SAPOA Property Review December 2014 - January 2015

South African Property Review

PROPERTY SOUTH AFRICAN

December 2014 /January 2015

REVIEW

MOTHER CITY HOSTED SAPOA meets the Mayor

PAYING IT FORWARD Corporate social investment: not just for seasonal goodwill

CSI and education

PRESIDENT’S MESSAGE Amelia Beattie reflects on the year to date PROPERTY TRENDS The industrial sector revolution: alive and well

December 2014 /January 2015

EYE ON AFRICA Uganda: prosperity and heightened development

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education, training and development

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from the President

Farewell 2014, welcome 2015 Dear Members,

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’m pleased to report that SAPOA has made progress on several fronts since my election to the Presidency in June 2014. We have commenced and advanced several successful projects with the goal of representing, protecting and advancing our members’ commercial property interests within the property industry. These initiatives address many of your objectives and seek to overcome some of the challenges you face today on a national and local level.

Our efforts in this regard are only possible thanks to the knowledge and commitment of the very capable SAPOA members who volunteer their valuable time and resources to further the work of SAPOA and its committees. SAPOA Committee members are drawn from the member companies, and meet monthly to share perspectives, advance policy recommendations and learn from one another. The contribution made by members in this regard is invaluable.

It is this combination of business networking and valuable social time that benefits companies, careers and the industry as a whole. We aim to put the REAL back into real estate.

Relationships, Education, Advocacy and Leadership – these are the pillars of our industry.

R Relationships E Education A Advocacy L Leadership

I wish to put forward the updates of these highlights as follows

RELATIONSHIPS We understand that, to further the property industry’s interests, it is imperative for us to foster good relationships with the relevant government departments, to try to strike a balance between the industry’s needs and the government’s mandates.

We recognise that good communication with local government is essential for the positive performance of the commercial property sector in South Africa, as a bulk of our members operate at local level. This we have been able to achieve through various engagements with government, with the most influential being the Meet the Mayor initiatives and CEO meetings we have held.

Based on the positive results of these meetings in 2014, SAPOA will continue to unlock relationships with local government.

SAPOA’s “Meet the Mayor” campaign offers member CEOs the opportunity to meet with mayors and their executive teams around South Africa. This campaign encourages debate on the challenges facing members, creates access to development

and infrastructure expansion matters, and removes obstacles to investment, thereby creating a stronger partnership.

The continuation of nurturing relationships between SAPOA and other industry bodies has been prioritised.

The newly signed Memorandum of Understanding between the South African Planning Institute and SAPOA holds great prospects as we endeavour to explore issues such as the need to initiate and promote reforms in the laws, policies and programmes relating to planning in South Africa while protecting and promoting the interests of members.

In 2014, we covered different membership sectors in the South African Property Review. Our first-ever Women in Property supplement was published, showcasing the progress that has been made and the growing number of roles that are successfully filled by women.

We will continue to foster relationships with industry bodies and organisations, such as SAIBPP, WPN, SAREIT, BACPO, SACSC, SACN and SALGA. SOUTH AFRICAN PROPERTY REVIEW

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from the President The property industry EDUCATION is the very key for us to begin has been plagued with Education to tackle the challenges that we are faced many issues, which have with in our industry. Solutions to this very critical matter have been formulated by resulted in regulations of way of a Skills Gap Analysis in the industry the industry and unintended being conducted in 2014. The aim for 50 students to be empowered in accordance consequences that stem from with the finding from the study by SAPOA’s same. There has been a huge 50th birthday remains a vital goal.

The driving of SAPOA courses on focus by the government on an e-learning platform is under way as we endeavour to keep up with what issues such as land reform, is current, convenient and cost-effective environmental affairs and for members.

Our Student On-boarding and Graduate labour matters Listing Programmes continue, and we urge members to contact us should they require recruiting graduates.

ADVOCACY FOSTERING AN ENABLING LEGAL ENVIRONMENT Tackling policy and legislation that is harmful to members and the industry, our Legal Committee under the Chairmanship of Desiree Nafte, Legal Executive at Hyprop, has made excellent progress in promoting a more enabling legal environment for the commercial property sector. SAPOA’s legal advocacy ensures we take part in forming policy and enacting laws that impact the property sector. We monitor and analyse relevant Acts of Parliament, Green and White Papers, Municipal Ordinances and Policies, and submit formal comments on behalf of our members.

We use advocacy to create supportive policies, and to remove and reform policies that are prejudicial to the commercial property sector.

The property industry has been plagued with many issues, which have resulted in regulations of the industry and unintended consequences that stem from same. There has been a huge focus by the government on issues such as environmental affairs, land reform and labour matters.

SAPOA has been gravely concerned about the future of property rights in South Africa, and we have been at the forefront of actively advocating for reasonable legislation while being aware of the balancing of the rights of all affected persons. We maintain that the sanctity of property rights should remain intact.

Below is a summary of some of the matters that we have been monitoring.

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1 GENERAL LEGAL MATTERS 1.1 Business Rescue Business Rescue is in the spotlight at the moment. Clearly the Chapter 6 provisions of the Companies Act No. 71 of 2008 are exceptionally problematic for SAPOA members; this section of the Act needs to be reconsidered.

Among other things, Norton Rose Fulbright has been requested to give a legal opinion on the provisions contained in Chapter 6.

SAPOA published a press release highlighting the detrimental impact the Business Rescue provisions have had on the industry, relating to (among others) unethical behaviour of Business Rescue practitioners who delay the process and the fact that property owners cannot recover rental payments while Business Rescue is under way.

We have also made representation to Mr Michael Katz explaining the implications of Business Rescue on the commercial property industry. He is awaiting our submission.

A Business Rescue workshop was held

by SAPOA on 30 October 2014 for members to discuss the practical impact of the provisions of the industry holistically. Norton Rose Fulbright facilitated the workshop, and will now consolidate SAPOA members’ views before making an official submission to the Department of Trade and Industry.

1.2 Exclusivity Clauses Exclusivity Clauses in leases are another exceptionally hot topic. It is clear from past surveys of SAPOA members that landlords are not in favour of these clauses.

SAPOA has officially lodged a complaint with the Competition Commission to request the Competition Commission to re-open its investigation into exclusivity clauses in leases, and for the Tribunal to make a definitive ruling on the anti-competitive effect of exclusivity clauses, as they are a huge barrier to entry and expansion in shopping centres.

GROUNDS FOR COMPLAINT 1. SAPOA recognises that in several recent merger applications before the Competition Tribunal involving commercial or retail property, the Tribunal has imposed a condition to the merger approval that the parties with exclusivity clauses in leases negotiate in good faith to seek an end to the relevant exclusivity clauses. Exclusivity clauses in this context are those provisions of a lease agreement that grant an anchor tenant in a shopping centre or mall exclusive rights to trade as a supermarket in the centre, thus precluding

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from the President 1 GENERAL LEGAL MATTERS a landlord from letting premises in a given shopping centre to tenants who may compete with anchor tenants in areas of business as therein specified.

2. Exclusivity clauses are usually requested by larger tenants as a condition for entering into long-term lease agreements, specifically in large retail centres.

3. The named respondents are not the only firms party to and insisting upon exclusivity provisions. However, they include the major supermarket chains, which have concluded and continue to seek to enforce the exclusivity clauses, thus excluding competitors.

4. It is SAPOA’s view that: 4.1 Through the exclusivity clauses, competition in offering of products and services to consumers is generally harmed to the detriment of consumers.

4.2 The net effect of exclusivity clauses is to restrict entry by competitors, particularly if such entrance is dependent upon scale of activity, and buying, distribution and selling networks.

4.3 The conduct is likely to result in: 4.3.1 Exclusion of potential new entrants (independent and small retailers); 4.3.2 Reduction in competition between supermarkets and broader competitors; 4.3.3 Anti-competitive effects and outcomes, including higher prices, to the detriment of consumers.

5. It is also noted that the issue cannot, in SAPOA’s opinion, be resolved on a case-by-case basis, inter alia because: 5.1 It is impractical, expensive and wasteful of resources to have to bring complaint proceedings in respect of each lease agreement; 5.2 The anti-competitive effects may be much broader than a localised investigation on local markets will reveal – for instance, a larger potential new entrant on a regional or national scale, which is reliant upon economies of scale in sourcing, marketing and distribution, may be discouraged by having to deal with local investigations and determinations, with existing incumbents defending their position contractually; 5.3 The resources required for references to the Tribunal under section 65 of the Act, should a supermarket seek to enforce the exclusivity clauses contractually, are extensive.

6. Approvals for mergers and acquisitions made conditional by the Competition Tribunal perpetuate this anti-competitive behaviour, and the requirements to engage with the incumbents to drop the exclusivity clauses are not sufficiently far-reaching in their effect, given the pervasive nature of the alleged practice in the retail sector.

7. SAPOA has recommended that the Commission investigate a range of exclusive leases, which are samples of different circumstances as to period of exclusivity, as to nature and extent of exclusion, as to geographic area of exclusion, with a view to a referral for determination by the Tribunal that will give guidance by way of precedent.

1.3 Polokwane Municipality It was brought to our attention by members that the Polokwane general valuation roll was published without an approved Rates Policy, which is in contravention of the Municipal Property Rates Amendment Act. We held several deliberations with the City of Polokwane in early 2014 regarding the general valuation roll, Rates Policy and the issues that affect members that emanate from same. The meetings were fruitful and resulted in our concerns being addressed.

Significant changes were made, which include the inclusion of the illegal land use category and rebates received for property owners of business of industrial properties with a market value in excess of R50 000 000.

1.4 Ekurhuleni Municipality SAPOA submitted comments pertaining to the Ekurhuleni Draft Rates Policy 2014/2015.

Comments submitted by SAPOA were taken into consideration. Changes that were made include the amendment of the definition of vacant land and addressing of incorrect categories on the draft documents.

1.5 Unlisted Property Funds Working Group On 5 July 2013, National Treasury released a new Tax Legislation Amendment Bill, with various proposals to amend the Income Tax Act. Some of these proposals, specifically section 8F and 8FA, have a negative impact on the unlisted property loan stock sector.

Whilst the listed sector issues have been addressed, unlisted property companies find themselves on an unlevel playing field with the listed property companies because they are affected by the changes to Section 8F and 8FA of the Income Tax Act.

We have requested National Treasury to review sections of the Tax Act as these investors are discriminated against. The leveraged investor is no longer able to offset the interest earned from unlisted property loan companies against the interest he has to pay on his loan. National Treasury needs to remove section 8F (3)(d) and 8FA(3) (d) from the Act, with reference to the longterm and short-term insurer, and pension and provident fund requirements.

1.6 City Of Tshwane Resellers Tariff The City of Tshwane Resellers Tariff has huge negative implications for landlords. According to the Electricity Regulation Act No. 4 of 2006, the regulator must regulate prices and tariffs.

NERSA is the only body authorised to approve electricity tariffs. It has come to our attention that although NERSA has not finalised the regulation of the reseller industry, the City of Tshwane has put forward a Resellers Tariff. Further, the NERSA approval document dated 30 June 2014 makes no mention of the Resellers Tariff for non-domestic consumers.

This is contrary to the intention and spirit in which the Electricity Regulation Act was drafted.

The Schedule of Tariffs introduced by the City of Tshwane and applicable from 1 July 2014 states that there will be a fixed demand charge in accordance with an amount per month per metering point payable, whether or not electricity is consumed, according to the rating of the consumer’s incoming circuit breaker where the rating of the circuit breaker is 60 amperes but not more than 80 amperes.

The Schedule further states that resellers of electricity may not charge a basic charge or fixed charge to these categories of consumers.

The landlord is worse off because he may no longer charge any fixed charges to these categories. This will have an immense effect on the ability of the landlord to recover all electricity costs, including but not limited to the provision of suitable metering, reading of meters, billing tenants, collecting the billed amounts and maintaining the installation.

The wellbeing of a property is determined by aspects such as the recovery of the utilities.

The failure to do so adequately directly affects the viability of the property. It is our view that landlords’ rights have been adversely and materially affected by the Resellers Tariff.

SAPOA has brought this matter to the attention of the Municipality with the intention to find solutions to a problem that has grave implications.

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from the President

2 BILLS

The primary purpose of the Investment Bill is to provide a legislative framework for all investment, including foreign investment. The intention is to put local investors on the same footing as foreign investors who were previously advantaged under the BITs

2.1 Property Practitioners Bill The Property Practitioners Bill (“Practitioners Bill”) was withdrawn by the Minister of Human Settlements and is being amended by the EAAB. SAPOA has been in discussions with the EAAB regarding the Bill to ensure that SAPOA members’ interests are protected.

We have been privy to the Practitioners Bill before it underwent the public participation process. We have drafted and sent a submission to the EAAB in response to the draft Bill, with the intention of influencing the final version of the Bill. The intention is to make sure that the commercial property sector is not overregulated, and that exemptions and exclusions should be included that are applicable to the commercial property industry pertaining to this Bill.

2.2 Expropriation Bill This Bill seeks to replace the Expropriation Act No. 63 of 1975. The new Bill displays a fundamental departure from the model of the Expropriation Act. The Bill broadens the grounds for expropriation to include expropriation in the “public interest”, and no longer bases the determination of compensation on market value. “Property” is broadly defined in the Bill, in a way that includes movable property and “a right in or to property”. This means that shares in a company or mining rights would constitute property that can be expropriated under the Bill. The Bill permits the Minister to expropriate property on the grounds of public interest or public purpose for the benefit of a “juristic person”, which is “established by law”.

The Bill’s provisions regarding expropriation for juristic persons would thus enable a number of statutory bodies to benefit from the expropriation of land from third parties at potentially less than market value.

Compensation becomes payable only when it has been agreed to by the state or decided by the courts. The Expropriation Bill was approved by Cabinet on 11 September 2014.

We have been engaging with government through BUSA and have made comments regarding the Bill at the Nedlac Forum. We have also advised government of our concerns, which include expropriation in some instances being a disincentive for business as owners are not likely to invest in properties without the certainty of security of tenure, the concerning issue of food security and the disincentive for foreigners to invest in the country.

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2.3 Licensing of Businesses Bill The Licensing of Businesses Bill has been withdrawn and is currently being revised by the Department of Trade and Industry.

2.4 Promotion and Protection of Investment Bill 2.4.1 The Promotion and Protection of Investment Bill (“Investment Bill”) was published in November 2013 and was open for public comment until January 2014.

2.4.2 The primary purpose of the Investment Bill is to provide a legislative framework for all investment, including foreign investment.

The intention is to put local investors on the same footing as foreign investors who were previously advantaged under the BITs. 2.4.3 Section 1 of the Bill sets out the definition of the concept of “investments”.

This includes: an incorporated (e.g. company) or unincorporated (e.g. association) entity; securities under the Financial Markets Investments Bill and shares under the Companies Investments Bill; contractual rights such as under turnkey, construction or management contracts, production of revenue sharing contracts, concessions or other similar contracts; investments in movable and immovable property, including commercial property, leases, mortgages, liens or pledges; intellectual property rights such as copyrights, patents, utility model patents, registered designs, trademarks, trade names, trade and business secrets and technical processes; and rights conferred by law to carry out economic and commercial activities, such as licences, authorisations and permits.

2.4.4 In terms of the Investment Bill, an investment may not be expropriated except in accordance with the Constitution, in terms of law of general application, for public purpose or public interest, under due process of law, with just and equitable compensation, effected in a timely manner.

We have sought a legal opinion from an expert in property investment rights.

The attorney is of the view that the Bill should not be a concern, and that it aims to put South African investors on the same footing as foreign investors.

However, the ultimate concern would be the constitutionality of the Bill – and the provisions made in the Constitution, which are incorporated in the property clause, same should not be deviated from.

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from the President

3 ACTS 3.1 Restitution of Land Rights Amendment Act No. 15 of 2014 The Restitution of Land Rights Amendment Act was signed into law on 30 June 2014.

This Act has extended the new deadline for land claims to 31 December 2018.

The Act is connected to the Expropriation Bill to allow claimants a longer period to lodge their claims.

We submitted comments through BUSA requesting for a shorter period for the lodgement of claims. The Restitution of Land Rights Amendment Act No. 15 of 2014 was assented to on 1 July 2014.

3.2 Protection of Personal Information Act No. 4 of 2013 The Protection of Personal Information Act (POPI) was signed into law by President Zuma on 19 November 2013 and was published in the Government Gazette on 26 November 2013. On 11 April 2014, the President set the commencement date for certain sections of POPI by proclamation in the Government Gazette. These sections relate to the definition section, the establishment of the Information Regulator and the creation of regulations to the Act. The remaining sections of POPI will only commence on a date still to be determined by the President. Once the remaining sections of POPI are implemented, all processing of personal information must conform to the requirements of this Act within one year of the implementation date.

We finalised the Protection of Personal Information Act Manual, which is customised for the property industry. Workshops will be held in all the SAPOA regions.

3.3 Employment Equity Amendment Act No. 47 of 2013 The Employment Equity Act No. 47 of 2013 (“Employment Act”) came into effect on 1 August 2014, making provisions for compliance and punitive measures for non-compliance. The Employment Equity Regulations were published and open for public comment until the end of March 2014; we await promulgation of these regulations.

3.4 Spatial Planning Land Use Management Use Act No. 16 of 2013 The Spatial Planning Land Use Management Act (“SPLUMA”) was passed as law in 2013.

Its purpose, among others, is to provide a framework for spatial planning and land

use management in the Republic of South Africa; to specify the relationship between the spatial planning and land use management system and other kinds of planning; and to provide for the inclusive, developmental, equitable and efficient spatial planning at the different spheres of government. It further intends to provide a framework for the monitoring, coordination and review of the spatial planning and land use management system, and to provide a framework for policies, principles, norms and standards for spatial development planning and land use management.

SAPOA members have raised concerns regarding the pressing need for Section 60 of SPLUMA to be implemented. Section 60(2) is the most crucial, stating that “all applications, appeals or other matters pending before a tribunal established in terms of section 15 of the Development Facilitation Act No.67 of 1995 at the commencement of this Act have not been decided upon or otherwise disposed of, must be continued and disposed of in terms of this Act.” We have been engaging extensively with the Department of Rural Development and Land Reform. We have also submitted comments pertaining to the Regulations and have further published a press release emphasising the negative impact that the non-implementation of SPLUMA has on job creation, the GDP and tax revenue.

SAPOA members have raised concerns regarding the pressing need for Section 60 of SPLUMA to be implemented. Section 60(2) is the most crucial, stating that “all applications, appeals or other matters pending before a tribunal established in terms of section 15 of the Development Facilitation Act No. 67 of 1995 at the commencement of this Act have not been decided upon or otherwise disposed of, must be continued and disposed of in terms of this Act”

3.5 Subdivision of Agricultural Land Amendment Act, 1970 The original aim of the Subdivision of Agricultural Land Act was to prevent the subdivision of agricultural land to the extent where the new portions created are so small that farming will no longer be economically viable.

We have written a letter to the Department of Agriculture, Forestry and Fisheries highlighting various issues that relate to the alignment of legislation, particularly the Subdivision of Agricultural Land Act, with national legislation such as SPLUMA, and the importance of streamlining of processes, which would bring a balanced approach that is in accordance with the National Development Plan. We await a suitable meeting date from the Department to meet with the SAPOA delegation.

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from the President 3.6 Financial Intelligence Centre Act No. 38 of 2001 (FICA) On behalf of SAPOA members, we have compiled a FICA manual, containing “Know Your Client” guidelines for the industry. There is a need for awareness in the industry in order for compliance to become a priority because hefty fines are associated with non-compliance. Workshops will be held to keep members abreast of the relevant industry-related requirements.

3.7 Municipal Systems Act, 2000: Outstanding rates and taxes In terms of Section 118 of the Municipal Systems Act, 2000 prior to transferring a property, the outstanding rates and taxes have to be paid. But section 118(2) allows for a property to be transferred provided the preceding 24 months arrears rates and taxes have been paid. This concession is increasingly proving to be problematic for mortgagees and new property owners alike, as there are numerous and widespread examples where: 3.7.1 Municipalities allow property owners’ accounts to be in arrears for periods longer than two years. When conveyancers approach municipalities to determine the arrears rates and taxes, they are not provided with full extent of the arrears but merely the arrears for the preceding 24 months. Once these arrears have been settled, municipalities provide the conveyancer with a Rates Clearance, and the property is then transferred into the purchaser’s name.

3.7.2 Municipalities are of the view that present owners are liable for previous owners’ debts to a Municipality, and are implementing this to the detriment of property owners.

We have sought a legal opinion on this matter, which will also focus on the recent case of Tshwane Metropolitan Municipality vs Mathabathe and Others, which emphasises the point that Section 118 of the Municipal Systems Act is arbitrary and has been wrongly interpreted. We had a meeting with COGTA and highlighted the concerns and prejudicial effect Section 118 has had on property owners, and provided COGTA with a legal opinion regarding same.

LEADERSHIP Leadership within the property industry is pivotal as we aim to set trends and be at the forefront of protecting poor member’s interests. In 2014 we have done so, as we continue to be the “voice of the commercial property industry” by undertaking pertinent research that drives investment decisions.

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4 RESEARCH SAPOA will be finalising the following research during the current financial year: ECONOMIC VALUE OF THE COMMERCIAL PROPERTY SECTOR INTO THE ECONOMY OF KWAZULU-NATAL: a) Urban-Econ Development Economists have been commissioned by SAPOA to undertake a detailed investigation of the commercial property industry in KwaZuluNatal, with special reference made to the City of eThekwini. b) The report is the second component of the “The Role and Impact of the Commercial Property Sector” study. The report aims to contextualise the size and quantity of the private property sector in KwaZuluNatal to provide a foundation for cost calculations related to application and other administrative processing timeframes. The second report supplements the first by analysing development application case studies in order to link processing time-frames to economic performance. c) The report will be presented at the 2015 Annual SAPOA Convention.

COMPARATIVE ANALYSIS OF SERVICE COSTS IN MUNICIPALITIES a) The SAPOA board has approved the appointment of Urban-Econ to undertake a survey to assess various charges, for example town planning services, building costs, building plans, consumption charges, municipal fees and bulk service contribution fees of 13 municipalities. b) The report will be presented at the 2015 Annual SAPOA Convention.

SELF-DETERMINED MUNICIPAL VALUATION CONCEPT It was brought to our attention by members that there are grave concerns regarding inconsistent and inaccurate valuations. The implementation of the Municipal Property Rates Act (MPRA) has posed an issue, resulting in general and supplementary valuation rolls that are not accurate, consistent, efficient or uniform as intended by the Act. This has a direct negative impact on property rates and it further impacts landlord and tenant relationships, as assessment rates are one of the top expenses on the landlord’s list of operating expenses.

A solution to this issue is the formation of a Valuers Office. Professional and registered

Valuers will work closely with the private sector to get the correct valuations of property owners. An accurate valuation roll can then be sent to the relevant municipality.

This would be a key tool to fair rating.

SAPOA is in the process of obtaining consent from a Metropolitan municipality in order to run the pilot programme, and to begin to unlock the numerous benefits of this concept.

STANDARDISATION OF INDUSTRY STANDARDS FOR FLOOR AREA MEASUREMENT SAPOA, together with RICS, is currently part of a global coalition to establish an International Standards Setting Committee (SSC) for measurements.

The SSC was brought into being by decision of the IPMS Coalition, which in turn was established as a result of the initiative of the World Bank to examine the creation of an international standard of measurement for buildings.

The SSC has been meeting for about a year now, and has initially focussed on the “offices” asset class.

Property, from residential and retail to office to industrial, has been measured inconsistently around the world. In some parts of the Middle East, hypothetical floors are included in a measurement. In India, property measurement can include off-site parking spaces, and in some parts of the United States, air-conditioned space is used as the basis of a measurement (and not floor area). Research by global property specialists Jones Lang LaSalle suggests that depending on the measurement methodology used, a property’s size can deviate by as much as 24%.

The new standard will enable uniform reporting procedures from the earliest building stages to leasing and management of properties, as well as long-term protection of assets.

AFRICA FOCUS COMMITTEE In 2014, SAPOA has established and led an Africa Focus Committee consisting of various industry bodies to provide leadership on the continent.

On behalf of SAPOA, I wish you a prosperous and joyous 2015.

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from the President

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from the CEO’s desk

OR F S IE LOBB U YO

Acting Chief Financial Officer Tshwane Metropolitan Municipality Corner Lillian Ngoyi and Madiba Streets Pretoria

CITY OF TSHWANE RESELLERS TARIFF

lished in 1966 and it is a unique, member The South African Property Association (SAPOA) was estab advance members’ commercial and industrial driven organization that aims to represent, protect ands of ownership, management and development. property interests within the property industry in term ts, utility management companies and are SAPOA’s members include landlords, managing agenTariff 2014/2015 hereinafter referred to as the thus directly affected by the City of Tshwane Resellers Resellers Tariff. organisations (some of which include ABSA, SAPOA represents approximately 1300 companies andMutual Properties, Liberty Properties, Eskom, Nedbank, City Property, Investec Property Group, Old V&A Waterfront Company, ACSA, Eris Property Transnet, East London IDZ, Growthpoint Properties, thes, and Resilient Properties etc.). Our members Group, Encha Properties, Zenprop, Redefine Propertieoffice and industrial properties in South Africa own and control about 90% of all commercial, retail, of the largest rate payers in South Africa. to the value of approximately R500bn and constitute some of the commercial property sector, it is our While our strategic focus is to ensure that we are the voice of networking for our members. SAPOA is also mission that we achieve that through creating platformthe property sector which includes government focused on strategic lobbying of various stakeholders in times to consult with an intention to seek an at national, provincial and local level. We endeavor at allthe mutual interests of our membership. amiable solution to issues that infringe on or prejudice that the City of Tshwane Resellers Tariff has It has been brought to our attention by our membersd like to highlight that we are aware of the colossal negative implications for Landlords. We woul and fraudulent behavior displayed by rogue challenges faced by municipalities due to the negligent the fact that municipalities aim to find ways to resellers. Having cognizance of this dire situation and ions which are reasonable and just and do not resolve this issue, we are of the view that there are solut indirectly or directly prejudice all resellers.

The following issues below pertaining to the Resellers

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Tariff are of concern:

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from the CEO’s desk

4 of 2006) the regulator must regulate prices According to the Electricity Regulation Act, 2006 (Act No Regulator Act, 2004 (Act No 40 of 2004) states and tariffs. Further, Section 10 of the National Energy the following: in writing and be— 10. (1) Every decision of the Energy Regulator must be laws; cable appli all a) consistent with the Constitution and b) in the public interest; in this Act, the Electricity Act, the Gas Act and c) within the powers of the Energy Regulator, as set out the Petroleum Pipelines Act; ected persons have the opportunity to submit d) taken within a procedurally fair process in which affto the Energy Regulator; their views and present relevant facts and evidence arised and recorded; and e) based on reasons, facts and evidence that must be summ the reasons therefore. f) explained clearly as to its factual and legal basis and d to approve electricity tariffs.

It is therefore clear that NERSA is the only body authorise were quite beneficial and it was resolved that The NERSA public hearings which took place on 22 July to achieve by 31 March 2015. The purpose of NERSA will publish the guidelines document which it aimschallenges relating to the resale of electricity. this guideline would be to deal with the implications and ugh NERSA has not finalised the regulation In addition to this it has come to our attention that althoforward a Resellers Tariff. Further, the NERSA of the reseller industry yet the City of Tshwane has put tion of the Resellers Tariff for non-domestic approval document dated 30 June 2014 makes no men tion and spirit in which the Electricity Regulation consumers. This would in effect be contrary to the inten Act was drafted. ane and applicable from 1 July 2014 states that The Schedule of Tariffs introduced by the City of Tshw an amount per month per metering point there will be a fixed demand charge in accordance with rding to the rating of the consumer’s incoming payable, whether or not electricity is consumed, acco is 60 amperes but not more than 80 amperes. circuit breaker where the rating of the circuit breaker may not charge a basic charge or fixed charge The Schedule further states that resellers of electricity placed in a worse off position as the landlord to these categories of consumers. The landlord is now ories. This will have an immense effect on the may no longer charge any fixed charges to these categ , including but not limited to the provision of ability of the landlord to recover all their electricity costs nts, collecting the billed amounts, maintaining suitable metering, reading of the meters, billing tena ed by aspects such as the recovery of the the installation. The well-being of a property is determin the viability of the property. utilities. The failure to adequately do so directly affects ratives which are established in the Electricity NERSA being the Regulator has to abide by the very impe Regulation Act. This includes amongst others ricity supply industry; to make the National Energy To establish a national regulatory framework for the elect ricity regulatory framework.

Regulator the custodian and enforcer of the national elect

R O F S E I B LOB YOU

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from the CEO’s desk

R

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or the prejudicial effect regard ns er nc co r ou ch t su gh lt of like to highli ustry as a resufore erty ind propard W e would therefore l Stand cia are er there mm and co laws By e ricity th Elect on the esumers in accordance with ations. justified. It is nsfieq ific cons as nc m edue ra classi ic dedareco lords om on inten ec unLand d an l against landlords therefore cannot be socia veimina e ha tion senc Discr in esthere with. ichected conn ion swh tatright orded menthe ple imaff R ords’ rights have been adversely and materially affected by the Resellers Tariff.

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faithffaully, Yours lly, ithfully, You Yorsurfaitshfu

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___ ____ ______ ______ ______ _____ _____ _____ _____ __________ __ __ __ __ __ __ Gopall NeilGopa Neil pacerl ive Offi Go iltive Execut Ne MrefExecu Chi Officer Officer Chief ec Chief Ex utive

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R O F SR E I B LOBBIES FO YUOU LOB YO

SOUTH AFRICAN PROPERTY REVIEW

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SOUTH AFRICAN PROPERTY REVIEW

Neil's Letters Dec.indd 10

2014/11/10 10:00 AM

from the Editor’s desk

The retail scramble for Africa The retail race on the African continent is heating up – but how long will the sector’s fire keep burning?

T

he South African retail world is abuzz and it appears that there are no signs of the sector slowing down. But how sustainable is this competitive behaviour that’s currently defining the market?

While the retail sector, in terms of total return, came second in both the IPD South Africa Annual Property Index results for the year to 31 December 2013 (16,8%) and the IPD South Africa Biannual Property Indicator results for the six months to 30 June 2014 (7,4%), the sector is trailblazing ahead.

From mall development, new openings, and refurbishments to international brand entries and South African and global franchise expansions into Africa, the retail market is milling with activity.

Currently, there are close to 20 malls under construction in South Africa that are expected to open within the next two years. Some of them are megalithic in physical size and influential stature – these include Zenprop’s 65 000m² Mall of the South; the Billion Group’s 88 000m² Bay West Mall and Atterbury’s 120 000m² Mall of Africa (the largest new mall built in South Africa in 10 years).

According to figures from the South African Council of Shopping Centres, South Africa’s large community, regional and super-regional malls and shopping centres will increase from the current estimate of 155 to 180.

The past year saw a plethora of new shopping centres open, some of which have been milestone developments for South Africa – for example, the landmark R1,4-billion 85 000m² Newtown Junction mixed-use shopping, leisure and office development as well as the socially innovative R400-million 27 000m² regional Eyethu Orange Farm Mall.

Other prominent shopping centre openings include the R600-million 35 000m² Heidelberg Mall; the R1-billion 65 180m² Matlosana Mall and the R220-million 17 800m² Bela Mall, which was one of the eight new shopping centres that Atterbury opened in South Africa, Namibia and Ghana before the end of October 2014.

Several refurbishments have also been undertaken this year, which included the completion of Hyprop Investments Limited’s extensive two-year R930-million redevelopment and refurbishment of

Rosebank Mall, which expanded the large regional mall from 36 000m² to 62 000m².

Redevelopments that are currently under way include 1Eighty’s R70-million refurbishment of Southdale Shopping Centre as well as the key renovations at Eastgate Shopping Centre over the next 24 months.

Amid new openings and refurbs, local and international retailer brands are either battling it out for space and market share, setting up shop for the first time on African soil or embarking on vigorous expansion strategies.

While South Africa’s top food retailers continue to fight over market share and the saga around long-term exclusive lease agreements in shopping centres continues, international brands are flocking to the country – think Zara, Topshop, the Cotton On group, Burger King, Lush and H&M, among others.

Just when you thought the spat between Massmart and Pick n Pay, Spar and Shoprite was getting juicier, a pizza war is being waged in South Africa that has led to the aggressive expansion of local players such as Famous Brands-owned Debonairs, Spur Corporation’s Panarottis and private player Romans Pizza.

After a six-year absence, Pizza Hut has returned to the country with the opening of a store in Johannesburg, and is set to expand aggressively in the rest of Africa – Pizza Hut will be opening outlets in Zambia and Angola by the first half of 2015. Then there’s Domino’s Pizza: Taste Holdings is aiming to have 150 Domino’s Pizza SA outlets

by December next year.

While the busy activity and hype paints a highly attractive picture for the retail sector, there are underlying factors that retailers need to be cognisant of. Amid a recession scare in South Africa and sacrificed economic growth, prospects for higher taxes and rising living and operational costs, consumer spending and confidence is under threat.

Although South African consumer confidence improved for the second half of 2014 – according to the latest MasterCard Index of Consumer Confidence, South Africa’s consumer confidence was 58,7 points, a 2,4 point improvement on last year’s score of 56,3 – consumer confidence is at a tipping point.

However, the future of retail in Africa appears optimistic. With the swelling of urbanisation and the rise of Africa’s middle class, the continent is robust in terms of retail as African economies become more consumer-focused and the desire for highquality goods and services is increasing.

Perhaps the retail scramble for Africa has only begun to feel the warmth.

Candace King, Editor

A word of thanks On behalf of the SAPOA publications team and the organisation at large, we would like to extend a warm thank you to all our readers who, through their interest, make the South African Property Review a success every month. SAPOA would like to thank all its members, affiliated organisations, clients and stakeholders for their support. Without your input, SAPOA wouldn’t be able to be the true voice of South Africa’s commercial property industry. As 2014 comes to a close and 2015 promises to bring further excitement and activity in the property industry, we wish you a safe and joyous festive season as well as a prosperous New Year.

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contents

December 2014 / January 2015

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

REVIEW

MOTHER CITY HOSTED SAPOA meets the Mayor

ON THE COVER Season’s greetings from SAPOA and the team at the South African Property Review

PROPERTY TRENDS The industrial sector revolution: alive and well

December 2014 /January 2015

EYE ON AFRICA Uganda: prosperity and heightened development

Cover with spine Dec/Jan_SUBBED.indd 3

Oilgro

PAYING IT FORWARD Corporate social investment: not just for seasonal goodwill

PRESIDENT’S MESSAGE Amelia Beattie reflects on the year to date

CSI and education

Abreal

December 2014 /January 2015

1 11 14 19 20 22 24 26 30 34 38 42 44 46 48 52 54 61 62 63 64

2014/11/10 2:09 PM

President’s message From the Editor’s desk Industry news Education, training and development Legal update Rescuing business rescue Town planning Keeping environmentally up to date New members Welcome to SAPOA Theme leader Paying it forward Africa uncovered Uganda Eye on the world Switzerland API Summit REIT Conference Property trends Where to from here?

Property career week Unlocking property’s key to education Meet the Mayor Cape of good business Feature Redefine gets real SAPOA industrial trends report Statistics SAPOA events Polokwane Golf Day Off the wall Finding poetry in the mundane 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, Lekgolo Mayatula, Michelle Marais, Caroline Coates, Warren Blunt Photographers Michael Glenister, Mark Pettipher, Gareth Gilmour, Warren Blunt, a21studio

P R O P E R T Y

F U N D

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.

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2014/11/10 10:12 10:10 AM

industry news

industry news

Motseng Investment Holdings scoops an award

First-ever existing building green rating awarded to Cape Town’s Black River Park

T

he 18 675m² North Park in Black River Park in Observatory, Cape Town, has become the first building in the country to be awarded an existing building certification from the Green Building Council of South Africa (GBCSA), under the Council’s newly launched Green Star SA Existing Building Performance (EBP) pilot tool.

Black River Park, owned by Leaf Capital and Joubert Rabie, has made it its mission to secure green certification for the entire 75 000m² office park – one of the largest business parks in the Western Cape. Consisting of a North and South Park, it is home to more than 110 companies, including the GBCSA’s head office and SAPOA’s Western Cape offices. As part of the GBCSA’s first-ever existing building rating, the North Park was recognised with a 5-Star GBCSA EBP certification.

“The awarding of our first-ever Green Star SA EBP rating to a building within Black River Park is a very significant milestone for the GBCSA, Misplon Green Building Consulting and the green building movement in South Africa,” comments Brian Wilkinson, Chief Executive Officer of the GBCSA. “We want many more owners of buildings to follow the example set by Black River Park. With this first EBP rating awarded, the GBCSA will go on a big drive to advocate the case to get existing buildings to be retrofitted with green innovations, because these buildings make up the majority of available buildings out there.”

Black River Park, together with Misplon Green Building Consulting, is now in the process of preparing submission packs to secure green ratings for the remaining buildings. While Wilkinson commended the efforts of Black River Park, he urged both the private sector and government to also look more seriously at securing green ratings for existing buildings through the GBCSA’s new certification tool. “If we want to make a bigger positive impact on making buildings more sustainable and green, existing buildings need to be targeted,” he says. “Our innovative existing rating tool aims to drive the transformation of these buildings to become more sustainable spaces.

“The EBP rating tool is directly aimed at the operators of existing buildings, with key focus directed at portfolio managers, owners, facilities managers and tenants. The role of the tenant is considered key to a building’s operations, and so the rating tool will also serve as a tenant awareness instrument – because tenant buy-in is essential for significant uptake of the tool. Our green lease toolkit is a key component in the ownertenant relationship in order to set up a win-win agreement.” +27 (0)86 104 2272, Gbcsa.org.za

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M

otseng Investment Holdings’ Mozambican subsidiary Comserv Mozambique has scooped the 2014 Vodacom Business Partner of the Year Award. The accolade, which forms part of the annual Vodacom CEO Awards, is in recognition of the exceptional service the company has provided for the regional mobile operator in Mozambique.

Comserv is part of the Selmec Group of companies, acquired by Motseng Facilities Management in 2012, and specialises in infrastructure maintenance and facilities management in the built environment, telecoms and retail sectors.

Ipeleng Mkhari, Chief Executive Officer of Motseng Investment Holdings, says the award is testament to

the meticulous, quality service that Comserv has provided Vodacom on the continent – and such recognition will go a long way in motivating the team.

“What makes this award even more meaningful is the fact that it coincides with Vodacom’s – and South Africa’s – 20th anniversary of democracy,” she says.

Motseng has invested substantially in building a skills set, and has been fastidious in ensuring that the quality of service is impeccable and exceeds customer expectations.

“We believe that this accolade will help the group to expand its operations across the continent and establish Motseng-Selmec as the preferred service provider of telecommunications across

Government shows green leadership with new DEA head office building

T

he recent official opening of the Department of Environmental Affairs’ (DEA)new 6-Star Green Star SA Office Design rated headoffice building represents a milestone and a significant step in green leadership, says Brian Wilkinson, Chief Executive Officer of the Green Building Council of South Africa (GBCSA).

“The landmark new green building represents a major commitment by the government to green building and sustainable development,” he says.

“We welcome the green leadership shown.

“For any building to achieve a 6-star rating is a feat to be celebrated because of the high standard of green

building design and construction applied.

For a government building, it is a precedent-setting move by the leadership of our country, and quite a progressive demonstration of consciousness for the green movement.

“As the biggest owner of property in the country and one of the biggest occupiers of office buildings, the government is a key stakeholder. It can play a crucial role not only in driving the development of green buildings within its own portfolio, but also in incentivising the private sector by occupying only office buildings that are green rated.”

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On TOP And On TrEnd: industry news the continent,” said Mkhari.

Luis Brazuna, Selmec Country Manager in Mozambique, agrees.

Ipeleng Mkhari, Chief Executive Officer of Motseng Investment Holdings

The GBCSA certified the new R653-million DEA head office building with a 6-Star Green Star SA Office V1 Design rating last year – the highest achievement of this kind for a government office accommodation project of this magnitude in South Africa.

The Council also recognised the efforts of the government in this project with a Green Star Leadership Award.

With a gross floor area of 30 654m², the building (located

“This award vindicates the hard work done by the team, and stimulates and encourages us to raise the bar even higher to ensure our clients can provide seamless and uninterrupted communication services to the people of Mozambique,” he says.

Shameel Joosub, Chief Executive Officer of the Vodacom Group, says the awards are an acknowledgement and a celebration of the partners who have contributed to the success of the group.

“The awards pay tribute to the partners who have contributed to the success of this global brand, without whose contribution we would have nothing to celebrate,” he says. “I wish to thank the nominees and the winners for their sterling contribution to the success of Vodacom. We look forward to having you on this journey as we embark on the next growth trajectory.” +27 (0)11 267 8000, Motseng.co.za

in Arcadia, Pretoria) showcases green building principles and targets the green output specifications outlined in the government’s National Climate Change Response Policy. The DEA head office is one of only three buildings in the country to have secured the GBCSA’s coveted 6-Star Green Star SA Office V1 Design rating.

“Now that the DEA’s head office has been opened, we encourage the development targeting a 6-Star Green Star SA Office V1 As-Built rating,” says Wilkinson. “It will make green building history as the first South African government building – and only the second building overall in the country – to do so.”

With the green leadership the government has shown in developing the DEA’s new head office and other new buildings, Wilkinson is optimistic that more government buildings will go green. +27 (0)86 104 2272, Gbcsa.org.za

education made easier for you industry news full fo ur day Pro gramme

SAPOA E-Learning saPoa has developed an e-learning training method for its members. this training platform includes the filming and production of video content which enables saPoa to manage the delivery of training material to audience groups, who will be able to access training material on their desktops, tablets and mobile devices.

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industry news

The property sector is running out of time to keep its transformation charter

T

he deadline to align the Property Sector Transformation Charter with the Department of Trade and Industry’s (DTI) revised B-BBEE Act and codes is looming.

The sector is running out of time to adapt its Charter and, if it doesn’t make the April 2015 deadline, the Charter will fall away and the property industry will automatically adopt the revised DTI B-BBEE codes.

This will place it under immense pressure to speed up transformation, says Marius Muller, Chief Executive Officer of Pareto Limited. “With the new Codes, there’s a great opportunity to have another look at how the property sector achieves BEE and ensure it is done in a sustainable way,” he says. “In general, the sector has made pretty slow transformation progress. After 20 years of democracy, we should be seeing more change. There’s more that we can do.

We should want to do better.”

The first BEE codes were introduced in 2007, after which the Property Sector Transformation Charter was separately legislated. However, following a review, the South African government revised the BEE codes in October 2013. The sector has until the end of April 2015 to ensure its Charter is compliant with the new Codes.

Muller says that much work was done by the sector to legislate its own transformation Charter, so it makes sense to align it and comply with the new standards set out by the DTI, and move forward as an industry.

He explains that the Property Charter allows for a more gradual implementation of BEE, compared with the revised BEE codes, which would result in greater transformation, faster. The big change in the revised codes is the adherence to a minimum score in three areas: ownership, skills development, and enterprise and supply development.

A business must score a minimum of 40% of their target in each of these areas or it will drop a BEE level. However, the implications for the property sector go beyond this.

“The real challenge for the property sector is that it previously enjoyed certain concessions, which translated into lower transformation targets. This manifested in the slower implementation of BEE,” says Muller.

16

He points out that, even with lower targets, the sector is making sluggish progress. And, should the alignment of the Property Charter fail to meet its deadline, it could leave the listed property sector in particular scrambling to make up ground.

For most companies outside of the property sector, black ownership must be more than 25% for transformation to have taken place. In the case of most listed companies, 40% of ownership is mandated because of shareholding by pension funds, which have a broad base of policyholders. As a result, listed companies are required to achieve 25% black ownership of the remaining 60% shareholding, or 15% black ownership. Yet for listed property companies, the level of mandated investment is 70%, so they only need 7,5% black ownership to be transformed.

Business outside of the property sector has generally been given 10 years to reach their 15% black ownership targets, whereas listed property companies have 20 years to achieve their targets (the reduced 7,5%).

“Given that, nearly 10 years down the line, the property sector is nowhere near its halfway mark of 3,75% of black ownership, it is clear that there is a lack of transformation in the sector,” says Muller. “This puts the sector at a disadvantage from a sustainability perspective. It’s not the principle that’s the problem – it’s the application.

“There are companies that have been successful with their transformation, and I acknowledge their efforts – so we need to consider why it isn’t happening in the property sector, and how we can do it differently to make it work in future. As an industry, we really do have a responsibility to openly and honestly discuss our contribution to transformation, particularly given the sensitivity and legacy of property ownership in South Africa.”

He points out that, in the listed property sector today, there is little transformation in executive teams. A recent IPD study, which excluded dual listed and internationally domiciled companies, revealed that only 11 of the 78 listed property executive director positions are filled by black people, of which only one is female. Dig a little deeper and you’ll discover only two of these black directors have risen to their

positions as part of an established business.

The others have come from black business, most of them on the basis of governmentbacked initiatives.

“Transformation is about changing the status quo rather than diluting it,” says Muller. “Black leadership is the most economical and effective way of achieving transformation, so we should be seeing more of it.”

While the future of transformation in the property sector is a big issue, Muller is adamant it shouldn’t be an emotive one.

“We need to look at the facts and figures and ensure they make sense,” he says. “What has become crystal-clear is that we’re running out of time to ensure compliance with the revised BEE codes for the sector. Given the lack of progress in our sector, it may be of greater national interest for us to rather, as a sector, revert to the generic BEE codes.” +27 (0)11 258 6800, Pareto.co.za

Marius Muller, Chief Executive Officer of Pareto Limited

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industry news

industry news

Vukile increases its strategic stake in Synergy

V

XCELLENCE IN PROPERTY DEVELOPMENT 2 0 1 4

always comes down to price and strategy. Synergy Income Fund’s assets have a strong strategic fit for Vukile’s portfolio – but that alone isn’t enough.

While we are eager to add the right assets to our portfolio, we simply won’t chase growth at any cost. We’ve been patient and waited for the price to be right for our investors before we act. Today, the pricing allows us to pursue this opportunity.”

Rapp confirmed that Vukile Property Fund will offer to acquire the remaining Synergy Income Fund B linked units at a swap ratio of one Vukile Property Fund linked unit for every 2,67 Synergy Income Fund B linked units. It will also extend a comparable offer to Synergy Income Fund A linked unit-holders at a swap ratio of one Vukile Property Fund linked unit for every 1,65 Synergy Income Fund A linked units. The only condition precedent to the deal is securing Competition Authority’s approval; thereafter the offer will be open for acceptance for 30 business days. Vukile Property Fund already has sufficient authorised and unissued units to settle the offers. +27 (0)11 288 1002, Vukile.co.za

INNOVATIVE

ukile Property Fund recently announced that it acquired a further stake in Synergy Income Fund, bringing Vukile Property Fund’s holding in Synergy Income Fund to a total of 39,965%. With its latest investment in Synergy Income Fund increasing its interest beyond 35%, Vukile Property Fund is obliged to make a mandatory offer to acquire all the remaining linked units in Synergy Income Fund.

“Vukile has been patient and prudent with its strategic stake in Synergy Income Fund,” says Laurence Rapp, Chief Executive Officer of Vukile Property Fund. “The time is now ripe to move this opportunity forward.”

In December 2013, Vukile Property Fund acquired about 34% of Synergy Income Fund B linked units. Vukile Property Fund then entered discussions to deepen its position in Synergy Income Fund with a view to Vukile Property Fund acquiring control of Synergy Income Fund or its underlying assets. However, Vukile Property Fund withdrew from these discussions in early September 2014, after the two parties were unable to find common ground on price.

Now Vukile Property Fund has triggered a mandatory offer by acquiring and taking transfer of 3 543 839 Synergy Income Fund B linked units from STANLIB Asset Management and 5 584 586 Synergy Income Fund B linked units from Liberty Group, both at a swap ratio of one Vukile Property Fund linked unit for every 2,67 Synergy Income Fund B linked units. “Any deal we do is about creating value for Vukile unit-holders,” says Rapp. “Doing the right deal

2 0 1 4

One of SAPOA’s primary objectives is to define excellence in the property industry.

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s part of this objective, our SAPOA Awards for Innovative Xcellence in Property Development provides public recognition for top-quality design and functionality, and a benchmark for excellence in property.

Be part of this exclusive award category entry in the most prestigious property awards programme in South Africa. Cement your position as an industry leader and align your company with the industry’s peak leadership body in recognising excellence.

Position your company as a market leader and reap the benefits from positioning as a champion of South Africa’s property industry, innovation and excellence.

Winning a SAPOA Innovative Xcellence Award provides members of the project team with a multitude of benefits.

Don’t miss the opportunity of celebrating the success that results from determination, and the resilience demonstrated by our industry in providing exceptional PROPERTY.

ENTRY FEE QUERIES

ENTRIES CLOSE

Laurence Rapp, Chief Executive Officer of Vukile Property Fund

R9 500 (excl. VAT) Jane Padayachee marketingmanager@sapoa.org.za or +27 (0)11 883 0679 16 February 2015

O N L I N E R E G I S T R AT I O N AT

S a p o a c o n ve n t i o n . c o. z a / a w a rd s

SOUTH AFRICAN PROPERTY REVIEW

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2014/11/10 3:09 PM

industry news

High demand sees launch of The Prestwich in vibey Green Point

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n acute shortage of stock is seeing upmarket apartments in prime locations on the Cape Atlantic seaboard being snapped up by investors and home-buyers.

In light of this high demand, a redevelopment is being launched on the site of 70 Prestwich Street in Green Point, titled The Prestwich.

This will cater for the growing demand for such units in this trendy and cosmopolitan De Waterkant location, which includes the buzzing Cape Quarter Lifestyle Village with its supermarket, clothing boutiques and other stores. “Such is the demand that it’s not unusual to find speculators competing for the same property, resulting in a marked escalation in property prices because of a lack of supply,” says Basil Moraitis, Pam Golding Properties Area Manager for the Atlantic seaboard and city bowl.

The Prestwich is located less than 100m from the sought-after V&A residential marina, which is also very much a seller’s market at present, with prices approaching R60 000 to more than R80 000 per square metre for units on the yacht basin, where the entry-

level price for a two-bedroom apartment is now about R6-million.

The bulk of the existing building – apart from the existing lower columns and slabs – is to be demolished to make way for The Prestwich, which will comprise 88 new apartments of one to two bedrooms, most with two bathrooms. With 24-hour high security, CCTV and a concierge, the apartments in The Prestwich include Wi-Fi, optional home automation, underfloor bathroom heating (with heated towel racks in main bathrooms), air conditioning, and fitted kitchens with oven, hob and extractor.

There is secure basement parking for all units, many of which enjoy sea or mountain views, with upper-level apartments having views on both sides. A trendy coffee shop and cafe will be accommodated on the ground floor, while the new portion of the redevelopment includes a swimming pool and pool bar.

“The inspiration for this development by well-known developer Land Equity Group originates from the exciting new

developments that have successfully sprung up in the vibrant London Docklands area and the Meatpacking district in New York,” says Moraitis. “The new building will utilise a combination of natural materials, with exposed concrete and hard-wood floors creating an industrial yet sophisticated feel that will appeal to young professionals and up-country buyers seeking a trendy residence or holiday home in a coveted location. It will also appeal to buyers from around the country who are looking for an investment property in Cape Town for their children attending the University of Cape Town – which we have identified as a rapidly increasing market.”

Completion of the redevelopment is anticipated for the end of 2016, with buyers benefiting from capital growth of their investment over the two-year project. +27 (0)83 501 5015, Pamgolding.co.za

Season’s greetings

SAPOA would like to take the opportunity to thank its members, sponsors, consultants and advertisers for their continued loyal and valuable support in 2014.

We wish you and your families happiness during the festive season and through the coming year.

SAPOA Christmas Message Advert_rev5.indd 1

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SOUTH AFRICAN PROPERTY REVIEW

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2014/11/10 10:26 AM

education, training and development

SAPOA’s Bursary Fund in full swing With R725 000 raised thus far, the SAPOA Bursary Fund continues to garner success, with seven students having already graduated through the scheme

Martin Ferguson, SAPOA’s HR, Education, Training and Development Manager, collaborates with thought leaders in South Africa’s property sector

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n 2010, Pareto Limited and SAPOA as founders established the SAPOA Bursary Fund, with the sole objective of creating a fund in the commercial property industry for scholarships and bursaries for previously disadvantaged individuals.

We are proud to announce that, from the first intake in 2010, seven students have graduated through the SAPOA Bursary Fund, and the majority have been placed with member companies. This year we will have five graduates.

The intention of the Bursary Fund is to recruit and enrol new students every year, and to reach a stage where we will be in a position to provide graduates who are qualified in commercial property to the SAPOA members and the commercial property industry on an annual basis.

The SAPOA Bursary Fund is managed by trustees and administered by SAPOA, and includes the following services: ●● The SAPOA Education, Training and Development Committee interviews and selects students in terms of the sponsoring companies’ mandate; ●● The SAPOA Education Manager assists with the university and hostel registrations; ●● The Fund manages the payment of study fees, accommodation, books and pocket money;

●● Quarterly feedback is provided to SAPOA Bursary Fund trustees and the subcommittee, which consists of sponsoring employers; ●● Student vacation work with sponsoring companies is arranged; ●● There is ongoing mentoring and quarterly one-on-one student meetings; and ●● Student progress and performance are managed.

As can be seen, SAPOA takes the administrative management of the Bursary Fund out of the hands of its members, who can then focus on their core business activities. The end result is that the industry has access to qualified graduate property students. Members benefit in the following ways: ●● Compliance with B-BBEE and Property Charter targets; ●● Member contributions are utilised to educate and train people in commercial property; ●● Scare skills in commercial property are addressed; ●● Members can employ skilled graduates who are qualified in property or as mandated; and ●● The SAPOA Bursary Scheme is registered and will issue Section 18 A Certificates for tax purposes, so participating members will also receive tax rebates.

To achieve the SAPOA Bursary Fund objectives, more funds

and sponsorships to the Bursary Scheme are needed.

Earlier this year, through the initiative of SAPOA President Amelia Beattie, the organisation raised R725 000 at the 46th Annual SAPOA International Convention and Property Exhibition in one day. This will assist the Bursary Scheme in funding about 10 final-year and/or honours-degree students in 2015.

As part of the R725 000 raised at Convention, SAPOA received a R50 000 donation from Bakgatla-Ba-Kgafela Properties, who had made a pledge during the Convention.

A cheque was officially handed over at the recent Bakgatla-BaKgafela 20-year democracycelebration event, which ran from 27 October to 2 November in the North West.

We are thankful for the sponsorships but we need more funds to really make an impact on the skills shortages. SAPOA, on behalf of the commercial property industry, makes an appeal to all its member companies to join our current sponsors, and make sponsorships and donations to our Bursary Scheme.

For more information, please contact: Martin Ferguson, Human Resources, Education, Training and Development Manager t: +27 (0)11 883 0679 e: martin.ferguson@sapoa.org.za

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legal update

Rescuing business rescue Born out of the negative impacts of South Africa’s sluggish economic growth and financial turmoil on business, the business rescue process poses great challenges for commercial property players and is now under critical review

A. Introduction

Eugenia Makgabo is an Admitted Attorney of the High Court and Acting Legal Manager at SAPOA

The South African economy has undergone some hard times and is yet to recover. The consequence of such a downturn has had an adverse effect on business.

In 2011, a potential solution was found to assist businesses that are financially distressed.

This came in the form of a business rescue process, which is guided by principles found in Chapter 6 of the Companies Act, 2008 (Act No. 71 of 2008), hereinafter referred to as the Act. The business rescue process has recently been a hot topic, with a review of the process now under way. There have been serious concerns regarding the process, which have led to unintended consequences that have directly negatively impacted the commercial property industry.

B. Purpose of business rescue Business rescue is defined in the Act as the proceedings to facilitate the rehabilitation of a company that is financially distressed. There are several ways in which this can be achieved, by providing for the following: ●● The temporary supervision of the company and of the management of its affairs, business and property; ●● A temporary moratorium on the rights of claimants against the company or in respect of property in its possession; and ●● The development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities,

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and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis, or, if it is not possible for the company to so continue in existence, results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company.

In 2011, a potential solution was found to assist businesses that are financially distressed. This came in the form of a business rescue process, which is guided by principles found in Chapter 6 of the Companies Act, 2008 (Act No. 71 of 2008), hereinafter referred to as the Act Reference has specifically been made to a financially distressed company, which essentially only refers to a company that appears to be reasonably unlikely to be able to pay all of its debts as they become due and payable within the immediately ensuing six months. In the alternative, a company that appears to be reasonably likely to become insolvent within the immediately ensuing six months.

C. Business rescue process The business rescue process can commence either by way of a company resolution or by a court order. The former is expanded on in Section 129 of the Act, and the latter in Section 131.

Business rescue proceedings commencing by company resolution The board of a company may resolve that the company voluntarily begin business rescue proceedings and place the company under supervision, if the board has reasonable grounds to believe that: ●● The company is financially distressed; and ●● There appears to be a reasonable prospect of rescuing the company.

Within five business days after a company has adopted and filed a resolution or such longer time as the Commission, on application by the company, may allow, the company must: ●● Publish a notice of the resolution and its effective date in the prescribed manner to every affected person, including with the notice a sworn statement of the facts relevant to the grounds on which the board resolution was founded; and ●● Appoint a business rescue practitioner who satisfies the requirements of section 138, and who consents in writing to accept the appointment.

Once such a practitioner has been appointed, the following must occur: ●● The filing of a notice of the appointment of a practitioner within two business days after making the appointment; and ●● The publishing of a copy of the notice of appointment to each affected person within five business days after the notice was filed.

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legal update A business rescue practitioner refers to a person appointed, or two or more persons appointed jointly, to oversee a company during business rescue proceedings. The practitioner’s goal would be to rescue the business in accordance with the above-mentioned requirements, which are entailed in the business rescue definition. The practitioner (after consulting the creditors, other affected persons and the management of the company) must prepare a business rescue plan for consideration and possible adoption at a meeting that is held in terms of Section 151 to determine the future of a company.

The business rescue plan must contain all the information reasonably required to facilitate affected persons in deciding whether or not to accept or reject the plan.

Business rescue proceedings commencing by court order A company may commence proceedings by way of court order. Unless a company has adopted the aforementioned company resolution, an affected person may apply to a court at any time for an order placing the company under supervision and commencing business rescue proceedings.

An applicant must do the following: ●● Serve a copy of the application on the company and the Commission; and ●● Notify each affected person of the application in the prescribed manner.

Each affected person has a right to participate in the hearing of an application in terms of this section.

After considering an application, the court may make an order placing the company under supervision and commencing business rescue proceedings, if the court is satisfied that:

●● The company is financially distressed; ●● The company has failed to pay over any amount in terms of an obligation under or in terms of a public regulation, or contract, with respect to employmentrelated matters; or

Landlords are in essence required to comply with their obligations to supply the required service to the company in the same manner in which they did prior to the commencement of business rescue proceedings, unless the agreement between the company and the creditor regulates the relationship between the parties in the event of an insolvency or business rescue ●● It is otherwise just and equitable to do so for financial reasons, and there is a reasonable prospect for rescuing the company; and ●● Dismissing the application, together with any further necessary and appropriate order, including an order placing the company under liquidation.

D. Identified challenges for the property industry It is quite distressing for the property industry once business rescue proceedings begin as landlords are stuck between a rock and a hard place. According to Section 133 of the Act, there is a general moratorium on legal proceedings against a company during business rescue proceedings, except with: ●● The written consent of the practitioner;

●● Leave of the court and in accordance with any terms the court considers suitable; and ●● As a set-off against any claim made by the company in any legal proceedings, irrespective of whether those proceedings commenced before or after business rescue began.

There are therefore far-reaching implications for landlords during this time, as in accordance with the Act, tenants must remain in the leased premises during the business rescue process.

Landlords are, in essence, required to comply with their obligations to supply the required service to the company in the same manner as they did prior to the commencement of business rescue proceedings, unless the agreement between the company and the creditor regulate the relationship between the parties in the event of an insolvency or business rescue. This means that landlords must continue to fulfil their obligations by still accommodating tenants without any security of being paid rental and utilities.

The landlord is then also placed in a position where there are instances where the business rescue process is protracted and the amount of loss is therefore increased. This process gives way for landlords to fund the company under business rescue with free rent and paid services, which effectively is unfair and is a way for tenants to escape from their contractual obligations.

Further, Section 135 (3) states the following: After payment of the practitioner’s remuneration and expenses referred to in Section 143, and other claims arising out of the costs of the business rescue proceedings, all claims contemplated: ●● In Subsection (1) will be treated equally, but will have preference over:

●● All claims contemplated in Subsection (2), irrespective of whether or not they are secured; and ●● All unsecured claims against the company.

This would essentially mean that landlords not being secured creditors are most likely going to be unable to recover any money from a claim after having fit the tenant’s bill.

There have also been reports of unscrupulous business rescue practitioners who do not effectively carry out their duties. This adds to the landlords’ predicaments as the financial ramifications continue to escalate.

E. Potential solutions It has been reported that the Department of Trade and Industry and the special committee on company law chaired by Michael Katz have commissioned a study of the dynamics of the system, established three years ago under the new Companies Act. The Companies and Intellectual Property Commission is also looking to tighten regulations on business rescue practitioners who take over the management of troubled companies to revive them.

The above-mentioned interventions are well received by the industry as this situation has become dire and cannot be left unattended. It is SAPOA’s intention to host a workshop to obtain the views of members with regards to the practical implications the process has had and to explore various solutions for this issue.

The next meeting of the Specialist Committee on Company Law takes place this December.

We will compile a submission that will highlight the unintended consequences and emphasise the importance of the Act being amended to consider the adverse effects the process has had on the property industry.

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2014/11/10 10:35 AM

planning and development

Keeping environmentally up to date In light of the Department of Environmental Affairs’ amendments to the Environmental Impact Assessment Regulations and associated Listed Activities under the National Environmental Management Act currently in process, it’s imperative that SAPOA understands the implications of these changes

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Lekgolo Mayatula is SAPOA’s Planning and Development Manager

Only 50 days are granted to prepare a final report; this time-frame includes another 30-day public review period. Based on the dynamic nature of development projects, a final report would be required more often than not

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he national Department of Environmental Affairs (DEA) is in the process of amending the Environmental Impact Assessment (EIA) Regulations and associated Listed Activities under the National Environmental Management Act No. 107 of 1998) and it is imperative that SAPOA understands the implications of these changes. SAPOA thus appointed the services of CHAND Environmental Consultants to review both General Notice 733 of 2014 (EIA Regulations) and General Notice 734 of 2014 (Listing Notice 1), which were published in the Government Gazette (GG 37951) dated 29 August 2014.

Overall, attempts have been made in the newly proposed Regulations to shorten the environmental processes required to obtain authorisation, by: l Reducing the time-frame for acceptance of the application by the Competent Authority (CA) to 10 days; l Significantly reducing time-frames for the compilation of reports, including a Basic Assessment Report (BAR), Scoping Report (SR), Environmental Impact Report and related Environmental Management Programmes (EMPr). These time-frames include the tasks of completion and incorporation of all specialist studies, conducting the assessments, compilation of the report, a 30-day public review period, and incorporation of public comments into the report; l Combining the initial Interested and Affected Party (I&AP) registration/ notification period with the 30-day public review period for draft reports; l Only necessitating a final report if there are significant changes to the draft documentation or new information that is available as a result of the public review.

Only 50 days are granted to prepare a final report; this time-frame includes another 30-day public review period.

Based on the dynamic nature of development projects, a final report would be required more often than not; and

Reducing the time-frame for notification of I&APs of the authority decision to only three days. This could result in a particularly tight situation in instances where two of these days fall over a weekend.

The restricted time-frames for the compilation of reports are positive in the sense that the processes could potentially move more quickly. However, it would require strict and diligent planning on the part of the applicant to ensure that all information is available prior to the commencement of the statutory process.

A number of aspects could affect the timeous compilation of the reports, including the availability of specialists and the particular seasonal/other requirements/conditions for certain specialist studies; the need to obtain written confirmation from municipalities on their capacity to provide services; the fact that specialist findings might reveal the need for additional specialist input or the need to revise designs and related drawings; the volume of comments received from I&APs; as well as the additional task of addressing comments on the final reports (not a current requirement).

The time-frames allowed for the assessment portion of the process seem unbalanced when compared to the time-frames allowed for decision-making by the CA. It is anticipated that environmental assessment practitioners may well commence with projects and the compilation of reports (including specialist studies) prior to the submission of application forms to the authorities to compensate for the limited time allowed for these activities.

It would therefore not necessarily have the desired outcome of a reduction in project time-frames. This early commencement could add risk to the applicant in that associated costs are incurred earlier in the process, while the application may be rejected. There is a provision to apply for an extension to the various time-frames, but this only applies to unforeseen scope expansion and exceptional circumstances. l

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planning and development

Other minor changes in relation to public participation include: l The need to obtain consent from the landowner or person in control of the property prior to applying for authorisation in instances where the applicant is not be the owner of the land; and l Allowance to combine the public participation processes where other permits or licences are also required, provided that this process is agreed to by all relevant authorities.

In terms of the applicable assessment process, Regulation 3 dictates that development proposals that trigger two or more Listed Activities as part of the same development must be subject to a scoping and EIA process, which would have significant cost and timing impacts on applicants.

While this regulation is also included in the current legislation, it is not currently being enforced by the CAs. However, the amended regulations might bring about a change in this regard.

Noteworthy changes to the content requirement of the various reports include: l The need for a “final micro-siting layout”; l Allowance for a shorter version of a BAR (resembling a due diligence exercise) in instances where the changing of ownership or transfer of rights and obligations is the only Listed Activity triggered; and l The need to include the required validity period for the environmental assessment (EA), as well as the dates on which such activity will be concluded and the post-construction monitoring finalised.

The time associated with the preparation of the final micro-siting layout is concerning in light of the new proposed time-frames for assessment processes. It also appears to eliminate the concept of applying for a development “envelope”, and means that the applicant would need to have more detailed plans of a proposal available at the initiation of the process.

The EA, if granted, will be issued for a particular project scope, list of activities and potentially the final micro-siting, which could result in very little room for related changes upon receipt of authorisation.

Authorisation could be refused if it does not substantially comply with the content requirements. Current legislation allows for the CA to reject the report, and to request additional information in such instances.

It does not appear as though this mechanism is allowed for in the new regulations.

Authorisation can also be refused if an SR does not comply with the “policy directives of government”.

By its very nature, policy is not law, and is required to allow for a degree of discretion in its application. It is unclear why this ground for refusal only applies to SRs and not to any other submissions. It is now easier for an applicant to submit an application substantially similar to an application previously refused. The only requirement is that the appeal on the refused application (if relevant) must be finalised.

In terms of the amendment of EAs, the 2014 regulations provide more clarity on the conditions under which an amendment application could be submitted. In contrast to current legislation, the new regulations only provide for minor administrative changes.

This suggests that in instances where the project scope changes subsequent to the issue of an authorisation, a new process would have to be commenced.

Specific clauses for the extension of an EA have been included. Authorisations may not be extended beyond 10 years from the date on which the original authorisation was issued, or five years where there are no “operational aspects” (for example, for decommissioning or closure of facilities).

New requirements propose that auditing must be conducted at three-year intervals for the period during which the EA and EMPr remain valid. Reports must then be submitted to the relevant CA. The expertise or independence of the person carrying out the audit is not specified.

There also appears to be an implicit requirement for retrospective auditing of EAs issued under previous environmental legislation, which would have significant implications for developments operating under existing authorisations.

An amendment application would need to be submitted to the relevant CA should an EMPr (or closure plan) need to be revised. This might be necessitated by the holder of the EA, or as a result of an audit or other factors.

The CA can suspend or withdraw an EA under certain conditions; however, they can only do so if the EA was obtained based on misrepresentation or non-disclosure of material information, and only if no activity (as contained in the EA) has been commenced with. This ensures that the applicant discloses all relevant information, and that a fair and transparent process is observed.

Provision is also made in the regulations for pre-assessment with a spatial development tool, which could result in more streamlined reports.

The most pertinent amendments to the Listed Activities contained in Listing Notice 1 are highlighted below. l In terms of bulk transportation infrastructure, distinction is made between water, stormwater, sewage effluent, process water, waste water, return water, industrial discharge and slimes; l The threshold for the development of various structures/infrastructure within 32m of a watercourse has been increased from 50m² to 100m²; l Development of various structures/ infrastructure in or within 100m of the high-water mark of the sea now excludes development on sites located within the urban edge; l Addition of an activity relating to new or expansion of existing residential, retail, commercial or institutional developments of 1 000m² or more on land previously used for mining or industrial purposes; l Development proposed on any site larger than one hectare that houses indigenous vegetation would need environmental authorisation. Specialist input might be required to determine applicability of this activity; l The transfer of rights and obligations or change of ownership of existing facilities, structures or infrastructure now demands authorisation; and l The expansion or changes to existing facilities, which will result in the need for a permit or licence in terms of national or provincial legislation governing the release of emissions or pollution will need authorisation.

Changes to the definitions of “indigenous vegetation” and “undeveloped” land must be noted.

In conclusion, it is apparent that there are a number of requirements in the proposed 2014 EIA Regulations and associated Listing Notices that would have an effect on SAPOA’s business operations.

SAPOA, as a potential applicant, is within its rights to comment on these and have its concerns carefully considered by the DEA in the development of the new 2014 regulations.

This document constitutes CHAND Environmental Consultants’ interpretations of the proposed regulations, and does not constitute a formal legal opinion.

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new members

Welcome to SAPOA We welcome the newest members to have joined the organisation, showcasing who they are, what they do and why they joined

By Candace King

Review

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outh African real estate group Choprop Holdings SA (Pty) Ltd specialises in mainstream and emerging property markets, with the goal of being recognised as the fastest-growing service-driven, efficient and effective property group in South Africa.

Established in 2007 by local entrepreneurs and married couple Yusuf and Shazia Essa, Choprop Holdings SA (Pty) Ltd boasts a proud history of experience with an unbeatable record of success in concluding just over 1 500 deals since its inception.

Choprop Holdings SA (Pty) Ltd continues to effectively and expertly market and develop property investments in some of South Africa’s most desirable locations, and has recognised the unparalleled investment opportunities in the country. The Group is proud to offer its clients innovation on all its on- and off-plan properties in these soughtafter regions.

Choprop Holdings SA (Pty) Ltd also offers unrivalled investment services and pioneering sales and letting products, with a passion for perfection and commitment to excellence in all areas of property.

Choprop is the ultimate solution for dynamic premium property services in the country, providing its clients with luxury residential and commercial properties for a safe, secure and profitable investment.

Choprop Holdings SA (Pty) Ltd’s national agents team is made up of 37 well-trained, skilled individuals who are helpful, reliable, persistent and passionate about service delivery. Choprop Holdings SA (Pty) Ltd is registered with the Estate Agency Affairs Board and is fully compliant with the laws pertaining to real estate.

Choprop Holdings SA (Pty) Ltd is effectively 100% black owned and has a level 3 BEE status, with a 110% procurement recognition level. Choprop Holdings SA (Pty) Ltd provides a spectrum of services within its diverse and multifaceted business.

“Choprop is committed to achieving the highest efficiency and service levels possible within all our divisions in South Africa, thus allowing no compromise on our ethical standards and code of conduct,” says Yusuf “Choppee” Essa, founder and Chief Executive Officer of Choprop Holdings SA (Pty) Ltd.

Yusuf “Choppee” Essa, founder and Chief Executive Officer of Choprop Holdings SA (Pty) Ltd

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n Property South Africa

Choprop Holdings SA (Pty) Ltd “Trust, integrity, honour, professionalism and understanding are words we live by because we believe this is the make-up and foundation of our internationally well-known and reputable brand,” he says. +27 (0)861 246 7767, Choprop.com

Choprop Holdings SA (Pty) Ltd specialises in: Property sales • Residential and commercial property sales • Bond origination • Business brokerage • Comparative market analyses and valuation • Property management and administration • Property development, repairs and maintenance • Auctioneering • Property vacancy and redundancy rescue Letting division management services • Commercial and residential letting and management specialists • Achievement of maximum rentals • Careful screening of tenants (including TPN, Transunion and Experian) • Ensuring adequate deposits are received and topped up when required • Finalising and signing of all lease documentation, including inspection and handover • Monthly statements and invoices to tenants and owners • Payment of levies (at owners’ instructions) • Re-letting and renewals (including a fully automated rental escalation) • Property administration, and in-house repairs and maintenance

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With a South African property market value in excess of R250-billion, SAPOA members control in the region of 90% of South Africa’s private sector commercial land and building stock, and manage the majority of property funds listed on the JSE. Each member is a leading player and decision-maker in the commercial property arena – and they use the South African Property Review as an extension of the SAPOA website and information platforms.

These members – company chairmen, CEOs and MDs – often control massive companies and their associated budgets. As true decision-makers, some of the brightest and most talented people in the sector occupy senior roles in the SAPOA member organisations.

The South African Property Review is mailed directly to the association’s leading members, and is also available to the general public both internally and online via Issuu - the online version is an exact copy of its printed original and has on average over 3300 impressions a month, giving a monthly reader exposure of over 5000.

To date our online July and August 2014 issue hit rates have reached 7605 and 7139 impressions respectively, with over 400 solid reads of an average of nine minutes, and growing....

The true value of the online versions is that they get revisited over and over again and generate a liquid international exposure for your company, making the South African Property Review a ‘must include’ in your marketing plans.

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Online and in hand, these monthly publications are the official voice of the South African Property Owners Association

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With a monthly average exposure of more than 5000 readers, the South African Property Review is a growing and recognised news platform and go-to source of important industry information, interviews as well as in-depth African and regional reports.

For advertising opportunities and rates contact Riëtte Stevens t: +27 (0)71 877 5520 e: sales@sapoa.org.za SOUTH AFRICAN PROPERTY REVIEW

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2014/11/10 2:22 2:21 PM PM 2014/11/10

theme leader

Paying it forward Corporate social investment turns up a notch as the property industry finds unique and invigorating ways to give back

By Candace King

“Initiated in October 2010 with the help of one volunteer and two participants, the HandmadeKaroo-Handgemaak social development community project in Prince Albert aims to help women who can knit and crochet to make beautiful items and generate an income. RMS helped to buy the initial materials” Ellen Joubert, Remote Metering Solutions’ CSI Project Coordinator

I

t’s often said that it’s better to give than to receive – a phrase that rings true in the property industry, as more and more of the sector’s players are giving back to society through their innovative corporate social investment (CSI) projects and charitable initiatives.

“Corporate social investment is part of the corporate landscape, and the idea that a bit of the wealth generated by companies is used to improve the lives of fellow South Africans makes us feel warm and fuzzy – especially now, with the festive season in full swing,” says Ellen Joubert, one of the coordinators for Remote Metering Solutions’ (RMS) CSI projects.

Joubert says that in order for RMS to make a tangible difference, the company follows an innovative approach – by hand-picking deserving projects in Prince Albert in the Great Karoo, they ensure maximum benefits for the community as well as a high level of accountability.

“In the Karoo, there are people with skills and time to create quality, handmade goods,” she says. “However, they often do not, because it’s not only hard to find materials but it’s also difficult to translate skill and time into a product that sells.

Remote Metering Solutions supports the Handmade-Karoo-Handgemaak CSI project, which assists women in Prince Albert in the Great Karoo

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“Initiated in October 2010 with the help of one volunteer and two participants, the Handmade-Karoo-Handgemaak socialdevelopment community project in Prince Albert aims to help women who can knit and crochet to make beautiful items and thus generate an income. RMS helped to buy the initial materials.”

Within a year, the project had grown to six participants, and could match the initial funds from its own income. This was used to grow the project further, with sewing machines, chairs and materials purchased for a new range of products.

After four years, 30 women participate in the project, earning up to R2 200 per month with their handwork. RMS continues to support the project with an online store, and by providing advice on managing finances and marketing and showcasing the beautiful work at the recent SAPOA Convention.

“Financially, the project stands on its own feet, thanks to the initial financial support and ongoing non-financial help,” says Joubert.

“The project found a niche in making special crochet blankets and knitted bunnies for the high-end market.”

Like many small towns, Prince Albert faces great social challenges. “Tourism is often seen as the panacea for the troubled platteland, but it is hard for young people from disadvantaged backgrounds to enter this industry,” says Joubert.

To help bridge this gap in Prince Albert, an increasingly popular tourist destination, RMS invested in the training of four young people from the local community as tourist guides. These newly trained guides are now helped to develop and present innovative new activities.

“A tour of the historic and modern culture of the coloured community is popular with foreign tourists and does a lot to spread tourism benefits into the wider community,” says Joubert. “A ‘Red Bus Tour’, presumptuous for a small town, is a hit with new and repeat visitors who want to spend a light-hearted hour getting a feel for the town and what it offers.”

She also notes that RMS now helps the local municipality to develop a smart-grid pilot project that will turn the municipality’s electricity-management woes into a much brighter picture for the municipality and the community alike.

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theme leader

South African businessman and real estate enthusiast Ettiëne Pretorius with Sir Richard Branson

The lessons learnt during the pilot project will help other municipalities, and the longterm impact of the project locally will include a handful new jobs – a rare achievement in a small town.

“RMS’s choice to focus a lot of its corporate social investment in a small community allowed it to get to know the people and their needs, and to identify partners who achieve a magnifying effect with the available money, making a little go a surprisingly long way,” says Joubert.

Taking the plunge “What you have at the end of your life will be determined by how much you gave,” says Ettiëne Pretorius, a South African businessman and real estate enthusiast with heart.

On 14 March 2014, Pretorius swam from Necker Island to Moskito Island situated in the British Virgin Isles to raise funds for the Faces of Hope foundation, which seeks to raise funds for select cancer sufferers to help meet basic financial costs and cover their debilitating oncology treatment.

“Being part of a children’s home for seven years has changed my life and gave ‘giving’ a whole different meaning,” says Pretorius.

“Success as defined by me is the power of my choices and the decisions I make to influence other people to be significant.”

Pretorius was invited to Necker Island for a five-day Oxford-meets-Necker think tank, where the top professors of Oxford University

and 20 influential entrepreneurs from all over the world came together to discuss climate change and how they as influential individuals can bring about change, setting an example of how to create a greener environment.

Both owned by Sir Richard Branson, Moskito Island and Necker Island are set to become beacons of sustainability, with the former to be developed into a premier eco-tourism resort and the latter to continue to reduce environmental impact, setting a great example for other island communities around the world.

“Meeting Sir Richard Branson was one thing, but knowing that this individual has changed the dynamics of entrepreneurship across the globe, living with one passion and goal in mind and changing the world, is all about excitement, humility and growth,” says Pretorius, “Traveling as frequently as I have been the past few years, I realised how important it is to create an experience for your customers. Sir Richard Branson has mastered this in every single way possible, which I experienced whilst flying with Virgin Atlantic. With every bit of attention to detail, I choose them time and again. From upper class to economy, there is no difference in service and I always feel at home.”

Pretorius is currently finishing his MSc in Real Estate while coaching 16 students each month on how to approach the real estate market. His philosophy is simple: “I do not negotiate, I educate. People are my passion, business is my game, and money is just a tool.”

Brenda Gilbert, an estate agent at Pam Golding Properties’ Fourways office

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2014/11/10 11:03 AM

theme leader Walking 1 200 kilometres for conservation

Karien Hunter, founder of AMC Hunter Inc

“In today’s society where poverty, malnutrition and HIV are endemic, the need for individuals and organisations to assist the underprivileged is at its greatest. Although many corporate organisations have tackled this issue by dutifully implementing CSI strategies in line with B-BBEE legislation, they are faced with the challenge of selecting reputable organisations to support” Karien Hunter, founder of AMC Hunter Inc

Brenda Gilbert, an estate agent at Pam Golding Properties’ (PGP) Fourways office, is incredibly passionate about conservation – so passionate, in fact, that at the end of October 2014, she had walked a total 1 200 kilometres to raise funds for a charity that’s close to her heart, the Eden to Addo Corridor Initiative.

“The Eden to Addo Corridor Initiative entails educating landowners and farmers on the creation of corridors, which are strips of land connecting protected areas,” explains Gilbert.

“These corridors enable animal migration and ensure that key ecological processes, such as pollination and seed disposal, across different types of habitats are maintained. They therefore enhance the long-term survival of species.”

The Eden to Addo walk is an annual event where 24 individuals hike for 400km over a period of 18 days in the Eastern Cape.

The hiking trail is the toughest and longest in South Africa, and involves strenuous, cross-country endurance walking over seven mountain ranges.

“This is the third time I have done this walk since it was first undertaken in 2007,” says Gilbert. “During my first Eden to Addo hike in 2008 I had the idea that I would ask my friends and family to sponsor me for the rest of the walk, so that I could give something back to the habitat that was providing such an eyeopening, exhilarating experience for me.

That year I raised R18 000, all of which went to the Eden to Addo Corridor Initiative.

The funds I raise in 2014 through my PGP network will be split between Eden to Addo and PGP’s Heart of Gold Trust.”

Gilbert’s conservation focus echoes that of PGP: the company has sponsored R10 000 towards her walk. PGP is also a founding partner of the National Biodiversity and Business Network (NBBN), which works with companies to develop a collective accountability for biodiversity management and conservation.

In addition, PGP is working on the development of a biodiversity guide for homeowners with the NBBN and the Endangered Wildlife Trust. This practical guide will focus on ways in which property owners can enhance biodiversity on their properties and become more environmentally responsible.

CSI watchdogs Durban law firm AMC Hunter Inc has launched the Gatekeeper Foundation, an accredited organisation programme that ensures that non-profit organisations (NPOs)

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in the Durban area would operate efficiently, effectively and legitimately in order to achieve their own goals to assist the underprivileged and, most importantly, give the investor the peace of mind to know that their contribution has made a real and lasting difference where it counts.

“In today’s society, where poverty, malnutrition and HIV are endemic, the need for individuals and organisations to assist the underprivileged is at its greatest,” says founder of AMC Hunter Inc Karien Hunter, who took the initiative to establish the Gatekeeper Foundation. “Although many corporate organisations have tackled this issue by dutifully implementing CSI strategies in line with B-BBEE legislation, they are faced with the challenge of selecting reputable organisations to support.”

She adds that, although it is very encouraging to see an abundance of volunteers willing to offer their time and resources to help those less fortunate, the reality of the situation is that often these people know little about operating an NPO – and this makes them less effective in addressing the needs of the beneficiaries they wish to impact. In addition, funders can sometimes be left wondering whether their contributions have been appropriately managed, and questions of accountability can arise.

“The Gatekeeper Foundation strengthens and assists NPOs by means of capacitybuilding programmes and the implementation of good governance,” explains Hunter. “In addition to this, the Foundation provides legal and financial guidance to selected organisations, giving corporate investors peace of mind.

Capacity building refers to the process of enhancing an organisation’s ability to fulfil its defined mission.”

As part of its strategy to improve the structure and systems of NPOs, the Foundation has initiated the concept of Gatekeeper Foundation Accredited Organisations. In doing so, it has identified six NPOs that will complete a capacitybuilding workshop.

“It is our intention that corporate companies will recognise that NPOs that have achieved Gatekeeper Foundation Accredited Organisation status are both reputable and legitimate,” says Hunter. “With the necessary funding, it is our plan to continue to roll out this programme to other selected NPOs in the hope that we can improve the NPO sector as a whole.”

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2014/11/10 4:50 PM

advertorial

Impact on SMEs boosts South Africa’s economic climate

FROM LEFT N Sasse, M Diliza, S Rakgokong, H Steyn and S Theunissen at the Property Point graduation

P

roperty Point has charted an exceptional path over the past seven years. What began as an idea backed by a passion for development has become an organisation proving to have major impact on small businesses in South Africa. Property Point, as an enterprise development initiative through Growthpoint Properties Limited’s larger corporate social responsibility, has evolved into a force for small and medium enterprise (SME) growth, and fortification in the enterprise development sector.

Through the years, the programme has been committed to building sustainable small businesses by understanding the mind-sets, challenges and needs of business owners.

Experience has evolved the model into a sophisticated, customised and holistic development programme.

Property Point provides developmental interventions that equip entrepreneurs to better run their businesses and become “procurement-ready”. The focus is on understanding the opportunity holder in terms of standards and processes. SMEs on the programme are exposed to opportunity holders in an environment where they learn how to approach and engage with decisionmakers for mutually beneficial relationships.

This is what sets the programme apart, because working closely with Growthpoint Properties Limited’s procurement and facilities management has proven to create market

linkages within Growthpoint’s own supply chain and the greater industry stables. To date, businesses in the programme have realised procurement opportunities to the value of R220-million, both within Growthpoint and in the rest of the property industry, and have collectively created more than 900 jobs.

“As a responsible corporate citizen, Growthpoint Properties is committed to the development of a healthy and vibrant SME sector in South Africa. This is why we developed Property Point: to bring this undertaking to life in a very real way” One of the benefiting SMEs is Masedi Electric-Serve, owned and run by Managing Director Seitebatso Rakgokong. The company specialises in electrical installations and maintenance, and joined the programme in 2012. As a candidate, the business went through a rigorous selection process, including a review of the business track record, growth potential and the business owners’ general mind-set. Property Point partnered with Masedi Electric-Serve for two years and empowered the businesses for sustainability.

Seitebatso Rakgokong, Managing Director of Masedi Electric-Serve

The business graduated in March 2014 as the best-performing in areas of turnover, contract size and net profit. Within two years, Masedi Electric-Serve achieved a 108% rise in net profit and grew its employee base from 25 to 63. Since graduating from the programme, the company has landed contracts with a major mining company and multiple retail sites at Growthpoint Properties Limited.

Property Point is driven by the pursuit of creating a tangible impact. “As a responsible corporate citizen, Growthpoint Properties is committed to the development of a healthy and vibrant SME sector in South Africa,” says Growthpoint Properties Limited CEO Norbert Sasse. “This is why we developed Property Point: to bring this undertaking to life in a very real way.”

t: +27 (0)11 811 0340 e: info@propertypoint.org.za w: www.propertypoint.org.za

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2014/11/10 3:05 PM

es: i r e eyerion a s Africa c hly ntry t f n e A o ou Th our m by-c try focus n cou

Africa uncovered

Uganda From colonial rule and state-sponsored violence spurred on by military dictatorship, to economic prosperity and heightened development, Uganda is now a stable East African market of interest

Population in thousands

4141-180 - 180 180-360 180 - 360 360-1 600 360 - 1,600

By Candace King

Uganda at a glance ▼ Population 37,58-million (2013) ▼ Major cities Kampala (1,7-million), Gulu (0,2-million) ▼ Currency Ugandan shilling (UGX) ▼ Total area 241 038km² ▼ GDP growth 5,8% (2013) ▼ Key industries Sugar, brewing, tobacco, cotton textiles, cement, steel production

N

ot too long ago, Uganda was in shambles – civil war and economic failure once haunted the East African country. However, in a short period of time, Uganda was able to pick up the pieces and become a relatively peaceful, stable and prosperous nation.

Situated in East-Central Africa, west of Kenya and east of the Democratic Republic of Congo, Uganda was under British colonial rule until it achieved independence in 1962.

After independence, things unravelled.

During the 1970s and 1980s, the country was a victim of rife human-rights abuse brought about by the authoritarian rulers of the time. Uganda’s internal trouble began with the military dictatorship of Idi Amin from 1971 to 1979, and the return to power of Milton Obote between 1980 and 1985.

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In this period, up to half a million people were killed as a result of ethnic differences.

In 1986, Yoweri Museveni came into power and brought relative peace, stability and economic growth to the country.

Museveni introduced democratic reforms, and through the reduction of abuses by the army and the police, he was responsible for the significant improvement of human rights.

With Western-backed economic reform, declining inflation rates and the discovery of oil and gas, Uganda rose to economic prosperity. While the financial economic crisis of 2008 hit Uganda hard, the country has been able to regain its strength thanks to past reforms and sound management of the downturn.

Economic reforms since 1990 have introduced solid economic growth based on continued investment in infrastructure, improved incentives for production and exports, lower inflation, better domestic security, and the return of exiled IndianUgandan entrepreneurs.

In light of its prime export earner – coffee – Uganda is vulnerable to changes in the world price of that particular resource.

However, the discoveries of oil and gas have improved its prospects tremendously.

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eye on Africa

41 - 180 180 - 360 360 - 1,600

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eye on Africa

LEFT A trader rolling fish skin to dry out before export to the Democratic Republic of Congo ABOVE Kibale National Park is full of botanical wonders and picturesque waterfalls

Real GDP growth

Figure 1. Real GDP growth Real GDP growth (%)

Eastern Africa (%)

Africa (%)

% 12 10 8 6 4 2 0 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013(e)

2014(p)

2015(p)

Source: AfDB, Statistics Department AEO. Estimates (e); projections (p)

Macroeconomic indicators 2012

2013(e)

2014(p)

2015(p)

Real GDP growth

2,8

5,2

6,6

7

Real GDP per capita growth

-0,6

1,9

3,2

3,7

CPI inflation

14,6

5,5

4,7

4,9

Budget balance % GDP

-3

-2,6

-4,6

-4,4

Current account balance % GDP

-9

-5,9

-4,4

-4,6

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations

Kampala prime rents and yields Prime rents

Prime yields

Offices

US$18,50/m2 per month

10%

Retail

US$25/m² per month

14%

Industrial

US$10/m² per month

14%

Residential

US$5 000 per month*

9%

Source: Knight Frank LLP * Four-bedroom executive house – prime location

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Other key natural resources include fertile soil, regular rainfall, and small deposits of copper, gold and other minerals.

Uganda has been commended for its strong focus on combating HIV/Aids – the virus reached 30% of the population in the 1990s and has now dropped to single-digit figures. Uganda has made important progress towards the Millennium Development Goals (MDGs), especially in the reduction of poverty – halving the proportion of people below the national poverty line has been achieved well ahead of the 2015 MDG deadline.

On the downside, Uganda got negative global attention for its harsh homophobic attitudes: anti-gay legislation introduced in 2014 has resulted in backlashes. Instability in south Sudan is also a risk for the country as it’s one of Uganda’s main export partners.

Further factors hampering Uganda include unreliable power, high energy costs, inadequate transportation infrastructure, and corruption.

The rate of socioeconomic transformation is being constrained because of underdeveloped human resources, inadequate physical infrastructure, an underdeveloped private sector, and low production and productivity in agriculture.

But Uganda continues to maintain positive economic growth. Between 2000 and 2012, Uganda’s GDP growth averaged seven percent. In 2013, the country saw the consolidation of macroeconomic stability and a gradual recovery of economic activity, with real GDP growth projected to reach 5,2% in 2013 and 6,6% in 2014. A seven-percent growth rate has been predicted for 2015.

Agriculture is a sector of importance in Uganda, employing more than 80% of the country’s work force. However, because of the looming threat of climate change and other factors, the focus is shifting. The contribution to GDP by agriculture, forestry and fishing, industry and services, has changed over the years, reflecting the changing structure of the economy. Economic growth is increasingly driven by the construction and service sectors – particularly telecommunications, financial services and real estate.

The Ugandan property industry As reflected in the Vision 2040 plan, Uganda’s goal is to become a modern and prosperous country by the middle of the century. The country is achieving this through a focus on infrastructure and development, which in turn is boosting Uganda’s property industry.

Highlighting this emphasis on infrastructure development is the recent pledge of money from global development leaders

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eye on Africa towards the world’s fastest-growing economies in Africa. The likes of the World Bank, African Development Bank and European Union recently pledged more than US$8-billion to boost economic growth and reduce poverty in eight countries in the horn of Africa. These funds will aim to support infrastructure development, including regional oil and gas pipelines, and assist with programmes to improve health and access to energy, and the expansion of university education and job training in the coming years.

Uganda is also making policy changes in order to assist property development. Now accepted into Ugandan law, the Industrial Property Bill brings about various changes in the law protecting inventions, creations and designs in Uganda, and is intended to support development in the private sector and promote private investment.

Tourism is also flourishing in Uganda – it is one of Uganda’s fastest-developing sectors and is also becoming an important market for foreign investment because of its oil reserves.

The faith in tourism is reflected in the recent announcement of the development of the country’s first Carlson Rezidor property.

The hotel group recently announced its first property in Uganda – the Radisson Blu Hotel Kampala. The upscale hotel, with 195 rooms, is set to be completed in Q4 of 2016.

Retail market As a result of rising pressure from national and international operators who were becoming frustrated at the lack of suitable space, the quantity and quality of retail provision in the country has improved as local developers in Uganda have responded to the demand.

Several retail projects have been delivered to market, including Acacia Mall in Kisimenti (16 192m²) and the Village Mall in Bugolobi (9 707m²). The future retail outlook for Uganda appears positive – this comes as a result of continued growth in disposable income and increasing consumer demand for better quality shopping facilities.

Industrial and office market Uganda’s prime industrial node is situated in the capital – the Kampala Industrial and Business Park, which lies approximately 15km to the east on the Kampala-Jinja highway, has experienced several new business uptakes.

The growth of the park has boosted the area’s critical mass, while industrial land values along the main road have risen steadily. A number of large manufacturers have been attracted to the area and have developed state-of-the-art factories on vast plots of land to accommodate their future expansion plans.

In terms of Uganda’s office sector, availability of good quality office space is still limited.

CLOCKWISE FROM TOP LEFT Uganda is teeming with wildlife in its plethora of national parks; mountain gorillas are a major tourist attraction in Uganda; the capital city of Kampala at night

As a result of Kampala’s office stock falling below international construction standards, good-quality space comes at a premium and tends to be leased quickly.

Currently, the biggest demand for office space comes from the oil, gas and telecoms sectors. There has also been an increased interest in modern serviced rental accommodation within a 5km radius of Nakasero Hill in the CBD. Furthermore, there is a modest level of construction activity.

Residential market Because of very high interest rates during 2012 and more stringent lending criteria, the housing market, particularly in the mid-price bracket, was quite sluggish thereafter. This was coupled with a sharp reduction in the number of purchases. There has also been an increase in the number of houses for sale from owners unable to cope with higher repayments. The key lending rate, however, dropped at the end of 2012, which has brought some relief to borrowers.

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series

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Th e WOR

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From quality timepieces and innovative scientific inventions to a policy of long-term monetary security, Switzerland has become synonymous with consistency and craftsmanship, turning it into a safe haven for foreign investors

By Michelle Marais

Key facts ▼ Population 8 061 516 (July 2014 est.) ▼ Major cities Zürich, Geneva, Basel, Lausanne, Bern, Lucerne, Winterthur, St Gallen ▼ Currency Swiss franc ▼ Total area 41 285km² ▼ GDP growth 1,9% (2013) ▼ Key industries Machinery, chemicals, watches, textiles, precision instruments, tourism, banking, insurance

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With Swiss precision W

ith its relatively small population of just over 8,04-million, beautiful mountainous topography, political stability, and an economy that is regarded as one of the most stable in the world, it is easy to understand why Switzerland is becoming increasingly appealing to capitalists.

The country’s economy follows the typical First World model, a term that was first introduced in the late 1940s by the United Nations and given to countries that aligned with the United States and the United Kingdom after World War II. In contemporary culture, Switzerland, along with these countries, is seen as having the most advanced economies, the greatest influence, the highest standards of living and the greatest technology.

At the core of its strong economy lies a highly qualified labour force. The country attracts some of the world’s most skilled experts in the fields of technology, pharmacology and biotechnology, and is known among the science community as the home of the European Organisation for Nuclear Research.

The Large Hadron Collider (LHC) – the world’s most powerful particle collider built from 1998 to 2008 – had top scientists from around the globe make their way to Geneva for the duration of its testing.

Evident in the enormous size and power of the LHC, Swiss companies are known to be extremely competitive in world markets, with some branches exporting more than 90% of their goods and services. The best-known export items are watches, chocolate and cheese. In 2011, Swiss exports reached nearly R2,2-trillion when watch manufacturers exceeded their previous annual result by 19,2%.

The Swiss economic policy has always been based on free trade, with low import duties and virtually no import quotas. The only exception was agricultural produce as this sector has such a small minority – 1,3 % of the population in 2006 – involved in it.

A larger minority is involved in the secondary or manufacturing sector (27,7% in 2012), while the majority of the working population is involved in the tertiary or services sector of the economy (71% in 2012).

In addition to its free trade policy and in line with the modern-day world view of minimising one’s carbon footprint, Switzerland prides itself on the fact that its energy and transport policies aim to be environmentally friendly, having as little impact as possible on the Earth. However, the current reality is that the age of exponential economic growth for Switzerland is over.

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eye on the world Did you know?

Long-term trends: three-year averages 2010-2012

2013-2015

2016-2018

Population (million)

7,9

8,1

8,2

GDP (USD billion)

644

689

701

81 848

85 643

85 480

GDP growth (%)

2,0

1,8

2,0

Fiscal balance (% of GDP)

0,1

0,1

0,5

Public debt (% of GDP)

36,1

34,2

30,9

Inflation (%)

0,1

0,1

1,1

Current account (% of GDP)

10,1

12,9

12,3

GDP per capita (USD)

Source: FocusEconomics Consensus Forecast Switzerland, November 2014

Being so closely linked to the economies of western Europe and the United States, the country was greatly impacted by the recession of the early 2000s.

In 2001, after the stock markets crashed worldwide, the rate of growth dropped from 1,2%, to 0,4% in 2002, and the following year saw the real gross domestic product (GDP) contracted by 0,2%. The economic slowdown had a noticeable impact on the labour market, which to this day never fully recovered.

become a fascinating cultural melting pot in the heart of Europe. Three of the continent’s major languages – German, French and Italian – are its national languages, along with Romansh, spoken only by a small minority.

The combination of its multilingual nature and a wide range of traditional customs has established Switzerland as a uniquely creative cosmopolitan environment.

As neutral as Switzerland

Much of Switzerland’s landscape is covered by nearly inhospitable mountains. Since the High Middle Ages (11th, 12th and 13th centuries), various powers had sought to control the mountain passes winding across the Alps and Jura Mountains, as they were part of a network of important communication routes.

The Swiss Plateau, which stretches from Lake Geneva in the west to Lake Constance in the east, and includes the Alps, Jura and the River Rhine, continues to be the most densely

Switzerland evolved over many centuries from a loose alliance of small self-governing towns and states to a fully fledged federal state of 26 cantons – a type of administrative division – dating back to 1848.

The country’s government consists of seven members, the Federal Council, elected by the Federal Assembly. Unlike in most other countries, each year a different member of the Federal Council fills the role of the Federal President. The post confers no special powers or privileges, and the President continues to administer his or her own department while in office.

The Swiss people have great influence on the country’s political affairs, thanks to their highly developed system of direct democracy.

Its position as a neutral state has enabled it to act as a mediator between conflicting parties, and allows it to play a vital humanitarian role in world affairs.

A great deal of the success of their political system can be attributed to the creation of a federal constitution, which laid a permanent foundation for national cohesion and the pursuit of the common good, all while upholding the country’s cultural and linguistic diversity.

And culturally diverse it sure is. The country lies at the crossroads of several major European cultures and has subsequently

Escape to the mountains

In 2001, every third computer mouse sold worldwide was produced by Swiss company Logitech.

Source: Pascal Couchepin, Federal Councillor for Economic Affairs, 2001

populated – 450 people per squarekilometre – area of the country.

Because of the revival in trade and commerce during the Middle Ages (from the fifth to the 15th century), powerful towns and cities began to emerge. Since 1935, urban development has claimed as much of the Swiss landscape as it did during the previous 2 000 years. This urban sprawl not only affects the plateau but also the Jura and Alpine foothills.

Switzerland has a dense network of cities, where large, medium and small cities are complementary. The weight of the largest metropolitan areas, which are Zürich, Geneva, Lausanne, Basel and Bern, tends to increase; and from the beginning of the 21st century, the population growth in urban areas is shown to be higher than in the countryside. In international comparison, the importance of these urban areas is stronger than their number of inhabitants would suggest.

The country has a strong architectural tradition as well. The Romanesque style of the 12th century is rich in expression and can be found in the cathedrals of Basel, Geneva and Lausanne. It is also very evident in many castles and fortresses around the country.

The pointed arches and ribbed vaults of the Gothic style can be found in the cathedrals of Schaffhausen, Zug and Zürich, while the churches of Einsiedeln

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eye on the world Did you know?

Switzerland has the second-highest life expectancy in the world and is joint first with the Netherlands on the Bribe Payers Index, which means it has very low levels of business corruption

and St Gallen display the beautiful Baroque design style that is characterised by its dramatic intensity.

Charles-Édouard Jeanneret-Gris, better known by his pseudonym Le Corbusier, was probably the most creative Swiss

Trade structure Primary markets | share in % U.S.A 11.1%

Other 24.0%

Other 14.1%

Other EU-27 16.5%

Exports Asia ex-Japan 14.5% France 7.1%

Germany 19.7%

U.S.A 5.7%

China 5.5%

Other EU-27 26.5%

France 8.4%

Imports

Italy 10.2% Germany 29.6%

Italy 7.1%

Primary products | share in % Other 13.1%

Exports

Manufact. Products 86.9%

Mineral Fuels 8.6%

Food Other 5.8% 5.6%

Imports

Manufact. Products 80.%

Source: FocusEconomics Consensus Forecast Switzerland, November 2014

36

architectural export of the 20th century.

Born in La Chaux-de-Fonds, a small city in the Neuchâtel canton in northwestern Switzerland, the architect was the driving force behind the International School of Architecture that heavily influenced almost every architectural trend throughout the Western hemisphere in the recent past.

In 2009, Swiss architect Peter Zumthor was awarded the Pritzker Architecture Prize.

His work – and the work of other design greats, such as Mario Botta, Jacques Herzog and Pierre de Meuron – currently shapes the Swiss cityscapes.

Thanks to its often-low tax rates, Switzerland is attractive to expatriates – but it is also one of the most expensive countries in the world to live in, and subsequently has one of the lowest owner-occupier rates in Europe.

Property ownership is higher in the rural areas, and the constant growth in urban populations over the past 50 years has increased the pressure on limited housing stock. Rising house prices and the tight property market means that interested investors should make extra sure to have all their ducks in a row before heading for the mountains.

Deve

Urbanisation Urban population: 73,7% of total population (2011) Rate of urbanisation: 0,49% annual rate of change (2010-2015 est.)

Source: CIA World Factbook

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API Summit

Reaching Africa’s summit

Amelia Beattie, Chief Investment Officer: Direct Property Investments at STANLIB and SAPOA President

With global climate change imminent, several African cities have joined the fight against this very real phenomenon, lighting the way for the once “dark” continent

By Candace King

38

N

o longer regarded as a flash in the pan, Africa has proved itself as one of the world’s fastest-growing markets. There’s no doubt that investment in Africa is surging, with real estate investment having doubled in recent times.

Currently, aggressive pan-African strategies are being fleshed out by companies that either want to enter the market for the first time or are expanding in Africa.

Celebrating the continent’s growth and highlighting its many opportunities, the 5th Africa Property Investment Summit (API) was recently held at the Sandton Convention Centre in Johannesburg in an effort to explore the African property landscape, with delegates from all corners of the African continent as well as the entire globe.

Attended by key local and international industry professionals and influential players, API 2014 played host to 365 registered delegates from 176 companies in 25 countries.

The three-day summit was a jam-packed affair that dealt with a plethora of issues, trends, opportunities and challenges relevant to the African continent.

API 2014 covered a vast range of topics from an African economic overview, delivering African strategies and financing, developing and delivering projects on the continent, to investment structures, understanding legal matters, and energy efficiency in Africa. The summit also took a closer look at the various regions and property sectors in Africa in relation to the sectors of retail, residential and hospitality, among others.

Africa rising: attractive yet challenging Africa gleams with growth and opportunity, but still faces the age-old challenges, including lack of infrastructure, data, professionalism and transparency. While Africa’s emerging markets are growing, education remains a key issue. Despite the challenges, investors in Africa remain upbeat and optimistic.

“Three years ago, there were six pan-African funds,” said STANLIB’s Chief Investment Officer: Direct Property Investments and SAPOA President Amelia Beattie. “Today, we have 17 operating on the continent – people now believe in the Africa property story.”

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API Summit

In light of the high volume of delegates who attended the summit, Beattie highlighted that this is testament not only to the scope and growth of the summit, but also to the attractiveness of the continent. “We need to take action,” she said. “In light of this call, as SAPOA President along with the organisation, I have launched the Africa Focus Committee – a platform to engage and collaborate with key issues on the continent. Without passion, we cannot operate in the industry or in Africa.

Hard work gets you into the top 10 – but it’s passion that gets you into the top three.”

While there needs to be a passion for Africa, there also needs to be an understanding of the various markets within the continent.

Nothing is linear about Africa’s growth, said Simon Freemantle, Senior Political Economist in the Africa Political Economy Unit at Standard Bank, adding that Africa is a market without threat, and that the continent’s major challenges include spreading the benefits of growth, fixing structural unemployment, grooming new leaders, acting on climate change, and responding to new and violent threats.

However, the race is still on, said Freemantle. “While it’s been a challenging year for global economies and global politics, and the emerging market universe has been under threat this year, Africa’s growth has been compelling.”

Freemantle pointed out that there have been increasing investment flows and political maturation across the continent, and that corporate interest in Africa is blossoming.

Africa’s middle class is very attractive right now, and there has been a stronger and diversified external demand in terms of exports.

Simon Freemantle, Senior Political Economist in the Africa Political Economy Unit at Standard Bank

“Half of sub-Saharan Africa will achieve GDP growth in excess of five percent,” said Freemantle. “It’s said that, this year, Africa will attract US$205-billion worth of investment.

Foreign direct investment flows seem to be recovering and tourism inflow is set to increase, with a projected 130-million arrivals in Africa in 2030.

“The future is bright, with expected sustained middle class growth. The middle class makes up 60% of sub-Saharan Africa’s population, and it will grow by 130% between 2020 and 2030.”

What’s your African forte?

Whether you are a developer on the African ground, an investor in African real estate or a retailer setting up shop or expanding your footprint on the continent, there appear to be both opportunities and challenges for all property players involved in Africa.

“It’s a challenging environment but developers are setting the tone,” said Steven Herring, founder and Director of Heriot Properties (Pty) Ltd. “However, there are big development plans and promises that are negatively affecting the developers’ reputation on the continent. Other challenges include the lack of development basics in certain markets and the lack of local skills – it’s not easy to convince locals to part with their land.”

Dale Ramsden, founding member and advisor at the RMB Westport Real Estate Development Fund, said that while Africa is receiving an unnecessarily bad reputation in terms of development issues, the gap is closing.

Dr Martyn Davies, Chief Executive Officer of Frontier Advisory

“You need to be careful and measured in your approach,” said Ramsden. “The biggest lesson that must be learnt comes down to relationships – you cannot go into Africa and be condescending. You need to spend time in the various markets, and you need to establish relationships.”

Because each market is different, the research required in Africa is very different than in South Africa, said Kgaogelo Mamabolo, STANLIB Africa Direct Property Development Asset Manager and the current Chair of the SAPOA Africa Committee. “We are quite familiar with the African space – each market is indeed different,” she said. “We believe that certain markets will only grow in 15 years’ time. The concern right now is not to over-kill the demand.”

She also noted that the slice is there to take – but it’s about how you grab it. “We have entered into the obvious markets but we see potential in other markets too,” she said.

“Property is a big capital game, so we need to be careful where we place money.”

Currently, the retail market is booming in Africa. “The most successful retail market is in Nigeria,” said Holden Marshall, Managing Director of Resilient Africa Real Estate. “We believe that small enclosed malls are the way forward. In the next five years, we are going to see a completely different landscape.”

The high cost of land is a major factor, and location of the land is also key, noted Managing Director of G5 Properties Kushil Maharaj. “Land title is another major concern, especially in the case of tribal land. One needs to take a very cautious approach,” he said.

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API Summit

FROM LEFT Alishia Seckham, BusinessDay TV business news anchor; Holden Marshall, Managing Director of Resilient Africa Real Estate; Steven Herring, founder and Director of Heriot Properties (Pty) Ltd; Dale Ramsden, founding member and advisor at the RMB Westport Real Estate Development Fund; Kushil Maharaj, Managing Director of G5 Properties; and Kgaogelo Mamabolo, STANLIB Africa Direct Property Development Asset Manager and current Chair of the SAPOA Africa Committee

In terms of investment structures, the playing field is changing. Traditionally, pension funds have been the key owner and developer of real estate in Africa; however, new channels of capital have emerged recently, including private equity and REIT platforms.

“The landscape is changing, with a few private equity firms looking into the space – but there is still caution and skepticism among international investors,” said Louis Deppe, Director of Real Estate Africa at Actis.

“We are also starting to see more funds targeting the exit.”

“Developing in Africa is hard work; it takes blood, sweat and tears,” said Louis Schnetler, Chief Executive Officer of Delta International Property Holdings Ltd. “Property fundamentals and location are key when investing in the continent.”

Certain criteria need to be considered prior to investing in a country, said Schnetler.

As much as anything else, you need a stable government, political reform, assurances of the ease of doing business, and consultants in certain areas.

One particular market that appears to be highly attractive in terms of investment is Mauritius. “Mauritius is currently very attractive, especially for REIT funds,” highlighted Yan Ng, Executive Director of International Trust Ltd. “The ease of doing business is the best here, and fewer tax implications are a definite plus.”

“Local South African pension funds are starting to hear the African story and are moving their mandates into African funds,” said Beattie. “Many new listings have come to market, and there’s an enormous amount of opportunity for listing in Africa, especially in the REIT arena. A large amount of capital is trapped in Africa. I believe we will see many listings in Africa over next few years.”

Destined dark continent or driver of growth?

Currently, there are bold thoughts on Africa’s future – thoughts that are simultaneously brave and brazen.

Africa has been full of many surprises and scares, said Dr Martyn Davies, Chief Executive Officer of Frontier Advisory. Think Kenya’s fast rise to fame, the Ebola virus, Zimbabwe’s spiralling decline, the rise of Nigeria as the continent’s largest economy. The examples are endless.

“There are general trends but Africa is so fragmented, and very diverse in terms of opportunities, growth and downward spiralling,” he said. “It’s not really about investing in counties; it’s more about specific territories and cities. Development in Africa is like Scrabble: the letters you have are the tools for development. You need more letters to create the most opportunities. We need to cluster the letters of African talent.”

rda Valley, West, Wie rda Road 6 Park, 36 Wie End Office 78544, Sandton 214 0684 w, Hunt’s PO Box (0)11 883 Paddock Vie 9 f: +27 1 883 067 a.org.za t: +27 (0)1 www.sapo

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FROM LEFT Alishia Seckham, BusinessDay TV business news anchor; Louis Deppe, Director of Real Estate Africa at Actis; Louis Schnetler, Chief Executive Officer of Delta International Property Holdings Ltd; Amelia Beattie, STANLIB’s Chief Investment Officer: Direct Property Investments and SAPOA President; and Yan Ng, Executive Director of International Trust Ltd

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2014/11/10 2:30 2:29 PM

REIT Conference

And the REIT goes on It’s only a year old but the South African REIT sector has established itself as a highly sought-after market that now boasts its own, very special Conference

By Candace King Photographs by Gareth Gilmour

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EITs in South Africa have come a long way in a very short space of time. Over the past seven years, the listed property sector came together in pursuit of establishing a REIT structure in South Africa. It was only last year, in May 2013, that the SA REIT Association was officially launched.

Illustrating the sector’s growth, the South African REIT Association, in collaboration with Nedbank Corporate Property Finance as a sponsor, recently hosted the first South African REIT Conference at the Sandton Convention Centre, which was attended by more than 300 delegates.

“The listed REIT sector is growing tremendously,” said Mark Stevens, Chairman of the South African REIT Association Marketing Committee and Managing Director of Fortress Income Fund. “It’s a well-governed, well-regulated and highly professional sector to invest in.”

“Ten years ago, property was a sort of swearword,” said Norbert Sasse, Chief Executive Officer of Growthpoint Properties Limited. “During the early 2000s, the sector

was worth R12-billion; now the value has risen to R300-billion.”

Ken Reynolds, Regional Executive: Nedbank Corporate Property Finance, Gauteng, agreed that the listed property sector is strengthening. “I would like to commend all the REIT players on their efforts to get REITs off the ground and getting REIT structures in place,” he said. “The property industry is really a function of the economy, with the construction industry driving the economy. The economy is going to continue at low growth but the players out there will find gaps.”

Addressing key issues, Andrew Parsons, Managing Director of Resolution Capital Australia, said that corporate governance, focus and simplicity as well as prudent capital management need to be emphasised in the industry.

“The REIT sector is a dynamic and innovative industry that has become powerful over the past 20 years,” he said.

“The global REIT market is in great shape.

From the global lessons learnt, I encourage you

CLOCKWISE FROM TOP LEFT Mark Stevens, Chairman of the South African REIT Association Marketing Committee and Managing Director of Fortress Income Fund; Ken Reynolds, Regional Executive: Nedbank Corporate Property Finance, Gauteng; Andrew Parsons, Managing Director of Resolution Capital Australia; Liliane Barnard, Chief Executive Officer of Metope Investment Managers; Nigel Payne, Chairman of Mr Price Group Ltd and Bidvest Bank Ltd

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REIT Conference

to refine your approach, and remain patient and disciplined.”

Liliane Barnard, Chief Executive Officer of Metope Investment Managers, said that the industry has grown tremendously in the last 25 years, and corporate governance has improved over the years too.

“We have really good management teams with very clear strategies and good communication networks with shareholders,” she noted. “We operate with global good practice. I think we tick all the boxes.”

But the sector is not untouchable. “In a world that’s chasing yield, one needs to be cautious because I don’t think we are through the difficult economic cycle from the 2008 financial crisis,” said Nigel Payne, Chairman of Mr Price Group Ltd and Bidvest Bank Ltd. Addressing the challenges and strengthening the sector is the Best Practice Recommendations (BPR) document, which is currently a work in progress.

“The BPR document is going to be quite a process,” said Laurence Cohen, Financial Director of Hyprop Limited. “We need to focus first on the nuts and bolts – the glaring inconsistencies. We would like to bed the document down and get feedback from the sector. The document is set to be published around year-end.”

“We now have a formalised REIT world coupled with the fact that, finally, property is being recognised as an asset class,” said Keith Engel, Africa Tax Practice Partner at Ernst & Young.

“This is not a dull sector, and it certainly has access to funding,” said Keillen Ndlovu, Head of Listed Property at STANLIB. “At the beginning of the year we were forecasting about R7-billion to R8-billion. However, we have seen more than R27-billion being raised through new listings, rights issues, private placements and book builds.”

“We need to prepare ourselves as an industry in terms of a changing economy as well as all the criteria and factors,” said Estienne de Klerk, Executive Director of Growthpoint Properties Limited and Immediate SAPOA Past President.

Reynolds provided projections for the industry for the next 12 months. He noted that there will be more specialisation among funds, as well as more consolidation. He said that a residential REIT will likely come onto the board, and institutional investors will move away from direct property and get into REITs. “There will be more properties in Africa and internationally, while opportunities in the developing markets will become more difficult to find,” he said. “There will be new listings but at a slower pace.”

Chairman of the SA REIT Association and Chief Executive Officer of Vukile Property Fund, Laurence Rapp, said that the SA REIT Conference has given the sector plenty to think about as an industry going forward.

“While the sector may, at times, be competitively aggressive, we are passionate about working together,” he said.

CLOCKWISE FROM TOP LEFT Laurence Cohen, Financial Director of Hyprop Limited; Keith Engel, Africa Tax Practice Partner at Ernst & Young; Keillen Ndlovu, Head of Listed Property at STANLIB; Laurence Rapp, Chairman of the SA REIT Association and Chief Executive Officer of Vukile Property Fund; Norbert Sasse, Chief Executive Officer of Growthpoint Properties Limited; Estienne de Klerk, Executive Director of Growthpoint Properties Limited and Immediate SAPOA Past President

“The REIT sector is a dynamic and innovative industry that has become a powerful sector over the past 20 years. The global REIT market is in great shape.

From the global lessons learnt, I encourage you to refine your approach, and remain patient and disciplined” Andrew Parsons, Managing Director of Resolution Capital Australia

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feature

Where to from here?

While our economy remains sluggish and political and social issues continue to loom, tough times appear to be ahead. But pockets of positive growth are peering through the clouds of uncertainty

By Candace King

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s 2014 draws to a close, the proverbial crystal ball is once again in the hands of analysts and industry experts who are sharing their thoughts and predictions for 2015 and beyond.

In light of the current rocky global and local economic landscape as well as several pressing issues and influential factors closer to home, the property industry is inevitably affected and needs to take cognisance of the trends around it.

Recognising this, the third instalment of the Improvon Property Group’s Property Trends Forum was recently held and attended by some of the property sector’s most active and serious players. The purpose of the Improvon Property Trends Forum is to provide South Africa’s top CEOs and their executive management teams, from all sectors of the country’s economy, with important insights, so as to guide their property strategies for the year ahead.

With the ability to comment authoritatively on a wide range of issues, this year’s panel of experts included political-economic trend analyst JP Landman; 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

Professor François Viruly; as well as STANLIB’s Chief Investment Officer: Direct Property Investments and SAPOA President Amelia Beattie.

Facilitated by well-known media personality David O’Sullivan, the forum dealt not only with the country’s current economic slowdown and weak growth projection, but also with major trends, including political concerns, labour unrest, tariff increases and government inefficiencies, as well as a host of other issues affecting the country.

Doom and gloom The current global economic landscape continues to struggle since the financial crisis of 2008, which has had an impact on the South African economy. “The global scene has changed dramatically over the last few months as we have now entered into a ‘new normal’ phase,” said Landman. “We are unlikely to see pre-2007 rates again any time soon. The whole world is looking at the low growth scenario.”

“South African GDP is decreasing and has been revised downwards from a high three percent to a low two percent,” said Viruly. “The current economic situation definitely has an impact on the property sector – most notably, the trajectory of interest rates is having an impact on the listed funds.”

Landman highlighted that South Africa has experienced very low growth for 2014 with less than 1,3%, adding that hopefully we will experience a 2.3% growth rate in 2015.

Low economic growth has a negative spin on attracting and retaining foreign direct investment, said Landman, adding that it’s essential for South Africa to work on the home front to attract investors. “The uncertainty around mining legislation is causing foreign investors to shy away from investing in South Africa – this needs to be dealt with, because this is where real business investment is situated,” said Landman.

He also said that it’s important to maintain the local investors – because if the locals run, the foreigners will run. We need to make it nice, warm and fuzzy for local investors.

“We need to start thinking more creatively about deal-making,” said Beattie. “How do we continue to make South Africa a gateway into Africa? We need to find other ways of acquiring international money.”

Looking more closely at the economic spin-off on the property industry, Beattie said that the effect of consumer spending growth will have an impact on the retail sector as well as the industry as a whole. She added that a major issue is unsecured lending, which results in stress and trouble – we need to carefully watch lending within retail stores, she said.

Other key issues that have a major impact on the property sector include urban congestion, infrastructure woes, legislation issues, rising operating costs as well as issues with government on all levels.

Working with government

With Sandton as a prime example, the private property sector can play a major role in stimulating economic growth (Photograph by Candace King)

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One of South Africa’s core issues is the strained relationship between the public and private sector as well as the lack of skills and guidance in all tiers of government.

Beattie highlighted that SAPOA is actively involved in lobbying for change for commercial

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feature

FROM LEFT Political-economic trend analyst JP Landman, property economist and lecturer Professor François Viruly, and STANLIB’s Chief Investment Officer: Direct Property Investments and SAPOA President Amelia Beattie, at the Improvon Property Trends Forum 2014

property owners and is working with local, provincial and national government in an effort to strengthen communication between the public and private sector.

“SAPOA is focusing on business rescue legislation, which currently gives very little right to property owners. We need to lobby very hard to change the legislation,” she said. “SAPOA is involved in the formation of self-determined municipal valuations and the establishment of a valuation office. The organisation is also working very closely with the mayors to assist local government.”

But things are improving with government.

According to Viruly, with 60% of South Africa’s population currently urbanised, government has turned its focus onto developing and improving our cities. “National Treasury has taken our cities more seriously in the last few months, with a strong focus on housing and transport,” he said. “This offers opportunities for the property sector. The biggest role we can play is to stimulate growth. We need to make the biggest contribution towards society.

It’s our duty.”

“Private sector institutions supported by private players and private funding have a huge impact on helping to change South Africa,” said Landman. “We need to focus especially on agricultural land reform and strengthening relationships with government – we can develop a very powerful institution that can help municipalities.”

“Local municipalities at their core suffer from a skills deficit,” said Beattie. “We need to

educate local government so they understand town planning regulations, correct valuations, rates and taxes, and so forth. I feel that it’s the property industry’s duty to put back into the municipalities as, for example, qualified skilled individuals are poached by the private sector. Everybody’s responsible for upskilling all levels of government. We need to roll out programmes and work together to formulate a skills plan.”

Pockets of growth and opportunity The current environment may appear negative but there are pockets of growth and areas of opportunity, according to Viruly – especially on the African continent, which is proving to be a crucial market.

With the continent growing at 5,5% on average, Viruly said that we need to sell the African story.

“The African growth story over the past 15 years is a good story to tell – it’s a huge story for the rest of the world,” said Beattie. “We need to keep selling the South African and African story as well as the continent’s fundamentals because there are good opportunities here.”

Beattie noted that property players need to show off the kind of investments that we have in South Africa and on the continent – which are of good quality and which trade very well, and are as good as you can get anywhere else (and even better, at times).

Currently, infrastructure development appears to be the most lucrative area of investment in Africa. “Six Johannesburg-like

cities are being developed in Africa,” said Viruly.

“Most notably, infrastructure development in East Africa is booming.”

He added that, amid the continent’s highest growth and development rate, South Africa will remain a key economic hub. “In South Africa, new urban hotspot cities are emerging – for example Rustenburg, which is a pocket of growth,” he said.

An important trend in the country is the astounding growth of the middle class.

However, Viruly said that we cannot rely solely on this group. “In South Africa we have largely relied on the growth of the middle class, which would grow the market, stimulate growth and boost our shopping centres. But this group is indebted and vulnerable,” he said.

A big trend that the property industry is facing is greening and sustainability, which are believed to become even greater in the coming years. The green issue is important for the sector, said Viruly. Tenants are leaving buildings that are not up to green standards, he noted.

“In terms of energy, I think the problem lies not in generation but in distribution,” said Landman. “The current trend is to pay more for energy-efficiency systems and fundamentals in order to save on energy and costs.”

Beattie said that there is a lot of opportunity to roll out sustainability in general. “A lot of money is being invested in developing renewable energy farms, which I think we will see the benefits of in the near future,” she said.

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2014/11/10 12:09 PM

property career week

Unlocking property’s key to education T

Professor Samuel Azasu, an associate professor at the School of Construction Economics and Management at the University of the Witwatersrand

With the built environment currently facing a dire skills shortage and a lack of transformation, the need for education among the previously disadvantaged has come to fore, with both public and private sector initiating the drive

By Candace King Photographs by Michael Glenister

he Property Sector Charter Council (PSCC), in association with SAPOA, recently hosted a Property and Construction Career Week programme aimed at school-goers in an effort to attract young students to the exciting world of property.

Held over the course of three insightful days, the programme was attended by speakers from tertiary institutions and property and construction sector associations as well as individuals in various careers in the industry.

Most importantly, the programme was attended by students hailing from several schools, including Minerva Secondary School, Namedi Secondary School, Fons Luminis Secondary School, Realogile Secondary School and Phomolong Secondary School.

The programme covered a vast scope of the industry, with topics ranging from construction and property ownership to property brokering as well as facilities, project and asset management.

“The property and construction industry is an interesting sector – once you are a part of it, you won’t want to leave,” said Saul Gumede, Chair of the PSCC and co-founder of the Dijalo Property Group.

Presenting at the career week, Professor Samuel Azasu, an associate professor at the School of Construction Economics and Management at the University of the Witwatersrand, said that real estate is part and parcel of how we live and operate. “The world becomes your home and job market,” he said. “You need to read the environment around you and come up with ideas and solutions that no-one else has come up with – and you need to do it swiftly.”

Azasu highlighted one of the industry’s biggest challenges – shortage of skills – noting that, currently, there are only three to four property degrees offered in South Africa, and that the sector needs property graduates.

This sentiment was echoed by the South African Minister of Public Works, Thulas Nxesi, who addressed the students on a personal level, highlighting the Department of Public Works’ (DPW) role and emphasising the importance of education and respect among the young generation.

Making DPW work with education

ABOVE Minerva Secondary School students BELOW Fons Luminis Secondary School students

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Nxesi laid the DPW’s cards on the table, speaking about the critical need for education and funding in the department and the country. He provided the current context of the built environment, addressing the main challenges and providing solutions through the power of education and funding.

“I commend this programme – it creates a platform for learners to understand the property sector and allows them to engage with the sector’s professionals and leaders,” he said.

“Many youngsters don’t get this opportunity, so this career week is an important opportunity.”

The Minister advised that students match their skills and talents with what’s suitable in the sector, make contacts, and question and do research. He also provided positive advice for the students with regards to their life choices.

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property career week

ABOVE LEFT Phomolong Secondary School students ABOVE Saul Gumede, Chair of the PSCC and co-founder of the Dijalo Property Group LEFT Namedi Secondary School students

He added that, in light of the huge variety of career opportunities within the DPW and the greater built environment, transformation is key.

“It’s important to stimulate empowerment of women and black individuals in the property sector,” the Minister said. “We need to open the industry to everyone in South Africa. The main challenge in the built environment and all its different spheres remains the slow pace of transformation.

We need to ensure that this starts with the students in the schools and their subject choices.”

According to Nxesi, at the moment, 24% of all professions in the built environment are black, while only nine percent are female.

He added that urbanisation is a growing issue not only in South Africa but also around the world.

“How are we going to respond to the development and infrastructure of our future cities? With the movement of individuals out of the townships and the influx of foreigners into the country, the pressure is building,” he said. “In order to build the essential infrastructure to cater for the major demand and urbanisation, skills and training are required – and this is now our challenge. While we are building the infrastructure and skilling the people, we

are trying to improve the economy and create jobs.”

The Minister highlighted that the DPW is addressing the country’s cities that are currently derelict, which will play an important role in the future with the rise of urbanisation.

He added that there is a lack of universities and medical facilities in South Africa, which is something that needs to be addressed.

According to the Minister, the DPW is currently running several initiatives to stimulate skills development. “We have taken the conscious decision to build up the skills that are lacking in the department and in the country,” he said. “While there are skilled graduates, they lack funding – which is what the department is focusing on addressing.”

He also noted that the department has provided 141 bursaries in tertiary education, and has employed 48 professional and technical staff who had been sourced from the private sector. “We are trying to groom our staff,” he said. “From 66 commerce students, we now have 120. The department will absorb the students who are interested.

There are 189 graduates of the young professionals programme, and 229 beneficiaries are operating in the artisans programme. We can’t rely on

external skills that are imported while there are thousands of South Africans without skills. It’s going to take time to change this.

All of this will be meaningless if you are not disciplined.”

South African Minister of Public Works Thulas Nxesi

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2014/11/10 12:37 PM

meet the Mayor

Cape of good business

FROM LEFT SAPOA President Amelia Beattie, Honourable Mayor of Cape Town Patricia de Lille and SAPOA Chief Executive Officer Neil Gopal

Continuing the public-private sector conversation, SAPOA met Cape Town’s Mayor once again to discuss the current and future plans and projects, as well as the way forward for the city and its commercial property players

T

he need to strengthen the dialogue and the overarching relationship between government and the private property sector has become imperative, not only for real estate players to get their projects off the ground and have their voices heard, but also for the public sector to grow and align itself with the property industry.

This is something that SAPOA understands and is actively rallying behind

By Candace King through its highly successful Meet the Mayor Photographs by Mark Pettipher series, which the organisation aims to make an annual affair.

A year ago, SAPOA hosted a unique dinner with the Honourable Mayor of Cape Town Patricia de Lille in an effort to bridge the gap between the public and private sector, and to solve the focal issues raised between the two parties.

The dinner was attended by many of the property industry’s key players, who all had burning questions.

Because of its fruitful outcome, SAPOA held another dinner with Honourable Mayor De Lille on 23 October 2014 in Cape Town to get the conversation going again between the two sectors. Once again, the event was

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attended by the Mayor, Deputy Mayor, various city officials, members of the SAPOA Board and industry leaders.

“When the SAPOA Board first initiated the idea in 2013 under the presidency of Estienne de Klerk, the intention was to facilitate detailed interaction between property owners, members of SAPOA and the local government of Cape Town,” said SAPOA President Amelia Beattie in her opening welcome at the dinner. “This dinner, which we hope to bring to the industry on an annual basis, started ways of improving strategic collaboration and partnerships between the private and public sector. It has now become a blueprint for SAPOA to have similar engagements in other cities.”

Beattie said that SAPOA recognises that good communication with local government is essential for the positive performance of the commercial property sector in Cape Town and in South Africa.

She noted that the Meet the Mayor series initiative now encourages debate on the challenges facing SAPOA’s members, creates access to development and

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meet the Mayor

Honourable Mayor of Cape Town Patricia de Lille

SAPOA President Amelia Beattie

Managing Member of CNdV Africa Simon Nicks

City of Cape Town Head of Trade and Investment Tim Harris

Executive Deputy Mayor of Cape Town Ian Nielson

FROM LEFT Councillor Siyabulela Mamkeli, City of Cape Town Mayoral Committee Member: Human Settlements; Alderman Belinda Walker, City of Cape Town Mayoral Committee Member: Tourism, Events and Marketing; Councillor Garreth Bloor, City of Cape Town Mayoral Committee Member: Events and Economic Development; Peter Levett, MD of Old Mutual Property; David Green, Director at ProAfrica Properties; Councillor Xanthea Limberg, City of Cape Town Mayoral Committee Member: Corporate Services; Ipeleng Mkhari, CEO of Motseng Investment Holdings; Councillor Johannes Van der Merwe, City of Cape Town Mayoral Committee Member: Economic, Environmental and Spatial Planning; Marius Muller, CEO of Pareto Limited; Honourable Mayor of Cape Town Patricia de Lille; Neil Gopal, CEO of SAPOA; Amelia Beattie, CIO of STANLIB and SAPOA President; Estienne de Klerk, Executive Director at Growthpoint Properties Limited and SAPOA Immediate Past President; Nomzamo Radebe, MD of JHI Properties; Dr Sedise Moseneke, Executive Director of Vukile Property Fund; Japie Hugo, City of Cape Town Executive Director: Energy, Environment and Spatial Planning; City of Cape Town Executive Deputy Mayor Ian Nielson; Izak Petersen, CEO of Dipula Income Fund

infrastructure expansion matters, and removes obstacles to investment and to working together.

“As an industry body whose 1 300 member companies own and control in excess of R500-billion worth of assets, SAPOA has unlocked several successful projects with the goal of representing, protecting and advancing our members’ commercial property interests within the industry,” said Beattie. “These initiatives address many of your objectives and seek to overcome the challenges you face today – on a national, regional and local level.”

Cape Town means business “This is the latest in a series of engagement with SAPOA members,” said De Lille in her opening speech. “This is a way to strengthen the relationship between the property industry and the City of Cape Town.”

Adding onto her topic from the previous year, De Lille expressed the need to shift expectations about Cape Town being just a holiday destination to that of a place for doing business and making investments.

She highlighted the lack of faith in the efficiency of local service delivery, noting that property owners don’t expect much from local council as service delivery has

become more questionable. She added that this strained trust will affect the way businesses choose to place their operations and investment in the future. “In order to position ourselves as a viable city we had to make the right choices years ago,” she said.

“We choose our investments wisely; we choose to invigorate our city centres. We need to strike the balance between bringing new blood into business and retaining existing skills.”

The current climate of cooperation is healthy, said Simon Nicks, Managing Member of CNdV Africa, adding that there’s positive interaction between officials and councillors in Cape Town.

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meet the Mayor

TOP ROW, FROM LEFT Honourable Mayor of Cape Town Patricia de Lille with SAPOA Chief Executive Officer Neil Gopal; CEO of Motseng Investment Holdings Ipeleng Mkhari, Honourable Mayor of Cape Town Patricia de Lille, SAPOA President Amelia Beattie and MD of JHI Properties Nomzamo Radebe; David Green, Director at ProAfrica Properties with SAPOA Chief Executive Officer Neil Gopal MIDDLE ROW, FROM LEFT City of Cape Town Director: Property Management Ruby Gelderbloem with Honourable Mayor of Cape Town Patricia de Lille and Charlton Gelderbloem; Councillor Siyabulela Mamkeli, City of Cape Town Mayoral Committee Member: Human Settlements with CEO of Dipula Income Fund Izak Petersen and Executive Director at Vukile Property Fund Dr Sedise Moseneke BOTTOM ROW, FROM LEFT Director at Smith Tabata Buchanan and Boyes and SAPOA Western Cape Councillor Refqah Fataar Ho-Yee with Honourable Mayor of Cape Town Patricia de Lille and CEO of Motseng Investment Holdings Ipeleng Mkhari; SAPOA Western Cape Committee member Nazeem Khan with Honourable Mayor of Cape Town Patricia de Lille

“An important issue with the Mayor is the restructuring of Cape Town,” he said. “The plan is to restructure Cape Town as an inclusive city. There’s a major focus on a nodal and corridor approach – there is a huge amount of opportunities for the property sector here.”

Former Democratic Alliance Member of Parliament and Shadow Minister of Finance, Tim Harris now works in the Mayor’s office as the Head of Trade and Investment. As part of his role to boost job creation and economic growth in the city, Harris said that we need to create space for the private sector and the city to work together in terms of investment.

“We are constantly competing with other cities and thus we have to open the eyes to the opportunities available in Cape Town,” he said. “Our objective is to reject the idea that South Africa is a country growing at two percent. New growth starts here in Cape Town – reinventing our role can uplift the country.”

Out of the plethora of the city’s initiatives and development projects,

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Cape Town is identifying key economic opportunities, especially in public transport and transport corridor development, as well as in housing plans.

The city is also embarking on rolling out major fibre-optic infrastructure in an effort to become Africa’s first digital city – a massive feat that De Lille is definitely aiming for.

Executive Deputy Mayor of Cape Town Ian Nielson said that the city is growing, a trend that is driving development in Cape Town. “Cape Town is currently home to four-million people – between 2001 and 2011, the city’s population grew by 30%,” he said.

Taking this rapid population growth into account, the city is looking at developing viable nodes and corridors angled around public transport and housing. Currently, two key transport corridors have been identified – the Voortrekker corridor and the Metro south-east corridor.

“We are succeeding in concentrating development in these two corridors,” said Nielson. “Simultaneously, we are ensuring

that we keep up the maintenance of existing infrastructure while we introduce new, modern facilities.”

Pushing the PPP envelope Beattie said that the reality is that we as an industry and local government are inseparable, and we have to work together.

“It therefore fits perfectly into this year’s strategic imperative of SAPOA to put the REAL back into real estate,” she said.

According to De Lille, the City of Cape Town values the property sector’s business and its user experience of government. “Without SAPOA, the city wouldn’t know what the industry’s challenges and concerns are,” she said.

“We appreciate SAPOA’s voicing of its concerns.”

“Years ago, the relationship between the public and private sector was strenuous,” said SAPOA Chief Executive Officer Neil Gopal. “This is now changing as we begin to engage with government and the various mayors. We thank the mayors for their participation.”

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feature

Redefine gets real While authenticity runs through its blood, Redefine Properties’ veins are also full of charity, as the listed REIT company is ploughing time, money and enthusiasm into education and the arts

By Candace King

Renske Coetzee, Head of Human Resources at Redefine Properties

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A

gainst the unsettling backdrop of a stagnant economy and skills shortage, the current job market in South Africa paints a gloomy picture for students seeking work opportunities and meaningful careers.

This picture is one that Redefine Properties, one of the country’s leading and largest JSElisted property companies, grasps and has taken into account as part of its day-to-day running of the business. In an effort to solve this issue, Redefine Properties is jump-starting promising careers in the property sector for smart young graduates. Through its learnership programme, Redefine Properties is recruiting graduates and school-leavers from designated groups fresh out of school and university.

The programme gives bright young stars who have successfully completed studies in various disciplines such as law, human resources, internal audit, finance and property-related fields, as well as schoolleavers who may not have the financial means to further their education, an opportunity to gain one year of hands-on business experience.

Entering its third year in 2015, the programme has been a success and has created great opportunities for promising graduates with their sights set on a career in the country’s exciting and growing listed property sector. Having begun with just five students in 2013, the programme expanded to include 18 learners in 2014, and is expected to grow even further in 2015.

“South Africa faces a shortage of skills and suitably qualified and experienced individuals,” explains Renske Coetzee, Redefine Properties’ Head of Human Resources. “This also impacts the property sector, where we have access to only a small pool of quality employees. Our learnership programme creates an exciting opportunity for youngsters, in addition to growing the number of qualified and skilled people entering our sector. We believe that our learnerships go a long way towards creating a better future for South Africa and the property sector – and for the next generation of business leaders.”

Successful candidates benefit from structured learning, which will earn them a recognised qualification in business administration, customised to the property sector and Redefine Properties. The learners also get practical onthe-job training in all facets of property management, and are managed, coached and buddied by Redefine Properties’ experienced employees and managers. Half of the learners in this year’s programme have been offered further work contracts with the company.

“We’re real people who want to add value to our clients, our youth, our community and our industry, and we strive to be a preferred employer,” says Coetzee. “We are committed to social responsibility and positive growth in all sectors in our society.”

She notes that education is a sustainable model: you don’t just hand out the fish, you provide the rod. The higher purpose of the programme is the upskilling of young people and giving citizens the chance to grow. “The property industry is way behind in terms of transformation,” she says. “It’s important that we transform with the right skills, and don’t just put people into positions for the sake of it.

I believe that the industry will only begin to see the changes in the next five to 10 years.”

A sound partnership Apart from Redefine Properties’ involvement in education, the company has invested itself in the arts. Redefine Properties has partnered with the Buskaid Soweto String Project, which assists young black musicians in South African townships.

As a key sponsor, Redefine Properties has played an essential role in supporting Buskaid in its teaching and growth. The partnership supports the project’s vision that all township children will be given the opportunities to channel their creative energies and talents through learning and playing classical music to the highest international standards.

Based in Diepkloof, the Buskaid Music School provides musical education to about 115 children and young people, and promotes life skills, knowledge transfer, and full- and parttime employment to 35 dedicated performers and teachers.

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feature

W

e spoke to Redefine Properties’ newly appointed Chief Executive Officer Andrew Konig about his role, the company’s strategy and his thoughts on the property industry’s current and future stance.

Q How has your position been thus far?

It’s been a few months since I was appointed as CEO in August 2014, but I’m still easing out of my former role as Redefine’s Financial Director. However, the way forward has been a seamless process. Former CEO Marc Wainer has left massive shoes to fill: as one of the industry’s stalwarts, Wainer has played a central leadership role at Redefine, and we will continue to benefit from his skills, vast property experience and significant dealmaking expertise. I have learnt a tremendous amount from him.

Q What are your goals and core

strategy for Redefine Properties?

Redefine’s main goal is to be the best in all aspects of what we do, so we can be the property owner of choice. Our core strategy is based on six strategic priorities, which aim to break down silos, improve communication internally, and align and integrate all divisions of Redefine. We are focusing on our staff in terms of growth and reward.

“Buskaid provides so much more than a music education,” says Marijke Coetzee, Redefine Properties’ Head of Marketing and Communications. “It shares life skills and opportunities for disadvantaged children to become tomorrow’s leaders. It gives its young members a brighter future. We are proud to be associated with Buskaid.”

“Buskaid has enjoyed a fruitful partnership with Redefine over several years,” says UK viola player Rosemary Nalden, the founder of Buskaid and Director of the Buskaid Music School. “Even when the company went through a major merger and changes, their support has been steadfast and generous.

This continued sponsorship has allowed Buskaid to provide an ongoing, sustainable and growing development programme.

Redefine is at the heart of the project’s collaborative community of sponsors.”

Coetzee says that, in light of music’s disciplined nature, the project essentially improves academic performance and assists the community to become economically viable, creating a difference in the area.

“Through Redefine’s sponsorship of – and work with – Buskaid, we make a positive

We embrace our tenants and have done pretty well in this regard. We live by certain values and we are cognisant of our tag line that we are people, not landlords.

Q What are your thoughts on the current nature of the property industry?

The economy poses unique challenges as there’s no take-up of new space by newcomers to the market. Along with an upward movement of interest rates, there has been an increase in administered pricing, operating costs, energy as well as the rates and taxes imposed on landlords.

The landowner is under pressure too. In light of this we need to be cautious in our funding approach. With no demand for space and the poaching of tenants, it’s very difficult to grow in this market. It’s important for property companies to have a point of differentiation.

Andrew Konig, Chief Executive Officer of Redefine Properties

Q What are Redefine Properties’ aims for 2015?

In terms of the current challenges and trends, the industry needs to be alert to what’s developing. But what unfolds today won’t always be the case tomorrow – we are experiencing a lot of erratic swings in the market.

Redefine’s aim is to provide sustained growth in income distributions and improve capital prospects. We are investing in a long-term asset class as a listed REIT, so we need to take the pain in the long-term game of property.

We have absorbed risk and have undertaken big deals based on a growth in our size, so in 2015 the strategy will be much of the same as we will continue to grow the business.

contribution to our communities and the arts, for now and for the future,” says Coetzee. “By creating new horizons for its members, Buskaid inspires residents of Soweto, music lovers from across South Africa and audiences around the world.”

Coetzee also notes that there are plans for future initiatives that Redefine Properties is looking into, adding that the company wishes to create a sustainable CSI plan that will build onto the existing projects and include future ones.

Q What trends should we be watching going into 2015?

Founder of Buskaid and Director of the Buskaid Music School, Rosemary Nalden (left) with Marijke Coetzee, Redefine Properties’ Head of Marketing and Communications

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SAPOA industrial trends report

The industrial revolution T

Stan Garrun, Executive Director and head of IPD South Africa

Richard Bennet and John Martin

Sawa Nakagawa, Klaus-Dieter Kaempfer and Jennifer Lisbey

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he industrial sector is looking very good.

This was discussed at a recent SAPOA trends breakfast presented by Stan Garrun, Executive Director and head of IPD South Africa, who noted that industrials continue to lead the sector pack.

Based on the findings of the SAPOA Industrial Vacancy Survey Report H1 2014, released in October 2014, the industrial sector appears strong as the highest-performing sector over the past 18 months. The report states that, for the six months ended 30 June 2014, industrial property was the bestperforming of the three main property sectors by returning 9,9% to shareholders over the six-month period. The total return comprised an income return of 5,2% and a capital growth of 4,5%.

Providing an accurate bi-annual insight into the performance of the South African industrial market, the SAPOA Industrial Vacancy Survey Report covers up to 30 distinct industrial nodes, including more than 400 industrial properties across more than four-million square metres as at H1 2014.

“With a strong income return, the industrial sector is performing quite well as improved fundamentals underpin the sector’s robust income return,” said Garrun. “Industrials’ total return of 9,9% beat retail at 7,4% and office at 5,8%.”

Commenting on the performance of the latter two sectors, Garrun noted that the retail sector is holding up as a result of base rental growth figures. However, capital growth in the sector has taken a knock. Office is lagging as usual, he added.

While the capital growth was improved, it was the income return that drove the outperformance relative to retail and office property. A low vacancy rate and aboveinflation net income growth highlight the excess demand currently prevalent in the sector and the current shortage of quality stock available.

In terms of the economic drivers of industrial property, Garrun highlighted that the current fundamentals are not conducive to major industrial expansion. This has led to a constrained supply in the sector, which is in turn supporting rentals and resulting in low vacancies.

The report stipulates that, currently, the constrained supply is supporting occupancy rates, which is underpinning rental growth and contributing to the sector’s quality total return.

“The level of industrial building plans passed, a good indicator of sentiment and future expansion, is currently at about 140 000m² per month,” states the report.

“While this is well off the lows of 2009, it is still 20% off the levels seen during the boom period of 2007 and 2008.”

While electricity supply concerns, labour unrest and municipal approvals may be contributing to the lower levels of supply, the demand side of the equation is what’s currently suppressing expansion. The report notes that, on the demand side, manufacturing production and industrial capacity utilisation have yet to reach the levels of 2007, suggesting that industrial-space users aren’t yet in full expansion mode.

Pieter Strydom, Adam Marcus, Michael Tymvios, Jeffrey Jalink and John Laws

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SAPOA industrial trends report While retail continues to keep it together and office once again lags behind, industrials remain robust with high returns and low vacancies

By Candace King Photographs by Michael Glenister

Looking at the industrial sector more closely in terms of segment performance, light manufacturing/low-grade units outperformed with a total return of 15%, beating warehousing (10%), standard units/workshops (9,7%) and hi-tech industrials (7,8%).

“Income return has been stable and strong across the segments, while low vacancy rates across the board have underpinned rental growth,” said Garrun. “The lowest vacancy rate was recorded in the warehousing segment – the vacancy results depict a good picture.”

In terms of the geographical performance of the sector, Western Cape industrials outperformed with a total return of 11,9%, followed by KwaZulu-Natal with 10,6% and Gauteng with 9,2%. The returns are reasonably flat in Gauteng, noted Garrun.

He also highlighted that a lower rental base could be a reason why the Western Cape has the most activity, adding that perhaps the Western Cape and KwaZulu-Natal are the top performers because of their port and harbour offerings.

A notable trend is industrial developments being located along good transport nodes, and obtaining good returns. Garrun believes we will see this trend going into the future.

He pointed out that the sector is not without its constrains, noting that industrial operating costs are up by 5,7%, with the usual suspects as the main drivers – rates and taxes, as well as electricity.

“Bad debts as an operating cost are high at 51%,” he said. “Expenses are growing faster than income. A good trend is that some operating costs seem to be coming down.”

On a positive note, energy efficiency has had a positive impact on returns. Top quartile efficient industrials outperformed the rest by about three percent – the top quartile efficient industrial property sample returned a total of 17,7%, while the rest of the sample returned 14,8%.

It’s just a phase So where are we in the property cycle?

Industrials are in a good space at the moment but the demand side is fragile. In terms of the cycle, the industrial sector is now situated in the middle growth phase, characterised by low vacancies and robust rental growth. Retail is in the early slowdown phase, with office in the late slowdown phase characterised by increasing vacancies and slowing rental growth.

Garrun said the sectors will most likely see this property cycle picture for another year in these phases of growth and slowdown, which has been the case for the past three years.

Industrials in summary • Industrial property has been the topperforming sector over the past 18 months .

• Improved fundamentals underpin a robust income return.

• Expenses are growing faster than income.

• Industrial is in a good space currently but the demand side is fragile.

• Demand side of economy needs to improve to drive manufacturing production.

• Improvement in production will increase capacity utilisation, leading to expansion.

• Constrained supply supports rentals and low vacancy.

FIGURE 1: INDUSTRIAL FUNDAMENTALS

Bi-Annual Return per segment - 2014H1 Income Return

Capital Growth

Total Return 15.0

16.0 14.0 12.0

% pa

The particulars

“This can be attributed to the savings on operating costs,” said Garrun. “In terms of the IPD Sustainability Annual Index, efficient buildings had better fundamentals, including higher net income growth, lower vacancy rates and lower discount rates.”

10.0

10.0

9.7 7.8

8.0 6.0 4.0 2.0 0.0

Source: IPD FIGURE 2: FUNDAMENTALS - Segment Level

Vacancy Rate

Base Rental Growth (%)

Capital Growth % pa

10

8

%

In terms of vacancies, the rate of industrial property as recorded by IPD at the end of June 2014 IPD was 2,6%, 60bps down from December 2013’s 3,3% and significantly down from 2009’s peak level of 7,1%. The declining vacancy rate has resulted in an above-inflation base rental growth, which has underpinned returns over the past 18 months.

6

4

2

0 Warehousing

High tech industrials

Light manufacturing / low grade

Standard units / Workshops

Source: IPD PAS SOUTH AFRICAN PROPERTY REVIEW

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people in profile

CSI projects in the property industry What CSI projects and charitable efforts is Atterbury involved in?

Giving back to the community has been in Atterbury’s DNA since the company’s inception.

A crucial part of its business philosophy is giving back and creating opportunities. Two vehicles are used for this: the Atterbury Trust and the Atterbury Foundation.

The Atterbury Trust is a key shareholder in Attacq, and has provided about 350 bursaries to students at tertiary institutions across South Africa over the past 17 years. Outstanding potential and severe financial need are the two criteria used for allocating bursaries.

However, it’s not just about a financial contribution: the company also invests in the nurturing and mentorship of the candidates.

The Atterbury Trust also contributes vital monthly financial aid to schools in Pretoria West, with money used to subsidise teachers’ salaries and for infrastructure maintenance, and is actively involved in the advancement of arts and culture, with the Atterbury Theatre being completed in May 2011.

The Atterbury Foundation allocates a portion of the development cost of each new project to the surrounding community, as was the case with the development of Lynnwood Bridge, where two new libraries (one in Alkantrant and one in Soshanguwe) were built together with a children’s home in Constantiapark. The Foundation is also involved in the removal of alien wattle trees in Geelhoutboom, and sourced alternative accommodation for the homeless people of Newtown during the construction of Newtown Junction.

Other Atterbury Trust projects include:

Zahn Hulme, Chief Operating Officer: Atterbury Trust 56

• Funding an annual national Atterbury piano competition at the Atterbury Theatre; • Funding up-and-coming artists via the Atterbury Theatre and the annual Versnit production at Rust & Vrede wine estate;

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SAPOA industrial trends report

Atterbury students attend a bursary function in February 2014

One of the Beyers Bytjies learners at the opening of the Triomf clinic in July 2014

Learners at Beyers Bytjies pre-primary school on Mandela Day

Ninette Hurter obtained a BSc in Quantity Surveying at UP in 2012

•

•

•

•

Co-establishing the Triomf healthcare clinic in the underprivileged community of Danville, where free medical services are provided by a group of doctors on a volunteer basis; Investment in a community radio station, GrootFM, which is used as a platform to mobilise the public and obtain donations for Atterbury Trust’s projects; The Re-Connect Shelter for homeless children in a donated house in Constantiapark, which Attacq continues to support by paying property rates and raising funds, with foster care run by a non-government organisation; and Funding transport for a group of St Alban’s College boys to visit the Dr Edward Phatudi School in Atteridgeville every month, which is used to provide an opportunity for those boys to make a difference in the lives of disadvantaged pupils.

Why did Atterbury decide to get involved in CSI projects?

As a successful company that’s committed to the future of South Africa, Atterbury has a responsibility to continuously provide opportunities to the less fortunate. “Feed the stream of life, not just your own dam,” is a favourite quote used by Francois van Niekerk, co-founder of Atterbury and its former Chairman.

Why is it important for property companies and organisations to get involved in CSI projects?

Property companies have the ability to affect surrounding communities positively – and they have a wide reach. More than just sponsorship, Atterbury focuses on projects that allow active involvement and have a hands-on impact on its immediate communities.

How has Atterbury benefited from giving back to society?

It’s immensely satisfying to see Atterbury Trust bursary students flourish once they enter the job market.

Qualified students are today actively involved in the South African economy as engineers, chartered accountants, legal advisors, teachers, and so on.

The Atterbury staff members are also heavily involved in community upliftment projects, including outreach programmes in Danville, which keeps the employees grounded and humble. The company’s credo is, “We make a living by what we get, but we make a life by what we give.”

Annalise Lugar obtained a BCom in Financial Accounting at UP in 2013

What are Atterbury’s future plans?

Atterbury is looking to expand its existing community involvement in conjunction with the listed company, Attacq. Projects in the pipeline include: •

•

•

•

The establishment of new ventures to assist entrepreneurs in establishing their own businesses; Securing funds from business associates and donor companies to recruit, select, and mentor and nurture new students; Securing learnerships and job opportunities for Atterbury students; Establishing a community centre in the western part of Pretoria that will provide a holistic service to residents, and allow for empowerment and skills development.

Facebook.com/AtterburyTrust Twitter.com/AtterburyTrust t: +27 (0)12 471 1600 / f: +27 (0)12 471 1666 zahn@atterbury.co.za www.atterbury.co.za SOUTH AFRICAN PROPERTY REVIEW

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people in profile

Eric B Wright

Ben Espach

Kokkie Herman

Managing Director

Director of Valuations

Director of Rates

Spectrum Valuation Services (Pty) Ltd

Rates Watch (Pty) Ltd

Rates Watch (Pty) Ltd

After matriculating from Durban High School in 1980, Eric B Wright completed his National Service. He began his career with the First National Bank Undergraduate Scheme (previously Barclays Bank), an accelerated advanced programme for young high-flyers. In 1988 he graduated from the University of South Africa, majoring in economics and business management. He attained several professional qualifications in the field of property development and management, as well as the Global Executive Programme at the Gordon Institute of Business in 2005.

Wright entered the property industry in 1991, managing large property portfolios for Fedsure and Absa. In 2002, he was tasked with outsourcing one of the largest units within that bank, comprising approximately of 400 property valuers. This was done through the creation of eight black empowerment joint-venture going concerns.

Spectrum Valuation Services (Pty) Ltd was established in 2008; it was built on the foundation of Absa’s property valuation arm. It was essentially founded as a commercial and agricultural valuation company, but has since won large residential valuation contracts and has entrenched itself in movable assets, plant and machinery, company valuations, and several specialised areas of expertise such as mines and timber valuations.

Spectrum Valuation Services concerns itself with a high level of integrity, professionalism and risk mitigation that surpasses the needs of its clientele. It operates on a national footprint and focuses on volume as a reward for the “peace of mind” it offers the industry.

The company employs true specialists in movable and immovable property valuations, and is the largest employer of qualified valuers in South Africa.

In addition, Spectrum Valuation Services (Pty) Ltd has been selected as a premium supplier of valuation services in South Africa’s land claims process, acting as an arbitrator in property legal disputes.

Ben Espach is a professional valuer and the Director of Valuations at Rates Watch (Pty) Ltd. He is a life member of the South African Institute of Valuers.

He obtained a BSc degree from the University of Pretoria and a National Diploma in Property Valuation from Technikon RSA. Previously a director with CS Massel Valuation Services, he was mainly involved with mass valuation and the implementation of the Municipal Property Rates Act. He has been with the Property Valuation Subsection of the City of Tshwane Metropolitan Council for 26 years, holding various positions, including those of Valuation Officer, Chief Valuer and Deputy Director.

The general quality of municipal valuations is a major concern. Municipal valuations are often undervalued and inconsistent. Objections and appeals are not dealt with promptly, and in many municipalities, valuation and rates queries are not attended to expeditiously.

Rates Watch is the only company in South Africa that is solely dedicated to the lodging of objections and appeals against entries contained in municipal valuation rolls. The company was established in 2009, and is now the leading brand name in watching and monitoring municipal valuations and rates.

The company is acknowledged as one of the country’s leading authorities on the Property Rates Act. Rates Watch will only submit an objection or appeal if, on a balance of probabilities, there is a reasonable chance of success. The company’s success rate so far is in the region of 98% at the various valuation appeal boards throughout the country, and its High Court achievements also rank well.

Rates Watch is the only company in South Africa that offers a dedicated and all-embracing service relating to municipal valuations, objections, appeals and monitoring of rates accounts.

Kokkie Herman grew up in the Free State town of Heilbron.

He obtained a National Diploma in Cost and Management Accounting at the Pretoria Technikon, then completed a BCom in Accounting at Unisa.

In 1984, he began his career in local government as a sub-accountant in Springs, eventually ending up as the Director of Revenue in 2009.

Apart from doing budgets and financial statements for the various municipalities, with the start of the Metro, Herman built the ledger structure and compiled the first two budgets for the Metro. The first one was a compilation of budgets in 11 different financial systems; the second was live on a financial system that is still running today.

Rates Watch was started by a number of shareholders.

Setting up a new company and making the change from government to the private sector was a challenge. But, with the combined experience and knowledge of local government, it filled a gap in the market. Rates Watch is the only company in South Africa that offers a dedicated and all-embracing service relating to municipal valuations, objections, appeals and monitoring of rates accounts.

Rates Watch offers many services to property owners, including valuation audits, valuation appeals, valuation objections, valuation monitoring, valuation roll inspections and monitoring, tariff and policy monitoring and comments, and legal assistance The combination of municipal finance and valuations has created specialised expertise which Rates Watch uses to the benefit of its clients.

As a company, its policy is to do the right thing at the right time and to work by the book – no shortcuts and no illegal dealings take place with officials on any level. Rates Watch proudly protects this and is willing to walk the extra mile, even in those cases where it is not part of the contract, to become a part of the client’s business with regards to property rates.

+27 (0)11 475 5177 / +27 (0)82 461 4509 eric@specval.co.za www.specval.co.za

+27 (0)11 918 0544 / +27 (0)82 894 6463 ben@rateswatch.co.za www.rateswatch.co.za

+27 (0)11 918 0544 / +27 (0)82 774 5578 kokkie@rateswatch.co.za www.rateswatch.co.za SOUTH AFRICAN PROPERTY REVIEW

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statistics

In hand and online, SAPOA’s South African Property Review has a far-reaching appeal - not only does the print version get mailed to a 2000+ targeted database, it also enjoys a monthly online impression rate of over 3675 hits, with an average read of upwards of six minutes per issue.

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SANDTON CITY MOVES UP A GEAR Muller mulls over retail offerings

INVESTMENT FUNDING Vunani’s quest for true value

THE PRECINCT EFFECT The rise and rise of trendy nodes

THE TALENTED MR NOMVETE Delta’s rise and rise

SHINE ON, SAPOA Our Convention report back

ies: ser ly ica Afr nthountry Theour mo y-c y-b ntr focus cou

Attorneys in focuos

ARROWHEAD Always on target ALL-STAR ASSET SA listed property in the lead

October 2013

REVIEW

Engineers & quantity surveyors

VUKILE’s NEW WUNDERKIND Why Dr Moseneke made the move

PROPERTY

South African Property Review

REVIEW

SOUTH AFRICAN

South African Property Review

PROPERTY

Project managers

PROPERTY EYE CANDY Excellence winners announced

Heritage, where the heart is

September 2013

South African Property Review

WALKING ON BROKEN GLASS Women shatter the ceiling

SOUTH AFRICAN

Attorneys in focuos

EAST AFRICA Land of promise?

REVIEW

Women in property

URBAN REGENERATION Capital in, profits out

PROPERTY August 2013

South African Property Review

REVIEW

SA REITs The dream becomes a reality

Architects in focus

REITs FOR THE UNLISTED SECTOR We speak to SAPOA’s incoming president

PROPERTY

SOUTH AFRICAN

South African Property Review

Welcome to the 45th SAPOA International Convention and Property Exhibition

July 2013

South African Property Review

REVIEW

SOUTH AFRICAN

South African Property Review

May/June 2013

South African Property Review

PROPERTY SOUTH AFRICAN

PROPERTY SOUTH AFRICAN

July 2014

REVIEW

OVERALL WIN NE R

Innovative Excellence Awards And the winners are…

YOUR NEW PRESIDENT Meet Amelia Beattie AFRICA Angola: oil-rich and growing fast

REAL ESTATE and the South African economy

WORLD SERIES Global markets in the hot seat

2014/05/19 10:51 AM

Getting your brand noticed by the leading decision makers in South Africa’s commercial property industry - you know it makes sense h nc lau e Re issu

Cradlestone Mall

Retail development under way

February 2014

Modderfontein metropolis

Developer May 2014

October 2014

Alexandra township mixed-use development

Mall of Africa

Shanghai Zendai’s city plan

Atterbury’s retail roll-out: the sky’s the limit

PDP class of 2013

Developer

PROPERTY

Developer

PROPERTY

PROPERTY

November 2013

PROPERTY

Developer

Paving the way for future investment

Rewarding the GSB, UCT, SAPOA course

Futuristic dream or visionary future?

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Towering feat: a catalyst for investment

Bridging the gap in the City of Tshwane

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Developing an oceanic fairy tale

Cornubia: Durban’s mixeduse marvel

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A work in progress

Repurposing industrial buildings

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Area review: Remotely on the rise

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Published quarterly, SAPOA’s Property Developer is mailed out along with it’s sister publication the South African Property Review.

The Property Developer is also available online.

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 www.sapoa.org.za

C o n ta c t Rië tte Steve ns - + 27 ( 0) 71 877 5520 - e mail sales@sapoa.o rg .za 60

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:56 PM

JLL

3

statistics

Sub-Saharan AfricaAfrica takes centre stage Sub-Saharan takes centre stage

Interest in Sub-Saharan Africa’s rapidly-growing economies is increasing – corporate occupiers and real estate

‘Real Estate Transparency improves in Sub-Saharan investors are selectively moving into African markets in ever greaterAfrica’: numbers. This is focusing attention on their real estate markets, a spotlight on transparency andIndex providing an impetus for market improvements.

JLL 2014 Global Real putting Estate Transparency

Top Global Transparency Improvers, 2012-2014

Figure 1.1: Top global transparency improvers, 2012-2014 0.6 0.5 0.4 0.3 0.2

Ireland

Colombia

Algeria

Mauritius

Zambia

Romania

Nigeria

Real Estate Transparency in Sub-Saharan Africa

Ghana

Qatar

0.0

Kenya

0.1

Source: JLL Global Real Estate Transparency Index, 2014

Figure 1.2: Real estate transparency improvement, 2012-2014 (Five core markets in sub-Saharan Africa) 2012-2014 Transparency Score Improvement

KENYA GHANA

NIGERIA

SOUTH AFRICA REIT legislation introduced in 2013 Increased data availability

ZAMBIA

Compliance with regulations

Increased foreign investment encouraging international standards of service provision

Lagos State Real Estate Transaction Department created to oversee regulations compliance

Better data collection and availability from market participants

REIT legislation

Enhanced land registry coverage

Land registry expansion and digitisation

More international consultants present and greater data collection by market participants

More international consultants present and increasing data availability

Land registry digitisation

Improvement in transparency level 2012-2014

Kenya, Ghana, Nigeria, Zambia and Mauritius all secured a position in the global top 10 improvers in JLL’s 2014 Global Real Estate Transparency Index. Major steps forward in regulation, data availability and transaction processes across most key markets have underpinned the positive movement in scores for the region as a whole.

“The increase in transparency in these markets is an outcome of concrete efforts by governments to improve the regulatory framework to create more business-friendly environments,” said Jeremy Kelly, Global Research Director at JLL. “We see more international corporations, investors and developers participating in the sub-Saharan African growth story, which

Governments are beginning to realise the imperative to enhance transparency in order to capitalise on the

is leading to major in momentum, the way Africa’s in the 10 of the – tangible opportunities offeredchanges and maintain while the private sectorbottom is driving advances in dataIndex availability and pace of change.

JLL’s”2014 Global Real Estate Transparency Index shows that,across amongthe the global realquickening estate themarkets operate, said Mark advances are being made region. regions, Sub-Saharan Africa has experienced the greatest regional increase in real estate transparency over Bradford, Chairman of JLL’s sub-Saharan “There is still a lot to be done before the last two years, although many of these improvements are still at an early stage and significant challenges in African business. transparency across sub-Saharan Africa operating conditions remain.

While sub-Saharan Africa has experienced reaches the levels of other international the greatest regional increase in real estate markets, but the pace of change is already Market regulation and data availability lift transparency levels transparency among the global regions, many impressive,” said Kelly.

Findings from JLL’s 2014 Transparency Survey reveal that Sub-Saharan Africa (SSA) has made the world’s of these improvements are still in theirFive early “Inevitably, there willNigeria, be setbacks strongest progress in real estate transparency.

SSA markets – namely Kenya, Ghana, Zambia and and stages and signifi cant challenges in operating progress will be all patchy but, over the in medium Mauritius – have demonstrated significant improvement in transparency scores; have secured a position the Global Topremain.

10 improvers. Major steps forward in regulation,term, data availability and transaction conditions transparency looksprocesses set to across improve as most key markets have underpinned the positive movement in scores for the region as a whole. While sizeable While sizeable transparency challenges international best practice is introduced and transparency challenges remain in Sub-Saharan Africa – particularly in Senegal, Ethiopia and Angola, which all remain ininsub-Saharan – –particularly in areAfrica’s policy-makers focus on initiatives to feature the bottom 10 ofAfrica the Index tangible advances being made across the region.

Senegal, Ethiopia and Angola, which feature attract new investment,” said Bradford.

Score Change (Inverse)

A

ccording to Jones Lang LaSalle’s (JLL) 2014 Global Real Estate Transparency Index, sub-Saharan Africa has experienced the greatest improvement in real estate transparency on a global scale over the past two years.

The increasing interest in the region’s growing economies has seen corporate occupiers and real estate investors moving into these markets. In light of this, African governments are realising the need to improve transparency in order to capitalise on the opportunities and maintain momentum.

The key drivers of the transparency improvement are: ● A growing presence of corporations, investors and real estate advisors, which is encouraging the start of market tracking and performance measurement; ● Launching of the first direct real estate performance index (outside of South Africa) in Botswana; ● Increasing the quality of, and ease of access to, land registry information, as shown by the progress on land registry digitisation in Kenya, Ghana, Uganda and Lagos State (Nigeria); 6 ● Passing of REIT legislation in Kenya and South Africa; and ● Improvement in enforceability of contracts and professional standards of agents.

Source: JLL Global Real Estate Transparency Index, 2014

Real Estate Transparency Index in Sub-Saharan Africa, 2014

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SAPOA events

Property gathering at Portside SAPOA Western Cape ended 2014 with an exceptional year-end networking function at the Portside building in Cape Town

By Caroline Coates

T

he Western Cape branch of SAPOA hosted a well-attended networking function on 30 October 2014.

The cocktail evening took place at event sponsor First National Bank’s new Portside building in Cape Town.

FNB Commercial Provincial Head: Cape Region Stephen Claassen delivered an interesting overview of the development of Portside, the building’s various challenges as well as its green credentials.

He was followed by speaker Steve Downing, a sales specialist at FNB Property Finance, who shared some of FNB’s current

projects and introduced the team to the audience.

SAPOA Western Cape Chairperson Refqah Fataar Ho-Yee summarised the region’s 2014 activities, which included well-received breakfast talks on various precincts in the Western Cape, educational workshops, and constant engagement between SAPOA, the City of Cape Town and the mayor’s office.

Incredible 360-degree views, great food and desserts, and sterling company resulted in a memorable year-end networking event for the Western Cape.

We hope 2015 is even more interesting!

ABOVE, FROM LEFT Networking guests; Refqah Fataar Ho-Yee, partner at Smith Tabata Buchanan Boyes (STBB) and SAPOA Western Cape Chairperson; Sedica Knight, Julie van Zyl and Samantha Lambert LEFT Time Mulder, Dave Russell, Bronwyn Ambler-Smith, Julie Szabo and Henje Boudry RIGHT Stephen Claassen, FNB Commercial Provincial Head: Cape Region; BELOW, FROM LEFT Steve Downing, sales specialist at FNB Property Finance; guests socialising in the eighth-floor reception area of Portside; Alan le Roux, Derick Henstra and Nazeem Khan

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Polokwane golf day

Golfers support the SAPOA Polokwane golf day S APOA held its annual golf day at the Polokwane Golf Club on 28 October.

Established in 1966, SAPOA is a memberdriven organisation that aims to represent, protect and advance members’ commercial and industrial property interests within the property industry in terms of ownership, management and development.

Speaking at the prize-giving ceremony afterwards, SAPOA Limpopo Regional Chairperson Sumari de Ridder said the organisation plans on making the golf day bigger and better in 2015 so that those who participate can meet and broker deals with leaders in the property industry. She also thanked Absa for sponsoring the halfwayhouse refreshments on the day.

The format for the golf day was four-ball alliance with the two best scores to count.

Riaan Koekemoer, Jan de Beer, and Weyden

and Nola Peceur came out tops with 91 points, followed by Niekie Coetzee, Baksteen Olivier, Dirk Botha and Leon Grimbeek in second place with 86 points. David Hlabyago, Peter Pratt, Thomas Nguni and Hennie van Staden finished in third position with 80 points.

Lynette Smith hit the longest drive off the seventh tee and Papu Lykanjiso was the nearest to the pin at the 11th hole.

SAPOA members were made aware of the SAPOA Bursary Trust, which was established towards the end of 2009. SAPOA is committed to searching for talented people who will add value to its members and the industry in its entirety by providing tertiary educational support through the SAPOA Bursary Fund.

SAPOA offers bursaries for full-time South African university and university of technology studies in property and legal studies.

Bursaries are also offered to Grade 12 learners

with a minimum C (60%) symbol in maths, science and accounting for BCom Accounting and Finance, BCom Property Valuation and Management, studies in the built environment, BSc Quantity Surveying and BSc Town Planning.

For more information, call +27 (0)11 883 0679 or email hrdmanager@sapoa.org.za.

CLOCKWISE FROM TOP Winners Weyden Peceur and Riaan Koekemoer with SAPOA Limpopo Chairperson Sumari de Ridder; Deon Kok (Absa Northern Regional Head of Commercial Property Finance) and Dawid Beetge (Absa Consultant for Commercial Property Finance) with their golfing goodie bags; SAPOA Limpopo Chairperson Sumari de Ridder hands over a prize to Papu Lykanjiso for being nearest to the pin on the 11th hole; Niekie Coetzee (right) with his caddie John Galane; the four-ball alliance of Peter Pratt, Hennie van Staden, Thomas Nguni and David Hlabyago– the team finished in third place; Halfway House sponsors, Absa’s Dawid Beetge, Deon Kok and Gerard Nel; Lynette Smith receives her prize for the longest drive at the seventh hole from SAPOA Limpopo Chairperson Sumari de Ridder

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off the wall

Finding poetry in the mundane The Chapel, a unique Vietnamese community space, has won the World Building of the Year award at the 2014 World Architecture Festival, proving that small projects can make big statements

By Michelle Marais Photograph by a21studio

C

ompleted in June 2014, the Chapel was designed by a21studio, a small Vietnamese architecture firm established in 2009. The community space was built in a new urban ward on the outskirts of Ho Chi Minh City in Vietnam, in response to the lack of communal centres as a result of an estate crisis in the area.

The interesting shed-like building is located on a small 200m² property. Owner, Long Ruoi encouraged the builders to use the leftover materials – steel frames, metal sheets and recycled wood – from previous construction projects.

By using steel for the main structure and working to the model of a traditional Vietnamese neighbourhood building, the foundation was made much lighter than normal. Subsequently, the construction period was shortened, saving costs.

For the stabilisation of the construction, the team of architects considered the use of columns and beams. A unique tree-shaped steel column was manufactured and has been used as both an interior structural element supporting the roof and as a space-saving aesthetic element, allowing for activities to take place on the ground.

The name for the building was coined when, after attaching the white painted metal sheets to the portal frame, the structure appeared as a beautiful white chapel in the distance.

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The interior sees three layers of printed fabric covering the openings, creating a rainbow of light around the stark white room. The importance of nature’s role was emphasised by the use of recycled wood for the furniture and floor finishing. Minimalist, natural landscaping accentuates the building’s understated exterior.

Essentially, the space was designed to be functional. Its purpose is purely to house people – especially the youth – and to encourage them to participate in various activities, such as conferences and exhibitions.

It also accommodates a small café, with the kitchen and utility areas occupying a triangular space along one edge. It is this modest approach to design that allowed the Chapel to walk away with the prize at this year’s World Architectural Festival (WAF).

Setting the benchmark for architectural excellence, the WAF showcase was held during the month of October in Singapore.

The International Live Competition is unique in that it lets anyone, regardless of their status or experience, apply. Event attendees can see the competition unfold before their eyes as they watch architecture teams present their projects and listen to the jury’s responses.

This year’s WAF “super-jury” was led by renowned British architect Richard Rogers and included Rocco Yim from Hong Kong, Julie Eizenberg from the US, Enric Ruiz

Geli from Spain, and South Africa’s very own Peter Rich.

“The judges felt this was a project that embraced history and modernity, and created a dialogue in the process,” said Paul Finch, WAF Programme Director, commending the winning building on behalf of the festival’s jury. “It has created maximum effect with minimum materials, and has produced an unexpected change of pace in its urban context. The opportunity has been taken to recycle and rethink materials and site, and a series of design issues has been addressed to produce a small project that makes a big statement. Colour and light have been deployed to put people at ease, and the architect has found poetry in the mundane.” a21studio’s innovative approach to architecture allowed the firm to produce an affordable, award-winning building. In light of this, it is refreshing to see that going green in terms of construction does not have to be a costly affair.

Circle of winners Previous winners of the World Building of the Year award include Grafton Architects’ Luigi Bocconi University in Milan (2008), Zaha Hadid’s prize-winning MAXXI in Rome (2010) and Gardens By The Bay by Wilkinson Eyre (2012).

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education, training and development

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1

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education, training and development

Proactive Quantity Surveying 3

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1 Head office for Ecobank in Accra, Ghana. Architects: Arc Architects 2 West Hills Mall in Accra, Ghana for a subsidiary of Atterbury Properties. Architects: Arc Architects 3 Student accommodation in Pretoria for the Feenstra Group. Architects: Boogertman + Partners 4 Vdara Office Park in Johannesburg for Bakos Brothers. Architects: Integrale Architectural Design

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