South African Property Review
SOUTH AFRICAN
June 2014
REVIEW
46th Annual SAPOA International Convention and Property Exhibition
HARBOURING SUCCESS The V&A: a destination in its own right
MOTHER KNOWS BEST Diving into opportunities in the Mother City
BOWING OUT Estienne de Klerk on a year of legislation, tabled motions and a commitment to education
Making a difference
The 46th Annual SAPOA International Convention and Property Exhibition
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from the CEO
The expropriation in the Investment Bill SAPOA CEO Neil Gopal provides comment on the latest Protection and Promotion of Investment Bill, a possible law that will change the face of investment in South Africa
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he Protection and Promotion of Investment Bill will probably with time be known, if passed as law in its current form, as one of the laws that left the investment confidence in South Africa shaken. While it is accepted that there is a need to ensure that South Africa aligns itself with other international countries in terms of best practice and bilateral investment treaties, it is what some have called disguised “expropriation without compensation” by government that has caused panic in some commercial sectors. The Bill applies to investments made for commercial or business purposes, and to material economic investments or a significant underlying physical presence in South Africa, such as operational facilities. Much criticism has been made in respect of the Promotion and Protection of Investment Bill, which was published for public comment in November 2013. A lot of the criticism has emanated from or in relation to jurisdictions that have or previously had bilateral investment treaties (BITs) with South Africa that have been or will be terminated. Foreign investors in those jurisdictions will, in some respects, be worse off. There are those who believe the foreign investors will be placed on the same footing as South African investors. It is an opinion that those foreign investors that enjoyed the jurisdiction of BITs will be placed on the same footing as foreign investors in jurisdictions that do not have BITs, notably major sources of foreign investment such as the US, Japan and India. Whether it is an ideal situation or not, it is believed that the Bill will ensure that all investors will have all the advantages and disadvantages of domestic South African legislation. This Bill entitles the government to take steps in relation to taxation, customs unions, free trade areas, common markets and similar international agreements or arrangements. It seems this does little more than protect things that are already
protected under international law. It is accepted that countries are entitled to govern their own taxation, subsidy and procurement processes without foreign interference, provided they are constitutionally valid laws of general application. The strongest criticism has been directed against expropriation and compensation provisions in the Investment Bill. Our Constitutional Court recently passed judgment in the case of AGRI South Africa versus Minister for Minerals and Energy, and this led to the principles of expropriation being extended. It is a fact that an investment may not be expropriated except in accordance with the Constitution, in terms of law of general application, for public purposes or in the public interest, under due process of law, with just and equitable compensation effected in a timely manner. These are rights built into the property clause in the Constitution, and they must apply to any expropriation in South Africa. The AGRI case extended this clause by stating that it is not expropriation if it is a “measure which results in the deprivation of property but where the state does not acquire ownership of
such property, provided there is no permanent destruction of the economic value of the investment, or the investor’s ability to manage, use or control the investment in a meaningful way must not be impeded.” It is clear that the concept that there is no expropriation if the state does not acquire ownership is an extension of the law of expropriation. The fear is that the state, instead of expropriating investments to itself, will take the rights over as custodian and will then administer those rights in favour of the general populous without actual expropriation. There is always a concern that the AGRI principle will be expanded into government taking that it is beyond the usual international concept of expropriation. Any such law should be subjected to a constitutional challenge. Many BITs entitle an expropriated foreign investor to the market value of the asset expropriated. Clearly, if expropriation becomes akin to nationalisation, investment will be seriously affected.
Welcome to Convention It’s that time of year again when the entire property industry meets under one roof for the highly anticipated 46th Annual SAPOA International Convention and Property Exhibition. Regarded as South Africa’s premier property conference of the year, the 46th Convention will once again present an exceptional opportunity for both local and international property professionals and practitioners to amalgamate to discuss the latest trends and investment opportunities as well as challenges. I would like to extend a warm note of thanks to all our sponsors as well as the SAPOA staff who make this annual event a major success. We hope that you enjoy the Convention – and the Mother City.
Neil Gopal, CEO
Thank you to our Convention sponsors ●●
Main sponsor: Liberty Properties
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Journalism Awards sponsor: JHI
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Dinner sponsors: Crane Construction Consultants
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Wireless hotspot sponsor: Standard Bank
and Remote Metering Solutions (RMS)
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Mini programme sponsor: Mott MacDonald PDNA Delegate’s booklet sponsor: Capital Property Fund
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USB sponsor: Otis United Technologies
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Pens and notebooks sponsor: Schindler
SOUTH AFRICAN PROPERTY REVIEW
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NO 1 SILO, V&A WATERFRONT
PROUD PAINT PROVIDER TO LANDMARK NEW BUILDS IN SA
STANDARD BANK ROSEBANK
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With years of extensive experience in many of South Africa’s groundbreaking builds, Dulux Trade offers a complete suite of architectural support services which can be selected to match the size and needs of your project - freeing you up to focus on your project.
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Adding Colour to People's Lives Trend and colour forecasting is a vital and inspiring part of our business, enabling you to be one step ahead of customers’ needs for years to come. As the largest colour manufacturer worldwide, we keep our fingers on the pulse of emerging social, economic and design trends around the world, as it is often here that we see the first signs of future colour movements. Our annual ColourFutures , is a wealth of visual inspiration widely regarded as the global standard in trending colours. TM
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Our specifier consultants can carry out a full site inspection. This includes assessment of the current condition of surface coatings, help with identification of difficult substrates and advice on extending maintenance cycles.
We offer full specification support tailored to your individual requirements. This ensures that correct preparation is highlighted and the products specified are the most appropriate for the location, environment and substrate type.
Our highly-trained team can attend pre-contract, tenant liaison, project review and post-contract assessment meetings, ensuring collaboration and clear communication from concept to completion.
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Accreditations ISO 14001 . ISO 9001 . OHSAS 18001 These accreditations are audited annually. AkzoNobel is one of the top three companies in the Dow Jones Sustainability World Indexes. AkzoNobel is also listed on the FTSEGood Index. Dulux Trade is one of the silver founding members of the Green Building Council of South Africa. Dulux is an approved B-BBEE contributor and is reviewed annually.
For further information visit www.duluxtrade.co.za or call 0860 330 111
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Property Acquisition and Investments | Asset Management | Advisory Solutions | Facilities Management
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We punch above our weight.
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from the editor’s desk
Making a difference Twenty years for our democracy and 46 years for SAPOA’s Convention – it’s indeed an exciting time for making a difference
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’m often referred to as a “freedom baby” or “freedom day child”. With my birthday falling on 27 April, a day that celebrates freedom and pays homage to the first national postapartheid elections of 1994, it’s quite a liberating feeling to know you entered the world on this very day six years earlier. This month, South Africa makes another major commemoration on 16 June, dedicating an entire day to the budding youth of the country in memory of the brave youngsters who fought in the struggle and lost their lives on the day of the Soweto Uprising in 1976, when high-school students protested about the introduction of Afrikaans as the medium of teaching in all local schools. South Africa has come a long way since the struggle days filled with tear gas, widespread angst and rife inequality. Twenty years after the country obtained its democracy, we still have much to learn and to do – protests and inequality are still a plague on South Africa’s house, as are high rates of unemployment, crime, corruption and poverty. Positively, many individuals, groups, organisations, businesses, large corporates and entire sectors of industry are doing their bit to make a difference in a group effort to make South Africa a brighter rainbow nation. The property industry is one of the sectors contributing to the country on several levels, including economic, infrastructural, developmental and social. Earlier this year, we focused on the various corporate social responsibility initiatives, in which a host of companies that operate in the property industry are continuously involved.
This month the theme is making a difference, something that SAPOA is actively engaged in. Apart from acting as the property industry’s voice, SAPOA strives to make significant contributions to the industry in the areas of education, law and government. Via its allencompassing property programme and bursary scheme, SAPOA’s education, training and development department has made notable contributions towards the training – and the empowerment – of individuals who previously did not have the ability to access property and who could not work as property practitioners. With the help of its legal department, SAPOA has lobbied on several pertinent issues, including skewed municipality rates and development matters. In an effort to bridge the gap between the private sector and the public sector, SAPOA has established strong, solid relationships over the past few months with the country’s local government mayoral offices, hosting key milestone dinners with the Mayors of Cape Town, Johannesburg and Tshwane. SAPOA is further making a difference in the form of its celebrated and highly anticipated Convention – the SAPOA Annual International Convention and Property Exhibition is now in its 46th year. At 26 years older than our democracy, the event is still influencing the industry and the country. It is regarded as the premium gathering for investors, property owners, lenders, services providers, developers, iconic personalities and thought leaders from around the world. The Convention simultaneously recognises wow-factor buildings and the master wordsmiths of South Africa. This year will once again showcase the property industry’s most innovative and aesthetically beautiful buildings in the Innovative Excellence Awards (the Oscars of the property industry) and acknowledge South African property journalists who have made significant contributions to the commercial and industrial property industry. This year will mark my second time attending and reporting extensively on the Convention. The event promises to be a hit, bursting at the seams with information, soughtafter speakers, panel discussions and, of course, networking. I look forward to seeing you there! Candace King, editor
SOUTH AFRICAN PROPERTY REVIEW
Office +27 11 463 8071 | info@milestoneproperties.co.za
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Guiding engineering journeys
Project manangement - Engineering - Environmental management
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www.gladafrica.com
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Commercial Property Specialists
Expert solutions. For you. For your asset. www.auctionexchange.co.za
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contents
June 2014
PROPERTY SOUTH AFRICAN
Abland
REVIEW
South African Property Review
SOUTH AFRICAN
June 2014
REVIEW
MOTHER KNOWS BEST Diving into opportunities in the Mother City
46th Annual SAPOA International Convention and Property Exhibition
HARBOURING SUCCESS The V&A: a destination in its own right
BOWING OUT Estienne de Klerk on a year of legislation, tabled motions and a commitment to education
ON THE COVER SAPOA president Estienne de Klerk bids farewell to his presidency after a year of multiple changes in the commercial property industry
Abreal
Making a difference
The 46th Annual SAPOA International Convention and Property Exhibition
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From the editor’s desk News Education, training and development Legal update The audit scrutiny of business accounts CEO’s letters Feature The president bows out Media lunch SAPOA Convention speakers Interview Patricia de Lille Interview Yuri Maltsev Feature Joining forces down under Africa uncovered The Seychelles Feature Mother knows best Feature Harbouring success Real estate in the global market Feature CT airport flies high Statistics Off the wall How tall can you go?
Oilgro
FOR EDITORIAL ENQUIRIES email editorial@sapoa.org.za or managingeditor@sapoa.org.za. Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: sales@sapoa.org.za Editor in chief Neil Gopal Editorial advisor Jane Padayachee Managing editor Mark Pettipher Editor Candace King Copy editor Ania Rokita Production editor Dalene van Niekerk Designer Dirk Knoesen Sales Riëtte Stevens Finance Susan du Toit Contributors Advocate Portia Matsane, Martin Ferguson, Baaitse Nethononda, David A Steynberg, Anne Schauffer, Denise Mhlanga Photographer Michael Glenister DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material.
P R O P E R T Y
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Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com
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e: david@rsalitho.co.za
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news
Leading commercial and industrial brokers a click away
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FROM LEFT CSCC chairperson Felix Fongoqa, Minister of Public Works Thulas Nxesi and CSCC CEO Thabo Masombuka
CSCC releases anticipated Baseline Report
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he Construction Sector Charter Council (CSCC), the executive authority responsible for overseeing and monitoring the progress of transformation and empowerment in the construction sector, recently released its Baseline Report on the State and Progress of Transformation and Empowerment in the Construction Sector for the period 2009 to 2013. After months of collecting certificates and scorecards and analysing the information contained therein, the CSCC released the longanticipated report, which contains a factual, qualitative and quantitative assessment of the extent to which construction measured entities and enterprises have implemented all seven broad-based black economic empowerment (B-BBEE) elements of the construction sector code since 2009. “This Baseline Report is the first attempt by the CSCC to measure and establish the progress of empowerment and transformation in the construction sector since the gazette of the construction sector code in 2009,” says CSCC CEO Thabo Masombuka. “Although the industry response in forwarding B-BBEE certificates and scorecards was rather inadequate and disappointing, this report provides the CSCC with a platform to continue with monitoring and evaluation going forward. “It will give the entire industry an opportunity to self-reflect on the state and progress of transformation with the view to improve on areas that require strengthening. “Following the release of this report, the real issue and challenge now confronting the construction industry is not whether or not there should be transformation and empowerment but the extent to which transformation initiatives must take place. In line with the founding objectives of the construction charter – which is the overarching transformation blueprint for the sector – this report gives us positive trends and indications towards the economic beneficiation of designated sectors, which are black women, the youth, the jobless and the disabled persons of our country. “Beyond this report, construction companies must begin to walk the talk and commit to transformation in a meaningful manner,” he concludes. +27 (0)11 262 4644, Cscc.org.za
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irst launched in July 2012, Comproperty.co.za recently announced the launch of its new portal, aimed at showcasing the best commercial and industrial premises available in and around South Africa. In response to the company’s clients’ needs and its desire to offer the best in industry search results, Comproperty.co.za will be offering an array of enhanced features, including free and featured listings, interactive maps (geospecific locating on each property), brokercontrolled property loading, automated feeds from brokers’ websites, optional direct links to
the brokers’ websites, leads received directly from clients, self-monitoring of leads, vacancy schedules, a leads management system, and newsletters. This new strategy was spearheaded by Sovtech, a technology-focused company that specialises in well-designed, powerfully built web development. The finished product is one that combines sleek, user-friendly layouts with competent, accurate content. The site is mobileoptimised and accessible from a number of platforms. +27 (0)60 767 8102, Comproperty.co.za
Atterbury’s Bela Mall to open in October 2014
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tterbury, together with Shoprite Checkers and local developer 2020 Developments are developing the new Bela Mall, which will bring top shopping and dining to the town of BelaBela in Limpopo when it opens in October 2014. Bela-Bela (formerly Warmbaths) is a town famed for its natural hot springs. The 17 800m² Bela Mall convenience shopping centre is on a prime site on the R101, near the N1 highway to Polokwane, and has already secured a top line-up of retailers, starting with anchor tenants Checkers and Game. Well-known national retailers Edgars, Foschini, Truworths, Jet, Pep, Legit, CNA, Totalsports, Identity and Chanson Fashion
Collection have also confirmed they will open shops at Bela Mall. They will be joined by the services of MTN and Capitec Bank, among others. “Bela Mall is designed to create a quality, convenient retail and restaurant experience for those living in and visiting Bela-Bela,” says Gerrit van den Berg of Atterbury. “It has been well received by retailers and we expect it to be equally popular with shoppers. Bela Mall will fulfil a unique retail need in this community.” Adding to the convenience of Bela Mall, it enjoys excellent access from all the main arterial routes in Bela-Bela. The single-level mall also offers over 800 parking bays. +27(0)11 450 2290, Wspgroup.com
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Palm Royale nears completion P alm Royale, the third apartment block in the Oasis Luxury Retirement Resort in Century City, is nearing completion. With the first transfers scheduled for end June, buyers have already snapped up 42 of the 58 apartments for a total value of more than R197-million – 75% of the total value. Purchasers attended a function on site recently to celebrate the completion of the new extended communal facilities, which include a 200-seater multi-purpose function room, a large water-fronting patio and a new hobbies room creatively built in a hollowedout berm that separates the resort from Ratanga Road.
The beautifully landscaped gardens have been extended, as has the water feature, to create a scenic lake and a flowing stream onto which a number of the ground-floor apartments front. Owen Futeran of developers Oasis Joint Venture, which comprises the Rabie Property Group and a Harries Projects consortium, said that there had been a flurry of sales, with three additional units close to finalisation. “We expect the R200-million mark will soon be reached as the momentum is fast building with buyers now able to see what they will be getting rather than just buying off plan,” he says.
The R260-million Palm Royale block comprises spacious two- and three-bedroom apartments that range in size from about 100m² to 237m², and vary from garden apartments to penthouses. Priced from R2,5million to just more than R8-million, many of the apartments boast spacious balconies suitable for entertaining with wonderful mountain and sea views. The first two phases of the Oasis development consisted of Palm Springs and Palm Grove apartment blocks, with 174 units in total and a Club House, the facilities of which would not be out of place in a five-star hotel, and which all residents automatically enjoy membership of. These facilities include a 25m indoor heated pool where regular water aerobics classes are given by a qualified teacher, a massage room, sauna, steam room, fully equipped gym, a library, lounge areas, a restaurant, bar, bridge room and billiards room. Also completed in phase one is the Oasis Care Centre, which offers hotel-style assisted-living apartments, frail care and a specialised Alzheimer’s/dementia unit, as well as physical rehabilitation. All apartment owners receive primary healthcare assistance provided by the Care Centre, and a new clinic will be located in the Palm Royale building. Palm Royale will be linked undercover to the Oasis Club and its new extended facilities. +27 (0)21 528 7310, Oasisretirementresort.co.za
Joining forces in the property market
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SP in Africa and RPP and SPN Consulting Engineers have joined forces. The union supplements WSP’s existing heating, ventilation and air conditioning, HVAC and mechanical engineering capability in Johannesburg, while joining one of the largest multidisciplinary engineering consultancies in Africa enables RPP to grow with WSP’s global skills network as backing. RPP and SPN’s full team of experts has relocated to WSP’s head office in Bryanston, where they continue to service existing agreements seamlessly. “We will carry across all our core values and high design standard, and we look forward to joining a well-respected international consultancy,” says Pieter de Bod, former principal of RPP Consulting Engineers and now director within WSP Building Services. “WSP has always been a big player in the property market, and
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we will to continue to serve our clients to the high standards to which they are accustomed with this global reach at our disposal.” Shared values, such as a passion for sustainability and innovation, have seen WSP and RPP make an impressive impact on the South African property sector in recent years. Working alongside each other on several high-profile projects, including Steyn City parkland residence in Northern Johannesburg and Maxwell Office Park in Midrand, the companies have complemented and supported each other’s skill sets to deliver best-inclass solutions for their clients. Standard Bank’s recently completed office complex in Rosebank, Johannesburg, is an example of collaboration and teamwork. WSP’s well-respected Green by Design team provided green building consulting services that led to the complex receiving a five-star design rating from the Green
Building Council of South Africa, while RPP provided cutting edge tri-generation designs to support the receipt of this rating. “We are thrilled to have the RPP and SPN team join WSP,” says Peter Hodgkinson, managing director for WSP Building Services division in Africa. “Our two companies have worked well together in the past, and we believe we can only go from strength to strength by formalising our relationship. “Pieter de Bod, Werner Broers, Jay Naidu and their team bring our Building Services head count in South Africa to more than 160 people, ensuring we can continue to offer our clients the services of highly skilled and qualified engineers that are passionate about design, passionate about buildings, and passionate about delivering projects on time and to specification – every time.” +27(0)11 450 2290, Wspgroup.com
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Nurturing property connections Broll Property Group, one of the largest employers of property professionals in Africa, offers an unrivalled mix of local property expertise interwoven with global market knowledge, with the sole purpose of maximising value to our clients. With total third party assets under management approaching R100 billion, Broll proudly builds long term relationships with our clients throughout sub-Saharan Africa aiming to exceed their expectations.
Broll’s full spectrum of property-related services: Office Leasing • Industrial Leasing • Retail Leasing and Projects • Investment Broking • Project Management Research • Asset Management and Consulting • Valuation and Advisory Services • Shopping Centre Management Property Management • Corporate Real Estate Services • Facilities Management South Africa | Lesotho | Namibia | Botswana | Zimbabwe | Mozambique | Madagascar | Mauritius Seychelles | Angola | Zambia | Malawi | Rwanda | Tanzania | Kenya | Ghana | Nigeria
Visit broll.com or call our team on 08610broll
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Complete overhaul of Vukile’s Randburg Square Mall translates into top quality mix of tenants
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arried out over three phases at a capital investment of approximately R207million, the upgrade of Randburg Square Mall has delivered an overall improved, fresh retail experience that has seen the centre enter a new phase, which is expected to translate into positive future growth. New flooring, new lighting, wider walkways and reconfiguration of central areas and some of the stores are just some of the modern enhancements that add to the appeal for shoppers and visitors to the centre. The 35 818m² (GLA) Randburg Square is owned by Vukile Property Fund and managed by JHI Properties. It is conveniently situated in the Randburg CBD, close to the intersection of Jan Smuts Avenue and Bram Fischer Drive, about 300m from the main Randburg taxi terminus north of Johannesburg. An office block of 15 127m² and a multilevel parking garage complete the current offering. “The redesign process has enabled us to attract 23 new retail stores to the centre, and we now have a top quality tenant mix to cater for Randburg Square’s diverse shoppers,” says Vukile chief executive Laurence Rapp. “We anticipate good growth in residential demand in Randburg going forward, which augurs well for the centre in the future. We have already seen footfall to the centre increase by about 20% since the main refurbishment work was completed in the last quarter of 2013.” “This upgrade has enabled us to reposition 24 existing tenants within the centre and adjust the tenant mix to provide a vibrant, value-added shopping experience to the people of Randburg and visitors to the centre,”
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says Jaco Nel of JHI Project Management, the project manager responsible for the centre’s refurbishment. Launched in the late 1970s as Sanlam Centre Randburg, the retail areas had long been in need of an extensive revamp to enable the centre to compete successfully with contending centres that have since been developed in the catchment area. “With almost 100% of the retail shops having been upgraded, the mall has attracted some major national tenants, including Shoprite (together with OK Furniture), Woolworths, Edgars, Foschini, Jet Stores, Truworths, Nedbank, Pepcor, Mr Price and Ellerines, and foot traffic has increased considerably,” says Nel. The mall has a large sphere of influence due to the taxi rank close by that mainly services Diepsloot, Randburg, Soweto, Cosmo City, Kya Sands, Alexandra and Kagiso. There are also households within a two-kilometre radius of the centre, in areas such as Blairgowrie, President Ridge, Fernridge, Kensington, Bordeaux and Hurlingham Manor. With an average foot count of more than 800 000 customers per month, the mall plays host to commuters, professionals, families and friends. The local authorities, together with property owners, have in recent years upgraded the public facilities in the surrounding area and made improvements to the traffic flow. The new Gautrain bus route and the incorporation of the Randburg CBD into the Bus Rapid Transport system have also improved access to the area. +27(0)11 911 8000, Jhi.co.za
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Mitchell’s Plain’s Watergate estate continues to grow
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he next phase of construction on Watergate Estate in Mitchell’s Plain in the Western Cape is set to go ahead following the announcement by Nedbank Affordable Housing Development Finance that it has approved further funding for this development, bringing the total that Nedbank has committed to Watergate to R180-milion. The funding, to New Age Property Developments under the leadership of Anver Essop, is for Portion D of Watergate Estate, zoned for 232 single residential units, mostly two bedroom, priced from R369, 900 to R469, 900 per unit. Nedbank Affordable Housing also previously provided financing for Portions C and B of the development, which consist of 357 units. New Age Property Developments launched the Watergate Estate development – the first privately funded affordable housing development in the Western Cape – as an anchor project for the Urban Renewal Program of the City of Cape Town during July 2009. Watergate is situated in an area in Mitchell’s Plain that has experienced much development recently, with the upgrade of the Mandalay and Philippi railway stations, and the construction of a public hospital adjacent to the estate. Mitchell’s Plain
is one of Cape Town’s and South Africa’s largest townships with a population of approximately one-million and a spending power of more than R100-million per month. “Nedbank is committed to enable access to development finance for developers with a track record in the affordable housing sector,” says Manie Annandale, head of Affordable Housing at Nedbank Corporate Property Finance. “Partnering with credible developers such as New Age Property Development Group enables us to play a critical role in ensuring quality developments that will assist in addressing South Africa’s housing backlog, particularly where demand far exceeds supply. “By providing funding for affordable housing developments, we will continue to make it a reality for developers to engage in these projects. We believe that the roll-out of further affordable housing will have a significantly positive impact on the socioeconomic conditions of South Africa.” The Watergate Estate development is situated on the corner of AZ Berman Drive and the R300 highway in Mitchell’s Plain. The site is located along one of the main arterial roads leading into Mitchell’s Plain. +27 (0)21 416 7000, Nedbank.co.za SOUTH AFRICAN PROPERTY REVIEW
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More positive signs emerging in Cape industrial property market
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ver the past six months some more positive signs have been seen in the industrial property market in the greater Cape Town area, according to Lloyd Nussey, a director at Baker Street Properties. “Rentals are starting to tick up, with gross rentals now averaging R38/m² (ex. VAT) from R35/m² (ex. VAT) six months ago for existing facilities,” he says. “The increase is driven by recent new developments, which now command rentals of more than R60/m² (ex. VAT), and the conversion of older redundant factories into more suitable distribution facilities. At Baker Street Properties, we use our extensive database to track the industrial property vacancies across the greater Cape Town area, including buildings that will become vacant within the next six months. Based on this data, we have seen a decrease in vacancies in the greater Cape Town area from 566 000m² in September last year to 431 000m² in March this year. This is a decrease of more than 31%, which is encouraging and is the driver starting to nudge average gross rentals upwards.” Other statistics revealed that 70,1% of current vacancies are reflected in facilities larger than 1 000m², the bulk of which are in older INDUSTRIAL PROPERTY VACANCIES MARCH 2014 Southern Suburbs 9,3% 39,881 m²
Montague Killarney & Surrounds 21,9% 94,023 m²
CBD & Surrounds Incl. Paardeneiland 5,4% 23,028 m²
Epping, Maitland, N'dabeni - 16,1% 68,806 m²
Bellville, Parow, Airport - 26,9% 115,204 m² Outlying Areas 20,9% 90,076 m²
nodes from Athlone, Blackheath, Bellville, Epping, Paarl and Parow (traditionally in the larger industrial townships). Epping for example, has seen a large take-up of vacant space as older buildings are being redeveloped into more suitable and versatile facilities. These redevelopments are almost exclusively distribution centres (DCs), with the exception of one or two manufacturing facilities. This is motivated by redundancy of existing space and a lack of available modern high-volume facilities. Also included in this figure is a 20 000m² development in Montague Gardens. For modern DCs, coverage of building to land is a maximum of 60% in order to cater for yard area to accommodate large commercial vehicles. The older townships offer a lower land base price than the new townships, and often prove more economical (even including the demolition of existing buildings). Nussey says an increase on vacant land price is looming on the horizon (albeit nominal compared to the pre-2008 peak), which Baker Street expects to play out during 2014. The popular development nodes – Airport City, Brackengate, Blackheath and Sheffield Park (bordering Lansdowne Road and the N7) – have virtually no land of significance left for sale. “On the flip side, we now have two new industrial townships coming on stream in the north,” says Nussey. “One is Atlantic Hills, close to Atlas Gardens; the other is the newly launched Rivergate township north of Parklands, where land can be purchased from R1 300/m² (ex. VAT). “We have noticed no movement on annual escalations, which seem to have settled on eight percent for medium-term leases, although purpose-built developments attract more favourable escalations. Furthermore, there continues to be a lack of industrial buildings for sale (particularly smaller units), which is probably a reflection on developers’access to finance for this type of development.” +27 (0)21 461 1660, Baker-street.co.za
Irene continues to grow into thriving business hub
I
rene is growing into a major business hub that complements Centurion and Menlyn Park’s business nodes as development continues in the area. “With a prime location that places it within 10 to 20km from the Centurion, Pretoria and Midrand CBDs, the greater Irene area has seen substantial growth over the past few years, and looks set to continue its development boom,” says Ken Reynolds, regional executive for Gauteng at Nedbank Corporate Property Finance. “Established developments such as the Route 21 Corporate Park, Irene Village Mall, Irene Farm Villages and Cornwall Hill Country Estate mark the area as a highly desirable address to live, work and play.” The multi-billion-rand Route 21 Corporate Park is one of Irene’s biggest developments and is located on the R21 highway (Albertina Sisulu Freeway) on the border of Centurion and Pretoria East. This hi-tech, top-security
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business park is a mixed use development that includes mostly stylish A-grade office space as well as neat industrial and warehousing components alongside a smaller retail element. The varied tenant mix includes BAE Systems, Land Rover Jaguar South Africa, Dimension Data, Annique Skin Care, McCarthy, Eskort and Volvo among others. “An increasing number of developers are exploring multipurpose developments as the trend creates new business hubs that prove popular and convenient for South Africans and continues to drive the economy,” says Reynolds. “There are approximately 300 different companies in the park, with an estimated 8000 workers who range from multinational companies and JSE-listed groups to smaller SMMEs making the park their home. “Nedbank has been approached to fund the development of the last undeveloped
highway-facing property in the park on an owner-builder basis for Justin Irvine of Little Creek Trading. On completion, the building is to be rented to Mapa Cleaning Technologies – a thriving small business that is consolidating its three current operations or premises into a new head office in Irene. “Nedbank Corporate Property Finance will fund the construction of Mapa’s new office facility for the amount of R17,5-million. It will be developed by JIC Projects of which Justin Irvine is the 100% shareholder. JIC Projects is highly successful and has completed more than R250-million’s worth of commercial office park developments over the last few years. Nedbank is proud to be a part of the growth in Irene, and will continue to offer flexible solutions that build and maintain sustainable relationships with its clients.” +27 (0)12 436 7000, Nedbank.co.za
SOUTH AFRICAN PROPERTY REVIEW
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10392
MAKING
TOP-RATED PROPERTY FINANCE HAPPEN
Rated first in the 2013 PwC South African Banking Survey. Nedbank Corporate Property Finance has been rated the top property finance bank in South Africa. We know that when we do well, our clients enjoy the benefits. We are honoured by this accolade, which affirms our position as market leader in the industry.
nedbank.co.za
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Nedbank Limited Reg No 1951/000009/06. Authorised financial services and registered credit provider (NCRCP16).
2014/05/19 2:19 PM
news
Revitalised Kuruman Mall to bring new life to CBD
T
he Moolman Group has entrenched and extended its long-standing association with Kuruman by acquiring the Shoprite Centre in Livingstone Street. The property is located in the heart of the Kuruman CBD, directly opposite the taxi rank. The shopping centre will be redeveloped in partnership with Kuruman Eiendomsontwikkelaars, the original owners and developers. The current centre consists of approximately 11 000m² of space and hosts tenants such as Shoprite, Pep, Dunns, Edgars Active and Old Mutual Bank. The first phase will see the redevelopment of the existing centre and is due to be completed and open for trading in November 2014.
YOU SEE WE SEE
The centre will undergo a major face-lift which will see the addition of new façades, attractive courts, natural light and general finishes of the highest quality. The second phase will see the creation of an additional 14 000m² to the centre and will open during the last quarter of 2015. The following tenants are expected to take a place in the centre: Checkers, Edgars, Legit, Truworths, Identity, Foschini, Fashion Express, Markham, Exact and Mr Price. “Kuruman Mall will consolidate the otherwise fragmented retail offering in Kuruman under one roof, where the residents of Kuruman can do all their shopping in one facility,” says Jannie Moolman of the Moolman Group. With the current decline of the Kuruman CBD, the redevelopment
will improve the general condition of the CBD and afford customers the opportunity to shop in a safe, convenient environment. Construction of the Kuruman Mall commenced in March 2014 with an estimated project value of R400-million. The development will see approximately 300 job opportunities being created during the construction phase; a significant portion of thelabour will be made up of locals. An official sod-turning ceremony was held on 10 April to mark the beginning of the new revamp. The event was attended by local dignitaries, including members of the local municipality. The local council has welcomed the move to upgrade the mall as it will bring benefits to the entire surrounding area. +27 (0)12 361 7970, Moolmangroup.co.za
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INFINITE SOLUTIONS WWW.PROPSYS.CO.ZA
2014/05/19 1:10 PM
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LOU I S KA RO L architecture interiors
education, training and development
SAPOA officially launches the first Commercial Property E-learning Programme I
Martin Ferguson, SAPOA’s HR, education, training and development manager, collaborates with thought leaders in South Africa’s property sector
Baaitse Nethononda, SAPOA’s education manager, is looking to work with corporates and industry bodies to improve the property industry’s education path
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n partnership with Hypenica, SAPOA has developed an e-learning training method that enables SAPOA to manage the delivery of training material to audience groups who’ll be able to access the material on their desktops, tablets and mobile devices. Our official launch will take place at the SAPOA Convention, but from June 2014 SAPOA will afford its members an opportunity to register and take part in the e-learning training programme, the Essential Commercial Property Programme (ECPP). The course will run for over three months instead of the four days of face-to-face sessions that SAPOA normally hosts. By not compromising the standards of education, the e-learning platform will be making a difference by building capacity, by bringing hope of change, and by providing skills to people who under normal circumstances would not have the opportunity to develop their knowledge and skills. It is SAPOA’s mission to impact its members with positive change by giving them a chance to study. The first SAPOA e-learning training programme is based on the very popular ECPP, which is focused on commercial and industrial property or real estate, and targeted at people who have some experience or formal knowledge of the commercial or industrial property industry (estimated two to three years of work experience) or those who have successfully completed the Introduction to the Commercial Property Programme.
E-learning benefits The programme will, with the use of the internet, assist in empowering its members and non-members as: ● Training content is available anywhere and at any time, and optimised for computers, mobile phones and tablets;
● Educational training programme costs are reduced, making it more affordable for both our corporate members and individuals; and ● Incidental costs such as travel, accommodation and meals are eliminated.
The E-learning Programme SAPOA’s e-learning platform is based on Hypenica’s Mobile Training Solution, and uses multiple channels – including mobile and web channels – to manage and deliver training material to defined student groups. Specific functionality includes: ● Configuration for any number of training programmes – that includes multiple content types, flexible work flow, question and test preparation, automatic scoring, real-time feedback from students; ● Optimisation for mobile and tablet access; ● Full granular control of which training can be accessed by which students; ● Easy communication with students through built-in communication functionality; ● Ability to schedule training per student or student group; ● Real-time, configurable dashboards that provide immediate feedback on student and course performance; ● Automatic report generation and distribution; ● Extensible platform generation and distribution; ● Extensible platform to include ability to configure and manage additional enterprise feedback, and voice of the employee/voice of the customer surveys; ● A fully managed and supported solution; and ● Possibility to run programmes from one source to various venues (webinar) for workshops/seminars.
SOUTH AFRICAN PROPERTY REVIEW
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The format of training delivery is by means of 10 video-based training modules. After each module, a delegate must complete a test successfully before gaining access to the next module. Each delegate receives an electronic student course manual that contains the training material on which the videos are based. Once the delegates are registered, access to the chat room will be granted. This will enable the assessor and/or lecturer to communicate with the delegates (and the delegates to communicate with each other). In the event of a student having difficulty in mastering the training content, this will be the method of having access to the assessor and/or lecturer to obtain clarity. After each module, there will be a test or assignment that must be successfully completed before moving on to the next module. Modular assessments will be made as the programme progresses. A final assessment will be in the form of a test – but it will be optional. A certificate of competence for delegates who successfully comply with all the assessment criteria, or a certificate of attendance will be issued
By not compromising the standards of education, the e-learning platform will be making a difference by building capacity, by bringing hope of change, and by providing skills to people who under normal circumstances would not have the opportunity to develop their knowledge and skills
upon successful completion of the training programme by the University of Johannesburg. The University will also act as a moderator in terms of its policies and procedures. The University of Johannesburg is a comprehensive accredited academic institution. As required by the Higher Education Act, it is registered with the Department of Education as a public higher education provider, and its qualifications are accredited by the Council on Higher Education and recognised by the South African Qualifications Authority.
WE’RE LEADING THE WAY TO A GREENER SANDTON
How do I register for the E-learning Programme? Potential students can register on the SAPOA website, which will link to the e-learning platform and the University of Johannesburg for the purpose of providing access to the programme and chat room, and registration with the university for certification purposes. The above will only take place once payment have been received. From the date of confirmation of the programme acceptance, delegates will receive their log-in and password details for access to the e-learning training material. They will have three months to complete the programme. Delegates will be able to determine their own progress to the next module depending on the pace of the work and time spent on the programme during this period. This means that delegates who work faster will be able to complete the programme in a shorter time than the threemonth period provided for. Delegates who take longer than the three-month period will have to reapply and pay an additional fee for access to the e-learning platform. In summary, E-Learning is the training method of the future. SAPOA will follow these trends and, depending on the success of our first E-Learning Programme, more could follow to address the commercial property industry’s training needs. The e-learning training is not bound to regions or borders, and offers SAPOA the opportunity to provide training to the rest of Africa.
ALW Estates has been helping to change the Johannesburg skyline for more than (50) years, building a reputation for quality project management and property administration that leaves many developers green with envy. Now ALW is helping to make Sandton green too, not with envy, but with the development of a beautifully imagined, AAA Grade office space aiming for a 4 Star Green Star SA Office Design V1 rating certification from the Green Building Council of SA. Boasting a wide range of sustainable features that reduce operational costs by up to 50%, Atholl Towers on Katherine Street is an iconic example of ALW’s ability to help tenants increase their profits while improving their environment. For more information on ALW and to view details of the Atholl Towers development, visit www.alwestates.co.za or call 011 728 7000 today.
ESTATES ALW EstatesSOUTH is a registered member of thePROPERTY Green Building Council of South Africa AFRICAN REVIEW
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The e-learning training format
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legal update
The audit scrutiny of business accounts: estate agents
Advocate Portia Matsane, manager of the legal-services department at SAPOA
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arious legislations have heralded and protected the interests of consumers mainly because of the susceptibility and legal ignorance that beguiles most of them. While the Consumer Protection Act of No 68 of 2008 has been “sanctified” as the ultimate law to protect consumers, there are some laws that preceded the Consumer Protection Act that have policy ambitions and objectives to protect consumers in respect of services and/or goods from various sectors. Like most sectors, the property sector is not spared from the multiplicity and divergence of laws that most often involve administrative and regulatory compliance. The Estate Agency Affairs Act No 112 of 1976, which is administered by the Estate Agency Affairs Board, is no exception in its attempt to protect trust monies held by estate agents. This Act regards trust money as money or other property entrusted to an estate agent in his or her capacity as an estate agent. This includes any other moneys, including insurance premiums, collected or received by an estate agent and payable in respect
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of any immovable property, business undertaking or contract for the building or erection of any improvements on immovable property. There is an express duty on an estate agent to open and keep one or more separate trust accounts, which must contain a reference to section 32 of the Estate Agents Affairs Act. Such an account or accounts should be opened with a bank. The requirement is for the estate agent or his employee to deposit in such account all trust money held or received by or on behalf of such estate agent. There is a further duty for an estate agent to notify the Estate Agency Affairs Board of the name of the Bank and the account number of each trust account.
Are auditors obliged to audit only trust accounts and not business accounts of agents? Some members of SAPOA have raised concerns whether or not the Estate Agents Affairs Board can request audit reports of both their trust and business accounts. There is therefore a need for SAPOA to bring clarity to the matter to ensure that its members are not found to be non-compliant with the provisions of the Estate Agency Affairs Board. Section 29(1)(a) of the Estate Agency Affairs Act requires every estate agent, in respect of his activities as such, to keep in one of the official languages at an address in the Republic such accounting records as are necessary fairly to reflect and explain the state of affairs of – of all moneys received or expended by him, including moneys deposited to trust account referred to in section 32(1) or invested in a savings or other interest-bearing account referred to in section 32(2)(a); ● of all his assets and liabilities; and ● of all his financial transactions and the financial position of his business. It is undoubtedly clear that the duty to keep records refers to both ●
the trust and business accounts as highlighted by the following wording in section 32: “of all his assets and liabilities“ and “the financial position of his business”. Section 29(1)(b) of the Act requires an estate agent, in respect of all his activities, to cause the accounting records to be audited by an auditor within four months after the final date of the financial year of the estate agent, which final date not to be altered by him without the prior written approval of the Estate Agency Affairs Board. It is therefore essential for both the estate agent’s trust and business accounts to be audited within four months of the financial year-end of the estate agent’s business. SAPOA recommends that members of SAPOA who are estate agents must ensure that both their trust and business accounts are audited in accordance with the Act. Nonadherence with the Act would result in conduct deserving of a sanction, which includes the withdrawal of an estate agent’s withdrawal of his Fidelity Fund Certificate.
This Act regards trust money as money or other property entrusted to an estate agent in his or her capacity as an estate agent. This includes any other moneys, including insurance premiums, collected or received by an estate agent and payable in respect of any immovable property, business undertaking or contract for the building or erection of any improvements on immovable property
SOUTH AFRICAN PROPERTY REVIEW
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Welcome to the future – a future of Mwangaza We are all writing a part of the script which tomorrow’s society will play out. At Royal HaskoningDHV we would like the title to read: ‘Welcome to the future’ - and for our chapter in that script to read ‘Mwangaza’ - a Swahili word which means ‘light’. Together with our partners and clients we consider how we can create a welcoming future - developing efficient and smart living. Whether switching on a light, travelling to work or drinking a clean glass of water - the solutions and work of our engineers surround us, making lives better and brighter. Our work contributes to the sustainable development of communities. Together, we deliver innovative sustainable answers to today’s challenges. Royal HaskoningDHV is an independent, international engineering and project management consultancy.
royalhaskoningdhv.com/za Untitled-1 1
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from the CEO’s desk
OR F S BIE LOB YOU 18 March 2014 The Municipal Manager Mbombela Local Municipality PO Box 45 NELSPRUIT 1200
LIDITY ON TOWNSHIP EXTENSION OF THE PERIOD OF VA
ESTABLISHMENT APPLICATIONS
the concern have brought to our attention lity ipa nic Mu al Loc a bel om Mb s. ishment application SAPOA members in the iod of validity on township establ relating to the extension of the per and adopted 2 a Council resolution was passedin terms of the 201 ber cem De 5 on t tha g din ure be extended a) It is our understan an approved township not in fut to the effect that the validity of Townships Ordinance, 1986 (Ordinance No. 15 of 1986), except provisions if the Town planning and stances; in the case of extenuating circum services only in availability of bulk infrastructure the to ble lica app is tion olu res s b) It is alleged that thi nicipal jurisdiction area; White River within Mbombela mu uncil without and adopted unilaterally by the Coip applicants/ sed pas s wa tion olu res the t tha affected townsh c) It is further alleged pation process being held with the any consultation or public partici tor that we are aware of; owners or the broader property sec it was passed the purported manner in which ticularly as and tion olu res d rte rpo pu s thi t par letter of the law It is our submission tha y and compliance with the spirit anddamentally severe with serious fun is and adopted, raises issues of legalit the commercial property sector prejudice likely to be suffered by ces within the region. financial and economic consequen
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from the CEO’s desk
g the availability pers are instrumental in facilitatin of the bulk and elo dev ip nsh tow t tha n sio mis to the majority a) It is our informed sub pment purposes and contributes of land for investment and develoes required selling and developing townships and erven therein. all related link and internal servic that have environmental approval processes fees and and ng nni pla n tow ive ens ext nal an terms of professio b) In addition, there are roval of rights which are costly in to be undertaken prior to the app ensive time periods required for township establishment and5 ween 2 to associated costs; let alone the ext ized (which ranges anywhere bet nal fi be to ses ces pro tion iza environmental author years). municipality ip establishment process, the localthat there are nsh tow the of t par as t tha tion acity to ensure c) It is our further conten infrastructure availability and cap has to evaluate the bulk service township development. On approval of the rights, the local to service the sufficient services available for the lk infrastructure service capacity contributed bu nt cie suffi is re the t tha s rm fi e elopers that hav authority implicitly con examples of certain township dev e proposed development. There areructure prior to their townships being proclaimed. This was don ast infr lk bu s substantially toward acity is secured. to ensure that adequate bulk cap mation of a township
the procla nship developers holding back on tow for s son rea the t tha mit sub We : vary and include the following, i.e.
enable the design and servicing costs to the purpose ng, nni pla ail det ent pm elo dev market uptake for a) Significant upfront nds that require a certain level of development and transfer of sta n on the invested capital. When the market slows down, as hasd of achieving a “breakeven” situatioally in the residential market, property developers tend to hol been seen since 2008 and especi hold given the time associated with achieving this “breakeven”; back or put their developments on and With regards ested as well as rates play a role. ws a rate free inv ital cap of t cos the h wit d ate licy no longer allo b) Holding costs associ bela Local Municipalities rates po s to rates, the changes in the Mbomn connected to services and/or transferred to a third party; thu bee er d. eith ime has cla township is pro period until an erf d with rates more severe when a making the holding costs associate capital in the elopers invest significant time and dev ty per pro and ip nsh ent which tow pm t We further submit tha ts further investment and develovides revenue rac att n tur in ich wh s ces pro nt scale. This further pro township establishme and job creation on a significant own contributes to economic growth of rates, taxes and service charges. Our members nationally of ue m val for the the to in properties in SA to the municipality mercial, retail, office and industrial and control about 90% of all com ute some of the largest rate payers in South Africa. approximately R300bn and constit
R O F S E I B LOB YOU SOUTH AFRICAN PROPERTY REVIEW
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2014/05/20 6:32 PM
from the CEO’s desk
the property sector er be exploring ways and policies with on severely inhibits rath uld sho ties pali nici mu t tha ef beli luti rent Council reso It is our fundamental nomic growth and job creation. The cur and that seeks to stimulate and facilitate eco ed goals in the National Development Plan and current national, provincial stat the to y trar con this and as such runs tion. local imperatives for growth and job crea to rescind the current ncil passes and adopts a resolution, , and property sector in Cou MLM t tha t ues req our is it id, the stakeholders In view of the aforesa ve with immediate effect, and engage with Council resolution of 5 December 2014 lyze the problems and how best these should be addressed in a collaborati ana and and erst und Mbombela to better manner. . and the relevant We are available to meet with yourselves amicably resolved.
officials to discuss how this matter can
be taken forward and
te dates and times to ency by providing us with three alterna urg with ted trea is tter ma this if ty sector. It shall be appreciated dates due to prejudice facing the proper choose from, which should be priority es of mutual interests. rative and strategic conversations on issu abo coll ing litat faci s ard tow nt me mit We assure of our com Yours faithfully,
________________________ Neil Gopal Chief Executive Officer
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from the CEO’s desk
The Hounorable Minister Ms. Connie September Department of Human Settlements Govan Mbeki House 240 Justice Mohamed Street Sunnyside Pretoria 0002
LOBBIES FOR YOU
23 January 2014 Dear Honourable Minister,
LAND M AND UNLAWFUL OCCUPATION OF FRO ON CTI EVI GAL ILLE OF N TIO VEN Re: THE DISCREPANCIES OF THE PRE ACT NO 19 OF 1998 ents non-profit organization that repres ners a is A) PO (SA n atio oci Ass s ner a) The South African Property Ow perty owners in South Africa. Such commercial property ow ers, almost 90% of commercial pro th Africa. Our membership includes also property manag and equate to 1125 companies in Sou sionals in the commercial, retailwhich fes pro ied var and s ker bro ty ity South Africa (BUSA) property developers, proper further a member of Business Un is OA SAP . tor sec ty per pro rial indust has a seat within NEDLAC. t we l property sector, it is our mission tha g rcia me com of e voic the are we t tha byin While our strategic focus is to ensure of networking for our members. SAPOA is also focused on strategic lob We achieve that through creating platform sector which includes government at national, provincial and local level. the of various stakeholders in the property intention to seek an amiable solution to issues that infringe on or prejudice endeavor at all times to consult with an mutual interests of our membership. of Illegal the objectives of the Prevention to as the rt po sup we t tha te sta to like hereinafter referred b) From the onset we would ation of Land Act No 19 of 1998 th occupiers and landowners. cup Oc ful law Un and m Fro n Evictio t that its intention is to protect bo arding evictions, namely that reg PIE Act and are cognisant of the fac ures that have been put in place We further agree with the proced home, or have their home demolished without an order of court no one may be evicted from their vant circumstances and that it is desirable that the law should right of made after considering all the rele fair manner while recognizing the a in d lan m fro iers up occ ful aw regulate the eviction of unl an eviction order. land owners to apply to a court for
SOUTH AFRICAN PROPERTY REVIEW
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from the CEO’s desk
FOR S E I B LOB YOU are faced with ers of office parks and shopping centresthe PIE Act. We own ty per pro l rcia me com as y acit cap t in accordance with c) Our members in their refore in some instances have to evic y the reality of defaulting tenants and the cerns regarding the prejudicial effect on the commercial property industr con our ht hlig hig would therefore like to Act by occupiers. and in some instances abuse of the PIE intentionally evade re tenants have used the PIE Act as a tool to that money will be whe nces insta us vario n bee have e ther that re g bank guarantees to assu It has come to our attention y tactic. For instance occupiers are now usin ns for paying rent and then subsequently as a dela al payments and then rely on the PIE Act to avoid payment. The financial ramificatioin the rent e late esca evad ars nally arre rim and the outstanding coming in, they then intentio very they are unable remove the tenant in the inte commercial property owners are colossal as d. To add to the dire situation, the court process to obtain an eviction order has become vere reco be ot cann process and then ultimately lengthy and is expensive. d) Section 4(6) of the PIE Act states the
following:
initiated, a court may six months at the time when the proceedings aremstances including the than e mor for tion ques in land the pied occu idering all the relevant circu “If an unlawful occupier has that it is just and equitable to do so, after cons grant an order for eviction if it is of the opinion persons and households headed by women.” rights and needs of the elderly, children, disabled need to protect South ifically with the policy, social and legislative ences which directly spec ion sect d one enti vem abo the with nt had unintended consequ Although we are in agreeme to bring it to your attention that the PIE Act has s and African citizens housing rights, we would like or suffers prejudice due to various aspects of the PIE Act being misused by occupier The ted. sect draf erty was prop Act The spirit in which the PIE affect the property sector. nity to essentially disregard the intention and such occupiers then are afforded the opportu the economy of the country. consequences of such conduct also then affect with the intention to rselves and SAPOA in order to engage you n wee bet g etin me a nge arra to We would therefore like nomic and social effects. find solutions to a problem that has eco be available to meet dates to choose from on which you will te rna alte (3) e thre with d vide pro g We shall appreciate bein with the SAPOA delegation. and look forward to hearing from you We thank you for your assistance herein Yours faithfully,
______________________ Neil Gopal Chief Executive Officer
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R O F S E I B LOB YOU
SOUTH AFRICAN PROPERTY REVIEW
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We’ve grown by 50 more office buildings… meaning we have more space for our clients to THRIVE By acquiring the entire R6,6 million Tiber Group property portfolio and R1,3 billion Abseq Properties (Pty) Ltd portfolio, we can now boast the addition of even more quality office space in Sandton and surrounds. As the country’s biggest office property owner, with a portfolio of 1,5 million square metres of office space across South Africa, valued at nearly R25 billion, we can truly offer our clients the perfect space to thrive.
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face to face
The president bows out By David A Steynberg
T
he 2013/14 year has seen its ups and downs for the economy, and for the property industry specifically. Costs have increased across the board and the economy has not grown significantly. Nigeria recently pipped South Africa as the continent’s biggest economy, albeit via changing its calculation methodology. Back home, and in the commercial property space, issues have been a mixed bag: the legislative and regulatory environment has created more and more hoops to jump through and assessment rates remained a sticky point, but it seems that the government is now more prepared to speak to the industry. These are some of the points raised by SAPOA president Estienne de Klerk. “The president has a nonexecutive role,” he says, adding that the executive team, which includes SAPOA CEO Neil Gopal, is able to lean on the board and the president for guidance. “There are several priorities the board identified this year that are important and affect the industry. “These include local government matters that require lobbying, as well as legislation, regulation and taxation,” he says. “These issues cannot be resolved in a single year but we have started on the process in addressing some of them. This also means that SAPOA is lobbying on behalf of the entire property industry to a greater extent than ever before.” Around assessment rates and billing issues, SAPOA has enlisted the skills and expertise of the likes of IPD, the University of Pretoria and Rates Watch to get better clarity with regards to historical data and to find solutions to the problems. “To engage government effectively, SAPOA has to obtain
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the appropriate background information,” says De Klerk. “That’s why we are doing an economic impact study – to show the government our contribution to the GDP, education and employment. This will be done by June 2015.” Initiatives to help improve the relationship between the property industry and local government include the successful Meet the Mayor road shows. “The groundwork has been laid to discuss difficult issues,” says De Klerk. “Through these gatherings, property players have had the opportunity to speak to the right people about issues such as development approvals and service delivery, for example. It has really paid dividends for members who attended these events.”
Strength in numbers: De Klerk believes SAPOA is even more relevant today because it can engage with government and stakeholders without fear of victimisation. This is thanks to its executive having no vested interest in individual companies. Another benefit of representing the interests of the greater industry lies in its collective clout and expertise. “Over the past year we have seen about 90 pieces of legislation introduced,” says De Klerk. “This roll-out of legislation and regulation is unprecedented; without SAPOA we would never have been able to address the issues via submissions and discussions with the relevant drafters.” De Klerk says that good progress has been made in transformation matters by the industry and will continue to receive priority. SAPOA will also increase its focus on education.
“Many companies are now managed by black professionals – but our industry still suffers from a wide skills shortage,” he says. “This is the result of its rapid growth and a lack of capacity building in the past. We have to focus on our youth to bridge the gap between their schooling and the tertiary qualifications they require to be successful in our industry. “This year sees the successful qualification of the first students from Pareto SAPOA Bursary Trust, a significant milestone. SAPOA will always be an advocacy body that creates events to promote the industry but education will become a bigger focus.”
Government comes to the table SAPOA has become much more nimble and responsive in dealing with issues, and has improved its communication with all its stakeholders, De Klerk says. “We’ve focused on the way we address the media and communicate to members to highlight the issues and action plans. “We take on contentious issues and stand up for our members. SAPOA is becoming increasingly difficult to ignore – so much so that government is now engaging us. We’ve had to stand strong on certain issues, so SAPOA is more swift and agile in its reaction to industry concerns.” Inter-industry relationships have also been strengthened, according to De Klerk. “Our relationships with the various associated industry bodies – such as the GBCSA, SACSC, SAIBPP, WPN and SA REIT – have improved, and we strive to ensure there is no duplication of efforts or activities,” he says. These relationships are especially important because only SAPOA is able to represent
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face to face SAPOA president Estienne de Klerk’s year has been characterised by new legislation, government coming to the table of its own accord and renewed commitment to education
broader property industry interests when reviewing and commenting on new pieces of legislation. Internationally, South Africa’s property sector compares favourably, and our members are increasingly conducting their business across the globe, says De Klerk. On 6 May 2014 SAPOA signed a memorandum of understanding with the Property Council of Australia (“PCA”), effectively strengthening ties between the two associations. “We’ve always respected the PCA for its ability to lobby and its research capabilities,” says De Klerk. “In South Africa, there is a general lack of cooperation between commerce and politics. In Australia the opposite is often true. Politicians engage and work with property players to ensure they attract investment to their cities. In South Africa, we have seen some similar, positive signs with the Western Cape, which is actively making an effort to attract private business.” De Klerk will soon hand over the presidency to chief investment officer at Stanlib Direct Property Investments Amelia Beattie. He describes her as “dynamic and committed”, and says it’s significant that a woman will lead the organisation. “With Beattie as SAPOA president, we are bound to continue our work on rates and taxes and legislation broadly,” he says. “But she will also spearhead e-learning and promote training.” De Klerk also notes that Beattie will have the backing of the executive team for implementation, and a board for a advice.
“Being the president of SAPOA is demanding and requires focus on the issues of the industry,” he says. “It has been a privilege to be given the opportunity to contribute to the solutions.”
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Further information can be obtained from: SAPOA Bursary Scheme PO Box 78544, Sandton, 2146 | Tel: 011 883 0679 | Fax: 086 517 1681 | edmanager@sapoa.org.za
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Further information can be obtained from: SAPOA Bursary Scheme PO Box 78544, Sandton, 2146 | Tel: 011 883 0679 | Fax: 086 517 1681 | edmanager@sapoa.org.za
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media lunch
SAPOA lunches with the press SAPOA met with the media for a second time to discuss pertinent issues, further cementing its relationship with the property press. By Candace King
A concerning issue was raised at the table by Gopal, a matter that SAPOA believes needs to be urgently addressed. Billions of rand in new property development in South Africa is being held up or is at risk of being scuppered by various legislative delays or bureaucratic legislation. 34
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APOA CEO Neil Gopal along with SAPOA President Estienne de Klerk met with the property industry’s leading journalists for the second time since November 2013 in the effort of further strengthening the organisation’s relationship with the media. In the form of an intimate lunch, Gopal and de Klerk digressed key industry-related matters and simultaneously highlighted SAPOA’s achievements, actions, and its desire to establish a bond with the industry’s press. In light of the media’s crucial role in reporting on the property industry, SAPOA saw the need to actively engage with the property press in the effort of nurturing a strong relationship between the two entities. De Klerk initiated the media lunch concept through his role as SAPOA President; which is merely one aspect of his work during his 12 month period. “SAPOA is pleased to report that is has made excellent progress on several fronts since November 2013,” said De Klerk. “This year we have commenced and advanced several successful projects with the goal of representing, protecting, and advancing our members’ commercial property interests within the property industry,” he added. A concerning issue was raised at the table by Gopal, a matter that SAPOA believes needs to be urgently addressed. Billions of rand in new property development in South Africa is being held up or is at risk of being scuppered by various legislative delays or bureaucratic legislation. Gopal said the country could not afford such delays, especially with pressing unemployment and lacklustre economic growth. “We have voiced concerns about development bottlenecks before, which are often caused by legislative delays, ill considered legislation or those which have unintended consequences. This, together with an increasing complex regulatory environment, is restricting the growth of the commercial property sector in the country,” said Gopal. He said two pieces of legislation that have recently been raised by SAPOA was section 60 of the Spatial Planning and Land Use
Management Act of 2013 (SPLUMA), and the out-of-date Subdivision of Agricultural Land Act (SALA) of 1970 (Act No. 70 of 1970). “We have raised our concerns around “SPLUMA with the Minister of Rural Development and Land Affairs, Gugile Nkwinti. SAPOA sent a letter to the ministry in which we asked the minister to use the discretion given to him in terms of section 60 (2) (d) of the Act, which, if used, will remove some of the financial, economic and social effects that are currently being experienced by the commercial property sector in terms of development of properties, creation of jobs and poverty alleviation,” explained Gopal. “In the interim, the government has published the Preservation and Development of Agricultural Land Policy. While this policy has similarities to SALA, the land reform process is also set to impact on the policy. SAPOA awaits the outcome of the consultation process on the policy,” Gopal added.
The President addresses the press During De Klerk’s reign as SAPOA President, several key issues were tackled, namely matters of a legal and governmental nature. “Tackling policy and legislation, which is harmful to members and the industry, our
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tribute
Tribute to retiring members
(board and committee members)
legal committee made excellent progress in promoting a more enabling legal environment for the commercial property sector,” said De Klerk. SAPOA’s legal department monitors and analyses relevant Acts of Parliament, Green and White Papers, Municipal Ordinances and Policies, as well as submits formal comments on behalf of the organisation’s members. Several pertinent draft policies and Bills were highlighted during the past year including the Spatial Planning and Land Use Management Act (SPLUMA), Protection and Promotion of Investment Bill, the Expropriation Bill, as well as many others. Furthermore, SAPOA has formed strong relationships with other groups and organisations which is essential for successful advocacy. SAPOA has forged stronger relationships with the Estate Agency Affairs Board (EAAB), National Treasury and the Department of Public Works, as well as the Competition Commission to mention a few. De Klerk pointed out that SAPOA’s focus on and input in education and research is quite crucial for the organisation as well as the industry itself. He adds that SAPOA’s ‘Meet the Mayor’ campaign is highly relevant as it opens crucial communication channels. “We recognise that good communication with local government is essential for the positive performance of the commercial property sector in South Africa,” noted De Klerk. He added that SAPOA will continue to forge relationships with further local government Mayoral offices. After 12 months of lobbying, extensive discussion, and hard work, De Klerk said that he is happy with what he has achieved alongside SAPOA“As my tenure as SAPOA President comes to a close this month, I would like to commend and thank SAPOA’s members for the invaluable contributions made to SAPOA, our sector, our economy, and society by serving the industry. My heartfelt thanks also goes out to SAPOA’s full-time team who have worked exceptionally hard this year to deliver innovative, relevant, and valuable benefits for SAPOA’s members.”
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APOA would like to thank all its Board members, Regional and National Committee Chairs, for the period June 2012 to June 2014, who are now retiring or ceasing to hold office, for their unfaltering commitment and service towards ensuring that SAPOA remains and continues to serve and pursue the mutual interests of its members across the country. SAPOA applauds them for the stewardship that they, as individuals or jointly with their Council or Committee members gallantly carried, by ensuring that key strategic relations are formed with various organisations and institutions to ensure a more viable business environment for the commercial property sector. Notably, their leadership ensured that their respective governance structures identify and tackle relevant industry related issues. SAPOA is indebted to them and we are grateful for the sincerity, integrity, and honor with which they have served our members. We see no quotation that is more befitting as a tribute to them than one by Winston Churchill, i.e.: “History with its flickering lamp stumbles along the trail of the past, trying to reconstruct its scenes, to revive its echoes, and kindle with pale gleams the passion of former days. What is the worth of all this? The only guide to a man is his conscience; the only shield to his memory is the rectitude and sincerity of his actions. It is very imprudent to walk through life without this shield, because we are so often mocked by the failure of our hopes and the upsetting of our calculations; but with this shield, however the fates may play, we march always in the ranks of honor.” Winston Churchill Thank you
Chairperson of the Board Estienne De Klerk
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the 46th annual SAPOA international convention & property exhibition
Convention’s lauded line-up What do the Cape Town mayor, a Russian professor of economics, a South African property fund CEO, a real estate global leader from Luxembourg, and a political analyst/radio personality have in common? The 46th SAPOA Convention, of course! Here’s a taste of what to expect. By Candace King
Eusebius McKaiser You may have heard him on the radio and have read his articles in various publications, but did you know that Eusebius McKaiser is much more than a media mogul? As a political analyst, broadcaster, lecturer, and writer, McKaiser also boasts a business background, having spent a year in corporate South Africa
Mayor Patricia de Lille The executive mayor of Cape Town is one of our political stalwarts. Once described by Nelson Mandela as “a strong, principled woman” and his “favourite opposition politician”, De Lille boasts a long list of milestone achievements, which include her role as a trade unionist in the struggle for equality and as the initial whistle-blower on the infamous Arms Deal in 1999. In 1988, De Lille was the first woman to be elected as vice-president of the National Council of Trade Unions. In 2003, she became the first female member of parliament to form her own political party in a democratic South Africa, winning seats at national, provincial and local level.
Asset Management. He was also the top-rated analyst on RMB’s rigorous investment excellence programme. Chetty has analysed shares in a variety of sectors, including consumer industrials, small cap mining and, more recently, financials, insurance and property. He headed up the RMB Asset Management financials team from 2007 to 2010, and was responsible for all share selection research in financials in addition to managing the highly successful RMB Financial Fund. In 2011, he was appointed to head the merged Momentum Asset Management Properties business in addition to managing the RMB and Momentum Property Fund. He is a regular property and market commentator on CNBC and Business Day TV.
as an associate at McKinsey and Company. With a strong academic background, McKaiser studied and lectured in the philosophy department at Rhodes University before doing research in moral philosophy as a Rhodes scholar at Oxford University. He remains an associate of the Wits Centre for Ethics.
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Nesi Chetty Fund manager and head of listed property at Momentum Asset Management, Chetty started his asset management career in 2002 as one of the youngest buy-side equity research analysts at RMB
Marc Wainer With more than 40 years of experience in the South African property industry, Wainer is the founder of Investec Property Group and is currently the CEO and executive director at Redefine Properties Limited, South Africa’s second-largest REIT, and director at Redefine International PLC. Both Redefine Properties Limited and Redefine International PLC are security holders of Cromwell Property
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Group, at which he is a director. He’s also an executive director at Fountainhead Property Trust, a South African listed retail property fund in which Redefine Properties Limited is the major shareholder.
Dr Douw Boshoff Boshoff is a senior lecturer at the Department of Construction Economics at the University of Pretoria. His professional experience includes project and construction management, and risk management in the banking industry. During the course of his career, he’s been involved in more than 25 000 valuation reports for property and developmentfinance purposes. His chief interests lie in property and construction economics, valuation, development studies and financial modelling in the construction and property industry.
Simon Freemantle As a senior analyst and head of the African Political Economy Unit at Standard Bank, Simon
Freemantle is responsible for interrogating Africa’s relationship with the emerging world, and how renewed engagement from the BRIC economies and others is reshaping Africa’s political and commercial environment. He writes extensively on the structural themes supporting Africa’s renewed growth prospectus, and is a regular commentator on a variety of public forums as well as in the media. Freemantle also analyses South Africa’s political situation for the bank.
Professor Brian Kantor Investec’s wealth and investment chief economist and investment strategist Professor Brian Kantor is an economics guru and academic heavyweight based in Cape Town. With a BCom and a BA (Hons) under his belt, Kantor worked his way up the academic ladder at the University of Cape Town from junior lecturer to dean of the Faculty of Commerce, before retiring in 2007. He was a member of the Competition Board from 1983 to 1989, and an advisor to the Margo Commission on Tax Reform in South Africa in 1986. From 1988 to 2001, he acted as the founding chairman of the V&A Waterfront and is currently a nonexecutive chairman of Acucap Properties.
Kees Hage Kees Hage is the PwC Global leader for real estate and a member of the PwC Global Asset Management leadership team, and chairs the PwC Global IFRS Real Estate International Accounting Group. Through his global real estate roles, he has developed an extensive international network and is fully dedicated to servicing international real estate clients. Kees has a master’s degree in business economics from Erasmus University in Rotterdam, and is Réviseur d’Entreprises in Luxembourg and has previously, worked as a qualified chartered accountant in the Netherlands and a certified public accountant in the US. He is chief editor of the PwC publication Asset Management Insights and co-chairs the Emerging Trends In Real Estate publication in partnership with the Urban Land Institute.
Michael Jordaan Former First National Bank (FNB) CEO Michael Jordaan is focusing his time on his long-standing passion for entrepreneurship, heading up a start-up private-
investment company, Montegray Capital. He is involved in various businesses, including the mobile messaging company Mxit. He is also nonexecutive director at JSE Limited. With more than 20 years of experience in the financial services sector and nearly a decade at the helm of FNB, Jordaan changed the face of FNB, which led the bank to be named the World’s Most Innovative Bank in the 2012 BAI-Financial Global Banking Innovation Awards, held in Washington in the US.
Rüdiger Naumann Rüdiger is portfolio manager on Investec Asset Management’s Target Date Funds and an analyst with a focus on asset allocation and property within the Multi-Asset team. He joined the firm in 2004 following his studies at the University of Cape Town. While studying towards his Bachelor of Commerce (honours) and Master of Commerce degrees, Rüdiger worked as a research assistant in the School of Economics and at a firm of management consultants in Germany. During 2000, Rüdiger worked as a Mozambique mercy flight pilot for the International Red Cross and on the High Flyers project for the Red Cross Children’s Hospital. From 1996 to 1997, Rüdiger lived in Germany where he worked in the film industry. Rüdiger holds a Master
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the 46th annual SAPOA international convention & property exhibition
of Commerce degree (cum laude) in Economics from the University of Cape Town.
Kevin Lings With more than 20 years of economic experience in South Africa, Stanlib’s chief economist Kevin Lings is responsible for domestic and global economic research and forecasts within Stanlib, as well as for providing input into the asset allocation process, fixed income, property and various equity franchises. Lings also managed an awardwinning unit trust for five years, and has delivered several economic presentations to clients and delegates at conferences and workshops, both locally and internationally.
Dr Yuri Maltsev There’s no denying that Yuri Maltsev’s resume packs a punch. Currently a professor of economics at Carthage College in Wisconsin in the US, Maltsev earned a BA and MA degree at Moscow State University, and a
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PhD in labour economics at the Institute of Labour Research in Moscow. Before defecting to the US in 1989, he was a chief consultant of the Bank for Foreign Trade and a member of a senior team of Soviet economists who worked on President Gorbachev’s reforms package. His papers and articles have been published in top journals and other publications around the world.
Clem Sunter It’s unlikely that scenario strategist Clem Sunter has a crystal ball – but his predicted scenarios are usually spot-on. Of British origin, Sunter moved to Lusaka, Zambia in 1971 to work for Anglo American Corporation Central Africa, before being transferred to the Johannesburg head office in 1973. In the early 1980s, he established a scenarioplanning function at Anglo with teams in London and Johannesburg, producing the notable “The World and South Africa in the 1990s” presentation. He was recently awarded an honorary doctorate by the University of Cape Town for his work in the field of scenario planning, and was voted by leading South African CEOs
as the speaker who has made the most significant contribution to, and impact on, best practice and business in South Africa.
Ben Espach Ben Espach is a professional valuer and director of valuations at Rates Watch (Pty) Ltd. He has been with the property valuation subsection of the City of Tshwane Metropolitan Council for 26 years, holding positions such as valuation officer, chief valuer and deputy director. He is a member of the South African Institute of Valuers, and in 2013 was elevated to a life member of the organisation. He also became a member of the Royal Institute of Chartered Surveyors during 2012.
Izak Petersen Dipula Income Fund CEO Izak Petersen originally co-founded the Mergence group of companies – which was the co-principal in the formation and listing of
Dipula – a decade ago. Prior to this he worked for PSG Investment Bank, first as group management accountant and subsequently as a transactor in structured finance and products, and was at Deloitte South Africa before that, where he executed services locally and in the US. Petersen continues to serve as an executive committee member of various industry bodies, and holds directorships in a number of companies in the Mergence group.
Vusi Thembekwayo Interesting and inspiring, Vusi Thembekwayo is the managing director of a boutique investment and advisory firm, and a business speaker who empowers his audiences with new knowledge, research findings and tools that they can immediately apply in their businesses or careers to achieve “stepchange” results. He ran a R400-million division in a R17-billion multinational, where he achieved the highest earnings before interest, taxes, depreciation and amortisation within the group. Today, he is the youngest director of a listed company and serves on several boards.
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Thank you Sponsors Advert_print.indd 1
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interview
The Mother City’s matriarch We had the pleasure of speaking to honourable executive mayor of Cape Town Patricia de Lille about her city and its development and infrastructure plans, and her encouragement of publicand private-sector engagement. The mayor means business! By Candace King
Q What is it that makes the Western Cape a prime example of a working and efficient South African province? The Western Cape and the City of Cape Town are places where we recognise the twin imperatives of providing the economicenabling environment that creates jobs and encourages investment, and the need to help those who need help the most. Focusing on these priorities, we understand the role that everyone needs to play and the fact that government has certain responsibilities – as does the private sector. Both need to be respected, and both can contribute to a more lasting society of opportunity.
Q What is the Democratic Alliance’s
strategy for the Western Cape in terms of development and management?
We’re investing heavily in public infrastructure and prioritising new utilities of the 21st century, such as broadband infrastructure and providing a business-friendly atmosphere for the market to work with. When combined, both of these will help encourage a crowdingin effect for investment from the private sector, using the foundation that government has provided.
Q Cape Town is regarded as one
of the world’s greatest and most beautiful cities. What contributes to the city’s success?
We have a government that’s passionate about its mission to work with its residents to make this a world-class city, and a leadership that is not satisfied with competing with local metros but uses international standards to benchmark performance.
Q In terms of development,
what is being done to improve the city and its surrounds?
Our objective is to become a world-class city of opportunity that is a great place to work, study, live and play in, and we leverage this objective through our economic-growth
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Cape Town mayor Patricia de Lille
and social-development strategies, which emphasise that economic and social development are two sides of the same coin. In terms of immediate steps within our strategy suite, from a spending perspective, we want to consolidate our public capital investment advantage by coordinating our major capital spending programmes in the
medium term and encouraging densification development along our transport corridors, investing heavily in public transportation and mobility options. This is coupled with increased investment in social initiatives such as labour-intensive public works programmes. Social work needs to offset immediate social needs while we position and market the city
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as a modern centre for global businesses to invest in, in terms of their national or regional operations.
Q The city is vibrant, clean and functional. What is the mayor’s office doing to maintain this?
We have very high targets for performance at the level of cleansing operations, and we’re making the right partnerships to ensure that we meet those targets. Furthermore, we have implemented a sophisticated corporate performance management system that allows performance objectives to be monitored and assessed on a continual basis.
Q How best can the private
and public sector work together to further develop the city? Are there any incentives for privatesector involvement?
As government, we need to understand how to assist the market more, so we need the marketplace to inform us accordingly. As for direct incentives, it depends on projects of interest. If you want to invest in Atlantis, for example, we have a range of direct financial and land incentives. If you want to invest elsewhere in the city, we can tailor an incentive package to your needs in terms of city functions and exposing you to the right decision-makers – all in accordance with due, fair and transparent processes.
Q How do you feel about
Cape Town being the World Design Capital this year?
It’s great to be the globe’s centre of innovation and creativity. I’m looking forward to some direct downstream advantages for our growing design-based industries, and more broadly to exploring ways in which we can transform this city to make it an even better place for all of its residents, using design to transform life.
Q What is being done to improve the lives of the less fortunate in the Western Cape?
We spend the majority of our budget on poorer areas in the most expansive operation of cross-subsidisation of any metro in the country. We know that, for the whole city to succeed, everyone needs to succeed. So we have increased spending in informal settlements, not only through innovative programmes such as area cleansing and janitorial services but also in terms of hard infrastructure such as electricity services.
And we have an expansive policy of rates rebates for the poor as well as a provision of subsidised utilities for everyone in an approach that encourages broad-based reconciliation and redress.
Q The annual SAPOA Convention is taking place in Cape Town this month. What are your thoughts on this event, and on SAPOA?
I think that SAPOA is a key stakeholder for local government as the representative of a massively important constituency – our property owners. It is a voice we need to listen to and one we respect tremendously. I’m proud to say that we have spent some time building a solid relationship with SAPOA, and its leadership knows they have access to me whenever they need it. As for the choice of conference venue, I’m always grateful for any business in Cape Town and proud to show off the very best that the city has to offer. I would be even happier if SAPOA members decided that they have to start or increase their portfolios in Cape Town properties!
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interview
Maltsev’s monetary view A professor of economics and a former economic advisor to Gorbachev’s government, Dr Yuri Maltsev, shares his expert opinion on global economics, and South Africa’s current situation and future By Candace King
Q How is the current global economic landscape performing? Real economic recovery is still to come. Today, the world economy is too reliant on the United States; is facing unpredictable security risks from Russia, China, North Korea and Iran; and is still addicted to easy monetary policy. We have a situation in which many developed market economies (such as the US and France) are swamped by an anti-capitalist mentality, while most developing and transitional economies are recovering from the socialist malaise. While the world economy is expected to grow very modestly in the range of two percent to 2,5% in 2014, the disparities between north and south are spectacular. Developing countries will be responsible for more than half of global growth and will continue to be an engine of growth, with average growth rates between five and six percent. The best indicators of economic success and favourable business environment include property and other human rights, rule of law, and favourable fiscal and stable monetary policies. The ultimate judgment of economic and political stability, sound property rights regime and favourable future expectations is foreign investment.
Q What are your thoughts
on South Africa’s economy and its performance in the current sluggish economic environment?
South Africa is the powerhouse for subSaharan Africa. Continued progress by South Africa towards a free-market economy is vital for the whole global commonwealth. This progress, however, is threatened by South Africa’s current political leadership, which is still burdened by a failed intellectual legacy of socialism. The unintended consequences of collectivist socialist policies include crime, HIV/Aids and unemployment. It’s very sad, because the people of South Africa – irrespective of race or religious creed – are very industrious, entrepreneurial and service-oriented.
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retirement in 1972. South African economists such as Leon Louw, Temba Nolutshungu, Herman Mashaba, Eustace Davie, Piet le Roux and others are known and recognised internationally. I regularly use their research when I teach.
Q Would you say that socialism is
being practised to a certain degree in South Africa?
Q What is the current economic
impact on the property industry, globally and in South Africa?
The economic impact of the ongoing crisis in the US property industry on the global economy is negative. American socialists in government and mass media describe the housing crisis as a market failure and put the blame on the hated “capitalist pigs”. The real estate market crash in the US triggered the world economic crisis. As a result, home ownership levels dropped like a rock, most notably for minorities and particularly for African Americans. In South Africa the property industry faces serious challenges in the years to come: slowing economy, social and political instability, rising interest rates, costly financial regulations and high unemployment. Current policies and rhetoric of income and land redistribution, destruction of property rights, threats of nationalisation (i.e. destruction) of the healthcare industry and racial divide are driving away the human capital needed to keep moving the country forward.
Q How have South African economists contributed to the rest of the world?
South Africa has made great contributions to the world history of economic thought. In 1948, famous Austrian economist Ludwig Lachmann became a professor at the University of the Witwatersrand, where he remained until his
Yes: by government and its clients and cronies, and not to a “to a certain degree” but at full pace. Socialism is not practised by hardworking, entrepreneurial people of your great country who are creating real value. This value, however, is being squandered by the political class to feed its voters and feed off value creators. It is not unique to South Africa; we see the same in the US and elsewhere.
Q What are your thoughts on the
future economic status of South Africa?
I wish I could provide you with an optimistic answer. There is an old saying that an optimist is an ill-informed pessimist. I see a frontal worldwide assault on economic and other freedoms. After decades of brainwashing, many began to believe that you can have a free society without property rights. It is the most dangerous belief. Russian writer and Gulag prisoner Vasily Grossman wrote 50 years ago, “I used to think freedom was freedom of speech, freedom of the press, freedom of conscience. But freedom is the whole life of everyone. Here is what it amounts to: you have to have the right to sow what you wish to, to make shoes or coats, to bake into bread the flour ground from the grain you have sown, and to sell it or not sell it as you wish. For the lathe operator, the steelworker and the artist, it’s a matter of being able to live as you wish and work as you wish and not as they order you to. And in our country there is no freedom – not for those who write books, nor for those who sow grain nor for those who make shoes.” I think South Africa is at a crossroads today and faces a clear choice between socialist slavery and freedom – and this choice is yours.
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feature
SAPOA president Estienne de Klerk (left) takes part in the SAPOA-Property Council MOU signing with Property Council of Australia national president Darren Steinberg
Joining forces down under In light of global trends and the need to affiliate, SAPOA has strengthened its relationship with the Property Council of Australia via a ground-breaking MOU By Candace King
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he partnership between SAPOA and the Property Council of Australia is nothing new – the property heavyweights boast a long-standing relationship of more than two decades. To further seal and strengthen this key relationship, a memorandum of understanding (MOU) was signed recently in Sydney, Australia between outgoing SAPOA president Estienne de Klerk and Property Council of Australia national president Darren Steinberg. “Our organisations enjoy a longstanding and positive relationship,” said Property Council of Australia CEO Peter Verwer in the MOU document. “As we discussed, there is great benefit in formalising a union between the leading real estate investment representatives of South Africa and Australia.” Verwer took a first stab at customising a SAPOA-Property Council MOU, establishing a framework for collaboration between SAPOA and the Property Council of Australia. “The aim of the alliance between the two organisations is to foster a more informed, transparent, efficient and respected real estate marketplace in our respective spheres of influence,” said Verwer. A complementary aim of the alliance is to promote and encourage greater commerce between South Africa and Australia.
“SAPOA has always had a strong working relationship with the Property Council of Australia,” explains De Klerk. “As an organisation, SAPOA has learnt a number of things from the Property Council, allowing us to access data and research as well as obtain insight into the Australian real estate market. This MOU formalises the relationship between the two organisations, and puts into gear the mechanisms that will activate decisions and matters that have long been discussed between the two parties.” The MOU document stipulates that SAPOA and the Property Council agree to: 1. Collaborate in order to serve their members’ mutual interests. In doing so, the two organisations recognise each other’s respective roles within the property investment universe and public policy community. 2. Commit to promote each other’s interests and, in particular, encourage corporations to join their respective trade associations. 3. Share information on leading industry practices and guidelines; assist with the collection of data needed for research projects or the development of performance measures where relevant;
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FROM LEFT SAPOA president Estienne de Klerk, Property Council of Australia CEO Peter Verwer and Property Council of Australia national president Darren Steinberg
“This MOU formalises the relationship between the two organisations and puts
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into gear the mechanisms that will activate decisions and matters that have long
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been discussed between the two parties”
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and identify ongoing research projects that develop the intellectual property that underpins these endeavours. Identify and share views on public policy issues relevant to the purpose of the MOU; and exchange perspectives on international advocacy issues on a regular basis. Share fact-based research-project results that highlight the importance and performance of real estate as an asset class and as a contributor to society. Explore opportunities to swap editorial content and advertising opportunities to be included in their respective publication platforms. Explore opportunities to swap annual updates relating to a market overview
of the South African and Australian property markets to be published in the respective publications and websites of both organisations. 8. Explore opportunities to promote each other to stakeholders operating in the respective spheres of influence of the two organisations. 9. Explore co-branding opportunities for events and publications, to be determined on an annual basis. Looking to the future, De Klerk notes that SAPOA will continue to align itself with international property organisations such as the British Property Federation as well as the Building Owners and Managers Association.
SAPOA and the Property Council agree and commit to: ●● Maximise dialogue in relation to mutually identified issues determined on an annual basis; ●● Exchange relevant data that helps achieve the purpose of the MOU; ●● Respect the confidentiality of discussions and data; ●● Keep each other informed of activities slated to occur within their respective regions of influence; ●● Offer complimentary reciprocal invitations to the most senior office bearers and the CEO of the respective organisations in relation to agreed major events; ●● Offer complimentary reciprocal invitations to members of the respective organisations, in relation to agreed major events, at member rates; ●● Communicate at least annually to agree priorities relevant to the objectives of this MOU; ●● Develop a calendar of activities and work programmes (events, research, etc) arising from these discussions, where they are mutually agreed; ●● Meet their own costs, except for commissioned research programmes, where costs will be shared by mutual written agreement prior to the commencement of any project; and ●● Review this MOU bi-annually.
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PORT Technology
feature
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: ies r e s ly eyerion y ca africa f nth untr A o e o Th our m by-c s yntr focu u co
Africa uncovered Seychelles
Population (people) 2 570-3 110 3 110-3 840 3 840-4 900
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The Seychelles carefully opened its doors to foreign residential tourism – the results are mindful, limited, low-density developments with strong environmental preservation principles at the heart By Anne Schauffer
Seychelles at a glance ▼ Population 90 846 (July 2013 est.) ▼ Major city Victoria ▼ Currency Seychellois Rupee (SR) ▼ Total area 455km² ▼ GDP growth (2013) 3,6% ▼ Key industries tourism, fishing, food processing, petroleum The Seychelles is a glorious contradiction. By discouraging mass tourism and commercialism for so many years, the republic has, almost inadvertently, managed to preserve the very reasons why discerning tourists yearn to visit, and to live and own property there. It’s about exclusivity, seclusion, luxury, extreme natural beauty. Historically, the 115 islands that comprise the Seychelles archipelago were uninhabited until the mid-18th century, when the French annexed them. They then passed through the hands of the British before becoming a separate colony in 1903, and an independent republic within the commonwealth in 1976. But in 1977, a coup d’etat shaped the future of
the Seychelles, when a quasi-Marxist government imposed an austere 16 years of non-commercialism on all levels. Today, the Seychelles is regarded as having one of the most environmentally conscious administrations in the world, and nearly 50% of the land is undeveloped and conserved. The country learnt the lessons of other tropical island destinations and deliberately limited tourism and development, thereby keeping the Seychelles as an essentially exclusive destination for the privileged few. The international airport only opened in 1971, so expansion was measured and deliberate. With more than 20 years of relative political stability, the Seychelles has even greater appeal. Add to that its geographic position outside of the cyclone and hurricane belts, its average maximum temperature in the balmy region of 29˚C, the fact that is has no malaria or other serious natural hazards or disease, and the Seychelles looks increasingly like what it really is – paradise, unspoilt. Unspoilt isn’t a synonym for rustic because the government has managed to create a balance between nature and development, particularly in the
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sphere of international tourism. Their environmental laws are stringent, and every tourism project is slowly and critically reviewed by both conservationists and the public. The country holds a record for the highest percentage of land under natural conservation, and as a world leader in sustainable tourism, it’s determined not to falter. The route it’s taken ensures that it attracts financially strong visitors over shortterm mass tourism. For non-residents, buying property in the Seychelles was traditionally an extremely complex affair involving government approval and rigorous vetting processes, with no guarantee of success. But that’s changed once the government recognised the benefits to the country of careful, well-managed tourism and foreign investment. Now, there are government-approved developments – still with stringent environmental restrictions – offering freehold title and residency rights for owners and their immediate families. The Seychelles tourism master plan, “Vision 21”, has opened the door circumspectly to five-star resorts and hotels such as Banyan Tree and Four Seasons (both offering full-service, villa-for-sale options), with priority given to low-density real estate projects with an ecoconscience. These have spawned a range of exquisite eco-island architectural designs, destined to tread very lightly on the island’s fragile landscape. The ongoing development of natural resources and good infrastructure, combined with changes to the law regarding property investment, are creating an environment conducive to foreign investment. In addition to opening its doors to residential tourism, the Seychelles has put in place a smorgasbord of incentives for investors, effectively tagging the country as a significant offshore centre. For permanent residents, there are tax benefits such as no capital gains tax, no estate duty and no land tax. 50
ABOVE On the endless stretches of white sand and warm indigo water, Desroches' Dream Team attends to your every whim BELOW At Zil Pasyon, luxurious homes are designed to become one with the pristine environment
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ABOVE The ultra-good life in a beach villa on Desroches Island awaits those who choose this, out of the ownership models offered on this magnificent island BELOW Eden Island is the end result of the Seychelles' government's reclamation project – essentially freehold property available for purchase by foreigners
Mahé is the largest and principal island of the archipelago, with Praslin the runner-up – but there are other exquisite little islands such as Desroches and Félicité, accessible by boat or plane (scheduled, charter and private flights). Airstrips give investors easy access to a few superb residential developments even further off the (very limited) beaten track. Many of the islands are uninhabited and only accessible by boat. Increasingly, foreign airlines from around the world are routing into Mahé, as the well-heeled see the opportunities to escape to paradise. The beaches are undoubtedly the main drawcard of the Seychelles, and because the archipelago consists of so many small pristine picture-postcard islands, the opportunity for extraordinary beach-front properties with palm trees, white sand and clear tropical waters is unparalleled. With the wealth of marine life around the islands, snorkelling and scuba diving just off the beaches or at designated dive sites are sensational. Chris Immelman, MD of Pam Golding Properties International and projects division, is marketing Eden Island. “It’s part of the 2000 and 2001 Seychelles government’s east coast reclamation project,” he says. “The goal is to provide additional ground where foreigners could purchase property here. Eden Island is one of the few freehold property options available to foreigners. Connected by a newly constructed bridge over the ocean, this residential marina development is a few hundred metres from the capital Mahé and covers more than 56 hectares, with more than 16 hectares of private waterways. The island has a broad range of freehold title homes, and you can own a luxury apartment, a spacious maison or a private villa with a swimming pool. There are four private beaches, a clubhouse with a tennis court, swimming pool and gym, offshore deep-water facilities that can handle super-yachts of more than 80 metres, private mooring berths for each owner’s boat, and a retail centre. “Any foreigner can purchase property here, subject to applying for sanction from the government (that is, providing personal documentation – we process this application),” he adds, describing the logistics of purchasing. “Those who’ve purchased property can apply for residency. Up to six investors (co-purchasers in a single property), together with their partners and children under 18, can apply for residency rights.
FAO food security data, June 2012
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Index number
150
Exports Imports
100 50 0
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France Germany Italy Mauritius Spain Australia UK US South Africa
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CHARLIE BRAVO #315-14
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eye on africa It’s not difficult to acquire residency, as long as you have all the correct paperwork in place.” Price-wise, Eden Island starts at US$450 000 for a one-bedroom apartment, reaching about US$3,5-million for a fivebedroom villa on the ocean. Pam Golding Properties has sold about 460 units to date to the value of US$400-million, with about 100 units remaining.” Due to open in 2015 is Zil Pasyon. Built along 1,4km of the island of Félicité’s coastline, it is a mixed residential and resort development, currently under construction. The island has been undergoing an extensive rehabilitation process, so all invasive flora
and fauna are being replaced by species endemic to the Seychelles. The resort will consist of 30 villas and is about 65% complete. Seventeen residences will be securely separated from the resort complex and serviced by the prestigious resort operator Six Senses. Of the total, four are at roof height, two are sold, and the remainder will be built to order. Built off-plan and on large plots, they come in three-, four-, and fivebedroom configurations, and start at US$4,4-million. Desroches Island is located 230km south-west of Mahé in the Amirante Archipelago, and is regarded as one of the most pristine islands in the world.
Its resort was nominated as one of the Top 10 Remote Hotels in the World by Forbes magazine. Aside from the hotel, there are different purchasing options and permutations, in particular the private beach retreats at US$4,25-million, set on 5 000m² sites with 56m of beach frontage and private pools. The Seychelles is for those who’ve been there and done that, and are now ready for a unique island lifestyle – holiday, residential or retirement – where exclusivity, privilege and privacy in an authentic, fiercely protected natural environment are, blissfully, almost a government decree.
National Accounts Statistics of Seychelles, 2011
National Accounts Statistics of Seychelles, 2011
Real GDP (% change)
Real GDP (% change)
14k
12,500
160k
12,000
140k
11,500
120k
11,000
100k
10,500
80k
10,000
60k
13k 12k 11k
US$ per person
SR Million
9k 8k 7k 6k
SR per person
10k
5k 4k 2004
2005
2006
2007
GDP, at constant 2006 market prices (Real GDP)
2008
2009
2010
GDP, at current market prices
2011
9,500 2004
2005
2006
2007
GDP per capita (US$)
2008
2009
2010
40k 2011
GDP per capita
An intensive rehabilitation programme to restore the fauna and flora of the island of Félicité is a drawcard for those who revel in pristine, natural surroundings
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project management
The “ATVANTAGE” of great teamwork The Atvantage Group of companies provides professional services to the property and construction industries. These services include development management and facilitation, project management, quantity surveying, procurement and logistics management, and construction legal services
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he Atvantage brand was established through the amalgamation of three professional services companies in 2005. The collective experience has culminated in a multifaceted group of specialised companies. Today, the group comprises a dynamic, experienced, and well-qualified team with a proven track record in the provision of professional services to the residential, retail, commercial and leisure sectors. South African-based professional services are executed under the Atvantage branded companies: Projects, Project Managers, Quantity Surveyors, Procurement and Construction Lawyers. In the Indian Ocean region these same services and expertise are offered through Indian Ocean Project Managers and Indian Ocean Procurement & Logistics, as part of the overall Atvantage Group.
Development and project management The essence of project management is the coordination and integration of project activities across multiple functional lines. We have developed proven planning and execution processes that enable accurate decision-making by our clients and project teams. These management processes and deliverables are designed to anticipate and proactively manage project risk rather than resort to reactive problem-solving. Through the application of our unique Project Accelerator platform, we optimise information flow and decision-making. This systems-oriented approach to project management forms the cornerstone of all our professional services offered throughout the group.
Quantity surveying Atvantage Quantity Surveyors provides the full scope of quantity surveying services as an independent professional service. These services include: u Cost planning, estimating and financial viability analyses, u Advice on contracting and construction procurement, u Preparation of tender and contract documentation, u Project cost management, and u Specialised services, including valuations, life-cycle costings, cost risk analyses, etc.
Procurement and logistics Through the collective experience of the group, Atvantage Procurement has in-depth knowledge of a wide range of the property development market sectors. The company has developed specialised skills in all aspects of procurement, logistics and supply chain management of architectural products, furnishings, operating equipment and fit-out environments. We have been involved in a number of recent prestigious development projects, undertaken in South Africa and abroad.
Construction law Our construction legal services are broadly categorised into “front-end legal risk management” and “back-end dispute resolution”. Risk needs to be clearly defined in order to design proactive risk management measures. By strategically advising on the most appropriate contractual strategy, organisational structure and forms of contract (professional services and construction), Atvantage Construction Lawyers work with our clients to adopt a procurement route best suited to their needs and the needs of the project. Our Juristic Management Services cover
THIS PAGE, FROM TOP Eden Island in the Seychelles; The Westin, Cape Town; Hotel Verde, Cape Town International Airport; Arabella Hotel & Spa, Kleinmond OPPOSITE, FROM TOP Taj, Cape Town; the presidential terrace at the Taj, Cape Town
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The Cape Town management team: STANDING, FROM LEFT Michael van Beuningen, director of ATV Project Managers; Christiaan Esterhuizen, director of ATV Procurement; Shaun Kark, director of ATV Procurement SEATED, FROM LEFT Hessel Dijkstra, group CEO; Dirk Blom, director of ATV Quantity Surveyors; Paul Harold Louw, group director (development); Dr Jonathan Kark, CEO of Atvantage Procurement; Jonathan Voss, director of ATV Quantity Surveyors; Toit Malan, group director (construction law)
the legal risk throughout the life of a development project, across the various disciplines of product development, branding/marketing/sales, financial and funding. In the construction industry, and in particular in times of increasingly competitive markets, disputes and disagreements often arise. In the highly charged construction environment, delays are often inevitable and lead to considerable extra cost for the parties involved. Few projects are completed without any disputes between the client and contractor or, as more frequently experienced in the industry, between the client and their appointed professional consultants. It is essential to understand the contractual basis of claims as well as the procedural aspects involved. We serve our clients by participating in claims formulation and assessment and dispute resolution, mediation, adjudication, arbitration and litigation as contract experts forming part of the legal team. We present or defend a claim on behalf of an affected party in the best possible format and most appropriate forum. We also act as mediators and adjudicators.
Office locations
original operational centres have since expanded to include offices in Centurion (Gauteng) and in Nairobi, Kenya.
Current projects The group is engaged in numerous challenging projects across all our geographical regions but a number of our current projects stand out for their long-term impact on the property sector and their prominence in the market. These include Eden Island, the continuing success story in the Indian Ocean Region; the Granger Bay precinct of the V&A Waterfront in Cape Town; and Rainbow Junction, the mixed-use mega-project in the Tshwane Metro of Gauteng.
T: +27 (0)21 423 4302 T: +27 (0)12 940 0654 E: hessel@atvantage.co.za E: paul@atvantage.co.za www.atvantage.co.za
The Group head office is located in the vibrant and cosmopolitan central business district of Cape Town. In 2005, when we commenced with the Eden Island development off MahĂŠ in the Seychelles, we established our Indian Ocean operations in the Seychelles. These two SOUTH AFRICAN PROPERTY REVIEW
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feature
Mother knows best The City of Cape Town is not only a thriving marine metropolis of good hope, but a driving destination of better opportunity for all to dive into By Candace King Photographs by Bruce Sutherland
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here’s just something about Cape Town. It’s a city with a raw civic X-factor; a city destined to be adored. Portuguese explorer Bartolomeu Dias knew he was onto something when he reached the Cape in 1488, the first European to do so. The discovery was so special that John II of Portugal dubbed it the “Cape of Good Hope” for its unequivocal optimism. When the Dutch jumped onto the Cape bandwagon – or rather bandship – and settled there in 1652, it was imperative to set up camp and colonise. It was Dutch colonial administrator Jan van Riebeeck who established a resupply camp for the Dutch East India Company which led to the birth of the city when it was still known as “ The Tavern of the Seas” – which then led to the birth of the name “Cape Town”. Who among those who had known the beautiful Cape for centuries as home, together with their new arrivals, could have foreseen the greatness the Mother City would come to attain? While Gauteng has long been South Africa’s economic breadwinner, the Western Cape has caught up, taking centre stage as
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a top financial and social hub. Business Day recently reported that the economy of the City of Cape Town is more inclusive than the national economy. This strong sentiment is based on findings stipulated in a City of Cape Town research report on its economic performance indicators, published on the South African LED Network website. The report further states that the Western Cape continues to perform better than the national average in employment creation, and saw more jobs created than any other province in the fourth quarter of last year: out of 141 000 new jobs created by the national economy, the Western Cape was responsible for 98 000 while Gauteng created no new employment and KwaZulu-Natal recorded a decline of 42 000 in employment levels. The Western Cape’s unemployment numbers are also contributing to its performance. At 23,4%, the Western Cape has remained below the national average unemployment rate of 24,5% as at the end of last year. On the basis of including individuals who are not seeking
work when measuring unemployment, the Western Cape figure was 22% compared with the national rate of 34%. Within the City of Cape Town, the rate of unemployment in the fourth quarter was 23%, with an additional 81 000 individuals finding jobs. Despite Cape Town’s successes and new opportunities, the city still faces challenges – a modern urban reality that isn’t unusual. For example, the strict unemployment rate for individuals aged 15 to 24 in Cape Town is estimated at 51,4%, higher than the national youth unemployment rate of 48,9%.
Rising to the challenge According to the fourth edition of the State of Cape Town 2012 Report, the city’s inevitable growth is presented both as a challenge and an opportunity for social, institutional and economic innovation. The report delves into issues most pertinent to increasing economic growth and development, diminishing social marginalisation, advancing social inclusion and cohesion, and building the city’s resilience.
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“Cape Town is one of the top performing cities in South Africa and in Africa,” says Cape Town city manager Achmat Ebrahim in the report. “But like other developing countries and cities, it is contending with rising unemployment, persistent poverty, a relatively high incidence of HIV/Aids, and crime. Efforts to address these challenges will require an integrated, aligned and strategic response in the medium to long term. For the 20122017 term of office, the city is structuring its programmes around five key principles and objectives: Cape Town as a city of opportunity; a safe, caring and inclusive city; and one that is well-run. The programmes contained in the Integrated Development Plan (IDP) 20122017 are informed by the OneCape2040 and the derived City Development Strategy, which sets out the long-term vision and goals for the city and the Western Cape.”
He further states in the report that the Social Development Strategy and Economic Growth Strategy provide a foundation for advancing the city’s social and economic development goals. “These long-, medium- and short-term strategies form the basis of the city’s approach to service delivery, and bring senior decisionmakers together to plan and work across departments and disciplines,” he says The city has identified its main challenges, and is currently working towards alleviating and, in some cases, eradicating these issues. One such challenge is the low activity rate in the informal sector – informal sector employment remains below 10% of total employment. Stakeholders are considering how best to support informal sector trading and growth.
Other key factors include economic and investment stimulation, IT improvement, social upliftment and development, the environment and sustainability, and improved and efficient transport.
Cape Town means business while staying connected According to a Global Competitiveness Study, which was completed for Cape Town in 2011, the importance of creating an environment that will make it easier for entrepreneurs to navigate the complex business landscape is critical. This, in turn, will contribute to Cape Town’s competitiveness. “One way in which Cape Town is creating an enabling environment for entrepreneurs and for job seekers is through the Cape Town Activa (CTA) Initiative,” says executive mayoral committee member Cllr Johan van SOUTH AFRICAN PROPERTY REVIEW
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In 2011, Table Mountain was voted as one of the world’s New 7 Wonders of Nature. It is the only natural site on the planet to have a constellation of stars named after it – Mensa, meaning “the table”
der Merwe. “CTA contributes to the City of Cape Town’s IDP ‘opportunity city’ objective to create an enabling environment that will attract investment, generate economic growth and create jobs. Through CTA, an entrepreneurship and employment support ecosystem (multi-stakeholder network) has been developed to promote organisations’ services and programmes in one place, which makes it easier for entrepreneurs and job seekers to find support. The multi-stakeholder network has drawn services from the public sector (local, provincial and national), the private sector (business development, associations, financiers, etc) and academia (the Cape Higher Education Consortium, universities, colleges, etc).” Adopted last year, the City of Cape Town’s Investment Incentives Policy focuses on the use of financial and non-financial incentives to encourage private sector job-creating investment, particularly in areas of high unemployment and within key sectors. It sets out a package of incentives that relates specifically to the city’s mandate, complementing the range of incentives offered by provincial and national government. The Investment Incentives Policy responds to the “opportunity city” principle articulated in the City’s IDP by providing for incentives that help foster increased opportunities for economic participation through sustainable employment creation. The city will review the incentives package every two years, based on the outcomes of an impact assessment, in order to ensure that it remains affordable and responsive to the rapidly changing needs of the economy.
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Apart from business and entrepreneurship initiatives and incentives, the city has implemented IT solutions to strengthen business operations and connectivity. The City of Cape Town has started to connect commercial buildings to its optic fibre network, with the aim of accelerating this programme as demand for affordable broadband services increases. The commercial building connection programme is part of the city’s continuing efforts to boost Cape Town as a business- and investment-friendly city. At the moment, the city has a dense fibre network in the Cape Town CBD, with cables also in Milnerton, Parow, Bellville, Durbanville, Athlone and Plumstead. The city’s current focus is to extend the bulk infrastructure to places such as Khayelitsha, Mitchells Plain and Atlantis. By providing telecommunications infrastructure in less-advantaged areas, licensed telecommunications companies will be able to offer services that were previously not commercially attractive to them. In light of the current growth of the internet and the rise of “big data”, the City of Cape Town is reviewing its data practices and has initiated the development of an open data approach and policy. “The City of Cape Town generates a significant amount of data that is potentially useful to citizens,” explains Van der Merwe. “By making appropriate big data available, the city will be able to tap into the creativity and innovative thinking of society in general, with attendant economic and social benefits.” Furthermore, according to Japie Hugo, City of Cape Town’s executive director for economic, environmental and spatial planning, the city recently rolled out a new electronic
software system to the eight district offices of its planning and building development management department. Known as the Development Application Management System, it is the first of its kind in South Africa, enabling home owners, property developers and professionals to submit building plans and land use applications electronically. These applications are then circulated digitally to relevant departments such as water services, electricity, health, roads/transport, fire services, environmental and heritage management, and others, for their respective input. Ultimately, the city would like to significantly improve its turnaround times of building plans and land use applications, thereby helping to unlock potential new growth and attract capital investment to Cape Town. Today’s multi-disciplinary approach to development has meant that many more layers of comment and approval are built into the regulatory process, thus weighing down the time it takes to obtain final approval. In some cases, highly complex applications for major developments such as Portside or Century City may need to be circulated to many different internal departments within the city. All this used to be done manually – but with the new electronic system, it all happens at the click of a button.
Green and viable There’s no doubt that Cape Town is a naturally beautiful city, given the fact that it’s situated in the Cape floral kingdom, and constitutes a famous harbour and iconic environmental landmarks (including Table Mountain and Cape Point).
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2650VA/E
The world’s most loved health club, you couldn’t ask for a better tenant. Virgin Active’s three-tier offering has an active solution for every lifestyle. Whether your development is aimed at an affluent market, value-seekers, or the money and time pressed, we’ve got a health club to meet their needs. Virgin Active Red Virgin Active Red is our streamlined on-the-go gym. Designed to make gym easy, fun, fast and convenient, it focuses on straightforward, world-class fitness. Targeting: - Emerging markets - First timers, short of timers - CBDs, provincial towns and convenience shopping centres (1500 m2 - 2000 m2)
Virgin Active Health Clubs
Our Health Clubs present a holistic wellness offering. Targeting: - Broader middle markets - Convenient suburban locations, easy access, adequate parking - Malls with lifestyle offerings (2500 m2- 5000 m2)
Virgin Active Classic Collection With iconic locations, in iconic buildings, in metropolises throughout the world, the Classic Collection is our premium offering. Targeting: - Top tier executives and discerning individuals - Iconic locations and buildings (3500 m2- 4000 m2)
For more information about our future development plans, please contact our Property Director. Herman de Beer Mobile: +27 82 460 3565 Office: +27 21 684 3519 herman.debeer@virginactive.co.za
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From a small jetty in 1654 to a working harbour in a flourishing mixed-use neighborhood: the V&A Waterfront is a major economic and tourism hub
With its innate natural traits and high level of biodiversity, coupled with global climate change and the increasing need for urban areas to become more sustainable, the city has identified a green economy strategy as key to its long-term economic growth and development. The city’s Environmental Agenda 2014 target is to see 60% of the biodiversity network formally conserved. Currently, just over 50% of the biodiversity network is under formal conservation. With its storm-water policies and infrastructure upgrade investments, the city will help to improve the quality of inland water bodies as well as contribute towards conserving biodiversity and coastal water quality. The city is also encouraging its citizens to become more eco-conscious – the launch of the Residential Solar Water Heater Accreditation Programme aims to motivate the faster roll-out of residential high-pressure solar water heaters and encourage residents with electric geysers to reduce electricity consumption and move towards the use of renewable energy. “As Capetonians, we all share the common goals of clean air, affordable and reliable electricity, and a healthy and resilient economy that will benefit us all,” says Hugo. “The City of Cape Town’s Solar Water Heater Accreditation Programme is one practical step, taken in partnership with the private sector, with the potential to make a real difference.” Residential consumption is responsible for 43% of the total electricity consumption in Cape Town. (Commercial consumption is 40%
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and industrial 13%.) A 25% to 40% reduction by households with electric geysers would make a considerable difference. Hugo notes that recent local market research commissioned by the city has shown there is indeed a willingness by residents to move towards using energy-efficient water heating systems, largely motivated by rapidly increasing electricity tariffs. A prime green example is that of Atlantis, one of the many redevelopment projects that Cape Town’s honourable executive mayor Patricia de Lille is passionate about. Located in the West Coast Development Corridor about 45km from the CBD and surrounded by fynbos veld, Atlantis was originally designated as an industrial decentralisation node. But after a long period of decline, which saw the erosion of its heavy industrial base, Atlantis is reinventing and repositioning itself as the home of green technology in the Western Cape. “Atlantis has been declared a special focus area by both the City of Cape Town and the provincial government of the Western Cape,” says Atlantis investment facilitation programme manager Stanley Visser. “As part of this focus, three major interventions have been undertaken that will see the regeneration of Atlantis and ensure the development of its people and the local economy.” The city has introduced a basket of incentives specifically targeted at attracting investors to Atlantis and retaining existing manufacturing operations to advance economic development and facilitate job creation. The city has also set aside about 67 hectares of city-owned industrial land for the development of the Atlantis Green Technology
Park. This initiative is being developed in partnership with GreenCape, the provincial government and the national Department of Trade and Industry. In addition to providing sites for renewable energy and green industry manufacturing businesses, the Atlantis Green Technology Park also provides potential investors with access to competitive lease and sales agreements, reasonable land prices, excellent existing infrastructure and accessibility, proximity to skilled labour, access to support and development services, and a strong network of local service providers. Atlantis has been proposed as a green technology Special Economic Zone (SEZ). The incentives for a SEZ will include lower corporate tax and advanced infrastructure, among others. The detailed feasibility for this SEZ, which will provide a clearer picture of the functions that the SEZ will support, is currently under way. Furthermore, transport linkages with the rest of Cape Town are being improved and Atlantis has been linked into the MyCiti bus network earlier this year. In view of rising electricity tariffs and the medium-term shortage of the country’s electricity supply, energy efficiency has become increasingly important to property owners. Commercial buildings use about 40% of the electricity supply in the Cape Town area, and they are an important sector to target in terms of energy saving. Cape Town’s Energy Efficiency Forum has been helping businesses lower costs and increase their competitive potential since it was launched in 2009 by the City of Cape Town in partnership with Eskom and SAPOA.
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feature During this time, many companies have gone to great lengths to improve the energy efficiency of their commercial buildings and operations, which has helped reduce Cape Town’s overall electricity demand. This relieves strain on the electricity grid, protects the city from unscheduled outages, and contributes to reducing our carbon footprint. As a way of rewarding commercial building owners for energy efficiency, the City of Cape Town hosts the annual Energy Efficiency Forum Awards.
Transporting greatness In keeping with its commitment towards building an opportunity city, the City of Cape Town has established a firm basis for sustained investment in public transport. To date, the city has invested R5,7-billion in the MyCiti Bus Rapid Transit system and has a 20-year plan for its further roll-out. The transport sector is responsible for 27% of Cape Town’s total carbon emissions. As in Johannesburg, current passenger transport in Cape Town is heavily dependent on private vehicles, which make up 48% of the modal share in terms of passenger kilometres.
The City’s growing investment in bus and non-motorised transport infrastructure, alongside the Passenger Rail Agency of South Africa’s planned investment in new rail lines, will help reduce carbon emissions in Cape Town. The current goal is to develop a multinodal public transport network, which the transport authority Transport for Cape Town can assist to advance the city’s strategy. However, the fiscal sustainability of this investment programme will remain elusive unless Cape Town progressively raises its residential and commercial densities from an average of 14 to more than 70 dwelling units per hectare in well-served public transport corridors. The city should also be proactive in encouraging a greater mix of activities along these corridors to ensure that buses and trains are busy in both directions. The city considers transit-oriented development (TOD) to be an integral development strategy that can only be achieved in partnership with the property development sector in Cape Town, says Hugo. The private sector, as investor, developer, landowner and tenant, is a critical partner in
the efforts to build a sustainable, high-quality public transport system. The city has identified two initial priority corridors or “integration zones” in which to leverage TOD: the Voortrekker Road Corridor (Cape Town CBD to Bellville CBD) and the central railway line corridor (Cape Town CBD to Khayelitsha and Mitchells Plain). An initial R67-million national grant has been secured to invest in catalytic projects in these priority corridors, aimed at leveraging a positive private sector response. This grant is performance-based and is set to grow over time. In the meantime, within these priority transit corridors, Cape Town has two urban development zones within the Cape Town CBD and Voortrekker Road areas.
The city needs you! The city takes working partnerships very seriously, Van der Merwe says. On an annual basis, the city invests several million rand in existing partnerships with the private sector by way of the Cape Town Partnership, the Greater Tygerberg Partnership, and the Philippi East Development Initiative, to collaborate in urban management and investment promotion activities in support of its initiatives, economic centres, key public transport corridors and nodes in Cape Town. The city is committed to an outcomesdriven partnership with the private sector in pursuit of transit-oriented development and other projects, and is putting in place resources, expertise and mechanisms to demonstrate this commitment. The property development sector is critical to making most, if not all, of the city’s projects and development plans happen by creating the demand – and in so doing, generating the revenue needed to sustain and improve such plans, Van der Merwe says. Catalytic projects that demonstrate this partnership are key to putting Cape Town on a sustainable and efficient trajectory – a Mother City that ticks all the boxes of growth and opportunity.
sue: wn s i t x o e ne Cape T ign h t n I ct es isse orld D 14 d e w the W of 20 as apital C Artist’s impression of Voortrekker Road (top) and Main Road, Strand (above) as an indication of what density can do for the quality of road corridors as part of transit-orientated development
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BAM architects
The extra mile Twenty-one years is a milestone associated with achieving a measure of maturity, when independent decisions are made and life is viewed through adult eyes
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or Chris Bam, the establishment of his practice 21 years ago already marked a level of independence rare for such a young architect. He says the years of consolidation on his home turf in the Cape and building a high-end client list have prepared him to expand the frontiers of Bam Architects to the north. The practice now also has a solid footprint in Johannesburg of more than 10 projects in progress. These range from commercial/industrial buildings to new premises for the Virgin Active health clubs. Bam Architects’ upfront exploratory work and development of concepts for the new range of smaller Virgin Active Red clubs, aimed at a different demographic from the traditional ones, has meant that the practice has become the sole design resource for this fast-growing sector of Virgin’s business. “We have walked the walk during two years of cooperation and commitment – common qualities we apply to all our projects – to achieve the right solution and bring the Red clubs to the market,” says Bam, adding that several of the new clubs will be rolled out this year, along with larger ones for which Bam Architects shares the design load with another practice. Sites of the first new Red clubs are Brackenfell in the Cape and Boksburg in Gauteng. They will open at the end of June. Bam Architects has also gained a reputation for landmark corporate head offices through its many significant projects completed or under way in the Cape. “It’s on this reputation that we will build our expansion to the north,” says Bam.
Impetus weathers the storm Looking back on the recessionary drift over the past six years, Bam believes that the firm’s weathering of the lean times is probably the result of its ability to maintain 66
impetus and resist negative trends. “It’s also very much to do with having the right clients with whom you can grow, and who have confidence in your ability to deliver,” he says. “Aligning our values with those of our clients and delivering a product whose function reflects exactly their market aspirations to achieve a competitive position are among our primary goals. For us, innovative and pristine design goes hand in hand with commercial viability.” The ability of the practice to survive and thrive is evidenced by the current staff complement of 17. “We have grown in line with the increasing projects, and the growth has also had the effect of attracting more work through the collective effort of a talented team. More appointments are on the cards – expansion to Johannesburg will result in a higher resource requirement.” A demonstration of Bam’s long-haul capability is the practice’s association with the Rabie Property Group. A development collectively called The Quays at Century City has just been completed, and comprises three separate buildings surrounding a small lake, which is connected to Century City’s hallmark chain of waterways. The residential component, consisting of Quayside and the Quay North building, provides sectional title apartments; the third phase, The Quays, houses sectional title office suites. The innovative, colourful collection of buildings creates a self-contained environment with a village atmosphere around a piazza with a restaurant. Occupants have the further benefit of having the Bam Architectsdesigned Virgin Active health club a short distance away. Rabie Property Group’s long-term commitment to Century City, which will last into the foreseeable future, is, according to Bam, typical of the group’s commitment
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BAM architects
MAIN PICTURE The Edge, Tygervalley Waterfront INSET Glacier Place, Tygervalley
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BAM architects to its projects. “The group also encourages its professional associates to turn out the most innovative and attractive work possible, which is both a challenge and an inspiration for us at Bam Architects. There is a dedication to a wide diversity of aspects that includes landscaping and even the tenant mix.” Rabie Property Group’s resident property brokers Property World have also taken offices at The Quays.
Green priorities Further north, Bam Architects is busy with another major green corporate headquarters building, which is also aimed at a five-star green compliance rating. It is The Edge, at the Tygervalley Waterfront, providing 10 000m² of AAA-grade office space, developed by Omnicron for Integri-t Property Fund. The building will be registered with the Green Building Council of South Africa with the objective of achieving the top green rating, in line with the groundbreaking sustainability measures employed in its construction. The entire building is double-glazed, and water from the quarry on the edge of which it is built will be used in the air-conditioning system, where it will also be treated to improve its purity before being returned to the quarry. “This purpose-designed system will have a substantial positive effect on the power-usage saving, which will be passed on as a benefit to the tenants,” says Bam. Sustainable materials will be used extensively throughout the building, and include a composite product for decking and façade screens to replace timber.
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BAM architects The material is made from 60% recycled wood fibre and 40% high-density polyethylene. Only reclaimed waste wood is used to make the material, substantially lowering the life-cycle cost. The development also incorporates spectacular landscaping, using indigenous drought-resistant plants, rainwater harvesting for irrigation, shade structures and walkways. It will be completed and occupied in October this year. Occupants will be the developer, Omnicron, as well as WorleyParsons, a firm of multidisciplinary engineering consultants. Already completed at the Tygervalley Waterfront is the landmark Bam-designed 12 000m² Glacier Group headquarters, Glacier Place, developed by Ingenuity Property Investments. It is already fully let, with Glacier as anchor tenant. Pioneer Foods’ head office and Santam are also accommodated in the remaining space.
Broad competencies Bam Architects incorporates a broad range of competencies, including insight and skill in the various applications for industrial architecture. The practice is well known for its many successful innovative industrial buildings that are both highly functional and attractive, avoiding any stereotypes. An industrial building designed by Bam Architects for use as a distribution centre for Moresport, the brand-holders of Sportsmans Warehouse and Outdoor Warehouse, is nearing completion. In partnership with Redefine, the nationwide redistribution facility is another individual creative design project by the practice. “Our versatility across many architectural functions is the result of a conscious decision to be ready for any major brief,” says Bam. “By being prepared, trained and backed by exhaustive research, we avoid being limited to work that might not always be available.” Bam Architects is headquartered at The Palms in Woodstock, a major industrial makeover of the old Baumann’s biscuit factory, undertaken by the practice for Wetherlys 14 years ago. The atmospheric, sensitive development – a mix of retail and office space – stands as one of the most innovative recycling projects in Cape Town. This earlier work represents Chris Bam’s determination that the buildings the practice creates should be sustainable on all levels. He was fully committed to green building principles well before the introduction of the official guidelines. He considers sustainability to be one of the cornerstones of good building design, and his projects embrace the use of recycled materials, innovative temperature control measures and the use of existing Chris Bam and easily available resources. Bam’s commitment to his practice, his colleagues and the clients they serve is backed by an abiding principle that progress through one’s working life should follow an upward curve that goes with greater experience and personal maturity. “There should never be any room for compromised or poor quality,” he says. Because he believes in enhancing the lives of his buildings’ occupants, those buildings provide pleasure on both a visual and a practical level. Though each of the projects is different, they all carry a stamp that distinguishes them as unmistakable products of Bam Architects’ design studio. THIS PAGE, FROM TOP Soho on Strand, Cape Town; Moresport National Distribution Centre, Philippi OPPOSITE, CLOCKWISE FROM TOP Virgin Active Century City; Sheffield Business Park; Quayside, Century City; The Quays, Century City (including the new Tribakery premises); Virgin Active Tygervalley
T: +27 (0)21 465 6007 / +27 (0)82 490 1060 F: +27 (0)21 465 6008 E: chris@bamarchitects.co.za www.bamarchitects.co.za SOUTH AFRICAN PROPERTY REVIEW
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feature
Harbouring success The V&A Waterfront is not just a leisure hot spot teeming with shops and restaurants – it’s also an important South African economic and tourism landmark By Candace King
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David Green, CEO of the V&A Waterfront
he Victoria & Alfred Waterfront has found its rightful berth in the economic wharf of the world. Nestled at the base of the equally iconic Table Mountain in the hub of Cape Town’s bustling harbour and a mere stone’s throw from the Cape Town Stadium, the V&A is a cosmopolitan precinct that amalgamates modern mixed-use vibrancy with an imbued heritage charm, thanks to the node’s number of historical buildings. Starting out as a small jetty (built by Jan van Riebeeck in 1654 to serve as a refreshment station for the Dutch East India Company), the area developed immensely over time with the construction of two harbour basins (the Alfred Basin and the Victoria Basin) that took place between 1860 and 1920. The foreshore was completed in 1945. In 1988, the V&A was established as a wholly owned subsidiary of Transnet Ltd, to redevelop the historic docklands around the Victoria and Alfred Basins as a mixed-use area with a focus on up-market retail, hotels and tourism, and commercial and residential development,
while ensuring the continued operation of a working harbour. Today, it is regarded as an important property asset and a key development in South Africa. “Effectively, the V&A Waterfront is an extended neighbourhood of the City of Cape Town,” says V&A Waterfront CEO David Green. “It’s a thriving precinct that’s home to 17 000 people who live and work in the neighbourhood.” With a decade of remarkable experience in ports and property, Green moved from the UK to South Africa in 2008, joining as CEO in 2009. “According to a recent economic impact assessment conducted by an independent group of economists, the V&A contributes R28,9-billion to the South African economy on an annual basis, and R198-billion in the past 10 years,” he says. “In the past decade, the V&A has been growing at 11%. It is responsible for the creation of more than 48 000 jobs nationally, and with the further development of the Waterfront, we could see this figure double in the next 10 years.” Green also notes that 200 business enterprises operate in the
“The V&A Waterfront is an extended neighbourhood of the City of Cape Town. It’s a thriving precinct that’s home to 17 000 people who live and work in the neighbourhood”
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Currently, the V&A is experiencing a number of exciting projects, including the refurbishment of the food court and the market. The existing Blue Shed and the craft market are undergoing a R50-million redevelopment
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V&A precinct, which inevitably acts as a strong source of future job creation. “The Waterfront experiences 24-million visits a year from local and international visitors,” he says. “The Western Cape is home to a variety of tourism attractions – but 60% of the visits and spend are attributed to the Waterfront.” Apart from its economic and tourism significance, the V&A adds viable value to the node’s real estate as well as property in the surrounding area. Green says that property situated within a 1,5-kilometre radius of the Waterfront is typically valued at 23% more. He notes that a watershed moment for the V&A as well as the property industry came in 2011, when the V&A was sold to a consortium of investors comprising Growthpoint and
the Public Investment Corporation (PIC) for R10-billion. This purchase and subsequent investment by the shareholders highlights the further development of the Waterfront into an even more vibrant and diverse destination. Currently the V&A is experiencing a number of exciting projects, including the refurbishment of the food court and the market. The existing Blue Shed and craft market are undergoing a R50-million redevelopment, which epitomises a complete re-imagining. Renamed the Watershed, the market will broaden to include a greater focus on design. “The re-imagining of this space is an affirmation of our commitment to enterprise development,” says Green. “By fostering local talent, we ensure that this is an industry that will thrive.” Positioned as a “talent incubator”, the Watershed will provide tenants with exposure to the millions of local and international visitors the Waterfront receives each year. Launching in September 2014, it will also be an ideal platform to showcase South African and African creativity. In terms of World Design Capital 2014, Green says that the Waterfront has embraced the spirit. The V&A is the perfect hub to showcase the best of what Cape Town has to offer as the World Design Capital. The Waterfront’s Clock Tower precinct has been converted into a bright and vibrant World Design visitor’s centre; the area also serves as an activation platform for a variety of World Design Capital 2014 projects. According to Green, the V&A Waterfront has a strong development pipeline, which includes the transformation of the Grain Silo Complex with the development of the Zeitz MOCAA – a unique, cutting-edge space that will house the Zeitz Museum of Contemporary Art Africa. The V&A has also launched its newest threephase residential development on Portswood Ridge, making it possible to rent 109 attractive studio, one- and two-bedroom apartments within the V&A Waterfront for the first time. Three office developments are also in the pipeline. With regards to the V&A’s retail and hospitality offering, the Waterfront is improving its tenant mix, introducing firsts to the Western Cape. These have so far included Louis Vuitton, Nespresso, Zara, Pylones and Topshop, among others. Another three/four-star hotel with 250 rooms will also be developed. Looking into the future, Green says that the V&A’s ultimate goal is to become the best waterfront development in the world, and to continue to provide a fresh, new, exciting and ever-evolving environment for locals and internationals alike.
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feature
The state of global
real estate While overall global real estate performance is illustrating positive growth, the international property arena continues to show pockets of low returns By Candace King
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he current global real estate landscape is proving to be very much like Forrest Gump’s unpredictable box of chocolates. While the latest data from IPD illustrates sweet performance, there exist clusters of negative returns with several trends continuing to affect certain markets. According to the recently released IPD Global Annual Property Index, 2013 was the fourth consecutive year of strong real estate performance. The Index recorded a total return of 8,3%, driven by the double-digit
growth in the US and the UK, and reinforced by good performance in commodity-rich countries such as Australia, Canada and South Africa. IPD provides real estate benchmarking and portfolio analysis services to clients in more than 30 countries around the world. These services incorporate more than 1 500 funds containing nearly 77 000 assets, with a total capital value of more than US$1,9trillion. Each year, IPD produces more than 120 indices helping real estate market
Asset class expected to perform best in 2014 and over the next 10 years
Real estate
25% 18% 17% 19% 16% 13% 17%
Precious metals Stocks Non-metal commodities Bank savings/Fixed deposits Corporate bonds Alternatives Government securities Currencies
2014 Over Next 10 Years
26%
4% 4% 3% 3% 7% 6% 3% 4% 6% 8%
Source: Franklin Templeton Global Investor Sentiment Study
“These results are not surprising, with real estate often falling between the generally higher performing but more volatile equity markets and the more stable but lower returning bond markets” Peter Hobbs, managing director and head of research at IDP
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transparency and performance comparisons, as well as nearly 600 benchmarks for client portfolios. As part of IPD’s global coverage, 25 countries are included in the global index, with additional coverage in seven other countries. The coverage scope consists of North America (42%); Europe, the Middle East and Africa or EMEA (42%); and parts of Asia Pacific (16%). However, despite the recent positive performance, values remained 15% below the 2007 values, and at least 10 countries (all of which are in Europe) continued to experience value declines during the year. Furthermore, the performance of the direct real estate market compares favourably with
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feature explains Sabina Kalyan, global chief economist at CBRE Global Investors. “The asset class continues to be attractively placed, with still wide spreads between real estate and other asset classes. Despite this, there are increasing signs of aggressive pricing, whether in the compression of property yields or tightening of spreads with bond yields.”
South Africa leads the global pack
government bonds that posted negative returns (-0,8%), but fall well short of the near-30% returns for global equities of the Morgan Stanley Capital International All Country World Index. “These results are not surprising, with real estate often falling between the generally higher performing but more volatile equity markets and the more stable but lower returning bond markets,” says Peter Hobbs, managing director and head of research at IPD. Over the long term, real estate has tended to generate attractive risk-adjusted returns compared with equities and bonds, driven by the relatively high income returns for the asset class. Over the past decade, income has represented 83% of the annual average 7,1% total return. “This high income return is a major reason for the wave of capital headed to real estate,”
In terms of global total returns by country in 2013, South Africa was the best performing market with 15,3%, while Spain was the worst with -0,3%. Ireland came in second with 12,7%. Other top-ranking countries included New Zealand (11,6%), the US (11,4%), Canada (10,7%), the UK (10,7%), and Australia (9,6%). Interestingly, Ireland was the worst performer in 2011, and was the worst market (0,8%) based on global total returns by country 10-year annualised results. Over the same 10-year period, South Africa was the best with 18,2%. The 10-year annualised global return was 7,1%. It’s not only IPD that’s showcasing South Africa’s real estate charm. According to the 2014 Franklin Templeton Global Investor Sentiment Survey, one of the largest surveys of its kind, South African investors placed property at the top of the list where they see the best opportunities in 2014 and the next 10 years, trumping stocks, precious metals and non-metal commodities. Based on the predictions of the perceived top performers in 2014, real estate was ranked at 65% while stocks at 48% and precious metals at 44%.
“This high-income return is a major reason for the wave of capital headed to real estate. The asset class continues to be attractively placed, with still wide spreads between real estate and other asset classes. Despite this, there are increasing signs of aggressive pricing, whether in the compression of property yields or tightening of spreads with bond yields” Sabina Kalyan, global chief economist at CBRE Global Investors
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feature Apart from South Africa, Australian and Malaysian investors showed the strongest preference for real estate investments this year. On the whole, global investors indicate they are most likely to add real estate, home country and emerging market equities as well as precious metals to their portfolios in 2014. Based on city performance, South Africa’s Johannesburg and Cape Town were not the top performers, irrespective of South Africa’s overall global total return position. Houston in the US was the best performing city in 2013 while Madrid in Spain was the worst.
and in the UK, London (14,5%) outperformed Edinburgh (8,5%) by six percentage points. These sub-national variations can persist with dominant financial cities (such as London and New York), commodity-based cities (such as Calgary and Houston) and tech cities (such as Boston and Seattle) tending to bounce back strongest since the financial crisis. “It is these variations that further contribute to the attractiveness of the asset class to investors,” says Mark Clacy-Jones, vice president and head of core research at IPD. “Beyond helping to diversify a multi-assetclass portfolio, our research demonstrates the
All property returns by country, % pa in local currency
2011 2012 2013
South Africa Ireland New Zealand US Canada UK Australia Korea Sweden Switzerland Japan Austria Norway Germany France Poland Finland Czech Republic Belgium Denmark Italy Hungary Portugal Netherlands Spain
%pa 18 16 14 12 10 8 6 4 2 0 -2 -4
Source: IPD, KTI
“It is these variations that further contribute to the attractiveness of the asset class to investors. Beyond helping diversify a multi-asset-class portfolio, our research demonstrates the significant diversification benefits within real estate, particularly when investing across global markets” Mark Clacy-Jones, vice president and head of core research at IDP
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Cape Town was the best performing over 10 years while Germany’s Frankfurt was the worst. Houston generated a return of more than 17% – a full 10% higher than Washington DC;
significant diversification benefits within real estate, particularly when investing across global markets.” In terms of the global total return by property type for 2013, industrial was the breadwinner while office was the worst. With regards to the global 10-year annualised results, office was still the worst while retail trumped the sectors. Unfortunately, inflation and currency impacts have had a negative effect on South Africa’s sterling 15,3% return – after inflation adjustment, South Africa was sitting at 9,5%, while the impact of the US dollar left us at -6,5%. Looking forward, IPD aims to include more countries in the Index over time, especially those in Asia and Latin America. Clacy-Jones notes that IPD is actively working on accessing data of other countries, including Brazil and the states of the Middle East. He believes that in the next two to three years these markets will most likely be included in the Index.
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Standard Bank on what to expect Standard Bank expects subdued economic conditions to weigh on the South African property market in 2014
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tandard Bank expects South Africa’s property market to than-R1-million band where there continues to be strong remain subdued throughout 2014 in line with conditions demand” says Garrett. in the broader economy. “The real estate sector tends to lag Office space below P-grade level will continue to face the broader economy by 12 to 18 months, so until we see a pressure due to an oversupply of space in many nodes. period of sustained economic growth, general demand for Development activity is largely focused on new premises for > Corporate and Investment Banking new or increased space will be muted,” said Gary Garrett, a number of blue-chip corporates looking to consolidate head of real estate finance at Standard Bank, Africa’s biggest and upgrade their space requirements. This consolidation lender by assets and market capitalisation. “This has a direct of space is a major contributor to the oversupply that’s impact on the amount of new development activity expected being experienced. and, as a result, growth in the sector through the supply of Demand for new industrial space will remain subdued new products.” for the foreseeable future in line with the broader economic Standard Bank does anticipate significant activity in the environment. Standard Bank expects light industrial listed sector. Following the spate of new listings in 2013, they premises, such as those used by logistics and warehousing expect the theme for 2014 to revolve around consolidation firms, to fare best in this segment. in the sector. Interestingly, Garrett believes increased activity will be “We saw a significant correction in listed sector prices seen across corporates that are large owner occupiers. “The PROPERTY ATTERBURY DIPULA INCOME in the second half ofRESILIENT 2013,FUND resulting in a more realisticHOLDINGS drive for balance INCOME INVESTMENT FUND sheet efficiency will result in corporates reflection of underlying property values,” says Garrett. “This, needing to assess how best to structure their real estate ZAR 600 million ZAR 1.77 billion ZAR 843 million along with the tougher economic environment (including assets,” he says. “This will create opportunities for banks to Term Finance Term Finance Finance expectations of further interest rate increases) and the use their realTermestate expertise to assist in the structuring of shortage of available stock, is the key factor driving the these transactions.” merger and acquisition activity.” Standard Bank still sees a strong demand for the development of quality assets in a number of countries Standard Bank expects 100 basis across Africa. This is being driven by several factors, NEW AFRICA ARROWHEAD COSMOPOLITAN including increased wealth (often linked to commodities DEVELOPMENTS PROPERTIES LIMITED GROUP points’ worth of additional rate hikes and natural resources), a lack of quality properties, Gary Garrett, head of real estate ZAR 540 million ZAR 700 million ZAR 450 million urbanisation and the growth of consumerism. While these finance at Standard Bank this year, which would take the Finance Term Finance Development Finance demand-sideTerm factors are partly offset by structural challenges such as complex legal and regulatory environments and central bank’s benchmark lending the high cost of borrowing in local currency, Standard Bank still expects demand to remain robust in certain countries. rate to 6,5% at the end of 2014 “In West Africa we see opportunities in retail assets, LANE – PHASE 1 MIDDELBURG MALL JABULANI PRECINCT particularly in Ghana and Nigeria, with the latter also Standard Bank ALICE expects 100 basis points’ worth of Abland and Pivotal Property Flanagan and Gerard CALGRO M3 Holdings Ltd Fund Investments (Pty) Ltd and offering good prospects for developers of quality office additional rate hikes this year, which would takeMoolman the central Group Garrett. “In the south and central parts of the bank’s benchmark lending to 6,5% at the end 2014. ZAR 440rate million 271 million ZARof 300 million space,” says ZAR Development Finance Development FinanceMozambique, Zambia and Angola, Finance continent, most notably Standard Bank anticipates that the SARB couldDevelopment lower the repo rate by 50 basis points to six percent in the second half we see good opportunities for retail assets as well as of 2015 on the back of persistent weakness in local economic residential accommodation, underpinned by leases from growth, some rebalancing in the economy and a return to entities involved in mining and the oil and gas sectors.” sub-six percent CPI inflation. Higher borrowing costs, subdued consumer spending and,Ourinexperience many nodes, oversupply of retail limit new showsanhow involved we’ve beenwill in building the real estate market. This foundation allows us to provide you with retail opportunities in South Africa’s major metropolitan the best possible financial solutions for your real estate needs. www.standardbank.co.za/cib centres, says Garrett. He does, however, believe that development opportunities exist in certain non-metro and rural areas where there is an undersupply of retail. The upward interest rate cycle is also likely to negatively impact the residential property market, which could be Authorised financial services and registered credit provider (NCRCP15). The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). SBSA 126413/RR – 3/13 further impacted by stricter end-user lending criteria being Moving Forward is a trademark of The Standard Bank of South Africa Limited applied in response to higher borrowing costs. “We believe that residential development opportunities exist in the less126413 R SA Real Estate.indd 1 2013/07/03 4:41 PM
NOTHING BUILDS A STRONGER FOUNDATION THAN A WEALTH OF EXPERIENCE
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CT airport flies high Ranked Africa’s thirdlargest airport and the second-largest airport in the Airports Company South Africa stable, Cape Town International Airport has won many awards, and undergone revamps and expansion valued at more than R2-billion since 2005 By Denise Mhlanga
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f you travelled to Cape Town International Airport prior to 2005, you will know that today, it’s an admirable piece of real estate, and not just a place for planes to land and take off. Now 59 years old, the airport was officially opened in 1955 as DF Milan Airport. In 1993 the name changed when Airports Company South Africa (ACSA) was officially formed to manage all South African airports, including Cape Town International Airport. In 1999 the company embarked on a project to upgrade and expand the international terminals at Cape Town International at a cost of R250-million. The project took four years to complete, with other major developments taking place between 2005 and 2010, explains Deidre Davids, communications manager for Cape Town International Airport. “Cape Town International Airport is the second-largest airport in the ACSA network and Africa’s third-largest airport, processing more than eight-million passengers per year,” she says. “It’s also Africa’s premier tourist and VIP destination, and has a reputation as Africa’s premier international award-winning airport, consistently performing among the best in the world for service in its category.”
Airport awards SKYTRAX and Airports Council International (ACI) are the two main agencies that do benchmarking and reward airports globally.
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Airport Service Quality (ASQ) Awards, hosted by ACI annually, recognise and reward supreme airports globally scored by the use of an ASQ passenger satisfaction survey. These awards are recognised as the global standard for measuring passenger satisfaction at more than 285 airports. The ASQ Awards are based on a measurement of passengers’ satisfaction by capturing passengers’ experience as they check in through the departure gates, thus providing a clear representation of passengers’ views on 34 key service indicators. For 2013, Cape Town International Airport received the Best Airport in Africa award from ACI. It also received this award in 2011 and 2012, and was included in the Airports Council International: Director General’s roll of excellence. (This is awarded for continuous service excellence.) In 2013, the airport was awarded the Best Airport in Africa and the Best Airport in Africa for Staff Service Excellence at the SKYTRAX World Airport Awards – an announcement that followed the airport being awarded the Best Airport in Africa accolade from ACI. The airport scooped the same range of awards in 2012, while in 2011, it won two ACI Airport Service Quality global awards for the Best Airport in Africa and Best Improved in Africa.
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16 top service indicators ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●● ●●
Waiting time in check-in queue/line Efficiency of check-in staff Courtesy Helpfulness of check-in staff Courtesy and helpfulness of security staff Thoroughness of security inspection Waiting time at security inspection Feeling of being safe and secure Ease of finding way through the airport Ambience of the airport Walking distance inside the terminal Courtesy and helpfulness of airport staff Availability of washrooms Cleanliness of washrooms/toilets Comfortable waiting/gate areas Cleanliness of airport terminal
It also won the SKYTRAX World Airport Award in 2011 for Best Airport in Africa for Staff Service Excellence. The SKYTRAX awards process is based on an independent, nine-month survey consisting of 12-million questionnaires completed by airline passengers of more than a hundred nationalities, and covering 385 airports.
In March this year, Cape Town International Airport won the accolade for the Best Airport Staff in Africa at the SKYTRAX World Airport Awards – one of three out of ACSA’s nine airports to win in these prestigious awards. OR Tambo International in Johannesburg was named the Best Airport in Africa, while King Shaka International in Durban, KwaZuluNatal won the award for the Best Regional Airport in Africa. The ACI awards, based on an Airport Customer Satisfaction Survey covering the entire airport experience for international and domestic travellers, saw participating airports being rated on 31 servicerelated parameters. In 2004, Cape Town International Airport achieved second place, Durban International Airport third place and OR Tambo International Airport fourth place in the regional ratings of Middle East/Africa, and rated the best in terms of overall satisfaction for airports handling five to 15-million passengers annually in 2003. In the same survey, Cape Town was second in the category of best airports in the Middle East/Africa region, followed by Durban and OR Tambo (third and fourth place respectively). Between 1998 and 2001, Cape Town International Airport won Africa’s Leading Airport Award.
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“Cape Town International Airport is the secondlargest airport in the ACSA network and Africa’s third-largest airport, processing more than eight-million passengers per year”
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feature “At our airport, we always encourage and motivate the staff members to strive for customer service excellence,” says Davids. “This is also extended to the value chain in terms of the airlines, car hire, retailers and so on, who play a key role as they interface with passengers at our airport.” She says the following are critical in winning the awards:
The airport is a key economic contributor to the region. Developing an aerotropolis will help unlock even more of its potential, and begin to grow business and investment in the city and the province ABOVE Vintage cable car at domestic departures BELOW Runway-side view of the airport BOTTOM Parkade 1 OPENING IMAGE Cape Town International Airport – runway-side view at night
1 Continuous focus and improvement in Airports Council International Airport Service Quality – passenger satisfaction remains a key focus, and includes things such as efficiency of check-in staff, the feeling of being safe and secure, the ease of finding one’s way through the airport, updated flight information screens, and cleanliness of the airport terminal. 2 Extending the focus beyond just the score but on trends (definition of the standard). 3 Understanding passengers’ real perception of quality through qualitative surveys. 4 Management of all performance areas in a combined session with all role-players, such as airlines and retailers. 5 All airport staff go through the behavioural standard training workshops twice a year, focusing on the following five customerservice behavioural standards: ●● Eye-to-eye: Acknowledging the customer by making eye contact
●● Greet and smile: Projecting a positive attitude ●● Step up: Taking pride and ownership of your environment! ●● My world: Knowing your airport ●● I care: Helping a customer, and being patient and awesome!
Checking in at the airport Davids says the entire terminal building measures about 110 000m². Currently, the airport has 9 026m² of retail space within the airport building precinct, with 79 retail outlets. It offers 5 990 parking bays –Shade P3 (719 bays), Shade P4 (747 bays), P1 (2 400 bays), P2 (1 412 bays) and Pick Up P1 (712 bays).
Extension and development projects According to Davids, despite the magnitude and complexity of the renovations that were finalised in May 2010, the airport consistently delivered top-notch services. The airport’s expansion began in 2005 with the transformation of its first multistorey car park, significantly increasing the parking capacity and enhancing the overall parking offering. Construction was completed in May 2010. This development was followed by a number of others, including the opening of the central terminal building, which now sees international and domestic departures being processed in the same large space.
PROJECT TIMELINES Project
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Date
1. Parkade 2 commissioning
December 2006
2. Relocation of Terminal 6 connecting tunnel
20 October 2008
3. Opening of Parkade1
18 December 2008
4. Central terminal building commissioning
7 November 2009
5. Road network upgrade
March 2010
6. Car rentals commissioned
1 April 2010
7. Domestic arrivals link opened
22 April 2010
8. Domestic arrivals link opened
23 April 2010
9. P5 long stay parking commissioning
15 July 2013
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feature There are 120 check-in desks and 34 selfservice machines, with four located on the ground floor of P1 and P2, says Davids. The new terminal was officially opened on 7 November 2009, together with the elevated roadway and additional air bridges. Other key
Cape Town International Aerotropolis The concept
ABOVE Duty-free shopping at international departures – a way for travellers to pass the time while they wait for their flight BELOW The international departures waiting/boarding area
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According to Deidre Davids, communications manager for Cape Town International Airport, no study has yet been conducted on the aerotropolis concept, but some work has been done on the background and objectives of such a study. The airport is a key economic contributor to the region. Developing an aerotropolis will help unlock even more of its potential, and begin to grow business and investment in the city and the province. John Kasarda first coined the term “aerotropolis” to describe the new role of airports in the 21st century as important nodes of global production and business. Kasarda defines an aerotropolis as “a new urban form placing airports in the centre with cities growing around them, connecting workers, suppliers, executives and goods to the global marketplace.” “We once built cities around harbours or railroad terminals, which led to the familiar shapes of Amsterdam, Venice, New York and Chicago. But cities built to take advantage of a hyper-competitive global economy are taking shape around the airport instead. “These cities have a name – the aerotropolis. They’re rising around China, India and the Middle East as each region prepares to take its place on the world stage.”
projects, such as the multistorey parkade near the current international terminal, the massive road-network upgrade, the fully operational air bridges and aircraft stands were completed in May 2010. The airport is now also equipped with a state of-the-art baggage-sorting system,
(Source: Kasarda, J. and Lindsay, G. (2011). Aerotropolis: The way we’ll live next)
Background and context The Cape Town International Airport, City of Cape Town and provincial government planning teams have been working closely over the past few years to promote integration and alignment of infrastructure investment programmes. A recent introduction to these discussions is the concept of developing Cape Town as an airport city, better known as an aerotropolis. While the concept is not new, with many cities (including Ekurhuleni) having quite far with their progressed developments, the City of Cape Town is at the infancy stage of fully understanding the potential benefit of such a development, and actively driving the aerotropolis vision in a structured manner. “Recognising the potential of developing Cape Town as an airport city, Cape Town International Airport wishes to pursue this opportunity together with the City of Cape Town and business partners by initiating a study with clear objectives, so that we begin to make tangible progress,” says Davids.
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which is fully automated and ensures less human interaction with luggage. The total cost of all construction ahead of the FIFA World Cup was about R2,5-billion.
The future and beyond According to Davids, ACSA has proposed to realign one of the airport’s existing runways. Right now, the airport has two active runways: the primary runway (Runway 01-19) and a secondary runway (Runway 16-34) that bisects it. ACSA has proposed to realign the primary runway and construct parallel and rapid-exit taxiways. The realigned primary runway (Runway 18-36) will be 3 500m long and will be built in accordance with international specifications, allowing larger (Code F) aircraft to land at Cape Town International Airport. Realigning the runway will unlock current development constraints, and will also allow for more efficient future expansion of the airport, says Davids. In 2007, the master plan for Cape Town International Airport was reviewed and, as
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part of this process, the runway development was considered. The preferred option was the realignment of the existing runway; as part of this process, an environmental impact assessment had to be conducted. The process will be fully managed by SRK Consulting (South Africa) (Pty) Ltd. SRK Consulting was appointed by ACSA to fulfil the process requirements in terms of EIA regulations. Stakeholder engagement is being managed in terms of a public consultation and disclosure plan prepared by SRK Consulting. According to Davids, phase one of the process was completed in December 2013, with phase two set to begin this month. ABOVE Domestic departures waiting area at Cape Town International Airport LEFT Part of the international arrivals lounge has been designed and decorated to look like the Bo-Kaap area of the Mother City BELOW Parkade 2 was commissioned in 2006
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advertorial
Auction success for Go-Dove SA GoIndustry DoveBid is a leading provider of asset management services globally. If surplus or idle assets are no longer needed, we provide expert advice with regards to value, asset management solutions to assist you in redeployment and, if not, offer a range of sale solutions, whether by auction or negotiation, to maximise the cash return
N
ow a part of Liquidity Services Inc (NASDAQ: LQDT), the leading reverse supply chain service provider to global Fortune 1000 corporations, GoIndustry DoveBid has offices in 17 countries, assisting the global corporate community in maximising sale realisations on surplus assets. We support our global client base with indepth asset and market knowledge across all industrial sectors and equipment markets, including property, construction and mining, automotive, transportation, pharmaceutical, food and beverage, consumer packaged goods, inventory and scrap. Clients benefit from this knowledge with up-to-date market-leading advice and our rich data, covering millions of asset sales and valuations around the world. “With more than R120-million’s worth of properties sold at the fall of the hammer, the auction industry has turned a new corner and proved that properties can be sold and confirmed in a transparent and authentic manner, providing the authenticity and corporate governance required,” comments Kim Faclier, Managing Director of Property at GoIndustry DoveBid South Africa.
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“GoIndustry DoveBid’s experienced personnel, auctioneers, national footprint and proprietary, cutting-edge IT platform provided the successful mechanisms for all the real estate auctions for the parastatal Telkom. A huge amount of planning, preparation, media placements, marketing, advertising, in print as well as online via our global IT platform, went into ensuring that this project was an unprecedented success.” The sale mandate included vacant land and residential buildings, as well as some highvalue commercial and industrial properties. More than 50 properties went under the gavel. They are situated all over South Africa, from the Western Cape to KwaZulu-Natal, Gauteng, North West and Mpumalanga – and many places in between. “The Gauteng auction had the most properties with the highest values,” says Faclier. “A vacant 9 999m² stand in Benmore Gardens, Sandton was sold for a R38,5-million; a 28 000m² property in Joubert Park in the Johannesburg CBD with five levels of parking was sold for R21,5-million; and a sought-after property in Mayfair sold for more than R7-million.
“At the Cape Town auction, properties sold included a building on the corner of Lower Church Street and Morom Road in Wynberg, which went for R3,5-million; and a building on a 120m² erf at 38 Buitenkant Street in the CBD, which was knocked down for R2,6-million. In Bloemfontein, the “Old Match Box” factory on the corner of Vooruitsig and Church streets in Hamilton was sold on site for R8,3-million. “Go-Dove’s lead auctioneer Joey Burke was ‘on fire’ at all the live auctions around the country. His mercurial auctioneering skills created a bidding frenzy among the buyers with more than R112-million’s worth of property sold and confirmed on the fall of the hammer.” More than 24 000 page views took place on our website, with more than 2 145 bids placed over a 24-hour period. The Go-Dove back-end system allows full tracking capabilities of the entire bidding history from registration right through to the end of the sale. “All in all, a 97% success rate was obtained and achieved via online auction, and a 100% rate for the live auction,” says Donovan Dalton, Go-Dove’s head of valuations.
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advertorial
John Cowing, Managing Director T: +27 (0)21 702 3206 E: john.cowing@liquidityservices.com
Donovan Dalton has been involved in commercial and industrial property transactions since 2005, joining GoIndustry DoveBid SA in 2010. He studied property valuation and law and, after starting his career as a commercial and industrial broker, today he heads up the valuation department for all movable assets and immovable property for GoIndustry clients in South Africa. Dalton is a qualified valuer and a full-status estate agent, and holds professional memberships with SAPOA, SACPVP, SAIV, SACSC, EAAB and IEASA. He also manages the company’s property disposal department and was involved in launching the company’s first dedicated online property auction division.
Donovan Dalton, Head Valuer T: +27 (0)72 591 8882 E: donovan.dalton@liquidityservices.com
John Cowing is the Managing Director of the South African business of GoIndustry DoveBid and the chairman of the South African Institute of Auctioneers. With more than 30 years of experience in the auction industry, he started his career at Michael James Organisation in 1984 and, after six years, moved to London to join Europe’s largest auction company, GoIndustry DoveBid. Thirteen years later he returned to open a branch in South Africa. After starting with two employees in January 2004, the company currently houses 48 staff – and it is still growing. GoIndustry DoveBid is now celebrating its 10th anniversary, and is considered a world leader in global online auctions. The company has recently been acquired by Liquidity Services Inc.
100% success rate for Go-Dove in record-breaking auctions throughout South Africa Joey Burke joined GoIndustry DoveBid SA in 2009. He sources new business opportunities and properties for auction. Coming from a family of auctioneers and with 33 years of experience, his highlights with GoIndustry DoveBid SA have included the positioning of the company on the Absa auctioneers’ panel, auctioning the Telkom portfolio (R130-million) with a 100% success rate, and helping to set up and build the new online immovable property division. Apart from being the company’s lead auctioneer, Burke is also a highly sought-after charity auctioneer who has raised more than R40-million in 10 years for well-known charities around South Africa.
Kim Faclier, Managing Director of Property T: +27 (0)82 554 6295 E: kim.faclier@liquidityservices.com
Appointed as property MD of GoIndustry DoveBid in 2011, Kim Faclier brought with her more than 20 years of experience in real estate across all sectors as well as asubstantial network within the banking and property institutions, investors and fund managers. A multiple award-winner who has been recognised internationally,she has been the recipient of the Women in Property Network Award, the Property Category Award for South Africa’s Most Influential Women in Business and Government (MiW) orchestrated by CEO Magazine. In 2013, her experience and reputation in the property industry also saw her invited to judge the World Auction Championships held in the US.
Joey Burke, New Business Development T: +27 (0)82 998 1133 E: joey.burke@go-dove.com
0861 GoDove (463683) www.go-dove.com
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advertorial
Absa at the forefront of
At Absa, we pride ourselves in offering our clients a comprehensive range of commercial property financing solutions
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ur products range from basic property finance facilities to complex financial structures. Our team of highly skilled specialists holds a wealth of knowledge and expertise in all facets of commercial property financing. In addition, our dynamic leadership team is able to respond to the ever-changing needs of a modern market. Through the backing of Barclays, we are not only well represented throughout South Africa but across the continent too.
Our focus cuts across multiple sectors and regions, giving us a competitive edge. We understand how important a complete banking solution is to you – our customer – which is why we go beyond simply addressing your needs. Our ultimate goal is to partner with you in shaping new horizons, whatever the size of your business. Contact us on +27 (0)11 350 4000 or visit our website to see how we can help your business prosper.
Absa, 4th Floor Barclays Towers West 15 Troye Street, Johannesburg 2001 +27 (0)11 846 1693 absa.co.za
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property finance in Africa P
ieter Steyn, a chartered accountant, is the head of commercial property finance within Absa’s Business Banking division. He completed a BCom (Honours) Accounting degree at the Rand Afrikaans University in 1995, and passed his board exams on the first attempt in 1996. After completing his articles at KPMG, Steyn relocated to the United Kingdom to work at Livingston as the deputy chief financial officer (CFO). In 2001, he returned to KPMG as a senior manager specialising in corporate finance. With the wealth of knowledge gained from working in the role of deputy CFO, he was keen to learn more about the field – it was here that his love for the commercial property finance sector started to bud. In 2004, he moved to AST Limited, where he spent four years in the roles of head of mergers and acquisitions and head
M
ichael Mortimer is an admitted attorney and conveyancer of the High Court of South Africa. He holds a BA and LLB degree from the University of Natal as well as a diploma in financial management from the Wits Business School. He has completed various leadership programmes, and had the honour of being part of the South African presidential delegation on the official state visit to China in 2010. Following his articles, Mortimer was employed at Pitcher and Pitcher to manage the conveyancing department. This is where he gained considerable experience in litigation and commercial law. In 1994, he joined Chapman Dyer Incorporated, where he was appointed the director of the property law department in 1995. Here he was further exposed to property law and development as well as corporate commercial law.
of corporate advisory services respectively. In 2007, he was appointed as a corporate development consultant at Absa; two years later he was appointed the head of business support and recoveries within the credit division. In 2012, at the age of 39, he was named Absa’s head of commercial property finance, looking after Africa. When asked about his role, he said, “This is the best place to be. We are able to help build our continent’s infrastructure and economy, while creating thousands of job opportunities in the process. These are just some of the small steps we are able to take towards building a brighter future for our children and this beautiful continent of ours.”
Pieter Steyn, Head of Commercial Property Finance Africa, Absa Business Banking
In 1997, he moved to Nedcor Investment Bank, where he was employed as a property finance relationship manager. In 2003, Mortimer moved to Absa to join the bank’s commercial property finance division, where he moved through the ranks from regional manager of the commercial lending team in Gauteng to head of lending Africa in 2009. He is an esteemed property expert in South Africa. As head of lending for Africa, he is breaking new ground across the continent at a rapid pace. “There are many exciting opportunities for property development in Africa,” he says. “I’m excited to be part of the dynamic team breaking this ground.”
Michael Mortimer, Head of Lending Africa, Commercial Property Finance, Absa Business Banking
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SLOVOVILLE CLINIC Situated just 45km west of the heart of Johannesburg is the community of Slovoville, Soweto. For many years the residents of Slovoville had to travel to neighbouring communities to receive primary health care services. The only facility available to them was a small makeshift container that operated as a clinic and provided medical services to the community. The City of Johannesburg Department of Health (CoJ Health) appointed the Johannesburg Development Agency (JDA) to implement the construction of a new clinic in Slovoville. A competent and experienced team which consists of Akweni Project Management, Ikemeleng Architects, PH Bagale, Phakamile Engineering, Empowerisk and Reflections Development Institute was appointed by the JDA to design and construct this flagship community clinic. The professional team translated the client’s vision and concept into this 1300m2 single storey facility modelled after a Level 2 clinic modified to adapt to the specific site and community conditions. The Slovoville Clinic boasts over 18 consulting rooms, an administration/waiting area, emergency services, diagnostics and treatment services and an ARV/TB facility. The clinic’s design and finishes are based on low maintenance, durability, affordability, robust and flexible space provision on the other hand taking cognisance of the pristine and sterile environment a healthcare facility must have. Some green building interventions were incorporated into the design of the building such as rainwater harvesting, energy efficient lighting, local labour and materials to reduce the carbon footprint of the building. At the clinic’s official opening ceremony held by Mayor Parks Tau and other city officials, the residents of Slovoville who participated in the realisation of this vision through the SMME/EPWP initiative were jubilant and proud of their new clinic. This service delivery achievement is the result of a collaborative effort between the City of Johannesburg, JDA, professional team, contractor and the Slovoville Community.
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Cape Town in context Source: Development Information and GIS Department, City of Cape Town
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ith regards to its citizens and economy, natural environment, urban growth and governance, as well as infrastructure accessibility and quality, the City of Cape Town is making strides in improving all facets. Over the years, Cape Town has experienced a population increase and changing demographic and living patterns. Census 2011 results indicate that, in the period from 1996 to 2011, the population of Cape Town increased by 46% to 3,7-million, with the biggest increase (124%) occurring in the black African population group. The number of people in the coloured population group grew by 28% from 1996 to 2011. The total number of households in Cape Town increased by 38% over 10 years, from 777 389 in 2001 to 1 068 572 in 2011. These new trends can be partly attributed to the city’s positive economic performance. With the exception of the agriculture, forestry and fishing,
and the manufacturing sector, the number of available jobs in Cape Town increased in all sectors between 2010 and 2011. While the growth of the economy has not been completely jobless, it has not matched the demand for jobs. In 2011, the average unemployment rate for Cape Town was 23,8% for all people aged from 15 to 64 (down from 24,9% in 2010). With key and effective programmes, plans and strategies currently in place, the City of Cape Town aims to further transform the growing city into one that has opportunities, and is safe, caring, inclusive and well-run.
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Southern tip of Africa
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Legislative capital; host of national Parliament
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Total area: 2 461km²
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294km of coastline
●●
400km² of national parks
●●
9 392km of tar roads
●●
Key economic infrastructure and landmarks include the international airport, port, international convention centre, Cape Town Stadium, Cape Town film studios, Robben Island (World Heritage Site), Table Mountain (one of
The number of available jobs in Cape Town increased in all sectors between 2010 and 2011
Economy
the Seven New Wonders of Nature – 2012), retail and financial head offices, call centres, broadband
Demographics ●●
Economic contribution of Cape Town to South Africa’s GDP
11,3%
(Global Insight 2012)
Economic contribution of Cape Town to Western Cape GDP
75,7%
(Global Insight 2012)
23% strict; 23,4% broad, fourth quarter 2013
(Quarterly Labour Force Survey, 2013; Stats SA)
R61 089
(Global Insight 2012)
Unemployment rate Per capita income (rand) – personal income per annum
Current population 2013 estimate: 3,86-million (Stats SA mid-year estimates)
●●
From Census 2011 (Stats SA): ●● ●●
46% of those aged 20 years and older have completed Grade 12 or higher
Western Cape
●●
76% of the labour force (aged 15
●●
47% of households have a monthly
●●
78% of households live in formal dwellings
●●
87% of households have access to piped
●●
88% of households have access to
Cape Town
to 64) is employed
7
income of R3 200 or less
6 5
water in their dwelling or inside their yard
4 3
a flush toilet connected to the public sewer system
2
●●
94% of households have their refuse
●●
94% of households use electricity
1 0 1996
The population is predominantly coloured (42%) and black African (39%)
Census profile and population change
Millions
Fast facts
removed at least once a week 2001
2011
for lighting in their dwelling
Source: 2011 Census Cape Town profile change from 2001 to 2011
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off the wall
How tall can you go? The sky’s the limit with the world’s latest “megatall” buildings and the East’s developments rising above the West By Candace King
B
uilding tall is back in fashion – and it’s not the West that’s walking tall on the construction catwalk. The colossal constructs of the East are towering above the rest of the world, redefining high-rise buildings into the future. According to “Structural developments in tall buildings: Current trends and future prospects”, a research paper that featured in the Architectural Science Review in 2007, tall buildings first emerged in the late 19th century in the US and were constituted as a so-called “American Building Type”. Thus the American dream not only incorporated the white picket fence but also the most important and powerful tall buildings. However, this dream is now a global one as tall buildings are a worldwide architectural phenomenon, with many high-risers being built in Asian countries such as China, Korea, Japan and Malaysia. The paper stipulates that, based on data published in the 1980s, about 49% of the world’s tallest buildings were located in North America, with the top 10
tall buildings hailing from this region. Over the past 25 years, the distribution of tall buildings has significantly changed, with Asia now having the largest share. According to a paper entitled “Megatall: What does it take?” by UK-based built asset consultancy EC Harris, at the moment nine out of 10 of the world’s tallest buildings are located in Asia, led by the Burj Khalifa (828m, pictured right) in Dubai, which is currently the globe’s tallest. At one stage it was tall and then supertall (300m+), but in 2011 the Council on Tall Buildings and Urban Habitat (CTBUH) decided that supertall was an outdated concept. Megatall (600m+) is now the “in” thing. Within the next decade we are likely to see not only the world’s first kilometre-tall building, Saudi Arabia’s Kingdom Tower, but also a significant number of megatall buildings, including China’s Sky City (838m). The CTBUH pipeline shows that we can anticipate at least 10 megatall buildings to exist across the world by 2020. It’s not only being tall that’s trending – traditionally, tall buildings have been the headquarters of commercial office space. Now other property types are going tall, including mixed-use, residential and hotel developments. So why has the East become the superpower of tall buildings? Apart from Asian countries establishing themselves as strong emerging economic global markets, another reason could be that the West, especially the US, has less favoured the development of tall buildings as a result of the terrorist attacks of 9/11. This is not to say that high-rise buildings are not being built at all in the West. Such developments will always exist because of their significant economic benefits in dense urban land use. The EC Harris paper highlights how the landscape for tall buildings is changing and provides an insightful outlook on what is required to develop a megatall building. It notes that, ultimately, the principal drivers to build tall are intrinsically linked to key drivers such as wealth, power and limitation on space. As many say, size matters – the same can be said for being tall.
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