South African Property Review February 2019 by SAPOA

PROPERTY SOUTH AFRICAN

February 2019

REVIEW

The voice for the industry

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

One-on-one

Architect in the making: Khensani de Klerk

SA Cities Network

Dr Geci Karuri-Sebina and Danga Mughogho on the State of City Finances 2018 report

CBRE and Excellerate Joint venture announced

Doing business in SA Focus on registering property

11:31 AM

WE ARE THE CENTRE OF RETAIL Retail is Competitive. With more space, more brands and more locations, weâ&#x20AC;&#x2122;ll help you sharpen up.

+27 11 911 8000 cwexcellerate.com

from the CEO

Update on the revised Expropriation Bill and the Property Practitioners Bill The Expropriation Bill

SAPOA will publish its full submission in the March edition of Property Review.

The Department of Public Works published the revised Expropriation Bill in the Government Gazette on 21 December 2018. The key amendment from the previous draft is that of Section 12(3) ,which states that: “It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to: ●● Where the land is occupied or used by a labour tenant, as defined in the Land Reform (Labour Tenants) Act 1996 (Act No. 3 of 1996); ●● Where the land is held for purely speculative purposes; ●● Where the land is owned by a state-owned corporation or other state-owned entity; ●● Where the owner of the land has abandoned the land; ●● Where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land. SAPOA supports a land expropriation process where the rights of present and future landowners are balanced with the need to ensure the stability and economic growth of the country. It is our view that Section 25 of the Constitution already mandates the State to expropriate land to achieve land reform. Unfortunately, the State’s track record with regards to giving effect to restitution and redistribution has been extremely poor over the past 20 years.

The Property Practitioners Bill

It had adopted a willing buyer/willing seller policy when there was no need to do so. It has not used its expropriation powers to redistribute land. SAPOA’s stance has always been that it is inappropriate to categorise all vacant land as “unproductive”. Although it may, at any point in time, not be used in the most productive manner, through market forces land would naturally be converted to a better and higher use. Investors invest in land where there is a high risk and potentially high return, and vacant land attracts higher rates. The investors are prepared to pay these rates because of the future potential of the land. We are concerned about the possibility of the government wanting to expropriate land being held for what it believes is “speculative” purposes. By definition, “speculation” implies “guesswork” or “a gamble”. It is unlikely that investors would buy land on a gamble. Intention represents a commitment to carrying out an action or actions in the future and involves activities such as planning, purpose and forethought.

The Property Practitioners Bill (“the Bill”) was published on 31 March 2017 in GG 40733, and is intended to replace the current Estate Agency Affairs Act of 1976 (“EAA Act”) in its entirety. SAPOA recognises the need for consumers to be protected, as well as the prioritisation of transformation. These imperatives are of importance and we are in support of same. Against this background, SAPOA has dedicated a great deal of time, effort and money over the past few years to assist the EAAB with redrafting and providing comments to all previous versions of the Bills so that the objectives outlined above can be met. In the main, the comment serves to provide suggestions aimed at strengthening clarity to the most important concepts in the Bill so that its application is clearly defined. The Department of Human Settlements subsequently engaged with stakeholders on the final version of the draft. It was disconcerting to note that the current version of the Bill does not reflect the significant engagement between SAPOA and the EAAB, and therefore appears to be largely unaltered. The following are just some of the concerns that were raised by SAPOA during the negotiation and redrafting: ●● The requirement that each director of a property practitioner company be registered as a property practitioner has been brought forward from the EAA Act. This requirement is no longer appropriate. SOUTH AFRICAN PROPERTY REVIEW

from the CEO

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

●● While the draft Bill intends to regulate more stakeholders within the property industry through the definition of a “property practitioner”, the composition of the Board focuses on the professional expertise and/or experience required. While such is important, it is critically important that the Board be representative of the various regulated sub-sectors of the property industry. ●● The limit placed by section 37(2) on the amount which may be paid from the Fund in respect of any category is unjustified and may lead to a loss of confidence on the part of the public in dealing with property practitioners. ●● Listed and unlisted property owners are already highly regulated. ●● Neither the EAA Act nor the Bill has provisions relating to exclusions from the Act. ●● Section 48(3) makes provision for the deemed approval of an application for a fidelity fund certificate. Notwithstanding the fact that the authority is supposedly compelled to issue the fidelity fund certificate to the applicant concerned under the circumstances set out in Section 48(3), the authority may nonetheless fail to do so. ●● The inspector is given the power to enter and inspect any business premises of a property practitioner without a warrant. Given the fact that certain property practitioners have multiple businesses, some of which are entirely unrelated to their business as a property practitioner, the inspector’s warrantless searchand-seizure powers should be limited to business premises. The Bill was introduced to the Parliamentary Portfolio Committee on 26 July 2018 in its original form, with little or no amendments or consideration given to the comments submitted by SAPOA. Best regards, Neil Gopal, CEO

SOUTH AFRICAN PROPERTY REVIEW

contents

February 2019

PROPERTY SOUTH AFRICAN

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

February 2019

REVIEW

The voice for the industry

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

One-on-one

Architect in the making: Khensani de Klerk

11:31 AM

Just as mathematical formulas are important to the integrity of

BY CREATING THE RIGHT SPACE, SOUTH AFRICANS WILL ALWAYS BE BREAKING NEW GROUND. View our portfolio of leading developments at abland.co.za

architectural design, so is analytical data important to the planning of future cities.

Architecture focus

SA Cities Network

Dr Geci Karuri-Sebina and Danga Mughogho on the State of City Finances 2018 report

CBRE and Excellerate Joint venture announced

Doing business in SA Focus on registering property February 2019

3 From the CEO 6 From the Editor’s desk 8 Legal update Some clarity on the implementation of land expropriation without compensation 12 Education and training Building capabilities of the property sector one student at a time 16 Joint venture Excellerating towards a common facilities management goal 20 Opinion Dynamic 2019 property market hinges on quality stock 22 One-on-one A need for greater understanding of how cities’ finances affect the economy 26 South African Cities Network The state of city finances 31 2018 review Lightstone reviews its 2018 findings and makes predictions for 2019 32 Architect one-on-one An architect (in the) making 36 Landscape architecture A tribute to Madiba 38 World architecture 10 hotly anticipated buildings set to be completed in 2019 40 World Architecture Festival Awards 1 000entries from 81 countries 41 Howmuch.net Visualising financial literacy rates around the world 42 Live-work-play How mixed-use precincts are benefiting inner cities 44 Doing business in South Africa Registering property 50 Off the wall What will life be like with 3D printers that can create anything? FOR EDITORIAL ENQUIRIES, email mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Taylor Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designers Eugene Jonck, Fanie van Niekerk Sales Pieter Schoeman: pieter@mpdps.com Finance Susan du Toit Contributors Justin Chan/www.architecturalrecord.com, Maud Nale, Nicholas Stopforth, Raul Amoros / howmuch.net, Samantha Bartlett, Tshepo Tshabalala, www.doingbusiness.org/southafrica, World Architecture Community, www.afritecture.org, Photography Mark Pettipher DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material. Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com

e: philip@rsalitho.co.za

SOUTH AFRICAN PROPERTY REVIEW

from the Editor’s desk

2019 gets under way It seems strange to me to be welcoming you as readers to 2019 in the February edition – but since this is our first issue of the year, it's only fitting

he December/January break may be a distant memory, but I’m very excited about the fact that the festive edition’s readership figures have by far exceeded our expectations. We’ve had 30 000+ page views, more than 870 new users, and an average read time of just over 10 minutes. What this means to us is that our content is engaging and retaining readers, which means our supporting advertisers are getting the best possible exposure to a unique and niche audience. You may notice we have added the tag line “The voice for the industry” to the front cover. This is a variation of SAPOA’s “voice of commercial property” slogan. SAPOA is committed to protecting the interests of the commercial and industrial property sectors in terms of ownership, management and development. SAPOA’s objectives are based on the principles of the free enterprise system as the only workable economic system, as well as the inalienability of property ownership – not only for its members but also for the future of South Africa and its competitiveness in the world arena. SAPOA encourages its members to share their expertise through active participation in the association. A forum allows members and non-members to respond to changes, decisions and legislation. With regards to legislative structures, SAPOA has fostered key relationships with the government and maintains a non-political bias. By setting quality standards, creating educational programmes and becoming involved in the collection and dissemination of property data and statistics, SAPOA is a source of information that’s useful not only to its members but also to the government at various levels and the industry as a whole. With SAPOA’s objectives in mind, the South African Property Review’s content is targeted at and relevant to the industry it serves. Every month we focus on particular sectors of the commercial property 6

SOUTH AFRICAN PROPERTY REVIEW

industry, we report back on legislation that affects both members and non-members, and we feature one-on-one interviews with interesting property professionals. As a “voice for the industry”, Property Review welcomes the opportunity to talk to our readers, and to get your stories out to your peers.

SAPOA’s aims and objectives include: ●● Issuing a clear position on matters relevant to the property industry where the interests of its members and the economy as a whole are impacted upon; ●● Providing a source of information for members and the government through collaboration, and the collection and dissemination of property data and statistics; ●● Enabling wider participation in the industry by ensuring historically disadvantaged members of the community become involved as owners, developers, employees and managers; ●● Providing professionally designed education programmes; ●● While remaining politically neutral, expanding contacts with the government at all levels to ensure our continued good relations and recognition as the authoritative voice of the commercial and industrial property industry.

In this edition, we have opened a dialogue with the South African Cities Network, who have graciously allowed us to print some extracts from their recently released State of City Finances 2018 report. We have also taken on transformation in the industry as a key editorial pillar. This month, we’re featuring a one-onone interview with an “architect in the making”, Khensani de Klerk. Towards the end of last year, the world’s biggest architectural awards festival – World Architecture Festival and Awards – was held for the 11th time in Amsterdam. It would be amiss of us not to bring you the winning architecture. Many of you have heard of artist Marco Cianfanelli, who’s been involved in many projects that combine architecture, art and public spaces. His epic sculpture Release, completed and unveiled in 2012, makes for a memorable inclusion in our magazine. It impacts and becomes part of the surrounding landscape as it visually shifts throughout the day, and is itself affected by the changing light and atmosphere behind and around it. A significant joint venture between CBRE and Excellerate was announced just as we were closing for the year, and I was invited to attend the official briefing that was held in January. This particular joint venture will definitely stamp its mark on facilities management in South Africa, and I look forward to following its progress as the year unfolds. 3D printing is entering our industry in more ways than one. From printing food to manufacturing spare parts – and perhaps one day even printing entire apartments, houses and offices – our “Off the Wall” feature this month gives you a glimpse of things to come. I hope you enjoy the read, and I look forward to engaging with you over the course of the year. Mark Pettipher, Editor and Publisher

MONEY TALKS. 83% of businesses use flexible workspace to cut costs. Itâ&#x20AC;&#x2122;s time to rethink the office.

CHOOSE A REGUS OFFICE TODAY.

Visit regus.co.za, download our app or call +27 21 300 2742 Offices / Co-working / Meeting Rooms

SOUTH AFRICAN PROPERTY REVIEW

legal update

Some clarity on the implementation of land expropriation without compensation Equitable access to land ownership and the protection of property rights against arbitrary state expropriation will always be a delicate balance. Any debate on these issues – the more so in South Africa, where there is an overwhelming need to expedite the land reform process – will always be controversial and complex

Review of the property clause The debate on the review of the property clause contained in Section 25 of the Constitution commenced in early 2018, when the National Assembly adopted a resolution in this regard. The main intention of the proposed review was to change the property clause to make it explicit that expropriation without compensation can be used to address skewed land ownership patterns. The review process was undertaken by a Constitutional Review Committee (CRC) and culminated in the adoption of the report by the CRC by both Houses of Parliament in early December 2018. The CRC called for a constitutional amendment to explicitly allow for the expropriation of land without compensation. During the final sitting of the National Assembly on 6 December 2018, a draft resolution was adopted for the establishment of an ad hoc committee, which will initiate and introduce legislation to amend the property clause. At this stage, it is still unclear what a redrawn property clause will look like, but it will most probably be known towards the end of March 2019, when this ad hoc committee will have to report back to the National Assembly. The debate and review process on the property clause has, so far, been mostly without any concrete proposals on how expropriation without compensation will actually be implemented in practice. From a legal perspective, it was therefore difficult to discern between the wide spectrum of comments and political noise made by stakeholders, and get clarity on what the road ahead would look like. This has, however, changed after the publication on 21 December 2018 of the Draft Expropriation Bill 2019 (Draft Bill) for public comment. 8

SOUTH AFRICAN PROPERTY REVIEW

The Draft Bill is available online at www.gov.za/sites/default/files/gcis_ document/201812/42127gon1409s.pdf. Written comments on the Draft Bill must reach the Department of Public Works no later than 60 days after publication.

High-level overview of the Draft Bill The Draft Bill can be seen as the key legislative tool to establish the process whereby the state is empowered to expropriate land for a public purpose or in the public interest. The preamble to the Draft Bill commences with a recordal of: ●● of the property clause as found in Section 25; ●● of the right to administrative action that is lawful, reasonable and procedurally fair (as envisaged in Section 33(1) of the Constitution); and ●● that everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court – or, where appropriate, another independent and impartial tribunal or forum (as envisaged in Section 34 of the Constitution). It is from the outset clear that the intention of the Draft Bill is to align the provisions of the current Expropriation Act, No. 63 of 1975 (Current Act), which will be repealed by the Draft Bill, with the provisions of the Constitution. Since the provisions of the Current Act are outdated and could be seen as being against the spirit of the Constitution, there should be no issue with this intention. The Draft Bill consists of nine chapters. The most important of these are most probably Chapter 2, which deals with the powers of the Minister to expropriate; and

Chapter 5, which deals with compensation for expropriation. A high-level discussion of some significant aspects contained in these chapters will follow below.

Powers of Minister to expropriate In terms of Chapter 2, the Minister of Public Works may, subject to the provisions of Chapter 5 (Compensation), expropriate property (as contemplated in Section 25) for a public purpose or in the public interest. It is notable that the expropriation power includes property in the widest sense and that it is not limited to land. Section 3(3) of the Draft Bill provides that the Minister’s power to expropriate applies to property “which is connected to the provision and management of the accommodation, land and infrastructure needs of an organ of state, in terms of his or her mandate”. This wording is not contained in Section 2 of the Current Act (which limits expropriation only for a public purpose) and the proposed Section 3(3) notably expands the Minister’s power to expropriate property. The Minister may also expropriate property on behalf of any organ of state and is also, subject to certain limitations, entitled to delegate or assign any power or duty conferred in terms of the Draft Bill to an official of the Department.

Compensation for expropriation The most significant section of Chapter 5 of the Draft Bill is Section 12(3), which provides that it may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to: ●● land that is occupied or used by a labour tenant (as defined in the

AUCTIONS

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

AUCTIONS

TENDERS

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

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

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

PROPERTIES SOLD Tiger Brands Meadowdale

SOLD FOR

48.3 Million

SS Federal Building Cape Town

ABSA House Cape Town

SOLD FOR

61.5 Million

87.1

Million

John Ross House Durban

SOLD FOR

Million

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

legal update ●● Land Reform (Labour Tenants) Act, No. 3 of 1996; ●● where the land is held purely for speculative purposes; ●● where the land is owned by a state-owned corporation or a state-owned entity; ●● where the owner of the land has abandoned the land; and ●● where the market value of the land is less than any direct state investment or subsidy in the acquisition and beneficial capital improvement of that land. Even though it is clear that expropriation with payment of nil compensation will not be limited to these five types of land only, it is now at least clear what types of land could be at risk. It is important to note that these exclusions only apply to land and not to other forms of property (for example, intellectual property or shares). Section 12(1) of the Draft Bill provides the way in which compensation for expropriation must be determined, and is a verbatim repeat of Section 25(3) of the Constitution. Section 25(3) provides that the compensation must be just and equitable and reflect an equitable balance between the public interest and the expropriated owner, having regard to all relevant circumstances, including: ●● the current use of the property; ●● the history of acquisition and use of the property; ●● the market value of the property; ●● the extent of any direct state investment or subsidy in the acquisition and beneficial capital improvement of the property; and ●● the purpose of the expropriation. There should be no issue with these principles contained in the property clause, but it is important to note that this is a complete departure from the provisions of Section 12 in the Current Act. In terms of Section 12(1) of the Current Act, the existing determination 10

SOUTH AFRICAN PROPERTY REVIEW

of compensation is based on, among other things, the aggregate of: ●● the amount which the property would have realised if sold in the open market by a willing seller to a willing buyer; and ●● an amount equal to make good any actual financial loss caused by the expropriation. Section 12 of the Current Act also contains a proviso that if there is no open market, compensation can be determined on the basis of the amount it would actually cost to replace the improvements on the property, or in any other suitable manner. It is significant that the proposed Section 12 of the Draft Bill includes “market value” as one of the factors to be taken into account. This is not a defined term and will definitely lead to uncertainty of interpretation.

Expropriation process Apart from generally being streamlined, the expropriation process as contained in Chapter 4 of the Draft Bill is not substantially dissimilar to the process that is contained in the Current Act. It is, however, important to take note of the following: ●● A notice of expropriation must in terms of Section 7(1)(a) be served on the owner and “any known holder of a right in the property”. Examples hereof would be holders of servitudes or leaseholds; it is required that an owner must also identify any unregistered rights holders such as tenants; and ●● The time periods in the process have been reduced – for example, the 60 days that an owner has to respond to an expropriation notice in terms of the Current Act has been reduced to 30 days. It is commendable that time periods are reduced to speed up the process, but the question should be posed whether it will be practical to implement this. Another example that may be difficult to implement is that the expropriating authority must, within 20 days after

receiving the response from an owner, either accept the amount of compensation or offer another amount as compensation. If parties are unable to agree on the amount of compensation, Section 21 (Chapter 6) makes provision for a mediation process and referral to a court to decide or approve just and equitable compensation. As this is an important affirmation of the rule of law in the expropriation process, this is commendable. However, the nature of the proposed mediation process is not defined, and time periods are not included, all of which may lead to uncertainty.

General comments The Draft Bill is based on the wording of the property clause contained in Section 25 of the Constitution. Any recommended changes to the property clause by the CRC may have a direct effect on the wording contained in the Draft Bill. Comments on the Draft Bill may therefore at this stage be premature, and comments may have to be reconsidered in time, all of which leads to continued uncertainty on land reform. With this in mind, one has to ask why the Draft Bill was published for comment prior to the finalisation of the review process, and why comments must be made before the CRC reports back to Parliament. Nevertheless, all stakeholders will hopefully be able to comment timeously, and all other possible concerns will hopefully be taken into account. It is, however, to be welcomed that there is at least some clarity on the way forward and how expropriation will most probably be implemented in the future. Certainty on the future implementation of expropriation of land without compensation will only be achieved once the property clause has actually been amended.

Johan Coetzee

Head of Real Estate Team Fasken Attorneys Sandton e: jcoetzee@fasken.com

THE COMPLETE HYGIENE AND FLOORING SOLUTION

CONTACT US SERRA SERVICES (Pty) Ltd Email: info@serra.co.za Tel: +27 (0)11 334 7447 Fax: +27 (0)11 334 7165 Web: serra.co.za & serramat.co.za Postal: PO Box 1225, Glenvista, 2058, South Africa Physical: SERRAÂ® PARK @ Meadowbrook Estate 14 Lascelles Road, Meadowbrook, Germiston, 1401

SOUTH AFRICAN PROPERTY REVIEW SERRASOLUTIONSSA

SERRA_SOLUTIONS

education and training

Building capabilities of the property sector one student at a time Nomvula Pooe’s property career spans more than 18 years. She served as the Chairperson for SAPOA’s HR, Education, Training & Development Committee from 2011 to 2016 before joining the SAPOA Bursary Fund as a trustee member. Since November, she has been sharing her expertise and experience as the Chairperson of the SAPOA Bursary Fund By Maud Nale

he SAPOA Bursary Fund has funded more than 100 students over the past six years and Chairperson of SAPOA’s HR, Education and Training Committee Nomvula Pooe hopes the growth trend will continue. “Ensuring that we produce graduates of the highest calibre, capable of tackling the workplace environment with ease, is paramount to the success of the Fund,” she says. The point of the Fund, according to Pooe, is to ensure it builds capabilities for the property sector in terms of the skills of the people coming in, with a strong focus on previously disadvantaged individuals. “The SAPOA Bursary Fund is well-monitored, and there are strict rules to ensure that sound financial and risk governance procedures are adhered to, to the benefit of the organisation and its member companies.” SAPOA partnered with Services SETA from the 2016 academic year, offering bursaries to additional students, resulting in an increased pool of financial assistance. “We are honoured have partnered with SSETA on this opportunity to educate future generations,” says Pooe. The Fund’s trustees are not oblivious to the many challenges students face on and off campus. Over the past two years, the Fees Must Fall protests have impacted students’ lecture attendance and overall wellbeing, and threatened to derail their progress. “Through regular contact with students, the trustees have been, and will continue to be, proactive in managing the situation should it flare up again, ensuring problems that could affect performance and have an impact on our funding are reduced, and that students get the support they need,” says Pooe. 12

SOUTH AFRICAN PROPERTY REVIEW

Nomvula Pooe

The Fund’s mentoring consultants, Excel at Uni, have been a pivotal link in bridging the gap between the Fund and bursars. “We get a quarterly report from Excel at Uni on student progress, and are able to detect red flags early in the process and manage these accordingly,” says Pooe. Our partnership with them is critical to looking after the interests of students.” Since 2013, 50 students have graduated from the Fund, and many have taken on meaningful roles within our member companies. “The bursars like playing a role within SAPOA,” says Pooe. “Some have expressed interest in giving back by mentoring those who are still studying. We have received positive feedback from many students, expressing gratitude for SAPOA’s intervention in assisting them to receive a tertiary qualification.” Strengthening the relationships with sponsors and Services SETA is high on the Fund’s priority list. “We greatly appreciate the support from our current sponsors – Services SETA, Abland, Hyprop, Growthpoint Properties, Octodec and Siyakha 1 Edu Trust – without whom our efforts to increase the pool of property professionals would be impossible.”

The trustees’ short-term goal is to grow the Fund, says Pooe. “It is our wish for the Fund to consist of at least 70% of member companies, all participating and growing it.” And from the trustees’ perspective, participation is not limited to financial backing. “The Fund is always searching for like-minded professionals to be part of the committee, coming up with ideas on how to expand our reach. “By partnering with SAPOA, the benefits to your organisation are endless, not only from a B-BBEE scorecard and corporate social responsibility perspective, but also from knowing you’re contributing to the skills capabilities and growth of the country,” she says. “In a stretched economy, commit to sponsor one student; expose them to your business so he or she becomes an ambassador for your organisation at the tertiary institution. Add value by assigning work to this student that will enhance their level of understanding of the property industry and allow them to assist you in meeting your company objectives. See your sponsorship as a short-term investment that will deliver long-term dividends.” Pooe is passionate about HR, and her expertise in the property sector enables her to assess the needs of both employers and employees in this field. She runs her own consultancy, which looks after best-practice learning and performance fundamentals of property professionals. “I believe HR best practices can play a vital role in changing the property industry to align with best human capital practices,” she says. “It is important that the sector stays agile, and aligns itself to international human capital practices.” To find out how you can play a role, e-mail bursaryfund@sapoa.org.za.

14 JU

9-2 019 19 6 50 YEA

Y 201 9 > 2 W E

SAPO P

PDP

L JU

A DYNAMIC & REFRESHED COURSE FOR THE WORKING PROFESSIONAL COURSE PROFILE & OBJECTIVES

SOUTH AFRICAN PROPERTY REVIEW

AREAS OF STUDY

QUALIFY FOR CPD POINTS TO ATTEND THE PROPERTY DEVELOPMENT PROGRAMME AT A 15% DISCOUNTED RATE!˚

DELEGATES QUOTES

GENERAL INFORMATION

COURSE FEE

SOUTH AFRICAN PROPERTY REVIEW

joint venture

Excellerating towards a common facilities management goal Plans are set for joint-venture operations between worldwide real estate services leader CBRE and South Africa’s leading facilities management company Excellerate to begin in April Compiled by Mark Pettipher

FROM LEFT Tony Brearley (CBRE), Tshinyi Magoro (CBRE), Marna van der Walt (Excellerate), Andreas Pudach (CBRE) and Gordon Hulley (Excellerate)

t a press meeting in Johannesburg, and following an announcement in December last year, we were told of the joint venture – CBRE Excellerate – which will involve a merger of CBRE’s facilities management operations in Africa and the Middle East with several of Excellerate’s businesses, including corporate real estate services, facilities management, valuation and project management services, as well as property management services outside of South Africa. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services; and development services. Marna van der Walt, Chief Executive Officer of Excellerate Property Services, pointed out that Excellerate’s property management operations in South Africa and its soft-services business, which provides cleaning, security and catering

SOUTH AFRICAN PROPERTY REVIEW

services across Africa, will not be part of the joint venture. “Our partnership with CBRE aligns with our core values,” says Gordon Hulley, Chief Executive Officer of Excellerate Holdings. “By structuring our relationship as a joint venture rather than an alliance, we will pool our respective skills and expertise and foster intense collaboration, which will drive superior client outcomes.” “CBRE’s aspiration is to be recognised as the largest – and leading – full-service real estate services and investment organisation in the world,” says CBRE’s President for Growth and Emerging Markets Tony Brearley. “Merging with Excellerate will allow us a greater footprint not only in South Africa and sub-Saharan Africa but also on the rest of the continent.” The joint venture (JV) fits in neatly with Excellerate’s drive to become the leading – and most trusted – provider of integrated property services in the Middle East and Africa. It already has a reputation for delivering on its core service values.

The JV will hone the focus on selfdelivery and further mitigate the risks surrounding supply chain management. By utilising the best information technology in the world, the combined CBRE and Excellerate services will ensure forward thinking, quality and excellence in client servicing. CBRE will continue to operate a wholly owned advisory-services business in the Middle East and North Africa. As it stands, Excellerate – which is based in Johannesburg – provides property services for property investors and occupiers across sub-Saharan Africa and the Middle East. As a JV in South Africa, Excellerate will hold 51% ownership, retaining its enviable B-BBEE Level 1 status. The company also boasts a procurement level of 135% and 66% black ownership (including 17,92% black female ownership), and it is proud to be an empowering supplier. Stepping out into sub-Saharan Africa as well as into the Middle East and North Africa, CBRE will hold the 51% share of the business. A separate board is being

joint venture

CBRE: The global market leader

CBRE: THE GLOBAL MARKET LEADER Global Coverage $337.6bn

480

TRANSACTION ACTIVITY

OFFICES

110

OF THE FORTUNE 100

COUNTRIES

$6.7Bn

150K

LEASES MANAGED

DEVELOPMENT PROJECTS

5.5B

80K

SQUARE FEET MANAGED

EMPLOYEES

CBRE primary operating units Advisory services

Global workplace solutions

Real estate investments

●● Advisory & transaction services ●● Asset services ●● Capital markets ●● Local project management ●● Valuations

●● Facilities management ●● Advisory & transaction services (GWS accounts) ●● Project management (GWS accounts) ●● Management consulting

●● Investment management (Global investors) ●● Development services (Trammell Crow Company) ●● Flexible space solutions (Hana)

set up, made up equally of Excellerate and CBRE members; this board will be tasked with setting of strategy and policy as well as operation procedures. Brearley projects that the combined business size of the JV would amount to about US$100-million and create opportunities for 900 new staff members. “The crossover synergy of our combined blue-chip portfolio gives us greater diversity; it allows for greater and more substantial experience, and enables us to open better self-delivery

services,” says Andreas Paduch, CBRE’s Head of Account Services, Transaction Management, and Advisory and Transactions for Europe, the Middle East and Africa. “We know that this is something our clients are actively seeking – they want to know that there is ownership when it comes to delivering on our promises.” “There will be greater demand for occupier services,” says Brearley. “At the same time, the African listed sector is growing. This is where we have strength

– in both sectors, our combined expertise will give us ‘critical mass’. As such, we will focus our attention there.” “As an empowering service provider, we as a JV will be looking to grow strong teams locally,” says Van der Walt. “Local offices will be run by local resources, who will be trained and encouraged through various development programmes that will utilise best-inclass technology.” “The JV will give us the broader reach into Africa that CBRE has been looking to SOUTH AFRICAN PROPERTY REVIEW

joint venture

Where Excellerate serves WHERE EXCELLERATE SERVE

EXCELLERATE PROPERTY SERVICES

South Africa (22+) Cote d’Ivoire Ghana Kenya Lesotho Namibia Nigeria Swaziland Tanzania Zambia Zimbabwe

Geographic coverage 24,000 people

USD12,6bn in assets

2,300

EXCELLERATE SERVICES OFFICES

buildings

21,250 tenants

14million m2

30+

under management

OFFICES THROUGHOUT AFRICA, UAE & UK

345

retail centres under management

PRIMARY OPERATING UNITS

Morocco (in process) United Arab Emirates United Kingdom LEGAL ENTITIES

Botswana Cameroon DRC Gabon Senegal Uganda

Excellerate primary operating units

Investor Services

• Property management Investor services • Asset services ●● Property management • Retail consulting ●● Asset services Riskconsulting management ●•● Retail ●● Risk management • Strategic leasing ●● Strategic leasing Alternative income ●•● Alternative income

Occupier Services

Integrated Services

• Facilities management Occupier services

• Security Integrated services

• Advisory & transaction

• Cleaning & Hygiene

●● Facilities management services (GWS accounts) ●● Advisory & transaction services • (GWS Project management accounts) (GWSmanagement Accounts) ●● Project accounts) consulting • (GWS Management ●● Management consulting • ● Capital Capital markets ● markets ● • ● Valuations Valuations ●● Research

●● Security ●● Cleaning & hygiene •●● Pest Parkingcontrol ●● Pest control • Canteen & Catering ●● Canteen & catering

• Parking

• Research

invest in,” says Brearley. “As an investment, the JV will give us greater opportunities and say on how to develop strategy – something an affiliation does not cater for. Through this relationship, we are able to overcome challenges that are unique to Africa – such as geopolitical 18

SOUTH AFRICAN PROPERTY REVIEW

20 stability and fast-changing country legislation – and help develop mature and transparent property sector solutions. For us to grow as the market matures and as our future clients demand it is only possible if we can rely on trusted partners on the ground.”

“Our unique selling point is our combined size, the scope of blue-chip client experience that we are able to offer, and the greater scope that we (as facilities managers) can bring to the region – and in the Middle East and in Europe as well,” says Van der Walt.

opinion

Dynamic 2019 property market hinges on quality stock If the thousands upon thousands of words penned in recent months about general sentiment in the South African property sector could be summarised in just a single one, the winner by a country mile would be “CAUTIOUS” – in capital letters By Samantha Bartlett

hat’s according to High Street Auction Lead Auctioneer and Director Joff van Reenen, who says industry leaders seems to be couching their words in a packing peanut panacea of caution. But the truth is that if companies come to the table with desirable stock, interested buyers with means are still out there. In fact, they never went away. “Detractors might at this juncture accuse us of wilfully ignoring the indices,” he says. “The fact is, we’re not, and there’s no getting away from the reality of the macro-economic whip South Africa has felt for some time. “Is the size of the investor pie smaller than it was three years ago? Yes, it probably is overall – but it has more to do with a watch-and-wait eye on the long game and a slight liquidity dip than a death of potential spending power. “The thing is, savvy investors are acutely aware the current market conditions are likely to deliver sound long-term returns if they spend wisely, so they are spending – they’re just not flashing their cash. “It therefore doesn’t take a rocket scientist to inject activity into the property market at the moment: just give buyers precisely what they want and give it to them at a fair market price. Everyone is open to negotiation right now.” Van Reenen says it sounds “too simple by half” – but the proof is in returns. “In our final auction of 2018 in late November, while the country was apparently still licking its wounds from its recent emergence from a technical recession, we held what was arguably our busiest sale ever, with property worth R1,2-billion on the offer,” he says. 20

SOUTH AFRICAN PROPERTY REVIEW

High Street Auction’s Joff van Reenen

“Our sales floors in both Johannesburg and Cape Town resembled Piccadilly Circus at rush hour, and we live-streamed to bidders across the globe.” So what do buyers want? According to Van Reenen, the list in 2019 will be as long and varied as it was last year, because at the moment investment is going into quality rather than quantity. There are, however, some stand-out sectors worth a special mention. One of them is retail, on which hundreds of millions was spent last year. “The past 12 months showed a significant decline in new gross lettable retail areas, and that’s unlikely to change in 2019 – which is good news for existing retail precincts and those who want to buy them,” he says. “It’s also well known that South Africa already has one of the highest ratios of retail space per capita in the world – largely driven by decentralisation – so it’s not unwise to slow the development of new greenfields

precincts while we face this period of economic recovery. “Last year, retail developments in strong catchment areas literally flew off the block,” he says. “As the property funds consolidate further, we will see more neighbourhood centres, community shopping centres and regional malls coming up for sale in 2019.” According to Van Reenen, there’s also a strident appetite for quality high-end residential stock: “We sold a number of properties at prices well north of R20million last year, including the castle at Noetzie – and at the last auction of 2018, an all-out bidding war saw a luxury mansion in Sandhurst change hands for R38,325-million.” P-Grade commercial developments in Gauteng and on the KwaZulu-Natal North Coast, in particular, are also in demand; so are modern industrial premises across the country as the need for distribution hubs grows. The country has just seen a return to positive GDP growth (2,2% in the third quarter), and in December there was an increase in the South African Chamber of Commerce & Industry Business Confidence Index for the third consecutive month. January also saw the Monetary Policy Committee leaving the repo rate unchanged. “That’s good news for South Africa and good news for the property sector going forward,” says Van Reenen. “Willing investors are out there; perhaps it’s time to park caution and instead focus on giving buyers what they want. “If the property industry consistently offers the best stock and puts a fair price on it, the numbers will follow. It’s really not rocket science at all – just good business.”

HEREâ&#x20AC;&#x2122;S TO THE BUILDER IN YOU.

SOUTH AFRICAN PROPERTY REVIEW 60 www.afrisam.com

Creating Concrete Possibilities

PROMISE_13397/E

IT TAKES MORE THAN CONCRETE TO BUILD YOUR VISION.

one-on-one

A need for greater understanding of how cities’ finances affect the economy Property Review talks to Dr Geci Karuri-Sebina and Danga Mughogho about the South African Cities Network’s recently released State of City Finances 2018 report. The theme of this year’s report is that citizens and cities are in financial crisis. Immediate challenges to municipal financial health include inadequate finance for delivering required infrastructure and services, and the affordability of municipal services for consumers in a worsening macro-economic environment. An ongoing question is, “Are our municipal managers and departmental heads qualified enough to help stimulate local economies through municipal initiatives?” By Mark Pettipher

Dr Geci Karuri-Sebina is an Associate of the South African Cities Network, a visiting research fellow with the Wits School of Governance, and the national organiser of the Civic Tech Innovation Network in South Africa. Her experience and interests span a range of development foresight, policy, innovation and practice topics, particularly relating to cities and local systems. She has more than two decades of working and publishing experience in these fields 22

SOUTH AFRICAN PROPERTY REVIEW

he first question we pose to Dr Geci Karuri-Sebina is related to private sector involvement. With so many of our municipalities in financial crisis, how can the private sector circumnavigate the endemic problems within them? “In political terms, municipal crises are systemic and not simply a party political problem,” she says. “Some of the problems are entrenched in the ways in which municipalities work and in how they are financed and governed. “Taking the perspective that the issues are systemic, the solutions reside in the deep reforms – or even transformations – that are needed in order for cities to climb out of the crisis they find themselves in. Some cities are just not coming right despite the party that holds them – if that is what one thought the problem was. “The State of City Finances 2018 report helps us to see that our cities of the future require the public finance and administration systems to adopt more enabling and responsive approaches to the realities and dynamics of the change that is occurring, and take with that a longer-

term view of the way that cities are to be sustainably financed. “The report thus indicates that there must be a conversation about the connection between the economy and finance, and as result a deeper reform is required. “Municipal workers and employees retain their jobs regardless of which party happens to be in power. Does getting the administration to work more efficiently make for a better future? I feel that this is necessary – but by itself, it is not enough. Far from it. “We need to look at how the financing equation will need to change or diversify in order to improve services and expectations.” Given the current balance of fiscal redistribution (the proportion of the national fiscus that gets apportioned back to the largest municipalities), the South African Cities Network’s position has been that there is a need for an alternative financing model if our cities are to be effectively and sustainably financed. According to Karuri-Sebina, “If you want an inclusive city, you cannot continue to give metros so little funding.

one-on-one A more balanced and fair redistribution of cash is needed in relation to where the population and the economy is.”

Beyond public money Let us answer a fundamental question: where do municipalities get the bulk of their money from? “An obvious answer is, ‘from property’ – and from the utilities that are provided and delivered as well as from the rates and taxes related to those utilities,” says Karuri-Sebina. “The municipalities also need to expand their tax base. “Putting it crudely, all people who live in our cities and towns are consumers. We all pay to the national base. But there is a limit to taxation. Individual households are already being taxed through PAYE, VAT, rates for water and electricity, and other levies – so where can additional income come from? “The economy needs to be stimulated – which once again leads us to the question of how municipalities can encourage the private sector to invest productively, and avoid developments that are simply ‘white elephants’ or islands and ‘ghost towns’, as we have seen elsewhere. There is an economic role that the municipality needs to play which goes significantly beyond only ‘poverty relief’ projects.” A positive stimulus and planning for inclusive economic growth is being formulated utilising the Integrated Urban Development Framework (IUDF), a South African government policy initiative that’s being coordinated by the Department of Cooperative Governance and Traditional Affairs (COGTA). The IUDF website (iudf.co.za) states that “The IUDF seeks to foster a shared understanding across government and society about how best to manage urbanisation and achieve the goals of economic development, job creation and improved living conditions of people living in South Africa.” COGTA’s vision is to build a functional and developmental local government system that delivers on its Constitutional and legislative mandates within a system of cooperative governance.

Some of the questions being asked are; a. Does a municipality have

an economist in its planning department, and do they understand what constitutes the local economy? b. What are the municipalities doing to enable the economy? c. How do their policies impact on the local communities? d. Does the municipal manager understand what can be done to facilitate a developmental and inclusive economy? e. Are the institutional arrangements working efficiently? f. What is being done to develop trust between the public and the municipalities? To develop a greater understanding of the endemic problems that many cities and municipalities face, the South African Cities Network hosts a series of quarterly infrastructure dialogues in collaboration with the Development Bank of South Africa, the Department of Planning Monitoring and Evaluation, and the Economic Development Department.

A positive stimulus and planning for inclusive economic growth is being formulated utilising the Integrated Urban Development Framework, a South African government policy initiative that’s being coordinated by the Department of Cooperative Governance and Traditional Affairs “The infrastructure dialogues provide a forum in which the government, the private sector and various civil society stakeholders can share perspectives on the infrastructure sector,” says Danga Mughogho, South African Cities Network’s Programmes Manager. “What’s emerged quite clearly from these dialogues is that the government alone cannot grow and

develop the country through investing in infrastructure. All stakeholders need to play their part.” (Source: Infrastructure Dialogues 2017-18 Annual Compendium. SACN, 2018: 1)

“Cities need funds to deliver services. The main source of city revenue is property rates; they also generate revenue from charges on services provided, such as electricity, water, sanitation and refuse removal. Phrasing the question as a ‘quid pro quo’ suggests that only those people who own property and earn enough to pay for city services deserve these services” “For collaboration to work, all parties involved – government, business and labour – must have shared interests and trust. Government needs to understand that its role is to enable the economy and wider participation, while the private sector is the developer.” (Source: Infrastructure Dialogues 2017-18 Annual Compendium. SACN, 2018: 4) There has been some discussion around this topic. We don’t mind more taxation – but what is the quid pro quo, what are the benefits, and how are services going to be improved and filtered down to the man in the street? “Cities need funds to deliver services,” says Mughogho. “The main source of city revenue is property rates; they also generate revenue from charges on services provided, such as electricity, water, sanitation and refuse removal. Phrasing the question as a ‘quid pro quo’ suggests that only those people who own property and earn enough to pay for city services deserve these services. “The reality is that cities have to provide services as best they can to all residents within their jurisdiction. This requires tough choices and decisions – SOUTH AFRICAN PROPERTY REVIEW

one-on-one and not everyone will be happy with either the level or the quality of the services they feel they have received. “Having said that, cities can – and should – do everything in their power to address concerns about service delivery from all residents.” Some say that the city narrative needs to be changed. Urban regeneration and planning need to be stepped up in light of many rural people migrating to the country’s cities, which could result in a greater development and prevalence of “informal townships” – or, at the very least, the expansion of existing “informal” settlements. “There is a crucial need for cities to make sense of their real economies – and this includes the informal economies that have grown and that make up a significant part of the productive and employment base of our urban economies,” says KaruriSebina. “But this economic segment has tended to be treated as a nuisance and criminalised. “The South African Cities Network has recently been collaborating with the South African Local Government Association (SALGA) project with regards to how the local government can better understand and enable the informal economy. This has been a major gap.”

“Treasury and the development financing institutions have been considering approaches such as land value capture, where greater public benefit can be derived from increasing property values. Cities and their financiers are going to be seeking broad-based infrastructure projects and investment opportunities that will encourage economic growth and stimulate the economic participation of their local communities”

SOUTH AFRICAN PROPERTY REVIEW

Danga Mughogho is the Programmes Manager for Well Governed Cities at the South African Cities Network, focusing on the management of municipal finances, developing human capacity in the public sector and the participation of vulnerable communities in municipal governance. Danga has more than 20 years of experience in the private and public sector, most recently as an independent consultant in democratic governance.

SALGA is an autonomous association of all 257 local governments in South Africa, with one national and nine provincial offices they are mandated to support local government. It has a clear and strategic role to play in representing the local governments’ interests within the system of government as a whole, as well as supporting its members to fulfil their developmental obligations. As a full partner in government, SALGA is expected to be an active participant in the intergovernmental relations system, to provide common policy positions on numerous issues, to voice local government interests, and to provide solutions to the challenges facing local government more generally. SALGA was instrumental in creating the South African Cities Network to focus on urban work, and still features in the South African Cities Network’s leadership structure. There is frequent collaboration between the two bodies on common research projects, such as the local government informal economy policy project. SALGA also plays a broad policy advocacy role based on the intelligence that the two parties are collectively bringing about more effective local governance systems. “In the cities of the future, the financing is going to have to be more diversified,” says Karuri-Sebina. “The private sector will play an ever-increasing part. This is not just a matter of the old privatisation debates – it’s more to do with practical finances that are more directly related to local economies and the forming of more and more innovative public-private partnerships. “The Treasury and the development financing institutions have been considering approaches such as land value capture, where greater public benefit can be derived from increasing property values. Cities and their financiers are going to be seeking broad-based infrastructure projects and investment opportunities that will encourage economic growth and stimulate the economic participation of their local communities.”

EARLY BIRD REGISTRATION NOW OPEN!

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

Previous Keynote Speakers >>

PRAVIN GORDHAN

MMUSI MAIMANE

JUSTICE ZAK YACOOB

THABO MBEKI

IMAN RAPPETTI

THULI MADONSELA

JULIUS MALEMA

GERRIE NEL

JEREMY CRONIN

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

SOUTH AFRICAN PROPERTY REVIEW

South African Cities Network

The state of city finances The recently published State of City Finances Report is one of the flagship publications of the South African Cities Network. It reports on the finances of the nine largest cities in South Africa: Johannesburg, Cape Town, eThekwini, Ekurhuleni, Tshwane, Nelson Mandela Bay, Buffalo City, Mangaung and Msunduzi. The 2018 edition is the fourth State of City Finances Report, following previous issues in 2011, 2013 and 2015

he theme of the 2018 publication is that cities have to address the systemic problems that affect their ability to achieve the policy goal of developmental local government. The financial function should enable cities to realise spatial transformation, meaning municipal budgets should be aligned with policy, and urban planning should reflect that orientation. Cities need to find a way to bridge the capital funding gap that prevents them meeting the infrastructure requirements of a steadily increasing urban population. To increase own revenues, cities can – and should – implement some of the alternative financing solutions that have been suggested. Cities also need to think of innovative ways of tackling the growing challenges to urban finances posed by the diversification of the energy sector and the growing impact of climate change.

1 The changing state of city finances

Tepid economic growth and rising unemployment directly affect city residents and businesses, and their ability to pay municipal bills. With the deteriorating national fiscal position, cities will need to rely more on their own revenue sources. City revenues appear to be quite resilient, growing at an average annual rate of about eight percent, and most cities collect within five percent of their originally budgeted revenue. However, most of the cities increased their provisions for debt impairment, indicating an expected deterioration in their ability to collect revenue. Own revenues make up more than 75% of total income, with the main sources being property rates and service charges. Of concern are the rapid increases in bulk tariffs, which are squeezing out the surpluses that cities have historically used to cross-subsidise other services; the low level of expenditure on repairs and maintenance of infrastructure; and the underspending of city budgets – cities spent on average 84% of their capital budgets in 2016/2017 compared to 94% in 2013/2014. Another concern is that between 2013/2014 and 2016/2017, the growth in employee costs outstripped the growth in number of employees in nearly all the nine cities. In addition, all the cities (except for Tshwane) had a worse cash position in 2016/2017 than in 2015/2016. Positive developments include the increase of internally generated and borrowed funds by smaller cities to finance capital expenditure, reducing their reliance on national transfers; and sound management of borrowing across the nine cities, as indicated by long-term liabilities growing at a similar rate to that of own revenues. None of the cities received 26

SOUTH AFRICAN PROPERTY REVIEW

a clean audit in 2016/2017, although the new administrations (elected following the 2016 elections) have taken active steps to investigate suspect contracts entered into by previous administrations. It is too early to assess the impact of the change in city administrations – the 2017/2018 annual financial statements and audit reports will provide an assessment of these administrations’ first “full year” at the helm.

Key messages ●● City revenues appear to be quite resilient, growing at an average annual rate of about eight percent and with collection rates of about 95%, although most cities have increased their provisions for debt impairment. ●● The rapid increase in bulk tariffs is squeezing out the surpluses that cities have historically used to crosssubsidise other services, while cities are underspending on repairs and maintenance and their capital budgets. ●● Only with the 2017/2018 financial statements and audit reports will it be possible to assess the impact of the new administrations elected in the 2016 local government elections.

2 Sustainability and equity: the tariffs story

Each city faces unique challenges in structuring its tariffs to ensure the municipality is funded, while keeping municipal bills affordable for the full spectrum of ratepayers and customers. The nine cities may have different tax and tariff strategies that respond to the different mixes of business and domestic customers, and household incomes, but they share some common characteristics. As the 2015 State of City Finances Report noted, the unaffordability of municipal bills is a threat to the sustainability of city finances. Between 2015 and 2017, the average cost of municipal bills for the different service packages grew annually by between 1,19% and 2,13%, compared to 5,1% and seven percent between 2010 and 2014. Increases in bulk tariffs are driving most of the increases in municipal bills; between 2015 and 2017, higher electricity and water costs accounted for 73% of the growth in municipal bills. Despite a slower real growth in cost, municipal bills remain unaffordable for the poorer. An affordability analysis, which used an affordability threshold of 10% maximum of household income spent on tariffs, found that most Type A and B service packages are unaffordable, supporting the finding that cities

South African Cities Network have generally regressive tariff structures. This means that municipal bills account for a proportionally greater share of the income of poorer households than of wealthier households. Flat-rate connection and/or service fees are the main reason that bills are regressive. Ekurhuleni has the most progressive tariff structure, largely because the city’s electricity tariffs’ stepped structure increased the cost of the Type D service package. Cities could possibly improve the progressiveness of their municipal bills through seemingly simple changes that would nevertheless require greater administrative capacity. For instance, they could eliminate basic levies or monthly connection fees (especially to lower-income households), have inclining block tariffs that increase progressively (especially for very high levels of consumption) and offer special service packages to indigents (provided that consumption is capped). However, cities have no control over the increases in electricity and water charges, which are set by national government. These increases are not only making municipal bills unaffordable, but also constraining the ability of cities to fund services that do not appear on municipal bills, such as roads, public transport, environmental health and safety, storm water management and public parks. A national debate is needed on whether national and provincial governments are leaving sufficient tax room to enable local government to raise enough revenue.

Key messages ●● Between 2015 and 2017, increased electricity and water costs accounted for 73% of the growth in municipal bills, but real growth in the cost of municipal services has slowed. ●● Most metros have regressive tariff structures, i.e. households with lower incomes pay a proportionally greater share of their income on tariffs than those with higher incomes. ●● To improve the progressiveness of bills, cities can eliminate basic levies or monthly connection fees, and make use of inclining block tariffs. ●● A debate is needed about whether or not national and provincial government are leaving sufficient tax room for local government to raise revenue to fund services such as environmental health and safety, storm water management and public parks.

3 Financing spatial transformation

South Africa’s urban agenda, expressed through the Integrated Urban Development Framework (IUDF), is premised on spatial transformation through densification. However, although the policy promotes compaction, the over-reliance on property rates as the primary discretionary revenue source for municipalities promotes sprawl. Property rates may represent a good local tax (being relatively stable and non-distortionary, and inherently

fair), but they also drive a perverse incentive to facilitate new peripheral development. Property rates contribute on average 16,8% of total revenues and 22,4% of own revenues in South Africa’s metros. Municipalities can increase the revenue from property rates by rezoning properties and land parcels to a higher cent-in-therand rate. Such increases are greatest off a low base, as when agricultural land is rezoned. Hence cities prefer greenfield development, most often resulting in sprawl, as the evidence shows; there is an inherent contradiction between compact cities and the financial incentive for municipalities to promote greenfield development. The contradiction between policy intent and the incentives created by property rates as the core source of local government revenue needs to be addressed. The over-reliance on property rates must be included in any investigation of alternative financing mechanisms for municipalities. The financing of spatial transformation can no longer be seen as something that is separate to the core revenue model of cities. An alternative revenue model is needed that will reward cities for developing and densifying brownfield sites and restricting greenfield developments. This will require finding ways of bridging the gap between financial practitioners and spatial practitioners.

Key messages ●● South Africa’s national urban agenda prioritises urban densification – but the municipal revenue model, which is dependent on property rates, incentivises urban sprawl. ●● The gap between city finance (core revenue model) and spatial transformation needs to be bridged, to ensure that the desired spatial objectives are incentivised and built into the day-to-day running of cities. ●● While property rates are a good local tax and should remain, an alternative revenue model is needed that rewards cities financially for developing brownfield sites and restricting peripheral greenfield development.

4 The growing funding gap

Cities are the engine of growth in the South African economy, but their budgets are under pressure. With rapid urbanisation, demand for services has risen exponentially, but the revenue sources available to the cities are insufficient to cover their core expenditure mandates. Given the current economic and demographic outlook, this funding gap is likely to grow over the next 10 years. While metros continue to generate surpluses on their operating accounts, they do not have enough actual revenue to fund capital expenditure, even after grants from national treasury are taken into account. Metros have a funding gap of between 10% and 38% of capital expenditure needs. In 2017, this funding gap was estimated at R18-billion and projected to grow to R83-billion by 2026 – a total gap of R569-billion over the next 10 years. SOUTH AFRICAN PROPERTY REVIEW

South African Cities Network The funding gap is the result of several factors, including: ●● Unfunded mandates where cities incur expenditures on functions for which they do not receive revenues, e.g. healthcare and libraries. ●● Expenditure inefficiencies, for example losses through non-revenue water. ●● Inadequate transfers from national government. ●● Insufficient fiscal efforts by metros, resulting in a failure to maximise own revenues. To close the funding gap will require many interventions, some of which are within the metros’ control while others fall within national government’s purview. Cities can improve expenditure efficiency and fiscal effort, and increase revenue extracted from city services and assets, including increased borrowing. National government may need to make policy changes in terms of the functions of metros, increasing transfers or introducing a new revenue source for cities. It is essential to close the gap for cities to continue to contribute to the country’s economic growth.

Key messages ●● Metros have a funding gap of between 10% and 38% of their capital expenditure. ●● Unless this funding gap is closed, metros will not be able to meet their core mandates over the medium to long term. ●● Cities can – and should – take steps to close the gap but need policy support at national level.

5 Localising taxation

Since 2000, the local government sphere has constantly evolved as a result of social, political and economic pressures that are most profound at municipal level. Home to 40% of South Africa’s population, cities are key to meeting the National Development Plan and the sustainable development goals, and need to balance developmental and social needs with the demands of being the country’s engine of economic growth. Under the current local government fiscal framework, metros are allocated a lower per-household equitable share and conditional grants than other municipalities because they have higher levels of economic activity. However, despite better revenue management and debt collection than other municipalities, metros have a funding shortfall, or a structural funding gap, which means that metros would not have sufficient funds to fulfil their mandates even if they collected all revenues owed to them. One solution is to assign greater powers to metros, to give them greater autonomy to manage and fund their mandates. The SACN, in partnership with National Treasury and the City of Tshwane, has conducted research into alternative financing models for metros. The principle underpinning revenue assignment in a decentralised fiscal system is that “finance follows function”, whereby expenditure is assigned before revenue instruments are assigned to a sphere of government. 28

SOUTH AFRICAN PROPERTY REVIEW

Five revenue options were assessed, based on their potential revenue and administrative impacts on city governments, as well as on the economic rationale and ease of implementation within the current legal and policy framework. The five options were: a surcharge on personal income tax (PIT), a surcharge on corporate income tax (CIT), a surcharge on transfer duties (property taxes), an occupancy tax/tourism levy and a local business tax. The PIT, CIT and transfer duties would be fairly easy to administer but the PIT and CIT would require a constitutional change and would have a negative economic impact, while transfer duties would be unlikely to be assigned to local government because of national fiscal constraints. Of all the options, the occupancy tax is the most viable one, while the local business tax requires further research. The recommendation is to pursue a tourism levy in the short term and explore options for implementing a business tax in the longer term.

Key messages ●● Cities need to be sustainably financed in order to meet the National Development Plan objectives and sustainable development goals. ●● Under the current local government fiscal framework, metros are allocated a lower per-household equitable share and conditional grants than other municipalities. ●● An assessment of five possible revenue options found that cities should pursue a tourism levy in the short term and business tax in the longer term.

6 Financing public transport

In most South African cities, poorer residents mostly use the public transport system, while wealthier residents drive private vehicles. Over the past decade, some cities have developed new public transport systems, which require high levels of upfront capital investment in order to reach a critical network density. Despite heavy investment in public transport networks, ridership remains below capacity, farebox revenues are inadequate and operating costs are higher than expected. Private vehicle use is the fastest-growing mode of transport, increasing by 24% in the metros over the past decade, while bus and rail travel has decreased. In 2013, 38% of commuters used private cars to get to work, compared to eight percent using public buses, 27% using minibus taxis, five percent using the train and 21% walking to work. At the same time, public transport remains expensive (two-thirds of households from the lowest income quintile spend on average 20% of their income on transport). The public transport systems rely heavily on subsidies from national government, which is unsustainable – especially since the national government is reducing overall funding because of fiscal constraints.

South African Cities Network Cities need to find a reliable revenue source to borrow against for capital expenditures and to continue to subsidise operations. Private vehicle-use charges are the most logical alternative source of funding for public transport, and would likely address the private-public imbalances that currently exist in the transport system at large. Vehicle charges provide a stable revenue source, while charging car users more accurately for the social and environmental costs of choosing to drive. The primary goal is to ensure financing for improved public transport service for the poor, with a secondary impact of a potential shift from private to public transport in general. Seven potential charges were assessed against eight criteria: revenue generation, behavioural change, public/political acceptability, flexibility, complexity, redistributive alignment, legislative environment and policy alignment. They were then ranked according to their suitability. The two top-ranking charges were parking charges and congestion charges, which were assessed using Johannesburg as a case study. The charges most suitable were found to be a single congestion charge, a parking sales tax and a parking levy. The congestion charge would have the largest impact on car use, and all of the charges would accomplish the dual tasks of shifting commuter behaviour to an environmentally sustainable means of transport, while also raising revenue to both maintain and grow the public transport system.

Key messages ●● The current public transport financing model in cities does not provide just and equitable or sustained financing for improving the travel experience of poorer public transport users. ●● Private-vehicle charges can provide a significant contribution to the costs associated with cities’ increasing public transport responsibilities, and ensure that these costs are not passed on to the users of public transport. ●● Implementing parking or congestion charges and ringfencing the revenue is the most effective way in which cities can ensure that continuous improvement of public transport is sustainably financed.

7 Cities and energy diversity

Electricity is a major energy source, fuelling city economies and generating revenues for city service delivery. Electricity sales contribute on average more than a quarter (26,8%) of municipal revenue, while the surplus generated from these sales is the third-largest contributor to city budgets after property rates and grants from national government. Surcharges on the sale of electricity to certain commercial, industrial and high-use residential customers cross-subsidise the free basic electricity that is provided to low-income households. However, since 2007, electricity sales in metros have declined, driven by decreasing use among certain industrial customers and high-use residential customers in response to the higher

electricity prices. At the same time, the cost of renewables has been declining. Cities need to be able to respond to the twin disruptions in the energy sector: the uptake in renewable energy and changes in consumer demand. The surplus that municipalities get from residential electricity sales (and use to cross-subsidise other households) comes from a very small pool of high-use customers. These are the customers who are most likely to install rooftop photovoltaic (PV) systems. These disruptions have an impact on city finances and affect the ability of municipalities to cross-subsidise low-income residential customers. Cities need to decrease losses from theft and expenditure on bulk electricity purchases by buying from cheaper, independent power producers than Eskom (improved internal efficiency); generate revenue through electricity trading (wheeling), grid charges and time-of-use charges; and get into alternative energy services, with support for solar water heater and rooftop PV rollouts. They also need a new business model to stay relevant in the face of fast-changing customer demands for energy service. Such a model needs to be built on a transparent cost of supply, and take into account revenue losses, energy service, infrastructure costs, current tariff structures and crosssubsidies, new technologies and business opportunities, and escalating Eskom tariffs.

Key messages ●● Electricity is both a major energy source and a central component of big-city finances. Therefore, the increase in uptake of renewable energy and changes in consumer demand for electricity affect not only city finances but also a city’s ability to cross-subsidise low-income residential customers. ●● Cities need a new business model to stay relevant in the face of fast-changing customer demands for energy, and should be taking on a more dynamic role in the national electricity sector. ●● Cities need to decrease losses from theft and expenditure on bulk purchases (buy from independent power producers), generate revenue through electricity trading and grid/time-of-use charges, and exploit alternative energy sources.

8 Financing climate change: adaptation and resilience in South African cities South Africa is one of the countries most likely to be affected by climate change (changes in weather patterns that are the result of the increase in greenhouse gas emissions). The required transition to a low-carbon, climate-resilient economy will require a combination of mitigation, adaptation and resilience measures. The key climate risks faced by South African cities are floods, drought and heat stress, while economic losses in South Africa resulting from climate hazards are projected to increase. SOUTH AFRICAN PROPERTY REVIEW

South African Cities Network

PROPERTY SOUTH AFRICAN

The voice for the industry

REVIEW

EARLY BIRD Convention 2019

SAVINGS

SAVE - R8 544 / 21% 25% Off delegate convention early bird registration fee + 20% Off with a full page ad in July & Aug (Book by 28 Feb)

SAVE - R24 300 / 19% 1 Additional ad and 25% Off delegate convention early bird registration with 8 months full page sign-up (Book by 28 Feb)

SAVE - R18 320 / 22%

25% off delegate convention early bird registration + 1 Additional ad with 8 months ½ page sign-up (Book by 28 Feb)

SAVE - R11 370 / 26% FREE ½ page ad in the convention edition with a full page ad in May & Aug

SAVE - R8 320 / 34% FREE ¼ page ad in convention edition with a full page ad in May

SAVE - R8 320 / 45% FREE ¼ page ad in pre-convention edition (June) with a 4x Market Place ads

Booking schedule 2019

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

Investing in adaptation and resilience can reduce risks and losses; this is amplified in cities, which are centres of economic growth and where high-value assets are located. The lesson from the Cape Town drought of 2017 is that proactive climate change adaptation and resilience through risk reduction and prevention could have pre-empted the need for costly, lastminute interventions. However, it is difficult for cities to access finance because international funds are typically directed at national governments, while private capital sources usually consider adaptation and resilience to be public goods. In addition, risk data is not readily available for metros, which also lack the capacity to plan, implement and monitor projects. City administrations also tend to be risk averse, and are subject to the restrictions of the Municipal Finance Management Act. Recommendations include enhanced public infrastructure management and planning (to reduce risk and impacts of climate hazards); climate mainstreaming; consistent, continuous and proactive climate adaptation and resilience; private sector financial instruments and innovative solutions, such as green bonds and insurance products; demand-side policies for adaptation and resilience investments; tracking adaptation and resilience finance and capacity issues by engaging with sector departments and service providers; identifying resilience-building projects; and collaborating with academic institutions, NGOs, think-tanks and international organisations that specialise in adaptation economics and finance.

11:31 AM

Refer to Property Review rate card

All rates quoted in South African Rand, exclude VAT and exclude agency commission (unless stated). Guaranteed positions incur a 15% loading. Every effort will be made to ensure advertisements are placed with the most relevant editorial or in the best position. A 50% cancellation fee will apply to all cancellations received after book by deadline. A 100% cancellation fee will apply to all cancellations received after material due deadline.

PROPERTY SOUTH AF RICAN

REVIEW

PROPERTY REVIEW - LogoTrea tment.pd

Th e vo ice for the ind us try

2016/08/25

11:31 AM

Key messages ●● South Africa is one of the countries most affected by climate change, facing climate risks of floods, drought and heat stress, and resulting in economic losses that are amplified in cities. ●● Investing in adaptation and resilience can potentially reduce these losses by up to 80%, but cities find it difficult to access finance for this purpose. ●● To access multilateral climate funds, cities need to partner with national and regional governments, and National Treasury should integrate climate change objectives into future infrastructure and development grants to cities.

Convention

Early Bird Reg istration Now Open!

SAPOA

The SAPOA An nual Convention and Property Exh Cape Town ICC ibition 18-20 June 201 9

Empower - De velop - Transfo rm

Sales: Pieter Schoeman e: pieter@mpdps.com t: +27 (0)21 856 1276

SOUTH AFRICAN PROPERTY REVIEW

We extend our thanks to the South African Cities Network for the preceding extracts. Click on the cover image at the beginning of the article to download the entire report. SACN. 2018. State of City Finances Report 2018. Johannesburg: SACN ISBN: 978-0-6399215-2-5 ©2018 by the South African Cities Network. The State of South African Cities Report is made available under a Creative Commons Attribution – Non-Commercial – Share-Alike 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/4.0/.

2018 review

Lightstone reviews its 2018 findings and makes predictions for 2019 The tough economic climate in 2017 induced pressure on the property market, which ultimately deterred growth within it. After renewed hope for the sector in 2018, transactional activity unfortunately remains subdued. As a result, business confidence has also decreased, recording the lowest number of transfers in the past three years for the third quarter of 2018. The continued debacle over land expropriation without compensation could also have a negative effect on all sectors of the property market, as talks of claims on commercial and retail land have emerged Commercial property

with 250 transfers. Although growth within the retail space has slowed down, there is still progress, catalysed by consumer spending habits. Recent data materially affected by lag in deeds office reporting

2000 1500

2500 2000 1500 1000

1000 Volume of Transactions

Recent data materially affected by lag in deeds office reporting

500

500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 2017 2018 Registration Date Industrial Office Retail

Volume of transactions during the period 2014 - 2018

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 2017 2018 Registration Date <R2.5 mil R2.5 mil - R5 mil R5 mil - R10 mil R10 mil - R20 mil R20 mil - R30 mil >R30 mil Unknown

The annual nominal inflation for the industrial, office and retail markets indicates that industrial property is above the six percent mark, while the retail and office spaces are at five

The overall view of transactions between 2014-2018

In a rather alarming finding, the total transfer values have dropped to about R3-billion year-to-date, which is a loss of more than R1-billion when compared to the same period in 2017. This is the most significant drop since 2016. Gauteng is still the zone experiencing the most transactions, followed by the Western Cape. 3500

2500

R4.0bn

2000

R3.0bn

1500

R2.0bn

1000 R1.0bn

500 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 2017 2018 Volume of Transactions Registration Date Value of Transactions

10% 8% 6% 4% 2% 201504 201508 201512 201604 201608 201612 201704 201708 201712 201804 201808

Value of Transactions

Volume of Transactions

3000

R5.0bn Recent data materially affected by lag in deeds office reporting

Volume of Transactions

In an analysis of the South African commercial property market, the largest number of transactions are made in the R 2,5-million or less range. An evident spike in the volume of transactions can be seen in the latter part of 2017, leading into the first quarter of 2018.

R0.0bn

Volume and Value of commercial property transactions between 2014 and 2018

Retail, industrial and office In an interesting finding during the third quarter of 2018, retail property had experienced the most registrations between these three sectors, with 525 transfers. This is closely followed by industrial property with 510 transfers, then office property

Inflation percentages for the industrial, office and retail market

percent and four percent respectively. In a summary of predictions for 2019, the following has been highlighted in Lightstone’s findings:

● Industrial property has shown demand. This can be mostly attributed to the development of the logistics sector in the country. It is forecast that the growth will continue steadily in 2019 as new projects and expansions are planned for the logistics sector. ● In terms of property investment, the country will experience a similar trend in 2019 to what was seen in 2018. Subdued activity will ensue, with companies opting out of real estate investments until the 2019 general elections have been held. Depending on the outcome, a slight uptick in activity can be expected. SOUTH AFRICAN PROPERTY REVIEW

architect one-on-one

An architect (in the) making Khensani de Klerk is an architecture and city planning graduate from the University of Cape Town. She is currently working as a junior architect and planner at Local Studio in Johannesburg. She was a research fellow at Swiss Federal Institute of Technology in Zürich (ETH Zürich) and has worked for Urban-Think Tank in Switzerland. She divides her life between Cape Town, Johannesburg and Zürich. Her efforts are centred on one core principle: to normalise architecture as a tool that allows multiple identity groups to be active designers of space. She is the founder and co-director of design-research-film collective Matri-Archi(tecture) (matri-archi.com), which empowers African women as a network dedicated to African city development and spatial education. She is also a director at the Youth in Property Association, an NGO aimed at transforming youth demographics in the South African property industry Interview by Mark Pettipher

What drew you to become an architect?

Khensani de Klerk (Photograph ©Klearjos Papanicolaou)

“Every person who experiences space also designs it, by virtue of moving through it and interacting with it. When you gain the architectural, technical and philosophical dexterity to read space, the ability to transform and unlock space for society to participate in as fellow designers becomes an exciting possibility. It’s an empowering tool”

SOUTH AFRICAN PROPERTY REVIEW

I’m still an architect in the making. Formally, I received a bachelor’s degree in architecture and a postgraduate degree in city planning. The journey continues. To be an architect, I believe, is to be in complete consciousness of the built environment, which is to be in conversation with your subconscious inner designer. Every person who experiences also space designs it, by virtue of moving through it and interacting with it. When you gain the architectural, technical and philosophical dexterity to read space, the ability to transform and unlock space for society to participate in as fellow designers becomes an exciting possibility. It’s an empowering tool – and that is why I want to be an architect.

You once said in an interview that your role is rooted in amending apartheid spatial planning and in exploring the intangibles – such as economics and politics – that come with negotiating that space. Can you elaborate? As a “born free” black South African woman who is in the spatial industry, I undoubtedly have the potential to contribute to amending the spatial injustice created by the apartheid regime. My role feels instinctive to the time and place I find myself in. But more than that, this role is a negotiation between the private and

public sector, to eventually (hopefully much sooner rather than later) improve the livelihood of disadvantaged South Africans. The brief presented to all of our fields of work is palpable – the challenge of inequality. Whether – and how – we choose to respond to this brief is the confrontational question. This has informed my constant engagement with both the scales of architecture and urbanism. As Professor Alfredo Brillembourg of ETH Zürich says, “Urbanism is frozen politics.” I am still practising and improving my own ways of briefly freezing these moments of urbanism, so as to respond meaningfully on the urban scale, with architecture as a tool.

What excites you about being a woman in the architectural space? The actual question we should be asking women is what it is about the architectural space that excites them – because the constant singling out of positionality in this particular discipline is overwhelming. This is both good and bad: good because it exposes the hyper male-dominated nature of the space, and bad because it often sensationalises women into tokens in the industry. But to answer the question simply: the driver of my excitement in this field is that I have the capacity to contribute to the unimagined reality of future African cities in a growing collective of equally creative and innovative professionals.

architect one-on-one Explain what intersectional city planning is. It is essential to mention that such a description cannot be defined statically. Because planning is premised on the built environment (be it through reaction policies or proactive planning), it is indubitably kinetic. The city changes every day as urban dwellers move through it, affecting the infrastructure and intangible conditions. I believe that intersectional city planning, as it stands (and the definition certainly grows), is a methodology of planning for cities that allows diverse users to participate economically, socially, physically and ecologically. In South Africa, where identities are predefined by an unjust history, it becomes imperative to depart from binary thinking and to explore ways in which cities can accommodate everyone infrastructurally. The rest becomes a city play of negotiation, a natural human engagement.

What would you say to young women who want to become architects? Hyper-masculinity runs rife in this industry, and you need to be aware – and strategic – about how you will achieve your shortand long-term goals. From the construction site to the board room, and back to the classroom, women are often expected to react with dramatic anger. My advice? Hone into that energy and use it to be productive. Never compromise quality: this will eliminate any possibility of being a token in the industry. Respect everyone you work with. And empower one another – because, quite frankly, not many will do this (although there are notable exceptions). Finally, to quote a German saying that a mentor of mine, Professor Tòma Berlanda once mentioned to me, Keine tag ohne eine linie – which translates to “not a day without (drawing) a line”. You have to exercise your creative muscle every day to maintain momentum.

spaces, where diversity in the workplace has been the standard. However, when stepping out of that space – interacting on site, at workshops, at events – you become exposed to the very apparent nonchalant patronisation of women in the field. Men will often undermine you on the construction site but, as principal agent, the best thing to do is to be assertive and calmly stand your ground.

You’ve said that your favourite female architect is Professor Lesley Lokko. In your view, what makes her work unique – and why her in particular? Professor Lokko is a great inspiration to me. I remain captured by her paper – White Papers, Black Marks: Architecture, Race, Culture – particularly because my interest in architecture focuses greatly on the sustainability of knowledge transfer and new media archival. As the current Head of Department of the University of Johannesburg’s Graduate School of Architecture, Professor Lokko has redefined and continues to fuel a rethinking of architectural pedagogy. The scarcity of Africa-specific spatial research is a critical issue. I also believe that inspiring students to speculate tropes unimagined, with an emphasis on multiple stakeholder participation, is an educational method that speaks to cultural sustainability – much needed in the African built environment today. I could go on at great length but, essentially, Professor Lokko is one of my

favourite architects because of her focus on the future of spatial Africa.

What gets you out of bed in the morning? My calendar for the past four years has a designated 6am time slot titled “selfimportance”. This means that every morning – before checking my e-mails and getting down to the day’s activities – I make a concerted effort to do something for myself. The specifics of that something have changed over the years; at the moment I run. Unfortunately, architecture hasn’t occupied this slot at all – in fact, it’s what tends to keep me up at night!

If you were to choose a South African building, which one stands as an icon and why? What makes a building truly South African, particularly in post-colonial South Africa? I’ll answer this question with one main criterion in mind – the contextual responsiveness of buildings. Peter Rich’s Mapungubwe Interpretation Centre is exceptional. Located in Mapungubwe National Park in Limpopo, it uses local materiality for its tectonic integrity, giving the building a sophistication and what I like to refer to as African minimalism. Using less, achieving more and responding to the vernacular of the context for cultural and ecological sustainability, the building is beautiful and grand! It’s a humble icon in the unique landscape.

What are some of the challenges you have faced in a profession dominated by men? Being underestimated. I’ve been lucky enough to have worked in intersectional

Mapungubwe Interpretation Centre in Musina, South Africa, by Peter Rich Architects. Photograph © Iwaan Baan

SOUTH AFRICAN PROPERTY REVIEW

architect one-on-one

Artist Residency and Cultural Centre in Sinthian, Senegal, by Toshiko Mori Architects. Photograph © Iwaan Baan

If you were to choose an international building, which one stands as iconic? Because I consider South Africa local to Africa, I’ll look outside of the continent for this answer. However, it is worth mentioning that, on the continent, the most iconic building for me is Toshiko Mori’s Sinthian Artist Residency and Cultural Centre in Senegal – for similar reasons to Mapungubwe. Off the continent, I’d say currently Zaha Hadid Architects’ MAXXI Museum in Rome, Italy. During my time working at Urban-Think Tank in Switzerland, we had the pleasure of exhibiting our Urban Parangolé project in the space. The building is an exceptional architectural example of urban acupuncture: it not

only serves as a museum but also bridges pedestrian desire lines in the city, acting as what us South Africans would call a “double-up”. From the street, it sits humbly in the romantic Italian context; from inside, it takes your breath away with its continuous, futuristic Zaha Hadid structural signature. As a museum, it too is an art piece.

Is there any particular school of architecture that you prefer? No. In terms of the schools that I’ve attended, I have preferred them for various reasons at different times. Right now, in South Africa, I’d say that the University of Johannesburg is doing exceptional things – radical thinking, for a country in need of radical reform.

MAXXI Museum in Rome, Italy, by Zaha Hadid Architects. Photography © Iwaan Baan

SOUTH AFRICAN PROPERTY REVIEW

I haven’t studied there, but I’m currently involved in research for one of the postgraduate units (Bloody Agency, lead by Local Studio). Having done a research fellowship at ETH Zürich in Switzerland, I must also mention that the dedication to excellence at the chairs of architecture and urban design is inspiring. The applied research approach is definitely an advancement to architectural pedagogy. I prefer this form of teaching: researching and learning as it jumps right into the reality of “the real world” as opposed to institutions treating education as a prelude to the real world, often isolated and separate from it.

How have the schools you attended influenced your design work? During my year at ETH as an invited visiting research fellow, I remained, without fail, captivated and motivated to engage in high-quality research, which has continued to mould the foundation of my design departure point – which is to spend an adequate amount of time on research and not just design. Furthermore, the applied research methodology of ETH taught me to approach projects through an iterative practice between design and research. This ensures the creation of a product, (a building, for example) and a checking mechanism (research), resulting in quality and giving a spirit of life to the design. Without spirit, design is meaningless.

PROPERTY SOUTH AFRICAN

REVIEW

The voice for the industry

Each SAPOA member is a leading player and decision-maker in the commercial property arena, they use the South African Property Review as a way to gain important peer exposure and recognition. With a South African property market value in excess of R5,7-trillion, SAPOA members control about 90% of South Africa’s private sector commercial land and buildings stock, and manage the majority of property funds listed on the JSE.

31 340 18 015 00:10:27

Open to all commercial property professionals, advertising in the online South African Property Review is an ideal way to reach these important decision-makers.

● Interactive reading and rich media ● Downloadable connected digital data links and much more ● Reader engagement through websites and e-mail hot links ● Interactive advertising ● Call to action opportunities ● The stories behind the stories

December / January 2019 Total page views Total sessions

Average time spent (minutes)

● One-on-One interviews ● On Show showcasing properties ● LinkedIn and Facebook following

According to Google an average time spent on a website blog is 4min. South African Property Review’s average read time per month is 10min 27s, 2.5 times the average online retention rate.

For advertising opportunities and rates contact Pieter Schoeman t: +27 (0)21 856 1276 / e: pieter@mpdps.com For editorial enquiries contact e:SOUTH mark@mpdps.com AFRICAN PROPERTY REVIEW

landscape architecture

A tribute to Madiba Designed and built to mark the 50-year anniversary of what began Nelson Mandela’s “long walk to freedom”, a quietly powerful sculpture stands on a piece of land that, quite randomly, irrevocably altered the history of South Africa Courtesy of www.afritecture.org Images © and courtesy of Marco Cianfanelli

ade possible by the Department of Cooperative Governance and Traditional Affairs (COGTA), the uMngeni Municipality, the Apartheid Museum and the KwaZulu-Natal Heritage Council in association with the Nelson Mandela Centre of Memory, this historic memorial site was inaugurated, completed and unveiled in 2012.

SOUTH AFRICAN PROPERTY REVIEW

The sculpture, by artist Marco Cianfanelli, significantly comprises 50 steel column constructions – each between 6,5 and 9,5 metres tall – set into the Midlands landscape. The approach to the site, designed by architect Jeremy Rose of Mashabane Rose Associates, leads visitors down a path towards the sculpture where, at a distance of 35

metres, a portrait of Nelson Mandela, looking west, comes into focus as the 50 linear vertical units line up to create the illusion of a flat image. Cianfanelli’s perceptive rendering of this meditative image of the international icon – achieved from interpreting composites of several portraits of Mandela sourced off the Internet, and a film grab – is appropriately monumental, yet fittingly transient and delicate. From its main focal point, the sculpture reads as a familiar photographic image, structurally suggestive of his incarceration; from the side, the design and arrangement of the columns create a sense or moment of fracture and release. “This represents the momentum gained in the struggle through the symbolic of Mandela’s capture,” said Cianfanelli about this deliberate structural paradox. “The 50 columns represent the 50 years since his capture, but they also suggest the idea of many making the whole; of solidarity. It points to an irony – the political act of Mandela’s incarceration cemented his status as an icon of struggle, which

landscape architecture then helped to ferment the groundswell of resistance, solidarity and uprising, and ended up bringing about political change and democracy.” The sculpture, which eloquently both impacts and becomes part of the surrounding landscape, visually shifts throughout the day, with the sculpture itself affected by the changing light and atmosphere behind and around it. Cianfanelli included an additional five smaller columns to create an axis from the main sculpture to the monument site across the road. Key behind the development and realisation of this memorial site, the Director of the Apartheid Museum Christopher Till remarks that this project is “an example of how the installation of art into a site of history and heritage can be a catalytic and powerful force”. The uMngeni Municipality, with the assistance of COGTA’s “government through corridor development fund”, further acquired the property adjacent to the capture site, and commissioned a plan for the establishment of a museum, multipurpose theatre and amphitheatre, and tourism and supporting educational and cultural facilities to be situated there. This will create job opportunities for the local community. This iconic image has become synonymous with the event marking the site of Nelson Mandela’s capture and is a major tourist attraction at this significant heritage site.

SOUTH AFRICAN PROPERTY REVIEW

world architecture

10 hotly anticipated buildings set to be completed in 2019 While leaving behind all the celebrations after 2018, World Architecture Community (WAC) editors had a glance at some buildings expected to be completed in the new year, and chose 10 of the most anticipated Originally published on World Architecture Community

1000 Museum, Miami, USA by Zaha Hadid Architects

ZHA’s 1000 Museum is being developed as a new residential tower, which has already started to take shape in the Miami skyline. 1000 Museum is the first and final residential tower that Hadid drew in the western region. In newly released renderings published in 2018, the images show detailed views of amenity spaces and provide a look at the exterior skin of the tower, which is elegantly wrapped in “an exoskeleton” that structures the perimeter of the tower in a web of flowing lines. The tower, located on Biscayne Boulevard in Miami opposite Museum Park, with views across Biscayne Bay to Miami Beach, will include 83 super-luxury units (including duplex town homes, half-floor residences, full-floor penthouses, and a single duplex penthouse), as well as a sky lounge, a doubleheight aquatic centre with indoor pool, and a lifestyle centre and spa that will overlook the tower’s sun and swim terrace level.

Beijing’s New Airport Terminal Building, Beijing, China by Zaha Hadid Architects

ZHA’s new terminal building in Beijing is designed to expand the city’s airport capacity to serve the world’s fastest-growing aviation sector. Set to accommodate about 72-million passengers per year, the new 700 000m2 airport terminal building has been designed to be extremely user-focused, efficient and adaptable for future growth. ZHA won a competition to design Beijing’s New Airport Terminal Building in 2011. Taking cues from principles of Chinese architecture, ZHA’s design scheme comprises interconnected spaces around a central courtyard. The design principles are set to guide all passengers seamlessly through the relevant departure, arrival or transfer zones towards the grand courtyard at the centre – a multi-layered meeting space at the heart of the terminal.

The Shed, High Line, New York by Diller Scofidio + Renfro (DS+R)

The Shed, designed by DS+R, is rising above the High Line on the far west side of Manhattan. The 18 500m2 building will function as a new cultural centre, and accommodate galleries and flexible areas for various art and cultural events. Inspired by the Fun Palace – an unrealised building-machine conceived by British architect Cedric Price and theatre director Joan Littlewood in the 1960s – DS+R’s building is being designed to be able to expand and contract by rolling the telescoping shell on rails. The Shed’s kinetic system addresses the industrial past of the High Line and the West Side Railyard. The architects are using conventional building systems for the fixed structure, and adapting gantry crane technology to activate the outer shell. The institution will be able to accommodate large-scale indoor and open-air programming on demand.

Expansion of the Norton Museum of Art, West Palm Beach, Florida by Foster + Partners

Foster + Partners is designing its first public garden for the expansion of the Norton Museum of Art in West Palm Beach, Florida. The design scheme is being developed as part of a transformative Norton expansion, which aims to reinforce the relationship between the building and the landscape, and serve as a new social space for the community. The first public garden, which is still under construction, is being designed as a subtropical garden and green space, and will include the Pamela and Robert B Goergen Garden. This will involve 11 significant gifts of art from the couple. The museum’s US$100-million expansion project will create a native flora surrounding the new Norton.

SOUTH AFRICAN PROPERTY REVIEW

world architecture Taipei Performing Arts Center, Taipei, Taiwan by OMA

OMA’s new Taipei Performing Arts Center will house many theatrical events in three different theatres – and each of them will function autonomously. The building pushes classical boundaries of theatre design with its multi-formed envelope. Following an entirely opposite approach arising from the traditional theatre design, OMA’s building proposes a new experimentation space for the internal workings of the theatre by producing (without being conceived as such) the external presence of an icon. The building is still under construction, and – according to OMA – is expected to be completed in late 2019.

Le Monde Headquarters, Paris, France by Snøhetta

Le Monde Headquarters is being developed for the Le Monde Group, an icon in the media world. It will house office space and different departments for the company. The building draws attention with its elongated, shining form, as well as a public space covered by the vaulted ceilings over the plaza. This public space represents the transient flow of information, like clouds or stars moving across the sky. The firm’s approach has been one of subtraction, taking a block, filling the entire site, then subtracting volumes to create entrance areas and public spaces. The subtracted volumes also relate to the existing site-planning restrictions and the capacity of the structural grid.

40 Tenth Avenue is almost complete: its outer glass skin has recently been dressed on the High Line in New York. Designed as an office building, it uses incident sun angles to carve away from the allowable zoning envelope to prioritise views and light between High Line Park and Hudson River. Creating a faceted and gem-like façade, the design advances Studio Gang’s “solar carving” strategy for enhancing connectivity in tall buildings. Developed through Studio Gang’s ongoing tall building research, the glazing system of the building has been geometrically optimised into a pattern of 3D facets that articulate the carved sections of the tower.

Public Art Depot in Museumpark Rotterdam, Netherlands by MVRDV

MVRDV’s Public Art Depot is still under construction in Museumpark Rotterdam, but the half-structure of the building is almost complete on site. The Public Art Depot Boijmans Van Beuningen has been envisioned as “a new building typology”, and the dramatic “bigness” of the building will reflect surrounding and green infills onto its own façade, creating its iconic presence with “disappearing illumination”. Comprising a mirrored bowl-shaped building, the structure will be a new addition to the existing museum, and will become a new cultural landmark for Rotterdam, alongside world-class institutions already in the area, including Kunsthal, Het Nieuwe Instituut, Chabot Museum and Sonneveld House. Ninety percent of the building will be open to the public, including artworks in storage. It is also intended for collection displays to change bi-annually based on themes.

40 Tenth Avenue, New York, USA by Studio Gang

GES 2, Moscow, Russia by Renzo Piano Building Workshop

Renzo Piano Building Workshop has converted the historical 1900s Moscow power station into an art gallery situated in the city’s Red October district. Commissioned by the V-A-C Foundation, Piano’s proposal will feature a 23m-high turbine hall settled into the main exhibition space, with the new building extending 100m in length. The interior is designed as flexibly as possible, forming a fragmented appearance with steel staircases, contrasting colours, platforms and galleries. All the structure is read in the interior space, which is a very stylistic feature of Piano’s design approach. GES 2 will become a striking cultural destination, offering new opportunities for artists and audiences on a local, national and international level. It is the first major venue in the city of Moscow for V-A-C. The “welcome” area of the new building will be made up of an outdoor sculpture park, with a library, a book shop, a cafe and an auditorium inside.

Amager Resource Centre, Copenhagen, Denmark by BIG

BIG’s new waste-to-energy plant – also known as the ARC Amager Resource Center – is almost complete, with only the landscape design by SLA still under construction. The project is scheduled to be completed in the first quarter of 2019. It is one of BIG’s most anticipated buildings, especially in Copenhagen. BIG won a competition to replace the adjacent 40-year-old Amagerforbraending with a new treatment facility in 2011. This facility will transform waste into energy with socially driven programmes throughout the building. The roof will be fitted with an activity park and a 500-metre-long ski slope. Conceived as the cleanest and most efficient waste-to-energy plant in the world, the building is expected to convert 400 000 tonnes of waste each year, which will provide heat for 150 000 dwellings and low-carbon electricity for 550 000 people.

SOUTH AFRICAN PROPERTY REVIEW

world architecture festival awards

1 000 entries from 81 countries Having completed its 11th year, the world’s biggest architectural awards programme received more than 1 000 entries from 81 countries. A panel of 130 architects narrowed down the submissions to 536 shortlisted entries in categories such as residential, civic, mixed-use, religion and education, before a jury of five chose 12 overall winners By Justin Chan / www.architecturalrecord.com

he 2018 World Architecture Festival, held in Amsterdam last November, culminated in the selection of the overall winners. First held in Barcelona in 2008, the three-day event celebrates projects around the world while raising important issues in the profession, and this year’s theme touched on architectural identity. The Building of the Year award – the festival’s highest honour – went to Singapore-based WOHA Architects for its work on Kampung Admiralty, a mixeduse retirement village in the firm’s home country, marking the third time the prize has gone to a project from Singapore.

Overall winners

The other winners at the festival were: ●● Future Project of the Year Medellin River Parks/Botanical Park Master Plan in Colombia by Sebastian Monsalve + Juan David Hoyos ●● Small Project of the Year Piedras Bayas Beachcamp in Chile by Camilo Moraes ●● Use of Colour Prize Pálás cinema in Ireland by dePaor ●● The Amsterdam Prize North South Line in Amsterdam by Benthem Crouwel Architects ●● Glass Future Prize Tour Montparnasse in Paris by Studio Gang ●● INSIDE World Interior of the Year Yumin Art Nouveau Collection in South Korea by JAC Studios ●● Landscape of the Year Pedestrian path along the Gypsum Mines in Barcelona by Batlle I Roig Arquitectura ●● Architectural Photography Award Pawel Paniczko for his images of the Long Museum West Bund in Shanghai by Atelier Deshaus 40

SOUTH AFRICAN PROPERTY REVIEW

●● Use of Certified Timber Prize International House Sydney in Australia by Tzannes ●● WAFX Award Beloit College Powerhouse in Wisconsin by Studio Gang ●● WAFX Research Programme Water Prize Ciudades Auto-Sostenibles Amazónicas by PUCP and UCL’s Development Planning Unit

howmuch.net

Visualising financial literacy rates around the world What is financial literacy? S&P’s Global Financial Literacy Survey defines it as the ability to understand essential financial concepts in making informed decisions about saving, investing and borrowing. The survey asked respondents a series of financial literacy questions. Here’s one example: suppose you have some money – is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments? The answer is obvious to anyone familiar with risk diversification By Raul Amoros / howmuch.net/articles/financial-literacy-around-the-world

t the highest level, financial literacy around the world appears strongest in countries with developed and advanced economies, especially Western Europe and English-speaking countries. There are no countries in South America where more than 50% of people are financially literate, and there is only one country in all of Africa.

Financial literacy around the world

Top 10 most financially literate countries (%) 1. Denmark: 71% 2. Norway: 71% 3. Sweden: 71% 4. Canada: 68% 5. Israel: 68%

Financial literacy in Africa

6. United Kingdom: 67% 7. Germany: 66% 8. Netherlands: 66% 9. Australia: 64% 10. Finland: 63%

Here’s a thought-provoking exercise: compare this map to the one we recently created for extreme poverty around the world. There doesn’t seem to be a clear correlation between poverty and financial literacy. After all, there are many places with very few extremely poor people (such as Russia and China), yet these same places also have extremely low financial literacy rates. That means poor people aren’t necessarily financially illiterate, and neither are rich people.

Financial literacy in Africa As is the case with so many other measures of economic progress and development, Africa scores the worst of all the continents. Only one country, Botswana,

breaks the 50% barrier, with more places falling in the 31%-40% range. The worst country for financial literacy on the entire

continent is Somalia, at 15%. The situation in Western Africa isn’t much better, where Sierra Leone is at 21%. SOUTH AFRICAN PROPERTY REVIEW

live-work-play

How mixed-use precincts are benefiting inner cities Across the world, property developers are faced with the challenge of creating spaces to facilitate the trend of urban living. As more and more people desire central living, with various amenities and minimal travel time, property companies must meet the demand with modern spaces that offer a range of benefits By Nicholas Stopforth

his is where mixed-use developments come in, offering the ability to “live, work and play” in safe and secure precincts. These developments are springing up in major cities worldwide, creating a new way of living and benefiting inner cities in a number of ways. The core appeal of mixed-use precincts is that they provide a solution for the growing number of people seeking to live and work in close proximity. This is, in part, a growing trend in South Africa in response to rising petrol costs. But the trend has been imminent for some years, driven by the fact that this immersion in inner-city life reduces hours of sitting in traffic as well as the resulting negative impact on the environment.

Amdec Group’s Harbour Arch mixed-use precinct (side view)

SOUTH AFRICAN PROPERTY REVIEW

Nicholas Stopforth, Managing Director of the Amdec Group, explains that there are, of course, challenges to meeting this demand. One thing in short supply in many, if not most, major city centres is space. This means that some businesses are moving out of the city, and suburban areas are growing into urban nodes around them. But for many people, there is still a desire to be located within the hustle and bustle of city life. “Another major challenge for developers is to create green urban spaces and less concrete jungle,” Stopforth says. “With this in mind, local property developers are taking inspiration from best practice globally

to ensure South African developments are set in the same league as some of the most iconic mixed-use precincts in the world.” Globally, developers are finding solutions to all the challenges they come across. Mixed-use developments utilise space to its maximum capacity, for example. These precincts are often defined by increased safety and security, smart design, convenience, connectivity and walkability. Secondary to the core function of these developments – but by no means lesser – is the challenge of meeting the growing demand for green spaces and eco-friendly and sustainable practices and technologies, and providing an extended range of health benefits. This, after all, is what the modern consumer demands. “We are constantly striving for unique solutions for green spaces within our developments,” says Stopforth. “We look towards trends around urban gardening initiatives and rooftop gardens, and we create parks for dog walking and simply enjoying the benefits of being in nature. “There are also many associated health benefits of life in mixed-use developments. The very nature of the lifestyle means can walk to everything you need – to work, to restaurants, and even to the gym.” The Amdec Group, for example, searches for inspiration globally, looking to the likes Hong Kong, Sydney, London and New York. The company’s “lifestyle meets real estate” projects include

live-work-play Melrose Arch (and the new One on Whiteley within the mixed-use-precinct), as well as the new Yacht Club and soonto-be-built Harbour Arch in Cape Town’s foreshore area. According to a 2018 report by HM Commercial Group, looking at the Okanagan region in the Canadian province of British Columbia, mixed-use spaces are the future of development and are the key to breathing new life into communities. In Cape Town, the Foreshore and Roggebaai precinct are seeing big development of mixed-use spaces. The area is more affordable per square metre than the Waterfront, but is still on the water’s edge and close to the CBD. It enjoys incredible accessibility, with roads, water taxis and pedestrian walkways linking it directly with the V&A Waterfront, the Cape Town International Convention Centre and the business hub at the centre of the city. As a result, the area has been attracting many blue-chip businesses and therefore increasing the demand for mixed-use spaces. Likewise, Sydney’s city centre is seeing huge urban transformation, with a number of mixed-use developments and transport infrastructure projects to meet the demand of a further one-million people expected to call the city home in the next 10 years. In the United States, extensive development is being seen in the upmarket northern suburbs of Atlanta in Kingsport in Tennessee and in Oceane in Sarasota, Florida. And in the United Kingdom, London is seeing urban construction in areas such as Palmer Street and Rochester Row in Westminster. In the process of creating modern urban precincts, mixed-use developments are channelling huge investment into city centres. There is significant potential for capital growth for initial investors in off-plan developments, an upwards trend already evident in the Yacht Club and Harbour Arch locally. As such, the Amdec Group predicts that the mixed-use trend is only set to rise in 2019.

Harbour Arch mixed-use precinct (walkability and view)

Melrose Arch smart city

Darling Harbour in Sydney

SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa 56

DOING BUSINESS IN SOUTH AFRICA 2018

Registering property

the necessary compliance documentation—such as an electrical compliance 11 In the third of several extracts from the World Bank Group’s Doingcertificate, Business in South certificate12 entomologist’s Africa report, Property Review focuses on business regulations enforcement All property transfers require the ser-andortheir plumbing certificate13—from certified 7 across five Doing Business areas. vices It goes Johannesburg eight other of beyond a conveyancer. professionals. Next they pay the transfer These legalto benchmark duty (property transfer tax) draft areas. the transfer deed, South African urban areas across practitioners four regulatory It also measures the process of to the South African Revenue Service conduct due diligence onmaritime the parties ports. trading across borders through four of South Africa’s It contains data (SARS) online and obtain abased payment receipt required for and property, and undertake current as of 1 May 2018 and includes comparisons withnumerous other economies on the transfer.14 procedural requirements behalf of data from Doing Business 2018: Reforming to Create on Jobs the seller and buyer. Conveyancers also Extracts from www.doingbusiness.org/southafrica have exclusive rights to lodge deeds at The parties then sign the deed at the 8 the deeds office. conveyancer’s office. Lastly the conveyancer lodges the deed at the deeds office that has rights. jurisdiction over property Forand the assumed Doing Business These arethe part of an tenure has long beencase—a at the property Main findings in question. Upon lodgment and followcommercial property transfer between forefront of the South African national economy’s land information system. ing governments, the initial intake, the deed is subject two companies—conveyancers start having reliable, up-todebate. It remains so because land is For ●● Across South Africa, transferring to three levels ofin examination at land the with a title search. information cadastres and recognised aroundThey the check worldforasliens an date property requires seven to nine deeds office. This process is the assess same or encumbrances the property and registries is essential to correctly important source ofonwealth. Where land steps. Seven steps are common throughout therevenues. country.15With ensure thatisthe selling the and Onceup-to-date the deed collect tax ownership secure, thecompany value of isthese to all locations, and variations rightfulis owner. Simultaneously, is deemed valid, the conveyancercan signs it information, governments map assets certain for all owners. Inthey the land gather the information to draft the before the registrar or deputy registrar at out the varying requirements location post-apartheid era, research has shown stem from local requirements. deed“property and all rights necessary documents. thelocation, deeds office. execution of the and Upon strategically plan the that are critical for all9 by ●● Mangaung is the easiest place to deed, ownership is legally transferred Conveyancers also conduct a comin South Africans to leverage their assets in provision of services and infrastructureto transfer property, and Msunduzi the areas buyer, where who will be are ablemost to transfer or pany search with the Companies and the they needed. support of economic growth, household 10 is the most difficult. use ability the property as collateral as soon as Intellectual Commission to The to access official information incomes andProperty jobs.” Moreover, evidence his or her name is captured by the data confirm that the business is registered on ownership also reduces transaction suggests that insecure property rights ●● National fee increases – including 16 unit, usually the next day. and in good standing. may be among the factors driving local costs in financial markets and makes it a nearly 50% increase in the businesses to invest abroad instead of in easier to use property as collateral. transfer duty for the property Conveyancers Across the nine South African locaSouth Africa. then apply for a municipal in the Doing Business case study rates clearance certificate on behalfwith of How tionsdoes measured, property transfers Land registries, together registering the seller. Depending on the location, require on average eight procedures – have made property registration cadastres that identify the location of property work in South Africa? also ensure the used seller obtains taking 31.7Registries days and 7.6% athey property, are that tools around The Deeds Act costing 47 of 1937 and of its more burdensome in most the world to map, prove and secure amendments govern land administration locations and have limited the practices drive differences in the process of conveying property (figure 5.1).

scope for potential improvement.

FIGURE 5.1 Transferring property in South Africa takes seven to nine steps

●● Mangaung is the top improver Preregistration

since 2015. It has reduced the procedural complexity of property transfers and cut a month off the process, propelling it to the top

The conveyancer conducts a title search and checks encumbrances on the property

Obtain a plumbing certificate

Registration

Obtain an electrical compliance certificate

Obtain a transfer duty receipt

of the ranking. ●● There is ample room for improvement. South African locations perform uniformly on the quality of land administration systems index and score only half of the 30 possible points, placing them behind 43% of economies globally.

SOUTH AFRICAN PROPERTY REVIEW

Obtain a rates clearance certificate

Obtain an entomologist’s certificate

The conveyancer prepares and collects all the required documentation

Parties sign all the documentation at the conveyancer’s office

Procedure present in all locations Procedure completed simultaneously in all locations Procedure present in certain locations only

Source: Doing Business database. Note: For more details on these procedures, see Doing Business in South Africa 2015.

The conveyancer lodges the deed

the proper is twice as the Russian Mexico. The to Brazil, w a month. T average for Russia, Ind the 44 hig Additionally 30 points o istration in India, Indon behind Rus property is it takes 22.5 property va densome in is identical three times Mangaung OECD high Msunduzi is Saharan Afr

How the p

Although s mon to all l transfer pro each place. City, Cape and Nelson practice req entomologi that the pr Additionally bylaws requ plumbing ce

The time i varies wide Mandela Ba This is larg in the time clearance c confirms th or charges been paid— property ca rates cleara seven times Nelson Man

doing business in South Africa in South Africa. Because this is a national law, land registries (deeds offices) follow the same process to transfer property across the country. However, varying municipal requirements and local practices drive differences in the process of conveying property (Figure 5.1). All property transfers require the services of a conveyancer. These legal practitioners draft the transfer deed, conduct due diligence on the parties and property, and undertake numerous procedural requirements on behalf of the seller and buyer. Conveyancers also have exclusive rights to lodge deeds at the deeds office. For the assumed Doing Business case – a commercial property transfer between two companies – conveyancers start with a title search. They check for liens or encumbrances on the property and ensure that the selling company is the rightful owner. Simultaneously, they gather the information to draft the deed and all necessary documents. Conveyancers also conduct a company FIGURE 5.2

search with the Companies and Intellectual Property Commission to confirm that the business is registered and in good standing.

All property transfers require the services of a conveyancer. These legal practitioners draft the transfer deed, conduct due diligence on the parties and property, and undertake numerous procedural requirements on behalf of the seller and buyer. Conveyancers also have exclusive rights to lodge deeds at the deeds office Conveyancers then apply for a municipal rates clearance certificate on behalf of the seller. Depending on the location, they also ensure that the seller obtains the necessary compliance documentation – such as an electrical

compliance certificate, entomologist’s certificate or plumbing certificate – from certified professionals. Next, they pay the transfer duty (property transfer tax) to the South African Revenue Service online, and obtain a payment receipt required for the transfer. The parties then sign the deed at the conveyancer’s office. Finally, the conveyancer lodges the deed at the deeds office that has jurisdiction over the property in question. Upon lodgment and following the initial intake, the deed is subject to three levels of examination at the deeds office. This process is the same throughout the country. Once the deed is deemed valid, the conveyancer signs it before the registrar or deputy registrar at the deeds office. Upon execution of the deed, ownership is legally transferred to the buyer, who will be able to transfer or use the property as collateral asREGISTERING soon as his or her name PROPERTY is captured by the data unit, usually the next day.

South African locations have room for improvement across all aspects of land administration EFFICIENCY OF PROPERTY REGISTRATION Time (days)

Procedures (number)

4 economies (global best)*

1 2

Rwanda OECD high income Australia East Asia & Pacific Chile, United Kingdom

Malaysia, Namibia Kenya

Malaysia

Chile BRIC

8 9 10

Mexico South Africa range (9 locations) Ekurhuleni, Johannesburg, Mangaung, Namibia Tshwane South Africa average Buffalo City, Kenya eThekwini, Msunduzi, Nelson Mandela Bay, Cape Town East Asia & Pacific

5 economies (global best)*** Rwanda

20 United Kingdom OECD high income

7 BRIC Mexico

3 economies (global best)** Australia Rwanda

25 30 35 40 45 50 55

QUALITY OF LAND ADMINISTRATION Cost (% of property value) 0 Singapore (global best) Rwanda Malaysia

Chile

Nelson Mandela Bay Buffalo City Mangaung Malaysia Johannesburg BRIC Tshwane OECD high income Cape Town East Asia South Africa average & Pacific Ekurhuleni United Kingdom Australia eThekwini Mexico Kenya

United Kingdom

OECD high income

Australia

8 Namibia

25 24 23 22

70 75

29 28 26

7 Msunduzi

60 65

Index (0–30)

All 9 South African locations

BRIC Mexico Kenya East Asia & Pacific Chile Namibia

21 20 17 16 15

All 9 South African locations

14 9 8 1 0

Source: Doing Business database. Note: The OECD averages are based on economy-level data for the 33 OECD high-income economies. The East Asia & Pacific averages are based on economy-level data for the 25 economies of East Asia and the Pacific. The BRIC averages are based on economy-level data for Brazil, Russia, India and China. * These are Georgia, Norway, Portugal and Sweden. ** These are Georgia, New Zealand and Portugal. *** These are Belarus, Georgia, Kiribati, Saudi Arabia and the Slovak Republic.

TABLE 5.1

Registering property in South Africa—where is it easier? 2018

2015

SOUTH AFRICAN PROPERTY REVIEW Quality of land

doing business in South Africa 58 DOING BUSINESS IN SOUTH AFRICA 2018 REGISTERING PROPERTY

Across the nine South African FIGURE 5.3 In five locations, time to obtain a rates clearance certificate is the main locations measured, property transfers driver of total time to register property require on average eight procedures FIGURE 5.2 South African locations have room for improvement across all aspects of land administration taking 31,7 days and costing 7,6% of the 48 15 Msunduzi 63 QUALITY OF LAND ADMINISTRATION EFFICIENCY OF PROPERTY REGISTRATION property value. 33 eThekwini 15 48 Procedures Time Cost Index Procedurally, this is twice as complex (number) (days) Ekurhuleni (% of property12 value) 33 (0–30) 21 as in China and the Russian Federation 0 14 5 economies 15.50 29.5 Cape Town but on par with Mexico. The average 3 economies 30 (global best)*** Singapore (global best)** 5 time is comparable to Brazil, where it 15 25.5 Tshwane (global best) 1 Rwanda 10.5 1 29 Australia 4 economies Rwanda also takes just over a month. The cost 10 (global best)* Rwanda 11 12 23 Johannesburg Chile 28 Malaysia is steeper than the average for the BRIC Malaysia 2 15 27 Mangaung 2 22.5 12 10.5 economies (Brazil, Russia, India and 20 26 Buffalo City 10 11 21 Nelson Mandela Bay China) and is 3among the 44 United highest Kingdom United Rwanda 25 3 25 Buffalo City OECD high income Kingdom Nelson Mandela Bay globally (Figure 5.2). 7 13 20 Mangaung

24 Malaysia OECD Johannesburg Time (days) 23 4 OECD BRIC high income Tshwane 35 high income Procedurally, this is twice Days to obtain a rates clearance certificate OECD high income 22 5 Cape Town Australia 40 East Asia Mexico South Africa average Days to complete other property transfer procedures 21 5 as complex as in China and & Pacific East Asia & Pacific South Africa range Australia Ekurhuleni 6 45 20 United Kingdom locations) the Russian Federation on Chile, Ekurhuleni, but (9 Australia Source: Doing Business database. United Kingdom 17 Johannesburg, 6 BRIC 50 eThekwini Mexico par with Mexico. The average Mangaung, 7 Mexico All 9 16 Namibia Kenya Tshwane 55 Kenya South African timeBRIC is comparable to Brazil, South Africa average 15 7 East Asia locations Mexico 8 60 Msunduzi is behind administration index, outperforming economies, while & Pacific Buffalo City, 14 where it also takes just over Kenya All 9 Chile eThekwini, Msunduzi, Malaysia, Msunduzi for sub-Saharan Africa Brazil, Indonesia and Nigeria but8 the 65 India, South average African Nelson Mandela Bay, 9 Namibia Namibia 9 a month. The cost is steeper locations (59,3 days). trailing behind Russia and China. Kenya Cape Town 70 8 4

Chile BRIC

Municipalities differ in how they receive applications for and issue rates clearance certificates—which has significant impact on the total time to transfer property.

than the average for the BRICEast Asia Transferring property is easiest in 1 14 10 75 Namibia & Pacific Municipalities manual outlier is eThediffer in how22,5 they receive Mangaung, where it takes days and How thesystem. processAnother compares economies (Brazil, Russia, 0 kwini, whichseven despite procedures its e-application applications issue value rates (Table clear- Although costs 7,62% offortheand property are India and China) and is process has duemeasured, to staffing anceItcertificates—which has significant common Source: Doing Business database. 5.1). is most burdensome in Msunduzi, to aalllag—largely the locations among 44arehighest globally data forimpact Note: The OECDthe averages based on economy-level the 33 OECD high-income economies. The East Asia & Pacificshortages averages are and basedaondifficult economy-level data for the 25 implementation on the total time to transfer prop-

the cost data is identical butIndiathe property transfer processes are not economies of East Asia and the Pacific. The BRIC averages arewhere based on economy-level for Brazil, Russia, and China. of new back-office erty.18 Electronic application is available process takes nearly three times longer. identical in eachsystems. place. In coastal * These are Georgia, Norway, Portugal and Sweden. and widely used by conveyancers in four ** These are Georgia, New and Portugal. Additionally, all Zealand locations score 15 The time needed in Mangaung is on par locations – Buffalo City, Cape Town, *** These are Belarus, Georgia, Kiribati, Saudi Arabia and the locations Slovak Republic. Mangaung and Buffalo City also issue (table 5.2). This is also available with the average for OECD high-income in Johannesburg but has yet to catch on with the private sector. Municipalities Registering property in South Africa—where is it easier? with e-application systems seem to 2018 perform better.2015 Nelson Mandela Bay is Distance to Distance to an exception because an efficient Rank frontier score frontier scoreit hasProcedures

of 30 points on the quality of land

TABLE 5.1

Location

(1–9)

OECD high income average

(0–100)

(number)

76.81

76.71

4.6

South Africa average

TABLE 5.2 Six municipalities offer 67.03 e-application for rates clearance7.4 57.23 7.7 certificates 58.69

East Asia & Pacific average

57.21

56.61

Mangaung (Bloemfontein)

Location 59.73

55.89

Johannesburg (Johannesburg)

Buffalo City (East61.45 London) 59.68

7ü

Tshwane (Pretoria)

Cape Town (Cape60.56 Town) 59.39

7ü

Ekurhuleni (Germiston)

Nelson Mandela Bay (Port Elizabeth)

Ekurhuleni (Germiston) 58.48 60.25 eThekwini (Durban) 57.93 59.10

Buffalo City (East London)

Cape Town (Cape Town) eThekwini (Durban)

BRIC average

66.14

5.5 Electronic application 7

8ü

Johannesburg (Johannesburg) 57.81 59.22 Mangaung (Bloemfontein) 54.69 56.45

9ü

ü Fully implemented 54.58 58.62

eThekwini, Msunduzi and Nelson rates clearance certificates electronically. For back-office functions, all locations use an electronic revenue management Qualityaccount of land system to determine municipal Cost administration dues before issuing Time for a property (% of property index the (days) clearancevalue) rates certificate. (0–30) However, 22.3 4.2 22.7backlocations experience different 29.2 delays. These 3.8 16.6 from office may stem 31.7following factors: 7.6 15.0of the the reliability revenue management system 15.8 platform, 74.5 4.3 whether municipal systems have 22.5 7.62 15 been connected across departments, 23 7.61 15 the number of departments that15 must 25.5 7.61 provide inputs on rates and whether 33 7.61 15 these details are up to date for most 20 7.63 15 accounts. On average, municipalities 21 7.63 15 have to obtain inputs from six to eight 29.5 7.64 15 departments—including electricity, 48 7.63 15 water, waste, valuation and housing. In 63 15 interMangaung these7.63 departments are connected through the SOLAR platform.

l Available, but not commonly used by conveyancers Msunduzi (Pietermaritzburg) 9 52.78 56.70 8 l Currently being piloted Source: Doing Business database. Source: Doing Business database. Note: Rankings are based on the average distance to frontier score (DTF) for the procedures, time and cost associated with registering property as well as for the quality of land administration index. The DTF score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the chapter “About Doing Business and Doing Business in South Africa 2018.” The OECD averages are based on economy-level data for the 33 OECD high-income economies. The East Asia & Pacific averages are based on economy-level data for the 25 economies of East Asia and the Pacific. The BRIC averages are based on economy-level data for Brazil, Russia, India and China.

SOUTH AFRICAN PROPERTY REVIEW

This is not slowest loc certificates circulated approval.

Additionall ments var Cape Town the title se with the a do not inc Tshwane th Depending and clerk, a conveyance avoid dela three locat simultaneo apply for a

Time varia different w municipal example, th certificate in three mu Ekurhuleni, 33,168.19 M has nine s ment that p This match speed in i cates and o differences reliability o deeds offic to register past two ye high numb Town Deed where lodg has faced failure of in action plan problem.

Cost varie of the pr Johannesbu Cape Town compliance for the mai

Msunduzi

eThekwini

circulated to different departments for approval.

Additionally, the list of application docuIn Cape Town and Mangaung a printout of Tshwane 15 10.5 25.5 the search must be included on alongthe aretitleequivocal. Depending Mandela Bay – contractual practice In Cape Town and Mangaung, Johannesburg 11 12 23 with the application. Applications application counter and clerk, that a title requires the seller to obtain an a printout of the title search Mangaung 12 10.5 22.5 do not include will be (conveyancers rejected. In search may beone required entomologist’s certificate proving that must be included along with Buffalo City 10 11 21 Tshwane requirements equivocal. always the include one to are avoid delays). the property is free of infestation. Depending on the application the application. Applications Nelson Mandelain BayCape7 Town, 13municipal 20 Consequently, in these three counter locations Additionally, and clerk, a title search may be required; (days) do not include one will the conveyancer cannot simultaneously bylaws require the parties to provide Time that conveyancers always include one to conduct a title search and apply for a a plumbing certificate. Days to obtain a rates clearance certificate be rejected. In Tshwane, the avoid delays. Consequently, in these rates clearance certificate. The time it takes to registerDays property to complete other property transfer procedures requirements are equivocal. three locations the conveyancer cannot Time variations may also stem from varies widely, from 20 days in Nelson simultaneously conduct a title search and Depending on the application Source: Doing Business database. different workloads and staffing at Mandela Bay to 63 days in Msunduzi. apply for a rates clearance certificate. counter and clerk, a title search municipal and deeds offices. Take, for This is largely because of differences Municipalities receive applications example, the number of rates clearance in the time needed todiffer obtainina how rates they may be required (conveyancers Time variations may also stem from certificate applications received in 2017 clearance certificate (Figure 5.3), which for and issue rates clearance certificates—which has different workloads and staffing at always include one to avoid in three municipalities: Mangaung (8 019); confirms that any outstanding utility bills and deeds offices. Take, for significant impact on the total time to transfer property. delays). Consequently, in these municipal Ekurhuleni (24 209); and clearance eThekwini, or charges due to the municipality have example, the number of rates three locations the conveyancer (33 168). Moreover, at the been paid – a necessary step before the certificate applications received intime 2017 of manual system. Another outlier is eTheMunicipalities differ in how they receive compiling the report, eThekwini property can be transferred. Obtaining cannot simultaneously conduct in three municipalities: Mangaung, 8,019;had kwini, which despite its e-application applications for and issue rates clearnine staff vacancies department aance ratescertificates—which clearance certificate almost process Ekurhuleni, 24,209; in andthe eThekwini, has asearch lag—largely to staffing hastakes significant a title and due apply for 19 that processes such applications. This seven in Msunduzi 33,168. and a difficult implementation impacttimes on thelonger total time to transferthan prop-in shortages Moreover, eThekwini currently a rates clearance certificate 18 Mandela Bay. matches the municipalities’ relative Nelson of new back-office systems. erty. Electronic application is available has nine staff vacancies in the depart20 speed in issuance clearance certificates Municipalities in howin four they ment that processesofsuch applications. and widely used bydiffer conveyancers andmatches overall performance. receive applications for, and issue, rates Mangaung Mangaung Buffalo City alsoissue issue This andand Buffalo City also locations (table 5.2). This is also available the municipalities’ relative clearance certificates which hasona rates clearance clearance certificates certificates electronicalelectronically. speed in issuance of clearance certifiin Johannesburg but has– yet to catch significant impact sector. on theMunicipalities total time to ly. For Forback-office back-officefunctions, functions,allalllocations locations cates and with the private overall performance. Similarly, Cost varies marginally – transfer property. Electronic application use an an electronic electronic revenue revenuemanagement management differences in workloads, staffing and with e-application systems seem tois use from 7,61% of the property system to perform and better. Nelson Bay is available widely usedMandela by conveyancers to determine determinemunicipal municipalaccount account reliability of computer systems across value in Ekurhuleni, exception because has an efficient impact the time needed inanfour locations (Tableit 5.2). This is also dues dues for for aa property propertybefore beforeissuing issuingthe the deeds offices rates clearance a property transfer. Over the Johannesburg and Tshwane clearance certificate. certificate. However, However, to register locations experience different backpast two years, in addition to the regular locations experience different backto 7,64% in Cape Town – TABLE 5.2 Six municipalities offer office delays. These may stem from high number of lodgments, the Cape office delays. These may stem from e-application for rates clearance with rates clearance and the certificates the following following factors: factors: reliability reliabilityofofthe the Town Deeds Office—one of the locations compliance certificate fees revenue revenue management managementsystem systemplatform, platform, where lodging a deed takes the longest— Electronic whether municipal systems have been an important due to Location application accounting forbacklog the main whether municipal systems have been has faced connected across departments, the failure of information technology (IT). ü Buffalo City (East London) connected across departments, the differences. This is becauseAn number of departments that must action plan was adopted to address the ü Cape Town (Cape Town) number of departments that must the largest share of fees provide inputs on rates and whether problem. l Ekurhuleni (Germiston) provide inputs on rates, and whether (including the transfer these details are up to date for most ü all these details are up to date for eThekwini (Durban) accounts. On average, municipalities Costduty, varies marginally—from conveyancers’ fees 7.61% and most accounts. l Johannesburg (Johannesburg) have to obtain inputs from six to eight of the property value in Ekurhuleni, On average, municipalities have to lodgment fees) are regulated ü Mangaung (Bloemfontein) departments—including electricity, Johannesburg and Tshwane to 7.64% in obtain inputs from six to eight different ü Fully implemented duty water, waste, valuation and housing. In Capenationally. Town—withThe ratestransfer clearance and l Available, but not commonly used by conveyancers departments, including electricity, water, Mangaung these departments are intercompliance certificate fees accounting alone accounts for 86% of the l Currently being piloted waste, valuation and housing. In 21 connected through the SOLAR platform. for the main differences. Thisproperty is because Source: Doing Business database. total cost to transfer Mangaung, these departments are interconnected through the SOLAR platform. available in Johannesburg but has yet This is not the case in Msunduzi – the Similarly, differences in workloads, to catch on with the private sector. slowest location to issue rates clearance staffing and reliability of computer Municipalities with e-application certificates – where applications are systems across deeds offices impact the systems seem to perform better overall. circulated to different departments time needed to register a property Nelson Mandela Bay is an exception for approval. transfer. Over the past two years, in because it has an efficient manual Additionally, the list of application addition to the regular high number of system. Another outlier is eThekwini, documents varies among municipalities. lodgments, the Cape Town Deeds Office which despite its e-application process In Cape Town and Mangaung, a – one of the locations where lodging a has a lag – this is largely the result printout of the title search must be deed takes the longest – has faced an of staffing shortages and a difficult included along with the application. important backlog due to the failure of implementation of new (updated) back- Applications that do not include one will information technology. An action plan office systems. be rejected. In Tshwane, the requirements was adopted to address the problem. 21

Ekurhuleni

Cape Town

15.5

29.5

doing business in South Africa ments varies among municipalities.

SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa

REGISTERING PROPERTY

FIGURE 5.4 Globally, 43% of economies are closer than South Africa is to the frontier of best practices in the quality of land administration frontier

Singapore (best performance)

Australia

All 9 South African BRIC locations East Asia & Pacific Namibia

United Kingdom Malaysia Rwanda

Mexico Kenya

Chile

Libya, Marshall Islands, Micronesia, Timor-Leste

OECD high income

43% of economies

25th percentile

50th percentile

75th percentile 60

100

Distance to frontier score for the quality of land administration index (0–100)

Source: Doing Business database. Note: The figure illustrates the distribution of the 190 economies in the Doing Business sample by their distance to frontier score (DTF) for the quality of land administration index. The DTF score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). The OECD averages are based on economy-level data for the 33 OECD high-income economies. The East Asia & Pacific averages are based on economy-level data for the 25 economies of East Asia and the Pacific. The BRIC averages are based on economy-level data for Brazil, Russia, India and China.

Cost varies marginally – from 7,61% Results for these dimensions are then surveyor-general’s offices use a common added for the important overall scoreinput on the “erf” number to uniquely identify each of the property value information in Ekurhuleni, BOX 5.1 Geographic systems provide forquality municipal services property (1 point), but they have separate Johannesburg and Tshwane to 7,64% in of land administration index. The Office the rates Chief clearance Surveyor-General, in Pretoria, is the cadastral agency. It has The eightdeeds local offices, per In South Africa, landnational administration databases. office’s one DeedsWeb Cape Town – of with and based province except for Northern Cape Province, which is administered by the Free State office. Each office has a geographic informacompliance certificate fees accounting falls under the purview of the national database also makes it possible to conduct tion system (GIS) comprising the national cadastre. for the main differences. This is because Department of Rural Development and an electronic search for encumbrances on Office of the Surveyor-General establishes cadastral and land dimensions throughout country. Reform. Moreboundaries specifically, the plot a given property (1 point).the The surveyorthe The largest share of Chief fees (including the Land It provides information to deeds offices for registration purposes. Its cadastral data—including plot-specific information and transfer duty, conveyancers’ fees and department’s chief registrar of deeds general’s offices have a geographic diagrams—are freely available online.a Each local surveyor-general’s office also has an email service through which clients can lodgment fees) are regulated nationally. (land registry) and chief surveyor-general information system (GIS) that captures, request diagrams not yet uploaded. This is an important resource for land owners who want to know their property boundaries The transfer duty alone accounts for 86% (mapping agency) manage property stores and analyses cadastral data (1 or access other information on properties relevant to their interests. through their local offices. Quality point). This is not to be confused with of the total cost to transfer property. Separately, municipalities have their own corporate partacross of the planning authority—that serve broader purstandardsGIS areunits—often thus uniform the municipal corporate GISa services. pose. While municipal corporate GIS teams periodically obtain source data from the local surveyor-general’s office, they build country, and all locations score half of Going beyond efficiency: the quality on this information to create maps encompassing multiple layers of geographical information—cadastral, topographical, subterthe 30 possible points on the quality of of land administration index In South Africa, land ranean and other information—pertinent for providing municipal services. Municipalities mainly use this data internally, for land While procedural complexity, time and land administration index, lagging behind administration fallsand under use and planning purposes. For example, having access to topographical information enables municipalities to zone issue 81 other economies globally (Figure 5.4). costbuilding of property registration all matter plan approvals. the purview of the national for businesses, good land administration Department of Ruralhave level of detail containedItin the municipal GIS variesoffrom one location to the next. This is mainly because municipalities goesThebeyond efficiency. ensures Reliability infrastructure their own development priorities and thus collect different information. Unlike the surveyor-general’s office, which Development andfocuses Landon property owners a secure title, backed A reliable land administration system updating information on individual land plots, municipal GIS services tend to focus more broadly, such as on the characterisReform. More specifically, the by a reliable land administration system. provides clear information on property tics of entire neighborhoods. For example, many municipalities use the GIS to monitor the creation and expansion of informal A reliable, transparent, complete and plot-specific ownership information. and prevents fraudulent chief registrar settlements. Nonetheless, some collect For example, Mangaungdepartment’s uses aerial photography to identifyof secure land administration system is transactions. Adequate infrastructure unreported capital improvements on individual properties, for municipal valuation purposes. deeds (land registry) and chief associated with greater access to credit, for keeping property records is key to surveyor-general (mapping Lastly, because the municipal GIS is mainly used internally, municipalities differ in what information they make publicly available lower income inequality and lower ensuring reliability. The gold standard is and by what means. In most locations residents can access GIS information in person at the municipality. Cape Town is among agency) manage property incidence of bribery at the land registry. a available fully digital, unified or blinked property the minority to make its municipal GIS data online, for free. through their local offices Doing Business assesses the quality of registry and cadastral mapping system this system through five main dimensions: that allows staff to electronically search ●● the of infrastructure and update records. If deeds offices Diagrams and surveyor-general’s a. Areliability searchable index is available through the website of the Office of the Chief Surveyor-General, available at http:/ /csg.dla.gov.za. can be free of charge. (0consulted to 8 points) The nine locations measured score 5 offices had a shared database, they b. Most of the GIS information is available on the Cape Town City Map Viewer, available at http://citymaps.capetown.gov.za/EGISViewer. ●● geographic coverage (0 to 8) of the 8 possible points on the reliability would score an additional point. The ●● transparency of information (0 to 6) of infrastructure index. Historical land use of a single database, updated with ●● land dispute resolution (0 to 8) records (cadastral maps and property changes in real time, would ensure that ●● equal access to property rights titles) are either scanned images or ownership and boundary data are linked (-2 to 0). microfilms (2 points). Deeds offices and across the two agencies. It would reduce 48

SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa the potential for fraud, as each agency would have access to the most updated information on land plots. Additionally, if land registry and cadastre historical files were digitised and searchable (rather than simply scanned), South Africa would score another two points – one for each agency’s records being fully digital.

Transparency of information Transparency is assessed by how the land administration system makes information publicly available. The best practice is for registries and cadastres to make landrelated information available either online or on a public board.

All nine locations score 3,5 of the 6 possible points on the transparency of information index. In South Africa, general information on time limits for completing property transactions is displayed on public boards located in all deeds offices (0,5 points), but the list of necessary documents is accessible only via conveyancers All nine locations score 3,5 of the 6 possible points on the transparency of information index. In South Africa, general information on time limits for completing property transactions is displayed on public boards located in all deeds offices (0,5 points), but the list of necessary documents is accessible only via conveyancers. Additionally, although deeds offices track the number of property transactions processed, this information is not publicly accessible. Anyone who pays the fee listed online can access information on property ownership (1,5 points). In this regard, the office of the chief surveyor-general makes effective use of technology. Anyone can access cadastral diagrams online, and general information – on fees and time limits to deliver an updated map – is also available on its website (1,5 points). Neither deeds offices nor surveyorgeneral’s offices have a dedicated mechanism for clients to file complaints.

Geographic coverage Globally, only 22% of economies have a land registry that includes all privately held land plots, and 24% have cadastral mapping that covers all private land. Where land registries fall short of complete geographic coverage, companies and individuals cannot be sure whether areas not covered are relevant to their interests. The locations measured score 2 of 8 possible points on geographic coverage. In urban areas, privately held land plots are mapped (2 points), but registration has yet to catch up with mapping, even in urban areas. Additionally, private land in rural areas is not yet fully covered by the cadastre and land registry. Many rural areas were once designated homelands, which started being mapped only after 1994. Extending the coverage of deeds offices and surveyor-general’s offices to include all privately held land would result in a score on this index of the full 8 points.

Land dispute resolution An economy with a model land administration system minimises the number of land disputes by ensuring that clients receive accurate information, provides a state guarantee for registration, and compensates parties for losses incurred as a result of errors by the property registry. In addition, it ensures that an effective and efficient court system exists to handle land disputes, and provides statistics on the number of such disputes in courts of first instance.

An economy with a model land administration system minimises the number of land disputes by ensuring that clients receive accurate information, provides a state guarantee for registration, and compensates parties for losses incurred as a result of errors by the property registry The nine South African locations score 4,5 of the 8 possible points on the land dispute resolution index. The law governing property registration mandates

that all property transactions must be registered at the deeds office to be opposable to third parties (1,5 points). However, property registration in South Africa departs from the practice in 146 economies worldwide because it is not legally subject to a state or private guarantee (such as title insurance). But South Africa does require indepth verification steps during a property registration (1 point). The identity of the parties to a property transaction is checked against a national database to confirm accuracy and ownership (1 point), and documents proving the legality of the transfer are checked by the conveyancer and the registrar, both of whom can be found liable for errors.

The state, however, does not provide compensation for losses incurred as a result of erroneous information provided by deeds offices The state, however, does not provide compensation for losses incurred as a result of erroneous information provided by deeds offices. When land disputes do arise, parties can file claims at their High Court provincial division, where cases typically take two to three years to resolve (1 point). But no disaggregated data are available on the number of first-instance land disputes. If such statistics were available, if property registration were subject to a guarantee and if the state compensated losses incurred as a result of erroneous information provided by the deeds office, South Africa would score another 1,5 points. In addition, faster resolution of land disputes would lead to an increase of up to 2 points in this index’s score.

Equal access to property rights Doing Business also assesses whether a person’s gender has a bearing on access to property rights. In South Africa, as in 175 other economies, all women have the same ownership rights to property as their male counterparts. SOUTH AFRICAN PROPERTY REVIEW

off the wall

What will life be like with 3D printers that can create anything? The ability to design and manufacture a physical object using 3D printing was a major technological breakthrough. Today, just a few years since it was first introduced, there’s already talk of how it is reshaping our future Compiled by Tshepo Tshabalala

ay your dishwasher breaks down and needs just one single part replaced. Wouldn’t it be easier and faster – not to mention significantly cheaper – to print the part at home versus calling the store, figuring out your warranty, ordering the aforementioned part, and waiting for it to arrive? Of course, it’s not entirely as simple as that. There’s a lot more to 3D printing

than simply loading the paper tray and pressing “print”. At present, ease of use is still a major issue, and the operational issues as well as the maintenance required for the upkeep of a 3D printer make it difficult for an average household to justify the cost of buying a machine that will set you back anywhere from US$1 000 to US$4 000.

The past The future

See the Image source and full discussion of the history of 3D printing here. 50

SOUTH AFRICAN PROPERTY REVIEW

But the prospect of a 3D printer being present in every home is an exciting one, and as the technology continues to advance, 3D printers are able to produce more and more objects from varying materials on demand, including electronics and sensors, glass, ceramic and even metals. Used in construction, in the space of only a few years, printing of threedimensional objects has gone from toys to buildings. 3D printers can now print with any construction material – plastic, metal, concrete – so the idea of printing houses is gaining popularity. All these developments highlight the tech’s potential for home application, from something as simple as printing kitchen knives on demand to using the technology for 3D-printed food. The latter could see you sending data to a foodbased 3D printer so it can prepare the optimal meal – or any nutritional supplements that you require. Traditional food purveyors Hershey and the Culinary Institute of America have taken a step into the future, and are already experimenting with 3D food printing. Whatever next?

FEBRUARY 2019

MARCH 2019

APRIL 2019

SOUTH AFRICAN PROPERTY REVIEW 81

60 30

SOUTH AFRICAN PROPERTY REVIEW SOUTH AFRICAN PROPERTY REVIEW