South African Property Review May 2014

South African Property Review

PROPERTY SOUTH AFRICAN

May 2014

REVIEW

EYE ON AFRICA Mauritius: sun, sea, sand and citizenship Urban design and regeneration

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from the CEO

No kid gloves for collusion In light of the very real existence of collusion in the property industry, SAPOA CEO Neil Gopal highlights SAPOA’s no-nonsense attitude towards corruption

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orruption has become the common ground that straddles the private and public sector in South Africa, with collusion a real threat to market dynamics. Collusion infringes on South Africa’s Section 4.1(b) of the Competitions Act and is regarded as the most offensive of all competition-law offences. In essence, it redistributes wealth from consumers to cartel members by inflating prices with no enhancement in efficiency or quality.

Almost a year ago, SAPOA raised its voice in condemnation of widespread collusion in the construction sector, which negatively affected its members. In June 2013, the Competition Commission fined 15 construction firms a combined R1,46-billion in relation to collusive tendering in projects between 2006 and 2011.

Fraud and corruption have been a challenge over the years in the Department of Public Works, where collusion between senior Department officials and landlords has been reported. In August 2012, the Minister of Public Works Thembelani Waltermade Nxesi presented a strategy against fraud and corruption in the Department, giving the Portfolio Committee a detailed insight into the investigations that were carried out by the Special Investigating Unit as part of the turnaround strategy that’s being implemented.

Minister Nxesi also pointed out that the major focus had been directed at the top of the organisation because the Department needed good senior management to address the issues of fraud and corruption. The successes so far have included the suspension of officials implicated,

the institutionalising of internal disciplinary processes, criminal proceedings, and the exposure of the fraudulent orders scam.

In March 2014, the Department presented its performance report for the third quarter of the 2013/2014 financial year, and said that while there had been a great deal of improvement, it had not yet reached “the ultimate point” that it was striving to achieve. One of the highlights of the quarter had been the holding of about 10 fraud-awareness workshops.

Collusion hurts not only the property industry but the South African economy as well. Cartel conduct affects prices in a given market and in the overall economy, and thus hampers the

way in which resources are issued. Most notably, collusion tarnishes a company’s image and hurts its reputation.

Collusion also represents a negative impact for our members in the form of escalated development costs and reduced yields, with a knock-on impact for demand in the economy and the growth of the property sector.

In light of SAPOA’s Code of Conduct, corruption and collusion of SAPOA members blatantly defies the organisation’s ethical nature and its high standards. As CEO of SAPOA, I feel that members of the organisation must take heed of the consequences if caught or suspected of conducting collusion. SAPOA will take action, resulting in the cancellation of membership – a stern action that has occurred before.

The property sector and the strong reputation that SAPOA enjoys cannot endure corruption and collusion. We have come a long way since our segregated past, and now is the time for us to work together to weed out corrupt individuals in our prized industry. We will continue to lobby regulators, such as the Competition Commission, to ensure these practices are eradicated from our economy.

SAPOA president Estienne de Klerk, president elect Amelia Beattie and I met with the Department of Public Works’ director general in early April to discuss a number of matters of mutual concern.

A communiqué regarding the outcomes of this meeting will be sent to our members in due course.

Neil Gopal, CEO

SOUTH AFRICAN PROPERTY REVIEW

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2014/04/09 8:57 AM

from the editor’s desk

Regenerating cities, regenerating perceptions Scarred by the segregational apartheid system, South Africa is a cesspool of niggling prejudice and negative perception. The time for change is now

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patial segregation spurred on by the unjust planning and legacy of apartheid is an unfortunate reality that largely affects the impoverished masses and previously disadvantaged South Africans who still live on the outskirts of the country in the former “homelands”.

Born during the culmination of the regime, raised in a postapartheid democratic South Africa, and given every opportunity to excel (including private schooling, university entry, personal transport, etc), I too feel the brunt of spatial segregation, physically, mentally and socially.

I live in the south of Jo’burg, in a quaint valley close to the Klipriviersberg Nature Reserve.

The area is somewhat spoilt – as is the whole of the South.

Commercial development is lacking, economic activity is low despite the several light industrial nodes that populate the area, key transport hubs are amiss, and social/leisure amenities are few and far between. (Gold Reef City ticks the only box here.)

To my mind, my once much-loved home town is now a place of mine dust and missed opportunity. Sitting in traffic on the M1 highway for up to three hours at times just to get to the North is like Chinese water torture but once you there, as a Southerner, it’s like you’ve stepped into Las Vegas: highrise buildings, Gautrain stations, monster shopping centres, must-eat-at restaurants and trendy cafes on every corner, and Burger King!

As a young professional, I want to live, work and play in a bustling node such as Sandton, Rosebank, Midrand, Bryanston, or even the currently trending Maboneng Precinct in the heart of Johannesburg. However, although it’s poised for further growth and destined for greatness, stereotypes still loom about this inner-city gem. “It’s full of criminals”, “You will get robbed”, “It’s filthy and dodgy”, “Oh, no, gross – why would you want to live there?” I’ve heard it all.

Crime is indeed the biggest cavity in South Africa’s bright smile. Safety and security are top priorities for residents and corporates alike, and citizens are often warned (mostly by

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other citizens, friends and family) about staying out of well-known seedy areas because “bad things happen” there.

In light of all this, it’s worth pointing out that one of the biggest tragedies of this decade – perhaps one of the biggest in South African history – took place in an up-market area tucked away in a securitised residential estate, where model and law graduate Reeva Steenkamp was shot. She was a young professional seeking opportunity, who was killed in the prime of her life.

Stereotypes, stigmas and prejudice are weak points for South Africa, hampering realities that have been brought on by our tumultuous past.

Thus spatial segregation and the repercussions of apartheid affect everyone in our country, from the marginalised poor to the promising young professionals. Currently, the public and private sector are working together to address spatial transformation, environmental and sustainability issues, and opportunities for the South – matters that we cover in this issue. As for the negative mind-sets … that’s something that bricks and mortar can’t change. Or can it?

The Convention is almost here!

It’s time again for the much anticipated 46th Annual SAPOA International Convention and Property Exhibition where the property industry comes together for three days of thought-provoking speakers, in-depth panel discussions, nonstop networking and, of course, the exciting party finale. After last year’s Valley of the Waves beach party at Sun City with its spectacular fireworks display, I wonder what the Convention masterminds have in store for this year’s delegates?

To find out, make sure you don’t miss out on this year’s prestigious event, hosted in the Mother City at the Cape Town International Convention Centre from 10 to 12 June.

See you there!

Candace King, editor

SOUTH AFRICAN PROPERTY REVIEW

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2014/04/07 2:00 PM

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contents

May 2014

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

May 2014

REVIEW

EYE ON AFRICA Mauritius: sun, sea, sand and citizenship

ON THE COVER This month’s cover showcases The Creative Axis Architects’ Park Station Gautrain’s commuter access

Urban design and regeneration

NEW LEASE ON LIFE Urban regeneration and spatial transformation change the game

Abreal

DEVELOPING AGAINST THE GRAIN Harvesting student accommodation

Commuter AXIS to Jo’burg’s rail network May 2014 Cover With Spine_MAY_rt_SUBBED.indd 1

2014/04/07 1:36 PM

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From the editor’s desk

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News

10 Education, training and development 14 Legal update Land reclamation in South Africa

Oilgro

18 Councillors in conversation 20 Urbanity’s new lease on life 26 Africa uncovered Mauritius 32 Cover story Creating Park Station 34 Egoli goes green 40 Developing against the grain 44 Interview Durban: the good news 46 Shop till you drop at Rosebank mall 50 Interview A revolution for Jo’burg South 52 Standing tall and proud in Rosebank 60 Statistics 62 NMC nourishes student accommodation 64 Off the wall The rise of Sandton rentals FOR EDITORIAL ENQUIRIES email editorial@sapoa.org.za or managingeditor@sapoa.org.za.

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 e: sales@sapoa.org.za Editor in chief Neil Gopal Editorial advisor Jane Padayachee Managing editor Mark Pettipher Editor Candace King Copy editor Ania Rokita Production editor Dalene van Niekerk Designer Dirk Knoesen Sales Riëtte Stevens Finance Susan du Toit Contributors Advocate Portia Matsane, Martin Ferguson, Baaitse Nethononda, David A Steynberg, Nicky Manson, Denise Mhlanga Photographer Michael Glenister

P R O P E R T Y

F U N D

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

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SOUTH AFRICAN PROPERTY REVIEW

Contents Review_MAY_SUBBED.indd 2

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

e: david@rsalitho.co.za

2014/04/09 8:43 AM

MetropolitanRepublic/14009/E

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news

Property management unlocks performance for SA Corporate real estate fund

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mproved key performance indicators have contributed significantly to the full-year performance of the SA Corporate Real Estate Fund, which recently announced 8,6% distribution growth for the year ended 31 December 2013, surpassing market expectations.

The results reflect a turnaround for the fund, which has been achieved with its four-pillar strategy that focuses on investment strategy, capital structure, alignment of investor and management interests, and property management.

At the beginning of 2013, SA Corporate targeted property management as one of the key areas to ensure the optimal performance of the fund. It sought to procure top property management services with a robust service level agreement to “stretch” key performance indicators. It also required its new property manager to have turnaround competence to proactively address the need to improve these indicators in the fund and add strategic value.

SA Corporate went out to tender and awarded the contract for the property management of its entire portfolio to Broll from 1 July 2013.

The resultant turnaround in the performance of the portfolio is evident in the numbers. SA Corporate’s reported second-half results exceeded expectations with 9,9% distribution growth compared to the second half of last year. Contributing significantly to this were the overall improved property portfolio fundamentals. During the year, vacancies reduced from 5,9% to four percent, net arrears after provisions decreased by R3,6-million to 3,2% of annual billings, builtin rental escalations are at least 8,1% for all sectors, and 73,1% of the tenants whose leases expired during the year have been retained in the portfolio, at positive consolidated rental reversions.

In addition, SA Corporate’s property expenses continued to decline as a percentage of property revenue, from 14,7% last year to 14,2% in the current year.

“We are very pleased with the progress Broll has made to date in the property management of our portfolio, and with its particular contribution to the turnaround of our retail properties,” says Rory Mackey, managing director of SA Corporate. “Broll is committed to continue to make improvements, and we anticipate a further reduction in retail vacancies in the current year. We greatly value the business relationship we have established with Broll since July 2013, and we look forward to this growing from strength to strength in the years ahead.”

“SA Corporate’s property management strategies underpin its performance for investors,” Malcolm Horne, CEO of Broll says Malcolm Horne, group CEO of Broll. “We’re pleased with the progress already made in furthering SA Corporate’s goals for its property portfolio. We’ll continue to maintain present portfolio metrics, ensuring sustainable performance, and find ways to further improve performance and add value, even in the coming challenging economic year.” +27 (0)11 441 4000, Broll.co.za

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Heathway Centre under new management brings new vision

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eathway Centre, situated on the corner of Beyers Naude and Castle Hill Drives, is a retail centre with high visibility and easy accessibility along Beyers Naude, one of Johannesburg’s most prominent arterial roads, and set to become a destination for families in this region.

In early 2014, the shopping centre was transferred to new owners, Sizanai General Trading Company, and is subsequently under new centre management.

The new owners have exciting plans for the centre to make, and plan to the focus familycentric, catering to parents with children of all ages.

Investing R2,5-million in a new outdoor play area, management has attracted new tenants, including the popular frozen yoghurt franchise Smooch, which is setting up a store overlooking the new playland, and Seemans, which has taken over 760m² of space with access to the new outdoor quarter.

Seemans is launching a flagship delicatessen, where customers can be seated to enjoy a meal while their youngsters enjoy the new playground, or simply visit to purchase their favourite deli meat and bakery supplies.

The new outdoor play area will attract families from afar with its

extraordinary choice of playground equipment.

Coupled with its refreshed centre vision, the management company is also giving the centre an exterior makeover to attract new customers.

The tenant mix is being carefully planned to make Heathway Centre into a centre of convenience and a destination for families looking for an ideal place to shop, make essential visits to medical practitioners, and eat at leisure while their children are entertained.

During the past few months, while the centre has been undergoing an external face lift, the new management team has successfully filled all the office space, including a medical suite with two doctors and two dentists. In the centre, they have secured school outfitters that supply uniforms to 35 schools in the region as well as PNA stationers, both complementing the existing Toys R Us store, and therefore capturing a wide market in terms of families with school-going children within a 5km radius. The lower ground also includes a Master Maths Centre and a public library as well as a Pick n Pay store, to enhance the centre’s mix for shoppers with school learners of all ages.

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news Cash Converters recently increased its retail space from 400m² to 1 200m² making it the largest Cash Converters store in the world.

There are currently two prominent retail units available.

One, adjacent to Toys R Us, is 560m² and ideal for a convenience grocery store. It offers internal and external access for shoppers, and will be close to an outside stairwell and to the new CrossFit gym, targeting professionals and mothers who want to train while their children are entertained.

The second unit is 213m² and is also on a prominent corner, near the escalators on the mezzanine level. It provides excellent pedestrian traffic and exposure, and would be ideal for a kitchenappliance store, a gift store or a banking outlet. Overall, the centre is split over two storeys consisting of 22 464m² of retail space, and offers free parking both above and underground. +27 (0)11 678 7553

Claims that South Africa’s economic bubble will burst are exaggerated

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arnings of the economic bubble bursting in South Africa, which would have an explosive ripple effect on the housing market, are exaggerated, says Rawson Properties’ chairman Bill Rawson. He acknowledges that a depreciating domestic currency and concomitant interest rate increases to fight inflation will put pressure on the household purse in South Africa, but he does not believe there is much chance of housing prices dropping in the foreseeable future.

“I see housing and its value not dropping but, at worst, remaining stable in this environment, as few people may qualify according to the banks’ tightened credit criteria in such a scenario,” he says. While he knows there may be increasing pressures on household budget through the rising cost of oil – and thus transport costs – and the spiralling cost of energy, he does not see the depreciating currency as the same kind of threat to the GDP as these factors.

Jesse Colombo of Forbes and Moneyweb has provided warnings that South Africa’s economic bubble is likely to burst. He sees South Africa as vulnerable because of its large current account and trade deficits, high inflation, significant dependence on foreign capital inflows and slowing economic growth. Acknowledging the “slight dip” in the housing market in 2008 and 2009 at the time of the global economic troubles, Rawson says this could largely be attributed to the simultaneous dumping of “loads of property on the auction market” by the banks, owing to mortgage loan defaulters or where there were no cash buyers.

“I don’t think [the banks] will make this mistake again.”

The next factor supporting a stable property investment platform is demand. South Africa still has a large need for housing, especially in the lower price sector. But Colombo argues that South Africa’s housing price surge in the last decade was financed by a mortgage lending boom that was growing at a 30% annual rate at its peak in 2006, causing household mortgage debt as a percentage of disposable income to rise from 27% to just under 50% from 2003 to 2010. He feels South Africa is experiencing an economic bubble that shares many similarities to those that caused the downfall of many Western economies in 2008. A lowinterest-rate environment inflates credit and asset bubbles, which has occurred in South Africa. +27 (0)21 658 7100, Rawson.co.za

Mauritius: an investment destination of choice

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aking an investment in Africa is considered to be tricky business, with the hurdles of political instability and economic uncertainty that can trip up the unwary.

But Mauritius, Africa’s shining beacon of social and economic stability, tops several polls as the safest place to put your finances.

It’s not just the beautiful scenery and balmy tropical sunshine that are persuading entrepreneurs and wealthy foreigners to relocate their businesses or add a villa in Mauritius to their portfolios.

The Ibrahim Index of African Governance hails it as the bestrun country in Africa, and the World Bank’s survey of the Best Countries for Doing Business ranked it as the first in Africa and 20th globally in 2014. These economic accolades are backed by a 92,9% employment rate and 89,9% literacy rate, a 15% corporate and personal tax rate and blissfully low crime.

The beautiful beaches, topnotch healthcare system, good flight connections and widely spoken English and French also make Mauritius an easy emigration option.

For businessmen used to dealing with bureaucracy, the Mauritian approach is a breeze.

Applications for occupation permits or residence permits are made through the Board of Investment and are issued within five working days. These efforts to open Mauritius up to foreign investors were essential after the country’s sugar industry slumped. (Sugar now contributes only one percent of GDP, down from 75% in the 1970s.)

“Without investment there won’t be growth or job creation, so our strategy is to diversify the economy,” says assistant director at the Board of Investment, Sachin Mohabeer. “We want more investors and high-calibre professionals working here and more retirees living here.”

The strategy to broaden the economy includes capitalising on the natural beauty of the island by allowing high-networth individuals to buy properties in specifically designated areas. Foreigners can invest in property under the Integrated Resort Scheme (IRS), which is designed to attract wealthy foreigners and their hard currency.

The government grants residency to investors who spend at least US$500 000 on an IRS home, and they can also apply for permission to start a business or find a job. Rob Hudson, MD of South African property development and sales company Hayes, Matkovich & Associates, says South Africans account for 40% to 50% of IRS sales and are often businessmen who want to take some money offshore.

Hudson says the IRS policy is incredibly successful in helping to diversify the Mauritian economy.

“You are investing in a stable country with a very low crime rate, an economy that’s doing well and a lifestyle that is hard to match anywhere else in the world,” he says.

The first IRS properties to be resold notched up an average 35% return on investment. Where other international “second home” real estate markets have collapsed in recent years during the financial crisis, Mauritius has stood out with positive growth and continued returns on investment. With about 40% of investors coming from Europe, this performance in the “hard times” bodes well for when the European investment markets recover. That said, Hudson does emphasise that Mauritius is a niche market opportunity but not a speculative one, and investors should adopt a medium- to long-term outlook. +27 (0)12 004 1917, Investmauritius.com

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New property listings become challenging as the sector moves to consolidation 2014 has confirmed that the listed property sector is moving from a cycle of new listings into one of consolidation. This trend is typical of the listed property sector in current market conditions, reports the SA REIT Association, and creates a unique set of opportunities.

“This cycle has seen nine new JSE listings, and while there may be a few more attempts to bring new companies onto the exchange, it will be exceptionally difficult,” says Evan Jankelowitz of Sesfikile Capital. “Equity and debt pricing have made it more demanding on vendors. The prices they will be able to fetch are no longer feasible.”

Contributing to this challenge is the good value already available to investors in the listed property sector from established companies with solid track records. “The listed property sector offers many cheap options to invest in the current market, as prices have come off sharply,” says Jankelowitz. “However, new listings will have to differentiate their offering considerably to entice investors.”

And using price as a differentiator will be difficult. “If a potential new listing wants to differentiate itself on price, it would need to list north of a 10% yield,” he says.

“However, this is unlikely to induce the owners to bring their portfolio to market.”

Providing a unique investment proposition is one way to achieve a successful listing in this market. Jankelowitz cites Attacq with its development bias and Investec Australia with its Australian exposure as examples with sufficient differentiation to attract investors.

With the high costs of bringing relatively small companies to market coupled with the existing appetite of the incumbents to grow, new listings have clearly become a challenge. But there are attractive alternatives for property portfolio owners seeking liquidity from their investment.

“In this market, it is preferable to transfer the portfolio into an existing listing. This would ultimately be a more efficient and effective mechanism,” says Jankelowitz.

Redefine International secures full ownership of London’s Earls Court Holiday Inn Express Hotel

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edefine International recently announced that it has agreed to purchase the remaining 40% of the issued shares in BNRI Earls Court Limited to secure full ownership of the Holiday Inn Express Hotel in Earls Court, London.

The £6,3-million (R111,2-million) transaction, which represents a net initial yield of seven percent, is being effected through Redefine International’s 71% held subsidiary Redefine Hotel Holdings Limited (RHH), and implies the value for the 150bedroom hotel of £28,1-million (R496-million).

Mike Watters, chief executive of Redefine International, explains that the hotel forms part of RHH’s existing portfolio of seven hotels. “It is well located, close to the Earls Court Exhibition Centre and Arena and the Olympia Exhibition Centre, and has performed extremely well, with underlying operating earnings 15% ahead of the budget for the six months to 28 February 2014,” he says.

Earls Court Holiday Inn Express Hotel is held under freehold title and is subject to a franchise agreement with InterContinental Hotels Group Hotels Limited until 2023.

Supported by its positive performance, RHH completed a 50-bedroom extension to the hotel in November 2012.

The purchase consideration will be funded by part of the proceeds from Redefine International’s recent share placement, together with further co-investment, on a pro rata basis, by the existing co-investors in RHH. “We are pleased to make the final steps towards deploying the capital from our recent share placement,” says Watters. “The limited service hotel sector continues to thrive in pockets of London, and this, combined with our in-depth knowledge of the performance of this particular hotel and our ongoing belief in the potential of this sector, supports our confidence that the transaction will deliver high-quality income to our investors.” +27 (0)11 783 0700, Redefineinternational.com

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“However, we often find that management’s attachment to their assets and business may lead to a more subjective thought process.

The core reasons behind listing are providing means of funding and liquidity. Both these outcomes are generally enhanced when selling into an already established entity.

But if it’s the incumbent’s ability to deliver future growth and profit off their success that is driving the proposed listing, the seller’s control and managerial direction would be marginalised.”

When satisfying the sector’s appetite for growth, consolidation is likely to replace new listings in the coming years because substantial physical property portfolios are hard to come by.

“In addition, the listed property market by its very nature corrects far quicker than physical property assets,” says Jankelowitz.

“Mergers are a better buying opportunity than growth through acquiring physical assets and developments.”

But consolidation also comes with challenges. “Onerous management contracts will provide a hurdle for consolidation,” he says. “The risk is that companies will overpay for these management agreements at the expense of shareholders’ best interests.”

Jankelowitz believes that smaller companies that have failed to grow substantially and have a lack of liquidity reflecting in a depressed price will become takeover targets. “A strong rating should be a natural deterrent because the price makes it difficult for predators to stomach.

But this takes time.”

News of corporate action already in the market includes the three-way consolidation talks between Delta, Rebosis and Ascension, as well as Arrowhead’s acquisition of a substantial stake in Vividend together with its outright acquisition of its management company.

Vukile is potentially seeking to acquire Synergy after buying a 34,5% stake in the company in December last year.

Most recently, it was announced that Redefine Properties will acquire the entire issue capital of Annuity Properties by way of a scheme of arrangement, and Annuity’s asset and property management companies.

In addition, companies with a legacy and strategic relationships – for example, Sycom and Acucap, and Premium and Octodecwill – will find merging attractive in this market. +27 (0)11 783 2201, Sareit.com

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2014/04/07 2:24 PM

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Attacq reports 19,9% NAV per share growth for half year

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ttacq recently announced its maiden half-year results since listing on the JSE on 14 October 2013. As a unique JSElisted capital growth investment in real estate, Attacq’s performance is measured by growth in net asset value per share (NAVPS). It reported an increase of 19,9% NAVPS from 31 December 2012 to 31 December 2013, and 7,8% for the six months from 30 June 2013.

Attacq also delivered on all 14 transactions disclosed in its listing prospectus, with 13 implemented by the close of the period, and the final transaction – to secure full ownership of Brooklyn Bridge Office Park in Pretoria – was implemented in March 2014 after receiving the Competition Commission’s approval.

During the period the gross assets increased to over R15.1 billion, up 13% since June 2013.

Attacq’s gearing was conservative at 35.7% as at 31 December 2013 and 69.6% of its total external interest-bearing debt was fixed.

“We’re satisfied with the results and proud of the management team for implementing all the transactions, including the internalisation of the asset management, disposal of four non-core assets at a 17% premium to the June 2012 carrying values, and the consolidation of our international portfolio, resulting in an increased shareholding in MAS Real Estate Inc,” says Morne Wilken, CEO of Attacq.

During the period, Attacq acquired 12,4% in African Land Investments together with Hyprop, in line with its African investment strategy.

This gives Attacq a threepronged strategy into subSaharan Africa. The first prong is via Atterbury Africa, jointly held by Hyprop and Atterbury,

CBRE awarded global retail property mandate for Shell Group which focuses on development of retail centres in Africa. These properties include the incomeproducing 19 000m² Accra Mall in Ghana, and four other developments of which two are also located in Accra, one is in Kumasi, Ghana and one in Zambia, Lusaka. The developments are in different stages of completion and will come into operation over the next two years.

The second part of the strategy is investment in Mauritius.

Together with local partner ENL Group, Attacq owns the 44 500m² Mall of Mauritius and has a remaining pipeline of about 30 000m² of commercial bulk.

The third prong is African Land Investments, which focuses on acquiring completed retail assets. It currently holds the 43 400m² Manda Hill shopping centre in Lusaka.

Locally, Attacq focused on consolidating the retail assets in its portfolio by acquiring the shareholding of the minority investors in its regional shopping centres, including Mooirivier Mall, the Eikestad Mall Precinct, Brooklyn Mall and Garden Route Mall. Attacq also boosted its effective shareholding in Attacq Waterfall Investment Company, the company that holds the development rights for the prestigious Waterfall Business Estate, to 85,9%, and broke ground on the largest single-phase mall in South Africa, the Mall of Africa.

“We are pleased with our first set of interim results as a listed company,” says Wilken.

“We’ve started the process of cleaning out our balance sheet, and Attacq is well positioned to move forward and benefit from exciting opportunities in our portfolio and development pipeline.” +27 (0)10 596 8892, Attacq.co.za

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BRE Group Inc recently announced a renewal and expansion of its contract with Royal Dutch Shell Plc. CBRE will manage the international energy company’s retail network portfolio in 22 countries across four continents. Under the contract, CBRE’s Global Corporate Services (GCS) group will provide real estate transaction management, lease administration and real estate consultancy services covering about 9 000 retail sites.

CBRE has managed the Shell Retail European portfolio since 2010 but the scope of the contract has now expanded to also include more than 3 000 retail sites in Asia Pacific, the US, Canada and South Africa. “Shell Retail is a long-standing client of CBRE in Europe,” says Mark Caskey, EMEA head of GCS at CBRE. “We are pleased not only to retain our relationship within that region but also to extend our partnership across Asia, Africa and North America. Our specialist petroleum and automotive divisions will strive to enhance the Shell Retail network by bringing uniformity of delivery, best practice transfer across regions, and dedicated investment in network analysis tools and technology.”

“We are delighted to secure the South African Shell Retail contract as part of a global outsource contract awarded to our affiliate partner CBRE,” says Malcolm Horne, group CEO of Broll, CBRE’s South African partner. “Broll’s corporate real estate team played a significant role in this achievement and will represent Shell SA in all of its retail sites across South Africa.” +27 (0)11 441 4000, Broll.co.za

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education, training and development

Subject matter: what matters?

With the pass rate sitting at a very low 30%, it’s in the best interest of both the public and private sector to address the issue if we want future qualified built environment practitioners.

By Baaitse Nethononda

Martin Ferguson, SAPOA’s HR, education, training and development manager, collaborates with thought leaders in South Africa’s property sector

Baaitse Nethononda, SAPOA’s education manager, is looking to work with corporates and industry bodies to improve the property industry’s education path

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n a statement released by the Department of Basic Education (DBE) addressing the matric pass rate, it was stated that “more learners need to pass matric.

This is very clear.” This statement was posted on the DBE’s website after the nation learnt that the pass mark is at 30% in some subjects and 40% in others.

During the State of the Nation Address, President Jacob Zuma’s speech was silent on the pass mark of 30%, which caused some debate.

“We should begin by raising the pass mark for all school subjects to 50% – the (still admittedly low) standard set for academic work in most contexts,” said honorary professor of education at the University of the Witwatersrand, and vice-chancellor and rector of the University of the Free State, Professor Jonathan Jansen. The Minister of Higher Education, in turn, came to the defence of the 30% pass mark, stating that South Africa was becoming a “dangerously elitist” country if it was considering “throwing away half of our young people” who did not achieve a 50% matric pass.

It is the requirement of South African universities that prospective students must have studied mathematics and physical science prior to taking certain courses at university level.

Mathematics is generally compulsory for all numerate programmes in engineering and built environment, commerce, law, management and science. Furthermore, the admission to study such qualifications requires a minimum of 40 to 49% on average.

However, having learnt that the passing mark is set at 30%,

what does that mean for the future of South African students?

It essentially means that many students are now limited in making choices of the type of qualifications that they intend to pursue.

Should a student not have the basic requirements needed to study towards a built environmentrelated qualification, it means that the gap of equipping our younger generation with necessary skills is not closing.

If the gap does not close, that will mean that the skills shortage in sectors such as property is imminent.

At the time that SAPOA held its career days in different secondary schools, it became evident that Grade 12 pupils, although exhibiting an interest in studying numerated programmes at tertiary level, had chosen to learn subjects that would not allow them to study any such programme. For example, a student who wanted to become a quantity surveyor was studying maths literacy instead of pure maths. This kind of subject choice immediately hampers the potential opportunities that lie ahead in our youth’s education.

It is our opinion that institutions of higher learning could intervene in preparing the calibre of students they need in their institutions.

Businesses – such as those in the property sector – could take part in relevant and/or beneficial interventions by supporting schools (especially underprivileged schools) in achieving requirements for numerate programmes.

Partnerships with government in addressing the increase of mathematics and physical science intake as well as targeting a higher pass mark could also be considered.

We should begin by raising the pass mark for all school subjects to 50% – the (still admittedly low) standard set for academic work in most contexts

SOUTH AFRICAN PROPERTY REVIEW

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education, training and development

Fixed term contracts of employment In the property industry, various companies manage commercial, industrial and retail properties for fixed periods of time. Certain employees are employed for the duration of the management period and, should a new property management company take over after the termination of such a fixed period, the fixed term contract of the employee terminates automatically Hugo Pienaar, director (employment law) at Cliffe Dekker Hofmeyr Inc

By Hugo Pienaar and Andrea Taylor

The Labour Relations Act No 66 of 1995 (“LRA”) A fixed term contract is one that is entered into for a specified time period relating to a project, or for reasons relating to operational requirements of a business. The contract automatically terminates when the termination date has been realised or once a project is completed.

There is no requirement to give the employee notice; no substantive reason is required nor is any severance pay due and owing to such employee when the contract expires. Despite this, employers often roll over the contract for a second or more periods.

As a result, such an employee never becomes a permanent employee. However, the employee may develop a reasonable expectation that, upon completion of the fixed term, the employment contract

The courts

Andrea Taylor, senior associate (employment law) at Cliffe Dekker Hofmeyr Inc 12

l A fixed term contract of employment may relate to a specified project as long as the contract of employment specifically refers to the termination date being related to the tapering off of the work related to the project, or the completion of such a project. This was confirmed in National Union of Metalworkers of SA & Others v SA Five Engineering (Pty) Ltd & Others (2007) 28 ILJ 1290 (LC).

Such contracts are also known as maximum duration contracts. l If a fixed term contract is for a specified period and is terminated prematurely, the Labour Appeal Court

will once again be renewed on the same (or similar) terms.

Currently, Section 186(1)(b) of the LRA regulates the dismissal of an employee in respect of nonrenewal of fixed term contracts.

It protects the position of an employee who can prove that the employer’s conduct gave rise to a reasonable expectation that the fixed term contract would be renewed on the same or similar terms, while the employer offer to renew such contract on less favourable terms or not at all.

In such circumstances, the termination of the fixed term contract may constitute a dismissal.

The onus is on the employee to prove the existence of a reasonable and legitimate expectation of the renewal. The test is whether a reasonable employee in the circumstances prevailing at the time would expect the employer has held in the case of Buthelezi v Municipal Demarcation Board (2004) 25 ILJ 2317 (LAC) that it would be fair for the employee to hold the employer to the duration of the contract and thus claim for the unexpired portion of the fixed term contract. l It has been held that if the operational requirements of an employer justify earlier termination of the fixed term contract, an employer may terminate the contract for operational reasons prior to the termination date, subject to fair procedure being followed and provided the contract permits early termination. l In the case of Potgieter v George Municipality (2011) 32 ILJ 104 (WCC),

to renew his or her fixed term contract on the same or similar terms.

It has previously been held by the courts that an employee cannot have a reasonable expectation of permanent employment as the current legislature limits the expectation to renewal on the same or similar terms.

The Labour Relations Amendment Bill 2012 (“LRAA”) The LRA has recently been amended by the Labour Relations Amendment Act of 2014 (“LRAA”). The LRAA is not yet in operation. The LRAA has expanded the definition of dismissal to include the failure by the employer to appoint the employee on a permanent basis after the termination of the fixed term contract, when the employee had a reasonable expectation that same would occur. an employee claimed damages for the alleged early termination of a fixed term contract.

However, the Court found that the contract of employment specifically stated that the fixed term period was linked to the term of office of the executive mayor, and that the executive mayor only had one-anda-half years remaining in office, not five years as the employee claimed.

Accordingly, the termination of the fixed contract on the basis of the mayor’s termination of office was not a repudiation of the contract, as the employment was intrinsically linked to the term of office as stipulated in the contract itself.

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education, training and development

Section 198B of the LRAA Section 198B regulates additional aspects of fixed term contracts.

The provisions do not apply to the following: l Employees who earn in excess of the prescribed threshold set by the Minister of Labour (currently set at R193 805,00); l Employers who employ fewer than 10 employees or fewer than 50 employees whose business has been in operation for less than two years, unless the employer conducts more than one business or the business was formed by the division or dissolution for any reason of an existing business; l If an employee is employed on a fixed term contract that is permitted by statute, sectoral determination or collective agreement.

Section 198B of the LRAA defines a fixed term contract as a contract of employment that terminates on the occurrence of a specified event, the completion of a specified task or project, or on a fixed date (other than an employee’s normal agreed retirement age). Section 198B further stipulates that an employer may only employ an employee on a fixed term contract for longer than three months if the nature of the work is of a limited or definite duration or the employer can demonstrate any justifiable reason for fixing the term of contract. The justifiable reasons are listed as follows, if the employee: l is a replacement of another employee who was temporarily absent; l is employed on account of a temporary increase in the volume of work, which is not expected to endure beyond 12 months;

Suggestions l We suggest that companies

carefully consider whether a fixed term contract is an operational necessity. If such a contract is, then any fixed contracts must include specific clauses that the employee

l is a student or a graduate who is employed for the purpose of being trained or gaining work experience in order to enter a job or profession; l is employed to work exclusively on a specified project that has a limited or defined duration; l is a non-citizen granted a work permit for a defined period; l is employed for seasonal work; l is employed for the purpose of an official public work scheme; l is employed in a position funded by an external source for a limited time; l has reached the normal or agreed retirement age applicable in the employer’s business.

An employee employed on a fixed term contract for longer than three months without justifiable reasons is deemed to be employed on an indefinite basis. Any employee employed beyond a fixed term period of longer than three months must not be treated less favourably than a permanent employee who performs the same or similar work, unless there is a justifiable reason for different treatment.

Once the LRAA is assented to, an employer must provide a fixed term contract employee with equal access to opportunity to apply for vacancies.

One very important aspect to take note of is that if an employee’s fixed term contract related to a specified project is terminated, and such fixed term period has exceeded 24 months, the employee is entitled to one week’s remuneration for each completed year of the contract, i.e. severance pay.

It is assumed that the majority of the employees employed to manage certain properties for the duration of a fixed term period will earn in excess of the ministerial threshold.

Accordingly, the main aspect to be concerned with in respect of the LRAA is that of a reasonable expectation of renewal or permanent employment.

To avoid the obligations of Section 198B, companies may ensure (where possible) that all employees on fixed term contracts earn in excess of the prescribed threshold. However, it must be noted that the threshold is raised on an annual basis.

Section 198B of

A transfer of a business as a going concern

occurrence of a

has no reasonable expectation of renewal or permanent employment after the termination date. l If an employee’s remuneration falls below the ministerial threshold and is for a period in excess three months, the contract must include

the justifiable reason for the fixed term period. l All fixed term contracts should include a clause that permits an employer to terminate the fixed term period prior to the termination date for operational reasons.

Section 197 of the LRA provides protection to employees who are employed prior to the transfer of a business (in whole or in part, and inclusive of an undertaking or service) as a going concern to another employer.

If a transfer occurs, the company/ employer of the employees prior to the transfer will be automatically substituted by the new employer.

All contracts of employment must then be transferred on terms and conditions that are, on the whole, not less favourable than those previously enjoyed by the employees, and the transfer will not interrupt an employee’s period of service.

The provisions of Section 197 may also be triggered in circumstances where a client cancels a service provider’s services and appoints a new service provider, who takes over either tangible or intangible assets (or both). This is known as a second generation transfer.

Section 197 of the LRA may find application in circumstances where one property management company is replaced by another. Caution must be exercised in such circumstances to avoid the provisions of Section 197.

the LRAA defines a fixed term contract as a contract of employment that terminates on the

specified event, the completion of a specified task or project, or on a fixed date (other than an employee’s normal agreed retirement age)

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legal update

Land reclamation i to establish minimum standards for the rendering of services; or to prevent unreasonable action taken by a province this is prejudicial to the interest of another province or the country as a whole.

C. The Act

Advocate Portia Matsane, manager of the legal-services department at SAPOA

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he purpose of this article is to analyse the objects of the amendments to the National Environmental Management: Integrated Coastal Management Act, 2008 (hereinafter referred to as the “Act”) and to determine the impact thereof on the commercial property sector.

A. Purpose of the Amendment Bill In order to understand the proposed amendments, there is a need to give an overview of the Constitution of South Africa No. 108 of 1996 (hereinafter referred to as the “Constitution”) and the objectives of the Act.

B. The Constitution a. Section 24 of the Constitution provides that “everyone has the right to an environment that is not harmful to their health or wellbeing; and to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that: i. Prevent pollution and ecological degradation; ii. Promote conversation; and iii. Secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.” b. Section 44(2) thereof states that Parliament may intervene, by passing legislation in accordance with section 76(1), with regard to a matter falling within a functional areas listed in Schedule 5, when it is necessary to maintain national security; to maintain economic unity; to maintain essential national standards;

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a. The Act was passed as law for the purpose of establishing a system of integrated coastal and estuarine management in the Republic of South Africa, including norms, standards and policies, to promote conservation of the coastal environment, and to maintain the natural attributes of coastal landscapes and seascapes. b. The Act further seeks to ensure that development and the use of natural resources within the coastal zone is socially and economically justifiable and ecologically sustainable. c. It further seeks to define rights and duties in relation to coastal areas and to prohibit incineration at sea. d. Furthermore, the Act seeks to control dumping at sea, pollution in the coastal zone, inappropriate development of the coastal environment and other adverse effects on the coastal environment. e. Finally, the Act seeks to give effect to South Africa’s international obligations in relation to coastal matters and to provide for matters connected therewith.

D. Objects of the Act The objects of the Act bring clarity to the intention of the legislators in passing it. Some of the objects thereof are: ●● to determine the coastal zone of the Republic; ●● to preserve, protect, extend and enhance the status of coastal public property as being held in trust by the State on behalf of all South Africans, including future generations; and ●● to secure equitable access to the opportunities and benefits of coastal public property.

E. South Africa’s international obligations in relation to coastal matters a. Reference is made to “A Review of the Department of Environmental Affairs and

Tourism: 1994 – 2009” article (hereinafter referred to as the “Article”) that notes that the South African coastline is more than 3 200km in extent, linking the east and west coast of Africa. It further states that from the coral reefs of northern KwaZuluNatal to the kelp forests of the Northern Cape, South Africa’s shores are particularly rich in biodiversity. (About 10 000 species of marine plants and animals are recorded as being part of the South African waters.)

The Article refers to the United Nations Convention on the Law of the Sea, which was ratified by South Africa in 1982. The Convention sets limits related to territorial sea limits, navigational rights, economic jurisdiction, legal status of resources on the seabed beyond limits of national jurisdiction, conservation and management of living marine resources, and the protection of the marine environment. b. What the Article also refers to that is noteworthy is South Africa’s promotion of the principles of sustainable development in terms of the marine environment, which are based on the principles of Agenda 21, (our emphasis), whereby marine environment, including all oceans and all seas and adjacent coastal areas, form an integrated whole that is an essential component of the global life support system and a positive asset that presents opportunities for sustainable development. c. Agenda 21 also includes the integrated management of coastal areas, sustainable use and conservation of living resources in the exclusive economic zone (EEZ), the protection of marine environment by managing pollution, and promoting the sustainable use and conservation of living resources in the high seas. d. It is reported that, in 1989, the Environmental Conservation Act was promulgated to halt the indiscriminate development that was taking place along the coast due to the fact that existing legislation then largely ignored natural coastal processes. While it attempted to restrict negative impact, it is reported it had a narrow perspective and allegedly failed to address access. Agenda 21 requested a broader vision for managing the coast in an integrated manner.

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legal update

n in South Africa F. The Bill a. The Bill seeks to amend the Act by: i. Amending certain definitions; ii. Clarifying coastal public property and the ownership of structures erected on and in coastal public property; iii. Removing the power to exclude areas from coastal public property; iv. Clarifying and expanding the provisions of reclamation; v. Clarifying definitions and terminology; vi. Simplifying the administration of coastal access fee approvals; vii. Simplifying and amending powers relating to coastal authorisation; viii. Replacing coastal leases and concessions with coastal use permits; ix. Extending the powers of MECs to dumping permits; x. Revising offences and increasing penalties; xi. Improving coastal authorisation processes; and xii. Providing exemptions. b. Below are the main critical amendments that are being noted for this legal opinion and a comparison that is being made with the provisions in the Act. c. Notwithstanding the provisions of subsection (1), coastal property does not include any immovable property structure, or part of immovable property structure, or installation or infrastructure located in a port of harbour whether located on land or the seabed, lawfully constructed by an organ of state. It further does not include any portion of the sea shore below the high-water mark, which was lawfully alienated before the Sea-Shore Act, 1935, took effect, or which was lawfully alienated in terms of that Act, and which has not subsequently been re-incorporated into the sea shore. It does not include any part of an island that was lawfully alienated before this Act commenced or any portion of a coastal cliff that was lawfully alienated before this Act took effect and is not owned by the State. d. The Bill defines “reclamation” as the process of artificially creating new land within coastal waters, and includes the creation of an island or peninsula, but excludes beach replenishment by sand

pumping for maintenance purposes. It is noteworthy to mention that “reclamation” was not defined in the Act, and that it is hereby being introduced by the Bill. i. Proposed section 7A – purpose of coastal public property: A coastal public property is established for the following purposes – …(e) to facilitate the achievement of any of the objects of this Act. ii. It is important then to have regard to what is regarded as composition of coastal property. The new section 7(1) of the Bill state that coastal property public property consists of: a. Coastal waters; b. Land submerged by coastal waters, including – i. Land flooded by coastal waters, which subsequently becomes part of the bed of coastal waters; and ii. The substrata beneath such land; c. Any natural island within coastal waters; d. The sea shore, including – i. The sea shore of a natural or reclaimed island; and ii. The sea shore of reclaimed land; e. any admiralty reserve owned by the State; f. any land owned or controlled by the State declared to be coastal property; g. reclaimed land; h. any natural resources or in any coastal public property of a category mentioned in paragraphs a to g.

G. Reclamation of land for state infrastructure a. As mentioned above, the Bill introduces the concept of reclamation of land in terms of the proposed section 7B. According to the Bill, reclamation of land for State infrastructure can only be done after authorisation is granted by the Minister of Environmental Affairs and Tourism after an application for such has been received. b. The Bill requires that an application for reclamation must be published for public comment for a period of 60 days through a Government Gazette. c. It is provided that any land reclaimed for development of State infrastructure vests in the organ applying for such reclamation.

The Act was passed as law for the purpose of establishing a system of integrated coastal and estuarine management in the Republic of South Africa, including norms, standards and policies, to promote conservation of the coastal environment and to maintain the natural attributes of coastal landscapes and seascapes The land should be used for the purpose for which the reclamation application is being made unless authorised otherwise by the Minister. d. The Bill allows for land to be reclaimed for purposes other than development of State infrastructure except where exceptional circumstances, which are not contrary to the purpose of coastal public property, can be shown. e. The Bill provides the Minister with the discretion to exempt in writing any person or group of persons or organ of State from a provision of this Act, provided that such exemption does not conflict with the objects of the Act. An exemption granted may be subject to conditions; be subject to payment of a fee; and be amended or cancelled at any time by the Minister.

The Minister is compelled to consult with any organ of State that may be affected by such an exemption prior to making a decision whether or not to grant such.

H. Impact on the commercial property sector a. The reclamation provisions impact on the current and future developments that other property owners have along the coastal areas. b. The big concern is that a major part of certain commercial developments has been established on historically reclaimed land, which means further developments will be made on further reclamation.

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So

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premier property co nference

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Making a Difference

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annual SaPOa S internatiOnal COnventiOn and PrOPerty exhibitiOn exhibitiO

CAPE TOWN – ICC 10-12 June 2014 Dear Members Don’t miss out on our exciting programme and line-up of speakers at South Africa’s premier property conference of the year. Here is a glimpse of our programme.

PrOgrAmmE The tour will take a look at the operations and general investments in the area.

Show off the market on St Georges Mall.

Experiencing the central business district which includes GMS Precinct 2.

Scenic route tour: City of Cape town Experience some of the most spectacular views in the world. The tour begins with a scenic drive along the Atlantic coast passing through the fishing village of Hout Bay. The tour then heads along Chapman’s Peak Drive on to Cape Point and the Cape of Good Hope Nature Reserve.

From there we travel to False Bay and return to Cape Town by way of the

07h00 – 09h30 registration Opens

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11h00 – 15h00 educational Workshop Gross lettable area – how to improve your return using measurements standards

12h00 – 17h00 Golf

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17h30 – 18h30 Golf Prize Giving

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day 2 – WedneSday, 11 th June 2014 Master of Ceremonies : eusebius McKaiser

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Simon’s Town naval base where we visit the Penguin colony at Boulders Beach. Travel via Fish Hoek fishing village and Muizenberg Return to Cape Town in the late afternoon.

11h00 – 15h00 bus tour: City of Cape town

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day 1 – tueSday, 10 th June 2014 11h00 – 17h00 registration Opens

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10h20 – 11h00 lessons for South africa from the Soviet union on the Savagery of Socialism

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Dr Yuri Maltsev: Former economics advisor to Russian President Gorbachev

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09h30 – 09h45 Opening Ceremony

11h00 – 11h45

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09h45 – 09h55 Welcome

11h45 – 11h55 SaPOa Journalist of the year awards

Patricia de Lille: Honorable Mayor of Cape Town

Sponsored by JHI

09h55– 10h10 Official Opening

11h55 – 12h30 next 5 years – your Future?

Estienne de Klerk: SAPOA President

Clem Sunter: Scenario Strategist

10h10– 10h20 address by Main Sponsor

12h30 – 13h15 Panel discussion: next 5 years – your Future?

Maurice Mdlolo: Managing Director

Clem Sunter: Scenario Strategist Dr Yuri Maltsev: Former economics advisor to Russian President Gorbachev

Liberty Group Properties (Pty) Ltd SAPOA Convention Programme_2pages.indd 1 Untitled-2 2

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SAPO

day 2 – WedneSday, 11 th June 2014 (continued) 15h15 – 16h30 Panel discussion: real estate investments trust (reits)

13h15 – 14h15

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14h15 – 14h25 Free iPad Giveaway

Prof Brian Kantor: Non-executive Chairman of Acucap Nesi Chetty: Fund Manager & Head of Property, Momentum Asset Management Sam Leon: Chief Executive Officer, Investec Property Group

14h25 – 14h45 Showcasing SaPOa’s innovative excellence

16h30 – 17h00 SaPOa annual General Meeting

14h45– 15h15 real estate investments trust’s (reits)

17h00 – 18h00 national Council Meeting

Prof Brian Kantor: Non-executive Chairman of Acucap

18h00 – 21h00 Opening Cocktail Function

day 3 – thurSday, 12 th June 2014 07h30 - 08h30 registration Opens

Marc Wainer: Chief Executive Officer - Redefine Properties Douw Boshoff: Programme Leader Real Estate BSc & Hons University of Pretoria

08h30 – 08h50 economic address

12h15 – 13h15

Analysing the property sectors economic impact in South Africa Kevin Lings: Chief Economist – STANLIB

08h50 – 09h10 Douw Boshoff: Programme Leader Real Estate BSc & Hons, University of Pretoria

13h15 – 14h00 Social network The coming digital disruption - and what to do about it Michael Jordaan: Ex. Chief Executive Officer - FNB

14h00– 14h10 announcing the winning stands

09h10 – 10h00 economic Panel discussion Kevin Lings: Chief Economist – STANLIB Douw Boshoff: Programme Leader Real Estate BSc & Hons, University of Pretoria

Simon Freemantle: Senior Analyst - Standard Bank Research

10h00 – 10h15 address by newly elected SaPOa President Amelia Beattie: Chief Investment Officer STANLIB Direct Property Investments

10h15 – 11h00

NETWOrkINg TEA/COffEE 11h00 – 11h30 Property rates and taxes: Making cents of it Ben Espach: Director of Valuations, Rates Watch

11h30 – 12h15 Panel discussion: Property rates and taxes: Making cents of it

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Ben Espach: Director of Valuations, Rates Watch Izak Petersen: Chief Executive Officer - Dipula Income Fund

14h10 – 14h45 the real estate landscape in 2020 A global view of the retail sector in the next 20 years Kees Hage: Partner, Global Real Estate Leader at PriceWaterhouseCoopers Luxembourg

14h45 – 15h45 Panel discussion: the real estate landscape in 2020 Kees hage: Partner, Global Real Estate Leader at PriceWaterhouseCoopers Luxembourg

15h45 – 16h15 vusi thembekwayo: “Rock Star of Public Speaking” 16h15 – 16h30 Convention Closing and “Wrap-up” eusebius McKaiser 19h00 - late SaPOa “Street Party”

(speakers and topics are subject to change)

www.sapoaconvention.co.za

PRINCIPAL SPONSOR

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sapoa national councillors

Councillors in conversation

Q

Who is Pieter Engelbrecht?

I’m the development head at Growthpoint Properties Limited and the current chairman of the SAPOA Innovative Excellence Awards.

I started my career in quantity surveying and have more than 27 years of development experience.

Pieter Engelbrecht

Lionel Kisten

Q

When did you join SAPOA? What are your thoughts about the organisation?

Growthpoint has been a very active member of SAPOA for more than 10 years. We also have relevant people in leadership positions who are active in the committees. Growthpoint staff are definitely very involved in attending the programmes, running them or being part of the committees.

With an outgoing president (Estienne de Klerk) and a past president (Norbert Sasse), we are big supporters of the organisation. As spokespeople for the industry, we also support many initiatives and enjoy all the opportunities that stem from them.

Q

What have been your greatest achievements with SAPOA so far?

Hatla Ntene

Q

Who is Essop Basha?

I am the head of utilities management at Growthpoint

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In the last year, Growthpoint has received a record amount of acknowledged best-practice and excellence awards for our industry.

Properties and was responsible for the establishment of this division in 2009. I have held several different positions throughout my working career, from IT systems design and development to business administration, HR, training and development, and IT finance.

I have a strong background in project management as well as stakeholder engagement.

Q

When did you join SAPOA? What are

The developments we entered address the urban challenge and direct impact on communities and the environment. Together, the committee spearheaded to include, for the very first time, the recognition for heritage entries.

I am also proud to mention that I lectured at the SAPOA PDP course, where I spoke on the urban design of mixed-use developments and enjoyed some exciting feedback.

Q

What are the current industry challenges and how can these be solved? How can SAPOA assist with these?

The trend of integrated convergence, where mobility is the norm, will allow the user the freedom of choice to thrive in inspirational spaces. This means that we enable the inhabitants of a building to do their work away from their desk with the use of intelligent business systems. The challenge is to create a place where memories can be made, and where people and businesses can thrive simultaneously.

SAPOA can assist with this by ensuring that we recognise leading innovation and that the members learn from these best practices – and, in doing so, future-proof their buildings.

your thoughts about the organisation?

I joined SAPOA about four years ago, when the Energy Efficiency Committee was still called by that name. The committee has since transformed into the Sustainability Committee, of which I am now the chairman.

The committee now focuses on all aspects of sustainability. SAPOA is a phenomenal organisation that provides significant contribution to the entire industry.

Q

What are your plans with SAPOA going forward?

What would you like to achieve alongside or for the organisation?

I would like to ensure that the Innovative Excellence Awards remain the forum to acknowledge best practice and excellence in our industry. We’re also hoping to launch the SAPOA Innovative Excellence Awards coffee-table book that will give recognition to owners, developers, architects and property practitioners. This has been a very exciting project, and will highlight and showcase some amazing buildings that our skyline can be proud of.

Q

Who is Lionel Kisten?

I’ve been involved in the property industry for at least three decades, and have experience in property management, asset management and property development, pertaining mostly to retail and commercial. I am the executive director of Landmark Real Estate Services. Along with Adam Markovitz and Anthony Changfoot as the founding members, we established the company about 13 years ago.

Q

What have been your greatest achievements with SAPOA so far?

I think my greatest achievement with SAPOA so far has been the establishment of several key relationships, including Eskom, the National Business Initiative (NBI), Business Unity South Africa and the Energy Efficiency Leadership Network, which involves the NBI and the Department of Energy. Another achievement is the hosting of the very first

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sapoa national councillors We speak to our national councillors about their role at SAPOA and their future goals at the organisation

As the first BEE property development company, Landmark specialises in developing shopping centres in underserviced areas, small towns and rural areas nationally. My role at SAPOA is chairman of the National Property Developers Forum, a position I have held for four years.

Q

When did you join SAPOA? What are your thoughts about the organisation?

I joined the SAPOA National Property Developers Forum about five years ago. SAPOA is a powerful brand and the official mouthpiece of the property industry, both locally and internationally. It is a wellmanaged organisation under the leadership of CEO Neil Gopal. He has steered this organisation to great heights and has achieved much success in dealing with pertinent matters that affect the property industry on a daily basis.

Q

What have been your greatest achievements with SAPOA so far?

Having been able to promote the Developers Forum as the official voice of this industry is a definite achievement. The introduction of the Property Developer magazine is another great milestone. Keeping the few dedicated, committed and SAPOA Energy Efficiency Workshop along with Eskom. SAPOA’s lobbying and achievement of lowering Eskom and municipality tariffs is another big milestone.

Q

What are the current industry challenges and how can these be solved? How can SAPOA assist with these?

In terms of the current energy

crisis, SAPOA can assist by educating

experienced members on the board is commendable – they have added great value to the Developers Forum.

Q

What are the current industry challenges and how can these be solved? How can SAPOA assist with these?

There are many challenges stifling property development growth at local, municipal, provincial and national government level. These include lack of maintenance on existing infrastructure; lack of investment in new infrastructure; lack of suitable developable land; shortage of technical skills, financial skills and townplanning skills; lack of functional town planning; inaccurate, illinformed Integrated Development Plans; capacity constraints; poor recruitment practices; malfeasance and maladministration; tender corruption; and weak management and operating systems. SAPOA has always tried (and will always try) its best to engage with all parties.

Q

What are your plans with SAPOA going forward? What would you like to achieve alongside or for the organisation?

I’d like to see exponential, equitable growth in the property industry.

members about reducing energy consumption. Furthermore, SAPOA can work on fostering stronger relationships with the likes of the South African Local Government Association and the municipalities in relation to more accurate utility billing and better tariff management. SAPOA can use its membership base to lobby government around incentives for the private property industry in terms of energy efficiency and reduction in carbon emissions.

By Candace King

I want to create a better life for all, especially the underprivileged and disadvantaged. I want to ensure that we develop more live, play and work townships, and a more inclusive property industry, whereby we foster small business growth, encourage job creation and create a climate suitable for investment and growth.

I want to boost transformation.

I also want to encourage women to participate in more pivotal roles in the property industry and especially within SAPOA.

Q

Who is Hatla Ntene?

I am currently the executive chairman of Mvua Property Partners (Pty) Ltd, an empowerment-owned property company associated with Capricorn Ventures International.

Mvua Property Partners is actively involved in acquisition of existing commercial offices, retail and industrial buildings; it is also involved in greenfield developments and brownfield developments to meet the requirements of clients.

Mvua has also identified the housing market as a strategic growth node, and has positioned itself to be a formidable player in this sector.

Q

When did you join SAPOA? What are your thoughts about the organisation?

I joined SAPOA in 1996. SAPOA is well-positioned to assist property owners with technical, legal, economic and marketing issues related to the industry. To this extent, members have to make themselves familiar with the services SAPOA provides.

Q

What have been your greatest achievements with SAPOA so far?

I have been a member of the Method for Measuring Floor Areas in Buildings Committee for several years. Our greatest achievement so

far is the publication of the current method, which came into effect in August 2005. SAPOA conducted several workshops in 2013; these were all well attended.

The committee attends to queries related to the use and application of the method. To date, we have attended to queries from landlords, tenants, architects, quantity surveyors and lawyers.

Q

What are the current industry challenges and how can these be solved? How can SAPOA assist with these?

The main challenge is that some of the landlords and tenants are not familiar with the publication. They sign leases with floor areas said to have been measured in accordance with the method, only to demonstrate lack of knowledge as and when there are queries.

Q

What are your plans with SAPOA going forward?

What would you like to achieve alongside or for the organisation?

I would like to see this method being included as part of reference reading at institutions of higher learning for property-related qualifications, and also being added as an annexure to lease documents where the said document is quoted. SAPOA should consider motivating this proposal to these institutions and property owners. The ideal situation would be to have a single voice representing all commercial property owners. SAPOA should facilitate consolidation of various property owner organisations to speak with one voice for the common good of the industry.

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theme leader - urban regeneration

Urbanity’s new lease on life Urban regeneration and spatial transformation are the key buzz words for 2014 and beyond, with the public and the private sector putting forward plans for a better civic future

By Candace King Photographs by Michael Glenister and Masimba Sasa

“We cannot close down Soweto and move people closer to the opportunities in the inner city. But it can be done through transit-orientated corridor development in order to stitch the city together” Mpho Parks Tau, City of Johannesburg executive mayor

Andries Nel and mayor Mpho Parks Tau

U

rbanity is the new black – there’s no doubt that urbanisation is increasing. In 1950, only three out of every 10 people lived in cities. In 2008, the number of people in cities was greater than that in rural areas for the first time. By 2030, more than two-billion people could be living in urban slums.

At the moment, 60% of the population lives in urban areas, a figure projected to reach nearly 72% by 2030. The plan for cities is to respond to increased urban living and population increase – so the opportunities presented by urbanisation need to be taken advantage of.

“We have to continue to develop as a cosmopolitan city on the global map,” said City of Johannesburg executive mayor Mpho Parks Tau at the Spatial Transformation of Cities conference, noting that the 21st century has been acknowledged as an “urban century” because, for the first time in history, more people live in cities.

Held earlier this year in Newtown, Johannesburg, the three-day conference was the first of its kind hosted by the South African Cities Network (SACN) in an effort to create an open platform for public and

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private sector dialogue on how best spatial transformation can be implemented in such a way that the outcome is positive change for South Africa.

Because of historical inequalities, a vast number of South Africans today live in impoverished conditions. As a result, people travel long distances daily, relying on expensive transport to reach their places of employment.

Regeneration of inner cities has turned this situation around, providing individuals with an opportunity to live, work and play affordably within inner cities, and reversing the trend of commercial migration. This is going a long way to reversing historical inequalities of South African society and contributing to the growth of new, vibrant communities.

According to Tau, there are many challenges in a city that’s built against the backdrop of a segregational apartheid system, and these need to be reversed via direct interventions and plans. “We cannot close down Soweto and move people closer to the opportunities in the inner-city,” he said. “But it can be done through transitorientated corridor development in order to stitch the city together.”

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theme leader - urban regeneration The nature of these developments around the corridors will improve urban spaces. But they need to be improved in a way that attracts private sector development. “We must create incubators of urban innovation,” said Tau. “Understanding both the age and anticipated growth of the city’s population will assist in planning for the future demand for services as well as economic and job opportunities. There can be no doubt that the rapid changes to the size of Johannesburg’s population will continue, and that we need to proactively confront these realities. We need to ensure that our plans and strategies are relevant to the daily experiences of all the city’s residents.”

“Development should take place where it is needed, allowed and meant to be,” said Johannesburg’s city manager Trevor Fowler. “The argument is that this will further marginalise the poor – but we must encourage investment and create a gateway to such communities.”

As a result of apartheid, large parts of the country (such as the “homelands”) did not have a local government present. Thus it is taking time to develop municipalities in these areas said Andries Nel, South Africa’s deputy minister of cooperative governance and traditional affairs.

“The Achilles’ heel of local government is transformation,” said conference facilitator and SACN CEO Sithole Mbanga. He also noted that the main focus issues around spatial transformation are mobility, land use, human settlement planning and good governance.

According to Nel, the government has built subsidised homes, and has provided access to water, electricity and sanitation. This has resulted in an 80%-90% access rate, which is a success story. But the government hasn’t been very successful in addressing the spatial legacy of apartheid.

“In the past 20 years, we have built 3,3million houses and have pushed levels of access to water and sanitation up,” he said.

“But we have not always been able to change apartheid’s spatial geography. In some ways the success that we’ve achieved in providing basic services such as housing has had the unintended consequence of strengthening that apartheid geography.”

In order to reverse the spatial legacy of apartheid, several urban growth and development policies and strategies have been initiated, including the National Development Plan 2030 (NDP), which calls for urban areas to be centres of both economic growth and social inclusion. The NDP stipulates measures and strategies to deal with this

challenge in order to create better living conditions and sustainable environments for people to work and play in.

Private sector investment Following the migration of large corporate tenants to leafy suburban areas in the early 1990s, there was a dramatic decline in the maintenance, policing and provision of municipal services to the inner cities. Private sector investors relinquished their buildings to rogue elements, and the continued degradation of these areas resulted in more crime, grime and degeneration.

But over the past five years, there has been a growing realisation that inner cities hold massive potential to attract business back into the area and satisfy a desperate need for safe, clean and affordable accommodation close to places of work, says Futuregrowth’s credit analyst Paul Semple.

“As a result, local government has started to invest in urban regeneration of inner cities and identified them as a key driver in our nation’s economic growth,” he says. “The mandates of Futuregrowth’s developmental funds seek to invest in projects that support urban regeneration and affordable housing, since these initiatives are uplifting the lives of many individuals, as well as support of key strategic areas prioritised by government.”

Semple further notes that great strides are being made in changing the face of Johannesburg’s inner city as more and more people move into rental accommodation facilitated by property investors such as the Trust for Urban Housing Finance and Jika Properties.

“The government has built subsidised homes, and has provided access to water, electricity and sanitation. This has resulted in an 80%90% access rate, which is a success story. But the government hasn’t been very successful in addressing the spatial legacy of apartheid” Andries Nel, deputy minister of cooperative governance and traditional affairs

“The Achilles’ heel of local government is transformation.

The main issues around spatial transformation are mobility, land use, human settlement planning and good governance” Sithole Mbanga, CEO of SACN

Sithole Mbanga SOUTH AFRICAN PROPERTY REVIEW

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theme leader - urban regeneration “Along with the improvement in living standards created by these investors and the diversity of people and income levels prevalent in areas such as the Maboneng Precinct, the growth of entrepreneurial talent, retail activities and general economic development has exploded, transforming once decrepit and forgotten parts of the city into vibrant and cosmopolitan communities,” he says.

Maboneng: the compelling urban regeneration story

“Hallmark Towers and Access City are two of the largest buildings on the east side of the Johannesburg CBD, and – in the case of Access City – one of the largest multitenanted industrial buildings in the southern hemisphere” Jonathan Liebmann, founder and CEO of Propertuity

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Jonathan Liebmann

The inner city of Johannesburg is harbouring a little gold mine known as the Maboneng Precinct. It’s the quintessential urban regeneration case study – one everyone should know about by now. Apart from knowing about it, people should see it with their own eyes – a visit to Maboneng should be on everyone’s bucket list.

“What makes Maboneng so successful is its appeal to a wide range of different markets,” says Propertuity founder and CEO Jonathan Liebmann, the man behind the precinct. “ The variety of options (from restaurants to residences) means there is something for everyone to enjoy. And the momentum of the development means there is generally something new to experience with each visit.

For the residents, we believe it’s the sense of community that comes from urban neighbourhood living.

“Having started with one development in 2009, we now have 40 buildings in the Maboneng property portfolio, 10 of which are already developed. The Maboneng community is approaching 2 000 new residents and workers. The Propertuity PLUS master plan that we are about to launch will see a further expansion of the neighbourhood and articulate our long-term commitment to the growth and upliftment of the entire neighbourhood.”

Commenting on regeneration in the rest of the inner city, Liebmann says it’s great to see how many successful projects there are at the moment. “It’s important to use the existing buildings to create integrated spaces and economies,” he says. “It doesn’t make sense for a city to not have a thriving economy at its actual centre, so the collective efforts of developers to bring back business to the central business district (CBD) is important if we are to make Johannesburg a world class African city.”

Propertuity recently expanded its footprint in Johannesburg’s eastern CBD with two of the most significant property purchases in the city in the last decade: it acquired Hallmark

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theme leader - urban regeneration Towers and Access City. Situated north of the Maboneng Precinct with a collective square meterage of 75 000, the two buildings play a significant role in connecting Maboneng to other upgraded areas on the east side of the city.

“Hallmark Towers and Access City are two of the largest buildings on the east side of Johannesburg CBD, and – in the case of Access City – one of the largest multitenanted industrial buildings in the southern hemisphere”, says Liebmann. “These two acquisitions will become icons of Johannesburg’s city skyline. Their cumulative size will provide a huge base on which Maboneng can grow significantly to the north towards our important neighbours at Ellis Park and the University of Johannesburg.

Both buildings will be key contributors to the recently legislated New Doornfontein City Improvement District (CID), which will ensure that the previously degenerated area will become clean, safe and well-managed”.

Funded in partnership with Nedbank Corporate Property Finance, the acquisitions highlight Nedbank’s commitment to innercity regeneration in Johannesburg. “The funding we have provided to the project illustrates our commitment to the regeneration of South Africa’s urban environments, which we believe Propertuity has achieved admirably through its Maboneng Precinct,” says Ken Reynolds, Nedbank Corporate Property Finance regional executive for Gauteng. “We have no doubt that these two properties will add value to the precinct.

“The Johannesburg inner city has always played a vital role in the greater South African economy. When you consider that rebuilding just the built infrastructure it contains would cost billions of rands, it becomes clear that the inner city is a regional and national asset of economic, social and historical significance – and one we should all be working hard to ensure is never allowed to go to waste.

“Since 2009, Nedbank Corporate Property Finance has been instrumental in the growing success of the Maboneng Precinct, funding various developments over the years with a collective value of about R100-million. And more recently Nedbank has literally put its money where its mouth is in terms of inner-city regeneration, not only providing funding for the R1,3-billion Newtown development, but also committing to occupying 40 000m² of office space in the mixed-use, heritage-rich development that is currently under way on the site of the old potato sheds.”

You can bank on innercity regeneration According to Reynolds, the long-standing commitment of the Gauteng local government to inner-city restructuring and regeneration is beginning to deliver returns for the people and economy of the province, and could serve as a valuable example for other city-centre rejuvenation projects around the country.

“While most inner-city developments focus on restoring residential, retail and light commercial capacity in these potentially valuable areas, the success already achieved in regenerating many industrial nodes – not just in Gauteng but across South Africa – makes a compelling case for an even higher priority to be placed on restoring the country’s city centres to their former glory,” he says, noting that it is this former glory that is the most compelling reason why government’s focus on inner-city regeneration deserves greater support from the private sector.

“A combination of decentralisation, high rentals, congestion, crime and the rise in popularity of office parks meant that, since the 1960s, Johannesburg’s inner city has found itself in a steady decline,” says Reynolds. “But to focus only on the current state of the CBD is to overlook the potential that this vital part of Gauteng holds as a regional development and employment-creation asset mainly as a result of its well-established infrastructure.”

HIS PICTURE AND ABOVE T Urban art is a common feature in Maboneng OPPOSITE Revolution House in the Maboneng Precinct is a residential building that offers a variety of loft apartments SOUTH AFRICAN PROPERTY REVIEW

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theme leader - urban regeneration “When developing corridors, we need to ensure return on investment and a rise in property prices.

Public investment alone cannot shift perceptions so partnerships are crucial” Thanduxolo Mendrew, CEO of the Johannesburg Development Agency

Thanduxolo Mendrew

In 2006, national government gave effect to its vision of inner-city regeneration via the creation of the Restructuring Capital Grant and the awarding of regeneration subsidies to many local administrations. Years later, the benefits of these investments are beginning to be realised, particularly through the many CIDs that have been established in major South African cities.

In Gauteng, the government’s investment in CID infrastructure has resulted in growing interest from private sector investors and organisations. And as a leading provider of property finance solutions in the region, and country, Nedbank Corporate Property Finance is not only supporting such investment but has also committed itself to establishing a presence in the fast-growing area.

Regenerating the future

“We need to confront both the reality and the perception of crime and safety. We need to break through that perception and stigma by illustrating the reality of the innercity regeneration movement” Mpho Parks Tau, City of Johannesburg executive mayor

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Looking towards the future, Semple says that Futuregrowth’s goal is to provide affordable housing to disadvantaged communities via urban regeneration projects. “Providing individuals with an opportunity to live, work and play affordably within inner cities goes some way to redress South Africa’s historical inequalities and helps build new and vibrant communities,” he says.

On an unfortunate note, the regeneration and transformation visions are being stopped in their tracks to a certain extent because of ingrained stereotypes and negative mind-sets – many citizens, property developers and investors still believe that the inner city is seedy, unsafe and crime-ridden.

“We need to confront both the reality and the perception of crime and safety,” said Tau at the conference. “We need to break through

that perception and stigma by illustrating the reality of the inner-city regeneration movement.”

“When developing corridors, we need to ensure return on investment and a rise in property prices,” said CEO of the Johannesburg Development Agency Thanduxolo Mendrew.

“Public investment alone cannot shift perceptions so partnerships are crucial.” He said the challenges include land infrastructure, financial incentives and regulation.

“The reversal of historical degeneration of inner cities will continue to grow over time as different parts of the city are developed and the face of the city changes,” says Semple.

“Local government initiatives to support this drive through more visible policing, municipal services and transport infrastructure will underpin the success of the challenges that need to be addressed.”

The perceptions are slowly shifting but there is definitely still a stigma attached, says Liebmann. However, this stigma can be eroded through a joint effort of the public and private sector.

“The public and private sector can join forces in many ways, but most importantly in terms of service delivery in denser areas, as well as with urban upgrades,” he says. “We’ve had a successful public-private partnership with the JDA with the recent pavement upgrades that have been done in Maboneng.”

“The public and private sector need to collaborate to ensure that the goals and vision of both parties are fulfilled,” says Semple. “The private sector provides capital through institutional investors such as Futuregrowth to facilitate investments, and the public sector ensures there is adequate infrastructure, services and incentives in place to support urban regeneration within inner cities. In addition to the investment in public transport, street cleaning and maintenance, local government has identified specific areas in the inner cities for redevelopment and has extended tax benefits to incentivise private sector investment.”

Liebmann believes that greening and sustainability are other current buzz words in the urban regeneration and spatial transformation movement. “We have a number of strategies and projects in place for this. We include greening in the design of most, if not all, of our buildings and employ a ‘local economy’ philosophy in terms of the acquisition of goods and services,” he says. “We encourage the same within the community.”

The negativity hasn’t stopped Liebmann, who was once labelled as “crazy” but is now one of South Africa’s most celebrated young urban entrepreneurs. In terms of developments

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theme leader - urban regeneration this year, Propertuity will be focusing on a number of residential buildings, some of which will have ground-floor retail. These projects include the Rocket Factory, Living MOAD, Craftsmen’s Ship and Situation East. When asked about the future vision for Maboneng, Liebmann proudly says he wants it to be “one of the best neighbourhoods in the world”.

In the words of well-known South African property economist and professor of property economics, property investment and property finance Francois Viruly, “The type of built environment we create needs to assist small businesses. Markets are social constructs; we create them and we can change them.

We can change the world tomorrow.”

“The type of built environment we create needs to assist small businesses. Markets are social constructs; we create them and we can change them.

We can change the world tomorrow” Professor Francois Viruly Professor Francois Viruly

Q&A with Geci KaruriSebina, South African Cities Network executive manager for programmes Q What makes regeneration so important today?

The growing pressures of urbanisation for one – the problems are becoming more pronounced. Also, 20 years postdemocracy, and with rising unemployment levels globally, people’s patience is wearing thin and tensions are rising in terms of social access and vulnerability.

Q Can’t new hubs of economic activity and importance be developed in areas such as Soweto and other outskirts areas in order to ease long-distance transport, traffic, etc to and from the city?

Jobs, especially new jobs, have to get closer to the people, and this is the focus of the township regeneration efforts of, for example, the Neighbourhood Development Partnership Grant (NDPG) programme, which seeks to gear investment into viable former township areas. But people also have to get closer to the existing jobs in densifying economic nodes, be they in the CBD, in the suburbs, or in other existing economic centres (such as the Sandtons and Umhlangas of the country).

All of these have lower-wage workers and higher-wage workers too. Consider also university students who have to commute long distances to find affordable accommodation.

Q How can fully-functioning integration be implemented when South Africa is still very much “segregated” in terms of race, class, wealth and, above all, mind-sets?

This is exactly why integration must be pursued. If we accept the continued spatial and physical segregation of our communities by race, class and wealth, then we have no hope of achieving social cohesion and integration. But it is indeed a chicken-and-egg situation. The attitudinal shifts towards greater inclusion, flexibility and new ways of understanding and using our spaces are also key.

Q Many still believe that the inner city of Johannesburg is seedy, unsafe and crimeridden. How can the ingrained stereotypes and negative mind-sets be changed?

The places must be made safer in order for people to occupy them – but people must also occupy and invest in them in order to make them safer. This is true for CBDs all around the world, and there have been great strides made elsewhere.

The trick, of course, is to turn the inner city around without killing its vibrancy and inclusiveness, or pushing out lowerincome groups. The latter is not a sustainable solution for South Africa.

Q How is the natural environment being taken care of while regeneration and spatial transformation take place?

Developing the city sustainably includes not only social and economic considerations, but also ecological ones.

Programmes such as the NDPG include clear criteria about this and encourage “cleaning and greening” as creating important pre-conditions for sustainable communities.

Q How can the public and private sector join forces in the regeneration of cities?

Through greater coordination of planning and investments.

The Spatial Transformation of Cities conference highlighted the need for greater trust, cooperation and performance between the sectors in order to achieve the mutual success for the city that all parties desire.

Q What is the common future vision of our cities and spatial transformation?

For us, the South African Cities Network, it is a vision of cities that are at once productive, inclusive, sustainable and wellgoverned – cities that are grappling with past but also future challenges. Cities that are engaging their range of urban actors in making conscious decisions and investments that show care for the cities and their inhabitants. These points form the core of what our future great, caring, equitable and safer cities could be – to use all the current urban jargon!

These are the kinds of cities we all wish to live in.

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: ies r e s ly eyerion y ca africa f nth untr A o e o Th our m by-c s yntr focu u co

The word “Mauritius” is synonymous with glorious beach holidays in sensational settings. But with the country’s appealing vehicles, which allow foreigners not only to own property but acquire citizenship, Mauritius is offering South Africans considerably more than brief fun in the sun

By Anne Schauffer

Population by millions 67 000-83 000 83 000-119 000 119 000-370 000

Mauritius at a glance ▼ Population 1,5-million ▼ Major city Port Louis (0,2-million) ▼ Currency Mauritian rupee (MUR) ▼ Total area 2 040km² ▼ GDP growth (2013) 3,2% ▼ Key industries Agriculture, tourism, textiles, manufacturing

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eye on africa

M

auritius is a volcanic island in the Indian Ocean (2040km² in size), about 2 400km off Africa’s south-east coast. With a 330km coastline surrounded almost entirely by a vast, unbroken coral reef, it’s a Mecca of water sports, diving, snorkelling and a host of other oceanic adventures.

For South Africans, it’s long been a favourite holiday destination, not least because of its easy accessibility, picture-postcard beaches and resorts, and typically tropical climate, with sun all year round. But today, it’s not just the perfect holiday destination – it’s a very real option as a country in which to invest, live and/or retire in. The vehicles that Mauritius has designed to enable foreigners to own property and obtain citizenship have changed the landscape entirely.

The Mauritian property industry The two schemes available are the Integrated Resort Scheme (IRS) and the Real Estate Scheme (RES). Properties located within the IRS can be sold freehold to foreigners at a minimum price of US$500 000, which entitles the purchaser to a residency permit. This lifestyle investment usually includes luxury amenities such as a golf course, marina, wellness centre and more.

Under the RES, residential units can be sold to non-citizens at no minimum price, but the acquisition of property over US$500 000 entitles the purchaser to a residency permit. This scheme is attracting the lockup-and-go market.

From the Mauritian perspective, the introduction of these schemes has generated significant growth for their own residential property market, with increases of between 10% and 15% annually over the past eight years. With its stable economy, steady currency and positive global reputation, Mauritius is an increasingly attractive investment proposition.

South Africans who, in recent years, have bought property, typically with price tags of R10-million or more, are smiling broadly on the capital growth front.

Chris Immelman, MD of Pam Golding Properties’ (PGP) International & Projects Division, describes the large influx of buyers as those looking for a very safe environment and a tax haven, as economic conditions worsen in Europe. “Mauritius is particularly popular as a retirement destination, and we see buyers attracted by very competitive tax rates where, if they take up residence, much of their offshore investment is tax-free or enjoys very low tax rates,” he says.

With tax rates of 15% onshore and between 0-3% for offshore investments, and no capital gains/dividend taxes, it’s no surprise there’s a steady increase in interest.

Nitin Pandea, a senior director at the Mauritian Board of Investments (MBOI), which facilitates investment into Mauritius, says South Africans have bought a third of all IRS properties and smaller-scale RES properties sold to date. “Foreign direct investment from South Africa has ballooned in recent years to about US$100-million a year. Meanwhile, about 1 500 applications for residency permits have been granted to South Africans, mostly professionals.”

Africa uncovered

Mauritius

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eye on africa Port Louis prime rents and yields Prime rents

Prime yields

Offices

US$34/m² per month

10%

Retail

US$45/m² per month

9%

Industrial

US$6,25/m² per month

12%

Residential

US$3 500 per month*

8%

Source: Knight Frank LLP (* Four-bedroom executive house – prime location)

Share of imports by country in total imports Switzerland 1,82 Germany 2,14 Belgium 2,25 Madagascar 6,21 Spain 7,13 South Africa 7,72 Italy 8,07 United States 10,49 France 17,39 United Kingdom 21,32

Source: Merchandise trade matrix, imports and exports of total all products (Annual, 1995-2011)

Regional summary

Plaines Wilhems

Population

Sum (Area in km²)

Population density (Persons per km²)

362 292

203

1 782

Pamplemousses

136 268

179

763

Flacq

135 406

298

455

Port Louis

118 431

43

2 774

Grand Port

110 907

260

426

Rivière du Rempart

106 267

148

720

Moka

82 301

231

357

Black River

76 605

259

296

GDP per capita (USD)

Real GDP (% change)

12,5k

USD

7,5k

5k

2,5k

1989

1998

Mauritius

Source: World Economic Outlook (October 2012)

28

2007

2016

20

0,0275

15

0,025

10

0,0225

5

0,02

0

0,0175

-5

0,015

-10 1980

1987

1994

Real GDP growth, % (left axis)

2001

2008

2015

Percentage

Percentage change

10k

0k 1980

The Mauritian stock exchange plays an important role in giving South African investors access to offshore investments. A number of JSE-listed companies have primary listings in Mauritius, including offshorefocused property funds, which are required to have primary listings elsewhere in order to be allowed a listing in Johannesburg.

Sachin Mohabeer, assistant director at the MBOI, says average prices in IRS developments have increased by 30% to 40% since 2005, when the government opened the island’s housing market to foreigners. It’s a fair assessment that those prices have been supported by the fact that foreign property buyers and their dependants qualify for permanent residence, a particularly attractive incentive for wealthy South African buyers increasingly looking for a Plan B and a safe haven for their cash.

0,0125

GDP based on PPP, % of world (right axis)

Source: World Economic Outlook (September 2011)

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eye on africa

Resorts either completed or under construction include Tamarina Golf Estate and Beach Club on the west coast, Villas Valriche on the island’s relatively undeveloped south coast near Bel Ombre, La Balise Marina at Black River on the west coast, Anahita World Class Sanctuary on the east coast, and Azuri in the north near Grand Baie. Le Parc de Mont Choisy was launched in the heart of Grand Baie late last year, and two other schemes were recently given the green light by the MBOI. South African buyers have not only achieved healthy capital growth on their Mauritian resort investments; they’ve also scored significantly from rand depreciation.

Timo Geldenhuys, sales director at Villas Valriche and La Balise Marina, says when the first homes were sold at Villas Valriche in early 2008, the rand was trading at R6,50 to the US dollar. “That’s a 70% gain over six years given the current exchange rate.”

“Mauritius has a similar cost of living to South Africa,” says Immelman. “There’s already a large foreign community, including South Africans, so new home-owners find an appealing community and social network. Familiar brands such as Woolworths and Pick n Pay allow South Africans to feel at home.”

He’s also certain the Mauritian property market is likely to remain strong because of the limited available land for development. “The government appears to want only 3 500 properties developed, so over the next few years there’ll be a shortage of stock. Foreigners generally prefer the west coast – either Grand Baie or Tamarin – and we’re already seeing a shortage of land there. In addition, the government is cutting back on permits in these regions, so a shortage of available units is likely to be a reality in the coming years.”

There’s another investor model too, marketed by Hotel Room Investments, namely Corail de Plage (€375 000 to €670 000). “Professionals form the bulk SOUTH AFRICAN PROPERTY REVIEW

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of investors into a relatively new asset class: sectionalised hotel suites and self-standing villas," says scheme CEO Mark Taylor. "It’s become not just a logical and established business practice but one of the most popular and lowest-risk investments for the private investor who lacks the time to manage his own portfolio.” Taylor considers tourism to be a “good, riskaverse” investment provided the destinations are known, and the hotels managed and marketed properly.

“Sectional-title investors secure up to a 60-day personal access to the property in which they invest (about a 10th of investors buy simply for this perk), which can either be put back into the pool if not required (to increase return) or swapped for vacations in similar resorts worldwide," says Taylor. "For the remainder of the year, each room is placed in the hotel’s rental pool, which pays monthly revenue pro rata to each owner. Anticipated returns are based on average tourism numbers and occupancy levels for similar properties in similar locations, discounted by 20% to 30% to ensure figures are conservative.”

PGP is marketing Le Parc de Mont Choisy, the only residential golf and beach estate in the desirable north. It combines prime position with the work of two iconic South African designers, architect Stefan Antoni and famed golf course designer Peter Matkovich.

Most units in phase one have been sold, any others reserved. Prices in phase one start at US$591 000 and, as with all integrated resort schemes, buyers qualify for residency. Later phases are predicted to be 20% to 30% more expensive when they’re launched later this year.

Other developments currently being marketed by PGP include two small apartment blocks with direct access to the sea and beautiful sea views – these are priced from US$1-million for 200m².

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Jonathan Tagg, director of Pam Golding Properties Mauritius, speaks to SAPOA Q How is the Mauritian property market performing?

There remains a strong demand from South Africa and Europe. We’re seeing a slight slow-down with the rand but we still have clients who are concerned about the rand’s longer-term weakness and are looking to get assets offshore.

Q How would you describe the economic status of Mauritius at the moment?

Mauritius has weathered the recession and continues to attract investment. It’s recognised as one of the safest places to live, and has strong tax advantages and a great climate. It’s also attractive to a broad group of people from Europe and South Africa, and the Asian and Russian markets are also growing.

Q Which sector is the strongest, and which is the weakest?

The strongest sector is the residential areas of Grand Baie and Tamarin – where buyers can live – while the leisure sectors in the quieter regions are slower to recover.

Q Is buying property for future holidays a big market?

If so, who are the buyers?

Buyers are South Africans and Europeans. There is growing demand from other regions in Africa (generally French-speaking regions), where there are expatriate communities.

Q Is there a strong buy-to-let market, holidays or otherwise?

Yes – generally apartments and the tourism region of Grand Baie, because rentals are important there. Many of these buyers will use their units in the future but rent them out for two to three years prior to occupying them.

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cover story

Creating Park Station The Creative Axis Architects breathe new life into PRASA’s Park Station, a now-rejuvenated transport mixed-use hub that’s set to become an even greater metro marvel

A

modern, integrated station connects with its surrounds, and reflects the character and identity of the community. It’s a type of station that is part of the community it services, and not just a place that people travel through. It should contribute to and enhance the local area, and benefit the local people and surrounding businesses that widely make use of its facilities.

This is what the newly revitalised Park Station is all about. Through the requirements and vision of PRASA and the architectural flare and excellence of The Creative Axis Architects, Park Station has been transformed into a holistic key node that forms part of the burgeoning community, sustaining and enhancing it on several fronts.

The Creative Axis Architects know and understand this type of design concept, noting that the character of the local area should influence station design, keeping it consistent with shopping precincts or any local heritage building features. Station designs need to cater for a broad range of activities and should be resilient to the changing conditions experienced within a station, both during the operational day and throughout the year. Depending on context, station design may also need to accommodate a range of operational scenarios, such as major events, changes to service or adverse weather conditions.

Station visitors are those who may wish to use the station for non-travelling purposes.

This group is likely to include people who arrive to “meet and greet” family and friends, or who use the station to shop or to eat. Their needs are met by the diversity of station functions and amenities. Currently at Park Station there is a pressing need for retail facilities in supporting the station. PRASA, as part of the station upgrade programme, identified the provision of additional retail and food outlets for passengers and for visitors.

PRASA’s brief l Prioritise the location of station facilities to encourage future development; create active spaces and stimulate growth without compromise to core passenger functions. l Provide for additional pedestrian flows resulting from development proposals into and out of the station to ensure station operations, flows and capacities are maintained or enhanced. l Ensure the station is able to operate independently from integrated commercial or residential properties. l Ensure maintenance, repair and future enhancements to each property can be undertaken without detrimental impact on the fabric or performance of the other buildings. l Ensure retail or other branding is integrated within the aesthetic and architectural fabric of the building.

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cover story Designing an integrated station

Planning and design of stations must deliver good value for money, give due consideration to environmental and ecological impact, and consider wider opportunities for regeneration and development. Efficient connection between transport modes and services is a core function of stations.

Design of connections should balance modal and functional priorities, using safe, direct routes that minimise conflict with other passengers or vehicles.

Not only does this minimise passenger journey times but it also ensures efficient connections that allow passengers to make their onward journey as easily and as logically as possible.

A variety of heritage assets exists across the rail network, including buildings, sites and spaces. As such, a heritage asset management process was necessary to ensure a strategic and systematic approach to the management of existing assets, helping to achieve value for money and safeguarding the special interest of the historic environments.

At Park Station, the retention of the existing façade within the new glass-box design enables one to recall the past heritage of the station building.

Opportunities to integrate developments above, under, around and within stations provide additional revenue streams. To maintain integrity, it is important that operational systems for the station and any associated developments remain independent.

Consistency of maintenance, however, is an important consideration for a seamless passenger experience.

PRASA identified the northern upper concourse entrance as being one of the key gateways into the station precinct. With the Gautrain and the Bus Rapid Transit (BRT) stations recently coming into operation, the northern entrance forms part of an intermodal spine that fuses the various public transport facilities at Park Station with the Gautrain station, the BRT station and Braamfontein.

The entrance portal with its curved curtain wall reaches out to encompass the radial landscape layout. The structure, particularly the curtain wall and tapered columns, is a strong symbolic and sculptural element within the brutal concrete context of the existing station precinct. The creative use of cladding, with smooth surfaces and offshutter concrete finishes, blends to a striking form that is in strong contrast to the existing station fabric.

The interior has undergone a complete refurbishment and has been converted into a food court with key franchise stores. The food court was an exercise in creating space within the tight constraints of the existing station and its effect on the function of a space. Using multifaceted bulkhead features that run throughout the single-volume space, the large white forms unfold, carving the space to create recesses at key focal areas.

There has been a significant shift in intermodal transport design, and customers

are now far more discerning about the environment in which they choose to travel.

The market itself is generating a demand for more integrated, multi-use and welldesigned stations that incorporate a fair share of retail components. It is not only clients such as PRASA that are driving the need for better design – the expectations of commuters have also increased.

Suite 1, Seva Sadan, 80 Gemsbok Street, Lenasia Extension 1, 1820 | PO Box 2128, Lenasia 1820 t: +27 (0)11 854 5922 | f: +27 (0)11 854 1743 f: +27 (0)86 774 1476 | www.creativeaxis.co.za SOUTH AFRICAN PROPERTY REVIEW

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feature

Egoli goes green In addition to addressing its apartheid spatial legacy, Johannesburg is re-stitching the city with a sustainable needle and thread

By Candace King Photographs by Michael Glenister and Candace King

L

SACN CEO Sithole Mbanga

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ike many 21st-century cities, Johannesburg has had its share of triumphs and pitfalls.

Plagued by its apartheid past, it continues to be shaped by that past on several fronts, including spatial disarray and alienation. The city is still divided on the basis of wealth, race, gender and physical location.

“Johannesburg has always been and continues be a city of stark contrasts – between those who enjoy the highest standard of living, and those who struggle to make ends meet,” says the city’s Hon. Mayor Mpho Parks Tau. “It is a city of colliding worlds and visions – a divided city that still bears the spatial scars of the unjust and immoral system of apartheid. But this cannot be Johannesburg’s only story – and it cannot be the story that prevails into the future. Johannesburg needs to change course.”

Furthermore, Johannesburg faces major challenges and loopholes in terms of dilapidated infrastructure, lack of adequate transport, poverty and unemployment, escalating rates and taxes, and municipality inefficiencies and local government woes.

“One of South Africa’s biggest problems is municipality transformation – how municipalities must transform is the current main challenge,” said South African Cities Network CEO Sithole Mbanga at the C40 Mayors Summit during the City of Johannesburg network breakout session.

Added to this brewing pot of problems are environmental and energy issues surrounding food insecurity, depletion of agricultural land, access to water and electricity, energy crises and climate change.

“Infrastructure and livelihoods in African cities are at risk of climate-change impacts that will manifest themselves in the form of an increase in the frequency and intensity of storms, floods, heat waves, and rising sea levels,” says Tau. “Erratic weather conditions threaten to disrupt urban food supply, exposing livelihoods to food insecurity.”

Acknowledging the ingrained evils and natural environment concerns, the City of Johannesburg has implemented adaptation strategies as outlined in the landmark Joburg 2040 Growth and Development Strategy (GDS 2040).

“GDS 2040 provides the basis for this change – as we continually strive to become an equitable, non-racial, prosperous, non-sexist and just society,” says Tau. “Shifting course will require commitment and dedication from all who make this city their home. Extraordinary effort is demanded of all of us, to work towards building a more equitable society, where everyone is cared for and where none are neglected.”

Envisioning a city that is resilient, sustainable and liveable, GDS 2040 is an aspirational strategy that defines the type of society the city aspires to achieve by 2040, and takes climate change into account.

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Climate change: greening the urban jungle In the broader context, climate change is expected to have a major impact on South Africa, affecting the economy, the people and the ecosystems.

The country’s contribution to greenhouse gas emissions on a global scale is small, accounting for less than two percent of total emissions. Despite this, South Africa’s energy-intensive economy and reliance on coal-based electricity makes the country the 13th-highest carbon dioxide emitter in the world.

Johannesburg’s situation is also a doubleedged sword. Remaining largely exempt from natural disasters, the city was rated as the fourthbest-placed city out of 21 major cities in Asia, the Middle East and Africa in terms of exposure to climate change-related risks (MasterCard Worldwide Insight 1). However, according to scientific evidence, the city will face increasing changes in weather patterns, most notably in temperature and rainfall.

Over the past 50 years, rainfall patterns have shifted significantly, bringing increased risk of flooding to the city.

Based on research conducted by the Climate System Analysis Group at the University of Cape Town, future model projections indicate that temperatures will increase significantly over

the next four to five decades and into the next century. The average of the seven climate model projections carried out by the Group indicates an annualised temperature increase of 2,4°C in the near future and 4,5°C further into the future.

The biggest increases are expected to occur during spring, with an average increase of 5°C for maximum daytime and 5,2°C for minimum night-time temperatures by 2081-2100.

Based on a downscaled model, increases show a maximum day-temperature increase of approximately 0,5°C for the Gauteng region.

A decrease in the temperature is anticipated for the months of April, May, June and July. No regions are expected to experience temperatures below 0°C. In terms of rainfall, the climate models analysed appear to indicate that rainfall may be expected to increase moderately but significantly into the future. The average precipitation projections for the seven climate models show an 18% increase in annual rainfall by mid-century, with a slightly larger increase of 27% projected for the period 2081-2100.

Jo’burg fast facts l 1 600km² of land l 4 434 827 people l 23,2% people under the age of 15 l 17% of South Africa’s GDP l 53% previously disadvantaged people l 20% of population lives in poverty l More than 90% of population has access to water, electricity and refuse removal

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feature

MMC for health and social development, councillor Nonceba Molwele

Corridors of Freedom key features

l Safe neighbourhoods designed for cycling and walking, with sufficient facilities and attractive street conditions. l Safe, complete streets with features to calm traffic, control vehicle traffic speeds and discourage the use of private transport. l Mixed-use developments, where residential areas, office parks, shops, schools and other public services are close together, stimulating economic activity and creating opportunities for emerging entrepreneurs. l Rich and poor, black and white living side by side – housing options provided cover a range of types and prices, including rental accommodation. l Limited managed parking to reduce the amount of land devoted to parking and further discourage the use of private transport. l Convenient transit stops and stations.

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MMC for transport, councillor Christine Walters

Total annual rainfall is expected to increase across all areas, ranging from 301mm to 758mm per annum. The majority of this rainfall is expected to occur during the summer months of December, January and February. The number of rain days per month is expected to increase by between 1 036 and 2 188 days.

Recognising that adapting to the impact of climate change as well as mitigating greenhouse gas emissions within the city is crucial, Cllr Matshidiso Mfikoe, member of the mayoral committee for environment and infrastructure services, instigated the development of the city’s Climate Change Adaptation Plan (CCAP), and is the driving force behind the development of a detailed understanding of the city’s carbon footprint.

In 2009, a comprehensive CCAP premised on numerical modelling was developed that assessed climate change risks to all the key sectors of the city. Furthermore, the city signed the Adaptation Charter at the 17th Conference of the Parties, held in Durban in 2011.

Informed by the city’s CCAP, a climate change vulnerability assessment was undertaken to understand the risks and vulnerabilities for citizens over time. The city has recently developed a flood risk assessment, highlighting and prioritising areas of risk, and is developing disaster management plans for each city region.

Current adaptation interventions include mapping flood-prone areas, developing earlywarning systems for climatic and related disasters, developing a climate change cost-benefit analysis and a heat-wave response plan, as well as raising awareness in vulnerable communities.

“Besides overseeing the city’s three major utilities responsible for electricity distribution, water and sanitation services, and waste management, my real challenge lies with educating our communities to understand climate change and the relationship that community behaviour has in contributing to adaptation and mitigation measures in order to build resilience,” says Mfikoe.

The city is also developing a comprehensive greenhouse gas emissions inventory – the World Resources Institute, C40 Cities Climate Leadership Group and Local Governments for Sustainability are jointly developing an international greenhouse gas accounting standard for cities, called the Global Protocol for Community-Scale Greenhouse Gas Emissions (GPC). Johannesburg is one of the first cities to implement the GPC. In terms of energy supply, resource constrains and increasing environmental concerns, the city has developed the Energy Demand-Side Management policy to encourage businesses and residents to reduce their demand for energy.

The city has implemented several interventions, including the retrofitting of council-owned buildings to improve consumption, a programme that promotes the low-smoke alternative fire-lighting method, waste minimisation, installing solar water heaters in low-cost housing, public/ street lighting, and the Bus Rapid Transit (BRT) system as a carbon reduction and income-generating system.

The city’s climate change action is based on four themes: sustainable communities, urban water management, integrated waste management and green transport.

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MMC for development planning, councillor Roslyn Greeff

Sustainable communities: unleashing the Corridors of Freedom In line with GDS 2040, the City of Johannesburg is embarking on a new spatial vision – a vision that aims to re-stitch the fragmented metropolis in an effort to shape the future city around the Corridors of Freedom redevelopment project. The project aims to transform entrenched settlement patterns that have long excluded the majority of the city’s residents from accessing economic opportunities, jobs and growth.

“We are re-stitching our city to create a different future for our residents, where we can link jobs to people and people to jobs,” says Tau. “We will be embarking on transit-orientated development. Because the developments are along transport corridors, the provision of transport such as Rea Vaya will enable fast, safe and affordable mobility along the corridors.

We have therefore dubbed these corridors the Corridors of Freedom, giving our residents increased freedom of movement as well as economic freedom, liberating them from apartheid spatial legacy characterised by informal settlements, poor schooling and limited recreational spaces.”

As part of the R110-billion infrastructure expenditure programme over 10 years, the shape of the future city will consist of well-planned transport arteries linked to interchanges, where the focus will be on mixed-use developments such as high-rise, high-density residential developments supported by office buildings, retail developments and opportunities for leisure and recreation.

MMC for environment and infrastructure services, councillor Matshidiso Mfikoe

“This will give rise to a people-centred city where the needs of communities – their safety, comfort and economic wellbeing – are placed at the core of planning and delivery processes,” says Tau. “The Corridors of Freedom concept will result in the reduced poverty for the majority of the city’s residents who are currently spending a large percentage of their income on transport.”

The Corridors of Freedom is a game-changer, says Cllr Roslyn Greeff, member of the mayoral committee for development planning, adding that average density in the city is still very low and densities peak in specific township areas of low economic activity (such as Alexandra). She also says Johannesburg is a poly-centric city and that deprivation in the city is racially-orientated.

On climate change, Greeff said that, “Natural disasters came about as a result of the negative effect of climate change and human activity. I believe spatial transformation can play the biggest role to reduce greenhouse gas emissions by promoting a dense and compact city where people can live, move around and work with a low carbon footprint.”

As weather extremes such as drought and resource shortages reduce agricultural viability in rural areas, migration of people to cities presents the problem of food insecurity. “In a developing country such as ours, the internal and external migration of people makes food security a real issue within the city, where a percentage of people go without a meal at least three times a week,” said Cllr Nonceba Molwele, member of the mayoral committee for health and social development. “Looking at urban agricultural and food gardens is a response that also contributes to reducing greenhouse gas emissions.”

There are more than seven-million trees in Jo’burg, making it the world’s largest urban forest.

Jo’burg has planted more than 200 000 trees since 2006

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feature feature As a result of escalating global food prices, increasing transport costs, reducing agricultural production and local markets, and food inflation, food insecurity in South Africa has increased alarmingly. Food insecurity among the urban poor in the most deprived areas of Johannesburg is currently at 42%. Only three percent of households in the city grow their own food.

“The price of food is a big factor in household poverty,” says Molwele. “According to a Gauteng Household Survey, food expenditure accounts for 35% to 65% of household spend on a month-tomonth basis. Food insecurity is mainly the result of problems of affordability rather than availability.”

Addressing this issue, the city has adopted a multipronged approach (the City Food Resilience Framework), which includes actively supporting and providing incentives for small-scale growers to supply fresh produce from urban food systems, improving access to markets and supporting small-scale cooperatives and subsistence farmers at household level.

The city is also facilitating the development of Food Empowerment Zones on large pieces of agricultural land, with the goal of establishing large-scale, high-yield crop farming and industriallevel animal farming on land that is city-owned.

The city aims to reduce food insecurity by 50% by the end of 2016.

Urban water management and integrated waste management: waste not, want not Flooding and drainage problems have become notorious traits of Johannesburg and are a massive problem that affects all areas of the city. Water courses are deteriorating and illustrate high levels of stress with erosion, bank collapse, channelling, loss of hydrological functioning and aquatic ecosystems, while most dams within the city are experiencing severe sedimentation and pollution.

The City is currently planning a review of storm water, road design, and construction standards and requirements, which will take into account the effects of climate change.

The review will consider sustainable urban drainage systems (such as green roofs, porous paving, swales, rainwater harvesting, detention ponds and basins for storm water run-off), and will revise standards in light of the particular characteristics of underlying geo-hydrological conditions and changing weather patterns.

The city has also developed emergency preparedness protocols for disaster emergency response and relief. With regards to addressing water scarcity, the city has developed and implemented a Water Demand Management Strategy, which takes into account the entire water cycle and identifies technical inventions that can be utilised to reduce technical losses, as well as social interventions to reduce demand and apparent losses.

In terms of waste management, the city’s strategic road map aims for zero waste to landfill by 2040. The City’s Integrated Waste Management Plan aims to implement sustainable waste minimisation, re-use, recycling and recovery programmes via strategic interventions, which include the promotion of composting, waste-to-energy, and other re-use and recycling initiatives supported by the implementation of waste-separation-at-source programmes.

Green transport: revitalising mobility The city’s transport system is defined by two characteristics: the majority of residents who do not own cars, and middle-income residents who are very much car-oriented. “There is a 50/ 50 split between private and public transport:

Forty-seven percent of the city’s citizens who earn less than R1 600/month use non-motorised transport as their primary means of transportation

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feature feature 50% minibus taxi usage, 25% Metrorail usage, and 25% bus and train usage,” said Cllr Christine Walters, member of the mayoral committee for transport.

Due to apartheid spatial planning, the city features sprawling low-density areas without viable public transport systems, forcing the majority of the working class as well as poor citizens to commute over long distances to access work and economic opportunities in the heart of the city.

Results from the 2011 South African TomTom Traffic Survey revealed that 78% of 3,8-million drivers on Johannesburg roads are stuck in severe traffic jams daily. According to the International Business Machines Corporation 2011 Global Commuter Pain Survey, Johannesburg was ranked as one of the worst cities in the world for long commuter times. Out of 20 international cities, Johannesburg ranked the fifth most painful city in terms of the emotional and economic toll of commuting.

Conducted by Stats SA, the National Household Travel Survey (2003) found that the average travel time between home and work for commuters making use of public transport is 59 minutes – close to one hour of travel time.

Egoli Goes Green_SUBBED.indd 39

More than 1,3-million South Africans spend more than two hours a day travelling to and from their places of residence. Another 30 minutes per trip can be added onto this as time spent on walking towards a station or bus stop, and waiting for a train or a bus to arrive. The survey also showed that 16,4% of Gauteng residents spend more than 20% of their monthly income on transport.

Private car use is a significant driver of energy consumption and greenhouse gas emissions in the city. A 10% shift of private car users to public transport for daily commuting will result in an eight-percent reduction in energy consumption.

The revitalised vision of Johannesburg will thus allow future citizens to work, stay, play and pray all in one vicinity without having to travel for long distances or use private motorised transport. Safe, affordable and convenient buses, as well as cycling and pedestrian activity will replace the carbonburning private car.

Having already implemented catalytic projects to help alleviate transport problems – including the introduction of the Rea Vaya

BRT system and the Gautrain high-speed rail link, the City of Johannesburg will be expanding and extending the Rea Vaya BRT system and will revitalise rail transport in the city. There will also be a restructuring and integration of all public transport modes across Gauteng.

The fleet for the first phase of the Rea Vaya BRT system had Euro IV emission standards with particle filters, while the second fleet meets Euro V standards. It is envisaged that, for future phases, the bus fleets will utilise a combination of biogas and diesel. A third phase, which will travel to the north of the city, is currently under construction and is set to become operational in 2016.

“Getting people out of their private vehicles and into public transport, converting to greener fuels in the public transport sector, and promoting the use of non-motorised transport will all make a big contribution to reducing greenhouse gas emissions,” says Walters.

“The public and private sectors must work together, and with the government, on all levels.

The city is determined to go green – there’s no turning back.”

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Developing against the grain Citiq’s Newtown silos harvest success in the student accommodation segment

By Candace King

W

hether you’re cruising or stuck in bumper-to-bumper traffic on the M1, you can’t miss them – the once dull and dilapidated grain silos in Newtown, Johannesburg are now a colourful, trendy student-accommodation block that is quickly approaching full occupation. Appropriately dubbed Mill Junction, the R40-million redevelopment accommodates up to 400 students from the University of Johannesburg, the University of the Witwatersrand, as well as other colleges in Johannesburg.

Mill Junction was completed in just 12 months. Developed by Gauteng-based property investment and management company Citiq, it includes both the former Premier Milling grain silos with 10 floors of accommodation and four additional storeys that have been built using shipping containers. The redevelopment involved cutting out windows from the gigantic silo walls and the inclusion of slabs to create floors.

Mill Junction covers all the basics, including study rooms, lounges, communal kitchens, bathrooms and free WiFi on every floor. It also includes a variety of recreational amenities such as a gym, table tennis facilities and a snooker room.

With exceptional views of the city, the Astro-turfed rooftop is the perfect place for students to mingle and socialise.

“Now complete, the 14-storey building towers over Newtown and is proof of what can be achieved through creative design and leading-edge architecture,” says Citiq CEO Paul Lapham. “We challenged our design team to be creative and innovative with the space, and they have surpassed all expectations. We realised that, if we could provide everything students would need for a study-friendly and comfortable environment, we might be able to make a positive contribution to their academic success.”

Thinking out of the box Silo conversions are nothing new. It’s an unconventional developing method that has been undertaken around the world, and apartments, hotels, student residences and even single-home dwellings have been built out of converted silos that once accommodated anything from grain to nuclear missiles. A good local example is the Old Biscuit Mill development in Cape Town.

Due to their flexibility and affordability, and the need to find uses for recycled containers, shipping containers are also very popular and are being used worldwide for holiday homes, cafés and restaurants, schools, offices, shopping malls and even skyscrapers.

Citiq was also responsible for the shipping container apartment block in Windsor. “The first alternative development was the apartment block built out of shipping containers,” says Lapham. “We were initially quite nervous about how the public would react to living in an apartment built out of shipping containers.

But as it turns out, all the apartments were rented out within two days of our open day. This opened our eyes to the pent-up demand that exists for good accommodation, irrespective of the building methods involved.

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CAPTIONS

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CLOCKWISE FROM TOP LEFT Citiq CEO Paul Lapham; a reception room; a communal recreational room with a snooker table; one of the bedrooms, leading onto a balcony

“Reusing these structures often provides an artistic and eclectic look and feel, which appeals to people wanting to establish their own individuality. This alternative development approach, as compared to traditional building methods involving bricks and mortar, has guided our more recent property acquisitions and designs.”

Joining the urban renewal rally Mill Junction is testament to what can be achieved when thinking alternatively about effective construction, urban renewal and social change. “Vacant land in city centres is difficult to come by,” says Lapham. “Repurposing the silos into student accommodation not only provides convenient and well-situated accommodation but also contributes to urban regeneration, and making Newtown a vibey and happening place.”

Although development took a mere 12 months, the Mill Junction project was not all smooth sailing.

What was once a bustling light industrial node, Newtown – like the rest of the inner city – turned into a decaying, crime-ridden black hole, leaving the grain silos abandoned. With the recent urban-regeneration up-tick in the inner city, Citiq and many other companies and visionaries have stepped in, despite much criticism. Lapham says the silos still housed two storeys’ worth of old, decomposed grain that needed to be removed, which proved to be a tedious and painstaking task.

42

Lapham adds that being a part of the rejuvenation of the city is more about inspiration than about doing a job. Like the inner city, Citiq has its own “rags to riches” story to tell. The company started out very small, managing only 15 flats.

Now it is a R1,5-billion company.

While growth and renewal are very important, greening and sustainability are equally crucial to the upliftment of the inner city. This is why Mill Junction incorporates renewable and energy-efficient architecture. “Apart from the contemporary design and the reuse of the existing silo structure, the apartments have energy-efficient features such as hot water from heat pumps, motion-sensor lighting, double-glazing on windows and external doors, energy-efficient lighting and water-pipe insulation,” says Lapham. “These initiatives have cut power consumption on the project to 50% of that used by a conventional building, and will have long term savings for the students who live there.”

Although slightly disappointed that property developer Atterbury called its colossal retail development, just across the M1 from Mill Junction, Newtown Junction, Citiq is not deterred and already has its sights on another similar project.

Having already purchased the adjacent silos, Citiq plans on developing more student accommodation at around R140-million. “The next project will be the Grand Silos,” says Lapham. “Construction is expected to commence once plans have been approved by the council. Somewhat bigger than Mill Junction, they will also provide student accommodation. While we particularly like the Newtown precinct, we are also looking at projects in a number of other areas.”

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2014/04/08 8:03 AM

interview

DURBAN:

Typically, conversational roads lead to economic doldrums, a sluggish property market and a tough credit environment. But here’s the pick-me-up: Mike Deighton, Tongaat Hulett’s managing director, sees “a big up-tick” for the next three years

By Anne Schauffer

M

ike Deighton describes a very real demand for property and envisages a far brighter scenario than many would have us believe – and he has solid numbers to endorse his beliefs. “A lot of us talk down the country but the realities on the ground often belie what one reads in the ‘popular’ press,” he says. “As a general comment – and I don’t think it’s unique to Durban or KwaZulu-Natal – we’ve been really pleased with recent enquiry levels, and it looks as though the next two to three years will be good for property.

“Despite a still-underperforming economy, we’re experiencing more investors returning to the market. Property needs people with a bit of long-term vision, and with a level of longer-term belief that things are going right. Their return is a positive sign.”

We chatted to Deighton about the forecast for Durban property – in particular his “patch”, which is the burgeoning north of Durban.

He examined the sectors of office, industrial, retail and residential, each of which has its own set of dynamics.

Mike Deighton, Tongaat Hulett’s managing director

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the good news Q Tell us about the trends in the office property sector.

Durban’s office sector is generally driven by tenants. The city has never really had a large speculative market. Recent office enquiries have been good, and it’s a period of intense office development.

We did some benchmarking around November last year, and found more than 80 000m² of office space under construction in the Umhlanga Ridge area.

In short, there’s a fair amount of office investment going on, and most of it is tenant driven.

With most commercial space – offices and industrial – there’s an element of people re-engineering or growing their businesses. People don’t move “just because”, and you seldom get start-up businesses underwriting a major office development. The development is driven by larger businesses – for example major banks, which are consolidating, bringing together their different operations and probably expanding as well.

Another interesting dynamic is that a number of professional firms – in particular those that have tied up with international ones – are expanding substantially. They now find themselves part of a global network, so they want prime addresses and they want to expand their operation. In a sense, they’re exporting South African expertise because they’re increasingly working globally – or elsewhere in Africa – rather than exclusively in South Africa.

Recently, we have also seen offices developed on a sectional-title basis with end-users, creating an entry for smaller to mid-size firms who choose to own rather than rent.

Q Is much happening in retail?

By their nature, retail developments tend to be bulky, so there aren’t that many. Retail development is a big investment that needs a lot of tenants, and a big retail scheme is always pretty difficult to assemble.

In Durban, we have only one substantial scheme, and that’s the 80 000m² shopping complex to be developed opposite Umhlanga Ridge in Cornubia, destined to break ground this month.

There’s also the planned refurbishment of the Westville Pavilion, an expansion of the Waterfall centre in the west, and applications for extensions to Gateway. But Cornubia is the only big greenfield project that’s imminent.

Q Industrial land has always been in

demand in Durban. Is that still the case?

There remains a scarcity of good industrial land to the north of Durban and, over the past two years, we’ve had a fantastic run on the Cornubia Industrial and Business Estate.

It’s quite big – 70 hectares – with only a handful of sites remaining, two buildings already completed and another six or seven about to

commence on site. Dube TradePort’s Trade Zone land has also been pretty much fully taken up.

There’s industrial land to the west of Durban but it’s often far out and there are challenges with infrastructure. There’s still not enough industrial space to handle the demand optimally, sometimes forcing businesses into second-choice options for their expansion.

Q Does the residential market consist only of high-end sales?

This market is currently very interesting. It’s going very well at the top end, with sales increasing substantially this year in developments such as Izinga.

Quality land is selling steadily and fetching good prices – anything from R1-million to R4-million per site. You’re unlikely to get in much below a R3-million to R10-million finished house.

The other end, which is also growing rapidly, is the more affordable bracket of R650 000 to R1-million for a flat or town-house.

In the Tongaat Hulett portfolio, we haven’t yet produced units in the gap market of R300 000 to R600 000. We are working hard in that space and, once we unlock the right model, there’s a massive market waiting.

There’s a new dynamic that’s emerged, not exclusive to KwaZuluNatal. In my opinion, a sea change that’s going to play itself out over the next few years is the move towards really well-managed residential rental portfolios.

There’s a big drive in that space, which we’re seeing both in terms of what’s happening and what’s in the pipeline. Increasingly, big professional organisations are producing large numbers of rental units that they hold in a portfolio. This is an emerging real estate asset class in South Africa and taps into a market where the demand is virtually insatiable.

Q What about the immediate future?

The last 12 months or so, we have seen the start of the pick-up – and my sense is that it’s gaining momentum. We’re running out of stock in certain areas, and we’ve opened new phases in a number of our developments.

To cater for another sector, we’ve consciously taken a decision at Sibaya – and, similarly, a 40-hectare, 480 000m² floor-area opportunity in Ridgeside – to transact in each of these cases with a single developer who will drive these.

Our reading is that both nationally and internationally, the time is right – people want to be able to take a big position and access big, long-term opportunities.

A single purchaser will then be the developer, the investor and the driver, enabling them to optimise their investment in the development over time.

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2014/04/08 9:09 AM

feature

Shop till you drop at Rosebank Mall When the full refurbishment and extension are complete in September, shoppers will have more retail options to choose from in a “trendy” mall

By Denise Mhlanga

P

eople – especially young professionals – love Rosebank. It’s centrally located, with easy access to the highway and nodes such as Sandton and Hyde Park.

According to Pam Golding Properties (PGP), the suburb “is coming into its own” – it is cosmopolitan, vibrant and enjoying an absolute resurgence.

Victoria Russell, PGP’s development specialist, says commercial property development has been particularly buoyant following the opening of the Gautrain Station in 2011, with close to R7-billion being spent on the development of new buildings and the refurbishment of several existing buildings.

However, the residential property market has been more subdued because of the shortage of available vacant land, with only a few luxury developments being launched – such as The Caversham on Sturdee Avenue and Forty4 on Keyes – with prices ranging from R2,8 to R5,9-million.

The owner of the landmark Rosebank Mall property, Johannesburg Stock Exchangelisted property fund Hyprop Investments Limited, has invested R932-million (with an estimated yield of seven percent) towards

the redevelopment of the mall, which commenced in September 2012 and is scheduled for completion in September 2014. The full refurbishment and extension project will see the mall almost double its size from 36 000m² to 62 000m² total GLA, says Pieter Prinsloo, Hyprop’s chief executive officer.

At 31 December 2013, the development property was valued at R1,7-billion – and because it is classified as development property, vacancy levels are not measured, according to Prinsloo.

He also points out that, as of the same period, lease commitments were at 98% of rentable area, indicating low vacancy levels for the centre once the redevelopment is complete.

Refurbishment and extension Prinsloo explains that it all started with the Nedbank Gardens implosion in April 2012, with formal construction starting in September.

In July 2013, phased opening of completed sections saw the opening of the Edgars/Dis-Chem area, while the Cradock Avenue entrance will open in July.

The scope of work on the former Nedbank Gardens site includes the construction of 12 000m² of new retail and roof parking, as well as new tenant parking and a new trucking tunnel

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The refurbishment includes altering routes in the mall and re-finishing of all floors, the replacement of all shop fronts, the reconstruction and reconfiguration of all bulkheads, replacing all electrical and mechanical services, reconstructing all bathrooms, and constructing new parking.

Furthermore, the scope of work on the former Nedbank Gardens site includes the construction of 12 000m² of new retail and roof parking, as well as new tenant parking and a new trucking tunnel.

By 31 December 2013, 30 new stores out of the planned 147 had opened for trading.

(The mall previously had 93 operating retail stores.)

Once the mall is complete, expect a contemporary, fresh and uncluttered feel in line with current design trends, featuring an oval “racetrack” format and seamless integration between all areas and levels. Shoppers will also get the first 30 minutes of WiFi connectivity free of charge from September.

Anchor tenants include a full line Woolworths Platinum store, a double-level Edgars department store, Dis-Chem and Pick n Pay.

When it comes to tenant mix, Hyprop understands that the right blend of global brands and popular local retailers will ensure that Rosebank Mall caters to a wide range of shoppers, increasing its reach and appeal.

International brands include Pringle, Ben Sherman, Kurt Geiger, Cotton On, Cotton On Kids and Celio.

Development challenges According to Prinsloo, the biggest challenge is balancing the construction activities with the mall’s continued operation. This relates to the retail trading environment as well as the customer parking. Other challenges include ensuring that safety standards are maintained, managing dust and noise, construction traffic and customer vehicular flows, and re-routing customers through the parts of the mall that are under construction. “We have approached these challenges with meticulous planning, remaining close to the affected tenants, keeping to the schedule, and ensuring high safety standards by providing clear signage and prompt closure of areas under construction,” says Prinsloo.

Once the mall is complete, expect a contemporary, fresh and uncluttered feel in line with current design trends, featuring an oval “racetrack” format and seamless integration between all areas and levels

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2014/04/07 2:38 PM

feature “The redevelopment is intended to capitalise on these characteristics by creating strong physical linkages with the natural urban corridors that connect the lower Rosebank office blocks to the upper retail parts and the Rosebank Gautrain Station” Pieter Prinsloo, CEO of Hyprop

Pieter Prinsloo, CEO of Hyprop

Urban regeneration in Rosebank Peter Collins, regional manager for JHI Properties’ brokering division, says the redevelopment of Rosebank Mall has densified Rosebank and made it similar to the decentralised Sandton CBD. “Rental growth in the area is among the highest in the country, with exceptional retail rentals commanded at the mall itself,” he says.

With increasing density in these areas and security concerns in degenerating nodes, initiatives such as urban regeneration provide a lifeline to declining rentals and decreasing capital expenditure, with mixeduse redevelopments realising better rentals, influx of tenants and increased security for those living and working in these areas, says Collins.

48

Prinsloo agrees with both PGP and JHI that Rosebank has undergone resurgence, saying it is becoming a truly integrated precinct in a central location. But market research showed that Rosebank lacked a quality regional shopping centre, and demand existed to service the 37 000 households located in close proximity to the Rosebank node. “This is especially relevant as there is no vacant land of sufficient size to accommodate a new regional mall in the area,” says Prinsloo.

He also points out that data reveals that surrounding suburbs have a very high annual- income-to-GLA ratio, which would be of further support once development is complete, noting that the mall is centrally located and therefore begins to act as a nucleus around which other activities can take place.

Rosebank is an integrated urban environment that offers visitors a unique “live, work, play” experience, and is one of the few urban areas in Johannesburg with a strong pedestrian culture and thriving street life, he says. “The redevelopment intends to capitalise on these characteristics by creating strong physical linkages with the natural urban corridors that connect the lower Rosebank office blocks to the upper retail parts and the Rosebank Gautrain Station.”

In addition, it will also connect to the hotel property, 54 on Bath, as well as create a vibrant north-south pedestrian walkway between the Standard Bank building on Baker Street and the busy taxi rank on Cradock Avenue.

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2014/04/08 8:42 AM

interview

A revolution for Jo’burg South City regeneration takes many forms but it gets really exciting when national ideology is met at ground level in practical ways.

We chat to Richard Bennet, marketing director at iProp, about where his company believes some of the greatest opportunities may be unlocked

By David A Steynberg

“Our main focus is on what the best opportunities are in terms of the NDP to facilitate job creation, inclusion, alleviating poverty and service provision to the areas that have been marginalised in the past.

Looking at this, there are huge opportunities�

50

Richard Bennet, marketing director at iProp

W

ith the Gold Rush into the ridges that became Johannesburg more than 120 years ago, development north and south of the mining belt was influenced by colonial (and later apartheid) sociospatial planning. This was over and above environmental factors such as wind direction, dust impacts and geophysical impacts of underground mining, resulting in a public and private investment focus to the north.

Despite the significant political and subsequent socioeconomic shift after 1994, we have not yet seen the same shift in investment focus

towards the disadvantaged areas in the South when compared with its northern cousins, Rosebank and Sandton.

But the intention is not necessarily to attract the financial industry out of Sandton and back to the city centre or to coax the pharmaceutical sector from Midrand to the South, according to Richard Bennet, marketing director at iProp.

The company, which morphed out of Rand Mines Properties 40 years ago, holds significant land reserves, which it has always recognised as having the potential to bridge

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the gap between the different social and racial groups divided by apartheid city planners.

“In the early days there was a number of large expropriations by government for various developments such as the City Deep Market and the Nasrec show grounds and recreational facilities,” says Bennet, explaining that these developments took out large chunks of land, giving some direction to the form of land development until the 1990s.

“But it was not driven by the desire to see significant changes in the spatial, stereotypical planning of the time,” he says.

“By the 1990s, our planning had already been put in place and the future of Johannesburg, as we saw it, was driven around the spatial changes we published in 1995. And this could be adopted in any of the other South African cities as they all had the same problems: gaps that had been created, which offered opportunities for linked development that was properly planned to create a more homogeneous and socially integrated society.”

A crown development The first step in this process was the creation of Crown City, which started to bridge the divide between Soweto and the Johannesburg CBD. “With about 324 000m² of mixeduse development rights being granted, largely possible due to the substantial bulk infrastructure that had already been established in the area for mining activities (including extensive road, rail, water and power networks), the motivation for additional infrastructure investment for the development opportunities was obvious,” says Bennet.

“The development that followed created new employment opportunities close to where people lived but, more importantly, because of its location, contributed to closing the socioeconomic divide.”

The development saw the creation of one of the region’s largest agglomerated wholesale/cash-and-carry nodes, which presented solutions for small- and mediumsized enterprises that had evolved in the surrounding previously disadvantaged areas.

“For the investor in this new space considerable gain was achieved,” says Bennet. With land prices starting in 2000

Klip River valley holds great agricultural and economic opportunities for residents of the area. It used to be the food basket of Johannesburg but crime and land invasion saw farmers leave at around R185/m², 12 years later resale of land was achieving R1 850/m². Considering the improvements on the land, this development area has produced a minimum R1-billion improvement on the city’s valuation roll.

What was once a wasteland completely reversed its fortunes. A negative impact was transformed into a positive, with significant growth in value being achieved in the surrounding areas.”

There’s that plan Bennet believes there is even more opportunity for the South – and it links in with the government’s National Development Plan (NDP) priorities, which at a metro level will translate into infill, densification, employment opportunities and economic emancipation.

“Our main focus is on what the best opportunities are in terms of the NDP to facilitate job creation, inclusion, alleviating poverty and service provision to the areas that have been marginalised in the past.

Looking at this there are huge opportunities,” says Bennet. “One of our consultants is working on an agritropolis concept in the Klip River valley in the South, which holds massive agricultural and economic opportunities for residents of the area.

That area used to be the food basket of Johannesburg but crime and land invasion saw farmers leave. There is an opportunity to bring back farming in a more intensive, technological approach to get higher production per hectare by using water

deemed unsuitable (acid mine drainage) and finding ways in which it can be treated and used. The technology for these solutions already exists.”

With agriculture offering a quick and sustainable solution to job creation and food security, this project has already had the ear of Johannesburg’s mayor Parks Tau. “The key is integrated development – it’s not just about farming,” says Bennet. “We’re talking about densification, agglomeration, beneficiation, transport of product, cold storage and export linkages. Thirty percent of produce may go towards subsistence of the people involved, 30% to export and 40% to local market distribution.”

Over and above food security, this concept holds the key to bringing economic investment to the South through direct investment as well as job creation. Bennet says there was a need to reverse the trend of people travelling in the mornings to the North for employment and back home to the South in the evenings. “What we’ve been saying is rather take the nodes that are blighted in terms of residential areas and do high-density and mixed-use development along these new public transport corridors, then use the areas that may have been set aside for housing on the urban edge for purposes of economic activity to give people employment opportunities closer to where they live,” he says. “At the same time encourage investment in integrated and mixed-use developments to give emphasis to these transport corridors. If you are able to get increased economic activity through investment in the South, you encourage bidirectional movement in the transport corridors, enabling their sustainability through increased use.”

If the “deprivation maps” are anything to go by, the South is in need of increased public and private investment, and should form the guiding principle of the city’s investment focus.

“The North will continue to attract investment because of improved transport infrastructure that has already been installed,” says Bennet. “There is no question that, if you are going to address the concerns of the larger population to bring about real spatial transformation, you have to focus on infrastructure investment in the South of Johannesburg.”

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Fluxmans’ history and sense of tradition in terms of spirit and experience melds within the ultra-modern architecture of the building. I.Scope’s interpretation of the interior design brief successfully juxtaposes timber panelling with frameless glass, along with splashes of Fluxmans’ favourite blues and rusts to carry over a link to the old office

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Standing tall and proud in Rosebank

Paragon Architects are the creators of 30 Jellicoe, an Investec-owned commercial property nestled in the heart of the rising business hub of Rosebank.

I.Scope Interiors & Architecture are responsible for the interiors and internal space planning

By Nicky Manson Photographs Michael Glenister

T

he new AAA-graded office block is home to law firm Fluxmans Attorneys, among others, and Paragon was briefed to design a contemporary building that respected the traditional background of Fluxmans.

Local residents were also involved in the process, and discussions were held around the design, which has taken both its location and surrounds into consideration. The building boasts four floors of basement parking and six levels of office space above ground.

Large glass windows, elegant steelwork and excellent street interaction have all rendered the design timeless.

The office space sits upon a raised platform, which includes the parking bays and is home to the building’s wall gardens. Almost all of the plants were pre-grown, so by the time of planting, they’d reached some level of maturity.

Plants include Acacia xanthophloea, Celtis africana, Viburnum sinesis and Ficus microcarpa.

The building’s large windows are a striking feature and are designed to allow as much natural light into the building as possible.

Cleverly sheltered from both the east and the west sun by deep overhanging sun screens on the north, the sunscreens were uniquely designed from a series of sun studies.

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What they DON’T teach at law school

Client service is not something they teach at law school, it’s something you develop over time.

As one of South Africa’s leading law firms, Fluxmans has built a reputation for expertise, passion for law and, importantly, service. Whatever your legal requirements, you can be assured that we will support you from the moment you walk through our doors.

ALWAYS AT YOUR SERVICE

Telephone : (011) 328-1700 | Telefax: (011) 880-2261 Web: www.fluxmans.com 54

SOUTH AFRICAN PROPERTY REVIEW

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on show “Sun studies were executed by the mechanical engineer, and internally the orientation of the blades directs your gaze to the treed residential suburbs beyond,” according to Paragon. It’s also a favourite feature of the architects. “There are two elements that define the building: the textured louvres on the east and west façade and the monolithic northern façade that glistens in the morning sunlight,” says Duanne Render, a project architect at Paragon.

The views of the northern suburbs are also to be admired thanks to the clever positioning of the windows, says SIP Project Managers’ Jeff Ehrlich. “The views from the upper levels to the North and West are breathtaking,” he says. “They give a very graphic view of the Johannesburg urban forest, and it is hard to believe that there is an old, established residential area below the tree canopy. This looked particularly spectacular when the jacarandas were blooming.”

Other integral parts of the building’s design include its glazing, the tapering columns and even the external staircase, which was built as a result of revised fire regulations and which, in turn, was included in the architectural design.

Structural, civil and façade engineers Pure Consulting provides consulting engineering services to the construction industry, primarily for building developments.

Our skills lie in the field of structural, civil and façade engineering. We also act as façade engineers to a number of the specialist subcontractors in the glass, metal and stone-cladding industries, as well as to our developer clients.

We are known for our cuttingedge and innovative approach to our work, for example in our use of 3D modelling techniques in an integrated CAD environment for design development, building performance modelling, and for the production of working structural and façade drawings direct from the modelling environment.

t: +27 (0)11 447 9554 e: info@pureconsulting.co.za www.pureconsulting.co.za

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Shared vision. One goal.

SIP Project Managers is the largest project management company on the continent, delivering both local and international projects.

With 35 years of experience and a portfolio of high-profile projects, SIP has become highly sought-after as a result of consistently delivering highquality projects on time.

SIP Project Managers (Pty) Ltd Reg no: 1984/006110/07 Head office: 10 Woodmead Estate, 1 Woodmead Drive, Woodmead, Sandton t: +27 (0)11 233 6800 f: +27 (0)11 233 6801 e: sipjhb@sippm.co.za 56

“It’s a wonderful combination of modern and classic style” With a building of this size, challenges can be expected – and here they were mainly the result of the location of 30 Jellicoe, in a busy, built-up street just off Jan Smuts Avenue. “The building stretched over a full block in a busy part of Rosebank,” explains Ehrlich. “There was a very limited laydown area for deliveries, which had to be scheduled on a ‘just in time’ basis to minimise the area taken up by stored material. To minimise the area of the site taken up by non-productive establishment, the builder established the site office in a nearby house. It was also fortunate that Jellicoe Avenue was wide enough to allow one lane to be barricaded off and used for deliveries.

There was a requirement to minimise disruption and noise to residential neighbours, as well as restricted contractor’s parking in areas where they may have impeded access to businesses around the site.”

Despite the tricky building conditions, opinion is unanimous of the sleek end result.

The atrium is particularly spectacular. Four storeys high, it houses the reception areas for Fluxmans and the other tenants, and provides a tranquil, generous space and a visual connection to the adjacent office levels.

Shelley Bennett, who deals with Fluxmans Attorneys’ marketing, believes the structure’s design reflects the classic nature of Fluxmans perfectly. “It’s a wonderful combination of modern and classic style,” she says. Her favourite space? The library.

When it comes to sustainable building measures, many responsible design principles were incorporated into the design. These included occupancy sensing on the light switching, use of intelligent ballasts on the light fittings, double-glazing and installation of blinds on the façades. In addition, the proximity of a substantial proportion of each office floor to external windows and views is in accordance with green design principles, and vastly improves the tenant experience, says Ehrlich.

“30 Jellicoe focuses on achieving efficiency and comfort through passive design principles, which include but are not limited to orientation; external northern, eastern and western shading; and large roof overhangs to exclude the maximum amount of unwanted direct sunlight to minimise glare and heat gain,” says Render, “The southern façade is also responsive in design to its requirements to regulate internal temperatures.”

Cathy Jones of I.Scope Interiors & Architecture was responsible for the interior design and space planning of Fluxmans’ main lobby, including the library and the common areas, as well as the office areas. The space planning and design had to encompass Fluxmans’ future growth and ensure that the new building accommodated the firm’s unique requirements. The brief was to encompass the company’s history and sense of tradition in terms of spirit and experience, and meld it with the new architecture of the building.

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WBHO is proud to be associated with the construction of the 30 Jellicoe project in Rosebank, the new home for Fluxmans attorneys

RELY

ON

OU R

A B IL I T Y

www.wbho.co.za

PO Box 7591, Westgate 1734 / 290 Granville Avenue North, Robertville Ext 10, Roodeport t: +27 (0)11 472 2355 f: +27 (0)11 472 1469 e: dehaan@lantic.net

PA N E L L I N G l C U S TO M - M A D E F U R N I T U R E l R E C E P T I O N CO U N T E R S SOUTH AFRICAN PROPERTY REVIEW

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on show “This can be viewed quite clearly in the interiors and the successful juxtaposition of timber panelling to the core/heart of the building (the traditional aspect) and the extent of frameless glass to the meeting rooms moving towards the exterior of the building (the modern aspect),” explains Jones.

A monochromatic colour scheme is interrupted by splashes of Fluxmans’ favourite blues and rusts, “a nostalgic nuance from their old office, which they liked very much”, she says. The combination of old furniture with new, custom-designed items is bordering on “tongue-in-cheek”, says Jones, with modern interpretations of traditional shapes, patterns and design being reinvented in turned leg tables and an Industrial Revolution-style library. “This juxtaposition was the biggest challenge in terms of imagery, fittings, decor and finishes – but through careful extremes in both cases, the result is a definitively unique style that appeals to the senses and can only be described as ‘modern traditional’.”

30 Jellicoe is a marriage of contemporary and classic styles as envisaged and created

by I.Scope Interiors & Architecture. Paragon and I.Scope’s desire for timeless, crisp design has certainly been achieved.

“Through careful extremes, the result is a definitively unique style that appeals to the senses and can only be described as ‘modern traditional’”

011 880 8600 info@iscope.co.za www.iscope.co.za

Architecture, Interior Design & Space Planning in commercial, residential & retail 58

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MEET THE TEAM ● Fluxmans Attorneys ● SIP Project Managers ● WBHO ● I.Scope Interiors & Architecture ● Paragon Architects ● Pure Consulting ● Quad Africa Consulting ● Brian Heineberg and Associates (Pty) Limited ● De Haan Skrynwerkers

4 Stan Road, Sandown Sandton, Johannesburg

Quad Africa Consulting (Pty) Ltd 32A Kloof Road, Bedfordview, Johannesburg 2007 t: +27 (0)11 455 1865 f: +27 (0)11 450 4614 www.quadgroup.co.za

PO Box 227, Gallo Manor 2052 t: +27 (0)11 784 0870 f: + 27 (0)11 784 0873 www.bhberg.co.za SOUTH AFRICAN PROPERTY REVIEW

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statistics

Real estate in 2020

1

Source: PwC Real Estate 2020 – Building the Future Report, 2014 High energy prices, climate change Figure 1: Global institutional-grade RE and government regulation are already ccording to Real Estate 2020: Future, pushing sustainability up Building the realthe estate In USD trn = Compound Annual Growth Rate a newbut report PwC, their rapid impact urbanisation agenda, by by 2020, willand 50 be far greater.

Technology already demographic changes – especiallyiswithin emerging 45.3 45 5.8% disrupting economics, markets – willreal lead estate to substantial growth inbut the real 40 by 2020, it willindustry have reshaped entire 3.9% estate investment over the next six years. sectors.

And the real estate community 35 20.3 Simultaneously, as the industry’s opportunities grow, 8.2% will have taken a greater role in the 29.0 30 so too will assets invested into the sector. financial ecosystem, in part moving into 23.8 25 The report predicts that the global stock of investable 10.3 the space left by banks.

18.9 20 6.9 real estate will rise by more than 55% to about 14.6% 8.1% 8.9% 4.6 15 Our fictionalby forum illustrates some US$45,3-trillion 2020, from a 2012 total of US$295.9% 2.0% 3.7% 25.0 elements of this change. believe the 10 trillion, and will expand again byWe a similar proportion 18.7 16.9 14.3 new era of real estate investment, to by 2030. The expansion will be greatest in emerging 5 2020 andwhere beyond, is the beginning a to economies, economic development willof lead time of unprecedented opportunity for 2004be well underway.

2007 Cities 2012 2020 Bybetter 2020, thequality 21st(and, century’s migration tenant in somegreat countries, clearer to the cities will real estate investors and asset managers, will be swelling across theout fast-growing in Asia,countries Africa,nthe Middle East property rights), and will play across housing,countries n Developing Developed countries although with greater risk. The global and Latin America.

Even the developed Western nations will be urbanising, albeit commercial real estate and infrastructure.

Source: PwC analysis stock of institutional-grade real estate at a slower pace.

But citiescapital will prosper.

While some become great centres of report alsomore findsnot thatall private will willThe expand by than 55% from wealth creation in a multipolar world, others are to fail. play a critical role in in 2012, fundingtothe growing and Figure likely 1: Global institutional-grade RE US$29.0 trillion US$45.3 changing need real estate and itswill supporting trillion in 2020, according to our 2: Relative size ofinventory institutional-grade RE per region The volume of for building activity be huge,Figure expanding the world’s of calculations.Intense It may then grow further to Total investable infrastructure. competition forGlobal prime real real estate in the Asia-Pacific region will rise by 37% institutional-grade real estate. construction output is expected to almost US$69.0 trillion in 2030 (see page 7 for estate will real estate managers and investors to US$8.7 to US$5,4-trillion by 2020, from a 2012 total of US$4real estate figures double to force US$15 trillion by 2025, up from trillion in 2012.5 Emerging 100% explanation of methodology).

This huge markets will befor the fastest but that sub-Saharan Africa is expected seek out in newAsia opportunities yield.

Yet thegrowing growing region, PwC 90% predicts total investable real estate in sub- trillion. For Europe, PwC predicts that total investable expansion inreal investable real toand be the second highest. changing estate world willestate presentwill them Saharan Africa will rise by 90% to US$0,7-trillion by real estate will rise by 27% to US$8,6-trillion by 2020, 80% be greatest in the emerging economies, with a far wider range of risks, which they must be 2020, from a 2012 total of US$0,4-trillion, while total from a 2012 total of US$6,8-trillion. economic development willthey leadwill come’ Yetwhere the philosophy of ‘build it and won’t prove universally successful.

70% equipped to manage.

Other changes in real estate by 2020 will include: investable real estate in the Middle East and north to better quality and, in some Some citiestenant will grow and become creative hubs, generators of economic growth.

60% l A

huge expansion in cities, with mixed results.

Africa will rise by 62% to US$2,5-trillion by 2020, countries, clearer property rights.

Andinfrastructure, it Others destroy wealth, poor slums and rampant crime.

Thewill report predicts thatwith the global l G

rowth in emerging markets will ratchet up from a 2012 total of US$1,5-trillion.

50% will play across housing, commercial Others stillout be ghost towns.

In some countries, the density of main cities will stock ofwill investable real estate will competition for real estate assets and competition Furthermore, total investable real estate in the US realpeople estate and infrastructure.

Indeed, drive away, to rural environments or satellite cities.

40% by more than 55% to about between real estate organisations. and Canada will rise by 38% to US$11-trillion by 2020, asrise intense competition continues to 30% US$45,3-trillion by 2020for core real compress investment from ato 2012 total of US$8-trillion, and total investable l Sustainability will transform design of buildings Figure 4: World urbanyields population from 1950 2050 20% estate, real estate managers will have and developments, presenting opportunities every incentive to search for higher Population in millions 10% and risks for real estate asset managers. yields elsewhere.

0 l Technology will disrupt real estate economics.

7,000 2004 2007 2012 2020centre stage. l Real estate capital will take financial On the next page, we highlight our six

A

xpansion in cities, xed results

rease n, 20102

up d n

ts to he

Success factors for the future

Source: PwC analysis

2,000

n Rest of world n Asia n Africa Source: United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision

Figure 2: World urban population from 1950 to 2050

60

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

0

1955

f Economic (2012).

11 Revision. g 10 million.

1,000

1950

f Economic (2012).

11 Revision.

013),

n Latin America n Sub-Saharan Africa n Developing Asia Pacific n Middle East and North Africa n Commonwealth of Independent States & Central and Eastern Europe n North America n Euro Area n Asia Pacific

6,000 predictions about what this means for real estate managers and the investment 5,000 community. After that, we describe our view 4,000about the likely changes in the landscape, their possible implications and how we believe you should prepare 3,000 for this fast-changing world

A global network with local knowledge and good government relations, specialist expertise and innovation, and a focus on cost management and scale are all success factors. Above all, there is a need to have the right people: to attract, retain and invest in them.

The response to the coming changes in the real estate industry will require considerable thought in order to form a winning strategy. Real estate managers will need to think globally, as global investable real estate will expand substantially, especially in emerging economies.

The PwC successful real estate managers 20205 Real Estate 2020: Building the of future will have already started to shape their responses to some or all of these changes.

PwC Real Estate 2020: Building the future 9

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annual SaPOa internatiOnal

COnventiOn and PrOPerty exhibitiOn

CAPE TOWN – ICC 10-12 June 2014 www.sapoaconvention.co.za

The Convention provides a comprehensive snapshot of expert opinions and research in terms of what to expect throughout the development and investment year ahead.

The two day event will deliver unrivalled opportunities to engage with industry leaders and political representatives, gain knowledge and inspiration, network and generate new business opportunities. These benefits are combined and delivered in one of the most high quality, informative, entertaining and dynamic event!

Please join us at this premier event!

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development

NMC nourishes student accommodation NMC, a member of the NMC Construction Group, completed a new R105-million living and learning accommodation complex for students, opening up an additional 313 beds for the Nelson Mandela Metropolitan University

By Stephanie King

T

he 16 000m² accommodation complex, situated on the main campus grounds, was executed within a 16-month programme.

The complex consists of two buildings connected by steel bridges on the upper levels and paved walkways at ground level. The buildings feature striking galvanised external staircases that lead from ground to upper levels.

The design responds to changing student expectations – the result of social, technological and economic change – and strikes a balance between leisure and studying. The residence provides common spaces for socialising and studying, with a special emphasis on providing essential connectivity, and the scheme includes two planning arrangements that consist of fourbedroom and two-bedroom apartments.

The four-bedroom apartments (with a shared kitchen, dining area and bathroom) are arranged along open corridors in fourstorey buildings stretched across the site with communal facilities on each level. These include a group study room, a communal lounge and laundry. At ground level, fully accessible units for people with mobility impairment are provided.

The two-bedroom apartments (with a shared kitchen, dining room and bathroom) are arranged around central staircases in smaller, three-storey buildings interspersed between the four-storey buildings. Communal facilities such as a group study room, lounge and laundry are located on the ground floor of each building.

The demand-and-supply gap for higher education infrastructure, particularly student accommodation, is growing. The rapid growth of enrolments and increase in numbers of international post-graduate students places further pressure on the accommodation shortage.

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The NMC Construction Group continues to make inroads into the studentaccommodation market. The Group has extensive experience in delivering educational infrastructure, and has been awarded a R45million contract to design and construct new student accommodation to provide 214 beds for the Cape Peninsula University of Technology (CPUT). The project is in close proximity of the Cape Town campus and will provide much-needed student accommodation across the 102 (two-bed) bedrooms sharing communal kitchens and bathrooms. NMC commenced with the project in April 2014; completion is expected in time for the 2015 academic year student intake.

“The student-accommodation market is a key growth area for the NMC Construction Group, and the CPUT award builds on our portfolio in the educational infrastructure sector,” says Mike van Coller, NMC’s director for new work. “We are currently involved with a range of projects in this sector throughout the country, as well as in Namibia. Since we’ve been participating in this sector, we have gained vast experience and understanding of delivering against accelerated construction programmes – a key criterion within this pressured market.

Our operations are aligned to the government’s objectives for the provision of student housing, and our track record reflects both the highest quality and safety standards without compromising on delivery.”

Some clients have opted to outsource their accommodation requirements, opening up opportunities for private developers, he adds.

The R485-million OBZ student residence for the University of Cape Town was developed

according to this model by Cape Living Developments. NMC constructed the multistorey complex within an extremely tight 20month schedule. With a footprint of 22 557m² equating to 94% bulk, OBZ Square provides 880 individual rooms (of 11m²) with en-suite shower, toilet and basin, and shared communal kitchens, making this the University of Cape Town’s biggest student residence. Construction innovations and green technology (such as the installation of off-site constructed bathroom pod units) significantly reduced pressure on the construction programme and environmental impact.

The market for off-campus student accommodation is growing, and offers fairly attractive buy-to-let opportunities for investors.

Currently, NMC are constructing the R100million Andringa Walk luxury apartment development. This project is located in the Stellenbosch CBD, and its close proximity to the University of Stellenbosch campus makes it well-suited for more discerning students who are looking for safe accommodation with all the modern conveniences.

The project consists of 116 apartments ranging in size from 35m² to 85m², constructed above the existing Eikestad Mall, three levels above third level. The design embraces the spirit of community, with the apartment units spanning across four apartment blocks that share a common podium area and lift lobby with direct access to the mall.

Similar projects successfully completed in this sector include NMMU’s engineering faculty, Gobabis Learning and Resource Centre, UWC Meteorology Laboratory, Old Mutual head office crèche and the Elkanah School campus.

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off the wall

The rise of Sandton rentals Sandton was last year’s fastest-growing office rental market – in the world

By David A Steynberg

S

andton may rank at number 67 on the 2014 Cushman & Wakefield Office Space Around the World report – but it is also the fastest-growing rental market.

Ask any Gautenger who’s ever driven into or out of Sandton what they would describe as the node’s most defining feature, and you’d most likely be presented with two options: traffic and office development.

While Sandton slowly pedestrianises itself and more commuters adopt the public transport opportunities available to them, the office market shows little signs of slowing down.

The Cushman & Wakefield report, which analysed the global office market last year, crowned London’s West End as the priciest location to set up shop, finally inching out Hong Kong as growth slows in the East.

Although there is an almost €2 000 difference in cost per square metre per year between London (€2 122) and Sandton CBD (€150), the trend in rental growth is like chalk and cheese.

London doesn’t even feature on the top 10 growth markets. Instead, Sandton CBD leads the pack with rental growth recorded at more than 45% year-on-year. Durban CBD (40%) grabs second place, while Durban Berea/La Lucia (around 35%) completes the all-South African top three rental growth markets. Cape Town CBD sits pretty in ninth, with downtown New York completing the top 10.

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“The most significant rental expansion within the Europe, Middle East and Africa (EMEA) region was seen in the Middle East and Africa, which witnessed rents increase by 14%,” said the report. “Both Qatar and Dubai saw business confidence pick up through the year, resulting in increased office market activity as well as supporting prime rental growth of 10% and five percent respectively.

“However, it was South Africa that experienced the highest rental growth in the EMEA region in 2013, with prime rents accelerating by almost 30%. The South African market saw a notable increase in the amount of large transactions over the year in the midst of a particularly active occupational market.”

Growth figures such as these are sending a very strong message to would-be tenants: get space quickly while prices are still low – in global terms.

SOUTH AFRICAN PROPERTY REVIEW

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PASSIONATE ABOUT AFRICA’S

FUTURE CITIES

Using solar chimneys to naturally ventilate the University of the Witwatersrand’s John Moffat Building, ensuring energy efficiency and cost optimisation by eliminating the need for air conditionin

WSP is a world leading engineering and design company with 15,000 staff in more than 300 offices in 35 countries. We work across the mining, energy, infrastructure, industry, transport and property sectors – demonstrating both technical depth and excellence in every project.

Our engineering and environmental expertise ranges from land remediation to urban planning, from engineering iconic buildings to devising sustainable transport networks and from designing the energy sources of the future to optimising resource usage in existing industries and processes.

We take pride in providing innovative, sustainable solutions for our clients as they develop Africa’s future cities.

35 15,000 300 COUNTRIES OFFICES EMPLOYEES

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All accounted for Every time

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Acknowledgement: SAOTA – Stefan Antoni Olmesdahl Truen Architects

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