South African Property Review December 2015 - January 2016 by SAPOA

South African Property Review

PROPERTY SOUTH AFRICAN

December 2015 / January 2016

REVIEW

Brokers and auctioneers

Retailing in Africa: Trends and projections

Engagement:

s●

series D L

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monthly cou n Our

CSI: Enabling communities

by-country focu try-

December 2015 / January 2016

Th e WOR

SAPOA Meet the Mayor series

Expanding cities: The broker’s pandemonium?

Alaska: A showcase of 3-million lakes

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contents

December 2015 / January 2016

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

December 2015 / January 2016

REVIEW

Brokers and auctioneers

Retailing in Africa: Trends and projections

Engagement:

CSI: Enabling communities

●

s●

monthly cou n Our

by-country focu try-

December 2015 / January 2016

The WOR

series

Abreal

Expanding cities: The broker’s pandemonium?

SAPOA Meet the Mayor series

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

Alaska: A showcase of 3-million lakes

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2015/11/30 3:17 PM

From the CEO From the Editor’s desk Industry news Legal update City improvement districts disallowed from raising levies Update Consultations on the Deeds Registries Amendment Bill Education, training and development SAPOA and Wits University launch new management development programmes Planning and development The impact of SPLUMA on the economies of townships and small towns EcoMobility Post-EcoMobility towards a sustainable Johannesburg Meet the Mayor Government SAPOA and City of Tshwane engagement Feature Our rapidly developing cities: the brokers’ take News Green Building Council of SA on an upward trail Research Retailing in Africa Awards Women in property awarded Eye on the world Alaska CSI Feature Construction industry prompt payment regulations Update SAPOA comment Awards Property Point wins top award for job creation Summit Gauteng City Region Spatial Planning Summit Research Awards Awarding future sustainability pioneers What’s on Upcoming events 2016 Frankly speaking On a lighter note Off the wall America’s ﬁrst hemp house pulls CO2 from the air

Oilgro

FOR EDITORIAL ENQUIRIES, email nthabi@mpdps.com or mark@mpdps.com 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 Editor in Chief Neil Gopal Editorial Advisor Jane Padayachee Managing Editor Mark Pettipher Editor Nthabi Nhlapo Copy Editor Ania Rokita Production Manager Dalene van Niekerk Designers Wade Hunkin, Eugene Jonck Sales Robbie Pansegrauw e: rob@mpdps.com; Riëtte Stevens e: sales@sapoa.org.za Finance Susan du Toit Contributors Amanda Froelich, Eugenia Makgabo, Lekgolo Mayatula, Maud Nale Photographers Mark Pettipher, Xavier Saer DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material.

P R O P E R T Y

F U N D

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

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e: llewellyn@rsalitho.co.za

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from the CEO

To the year that was We recognise and celebrate all our members’ efforts as we look forward to another fruitful year

Dear Members, The end of a year is a good time to look back and reflect on achievements – and to look forward to see what we still need to accomplish.

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

At the outset, let me say that SAPOA starts with you, our members – without you, it would not have been possible to come this far. Warmest thanks and deep appreciation for all your contributions, efforts and dedication in making SAPOA the success story that it is today. Members continue to support and frequently express confidence in the work we do. As so much of our work this year has shown, we work best when we work together. We all acknowledge that we have had our fair share of challenges. However, as a member-driven organisation, we have managed to collectively surmount our problems and move on to greater heights. We have made great progress on several projects this year, especially those involving government legislation and policies. This shows both that SAPOA is a force to be reckoned with in the property industry

s part of this objective, our SAPOA Awards for Innovative Excellence in Property Developments provides public recognition for top quality design and functionality and a benchmark for excellence in property Be part of this exclusive award category entry in the most prestigious property awards program in South Africa, cement your position as an industry leader and align your company with the industry’s peak leadership body in recognising excellence. Position your company as a market leader - reap the benefits from positioning as a champion of South Africa’s property industry, innovation and excellence.

and that progress through national consensus is feasible. These projects will be covered in great detail in the next issue. The year 2016 will mark SAPOA’s 50th anniversary. We have several activities planned to mark this huge milestone, including the 50th Anniversary Convention & Property Exhibition, which will take place at the Sandton Convention Centre in Johannesburg from 21 to 23 June 2016. As 2015 draws to a close, I would like to take an opportunity to thank all the members for your contributions during the year. I hope that you will have some time off to spend with family and friends, and that the holiday spirit of love and sharing will prevail. To those of you who are travelling, may you all have a safe and pleasant journey. On behalf of SAPOA, I wish you a joyous and prosperous 2016. Neil Gopal, CEO

Winning a SAPOA Innovative Excellence Award provides members of the project team with a multitude of benefits. Don’t miss the opportunity of celebrating the success that results from determination and the resilience demonstrated by our industry in providing exceptional PROPERTY.

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meet the mayor

Kudos to our member partners for their annual contributions to the SAPOA Bursary Fund

SAPOA is proud to announce Abland’s contribution of R1 million towards the Bursary Fund Other member contributions for 2015/16: ● Hyprop Investments Limited increased their current contribution of R 140 000 to R 280 000 ● The Siyakha Education Trust has committed R 100 000 per year over 4 years – it started in 2014 ● Growthpoint Properties contributed R 60 000

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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

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Contact: Fiona Kahn e: edmanager@sapoa.org.za

12:31 PM 2015/11/30 12:29

from the Editor’s desk

Farewell to a turbulent yet positive year The last few years have been turbulent in terms of our country’s economy but the commercial property sector has remained resilient, with many city skylines signiﬁcantly altered by the development of landmark skyscrapers

he past year has been positive for SAPOA. We saw yet another successful Convention hosted by the organisation, where current President Mike Deighton was elected to lead SAPOA and President Elect Nomzamo Radebe was announced. We look forward to an even more prestigious 50th Anniversary Convention in 2016. Also in 2015, SAPOA was represented by CEO Neil Gopal and current SAPOA President and Managing Director of Tongaat Hulett Developments Mike Deighton at the BOMA Every Building Annual Conference and Expo, held at the Los Angeles Convention Center. The conference, which was attended by about 3 400 delegates, saw Gopal chair its International Council, comprised of the real estate associations from around the world that have affiliated with BOMA International, in what cements SAPOA’s position as a leading global commercial property body. The business landscape in other parts of the world has not been as uplifting, with several incidents that have kept business under pressure globally, including Greece’s debt woes and China devaluing its Yen in an attempt to keep its economy from collapsing.

At the time of writing, the entire globe was still in shock after more than 20 people were killed in an attack on a luxury Radisson Blu Hotel in Bamako, Mali – only a week after militants killed 130 people in gun and bomb attacks in Paris and three weeks after a Russian airliner was downed over Egypt by a bomb, killing all 224 people on board. As for us at the bottom edge of Africa, we have been fortunate not to be directly affected by these attacks. In an indirect yet very real way, however, the business fraternity here at home is definitely affected. Businesses and individuals who hold foreign investments or even those with aspirations of pursuing foreign business interests are now faced with the very tough decision of taking political unrest into consideration. Foreign business owners with interests in South Africa may also have to re-evaluate their investments based on the need for cash flow brought on by unrest in their own countries. On a more cheerful note, all of this has not deterred serious investors from investing in foreign economies, particularly in Africa. In this issue of the South African Property Review, we look at retail in Africa and surmise some recent findings on trends on the African continent. We also highlight SAPOA’s Meet the Mayor series, already in its third year. This year saw the organisation come into conversation with the Executive Mayors of Cape Town and Johannesburg, and host an engagement session with Tshwane council representatives. As we prepare to enter another year, we hope to make it one filled only with positive growth in the property space – and we look forward to more member engagement. Until next time. Happy holidays! Nthabi Nhlapo, Editor SOUTH AFRICAN PROPERTY REVIEW

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industry news

New JSE listing offers fresh avenue for offshore property investors

Layout for interior perspective A1

The Zone revamped R osebank’s first food court, a 2 000m² indoor food emporium on the first floor of The Zone @ Rosebank, with panoramic views over western Johannesburg and a balcony on Oxford Road, is open for business. A milestone in the R500million revamp of the suburb’s hub for fashion, food and entertainment, the new food court, dubbed Food @ The Zone, enables movie-goers, families and entertainmentlovers to relax in a stunning open-plan self-serve dining space, with access to some of South Africa’s favourite fast-food vendors and sitdown restaurants, including Panarotti’s, Spur, Simply Asia, Wakaberry, Sweets From Heaven, Jimmy’s Killer Prawns and Häagen Dazs. “The new food court will revitalise the movie area of The Zone @ Rosebank with its abundance of natural light, natural and earthy colours, slick seating and granite tables, and soft backlit wallpaper and mosaic tiling,” says Nqaba Mangcu, project architect at Louis Karol Architects, the firm responsible for the re-fit.

“Shoppers will also have access to a smart-connect area with WiFi, TV and desk plugs.” “Our intention with the new area, Food @ The Zone, is to enhance the family appeal of The Zone @ Rosebank, and add more leisure facilities to the existing cinema complex, so that families and moviegoers can really enjoy a full outing,” says Desmond Heunis, Regional General Manager at Old Mutual Properties. “The Zone @ Rosebank is now able to cater for a broad entertainment-loving market.” Owned by Old Mutual Properties, and located between Cradock Avenue and Oxford Road in Rosebank, the mixed-use mall development recently announced the addition of four new tenants to its growing fashion, food and entertainment offering: Kauai’s first concept store, a new branch of Frenchstyle bakery The Patisserie, fashion designer Thula Sindi’s flagship boutique, and the first outlet of international Danish jewellery manufacturer Pandora. There is also a UK-head-quartered chain of gyms and a few other “firsts” for Rosebank.

nternational Hotel Group Limited, a Europe-focused hotel and leisure property investment vehicle, has commenced trading on the JSE’s AltX exchange. The listing follows a private placement among individuals and institutions last week that raised an aggregate R253 869 070. At an opening price of R20,5562, International Hotel Group Limited has market capitalisation of R308-million. International Hotel Group Limited is a dual listing on the JSE’s AltX exchange, with a primary listing on the Luxembourg Stock Exchange launched in July this year. The company has been established to afford property investors the opportunity to invest directly into a portfolio of income-yielding hotel assets. International Hotel Group Limited aims to acquire assets than can deliver consistent cash returns of about seven percent on equity. The hotel assets will initially be in the UK and then expand into selected European markets. The properties will be in the economy and mid-tier hotel

markets. International Hotel Group Limited currently has a portfolio of three hotels in the UK, valued at £18,3-million. The Chief Executive of International Hotel Group Limited is Helder Pereira, a veteran of South Africa’s hotel sector who previously held executive positions at Tsogo Sun Holdings and Southern Sun Hotels. “International Hotel Group Limited offers investors based in South Africa an attractive and focused vehicle for investing in offshore property,” he says. “We are particularly pleased to be able to bring to market this opportunity to utilise our expertise and experience in both property investment and the hotel sector. We will seek to invest in hotels with good locations and a track record as well as greenfield and conversions where there is good opportunity for upside. Properties will be chosen for their capacity to deliver good cash returns and in areas with a less cyclical demand area and will generally be branded to ensure access to good distribution channels.”

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industry news

Housing sector in surprisingly positive territory

espite the current rather gloomy economic environment, the residential housing sector has been in surprisingly positive territory. Contributing to the high demand in the lower end of the market is South Africa’s largely young population, with growing numbers of aspiring first-time buyers. This is one of the factors impacting the surge in house-price inflation in the townships, which according to FNB’s latest property barometer rose in the second quarter of 2015 by 17% from the previous year’s levels. The sectional title market continues to outperform, with the gap in price inflation particularly visible between the two extremes of large

freehold property (four-plus bedrooms) and the smallest category of sectional title with fewer than two bedrooms. According to FNB, a comparison reveals that in 2014, on average, the smallest category of sectional title property increased by 8,8% while large freehold property prices grew by 5,6% on average. For the first half of 2015, the gap between these two widened further to 10,4% for small sectional title property compared with 5,4% for large freehold. “This trend may be the result of lifestyle choice and affordability issues but it’s perhaps also indicative of the young profile of our population,” says Dr Andrew Golding, Chief

Executive of the Pam Golding Property group. “However, this needs to be viewed against the overall freehold versus sectional title market, which in 2014 saw the former outperform with an average price increase of 6,3% while sectional title averaged 5,6%. Our interpretation of this rather surprising trend is that housing demand continues to

outstrip supply. Like many other parts of the world, the housing shortage in South Africa is on a significant scale in virtually all segments of the market.” Golding says three notable outperformers stand out: the lower end of the residential property market, the sectional title market and the major metropolitan areas.

Dr Andrew Golding, Chief Executive of the Pam Golding Property group

Communities support neighbourhood convenience centres

oderate sales growth aside, South Africa’s retail sector remains attractive to property investors, including individual buyers seeking niche opportunities such as neighbourhood centres. The success of neighbourhood centres is primarily driven by ease of access for consumers residing or working in the vicinity, as long as the tenant mix and product offering is geared to suit their needs. A case in point is Mountain View Shopping Centre in Gordon’s Bay on the scenic False Bay coastline in the Western Cape, which was sold for R27,75-million. “Acquired from a property fund by a local investor, the location of the centre at the entrance to the town via Sir Lowry’s Pass ideally serves local residents,” says Elton Holland, Director at Ikon Property Group. “Initially a 7/11 store with a few small shops, then revamped in late 2012 and now best described as a neighbourhood convenience centre, Mountain View currently comprises a gross lettable area of 3 208m².” The owner of the centre has subsequently acquired an adjacent vacant site of 4 600m² with the intention of developing a second major retail anchor for Mountain View, which would also entail reconfiguration of the centre for optimal consumer appeal. “The purchaser has made a sound investment,” Holland says. “Small neighbourhood centres are sought-after, particularly in a comparatively affluent area such as Gordon’s Bay.” He says in the current economy, the increases in rates, taxes, electricity and security continue to impact on tenancy occupancy costs, with gross rental increases overtaking sales growth, thereby reducing traders’ bottom line. In protecting the capital appreciation of his/her asset, the landlord must likewise bear some of the increased costs as opposed to passing them all onto the tenants.

Sectional Title and HOA Litigation Commercial and Retail Property Litigation

Civil and Commercial Litigation Corporate Law and Insolvency

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industry news

RICS and SAIV to work closer together for local and international benefit

he Royal Institute of Chartered Surveyors (RICS) and the South African Institute of Valuers (SAIV) have formalised a longstanding working relationship with the signing of a Memorandum of Understanding that will see the two bodies collaborating closely in the future. The MoU was signed recently by Martin Brühl, President of RICS and Mark Bakker, President of SAIV. As bodies that have the public’s interest at heart, both RICS and SAIV promote high professional standards with the aim of building public confidence in the profession and in the industry, says TC Chetty, RICS Country Manager for South Africa. “As part of the MoU, the two organisations have agreed to share information such as research, industry standards and market data for mutual benefit,” he says. “They will also promote one another’s conferences, events and workshops to their members, offering special member rates to one another.” “We are very honoured to be involved with RICS, which has always been a benchmark of industry quality,” says Bakker.

“The valuation profession in South Africa has not had as much international exposure and connection as SAIV would like until now, but the formalised relationship with RICS will undoubtedly be beneficial to the profile of the profession as a whole. The opportunities for education, information and international collaboration will all benefit members, as well as the public at large.” Brühl says the agreement is important for RICS because it views South Africa as a strategic market in Africa. “What we’re doing here, we would like to do elsewhere in Africa – promoting the standards and training professionals, and if they want to become members of RICS, regulating them.” Apart from SAIV, RICS currently has collaborative relationships with the SA Council for the Quantity Surveying Profession, Association of South African Quantity Surveyors, the SA Property Owners Association, SA Council for the Property Valuers Profession, SA Council for Professional and Technical Surveyors and the SA Council for Project and Construction Management Professions.

Martin Brühl (RICS) and Mark Bakker (SAIV) sign the MoU

Redefine Properties’ 90 on Grayston

Defined by growth in earnings and net assets

edefine Properties’ full-year results released recently reflect the company’s strong growth trajectory for the year ended 31 August 2015, backed by a solid financial performance and underpinned by a dynamic, future-focused strategy. The company declared a final distribution of 41 cents per share, taking its full year distribution to 80 cents for the year ended 31 August 2015, translating into a 7,3% increase on the previous year. “This has been a year of high activity in which we significantly expanded on the scope and quality of our investments,” says Redefine’s Chief Executive Officer Andrew Konig. “Our investment profile has also been raised considerably by our inclusion in the JSE Top 40 index, in our 15th year as a listed company.” In another first for the company, its distributable income has risen by R875-million to exceed R3-billion, an increase of 36%. Group total assets also increased by 22% to R70-billion, predominantly funded through expansion of the capital base, which resulted in improved credit metrics. The portfolio of global property assets currently managed by Redefine –

and spread across South Africa, Europe and Australia – is valued at R64,5-billion. New developments in South Africa with an approved value of R3-billion are currently in progress, while refurbishment of existing properties in the portfolio, valued at R800million, are also under way. A strong focus for the company is environmental sustainability. Redefine is in the process of installing smart metering for water and electricity across their portfolio, the positive impact of which will be improved billing and consumption management. “Income yields can be increased by more than 10% with the use of solar,” says Konig, explaining Redefine’s sustainability focus. “We are looking at alternative sources of energy – especially because there has been an improvement in the efficiency and cost of photo-voltaic panels. However, not all existing roof structures have been designed to carry the weight of these panels, so we also need to consider feasibility.” Redefine is aiming for at least a four-star Green Star rating across all its new developments, including the 90 Rivonia Road and 90 Grayston Road properties.

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industry news

Times Square at Menlyn Maine W

ork is under way at Sun International’s latest project – a major development in Pretoria’s eastern suburbs. The project at Menlyn Maine has been three years in the making; the entertainment complex is set to become the flagship property of the group when it opens in 2017. As the development gets under way, the new venture will create as many as 10 000 jobs during construction, and a further 2 200 jobs when the project is complete. “We have worked extremely hard on this project and are particularly proud of it,” says Sun International’s Chief Executive Graeme Stephens. “After a wave of change and development in

the late 1990s, this is the most exciting development in our industry in years. The design was finalised after drawing on the experience of not only South Africa’s urban casino complexes but a study of the latest trends internationally.” Architecturally, the building has been wrapped in glass so that it has a contemporary feel. There will be a large number of restaurants and bars as well as nightclubs, making it the entertainment hub of the city. An 8 000-seater indoor arena will mean that Tshwane can host major concerts and exhibitions, and the iconic five-star hotel and conference centre will cater to the needs of the diplomatic travel market,

recognising Pretoria’s position as the diplomatic hub of South Africa and home to embassies from around the world. The world-class casino with 2 000 slot machines and 60 tables will be one of the largest in the country, second only to the Group’s Grand West casino in Cape Town.

“Sun International will be investing billions into Tshwane and Gauteng’s tourism infrastructure,” says Stephens. “We believe that this unique project links well with the provincial government and the City of Tshwane’s vision for quality urban renewal and sustainable development.”

Chevron South Africa Cape Town head office “water-positive”

hevron Century Boulevard is a R200-million, 9 000m² head office with a difference. It is a water-positive building, collecting more water than it consumes. Both rain water and air-conditioning condensate are harvested from the roof and balconies, and stored in a tank below the basement, which is almost the size of an Olympic pool. This amounts to a reduction in water consumption in the building of approximately 90%. Chevron Century Boulevard is one of a handful of buildings in the area that has been awarded a five-star Green Star rating by the Green Building Council of South Africa for excellence in green building design, construction and management. “Chevron South Africa wanted to provide the most appropriate and sustainable long-term office accommodation for the wellbeing of our employees and the environment in which we operate,” says Shashi Rabbipal, Chairman of Chevron South Africa, about the sustainability performance of the company’s head office. “The operations of the building over the past 12 months show that design and construction techniques are critical to producing sustainable spaces.” Occupied since 2014, the new Chevron South Africa headquarters has reduced its electricity consumption by about a half. Contributing to the reduction in electricity usage is the installation of sophisticated lighting control, known as Digital Addressable Lighting Interface, which is energy-efficient and permits control over each light individually.

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SOUTH AFRICAN PROPERTY REVIEW

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2015/11/30 3:22 PM

legal update

City improvement districts disallowed from raising levies There are numerous concerns that property owners have raised over the years regarding the ability of local government to deliver municipal basic services effectively throughout our cities

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

This legal opinion is only a guide and should not be copied with the expectation that it will serve each party’s individual circumstances. Most of these recommendations have not been tested in our courts. SAPOA cannot guarantee any success in any court if any of these recommendations are put to use. 10

here are numerous concerns that property owners have raised over the years regarding the ability of local government to deliver municipal basic services effectively throughout our cities. It cannot be denied that local government has made efforts to ensure that urban places are liveable and conducive for businesses to be run. Constrictions such as capacity, among others, have become a stumbling block for local government to be able to optimally deliver in a way that allows businesses to remain attractive and sought-after. But as the saying goes, Rome was not built in a day. It remains the challenge to ensure that cities are promoted as leading business destinations in order to allow for sustainability of businesses in environments that are efficiently managed. It is indeed a continuous journey that needs to be embarked on by the property industry and by government. In recent times, property owners have increasingly taken it upon themselves to find possible solutions to the above-mentioned challenges. This has come in the form of the establishment of Central Improvement Districts (CIDs), which are funded by the property owners. The Cape Town Central City Improvement District was established in 2000 and was the first CID of its kind in South Africa. The common thread is to provide complementary urban management services, which have been regarded by some as “topping up” of services. In some instances,

this has resulted in some of the basic services that should be provided by a municipality being provided by the CIDs. The collaboration between local government and the private sector regarding CIDs has been a fruitful one; as a result, successful CIDs have been established nationally. The formulation of these CIDs has not come without obstacles, the most recent one being evidenced in the Randburg Management District v West Dunes Properties and another (451/2013)[2015] 135 ZASCA. The judgment was delivered on 30 September 2015. The issue was the legality of levies imposed under the Gauteng City Improvement Districts Act No. 12 of 1997, hereinafter referred to as the CID Act, which provides for the imposition of levies on rateable immovable properties situated within a City Improvement District. Such levies are paid to a management body charged with the implementation of a “City Improvement District plan” to finance various services that, in terms of Section 6(4) of the CID Act, “must be in addition to or an enhancement of those provided by the municipality”.

Background West Dunes Properties 141 (Pty) Ltd, hereinafter referred to as the First Respondent, is the owner of two immovable properties in the municipal area of Johannesburg, within what is known as the Randburg City Improvement District, the latter having purportedly been established under the provisions of the CID Act in 2004. It was thereafter

managed by the Randburg Management District, hereinafter referred to as the Appellant. The Appellant instituted action for levies imposed on the First Respondent in respect of its immovable properties under the provisions of the CID Act. Its claim related to various periods from 2005 to 2011. The matter came before the Johannesburg High Court, which concluded that the Appellant had not proved that: ● The Randburg CID had been properly formed in compliance with Sections 2 and 4 of the CID Act; ● The imposition of levies under the CID Act from 2004 onwards was valid; ● The decisions of the Appellant from 11 September 2008 to increase levies were ultra vires its powers and invalid. Pursuant to these findings, the Appellant’s claims were dismissed. The Appellant then appealed to the Supreme Court of Appeal.

Considerations ● The critical issue that had to be established was whether the court a quo was correct in concluding that the Appellant had failed to prove that it had been duly established under the CID Act. ● It was of importance to set out the process that must be undertaken for a CID to be established. The following was noted: a) Under Section 2(1) of the CID Act, a municipal council is obliged to consider the formation of a CID on receipt of a petition

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legal update

indicating the support of 25% of owners of rateable properties within the boundaries of such a proposed district. Section 2(4) requires the petition to take the form of a CID plan, “covering a three-year period, and must include the prescribed requirements and be in the prescribed form”. Sections 2(5) to (10) of the CID Act and Regulations 10 to 15 prescribe certain procedures for public participation in consideration of the approval of the CID plan, including a public hearing, and both written and oral objections and comments. Under Regulation 11, notifications and advertisements are to be given to rate-payers and the public, and are to contain details of the date, time and place at which a public hearing is to be held, a place at which the proposed CID plan will be available for inspection, the location of boundaries of the proposed CID plan, the additional services that are proposed to be provided thereunder. Importantly, the notices and advertisements must detail the proposed levy to be imposed. Once this public meeting has been held and the associated consultative process followed, the municipal council is called upon to take a decision on a petition in accordance with Section 3(2) of the CID Act. In that regard, Section 3(2) provides that it is only after the establishment of a CID has been approved under Section 3(2) that it and its management board may be formed. In this regard Section 4 of the CID Act provides, inter alia:

“After a petition is approved in terms of section 3, the City Improvement District may be formed only after written proof in the prescribed form is provided to the municipal council by the petitioner indicating that more than 50% of the owners of rateable property who represent more than 50% of the rate base in value of the property in the city improvement district, approve the formation of the city improvement district and city improvement district plan as approved by the municipal council”. f ) Further, after the written proof mentioned in subsection 1 is acknowledged by the municipal council, a City Improvement District management body must be formed and incorporated in terms of Section 21 of the Companies Act (Act No. 61 of 1973) or as any other legal entity approved by the MEC. ● The Appellant was obliged to prove that a petition relating to the formation of the Randburg CID under Section 3(2) had been properly conducted. Despite the assistance of the City, the Appellant was unable to call any direct evidence of such approval. ● When a witness was called to testify, she had no recollection of the circumstances under which she had come to write an approval letter. However, she stated that she assumed that the city’s mayoral committee on whose behalf she had written had been delegated authority by the city’s municipal council to consider the approval of the Randburg CID, although she could not say whether that had in fact been the case. The judge was in agreement with the judge’s view.

● The Appellant argued that levies under the CID Act are not imposed by a municipality and, secondly that such levies are in any event not levies as envisaged by Section 160(2) (c) of the Constitution.

When a witness was called to testify, she had no recollection of the circumstances under which she had come to write an approval letter Judgment The judge held the following: ● Section 60(1)(a) of the Local Government: Municipal Structures Act No. 117 of 1998 provides that if a municipal council has more than nine members, its executive mayor may appoint a mayoral committee from among the municipal councillors. ● However, although Section 59(1)(a) of the Local Government: Municipal Systems Act No. 32 of 2000 (the Systems Act) provides that a municipal council may delegate certain of its powers, Section 59(2)(a) goes on to provide that any delegation “must not conflict with the Constitution”. Section 160(2) of the Constitution, in turn, provides that a municipal council may not delegate “the imposition of rates and other taxes, levies and duties”. ● Consequently the imposition of a levy is a function that the city was not permitted to delegate to its mayoral committee. If what was imposed under the CID Act indeed constitutes such a levy, then the delegation upon which the Appellant relies would be invalid.

● Further, Section 229(1) of the Constitution provides that a municipality may impose the following: a) Rates on property and surcharges on fees for services provided by or on behalf of the municipality; b) If authorised by national legislation, other taxes, levies and duties appropriate to local government or to the category of local government into which that municipality falls – but no municipality may impose income tax, value-added tax, general sales tax or customs duty. ● Given that the CID Act is provincial legislation under which a municipality imposes levies on owners of immovable property, this notion cannot pass constitutional muster. ● Further, that CIDs have historically been created for a period of three years under provincial legislation and then it was assumed they could be renewed. This was, in fact, not the case, and CIDs had to undergo a complete re-application every three years. All CIDs that had not done this were unlawfully constituted. ● The compulsory obligation to pay levies for municipally approved CIDs thus never lawfully existed, so all levies historically collected from any municipally approved City Improvement District were unlawful. SAPOA has engaged with the National Treasury and will be part of a Precinct Management Steering Committee, which will be established by the National Treasury and or COGTA. This will be for the purpose of arranging a strategic assessment of the South African CID legislation and establishing what the direction should be.

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update

Consultations on the Deeds Registries Amendment Bill Assessing the socioeconomic impact for the online deeds registry process

he world is evolving and the interest to transition into a paperless environment is one that is a convenient and popular option. There have been discussions regarding the improvement of Deeds Registration system in recent years. Such improvement involves a migration to an electronic system. The Department of Rural Development and Land Reform (DRDLR) is in the process of developing amendments to the Deeds Registries Act No. 47 of 1937, in order to provide for the electronic deeds registration system. This is in a bid to maintain and improve aspects of the current deeds registration system, which provides legal security to landowners and property-rights holders. SAPOA was identified as a key stakeholder by the DRDLR; hence our input in this regard was required. An interactive session was recently held with economic consulting firm Genesis Analytics in order to conduct

a socioeconomic impact assessment on the proposed Bill. The objective of the assessment was to ensure that the migration to an electronic system and the introduction of new legislation is successful, efficient and appropriately designed.

The process involved: ● Conducting a situational analysis of the existing deeds registration system and processes; ● Understanding the stakeholder groups both directly and indirectly involved in the current process, and the groups most likely to be impacted by the proposed reforms; and ● Analysing and assessing the various forms of impact on the different stakeholder groups to identify the benefits, costs and risks of the new system.

It was communicated by members that they have concerns regarding the following aspects: ● Inter-connectivity with different spheres of government to ensure a smooth transition from paper to digital with a guarantee of no extra delays; ● Timeframes from a municipal perspective, in terms of the approval process; ● The assurance of data integrity, security and back-up systems with a strong emphasis on not creating a system that will enhance fraud; ● Whether there are mechanisms in place regarding factors such as load shedding or when servers are offline; and ● The confidentiality aspect and who will have access to the information. Genetics Analytics is in the process of compiling a report that will be sent to the DRDLR for consideration. Further updates will be shared with members.

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education, training and development

SAPOA and Wits University launch new management development programmes The SAPOA Educational Programmes are developed to cater for the commercial property industry, from basic, entry level programmes to executive programmes

ur programmes cater for various career paths in commercial property, and include property management, facilities management, property development, project management, asset management and property financial careers. Until now, the SAPOA Property Development Programme was targeted at senior management level, and our International Property Leadership Programme at executive management level. To add to our current management programmes, SAPOA, in partnership with Wits University, has developed the Management Development in Commercial Property and Senior Managers Development in Property programmes, which will be introduced in 2016. Below are more details of these new programmes.

Management Development in Commercial Property (NQF 7) The programme aims to: ● Broaden the perspective of directors, executives and managers whose previous experience has mainly been in a specialist area, by providing knowledge, skills and techniques that will lead to more professional management; ● Provide delegates with the ability to make sound decisions; ● Increase the effectiveness of working with diversity in the workplace; and ● Foster awareness of economic, political

and social factors affecting business management. The course content: ● Module 1: Human Resource Management, Industrial Relations and Group Dynamics ● Module 2: Theory of Economics for Property Management ● Module 3: Theory of Accounting and Finance in Property ● Module 4: Operations Management Practice in the Property Sector ● Module 5: Theory and Practice of Strategic Management ● Module 6: Marketing Theory and Practice for the Property Sector Upon completion of the course, participants should be able to: ● Demonstrate skills in human relations management and labour relations practices ● Explain the economic environment and the fundamentals affecting commercial property management ● Demonstrate an understanding of the principles of property finance and accounting ● Calculate and evaluate investment options ● Apply sound judgment in the practice of property operations management ● Distinguish between suitable choices arising from strategic analysis, in the ambit of law and good governance

● Develop a realistic marketing plan for an entity in the property sector The target audience will include experienced business managers, upcoming managers with a bachelor’s degree or similar qualification, or individuals who have already been in a middle management position for five years who may not have a formal qualification, or professionals from nonmanagement disciplines wishing to gain exposure to managerial principles.

Senior Managers Development in Property (NQF 8) The aim of this programme is to impart those management skills necessary for senior managers to develop business skills that support their new senior role in the organisation, and to update skills and knowledge of existing senior managers with current business best practice. The course consists of four modules, including a research-based assignment on an upcoming project: ● Module 1: Strategy and Environment ● Module 2: Management of Resources ● Module 3: Management of People ● Module 4: Integrated Research Project Upon completion of the course, participants should be able to: ● Demonstrate an ability to link strategic action with aspects of the business environment

● Develop organisational performance measures in their organisation ● Analyse the effective management of business resources using operations and project management techniques ● Apply principles of people management through group dynamics, HR management and self-management ● Synthesise a researchbased assignment on a workplace problem or upcoming project The target audience will be: ● Middle managers earmarked for senior management as part of a leadership career path ● Newly appointed senior managers ● Experienced senior managers eager to benchmark themselves against best practices ● Technical managers in senior management positions ● Development of targeted groups with higher degrees in terms of B-BBEE and Employment Equity Plans Look out for advertisements about the starting dates for the roll-out of these new management programmes. For more information, please contact: Fiona Kahn Education Manager t: +27 (0)11 883 0679 e: edmanager@sapoa.org.za

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planning and development

The impact of SPLUMA on the economies of townships and small towns The question of what the Spatial Planning Land Use Management Act is and its application attracts a lengthy explanation that details how the Act will affect residents and municipalities

Lekgolo Mayatula is SAPOA’s Planning and Development Manager

The National Development Plan (NDP) is the country’s long-term strategic plan, and even though sector strategic plans are developed in alignment with the national objectives, the results of these are only noticeable through mediumto short-term strategic plans. 14

ur office often receives the following enquiry: “What is the Spatial Planning Land Use Management Act, and what impact does it have on our business?” This is a complex question to answer because, from the onset, the answer should be that the Spatial Planning Land Use Management Act (SPLUMA) is the legislative framework that provides local government (municipalities) with the full authority to create and implement spatial planning and land use management decisions within their area of jurisdiction. The complexity of SPLUMA is it requires certain decision-making structures to be put in place; these need monetary consideration prior to implementation. For example, each municipality is required to establish a Municipal Planning Tribunal and must have, among other requirements, a land use planning by-law in place that is aligned with SPLUMA to assist with the decision-making and enforcement of the Act. But the reality is that municipalities (with the exception of the City of Cape Town) are still gearing up for the actual implementation of the Act and are currently making use of the SPLUMA transitional implementation processes that allows for the previous land use management systems to be used until such time as their decisionmaking structures are in place. Each provincial planning department must develop a provincial land use planning act that will provide a holistic guide to the provincial planning process.

Each municipality is required to have a Municipal Tribunal, land use planning by-laws, a land development officer, appeal authority, delegations, tariff structure, land use scheme and spatial development frameworks in place. It is, however, important to note that as a result of the Municipal Systems Act and the decision-making structures, the actual implementation of each component will be determined by the appropriate municipality. Each municipality is required to have a SPLUMA-compliant spatial development framework within five years (from implementation of the Act – i.e., by July 2019). With SPLUMA being the single planning system on all land use (commonly referred to as the wall-to-wall legislative framework) and its intention of addressing the segregated planning systems and practices of the past, the challenge that the Act faces is merging the existing dysfunctional systems with those that seem to be functional. An illustration of this was highlighted at the “Township Economy: What Is the Role of Infrastructure in Government’s Strategy to Revitalise Township Economies Infrastructure” discussion, and the Small Towns Conference. Some of the major points that were raised in both engagements were that: (a) There is a need to innovatively capitalise on the exiting human capital within the two environments (i.e. townships and small towns);

(b) Both environments require coordinated investment and implementation by both the private and public sector; (c) Government must intentionally create an investmentconducive environment within both economies, and work in partnership with various stakeholders, including the communities; (d) The agglomeration of business and agricultural hubs and efforts needs to be strategically considered and implemented; and (e) Entrepreneurship is highlighted as a central point in creating a supportive infrastructure and in the deliberate development of the township and agricultural value chain. The fundamental developmental key to addressing the issues above (and many more) lies in the consecutive implementation of SPLUMA through the three entities of the South African society: inter-governmental collaborative partnerships, civil society and the public sector. To provide more clarity on this aspect, it is important to distinguish the exact mechanism in SPLUMA that would facilitate the proposed collaborative approach. The process of spatial planning and land use management requires strategic forward planning documents that are approved and adopted by the various municipalities. These need to project the long-, medium- and short-term

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planning and development planning and development objectives of the municipality, and this process should be in line with the objectives of the associated districts, provinces and the national perspective. The National Development Plan (NDP) is the country’s longterm strategic plan, and even though sector strategic plans are developed in alignment with the national objectives, the results of these are only noticeable through the medium- to short-term strategic plans. The spatial development frameworks (SDFs) and integrated development plans (IDPs) are the some of the strategic implementation plans that allow for the manifestation of SPLUMA’s intentions, which in essence showcase the South African narrative as articulated in our Constitution. What impact does SPLUMA have on our business? The answer to this question vests in the commitment that we as an industry and a country demonstrate to the actual implementation of SPLUMA. As discussed, there have been engagements on small towns and the township economy; in both discussions, it was clear that government is unable to change the country on its own. Government does not exist without its citizens; therefore, without the collaborative effort of the citizens of the country, South Africa will not be able to reach its full potential. That would mean that as a collective, as shareholders and investors in this beautiful country, we’d have put ourselves out of business. It would be totally irresponsible to create the impression that government is the only entity in the South African story that is focused on changing the country’s narrative. In fact, it is through the defined roles and responsibilities of the three South African entities that the change takes place – and as reflected within the various discussions, these entities do work in collaboration (at times).

Examples of these collaborations are reflected in initiatives such as: ● The National Treasury’s Neighbourhood Development Programme, Provincial Townships Revitalisation Strategies and the Industrial Development Corporation; ● The Department of Rural Development & Land Reform’s intention to establish Agriparks which will consist of three basic units: the Farmer Production Support Unit, the Agri-Hub Unit and the Rural Urban Market Centre Unit; ● The business community initiative of developing the City Improvement Districts concept to ensure that city spaces are well managed and conducive to investment opportunities; ● The commitment by the business community to assist with the funding and capacity building within the built environment through the awarding of bursaries and providing relevant educational programmes; ● The Department of Cooperative Governance and Traditional Affairs’ implementation of the Back to Basics programme and the draft urban development framework that will most likely be approved by Cabinet before the end of 2016; ● Examples of civil society taking ownership of their living spaces and working in collaboration with their municipalities to revitalise their environment. The story of the Philippolis community, through a project titled “Philippolis Clean-Up: Pulling Yourself up by Your Own Bootstraps” as shared by Professor Doreen Atkinson at the Small Towns Conference, illustrates the strength that resides within communities and how similar initiatives can be become the basis for credible community engagement. The process

might take longer than regulated processes but the results far outweigh the minor delays; and ● Examples of local government such as the Gamagara Local Municipality (situated within the John Taolo Gaetsewe District Municipality), which is investigating techniques of addressing the disconnect between the municipality and mining towns in the Northern Cape, and the Maluti-APhofung Local Municipality (which consists of towns such as Harrismith, Kestell, Phuthaditjhaba, etc). Through their foresight, they were able to use the strategic location of Harrismith along the N3 corridor as a logistics gateway, providing great benefits to the town and surrounding community. The initiatives above illustrate the many ways in which we as a country are capable of addressing and changing the South African narrative for the better. But the question still remains: what impact does SPLUMA have on our business? The answer lies in the active, robust engagement by the industry in the IDP process. The IDP is the strategic management process used by municipalities over a period of five years for the principal purpose of planning, budgeting, management and decisionmaking within a municipality. The process is divided into five phases: ● Phase 1: The Analysis Phase, which focuses on all the existing problems faced by the various stakeholders within the municipality’s jurisdiction. This assessment however is not limited within the specific municipal area as some problems could be cross-cutting demarcated municipal boundaries. ● Phase 2: The Strategic Phase, which focuses on key development priorities

affecting the various stakeholders within the municipality and formulating the action plan on how these priorities will be implemented. ● Phase 3: The Project and Programme Phase, which focuses on the creation of high-performance integrated project teams that operate in a coordinated manner across functional boundaries with the municipal departments to ensure that the municipality’s strategic objectives are aligned and implemented. Specialist outsourced teams may utilise the municipality’s capacity. ● Phase 4: The Integration Phase, which focuses on ensuring that identified projects and sectoral operational business plans comply with the municipality’s strategies, resource framework and legislation, as well as its alignment to provincial and national sector department plans. ● Phase 5: The Approval Phase, which focuses on getting the necessary implementation support for the proposed IDP from various stakeholders. This allows for all stakeholders to gain access and submit comments on the draft IDP prior to it being submitted to council for a decision. In addition to the abovementioned phases, there’s an annual implementation review process that requires the submission of an annual report; the monitoring, evaluation and review of the report; the annual budget review; and the assessment of the sectoral operations business plans. Herein lies the answer to the question raised by the industry: active participation within the IDP process allows for the three South African entities to work together to ensure the manifestation of SPLUMA’s intent.

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meet the mayor

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EcoMobility

Post-EcoMobility towards a sustainable Johannesburg As a de-brief after the month-long ecomobility festival in Sandton CBD, the City of Johannesburg hosted an executives’ breakfast to explore a deeper engagement with the private sector By Maud Nale

SAPOA CEO, Neil Gopal

he City of Johannesburg hosted a CEO’s breakfast to establish a solid, structured partnership for the short, medium and long term and to, in particular, sustain the momentum created and move the city towards a more sustainable, liveable and resilient Johannesburg.

Director of City Sustainability in the office of the Executive Mayor of the City of Jo’burg Flora Mokgohloa

Executives from organisations around the Sandton CBD gathered to share positives and lessons learnt from the month-long festival. The programme was facilitated by SAPOA Chief Executive Officer Neil Gopal. The City of Johannesburg says that it received positive feedback about last month’s EcoMobility World Festival, which was aimed at providing a sustainable transport solution to decongest the city and change the way we move. During the month of October, people were encouraged to walk, cycle and use public transport to and from Sandton. The CBD was partially closed to private vehicles, and priority was given to public-transport use, cycling and walking, with park-and-ride facilities made available to other modes of transport and express lanes created to ease traffic. According to Flora Mokgohloa, Director of City Sustainability in the office of the Executive Mayor, private vehicle use dropped from 90% to 68%, with a high degree of cycling taking place. The city intends to build on the festival to achieve the following objectives: 1. To promote and increase private sector engagement and investment in creating a platform on broader sustainability, including climate-positive and carbonneutrality commitment, employee engagement and green building policy. 2. To demonstrate the business case to contribute to a sustainable Johannesburg. 3. To highlight best-in-class private sector driven in line with global multi-lateral principles. 4. To share updates on trends from international and country level experts. 5. To establish connections across all parties and international platforms. The city will build on the lessons learnt to consolidate a corporate engagement strategy for a sustainable Jo’burg in the lead-up to the COP21 climate negotiations in Paris and the Habitat III Urban Agenda in Uganda in 2016.

It is the city’s intention to build the goodwill of the private sector and to enhance the city’s sustainability. What were some of the lessons learnt from the EcoMobility Festival? “There is a need for a safe, accessible, affordable transport system in Sandton,” says Mokgohloa. “Ecomobility is not about achieving immediate results but more of a long-term solution to decongesting Sandton and the city at large. We are a very aspirant city that wants to position itself globally; we are the headquarters of about

Executive Director for Transportation at the City of Jo’burg Lisa Seftel

60% of global companies. If we don’t capitalise on the goodwill that exists among most of the corporate headquarters that exist in Jo’burg, we will have missed an opportunity. We would like to work with the corporate sector to be able to build the kind of city that we all can share. We really want a much deeper engagement and partnership in how we start working together towards a more sustainable Johannesburg.” Executives on the day included Ajen Sita from EY, Sandton Convention Centre’s Mati Nyameza, Thulani Sibeko of the Nedbank Group and Tjipo Mothobi-Tshaka from SADC Private Sector Constituency. SOUTH AFRICAN PROPERTY REVIEW

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meet the mayor

Collaboration: a formidable force for development In its third annual instalment of the Meet the Mayor initiative, SAPOA met with the Mayor of the City of Cape Town in an effort to cement relations between the city and the commercial property industry By Nthabi Nhlapo Photographs by Mark Pettipher

SAPOA Chief Executive Officer Neil Gopal, Executive Mayor of the City of Cape Town Patricia de Lille and SAPOA President Mike Deighton

ne of SAPOA’s key endeavours is to strengthen partnerships, dialogues and collaboration between the commercial property sector and government. To that end, the organisation hosted a series of Meet the Mayor events recently. The Cape Town edition of the Meet the Mayor initiative was attended by Executive Mayor of the City of Cape Town Patricia de Lille, Deputy Executive Mayor Ian Neilson, SAPOA President Mike Deighton, SAPOA Chief Executive Officer Neil Gopal, SAPOA board members and representatives from the City of Cape Town, among other government and property industry stakeholders. The city communicated its commitment to building an opportunity city by creating an enabling environment that will attract investment and generate economic growth and job creation. In his opening address, Deighton referred to the occasion as a milestone that would solidify the relationship between SAPOA and the City of Cape Town, and encourage

further collaboration between the two parties. “There is a palpable comfort in this event as it has now matured from when it was first initiated,” he said. “In addition, it is appropriate that the topic of the conversation is pertinent.” He also added that it is gratifying that the public sector is acknowledging cities as the drivers of the economy. Deighton pointed out that as the urban conversation advances between SAPOA, the property industry at large and government, South African cities would begin to progress and evolve, and to compete on a global scale. In her address, Mayor de Lille expressed that the property sector is key to the city. “We are committed to working with all property owners in developing their businesses because the property sector is one of the major income streams and contributors to economic growth in our city,” she said. The Mayor was elated with the World Bank’s recent report on the ease of doing

business, which ranked Cape Town as first in dealing with construction permits in the country. The Mayor also updated attendees on the following city developments:

DAMS There is great traction with the Development Application Management System (DAMS), which has enabled residents to submit and track building plans electronically. Since January 2015, 96% of all building plans have been approved within the prescribed time frames. During the 2014/2015 period, the city has finalised more than 29 000 building plans to the value of R21,1-billion through DAMS. “By the third week of April in 2016, your professional teams will be doing their submissions on the internet via the city’s secure web portal, from anywhere and at any time, as we take this sophisticated electronic system to the next level by introducing web-based building plan and land-use submissions,” said De Lille.

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meet the mayor Other properties on offer for community, business and residential use are located in Atlantis, Langa, Brackenfell, Goodwood, Constantia and Simon’s Town.

Problem buildings

Executive Mayor of the City of Cape Town Patricia de Lille

Municipal Planning By-law Another milestone this year was the adoption of the Municipal Planning By-law, which came into effect on 1 July. The innovative systems built into the bylaw will reduce red tape, enable more responsive development regulation, and unlock investment potential. The Municipal Planning Tribunal has been established with highly qualified and experienced private and public sector members, and Dave Daniels has been appointed as the chairman of the tribunal while Sydney Holden is the deputy chair.

The built environment development strategy The city’s built environment development strategy seeks to build housing developments more densely, and along major transport infrastructure projects and routes. “In terms of the city’s well-located land holdings suitable for development, we are looking at how we can partner with the private sector to develop this land in a manner that contributes to the built environment development strategy,” said the Mayor. Since 2012, at the start of the city’s current integrated development plan cycle, a hundred of city-owned properties to the value of more than R100-millon have been released to the market. In March 2015 another list of properties was released in line with the city’s efforts to leverage on its assets, and stimulate economic activity and investment with the release of property not required for municipal purposes. The properties include two high-valued properties located in lower Long Street and a property in Century City.

SAPOA President Mike Deighton

The site opposite the CTICC is approximately 3 500m², with a general business zoning and maximum permissible floor area of 15 500m², providing for a wide range of uses.

The city is placing the spotlight on problem buildings that could be better utilised. “There are hundreds such buildings that are dilapidated and no longer in use, yet the municipality continues to pay for security services at the site,” De Lille said, encouraging attendees to assist in formulating plans to revamp these underutilised properties, some of which are in prime spots. Speaking about the city’s long-term plans for improving the transport system, Neilson said, “We are looking at integrating the transport system to a level where transport modes can be accessed through one portal and where commuters can use one access ticket across all transport systems in the city.” Among other issues discussed on the evening were land invasions, power shortages, alternative energy solutions, informal trading around the city, crime and increased pedestrian-based traffic distractions (jaywalking) on the city roads. In his closing address, Gopal updated the Mayor on the SAPOA Bursary Fund, SAPOA’s collaboration with the National Treasury, SAPOA’s role in developing the rates policy for the City of Polokwane, the upcoming SAPOA 50th Anniversary Convention to be held in 2016, and other projects. One of SAPOA’s priorities is to ensure that various government departments and representatives remain in constant conversation with the property sector, and that the industry’s needs are addressed at a legislative level. Thus the Meet the Mayor initiative will continue in other cities and remain a highlight in SAPOA’s diary.

City of Cape Town Executive Deputy Mayor Ian Neilson and SAPOA Chief Executive Officer Neil Gopal

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meet the mayor

SAPOA President Elect Nomzamo Radebe

SAPOA board member Dr Sedise Moseneke

SAPOA board member Izak Petersen

SAPOA board member Vuyani Hako

Guests with representatives from the City of Cape Town and SAPOA

Imraan Ho-Yee, Refqah Fataar Ho-Yee and Nazeem Khan

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The

meet the mayor

coffee table book... very year, buildings get smarter and more beautiful. SAPOA’s primary objective is to define excellence in property and recognise top quality design and functionality as a benchmark for excellence.

E INNOVA TIVE

The SAPOA Awards for Innovative Xcellence in Property Development is widely respected within the commercial property design industry and illustrates a combination of excellence from the clarity of purpose in the brief, ingenuity of product, clever design solutions and delivery on time and within budget.

XCELL IN ENCE PROPER TY DE ENT

VELOPM

It is this recognition that owners, developers, architects and property practioneers strive for. A SAPOA award is forever, much like the raw bricks and mortar that make up the timeless beauty of property. 2 0 1 5 2 0 1 5

To be part of this amazing opportunity, partner with us by profiling your executives and/or team in our SAPOA Innovative Xcellence Awards Coffee Table Book Volume 3, 2016. Your double-page advert will form part of the 2016 profiles submission for the excellence awards.

CORPORATE OFFICE

DEVEL OPMEN

Corporate offiCe

o. 1 and 2 Silo are the first comple ted phase in the Silo Precinct of the V&A Waterfr ont, which will soon see the redevelopmen t of the historical Grain Silo. No. 1 Silo is an 18 500m² develo pment overlooking Square and the Silo Atlantic Ocean. The building was and built to be the designed new headquarters of blue-chip tenant Gray, who was Allan looking to consoli date its offices V&A into a single within the development that would reflect its values and encour company age greater commu nication staff members. between its The building has been awarded the region’s first 6-star Green Star rating for Design from the GBCSA, and As Built rating is an being sought. Incorpo rating innovative design solutions green with proven techno logy, No. 1 Silo with the environment works rather than agains t it. Key sustainability features include the high-performan ce,

Silo Square, South

Arm Road, V&A

develo pment

No. 1 Silo

Waterfront, Cape

Town

fully glazed, double -skin glass façade that maximises and ensures optima views l use of natural light, displacement ventilation and the use of a sea-wa ter cooling system This system makes . use of water from the ocean to reject waste heat from the cooling plant, which allows for potable water savings significant and improves the overall efficiency the building. Further of sustainable feature s include a private roof garden, low-flow water fittings and electric-car chargin points in the basem g ent.

InternatIonal

tre

The Oberoi Cen

Business

RALL WINN OVE ER RALL GREEN AW OVE AR D

for excellen ce 2014 SAPOA awards for excellen ce 2014

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ORATE OFFIC ED ORP EV R: C EL NE OP W IN ME

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FROM LEFT TO RIGHT Frans de Jager FrancoisFROM TO RIGHT Frans (Business Development RossoLEFT uw (Direc de Jager (Busin Direct Francois Rosso tor), Charl Botha ess Developmentor, Founder), Martin Meine Sandi Mbutu ma (Busin uw (Director), Charl(Director), Chetin Ramje sz (Cape Director, Found e (Direc Botha er), Martin Meine Town Resident Direct Sandi Mbutu ess Development Director),(Director), Chetin Ramje tor), Leon Cronje or), ma (Business sz (Cape Town (Financial Direct e (Direc Development Nicolas Sheard (Chief Resident Direct or, Founder), Execu tor), Leon Cronje Director), Nicola or), s Sheard (Chieftive Officer, Founder),(Finan Direct Andrecial Executive Officer w Mmba or, Founder), , Founder), Andre ra (Quality Assurance Director) w Mmbara (Qualit y Assurance Director)

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11:17 AM 2015/12/02 11:14

meet the mayor

Creating polycentric cities through collaboration In its continued effort to strengthen partnerships, dialogues and collaboration between the commercial property sector and government, SAPOA met with City of Johannesburg Executive Mayor Parks Tau and senior members of the city By Nthabi Nhlapo

SAPOA President Elect Nomzamo Radebe, SAPOA Chief Executive Officer Neil Gopal, Executive Mayor of the City of Johannesburg Parks Tau, City of Johannesburg City Manager Trevor Fowler and SAPOA President Mike Deighton

he SAPOA Meet the Mayor initiative in Jo’burg was attended by Executive Mayor Parks Tau, SAPOA President Mike Deighton, SAPOA Chief Executive Officer Neil Gopal, SAPOA Board members and representatives of the City of Jo’burg, among other key government and property stakeholders. Speaking to attendees, Deighton pointed to the north of 50% of GDP that is generated in our cities, which is expected to grow closer to the global standards of about 75%. Recognising this fact he said, “Tonight we are here to drive value that lies inherent and

embedded in our cities, and events like this one speak to the foundations of how we move cities forward through relationships between influential people such as those that are brought together by these events.” The occasion was a celebration of the progress in relationship-building between SAPOA and the public sector, and a chance for engagement in a constructive, relaxed setting. “The concept of the corridors of freedom gives confidence and direction to business, and assists businesses in bringing about the changes to the economy needs,” he said.

Mayor Tau concurred in his presentation, saying, “It is imperative that we solidify this partnership to ensure synergy between the city and the private sector. We are home to 40% of the people of South Africa (and counting), which makes it paramount that we begin to plan our cities in an even more sustainable way, taking into consideration what the future of our cities will look like.” He noted that the country is evolving in terms of energy, especially because the city has taken responsibility for climate change and is progressively finding alternative ways of producing and consuming energy. “This means that some of the traditional ways we have used for generating revenue via rates and taxes will be pressed as people move more steadily to alternative energy,” he said. “As municipalities, we have to think about these issues and consider having conversations about future revenue streams.” The mayor spoke about the city’s last engagement with the commercial property sector, which focused on, among other things, the new city form and capital investment programme, the cost of doing business with regards to tariffs, turnaround times and

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meet the mayor administrative efficiencies (land use and building control, and clearance certificates) as well as climate change and resilience. He also expressed the city’s impact of spatial disconnect by looking at the inefficiencies of the urban systems across to country, which include the amount of time people have to spend to reach opportunities such as their workplace. “Globally, cities with a higher density mean that people live closer to their place of work and leisure,” said Tau. “One of the critical considerations when establishing a metro is its ability to create various nodes that are polycentric and function as a unit. As the city, we’ve been looking at creating a compact form of polycentrism through the intervention of the corridors of freedom to help us create a city that functions better than it does.” He mentioned that over the past few decades, the city’s infrastructure investments have been driven by certain policies that take into account its spatial framework as well as developers’ needs. The mayor also mentioned that the city is still in conversation with the industry on the issue of valuations, and perhaps even self-valuation of commercial property. “Let us use conversations such as this to have discussions about partnerships that can help us reap mutual benefits for both the municipality and business,” said Tau. “We are convinced that SAPOA is our best starting point in building these partnerships.” He highlighted three areas of discussion and partnerships:

Paul Kollenbeg and Renney Plit

Goeff Jenette and Stan Katz

Global environment facility In the Corridors of Freedom: look at models towards the creation of compact low energy zones; need to partner with SAPOA and the Green Building Council of South Africa for this.

Water The installation of water-saving devices (such as cisterns and urinals), retrofitting, contemplating a new by-law for new buildings, and considering using treated effluent in golf courses and office parks.

Neil Gopal, Marianka Victor and SAPOA board member David Green

Energy Finding means to generate and use power more efficiently. As part of his comments, Gopal – who also drove the day’s programme – said that over the past few years the relationship between SAPOA and government has improved. Gopal also mentioned that SAPOA is involved in some key discussions with other cities and government departments.

Anthony Diepenbroek, Wenhui Du and Niki Guo

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government

SAPOA and City of Tshwane engagement SAPOA met with key City of Tshwane stakeholders to foster relationships between the public sector and the private sector on issues affecting property owners, managers and developers in the capital city By Nthabi Nhlapo and Maud Nale Photographs by Xavier Saer

FROM LEFT City Manager of the City of Tshwane Jason Ngobeni, SAPOA Chief Executive Officer Neil Gopal, MMC for Economic Development & Planning Councillor Subesh Pillay, SAPOA President Mike Deighton, and MMC for Housing and Human Settlements Councillor Joshua Ngonyama

APOA recently had an engagement session with some key City of Tshwane representatives in Irene, Centurion. The city presented its Vision 2055 – remaking the capital city through radical economic transformation and spatial justice. The event was attended by Councillor Subesh Pillay, MMC for Economic Development and Planning; City Manager Jason Ngobeni; Joshua Ngonyama, MMC

Councillor Subesh Pillay

for Housing and Human Settlements; SAPOA President Mike Deighton; and SAPOA Chief Executive Officer Neil Gopal, among others. Deighton, also the Managing Director of Tongaat Hulett Developments, highlighted the four pillars of SAPOA. “The four pillars of SAPOA are relationships, education, advocacy and leadership,” he told attendees. “Relationships play a strategic role in bringing together key stakeholders in our vision as a country.” Pillay shared the city’s vision. “The vision for the City of Tshwane is to be a liveable, resilient and inclusive city whose citizens enjoy a high quality of life, and have access to social, economic and enhanced political freedoms, and where citizens are partners in the development of the African capital city of excellence by 2055.” Pillay highlighted the following outcomes for the city in line with Vision 2055: ● The creation of a resilient and resourceefficient city; ● Harnessing a growing economy that is inclusive, diversified and competitive; ● Building a city with quality infrastructure development that supports liveable communities;

● Erecting an equitable city that supports happiness, social cohesion, safety and healthy citizens; ● Being an African capital city that promotes excellence and innovative governance solutions; and ● Ensuring that South Africa has activist citizens who are engaging and aware of their rights, and who present themselves as partners in tackling societal challenges.

Shaakira Karolia, City of Tshwane chief economist

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government Agri-business

City Manager of City of Tshwane Jason Ngobeni

Vision 2055 will create sustainable and inclusive growth, driven by creating jobs and growth in three sectors and underpinned by a strong, green economy. The three sectors that are earmarked for growth are:

Vision 2055 aims to support emerging farmers and turn Tshwane into a hub for agriculture production and processing. The city will develop a “green belt’’ of industries, agricultural beneficiation and green settlements; however, it is not planning to spend vast amounts of money implementing these interventions and will rather develop innovative revenuesharing arrangements with the private sector. The Tshwane Agropolitan City located in the east of Tshwane will be instrumental in reigniting an interest in agriculture and agriprocessing. It will also contribute towards renewable energy generation through solar and biogas plants, job creation, and the social cohesion and restoration of dignity to the displaced farmers of the Bronkhorstspruit and Cullinan areas.

At the engagement session, attendees addressed concerns around stimulating green industrial development, the delay in approval processes and capacity problems from the city. Pillay addressed these and other concerns, saying that there are several major interventions that the city will implement to crate efficiency and fast-track processes in the City of Tshwane, especially the inner

Tourism This will transform Tshwane into a globally recognised business destination. The Bus Rapid Transit system, A Re Yeng, forms an accessible transport system for locals and tourists alike. The city aims to create an affordable, fast, convenient and accessible transport hub. The City of Tshwane, as part of Integrated Rapid Public Transport Network (IRPTN), conducted a pre-feasibility study for Light Rail Transit (LRT) for the City of Tshwane in the last financial year. The findings of the city’s 2014 IRPTN Operations Plan showed that some of the proposed future IRPTN routes are likely to be suitable for the possible introduction of LRT. It was recommended that the feasibility of introducing LRT be subjected to further, more detailed investigation.

SAPOA President Mike Deighton

city regeneration. These will include the introduction of incentives to attract investments as well as quickening the approval processes. The city will continue to engage with the various sectors to understand how to do things better. “It’s all about partnerships,” said Gopal in closing. “There is so much more that we can achieve together.”

SAPOA Chief Executive Officer Neil Gopal

Education The aim of Vision 2055 is to drive access to education and economic growth, and ensure Tshwane’s global recognition as an education hub. Tshwane has four university precincts that are supported by additional tertiary and research institutions. These precincts will be instrumental in the creation of a “university city” through creating significant landmarks that provide orientation cues and signage to assist in getting around. Recreation, arts and culture will be emphasised through the hosting of several cultural events, a vibrant nightlife and a choice of activities for those with varied interests.

Guests at the engagement session

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feature

Our rapidly developing cities: the brokers’ take With the rapid development of cities and continued urbanisation, commercial property brokers may be left to face several challenges. We find out what some of these may be By Nthabi Nhlapo

S “This has provided brokers with more stock to show their clients but at the same time has put pressure on asking rentals. A number of developers have built on behalf of specific tenants off the back of long leases, but there are still a number of properties being built in the hope of finding occupiers, putting the developers at risk” – Francois Staples, joint Chief Executive Officer and co-owner of Galetti Knight Frank

outh Africa (and the rest of Africa) is expected to be largely urbanised in a few years, with more and more people leaving their rural homes for the big cities. This has driven large-scale developments and the mixed-use evolution into gear with an increasing number of residential and commercial property developers being party to the expansion of our cities. Between the developers and owners of property and clients who are on the lookout for premises are the property brokers, who have to balance finding the right properties at the right prices in a vibrant urban economy. Francois Staples, joint Chief Executive Officer and co-owner of Galetti Knight Frank, says growth in the commercial centres over the last five years has been huge. In reference to Cape Town, he says a large number of AAA-grade offices have come into the market, with more to follow soon. “This has provided brokers with more stock to show their clients but at the same time has put pressure on asking rentals,” he says A number of developers have built on behalf of specific tenants off the back of long leases, but there are still a number of properties

being built in the hope of finding occupiers, putting the developers at risk.” He says the demand for new buildings is not keeping up with the increasing supply, and the high asking rentals of AAA-grade newly built property is increasing the desirability of B- and C-grade, thus reducing vacancy levels in these properties. He reflects on the popularity gained by mixed-use precincts: “There is more demand for live/work/play-type environments now than ever before. With security, the cost of commuting and general convenience of mixed-use developments, traditional types of buildings will find it increasingly difficult to compete. However, smaller towns remain unaffected as there simply isn’t the scale of demand to justify development of these types of environments yet.” Although the property industry is lively, he points out some challenges, including compliance with new government regulations. “We need to look for a way in which we can improve training, specifically tailored towards commercial brokering,” he says. Wendy Peacock, Managing Director of CIP Brokers agrees that there are some challenges for commercial property brokers – but these

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are not necessarily aligned to the rapid urbanisation of the country. Based in Durban, she says finding decent stock to show clients is a growing problem. “Durban has been pretty slow in redeveloping the CBD,” she says. “Having said that, we have a number of new players in the CBD who are converting old office blocks into affordable housing and student accommodation.” She mentions some developments in the Durban area, including: ●● 320 West Street, which has been upgraded for office tenants after it was sold to Propertuity, and is leasing at around R50/m². ●● The ex-FNB property on the corner of Smith and Field Streets has been converted to smaller retail outlets on the ground and mezzanine floors, and the “office tower” has been sold to a college.

“There is still a shortage of retail space in the CBD as there are only four blocks that trade well” – Wendy Peacock, Managing Director of CIP Brokers ●● The two blocks (of small workshop and office buildings) opposite the Durban ICC have been sold for R100million and will be upgraded to the same standards as Maboneng in JHB. Council has also earmarked the property across the road for its new Council office development.

●● The old army site next to the Suncoast Casino has been sold to Anand Singh for a theme park and hotel development. ●● The old China Mall property (previously owned by Bears) is undergoing a revamp for retail outlets. Even with these developments, Peacock says there is still a shortage of retail space in the CBD as there are only four blocks that trade well. “Most of the stores have a basement, ground floor and first floor, which is not ideal for today’s market,” she says. “Rentals are high – but just one block out you can achieve rentals of around 50% cheaper.” Selwyn Sharon, commercial broker at Pam Golding Properties, says our major cities have been affected differently by rapid urbanisation. “You can’t compare Cape Town to Sandton,” he says. “There are a lot of company head offices in Sandton, while Cape Town has fewer large corporates and tenants are more conservative. A global fact is that people are coming from the countryside more rapidly, so we expect cities to grow at a faster pace and expand dramatically.” Sharon says this puts pressure on residential property demand. “For almost 10 years, there were very few new buildings constructed in the Cape Town CBD, and old office buildings were converted into residential properties. Now there is a huge demand for convenient living spaces as young, affluent people are coming to the city.” The biggest issue is finding buildings for sale. “I have lists and lists of people and consortia who are willing to buy buildings but there is very little supply, and the private landlords and companies who own property in Cape Town are not selling,” says Sharon. It is evident that brokering is a dynamic facet of commercial property – and as long as our skylines continue changing, so will the role of the broker.

You can’t compare Cape Town to Sandton. There are a lot of company head offices in Sandton, while Cape Town has fewer large corporates and tenants are more conservative. A global fact is that people are coming from the country side more rapidly, so we expect cities to grow at a faster pace and expand dramatically.” – Selwyn Sharon, commercial broker at Pam Golding Properties

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Green Building Council of SA on an upward trail The euphoria of the recently held annual Green Building Convention was heightened by achievements and milestones on the sustainability agenda

The Green Building Council of South Africa certifies the first housing projects in the country using the EDGE residential green building tool

he Green Building Council of South Africa (GBCSA) recently hosted its annual Green Building Convention in Cape Town – a signature gathering on the greening and sustainability calendar that brought together close to 800 diverse property, green building and sustainability industry leaders and professionals for a week of green building education courses and environmentally conscious building tours, and two days of high-profile thoughtleadership. This was coupled with an innovative exhibition of green building products and services as well as excellent networking. We look at some of the highlights from the conference.

cost of going green. These topics brought about further debate on the ongoing energy crisis, the overload in the transport sector, the growing water crisis and alternative energy solutions. The Convention programme, led by broadcast personality and property guru Kura Chihota, included Dr Chris Smith,

Top speakers “If everyone got free WiFi with every tree they planted, we wouldn’t have the problem of climate change.” This was the sentiment shared by renowned businessman, activist and sustainability advocate Jochen Zeitz at the Convention. Industry leaders shared their expertise and insight, in line with the convention theme of Inspiring Better Buildings, by unpacking ways of building better business, building better cities and delving into the

Dr Chris Smith

a member of the Naked Scientists, based at Cambridge University in the UK. The group is made up of a team of scientists, doctors and communicators whose passion is to engage the general public more closely about the worlds of science, technology and medicine. The Naked Scientists’ radio shows, heard locally on Radio 702 and in several other countries around the world, cover not only scientific but also business and social perspectives on sustainability. Former Greenpeace activist and chemist Professor Michael Braungart was another inspiring speaker at the convention. He spoke about how, as a society, we can rethink industrial production in a way that is positive instead of negative. As the founder and scientific CEO of the Hamburg-based consulting firm, Environmental Protection and Encouragement Agency (EPEA) Internationale Umweltforschung, Braungart took a step further and focused on achieving sustainable abundance in production. He has authored notable books on his pioneering concepts, including Cradle To Cradle: Remaking The Way We Make Things and Beyond Sustainability: Designing For Abundance.

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news Green Star SA Leadership Awards 2015 South Africa’s top-rated Green Star SA buildings and leading professionals were announced in the Green Star SA Leadership Awards 2015. The annual Green Star SA Leadership Awards, sponsored by Old Mutual Property, are comprised of four categories. For buildings, there are the Highest Rated Building and Best Quality Submission awards, while individual professionals are recognised as either a Rising Green Star or an Established Green Star. “Our Convention this year aimed to Inspire Better Buildings, and this is exactly what our leading building professionals and projects are achieving,” said Brian Wilkinson, GBCSA’s Chief Executive Officer. “Like us, they constantly work towards designing, building and operating better, greener buildings that tread lightly on our stressed planet. These winners are at the forefront of making a difference in the built environment. They are leading by example in the greening and sustainability space.” As the sponsors of the Green Star SA Leadership Awards this year, Regional Manager for Old Mutual Property Faieda Jacobs says they are proud to be a part of the event. “Old Mutual Property is committed to sustainable development, and the breadth and quality of entries submitted only serves to prove there are many corporates out there starting to come on board,” she says. “We see our participation in the awards as an important step in building a better future for South Africa.” Hotel Verde in Cape Town was officially named the winner in the Highest Rated building category for its Existing Building Performance (EBP) pilot tool rating. Hotel Verde is owned by Mario Delicio, with Andre Harms from Ecolution as the project’s accredited professional. Runner-up in this category, Upper Grayston Building in Sandton Central, Johannesburg, was recognised for its 6-Star Green Star SA Office v1 As Built rating. It is owned by Tower Property Fund and its Accredited Professionals were Annelidé Sherrat and Marloes Reinink of Solid Green. The best quality submission award was won by Solid Green’s Dash Coville, for his work as the green building accredited professional on the Monte Circle Building A development. The development received a 4-Star Green Star SA Office v1 Design rating and achieved a score of 98% of points targeted. Monte Circle is owned by Abland. The runner-up in this category was Sally Misplon for her work as the green building Accredited Professional on the Gatehouse Building at Black River Park in Observatory, Cape Town. The building received an EBP Green Star SA rating, and is owned by Redefine Properties.

Jochen Zeitz

Acknowledging outstanding and ongoing contribution to green building in South Africa, Alison Groves of WSP was awarded the Established Green Star. Jaco Kemp of Arup was named the runnerup in this category. Mauritz Kruger of RHDVH was named this year’s Rising Green Star and Nick Gorrie of Agama was the category’s runner-up. “The future is indeed bright with these professionals working together for a better built environment,” Wilkinson says.

Excellence in Design for Greater Efficiencies With the GBCSA certifying the first housing projects in the country using the Excellence in Design for Greater Efficiencies (EDGE) residential green building tool, currently in the pilot phase, the Council is now set for a major roll-out of green building ratings in South Africa’s residential property sector. At the Convention, Wilkinson revealed that the Ravenswood affordable housing

development in Ekurhuleni, Gauteng, has become the first residential project in Africa to achieve an EDGE Design Certification. The development is led by affordable housing fund, International Housing Solutions (IHS), who are rolling out a number of residential developments in South Africa that will be EDGE-certified. Created by the International Finance Corporation (IFC), a member of the World Bank Group that focuses on the private sector, EDGE was brought to South Africa a year ago by the GBCSA. It was launched at the GBCSA’s seventh annual Convention in September 2014. “Awarding the first EDGE pilot rating in the country is a significant milestone, not just for the GBCSA and its partners in the programme, but for the South African residential property sector and its journey towards going green and becoming more sustainable,” says Wilkinson. “We appeal to the residential property industry to join the movement to change the way homes are built in South Africa. “The Ravenswood development is officially the first residential project to secure an EDGE rating as part of the GBCSA’s piloting of the residential green building tool in South Africa, but two other projects have also since secured EDGE certification. Following this pilot phase, the GBCSA is now ready for a full roll-out of EDGE to residential development across the country. “When the GBCSA and the IFC announced the introduction of EDGE in the country last year, South Africa became the first nation to introduce the EDGE certification programme for homes on behalf of the IFC. It was a ground-breaking move. Now we want to take the roll-out of EDGE to the next level. EDGE-certified homes will attract prospective buyers who understand the long-term value of their investment in a green home, with its lower utility bills and higher resale price. This is the message we will be taking to the residential property sector.”

The EDGE residential green building certification is currently in pilot phase

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research About the report Retail companies based in Africa and listed on the continent were included in the top 25 African powers of retailing, based on their non-auto retail revenue for fiscal year 2013 (encompassing fiscal years ended through June 2014). African-listed subsidiaries of large global retailers are included as individual entities in this report, and it is aimed at identifying those listed companies that one could consider “African” or “Local”. Angola and Ethiopia do not have stock exchanges and therefore retail companies based in these countries were not included in the report. Retail trade comprises establishments engaged in the sale of merchandise, generally in small quantities to the general public, and the rendering of services incidental to the sale of merchandise (eg. delivery, installation, maintenance, repair, alterations). The revenue derived from such service activities is included in the African powers calculation of retail revenue. Food-service companies and restaurants are not included in this list, as they are generally considered to be part of the leisure and hospitality sector of the economy. Further to this, motor vehicle dealers are excluded along with retailers that derive the majority of their revenue from the sale of motor fuel, as they are considered to be primarily petrol stations. Each of the top 25 companies was analysed on key parameters such as financials, core and ancillary retail sectors, geographic presence, store formats and store footprint. The key financials collated were group revenue, retail revenue, net profit margins and return on assets.

Retailing in Africa Deloitte’s ﬁrst edition of the African Powers of Retailing report, unearths some insights into the top 25 regional retail players, their successes and some of their stories

he recently released ‘African Powers of Retailing’ report is Deloitte’s first in an annual series which identifies the Top 25 listed African retailers by revenue and tracks the progress of the top African retail performers on the continent. It provides a comparative macro-view of Africa-based (or “home-grown”) listed companies whose core business is retail. African-listed subsidiaries of large global retailers are included as individual entities, while there is no focus on foreign multinational companies with operations in Africa. Many African economies are transitioning towards consumption-driven markets, which is, to some degree, reflected in the country retail contributions to GDP where both East and West Africa have 10 countries with retail revenue contributions of more than 50%. Five key pillars of the consumer opportunity in Africa are evident: the rise of the middle class, exponential population growth, the dominance of the youth, rapid urbanisation, and fast adoption of digital technologies. While the top 25 retailers are concentrated in South Africa, the emergence of companies such as Zambeef (Zambia), Choppies (Botswana), and Société Magasin Général (Tunisia) are observed as some of the fastest-growing on the continent. The 10 fastest-growing retailers also have a wide geographic presence,

with an average country presence in eight countries and an average store count of more than 900. Although still in its infancy, the African digital evolution is a promising prospect for retailers, with the e-commerce market expected to be worth approximately US$50billion by 2018. Some of Africa’s most successful emerging e-commerce businesses originated in Nigeria and have expanded across the continent. International retailer interest in Africa also appears to be increasing, with early stage retail development representing significant potential as retail chains develop and gain economies of scale, and food safety and higher store standards become embedded in shopper expectations. The barriers to retail success mentioned in the report mirror many current views, and include a shortage of high-end retail space, infrastructure issues, political instability and currency challenges. For international and African companies seeking to invest on the continent the opportunities clearly exist – and there are local players to partner with who know the markets, understand its cultures and speak the languages. If common ground can be found, a combination of international expertise and local knowledge might be a successful formula for ongoing retail growth in Africa.

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research The informal retail market

African retail trends 2015

According to the United Nations Economic Commission for Africa, the African retail market is characterised by approximately 90% of transactions occurring through informal channels. This could signal an opportunity gap for the increased establishment of formal retail presence to capture larger portions of this market share. Hurdles such as the diverse consumer mix, low levels of established distribution networks, infrastructure constraints and political and economic uncertainties are some of the challenges faced by big formal retail chains setting up in-country operations. The small local and informal retail transactions account for 96% in Ghana and 98% in Nigeria and Cameroon. Even in Kenya, the vast consumer base in rural areas still shops at informal outlets, which account for approximately 70% of retail shopping. Zimbabwe also has a fragmented retail market and is seeing a recent upsurge in small “tuck shops”. South Africa leads the way in terms of formal retail, with 60% of South Africans shopping in formal retail supermarkets.

1. The informal retail market is still significant 2. Increasing omni-channel strategy adoption – the rise of e and mCommerce 3. International retailers enter Africa 4. South African retailers focus on expansion outside the continent 5. Forecourt retailing grows 6. Grocery retailing drives the industry Source: Deloitte, African Powers of Retailing

Internet retailing or e-commerce

Regional profiles based on the top 25 companies headquarters locations in FY13 Region

Number of companies headquartered in the region

Average retail revenue (US$-million rounded)

Share of top 25 revenue

Top 25

1 772

100%

Southern Africa

2 441

93,7%

East Africa

246

2,8%

North Africa

568

2,6%

West Africa

445

Central Africa

Source: Deloitte, African Powers of Retailing

Although it accounted for only a small share of total retail sales in South Africa at 0,59% in 2014, the market is seeing a positive growth rate in e-commerce. Mobile commerce or m-commerce has become a focus for many retailers, given the proliferation of mobile phones, the shortage of retail space infrastructure and the increasing need for convenience among consumers. South Africa’s major retailers are adopting omni-channel approaches in an effort to supplement brick and mortar sales with online stores. These include Mr Price Group, Massmart Holdings and Woolworths Holdings.

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research

Top 25 companies: Quick stats

The sector is also seeing increased interest from global investors. In 2014, hedge fund Tiger Global Management invested US$100million in South African online shopping website Takealot.com, while the German firm Rocket Internet also invested €120-million in Nigeria-based online retailer Jumia in 2014. Cyber-security, fraud, corruption, and infrastructural and logistical difficulties bring with them many growth obstacles; however, internet retail start-ups are finding solutions to these challenges and continue to invest in consumer awareness, optimising delivery networks and building trading platforms. Large retailers appear to be focusing on e-commerce, moving towards real-time proximity marketing and on-the-move customer engagement.

Top 25 companies: Quick stats

International retailers enter Africa International retailers eager to establish a footprint on the African continent have tended to enter via South Africa. This is historically the result of a more mature South African market and access to the purchasing population. Retail barriers to entry in Africa continue to include a shortage of high-end retail space, infrastructure issues, political instability, overstatement of access to the middle class, and currency challenges, among other things. Walmart Stores entered South Africa by purchasing a controlling share in local retailer Massmart Holdings in 2011, and Londonbased accessories maker Radley partnered with Brand Capital to enter South Africa in October 2013. Other retailers who have entered Africa include Mango, Topshop, Zara and Cotton On – all in South Africa. The US fashion brand Forever 21 set up its first South African store in 2014. Hugo Boss opened a store in Lagos in 2013, while Prada opened a store in South Africa in 2015. In Nairobi, London-based private equity firm Actis inaugurated its US$250-million Garden City mall in May.

Top 25 companies: Quick stats

88.9%

Composite net profit margin for the top 25

5.4%

2011

128,6

2012

Average number of countries in which a top 25 retailer has operations

Compound annual growth rate in revenue, 2009 to 2013

9.8%

US$9.85 bn Revenue of the number 1 retailer in the top 25

US$47.4 mil Minimum revenue to be on the top 25 list

Average retail revenue size of the top 25

US$1.7 bn

Source: Deloitte Analysis

Source: Deloitte analysis Source: Deloitte analysis

African Powers of Retailing 2015

South African retailers focus on expansion outside the continent

109,4

104,1

111,4

119,4

2013

2014

2015F

2016F

2017F

128,3

2018F

Forecourt retailing grows

Retailers such as The Foschini Group (TFG), Shoprite Holdings and the Spar Group are targeting expansion beyond South Africa, looking as far as Europe and Asia Pacific. They seek to expand into areas or countries that are showing recovery and provide access to an established consumer base. While sub-Saharan Africa has long-term potential, a shortage of retail locations and high transportation costs are among the factors limiting expansion opportunities in the area. According to Bloomberg, South African retailers have already spent at least US$1,5-billion buying European companies in 2015. In September, Truworths International entered into preliminary nonbinding negotiations to acquire Office Retail Group, a UK-based footwear retailer. The Foschini Group acquired UK clothing chain Phase Eight for US$214-million in January. Steinhoff International Holdings acquired Cape Town-based clothing and accessories retailer Pepkor Holdings for a US$5,3-billion, giving it access to markets such as Poland, the Czech Republic and Australia. Mr Price Group, a South African retailer selling clothing and household goods, will open a test store in Australia in the second half of the new fiscal year ending March 2016.

115,1

Source: Planet Retail; F = forecast retail sales

52.5%

5.3

US$44.3 bn Collectively earned revenue of the top 25

E-commerce channel share of total retail sales in South Africa (2011-2020F) 139,1

Food and beverage sector contribution to the top 25 collective revenue

Revenue contributed by the top 10 retailers to the top 25

137,9

147

2019F

2020F

Forecourt retailing (which refers to express stores that stock between 1 500 and 2 500 product lines, stay open 24 hours a day, seven days a week and cater to the convenience retail market) is growing at a rapid rate in South Africa. The last few years have seen several South African retailers collaborate with forecourt owners to branch out into this retail format. Woolworths Holdings and Engen Petroleum entered into a collaboration agreement for Woolworths to open express forecourt stores at Engen petrol stations. In 2013, Woolworths Holdings opened its 50th Engen forecourt store, known as Woolworths Food Stop. The company is considering accelerating plans to open 45 additional forecourt stores by June 2016, taking the total number of Food Stop outlets to 95. Pick n Pay signed a similar deal with BP in 2008, resulting in nine Pick n Pay Express stores on BP forecourts in South Africa by 2012. There are also plans in place to convert 120 BP Express forecourt stores into Pick n Pay outlets between 2012 and 2017. Fruit & Veg City signed an agreement with Caltex to roll out Freshstop stores in Caltex forecourt stores. There are currently 200 forecourt stores in operation. Fast-food chains have also partnered with petrol stations: Burger King is at Sasol, Steers outlets can be found at Shell stations, and Wimpy is present at Engen stops. The forecourt retail market constitutes approximately four percent of South Africa’s retail market, and has emerged to offer a one-stop shop that meets the fuel and food needs of consumers. Forecourt retailers are expected to record continued growth as a number of new petrol stations open throughout Southern Africa. In Africa as a whole, convenience shopping is becoming one of the primary forces behind organisational strategy revisions in terms of locations and stores.

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research Some service station operators have developed their own food and beverage retail offerings via forecourt stores or through partnerships with other retailers in order to capitalise on the demand for convenient food shopping. Delight! and Bonjour are both retail offerings from the oil and gas players Sasol and Total Nigeria.

Grocery retailing drives the industry Among the top five largest African retailers are Shoprite Holdings, Pick n Pay and the Spar Group, all of which are involved in food and beverage retailing. Furthermore, approximately 64,8% of total retail sales across the continent in 2013 were accounted for by food retail sales. The popularity of retail supermarket chains continues to rise among low- and middleincome consumers, according to Euromonitor International. As the African economy continues to improve and expand, it is likely that groceries will be a key driver of industry growth across the continent’s retailing industry.

The top 25 listed retailers in africa Having collectively earned a retail revenue of US$44,3-billion in FY13 and contributing approximately 5,4% to the total African retail market size of US$823,2-billion, the top 25 listed retailers in Africa grew by nine percent year on year in 2013, from US$40,6-billion in the previous year. Africa’s economic progress and its 350million-strong middle class (as per estimates of the African Development Bank) have made the region attractive for retailers. With an urbanisation rate of 3,61% and seven of the 10 fastest-growing economies in the world, sub-Saharan Africa, in particular has become an attractive investment destination for both domestic and international retailers. The southern African retail market is relatively more mature and sophisticated than those in West and East Africa; however, because of its saturation, companies are looking beyond southern Africa to expand into countries such as Rwanda, Tanzania, Kenya, Nigeria and Ghana.

The top 25 African retailers have a continental presence (including their headquarters and operations) in 21 African countries, where they operate either though their own stores or through franchise agreements with local retailers. The majority of these companies have their headquarters in South Africa, and 15 of the companies with South African headquarters account for US$40,7-billion or 91,9% of retail sales of the top 25 retailers overall. In terms of retail sector, 36% of the top 25 listed retailers (nine out of 25 companies) are involved in core food and beverage retailing, with 24% focused on clothing and accessories (six of the 25 companies).

Operational presence Southern Africa is the headquarters country of 17 of the top 25 publicly listed African retailers, with a revenue share of US$41,5billion (93,7% of total retail sales of the top 25 retailers).

The top 25 African retailers, FY13 Retail revenue rank FY13

Name of company

HQ country

Shoprite Holdings Ltd

South Africa

Massmart Holdings Ltd

South Africa

Pick n Pay Stores Ltd

South Africa

The SPAR Group Ltd

Core retail segment 2013

FY13 revenue (US$-million)

FY13 revenue growth (y-o-y )

FY11-FY13 revenue CAGR

Food and beverage

9 852,5

10,5%

11,1%

General merchandise

7 529,9

9,8%

8,7%

Food and beverage

6 343,3

6,5%

6,8%

South Africa

Food and beverage

5 166,7

10,7%

11,5%

Woolworths Holdings Ltd

South Africa

Clothing and accessories

3 827,8

12,7%

17,8%

The Foschini Group Ltd

South Africa

Clothing and accessories

1 594,1

13,6%

11,7%

Mr Price Group Ltd

South Africa

Clothing and accessories

1 557,7

15%

14,1%

Clicks Group Ltd

South Africa

Health and personal care

1 349,7

7,9%

6,7%

JD Group Ltd (Steinhoff International Holdings Limited)

South Africa

Furniture and home furnishings

1 141,3

-5,8%

2,5%

Truworths International Ltd

South Africa

Clothing and accessories

1 008,2

7,1%

8,8%

Label’Vie SA

Morocco

General merchandise

681,9

2,1%

3,5%

Choppies Enterprises Ltd

Botswana

Food and beverage

567,9

24,4%

23,2%

Lewis Group Ltd

South Africa

Electronics and appliances

523,4

1,8%

4,3%

OK Zimbabwe Ltd

Zimbabwe

Food and beverage

483,7

0,8%

8,3%

Iliad Africa Ltd

South Africa

Building materials

464,2

-0,6%

2,7%

Société Magasin Général SA

Tunisia

General merchandise

454,5

11,3%

19,5%

PZ Cussons Nigeria Plc

Nigeria

Electronics and appliances

444,7

2,2%

0,5%

Meikles Ltd

Zimbabwe

Food and beverage

346,4

-2,3%

Sefalana Holding Company Ltd

Botswana

General merchandise

229,6

11,7%

Zambeef Products Plc

Zambia

Food and beverage

171,8

23%

27,4%

Uchumi Supermarkets Ltd

Kenya

Food and beverage

163,8

0,7%

AVI Ltd

South Africa

Food and beverage

155,7

5,2%

21,9%

Furnmart Ltd

South Africa

Furniture and home furnishings

131,6

8,9%

13,4%

Edgars Stores Ltd (Edcon)

Zimbabwe

Clothing and accessories

64,8

7,6%

12,6%

Rex Trueform Clothing Co Ltd

South Africa

Clothing and accessories

47,4

3,7%

-3,7%

Source: Deloitte, African Powers of Retailing; CAGR = composite annual growth rate, y-o-y = year on year SOUTH AFRICAN PROPERTY REVIEW

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research Top 25 African retailers by country headquarters (%) Morocco Tunisia Nigeria Kenya Zambia Botswana Zimbabwe 60%

South Africa 0%

10%

20%

30%

40%

50%

60%

70%

Source: Published company data and Deloitte analysis

Although the highest year-on-year revenue decline was that of the South Africa-based company JD Group, the region did not pose significant challenges for other companies operating in Southern Africa. This includes the Mr Price Group, TFG and Woolworths

Holdings, which all had some of the highest annual revenue growth rates in 2013. East Africa, with five of the top 25 companies headquartered in the region, accounts for US$1,2-billion (2,8% of their total retail sales) and posted 2,8% composite year-on-year growth.

North Africa witnessed stronger year-onyear growth at 5,6%, contributing two of the top 25 retailers and a US$1,1-billion revenue share (2,6% of total retail sales of the top 25 retailers). West Africa accounted for one percent of total retail sales in 2013, with only one company in the top 25. The central African region had no headquarters of any company on the top 25 list. A total of eight of the fastest 10 companies were based in Southern Africa (namely in Botswana and South Africa), while one company was based in East Africa (Zambia) and another in North Africa (Tunisia). While the top 25 retailers have a limited operational presence in Africa, operating in 21 out of 54 countries on the continent, other countries, such as Algeria, Sudan and Ethiopia, are among the top 10 countries by retail market size but have no listed African retailer present. Nigeria is the largest retail market in Africa with a retail size of US$122,9billion as of 2013; however, only one listed retailer is headquartered in the country, and five other listed retailers have an operational presence there. Report courtesy of Deloitte

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awards

Women in property awarded The face of the South African property sector is changing as woman make inroads into this traditionally male-dominated industry

n the last few years, the property sector has seen several women appointed as CEOs of property companies. Genevieve Naidoo, Chairwoman of the Women’s Property Network (WPN), acknowledges that things are changing as women continue to climb the corporate ladder across the real estate sector. The WPN recently celebrated women in the South African property sector at a gala dinner at the Sun Square Ballroom at Montecasino in Johannesburg.

Airports Company South Africa sponsored the event, with the awards sponsored by the Royal Institution of Chartered Surveyors. The awards are a collaborative platform dedicated to recognising outstanding leadership, vision, inspiration and innovation in organisations that have stepped up and shaped women’s roles within the private and public sector. The award categories reflect a wide spectrum of women, including CEOs, executives and leaders in corporate South

Young achiever award (under 35 years old)

Nina Dube

Public sector award The winner in this category was Nina Dube, recognised for the significant role she plays within Barclays Africa (Absa). In quite a short time, she has moved up the ranks through challenging positions. Also in this category, an honourable mention was made of Nikiwe Mkhabela of STANLIB who was acknowledged for the 2014 STANLIB achiever award. The other nominees were: ●● Jacqueline Bisschoff, Operations Director, UAS ●● Shevira Bissessor, Executive, AECOM ●● Nompumelelo Lukhele, Project Manager, Spar South Rand ●● Nikiwe Mkhabela, Asset Manager, STANLIB

Entrepreneur award

Zola Ntwasa

Africa, SMMEs, government departments and agencies, and entrepreneurs. Also at the gala dinner, two special recognition awards were announced that acknowledged significant contributions by dynamic, passionate women whose efforts have transformed and inspired the sector. These were awarded to Bronwyn Corbett, COO and CIO of Delta Property Fund and CEO of Delta Africa, and Jackie van Niekerk, Managing Director of Pivotal Fund Limited.

The nominations in this category were all strong candidates. The final consensus was that Zola Ntwasa of Jade Capital Partners be recognised as the winner as a result of her passion for the industry, involvement in various industry initiatives over the years, and the fact that she is well networked and respected. The other nominees were: ●● Nkuli Bogopa, Group Property Manager, Rio Tinto ●● Kim Faclier, Managing Director Property, GoIndustry DoveBId SA ●● Sibongile Manganyi, Managing Director, Indigo Kulani Group

Yondela Silimela

In this category, Yondela Silimela was recognised for her role within the planning department at the City of Johannesburg. The other nominee was: ●● Lebogang Shole, Head of Facilities Management, Public Investment Corporation

The awards were adjudicated by: ●● TC Chetty, Country Manager: RICS South Africa and Chief Executive, TC Chetty and Associates (TCAA) ●● Marius Muller, Chief Executive Officer, Pareto Ltd ●● Genevieve Naidoo, Head of Real Estate Valuations & Project Management (SA & Rest of Africa), Standard Bank CIB, and WPN Chair ●● Nomzamo Radebe, CEO, JHI Properties SOUTH AFRICAN PROPERTY REVIEW

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erie

s●

monthly cou n Our

Th e WOR

eye onLD thes worlds ●

by-country focu try-

Picturesque Alaska The home of three-million lakes, numerous volcanoes and boundless glaciers, Alaska is one of the US’s most scenic states Compiled by Nthabi Nhlapo

overing a fifth of the continent of the US, Alaska is the largest in the union – twice as big as Texas. The state that is only about 80km from Russia has almost its entire length of highway asphalt-surfaced, while approximately half of the roads in the highway system as a whole are paved. This puts misconceptions about bad roads in the state to shame. Other misconceptions concerning Alaska are the apparently bad weather and presumed high prices. During summer, average daytime temperatures throughout the state go up to 32°C – which is not at all as cold as perceived and very much contrary to popular belief. Similarly, although higher than in most states, prices throughout Alaska are generally quite reasonable and not as exorbitant as expected.

Landscape Alaska is quaint, with scenic landscapes covering most of the state. Of the 20 highest peaks in the United States, 17 are in Alaska. Denali, the highest peak in North America, is more than 6km above sea level; its Native American name translates to “The Great One”. There are more than 3 000 rivers in Alaska and more than three-million lakes. There are also an estimated 100 000 glaciers covering about five percent of the state, ranging from tiny cirque masses to huge valley glaciers, and making the state the home of more active glaciers and ice fields than the rest of the inhabited world. There is a lot of volcanic activity with more than 70 potentially active volcanoes – some of which have erupted in recent times. This is where the most violent volcanic eruption

Key facts ▼ State nickname “The Last Frontier”. The name Alaska is derived from the Aleut word Aleyska, meaning “great land”. ▼ State abbreviation AK ▼ State motto “North to the Future” ▼ State song Alaska’s Flag ▼ State capital Juneau, located in the southeast region of Alaska ▼ Largest city Anchorage

▼ Area 1 718 000km² ▼ Population 736 732 (Census Bureau: 2014) ▼ Name for residents Alaskans ▼ Major rivers Yukon River, Kuskokwim River, Colville River, Copper River ▼ Major lakes Iliamna Lake, Aleknagik Lake, Becharof Lake, Clark Lake, Minchumina Lake ▼ Highest point Mt McKinley: 6 194m above sea level. It is also the highest point in the US.

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eye on the world

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eye on the world Did you know? t Aurora Borealis (the northern lights) can be seen about 243 days a year in Fairbanks. t While it is legal to shoot bears in Alaska, waking a sleeping bear for the purpose of taking a photograph is prohibited. t Alaska is the only state name that you can type on one row of a keyboard. t The fishing and seafood industries are the state’s largest private employers. t Barrow, 1 287km south of the North Pole, has both the longest and the shortest day. When the sun rises on 10 May, it doesn’t set for nearly three months. When it sets on 18 November, Barrow residents do not see it again for nearly two months. t There are places in Alaska that get 24 hours of sunlight – and places that get 24 hours of darkness. t Giant vegetables are common in Alaska as a result of the extremely long days in summer. Alaska has grown a record-breaking cabbage, which weighed 42,6kg. t It is illegal to whisper in someone’s ear while they are moose-hunting in Alaska. t Alaska has the highest concentration of bears (grizzly, black and polar), numbering 100 000.

of the century took place in 1912 when Novarupta Volcano erupted, creating the Valley of Ten Thousand Smokes, which is now part of Katmai National Park. On 27 March 1964, North America’s strongest recorded earthquake, with a moment magnitude of 9.2, rocked central Alaska. Annually, 5 000 earthquakes (including 1 000 that measure above 3.5 on the Richter scale) are experienced in this state. Of the 10 strongest earthquakes ever recorded in the world, three have occurred in Alaska.

Population Alaska is the fourth-least populous and leastdensely populated of the 50 states. If New York City had the same population density as Alaska, only 16 people would be living in Manhattan. Approximately half of Alaska’s residents live within the Anchorage metropolitan area. Three groups of natives have previously lived in Alaska: Eskimos, Aleuts and Native Americans. In terms of race, the state is estimated to be 67% white, 15% American Indian and Alaska Native, five percent Asian and just over three percent African American.

According to the 2011 American Community Survey, most people over the age of five speak only English at home, with less than 20% speaking other languages (such as Spanish and other Indo-European and Asian languages). The Alaska Native Language Center at the University of Alaska Fairbanks claims that at least 20 native Alaskan languages exist; there are also some with different dialects. Most of Alaska’s native languages belong to either the Eskimo-Aleut or Na-Dene language families. Alaskans enjoy Dog Mushing, which was once the primary mode of transport in most of the state. Every year Alaska hosts the 1 931km Iditarod Trail Sled Dog Race from Anchorage to Nome, often called the “Last Great Race on Earth”.

Economy The cost of goods in Alaska has long been higher than in other states, which has earned it its notoriety as an expensive place to visit and live in. Recently, however, the cost of living has reduced significantly. Alaska is the 10th-wealthiest state based on per capita income, and the state’s unemployment rate as of November 2014 was 6,6%. According to a 2013 study by Phoenix Marketing International, Alaska had the fifth-largest number of millionaires per capita in the United States, with a ratio of 6,75%. Employment is primarily in government departments and industries such as natural resource extraction, shipping and transportation. Federal subsidies are also an important part of the economy, allowing the state to keep taxes low. Federal government employees, in particular United States Postal Service (USPS) workers and active-duty military members, receive a Cost of Living Allowance usually set at 25% of base pay because, while the cost of living has gone down, it is still one of the highest in the country. Rural Alaska, however, still suffers from extremely high prices for food and consumer goods compared to the rest of the country, because of the relatively limited transportation infrastructure. Alaska’s economy is dominated by the oil, natural gas, and fishing industries, with more than 80% of the state’s revenue derived from petroleum extraction. Tourism is also quite a significant part of the economy. Alaska’s main export product (excluding oil and natural gas) is seafood, primarily salmon, cod, Pollock and crab.

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eye on the world Agriculture represents a very small fraction of the Alaskan economy and is primarily for consumption within the state. The sector includes nursery stock, dairy products, vegetables and livestock. Manufacturing is limited, with most foodstuffs and general goods imported from elsewhere. About 65% of Alaska’s land is owned by the federal government – more than any other state. This land includes a multitude of national forests, national parks and national wildlife refuges.

Climate The weather is not as extremely cold as one would think, and summers can be surprisingly warm, reaching temperatures in the upper 30s on the Celsius scale. The southeast is both the wettest and the warmest part of Alaska on average, with milder temperatures in the winter and high precipitation throughout the year. Ketchikan is the only region in Alaska in which the average daytime high temperatures are above freezing during the winter months. The climate of Anchorage and southcentral Alaska is mild by Alaskan standards as a result of the region’s proximity to the coast. While the area gets less rain than southeast Alaska, it gets more snow, and days tend to be clearer. The area stretching from the northern side of the Seward Peninsula to the Kobuk River valley (i.e. the region around Kotzebue Sound) is technically a desert, with certain sections of it getting less than 25cm of precipitation annually. While the summer temperatures can sometimes be quite high, winter temperatures can easily fall below zero – sometimes as low as -51°C.

2012 retail sales statistics for Anchorage 0% 2%

5% 8% 10% 12% 15% 18% 20% 22% 25% 28%

Building material and garden Clothing and accessories Electrical and appliances Food and beverage Food services Petrol stations General merchandise Health and personal care Home furnishings Miscellaneous Non-store purchases Sporting goods

Anchorage

Alaska

United States

Source: Clrsearch.com

The highest recorded temperature in Alaska is 38°C in Fort Yukon (making Alaska tied with Hawaii as the state with the lowest high temperature in the US). The lowest official Alaska temperature is -62°C in Prospect Creek

– one degree above the lowest temperature recorded in continental North America (in Snag, Yukon, Canada). The climate in the extreme north of Alaska is Arctic, with long, very cold winters and short, cool summers.

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people in profile

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

Chief Operating Officer of Atterbury Trust Zahn Hulme

Giving back to the community has been in Atterbury’s DNA since the company’s inception. A crucial part of its business philosophy is giving back and creating opportunities. Two vehicles are used for this: the Atterbury Trust and the Atterbury Property Foundation. The Atterbury Trust is a key shareholder in Attacq, and has provided about 500 bursaries to students at tertiary institutions across South Africa over the past 18 years. Outstanding potential and severe financial need are the two criteria used for allocating bursaries. However, it’s not just about a financial contribution: the company also invests in the nurturing and mentorship of the candidates. The Atterbury Trust also contributes vital monthly financial aid to schools in Pretoria West, with money used to subsidise teachers’ salaries and for infrastructure maintenance, and is actively involved in the advancement of arts and culture, with the Atterbury Theatre being completed in May 2011. The Atterbury Property Foundation allocates a portion of the development cost of each new project to the surrounding community. This was the case with the development of Lynnwood Bridge, where two new libraries (one in Alkantrant and one in Soshanguwe) were built together with a children’s home in Constantiapark. The Foundation is also involved in the removal of alien wattle trees in Geelhoutboom, and sourced alternative accommodation for the homeless people of Newtown during the construction of Newtown Junction. An exciting new initiative that Atterbury became involved during in 2015 is the Richmond Park Treasury Trust.

Other Atterbury Trust projects include: ●● Funding an annual national Atterbury piano competition at the Atterbury Theatre; ●● Funding up-and-coming artists via the Atterbury Theatre and the annual Versnit production at Rust en Vrede wine estate; ●● Co-establishing the Triomf healthcare clinic in the community of Danville, where free medical services are provided by a group of doctors on a volunteer basis; ●● Investment in a community radio station, GrootFM 90.5, which is used as a platform to mobilise the public and obtain donations for Atterbury Trust’s projects; ●● The Re-Connect Shelter for homeless children in a donated house in Constantiapark, which Atterbury Property Foundation continues to support by paying property rates and raising funds, with foster care run by a non-government organisation.

Why did Atterbury decide to get involved in CSI projects? As a successful company that’s committed to the future of South Africa, Atterbury has a responsibility to continuously provide opportunities to the less fortunate. “Feed the stream of life, not just your own dam” is a favourite quote of Francois van Niekerk, cofounder of Atterbury and its former Chairman.

Why is it important for property companies and organisations to get involved in CSI projects? Property companies have the ability to affect surrounding communities positively – and they have a wide reach. More than just sponsorship, Atterbury focuses on projects that allow active involvement and have a hands-on impact on its immediate communities.

How has Atterbury benefited from giving back to society? It’s immensely satisfying to see Atterbury Trust bursary students flourish once they enter the job market.

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SAPOA industrial trends report

Qualified students are today actively involved in the South African economy as engineers, chartered accountants, legal advisors, teachers, and so on. The Atterbury staff members are also heavily involved in community upliftment projects (including outreach programmes in Danville and Booysens), which keeps the employees grounded and humble. The company’s credo is “We make a living by what we get, but we make a life by what we give.”

What are Atterbury’s future plans? Atterbury is looking to expand its existing community involvement in conjunction with the listed company Attacq. Projects in the pipeline include:

Richmond Park Atterbury was appointed as the developer on the new Richmond Park development in Milnerton adjacent to the N7 in Cape Town. It has huge significance as a major commercial development in Cape Town as well as from a socioeconomic and community upliftment perspective, with the affected families benefiting through the Richmond community trust. About 400 families were forcibly removed from this land in 1972 and resettled in Atlantis and on the Cape Flats. These families today represent around 5 300 people spanning five generations. A claim to have ownership of the land restored to its original owners in terms of the Restitution of Land Rights Act was approved and they finally had the land transferred back to them in December 2014 in the form of a community trust (the Richmond Park Communal Property Association), which has now leased this prime commercial land to the developers and is also a 25% shareholder in the development company. This development will create jobs and skills development opportunities for local people. During construction alone, about 15 000 jobs are anticipated to be created over Richmond Park’s development period. This excludes the permanent jobs created by the commercial property tenants that will take up space and open up business operations within the park.

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

Employment and skills development opportunities for the Richmond claimants are also a significant aspect of the Richmond Park development. Currently, about 50% of the claimants are unemployed and survive off state welfare grants. Atterbury wants to change this situation: the company sees this as a socially conscious project and a catalyst for positive change. A number of bursaries will be awarded for 2016 as well as a skills development project for unemployed people in the construction and building sector.

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

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csi

A meaningful investment The Abcon Group Foundation is a non-proﬁt company through which the corporate social investment initiatives funded by the Abcon Group are implemented

bland’s charity work has for several years gone towards assisting Impilo Foster Homes NPC in Cosmo City and the Genesis Crèche in Diepsloot through various initiatives. The passion and the visible positive impact on these communities brought the Abcon Group of companies together to form the Abcon Group Foundation (AGF). The Abcon Group is made up of five specialist property companies, three property funds and a private equity investment arm.

The AGF precinct The Abcon Group has extensive experience in property development, and wished to identify ways to substantially and meaningfully put its skills and resources to charitable use. The AGF bought a 2,5-hectare property on Summit Road near Diepsloot, which provides the ideal location to develop a project that gives real critical mass to the Foundation’s work with various beneficiaries.

Foster homes and ancillary buildings With the benefit of the relationships and partnerships developed and maintained over time, the concept of the AGF precinct was born. The vision for the precinct is to provide an integrated environment with a full cycle of development that provides for 20 residential units, which will accommodate about 200 Aids orphans, together with facilities such as a clinic, a crèche, a primary school and a specialneeds school. This will provide the Aids orphans with a safe place to live, with parental support figures in place. The educational and other support will enable them to progress and become contributing members of society – either through the facilities at the AGF precinct or by means of bursaries and support programmes into adulthood. Impilo Foster Homes NPC are the main beneficiaries of the project and will be making provision for the much-needed care and support for the children as well as the precinct.

orphans as they mature and look to enter the workplace. It will offer a range of training and skills-transfer opportunities as well as those that are specialised to the construction and property sector. This will not only give support to the wider community through job creation but will also positively benefit the industry. The design of the precinct also makes provision for an attractively landscaped open green space in the centre, which can house various recreational areas and a vegetable garden. The intention is to make the precinct as sustainable and self-sufficient as possible.

Adaptive reuse of existing buildings The property has some existing buildings that will be renovated and converted into a main reception and administrative building, management housing, ablutions and various services. The existing swimming pool and tennis court will also be redone. The precinct is designed in a manner that will provide several support facilities to the local community. These facilities will include a clinic and convenience shop, as well as a new village hall incorporating a multi-

purpose gathering space, a library, and an information and training centre with an attractive external piazza.

Marketing and fundraising The AGF Precinct is a significant development project, which has been estimated at around R70-million. Fundraising and marketing are done through various events, such as the Potjiekos Competitions, Golf Days and many other initiatives. There are several avenues of donations available which include cash deposits to the AGF, professional services, “payment in kind” and through execution such as construction, painting, plumbing etc. The AGF plans on breaking ground on the first phase (fencing and guardhouse) in January 2016.

Conclusion This project touches on all three pillars of the AGF: foster homes development, skills development, and training and environmental management. The Abcon Group of companies sees this as an opportunity to put its expertise to help uplift and educate some of the young South Africans who are most in need.

Each school is accessed off a secure courtyard. Play areas are created for each age level. Schools all have access to the central green and multi-functional hall.

1> crèche

40 children; 2 to 3 classes; area: 150m2

2> primary school

120-160 children; 6 to 8 classes; area: 350m2

3> special-needs school area: 200 m2

Skills transfer and training Next to the identified piece of land is a skills transfer and training centre, which will provide further opportunities for the Aids

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csi

Decongesting the city Boogertman + Partners Architects celebrates ecomobility through sustainable design

The client #DECONGEST: a non-profit company that focuses on raising awareness of greenmobility innovations in urban South Africa through electric bicycle rides, bicycle networks and cycle-commuter research.

The brief Boogertman + Partners Architects was approached by #DECONGEST to design sustainable, modular Green Mobility Hubs that would serve as bicycle charging station platforms where people can connect, form part of bicycle-sharing schemes and store their bicycles in a safe urban environment. The design had to be modular in order to adapt to public spaces and to the needs of corporate environments that might seek to include this model in their existing spaces. With the EcoMobility World Festival 2015 in Sandton in mind, the Sandton area was identified and selected as the project location for research and design purposes.

1 The floating canopy

The motivation ● To address the gap that exists between sustainable green buildings and the current transport systems around these buildings in South Africa. ● To design a sustainable solution that will lead to a cultural change in terms of transport in urban areas – a solution that would support the ecomobility movement of creating pedestrian-friendly, sustainable, safe and decongested cities.

2 The modernist pavilion

3 The sculptural structure

Design requirements A positive addition to the current streetscape and urban fabric of Sandton, following specific functional requirements and design principles.

The process A shared enthusiasm and values with regard to the topic between Boogertman + Partners Architects and #DECONGEST led to the beginning of a design process where Boogertman + Partners Architects designed all aspects of the proposed Green Mobility Hub concepts. Thorough market research was conducted by all parties with regards to currently available technology, similar international concepts, available materials and the functionality of the mobility hubs. Inspiration was drawn from research based on similar concepts, their scale, spatial quality, function and architectural language.

4 The urban hack

The Green Mobility Hub concepts designed by Boogertman + Partners Architects. Visit Boogertmanandpartners.com for more in-depth information. #Designingabettertomorrow SOUTH AFRICAN PROPERTY REVIEW

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csi

Engaging learners on the Constitution The National Schools’ Moot Court Competition is one of the key initiatives in which the Pro Bono and Human Rights Practice at Cliffe Dekker Hofmeyr has been involved since 2014

he National Schools’ Moot Court Competition (NSMCC) began during the course of 2011. It is a joint initiative of the University of Pretoria, the Department of Basic Education, the Department of Justice and Correctional Services and the Foundation for Human Rights. Learners from all secondary schools in South Africa are encouraged to participate in the competition, which provides a unique opportunity for learners from diverse backgrounds to develop their research, writing and oral advocacy skills. The aim of the NSMCC is to create greater awareness and understanding among schools and communities through active participation and increased engagement with the Constitution as well as the values that it embodies. In addition, the competition encourages talented young people to consider pursuing a career in law. The first elimination round of the competition requires learners to submit essays related to the selected moot topic. Those learners who successfully make it through the essay-writing round go on to compete in various oral argument rounds, culminating in a final round argued before a panel of adjudicators at the Constitutional Court. Every year, the moot problem is one that involves fictional learners faced with a scenario in a school environment implicating various Bill of Rights issues. The theme for the 2015 competition revolved around the right to equality – in particular the right not to be discriminated against on the grounds of sexual orientation. As part of its contribution, Cliffe Dekker Hofmeyr (CDH) recently hosted a training workshop at its Johannesburg office for all the learners participating in the national oral rounds of the competition. Many of the company’s lawyers also assisted in adjudicating the quarter- and semi-final

Jacquie Cassette, National Head of CDH Pro Bono and Human Rights Practice

rounds of the competition, which were held at the University of Pretoria. The workshop was facilitated by the Pro Bono and Human Rights Practice together with other members of CDH from various other practice areas. The purpose of the workshop was two-fold, aiming, firstly, to assist the learners with their preparation for the oral rounds of the competition and, secondly, to provide them with meaningful exposure to the legal profession and our legal system. Together with their educators, approximately 72 learners from schools across the country listened attentively to presentations and panel discussions on topics ranging from an introduction to the South African legal system to a discussion of relevant constitutional rights and principles as well as the art of mooting.

Members from various practice areas assisted in bringing important theoretical legal concepts to life for both learners and their educators, while Advocates Nadine Fourie and Benny Makola from the Johannesburg Society of Advocates provided the learners with many useful tips on how to effectively prepare and present argument. The learners also thoroughly enjoyed engaging with associates and candidate attorneys in breakaway group sessions. The workshop culminated in an address by guest speaker Acting Justice Matojane from the Constitutional Court, who motivated learners with a presentation of his personal journey to becoming a Justice in our country’s highest court. In addition, Justice Matojane sought to sensitise the learners to the significance of our new Constitutional dispensation and the vital role that it plays in our democracy. The workshop concluded with an informal dinner, which was attended by learners, educators and members of the firm. The final oral round of the competition was held at the Constitutional Court before a panel of five adjudicators, including Justice van der Westhuizen and Acting Justice Matojane. Springfield Convent Secondary School took first place, with Gibson Pillay Secondary School following close on their heels in second place. As with last year, the standard displayed by the learners participating in the national rounds of the Competition was high and the level of passion, dedication and determination displayed by most was heartening. CDH is proud to once again be involved in the 2015 competition – and, as it did last year, has again offered generous bursaries to all four of the finalists of the 2015 competition should they choose to study law.

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feature

Construction industry prompt payment regulations When there are too many exemptions to the regulations, they will not work, according to Malaysian expert Professor Sundra Rajoo. We find out more

atuk Professor Sundra Rajoo, guest presenter at the second annual MDA Collective Wisdom lecture in Johannesburg, has said that the development of alternative dispute resolution for the construction industry has the potential to help the industry grow, but that the proposed regulations should not allow many exemptions – particularly from state-owned companies. Rajoo is an expert on the Malaysian equivalent of the CIDB Prompt Payment Regulations – the Construction Industry Payment and Adjudication Act (CIPAA), which was adopted in 2012 and implemented just over a year ago. The proposed guidelines have been under development in South Africa since 2013. They were tabled by the Construction Industry Development Board (CIDB) and released for public comment in May this year. The regulations are likely to be implemented soon. “Malaysia’s experience was that the state initially wanted to be exempted from the Act but this would not have made any sense, given that a large percentage of projects in the construction industry are undertaken by state-owned companies (SOCs) and that it is an important driver of the economy,” says Rajoo. “Government argued that SOCs are too large to adhere to the principles of the Act, but luckily the counter-argument prevailed: that no entity – SOC or otherwise – should enter into a contract if they can’t manage it.” In just over a year since the implementation of CIPAA in Malaysia, the number of matters registered has more than tripled. Of these, most were settled in considerably less time. The majority of claimants were contractors and subcontractors, while respondents are mostly main contractors and employers. The most common types of adjudication disputes involve final accounts, interim payments and payment of professional fees. Vaughan Hattingh, Director and Adjudication Practitioner at MDA Consulting, says there are many lessons from Malaysia – as well as from the UK, Singapore and Hong Kong – that can be applied in South Africa. “The South African regulations are well crafted, and the development of alternative

dispute resolution will assist the construction industry in growing by providing binding guiding principles accepted by individuals, corporations and state-owned entities,” he says. Rajoo has advised South Africa to focus on the competence of adjudicators and to ensure that the strict timelines provided in the regulations are adhered to. “Adjudication is quick and rough justice,” he says. “Ideally you need construction professionals to be heavily represented on the panel of adjudicators, not just legal practitioners.” According to Hattingh, the South African construction industry has questioned whether there are sufficiently qualified and competent adjudicators, and whether adjudicators’ decisions will be enforceable. “We are in a good position, as South Africa’s courts have been robust in enforcing adjudication decisions,” he says. “While training in construction adjudication will likely receive greater focus, existing training programmes have already helped to improve dispute resolution skills in the construction sector.” Hattingh has been involved in the development of the course and course material for a certificate programme in construction adjudication at the Centre for Continuing Education at the University of Pretoria. The industry, legal practitioners and especially contractors and subcontractors have welcomed adjudication as an effective means of resolving payment disputes in Malaysia. “The aggrieved parties have embraced the flow of money in the construction industry, and this is expected to increase as awareness of this new right to recourse grows,” says Rajoo. While Malaysia’s experience bodes well for better cash flow in South Africa’s construction industry, Rajoo says there is a long road ahead. “The journey from the conception of the CIPAA in Malaysia to getting it gazetted and eventually implemented was arduous,” he says. “The process is ongoing – as new scenarios appear, additions and amendments follow to ensure the Act’s effectiveness.”

“South African regulations are well crafted, and the development of alternative dispute resolution will assist the construction industry in growing by providing binding guiding principles accepted by individuals, corporations and state-owned entities”

Datuk Professor Sundra Rajoo

Vaughan Hattingh, Director of MDA Consulting

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update

SAPOA comment SAPOA comments on the draft regulations Community Schemes Ombuds Service Act No. 9 of 2011 and Sectional Titles Schemes Management Act No. 8 Of 2011

SAPOA CEO Neil Gopal

he Minister of Human Settlements, Lindiwe Sisulu, recently published the Draft Regulations Community Schemes Ombud Service Act as well as the Sectional Titles Schemes Management Regulations for public comment. SAPOA CEO Neil Gopal recognises the mandate and objectives of the Department of Human Settlements pertaining to the enabling legislation. “We are cognisant of the fact that imbalances need to be addressed where necessary and that there is a need for consumer protection to be prioritised,” he says. Good governance of institutions and bodies corporate cannot be overlooked. However, the measures put into place to achieve same should not be cumbersome or be to the detriment of property owners. In terms of the Community Scheme Ombud Service Act No. 9 of 2011, CSOS provides a dispute-resolution service, regulates the conduct of parties within community schemes and is there to manage scheme governance documentation. Monthly levies are payable to CSOS based on the municipal valuation of each housing unit. Units from up to R500 000 are entitled to a 100% waiver of these levies. The maximum amount per month per unit is R68 for units valued at R2 250 001 and above. In addition, a 100% waiver of application and adjudication fees are applicable to families whose net household income is less than R5 000 per month. Every community scheme will be required pay the levy before 30 September of each calendar year.

Gopal further notes that given the unstable economic climate in South Africa, property owners are faced with financial hardships – and it has been forecast that the future will be more trying. This is evidenced by the latest statistics published in the Indicator Watch for the South Africa Commercial Property Market Cycle, which indicate that the direction of interest rates is upwards, with market commentators suggesting that interest rates could still rise by up to 75 basis points between now and 2016. There is growing concern that the inflation rate will rise during the rest of 2015 and into 2016. It’s likely that the inflation rate will still remain below six percent in 2015 but the sector continues to face the significant rise in electricity costs and, therefore, operating costs.

The South African property market remains vulnerable to expected increases in rates and sluggish prospects for the domestic economy. The need for reserves is encapsulated in the existing Sectional Titles Schemes Management Regulations The South African property market remains vulnerable to expected increases in rates and sluggish prospects for the domestic economy. The need for reserves is encapsulated in the existing Sectional Titles Schemes Management Regulations, which are available to sectional title owners to enforce against their trustees or managing agents; alternatively they are an obligation on managing agents to impose upon schemes. The principle of having appropriate reserves is accepted but there’s no rational link between the annual contributions under the maintenance plan and the amount of reserves required (hence the provisions in the existing legislation for special levies). Accordingly, either the level of the prescribed reserves must be reduced substantially or considerable and reasonable periods of time must be allowed

for bodies corporate to build up those reserves. The issue is that most people do not carry the kind of savings that would enable the rapid provision of prescribed reserves; this will result in excessive hardship. Regulation 22 specifically states that a body corporate must prepare a plan for maintenance, regulation and replacement of major capital items over the common property within the next 10 years. This is a technical exercise that spans a long period and will therefore require specific skills at an additional cost. The fact that fidelity insurance applies generally to all persons who have money or control over monies that belong to the scheme is quite a stringent requirement. The current situation dictates that it is compulsory for trustees of schemes to give members of bodies corporate the option of making a decision at an annual general meeting whether or not they’d like to take out fidelity fund insurance. The following is unclear regarding this provision: the cost of cover; conditions attached to the granting of cover; whether or not all trustees are required to provide cover; and consequences of cover not being secured. “SAPOA realises that South Africa is a developmental state, and that there is a need to guide economic development and use the resources of the country to meet people’s needs by balancing economic growth and social development,” says Gopal. “The property industry needs to grow; given the unintended consequences that emanate from the Regulations, such growth could be hampered.”

Chief Ombudsman Themba Mthethwa

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people in profile

Graham Marder

Millicent Maroga

Kim Faclier

Principal

Head of the Old Mutual Foundation

Managing Director Property (Africa)

Marder Properties

Old Mutual South Africa

GoIndustry DoveBid SA (PTY) LTD

A2 - 120mm A1 - 170mm

A3 - 87mm

A5/DL - 45mm A4 - 62mm

A6 - 37mm

Marder Properties was established in 1994. Millicent Maroga joined Old Mutual It is well-established on the East Rand, and as the head of the Old Mutual Foundation in Midrand and Centurion. Its speciality is in in April 2015. Previously with SAB, she held industrial, commercial property, investment various position,s including that of Corporate sales and leasing. This focus has allowed the Affairs Manager and Public Policy Manager. company to gain expertise in all property Maroga has an honours degree manner of transactions: leases, sales, in sociology from the University of developments, acquisitions and investments. Johannesburg and a master’s degree The company has excellent relationships from the University of Manchester in with property developers, and individual the UK, where she studied through the and corporate property owners, enabling it coveted Nelson Mandela Scholarship. She to offer competitive premises and property has recently completed a programme for options. This success in the property industry management development with GIBS. has resulted in an extensive and loyal client Maroga chose to join Old Mutual base and repeat business. The brokering because of its reputation as one of team at Marder Properties offer expertise the best companies to work for and in buying, selling and leasing commercial, its tradition of trustworthiness. She industrial and investment properties. has great admiration for its commitment Marder has a solid financial background, to developing South Africa on both an which he applies to the complex demands economic and a social level, and uses the of property investments. Since Marder example of Old Mutual’s involvement and Properties’ inception, he has emphasised support of the Dinokeng Scenarios, which the importance of facilitating property exemplified ground-breaking dialogue at transactions that satisfy the needs of all a national level. parties. This philosophy, coupled with The Old Mutual Foundation enjoys his high ethical standards, has resulted fulfilling its responsibility of creating in exceptional client retention. change that has a positive, sustainable His vast network is well-respected impact across South Africa by empowering in the industry. He has always been a people and communities through enterprise Old Mutual GENERIC LOGO prINt member of SAPOA and serves on the and skills development, and education SAPOA Brokers’ Committee. His experience and job creation, eventually leading and relaxed confidence instil peace of mind to socioeconomic transformation. in his clients. In his free time, he enjoys golf, fishing, biking and travelling.

t: +27 (0)11 453 1220 graham@marder.co.za www.marder.co.za

t: +27 (0)11 217 1364 Mmaroga@oldmutual.com www.oldmutual.co.za

GoIndustry DoveBid SA (Pty) Ltd, part of global giant Liquidity Services Inc, was recently awarded the prestigious SA National Business Award 2015 in the Fast Growth Category. Under Faclier’s dynamic leadership, the property side of the business has concluded a series of record-breaking live and online auctions around South Africa, equating to more than R700-million with a huge pipeline going forward into 2016. Entrepreneurial by nature and with a unique ability of bringing deal-makers together, she is known as a connector of note. A multiple award winner and recognised internationally, she received the prestigious 5 Star Women in Property Network Award in 2011, highlighting ethics, integrity and empowerment within the local property market. In 2012, she won the Property Category Award for South Africa’s Most Influential Women in Business and Government, orchestrated by CEO Magazine. In 2013, her experience and reputation saw her get invited to judge the World Auction Championships held in the US. Faclier is a part of the Young Presidents’ Organisation, the world’s leading network of CEOs and MDs, and currently sits on the Regional Board for Africa. She’s most passionate about her family, especially her three nephews (Eden, Leo and Adam) and niece Lily – truly the loves of her life.

t: +27 (0)21 702 3206 / f: +27 (0)86 600 7112 Kim.Faclier@liquidityservices.com www.liquidityservices.com / www.go-dove.com SOUTH AFRICAN PROPERTY REVIEW

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awards

Property Point wins top award for job creation Property Point, a Growthpoint Properties initiative, has been named the winner of the Job Creation Award at the Mail & Guardian Investing in the Future Awards

Shawn Theunissen with the Job Creation Award at the influential Mail & Guardian Investing in the Future Awards

roperty Point is an enterprise development initiative that was founded by Growthpoint Properties, South Africa’s largest JSE-listed property company, in 2008. It has achieved tremendously positive results, not only in job creation but also in the spheres of procurement opportunities, and nurturing and growing small business and entrepreneurs. So far, Property Point has been instrumental in creating more than 1 141 jobs. Almost a hundred businesses have participated in Property Point’s two-year programme, enabling them to generate more than R451-million in procurement opportunities, with a reported revenue growth of a remarkable 54,5%. The initiative has been named the winner of the Job Creation Award at the Mail & Guardian Investing in the Future Awards. “We are thrilled to receive this esteemed award,” says Norbert Sasse, Chief Executive Officer of Growthpoint Properties, commenting on the award. “It is incredibly rewarding to see the progress of Property Point, and the ever-growing number of entrepreneurs and small businesses that have graduated from its programme. Enterprise development is a key focus area for Growthpoint and accounts for the biggest portion of our corporate social investment. With it we strive to be leaders in job creation, transformation and sustainability. This is one way in which we do our bit for the much-needed stimulation of the South African economy.” “Property Point is here to support small businesses, create jobs and link entrepreneurs with real opportunities in our industry,” says Shawn Theunissen, Head of Property Point and head of Corporate Social Responsibility at Growthpoint Properties. “We truly want to uplift and transform. It is an honour to receive this award, particularly because of the high regard in which these accolades, and those who award them, are held.”

The Investing in the Future and Drivers of Change Awards are a Mail & Guardian and Southern Africa Trust initiative. While it was founded by Growthpoint Properties, Property Point has grown to collaborate with partners across the property industry to drive enterprise development forward for the sector. Its first partnership came at the beginning of 2015, with JSElisted property capital growth fund Attacq. Now, Property Point is a growing catalyst for successful enterprise and supplier development within the South African property industry, helping other property companies create jobs too. “By collaborating with partners in the property sector, we are really able to drive enterprise development forward,” says Theunissen. “We invite more participants in

“By collaborating with partners in the property sector, we are really able to drive enterprise development forward” –Shawn Theunissen, Head of Property Point the property industry to work together for meaningful, positive impacts that help develop a healthy, vibrant SME sector that can unlock real opportunities and create even more jobs.” Growthpoint, South Africa’s largest REIT and a JSE ALSI Top 40 Index company, is also a JSE Socially Responsible Investment Index company and a Dow Jones Sustainability Index company. It owns and manages a diversified portfolio of 471 properties in South Africa and 53 properties in Australia through its investment in GOZ, and has a 50% interest in the properties at the V&A Waterfront in Cape Town. Growthpoint’s consolidated property assets are valued at more than R100-billion.

SOUTH AFRICAN PROPERTY REVIEW

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summit

Gauteng City Region Spatial Planning Summit A focus on spatial transformation and urban restructuring of our cities and working towards a more collaborative approach to effect the change we want to see By Maud Nale

he Gauteng city region’s vision of building Gauteng into a seamlessly integrated, economically inclusive, socially cohesive and globally competitive Afropolitan city region was expressed at the Gauteng City Region Spatial Planning Summit in Sandton in November 2015. In his opening address, Gauteng Premier David Makhura highlighted the vision of the city to transform the spatial configuration and landscape of the Gauteng province through better coordinated land use management and balanced spatial development. “For more than a decade, we in Gauteng have been pursuing the idea that, given the reality that we are a highly urbanised and densely populated province with an increasingly integrated cluster of cities and towns and constellation of industries that constitute a single regional economy, the best way to govern our province is through the model of a city region,” he said. “This means that although we have different spheres of government in the economy and space of Gauteng and its neighbouring towns and cities, we have to plan and work as a single entity in order to enhance the global competitiveness and spatial efficiency of Gauteng as an industrial and financial hub of sub-Saharan Africa.” Gauteng, according to the premier, is the most populous province in our country, with more than five-million people having moved there over the past 15 years. By 2030, it is estimated that Gauteng will be home to between 18- and 20-million people. This huge growth spike has a ripple effect on delivery of services. A need for proper planning, effective urban management and integrated urban development capabilities in managing the rapidly changing urban landscape is necessary. Makhura welcomed strategic partnerships with the private sector to ensure a sustainable and inclusive Gauteng in the long term,

Minister of Cooperative Governance and Traditional Affairs Pravin Gordhan

and to eliminate the spatial divide that exists in our province. He concluded his address by reiterating that spatial planning is part of the human development effort. The keynote address by the Minister of Cooperative Governance and Traditional Affairs Pravin Gordhan emphasised the

importance of recognising spatial change as a long-term process that requires commitment and discipline to stay with the plan, while being both iterative and flexible in responding to changing times. Various levels of government play a critical role in spatial transformation. “Spatial transformation is not a task that can be left to cities alone,” said Gordhan. “Restructuring the city space and redressing the current urban inefficiencies calls for systematic and collaborative approach between levels of government and nongovernment partners”. Gordhan’s closing remarks were a retrospective of the bigger-picture thinking around spatial planning. “Planning is about enhancing the dignity of our people, enhancing their economic wellbeing and creating an inclusive dynamic that reduces poverty, inequality and unemployment,” he said. “We still have much to do to achieve social integration and solidarity among our richly diverse nation.” The programme of the summit was facilitated by journalist and TV and radio presenter Tim Modise.

Gauteng Premier David Makhura

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research

Property operating costs remain virtually unchanged year on year SAPOA recently hosted a research breakfast on commercial property operating costs By Nthabi Nhlapo

Stan Garrun presenting

APOA held a research breakfast on operating costs across the country with a focus on current cost drivers and their impact. The research report zoned in on areas that need focus as the current challenging trading environment sees rentals come under pressure across most commercial property segments, and operating costs becoming pivotal as a means of maintaining net income growth. Presented by Stan Garrun, Executive Director for Client Coverage at MSCI Real Estate, the event delved into some of the factors that affect operating costs across the board. Garrun noted that excess rental supply in certain market segments weighs in on rental growth while stiff competition for tenants increases spend on tenant installation, thus muting rental growth through longer risk-free periods.

“Administered and regulated costs are increasing faster than inflation and faster than rental growth,” he said. The research shows that property operating costs are virtually unchanged as they are down 0,5% year on year for the year ended June 2015. “Consumer price inflation increased by 4,7% during this time, which translates to a real decline of four percent in operating costs,” explained Garrun. “The industrial sector saw the largest increase during the period with 2,9% year on year, followed by the office and retail sectors with +0,2% and -1,8% respectively.” For the same period, operating costs accounted for 42% of gross rental, which is an improvement from a high of 44% in 2012. This improvement was boosted by the fact that basic rental posted an encouraging 3,6% increase for the period. “Administered costs, the biggest driver of operating costs, rates and taxes and other municipal charges, contributed 62% of total operating costs,” said Garrun. The research also touched on building management, a relatively small item in absolute terms, which increased by 29% – perhaps an indication of landlords investing in facilities-related activities with a view to increasing efficiencies in years ahead. Similarly, letting commissions increased by 12% year on year to June – a surprising finding given that the overall vacancy rate increased to 5,3% – but several segments recorded encouraging declines in vacancy rates. Among the segments recording the largest improvements in vacancy rates were offices and industrials larger than 25 000m² – these segments typically attract long-term tenants, which impacts the amount of letting commission payable according to the SAPOA fee scale.

In summary, the key findings of the research are as follows: ●● Property operating costs were virtually unchanged with a 0,5% year-on-year decline. ●● As a percentage of gross rental, operating costs have improved somewhat on a three-year view. ●● Administered costs were the largest contributor to declining operating costs. ●● Property net income increased by 2,8% – a function of the 0,5% decline in operating costs and a 2,7% increase in gross income.

Ahmed Moola

Pieter Strydom and Juanita van As

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research

Jeffrey Jalink and Nico Pretorius

Suzzane Sherry and Yuven Ramkhelawan

Jenna-Lea Huxtable and Saskia Engels

Brenda Itholeng, Kyle Padayachie and Portia Tladi

SAPOA Western Cape The SAPOA Western Cape Regional Council recently held a successful Introduction to Commercial Property Programme and a series on Property Investment lead by Professor François Viruly, Head of Property Studies at the University of Cape Town

Professor François Viruly with guest lecturer Jonathan Smith

Attending the Property Investment series were: BACK ROW, FROM LEFT Tyrel Momberg (GBCSA), Jethro Tait (GBCSA), Colin Young (guest lecturer from Urban Growth Property), Robin Lockhart-Ross (guest lecturer from Nedbank), Alain Walker (GBCSA) MIDDLE ROW, FROM LEFT Bridget Scheckter, Sean Gomes (Santoni Group), Anne Voorneveld (Abreal), Lynn Middelmann (Santoni Group), Shakira Adam-Varachhia (GBCSA), Jacques Groenewald (GBCSA), Craig Martin (Horizon Capital), Antony Marks (City of Cape Town) FRONT ROW, FROM LEFT Angie Goff (Eliangexi Investments), Professor François Viruly (associate lecturer at the University of Cape Town), Pamela Pena (Old Mutual), Alwyn Bester (Dhk Architects)

The delegates with the lecturers

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awards

Awarding future sustainability pioneers Growthpoint Properties and the Green Building Council of South Africa hosted an awards evening to celebrate outstanding research work by students from some of the countryâ&#x20AC;&#x2122;s leading property faculties By Nthabi Nhlapo

First-place winners (UCT) with judges: Neil Gopal, Moeketsi Thobela, Brian Wilkinson, Dijon Ross, Mieke van der Merwe, Rowan McKenzie, Martin Smith and Werner van Antwerpen

Runner-up group (UCT): Daniel Searle, Kenny Reynolds and Alex Demetriou with Brian Wilkinson

Third-placed Wardah Ploker and Thabo Mathuthu (Wits) with Brian Wilkinson

n an effort to encourage innovation among property students from some of the countryâ&#x20AC;&#x2122;s leading universities, Growthpoint Properties and the Green Building Council of South Africa (GBCSA) hosted the Greenovate awards in an exclusive event at the Fire & Ice Hotel in Melrose Arch. The awards involved students being pitted against one another in project work that involved group research on various sustainability topics. The prizes included money totalling R40 000, GBCSA Conference 2016 tickets (flights and accommodation included) and Green Building Tours. Each group of students conducted research and presented findings and recommendations to a panel of judges that included GBCSA Chief Executive Officer Brian Wilkinson, SAPOA Chief Executive Officer Neil Gopal, South Africa Photovoltaic Industry Association Chief Executive Officer Moeketsi Thobela and Martin Smith, who is the Technical Director for Buildings at Aurecon. Programme director Werner van Antwerpen of Growthpoint Properties said that, together with the GBCSA, the company saw a gap in the market and took the awards initiative to assist in the creation of future industry leaders who

SOUTH AFRICAN PROPERTY REVIEW

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awards

GBCSA Chief Executive Officer Brian Wilkinson

University of Pretoria finalists with their supervisor: Percival van der Walt, Finleigh Ellison, Demi van der Merwe, Mareli Pienaar and Danie Hoffman

Head of Sustainability and Utilities at Growthpoint Properties Werner van Antwerpen

Pieter Engelbrecht, Derick Henstra, Natalie van der Bijl, Hannelie van der Merwe and Neil Gopal

Michael Jordaan, founder and Chief Executive Officer of Montegray Capital

are in tune with the needs of the environment and alternative ways of creating monuments without impacting the environment negatively. “We targeted honours students from some of our leading universities that provide property studies,” he said. “This is an occasion to celebrate – we have government, students and the private sector coming together for a common cause.” Speaking at the event, Wilkinson said that the GBCSA endeavours to inspire students and industry leaders to keep the passion

and develop better buildings by advocating for green building, which – together with educating professionals and certification – is the GBCSA’s role in the industry. The keynote speaker was venture capitalist Michael Jordaan, who stepped down as CEO of First National Bank to pursue his passion for entrepreneurship and is the founder and Chief Executive Officer of Montegray Capital. He spoke about the power of innovation and the innovator’s dilemma. “Often innovators are faced with the problem of coming up with too many ideas but one needs to remember that ideas are not good enough,” he said. “It is the ability to implement them that matters most.” He explained some of the steps FNB took to be more innovative, and included some basic principles: ●● Remember that no one person is smarter than everyone. Teamwork is always best. ●● Take risks. Don’t be afraid to make mistakes. You will never achieve the extraordinary by living a conventional life. ●● Recognize and reward innovators. Jordaan also mentioned that, in today’s economy and social space, major changes are helping to define the world. These include the

Internet of things, the fact that greenhouse gases dominate and renewable energy costs continue to plummet (and so does the price of energy storage), the rise of 3D printing, the sharing economy, the emergence of self-driving vehicles, and changes in the education space. The winners on the day included first-prize winners Rowan McKenzie, Dijon Ross and Mieke van der Merwe of UCT, whose topic was “The Role of the Green Property Indicator in the South African Property Market”. Second-placed were Alex Demetriou, Daniel Searle and Ken Toplis of UCT; their topic was “An Investigation into Urban Facilities Management and the Development of a Sustainability Rating Tool for Urban Precincts: A Case Study of the Central City Improvement District, Cape Town”. In third place were Amy McGregor, Thabo Mathuthu and Wardah Peters of Wits; their topic was “Early Contractor Involvement Framework to Improve Sustainability and Green Building Practice in the Construction Industry”. The event was a resounding success, with competitors and organisers walking away confident that a green future is attainable. SOUTH AFRICAN PROPERTY REVIEW

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UPCOMING

EVENTS

2016 February

Region

Date

Event

East London

6 February 2016

East London Breakfast Workshop

Johannesburg

10 and 11 February 2016

Negotiation Skills Masterclass Programme (NSMP)

Gauteng

15 to 19 February 2016

Facilities Management Programme (FMP)

Gauteng

17 February 2016

Legal Breakfast

Port Elizabeth

18 February 2016

Networking Event

Limpopo

23 February 2016

Limpopo Breakfast Seminar

Gauteng

25 February 2016

Research Breakfast

March Region

Date

Event

KwaZulu-Natal

8 March 2016

KZN Breakfast Presentation

Gauteng

10 March 2016

Networking Event

Gauteng

14 and 15 March 2016

Property Financial Programme (PFP): Basic

Gauteng

14 to 18 March 2016

Building Construction Technology Programme (BCTP)

Port Elizabeth

16 March 2016

Power Hour Breakfast

Gauteng

16 to 18 March 2016

Introduction to Commercial Property Programme (ICPP)

East London

17 March 2016

East London Networking Event

Gauteng

29 March to 1 April 2016

Immovable Asset Management Programme (IAMP)

April Region

Date

Event

Gauteng

7 April 2016

Power Hour Breakfast

Gauteng

11 to 15 April 2016

Intensive Project Management Programme (IPMP) for Built Environment Practitioners

Gauteng

13 and 14 April 2016

Negotiation Skills Master Class Programme (NSMP)

KwaZulu-Natal

13 to 15 April 2016

Introduction to Commercial Property Programme (ICPP)

KwaZulu-Natal

14 April 2016

Research Breakfast

Gauteng

18 to 20 April 2016

Introduction to Commercial Property Programme (ICPP)

Limpopo

21 April 2016

Limpopo Golf Day

Gauteng

28 April 2016

Legal Breakfast

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frankly speaking

On a lighter note He would like to move the Egyptian pyramids to Springbok in the Northern Cape, and has an unwavering passion for the construction environment. We get to know Aveng Construction and Engineering’s Operating Group Managing Director, Chris Botha By Nthabi Nhlapo

Q If you weren’t an engineer,

Q What is the best advice

I’d be an architect. Designing landmark structures would be great.

“Don’t lie.”

what would you be and why?

Aveng Construction and Engineering Operating Group Managing Director Chris Botha heads the company’s operations in Africa. He studied civil engineering at Stellenbosch University and has more than 20 years of experience in the industry. Aveng Construction and Engineering offers a comprehensive process technology design and sourcing ability. With its capability in multi-disciplinary engineering design, operation and maintenance of metallurgical processing plants as well as project and construction management, Aveng is able to deliver complex projects for its clients, including those in remote places. Aveng aims to own and operate a portfolio of infrastructure, mining and manufacturing-related businesses, each of which will achieve top-quartile performance compared to its peers when measured against return on invested capital, earnings growth and positive cash ﬂow generation through the business cycle. The company endeavours to achieve this through ongoing involvement in building iconic structures, landmark buildings, bridges, dams, airports, roads and power stations, which form the backbone of many economies in developing countries.

Q What do you like

you’ve ever got from a child?

Q How lucky are you? Why?

The people: dynamic and effecting change.

I have been exceptionally fortunate for many years, and have got out of a few tight spots. Our provider has always held a hand over me.

Q Would 8-year-old Chris

Q What is your favourite

He’d probably be more confused. He thought the restaurant business was his destiny.

Blue. It matches my other blue shirts.

most about your work?

be proud of you today?

Q If we gave you a one-way

all-lifetime-expenses-paid relocation to any part of the world, where would you go?

Rotorua in New Zealand – it’s beautiful, quiet and peaceful, and I would enjoy the country life.

Q What do you do in your spare time?

My spare time consists of playing golf, drinking wine, spending time with the kids and at the farm, and catching up on emails.

Q Name five uses of a cellphone without a battery.

clothing colour and why?

Q What’s your favourite place to eat?

Any pizzeria or Italian restaurant, even more so if it is in Stellenbosch, Venice or the Algarve.

Q Does your family have a pet? Do you talk to it?

Jade Cornell is our border collie and Whiskey is the cat. They are higher up the priority ladder at home than I am, so they are often involved in long, grown-up conversations.

Q If we came to your home

and looked in the refrigerator, what would I find?

Paperweight, target practice, table prop, coaster, a promissory note in lieu of cash.

Milk, eggs, leftovers… There’s always a tin of dog food hidden away in there as well.

Q If we gave you a hippopotamus,

Q What fascinates you about life?

would you keep it?

I would – but only until the pool runs dry.

Its unpredictability. The only thing that is certain in life is that nothing is certain! SOUTH AFRICAN PROPERTY REVIEW

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off the wall

America’s ﬁrst hemp house pulls CO2 from the air The gorgeous, ecofriendly home was made using cannabis-based building materials By Amanda Froelich

hat can be used as medicine, an industrial building material, clothing fibre, a base for concrete, a nearly perfect natural food, a nourishing skincare ingredient, for making paper, ecofriendly fuel options, and more? That would be hemp, often referred to as cannabis, marijuana or the dagga plant. Hemp has been called the most useful plant in the world – and with hundreds of medicinal, industrial and food applications, who would deny it? In the US, five states have legalised the recreational use of cannabis, and hemp-based building materials are now gaining popularity. The first house built in the US with hempcrete was constructed in Asheville, North Carolina: the 315m² Push House boasts a number of ecofriendly features. To create a solid yet breathable wall system, hemp herds were mixed with lime and water on site, and poured in between the exterior supporting studs in lift. As USA Today notes, hempcrete is actually less like concrete and more like infill straw bale, as it is non-structural. The insulating quality has the unique ability to capture airborne pollutants over time, absorbing carbon once it is grown and in place. In addition, the material’s high thermal mass helps keep a steady interior temperature, rather than allowing it to fluctuate. The interior walls of this gorgeous, ecofriendly house are made from Purepanel, a unique product made from recycled paper. It consists of a rigid skin with a corrugated paper core, similar to cardboard. According to CNN, the house also features 30 salvaged window frames that have been

fitted with hi-tech glass. They were placed to allow the most day lighting without overheating the space. An open floor plan also allows the light to pervade deep into the home. That’s not all: the energy-efficient wall system is coupled with a super-efficient 21 SEER air-based heat pump to effectively heat and cool the home, reducing utility costs and also the need for expensive equipment. With these instalments, this home ends up costing a respectable US$1 430 (approximately R19 700) per square metre to build. Some compromises were made, such as introducing petroleum-based foam products into the ceiling and foundation. However, the house is a stellar example of how health, energy and design can coexist in sync. The architect is looking forward to constructing similar, smaller homes in the future once he gets through the learning curve of using hempcrete. Admirably, he says from here on he will only build houses that are safe enough for his daughter to live in. We applaud that. Source: Trueactivist.com

SOUTH AFRICAN PROPERTY REVIEW

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meet the mayor

DUBE CITY:

DUBE TRADEZONE:

DTP

SOUTH AFRICA

DBN

Proposals received by 25 January 2016 will be evaluated by 29 February 2016. Proposals received thereafter will be evaluated as and when received, subject to the availability of sites.

To secure a prime location â&#x20AC;&#x201C; contact Tim Hudson: (T) +27 32 814 0000, (E) property@dubetradeport.co.za To download a PDF of the submission details, go to: WWW.DUBETRADEPORT.CO.ZA/PROPOSALS SOUTH AFRICAN PROPERTY REVIEW

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meet the mayor

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