandown façade

R97-million contract to extend and upgrade an office block in soughtafter Sandown Valley Crescent has been completed by multidisciplinary construction group Liviero. It was undertaken for client Zenprop, and the building’s new tenant is Sun International. Liviero Chief Executive Officer Neil Cloete reveals that the five-storey office block’s striking new look includes a gleaming glass façade that was one of the challenges of this project. “The unitised glass façade was fixed from the inside of the building, off the existing slabs, without the need to erect access scaffold around the façade,” he explains. “This meant that basement work could continue below during the façade installation, saving the client time and money.” Outlining the complexity of the glass façade, Liviero Building Managing Director Brad Boertje states that it comprises 792 panels that each consist of an aluminium frame, with toughened glass attached to it with structural silicone. “On the ground floor, the glass façade was clad with three panes of glass per panel, utilising Eclipse Advantage grey toughened glass,” he says. “The other floors had two panes of glass per panel, and these floors were clad with Coollite ST120 sterling silver toughened glass. There are a total of 1 848 panes of glass. The viewing panes were treated with a low-e coating to enhance the glass’s thermal properties. The other panes were backed with a lambda insulation panel closed off with an aluminium backing pan.” To install the panels – which make up a total 3 000m² of glass – they were lifted on racks into the building utilising Liviero’s loading platforms. They were then individually placed on trestles into a horizontal position and prepared. Each panel was then hoisted out of the building and into place. Specialist subcontractor Centurion Glass and Aluminium Fenestrations had designed and built a purpose-made winch for this exercise, Boertje explains. The glass panels are all 1 200mm wide but vary in length. The longest panel is 4 837mm long and weighs 320kg. The Liviero team worked seven days a week for seven months on this highprofile project, and the end result is a shimmering new Sandton landmark. +27 (0)11 466 2644, Liviero.com

most recent sales including a mix of local (Cape or Winelandsbased) buyers, a few from Gauteng and another from further afield in Africa. Plots at Romansbaai can be developed according to each buyer’s individual preference, using his or her own architect and builder. Just 15ha of the total estate is allocated to the built environment, and plot sizes range from 1 200m² to 6 400m². Prices for the erven range from R513 000 to R3,42million inclusive of VAT, and all properties enjoy sea views. “Romansbaai occupies a unique position in that it is situated on one of the few north-facing beaches on the Cape coastline,” says PGP’s Development Manager Louise

Pam Golding on Main in Kenilworth rapidly taking shape

lready at ground level, with all three floors of basement parking completed, construction work is progressing well on the site of the new P-grade (or AAA-grade) office and retail building, Pam Golding on Main in Kenilworth, Cape Town. Situated in a bustling commercial node on the corner of Main and Summerley Roads and comprising a gross lettable area of 4 100m² in total plus 185 parking bays, the project is on track for final completion in May 2015, says Peter Golding, Project Manager on the up-market redevelopment on behalf of the Pam Golding Property Group. Tenants already secured include national retailer Pick n Pay, which will occupy 450m² on the ground floor for their new small-store offering, which will include a coffee shop and bakery, among other enticing attractions, and Pam Golding Properties, which will occupy just over 1 000m², comprising the entire first floor and some retail space on the ground floor. “We’re looking forward to seeing our southern suburbs office returning to its former ‘home’ on this high-profile, redeveloped site in mid-2015,” says Laurie Wener, Managing Director of Pam Golding Properties (PGP) in the Western Cape’s Cape Town Metropole.

“Incorporated in this new space will be our extensive sales team for the area, as well as our southern suburbs residential letting department, and Cape regional suite of offices and service departments supporting our Western Cape operations. Visitors to our new office will enjoy the convenience of ample, secure underground parking with elevator access to the lobby and PGP offices, with elegant interiors and stateof-the-art property displays.” Golding says the response to the launch of Pam Golding on Main has been extremely positive. “The development has attracted considerable interest, and the only retail space still available is approximately 280m², being allocated for a restaurant on the corner, and one adjacent shop,” he says. “For the restaurant we envisage a vibey establishment spilling out onto a spacious pavement area, which will serve three meals per day, catering for office staff in the vicinity as well as local residents. With two other restaurants, Jakes on Summerley and Borruso’s, close by, our aim is to help foster an inviting ambience, which will create a lively streetscape with al fresco dining after working hours.” The rental rate of the retail space is R200/m². Golding says the remaining

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on record Varga. “This means that it enjoys protection from the notorious Cape south-easter, as well as magnificent views across Walker Bay and spectacular sunsets. The development lies on Danger Point peninsula, a famous landmark in the Gansbaai area, which is worldrenowned for its whale-watching, fishing and great white shark diving opportunities. The lifestyle on offer is all about relaxation by the sea, soaking up the pristine private beachfront, and living in harmony with the magnificent surrounding flora and fauna.” Every effort has been made to protect the natural environment during the development process, including clearing of alien vegetation, reintroduction of indigenous species, and the installation of environmentally

friendly systems such as solar water heating, recycling facilities and windproduced electricity. All residents have access to a fynbos walking trail within the conservancy, and to safe swimming, fishing, snorkelling and diving spots, with kreef-diving in season for those who obtain the necessary permits. Whale-watching in season will be another highlight. Major shopping, restaurants, sporting and medical facilities are all available in Hermanus, while the nearby villages of Stanford, De Kelders, Gansbaai and Kleinbaai offer further recreational facilities, as does the easily accessible Elim Wine Route. The estate is fully guarded with biometric access control and electronic monitoring. Services have already been installed. +27 (0)21 851 2633, Pamgolding.co.za

office component of the building allows for up to 12 office units, ranging in size from 84m² to 2 100m² in total, or about 1 000m² per floor. “Located on the second and third floors, this is ideal for businesses seeking top-quality office accommodation at a convenient, up-market address, with easy access to freeways and various modes of transport – including a railway station,” he says. “Prime residential areas surround this node, with a Virgin Active gym and Cavendish Square in nearby Claremont, while Cape Town CBD and Cape Town International Airport are an easy drive away.” The monthly rate for office space to let is R155/m² with a rate of R80 for balconies, with secure basement parking at a monthly rental of R1 000 per bay. Parking access and exit will be via Summerley Road, with 45 minutes’ free parking for Pick n Pay customers. Payment for parking will be ‘pay on foot’ at commercial rates. “Importantly, Pam Golding on Main is designed to incorporate a number of green building features, with a focus on energy and water efficiency, to reduce

operating costs and improve the working environment for tenants, shoppers and visitors,” says Golding. These include low-flow water fittings, insulation for heat reduction or retention in accordance with exterior climatic conditions, the provision of carbon dioxide monitors in the basement for greater energy efficiency with regards to the ventilation fans, internal blinds for glare control, split-unit air conditioning with low-ozone depleting refrigerants, a general waste area for storage and sorting of waste for recycling, and individual tenant operation of air conditioners for economic efficiency. In addition, commissioning of all the building systems (mechanical, electrical, water and lift) will be carried out in accordance with Chartered Institution of Building Services Engineers standards (a key component of an energyefficient building), while power factor correction (to optimise the balancing of the electrical system for increased energy efficiency), is included in the design. +27 (0)21 426 4440, Pamgolding.co.za

V&A commits additional R1,5-billion to Silo district development

he final phase of the V&A Waterfront’s Silo district is on track for early 2017 completion at a substantial investment of R1,5-billion. The district is already home to multiple award-winning No.1 and No.2 Silo developments, and is the location of the Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA), currently being developed in the Grain Silo complex. This will bring the total investment by V&A Waterfront shareholders, Growthpoint Properties Limited and the Government Employee Pension Fund, managed by the Public Investment Corporation, to more than R2,5billion. Four new developments will introduce more than 35 000m² of mixeduse, sustainable developments, including new corporate offices, a residential development, a Virgin Active Classic Health Club, and a mid-range internationally branded hotel, plus more than 1 050 additional parking bays. Once it’s completed, approximately 2 500 people will work at the Silo district daily. In a 2012 economic-impact study that is currently being updated, the expected nominal contribution to GDP from future developments is R28-billion by 2023. “With approximately 30% or 180 000m² of the V&A Waterfront property available for development, the Silo district is our current area of shortterm development focus,” says V&A Waterfront Chief Executive Officer David Green. “Development at the V&A is market-led, in response to a demand we have seen for bespoke commercial offices and urban residential with harbour and mountain views. The intention is to create a vibrant and mixed-use sustainable district with sustainability credentials that will offer business opportunities, accommodation, lifestyle options and eateries.’’ The Silo district developments will be focused around the Zeitz MOCAA that sits at the heart of this district, and the surrounding new central pedestrian plaza – Silo Square – providing a gathering place for locals and international visitors alike. The district will also build upon the sustainable pedigree of No.1 and No.2 Silo, with all developments targeting a rating from the Green Building Council of South Africa (GBCSA). This includes working with the GBCSA to develop a new mixed-use tool that will be a first for South Africa. The new developments will sit on top of the 2 750 parking-bay super-basement that will house the district sea-water cooling plant and a number of other district services, including sprinkler tanks, backup generators and diesel storage, potable water and gas. The ability of the V&A to provide district-wide services, including the high-speed fibre network being rolled out across the entire V&A, enables the developments and tenants to unlock real sustainable operational savings, which will ensure that the Silo district will be at the forefront of 21stcentury development. +27 (0)21 408 7500, Waterfront.co.za

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legal matters

A look into the Built Environment Policy A Introduction

The built environment has recently been faulted for shortcomings with regards to compliance with the regulatory environment and the need for professions to serve the imperatives of government, which include aspects such as transformation, public protection, and good governance. The Department of Public Works (DPW) has published the Built Environment Policy, hereinafter referred to as the Policy, to articulate the aforementioned concerns. The Policy seeks to identify possible solutions with the intention to resolve challenges such as the formation of a single Council for the Built Environment with six professional boards, and the relocation of the function of the Council for the Built Environment to the DPW.

By Eugenia Makgabo, Admitted Attorney of the High Court and Acting Legal Manager at SAPOA

As various concerns still plague the built environment, the Department of Public Works has introduced the Built Environment Policy to iron out the issues

B The built environment profession defined

The Policy states that a built environment profession includes any of the following registrable professions: ●● Architectural profession; ●● Project and construction management profession; ●● Engineering profession; ●● Landscape architectural profession; ●● Property valuers profession; and ●● Quantity surveying profession. The built environment profession has been regulated by a plethora of legislation dating back to 2000. The legislation consists of the following: a. Council for the Built Environment Act, 2000 (Act No 43 of 2000); b. Architectural Profession Act, 2000 (Act No 44 of 2000); c. Landscape Architectural Profession Act, 2000 (Act No 45 of 2000); d. Engineering Profession Act, 2000 (Act No 46 of 2000); e. Property Valuers Profession Act, 2000 (Act No 47 of 2000); f. Project and Construction Management Professions Act, 2000 (Act No 48 of 2000); g. Quantity Surveying Professions Act, 2000 (Act No 49 of 2000).

C Background to the Policy

There was a need that was recognised by the DPW to identify whether the built environment professions are currently functional. Both the Council for Built Environment and the Built Environment Professional Council were required to participate. The Council for Built Environment is an umbrella body for the Built Environment Professional Council, and is responsible for the discharging of the government policy as well as the legislative mandate. The Professional Councils, on the other hand, are independent bodies that fulfil the role of self-regulation of the various professions. The aforementioned participation required that they provide feedback on the following: a. The progress by Councils towards the implementation of policy; b. Constraints faced by the Councils in implementing policy; c. Policy and legislative constraints that inhibit the Councils in implementing policy; and d. Future actions required from the DPW to enable the implementation of policy. The result of the participation was that a task team was formulated and various challenges were subsequently identified, which revolved within the regulatory and organisational environment. There were options that were put forward, and the DPW established potential solutions by way of an option analysis.

D Identified challenges

The following aspects were highlighted: a. Poor cooperation linked to legislative inadequacies It is anticipated that the Council for Built Environment would coordinate and facilitate the implementation of policy within the built environment. However, like the Council for Built Environment, each Built Environment Professional Council has its own independent council accountable to the Minister of Public Works. Further, no mechanisms exist that oblige the Built Environment Professional Councils to act in synchrony on any matter.

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legal matters Thus on matters that Built Environment Professional Councils do not consider important or where they disagree with the Council for Built Environment, the Built Environment Professional Councils reinforce their independence from the Council for Built Environment, thus inhibiting the Council for Built Environment from effectively discharging its mandate. The prevailing legislative environment does not ensure synergy and uniformity in the implementation of policy among the Built Environment Professional Councils. b. Accountability The Built Environment Professional Councils are established through legislation, and in terms of the Public Finance Management Act, 1999 (Act No 1 of 1999) are defined as public entities established to maintain professional competence, protect the public, register professionals and encourage growth of the profession. The Built Environment Professional Councils, although appointed by the Minister of Public Works to perform a regulatory role, perceive themselves as completely independent of the state, representing the professionals. Instead of seeking a mandate from the Minister of Public Works, the Built Environment Professional Councils seek their mandate from the professionals. c. Alignment to government policy planning Currently there is poor alignment in policy planning and implementation between the DPW, the Council for Built Environment, and the Built Environment Professional Councils. The Built Environment Professional Councils, unlike the Council for Built Environment, are at arm’s length from the DPW and therefore are not privy to the debates and decisions taken by the DPW, thus hindering the implementation of the DPW’s policy decisions by professional Councils. This leads to the disjuncture in the business plans of professional councils and that of the DPW. The former have not embedded in their business plans their contributions to government’s national priorities. d. Transformation After 20 years of democracy, the number of previously disadvantaged individuals registered as professionals across the built environment professions is dismally low, averaging less than 25%.

While this is a product of many factors, which government is addressing, it is also the outcome of scarcity of innovation by respective Built Environment Professional Councils to address the impediments encountered by previously disadvantaged individuals to register as professionals. For example, there are limited opportunities for graduates to get practical training, resulting in a lapse in time before the graduates enter the labour market. Hence, historic inequalities at educational institutions and socioeconomic disparities ought to be challenges the Built Environment Professional Councils address, in partnership with all relevant stakeholders.

E Identified possible solutions

The following option analysis has been suggested: Option 1: A single Council for Built Environment with six professional boards This option provides for the establishment of a super council that replaces the Council for Built Environment. The six professional Council Acts would be repealed and Built Environment Professional Councils converted to professional boards that report to the Council. It restructures the current system to provide for standardised regulation of the built environment. The option was not supported by the Built Environment Professional Councils, National Treasury and the Department of Science and Technology. Option 2: The Council for Built Environment and six professional councils (amending legislation) Option 2 reflects the current situation. This option proposed that the Minister would continue to regulate the Council for Built Environment and the Built Environment Professional Councils, maintaining the current flat structure remains. This option provides for the Built Environment Professional Councils to report through the Council for Built Environment, but they cannot be accountable to the Council for Built Environment as the Built Environment Professional Councils remain regulatory instruments of the Minister of Public Works. Given that the relationship between the Council for Built Environment and the Built Environment Professional Councils is perceived as unclear, legislative amendments are required to clearly define the roles and responsibilities of the Council for Built Environment and the Built Environment Professional Councils.

This is a tedious exercise. However, as this option largely maintains the status quo, many of the current challenges, particularly with regard to accountability and aligned processes, may still be experienced. This option may not be ideal for the abovementioned reasons. Option 3: Relocate the function of the Council for Built Environment to the DPW The Minister of Public Works will directly regulate the built environment professions and entrench the DPW’s shareholder role. The Council for Built Environment’s promotional, facilitation and coordination role over Built Environment Professional Councils will be relocated within the DPW, leading to improved synergy between the DPW and the professional councils. The operationalisation and institutionalisation of the DPW’s oversight across the Built Environment Professional Councils will be determined through a comprehensive business case, post the approval of this policy. This is the preferred option by the DPW.

F Conclusion

SAPOA has submitted comments, which detail that the Council for Built Environment should not be dissolved, and that a balanced approach should be considered by government that allows for the streamlining of processes to ensure that there is uniformity and effectiveness within the built environment.

The Department of Public Works (DPW) has published the Built Environment Policy to articulate its concerns. The Policy seeks to identify possible solutions with the intention to resolve challenges such as the formation of a single Council for the Built Environment with six professional boards, and the relocation of the function of the Council for the Built Environment to the DPW October 2014 l property developer

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interview

Meet Mr Martin As the newly elected Chair of the SAPOA National Developers Forum, Project Manager at iProp (Pty) Ltd John Martin is ready to tackle his position head-on with a strong focus on marrying the public and private sector By Candace King Photograph by Michael Glenister

eeting John Martin for the first time to discuss his role as the newly elected Chair of the SAPOA National Developers Forum was a relaxed yet serious interaction. It’s clear that he’s ambitious about leading and improving the Forum, and about addressing the property development sector’s many challenges. With an academic background in building construction and business management, Martin has a BSc in Building Science and an MBA from the University of the Witwatersrand. His skills and expertise lie in project management and construction management with a focus in township design, township development, project estimation, engineering, management and budgets. More recently, Martin has developed a penchant for dispute resolution. “My interest in alternative dispute resolution is the result of being involved with two major disputes – one of which was fairly quickly resolved using arbitration, and one of which has now dragged on for years and years in the court system,” he says.

“My interest in alternative dispute resolution is the result of being involved with two major disputes – one of which was fairly quickly resolved using arbitration, and one of which has now dragged on for years and years in the court system”

John Martin, Chair of the SAPOA National Developers Forum and Project Manager at iProp (Pty) Ltd

He recently completed the Fellowship Admission Course in Arbitration with the Association of Arbitrators of South Africa where he has been admitted as a Fellow. He also has a Diploma in Advanced Property Practice from the National Property Academy; a Certificate in Negotiation Skills from Conflict Dynamics; Construction Adjudication from BCA Training (Pty) Ltd; and a Specialisation in Construction Law from the Association of Arbitrators of South Africa. His work experience includes being a Director at Girder Naco Engineering. “Girder Naco was an engineering company specialising in structural steel fabrication and construction,” he says. “We built shopping centres, industrial buildings, mining plants and microwave towers.” Prior to joining iProp (Pty) Ltd, Martin worked as a Project Manager at Grinaker Projects, where he managed construction projects on a turnkey basis for Grinaker’s clients. For the first 15 years at iProp (Pty) Ltd, Martin served as Development Director.

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interview

“The sector has a bright future and partnerships are blossoming. It’s easy to sit back and complain but I don’t think that’s the way forward – there’s a lot that still needs to be done in South Africa” Thereafter – in November 2012 – he was appointed as Project Manager. “In November 2012 I turned 60, and in terms of iProp’s rules, relinquished my directorships and shareholding in the iProp companies,” he says. “I have been retained by iProp on a three-year contract to handle the company’s construction and development. “iProp is a land development company specialising in developing land that had previously been used for mining operations, and producing townships for industrial, commercial and residential use. iProp also partners with landowners to develop their land on a joint-venture basis so that the landowners can participate in the profits realised from development of their land.”

The right time In light of his extensive experience and knowledge in the property development and management industry, it came as surprise when Martin mentioned that he had only joined SAPOA recently. “I’ve known Neil Gopal for more than 20 years, and decided that I’ve got the capacity now to join SAPOA and give back. It’s about time! Furthermore, SAPOA is an extraordinary organisation to be involved in,” says Martin. “Former SAPOA National Developers Forum Chair Lionel Kisten exited on a very positive note. He always saw the upside of situations, and encouraged people to see the positive side of things.” Filling great shoes, Martin says that as Chair he aims to pick up from where Kisten left off, with a major focus on driving, building and strengthening the communication between the public and private sector, as well as all necessary parties and stakeholders. “SAPOA is becoming a much more voiced and acknowledged body because of the relationships it has built up with public agencies and quasigovernmental bodies,” he says, pointing out that the current burning issue in property is the strained relationship and communication between public and private entities. He believes it’s the sector’s greatest challenge. “The private sector aims to maintain financially viable businesses and developments while making a profit, while the public sector has a completely different objective,” he says. “So we need to marry the two. Currently there’s a major gap in information, and there are also social obligations, including community needs and upliftment. Such issues need to be addressed within this marriage.” He believes it’s about nation-building. “As an industry – and a country – we have spent 20 years learning how to engage with one another,

and we’re finally getting there,” he says. “Thanks to Neil and his efforts, the communication and collaboration barriers in property are being broken down, and the stigmatic mind-sets and negative perceptions are changing.” On the flip side, Martin is highly enthusiastic about the many opportunities in the sector. “The current industry landscape is vibrant, dynamic and full of opportunities – there’s a lot going on, from the grand iconic corporate developments to the major housing backlog that is currently being addressed,” he says. “There are big infrastructure development projects under way as well, and let’s not forget the foreign investment that is flowing in from international players. “The sector has a bright future and partnerships are blossoming. It’s easy to sit back and complain but I don’t think that’s the way forward – there’s a lot that still needs to be done in South Africa.” Martin is also encouraging the new roll-out of legislation that aims to standardise regulations across the country. “It’s necessary,” he says. “Fragmented legislation is confusing and cumbersome, and thus an amalgamation of legislation is needed – something that SAPOA has been working on tirelessly for many years now.”

Moving the Forum forward As part of his responsibility as Chair, Martin wants to get everybody on the same page – something he confesses is not a small undertaking. “A wonderful foundation has been laid already,” he says. “But as a Forum, we need to take the time and effort to contact those in the public sphere. I’ve taken the time to listen to the various issues from the side of government and the municipalities – something that is quite sobering to hear. We need to understand their problems and see where they are coming from. We need to create a landscape where both parties benefit. We should focus on their needs and what the private sector can do to help them.” In terms of the Forum, Martin aims to encourage further support from the developers as well as the smaller-scale entrepreneurial “barefoot business” players who are very active at grassroots level. He says that, since we’re living in a world of social media, perhaps the Forum could go digital and thus further extend its reach to both new individuals and to those who can’t attend meetings. “We could get online and gather more exposure in that way. We definitely have to modernise the way we do things, so it’s a plausible suggestion,” he says. “I want to pass on to the next Chair a vibrant Forum full of good ideas – mixed with a bit of fun.” October 2014 l property developer

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face to face

Motseng’s leading lady We speak to the tenacious and irrepressible Ipeleng Mkhari, Chief Executive Officer of Motseng Investment Holdings, about her bold BEE company’s property development division and her thoughts on the construction sector’s overall performance and transformation By Candace King

hief Executive Officer of Motseng Investment Holdings and SAPOA Board Member Ipeleng Mkhari is a pioneering entrepreneur and an asset to the property industry. She established Phosa Iliso CCTV, the first black woman-owned and managed CCTV business, and subsequently co-founded the Motseng Investment Holdings Group in 1998 with Sandile Nomvete, Chief Executive Officer of Delta Property Fund. Mkhari has been responsible for various aspects of the Motseng Investment Holdings Group, including business development, shared services, key account management, international growth strategies and principal investment initiatives. She holds a BSocSci degree from the University of Natal and completed the Executive Development Programme at Wits in 2004. She serves on the boards of all Motseng Investment Holdings’ subsidiaries, KAP Industrial Holdings, Delta Property Fund and SAPOA, and St John’s Diocesan School for Girls. In 2008, Mkhari was named one of CEO magazine’s “Most Influential Women in Business”. She was also named the “Cosmopolitan Mover of the Year” and was a finalist in the Entrepreneur Business Woman of the Year in 2006. She is an Archbishop Tutu Fellow.

Q Tell us about Motseng’s

property development portfolio.

The Motseng Group has been involved in property management and project management for more than 10 years. During this period, Motseng has participated in select development schemes. In 2013, Motseng embarked on a targeted strategy to expand its development activities as part of its property investment strategy.

Q What are Motseng’s

current leading property development projects?

Ipeleng Mkhari, Chief Executive Officer of Motseng Investment Holdings

Motseng has three neighbourhood retail developments in traditional township environments in South Africa, as well as leading public/private developments in government accommodation. The projects include the 10 320m² Umlazi Station Precinct Development in Durban; the 12 923m² Highlands Gateway Mall in Lesotho; and the 8 712m² Alexandra Township mixeduse development, comprising office and retail space, in Johannesburg.

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face to face

Q How are these projects

Q Do you think that the

Key to Motseng’s development and investment strategy is a targeted focus on the following: sustainable commercial development in townships; job creation; preferential procurement of local and black-owned entities; and enterprise development partnerships.

I think there are definitely sections of the sector focused on developing and supporting women and BEE players. However, the challenges of sustainability, experience and technical exposure are still real obstacles. In the construction sector specifically, it’s incredibly difficult to develop BEE and women contractors – there is also the challenge of identifying high Construction Industry Development Board-rated black contractors who are able to develop larger property schemes.

economically and socially contributing towards their surrounding areas?

Q What are your thoughts

on the current construction and development sectors in the property industry?

The construction and development sectors have experienced very strong growth in recent years. However, since the post-2010 challenges in the construction industry, there has been a significant decline. The area of potential growth is still the government infrastructure spend.

Q What are the sector’s biggest challenges?

Overall, the sectors will be affected by the economic downturn in South Africa. It remains a difficult trading environment for developers and construction firms, and the intra-dependency between these sectors is critical for the robust growth of each sector. While we have seen the growth of new retail and industrial property developments, one cannot ignore the challenges experienced by all.

Q How best can these

challenges be resolved?

The reality is that capital follows value – and this comment is as true in the property sector as it is in other sectors in the South African economy. There are no real quick-fix solutions to the economic challenges we face, and as developers and construction firms continue to look for opportunities, one cannot ignore the fact that all are seeking quality opportunities, which are more costly to cultivate.

sector is changing in terms of having more women and BEE players?

Q How best can the public

and private sector join forces in developing the country?

I find that there are a few public sector agencies attempting to actively promote black and black female construction firms and developers. Serious real opportunities exist in active public-private partnership (PPP) engagements between public and private sector players. However, the gestation periods of some of these development and construction opportunities are also prohibitive.

“There are no real quick-ﬁx solutions to the economic challenges we face, and as developers and construction ﬁrms continue to look for opportunities, one cannot ignore the fact that all are seeking quality opportunities, which are more costly to cultivate”

Q Where do you wish to see the construction and development sectors in the near future?

I certainly think that there needs to be further partnership at stakeholder level between industry and relevant government agencies. These sectors are very capital-intensive, so the barriers to entry are quite stark.

Q What are Motseng’s

future plans in terms of property development?

Motseng’s plans are to provide a strong pipeline for its own property investment portfolio and property service businesses, and to continue to partner with the public sector in its quest to develop its own stock through successful PPPs.

More on Motseng Investment Holdings

otseng Investment Holdings is a diversified investment holding company, with investment and operations in property through the property investment and property services boutiques, as well as diversified strategic investments. The company strives to become the premier black-owned investment group in southern Africa, and to have a universal reputation for its investment acumen and industry professionalism. Motseng Investment Holdings is invested in a wide portfolio of listed and unlisted

companies with key holdings in the property sector. Its investments are targeted at – but not limited to – infrastructure, property-related diversified industrials, transport, energy, services, manufacturing, telecommunications and financial servicesrelated industries. With a historic focus on property, Motseng Investment Holdings has diversified its offering by creating 10 investee companies to provide comprehensive and professional service delivery. October 2014 l property developer

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sector focus

Hey, big sector!

Spend a little time with the industrial sector and you will learn that it’s not just South African real estate’s best performer – it’s also a market that’s quite diversified, with particular influencing trends. We take a closer look By Candace King

BELOW Lords View Industrial Estate is an environmentally friendly and eco-sensitive industrial and logistics park that provides a prime location for industrial tenants to help reduce transportation costs and streamline the supply-chain process

ccording to the IPD South Africa Annual Property Index results for the year ending 31 December 2013, industrial was the top sector with a total return of 17,1%, outperforming retail at 16,8% and offices at 13,6%. In terms of the property segments, the industrial sector again impressed, with manufacturing/low-grade industrial achieving a 20,9% return, superseding retail’s super-regional centres (19,4%) as well as inner-city offices, which continued to trail behind with a 12,7% total return for the year. While competitive leasing strategies put pressure on base rental growth rates during the course of this period, commercial property vacancies declined across all three sectors, underlining the confidence in the recovery trends. According to the SAPOA Industrial Vacancy Survey Report 2013, the vacancy rate of industrial property as recorded by IPD at the end of 2013 was 3,3%,

down from 4,7% a year ago and 7,1% when vacancies peaked in 2009. The report states that the declining vacancy rate has resulted in an above-inflation base rental growth, which underpinned returns over the past year. The report notes that the declining vacancy rates have been supported by a combination of demand and supply factors. The previous year saw a pullback in the construction of new industrial property, supporting occupancy rates and rentals – about 950 000m² of industrial space was constructed during 2013, 15% down from the year before. On the demand side, the report states that manufacturing production and industrial capacity utilisation has yet to reach the heights of 2007, implying that industrial space users aren’t yet in full expansion mode. On a segment level, the report highlighted that warehousing and light manufacturing recorded the lowest vacancy rates for the

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sector focus FIGURE 1:

LONG TERM INDUSTRIAL VACANCY RATE

14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0

2001: 11.6 2009: 7.1 2007: 1.3

year with 1,7% and 1,2% respectively. Vacancies among hi-tech industrials, the most defensive industrial segment through the cycle, remained low at 2,3%, while standard units recorded the highest vacancy rate at 5,3%. Interestingly, there was an increased vacancy rate among larger industrial units during 2013. Industrial properties larger than 25 000m² recorded a vacancy rate of 5,7%, while units smaller than 25 000m² registered an average vacancy rate of less than two percent. On a regional level, the lowest vacancy rate was recorded for the greater Cape Town area, where an aggregate vacancy rate of 1,5% was recorded across 64 properties. Gauteng and KwaZulu-Natal followed with vacancy rates of above 3,2% and 3,8% respectively. The report highlights that although vacancy rates in these two regions was higher than that of the Western Cape, there was significant divergence on a nodal level, with vacancy rates ranging between zero and 10% in both these regions.

Industry opinion

As quoted in the Financial Mail “Property Handbook 2014” annual report, Managing Director of JHI Properties Nomzamo Radebe said, “The industrial market remains consistently strong (with growth of about seven percent), with steady activity that is mainly focused towards storage and distribution operations rather than manufacturing. There is good demand across the board from large- and medium-sized tenants. Generally, there is

3.3

always good movement in the distribution market because these businesses tend to have underlying contracts that shift over time, requiring them to realign their premises.” Radebe noted that growth in the manufacturing property sector is limited, but the market remains solid. “This market is mainly on longer-term leases, therefore more entrenched and costly to move,” she said. For warehousing and distribution users, said Radebe, easy access to transport, especially key highways and airports, as well as locations that are situated close to client bases are crucial. As modern space is now in demand, she noted that currently there are two types of users: thriving, high-profile expanding businesses looking for larger, more practical space; and users seeking smaller, more economical space. There is also a trend towards small- and medium-size businesses looking to own and/or develop their own premises. “Investment in industrial property is focused towards the industrial nodes, such as the East Rand, and where new ground is being opened up, such as Waterfall – and to some extent around airports,” said Radebe. The trend in the industrial investment market is around long-term efficiencies and new green facilities.”

Nomzamo Radebe, Managing Director of JHI Properties

Industrially green

A prime example of a green industrial facility is the Lords View Industrial Estate. Situated on a prime piece of land

FIGURE 2:

LONG TERM INDUSTRIAL BASE RENTAL GROWTH

15.0 10.0 7.0

5.0 0.0 -5.0

96 97

00 01 02

03 04 05 06 07

08 09 10 11

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sector focus in the heart of the bustling key Midrand node, Lords View Industrial Estate is located on Allandale Road (K58), which gives excellent access to both Pretoria and Johannesburg (via the N1 approximately 6km to the west) and the airport (12km to the east). The developers of Lords View Industrial Estate, Lord Trust Developers (Pty) Ltd, understand the current demands of today’s importers, distributors, and manufacturers who require considerably larger facilities, higher clear heights, greater parking and storage capacity, security and an environmentally sustainable design.

Lords View Industrial Estate has been planned as an environmentally friendly and eco-sensitive industrial and logistics park, which is reflected in some of its green features including Eskom electricity being supplemented with electricity converted from methane gas from the Enviroserv landfill site; centrally landscaped storm-water reticulation for irrigation purposes; on-site storm-water management and waste management; private open spaces with jogging and walking tracks; tree- lined roads and central boulevard; and the natural use of owls for rodent control.

Lords View Industrial Estate in view Phase #

Total size

Sold

For sale

Phase 1

21ha

17ha

4ha

Phase 2

13ha

7,5ha

5,5ha

Phase 3

12ha

Phase 4

Not yet proclaimed and services under construction

Phase 5

Not yet proclaimed and services to commence shortly

Phase 6

Not for sale

especially large units. There has certainly been good demand up to now, borne out by the likes of 41 000m² of speculative space let to UTI in the Raceway Business Park, and 25 000m² let to DHL in Plumbago Park. In our own park, Lords View Industrial Estate, we have concluded the following land sales: 105 000m² sold to Unilever for the development of an ice cream factory; 73 000m² sold to Grandmark International for an automotive parts warehouse; 50 000m² sold to Green Cross Africa for pharmaceutical manufacturing; 90 000m² sold to the Laser Transport Group for three large warehouses; and 18 000m² sold to Freightmore for warehousing. We chat to Warwick Lord, Chief Executive Officer of Lord Trust Developers (Pty) Ltd, about the overall industrial sector as well as the current stance of his industrial park development, Lords View Industrial Estate.

Q How is development doing in the industrial sector? The industrial sector in the greater Johannesburg area is, contrary to factors such as the current labour unrest and the unreliable power supply, doing reasonably well, as seen in the good take-up of space,

Q Currently, what are the biggest challenges that the sector faces? The lack of growth in the economy together with the labour unrest does not bode well for growth in the manufacturing sector. The industrial property sector needs a healthy economic environment for manufacturers to flourish. Furthermore, availability of a guaranteed supply of electricity is essential because the manufacturing sector cannot live with the constant threat of

blackouts. The provision of proclaimed and serviced industrial land will not happen if developers are not assured that power will be available timeously.

Q What are the latest trends in the industrial sector? There seems to be a lot of demand for large, modern industrial space where the correct logistical location is the deciding factor.

Q Tell us more about Lords View Industrial Estate. Our Lords View Industrial Estate in its original form was six phases with a gross size of 100ha. Sales have been good so far, and all servicing up to phase three is almost complete. The developers have recently purchased two adjoining properties that will take the park up to a gross of 130ha. These future phases are currently awaiting township establishment approval, and the EIA’s are expected to be complete by early 2015. The Lord Trust has now expressed its appetite for owning top structures that are custom-built for tenants. At present there are two proposals out with major international companies that, if successful, will result in leases for 50 000m² under roof.

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sector focus

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area review

Remotely on the rise T

James Templeton, Chief Executive Officer of Emira Property Fund

“In the Free State, retail developments in previously disadvantaged nodes and nodes where there is a strong residential sector are experiencing the most demand“

hey may seem “dead and desolate” to the seasoned cosmopolitan but the Northern Cape and the Free State are rich in natural resources and arable land. Both provinces boast thriving agricultural and mining industries, which bodes well for property development opportunities. As the largest and most sparsely populated province in South Africa, the Northern Cape is home to the famous diamond mines around its capital Kimberley, as well as its sheep farming and abundant tourism hot spots, including the Kgalagadi Transfrontier Park, Augrabies Falls, the Great Karoo and the Namaqualand area known for its beautiful daisies. Often referred to as South Africa’s bread basket, the Free State is one of the country’s agricultural hubs, producing more than 70% of the country’s grain. The Free State is also home to a wealth of mineral deposits, specifically gold and diamonds.

Development on the rise

In recent years, property and infrastructure development has garnered attention in both provinces, with a specific focus on renewable energy development in the Northern Cape, and housing and retail construction in the Free State. Northern Cape Premier Sylvia Lucas has noted that the goal for the province is to have it run entirely on renewable energy, which has initiated the construction of solar and wind power plants in the region. An example is the development of a new R1,5billion solar power plant near Kimberley. Built by independent power producer Droogfontein Solar Power, the project will supply the Eskom 132kV gridline and generate 85 458MW per year. The Premier noted that, in line with the Provincial Renewable Energy Strategy, the province will become a net producer of renewable energy to the rest of the country by 2020. Aligned with this development, agricultural development has been identified as a key strategic intervention in the growth of rural development. Transport infrastructure development has also been earmarked. Approved by the Cabinet in November 2013, the Specialised Economic Zones (SEZ) Bill is the Department of Trade and Industry’s proposed intervention for long-term

industrial and economic development. Along with the existing Industrial Development Zones, the proposed SEZs are key catalysts for fixed investment in South Africa’s most underdeveloped regions. Proposed SEZs have been identified in Upington, Northern Cape, which will focus on solar power, and in Harrismith, Free State, which will focus on agro-processing and logistics. Apart from infrastructure development, commercial property is also becoming prominent. According to Chief Executive Officer of Emira Property Fund James Templeton, both provinces are experiencing different growth patterns and demands. “Property development in the Free State is slow as the province does not show the population growth of some of the bigger regions,” he says. “With regards to the Northern Cape, especially in the towns of Postmasburg, Kathu and Kuruman, there has been a boom in property development in all sectors – retail, industrial, offices and residential – because of the growth in the iron ore mining sector.” Spread across the office, retail and industrial sectors, Emira Property Fund’s South African portfolio footprint spans across the country, with a five percent geographical spread in Bloemfontein.

Trends and challenges

Templeton notes that the strongest sectors in the Free State are retail and residential, while industrial is the weakest. In the Northern Cape, he says all sectors are performing strongly, adding that it is quite difficult to pinpoint a weak or strong sector in this region. “In the Free State, retail developments in previously disadvantaged nodes and nodes where there is a strong residential sector are experiencing the most demand,” he explains. “In the Northern Cape, all sectors that are focused in the iron ore belt are illustrating very strong demand in areas that previously had very little to no development but which now have to provide for the influx of the various new businesses.” Templeton says that one of the current challenges facing these regions includes infrastructure, which is one of the major drawbacks for developers.

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area review

While the Northern Cape and Free State provinces are sparsely populated and boast large tracts of open land, they both have the potential to serve as prime property hubs angled around the regions’ agricultural and mining prowess By Candace King

Emira Property Fund’s 21 266m² Southern Centre in Bloemfontein

“In the Northern Cape, development and infrastructure demands are problematic due to the development boom, which councils have not been able to keep track of,” he says. “Developers have provided for infrastructure in their feasibility because waiting for councils could take a long time, with budget constraints also playing a further hampering role. In the Free State, infrastructure is less of a problem. However, developers have to make full provision in their budgets to take care of all bulk services. Zoning delays and plan approvals take very long and often frustrate developments.” Another pertinent issue in these areas that has been raised by developers in the industry is that of corruption within government. Furthermore, very high rates and taxes and climbing electricity costs pose additional problems. “Getting land costs, building, rentals and return ratios to work

and still give financiers comfort is a challenge within itself,” says Templeton. In terms of sustainability, he says that property and development sustainability is very important in both regions in light of several aspects that play a role in property development. These include supply that overshadows demand, predominantly in the Free State; very high land costs in relation to rentals being achieved; extremely high infrastructure costs; incredibly stringent financing requirements that require the developments to prove they can sustain themselves; and high rates and taxes and electricity charges. Templeton highlights that the biggest and most noteworthy development projects presently under way include Heritage Square Shopping Centre, Kathu; Kathu Village Walk Phase 2, Kathu; the Courtyard mixed-use development, Bloemfontein; Southern Centre redevelopment and

expansion, Bloemfontein; N8 airport mixed-use development, Bloemfontein; China Retail Centre, Bloemfontein; Woodlands Shopping Centre, Bloemfontein; Checkers Centre, Kathu; and Bestwood mixed-use development, Kathu.

Future growth

“Even though there are several problems, we must remember that no development is easy,” says Templeton. “As growth is steady, there are still very lucrative opportunities in the area. While there are no fireworks at the moment, there are still serious opportunities – especially if the developer is willing to get creative.” He adds that, in the near future, developments will continue at the current pace – but new ones will be more difficult to come by. Only the seasoned investors and developers with an eye for opportunity will be able to secure them. October 2014 l property developer

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The modern industrial revolution If you go downtown to The Sheds @1Fox today, you’re in for a big surprise. There’s an old forlorn industrial space that’s ready to emerge from its disguise By Candace King Photographs by Michael Glenister

here are two distinct and exciting traits about the Johannesburg CBD – its rich and generally unearthed history, and its current widespread revival. Inner-city Jo’burg is where the magic began and where it still continues today. From trendy corner coffee shops to entire “village-like” communities and precincts, the Johannesburg CBD is changing as abandoned light-industrial buildings of yesteryear are being redeveloped into modern urban cosmopolitan hot spots that now dot the inner-city. Nestled just below the bustling M1 freeway, and hidden behind brick walls and mammoth steel gates is an entire district of shabby “abandoned” industrial warehouses with the greatest potential to become a gold mine of redevelopment activity – a vicinity that has the opportunity to become the CBD’s next “cool kid” retro hang-out. Realising the prospects of this budding area, a group of creatives and developers came together to flesh out the concept, design and development of a contemporary food, wine and lifestyle emporium that’s set to become a new attraction for Jo’burg and a showcase of South African produce. Owned and being renovated by the Johannesburg Land Company (Pty) Ltd, the selected locale – a cathedral-like industrial space that’s reminiscent of a Victorian-era greenhouse – is receiving a new lease on life.

The fox is out the bag

Soon to be known as The Sheds @1Fox, the emporium will become a vibrant, permanent marketplace – a foodie destination set in an arcade of fresh produce, artisanal food and drinks, deli goods and designer items surrounded by restaurants and cityslick bars. Jozi extraordinaire Gerald Garner is a key partner in the development and operation of The Sheds @1Fox. Apart from being the Managing Director of Double G Media (Pty) Ltd, Garner runs JoburgPlaces tours and events, and is the author of the Spaces

& Places series of guide books – JoburgPlaces and SandtonPlaces. Garner is also contracted to run and administer the Secretariat of the Johannesburg City Tourism Association and is a partner in Live World Productions. The latter is the producer of the 2014 ABSA Joburg City Festival. He is working with Jan Roode, known for the innovative Happy Me brand that involves teas, coffees and mixology drinks, to bring The Sheds @1Fox to reality. “The concept started around December 2013, an idea that was initially Gerald’s – he walked in and immediately saw the potential,” says Fred de Wit, Operations Executive at Summit Management Services (Pty) Ltd, a subsidiary of the Johannesburg Land Company (Pty) Ltd. Thereafter, says De Wit, lease negotiations were entered into and the contract was signed by the end of June 2014, with construction and renovation beginning in July 2014. For something that was conceived in such a short time, De Wit says that there has been phenomenal interest from the public, local celebrity figures, and music and event coordinators and groups. “There’s a great interest in this project, with various up-market tenants already showing a desire to set up shop at The Sheds @1Fox,” he says.

The Craft Bar at The Sheds @1Fox will form part of a craft beer hall where visitors can relax and enjoy the vibe

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Fred de Wit, Operations Executive at Summit Management Services (Pty) Ltd, a subsidiary of the Johannesburg Land Company (Pty) Ltd

While it may rival Jozi’s artisanal A-listers such as Arts On Main (the home of Market On Main) and 44 Stanley, De Wit says that the aim for The Sheds @1Fox is to be completely unique. “We want to create a space for inner-city corporates and those working in the CBD to venture out of the office and visit for lunch or after-work drinks,” he says.

The old, the new, and the green

The site of The Sheds @1Fox has an intriguing past. With sections of the location almost 80 years old, a portion of the site was once allegedly a dynamite factory that supplied explosives to the surrounding mines in Johannesburg. During World War II, the factory was shut down in the fear that the Germans would try to take the explosives. It’s also alleged that there’s an old mine below the site, where an underground bridge rests. “Steeped in history, this is the site where industrial equipment supply business Hubert Davies opened its first mining warehouses in the 1890s,” says Garner. “There was even a liquor licence granted for the site in those years. We will recreate the Good Luck Bar, where miners drank their sorrows away while hoping for the next big piece of gold. “While it is impossible to prove, a portion of the main warehouse, which is built from

timber, could be the oldest warehouse in all of Johannesburg. Most of the plans date back to the 1920s and 1940s when one looks at the bigger precinct, but this is Ferreirastown. This is where the first mining explorers pitched their tents. It is the origin of Johannesburg in so many ways.” Themed as a South African showcase of the best produce available in the country where Jo’burg’s suburbanites go to enjoy a truly urban experience, The Sheds @1Fox will initially open as a versatile events venue with temporary market activations and popup restaurants and stores, but will ultimately be turned into a permanent food, wine and design market space. Ideally located in Ferreirastown/Westgate near the junction of the M1 and M2 highways but within walking distance of the Corporate Mining District (Marshalltown), it will be a prime hub of urban entertainment. It’s also easily accessible by Gautrain bus as well as the Rea Vaya bus. The efficient Rea Vaya system has two station complexes within walking distance (Westgate and Chancellor House), providing quick links to the Gautrain Johannesburg Park Station and other desirable city districts, including Maboneng, Braamfontein and Milpark. It will attract the city’s corporate workforce and apartment dwellers for a rich shopping and leisure experience in an extraordinary setting. It will also become an attraction for the millions of travellers passing through Johannesburg each year. “We have tried to maintain the original old-world aged industrial look and feel of the site by keeping and simply reinforcing the existing old wooden beams,” explains De Wit, adding that the unused timber supply will be utilised in the making of the marketplace’s furniture. Sticking with the eco-friendly route, De Wit says that the project will install energysaver fluorescent lights as well as LED lights. “Pot plants will be placed extensively around the site as part of a food-garden installation,” he says. With active gas lines confirmed by eGoli Gas on Marshall Street and Hubert Street, he adds that the emporium will be able to access gas for its operation. With a current development cost of R2,5million, the 2 100m² marketplace will feature about 60 stalls. The market space will also accommodate outside food trucks that will feed hungry visitors as they enter or exit. The development will also include a 3 600m² parking lot, situated opposite the emporium and able to accommodate about 150 vehicles. The site will boast brand new sidewalks and street trees courtesy of the Johannesburg Development Agency.

Striking gold

Like the vast opportunity that lays in waiting across the city of Johannesburg, the potential of The Sheds @1Fox is unlimited. The site boasts several adjacent buildings that have the potential to become future redevelopment projects or phases. “We could turn the neighbouring derelict buildings into residential apartment units,” says De Wit. “There are also certain sections of the site that we are not currently renovating, but which have the potential to transform into further entertainment spaces of the project. The possibilities are endless. “The negative perceptions about the Johannesburg CBD are changing. This project is not only good for the tenant and sub-tenants, it’s also a positive venture for the city and will surely stimulate further redevelopments of other sites. Johannesburg isn’t dead; and I strongly believe that this project will be a success.” The Sheds @1Fox is scheduled to open its creaky contemporary doors on 1 October 2014 as the temporary, pop-up marketplace and events space until 31 December 2014. Tenant installations are set to follow in January 2015; and in March 2015 The Sheds @1Fox will open as a permanent marketplace and events venue with restaurants and shops.

Gerald Garner, Managing Director of Double G Media (Pty) Ltd, Manager of JoburgPlaces tours and events and author of the Spaces & Places guide books

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Enter the agritropolis Long rejected since the dark days of apartheid, the south of Johannesburg is on the verge of transforming into a one-stop agricultural-tourism-educational-environmental-historical shop – a thriving destination By Candace King Photographs by Michael Glenister

Richard Bennet, Marketing Director at iProp (Pty) Ltd, SOJO Chairman and SAPOA National Developers Forum Committee Member

Aptly referred to as Johannesburg’s Jewel of the South, the Klipriviersberg Nature Reserve is the largest proclaimed nature reserve in the Johannesburg Metropolitan area, and boasts a vast diversity of fauna and flora

Map showing the core focus area of KlipSA located in the southern areas of Johannesburg

n intricate yet simple agriculturally based project with tremendous potential is brewing in the south of Johannesburg. Past the once-active mine dumps, a dormant market is on the cusp of transforming the quiet Jo’burg South into the next key tourism hub, rivalling the likes of Magaliesberg and Hartebeespoort Dam. Dubbed the Klipriviersberg Agritropolis initiative, the project is the brainchild of south-based Klipriviersberg Sustainability Association (KlipSA) and South of Joburg Business and Tourism Forum (SOJO), who have established a viable model in a very specific location. The initiative is riding on the backbone of a proposal for a partnership in social and economic development that adds value to natural biodiversity assets. Its purpose is to simultaneously realise community, social and economic upliftment, which is based on protecting, promoting and enhancing the value of the special natural qualities of the South of Jo’burg. Based on a multifunctional value chain as well as organic production, the severalpronged initiative will include key projects and programmes focused around stimulating agriculture, tourism and education, assisting job creation, addressing food scarcity, and preserving the surrounding natural assets. “We want to create an intense-urban agriculture lifestyle and simultaneously protect, promote and enhance the 680ha Klipriviersberg Nature Reserve – a prime natural asset of the area that’s home to historical sites of value,” says KlipSA Chairman, development consultant and SAPOA Affiliate Andrew Barker. “With its biodiversity and historical heritage, the reserve can be boosted as a tourism hub.” Aptly referred to as Johannesburg’s Jewel of the South, the Klipriviersberg Nature Reserve is the largest proclaimed nature reserve in the Johannesburg metropolitan area, and boasts a vast diversity of fauna and flora. Situated a mere 10km from the centre of Johannesburg, 5km from Soweto and easily accessible from Sandton, the East and the West Rand, the Klipriviersberg Nature Reserve is of botanical, geological, archaeological, historical and cultural interest.

Andrew Barker, Chairman of KlipSA, development consultant and SAPOA Affiliate

Realising the potential

Apart from the Klipriviersberg Nature Reserve, the South is home to important and irreplaceable areas of environmental and biodiversity conservation value as well as viable land of agricultural potential. In line with the Johannesburg Growth and Development Strategy for 2040 (GDS 2040), KlipSA and SOJO propose the establishment of the Klipriviersberg Economic and Ecosystem Development Zone, a major special economic and ecosystem development zone covering Johannesburg, Ekurhuleni and Midvaal that will act as a future economic development zone for the Gauteng city region and thus stimulate the Klipriviersberg Agritropolis. “Gauteng is growing and will need a viable source of food production,” says Richard Bennet, Marketing Director at iProp (Pty) Ltd, SOJO Chairman and SAPOA National Developers Forum Committee Member. The level of food insecurity in Johannesburg, measured by the number of people who go without at least one meal between three and 10 days in a month, is sitting at 27% city-wide and at 41% in the poorest neighbourhoods.

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feature

sHouldn’t you be talking to one of kzn’s largest landlords? With more than a million square metres of lettable space, Ithala’s diverse property portfolio is the second largest in KwaZulu-Natal, following the Provincial Government. With 22 retail centres, 3 industrial estates and 13 light industrial complexes ideal for SMME businesses, Ithala is sure to have the property to meet your unique business requirements. Isn’t it time you spoke to us about your property needs? Tel: 031 907 8792 Email: properties@ithala.co.za

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October May 2014 2014 l property l property developer developer

2014/09/11 5:44 PM

feature According to a recent Business Day article, 10 000 new people enter Johannesburg on a monthly basis – this equates to 300 new mouths to feed daily. To address this matter, the proposal puts forward an organic farming initiative focused around food security, job creation and community upliftment. Integrated activities of the agri initiative will include agriculture, aquaculture, energy generation, biomass generation and recycling. It will stimulate local economic development in terms of suppliers and services, farming, markets, local product beneficiation, agri processing and logistics. The tourism aspect of the overall initiative is anchored around the preparation of an integrated tourism development strategy to realise economic and social investment and growth from the diverse natural and human resources and infrastructure of the Klipriviersberg region. The initiative also suggests an environmental upgrade of the area, including the Klip River Wetland Management Plan, which proposes the preparation of an integrated management plan for the Klip River wetlands in order to improve the quality and quantity of water in the river, and stimulate related economic and social development from the wetland goods and services. Furthermore, the initiative includes the proposed establishment of an environmental educational centre – the Klipriviersberg Sustainability Education Centre – in order to provide educational resources and facilities for local communities, schoolchildren and university students.

Getting involved

Apart from KlipSA and SOJO’s involvement, Bennet and Barker note that the City of Johannesburg is very keen on this initiative. Furthermore, government on a national, provincial and local level is on board, along with business entities from a corporate social investment angle. “The city owns a vast amount of land in the south of Johannesburg,” explains Barker. “You and I own that land through the city. This land is being abused through misuse,

illegal dumping, and so on. Through the project, the land will remain an asset of the city but will be occupied by the community through the initiative of the private sector. The land will be administered and managed through carefully considered institutional and business structures that involve all relevant stakeholders.” Barker notes that current development in Gauteng is perpetuating the apartheid spatial legacy of isolating the majority of citizens. “We need to bring the jobs to the people, not the other way around,” he says. Furthermore, he says that environmental concerns of a project are usually the last thought after the project has been developed. The agritropolis will flip this method of development on its head. “Key to this is that we are offering the richest opportunity by placing the project close to the workforce,” says Bennet. “In addition, the agricultural production and delivery chain will be greatly assisted in that extensive distances of travel for fresh produce will be eliminated, and the quality of food will be improved – thus a ‘seed to feed’ model is established. There are many farming initiatives, but they’re unsustainable. If you get a group of farmers producing as a single community and the production line fails, the whole system will fail. One needs to create an agglomerated market.” “Collaboration is a key fundamental in this project, and we hope to see it grow in a short period of time,” says Barker. “There has been good support thus far, and the vision has been captured. It now requires ‘glass half-full’ thinking.” Like the major success of the Winelands in the Cape that spurred on tourism, education and agriculture, Bennet says the same can be achieved in the south of Johannesburg. “The potential is unlimited,” he says. “It all boils down to the drive and mind-set of people wanting to make a difference.” “It can change the city, change the current way of thinking, and change the legacy of apartheid and lifestyles of many people,” says Barker.

The Klip River, which flows through the area, is a key natural element of the agritropolis initiative

The Klipriviersberg Nature Reserve has a wide diversity of fauna and flora

Klipriviersberg Agritropolis key projects and programmes l Organic farming initiative l Tourism strategy l Environmental upgrade: Klip River Wetland Management Plan l Education and training: Klipriviersberg Sustainability Education Centre

Zebra roam the hills of the Klipriviersberg Nature Reserve, along with wildebeest and a variety of other antelope

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Tran

feature

Transnet Property: Port Elizabeth

1. Warehouse space, approx. 12 226m2, (enclosed unit) and 2. Warehouse space, approx. 8 000m2,(not enclosed) Both areas are situated inside the main warehouse at Transnet Park, Ries Street, Deal Party. 3. Buildings in extent ±1 114m2 and land in extent ±11 307m2 Grahamstown Road, Deal Party. 4. Semi-secured, hard surfaced, serviced land in extent ±26 045m2, situated in Grahamstown Road, Swartkops. 5. Portion of truck repair workshop (including ofﬁces) in extent ±1 591m2, situated in Grahamstown Road, Swartkops. 6. Ofﬁce building, in extent ±434m2, situated in the old COMSEC precinct off Grahamstown Road, Sydenham. The proposals should include the following: • Full details of proposer • Rental offer • Proposed lease term • Proposed usage It should be noted that the storage of hazardous or harmful commodities will not be permitted. Transnet’s normal credit approval process will have to be complied with and the lease of space will also be subject to the terms and conditions of Transnet’s standard Agreement of Lease (a copy of which will be made available on request). Transnet reserves the right to withdraw this proposal invitation at any time and will be under no obligation to accept any proposal received

Should you have any queries, please contact Karin Munro on telephone no. 041 507 1300

October May 2014 l property developer

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2014/09/11 2:48 5:38 PM 2014/09/12

editorial

Cutting red tape in Gauteng to boost economic growth Siphiwe Ngwenya, Group Chief Executive Officer of the Gauteng Growth and Development Agency (GGDA), shares his opinion on the importance of the public sector’s role in stimulating sustainable economic growth

conomic development involves a number of national, provincial and local government agencies interacting at different levels. In this complex and fluid environment, a coordinated and aligned public sector is one of the core requirements for sustainable economic growth. This needs to occur both horizontally and vertically. Crucially, the strategies and actions of the Gauteng agencies seized with the agenda of radical economic transformation must themselves be coordinated and aligned. In addition, horizontal alignment is required at the metropolitan and district municipal levels. Economic development departments and agencies are all grappling with similar challenges in their respective local economies. These include high unemployment, inadequate infrastructure and effective support for local businesses. To facilitate progress, municipalities need to learn from each other about what works – and the Gauteng Growth and Development Agency (GGDA) is playing a major role in the sharing of this knowledge. My assessment is that, while there is still considerable work to be done, horizontal coordination and alignment is improving at both the provincial and local levels. Vertical alignment is another matter and, in my view, requires a paradigm shift to fix. Fundamentally, we need a better model of engagement between national, provincial and local government in the field of economic development. In order to address the issue of vertical alignment, the GGDA and the municipalities in Gauteng have started a process of providing Strategic Project Development Facilitation Services. These will assist property developers and investors in navigating public sector-related approval processes using different fast-tracking mechanisms. The aim of the new boutique services is to reduce red tape with the view to promote economic development and foster investment in both developed and under-developed economic nodes of the Gauteng city region. Criteria have been developed and adopted to identify strategic projects that the private sector leads that will receive the fast-tracking services from a task team provincial and municipal officials will form. Retail, commercial and industrial development projects will be prioritised. Projects with an investment value higher than R50-million offer significant job opportunities and are likely to have a catalytic impact on the local economy, and will receive the highest score from a newly developed rating methodology. The other elements of new criteria that will be used for selected priority projects will be linkages with small and medium enterprises and environmental friendliness. The GGDA, with its partners, has already identified and packaged infrastructure and sector development projects throughout the province.

We are now planning partnerships with local and international property developers to implement some of the strategic infrastructure projects. This includes the Gauteng Industrial Development Zone (IDZ) located within OR Tambo International Airport. The first phase of the IDZ is a Jewellery Manufacturing Precinct. The second project is the NASREC Special Economic Zone, which will attract investors in the information and communication technology (ICT) and the business processing and outsourcing sectors. Further, we are inviting interested parties to partner with us as we expand The Innovation Hub, which is located in Pretoria next to the Council for Scientific and Industrial Research. The Innovation Hub focuses on research and development, renewable energy technologies, ICT and the green economy. In the automotive sector, the Gauteng government has invested millions of rands in the Automotive Supplier Park located in Rosslyn that serves the international automotive companies (including Ford, Nissan and BMW) based in the province. The GGDA and the City of Tshwane are working together to expand this facility and position the city as an automotive capital of Africa. Opportunities also exist for property developers to join hands with the GGDA in the next commercial development phase for the Constitutional Hill site. The site is home to the Constitutional Court of South Africa and other historical symbols of our country, such as the women’s jail. Additionally, various other provincial and national government agencies have their own infrastructure projects in Gauteng that present opportunities for property investors and developers. These include the extension of Gautrain lines, the Passenger Rail Authority of South Africa and Transnet rolling stock programme, the provincial plans on internet broadband, the greening of the Gauteng economy and the re-industrialisation of old industrial areas. The creation of the Gauteng Investment Centre (GIC) – a one-stop shop at The Place, No 1 Sandton Drive in Sandton, demonstrates a clear commitment of the GGDA and its government partners to build the link between the government as a whole and the private sector. It gives true meaning to the word partnership. The ultimate goal in terms of promoting economic development is a genuine partnership between national, provincial and local government. In the past, the partnership model failed because relationships were fragmented. The establishment of the GIC will streamline the process and lead to a significant maturing of the current relationship model between government and the private sector. Considerable resources go into economic development at all levels. We must ensure we get maximum “bang for the buck” out of that investment. If we cannot use the rands wisely and make a true transformational difference, we would be better off giving them back to the businesses and families that earned them in the first place.

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editorial

CHARITY BEGINS AT HOME SAPOA’s combined December/January issue of

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October 2014 l property developer

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2014/09/12 2:31 PM 2014/09/12 1:54 PM

PDP 2014

The Property Development Programme 2014 After an insightful two weeks of hard work, team brainstorming and intriguing project proposals, this yearâ&#x20AC;&#x2122;s SAPOA Property Development Programme (PDP) 2014 was once again a big success By Martin Ferguson, HR, Education, Training and Development Manager at SAPOA and PDP Facilitator

Martin Ferguson, HR, Education, Training and Development Manager at SAPOA

One long-term objective of the course is to promote the profitability of sponsoring companies through high-level management development. In addition, delegates build lasting business and personal relationships with course colleagues

he extremely popular Property Development Programme (PDP) is presented jointly by SAPOA and the Graduate School of Business (GSB) of the University of Cape Town. Running from 20 July to 1 August 2014, this intensive two-week course is South Africaâ&#x20AC;&#x2122;s premier management programme on property finance, valuation, property law, negotiation, investment, development, marketing and management. Delegates attending PDP find that their skills and knowledge are sharpened not only by the practical instruction and case studies, but also by the interchange of ideas with their course colleagues, resulting in an extended basic knowledge in the principles and practices of property investment, development, marketing and management. An experienced GSB faculty, supplemented by national and international instructors, provides a strong base to the programme in the areas of financial management, group dynamics, strategic thinking, negotiation, and presentation skills and economics. Sourced by SAPOA, the balance of the instruction and seminar leadership comes from leading figures in the industry and from a series of projects, which are undertaken on a competitive inter-team basis. One long-term objective of the course is to promote the profitability of sponsoring companies through high-level management development. In addition, delegates build lasting business and personal relationships with course colleagues.

Participants are drawn from the many disciplines that comprise the commercial property industry, for example property development, financial, legal, architectural, engineering, quantity surveying, building planning and the brokering sectors. The calibre of participants is traditionally very high, and the standard of instruction is therefore pitched at senior and potential senior management. With a maximum of 64 delegates selected to attend each year, the PDP course is extremely intensive, with lectures and projects running from 8.30am to 10pm, Monday to Friday. Thus it is required that delegates live in the recommended accommodation for the duration. The learning process is stimulated through a combination of class instruction, discussion, seminars and project work. This is supplemented by periods of private preparation, during which each delegate reviews the course material provided during the past day and prepares for the coming lectures. Participation in lectures and groups is essential for the learning process. Projects are assigned during the course, for completion by the groups. A final group project is presented to a panel of judges. On the last evening of the course, delegates attend a dinner where they receive certificates from the GSB, and awards for the final project. An assessment of each delegate is forwarded to the sponsor and the delegate on completion of the course.

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PDP 2014

PDP 2014 reflections PDP Co-ordinator Professor François Viruly, well-known South African property economist and lecturer of Urban Economics, Property Development and Portfolio Management at the University of Cape Town in the School of Construction Economics and Management, provides insight into this year’s PDP proceedings By Professor François Viruly

he Property Development Programme (PDP) provides a unique learning experience characterised by a combination of lectures and the application of property development concepts in a casestudy environment. In the first week of the programme, participants are taken through critical concepts associated with the different stages of the property development process. Lectures cover the inception of the development idea, urban planning, urban design, feasibility studies, and property and asset management. In recent years, the programme has evolved, reflecting new trends such as green buildings and the challenges of undertaking developments across the African continent. The learning experience is also enhanced by the fact that participants come from different professional backgrounds in the private and public sector. PDP offers an opportunity for delegates to integrate their existing knowledge with aspects of the development process that they may not necessarily be exposed to on a daily basis. In the second week of the programme, participants are expected to undertake a comprehensive development feasibility study, which is done in syndicates. Every year, the PDP Organising Committee identifies a Cape Town site that offers the required level of development complexities. The syndicates are expected to prepare a balanced and realistic feasibility study for the proposed site. In judging the completed feasibilities, the judging panel gives specific attention to a number of parameters. These include urban planning, design, market analysis, financial feasibility, the building cost programme, the bankability of the project, and the legal opportunities and constraints associated with the site. In 2014, a decision was taken to identify a site with the independent, Cape Townbased property development company Rabie Property Group, the developers of Century City. The chosen site is located in the 30ha Ratanga Junction theme park. Some of the challenges associated with the site included existing buildings linked to the theme park, the existence of water canals,

the expectations of the existing owners, and the need to improve accessibility to the site. In undertaking their feasibility studies, the syndicates were asked to provide Rabie Property Group with an appropriate value for the land based on a residual land value calculation. It is worth highlighting that, on completion of the feasibility studies, the syndicates submitted land values that varied between R13-million and R193-million. The proposed total bulk, including residential and commercial uses, varied between 20 000m² and 72 000m². The winning team, Feroa Developments, proposed a mixed-use development with residential, retail and office uses, providing a total bulk of 38 466m². Approximately 30 466m² was allocated to the residential component, 2 000m² was allocated to the retail component and 6 000m² was allocated to the office component. The total capital outlay was approximately R1-billion, and provided a project yield of 11,84%. The objectives of the proposed project included the achievement of an acceptable return on the development, the creation of a vibrant urban structure, and the development of an appropriate balance between home, work and play. The proposed urban design was based on easy access and optimal connectivity for pedestrian movement, designing within climatic constraints and enhancing energy

and resources efficiency, the prioritisation of vistas, the adaptive re-use of existing structure to form public retail space, and continuity of a green network through a series of parks and green spaces. The developments proposed by the other six syndicates included a business school focused on the film industry; Bridgeway Skies (a mixed-use landmark building); Life@Century City, a high-density mixeduse development that included a five-star green hotel; up-market residential blocks; conference facilities; and modular residential units based on the use of modular units. In 2014, PDP once again illustrated that a site can provide a broad spectrum of design and feasibility options. A common thread apparent across the different projects was that, in devising a successful project, developers must pay attention to the technical options of the site (the bulk) while at the same time considering the marketability of the project. While syndicates often focus on the development of mixed-use developments, there is often a realisation that complexities exist in sequencing such developments correctly. Insufficient attention was often given to time required to plan the project before construction can start. PDP continues to offer an opportunity for participants to grapple with the considerable challenges that developers face daily. Until next year!

Professor François Viruly, well-known South African Property Economist and Lecturer of Urban Economics, Property Development and Portfolio Management at the University of Cape Town

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PDP 2014

PDP 2014 participants Abhulimen, Osezua

Jasper, Marty

Mlambisa, Nomonde

Alberts, Stanton

Javangwe, Wilson

Moodley, Linda

Atlaw, Mekbib

Joubert, Nicolette

Mothibeli, Itumeleng

Bellamy, Mandy

Lekoetje, Potlaki

Motopi, Ann

Botha, Daleen

Levi, Marc

Naicker, Pershia

Bye, Ruan

Mafunga, Sizwe

Naidoo, Krishnen

Byres, Kelvin

Mahlangu, Bongani

Ntikinca, Ndileka

Christelis, Peter

Mahlangu, Vusi William

Nell, Johann

Clark, Sam

Makubalo, Litha-lobom

Nene, Khanyisile Primrose

Cronje, Ingrid

Malobola, Job

Nicoloudakis, Astrino

De Wit, Peter

Mbata, Malcolm

Nyambeni, Luambo Nicholas

Ermacora, Marco

McKeown, Darroll

Palekar, Bilquis

Grobler, Hermanus Johannes

Mjwara, Queen

Palframan, Mike

Haupt, Raynard

Mkhize, Luther

Petersen, Eben

Realbanc Limited Project Manager

Nedbank CPF Property Valuer

Gerizan Trading Chief Executive Officer

Hyprop Investments Limited General Manager for Somerset Mall

Stor-Age Self Storage Development Project Manager

Standard Bank Transactor: Real Estate Africa

Focus Project Management Director

Christelis Group (Pty) Ltd Proprietor/Founder

Mbatha Walters and Simpson (Pty) Ltd Regional Director

Nedbank Relationship Manager

Deloitte Inter Continental Hotels group Assistant Director

Fortress Income Fund/Starship Props One cc Accountant/Asset Manager

Standard Bank Namibia Commercial Property Manager

Rabie Property Group (Pty) Ltd Project Manager

Standard Bank Development Project Manager

Javangwe Advisory and Intermediary Services Director

Old Mutual Investment Group (Pty) Ltd Deal Implementation (Legal)

Liberty Properties Development Manager

Tarloy Properties (Pty) Ltd Executive Director

City of Johannesburg Assistant Director

Focus Project Management Construction Project Manager

Mahlatsi Tumelo Cost Consultants (Pty) Ltd Financial Director

Indwe Quantity Surveyors Director

Transnet: Property Manager: Legal Services

Growthpoint Management Services Project Manager

AECOM South Africa (Pty) Ltd Executive

Liberty Group Properties Head: Commercial Leasing

Focus Project Management Construction Project Manager

PRASA Assistant Portfolio Manager

Standard Bank Portfolio Property Leasing Manager

Vukile Property Fund Asset Manager: Retail

ABSA Head: Building Project Management

Nedbank Ltd Relationship Manager

Capital Property Fund Asset Manager

Transnet Portfolio Manager

Capital Property Fund Asset Manager

Airports Company SA Corporate Property Specialist

Damatsa Investments (Pty) Ltd Director

Palconi Projects (Pty) Ltd Managing Director

Palekar & Associates (Pty) Ltd Architect

Nedbank Corporate Sales Manager

FNB Commercial Property Finance Credit Head

property developer l October 2014

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PDP 2014

Back row, from left Osezua Abhulimen, Astrino Nicoloudakis, Johann Pieterse, Karel Korner, Stanton Alberts, Hermanus Johannes Grobler, Grant Wilson, Marco Ermacora, Johann Nell, Thys Steynberg, William Wallace Fifth row, from left Bevan Williams, Potlaki Lekoetje, Queen Mjwara, Hope Segone, Maxwell Sacks, Mandy Bellamy, Colin Young, Kelvin Byres, Krishnen Naidoo, Nicolette Joubert, Linda Moodley, Daleen Botha, Victor Sodala Fourth row, from left Werner van Antwerpen, Marc Levi, Peter de Wit, Ingrid Cronje, Marty Jasper, Thuli Zulu, Craig Wittstock, Khanyisile Primrose Nene, Mekbib Atlaw, Sithiwe Thubane, Litha-lobom Makubalo Third row, from left Adrian Read, Sam Clark, JC van Pletzen, Kamal Soonderjee, Eben Petersen, Mike Palframan, Wilson Javangwe, Peter Christelis, Joey Vieira, Sinéad Whitaker, Raynard Haupt, Mokgwetsi Phala, Ndileka Ntikinca, Luther Mkhize Second row, from left Julie van Os, Ruan Bye, Itumeleng Mothibeli, Krishen Veerapen Chetty, Stanton Alberts, Bongani Mahlangu, Job Malobola, Ann Motopi, Pershia Naicker, Jeanette Seabe, Rizwaan Ismail; Bilquis Palekar Front row, from left Norman Griffith; Martin Ferguson, Malcolm Mbata, Chris Teague, Darroll McKeown, Nomonde Mlambisa, Vusi William Mahlangu, Sizwe Mafunga, Luambo Nicholas Nyambeni, Chris Segar, Gilbert Sunglee, Nicholas Ramsay, Professor François Viruly

Phala, Mokgwetsi

Steynberg, Thys

Wallace, William

Pieterse, Johann

Sunglee, Gilbert

Whitaker, Sinéad

Ramsay, Nicholas

Teague, Chris

Williams, Bevan

Read, Adrian

Thubane, Sithiwe

Wilson, Grant

Sacks, Maxwell

Van Antwerpen, Werner

Wittstock, Craig

Seabe, Jeanette

Van Os, Julie

Young, Colin

Segar, Chris

Van Pletzen, JC

Zulu, Thuli

Segone, Hope

Veerapen Chetty, Krishen

Soonderjee, Kamal

Vieira, Joey

Arc Architectural Consultants Pretoria (Pty) Ltd Director

Basil Read Developments (Pty) Ltd Development Manager

Hodari Properties Asset Manager

Growthpoint Properties Ltd Property Manager

Malca Properties cc Managing Member

Eskom General Manager Real Estate

Avior Research Corporate Finance: Property

Old Mutual Investment Group Investment Professional

Standard Bank Product Manager Commercial Property Finance

Standard Bank Deal Maker

Currimjee Property Management & Development Ltd, Property Manager

Flanagan & Gerard Retail Leasing & Developer Manager

Phenomenal Developers Managing Director

Growthpoint Sustainable Development Management

Nsika Architects Project Architect

JD Property Developers Owner

Amdec Commercial Property Manager

AECOM South Africa (Pty) Ltd Associate

Standard Bank Manager: Real Estate Finance, Structured Debt

AECOM South Africa (Pty) Ltd Associate

Stratford Property Ventures Development Manager

Nine Cubed Group Managing Director

Investec Leasing Consultant

Vivo Energy Mauritius Limited Network and Property Manager

Growthpoint Properties Limited Project Manager October 2014 l property developer

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2014/09/11 3:27 PM

PDP 2014

Developing ideas Here are this year’s PDP team property development project proposals By Candace King

abie Property Group (RPG) is a prominent South African property developer with a main focus in the Western Cape and, in particular, large mixed-use projects such as Century City, Westlake, Big Bay and Royal Ascot. Its core ethos is to create urban landscapes in which people can live, work, play and shop. On top of this, the group’s aim is to deliver good returns and substantial capital growth for investors. RPG volunteered the remainder of Erf 5153, Montague Gardens, Century City, as the focal point for the project for the PDP class of 2014. Previously known as the Ratanga Islands, the property in its current state consists of a theme park located on a centre island within Century City, which has become unviable and will be discontinued. The 2014 PDP group project objective was to make a land offer to RPG for the remaining portion of Erf 5153 based on a scheme that compliments the surrounding new Bridgeway office and convention centre precinct. This precinct, which is currently under construction, has been modelled on a new urban green building theme. The development needed to consist of complimentary uses, with no zoning restrictions applied. Creating a sense of place was a primary goal, which directly addressed the need to

“work, play, live” within the newly built hi-tech environment. The context of surrounding buildings was an extremely important consideration in determining the uses.

First winning team: Feroa Developments (Pty) Ltd

In keeping with the Ratanga tropical theme, and given that this is Africa, the Feroa Developments team based its name on The Jungle Book’s Spotted Woodpecker character. The name means to “come back again”. The team highlighted that greening of the environment is essential to all the stakeholders of Century City, and the Spotted Woodpecker would be central to this theme. They noted that the “f” logo is free-flowing, with similar inverted lines of the shape of the two islands. The two “spots” in the logo (of the Spotted Woodpecker) are also meant to represent the two islands. In determining the most optimal use of the bulk, the team gathered substantial market information to determine the needs of the market before any decisions were taken. Armed with their market research, they determined that the best use of the space would be for high-end residential units (30 466m²) on both Feroa West and East Islands, office space First winning team Feroa Developments’ site plan

(6 000m²) and 2 000m² of retail, together with the required parking for each site. The team noted that the overall estimated project yield would be 11,84%, with property assets worth approximately R100-million, before taking gearing into account. In addition, the team highlighted the following, which would be achievable: 30% equity stake in P-grade green office space valued at R58,5-million and 2 000m² of retail space valued at R40-million. The team’s development proposal set out to maximise the canal exposure and fully utilise the north-facing space, which is viewed as probably the most prime real estate in Century City. Given the excellent prospects for not only the precinct but for Century City generally, the team highlighted that the development remains an attractive one and will only enhance this prime Cape Town node.

Second winning team: Bridgeways Islands Development

The team presented the development of three up-market residential blocks totalling 10 003m² (saleable area) and consisting of three floors of up-market residential units with parking within the buildings erected in the southern location. The residential component of the development is known as Bridgeway Islands, and has exclusive entry into the node from a new road that will be constructed by RPG. The northern side of the island will undergo a refurbishment of the existing structures within the existing Ratanga area to create an essence of nostalgia and soul. The 4 774m² (GLA) will create restaurants and a small complementary office component. This new retail and entertainment area will have the vision of celebrating all cultures alongside a vibrant water-canal area known simply as The Canals. The Canals will link to the current parking site area that will be connected by a new large pedestrian bridge. The parking area site will be developed to create 7 650m² (GLA) of A-grade office space, 400m² (GLA) of retail space, and a new parkade of 18 000m² offering 625 covered bays.

property developer l October 2014

PDP Developments_SUBBED.indd 32

2014/09/11 4:01 PM

PDP 2014 Third winning team: Island Junction (Pty) Ltd

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This 8 050m² (excluding the parkade) development will be known as Bridgeways Connect, given its close location to the new Century City Convention Centre (CCCC). Two hundred and fifty bays will be allocated for use in terms of an existing lease that’s in place. There will also be a small convenience retail component on the ground floor of this property. An offer of R129-million will be made to RPG by the Bridgeways Islands Development (BID) investors for the remaining portion of Erf 5153, Century City, previously known as the Ratanga Islands. The BID development

will maximise the residential use on the islands while still maintaining an element of authentic entertainment. A sense of place and theatre will be created at The Canals that will ensure the area will become an attractive alternative to the V&A Waterfront. Bridgeways Connect will also ensure the sustainability of the CCCC and add a significant amount of covered parking to the Bridgeway precinct. The BID will thus support the endeavours of RPG in its pursuit of excellence in developing Century City into a landmark property to be enjoyed by Capetonians and international travellers alike.

The team proposed that it had identified a viable commercial opportunity that will not only deliver good returns and capital growth but also be in line with RPG’s Director Greg Deans’ mantra of creating places for people. The team believed that it had identified a missing service at the Century City precinct – a service that will benefit the Century City community as a whole, and not just the residents who choose to live or work there. The team’s decision for this type of development was taken after thorough research on the market was conducted. The development idea was the result of a thorough discussion of what the team felt the target market wanted, as well as an examination of the broader context, which focuses on the current economic environment. The team proposed a mixed-use development with a unique blend of retail, offices and residential offerings. The aim is for the development to have a market-type European feel to it to bring people together. In terms of the development, the team proposed a focus on repurposing some buildings that are currently on site in order to save costs and achieve the authentic and sustainable feel the team thought the target market would be attracted to. From the financial side, the team aimed to sell off about 40% of the newly built residential units and hold the remainder for rental income purposes. The land use mix would include a single anchor tenant and smaller retail offerings as line shops, all totalling approximately 3 300m²; small unit office accommodation of about 2 200m²; the retaining of selected existing conference facilities totalling 1 400m²; mid- to highend residential apartments for sale and rental totalling 13 500m²; as well as parking provisions to service the above. The total development cost was R252 126 186 (excluding VAT). The developed site area totals 28 913m², with a total developed bulk of 35 714m². The team’s fully developed bulk is in the region of 20 000m². The team’s internal rate of return was 19% with a residual land value of R100-million. October 2014 l property developer

PDP Developments_SUBBED.indd 33

2014/09/11 4:01 PM

PDP 2014

Leaders of the PDP pack

This year’s PDP 2014 team leaders speak about their role, and share their thoughts about the property development landscape By Candace King Photographs by Mark Pettipher

Q As a team leader, what

qualities should you have to direct real development projects in the industry?

Mike Palframan First winning team leader Sales Manager: Eastern Cape Nedbank Corporate Property Finance

Q How were you selected

as the leader of your team?

This was an interesting dynamic, given that we had a number of individuals who were strong “coordinators”, as opposed to shapers, implementers and specialists (as per the initial team roles discussed on day one of the PDP course) within the group. I think it progressed naturally as we discussed each other’s strengths and roles within the team. As it happened I was also the “ideas man”, and I think the team was happy for me to run with ideas I put forward. I was able to then shape what we put forward.

Q How did you feel

about leading your team?

I loved it, and did not feel like I was leading. There were a few wise heads to bounce ideas off. We agreed from the beginning that we were going to have fun and that was what we ended up doing! We never ran out of energy or passion, which is what I promised the team. It was not daunting; the team gelled really well. When everyone buys into the ideas and is on the same page, it makes leadership easy. Although we did have a few specialists in the group, what we didn’t do was send everyone off to work on their specialist portions for a few days, then assimilate and consolidate the information. We made sure that the experience was a learning curve for everyone, and all parties understood why we took the decisions that we took. The only daunting part was the initial realisation that we did not have a quantity surveyor in our team, but chose to accept it and press on without one. We were able to leverage off the quantity surveyors in other teams, for which we were grateful.

To some degree, I really do believe in surrounding yourself with good people who are specialists in their area. We somehow had these qualities in our team dynamic. I come from the banking world, so I have a broad view of what is involved in putting a development together. I was fortunate to have been able to take a step out of that role for this exercise, and to use more creative energy in other roles. It was great to understand the intricacies involved in the development game.

Q What was your greatest

challenge as team leader?

A few small challenges: trying to convince certain team members that, although some of the ideas were more fun than serious, we needed to sell our development to the other teams as well – so the presentation of our ideas had to be done well. The single biggest challenge was getting hit with some initially unbudgeted-for expenses when running our feasibilities. The impact these have on returns is astounding and requires improvisation (within reason!). The final challenge was to condense a half-hour presentation into fifteen minutes … but we managed!

Q What are your thoughts about

the property industry and the current development landscape?

It’s a great industry to be part of. You realise that there are very accomplished professionals who are eager to learn. In terms of the current development landscape, I question when the momentum will slow down. As a banker with Nedbank Corporate Property Finance, I have seen unprecedented growth in funding over the past few years and (by and large) very little slow-down in this industry since the financial crisis of 2008. I find it interesting that, regardless of where we are in the property cycle, you still have nodes that continue to “pump”. The Century City assignment itself revealed high demand for good residential units within this particular node – and yet after the global financial crisis, growth in new residential units across the board has generally been somewhat limited.

Craig Wittstock Second winning team leader Project Manager: Stratford Property Ventures

Q How were you selected

as the leader of your team?

There was no formal process – but upfront, as a group, we needed someone who would primarily coordinate and organise. This role was fulfilled by myself and Colin Young. The group went through an initial process of defining roles and assigning tasks, with each member effectively becoming the leader of their own space. Following this, the role of the team leader/s effectively involved evaluating progress, reassigning tasks, and the overall organisation. This was made easier by the significant input received from the team members, who all contributed individually to the leadership of the team.

Q How did you feel

about leading your team?

Our group members were mature with strong personalities – each competent in his or her area. With this mature and strong culture as the backbone, the team had many professional debates, which fostered an open and honest working relationship, and made leading the team exciting and rewarding. Was it daunting? No. Considering our group members and the great dynamic we had in the team, the task was a valuable, insightful experience.

Q As a team leader, what

qualities should you have to direct real development projects in the industry?

You need to understand the development process, which will enable you to manage it more effectively and identify associated risks. You also need to understand the market and what clients want. You must be able to collectively administrate, coordinate and

property developer l October 2014

PDP Team Leaders.indd 34

2014/09/22 9:00 AM

PDP 2014 organise the many specialist fields within the development process that each form an integral part of the development supply chain.

The real challenge in this environment is the limited time available. Time management was therefore critical.

to take direction from and report into. My role became that of overall project manager. My goal was to make sure each member was able to bring his or her full strengths to the fore when it was appropriate and necessary, while always being very aware of the extremely tight deadlines and the high standards of quality and accuracy that we would be held to in our final submission and presentation.

Q What are your thoughts about

Q How did you feel

Q What was your greatest

challenge as team leader?

the property industry and the current development landscape?

Generally, the market is somewhat flat, even subdued, with only certain areas showing strong activity (for example, Sandton). But there are real opportunities in the industrial market. One of the biggest challenges developers face at the moment is the lengthy time frames taken by council with regards to, but not limited to, plan approvals and bulk service connections. The protracted processes inhibit projects commencing timeously and negatively affect the industry’s supply chain.

Darroll McKeown Third winning team leader Executive, Programme and Project Management: Africa AECOM South Africa (Pty) Ltd

Q How were you selected

as the leader of your team?

We took time to get to know each other as a group during the first day of the programme. I remember this as a particularly intensive day – not only were we trying to absorb as much information as possible about the task that had been set for us, we were simultaneously privately assessing the colleagues we had been grouped with for the demanding week ahead. We didn’t formalise the leader selection process as such, but it became clear over the course of the afternoon where each team member’s preferences and capabilities lay. Ironically, my first statement to the team was that although this was my area of expertise, I was happy for somebody else to take the lead, as I knew I would also have to take on the role of quantity surveyor for the team (we didn’t have a practising Pr.QS). I believe a small core of us performed as a leadership group, which the rest of the team was happy

A leader should make the effort to understand all aspects of the team’s work and output. His/ her role is not to be an expert in everything but to be interested and involved in all aspects. How else can he or she be sure that every output going into the proposal is actually adding value to the whole?

Q What was your greatest

challenge as team leader?

We were faced with the challenge of melding a team of 10 individuals from four different countries, with different skills bases, into a professional and effective unit, and to finish a task in four days that hand-picked professional teams can take up to 12 months to finish in the real world. It was a daunting task. Having said that, I felt we had the nucleus of a very strong development concept; we just had to deliver all the requisite parts to make our submission as complete and accurate as possible. The other major challenge in the PDP context is that you are effectively developing your design, costing and finance models in parallel. In the real world, the stages are at least slightly offset so design can inform the costs and flow into the valuation. A result of this is that you run several permutations, most of which you discard as the end product becomes clearer and you are left with your formed proposal. It’s a very revealing process, and the dynamics are a concentrated version of everything that transpires on a real scheme.

On the PDP project our biggest challenge was time – or lack thereof. For example, the time afforded to upfront optioneering is so limited that I think some of the teams may have felt forced to pursue concepts they didn’t have full belief in. This can be demoralising. We had formulated a strong mixed-use concept for our development, so our next biggest challenge was doing justice to the potential it held. If we failed anywhere, I think it was that we didn’t quite complete our thinking around the last of the three sites, and we put forward an uninspiring block on that particular piece of land. Having said that, I think we optimised our time allocation on the things that added value to our submission. We developed a robust, inspiring design, and a thorough cost estimate. This gave us a strong foundation on which to build our valuation and funding model. I felt it important that we leave ourselves enough time at the end to spend on sensitivity checks; this is where we were able to tweak different usage ratios and income scenarios along with our funding structure to find the most sound business framework.

Q As a team leader, what

Q What are your thoughts about

Humility is a key attribute for any leader. That doesn’t mean weakness – it means having the insight to recognise that every team member has an inherent value to add to the process, and allow them the opportunity to do so. To balance this, a leader needs to always have an eye on the end vision and the time, quality and cost constraints that limit to that vision. It’s difficult sometimes to cut ideas short when you realise it’s no longer constructive to stay in that phase of the project – but it must be done, and the leader has to identify when this moment has been reached. Courage is also key in the real world because, ultimately, the leader must have the character to make decisions and must stand by them even if they prove later to have been errors. I also firmly believe that no leader can be effective if they are not working at least as hard as the rest of the team. An absentee leader who “checks in” periodically will not engender the loyalty and trust of his team.

The development industry in South Africa and throughout Africa is still very entrepreneurial and embryonic, in my view. Both of these are very positive things, as the blank slate of opportunity is there for the industry to form into a progressive example of how to create functioning urban spaces and uplifting, empowering rural nodes. On the negative side, there is currently such a broad range in scale and quality across all sectors. There are developers making money at both ends of the scale and, ethically, I think we have a long way to go before we can say that all developments in the country are putting the real needs of long-term social and economic growth at the top of their priorities list. Health and safety is still very often undervalued in the pursuit of profit, as is the sustainability of the built environment. I believe there is a relatively broad sweet spot in the development industry, where all commercial and social factors can be addressed – provided all role-players recognise and value each other.

about leading your team?

qualities should you have to direct real development projects in the industry?

the property industry and the current development landscape?

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PDP 2014

A team effort

With PDP 2014 having already come and gone, the team members of the first winning group share their thoughts on this year’s programme as well as their winning proposed development By Candace King, Photographs by Mark Pettipher

The winning team (from left): Tony Gebhardt (PDP 2014 sponsor and judge), Hamlyn Gebhardt Quantity Surveyors; Mokgwetsi Phala, Arc Architectural Consultants Pretoria; Luther Mkhize, Focus Project Management; Peter Christelis, Christelis Group (Pty) Ltd; Bongani Mahlangu, Focus Project Management; William Wallace, Amdec; Ndileka Ntikinca, Transnet; Mike Palframan, Nedbank Corporate Property Finance; Eben Petersen, FNB Commercial Property Finance; Jeanette Seabe, Eskom; Krishnen Naidoo, Capital Property Fund; Kumeshnee West (GSB Acting Director), University of Cape Town

Mike Palframan, team leader Sales Manager: Eastern Cape Nedbank Corporate Property Finance

Q How does it feel to be a part of the first-place team of PDP 2014? Absolutely thrilled! What a good team! We were very excited about what we managed to accomplish. I think we were the dark horse in the competition – we surprised a few of the other groups with what we came up with.

Q Why do you think your project won first place? I think there were a number of original ideas that we were able to translate into a greatlooking document, coupled with an excellent presentation. We were also able to showcase the talents of our brilliant architect, Mo Phala. I think that, in terms of the project brief, we not only achieved acceptable returns with our development, but we were also able to convince the judging panel of the value that our green development would add to the Century City precinct. Personally, I feel justice prevailed – this was a group of individuals who really

gelled well together and worked as a cohesive unit throughout, with everyone contributing in some way. We agreed upfront that we were going to have fun. This, I believe, showed in the presentation. The group dynamics were a true life lesson for me.

Q What were your best moments during PDP – and the most challenging things you faced? Being announced as the winners was a very special moment, which even beat the relief of handing in our proposal paper ahead of the challenging deadline. I also found it more of a challenge than I expected to sell my fun ideas around the name and presentation to some of the group members – although eventually we all bought into them.

Q Where would you like to see your proposed development venture going forward? It would be great if the shareholders of Rabie Property Group and future developers of the site considered using some of what we put out. Our mixed-use development lends itself perfectly to this high-value Century City precinct. Tongue in cheek, I’m thinking about copyrighting the logo, development name, and my marketing catch-phrase, “a cut above the canals”!

Q What are your overall thoughts on this year’s PDP? I enjoyed every minute of it. I met really good, intelligent individuals and made some life-long bonds. The long hours and time away from home (13 days!) was time well spent listening to excellent speakers. SAPOA is to be commended for what it put together with this course.

Bongani Mahlangu Construction Project Manager: Focus Project Management, a Division of the Crowie Property Group

Q How does it feel to be a part of the first-place team of PDP 2014? I’d like to relive the moment when Martin said, “And the winning team is … Group 2”. It still feels great to be the winner of PDP 2014 – it was a great experience and a good space for industry players to mingle and share thoughts.

Q Why do you think your project won first place? We had a tight-knit group with quite a diverse background in terms of our careers – but we

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PDP 2014 had one common goal: to sell our idea to the panel. We used the information gathered throughout our lecture weeks to put together our proposal. Based on key information, we managed to come up with a scheme that spoke to the panel and married well with Century City’s vision. We had the best-looking scheme, produced by underdogs of this year’s PDP!

Q What are your overall thoughts on this year’s PDP? It was a great platform to converse on issues that affect our built environment as a whole. There were valuable inputs from all speakers. I wish I could come back next year.

Q What were your best moments during PDP – and the most challenging things you faced? The best moment was being named PDP 2014 champs. I think Professor Viruly is vital to this programme and should be retained. The most challenging moments happen when one feels like the group is no longer aligned to the goal, and seeing that the vision has distorted.

Furthermore, we implemented some innovative features, which set us apart from our competitors.

Q What are your overall thoughts on this year’s PDP? The 2014 PDP met my every expectation of a course widely praised by its alumni and property industry participants. Its intense and all-encompassing modules were presented by dynamic leaders of their respective fields, and emphasised and highlighted the growing trends and innovation in the local and global property industry. The opportunity to meet and network with senior individuals from all sectors of the industry was invaluable. Thank you to the Graduate School of Business of the University of Cape Town and SAPOA for hosting such a beneficial and successful programme.

Q What were your best moments during PDP?

Q Where would you like to see your proposed development venture going forward?

The PDP course is held at the UCT Graduate School of Business campus at the V&A Waterfront. Its close proximity not only offered us access to its retail and recreational offerings, but also exposed us to one of our country’s prime real estate landmarks. This was a highlight.

I would like to get a call from the funders informing me that I should be lead project manager for the proposed development. That would be a dream come true.

Q Where would you like to see your proposed development venture going forward?

Peter Christelis Christelis Group (Pty) Ltd

It would be great to see elements of our project implemented at the site and incorporated into the Bridgeways precinct. We look forward to receiving an invitation to the launch of the development!

Ndileka Ntikinca Acting Regional Manager:

Q How does it feel to be a part of the first-place team of PDP 2014? I’m extremely proud of the accolade. We were competing against syndicates with exceptionally strong intellectual resources and experience. Despite this competition, we capitalised on the unique strengths of our individual members, and were able to present and deliver a firstclass proposal to the Rabie Property Group.

Q Why do you think your project won first place? Although it’s an academic exercise, the proposed development was practical and simple. Via thorough research, we identified the perfect type of development for the site with maximisation of bulk being a priority for us. We attributed realistic financial variables to our feasibilities, enabling us to calculate a reasonable offer price for the value of the land.

Central Region Transnet Property

Q What were your best moments during PDP – and the most challenging things you faced? The best was working with the type of people that I worked with in the team. Even if we had differences of opinion, no-one took it personally – everyone was fully committed and egos were forgotten. The most challenging was the fact that we had little or no recreational time. We also got very little sleep, especially during the project week.

Q Where would you like to see your proposed development venture going forward? I would like to see it going up on the same site and being undertaken for real!

William Wallace Commercial Property Manager Amdec Group

Q How does it feel to be a part of the first-place team of PDP 2014? First, I’d like to say that I was honoured to be selected to participate in the course. The course itself was superb, as was the level of students (many of whom were from beyond South African borders – some hailing from Nigeria, the UK and Mauritius) and calibre of lecturers. I therefore feel incredibly honoured to have won first place, and see this as a wonderful validation of my road to success in the industry. It signifies to me that I have reached a level of maturity and experience in the field.

Q Why do you think your project won first place?

I think it was because we took it seriously, and were real and practical about what was expected of us.

The project ticked a lot of the boxes, which I think ultimately led to it being viewed so positively. I feel much of its success can be attributed to the exposure I’ve had to the development of the iconic Melrose Arch precinct. This provided me with the ability and vision to look at a mixed-used node in the way I did. I was also very mindful that the position of the development on the water added huge value, offering great views and a superb ambience. This allowed for the creation of a high-end development of this kind.

Q What are your overall thoughts on this year’s PDP?

It required a lot of hard work that has never before been required during a training intervention.

This was an excellent course in every way. From the lecturers to the participants, all were exemplary – and also very enjoyable.

Q How does it feel to be a part of the first-place team of PDP 2014? Great, confident and heroic.

Q Why do you think your project won first place?

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PDP 2014

The content was relevant and of good value. The setting was also beautiful; the old prison at the V&A Waterfont and the Clock Tower building are in themselves world-class facilities.

Q What were your best moments during PDP – and the most challenging things you faced? My best moment was winning first place! The group to which I was allocated was also wonderful; our individual strengths were varied and we pulled together well. The course was fairly demanding, and at times I felt emotionally drained. The challenge was to maintain diplomacy in a team when each member was being stretched to capacity on every level. I’m a Western Province long-boarder. I truly enjoy competitive sport and have competed in many triathlons so, in a way, I could relate to this course as another “endurance event”. It was really both a mental and social challenge!

Q Where would you like to see your proposed development venture going forward? With my experience as a commercial property broker, I strongly believe that this development would be viable – and a sought-after residential scheme. It would be phenomenal if a company as reputable as the Rabie Property Group implemented the model and design.

Krishnen Naidoo Asset Manager Capital Property Fund

Q How does it feel to be a part of the first-place team of PDP 2014? From all the other professionals in the various teams, I think that it is a great achievement. I was ecstatic that our team won.

Q Why do you think your project won first place? I think that we were one of the teams that decided to maximise the bulk and increase the profits. I also think that we came up with a spectacular design and a feasibility that was realistic, and the judges were impressed with our presentation.

Q What are your overall thoughts on this year’s PDP? I think that it was well organised. Martin and Shireen were extremely accommodating, while the lecturers were professional in their various fields of expertise. The course was informative – but also quite demanding, especially during the second week.

Q What were your best moments during PDP – and the most challenging things you faced? The best moment was when we were announced as winners. The most challenging was the 24-hour period before we had to submit the proposal – we put in a lot of effort.

Q Where would you like to see your proposed development venture going forward? I think we were on the right track for the proposed site (Ratanga Junction). I would like to see Rabie going ahead with the scheme – or with something similar.

Mokgwetsi “Mo” Phala Director Arc Architectural Consultants Pretoria (Pty) Ltd

Q How does it feel to be a part of the first-place team of PDP 2014? Being awarded first prize was a breathtaking experience – the cherry on the top for a hard-working team of individuals who never left the “prison cell” at the Breakwater Campus. It’s as though we became voluntary prisoners, captivated by the will to want to learn and teach each other in the process. The zest to want to understand, participate and contribute, and the zest for innovation, creativity and positive energy displayed an experience that has shaped us and is one of the greatest prizes that one can receive to survive in our ever-challenging yet exciting property industry.

Q Why do you think your project won first place? The response to the brief presented a solution that is ambitious yet firmly grounded in terms of forecasting and reading of the markets, and responding to the needs apparent in our economical landscape.

The innovative solution prioritised the public while making place, creating human spaces, and most importantly unleashing the inherent value of the land and the commercial opportunity it presents for the developer.

Q What are your overall thoughts on this year’s PDP? It was amazing to have been given an opportunity to practise what we had been taught with a real-life situation and spatial problem. It’s a humbling experience. After two weeks of being exposed to the workings and backbone of the property development process presented by a distinguished panel of knowledgeable experts, and spending countless hours with 60-odd other professionals within the student body, one can only imagine the mental stimulation and opportunities this has created and will continue to foster.

Q What were your best moments during PDP – and the most challenging things you faced? My best moment was the realisation that I was clueless with regards to certain fundamentals of property development – this became a challenge that was overcome at the end of a stimulating and enriching learning process. Making new friendships with people from all over the world while learning was great, and it goes without saying that working with a fantastic group of professionals to deliver a winning proposal was a pleasure. I’m grateful for the opportunity.

Q Where would you like to see your proposed development venture going forward? The opportunity to further assist the Rabie Property Group in realising the project in the future in some way or another would be the greatest of pleasures – one that would be unprecedented and would certainly set a benchmark that speaks volumes in our property industry and the South African built environment.

Luther Mkhize Construction Project Manager Focus Project Management, a Division of the Crowie Property Group

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PDP 2014

Q How does it feel to be a part of the first-place team of PDP 2014? It was exciting to learn that we had been placed first. While the work was being done, we did not really expect to make it to the top but the effort was more on fulfilling the work at hand. Perhaps by default, we did our best to fulfil the task. For me particularly, it was a great honour. I did not see the win coming, albeit the presentation was quite beautiful.

Q Why do you think your project won first place? The design was breath-taking; Mo is a legend! We had a solid grounding with the diverse members of the team and this was foundation enough to inspire willingness in everyone. The housekeeping was attended to very early in the formation of the club, and so the ill fate (of varying nature) suffered by some of the other teams was of no bearing to our team.

We really did not know much about the topics we spoke on!

Q What was your best moment during PDP?

Q Where would you like to see your proposed development venture going forward?

Seeing the team pull together to finalise our proposal in the early hours of the morning after spending way too many hours in a “prison cell” was a definite highlight for me!

I think the project can be developed exactly the way we proposed it to be. That is an ideal situation. The market is available and if that is what the land owner has in mind in terms of property development, then why not make a profit out of it! As long as we do not forget where we come from – let’s ensure that Feroa Islands does not completely wipe out the memories and history of Ratanga Junction.

Eben Petersen

Q What were your best moments during PDP – and the most challenging things you faced? I would say my best moment was the part when the whole team presented. Standing in front of the crowd was really exciting and fulfilling. Once you’re done with the presentation, you really feel like a different person. The challenging and really testing times were at that same moment, when we realised that the time for the presentation was limited. Making that choice of ensuring that each team had something to say was really testing; for some unknown reason everyone wanted to say something … especially something that they had only just been exposed to.

It would be an honour if the Rabie Property Group decided to actualise our project.

Jeanette Seabe General Manager: Real Estate Eskom

Credit Head: Commercial Property Finance FNB Commercial Property Finance

Q What are your overall thoughts on this year’s PDP? I would recommend that anyone thinking of taking the course do so, without a doubt. Having had the opportunity to be sponsored by my employer, I feel like a bonus has come in early! The course is very appropriate – you catch on quickly because of the discussions and especially the presentations, as facilitators make it possible to be a part of the discussions and ultimately the presentation itself. I was able to chip in and share what I know for further learning – and, most importantly, to paint a picture for everyone so that even for those in different fields of work a level field is created.

Q Where would you like to see your proposed development venture going forward?

Q How does it feel to be a part of the first-place team of PDP 2014? It’s a great feeling, and a crowning moment to long hours of teamwork. All presentations had their merits. The adjudication panel must have had lots of healthy debate.

Q Why do you think your project won first place? Century City is an icon on the local property landscape, with the Bridgeways precinct having several exciting projects on the go. Ratanga Junction is a prime location but a challenging site – as we learnt while getting stuck into the project. We thought our concept was aligned with market demands and extracted full potential from the site. Our design focused on green building principles, following into a “green lung” to keep breathing vibrancy into the development. As the Rabie Property Group pointed out, market alignment would not be enough – we not only needed to be sensitive to the site but also to create people spaces.

Q How does it feel to be a part of the first-place team of PDP 2014? I feel very proud. Winning meant that there was something that we did better than the other teams.

Q Why do you think your project won first place? Our project won because it covered most of the areas and applied most of the lessons that we had learnt during the coursework.

Q What are your overall thoughts on this year’s PDP? It was hectic and very challenging. Personally, I feel that there was not enough time for us to engage the lecturers on some of the pertinent issues. I think that the course should possibly allow for pre-work (in preparation for the lectures). It would also be great to have refresher courses at a later date.

Q What are your overall thoughts on this year’s PDP?

Q What were your best moments during PDP – and the most challenging things you faced?

The level of property expertise of participants is impressive. The course is well structured and directed, and the presenters are topic experts. The combination of diversely skilled teams, presentations and practical application presents a fertile learning opportunity.

The project preparation period was incredibly challenging. We had very tight deadlines – but I really enjoyed working with my teammates during that period. The long hours that we had to put in were very draining.

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last word

Lings links SA’s missing economic pieces Puzzled about South Africa’s economic future? Chief Economist at STANLIB Kevin Lings proposes several remedying aspects of SA’s economy that will place the country on a higher potential growth path in his first book The Missing Piece: Solving South Africa’s Economic Puzzle By Candace King

mid his busy schedule and demanding position, STANLIB Chief Economist Kevin Lings was able to complete his first book within 10 months of its inception as a spoken idea – a commendable feat for one highly occupied man. With more than 20 years of economic experience in South Africa, of which 13 have been spent with STANLIB, Lings is responsible for domestic and global economic research and forecasts within STANLIB as well as for providing input into the asset allocation process, fixed income, property and various equity franchises. Lings also managed an award-winning unit trust for five years and has delivered several economic presentations to clients and delegates at conferences and workshops, both locally and internationally. Based on his rich CV and experience, Lings was in the perfect position to write an honest and upfront book on the economics of South Africa, highlighting both sides of the scale – what South Africa did right, what it did wrong, and what it needs to help boost its economy. “The Missing Piece: Solving South Africa’s Economic Puzzle is an important contribution to the debate on how best to address the structural problems that have plagued the South African economy,” said Dr Sibusiso Sibisi, Chief Executive Officer of the Council for Scientific and Industrial Research. “Kevin Lings not only documents the many social and economic achievements of the post-apartheid government, but also identifies the key areas in which the country has not performed adequately and suggests some potential solutions.” Published by Pan Macmillan South Africa, Lings’ 244-page debut book was recently launched at Exclusive Books at Nelson Mandela Square, Sandton. The book is anchored around four key pieces of South Africa’s economic puzzle, with Lings providing a score for each.

These pieces include internationalisation, government’s fiscal policy, the social backlog and addressing past injustices, and government support of business which, he says, is the missing piece. Lings notes that the business sector, a piece that South Africa has missed, is an integral part of any thriving economy. For business to be successful, the sector requires skills, fair regulation, technology and infrastructure. During the country’s first democratic election in 1994, South Africa’s vision was evident – it needed to change the structure of the country’s economy with importance placed on land ownership, employment opportunities and access to essential services, which needed to be aligned with the overall needs of the South African population. Since then, the book looks at several aspects of the South African economy over the past 20 years, and analyses the next 20 years and what is required in order to put the four pieces together to place South Africa on a higher potential growth path. This involves focusing on business development, redressing education policies, improving the use of technology, addressing our infrastructural backlog and developing a closer relationship with the rest of Africa. Lings points out that the consistency of economic growth is more crucial than the magnitude of growth in stimulating job creation. “You can’t have a vibrant, growing economy that creates jobs unless your business sector is vibrant and growing,” he said in an interview with Moneyweb. While providing an accessible and comprehensive overview of the main issues, The Missing Piece: Solving South Africa’s Economic Puzzle also offers viable, practical policy proposals for the country. Almost a third of the book is dedicated to solutions, and that is what South Africa desperately needs – a lot of solutions.

Kevin Lings, STANLIB Chief Economist

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