South African Property Review December 2018 January 2019 by SAPOA

South African Property Review

PROPERTY SOUTH AFRICAN

December 2018/January 2019

REVIEW

The voice for the industry

PROPERTY REVIEW - LogoTreatment.pdf

ON SHOW

Market Theatre Foundation the cultural heartbeat of Jo’burg’s CBD Commercial property development and CSI

One-on-One

Tebogo Mogashoa rejuvenating inner cities one building at a time

Developer Viewpoint

Clean living in the Western Cape?

CSI December 2018/January 2019

Big corporates show us the way

2016/08/25

11:31 AM

SOUTH AFRICAN PROPERTY REVIEW

from the CEO

The property industry is faced with insurmountable challenges from a multitude of collapsing municipalities Rising municipal property rates are a hot-button issue – one that not only negatively affects operating costs and gross rentals, but also makes demands on property management resources ●● Municipalities not grasping the vital relationship between a complete and accurate valuation roll and tariff setting, i.e. the property rates budget; ●● The complete lack of property information that would enable the municipal valuer to perform accurate and consistent valuations; ●● Inadequate resources to compile valuation rolls that are consistent, and the maintenance thereof.

Much criticism has been levied against the way in which the Municipal Property Rates Act has been implemented

iven their above-inflation growth and higher growth relative to other operating costs, property rates have increased as a percentage of total operating cost over time. In 2005, property rates worked out to 17,3% of operating costs; by the end of 2016, this escalated to 22,8%. It is common knowledge that the South African municipal valuation sector is in dire straits and in need of urgent revision, especially where the valuation of commercial properties is concerned. Much criticism has been levied against the way in which the Municipal Property Rates Act (MPRA) has been implemented by municipalities. There is consensus that municipalities are performing better with residential than commercial properties. When it comes to commercial properties, there is little consistency and accuracy with regards to the municipal values. In our view, the fault does not lie with the Act as such. The main weaknesses can be attributed to: ●● Inexperienced valuers being appointed to perform valuations;

by municipalities Implementation of the MPRA is failing at most municipalities across the country. It has become problematic, resulting in general and supplementary valuation rolls that are not accurate, consistent, efficient or uniform as intended by the Act. This has a direct negative impact on property rates, and further impacts landlord and tenant relationships, because property rates are one of the top expenses on the landlord’s list of operating expenses. Property owners may be liable for penalties if information is not submitted or incorrectly submitted.

Other areas of concern

The validity of a GV roll is a maximum of five years for metros and seven years for other municipalities. Typically, one wants to reduce this cycle to prevent major valuation changes. The City of Johannesburg, for example, has more than 900 000 properties. One person can inspect, on average, 20 properties per day. This equates to 45 000 days of inspections.

Twenty-five years ago, the City of Tshwane had 45 valuers valuing 149 000 properties. Today, it has 35 valuers trying to value 800 000 properties. Cape Town is the shining light: it has the capacity in terms of manpower and a well-maintained database to produce a new valuation roll every three years. The other metros with in-house valuation departments (Nelson Mandela, Buffalo City, eThekwini, Ekurhuleni, Johannesburg and Tshwane) are struggling. Municipalities are faced with capacity issues because they are not prepared to source their best source of income, and the best service providers are not always appointed.

Rates policies

The policies are often badly drafted and in conflict with the MPRA and regulations. Property rates tariffs are not published in time or not published at all. Municipalities that are not decreasing tariffs with the new valuation roll are: ●● Johannesburg ●● Ekurhuleni ●● Buffalo City Municipalities that increased rates when the new roll was implemented: ●● Mogale City (Krugersdorp) ●● Mangaung ●● Nelson Mandela Bay. It is a concern that only three out of the eight metros reduced tariffs with the implementation of new valuation rolls.

By-laws

●● By-laws are not adopted to give effect to the rates policy. ●● Debt control policies are not enforced to recover rates. ●● Not all municipal valuers are qualified or designated. Designations are often done too late. ●● The biggest challenge in valuation of properties is to have consistent values. SOUTH AFRICAN PROPERTY REVIEW

from the CEO

1 BCX Head Office. Architects: SVA International 2 Management Team 3 Menlyn Learning Hub. Architects: Boogertman + Partners 4 West Hills Mall in Ghana. Architects: ARC Architects

SOUTH AFRICAN PROPERTY REVIEW

If the values are not consistent, the rates burden is not spread fairly and equitably. ●● Notices of valuation rolls are not published or are published late. ●● Objections are not considered promptly. In Johannesburg, objections on supplementary valuation rolls are outstanding for more than 12 months. ●● Changes are not implemented on the billing system, or there is a delay with the implementation. More often than not, journals are not done or are done incorrectly. ●● Valuers consistently complain about the appeal boards. Administrative support by municipalities is not very efficient. Appellants are not notified, and decisions are not implemented (or there is a delay). ●● Consistent delays in making supplementary valuations, and delays in updating the new value, result in huge back charges.

contents

Conclusion

SAPOA will be embarking on research in this area to: ●● Distinguish between the three different Acts regulating the business of municipalities to act in accordance with the relevant legislation should any legal actions need to be taken. ●● Understand the impact of and difference between the increase in property value and increase in rate to meet the budget. ●● Identify areas of concern in instances where property rates have increased to such an extent that property owners are highly concerned about current and future investment within certain municipal areas. ●● Establish the impact of the increase on property owners in this economic climate. ●● Propose communication to the Minister of Cooperative Governance and Traditional Affairs. ●● Assist our members with an administrative function in the form of a database capturing the previous and current effect of municipal property rates on their properties.

Best regards, Neil Gopal, CEO As another year draws to a close, I hope that you will spend time with family and friends, and that the holiday spirit of love and sharing will prevail. On behalf of SAPOA, I wish you prosperity, health, happiness and peace in the New Year. Here’s to the best of holidays and a prosperous 2019. Season’s Greetings!

December 2018 / January 2019

PROPERTY SOUTH AFRICAN

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

December 2018/January 2019

REVIEW

The voice for the industry

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

ON SHOW

11:31 AM

ON THE COVER The Market Theatre Foundation building in Jo’burg’s Newtown Junction Precinct draws patrons from all walks of life to

Market Theatre Foundation the cultural heartbeat of Jo’burg’s CBD Commercial property development and CSI

be part of the CBD’s cultural heartbeat

One-on-One

Tebogo Mogashoa rejuvenating inner cities one building at a time

Developer Viewpoint

Clean living in the Western Cape?

CSI December 2018/January 2019

Big corporates show us the way

3 From the CEO 6 From the Editor’s desk 8 SAPOA President’s year-end message Advocacy taking priority 10 Legal update “The transfer of immovable property is essentially a claim to deliver goods, and prescribes after three years” 12 Legal update Delays in approval of Land Use and Building Plan applications are costing the local economy 14 Legal update What counts as a “dispute” with a municipality? 18 Education and training 20 Planning & development SAPOA participates in the review of the Integrated Development Planning process 2018/2019 22 CSI The Amdec Group: building a charitable future 24 CSI The Mentorship Challenge: a formidable platform to upskill entrepreneurs 26 CSI Know thy neighbour – Tongaat Hulett certainly does! 28 Inner city redevelopment: one-on-one Inner city rejuvenation: changing cities one building at a time 32 Developer viewpoint Streets are clean – life is good 38 On show Market Theatre Foundation makes a cultural mark in Jo’burg’s CBD 50 Doing business in South Africa Dealing with construction permits 57 Howmuch.net Extreme poverty around the world 58 SAPOA research reports 60 Social 62 Off the wall Bike enthusiasts could get airborne FOR EDITORIAL ENQUIRIES, email 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 Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Taylor Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Eugene Jonck, Fanie van Niekerk Sales Pieter Schoeman: pieter@mpdps.com Finance Susan du Toit Contributors Chantelle Gladwin-Wood, Maike Gohl, Maud Nale, Tshepo Tshabalala, Raul Photography Mark Pettipher DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material. Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com

e: philip@rsalitho.co.za

SOUTH AFRICAN PROPERTY REVIEW

from the Editor’s desk

…and the countdown begins In many ways, the countdown has begun. Most of the industry’s commercial property firms shut their doors in alignment with what is traditionally the construction industry’s festive season break. The countdown to 2019 and the countdown to the county’s general election in May remind me of words in a passage I read recently: “So teach us to number our days, that we may apply our hearts to wisdom”. I will certainly be working on that in the new year…

s we head towards our individual shut-downs, it is good to find time to reflect on what has gone through the pages of Property Review this year. This time last year we had just completed our fully integrated online edition of the magazine, moving away from the standard upload to Issuu.com: we hosted Property Review on its own server, and we were discovering how to code the magazine so that we’d have better control over the “rich media” and interactivity we could offer you. Twelve months on, we have streamlined the back end, and our reader experience is far slicker than before. We have had a tremendous response SURVEY to the fully integrated online edition: our stats show we are definitely on trend. Going into 2019, we are looking to be an even more effective platform for you, as the commercial property industry, to get your stories, opinions and concerns “cyber-aired”. To help us achieve this, we included an easy-to-participate-in reader survey in this issue. I look forward to receiving your feedback – it’s coming straight to my inbox! On 3 January 2018, the cost of fuel was R14,20 per litre. Eleven months later, on 7 November, it stood at R16,85. On 18 January this year, we needed to find R12,14 to buy a greenback; at the time of preparation for this edition, we needed R13,89. According to Absa’s “South Africa Quarterly Perspectives” research released in October, the bank had lowered its GDP growth forecast to 0,5% and 1,4% for the remainder of 2018 and 2019 respectively, attributing the revision to “ongoing constraints on the consumer and persistently low business confidence”. SAPOA President Ipeleng Mkhari and CEO Neil Gopal have both been deeply concerned about the dysfunctional state 6

SOUTH AFRICAN PROPERTY REVIEW

that many of South Africa’s municipalities find themselves in. Gopal’s message highlights some of the concerns, and Mkhari’s mid-term message, while quite reflective, reinforces the SAPOA CEO’s sentiments. “Municipalities are charging higher rates and taxes,” she says. “The escalation of higher taxation and its correlation to service delivery, skills and governance are real issues, and are critically important to having municipalities working properly.” Fittingly, this month we bring you the second instalment extracted from the World Bank’s “Doing Business in South Africa Report”, which looks at the ins and outs of dealing with construction permits. In relation to this, we also offer you an opinion piece on the effects of delays in approval of Land Use and Building Plan applications by the Chair of the South African Institute of Architects’ Practice Committee, Simmy Peerutin. The Johannesburg CBD is going to be a “must follow” for rejuvenation projects over the next 18 months or so, according to Tebogo Mogashoa – the “entrepreneur extraordinaire” tells us about his dream of rejuvenating inner cities one building at a time. We were given first-time access to the international award-winning Market Theatre Foundation (MTF) building, and our “On Show” feature offers up some spectacular photography courtesy of

former MTF student Mpho Mokgadi. This particular feature also allowed us to engage one-on-one with MTF Chief Executive Officer Ismail Mahomed and the Foundation’s Chief Financial Officer Christine Mcdonald – as well as with KMH Architects’ Wayne Mansfield and Michael Cornwall, and ADA Consulting Engineers’ Paul Maitre. Spanning the last quarter of 2018 and the first quarter of 2019, this edition of Property Review falls into our quarterly Developer Focus. To this end, we take a look into what’s been happening in Cape Town and speak to Deon van Zyl, Chairman of the Western Cape Property Development Forum to get his opinion on the recent events that created a hiatus in terms of opportunities in the Western Cape; and Rob Kane, Chairman of the Cape Town Central City Improvement District, who is more upbeat about the Mother City’s CBD. In the spirit of giving, at this time of year we like to highlight various firms’ corporate social initiatives. This year we have chosen to feature a report back on Redefine’s Mentorship Challenge, the first season of which was hosted by Marc Wainer on CNBC Africa; the Amdec Group’s Cyclethon in aid of the Smile Foundation, which attracted more than 1 400 cyclists and raised funds for lifealtering surgery for children; as well as Tongaat Hulett’s iThuba programme of enterprise development initiatives. I look forward to bringing you many more interesting and topical editions of Property Review in the New Year and further developing the magazine as “The voice for the industry”. On behalf of the editorial team, I wish you all an awesome and restful break, and a prosperous 2019. Enjoy the read. Mark Pettipher, Editor and Publisher

AUCTIONS

CALL US TO GET YOUR PROPERTY SOLD ON OUR NEXT AUCTION YOUR PARTNER OF CHOICE FOR COMMERCIAL PROPERTY AUCTIONS Through a passionate approach, commitment to unrivalled service, we are the leaders in the sale of commercial property across South Africa, Broll Auctions & Sales is a logical choice when partnering with a commercial property company

AUCTIONS

TENDERS

AUCTIONS SEND A CLEAR AND DEFINED MESSAGE TO THE MARKET HIGHLIGHTING THE CERTAINTY OF A SALE.

TENDERS GIVE SELLERS THE OPPORTUNITY TO CONDUCT A CONTROLLED AND PRECISE TRANSACTION.

ONLINE MARKET PROPERTY GLOBALLY REDUCTION IN SALE CYCLE STREAMLINE SALES PROCESS LEGALLY COMPLIANT REDUCTION IN MARKETING COSTS

PROPERTIES SOLD Tiger Brands Meadowdale

SOLD FOR

48.3 Million

SS Federal Building Cape Town

SOLD FOR

61.5 Million

ABSA House Cape Town

SOLD FOR

87.1

Million

John Ross House Durban

SOLD FOR

Million

AUCTIONS | PRIVATE TREATY SALES | TENDERS visit broll.com or call us on 087 700 8289 SOUTH AFRICAN PROPERTY REVIEW

SAPOA President’s year-end message

Advocacy taking priority Ipeleng Mkhari talks to Property Review about the first half of a presidency that’s seen huge amounts of travel, of taking issues to mayoral committees, and of striving to get a better understanding of members’ concerns. SAPOA continues to be the most prominent property authority in Africa, occupying a strategic location in global markets as the gateway to Africa’s changing landscape of property management By Mark Pettipher

emaining true to its vision of being South Africa’s nationally accepted leading property association, SAPOA is committed to actively and responsibly representing, protecting and advancing its members’ commercial interests within the industry, and continues to provide tangible deliverables to its stakeholders that safeguard capital investment and industry growth. “SAPOA members are at the epicentre of South Africa’s economic growth,” says Ipeleng Mkhari, SAPOA President and Chief Executive Officer of Motseng Investment Holdings. “They are major contributors to job creation, dependable holders of inclusive industry opportunities, and the true voice of the property industry.” This is the message SAPOA is taking to government. “As a member-driven organisation, we continue to champion conversations around transformation, air the continuing debate on expropriation of land without compensation (EWC), and promote policies of further education,” says Mkhari. “We cannot ignore the real issues we have in South Africa – such as unemployment, and the lack of gender inclusivity and skills development.” Her first six months as President have been travel-intensive. Along with SAPOA CEO Neil Gopal, Mkhari has been getting to grips with issues such as land invasions in KZN, where members were “forced” to leave their sites. The pair also travelled to the provinces to gain an understanding of the obstacles that developers, landlords, managers and property stakeholders are facing around the country. They have engaged with the mayors of Nelson Mandela Bay, Mpumalanga, Tshwane, Polokwane and eThekwini. “There is real concern about the impact that ‘mismanaged and dysfunctional 8

SOUTH AFRICAN PROPERTY REVIEW

municipalities’ are having on the industry,” says Mkhari. “Taking back what we’ve learnt, we need to see how and why municipalities are not working. We must get the attention of Deputy Minister Andries Nel and the Corporate Governance and Traditional Affairs (CoGTA) ministers, as well as the Finance Ministry, to show that these matters are aligned not only with a province’s growth but with the growth of the country as a whole.

SAPOA President’s year-end message “While we as SAPOA have submitted our opinions and suggestions on EWC, we have noted that the debate has quietened down at a national level. Our continued focus is to ensure we stay close to the development of EWC and, simultaneously, that provincial- and local-level concerns over municipality mismanagement remain a priority for SAPOA. “Municipalities are charging higher rates and taxes. The escalation of higher taxation and its correlation to service delivery, skills and governance are real issues, and are critically important to having municipalities working properly. We are engaging with CoGTA to ‘join the dots’. Our aim is to ensure that we improve stakeholder relations between SAPOA and CoGTA in order to protect our members’ interests. “Advocating for and improving service delivery in one municipality will have an effect on all our members. As we succeed in one, we can take similar arguments to others. The long-term improvement as a result will have a positive outcome for the rest of the country. “Our conversations with the CoGTA leadership have clearly articulated the direct correlation between investment in South Africa and the requirement for improved resources and infrastructure. “As SAPOA, we recognise the importance and necessity to address land reform in our country. However, EWC (and all the uncertainty that surrounds it) has a significant downside to it. It is creating huge doubt in the minds of international and domestic investors, and it cannot be ignored. Investors are looking for clarity as well as certainty.” Mkhari’s experience points to a knowledge of the South African market. “It is understood that the property industry is fluid, and an investor needs to be able to respond. Implementation of the outcome of EWC will take a long time – perhaps a decade or more – so in context, if a land owner wishes to sell or develop, they need to react swiftly and be undeterred.” Part of the confusion is whether or not the EWC narrative is, in fact, focusing in the right place. In the beginning the debate was about farming land. But should the

focus not be on what is happening in the urban environment and the inner cities, and what is happening to buildings of delinquent landlords who are not utilising or maintaining their properties? What municipal land can be released to help ease the burden of affordable inner-city housing and push the densification issue?

“Integrated urban planning networks also need to be re-examined. The equation is not working. Empowering municipal managers and allowing them to make decisions without fear of retribution will go a long way in moving municipalities forward” “In reality,” says Mkhari, “the biggest challenge is that the government of the day is out of touch with the county’s biggest populace – the youth. Only by understanding the needs and aspirations of this segment of society can South Africa’s journey really go forward. The youth are not on the fringes – they are at the centre of our society. A young person in South Africa is typically unemployed, black and unsure of where the next rand is coming from. Young people are resilient: they are trying entrepreneurial options, but even more so, they are hanging on to governmental promises. Perhaps the National Development Plan needs to be readdressed. “Land, tenure and title ownership are as important to the youth as getting the right education, getting a qualification and getting a job. The future of South Africa depends on this! “Skills development and industryspecific education policies need to take more precedence in our conversations. We are seeing the positive impact of commercial property sector bursary funds such as those offered by SAPOA and the Women’s Property Network (WPN).

Funds such as these are forming the ‘umbrella’ under which organisations are educating the right people – people who want to be in the industry – which can only benefit South Africa and the rest of Africa. “Integrated urban planning networks also need to be re-examined. The equation is not working. Empowering municipal managers and allowing them to make decisions without fear of retribution will go a long way in moving municipalities forward.” Part of the SAPOA President’s role is to attend conventions and meetings, and to engage with other similar professional organisations, such as the South African Institute of Black Property Practitioners, the South African Council of Shopping Centres, the Property Sector Charter Council, the Green Building Council South Africa and the WPN. “It is very interesting to see the different focus that each organisation has, and to realise that we as SAPOA continue to deliver commercial property advocacy at a macro level,” says Mkhari. “Our members realise this and know that, big or small, SAPOA members’ interests are being taken to the highest possible levels of government. SAPOA’s mandate is to drive policy, protect members’ rights and add value as an association by dealing with macro issues at national and local government levels, while offering timely opportunities for members to voice concerns and engage with one another through SAPOA’s various committees, workshops and networking functions. “The next six months will see ‘the winds of change’ upon us. As we head into 2019, uncertainty can be seen as opportunity. We can and will work together to achieve a common goal. South Africa will have an election – and, as SAPOA, we will ensure that we drive home the importance of enabling policies and greater collaboration between legislative authorities and ourselves. I am hopeful that the ‘New Dawn’ will empower us all. “I wish you all a restful break – and a prosperous 2019.” SOUTH AFRICAN PROPERTY REVIEW

legal update

“The transfer of immovable property is essentially a claim to deliver goods, and prescribes after three years” This was the unanimous decision of the Constitutional Court in the matter of eThekwini Municipality v Mounthaven (Pty) Limited Case CCT05/18 [2018] ZACC 43 on 31 October 2018

Introduction

Johan Coetzee

“The municipality brought the application to compel retransfer in the High Court only in 2014. If the claim for re-transfer is a ‘debt’, it would have prescribed three years after the period within which the buildings had to be completed – by May 1991. If it is a real right, then the submission is that prescription does not apply. If it is a right secured by a mortgage bond, the submission is that the prescription period of 30 years has not yet elapsed. All thus turns on whether it is a ‘debt’, to the exclusion of the latter two possibilities.”

SOUTH AFRICAN PROPERTY REVIEW

The matter came before the Constitutional Court as an application by the municipality, seeking leave to appeal against a decision of the Supreme Court of Appeal (SCA). The SCA confirmed the dismissal in the High Court KwaZuluNatal Local Division, Durban of the municipality’s application to compel Mounthaven to re-transfer a property that it had previously sold to Mounthaven. The municipality’s case rested on the proper interpretation and effect of a reversionary clause in the original deed of sale and subsequent deed of transfer. The SCA upheld the decision of the High Court that the registered right contained in the clause constituted a “debt” that had prescribed under the Prescription Act No. 68 of 1969, and that the application for a re-transfer had to be dismissed. In the judgment written by Justice Froneman, the Constitutional Court refused leave to appeal on the basis that the application lacked reasonable prospects of success. The reasoning of the Constitutional Court confirmed interesting legal arguments raised by the parties in both the SCA and the High Court that are noteworthy for the property industry.

Facts The municipality sold the property to Mounthaven in terms of a deed of sale on 24 May 1985, and the property was transferred in the name of Mounthaven during August 1986. The deed of transfer contained a special reversionary condition to the effect that Mounthaven had to erect buildings on the property to the value of R100 000 within three years of the

purchase date. If Mounthaven failed to do so, the municipality would be entitled to re-transfer of the property. Mounthaven failed to develop the property within the three year period. The reason given by Mounthaven for the failure was that they had a dispute with the Municipality regarding a stormwater pipe that ran beneath the property, which was the responsibility of the municipality to relocate. In 2012, the municipality approached the High Court, relying on the special reversionary condition in the title deed, claiming the re-transfer of the property.

Main arguments of the parties Both the SCA and the High Court held that the municipality’s claim to re-transfer the property was a “debt” that had become prescribed under the Prescription Act. Mounthaven supported the decision by these courts when it was argued in front of the Constitutional Court. The municipality’s arguments were that: ●● Its claim is not a “debt” under the Prescription Act; ●● The reversionary right in the title deed is a limited real right in property, not subject to prescription; and ●● Alternatively, it is a claim secured by a mortgage bond that only prescribes after 30 years under the Prescription Act. Justice Froneman continued on Page 4, Paragraph [5], as follows: “The municipality brought the application to compel re-transfer in the High Court only in 2014.

legal update If the claim for re-transfer is a ‘debt’, it would have prescribed three years after the period within which the buildings had to be completed – by May 1991. If it is a real right, then the submission is that prescription does not apply. If it is a right secured by a mortgage bond, the submission is that the prescription period of 30 years has not yet elapsed. All thus turns on whether it is a ‘debt’, to the exclusion of the latter two possibilities.” The Constitutional Court’s finding on these arguments is discussed hereafter.

Is the claim a debt? Justice Froneman referred to the case of Makate v Vodacom Ltd [2016] ZACC 13, where the dictionary meaning of “debt” was accepted. In terms thereof, the meaning includes an obligation to pay money, deliver goods or render services. It continued to state that material or corporeal goods consist of both movable and immovable property. Ownership of movable goods is transferred to another by actual or deemed delivery. In the case of land (immovable property) this is practically impossible and continued in Paragraph [8] on Page 10 as follows: “Hence it is an acceptable principle of venerable ancestry in our law that the equivalent of delivery of movables is, in the case of immovable property, registration in the deeds office. A claim to transfer immovable property in the name of another is thus a claim to perform an obligation to deliver goods in the form of immovable property. It is a ‘debt’ in the dictionary sense accepted in Makate. It really is as simple and straightforward as that.”

Is the claim a real right? The municipality further argued that the obligation to deliver the immovable property flows from a real right and not a personal right. Real rights give rise to competencies, not correlative personal obligations, and do not constitute a “debt” that can prescribe. Justice Froneman referred to a test endorsed by the SCA in Willow Water Homeowners Association (Pty) Ltd v

Koka N.O. to determine whether a right is real, as opposed to personal. This test has two requirements: ●● The person who created the right must have intended the present owner as well as successors in title to be bound; and ●● The right must result in a subtraction from the dominium of the land against which it is registered.

alternative argument that the registration of the reversionary right created a mortgage bond to secure compliance with its provisions, which only prescribes after 30 years. In this regard, it was held that when the principal liability (to re-transfer the property) lapsed because of prescription, there was no remaining accessory obligation that could be secured.

In this regard, the finding was that the facts did not meet the first requirement, as the clause in the title deed did not contain a provision that it is binding on successors-in-title. It was then considered if registration of the condition in terms of the Deeds Registries Act would make any difference. Section 63 of the Deeds Registries Act essentially provides that conditions creating or embodying any personal right, or which do not restrict the exercising of ownership, cannot be registered. There is, however, a proviso that such a condition can be registered if, in the opinion of the registrar, such conditions is complimentary or otherwise ancillary to a registrable condition or right contained in such deed. The Constitutional Court held that it may be accepted that the registration of the condition was proper in terms of Section 63. However, registration on its own does not convert an ordinary personal right into a real right (relying on cases like Nel, Low Water Properties, and others). This conclusion was reached despite the finding of the Ferreira Deep case, which held that a personal right is personal until registered, when it becomes a real right. The main reason for reaching this conclusion can be seen in the following quote in Paragraph [20] on Page 10: “The reversionary clause in C(2) creates a personal obligation on Mounthaven to complete buildings to a certain value within a limited time. The clause is not of a kind that creates a real burden (modus) on the property itself, in which case the real right might exist in the relationship between the holder and the burdened object of the right.” In reaching this conclusion, the judgment also dispensed with the

Finding As there were no reasonable prospects on appeal and it was not in the interest of justice, application for the granting of leave to appeal was refused.

Effect and general comment Reversionary right clauses are fairly commonly used, especially in instances where municipal land is made available for development, or new township developers would require the erection of buildings within a specified time. The most important effect of this decision is probably that parties should take into account that reversionary clauses will not be valid and enforceable for an indefinite period, and could possibly prescribe. It is welcomed that the Constitutional Court confirmed, as held in previous case law, the clear distinction between, and effect of, real and personal rights. From a practical perspective, reversionary clauses should be carefully drafted and considered. Care should also be taken to remember that the obligation to re-transfer will constitute a “debt”, which can prescribe within three years. In order to stay the commencement of prescription, a reversionary right holder will be prudent to enforce implementation of the obligation before the expiry of a three-year period.

Johan Coetzee Partner and Head of Real Estate Fasken Attorneys e: jcoetzee@fasken.com t: +27 (0)11 586 6000

SOUTH AFRICAN PROPERTY REVIEW

legal update

Delays in approval of Land Use and Building Plan applications are costing the local economy “Any sensible government must learn to unleash the energy of its people and get them to perform, instead of trying to get a bureaucracy to perform” –Verghese Kurien, I Too Had A Dream

nce, when bemoaning the lack of proactive support from Council officials to expedite approvals, a wise developer, who had also worked in the public sector, remarked that public sector officials are not focused on facilitation and expedition. Instead, they focus on compliance – and when in doubt, they will always err on the more conservative side of any question. This is because no-one gets fired for taking a more conservative view. With some notable exceptions, that has been most professionals’ experience when it comes to obtaining approval for Land Use and Building Plan applications in Cape Town. And, more than anything else, it explains the ongoing malaise. There are two main pieces of legislation that govern the right to build on a site: the Municipal Planning By-law (which derives its authority from the Spatial Planning and Land Use Management Act) and the National Building Regulations (NBR), which derives its authority from the National Building Regulations and Building Standards Act. There are other important acts, governing heritage and environment for example, but the most commonly encountered acts are the two mentioned. The former regulates use and building form and prescribes the procedure to be followed in the event one wishes to depart from the rules governing a planning zone. The latter deals with technical aspects of building, such as structure, fire, and so on.

Let us examine each in turn, starting with the By-law. Of course, the best way to shorten Land Use approval time is to cut out one cycle altogether: ensure the project complies with the By-law in all respects, and one should be able to obtain Land Use Clearance in a matter of days. However, there is often a reason one might need to – or want to – obtain a departure. There is nothing inherently wrong with the By-law or the processes to be followed in the event of a departure. The problems arise out of the execution of these principles. Simply put, the process takes far too long, and officials do not appear to be held to account when exceeding their target review times. And while in the interest of fairness and administrative justice, sections of the process cannot be significantly shortened (for example those that relate to public participation), others could be dramatically curtailed if there was the political will and the necessary staff resources. 12

SOUTH AFRICAN PROPERTY REVIEW

While the time frames suggested may seem long (see below), they are short in comparison to what is generally being achieved now. Developers need to collectively apply more pressure on the city to expedite this process, most probably through associations such as SAPOA and the Property Developers Forum. Additionally, we are seeing more objections to departure applications on the grounds of spatial justice. While the cause is understandable and just, and has focused local government and the private sector, one has to question the means. The fact is, developments worth hundreds of millions mired in the Land Use approval process are, as a direct consequence, not contributing to job creation or retention at this critical time of almost zero growth in the economy. This poses a critical risk to the economic survival of many built environment practices. Turning to Building Plan Approval, the official time frames are much shorter but there are processes that need to be improved and, in my opinion, regulations that need amendment.

Consider the following timetable for the Land Use Approval process: ●● Submit = Day 0 ●● Request for further information +1 week ●● Submit further information +1 week ●● Review and decide on advertising +2 weeks ●● Prepare adverts +2 weeks ●● Advertise +5 weeks ●● Applicant to comment on appeals +2 weeks ●● Review comments/objections +2 weeks ●● Write report +2 weeks ●● Place on MPT agenda +2 weeks ●● MPT review and decision TOTAL TIME TO DATE 19 weeks or 4½ months

Then

●● Notify objectors of decision +1 week ●● Appeal period +5 weeks ●● Applicant to comment on appeals +2 weeks ●● Review appeals +2 weeks ●● Write report +2 weeks ●● Place on MPT agenda +2 weeks ●● MPT review and decision TOTAL TIME TO DATE 33 weeks or 8 months

legal update The first is the problem of amendment letters, as they are called. Some time after Building Plan Submission and the payment of the scrutiny fee, almost inevitably, the applicant receives an amendment letter calling for changes or additional information. That is no problem ,and the stated intent from Council is to only issue one such letter, but more often than not the process is repeated, sometimes three or four times. It is often said that anyone can find something wrong with a drawing that is part of a Building Plan Submission. The real problem is that each time a letter is issued, that constitutes a refusal and the clock is reset to 0, allowing a further 30 or 60 days for approval each time. When one reviews approved plans from some years ago, the level of detail is substantially less. It is generally known that the council does not often face lawsuits in relation to approved building plans, apart from Section 7 of the Regulations, which is in effect related to land use. Is it not time to consider how to reduce the level of detail on submitted plans, especially where notes refer to “deemed to satisfy” provisions of the NBR? These notes should surely suffice. We also need to define the terms of engagement where a rational design is used. Once the credentials of the professional are accepted, should the proposed design not also be accepted, much in the same way the structural engineer’s work is accepted? After all, once a rational design is used, the primary responsibility passes to the consultant. Recently, there has been a change of attitude towards Provisional Approval to commence certain works on site prior to full Building Plan Approval. If approval processes were not so drawn out, this may not be such an issue, but given the financial and other uncertainties deterring development, approval for early commencement can be absolutely critical, particularly if a project involves piling, basement excavations in hard rock, and so on. As previously understood, once the plan has been cleared by Land Use Management, and the scrutiny fee paid, an application could be made to expedite certain initial construction activities at the owner’s risk. This appears no longer to be the case, or is granted only in exceptional circumstances. Having said all of that, anecdotally, Cape Town is still rated highly among professionals for the way in which the council is organised and has innovated with regards to Plan Submission, by developing the planning portal that allows for electronic submissions. Additionally, there is monthly engagement with top officials and professional representatives of their respective bodies, which is conducted in a genuine, open and constructive manner and has yielded some significant improvements. The point of this article is to highlight some other key issues and hopefully galvanise support for change.

Simmy Peerutin Chair SAIA Practice Committee Member CiFA Council Engagement Group Committee Member Western Cape Property Developers Forum SOUTH AFRICAN PROPERTY REVIEW Sutherland Half Page Advert FA.indd 1

13 2018/11/22 13:32

legal update

What counts as a “dispute” with a municipality? By Chantelle Gladwin-Wood, Partner, and Maike Gohl, Senior Associate at Schindlers Attorneys

Introduction This is part 1 of an “idiot’s guide” to logging queries, disputes and complaints with the City of Johannesburg Metropolitan Municipality (“COJ”). Although one might question why it is necessary to write an article explaining what appears to be such a simple concept, we regularly receive reports of customers not being able to take their matters forward as a result of not having been able to log a dispute, logging the wrong type of dispute, or not having proof of the dispute logged. What will become clear from the contents hereof is that logging a dispute is much more complicated than you might imagine at first.

Why should I care about this question? Section 102 of the Local Government: Municipal Systems Act No. 32 of 2000 (“the Systems Act”) provides as follows: Amounts 102. (l) A municipality may– (a) consolidate any separate accounts of persons liable for payments to the municipality; (b) credit a payment by such a person against any account of that person; and (c) implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts of such a person. (2) Subsection (1) does not apply where there is a dispute between the municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality from that person.

A customer who raises a “dispute” that “concerns any specific amount claimed by the municipality from that person” is thus insulated from “credit control action” (which could include the termination of services, or the issuing of summons) for so long as that “dispute” exists. In the absence of such a “dispute”, however the municipality is free to take whatever lawful form of credit control action it might see fit against the consumer.

What is a “dispute” for Section 102? This is a complicated question. There is no definition of “dispute” in the Systems Act, which governs the relationship between municipalities and customers. Section 102(2), however, indicates that such a “dispute” must be “concerning any specific amount claimed”. Importantly, this means that the customer needs to point to the amount claimed in a specific invoice in order for the query to be “valid” for the purposes of section 102. It does not mean (as some municipalities incorrectly contend) that the customer needs to advise the municipality how much of the total bill the customer thinks he does not owe in rands and cents terms – as this would be impossible for the great majority of customers who do not know how to calculate municipal charges or where the customer does not have the information necessary to do those complex calculations. It is sufficient for a customer to point to the “total amount” owed in any particular invoice and dispute that amount, or to point to the amount owed for a specific section of the invoice (such as

rates, electricity, sewerage, and so on) – provided that the amount in the invoice is identified.

A “true” or “bona fide” query If one looks to the decisions of courts made in the context of what a “dispute” is for the purpose of sectional title management, we find that a pure refusal or failure to pay levies does not count as a dispute.1 Applying this reasoning in the municipal context makes sense, because it would be unjust if a customer were able to avoid payment of a “disputed” amount or credit control action being taken against him in relation to a “disputed” amount purely because the consumer raises a “query” or “dispute” that is not connected to the amount owing – such as the incorrect billing address, not receiving invoices or an incorrect property description or size. Furthermore a query logged to the extent that the charges are “too high” would not qualify as a bona fide query unless the reason for them being too high was disclosed. To simply say that you “dispute” a charge without disclosing a reason for it is not a bona fide dispute. In Herbst and Another v City of Tshwane2, the Court held that the customer had not raised a “dispute” because its “problem” was that the municipality was charging it for rates based on a categorisation of nonpermitted use when the permitted use did, at the time, prevent that particular use. The defence raised was that the customer had applied for a rezoning,

1 Body Corporate of Via Quinta v Van der Westhuizen N.O. and Another (A196/2017) [2017] ZAFSHC 215 (16 November 2017), paragraphs 16 and 17 2 (32443.2015) [2016] ZAGPPHC 497 (27 May 2016)

SOUTH AFRICAN PROPERTY REVIEW

legal update

which had not yet been granted. The court found that there was no “dispute” as the application for rezoning had not yet been granted, and the customer admitted that it was actually using the property in contravention of its permitted use. Moreover, a “general dissatisfaction” with the municipality’s service delivery or response rate does not qualify in law as a “dispute” that will entitle a person to withhold the payment of rates or service charges3, nor will a “civil protest” (as confirmed by our Constitutional Court in Rademan4).

COJ’s own by-laws and policies If life were simple and COJ operated based on clear and logical documents, we would probably not be writing this article. Sadly, COJ’s various documents use various terms – such as “compliant”, “query” and “dispute” – seemingly interchangeably in a number of instances, and do not contain definitions. This can make their interpretation rather complex. It must be understood, however, that COJ is only lawfully empowered to create its own rules/laws insofar as they comply with national laws (such as the Systems Act). To the extent that there is a conflict, the municipality’s rules/laws would be unenforceable in law. In terms of the COJ’s Credit Control By-laws (“by-laws”), a dispute is couched as a “query” or “complaint” in relation to the accuracy of any amount due and payable in terms of any invoice rendered. This is a very narrow concept

of query, which does not include reference to faulty infrastructure (such as meters, street lights or pot holes), amounts not billed to an invoice, not receiving invoices or invoices not being available, incorrect addressee or contact information, or anything relating to a property’s size, description, valuation

It is likely that COJ only refers to disputes/queries/ complaints which relate to the amount owed in terms of a specific invoice because of Section 102(2) which provides that liability for payment of an amount is only deferred if a “dispute” in relation to “any specific amount” owing has been raised. This is rather shortsighted, however, because the purpose of allowing consumers to raise a dispute is not simply to protect them from credit control taken for non-payment until the dispute is determined or categorisation. There are no actual definitions of “query” or “dispute” in this document that might guide us further. It might be argued by the municipality that the words “query” and “complaint” were specially utilised in order to refer to “problems” that are not “disputes” within the true meaning of the term. If this is the case, then it would mean

that “problems” that are not “disputes” must be raised and dealt with in terms of these by-laws, whereas “disputes” must be dealt with in terms of the policy referred to below. It is more likely, however, that the drafters of the by-laws simply used loose language, and that queries and complaints are meant to count as disputes. In COJ’s 2015 Credit Control and Debt Collection Policy (“policy”), COJ seems to distinguish between a “query”, which is logged initially through the Call Centre, and a “dispute”, which is logged in writing with the city if the “query” is not resolved in 21 days. The words query/dispute are mostly used interchangeably to refer to “the correctness of an account or any entry thereon”. Again, this is a very limited concept and excludes several crucial issues that a consumer might want to take issue with. It is likely that COJ only refers to disputes/queries/complaints which relate to the amount owed in terms of a specific invoice because of Section 102(2), which provides that liability for payment of an amount is only deferred if a “dispute” in relation to “any specific amount” owing has been raised. This is rather shortsighted, however, because the purpose of allowing consumers to raise a dispute is not simply to protect them from credit control taken for non-payment until the dispute is determined. The purpose is to give the municipality notice of something that is incorrect so that it can be corrected. If a municipality only deals with or recognises queries that relate

3 Annette May, The Withholding of Rates in Five Municipalities, published at http://www.ggln.org.za/media/k2/attachments/SoLG.2011-Community-Law-Centre.pdf, accessed 2 November 2018 4 Rademan v Moqhaka Local Municipality and Others (CCT 41/12) [2013] ZACC 11; 2013 (4) SA 225 (CC); 2013 (7) BCLR 791 (CC) (26 April 2013)

SOUTH AFRICAN PROPERTY REVIEW

legal update Note further that the form in which the law allows the dispute to be raised is just as critical as its content. If the law provides that the dispute must be raised in writing, then raising it telephonically will not assist the customer in arguing that it is entitled to withhold payment in terms of Section 102

to amounts owed, and does not address or recognise others – such as those dealing with incorrect billing data, addresses, property descriptions, etc – this is going to result in a situation where the municipality’s billing data has little integrity, invoices might not be delivered to the right place or at all, and customers become dissatisfied with the municipality’s ability to render them a proper invoice. This may lead to a reduction in collections for the municipality because the correlation between the diminution in a trust relationship and the diminution of the regularity and extent of payments made in terms of that relationship is well documented.

The form of the dispute

In this regard, it is worth noting that COJ allows a customer to “log a query” on its website – but that its by-laws and credit control policy do not provide for this, and the policy requires “disputes” to be lodged in writing, meaning that it is possible that COJ could argue that a “query” or “dispute” lodged through the website or over the phone does not defer payment of the disputed amount

SOUTH AFRICAN PROPERTY REVIEW

Note further that the form in which the law allows the dispute to be raised is just as critical as its content. If the law provides that the dispute must be raised in writing, then raising it telephonically will not assist the customer in arguing that it is entitled to withhold payment in terms of Section 102. In this regard, it is worth noting that COJ allows a customer to “log a query” on its website – but that its by-laws and credit control policy do not provide for this, and the policy requires “disputes” to be lodged in writing, meaning that it is possible that COJ could argue that a “query” or “dispute” lodged through the website or over the phone does not defer payment of the disputed amount.

Payment of the undisputed charges Note lastly that, in terms of COJ’s bylaws, a “query” or “complaint” must be accompanied by payment of certain amounts (i.e. the undisputed charges for services not in issue, and the undisputed average over a particular period for the service in issue). However, one must question whether this is lawful because it requires the payment of an average amount towards the service disputed each month, where Section 102 does not provide for same. A full discussion of this issue, however, is beyond the scope of this article. It

is recommended that a customer disputing any particular charge should make payment of a reasonable amount for that charge – if appropriate, calculated based on an average of prior periods – because not doing so could land the customer with a very large bill at the end of the day, which he is liable to settle and might have difficulty doing for cash flow purposes. This, however, is just a practical recommendation and not an endorsement by the authors that the amounts set out in Section 11 of the bylaws are lawfully due and payable when a query or complaint (which actually constitutes a dispute) is logged. Please take legal advice from your attorney in this regard on the facts of each case.

Conclusion In order to qualify as a dispute for the purposes of delaying payment, the customer must: ● raise his/her/its “problem” with the municipality ● raise his/her/its “problem” in the prescribed form ● raise his/her/its “problem” by specifying which amount in which invoice is disputed, and for what bona fide reason. That reason must explain why the amount charged is wrong. Civil protest or general dissatisfaction, or a claim that the charges are “too high” are inadequate. Payment of the “average” in terms of Section 11 of the COJ’s by-laws might be payable in order to “preserve” the effect of the dispute/query/complaint. A query logged telephonically with the COJ in terms of Section 16 of its policy does not appear to suspend payment, because it is not a dispute. Only when a dispute is lodged will the protection contained in Section 102 of the Systems Act kick in. For safety’s sake and to avoid the chance that COJ might argue that you have lodged a query or a complaint rather than a dispute, specifically refer to a “dispute” in terms of the policy when raising same.

SOUTH AFRICAN PROPERTY REVIEW

education and training

Western Cape Market Research and Property Economics Workshop Western Cape Regional Council hosted the half-day workshop on 10 October at the Century City Conference Centre

Delegates who attended the Market Research and Property Economics Workshop

he workshop looked at the drivers that influence the property market as well as the impact that changing market dynamics have on the property market and catchment areas.

The following topics were covered: ●● Understanding the drivers that will likely influence

the property market in the next decade ●● The impact of e-retail on the market ●● The impact of macro-economic trends on the market ●● Understanding the South African property cycle ●● Researching the sectors of the commercial property market

●● Analysis of the residential sector ●● What makes a good property research report Professor François Viruly of UCT’s Urban Real Estate Research Unit served as the workshop’s facilitator, with presentations from Andreas Bertoldi of RebelGroup and Sanette Uys of Serendipityremix.

Mpumalanga Tenant Arrears in Commercial Property Workshop Mpumalanga Regional Council held a Tenant Arrears in Commercial Property Workshop on 25 October

he half-day workshop was held to help delegates cultivate a broader understanding of the various courses of action available to commercial landlords – and managing agents – in dealing with tenants who default on lease obligations. It covered rental collections; remedies for breach of lease; court procedures; the landlord’s hypothec and other forms of security (including suretyships and collateral security such as notarial bonds); the legislation applicable to the rental property arena, such as the 18

SOUTH AFRICAN PROPERTY REVIEW

A total of six delegates from Eagle Creek Investments, Oriprops cc, Theunissen Jankowitz Nelspruit (Pty) Ltd, Mashinini Trading and Aksion Plan attended the Tenant Arrears Workshop in Polokwane, facilitated by Marlon Shevelew. FROM LEFT Ross O’Mahoney, Marlon Shevelew, Craig McFadyen, Gugu Mkhatshwa, Pieter Mocke, Gené Ueckermann and Wouter Mocke

Companies Act, the Consumer Protection Act and the Conventional Penalties Act; as well as the impact of liquidations and business-rescue proceedings on leases. It also provided insight into recent case law impacting directly on the industry.

All of this was conveyed in a logical, easy-to-understand and expert manner. The course was facilitated by Marlon Shevelew, practising specialist rental property litigation attorney and Director of Marlon Shevelew and Associates Inc.

education and training

KwaZulu-Natal and Gauteng Negotiation Skills Master Programme Both KwaZulu-Natal and Gauteng hosted this two-day workshop – the former at the Master Builders Conference Centre in Durban on 15 and 16 October, and the latter at SAPOA’s head office in Sandton on 25 and 26 October 2018

egotiators need to understand the psychology of the game, and how to use heightened emotional intelligence to achieve the desired outcome and manage the other parties effectively. This workshop, facilitated on both occasions by Candis Cheyne, gave delegates the tools, techniques and confidence needed to achieve the desired outcomes when negotiating.

Some of the areas covered included: ●● Understanding the negotiation process as a whole, and different negotiation styles ●● Correct approach to negotiation ●● Flexible and varied communication ●● Cultivating the ability to achieve a win-win situation ●● Becoming more goal-focused when negotiating

●● Emotional intelligence ●● Confidence and self-esteem ●● Enhanced communication skills ●● Assertiveness ●● A winning negotiation style ●● Focusing and listening skills ●● Understanding personality profiles ●● Conflict management, from the causes of the conflict to how to handle it effectively

A total of 10 delegates attended the KwaZulu Natal Negotiation Skills Master Programme FROM LEFT Sumaya Goldstone, Paula Pather, Julie Ishwar, Trenley Tilbrook, Deshnee Sukdeo, Candis Cheyne of Corporate Intelligence (facilitator), Dale Williams, Louise Gibson, Melanie Clarkson, Mondli Msani and Khaya Mpetha

A total of 13 delegates attended the Gauteng Negotiation Skills Master Programme. BACK ROW, FROM LEFT Candis Cheyne (facilitator), Vincent Matsimela, Danie de Beer and Yasin Chetty FRONT ROW, FROM LEFT Ida Robinson, Shahlene Perumal, Rendani Phaswana, Carol Mathibe, Palesa Sibiya, Ezekiel Leseyane, Shereen Nortjie, Matlou Mokgehle, Othelia Ntsoane and Shirley Bulasigobo

SOUTH AFRICAN PROPERTY REVIEW

planning & development

SAPOA participates in the review of the Integrated Development Planning process 2018/2019 Introduction As required by the Municipal Systems Act (Act No. 32 of 2000), each municipal council, within a prescribed period after the start of its elected term, must adopt a process set out in writing to guide the planning, drafting, adoption and review of its Integrated Development Plan (IDP). According to Section 34 of the Municipal Systems Act (MSA), every municipality is required to prepare an IDP Section 28 of the MSA requires the following from each municipality: 1. Each municipal council, within a prescribed period after the start of its elected term, must adopt a process set out in writing to guide the planning, drafting, adoption and review of its integrated development plan. 2. A municipality must, through appropriate mechanisms, processes and procedures established in terms of Chapter 4, consult the local community before adopting the process. 3. A municipality must give notice to the local community of particulars of the process it intends to follow.

City of Johannesburg: Integrated Development Plan 2018/2019 In line with its commitment to actively and responsibly represent, protect and advance its members property interests, SAPOA continues to participate and engage with the City of Johannesburg in the preparation and review of the city’s IDP and budget. As a requirement of the MSA, municipalities are obliged to prepare a five-year business plan to address economic and social development priorities, determine capital investment priorities for hard and soft infrastructure, and prepare capital and operational financial budgets. 20

SOUTH AFRICAN PROPERTY REVIEW

The initial IDP of the new Johannesburg political administration included 10 mayoral priorities, which guided the development of the five-year plan that Executive Mayor Herman Mashaba openly promoted as a “pro-poor budget”, focusing on economic growth, job creation, inequality and poverty. The administration has come to realise that the management of the city is far more complex and difficult than initially anticipated. In addition, the city exposed an infrastructural backlog which will require R170-billion over the next 10 years. The review of the IDP has resulted in a refinement of the strategic priorities, and the evolution of the initial “10 Point Plan” into a focused set of five growth and development outcomes and nine mayoral priorities. The city has introduced a developmental concept, “Diphetogo” – meaning “real changes” – and is focusing on implementing important priorities relating to development, repair and maintenance of infrastructure; delivery of basic services; economic growth and job creation; public safety; and housing provision. In line with this, the city has increased the budget for basic infrastructure from 57,8% in 2016/2017 to 69% in 2018/2019. This will be used to address road surfaces and sidewalks, bridge repairs, electrical substation capacity and network upgrading, electrification of informal settlements, and the replacement and renewal of water infrastructure. Economic growth and job creation are focusing on small business, entrepreneurs and job-seekers, to provide access to economic opportunities. The city has established three Opportunity Centres, which offer services and support. A further three centres will be opened through this financial year. Artisan training is also a programme being implemented to train

young people in skills that will help them find jobs. Public safety, crime and substance abuse, with an expansion of health and social facilities, are also high on the city’s implementation plans. The City is also recognising its limited resources and capacity for what must be done, and is proactively looking to establish meaningful partnerships with the private sector, business and communities. SAPOA will continue to work with the city to promote development and investment, and to support the city in achieving its developmental priorities.

eThekwini Metro: Integrated Development Plan 2018/2019 The eThekwini (Durban) Municipality’s IDP was redrafted in 2017/2018, a process into which SAPOA made input. SAPOA’s Regional Council scrutinised and commented on the mandatory 2018/ 2019 review. The IDP was rated as “comprehensive”, and the municipality, describing itself as “mediocre in its competitiveness across multiple dimensions”, was commended for its candour. A Living Conditions Survey, which is conducted on a regular basis, does not include commercial and industrial property owners, who have complained persistently of litter, illegal dumping, poor maintenance of roads, inadequate maintenance of street lighting and safety. Despite these property owners contributing 58% of rates revenue, their concerns often receive less attention, although the institutional framework offered by Urban Improvement Precincts (UIPs) does prompt more responsiveness from officials. Inner city and industrial precincts require the most attention. The vacancy rate in inner-city office blocks stood at 18,4%, significantly higher than any

planning & development other Durban area and other South African metros. Plans are afoot for both inner city regeneration and the revitalisation of major industrial zones. Additional resources devoted to the problem of “bad buildings” would expedite solutions, such as reinvestment on the part of new investors who find existing opportunities beyond their pockets, and the provision of more affordable housing (of which the city is worryingly short). SAPOA pointed to the economic benefits of precinct management, which presently does not enjoy the full cooperation of line departments. Indeed, the lack of integration among departments was acknowledged in the review, which advocated six separate steps, including the integration of electronic systems. Disparity is inevitable while municipal operations remain departmentalised, and the integration required is not confined to electronic systems: much more transversal management is a necessity in this area. SAPOA suggested that this, although reflected in the review, required greater emphasis and more concerted action to constitute a remedy. SAPOA referred to a list of “catalytic projects”, noting that they dated to before 2014, and expressed its disappointment that updates on the progress of these had not been provided. Business also believes that the city should invest more in infrastructure for growth. Furthermore, the disruption of development projects by business forums had begun. The response in the IDP was a Business Continuity Programme, which focused on the disruption of public sector projects. Unfortunately, the disruptions have escalated, with more problems than solutions emerging. Finally, despite positive departmental reports on the updated valuation roll, SAPOA repeated its plea for the review of any anomalies. It is believed that an excess of outliers represents a loss of rates revenue for the city. This was also the subject of a separate SAPOA submission.

City of Cape Town: Integrated Development Plan 2018/2019 An almost-exclusive focus on coping with the water crisis On reflection, the main issue concerning the proposed 2018/2019 amendments to the 2017-2022 IDP is coping with the city’s water crisis. The main strategy appears to be to spend approximately R2,4-billion (in the first year) on augmenting the city’s water-supply sources, and on trying to preserve the current water financial structure in the face of a massive drop in water consumption.

A need to rethink and restructure the city’s water undertaking As a result of the approach that underpins the existing water undertaking financial structure, which was developed over many years in an engineering regime that didn’t significantly acknowledge the finite nature of water supplies (particularly in the southwestern Cape), the city’s Water and Sanitation and Treasury departments have found themselves in a crisis with the advent of the drought. Instead of being able to see the significant water savings achieved by the city’s residents as an important step towards creating a sustainable city and decoupling its population and economic growth from resource consumption, the embedded approach to water supply and financing has meant that this has created a massive problem.

Insufficient attention given to service delivery and inclusion of migrants While some attention has been given to services and housing in low-income areas (and for new migrants), this does not seem sufficient. This is reinforced by the number of service delivery protests that are occurring in informal settlements.

Misalignment between the recognition of a fastgrowing city that requires an IDP and a budget that

are rapidly responsive and socially and economically inclusionary A rapidly growing city requires innovative, rapid delivery processes for urban infrastructure, housing, economic growth and job creation, and excellent transport services. This review of the IDP suggests that while these are mentioned, the attention and budgets they receive is far less than the current situation requires. Furthermore, there is insufficient evidence that the city is switching over to a rapid, strategic service delivery model based on Smart Growth principles and drawing on appropriate precedent – particularly from South America, where cities such as Bogotá and Curitiba have been effectively engaging with these challenges for many years.

“If cities don’t deal constructively with poverty, poverty will deal destructively with cities” SAPOA is concerned that this famous 1975 quote by Robert McNamara may become applicable to Cape Town. The increases in unemployment, informal settlements and back-yarders, the deterioration of the public transport system and public safety and security (with its documented impact on tourism), and urban protests and civil unrest suggest that the city is approaching a tipping point. The experience of the water situation and how it was managed, growing from a concern into a crisis to a point where there are frantic efforts to rebalance the financial structure of the water undertaking through massive and rapid water and sanitation tariff increases, suggests there are grounds to be concerned. If this state of affairs was allowed to develop in respect of water, what is to prevent it happening in the transport, housing and urban services sectors, all of which are exhibiting worrying signs of stress? In this context, the proposed 2018/ 2019 amendments to the 2017/2022 IDP and the accompanying budget do not appear to be giving sufficient attention to issues other than the water crisis – and even here the approach is concerning. SOUTH AFRICAN PROPERTY REVIEW

CSI

The Amdec Group:

building a charitable future

The Amdec Group, South Africa’s leading developers of New Urban lifestyles, is building a lot more than property – it is constructing a brighter future for our country’s underprivileged communities too.

To raise funds for the Smile Foundation, the Amdec Group is proud to lend its support to the SASFIN Cyclethon and Kiddies Cycle race, hosted by Melrose Arch

uilt on firm family values, the Amdec Group is committed to an optimistic, fair and caring South Africa while it’s stated mission is to enhance individual lives and build communities through property. To this end, the causes and initiatives they support are chosen with great care, and there is a strong focus on the upliftment of children through education and sports development. It sets these youngsters up for a much brighter future than they would otherwise have faced. Changing lives in this manner gives renewed hope to children, families, and communities. The Amdec Group has, in recent months, supported the following initiatives (among others):

Every year, Amdec offers support to two events that raise funds for the Foundation: the SASFIN Cyclethon and Kiddies Cycle race, hosted by Melrose Arch, the Amdec Group’s iconic mixed-use precinct in Jo’burg; and the STBB-4-GOOD Mountain Bike Challenge and Trail Run, which takes place at Overgaauw Wine Estate outside Stellenbosch. “The Amdec Group has supported the Smile Foundation for many years with one intention: to help children smile,” says

Hedley Lewis, Chief Executive Officer of the Smile Foundation. “And when Amdec supports something, they support it wholeheartedly. It’s lovely to see the entire company getting behind the event.” Smile was one of the late Nelson Mandela’s favourite charities. His love for children, and his belief that the future lies in their hands, were two of his great passions. More than 1 800 people participated in the STBB-4-GOOD Mountain Bike Challenge and Trail Run, while the

The Smile Foundation The Smile Foundation is an NGO that helps underprivileged children with facial conditions such as cleft lip or palate, facial paralysis, burn wounds and more. One in every 750 babies in Africa is born with a cleft lip or palate, and without surgery, they often have difficulty breathing, drinking, eating and speaking. This leads to malnutrition, medical and psychological problems, and a lifetime of social stigma as a result of living with a deformity. 22

SOUTH AFRICAN PROPERTY REVIEW

The Amdec Group funds the schooling of a talented underprivileged youngster to attend the remarkable Christel House South Africa school. Nashita Diedericks hails from Hanover Park, an area blighted by gangsterism and drug abuse, but she diligently attends school and her grades have improved dramatically.

CSI Melrose Arch Cyclethon attracted more than 1 400 cyclists. The events raised significant funds, equating to about 150 operations – changing forever the lives of these children and their families.

Reddam Foundation The Amdec Group recently agreed to be the main sponsor of the 2018 Reddam Foundation Golf Day. The Foundation offers talented disadvantaged learners full bursaries and provides them with the opportunity to benefit from the exceptional learning and sporting facilities of Reddam House, one of South Africa’s top schools. Reddam House subsidises 50% of the selected student’s education costs; the remaining 50% is paid for by the Reddam Foundation. The Reddam school motto is “Giving Back”, and this core philosophy is embodied in the Reddam Foundation. Uplifting a young student from a disadvantaged community through an education of the highest quality not only changes one life, but also enhances the lives and relationships of the student’s extended family and the broader community. The Amdec Group sponsorship, along with numerous additional fundraising initiatives and the Reddam House subsidy, will this year provide sufficient funding for 10 talented students from disadvantaged communities to receive a world-class education at Reddam House.

three days and included 840 players competing in the three age groups. “The beauty of the tournament is that it pits teams from small, outlying schools against those from big-name rugby schools, often with surprising results,” says local organising committee member Jean Stemmet, also a Paarl Gym old boy. “Last year, for example, Hermanus beat the mighty Grey College.” The Amdec Group’s sponsorship makes it possible for teams to travel from all over the country. It gives youngsters from disadvantaged backgrounds the opportunity to improve their rugby skills and learn to compete in a spirit of fair play and sportsmanship, to make friends that last a lifetime and to gain invaluable life experience. The event is future-focused in that it seeks to pave the way for talented young players to enter formal rugby training and development programmes. This year, under-12 Player of the Tournament Kyle Smit from Lochnerhof Primary in Strand received a scholarship to attend high school at Paarl Gymnasium. Furthermore, the tournament’s top players will be selected to play in the Dubai 7s schools tournament later this year. The 2018 Marius Schoeman 7s spanned three days and saw 70 teams compete. Paarl Boys High won the under-17 age group, beating Grey College in the final.

2019 Save Our Rhinos wildlife calendar The Amdec Group’s Save Our Rhinos initiative reflects another key area of

focus for the Amdec group – the environment. The initiative is the brainchild of Amdec Group Chairman John Wilson, who combined his passion for wildlife and photography to raise funds for the protection of rhinos and other endangered species. By compiling an annual calendar featuring his striking photographs, Save Our Rhinos has raised more than R1-million in the past four years. All the funds raised go towards SANParks Honorary Rangers, a group of unpaid volunteers who give freely of their time to support conservation in South Africa’s National Parks. Unlike many fundraising initiatives, Save Our Rhinos ploughs 100% of donated funds into the purpose for which it was intended – no public money is used to finance the rangers’ activities, and every cent donated goes towards funding antipoaching activities. The 2019 calendar, entitled “We are Family”, features photographs of animals and their offspring at close range in the wild. The theme resonates with the Amdec Group’s strong focus on family values, and underscores the Group’s commitment to preserving South Africa’s rich natural heritage for future generations. The Amdec Group appeals to the public to support the Save Our Rhinos initiative. Anyone wishing to make a contribution can do so by e-mailing Mia Blom at Amdec at miab@amdec.co.za, or by calling +27 (0)21 702 3200.

Marius Schoeman 7s Festival The Marius Schoeman schoolboy sevens rugby tournament brings together hundreds of under-12, under-15 and under-17 schoolboys from all backgrounds, to take part in what the organisers believe to be the biggest tournament of its kind in the world. The tournament is held in association with Marius Schoeman, High-performance Manager of South Africa’s all-conquering Sevens team, the Blitzbokke, and hosted by his alma mater Paarl Gymnasium. The Amdec Group was the main sponsor of the tournament that spanned SOUTH AFRICAN PROPERTY REVIEW

CSI

The Mentorship Challenge: a formidable platform to upskill entrepreneurs Season 1 of The Mentorship Challenge, which debuted on CNBC Africa in 2017, has won many awards during the year for its impactful marketing – the latest being at the prestigious 2018 Assegai Awards, where it scooped gold in the Best Social Media category and silver for the Online Campaigns category. It also bagged silver at the 2018 Prism Awards in the Sponsorship category earlier this year Supplied

Redefine Properties’ Executive Chairman Marc Wainer – the host of The Mentorship Challenge – with guest mentor Zuki Mzozoyana

reated by the JSE-listed diversified real estate investment trust Redefine Properties and hosted by the venerable Marc Wainer, the show (which is currently being re-broadcast), challenges industry titans to fuel entrepreneurial mentoring activities and contribute to making a meaningful difference in the development of young entrepreneurs. The show seeks to entrench a culture of mentorship in a skills-scarce South Africa by challenging business leaders from corporate South Africa to pledge personal time to mentor budding entrepreneurs. Its online platform provides the real estate for the mentors

SOUTH AFRICAN PROPERTY REVIEW

and mentees to engage and schedule time together. The show expected a modest outcome – 100 mentors pledging a total of 500 hours to a base of 1 000 mentees. At the end of Season 1, just under 200 mentors had signed up, exceeding the initial target and collectively pledging more than 5 000 hours between them. “We ended up exceeding our own expectations – and we have almost 2 700 mentees applying for mentorship,” says Marijke Coetzee, Head of Marketing and Communications at Redefine Properties. “Many of us can identify at least one individual – a teacher, a colleague or

even a family member – who has made a positive impact; the one who believed you could be better and encouraged you to achieve your potential. The Mentorship Challenge was born from that strong desire to tap into the potential among the youth by offering necessary guidance and support, and filling a gap that not even formal education provides.” Mentoring offers the mentor an extraordinary opportunity to contribute to a mentee’s professional, business and personal growth by sharing knowledge and experience. “Millennials in the workplace and young entrepreneurs today are very

CSI

Marijke Coetzee, Head of Marketing and Communications at Redefine Properties

much influenced by the types of leaders they are able to observe and learn from,” says Coetzee. “To that end, well-matched pairings and a clear purpose have been the cornerstones of this success.” While the Global Entrepreneurship Monitor’s latest report for South Africa

reveals that our country’s entrepreneurial activity is at its highest level since 2013, the Seed Academy’s State of Entrepreneurship results indicate that entrepreneurs are not thriving, and that dramatically more needs to be done to improve our entrepreneurial ecosystem. The report further states that having a mentor aligned to the entrepreneur’s business is a key success factor. Few entrepreneurs have mentors through their enterprise supplier development programmes; yet, overwhelmingly, those who do believe that the mentors add significant value to their businesses. “Entrepreneurs are the economic engine that South Africa needs at this time, and mentors are one of the most valuable resources to kick-start the journey,” says Coetzee. “At a minimum, mentorship should be the practice to develop leaders in all spheres of business. At Redefine, we revel in this opportunity to be able to contribute to building South Africa.”

Local business leaders who stepped in with pledges to pay it forward included Taddy Blecher, Trevor Manuel, Lira, Gil Oved, Brian Joffe, Grace Harding, Lebo Gunguluza, Angus Taylor, Judge Bernard Ngoepe, Tebogo Mogashoa, Papama Ramogase, Marc Lubner, Amy Kleinhans, Anthea Ambersley, Zuki Mzozoyana, Ntando Kubheka and Rodney Berman.

RICA SOUTH AF 2016/2017 REPOLLRT SSE S BUS INE ? CAN SMA SOU TH AFR ICA IN SURVIVE

y Kew and gton, Penn Mike Herrin

Alesimo

Mwanga

When private-public partnership works! Meet the entrepreneurs who benefit.

The Department of Small Business Development (DSBD) and Property Point have joined forces to take 16 small to medium-sized, black-owned, businesses, through a life-changing enterprise development programme. This programme will provide bespoke business interventions and facilitate access to markets in order to catalyse business growth and sustainability. Richard Chauke is the Managing Director of Value Waste, which was established in 2014 and specialises in waste management and recycling services. ‘’ I was 25 when I started my first paying job as a Promoter at UNISA, but now that I run my own business, I’m really proud that as an SMME I can provide employment for young people and women. I also like the fact that the property sector, more so the waste industry, is not a seasonal business, people create waste all the time.’’ Says Richard. The business faced its fair share of challenges, there was a time when the local community threatened to burn the business's assets, but Richard and his team have since created a mutually beneficial relationship with their community by opening a buyback center where the community can benefit from recycling. He has also differentiated his business by paying his clients rebates for the waste they bring. ‘’One of the most important lessons I have learned is to never burn your bridges because you never know who you may need one day’’ he explains. Richards business has benefitted immensely from being on the Property Point Programme. ‘’ The programme has benefitted me by facilitating networking opportunities through Entrepreneurship To The Point sessions and effective training such as the fire-marshal course I did. The vision for my business going forward is to open buyback centers across the country and to diversify into property ownership and create affordable accommodation for students’’ Says Richard. Property Point is a Growthpoint Properties initiative which provides entrepreneurs with the skills and personal development support they need to develop their enterprises into fully independent companies. For more information on Value Waste, contact Richard Chauke on 084 837 1371 or info@valuewaste.co.za

SOUTH AFRICAN PROPERTY REVIEW

CSI

Know thy neighbour – Tongaat Hulett certainly does! Cornubia Phase 2D, also known as Blackburn Village (BBV), is located across the N2 west of iZinga, and is a lively home to about 4 500 residents, the majority (more than 90%) of whom are under the age of 40 years. This community is relatively highly literate, as almost 100% have an education of Grade 9 and above – yet only 36% are employed in the greater Umhlanga economic node that creates more jobs than work-seekers at BBV

“Z

ero percent unemployment in Cornubia (including BBV) is the goal set by Tongaat Hulett and the eThekwini municipality to facilitate a socially and economically integrated greater Umhlanga region,” says Tongaat Hulett Developments’ MD Mike Deighton. “Settlement of indigent people in the proximity of opportunity does not guarantee economic participation and social cohesion, unless deliberate interventions are implemented to enable self-leadership and development, which leads to economic participation,” says Bongani Gumede, Tongaat Hulett Developments’ Executive Head for Community Public Private Partnerships. iThuba, meaning “opportunity”, is a programme that facilitates upskilling and linkages between local demand and the supply of labour. Walk-in iThuba centres managed by the communities have been established in BBV, Cornubia Phase 1 and Waterloo, all feeding the iThuba Training Centre at BBV’s socioeconomic sustainability and innovation programme (SSIB) hub.

SOUTH AFRICAN PROPERTY REVIEW

The Training Centre is a catalyst for skills and enterprise development that enables economic participation and improves quality of life. Focus is on dominant economic sectors such as construction, retail, hospitality and property services.

This public-private partnership is a key city strategy in accelerating development and service delivery. While Tongaat Hulett has made some property available for the development of sports and recreational facilities, the city is preparing for the installation of an outdoor gym. These initiatives are implemented by empowering the community to lead issues of importance through the iThuba Steering Committee. Major developments undertaken in close proximity to low-income housing settlements should employ some of the inhabitants, but this is not always the case. “The challenge is that communities battle to meet the skills requirements for the jobs,” says Rieva McMurtrie of Tongaat Hulett Developments. Construction companies tend to bring their own skilled staff, or

use conventional channels to source skilled people, so people from surrounding settlements often don’t get to participate in the new economies that are created. “Programmes such as iThuba are the essence of our SSIP,” says McMurtrie. The SSIP addresses the effect of developments on the communities they surround, who need to understand what is happening in the area, and the direct impact these developments will have on their lives. Tongaat Hulett engages with these communities long before the first grader arrives on site. Extensive surveys help to obtain a clear picture of the population demographics in the development area. Cornubia, targeted at indigent beneficiaries across eThekwini municipality together with BBV, has a high need for social services. Statistics reveal the misalignment between social demographics and social amenities. For example, there are nearly 1 000 children under the age of six, with only 80 attending early childhood development centres (ECDCs). More than 1 600 children of school-going age are attending schools in neighbouring communities, with a temporary Solomon Mahlangu Primary School in Cornubia Phase 1 accommodating 700 learners. After-school support services are lagging but desperately needed to keep the children off nearby construction sites and rubbish dumps. There are, however, initiatives to accelerate more social facilities, such as ECDCs, the development of a new school in Phase 1 and recreational facilities. At BBV there is one dusty sports field that serves the entire community, while other teams are training in the nearby cane fields’ loading zones. The creation of ECDCs is one of Tongaat Hulett’s key interventions – part of its education training placement programme.

CSI The BBV community is proving that, with empowerment, communities can sculpt their own destiny. The renovations of the iThuba community centre and the ECDC were all done by three BBV construction companies. These companies (all based in BBV) were able to employ 37 newly skilled graduates from the iThuba training centre, all residing in BBV. The Blackburn ECDC was renovated in 2017 and is run by two community caregivers overseen by a temporary mentor, Nonhlanhla Sithole, a qualified school teacher. The centre accommodates children from birth until the age of six. The training centre, piloted with the opening of a construction skills programme towards the end of 2016, coordinates job opportunities and work-seekers, assessing skills gaps and upskilling and linking people to opportunity through training programmes. The initial programme is funded by Tongaat Hulett; work is under way to encourage others to contribute }to the initiative. The pilot (construction training) has provided many lessons to help improve the roll-out of the programme – learn and earn and lifelong learning by ensuring continuous skills adaptation for a changing workplace via incremental improvements. The programme has been a runaway success. It is encouraging that the Ridge Management Associations, among others, have answered the call to contribute to this initiative. The centre’s training facilitators include artisans retired from the construction industry as well as some contractors and business owners active on projects in the area. This success indicates that there is a definite role for retired professionals willing to contribute their knowledge and skills to the development of neighbouring communities. The quality of training is of such a high standard that more than70% of training centre graduates are placed in jobs within the greater Umhlanga area. Electrical skills development facilitator Nathi Mutwa was able to brief the new graduates on the building’s requirements, leaving them to get on with the work with minimal supervision. Such is the quality of the training and the calibre of the facilitators.

iThuba is fast becoming a centre of excellence, and a reliable conduit for the community to participate in new developments. Community members already employed on local construction projects frequently return to the iThuba training centre for upgrades to their existing skills set. Community members are initially interviewed by iThuba administrators, recording personal details, skills and work preferences on a central database. They are contacted when training becomes available in their preferred sectors. The database will soon become accessible to local businesses with the view to ensuring that as many future jobs as possible will be taken up by people from communities within the greater Umhlanga area.

As people undergo training, details of their skills development are recorded on the database. Neliswa Nogoni, a local university social sciences graduate, is iThuba’s administrator and an active member of the community. She says that feedback from employers indicates that graduates from the training centre are considered very “sharp”, and more than adequately skilled for the work they are employed to do. The centre trains on demand from Monday to Friday – an essential part of its strategy to ensure the trainees are placed in local jobs – with classes in a network of buildings located just 15 minutes’ walk from BBV. Uniformed trainees create brick and cement structures, chase walls for wiring conduits, run pipes, install toilets and read plans – all under the watchful eye

of facilitators who pass on the knowledge they gained from a lifetime of quality workmanship. Graduation takes place every Friday. As awareness of iThuba grows, it is the hope that local businesses will assist by applying their know-how to resolving some of the most pressing community challenges. While conditions and lack of services and social amenities remain a challenge, BBV remains a home, a vibrant community determined to improve the lives of its members. Recent iThuba statistics indicate that the average age of the residents is under 40 years, with 36% employed in an economic region that creates more jobs than workseekers. What is encouraging is that more than 90% want skills to improve their prospects. Successful lessons from the BBV iThuba community centre led to the city including BBV in the Urban Safety Governance Master Class 2018 for informal settlements, and presenting the BBV iThuba case study at the World Urban Forum in Malaysia in May 2018. The case of Blackburn as an integral part of the Greater Umhlanga region confirms the eco-systemic nature of demand and supply linkages – and the fact that neighbourhoods of different socioeconomic status can co-exist sustainably if planned properly. When communities stand up and develop their neighbourhoods, nothing is impossible – and if they can do it with so little, why can’t we? Feedback from employers so far has been very positive: trainees from iThuba are sharp and well-trained. SOUTH AFRICAN PROPERTY REVIEW

inner city redevelopment: one-on-one

Inner city rejuvenation: changing cities one building at a time Born in Orlando West and educated at Wits University, Chairman of the Talis Holdings Group Tebogo Mogashoa has a diverse portfolio of business interests. He talks to Property Review about his journey and his vision for inner city rejuvenation By Mark Pettipher

Photograph by Mark Pettipher

SOUTH AFRICAN PROPERTY REVIEW

f you head to Tebogo Mogashoa’s blog/ website Tebogomogashoa.co.za, you’ll find a succinct outline of his activities. The 1996 engineering graduate of the University of the Witwatersrand specialised in telecommunications engineering, systems integration and product enhancement. His entrepreneurial traits emerged early, and he started a consulting engineering business “straight off campus”. His subsequent success in business resulted from his visionary approach and the ability to combine strategic thinking with a healthy tolerance for ambiguity. Today, with more than 20 years of experience as a successful businessman that’s underpinned by exceptional entrepreneurial vision and flair, he offers a unique approach to commerce and leadership in Africa. Over the years, he has grown his business interests into finance, property development, fleet management and information communication technology, and owns a diversified investment holdings company with interests in commercial property, asset-based finance, factoring and invoicing, and development funding. His objectives as Chairperson of the Talis Holdings Group are long-term and proactive – and that is why he identifies with and invests in the growth sectors of the African economy. “Getting into property was a natural progression for me,” says Mogashoa. “My first foray into the commercial property sector was the successful development of the Pan Africa Mall, which opened its doors in Alexandra in 2009. The centre was the first of its kind in South Africa and built with fully integrated public transport. It includes a 50 000m2 taxi

inner city redevelopment: one-on-one facility and is ideally placed in one of Alexandra’s busiest hubs.” Mogashoa’s portfolio comprises retail assets and office developments across the country. He holds a number of corporate positions: in addition to being the owner of Talis Holdings, he is the Chairman of the Divercity Property Fund and the Chairman of the Atterbury Property Fund. He is also a board member of Ascension Capital and the President of Wildlife Ranching South Africa. “Divercity was formed by the coming together of like-minded property investors – the Talis Property Fund, Atterbury Property Developers and iThemba Property Managers,” he explains. “The idea is to build a solid platform of commercial and residential development and management skills, and fuse them into Divercity. I’m also pleased that we have obtained unconditional approval from the Competition Commission to formulate this fund, and as a result we have attracted support from institutional investors such as Nedbank Property Partners and Rand Merchant Holdings. “We are precinct developers. Our objective it to identify an inner city precinct and redevelop it into a vibrant, functioning community – much like taking the existing Maboneng Precinct and joining it to our recently acquired Jewel City. Our plans will see Jewel City reopen to the public with a fully pedestrianised streetscape, effectively connecting Maboneng to the Absa precinct. Divercity will be launching more than 2 600 affordable apartments over the next 18 months, covering about 75 000m2 of new residential space in the Jo’burg CBD.” The new Jewel City precinct will see several old buildings being redeveloped and the area transformed into a “live, work, play” mixed-use property node. It will include 20 000m2 of commercial space, retail space and 2 200 residential apartments over two phases. “Through the Divercity Property Fund, we are able to be a catalyst for the redevelopment of inner cities,” says Mogashoa. “The acquisition of Jewel City from Redefine as well as the rights to redevelop the Absa Towers, combined

“Divercity’s ethos is to challenge the past spatial planning policies and bring people to the inner cities,” says Mogashoa, “our developments will include schools and hospitals, we are mind full of developing functioning communities.” with the inherited legacy of Maboneng Precinct and building on the continuity of the Newtown Junction through the Newtown Junction Mall and associated office developments, we are creating a formidable critical mass, which will form an incredible homogeneous node. “The formulation of Divercity has been my most professionally fulfilling experience to date. To be part of a programme to rejuvenate Johannesburg’s inner city, means that we’re taking the project really seriously. This is the single largest investment the CBD has experienced since the advent of South Africa’s new democracy.

“I encourage other institutional investors and property developers to invest in the rejuvenation of inner cities, starting with Jo’burg as the ‘engine room’ of South Africa’s economy.” The Absa Towers Main redevelopment has been on the cards for several. It will see the building being transformed into a mixed-use property, including 520 residential apartments, a floor of coffee shops and restaurants, office space and convenience retail on the ground floor. “The Divercity partnership has an inner city focus and aims to create functional neighbourhoods within our cities, with affordable housing being a cornerstone of our developments,” says Mogashoa. “To date, we have committed to invest R2-billion in the current financial year into our developments in the Jo’burg CBD. When complete, it will represent about R4-billion worth of investments in the city centre.” In a press release about the investment, Johannesburg Executive Mayor Herman Mashaba said, “I am overwhelmed by this commitment, especially the scale of the projects and the promise given by Divercity. We have a housing backlog of more than 300 000 in Johannesburg, so a project of this scale that addresses

The Absa Towers Main redevelopment

SOUTH AFRICAN PROPERTY REVIEW

inner city redevelopment: one-on-one Partnership we are getting tremendous help in this regard. “I believe that, in future, the landreform focus should look to urban land redistribution. More and more of the populace is moving away from the rural areas, and Divercity is contributing to the national phenomenon of urbanisation.

There will be a continued demand for urban settlement for the foreseeable future – and I really look forward to playing my part in harnessing the effects of investors and collaborating with the government to commit to the rejuvenation of our inner cities, one building at a time.”

Divercity’s inner-city Jewel City development begins in Jo’burg ABSA Tower © Heritage Portal

the affordable housing challenge in the city is heartening. We want to create an enabling environment for the private sector to invest in the city. “I have previously said that we want to turn the Johannesburg CBD into a construction site. What inspires me about Divercity’s plans is that they are not part of the 84 buildings that the council has released for development. Divercity’s investment will hopefully spur other private sector-led projects, as well as the take-up of the city’s various urban regeneration property development opportunities.” “Divercity’s ethos is to challenge the past spatial planning policies and bring people to the inner cities,” says Mogashoa. “Our developments will include schools and hospitals. We are mindful of developing functioning communities. “We’re not about creating new cities – we are looking to repurpose buildings through renovation. The buildings we are acquiring are generally structurally sound offices that can be reworked while considering the heritage of the city. That way we can work with existing infrastructure and bring ordinary people into our cities. We anticipate the rebirth of street culture as we have seen with the Maboneng Precinct; hopefully we can help to ignite the city to work around the clock. “Of course we cannot redevelop precincts without the support of the city’s executive committee – and thanks to the Johannesburg Inner City 30

SOUTH AFRICAN PROPERTY REVIEW

ivercity Urban Property Fund has turned the first sod of the Jewel City redevelopment in the Jo’burg CBD. The initiative is a major investment in Jo’burg and will have a total development value of more than R1,2-billion once complete. Jewel City has been closed to the public for decades. It spans six city blocks that were the former heart of the diamond and precious metals trade in Jo’burg. The revitalised Jewel City will reopen to the public as a vibrant mixed-use precinct. It will be amenity-rich with a school, a clinic, a gym, parking and convenience retail as well as fast food and restaurants. It will also include 20 000m2 of commercial space and 1 200 residential apartments in its first phase, with up to 1 000 in its second phase. The development will create significant employment in the city (an estimated 1 279 temporary jobs and 1 384 permanent jobs), and will contribute to the municipal and national tax base. In the next 18 months, Divercity will launch more than 75 000m2 of new residential space in Jo’burg, in Jewel City and its surrounds, with more than 2 200 apartments in total. More than 80% of this will fall within the rental cost range defined as social housing by the Social Housing Regulatory Authority of South Africa. Divercity’s major shareholders and stakeholders Atterbury Property, iThemba Property and Talis Property Fund, as well as its cornerstone investors RMH Property and Nedbank Property Partners attended the ceremony where the first sod was turned by the Executive Mayor of Johannesburg Herman Mashaba, Jo’burg’s MMC for Development Planning Reuben Masango and non-executive Director of Atterbury Property Fund Phuti Mahanyela. Mashaba was excited by the project. “It’s a catalyst for igniting the City of Johannesburg,” he

said. “We are a city with a housing backlog of 300 000, and 160 000 of our people are looking for accommodation. One in three people in Johannesburg is unemployed. If Johannesburg isn’t working, South Africa has no chance of succeeding, so this project is very important, not just for Johannesburg but also for South Africa. It’s important for Africa. “This is an opportunity for us to provide affordable accommodation for our people, to provide student accommodation and to create opportunities to unleash the entrepreneurial potential of our people. We, as government, have a role to play as a facilitator. “You have a government that’s ready to work with you. We can turn the city around. We can’t build it overnight, but this is a beginning. We are ready to do business. I thank all at Divercity from the bottom of our hearts. This was what South Africa needed. I hope that your investment, your initiative, will trigger other investors to identify the City of Johannesburg as the biggest real estate opportunity in the world today.” In addition to creating an inclusive “live, work, play” precinct, the Jewel City project will enhance the area. It will be fully pedestrianised, with a people-friendly walkway along Fox Street. Its pedestrian walk will link it with two other Divercity projects: the new Absa Towers Main redevelopment to the west and new residential developments in Maboneng to the east.

EARLY BIRD REGISTRATION NOW OPEN!

THE SAPOA ANNUAL CONVENTION & PROPERTY EXHIBITION CAPE TOWN ICC 18-20 JUNE 2019

Previous Keynote Speakers >>

PRAVIN GORDHAN

MMUSI MAIMANE

JUSTICE ZAK YACOOB

THABO MBEKI

IMAN RAPPETTI

THULI MADONSELA

JULIUS MALEMA

GERRIE NEL

JEREMY CRONIN

www.sapoa.org.za/convention/registration/

SOUTH AFRICAN PROPERTY REVIEW

Developer viewpoint

IMAGE © https://commonpurpose.org

Streets are clean – life is good Every quarter, Property Review delves into what’s happening in the property development landscape. With the turbulence caused by the mayoral debate in the Mother City over the past few months, we talk to developers in Cape Town to get their opinion of what is really going on By Mark Pettipher

talk with SAPOA’s alliance member and the Western Cape Property Development Forum (WCPDF) Chairman Deon van Zyl is a good place to start. As Chairman, Van Zyl is well-placed to have an opinion about the latest developments in the Western Cape, and the Mother City in particular. “The WCPDF exists to create awareness around and address the issues that often impede the property development industry in the Western Cape,” says Van Zyl. “We actively engage with politicians and various government representatives 32

SOUTH AFRICAN PROPERTY REVIEW

to provide detailed input and feedback on draft legislation and policy. While the industry is obviously impacted by national legislation, the most critical development issues tend to occur at ground level – therefore our emphasis is regional.” Reflecting on what he terms the “mood” of the local property development community, he says that there is a fundamental void between the perception of the development industry about the political status quo and that of the average Joe Public.

“Capetonians believe that things are run well, that there is good governance in the city, that the streets are clean and life is good,” says Van Zyl. “But show me the bigger picture. What will the city look like in 20 or 30 years from now?” Van Zyl is critical of the lack of “vision”, and is looking for the vision that goes beyond just having clean streets and a reasonable service delivery. “It is largely accepted that Cape Town is certainly ‘open for business’ – but perhaps there should be an additional focus on being ‘open for growth’,

Developer viewpoint

allowing change and the facilitation of property development? “One should never speak lightly of the need for clean governance. Recent events illustrate that, under the guise of clean governance, no expense will be spared to peruse this perception – even if it means investing hundreds of thousands of rand to prove that no politician or official, irrespective of seniority and executive status, should accept a ride on a train or, literally, a free lunch. In the private sector, decisions such as these are left to executives in terms of professional discretion. In the public sector, it gives one’s political enemies enough reason to grind a city to a halt. No-one seems to mind because clean governance makes us sleep well at night, even if there is grinding poverty out there. “With all this political noise around us – something that is not unique to Cape

Town’s municipality – what is being done to retain and develop those civil servants that actually want to get things done? It appears that any attempt to facilitate innovative thinking and decision-making has become, within the current norms, something to be frowned upon. Why employ brilliant brains in the civil service if they cannot do what they are supposed to do: think and implement? Perhaps our President’s ‘Thuma Mina’ initiative is not compatible with the plethora of legislation and policies that actively undermine delivery in the public sector. “This type of status quo only supports a no-change culture that seems to be a constant in many of the nation’s municipalities. The culture of antichange and anti-development flies in the face of the lip service being given to investment and job creation. Yet 24 years into democracy, the Cape still

looks and functions much the same as it did before 1994. We cannot address the wrongs of the past if our primary obsession is to keep things the same as they have been for centuries. “The city’s ability to grow is being hampered. Bureaucracy is the biggest contributor to inflation and is hindering the very drive we need for job creation. For several years, the political rhetoric has fed us the theme of catalytic investments – such as the Foreshore, Maiden’s Cove, Salt River/Woodstock and Conradie Hospital. Yet time and time again, these projects have failed to be implemented because some rule of procurement or decision on alienation of land was not adhered to, while other decisions were taken in the wrong order. The Sea Point Pavilion still hosts little more than a locked-up ice cream shop – years after the failure of a similar attempted catalytic investment. “Our city officials should be mindful, that the real client is not the developer – it’s the people of our city and province who will ultimately be the recipients and users of the developments we’re attempting to get off the ground. Time is of the essence in more ways than one because stifling development has a knock-on effect on the economy, and the construction industry is already laying off workers. “Conversely, making sure that our city officials work in an environment that stimulates, is dynamic in its thinking and open for change will have a positive effect; one that will send ripples through the industry. “It is still more expensive and red tapeintensive to develop a ‘brownfield’ site in the city than a new greenfield development outside of it. For property developers, it is becoming attractive to look beyond the boundaries of the city to nodes such as the Saldanha Bay IDZ, Malmesbury, and up the N1 to Paarl.” It’s clearly time for the private sector to step forward and drive an investment vision for the city and the region. It’s time to experiment with new ideas and define new opportunities. It’s time for the private sector to think about what the city of 2050 should look like. SOUTH AFRICAN PROPERTY REVIEW

Developer viewpoint

IMAGE © http://injini.co.za

CCID encouraged by growth in the CBD Speaking to Rob Kane, Chairman of the Cape Town Central City Improvement District (CCID) and CEO of Boxwood Property Fund, we find out that Cape Town is perceived to be “successful”. “This is why the city is attracting so many people,” he says. “It’s a blessing, but also a curse, because the large number of developments in recent years has placed CCID resources under strain.” The Cape Town CCID is a publicprivate partnership that was established in November 2000 by local property owners, with a vision for Cape Town’s CBD to rise from the “crime and grime” scenario it had fallen into, and to become a safe, clean, caring urban environment. Today it is also a vibrant place for investment, and a worldclass live-work-play-and-stay destination that’s welcoming to all. It’s considered to be South Africa’s most vibrant and safest CBD. 34

SOUTH AFRICAN PROPERTY REVIEW

“But in recent months the city has struggled to handle the politics of the day,” says Kane. “There is a certain amount of turbulence within the council offices, which has had an adverse effect. Officials seem to be reticent to make decisions. “As an organisation, the CCID has been talking to the city for some time about the need for affordable housing located in close proximity of the CBD. There is a need – not only in the Cape Town CBD – for affordable housing that would allow families to live closer to work and perhaps even walk to their place of employment. This could also help to relieve the traffic congestion that we face daily. This is a complex debate, and we need to be careful not to incur unintended consequences. One of the many questions under consideration is whether it is better to build one unit in the CBD when two similar dwellings can be built for the same price just outside the CBD.

“There are a number of pockets of land that are potentially available for development, but there is a disconnect between policy and alienation. Whether it’s municipal, provincial or national, every sector has its own set of rules and regulations. “Take the Good Hope Centre as an example. At present, it is a huge drain on the city council’s resources. The provincial government owns about 40% of the east side of the city, where the Good Hope Centre is located – and some of it could easily be used for social and affordable housing. “Cutting through ‘red tape’ is our biggest hindrance to progressing any potential redevelopment. “The CCID has always had an excellent relationship with the Cape Town City Council. The officials with whom we work are very dedicated people, but the ongoing turbulence and uncertainty – not only over the question

Developer viewpoint of expropriation of land without compensation but also over the city’s leadership – has meant that the passage of planning approvals and document processing had hit a bit of a hiatus. We’re looking forward to things settling down quickly. “The city is in good shape, but the overall national economy is punishing us all. There is a need for the country to increase its GDP numbers. There is about R8,6-billion worth of development going on in the CBD, with perhaps too much high-end residential stock being constructed. People may need to become more realistic with their rate of return expectations.” From a Boxwood Property Fund perspective, Kane’s outlook for the future seems to be positive, “We have invested about R900-million in the city centre – this includes six distressed buildings, each of which has huge redevelopment potential. The jewel in the purchase was the Shell building, which will quickly be restored to its former glory. We are confident that we have our business model right, and we believe that Boxwood can help the city grow exponentially. “All the buildings are well located and have ample parking. They will be renovated to be more sophisticated, and given quirky touches. We will be introducing trees and walkways, and improving the pedestrianisation and streetscape elements of the precinct. We aim to ensure that all of our buildings receive a minimum 4-star Green Star certification. “While there has been significant growth in the value of CBD property in the past 18 years – 2006 saw property value of R6-billion rise to a five-fold estimate of R31-billion – the greater concern is what to do about the increased influx of people into the CBD and the transport congestion that the CBD is facing. We have been told that since 2011, our Metrorail has been steadily declining, and now carries only about half of the passengers it carried in 2011. Yet the number of commuters coming into the CBD has grown enormously…”

Getting to work – a challenge for most city workers If you were to visit Cape Town during school holidays, you could be forgiven for thinking that getting into the City Bowl and around the CBD is a piece of cake. You’d be wrong, of course. When it comes to being back at work, your journey into town can be anything from 90 minutes to two hours. All major cities in the world have traffic to contend with, but Cape Town’s transport crisis is exacerbated by the fact that the City’s Metrorail is working at just shy of 50% of its capacity. Only 45 train sets remain in the aging service, and these are being subjected to interference by criminals, who burn the carriages and pilfer the network’s cables. This sabotage is destructive and costly. The knock-on effect is a bumper-tobumper one, and a two-hour journey to get into town. Depending on where you live, your only solution is a bus or a taxi. Going into the city from the Cape Flats or Khayelitsha and further afield means you have to rely on the ubiquitous minivans. If you’re starting your journey from the West Coast, you have access to the MyCiti bus network – but anywhere else, your only options are minibus taxis or a personal car.

Congestion, congestion and more congestion SAPOA Western Cape committee member and owner of Trafficon Steve Sutcliffe is

of the opinion that school-holidays traffic is an indication of road infrastructure that’s in good shape. It only needs to be managed better. “It seems that everyone’s solution to traffic is to build more roads and thus erase congestion problems,” says Sutcliffe in summing up the Western Cape’s transport dilemma. “But the truth is, we’re addicted to our cars. And the more a ‘patient’ relies on his ‘fix’, the more he will need it. There is good evidence around the world that building additional road infrastructure encourages additional car use. So, it’s short-term gain – but longer-term pain. “The real problem is congestion. Congestion is about bottlenecks in the network. It is true that our peaks now last longer than one hour. Eliminating certain bottlenecks to increase capacity would only shorten peaks a little; it would not eliminate congestion or provide sustainable solutions because latent private vehicle demand would quickly return conditions to where they were before the new road was built.” Should we be concerned with moving cars, or people? “Putting aside the debate on quality transit such as rail and bus operations, the single-person car commute is a luxury we can no longer afford,” says Sutcliffe. “Why spend any more on infrastructure than is absolutely necessary? Congestion charging, toll fees and higher fuel levies are simply taxes that are passed on to the

A burnt train at Steenberg station. No injuries were reported, and the cause of the fire has not been determined. Picture © City of Cape Town

SOUTH AFRICAN PROPERTY REVIEW

Developer viewpoint consumer in one way or another. Taxes can often breed contempt through an unwillingness-to-pay principle – but do they change behaviour?” The success of the private car stems from offering a flexibility of travel – a freedom to choose our time and space and thus control our day. But is this preferred choice actually diminishing our flexibility because we can no longer enjoy reliable travel times? Would a consistent 60-minute trip every day not be better than a 45-minute trip one day and an hour and 45 minutes the next? “Would ‘appropriate’ congestion encourage more public transport use? It could do, if there were a safe and reliable public transport alternative,” says Sutcliffe. “And what about the promise of variable working hours, future technologies and autonomous vehicles? We all need a little more encouragement to believe any of it. The nagging question remains – do we build more infrastructure or manage what we have in a better way? What can be done now to improve congested conditions, to improve mobility and accessibility, to support the economy and to encourage sustainable growth? “We cannot build our way out of congestion. Populist calls for more infrastructure will not help the transport crisis. In much the same way that the general public has risen to the challenge and changed its individual thinking around water usage, it is crystal-clear that the public will have to solve the transport crisis itself too. “Private intervention to beef up security to promote a safer and more dignified commute to work on our trains and buses to work is the way to go. However, given what we have, the city needs to encourage and facilitate the development of better public facilities that are more frequent and more appropriate – and above all, the efficient use of subsidies. Yes, minibus taxis have a role to play too. “Every crisis opens up opportunities, and perhaps the answer is actually no more than a cellphone app away. Services such as Mobility as a Service and ride-sharing as well as better ride-hailing 36

SOUTH AFRICAN PROPERTY REVIEW

options can all be controlled and summoned with a tap of a finger. “In short, perhaps the answer is to encourage our municipalities to facilitate and incentivise the privatising of some aspects of public transport. “The commuting public could halve the number of vehicles on the road tomorrow – but only if we have the collective will, and perhaps some kind of government incentive, to make the change. Every commuting day would be like a school holiday – imagine the relief! Take how quickly Uber has changed opinions and travel options – it has not necessarily taken trips away from the metered taxi industry, but it has created many more shared journeys and job opportunities. “In reality, the true answer to Cape Town’s congestion lies in tackling the issues of population development. Many people – city developers, city managers and the Mayor – are discussing the need for affordable housing in the city. Proper inclusive planning is needed. There was talk of transport corridors into and out of Cape Town, but for those to be densified and efficient, there needs to be an integrated two-way transport flow to the system. “It’s not efficient for traffic to move only one way in the morning and back again at the end of the day. There has to be a sustainable, continuous backand-forth flow. In short, there is a need for a smart public transport system – for smart living.”

Security “beef-up” on Western Cape Metro It was reported in the newspaper that Transport Minister Blade Nzimande has recently launched a security unit to look after the Mother City’s trains. Nzimande commented that the unit was not a substitute for the railway police. “We want to multiply the impact,” he said. “Years ago, Cape Town Metrorail was one of the best, but since 2015, it has deteriorated rapidly. Some members of the community know who is burning trains, stealing copper and destroying the infrastructure. Law enforcement alone is not enough; they need assistance, and I appeal to members of the community to come forward.” Western Cape Premier Helen Zille told the new recruits, “You are the people to help us establish rail safety and security. You are very important to every commuter in the city.” Former mayoral committee member for transport Brett Herron said that the “Protection of our rail infrastructure is absolutely vital to keep our city moving.” Metrorail regional manager Richard Walker also commented: “We already have 84 trained members. Training of the remaining 100 will be finalised in the next two weeks.”

IMAGE © https://www.pexels.com/de-de/@magda-ehlers-pexels

We help you put legal structures in place while you get ready to break new ground. We act for major real estate owners, investors and developers; financial institutions and lenders; Real Estate Investment Trusts; office and retail landlords; major tenants; owners

and managers of properties in the retirement sector; and developers of commercial, multi-residential, mixed-use, industrial and office properties including renewable energy projects.

Visit www.fasken.com for more information.

SOUTH AFRICAN PROPERTY REVIEW

on show

Market Theatre Foundation makes a cultural mark in Jo’burg’s CBD “Capturing the spirit of Ubuntu”, is how the Market Theatre Foundation buildings have been described. Accidental interaction opportunities spark creativity between various departments and patrons. Property Review speaks to the Market Theatre Foundation, KMH Architects and ADA Consulting Engineers about the incredible professional collaboration that has resulted in the “heartbeat” of Newtown Junction By Mark Pettipher

SOUTH AFRICAN PROPERTY REVIEW

on show

he Market Theatre Foundation (MTF) set down its roots in 1976. Working out of various rented and dilapidated rooms, the Foundation has come a long way – but it has remained an independent theatre, funded in the main under the auspices of the Department of Arts and Culture. With more than 300 awards to its name (21 of them of international acclaim), the Foundation is proud of its 42-year history and remains at the forefront of producing and presenting edgy, authentic, African artistic performances that celebrate our nation’s diversity. Founded by Mannie Manim and the late Barney Simon, and constructed out of Johannesburg’s Indian Fruit Market that was originally built in 1913, the theatre became internationally known as South Africa’s “theatre of struggle”. Armed with little more than a conviction that culture can change society, the Market Theatre challenged the apartheid regime. The strength and truth of that conviction was acknowledged in 1995, when the theatre received the American Jujamcyn Award. Minister’s visit Official opening of The Market Theatre Square

SOUTH AFRICAN PROPERTY REVIEW

on show

In providing a voice to the voiceless, the Market Theatre did not forego artistic excellence – rather, it made a point of it. During the past four decades, the Market Theatre evolved into a cultural complex for theatre, music, dance and the allied arts. MTF’s Chief Financial Officer Christine Mcdonald joined the organisation in 2003. In 2012, she was part of the adjudication committee set up to asses presentations for the structural “rebirth” of the theatre. “At the time, we were ‘scattered’ across several dilapidated buildings, renting space for administration from Nedbank, and rehearsal areas, photo-workshops and Theatre Laboratory space from Old Mutual,” she says. “The city had made a provisional agreement with Atterbury, who had obtained plans for the redevelopment of Newtown Junction, to build offices for the Foundation. Old Mutual had lodged plans to develop their part of the area and had failed to get planning permission. The opportunity to buy those buildings arose, and the Department of Arts and Culture (DAC) made it possible to buy the stock. “With an initial budget of R25-million, the project went out to tender, which eventually transcended into an architectural competition. KMH Architects presented us with a walk-through that appealed to the judges; they also gave us options of being able to develop the project in phases.

SOUTH AFRICAN PROPERTY REVIEW

“The developed phases meant we were able to persuade the DAC to release further funding at strategic periods till completion in 2016. The eventual cost was R100-million – now, here we sit in an award-winning development that came out of a chrysalis, giving us all our departments (admin, actors’ laboratory, the photo-workshop ,rehearsal rooms and theatres)in one centre,” With more than 35 years of experience in the arts sector, Ismail Mahomed took on the role of the Foundation’s CEO in August 2016. “Through the development of the new building, the DAC has aligned this project with a much bigger vision for the gentrification of Jo’burg’s CBD,” he says. “Together with the recently completed Newtown Junction Mall and Atterbury’s Newtown Junction, we are seeing greater foot traffic. There is a positive effect on safety, which is attracting a number of other activities such as book fairs, street art and performances. Even embassies are utilising the space for diplomatic events and cultural exchange programmes. Before, the area was only really open on Saturday evenings; now the precinct enjoys a ‘buzz’ that runs throughout the week and extends into the weekend. The precinct has been cited by CNN Travel as one of the top 10 places to visit in Jo’burg. “The John Kani Theatre has a seating capacity of 450 and forms our largest venue. The Mannie Manim Theatre gives us

on show a venue with 155 seats. The Barney Simon Theatre, which is named after the Market Theatre’s first artistic director, allows us to seat 114 people. “The rebirth of this precinct, our integrated communication ethos and the working relationships we have built with the surrounding businesses mean that Newton Junction and the Market Theatre are having a significant economic effect on the local community. From restaurants and coffee shops to car guards, there is a micro economy that’s sprung up as a direct result of the development of this building.” “The MTF, through its accidental interaction opportunities, sparks creativity between various departments and patrons,” says Mcdonald. “There is something going on for all cultures and all walks of life – that is the beauty of the flexible venues that we have here. The foyer and venues allow for everyone to mix, feel safe and, above all, have a sense of belonging.” “This is the first new building to have been established for – and specifically dedicated to – the performing arts since the ‘dawn of our new democracy,’” says Mahomed. “It is an important investment by the DAC.” As a Foundation, the theatre plays an important role in education. Through the performing arts and culture departments of a number of the city’s larger institutions – such as Wits and the University of Johannesburg – and in conjunction with the National Institute for Humanity and Social Science, the Foundation works with several inner-city schools to bus pupils to the facility so they can experience expression through theatre. The Audience Development Manager also promotes teachers’ nights and the teaching of actors through the Market Theatre Laboratory. Courses are available for would-be photographers through the Market Photo-Workshop. A highlight of the year is the Market Theatre Foundation’s participation in the annual inner-city schools festival. More than 20 schools take part. The festival is run in association with Hillbrow’s Windybrow Theatre, whose main objective is to enrich children’s minds through the performing arts.

SOUTH AFRICAN PROPERTY REVIEW

Single building, many functions

PROPERTY DEVELOPMENT CONSULTANTS We are committed to supporting clients in their development endeavours to plan, expand capacity, create sustainability and enhance the quality of the environment.

Ofﬁce D205, Northview Shopping Centre Cnr. Malibongwe Dr & Olievenhout Ave, Northwold

Tel: 087 550 0849 / 072 517 4558 Email: admin@akmeholdings.com wisdomn@akmeholdings.com 44

SOUTH AFRICAN PROPERTY REVIEW

Each project that KMH Architects takes on is treated uniquely, and the philosophy for each building is borne out of observing and feeling the site, gathering design clues and allowing concepts to form. All the clues KMH needed were on the derelict site: this is the way KMH Architects described the thinking behind the MTF building proposal. The design had to incorporate the Foundation’s core principles. The then-Artistic Director Malcolm Purkey wanted people to be able to visualise what was happening in the theatre, and to be part of the arts and culture experience. He wanted the public to be able to observe rehearsals. The building needed to be visual; it needed to allow navigation through it and accommodate movement. The single building had to be accessible, practical and multifunctional. Added to the philosophy was a need to address the heritage of the area. To this end, KMH conferred with South Africa’s leading heritage consultant Herbert Prins to negotiate the site’s architectural requirements. KMH’s entry concept into the competition (competing against five other architectural practices) included reusing existing infrastructure. The firm was sensitive to the fact that the proposal would have to fall in with – and be part of – the Newtown Junction development. “This was not supposed to be an architectural showpiece,” says Wayne Mansfield, a partner at KMH. “It was not designed to show off but to demonstrate an integrated and robust theatre experience. “The four elevations take up an entire city block. Each elevation deals with different characteristics and language,

on show but there is definitely a subtle common theme that ties the five buildings together. “Because the competition objectives were clear about the different components that the Foundation required, the design includes high levels of integration, adaptability and flexibility. The oldest structure – about 104 years old – is a corner building, which according to Herbert Prins held no architectural significance but had huge heritage importance.” It is the last remaining migrant-worker eating house in South Africa. A modest 200m2 building, it was incorporated more or less “as is”, with a few modifications such as the enclosure of the windows to create shelf space. The building eventually formed the Foundation’s library and archive space. “Every department’s identity was taken into consideration, including the theatres, administration, laboratory, photoworkshop, and rehearsal rooms. Each needed to be easily accessible and visible,” says Michael Cornwall, Associate Partner at KMH. “We achieved this through the use of windows, easyaccess walkways and interconnected corridors. We were looking for those ‘accidental interactions’, where each experience is celebrated. The ramp system joining the floors can be used as a gallery; the roof space can be used as an outdoor theatre; the foyer, auditorium and courtyard as gathering places…” Before work could commence, the heritage component had to go out for public participation. “It took eight months

SOUTH AFRICAN PROPERTY REVIEW

on show to discover what was required to ensure that the MTF building fulfilled its ‘public’ obligation,” says Mansfield. “The project was ‘vetted’ by our peers – the Gauteng Institute of Architecture as well as the National Heritage Foundation. “One of the outcomes of the public critique was that we needed to be open-minded with our modifications, while a heritage compliance was to take into consideration Mary Fitzgerald Square, the adjacent Museum of Africa and the elevated highway. The new structure could be quite tall, but needed to be tiered down towards to the square. “Part of our brief was to track the entire project. Because we had proposed phased stages, the MTF was able to release evolutionary funds at strategic times during the build, and we were then able to add elements such as state-of-the-art rehearsal rooms and the auditorium, making the project better as a result. “Thanks to the vision, perseverance and open communication the team received from our client, we (together with Herbert Prins) embraced the recommendations and components, and incorporated them into the eclectic expression that is the Market Theatre Foundation’s building.” KMH has subsequently won international awards for the MTF building – the Social Gain Merit Award during construction, and the World Architectural News award for Best Performing Space once it was completed. “Winning these awards is humbling, and credit must be given to the team’s collaborative effort,” says Mansfield. “Thanks to working with theatre designer Dennis Hutchinson, acoustic engineer Ivan Lin and our heritage consultant, we were able to achieve Malcolm Purkey’s ‘spirit of Ubuntu’. Patrons are able to interact with other theatre-goers and experience South African theatre at its best. “This project was important to KMH because it was our first major intervention in Johannesburg since the 1950s. It has set the foundation for us. Michael joined us at the very beginning of the project, ‘cutting his teeth’ on it, so to speak. The experience he’s gained through the process has elevated him to Associate, proving that lessons learnt can be taken forward into other projects. We are happy to share that the final build is true to the concept proposal thanks to early buy-in of MTF and sticking to the vision.”

Three projects in one “We’ve worked with KMH Architects over a number of years, so when the Market Theatre Foundation project came up, it fitted well with our inner city and community redevelopment ethos,” says Paul Maitre, Managing Director of ADA Consulting Engineers. “While the project was to be a single entity, it was really more like three projects in one. First, there was heritage to take into account, so existing buildings were to be repurposed and certain façades were to be retained. Second, there was a basement that needed to be floodproofed. Finally, elements of a new build as well as total rebuilds such as adding floors to an existing structure also came into play.” 46

SOUTH AFRICAN PROPERTY REVIEW

on show

To start with, the structural integrity of the existing buildings needed to be established. ADA needed to create a workable solution developed from KMH’s overall concept that required an as-built survey as an essential part of the development. The core of the office building had been a factory at some stage in its life, and there was a mono rail that provided clues as to the load capacity of the building’s foundations. “Reading the ‘language’ of the old building while knowing that old building techniques tended to overcompensate, we still needed to do a due diligence on the strength of concrete and existing structure reinforcement,” says Maitre. Samples taken at strategic intervals throughout the basement gave reassurance of the structural integrity of its foundations. Only once this process was complete could the requirements of removing the roof and adding a floor be addressed. This was done with large span steel trusses supporting reinforced concrete slabs with polystyrene void formers. Composite action was ensured with welded shear studs. “The heritage element of this project was unique to the build,” says Maitre. “We had to retain a number of the façades, so in order to maintain its historical integrity, some of the brickwork and cladding had to be disassembled and rebuilt. As the roof came off, we needed to install steel brackets to support the walls. “Because the site is underlain by alluvial soil and clay, our geotechnical survey determined that some of the buildings would require piled foundations. One challenge was to attend to the basement flooding from storm water. We introduced independent sumps at the lowest point of the basement from which flood water could be pumped; we also elevated the entrance at road level to control flooding from the street.” The requirement to deliver a multi-use building meant dealing with the challenge of satisfying a large number of people’s ideas about how buildings should look and function, while retaining as many of each building’s unusual features as possible. In terms of the multiple buildings set around the courtyard, each of the four outer elevations creates, respects and represents a different aspect of the retained heritage. Subtle sight lines and clever glass panels needed to hold the aesthetics 48

SOUTH AFRICAN PROPERTY REVIEW

of the project together. “In consultation with KMH we took a pragmatic view in order to realise savings and address budget constraints,” says Maitre. “We understood the building’s purpose, and the architects were receptive to the advice we gave as to what could be done and what materials could be used. They placed a great deal of trust in us, with the knowledge that we are just as risk-adverse as they are.” Both ADA and KMH have responded to the challenge of being sensitive to the “green movement”, keeping in mind that buildings need to be sustainable. The architectural response of this build’s form and function and the application of materials used allows for the longevity of the building. It is structurally reinforced but retains a good measure of its original historical integrity.

Meet the team Project The Market Square – Market Theatre Location Johannesburg, South Africa Owners and developers Market Theatre Foundation ●● MTF CEO ismailm@markettheatre.co.za ●● MTF CFO christine@markettheatre.co.za ●● Architects KMH wayne@kmh.co.za ●● Acoustic consultants Linspace ivanlin@linspace.co.za ●● Electrical engineers Plantech pgouws@plantech.co.za ●● Structural engineers ADA Consulting paul@adacons.co.za ●● Heritage consultant HMJ Prins h.prins@iafrica.com ●● Interior designer I4C/Interiors for Change catherineg@i4c.co.za ●● Photographer Market Photo-Workshop lekgethom@marketphotoworkshop.co.za ●● Project manager Badat Development agmat@badatdev.co.za ●● Quantity surveyor Walker Maré JHB basil@wmqs.co.za ●● Theatrical consultant Denis Hutchinson denishutch@gmail.com ●● Town planning AKME Development Agency wisdomn@akmeholdings.com

doing business in South Africa

Dealing with construction permits Dealing with construction permits: Main findings

• Across the nine South African locations measured, the constructionpermitting process requires on average 18 procedures, takes 125 days and costs 2,2% of the warehouse value. This is faster than the average for OECD high-income economies but requires six more procedures and is 40% more expensive.

• Cape Town is the place where it is easiest to build a warehouse and connect it to water and sewerage, while Tshwane is the most difficult.

• Nelson Mandela Bay improved the most since 2015, moving up one place in the ranking to take the fifth spot. Peer-learning engagements with the municipalities of Johannesburg and Tshwane allowed Nelson Mandela Bay to optimise its work flow and better monitor incoming applications. The time to obtain approvals of building plans dropped by more than 12%, from 40 days in 2015 to 35 days today.

• South Africa’s average score on the building quality control index – 12 of 15 possible points – is among the highest globally, and ahead of the averages for OECD high-income and BRIC economies. However, the country receives no points on the liability and insurance regimes index.

• Five municipalities introduced minor improvements making construction approval easier, but there is still room for improvement. Among the main constraints to greater efficiency are the lack of a streamlined process for pre-approvals and the use of inefficient paper-based systems.

SOUTH AFRICAN PROPERTY REVIEW

In the second of several extracts from the World Bank Group’s recently released Doing Business in South Africa 2018 report, Property Review focuses on business regulations and their enforcement across five Doing Business areas. It goes beyond Johannesburg to benchmark eight other South African urban districts across four regulatory areas. It also measures the process of trading across borders through four of South Africa’s maritime ports. It contains data current as at 1 May 2018, and includes comparisons with other economies based on data from Doing Business 2018: Reforming to Create Jobs. Because this edition of Property Review has a developer focus, we have chosen an extract from the “Dealing with construction permits” section Extracts from http://www.doingbusiness.org/southafrica

he construction sector is the secondlargest employer in South Africa after the government. Since construction and building are labour-intensive, when this industry is operating at full capacity, large sections of an economy’s workforce are active. Worldwide, the construction industry is recognised as a significant contributor to employment and economic growth. The South African construction industry thus has the potential to bolster the National Development Plan’s goals of higher economic growth and job creation. Following the end of the apartheid era’s economic isolation, there was relatively steady growth in total construction output for 20 years (from 1990 to 2010). However, with the 2008 financial crisis and the completion of infrastructure projects in preparation for the 2010 World Cup, growth slowed. This led to labour unrest and strikes, which negatively affected the construction sector and caused delays in major building projects that persist to this day. Studies have shown that extensive delays in the construction-permitting process can lead to higher transaction costs and fewer construction projects.

Economies such as Denmark, New Zealand and Taiwan (China) have proved that the construction-permitting process can be relatively simple, efficient and safe. In these economies, regulatory reforms have revolved around three key features: delegating parts of the process to the private sector, applying risk classification for buildings, and using new technologies (such as electronic platforms and onestop shops).

How does construction permitting work in South Africa? South Africa’s construction permittingprocess follows a general scheme of 11 steps common to most locations (Figure 3.1). Under the National Building Regulations and Building Standards Act, constructing a building requires the prior approval of the building plans by the local authority (municipality). The building company (the builder) must first prepare a set of building plans and submit them to the municipal building control department. The submission usually includes the application form, a copy of the title deed, a zoning certificate and detailed drawings.

doing business in South Africa

To prepare the architectural and structural designs of the plans, the builder needs a geological and topographical survey of the land plot. Such surveys are conducted by a private licensed firm or land surveyor. Once all required documentation is presented, a fee for submission must be paid immediately, and a reference number is provided to the builder. The application is then sent to the various municipal departments (for example, health, water and sanitation, fire, traffic, roads and energy) for their review and comments on the plans. Once building plans have been approved, the builder must notify the municipality of its commencement of work at least four days before construction begins. At this point, the builder will also apply for the connection to water and sewerage services at the municipal water and sanitation department. Compulsory building site inspections happen at various intervals during the construction process. These inspections include the excavation inspection (foundation trenches) and an open drain inspection. Once the building work has been completed and the plot is ready for final inspection, the builder must notify the municipality of the completion of the work.

Lastly, the builder prepares a set of certificates of compliance. These indicate that the building has been designed and erected in accordance with the application for which approval had been granted. The builder then sends the certificates of compliance and a written request for issuance of the occupancy certificate to the municipality. The local authority usually issues this within 14 days. Per the National Building Regulations and Building Standards Act, the building may not be occupied prior to issuance of the occupancy certificate. These 11 steps require an average of 18 procedures, take 125 days and cost 2,2% of the warehouse value. This performance is twice as fast as the average of the BRIC economies (Brazil, the Russian Federation, India and China) and almost a month faster than the OECD high-income economies (Figure 3.2). However, the process requires nearly six more procedures and is nearly 40% more expensive than the average of the OECD high-income economies (12,5 procedures and 1,6% of the warehouse value). Denmark – the global best performer – requires seven procedures and is two months faster than the South African average. In Denmark, pre-construction clearances are not required, and the building permit

application can be managed and completed online. Nevertheless, South Africa’s average score on the building quality control index – 12 of 15 possible points – is among the highest globally, and ahead of the averages for OECD high-income and BRIC economies. The nine locations that have been benchmarked show notable differences in the efficiency of the constructionpermitting process and the quality of building regulation. Obtaining construction approvals remains easiest in Cape Town – 17 procedures, 88 days, 2,4% of the warehouse value, and 12 points on the building quality control index. It is more difficult in Tshwane and Johannesburg, where the process, even though cheaper (2,1% on average), requires three additional procedures and takes two-and-a-half months longer.

How the process compares Obtaining construction approvals requires between 17 and 20 procedures in South Africa. This stems from local requirements before construction. Buffalo City and Cape Town have no municipal requirements prior to submission of building plans. In these locations, building plans are circulated internally by the municipality to the town planning, traffic engineering, health, wastewater, roads and storm-water management departments for comments and stamps of approval on the plans. In Johannesburg, Mangaung, Nelson Mandela Bay and Tshwane, the municipality does not circulate building plans internally across departments; instead, the applicant is responsible for getting the plans to each of the departments involved. Depending on the location, this adds between three and five procedures to the preconstruction phase. Additionally, in six locations, builders need a mandatory pre-construction approval from the town planning or land use management departments. In Ekurhuleni, Johannesburg, Nelson Mandela Bay and Tshwane, the builder must obtain a site development plan SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa

from the town planning department. In eThekwini and Msunduzi, the land use management department must conduct “pre-scrutiny” of the plans. Despite its high number of procedures, South Africa’s construction permitting process is relatively fast. The South African average is not only faster than the average for OECD high-income and BRIC economies but also faster than nearly 60% of the 189 other economies measured by Doing Business. However, significant differences still exist at the local level. Compared with the previous benchmarking in 2015, construction permitting is still fastest in Cape Town (88 days). This is mainly due to continued improvement of the municipality’s electronic platform for submitting building plans. Meanwhile, Tshwane remains the location with the longest delays (179 days). On average in Tshwane, as in Mangaung and Johannesburg, it takes approximately two months to obtain approval of 52

SOUTH AFRICAN PROPERTY REVIEW

building plans because of a lack of capacity to efficiently process the volume of plans, and the number of times building control departments circulate the plans internally. In Tshwane, for example, files are sometimes mislabelled, misfiled or sent to other service departments unnecessarily, delaying the process. The average cost of dealing with construction permits is 2,2% of the warehouse value – R84 532 (US$6 146) – and ranges from 1,9% of the warehouse value in Msunduzi to 2,6% in Nelson Mandela Bay. Building plan approval fees are the main drivers of this variation. These fees, set by the local authorities, depend on the use of the building and its size. They comprise more than a third of the total cost on average, and vary across locations (Figure 3.3). Pre-construction procedure costs such as fees to obtain geotechnical and topographical surveys of the land plot, can also amount to upwards of R37 695 (US$2 740). However, these procedures

– performed by a private sector firm or a private land surveyor – cost approximately the same nationwide, accounting or 45% of the total cost on average. These surveys provide information to the civil or structural engineer to design a sound foundation system as well as the drainage and storm-water circulation systems.

Going beyond efficiency: The building quality control index Construction regulations can help protect the public from faulty building practices, but to do so they need to be clear and thorough. Where regulations lack clarity, there is a risk of confusion among both builders and authorities, which can lead to unnecessary delays and disputes. Overly complicated regulations can also increase the opportunity for corruption. An analysis of the World Bank’s Enterprise Survey data shows that the share of firms expecting to give gifts in

doing business in South Africa exchange for construction approvals is correlated to the level of complexity and cost of dealing with construction permits.

What has changed? Since 2015, five municipalities have introduced improvements that make construction permitting easier by reducing building plan approval times, improving electronic platforms or both. These are Cape Town, Mangaung, Msunduzi, Nelson Mandela Bay and Tshwane. Mangaung and Tshwane cut the time required to obtain the occupancy certificate by 17% (four days) and almost 30% (two days) respectively, while Nelson Mandela Bay reduced the time required to obtain pre-construction approval of the site development plan by more than 12% (five days). In Tshwane, the building control department became more efficient by training and coaching staff in processing applications faster. Similarly, a change in the management team in Mangaung has greatly increased the administrative efficiency of the process over the past three years. Officials from Nelson Mandela Bay met with counterparts from Tshwane and Johannesburg to better understand

how these municipalities organise their work flow and identify bottlenecks. These peer-learning engagements have allowed Nelson Mandela Bay to optimise its own work flow and better monitor incoming applications, with more quality control. As a result of the successful implementation and continuous improvement of the Development Application Management System (DAMS) platform, the time to obtain approval of building plans in Cape Town dropped by 18%, from 45 to 37 days. In Msunduzi, a similar electronic platform was introduced, focusing on building plan applications that had already gone through the prescrutiny process. However, in Msunduzi this has yet to show a reduction in time because of other factors – chief among them being the decrease in the number of staff at the building control office. Not all changes have made life easier for entrepreneurs (Figure 3.4). In fact, in all locations, municipalities raised construction approval fees. In Buffalo City, Cape Town and eThekwini, the magnitude of local tariff increases has made business conditions worse. Building plan approval fees, along

with the cost to connect to water and sewerage, went up by more than half over the past three years, far exceeding the rate of inflation for the same period.

Some local initiatives have also made the process more burdensome. Cape Town now requires the approval of a waste integrated plan as a mandatory pre-construction procedure Some local initiatives have also made the process more burdensome. Cape Town now requires the approval of a waste integrated plan as a mandatory pre-construction procedure. This requirement was introduced through a 2016 by-law as part of the municipal environmental agenda to minimise the waste going to landfills by making sure construction waste is recycled in the correct facilities. The addition of this procedure as a separate requirement – versus as part of the approval process, as in other locations – has contributed to a drop in Cape Town’s overall performance in efficiency to below the average for OECD high-

SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa

income economies. In 2016, Mangaung introduced a fee of R5 500 (US$400) to obtain an occupancy certificate, becoming the only municipality measured to charge a fee for this procedure.

What can be improved? Making the process of dealing with construction permits easier has several benefits. First, economies with simpler procedures and less costly regimes have larger construction industries. Second, reducing the cost and hassle of obtaining construction approvals keeps more construction in the formal economy, therefore improving public safety. Finally, a simpler and faster building approval process benefits both the public and private sectors. A study in the United States shows that accelerating permit approvals by three months could increase a local government’s property-tax revenue by 16% and overall construction spending by 5,7%, expanding the benefits of increased construction activity to the rest of the economy. While some South African localities – such as Cape Town and eThekwini – stand out in the process of construction permitting when compared with BRIC or OECD high-income economies, other lagging localities show different strengths in managing construction permitting. 54

SOUTH AFRICAN PROPERTY REVIEW

This means that there is room to improve and learn from other locations The following list of recommendations is based on good practices both within South Africa and from other economies around the world, and points to potential ways to introduce those improvements.

Consider differentiating projects by risk and introducing risk-based inspections Categorising building projects based on risk and adopting risk-based inspections can lead to streamlined pre-construction approvals and procedures during construction for low-risk buildings and allow municipalities to better allocate resources. Yet in South Africa, the building plan approval process does not differentiate by a construction project’s size or its level of risk to public safety. All projects are subject to the same level of scrutiny, regardless of complexity. This may cause delays as well as an inefficient use of resources, especially where projects are relatively simple and routine. It also makes the inspection process inefficient. In South Africa, inspections occur during specific phases of construction, regardless of a building’s size, location or intended purpose. This phased inspection requires that authorities have enough resources to inspect buildings at each phase.

When all projects are subject to the same stringent regime, resources are more likely to be strained. For example, in Buffalo City the phased inspections do not always occur in practice, due to an insufficient number of inspectors. This can lead to missed, hurried or incomplete inspections. Although many risk-based inspections systems include a minimum number of phased inspections for all buildings, they typically give priority to buildings with high risks, such as environmental risks. Having fewer inspections for less risky buildings lowers costs without compromising safety. This increases flexibility and enables inspectors to move away from random and phased inspections. For example, the United Kingdom has defined key stages of inspections for all buildings, plus additional inspections based on the building’s risk level. High-risk sites must undergo extra inspections. The assessment is adjusted accordingly during construction. To set up a risk-based inspection system, South Africa should develop a detailed system to categorise building risks, based on several criteria, including building classification, nature of use and occupancy. Classifying and assessing buildings is important for determining the frequency of inspections. Because not all buildings are similar in terms of risk levels, an understanding of the risks associated with distinct types of buildings is essential. Differentiating projects by risk can also allow municipal departments to allocate more resources to riskier projects while maintaining the required levels of inspections for low-risk projects. Departments involved in issuing building plan approvals could assess the actual costs of reviewing plans and conducting inspections, and calculate fee rates accordingly. Additional brackets could be added based on risk categories. This way, larger projects with more substantial building fees could subsidise smaller ones. In economies that have adopted good practices in this area, building approval fees are generally set to recover the costs of the service provided,

doing business in South Africa and may vary depending on the size or complexity of the project. This approach can also be applied to inspections. Introducing risk-based categories can be challenging. Among the many prerequisites are sound legislation, accurate categorisation of buildings, effective agencies with sufficient resources, and well-trained workers with legal mandates to conduct inspections. Economies that have successfully implemented such systems have seen more efficient inspections of their construction industries without compromising the safety of workers, the public or the buildings.

Increase efficiency by improving coordination, consolidating procedures and implementing electronic platforms The streamlining of pre-construction clearances is a key factor in making the construction-permitting process more efficient. In South Africa, builders must complete five more steps than in the average OECD high-income economy and the average economy in East Asia and the Pacific. In locations such as Johannesburg, Mangaung, Nelson Mandela Bay and Tshwane, the applicant must take the plans to the different municipal departments (such as water and sanitation, fire, roads and storm-water, and energy) to obtain their comments. One way to simplify this process is by establishing one-stop shops. Today, more than 37 economies around the world have a one-stop shop for construction permitting. Serbia made it mandatory to request a building permit online through the e-permit system. Singapore introduced the CORENET (Construction and Real Estate Network) electronic submission system in 2013. This has streamlined the process for building professionals to request and obtain several approvals from different authorities. Obtaining approvals for building and fire safety plans, commencement permits, environmental and parking clearances, and workplace safety and health notifications are among the services that can be done through CORENET.

The success of one-stop shops hinges on efficient coordination among all departments involved and often requires comprehensive legislation that ensures information-sharing and establishes oversight mechanisms However, the success of one-stop shops hinges on efficient coordination among all departments involved and often requires comprehensive legislation that ensures information-sharing and establishes oversight mechanisms. In early 2017, Lagos in Nigeria expanded its electronic platform to the public by introducing an electronic title search at the Lagos State Land Registry. As a result, the local authority eliminated the need to obtain an affidavit from a commissioner of oaths for title search, which used to be a required document when applying for a development permit. This reform reduced the number of procedures and improved the coordination among local authorities. In the initial phase, South African municipalities with a paper-based approach can start by streamlining procedures and processes. Analysing the work flow to eliminate redundancies and identifying bottlenecks can lead to a better monitoring of incoming applications. These steps, combined with a risk-based approach, can reduce the approval times without compromising safety.

In the initial phase, South African municipalities with a paper-based approach can start by streamlining procedures and processes. Analysing the work flow to eliminate redundancies and identifying bottlenecks can lead to a better monitoring of incoming applications

In the longer term, municipalities can start implementing electronic platforms, which allow them to use a computerised work flow system across key departments, and gradually open the system to integrating more services in the permitting process. However, building control authorities should balance the costs and benefits of going electronic. To determine cost effectiveness, having solid statistics – which show the number of building plans reviewed, inspections conducted and certificates of occupancy granted – can help a building control department identify where and when problems occur. Analysing these statistics can facilitate an understanding of how an electronic platform can bring significant benefits in quality, provide better service, reduce staff time and improve coordination with other municipal departments. Smaller South African municipalities, where the cost of going electronic may not be justified, could follow Lithuania’s example. The Vilnius municipality acts as a one-stop shop that collects all information from different departments on behalf of the applicant. The builder submits only one consolidated form to the municipality requesting the “Special Architectural Requirements”, which are the technical conditions needed to prepare the design documentation. The municipality then gathers these technical requirements from all departments, and gives them to the builder. This approach can significantly reduce pre-construction procedures and ease the applicant’s burden of having to circulate building plans.

Introduce stringent liability and insurance regimes for latent defects While builders and architects in South Africa are held liable for structural flaws or problems in the building, liability coverage is not required by law but is addressed through a contract between parties. Additionally, there is no legal requirement for any party to obtain a 10-year liability insurance policy to cover structural defects in the building once it is in use, nor do most parties SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa obtain such insurance in practice. Liability regimes should be coupled with a compulsory insurance system for owners, designers and contractors. Liability and insurance regimes are essential in the construction sector because they ensure the accountability of the practitioners as well as the enforcement agencies themselves. Available insurance systems also contribute to a restitution mechanism for an aggrieved party or plaintiff.

In France, government legislation has established an insurancedriven building control process. The result has been a construction regulation system that functions with very minimal state involvement, and a largely simple and straightforward permitting process In France, government legislation has established an insurance-driven building control process. The result has been a construction regulation system that functions with very minimal state involvement, and a largely simple and straightforward permitting process. Contract and tort laws may specify a warranty period for the liability – a period that can be extended for an additional cost to the owner (if the builder pays an additional premium to the insurance company). In Belize, New Zealand and the United Kingdom, for example, the warranty period can range from one to three years after the building is completed. During this time, the building contractor must repair any defects. Contractors commonly hold insurance to cover these costs even if not required to do so by law. In other economies, however, liability is generally shared by the contractor and the architect, often for 10 years. In Australia, for example, both the contractor and the architect must have insurance for 10 years. Even among high-income economies, very few make this insurance mandatory. In more than 60% of economies, the architect who designed the plans or the 56

SOUTH AFRICAN PROPERTY REVIEW

construction company will be held liable for any defects, but not the supervising engineer or the agency that conducted inspections during construction. In most cases, the question of who is held liable depends on the origin of the defect. For example, if the defect was a result of an error at the design stage, the architect is usually held liable. Having insurance to cover costs that arise from structural defects benefits all parties involved, from clients to contractors. It ensures that damages will be covered if defects occur once the building has been occupied – and gives parties assurance that they are protected, which can encourage more construction. Having insurance to protect against excessive costs from potential damages can be particularly important for small and medium-sized construction companies.

Involve private sector professionals in the construction-permitting process Partnering with the private sector to supplement municipalities’ strained capacity to oversee building design, control and inspections can make the construction-permitting process faster and more efficient. The South African locations where the process takes the longest – such as Ekurhuleni, Johannesburg and Tshwane – could reap numerous benefits if private sector involvement were carefully implemented within a coherent regulatory framework. Most EU member economies have made a complete shift from public to private governance mechanisms in building regulation, reflecting a desire to improve the quality of regulation, reduce the administrative burden for applicants, and support a greater focus on risk mitigation. Japan has established a successful regulatory system that relies on thirdparty checks, thus increasing its capacity to detect deficiencies in building design and construction. For the private sector to successfully assume such an important regulatory role, a robust vetting system should be in place. Private third-party entities carrying

out controls on construction are entrusted to promote compliance with building codes and regulations and enforce rigorous safeguards in the public interest. To do so, public agencies could enforce professional certification criteria to ensure that individuals and firms are eligible to take on a regulatory mandate. This is important because individuals and firms with poor qualifications would undermine the objective of such a regulatory mechanism, as the quality of service provided by these professionals would fail to meet required safety standards. However, third-party inspections may end up costing more. Doing Business data show that hiring a qualified thirdparty professional on construction projects raises the cost of regulatory compliance by 1,3% on average in upper-middle-income economies. The trade-off in economies with lower prices is that regulatory compliance takes longer than in those economies with third-party involvement.

Third-party inspections may end up cost more. Doing Business data show that hiring a qualified thirdparty professional on construction projects raises the cost of regulatory compliance by 1,3% on average in upper-middleincome economies. The trade-off in economies with lower prices is that regulatory compliance takes longer than in those economies with third-party involvement Municipalities in South Africa should take into consideration the cost-benefit trade-off when deciding whether to delegate some of their functions. Many economies with well-developed construction industries have successfully implemented some level of collaboration with licensed private building professionals to reduce public controls. Austria and Germany use qualified professionals for plan reviews and inspections. Austria, Australia, Canada, Germany, Japan, New Zealand, Singapore and the United Kingdom allow private professionals to conduct inspections.

howmuch.net

Extreme poverty around the world A new report from the World Bank has just landed, finding that a record low of 10% of humanity now live in extreme poverty (down from 11% in 2013). But poverty rates aren’t anywhere close to equal between continents or even countries, as our new series of maps clearly demonstrates By Raul / https://howmuch.net/articles/people-living-in-extreme-poverty-2018

he World Bank provides an in-depth explanation for its methodology, which you can find in Appendix A of the full report. We focused on the percentage of people in each country living below what the World Bank defines as extreme poverty, or US$1,90/day. We’ll let the researchers defend this definition on their own, but there is one caveat to keep in mind: it can be extraordinarily difficult to collect reliable data from so many countries on a regular basis, so we used the latest year in which numbers were available whenever possible. For example, in some of these maps we compare 2011 figures against 2015. In short, our maps provide the clearest possible apples-to-apples comparison for extremely poverty around the world. To start, there are several dark- and light-green countries scattered around the globe. From the United States down to Argentina and from Russia to Australia, there are many developed countries where very few people experience a subsistence standard of living. This is what people mean when they refer to the global North and South. To be fair, there are several gaps in the available data in places such as Saudi Arabia, Afghanistan, Poland and Greenland. But none of these countries would change the overall story – which is that developed countries are much wealthier than everyone else.

is clustered to the north along the Mediterranean, notably the ones closest to Europe and furthest from the heart of Africa. The Democratic Republic of Congo (77,1%) and Madagascar (77,6%)

are at the epicentre of global extreme poverty. They are the two poorest countries on the planet, where it’s far more common to find someone living on less than US$2/day than not.

People living in extreme poverty

People living in extreme poverty in Africa

People living in extreme poverty in Africa It’s clear that the continent with the most extreme levels of poverty is Africa. There are only five countries on the entire landmass where less than five percent of the population lives in abject poverty; in fact, most places have levels well above 25%. The only group of green countries SOUTH AFRICAN PROPERTY REVIEW

SAPOA research report

Office Vacancy Report At Q3 2018, the national office vacancy rate as recorded by SAPOA was 11,2% – up 10bps on the quarter before. The sticky vacancy rate (especially in the A-grade segment) has seen asking rental growth slow to 5,3% y/y – down from 6,3% in the quarter before Extracts form the Office Vacancy report released by SAPOA, October 2018

he report indicates aggregate vacancy rate has moved broadly sideways since 2011, while the level of development activity has been trending steadily lower since reaching a peak in Q4 2015. This places the current quarter roughly midway relative to its long-term history in terms of its total vacancy rate and development as a percentage of existing stock. Asking rental growth has dipped below inflation again after a couple of successive above-inflation periods, and remains negative in real terms on a three- and five-year view – indicative of the low growth environment and excess supply in the market. Future improvement in vacancy rate and asking rental growth depends on strengthening underlying demand drivers, most notably financial and business services, employment growth and capital investment. Capital investment into financial and business services, while still in the low single digits, has been positive for five quarters, reducing the probability of short-term deterioration in the vacancy rate. Given the low economic growth and structural growth constraints, it is becoming increasingly hard to imagine the national office vacancy rate returning to mid-single digits within the next three years. Renewed business optimism amid a changing political landscape could be the much-needed catalyst to unlock capital investment in the sector that could drive employment growth and subsequently the demand for office space. 58

SOUTH AFRICAN PROPERTY REVIEW

Key Findings

●● At Q3 2018, the national office vacancy rate as recorded by SAPOA was 11,2% – up 10bps on the quarter before. The sticky vacancy rate (especially in the A-grade segment) has seen asking rental growth slow to 5,3% y/y – down from 6,3% in the quarter before. ●● On balance, the office sector is still in recovery phase, with the overall vacancy rate moving sideways and asking rental growth negative in real terms since 2011. This is indicative of the low economic growth environment and an excess supply in the market. ●● For the 33 quarters since Q4 2010, there have only been six quarters of improving office occupancy rate. Despite this, the overall office vacancy rate has only increased by 1,5% during this period, highlighting the sideways trend that characterises the drawn-out recovery phase of the current cycle. ●● The quarter ending September 2018 saw vacancy rates increase in the B-grade, C-grade and Prime grade segments, while the A-grade office segment saw occupancy rates improve by 40bps. The largest change was in the Prime office segment, with a quarter-on-quarter deterioration of 120bps to end the quarter at a three-year high of 6,7%. ●● As at the end of Q3 2018, the SAPOA OVS sample included more than 2m sqm of green certified office space (~22% of total P- and A-grade office GLA). ●● For the quarter ending September 2018, Green-certified Prime and A-grade offices had a vacancy rate of 4,6% versus the 9,2% of all P- and A-grade offices, and a premium on asking rental of 14% (R171/m2 vs R150/m2).

●● Among the country’s five largest metropolitan municipalities, the City of Cape Town still has the lowest overall office vacancy rate despite an increase of 30bps during the quarter. The highest vacancy rate among the larger metros was the 12,8% recorded for the City of Johannesburg; it overtook eThekwini, which improved to 12,1% after a 120bp improvement. ●● It’s the first time that the City of Johannesburg has had the highest office vacancy rate among the five largest metros since 2003, when it’s aggregate vacancy rate topped out at 17,1%. ●● The report also analyses office vacancy rates by building size. Interestingly, vacancy rates are the lowest in office buildings smaller than 1 000m2 (4,7%) and larger than 20 000m2 (7,5%) but significantly higher in the middle tiers. ●● At the end of the current quarter, developments under construction totalled 544 000m2. This is up from the previous quarter but down significantly from its Q4 2015 peak. ●● Expressed as a percentage of existing market stock, development activity is currently at 2,9% – off the 6,6% high of Q4 2007. One driver of the decline is that many development schemes are scaling down speculative building activity and opting to only phase development on a tenant driven basis. ●● On balance, the office sector is still in its recovery phase, with the overall vacancy rate moving sideways and asking rental growth still negative in real terms since 2011. This is indicative of the current low growth environment and the significant excess supply still present in the market.

SAPOA research report

Operating Cost Report For the six months ended June 2018, total operating costs equated to 33,9% of gross income on an All Property level. This is unchanged from December 2017 – but well off the highs of 2011, when a gross cost-to-income ratio of 36,2% was recorded at an All Property level. At the current level, the All Property gross cost to income is below its 18-year average of 34,5% Extracts from the Operating Costs Report released by SAPOA, October 2018

he unchanged gross cost-to-income ratio was a result of total operating cost and gross income growing at about the same rate during the period under review. Gross income was driven by the recoveries of metered municipal costs, while operating costs growth was underpinned by increased municipal charges as well as costs relating to property repairs and maintenance. On a sector level, industrial property recorded the largest improvement in its gross cost-to-income ratio. By improving 120bps to 29,6%, the sector improved to its best level since 2008, helped by its consistently low vacancy rate. The retail and office sectors saw very little change over the six months ended June 2018. The retail sector’s gross cost to income improved by 20bps

Key findings

●● On a sector level, industrial recorded the largest improvement in its gross cost-to-income ratio. By improving 120bps to 29,6%, the sector improved to its best level since 2008, helped by its consistently low vacancy rate. The retail and office sectors saw very little change over the six months ended June 2018. The retail sector’s gross cost to income improved by 20bps to 36,5%, while the office sector’s ratio was unchanged on its December level of 31,5%. ●● On a net basis, cost-to-income ratios are down across all three major property sectors, given the increase in variable cost recoveries (metered consumption not “fixed” according to the lease) as well as the improved recovery rate thereof. ●● Among the property operating costs categories, municipal charges constituted the largest proportion of overall operating costs as at June

to 36,5%, while the office sector’s ratio was unchanged on its December level of 31,5%. On a net basis, cost-to-income ratios are down across all three major property sectors, given the increase in variable cost recoveries (metered consumption not “fixed” according to the lease) as well as the improved recovery rate thereof. On an All Property level, the net income-to-cost ratio improved to 20,5% as at June 2018 (from 22,8% in December 2017).

Since the early 2000s, municipal charges have seen the largest increase of the different cost categories, becoming a bigger slice of a bigger pie. During this

time, it increased almost sevenfold from R5,24 in 2000 to R36,04 in June 2018 (CAGR of 11,6%). On a sector level, industrial property’s municipal charges make up the largest percentage of total costs at 72,7%, followed by retail and office with 64,4% and 59,5% respectively.

2018, at 63,9%. Since the early 2000s, municipal charges increased almost sevenfold from R5,24 in 2000 to R36,04 in June 2018. ●● Municipal charges comprise of rates and taxes, electricity and other metered utility charges, such as water and CID charges. ●● On a sector level, industrial property’s municipal charges make up the largest percentage of total costs at 72,7%, followed by retail and office with 64,4% and 59,5% respectively. ●● Overall operating costs increased by R5,74/m2 per month for the period ended June 2018 (11,3% up on a square-metre basis). The biggest driver of the increase was municipal charges (R3,47/m2). ●● Repair/maintenance and tenant installations grew to be the secondlargest cost category on an All Property level as at June 2018, after an 18,7% per square metre increase. ●● As a percentage of gross income, super-regional (>100 000m2) and

regional centres (50 000-99 000m2) reported the lowest ratio of the multi-tenanted retail formats at 35,9% and 35,3% respectively. ●● On a net basis, super-regional centres’ cost-to-income ratio has increased from 22,5% to 26,6%. While H1 2018 is the first-ever period where super-regionals recovered more than 100% of their electricity expense (through initiatives like solar PV), a significant increase in rates and taxes offset this. ●● The Prime office segment remains well placed with regards to operating costs as a percentage of gross income at 30,2% (below its long-term average). The gross cost-to-income ratio of secondary offices at 30,7%, is down on its 2016 level of 38,4% as several underperforming assets have been sold. The secondary-quality office segment has been among the segments with the highest level of transaction activity – typical of this phase of the property cycle.

Costs driven by increased municipal charges

SOUTH AFRICAN PROPERTY REVIEW

social

City of Johannesburg 84 Properties Inner City Development Engagement Session The Executive Mayor of the City of Johannesburg Councillor Herman Mashaba hosted a CNBC Africa-facilitated engagement session on 13 November on the issue of the 84 properties in the inner city. Mashaba made the initial announcement about his intention of turning the inner city into a construction site at a launch event in August. Starting out as 71 properties, the portfolio has since increased by an additional 13 By Maud Nale

he city is making its property available for progressively transforming the inner city into a space where residents can live work and play. According to the Executive Mayor, the time to invest in the inner city of Johannesburg is now. “These 84 buildings are just the beginning,” he said. “There is potential for 500 buildings, so we will be releasing approximately 100 of these annually. By the end of this year, we hope to add another 20 buildings to the market. The potential is huge.” The Mayor’s strategy is to build an inclusive society. “My role is to create an enabling environment and fair play, and allow entrepreneurs to go out.” The panellists at the session included Paul Jackson, CEO of the Trust for Urban Housing Finance (TUHF); Vuyiswa Mutshekwane, CEO of the South African Institute of Black Property Practitioners (SAIBPP) and SAPOA CEO Neil Gopal. As a provider of access to finance to entrepreneurs passionate about development in the country’s inner cities, Jackson finds the Mayor’s focus on the inner city extremely refreshing. “The potential for an efficient inner city is enormous – there is a huge demand to live downtown,” he said. “Jo’burg has real challenges that need to be addressed, and these 84 properties are a step in the right direction. Investment is going to be an essential component; TUHF stands ready to finance entrepreneurs if they have a building.” He has, however, highlighted that urban management is one of the biggest challenges that need to be solved in the next five years. Although the opportunity is wellintentioned, as it provides entrepreneurs with a chance to find their space, 60

SOUTH AFRICAN PROPERTY REVIEW

The CNBC Africa-facilitated engagement session was hosted by the City of Joburg. Pictured with Executive Mayor Councillor Herman Mashaba is panel facilitator Godfrey Mutizwa, Vuyiswa Mutshekwane of the SAIBPP, SAPOA CEO Neil Gopal and Paul Jackson of the TUHF

Mutshekwane cautioned that the needs and interests of the new entrants and smaller players have to remain firmly at the heart of whatever initiatives are proposed. She also highlighted the real challenges of such an endeavour: “Let’s not lose sight of the real challenges that make it increasingly difficult for players with a minimal balance sheet, track record and network to forge a way in a very trying environment,” she said. “ The cost of financing and the access thereto cannot be ignored. There are also regulatory and zoning issues, as well as the process and legal costs of evicting people from these hijacked buildings. All these elements can be a deterrent even for an established player.” She also emphasised the importance of inclusive, spatially integrated developments that accommodate low-cost housing. Gopal believes that there needs to be a back-to-basics approach. “If we don’t fix the basic things – such as safety, security, cleanliness and innovations – investors won’t come,” he said. He also appealed to SAPOA members to partner with the city in addressing many of the challenges

they experience. “The job of an Executive Mayor is a particularly difficult one,” he said. “We acknowledge that mutually beneficial partnerships and a joint working relationship with the government can at times be fraught with challenges that could be avoided through better understanding. The reality is that we are inseparable, and we must work together. It is only by doing this that we can jointly find solutions to the problems we are all facing.” The engagement session was facilitated by Godfrey Mutizwa of CNBC Africa.

The bid closing date has been extended until end January 2019. Visit http://www.jhbproperty.co.za/ images/ICProspectus.pdf to view the prospectus. In addition, tender documents can be downloaded free of charge at http://www.jhbproperty.co.za/index.php/ tenders-and-rfqs/advertised-tenders#rfp. Alternatively, they are available for purchase at the Joburg Property Company offices in Braampark.

social

Port Elizabeth Networking Evening SAPOA Port Elizabeth Regional Council hosted a members-only networking evening on 22 October.

Musa Mazvizvo, Craig Harwood and Mathakanyana Mkhumane

he evening took the form of a tour of the new Coca-Cola Beverages Africa Headquarters in Humewood, Port Elizabeth. Guest speaker, Group Talent Manager for Coca-Cola Beverages Africa Craig Harwood, welcomed guests and gave a brief presentation about the move of the Coca-Cola bottlerâ&#x20AC;&#x2122;s African operations to Nelson Mandela Bay. This was followed by a tour of the building, which members found very informative.

Andy Chinangwa and Musa Mazvizvo

FROM LEFT â&#x20AC;&#x2030;Vaughn Clarke, Waldo Potgieter, Kelly Hall, Faaiq Andrews, Mathakanyana Mkhumane, Mike Palframan, Craig Harwood, Andy Chinangwa and Busi Nzo

The Coca-Cola canteen

SOUTH AFRICAN PROPERTY REVIEW

off the wall HoverSurf Hoverbike Weight: 115kg Total thrust: 364kg Max speed: 96km/h Safe flying altitude: 4,9m Flight time with pilot: 10 to 25 minutes Flight time in drone mode: up to 40 minutes Charge time: 2,5 hours Price: US$150 000 https://youtu.be/GQMGq8gk6QM

Bike enthusiasts could get airborne HoverSurf, a start-up tech company based in San Jose, California, has designed a flying machine called the Hoverbike. As it falls under the parameters of a US FAA rule established in 1982 as an Ultralight, it will get you airborne without the need for a pilot’s certificate or medical examination Compiled by Tshepo Tshabalala

overSurf says this electric-powered Ultralight will fly at more than 60km/h, and has a range of up to 21km. A carbon-fibre frame supports four propellers. Pilots are assisted by a flight computer that helps provide stability during take-off and landing. Two leathercovered joysticks control the aircraft. Flights can last up to 25 minutes – then it will take about two-and-a-half hours to recharge the batteries. Although pilots don’t need to be certified, the US FAA does set some strict parameters on when, where and how ultralights can be flown. For example, Part 103 decrees no flying may occur above or near airports, above crowds, when visibility is poor, or above any congested area of a city. The basic idea is that ultralight pilots should avoid situations in which they could hurt anyone other than themselves. Making good on a memorandum of understanding signed in 2017 at tech expo GITEX, HoverSurf has delivered Dubai Police its first serial production unit of the S3 2019 Hoverbike, and has begun training officers to fly it. During 2018, HoverSurf focused exclusively on creating and perfecting the S3 2019 hoverbike. By combining its custom-built flight controller with some highly innovative composite-material processes, and having a dedicated team, HoverSurf was able to achieve something truly amazing. 62

SOUTH AFRICAN PROPERTY REVIEW

In an interview with CNN, Brigadier Khalid Nasser Al Razooqi, General Director of Dubai Police’s artificial intelligence department, described the eVTOL vehicle as a first-responder unit used to access hard-to-reach areas. The aim is to have Hoverbikes in action by 2020. “Currently we have two crews already training (to pilot it) and we’re increasing the number.” HoverSurf COO Joseph Segura-Conn explained that ideal candidates will be able to ride a motorcycle and have drone operating experiences. If you have a spare US$150 000, the hoverbike could be yours, but SeguraConn cautions that buyers are screened to ensure they can handle the new tech.

Safety HoverSurf’s new flight computer consists of three separate blocks connected by CAN bus, with a processor in each unit, an external information display, a tuning system, and an updated firmware V.1085 designed specifically for the Hoverbike S3. Auto-take-off (AT), auto-landing (AL), Alt Hold, Manual and RC control are also available, as well as anatomical armadjustable joysticks with covers made of genuine leather, a dashboard convenient for glove use, and laser all-weather LiDAR. The S3 model also includes the triple security system: electronic (emergency landing, sound and visual warning system, anti-interference screening), mechanical

(a kill switch) and passive (embedded deformation zones, power fences, and protective elements for the pilot made from reinforced carbon).

Power The Hoverbike S3 2019 is powered by lithium manganese nickel batteries. The chemistry adds nickel to IMR chemistry, making this a “hybrid” battery that combines the safety and low resistance of manganese with the high energy of nickel. This results in a battery with a reasonably high capacity and a high discharge current. The chemistry is stable, meaning that expensive built-in protective circuits are not required. The hybrid battery carries a capacity of 12,3kWh, allowing for flight times of up to 40 minutes in drone mode, and an actual flight time with a pilot of between 10 and 25 minutes (depending on weight and weather conditions). A portable homecharging pack allows quick charging in as little as 2,5 hours without removing the batteries.

JANUARY 2019

DECEMBER 2018

MARCH 2019

FEBRUARY 2019

SOUTH AFRICAN PROPERTY REVIEW 81

SOUTH AFRICAN PROPERTY REVIEW

South African Property Review December 2018 January 2019

Articles inside

From the Editor's desk

SAPOA President's year and message

from the CEO

On Show The Market Square Theatre