South African Property Review April 2014

South African Property Review

PROPERTY SOUTH AFRICAN

April 2014

REVIEW

AFRICA Mozambique: more than prawns and beaches

Attorneys, brokers and auctioneers

RICS A femalepresident ďŹ rst

THE BIG DEAL The point when growth changes the way of doing business

April 2014

AMAzing contemporary architecture

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2014/03/07 9:19 AM 3/5/14 12:14 PM

from the CEO

Landlord liaison SAPOA CEO Neil Gopal addresses National Treasury’s proclamation to the Department of Public Works on leases, an issue that’s negatively impacting the industry

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he National Treasury has issued a proclamation to the Department of Public Works (DPW), which stipulates that the DPW cannot enter into leases longer than three years. Furthermore, the Treasury will not approve any annual escalation rate above 5,5%.

A DPW national meeting with landlords and representatives was held on 11 December 2013.

The primary purpose of the meeting was to inform all landlords that the department is aware of the challenges of the expired lease agreements within its leasing portfolio and wishes to indicate measures that the DPW, through its Property Management Trading Entity (PMTE), is taking to address the challenges.

The meeting also served to communicate critical supply chain requirements as per the Public Finance Management Act (PFMA) and the Treasury, and to communicate the department’s strategy on clearing the backlog of expired leases. It aimed to provide a platform to listen to the problems of landlords and endeavour to jointly find solutions. “We are committed to building a new and improved relationship with all our stakeholders,” said the DPW. “We are in a seven-year process of rebuilding the DPW and to operationalise its PMTE to improve the management of properties and provision of property services to our clients to deliver public services to the citizens of our beloved South Africa.”

The DPW acknowledges that the relationship between landlords and the department is not exactly what it should be. Apart from certain unreasonable and problematic landlords, there is rife fraud and corruption among landlords and DPW employees. Deloitte & Morar Consortium was appointed to conduct an audit of 2 162 leases as well as to propose business process re-engineering of the DPW’s lease management.

SAPOA’s concerns are that:

The findings reveal that: ●● 576 leases have no written agreements; ●● More than 100 leased properties have no client departments (tenants); ●● In a significant number of lease agreements, the DPW is paying for more space than is occupied; ●● More than 90% of leases procured via nomination or negotiated “irregular” procedure are in violation of PFMA and Treasury directives of open tender procurement expectations.

While SAPOA commends the DPW for its attempt to root out corruption and the imposition of alleged high rentals, this proclamation is having a significant impact on landlords. A three-year lease with a fixed escalation poses its own set of problems. This will hamper SAPOA members as well as practitioners in the property industry as a whole.

1 N either the Treasury nor the DPW engaged with the property industry leading up to the proclamation and new set of rules imposed; 2 The quality of premises secured will not be of the best quality due to a short lease period; 3 The Treasury decree will discourage longterm investors; 4 It will cause upheaval for the BEE players as their lease periods go from nine years and 11 months to a three-year period; 5 The operational costs are significantly higher than the escalation rate of 5,5%, and hence the fundamentals as tabled by the DPW are unsustainable to the industry; 6 To issue a tender for every space requirement is a cumbersome administrative process if not well managed; 7 There are no guarantees that the tender process will be foolproof in order to limit fraud and corruption; 8 A low escalation rate of 5,5% will result in a higher initial rental, which is counterproductive to what the Treasury and the DPW are trying to achieve.

These new measures will skew the market and have its own set of unintended consequences. The DPW is developing new approaches to conducting business, with cost reduction as a key driver. It aims to negotiate collectively with landlords as well as engage with SAPOA and the South African Institute of Black Property Practitioners to seek guidance and support as the department builds the PMTE, and to work towards developing technical and professional skills for their property management needs.

In order to address these concerns, SAPOA is in the process of meeting with the Treasury to discuss the matter.

Neil Gopal, CEO

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from the editor’s desk

Success and the city What makes a city successful? Smart people who share

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have always loved simulator video games. When I was growing up, SimCity – the addictive and highly popular city-building and simulation game – was a firm favourite. But as much as I loved developing and expanding my city, from the underground water piping and zoning to the first grand and expensive city landmark, it always seemed to fail.

Whether it was irreversible indebtedness and bankruptcy, rife crime and corruption, bludgeoning natural disasters or alien invasion (the extraterrestrial kind), my city went from “Happyville” to “Horrorville” almost every time I tried my luck at being mayor.

Now much older, I’ve realised that my downfall was the result of my smartness, or lack thereof rather. I didn’t build smart, I didn’t manage smart – I was not a smart mayor.

In today’s fast-paced and rapidly urbanising world, cities need to up their game.

Consultancy firm Arup’s 2011 UrbanLife report, entitled “The Smart Solution for Cities”, provides strategic recommendations on how cities can be more effective, transforming power-hungry urban areas into low-carbon smart cities via the creative use of technologies. The report states that “The challenges of climate change, population growth, demographic change, urbanisation and resource depletion mean that the world’s great cities need to adapt to survive and thrive in the 21st century.”

It also states that, for leaders of growing cities, reducing emissions while increasing living standards and economic success represents an enormous challenge.

A solution? Information and communications technologies (ICT) – it is estimated that 15% reduction in emissions via ICT is possible by 2020 (according to The Climate Group).

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“Information has a strategic role to play in reducing the carbon footprint of cities.

“Amalgamating information on city systems means that it can be deployed in real time to city leaders, allowing them to make decisions about the most effective use of city resources swiftly – and, ultimately, to feed those decisions back to the components of the city: the transport providers, the energy companies and the building owners.

“Also – and this is often overlooked – information can be provided to the city’s endusers, and through awareness the behaviour change necessary to achieve resource efficiency can be achieved.”

But smart cities cannot be attributed solely to a mobile phone or broadband connection.

Smart cities combine new technology with smart new ways of thinking about the technologies’ role in organisation, design and planning.

It is the Arup specialists’ recommendation that cities adopt a smart city development strategy based on three interlinked components: leadership, urban informatics and systems architecture.

Apart from being smart, cities need to share. Collaboration between the public and private sectors as well as the various levels of government is imperative for cities to thrive and achieve optimal efficiency.

In the ironic words of the late co-founder, chairman and CEO of Apple Inc Steve Jobs, “Technology is nothing. What’s important is that you have faith in people that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”

Candace King, editor

SOUTH AFRICAN PROPERTY REVIEW

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contents

April 2014

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

April 2014

REVIEW

AFRICA Mozambique: more than prawns and beaches

Attorneys, brokers and auctioneers

Abreal

RICS A femalepresident first

ON THE COVER This month’s cover showcases the AMA Architects-designed Kaya FM office on Jan Smuts Avenue in Parktown North, Johannesburg.

THE BIG DEAL The point when growth changes the way of doing business

April 2014

AMAzing contemporary architecture

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2014/03/07 8:42 AM

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From the editor’s desk

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News

12 Education, training and development 14 Legal update Regulation of cartels in South Africa

Oilgro

16 Councillors in conversation 18 Attorneys, brokers, auctioneers 26 Africa uncovered Mozambique 30 C40 mayors summit 36 Interview RICS’ first lady 40 WAM makes headlines 42 Ellerines: sixty-four and still going strong 45 Tiber deal changes the way Growthpoint does business 48 Meet the mayor Capital investment, capital vision 50 Statistics 52 People in profile 60 Property management prospers 62 The origin of e-tolls 64 Off the wall Teaching green 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, Nicky Manson, Denise Mhlanga Photographer Michael Glenister

P R O P E R T Y

F U N D

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

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

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

e: david@rsalitho.co.za

2014/03/10 8:31 AM

So

S a’ c

h af r i

premier property conferen

ce

f

o

Making a Difference

ut

th

e yea

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Sapoa convention property exhibition

international convention centre

cape town, 10-12 June 2014

www.sapoaconvention.co.za

Eusebius McKaiser

convention Mc/Facilitator

Dr Yuri Maltsev

Former economics advisor to russian President Gorbachev

Prof Brian Kantor

non-executive chairman of acucap- the JSE listed reit

Clem Sunter

Scenario Strategist

Kevin Lings

chief Economist –Stanlib

Patricia de Lille

Michael Jordaan

Nesi Chetty

Simon Freemantle

The Honorable Mayor of the city of cape Town

Fund Manager & Head of Property, Momentum asset Management

Ex cEo FnB

Senior analyst – Standard Bank research

Izak Pietersen

cEo, Dipula income Fund

Vusi Thembekwayo

rock Star of Public Speaking

Marc Wainer

cEo, redefine Properties

Kees Hage

Partner and Global real Estate leader - Pwc luxembourg

The Convention provides a comprehensive snapshot of expert opinions and research in terms of what to expect throughout the development and investment year ahead.

The two day event will deliver unrivalled opportunities to engage with industry leaders and political representatives, gain knowledge and inspiration, network and generate new business opportunities. These benefits are combined and delivered in one of the most high quality, informative, entertaining and dynamic event!

Please join us at this premier event!

Estienne de Klerk SaPoa President

Neil Gopal cEo, SaPoa

PrinciPal SPonSor

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news

Nedbank enables major motor vehicle manufacturing investment for Iveco SA

N The official sod turning ceremony for the new Discovery global head office in Sandton, February 2014. FROM LEFT Rudolf Pienaar (Growthpoint), James Tannenberger (Zenprop Property Holdings), Estienne de Klerk (Growthpoint), Adrian Gore (Discovery), Barry Swartzberg (Discovery) and John Robertson (Discovery)

New global head office for Discovery in 2017

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iscovery Limited announced on 25 February the start of a property development that will see Discovery’s more than 5 000 employees move into a new office development in Sandton. The development will be managed by Growthpoint and Zenprop, two of South Africa’s most established and well-known property developers, through a joint venture. The development, which will be coowned by Growthpoint and Zenprop, will be one of their premier rental properties, and Discovery will be leasing the space over a long-term period.

Discovery’s new offices will serve as the company’s hub for the growing international business that now has operations in South Africa, the US, the UK, China and Singapore. It will house all Sandtonbased employees who are currently working in four different buildings in the Sandton CBD. “One of the key success factors for Discovery is the ability of our people to work in integrated teams across business divisions and areas – an aspect that adds to Discovery’s already innovative and dynamic culture,” says John Robertson, Discovery Limited executive director. “A working environment that provides optimal space for creativity, connection and growth is critical to foster and encourage innovation in our business.”

Discovery’s Johannesburg-based employees are currently working in four buildings in the Sandton CBD. The company has grown significantly over the past few years in terms of current businesses as well as new ventures and initiatives. Employing the best people to meet these business requirements is a priority and the growth in the number of employees reflects the rate at which the Discovery business is growing.

“Over the past few years, the head count in our Sandton campus has grown by an average of six percent per year,” Robertson says. “In reviewing our current office space it has become clear that we’d quickly need more space to meet our long-term capacity needs for the next 15 years.”

“We’re excited to partner with Discovery and Zenprop on what will be one of Sandton’s most iconic landmarks,” says Rudolf Pienaar, divisional director for offices at Growthpoint. “Discovery’s brief was to design an efficient and modern building that is good for the environment and provides an inviting space for their employees to deliver their best. Most importantly, the new building design had to accommodate their future growth without wasting space, time or money.”

“Consisting of two wings, the design of the Discovery building will allow for a phased approach to growing the headquarters as Discovery continues to expand operations,” adds joint venture partner Zenprop Property Holdings CEO James Tannenberger. “In addition to the benefit of having all their employees in one location, they will also experience a cost saving over the lease period in terms of rental costs and maintenance because the new building will be far more efficient. The building will incorporate a Green Building Council of South Africa green building accredited rating of at least four stars, making it one of the most environmentally sustainable and efficient buildings in Sandton.”

The development is expected to be completed by mid-2017 with all employees relocated to their new office space by January 2018. +27 (0)11 529 1450, Discovery.co.za

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edbank Corporate Property Finance is playing a role in enabling growth and jobs in the vehicle manufacturing sector by funding the construction and refurbishment of a R230-million motor vehicle manufacturing facility for Iveco South Africa (Pty) Ltd, a joint venture between Iveco SA Works (Pty) Ltd and Larimar Group Limited, in Rosslyn, Pretoria.

“This deal demonstrates Nedbank’s support for the industrial property and vehicle manufacturing sectors, which are both starting to recover,” says Ken Reynolds, regional executive at Nedbank Corporate Property Finance in Gauteng. “This is a major investment for South Africa involving Fiat Industrial and the Industrial Development Corporation (IDC), and the facility is expected to employ more than 1 000 people who will be manufacturing trucks and buses for the African market, including Putco buses.” Nedbank Corporate Property Finance is partnering with long-term client Roman Cendrowski of CEZ Investments CC who will be the landlord of the property.

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news Iveco SA Works will be the tenant and the developer in the project; shareholding is 60% Iveco South Africa and 40% Larimar Group. Fiat Industrial owns 100% of Iveco South Africa and will invest €40million (about R544-million) via shareholder loans in Iveco SA Works.

The property is situated on the corner of Kitshoff and the R566, which is the main road between Rosslyn and Brits. The location enjoys good exposure and easy access to the R80 and N4 highway.

The total site comprises 181 000m², with an existing structure of 36 000m² and masonry buildings of 2 000m².

A new warehouse will be built to the extent of 10 000m², which will house the truck facility, and the renovated warehouse will house the bus facility.

The project is expected to be completed this month (April 2014). “Cendrowski has been a Nedbank client since 1991 and he has solid experience in properties such as this one,” says Reynolds. “Supporting this venture is yet another way of underscoring Nedbank Corporate Property Finance’s commitment to enabling opportunities in the property market for our clients.” +27 (0)11 294 4444, Nedbank.co.za

SAPOA drives forward with targeted research into South Africa’s property taxes

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APOA is pushing ahead with a pivotal initiative to lay bare the current property tax regime in South Africa, with the appointment of Business Enterprise at the University of Pretoria in partnership with specialist consultants Rates Watch (Pty) Ltd. “The prevailing level of, and the increases seen in property taxes throughout South Africa in recent years continue to be of concern to the commercial and industrial property industry,” says SAPOA CEO Neil Gopal. “For that reason, we’re taking a strategic and proactive approach to identifying, collecting and analysing core data on property taxes, so that we can best inform both our members and our efforts as an advocate for the sector. ”The project focuses on generating empirical and credible information on several key questions of interest. One is the constitutional implications of municipal property tax decisions; another is the consequences of the Rates Act 2004 in ensuring municipalities correctly set property taxes. SAPOA has also asked the researchers to assess the impact of property rates relative to both municipal funding models and the market-related value of properties.

Best international practice will be examined as part of the scope of work to set a benchmark for South Africa. The key outcome from SAPOA’s perspective is a set of recommendations that can be effectively used to influence policymakers on issues relating to setting and imposing property taxes.”

Given the gravity of the property tax situation in South Africa, SAPOA is taking a multi-pronged approach to unearthing facts about property-related municipal costs.

In addition to the research project with the University of Pretoria and Rates Watch, SAPOA last month appointed Rates Watch separately to undertake a comprehensive investigation into municipal budgets as well as the policies and legislation that underpin them.

“The two initiatives dovetail closely and it makes sense to conduct them in parallel,” says Gopal. “Since the property sector contributes significantly to the rates base in South Africa, we intend to find out everything we can about property taxes and their impact on our sector.” +27 (0)11 883 0679, Sapoa.org.za

Trafalgar Property offers Rentshield benefits to clients

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rafalgar Property and Financial Services is pleased to announce that it now offers its clients the benefits of Rentshield as an additional service.

Rentshield is a unique property letting management tool which enriches Trafalgar Properties’ service offering and adds value to the level of service provided to clients.

“We recently completed a pilot training phase and took the decision to provide clients with the Rentshield product on a choice basis, if and when they feel it can add value to their buildings or circumstances,” says Andrew Schaefer, MD at Trafalgar Property and Financial Services.

According to Schaefer, Rentshield does the application screening as well as the in and out inspection on behalf of Trafalgar. “We are proud to be associated with Trafalgar Properties and believe our product will offer peace of mind to landlords across the board, as it protects them in

more instances than a traditional deposit would,” says Martin Goodman, director of Rentshield.

The old-school idea of an upfront deposit is dated, and landlords are increasingly starting to realise the security and peace of mind Rentshield can add. This new product offered by Trafalgar takes care of many property investment risks associated with letting a property, including a loss of rental income for up to three months’ rent. Should a tenant not pay on the due date, a slow payment solution is offered where the rent gets paid into the landlord’s account within 48 hours of them submitting a claim. It also covers the landlord’s legal fees during the eviction process up to the value of R50 000, and ensures that all processes fall within the scope of the Consumer Protection Act. Other benefits include protection of up to one month’s rental for unpaid utilities, any malicious damage

to the property and for absconding tenants.

Trafalgar actively started to present the option to clients as units became vacant, with some landlords showing immediate interest, while others remain more comfortable with the basic 10% increase.

Schaefer believes there will be a slow incremental growth from a zero-base as vacancies are currently at historic lows, but said the uptake will be bigger on units that are a little harder to rent as the product could serve as the tipping-point towards filling the unit quicker or accessing a broader market segment for letting purposes.

“Rentshield is a novel and unique offering with interesting value proposition features,” Schaefer says. “we will watch with interest to see how this offering will be taken up by our clients and the value it will add to both parties.” +27 (0)86 1376 748, Rentshield.co.za

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Emira delivers 6,5% half-year distribution growth

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mira Property Fund has reported distribution growth to investors of 6,5% for the six-month period to 31 December 2013.

James Templeton, CEO of Emira, attributes this improvement in Emira’s performance to its successful strategies, which have resulted in significant progress achieved across all key metrics.

“Emira has done well in a tough market to deliver real growth for investors and meet forecasts,” says Templeton. “Portfolio vacancies reduced to 5,1%, tenant retention is at up at 70%, rental reversions are looking better and cost controls continue to yield benefits.

This all contributed positively to results.”

Emira’s net asset value grew by 8,7% during the 2013 calendar year.

Templeton confirms that Emira is on track to deliver similar growth for its full financial year. “Despite subdued economic

growth, Emira’s performance will continue to be driven by top-line growth from improved vacancies, rental escalations and income from our Australian listed investment. It will also benefit from the tight cost controls in place, including savings from the property management tender, and our proactive interest rate management.”

During the half-year, Emira’s vacancies improved from 5,6% to 5,1%, driven by substantial letting across all sectors. This includes 27 leases and renewals of more than 2 000m² each, accounting for 103 000m² with a value of R400-million and an average duration of five years.

“We made further good progress improving the quality of our property portfolio with strategic acquisitions, disposals, refurbishments and extensions,” says Templeton.

The Odyssey management contract awarded to PGP

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aving recently acquired the management contract for The Odyssey, a trendy new 58-unit apartment building in Cape Town’s vibrant Green Point area, Pam Golding Property Management Services now manages property assets on behalf of owners to a total value of more than R15-billion.

These comprise in excess of 160 properties, including 5 700 residential and commercial units.

The Odyssey is a prestigious building in a modern, sophisticated design – ideally situated on Main Road, directly opposite the Green Point Urban Park. It is well-positioned within walking distance of Cape Town’s CBD and the V&A Waterfront, and numerous leisure and entertainment facilities.

Mike Morey, MD of Pam Golding Property Management Services, is a financial accountant who has been in the real estate industry for more than 20 years.

“A further significant contract concluded recently is for the management of the homeowners association of Croydon Vineyard Estate in Somerset West

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in the heart of the Cape Winelands,” he says. Set against the scenic backdrop of the Hottentots-Holland Mountains and with views

Emira disposed of six non-core properties for R329-million, and acquired a fully-let industrial building in Cape Town and an industrial site for development in Pretoria.

With acquisition opportunities scarce for the listed property sector Templeton says Emira has no interest in growing for growth’s sake. “Any transaction we consider has to enhance income and distributions.”

Emira reported that it has R603-million worth of refurbishment and extension projects under development. The most significant is the major R513-million upgrade and extension of Wonderpark Shopping Centre, its biggest asset.

Offices comprise just less than half of Emira’s diversified property portfolio by value, at 47%. And, with Emira’s continued focus on letting and tenant retention, its office portfolio is bucking

of Table Mountain, the estate comprises in excess of 200 units. Other recent contracts include the management of eight up-market homes in Warblers Grove in Constantia, and the residential component in The Square, a mixed-use development in Plettenberg Bay.

“This year also sees us take on the management of the body corporate of Royal Troon, a complex comprising 24 residential units in Atlantic Beach on the Cape West Coast,” says Morey. He says among the more prestigious management contracts awarded in recent years is that of the centrally situated Mandela Rhodes Place, consisting of residential, commercial and retail components, in Cape Town’s central city.

“Based in the building itself, we are able to closely manage the smooth running of this iconic property, which is home to acclaimed restaurants, coffee shops, a hotel, spa and a number of up-market shops fronting the well-known St George’s Mall on the ground level. The property also provides ample parking for residents, commercial tenants and casual parkers in the city’s bustling CBD,” says Morey. “Our focus is on making a contribution towards the preservation and enhancement of the value of clients’ assets by maximising investment growth and income generation through sustained, results-driven service.” +27 (0)21 426 4440, Pamgolding.co.za

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news the negative trend, and instead achieving improved vacancies.

“We’ve done well to gain back share in a difficult market and reduce vacancies to levels below the SAPOA average, which we expect to continue,” says Templeton.

He adds that like-for-like net income from Emira’s office portfolio is up by 6,4%, from a like-for-like decline last year.

“This is an exceptional result from the office portfolio but it was still beaten by the 7,5% like-for-like growth from our retail portfolio, illustrating the benefits of a diversified portfolio. Net income from the entire portfolio grew by 4,5% like-for-like on the comparable period last year. Emira’s focused approach to letting space and tenant retention is showing in the numbers, and we will continue to refine our entire portfolio to maximise its performance.”

Income from Emira’s rand-hedge investment in Growthpoint Properties

James Templeton, CEO of Emira

Australia (ASX:GOZ) increased by 17,5% thanks to growing distributions from GOZ,

a weaker rand against the Australian dollar, and also because Emira followed its rights in respect of a rights issue in December 2013.

Emira’s GOZ investment comprises six percent of its assets. It is valued at R626million, compared with its investment cost of R372-million. Emira closed the half-year period with a moderate 30,6% loan-tovalue ratio.

About 76% of its debt is fixed at a weighted duration of five years and nine months at an all-in weighted average interest rate of 8,5%. It also continued to take advantage of lower rates of funding available on debt capital markets during the period.

“By aiming for revenue-enhancing opportunities that further Emira’s strategies and maximising our portfolio and its assets, we will continue to provide sustainable and growing income for our investors,” says Templeton. +27 (0)11 028 3100, Emira.co.za

Budget attack on property industry is unjustified

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APOA has expressed its dismay at comments made by Finance Minister Pravin Gordhan about the commercial property sector during his recent budget speech.

During the speech, the minister asked of the property industry, “Why aren’t you honest in the deals you make with government?”

Commenting, CEO of SAPOA Neil Gopal says, “This attack on the entire property industry is unwarranted and unfortunate. Many of the issues raised stem from government’s own inefficiency and mismanagement.”

Minister Gordhan went on to make the following comment in the official published speech: “Improving the quality of public services and cutting waste, Mister Speaker, this is a Budget in which circumstances dictate that we cannot add resources to the overall spending envelope. The emphasis falls therefore on ensuring that expenditure is allocated efficiently, enhancing management, cutting waste and eliminating corruption.”

According to Gordhan, an initiative was undertaken in 2012 jointly with Minister Nxesi and the Department of Public Works (DPW) to review the validity and cost effectiveness of all government property leases.

The exercise had exposed several deficiencies. These included government paying for accommodation that is unoccupied or occupied by non-governmental entities, marked divergences from market rates per square metre, inappropriate non-competitive procurement procedures, missing or invalid lease agreements and unsubstantiated payments to landlords.

The intervention apparently also identified a backlog of more than half of the lease portfolio reviewed, said Gordhan.

Gopal believes that the alleged high rentals may be the result of collusion between some landlords and civil servants, which have been exasperated by the DPW’s Property Management Strategy: A BEE, Job Creation and Poverty Alleviation Policy that has limited fair market competition.

The DPW’s unwillingness to engage with large listed and institutional property owners adds to this problem.

“We approve and applaud the National Treasury and other authorities’ investigation into these suspicious leases,” Gopal says.

“Over the past six years, SAPOA has strongly advocated against the precise DPW leasing practices that have resulted in these leases with inflated rentals being concluded.”

SAPOA called on the Minister of Public Works to make public the external auditors’ report on the leasing scandal and expose those involved, from both the private and the public sector. However, Gopal points out there is easily-available information on market rentals in specific locations across South Africa, and referencing it should be part of the DPW’s internal processes.

“The DPW’s willingness to sign leases at rentals in excess of market value has a wider impact for business, such us driving up rentals in the Pretoria CBD,” Gopal says. The 2009 Property Management BEE Strategy and the most recent National Treasure Proclamation are futile attempts to plug corruption by overriding market forces.

“Corrupt officials and landlords will find a way of overriding these mechanisms, making the situation even worse,” says Gopal.

“Since the mid-1990s, every Minister of Public Works has encountered this problem, yet the issue remains unresolved. Simple, basic lease management systems seem absent in the department.”

He also notes that continued change of leadership at ministerial and director-general level over the past decade have resolved little in the fight against corruption, perhaps even exacerbating the situation.

“It is frustrating when the government attacks our industry and fails to engage with our representative body to resolve some of these issues,” says Gopal. “The National Treasury’s procurement division has issued a policy document on leasing that has never been discussed with the industry and this will lead to further problems in regulating their leasing portfolio.” +27 (0)11 883 0679, Sapoa.org.za

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RICS and Ghana Institution of Surveyors reaffirm commitment to global standards

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he Royal Institution of Chartered Surveyors (RICS) and the Ghana Institution of Surveyors (GhIS) reaffirmed their commitment to the enforcement of global property standards at GhIS’ ninth annual Surveyors’ Week in Accra.

At the event in the Ghanaian capital, Louise Brooke-Smith, a fellow of the Royal Institution of Chartered Surveyors and RICS president-elect, signed a certificate reaffirming both institutions’ commitment to last November’s memorandum of understanding (MoU).

Under last year’s MoU, both organisations agreed to work together to promote the need for international standards in property, as well as issuing guidance as to how these can be used and of benefit to local markets.

Members of GhIS may be eligible to join RICS, through meeting RICS’s criteria for direct entry. In recognition of the union between the two organisations, the normal once-off joining fee will not apply to GhIS members registering for RICS membership before 31 July 2014.

During the conference, Brooke-Smith appeared alongside RICS’ honorary secretary Rob Mahoney to talk about the RICS Africa Strategy in partnership with the GhIS. Brooke-Smith said, “It is an honour to be addressing the delegates here in Accra, and to demonstrate our combined commitment to enforcing property standards across the world, in the public interest.

The GhIS is a fine institution, and to be working collaboratively in this way is excellent news.” +27 (0)83 632 5555, Rics.org

f 10

2014 National

By Denise Mhlanga/Courtesy of Property24

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f you didn’t think Budget 2014 was unexciting, at least for property, then you are not alone. What could have been helpful was if the budget gave tax breaks in the form of transfer duty threshold, rates and capital gains tax, says Herschel Jawitz, chief executive officer at Jawitz Properties.

According to Adrian Goslett, chief executive officer at RE/MAX Southern Africa, now is the time for households to curb spending and not accumulate more debt as this is a hindrance to many wanting to buy property.

“Interest rates hikes are expected to continue over the next year, along with the projected fuel increase in April, and this will increase the financial pressure on households that have high debt levels,” says Goslett.

While further rate hikes will negatively affect consumers with high incometo-debt ratios, those who have savings in place and interestgenerating investments could see some benefit.

The positive contributions that the budget will make, such as the projected 216 000 houses to be built along with the other budget allocations to infrastructure development, housing subsidies and an increased supply of electricity to more homes, can only be of benefit to the South African economy as a whole, and in turn, the property market, says Goslett.

Seeff chairman Samuel Seeff says the property market is in the healthiest position since the economic downturn, pre-2007/2008.

It seems to be defying the economic trend and, while growth has slipped over the past year, property has taken off, although primarily in the metropolitan areas, he says.

Meanwhile, Investec’s Annabel Bishop notes that GDP growth was revised down to 2,7% year-on-year from 2014 from a previous estimate of three percent – it is now in line with the World Bank forecasts but above Investec’s forecast. She also points to the fact that interest rate hikes are a possibility, and the bank believes the budget outcome is highly unlikely, in isolation, to prompt any of the rating agencies to downgrade South Africa’s sovereign credit rating.

“The outcome is better than expected and shows a very firm commitment to fiscal restraint,” she notes.

The highlights Other budget highlights include the indirect tax adjustments for 2014, mainly related to the traditional inflationlinked increases in fuel levies and excise duties.

In terms of environmental taxes, the implementation of carbon tax legislation, initially scheduled for January 2015, has been postponed to 2016 so as to allow for the completion of the consultation process on draft legislation.

The intention of the consultation process is to ensure that design of the carbon tax legislation does not unnecessarily disadvantage households and firms, explains Bishop.

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news

Budget highlights Expenditure aimed at supporting families and communities remains the largest share of the budget.

Government will continue to increase the breadth and quality of public services over the next three years, with education, health and social grants remaining the largest components of social expenditure aimed at improving the quality of life of families and communities.

Finance minister Pravin Gordhan says spending on social infrastructure – which includes health, education and community facilities – is projected to increase from R30-billion in 2012/2013 to R43-billion in 2016/2017.

Priority will be given to eradicating school infrastructure backlogs, and refurbishing clinics and hospitals. The allocations for education and health account for more than 65% of the social infrastructure budget.

Access to free education has increased rapidly since government introduced nofee schools in 2007. Currently 60% of schools do not charge fees, up from 40% five years ago. In 2007, five-million learners had access to free education; by 2014 the number had risen to 8,8-million.

In collaboration with community organisations, provinces will spend R50billion over the next three years on providing social development services that benefit the most vulnerable members of society. Funds are also added to the provincial equitable share to expand the reach of shelters for victims of gender-based violence.

A new conditional grant

is introduced to establish substance-abuse treatment centres in four provinces that do not have such public facilities.

Over the next two years, R1,9-billion has also been set aside from the human settlements development grant to provinces to create an indirect grant to upgrade sanitation infrastructure.

In addition, R180-million is added to the human settlements development grant to accelerate the upgrading of informal settlements in mining towns, on top of the R1,1billion added for this purpose for the next three years.

Spending on human settlement programmes amounted to R70-billion over the past five years, contributing to 590 000 houses being built and 850 000 households being connected to electricity over this period.

Metropolitan and larger urban municipalities are expected to use a combination of grant funds and their own revenue to upgrade informal settlements. The R32,2billion urban settlements development grant, over the MTEF period, is an integrated source of funding to upgrade urban informal settlements in the eight metropolitan municipalities.

National government will provide R15,2-billion over the three-year spending period to subsidise provincial bus services for commuters and learners. This includes an additional R150-million to offset rising fuel and labour costs.

Provinces also contribute

to the cost of these services through their own funds, which provides an incentive to improve efficiency.

Spending on social grants has increased from R75-billion in 2008/2009 to R118-billion in 2013/2014, reaching R145billion in 2016/2017, while the number of recipients has increased from 13,1-million in 2009 to 15,8-million today.

Social grant expenditure will remain significant at more than three percent of GDP; however, there has been a substantial reduction in the cost of paying grants over the past five years, from an average of R32 per beneficiary per month to a fixed rate of R16,40 per beneficiary per month.

Growth in social grant spending is driven by changes to the grant values and the number of people receiving grants. The child support and the old age grant are the two largest grant programmes, constituting about 75% of total grant spending, according to the Ministry of Finance.

To boost economic growth, transformation and job creation, the budget has allocated R35-billion for industrial development, which includes R6,5-billion for SMMEs, R5,4-billion for provincial investment agencies and R2,3 billion for various research and development support initiatives. However, this does not include tax and other incentives.

Over the next three years, special economic zones are allocated R3,6-billion to promote value-added

exports and generate jobs in economically disadvantaged parts of the country.

Preparatory work is under way to attract investors to the zones through tax incentives, infrastructure enhancements and other initiatives.

Another initiative is the agricultural policy action plan to support the National Development Plan target of creating one-million jobs in agriculture by 2030.

Expenditure over the medium term will focus on improving agricultural productivity.

More than R7-billion will be spent on conditional grants to provinces in support of about 435 000 subsistence and 54 500 smallholder farmers, and to improve agricultural extension services.

Since April 2012, 200 farms have been recapitalised through government grants and 728 farmers have received training.

Government aims to recapitalise another 867 farms by 2016/2017.

There is also the Employment Tax Incentive (ETI) launched in January this year – an incentive that subsidises the salaries of newly recruited workers aged 18 to 29.

The ETI should support a total of 240 000 jobs over the next three years, and the third phase of the Expanded Public Works Programme will be launched in April this year.

Over the next five years, it aims to create six-million jobs of short- to mediumterm duration (up from fourmillion over the past five years).

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education, training and development

The right to protest Section 69 of the Labour Relations Act, 66 of 1995 (“LRA”) currently provides that a picket may be held in any place to which the public has access but outside the premises of an employer; or inside the employer’s premises with the employer’s consent. The employer’s consent may not be unreasonably withheld

By Melanie Hart

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

The question that arises is whether a trade union and its members may picket an employer-tenant at a shopping centre despite the objection of the owner or property manager

In-store picketing

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n Shoprite Checkers (Pty) Ltd v CCMA and Others (2006) 27 (ILJ) 2781 (LC), the court dealt with the circumstances in which a commissioner may make rules in relation to in-store picketing.

SACCAWU demanded that it be permitted in-store picketing and wanted 20 workers to picket in store.

The employer refused to agree to this.

This dispute had to be considered by the CCMA in terms of section 69, and the CCMA decided to permit a maximum of six in-store picketers.

The employer took this decision on review to the Labour Court.

The Court found that SACCAWU had failed to discharge the onus of proving that it was unreasonable to refuse permission for 20 in-store picketers. The decision to grant in-store picketing was against

S

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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triking, protesting and picketing seem to be the order of the day of late. It has previously happened (and is likely to happen again) that disgruntled employees of a tenant in a shopping centre, being their employer (“the employer-tenant”), wish to picket inside or at the entrance of the shopping centre in relation to an employment dispute. The location where a picket takes place is often a difficult and contentious issue.

For picketers, the main considerations are to make the greatest possible impact in communicating their demands, and persuading other employees to join the strike. For the lessor and the employer, the primary

the interests of the employer, and it should have been heard before the picketing rules were established.

The CCMA’s reasoning to allow in-store picketing being that the purpose of the picket would be defeated if picketers were restricted to picketing outside the entrances to shopping malls was not supported by the facts. The majority of the employer’s stores were stand-alone stores where picketers would be visible if they stood outside the stores.

Considering this decision in the light of the proposed amendments, as a general principle, the picket could take place inside or at the entrance of the shopping mall, provided that the owner or property manager had an opportunity to make representations before the picketing rules were established.

In making such representations, the owner or property manager

should consider whether the picket at the shopping centre is likely to achieve the purpose of the picket or whether the picket could be better served elsewhere – for example, at stand-alone stores belonging to the employer and situated elsewhere.

If the picketing rules prevent the picketers from picketing at the shopping centre in circumstances where the employer-tenant has not consented to in-store picketing, the owner or property manager of the shopping centre is bound by those rules.

The owner or property manager of the shopping centre could, however, apply to the Labour Court to amend the picketing rules by proving that the employer-tenant’s refusal to allow in-store picketing was unreasonable.

This remedy is discussed further below.

concerns are to ensure that the picket is conducted peacefully, and that it does not obstruct entrances, hamper deliveries or turn away customers. In the end, it’s about achieving a balance between the two competing interests.

A shopping centre seldom belongs to the picketed employer-tenant, and the owner or property manager of the shopping centre is unlikely to ever allow picketing on his property.

The question that arises is whether a trade union and its members may picket an employer-tenant at a shopping centre despite the objection of the owner or property manager.

The changes to the LRA propose two

amendments, which are significant to owners of shopping centres and property managers.

Firstly, the proposed amendments extend employees’ right to picket at a property that is owned or controlled by third parties.

Secondly, the proposed amendments to the LRA seek to make picketing rules binding on third parties such as landlords of employer-tenants.

Pickets that comply with section 69 of the LRA enjoy the same protections as strikes that comply with the LRA. The LRA does not regulate in any detail how a picket must be conducted, and it is in the main left

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education, training and development

to the parties to formulate rules that will govern the picket. If the parties are unable to agree, the CCMA decides the picketing rules.

Picketing rules generally set out when the picket will take place, where it will take place, how many persons will participate in it and other ancillary matters.

Given that the owner of a shopping centre (and/or the property manager which controls such shopping centre) is bound by the picketing rules, it is imperative that the owner has insight and participates in the drafting of such rules so he picketing rules confine the picket in an acceptable manner.

The impact of these two amendments on the owners and property managers of shopping centres is considered below.

Picketing rules It is interesting to consider the proposed amendments having regard to an older decision of the Labour Court, in which the owner of a shopping mall attempted to interdict picketers, to highlight how the legal position will change in light of the proposed amendments.

In Fourways Mall (Pty) Ltd v SACCAWU & Another 1999 (3) SA 752 (W), the applicants were the registered owners and landlords of two shopping centres at which Edgars, the employer, was a tenant.

As a result of a wage dispute between Edgars and its employees, the Labour Court issued an interim order in favour of the landlord prohibiting the unions’ members from interfering with, assaulting or intimidating customers, and interdicting other unlawful behaviour.

The picketing rules provided that it was the unions to negotiate with the landlords of shopping centres regarding their right to picket.

On the return date, the Court discharged the interim order. The Court held that the LRA relates to employers and employer relationships, and no such relationship existed between the applicants, as the owners of the shopping centres had no relationship with the members of the unions.

The Court further held that the nature of the dispute between them arose from their right to protect their property from unlawful infringement.

In terms of the proposed amendments to the LRA, the picket can only take place where the third party has had an opportunity to make representations to the Commission for Conciliation, Mediation and Arbitration (“CCMA”) before the picketing rules are established.

The third party may also refer a dispute to the CCMA and apply to the Labour Court for urgent interim relief that is just and equitable in the circumstances, including an order directing any party to comply with a picketing agreement or rules, or varying the terms of such picketing agreement or rules. The Labour Court is also granted the power to suspend a picket in appropriate circumstances.

Certainly had the proposed amendments reflected the legal position at the time of the Fourways decision, in our view the landlord applicant companies would have had the interim order confirmed on the return date.

The proposed amendments to the LRA in relation to the standing of an owner or property manager of a shopping centre to interdict unlawful behaviour during a picket have thus been extended.

Melanie Hart, director at Fasjeb Martineau

A claim for damages A remedy that an owner or property manager of a shopping centre has in the event of damage caused during a picket is to seek to hold the responsible trade union(s) concerned liable for any losses sustained during a picket.

Sections 67 and 68 of the LRA envisage that if employees embark on unprotected strike action or conduct in furtherance of such unprotected strike action (such as a picket), the employees commit a delict or breach of contract. The employees and the responsible trade union can be held liable for losses suffered as a result of the strike. This is subject to the qualification that the trade union has clearly orchestrated the strike.

This claim can be lodged in the form of a common law delictual claim for damages or a statutory claim for compensation in terms of section 68 of the LRA. Section 11 of the Regulation of Gatherings Act also makes provision for joint and several liability between persons who take part in a demonstration and the organisers of such a demonstration unless one of the defences can be established. The defences include the fact that the act or omission which caused the damage did not take place within the scope of the demonstration or that all reasonable steps were taken to prevent the act or omission in question.

Conclusion It is important, in light of the two decisions discussed and the proposed amendments to the LRA, that landlords consider how they’d approach the issue of picketing and what they’d like to see in the picketing rules. Where possible, it would be prudent to negotiate and conclude agreements on picketing well in advance of any proposed strike.

Setting up and agreeing on clear and acceptable picketing rules should obviate the need to approach the Labour Court to intervene on an urgent basis.

We would further propose that the lease agreements of labourintensive employer-tenants within shopping centres address the issue of picketing.

The National Assembly passed the Labour Relations Amendment Bill (“the Bill”) on 5 November 2013, and the Bill returned to the Portfolio Committee on Labour of the National Assembly for consideration of proposed amendments. It remains unclear as to when the amendments will come into force. It will likely be during the course of 2014.

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legal update

REGULATION OF CARTELS IN SOUTH AFRICA T

By Advocate Portia Matsane, manager of the legal-services department at SAPOA

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he vicissitudes of the South African regulatory system are likely to leave most sectors reeling in their attempts to comply or explain non-compliance with regulatory processes against the need for businesses to grow and be sustainable amid global and national competitiveness.

The Corporate Leniency Policy that deals with cartels came under scrutiny in the Supreme Court of Appeal.

The Competition Commission of South Africa has a Corporate Leniency Policy that is issued in terms of the Competition Act, 1998 (Act No 89 of 1998), hereinafter referred to as the “Act”. The Policy is intended to clarify matters falling within the jurisdiction in terms of the Act. It outlines a process through which the Commission will grant a self-confessing cartel member who is first to approach the Commission immunity for its participation in cartel activity, upon the cartel member fulfilling specific requirements and conditions set out under the Policy.

The Act states that an agreement between, or concerted practice by, firms or a decision by an association of firms is prohibited if it is between parties in a horizontal relationship and involves any of the following restrictive horizontal practices: • Directly or indirectly fixing a purchase or selling price or any other trading condition; • Dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or • Collusive tendering.

The Competition Commission explains that immunity means that the Commission would not subject the successful applicant to adjudication before the Tribunal for its involvement in the cartel activity that is part of the application under consideration.

This also means that the Commission would not propose to have any fines imposed to that successful applicant.

Leniency Policy – Supreme Court of Appeal judgment The Leniency policy was debated and argued before the Supreme Court of Appeal under Case No: 660/2011. The parties were Agri Wire (Pty) Ltd and Agri Wire Upington (Pty) Ltd respectively as the first and second appellants, with the Commissioner of the Competition Commission & Others being the respondents.

The judgment concluded that cartel conduct, where ostensible competitors collude to set prices or terms of trade, or divide markets, fix tenders or engage in similar conduct, is one of the most difficult types of anti-competitive behaviour to identify, prove and bring to an end. It was further stated that the reason therefore is that a successful cartel is conducted secretly and its continued success depends on its members not breaking ranks to disclose their unlawful behaviour to the competition authorities.

In this case, the appellants challenged the legal basis of the Corporate Leniency Policy by contending that evidence

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legal update

obtained by the Commission from one of the respondents was unlawfully obtained in terms of the policy. The appellant sought an order that the evidence obtained from this respondent pursuant to the grant of conditional immunity was unlawfully obtained, and an order declaring that the complaint referral to the Tribunal was unlawful and should be set aside.

The Court looked at the Corporate Leniency Policy, and it was noted that wherever reference was made to immunity being granted, the Commission was being identified as the party that grants the immunity. The provisions of the Policy in respect of conditional immunity received focus as it provides that conditional immunity precedes total immunity or no immunity. Further thereto, the Commission will give the applicant total immunity after it has completed its investigation and referred the matter to the Tribunal and once a final determination has been made by the Tribunal or the Appeal Court, as the case may be, provided the applicant has met the conditions and requirements set out in the Policy on a continuous basis throughout the proceedings.

The Supreme Court of Appeal decided that the purpose of the Act is to promote competition in South Africa and that, to that end, the Commission is empowered to promote market transparency, and to investigate and evaluate alleged contraventions under which cartels fall. It was further decided that the Commission

was empowered under the Act to adopt and implement the Corporate Leniency Policy by giving conditional and total immunity to parties who make disclosures and provide evidence that enables it to pursue cartels and bring them to an end.

Further thereto, thereto, and in referral to section 59 (3) of the Act, the fact that the Tribunal can take a party’s cooperation into account in determining an administrative penalty does not have a corollary that the Commission may not grant immunity.

The Supreme Court of Appeal decided that the purpose of the Act is to promote competition in South Africa and that, to that end, the Commission is empowered to promote market transparency, and to investigate and evaluate alleged contraventions under which cartels fall

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sapoa national councillors

Councillors in conversation

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

By Candace King

Q

Who is David Reid?

David Reid, current chairman of the SAPOA Brokers Committee

I am an investment sales broker at JHI as well as the current chairman of the SAPOA Brokers Committee.

I have a BA degree from the University of KwaZulu-Natal and an MBA from the University of Cape Town.

With more than 25 years of experience in the industry, I have proficiency in several fields, including property development and commercial and industrial management.

I have worked for the Spar Group and was involved in finding new development locations for the chain during a period when the group was experiencing a rigorous expansion phase.

I’ve also been involved in a number of other major developments and properties, including Alexander Forbes Place, 90 Rivonia Road, Grayston Hotel, The Glen Shopping Centre and the Cape Grace Hotel.

Q

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

I joined SAPOA in 1991, and I see it as a very professional organisation.

SAPOA prides itself on supporting the commercial and industrial property sectors. It’s an important organisation

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because it deals with all the facets of the property industry – the law, government, private sector, infrastructure and development interests. It offers networking and education opportunities, and is well represented across several social groups.

Q

What have been your greatest achievements with SAPOA so far?

A great achievement would be the introduction of certain information channels, including economic and legal forums, as well as the introduction of a new forum on urban land development. Another achievement would be the concept implementation of self-regulation and accreditation for quality highperforming brokering in the industry.

Joan Goldswain, the previous chair of the Committee, should be congratulated as she made a huge contribution to the committee.

Q

As part of your portfolio with SAPOA, what are the current industry challenges, and how can these be addressed?

How can SAPOA assist with these issues?

The biggest challenge is that brokering is not sufficiently recognised by larger commercial and industrial players as a key function in the industry.

Brokers are often used but are not acknowledged as role-players.

SAPOA can assist through broker education, which is a huge challenge in itself. Furthermore, transformation is needed. SAPOA can also work on appealing to all sectors of society in South Africa.

Q

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

I want to be become even more involved and further improve on my achievements as well as the achievements of the committee members, who work tremendously hard.

Further recognition and representation of brokers is something I want to work on.

Hearing and taking in the interests, opinions and concerns of members is another important aspect.

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James Aling, managing director at Halls Properties

Q

Q

Who is James Aling?

As part of your portfolio with SAPOA, what are the current industry challenges, and how can these be addressed? How can SAPOA assist with these issues?

I’m the managing director at Halls Properties, the property development business of the Halls Group, based in Nelspruit, Mpumalanga. I’m also the current chairperson of the newly established regional council of the Mpumalanga region.

Q

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

Our organisation has been a member of SAPOA for more than 10 years, and we have really made use of the educational and training programmes to develop our team.

I think SAPOA is one of the more successful commercial collectives representing an industry, in this case the commercial property sector on many fronts.

SAPOA’s advocacy work has increased over the past couple of years, particularly when engaging with government on new policies and legislation. The organisation’s research, education and training, networking, and annual conventions remain relevant and add value.

Q

Real-time in the Cloud

Q

What have been your greatest achievements with SAPOA so far?

The greatest achievements include establishing a regional council for Mpumalanga with like-minded commercial property players in the region, and establishing a platform to start engaging with government in a meaningful way.

Ensuring that government continues to provide an enabling environment for the commercial property sector to survive and thrive; partnering with local government to strengthen their capacity and improve their efficiency in terms of service planning and delivery, including a funding framework for the sustainable funding thereof; partnering with local government on improving turn-around times for processing township establishment, re-zoning and subdivision applications, as well as making key stats available to improve market transparency.

Integrated

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

I would really like to get the regional council well established and representative of the broader Mpumalanga region, and see City Improvement Districts get onto the SAPOA agenda as a sustainable approach to developing healthy neighbourhoods or revitalising precincts in partnership with the property owners and local government.

Software designed for property managers www.mdapropsys.com 0861 00 2231

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attorneys, brokers, auctioneers

The middle men Amid altering trends, tough economic times, rising regulation and the growing need for professionalism and quality service, real estate attorneys, auctioneers and brokers are upping their game, one deal and client relationship at a time

By Candace King Photographs by Michael Glenister

“Technology has driven the change in the way business is done, creating a sense of urgency and immediacy in giving advice. Where applicable, matters can sometimes be handled without ever meeting the client” Andrew Bembridge, director at ENSafrica

W

hat do attorneys, auctioneers and brokers have in common? They are all essentially regarded as middle men, as each professional in his or her respective field acts as an intermediary. The need to develop and maintain strong relationships is also important in these fields of the property industry.

Law practitioners within the property business area often deal with brokers, auctioneers and other property professionals.

The success of a large transaction involves many players, including brokers, surveyors, and town planners. These transactions are therefore dealt with on a team basis with a view to a common goal.

Brokering is a networking industry, so strong reciprocal connections with fellow industry professionals are critical to success.

Every deal has particular qualities that may suit different sectors of the market where collaboration takes place.

Most professionals work very well with brokers – valuers call brokers frequently for information to assist with their valuations; brokers keep close to town planners who can provide useful zoning information; auctioneers (although direct competition) often have close associations with brokers and share leads and thus commission; and attorneys also seek information from time to time.

The impacting trends As is the case with many professions across the spectrum, the work of an attorney, auctioneer and broker is heavily influenced and shaped by aspects such as technology, increasing competition and the need for professionalism.

“Technology has changed the profession because so much information is available online in an instant,” says Andrew Bembridge, director at ENSafrica, the largest law firm and the only one of its kind in Africa. “Many of the administrative procedures with, for example,

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Andrew Bembridge

the South African Revenue Service (SARS), local authorities and deeds registries can be undertaken online. Technology has driven the change in the way business is done, creating a sense of urgency and immediacy in giving advice. Where applicable, matters can sometimes be handled without ever meeting the client.”

Jointly leading the firm’s real estate/ property department, Bembridge’s practice experience entails his involvement in many major property transactions throughout South Africa and Africa. His experience encompasses developments such as land use applications, township proclamations, water projects, and environmental and heritage applications.

His experience further extends to commercial property transactions involving both immovable and movable property, the drafting of intricate agreements, and the implementation of the transactions arising out of those agreements. He also has extensive experience in the land rights and

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attorneys, brokers, auctioneers

Joan Goldswain

restitution laws of South Africa, assisting both land owners and communities, and has served as a member of the Johannesburg Attorneys Association Property Law Committee.

“Technology (as opposed to traditional desk-bound canvassing tasks – has given brokers much more time to put deals together,” says Joan Goldswain, founder and owner of Goldswain Commercial Properties and former SAPOA Broker’s Committee chair.

“Research into almost anything affecting our industry – company information, legislation, bills under consideration, etc – is available on the internet.

“Technology has allowed more attractive and easily put together presentation packs.

Spreadsheets are easy, virtual building visits work wonders and canvassing lists are easily accessible. Traditional canvassing/prospecting is all but history because digital advertising has taken over. Technology is affordable, easily updated and, if used correctly, most effective. This is particularly true in the case of larger brokerages, which have the budget and vast spread of brokers covering all aspects and all areas.”

After 22 years in the industry, Goldswain started her own business in 2011. Although her main focus is the office sector, in particular in the northern suburbs of Johannesburg, Goldswain works with associations and with numerous area and sector specialists throughout the country.

“Internet advertising has resulted in enormous changes,” she says. “However, landlords are increasingly particular as to whom they take on as tenants, and to this end, they demand an enormous amount of information and documentation – yet more administrative chores.”

“Brokering is a networking industry and information is paramount,” says Peter Collins, regional manager for JHI Properties’ brokering division, which is a member of the Excellerate Property Services group. “New technologies have allowed for better mining of data to create opportunities. Database administration and maintenance has become crucial in an increasingly competitive environment.

Corporate clients are industry-savvy and expect high levels of service delivery.”

However, Collins notes that it’s the deals business and people skills in deal-making that will always play an integral part in success. Bembridge adds to this by saying that, despite the use of technology, the personal contact and way of practising as an attorney remains the same.

“Personal canvassing/prospecting is still the choice of many ‘old-school’ brokers, as the personal touch remains popular. To let/for sale boards continue to work well,” says Goldswain.

Bembridge says the legal profession has become more competitive, and clients now have more knowledge of their businesses and what is required of their lawyers.

Accordingly, lawyers have to continually add value for their clients. “The profession has most certainly remained competitive,” says Bembridge. “Within the conveyancing business area, recommended tariffs remain the same – but competition is not all about pricing. Personal relationships and the quality of service rendered to clients are still a determining factor when clients choose a firm.”

“The industry is very competitive. There is also a trend of landlords employing their own in-house brokering teams and/or encouraging

“Internet advertising has resulted in enormous changes. However, landlords are increasingly particular as to whom they take on as tenants, and to this end, they demand an enormous amount of information and documentation – yet more administrative chores” Joan Goldswain, founder and owner of Goldswain Commercial Properties

“Brokering is a networking industry and information is paramount. New technologies have allowed for better mining of data to create opportunities.

Corporate clients are industry-savvy and expect high levels of service delivery” Peter Collins

Peter Collins, regional manager for JHI Properties’ brokering division SOUTH AFRICAN PROPERTY REVIEW

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attorneys, brokers, auctioneers

“The industry is very competitive. There is also a trend of landlords employing their own inhouse broking teams and/or encouraging their property managers to broker deals for commission. This is an uncomfortable situation for independent brokers” Joan Goldswain, founder and owner of Goldswain Commercial Properties

their property managers to broker deals for commission. This is an uncomfortable situation for independent brokers,” says Goldswain.

According to Collins, there is greater competition in the market for tenants, with tenants being conscious of fixed premises costs over the term of tenancy as well as increasing operational expenses such as utility charges, rates and taxes. “As brokers, we strive to be as thorough and professional as possible, delivering a high level of service to our clients. We also aim to increase our market share,” he says. “Brokering has become more professional and more specialised in order to deliver better service to tenants and landlords. Brokers now exhibit far greater levels of professionalism, and have higher qualifications and skills than ever before.

“Another trend in the industry is towards creating better networks, both nationally and internationally, with the presence of international real estate brands creating associations with local brokerages.”

The long arm of the law In recent years, legislation has come into play, shaping and regulating practitioners. New legislation has tightened up the industry, weeding out corruption, and ensuring client protection and professionalism. Regulatory compliance together with increased corporate governance and accountability have been a prominent feature of transformation of the overall industry over the past few years.

“Since 1994, there has been a plethora of legislation as required by the Constitution that lawyers, particularly property lawyers, need to be aware of,” says Bembridge. “Apart from the legislation generated in South Africa, this has not really impacted our business – but one has to remain up to date with the ins and outs of promulgated legislation, and be aware of upcoming legislative changes.”

20

“Legislation and other demands still keep a broker at his or her desk more than necessary but legislation requirements also leave little time for the solo broker to actually broker,” notes Goldswain. “I believe that the industry is over-legislated. The Estate Agency Affairs Board (EAAB) continues to introduce new (and time-consuming) requirements. Government legislation, including the Companies Act, the National Credit Act), the Financial Intelligence Centre Act, the Consumer Protection Act (CPA) and many others, has an impact on the job of a broker. EAAB qualification for experienced and new brokers is very time consuming – and mostly irrelevant to our day-to-day functions.”

Collins says that greater compliance with the various Acts, not to mention SARS, has created mountains of paperwork in the term of a transaction. However, he believes it has provided increased financial security for tenants and landlords, with better transparency, recordkeeping and accountability.

“The CPA assists buyers and sellers. This act has strengthened the market because it has weeded out the ‘garage’ auctioneers and has made the public feel safer,” says Dall.’

Challenging times – yet optimistic With regards to attorneys, Bembridge says that one of the greatest challenges facing the profession is to retain its exclusivity to the rendering of legal services. Large corporates are employing larger in-house counsel teams that are as competent in many regards as independent lawyers. The challenge to the profession is to remain relevant, yet to ensure that specialist legal services are able to be competently rendered at the same time.

“There are pockets of value in the market, and the main themes have been around lowering operational expenses, restructuring, and building long-term efficiencies towards

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attorneys, brokers, auctioneers High Street Auctions will continue to uphold its integrity through professionalism and a “no-nonsense” attitude.

“We are not the new Auction Alliance – we do things differently” James Dall, joint managing director at High Street Auctions

James Dall

Real estate auctioneering is very difficult and companies need to be highly proactive to do the job justice. “The industry is fast-paced now and has almost turned into a science” Joff van Reenen, High Street Auctions’ director and lead auctioneer

22

sustainable growth. As a result, fewer deals in the market and increasing competition between landlords for the big users mean less space for brokers to operate,” says Collins. “The barriers to enter into commercial property brokering have increased as a result of greater regulatory compliance, and the deal cycle being longer than ever before. The upside is we have fewer but well-skilled commercial property brokers.”

In the past few years, corruption has come to the fore. In light of this very real phenomenon in the industry, High Street Auctions abides by strict policies and relies heavily on an ethos based around brutal honesty. “Our name and our brand are sacred to us,” says Joff van Reenen, High Street Auctions’ director and lead auctioneer. “We are a small team with a focus on being niche and specialised. We are that one percent of people who wake up in the morning and truly love going to work.”

High Street Auctions was established on decades of experience garnered in the property investment and development, finance and auction industries that came together with the formation of a company of industry experts. The collective experience and proven track record of these unique individuals provided the synergy to create a formidable property auction business with an exceptional pedigree.

According to Van Reenen, real estate auctioneering is very difficult and companies need to be highly proactive to do the job justice. “The industry is fast-paced now and has almost turned into a science,” he says.

“Cash is tight so there are fewer buyers.

Solutions need to be created,” adds James Dall, joint managing director at High Street Auctions.

“In all honesty, we personally don’t really deal with any challenges,” says Van Reenen.

“I think at High Street Auctions, the main concern is that we keep up with our standards and ensure professionalism.”

Looking towards the future, Bembridge believes there won’t be much change in the profession. However, he says there will always be a place for competent practitioners within the property industry.

“I believe that brokers will be around for many years to come,” says Goldswain. “They are a one-stop shop for prospective tenants, and where the broker and tenant form a relationship, the tenant will always go back to the same broker for any future commercial property needs. This is the one profession where good service and good relationships can be nurtured over a very long period.

Landlords woo brokers and offer attractive incentives, parties, competitions, special outings, and so on. This makes one believe that brokers do have their place in this very exciting industry!”

“I see the profession becoming more specialised and better regulated, with evolved business practices becoming the norm,” says Collins. “There are already trends towards a greater skills set and better service delivery, particularly in the corporate property space, and we are seeing increased globalisation as interest from international companies in the burgeoning African market gathers momentum. The bigger companies will continue to grow with access to international networks, while providing value-added real estate services to corporate clients.”

Dall says that High Street Auctions will continue to uphold its integrity through professionalism and a “no-nonsense” attitude.

“We are not the new Auction Alliance – we do things differently.”

Joff van Reenen

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2014/02/28 12:46 PM 2014/03/07 9:07 AM

Cliffe Dekker Hofmeyr business law firm announces new chairman

A

ttie Pretorius, a director and the national

He will be freed up to focus specifically on the firm’s relationship

practice head of Cliffe Dekker Hofmeyr’s

with DLA Piper and its key role as one of the member firms of

real estate practice, became chairman of the firm in April

the DLA Piper Africa Group. He will also continue to serve as

2014. Pretorius has been a director at the firm since 1984.

a mentor and adviser to younger lawyers in the firm.

Pretorius graduated from the University of the Free State

“With foreign direct investment into Africa expected to

with a BCom LLB in 1978, then served articles with a firm of

grow significantly to US$150-billion by 2015, the DLA Piper

attorneys in Bloemfontein and was admitted in 1980. In 1984

Africa Group was formed to meet the increasing demand for

he made his best career move by joining Hofmeyr van der

seamless legal services across Africa, combining national and

Merwe (now Cliffe Dekker Hofmeyr). Since being admitted,

regional knowledge with top global expertise. The DLA Piper

he has followed his passion for real estate and currently

Africa Group firms have worked together on a number of the

heads up the real estate practice area in the firm, which

largest and most exacting transactions and projects in Africa

employs approximately 100 people in the Sandton and

in the past few years, forming excellent relationships along Chris Ewing

Cape Town offices.

Pretorius is a highly respected and recognised real estate lawyer in both South Africa and globally. Best Lawyers International 2013 South Africa listed Pretorius as the

the way. My focus will be specifically on these important

He also acts for various banks in respect of security structures

relationships and transactions in Africa, buoyed by the fact

for commercial loans.

that we were recently awarded the highest rating of ‘gold

The team is also advising project companies, prospective

for client satisfaction among African firms” in the Legal Week

Johannesburg Lawyer of the Year for Real Estate. Who’s Who

financiers and joint venture partners of project companies on

Client Satisfaction Survey,” Ewing said of his future role in the

Legal – the International Who’s Who of Real Estate Lawyers

the property aspects pertaining to renewable energy projects

firm. “I look forward to having the time to spend on this new

2011 and 2012 nominated Pretorius as a leading lawyer in

in terms of the Request for Qualification and Proposals for New

role – and I wish Attie every success as the new chairman

real estate. Practical Law CompanyPLC Which Lawyer? 2007

Generation Capacity under the Independent Power Purchase

of our firm.”

to 2011 endorsed Pretorius as a leading individual in corporate

Procurement Programme issued by the Department of Energy.

real estate; and in the Expert Guides: Guide to the World’s

Commenting on his chairman appointment, Pretorius said,

Leading Real Estate Lawyers 2009 and 2011, Pretorius was

“I have to fill the very big shoes that Chris Ewing will be leaving

nominated by in-house counsel and peers as one of the

behind, and that is a daunting task. I want to pay tribute to Chris,

pre-eminent practitioners in the world in real estate.

who has served the firm as an inspiring leader for many years.

Pretorius has been part of a magnificent team of real

Cliffe Dekker Hofmeyr is a fantastic firm and it holds wonderful

estate professionals. Together, they have built one of the

opportunities for all of its people. My duty is merely to build on

biggest and most successful real estate practices in South

that – I see this as a team effort and will be working in close

Africa. Over a period of almost 30 years, he has worked for

cooperation with the rest of a very capable management team.”

various corporate clients disposing or acquiring immovable

After a long and illustrious career spanning 40 years at Cliffe

property, including commercial and retail properties. The

Dekker Hofmeyr, Chris Ewing, the current chairman, will retire

deal value of many of these transactions exceeds R1-billion.

as a partner, but will remain closely associated with the firm.

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“I have to fill the very big shoes that Chris Ewing will be leaving behind, and that is a daunting task. I want to pay tribute to Chris, who has served the firm as an inspiring leader for many years”

2014/03/07 9:36 AM

Cliffe Dekker Hofmeyr is a member of DLA Piper Group,

Attie Pretorius

an alliance of legal practices.

www.cliffedekkerhofmeyr.com

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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

Mozambique

Apart from its picturesque beaches and famous prawns, Mozambique is a thriving property hot spot

By Candace King

Mozambique at a glance ▼ Population 23,5-million ▼ Major city Maputo (1,8-million) ▼ Currency Metical (MZM) ▼ Total area 799 380km² ▼ GDP growth (2012) 7,5% ▼ Key industries Food, beverages, chemicals, aluminium, petroleum products, textiles

B

illed as a tropical African paradise, Mozambique is one of Africa’s “it” countries. In recent years, it has become a major tourism and business hub and is regarded as a popular island holiday destination.

Apart from its rich culture and landscape, Mozambique boasts an equally rich history. Under Portuguese rule for more than four centuries, the country finally gained independence in 1975. This was followed by a protracted civil war, which began in 1977 and resulted in one-million deaths. Despite its current truly democratic nature, this former colony has retained some of its colonial heritage, evident in its official language and its mouth-watering cuisine.

At independence, Mozambique was one of the world’s poorest countries, a status that worsened as a result of socialism and the civil war. Since the conclusion of the war in 1992, the country has emerged as one of the world’s fastest growing economies. According to Stephan Morais, deputy chief executive officer of Mozambique’s first national investment bank, Banco Nacional di Investimento, Mozambique has been the second-biggest grower on the African continent in the last 15 years, after Rwanda.

In 1987, the government engaged in macroeconomic reforms in an effort to stabilise the country. The reforms led to improvements in the country’s growth rate and a decrease in inflation.

Mozambique’s annual average GDP growth has been among the world’s top 10 since 2011. In 2012, the Mozambican economy maintained its robust performance with a real GDP growth of 7,4%.

With a progressive increase in coal production, a continuation of sizeable foreign direct investment inflows, the credit expansion to the private sector, and the implementation of large infrastructure projects, growth is expected to increase to eight percent in 2014.

Rich in natural resources, the country is steadily developing its infrastructure and is weaning itself off external aid. Mozambique’s economy is mostly based on agriculture; however, other industries are starting to grow fast. These include food and beverage, chemical manufacturing, aluminium and petroleum production, and tourism.

According to the World Bank, the emerging extractive industry could provide the means for Mozambique to reach the status of a middle-income

Population by millions

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Africa uncovered country by 2025. The likely improvement in the business environment may spark a diversification of economic activities, which is crucial for sustainable economic growth. The Mozambican government estimates year-on-year economic growth to reach 10% in the next few years.

The recent offshore gas discoveries, estimated at more than 200-trillion cubic feet and worth US$800billion, are one of the largest known gas reserves, which could possibly transform Mozambique into the next African energy superpower.

Mozambican property industry With strong economic growth, favourable climate, sound affordability and prime location as key attributes, investing in Mozambique real estate is a positive venture. Although currently small, the private and commercial property markets are growing.

Retail investment and development are being stimulated due to the rising need for goods, and the increasing desire for holiday vacations and homes has led Mozambique to become a leisure and residential property haven.

According to Pam Golding Properties (PGP), the property for sale and rent in Mozambique is highly attractive, with a monetary value that reflects this. Because of its fast-growing economy, Mozambique has experienced a boom in property development over the past few years, a trend that is

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2014/03/07 11:11 AM

eye on africa Maputo prime rents and yields Prime rents

Prime yields

Office

US$30/m² per month

10%

Retail

US$40/m² per month

10%

Industrial

US$10/m² per month

14%

Residential

US$6 000 per month*

7%

* Four bedroom executive house – prime location

Share of imports by country in total imports Portugal: 2,39 Malawi: 2,48

Germany: 2,21

Zimbabwe: 4,16

Netherlands: 23,05

China: 5,08 Spain: 5,32

Italy: 7,39

South Africa: 18,04

Belgium: 10,34

Source: Merchandise trade matrix, imports and exports of total all products, annual, 1995-2011 (millions of dollars)

Regional summary Sum (area in km²)

predicted to continue as more buyers and investors enter the market.

According to PGP’s website, “Land tenure is obtained through usage rights and not via traditional ownership.

All land in Mozambique is state-owned, so both local and foreign buyers merely own the right to use the land, initially for a period of 50 years, which is then renewed every 50 years. Property on the land itself does not fall under this lease basis however, and thus can be sold, transferred or rented as applicable.”

In 2007, the Mozambican government introduced new legislation to allow foreign nationals to purchase real estate, which has opened up great investment opportunities for property buyers in Mozambique.

Population

Population density (persons per km²)

Nampula

3 986

51

78,132

Zambezia

3 849

37

103,133

Tete

1 784

18

101,783

Sofala

1 643

24

68,049

Retail market

Cabo Delgado

1 607

21

77,844

Manica

1 438

325

4,425

Inhambane

1 272

18

69,096

Gaza

1 229

16

76,086

Although slow to take off because of the large size of the informal sector, the retail market is experiencing activity, especially from South African retailers. Most of the retail developments are located on the outskirts of towns, on the main arterial routes.

Real GDP (% change)

GDP per capita (USD)

15

1250

1000 10 750

500 5 250

0

2000

2005

2010

Source: World Economic Outlook, October 2012

28

2015

0

2000

2005

2010

2015

Source: World Economic Outlook, October 2012

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Gonçalo Morgado Marques, manager of Pam Golding Properties Mozambique, speaks to SAPOA Q Why invest in Mozambique?

We are one of the countries in the world with the highest economic growth, and forecasts predict it will remain steady in the forthcoming years. Natural resource explorations, enough market space for international and national companies, investment incentives and an investment-friendly environment, as well as sound returns on investments, are just a few of the reasons why investing in Mozambique makes sense.

Q How is the Mozambique property market performing?

Mixed-use developments housing shopping centres are popular – these include the Polana Shopping Centre, the Maputo Shopping Centre and the Marés Shopping Centre, which is a recent entrant to the market. Retail rents hover around US$30-US$40/m² per month, with good potential for rental growth.

Industrial and office market Industrial business is relocating to peripheral city locations as a result of the congestion charge for large commercial vehicles in the city and escalating land prices. Property in traditional industrial nodes in the heart of Maputo is experiencing conversion into higher-value office or retail warehouses. This is also being witnessed in areas close to the port and airport.

Prime warehouse rents are high (US$10/m² per month); however, this reflects the city-centre location of some warehouse properties and the fact that they are often used as offices.

Office development is experiencing a reasonable boom, with interest deriving from the banking, telecoms, professional and diplomatic/aid sectors.

There has been modest rental growth over the past two or three years, with prime office rents rising from US$25/m² per month to US$30/m² per month. New office space in Maputo is completed to a “shell and core” finish.

Residential market The residential sector is the most vibrant sector in the Mozambican property industry because of the large demand for housing and for occupiers seeking residential properties for office use. The strongest growth is deriving at the top of the market while rents are much lower on the local mass market, at around 10 to 20% of these levels. Low- and middle-income housing development is experiencing great attention, with construction underway around Maputo’s new ring road and in areas such as Matola and Zimpeto.

Mozambique property remains very challenging – and thus very attractive. The entrance of new developers is bringing a bigger and better variety of products to the market, enabling the market to better cater for demand, especially the demand that originates abroad, with international standards and big expectations. Improvements to infrastructure and the creation of new development areas also allows the market to expand.

Q Which sector is the strongest and which is the weakest?

Because of the rapid economic growth that the country is facing, with an influx of numerous international companies and individuals as well as a rapidly growing middle class, commercial and residential sectors of the real estate market are quite strong.

The weakest sector is the leisure property sector, where demand has decreased in recent years, especially as a result of a decrease in investment from South African investors. The leisure market is the weakest at this stage but continues to be one of the sectors with a great deal of opportunities.

Q What are the latest developments?

Mozambique is seeing real estate developments taking place at a fast pace pretty much everywhere. In the country’s capital, Maputo, and in the rapid development areas, residential, commercial and industrial real estate developments are taking place. There are a few very big projects under way in Maputo but even larger projects are taking place in other cities, such as Pemba and Palma (directly related to the liquefied natural gas operations), Beira (because of its port and commercial tradition), Nacala and Nampula (as a result of the ports and new infrastructures for the coal explorations and shipping), and Quelimane, among others.

Q How is the economic and political stability in Mozambique?

Mozambique is stable from both an economic and political point of view. There has been some news about unrest between Frelimo (the ruling party) and Renamo (the opposition party) but so far it has not affected the economy, and it is believed that it won’t take long for the two parties to come to an agreement.

Q What are the country’s future prospects?

We believe the country is going to continue its steady economic growth and that it will continue to be politically stable. Both private and public investment will allow Mozambique to continue evolving, becoming closer to other developed countries in the region – and, due to its privileged geographical position, hopefully to become one of the economic hubs of sub-Saharan Africa.

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Several countries have implemented Bus Rapid Transit (BRT) systems in their cities, including Johannesburg, which is ambitious about its Rea Vaya BRT system.

Such systems reduce greenhouse-gas emissions and improve the commuters’ journey

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

G

lobal climate change is no longer a fallacy.

Apart from the facts, figures and frenzied arguments among the scientific community, climate change is clearly evident – hotter temperatures, heavier rainfall, rising sea levels and severe flooding are commonalities as well as conversational topics these days.

According to the fifth report by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), it is virtually certain that the planet has warmed since the mid-20th century and that humans are responsible for this.

Released in 2013, the report confidently stipulates that man-made activities over the past 100 years have contributed towards unprecedented climate change. It’s unequivocal that Arctic sea ice is melting and that the oceans are getting warmer.

Addressing global climate change is the sole purpose and goal of the C40 Cities Climate Leadership Group (C40), a network of large and engaged megacities from around the world that are committed to implementing meaningful and sustainable climate-related actions locally that will help to address climate change globally.

Established in 2005 and expanded in 2006 via a partnership with former US president Bill Clinton’s Climate Initiative, C40 is responsible for a meaningful global impact in reducing both greenhouse-gas emissions and climate risks.

C40 participation and footprint is growing – if C40 was one country, it would account for the third-largest population and second-largest economy in the world.

At the Rio+20 United Nations Conference on Sustainable Development in 2012, C40 announced that member cities’ existing actions will reduce annual greenhouse-gas emissions by 248-million tonnes by 2020; and that the potential reduction could be in excess of one-billion tonnes by 2030.

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By Candace King Photographs by Michael Glenister

“Mayors have the power and the will to confront climate change, and they are seizing every opportunity to take action,” said Michael Bloomberg, philanthropist, 108th mayor of New York City and the president of the C40 board. “C40 cities are doing more than has ever been done before to reduce emissions and become resilient – that’s why they are increasingly looked to for leadership by the international community. In my new role as United Nations Special Envoy on Cities and Climate Change, I’m looking forward to working with C40 cities, and other cities around the world, to build on our progress.”

C40 encourages mayors to transform their cities into resilient and liveable megacities that demonstrate action, impact and opportunity – an ethos adoption that is happening in Africa as we speak.

Africa’s C40 first All eyes were on the continent during the fifth biennial C40 Cities Mayors Summit, held for the first time on African soil and proudly hosted by the City of Johannesburg.

Joined by global climate change leaders and eco-conscious ambassadors, the summit was attended by mayors and top officials from more than 45 cities in an effort to address climate change around the world through the advancement of urban solutions and the implementation of energy-efficiency strategies.

During the summit, several announcements were made. These included the release of a landmark research report, the launch of a new programme that provides on-the-ground support to cities, and (most notably) the signing on of three African cities – Cape Town, Dar es Salaam and Nairobi – bringing the total representation of the continent to seven member

City of Johannesburg executive mayor Mpho Parks Tau

BELOW Mayor Parks Tau proudly hosted the fifth biennial C40 Cities Mayors Summit, a three-day climate change conference held at the Sandton Convention Centre and attended by mayors from across the globe

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cities, and the total global membership to 66 (at the time of writing).

The United Nations Habitat has projected that, by 2025, 50% of the African population will be urban. The IPCC fourth assessment report highlighted that Africa is the most vulnerable continent to the impacts of climate change as a result of several stressors as well as low adaptive capacity.

“Although the African continent faces disproportionate impacts from climate change, we are no less dedicated to contributing to solutions,” said City of Johannesburg executive mayor and 2014 C40 summit host Mpho Parks Tau. “African cities are growing at a tremendous rate, and it is our duty as mayors to ensure the long-term sustainability of our communities.

That’s why African mayors are stepping up to join the C40.”

The mayor of Dar es Salaam, Hon Dr Didas John Massaburi, said that Dar es Salaam is moving forward on several fronts, such as town planning, in order to take action in the fight against climate change. “I’m happy to be a part of the winning team that is C40,” he said.

Mayor Parks Tau noted that the 2014 C40 summit represents a major turning point because climate change is a very real issue that has become important to cities. He added that it’s something that cannot be ignored any longer.

“Climate change will disproportionately affect the poor, who have contributed the least to its causes,” said Tau. “This is a global problem requiring global solutions, which can only be achieved through the concerted efforts of all countries around the world.”

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C40 mayors summit CAM 2.0 now in the biosphere Dubbed Climate Action in Megacities Volume 2.0 (CAM 2.0), the report provides compelling evidence that the C40 cities are taking significant actions to reduce carbon emissions and climate risks.

One such action involves implementing rigorous energy-efficiency regulations for urban attributes such as buildings, bus rapid transit lines, and flood risk mapping.

Developed in partnership with consulting firm Arup, CAM 2.0 indicates a clear trend of expanding and accelerating climate action in the world’s megacities.

“Mayors have real power to cut emissions and improve climate resilience, and they are taking action,” said newly elected C40 chair, Rio de Janeiro mayor Eduardo Paes.

“C40’s networks and efforts on measurement and reporting are accelerating city-led action at a transformative scale around the world.”

Following an initial report published in 2011, CAM 2.0 illustrates that reported action has nearly doubled since 2011, with cities reporting more than 8 000 climate actions currently under way. Forty-one percent of actions are taking place at a transformative, city-wide scale, while 98% of reporting cities say climate change presents significant risks to their populations and infrastructure.

The report notes that C40’s networks have successfully driven collaboration between cities and have led to massive upscaling of projects and programmes. There is a 500% increase in cities implementing bike-sharing schemes over just two years –six in 2011 to 36 in 2013.

Importantly, the report notes that learning between cities is global. For example, the number of cities reporting BRT systems more than doubled between 2011 and 2013, with 13 forerunners in the global south and 16 successors in developed, western countries.

ABOVE RIGHT Executive secretary of the United Nations’ Framework Convention on Climate Change Christiana Figueres has been involved in climate change negotiations since 1995 RIGHT Michael Bloomberg, the 108th mayor of New York City, former C40 chair and president of the C40 board, is regarded as a key member of the organisation BELOW C40 president Michael Bloomberg, mayor Parks Tau and Rio de Janeiro mayor Eduardo Paes with schoolchildren at Cosmo City OPPOSITE, FROM TOP Hon. Minister Trevor Manuel, chair of the National Planning Commission, alongside mayor Parks Tau at a session relating to healthier, wealthier cities; as the newly elected C40 Chair, mayor Eduardo Paes is honoured to lead the strategic direction of the organisation; Dar es Salaam mayor Hon. Dr Didas John Massaburi joins the C40 Cities clan along with Cape Town and Nairobi

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The C40 Mayors Summit provided plenty of insightful sessions about city leadership, sustainable communities, climate-proofing megacities, climate risk assessment, and transportation-demand management

“C40’s emphasis on measurement and reporting helps cities focus resources and spread the most effective solutions – and this report shows that our efforts are bringing powerful results,” said Bloomberg. “By using data to show what works – and what’s possible – cities can inform the global conversation on climate change and can contribute towards aggressive national targets to reduce emissions.”

Where to from here?

Executive secretary of the United Nations’ Framework Convention on Climate Change Christiana Figueres said that the merging between cities and governments should become our common cause, and that this collaboration can be achieved through, among others, the use of international metrics, setting targets and monitoring progress, greening the current finances of cities, and opening the door to commercial funding and private investment. “This is not an exercise of exclusion but of collaboration and inclusion,” she said.

34

Today, half of the world’s population lives in cities, and by 2050 that proportion will increase to 70%.

Mayor Paes pointed out that citizens are moving back to the cities from the suburbs they once fled to and that, in retrospect, the citizen is also part of the climate change solution. He added that their participation is crucial in the global climate change movement.

During the closing plenary of the summit, Mayor Paes presented a letter to United Nations Habitat’s executive director Dr Joan Clos that urged the United Nations’ Open Working Group on Sustainable Development Goals to recognise the unique challenges of urban spaces, and presented a strong argument for the inclusion of urban areas in national programmes.

Another noteworthy take-home message was the working together of the public and private sectors as well as the collaboration of government on all levels – local, provincial and national.

Figueres said that, going forward, emphasis needs to be placed on mitigation and adaptation in the transition towards

low carbon usage and high resilience.

“I encourage two things: invest in economic growth and actively reach out to national government,” she said. “As we approach 2015, now is the time for city leaders to interact more effectively with national governments, to ensure coherence in the design and collaboration in the implementation of climate change policies and measures. Only by concertedly contributing to the growing groundswell of climate action can we meet the needs of current citizens and the expectations of future generations.”

“We welcome the inclusion of more African cities to the C40 network,” said Tau when asked about the future of Africa and C40. “This expansion will stimulate direct action for mitigation and adaptation at local government in Africa. We must remember that climate change is about people – current and future.”

In a personal video message, aired at the summit, former US president Clinton said that the problems surrounding climate change are larger than ever – and that this is only the beginning.

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C40 mayors summit

C40 mayors summit

PROPERTY SOUTH AFRICAN

REVIEW

CAM 2.0 key sector findings Adaptation and water ● Cities are taking climate adaptation seriously – 98% of cities recognise it as a threat that presents significant risk, and they are allocating funding (80% of cities) and staff resources (83% of cities) to develop solutions. ● Of the reporting cities, 89% and 77% have power to act on adaptation and water, respectively.

Energy efficiency ● Of responding cities, 90% are taking action on outdoor lighting to reduce emissions from street lights and to introduce smart street-lighting technology. ● Of the total actions addressing energy efficiency in buildings, 69% of actions focused on reducing energy demands in buildings, including insulation and monitoring energy usage. ● Of the reporting cities, 84% and 88% have power to act on buildings and outdoor lighting, respectively.

Energy supply

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● Waste-to-energy is a cross-sector success, with cities reporting the highest proportion (64%) of transformative and significant actions, including capturing methane gas at landfills and generating low carbon energy through anaerobic digestion at waste-treatment facilities. ● One-third of energy supply actions planned for future expansion will focus on generating energy from waste. ● Of the reporting cities, 49% have power over energy-supply assets.

Finance and economic development ● Forty-seven percent of cities have established their own funds to invest in energy efficiency, renewable energy or carbon-reduction projects. ● More than 50% of all planned actions are already in the pilot stage, suggesting strong innovation and scaling potential.

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● Of the reporting cities, 70% have power to act in the finance and economy sector.

Sustainable communities ● C40 cities are implementing more than 350 actions on sustainable community development, with a trend towards more transformative or significant actions rather than pilots or proposed actions. showing that cities are accelerating their response to climate change. ● Of the reporting cities, 58% and 25% have power to act in the food, agriculture, and information and communication technology sectors, respectively.

Transport ● The greatest increase in reported actions was found in the transport sector, with 150% increase in actions

● Of reported actions, 49% are to promote walking/cycling (more than any other action area in private transport). ● Of the reporting cities, 88% have power to act on transport.

Waste

management/gas to energy. ● Of the reporting cities, 82% have power to act on waste.

IN T H

management are implementing landfill gas

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transformative stage and are being delivered citywide. ● Ninety-two percent of cities taking action on landfill

XT I S S U NE g’s he r ’bu n t st Jo ion i gain nge a t a ac ht e ch fig at m cli

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● Sixty-five percent of actions in waste reduction are in the

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Making a Difference

● Cities are taking 1 534 actions in transport, 873 of which are in private transport and 661 in mass transit.

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(compared to 2011).

Contact Riëtte Stevens c +27 (0)71 877 5520 t +27 (0)11 883 0679 f +27 (0)86 216 9026 premier property e sales@sapoa.org.za So

● Seventy-six percent of cities intend to expand a community-scale development action already in progress,

Sapoa convention property exhibition

international convention centre

cape town, 10-12 June 2014

SOUTH AFRICAN PROPERTY REVIEW 35 www.sapoaconvention.co.za

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2014/03/10 8:22 AM

feature

RICS’ first lady

By Candace King Photographs by Michael Glenister

With offices in 27 cities around the world and more than 100 000 qualified members in 146 countries, RICS boasts a rich global presence. International property professionals have come to learn that attaining RICS status is the recognised mark of property professionalism.

“With our stringent regulations, there is confidence in knowing that RICS members and staff are ethical,” says RICS president-elect Louise Brooke-Smith

The Royal Institution of Chartered Surveyors’ (RICS) global president-elect, Louise Brooke-Smith

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feature With extensive experience and noteworthy achievements under her belt, the Royal Institution of Chartered Surveyors’ (RICS) global president-elect Louise Brooke-Smith now wears the pants, adding further professionalism to an organisation that’s already held in high esteem

I

t’s quite an honour to be president of any respected global organisation. It’s a prime position that requires great responsibility and demands ethical behaviour as well as professional practice. Filling such shoes is Louise BrookeSmith, the Royal Institution of Chartered Surveyors’ (RICS) current global president-elect.

Based in Birmingham in the UK, from 1 July 2014 she’ll take up her new role, becoming the first female president of RICS. “It’s a huge honour,” says Brooke-Smith, “However, my new role should not be seen as tokenism. I was quite adamant to take the position and it’s great to see that other women are following suit in property, reflecting the diversity of the current organisation as well as the global industry.”

Brooke-Smith is a chartered surveyor and chartered town planner by profession. “As president, I still keep my day job which is challenging yet doable,” she says. “I think that a practising president is beneficial as there is a sense of realism to it – a president that is exposed to industry trends and issues on a daily basis is more equipped to handle the job.”

After working in the public and private sectors both in the UK and overseas, she established a planning and development consultancy in Birmingham in 1994, with affiliated offices in Leeds and London.

She boasts extensive knowledge and experience in both the legal and commercial aspects of the planning and development industry, and is an accomplished expert witness. She is a Neighbourhood Plan examiner and is frequently asked to speak on property matters at conferences across Europe and the Far East.

Brooke-Smith is passionate about diversity and women’s rights. In 2010, she received the coveted Woman in Property award from the Women on Their Way organisation. She is a commissioner for Disaster Management, and regularly represents RICS at international forums, including UN Habitat, the United Nations Centre for Human Settlements and the World Economic Forum.

She is a visiting fellow at Sheffield Hallam University and has recently been awarded an honorary doctorate by the University of Wolverhampton for her services to property, construction and land use planning.

RICS in review Originally established in the UK by Royal Charter in 1868, RICS is an independent professional body regarded as the world’s leading qualification when it comes to professional standards in land, property and construction.

With offices in 27 cities around the world and more than 100 000 qualified members in 146 countries, RICS boasts a rich global presence.

International property professionals have come to learn that attaining RICS status is the recognised mark of property professionalism. “With our stringent regulations, there is confidence in knowing that RICS members and staff are ethical,” says Brooke-Smith.”

Since its inception, RICS has been committed to setting and upholding the highest standards of excellence and integrity, providing impartial, authoritative advice on key issues that affect businesses and society today.

RICS is a regulator of both its individual members and of firms, enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector.

“As a professional body, we are required by our charter to act in the public interest – and for this reason, partnership is central to our approach,” says Brooke-Smith. “In line with this we are working with many local government bodies, trade associations, employers and universities to raise professional standards.”

Encompassing the entire ambit of the built environment, RICS focuses on all facets of the property industry, providing its eclectic mix of members an unlimited wealth of information and aid from across the various industry fields.

Brooke-Smith notes that RICS’s ongoing goals include the continuation and encouragement of the organisation’s professionalism and the implementation of education and training among all its members.

She adds that RICS’s business plan is constantly being developed in order to affectively respond to the market and its ever-fluctuating trends.

Furthermore, RICS aims to expand its presence and professionalism into developing and emerging markets.

RICS and BRICS RICS is currently working on establishing relationships and expanding its reach into the developing and emerging markets of South America, India, China and Africa.

During her recent visit to the African continent, Brooke-Smith met with partner organisations, members and others with a close interest in the built environment.

RICS has many years of experience on the continent, with national associations and active local member groups in Ghana, Kenya, Nigeria and South Africa.

Many other groups across numerous countries have been established over many years and, following independence in the 1960s, continued successfully as independent bodies while still retaining strong links to RICS. “Over the past two years we have been developing a strategy for Africa – a vision that primarily responds to the economic growth in subSaharan Africa, and the huge potential and demand for expertise across the built environment,” says Brooke-Smith. “Now we are moving forward with this strategy.”

“In common with other regions, we understand that Africa needs to invest unprecedented sums in infrastructure to meet the growing demand of its population and economy. This is estimated to be in the region of US$1-trillion per year, or equivalent to 70 times the projected costs of the Rio Olympics. This forms part of the rapid urbanisation taking place in Africa, with key cities expected to experience population growth of 60% compared to 2010 levels.

“Given these challenges, we are seeing increasing demand for expertise in all areas of surveying and acknowledgement of the importance of the RICS qualification, training, services and standards.

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feature

FROM LEFT RICS business development manager for Africa Craig Hudson, president-elect Louise Brooke-Smith, SAPOA CEO Neil Gopal, RICS STANLIB chief investment officer: direct property investments Amelia Beattie, RICS regional managing director: EMEA Mark Walley, RICS honorary secretary Rob Mahoney, SAPOA HRD manager Martin Ferguson

“As a professional body, we are required by our charter to act in the public interest, and for this reason partnership is central to our approach”

38

“The RICS qualification is recognised worldwide, thereby enabling members to work across markets. Our members are able to offer advice across the whole of the property life cycle, from inception and planning through to valuation, project management, construction and ongoing maintenance, and ultimately to management, renovation or replacement.”

Despite the challenges, Brooke-Smith notes that there have been dramatic changes on the continent.

“Personally, I’ve been fortunate enough to have visited South Africa a number of times over the past 20 years, and have seen some amazing changes since my first visit in the early 1990s, when I was undertaking a research project for United Nations Habitat on housing projects across South Africa, Swaziland and Botswana,” she says. “Following visits were in the late 1990s and then again in 2009, when I travelled across the country with my family.

“The differences that I have seen and experienced over that 20-year period have been truly inspiring. South Africa is certainly a country with some economic challenges but it also possesses immense enthusiasm and huge potential, which the international community is finally – and quite rightly – recognising.”

RICS’s future focus RICS has developed a fairly strong and successful relationship with the South African Property Owners Association (SAPOA) in order to gain more insight into the continent and to solidify bonds with local role-players.

Brooke-Smith notes that this particular partnership will benefit both parties – RICS will benefit the members of SAPOA and, in turn, SAPOA will assist RICS in furthering its reach. She says that this relationship will be amalgamated even further going forward.

Looking ahead to her upcoming year in office as RICS president, Brooke-Smith is pleased to emphasise that Africa is one of her three key platforms, which also include land use, planning and land economics, as well as diversity and gender equality in the property industry.

“I firmly believe that the potential of this continent, in terms of the built environment, should be more positively recognised, and that chartered surveyors can play an invaluable role in offering their expertise and professional standards, so that the very best can be achieved in any environment or location,” she says.

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2014/03/10 8:20 AM

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2014/01/16 9:06 AM

new development

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new development

WAM

makes headlines

Morningside, just minutes from Sandton Central, is set for new urban catalysing with the development of WAM Sandton

B

By David A Steynberg

etween April and June, a new mixed-use, multistorey statement is set to be built just outside the busy and highly popular Sandton Central node. WAM Sandton will combine simple, bespoke residential living with customised, hi-tech offices, divided by a communal leisure and entertainment space.

According to Adrian Maserow of AMA Architects, WAM Sandton is set to become an urban catalyst to the area. “That urban growth should encourage mixed-use, so that people live, work, educate and entertain all within a pedestrianised zone,” he says.

“Isolated office buildings could eventually prove to be the demise of a place such as Sandton, where in large edifices there’s no-one around for 15 hours of the day. We should promote growth and the 24-hour lifestyle in our city centres.”

WAM Sandton is capitalising on the work, live and play concept, taking it a step further. “It’s a lot more than that,” Maserow says. “You actually should encourage places of prayer, training, education, culture and other city functions within a precinct or within a single site.”

The Morningside suburb boasts schools, religious amenities, retirement facilities within walking distance and hotels, and is furthermore directly on the Gautrain bus route. It therefore made sense for developer Leslie Lob to build WAM Sandton on a vacant site he had banked for more than 10 years. His vision was always to develop a mixed-use precinct.

“I think many major urban developments currently being planned in a built-up environment in the US and Europe are conceived as a mixed-use environments,” says Lob. “Los Angeles, for example,

experiences many of the same problems as Sandton – traffic, congestion, poor infrastructure. So there are many advantages in a mixed-use development in one location where you live, work, shop and play, all in one environment. That’s the concept here.”

Being able to live and work within the same campus is the uniqueness of WAM Sandton. The office spaces are for sale. “You own your office premises,” says Maserow. “This is suited to the smaller tenants who see Sandton rentals heading north of the R200/m² mark and realise they can own their space. Not every taker is a 15 000m² or 20 000m² tenant. There are smaller tenants and I think that a lot of the smaller spaces are only available at a lower grade. This is a new prime development and it is now available.”

Lob advises that the main attraction, other than being on major private- and public-transport routes and the world-class amenities Sandton offers, is the fact that the office space is fully customisable. It is fully flexible.

Lob says the market is looking for options. “Most of our enquiries are from tenants who are seeking flexible office space to suite business requirements,” he says.

These offices will be triple-A grade and the building is expected to notch four green stars, focusing on orientation, fresh air and energyconscious utilities. In addition to this, it is a global answer to the need for fewer cars on our roads, accessible and reliable public transport, and the choice of either walking, cycling or taking public transport directly to the CBD.

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feature

Ellerines: sixty-four and still going strong Despite tough economic times, furniture retailer Ellerines continues to offer value for its customers, both old and new

By Denise Mhlanga

B

ack in 1950, furniture retailer Ellerines started out with one store in Germiston, Gauteng. In 2014, the retailer – which targets the LSM 3 to 6 group – has grown its store numbers significantly while making life easier for its customers.

Robert Dodds, chief marketing and retail officer for Ellerines Holdings Limited (EHL) explains that Geen & Richards is an award-winning brand, having been voted the leading brand in furniture retail for five consecutive years, thanks to the trust relationship it has with its customers. It enables customers to reach for their dreams – to buy quality furniture at affordable prices with low monthly instalments. In fact, Ellerines was the first furniture retailer in South Africa to sell goods on credit, thus fully living up to its promise of making life easier for its customers.

Dodds emphasises the fact that Ellerines prides itself on the value it can offer without compromising on quality.

“We spent the past four years adjusting our stores in line with market conditions,” he says. “For example, we had a number of stores on Church Street in Pietermaritzburg, so as the leases came up for renewal, these were consolidated to do away with overlaps.”

All EHL stores are leased. The portfolio consists of 572 Ellerines stores across South Africa, 196 Beares, 34 Furniture City stores, 74 Geen & Richards, 60 Dial-a-Bed outlets and 28 Wetherlys, and an additional 78 stores in Botswana, Namibia, Lesotho, Swaziland and Zambia.

Dodds says EHL has enormous brand equity. Two-thirds of the portfolio has been revamped and rebranded, and now offers superior quality across the board. Wetherlys, for example, is a decorator’s hub with everything under one roof; Geen & Richards is an aspirational brand; while Beares cares – that is its selling point.

Retailer history and property portfolio

“Ellerines is a brand of choice because of its community affiliation and loyal customers” Robert Dodds, chief marketing and retail officer for Ellerines Holdings

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The Johannesburg Stock Exchange-listed company African Bank Investments Limited – a market leader in the personal unsecured credit market in South Africa – acquired EHL in 2008 for R9,2-billion, and in October 2013 wrote off R4,6-billion in debt on the unprofitable business. (According to EHL, it’s only last year that the company did not make a profit.)

African Bank provides credit to EHL retail stores. While, of late, there has been talk of African Bank wanting to sell Ellerines, it says it is looking at strategic partnerships with the retailer, noting that Ellerines gives the bank access to the biggest distribution footprint in the country.

Dodds explains 14 brands within EHL have been consolidated into six: Ellerines, Beares, Geen & Richards, Furniture City, Diala-Bed and Wetherlys.

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Rural and retail property

While retail has

Ellerines’ customer base is broad, with little disposable income, so the product offering is specifically driven to deliver quality at affordable prices. An interesting thing on the note of whether these customers own or rent homes is that it includes both. A customer who lives in Alexandra in Johannesburg may buy furniture at his or her nearest store and have it delivered to his or her primary home in Polokwane, for example.

As for rural retail, Dodds says they are seeing many community-oriented retail developments whereby within a 30-to-40kilometre radius there is a retail centre (such as Thohoyandou in Limpopo). This reduces travelling costs and thus leaves consumers with more money to spend. “Commuting is a huge issue for this type of consumer of retail specifically, so a move

impressive growth prospects, the challenge lies with the furnitureretail model. Dodds believes developers need to engage with furniture retailers so that, instead of just expecting them to sign leases in big malls, they can develop furniture nodes with more reasonable rentals

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feature in shopping habits to community centres is a reality in many parts of the country,” says Dodds.

According to Jason McCormick, the managing director at McCormick Property Development, the rural property market has seen a massive influx of new developers looking to develop as a result of perceived oversupply of shopping centres in the urban areas. This has led to many poorly conceived schemes coming onto the market, and a concomitant reduction in opening yields and returns as developers fight for developments in a crowdingout market.

“The biggest difference seen over the past six months has been the slow-down in credit spending among the credit-driven fashion retailers,” he says. “This has led to a reduction in their voracity for new space in new developments, with tenants looking to their existing footprints to find growth rather than taking up new space.”

McCormick says this has led to a reduction in demand for new space, and a lengthening of time it takes to lease new schemes. He notes that, with an increase in interest rates and more hikes expected this year, challenging times are ahead for retail property developers to roll out marginal or low-yielding schemes without the injection of significant equity into the development, because of the forecast increase in financing costs over the medium term.

Asked what drives growth and demand in this market, Dodds says it is the product offering, value for money and access to affordable credit, which Ellerines is able to provide through African Bank. He explains that, in light of the National Credit Act and the national credit regulations, their brands have preceded these, pointing out that they always treat customers fairly, thoroughly accessing credit applications, and brought down interest rates on unsecured lending so their customers do not drown in debt.

Furthermore, he says furniture retail is credit-dependant. Increases on property costs have escalated and these escalations are costly; as a result, EHL has redesigned its stores, removing carpets and replacing them with tiles, thus adding to the flexibility of being able to further enhance the furniture displays.

Moreover, footprint optimisation and revenue stream additions to the stores – such as the launch of Sharptalk, a contract cellular mobile offering powered by Virgin Mobile, and personal loans provided by African Bank – form part of income generation. Rural retail does, in some instances, have people with a high income.

A lot of informal employment happens in these nodes, so people have cash available to spend, says Dodds.

However, while retail has impressive growth prospects, the challenge lies with the furniture-retail model. Dodds believes

developers need to engage with furniture retailers so that, instead of just expecting them to sign leases in big malls, they can develop furniture nodes with more reasonable rentals.

It is for this reason that furniture retailers such as those belonging to the EHL group are moving into smaller stores and redesigning these to keep overheads at reasonable levels. Five or 10 years ago, furniture retail used to be decentralised – but now, says Dodds, it has centralised distribution and smaller-format stores as well as fewer brands, which results in greater business efficiency.

Retail sector challenges and opportunities According to Dodds, some of the challenges include access to credit (many households have debt), a depressed economy (which makes for a tough retail trading environment), low footfall traffic, and attracting and retaining passionate retail staff (in order to reduce turnover). But he says EHL sees new talent as an opportunity to create excitement about retail as a career – the group invests in staff training, offers internships and, through Ellerines Club, provides bursaries and learnerships for those interested in retail.

Amid all the challenges, Ellerines will continue to improve its product offering, be innovative, optimise its footprint and live its values of putting its customers first.

Furniture retailers such as Ellerines are moving into smaller stores, redesigning these to keep overheads at reasonable levels 44

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feature

Tiber deal changes the way Growthpoint does business Growthpoint’s office division has ballooned in size and significance in the past year.

And with the conclusion of the 300 000m² Tiber deal, the listed giant has transformed the way the division is run

By David A Steynberg

W

ith two large transactions announced late in 2013, Growthpoint scooped up some of Gauteng’s most sought-after office properties.

First, in October 2013, it announced it had acquired Abseq Properties (Pty) Ltd, which owns and manages a portfolio of 17 high-quality office properties in northern Johannesburg and Woodmead, comprising a substantial 79 971m² of predominantly A-grade offices.

Then, in November, Growthpoint announced it had acquired the entire Tiber Group portfolio of properties and management business in its largest single acquisition to date. The 300 000m² portfolio consists of mainly prime- and A-grade offices, including 25 quality properties and a 50% stake in a further five properties. It also incorporates 28 000m² of undeveloped bulk. An impressive 50% of leases in this portfolio expire in 2018 and beyond.

These transactions are a major boost to Growthpoint’s inland office property portfolio, with many of the acquired properties located in and around South Africa’s business hub of Sandton.

“We were ecstatic to successfully conclude these transactions,” says Rudolf Pienaar, Growthpoint Properties’ divisional director for offices. “Now we can provide even more opportunities and options for our clients. We’ve also gained exposure in prime nodes and strengthened our representation where we were underexposed – in areas such as Sandton, Wierda Valley, Rosebank, Bryanston and Woodmead.”

CLOCKWISE FROM TOP LEFT

Jewels in the crown

Dr Werner van Antwerpen has been appointed

Landmark Sandton buildings that are now owned

by Growthpoint include the new home of PPC on the prime corner of Katherine Street and Grayston Drive in Sandton, and Inanda Greens in Wierda Valley, which features 40 000m² of multi-tenant offices for blue-chip businesses, arranged around a nine-hole golf course. Growthpoint now also co-owns (with Zenprop) the trio of distinctive Alice Lane properties in the heart of Sandton spanning a collective 64 000m² of prime office space: the Towers, the Absa Capital building and the Annex, which is currently under development.

Growthpoint Properties office division’s sector head of sustainability; Debbie Theron has been appointed Growthpoint Properties office division’s sector head for the north Gauteng portfolio; Leanne Sowray has been appointed Growthpoint Properties office division’s sector head for the south Gauteng portfolio; Pieter Engelbrecht is Growthpoint Properties office division’s head of development; Paul Kollenberg is Growthpoint Properties office division’s asset manager for the south Gauteng portfolio

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The Nestlé head office in Bryanston has also joined Growthpoint’s office portfolio, as has Rosebank’s iconic Oxford Corner situated on the high-profile junction of Oxford Road and Jellicoe Avenue, which is home to Allan Gray.

In Newtown, the historic Turbine Hall and Square, the 23 000m² head office of Anglo Gold, is also now part of Growthpoint’s quality portfolio of offices.

The acquisitions have increased Growthpoint’s office portfolio value to R23,7-billion. It now offers its clients more than 1,5-million square metres of quality office space. The new acquisitions have also enhanced the quality of the Growthpoint office portfolio – more than 80% of the combined portfolio now comprises prime and A-grade offices.

Proof in the pudding The attractiveness of Growthpoint’s office portfolio is revealed in the numbers: at well below the SAPOA national average of 11,2%, it has a 7,5% vacancy level, arrears are extremely low, and it is delivering growing rentals with built-in annual escalations averaging about eight percent. For Growthpoint, however, the successful conclusion of these deals was just the beginning.

The challenge of integrating the property management teams from both Tiber and Abseq into Growthpoint’s office division, and incorporating the buildings into the Growthpoint portfolio, is where the excitement lay. “It created a unique opportunity to think outside the box and create an innovative and effective structure that really delivers on Growthpoint’s goal to always be client-centric,” says Pienaar.

And, with its clients in mind, Growthpoint took the bold step to completely reorganise its inland office division’s operational structure.

“We wanted to incorporate the new properties in a way that forms the best framework for client service,” says Pienaar. “At the same time, it had to make sound business sense and create a solid platform for reporting.”

Instead of treating these new portfolios as separate entities, Growthpoint opted for a fully integrated approach, preferring to organise its portfolio into distinct geographic zones. “We considered ways to make it easier for our clients to do business with us,” explains Pienaar. “Having to deal with three different people handling three different portfolios, when a query relates to three adjacent buildings, was simply unacceptable.

By electing to manage the portfolio with a unified nodal approach we’re ensuring clients have a single contact point and the support of a team with a deep understanding of their unique location dynamics.”

Applying this nodal approach, Growthpoint first divided its Gauteng portfolio into a northern and southern region. Zooming in, it identified three 46

unique geographic business nodes in each region.

These geographic nodes match those used by SAPOA. The northern Gauteng region spans the three nodes of Johannesburg north, including Bryanston, Rivonia and Woodmead, as well as Midrand and Pretoria/Centurion. The southern region includes Sandton Central, the Sandton surrounds and the Rosebank/Parktown node.

Aligned with this nodal approach, Growthpoint restructured its Gauteng-based office team. Each region will be led by an asset manager and a sector head responsible for property management. The team will also include three portfolio managers for each regional node.

Paul Kollenberg is the Growthpoint Properties office division’s asset manager for the southern Gauteng region, while Leanne Sowray and Debbie

Theron have been appointed as sector heads for the southern Gauteng and northern Gauteng regions respectively.

Growthpoint’s office division has also grown substantially thanks to these transactions. More than 60 people have joined the office team.

“We are pleased to welcome our new office division members and look forward to benefiting from the experience and knowledge of the new properties they bring to the team,” says Kollenberg.

“As we form our new teams, each person is being carefully placed and aligned with the properties to optimise this.”

All this change doesn’t come without challenges, which is why Mindcor assisted with change management to ensure that the transition was as smooth as possible.

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feature

LEFT Growthpoint and Zenprop now co-own the Towers in Alice Lane, Sandton OPPOSITE, CLOCKWISE FROM TOP The Absa Capital building in Alice Lane, Sandton, is now jointly owned by Growthpoint and Zenprop; Growthpoint acquired the Nestlé head office in Bryanston as part its recent Tiber transaction; the iconic Oxford Corner in Rosebank

And even with its new structure, Growthpoint saw further opportunity to create two innovative new touch-points for its office clients.

Growthpoint has made excellent headway in its client relationships, consistently increasing its understanding of their businesses. With its growing portfolio and an already large and growing base of blue-chip and multinational clients, this insight has become more important to its business approach.

“With the many changes in the portfolio, we felt the time had come to commit even more attention to client relationships,” says Pienaar. “To do this, we’ve introduced a new position in the team for a dedicated national client relationship manager to focus exclusively on Growthpoint’s largest office clients.”

This will help Growthpoint gain a better understanding of these significant clients’ business

and assist them with their unique property requirements across South Africa. It will also ensure Growthpoint’s office development team remains on the cutting edge of delivering tailormade solutions for corporate property requirements.

Keeping it green And this is where the second unique client touchpoint will be introduced. Over the past few years, Growthpoint has built a strong office development team, headed by Pieter Engelbrecht. This team plays an important role in implementing Growthpoint’s objectives for sustainable development. Four of its developments have received SA Green Star ratings from the Green Building Council of South Africa.

A further three are awaiting certification, and there are more in the pipeline for future submission.

In addition to earning SA Green Star ratings, they have also earned a growing number of accolades and awards for innovative sustainability and green development.

Building on its strong track record of providing top green buildings for leading businesses in South Africa, Growthpoint has appointed Dr Werner van Antwerpen as head of sustainability in the office sector.

“We’re excited about the development potential of the increased portfolio and we can now offer even more opportunities for made-to-measure, efficient, environmentally sound premises for clients, specifically around the Gautrain stations,” says Engelbrecht. This includes the prime site for development 144 Oxford in Rosebank, directly opposite the Hyatt Hotel.

To this end, Growthpoint also developed offices at 44 On Grand Central near the Midrand Gautrain station, which houses the Gautrain Management Agency. The first phase of its Lakeside office park development has been completed, opposite the Centurion Gautrain station and was the first complete redevelopment of an existing building to receive a GBCSA rating.

It also won a SAPOA Innovative Excellence Award.

The entire building has now been let to Aecom.

Besides green building for new developments, Growthpoint is also making excellent progress ensuring the buildings in its office portfolio are energy- and water- efficient. Growthpoint is in the process of undertaking a R100-million project to replace office lighting with energyefficient light fittings, working with its clients with the common objective of reducing electricity costs.

Together with Eskom, Growthpoint is also the co-sponsor of the GBCSA water and energy benchmarking tool. It has rated its entire office portfolio using this tool and now focuses on buildings with above-benchmark consumption.

The GBCSA has launched an Existing Building Performance Rating Tool, and Growthpoint has made several of its buildings available as part of the pilot. Over time, it will rate more of its buildings, including those newly acquired.

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meet the mayor series

Capital investment, capital vision The City of Tshwane is living up to its capital status as it sets its sights on becoming an even greater landmark metropolis through innovative development and meaningful partnerships

By Candace King Photographs by Michael Glenister

SAPOA CEO Neil Gopal

R

egarded as one of the world’s most prolific architects, Sir Herbert Baker was responsible for several iconic buildings in South Africa, including the grand Union Buildings in Pretoria, or Tshwane, as it is now called.

As the de facto capital of South Africa, the City of Tshwane has long been a historical hub and a leafy cultural and residential haven for many citizens. Still retaining its natural beauty, the city over the past several years has transformed into a bustling commercial node with office and retail development driving growth – it appears as though the city of Jacarandas is rivalling the city of gold.

In light of the private property sector’s increasing interest, the City of Tshwane’s local government wants to join the rapid development and investment crusade too. “There needs to be an open-door policy both ways,” said SAPOA president Estienne de Klerk.

This strong – and much-needed – sentiment was stated at a recent Meet the Mayor dinner hosted by SAPOA along with the City of Tshwane on 27 February 2014 at 131 on Herbert Baker Boutique Hotel in Groenkloof. Designed as a closed session for captains of the industry, the dinner was attended by several property industry CEOs and role-players as well as members of Tshwane local government.

The third instalment in the highly successful Meet the Mayor series, the dinner served to encourage debate between the City of Tshwane’s mayor and

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Executive mayor of the City of Tshwane, councillor Kgosientso Ramokgopa

SAPOA members on the challenges facing them; to enlighten members about the city’s plans relating to infrastructure expansion and development-related matters; to facilitate more efficient investments and to overcome related obstacles.

“SAPOA’s role goes beyond merely creating relationships; it educates, creates capacity and deals with challenges head on – for example, the way it has dealt with municipal rates,” said de Klerk. He added that the issue around the escalating municipal rates needs to be combated through strong and meaningful partnerships with government. “It is a symbiotic relationship,” he said.

PPP in Pretoria The City of Tshwane presented its development plans at the dinner, as well as investment projects and incentives planned for the private sector.

The city proudly welcomes partnership with the sector. “This is the start of a process, the start of a relationship between property owners, developers and the city,” said City of Tshwane MMC Economic Development and Planning, councillor Subesh Pillay. “The decision has been made that the next wave of projects will be government-led, with the private sector delivering them.” Pillay noted that the private sector is very frank and honest when highlighting the challenges it faces

– something that is crucial in maintaining a symbiotic relationship between two parties.

An insightful presentation was given by SAPOA representative Thinus Delport on how the private sector can best engage and work with the City of Tshwane. He highlighted that a platform needs to be established between all stakeholders and the city. “Rome wasn’t built in a day or within one generation; but, this generation can deliver and do something now,” he said.

Delport noted that we need to acknowledge Tshwane’s achievements over the past 20 years, including the recent incorporation of Kungwini into Tshwane, and work together towards the goals of the Tshwane 2055 vision. “Tshwane has gone through many changes over the years (including its name) and has made major improvements, especially in the townships of Soshanguve, Atteridgeville and Mamelodi,” he said. “Transport and infrastructure improvements have also been made, with the city looking forward to the TRT roll-out.”

The city is blessed with green open spaces, an attractive trait that needs to be nurtured and kept intact. So the greening and cleaning up of the CBD is highly commended. Apart from the fruitful positives, Delport highlighted the major issue around private sector development plan approvals, which simply hang. “R400-million worth of retail development projects have been

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LEFT (front row) SAPOA president Estienne de Klerk and Nndwamato Mutshidza; (second row) city manager Jason Ngobeni, SAPOA board member Marius Muller, MMC Economic Development and Planning, councillor Subesh Pillay, and chief economist Shaakira Karolia; (third row) MMC Housing and Human Settlements Joshua Ngonyama, executive mayor of the City of Tshwane, councillor Kgosientso Ramokgopa, SAPOA CEO Neil Gopal, MMC Infrastructure councillor Jacob Masango, chief financial officer Andile Dyakala; (back row) board member Musa Ngcobo, SAPOA past president Dr Sedise Moseneke, senior executive head of city planning Makgorometje Makgata TOP RIGHT MMC Economic Development and Planning, councillor Subesh Pillay LEFT, FROM LEFT SAPOA president Estienne de Klerk; SAPOA representative Thinus Delport

proposed, but these projects have not been able to get off the ground due to delays,” he said.

In light of such challenges, Delport said that laying the foundation for cross-pollination is important, and input between the mayor’s office, his officials and the property industry is needed where an understanding of challenges and opportunities can be realised in both directions. “All must realise that Tshwane has even greater potential, which all must work towards,” he said. “The mayor has been helpful with many important projects, and has conveyed the message that he wants to stimulate development as well as approve projects on a 7(6) basis, which is of great assistance to the market.

The mayoral projects in the past were very successful in cases where the support from the mayoral committee expedited them.”

Meet the mayor “SAPOA’s involvement is confirmation of its faith in the city,” said executive mayor of the City of Tshwane, councillor Kgosientso Ramokgopa. “SAPOA is one of the biggest investors in the city and that, through conversation and advocacy, can influence the decision-making of the city.”

Ramokgopa said that the overall plan is to spatially reconfigure and regenerate the city, especially the inner city, which has been institutionalised in the long-term plan. He noted that this needs to be ensured as it is one of the key variables for success. Several challenges and issues need to be addressed, including mobility, climate change, outdoor environment accessibility (such as access to parks and public amenities, as well as sustainability.

“The city needs to be run like a business – maximise the returns, stretch the rand and improve the quality of life for all citizens,” said Ramokgopa. “However, the primary concern is not to generate profit; rather, it’s about being self-sustaining. The city needs to become a laboratory for innovation as we try new things and make discoveries and make use of unorthodox methods.”

In closing, SAPOA CEO Neil Gopal said that the Meet the Mayor dinner series has proved to be a success, with both the mayoral offices of Johannesburg and the Western Cape having made follow-up calls to SAPOA in an effort to meet up again and take the relationships further.

“But what’s happening in Tshwane is beyond conversation,” said Ramokgopa.

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statistics

2014 elections: loyalty vs apathy Source: Fast Facts January 2014, South African Institute of Race Relations (SAIRR)

W

ith the fifth set of national and provincial elections to be held on 7 May, marking 20 years of democracy, South Africa is curious to see what the outcome is going to be. Polling data indicates that South Africans’ confidence in government is decreasing, with one in four people saying that they will not be voting.

Apart from contending with other power-hungry parties, the ruling party – the African National Congress (ANC) – is also facing and dealing with apathy and disillusionment of a large number of South African citizens.

Apathy is currently illustrated through the overall increase in the proportion of eligible voters who did not vote at all in past elections, and disillusionment through the sharp increase in the number of “service delivery” protests around the country.

While support for the ANC has not fallen below 60% since the first national elections in 1994, the proportion of eligible voters who did not vote has risen from 14% to 41% in the 2009 elections. This share is even higher in local elections, where voter apathy has hovered around 60%. The increase in the number of major “service delivery” protests, from 10 in 2004 to 155 in 2013, completes the picture.

The South African Police Service reported a 93% increase in the number of incidents of public violence, from 974 cases in 2004/2005 to 1 882 in 2012/2013.

Anger and frustration has further heightened as a result of the official unemployment rate of almost 26%.

Age group

Eligible

Proportion eligible by age group

Registered female

Registered male

Total

18-19

2 040 245

6%

239 753

199 700

439 453

20-29

9 800 193

28%

2 770 797

2 368 961

5 139 758

30-39

8 312 825

24%

3 146 330

2 873 685

6 020 015

40-49

5 936 664

17%

2 653 233

2 256 091

4 909 324

50-59

4 161 860

12%

2 062 428

1 639 041

3 701 469

60-69

2 538 791

8%

1 265 976

932 191

2 198 167

70-79

1 261 021

4%

731 555

407 592

1 139 147

80+

347 098

1%

412 142

158 926

571 068

Total

34 398 697

100%

13 282 214

10 836 187

24 118 401

Voter registration: All voters by age, 2013

The African National Congress (ANC) is facing and dealing with apathy and disillusionment of a large number of South African citizens

However, many citizens may still be loyal to the ANC in light of the roll-out of services by the State.

In 2012 about 56% of learners attended no-fee schools, and the number of social-grant beneficiaries increased from 2,4-million in 1996/1997 to more than 16-million in 2013/2014. In addition, 47% of households receive free water and 28% receive free electricity.

With both sides of the coin evident, it will be difficult to predict voters’ decisions at the polls, as well as the possible outcome of the elections.

Political representation of Parliament The National Assembly Seats currently held

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The National Council of Provinces Seats currently held

Provincial legislatures Seats currently held

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Keeping it legal Glyn Marais Incorporated is celebrating 24 years in the business.

The practice understands that modern-day commerce requires speedy solutions ompromising quality. “We are particularly strong in the listed property environment, where we are regarded as one of the key players with in-depth knowledge and practical experience”

G

lyn Marais Incorporated has been in practice for 24 years since it was founded in 1990. It is a specialist corporate practice with an emphasis on corporate finance and a strong accent on corporate property transactions, which follows the simple business principle of “there is no such thing as one size fits all”.

With a head office in Sandton and an office in Cape Town, Glyn Marais can easily attend to the needs of its Cape-based clients.

The firm has carved out a solid reputation and preference for executing more complex work where it believes it can add value, and is particularly strong in the listed property environment. It’s regarded as one of the key players thanks to its employees’ in-depth knowledge and much practical experience.

Glyn Marais also has a keen understanding of the legal risks that its clients may encounter in the transactions in which they are involved. This means that the firm can identify these risks and provide its clients with a legal solution or, alternatively, with a methodology for mitigating these risks.

Glyn Marais intrinsically understands that it is important to have a clear understanding of the client’s mandate, the transaction in question, and the legal steps that need to be taken in order to comprehensively address the issues at hand in a timeous and focused manner.

There are constant legal changes in the industry. This year will see consolidation in South Africa’s listed property sector, with the bigger companies acquiring smaller companies that have attractive yields, and smaller companies merging with each other to increase their market capitalisation and liquidity. The new real estate investment trust (REIT) structure should also encourage foreign investment in South Africa’s property sector. There is also a possibility that, later this year, the REIT structure may be extended to unlisted property companies.

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Over the past 12 months, Glyn Marais has been involved in a number of large property transactions. These include: l a ttending

to the acquisition and disposal of

properties on an ongoing basis for various major funds and developers; l a dvising

a purchaser on the acquisition of the

property portfolio owned by the Tiber Property Group, its subsidiaries and related companies to the value of approximately R6,1-billion.

This transaction included the acquisition of property letting enterprises, shares and claims in property owning companies, as well as the acquisition of the asset and property management business of Tiber Projects Proprietary Limited; l a ttending

to the restructuring of the Georgiou

Property Portfolio and advising on the funding associated with such restructuring, the listing of Accelerate Property Fund Limited on the JSE, and the acquisition by and transfer to Accelerate Property Fund Limited of 51 property letting enterprises from the Georgiou Property Group to the value of approximately R5,9-billion, including advising on the funding of Accelerate Property Fund Limited; and l a dvising

a purchaser on the acquisition of the

entire issued share capital of Abseq Properties Proprietary Limited, which is the owner of 17 underlying properties, as well as the acquisition of the property administration business of Abseq Properties Proprietary Limited to the value of approximately R1,3-billion and attending to the funding of the acquisition.

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As one of the founding partners, Francois Marais is a senior director and the practice leader. Marais specialises in corporate finance with a particular emphasis on mergers and acquisitions, listings, private equity, leveraged buy-outs, equity and debt offerings, joint ventures, privatisations, stock exchange and takeover panel issues. After qualifying in 1981, he worked in a merchant banking environment and was formerly a senior manager of Central Merchant Bank’s corporate finance division. Highlights of his career include a number of recommendations, such as one by the PLC in the areas of banking and finance, corporate and mergers and acquisitions; by the IFLR1000 as a leading lawyer in the areas of capital markets and mergers and acquisitions; by The Legal 500 in the areas of banking and finance, corporate and mergers and acquisitions; and by Chambers and Partners in the areas of corporate and mergers and acquisitions.

Ashleigh Dawson is a senior associate in the property department. She joined the company in 2011 as an associate and was promoted to senior associate in 2012. She specialises in general commercial law, acquisition of property and letting of enterprises and large-scale development of properties.

Last year, Dawson was admitted as a conveyancer and a notary public.

Areas of Practice l Corporate finance, mergers and acquisitions, general commercial l Finance and banking l Regulatory and competition l Property, conveyancing and construction l Employment

l Business rescue and company turnarounds l Dispute solution, insolvency, liquidation l Environmental, mining and natural resources l Tax

Brian Frank is a senior director and heads up the property department. His core competency and focus is the corporate property sector, large-scale property, and leisure and hotel developments – he has in fact been instrumental in preparing the legal structures for big resorts and nature reserves. He has been in practice since 1982 and was the founding partner of Attorneys Frank-Tanner, which successfully merged with Glyn Marais Incorporated in 2001. Prior to that he was a director at Anglo Vaal Limited and the South African Government Diamond Valuator DVIC Proprietary Limited for a number of years.

Highlights in his career include being recommended by the PLC in the area of real estate and by The Legal 500 in the area of mining.

Glyn Marais Incorporated +27 (0)11 286 3700 www.glynmarais.co.za

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AMA Architects:

designs and reflections 2014 AMA Architects is a leading South African architectural firm based in Sandton

By Adrian Maserow

A

MA architects has grown its footprint as a contemporary built design firm that values creative innovation, critical thinking, team effort and the rational pursuit of cutting-edge architectural solutions.

These ideals are the source of AMA Architects’ fitness and competitiveness in a fast moving, global, built-environment design world. The group has actively developed the skills and capacity for diverse project types, including commercial, retail, residential, industrial and refurbishment.

These diverse processes all feed into a body of distinctive projects that demand capabilities to meet with the requirements of high-demand project challenges.

The technology and sustainability of architecture AMA Architects highlights that the technology of construction is used in the conceptual basis of design. The methods and means of making architecture advances the art and science of architectural design.

In the project for the Kaya FM head office on Jan Smuts Avenue, the group explored use of light steel frame building (LSFB), which was clad in high-density polystyrene panels. These were sculpted in a refined compositional façade.

The project for the Lakeside office building in Tshwane won the overall SAPOA Award for Sustainable Architecture in 2013.

The LSFB construction proved invaluable as an engineering methodology to keep the building light and within the constraints of the geotechnical criteria.

This redeveloped office building consists of 5 223m² of A-grade office space. It is located opposite the new Gautrain station in Centurion. The transformed building encloses its core space through a glazed atrium from which there are extended views. The office configuration favours an open-plan arrangement around the atrium, and all internal fire-escape stairs and vertical service shafts, often in the middle of a floor plate, were stripped out to free up the floors.

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Green Star-rated office buildings prove to be pivotal to the services that AMA Architects brings to its clients and the buildings that they inhabit.

The Atholl Towers offices will be completed in 2014. This building is alongside the phase one Volkswagen head office building and backs onto Katherine Street. It will also be Green Star-rated.

Through careful place-making, the composition completes itself about a unique piazza that is placed as a gathering concourse in the hard landscaping between two buildings.

The building’s lines simultaneously seek the extended horizon, and the contained views of nearby spaces provide an intimacy in the entrance courtyard. The sequenced procession of forms has a recognisable spatial poetic.

Here a fluid compositional layering of horizontal and vertical structural modulations expresses the relationship between the inside and the outside. The architecture spectacularly embraces the existing node’s architectural scale, and is stepped between the neighbours’ elevations, resulting in a harmonious linking of the scales and the spaces between them.

Symbolism and poetics of design AMA’s conceptual project work is inspired by the poetic and metaphysical design model. This pursuit is driving evolutionary change in architectural design and the environment in which we live.

An enriched approach is taking mankind into a deeply connected holistic process, informed by fully integrating the physical, spiritual and psychological worlds in which architecture is placed.

The model explores such complex matters such as how people think about things as opposed to what they think; why people make decisions in different ways; why people respond to different motivators; why and how values arise and spread; and the nature of change. The designs aim

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to make sense of “the enormous complexity of human existence”; architectural designs must therefore embrace a deep dialogue that transcends linear thinking.

The TSR factory built up on the former Greenhills driving range is a remarkable industrial space that uses its evocative section to highlight the powerful design forces required for this factory. Here the modulated bays shaped through its curved light monitors extend in a rhythmic beat to an exhilarating internal factory space.

The overhead cranes and the concrete columns are bathed in a clear daylight that promotes precision and high levels of productivity.

Mixed-use designs The accelerated urbanisation patterns of forward-thinking cities promote mixed-use projects, which results in comprehensive integrated urban solutions for communities.

Proven liveability considerations are the framework for successful mixed-use architecture that communities may find they are most connected to, and in which they will flourish.

The separation and zoning of commercial, retail, residential, civic and industrial functions is increasingly being blurred, and AMA Architects actively looks to design urban catalysts. A healthy web of connected urbanisation impacts on the fabric of design and property.

AMA’s WAM Sandton project integrates sectional title offices with residential, hotel and limited retail uses. It pursues the live, work and play design philosophy that AMA Architects supports on a single Sandton site.

Through innovation and critical thinking, AMA Architects designs architecture to bring people together through built environment catalysts.

Public spaces can act as the nuclei of public, cultural and private spaces that seamlessly connect. They can evoke a spiritual resonance in which one can fully find oneself.

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Architects are fortunate enough to be a part of this drive to connect with the essence of the powerful and collective memory of urban spaces.

The mixed-use Sandton Skye Towers will rise high above the hustle and bustle of Sandton, with the top loft and penthouse apartments on the 15th floor prominently placed on the magnificent Highveld skyline.

This contemporary “urban resort”-style apartment hotel is an iconic assemblage of three crafted towers that all sit on a public facilities podium, inhabited by restaurants, pub, pool decks, gymnasium, wellness spa, business centre, hotel concierge and reception areas.

Each tower block was designed from the inside out, and was then further refined in each of the 17 storeys through a sculptural exterior skin that is layered in coloured glass, stone cladding, aluminium and plaster render. The apartments have generous views that stretch out in panoramic fashion diagonally across the corners, embracing a premium vantage across one of the most-privileged positions in the heart of Sandton.

The evolution of the public amenity podium will surprise all who visit this 24/7 environment. Here every meter is put to innovative use. The boutique approach to the design is celebrated in the exuberant poetic of the facilities of the restaurant, the bar, the business centre, the library, the outdoor deck and pool, the health spa and gymnasium, and the indoor pool.

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New ideas on materiality are explored in its glazing and cladding, which expresses the significance of its façade’s tapestries.

The colourful cladding of this collection of buildings is visual proof of the evolution of Sandton into a contemporary city.

Technology is provided in each cuttingedge apartment in its global context. The interiors are cool, with volumes expressed through the floor-to-ceiling expanses of glass, and stretched space leading back to the wonderfully designed foyers and circulation hubs.

The interior colour schemes are white on white, stone on silver and charcoal on grey, allowing for the individual expression in these crisp interiors.

The Sandton Skye is an architectural statement of contemporary Sandton. The design philosophy has been driven by ambition and the appreciation of the location. More of us aim to live in close proximity to amenities, and to capitalise on the comforts and community of neighbourhood efficiencies.

Soft colours, beautiful proportions and dynamic materials are all expressed as inspirational, powerful and dynamic architecture. The Sandton Skye Towers are placed about the podium, and shaped through a sense of place-making and contemporary significance. The visual appreciation of this design is understood through a holistic re-interpretation of a “paradise on earth” that is a uniquely urban architectural assemblage.

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Michelle Rosenthal and Lisa Schewitz Amrose Commercial Properties Amrose Commercial Properties is a professional commercial property brokerage in the Eastern Cape area. It started when two dynamic women, Lisa Schewitz and Michelle Rosenthal, found a niche and decided to specialise in an industry that needed professional service, integrity and sound advice.

The company started in 2007. With passion, zest and commitment, today, it is the commercial brokerage of choice for clients from around the country who are seeking property transactions in the Eastern Cape.

Schewitz’s more than 10 years of experience with Investec bank coupled with Rosenthal’s marketing and strategic experience at MTN have made these two ladies a formidable force in the industry. At the end of the day, Amrose is a client-centric business that focuses on presenting suitable opportunities and assessing individual specific requirements. The consultancy likes to create opportunity, satisfaction and long-term relationships not only with its clients but also with landlords and tenants.

The strength of the company is that both women are hands-on in the business. It’s their business so they have a vested interest to make it work, and they’ve learnt that you get out what you put in. If one sits back and waits for things to happen, they don’t.

Rosenthal and Schewitz get out there and are proactive, and they try to add value to the transaction. There is no door that Rosenthal can’t open: her network of connections is a key that adds tremendous advantage in the industry. Schewitz’s strength is that she is more tenacious than a bulldog and never lets go.

The greatest challenge is the risk of time and effort to the transaction. The two put in the same amount of time, effort, energy and commitment to a small transaction as they do to a large one, so the returns don’t always compensate the diligence.

Both women left the corporate world because of personal commitments and children, and started in the commercial property industry in 2006, working for an established agency in East London. A year later, they took the plunge and started their own business. They had to go hit the books again and write exams in order to ensure they were compliant with SAPOA and the EAAB. They both became principals of their own business. The first year was full of challenges – they soon realised that selling 58

Judith Guthrie Judith Guthrie Properties a property was only part of the transaction, and that getting the banks on board was even harder.

They started to bring tenants to the properties they sold and value-engineer the leases to enhance the transactions. They built up relationships with tenants who were looking for a footprint in East London.

Their business changed – they enjoyed sourcing properties for the right clients as opposed to tenanting properties with whatever leases they could find.

Getting McDonald’s into the East London CBD was a challenging experience – so much so that Rosenthal and Schewitz offered to do the demolition of the building themselves. They were also part of the first Nando’s drive-thru in East London. They’ve enjoyed working with property funds and assisted when they sold off some of their non-core properties in East London to private individuals, such as the old Metro Cash and Carry business premises sold to the Kit-Kat Group. They were also part of Steinhoff relocating its prime dealership and selling its property to Buffalo Toyota in the CBD. Being based in East London and being fortunate enough to have close relationships with their local authorities and municipalities has certainly been of assistance to Rosenthal and Schewitz’s out-of-town clients.

According to the Amrose women, the feedback they get is that they are professional, hard-working, enthusiastic and committed. They try their best and are honest in their transactions. In the end, when the deal is concluded, they pride themselves on the fact that their involvement never ends.

They give constant feedback to all parties. Their business is about relationships, trust and service – three qualities that are at the core of their personal lives and that they bring with them to whatever they do, be it in servicing their clients, charity work or just being moms. They have high expectations of themselves and their clients. Rosenthal and Schewitz clearly enjoy putting in the hard work, and the repeat business from clients makes it all worthwhile.

Judith Guthrie is an award-winning property consultant whose 20-year career in commercial property management, sales and leasing has culminated in her establishing Judith Guthrie Properties, a leading commercial property company in Durban.

Guthrie obtained her EAB qualification in 1989 and went on to obtain several industry-related certifications in sales and marketing through Damelin Management School in 1993, and in negotiation skills training through Andy Sachs in 1994.

She began her career as a portfolio manager at Murray & Roberts Properties in 1992, and quickly progressed into corporate positions at Rand Merchant Bank Properties in 2001 where she was a property leasing consultant, and at Colliers International in 2003, where she was a director of commercial brokering.

In 2002 and 2003, she was elected chairperson of the regional chapter of the Women’s Property Network, and in 2003 she became the president of the first regional chapter of Business Network International in KwaZulu-Natal. In 2004 and 2005, she won the Colliers International Regional Broking Award, and in 2005 and 2006 was a double-nominee for the Women’s Property Network Five Star Woman Award.

From 2005 to 2008 she was a SAPOA regional councillor and sat on the organisation’s National Office Vacancy Committee until 2010.

Guthrie currently serves on both the KZN committee for the Women’s Property Network and on the Vacancy Survey Committee for SAPOA, of which she is a member. She is also is a member of KZN Women in Business.

Guthrie successfully launched Judith Guthrie Properties in April 2009. With her impressive experience in the diverse aspects of property brokering, her exceptional interpersonal and communication skills, and her dynamic understanding of both local and global commercial property trends, she provides her clients with a world-class property management service.

+27 (0)82 443 6776 / +27 (0)83 225 7444 lschewitz@amrose.co.za / mrosenthal@amrose.co.za www.amrose.co.za

+27 (0)31 830 5266 judith@judithguthrie.com www.judithguthrie.com

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REGISTER attorneys in focus 2014 - 2015

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

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Gareth Shepperson Shepperson Attorneys

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When Gareth Shepperson realised that law firms seldom provide the blend of corporate, commercial and property advice that the diversity of players in the property industry seek, he created a property-focused boutique practice that is highly enthusiastic about providing such services. Shepperson Attorneys was born out of a desire to assist its clients in achieving unsurpassed outcomes: “A footnote in your success story, so to speak,” he says.

Shepperson represents diverse clientele.

He believes that, whether you’re representing a multinational property service group, a national property developer, an estate agency or a private individual, it is essential that you listen to each client’s unique story and provide practical solutions to the problems they’re experiencing.

He provides regular updates on property industry news to more than 4 000 monthly readers of his blog and to followers of the firm’s Facebook and LinkedIn pages. The Q&A section provides the firm with valuable insight into the thoughts of the people affected by legal issues in the property industry. “My clients want to be certain that they have access to the most modern and innovative solutions to their realworld problems,” he says. “I strive to be at the cutting edge of the property industry, which is why I’m an active participant in SAPOA.” Shepperson serves as the chairman of SAPOA Gauteng, a member of the SAPOA National Council and a member of the SAPOA legal committee. He is a member of the property committee of the Pretoria Attorneys Association and attends its monthly meetings with the Registrar of Deeds and the Deputy Registrars, thereby contributing to effective conveyancing practice in Gauteng.

For more information on Shepperson Attorneys, please visit the firm’s website.

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BOOKING DEADLINE: 7 July 2014 For ALL Your Real Estate Questions, We Are The Answer!

+27 (0)12 362 4688 gareth@propertylaw.onmicrosoft.com www.prop-law.co.za

Contact Riëtte Stevens c +27 (0)71 877 5520 t +27 (0)11 883 0679 f +27 (0)86 216 9026 e sales@sapoa.org.za SOUTH AFRICAN PROPERTY REVIEW

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PMP awards

Property management prospers

By Candace King Photographs by Michael Glenister

Senior lecturer at the Wits School of Construction Economics and Management and PMP programme director Dr Samuel Azasu

The intention was to develop a course that will formalise the process for entering the property management industry and create an industry standard for the property manager, with a nationally recognised certification in property management by a reputable institution 60

H

HRD manager and MC Martin Ferguson

eld at the Hyatt hotel in Rosebank, the Property Management Programme (PMP) Award Certification evening was attended by University of Witwatersrand academia, Wits Enterprise and the PMP graduates, who proudly received their scrolls on the night.

SAPOA and the property industry have long felt the need for a standardised and indepth property management course that’s focused on training property managers in the basics of property management. ”The property management course was developed to offer an appropriate mix of practical and theoretical learning, and to be reflective of existing international and national trends in the industry,” said human resources development manager and MC Martin Ferguson.

The course encompasses all aspects of property management and contains a large

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

The class of 2013 is the fifth group to qualify for the PMP. The programme has been averaging between 20 and 23 students per year.

Forty delegates have already registered for PMP 2014.

“Congratulations on your achievements,” said Ferguson in his closing. “Let this be a step to a bright future in commercial property management. Do not stop here: take charge of your own personal development as well as your own career, and grow your knowledge, experience and qualifications.”

SOUTH AFRICAN PROPERTY REVIEW

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PMP awards

Honouring the class of 2013, the Property Management Programme Award Certification evening proved that education in commercial property is gaining momentum

Martin Ferguson with PMP top three graduates Emma Levine (top left), Sarvin Naidoo (top right) and Bhavin Madhavji (bottom right) ABOVE, BACK ROW, FROM LEFT Andrew Hope-Jones, Uwe Putlitz, Professor David Root, Tesfaye Solomon Fitamo, Sandiswa Nqampoyi, Moses Ntokozo Ndaba, Professor Ian Jandrell, Duncan Raftesath MIDDLE ROW, FROM LEFT Sarvin Naidoo, Mekbib Solomon Atlaw, Rubiel Frank Nounawon, Vuyokazi Mtwecu, Thembile Tshabalala, Farida Laurie, Aysha Fakier, Emma Levine, Rookmoney Jenny Govender FRONT ROW, FROM LEFT Bhavin Madhavji, Dimple Patidar, Dr Samuel Azasu, Notika Diseko, Doegra Louis, Ntakuleni Reginah Ramalculukusha, Jonathan Smith, Martin Ferguson ABSENT Adele Golombick, Elvis Skhosana, Dawn Gradidge

SOUTH AFRICAN PROPERTY REVIEW

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hot topic

The origin of e-tolls Still a hot topic among frustrated penny-pinching citizens, the e-tolling system is just one of the many links in the greater chain of concern in South Africa

By Candace King

S

till a hot topic among citizens of South Africa, including players in the property industry, e-tolls were at the top of the agenda during a recent SAPOA power-hour breakfast. As guest speaker, John Loos, FNB’s household and property sector strategist, provided insightful facts and information during his presentation on a scenario of the shape of the future South African city.

According to Loos, the highly opposed e-toll system is just another link in the chain of events that has altered the South African landscape over the past few years, starting from the 1970s’ fiscal deterioration, which resulted in the Capex decline as well as urban infrastructure shortage and decay.

“Defence spending was the original source of government financial pressure,” said Loos. “These days, social expenditure items are the big-ticket items.” He noted that, although improvement has begun, long-term fiscal weakness continues to constrain economic fixed investment. This has resulted in a heightened effective land scarcity, which has in turn driven densification, private transport congestion and increased pollution.

The “disorderly” densification and its consequences gradually led to the realisation by government that something needed to be done, resulting in the launch of various infrastructure upgrades, including transport.

“The initial solution was to upgrade the road system and to improve elements of public transport – but public transport initiatives are costly, and have seemingly been done in isolation from each other (for example, the Gautrain is not linked to Metrorail),” said Loos. “Nevertheless, the need for a solution is steadily bringing a greater public transport ‘culture’, and in many instances a broader roadtransport solution seems more viable than rail, given our already extensive road infrastructure. However, the economic boom times are over, and tax revenue for transport funding remains limited.”

Real GDP growth over the past five years has averaged about 1,9% per annum. Government debt and fiscal deficit has increased, and the personal tax burden has been rising gradually.

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John Loos, FNB’s household and property sector strategist

Ongoing fiscal constraints require alternative sources of funding, which has resulted in a turn to the User Pays Principle for roads in South Africa, and thus the implementation of the e-tolls system. Successful SANRAL implementation (in government’s eyes, at least) could well mean that e-tolls will in future broaden to include non-national roads (possibly in a zone-tolling format, London-style), thus providing funding for a greater road network than merely one or two freeways.

But should this happen, further measures may be required because e-tolls can create distortions in terms of road use as well as in how people and businesses locate themselves. In addition, despite significant densification to date, population density is probably still too low and uncoordinated for a viable, state-of-the-art mass public transport network – and the taxpayer can’t foot the bill.

“These shortcomings could well then lead to stricter limits on urban sprawl, as well as zoning for densification along transport corridors,” said Loos.

“Brazilian city Curitiba is held up as a good model of urban and transport corridors, with high-density corridors providing the mass demand for public

transport along those corridors. This could be the future for South African cities.”

Loos emphasised that this is merely one possible scenario, and there are no doubt other possibilities.

However, what is important, he said, is for cities’ stakeholders to accept that radical change in our urban design is needed to address issues such as congestion, ageing infrastructure and environmental issues, and get involved in the debate as to “how” things should change rather than whether they should change.

Ii is important to realise that South Africa is a services-dominated and increasingly skills-driven economy. Skilled people go for lifestyle (giving the Western Cape something of an advantage of late), and good urban and transport planning helps to create the kind of lifestyle that can give a city or a region a competitive advantage over others.

Loos does not necessarily agree with changes such as e-tolling. “I personally favoured the fuel levy as a means of transport funding over the e-tolling system,” he said. “It is a good proxy for road usage, costs very little to collect, and can incentivise less overall use of private transport (one can exempt public-transport operators) – as opposed to e-tolls, which incentivise less use of certain routes only. It is also an effective environmental tax. One could then earmark fuel levy funds for road funding in a coordinated way across the entire country to all of the different authorities running roads, as opposed to having each agency just doing its own thing.

“However, the reality is that I didn’t have my way, and it looks increasingly as though e-tolls are the future reality in South Africa. This, however, is not all bad. Doing nothing would be bad.”

In closing, Loos spoke of a radically changing future for retail centres and malls. Densification and a lack of recreational space for households in our cities create a huge opportunity for malls to become more of a recreational and lifestyle facility as opposed to a place where people go merely to shop.

This could serve to fill a future void left by growth in online shopping.

SOUTH AFRICAN PROPERTY REVIEW

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off the wall

Teaching green

By David A Steynberg

An almost 70-year-old school in Soweto is currently undergoing an innovative green face-lift

S

t Martin de Porres High School in Orlando West, Soweto, was established in 1947 as a temporary structure complete with concrete fencing and tin roofs. Almost 70 years later, the community and the learners are looking forward to a permanent, purpose-built school.

But this will not be an average school. This high school will be the first South African green school, due for completion this year and ready for learning in January 2015.

“The overall design principles of the model are that the school be energy-efficient, constructed from sustainable and/or ‘green’ materials, be easily and quickly erected in any variation of land and siting conditions, and that the methods of educating be enhanced by the quality of space created,” says the project’s architect, director Patrick Nayler of Lyt Architects. “Open spaces are generated in the precinct design by the placement of classroom modules enveloping quadrangle forms, thus bringing the outdoor space into the classroom. The site is being engineered to generate split levels, removing unsuitable ground materials, and to facilitate the rainwater harvesting mechanism reliant on gravity.”

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A critical design element is that the buildings can be erected from components pre-manufactured off-site, quality checked and delivered for re-erection. Fresh air principles have also been included. “Classrooms have been meticulously designed to enhance natural ventilation, light harvesting, comfortable and ambient environments, and low energy use,” says Nayler, adding that photovoltaic panels have been incorporated in the precinct to harness solar energy, solarwater geysers, LED lighting and rainwater harvesting.

“Hydroponic gardens, recycling areas and open-air teaching zones are integral elements of the precinct.”

Digital media mechanisms have been adopted in the classroom, including interactive walls, tablets and ergometric work stations to reduce paper usage and waste.

“Novo Domus confirmed that a conventionally built school of this size would take approximately 14 months,” says Nayler. “The firm completed it in 14 weeks, which is demonstrative of the time-saving. Novo Domus talks about a 30% saving across the board: materials are similarly cost to conventional. Savings come in via the shorter build duration and obvious labour saving. The longer-term payback savings from energy efficiencies are the really noticeable financial advantages.”

The structure itself is also 100% stable in all aspects, according to Nayler. “The concept of the Lyt Green School is a rapid deployment solution to the critical demand for schools,” he says. “Our concept is designed for a 50- to 100year life cycle as a minimum.

“The concept is for a modular component system that is flexible in the use of materials, location, access and climactic conditions. We can adapt the concept to suit any scenario while maintaining the underlying parameters and have an end result that creates the special and learning environments that we seek.”

SOUTH AFRICAN PROPERTY REVIEW

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