South African Property Review February 2016 by SAPOA

South African Property Review

PROPERTY SOUTH AFRICAN

February 2016

REVIEW

A collaboration of inﬂuence

SAPOA, National Treasury partnership

Architects

More than bricks and mortar Interior design and landscaping

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series D L

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Th e WOR

Online malls South Africa on the bandwagon? Redefining Durban Station Road revamped

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February 2016

Discovering Mexico From the temples of Chichen Itza to the beaches of Cancún

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contents

February 2016

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

February 2016

REVIEW

A collaboration of inﬂuence

SAPOA, National Treasury partnership

Architects

More than bricks and mortar Interior design and landscaping

s●

●

Redefining Durban Station Road revamped

monthly cou n Our

The WOR

Online malls South Africa on the bandwagon?

D series

ON THE COVER Modern urban architecture is about far more than just bricks and mortar. This issue features profiles of architects from some renowned firms, as well as landscaping architecture and interior design

Abreal

by-country focu try-

February 2016

Discovering Mexico From the temples of Chichen Itza to the beaches of Cancún

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2 4 6 10 12 14 16 20 22 24 28 30 32 34 38 42 46 48 50 52 53 54 55 56

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From the CEO From the Editor’s desk Industry news Legal update SAPOA submission on the draft carbon tax bill Education, training and development An informative start Planning and development South African water crisis: back to basics News Forging ahead through collaboration Theme leader Sustainable landscaping Feature The engaged workplace of the future Theme leader Interiors that work Opinion Buoyancy in local commercial property ﬁnance Research Construction industry experiences multi-faceted challenges Research SAPOA Retail Trends Report Eye on the world Mexico Feature Repurposing industria: an injection of vibrancy Proﬁles Feature Standard form construction contracts Technology Cloud shopping Update The e-lodgement system: an overview Events Cementing relations Events Power hour Frankly speaking Simon says What’s on Upcoming events 2016 Off the wall Imagined reality: courageous, bold and just a little insane

Oilgro

FOR EDITORIAL ENQUIRIES, email nthabi@mpdps.com or mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Advisor Jane Padayachee Managing Editor Mark Pettipher Editor Nthabi Nhlapo Copy Editor Ania Rokita Production Manager Dalene van Niekerk Designers Wade Hunkin, Eugene Jonck Sales Robbie Pansegrauw e: rob@mpdps.com; Riëtte Stevens e: sales@sapoa.org.za Finance Susan du Toit Contributors Anne Schauffer, David A Steynberg, Dries Goosen, Eugenia Makgabo, Jenny Seddon, Lekgolo Mayatula, Maud Nale, Robin Lockhart-Ross, Uwe Putlitz Photographers Jabu Nkosi, Mark Pettipher, Xavier Saer DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material.

P R O P E R T Y

F U N D

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

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e: llewellyn@rsalitho.co.za

2016/01/21 12:17 PM

from the CEO

SAPOA committed to intensifying cooperation with the public sector The 2015 budget speech projected South Africa’s economy to grow by two percent in 2015 and growth to rise to three percent by 2017. Fast-forward to December 2015, and the country faced a different outlook, which could still be affecting us in 2016 and beyond

day after his re-appointment, Minister of Finance Pravin Gordhan confirmed that the government will stay the course of sound fiscal management, and focus on fiscal consolidation and debt stabilisation in the medium term. South Africa’s government is committed to stabilising the economy and ensuring its budget is fiscally sustainable, Gordhan said. He assured that any extra expenditure would only be accommodated if extra revenue is raised, and any revenueraising opportunity would be carefully considered to ensure it does not damage growth or affect the poor negatively. We are currently faced with a challenging global, emerging-markets and domestic economic environment, and we appeal to the government to fast-track economic reforms aimed at alleviating the most binding constraints to growth, and to build a more competitive economy. The implementation of these reforms will ensure that challenges of poverty, inequality and unemployment are addressed effectively. As the commercial property industry, we are committed to intensifying cooperation and partnerships with the public sector to improve investment so that, as a sector

and as a country, we can achieve higher rates of growth. SAPOA’s commitment to partner with the Finance Ministry was solidified when a Memorandum of Understanding (MoU) was signed with the National Treasury in Johannesburg last month. The intention of the working relationship is to focus on joint strategic partnerships, collaboration on research, coordinated planning and urban management. Both SAPOA and the National Treasury highlighted the importance of a combined strategy and pooling of resources between the public and private sector in addressing spatial transformation of urban centres in South Africa. Deputy Director General of the National Treasury Malijeng Ngqaleni emphasised the challenges the department faces in spatial inadequacies, and how working relationships such as these will strengthen the resolve towards realising some of the most important built environment objectives within the cities. Some of the 2015 budget speech highlights affecting commercial property, include: ●● A draft carbon tax bill, which will be implemented in 2016. Companies that own or control facilities that emit greenhouse gases (such as carbon dioxide, methane, nitrous oxide and others) will be subject to the carbon tax. The carbon tax’s design will include a number of measures (such as the use of carbon offsets), which will reduce a company’s carbon tax liability. ●● In terms of real estate investment trusts (REITs), it was proposed that unlisted property-owning companies should qualify for the same tax treatment as listed REITs, if they become regulated. A regulatory framework for such companies will be developed by government. ●● The transfer duty rate has been increased to a maximum of 11%. However, the new rates eliminated transfer duty on all property acquired below R750 000

and decrease the effective liability on properties up to an amount of R2,3-million. Further to these issues, the Urban Investment Partnership Conference, which took place in August last year, aimed to facilitate discussion around urban investment, to renew and strengthen dialogue between government and the private sector, and to leverage deeper and results-focused partnerships between all stakeholders on urban investment needs and opportunities. It is hoped Gordhan will also address this during his tenure. The Minister is due to present his threeyear budget to parliament on 24 February, which will shed light on how the government will fund plans to add 9 600MW of nuclear power to the national grid and stabilise the economy. Having been associated with the Finance Ministry for almost two decades, Gordhan is relatively familiar with the terrain and its challenges, and the signing of the MoU is a step in the right direction. Neil Gopal, CEO

Minister of Finance Pravin Gordhan

SOUTH AFRICAN PROPERTY REVIEW

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from the Editor’s desk

The ever-changing commercial landscape The business sector is known for its fluidity. Even though in recent years challenges facing various sectors have mounted, there is a silver lining

t the time of writing, the Rand had plummeted against major currencies, but the Minister of Finance Pravin Gordhan assured South Africans that there is no need to panic or to be anxious about our (economic) environment. The Minister assured us that his Ministry would do everything possible to stabilise our economy. He said that South Africa is not going into a recession and is spending about R1,3-trillion every year. However, the problem is that the economy is not growing fast enough. In addition to this he encouraged businesspeople to capitalise on the weak rand by attempting to find ways to increase exports – a silver lining in the dark cloud. One of the sectors that has been hardesthit is the agricultural sector, which is battling the worst drought in three decades. It has also been reported that farmers have their highest-ever debt of more than R125-billion with South African banks as a result of lower yield, which has led the sector into worrying territory. FirstRand has the largest proportion of total loans extended to agriculture among the four main lenders at 3,6%, Barclays Africa has 3,4%, Standard Bank has two percent and Nedbank has one percent.

Similarly, the mining sector – hit hard by slowing demand from China – is cutting jobs and selling or shutting down nonviable mines. South Africa’s construction sector has not been spared either. Last year, PwC’s third edition of the “SA Construction” research report analysed nine top construction companies listed on the Johannesburg Stock Exchange and found that the 2015 financial year saw a decline in market capitalisation and financial performance. Eight of the nine companies reflected a decrease in market capitalisation. In aggregate for the nine companies analysed, market capitalisation decreased by 38% to R25,9-billion as at 30 June 2015 (from R41,6-billion as at 30 June 2014). From 30 June to 31 October 2015, the nine companies analysed showed a further nine percent decline. Ultimately, the health of the economy on a larger scale affects individuals on a more basic level. This is one of the concerns behind the newly signed 2015 Tax Laws Amendment Act and the Tax Administration Laws Amendment Act, which will come into effect on 1 March.

The Treasury hopes to encourage saving by preserving retirement savings when individuals change jobs and converting a portion of pension to an annuity at retirement, among other means. Provident fund members who resign from their job will be able to take all their retirement savings as a cash lump sum upon resignation, with tax implications. As an option, they can preserve their money with a financial institution – without tax implications. It is evident that while there are various challenges to the economy, there are also strides that are being made in an effort to keep South Africans in a financially stable position. It is not only the government that is affected when the economy is ailing, as private company owners and employees find themselves in compromising positions. This year will be challenging – but, as the Minister of Finance says, the economy is growing and we are not facing a recession, so recovery is possible. Until next time. Nthabi Nhlapo, Editor

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READY TO GROW?

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Are you analytical? Are you a natural communicator and leader? Do you pay particular attention to details and do you enjoy being part of a professional and driven team? If so, we may have the perfect job for you! As one of the most progressive and dynamic property companies in South Africa (aside from being the largest), we are aware that we need a unique advantage, a way of doing things that sets us apart. We are always looking for ways to provide our clients with space to thrive and as a result are looking for strategic thinkers that are energetic, passionate for success and have solid business acumen. So look at the job specifications below and if you fit the bill, send us your application. Job title: Location: Qualifications: Experience:

Portfolio Manager (Office) Sandton Minimum of three years relevant tertiary qualification (preferably associated with property management) 7 to 10 years property management experience within the Office sector

You must have sound knowledge in : • • • • •

Office/ Commercial market indicators Financial accounting principles Knowledge of Office / Commercial leasing principles and lease agreements and a proven lease negotiation track record Financial, marketing, administrative and technical components of Office / Commercial buildings Basic technical knowledge of buildings

For more information, contact Reabetswe Motshegare on 011 944 6122 or recruitment@growthpoint.co.za and clearly title the role you are applying for in the subject line.

SOUTH AFRICAN PROPERTY REVIEW

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industry news

Emira launches major R795-million Knightsbridge redevelopment in Bryanston

mira Property Fund is undertaking a major R795-million redevelopment of its Knightsbridge Manor office park in Bryanston, Johannesburg, into a P-grade and leading-edge Green Star SA-rated office complex. The three-phase redevelopment of the prime-located office park will see it more than tripling in size to 29 352m² in terms of GLA. As part of the landmark project, Emira is renaming the park to, simply, Knightsbridge. Located in Sloane Street opposite the Didata Campus, Knightsbridge started in November 2015. It is being undertaken in phases, with the first of seven new buildings set to be completed in May 2017. The new office park will boast a minimum 4-Star Green Star SA rating from the Green Building Council of South Africa. “Our ground-breaking redevelopment of Knightsbridge supports Emira’s strategy of improving the quality of certain B-grade office stock,” says Geoff Jennett, Chief Executive Officer of Emira Property Fund. “It will significantly increase the value, attractiveness and competitiveness of this excellently located property. The new Knightsbridge is going to be a P-grade, resource-efficient and green-rated office complex.” The project is portfolioenhancing. The entire office park is designed to achieve a 4-Star Green Star SA rating, supporting Emira’s principles of responsible investment. Jennett reports that Knightsbridge responds to demand for offices in the Bryanston area.

It also leverages the park’s prime location in a growing business hub. Located on one of Bryanston’s key arterial roads, Knightsbridge has quick access to the N1 highway. “Bryanston is becoming the preferred alternative to Sandton for blue-chip businesses and large A-grade and P-grade office users,” says Jennett. Bryanston is the fourthlargest office node in Jo’burg after the CBD, Sandton and Midrand. It has relatively high office occupancies. According to SAPOA, Bryanston’s office vacancies were 7,2% for Q4:2015, compared with a national average of 10,5%. P-grade office vacancies are at a low 1,7%. It is an area that is upgrading and developing, especially around Nicolway Bryanston shopping centre, Ballyclare Drive and Main Road. New offices find tenants quickly. Welcome news for anyone who uses the roads in this area, Emira’s project will result in the upgrade of the intersection of Sloane Street and William Nicol Drive. This strategic upgrade will also benefit Emira’s nearby Epsom Downs Shopping Centre and Office Park. Emira acquired Knightsbridge Manor – originally built in the mid-1980s – in 2003. Despite cosmetic refurbishments, the park’s buildings have dated and are attracting B-grade rentals in an area characterised by A-grade and P-grade offices. “While Emira initially considered an upgrade for the park, it quickly became clear its complete demolition and redevelopment would be a much better option to boost its value and performance,” Jennett explains.

Tsitsikamma

Bowman Gilfillan Africa Group assists to set aside a pilot project allowing fishing within the Tsitsikamma Marine Protected Area

owman Gilfillan Africa Group, instructed by the Wildlands Conservation Trust, assisted the Friends of Tsitsikamma in launching an urgent application in the Pretoria High Court to interdict SANParks, the Minister of Environmental Affairs and Tourism and the Tsitsikamma Community from implementing a decision to permit recreational angling in the Tsitsikamma Marine Protected Area (TMPA), pending the outcome of a review application that also formed the second part of the application proceedings. For at least the past 15 years, legislation and policy have prohibited fishing within the TMPA, which is currently an area of “no take” based on sound scientific reasoning. “On 19 November 2015, the Minister published draft notices and regulations in the Government Gazette calling for public comment on the feasibility of opening up four areas within the TMPA to shore fishing by 1 February 2016,” explains Trudie Nichols,

partner in Bowman Gilfillan Africa Group’s Litigation & Dispute Resolution Department. Notwithstanding that the public comment process was under way, on or about 30 November 2015, Nichols explains that Friends of Tsitsikamma, an association consisting of scientists, academics and marine conservationists throughout the country, argued that the decision to permit recreational angling as a pilot project while the public consultation process on the very issue was under way was prohibited by law. “As a result, all three respondents were interdicted from implementing the decision to allow recreational angling within the marine protected area,” says Nichols. “In addition, the decision to implement the pilot project for recreational angling was reviewed and set aside.” She adds that this order highlights the importance of the Tsitsikamma National Park as a national asset for all South Africans.

SOUTH AFRICAN PROPERTY REVIEW

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industry news

Jacobs Matasis opens new ofﬁce in Johannesburg

acobs Matasis (Pty) Ltd, a company jointly owned by Jacobs Engineering Group Inc. and Matasis Investment Holdings, has announced the opening of its new office in the Waverley Office Park in Bramley. As a provider of engineering, technical, professional and construction services, Jacobs Matasis is a significant contributor of expertise to the region and a major service provider to the oil and gas, chemicals, mining, consumer products and heavy process industries in southern Africa. Jacobs Matasis has invited the non-profit organisation Women in Engineering (WomEng) to use a portion of the new office space, showing continued dedication to the development of female engineering leaders in Africa. “Being at the heart of this thriving economic area, the financial centre of the region, we will better serve our customers and yield greater opportunities for our employees, recruits and female engineers, helping to create a lasting skills legacy,” says General Manager Chris Taylor. “Jacobs’s offer to host WomEng at its new office is a big help for us and a significant show of support to our mission to develop the next generation of engineering leaders,” says Hema Vallabh, co-founder of WomEng. “Women are still grossly under-represented in engineering, despite the fact that they represent a competitive advantage in the sector. WomEng plays a crucial role in assisting companies in recruiting, developing and retaining talented female employees.”

Top prices being achieved for homes on Welgedacht Estate in Cape Town

here is such demand for homes on the wellestablished and up-market Welgedacht Estate bordering Tygerberg Hills Nature Reserve in Cape Town that homes are being acquired at high-end prices only to be demolished to make way for luxurious new houses at an additional investment of at least R3-million. “With no plots left, it is remarkable how much people are prepared to invest purely to acquire a stand and secure their spot to build a new home,” says Annien Borg, Managing Director for Pam Golding Properties in the Boland and Overberg. “In October 2014 a house on a plot of 2 153m² sold for R7,37-million to be completely demolished. “A more recent sale to secure a ‘plot’ occurred in September 2015. In a prime position overlooking the dam, the 430m² house and 1 200m² erf sold for R8,44-million.

The house was completely gutted and is being rebuilt with more or less only the foundations retained, and one or two walls.” With 19 properties changing hands in 2015 (to November), the two highest prices achieved on the estate for the year to date were concluded by Pam Golding Properties for R11-million and R10-million respectively. The highest price ever achieved on the estate was for a spacious family home set on three consolidated plots, which fetched R12,5-million in 2012. In 2015, the lowest price for a property in Welgedacht Estate was R3,8-million. During the three-month period from August to October 2015, the average selling price was just over R5,15-million, while in the price band over R3-million, the average selling price was slightly higher than R6,3-million.

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industry news

Webber Wentzel moves to iconic building in Sandton business district

90 Rivonia Road, Sandton

aw firm Webber Wentzel has almost completed the relocation to its new rental premises at 90 Rivonia Road, Sandton. The building, developed by Redefine Properties, took three-and-a-half years of intricate planning to complete. It will now house the entire Webber Wentzel Johannesburg staff complement of more than 650 people in one collaborative space.

The 25 000m development occupies an island site with seven floors and a 2 000-car parking basement opposite Sandton City, as well as an annex of 10 000m² for future expansion. It is within easy reach of clients and central transport hubs, including OR Tambo Airport via the Gautrain. “A more cohesive working environment brings distinct benefits for our clients,” explains Sally Hutton, Managing Partner of Webber Wentzel. “The move to 90 Rivonia Road represents an exciting milestone in our plans to grow and modernise the firm in line with global best practices, while at the same time delivering on our key differentiator – the seamless collaboration of specialist teams, structured around our clients’ needs.” Managing the rising rental costs of property in the heart of Sandton’s business district was also an important consideration when Webber Wentzel negotiated the deal with Redefine Properties. The firm has increased its space by 30% for the same cost as its previous rental, with 10 000m² retained for future growth. At the same time, it was an opportunity to create an environment that focuses on sustainability, business continuity, productivity and staff comfort. Many other efficiencies will flow from the consolidation of the firm (which previously occupied three adjacent buildings) into one centralised office. The modern and energy-efficient building, which achieves a 4-star rating from the Green Building Council of South Africa, features an entire floor dedicated to the health and wellness of its staff, including an all-inclusive dining facility, a wellness centre with a doctor, nurse and physiotherapist on call, as well as a fully equipped gym. Generators and water-storage tanks ensure that business continues unhindered during load- and water-shedding.

How a real-estate boom can shape economic development on the continent

outh Africa is home to 15-million square metres of office space, while the rest of Africa, including north and sub-Saharan Africa, contains a mere six-million, according to a report by Jones Lang LaSalle. But this is set to change. Africa is witnessing a remarkable growth of its city economies, with a rate of urbanisation that in some areas is pushing nine percent a year. The commercial real estate sector in Africa has been described as “poised for lift-off” by expert analysts. But how will the continent capitalise on this sector to ensure that property markets foster economic growth and development? It is to address this challenge that the Department of Construction Economics and Management at UCT has partnered with Nedbank Corporate and Investment Banking (NCIB), to form the UCT-Nedbank Urban Real Estate Research Unit under the directorship of Associate Professor François Viruly. The primary source of funding for the unit is NCIB’s Property Finance business, which has committed R1-million per year to the unit

for the next four years. With this funding, the unit will develop an interdisciplinary research platform to identify issues within and solutions to urban real estate investment, finance, economics and management problems in Africa. “The success and long-term sustainability of African cities is a function of vibrant property markets,” says Viruly. “It should be founded on an understanding of how they function and what they are expected to deliver.” According to Viruly, the risk of letting the African real estate sector boom take place without the accompanying research and understanding of the impacts of property development is huge. “A great example of this,” he says, “was the 2008 global financial crisis, which clearly demonstrated the social risks of an unmanaged property boom.” A core research team in the Department of Construction Economics and Management, which includes Associate Professor Kathy Michell and Rob McGaffin, has already been active in this area.

Professor François Viruly

On NCIB’s involvement in the Urban Real Estate Research Unit, Robin Lockhart-Ross (Managing Executive of NCIB Property Finance) says, “Investment in and funding of property ventures and developments necessitate taking a long-term view that is properly informed. The importance of highquality real estate research in investment and financing decisions cannot be overstated. Both our association with UCT and commitment to research are consistent with our aspiration to promote thoughtleadership in the property industry.”

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legal update

SAPOA submission on the draft carbon tax bill The National Treasury published the Draft Carbon Tax Policy on 2 November 2015 for public comment

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

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

outh Africa has committed to reduce greenhouse gas emissions below business as usual by 34% by 2020 and 42% by 2025, as well as adaptation measures as outlined in South Africa’s Intended Nationally Determined Contributions recently submitted to the United Nations for the Conference of Parties (COP 21) of the United Nations Framework Convention on Climate Change in Paris. The abovementioned time frames have been viewed as unrealistic and rather ambitious. The government has developed broad policy frameworks that identify climate change as a key challenge. Climate change poses a major challenge to humankind, and one of the most significant ways to mitigate this risk is by reducing greenhouse gas emissions The carbon tax consultation process has been ongoing for five years. A carbon tax discussion paper was released in 2010, followed by the Carbon Tax Policy Paper in 2013 and the Carbon Offsets Paper in 2014. The current Draft Carbon Tax Policy is the next phase in the process, and it has been said that the Bill is set to come into operation in phases. The National Treasury has reported that South Africa faces a number of environmental challenges that are likely to be aggravated as the economy grows if natural resources are not properly managed and protected. These challenges include:

● Emissions of local air pollutants that manifest in poor air quality with adverse impacts on society; ● Excessive emissions of greenhouse gases that contribute to global warming (climate change); ● Inappropriate land use that results in land degradation; ● Biodiversity loss and damage to terrestrial ecosystems; ● Deteriorating water quality with severe impacts for South Africa as a waterstressed nation; and ● Increasing levels of solid-waste generation comparable to many developed countries. The South African economy has one of the highest energy intensities (energy consumption per unit of output) in the world. Improvements in energy efficiency and the promotion of renewable energy sources have been highlighted as important components of the Department of Minerals and Energy future energy policy. The Department of Minerals and Energy’s proposed Energy Bill would allow the Minister of Minerals and Energy to establish a National Energy Efficiency Programme to regulate energy efficiency matters. A carbon tax is a means by which government can intervene by way of a marketbased instrument to appropriately take into account the social costs resulting from carbon emissions. A carbon tax seeks to level the playing field between carbonintensive (fossil fuel-based firms)

and low carbon emitting sectors. Carbon tax is essentially designed to assist government with climate-change challenges and to encourage prudent behaviour with regards to energy efficiency, reduction of pollution from industrial processes, waste management and reuse of by-products. The encouragement of a low carbon economy is one that is necessary; however, this should be achieved by taking into consideration measures that can reasonably be implemented. SAPOA supports the growth of the South African economy – and it supports South Africa’s international commitments to reduce carbon emissions in line with the national policies, especially the National Climate Change White Paper and the National Development Plan. SAPOA has however noted concerns regarding the carbon tax, which include the following: The property sector is facing significant challenges, which include above-inflation increases in electricity prices, rates and taxes, and the imposition of a carbon tax is expected to significantly contribute to administered cost pressures. It is understood that for most property owners the impact of the carbon tax is not expected to be direct, but more of an indirect impact. The impact of a carbon tax on the property industry is expected to be largely in the form of increasing electricity prices and fuel price. As the national utility, Eskom, will be directly liable to pay carbon tax on their direct emissions, it is expected that this cost would be passed on to its consumers.

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legal update The design structure of the For property carbon tax would not allow for owners, it the property industry to benefit from any tax-free allowances, and would need there is limited scope for reducing to be clear the impact of the carbon tax on the industry. The industry has on what the been investing in sustainable minimum technologies in order to reduce its electricity consumption, but threshold is in many instances this may not for mandatory be fully under the control of owners. In addition, reporting of carbon property investment in sustainable emissions as well technologies is often without Additional tax liabilities as the carbon tax. returns. would make it even more Property owners challenging to improve on sustainable technologies have numerous in the property industry. sites around South The organisation therefore wishes to raise its concerns Africa, so is the regarding the timing of the threshold for all imposition of a carbon tax, and the impact on the industry could sites cumulative see significant cost increases in or per site? an already high administered cost industry. In some cases Specific comments are property owners highlighted below. may have direct Persons subject to tax emissions The explanatory memorandum states that for stationary and therefore combustion emissions, reporting a minimum thresholds will be determined by source categories as stipulated threshold would in the National Air Quality Act need to be clariﬁed of 2004, which states that “only In addition, the impact on property owners would depend on how the electricity costs are managed in lease agreements with tenants, in which the cost will be passed onto tenants. The increase in the fuel price will need to be taken into account by SAPOA members, over which they have little or no control. In addition, it is expected that there would be a cost impact on other building materials – for example, the cement industry would be directly liable to pay carbon tax on direct emissions and therefore it is expected that the cost would be passed on to consumers.

entities with a thermal capacity of about 10MW will be subject to the tax in the first phase”. For property owners, it would need to be clear on what the minimum threshold is for mandatory reporting of carbon emissions as well as the carbon tax. Property owners have numerous sites around South Africa, so is the threshold for all sites cumulative or per site? In some cases, property owners may have direct emissions and therefore a minimum threshold would need to be clarified. Therefore it is not clear what is meant by thermal capacity of around 10 MW and clarification on this matter is requested.

Uncertainty about the carbon price for Phase 1 and going forward

Complexity of the carbon tax

The tax rate for Phase 1 has not been clearly defined. In addition, in the Carbon Tax Bill there is no mention of the previously proposed 10% (nominal) annual increase up to Phase 1. The explanatory memorandum stipulates that the “actual rate will be confirmed by the Minister of Finance through the annual budgetary process”, which implies that there will be an annual increase in the rate. Therefore there is no clear carbon price going forward, which makes it extremely difficult for investment planning.

Revenue “neutrality” of the carbon tax There is no explanation as to how the revenue from the carbon tax will be allocated during Phase 1. The explanatory memorandum states that all revenue will be recycled by: ● Reducing the current electricity levy; ● Providing a credit rebate for renewable energy premium; ● A tax incentive for energy savings; ● Increased allocations for basic electricity or alternative energy; ● Funding for public transport; and ● Some initiative to move freight transport from road to rail transport. We recommend that clear commitments are made in the Bill for ensuring the tax revenue is neutral.

Tax-deductible character of the tax It is not clear whether the carbon tax will be deductible in terms of the Income Tax Act. This has an important implication for determining the actual aftertax impact of the carbon tax.

As a general comment on behalf of the organisation, the carbon tax design is extremely complicated. The carbon tax calculations are also complicated, with numerous tax-free allowances affecting sectors differently. In addition, the inter-relationship between the mandatory reporting and carbon budgeting processes of the Department of Environmental Affairs is not clear at this stage. The Draft Carbon Tax Policy is undoubtedly accompanied by both environmental and socioeconomic consequences, which will also have an impact on the property industry. SAPOA’s recommendation to the National Treasury is to delay the implementation of the carbon tax until after 2020 so that all the mandatory reporting and carbon budget processes are finalised and implemented for a few years. The imposition of the carbon tax is therefore premature.

The explanatory memorandum states that for stationary combustion emissions, reporting thresholds will be determined by source categories as stipulated in the National Air Quality Act of 2004, which states that “only entities with a thermal capacity of about 10MW will be subject to the tax in the ﬁrst phase”

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education, training and development

An informative start SAPOA Education and Training department kicks off 2016 with two yearlong programmes in property – the Certiﬁcate for the Commercial Property Practitioner (CCPP) and the Property management Programme (PMP)

The following subjects During the three The Certificate for the Commercial Property will form the contents days, practical Practitioner (CCPP) of the course: case studies and The Certificate for the Commercial ● Introduction to property Practitioner (CCPP) is held development problems will Property in partnership with the University ● Building technology and services be discussed of Pretoria. CCPP is a one-year distance-learning programme ● Building and by leading and is South Africa’s premier design economics practitioners in qualification for practitioners and ● Financial mathematics (whether independent ● Management accounting the ﬁeld. Time will brokers or employed by institutions) ● Principles of economics ● Property law also be allowed involved in office, retail and industrial leasing, welling ● Town planning for discussion management and investment. ● Property finance ● Property management of any problems Delegates will find their skills and knowledge sharpened not tax or contentious only by the practical instruction ●● Property Property marketing issues that and case studies, but also by the ● Negotiation of ideas with the ● Property valuation participants interchange lecturers and colleagues in the ● Investment analysis may have three-day block session. Entrance Evaluation is by means of six cation is a minimum of encountered qualifi assignments to be submitted matric, with mathematics at on a monthly basis, and a fourduring their matric level being desirable. Appropriate broker experience hour written examination preparation will be a recommendation for in November.

For more information, please contact: Mafonti Morobi Training Coordinator t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: hr-education@sapoa.org.za

acceptance. Successful delegates are awarded a certificate of completion at the graduation ceremony by the University of Pretoria. CCPP comprises 26 subjects to be studied by correspondence between March and November 2016. During October 2016, participants will attend a three-day block session at a venue in Gauteng. During the three days, practical case studies and problems will be discussed by leading practitioners in the field. Time will also be allowed for discussion of any problems or contentious issues that participants may have encountered during their preparation.

This course has been recorded with the South African Qualifications Authority (SAQA). Employers may claim the approved rebate from their SETA on the cost of the course, thereby making it more attractive for them to implement staff training. The course has been submitted for CPD points.

Property Management Programme (PMP) Property Management Programme (PMP) is held in partnership with the University of the Witwatersrand. Held as a one-year learning programme from March to November 2016, it is aimed at providing participants with a comprehensive overview

of processes and decisionmaking in the property management work environment. The course targets people interested in studying property or delegates with two or three years of experience working in the property industry. The PMP is divided into five main themes. A strong emphasis will be placed on case studies relating to: 1. Property law 2. Property-related technology and facilities 3. Property management 4. Property economics and finance 5. Property marketing At the end of this training programme, students will be able to demonstrate a thorough understanding and apply concepts in the above-mentioned fields. Participants are expected to follow a structured learning programme consisting of lectures, assignments and formal as well as informal assessments. Learners are expected to actively participate in formal lectures and interactive case studies as well as individual and team learning. The University of the Witwatersrand is a comprehensive accredited academic institution. As required by the Higher Education Act, it’s registered with the Department of Education as a public higher education provider, and its qualifications are accredited by the Council on Higher Education and registered with the South African Qualifications Authority.

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education, training and development

Other training courses being offered by the SAPOA Education & Training department between February and March 2016 are:

Facilities Management Programme (FMP) The FMP is an intensive five-day course offered by SAPOA. The course is aimed at people in topand middle-management positions. Private-sector practitioners as well as public sector employees have substantially benefited from the course over the years. More than 1 000 delegates have attended the course, many of whom have been launched on a lucrative FM career path.

Negotiation Skills Master Class Programme (NSMP) Having good negotiation skills can mean the difference between success and failure in the business world. Those who know how to negotiate tend to rise to the top of whatever industry they are in. At the same time, those who do not know how to negotiate tend to stay where they are or fall backwards.

Introduction to Commercial Property Programme (ICPP) – March The ICPP is a three-day programme targeted at people who have no experience or formal

knowledge of the commercial or industrial property industry. This programme deals with property terminology, legal environment, introduction of the various role-players in the industry, legal aspects, building plans and the conveyancing process in property.

Building Construction Technology Programme (BCTP) – March The BCTP is an intensive five-day course. The course is structured to satisfy the needs of many property practitioners who have entered the industry via routes other than specific training and education in the built environment.

Property Financial Programme (PFP) – March This PFP training programme is aimed at new entrants and people who have no formal experience or knowledge in financial concepts as pertaining to the commercial or industrial property industry. Delegates will be able to apply the knowledge learnt in their working career as financial practitioners in the property industry. For detailed information regarding any of these courses, visit Sapoa.org.za or contact Mafonti Morobi.

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2016/01/21 11:40 AM

planning and development

South African water crisis: back to basics Future water availability is one of the biggest threats facing people and businesses in South Africa

Lekgolo Mayatula is SAPOA’s Planning and Development Manager

According to the Department of Water and Sanitation, the water-use efﬁciency and water-conservation practices of most responsible South Africans and visitors are playing an important part in ensuring that all have access to the little available water. 14

outh Africa is facing its most serious water crisis in recent history, as rapidly depleting water supplies spell massive problems for the country. The low rainfall, drought conditions and extreme heat waves many parts of our country are experiencing are having a negative impact on limited water resources, and an even greater need for drinking water. Some of the worst-affected areas are the Free State and Eastern Cape, where reservoirs are at record lowest levels and reaching crisis proportions. As the country continues to battle drought, there have been calls for the adoption and implementation of a long-term water strategy to ensure the country has enough water to meet increasing demand. According to the Department of water and Sanitation, the water-use efficiency and waterconservation practices of most responsible South Africans and visitors are playing an important part in ensuring that all have access to the little available water. The government of the three major metros in Johannesburg, Cape Town and Durban is putting its money where its mouth is to establish feasible strategies to curb the ever-growing crisis from spiralling out of control. Municipalities in line with their mandate are required to develop water-conservation and water-demand management strategies that aim to ensure the balance between the fair distribution/usage of available water resources, and managing

the future demand thereof. It is important for the private sector to understand the various management plans/policies that the municipalities have published and utilise them when assessing and managing their water services.

The City of Johannesburg has a conservation programme called “Operation Gcin’amanzi” – meaning “to conserve water” in isiZulu – where R800-million is allocated to improve service delivery throughout Soweto over a period of five years. One of the project deliverables is to repair private plumbing fixtures and the installation of freepay water meters to individual properties. Other project being implemented include “Project Thonifho” – meaning “respect and dignity” in Luvenda – which aims to restore dignity to informal settlement communities by eradicating water and sanitation blockages through the provision of basic sanitation and water services. In addition, the city has embarked on water-awareness campaigns such as the Water Festival, which takes place every April, and the Tappie Road Show, held every Tuesday and Thursday at primary schools, which aims to share conservation techniques with learners and teachers.

The City of Cape Town published its water by-law in 2010; it is used to control and regulate water services in the Cape Metropolitan area. The city also has a long-term conservation

and water demand management strategy (2007), developed with the intention to find alternative methods of reducing the need for expensive capital infrastructure for as long as it is economically viable, and to minimise water wastage. Some of the actions the city committed to undertake to deliver on its strategy are: (a) To reduce and maintain low levels of water losses through the reticulation system; (b) To reduce and maintain low levels of non-revenue demand by consumers; (c) To adopt and implement proactive operational and maintenance measures; (d) To reduce and maintain low levels of billing and metering losses; (e) To promote the efficient use of water to customers and consumers; (f ) To regulate and enforce the prevention of water wastage; (g) To promote alternative water resources and technologies; (h) To ensure that the quality of treated effluent is of suitable standard. With the recent drought the city has implemented Level 2 water restrictions, with effect from 1 January 2016. The restrictions have been imposed as a result of the city’s low dam levels and are not only limited to the City of Cape Town: other municipalities throughout the country have also introduced (and in some instances rigorously started enforcing) water restrictions

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planning and development with the intention of preserving the precious resource. The city’s website provides a guide on water restriction measures applicable to specific user categories.

The eThekwini Municipality has a Water Services Development Plan (2011) that aims to provide structured delivery of water with the overall intention of improving efficiency, affordability and sustainability within its jurisdiction. The recent drought lead to water rationalisation being implemented in the municipal area (and in the province), and consumers have been advised to use water sparingly.

The GBCSA has developed a rating tool called the Water and Energy Benchmarking Tool. Project teams can use this tool without having to employ a consultant. They are able to benchmark their building against best practice with the view to getting their building to that level The municipality also initiated a campaign that focuses on reducing water leakage thorough its water conservation and water demand management programme. These initiatives are public sector-based. Some of the common issues highlighted within the various strategic documents include the lack of infrastructure funding, the need for human resources at an operational level to perform basic functions, more research

and exploration of innovative water conservation alternatives, the need for leakage repairs and continuous public-awareness campaigns on water usage and conservation. The commercial and industrial property sectors have actively engaged on matters regarding the conservation of water but there needs to be continued dialogue between the various sectors and research institutions in terms of developing short- and long-term water conservation and usage/management solutions. The Water Research Commission released a report – “Alternative Technology for Stormwater Management: The South African Guidelines for Sustainable Drainage Systems” (2013) – which recommends that stormwater management systems in urban areas should consider stormwater as part of the urban water cycle; this could be implemented through a strategy known as Water Sensitive Urban Design (WSUD) and the Sustainable Drainage Systems (SuDS). The Green Building Council of South Africa (GBCSA) recommends the following be considered by the property sector when initiating projects: ● There needs to be a clear understanding of the existing or expected consumption profile as well as the aspect of budgeting money or time. Example: water use in an office building is typically attributed to landscape irrigation, toilet and urinal flushing, dishwashing, drinking and showers (in some instances). It is imperative to determine which one consumes the most water and how much, and then decide where savings can be made. ● The approach to saving water may include one or a combination of active systems (technology), passive systems (shading on water “bodies” such as pools), and behavioural change

– for example, users turning off the tap when not in use. ● Water Recycling is often the prime solution to water saving in buildings. The sources of water include rain water, greywater and blackwater.

Further aspect to for consideration include: ● Rainwater harvesting systems – this would call for understanding the amount of roof area available, as well as other hard surfaces (such as driveways and pathways), then for having a collection point where the water is captured and filtered. Some projects opt for installing tanks that collect water from the roof surface only. ● All systems (such as heat rejection and fire systems) needing water are to use reused water. ● Low-flow water or automated taps (with sensors) should be installed, as well as dry/ waterless or automated (with sensors) urinals and low-flush toilets. ● Blackwater treatment systems – these collect effluent from toilets and “clean” the water; the water can be used for landscaping instead of using municipal water, thus leading to savings. Other systems actually combine this system with a greywater harvesting system, which collects water from showers, urinals, handwash basins, dishwashing sinks, etc), taking the “solids” from blackwater and greywater into a bio-digester to generate energy. The water is processed to potable water use. ● If there are pools, these should have a net (for safety purposes) and pool covers to slow down the evaporation rate and eliminate the need to fill them up. For example, if the decision is to keep using fountains for aesthetics, the same water can be circulated instead of using a constant fresh supply from the tap.

The other alternative is to only switch them on at certain times. ● Use drip irrigation for landscaping; water in the early morning or late afternoon to avoid rapid evaporation, which would result in excessive water use. ● Plant indigenous plants or Xeriscape (plant waterwise plants). ● Finally, installation of water meters and a leakdetection system helps measure consumption; The GBCSA has developed a rating tool called the Water and Energy Benchmarking Tool. Project teams can use this without having to employ a consultant. They are able to benchmark their building against best practice with a view to getting their building to that level. For further information, refer to Gbcsa.org.za/other-tools/ energy-water-benchmark. The collaborative effort on water conservation is evident when we all work together – and the results can be visible immediately. In January this year, the Department of Water and Sanitation thanked the country and tourists for their efforts to save water during the festive season. But the reality is that we are all, in some way, affected by this water crisis, and that conservation should be part of our daily activities as families, communities and a country. “We must use water efficiently as we are affected by the drought and water supply challenges in the country,” said a department spokesperson. “Let us make water conservation a daily activity, not only during the drought or the festive season but throughout the year and upcoming years.” Together we can make a difference – so let’s all work together. Additional sources: South African Cities Network; the Green Building Council of South Africa

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2016/01/21 10:07 AM

news

Forging ahead through collaboration In a landmark occasion, SAPOA and the National Treasury signed a Memorandum of Understanding to maintain an ongoing exchange and dialogue and ensure greater alignment, confidence and consultation between the public and private sector

SAPOA President Mike Deighton

By Nthabi Nhlapo

s a recognised representative body and the official voice of the commercial and industrial property industry in South Africa, SAPOA strives to promote the interests of its members in respect of commercially directed property ownership, education, development, marketing and management. Similarly, the National Treasury is responsible for managing South Africaâ&#x20AC;&#x2122;s national government finances, supporting efficient and sustainable public financial management, which is fundamental to the promotion of economic development,

good governance, social progress and a rising standard of living for all South Africans. The roles of these two associations have led to the momentous signing of a Memorandum of Understanding (MoU) that will allow them to collaborate in achieving the National Development Plan (NDP Vision 2030) goals. NDP Vision 2030 represents a shift in terms of highlighting the need for spatial restructuring, and builds on delivery targets set in the 12 outcome areas defined in the Medium Term Strategic Framework.

Representatives from SAPOA and the National Treasury. STANDING, FROM LEFT Collins Sekele, Samantha Naidu, Ndimphiwe Jamile, Nomzamo Radebe, David van Niekerk, Neil Gopal, Lindsay Martin and Clement Mulamba SEATED Malijeng Ngqaleni and Mike Deighton

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news “This document has the potential for joint working between two very important stakeholder groups. The MoU covers the who, the what and the whys of any collaboration like this” –Mike Deighton, SAPOA President FROM LEFT National Treasury Deputy Director-General of Intergovernmental Relations, Malijeng Theresa Ngqaleni and SAPOA President Mike Deighton

The signing of the MoU was attended by representatives of the National Treasury, including Deputy Director-General of Intergovernmental Relations Malijeng Theresa Ngqaleni, as well as SAPOA President Mike Deighton, SAPOA President Elect Nomzamo Radebe and SAPOA CEO Neil Gopal. In his welcoming address, Gopal said the MoU is meant to cement relations between the organisation and government, and to ensure collaboration on various projects such as research. SAPOA and the National Treasury will coordinate and align their efforts in support and development through the formation of a steering committee, which will take decisions on consensus. “We will set up a steering committee as MoUs have a tendency to collect dust,” said Gopal. “It is imperative that we action this particular one by engaging regularly.” The committee will consist of four representatives – one executive and one management representative designated by each party. Other representatives may be appointed from various institutions, and will be co-opted to the steering committee as and when the need arises. “What makes this MoU a document with a difference is that we have set an appropriate pace,” said Gopal. “This is not only a plan for collaboration but an endeavour with a physical undertaking to drive it forward.” Deighton also expressed his delight with the occasion, saying, “This document has the potential for joint working between two very important stakeholder groups. The MoU covers the who, the what and the whys of any collaboration like this. It gives a succinct picture of the National Treasury and its work.

It is important for us to reflect on key issues that need to be addressed as potential for growth in our cities is exponential, and it begs to be harnessed.” He also said that the MoU will be a driving force behind the development of our cities, which are “critical to growth and dealing with poverty”. In the pursuit of improving the standard of living of all South Africans, Deighton said, such collaborations are essential. “The advocacy role is not about fighting and throwing blame at each other but rather finding constructive ways of getting solutions to our challenges as a nation, government and the business fraternity,” he said. “It is encouraging that one of the focus areas of the MoU is spatial transformation through planning, targeting and municipal engagement.

“What makes this MoU a document with a difference is that we have set an appropriate pace. This is not only a plan for collaboration but an endeavour with a physical undertaking to drive it forward” –Neil Gopal, SAPOA CEO

SAPOA CEO Neil Gopal

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news “We want to encourage development in targeted nodes and corridors. We recognise SAPOA as a very important body that is the voice of commercial property in the country, so we are very confident to be aligned with such an organisation” –Malijeng Ngqaleni, National Treasury Deputy Director-General of Intergovernmental Relations

Shared plans and initiatives will address areas that are blockages to development more adequately.” Ngqaleni expressed the importance of alignment in terms of private sector investment, and the need to collaborate in order to foster a common vision and goal between the public and private sector regarding areas of mutual interest. These areas will be guided by NDP Vision 2030 and by common and shared outcomes, while focusing primarily (but not exclusively) on the urban context and the need for efficient, inclusive, sustainable, integrated, well-governed and competitive cities. “We want to encourage development in targeted nodes and corridors,” she said. “We recognise SAPOA as a very important body that is the voice of commercial property in the country, so we are very confident to be aligned with such an organisation.” She said, among other things that the National Treasury has put pillars in place for development that makes a real change through spatial planning, private sector contribution and urban management. “It is one thing to change a city but management of urban developments is key,” said Ngqaleni. “We want to create opportunities for skills and capacity development to achieve coordinated planning and implementation of our developmental goals.

“Working together, we believe that we will be able to succeed. This MoU is a catalyst for change. We not only have the pleasure of signing the document but also look forward to making real strides to realise the objectives of this partnership.” The strategic themes that the MoU aims to address are outlined below.

Spatial transformation, specifically focusing on the following aspects: ●● Spatial planning and spatial targeting of all spheres of government and private sector investment across all sectors and land; ●● The promotion and alignment of the planning, financing and development of mixed-use developments; and ●● Precinct management and City Improvement Districts, which entails managing precincts through an areabased management approach using tools that facilitate and/or enforce compliance with precinct plans and development agreements, and ensure the desired commercial and developmental outcomes.

Financing infrastructure, which includes: ●● Developing a framework that ensures the funding models, financing, project prioritisation and any incentives are optimised to attract sustainable and viable public and private investment; ●● Facilitating the coordination of delivering bulk infrastructure that is supportive of a range of development opportunities; ●● Improving on investor coordination; and ●● Facilitating the management and maintenance of existing and future infrastructure.

Skills, capacity and leadership:

STANDING SAPOA President Elect Nomzamo Radebe and SAPOA CEO Neil Gopal SEATED National Treasury Deputy Director-General of Intergovernmental Relations Malijeng Theresa Ngqaleni and SAPOA President Mike Deighton

●● Agreeing on a process in which to share and disseminate plans, information and research; ●● Where relevant, participating in each other’s data gathering and research; ●● Providing invitations and access, where relevant, to each other’s conferences, workshops and internal committees; ●● Investigating aspects that negatively impact on development and proposing possible solutions to unblock potential development bottlenecks; and ●● Identifying avenues or ventures that will enhance skills and leadership capacity within the built environment.

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meet the mayor

“DUBE TRADEPORT

IS THE IDEAL PLACE TO INVEST.” Thobani Msimang, Chief Executive Officer: Eureka Capital www.eurekacapital.co.za

As the South African subsidiary of an internationallyowned investment firm representing investors from around the world in a range of economic sectors, Eureka Capital identifies opportunities or acts on mandates to meet investor interests. Dube TradePort offers a great platform for those investors. The knowledge that there is Government buy-in and support, legal protection and political stability is critical to such investors, as is the importance of dealing with people who are warm, professional, service-orientated and willing to help you deal with any challenges you may face. The level of professionalism of Dube TradePort Corporation’s people is of international standard. Equally important is the need for efficiencies - access to highways and other facilities - which enables the ease of doing business... Dube TradePort offers that environment. Accordingly, we’re building a high-tech innovation centre in Dube City as a major incubator to promote entrepreneurial innovation.

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To experience what Dube TradePort has to offer, visit www.dubetradeport.co.za

SOUTH AFRICAN PROPERTY REVIEW

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theme leader

Sustainable landscaping Landscaping on any scale can be a challenging part of commercial property – it takes innovation, creativity and planning to create a sustainable, attractive exterior Compiled by Nthabi Nhlapo Photographs by Mark Pettipher

The green roof of the Sage building at the Menlyn Maine Precinct in Pretoria accommodates urban agriculture such as vegetable and herb production

he roof garden is no longer a sight to marvel at as more and more corporates embrace the greening agenda by incorporating many green features to both their interiors and exteriors. In this regard, landscaping plays a pivotal role in helping companies achieve a holistic appearance when choosing elements to enhance the visual appeal of their business. Landscaping consists of many design, implementation and maintenance elements and considerations, including making provision for plantings, irrigation, water features, outdoor entertainment areas, and so on. Implementing well-manicured gardens adds to the ambience of any facility. Quality plants, soil enrichment, irrigation, retaining walls, stepping stones and pathways make the first impression on clients entering a commercial premises, and as with the brick-and-mortar aspect of a building, they need careful planning.

It is for this reason that landscaping architects are mandated with creating flow between gardens and buildings. With the consideration for the overall look of a building in mind, corporates also have to consider the effects of their landscaping on the environment – which is perhaps one of this generation’s biggest building requirements. Water resources and their future availability underpin the very existence of the landscaping industry. Landscape architects, designers, contractors and maintenance specialists need to design landscapes that suit the new reality of predicted water shortages, and to plan the most waterefficient on-site irrigation.

Africa’s first six-star green building outside South Africa This principle is represented well by the current development of the Nobelia Office Tower in Kigali, Rwanda – Africa’s first six starrated green building outside of South Africa.

Intent on environmental preservation, the eight-storey Nedbank building in the Menlyn Maine Precinct has a 17m tall vertical garden

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theme leader

WSP | Parsons Brinckerhoff Africa, a multidisciplinary engineering consultancy, is developing the 19-storey tower, of which 16 floors will be dedicated to office space. “WSP’s Green by Design team was appointed to this project based on the company’s expertise and reputation as sustainability consultants, as well as its working relationships in the broader industry,” says Eloshan Naicker, a sustainability consultant at WSP. The building façades contain no glass, and are made of a polycarbonate material (acrylic glazing) and a mesh structure that allows plants to grow under it – a visually pleasing yet sustainable landscaping feature. The objective was to ensure vegetation could grow all over the mesh, creating natural shading. In addition, the entire façade is manufactured to be 100% disassembled for later reuse or recycling. “To achieve a six-star rating, you need to be prepared to push previously conceived boundaries,” says Naicker. “Through the collective and dedicated efforts of the project team, we were able to achieve the best possible outcome on this project, and have certainly set the benchmark very high for future green building projects in Rwanda.”

The “green-over” of the Towers on the Foreshore The Food Lover’s eatery at the recently revamped Towers on the Foreshore is a Redefine Properties’ redevelopment that

has added another iconic structure to Cape Town’s central business district. The Towers, formerly known as the Standard Bank Building, is one of several developments recently completed or under way that will transform the Foreshore into a bustling commercial district. The R533-million “green-over” of the Towers is one of several developments expected to push investments in the CBD to more than R30-billion by 2020. “By creating a vibrant pedestrian space between the Civic Centre and Hertzog Boulevard Square, the Towers has also contributed to the regeneration of this area of the Foreshore, long a dormant part of the city,” says Redefine Properties’ Chief Executive Officer Andrew Konig. “We have redeveloped a well-located, under-parked, historical building and upgraded a formerly under-utilised public space to add significant value to this part of the city.” Aware of the importance of creating accessible and appealing communal spaces, Redefine Properties linked the ground floor lobby on the North Tower to the South Tower by means of an integrated walkway that allows new retail tenants to access the public atrium. This creates a dynamic pedestrian space between the Civic Centre and Hertzog Boulevard Square. The upgrade, which started in February 2013 after five years of planning, includes an additional 13-floor parking area as well as the two new glass towers and a landscaped public atrium.

Rand Water and SALI’s principles for water-conscious landscaping ●● ●●

●●

●● ●●

●●

Plan and design to conserve municipal water and harvest free rainwater. Remove declared alien invader plants – they over-consume water and destroy habitats. Create practical turf areas of manageable sizes and shapes, and select appropriate grass types. Zone the landscape into different hydro zones and group plants according to their water usage. Make the low-water-usage zone as large as possible. Thereafter, determine how much and how often to water through the seasons. Use soil amendments such as compost, manure and waterretentive polymers. Use mulches, especially in high and moderate watering zones. Irrigate efficiently with properly designed systems, and by applying the right amount of water at the right time. Maintain the landscape appropriately by mowing, pruning and fertilising properly.

Managing water-stress in landscaping It is not only important to remodel cities through refurbishments and the addition of attractive landscaping features; it is equally important to consider the environmental impact of any such projects. Rand Water, together with the South African Landscapers Institute (SALI) promote the concept of water-wise landscaping. They provide guidelines to landscaping to assist with water scarcity in South Africa – something that could assist planners in choosing the appropriate service providers when outsourcing the landscaping function. Although the world’s water supply remains constant, the population grows, putting pressure on our water resources. Add global warming to the equation and it is clear water preservation is paramount.

It’s not only important to remodel cities through refurbishments and the addition of attractive landscaping features; it is equally important to consider the environmental impact of any such projects SOUTH AFRICAN PROPERTY REVIEW

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feature

The engaged workplace of the future A new report shows engagement and productivity gains associated with using physical design to convey company culture

hile the concept of enhancing employee engagement is not new, the strategies adopted by companies over the years have been constantly evolving. A new report released by JLL (NYSE:JLL) highlights momentum picking up in the latest such approach – one that uses the physical design of a workplace to express company culture and connect employees to brand values. “Companies have spent a significant amount of time refining strategies to increase engagement through the efficiency of their workplace and the effectiveness of their employees,” said Craig Hean, Managing Director of JLL South Africa. “But many are realising they may have been undervaluing the only resource with unlimited potential – their workforce. In response, we’re seeing a trend towards looking at culture and creating workplaces with a personality and expression to match.” The benefits of an engaged workforce and the problems associated with disengagement are well documented. Recent studies peg the cost of disengagement to the US at between US$450-billion and US$500-billion a year. Conversely, research shows that organisations with engaged employees experience almost 150% higher earnings per share compared to their competition. Companies that have taken the next step, however, are reaping even more benefits: those who actively developed their culture returned more than 500% higher revenue and 750% higher income. JLL’s report “Fully Engaged” introduces the concept of “workplace expression” as being the final piece of the “three Es” of employee engagement. With significant gains made over the past two decades in the first two “Es” – efficiency and effectiveness – adding the final piece of expression to the mix can create a dynamic and compelling environment that reconnects employees with their purpose, and directs renewed energy and engagement while driving innovation and productivity to new levels. Workplace expression is a tool that improves the engagement and

motivation of employees by harnessing and communicating the cultural and brand values of a company through the physical design of its workplace. Effective workplace expression plugs into culture by sending a message to employees about their value to the organisation and what the company stands for. Every organisation has a unique culture that needs to be evaluated to find the best match, but the basic principles to consider when creating powerful workplace expression include: ●● A deliberate office design that allows cultural values to inform, direct and generate employee engagement; ●● A combination of office design, objects and systems to show the company appreciates its people and the contribution they make; ●● An environment that empowers employees by giving them choice in their daily work habits; and

●● An atmosphere that boosts internal buy-in and direction. Employees are typically attuned to the messages their work environment is sending. Creating a responsive environment enables employees to produce meaningful work. It also instils a sense of pride and can revitalise organisational performance. “Would you bring your best friend to your office?” asks Hean. “The answer to that question is very telling. Culture is intangible and hard to measure actively, yet it’s easy to sense when you walk into an office. Workplace expression shifts the office from being a comfortable background to an active cultural lever used to shape employee perceptions, motivations and behaviours. Allowing it to become a location where a company’s vision and mission manifest themselves can transform a place to work into the best place to work.” The full JLL report can be accessed at Jll.com.

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meet the mayor

SOUTH AFRICAN PROPERTY REVIEW

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2016/01/20 2:08 PM

theme leader

Interiors that work Many businesses struggle with the prospect of designing interiors for functionality, aesthetics and to meet budgets. Whether outsourcing the interior design function or taking it on in-house, it is paramount that basic principles are considered By Jenny Seddon

Once you decide on an area, you need Experienced, professional Information gathering The person in charge of the interior design to select a couple of building options. advice contributes significantly project needs to be an internal researcher to you enjoying the process of and needs to know how to gather as much Space planning relevant information about the company It is important to have your office layouts interior design, and it beats as possible. on a scaled plan so that you can see how Among some of the issues to be taken your staff will fit into the space and where floundering around in an into account are staff contingency, future each department will be located. This is unknown world of space expansion plans and the need for print areas, a great opportunity for rethinking the plans, electrical layouts, meeting spaces, eating spaces, storage areas, processes at your company and streamlining informal meeting areas, focus rooms and them for efficiency. air-conditioning options, telephone rooms. There are many different options for The input of company management is layouts that can be explored. For instance, building finishes and a myriad paramount to carry out this process successfully. instead of the common “benching” cluster of of fabrics and furniture. Here four to six desks, an alternative is to have a spine of storage modules in the middle of are some guidelines to making Location Finding a location that not only represents a workstation cluster, with desks at 90° to the interior design decisions the core values of the company but also spine – or a collection of three desks at 120°, meets various objectives such as where the majority of its clients are so that they have easy access to the premises (and vice versa), is of paramount importance. Consider where your staff members reside and whether there are public transport routes nearby, and take into account safety and security as well as the proximity of amenities such as shopping centres, gyms or schools.

together creating a circle. Don’t forget to factor in storage units and smaller items such as broom and stationery cupboards.

Choosing finishes This can be a minefield as there are so many choices. Be aware that there are corporate grades versus domestic grades in the quality of base building (walls, floors, ceilings, etc)

Each office plate houses its own centrally located social and team node. These areas were designed to promote collaboration and ad hoc feedback sessions

It’s all very well having the practical items selected, but what about how the interiors make you feel when you enter the space? What will your working day be like? How will a client view your company? 24

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Total has modernised its working environment, promoting efficiency among staff and solidifying corporate identity. The staff café was designed to support different seating arrangements to accommodate a variety of casual meeting settings throughout the day, over and above the daily communal morning and midday eating facility. The design is by Paragon Designs

finishes and fittings. You want to choose finishes that are going to stand the test of time, and this can be guided by the length of your lease agreement. There are choices such as carpet tiles versus broadloom or stretch carpets. In an office setting, it is suggested that carpet tiles are used because one tile can be replaced when it is damaged. There is a choice in density of office carpets, with a lightweight one being less expensive than a dense one. The denser choice will have a longer life span and feel better underfoot. The same can be said for office ceilings, where

there are various choices that provide better acoustic absorption than others. Glass and flush plaster (smooth, plastered and painted) ceilings also add length to the timeline of an installation, as do other finer details. Ultimately, however, it is worth having unique niceties that make your office special – so plan ahead and allow yourself enough time for your project.

Interior design It’s all very well having the practical items selected but what about how the interiors make you feel when you enter the space? What will your working day be like? How will a client view your company? Although interior design sounds like a frivolous nice-tohave, clever design can aid in encouraging creativity, productivity and, eventually, benefit the bottom line. Some people may have a natural affinity with design, and can assemble a myriad of items and finishes for an attractive end product, but will struggle to create a functional working environment that’s conducive to productivity and engagement. There are many things to be addressed in office design, such as: ●● What sort of lighting will create the right mood? ●● What task lighting is required for the receptionist if there is softer lighting in other parts of the entrance? ●● Where does the change in floor finishes take place?

●● How is signage displayed? ●● What is a practical wall finish that will still look wonderful? ●● How will the acoustics be addressed?

Branding Your brand needs to come to life in your design and should help people understand the type of business you represent. With your office change project, you have an opportunity to make people connect with your brand. Careful thought should go to how you represent yourselves to the viewer. Subtle reminders work just as well, if not better, than hard-sell branding. Designing with your brand in mind goes a long way to communicating our company culture and infusing pride in the organisation.

Furniture Office furniture has evolved and has become an integral part of the work environment. With such a large variety available, selecting furniture can be an arduous and overwhelming task. Furniture often takes up a large part of your budget and a good purchase can be with you for the next 10 years or more, so getting good advice will stand you in good stead. There are options for heightadjustable desks, mobile desks on castors, various cluster choices, numerous filing possibilities, and many privacy panel heights and finishes. SOUTH AFRICAN PROPERTY REVIEW

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theme leader You will need to consider the materials used on your furniture and make sure that you are being supplied the right quality for a corporate environment.

Going green There is a lot of information on “greening the office” – enough to fill an entire eBook on its own. It has become customary and is indeed essential to consider our actions and behave responsibly when it comes to building and managing our office environments. This is not only about recycling: it is also about using water and electricity efficiently, managing air-conditioning systems proficiently, using local products rather than imports, re-purposing items, making sure people have access to natural light, and specifying products that don’t emit bad gases.

Managing staff expectations Some of you may have had experience renovating your own homes and have felt the pressure and anxiety that goes with making changes to the space. Through our years of experience, we have found that there is a significant need for the guidance for staff expectations. It is essential that employees are included in the process and individually buy into the changes that are made. This will ensure that the office move or renovation is a great success. Managing employee resistance is a specialised field that an industrial psychologist is trained to handle. The guidance of such an individual makes a huge contribution to the smooth running of a project.

Structural requirements and documentation If you haven’t been involved in an office build before, you may not realise that there is an entire infrastructure that needs to be built. This includes the air-conditioning system, the electrical requirements, ceiling requirements and fire sprinklers (if necessary), lighting layouts, plumbing, floor finish details, your IT installation, security, and so on. All of these need to be documented so that the contractor has drawings to accurately cost and build from. Most people find it easier to use a professional company to do this because getting the details right can be tricky, and

The atriums provide natural light, and the layouts were carefully planned to maximise external views. These were two-star Green Star-rated building points that the design successfully achieved

drawings need to be submitted to landlords, the council and the fire department.

Costing When your design is ready, various quotes need to be obtained. You need to be sure that you’re comparing apples with apples. Is the paint of the same quality on the quotes you have acquired? Is the carpet in the same range with the same base layer? Are the ceiling quotes for the same type of ceiling (bearing in mind that some types absorb sound better than others)? Once you have made a decision about who your suppliers are going to be and accepted the quotes, you may have to plan and manage the construction process from start to finish – bearing in mind that there is a particular order to how items should be installed. For example, what would happen if the carpet was installed before the ceiling?

Conclusion Designing and building your new office is time-consuming and can be overwhelming. You need to carefully weigh up the cost of the time and monetary resources involved in seeing out this process versus employing a specialist company to do this for you.

Jenny Seddon is a partner and Head of Design at Paragon Interiors. Paragon-interiors.co.za

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Buoyancy in local commercial property ﬁnance In taking a view on the performance of the property market in 2016 and beyond, the listed property and the ofﬁce, industrial, retail and residential markets are examined

Robin Lockhart-Ross

The upcoming implementation of Basel III capital and liquidity requirements is set to present some challenges that will make it increasingly difﬁcult and costly for banks to lend on a longer-term basis

hile the local commercial property finance market has been constrained by poor GDP growth, rising operating costs and low business confidence in the first half of 2015, it remains remarkably buoyant, continuing the strong trend seen over the last few years. According to Robin Lockhart-Ross, Managing Executive of Property Finance at Nedbank Corporate and Investment Banking (NCIB), a notable trend for property finance since the global financial crisis in 2008 has been the improvement in the quality of its book. “Four or five years ago, 3,5% of our total commercial property finance book was problematic – that number is now less than 1,25%,” he says. “This is a low ratio by bank standards, where anything below two percent is acceptable. Our credit loss ratio (bad debt as a function of the total book), which is usually between 0,2% and 0,4%, is currently less than 0,2%.” He notes that most competitors are experiencing similar trends. Property Finance at NCIB has consistently performed in recent years, attracting the largest market share of the commercial property finance market in South Africa at 34%. “Our book reached R100-billion in the middle of 2014 and R110-billion by the end of 2014, and now stands at an estimated R119-billion as at end August 2015 – a significant achievement given the current economic environment.” He notes, however, that there are some headwinds facing the commercial property finance market. “The upcoming implementation of Basel III capital and liquidity requirements is set to present some challenges that will make it increasingly difficult and costly for banks to lend on a longer-term basis,” he says. These requirements mean that the amount of capital banks need to hold against a loan increases as the term of the loan itself increases. In addition, new liquidity ratios are going to be applied in 2018 that will require banks to source funding for its loan book of duration that matches the period of the loans, which will be difficult to achieve in the SA market.

This is likely to see banks having to shorten the period of their loans to property investors, which in turn may also result in non-bank lenders increasing their presence in the property finance market as they will not be subject to the same strict requirements under Basel III regulations. In taking a view on the anticipated performance of the property market in 2016 and beyond, Lockhart-Ross notes the following:

Listed property The listed property sector has seen a high level of activity, with most of the big players looking to increase the size of their portfolios. “For example, Growthpoint recently acquired Acucap Properties and Sycom Property Fund, while Redefine took a 66% stake in Fountainhead and acquired the unlisted Leaf Properties portfolio,” he says. “Finding quality stock at realistic values is difficult, which has seen bigger funds acquire and consolidate smaller funds.” He adds that, as listed property funds in South Africa are well managed, well diversified and well hedged, they represent the safest prospect from both an investor’s and a lender’s perspective, despite the market having entered a rising interest rate cycle.

Office market According to Lockhart-Ross, the office market remains the most concerning for bankers, particularly in certain locations where there is existing or looming oversupply. “For example, A-grade office space in Sandton has vacancy levels above 11%,” he says. “While development and refurbishment has continued, most of these projects are tenant-driven.” He says that banks are cautious about funding new office developments unless they are supported by a strong tenant on a long lease, or they are being undertaken by a listed fund or substantial developer with a strong balance sheet. Another contributing factor to the concern surrounding the office market is the consolidation of offices by the big corporates in mega head-office

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opinion campuses in key nodes, with the subsequent negative impact this has of increasing the level of vacant space in surrounding or secondary nodes.

Industrial market Lockhart-Ross says the industrial property market has seen positive growth over the last few years, with one of the main reasons being the drive for efficiency and scale in logistics and distribution among retailers. “Three or four years ago a 50 000m² warehouse was considered substantial; now, many of these facilities are over 100 000m²,” he says. “The market has also been fuelled by other balance sheet transactions, such as the recent sale and leaseback deals by major industrialists like Macsteel and Aveng looking to re-finance their owner-occupied property portfolios.” He adds that while there has been substantial development activity in the Waterfall node around the Mall of Africa that is currently under construction by Attacq, overall there is not a significant amount of new building development taking place in the industrial sector, and only a few new industrial nodes are being developed (such as Cornubia to the north of Durban and Hammarsdale to the west).

Retail market “There is a sense of caution among bankers around retail property,” says Lockhart-Ross. “Although a number of major shopping centres have recently come or are coming on stream – such as Newtown Junction in the Johannesburg CBD, Forest Hill in Centurion, Bay West in Port Elizabeth and Mall of Africa in Midrand – the reality is that very few opportunities for mega retail projects remain. In the major cities, there are potential opportunities for new regional malls in

Kempton Park near OR Tambo airport in Gauteng and in the Table View/Blouberg area in the Cape, but most secondary cities already have regional malls. Though townships and rural areas are still experiencing development and refurbishment activity by established players, caution needs to be exercised by developers and bankers to understand the reasons and dynamics that are driving retail

We are witnessing several substantial new high-rise sectional-title residential developments in areas such as Sandton and Rosebank, driven by proximity to work, ease of interaction and the expanded Gautrain routes demand in these areas, which are mostly based on supporting infrastructure as well as government subsidies and grants.” He adds that selective opportunities still remain in niche retail centres, many of which exist near – and are complementary to – regional malls; as well as in township and rural areas, provided these are underpinned by real economic growth and solid retail fundamentals.

Residential market According to Lockhart-Ross, the residential sector is encouraging. “We are witnessing several substantial new high-rise sectionaltitle residential developments in areas such as Sandton and Rosebank, driven by proximity

to work, ease of interaction and the expanded Gautrain routes,” he says. “And in KwaZulu-Natal, the last phase of Pearls of Umhlanga achieved just north of R1-billion in pre-sales, while it is estimated that a significant number of new residential units are planned and proposed over the next few years for the Atlantic Seaboard in Cape Town. “In addition, there is an emerging trend whereby listed property funds such as Arrowhead, SA Corporate and Redefine are acquiring and developing residential properties within their existing portfolios. Previously only a few listed funds – such as Premium and Octodec – included any meaningful residential components. This trend is not surprising as occupancy levels in residential properties in key nodes are good, while defaults and arrears are low. So it’s quite possible we will see the formation of a dedicated residential REIT in the market in the near future.” He adds that the development of student accommodation is also attracting more entrants and gaining more traction, especially in traditional university towns, with the likelihood of a student accommodation fund coming to market soon. “While we believe that the market for residential developments should stay strong until at least 2017/2018, it is important to remember the lessons learnt after the global financial crisis from undertaking and funding mega lifestyle developments in multiple phases over extended periods,” he says. “We saw then the challenges that can arise should the economy change, so it remains critical to consider the financial substance and track record of the developers and the period and phasing of the development to ensure any possible risk is managed.”

Newtown Junction

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research

Construction industry experiences multi-faceted challenges South Africa’s construction industry faced a challenging year in 2015, marred by industrial action, substantial delays on projects and questions raised around safety concerns on structural projects

wC’s third edition of “SA Construction” highlights some of the trends in the South African construction industry. The study’s findings are based on the financial results of the leading construction companies listed on the Johannesburg Stock Exchange (JSE) for financial year ended June 2015.

The South African construction industry The construction industry is cyclical in nature, and the cycle is not in its favour at present. The 2015 financial year saw a decline in market capitalisation and financial performance. Eight of the nine companies reflected a decrease in market capitalisation. In aggregate for the nine companies analysed, market capitalisation decreased by 38% to R25,9-billion as at 30 June 2015 (R41,6-billion as at 30 June 2014). From 30 June to 31 October 2015, the nine companies analysed showed a further nine percent decline. The government’s National Development Plan and its continued commitment to infrastructure investment of R810-billion over the next few years are still positive signs for future growth in the industry, although this value has decreased from previous years. “Last year was tough for most construction companies, with lower revenue and profit margins, and fewer new projects in the offing,” says Andries Rossouw, PwC assurance partner. “To date we are not aware of how much will be spent on this infrastructure in the future.” This is the first time in five years that the secured order book decreased (by four percent) on the prior year. The secured order book covers 1,3 times current-year-revenue, in line with the prior year, as the lower order book was mirrored by lower revenue.

Financial performance of the industry Total revenue decreased by seven percent to R129,3-billion on the prior year as a result of a decrease of R8,6-billion from Aveng, a R5,4billion decrease from Murray & Roberts and a R1,6-billion decrease from Group Five, partially offset by a R3-billion increase from WBHO and a R1,4-billion increase at Stefanutti Stocks. These decreases were largely a result of the weaker economy, in particular for commodity markets, with a notable decrease in revenue from oil and gas projects.

Total operating costs decreased by five percent in response to lower revenue. Staff costs continue to represent a significant component of operating costs, constituting 29% of total operating costs (2014: 28%). Cash generated from operations increased by two percent on last year from R4,3-billion to R4,4-billion. Solvency and liquidity ratios remain reasonably strong and in line with the previous year at 1,6% and 1,3% respectively.

Tax challenges With regard to the international climate in which construction companies now operate, there are a number of tax matters that multinational construction groups will need to consider. These include base erosion and profit shifting as well as the imminent country-by-country reporting regimen. This regime will require disclosure on a countryby-country basis in respect of each operating entity within a multinational group. In addition to the pending changes to the reporting of cross-border transactions, a new Double Taxation Agreement (DTA) between South Africa and Mauritius has been concluded, which will have significant relevance to multinational construction groups with Mauritian-based operations. Under the new DTA, the South African Revenue Service and the Mauritian Revenue Authority must “endeavour” to reach “mutual agreement” on whether a dual-resident company should be taxed only in Mauritius or only in South Africa.

Improving value to stakeholders

Andries Rossouw, PwC assurance partner

Integrating risk for performance With the downturn in the global economy and harsher local operating conditions, risk management continues to be a vital component of effective management in the South African construction industry. In order to remain sustainable during this difficult period, companies need to be proactive towards potential risks in order to compete. The common risks identified by construction companies include monitoring and compliance with the B-BBEE codes; industrial unrest; talent management and the retention of staff ; growth and expansion within the industry; project execution; liquidity risk; health, safety and environmental sustainability; legislative and regulatory compliance; tender risk; and credit risk management.

The construction industry adds significant value to South Africa and its people. The monetary value received by various stakeholders is often summarised by companies in their value-added statements. Seven of the nine companies included in the construction industry analysis, comprising 69% of the revenue earned by all companies considered, provided readily available valueadded statements. According to Stats SA, more than 1,4-million people are employed by the construction industry, either on a contract basis or permanently. The state received 10% (2014: 19%) of value created in the form of direct taxes. The reality is that the state receives significantly more if one takes into account the tax on employee income deducted from employees’ salaries and net indirect taxes such as VAT. “The South African construction industry is well placed to cope with new growth requirements and take on large scale projects,” Rossouw says. “But it will need to manage short-term liquidity requirements.”

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The

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

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research

SAPOA Retail Trends Report Despite weak economic growth, retail trading performance as measured by the IPD Trading Density Index, which quantiﬁes sales performance as well as other key retail performance metrics across 24 merchandise categories in more than 100 retail centres, remains robust

he South African GDP growth for the third quarter of 2015 came out at 0,7% quarteron-quarter, seasonally adjusted annualised (q/q-saa) meaning the country steered clear of falling into a technical recession. However, without annualisation, growth came in at a paltry 0,1% q/q, meaning the economy saw virtually no growth between the quarters. Higher interest rates and taxes, along with drought, global economic slowdown and weak commodity prices suppressed economic growth. Encouragingly for the retail sector, these exogenous variables haven’t had a dramatic impact on aggregate trading performance. However, it goes without saying that no two centres are alike, centres’ catchment areas differ in size and composition, and they are subject to varying levels and quality of competition as well as different growth drivers and detractors. The sector will keep a close eye on disposable income growth in the months to come, with additional interest rate hikes likely to impact on households’ debt-to-disposableincome ratio. Trading density (sales per square metre; annualised), increased by 5,8% year on year (y/y) in current price terms for the quarter ending September 2015, up from a revised 5,5% y/y recorded for the quarter prior. The 5,8% increase in trading density was driven by a sales growth of 5,5% and a space growth of 0,3%. The current level of sales growth is below that recorded by StatsSA, which increased by

6,5% y/y for the year ending September – implying that mall-based retailers slightly underperformed in the larger retail market for the period. Part of this may be explained by mall-based trade coming off a higher base but other factors likely to have contributed to this may include growth in online retail, consumers increasingly looking to value centres/factory stores and postponing bigticket purchases. For the year ending September 2015, annualised trading density grew in excess of inflation for all retail formats, barring neighbourhood centres. Neighbourhood centres recorded a 2,2% y/y growth compared to the 8,3% recorded by small regional shopping centres. Within the small regional segment there was a fair amount of dispersion in the performance of individual centres with as many centres under- and outperforming. This highlights the importance of correct positioning and being relevant, especially in the case of centres that don’t dominate their node from a floor area point of view. It has to be added that the trading density growth recorded by small regional centres was aided by a 50bp improvement in vacancy rate over the 12 months. Super-regional centres recorded a growth of five percent, a notable moderation from the trend of the last three years. Small regional and community centres both recorded growth in excess of inflation at 6,9% and 6,6% respectively.

Retail sector: macroeconomic fundamentals 1995 to 2015 Disposable income growth current price terms 25%

27 17

20%

15% 10% 5% 0% 96 98 00 02 04 06 08 10 12 14 Source: MSCI Real Estate

Prime interest rate

16 11 6

99 01 03 05 07 09 11 13 15 17 19 Debt to disposable income

95 97 99 01 03 05 07 09 11 13 15

On an indexed basis since 2011, superregional centres have outperformed other retail formats in terms of annualised trading density growth. Super-regional centres have seen spend grow 16% more than the next best segment (regional centres) since 2011. Neighbourhood centres have lagged the other retail centre segments, which underlines the importance of nodal dominance in the current economic climate. Larger centres offer consumers greater variety with regards to tenant mix and are likely to report longer dwell times when compared to smaller retail formats.

Drivers of trading density growth On an aggregate level, trading density growth was driven by a 5,5% increase in sales while occupied floor space was down by 0,3%. Sales, meanwhile was a function of foot-count increasing 1,4% on the year prior and spend per head improving by 4,1%. So while there has been a slight improvement in shopper numbers, the major driver has been the increase in spend per visit, suggesting the lumping together of purchases. Over time, the amount of spend per head is the primary driver of retail sales growth; the impact of foot-count growth is secondary. In other words, the number of shoppers visiting malls hasn’t grown significantly, which makes sense given high unemployment and slow economic growth. Thus successful centres are the ones that can both attract shoppers and maximise their dwell time and spend.

Retailer cost of occupancy Retailers’ cost of occupancy as measured by the ratio of gross rental to sales was broadly stable (down 5bp) for the year ending September 2015. Given that sales increased by 5,5% y/y, it can be deduced that gross rental increased at a marginally lower rate – largely as a result of increasing vacancy rates, especially in the smaller centre segments. On a segment level, the picture is mixed. Super-regional and neighbourhood centres saw year-on-year increases in their gross rent to sales ratios of 10 and 30bp respectively, while the other segments saw improvements of between 10 and 35bp.

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research Retail vacancy rate per segment Community

Neighbourhood

Regional

Vacancy rate

Small regional

Super-regional

Current vacancy rate

Super-regional

2,6

8 7

Regional

3,4

Small regional

3,3

6 5 4 3

1 0

8,7

Community

2005

2007

2009

Drilling down to a category level, shoes, home furnishings and food service were among the categories recording improved cost of occupancy ratios on the back of growing trading densities. Convenience services, bookstores and travel outlets were among the categories posting deteriorating cost of occupancy ratios.

Retail vacancy rates Retail vacancy rates remain low on aggregate but there continues to be divergence in the trends of the smaller and larger retail formats. As at September 2015, neighbourhood and community centre vacancy rates were recorded at 8,7% and 8,4% respectively. Community centres in particular have seen a sharp rise in vacant space in recent years after posting a multi-year low of 2,7% in Q3 2012. Super-regional vacancies remain the lowest among the different retail formats at 2,6%, followed by small regional and regional on 3,3% and 3,4% respectively. Community and neighbourhood centres have followed a similar trend since 2009, with both segments experiencing noticeable “double dip” moves in vacancy rate. After the 2008/09 recession these segments saw steep increases in the amount of vacant space followed by a period of improvement and another move up. Interesting to note is that the neighbourhood shopping centre segment has lead the vacancy cycle on the way down and up. Neighbourhood centres have lead the community and small regional segments

2011

2013

2015

8,4

Neighbourhood

by nine to 12 months, which in turn have lead the regional and super-regional segments by 12 to 18 months. This serves as proof of the widely held notion that larger centres are more defensive through the cycle while smaller centres tend to be more sensitive to pullbacks in consumer spend. Smaller centres also experience steeper moves in vacancy rate change whether as a result of their smaller tenant pool or the defensiveness thereof (lower percentage of national tenants as an example).

Merchandise category trends On a category level, there was a wide spread of growth in annualised trading density. Category performance is not tied to centre type, and there were very few categories that recorded strong growth across all retail formats. When analysing the 10 largest categories (percentage of spend), home furnishings is the only category to boast double-digit trading density growth across all segments. This is perhaps not all that surprising given the currently low interest rate – but slightly unexpected given low economic growth. This result also stands in contrast to the latest StatsSA retail sales results, which recorded a 4,6% decline in sales for the “Household furniture, appliance and equipment” category. This implies that mall-based furniture retailers are doing better than those on “main street”, and that consumers visit malls to purchase home furnishings and decor items for the benefits these centres offer

in terms of safe parking, longer trading hours and comparative shopping. Another notable insight is the performance of the jewellery category. Super-regional and small regional jewellery stores recorded positive growth while regional, community and neighbourhood jewellery stores experienced a sharp pullback in trade. It is hard to pinpoint drivers without additional information, but it’s clear super-regional centres have an advantage over other segments in the big-ticket categories with their ability to house tenants covering a variety of brands, styles and price points. * Research compiled by MSCI Real Estate

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erie

s●

monthly cou n Our

Th e WOR

eye onLD thes worlds ●

Finding the real Mexico From the temples of Chichen Itza to the beaches of Cancun and the bustle of Mexico City, Mexico boasts a diverse landscape and rich history that beg to be explored

by-country focu try-

Compiled by Nthabi Nhlapo

Key facts ▼ Official name: United Mexican States ▼ Form of government: Republic of federated states ▼ Population: 120 286 655 ▼ Capital: Mexico City (20,45-million residents) ▼ Life expectancy: 75,4 34

▼ Official language: Spanish ▼ Currency: Peso ▼ Area: 1 964 375km² ▼ Major mountain ranges: Sierra Madre ▼ Major rivers: Rio Grande, Yaqu

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eye on the world

he home of the world’s largest population of Spanish speakers, Mexico is infamous for producing many immigrants into the US – but there is more to this diverse, populous country than most care to find out. Mexico is located in the “Ring of Fire”, which is one of the world’s most violent earthquake and volcano zones. The Ring of Fire contains more than 450 volcanoes and is home to approximately 75% of the world’s active volcanoes. Popocatépetl is considered to be the most dangerous volcano in Mexico, and is located only 70km southeast of Mexico City, from where it can be seen in the right weather conditions. Consisting of 31 states and one federal district, the country is known for its crime syndicates and drug smuggling – but there

is actually only one gun shop in the whole of Mexico. Ninety percent of the country’s firearms are smuggled in from the US. With plenty of surprises in store, this is a country of contrasts, friendly people and breathtaking sunsets – and there are endless discoveries to be made.

History The capital, Mexico City, is one of the largest cities in the world, and it is built directly over Mexico’s cherished archaeological sites, which are pretty well spread out across the country. Mexican history does not begin with the arrival of the conquistadors – Mexico has been settled since at least 20 000BC, when migratory hunters from Asia and Africa made it here.

Pre-Columbian Mexico was home to many advanced Meso-American civilisations, including the Maya, Inca, Aztec and Toltec cultures, and many other societies that have survived the best efforts of European conquerors to eradicate them. The country was conquered and colonised by Spain in the early 16th century. After conquering Mexico, the Spanish undertook a complete transformation of the culture, architecture, society and language, explaining why Spanish is widely spoken in Mexico. The Aztec people got sick from smallpox and other diseases that the Spanish brought with them. The Spaniards also seized and destroyed the Aztec capital, and built Mexico City (which resembles a Spanish city) on top of the Aztec capital.

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eye on the world

A wooden-log cabin/houseboat on the golden sand of a tropical beach amid palm trees

The Mexican capital was built on a lake, so it’s sinking between 15 and 20 centimetres a year. In the 20th century, it sank between nine and 11 metres. The infrastructure, water supply and irreplaceable architecture are under constant threat. Administered as the Viceroyalty of New Spain for three centuries, Mexico achieved

Did you know? t The highest mountain in Mexico is Pico de Orizaba. It has a dormant volcano that peaks at 5 636m above sea level. t The national symbol of Mexico is the golden eagle; it features prominently on the coat of arms. t The most popular sport in Mexico is soccer. t Mexicans take sports seriously. In some dangerous sports, such as bullfighting and rodeo (which was invented in Mexico), competitors still put their lives on the line. t The world’s largest pyramid is not in Egypt; it’s actually in Mexico. t Mexican General Santa Anna held an elaborate state funeral for his amputated leg. t The Aztecs sacrificed one percent of their population every year, or about 250 000 people. t Mexico’s 34th president Pedro Lascuráin ruled for less than an hour, then he quit. t Mexico introduced chocolate, chillies and corn to the world. Chocolate was discovered in Mexico and was made by the Meso-American people into a sweet beverage using natural sweeteners. Corn (Zea maiz) was first cultivated in central Mexico; and most chillies come from Mexico. t The Chihuahua, the smallest breed of dog in the world, is named after a Mexican state. t Spanish conquerors introduced bullfighting to Mexico. Today, bullfighting is a popular national sport. 36

independence early in the 19th century. Centuries of mysteries are held within the pyramids, temples, ceremonial palaces and ancient cities. The pyramids of Teotihuacan near Mexico City, the Mayan city of Tulum near Cancún and Monte Alban, which is just a short distance from Oaxaca, are all easily accessible from major tourist areas. Chichen Itza near Merida is the most famous – and the best restored – Mayan city. The ageless cave paintings of the arid Baja desert and the tranquil shores of the Sea of Cortez are also just hours away by car from the border at San Diego, which makes Mexican history fairly accessible. Stone tools have been found in Mexico that suggest the existence of humans there more than 23 000 years ago.

The people and their culture Today almost three-quarters of the population lives in urban areas. Despite the urbanisation, small-town life as it existed for centuries is

still easy to find. In many villages, you are likely find a Catholic church in the plaza or central square, surrounded by a few stores and government buildings and an open-air marketplace. Mexico is the product of a rich Indian heritage and three centuries of Spanish rule – and a shared border with the US means most Mexicans are mestizos (they have a mix of Indian and Spanish blood). At last count, there were more than 50 indigenous languages (other than Spanish) spoken in Mexico. However, Spanish is understood almost everywhere. Religion is of great importance in Mexico, with about 90% of the people practising Roman Catholicism. The many spectacular churches, chapels and tabernacles across the country are tremendous tourist attractions; you can even find tours that specialise just in churches. Throughout its history, Mexico has been home to great artists. The Mayans and other Indians created impressive murals, sculptures, and jewellery. Modern Mexican artists include great painters, photographers, sculptors and muralists. Perhaps the most important characteristic of the Mexican people is their festive spirit. Every holiday – national, religious or local – has its celebration. The most famous of those celebrations are the fiesta of Cinco de Mayo, the Novena (or nine days before Christmas) and the celebration of the Día de la Independencia.

Tourism Mexico is home to more than 30 UNESCO World Heritage Sites and welcomes more than 20-million visitors every year – for good reason. It is a land of extremes, with high mountains and deep canyons in the centre of the country, sweeping deserts in the north and dense rainforests in the south and east.

The Temple of the Warriors at Chitzen Itza, the site of Mayan ruins on the Yucatán Peninsula

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eye on the world Mountains cover much of Mexico. Between the Sierra Madre Oriental mountain range in the east and the Sierra Madre Occidental in the west lie small mountain ranges on the Central Plateau. These regions are rich in valuable metals such as silver and copper. The stretch of land called the Yucatán Peninsula juts into the Gulf of Mexico from the country’s southeastern tip. It was once the home of the Maya civilisation, an ancient culture whose amazing buildings can still be seen today. The white-sand beaches of the Caribbean and the incredible Mayan cities of the Yucatán Peninsula are just hours away from anywhere in the US by air. This is a country where you can be snorkelling on a tropical beach in the morning, exploring ancient ruins in the afternoon, sipping coffee in a quaint colonial city in the evening and getting a massage at a chic spa the same night. The home of tacos, burritos and enchiladas, this is one country that prioritises leisure time – so an afternoon siesta is the norm for most Mexicans. As a tourist, you will have no problem finding public transport in Mexico City – with 100 000 taxis, it boasts the largest taxi fleet in the world.

The Mexican economy is strongly linked to those of its North American Free Trade Agreement partners, especially the US, and it was the first Latin American member of the Organisation for Economic Cooperation and Development (since 1994). It is classified as an upper-middle income country by the World Bank, and a newly industrialised country by several analysts. Mexico is quickly becoming one of the world’s manufacturing giants. A strategic geographical location and a relatively costeffective labour force are major factors. Business travellers will likely be visiting Mexico City, Guadalajara or Monterrey, where 90% of Mexico’s businesses have their headquarters. By 2050, Mexico could become the world’s fifth-largest economy.

Education Education is currently mandatory for ages five through 15; that age will lower to three by 2008. As of 2005, Mexican children had almost an 80% enrolment rate. There are about 19million primary- and six-million secondaryschool students in the Mexican system, and higher education boasts 2,4-million students as of 2005. This young population (half of all Mexicans are under 20) will face many challenges in the coming years, as the gap between rich and poor is still vast, and the traditionally high birth rate is set against a sharply reduced death rate as a result of improved health care and sanitation. Images courtesy of Photoeverywhere.co.uk

Economy

An old village home

Mexico: National debt from 2010 to 2020 in relation to gross domestic product (GDP) 60% 50% National debt in percentage of GDP

The Mexico-US border is the largest economic divide on the planet. For many Mexicans, the best chance of a better life lies in the much more prosperous United States so hundreds of thousands of Mexicans go to the US, legally and illegally, every year in search of work. The global financial crisis in late 2008 caused a massive economic downturn in Mexico the following year, although growth returned quickly in 2010. Poverty remains one of the country’s major challenges. Ongoing economic and social concerns include low real wages, high underemployment, unequal income distribution, and few advancement opportunities for the largely indigenous population in the impoverished southern states. Mexico’s main industries include food and beverages, tobacco, chemicals, and iron and steel, while the agricultural sector focuses on corn, wheat, soy beans, rice, beef and wood products. If you are looking to consume Mexican products outside of Mexico, you are most likely to find manufactured goods including oil and oil products, silver, fruit and vegetables.

40%

42,23% 43,2% 43,17%

46,36%

49,76%

51,98% 52,05% 51,96% 51,47% 50,79% 49,96%

30% 20% 10% 0%

2010

2011 2012

2013 2014 2015* 2016* 2017* 2018* 2019* 2020*

Source: IMF © Statista 2015; additional information: Mexico; IMF

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feature

Repurposing industria an injection of vibrancy From nowhere to Neverland, Station Drive off Durban’s Umgeni Road is gaining traction – and from yesterday’s clothing industry is emerging the creative precinct envisaged by Durban’s bold and brave By Anne Schauffer Photographs supplied by the Foundry

Andrew Rall

t is a no-frills, easy to miss masterpiece but Andrew Rall, one of the visionaries behind the Station Drive Precinct isn’t perturbed by its low-key setting. “This isn’t Umhlanga Ridge where you have a gatehouse and designated parking and everything is perfect,” he says. “If you want that, Station Drive isn’t for you. It’s edgier, authentic mixed-use. Here you can get a lunch takeaway from the guy on the corner for R15 and at 4pm there’s a crazy rush for public transport by the CMT employees next door.” Regeneration of an area is not for the fainthearted; it’s a slow, organic process at best, and risky at worst. There’s no real blueprint. But rather than shouting about it incessantly, these Durban entrepreneurs are letting others do that for them, and as the word gets out – and the mix on offer becomes more diverse – more hands go up in support. For many, the question would be “why Station Drive?” but for Rall, it’s rather “why not?” The area had always appealed to him, and he’d considered renting premises there five years ago but was dissuaded. “I’d approached an estate agent who told me, ‘Don’t touch it, it’s next to the railway line, it’s a crime spot, it’s a U-drive … look how many places are vacant.’”

But Rall’s journey had been different. He’d travelled extensively overseas, where gritty urban renewal was happening; industrial areas were being transformed into commercial-type nodes. And when he started up his two small businesses in his home town of Durban – an advertising-design agency and a consumer research and insights business – they grew fast. He needed a Johannesburg office. “We moved into Braamfontein. My landlord moved from one derelict building to another and did them up, and we watched the areas develop, with a great urban culture rise to match it. We couldn’t allow our Jo’burg office to be that much nicer than our head office in Durban – we needed new premises.” Nothing available came close to the creative urban precinct envisaged. “End of February 2014, our lease was up,” says Rall. “There were one or two people keen to do things but nothing ever came of it. Lion Match happened but it’s a commercial-office type property, too expensive for creative businesses.” It was frustrating on a number of fronts. “It’s far harder to achieve something similar in Durban because owners of buildings are difficult to deal with,” says Rall. “In Jo’burg, it’s about making the numbers work. You offer a fair price, then negotiate up or down.

Here, owners overestimate the worth of the buildings, so when you do the numbers, it doesn’t make financial sense.” He’s not alone in that assessment, as developers dipping their toes into Durban waters have discovered. But behind the Station Drive façades, something was happening. Sean Stretch was developing his 966m² Open Plan Studio on the fourth floor of light industrial premises, the Chamonix Building (now the Design Factory). Stretch has a wry smile on his face as he describes his early relationship with Station Drive. “I submitted a proposal to the building owners, Durban Property Managers, which somehow ended up in their trash can,” he says. “Architect Dereck Peterson found it, was intrigued, and called me.” Stretch’s vision was to create a combined office/art/photo studio and event space. Fourteen offices offer individual and shared working spaces, with tenants ranging from technology and design to fine art and teaching; each benefits from proximity to other creative services. Importantly, Stretch says, “Open Plan is a showcase for ideas and provides a platform for interaction with the community. It’s a public space that we manage, and it serves as a contact point for

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feature “If I wanted to run it the way I envisaged, I had to invest in the building,” he says. Welcome to the Foundry… Rall’s currently in the process of trying to buy the property but he believes he’ll have to overpay by 60%. “That’s what it will take to own it, and I want to own it,” he says. “If you have a landlord who doesn’t understand what you’re trying to do – sees it only as a cash cow – you’ll never get a return. You’ll get a better return buying a commercially listed property on the JSE than a commercial property in Durban. Historically, if I look at what I’ll have to pay and what the JSE property sector delivered over the last five years, for the price I’m paying, I would do twice as well buying listed shares. “If I wanted to make this floor work, I couldn’t have 300m² of communal spaces [which he does]; I’d need to chop it up and really squeeze every last cent.” the public to experience the building, its architecture, amazing views and the area as a whole.” There’s an increasing range of public participation events, from art shows and workshops to a recent clean up of Station Drive, and future regular monthly or weekly events. Rall met Stretch, saw what he was doing, and jumped on board. Rall not only needed spacious premises for his agency work but also for a craft distillery, a very different kind of model from the big-business alcohol conglomerate. “In the urban context, you can only have a distillery in an industrial zone.” Rall bit the bullet and rented the entire building of 1 500m², every single one of them needing repair. He gutted the building, redid the electrics and earth leakage, installed all the necessary amenities – all out of his own pocket. There’s demand for the other floors, spaces and buildings but Rall says his motivation wasn’t for it to be an investment. “To be honest, what I’m doing isn’t about delivering a return,” he says. “Yes, it kind of pays for itself but it’s not business. It just allows there to be the creative space I wanted. For a creative precinct to work, it’s all about the right kind and mix of tenants. If you don’t achieve that, the area won’t turn into anything.” The distillery – Distillery 031 – opened in early November 2015 but Rall had his licences, stills, bottles and equipment for rum, gin and more long before then. Station Drive is building its reputation brick by brick, brand by brand, and Durbanites are drawn there by a combination of curiosity, the element of surprise, a love of industrial SOUTH AFRICAN PROPERTY REVIEW

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feature

buildings repurposed, the mix of creative businesses small and big, commercial and retail – and of course, the edibles and quaffables at the likes of Distillery 031 or the casual eatery in a brewery, S43 (That Brewing Company and restaurant), owned by legendary Cafe 1999 owner-chefs Marcelle and Shaun Roberts. You can meet up for coffee at Max Pienaar’s Savior or Charles Kerr’s vast lifestyle and furniture warehouse Con Amore; and the Sunday Morning Trade at the Plant is Durban’s weekly source of farm-fresh ingredients and artisan goods.

Cool labels, the sight and sound of sewing, camera shutters, carpentry, jewellery and leather make is as intriguing as it is appealing. So too is the wonderful interior design work happening inside these buildings, which is drawing creatives to choose it as their workspace. The energy is tangible. “I’m where I wanted to be,” says Rall. “We’ve developed the Station Drive Precinct as a concept, and we have a committee that runs it. We’re engaging with the city to resolve the parking issue and improve the road, and sort out all the other logistical issues.”

They’re risk-takers, and they’ve put themselves out there in the public domain. They’re repurposing dilapidated buildings and breathing new life into forgotten corners of the city – and Durbanites are definitely coming out to play.

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meet the mayor

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ARCHITECTS

people in profile

Ewa Winczewski

Anthony Orelowitz

Principal Architect/Director

Director

Ispaces Interiors

Paragon Architects

Ewa Winczewski graduated from Wits with a degree in architecture in 1993. From a young age, she had a keen interest in drawing and design, and in finding out how buildings worked. She has acquired broad knowledge in the field of architecture and interiors, having been exposed and involved with a wide variety of projects in the residential and commercial field. She successfully ran her own business for 10 years. During this time she became involved with the design of commercial projects with Empowered Spaces Architects. Ispaces Interiors was a natural progression and the end result of their successful partnership. The challenges at Ispaces include dealing with fast-paced projects where making the right design decisions in a short span of time becomes imperative to the success of a project. Ispaces is an interior architecture and design studio in Parkmore, Johannesburg. “We are vibrant and quirky, and we pride ourselves on offering our clients a personal service,” she says. “We believe that great design should encompass all aspects of our life. Our services include initial space planning, custom joinery design, specification of finishes and furniture.” Winczewski says Ispaces and Empowered Spaces have been involved with, and successfully completed, amazing buildings, including Covidien head office, Noswall Hall student accommodation, DHL head office, Servest head office and Hilti head office.

Anthony Orelowitz was born in Johannesburg and studied at Wits. He started the Paragon Group in 1997 with Henning Rasmuss, with the specific aim of being innovative in their field. “We didn’t want it named after us because we wanted the company to be an entity in itself, something beyond us,” he says. “So we took random stabs at interesting words we found in the dictionary to come up with a suitable name, and eventually decided on ‘paragon’, which means excellence.” He has made a significant contribution to the Sandton skyline, with a number of his designs now defining the urban fabric of this bustling area. Relationships are important to him and with years of experience in his field, he has developed the necessary skills vital to ensuring a successful project. Through a process that involves crafting a building using current software and material development, he embarks on the road to creating beautiful buildings that work. “At Paragon we pride ourselves on our dynamic bespoke approach to commercial architecture, focusing on crafting remarkable buildings and spaces, despite constraints of budget, time and construction skills,” he says. “We are perceived to be one of the leading commercial practices in South Africa.” Is there a particular building that he loves? “No, there are so many. I’m what you’d call an architectural polygamist.” He admires local architects such as Jeremy Rose (who passed away in December 2015) and Pierre Swanepoel.

t: +27 (0)11 883 8380 / +27 (0)82 724 1524 ewa@ispaces.co.za www.ispaces.co.za 42

+27 (0)11 482 3781 / +27 (0)82 557 5600 anthonyo@paragon.co.za www.paragon.co.za

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people in profile

Henning Rasmuss

Thulani Sibande

Claire D’Adorante

Director

Associate Director

Paragon Architects

Paragon Architects South Africa

Paragon Interface

Henning Rasmuss studied at Wits, obtaining a bachelor degree in architecture cum laude. The biggest opportunities in Africa are the fast-growing capital and regional cities in which we live, whether they are well managed or not. The opportunity for learning and the professional satisfaction arises from the hunger for the new and untested: everything around a project, including relationships, design, technologies, contracts, leasing, finances, construction and operations. Part of this continent is highly organised and highly professional, and right next door will be “square one” territory. The challenges are the people and critical skills needed. “We innovate and are enquiring; we are generalists looking for opportunity in every project, building careers for young architects, building good teams,” he says. “We are architects who understand business. The Paragon Group, of which Paragon Architects is the historical core, has been an amazing journey that is not nearly finished. “We have worked with incredible people along the way. We love the people we work with – even on the high-stress days, when it all seems to be going pear-shaped,” he says. Henning was personally involved in the detailing and component development of the 38 000m² cable-supported glass roof of the Cape Town Stadium for the FIFA World Cup 2010, as part of the Stadium Architects JV. The components were made in seven countries by a diverse set of people. The technical complexity and performance was a unique, once-in-a-lifetime project.

Thulani became involved in architecture immediately after matric. He spent two years as an in-house trained draughtsperson but felt he needed a formal qualification in business and architecture. He studied at and graduated from Intec College with a business management qualification, then graduated from TUT with a diploma in architecture before completing a BTech and an MTech. He joined Paragon Architects in November 2006 as a senior technologist. Paragon Architects South Africa is the local South African business unit of an international architectural business, delivering a complete range of design and project implementation services for ambitious and innovative clients. The firm’s key contribution as design architects is the value engineering of buildings for predetermined financial returns in fast-track construction projects. Technology integration is one of its defining strengths. High levels of responsibility and an active performance-monitoring process make it attractive as an employer. His proudest educational achievement was his diploma graduation, and receiving an award as the ‘’Best Architectural Student Achiever”. In the corporate world, being appointed to lead and direct a business of this scale was one of the most memorable achievements of his career to date. The company played a significant role in this by assigning him a lead role on projects that he completed while still a relatively young employee.

Claire D’Adorante is an interior designer who has worked professionally in the industry for nearly 16 years (in Australia for six of them) across a variety of sectors, including commercial, retail and residential design schemes. She studied at the Design Centre College of Design in Greenside, Johannesburg, graduating with a BA honours degree in interior design. She always had a passion and talent for art and design as well as an interest in the construction industry, having been exposed to the environment growing up. “Opportunities in the property industry are huge at the moment in South Africa,” she says. “We’re constantly growing and changing as a country, and there are large and exciting developments happening in the industry, which for a professional are extremely challenging and rewarding. We believe in innovation and excellence and are always striving to push the boundaries of what is possible. We also strive to stay at the forefront of global leading trends in workplace design to give our clients the best possible solutions for their business. “We’ve secured two of the largest singletenanted fit-outs in South Africa – Sasol and Discovery’s new head offices – on a design pitch basis, tendering against some of the best interior firms in the country. Both projects are currently under construction. We are also extremely proud of the Alexander Forbes building, where we worked with Paragon Architects to create a fully integrated ‘green’ building from the inside and the outside.”

+27 (0)11 482 3781 / +27 (0)83 449 2670 henningr@paragon.co.za www.paragon.co.za

+27 (0)11 482 3781 / +27 (0)73 726 3335 thulanis@paragon.co.za www.paragon.co.za

+27 (0)11 482 3781 / +27 (0)74 688 7777 claired@paragon.co.za www.paragon.co.za SOUTH AFRICAN PROPERTY REVIEW

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people in profile

Michael Magner

Edward Brooks

Reon van der Wiel

Director and Principal Architect

Activate Architects

Michael Magner grew up in Centurion and went to high school in Pretoria. He relocated to Johannesburg to study architecture at Wits in 1992, graduating in 1997. He’d decided he wanted to be an architect in primary school. His grandfather was a builder, and he’d always liked drawing and making things. Magner says architecture makes a profound contribution to people’s lives and lifestyle, both on the urban scale and on the home scale. Green building is offering wonderful opportunities to break old habits and imagine better buildings and cities. It has brought new vigour to a very old profession. Activate Architects is a firm that’s always been interested in green design. Notable projects in this regard include Forum Homini Hotel and Lebone College. The interest in green design gained momentum once the Green Building Council of South Africa (GBCSA) was established. This momentum has allowed much higher levels of acceptance of new technologies and energy-efficient design. SANRAL HQ and the Bay West project are both Green Star-rated projects. The firm believes in teamwork, both within the office and between the consultant and the client. A good team is far more than the sum of its parts, and developing buildings is a team sport. Activate Architects aims to design highperformance architecture, whether this is a student res or an AAA-grade office. When Magner isn’t at the office, his recreational activities include mountain biking, golf and sailing.

Edward Brooks studied architecture at Wits, graduating in 1997 with a distinction in design. Before starting up Activate Architecture in 1998, he worked at architectural practices in Johannesburg and Lisbon, Portugal, as well as for the city planning department of The Hague, Netherlands. He was a second-year design and design external examiner at Wits from 2002 to 2008. Brooks is a GBCSA-accredited professional since 2009. He also participated in the GIBS Nexus programme in 2005. In 1998, Activate was formed as a close corporation called “Johannesburg Studio for Architecture” . During the first two years, the practice underwent a number of important changes, eventually consolidating in 2000 as an established small practice of two partners (Edward Brooks and Michael Magner), a couple of staff and the Activate brand. In 2009, Activate was converted to a Pty company to accommodate the firm’s anticipated growth. With a passion for architecture, good design and attention to detail, the firm has grown steadily to take on a variety of larger projects for a broad spectrum of private, institutional and commercial clients. (Brooks was the project architect for the SANRAL head office in Pretoria.) For him, the biggest challenge of being a professional architect is the pressure of delivering projects on time. Brooks has a keen interest in travel and property, and is an avid wine and coffee connoisseur. To keep fit and blow off steam, he enjoys running and squash.

Reon van der Wiel matriculated from Potchefstroom Boys High School in 1994. He also studied architecture at Wits, graduating in 2002. He worked for Activate Architecture as a student, and joined the firm in 2002 as a qualified architect. He has proved to be an invaluable asset to the firm, becoming a partner in 2006. His family has a long history in the building industry. His grandfather was a contracts manager, so Van der Wiel was exposed to the building environment early on. He believes in designing and putting out into the world something that was not there before. Van der Wiel helped the CIDA University set up its MACC course, and presented the architecture and construction component of it. He also lectured at Wits in the architectural representation elective from 2006 to 2007. He believes in teamwork and accountability in the workplace. The biggest challenge of being a professional architect is balancing the time and cost of designing and constructing a building. Budget and time versus quality always need to be in balance. Activate focuses on each client’s specific needs; the physical and financial context; and using the latest building information modelling software to design evidence-based, up-todate and appropriate high-performance architecture. It has developed as a forerunner in green building design in South Africa. Outside of the office, Van der Wiel loves sculpting and mountaineering; in his spare time – when needed – he is a DIY boffin.

+27 (0)11 788 8095 michael@activate.co.za www.activate.co.za

+27 (0)11 788 8095 edward@activate.co.za www.activate.co.za

+27 (0)11 788 8095 reon@activate.co.za www.activate.co.za

SOUTH AFRICAN PROPERTY REVIEW

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people in profile

Adrian Maserow

Gerald Pereira

Marco Fanucchi

Director

AMA Architects

After attending an exciting open day at the faculty of architecture at Wits, Adrian Maserow was interviewed by the newly installed head of the faculty Pancho Guedes and his selection team. He did a bachelor of architecture degree; a few years later, he got a master’s degree in architecture at the height of Guedes’s leadership. The AMA group was established in 1993 and has since completed notable works of architecture of the highest standard of design skill, employing efficient and viable design solutions through an innovative spatial aesthetic. The firm considers the uniqueness of a place and a client’s individual requirements in order to fully evaluate each distinctive brief through an engaging design process. AMA’s visionary thinking and innovative approach to design involves high levels of collaboration with other built environment professionals. From its Sandton offices, and together with Gerald Pereira and Marco Fanucchi, this team of architects and designers practises a contemporary ethos and philosophy of design. AMA seeks like-minded developers, project financiers, local authorities and built environment professionals who are committed to promoting the long-term view of well-considered building design. AMA is a creative and visionary talented team of architects that routinely supports the goals of the programme and project’s budget, surpassing all expectations of the architectural design.

Gerald Pereira grew up in Johannesburg. With a background in project management and architecture, he has been with AMA Architects since 2004. He has a bachelor of architecture degree from the University of Pretoria. He always wanted to study architecture, and has worked in the building industry since completing his studies. One of the biggest challenges he faces is performing work on risk while still having to pay staff and carry operational costs. This is the industry standard. AMA tries to limit risk by working with developers with whom it has strong relationships with. Often a scheme will change three or four times on a single piece of land before anything is built. Recovering costs in those instances is a huge challenge. Adrian Maserow founded AMA in 1992. Since then the firm has grown and has been able to increase its workload exponentially. AMA’s dedication to customer service and quick response times, and its focus on providing the right product for the proposed developments (based on the brief and the changing dictates of the market at any point in time), have been crucial. The VWSA project (head office on the side of Katherine Road) has been really enjoyable, as has been the Atholl Towers multi-tenant development for the same developer and the almost-completed Clientele Call Centre project in Morningside. AMA also helped achieve a 5-Star Green Star rating for the Atholl Towers project. The firm is proud of its architectural contribution to the Sandton skyline.

Marco Fanucchi matriculated from Saint Benedict’s College in 1996. He obtained a Bachelor of Architectural Studies at Wits in 2000. He also has a bachelor of architecture degree from Wits, which he obtained in 2003. He joined AMA Architects in November 2005, becoming a director in 2008. Last year marked his 10th year with AMA. During this time, he witnessed the growth of the practice into a firm that is recognised as a leading contemporary commercial design firm in South Africa. He says that AMA approaches each project with a fresh perspective, always pushing to maintain the balance between innovation and the essential requirement to satisfy client’s expectations. Buildings are the settings for everyday life, and – as architects – AMA has a massive responsibility to deliver an architecture of generosity that elevates the day-to-day experience of its projects from pure function and cost into something more memorable. “We always have to ensure that our projects are not simply reduced to a valueengineered vehicle for delivering a profitable return,” he says. In an extremely competitive market, it is essential that AMA is always up to date with the latest construction and computer technology. This ensures that the firm is able to offer a competitive edge with regards to exploring design solutions, accurate documentation and – ultimately – the successful delivery of projects.

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

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

+27 (0)11 807 7505 marco@amagroup.co.za www.amagroup.co.za SOUTH AFRICAN PROPERTY REVIEW

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feature

Standard form construction contracts Successful contracts are well administered events relying on the skill and cooperation of all involved. Many potential problems that arise during the execution phase and after completion can be avoided – or at least minimised – at conception and at design stage By Uwe Putlitz

tandard form contracts include tried-and tested procedures to deal with the execution and payment and, where necessary, any resultant claims. Such contracts include “alternative dispute resolution” methods to resolve any disagreements privately, speedily and cost-effectively. Standard forms of contract are used in the building industry around the world because they are well understood and thus result in fewer disputes on matters of interpretation, reducing procurement and contract administration costs. Research in Australia shows that two-thirds of contracts used are standard form contracts – but that almost half are modified in some way (SCL Australia, 2013). For a contract to be effective, the employer and the design team must select the most appropriate form to implement a project in a particular location. Interestingly, the Latham Report (in England in 1994) recommended the use of standard contracts without amendments. Amendments to standard forms were also criticised by Lloyd QC in Royal Brompton Hospital National Health Service Trust v Hammond and Others. “A standard form is supposed to be just that,” ran the criticism. “It loses its value if those using it or, at tender stage, those intending to use it have to look outside it for deviations from the standard.”

Advantages of standard form construction contracts A standard form of contract is negotiated between the different role-players in an industry to equitably spread the contractual risks.

The contracting parties must be thoroughly acquainted with the content and application of individual clauses of a standard form. The use of a standard form contract avoids the cost and time of individually negotiated contracts. Evaluation of tenders is made easier as risk allocation is common to all tenders and, if the parties make changes to the wording of a standard form, such changes must be clearly identified in the procurement documents, failing which they shall be null and void.

The disadvantage of standard form construction contracts For some applications, standard form contracts may be too long and too complex.

Why use a standard form construction contract? Unlike in the manufacturing industry, each building or construction project is unique, despite the fact that projects frequently use similar and familiar construction methods. The execution of each project should be formalised with an appropriate contract document, using a standard form agreement to suit the majority of applications. Such contracts require the appointment of a neutral person, traditionally paid by the employer, to fairly administer the execution of the works. The drafters of Joint Building Contracts Committee (JBCC) agreements have largely avoided including non-contractual issues (such as the “parties must work as a team”

and specifications of method statements) in the agreements to avoid duplication and errors in non-matching texts. These belong in the preliminaries document. JBCC agreements and other standard form agreements used in building and construction follow a similar layout to cover the legal requirements of a contract and to highlight project-specific performance criteria. Where either party fails to perform its obligations in terms of such an agreement, a series of clauses deals with insurances, guarantees, suspension and termination options. Where the relationship between the parties has deteriorated, alternative dispute resolution options are provided that may be followed to resolve such differences in private and within the framework of the contract.

Contract administration Signing a standard form contract is a good start. Hopefully no-one has made unidentified changes to the wording – or, if there are changes, the parties have analysed the potential implications prior to signing. The four standard form contracts in common use throughout Africa also differ from most other agreements by requiring the appointment of a neutral agent by the employer to fairly administer the agreement. JBCC refers to the “principal agent”; other agreements refer to the “engineer” or the “project manager”. The duties of such an agent are similar and defined in their respective professional appointment conditions. Such an agent’s authority is limited to the execution of the works on behalf of the employer; he is not to act unilaterally or independently. There is no recognised job description or minimum qualification for a “principal agent”. Preferably such a person should have a tertiary qualification in architecture, building science, engineering or quantity surveying, a good deal of common sense, experience of the industry and an ability to manage people. To carry out the duties of a principal agent is a professionally responsible task that requires a significant time commitment to a project. The principal agent (and the other roleplayers) must be alert to possible problems that may arise during the pre-contract phase and during the execution phase of a contract.

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feature A small problem that’s neglected can quickly become a large and expensive disaster. Often such problems stem from decisions made long before the building contract is signed. An English judge in MJB v Defence Construction (1995) noted that ”A prudent owner would also consider the capability and experience of the contractor and how realistic the tender price was.” Sadly, in South Africa many organs of state appoint contractors on “price”, not on “competence”, resulting in poor performance, abandonment of works and termination of contracts. By the time a project is re-tendered, the budget for it has lapsed because most projects are budgeted per financial year and not on a project basis – not a recipe for successful service delivery!

Contract execution A standard form contract is a legal agreement. The authors of the agreements in common use have spent much time choosing the words and/or the order of words in a sentence to clearly describe the rights and/or obligations of the parties. Thus a legal agreement also becomes a reasonably user-friendly contract administration tool. The JBCC technical committee has been largely successful in breaking longer clauses into short subclauses as a check list of rights or obligations.

Many problems arise from superficial, incomplete or wrong construction information, and a number of problems arises because of “changes” that could have been avoided with proper design and project management. Scope changes occur frequently, generally with disastrous consequences, because the provisions of the contract often fall away to be renegotiated – usually to the disadvantage of the employer.

Standard form contracts include clauses that list the steps to be taken to manage an event: participants are to give notice to the other parties of an event, follow-up notice to quantify an event (which has implications in terms of time, money and quality), and to adjudicate the event. Uwe Putlitz is the Chief Executive Officer of the Joint Building Contracts Committee.

Conclusion The JBCC publishes a principal building agreement for use with all types of building contracts. It is used in conjunction with the nominated/selected subcontract agreement. The N/S subcontract agreement provides for the appointment of specialist subcontractors under the same conditions as the principal contractor, highlighting the different responsibilities where a “nominated subcontractor” defaults (the employer is at risk for quality of the work, cost and time overruns) compared with where a “selected subcontractor” defaults (the contractor is at risk for the quality of the work, cost and time overruns). The minor works agreement is for small, simple projects under the control of a single

(often emerging) contractor without nominated/selected subcontractors. The principal agent has a wider responsibility to coordinate and administer such a contract and to assist with programming, quality control, valuations, and so on. The JBCC publishes worksheets, including “certificates” to record the start/completion of a section of work and the works as a whole, and “certificates” to record interim and final payments – substantiated with calculation sheets as well as a notification of amounts due to each of the parties. The JBCC also publishes various “guarantee” forms for (non)performance by the contractor, (non)payment by the employer and advance payment by the employer.

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technology

Cloud shopping South Africa’s retail landscape, which is becoming increasingly crowded has seen many start-ups opt for the ease an online presence affords them. Could a marriage of the mall experience and online shopping be the holy grail of shopping in the future? By David A Steynberg

outh Africa’s 1 942 shopping centres occupy more than 23-million square metres of retail space. Astonishingly, nearly 93% of the continent’s shopping centres in the South African Council of Shopping Centre’s (SACSC) directory can be found in South Africa – cementing the well-known fact that we like to shop. According to Amanda Stops, CEO of SACSC, the figures studied indicate a rising requirement for convenience. Convenience centres are the most prevalent retail centres in South Africa, while the 601 neighbourhood centres in the country cover more square metres combined than any other retail centre category. “South Africa’s shopping centre story is also, more and more, the story of its consumers,” says Stops. “The growth of our shopping centre market has risen to meet consumer needs and the needs of our transforming community.” Dr Dirk Prinsloo of Urban Studies estimates that the country’s increasing population numbers and rising disposableincome levels will increase the per capita demand for retail space from the present 0,4m² to 1,5m², to 2m² over the next eight to 10 years. According to Prinsloo, the significant growth in the country’s shopping centre market has been driven by our changing population demographics – since the country’s first democratic election, the growth in this market has boosted South Africa to number six in the world in terms of number of shopping centres. Prinsloo cautions, however, that the market will have to continue to heed the demand signals from its shoppers if the massive growth of the last 21 years is to continue. “The consumer of the future will be more demanding,” he says. “Online opportunities and shopping will increase, therefore a very strong need exists to

formulate an omni-channel retail strategy.” Online shopping currently comprises one percent of the retail market, and is therefore not yet seen as a significant competitor of the shopping-centre market, according to Prinsloo. He concludes that malls must be seen as destinations or community meeting spots by the new consumer if they are to continue thriving amid the ever-gathering wave of technology and innovation. Trends perceived by big players in the online shopping sphere seemingly support this. Takealot, voted South Africa’s favourite e-commerce store at the 2015 eCommerce Awards, and South Africa’s biggest online retailer, reports a marked increase in sales over the last 12 months, and was expecting record sales volumes over the festive season. “Over the past year we’ve seen a substantial increase in online shopping as local consumers become more enamoured with

the convenience of ordering online, particularly through the Takealot mobile app,” says Declan Hollywood, chief marketing officer at Takealot. The fact that it is specifically the new mobile app that’s driving the increased sales at the online store speaks to the need for continued innovation to attract consumers. Innovation costs money, though – money that start-ups and work-from-home business

owners may not have. New innovator in the e-commerce market, Cloudly Stores, recognises this. “Cloudly Stores was developed with small businesses and

Online shopping currently comprises one percent of the retail market, and is therefore not yet seen as a signiﬁcant competitor of the shopping-centre market entrepreneurs in mind; giving them the opportunity to create an online presence with no start-up costs or exorbitant fees that could be otherwise spent growing their business or buying stock,” says Lisa da Costa, co-developer of Cloudly Stores. The project was inspired by the high prevalence of informal buying and selling happening on Facebook, often dominated by one-person

businesses. Business-owners who use their Facebook page as the primary portal for sales of their goods often don’t have the money or skills to set up their own website, explains Da Costa, and sell directly to their page fans. According to Da Costa, Cloudly Stores wants to differentiate itself from other online shopping sites by giving business-owners the opportunity to sell on Cloudly and develop their

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technology made aware of the demand for an online mall like Cloudly Stores by the recurring demands from small business-owners. According to Da Costa, a substantial number of South Africa’s young and creative entrepreneurs are unable to fund their own e-commerce ventures. Considering the fact that the demand for homemade, proudly South African goods continues to increase as the country’s consumers join the “back to basics” living philosophy, it can be argued that the stores on Cloudly, and therefore Cloudly itself, will be enjoying a steady increase in shoppers, looking for something not on offer by the bigger, more mainstream e-commerce shops. Many start-ups or small business-owners may feel that, with the widely available free website design sites, it would be easier to just set up their own portal. Da Costa says that four main reasons exist why Cloudly Stores should still be the gateway to e-commerce for many creatives and entrepreneurs, the main one being the ease of “setting up shop”. “You can set up your store in five minutes, with no risk and no upfront costs,” she says. “You get an almost instant online presence. You will also only pay when you sell, so there is no initial cash outlay.” It’s also believed that all stores on Cloudly will benefit from crossselling, since every store’s goods will be on display to the other stores on the site. In addition to the very streamlined admin process that comes with selling on Cloudly Stores,

own store-front, managing their own clients, products and sales. This eliminates the need for Cloudly to hold any stock or receive payments on behalf of business-owners. Effectively, Cloudly is South Africa’s first online mall. “There are a few online marketplaces in South Africa but they are restricted to niches and are not as flexible

as Cloudly is,” says Da Costa. “We also don’t hold the merchants’ money and all of our stores get paid for directly (like they would in a brick-and-mortar shopping mall). In fact, none of the transactions ever enters our bank account; it’s between the store and the client.” Lisa and her co-developer and husband, Rapheal da Costa of Hashtag Consulting, Software and App Developers, were first

the e-commerce site will be offering businessowners many additional features, such as auctions and coupons, which should market their goods even more efficiently to the various consumer markets. Consumer behaviour, the pace of technological innovation and the rising cost of building may just prove to be the drivers needed to change the retail game forever. SOUTH AFRICAN PROPERTY REVIEW

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update

The e-lodgement system: an overview The legislative face of town and regional planning has changed with the July 2015 commencement of the Spatial Planning and Land Use Management Act (Act No. 16 of 2013) (SPLUMA), the regulations thereto, and municipal by-laws on land use planning being gazetted on a weekly basis By Dries Goosen

ovel legislative processes and procedures have put a weight on the facilitation of development in municipal space. The Spatial Planning and Land Use Management Branch of the National Department of Rural Development and Land Reform (DRDLR), as custodians of the Act, are mandated to support and monitor municipalities during the implementation of the legislation. Assisting the national departments, the provincial departments and the municipalities with this colossal law reform process, the department needed a system that can facilitate intergovernmental participation and relations. In addition, the system needed to broadcast norms and standards for land use management and compliance monitoring, provide support and assistance in terms of land use management, enable alignment of spatial plans, policies and frameworks across spheres of government, and give an oversight of the state of land use planning and management for strategic and operational management. The Spatial Planning and Information System was established in 2013, and development of the system is being done on a continuous basis. One of the goals of the Act was to reiterate the constitutional right of municipalities to manage development in their municipal area. In provinces such as the Free State this brought about a particular challenge. Municipalities are not capacitated with the skills or systems to handle this responsibility, as all decisions on development applications have been taken on the recommendation of the Free State Townships Board and not on a municipal level. In order to assist municipalities with the function of receiving and processing land development applications, the DRDLR is developing a system for the electronic lodgement of land development applications. This will enable municipalities to be capacitated with the built-in knowledge of the system to deal with the requirements of the SPLUMA. The E-lodgement System (as it is called), developed for the department by Pula Strategic Resource Management (Pty) Ltd, is a webbased system where applicants can lodge

land development applications by filling out forms online, uploading supporting information and obtaining cadastral information, zoning information, land use schemes, valuation rolls etc, in order to assist with the application formulation process. The system notifies the municipality and the applicant of the necessary steps that have to be followed in accordance with the by-law of the relevant municipality. All documentation and processes are kept in the system for monitoring and auditing purposes, and the system will be able to generate reports for multiple users

â&#x20AC;&#x201C; for example municipal planning tribunal members and provincial departments. The system will be categorised and developed per function, allowing the municipalities to incrementally adapt their systems to slot into the electronic lodgement model. The functions include pre-lodgement, where the applicant can obtain spatial information applicable in formulating his application; lodgement, where applications will be lodged in terms of the municipal by-law; assessment, where applications will be verified and assessed; decision-making, where either the Municipal Planning Tribunal

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update or authorised employee will decide on the applications; decision, where processes of approvals and rejections will be managed by the municipality; compliance, to check the compliance to conditional approval and to register the compliance; and the monitoring function, where departments can monitor applications and processes followed. Advantages of using the system are evident for government, private sector and the public. The system is developed to fast-track applications in a local municipality and to ensure that an application complies with the relevant sections of the municipal by-law. The average end-to-end processing time of an application will be reduced; the technology will also cut back on the consumption of paper and will reduce costs such as postage, printing and manual processing. The system creates an audit trail by keeping a history of the application process from all role-players in the application process. The system will enable the applicant to not be dependent on his location – through online communication and easy access to planning tools, the

applicant will be able to establish a township in Upington while being stationed in Clarens. With the use of the system, all documents are kept safe and will circulate to all departments without the worry of them not reaching their final destination. The server of the system is stored at a secure bunker in Bryanston, ensuring that no record is lost or deleted. The system can provide the audit trail by keeping a history of applications and the process for all role-players involved in the application. This will assist in litigation – and help minimise such with the built-in notifications of undue delay. Monitoring of development in municipalities can take place in real time in order to identify areas where development pressures lie and to proactively upgrade the necessary services; this will help develop a more efficient form of spatial planning. The adherence of departments, municipalities and the public to spatial policies and planning legislation can be monitored and addressed. Municipalities can be supported remotely from provincial and national government,

which will aid in the effective use of the professional HR capacity. The system is the first step for the DRDLR to use its human resources to achieve the maximum outcome. The electronic system is the first of its kind and will enable a more cohesive planning environment that will fasttrack, monitor and enable development in accordance with the relevant planning legislation of a specific municipality. The e-lodgement system will be piloted in the Northern Cape and Free State provinces. The first application was lodged electronically on 9 September 2015 by Ms Aläe Gräbe in the Free State. By involving professional organisations such as the South African Planning Institute, South African Geomatics Institute and other institutions, the DRDLR has access to trained developers, town planning consultants, land surveyors, lawyers, municipalities, government departments, non-government organisations, and so on. Additional training can be requested from the department – requests should be sent via email to walter.smit@drdlr.gov.za.

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SAPOA events

Cementing relations SAPOA Limpopo hosted a gala dinner at Pietersburg Club, at which Polokwane Executive Mayor Thembi Nkadimeng was the keynote speaker

Peter Pratt, Mayor Thembi Nkadimeng, SAPOA Regional Secretariat Zendi Linde, SAPOA CEO Neil Gopal and Paul Altenroxell

Jean du Toit, Hambis Kourtoumbellides, Mr Lehapana and Loucas Kourtoumbellides

Nedbank colleagues enjoying the evening

Adrian Lucas and Peter Pratt

ABOVE Networth Properties representatives inspired by the Mayorâ&#x20AC;&#x2122;s speech RIGHT Professor Joe Nel speaking about SAPOA

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events

Power hour The Western Cape Regional Council ended off 2015 with a Power Hour Breakfast on transport in Cape Town, presented by Councillor Brett Herron of the City of Cape Town. Colin Devenish of the V&A Waterfront sponsored four students currently doing property studies at UCT to attend the breakfast, while Growthpoint Properties for sponsored the event

FROM LEFT Colin Devenish, Executive Manager of Operations at the V&A Waterfront; Shingirayi Zimunhu, UCT student; Tinotenda Jeketera, UCT student; Nomahlubi Ndziba, UCT Student; Refqah Ho-Yee, SAPOA Western Cape Chairperson; Councillor Brett Herron, City of Cape Town; and Michelle Chesa, UCT student

David Stoll of Growthpoint Properties with SAPOAâ&#x20AC;&#x2122;s Refqah Ho-Yee

Councillor Brett Herron

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frankly speaking

Simon says He is not afraid of being seen in a pink shirt and has peculiar cooking skills. We meet JHI Corporate Real Estate Services’ joint Managing Director, Simon Wilkins By Nthabi Nhlapo

Q You studied architecture and have worked in the property industry for some time. What’s your favourite building in the world, and why?

Anything by British-Egyptian architect Zaha Hadid. She designed the London 2012 Aquatics Centre and the Tokyo 2020 Olympic Stadium. Her buildings don’t conform to any rules and I love that. More importantly, they embody what I think the function of great architecture is – to inspire.

Q Name five uses for a car without an engine.

I have an old Landie Defender at home so I’m used to this scenario – jungle gym, kids’ fort, grass shade cover, self-contained bijou residence and, of course, with no aircon in the summer, a sauna!

Q If we gave you a trampoline, would you keep it?

Absolutely – thanks!

Q What do you like most

Q What is the best advice

Having the ability to offer the best service in the industry. Every client has different needs so being able to deliver multifaceted solutions that drive immediate results time and time again is hugely rewarding.

To keep asking “why” until I understand it. “Don’t sneeze when somebody’s cutting your hair” is also full of wisdom.

Q If there were Oscars for the property

I have a great family, great friends and the opportunity to work alongside some of the most influential, knowledgeable and charismatic people in the industry.

Quick answer – yes, many!

Q What is your favourite colour

about your work?

industry, would JHI win? How many Oscars would you have by now?

Q If you weren’t in the property

you’ve ever got from a child?

Q How lucky are you and why?

of clothes to wear?

industry, what would you be doing for a living?

Black – but I have been known to throw on a pink shirt now and again.

I’d be a fighter pilot – Top Gun clearly left a lasting impression!

Q If we came to your home and

Q Speaking of alternative careers, do you think Kurt Darren would make a good architect? Why?

Anyone who can pull off Kaptein will be good in any career!

Q If you could live anywhere

looked inside the refrigerator, what would we find?

Very little. The zoo needs feeding.

Q Are you a good cook? If you

are, name five dishes that are made using eggs.

I wouldn’t mind giving New York a try.

Eggs fried, eggs boiled, eggs scrambled, eggs poached and eggs microwaved (not recommended!).

Q You have a master’s degree

Q Does your family have a pet?

Managing a zoo – in my case, my four kids.

Our staffie Nala is my frequent confidant – she knows everything! Our fish Dorito and Tiger aren’t quite as insightful!

in the world, where would it be?

in property investment. What other skills/activities do you master in your spare time?

Do you talk to it?

Simon Wilkins has more than 14 years of experience in the property industry and holds an master’s degree in property investment and a bachelor’s degree in architecture. He has local and international investment advisory experience, having worked in South Africa, other parts of Africa and the UK. The property portfolios under his management have been in excess of R5-billion. JHI Properties (Pty) Ltd prides itself on more than a century of experience. The company whose services are fully supported from its South African ofﬁces has a footprint in South Africa, Namibia, Botswana, Zimbabwe, Lesotho, Zambia and Ghana. JHI Properties (Pty) Ltd has approximately R110-billion in asset value, about 2 000 buildings, more than 18 300 tenants and approximately eleven-million square metres under management.

SOUTH AFRICAN PROPERTY REVIEW

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2016/01/21 11:12 AM

UPCOMING

EVENTS

2016 February

Region

Date

Event

East London

6 February 2016

East London Breakfast Workshop

Johannesburg

10 and 11 February 2016

Negotiation Skills Masterclass Programme (NSMP)

Gauteng

15 to 19 February 2016

Facilities Management Programme (FMP)

Gauteng

17 February 2016

Legal Breakfast

Port Elizabeth

18 February 2016

Networking Event

Limpopo

23 February 2016

Limpopo Breakfast Seminar

Gauteng

25 February 2016

Research Breakfast

March Region

Date

Event

KwaZulu-Natal

8 March 2016

KZN Breakfast Presentation

Gauteng

10 March 2016

Networking Event

Gauteng

14 and 15 March 2016

Property Financial Programme (PFP): Basic

Gauteng

14 to 18 March 2016

Building Construction Technology Programme (BCTP)

Port Elizabeth

16 March 2016

Power Hour Breakfast

Gauteng

16 to 18 March 2016

Introduction to Commercial Property Programme (ICPP)

East London

17 March 2016

East London Networking Event

Gauteng

29 March to 1 April 2016

Immovable Asset Management Programme (IAMP)

April Region

Date

Event

Gauteng

7 April 2016

Power Hour Breakfast

Gauteng

11 to 15 April 2016

Intensive Project Management Programme (IPMP) for Built Environment Practitioners

Gauteng

13 and 14 April 2016

Negotiation Skills Master Class Programme (NSMP)

KwaZulu-Natal

13 to 15 April 2016

Introduction to Commercial Property Programme (ICPP)

KwaZulu-Natal

14 April 2016

Research Breakfast

Gauteng

18 to 20 April 2016

Introduction to Commercial Property Programme (ICPP)

Limpopo

21 April 2016

Limpopo Golf Day

Gauteng

28 April 2016

Legal Breakfast

Dates are subject to change. Please see www.sapoa.org.za for regular updates.

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2016/01/20 3:43 PM

off the wall

Imagined reality:

courageous, bold and just a little insane Supported primarily only by a dozen steel legs, the iconic Sharp Centre for Design in Toronto is a marvel that elevates architectural creativity to another dimension Compiled by Nthabi Nhlapo

he Sharp Centre for Design at the Ontario College of Art & Design in Toronto, Canada is an architectural landmark that opened in 2004 as part of a major US$42,5-million campus redevelopment. The black-and-white design, which resembles a tabletop, rises above the university’s main building. At first sight, it is mind-boggling how the enormous structure can be supported only by several pillars. The multicoloured, 26m tall pillars not only add to the colourful design of the building, they also create the illusion of it being suspended in mid-air. Previously hailed as one of Toronto’s most influential buildings, the Sharp Centre for Design was designed by acclaimed British architect Will Alsop in partnership with Toronto-based Robbie/Young + Wright Architects Inc, and structural engineers from Carruthers & Wallace Ltd and MCW Consultants Ltd. It is the first building completed by Alsop in North America. The Sharp Centre was built as part of an expansion of the Ontario College of Art & Design in downtown Toronto. The project was funded by the college, the province of Ontario and Rosalie and Isadore Sharp – the benefactors after whom the building is named. Located in a quiet side street between two main commercial streets, its immediate neighbours include mid-rise housing, a food court, the Art Gallery of Ontario, the Gardiner Museum of Ceramic Art (temporary location), and Grange Park, a treed community park immediately south of the Art Gallery of Ontario. From Grange Park, the black and white volume creates a delightful edge as it hovers on its stilts. With the addition of the Sharp Centre for Design at the college, Alsop cleverly addresses the complicated notion of expansion in a dense urban setting with his soaring blackand-white box. Provocative, unconventional, hopeful, whimsical and perhaps irreverent, the building is remarkable in the context of Toronto. As a winner of a 2004 RIBA Worldwide Award, it was described as “courageous, bold and just a little insane”. Alsop’s project seems perfectly fitting for a college of art and design in a city criticised for competent but ordinary architecture.

SOUTH AFRICAN PROPERTY REVIEW

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2016/01/20 3:44 PM

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