South African Property Review June 2018 by SAPOA

PROPERTY SOUTH AFRICAN

June 2018

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

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2016/08/25

11:31 AM

Build-up to SAPOA’s Annual Convention & Property Exhibition 2018 The future we create – Imagine the possibilities

Property Tech

Digital communication transforming the way we do business

WCPD Forum

Western Cape developers attend 5th Convention

MetroWatch

Facts and ﬁgures: eThekwini

SOUTH AFRICAN PROPERTY REVIEW

from the CEO

Welcome to the 2018 SAPOA Annual Convention & Property Exhibition Regarded as South Africa’s premier property conference of the year, the SAPOA Annual Convention & Property Exhibition will once again present an exceptional forum for local and international property professionals and practitioners to refresh their knowledge base and explore technology innovations in real estate

he 2018 edition of the Convention will strive to offer plenty of networking opportunities, allowing you to meet and interact with leading property professionals, industry leaders, friends and colleagues, as well as sponsors and exhibitors. The three-day event will be held from 19 to 21 June at the Durban International Convention Centre. The theme of the 2018 Convention – “The Future We Create. Imagine the Possibilities” – will challenge delegates to think futuristically, and allow them to explore the possibility of multiple futures and new technologies within an innovative and diversified real estate environment. SAPOA has again selected a line-up of thought-provoking local and international speakers to share their knowledge and expertise. The first day of the Convention will provide an array of networking opportunities in the form of a golf day at Mount Edgecombe Golf Course as well as an engaging, educational and inspiring city tour. SAPOA will also be hosting a workshop on the issue of the water crisis. For an industry body, a collaborative effort on the part of all members is required to address the challenges we are facing. The situation is unprecedented in the world, and information and knowledge sharing is very important in saving lives and our economy. The information-sharing workshop will highlight various initiatives that industry players have implemented in curbing this growing problem. Talk of land reform is back on the agenda of South Africans, with a review of the Constitution relating to land expropriation without compensation. Day 2 of the Convention will kick off with an in-depth address on this topic.

There will also be a discussion on emerging technologies – specifically the impact blockchain is having on how information is collected, shared and analysed within organisations, and some real-world applications of this technology. The day will conclude with a presentation on how the property industry will need to adapt in a fluctuating economy. Office spaces are changing to maximise productivity. The first discussion on Day 3 – “Productivity in the Modern Office Environment” – will showcase examples to highlight that companies do not necessarily need a Google-sized budget to implement designs and systems that will boost productivity in the work environment. The political narrative entitled “We Cannot Predict the Future – But We Can Invent It” promises to be a robust discussion about the South African landscape and the endless possibilities available to all South Africans to invent the ideal political future. Day 3 will conclude with an analysis of how the real estate industry performed and what the future holds.

Political analyst, broadcaster, lecturer and writer Eusebius McKaiser will once again host the proceedings as Master of Ceremonies. In the face of further global economic and political uncertainty, the Convention will provide the perfect platform for commercial players to gain knowledge with regards to the role and impact of the commercial property sector. We trust that the many issues raised, discussed and debated – and our well-informed speakers’ views and opinions – will be of great value to delegates’ experience at this event. Durban is an exceptional location for the Convention. It is known for its warm, subtropical climate and extensive beaches. The city is built around one of the busiest ports in Africa, and focuses on providing visitors with unique experiences that go beyond the beach and into the realm of Durban’s diverse culture, urban lifestyle and scenic diversity. The International Convention Centre, in the heart of the city, provides the perfect backdrop for both pre- and post-Convention meetings and networking opportunities. On behalf of SAPOA, I would like to extend our gratitude to the Convention’s principal sponsor, GladAfrica Group – as well as all other sponsors – for their valuable contribution. I would also like to thank the SAPOA Convention Committee, and the SAPOA Executive Board and staff who make this annual event a major success. We hope that you join us for a symphony of outstanding real estate discussions, and take a little extra time to enjoy the spectacular and unique beauty of the Zulu Kingdom. Best regards, Neil Gopal, CEO SOUTH AFRICAN PROPERTY REVIEW

contents

June 2018

PROPERTY SOUTH AFRICAN

REVIEW

1 South African Property Review

PROPERTY SOUTH AFRICAN

June 2018

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

11:31 AM

ALL ROADS LEAD TO DURBAN

Build-up to SAPOA’s Annual Convention & Property Exhibition 2018 The future we create – Imagine the possibilities

ON THE COVER June sees SAPOA members and international delegates heading to Durban for this year’s SAPOA Annual Convention & Property Exhibition. It will once again offer an enlightening, entertaining and energetic

Convention build-up, speakers

forum for local and international property professionals

Property Tech

Digital communication transforming the way we do business

and practitioners to refresh their knowledge base and explore technology innovations in the commercial

property and real estate environment. WCPD Forum

Western Cape developers attend 5th Convention June 2018

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

MetroWatch

Facts and ﬁgures: eThekwini

From the CEO

From the Editor’s desk

8 Convention build-up 14 Convention profiles 20 Legal update City of Johannesburg’s Outdoor Advertising By-law 24 Developers’ Forum Growing Africa’s premier destination through property development 28 Facts and figures Cape Town CBD in numbers 30 Technology in property development South African consultancy leads the way with 3D technology

SOUTH AFRICAN PROPERTY REVIEW

32 Gauteng property development Oxford Parks: a catalyst for urban regeneration 35

KZN development Park Square leads the way for future-forward workspaces

MetroWatch

44 Howmuch.net 46

Social

Off the wall The future of sensor-packed smartphones

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 Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Eugene Jonck Sales Nkepile Setshedi: sales@sapoa.org.za, Pieter Schoeman: pieter@mpdps.com Finance Susan du Toit Contributors Karen Eicker, Louise Hunt, Raul Amoros, University of Alabama at Birmingham (UAB) 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

The future of sensor-packed smartphones

51 SOUTH AFRICAN PROPERTY REVIEW

from the Editor’s desk

Our bags are packed, and we’re ready to go! As excitement mounts, we are gearing up to head to Durban – not quite with bucket and a spade, but certainly armed with anticipation of what promises to be another enlightening, entertaining and energetic Annual Convention

s our CEO Neil Gopal mentions in his CEO address, the SAPOA Annual Convention and Property Exhibition is full of promise – and, I for one, am very much looking forward to the Tongaat Hulett-hosted city tour of Durban. I get a number of press releases each month, all telling me how Durban is developing projects such as Bridge City, Cornubia, the Sibaya Coastal Precinct and Park Square (adjacent to the iconic Chris Saunders Park) – now I’ll get to experience them first-hand. Apart from running the various speakers’ profiles in this issue, we also speak to political analyst Daniel Silke, economist Mike Schussler and water expert Mike Muller to get their views ahead of the Convention programme. While we were out of the office interviewing our speakers and panellists for this Convention build-up edition, the Western Cape Developers Forum was running its own convention in Cape Town. We were able to get hold of Deon van Zyl, the Forum’s Chairman, to get an idea of some of the issues covered. Imagining the future has been uppermost on our minds for a while, with technology playing a huge part in our thinking. In this issue, we interview BIM managers Craig Howie and Andre Schoeman about the vital part that technology plays in communication in their built environment. Closer to home (and in keeping with our quarterly developer’s theme), we discover a precinct that is changing the skyline of Umhlanga. Park Square – Nedbank’s iconic R1-billion mixed-use office and retail development – is set to shake up Durban’s workspace culture. Over in Gauteng, Rosebank is coming under the spotlight with Intaprop’s innovative urban-regeneration precinct at Oxford Parks, which aims to create a

SOUTH AFRICAN PROPERTY REVIEW

well-maintained, sustainable, pedestrianfriendly environment. Looking ahead to August, in addition to the Convention report back that we will be focusing on in Property Review, we will also be publishing our annual Women in Property supplement. In the past it, has been well supported – and we thank you for that. We invite you, our members, to take advantage of this opportunity to pay tribute to the commercial property industry’s hardworking women. We will of course be interviewing the ladies on SAPOA’s various committees, and we will also speak to incoming President Ipeleng Mkhari, who will soon join SAPOA’s other First Ladies – Lynette Finlay, Marina van der Walt, Amelia Beattie and Nomzamo Radebe – by taking up the reins of SAPOA’s leadership. Please contact either mark@mpdps.com or Pieter Schoeman at pieter@mpdps.com for more information. I’m pleased to say that Property Review is available both in print and online – so you can click away and read our back issues as well. To do so, visit Southafricanpropertyreview.co.za. Enjoy the read, and see you all at Convention! Mark Pettipher, Editor and Publisher

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We cannot predict the future of our country’s political landscape, but we can invent it As we anticipate SAPOA’s Annual Convention, Property Review spoke to political analyst Sithembile Mbefe, who will be part of the political discussion on the political future of our country Sithembile Mbefe, lecturer at University of Pretoria

ithembile Mbefe is a lecturer in the Department of Political Sciences at the University of Pretoria, where she lecturers on international relations and South African politics. She is also an Associate Fellow of the Centre for Governance Innovation at the University of Pretoria. She comments frequently in the media on a range of issues in South African politics. Mbefe has quite an impressive resume to go with it. She recently completed her doctoral dissertation on South Africa’s foreign policy during its two elected terms in the United Nations Security Council (2007-2008 and 2011-2012). Her DPhil in International Relations will be conferred in September 2018. She has published on the Economic Freedom Fighters’ and South African elections in accredited academic journals. Her research has been funded by the National Institute for Humanities and Social Science (NIHSS), National Research Foundation (NRF), the American Social Science Research Council (SSRC) and the Mellon Foundation. In 2014, she was a visiting scholar at the Department of Political Science and Balsillie School of International Affairs at the University of Waterloo in Canada. Last year, we spoke of a troubled economy under the then-president Jacob Zuma. But much has changed since then. “2017 was a difficult year for the economy with the technical recession, various credit ratings

SOUTH AFRICAN PROPERTY REVIEW

Compiled by Maud Nale

downgrades and crises at the StateOwned Enterprises. Highly-indebted and poorly governed SOEs were the biggest threat to the economy because creditors were threatening to call their loans, which would have forced the Treasury to pay back trillions of rand,” she says. But the outlook since then has been somewhat different in the ‘new dawn’ under President Cyril Ramaphosa. “Since becoming president, Cyril Ramaphosa has improved the economic outlook by focusing on stabilising the SOEs by appointing Pravin Gordhan as the Minister of Public Enterprises and authorising Special Investigations Unit (SIU) investigations into Transnet and Eskom. Minister Gordhan has appointed new boards and executive appointments to various SOEs to remove individuals allegedly involved in State Capture.” Despite this ‘new dawn’ Mbefe believes that there is still a lot that needs to be done to restore investor confidence. “Investor confidence has risen since President Ramaphosa took over, but this has yet to translate into significant economic growth or reduction in unemployment. This is because the structural factors undermining the economy remain unchanged.” About President Ramaphosa’s first 100 days in office, Mbefe feels that the 100 days marker is symbolic rather than a realistic measure of

performance. “Nevertheless, I think Ramaphosa has performed well considering the constraints he faces. He won a slim margin in the ANC conference, which limits his ability to make wholesale changes to government. Moreover he is completing the electoral mandate given to the ANC under Jacob Zuma in 2104 and is yet to have his own support tested in a national election.” Ramaphosa’s successes have been in the areas play to his strengths. He’s put people he trusts in key economic ministries: Finance, Public Enterprises and Mineral Resources. For the first time in years the SA Commissioner of Police, the Head of the Hawks and the Head of Crime Intelligence have permanent appointments, which will go a long way in stabilising SAPS. Ramaphosa has made important senior appointments in the intelligence services. This should enable free and fair investigations of state capture.” Despite all these positive changes, “Shaun Abrahams is still National Director of Public Prosecutions, so it will be a while before anyone is held accountable for looting the state.” “With regards the ruling party, the first 100 days has only exacerbated divisions within the ANC. Jacob Zuma is not taking a quiet retirement and his supporters seem intent on making life as difficult as possible for the new ANC leadership.” Mbefe weighs in on the race for the

upcoming general election. “The race for the 2019 elections is likely to make things worse, as comrades vie for positions in national and provincial government. However, the internal issues plaguing the DA and, to a lesser extent the EFF, mean the ANC will have limited competition and will probably still win a substantial national majority in 2019.” On the issue of land reform, Mbefe believes that the debate is long overdue. “It is positive that the debate is happening within Constitutional boundaries through a parliamentary committee. This will help prevent the chaotic process seen in Zimbabwe. Research from the World Bank and OECD shows that South Africa’s greatest challenge is inequality. A comprehensive, legal and fair land reform programme will contribute reducing the country’s high income and wealth inequality.” What, if anything, would need to happen for the country to move forward? “For South Africa to move forward, all sectors of society need to do more to include young people in economic activity. Unemployment disproportionately affects people between the ages of 15 and 24, the vast majority of whom are not in education, employment or training. The country has no future unless it provides opportunities for young people.” Sithembile will form part of a political panel discussion on Day Three of the Convention. The topic is, entitled We cannot predict the future, but we can invent it. She will sit alongside political analyst Daniel Silke, Political Analyst Ranjeni Munsamy and Political Analyst and Conflict Transformation Expert at UKZN, Lukhona Mnguni. The discussion will be facilitated by award winning journalist, Iman Rappetti.

Giving perspective to the country’s economy Economist at Nedbank, Isaac Matshego is a panellist at the SAPOA Annual Convention. He spent some time with Property Review giving his perspective on the country’s economy, as SAPOA builds up to what promises to be another great property event Compiled by Maud Nale

saac Matshego specialises in macroeconomic and market analysis of emerging markets in mainly SubSaharan African economies. His current focus is country risk and sovereign debt analysis as well as exchange rate analysis and forecasting, with a particular focus on Sub-Saharan Africa. He is also a member of the Sovereign & Financial Institutions Risk Committee which monitors Nedbank’s exposure mainly to - but not limited to - sovereign debt across the globe. Matshego believes that the change of government leadership has engendered a renewed focus on addressing the economic challenges that South Africa faces. “Significantly, closer cooperation between government and business in tackling the socioeconomic issues is being invigorated. “ “The real challenge, however, lies ahead and it will take more than just a change in government leadership to set the economy on a sustainably strong growth trajectory. Economic policies that address the structural impediments to investment and growth will not only attract foreign investment but will also revive spending by domestic investors.” “Of great importance is a quick resolution of the proposed amendments to the land redistribution legislation as well as the revised Mining Charter. Tackling these policy issues prudently will be necessary to set SA on a higher growth trajectory.” Matshego moves onto the state of South Africa under the new leadership

Isaac Matshego, Economist, Nedbank

under President Cyril Ramaphosa, and whether the ‘new dawn’ could mean a change for the future of our country. “A renewed focus on addressing the economic challenges will go some way in supporting business confidence further and boosting growth expectations. This, hopefully, will boost fixed investment and help to create jobs.” Emerging markets have been racing ahead economically. South Africa, on the other hand, is still lagging. Matshego is optimistic. The outlook for the South African economy has improved with the change of government leadership and government’s renewed focus on reviving economy growth has brought a sense of confidence to the business sector. This bodes well for higher investment and a faster growth pattern,” he says. He does, however, believe that much will be clearer after SOUTH AFRICAN PROPERTY REVIEW

the next year’s general election. “The post-2019 government’s policies will be crucial for the direction of the economy.” His predictions for the next five to ten years? “The global environment is likely to be favourable, barring a significant disruption of a broader trade war among the large economies.” Matshego will form part of an economic panel discussion on Day Two of the Convention. The topic is, entitled South Africa’s Economy: Muddling through will no longer do. He will sit alongside South African economist Mike Schussler, Chief Economist at Efficient Group, Dawie

Roodt and Head of Economic Research at PIC, Mohammed Nalla. Based on the theme of the economic panel discussion, Matshego shares brief insights on why he believes muddling through the South African economy will no longer do. “South Africa faces a number of socioeconomic challenges, primarily high unemployment and poverty rates. The economy thus needs to growth at rates high enough to attract investment that will expand the production base and help to create jobs at a rate required to alleviate poverty. Slow growth tends to exacerbate the socioeconomic challenges.

Much more still needs to be done for South Africa to move forward Prominent political analyst and commentator on South African politics, Ranjeni Munsamy, will also form part of the political discussion on Day Three of the SAPOA Convention. She weighs in on the future of our country’s politics. Compiled by Maud Nale

anjeni Munsamy is Associate Editor: Analysis for the Tiso Blackstar Group. She previously worked as Associate Editor of Daily Maverick. She has over 20 years’ experience in journalism and communications and has worked as a political correspondent at several South African media houses, including the Sunday Times. She has reported extensively on all South Africa’s presidencies since 1994. She has also covered international events such as the 2016 presidential elections in the United States. She also served as Head of Communications in the Ministry of Higher Education and Training in South Africa. Munsamy previously served as a communications strategist and media trainer for political and labour organisations. Despite the change on political power from the then-president Jacob Zuma to

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Cyril Ramaphosa, Munsamy still believes the country’s economy is in serious trouble. “The economy is still in serious trouble but sentiment about South Africa has changed significantly since the political transition in February,” she says. “President Cyril Ramaphosa has made significant changes in his cabinet to restructure the economic cluster and announced a team of investment envoys to draw $100 billion to the South African economy in five years. The president also announced a series of summits – among them an investor conference and jobs summit – to tackle perennial problems that result in sluggish economic performance and low growth.” “South Africa is still beset by a high cost of living, exacerbated by the VAT increase. Steep petrol price hikes and a 2.2% fall in GDP in the first quarter of 2018 reflect that a change in political leadership is not a

Ranjeni Munusamy, Associate Editor: Analysis for the Tiso Blackstar Group

magic fix for the troubled economy. The call by Ramaphosa for a national effort to rebuild the country needs to be taken seriously to effect real change.” “There has been a period of rapid change since the ANC’s 54th national conference in December that resulted in the election of Ramaphosa as the ANC leader. This enabled the political transition in February through the recall of former president Jacob Zuma and election of President Ramaphosa. The new president firing of some people in cabinet implicated in corruption and responsible for negative perception in government had a positive spinoff. So too did the clean-up process in state-owned enterprises undertaken by the new Public Enterprises Minister Pravin Gordhan. The suspension of the commissioner of the South African Revenue Service and new appointments in the South African Police Service have also been welcomed.” “The ANC is maximising on the positive energy in the nation around the “new dawn” and has adopted the president’s “Thuma Mina” phrase as the cornerstone of its 2019 election campaign. But it remains to be seen whether the momentum will be sustained until next year’s elections.” On the issue of land reform, Munsamy believes that a well-managed process is required to deal with problems of inequality and poverty in our country. “It came as a shock to many that the ANC

adopted a resolution to amend the constitution to expropriate land without compensation. This happened after a protracted battle at the ANC’s December conference. Since then, the EFF pushed the ANC into agreeing to the constitutional amendment in parliament. The ANC has had to take ownership of the issue even though it was not completely ready to do so.” “There are clearly people in the leadership, including President Ramaphosa, who want to tread cautiously and want to do more groundwork to explore what has retarded the land redistribution process, how much land is already available for redistribution and to test the expropriation process in the constitutional court. There is no doubt that the land redistribution process so far has been dismal, and that a heightened, well-managed process is required to deal with problems of inequality and poverty in South Africa.” But what, if anything, would need to happen for the country to move forward? “The state needs to become more efficient and needs to stop wasting money. The auditor-general’s audit report for municipalities released in May 2018 showed a regression compared to the previous year, with irregular and fruitless and wasteful expenditure ballooning more than 70%. Bad performance, inefficiency, corruption and irregular spending are also inherent at provincial and national government level, resulting in a state that is unable to serve the citizenry optimally. The experience of state capture reveals the vulnerabilities that exist and that there are insufficient accountability and reporting mechanisms to expose corruption.” “There are major weaknesses in the state, including the criminal justice system. People who break the law, including through looting state coffers, must be brought to book. Too many South African remain trapped in the cycle of poverty and there needs to be a greater national effort to create jobs and enable people to live better lives. South Africa also needs strong political leadership and a more robust work ethic to move forward.”

The road to recovery South African economist Mike Schussler is a speaker at the SAPOA Annual Convention and a well-known economic commentator in the media and in academic articles. By Mark Pettipher

Mike Schussler, South African economist

ike Schussler has been the winner of the “Economist of the Year” competition twice – one of only three economists to have won it more than once in the past 25 years. He was also recognised as the “Small Business and Member of the Year” by the Johannesburg Chamber of Business. Well-known for his innovative research on subjects ranging from employment to education indicators, Schussler invented and maintains the Provincial Barometers and fixed investment indices, which have been widely published to give insight into economic conditions on a regional basis – the first and only such indices in South Africa. His innovative approach has also led to other economic measurement indices and management tools, such as The BankservAfrica BETI, the Absa SMME index and the SA Payprop rental index He presents economics in an entertaining and understandable style that has impressed international chief executives and South African audiences from farmers to financiers. He also advises and presents to pension funds, local governments and business chambers.

“Before we can talk about the South African economy, we need to put ourselves in the world context,” he says. “We have seen the biggest reduction in world poverty – now less than 13% of the world’s population is living on less than US$2 per day. “The international environment is looking a lot better than before. Last year (and this year), growth forecasts have been lifted and world optimism has been increased. Furthermore, emerging markets are racing ahead; sadly, in the past eight to 10 years, South Africa has lagged behind. “Those emerging markets are also our trading partners. South Africa is an open economy; as such, our top 25 trading partners need the world to grow for us to keep commodity prices stable. Gold is an exception to the rule as it is a hedging commodity, and is often collated to interest rates and a gauge against inflation. Platinum is being particularly hard-hit, brought about by diesel engines becoming less popular as a result of their expensive emissions controls. “But the positive rise in commodities and the marked improvement and increase in our neighbouring economies mean that our neighbours will buy more of our manufactured goods. Unfortunately, I predict a disappointing growth in our economy because our manufacturing and mining industries are slow – and in some cases negative. “We can put that down to a number of factors, but it can mainly be ascribed to the decreasing demand for platinum. The increase in the value of the rand has also had an effect on the economy.” Schussler moves on to the state of South Africa. “We can all agree we are in a better position now that we are post-Zuma. The figures show that there is increased business confidence, and that our new President is making the right moves. SOUTH AFRICAN PROPERTY REVIEW

“While the land reform debates rage, we will experience a stalemate – investors are weary of committing to long-term investment on anything that involves property, agriculture being uppermost. But with Pravin Gordhan cleaning up the parastatals and state-owned enterprises, there is hope that some of the promises can be reinstated, meaning that more money will trickle back into the consumers’ pockets. “There are a number of ‘big’ things to address, such as housing, infrastructure and sanitation. As an example, if more RDP housing title deeds were to be released, there would be more ownership, which in turn means that there would be better ‘security’ for loans and the micro-economy would begin to grow, further stimulating entrepreneurial developments in the lower-income sector.” South Africa’s tax is among the top 10 in the world. This tax burden weighs heavily on the shoulders of a relatively small tax-paying base, and our towns and cities are relying on relatively high tariffs to foot the bills. Our internal discouragement is leading to a number of bigger property investors looking outside of our borders. “From a property perspective, the government needs to step up,” says Schussler. “Instead of bailing out failing parastatals such as SAA and paying aboveinflation government wages, we need to hold back that money and invest in improving people’s lives by enhancing value within towns, bettering roads, improving lighting and transportation, and increasing crime-fighting initiatives. “As the country heads towards a general election, the government needs time to consolidate and fix the ‘rot’ of the past 10 years. Growth will not be much more than two percent. With population growth predicted to be 1,7%, we need the economy to grow by at least 3,7% – and to wipe out the historic backlog, we need a growth of more than seven percent.” Schussler offers pointers as to where growth should be focused. “We need to look at what we have,” he says. “Tourism probably offers the biggest opportunity: South Africa is not in the top 40 as a mustvisit destination; if we develop our domestic and international appeal through more affordable travel opportunities, it 12

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would allow for better spending on the related industry needs – guest-houses, hotels, restaurants, flights and on-theground services such as buses and taxis. “What can the property industry do to contribute? Shopping centres in the urban environment have been over-traded – but there is a need for smaller centres in rural areas, catering more towards co-ops and local goods and manufactured products, thereby creating access to our ‘cash’ economy. “When it comes to shopping centres in bigger cities and towns, we will no doubt see a change in the way they operate – especially if we see further growth in online shopping. There will need to be collection points offering ‘pick-up-and-go’ services. Malls will also have to look at better, more innovative ways to ‘entertain’ their customers. We are already seeing some petrol stations offering collection points because they’re located in more convenient areas, and usually where the traffic congestion is less. “I see further growth in areas such as retirement complexes, and a need

for more hospitals and healthcare facilities for our ageing population. There could even be an opportunity for medical tourism, especially as there is a growth in the ‘private’ medical sector. The leisure industry will see growth because people are no longer working 10-hour days. “On a grander scale, and as the economy grows, consideration should be given to how people move about. Take airports and railway terminals: these areas are ripe for economic expansion. An aerotropolis or even a ‘rail-tropolis’ has the ability to cater for all travellers’ needs with shops, restaurants, hotels, car parking and onward transportation to precincts with similar smaller facilities. In addition, we may see a trend towards a more ‘live, work and play’ environment, brought on by the desire for easier access to safer conveniences and a more integrated lifestyle. “As the population densifies, there will be opportunities in the inner cities to repurpose buildings. But the ‘people’ element needs to be taken care of while retrofitting, to include play areas and walkways that encourage the wellbeing of tenants.”

Ideology vs best practice As SAPOA’s Annual Convention in Durban draws closer, Property Review talks to author and political analyst Daniel Silke, who will be a panellist at the event By Mark Pettipher

Daniel Silke, author and political analyst

ast year we spoke of a troubled economy, a country that was in political disarray, and an understated disdain and sentiment towards thenPresident Jacob Zuma. But much has changed since then. “With the appointment of Cyril Ramaphosa, we have seen an upbeat shift in sentiment,” says Daniel Silke cautiously. “However, we haven’t seen any real change in policy. The positive sentiment is centred around the private sector being more comfortable with Ramaphosa as the country’s president. We believe he is someone that the sector can do business with – and he has said that he will use his business

knowledge to steer the country towards a better future. “The improved sentiment is, however, offset by a continued political discourse polarised around race and race invectives and the unease among communities, and is compounded by uncertainty around the proposed expropriation of land without compensation (ELWC). Adding to the ANC’s woes is the difficult and often violent domestic political debate raging seemingly unchecked within the party. Until racial discourse is under control or alleviated, we will not see a better era. “I’d say there has been an almost schizophrenic aspect to the country’s politics in the past few months. Positive growth is being held back because Ramaphosa has not been able to control the debate on the ELWC, and is seemingly allowing the EFF to dictate its direction. Land expropriation is a complex issue. There have been about 140 000 written submissions to date. Each will need to be acknowledged and replied to; thereafter, the examination needs to go through the rigours of legal interpretation and the parliamentary process.

“Land reform is caveated by the understanding that change would not take place if it is detrimental to the broader economy and, most importantly, to South Africa’s food security. Ramaphosa has also widened the caveat, adding that it should not affect land tenure and the right to hold private property” “Land reform is caveated by the understanding that change would not take place if it is detrimental to the broader economy and, most importantly,

to South Africa’s food security. Ramaphosa has also widened the caveat, adding that it should not affect land tenure and the right to hold private property.”

Silke asks the following questions, which have been echoed by a number of politicians and concerned citizens: ●● Who is entitled to the land? ●● What kind of claims will be made? ●● What kind of land will be alienated – private or state? ●● What will the legal challenges be? With the land question in mind, “We are in an unknown,” says Silke. “No-one likes uncertainty – particularly foreign investors. Over the past eight years, we have seen a collapse in foreign direct investment (FDI) – and to try to stem this trend, Ramaphosa has sent emissaries into the international market to try to attract R100-billion in FDI. Because land reform is a major impediment for both domestic and foreign investors, those emissaries will be questioned on the domestic policy, and it will take a huge leap of faith for investors to commit to South Africa this far ahead of next year’s general election. “Ramaphosa needs to be given an electoral mandate. For South Africa, this is probably the most critical year: while Ramaphosa struggles with his grip on the ANC, we are as we were last year still in ‘wait and see’ mode. There are many positives, centred around the immediate cabinet reshuffle and the mammoth task that Pravin Gordhan has ahead of him to reboot and make state owned enterprises profitable. “The policy to reign remains elusive. The ANC is deeply divided, and it would appear that Ramaphosa does not have a solid hold on his tenure. He was elected by a small majority, and still does not have the full support of his party. The ANC needs to quell the domestic political violence we are seeing, rein in the disharmony that is being projected in KwaZulu-Natal and the north, and pacify the two labour

movements, SAFTU and COSATU. “For the country to go forward, the government needs to start to adopt best-practice policies. In recent years, South Africa has not been able to take advantage of global growth, and has not meaningfully competed with other emerging markets. In fact, we are lagging behind other African countries. But there are positive moves within the government to address these issues. “With our population growth being higher than our GDP, and unemployment sitting at about 9,5-million, our tax base is under strain. There are encouraging moves in the private sector because the sector is keen to help with the various unemployment schemes being initiated by the government. “The biggest challenge to the employment issue is the quality of education, which needs to be improved ASAP. Then there is the onslaught of artificial intelligence, particularly in the manufacturing sector. South Africa needs to improve its manufacturing base and become more competitive; it needs to become more attractive than our neighbours in this respect. “We are competing with African countries in which trade unions are less entrenched, making FDI in those countries more attractive. The opening up of free trade agreements on the continent should give South Africa’s established manufacturing companies a competitive edge – especially our steel sector. “I believe that the ANC needs to take a ‘hard-nosed’ view of their policy – one that is void of emotion. We need to get our country out of the rut it finds itself in. There has to be a strong fiscal policy to get South Africa out of the political malaise and of the R50billion shortfall. “Furthermore, the state must play a more substantive and supporting role in the economy to increase the tax base by encouraging a robust job market that’s more about best practice than about political ideology.” SOUTH AFRICAN PROPERTY REVIEW

SAPOA’s Annual Convention & Property Exhibition 2018: speakers and panellists Noel Mashaba Executive Chairman GladAfrica Group Address by Principal Sponsor Day 2 - 09h50 - 10h00 l SAPOA Board Member l Chairperson of SAPOA’s Ethics Committee. l Founder of GladAfrica Group (Pty) Limited GladAfrica Consulting Engineers (Pty) Limited GladAfrica Investments (Pty) Limited GA Environment (Pty) Limited.

Mmusi Maimane Leader of the Democratic Alliance Keynote Speaker Day 2 - 10h00 - 10h45 ●● Parliamentary leader of the opposition in the National Assembly of South Africa. ●● Former Democratic Alliance’s (DA) ●● Deputy Federal Chairperson, ●● DA National Spokesperson ●● Leader of the DA Caucus in the City of Johannesburg Municipal Council. 14

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Jeremy Cronin Deputy Minister of Public Works Expropriation of land without compensation - Keynote Speaker Day 2 - 11h30 - 12h15 ●● Former Deputy Minister of Transport ●● Member of the South African Communist Party ●● Member of the African National Congress National Executive Committee ●● Former editor of UDF’s journal Isizwe

Dale Sinclair Aecom, Director: Technical Practice CIC BIM Champion (UK) Exploring emerging technologies: Are you ready - Panellist Day 2 - 13h30 - 14h15 l Delivered many large-scale projects l Passionate about developing innovative design processes using modern methods of construction and digital technologies. l Author of RIBA Plan of Work 2013 l Speaks on the RIBA Plan of Work, BIM, and the future of the built environment industry.

Dawie Roodt Founder, Director and Chief Economist of the Efficient Group Economic presentation - South Africa’s Economy - Panellist Day 2 - 15h30 - 16h30 ●● Chairman of Efficient Private Clients, ●● Nationally renowned economist ●● Specialises in monetary and fiscal policy ●● Ranked the most referenced economist in the country ●● Recipient of the prestigious Economist of the Year award, ●● Anchor presenter of Ontbytsake

Iman Rappetti Award-winning journalist and radio personality JOIN THE CONVERSATION - We cannot predict the future, but we can invent it Interviewer Day 3 - 10h45 - 12h00 l Works across print and radio l Currently a senior news anchor. l Reputation as a fearless journalist and broadcaster l Confronted politicians on many occasions, forcefully asking things we’ve all been dying to know. l Former religious student in Iran

Izak Petersen CEO of the Dipula Income Fund The future of real estate - Panellist Day 3 - 13h45 - 14h45 l Chairman of the South African REIT Association. l Co-founder the Mergence Group of companies l Served on the boards of SAPOA, the Association for the Advancement of Black Accountants and the Association of Black Securities and Investment Professionals.

Isaac Matshego Economist, Nedbank ECONOMIC PRESENTATION - SOUTH AFRICA’S ECONOMY - Muddling through will no longer do Day 2 - 15h30 - 16h45

John Salustri editor-in-chief of Salustri Content Solutions Productivity in the modern office environment - Facilitator and Speaker Day 3 - 09h45 - 10h15

l Formerly with Standard Bank Ltd Group Economics Division l Formerly with Investment Solutions Ltd’s Market and Economic research unit l Holds ecconomic degrees from University of the North West and University of South Africa

l Four-time recipient of the National Association of Real Estate Editors’ Award for Excellence in Journalism l Founding editor of GlobeSt.com l Former editor of Real Estate Forum and Facilities Design and Management magazines

Lukhona Mnguni PhD intern researcher in the Maurice Webb Race Relations Unit JOIN THE CONVERSATION - We cannot predict the future, but we can invent it Panellist Day 3 - 10h45 - 12h00 ●● Founder of The Giveback Initiative at his former high school, ●● Alumnus of the “Brightest Young Minds” in South Africa. ●● Lifetime member of the Golden Key International Honours Society ●● Board Associate for Akhani Education Social Investment Management, ●● Trustee in the McCord Trust, ●● Contributing political analyst

Lisa Stanley CEO of OSCRE International Exploring emerging technologies: Are you ready - Facilitator Day 2 - 13h30 - 14h15 Productivity in the modern office environment - Panellist Day 3 - 09h45 - 10h15 l Over 20 years’ experience in asset and property management, strategic planning, real estate operations, brokerage, compliance and advocacy SOUTH AFRICAN PROPERTY REVIEW

Michael Stannard Managing Director of Paper Plane Exploring emerging technologies: Are you ready - Panellist Day 2 - 13h30 - 14h15 ●● Director at the AccTech Institute ●● Google LaunchPad Mentor ●● Leading expert on cryptocurrency Bitcoin, blockchain and artificial intelligence ●● Advisory on exponential technology ●● Advisory on the Fourth Revolution

Mohammed Nalla Leads the Economic Research Division at the Public Investment Corporation ECONOMIC PRESENTATION - SOUTH AFRICA’S ECONOMY Muddling through will no longer do. Day 2 - 15h30 - 16h45 l Former Head of Strategic Research Nedbank Capital l CFA charter-holder, Nalla has always aimed to merge the academic world of economics with the practicalities of capital markets and the real economy. l Regular participant at conferences and round-table discussions, both domestically and abroad. 16

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Phil Barttram MSCI – Real Estate Executive Director: Client Coverage 2017, The Year that was - Speaker Day 3 - 12h30 - 12h15 The future of real estate - Faciltator Day 3 - 13h45 - 14h45

Ranjeni Munusamy Associate Editor: Analysis for the Tiso Blackstar Group JOIN THE CONVERSATION - We cannot predict the future, but we can invent it Discussionist Day 3 - 10h45 - 12h00

l Former head of Property Research, at Old Mutual l Self-proclaimed real estate evangelist, l Has a MBA from UCT’s Graduate School of Business, l More than 20 years in financial services in London and South Africa.

l Former Associate Editor at The Daily Maverick, l Prominent analyst and commentator on South African politics l More than 20 years of experience in journalism and communications. l Political correspondent at the Sunday Times. l Served as Head of Communications in the Ministry of Higher Education and Training in South Africa

Nesi Chetty Head of Listed Property Momentum The future of real estate - Panellist Day 3 - 13h45 - 14h45

Rudolf Pienaar Properties Divisional Director, Growthpoint The future of real estate - Panellist Day 3 - 13h45 - 14h45

●● Former head of Financials at RMB, ●● Fund manager and Head of property for the merged investments business at MMI ●● Manages flagship Momentum Property Fund ●● Investment committee member of Eris Properties, Group BSM Credit, and Momentum Securities

●● Chief Development and Investment Officer Growthpoint ●● Director of Acura’s Properties Limited and Sycom Property Fund Managers ●● Property Committee member of Victoria and Alfred Waterfront ●● Former past Chairman of the GBCSA ●● Director of the World Green Building Council

Sithembile Mbete Lecturer in the Department of Political Sciences at the University of Pretoria JOIN THE CONVERSATION - We cannot predict the future, but we can invent it Discussionist Day 3 - 10h45 - 12h00 l Associate Fellow of the Centre for Governance Innovation at UP l Doctoral dissertation on South Africa’s foreign policy l DPhil in International Relations will be conferred in September 2018. l Published on the Economic Freedom Fighters and South African elections in accredited academic journals.

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l Managing Partner for Deloitte Africa’s Center for the Edge l An expert exponential technology, l Consultant to fintech businesses l Chairman of a crowdfunding NPO. l Degrees from the University of Stellenbosch, UNISA, the UCT Graduate School of Business and Singularity University in California. SOUTH AFRICAN PROPERTY REVIEW

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outh Africa is without doubt in a perilous place when it comes to education and training. The merits of the World Economic Forum data may be debated, but the consistent reporting over a number of years regarding the “learning outcomes” landscape in South Africa is cause for grave concern. Among the 137 countries reflected in the 2017/2018 Global Competitiveness Report (competitiveness is described as a set of institutions, policies and factors that determine the level of productivity of a country), glaring inadequacies loom large as barriers to sustainable development and economic growth. Consider the South African scorecard on the following (1 being the best, 137 being the worst): we are at 85 in higher education/training; at 116 in primary education; at 114 in quality of the education system; and at 128 in quality of maths and science education. We seem to be dumbstruck by typical US political jargon of “send your kids to college”. The undisputed necessity of top-notch university education is obvious – but where are the voices that equally promote technical training and timehonoured artisan training? What should the numbers ratio be between tertiary education (universities), training (specific, useful, immediate competency) and artisan training? Who gets the “free” education?

Internationally, many of the most successful entrepreneurs in the built environment did not follow the standard tertiary education route, but rather a skills-training route. Much of our capacity to create the latter has been lost by the disastrous conversion of our high-class technikons (which are now all universities), and the demise of the technical colleges and other specialised colleges. The gap between schools and universities is more of a glaring abyss. There are valiant efforts by the private sector to fill the void with colleges, academies and so on – but without any state funding. As a result, the private sector is stretched to its limit, especially when it comes to finding a way through the endless red tape and other obstacles that need to be overcome in order to serve the country. The above requires scientific analysis. How big should our universities be? Are the objectives (and the structure) of the technical vocational education and training (TVET) colleges conducive to satisfying South African requirements? How should private education institutions be supported? What else has to be done to make artisanship as attractive as it is in other parts of the world? The single most important requirement right now is to fix the education system – and to get the foundations in place.

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legal update

City of Johannesburg’s Outdoor Advertising By-law The City of Johannesburg published its draft Outdoor Advertising By-Law for comment. Comments were due on 7 July 2017

APOA submitted comments and concluded by stating that, in terms of the current regulatory system, the City Council is already conflicted in that it is both player and referee in the outdoor advertising sign industry – an intolerable situation that SAPOA objects to. The city is the owner of vast tracts of road reserve, ideal for the display of advertisements. In this regard the City Council is a direct competitor with private property owners on the same road. But in terms of the current regulatory system, the City Council is also the decision-maker on the approval of such advertising sings.

As a property owner, the City Council has a duty to exploit its assets for the benefit of the community. The charging of rent for the display of advertisements on road reserve has long been a substantial source of income for the City Council. Its conflict lies in the dual regulatory role it is fulfilling As a property owner, the City Council has a duty to exploit its assets for the benefit of the community. The charging of rent for the display of advertisements on road reserve has long been a substantial source of income for the City Council. Its conflict lies in the dual regulatory role it is fulfilling. 20

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The introduction of this draft by-law is the ideal opportunity to consider that the city must divest itself of one of the two regulatory functions – the most suitable being, of course, the approval process. There is nothing contained in any of the constitutional provisions that prohibits the City Council from appointing an independent body to adjudicate the applications for the approval of advertising signs The introduction of this draft by-law is the ideal opportunity to consider that the city must divest itself of one of the two regulatory functions – the most suitable being, of course, the approval process. There is nothing contained in any of the constitutional provisions that prohibits the City Council from appointing an independent body to adjudicate the applications for the approval of advertising signs. This body should be representative of all the role-players in the industry, including private property owners, billboard companies and the City Council. Such a system will be objective and fair, and will prevent the conflict of interest the City Council is currently vested with. On 20 March 2018, the city adopted and approved the Outdoor Advertising By-law. It stated that the By-law will be promulgated on the 31 May 2018.

SAPOA is deeply concerned over some fundamental omissions in the City of Johannesburg’s proposed outdoor advertising by-laws. Upon comparing the initially proposed by-laws that were published in 2017 for public participation and comment with the new by-laws that will come into effect at the end of May, it was noted that although certain amendments had been made, none of the fundamental submissions made by SAPOA and other important industry role-players were included in the report or the proposed by-laws at the time of submission to the City Council for consideration and adoption. The following submissions by SAPOA were not included in the report: ●● The promulgation of the new by-laws will immediately and retrospectively criminalise hundreds of private property owners with unapproved advertising signs on their properties, without affording the affected property owners the opportunity of arranging their affairs in such a manner as to ensure compliance with the new by-laws and legitimisation of the affected advertising signs. ●● The city, as a commercial roleplayer in the outdoor advertising arena, is undoubtedly conflicted between its regulatory function and its commercial interests. ●● Because of the above (and from a constitutional perspective), the regulatory control over the process should ideally

legal update

be divested to an impartial decision-making body and not to any particular city official. ●● The enforcement measures, which are severe, can be imposed arbitrarily by the officials filling the investigative, prosecutorial, adjudicative and sheriff’sfunctionaries’ roles. This is in contravention of the rule of law. During a meeting held in August last year, an undertaking was made by the city to consider SAPOA’s submission – but this has not happened. If it had, the submissions and the reasons for the rejection thereof would have been included in the report. As a result SAPOA, through its attorneys, has sent a demand to the city on the following aspects: ●● An undertaking not to promulgate the new by-laws on any other date without informing SAPOA in writing of the anticipated promulgation.

●● A confirmation that the approval of the Minister of Trade and Industry has been obtained for promulgation of the new by-laws. ●● A confirmation that the submissions, specifically those of the entities affected, will be reconsidered and included in the report to be tabled and submitted to the council for reconsideration. ●● The by-laws target private property owners for specific fiscal penalties not applicable to council land. ●● This places a liability on property owners – and specifically private property owners – for compliance on matters not that are not within their control, with the resultant immediate criminalisation of property owners in the absence of transitional provisions in the by-laws. ●● The fiscal penalties are irrational. ●● The retrospective effect of the by-laws is unconstitutional.

●● An independent body should be created to adjudicate applications, and control measures should be implemented to ensure equal application of the by-laws. ●● The public participation process may be lacking. ●● All relevant information provided to the Mayoral Committee meeting may not have been provided (including the full comments to the by-laws from industry players), with the result that the council decision may have been irrational The city responded by stating that it had made no commitment to amending the by-laws by including all the comments. It further stated that the new by-law has been submitted to the Provincial Gazette for promulgation. The city is awaiting confirmation of the date of promulgation, and will go ahead as planned.

When private-public partnership works! Meet the entrepreneurs who benefit. The Department of Small Business Development (DSBD) and Property Point have joined forces to take 16 small to medium-sized, black-owned, businesses, through a life-changing enterprise development programme. This programme will provide bespoke business interventions and facilitate access to markets in order to catalyse business growth and sustainability. Meet Flavia Tau, Director of Tumagole Trading and Enterprises. Tumagole specialises in renovations, building and general maintenance and has been in operation for the past 12 years. ‘’The idea of being independent and being able to have full control of my life and the direction I wanted to take was what made me start the business’’, explains Flavia ‘’I was excited to be venturing into a new path even though I was afraid’’ Flavia was working as a junior accountant and selling handbags before she started the business.

In the beginning, she struggled with sourcing clients and very quickly learned the importance of having the right information so that she didn’t miss out on any opportunities. ‘’I remember having to deal with a potential client who was making it difficult for me to execute a project that could have been a breakthrough for me, but when I look back on that, It helped me develop a thick skin towards wanting to achieve my goals’’. Flavia sais getting her first purchase order is still one of the highlights of her business journey, she is now even more determined to achieve what she regarded as impossible. ‘’I want to be remembered for my go-getter attitude towards life and for creating opportunities wherever I can’’ she explains. The business is not at the level of sustainability Flavia would have hoped, but she is working hard to get it there. She would like to grow the businesses to be able to create 50 or more sustainable jobs in the near future. Property Point is a Growthpoint Properties initiative which provides entrepreneurs with the skills and personal development support they need to develop their enterprises into fully independent companies. For more information on Tumagole Trading visit www.tumalgoletrading.com

SOUTH AFRICAN PROPERTY REVIEW

developers’ forum

Growing Africa’s premier destination through property development Chairman Deon van Zyl addressed the fifth annual Western Cape Property Development Forum Conference as the organisation embarks on its 10th year of operation, striving at all times to improve the property development environment through collaboration with the province’s municipalities By Mark Pettipher

Deon van Zyl, Chairman

t last year’s Conference we spoke about making sense of, and surviving, an ever-changing environment. The only constant was change, we said. I’m not sure whether that was prophetic – but what a year of change we’ve had! At national level, we now have a new President, a new Minister of Finance, a new SARS Commissioner … and locally, a new mayor? Although things at provincial level have been reasonably stable, we have seen changes in planning legislation, new environmental regulations, and heritage finding its feet. But a lot of provincial authority has also been removed through planning law changes, thus diluting its contribution of stability. At city level, which we know represents more than 70% of the province’s economy, we have a totally different situation: ●● We will soon have the third mayor in an eight-year period. ●● There will be three Mayoral Committee members for planning and development in Cape Town – and possibly four Executive Directors for planning. 24

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This type of change is not unique to Cape Town. Stellenbosch seems to change its Municipal Manager and Planning Director at the drop of a hat. Minister Ivan Meyer published the Municipal Economic Review and Outlook 2017 last year. It focused on identifying bottlenecks and constraints that are hampering economic growth and job creation. The report contextualised the Western Cape economy with that of the rest of South Africa, and gave some insight into international trends. It predicted that fixed investment will remain under pressure and that the public sector will come under pressure to reduce expenditure.

The report noted the following national risks: ●● Continued political uncertainty in economic and fiscal policy; ●● Possible large sell-offs in foreign holdings of South African bonds; and ●● Drop in business and consumer confidence.

All of these risks spoke to levels of uncertainty in South Africa. At a provincial level, the only risk described was the drought and its impact on agriculture and agri-processing. But I would argue that this is not the only risk staring us in the face in the Western Cape. The list of risks that I would have expected in the report would have been more along the lines of: ●● Energy certainty; ●● Urbanisation; ●● Lack of municipal bulk infrastructure maintenance and upgrading; ●● Under-spending by local authorities; ●● Runaway salary bills in local government;

●● Traffic congestion and the implosion of PRASA; and ●● The fact that we have still not figured out how to fund national road infrastructure – and the threat of closing the Huguenot Tunnel for a substantial time while necessary maintenance work takes place could be catastrophic to the Western Cape. We can debate the merits of each of the above, but the important risk that I want to highlight is government procurement and its impact on the property industry. On a positive note, the report expressed the expectation that a decline in national interest rates could stimulate the services sectors in the Western Cape. It is fair to say that our new healthconscious President, our new/old Minister of Finance and our new “Duracell” Minister of Public Enterprises are working 24/7 to create political and policy stability and confidence. We cannot expect them to do miracles if we do not give them real support from grassroots up. The support I’m talking about is making sure our own house is clean and working well. I’m talking about whether the provincial and local government machinery that services the economy is working as it should, and whether it is stimulating investment into Africa’s premier property destination. Are all government structures (not just the political tier) servicing the investment environment? Is there a culture of public service and investment facilitation – or a culture of regulation and box-ticking? A couple of years ago, the provincial government introduced the Red Tape to Red Carpet programme – a real sign that it had taken note that the ability of

developers’ forum business to function well was directly impacted by the level of regulation and bureaucracy. People with a “can-do” attitude were appointed, making a difference to some lives. Unfortunately, this programme has had limited success for the property development industry. The property industry is not a single business entity: it is a complex world of multiple disciplines and role-players covering technical, commercial, legal and delivery functions, each within a separate set of legislative, policy and technical constraints. If there is a hiccup in any sub-part of the development industry, the whole project is delayed – or worse, cancelled. When you’re talking about the mechanical functioning of any component of an engine, you need specialists to discuss performance vs expected performance. This is also true of property development. Talking planning or heritage legislation or transport planning with a call-centre operator simply does not work. Some constraints can only be addressed between specialists, which often takes the conversation to the level of legislation and policy – but even more often to the level of opinion and subjective interpretation of policy. A call centre cannot do much if an environmentalist dictates that I cannot plant oak trees in my development and threatens to withhold rates clearances on a multimillion-rand development – or if an overzealous official delays a project for more than a year because he or she is trying to protect an idea that has never been unpacked in legislation or policy. A call centre does not have the insight or authority to ask the official how they came to their conclusion. We all share a desire to maintain the natural and cultural qualities of the province. But unless this desire is aligned in legislation and policy – and, more importantly, in the way that interpretation bottlenecks are addressed – the Red Tape to Red Carpet programme will struggle. I am talking about a cultural change in governance. I am talking about less regulation and more facilitation of investment. Perhaps it is time to talk

about a Red Carpet Ombudsman in the province and in each municipality, on each portfolio committee – a qualified and experienced individual who understands property, and who can unblock the pipelines on a daily basis. A private-banker type of person who knows which buttons to push. If investment is important, then it should be important enough to throw the right resources at the problem. Local authorities are becoming more dependent on the revenue they generate through rates and taxes. The revenue stream is critical and needs to grow. Facilitation of property development to support growth is the only way to go.

I have recently been told that the World Bank now expects governments to talk to local consulting and construction sectors about roll-out programmes, not on a project-by-project basis, but on a budget cycle of five to 10 years. Why? Because if you do not maintain the production pipeline, none of these sectors will have the ability to deliver when government’s crisis hits As I’ve said previously, the property development industry is a complex world of many role-players – not least the consulting sector and construction sector. A healthy consulting sector is critical to any economy. It is essential to protect the ability to interpret economic need and growth, and to realise this in development projects through design and implementation. We need to support our architects, our engineers, our quantity surveyors. It’s the implementation of their projects that generates income for the local government through growth in rates and taxes.

In the same way, you cannot construct infrastructure and buildings without a healthy construction sector. You cannot construct housing with builders who are not able to deliver on time, on budget and within quality expectations if the contracting pipeline does not sustain it. It is the contractors who employ labour, and who get money to some of the poorest communities. Both consulting and construction depend on private investment – but even more on public investment. The government has a strategic obligation to make sure the consulting and construction industries are healthy and gainfully employed. I have recently been told that the World Bank now expects governments to talk to local consulting and construction sectors about roll-out programmes, not on a project-by-project basis, but on a budget cycle of five to 10 years. Why? Because if you do not maintain the production pipeline, none of these sectors will have the ability to deliver when government’s crisis hits. To paraphrase: the consulting and construction sectors need a higher level of certainty. If the government does not provide certainty on roll-out, it is opening the door for international consultants and contractors to step into the gap with little regard for local job creation. Welcome China, welcome India! We need to address the turnaround time for the appointment of consultants. We cannot tolerate delays in the appointment of contractors at the risk of having to send money back to National Treasury. My plea to government is to set up a work group with the industry to talk about procurement at provincial and municipal levels. Whether we like it or not, the government’s procurement policies (or the interpretation of those policies) are a real risk to the consulting and construction sectors, which creates a major risk to the property development industry. With fewer consultants and contractors in the market, the delivery cost will go up and the workload will become overwhelming for the few remaining. SOUTH AFRICAN PROPERTY REVIEW

developers’ forum We are continuously reminded that the provincial government’s role is, except for certain core functions, to provide oversight and guidance to local authorities The one aspect that has been brought to my attention is the need for the smaller municipalities to communicate investment opportunities to the wider development industry. On the theme of the assistance that the Forum and its members can provide to the provincial and local government to facilitate investment through the property development industry: ●● I have spoken about our willingness, together with the various professional bodies associated with the Western Cape Property Development Forum, to engage on the topic of public procurement of services and construction. This offer stands. ●● We also offer our time to sit with the Red Tape to Red Carpet team to look at how this service can be maximised for the property development industry. ●● I would like to offer, on behalf of engineering colleagues, their time to engage with government to set up a work group on engineering standards. We are starting to see local authority officials expecting engineering standards that government itself does not adhere to. (Don’t get me going on landscaping and irrigation standards in the city!) We need to talk about the maintenance bulk infrastructure capacities and standards, and the need to ensure that local authorities have access to qualified and experienced engineers, both in-house and as strategic consultants. ●● Some of our members have already engaged with several of your in-house strategic teams. We continue to discuss the impact of energy and water provision in the province. ●● We have recently engaged with your team looking at the province’s proactive thinking on electrical 26

SOUTH AFRICAN PROPERTY REVIEW

vehicles, and how the province can talk to industry about this. ●● Minister Winde, the Western Cape Property Development Forum meets with your colleague, Minster Anton Bredell, on a quarterly basis to look at the impact of planning and environmental legislation on the industry. We appreciate this opportunity, and will continue with this engagement.

A new initiative that I can announce is the cooperation between the Western Cape Property Development Forum and the UCT: Nedbank Urban Real Estate Research Unit. We are currently working on a training programme that we would like to offer to the provincial and local authorities A new initiative that I can announce is the cooperation between the Western Cape Property Development Forum and the UCT: Nedbank Urban Real Estate Research Unit. We are currently working on a training programme that we would like to offer to the provincial and local authorities. The focus of the programme is to expose members, politicians and officials to issues impacting on real estate development. The aim is to empower them to critique any draft policy concept in terms of whether it will facilitate or undermine investment. This will create a practical market awareness and empower officials to negotiate ideal outcomes with a clear understanding of market forces and realities. Our ideal is to empower officials and politicians to become investment facilitators rather than gatekeepers. Our offer to local authorities is to put up your hand and to engage with us on how such a programme can best be implemented. This training should be compulsory!

Which leads me to celebrate a wonderful success: last year we introduced a new organisation called Youth in Property Association (YIPA) – an initiative by some energetic UCT students. We recently concluded our second job-shadow event with YIPA, exposing a number of Grade 12 students from disadvantaged communities to the property industry. On a personal level, I can vouch for the success of this programme and can share what a humbling experience it has been for me and my company. The student we hosted, a 17-year-old lady, again taught me that we have some way to go to create opportunity for our youth in this country. She lives with her unemployed brother. Both their parents passed away some time ago. They survive on her grant money as a minor. The odds have been stacked against her and yet she gets “7s” – that’s 80% and higher in all her subjects! Unfortunately, she will be lost to the property industry – she plans to study medicine. The Forum would not be possible if it were not for several strategic associations with various professions and organisations. For those who have looked at our website, the following will not be news – but for the rest, I offer some background. We are proud to be able to formally associate with several organisations that all have a seat on the Management Committee: ●● South African Property Owners Association (SAPOA); ●● Urban Design Institute of South Africa (UDISA); ●● South African Association of Consulting Professional Planners (SAACPP); ●● Cape Institute for Architecture (CIA); ●● Association of Construction Project Managers (ACPM); ●● Association of South African Quantity Surveyors (ASAQS); ●● Consulting Engineers South Africa (CESA); ●● Green Building Council of South Africa; and ●● Youth in Property Association (YIPA). This conference received CPD accreditation from five professional institutes.

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SOUTH AFRICAN PROPERTY REVIEW

facts and figures

Cape Town CBD THE CENTRAL CITY

MyCiTi Bus Rapid Transit

3 572 155

IN IN NUMBERS NUMBERS

During 2017, a total of 3 572 155 passengers boarded a MyCiTi bus within the Central City, with 3 587 325 alighting.

The overview of some of the factsfacts Thefollowing followingisisa asnapshot snapshot overview of some of the and figures to be found in the State of Cape Town Central and figures to be found in this report, to enable a quick City Report. This gives us a quick understanding, at a glance, understanding, at complexity a glance, ofofthe complexity of the of the diversity and the diversity area that and forms the traditional downtown or CBD of Cape Town or CBD of Cape Town. area that forms the traditional downtown

DOING BUSINESS

The 3 157 businesses in the CBD operate in the following categories1 and subcategories: A TOTAL OF 190 ACCOMMODATION & TRAVEL BUSINESSES INCLUDING:

4 airlines

9 Car hires

24 Embassies

38 Hotels

8 Student hostels

85 Travel services

22 Backpacker establishments

A total of 116 architecture, engineering & surveying firms including the following: 60 Architectural 34 Engineering 20 Quantity surveying 2 Land surveying

A TOTAL OF 111 COMMUNICATIONS, MEDIA & ADVERTISING AGENCIES INCLUDING: 11 Advertising 5 Communications 7 Event management 28 Film & TV production 2 ICT (marketing) 12 Marketing & branding 12 Media companies 15 Printing & publishing 14 Public relations 5 Specialist/other

A total of 95 Educational institutes & resources including: 84 General learning 3 Libraries 8 Museums

A TOTAL OF 50 EMPLOYMENT & RECRUITMENT AGENCIES BROKEN DOWN AS FOLLOWS: 38 Employment 3 Casting 2 Entertainment 7 Modelling

A TOTAL OF 74 CORPORATE & GENERAL OFFICES INCLUDING: 12 CLOTHING MANUFACTURERS 7 Co-working spaces

14 Energy companies 18 Food companies 1 Health & beauty 1 Investment company 4 Mining companies 8 Retail administration

6 Discount shops

5 Theatres

19 Electronics, photography & music

2 Auctioneers 5 Adult-themed shops 27 Art galleries 5 Bakeries

7 Fashion accessories & handbags 1 Florist

9 Barber shops

54 Furniture, lighting & decor

63 Bars & clubs

19 Gyms

7 Booksellers & publishers

37 Hair salons

7 Specialist/ other

A total of 38 artistic studios including the following: 4 Fine artists 3 Graphic designers 7 Interior decorators 2 Jewellery designers

5 Music producers & sound production 12 Photographic 5 Specialist/other

A TOTAL OF 986 ENTERTAINMENT & RETAIL ENTITIES BROKEN DOWN AS FOLLOWS: 17 Adult entertainment

2 Conferencing & events

28 Laundry, drycleaning, shoe repairs & tailors

2 Plumbing & sanitaryware

14 Liquor stores & wine merchants

14 Printing, copying & lamination

4 Locksmiths & security 1 Luggage & leather goods

2 Postage & courier

114 Restaurants

COMMERCIAL & RETAIL SPACE

1 048 023m2 Total commercial (office) space in the Central City

20 Speciality shops

9.9% Office vacancy

24 Mobile devices

20 Sporting goods (equipment & clothing)

rate as at Q4, 2017

13 Motor cars

21 Superettes

268 239m2

10 Hardware

4 Motorcycles

3 Stationary & packaging

Total retail space in the Central City

109 Clothing & shoes

32 Health & beauty (incl. spas)

19 Motor parts & repairs 5 Petrol stations

2 Supermarkets

45 Coffee shops

8 Internet cafes

8 Opticians & eyewear

61 Takeaways

7% Retail vacancy

20 Curios & markets

71 Jewellery design & manufacturing

2 Pawn shops

6 Vintage & secondhand

3 Butcheries

12 Department stores

SOUTH AFRICAN PROPERTY REVIEW

6 Pharmacies

rate as at Q4, 2017

facts and figures

A total of 142 ICT & telecoms including: 9 Business development 22 Call centres (general) 1 Energy company 6 Financial services & banking 3 Health & beauty 70 Software & website development 1 Insurance 5 Online marketing 3 Retail 17 Telecoms 1 Travel service 4 Specialists/other

A total of 238 Finance, investment, insurance & banking including: 38 Accounting firms 27 Banks 10 Business development 2 Call centres 15 Debt recovery 40 Financial services & banking 2 ICT (online transactions) 44 Insurance 46 Investment companies 14 Specialists/other

A total of 61 Freight, customs brokering, shipping, import & export including:

Freight forwarding & customs brokering

A total of 665 law firms & advocates broken down as follows:

193

THE VALUE OF CENTRAL CITY PROPERTY

A total of 95 NGOs/NPOs & industry councils including: 6 Artistic studios 7 Business development 4 Education & training 4 Medical, health & beauty 23 Industry councils 4 Legal services 44 NPO general 2 Theatres 1 Urban management

Import & export

The overall official nominal value of all property in the CBD, according to the City of Cape Town’s most recent (2016/17) property evaluation.

R3 548 000 000 The value of property, conservatively estimated 2 and still to be officially assessed by the City, that has come online in the Central City during the course of 2017.

Shipping companies

203

R30 628 149 724

R8 298 000 000

Specialists

The value of property, conservatively estimated, that is under construction.

R1 630 000 000

462

Law firms

The value of property, conservatively estimated, that is currently in the planning phase.

Advocates

GOVERNMENT FACILITIES

THE TOTAL OF MEDICAL ENTITIES IN THE CENTRAL CITY

Government agencies

Parastatals

Local government

R14 226 000 000

National government

Provincial government

RESIDENTIAL SPACE

Political parties

59 205

The number of residential complexes in the Central City

Total number of government employees: 18 917 Number of general public using government facilities daily: 30 627 A total of 62 property & real estate broken down as follows:

Commercial brokers

Estate agents

Property management

Property & real estate

Property & investment brokers

Property developers

Number of units sold (transferred to owners) during 2017

R41 287/m2

Average m² price transferred during 2017

Property construction

1 Many businesses may engage in more than one activity; for the sake of classification, the primary activity has been used for this

report. Much of this also lies in the interpretation of how a specific business may see itself. For example, some financial operations which run call centres will first and foremost see their business as financial, while others will prioritise their function as being that of a call centre. Or a retail venue which is both a bakery and a coffee shop may classify itself primarily as a bakery. 2 In terms of the estimated values of properties that have opened their doors during 2017, as well as those under construction, in planning or proposed, the term “conservative” is used throughout this report as not all values are known to the publishers at the time of going to print. The values outlined in this report are therefore those that have been made public by property owners and developers themselves.

The value of property, conservatively estimated, that is currently proposed and is hoped to begin construction by 2020.

R2 768 806

Average price per unit transferred during 2017

51.92m2

Average size of unit transferred during 2017

SOUTH AFRICAN PROPERTY REVIEW

technology in property development

South African consultancy leads the way with 3D technology Property Review talks to Aecom National BIM Manager for Buildings & Places Craig Howie and Aecom National BIM Manager for Civil Infrastructure Andre Schoeman about the importance of embracing technology in the workplace, and integrating software to develop efficient communication strategies By Mark Pettipher

Craig Howie, BIM Manager for Buildings & Places

hen Craig Howie joined Aecom four years ago, the company had already set itself on the path to leading South Africa’s built environment towards using integrated technologies as a means of increasing the efficiency of communication. “Building information modelling (BIM) is an international yardstick, with numerous countries having mandated it as a standard requirement,” he says. “When I joined Aecom, my thenmanager had already said that 2D drawing was to be consigned to the bin. There was a directive from management to develop improved communication, especially with regards to building design and development. A cut-off date was set for Aecom to embrace 3D modelling.

SOUTH AFRICAN PROPERTY REVIEW

“As there are different ways in which people communicate and many different technological platforms on which to do so, we have taken the deliberate decision to encourage first-principle communication. The first prize is to have face-to-face conversations – there can be no misunderstanding with this kind of interaction. If we can’t talk face to face, the next avenue for us is to make a good old-fashioned telephone call. “We understand that not all disciplines on our projects will be in one office; they seldom are these days. We have our main design offices in Cape Town, Durban and Johannesburg. As a fully integrated firm, we connect knowledge and experience across our global network, conducting business in more than 150 countries. Technology is central to making this happen. “It’s not always possible to meet face to face or use the phone, so we also utilise many digital communication tools, such as video conferencing, instant messaging applications and cloud-based collaboration tools.” “We conduct a large number of meetings using facilities such as WebEx, which is easily accessible through our laptops from anywhere with an internet connection,” says Schoeman. “We are able to share screens, and work as though we are sitting beside our clients and colleagues.” “Since we experience life in 3D, it makes logical sense that we should use 3D to develop our designs,” says Howie.

“We are now taking that a step further, beyond on-screen or printed 3D images to immersed experiences through virtual reality (VR) and augmented reality (AR). This allows both the design team and the client to ‘walk through’ a VR scene of an actual project at a 1:1 scale.” While there is a great deal of different design software on the market, Aecom has partnered with Bentley and Autodesk, entering into global agreements with both. These strategic partnerships were largely the result of a need to standardise requirements throughout Aecom’s network. They use Autodesk Revit, which is a multi-disciplinary tool that allows engineers, architects and MEP engineers to work in the same design software. They also use Autodesk Civil 3D, which is used by Aecom’s civils teams.

technology in property development

Andre Schoeman, BIM Manager for Civil Infrastructure

“Added to the need to standardise software platforms is the requirement to maintain core performance by optimising workflows,” says Howie. “Chances are that university graduates entering Aecom’s employment will likely have been exposed to Autodesk products though coursework. Likewise, an employee from another firm in a similar field will most probably have used a version of the software before. This was a key driver in our choice of ‘preferred’ tools.” “We believe we have a competitive advantage,” says Schoeman. “BIM allows us to share designs, project management progress and walk-through VR scenes with our clients better than ever before.”

“As we work closely with our software partners, we have the advantage of being exposed to greater insight into technological change in terms of software developments,” says Howie. “We are able to get valuable insights into their development road-maps, and alter our planning accordingly. With this in mind (and with our understanding of the technology), we are subsequently able to offer our clients the best and most up-to-date solutions on the market, while our teams are able be at the cutting edge of the latest technology. “It is critical we keep ahead of the curve and maintain our connectivity throughout our offices, because it is fundamental to achieving digital excellence on our projects. In many cases, especially with our global multinational clients, we are contractually required to provide 3D models, as well as asset and facility management information through BIM.” “Since we are a multi-faceted organisation, we offer integrated services across a number of disciplines, including design consultancy services for engineering, architecture and civils,” says Schoeman. “These areas are the most affected by advancements in technology. Our ability to draw on experience and solutions from our international network means we deliver First World solutions to issues in the African environment.”

“However, this does not undermine the importance of Aecom partnering with professional companies on the ground,” says Howie. “We understand the African ‘challenge’. We rely heavily on local knowledge to overcome language barriers, deal with municipal rules and regulations, and work within different cultures. “Through our software, we are able to translate plans for council submissions efficiently into the different languagedependent requirements we may encounter. However, in many cases in the public sector, we still need to submit drawings as flat hard-copy printouts or PDF files. In this respect, municipalities still have much to do to catch up with modern technologies and the industry. “Our technical efficiencies also extend to our teams in the field. In the past, paper plans needed to be taken to the site. Now we equip our teams with iPads. All the information they require is accessible on screen. When it comes to on-site snagging, for example, we can take a photo with the iPad, pin it to the relevant position on the plan, annotate the snag and post the requirements almost immediately to the necessary consultant or contractor. This helps us identify and resolve issues faster and more accurately than what was previously possible. “In short, technology in Aecom’s workplace and field environment helps us deliver ‘faster, smarter and better’.”

Creating modelling solutions New BIM tools for complex projects SOUTH AFRICAN PROPERTY REVIEW

Gauteng property development

Oxford Parks: a catalyst for urban regeneration Oxford Parks, which officially broke ground in April 2017, is envisaged to be a sustainable and cosmopolitan medium-density urban environment that brings 300 000m² of development rights to the Dunkeld Precinct that links Illovo to Rosebank along Oxford Road in Johannesburg By Karen Eicker

he precinct is targeting a 4-star Green Star Sustainable Precinct Pilot rating, and each building will be encouraged to attain a minimum 4-star Green Star Design certification. Carollyn Mitchell, Director at Intaprop, says the vision is to build on the strength and unique energy of Rosebank to develop from the outset a dynamic, vibrant urban lifestyle with a strong pedestrian focus, located close to public transport offerings. “We’re looking at the precinct holistically with the intention of making an exceptional intervention into the existing city structure,” she explains. “The vision is to create a sustainable public environment that will assist in supporting the longevity of the investment by making an attractive, pedestrian-friendly precinct with wellmanaged infrastructure.”

Considering the public realm “In order for cities to grow in a sustainable manner, developments must take the opportunity to move green design beyond the building scale into the public realm,” says Marloes Reinink, founder and Director of Solid Green, the green building consultants on the Oxford Parks precinct and the Phase 1 building. “We are excited to be involved with this development, which is intended to contribute positively to the existing urban fabric of the Rosebank-Dunkeld area.” Scaling of the public environment and active building interfaces was extremely important, and pedestrian-level lighting contributes towards a quality experience for pedestrians and cyclists alike. Moving from Oxford Road towards Cradock, there is a hierarchical progression of streets, with the friction of road surfaces increasing

incrementally so that cars are forced to slow down and be more mindful of pedestrian and cyclist activity. Security was a concern from the outset – the development has no fences so it can seamlessly integrate into the city fabric. Passive surveillance design techniques have been used so that wellbeing of pedestrians is considered at all times. According to Mitchell, the precinct is run by a property owners’ association, which will become a City Improvement District over time, and will be tasked with ensuring the vision of the development is adhered to. Building heights will range from four to six storeys, with building uses envisioned at one-third residential and two-thirds offices. The residential component will comprise between 2 000 and 2 700 units, bringing in 4 000 to 5 000 residents, while the offices are expected to bring in 10 000 to 14 000 office workers. Hotel offerings, high street-type retail at ground-floor level and various leisure activities are expected to generate a 24hour vibrancy for the precinct. In addition to its own amenities, Oxford Parks is close to a range of services, including schools, day-care facilities, a gym, medical facilities, pharmacies, dry cleaners, banks and restaurants. This reduces the need for private car trips and provides convenience for precinct users. The precinct is also perfectly located from a public-transport perspective. The Rosebank Gautrain station is within easy walking distance, as are a number of bus routes on Oxford Road and the newly revamped Rosebank taxi rank.

Phase 1 targets 5 Green Stars

Oxford Parks Phase1 courtesy of Intaprop

SOUTH AFRICAN PROPERTY REVIEW

The first building in the precinct, Oxford Parks Phase 1 (also developed by Intaprop), has been registered with the Green Building Council of South Africa,

Gauteng property development and is targeting a 5-star Green Star Office v1.1 Design rating. Located on the corner of Jellicoe and Oxford roads, the project consists of six floors with a gross floor area of 10 035m² (excluding parking areas). Rather than pursuing an As Built certification, Intaprop decided to implement commissioning and building-tuning by an independent commissioning agent and the project engineers, which provides a better return on investment and ensures the building operates optimally from the start. Environmental strategies are being implemented to enhance the wellbeing of the building’s users – such as ample fresh air, access to external views and plenty of natural daylight. As salaries are the biggest cost to companies, enhanced work performance and an improvement in working quality and quantity equate to direct cost savings. Being able to analyse consumption data is key to understanding and managing building systems and to assessing opportunities for savings. Accordingly, sub-metering of major energy and water consuming systems is in place. Water-efficient fittings are also being installed to limit occupants’ water usage. In addition, to minimise greenhouse-gas emissions associated with operational energy consumption, an energy model of the building was generated during the design stage,

comparing the building to a SANS 10400 national building model. This energy model has helped to inform the building design to ensure high performance from a building envelope perspective. Modelling also enabled internal operative temperatures to be assessed to ensure that they are within the ASHRAE Standard 55-2004 Acceptability Limits for at least 98% of occupied hours, thus ensuring a high level of thermal comfort. Building glazing performance modelling was also carried out, and performance values were agreed with the architect and mechanical engineer to assist with specification of glazing. In terms of reducing energy consumption, provision has been made to ensure that all individual or enclosed spaces are fitted with occupancy sensors. The project also saves energy by providing office lighting that is not over-designed, with an average maintained illuminance level of no more than 400 lux. All selected gaseous and firesuppression systems, refrigerants and thermal insulants used for the development have an ozone-depleting potential of zero, to eliminate any contributions to long-term damage to the earth’s stratospheric ozone layer. In terms of the Green Star rating, three main requirements had to be met before the project commenced with demolition and construction: a waste management

plan, an environmental management plan, and a hazardous waste management survey on existing buildings. NEMAI Consulting was appointed to compile both the waste management plan and the environmental management plan, which have been signed off by both the bulk earthworks contractors and the main contractor. Consulting Occupational Hygienists (COH) was appointed to conduct hazardous material surveys of all the existing buildings that were on site, and safe disposal certificates were required to ensure that any hazardous materials reported in the survey were safely disposed of by the demolitions subcontractors. To reduce waste to landfill during building operations, a waste recycling storage area has been provided in the basement within 20 metres of the exit. This dedicated area meets the Green Star sizing requirements, and will accommodate paper/cardboard, plastic, glass, cans and metals. The project is also targeting the Watercourse Pollution credit, which deals with stormwater runoff. It is important that a development such as this one tries to capture the stormwater and reuse it within the building or within the precinct. The system has also been designed so that minimal pollutants and trash are diverted to municipal stormwater channels.

Oxford Parks South View courtesy of Intaprop

SOUTH AFRICAN PROPERTY REVIEW

KZN development

Park Square leads the way for future-forward workspaces

Rapid technological advancements have allowed us to redefine our work life. Saying goodbye to the nine-to-five, many professionals around the world are now untethered from their desks, and able to work from anywhere thanks to Wi-Fi, smartphones and a host of other tech-savvy tools. The benefits of this work method have been lauded for increasing productivity and work satisfaction in employees By Louise Hunt

hile it seems that work has left the building, companies and their employees are still in need of futureforward spaces to connect, collaborate and share ideas. Many office developments are responding to this need by providing a considered work environment that emphasises openness, transcends the idea of the daily grind, and encourages a healthy work-life balance in campusstyle and community-oriented spaces. In a 2017 article for Director magazine, behaviourist Monica Parker – founder of the organisational change consultancy Hatch, whose clients include Microsoft, Deloitte and the BBC – said that “People always need a place to come together, and while coffee shops are great, people still like to have a place they can call a ‘work home’. I don’t think that work has left the building. There is still that communal driver.” Today, companies increasingly understand the importance of nurturing

productivity through the significant benefits of open and flexible office environments. These benefits include creativity, knowledge sharing, teamwork and coordination. While Google, Apple and other tech-advanced companies have been operating like this for decades, South Africa is only just beginning to ride the crest of the flexible, open work wave. Cue Park Square – Nedbank’s iconic R1-billion mixed-use office and retail development, located in Umhlanga’s New Town Centre and thriving commercial hub. Bordering the popular CJ Saunders Park and featuring innovative commercial and retail offerings, Park Square (with its considered restaurants, shops and coffee bars) will offer a connected work culture that incorporates a unique leisure offering seamlessly linked to a vibrant and open urban square. The 4-star Green Star-rated building, due for completion in October this year, includes 36 000m² of commercial space,

Ken Reynolds, director of Nedport Developments (a subsidiary of Nedbank)

4 000m² of retail and an impressive open public piazza that’s 3 500m² in size. It’s easily accessible to pedestrians, offers abundant parking and is conveniently close to a GO!Durban Integrated Rapid Public Transport Network stop. “Projects such as Park Square are effectively turning the South African urban planning paradigm around,” says Ken Reynolds, Nedbank Property Finance Divisional Executive, property expert and Director at Nedport Developments,

Umhlanga’s premier retail and commercial development, Park Square, offers premium quality P- and A-grade real estate. Ultimately this will be a place where work and life meet in the most sought-after business destination on the KwaZulu-Natal North Coast

SOUTH AFRICAN PROPERTY REVIEW

KZN development which is a subsidiary of Nedbank (and Park Square’s developer). “This innovative and connected space encourages people to think beyond the boardroom, and take time to unplug and to connect with one another. By similarly drawing in the surrounding communities for shopping and relaxation, the overall effect is a sociable, communal space that emphasises a convenient and balanced work-life experience.” Park Square has already secured several high-profile tenants, including Nedbank, Spar and the IBV International Vaults. “Customers no longer want to shop in large centres,” says Spar Marketing Manager Travis Anderson. “They want the convenience of parking, walking straight into a building, shopping and walking straight out. We love Park Square because of its convenient location in a fast-developing area and its proximity to the CJ Saunders Park, which will allow us extra exposure as we piggy-back off activities held there.” Reynolds says, “Imagine your day like this: arrive at work with your barista-made coffee in hand – in a reusable mug of course! Use the morning for planning and responding to mails, followed by a quick jog around the park at lunch. Tuck into an artisanal sandwich bought from the Spar, then attend afternoon meetings and drinks in the Square with your new client. Then you have imagined a day at Park Square.” Not forgetting profitability, a positive work environment increases productivity and, in turn, can have a significant impact on a company’s success. In addition to a reduction in staff downtime, having amenities within walking distance of employees’ desks also reduces stress and the lunch-hour rush, with staff being able to avoid having to leave the campus for their requirements, from healthcare to lunch and even recreational shopping. “Park Square offers mutual benefits for the employer and the employees with its unique commercial and lifestyle aspects,” says Reynolds. “This world-class destination offers a win-win situation for both, where staff benefit by working in an open, future-forward environment and companies reap the rewards on their bottom line.” 36

SOUTH AFRICAN PROPERTY REVIEW

AUGUST SUPPLEMENT

women PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

11:31 AM

in property

Recognising women in property “Byrd’s-eye” view of Afr ica

Board Member Nnem a Byrd, CFA, flies the flag for SAPOA in sub-Sahara n Africa and beyond

In profile

SAPO

A in s

nema Byrd joined the STANLIB Africa Direct Property to the market newer, institution Development Fund in 2014 al-quality assets, as the Investment particularly in the retail space. Byrd Principal. Born in Nigeria, finds W thatom she has always less-volatil theen in e, euro-pegged West African had a passion for the built Proper CFA franc used environment, and headed ty talk in Côte d’Ivoire gives investors off to the Massachusetts Institute additional comfort. s to SA of Technology (MIT) However, Nnema Byrd, Board Member POA’s it is important to note that ear in the US to study architectur there e. She soon realised that ingare Resear in some well-established local and mind she wanted a greater involvemen ch Com its regional retail me tenants that SAPOA’ t in the business side and s role mittee developers, which means and sta mbers inform of property, so she returned is that ed new tist to kee entrants to the MIT Sloan School of ics, Res as to into Chair p For Elaine this market will need to be current earch Management to complete person Wilson exa very competitiv Com tren mp her MBA, later earning her e tosaygain mittee le, in ds to com s the Elaine significant traction. change terms Chairpe mission CFA charter. Her focus on finance Commit of Offi on rso Wilson a its n tee as well as real estate reg ce Vacanc reports ular bas reports, will con will be Byrd believes there are a number y, Cap – Participation in proper meant that she could meld is, so wh the sam tinue statistics attributes andthatDis Office Vacanc her passion for buildings Costs, of e, ile ty the an the bas y, Indust Rates on going statistics “There count women have that they can and finance into a career that e report ry must Report bring basis. and tren Taxes, There to the and table. involved raising capital Her be , and wil ds organisations opens Ope say “Tre answers will var l also advice to any young woman the Ret rating in our nds, top to bring development projects be the y on up repentering to eve ail Trends reports,” icality orts. The the property key fac to fruition. After 18 years specific rything giv and she ing rep tor se industry ort. says. ”Ou s that relevan inform is that, first, hard work are par GDP and that we in the US, part of which she which dictate andcan ce: the ation to in min t of the diligence pay r report the opportunity to get spentLiliane to hav working in real d. We se are what SAP estate and talks be dow off; Barnard members municipal our me s are abo e those to SAPOA’s second, that Editor also the investment and commercia it is vital ww nlo mbers OA nee ut to w.s payapoattention rep concise l banking as well as in real ds to kee a.org.z to ade thed from SAP hip package, have been issu need to be aw way.”o orts presented – so we hav Mark Pettipherdetails. a. about are of Finally,the exciting ed by to know people in the estate private equity, Byrd networking OA’s we point in e andWil sonopportunities what rep p building in a cle other returned to Africa to further bsite, bringin is relationshi bodies. the hea ps orts ar and with people g out a that still abound research property commis in the in thecommercial her goal of contributing to industry ofis key. There d sector report sioned property development on is little at Bro that has is well and rele industry and expan ll, and As a woman in property, alre the continent. ase placed d ady d.” one Wilson of the been biggest decisio to ma Ela Resear challenges Byrd has faced ns abo ke ch Comine Wilson is the A year ago, upon her appointme is ut breaking , mit As SAP into the kin one’s perspective a maletee Ch electio head iliane OA nt to Barnard is the CEO of Metope Investmentof rep the SAPOA ofindustry Theortproperty airper ’s isds an amazing ns com dominated to work s that sector resear go, so industry in Board, Byrd stated her intention son e and networking willand do ma st in. chbyat previously worked at Old Mutualmowhich toManagers. the make theShemost releAlthough bepreviously been dominated vant to it has transfer of skills and knowledge yors and their Broll, of the opportunity to play an members com and is SAPOA’ OMIGSA), gaining experience in the mining active(now happen role in men, with often the property more s more women coming and . She intoelthe the cha mittees. “W informally. However,of participatio w is min industry. In a vibrant and ith l plac nge in sector, building and construction, and retail dfu stimulating stocks, asthe nee property to work marketplace, l our 12 months, d to nbe in perhaps you wil ed makenvironment mayor ns l find she has embodied SAPOA’s well as listed property. organisatio current e deci is upwitthe h opportunit infobecoming Barnard has opens that the s, held many to know rmatio y to objectives, has built a get ‘softer’ place. and Certainly having more si on mu n, city people the industry aware nicipal s abou and is relationships with fellow and tha theimpact expand such as that ofinportfolio manager reports women perspective Board influential usually t repone’s industry. will members,positions, kind our broader t and has ortins our are be out the s of re may participated in some significant and Head of Listed PropertyShe dated traditional at believes OMIGSA, that Headthe of Asset lybychallengin environment of statist same in ter in ga positive ports aspects way.th SAPOA events, of the they com ms the tim ics but property at including the “Meet the Mayor” Management at Old Mutual e as chairperson e out Property, and industry being an will scope that the continue role . Barnard’s ill beREITs of thewunlisted to equalise dinner in Cape Town. more as may cha SAPOA’ m women independent nonexecutive director nge,” She says she felt privileged s role Wilson of achieve Pangbourne, sector has meant that she’d had positions with the ost says in res is toleadership to have met Patricia de Lille. . “Each retoledeal earchin property. comple She is isvery vantthat mayor Barnard his thegrateful chairperson “It was exciting to hear about Emira and Redefine. of me National to Treasury, have where or she had is advocating nt the has that are opportunit tothe her ow reports y to workSA thethe Mayor’s n ideas SAPOAsuccessful prioriti committee with POsame involved suchintrailblazing seeing towomen thealready unlisted projects, aspirations for the sector should have the and A’staxmbenefits as Report es, and in pla African Mother City, s such in South y. property and the strides embe establishment a huge this has of legislation as Amelia for unlisted and asthethe listed sector. Beattie the city is taking to become areREITs, (CEO rs. influen Two releof Office a global ce on a vanLiberty ideas planning. centre t becaus“It’sDegrees), with more andMarna than and 30 yearsvan in the der commercial extremely Walt (CEO other uneven playing field, and it is Indust digital city that stands as a ofproperty Excellerate e theanyServices) We nee city’s res earch houProperty beacon insector, aware Africa,” are notand ry reports d to be shesays brings invaluable experience Byrd. to SAPOA. almostandimpossible SAP Nomzamo of tho to pro create she Radebe for REIT,” OA’(CEO “It has also been very worthwhil A year ago, upon her s memb of JHI ses ducedan unlisted se per the diff and Immediate are aim Past cha e participatin Barnardg oncontinues son nge ers by to be excited ere about the . explains. the moment, nel ed spe we are waitinggov the President of SAPOA), s and forern a decision nces in On the Board and seeing many of whowhall continue to“At be pre ance. the dyn pave the waycifically at SAPOA’s goals property pared industry, it’s an –amazing being met bysayingforthat appointment to the so the career ole, toSAPcome amic becaus knownThese diff women OA isfrom Treasury on a piece of legislation in property. the team, and the recognition to get of a organisat erence e you SAPOA not a city’s into. “While s work forrepan get of the impact ion res as Twin Peaks. The ortinstitution, Twin Peaks model offorfinancial earch the you can outsou s toforins Byrd’s objectives exampsector a new hea may come organisation has within the hou rcesinclude thetion le, wh titu about year Pretorare Board, Byrd stated industry.”such as an Old Mutual or a bank, there number regulation a ch se require regulator willthe resear ose inte d of town creation s ahead of a prudential ia,aUrb focus her h as thesee the ments planning, an- arm of suc rpretation and Byrd does a fair amount of of large and smaller firms allwithin may thatthe SAPOA a research variety Eco on markets of n and And soin the South travelling UniAuthority – the our as part of her outside offering versity – housed of the MSCI.Prudential reports plans cha differ from the of “W South of intention to make the job, and when asked about city Africa, eofneeBank have the opportunities,” she says. “Alternatively, are the ’s nge previous youusu benefit can workfor African rele Reserve d to ens an interesting (SARB), while the “TheFSB most be . van place she members who planne t, and SAPOA sadwill al report ure thing is in ourfor are had visited, she recalled her rs. yourself. If you have wh a capacity havconduct risk increasingl the s,ywe expanding ile transformed a dedicated e been regulator app that the businessfortrip north we of will market will nee into roaand last year to South Africa’s of the opportunity to ch and re are ma d toSector entrepreneurial spirit Abidjan in Côte d’Ivoire. She hocborders. ideas tha produced bas to match it,adworking aware In addition, play – the be flex ny plans sheFinancial Conduct repfor has identified states that, as the country ed on tha ortyourself t are bril ible Authority.” s as we t the that resear a needimp re’s forortdeveloping can be incredibly rewarding. paper Barnard liant tha emerges from the political ll,” say a needin the industry, ant to similar at trends advocacy they are observes s Looking an active role in the t simply ch, and many conflict and economic Wilson models in for our me themnetworking. planne theabout various don’t get “Our industry is all “Repor in South citi countries. es if She instability that occurred over are dec o We allmbersthat d on. We retail is. suffering Africa. ts are the pla predicts that bec off “The majority the greater part of the isio aus cou of my sisters the reports ns n-make e a ld have work with the same information. Many the ligh Wilsonalthoughsawthey years ago, need to rs there past 20 years (which resulted really gre closures ber ofon the horizon, property industry. in themay benum t of day is a per in a lackIofattended be ana at investmen indust pro and daughters .” t in two-week in and SAPOA’s the Central fection lyticalwon’t be as Property STANLIB Development Africa as inOur the US andduc fixed assets theing UK.report Direct Property ist wh as well badntry. property), there is now a rush Developme Fund s. She have a en it to bring Programme. The exposure that I received has been factua insists com Having assaid that, shopping flow are African Republic centres

earch

Excited about the Property sector

of dat

don’t know es to , that going that all +27 (0)11 448 5032l. and tha each rep invaluable – and not just in terms of how Th reports property tinevetheir to have to become “destinations” own right. ort mu must e fin ry sta their rights,SAPOA so they st tell women can’t development works. The bonds that I formed withal forApart in property mingfrom just being a place to shop, they tement ma a sto are going de mu of per st be qua ry, son’s defend them. But we who some team members in my group mean I’m still in to have toainclude charac facilities lified. such SA as ice-skating rinks, ter liesPOA wome in the cinemas, a greater variety of restaurants n in pro and more know our rights can help contact with them today. ir ow pe n hand rty “It is important to have a holistic view of our innovative entertainment. s - Ann e Frank them. We must always help industry, and it is equally as important to have an Online shopping will also have an effect on our them: the battle is always understanding of economics, financing and accounting. centres, as more retailers may take smaller space in The diverse nature of our requires that we strategic locations, and place greater emphasis on to promote and protect have a greater overview ofindustry what is involved before bigger and more accessible warehousing. the rights of women” specialising in one field. On a positive note, Barnard says, “We have seen – Catherine Samba-Panza, President of the Central African Republic

“My advice to young women coming into this industry is to work hard, persevere and look creatively for solutions to the challenges you will be faced with.

down cycles before. As a property owner, you can repurpose buildings as and when they become vacant. We’ve seen inner-city rejuvenation, and we’ve seen older

SAPOA women in property

To book your space, contact Pieter Schoeman e: pieter@mpdps.com For editorial enquiries, contact Mark Pettipher e: mark@mpdps.com Booking deadline 5 July 2018 Editorial deadline 3 July 2018

name launched under the A joint venture was and went on to Property Services Motseng Marriott ices business, ed management serv become a fully staff industry in the water of this toe a be to ed which prov st in and start then inspired to inve for Mkhari, who was -related businesses. up similar property e of KAP a three-percent shar In 2004, MIH acquired specialised , a listed group that ings Hold l iona rnat Inte r transport, tics and passenge in contractual logis l activities, rsified into industria and was also dive and the ents motive compon auto , icals chem timber, ing. manufacture of bedd Mkhari and apparent that all of In 2005, it became off when MIH k was really paying Nomvete’s hard wor lion. “This -mil R100 of more than achieved a turnover ncial position e put us in a solid fina incredible mileston Services’ 50% Corporate Property to acquire Marriott ownership we achieved 100% so , ness busi our stake in n we renamed it tion – which is whe of our own organisa ices,” says Mkhari. Motseng Property Serv in 2005, year for us because “That was a big Management Motseng Facilities r ed yea blish 20esta the r also we entity that s (MIH). Ove stment Holding on the role that women demand for a company Motseng Inve e to fulfil the growing arena.” In is the CEO of a whole ificant influenc ities management ty industr y as Ipeleng Mkhari ling career, she’s had sign sed purely on the facil Africa’s proper focu ster th her Sou stments, of Inve c and rse tegi cou seng Stra organisation Mot ed own blish her esta h bot they 2007, play in rity and cleaning the company’s secu aded offlo and a property business. ’t intend to launch to focus on their core peleng Mkhari didn s forward stment services pany took bold step ched Motseng Inve And in 2008, the com pany. When she laun com i vete much more har Nom ile Mk g Sand ted to become so school friend wan About Ipelen her “We y e. with ) ersit mor (MIH Univ “So Holdings rity services once Sci degree from the lords,” says Mkhari. Mkhari holds a BSoc ing company for a secu ice provider to land utive in 1998, it was a hold has than a serv assets with completed the Exec r leadership, MIH acquiring commercial of Natal and has tion. But under thei y ness School. we set our sights on nisa fora Busi st orga first Wits almo at our me with was ent leases. This Development Program tifaceted organisation has held long-term governm diversified into a mul career with MIH, she er its banner. ip space.” During her 20-year und ersh y king own entl wor the curr le is into but peop She – 400 ess marketing the company. deliver overnight succ working as the various positions in The strategy didn’t ctor of all Mkhari had been had taken saw an Officer. She is a dire t three years, Motseng company when she the Chief Executive in the period of abou ager of a CCTV an independent ts, with as man ed CCTV asse in serv ned has illion k-ow and oximately R1-b MIH subsidiaries blish the first blac panies. ownership of appr the opportunity to esta of various public com rds, she met up sheet. However, nonexecutive director its own balance h Africa. Soon afterwa off ions Sout inat tal in capi nom pany n wing com follo ial visio ble approach to She has received the ed her entrepreneur was not a sustaina Year 2006, ts company felt this Nomvete, who shar the asse of al with er hers tion Mov brot addi e itan 20 mber 2012, contract for the Kuen and awards: Cosmopol Business acquisition – so in Nove – and a large CCTV ’s Entrepreneurial d the Delta Property tal for MIH. finalist in the BWA d, and Mkhari liste capi hase Star seed 5 purc the WPN were ialided the prov ision 2006, finalist in ned assets into a spec focused on the prov Woman of the Year sold the Motseng-ow Fellowship At first, the company cleaning, Fund and , awarded the Tutu included security and Woman Award 2006 purpose entity. of soft services that a leading woman has son of the it as ed ago, s gnis year reco appointed Chairper days nearly 20 in 2008, and azine In 2007, she was y but since those early business by CEO Mag management, N). At that time, a fairl in government and the industrial, fleet Property Network (WP ork into en’s Netw d Wom erty rsifie Prop dive the , committee’s focus also the utive ors. In 2002 sect exec the erty of prop in 2008. She was was significant part later, textile trading and 2007 and 2009, and riott Corporate mentorship. A year Chairperson between approached by Mar on education and 20 Movers entrepreneurs were t and mentorship ure. “This fit was s in 2012 as one of the Education Trus featured in The Time form a 50/50 joint vent ched to rded laun ices ari awa Serv Mkh ng was erty andi she g Prop a. In 2015, of expandin WPN was rebr company strategy and Shakers in Afric It was clear that award, and e in perfectly with our on programme. Woman of the Year focused on much mor were eager to sign that we so tion nisa ent, the Forbes Pioneer orga ronm an next OA’s itself as into the built envi nomination for SAP ari. recently accepted a Mkh says ” line, ed the dott /2018. President Elect 2017

waves Women makingindustry in the property I

SAPOA women

in property

MetroWatch

Keeping an eye on Municipal spending

Property Review continues to bring you extracts from the https://municipalmoney.gov.za website, we believe that we should know how our taxes are being spent and have a say how money is spent. The website is designed to present key municipal financial information to a general audience, who do not necessarily have any financial background or knowledge. All municipalities are required to regularly submit their financial information to National Treasury, who in partnership with Code for South Africa is making it available to the public through the API, in a machine-friendly format. Who is behind Municipal Money Municipal Money is brought to you by the National Treasury, which has collected extensive municipal financial data over several years and would like to share this information with the public in order to increase transparency, strengthen civic oversight and promote accountability.

What is a municipal financial year? A financial year is an organisationâ&#x20AC;&#x2122;s accounting period of 12 consecutive months, at the end of which the accounting books or records for

that period are closed. The financial year is used as a basis for planning, budgeting, measuring financial performance and financial reporting. The financial year for South African municipalities runs from 1 July of each year to 30 June of the following year. Budgets need to be prepared and approved for each financial year. At the close of the financial year, reporting against the approved or adjusted (if any) budget is required in the form of Annual Financial Statements and an Annual report.

eThekwini

Metro municipality in KwaZulu-Natal Population

3 476 686

2 558.9

square kilometres

1 358.7 people per square kilometre 031 311 1111 http://www.durban.gov.za City Hall 263 West Street Durban 4001

MAYOR/EXECUTIVE MAYOR

Mrs Z Gumede (Zandile) 031 311 2130 mayorspa@durban.gov.za

Secretary

Ms Nokukhnya Mkhize 031 311 2110 mayorspa@durban.gov.za

MUNICIPAL MANAGER Mr Sipho Nzuza 031 311 2100 metroceo@ durban.gov.za

Secretary

Ms Lungile Gidigidi 031 311 2132 lungile.gidigidi@ durban.gov.za

CHIEF FINANCIAL OFFICER

Dr Krish Kumar 031 311 1131 Krish.kumar@durban.gov.za

Secretary

Ms Silindile Majozi 031 311 1131 Silindile.Majozi@durban.gov.za

DEPUTY MAYOR/EXECUTIVE MAYOR Mrs Fawzia Peer 031 311 2013 Fawzia.Peer@durban.gov.za

Secretary

Mrs Hazel Moonsamy 031 311 2013 Hazel.Moonsamy@durban.gov.za

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch FINANCIAL PERFORMANCE Audit outcomes 2016 Unqualified - Emphasis of Matter items

2015 Unqualified - No findings

2014 Unqualified - Emphasis of Matter items

2013 Unqualified - Emphasis of Matter items

Did You Know? There are 5 types of audit outcomes.

SOURCE: Municipal Audit Reports

Unqualified Opinion

No Findings

Emphasis of Matter Items

Qualified Opinion

Adverse Opinion

Disclaimer of Opinion

The Auditor-General expresses This is expressed when the The Auditor-General does not reservations about the fair auditor concludes that the have all of the underlying The Auditor-General can state, Same as an Unqualified documentation needed to without reservation, that the Opinion with no findings, but presentation of the financial annual financial statements do not present the determine an opinion. For financial statements of the the Auditor-General wants to statements. There is some municipality’s financial example, the lack of municipality fairly represent bring something particular to departure from the Generally Recognised Accounting position, results of operations underlying documentation the financial position of the the attention of the reader. Practices (GRAP) but is not and cash flows in line with and the amounts in question municipality and are in line sufficiently serious as to Generally Recognised may be so great so that with Generally Recognised warrant an adverse opinion or Accounting Practices (GRAP). it is impossible to give Accounting Practices (GRAP) disclaimer of opinion. any opinion on all.

Did You Know? A municipality’s cash balance refers to the money it has in the bank that it can access easily. If a municipality’s bank account is in overdraft it has a negative cash balance. Negative cash balances are a sign of serious financial management problems. A municipality should have enough cash on hand from month to month so that it can pay salaries, suppliers and so on.

Cash Balance July 2016 - June 2017 Not available

Cash balance at the end of the financial year. More than double the cash balance for similar municipalities nationally: R 3 088 912 098

good

Positive Balance

bad

Negative Balance

An Outstanding Opinion Means that the Auditor General raised queries with the municipality and therefore has not submitted another opinion.

Reference: State of Local Government Finances Formula: Cash available at year end = Cash Flow item code 4200, Audited Actual What does it mean when something is listed as ‘Not Available’ or a bar is missing from the chart?

When something is listed as ‘Not Available’, one or more of the things needed to show the indicator for that date was missing from National Treasury’s local government database. This usually happens when the relevant municipality has not submitted the data to the National Treasury in an acceptable form in time. It might have been submitted late and will be available in the next quarter. It might also be available directly from the municipality but without the vetting done by National Treasury before inclusion in their local government database.

Did You Know? Cash coverage measures the length of time, in months, that a municipality could manage to pay for its day-to-day expenses using just its cash reserves. So, if a municipality had to rely on its cash reserves to pay all short-term bills, how long could it last? Ideally, a municipality should have at least three months’ of cash cover.

Cash Coverage July 2016 - June 2017 Not available Months of operating expenses can be paid spec 01 for with the cash available. More than 1.5 times the coverage for similar municipalities nationally: 1.9 months

good average bad

More than 3 months Between 1 and 3 months Less than 1 month

Reference: State of Local Government Finances Formula: = Cash available at year end / Operating Expenditure per month = Cash Flow item code 4200, Audited Actual / (Income & Expenditure item code 4600, Annual Audited Actual / 12) If Cash available at year end is negative, we say Cash Coverage is zero months. SOUTH AFRICAN PROPERTY REVIEW

MetroWatch Did You Know? This indicator is about how much more a municipalty spent on its operating expenses, than was planned and budgeted for. It is important that a municipality controls its day-to-day expenses in order to avoid cash shortages. If a municipality sigificantly overspends its operating budget this is a sign of poor operating controls or something more sinister. Overspending by up to 5 percent is usually condoned; overspending in excess of 15 percent is a sign of high risk.

Spending of Operating Budget July 2016 - June 2017 1.9% overspent Difference between budgeted operating expenditure and what was actually spent. About 1.4 times the underspending or overspending for similar municipalities nationally: -1.4%

good

Up to 5%

average bad

Between 5% and 15% More than 15%

Reference: Over and under spending reports to parliament Formula: = (Actual Operating Expenditure - Budget Operating Expenditure) / Budgeted Operating Expenditure = (Income & Expenditure item code 4600, Audited Actual - Income & Expenditure item code 4600, Adjusted Budget ) / Income & Expenditure item code 4600, Adjusted Budget

Did You Know? Capital spending includes spending on infrastructure projects like new water pipes or building a library. Underspending on a capital budget can lead to an under-delivery of basic services. This indicator looks at the percentage by which actual spending falls short of the budget for capital expenses. Persistent underspending may be due to under-resourced municipalities which cannot manage large projects on time. Municipalities should aim to spend at least 95 percent of their capital budgets. Failure to spend even 85 percent is a clear warning sign.

Spending of Capital Budget July 2016 - June 2017 100.0% underspent

Difference between budgeted capital expenditure and what was actually spent. More than 1.5 times the underspending or overspending for similar municipalities nationally: -60.975%

good

Up to 5%

average bad

Between 5% and 15% More than 15%

Reference: Over and under spending reports to parliament Formula: = (Actual Capital Expenditure - Budgeted Capital Expenditure) / Budgeted Capital Expenditure = (Capital item code 4100, Total Assets, Audited Actual - Capital item code 4100, Total Assets, Adjusted Budget ) / Capital item code 4100, Total Assets, Adjusted Budget

Did You Know? Infrastructure must be maintained so that service delivery is not affected. This indicator looks at how much money was budgeted for repairs and maintenance, as a percentage of total fixed assets (property, plant and equipment). For every R10 spent on building/replacing infrastructure, R0.80 should be spent every year on repairs and maintenance. This translates into a Repairs and Maintenance budget that should be 8 percent of the value of property, plant and equipment.

Spending on Repairs and Maintenance July 2016 - June 2017 Not available Spending on Repairs and Maintenance as a percentage of Property, Plant and Equipment. More than 1.5 times the spending for similar municipalities nationally: 3.885%

good

More than 8%

bad

Less than 8%

Reference: Circular 71 Formula: = Repairs and maintenance expenditure / (Property, Plant and Equipment + Investment Property) = Capital Acquisition item code 4100, Audited Actual / (Balance Sheet item code 1300, Audited Actual + Balance Sheet item code 1401, Audited Actual )

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch Fruitless and Wasteful Expenditure July 2014 - June 2015 0.8% Unauthorised, Irregular, Fruitless and Wasteful Expenditure as a percentage of operating expenditure. Less than a fifth of the expenditure for similar municipalities nationally: 5.16%

good bad

0% More than 0%

Reference: Circular 71 Formula: = Unauthorised, Irregular, Fruitless and Wasteful Expenditure / Actual Operating Expenditure = Unauthorised, Irregular, Fruitless and Wasteful Expenditure item codes irregular, fruitless, unauthorised / Income & Expenditure item code 4600, Audited Actual

Did You Know? Unauthorised expenditure means any spending that was not budgeted for or that is unrelated to the municpal department’s function. An example is using municipal funds to pay for unbudgeted projects. Irregular expenditure is spending that goes against the relevant legislation, municipal policies or by-laws. An example is awarding a contract that did not go through tender procedures. Fruitless and wasteful expenditure concerns spending which was made in vain and would have been avoided had reasonable care been exercised. An example of such expenditure would include paying a deposit for a venue and not using it and losing the deposit.

Note Since calling expenditures unauthorised, fruitless and wasteful or irregular can involve quite a lot of debate, the numbers used are the restated audited amounts 18 months after the financial year end - part of the Medium Term Revenue and Expenditure Framework. Did You Know? The current ratio compares the value of a municipality’s short-term assets (cash, bank deposits, etc) compared with its short-term liabilities (creditors, loans due and so on). The higher the ratio, the better. The normal range of the current ratio is 1.5 to 2 (the municipality has assets more than 1.5 to 2 times its current debts). Anything less than that and the municipality may struggle to keep up with its payments.

Current Ratio July 2017 - June 2018 Quarter 2 1.44 The value of a municipality’s short-term assets as a multiple of its short-term liabilities. About 90 percent of the ratio for similar municipalities nationally: 1.555

good average bad

More than 1.5 Between 1 and 1.5 Less than 1

Reference: Circular 71 Formula: = Current Assets / Current Liabilities = Balance Sheet item code 2150, Monthly Actual / Balance Sheet item code 1600, Monthly Actual Note The quarterly summary looks at the state at the end of each quarter. If the monthly data is missing for the last month in the quarter, the previous month in that quarter. If all months are missing, that quarter is shown as blank. Did You Know? Liquidity ratios show the ability of a municipality to pay its current liabilities (monies it owes immediately such as rent and salaries) as they become due, and their long-term liabilities (such as loans) as they become current. These ratios also show the level of cash the municipality has and / or the ability it has to turn other assets into cash to pay off liabilities and other current obligations.

Liquidity Ratio July 2017 - June 2018 Quarter 2 0.62 The municipality’s immediate ability to pay its current liabilities About 90 percent of the ratio for similar municipalities nationally: 0.69

good

More than 1

bad

Less than 1

Reference: Municipal Budget and Reporting Regulations Formula: = (Cash + Call Investment Deposits) / Current Liabilities = Balance Sheet item codes 1800, 2200, Monthly Actual / Balance Sheet item code 1600, Monthly Actual

Note The quarterly summary looks at the state at the end of each quarter. If the monthly data is missing for the last month in the quarter, the previous month in that quarter. If all months are missing, that quarter is shown as blank.

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch Did You Know? Municipalities donâ&#x20AC;&#x2122;t manage to collect all of the money they earn through rates and service charges. This measure looks at the percentage of new revenue that a municipality collects. It is also referred to as the Current Debtors Collection Ratio.

Current Debtors Collection Rate July 2017 - June 2018 Quarter 2 77.07% The percentage of new revenue (generated within the financial year) that a municipality actually collects About 80 percent of the rate for similar municipalities nationally: 95.845%

good Note The quarterly summary looks at the state at the end of each quarter. If the monthly data is missing for the last month in the quarter, the previous month in that quarter. If all months are missing, that quarter is shown as blank.

bad

95% or more Less than 95%

Reference: Municipal Budget and Reporting Regulations Formula: = Collected Revenue / Billed Revenue = Cash Flow item codes 3010, 3020, 3030, 3040, 3050, 3060, 3070, 3100 , Monthly Actual / Income and Expenditure item code 0200, 0300, 0400, 1000, Monthly Actual

INCOME Where does City of Cape Town get its money from? Did You Know? The more a municipality is able to generate its own income, the more self-sufficient it is. Municipalities should not be too reliant on transfers and grants from other spheres of government.

1. Money Generated Locally

2. Money from National Government

84.09%

15.91%

From residents paying for water & electricity,rates, licenses & fines, and from interest and investments.

From the Equitable Share of taxes, and Grants from National Government.

July 2016 - June 2017

Reference: Local Government Equitable Share Source: Income & Expenditure Audited Actual Did You Know? This shows how much of a municipalityâ&#x20AC;&#x2122;s income it is able to generate itself (through property rates, service charges, etc), compared with how much it receives as transfers and grants from national government. The more a municipality is able to generate its own income, the more self-sufficient it is.

Where money comes from

Source: Income & Expenditure Audited Actual and Original Budget 42

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch SPENDING - How money is spent Did You Know? Employee-related costs are typically the largest portion of operating expenditure, but they should not grow so large that they threaten the sustainability of the operating budget. The normal range for this indicator is between 25% - 40% of total operating expenditure. Municipalities must guard against spending too much on staff while also making sure they have the people they need to deliver services effectively.

Staff Wages and Salaries July 2016 - June 2017 28.42% Staff salaries and wages as a percentage of operating expenditure.

within norms 25% to 40% outside norms less than 25% or more than 40% Formula: = Wages & Salaries + Social Contributions / Actual Operating Expenditure = Income & Expenditure item codes 3000, 3100, Audited Actual / Income & Expenditure item code 4600, Audited Actual

Did You Know? Private contractors are sometimes needed for certain work, but they are usually more expensive than municipal staff. This should be kept to a minimum and efforts should be made to provide services in-house, where possible. This measure is normally between 2 percent and 5 percent of total operating expenditure.

Contractor Services July 2016 - June 2017 5.29% Costs of contractor services as a percentage of operating expenditure.

within norms up to 5% outside norms more than 5% Formula: = Contracted Services / Actual Operating Expenditure = Income & Expenditure item code 4200, Audited Actual / Income & Expenditure item code 4600, Audited Actual

What is Money Spent On?

Did You Know? Municipalities spend money on providing services and maintaining facilities for their residents.

Planning and Development Health

Source: Income & Expenditure Audited Actual and Original Budget SOUTH AFRICAN PROPERTY REVIEW

howmuch.net

Which country has the When a country experiences slower economic growth, the government receives less in tax revenue and therefore has to borrow money to keep up the delivery of essential services. Any funds borrowed accumulate as public debt, and will eventually have to be repaid. This debt is not necessarily a bad thing – in fact, it’s quite normal for a country to raise debt – but excessive debt could put a country’s future economic wellbeing at risk if the underlying reasons that the debt was required in the first place are not addressed By Raul Amoros Howmuch.net/articles/countries-scaled-to-the-unsustainability-of-their-debt

ne of the ways to compare debt levels between countries is the debt-to-GDP ratio: a ratio of a country’s total debt to its gross domestic product (GDP), where debt is measured in dollars (US$) and GDP is measured in the value of goods and services produced per annum (US$/year). Therefore, the higher the ratio, the longer it will take for a country to pay off its debt. For instance, a country with a debt-to-GDP ratio of 100% could theoretically pay off its debt in one year – but realistically, a country will only devote five to 10% of its GDP to debt repayment, so it would take about 10 years to pay down the debt in this instance. We built a map to compare the debt-to-GDP ratios of the world’s most representative economies. The size of each country on the map represents the level of debt – a larger size means a higher debt-to-GDP ratio. We also included a colour-coding to illustrate the GDP growth rate of each country: red countries have negative growth rates (-5% to 0%), and green countries have very high growth rates of more than five percent.

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The countries with the highest debtto-GDP ratios are Japan (230%), Greece (177%), Lebanon (134%), Jamaica (133%), Italy (132%), and Portugal (130%). These countries, with perhaps the exception of Lebanon, also have a low (or negative) GDP growth rate, which is not good news for their economic outlook. Obviously, Greece is already dealing with financial turmoil as a result of its inability to pay off its debt, but other countries with high debt levels and low economic growth rate also face serious default risks (for example, Italy and Cyprus). For the countries with the highest debt-to-GDP ratio, debt has actually been increasing over the past few years. But this isn’t necessarily a huge problem. As long as the countries are using borrowed funds to successfully stimulate their economies, they will be able to pay back their debt on time. But if governments continue to borrow without increasing economic output (GDP), debt levels could get out of control and countries will be forced to default on their loans. (This is what happened to Greece.)

Interestingly, the countries with the lowest debt-to-GDP ratio (Saudi Arabia, Nigeria, the UAE and Russia) all have large nationalised natural resource industries (oil and natural gas). The production of oil and gas provides these countries with a relatively stable source of revenue – which means that they don’t need to borrow further funds to pay for government services. It should be noted that, according to the IMF, there is no simple threshold for unsafe debt-to-GDP ratios. But the IMF has found that higher debt levels are associated with more volatile growth. Countries with a high debt level are more susceptible to collapse when economic shocks occur. The important thing is, therefore, not so much the actual level of debt, but whether the underlying causes of the high debt level are being addressed. Many countries, including the US, are dealing with unsustainable debt levels. In order to rein in this debt, either government revenue generation models will need to change, spending cuts will need to be made, or economic growth will have to increase.

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most unsustainable debt? How do countries successfully pay back their debt? Typically, to pay off its debt, a country needs to decrease its spending or increase government revenues. In the short term, decreasing spending is far more plausible. Take Iceland, for example: the country faced a debt crisis in 2008 after the sub-prime

mortgage crisis that originated in the US. Iceland’s national banks were unable to get the required financing from the international market, and eventually had to declare bankruptcy. Their solution? The government restructured the country’s three largest banks, declaring them insolvent, and set up currency-swap agreements with

nearby Scandinavian countries. Some have argued that one of the main reasons why Iceland was able to get itself out of debt is the country’s Protestant heritage: the theory is that Protestant countries tend to be more receptive to financial discipline and austerity measures in times of financial strife.

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Western Cape networking evening

FROM LEFT Lisa Steytler, Jehan Adams, Larry Unterhalter, Madeleen Greyvenstein, Lyn Roux, Nadia Nel, Rista Roets, Jason Wells, Garret Miller and Marlon Parring

Paul Aitken with Lara Schenk

FROM LEFT Matthew Anderson, Wesley Cole and unknown

APOA Western Cape Regional Council held a networking evening on 3 May 2018 in the Atrium of the Liberty Offices in Century City. Western Cape Regional Councillor Marlon Parring welcomed guests on behalf of SAPOA. There was also an address by Jason Wells of PG Bison, one of the sponsors for the evening. The event ended with a lucky prize draw, and was enjoyed by all 120 guests in attendance.

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FROM LEFT Johann Nieder-Heitmann, Angelique van Wyk and Graham Smith

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FROM LEFT Caroline Levine, Rosa Saunders, David Schulman, Kerryn Moulang, Kyle Fisher, Linda Tyack and Roan Dalzell Tafadzwa Ncube with Ntoitsa Kotelo

FROM LEFT Bruce Kerswill, Dave Russel, Astrid Gilwald and David Stoll Cebo Nikelo with Hannes Mouton

FROM LEFT â&#x20AC;&#x2030;Werner van Rooyen, Johan de Beer and Graham Smith

Michael Doveton with Patrick Parring