South African Property Review February 2015

South African Property Review

PROPERTY SOUTH AFRICAN

February 2015

REVIEW

Transformation: the journey thus far Property developers, managers, owners and urban designers

REFURBISHMENT Keeping up appearances

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GROWTHPOINT Driving transformation AFRICA SERIES Ethiopia: a phoenix rising?

by-country focu try-

February 2015

United Kingdom: a royal power

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contents

February 2015

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

February 2015

REVIEW

Transformation: the journey thus far Property developers, managers, owners and urban designers

REFURBISHMENT Keeping up appearances

ON THE COVER From chaos to charisma, the South African landscape is changing to become more inclusive as spatial and social transformation take centre stage

Abreal

series

s●

LD

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monthly cou n Our

The WOR

GROWTHPOINT Driving transformation AFRICA SERIES Ethiopia: a phoenix rising?

by-country focu try-

February 2015

United Kingdom: a royal power

Cover with spine_FEB_SUBBED.indd 1

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From the CEO From the Editor’s desk Industry news Education, training and development Legal update What’s fair is fair Planning and development An update on SPLUMA New members Welcome to SAPOA Theme leader Transformation: the journey thus far Africa uncovered Ethiopia Eye on the world The UK: a royal power Feature Growthpoint’s pinnacle of transformation Feature Keeping up appearances Feature Transforming with Transnet Property Feature Investing in potential SAPOA events Liaising over lunch Partnering with PwC Statistics What’s on SAPOA upcoming national events SAPOA educational programmes and workshops Off the wall Simplified living

Oilgro

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 Photographers Michael Glenister, Elvis Ntombela, Brett Rubin DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA).

All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material.

P R O P E R T Y

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

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e: david@rsalitho.co.za

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from the CEO

Exclusively detrimental

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urrently a hot topic, long-term exclusive lease agreements in shopping centres have been at the forefront of industry discussion because, we believe, they allude to anti-competitive behaviour.

The saga surrounding exclusivity clauses in long-term lease agreements continues – as recently reported in the media, Wal-Mart Stores Inc has come under legal fire by local supermarket chains as they endeavour to defend their business from the US retailer’s “store encroachment” in shopping centres.

Having recently introduced food to its retail offering, Game, a chain owned by South African food and goods wholesaler Massmart Holdings Ltd (which is owned by Wal-Mart Stores Inc), the US retailer has experienced great opposition from local food retailers who

have sued to enforce lease clauses barring new food retailers.

Massmart Holdings Ltd CEO Guy Hayward recently commented in the media that “the behaviour by the retailers just feels intuitively anti-competitive. It’s going to reduce choice for customers.”

Apart from reducing choice, the fight over exclusivity clauses will have a negative impact on Massmart Holdings Ltd’s growth. In light of this, Massmart Holdings Ltd lodged a complaint on 31 October 2014 with the Competition Commission against Pick n Pay, Shoprite and Spar to ban lease exclusivity.

In light of the continued enquiries made

by SAPOA to the Competition Commission to investigate exclusive leases at shopping centres, we as the industry feel that this matter needs to be addressed urgently.

The importance of hearing the industry’s concerns is at the core of what SAPOA does as an industry-orientated and member-driven organisation. Our survey shows that while lease agreements with key anchor food retailers are crucial for shopping centres in terms of various aspects, exclusivity clauses within lease agreements are not favourable.

Based on the outcome of the survey, the participants felt that long-term leases are crucial when it comes to securing grocery anchor tenants. Most felt that long-term leases are also important when it comes to the required financing of developments and acquisitions, the improvement of the quality of assets, the certainty of income and the tenant mix.

However, the survey showed that 100% of the respondents indicated that other

tenants are concerned with the term of the grocery anchor tenant’s lease. Furthermore, all respondents indicated that the grocery anchor tenant’s lease is almost always renewed, and 94% of the respondents indicated they would not prefer exclusivity clauses in their leases.

When asked which initial lease term they were most likely to support for the grocery anchor tenants, 77% of respondents said 10 years. Fifty-six percent strongly agreed that exclusivity clauses have no benefit and are actually detrimental to the management of assets.

Based on some of the comments provided by the respondents, exclusivity clauses prevent the landlord from placing boutique stores in a shopping centre. They also prevent the landlord from optimising a tenant mix that is best suited for the shopper coming to the centre. One respondent said that market changes bring new formats that cannot be predicted, so exclusivity is not an option for long-term value.

While very few of the respondents felt that exclusivity clauses give security of income and allow certainty of shopping centre viability over the long term, most feel they’re not beneficial and block independents from entering shopping centres.

SAPOA continues to liaise with the Competition Commission with regards to the investigation of exclusive leases in order to reach an appropriate outcome.

Neil Gopal, CEO

Opinions from the industry on exclusive lease agreements Based on comments provided by the participants in the survey which SAPOA conducted, most felt that exclusivity clauses within lease agreements are unfavourable.

Here are a few: ● Exclusive clauses prevent the landlord from placing boutique stores – a bakery, butcher, small green grocer. ● Market changes bring new formats that you cannot predict, so exclusivity does not guarantee long-term value.

Brands also go out of fashion, which is a similar problem.

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● They prevent the landlord from optimising a tenant mix best suited to the shopper coming to the centre. Grocery anchor tenants also change the products they sell over the term of the lease, thereby competing with other tenants. ● Independents offer a product variety and a service, which the nationals cannot always offer. ● The landlord is unable to manage his asset in the best interest of the actual asset. Exclusivity is only beneficial to the retailer, and enforcement of the

exclusivity is usually detrimental to the tenant mix. ● Exclusivity clauses limit the entry of independents. They also reduce the overall rental/m2 because independents pay a higher rental for the space they would otherwise take if not for the exclusivity clause. ● The arrival of Food Lover’s Market, the improvement of Checkers against Pick n Pay and the Massmart Food concept have proven that exclusivity has more downsides than upsides.

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from the CEO With long-term exclusive lease agreements in shopping centres under the spotlight, SAPOA CEO Neil Gopal highlights the industry’s opinion on the matter

97%

of respondents said that without receiving long-term leases, whether exclusive or not, grocery anchor tenants would not be inclined to enter a shopping centre

59%

said that leases with an initial period of more than five years should not contain automatic renewal options, and the options should not be on the same terms and conditions as the original lease agreement

54%

said that long-term leases with grocery anchor tenants are extremely important for required financing of developments and acquisitions

100%

said that the grocery anchor tenant’s lease is almost always renewed

88%

said that shopping centre sizes is irrelevant when it comes to long-term leases with grocery anchor tenants

94%

said that they would not prefer exclusivity clauses in their leases

100%

said that other tenants are concerned with the term of the grocery anchor tenant’s lease

56%

strongly agreed that exclusivity clauses have no benefit and are actually detrimental to the management of assets

77%

said that they support a 10 year initial lease term for the grocery anchor tenants

Source: SAPOA Lease Agreement Survey

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from the CEO’s desk

OR F S IE LOBB U YO SAPOA SUBMISSION DOCUMENT BUSINESS RESCUE SPECIFIC PREJUDICE SUFFERED BY LANDLORDS COMMENTS SUBMITTED BY SAPOA IN REGARD TO THE 18 NOVEMBER 2014 A. INTRODUCTION ization lished in 1966 and it is a unique, member driven organ The South African Property Association (SAPOA) was estab property commercial and industrial property interests within the that aims to represent, protect and advance members’ Developers, development. SAPOA’s members include Landlords, industry in terms of ownership, management and ers are property industry. It is for this very reason that our memb Property Managers, essentially key role players in the the consequences that stem from same. directly impacted by the Business Rescue Provisions and Investec organisations (some of which include ABSA, Nedbank, SAPOA represents approximately 1300 companies and Properties, rties, Eskom, Transnet, East London IDZ, Growthpoint Property Group, Old Mutual Properties, Liberty Prope Hyprop Group, Encha Properties, Zenprop, Redefine Properties, the V&A Water front Company, ACSA, Eris Property office and ers own and control about 90% of all commercial, retail, Investments and Resilient Properties etc). Our memb ayers ximately R500bn and constitute some of the largest ratep industrial properties in South Africa to the value of appro in South Africa. ess Rescue 2008 and particularly Chapter 6 which deals with Busin SAPOA is cognisant of the fact that the Companies Act, esses gement of distressed companies. There is a need for busin Proceedings aims to provide for the organization and mana of ver the in agreement with this very crucial notion. We are howe to flourish in order for the economy to grow, and we are n to interests of all parties involved, giving greater consideratio view that this should be done reasonably and in the best the overall social and economic outcomes.

B. FORMAL COMMENTS The following concerns have been raised below by our

members in their capacity as Landlords:

1. Major prejudice to landlords placed in a terrible position for the following reasons: 1.1 In business rescue proceedings the landlord is really usually without paying rental or utilities; 1.1.1 The tenant continues to use the leased premises water, sewerage and refuse removal but the landlord does 1.1.2 The landlord is liable to pay Council for electricity, ; not recover these costs from the tenant in business rescue t t the tenan goes into business rescue, the landlord canno 1.1.3 If the tenant is not in arrears at the time that guarantee; appropriate the tenant’s deposit or cash the tenant’s bank premises; the ying 1.1.4 the landlord cannot prevent the tenant from occup t ss proce will not supply goods or services to the tenan 1.1.5 other creditors of the tenant in the business rescue nt preve cannot stop providing services or utilities or unless the tenant pays for them upfront. The landlord the tenant from being in occupation of the property; ted prior to the business rescue process; 1.1.6 the landlord loses its tacit hypothec if it is not perfec

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SOUTH AFRICAN PROPERTY REVIEW

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from the CEO’s desk

rescue process- deposit/guarantee and/or tacit hypothec; 1.1.7 the landlord loses all its security in the business in the matter of Tuning Fork (Pty) Ltd t/a Balanced Audio 1.1.8 recent court decision in Western Cape High Court the principal indebtedness had been extinguished v Greef and Another 2014 (4) (SA) 521 (WCC) held that rescue plan and therefor as the principal debt was by the implementation and adoption of the business r erodes the landlord’s security; extinguished, the surety was not liable. This decision furthe 2. Leases are bilateral contracts each party’s obligations to perform is undertaken in return 2.1 A lease is a prime example of a bilateral contract where y the premises they must pay the rent. If the rent is paid for the other party’s performance. If a tenant wants to occup of the premises and continue to provide the services. the landlord must give free and undisturbed occupation g orium on legal proceedings to resist eviction but not payin 2.2 Business practitioners are relying on the s 133(1) morat es but are expected to continue to pay for and provide servic or securing the rent. The landlords not only get no rent s to al as well as other services such as security and acces such as electricity, water, sewerage and refuse remov charges due by the tenant. common areas. They may even be obliged to pay back ut any rescue and providing post-commencement finance witho 2.3 Landlords are effectively sponsoring the business rights or any security. that commences (and many companies deliberately see 2.4 If the rent is up-to-date at the date business rescue ess hypothec nor recover the unpaid rent during the busin it is) the landlord cannot cancel the lease, rely on its rescue process.

3. Landlord has limited rights 3.1 A landlord has limited rights legally and practically. rent. proceedings is minimal because it is based on the arrear 3.2 The landlord’s voting power in the business rescue make the rent due for the remaining of the lease in order to Landlords should have a vote based on the total value of the process fair. treat business rescue practitioner to pay the rent or otherwise 3.3 All the remedies that the landlord has to force the go to action are not justified. Landlords should not have it fairly require court action. The cost and delays of court atically under the lease as a bilateral contract and under to court to assert the rights that they should have autom the law. in the by the business rescue practitioner to a certain percentage 3.4 The rent due must be paid in full and not reduced pay rent in full. rand because of the bilateral nature of the obligation to 4. Better off under insolvency laws hs’ its hypothec as security for payment of at least three mont 4.1 Under the insolvency laws the landlord can exercise rent (Insolvency Act, 1934: Section 95). ions to preserve what security the landlord has from third 4.2 The business rescue process provides no clear provis personal sureties. Landlords should always be able to parties such as mortgages, pledges, suretyships and other payment of the amounts reciprocally owed by the exercise those rights against third parties in order to get company occupying the premises.

5. Post-commencement finance must be the rent despite the obligation to do so, unpaid rent Where the business rescue practitioner does not pay e the landlord with a secured claim. deemed to be post-commencement finance and provid 6. Damages dambilateral obligations under the lease, landlords have a 6.1 In addition to the landlord’s claim for payment of all rds landlo that cost the e includ must claim lease. Their ages claim arising from any premature termination of the incur, namely: were amortised over the period of the cancelled lease; 6.1.1 the loss of the original tenant installation costs which as long as six months or more (especially if cancellation 6.1.2 the time taken to re-let the premises which can take occurs in November/ December in any year); ts; 6.1.3 the broker’s costs for finding existing and new tenan ses. premi the ating reinst for 6.1.4 reinstatement costs

R O F S E I B LOB YOU SOUTH AFRICAN PROPERTY REVIEW

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2015/01/15 11:04 AM

our members in

’s deskdeskntioned objectives we have had concerns from ofntation of the Act. CEOCEO’s thethe from from aforeme impleme

of the c) In light of the garding certain aspects re rs ne ow ty er op pr their capacity as effect or garding the prejudicial re ns er nc co r ou t such like to highligh ustry as a result of ind ty er op pr W e would therefore l cia er nces on the comm mifications. unintended conseque social and economic ra ve ha e nc se es in ich wh implementation R O F S e following: IeEno B rt 7 of the Act states th PaR O that B te F W d) O L ormation IUES B ay require additional inf O m ity or B th Y au e ibl ns O po mental or L“In considerin g the application a res undertake an environ to nt ca pli U ap e th ire YO d may also requ den.nt review.” entio epera ind ct to from the applicant, an bjecom su op o be int e ay m ts uld en wo m A ss UM t, wh and 53 to 61 of SPL 32se men 1 toas tionsich 4 Sec y 201 come into operation.

Julss On r1stasofse •othe derstanding that 33 and 52 of SPLUMA would ns tio Sec 4 201 r be ction it is our un se tem d Sep ne tio en • On 1st of em ov ab en e be tivity which occurs havye ac t with th s tha umd reemenng forire l qu in ag neeficia eproce fort an bear ar s iou we var gh re the ou gh Alth worki ou not ich is thr ss n wh ces ) tio rescue vin sand atten 7. Busin ouer Lic ious pro (W ULAs t varpr e rtous com enses vel m tha ver been proven to be we hoess Land Reatforic. s ha has uin es ate and It iss oc W nt b) me of is g op Th ng.

De worki tembera plan togetlat ral not is Ru Sep the rescue 1 of lem ess t is en busin ob ich The pr rtm 7.1 wh e pa A m De UM co the SPL be by for s put ed te toces ha Act n dathe period requirue ed by over regu her.ion as establish ntar tio al do terco nti tevin than wapracti po ae cha longe set imple far me of the the taking 0m share witse e pro iss tioner sur ge som an t rescue thin llen tha be wimu t Busin to fac 7.2 s hav the s of em and litieess se ty ipa e aci nic50 er cap Th lack of in.suc rtatwo s nning approval h as ce pla unetaken dlitie es lete. dhave anipa an toacomp to issu al nic years hyge ovmu du gtllen cesprand s are ap vin plans t rescue pro en Some m the cha mple ss by co201 eselen te se da 4. Thx, As n tio ct nta pa tion to pay the rent or to secure the rent. me to get lpleIm imany’s d ta en mste onge sug evir obliga Thignore ce.En comp the plathey an A. Further the timing sgintime UL law W mean by-vin the a havIne ha ite ve spt7.3 ha t deno no es oneit isdo 5.busin d ifwhen 201 already far too late. ryis t and being able spen en rescue Feb m essde is 1ac lop A comp intosu itygo ve anies tivrua de SPL Most onors ct ction paon truUM im drealistic solution ns7.4 ere jor cofor only sid ma the con a when s be l credit ha de their to Mo tly ent ec paym ati delay dir to y ple that a Differenti is in simpl dessthrescue an gogtinto hybusin anies comp Most princi n len te ofte is oval in support of, nts. appr7.5 paUM cuSPL ocnt which we areire d me d, A in its entirety on the set da r, an ste ge nts na te ple by c) It was sug im d can ation. s qu liquid is litie re the ipa Fur es nic A. am mu UM n efr SPL lita business rescue tim the nt po tro me of Ellerines) plerescue mee the me to wh to imess st ofthere theedbusin in on assiti (eg ere tmo edtte r po involv leases of ms n as we er ble tiothus are be numb aaci are the and m mina fro ter Where rn 7.6 de lea pro ty uld rve wo se g rent s cap re payin ut e litie ipa river nicand l the others witho mufull thecance do not hav cherry-pick the bestexe er of in oth rent as theypracti ue the the pay iss ere don’t , e wh leases e th rcis on able to n ng s’ un tio rni tioner ss-eleaclarifica ses.the municipality is a crolik succes andals serve s ici ge kinasdly llen chapa that nici wolduld tio nta Wteit cou me off e)tha ple l ge. im vanta of disad e ms doubl un a ter rds m in landlo s ini the giving hekw nicipa muvis taskworks an ex theing rmist litanad toforperfo po orof by the eTtioner ionset ess trobe busin nsbe edlitie apa rescue to etent yneex yrkcomp en an cientl r suffi fo not are s ve7.7 or s te hame da practi w rescue wo ess t a busin en the of uld Many atmof the view that sho treare nsg for all payin wailittey,r we and tio them rmina w to te due ne rental de yvery losing an are rve they t be fosrsno se sewas no re al becau rds nly ssib ov er landlo tai po pr for riv a cer ap worst is do be uld in This t . ta wo costly s no ob thi are thi to Delay uld y. nt ure sho effi,cientl thineythewa distantefut th d) However any. t be noat de ted the Department thethdistre totil veh tim shoed esun ecid servic mple t ha cocomp en e them tosprovid is isssed ess pa to enabl s uld utilitie De reasdin e third srtm public as, suc thnic at such th asmu ipalitie partie d an ll aa m ko Um ntroty.i and Mv y of the rivers. This wi thecou n the sts of twee intere flows in an besstbe e theer th s ge thein riv an A ch UM ich SPL wh of ity Section 60 ts. e any activ wrmtha thedvie ofan are le to we es approv chang on erne sedab ati be un for landlords can fa mersnd wi8.ll Propo it hashow om pactstions s dtyrec er ne ive im tio lop sugge en gatwith ve Act rem de , anies the afo Comp to the e the ne of ns du of t ow nt sectio ligh releva er Inga of dthe nnte op e) r of urgency versio prd-up ctd and matte a marke a pa attach as im We 8.1 ely me tiv ple im nesho prioritised by the business rescue uldbebefairly tanding of the proce lly the country. ders entiass. uncomp an us treate getupulo anrsdunscr ke ta any directors ll and private sectors and ess wi blic s es favou it oc that pr way both the pu a e such th in g used lon if it is w work ss will honot ction (2) proce bse rescue Sus. essto blish esta es oclysecure like prcal dcifi ,s mo uldbusin foren d).lished in woThe ed tiorene vid are We8.2 costs espe em s pro (whos or ion af tioner vis e practi pro th rescue r ess nal fo busin t t tio ab peten nsi en est incom tra m al and un rs ire the holde trib qu to a share ore preserved and not expunged by the er you g bef refec ly e ological re appeals or otherrsma mbth pendin huand of f) tent must be exWe any ment from on which thers comp s, and shareholde of tte commence ationors direct theplic 5) at thete 199 again t “alstl ap of 67 .

8.3 se tes tha No t (Ac choo ichAllstarights 5 wh to 199 , s Act n da tio te ilita of in na Fac sed er nt po alt me dis ) op d e of(3must be continued an re the Develing provided wi thdisth 15 of plan. tionrescue solutions of Secess sed terms busin po am d ise be fin erw e in iat n decided upon or oth r to ect bee debo th sectors icable in tooraid ion shsall at e thi gin leg Wof be l de wil t A haveprno tha PO Act ap ion t in SA vis winthofth thies very pro t tio eenta toplemme leim abthe es towards investmen ail tiv av en is be It ” inc . ll Act wi dis s u thi s yo of rd ms wa ter to ice prejud . ribute 9. Extreme mynt s the iallyeconoco ardnt towse on es of companies under business rescue and urgent uti trib ascon g rds kinue iss ering extreme prejudice compared with other creditors to maLandlo suffich arewh ini. ts to the Companies Act, 2008 are required. kwdmen Ethe amen m you. u. rd to hearing fro n and look forwaan rei he ard to hearing from yo rw nce fo ista k ass r loo d you for We thank youyou for your assistance herein We thank faithfu Yours rsurfait ithfully, You fally, shfu Yo

____________ _________ ______ ___ ______ ______ __________ ______ ____ ____ __ Gopal l__ Nei NeilrefGopal pacerl ive Offi il Go Execut Ne M Chi Chief Executive Officer

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Chief Executive Offic

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SOUTH AFRICAN PROPERTY REVIEW

OR F S IE B B LO YOU

R O F S E I B LOB YOU

2014/09/11 5:19 PM

Neil's Letters October.indd 4

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SOUTH AFRICAN PROPERTY REVIEW

Neil's Letters FEB.indd 6

2015/01/15 11:08 AM

from the CEO’s desk

SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 9:46 AM

from the Editor’s desk

How can we not help you?

Bad customer service could kill a brand and hurt a shopping centre – retailers take note

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n the space of a week, I experienced the best and the worst customer service. Without naming and shaming the retailers involved, the former occurrence was pleasant, unbelievable in fact; the latter put me completely off the particular store – and the shopping centre it’s in.

While that may seem slightly imprudent, the fact remains that consumers are at the end of their wits. With South Africa’s economy slowing down, escalating rates and taxes, the dreaded e-tolls, water shortages and electricity blackouts, yo-yo-ing petrol prices, and the rising cost of living, times are indeed tough for the consumer. Add bad customer service to this brew and the result can be detrimental to a retailer brand.

The overall indebtedness of consumers remains a problem in the country. According to Statistics South Africa, South African indebted consumers collectively owe about R1,44-trillion.

Yet despite being strained and pressured, consumers appear to still be shopping.

According to recent data from the MasterCard Index of Consumer Confidence, South African consumer confidence improved for the second half of 2014.

With a score of 58,7, a slight improvement of 2,4 points compared to last year’s score of 56,3, the index currently describes consumer confidence as “neutral-positive”.

But consumers remain unhappy as they deal with a plethora of challenges and irritations from the retailer and serviceprovider sectors.

New research conducted in South Africa and Nigeria by French research firm Ifop reveals that 80% of people feel annoyed when receiving unsolicited marketing messages on their mobile phones.

In other negative consumer news, South Africans are dissatisfied with the laptops they’ve purchased, according to research recently released by the South African Customer Satisfaction Index, which showed that in 2014 South African consumers gave an average customer satisfaction score of 75,1 out of 100 for their laptops – four points lower than in 2013.

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Consumers are lashing out and it’s believed that the controversial Cell C Johannesburg highway banner is only the beginning.

However, irate consumer behaviour is not only limited to South Africa. According to the results of a new survey of 10 000 people worldwide, poor customer service kills sales. Conducted by American Express, the research was conducted using an online survey, which drew responses from 10 000 people in the US, Canada, Mexico, Italy, the UK, India, Japan, Singapore and Hong Kong.

In Canada, 57% of the survey’s respondents said they had abandoned a purchase as a result of poor customer service in the past year. In the US, the figure was 60%. In Mexico and Singapore the figure was 68%, while in India the figure was the highest at 71%.

The survey further revealed that the percentage of respondents who believe that companies are paying less attention to providing good customer service has increased significantly to 40%, compared to 32% in 2012 and 24% in 2011.

With regards to the Cell C debacle, bad customer service can kill a company.

According to analyst David Shapiro, Deputy Chairman at Sasfin Securities, only Vodacom and MTN will survive the mobile war – he predicts that we will not see Cell C or Telkom Mobile in a few years’ time. While Shapiro attributes this to market capitalisation, poor customer service can be another nail in the coffin.

Apart from the death of companies and brands, bad customer service can have a negative impact on shopping centres in terms of tenant mix and tenant satisfaction.

Retailers with tainted reputations can lead to other retailers not wanting to be situated near them in a shopping centre.

Furthermore, the loss of bad tenants can add to the already-existing issue surrounding anti-competitive behaviour in shopping centres. While the battle over exclusive lease agreements continues, the dynamics of the retail arena are shifting as the fight for space is heating up. At the moment, fashion retailers at shopping centres are beginning to trump traditional food retailers in terms of space and anchortenant status.

Redefine Properties’ Chief Operating Officer David Rice told The Citizen that, “If you are developing a new centre, there will be food, but with existing and well-developed centres [that] we are adding on to, do you need food as an anchor? We don’t think so.”

With the continued rise in the number of international brands that are entering the South African retail market, competition is bound to heighten.

Fashion is taking the role of an anchor,” said Rice. “So you get double the rent, it will cost less to put them in and it suits the demographics perfectly.”

With the Consumer Protection Act already wreaking havoc among landlords, shopping centre owners will want to maintain a healthy tenant mix. On the flip side, retailers will want to avoid poor customer service in order to maintain their image. You never know when the next slander billboard will be erected for all to see.

Candace King, Editor

SOUTH AFRICAN PROPERTY REVIEW

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Job

CHARLIE BRAVO #432-14

from the Editor’s desk

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SOUTH AFRICAN PROPERTY REVIEW

Job 432-14 Ed's Letter_FEB_SUBBED.indd Redefine tactical/removals 9 297x210mm.indd 1

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2014/12/08 2015/01/14 11:34 9:52 AM

industry news

Northgate Park launched as a trendy office redevelopment

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ew life is being breathed into Northgate Island in Brooklyn, Cape Town, a former “big box” retail development being upgraded to high-profile, A-grade office space with a green urban park, to be rebranded as Northgate Park. Northgate Island was originally developed to capitalise on the success of Canal Walk retail traffic but the development has been plagued by vacancy. Subsequently, 85% of the 18 000m² property was acquired for R110-million in a joint venture between Arbitrage Property Fund and Buffet Investment Services, with the intention of repurposing the under-performing asset into an A-grade office park focused on providing an affordable, well-positioned, attractive offering with ample parking.

The redevelopment represents a further investment of R30million by the development consortium. “Situated directly on the intersection of Section Street and Koeberg Road between the N1 and the M5, with high visibility to passing traffic, Northgate Park is an easy seven-minute drive (against the traffic) from Cape Town city centre, about 10 minutes from the southern suburbs and 20 minutes from the northern suburbs, making it one of the most conveniently located office developments in Cape Town,” says Ilan Kaplan, MD of Arbitrage Property Fund. “It’s quicker to reach than Woodstock or Century City with little to no congestion at the access and exit points on the highway. For staff using public transport, the location on Koeberg Road is ideal – it has a prominent taxi zone and a planned MyCiTi bus route.”

The office accommodation in Northgate Park will comprise open spaces with high ceilings, large floor plates with very few columns, and floor-to-ceiling windows on each side, providing an abundance of natural light within a trendy and modern ambience. There is also potential for the bulk of the redevelopment to be increased. “Such is the favourable response from the market that 60% of the space is already let,” says Kaplan. “We have secured several blue-chip tenants and have received brisk enquiries for the bulk of the available space.

Moore Stephens has taken up 3 000m² of space, while Vida e Caffè is to occupy 1 250m², including the head office. Existing tenants include SA Home Loans, Dulux, Tile Africa and Homemakers Fair.”

The buildings will have fibreoptic internet connectivity, access control with 24-hour security and a range of energy-efficient features.

An application for a Green Star rating is currently under way. “We are creating a sense of movement and dynamism to reflect the energy from the activity on one of the best-used highway junctions in Cape Town,” says Stephen Whitehead, Director at Boogertman + Partners Architects. “Northgate Park is set to benefit those using the buildings and act as a catalyst for the further transformation of its environs.”

The redevelopment is scheduled for completion in March 2015. +27 (0)21 421 5550, Northgatepark.co.za

Nedbank enables executive apartment hotel in Rosebank

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n response to increased demand for residential property in Johannesburg’s thriving Rosebank area, a new executive apartment hotel, The Capital on Bath, was launched in January. Nedbank Corporate Property Finance is the financier behind the deal, providing R100-million to the Capital Hotel Group for the development of the hotel, which comprises 52 apartments and 100 hotel rooms.

Situated in the heart of Rosebank on iconic Bath Avenue, the apartments and rooms boast unprecedented views and impeccable finishes, while the hotel offers a gym and outdoor pool, state-of-the-art security and keyless access, a café and bar, laundry and housekeeping, air conditioning and Wi-Fi. Ken Reynolds, Regional Executive: Nedbank Corporate Property Finance, Gauteng, says that Rosebank has attracted much interest from savvy investors looking to invest in this rapidly growing, popular area.

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“Rosebank has seen much commercial development and investment since the Gautrain station was launched in 2011, and has been declared one of 35 priority areas in Johannesburg to receive improved service delivery and infrastructure,” he says. “In the past three years, close to R7-billion has been spent on development of new office buildings and the refurbishment of older commercial buildings in the area, including the extension and upgrade of Rosebank Mall. According to the Rosebank Management District, the area has become Johannesburg’s third-largest high-rise business centre.”

While commercial development and investment in Rosebank has been ongoing, there has been limited residential development, which has led to demand for residential property in the node. Well positioned for easy access to the Johannesburg CBD, Illovo, Melrose and Sandton, Rosebank has become one of Jo’burg’s most desirable addresses for businesses and executives alike. “In addition

to the attractiveness of Rosebank itself, The Capital on Bath is within walking distance of the Rosebank CBD and the wealth of shopping and entertainment it offers; the Rosebank Gautrain station; and the excellent schools and private hospitals in the district. Taking these factors into account, the demand for this development is to be expected,” says Reynolds.

The Capital on Bath is the seventh in The Capital Hotel Group’s portfolio of executive apartment hotels in the Sandton area. “We are consistently ranked number one on the STR Global Hotel Benchmark Survey for our Group’s performance in Sandton,” says Marc Wachsberger, MD of The Capital Hotel Group.

“It is therefore a natural progression for us to move into Rosebank with the same core values in mind, offering brilliant basics to our corporate clients while meeting their budget.

In this regard, Nedbank has been a fantastic client and capital provider. They just get it.” +27 (0)11 294 4274, Nedbank.co.za

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industry news

industry news

Growthpoint wins international lighting award

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XCELLENCE IN PROPERTY DEVELOPMENT 2 0 1 4

at Growthpoint. “We realised the necessity of reducing the impact on the environment by prioritising electricity reduction.”

And, as South Africa’s largest JSE-listed REIT, Growthpoint is having a massive positive impact on energy saving in South Africa.

Growthpoint teamed up with Eskom and the Green Building Council of South Africa to create a benchmark rating system for electricity and water consumption for the industry – the WEBdex rating – and then applied it to all of Growthpoint’s buildings.

A first step to improving consumption was for Growthpoint to replace inefficient lights on buildings.

Aurora Lighting and Standard Electrical were tasked with providing the solution.

The colossal low-energy retrofit is one of several energy-efficiency projects undertaken by Growthpoint.

It is also embracing alternate energies with rooftop solar panel projects, which have been very successful at Lincoln on the Lake in Umhlanga, Infotech in Hatfield, and at Rustenburg’s Waterfall Mall.

“What’s good for the planet is also good for business,” says Van Antwerpen. “Reducing electricity and water consumption reduces utility charges. We constantly push the boundaries of sustainability and are focusing on creating space for our clients to thrive.” +27 (0)11 944 6249, Growthpoint.co.za

INNOVATIVE

rowthpoint Properties Limited won the first-ever International Lighting Project of the Year award at the 2014 Lux Awards in London recently.

In a massive energy-saving project, Growthpoint undertook a low-energy retrofit, introducing more than 100 000 energyefficient lamps and light fittings in 157 of its multi-tenanted office, industrial and retail buildings across South Africa, over a period of 10 months.

The solution was provided

by Aurora Lighting and Standard Electrical, helping Growthpoint – and South African businesses – achieve carbon savings of 12 000 metric tons a year and demand savings achieved of 5,5MW for an annual energy savings of 22 500 MW hours. Chosen as the most outstanding project outside the UK and the Republic of Ireland, Growthpoint’s pioneering energy efficiency beat out remarkable projects from Germany, UAE and Turkey.

“We are thrilled about this recognition,” says Growthpoint CEO Norbert Sasse. “Energy efficiency at our properties is important to our environmental sustainability. It also takes pressure off the national electricity grid and supports our clients by helping to keep their occupation costs lower.”

Commercial properties are large global energy users, and increasingly businesses are burning the candle at both ends, explains Werner van Antwerpen, who heads up sustainability and utilities

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

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

Be part of this exclusive award category 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 Excellence 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

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

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2015/01/14 10:04 AM

industry news

PGP to market Rosebank’s Latest Sandton new Park Central addition challenges P traditional developments

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ollowing the global trend of demand for more flexible, serviced office space, the latest addition to Sandton’s commercial property sector challenges what many developers have considered the “norm”. Situated at 150 Rivonia Road in Sandton, the development has been designed around meeting the demand from entrepreneurs and small to medium enterprises (SMEs) for more flexibility when it comes to office rentals. What truly sets it apart from other commercial lease offerings is that tenants have unique access to a private investor network, giving investment-ready companies the opportunity to attract and secure such investment.

This has created a stir among many SMEs as this is the first time such a concept has been introduced in South Africa. The Business Exchange, developed by investment guru David Seinker, offers both local and international businesses fully serviced and flexible office space, while also providing complete access to marketing, digital and public relations services.

“We developed this commercial space concept around the rising trend and demand for more flexibility and fully serviced offices, offering not only space but also access to resources that many SMEs do not have and which many cannot afford as additional outsourced services,” says Seinker, “We introduced access to an investor network as our market research showed that this was a growth-limiting factor for most SMEs. “We anticipate much investment as these private investment funders are ranked among some of the wealthiest individuals in Southern Africa and have completed investment deals totalling R62-million to date. Sandton will always be in demand because of its infrastructure and proximity to various businesses but setup costs, rental agreements and a lack of flexibility and resources can be crippling for entrepreneurs as they start up their ventures. They are driving the demand for such flexibility and access to resources in the Sandton area, and many property developers are being forced to take note.”

The Business Exchange, offering a variety of office setup options, features a reception area and welcome lounge for all tenants, fully equipped meeting rooms, complete IT and telecoms infrastructure, parking, and a café, restaurant and bar within the building.

The space will house 40 businesses with rentals starting from R11 000 a month. In addition, the company is offering a virtual package for budget-tight entrepreneurs who require a prime address with access to meeting-room facilities.

The company will also be targeting international corporates who require flexible office space, enabling them to grow into Africa. “150 Rivonia Road is the first building to launch under The Business Exchange,” says Seinker. “In the next five years, we aim to house more than 1 000 businesses across the country. From there, we will look to expand further into Africa.”

The Business Exchange in Sandton will open its doors in February 2015. +27 (0)11 589 9020, Thebusinessexchange.co.za

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am Golding Properties (PGP) has been awarded an exclusive mandate to market Park Central, a luxury high-rise residential property development in the heart of Rosebank. This was announced recently by the PGP Group CEO, Dr Andrew Golding.

“Pam Golding Properties is honoured to market the properties of a residential development that is both revolutionary in its concept and unprecedented in its scope for the area,” he says.

“The block will also assist in further stimulating the rapidly growing local economy of Rosebank. With its modern design, Park Central is set to become the landmark residential building of the Rosebank area.

Offering a compelling combination of ‘green’ and Manhattan-type lifestyles within a secure environment, this residential development will offer the people of Johannesburg a completely new model of urban living.”

Golding explains that Park Central has been designed around a pedestrian precinct

incorporating landscaped parks and sky gardens, and will have all of the convenient facilities of Rosebank available, including the Gautrain Station and the Rosebank Mall, both of which are within easy walking distance.

Medical facilities, hotel and conference facilities, schools, art galleries, a public library, parks and a number of office blocks, company headquarters and other commercial buildings are also within easy reach of the development. Park Central is being developed on the corner of Baker Street and Keyes Avenue in Rosebank, and will consist of more than 400 luxury one- and two-bedroom apartments, as well as three-bedroom penthouse units with a choice of the highest quality finishes, said Golding.

The sectional title apartments will be priced from R1,75-million and marketed off-plan. Peet Strauss, Development Manager at the PGP Hyde Park office, points out that with R7-billion in investment in commercial buildings alone, the Rosebank precinct has undergone rapid growth in recent years.

Attacq closes successful R640-million capital raise

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ttacq Limited successfully closed a R640-million capital raising recently.

Originally seeking to raise capital of about R500-million through an accelerated book-build, strong demand resulted in increasing the capital raise to R640-million through the placing of 29 629 630 shares at a price of R21,60 per share.

The R640-million was raised to allow Attacq the ability to acquire the remaining 18,8% of its key asset, the Waterfall pipeline, and take full control of the strategic

planning of Waterfall, including the rollout of its infrastructure. This strategy has been formulated jointly with Atterbury Property Holdings, which is increasing its deployment of development capacity in other markets including central and eastern Europe, a direction that supports Attacq’s diversification strategy.

Atterbury’s exclusive right as developer of Waterfall will also be amended to allow Attacq the option to partner with other developers as a means of accelerating the Waterfall development.

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On TOP And On TrEnd: industry news “The residential property market in Rosebank has grown hand in hand with this and the demand for well-situated property in the area has been unprecedented,” says Strauss.

“Rosebank is now being associated with a highly colourful, dynamic and convenient urban-chic lifestyle.”

Strauss says that with stateof-the-art security, the safety of residents will be given top priority.

Some of the amenities that will be available include secure pedestrian precincts, a landscaped park, 30 sky gardens scattered throughout the building as common green space, a clubhouse, a swimming

pool, entertainment areas, a coffee shop, a bar/restaurant, a crèche, a gym, a braai area that includes a pizza oven, and lounge and entrance foyer with a concierge.

The building will have a Green Star SA rating. “Park Central is the largest and most exciting residential development concept to ever come online within the Rosebank precinct,” says Strauss.

“It is an indication of how much confidence the developers have in the property market in the area. PGP is looking forward to marketing these quality homes.” +27 (0)11 325 0659, Pamgolding.co.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.

Easily accessible This is a customised, central training platform that can host all training material This will come into effect from 2018. Atterbury will still retain a 20% undivided interest in the Mall of Africa, Waterfall’s superregional mall opening in April 2016.

In keeping with the continuing strategic relationship between Attacq and Atterbury, Attacq has secured a pre-emptive right for defined material developments to be undertaken by Atterbury, locally and internationally, ensuring Attacq’s continued access to Atterbury’s development pipeline. “The excellent result of Attacq’s capital raising reflects a healthy appetite in the market for Attacq shares and demonstrates strong support for our strategic direction,” says Morné Wilken, Chief Executive Officer of Attacq. +27 (0)10 596 8892, Attacq.co.za

Available any way, anytime and from anywhere Built-in communication functionality accredited and certified with

registration information

Training Coordinator Po Box 78544, sandton 2146 T: 011 883 0679 F: 011 883 0684 Email: hr-education@sapoa.org.za

Launched in September 2014

Morné Wilken Chief Executive Officer of Attacq

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2015/01/14 12:46 PM

education, training and development

Casting light on skills development In light of skills shortages in South Africa, SAPOA is undertaking research relating to capacity and transformation in the commercial property industry Photographs by Michael Glenister

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

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ith skills development as a key Property Sector Transformation Charter pillar and priority element, it’s imperative for the commercial property industry to address issues pertaining to skills shortages and transformation within the sector.

Transformation in the property sector continues to be a very important focus area. Furthermore, time is of the essence for the property industry to adapt its Property Charter as the April 2015 deadline to align the Property Charter with the Department of Trade and Industry’s Revised BBBEE Act and Codes is looming.

In light of this, SAPOA is undertaking research to determine the capacity and skills development needs relating to skills throughout the industry, regardless of whether they are employed by companies that belong to SAPOA or not.

SAPOA HR, Education, Training and Development Manager Martin Ferguson addresses the industry’s HR managers about SAPOA’s research on capacity and skills development needs in the commercial property sector

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“If we are going to try to address the industry’s challenges, we need to develop a comprehensive understanding of the skills gap within the property sector,” says SAPOA President Amelia Beattie.

Beattie highlights that SAPOA has long recognised that our industry’s workforce needs to be future-ready, and that the widening skills gap needs to be addressed now more than ever.

“High levels of investment in human capital and strong education systems are drivers of economic growth,” she says.

“In order to prepare ourselves for future growth and for the sector to be globally competitive and contribute positively to the South African economy, we need to identify the critical and scarce skills in the sector.”

The research was highlighted at a recent SAPOA breakfast session, which was attended by human resources managers from some of the industry’s leading companies.

The research seeks to understand facets affecting capacity in the property industry. The results will be used to understand and analyse the skills shortages in the industry; to determine the growth and/or decline of jobs that the industry experienced over the past 10 years; and to determine the current status quo in terms of employment equity.

Furthermore, the research will determine the scope, depth and investment of commercial property education and training required, as well as determining the future capacity required and identifying possible stumbling blocks to achieving the growth needed.

The research will also determine the level of funding and bursaries required to address the industry skills shortages. In line with this, the organisation has invested itself in the funding of budding property students.

In an effort to address issues of transformation in the property industry and to alleviate the skills shortage in the country, SAPOA established a bursary fund scheme that has garnered some success since its inception.

“About five years ago, the SAPOA Bursary Fund was initiated with the sole objective to create a fund in the commercial property industry for scholarships and bursaries for previously disadvantaged individuals,” says SAPOA Chief Executive Officer Neil Gopal.

“These students are taken through a four-year degree, with the fund fully managed at the SAPOA head office, which keeps the intensive administrative matters out of our member’s hands.

The students are placed with member companies

by SAPOA upon completion of their degree.”

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education, training and development education, training and development o p t i m a l e n g i n e e ring Gopal says that since the first intake in 2010, seven students have graduated through the SAPOA Bursary Fund, and most have already been placed with member companies. Another six students will graduate in 2015.

“In the grand scheme of things, these numbers are small and there is much more work to do,” says Beattie. “We need to continue to mobilise the corporate citizenship arms of our members, to help ensure that the skills gap in our industry is addressed.”

“We need about 50 students to graduate every four years, which is going to require time and money as well as the industry’s support,” says Gopal. “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.”

Beattie believes that education is a powerful tool and that it can make a meaningful difference in transformation. SAPOA’s skills development initiatives could provide a focused solution for the transformation area of skills development by enabling members to channel spend to a recognised education programme.

Once completed, a summary of the results will be published on the SAPOA website. Furthermore, the full report and an implementable skills plan is earmarked to be released at the 47th Annual SAPOA International Convention and Property Exhibition in Durban in May this year.

Rosebank Towers Rosebank, Johannesburg

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www.sutherlandengineers.com SAPOA President Amelia Beattie is passionate about education

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2015/01/14 10:34 AM

education, training and development

EAAB CPD cycle roll-out The EAAB is rolling out the first three-year CPD cycle this year, with the assistance of workshops and events nationwide

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he Estate Agency Affairs Board (EAAB) is rolling out the first three-year Continuing Professional Development (CPD) cycle, which commenced on 1 January 2015. From this date, the EAAB will be offering participants an extensive diary of workshops and events around the country.

It is also envisaged that participants will shortly be able to accrue a set number of verifiable CPD points via e-learning mechanisms. This will particularly assist those participants who do not reside, or conduct business, in the major metropolitan areas.

It should be noted that some participants who previously attended specified EAAB audit compliance workshops during 2013 and any one of the annual roadshows in 2014 are entitled to accrue CPD points for attendance at those events.

These points will be allocated to the participants concerned for the 2015 calendar year. As with all other verifiable CPD points, these points will be reflected on the My EAAB portal per individual.

Applicable fees After undertaking extensive research, the EAAB has determined that the following fees will be payable by all estate agents on the CPD cycle for the 2015 calendar year: ●● Non-principals: R2 000 per annum due on or before 28 February 2015. ●● Principals: R2 500 per annum due on or before 28 February 2015.

Such fees are payable by participants yearly in advance by no later than 31 January of each calendar year. Payment of these annual fee entitles participants to attend as many

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CPD workshops, events and interventions presented by the EAAB as may be necessary for them to acquire the mandatory 15 verifiable CPD points per year.

It is to be emphasised that no provision is made for payment at the workshops, events and interventions themselves.

Participants who have failed to pay upfront will be denied entry to CPD workshops, events and interventions.

The EAAB will be addressing the requisite statements of account in this respect to all participants on the CPD cycle in due course. It would be appreciated if payment thereof could be effected by participants by no later than the dates referred to above. This will enable the necessary administrative arrangements for the CPD workshops, events and interventions to be timeously finalised.

Using the My EAAB portal It is expected that all participants will frequently access the My EAAB portal at Eaab.org.za, so as to be fully aware of, and regularise, their CPD activities, and to ensure compliance with the mandatory CPD requirement of accruing 15 verifiable and five non-verifiable CPD points per year.

The My EAAB portal will also contain a comprehensive diary of scheduled CPD workshops, events and interventions for the 2015 calendar year, thus enabling participants to decide which specific events, when and at which venue they would prefer to attend as the most convenient to them. The obtaining of the required verifiable CPD points can thus be planned for in advance by participants.

It will be found that the My EAAB portal contains both declaration and a personal development plan. These documents must be electronically completed by each individual participant and submitted to the EAAB.

The declaration The declaration is relevant to the proposed accrual by each participant of the required five non-verifiable CPD points per year. Participants may accrue such points from a maximum of three of the identified nonverifiable CPD categories.

A participant may, for example, declare that, in the first year, two points will be obtained in the professional development category, two points in the personal development category and one point in the corporate social investment category. The same principle will thereafter apply for the ensuing two years of each CPD cycle.

A further declaration will similarly be required to be submitted by the participant for each of the additional years of the CPD cycle. While the declaration form has been designed to be as user-friendly as possible, participants are required to carefully consider and reflect on the nature of the non-verifiable CPD activities they wish to pursue in each of the three years of the CPD cycle, with special regard as to how the obtaining of those points can add value, both personally and professionally, to their role as practising estate agents.

The personal development plan Completion of the personal development plan by participants will ensure their meaningful

participation in, and commitment to, CPD workshops, events and interventions. Participants must have specific regard to those identified CPD activities which they believe will be the most beneficial to them personally, and in the business and professional estate agency environments in which they operate and interact.

Empirical evidence suggests that participation in relevant CPD events is invaluable in not only in creating structured career path progression but also in addressing the educational and compliance gaps that will invariably exist where estate agents are concerned.

CPD should, essentially, be positively viewed and embraced by participants as a valuable career-enhancing opportunity, rather than negatively as an onerous imposed chore that must be complied with.

Submission The declaration and personal development plan must, after completion, be submitted by participants to the EAAB by 31 January of each calendar year.

Participants will, however, be granted a further period of three months after 31 January within which to reconsider their original CPD choices and to make any changes they feel are necessary to accommodate their desired developmental programmes.

From 1 May of every year, the declaration and personal development plan as submitted by each individual participant will be accepted by the EAAB as constituting the finalised CPD programme of that participant for that year. Participants will, accordingly, be routinely required to comply with the submitted plans.

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2015/01/14 10:38 AM

education, training and development

Lecture with SAPOA Are you interested in lecturing on a SAPOA educational programme or being a presenter at a workshop? SAPOA is now offering you the chance to do so

S

APOA partners with various universities, including the University of Cape Town, University of Pretoria, Free State University, University of Johannesburg, Nelson Mandela Metropolitan University, and the University of the Witwatersrand to offer professional property education courses.

SAPOA runs several basicto high-level education courses ranging from three days to oneyear certificate programmes.

The courses are offered on a national basis, making them

easily accessible to the commercial property industry.

SAPOA also offers workshops in all our regions on various relevant topics that are of interest to the commercial property industry.

As a member-based association and with various professionals in the industry, we are calling on members from all regions to register their interest with the SAPOA HRD Department as a lecturer and/or workshop presenter in the following topics:

●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●●

Property economics Property valuation Property investment and REITs Asset or portfolio management Property and facilities management Tourism in the property market Financial feasibilities Commercial property finance Property tax Property law Town planning Property development Architectural design

●● Green buildings and energy efficiency ●● Project management ●● Construction, health, safety and building regulations Interested members can send their CVs to Mafonti Morobi at hr-education@sapoa.org.za, detailing the following: ●● Area of expertise ●● Highest qualifications ●● Working experience ●● Residential area ●● Contact details ●● Lecturing experience

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2015/01/14 10:38 AM

legal update

What’s fair is fair With the advent of the Consumer Protection Act, consumers who enter into contracts have more ground to stand on as the spotlight on unfair stipulations in contracts has been strengthened

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

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ontracts are entered into between parties with the intention to create legal obligations that, in principle, speak to the core of the law of contracts. The elements of a valid contract are consensus, capacity, formalities, legality, possibility and certainty.

The law of contract is concerned to a great extent with fairness in contractual transactions.

However, fairness in contracts cannot be looked at in isolation: it essentially goes hand in hand with specific considerations.

These include equity, good faith and public policy.

In my view, all three considerations are crucial, and a strong case can be put before the court if all of the considerations can be proved to have been violated. There are, however, circumstances that would automatically lead to a contract being void. For instance, should consent be obtained fraudulently, by mistake or by duress, this would equate to a contract being struck out by the courts. Good faith is viewed as honest and sincere intention or belief. This concept should be carried out from the formation of the contract until the enforcement of the contract.

Good faith has been debated over the years and the view is that courts should have a robust approach to this concept in order to transform thoughts around contracting, with the ultimate goal being to have substantive equity in contracts. Equity is defined as fairness.

Public policy is defined in Barkhuizen v Napier. The Constitutional Court stated as follows: “Notions of fairness, justice and equity, and reasonableness cannot be separated from public policy.

Public policy is informed by the concept of Ubuntu.” Simplified, this can be described as norms, values and standards that are representative of respect and ethical behaviour. This standard would be determined by societal views of morality. Public policy seeks to grant protection to parties and a method of weighing whether the contract was prejudicial to a specific party.

Contracting parties’ position Parties that have entered out of their free will into a contract are held to a higher standard. Such parties are expected to have read and understood what they have contracted into and ultimately put their signature to. Generally, persons who sign contracts are bound by the ordinary meaning and effect of the words.

The term “you have signed your life away” is one parties are expected to be aware of. Caution is expected to be exercised at all times. This approach of our common law was confirmed

by Professor HR Hahlo of Wits University in 1981: “Provided a man is not a minor or a lunatic and his consent is not vitiated by fraud, mistake or duress, his contractual undertakings will be enforced to the letter. If through carelessness or weakness of character he has allowed himself to be overreached, it is just too bad for him, and it can only be hoped that he will learn from his experience. The courts will not release him from the contract or make a better bargain for him.

Darwinian survival of the fittest, the law of nature, is also the law of the market-place.”

This seems to be a very harsh and strict approach. The courts should have a balanced view taking into consideration broader

aspects of contractual law and holistic circumstances. Regard should be taken to the context and purpose. Protection would more likely be given to parties who are illiterate, come from disadvantaged backgrounds where they have had minimal exposure to such transactions, and have poor language skills – in other words, people who are classified as having unequal bargaining positions at the conclusion of the contract. Such parties are assumed to have been taken advantage of, and protection should therefore be imminent.

It was held in Afrox Healthcare v Strydom that, “The elementary and basic general principle was that it was in the public interest that contracts entered into freely and seriously, by parties having the necessary capacity, should be enforced,” and that, “The question is whether upholding the relevant clause or other term would be in conflict with the interests of the public as a result of extreme unfairness or other policy issues.”

Further it was held in Barkhuizen v Napier that “Thus a term in a contract that is inimical to the values enshrined in our Constitution is contrary to public policy and is, therefore, unenforceable.”

Protection in terms of the Consumer Protection Act The advent of the Consumer Protection Act No. 68 of 2008 has provided solace for consumers who enter into contracts. The position has remained and been maintained that the correct way of protecting consumers against unconscionable contracts or clauses is to provide mechanisms in consumer legislation.

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legal update

According to the Act, a supplier is defined as: • A person who markets any goods or services.

A consumer is defined as (in respect of any particular goods or services): • A person to whom those particular goods or services are marketed in the ordinary course of the supplier’s business; and • A person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business, unless the transaction is exempt from the application of this Act by Section 5(2) or in terms of Section 5(3).

Consumers are protected under the Act, with the exception of a juristic person whose asset value or annual turnover at the time of the transaction equals or exceeds the threshold value of R2-million.

Section 48(1)(a) prohibits a supplier from offering goods or services on terms that are unfair, unjust and unreasonable.

Section 48(2) then gives specific examples of prohibited agreements and terms. These include the following conditions: • It is excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied; • The terms of the transaction or agreement are so adverse to the consumer as to be inequitable; • The consumer relied upon a false, misleading or deceptive representation as contemplated in Section 41, or a statement of opinion provided by or on behalf of the supplier, to the detriment of the consumer; • The transaction or agreement was subject to a term or condition, or a notice to a consumer contemplated in Section 49(1);

• The term, condition or notice is unfair, unreasonable, unjust or unconscionable; and • The fact, nature and effect of that term, condition or notice was not drawn to the attention of the consumer in a manner that satisfied the applicable requirements of Section 49.

The courts are empowered to consider certain facts when determining whether the contract is unfair. These include: • The fair value of the goods or services in question; • The nature of the parties to that transaction or agreement, their relationship to each other and their relative capacity, education, experience, sophistication and bargaining position; • Those circumstances of the transaction or agreement that existed or were reasonably foreseeable at the time that the conduct or transaction occurred or agreement was made, irrespective of whether this Act was in force at the time; • The conduct of the supplier and the consumer, respectively; • Whether there was any negotiation between the supplier and the consumer, and if so, the extent of that negotiation; • Whether, as a result of conduct engaged in by the supplier, the consumer was required to do anything that was not reasonably necessary for the legitimate interests of the supplier; • The extent to which any documents relating to the transaction or agreement satisfied the requirements of Section 22; and • Whether the consumer knew or ought reasonably to have known of the existence and extent of any particular provision of the agreement

that is alleged to have been unfair, unreasonable or unjust, having regard to any: – custom of trade; – any previous dealings between the parties; or – the amount for which, and circumstances under which, the consumer could have acquired identical or equivalent goods or services from a different supplier.

It is important for parties entering into a contract to bear in mind that the purpose of the contract is ultimately to mitigate risks and manage expectations

Conclusion The court can decide whether the agreement was indeed unconscionable based on the satisfaction of the above factors.

The two positions are set in law. If, under the Act, one is considered as a consumer, then the avenue to take would be to seek redress by going to court and allowing the court to decide whether indeed the contract is unconscionable, unfair and unreasonable. The other position is that there is a duty of care that is expected from the contracting parties to have read the contract, and assented by way of signature and conduct. The onus would therefore lie with the aggrieved party to prove that a contract which they had consented to was unconscionable.

This would be very hard to prove in a court of law, and the question of negligence is likely to be examined by the court, as the aggrieved party could be viewed as having acted negligently and therefore suffering the consequences for such an act. It is important for parties entering into a contract to bear in mind that the purpose of the contract is ultimately to mitigate risks and manage expectations. The sanctity of contracts must be upheld at all times, while unscrupulous parties who act in a mala fide manner must feel the might of the law.

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planning and development

An update on the Spatial Planning and Land Use Management Act (SPLUMA) 1 Background

Lekgolo Mayatula is SAPOA’s Planning and Development Manager

The purpose of this circular is to inform SAPOA members of the latest developments and progress made on the finalisation of the proposed SPLUMA Regulations, to enable the implementation of SPLUMA

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1.1 The purpose of this circular is to inform you of the latest development and progress made in the finalisation of the proposed SPLUMA Regulations, to enable the implementation of SPLUMA. 1.2 SPLUMA was signed into law by the President on 2 August 2013, and formally published in the gazette on 5 August 2013.

The Minister of the Department of Rural Development and Land Reform (DRDLR) gazetted and published Draft Regulations in terms of Section 54 (1) of SPLUMA on 4 July 2014 for a period of 60 days for comments. The DRDLR further re-published the Draft Regulations for a period of 30 days, with the new date for the closing of the commenting period set at 10 November 2014.

The DRDLR is currently in the process of considering the comments received. The purpose of the re-publication was to allow for more time for interested parties to provide comments on the Draft Regulations.

It must be noted that the re-published Regulations are exactly the same as those published on 4 July 2014.

1.3 On 3 October 2014, a national working group (NWG) was established to propose suggestions on the completion of the Draft SPLUMA Regulations. The meeting resulted in the establishment of five thematic working groups (TWGs), whose function was to deliberate on the five themes of the Draft Regulations. Furthermore, the TWGs met on 9 October 2014, when key issues for consideration from the five thematic areas were presented and discussed. The composition of the five TWGs was such that there was representation form each province. The representation includes various national departments, provincial government and municipalities.

1.4 The NWG met on 16 October 2014, and it was agreed that the framework approach to the drafting of Regulations is preferred.

On 23 October 2014, the convener of the NWG concluded Chapter 6 of SPLUMA required immediate regulation, in order to implement SPLUMA. 1.5 Some principle decisions were taken on 16 October 2014. These were then ratified at the meeting on 23 October 2014, and included: • That the proposed Regulations should take the form of a set of Regulations and should as such give broad minimum standards to be completed with, recognising the difference in competencies of the three spheres of government involved; • That the proposed framework Regulations are to contain a minimum set of Regulations to enable the implementation of SPLUMA; • That the Regulations are to be supplemented by a set of Standard Draft Municipal Land Use Planning Bylaws to be presented to municipalities for their adoption, with or without amendments; • That SPLUMA may have different sets of Regulations, some of which may come at a later stage, especially where they are not needed right now to be able to implement SPLUMA; • That it is recognised that the Regulations and the proposed bylaws will not be the only regulatory instrument for land use planning, and that they will also be supplemented by various sets of guideline documents and pro-forma documents such as standard agreements, standard notices, application forms etc; • That suitable exemption clauses be adopted to make provision for provincial and municipal differentiation.

(This is dependent on the content of the Regulations); • That it is imperative for SPLUMA to be implemented as soon as possible; • That the supporting regulatory instruments be expanded and further developed as time goes on and more experience is gained;

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planning and development • That the Act be scrutinised to determine which sections of the Act require Regulations right now to be able to implement SPLUMA as a minimum.

Chapter 6 of the Act was singled as a Chapter to be considered In more detail

by TWG 4; and • That TWG would interrogate the existing proposed Regulations to determine, in light of the above, which of the clauses can remain, which are to be adjusted and which are to be omitted, and for those to indicate whether or not these should be taken in later Regulations, bylaws or guidelines.

2 Resolutions of the 3rd NWG meeting 2.1 The new structure of the proposed Draft SPLUMA Regulations to be drafted, which primarily focuses on regulating Chapter 6 of SPLUMA, was adopted by the NWG on 4 November 2014.

2.2 Thematic Working Group 1 and 4’s presentation on the section of Chapter 6 of SPLUMA to be regulated, including sections requiring bylaws and guidelines, was adopted by the NWG, and includes the following:

Section

Bylaw content

33(1) &(2)

Additional matters

37(2)

T&C of MPT members

37(4)

MPT members nomination procedure

40(1)-(4)

MPT procedures, operations and oral hearing

44(1) & (2)

How and where application is to be submitted and handled

43(1)

List of matters to be considered in conditions of approval

44(1) & (2)

Detailed time frames for application procedures (add to 10 + 4)

44(3)

Standard matters for consideration by all decision-makers

46

Process after approval iro SG and Registration of Deeds

47(1)

How and where application is to be submitted and handled

48-50

Investigations,engineering services and parks and opens spaces

Section

Guideline content

Regulate now

Brief content proposal

33(1)

Where to submit application and to whom

33(1) & (2)

Mun to decide on application process and alignments

34(1) & (2)

Pro-forma agreements and district involvement

34(1)

Provide for minimum content of JMPT agreement

34(3)

Pro-forma notice

36(2)-(4)

Minimum regulation on nomination procedure

35(1)-(4)

MPT type, categorisation and authorised official resolutions

37(2)

Regulations on terms and conditions of MPT members

37(2)

38(5) & (6)

Minimum regulation on nomination procedure (replacement)

T&C of appointment of MPT members and N&S of not in Regs

37(3)

40(1)-(4)

Mun to determine way of MPT operational issues

Legally vetted guidelines for Section 139 intervention

37(4)

Provide pro-forma notice

40(5) & (6)

Use existing Reg 69 and accessibility of S 31(2) of Act

38(2)

41(1) & (2)

Mun to determine applications, approval and thereafter

Guidance on process to remove disqualified MPT member

44(1) & (2)

10 months to complete and four months for decisions

38(3)

Guideline on disclosure of interest

45(2)

Procedure to intervene and cost allocation

40(1)-(4)

MPT operation and procedures

47(1)

Mun to determine applications, approval and thereafter

41(1)-(2)

How to regulate for submission of applications

51(2)

Appeal to ready for decision 150 days

42

Public interest, transformation imperatives and agricultural land

52 (Yes & No)

National interest

42(2)

How to ensure compliance with environmental legislation

On 3 October 2014, a national working group was established to propose suggestions on the completion of the Draft SPLUMA Regulations.

The meeting resulted in the establishment of five thematic working groups (TWGs), whose function was to deliberate on the five themes of the Draft Regulations. Furthermore, the TWGs met on 9 October 2014, when key issues for consideration from the five thematic areas were presented and discussed.

The composition of the five TWGs was such that there was representation form each province.

The representation includes various national departments, provincial government and municipalities

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planning and development It has to be accepted that a new date for envisaged SPLUMA implementation be communicated. There has to be a date set to work towards so as to inform a timeline for completion of minimum actions

Section

Guideline content

43(1)

Standard matters in conditions of approval (b) proscribed

33(1) & (2)

Additional matters

37(2)

T&C of MPT members

44(1)-(2)

Written submission, and where and how to do oral hearings

44(3)

Detailed time frames suggestion

45(3)

How to deal with and consider intervener applications

46

Dealing with applications not in accordance with title conditions

47(1)

Notification process of submission and relevant considerations

47(4)

How to deal with conditions to benefit of state

51(3)-(7)

Pecuniary and proprietary interest

52

What is national interest, how to deal with it, who deals with it and status of decision

to be drafting the proposed Standard Draft Municipal Land Use Planning Bylaws so as to be clear on the extent of the content thereof, and to prevent interpretation issues.

3 Proposed schedule till 1 July 2015

2.3 The dates for the completion and approval of the Regulations as proposed by the NWG on 4 November 2014 included: • TWG Chairpersons and Deputy Chairpersons 2nd meeting: 17 November 2014 • Final NWG 5th: 3 December 2014 • Proposed Closing NWG Meeting/NCF: 10 December 2014 2.4 The legal drafting team would in the 14 days after 4 November 2014 revisit and redraft the exiting proposed regulations, mindful of the decisions/instructions given by the NWG meeting on 4 November 2014.

It is of utmost importance that the content of the Regulations be finalised as soon as possible to be able to fully inform the team

3.1 It has to be accepted that a new date for envisaged SPLUMA implementation be communicated. There has to be a date set to work towards so as to inform a timeline for completion of minimum actions.

Since 1 July 2015 marks the date of implementation of the new municipal financial year, it was proposed that 1 July 2015 would be the new target date. It is a rather tight framework, and to reach this objective, the cooperation and commitment of all involve would be required.

3.2 Agreement was thus made with regards to administrative and other functions of municipalities and provinces, which is to ensure that implementation of SPLUMA is budgeted for, and preparation in regard thereto is planned towards the date of 1 July 2015.

3.3 The schedule of dates to ensure the effective start towards the implementation of SPLUMA is indicated below: • SPLUMA Draft Regulations approved by the Minister: 1 January 2015 • Bylaws, delegations and tariffs: 1 April 2015 • Land use regulators, MPTs and Appeal Authority: 1 July 2015 • Provincial SPLUMA legislation: 1 July 2015 • Training and capacity building: 1 March 2015 to 1 July 2015 3.4 Further communication in this regard is to follow. The DRDLR would like to thank you for your continued participation in this process to improve the spatial planning and land use management functions of the three spheres of government in South Africa.

Schedule towards the implementation of SPLUMA Oct-Dec 2014

Jan-Mar 2015

Apr-June 2015

1 July 2015

2015-2016

Regulations Bylaws, delegations, tariffs, etc Setting up land use regulations (MPTs & approval authority) Provincial SPLUMA legislation Training and capacity building Commencement date 22

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Con

s

6

E

planning and development t. 196

THE REAL IN REAL ESTATE

property, people, purpose & passion

ANNUAL SAPOA INTERNATIONAL

CONVENTION AND PROPERTY EXHIBITION

DURBAN - ICC 19 - 21 MAY 2015 ! e t a d e h t e v a S

Enquiries: Jane Padayachee: t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: marketingmanager@sapoa.org.za

www.sapoaconvention.co.za SOUTH AFRICAN PROPERTY REVIEW

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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

ECA Consulting

E

CA Consulting is a civil and structural engineering consultancy that is proud to be part of infrastructure development in South Africa’s cities, towns and rural areas, transforming the lives of many citizens.

For the past 21 years, ECA Consulting has surpassed industry standards, with a team of highly skilled, award-winning engineers and design specialists. Founded in 1993 in Vryheid, KwaZulu-Natal by Ernst Cloete, ECA Consulting originally specialised in commercial and industrial development. The company soon expanded to offer consulting civil engineering services in related disciplines, including civil construction, water provision, roads and transportation, public sector infrastructure, regional planning and property development.

Apart from expanding its scope, the company has widened its operations to include additional offices in Mbombela, Mpumalanga and Ladysmith, KwaZulu-Natal.

ECA Consulting offers various specialist services to assist private and public sector clients in disciplines such as water and waste water treatment facilities; bulk water supply networks, pumping schemes and

Eugene James Bosch, Managing Director of ECA Consulting

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reservoirs; structural design; roads and transportation; property development and township infrastructure; and geographic information studies (GIS).

“We pride ourselves on being one of the most dynamic, reliable and thorough structural civil engineering companies in South Africa,” says Eugene James Bosch, Managing Director of ECA Consulting. “At ECA Consulting, we adapt our services and designs to meet with the needs of developers, so they can align their business with the demands of an ever-changing market. The intended end land use of townships is also taken into consideration when we design and implement the required services. At ECA Consulting, we coordinate development activities, converting ideas into real property.”

Bosch explains that enduring relationships have been built over the years with many government departments, such as Public Works, with the planning, design and construction of schools and clinics throughout a number of municipal areas. “We have a reliable track record of completing municipal and provincial road projects for several provincial and municipal roads authorities by adhering strictly to exact standards and timelines,” he says.

Urban and rural townships benefit substantially from ECA Consulting’s GIS services, which use proven methods for collecting community-specific information on real and pressing needs such as schools, clinics, roads and bulk water systems.

Since 1993, ECA Consulting has been involved in the development and refurbishment of water purification and waste water treatment facilities. Extensive knowledge on water treatment processes has enabled ECA Consulting to introduce new technology, building on the water treatment principles of the engineers who’d gone before.

ECA Consulting also assists with the construction of temporary package water treatment plants, providing communities with clean drinking water until a bulk or regional water supply is brought online.

The team’s knowledge and experience makes it particularly adept at handling emergency municipal water supply situations, ensuring that municipal officials can focus on communication, while ECA Consulting handles everything else.

Working alongside many municipalities, ECA Consulting enjoys playing a pivotal role in the upgrade and enhancement of public facilities, says Bosch. “We offer design services, and assist emerging contractors on site to facilitate the construction of affordable and low-cost residential housing.

We are fully dedicated to the upliftment of our people.”

ECA Consulting believes in the transformation of South Africa, and is verified as a small enterprise with a Level 3 BEE contribution classification and with a recognition score of 80%. ECA Consulting is a 100% South African-owned company.

All the company’s shares are held by the employees themselves. ECA Consulting is also a member of the Association of Consulting Engineers of South Africa.

With a mission statement of “Changing lives through the delivery of sustainable, cost-effective engineering solutions with integrity”, the company is also committed to assisting previously disadvantaged individuals. “Our commitment to training and mentorship is evident in our in-service civil and structural engineering training programmes and annual bursary awards,” says Bosch. “A large portion of the company’s budget is directed towards development and education.” +27 0(34) 983 2825, Ecaconsult.co.za

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new members

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theme leader

Transformation: the journey thus far Transformation in the property industry has come a long way since the inception of democracy; however, the journey has only just begun

By Candace King Photographs by Elvis Ntombela

“Transformation is imperative.

It leads to job creation. It leads to money staying in the country, which affects South Africa’s balance of payments. It also leads to skills development.

It’s good for our country’s economy as well as its stability” Thomas Matlala, President of the South African Institute of Black Property Practitioners

A

s cranes dominate the South African skyline, our built environment is constantly being reshaped, with new property developments, grand refurbishments and regenerative projects mushrooming across the country.

While physical development and spatial transformation are imperative for the future stability, inclusiveness and growth of South Africa, the real estate sector has over the years increasingly focused its attention not only on the bricks and mortar but also on the individuals working within the sector, with a particular emphasis on the previously disadvantaged and on black economic empowerment (BEE).

Transformation in the property sector has come to the fore and is now regarded as a must-have, says South African Institute of Black Property Practitioners (SAIBPP) President Thomas Matlala.

Matlala emphasises that a transformed property sector is beneficial for the country as a whole; and that black-owned property companies boasting bright and skilled

Thomas Matlala, President of the South African Institute of Black Property Practitioners

26

Sisa Ngebulana, Chief Executive Officer of Rebosis Property Fund

property practitioners will have to be created. “Transformation is imperative,” he says. “It leads to job creation. It leads to money staying in the country, which affects South Africa’s balance of payments.

It also leads to skills development. It’s good for our country’s economy as well as its stability.”

Strides have been made in the property sector. Over the past four years the industry has seen the rise of new and influential black property players such as Rebosis Property Fund Chief Executive Officer Sisa Ngebulana and Delta Property Fund Chief Executive Officer Sandile Nomvete.

Such players have successfully listed black-managed and substantially owned funds worth billions of rands on the JSE. Furthermore, credit goes to companies such as Growthpoint Properties Limited, Redefine Properties, Hyprop Investments Limited, Vukile Property Fund Limited, Resilient Property Income Fund and SA Corporate Real Estate Fund that undertook BEE transactions in the early to mid-2000s.

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theme leader

FROM LEFT Marius Muller, Chief Executive Officer of Pareto Limited; Ipeleng Mkhari, Chief Executive Officer of Motseng Investment Holdings; and Samuel Azasu, Associate Professor of Real Estate at the University of the Witwatersrand

Hyprop Investments Limited and Redefine Properties also played a key role in transferring skills, balance sheet support and assets to thenunlisted funds Vunani Property Investment Fund, now Texton Property Investments, and Dipula Property Fund (now Dipula Income Fund).

Apart from the private sector, government has also partly played a role in promoting the emergence of black property players.

In 2011, the Department of Public Works (DPW) stopped signing long-term leases with established property companies or individual landlords who lacked empowerment credentials. This was a catalyst for the listing of funds with BEE credentials.

“While much has been achieved in the past 20 years in the property industry through the entry of black players and women, more still needs to be done,” says Matlala.

“The Property Sector Charter by default doesn’t have the same teeth as the other Charters in South Africa,” says Ngebulana.

“For argument’s sake, the Mining Charter acted as a much bigger catalyst for BBBEE given the procurement levels it prescribed.

As a mining house you had to comply to qualify for new mineral order mining rights.

In the property sector, government doesn’t necessarily have this leverage – the DPW is the only mechanism available at a national

“Transformation is non-negotiable; it should be at the pinnacle of everything we do. And it needs to be broad-based” Parks Tau, Executive Mayor of the City of Johannesburg

Progressive yet slow Despite the achievements made, black ownership only constitutes about four percent of the total R400-billion market capitalisation of the South African listed property sector. Unfortunately, black people are still highly under-represented in the high echelons of real power and decision-making in most listed property companies.

According to IPD South Africa research for 2013 and 2014, out of a total of 261 nonexecutive and executive directors, only 53 are black and 189 are white. Black people are over-represented as non-executive directors, meaning they don’t play a role in the operational management of these companies.

The report shows that there are only six black executive directors on the boards of listed property companies.

City of Johannesburg Executive Mayor Parks Tau

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theme leader

Nomzamo Radebe, Managing Director of JHI Properties

“Unless we actively pursue change, we could find ourselves with our very own ‘South African Spring’, where the ‘have-nots’ no longer ask to be included in the mainstream economy, but agitate for change through an uprising” Sandile Nomvete, Chief Executive Officer of Delta Property Fund

level to influence transformation, and even there it is limited to the Incubator Programme applied to only a handful of listed funds.”

Transformation, believes Nomvete, is part of a larger project to ensure that everyone thrives and leads meaningful lives. For him, economic transformation is crucial to creating a stable society. If such transformation is not implemented, he warns, the consequences will be dire and grim.

“Unless we actively pursue change, we could find ourselves with our very own ‘South African Spring’, where the ‘have-nots’ no longer ask to be included in the mainstream economy, but agitate for change through an uprising,” he says. “It is, therefore, very important for us as a society and a sector to avoid such a scenario. In future, as historically disadvantaged individuals increasingly muscle their way into the mainstream economy, the focus will no longer be on skin colour but on class – the rich versus the poor. I believe this would be the greatest challenge for the country.”

Acting on change

Sandile Nomvete, Chief Executive Officer of Delta Property Fund

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Two decades into our democracy, it’s time to act, says Matlala, adding that now is the time for government to implement and enforce policies.

This, among other key transformation topics, was addressed at the 2014 SAIBPP Convention. Held at the Turbine Hall in Newtown, Johannesburg, the one-day Convention offered the property industry a chance to openly discuss its contribution to the overall transformation of the country

given the sensitivity and legacy of property ownership in South Africa.

“We have some of the best policies in the world – but if we can’t implement these policies properly then we won’t achieve anything. Thus implementation is key,” says Matlala.

Pareto Limited Chief Executive Officer, Marius Muller, agrees. “You can’t blame the policy and the vision when you have implemented it badly,” he says. “We need to marry making a profit with transformation.

There needs to be an incentive that business responds to. Making the change, I believe, is a commercial issue.”

“Transformation is not only about addressing the issues of the past; it must make compelling business sense,” says Samuel Azasu, Associate Professor of Real Estate at the University of the Witwatersrand.

Azasu believes that there’s a trust deficit between the public and private sectors.

“When trust is broken, the backbone of business weakens,” he says.

“Government doesn’t make a difference; it’s the people within the government that can make a change,” says Muller.

“Transformation is about changing what is wrong – it can happen and it can be commercially viable.”

While there are challenges when dealing with government, it’s imperative for the public and private sectors to join forces in the transformation journey. Partnerships are key in the transformation of the country, says City of Johannesburg Executive Mayor Parks Tau. “Business needs to advocate and lobby for transformation, and needs to work side by side with government during this process,” explains Tau. “There are a number of areas where we can collaborate in order to drive the process of transformation.

“There’s great opportunity within the property sector in terms of driving transformation. We need to build and develop a city that’s world-class – we need to create access to the city. If we do not, we will never achieve true transformation.”

“There is an under-representation of black people in the sector, thus there is a great need to ensure transformation,” says Nomzamo Radebe, Managing Director of JHI Properties. “There has been a notable change in the sector; however, this progress is slow.

“There is recognition and we have a voice, but we are only a handful and a drop in the

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theme leader

ocean – and we need to tackle this head-on.

We have made strides but we still have a long way to go.”

Having come from humble beginnings, Radebe says that education was the key to her progress and it remains a significant element in her life to this day.

According to Ipeleng Mkhari, Chief Executive Officer of Motseng Investment Holdings, we need to have very aggressive, skills-driven programmes that bring new entrants with the right skills into this market.

The next 20 years Apart from investing in and stimulating education and training, Matlala says that partnering with government will be beneficial for enhanced transformation.

“We need to train students to be the future business leaders,” says Matlala.

“When there’s a problem in society, we cannot solely leave it up to the politicians.

If you turn to government then you need to work with them – we need institutions and government.”

Matlala believes that leadership, a fundamental instrument of transformation, is lacking in the country. “This country lacks leadership, business lacks leadership,” he says.

“The death of business leadership at this time is crippling. What is it that we as business can do to assist our issues?”

“We need to take the emotion out of the equation and stop playing the historical disadvantaged card,” says Muller. “We need to take responsibility and not blame.

Socioeconomic development is not about providing a cheque; it’s about making a difference – provide the rod instead of the fish.”

“Transformation is non-negotiable; it should be at the pinnacle of everything that we do. And it needs to be broad-based,” says Tau. In terms of the road ahead, SAIBPP Past President and Executive Director of Dipula Income Fund Saul Gumede says that SAIBPP’s long-term goals include creating a financially stronger organisation, being more involved in upskilling and education, and intensifying its transformation agenda.

“We need to move into a different gear in order to strengthen transformation,” he says.

Partnerships between established and transforming businesses is imperative, says Mkhari, and getting black women into the industry is also crucial.

“Getting the elements of funding and transformation right is challenging – partnerships can assist here,” she says. “The intent from the public and private sector is where change begins.”

“Change is confused with the word transformation,” says Radebe. “It’s a process that equalises value. We require a paradigm shift to achieve transformation.”

“We have changed the lives of people but we haven’t changed the game,” says Xolani Qubeka, General Secretary of the Black Business Council. “We need to be able to change attitudes, unite and bring forward ideas of improvement and changes for the better.

We need to be agents of change ourselves.”

“We have changed the

Xolani Qubeka, General Secretary of the Black Business Council

lives of people but we haven’t changed the game.

We need to be able to change attitudes, unite and bring forward ideas of improvement and changes for the better.

We need to be agents of change ourselves” Xolani Qubeka, General Secretary of the Black Business Council

Saul Gumede, SAIBPP Past President and Executive Director of Dipula Income Fund

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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

From famine to economic fame, Ethiopia has risen to the top in three decades as one of the world’s most poised emerging markets By Candace King Ethiopia at a glance ▼ Population 94,1-million (2013) ▼ Major cities Addis Ababa (3,4-million), Dire Dawa (0,6-million) ▼ Currency Birr (ETB) ▼ Total area 1 104 300km² ▼ GDP growth 10,6% (2013/2014) ▼ Key industries Agriculture, food processing, beverages, leather, textiles, chemicals, cement

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hen one thinks of Ethiopia, extreme poverty and famine are the first things that come to mind. While these ills have plagued the country for decades, Ethiopia’s image is changing to one that’s prosperous and full of opportunity.

Thirty years ago, Ethiopia suffered a famine that has been dubbed of “biblical”

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proportions, which resulted in the death of more than one-million people. Today, the country is transitioning into modernity and is experiencing high economic growth as one of the fastest growing non-oil economies in Africa.

Situated in eastern Africa, west of Somalia, Ethiopia is now regarded as one of the world’s top five emerging economies right up there alongside China and India. With continued rapid growth across all sectors, Ethiopia is becoming an African powerhouse.

Forget the BRICS and meet the PINEs, said Time magazine in March 2014. As the famous emerging markets of Brazil, Russia, India, China and South Africa have slowed and new exciting markets have ushered in, the Philippines, Indonesia, Nigeria and Ethiopia are the new emerging kids on the block.

Increased political stability, reduced trade barriers and improved governance have all played a role in Ethiopia’s rise. In 2011, Ethiopia’s impressive 11,4% GDP growth placed it on the map as one of the world’s fastest-growing economies.

In the 2012/2013 fiscal year, Ethiopia’s economy grew by 9,7%, the 10th year of robust growth in a row. In 2012, Ethiopia was the 12th-fastest-growing economy in the world. Over the past decade, the average annual real GDP growth rate for the country was 10,9%. From now until 2017, several projections suggest that Ethiopia’s growth will average between seven and 10 percent.

As Africa’s second-largest in terms of population, the biggest landlocked country on the continent, and sub-Saharan Africa’s fifth-biggest economy, Ethiopia has come to be known as a growing nation with a wealth of potential.

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Africa uncovered

eye on Africa

Ethiopia

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Population in thousands

180-310 310-1 500 1 500-4 500 4 500-28 000

Economic and opportunistic wealth aside, Ethiopia is rich in natural resources and boasts cultural and ethnic diversity. The country’s history is even richer: it’s regarded as the true cradle of humankind as fossils dating back 3,2-million years were found in Ethiopia’s Afar Triangle, the oldest record discovered of one of humankind’s earliest ancestors.

Unique among African countries, Ethiopia (along with Liberia) is considered the only county in Africa to never have been truly colonised. The ancient Ethiopian monarchy led by Emperor Haile Selassie maintained its freedom, with the exception of a brief Italian occupation from 1936 to 1941.

Thereafter, monarchic rule came to an end in a coup in 1974, resulting in Ethiopia becoming a socialist state. With the onslaught of coups, uprisings, wide-scale drought and massive refugee problems, the regime was finally eradicated in 1991 by a coalition of rebel forces, the Ethiopian People’s Revolutionary Democratic Front, leading to stability. A constitution was adopted in 1994, and Ethiopia’s first multi-party elections were held in 1995.

Ethiopia is home to one of the oldest Christian churches – the Ethiopian Orthodox Church – and was a founder member of the United Nations and the African base for many international organisations.

Ethiopia’s economy today mainly relies on agriculture, which constitutes close to 50% of Ethiopia’s GDP, with coffee as a key export. In the 2012/2013 fiscal year, it grew by 7,1%, while industry, accounting for 12,3% of GDP, rose by 18,5% and services, with 45% of GDP, increased by 9,9%. This momentum is expected to continue in 2015.

Negatively, frequent drought, poor cultivation practices and climate change affect Ethiopia’s agricultural sector, which has led to the government pushing to diversify into

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manufacturing, textiles and energy generation.

Business opportunities are diverse, and include commercial farming and intensive horticulture, industrial development, agriindustry, construction, mineral mining and metal works as well as services in the tourism and hospitality sectors.

While banking, telecoms, insurance and micro-credit industries are restricted to domestic investors, Ethiopia has attracted significant foreign investment in textiles, leather, commercial agriculture and manufacturing.

Foreign investment has also begun to pick up. Chinese investment has made quite a mark in Ethiopia: Huajian, one of China’s biggest shoe manufacturers, has invested heavily, and currently employs more than 500 people at an industrial park outside Addis Ababa, with ambitious plans for further expansion. Ethiopia’s economy continues to follow its state-led five-year Growth and Transformation Plan implemented in 2010, and has thus far achieved high single-digit growth rates through government-led infrastructure expansion and commercial agriculture development.

The Ethiopian property industry With urbanisation rapidly growing, Ethiopia is undergoing great physical change and development is taking shape. Ethiopia’s citizens are experiencing the change too as the country caters to a rising middle class.

One study has shown that Ethiopia creates millionaires faster than anywhere else on the continent. Ethiopia imports about 10-million litres of wine a year to serve the growing middle class. The government highlights that it is on track to meet most of the Millennium Development Goals – by 2025, Ethiopia will become a middle-income country.

Currently, the country is experiencing a property and infrastructure boom, especially in the capital Addis Ababa, where “Afropolitans” – Africa’s urban and trendy middle class – thrive. As you drive out of the capital, newly built affordable government housing and private housing developments can be seen.

Infrastructure spending in Ethiopia, as a percentage of GDP, is the highest in Africa.

Through its development plan, the government is focusing heavily on transport and energy.

During the second phase of the Growth and

Macroeconomic indicators 2012

2013(e)

2014(p)

2015(p)

Real GDP growth

8,8

9,7

7,6

7,2

Real GDP per capita growth

6,2

7,1

5

4,7

CPI inflation

20,5

7,4

7,9

7,6

Budget balance % GDP

-1,2

-2

-0,4

-0,3

Current account balance % GDP

-6,5

-5,4

-9,4

-10,9

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

Addis Ababa prime rents and yields Prime rents

Prime yields

Offices

US$15/m2 per month

10%

Retail

US$30/m² per month

10%

Industrial

US$4/m² per month

16%

Residential

US$4 500 per month*

8%

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

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Transformation Plan, which runs from 2015 to 2020, Ethiopia is set to spend US$20-billion on its power-development programme. The funding will go towards the construction of 10 to 12 additional power-generating projects.

The state owns all the land under Ethiopia’s constitution and offers long-term leases to tenants. Land use certificates are now being issued in some areas, allowing tenants more recognisable rights to continued occupancy and making more concerted efforts to improve their leaseholds.

Retail market The retail sector in Ethiopia is still in its infancy, characterised by local retail operators. Slowly but surely, foreign retailers are accessing the Ethiopian retail market, with the government open to foreigners managing state firms.

Currently, in the Addis Ababa retail market, there are no stand-alone malls, with retail property located on lower and ground levels of office blocks. Examples include Dembel City Center and Getu Commercial Center.

But with the rapid growth of Ethiopia’s middle class, the retail market is sure to expand. According to research by Sagaci Research, there’s potential for 15 to 20 new modern supermarkets and five to 10 new shopping centres in Addis Ababa between now and 2018.

OPPOSITE Meaning "new flower", Addis Ababa was founded in 1887 by Emperor Menelik ABOVE Edna Mall in Addis Ababa, Ethiopia's capital BELOW LEFT A member of the Mursi tribe from the isolated Omo valley in southern Ethiopia BELOW RIGHT A trader selling dried goods and spices

Industrial and office market

Residential market

The Ethiopian industrial sector is beginning to display signs of future potential. Currently, the market mostly comprises local and light industrial activity. According to Knight Frank’s Africa Report 2013, industrial “zones” are just starting to appear, located in areas such as Kality and Akaki.

In terms of the office sector, there has been a reasonable amount of office construction in Addis Ababa, largely focused on the prime areas of Bole and Kazanchis. This has generally been in a format that incorporates retail at lower levels, sometimes to an intrusive extent, which is to the detriment of the office element of the building.

According to Knight Frank, the Addis Ababa residential market is strong, with the serviced apartment sector proving to be particularly successful off the back of the boom in the hospitality sector.

Knight Frank’s Africa Report 2013 says that “Serviced apartments associated with ‘brand’ hotels can rent for as much as US$6 000 per month. Rents for good-quality villas are generally in the order of US$3 000 to US$4 500 per month, and some are used as offices.

However, rents will always be higher for commercial use because there is an increased property tax for landlords who are leasing commercial premises.”

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2015/01/14 11:22 AM

s●

series

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monthly coun our

Th e WOR

LD

by-country focu try-

From kilts to castles and The Beatles to James Bond, the United Kingdom has earned its place among the global powers not only for its phenomenal exports but for its globalised economy

By Michelle Marais

A royal power N

ot to be confused with Britain or Great Britain, the United Kingdom (the UK) consists of four countries – England, Scotland, Wales and Northern Ireland – and is inhabited by an estimated 64,1-million people, making it the 22nd-most populous country in the world.

Along with the four home nations, the UK has 14 overseas territories, including the hotly disputed Falkland Islands, Gibraltar and Indian Ocean territory. Queen Elizabeth II, who ascended the throne upon the death of her father King George VI in 1952, is the monarch of the UK; its constitutional monarchy is commonly referred to as the British monarchy.

London, home to the Queen’s residence, is the capital city of both England and the UK, and is not only an important financial centre with the fourth-largest urban area in Europe but it also has the largest gross domestic product (GDP) in Europe.

Pound for pound After the economic recession of 2012, the UK’s economy has bounced back to positive growth. However, since 2006, when it reached its highest economic freedom score ever, the UK has largely been on a path of declining economic freedom as a result of expansionary public spending and subsequent government debt.

Government involvement is primarily exercised by HM Treasury – the government’s economic and finance ministry, which is headed by the Chancellor of the Exchequer – and the Department for Business, Innovation and Skills.

In 2013, the UK was the fourth-largest exporter and importer in the world, importing 40% of its food supplies, and had the secondlargest stock of inward foreign direct investment and the second-largest stock of outward foreign investment, making it one of the world’s most globalised economies.

Key facts ▼ Population 64,1-million (2013 est.) ▼ Major cities London, Birmingham, Glasgow, Liverpool, Manchester, Leeds and Edinburgh ▼ Currency Pound sterling (GBP) ▼ Total area 243 610km² ▼ GDP growth 1,7% (2013) ▼ Key industries Banking, insurance, business, aerospace, pharmaceutical, automotive 34

Source: UK Employment Trends: CBI/Accenture Employment Trends Survey (Cbi.org.uk)

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

2013-2015

2016-2018

Population (million)

63,1

64,5

65,8

GDP (US$-billion)

2 543

2 879

3 110

GDP per capita (US$)

40 295

44 621

47 236

GDP growth (%)

1,4

2,5

2,5

Fiscal balance (% of GDP)

-7,9

-5

-2,3

Public debt (% of GDP)

83,9

90,8

89,3

Inflation (%)

3,5

1,9

2,1

Current account (% of GDP)

-2,7

-4,1

-3,2

● Although the UK’s population is growing faster than ever, its home-building rate is among the worst in the world. ● Nearly half of all London households live in flats, compared to just 14% in England as a whole.

Source: FocusEconomics Consensus Forecast United Kingdom, December 2014

The service sector dominates the UK economy, contributing about 78% of GDP. This sector includes banking, insurance, business services and other service industries, most of them operating in London. The aerospace industry, pharmaceutical industry and automotive industry also play a major role in employment and exporting. The UK’s economy is further boosted by North Sea oil and gas production; its reserves were valued at an estimated R432-trillion in 2007.

In 2014, the country was considered to have a high-income economy, and with a score of 74,9 is categorised as very high in the Human Development Index, ranking 14th in the world. With economic growth forecast at 3,2%, the UK is currently creating more jobs than the European Union combined, which has resulted in unemployment falling at a record pace.

Internationally, the UK remains a power as it exercises considerable economic, cultural, military, scientific and political influence.

Playing house Consisting of more than 27,8-million residential properties, the UK housing market plays a large part in the country’s economy. In 2012, the average mortgage was more than three times the size of buyers’ income, making it evident that Britons are well aware that purchasing property is one of the biggest investments they will ever make.

The financial crisis in 2008 had a significant effect on the housing market, which is very sensitive to the overall economic climate – house prices fell in the UK by about 15% between January 2008 and March 2009.

In addition, the number of property sales in the UK dropped almost by half from its peak of 1,67-million in 2006 to 0,86-million in 2009. Since then, the number of sales has recovered somewhat, reaching 1,07-million in 2013.

Housing tenure in the UK has seen great change over recent years. Between financial year 2001/2002 and financial year 2011/2012 there was an increase of 8,3% in total dwelling stock.

England The make-up of England’s housing sector changed dramatically between 2001 and 2012, growing by nine percent over this period from 21,2-million to 23,1-million.

The significant growth in private rental stock was mirrored by a decrease in local authority housing stock. Much of the decrease can be attributed to large-scale housing stock transfer, while the remainder of the decrease has been a result of low local authority building rates and the introduction of the right to buy.

In recent years, the UK government has pursued a number of high-profile housing policies, including the Local Infrastructure Fund and the Get Britain Building Investment Fund, which both aim to boost the house building rate.

The financial crisis in 2008 had a significant effect on the housing market, which is very sensitive to the overall economic climate – house prices fell in the UK by about 15% between January 2008 and March 2009

Economic structure GDP by Sector | share in % 100

2002-04

2005-07

GDP by Expenditure | share in %

2008-10

120 Agriculture

2004-06

2007-09

2010-12

100

Net Exports

80 80 60

40

Investment

Manufacturing 60

Other Industry

40

Government Consumption

20 20

0

Services

0

Private Consumption

-20

Source: FocusEconomics Consensus Forecast United Kingdom, December 2014 SOUTH AFRICAN PROPERTY REVIEW

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Trade structure

●● The UK’s currency is the pound sterling, which is also the world’s third-largest reserve currency after the US dollar and the euro. ●● Founded in 1694, the Bank of England was the first privately owned national bank in any country.

Primary markets | share in %

Primary markets | share in %

U.S.A. 6.7%

U.S.A. 10.5% Other 29.6%

Other 30.8%

Other EU 27 23.8%

Other EU 27 19.7%

Exports Other Asia ex -Japan 11.4%

Imports China 8.0%

Germany 11.3% France Netherlands 7.4% 8.8%

Other Asia ex -JapanFrance Netherlands 6.5% 5.4% 7.5%

Germany 12.6%

The proportion of local Primary | share Primaryproducts products | share in % in %

authority housing is higher in Scotland than any other country. However, there was a decrease from 23,9%

Mineral Fuels 13.3%

in 2001 to 12,7% in 2012 in

Food 6.3%

Food 9.4%

Other 12.1% Mineral Fuels 13.2%

Exports

this type of tenure while

Other 11.9%

Imports

private rented dwellings Manufact.

Products 65.4%

Manufact.

Products 68.2%

increased by 89% – a figure not seen since 1969. Much of the decrease in housing stock by tenure can be attributed to housing stock transfers, which saw many thousands of dwellings being transferred from local authority control to housing associations

Source: FocusEconomics Consensus Forecast United Kingdom, December 2014

Scotland Since 2001, the makeup of Scotland’s housing sector has also changed quite significantly. The overall number of dwellings in the country has seen growth of 8,5%, rising from 2,31-million in 2001 to 2,51-million in 2012.

The proportion of local authority housing is higher in Scotland than any other country.

However, there was a decrease from 23,9% in

2001 to 12,7% in 2012 in this type of tenure, while private rented dwellings increased by 89% – a figure not seen since 1969.

Much of the decrease in housing stock by tenure can be attributed to housing stock transfers, which saw many thousands of dwellings being transferred from local authority control to housing associations.

The Scottish government has set out a strategy and action plan for housing for the next decade, known as Homes Fit for the 21st Century.

Wales The change in Wales’s housing sector is no less dramatic than in England’s or Scotland’s.

The overall number of dwellings has seen a similar increase in growth of nine percent in the period between 2001 and 2012.

The growth in owner-occupied housing was mirrored by a decrease in local authority housing stock from 187 855 to 88 392. Much of the decrease can be attributed to largescale housing stock transfer, with registered social landlords now being responsible for all the social housing in half of Welsh local authorities.

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Source: TheCityUK (Thecityuk.com)

With these figures in mind it is clear that the housing market in the UK has seen great change since the turn of the century. The overall level of dwelling stock has increased by more than eight percent from 2001, while there has been substantial change in the proportions of different tenures across this time period

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Nonetheless, Wales has seen the largest proportional increase in properties rented from registered social landlords, showing an increase of 5,4% during this period.

From a policy perspective, the Welsh government’s Housing White Paper (2012) sets out a programme of legislative and nonlegislative action against its three strategic objectives of more homes, better homes and better housing services.

The country’s Housing Bill, which has been passed by the Assembly, aims to make a difference in people’s lives – as does the Renting Homes Bill, which is due to be introduced in 2015.

Northern Ireland Northern Ireland has seen the strongest rate of growth in the overall number of dwellings by some way at 13,6%, from 668 000 units in 2002 to 759 000 units in 2012.

Northern Ireland has also seen a marked decrease in properties rented from local authorities, from 120 000 in 2002 to 93 000 in 2012. At 12,3% of overall dwelling stock, this means that Northern Ireland has almost double the proportion of England (7,3%) and Wales (6,4%), and is second only to Scotland (12,7%).

Another change of note is the growth of private rental dwellings, which almost trebled from 47 000 to 121 000 for the same period,

meaning that private rented dwellings made up 15,9% of dwelling stock, up from seven percent in 2002. This is second only to England, which has 18,5% of its dwelling stock made up of private rents.

Housing policy has also been devolved in Northern Ireland. The recent Facing the Future: Housing Strategy for Northern Ireland acted as a consultation on the aims and goals of the Northern Ireland Department for Social Development.

With these figures in mind, it is clear that the housing market in the UK has seen great change since the turn of the century. The overall level of dwelling stock has increased by more than eight percent since 2001, and there has been substantial change in the proportions of different tenures across this time period.

While the overall level of dwelling stock has improved, the number of houses that are built in the UK continues its longterm downward trend.

This lower level of house building may also have had an effect on the average price of houses. Prices have continued on a long-term upward trend but have seen large fluctuations, both at a UK and regional level. The most notable price increases have taken place in London, which has seen a rise of about a third, making the purchase of property nearly impossible.

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opinion

Growthpoint’s pinnacle of transformation With transformation more important than ever, Norbert Sasse, Chief Executive Officer of Growthpoint Properties Limited, highlights his company’s commitment to transformation and empowerment

G

rowthpoint’s board and management have always appreciated and understood the need for transformation. While founded in 1987, Growthpoint only became an active, growing company from about 2001, when still part of Investec, and well after the end of apartheid and the dawn of democracy in South Africa.

So we’ve always operated in a South Africa where achieving meaningful participation by including historically disadvantaged South Africans in our economy is a business imperative – we’ve always understood the need for transformation and empowerment.

Putting this understanding into action, Growthpoint was one of the very first listed property companies to execute an empowerment transaction. We introduced our first Black Economic Empowerment (BEE) partners in an unprecedented fully funded R1-billion deal in 2005, the largest empowerment of its kind in the property sector at the time.

The BEE consortium comprised the broadbased empowerment companies: Amabubesi Investments, Miganu Investment Holdings and Unipalm Investment Holdings, each of which owned one-third interest in the BEE consortium that held its interest in Growthpoint via AMU Trust. Each of the groupings was required to include a broad base of shareholders in its respective consortia.

The trust acquired about 14% of the total Growthpoint linked units in issue at the time, with a unique mezzanine funding structure especially designed for the deal. As part of the transaction, the BEE consortium also acquired a 14% interest in the Growthpoint management contract, which was sold to them by Investec Property Group Limited.

Strengthening transformation

Norbert Sasse, Chief Executive Officer of Growthpoint Properties Limited

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Our new BEE partners added valuable strategic input for Growthpoint and made positive contributions at shareholder and board level. Key role-players and shareholders in Amabubesi included Bulelani Ngcuka, Sango Ntsaluba, Thabiso Tlelai and Peter Moyo; while Mzolisi Diliza and Dr Penuell Maduna were the key representatives of Miganu. Cape-based entrepreneur Ragavan Moonsamy and Lazarus Zim were the largest shareholders in Unipalm.

Diliza, the representative for Miganu, was already a director of Growthpoint thanks to our earlier Mines Pension Fund transaction, and two further representatives of the AMU Trust, including Moonsamy, were also appointed to Growthpoint’s board.

Diliza participated in the original BEE commission chaired by Cyril Ramaphosa, which was set up to deal with the economic transformation of South African business. As CEO of the Chamber of Mines of South Africa

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opinion and coupled with his mining background, Diliza also participated in the Mining Charter, which was trailblazing for the industry and the first Charter to be gazetted into law, beating the Department of Trade and Industry (DTI) to the finishing line. Diliza has been, and remains, a champion of transformation at Growthpoint as chairman of our dedicated Transformation Committee.

Shortly after that initial BEE transaction in 2005, we completed a second transaction in 2006, with black-controlled management property investment holding company Phatsima Properties led by Herman Mashaba.

This transaction followed Growthpoint’s takeover of Metboard, with Mashaba being the chosen empowerment partner for Metboard and a director at the time.

Phatsima acquired 2,3% of Growthpoint’s units in issue, which then had a market value of R280-million, also fully funded with specially created mezzanine funding. As an integral part of the transaction, Phatsima also acquired a 2,3% interest in the Growthpoint asset management contract from Investec Property Group.

Mashaba, who held a 40% indirect beneficial interest in Phatsima, was a nonexecutive director of Growthpoint and continued to represent Phatsima in this position. Today, he is Deputy Chairman of Growthpoint. Other key role-players and shareholders in Phatsima included the ABM Kalla Family Investment, Selomane Maitisa, the Field Band Foundation, Jacqueline Mafumadi, Tim Modise and Joyce Dube.

The implementation of both BEE transactions was a major step towards ensuring that Growthpoint’s BEE equity ownership and control responsibilities were addressed in terms of the DTI Codes of Good Practice on Broad-Based Black Economic Empowerment (BBBEE).

The transactions introduced BEE partners represented by influential role-players who have added value to Growthpoint and its shareholders, and simultaneously benefited historically disadvantaged South Africans.

Collectively, by the end of 2006, our transactions placed about 17% of the shares of the company in black hands.

In February 2007, the DTI gazetted the BEE Codes of Good Practice, and the sector was drafting a Property Sector Transformation Charter. At the same time, Growthpoint sought to lead the market through early adoption of the principles in the Property Sector Charter by focusing on each of the elements contained in the Charter, but in particular through enterprise development.

The point of change In early 2008 Growthpoint launched the Property Point with the aim to boost small- and medium-sized enterprises (SMEs) serving South Africa’s listed property sector by giving them a toehold in a highly competitive marketplace.

Property Point is all about training and supporting entrepreneurs to develop their enterprises into fully independent companies that are able to compete effectively in the open marketplace.

As a hands-on property owner, Growthpoint recognised our unique position to sponsor selected micro and small businesses through skills training and personal development, and then support them by ensuring tendering opportunities within Growthpoint and its service providers.

Property Point was the only enterprise development project of this kind in the listed property sector at the time, and it still stands out among the sector’s innovative initiatives by offering a range of entrepreneurial opportunities for small businesses.

Six years later, Property Point has had significant impacts. To date, 904 full-time equivalent jobs have been created by its beneficiary companies, and R217,8-million worth of market linkages has been facilitated for the 86 SMEs that have been on the programme. Some 1 730 entrepreneurs have attended its “To the Point” training and information sessions.

It has also helped to diversify our supply chain and supported our procurement from black suppliers. Today, our preferential procurement score is 16,9 out of 20 on total procurement spend – which amounts to about R2,2-billion towards BBBEE-compliant suppliers. This achievement has taken a massive and active effort by Growthpoint.

Our transformation initiatives resulted in Growthpoint leading the listed property sector’s BBBEE for more than four years, achieving a Level Two BEE rating in 2010 based on our commitment to the seven pillars of the Property Sector Charter scorecard: ownership, control, employment equity, preferential procurement, skills development, social responsibility and enterprise development.

For the largest listed property company in South Africa, this was no simple task. Our BEE programme had to be far-reaching and broadbased, and serve to benefit a large number of previously disadvantaged individuals.

Growthpoint remained at the forefront of transformation in the sector until the welcome emergence of funds such as Dipula, Rebosis, Delta and Ascension in the sector.

Property Point is all about training and supporting entrepreneurs to develop their enterprises into fully independent companies that are able to compete effectively in the open marketplace

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opinion SA REITs have a key role to play in providing affordable access to property ownership of South Africans. Where property ownership still remains out of the financial reach of many South Africans today, REITs are a uniquely affordable and liquid way to access the benefits of property ownership

Notwithstanding our continued enthusiastic support for transformation, given the nature of our business model as a Real Estate Investment Trust (REIT) – we distribute all our earnings, which requires us to continually issue new shares to raise capital to achieve growth – the aggressive growth of our company, and the changes to the DTI Codes, remaining meaningfully empowered at ownership level is a massive challenge.

As new shares are issued, we cannot force our shareholders to follow their rights. Thus black ownership is highly susceptible to dilution.

Even with this challenge, Growthpoint strives to play an important role in the transformation of society, including economic and social change. This is evident both in terms of our strategic external partners and on an operations level. We place a high importance on nurturing relationships that further transformation and BEE, and we are still attracting new black investors.

In August 2014, Southern Palace Properties, a wholly owned subsidiary of black-owned and managed diversified industrial holding company Southern Palace Group, acquired a 7,95% stake in Growthpoint.

It was acquired from the Government Employees Pension Fund (GEPF) through its asset manager, the Public Investment Corporation. The transaction makes Southern Palace the largest non-institutional shareholder in Growthpoint and the largest shareholder after the GEPF, which still has a 10,96% shareholding in Growthpoint.

Giving back through property Growthpoint specifically – and REITs in general – has an important role to play in bringing the benefits of property ownership to more South Africans. Historically, property ownership is not part of black culture, stemming from the former Group Areas Act where black people were told where they could live and were prohibited from owning property.

To successfully overcome this legacy, both individual and collective efforts are required.

SA REITs have a key role to play in providing affordable access to property ownership of South Africans. Where property ownership still remains out of the financial reach of many South Africans today, REITs are a uniquely affordable and liquid way to access the benefits of property ownership.

For Growthpoint, transformation remains a key performance area, and we will continue to focus on all aspects of the Property Sector Charter with our transformation initiatives.

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Growthpoint’s commitment to transformation is also supported by our education and social infrastructure initiatives, which make up our corporate social responsibility. From our Growsmart literacy programme, which has supported the work of 302 schools in the Western Cape reaching some 70 000 learners, to our support of the Thandulwazi Maths and Science Academy, we help to create platforms for access to good-quality education, and support a future generation of educated, skilled leaders.

Our R410 000 bursary programme supports learners at tertiary level. A portion of these funds is contributed directly to SAPOA, and is allocated to deserving underprivileged students.

As our core business is to develop, invest and manage a diverse portfolio of property, we are intensely aware that by creating property assets for communities, we provide a platform and opportunities that go beyond the value of the asset alone.

So far, we have contributed R11,7-million towards the development of community, youth and skills centres, completing one every year since 2011 in areas such as Diepsloot.

Growthpoint entered the second half of 2014 with representation of 48,4%, in accordance with BBBEE reporting of the Property Sector Charter. This headway is even more remarkable if you consider that Growthpoint didn’t have a single staff member prior to June 2007, when it acquired its property asset management and property administration businesses of Investec Property Group, adopting an internal management structure.

We continue our efforts to employ more people from previously disadvantaged groups, as well as to improve gender representation, especially in our core skills areas and our senior management.

Growthpoint has created an enabling environment for designated groups to achieve using both recruitment and organic growth – through skills training and development and succession planning – to achieve its employment equity targets.

Through our BEE and other transformation initiatives, we have learnt many important lessons. Transformation is a journey. We are committed to going along the road of transformation and to actively furthering empowerment in the property sector with a far-reaching and broad-based BEE programme.

Growthpoint will remain an active participant in South Africa’s economic transformation.

SOUTH AFRICAN PROPERTY REVIEW

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NEW LEASE ON LIFE Urban regeneration and spatial transformation change the game DEVELOPING AGAINST THE GRAIN Harvesting student accommodation

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BANKING ON DESIGN Setting new standards in interiors

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Shanghai Zendai’s city plan

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Keeping up appearances Retail refurbishments are on the rise in South Africa – a sure sign that shopping centres are staying on top and on trend

By Candace King

BELOW Rural retail gem Paledi Mall has been extended from 13 089m² to 24 081m², growing from 50 to more than 95 shops

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mid sluggish economic growth and rising living costs, South Africa’s shoppers appear to have been thrown into the deep end. But despite this consumer choke-hold, the retail sector remains robust, with a flurry of activity taking place in not only the new development of retail centres but also the refurbishment of existing malls.

Across the country, refurbishments are taking place, from prime regional shopping malls to smaller neighbourhood and rural community centres. More excitingly, retail nodes are being developed – a concept that is mushrooming in the retail sector.

Situated in the east of Johannesburg, the iconic Eastgate Shopping Centre is set to undergo a major revamp, expanding its already impressive offering to ensure it stays on top of the latest retail trends.

Owned by the Liberty Group, Eastgate has been a landmark in the east of Johannesburg for more than 30 years, forming an integral part of the Bedfordview community. Easily accessible from the freeway between Oliver Tambo International Airport and the Jo’burg CBD, it remains the lifestyle experience of choice for visitors.

With just over 280 stores, Eastgate offers it all, from South Africa’s leading retailers to the biggest international brands; from highfashion boutiques and street concept stores to restaurants, cinemas and rooftop dining, and a host of specialty stores, ongoing events and entertainment.

It’s frequented by more than 1.6-million loyal shoppers every month – and Liberty’s vision for Eastgate will ensure it remains a premier lifestyle destination in Johannesburg’s eastern suburbs.

Eastgate will experience a redevelopment over a period of approximately 24 months which will include tenant refurbs and expansions, the addition of new international brands, more parking and a brand-new entertainment offering.

An IMAX Theatre, two new Cine Prestige theatres and a new Ster-Kinekor movie house will be introduced on the roof level of the centre, which will complement the restaurant and food area, with additional entertainment on the piazza and roof level. Furthermore, Edgars will be expanding into the existing Ster-Kinekor space, to occupy a mega store of 13 000m².

As part of the store expansions, national retailers Markham, Jet and Foschini will be going through refurbishments and expanding their footprint within Eastgate. Woolworths will also be expanding its already impressive premises at Eastgate with an expansion that will add Witchery and Trenery concept stores to its lifestyle brand offering.

Shoppers will see this extension going out into the parking area at Entrance 2, which will allow for a new entrance to the shopping centre.

With this expansion, Eastgate will expand the current north-facing parkade with two additional levels of parking to accommodate shoppers. The reticulation will also be improved to make the parking more convenient. This will bring an additional 1 300 parking bays to the centre.

The project will also address improving sight lines, vertical circulation, and the repositioning of the lifts and toilet facilities for added convenience.

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The iconic Eastgate Shopping Centre is set to undergo a major revamp over the next year, adding 14 000m² to its current footprint of 123 694m² which includes the Office Towers

While Cotton On opened in October 2014, Eastgate is set to bring more international brands, including Zara and Topshop to its retail offering. These will be opening their doors in 2015/2016, offering the Eastgate shopper additional “on-style” fashion.

The final phase of the project will include the modernisation of some parts of the façade of the building. Some of the entrances will be updated to reflect the new, modern aesthetic throughout the centre.

From distress to finesse Nestled in the heart of the densely populated suburb of Southdale in the south of Johannesburg, Southdale Shopping Centre is experiencing a new lease on life with a complete revamp.

Built in 1969, Southdale was in desperate need of a change: the centrally situated neighbourhood centre had become outdated and slightly run-down. In order to realign with the requirements and demographics of shoppers in the area, the owner of the centre, 1Eighty – a member of One Property Holdings – has dedicated time and money to the complete turnaround of the centre.

Chris van Reenen, Chief Executive Officer of One Property Holdings and a director at 1Eighty, says the centre was in desperate need of modernisation. “While tenants have remained loyal, the centre was in dire need of an overhaul to significantly boost the appeal for shoppers and visitors, and to attract new and national tenants – a factor that impacts positively on both existing tenants and shoppers,” he says. “Well positioned in a typical ‘convenience’ setting, Southdale has always been a community centre, enjoying considerable local support from industries and businesses, which have a strong presence

in the area, as well as from the highly populated surrounding residential areas, including Soweto.”

Of late, however, says Van Reenen, there has been some “leaking” of shoppers to other centres, emphasising the need for it to be improved to make it a more appealing community centre.

“Positively, market research reveals local demographics that indicate mainly a middleclass income segment with a high percentage comprising a relatively young profile between the ages of 20 and 44 – including families – which augurs well for the future of the centre and for potential inflows of additional shoppers,” says Van Reenen. “Having already implemented improvements to the fashion and food offering, we are starting to see an

influx of visitors to the centre, despite the revamp still being under way.”

With approximately R28-million already invested in phase one, a further R10-million is earmarked for the second phase, with the entire refurbishment project amounting to approximately R70-million in total.

Phase one of the project was completed at the end of 2014, while completion of phase two, comprising the revamp of the exterior and parking lots, is anticipated for the end of 2015.

“Key factors in enhancing the shopping experience include the integration of spaces in the centre, mainly with the use of increased volume, natural light, steelwork and colour for visual appeal, as well as improvements to the flooring,” says Van Reenen.

Once tired and outdated, Southdale Shopping Centre is experiencing a complete overhaul, with anticipated completion at the end of 2015

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Accelerate Property Fund’s Fourways Mall is set to form part of a greater retail node via a grand refurbishment plan

Southdale currently comprises a gross lettable area of 33 000m², incorporating 30 500m² of retail space and a three-storey office block of 2 500m². Currently the centre has 877 parking bays, but the entire parking lot will be resurfaced and upgraded, and a further 113 parking bays will be added as part of the revamp. Van Reenen says repositioning of tenants in the shopping centre includes the expansion of added-value retailers such as Ackermans, which has relocated into a new 600m² store to its new specifications, with Jet Store now occupying the adjacent 600m² shop (to be expanded by an additional 600m² to a Jetmart store). Mr Price has been enlarged, while Fashion Express has relocated and Cash Crusaders has been moved into a new shop close to Capitec Bank.

“We have also revamped a number of other smaller shops and are working with the tenants to get their merchandise, look and feel, and general offerings up to our specifications,” says Van Reenen.

A number of new tenants have already been signed up, with 800m² to be occupied by Goldwagen (automotive parts), 450m² for Affordable Tyres, 201m² for Cre@tivity, 169m² for Sheet Street, as well as Levingers Dry Clean & Shoe Clinic, The Fish & Chip Co, Chesanyama and other fast food outlets.

One Property Holdings’ strategy is to acquire distressed centres, renovate and retenant them, and completely turn them around. Successful projects include Sasolburg Junxion, Northmead Mall in Benoni and Megapark Mall in Kriel, Mpumalanga.

Werner Franck, Managing Director of Vertias, One Property Holdings’ Project Management division, says recycling is a key focus. “In taking over old buildings and renovating them, we aim to use as much of the existing materials as we can, retaining the history and elements of the property where possible.”

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Energy-saving features incorporated during the refurbishment include raising the roof and ceilings to increase natural light and reduce electricity consumption, insulating all new areas and installing a solar system where possible.

Rural revamp Outside of Gauteng, rural retail centres are also experiencing revamps, the latest being Paledi Mall in Limpopo. Situated in the rural town of Mankweng, 29km east of Polokwane on the R71 Tzaneen Road, Paledi Mall recently got a refurbishment and an extension worth R125-million. Financed by Nedbank Corporate Property Finance to developers the Twin City Development Group, the community shopping centre has been extended from 13 089m² to 24 081m², growing from 50 to 95 shops.

The R282-million centre is anchored by Spar, Shoprite and Woolworths stores. It also offers a Sasol filling station located at the entrance from the R71, a Supa Quick Fitment Centre, a free-standing KFC drive-thru and 897 parking bays.

The town of Mankweng is set to grow in the coming years, which will inevitably have a major impact on the demand for retail facilities in the area. Currently, the University of Limpopo is the main attraction in the area; there is also a hospital and various schools. Furthermore, student accommodation facilities are to be developed over the next three to five years.

D’Anvo Jones, Regional Head: Nedbank Corporate Property Finance, Pretoria, says that Twin City Development pioneered retail in previously disadvantaged areas and has achieved unrivalled success. “The company is well-respected in the industry for its ability to deliver projects of this calibre, and we are pleased to have been able to provide agile financing solutions for this development,” he says. “We believe that the refurbished and extended Paledi Mall will create a relevant

and appealing retail option for Mankweng residents and for those studying at the University of Limpopo, and that it will be yet another successful project for Twin City Development.”

“We are very excited about the redevelopment of Paledi Mall,” says Johan Visagie, Managing Director of Twin City Development. “We are confident that the centre will become the ultimate shopping destination in the region because of its position and accessibility, along with the strong tenant mix and modern design.”

“Nedbank Corporate Property Finance is proud to have enabled this refurbishment and extension, which will expand the limited retail offerings that were available in Mankweng, thus illustrating our leadership position in commercial property funding in South Africa,” says Jones.

It’s all about the node The latest trend in the retail sector is the establishment of strong retail nodes that are ideally situated.

With a strong focus on retail opportunities, Accelerate Property Fund has commenced with a master plan to refurbish its flagship retail asset, Fourways Mall, as well as surrounding properties in the north of Johannesburg near William Nicol Drive and Witkoppen Road into a retail node.

The redevelopment will see an additional 90 000m² of space added to the centre, which will result in Fourways Mall occupying 175 000m² after completion, making it the “biggest super-regional development” in South Africa.

As a retail-angled fund, Accelerate Property Fund is set to zone in on the Fourways area.

The fund also owns Cedar Square, The Buzz Shopping Centre, Fourways Game, Leaping Frog and Fourways View. The development is set to begin in the first quarter of 2015.

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LIBERTY GROUP

is taking Eastgate to the

MAX

Trading Hours: Mon-Thurs: 09:00 -18:00 | Fri: 09:00-21:00 | Sat-Sun: 09:00 -17:00 | Public Holidays: 09:00 - 17:00 Tel: +27 (11) 479 6000 | Fax: + 27 (11) 408 3976 | 3 Bradford Road, Bedfordview, 2008 SOUTH AFRICAN PROPERTY REVIEW

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Transforming with Transnet Property With a strong focus on skills development, public-private sector collaboration and industry transformation, SAPOA, Wits Enterprise and Transnet Property are passionate about empowerment and partnership

By Candace King Photographs by Michael Glenister

Thabo Lebelo, Transnet Group Executive: Transnet Property

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APOA believes that education is an imperative platform to be involved in within the property industry. In light of this, the organisation has partnered with several high-ranking tertiary institutions and large and significant public entities in order to make a difference and alleviate the major skills shortage in the country.

Via an arrangement with Transnet Property, SAPOA in conjunction with the University of the Witwatersrand runs a customised version of the SAPOA Property Management Programme (PMP), specifically aimed at Transnet Property’s female employees in middle management.

Recently, 19 women from Transnet Property graduated through the programme with a 100% success rate. “Our women have done it – this shows their commitment to use every opportunity to empower themselves,” said Thabo Lebelo, Transnet Group Executive: Transnet Property, at the graduation ceremony.

Transnet Property is very proud that a 100% success rate was achieved with the first group of 19 students. Since having completed the course, which began in February 2014, the group has formed a Women’s Forum and is currently considering various projects within the Transnet Property division that they can become involved in.

One of the students was also recently accepted to and attended the acclaimed Property Development Programme (PDP) hosted by SAPOA and the University of Cape Town. Several of the other students in the group of 19 women attended a conference on leadership in the public sector as part of their continued development. One of the students in the group was also recently promoted within Transnet Property.

PMP in perspective

Raisibe Lepule, Transnet Group Executive: RMO

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SAPOA, as the commercial property employer body, and the property industry at large have long felt the need for a standardised and indepth property management course that is focused and trains property managers in the basics of property management, said Martin Ferguson, SAPOA’s HR, Education, Training and Development Manager.

“The intention was to develop a course that will formalise the process for entering the property management field and create an industry standard for the property manager,

with a nationally recognised certification in property management,” he said. “The property management course was developed to offer an appropriate mix of practical and theoretical learning, and to reflect existing international and national trends in the industry.”

The University of the Witwatersrand, through Wits Enterprise, provides the necessary training, skills and expertise in a holistic manner and enables the students to acquire a comprehensive overview of the property management function, with sufficient detailed understanding and knowledge, in an industry that is severely hampered by a skills shortage and a lack of formal training.

“Wits has a strong relationship with Transnet, and it continues to grow,” said Professor David Root, Head of the School of Construction, Economics and Management at the University of the Witwatersrand.

“Our women have done it – this shows their commitment to use every opportunity to empower themselves” Thabo Lebelo, Transnet Group Executive: Transnet Property

“We need to provide specialised skills in the property sector that will contribute towards the strengthening of the sector,” he said. “We must provide the ladder of opportunity for students in order to acquire skills. Too long has the industry been dominated by men – I’m pleased to see the dynamics changing as we now have 51% female and 49% male participants in our Wits property programme.”

Students who have completed this programme are embraced by the commercial property industry, and today many of South Africa’s largest property portfolios and shopping centres are managed by people who have obtained this qualification.

The course encompasses all aspects of property management, thereby ensuring that the students acquire a comprehensive understanding of the numerous functions of the property manager, and enables

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feature students to perform a variety of property management functions to the depth required by professional property management companies and practitioners.

The course contains a large component of practical training in the areas of marketing, lease negotiations, financial administration and management, general accounting, interpersonal relations and communications with various stakeholders, and the physical management and maintenance of buildings and infrastructure.

“The course provides skills in the key aspects of the property management functions, from the marketing of property space, the effective negotiating of leases and the preparation of business/management plans and detailed budgets to the analysis of financial statements, proactive credit management, preparation of management reports, and the interpretation and application of relevant legislation,” said Ferguson.

Thabo Lebelo, Transnet Group Executive: Transnet Property and SAPOA Chief Executive Officer Neil Gopal

Future female property players “As women today, you all know where you come from – and it hasn’t been easy,” said Lebelo.

“You were disenfranchised. It’s now your time to use your skills and the knowledge you’ve gained.”

“For taking up this challenge and being the first group to undertake this, I commend you,” said Raisibe Lepule, Transnet Group Executive: RMO. “The potential that you presented through your projects is there, so don’t give up.” The second group of 20 women commenced the programme in November 2014. “We wish to thank the University of the Witwatersrand for partnering with SAPOA and equipping these delegates with a commercial property qualification, and for helping us to raise the skills levels in our industry,” said Ferguson.

Addressing the students, Ferguson added, “Congratulations on your achievements.

Let this be a step towards a bright future in commercial property management with Transnet Property. With a reputable organisation that supports and cares about the skills development of its employees the way Transnet does, you must take charge of your own personal development and your own careers, growing your knowledge, experience and qualifications.”

“Don’t underestimate your plans, ideas and project proposals,” said SAPOA’s Chief Executive Officer Neil Gopal. “Several years ago, the V&A Waterfront in Cape Town was planned by SAPOA PDP students.” Gopal also highlighted that SAPOA will continue this journey with Transnet Property, and will continue to drive its Bursary Fund.

SAPOA HR, Education, Training and Development Manager Martin Ferguson and Professor David Root, Head of the School of Construction, Economics and Management at the University of the Witwatersrand

“SAPOA would like to thank the University of the Witwatersrand and Wits Enterprise for the professional manner in which it runs the PMP course. We thank Transnet Property not only for being a valued member of SAPOA, but also for its excellent and continuous support on a national level and for acknowledging SAPOA as its training partner. Finally, we thank the 19 women who dedicated themselves to the programme. SAPOA wishes you all the best in your future endeavours in the world of property” - Neil Gopal, SAPOA CEO SOUTH AFRICAN PROPERTY REVIEW

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Investing in potential Earmarked as one of South Africa’s key sectors, the tourism industry is responsible for a large percentage of the country’s economic growth. Foreigners from around the globe are realising this, resulting in a number of them investing in the country’s potential

By Michelle Marais

F

rom the verdant valleys of the Cape Winelands to the white sandy beaches of the East Coast and contemporary skyscrapers decorating Johannesburg’s skyline, South Africa is home to cities as diverse as the people who inhabit them. This, along with its weaker currency, have made South Africa a soughtafter tourist destination; subsequently catching the eye of influential foreign investors.

Grape expectations Considered South Africa’s gastronomic capital, Franschhoek in the Cape Winelands produces quality wines at exceptional value, even more so when compared with the wine regions of France, Italy or the Napa Valley.

According to Wines of South Africa, wine tourism is one of the fastest-growing and most lucrative sectors of the global tourism market, and contributes about R4,3-billion annually to the country’s tourism revenue.

It then comes as no surprise that the world’s power players are grabbing at every opportunity to invest.

Testament to this is Val de Vie wine and polo estate. In 2013, the estate became the site of the first-ever Chinese investment in the South African wine industry when Perfect China, a 51% shareholder in Perfect Wines of South Africa, purchased the wine cellar, attached 25-hectare wine farm and historic manor house.

British billionaire Sir Richard Branson recently joined the list of foreign investors when he acquired Mont Rochelle Hotel and Mountain Vineyard, adding the luxury estate to his eclectic Virgin Limited Edition property portfolio.

Branson’s investment comes shortly after a similar investment was made by the Indian billionaire entrepreneur Analjit Singh. Singh acquired three adjoining Franschhoek farms – Dieu Donné, Von Ortloff and Klein Dassenberg – for about R80-million, and also purchased a substantial stake in multiple Platter five-star awarded Mullineux Family Wines located in the Swartland.

More recently, the Mantis Collection chose Pearl Valley Golf and Country Estate as the home of their latest hotel. Mantis founder and Chairman Adrian Gardiner confirmed that the Valley Hotel will be the largest hotel in the region. “With 80 rooms, we can cater for larger events but remain small enough to provide the quality service and personal attention for which Mantis and Pearl Valley are renowned,” he said.

The suites on offer – starting from R1 299 000 – will be fully furnished single or double suites, all beautifully rendered by international design house MI Designs.

Aside from the commercial and hospitality development opportunities available to buyers, the winelands are also attracting a slew of property buyers intent on becoming permanent residents.

Did you know?

Eight of the top 100 restaurants in South Africa are found in Franschhoek.

Boasting 80 rooms, the five-star Pearl Valley Hotel will be the largest hotel in the region

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Since October 2013, about 42 farms to the total value of almost R235-million were sold, while about nine larger lifestyle and commercial farms were sold for between R10-million and R30-million.

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feature City by the sea With its rich history, topographically hilly landscape and large natural port, Durban has become one of South Africa’s major metropolitan cities.

The city is known as the home of subSaharan Africa’s largest and Africa’s bestmanaged port, and is a major centre for both business and tourism. A strong economy underpins the city, which has led to Durban receiving a lot of attention from local and foreign investors hoping to have a chance to be a part of Durban’s (and Africa’s) future potential.

Thanks to its rich natural resources and well-developed infrastructure, it’s considered a competitive region for foreign investment, attracting investors from China, India, South Korea and the Americas – particularly for reexport opportunities through the port.

According to Head of Economic Development Russell Curtis, many investors are also keen to be part of the massive infrastructure upgrade taking place in the city, which totals more than a trillion rand worth of investment.

One such investment opportunity presented itself in the form the recently declared Industrial Development Zone – a precinct located strategically 30km north of Durban. It is home to the state-of-the-art King Shaka International Airport, which is considered to be one of South Africa’s top 10 investment opportunities, and is geared to promote foreign and local investment.

The “green” economy is another exciting area generating interest. US company Hydro Alternative Energy (HAE) is looking at ocean currents as an energy source, with only two potential locations in the world, one being the city of Durban. HAE is currently raising the capital to develop this project further.

The city’s property sector is also showing a slow but steady increase. Industry players are reporting a rise in holiday-home buying in recent months, which hit rock bottom during the 2008-2009 recession.

Samuel Seeff, Seeff Property Group Chairman, believes perceived value has been a key driver of sales to both local and offshore buyers, since the drop in leisure property prices and salve volumes was much more pronounced than in the case of the primary home market. “The weak rand has also boosted sales to foreigners,” he says.

Emphasising this was Chairman of Lew Geffen Sotheby’s International Realty, Lew Geffen, who said the latest available statistics from property data company Lightstone prove that foreign buyers are looking at areas beyond Cape Town and Johannesburg.

“For example, foreign buyers purchased 670 properties worth about R800-million in KwaZulu-Natal in 2013,” he said. “We are also seeing a growing trend among foreign buyers to purchase properties in South Africa as investments rather than for own use – a healthy vote of confidence in our real estate market.”

Did you know?

Durban harbour is the ninth-largest harbour in the world.

Place of light It began in 2009 with the regeneration of one derelict warehouse building into what has become Johannesburg’s creative hub – Arts on Main. Today, Maboneng, a Sotho word meaning “place of light”, is one of the leading urbanrenewal movements – not only in the fastpaced city but in South Africa as a whole.

By re-centralising and making use of otherwise empty buildings, the Maboneng precinct is lifting the overall reputation of Johannesburg locally and abroad. Not only is the area providing opportunities for new entrepreneurs, it’s also attracting tourists and

ABOVE The suites at the Pearl Valley Hotel will be fully furnished single or double suites, all beautifully appointed by international design house MI Design BELOW As a major centre for both business and tourism, the city of Durban is home to sub-Saharan Africa’s largest and Africa’s best-managed port

SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 12:54 PM

feature

ABOVE The lucrative offering at Val De Vie Estate in the Western Cape has attracted foreign investment

Cape Town has emerged as the most popular city in southern Africa for new hotel investment, despite the oversupply that depressed the industry since 2010 World Cup

BELOW Maboneng Precinct: Arts on Main’s upstairs cocktail bar

foreign investment into the city, and boosting the economy. The first sectional title unit in Main Street Life (the first residential development in the precinct) was sold at R8 788/m² in July 2010. The latest unit in the same building was signed in June 2013 for R12 700/m². This amounts to nominal growth of 45% in 36 months, and equates to an annual growth of 15%. In addition, units in Main Street life are presently achieving yields of up to 10% compared to peaking nationwide average property yields of 6,2%.

Maboneng 2.0, the name given to the second development phase, plans to create a sustainable neighbourhood through the development of buildings and public space.

A further R500-million is expected to be invested in the neighbourhood, and hundreds of jobs are expected to be created. To date, about R300-million has been invested in the precinct, and some of the most valuable properties in Johannesburg are part of the neighbourhood. These include Jewell City, currently valued at R350-million.

With the guarantee that many more buildings in the neighbourhood will continue to be uplifted, inevitably resulting in properties increasing in value, the Maboneng precinct has gained a reputation for being a prime investment opportunity for locals and foreigners interested in the regeneration of Johannesburg.

Check-in, please Cape Town has emerged as the most popular city in southern Africa for new hotel investment,

52

despite the oversupply that depressed the industry since 2010 World Cup. Joop Demes, Chief Executive Officer of Pam Golding Properties Hospitality, says the acquisition of the Protea Hotel Group by Marriott in 2014 sparked foreign direct hotel investment focused on the Western Cape and Johannesburg, with the US, China and the Middle East leading the surge. Because of a favourable exchange rate, international demand is increasing, with Europe and the US as the key markets, and a sharp increase in investment from China.

“There is strong interest and demand for existing underperforming hotels as well as for green-field opportunities,” Demes says.

The hospitality side of Pam Golding Properties Lodges and Guesthouses has facilitated 56 foreign direct investment transactions, worth almost half-a-billion rand.

Taking these figures into consideration, there is no doubt that South Africa’s hospitality industry is not only expanding but that the properties on the market are world-class.

The country’s growing tourism sector not only ensures that visitors from around the globe flock here, it also opens their eyes to South Africa’s potential and, subsequently, exciting investment opportunities.

Did you know?

Johannesburg is the capital of Gauteng, which is the wealthiest province in South Africa, and has the largest economy of any metropolitan region in sub-Saharan Africa.

SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 4:42 PM

SAPOA events

Liaising over lunch S

ince SAPOA Immediate Past President Estienne de Klerk conceived the idea, the SAPOA media lunch session has become an integral campaign of the organisation in order to engage, enlighten and bond with the property industry’s wordsmiths and with leading media houses.

SAPOA hosted the third media lunch in early December 2014.

It was attended by SAPOA Chief Executive Officer Neil Gopal, SAPOA President Amelia Beattie as well as journalists and media representatives.

Continuing with the same flair that De Klerk brought to the lunch table, Beattie addressed the media with passion, highlighting all the successes, issues and challenges that SAPOA is actively involved in, as well as discussing its future plans.

In terms of skills development, said Beattie at the lunch, SAPOA

believes that it is imperative for the commercial property industry to actively address skills shortages and transformation within the sector. “If we are going to try to address the industry’s challenges, we need to develop a comprehensive understanding of the skills gap within the property sector,” she said.

In light of this, SAPOA officially announced the launch of a research study during the lunch, highlighting that it seeks to investigate the issues affecting capacity in the property industry.

The results of the research will be used to understand and analyse skills shortages in the industry.

Other matters that were addressed included the initiation of the SAPOA Africa Committee, which is currently being amalgamated; the addressing of exclusivity lease clauses in shopping centres; the lobbying around the business rescue

process; and working with the government (especially the Department of Public Works) with regards to skills development and improved communication.

The continuation of the successful SAPOA Meet the Mayor campaign was also highlighted, with Beattie saying that SAPOA will continue to host the Meet the Mayor dinners. These are expected to take place in eThekwini and East London in 2015.

After a fruitful session of socialising, the third media lunch instalment was a great success.

Gopal would like to thank all the journalists for their continued support in publishing SAPOArelated content in the media.

SAPOA looks forward to the next media lunch, which will take place before the 47th Annual SAPOA International Convention and Property Exhibition in eThekwini between 19 and 21 May 2015.

ABOVE Moneyweb journalist Ray Mahlaka and SAPOA Publications Editor Candace King BELOW, FROM LEFT Marketing Concepts Media Liaison Anne Lovell and Commercial & Industrial Property News Editor Nerine Zoio

SAPOA shed light on its latest endeavours at the lunch table with the industry’s media

By Candace King Photographs by Michael Glenister

SAPOA President Amelia Beattie

ABOVE Engineering News and Mining Weekly Senior Online Writer Leandi Kolver and SAPOA CEO Neil Gopal BELOW LEFT SA Property Insider’s Thabang Mokopanele BELOW RIGHT Property24 Editor Julia Hinton

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2015/01/14 1:13 PM

editorial

Partnering with PwC Through recent engagement, PwC is contributing towards SAPOA initiatives in 2015 to bring strengthened real estate matters to the greater property industry

By Candace King

O

ver the past few months, SAPOA has been engaging with PwC to offer more real estate thought leadership to the industry.

With offices in 157 countries and more than 195 000 people, PwC is a multinational professional services network that aims to create value for its clients, people and communities in a changing world.

Through a proposed industry initiative, SAPOA highlighted several opportunities that include presentations at quarterly seminars, participating in educational programmes, joint research, involvement in industry newsletters, conferences, and the publishing of articles in SAPOA’s magazines.

The focus will be around several areas, including technical aspects, governance factors impacting the real estate industry, research and the distribution of thought leadership. Technical focus areas will include tax and REIT updates, IFRS updates and integrated reporting. Governance, effective capital project oversight, trust and transparency, and practices and trends in executive remuneration will also be dealt with. Factors impacting the real estate industry will also be taken into account. Such factors include sustainability, construction trends, hospitality and retail outlooks, and alignment of corporate and financing strategies.

In light of research, the entities can share and distribute each other’s research publications such as emerging trends in real estate, real estate news briefs and outlooks.

FROM LEFT SAPOA CEO Neil Gopal and PwC Partner and Director Ilse French

Distribution of PwC thought leadership Global

Real Estate 2020 Re Em Emerging Trends in Real Estate - A global view - US & Canada - European - Asia Pacific Management Insights - Real Estate topics Achieving Total Retail Consumer expectations driving the next retail business model

Local

So Africa retail and consumer South products outlook pr South Africa hospitality outlook So Technology update South Africa Quarterly Real Estate News Briefs Technical updates Tax updates

Source: PwC Real Estate proposed industry initiative with SAPOA, May 2014

54

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2015/01/14 1:15 PM

editorial

SAPOA/PwC 2015 event schedule Date

Time

Session

Proposed topic

Presenter/s

13 February

8am – 9.30am

Power hour breakfast

Trends in the South African construction industry

Andries Rossouw

30 May

9am – 12.30pm

Half-day workshop

The future of retail in Africa

John Wilkinson/Peter Hoitjink

Capital projects and infrastructure: overcoming obstacles to improve Africa’s infrastructure

Jonathan Cawood

Enhance shareholder value: alignment of corporate and financing strategies 14 August

27 November

8am – 9.30am

Power hour breakfast

9am – 12.30pm

Half-day workshop

Craig du Plessis

Tax and REITs: responding to the current challenges

Craig Miller

Executive remuneration: practices and trends in the real estate industry

Martin Hopkins

Sustainability: beyond green value

Jayne Mammatt

Getting to grips with integrating reporting

Jayne Mammatt

Real estate 2020: building the future

Ilse French

Factors impacting the real estate industry

Sustainability

Technology

Hospitality outlook

Retail outlook

Insurance: developments in property insurance market, risk factors and indemnity cover

Capital availability – pension funds and banks

Mergers and acquisitions Source: PwC Real Estate proposed industry initiative with SAPOA, May 2014 SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 1:15 PM

SAPOA reports

Retail and office under the spotlight Through its latest sector reports, SAPOA highlights the key findings for the retail and office sectors

By Candace King

S

APOA recently released its latest reports for the retail and office sectors. Compiled

by IPD South Africa, the SAPOA Retail Trends Report Q3 2014 and the SAPOA Office Vacancy Survey Report Q4 2014 were released in December 2014.

SAPOA Retail Trends Report Q3 2014 For the year ending September 2014, the centres in the IPD retail sample recorded a year-on-year increase of 6,5% in annualised trading density (sales per square metre). In real, inflation-adjusted terms, this translates into marginally positive growth. Retailer’s cost of occupancy, measured as gross rental as a percentage of sales, was largely unchanged over the past quarter, but it is currently 100bps higher than at the height of the recession.

As at September 2014, vacancy levels remain below four percent in centres above 25 000m²; smaller centres have seen vacancy rates rise significantly over the past six months.

Gross rentals continue to grow faster than sales, which has seen the retailers’ cost of occupancy increase. Cost of occupancy is currently the highest in the 10-year history of the series and is almost exclusively driven by higher administered costs.

The average foot-count per square metre recorded for the quarter ending September 2014 was down by five percent from a year before, adding additional proof to the argument that shoppers are frequenting malls less often and combining purchases in order to save on associated travel and parking costs.

There continues to be a divergence in the performance of the various merchandise categories. Categories that have outperformed include mostly retailers of non-durable and semi-durable goods, while categories that have lagged include retailers selling durable goods and discretionary items.

started showing signs of stabilisation. As at Q4 2014, the national office vacancy rate, as recorded by SAPOA, was 11,1%, down from 11,6% a quarter before. The 50bps improvement was the biggest single quarter decline in the overall vacancy rate since the second quarter of 2007. Despite the improvement, the vacancy rate remains high and would be expected to weigh on real asking rental growth in the short to medium term. 1 2014/12/15 Pages from SAPOA Office Vacancy Report_Dec 2014.pdf The latest quarter saw asking rentals post their first above-inflation year-on-year increase OFFICE VACANCY SURVEY REPORT since 2010 by growing by 5,8%.

Q4: The2014 current phase of the cycle should be viewed in the context of the period from 2000 to 2001, when both the office vacancy rate and macroeconomic fundamentals were at a similar crossroads.

The latest quarter saw an improvement The S outh African macroeconomic environment incontinues the vacancy rate ofheadwinds. all officeIn grades, with to face several saying that, several key drivers the office sectorwhich has started the exception of ofprime offices, saw a showing signs of stabilisation. marginal increase.

Financial Business – a keyoffi leading Both & Aandservices B-grade ces indicator recorded of office demand – recorded growth of 1.9% for the year improvements of 40bps relative to the quarter ending S eptember 2014. While this is well of the lows before.

The prime offiacelevel vacancy rate ended of the recession, arguably of at least 3.5% is needed to catalyse an upwards in employment the quarter 40bps up on shift 6,3%.

Un-let new developments continue to be the cause of the prime office vacancy rate moving higher.

DECEMBER 2014

Economic Drivers of the OfficeSector

56

Non-farm jobs growth recorded an encouraging 2.6% increase for the second quarter of the year. More of theFor same is needed in orderon tothe tip the officevisit cycle into a further information reports, situation of excess demand as the total number of nonSapoa.org.za farm jobs are still below that of 2007 levels.

Figure 1: Economic drivers of the office sector, 2004-2014 Real GDP growth

Business Confidence Index 100

12,0%

10,00

80

8,00

70

8,0%

6,00

60

4,00

50

6,0%

2,00

40 4,0%

0,0%

-

30

2,0%

04

07

10

13

Non-farm jobs growth 12,00

90 10,0%

SAPOA Office Vacancy Survey Report Q4 2014 The South African macroeconomic environment continues to face headwinds. In saying that, several key drivers of the office sector have

As was the case in the previous two cycles when vacancies were nearing peak levels, inner-city office vacancies are significantly higher than that of city decentralised office nodes.

During the quarter ending December 2014, the national inner-city office vacancy rate improved to end at 14,9%, while the country’s city decentralised nodes posted an aggregate vacancy rate of 9,7%, 50bps down 2:55 PM from the previous quarter.

Development activity, although slightly down on the quarter before, remained high at Q4 2014 with ~707 000m² under development.

While development activity has been trending up since 2010, the amount of speculative development has been trending down ever since the recession.

Despite the 50bps improvement recorded during the(with current quarter, offioverall ce sector came in at 51 50 being neutral) – the meaning sentiment nowamarginally can stillin the be business seen community as being isin slowdown positive – possibly implying that executives are still phase because of increasing vacancies and taking a wait-and-see approach before committing to slowbusiness rentalpremises. growth when viewed on an larger annual basis.

20

-2,00

10

-4,00

0

04

07

10

13

-6,00

04 06 08 10 12 Source: StatsSA, RMB/BER

Source: StatsSA, RMB/BER

SOUTH AFRICAN PROPERTY REVIEW 2

SAPOA Reports_SUBBED.indd 56

SAPOA C ONTACT DET AIL S T: 011 883 0679

F: 011 883 0684

Email: marketingmanager@sapoa.org.za

Web: www.sapoa.org.za

2015/01/14 1:16 PM

statistics

Power blackouts impact retailers With the sudden and frequent power blackouts in South Africa, the retail sector is set to be impacted, with discretionary retailers more exposed than food retailers Sector Update: Consumer Goods and Retail South Africa, Renaissance Capital Equity Research, 11 December 2014

S

outh African retailers will see sales growth impacted by the recent significant power outages. According to research undertaken

by Renaissance Capital, feedback from some local retailers suggests that food retailers are better positioned than discretionary retailers as a result of their fresh offerings, resulting in most stores having generators. (Most discretionary retailers do not have generators.)

Shopping mall-based stores – specifically non-food – are likely to see a greater impact as feedback suggested most malls in South Africa have generator backup for basic lighting and foot-count drops significantly when

outages occur. Street-based stores tend to have more natural lighting and thus are likely to hold up better than mall-based stores.

Woolworths, Spar and Pick n Pay have all claimed to have almost 100% generators in their stores because of the cold storage and fresh offerings. Also, the basic daily need for food products means that they are likely to be more resilient to a major drop-off in sales growth than discretionary retailers.

Discretionary retailers require power for visibility of products and credit-scoring transactions. It is sensed that shopping-mall and credit-based discretionary retailers are likely

to be the hardest hit – stores such as Foschini, Truworths, Clicks and Lewis.

Renaissance Capital believes that some of the lost trade will be offset by greater demand when the power is on. “We find that, as a result of the food offerings, food retailers are likely to be more defensive to power outages. We are more cautious on discretionary because of the greater exposure to power outages and strong run-up in share prices from midOctober 2015,” states Renaissance Capital in its report update.

Renaissance Capital will review its numbers post-January 2015 trading updates.

Figure 1: SA retailer feedback on power outages % of stores with generators

Retailer Woolworths

Clicks

Foschini

99% of stores

Company comments - Almost all (99%) of the stores have generators.

- Stores remain open in bigger malls even when footfall is impacted by power outages. Food in stores and sustained power generation make the stores more defensive to pure discretionary retailers.

5% of stores; mall-based stores have basic lighting backup

- Very few malls have power generators that are able to maintain power to the whole mall.

- The major retailers with refrigeration normally all have backup generators to avoid large losses on the cold chain products.

- With very few exceptions, when the power goes down in a mall, customers essentially vacate the mall en masse (except for the few who intend to buy/finish buying the food in the store they are in).

- Once a mall is down (and it is known or subsequently seen), few customers arrive.

- The larger shopping mall experiences normally take in a lot more activity than a single shop (i.e., it is often an outing with the family, with the average stay of four to five hours).

- It therefore does not make a lot of sense for Clicks to have a generator for its store when customers are largely absent.

- Clicks will not be providing any info on the trading impact at this stage.

0% of stores; mall-based stores have basic lighting backup

- Stores do not have generators. The company is keeping a record of turnover lost during blackouts.

- All stores are well equipped to trade offline, so that is not a problem for the Ggroup. In stores outside of shopping centres, there is usually sufficient light; these stores can continue trading without power.

- Stores in shopping centres are a different story. The majority of shopping centres does not have generators to run the whole centre, but rather generators for emergency lighting only. When the power goes out, the centres become very dark and stores need to close as customers cannot properly see the merchandise (and for security reasons). The exception to this would be the big food retailers, who have their own generators for perishable goods.

- When the power goes out, customers leave the shopping centre and very often do not go back when the power goes back on. All in all, these power outages are affecting the retail sector quite badly.

100% of corporate stores and 90% to 95% of franchise stores

- 100% of corporate stores have generators, and these are able to power the lights, tills, refrigeration and all service area requirements.

- It is more difficult to confirm the number of franchise stores with generators – but it is safe to assume that 100% or close to 100% of franchise store have generators, which can at least run the tills and the lights.

- Although the company’s stores are open and trading, customers may be put off centres that are dark – or assume Pick n Pay is closed because they can see a number of line shops that are closed. This could be exacerbated by traffic snarl-ups caused by traffic lights that do not work during load shedding.

- Difficult to assess the potential impact of load shedding on the business. Pick n Pay is geared up, but there are other factors that may affect turnover.

85% to 90% of stores

- The vast majority of retailers have generators. The company initiated this as a focus after the last Eskom crisis and has assisted a number of retailers in purchasing generator systems. Unfortunately, not all stores have a full service; i.e., they have purchased generators with only sufficient power to run lighting and tills, but not all the operations. Thus even where the generators are in use, this does not imply the store is not impacted by outages.

- As Spar is independent of the retailers, it has not yet attempted to quantify the loss to the wider business. There is no doubt that retail is being impacted by the outages, even where backup generators are in use (but much less than if the stores did not have generators).

Pick n Pay

Spar

Source: Statistics South Africa, the South African Reserve Bank and RICS (2012) SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 1:17 PM

what’s on

Upcoming events in 2015 February Region

Date

Event

Midrand

2 to 6 February 2015

BCTP

Gauteng

13 February 2015

PWC Power Hour Breakfast

Port Elizabeth

18 February 2015

Regional Meeting

Gauteng

20 February 2015

Power Hour Breakfast

Midrand

23 to 27 February 2015

FMP

Gauteng

26 February 2015

Breakfast Engagement on SPLUMA

March Region

Date

Event

Buffalo City

3 March 2015

SAPOA Buffalo City Breakfast

Western Cape

4 March 2015

Post Budget Power Hour

KwaZulu-Natal

5 March 2015

ICPP Training

Port Elizabeth

6 March 2015

Breakfast Event

Gauteng

9 to 11 March 2015

ICPP Training

TBC

9 to13 March 2015

ECPP Training

Gauteng

10 to 13 March 2015

MIPIM

Gauteng

12 and 13 March 2015

ICPP Training

Port Elizabeth

18 March 2015

Regional Meeting

Polokwane

19 March 2015

Council Meeting

TBC

24 March 2015

Research Breakfast

KwaZulu-Natal

25 March 2015

ICPP Training/Audit Risk

TBC

25 to 27 March 2015

ICPP Training

April Region

Date

Event

KwaZulu-Natal

7 April 2015

SPLUMA Breakfast Session

Port Elizabeth

10 April 2015

Heritage in Nelson Mandela Bay

Mpumalanga

10 April 2015

Lease Agreement Workshop

Port Elizabeth

15 April 2015

Regional Meeting

Gauteng

16 April 2015

SAPOA Human Resources/Board Meeting

May Region

Date

Event

Western Cape

6 May 2015

SANS 100400 Workshop

TBC

7 May 2015

SAPOA National Council

Gauteng

13 May 2015

Research Breakfast: Operating Costs Report

KwaZulu-Natal

19 to 21 May 2015

SAPOA Annual Convention

TBC

20 May 2015

British Council of Offices

KwaZulu-Natal

20 May 2015

SAPOA AGM at Convention

KwaZulu-Natal

20 May 2015

Board Meeting

TBC

29 May 2015

PWC Half-Day Workshop

58

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2015/01/14 1:22 PM

what’s on

Events and dates subject to change.

June Region

Date

Event

Gauteng

5 June 2015

Protection of Personal Information

TBC

9 June 2015

Research Breakfast

TBC

13 June 2015

Protection of Personal Information

Port Elizabeth

17 June 2015

Regional Meeting

East London

23 to 25 June 2015

ICPP

KwaZulu-Natal

25 June 2015

Golf Day

USA

28 to 30 June 2015

BOMA International Conference

July Region

Date

Event

Gauteng

2 July 2015

Negotiation Skills Masterclass Programme

Gauteng

7 July 2015

Introduction to Brokering Seminar

Port Elizabeth

15 July 2015

Regional Meeting

Gauteng

28 July 2015

Golf Day

August Region

Date

Event

Gauteng

4 August 2015

Research Breakfast

Gauteng

6 August 2015

SAPOA Audit Risk Meeting

KwaZulu-Natal

11, 12 and 14 August 2015

ECPP Training

Gauteng

11 August 2015

PWC Breakfast

Polokwane

12 August 2015

Breakfast: Town Planning Scheme

Gauteng

13 August 2015

Lease Agreement Workshop

East London

14 August 2015

Golf Day

Gauteng

14 August 2015

PWC Power Hour Breakfast

Gauteng

17 to 21 August 2015

FMP Training

East London

19 August 2015

Introduction to Brokering Seminar

Port Elizabeth

19 August 2015

Regional Meeting

TBC

20 August 2015

Introduction the Brokering Seminar

Gauteng

20 August 2015

SAPOA HR Meeting

TBC

20 August 2015

SAPOA Board Meeting

Gauteng

25 to 28 August 2015

ECC Training

Gauteng

28 August 2015

MOMFA

September Region

Date

Event

Port Elizabeth

1 to 3 September 2015

ICPP Training

KwaZulu-Natal

3 September 2015

Negotiation Skills Masterclass Programme

Gauteng

7 and 8 September 2015

ICPP Training

TBC

7 to 11 September 2015

ECPP Training

Western Cape

8 to 11 September 2015

ECPP Training

Port Elizabeth

8 September 2015

Golf Day

Polokwane

10 September 2015

SANS 10400 Workshop SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 1:25 PM

what’s on

September Region

Date

Event

Polokwane

16 September 2015

Council Meeting

Port Elizabeth

16 September 2015

Council Meeting

TBC

17 and 18 September 2015

National Council Meeting

TBC

17 September 2015

Networking Event

TBC

22 September 2015

Golf Day

Western Cape

26 September 2015

Property Development Workshop

Gauteng

28 to 30 September 2015

IPMP Training

KwaZulu-Natal

29 September 2015

SANS 10400 Workshop

KwaZulu-Natal

30 September 2015

SACSC Annual Congress

October Region

Date

Event South Afr

1 and 2 October 2015

SACSC Annual Congress

Gauteng

1 and 2 October 2015

IPMP Training

Gauteng

2 October 2015

Legal Power Hour

Western Cape

6 to 8 October 2015

ICPP Training

Polokwane

13 October 2015

Golf Day

KwaZulu-Natal

15 October 2015

Networking Breakfast

Gauteng

17 October 2015

Research Breakfast: Industrial Industry Report

TBC

22 October 2015

Audit Risk Meeting

KwaZulu-Natal

23 October 2015

Networking Breakfast

Gauteng

23 October 2015

Brokers Economic Update

Gauteng

26 to 30 October 2015

BCTP Training

Port Elizabeth

29 October 2015

Gala Dinner

ican Pro

KwaZulu-Nata;

ociation

ers Ass

perty Own

t

- Proper

November Region

Date

Event

Gauteng

4 November 2015

ECPP Training Course

TBC

5 November 2015

SAPOA HR Meeting

TBC

5 November 2015

SAPOA Board Meeting

TBC

6 November 2015

Legal Power Hour

TBC

10 November 2015

Research Breakfast

KwaZulu-Natal

11 November 2015

Gala Dinner

Gauteng

11 November 2015

Negotiation Skills Masterclass Programme

TBC

13 November 2015

Networking Evening

Gauteng

16 to 20 November 2015

FMP Training

Gauteng

17 November 2015

FM and IAMP Training Courses

Port Elizabeth

18 November 2015

Council Meeting

Polokwane

20 November 2015

Council Meeting

Gauteng

20 November 2015

Brokers and Legal Update

Western Cape

21 November 2015

Property Development Workshop

Polokwane

26 November 2015

Gala Dinner

TBC

27 November 2015

PWC Half-Day Workshop

December Region Buffalo City

60

Date 3 December 2015

Event Developers’ Gala Dinner

SOUTH AFRICAN PROPERTY REVIEW

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2015/01/14 1:35 PM

Reg

REGISTER SAPOA PROPERTY

2 0 1 5 - 2 0 1what’s 6 on

legal update

DON’T MISS OUT on this well-used and popular industry resource, where each year we accept a large number of listings and advertisements from professionals and service providers across the entire spectrum of property activities.

SAPOA aims to provide added value by offering the basic listings free of charge to all members, and in this respect, we hope that we are assisting you in your marketing endeavours to some extent.

We thank you for your support in previous years, and in an effort to improve the look and ease of usage, we have redesigned the directory layout to a four column grid and made available certain entries which will stand out from the norm.

Architects

R E T S I REG

South Afr

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TY

Ranked as the #1 design enginee firm by ring reve Enginee ring New nue in magazin s-Record e’s rankings annual indu stry , fully inte AECOM is a prem grated infrastru ier, and sup port ctur broad rang services firm e , with e of markets a operatio . AECOM’ ns 1,900 peo in Africa boa s st deliveri ple with a prou more than ng d solution excellence and history of s industry for our clients developing across sectors. all Contact us on

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P.O. Box 1393 6, The Western Mowbray, Cape, 7705 t: +27 (0)21 448 2666 f: +27 (0)21 448 2667

dd 1

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ADENDORFF INTERIORS ARCHITECTS & CC

P.O.Box 4030 1, Eastern Cape Walmer, Port Elizabeth , 6065 , t: +27 (0)41 581 4765 f: +27 (0)86 618 2183

Roof Terrace Suite 8 Arnold Road , , Rosebank t: +27 (0) 11 788 8095 , 2132 F: +27 (0) 11 788 8097

AMA 3 (PT

Directors: Edward Broo Michael Mag ks: edward@activate.c o.za Reon van ner: michael@activ ate.c der Wiel: reon@activat o.za e.co.za w

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ARC ARCHIT PRETORIA ECTURAL CONSUL TANTS

P.O.Box 1339 9, Gauteng, 0028 Hatfield, t: +27 (0)12 362 7350 f: +27 (0)12 362 7349

ARCHI-M

Property

STUDIO

3 CC P.O.Box 9650 , Bloe The Free State mfontein, , t: +27 (0)51 9300 430 8714 f: +27 (0)51 448 5384

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P.O.Box 1299 , Gauteng, 2052 Gallo Manor, t: +27 (0)11 807 7505 f: +27 (0)11 807 7509

SAPOA Proper t y Register 2014 - 2015

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S (PT Y) LTD P.O.Box 9566 4, Gauteng, 0145 Waterkloof, Pretoria, t: +27 (0)12 346 1295 f: +27 (0)12 346 1249 BLACKSHEE P

P.O.Box 5260 S INC 4, Saxonwo Gauteng, ld, 2132 t: +27 (0)11 447 1344 f: +27 (0)11 447 1343

CONSULT

THREE ARC

P.O.Box 7167 HITECTS 1, Eastern Cape Central, Port Elizabeth , , t: +27 (0)41 6006 585 0086 f: +27 (0)86 513 2278

CSAR 3

P.O.Box 5267 3, Gauteng, 2132 Saxonwold, Rosebank , t: +27 (0)11 880 2466 f: +27 (0)11 447 3441

DESIGN

223 Tribella, 166 Gauteng, 2192 Rivonia Road, Morn ingside, t: +27 (0)87 700 8291 f: +27 (0)86 225 6665

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P.O.Box 5, Bhis Eastern Cape ho, , t: +27 (0)40 5605 635 1951 f: +27 (0)40 635 1961

CO-ARC INT ARCHITECT ERNATIONAL

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P.O.Box 1356 IGN (PT Y) LTD , Rivonia, Gauteng, 2128 t: +27 (0)11 803 0000 f: +27 (0)11 803 0000

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P.O.Box 153, Louis Trich ECTS CC ardt, Makhado Louis Trich ardt, , Limpopo, 920 t: +27 (0)15 516 2460 f: +27 (0)86 524 3827

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(PT Y) LTD

P.O.Box 6953 5, Gauteng, 2021 Bryanston, Johannes burg, t: +27 (0)11 467 5299 f: +27 (0)11 467 6067

DBM ARC

HITECTS

PTA (PT Y)

P.O.Box 9578 0, Gauteng, 0145 Waterkloof, t: +27 (0)12 809 3941 f: +27 (0)86 619 6662

LTD

DESIGN THR

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SIXT Y (PT P.O.Box 1572 Y) LTD 1, The Western Vlaeberg, Cape, 8018 t: +27 (0)21 4626630 f: +27 (0)21 462 6634

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P.O.Box 5268 5, Saxonwo Gauteng, ld, 2132 t: +27 (0)11 326 5000 f: +27 (0)11 326 5002

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P.O.Box 8761 9, Gauteng, 2041 Houghton, t: +27 (0)11 884 7111 f: +27 (0)11 884 7110

ACG ARCHIT

S CC P.O.Box Cape Town, The Western Cape, 7915 t: +27 (0)21 448 6615 f: +27 (0)21 448 6621 ARCHITECT

Managers and adm inistrators

HITECTS P.O.Box 4063 , Tygervalley, The Western Cape, 7536 t: +27 (0)21 949 2530 f: +27 (0)21 945 4183

& FOGART

PM BAT LEY PARTNE RS ARCHIT DESIGN ECTURE

AA PAPAGE ASSOC INC ORGIOU ARCHITECT ORPORATED &

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P.O.Box 1128 8, Gauteng, 1457 Randhart, t: +27 (0)11 907 2015 f: +27 (0)11 907 2020

P.O. Box 321, Saxonwold, Gauteng, 2132 t: +27 (0)11 788 8095 f: +27 (0)11 788 8097

ARCHITECT

P.O.Box 1293 CHR ARCHITECT 2, S CC P.O.B IS OWTRAM ARC Eastern Cape Centrahil, Port Eliza HITECTURE ox 1926, Pine beth, , 6006 gowrie, t: +27 (0)41 Gauteng, 373 4340 2123 f: +27 (0)41 t: +27 (0)11 373 4324 022 6260 f: +27 (0)86 648 8262

ARG DESIGN

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BOUDRY

P.O.Box 5183 S & ASSOCI 8, ATES The Western Waterfront, Cape, 8002 t: +27 (0) 21 448 3955 f: +27 (0)21 448 5910

P.O.Box 157, PERTY X1 Gauteng,2146 Postnet Suite, Melr ose Arch, t: +27 (0)11 033 6600 f: +27 (0)11 033 6600

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P.O.Box 8707 6, Gauteng, 2041 Houghton, t: +27 (0)11 880 0600 f: +27 (0)11 880 0603

OWNERS

DEVELOPERS

Developers

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● 53 categories, full and part category page sponsorship ● Highlighted data entries ● Data entries with logos ● Affordable small advertisements half and quarter page ● Boxed column and part columns

9 5:27 PM

BOOKING DEADLINE: 07 July 2015 Material deadline:

Logo entries 04 July 2015 Column entries 04 July 2015 Display adverts 05 August 2015

For advertising opportunities and rates contact Riëtte Stevens SOUTH AFRICAN PROPERTY REVIEW SOUTH AFRICAN PROPERTY REVIEW 61 20 c: +27 (0)71 877 5520 t: +27 (0)11 883 0679 f: +27 (0)86 216 9026 e: sales@sapoa.org.za What's 61 RegisterOn_FEB_SUBBED.indd ad.indd 20

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SAPOA educational programmes and workshops

SAPOA educational programmes for 2015 The SAPOA Education, Training and Development Department is planning the following educational programmes for 2015

Property Leadership and Management Programme

What’s new in education

The SAPOA educational programmes are designed to cater for the commercial property industry from entrylevel to executive programmes.

We currently have a Property Development Programme at senior management level and an International Property Leadership Programme at executive management level, and we wish to develop

We developed the following programmes to satisfy our members’ educational and skills requirements. They are: ●● Property Investment and Financial Programme ●● Property Financial Programme ●● Property Leadership and Management Programme

a programme at junior to middle management level on management and leadership with the Henley Business School.

We will keep our members updated on the progress made. Make sure you are registered with the SAPOA Membership Department to receive our educational mailers for the dates and times of these workshops.

Property Investment and Financial Programme

Various SAPOA educational programmes cover investment and finance as modules. We are looking at developing a programme focused on investment and finance for the commercial property industry in partnership with the Henley Business School. We will keep our members updated on the progress made.

Property Financial Programme (PFP) This PFP was presented for the first time in 2014. It consists of three levels and is targeted at administrators, supervisors and managers from financial and leasing departments in property management companies.

●● PFP (Basic) This is a basic financial programme aimed at people who have no formal experience or knowledge of financial concepts in the commercial property industry. The programme covers the introduction to the financial and accounting environment, working capital management,introduction to time value of money and customer identity (the various types of clients).

●● PFP (Intermediate) Property finance (and other financial aspects relating to commercial property) is a highly specialised field. We cover advanced time value of money, budgeting, capital budgeting and decision-making, lease analysis and utilities management in this programme.

●● PFP (Advanced) The advanced PFP training programme is the final level of the PFP series. It covers: ●● The lease negotiation process; ●● Principles of valuation i.t.o. the discounted cash flow model, the income capitalisation model and the direct capitalisation model to determine whether the value of a property is calculated correctly; and ●● Analysis of financial statements and dealing with risk.

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SAPOA educational programmes and workshops

SAPOA workshops planned for 2015 Valuation series of workshops Each of these is a full-day workshop, and will deal with: 1.1 Time value of money for property practitioners 1.2 Commercial property economics 1.3 Advanced income capitalisation valuations 1.4 Principles of discounted cash flow valuations 1.5 Principles of feasibility studies 1.6 Valuation of properties under construction 1.7 Highest and best use valuations

Sectional Title Workshop The HRD Department has received quite a number of requests for a sectional title workshop after we ran our lease agreement workshops.

We will host a full-day workshop on sectional titles.

The Property Lease Agreement Workshop This is a full-day workshop to be presented by a property lawyer. The following is an outline of the contents: ●● Essentials for a lease agreement ●● Rights and obligations of the lessor and lessee ●● Specific leases ●● Legislation affecting leases ●● Recent case law affecting leases

Property development series of workshops Each of these is a half-day workshop, and will deal with: 2.1 The fundamentals of property development 2.2 Town planning and the legal framework of developments 2.3 The development feasibility study 2.4 Raising finance for property developments 2.5 Delivering the property development 2.6 Handing over the development

Lease Negotiating Workshop The Lease Negotiating Workshops are run over two days, where negotiating skills, techniques and role plays will form part of the programme. A before and after assessment will be conducted as proof of the negotiating skills acquired.

The maximum delegates per workshop will be limited to 14.

The National Building Regulations Act: “The SANS 10400 Regulations” (One day workshop) SANS 10400 issued in terms of the National Building Regulations and Building Standards Act 103 of 1977 sets the requirements to ensure buildings will be maintained, designed and built in such a way that persons can live and work in a healthy and safe environment.

Since the application of the SANS 10400 Building Regulations came into effect almost three years ago, there has been much confusion as

to what they entail and what must be complied with.

The workshop will cover the philosophy and intent behind the Regulations, to enable attendees to interpret and understand the requirements of the National Building Regulations. Various sections of SANS 10400 will be covered to ensure that attendees are made aware of the basic requirements of developing and maintaining buildings to ensure the health and safety of persons.

SAPOA’s Education, Training and Development Department is planning several workshops for 2015.

We have identified two topics – valuation and property development – and will host a series of workshops per topic at monthly intervals.

Delegates may enrol for the full workshop series at a discounted fee; those who only wish to attend the workshop of their choice can do so at the normal SAPOA workshop fee

Occupational Health and Safety Act: Legal Liability (Half-day) In this workshop we will deal with occupational health and safety risks, who is the employer, duties and responsibilities of the employer, safety representatives, and their functions and investigations. The last part will deal with managing risk and the impact of the amended Construction Regulations that came into effect in August 2014.

The Financial Intelligence Centre Act (FICA) The Financial Intelligence Centre Act No 38 of 2001 (FICA) was signed into South African law 13 years ago. The Act covers “Anti-Money Laundering and Counter-Terrorism Financing Legislation”. Compliance FC officials have stated that the time has come to exercise zero tolerance. The warm-up window period has closed and the centre is now vigorously implementing the Act.

Green Building Council Workshops We will be partnering with the Green Building Council on some of its workshops. Make sure you are registered with the SAPOA Membership Department to receive our educational mailers for the dates and times of these workshops.

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off the wall

Simplified living Designed specifically for the South African context, POD-INDAWO is a design intervention that affords homeowners a comfortable, functional small-space experience

By Michelle Marais Photographs by Brett Rubin

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I

t started as a counter-culture movement in the 1970s and 1980s, pioneered by a handful of people who appreciated living off-grid and on the land. Over the past 40 years, the smallhome movement has changed direction and emphasis many times but remained widely popular among those who prefer a simplified living in small spaces.

Putting their own spin on the resurging trend is Clara da Cruz Almeida from Collaborate000 Architects and Johannesburgbased design brand Dokter and Misses, who collaborated to bring to life a modern nanohome called POD-INDAWO. The design process was centred around challenging existing attitudes towards conventional living spaces, and the most efficient way to create an intervention within sustainable living – and the contemporary urban landscape.

Each 17m² POD is manufactured off site to specific client specifications, allowing the owner to start with an empty shell or to kit out its interior. Once delivered on site, the modular, prefabricated home is connected to electrical and plumbing services. It can even be set up for off-the-grid operation.

Several units can be positioned in various configurations to form larger, multi-use living areas. Because the POD is designed as a lightweight structure, it can be placed anywhere on 24m² of open land and moved to another site at any point in the future.

However, installing this small home in South Africa requires approval from council.

In today’s day and age, downsizing a primary residence makes a lot of sense to anyone who feels “footprint guilt” or a financial squeeze, or simply wants time to enjoy their small space rather than spend hours cleaning or fixing it.

Making inroads into ecofriendly, customisable living solutions, the POD’s design and size allows all these things, and – taking the recent load-shedding into consideration – the drastically reduced energy bill is a welcome bonus.

For Dokter and Misses, simplicity and ease were vital in the realisation of the POD’s design. The design duo rose to the challenge by creating a living space that is both functional and energy-efficient; a space that could ideally be treated as a “starter” home, elegant guest cottage, home office or holiday home.

Before setting out to design the interior, the brand realised that it needed to convey a sense of calm. This was successfully achieved by keeping it predominantly white, with dollops of mint-green and grey to add colour.

The wall-mounted storage encourages the owner to display items, while ample closed storage helps prevent clutter. The POD’s interior is as custom-made as they come.

Everything from the kitchen to the bed, fold-down table and fold-away couches was specifically designed to optimise spacesaving and to maximise the POD’s living area.

The only products used in the prototype that were sourced from an existing range are the lighting and bathroom fixtures from DAM. With the first prototype completed, the team is reviewing the costs but says one can expect to pay between R200 000 and R700 000, depending on specifications.

Whatever the reason – environmental, economic, spiritual – opting for a smaller home has many benefits. Here’s to celebrating innovative local design, and hoping to see the POD-INDAWO in communities across the globe soon.

Specifications The total net internal area, including the mezzanine, measures 17,28m².

The deck is 9m².

Did you know?

“Indawo” means “place” in Xhosa.

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JACARANDA CITY’S BRT

BROUGHT TO YOU

BY WSP

As one of Africa’s largest engineering consultancies, WSP plays an important part in our continent’s sustainable development. We aim to future proof our projects while preserving our nation’s heritage. Everything we do is approached with passion and caring. This is manifest in our handling of Pretoria’s prize Jacaranda trees while working on the city’s new Bus Rapid Transit (BRT) system.

The BRT system in Pretoria is just one example, where we are bridging the gap for commuters. Rapid Transit means less congestion, less pollution, and shorter commutes. It was decided to preserve and relocate these trees, rather than destroy them.

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1

2

Proactive Quantity Surveying 3

4

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

Our track record speaks for itself.

DelQS was established in 2000 and has since built up a remarkable track record. We have provided quantity surveying services for almost all building types ranging in construction cost from relatively small to multi-billion Rand developments. Building and property economics is a specialty.

QUANTITY SURVEYING

Gerhard de Leeuw

Akopo Africa

Nico Roos

Dr CornĂŠ de Leeuw

DISPUTE RESOLUTION

PROPERTY VALUATION

www.delqs.com | JHB +27 (11) 642 8751 | PTA +27 (12) 460 3304 Associated offices: GHANA | KENYA | MAURITIUS | NAMIBIA | NIGERIA | TANZANIA | UGANDA

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