South African Property Review Feb 2014 by SAPOA

South African Property Review

PROPERTY SOUTH AFRICAN

February 2014

REVIEW

AFRICA SERIES Botswana: from rags to riches

Architects and architecture

EMERGING MARKETS Affordable housing and student accommodation GAUTRAIN Unlocking the property pipeline

February 2014

Architecture New-age aesthetics

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from the CEO

Efficiency:

the key to our cities and beyond SAPOA CEO Neil Gopal addresses local authority efficiency and projects the industry outlook for 2014

fficient towns and cities with competitive rates and taxes stand to benefit from more commercial property investment and development in 2014. Local authorities with competitive rates, lower utility costs and incentives for property developers and owners will fare much better in attracting privatesector investment. Those with overinflated rates increases, marred with red tape, skills shortages and corruption, will undoubtedly lose out. Because of the frustration many property investors currently face, with unreasonably high (and mounting) rates increases by some local authorities – the result of inaccurate data and maladministration – local authority efficiency is becoming an increasingly important factor when making major property investment decisions. As a result, even with excellent development sites, poorly run municipalities stand to miss out on billions of rands of investment and rates income. Local authorities need to ensure correct municipal valuations. This will lead to an accurate valuation roll and help increase their pool of ratepayers. In 2014, property development activity will continue on a larger scale, such as that of Waterfall Business Estate and Steyn City. Public sector infrastructure spending – such as roads, rail and housing – will also have positive impact on private sector developments. SAPOA’s recent meetings with the mayors of Johannesburg and Cape Town and with senior representatives of both cities were a big step forward in the dialogue between the property sector and local authorities. SAPOA hopes to continue these discussions and expand them to other regions in 2014. South Africa’s

low economic growth outlook of about two percent, a huge current account deficit and the possibility of an investment ratings downgrade by rating agencies will have a negative impact on all sectors of our economy. When it comes to commercial property, retail will continue with its positive performance while the office sector will remain under pressure. Much of sub-Saharan Africa is starting to attract new multinational investment and this is also bringing more diversification to the local property market, with an increased interest in retail development in other African countries. In terms of South Africa’s listed property owners, we should expect more consolidation of smaller funds in 2014, which will boost the scale and liquidity of the funds. The sector’s fundamentals are strong and vacancies are well managed, which bodes well for solid performance. Furthermore, the potential of residential REITs is likely to be explored by the sector this year – and it isn’t only in sub-Saharan Africa that this sector is identifying opportunities; it is also investing in Europe, Australia and even the US. The new REIT structure has also paved the way for inward investment into our listed property sector. Despite the positives, the sector will remain vulnerable to various risks in 2014. We could see increased pressure on tenant retention and rental growth, given the low levels expected for GDP growth. The main threats to commercial property include unsustainable levels of increasing rates and taxes, electricity costs, skills shortages in the public sector, the low economic growth rate, poorly conceived legislation, corruption and maladministration. Neil Gopal, CEO

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from the editor’s desk

Corridors of concern SAPOA Publications’ editor unpacks her opinion on an issue of concern surrounding Jo’burg City’s Corridors of Freedom development project

ith a passion for writing and expression, and an interest in current affairs, I always knew I would be involved in the media industry. But I never imagined I would become the editor of a commercial property magazine – two, in fact. The South African Property Review and the Property Developer are exceptional titles that have helped to shape my career as a journalist. Property is a fascinating thing. It not only represents our built environment but it defines our existence as humans. So in my first editor’s letter, I thought I’d jump straight into a meaty issue that deals with property and humans – proposed development and concerned residents are part of a common, sinewy debacle on which we all need to chew. During the 10 days of extensive reporting on the death of former President Nelson Rolihlahla Mandela, I bought as many newspapers and magazines as I could to soak up the media frenzy. It was then that I came across an article in The Citizen newspaper entitled “Corridors of Freedom raise more concerns”. I had to pause and read this first before engulfing myself in the plethora of Madiba tributes. The piece focused on the raised community concerns over the City of Johannesburg’s proposed Corridors of Freedom development project. Residents situated along the routes of proposed development fear that densification will result in more crime. Furthermore, they question whether the South African Police Service will be able to cope with the influx of people. Commenting on the project’s densification of the Empire/Perth Corridor, Melville resident Danyle Nunes said that wherever mass population was recorded, more crime soon followed. “My only concern with this project is that the police are currently taking a lot of strain, with lack of vehicles, manpower and skills,” said Nunes. One of the focal goals of the Corridor project is to combat crime – the project includes Crime Prevention Through Environmental Design principles. On 26 November 2013, residents, residents’ associations and interest groups gathered at a participatory planning

session arranged for constructive engagement with city officials. “I registered as an interested and affected party and attended every meeting since the planning phase of the Rea Vaya (Corridor) project,” said Auckland Park resident Pierre Roestoff. “No mention of this development corridor was made at those meetings. This plan seems to have slipped through the back door.” The Rea Vaya project was rolled out in 2009 and has been publicised for some time on the Rea Vaya and the City of Johannesburg websites – it’s nothing unheard of. “Where are the studies that prove it is feasible to build highdensity residential housing as far from the Corridor as Melville Koppies?” asked another resident. “Did someone just take a coloured pen and apply zoning by numbers?” The project is backed by research and is stipulated in the 2012/2016 Integrated Development Plan, which coincides with the Spatial Development Framework and highlights the implementation of the Sustainable Human Settlement Urbanisation Plan. As a suburb dweller and personal vehicle commuter myself, I can understand such concerns with regards to not being informed and the “possible” crime increase. What I don’t understand is the constant complaining of South Africans. Our country is plagued by challenges – one being the underdevelopment of rural areas and neglect those previously disadvantaged. And here is a project that will help to alleviate this issue and transform a city that is still shaped by our apartheid past. South Africans moan when the government does not perform its duties – and still groan when it does. Like the many published articles and televised reports urging us to live the legacy of Madiba who selflessly fought for democratic freedom, communities need to shed their cloaks of negativity for the greater morale of our country. We cannot lose steam now in the revitalisation of our country. The Corridors of Freedom should be fought for too. Candace King

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contents

February 2014

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

February 2014

REVIEW

AFRICA SERIES Botswana: from rags to riches

Architects and architecture

Abreal

ON THE COVER Our theme leader features, among others, the new Investec regional offices in KwaZulu-Natal

EMERGING MARKETS Affordable housing and student accomodation GAUTRAIN Unlocking the property pipeline

February 2014

Architecture New age aesthetics

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From the editor’s desk

News

14 Legal update Municipal Property Rates Amendment Bill 16 Education, training and development

Oilgro

19 Councillors in conversation 20 New-age architecture 28 The lion’s share 32 Africa uncovered Botswana 36 The Sandton story Oversaturation 40 Emerging markets making waves 46 Interview Izak Petersen 48 Gautrain: unlocking the property pipeline 52 Victoria & Alfred’s Silo Square inspires 56 Taking their toll 60 Architects in focus 63 Statistics 64 Off the wall Cycling in the sky 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 Sales Riëtte Stevens Finance Susan du Toit Contributors Advocate Portia Matsane, Martin Ferguson, David A Steynberg, Nicky Manson Photographer Michael Glenister

P R O P E R T Y

F U N D

DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material. Printed by

SOUTH AFRICAN PROPERTY REVIEW

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

e: david@rsalitho.co.za

2014/01/16 9:14 AM

In the last year since September 2012, we have opened an additional 5 clubs to grow our estate to 109 clubs in South Africa. So what is next for us in 2014 and beyond? Well, we are planning a continued accelerated rollout of new Health Clubs across the country and are looking to secure multiple locations 2 2 ranging from 1500m to over 4000m . We have a proven quality and business record that has created and maintained fantastic and historic relationships with developers and landlords. We have an iconic brand that promotes activeness and attracts tenants and visitors alike to locations all across South Africa. If you would like to propose a possible location or development with us, we would be delighted to speak to you. Please contact our Property Director Herman De Beer for further details on 082 460 3565 or herman.debeer@virginactive.co.za. www.virginactive.co.za

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news

Woolies cans business in Nigeria, SA retailers to follow?

hile Woolworths has canned its three-store pilot project in Nigeria, citing a mismatch with the Nigerian consumer and climate, Broll Nigeria says this need not deter South African retailers from profiting in the country. In fact, Broll expects more South African retailers, especially value retailers, to seek opportunities in the Nigerian market in the coming months and years. “Yes, doing business in Nigeria is a challenge,” says Broll Nigeria’s Norman Sander, who manages Ikeja City Mall in Nigeria. “But if you can offer middle-class Nigerians the right price, product, service, quality and choice, the sky is the limit.” South African retailer Shoprite is notching up exceptionally strong trading at Ikeja City Mall, according to Sander. He also says South African retailers should be prepared to change their models for the Nigerian consumer. If they do so, they stand to gain a firm foothold in the marketplace in a country where consumers are brand-loyal and value good service, which is in short supply. But he says the Nigerian market is vastly different from that of South Africa and its neighbouring countries. “Research is essential to understanding this unique set of consumer needs and norms, before venturing into this exceptional territory.” Broll is increasingly being called upon for its professional property services and insights to support retailers and property owners who are seeking to unlock the many retail opportunities in Nigeria. “The market and spend needed for retail success is here and growing,” says Sander. “Retailers wanting to crack this market need to customise their models to meet the unique consumer needs and aspirations.” Sander offers a few suggestions that Broll has picked up for retailers planning to enter the Nigerian market, starting with using a cash-based model initially, rather than counting on sales from accounts or cards. He explains that there is little, if any, brand recognition for South African retailers in Nigeria, where consumers are more familiar with US and European retailers. This requires a marketing strategy that goes beyond advertising store openings and extends to launching a new brand. The market’s buying patterns are also different from what South African retailers are used to. With the mobile-phone boom in Nigeria, and an increasingly techsavvy population, Sander says digital and social-media marketing are effective tools for retailers. Despite all the opportunity, Sander cautions that retail in Nigeria is not for sissies. “Mall rentals are high because of the elevated infrastructure and development costs which, in turn, demand high turnovers,” he says. “Infrastructure is poor, red tape is plentiful and officials often interfere. The supply chain also takes far greater focus, with a host of potential obstacles to be navigated. ”Yet, with all the challenges, Nigeria’s retail opportunities keep on growing on the back of mass urbanisation, the emerging middle class, rising retail awareness and an increasing consumer culture.” +27 (0)11 441 4000, Broll.co.za

JHI focuses on retail sector growth in Africa

s increasing global attention focuses on developing countries in Africa and as growth on existing business tends to be muted, an ongoing trend is for retailers to expand into the continent in order to increase their number of stores and turnover, says Gielie Visser, who has just been appointed the director of retail strategy at JHI Properties, focusing on Africa. “Developers are seeking out opportunities in stable economies where they can make sound returns – and if you can offer US dollar transactions, even better,” he says. “Developments on the continent are increasing in size and sophistication, which is not surprising, given the size of the market.

“There remains scope to promote sometimes simple innovations such as LED lighting and energy-efficient design. The challenge is to sell such concepts in the context of longterm cost savings, and not just the responsible thing to do. “Our aim is to become involved in developments from the start and guide the decisionmaking process in a responsible way. There are many opportunities to do simple things better – for example, sometimes it is more important to have skilled staff and clean toilets than the very latest in European fashion.” A member of Excellerate Property Services (EPS), JHI Properties is already well established in Africa.

EPS partners with First Air Group

n a strategic move to further expand its operations as a multiservice provider within the property sector, Excellerate Property Services (EPS) has formed a partnership with First Air Group, an established business that provides the technical aspects of facilities management, comprising primarily mechanical and engineering services to commercial, industrial and retail property owners.

The services provided include facilities management, maintenance and repair services to buildings, industrial plants and equipment associated with engineering support services. “In line with our vision to expand our service offerings, we identified First Air Group as a reputable, established company well-suited to provide services to clients within the Excellerate Property Services group, while simultaneously continuing to grow and expand First Air’s

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news Over and above the 300 shopping centres managed in South Africa, JHI manages and/or provides leasing facilities for a number of shopping centres, highstreet retail buildings and mixed-use assets with retail components in Namibia, Zimbabwe, Mozambique, Swaziland, Ghana, Nigeria, Lesotho, Kenya and Democratic Republic of Congo (DRC). With a project team for Africa comprising seven highly skilled and experienced development and project managers, JHI Properties is also involved in a variety of development projects in Africa, including acting as development and project managers for an Innscor retail outlet in the DRC. “Our ongoing strategy is to continue to increase our presence and activities in the retail property management sector on the African continent and we are committed to securing the best strategic retail letting skills in the region,” says Marna van der Walt, CEO of EPS. ”Because of the significant scale of property already under management, JHI can offer cost-effective services with the highest quality over a broad range of propertyrelated disciplines.” +27 (0)11 911 8000, Jhi.co.za

existing operations,” says Marna van der Walt, CEO of EPS. “This partnership further enhances our existing comprehensive service offering to the property sector, providing added value and convenience for both our existing and potential clients. For example, a significant number of JHI Properties’ clients require mechanical and engineering services, which provides immediate business opportunities as well as synergies for crossselling of other services provided within the Excellerate Property Services stable of companies.” +27 (0)11 523 2980, Epsgroup.co.za

5th Avenue Properties announces strategic alliance

ommercial property brokerages 5th Avenue Properties recently announced its strategic alliance with London Stock Exchangelisted global real estate advisor Savills UK and European businesses in the commercial property sector. This alliance will also facilitate a close working relationship with Pam Golding Properties. The alliance between 5th Avenue Properties and Savills is set to create a market precedent that was not previously seen within the South African and African real estate service-provider landscape. “By putting Savills and 5th Avenue together, we’ve created a broad and powerful platform to be able to offer commercial real estate services within Africa,” says Anthony Green, director at 5th Avenue Properties (pictured left). “Our relationship with Pam Golding Properties will no doubt deliver mutually beneficial opportunities both within South Africa and across the company’s network elsewhere in Africa.” The property industry in South Africa has changed dramatically over the last decade, creating opportunities for innovation such as this most recent endeavour. Alliances such as this one not only benefit our local economy and foreign investment into Africa but also ensure that outbound commercial property investors are able to take advantage of Savills’ extensive infrastructure within the global real estate landscape. “We are able to combine our experience and expertise – the Bank of China, Wrigley’s, Vodacom, Sumitomo Bank, AMB Capital, Nestle, DB Thermal, PPC, MTN and Avon Justine being just a few of 5th Avenue’s client base – with more than 500 of Savills’ offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East,” says Green. “Over the past 12 to 18 months, we have seen a significant increase in interest from our corporate real estate clients for a presence in the emerging markets in Africa,” says Mark Ridley, CEO of Savills UK. “In particular the oil and gas industry, pharmaceuticals and financial sectors all have expansion plans in this area. 5th Avenue Properties will offer our commercial clients premier property advisory service in South Africa and southern Africa, providing the right service lines and geographical reach.” +27 (0)11 234 6111, 5thavenue.co.za

Growthpoint acquires 8ha site in Cape Town

ncreasing its exposure to industrial property in the Western Cape, Growthpoint Properties has acquired one of the largest and last remaining unutilised properties in Bellville, Cape Town. Spanning nearly eight hectares, the site is prominently positioned adjacent to the wellknown Sacks Circle industrial site. It was acquired from AECI Sans Fibres and the deal was facilitated by Cape Industrial Properties. “This excellent site offers all the benefits of a prime location in a well-established industrial node – substantial electricity, great road access, public transport and generous yard space,” says Growthpoint Properties development manager Riaan Munnik. “It is an exceptional opportunity to grow our industrial footprint in the region with a property that can be customised to meet the needs of a manufacturer or big box warehousing.” The site enjoys an ideal position on Mill Street, near the corner of Robert Sobukwe Road (formerly Modderdam Road) and Peter Barlow Street.

The development has a General Industrial 1 zoning in place. Importantly, it has the option for two access points for security-controlled entrances, which offers optimal vehicular circulation and generous yard spaces. “The site provides flexibility to develop premises starting from 5 000m² to as large as 40 000m²,” says Munnik, who notes that this is a unique opportunity to custom develop a modern, high-spec facility to particular user requirements. “Working with our clients, we will deliver customised, top-quality facilities that include energy efficiencies to meet our clients’ needs, with competitive rentals. We’re excited about the unique proposition that this site represents and we look forward to developing a high-quality facility that will grow our impressive development portfolio, for which we have received tremendous accolades.” +27 (0)11 944 6001, Growthpoint.co.za SOUTH AFRICAN PROPERTY REVIEW

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news

Redefine’s first direct offshore property acquisition in Australia

edefine Properties has completed its maiden direct offshore property acquisition, obtaining a 50% share in the landmark Northpoint Tower located in north Sydney, Australia. For this transaction, it partnered with ASX-listed company Cromwell Property Group, in which it has a 12,9% direct holding and a further 13,2% indirect holding through Redefine International PLC. The purchase consideration for Northpoint Tower is AUD279-million, which approximates an income yield of eight percent. The property is 50% geared and Redefine has funded its equity portion by leveraging its directly held Cromwell shares in Australia. As a result, the acquisition will be earningsenhancing for Redefine investors from the initial year of ownership. Redefine CEO Marc Wainer says a property of this quality, which

includes the potential for expansion, at the sort of yields obtainable in Australia, is unmatched in the South African market – particularly given that Redefine’s average cost of funding this transaction is around six percent. Northpoint comprises 30 000m² of offices in an iconic 37-storey office tower. It also includes 5 000m² of retail space and 420 parking bays. It includes an opportunity to expand the retail by a further 5 000m² and improve the existing retail offering. “We are excited to partner with Cromwell on this acquisition and have no doubt that, under their management, significant value will be added to this asset,” says Wainer, adding that Redefine will actively pursue similar joint ventures with Cromwell and Redefine International in the future. +27 (0)11 283 0000, Redefine.co.za

Vaal Mall expansion to enhance retail experience

ollowing seven successful years of being the premier shopping destination of Vanderbijlpark and the Vaal Triangle, Vaal Mall will undergo a substantial 20 000m² expansion in 2014. Co-owned by Sycom Property Fund and Changing Tides, a Flanagan & Gerard Property Investment company, the R450million project will see the centre expand from its present 50 000m² to 70 000m². Commencing this month (February 2014), the expansion will include upgrades to the existing mall, ensuring a consistent, fresh, modern look and feel throughout the centre. “Vaal Mall is a flagship in the Sycom portfolio,” says David Falck of Sycom Property Fund. “This expansion will ensure that it remains the preferred and most dominant shopping centre destination in the greater Vaal area. Vaal Mall’s major retailers are growing with the centre. Game, Edgars, Woolworths, Truworths, Foschini, Dis-Chem and Mr Price will see a sizeable

increase in floor space, offering shoppers greater variety and choice. Adding to the already diverse tenant mix at the mall, Ster-Kinekor will introduce a cinema complex, offering visitors an entertainment option. According to Paul Gerard of Flanagan & Gerard Property Investment, the demand for retail space within Vaal Mall has been exceptional, with many national retailers jumping at the chance to expand. “This enables us to be selective with new tenants and amplify the retail mix with shops that are

an excellent match for the mall’s customers,” he says Vaal Mall’s expansion will also see Wakaberry and the Cotton On group make their debut in the centre. Customers will also enjoy the convenience of a mezzanine parking level as well as rooftop parking for direct access to the cinemas. Vaal Mall’s strong financial performance, solid trading densities and foot-count of nearly 10-million shoppers per annum, growing by six percent year-onyear, underpinned the decision to expand the shopping centre.

“There is no doubt we’re on the right track with the expansion and upgrade,” says general manager of Vaal Mall Jacques Mizen of Acucap Management Services. “It will offer bigger and better stores, a strong entertainment component consisting of cinemas and children’s entertainment, more variety to create an even better shopping experience, upmarket fashion stores, a comfortable shopping experience, plenty of covered parking and a few extra surprises.” +27 (0)10 590 4867, Fgprop.com

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Industrial users attracted to airport locales

Tongaat Hulett to release prime land in Umhlanga

ongaat Hulett will release 42 of the remaining 62 hectares of Ridgeside, its iconic development on Umhlanga Ridge, to the market as a single transaction in the first quarter of 2014. Located on the prime sea-facing slopes of Umhlanga Ridge, Durban’s first-choice office location and one of the leading property investment opportunities available, the site is fully zoned to accommodate 485 000m² of mixed-use floor area, comprising 83 817m² of commercial space (offices, retail and other commercial uses) and 3 158 residential units (including hotel and other leisure uses). Durban has been constrained in relation to other major centres in prime real estate investment during recent years, and the strategy is now to accelerate the pace of development in Durban in collaboration with other role-players. “The transaction will allow a single investor or consortium to assemble a real estate asset base in the most sought-after location in KwaZulu-Natal that will, on completion, exceed R12-billion in value,” says Tongaat Hulett property executive Michael Deighton. Since the commencement of land conversion on Umhlanga Ridge 17 years ago, the node has attracted more than R50billion in real estate investment,

while currently 164 000m² of development, representing more than R3,6-billion in investment value, is under construction. “The timing is just right for this mega property transaction initiative to be undertaken,” says Tongaat Hulett CEO Peter Staude. “It will allow stakeholders to maximise their investment and it will further increase the pace of development in the region, building on the investment platform already created.” +27 (0)32 439 4000, Tongaat.com

roximity to international airports in major centres is increasingly becoming a key factor for industrial property users, and Airport City – a secure, modern park with high exposure to the N2 and the busy Borcherds Quarry Road next to Cape Town International Airport – is no exception. So says Seamus Daly, leasing, sales and investment broker for JHI Properties, who recently concluded a lease for 3 030m² of warehousing and offices at Airport City on behalf of Dachser South Africa. The total value of the five-year lease is R15-million. The local operation of this global logistics provider relocated to larger premises in Cape Town, moving from a 750m² warehouse to a 2 215m² facility plus 815m² of offices, including a recreation room with an indoor braai. “This well-maintained property is only four years old, with quality office accommodation plus a warehouse with multiple loading doors, excellent flow, wide access gates and loading docks, as well as a generous yard area,” says Daly. “In recent years we have increased our staff complement from 40 to 55 and experienced considerable growth in our business, necessitating a larger warehouse,” says Thorkild Nielsen, branch manager of Dachser in Cape Town. Dachser’s global network extends to more than 242 locations and 24 800 staff in total. Daly adds that land is available in Airport City for industrial development to suit tenant requirements. “The sites range from 2 400m² with approved plans for a 1 200m² warehouse with three loading doors plus offices, to development sites of up to 20ha. We also have a number of existing warehouses available from 250m² to 2 000m²,” he says. +27 (0)21 4181640, Jhi.co.za

PGP engages with Spain and Portugal

ow that Spain has promulgated legislation that will grant automatic Spanish residency to nonEuropean Union citizens who invest €500 000 in property, Pam Golding Properties (PGP) is marketing a broad selection of properties, from one-bedroom apartments and beach cottages to spacious seaside villas and mountain retreats, situated mainly in the prime locations of Barcelona and the Costa Brava as well as the islands of Mallorca and Ibiza. “The properties, starting from just under €400 000, are part of an initial offering we are showcasing, and comprise both new and existing homes that we believe will have high appeal as leisure investments for South Africans,” says PGP’s

chief executive Dr Andrew Golding. “This is coupled with the fact that investors who acquire properties priced from €500 000 will be entitled to Spanish residency. This in turn qualifies them for a Schengen visa, which grants unrestricted access to the Schengen zone. “Our international and projects division has formed an association with an experienced and reputable local company, which will provide buyers with professional advice regarding the legal aspects of acquiring property in Spain, as well as managing agents to handle the holiday letting of the properties. “In terms of the residency programme, the minimum amount of €500 000 is payable in cash. Residency is granted initially for one year, and we

have been advised that the application for renewal is a formality, and thereafter is required every second year.” “In addition to the Spanish residency programme, we have just concluded an association with a real estate partner in Portugal to take advantage of the Portuguese Golden Visa programme,” says Chris Immelman, MD of PGP’s international and projects division. “This is very similar to the Spanish programme – but it does seem to fast-track the process to obtaining Portuguese citizenship, which entitles one to a Portuguese passport. The entry level is also €500 000, which results in permanent residency after five years and citizenship after six years.” +27 (0)21 762 2617, Pamgolding.co.za

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sapoa national councillors SAPOA Annual Convention

Previous thought-provoking speakers

Parks Tau Mayor of Johannesburg

Thabo Mbeki Former president of South Africa

Tokyo Sexwale Former Minister of Human Settlements

Mamphela Ramphele Former MD of the World Bank

Thuli Madonsela Public Protector

FW de Klerk Former president of South Africa

Judge Dikgang Moseneke Deputy chief justice of the Constitutional Court of South Africa

Thoko Didza Former Minister of Public Works

Patricia de Lille Mayor of Cape Town

Meet the leading players in the property-industry at the annual SAPOA Convention and Property Exhibition. This event celebrates all things property-related, and has a stellar line-up of speakers. For three days every year, attendees have unsurpassed access to internationally and nationally renowned speakers, the latest trends in commercial property, and a unique forum to learn about developments within South Africaâ&#x20AC;&#x2122;s government and private sector that affect the property industry as a whole.

Tony Leon SA ambassador to Argentina

Gill Marcus Governor of the Reserve Bank of South Africa

Elias Masilela CEO of Public Investment Corporation

Sir Ken Livingstone Former mayor of London

Richard Quest Convention facilitator and MC

John C Cushman III Chairman, Cushman & Wakefield

www.sapoaconvention.co.za

Save the date: 10 to 12 June 2014, CTICC

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legal update

Summary of the Municipal P The South African Property Owners Association has considered the provisions of the Local Government: Municipal Property Rates Amendment Bill 2013 (the “Bill”). Hereunder is a summary of the proposed amendments

to pay a rate levied by the municipality. A body corporate is not liable for rates on units in a sectional title scheme or rights of extension or exclusive use areas unless those are owned by the body corporate.

4 Land Reform Beneficiaries The present rates exemption for land belonging to a land reform beneficiary is extended to the spouse and dependants of that beneficiary.

5 Place of Public Worship By Advocate Portia Matsane, manager of the legal-services department at SAPOA

1 Agricultural Properties The definition of Agricultural Properties is proposed to be amended to include properties that are used for the rearing, trading and hunting of game but exclude properties used for the purposes of eco-tourism and any portion used for the hospitality of guests. This will allow farmers who breed game to also hunt and trade in game without affecting the agricultural purpose of their properties. However, as soon as a part of the property is used for eco-tourism or hospitality of guests, then that part will be valued on a commercial basis.

2 Mining Properties There are presently a number of disputes with municipalities as to whether mining potential affects the value of properties or not. The Bill clarifies this aspect and specifically records that a municipality may not levy a rate on mining rights or mining permits within the meaning of the Mineral and Petroleum Resources Development Act 2002, but may levy a rate on buildings and structures above the surface of mining properties required for the purposes of mining. This is a logical amendment as all mining rights vest in the State and should not be brought to account in levying a rate.

3 Sectional Title Owners 3.1 The present Local Government: Municipal Property Rate Act 6 of 2004 (the “Act”) does not provide that rates may be levied on exclusive use rights and rights of extension. 3.2 The Bill now provides that in sectional title schemes, the holders of exclusive use areas or rights of extension will be liable

A new definition has now been included in the Bill to clarify the meaning of a place of public worship. Inter alia, to qualify, the land must be either registered in the name of a religious community, or in the name of a trust for the benefit of a religious community, or subject to a land tenure right.

6 Runways The limitation of runway land as public service infrastructure is amplified. The previous narrow description of “runways or aprons at national or provincial airports” in the Act has now been amplified to include the areas for air traffic control units and, importantly, “the vacant land known as the obstacle-free zone surrounding the runways or aprons which must be vacant for air navigation purposes”. This goes a long way towards clarifying that the greater land used as an airport does form part of public service infrastructure. Land on which other airport buildings such as hangars are situated will still not qualify as public service infrastructure.

7 Public Service Purposes The definition of “public service purposes” has also been amplified to include land owned by the State or an organ of State for rendering services to the public such as hospitals, clinics, schools, libraries, police stations, prisons, courts of law and the like. This now allows a deferential rate to be applied to these properties.

8. Residential Properties 8.1 There has been concern that the Bill provides that second properties will be rated at a different value. This does not appear to be correct, as the Bill provides that if the “primary use or permitted use is for residential purposes” then the property is considered residential property.

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legal update

l Property Rates Amendment Bill 2013 If a commercial activity is undertaken on a residential property, then it will not qualify as residential property. There is no distinction as to the number of properties owned. However, this excludes vacant properties which may attract a different rate. Vacant, we assume, means unimproved. 8.2 This is an improvement on the previous definition, which simply said that residential property means “a property included in a valuation roll as such”. 8.3 The Act prohibits differentiation of rates on residential properties except under certain circumstances. The Bill now amends this so that it does not apply to residential property that is vacant. A differentiation of the properties that are vacant is permitted.

9 Deferential Rates There are some notable changes to the categories of rateable property, which may have different categories: 9.1 Reference to the consideration of the geographical area to which the property is situated has been deleted; 9.2 Agricultural properties are now defined as discussed above; 9.3 Smallholdings are no longer a separate category of rateable property. They will now either fall under agricultural properties, industrial properties or residential properties, depending on their use; 9.4 Reference to “State-owned properties” has been replaced with “properties used for public service purposes”, as dealt with above; 9.5 A number of categories are excluded for differential categories such as properties acquired through the Restitution of Land Rights Act, protected areas, properties on which national monuments are proclaimed, properties owned by public benefit organisations, private owned towns services by the owner, formal and informal settlements, State trust land and communal land; 9.6 An addition to the category clause is that the Minister, with the concurrence with the Minister of Finance made by notice, may create any category for different rates. This leaves the matter

open for change without having to amend the Act; 9.7 It should be noted that the amendment relating to differential rates will come into effect on proclamation under a separate Gazette.

10 Categories for Exemptions, Rebates or Reductions 10.1 Included in this category now are properties used for public service purposes (see above), properties on which land tenure rights apply and on which no industrial commercial business, mining or commercial agricultural activities are conducted, and properties subject to the National Heritage Resources Act. 10.2 The category relating to land tenure is qualified in that if land held under a land tenure right (in terms of Upgrading of Lands Tenure Rights Act 1991) is commercialised then the exemption/reduction/ rebate would not be applicable.

11 Increase in Rates during a Financial Year An amendment to Section 12 of the Act provides that a rate for a financial year may not be increased during a financial year as provided for in the Municipal Finance Management Act. Previously, increases were permitted.

12 Impermissible Rates The municipality may not levy a rate on a number of categories of properties, and the Bill amends these so that rates are impermissible on: 12.1 particular parts of public service infrastructure; 12.2 the seashore as now defined in the National Environment Management Integrated Coastal Management Act 2008, unless the property is alienated or let; 12.3 mining rights or mining permits excluding buildings and infrastructure above the surface, as we have mentioned above; and 12.4 property belonging to land reform beneficiaries or their heirs, dependants or spouse (see above).

13 Provision of Address The Bill provides that a person liable for a rate must furnish a municipality with an address to which correspondence can be directed. In the light of this provision, the obligation to provide an address to the municipality now rests with the property owner.

14 Period and Validity of Valuation Roll It should be noted that the Bill provides that valuation rolls will now be for a period of not more than five years as opposed to four years under the Act. The MEC for Local Government will be able to extend that period for up to seven years as opposed to the provisions in the Act being five years.

15 Access to Information The Act presently provides that the municipal valuer or assistant municipal valuer may require owners to give the valuer access to documents and other particulars relating to the property. The Bill extends this obligation to bodies corporate, share block companies and the management association in respect of property time-sharing schemes.

16 General Basis of Valuation This remains the same as in the Act, save that it is now specifically recorded that mining rights or mining permits in terms of the Mineral and Petroleum Resources Development Act are specifically excluded from the category of licence, permissions or other privileges granted in relation to the property that were to be brought to account. This entrenches the further exclusion of mining rights and mining permits from rateable properties.

17 Adjustments or Additions to Valuation Rolls The Act provides that any adjustments must result in the calculation of the amount actually paid on the property in the amount payable on the property since the adjustment or addition to a valuation roll. The Bill proposes an amendment that the municipality must repay any person who paid a difference in addition to that that was payable. SOUTH AFRICAN PROPERTY REVIEW

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education, training and development

SAPOA graduates Q What are your thoughts on the property industry? The property industry provides us with a way to grow. I’ve had exposure to retail, small works and non-developments, where I plan to invest my quantitysurveying qualification. My manager Pieter Engelbrecht has shown me the different stages of developments and educated me about the industry.

Martin Ferguson, SAPOA’s HR, education, training and development manager, collaborates with thought leaders in South Africa’s property sector

SAPOA student graduates reflect on their passions and goals for a future in property

Q What would you like to achieve in the property industry? Property development has caught my eye, so that’s where

Q What are your goals and dreams for the future? I’m aiming for my PR(QS) accreditation within the stipulated time frame of two years). Property investment is a platform I plan to reach, and growth is the ultimate goal.

Nomcebo Nxumalo BSc Quantity Surveying University of Witwatersrand

me the opportunity to further my studies and provided the support I needed through my undergraduate and post-graduate studies.

Q How do you feel about SAPOA? SAPOA is a powerful platform, and very influential in the industry. As an individual, I would have registered with SAPOA. The workshops SAPOA provides keep me on the same level as other role players. I too want to be a South African property owner. Q How do you feel about being part of the education programme? As part the first group to be awarded the bursary, I believe the students, went through a progressive journey to get to this point. The programme is great for property students. I had a vision of being on site; and SAPOA has altered my thinking. During my vacation work, I was exposed to various departments, which helped me figure out my strengths. SAPOA has many registered companies. Having those companies invest time in the students would work very well.

I plan to make my mark in the industry. I would like not only to develop property but also to be able to invest in property. Property development is a journey I can’t wait to explore.

Q What are your thoughts on the property industry? The property industry is a dynamic, exciting sector with a lot of room to learn and grow.

Philani Mzila BCom (Honours) Investments and Corporate Finance University of Witwatersrand Q How do you feel about SAPOA? SAPOA is a great organisation, which has been able to address the disconnect found between business and government. Overall, it’s a professional outfit with a great reputation. Q How do you feel about being part of the education programme? The education programme is a great initiative. It has given

Q What would you like to achieve in the property industry? My main goal right now is to learn and absorb as much as possible. A lot of the time the industry and classroom are two different worlds, and my goal is to fill that gap with knowledge. Q What are your goals and dreams for the future? In terms of academics, my immediate goals are to get my master’s in finance and investment at Wits Business School. I also want to attain my finance designation. In terms of the industry, probably to be a fund manager or fund principal.

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education, training and development

2014 Mathoto Mefolo

professions meet to make sure that the standard of the country’s property matches international standards.

BSc Quantity Surveying University of Witwatersrand Q How do you feel about SAPOA? SAPOA is a wonderful association, which has given young people an opportunity to further their studies at university. Q How do you feel about being part of the education programme? I’m very happy to be part of the programme. It has helped so much, especially with the payment of fees – and also by looking out for us in terms of the whole varsity experience.

Q What would you like to achieve in the property industry? I’d like to learn and equip myself with skills to be able to work and run a project, or to be a developer. Q What are your thoughts on the property industry? It is a large industry that contributes to the economic growth of the country. It is a beautiful industry to work in because it is where different

Q What are your goals and dreams for the future? To become a registered quantity surveyor and to make a difference in the property and construction industries.

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

s part of this objective, our SAPOA Awards for Innovative Excellence in Property Developments provides public recognition for top quality design and functionality and a benchmark for excellence in property Be part of this exclusive award category entry in the most prestigious property awards program 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 - reap the benefits from positioning as a champion of South Africa’s property industry, innovation and excellence.

SAPOA congratulates its bursary students and wishes them the greatest of success in their careers

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. ENTRIES CLOSES 17th FEBRUARY 2014 ENTRY FEE R7 500.00 (excl VAT) QUERIES Jane Padayachee marketingmanager@sapoa.org.za or 011 883 0679 ONLINE REGISTRATION www.sapoaconvention.co.za - Awards

w w w. s a p o a c o n ve n t i o n . c o. z a SOUTH AFRICAN PROPERTY REVIEW

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education, training and development

SAPOA offers first e-Learning Educational Programme in 2014

APOA currently offers 10 different training programmes in conjunction with various universities in South Africa. Rising travel, venue, trainer and study-material costs have resulted in SAPOA evaluating alternative e-learning methods as well as following new educational trends. e-Learning will also be welcomed by younger generations – we will be able to develop their skills in a manner they not only understand but also prefer and feel comfortable with. There are various e-Learning options and service providers but, at this point, some service providers used by the universities tend to take up to 75% of the revenue generated by our programmes. SAPOA has appointed Hypenica to create a training platform, including the filming and production of the training video content. SAPOA’s primary objectives for deploying a system of this kind are the following: l Development of a customised, central training platform that can host all training material l Generating additional revenue by increasing total student numbers l Reduction of trainer and venue costs l Availability of training content anywhere at any time, in a way that’s optimised for mobile and tablet platforms l Reduction of the educational training programme cost, making it more affordable for both corporate members and individuals. The solution is based on Hypenica’s Mobile Training Solution (MTS) and 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. Hypenica’s MTS solution uses multiple channels, including mobile and web, to manage and deliver training material to defined student groups. Specific functionalities include: l Configuration of any number of training programs – that includes multiple content types, flexible work flow, question and test preparation, automatic scoring, real-time feedback from student; l Optimisation for mobile and tablet access; l Full granular control of which training can be accessed by specific students; l Easy communication with students through built-in communication functionality; l Ability to schedule training per student/student group; l Real-time, configurable dashboards that provide immediate feedback on student and course performance; l Automatic report generation and distribution; l Extensible platform generation and distribution; l Extensible platform to include ability to configure and manage additional enterprise feedback and voice of the employee/voice of the customer surveys; l A fully managed and supported solution. This solution can also be utilised to run programmes from one source to various venues (“webinars”) for workshops and seminars. Watch this space for more information and for our launch date in early 2014.

The world needs fewer engineering companies. Rebranded as Royal HaskoningDHV, SSI Engineers & Environmental Consultants believes in being more than an engineering company. Our rebranding to Royal HaskoningDHV ushers in a new class of engineers and consultants, offering solutions for the sustainable interaction between people and their environment, ultimately enhancing society together.

www.rhdhv.co.za www.royalhaskoningdhv.com

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Councillors

sapoa national councillors

in conversation

We speak to our national councillors about their role at SAPOA and their future goals at the organisation

What have been your greatest achievements at SAPOA so far?

Who is Imraan Ho-Yee? I am a 45-year-old father of four, happily settled in Cape Town. I am one of three directors at Vivid Architects, an architectural practice that specialises in the design of large commercial projects, including retail centres, offices, hotels and commercial residential projects. Vivid Architects has been in existence for the past 15 years. I’m also the current chairman of SAPOA’s Western Cape committee.

When did you join SAPOA? What are your thoughts on the organisation? Vivid Architects has been a SAPOA member for the past seven years. As a professional architectural practice working in the commercial property environment, it was essential to join SAPOA, as it is without doubt the leading property industry association. SAPOA has to fulfil a very wide role as members include large corporate property players and smaller professional consultants. In addition to the core full-time SAPOA staff, the SAPOA board, the National Council and Regional Committees comprise volunteer members who give of their time to the benefit of the property industry.

As the current regional chairman, a position I’ve held for nearly two years, my aim has been to create relationships with other professional bodies and organisations that are individually dealing with specific property related issues. Together with these organisations, SAPOA can pool resources and effectively lobby issues that are of concern to all. One of our major projects is an extensive research document that aims to assess the value of the property industry in the Western Cape and to quantify cost to the industry of possible protracted delays to development approvals. The aim is to use this information to assist, improve and (where possible) guide provincial and local government systems, and to raise awareness of the difficult environment the development industry often works in.

As part of your portfolio with SAPOA, what do you think are the current industry challenges? How can they be solved? How can SAPOA assist? Our key committee focus over the past few years has been to improve the presence of SAPOA in the region, in particular with provincial and local government, officials and politicians. We have achieved this, and SAPOA is considered a valuable stakeholder in the economy of the region. Our regional committee is very active in organising informative breakfast presentations, educational workshops and very valuable networking events.

By Candace King

What are your future plans with SAPOA? What would you like to achieve alongside or for the organisation going forward?

Advocacy would be our primary objective in the future. Dialogue with the government and other related organisations and stakeholders can only be beneficial to SAPOA and all its members.

Who is Grant Wheatley I’ve been involved in the property sector for the past 20 years with a focus on the Eastern Cape. I’m employed as an asset manager within Novate Properties, working on new property developments and ensuring the current portfolio is well positioned to provide the required returns for our investors. I serve as the chairman of the Buffalo City chapter of SAPOA.

When did you join SAPOA? What are your thoughts on the organisation?

I’ve been on the local SAPOA committee for the past six years, and have enjoyed seeing the organisation move into a professional role as the voice for the commercial property sector in the country.

What have been your greatest achievements at SAPOA so far? Establishing our own local property development awards and showcasing the great work that our property owners do in Buffalo City.

As part of your portfolio with SAPOA, what do you think are the current industry challenges? How can they be solved? How can SAPOA assist? Our biggest issue is local government capacity in both infrastructure provision and financial management. I believe that many of our small towns – and even our large metros – are not seeing the much-needed growth due to this lack of capacity. The government needs to engage business, identify the problems and bottlenecks and then work together to relieve the constraints. SAPOA members have a wealth of knowledge and experience that could be utilised to solve these problems.

What are your future plans with SAPOA? What would you like to achieve alongside or for the organisation going forward? I believe we should step up our efforts in engaging government to ensure our voice is heard. The property sector has a major role to play in developing our economy, especially in our underdeveloped regions.

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architecture

New-age architecture The art of architecture has evolved as the profession moves into an era of appealing aesthetics, sustainability, technology and innovation. By Candace King

rchitecture has always been seen as an art. Throughout history, architecture has played an important role not only by providing shelter and a place to live, work and play, but also by giving meaning and symbolism to specific structures, be it beauty or cultural significance. Our world is populated by a vast amount of interesting, colossal structures that assign specific ideas, meanings and economic importance to specific areas and countries. For example, Paris in France is famous for the Eiffel Tower, while Egypt’s pyramids and the Sphinx are key structures that represent thousands of years of history, serving as a major boost for the country’s tourism sector. Although still very young in terms of an iconic and historic architectural presence, South Africa is moving into an era of contemporary architectural brilliance with the development of several noteworthy structures. The South African architectural industry has evolved into a thriving modern sector that is being led by bright young innovators and strong ideas of aesthetics, sustainability, technology and innovation. No matter how big or small, the new buildings being constructed in the country are highly creative and innovative. From smallscale offices and factory warehouses to stunning hotels and shopping centres, new and refurbished buildings in our cities are changing the landscape, one scaffolding at a time.

Sustainable buildings, sustainable communities With climate change becoming a reality and the need for eco-friendly buildings increasing, the current crop of architects will need to find ways to create sustainable structures. Such innovative ideas and applications are applauded and recognised by the 27th annual Corobrik Architectural Student of the Year awards. The awards highlight the technical talent of the cream of South Africa’s architectural students, aiming to drive the advancement of design excellence nationally. At a recent event for the awards, Thomas Dlengezele of Corobrik said that “It is the challenge of architects today to combine creative design and specification to achieve an architecture that is not only in context with the environment 20

in which it is placed and the people it is to serve, but that has resonance with the natural qualities of the surrounds both aesthetically and in terms of environmental impact reduction. In almost three decades that we have been sponsoring the awards, there has been a growing focus on the need for greater energy efficiency in buildings and water conservation, leading to reduced environmental impacts. This dove-tails with the pressing demand for affordable housing, bearing in mind that 14% of total monthly household income is spent on energy needs, with domestic-space heating being the biggest consumer of energy in South African households after cooking and hot-water provision.” Dlengezele noted that the use of clay bricks in construction, with their inherent thermal mass, provides a relevant, cost-effective way of achieving the requisite thermal comfort and lower heating and cooling energy usage in South Africa’s different climatic zones (characterised by their well-defined diurnal temperature swings). “For all-round performance over the entire life cycle of houses, clay-brick houses suitably designed and specified with nature and the needs of disadvantaged communities in mind are best equipped to support the three pillars of sustainable development – care for the environment, economic value and the social needs, of which dignity is one,” he said. Corobrik sees design innovation and green construction as long-term priorities, illustrating this belief in the development of the sustainable eThekwini Water and Sanitation (EWS) Customer Service Centre in KE Masinga Avenue in Durban. Developed by the City Architects, the building was constructed with the use of Corobrik’s low embodied energy clay bricks, which complemented both the overall design and specific features of the building. “Clay brick is extremely versatile and compatible with complementary green building methods and design fundamentals,” says Dirk Meyer, managing director at Corobrik. “Clay brick has mineral properties recognised for meeting all necessary requirements for healthy living, providing noise insulation and not releasing toxic gases. Additionally, its natural propensity to manage the sun’s energy and support superior indoor thermal comfort mean that clay brick structures are typically cooler in summer and warmer in winter.”

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architecture

The spectacular ocean views and views across to Durban’s cityscape had a huge inﬂuence on informing the arrangement of the Investec ofﬁce space around public interface and service spaces

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architecture City Architects’ Rob Johnson said the project brief was both specific and stringent. Not only was the centre intended to provide customers with better facilities and waiting areas but it was to illustrate what a carefully thought-through green building could achieve in a high-density urban environment. The centre now features a ground floor occupied by the customer service facility, which leads onto a covered piazza, radio dispatch and offices on the first floor, and a planted roof terrace. Green features include a urine diversion system, using phosphates derived from urine from waterless urinals for processing into fertiliser, and tanks that collect groundwater, rainwater from the roof and condensate from the air-conditioning units for flushing toilets and irrigating plants. The air-conditioning system automatically shuts down in sections when demand drops. Another noteworthy Corobrik project is the enhanced design of the Helenvale Resource Centre in Port Elizabeth. Architect Miles Hollins from The Matrix Urban Designers and Architects in the city, who conceptualised the project, says that it had progressed from a scheme that included extensive renovations to a complete rebuild of the facility. “The existing community centre was an isolated event on a barren, rocky site in the heart of the Helenvale community,” he says.

“Too small and in a severe state of disrepair, it no longer served the needs of the local community. The initial brief called for extensive renovations to the existing building as well as additional facilities. However, after a thorough analysis of the site and brief, and through intense consultation with the client and the community, we realised that the full civic potential of the site could only be realised by demolishing the existing infrastructure to make way for a new, integrated facility.” Christie van Niekerk, Corobrik’s Western Cape manager, said that one of the main challenges of this project was to find a balance between providing the best quality building materials and meeting the tight budget provided by the Nelson Mandela Bay Municipality. In the end, a satisfactory choice of clay face brick was selected, which keeps maintenance costs to a minimum. Sustainable facets were also included – automatic electric light management, heat pumps, rainwater harvesting and wall and roof super-insulation. The creation of a community plaza, which extends the civic landscape from a new urban park (part of the Helenvale Precinct Plan across Leith Street, which is the primary modal interchange in Helenvale) and then climbs up to the main public entrance to the building, was key to the design of the new facility.

“This spatial relationship really connects the new complex with the community it serves,” says Hollins. “The tree-shaded plaza includes a tall marker tower that defines the place and a welcoming pergola that ferries the community into the lightly enclosed Community Street.”

Technology and innovation Apart from sustainability, technology and innovation are paving the way in the industry. With the likes of the Alexander Forbes building and Sasol’s new headquarters in Sandton, as well as Sage VIP’s new head office in Pretoria, our new modern buildings are innovative forces to be reckoned with. Innovation can be implemented even on smaller-scale projects. Take, for example, the recent renovation of the Paarman factory, located in Constantia in Cape Town. Managing director of Paarman Foods, Graham Paarman, wanted his office to be accessible to his production staff, which translated into the management offices being relocated to the middle of the factory. “I did not want to be isolated from my team,” he explains. “In my opinion, one of the biggest mistakes made in business these days is a management team that operates away from the core of the business.”

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architecture

This was achieved by suspending the offices above the factory floor, using structural steel slung like a bridge, with a gantry walkway within the girder. The design further makes provision for additional offices in the future. “The project was very unique, and with the use of a good, professional team and quality innovative products, the renovation has provided a vastly more productive working environment, which met my brief and our requirements,” says Paarman.

Another innovative and exciting up-and-coming architectural masterpiece is 177 Empire Place, the first hotel to be built in Sandton in four years. It is set to revolutionise short-, medium- and long-term accommodation for national and international businessmen in Johannesburg. Being developed by Executive Apartments and Hotels (EAH) and managed by property development and finance specialists Construct Capital, 177 Empire Place is a 132-room apartment hotel that is exceptionally unique – it can be run

as a traditional hotel, as long-term rentals, or units that can be sectionalised and sold as stand-alone apartments or investment rental stock. The property has been designed in such a way that every room has direct access from the corridor but can also be configured into two- or three-bedroom suites, offering a unique solution to business travellers who simply require one room or are looking for a bigger suite with a lounge, kitchen and other facilities. Planned to be open for business in the first quarter of 2014, 177 Empire Place is the result of increased demand for alternative accommodation for business travellers, particularly in the Sandton area. “Would you rather stay in a cramped 28m² hotel room while travelling – or in a fully serviced apartment, where you can sit comfortably and work?” asks Clifford Kupritz of Construct Capital. “In addition, it will be more affordable than a hotel. The key is that there’s a concierge as well as additional facilities available– these include meeting rooms, conference facilities, restaurant and room service. Each unit can adapt to one-, two- or three-bedroom apartments, depending on the guest’s requirements. Through innovative design we have been able to utilise the space far more efficiently, giving customers a better value proposition than that of a similarly fitted hotel establishment.”

THIS PICTURE AND OPPOSITE BOTTOM Helenvale Resource Centre in Port Elizabeth ABOVE Paarman Foods factory in Constantia, Cape Town OPPOSITE TOP eThekwini Water and Sanitation Customer Service Centre in KE Masinga Avenue, Durban

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architecture

Q&A with Marc Wachsberger, founder and owner of EAH The hotel also boasts a feature where you can open your hotel-room door with your cellphone instead of a key card.

Q Does this hotel feature any sustainable systems? The hotel uses heat pumps to generate hot water instead of conventional geysers. Performance glazing has been used on some of the façades to reduce the mechanical loads. The hotel is fully fitted with low-flow brassware and dual-flush toilets.

Q Is the design and configuration concept of 177 Empire Place new? The concept is quite new and revolutionary, lending itself to the 21st-century global traveller – young families and young individuals/groups travelling and staying for short to medium periods of time. The concept started at our sister hotel, 20 West, which was initially designed as an apartment block consisting of two-bedroom apartments, then later converted to a hotel through an interconnecting door system that made it viable to get two rental incomes per two bedroom apartments instead of one.

Q How does technology and innovation play a role in 177 Empire Place? We have implemented affordable technology in order to keep costs down, passing on the benefits to our clients. The focus has been to provide the fastest wireless internet and state-of-theart conference and meeting facilities with good acoustics, modern finishes, high-tech data, and screens and iPad docking stations.

Q Does the hotel boast any unique aesthetic features? GLH and Associates Architects’ interpretation for this contemporary hotel was to revolutionise the conventional hotel where all punch-out windows lined up and the building looked like a box. Asymmetry is the key. Through the use of massive extents of glazing to all rooms, natural daylight and maximum views across Sandton have been created. The careful modulation of glazing and vertical floating panels offset on every alternate level create an apparent asymmetrical configuration of the façades, which results in a striking play of rectangular forms. This typical modulation is injected with special glass corners, higher roofs and concrete vertical elements, which further enhance the façades.

Since its inception, the look, feel and functionality of KwaZulu-Natal’s Umhlanga new town centre has been carefully managed, with a clear overall urban vision and architectural guidelines within which architects could

Q Will 177 Empire Place revolutionise the industry?

craft their buildings

Apartment hotels have been a revolutionary introduction in Sandton, meeting the needs of corporates on budgets and those looking for a longer stay than just a few nights. This concept is already well known in the rest of the world.

By Anne Schauffer Nedbank photographs courtesy of dhk architects; Investec photographs by Karl Beath

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architecture

Investec’s KwaZulu-Natal regional office

Designs on commerce T

he tracts of land from Umhlanga Ridge roll down from the crest of the hill towards the magnificent KwaZulu-Natal coastline. For some who work and play here, there are distant city lights to the south; for others, breaker views; and still others, the ocean stretching away to the north. Architectural designs here have been strongly driven by responses to this ever-dynamic outlook. A range of contemporary commercial buildings and corporate headquarters has risen from the ground of the Ridgeside Precinct, and like the entire new urban landscape, has been designed and built within the framework prescribed by the Ridgeside Precinct’s Development Guidelines.

One of Ridgeside’s landmark corner sites was chosen for Investec’s new KwaZulu-Natal regional office. Selected for its panoramic views over the Indian Ocean and high exposure to major arterials, the brief to Durban-based Elphick Proome Architects (epa) was to provide a premium AAA-grade office with a sophisticated expression, capturing an established corporate image and rendered in highquality materials – a building that would not only complement the existing Investec office portfolio but also convey the institution as a leading international bank. As George Elphick says, “The driving factor that tied the design together was the desire to keep it simple – an uncluttered refined elegance. As Le Corbusier wrote in 1925, ‘simple is easy’.”

The spectacular ocean views and views across to Durban’s cityscape had a huge influence on informing the arrangement of the office space around public interface and service spaces. Transparency is important to Investec, and the expressed desire that all the occupants should experience activity within the building acted as a powerful design driver. This is overtly displayed by a dramatic, cathedral-like glazed atrium, glass partition walls within the office spaces and three prismatic cantilevered meeting pods. Sets of escalators display circulation in the arrival space and generate a legible energy in the heart of the focal space. A feature that significantly distinguishes this building is the delicate veil fritted glass suspended as a screen to the atrium envelope.

SAPOA members Investec and Nedbank’s commercial offices in KZN take full advantage of the panoramic views over the Indian ocean

LEFT Nedbank’s KZN offices house about 600 staff members RIGHT Investec’s atrium

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architecture Nedbank’s KZN offices, southeast elevation OPPOSITE Nedbank’s atrium

Designing the world’s most luxurious health club A new Virgin Active Health Club has become a central feature in the business and social culture of Sandton. Every effort has been taken to provide members with a personalised, luxurious exercise and wellness experience. Alice Lane Health Club amounts to an investment of more than R150-million, plus untold hours of blue-sky thinking. Situated between Alice Lane, 5th Avenue and Fredman Drive, the club is set to attract the most exclusive clientele with its combination of personalised service, designer interiors, a full-service restaurant and the latest in training equipment. Part of a development consisting of three office blocks and a piazza, Alice Lane shares the neighbourhood with the Sandton Sun, Mandela Square and the Sandton International Convention Centre. “The Virgin Active team travelled the world looking at world-class health clubs to ensure that Alice Lane Health Club stood out,” says Richard Lamb-Hughes, brand director of Virgin Active South Africa. “The result is a boutique, six-star hotel experience that was designed around a state-of-the-art health club.” 26

The company contracted some of the country’s most dynamic companies, including Paragon Architects, Tonic Design, Design Line Architecture and Paul Pamboukian Lighting Design, to ensure the end product matched the vision. To keep things as green as possible, they consulted with Solid Green, specialists in sustainability in the built environment. “We’ve struck a balance between high energy and relaxation for busy executives,” says Lamb-Hughes. “The Nook and chill-out area are media-free; just a quiet space with a beautiful view of the Sandton skyline. For those who prefer to be kept in the loop continuously, the lounge features multiple television screens beaming out the latest news, sport and business updates. Let’s not forget that Alice Lane is as much a state-of-the-art training facility as it is an architectural achievement. Technogym Artis training equipment keeps you connected to the web while you work out. If quiet focus is what you’re after, get hung up in the anti-gravity yoga studio, which combines the principles of yoga, Pilates and even dance – all in suspension.” Or just head to the roof. “With the growing popularity of rooftop gardens and skyline imagery, we saw an opportunity to create something extraordinary,” says Lamb-Hughes.

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architecture Hundreds of fritted toughened glass panels, supported on stainless steel spider fittings, attenuate light ingress and act as a sun shade to the atrium. This screen exhibits a sheer façade, which complements the granite-clad forms of the building and delivers a memorable signature. For Elphick, the iconic nature of the building lies primarily in the way it addresses its immediate position in terms of being on a corner, and the resolve to use only two materials in the entire external part of the building – granite and glass. Epa won the highest industry accolade for this Investec building – a South African Institute of Architecture Award for Excellence, one voted for by South African peers.

First Ridgeside office building development The first office building developed at Ridgeside was for Nedbank, designed by dhk architects and providing new office accommodation for about 600 staff. The client’s brief was to design a high-quality, contemporary, urban office-park-type development within the given parameters, and that the building be certified under the Green Building Council of South Africa’s (GBCSA) Green Star design rating system for offices. A Four Star rating that rewards ‘Best Practice’ was targeted, and in meeting this,

the Nedbank building became only the second office development in the country to be fully accredited under these stringent design specifications, and the first in KZN. “The site itself, and specifically the views from it, inspired the design,” says Derick Henstra, chairman of dhk architects. “The through-atrium office typology was suggested by the client, and this worked very well for the site and the potential for views from the raised podium. The corners of the building have been accentuated as a direct response to the design guide for the precinct, and again the potential for magnificent views. The façade has a distinctive horizontal composition, reinforced by

the resolution of the façade elements and choice of colours. The introduction of shading devices, corner treatment, accentuated roofs and setbacks on the ground and third floors further define the composition. “Conceptually, the office floor area is arranged over four storeys to both sides of a centralised atrium. The atrium extends to the full length of the plan and is naturally day-lit with fullheight glazing to both ends and high-level clerestory windows to the sides. It provides an attractive communal space for employees, with a terrace at one end served by a deli/canteen with unparalleled sea views. The atrium is activated with an FSC hardwood-clad feature staircase and is crossed with bridges linking the flanking office accommodation. Feature lighting, timber feature walls, a bespoke reception desk and floor finishes complete the high-quality interior.” Henstra says the client’s brief was always to design a building that was efficient both from a commercial and operational aspect–- climatic considerations, access to views and daylight were always part of the architectural design. A reduction in energy consumption, rather than energy production on site, was a major consideration as well. Nedbank’s – and dhk architects’– Four Star GBCSA rating speaks for itself.

This open-air training area, with 360º views of the greater Sandton, features all-weather training equipment, including a 10-station, multipurpose Queenax functional training frame. The lift is lined with AstroTurf, creating a seamless transition from the club area to the two-lane 20-metre sprint track. Even the change rooms are unique. Forget “Male” and “Female” entrances – Alice Lane has a His and Hers, offering a discreet but comfortable space in which to refresh after training, complete with two-level showers, a clothing press, hairdryers and flat irons. Part of the overall sensory experience includes a full-service restaurant, Kohu, headed by chef Hylton Espey, a man with a passion for sustainable farming, organic cooking and nutritious food presented with imagination and flair. The flexible organic menu, designed with input from a dietitian, is all about offering fabulous food while delivering superb service at every turn. With Sir Richard Branson himself billing it as “the world’s leading Classic Collection Health Club” within the 16 current global clubs situated in London, Lisbon, Madrid, Spain and Singapore, you can expect far beyond the usual. “We’ve created an experience that doesn’t exist anywhere else,” says Lamb-Hughes. “But in order to have built the best and be the best, we had to take a quantum leap in terms of design, lighting, architecture and, most importantly, service.”

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feature

The lion’s share While Africa takes its rightful place and portion of the world economic pie, the sub-Saharan African commercial real estate market is poised for a promising growth opportunity By Candace King Source: Jones Lang LaSalle

n recent months the African continent has risen to unprecedented heights on

all fronts. From Africa’s economic growth

significant pay-offs in those African cities that are creating economic stability.

and rapid urbanisation to its emerging middle

“Many sub-Saharan African cities are

class and boosted infrastructure development,

showing remarkable dynamism,” says report

the continent is fast becoming a global giant

author and global research director at Jones

that’s snapping up opportunity.

Lang LaSalle, Jeremy Kelly. “Accra, Addis Ababa

The African feat has been well documented

and Maputo are among the world’s fastest

by a plethora of publications and now there’s a

growing city economies; Luanda and Lagos

new insightful report out that highlights several

currently house some of the world’s most

elements set to propel Africa into a successful

expensive commercial real estate due to

continent of powerhouse proportions and further

severe supply-demand imbalances. Meanwhile,

stimulate the commercial real estate market.

Nairobi is emerging as a regional technology

Entitled “The African century: Twelve pillars

powerhouse, known as Africa’s ‘Silicon

of Africa’s future success”, this new research

Savannah’. This rapid evolution of cities

report by Jones Lang LaSalle on Africa identifies

across sub-Saharan Africa is translating

12 key factors that are underpinning the rapid

into a high-energy phase of real estate

evolution of 40 key cities across the continent.

development as the industry responds

Furthermore, it reveals that the sub-Saharan

to rapid urbanisation and strong demand

African commercial real estate market is

from businesses and consumers for modern

geared for a once-in-a-lifetime positive

commercial offices and shopping malls,.”

growth opportunity as Africa’s evolving

Mark Bradford, chairman for sub-Saharan

urban network is creating a significant growth

Africa at Jones Lang LaSalle says that, “With

platform for the commercial real estate sector.

only 2 000 000m² of A-grade commercial

Urbanisation and real estate

office space in the whole of sub-Saharan Africa (excluding South Africa), the office

In the past two years there has been a distinct

stock is barely equivalent to that of Edinburgh

increase in interest in commercial real estate

or Auckland, providing for a population of 830-

opportunities in African cities, many of which

million people. Despite concerns over poor

are the world’s fastest growing city economies.

transparency, the real estate opportunities

An urgent need for modern commercial real

are clearly evident, with an increasing number

estate is being created as a result of not only

of investors keen to access Africa’s frontier

Africa’s attractive natural resources but also

markets. For many investors and corporations,

the growth in manufacturing, technology

the long-term potential in sub-Saharan Africa

and telecoms, finance, outsourcing,

is too great to ignore.”

retailing and hospitality sectors. on Africa’s real estate potential, and developers

Commercial real estate set to roar

are now responding to the strong demand for

Set against the backdrop of robust economic

modern shopping malls, offices and hotels.

growth, heightened foreign investment,

Africa offers a huge diversity of operating

rapid urbanisation and an emerging middle

conditions, city dynamics and real estate

class that is willing to spend, the sub-Saharan

environments; yet it is the rapidly expanding

Africa commercial real estate sector is

cities in sub-Saharan Africa that are attracting

responding to the strong demand for

the greatest interest. Although there are

high-quality property, which boasts

challenges, the operating environment

promising outcomes for the industry.

International capital is beginning to focus

is selectively improving and there are potentially

SOUTH AFRICAN PROPERTY REVIEW

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feature

Africa’s evolving urban network North Africa Casablanca, Rabat, Marrakesh, Tangier, Algiers, Tunis, Tripoli, Cairo, Alexandria, Khartoum

6. Africa Innovation and Technology West Accra, Abidjan, Dakar, Lagos, Port Harcourt, Kano, Ibadan, Douala, Libreville, Malabo, But Africa is not just a resources play … Kinshasa, Luanda, Brazzaville • Many African cities have strong entrepreneurial energy, and several innovation sectors are East Africa performing well. Innovative uses of technology are Nairobi, Mombasa, Addis allowing some cities to Ababa, leapfrog normal evolution Kampala, Dar es themselves Salaam, Kigali, and position as centres of technology and research on the continent. The rise of mobile Port Louis telephony and mobile banking is creating pockets of excellence, with Nairobi – Africa’s ‘Silicon Southern Africa Lusaka, Harare, Maputo, Windhoek, Johannesburg, Cape Town, Durban, Port Africa’s Top Technology Hubs Elizabeth, Gaborone Presence of International ICT Companies

The African Century - Twelve Pillars of Africa’s Future Success 9

Savannah’ - emerging as a regional powerhouse in mobile technology. Elsewhere, Accra is witnessing strong growth in its ICT sector, while Addis Ababa is emerging as a hub for IT start-ups.

Africa’s top technology hubs

SOUTH AFRICAN PROPERTY REVIEW

Based on presence of Hewlett Packard, IBM, Intel, Microsoft, Siemens, Vodafone, Huawei and Cisco Source: Jones Lang LaSalle, 2013

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the industry starts to respond to rapid urbanisation

feature

create opportunities for international players.

Africa’s Commercial Real Estate Stock

Africa’s commercial real estate stock

Africa currently accounts for less than 0,5% of global direct commercial real estate investment volumes, the bulk of which is transacted domestically within South Africa. But international capital is beginning to move into Africa as investors seek to access the continent’s growth prospects. “Unencumbered by a legacy of existing stock, the continent has a real opportunity to leapfrog the normal evolutionary process and to build assets equipped for the modern technologically enabled business and consumer,” states the report. “The reality, however, is that the future shape of Africa’s real estate market will be determined by its ability to tackle poor transparency, which will continue to be a major barrier to real estate construction, occupation and transactional activity. Here, sub-Saharan Africa can learn from many other emerging markets across the globe, who are successfully improving both their regulatory controls and the fairness of their real estate transaction processes.”

The backbone and success of the commercial real estate sector will rely heavily on the pillars of Africa’s future success, which have been identified as:

The growing number of brand-conscious

l Sustained economic growth l Favourable demographics l Rapid urbanisation l Expanding middle classes l Commodities and energy resources l Innovation and technology l Increasing foreign direct investment l Service sector growth l Offshoring activities l Improving governance, economic management and transparency l Infrastructure development l Rapidly evolving commercial real estate market

The implications for property practitioners, including developers, retailers, corporates, hotel operators and real estate investors, are vast in Africa. Sub-Saharan Africa’s commercial real estate sector is in an early, high-energy phase of development as the industry starts to respond to rapid urbanisation and strong demand from businesses and consumers for modern real estate infrastructure. Nonetheless, the continent remains severely undersupplied with high-quality commercial space, and a lack of experienced local developers will create opportunities for international players. On the retail front, international retailers are responding to the growth opportunities.

in “frontier” markets – poor transparency,

*Excludingurban South Africa. bureaucracy, high costs, skill shortages consumers is not going unnoticed by Relates to modern offices and shopping malls African retailers developers and retailers. Source: Jones Lang LaSalle, Emerging MarketsSouth Consultants, SACSC, IHS Global Insightand an absence of suitable real estate.

There is an urgent requirement for quality

such as Shoprite, Pick n Pay, Massmart and Woolworths have taken the lead, but several

office assets to meet the strong demand from

other international retailers are now assessing

a broad range of growing corporate sectors

the opportunities. Retailer expansion, however,

– finance, outsourcing, oil and commodities,

will continue to be hindered by a lack of high-

manufacturers and telecoms. Jones Lang LaSalle

quality retail accommodation.

estimates that there is less than 2 000 000m² of

However, shopping mall construction is set

A-grade stock across sub-Saharan Africa

to take off as developers and retailers respond

(excluding South Africa),

to the severe supply-demand imbalance. The

of which about half is located in just four

stock is rapidly expanding at a rate of more than

cities – Nairobi, Lagos, Luanda and Port Louis. The hotel sector in Africa is experiencing

20% a year, spearheaded by Cairo, Casablanca, Lagos and Nairobi. Nigeria’s main cities have

strong growth led by upscale business hotels.

become key targets because of the scalability

Africa is estimated to have about 90 000 branded

opportunities of a country of more than

hotel rooms, compared to about 128 000 in

170-million consumers.

London alone. With more than half of the hotel

Corporates are leading the charge into

rooms concentrated in just three North African

Africa and, out of necessity, are acting as

countries (Egypt, Morocco and Tunisia), the

a catalyst for new real estate development.

potential opportunities for the hotel sector

Many multinationals have already established

in the sub-Saharan region are substantial,

significant footprints across the continent, and

and international and regional hotel operators

are facing the typical challenges of operating

are actively seeking to expand their presence.

Real estate transparency New York, London, Sydney, Paris Hong Kong, Frankfurt, Singapore, Madrid Johannesburg, Milan, Tokyo, São Paulo Istanbul, Shanghai, Moscow, Dubai, Mumbai Gaborone, Port Louis, Nairobi

Highly transparent Transparent Semitransparent

Casablanca, Cairo, Lusaka

Low transparency

Tunis, Accra, Algiers, Khartoum, Lagos, Luanda

Opaque

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emerging. This is being driven by platforms such as M-Pesa in Kenya, which is now used by a reported 70% of Kenya’s adult population. Similar systems have been set up throughout Africa, working with major banks such as South Africa’s First National Bank.

The hotel development pipeline is increasing, and Nigerian, Ghanaian and Tanzanian cities

Africa’s Financial Centres Hierarchy Africa’s financial centre hierarchy Emergence of Regional Banking Hubs

are emerging as a primary focus of activity.

The African future Amid the compelling long-term growth story, Africa is still plagued by poor transparency, which will hinder investor activity. Poor infrastructure, corruption, scale of markets and low liquidity will continue to deter most

feature

The African Century - Twelve Pillars of Africa’s Future Success 13

The African Century - Twelve Pillars of Africa’s Future Success 5

10. Improving Governance, Economic Management and Transparency Operating environments are selectively improving

•

most favourable risk profiles and, combined with their high rates of economic growth, provide among the continent’s most attractive environments for investors.

Business operating environments in Africa are selectively improving and economic governance is, in general, becoming more rigorous. Nonetheless, investors’ concerns about a wide range of risks persist, and Africa will remain a challenging balance of risk versus opportunity. Within Sub-Saharan Africa3, Accra (Ghana), Lusaka (Zambia), Dar es Salaam (Tanzania) and Maputo (Mozambique) are judged to have the region’s

2. Favourable Demographics

investors. The report stipulates that the key

to success for international investors will be to secure the right local partners to guide them through the complications of land

Africa’s demographic boost

title, bureaucracy and political risk.

Doing business in Africa is not easy and

poor real estate transparency will continue to

•

Africa is becoming a market of global scale - its • Africa is a mosaic of 54 countries, yet several African Cities – Risk v Opportunity population, currently in excess of one billion, is heavily populated countries are likely to dominate across Africa. Still, for many international real African cities: risk vs opportunity expected to double over the next 25 years, the future market opportunities. Nigeria (the Based on presence of a basket of key African and international banks, accountants and insurance companies estate players, the possibilities offered by Africa’s Source: Jones Lang LaSalle, September 2013 fast-growing markets be too great to ignore. fastestwillgrowth rate of any continent. continent’s largest market with a population of 174 KPMG In an effort to further publicise the future million), Ethiopia (94 million), Egypt (82 million), growth and development of Africa and its South Africa (52 million), Kenya (44 million) and • Its working-age population is growing especially vibrant cities, the African Century Report forms Morocco (33 million) are providing true scalability with 70% the total population part of the newvigorously, Jones Lang LaSalle Africaof Cities Research Programme, which is30, set to roll out viaa potentially huge for corporations, retailers, hotel operators and real aged under delivering a series of reports that provide new insights estate developers. demographic boost. By into 2040, Africa’s working-age this rapidly urbanising continent. The programme population will be larger than either China or India. be a binding constraint in all but a few markets

explores the continent’s evolving urban network and assesses how the changing environment is impacting on current and future commercial real estate requirements. Through its series of reports, Jones Lang LaSalle will identify which

Working-Age Population African cities offer the greatest real estate

Fastest growth Africa opportunities, and will delve in into real estate sector prospects and transparency.

Working-age population

Risk: Country Risk, IHS Global Insight, September 2013. Growth: GDP Change 2011-13, IHS Global Insight, September 2013 Source: Jones Lang LaSalle, September 2013 3

Excluding South Africa, Botswana and Namibia

Working-Age Population defined as 15-64 age cohort Source: UN World Population Prospects, 2012

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es: i r se ly a ic th ntry r f n e A r mo -cou h T ou by y- cus r t n fo u o c

eye on africa

Africa uncovered Botswana

From being one of the poorest countries on the continent, Botswana is now a fast-growing economy with much to offer By Candace King

Botswana at a glance ▼ Population 2,1-million ▼ Major city Gaborone 0,2-million, Francistown 0,1-million ▼ Currency Pula (BWP) ▼ Total area 581 730 km2 ▼ GDP growth (2012) 3,8% ▼ Key industries Diamond mining, minerals, tourism, textiles

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eye on africa

n a quintessential rags-to-riches tale, Botswana has risen from the ashes to become another of Africa’s success stories. Although a small country of two-million people, Botswana has achieved unprecedented growth and recognition. In a short time, it’s been transformed from one of the poorest countries in Africa (with a per capita gross domestic product (GDP) of about US$70 when it gained independence from the UK in 1966) into one of the world’s fastest growing economies, and has moved into the ranks of upper-middle income countries. Due to its political stability, democratic principles, good standards of education and public services, Botswana was propelled into a period of prosperity – real GDP, based on the revised estimates and at the new constant 2006 prices, increased at an average annual rate of 4,6% between 1994 and 2011. It has ranked among the world’s fastest growing economies since the mid-1960s, outstripping the oil-rich Gulf states over the same period. In 2011/12, the country recorded its highest-ever investment and employment figures, and foreign direct investment totalled P1,4-billion. It is one of only three countries in the world (along with the Maldives and Cape Verde) to have moved upwards from Least Developed Country since the category was devised by the United Nations more than 40 years ago. With its good governance, economic growth and ability to successfully manage and utilise its natural resources, Botswana’s living standards and

infrastructure development over the past 40 years has transformed and improved tremendously. The country has actively engaged and invested in infrastructure through the development of roads and airports. It has also become more active in the downstream production and distribution of its biggest prized natural asset, diamonds. Speaking of natural assets, Botswana boasts a thriving tourism sector, and its national parks and reserves are considered to be among the best-run in the Africa.

Not without its problems However, Botswana is not a perfect African utopia. Like most of the continent’s countries, Botswana is troubled by high levels of poverty and inequality, and generally low humandevelopment indicators. Although poverty rates have declined from more than 50% at independence to just above 19% today, significant and stubborn pockets of poverty remain, especially in rural areas.

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eye on africa

Population in thousands

Area in km²

Central

639

147 730

South east

346

1 780

194

Ghanzi

117 910

Kweneng

305

35 890

Southern

216

28 470

North west

176

129 930

North east

159

5 120

Kgatleng

7 960

Kgalagadi

105 200

Due to its political stability, democratic principles, good standards of education and public services, Botswana was propelled into a period of prosperity

Population density (persons per km²)

Significant strides have been made in the education sector with education expenditure in Botswana being among the highest in the world at about eight percent of the GDP, but the sector has not created the skilled workforce the country needs to diversify its economy. Unemployment has remained persistent at nearly 20% and, consequently, income inequality in Botswana is among the highest in the world. The HIV/Aids pandemic has added to Botswana’s problems – the country suffers from the second-highest HIV/Aids adult prevalence rate in the world. Although not unique to Botswana, the global economic downturn and continued world market uncertainty have had an impact on the country’s economic outlook, especially because of its reliance on diamond exports. Real GDP growth slowed considerably to about four percent in 2012 after two years of strong post-crisis growth. Indicators from the first half of 2013 suggest growth has slowed further to below four percent on an annual basis. Inflation has declined from over nine percent per annum in 2011 to 5,6% annualised in August 2013, and the current bank rate of eight percent

is its lowest level in more than 20 years. The exchange rate was relatively volatile during 2013, due to the weakness of the South African rand against the US dollar. As of the end of August 2013, the pula depreciated almost 11% against the US dollar over the year, while appreciating eight percent against the rand. Although export growth was robust in the first half of 2013, the current account remains in deficit, and the large trade deficits incurred since 2009 have negatively impacted on Botswana’s pool of foreign exchange reserves. A major challenge for Botswana is the arising dilemma of the predicted decline in diamond revenues. Although currently uncertain, government estimates that the main diamond deposits will be exhausted between 2025 and 2030. Thus diversification into sectors beyond diamonds is a priority and a major challenge. Forecast data for Botswana through to 2017 is positive, with annual GDP growth estimated to be more than four percent. In 2012, Knight Frank noted that the economy will remain susceptible to global shocks given its reliance on the diamond industry. Furthermore, diversification will remain a priority for the government.

The Botswana property industry Another positive for the country is the growth and development of its property industry. It has been highlighted that the property market in Botswana is becoming more competitive. This is widely seen in Gaborone as a result of the increased supply of available office and retail space. In July 2013, IPD South Africa reported that the Botswana property market continued to experience resilience – according to the IPD Botswana Annual Property Consultative Index, the total return for all property was 17,9% for the year ending in December 2012.

Retail market The retail sector has experienced visible growth in recent months – especially in Gaborone with the arrival of new shopping centres such as Airport Junction and Rail Park Mall, which have introduced new retailers and food outlets to the country. Occupancy in the main shopping centres remains high, as does the demand from retailers. Despite this, there is still a lack of diversity in terms of the offering at each mall.

Industrial and office market The industrial sector is most active in Gaborone, where inflated prime rents have been achieved in the past as a result of office occupiers utilising light industrial locations because of a lack of available offices. In relation to the increased supply of offices, zoning has become more heavily applied, which is changing the nature of the market.

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eye on africa Prime rents

Per m² per month

Prime yields

Offices

US$13,50

Retail

US$31

Industrial

US$6,75

11%

Residential

US$2 000 per month

Source: IPD Botswana Annual Property Consultative Index December 2012

IPD Botswana Annual Property Consultative Index Total return % 12 mths

Income return % 12 mths

Capital return % 12 mths

All Property

17.9

11.0

6.3

Retail

16.6

10.6

5.5

Office

15.2

11.7

3.2

Industrial

28.4

12.5

14.3

Residential

24.4

8.8

14.4

Equities

7.7

Bonds

6.3

Inflation

7.4

Other* Comparative Data

*No results published for conﬁdentiality reasons. Data sources: BSE All Share, BSE Bond Index, CSO Botswana CPI National

Another positive for the country is the growth and development of its property industry

A small amount of new space is being constructed on the outskirts of the city centre and en route to the airport, mostly for owner-occupation. The office sector is growing in Gaborone, which has led to the emergence of a new CBD. However, the delivery of new developments to the market has resulted in oversupply, which has caused a crash in rental values for ageing secondary-grade accommodation. Some buildings in the older part of the CBD saw rental values fall by approximately 50% from their peak in 2010. On a positive side, the take-up of new offices in the CBD has been strong, with major corporate occupiers, small professional practices, parastatal organisations and public sector bodies all contributing to the mix of tenants and owner-occupiers.

Residential market The residential sector remains robust, especially in Gaborone, with prices in both rentals and capital values increasing. Due to the expansion of the diamond industry, an influx of expats into Gaborone has led to a demand for properties in the prime areas of the city. This high level of demand has stimulated more development opportunities, with interest also being observed in areas outside of Gaborone.

IPD Botswana Annual Property Consultative Index database profile Capital value BWP (m)

Capital value %

Number of properties

Number of funds

All Property

2,850.2

100.0

103

Retail

1,463.0

51.3

Office

661.7

23.2

Industrial

279.4

9.8

Residential

157.9

5.5

Other*

288.3

10.1

The ﬁgures above represent the full coverage of the IPD Botswana Annual Property database as at December 2012. The IPD Botswana Annual Property Consultative Index employs only fully revalued assets from that database. SOUTH AFRICAN PROPERTY REVIEW

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feature

The Sandton story With extensive development taking place and an increased inﬂux of people into the already bustling node, is Sandton heading for oversaturation? By Candace King

bout 40 years ago, the prestigious

commenced with a number of additional

Sandton Office Towers) as well as the Sandton

node known today as Sandton was

office and hotel developments. In the mid-

Convention Centre. Liberty also owns offices

an undeveloped countryside affectionately

to-late 1990s there was a significant move

(171 Katherine Street) and hotels (Southern Sun

named the “mink and manure” belt of

of commercial occupancies from the central

Katherine Street and Garden Court Morningside)

Johannesburg, housing horse stables

business district to buildings in the northern

on the outskirts of the node.

and a small but affluent community.

suburbs. This resulted in both the upgrading

Today, Sandton is regarded as the richest

Currently, Sandton is said to be in its second

of old premises and development of new

development life cycle and further growth is

square mile in Africa, and the business and

offices for many of South Africa’s leading

being spurred on by several factors. According

financial hub of South Africa. Global high-end

businesses. The move of the Johannesburg

to Urdang, the current growth is being driven

brands and giant multinational corporates call

Stock Exchange and several of the major

by the quality of the real estate coupled with

it home, and all the leading property developers

banks cemented the area’s status as the

the truly mixed-use nature of the precinct.

and companies want a slice of the Sandton pie.

commercial hub of South Africa.”

There are retail areas, convention facilities,

“In the mid-to-late 1970s, the Sandton area

The Liberty Group is one of the biggest

hotels and residential facilities all within

was primarily a peri-urban area consisting

role-players in the node. Liberty is the majority

close proximity, making the node a very

of smallholdings and residential properties,”

owner of the Sandton City complex, which

convenient location. Positive infrastructural

explains Mel Urdang, director of retail and

consists of retail (Nelson Mandela Square and

developments (such as the Gautrain) have

leasing at Liberty Properties. “But in the late

Sandton City), hotels (Sandton Sun, Sandton

further enhanced the demand to be situated

1980s, following the first set of extensions to

Towers Intercontinental, Garden Court Sandton

in the node – and so Sandton continues to

the Sandton City complex, other developers

City) and office facilities (Atrium on 5th and the

expand and develop.

SOUTH AFRICAN PROPERTY REVIEW

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feature New developments, especially ofﬁces, are mushrooming across the Sandton skyline, with many of the big names – Alexander Forbes, Sasol and Ernst & Young (now EY) – ﬂocking to the CBD in recent months “Most of the developments, both under

Currently, about 135 000m² of space

construction and planned, will change the

is available for leasing, which is 78% of the

Sandton skyline in the next five years,” says Fran

174 300m² of new projects already confirmed.

Teagle, director of the commercial brokering

Furthermore, this space is set at a price of R165/

division at Broll. “It means a modernisation of

m². This is having an effect on B-grade office

the area, as old B-grade buildings make way

owners as a lot of vacant B-grade space is being

for new, modern Green buildings.”

left open on the market. These owners will need

New developments, especially offices,

to seek out alternative methods in which they

are mushrooming across the Sandton skyline,

can keep existing tenants or attract new ones.

with many of the big names – Alexander Forbes, the CBD in recent months. Although the overall

Infrastructure challenges and possible solutions

office sector has experienced slow growth for

Apart from the vacancy problem, spatial

some time, office development in Sandton

and infrastructure issues are looming. There

is flourishing. According to the SAPOA/IPD

is widespread concern that Sandton is fast

Office Vacancy Survey Report for Q3 2013,

becoming another Bangladesh in terms of

Sandton’s office vacancy rate is at 8,5%

stressed, damaged infrastructure, municipal

on 1 500 000m² of rentable space, which

woes, overwhelming traffic issues, and a

is almost half of the global average.

heightened densification of people in the area.

Sasol and Ernst & Young (now EY) – flocking to

SOUTH AFRICAN PROPERTY REVIEW

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feature Q&A with Barrow Properties’ CEO Paul Barrow and sales and development manager Jake Hoddinott Q Does the widespread development taking place in Sandton pose a threat to the bustling CBD? PB: There will be a movement towards the Sandton CBD becoming a mixed-use city, with people living and working in close proximity. The improvement in public transport will assist in alleviating the traffic problems associated with densification. JH: Sandton is fast emerging as a more traditional CBD. Johannesburg is unique in that it has several core business nodes. Although the growth and densification of the Sandton CBD places pressures on existing infrastructure and capacity, it is creating South Africa’s clear-cut financial district. From a commercial-property point of view, there does appear to be significant demand to have a Sandton address.

Q Is it possible that Sandton will become oversaturated? JH: If current infrastructure is not upgraded, then yes; but developers try work with the local municipality

Fran Teagle, director of the commercial

and town planning divisions to improve localised infrastructure around each development.

brokering division at Broll

Q Will the heightened influx of people entering and exiting Sandton cause backlog and damage to the roads?

About 100 000 people (and counting)

JH: Most definitely; and this can already be felt. However, more and more people are using public transport

are entering and exiting Sandton every day.

and we are seeing a shift to choosing to reside close to places of work. This is expected to intensify and is primarily

The new headquarters of Sasol, EY and Webber

driven by factors such as rising fuel costs, e-tolls and traffic congestion.

Wentzel alone are expected to bring in 10 000

Q Construction has caused severe traffic jams. On top of this, there have been power and water outages. How can these issues be solved? PB: Unfortunately this problem is not specific to our major CBDs. There needs to be a coordinated effort

more vehicles a day. According to statistics, the number of commuters to Sandton is growing at an average of two percent per year. With the increase of commuters comes road

by all concerned to address this.

damage and traffic congestion. Furthermore,

JH: There needs to be more direction from council in accommodating development needs and resolving

the sufficient supply of electricity and sewage

bottlenecks in the development process. For the growth and improvement of Johannesburg, municipalities

capability will also be a major concern – will the

and town planning need to work closer with developers to avoid disruptions and utility problems.

current electricity supply and sewage system in

Q What is the best way to cater for the increased number of people and vehicles in Sandton? JH: Create pedestrian-only areas where people are forced to walk short distances rather than drive.

Q How will the major attraction to Sandton affect neighbouring nodes?

Sandton be able to accommodate the influx of new people? “The ongoing development of the node continues to put pressure on the road infrastructure within the area,” says Urdang.

JH: The growth of Sandton will likely draw businesses away from less established business nodes such as Rivonia.

“However, each new development is approved

However, certain business nodes are holding their own – Rosebank and Melrose Arch are examples. These prime

by the city and we are confident that the future

business precincts are attractive to businesses because of their ease of access and the equidistant location between

needs of Sandton will be accommodated in

the old Johannesburg CBD and the Sandton CBD.

this regard.”

Q What does the future look like for Sandton?

business nodes but to date the roads and public

“Traffic is heavy at peak times as in all

JH: Sandton is fast becoming a modern, first-world CBD. On the back of this, it has attracted – and will continue

transport have coped with the demand,” Teagle

to attract – the head offices of large local companies as well as international corporations setting up regional offices

says. She adds that the current construction is a

in South Africa and Africa.

temporary inconvenience in certain areas where development is underway, and may persist.

15 Alice Lane

SOUTH AFRICAN PROPERTY REVIEW

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feature SANDTON & ENVIRONS Total rentable area (m2)

Area available for leasing (m2)

Current %

Committed new developments

Gross asking rentals (rands/m2)

Previous months 3%

Min

Max

Med

329 921

8 500

2,6

4,5

0,9

165,50

928 172

88 318

9,5

11,3

7,5

8,9

85,00

205,00

130,00

286 615

35 243

12,3

9,0

9,7

9,8

75,00

145,00

100,00

39,8

Total

1,544,708

132,060

8.5

9,6

7,9

8,6

Total rentable area (m2)

Area available for leasing (m²)

Median asking price

173 407

135 407

190,00

Source: SAPOA/IPD Office Vacancy Survey Report Q3: 2013 With regards to the electricity and water supply concern, she says most buildings now have emergency water supplies and generators to keep things going. Amid the concerns, solutions are coming to the fore. Currently, the district is busy with a Sandton transportation study in an effort to find ways to make it easier for commuters. It has been mentioned that improvements could be made, for example by widening the roads or building a flyover at the Grayston Drive and M1 interchange. Other solutions include the encouragement of commuters and pedestrians to use alternative modes of transport, including bicycles, buses and taxis. “The upgrade of Sandton City’s pedestrian entrances to the shopping centre recognises the positive movement towards a more pedestrianised environment within the Sandton CBD,” says Urdang. Development of dedicated cycling lanes is being investigated and the Johannesburg bus rapid transit system, Rea Vaya, will begin construction of its Sandton route in 2014. Developers will also need to look into the construction of high-density residential and mixed-use developments in the node. One such development is Katherine & West – the latest building in the Sandton CBD to turn heads.

“Sandton’s residential property market

“Liberty is focused on continuously improving

Starting from R9-million and scheduled to

is appealing to buy-to-let investors because

its investments within the area in order to

be ready for occupation in April 2014, the

of the area’s increasing demand for rental

ensure the properties remain iconic, thus

development comprises eight storeys of

accommodation,” comments Paul Barrow,

meeting the needs of the area, its tenants

AAA-grade commercial units ideal for small-

CEO of Barrow Properties, the developers

and its patrons,” he says.

to-medium businesses or a regional base of an

of Katherine & West.

international organisation. The top two storeys

Teagle believes that Sandton’s future looks very positive. “We see this as the real

of this prestigious development accommodate

The future of Sandton

seven luxury duplex penthouses. It is conveniently

Development is a positive thing when it

she says. “While most of the commercial

located next to the Sandton Gautrain Station.

attracts a plethora of people and the biggest

sites are owned by listed funds and large

and best in the business and property worlds.

developers, there is demand from smaller

Kent Gush of Kent Gush Properties says that

The drivers of Sandton’s current success story

private companies to purchase office space

“Billions of rands have been earmarked for

need to be fully aware of the concerns, and

in Sandton, and we believe that there is

new office, retail and hotel developments

need to deal with the outcomes in the most

opportunity for development of more

near the Gautrain stations in Sandton Central

innovative and efficient way possible.

sectional title office buildings.”

Appointed sales agent of Katherine & West

and Rosebank. This is having huge spin-offs

Urdang says that Liberty will continue to

growth node for the foreseeable future,”

One thing is certain: Sandton’s star power

for both the existing property market and

provide world-class office and hotel facilities

status is bound to remain intact for many years

new residential developments.”

and the finest of retail offerings within the node.

to come.

SOUTH AFRICAN PROPERTY REVIEW

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feature

Emerging markets making waves Emerging markets – such as affordable housing and student accommodation – are gaining ground in South Africa, showing great demand and growth prospects By Candace King

ith the traditional property markets still showing both positive and negative

outlooks, emerging markets in South Africa are

securitisations and other innovative

and growth potential. Currently, the biggest

products that can tap insurance and

markets garnering attention are affordable

other funds. Ultimately, it is starting to

housing and student accommodation.

change the way the country’s cities look

an influx of young adults enrolling in tertiaryeducation institutions across the country, the

and function because it is the perfect vehicle to absorb growing urban populations. According to the figures, most affordable-

affordable housing and student accommodation

housing markets are growing faster than the

markets are beginning to boom, with demand

wider metro residential property market. Statistics

constantly on the increase.

show that in 2012, seven of nine metro affordable

Affordable housing in the fast lane The affordable-housing market in South Africa is

the development of mortgage markets,

coming to the fore, illustrating sound demand

Due to a growing urban population and

“The affordable-housing sector has made unparalleled strides in starting to reverse the legacy of apartheid spatial planning, with developments contributing to economic growth and development for the country”

Proxenos says the sector contributes to the growth of capital markets through

areas grew faster than the market overall in those cities and eight grew faster than the national average, while only two metros grew faster than the national property market.

defined as households earning between R3 500

Proxenos says that sales prices and values

and R25 000. This market accounts for about 32%

have been on an upward trend since the dip in

of the entire home-loan market, requiring cost-

2008/2009. Nationally, across the nine metros,

effective, good-quality housing up to R600 000.

prices and values are more closely related,

“The affordable-housing sector has made

which can in part be ascribed to improved

unparalleled strides in starting to reverse the

market information and communication as

legacy of apartheid spatial planning, with

well as a better connection between buyers

developments contributing to economic growth

and sellers. Residential property values in

and development for the country,” says Soula

affordable areas are growing faster than

Proxenos, a managing partner at International

across all metro areas each year since 2008,

Housing Solutions (IHS) responsible for strategy,

with the exception of 2009. However, sales

business development and investor relations.

price appreciation lags the whole – potentially

The growth of the black middle class,

a function of the credit environment.

rapid and continued urbanisation and a huge

“In 2012, transactions under R500 000

backlog in the availability of quality housing

were about the same rate as in 2007 – about

units have seen the sector gain prominence

33% of all transactions,” says Proxenos. “While

in recent years – both for the opportunities

sales transactions plummeted from 2007 to

and challenges presented by these factors.

2009, they rose slightly to 66% of the 2007

“There is a strong, independently proven

figure in 2010. Sales in affordable areas

Soula Proxenos, managing partner

link to job creation through construction

remained relatively stable, and buffeted the

at International Housing Solutions

and ancillary services, and the nature of

large drop in 2009. Affordable areas have higher

developments is contributing to the stability

(national average is 70% while affordable areas

of family units and communities,” says Proxenos.

is 85%) and growing equity levels, with fewer

“Additionally, being able to step onto the

bonded properties and greater opportunity

property ladder has brought the potential of

to leverage assets. Affordable areas also have

wealth creation where it did not exist before,

below-average loan to value rates (total loan

as families are able to develop SMEs on the

size to area value), with level of property

back of accumulated equity in their properties.”

indebtedness having remained stable.”

SOUTH AFRICAN PROPERTY REVIEW

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feature

You can bank on it

loan market consists of about 14 million

The market has been supported by

households,” says Marais. “Of this, nine million

several financial elements and institutions.

households earn less than R3 500 per month

The government has repeatedly stressed

and qualify for fully subsidised housing. Above

its support for affordable housing as a

this layer lies the affordable-housing market,

development and housing provision model.

which according to our research comprises

Its financial commitment is expressed by way of the FLISP programme. Financial Sector Charter (FSC) guidelines have brought more access to credit, while banks have been livened to the potential in the sector. “New guidelines are expected to encourage participation in the sector even further, with more stock and players entering the market,” says Proxenos. “Significantly, new and innovative development funding solutions, such as private equity as a source of project finance as offered by IHS, have

“There is still an enormous amount to do in this market, and we are confident that we will see good growth in our business and loan book in the years to come”

about 4,5-million households, of which there

Marius Marais, CEO of FNB Housing Finance

employer support,” says Marais. “We’re looking

also changed the game.

On the demand side, there is a major need for innovation in financial products in this market. The traditional mortgage loan financial product cannot be the only solution as it is in the higherend market. “There is a strong need for more innovation and a holistic approach around alternative loan structures such as pensionbacked loans and unsecured home-improvement loans as well as government subsidies and into developing different ways of financing this

All of the major banks are actively engaging in the market, providing project

is a demand for about a million new homes.”

market by combining a mix of different financial The business unit plans to finance the next

options that can really serve this market’s needs.”

finance for affordable-housing projects as

100 000 homes in half the time, by 2018, and

well as mortgage finance. Banks are certainly

has made a commitment to fund approximately

building more units at the right price level to

more focused on this segment of the market

6 000 new housing units to the value of R2-

meet the demand, Marais says. “Currently there

as they aim to meet their FSC targets, says

billion over the next two years. These units will

is no supply of houses to a household earning

Proxenos. “Standard Bank recently indicated

come from 40 developments that the bank has

between R3 500 and R9 000,” he says. “We are

their desire to grow their affordable-housing

approved, consisting of a total of 12 000 units.

in the process of doing work around building

loan book to R24-billion by 2015.” FNB’s Housing Finance division is going

“We recently analysed the latest Census data, and our analysis shows that the entire home

On the supply side, it is essential to start

specifications with players in the supply chain with a view of finding a lower-priced design.

strong with around 20% growth in the market over the last financial year and a good outlook. The business division, which is 10 years old, has grown its loan book to close to R13-billion, and recently reached its 10-year target of more than

In 2012, the market share of loans made in affordable areas for various banks was:

100 000 units financed. “There is still an enormous amount to do in this market, and we are confident that we will see good growth in our business and loan book in the years to come,” says Marius Marais, CEO of FNB Housing Finance. “There is very high demand in the affordable-housing

“Others” included SA Home Loans,

sector with an estimated million homes still

Integer, the National Housing Finance

needed and an average of only 20 000 units

Corporation (NHFC) and Investec.

developed a year, without taking into account future demand.”

SOUTH AFRICAN PROPERTY REVIEW

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feature

This may also mean reducing the starter home size to below 40m².”

The challenges FNB’s Housing Finance market, of which first-

l Process delays due to legislative/regulatory

With more than 3 000 units, Glenridge in

frameworks and capacity constraints at

Protea Glen is another success story that proved

provincial and municipal levels – more direct

market demand, and the area continues to grow.

contact needed earlier in the planning process.

The business unit’s work with Calgro in Fleurhof

l Expanding environmental considerations and

and Jabulani has indicated that high-density

time homeowners form 96%, is most affected by

alternative technologies that use renewable

housing developments are also viable. Together

issues of affordability and economic risks such

energy – more regulatory enforcement,

with developers, FNB Housing Finance is creating

as interest rate increases, inflationary pressures

innovative funding sources, partnerships.

more options for the market all the time.

and unemployment. “The bank can help with

Student accommodation on the up

some of these risks and about 40% of our new

Despite the challenges, there have been several

loans are on a fixed-rate basis,” says Marais. “We’d

success stories. Cosmo City in Gauteng is a case

like to see the whole market moving to a fixed-

where the team had an opportunity to work in multiple markets in one place. The project

Pam Golding Properties reports that, while there

rate mechanism, which will protect the customer from rate increases in the future. Noteworthy to

included 15 000 units, ranging from RDP to

focused residential properties, that trend is

this market, the default rate is more stable than

high-end homes. Cosmo City is one of the

changing noticeably – with demand growing

that of the traditional mortgage segment where

reference points in the country that proves

from would-be residents as well as investors

annual household income is more than R300 000.”

that integrated developments can work. FNB

wishing to capitalise on student rentals.

Proxenos notes there are certain unique and

Housing Finance roughly estimated that the

was previously very little demand for student-

The Cape Peninsula University of Technology

other universal challenges. These include:

first 1 000 families in Cosmo City who received

campus in Wellington currently has more than

l Infrastructure not being able to meet the

finance have accumulated R100-million worth

2 500 students enrolled in the faculties of applied

of wealth over the years.

sciences, business, and education and social

demand, including electricity, water, sewage, and roads. More funders will be needed to provide capital for this, and private/public partnerships will have to be put in place. l A substantial shift to unsecured lending could change the dynamics, especially for previously disadvantaged and first-time home buyers. l Lack of credit records/levels of indebtedness for target consumers – more buyer/borrower education; use of guarantee and/or insurance products; offering of innovative mortgages. l Escalating building costs and availability and price of well-located land with bulk services (infrastructure) in place.

sciences. The figure has grown by about five There are sizeable affordable-housing projects in several provinces being funded by the major banks and built by a number of developers, such as: l Fleurhof, Gauteng l Jabulani, Gauteng l Cosmo City, Gauteng l Windmill Park, Gauteng l Bahrain, Western Cape l Happy Valley, Western Cape l Applewood, Eastern Cape

percent per year over the past few years, and is expected to accelerate in 2014 and beyond. The demand is also evident in JHI Residential’s rapid expansion into Africa. “We’ve recently been awarded a number of new contracts on the continent,” says Thea Bezuidenhout, MD of JHI Residential. “Most notable of these is the management and letting of studentaccommodation units in a brand-new cluster development, Emona Student Residence in Windhoek, Namibia, which will cater for the burgeoning demand for such accommodation.

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feature

Affordable housing: Protea Glen (above), Jabulani (below) and Fleurhof (opposite)

SOUTH AFRICAN PROPERTY REVIEW

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feature It recently completed a pilot project, the first of its kind, with the Free Market Foundation and the Ngwatha Municipality in the Free State, to provide 100 households in the municipality with fully tradable title deeds that enable the owners to use these homes as a vehicle to create wealth. “We are invested in the communities in South Africa to find non-traditional ways of providing for this market in new technologies, energy, and ways of utilising land and homes as assets,” says Marais. Further social housing management

ABOVE Proposed student accommodation, Emona, in Windhoek, Namibia BELOW Maboneng

contracts are in the pipeline for JHI Residential to manage social housing accommodation with

With a national student population currently

We also manage sub-contractors as required

a partner, accredited Social Housing Registration

close to 13 000, the University of Namibia has

– particularly in the case of properties that are

Authority provider Toproot. Bezuidenhout says,

a strong demand for accommodation, which

undergoing renovation and the installation

“Another initiative with Toproot consists of 30

offers further potential for the growth of our

of additional facilities and improvements

Johannesburg inner-city buildings, of which the

business. We see this as a stepping stone to

to cater for students, such as a canteens,

first five – comprising a total of approximately

increasing our presence in Africa significantly,

wireless connectivity and access control.”

200 flats catering the affordable market – will

and are currently in negotiations regarding further management contracts for student

Into the future

accommodation in Zambia and Botswana.”

The future success of these emerging markets

Bezuidenhout says that managing student

will depend on dual support from the public

accommodation (and understanding the

and private sector, the implementation of

students’ needs) is a specialised business.

alternative ideas and technologies, and

“We understand the specific requirements

sustainable development.

necessary for the management of this type

Over the past 10 years, FNB Housing

of accommodation, and place a high priority

Finance has been looking at alternative

on security and providing added value with

building technologies that can potentially

regards to social requirements,” she says. “It is

assist with affordability issues and possibly

very much a personal service, as we provide

ease the housing backlog by ensuring the

the interface with the student community and

buildings are completed more quickly. The

the educational institutions. The main focus in

division is also currently looking at projects

most instances is to uplift social skills and create

that will release capital into the market, such

an appealing community for the students.

as ways of using tribal land.

be ready mid-2014.” The affordable-housing market has been identified in the rest of Africa as a growing one.

“There is little doubt that the sector will continue to grow due to demand driven by urbanisation and the improved macroeconomic environment” Soula Proxenos, managing partner at International Housing Solutions FNB Housing Finance is starting to look at markets in countries in which it operates to begin expanding its footprint. “After 10 years, the FNB Housing Finance business is playing a leading role in the sector, and we look forward to growing our business in South Africa and the rest of Africa in the near future,” says Marais. “Although no comprehensive data is currently available to respond quantitatively, the context and needs across the continent mostly mirror the same urbanisation and demand issues that has made the sector a success in South Africa,” says Proxenos. “Hence the decision by IHS to include subSaharan Africa as part of its strategy for its second fund. There is little doubt that the sector will continue to grow due to demand driven by urbanisation and the improved macroeconomic environment. Innovation will continue to develop with new funding sources and products. Governments will need to play a leadership role and find sustainable ways to support this segment of the market.”

SOUTH AFRICAN PROPERTY REVIEW

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interview

Industry overview with Izak

mid sluggish and stagnant growth in some of the property industry’s sectors, and the economic woes and local political concerns that affect the industry, the listed property sector in South Africa remains robust. Due to the consistent positive performance and maintained attraction, the fundamentals in listed property are still reasonably strong. This is a sentiment that echoes across the sector, with many funds reporting exceptional results. “On average, most funds are still reporting inflation-beating income growth numbers,” says Dipula Income Fund CEO Izak Petersen. “I think this is purely as a result of the fact that the general quality of portfolios in South African funds is fairly good.”

More than a decade ago, it was the large life insurance companies that predominantly held property. Because of the overexposure of the asset, these companies disposed of the properties during a time when the listed property sector was quite small

Dipula Income Fund CEO Izak Petersen shares his thoughts on listed property, the industry’s challenges and the way forward for South Africa By Candace King

“There has been a massive interest in property as an asset class in the past decade, which has sustained the share prices or unit prices of the funds and, as a result, there has been income growth and generous share price returns,” he adds. Dipula Income Fund is a prime example of this growth. Dipula recently reported growth of seven percent in combined A- and B-linked distributions for the year ended 31 August 2013. Dipula’s final A-linked distributions increased at a preferential five percent, while its final B-linked distributions grew by 9,6%. During 2013, Dipula’s market capitalisation rose significantly from R1,8-billion to R2,8billion. Dipula’s acquisitions for the year totalled more than R1,1-billion at an average yield in excess of 9,8%, which helped increase revenue. Dipula’s distributable income increased by 45,5%, while its portfolio grew by 54% from R2,4-billion to R3,75-billion as a result of

SOUTH AFRICAN PROPERTY REVIEW

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interview LATEST RELEVANT INDICATORS Key Economic Indicators 30.00% 25.00%

Expected GDP Growth y/y

20.00%

CPI y/y Current account deficit

15.00%

Budget deficit

10.00%

SA long bond Consumer confidence index Q2 2013

5.00%

Retail sales y/y Unemployment

0.00%

Prime Rate

-5.00% -10.00% • • • • • • •

Continued declining trend in housing prices Declining credit extension Little to no long term investment by large corporates Could STATS SA be excluding a large part of SA in economic data Lots of liquidity in equity markets this may be the reason for the continued resilience of listed property Listed property and low interest rates has been the underpin for physical property Intrinsically commercial property is starting to seem generously priced

acquisitions and capital appreciation on the existing portfolio. In line with its strategy, 11 Dipula also sold and transferred 13 properties for total value of R27,2-million. “Dipula is doing well. We have managed to grow our portfolio significantly in the past 12 months. We are quite happy with the results because they are in line with our core strategy. Our objective of buying portfolio-enhancing and income-growing properties is paying off – and this can be seen in our results,” says Petersen. The life of listed funds makes for an interesting tale. More than a decade ago, it was the large life insurance companies that predominantly held property. Because of the overexposure of the asset, these companies disposed of the properties during a time when the listed property sector was quite small. As the disposals occurred, a lot of the properties found their way into the listed funds. Furthermore, in the past few years, the professionalism of how these funds were run increased and, as a result, the analysis and understanding of property as an asset class has improved.

The property industry and the economy The property sector is performing reasonably well at the moment, according to Petersen, but there are several areas of concern areas. While retail and industrial are doing well, the office sector is still under pressure because of high vacancies and low demand, and the residential market is still depressed. “Property does not operate in isolation – if there is slight economic pressure, there will be an effect at some stage on property,” says Petersen. “Despite negative economic undertones, the property industry is still holding it together.”

He notes that physical non-listed property is expensive and that property sellers have become slightly unrealistic in terms of price expectations. He believes that this has to do with the low-interestrate environment, which has caused confusion about where property should actually be trading. Despite this, there is a huge demand for property from various players, including those in the listed sector. In terms of South Africa’s economic performance, Petersen says things are not going well. “Currently, South Africa’s growth is trailing behind the rest of the African continent and behind the BRIC countries,” he says. “So growth in the country is disappointing at the moment.” Petersen highlights several concerning factors of the market, starting with economic growth. “GDP growth is a big concern,” he says. “You can’t have any growth in any sector if your economy is not growing. Further concerns include the widening current account deficit and budget deficit; decreasing consumer and business confidence; and unemployment, which is sitting at 25% – one of the world’s highest. Unemployment coupled with a failing education system can only spell disaster.” A key concern for property players and the end-user sits with government and the municipalities. Unrealistically increasing municipal rates, a lack of political will, corruption, rising utilities costs, and poor planning and service delivery are among the biggest challenges that the property industry faces. On a positive note, interest rates are at an all-time low. Property development is also positive. “In Johannesburg alone, there is a fair amount of activity with a lot of earmarked infrastructure developments by government as well as new retail development

coupled with strategic property refurbishments,” says Petersen. “A major positive is the development of shopping centres in rural under-serviced areas, which is quite a competitive space at the moment.”

The future is now Looking forward, Petersen says he feels optimistic. “I believe there are enough complaints to go around and that none of these issues are unknown to the individuals who can make a difference,” he says. “South Africa needs positive leadership, and we need to ‘sell’ the South African story. We need politicians to take up this role in addition to the average person on the street.” On the property front, Petersen believes that we will see reasonable results in the sector in 2014, including further inflationbeating distributions as well as some capital growth on units in the listed property space. He adds that the private sector needs to work with the government and engage with the municipalities to ensure decent products are brought to under-serviced communities. In terms of Dipula, Petersen says the company intends to diversify its sources of funding even further in 2014 and will seek a credit rating to access the debtcapital markets. “We took our first steps in establishing practical and impactful social initiatives,” he says. “We are also looking into energy efficiency as a way to benefit our financial and environmental performance overall. We believe that our strategy is on track, and we will advance it further in 2014.” He notes that, while we cannot control global issues and their knock-on effects, it is important to remember that what this country can do is get its own ducks in a row. “If all South Africans can pull together to solve the issues, then we can make a difference. It’s all about changing negative mind-sets.”

“If all South Africans can pull together to solve the issues, then we can make a difference. It’s all about changing negative mind-sets” SOUTH AFRICAN PROPERTY REVIEW

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transport

Gautrain:

unlocking the property pipeline

With the announcement of further extensions to the Gautrain network, CEO Jack van der Merwe is reluctant to share speciﬁcs. But it’s clear he’s excited about what has already been achieved, and the potential for ordinary residents and property developers By David A Steynberg

he Gautrain has been somewhat of a development catalyst around its various stations. And with last year’s announcement of its proposed new routes, it’s not surprising that many players are eagerly awaiting confirmation to exploit first-mover advantage. But Gautrain CEO Jack van der Merwe says that is one of two things he refuses to do this time around. “There are two things I’m never again going to say upfront: how much something is going to cost and where we plan on building stations,” he tells us from Gautrain’s new headquarters opposite the Midrand Station. “At the moment I’ll be happy if we start building in five years. I hope we don’t wait longer than seven years.” The new routes, and the stations that complement them, are big news for commuters and property developers. And because the model has proven itself already, people are not as scared as they were originally.

“What we’ve seen all over the world is that because a rail system is permanent, the environment accepts it and develops around it,” says Van der Merwe. “It doesn’t do the same around a bus route because people know a bus route can change. We did it now for the first time in South Africa and people were afraid; they thought, ‘There goes the neighbourhood’. But actually the opposite happened. There’s been an explosion of development around the stations. I think people have lost their fear of rail. “We’ve commissioned a study to see what the exact impact has been because we’ve seen the development. We’re actually unlocking the potential. In Sandton there’s apparently twomillion square metres of office space that has already been approved but not built; I think this will open up that possibility.” Sandton, however, with its ambitious plans faces a historical dilemma – one

where the Sandton council back in the 1970s rejected all Pretoria and Witwatersrand routes into the then-rural enclave. Van der Merwe was working with the CSIR at the time, which was commissioned to develop the routes within PWV (Pretoria, Witwatersrand, Vereeniging). “At that stage Sandton was a council on its own. The network we developed was a freeway grid and a K-route, the secondary express routes or carriage routes, and Sandton forced us to take out all the PW routes. They said they didn’t want them in Sandton,” says van der Merwe. “They said they wanted double roads, no street lighting. It had to be a rural area, and now they are seeing the results of that. In Sandton there are not enough services to carry what they want. So now that Sandton is land-locked and if you have a system that can feed people in and out of Sandton without clogging up the roads, that’s going to work well.”

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transport

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transport

While all 10 stations are located in developed areas, some more so than others, the strength of the Gautrain as a property catalyst is most evident in Modderfontein – a greenbelt 10 kilometres from Rhodesfield Station where Heartland Property holds 1 600ha of undeveloped land. “What is interesting is we built 10 stations but on the Heartland property we built a sub-structure for an 11th station in the Modderfontein area,” says Van der Merwe. “Now you see it has been sold to the Chinese, and they will build on top of our station.” The proposal is to construct a New York- or Hong Kong-type super city, with Hong Kong Stock Exchange-listed Shanghai Zendai planning to develop the mixed-use site over 10 years. The Chinese land developer plans to transform the Modderfontein property into a “New York of Africa” with investments of R80-billion over the next 15 years, which include a financial hub, 35 000 homes, an educational centre and a sports stadium. In fact, during Gautrain’s conception, Van der Merwe thought of using the Hong Kong model. “I had visions of developing the stations the way they are in Hong Kong – you build the station 50

Gautrain CEO Jack van der Merwe

The next step for Gautrain is to consider current and future capacity, and where to start building ﬁrst but it’s is actually just access to the shops, offices, accommodation,” he says. “So it’s a multipurpose island that gets built. Then the developers, Siemens, who tendered, said they wouldn’t touch property.

They said it just makes the project too complicated: you’re doing a very complicated train construction and then you have to keep an eye on property development in the area. So we turned it around and said we’d just take a functional transport area for the station so we actually took the minimum. “Then we sat down with the councils and gave them development plans for a two-kilometre radius around each station to use for land applications. Our idea is mixed-use, which seems to be working. I think that’s the formula we will use for the new stations as well. We saw that with that radius, 50% of the land was vacant around the train stations. If you then take a five-kilometre radius, 75% of the land was vacant. I think that opens it up for development. It wouldn’t surprise me if you took the 45-degree line from the east of Pretoria to the west of Johannesburg and found that 80% of the land is still open for development.” Station for station, the Johannesburg CBD still has the biggest amount of office space available. Rosebank is the second Sandton so there’s a lot happening there and there is a lot of residential space ready for redevelopment.

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transport

“Rosebank is the next growth point,” says Van der Merwe. “Sandton is developing but Marlboro is where the potential is. Then we have a planned station at the SA Mint: there’s a lot of development happening there, many cluster houses and security estates. In Centurion there are massive plans for redevelopment but Pretoria actually surprises me: there is a plan for a government precinct to be built behind the station. If that happens, it is going to be massive. I’ve seen plans for development on top of the Gautrain Plaza Station, and Hatfield is another big growth point. The whole Rhodesfield area is also being developed. I’m working on the aerotropolis plan and that is one of the areas that we will redevelop. The location of the train is not bad.” The next step for Gautrain is to consider current and future capacity, and where to start building first. “We are running quite full trains now,” says Van der Merwe. “We are looking at buying more train sets but you can’t actually tax today’s people to create capacity for 50 years from now. How much spare capacity do we provide now to have the benefit down the line?

“The Pretoria city council area is 100km by 120km. The people in Tshwane live 46km away from the CBD. So you have to move them 46km in and 46km out – 92km in total, which is totally unsustainable. To make transport viable, you have to start that side.” Johannesburg, according to Van der Merwe, is quite serious about having much shorter trips, which can only be done through densification and having the infrastructure to support it. “In the triangle between Tshwane, Johannesburg and Ekurhuleni, you have to start maximising on the land,” he says. “The challenge for the future is to start looking at 75 to 100 units per hectare but to still design liveable solutions. You would need to have shared open spaces and densify them to get liveable communities.” On paper it all sounds fantastic. But attitudes and habits are harder to break – even though there is progress. “The Gautrain is so important in our country,” says Van der Merwe. “Our publictransport system is a mode of force: people use it because they have to. They have no other options. And in our country, if the average

monthly household income is more than R6 500, they buy a car and then clog up the system. You have to make public transport a mode of choice – and we see in our survey that we have 77% of users converting from a car. They actually have a choice, and they leave the car at home.” Looking forward 25 years from now, Gautrain predicts doing 25-million passenger trips a day – the equivalent to London. “If we have 25-million passenger trips a day the bulk of it has to be nonmotorised,” he says. “You need to be able to walk. And to do that you have to live close by. We are moving towards a mega city, which is just exhilarating. Sixty percent of the world will be living in cities in the next 10 or 20 years. They just get bigger and bigger, and that’s why we have to get the infrastructure now.” It is forecast that in the next 25 years, the car population will double. “That’s the ‘do-nothing’ scenario,” says Van der Merwe. “If we don’t move to public transport, the average speed will go down to 10km/h. Ironically, in 18th-century England, when the primary mode of transport was a horsedrawn carriage, the average speed was 15km/h…”

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nodal development

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nodal development

Victoria & Alfred’s Silo Square inspires No 1 and No 2 Silo at the V&A Waterfront have 10 Green Stars between them, while a new contemporary art museum is set to crown the node By David A Steynberg

ommercial spaces are designed for people. In the case of offices, tenants need to be happy, productive and comfortable, as well as – dare we say – inspired. The V&A Waterfront’s newest development, No 1 and 2 Silo, fits the bill perfectly. No 1 Silo is occupied by investment services provider Allan Gray, and No 2 – the residential space – by chic, modern-loving residents. Both buildings have been awarded Green Star ratings by the Green Building Council of South Africa, and have gained admiration from academics and industry peers for the way in which the developers approached a project a few feet away from a heritage site – Cape Town’s historic Grain Silo complex. “From an urban-design point of view, we wanted to create a positive outdoor urban space around the existing Grain Elevator and Silo Storage bins building: a new urban space between the old and the new,” says Lloyd Rubidge, director at VDMM Architects, who together with Rick Brown Associates designed the 18 000m² offices. “The purpose of this intervention was two-fold: to secure the status and presence of the existing buildings, and to create and define a site for the new Allan Gray headquarters building.

“The decision was taken not to introduce a ‘self-referential’ icon building into the existing precinct but rather to reconstruct the precinct around an already existing iconic structure,” says Rubidge. “The Silo had in the past been the tallest building in Cape Town. It was once tied into a countrywide network of rail tracks and inland silo facilities; its function and purpose were integral to the economy of the Western Cape. As such, it remains one of the few large and intact historical structures at the V&A Waterfront.” This approach has been recognised and welcomed by architect Professor Julian Cooke, who in a 2012 Architecture South Africa feature wrote, “The first diagram for the building shows the intent: it will be background for something that already exists, the large historic silo. It will be the first part of, and stimulus for, a series of urban spaces around the silo, setting up a precinct with just the kind of intense and interactive nature the city needs. There is something going on here which is a good deal bigger than showing off the importance of the client and the skill of the architect – appropriate and sustainable city building.” The V&A Waterfront is home to South Africa’s second 6 Star Green Star SA building

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nodal development Zeitz Museum of Contemporary Art Africa

in the form of No 1 Silo – with the Department of Environmental Affairs poised to develop the country’s third when its new head office is complete. No 1 Silo is currently the largest green office building in SA. This is significant, given the scale of the project. “Sustainable development and green operations are fundamental to the V&A Waterfront’s overall development strategy,” says David Green, CEO of the V&A Waterfront. “We have adopted a rigorous approach to green construction and sustainable design principles, and the efficient use of natural and energy resources.” More than mere words, the latest crown in the V&A’s impressive property portfolio, No 1 Silo exists symbiotically with its environment. Seawater from the Atlantic Ocean is used to reject waste heat from the cooling plant and allows for significant potable water savings. It also improves the overall energy efficiency of the building. The IT server room fulfils a dual purpose: it not only keeps the business connected, but the heat generated by the servers is fed to the underfloor water-borne heating system to warm the reception area. One of the biggest innovations is the double-glazed, double-skin, high54

performance façade. Its claim to fame is that, by tracking the sun’s movement over the building, it automatically controls the blinds between the internal double-glazed system and the external single-glazed skin. This reduces solar heat gain and maximises natural light penetration, while controlling solar glare in the office space. From an aesthetic perspective, this façade maximises views and natural light throughout the building. While No 1 Silo is the Western Cape’s first 6 Star Green Star SA commercial building, No 2 Silo – which sits adjacent – notched some sustainability accolades of its own: a 4 Star Green Star rating. No 2 Silo, which boasts 31 apartments spread

across seven floors, is the first South African residential development to receive its stars using the new rating tool. The “As Built” category rating ensures that the original environmental intentions during the design phase were adhered to. “The V&A Waterfront is an extension of the city and a neighbourhood within the city,” says Green. “The development of Silo Square honours the initial vision of the V&A Waterfront to remain the most desirable place for Capetonians to live, work, shop, play, stay and eat in, and to be an integral part of the City of Cape Town and of the ongoing regeneration of the docklands.” While grain sustained the area many years ago, tourism has far surpassed it. It is fitting that one of Cape Town’s iconic skyline structures – the historic grain silo – will again contribute to the Cape’s economy. This will be achieved when the Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA) moves into the 57m-tall silo. “Given the history and socioeconomic role the V&A Waterfront plays in South Africa, and the sheer number of visits we achieve annually, we felt this gift to the nation, where commerce meets culture, was entirely appropriate and will correctly continue to position the Waterfront as a social nexus for all Capetonians, South Africans and international visitors who take joy in celebrating culture,” says Green. Zeitz MOCAA will cover more than 9 500m², placing it among leading contemporary art museums worldwide. Across nine floors, 6 000m² will be dedicated to exhibition space, while one floor will be devoted to education. With the completion of No 1 and No 2 Silo, as well as the forthcoming Zeitz MOCAA, the V&A Waterfront – and Cape Town – is set to continue to inspire the hearts, minds and imaginations of all who live, work and visit here.

Artist’s impression of the view from the pool deck

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nodal development No 1 Silo main atrium

No 1 Silo main atrium

No 1 Silo courtyard

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feature

Taking their toll With the controversial e-tolling system officially in full swing, property players and analysts reflect on how it will affect the industry By Candace King

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feature

aving gone live at midnight on 2 December 2013, the muchopposed e-tolling system is now a reality. After extensive lobbying, protests and appeals, the implementation of the e-tolling system has left many South Africans in Gauteng reeling with anger and bitterness. Many people have taken to social-media platforms such as Twitter and Facebook to rant about the implementation of the system. They included prominent South Africans – former secretary to the late former South African president Nelson Mandela Zelda la Grange tweeted, “Can’t compare traffic fines to e-tolls. Traffic fine: you committed an offence. E-toll: you pay because the money was used for corruption elsewhere.” Despite the fact that close to 800 000 people registered for e-tolling just hours before the system went into operation, vehicle users refuse to purchase e-tags, arguing that registering will leave a dent in their pockets. Already plagued by slow economic growth and high levels of household debt, the tolls are set to hike up travel costs for commuters. Citizens living in Gauteng will not be the only ones affected – SANRAL has revealed that it is looking to extend the usage of Gauteng’s e-tags to toll plazas throughout South Africa to prevent traffic congestion in other urban areas.

E-tolls from both sides of the gantry On the topic of congestion, there were mixed reports about traffic on Gauteng’s highways just days after the system was implemented. According to SAPA, Johannesburg Metro Police reported that congestion was heavy just like on any other day. However, other reports stated traffic volumes on alternative routes, including the M1 and routes through residential suburbs, were higher than normal as motorists avoided using the e-tolled freeways. Amid the gloom, there has been a shimmer of positivity. Some motorists are pleased at the free-flowing traffic on the N3 and N1 North. Car-rental company Avis Southern Africa said it acknowledges the positive impact of the system and that it would continue to support upgrades to roads countrywide. Transport Minister Dipuo Peters told reporters at SANRAL’s operations centre in Midrand last year that the cost of the e-toll tariffs has been exaggerated, and that the system would benefit road-users and enhance safety on the roads. She noted that the Gauteng Freeway Improvement Project had provided the required road infrastructure in the province. According to statistics, Gauteng generates almost 38% of the total value of South Africa’s economic activities.

E-toll tariffs have been exaggerated. The system will benefit road-users and enhance safety on the roads Transport Minister Dipuo Peters

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feature Over the past 10 years, Gauteng has experienced a tremendous amount of growth in terms of housing, office, retail and commercial development. Because of this, infrastructure provision, especially transportation-related infrastructure, was not implemented simultaneously with the other infrastructure. This led to the government’s plan to implement infrastructure projects aimed at increasing the capacity of the roads infrastructure. Peters said that a total of 201km of freeways had been upgraded, 585km new traffic lanes added, 34 interchanges upgraded, and four new directional ramps built. “It is unfortunate that, when people complain about the cost of e-tolls, they do not look at the benefits,” she said.

What does this mean for the property industry?

“The study further reported that another knock-on effect, pertinent for property owners, was an increase in traffic through residential areas,” says Roberts. “This factor directly led to a decline in the value of property adjacent to the tolled routes. In addition, there was a significant rise in accidents resulting in the diversion of traffic due to a combination of higher traffic volumes and poor maintenance on the residential routes. It is no secret that government’s lack of infrastructure funding – or, more accurately, the proper allocation of funding – has resulted in the decline of suburban roads managed by local councils. The shift in traffic patterns resulting from e-tolling is likely to result in further degradation of suburban road infrastructure.”

For our industry, the greatest concern is how the e-tolling system will affect the property sector. The system is highly likely to influence consumer confidence and expenses and urban migration, as well as development and current property prices. It will also likely affect secondary alternate routes, as has already been reported, leading to congestion and road damage.

Nelson Ferreira, Pam Golding Properties area principal on the East Rand, believes residents living on the East Rand could possibly make use of several alternate methods of travel, including split-cost lift schemes and the Gautrain, and use a larger percentage of back roads on the way to work and back. “I don’t believe this will result in a mass exodus of people wanting to live closer to work because I truly believe the value offering of properties on the East Rand is significant,” says Ferreira. “I think anyone relocating will definitely experience the change in house price and will find it challenging to find the same kind of home elsewhere for the same rand value.” These trends will also have a positive impact on the demand and supply of commercial property (retail developments) in these areas. A prime example of this is Krisp Properties’ planned Olievenhoutbosbased 9 000m² Olive Wood Shopping Centre and 114-unit residential estate situated along Johannesburg’s R55, which stands to benefit from the increased traffic along a popular alternate route to the e-tolled highway.

Jacques du Toit, Absa Home Loans

John Roberts, CEO of Just Property Group “The knock-on effects of e-tolling are myriad,” says John Roberts, CEO of Just Property Group. “Studies conducted in the US have indicated that there was a significant change in road-use habits from logistic firms once tolling mechanisms were implemented on major routes.” He adds that, as can be predicted, where companies decided that the tolling would make their businesses less viable, alternate routes were used, resulting in a huge increase of traffic on back roads and – ironically – resulting in greater-than-average congestion.

“Developers will find it hard to buy a space earmarked for low-cost transport due to high tariffs,” says Absa Home Loans senior property analyst Jacques du Toit. “At some point, people will have to bear the brunt if they cannot afford to move to expensive areas designed for lower transport costs. Property developments will commence as normal, with a focus on areas where there is a strong demand for development and expansion. Business operating costs in general will increase, with the effect eventually felt by consumers in the form of higher prices of goods and services, which may lead to higher inflation.” He adds that residents of Johannesburg and Pretoria who work in these two cities and travel on Gauteng highways frequently could increasingly make use of public transport, especially the Gautrain. This may mean that demand for residential property in the vicinity of Gautrain stations and on related bus routes increases further, putting upward pressure on property prices in these areas.

John Loos, FNB

Future of e-tolling So what are the possible solutions to the e-tolling saga? According to John Loos, a household and property sector strategist at FNB, “A coordinated urban transport and infrastructure strategy is needed. Using the fuel levy for funding transport infrastructure appears more efficient and fairer, and would likely create less negative transport and property market distortions than e-tolling.” With the system still fresh on our roads, the full extent of e-tolling and its longevity will be revealed in the coming months. It’s very possible that the system will reshape the cityscape.

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serra® - washroom excellence

Serra Services: your complete washroom solution E

stablished in 1985 as a family business, Serra® has grown to create a competitive position in the washroom industry during the past 28 years and, according to market surveys, holds an enviable position where the preferred choice in seven out of 10 “A” and “P” Grade buildings is for Serra® branded products. Serra® has a record of many “firsts” in the South African washroom industry and has achieved another with the launch of 11 new state-of-the-art washroom dispensers, designed and manufactured in-house from high-quality stainless steel. Stainless steel – a locally sourced, high-end material – was selected not only because it is the norm in the US washroom industry but also because stainless steel products offer many in-use benefits. These include cost-effectiveness, durability, strength and safety, vandal resistance, near zero maintenance and, most importantly, a high hygiene factor. Stainless steel is fully recyclable and environmentally friendly material, making it a green product. Continuous research and development ensures that all Serra® branded washroom products are the best available, both locally and internationally. Regular overseas visits by management ensure that overseas products and service trends are closely monitored, and adapted and implemented to suit both local and international conditions. Not only does Serra® supply the whole of Africa

with quality-guaranteed washroom products, it is proud to boast an overseas export status. With exports to the UK, Oceania and First World European countries, Serra® is obviously the right choice. As a manufacturer, Serra® is represented throughout the world by more than 400 distributors. In some cases Serra® finds it necessary and beneficial to both the company and to potential clients to go directly to the end-user market. In these situations, Serra® has as its target market the corporate and blue-chip companies – those that expect world-class products supported by world-class service. A completely structured in-house engineering company incorporates light-medium machinery and hardwearing tools for the manufacture of the Serra® branded stainless steel and coated mild steel products. Chemicals and plastic products are manufactured off site, utilising Serra®’s equipment and formulae. Serra® has a large range of attractive, quality-guaranteed washroom products, from hand-drying facilities, disposer wall bins, soap dispensers, feminine hygiene, lockable

toilet-roll holders, toilet-seat sanitisers and air fresheners; and the company is constantly improving and adding to the list. These modern, quality-guaranteed washroom products are supplied in both stainless steel and other quality material finishes. Serra® is determined to be recognised as an international, worldclass company staffed by professional, caring and capable people committed to continually providing superior service levels, to pursuing mutually beneficial long-term relationships with clients, and to ensuring a prosperous living and healthy environment for all. Should you already have a washroom and hygiene service provider, why not request Serra® branded dispensers and hygiene systems? We guarantee a quality, competitively priced hygiene solution – but more importantly, a reduction in consumable expenditure.

1217 Southdale, South Africa 2135 t: +27 (0)11 334 7447 f: +27 (0)11 334 7165 or +27 (0)11 334 9858 e: info@serra.co.za Serra.co.za or Serramat.co.za SOUTH AFRICAN PROPERTY REVIEW

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architects in focus

It’s all in the architecture Adrian Maserow Director, AMA Architects

AMA Architects recently celebrated its 20th birthday. A leading architectural firm in South Africa, its beginnings coincided with the birth of democracy. Since then it has grown as a contemporary design firm that values creative innovation and critical thinking in pursuit of cutting-edge architectural design. “These ideals are the source of our competitiveness in a fast-moving global built environment,” says director Adrian Maserow. “We’ve developed a capacity for diverse project types and processes that all feed into a body of distinct projects. We’re privileged to share a site with an iconic Sandton office building, a three-tower residential urban resort, a 25 000m² shopping mall, a prominent heavy engineering industrial factory and a warehouse.” Evolutionary change in the architectural design environment is seen in the accelerated urbanisation patterns of forward-thinking cities that promote mixed-use projects. The 21stcentury architectural design will excel through proven liveability of mixed-use precincts. The technology of construction is highlighted in the conceptual basis of AMA’s design. The methods and means of making architecture advance the art and science of architectural construction. “In our project for the Kaya FM head office on Jan Smuts Avenue in Johannesburg, we explored the materiality of light steel frame building clad in high-density polystyrene panels sculpted in a refined compositional façade,” says Maserow. “In our proposal for 1 Sandton Close, we wrapped a glazed envelope with projecting shading screens to adaptively reuse three distinct office buildings into one corporate campus. Then, in a conceptual project in Istanbul, we were inspired by the ‘hands’ in its design poetic. Its architecture depicts an open right hand, an image recognised and used as a sign of protection in many societies. We’ve placed our designs like hands resting on the Earth, with the poetic of form as the symbolic essence of protection, blessing, power and strength.”

Marco Fanucchi joined the team at AMA Architects in November 2005 and became a director in 2008. AMA Architects is recognised as a leading contemporary design firm with an optimistic vision and a strong passion for excellence in design. Regardless of the size of the project in question, the AMA Architects’ team is dedicated to delivering results that preserve a strong balance between the architectural ambition and the pragmatic commercial requirements. The year 2013 saw impressive growth at AMA Architects, both in human and technical resources as well as the scale and complexity of the projects under construction. With the release of SANS 10400 XA, environmental sustainability has become a major focus on all new developments and the firm has been greatly encouraged by the willingness of developers to pursue green accreditation on a number of new projects. Large projects due for completion this year include the Sandton Skye Residential Tower (Sandton) and the TSR Head Office and Factory (Edenvale). AMA is also looking forward to breaking ground on a number of very exciting new projects in 2014. “The key to AMA Architects’ success has been the company’s willingness to embrace the latest technology and software,” says Fanucchi. “These tools give us a competitive edge with regards to exploring design solutions, accurate documentation and ultimately the successful delivery of projects.”

+27 (0)11 807 7505 adrian@amagroup.co.za www.amagroup.co.za

+27 (0)11 807 7505 marco@amagroup.co.za www.amagroup.co.za

Marco Fanucchi Director, AMA Architects

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architects in focus

Gerald Pereira Director, AMA Architects Gerald Pereira is a director at AMA Architects. “We regard ourselves first and foremost as consultants who deliver a key service to our clients,” he says. “This is extremely important to us. At the same time, we set ourselves apart by trying to have a good understanding of the property climate. This allows us to deliver projects that aspire to a forward-thinking type of architecture, embracing anything that may be a specific requirement of the project, site, client or the current market.” AMA’s ability to deliver on projects is key. Without the ability to deliver a lot of similar businesses fail. The company’s most recent proud achievements are a result of close collaboration with other consultants and very forward-thinking developers. One has to have conceptual vision but without a willing team and a client that initial idea can quickly fall apart. “We are quite proud of the Overall Green Building Award from SAPOA for the Lakeside office opposite Centurion Gautrain station, as well as the completion of the Volkswagen Group South Africa’s sales and marketing operations office in Katherine Street,” says Pereira. The sustainable agenda, green-rated buildings and energy-efficient buildings have for some time been the set criteria for a lot of developers and tenants. Going forward, AMA will continue to propose sustainable buildings such as the Lakeside development (5 Star Green Star rated design), and the Atholl Towers project (aiming for a 5 Star Green Star rating). The property industry is always evolving with development requirements. In future, sustainable projects will be key.

+27 (0)11 807 7505 gerald@amagroup.co.za www.amagroup.co.za

Sarene Lyon Nel Director, D12 Interiors Sarene Lyon Nel qualified as an interior designer at the University of Pretoria in 2002 and has been part of the design team for eight years. Together with executive chairman Adrian Maserow, Lyon Nel leads a talented interior design group with a commitment to simple yet cutting-edge design solutions. D12 Interiors was founded in 1999. The interior design of this firm is distinctive, specialising in the commercial, residential and leisure fields. “We are committed to the creation of an exuberant, contemporary interior design,” says Lyon Nel. “Thus our vision and philosophy are to embrace each project with an enthusiasm for the uniqueness of its characteristics and the project requirements. Worthy design incorporates the will of clients, and this is pursued with each project through a highly interactive approach. Environmentally sustainable design is a high priority of the company, and D12 Interiors seeks like-minded developers and professionals who are committed to promoting the long-term view of well-considered building design and construction.” Lyon Nel has successfully completed multiple projects, including the Multichoice customer-care centre, Multichoice New Media, Multichoice MCA-IT, Transnet NOC (10 000m²), Safika holdings, CVR attorneys, and Avroy Shlain (2 100m²) and Gautrain Management Agency (2 500m²). The practice has designed for two 4 Star Green Star rated office buildings in Pretoria and Midrand.

+27 (0)11 807 7505 sarene@amagroup.co.za www.d12interiors.co.za

Anton de Jongh Director, Arc Architects With 33 years of experience, 16 of which he spent at the helm of Arc Pretoria, this progressively thinking architect is always kept on his toes by the rapid advancements in the field of architecture. Arc focuses on corporate and commercial office, retail, institutional/educational, interior and urban architecture on a pan-African basis. In the arena of corporate office, Arc prides itself on obtaining an intrinsic understanding of the user requirements and, armed with the latest sociological and technological advancements, translates it into cuttingedge architecture. The competition-winning Ecobank regional head office in Accra and the redeveloped JHI head office in Sandton serve as diverse torch-bearers. Retail projects range from greenfields developments to the redevelopment of existing malls with fresh innovation. The University of Pretoria’s Engineering development rewrites the precinct’s urban landscape and is the recipient of the 2013 SAPOA Award for Innovative Excellence for a mixed-use development, a SALI gold award and a Steel awards commendation. Arc believes that its staff’s dedication, passion and challenging of boundaries as well as adhering to project parameters and the client’s vision are the things that set the company apart from its competition. This goal can only be achieved when dedicated designers, integrated systems and technology are in harmony to afford each individual the opportunity to follow through from innovative conceptual design to hands-on delivery. Financial, time and environmental constraints have multiplied, forcing both clients and professionals into higher levels of applied expertise, only sustainable with traditional teamwork and relationships.

+27 (0)82 446 3626 ants@arc.co.za www.arc.co.za SOUTH AFRICAN PROPERTY REVIEW

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architects in focus

Pierre van Driel Director, Arc Architects

Mo Phala Director, Arc Architects

Madi van Wyk Director, Arc Architects

With extensive exposure to the ever-evolving nuances between developers and tenants over the past decade, Pierre van Driel has more than 16 years of experience in providing proven excellence to Arc Architects’ clients in a wide range of building uses throughout the continent. As both director and shareholder at Arc Architects, Van Driel has spearheaded the firm’s Ghanaian branch and has a firm grasp of the different developmental obligations that developers and contractors face in emerging markets – providing an uplifting, sellable property that yields the expected returns throughout its lifetime. Acquiring each developer’s unique ways, systems and standards is key to Arc’s longstanding client/consultant relationships. But Arc Architects will never claim to know everything, since the industry is evolving ever faster. The most important change is time. Things happen faster, thus an effective information-management system is crucial. More instructions need to be heard, so keeping familiar faces across the table to record, recall, interpret and express the clients’ vision is standard. Then there’s value-added input. Another significant change is cultural variance: Arc Architects prides itself on sharing knowledge with its partners abroad and its clients, as well as among its staff members. Arc Architects differentiates itself by being able to identify possibilities that can work for everyone. The firm spots income generators and helps to prevent maintenance hazards. With effective teamwork, smooth communication and current experience of the relevant field, Arc Architects makes it all seem as though it was your idea.

From working in the public sector as an architect and urban designer for the City of Tshwane to designing skyscrapers in the Chicago offices of Skidmore, Owings and Merrill LLP, Mo Phala adds a unique perspective to Arc’s make-up. A committed director and shareholder, Phala says that having been awarded a Fulbright Scholarship in 2005 changed his architectural career and perspective. “The experience broadened my mental portfolio and my understanding of different cultural landscapes,” he says. “Most importantly, it created the paradigm shift within that is required to best explore new frontiers of conceptual thought and innovative form/ space/place-making in architectural work. This has translated into ongoing commitment to our clients to produce innovative architecture that is supported by a practical and coordinated technical support base. Process management is paramount to achieve time, quality and financial parameters. In a systems-driven design office such as ours, this allows for more time to be spent on design and detail documentation. As a registered member of the Green Building Council of South Africa, Arc Architects fully embraces the principles and aims of producing sustainable and energy-efficient architecture.” The firm’s commitment to the built environment extends to its involvement at academic institutions, architectural associations and social initiatives that encourage the advancement and wellbeing of the architectural landscape in South Africa. As a Level 3 BBBEE contributor, Arc embraces all the principles of BBBEE fully. “We derive great satisfaction when our clients get that warm, fuzzy feeling once they see the potential of their dreams, ideas and investment unleashed,” says Phala.

Madi van Wyk joined Arc Architects in 2007 and was promoted to director at the beginning of 2013. A master’s degree in architecture at the University of Pretoria on the back of a BCom in financial analysis at the University of Stellenbosch equips her with the tools to understand both the client’s dream and the project’s viability. Arc Architects ensures that project solutions are pragmatic while also being at the cutting edge of latest technologies, pushing the boundaries of industry beliefs. An award-winning mixed-use project such as the University of Pretoria Engineering 3 building, with a parkade, entrance and auxiliary functions, required a tremendous effort from Arc Architects when it came to translating the multifaceted user requirements and compiling the project brief. As part of this, the foyer addition to the Aula auditorium is one of Arc’s proudest realisations. Arc Architects illustrated its ability to manage an elaborate heritage process locally and nationally together with the complex requirements of alternative end-users, and to coordinate extensive services to be set within a glass box. All this was done without ever compromising on attention to detail or the intricate connections to the existing fabric. The promulgation of the new SANS 10400 XA regulations has called for even more involvement from consultants in shaping ideal building environments. It has also had a detrimental impact on the cost of projects, especially in terms of mechanical service requirements. Arc Architects focuses on optimised buildingenvelope design to reduce the impact on HVAC loads that directly reduces the power requirements in order to ensure feasible projects.

+27 (0)82 697 9960 pierre@arc.co.za www.arc.co.za

+27 (0)83 758 1999 mo@arc.co.za www.arc.co.za

+27 (0)72 288 8969 madi@arc.co.za www.arc.co.za

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statistics

South Africa: the big three Statistics South Africa

Source: Fast Facts November 2013, South African Institute of Race Relations (SAIRR) 1.5

auteng, KwaZulu-Natal, and the Western Cape are South Africa’s biggest breadwinners, contributing tremendously to the country in more ways than one. Together the three provinces occupy only 20% of the total land area of South Africa. But Gauteng and KwaZulu-Natal, the country’s most populous provinces, account for more than 40% of the total population. Higher levels of urbanisation are also evident, with Gauteng having as many as three of South Africa’s eight metropolitan areas. Together, Gauteng, KwaZulu-Natal and the Western Cape account for about two thirds of South Africa’s economy. At 4,4%, 4,1% and 4,5% respectively, the average real annual economic growth rate of each of the three provinces over 10 years was above the national average of 3,9%. The Northern Cape’s growth was slowest at 2,4%. Gauteng alone accounts for more than a third of the total South African GDP. The finance sector South Africa is the single largest contributor to the economies of the three provinces. Manufacturing and trade also account for significant shares of economic activity. Almost two thirds of all employed people and just over 70% of individual taxpayers are registered in the three provinces combined. Gauteng and the Western Cape have the lowest ratios of people who do not work and are dependent on those who are employed. Educational outcomes are also significantly better in these areas. The proportions of adults with no education are lowest in Gauteng and the Western Cape.

Migration

Figure 1.17 shows the inter-provincial migration, the movement of people from one province to another. Net migration on the tables shows the differen inflow and outflow (in thousands) in the respective provinces. Gauteng remains the province attracting the highest number of migrants from other provinces an increase of 566 760, which is lower compared to the 901 622 that was recorded in 2011, followed by Western Cape with a gain of 192 401 people in economic activities in these two provinces justify the high inflow, as people tend to move in search for job opportunities. Eastern Cape, Limpopo and KZN s losses with 325 078, 259 116 and 109 889 respectively. Thus people move, especially from the rural provinces of Eastern Cape and Limpopo to the mo provinces of Gauteng and Western Cape for better opportunities, be it education or employment.

Net migration in thousands Census 2001 and 2011, and Community Survey 2007

enumeration by previous province of residence) Figure 1.17: Net migration in(Province thousandsof (province of enumeration by previous province of residence): Census 2001, 2011 and Community Survey

Limpopo

Mahikeng

North West %

Pretoria

Johannesburg

Gauteng %

Potchefstroom

Polokwane

Mbombela

Mpumalanga

Welkom

Free State

Kimberley

KwaZulu-Natal %

Bloemfontein

Northern Cape

Pietermaritzburg %

Mthatha

Eastern Cape

Bisho

Western Cape %

Cape Town

Port Elizabeth

Percentage distribution of total population by province: 3 Census 1996, 2001 and 2011, and Community Survey 2007

Statistics South Africa

Durban

ABOVE A chart depicting inter-provincial migration – the movement of people from one province to another. Net migration on the tables shows the difference between the inflow and outflow (in thousands) in the respective provinces. Gauteng remains the province attracting the highest number of migrants from other provinces. In 2001, it saw an increase of 566 760, which is lower compared with the 901 622 recorded in 2011, followed by the Western Cape with a gain of 192 401 people in 2011. The high economic activities in these two provinces justify the high inflow, as people tend to move in search of job opportunities. Eastern Cape, Limpopo and KwaZulu-Natal show the biggest losses, with 325 078, 259 116 and 109 889 respectively. Thus people move, especially from the rural provinces of Eastern Cape and Limpopo to the most industrialised provinces of Gauteng and Western Cape for better opportunities, be they education or employment.

Census 2011 Pr

Figure 1.1: Percentage distribution of total population by province: Census 1996, 2001, 2011 and Community Survey 2007

Those who are literate and have higher education are also most likely to be living in these two provinces. The proportion of people who have attained Grade 12 is also relatively high in KwaZulu-Natal. People in Gauteng and the Western Cape are also better placed to afford medical aid and are more likely, because of their education levels and income status, to have better nutrition levels. Not surprisingly, many of South Africa’s internal and international migrants head for Gauteng and the Western Cape. Statistics South Africa’s estimates Figure 1.1 shows gradual declines in the percentage share of the total population in Eastern Cape, Free State, KwaZulu-Natal, and Limpopo since 1996. However, ABOVE Gradual declines in the percentage share of the total population in the Eastern Cape, Free State, KwaZulu-Natal and Limpopo for the period 2006-2011 indicate that most of the Western Cape, North West and Gauteng have recorded increases since 1996; Gauteng shows the largest increase – 1,7 per cent, from 22,0% in 2007 to 23,7% in 2011. Northern Cape has remained at 2,2% 2001, whereas Mpumalanga showed a Gauteng decreaseshows of 0,2 centincrease between 1996 and 2001; moving however, it remained since 1996. However, the Westernconstant Cape, North West since and Gauteng have recorded increases since 1996; theper largest people out of the Free State, Limpopo, constant between 2001 and 2007 at 7,5%, an increase of 0,3 per cent is seen in 2011. – 1,7%, from 22% in 2007 to 23,7% in 2011. Northern Cape has remained constant at 2,2% since 2001, whereas Mpumalanga showed Mpumalanga, the North West and the Northern a decrease of 0,2% between 1996 and 2001; however, it remained constant between 2001 and 2007 at 7,5%, and an increase of 0,3% Cape headed for Gauteng. Those from the Eastern is seen in 2011. Cape largely choose to move to the Western Cape. SOUTH AFRICAN PROPERTY REVIEW

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Census 2011 Provinces at a glance

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off the wall

Cycling in the sky By David A Steynberg

Besides its obvious health benefits, cycling holds great possibilities for easing traffic congestion. But more often than not, cities lack safe and dedicated cycle lanes due to space constraints. Which is why the SkyCycle may hold the key

ith global cities becoming increasingly congested and recognising that alternative forms of transport are key to managing busy networks, exterior architecture firm Foster + Partners and Space Syntax have proposed an innovative solution in London. Dubbed the SkyCycle, safe and long-distance cycle routes will be constructed above the existing suburban rail network. According to Foster + Partners, “The proposed SkyCycle network follows existing suburban rail services and provides more than 220km of safe, car-free cycle routes that can be accessed at more than 200 entrance points. Almost six-million people live within the catchment area of the proposed network, half of whom live and work within 10 minutes of an entrance. Each route can accommodate 12 000 cyclists per hour and will improve journey times by up to 29 minutes.” This initiative will go a long way towards easing the already pressured public-transport system, especially considering that London’s population is set to grow by 12% over the next decade, exceeding 8,6-million people. 64

“The impact on systems that are already operating at capacity is further compounded by changing patterns of use – for example, people are working further away from their homes, as well as travelling around London more in their leisure time,” says the firm. “The rapid rise in energy prices and transport policy decisions have not yet diminished the dominance of the motor vehicle on the capital’s roads, resulting in a poor public realm with limited space for pedestrians, and contributing to an increase in air quality-related diseases and obesity.” The SkyCycle approach has potential applications in cities around the world, including Jo’burg, Durban and Cape Town. “As London’s railway lines were originally built for steam trains, they follow contours that naturally reduce the amount of energy expended and avoid steep gradients,” says Foster + Partners. “SkyCycle exploits this historic legacy. Associated benefits include the regeneration of the typically low-value, often underutilised industrial sites next to railway lines; vertically layering the city to

create new social spaces and amenities on these cycling high streets; and the integration of automated goods delivery networks.” According to studies, the SkyCycle provides capacity at a much lower cost than building new roads and tunnels, and presents other development opportunities for businesses along the route and at the stations. “Cycling is one of my great passions – particularly with a group of friends,” says Lord Norman Foster. “And I believe that cities where you can walk or cycle, rather than drive, are more congenial places in which to live. To improve the quality of life for all in London and to encourage a new generation of cyclists, we have to make it safe. However, the greatest barrier to segregating cars and cyclists is the physical constraint of London’s streets, where space is already at a premium. SkyCycle is a lateral approach to finding space in a congested city. By using the corridors above the suburban railways, we could create a world-class network of safe, car-free cycle routes that are ideally located for commuters.”

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Acknowledgement: SAOTA â&#x20AC;&#x201C; Stefan Antoni Olmesdahl Truen Architects

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