South African Property Review May 2018 by SAPOA

PROPERTY SOUTH AFRICAN

May 2018

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

PROPERTY TECH:

11:31 AM

VR, AI and cyber

Project management Technology takes the lead

Security issues? New trend overview

MetroWatch

The Mother City in ďŹ gures

TECHNOLOGY

TRENDS

CONSUMERS

SOUTH AFRICAN PROPERTY REVIEW

from the CEO

SAPOA concerned over City of Jo’burg’s general valuation process for objections and appeals SAPOA is concerned over the lack of feedback from the City of Johannesburg about the latest general valuation (GV) process. In correspondence to the City Manager, SAPOA has highlighted the legal position on three key factors affecting the valuation roll These three key factors are: ●● Ratepayers are not liable to pay disputed rates pending the outcome of objections or appeals. ●● The city is not entitled to cut off services such as electricity if ratepayers fail to pay the portion of their rates that they are disputing, nor may it threaten to do so. ●● The city is not entitled to claim interest on any shortfall on rates payable by ratepayers on finalisation of objections or appeals. On the question of ratepayers not being liable to pay disputed rates, the city refers on its website to Section 50(6) of the Local Government: Municipal Property Rates Act 6 of 2004 (MPRA) and concludes as follows: “Therefore the account must still be paid until the objection process has been finalised.” The city in fact insists that the full number of rates billed must be paid, including any disputed amount. SAPOA has pointed out that this interpretation is incorrect. In addition, it is significant to note that the City of Cape Town reached a different conclusion. In a circular released as part of its GV 2015, it posed the following frequently asked question: “Do I still need to pay the new rates if I disagree with the value and my objection is still unresolved?” It then supplied the following answer: “You will need to pay rates until the objection is resolved. The rates need not be based on the new valuation but must at least resemble the amount you are currently paying…” On the question of the city being entitled to cut off services such as electricity if ratepayers fail to pay disputed rates, Section 102(2) of the Systems Act clearly states that municipalities are prohibited from terminating municipal services in relation to amounts under dispute.

On the question of the city being entitled to claim interest on any shortfall on rates payable by ratepayers on finalisation of objections or appeals, the city misquotes the relevant provision of the MPRA, namely section 55(2). That section, in fact, provides in 55(2)(b)(i) that where there is a shortfall payable by the ratepayer, the municipality “must” recover the shortfall from the ratepayer “without adding interest” thereon. It is only when the municipality is required to refund surplus rates paid by the ratepayer that interest must be added. It is SAPOA’s understanding that, in previous valuation exercises, the city did not follow the correct practice, and the indications are that the city does not intend to do so with the current valuation process. SAPOA has asked the city to provide it with an assurance that it will ensure its practices pertaining to GV 2018 will align with the legal requirements set out above. In response to SAPOA, the Mayor issued a statement on 16 April stating that he has taken steps to ensure that property owners who objected to their property valuations in GV 2018 will receive further support from the city. This support will take the form of ensuring that those who objected to their property valuations will continue paying what they have been paying historically until the objection process is finalised. SAPOA would like to see that the city implements GV 2018 as per the MPRA as announced by the Mayor, and that the objections are finalised in the shortest period of time. There should also be no threats to disconnect services, and no backdating of interest charges upon finalisation of the objections. Best regards, Neil Gopal, CEO SOUTH AFRICAN PROPERTY REVIEW

contents

May 2018

PROPERTY SOUTH AFRICAN

REVIEW

1 South African Property Review

PROPERTY SOUTH AFRICAN

May 2018

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

PROPERTY TECH:

11:31 AM

Property technology is advancing at an incredible pace. Property Review looks at a number of ways in which the new trends are affecting property management, security and how spaces are

VR, AI and cyber

presented to potential investors. Technology and innovation

2 Project management

Technology takes the lead

Security issues? New trend overview May 2018

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

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch

The Mother City in ﬁgures

1 From the CEO 4 From the Editor’s desk 8 SAPOA working for you 10 Convention Profiles 12 Education Certificate for the Commercial Property Practitioner certification ceremony 18 Legal update City of Johannesburg’s general valuation process for objections and appeals: GV 2018 20 One-on-one: project management When projects are king 22 Technology in property Virtual reality: visually moving through property 26 App technology Property apps:putting tenant, landlord and broker in the fast lane 29 Security Keeping your assets safe 32 Smart cities 5G could ignite smart city development in South Africa 34 Opinion Smart cities in Africa: it’s not just about ICT 36 MetroWatch 42 Howmuch.net 44 Social 46 Off the wall Generation Z is here FOR EDITORIAL ENQUIRIES, email mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Eugene Jonck Sales Nkepile Setshedi: sales@sapoa.org.za Finance Susan du Toit Contributors Daniel Newman, Eckart Zollner, Irene Bailey, Katie O’Toole McFarland, Raul/Howmuch.net, Tony Karafilovski Photography Mark Pettipher DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material. Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com

e: philip@rsalitho.co.za

Generation is here

46 SOUTH AFRICAN PROPERTY REVIEW

from the Editor’s desk

Tech, tech and more tech: time to stop being a technophobe If we’re not embracing technology there is a danger of being left behind. Property Review has been online for the better part of five years; now we’ve also moved to our own publishing platform. While the magazine is still available on Issuu.com, we’ve created our own cyber-landing page, www.southafricanpropertyreview.co.za. Here you will find a fully interactive online version of our print edition. Click away – we know you want to!

he month began with the sad news that Nomzamo Winifred MadikizelaMandela, known as the “Mother of the Nation”, had passed away. Born in Bizana in the Eastern Cape in 1936, she died on 2 April at the age of 81. Our belated condolences go out to her family, and we commiserate with all South Africans on her passing. Those of us who have been involved with the property industry for some time will know Pam Golding, who also passed away – on 3 April, aged 89. We extend our sympathies to the Golding family. Pam Golding was a force. She launched Pam Golding Properties in 1976 in a very much male-dominated environment. Today her legacy is a thriving business that has more than 300 offices across Africa, Europe, the UK and Indian Ocean Islands. It is currently in the capable hands of her son, Dr Andrew Golding. To kick off the read this month, SAPOA Chief Executive Officer Neil Gopal and his legal team raise concerns over the City of Johannesburg’s valuation process for objections and appeals. SAPOA’s continued involvement with certification is highlighted in our HR pages. Guest speaker Malcolm Horne, the Chief Executive Officer of Broll, was at the ceremony to present delegates with their Commercial Property Practitioner Certificates. Also present were Neil Gopal and the Department of Public Works’ Human Resources Development Manager Fredah Maseko. Staying with HR, SAPOA and the University of Johannesburg also honour the Property Management class of 2017. I’ve been in my element while putting together this edition of Property Review. As a bit of a geek, I simply love technology – so most of my questions to SAPOA 4

SOUTH AFRICAN PROPERTY REVIEW

members leading up to this month’s focus topic have been “What technology have you been using in your business?” and “How is technology changing the way you look at what you’re doing?” With that in mind, I met with Wayne Berger of iShack, who talked about developing apps and software that help brokers identify properties, streamline “paperwork” and generally be more costeffective and efficient in the way that they go about their business. There is much talk about the ways in which virtual reality (VR) is changing the landscape of presenting spaces to potential investors and buyers – so we spoke to Steve Pinto, who gave us an overview of what is possible in the VR environment. From demonstrating work spaces to taking new cars for a drive and developing total-immersion training programmes, NewReality is bringing solutions to some of the most technically challenging issues. Mislaid your building plans? Want to adapt a work space or simply map your property asset? Technology is here to make all that much simpler. Advance 3D’s Wayne Jacobs takes us through how he is able to digitally scan, plot and render high-resolution images, and generate a point-of-interest walk-through of any

indoor environment that can be viewed on any platform or smartphone. We’ve all heard the notion of “smart cities” being banded about, so we’ve done some research and asked people for opinion pieces. What it boils down to is that there is a need for our cities to have better and more reliable connectivity – and once we’re all connected, the sharing of information can become the norm. Tim White, Chief Executive Officer of Profica, also sat down with us, and told us that with his project management requirements in nine African countries, his company uses a ISO9001-certified quality management system, combined with a bespoke, Web-based document control and project management system, on all its projects. Commercial property security may not be uppermost in people’s minds when they nip out to the mall or around an office precinct. This could be because of how the owners instructed their security companies to engage with the public. Kevin Monk, Technical Managing Director of Stallion Security, shares some of his observations with us. Hi-tech surveillance and artificial intelligence are certainly going to be the way of the future when it comes to “policing” the precinct. To end off this edition, we’re running a slightly longer than usual “Off the Wall” article, ushering in Gen Z. Even Millennials will begin to feel “old” because Gen Z will soon account for 20% of the modern workforce. Could the office of tomorrow be a more structured environment? Will communications swing back to face-toface? Judging by what we’ve seen with the tech trends, this could be the case! Enjoy your read. Mark Pettipher, Managing Editor

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SAPOA working for you 12th March 2018 The MMC Finance Group Finance 5th Floor BKS Building Pretorius Street Pretoria Dear Honourable MMC Fourie

CITY OF TSHWANE RATES AND TAXES

d this of your busy schedule you dedicate and appreciate the fact that in spite day this on OA SAP with ting mee We thank you for s discussed related to: time to us. We confirm that the issue to other Municipalities; ● The high rates tariffs in relation ane; in the ● The valuations of properties in Tshw lted in the charges being the highest rates and taxes in Tshwane has resu of ect resp in ge chan tariff the It was noted that on a property valued at R419 000 000. comparative property rates payable country. We set out by example the Metro

Tariff

Monthly Rates

R/m²

Tshwane

0.03282

R 1 145 965

R 42.94

Johannesburg

0.01798

R 627 872

R 23.53

Ekurhuleni

0.01832

R 639 673

R 23.97

Durban

0.02700

R 942 750

R 35.32

Mangaung

0.02876

R 1 004 099

R 37.62

Cape Town

0.01280

R 446 759

R 16.74

r tenants in the City. This is also forcing majo OA members to hold back on investing SAP ng forci is tariff high ned ntio The aforeme s e.g. Sandton. to consolidate its offices to other area its income , however the City needs to balance to keep tariff increases to a minimum g tryin is City the that ated t. indic We note that you ges envisaged cannot happen overnigh many obligations, and that any chan and expenditure, and has to meet its of SAPOA: Self Determined Municipal Valuations We confirm the following in respect with the City of Johannesburg regarding ct proje pilot a ced men com had it ation team that understands the ● SAPOA indicated that , this would require a highly skilled valu ever How City. the to tion enta pres a e and would like to mak valued. s in the various categories have to be amended after various categories and how propertie s in Polokwane. The rates policy was ertie prop e valu high for te reba a ng duci intro in ntal ● SAPOA was instrume consultation with the Mayor. y of Polokwane: ● Extract from the 2015/16 Rates Polic

8.14 OWNERS OF BUSINESS OR INDUSTRIAL

PROPERTY WITH HIGH MARKET VALUES

ket value is strial purposes whose improved mar Properties used for business or indu : one to ted limi but rebates as follows R50 000 000 and above will receive 10% rebate 999 Market value R50 000 000 - R99 999 999 25% rebate 999 9 Market value R100 000 000 - R49 40% rebate ve abo and 000 000 0 Market value R50

idered for this rebate. s valued at R350m and higher be cons ratio. It ● SAPOA suggested that propertie the City should consider reducing the mercial properties is currently 1.0:3.0 and com and l entia resid een betw tariff ● The ratio of the indicated that the ideal ratio is 1.0:2.0. l Property Rates Act was drafted it was was mentioned that when the Municipa ratio, Cape Town is given as an example. municipalities who have achieved this of ber num a are erties there that d tione ● It should be men view that a significant number of prop bers at the meeting, SAPOA is of the mem the of e som by ated indic ● Although it was are undervalued. essed in the next valuation roll. the City needs to ensure that this be addr and es valu low the of lt resu a are s ● The high tariff of the City: We confirm the following in respect te as a short-term solution. reba ly so a iding prov ● The City will look at gories have to be looked at holistical undertaken in the short term, as cate be ot cann es gori cate subthe ● The valuations and that it benefits all. ed in the next valuation roll ● Under-valuations must be address Yours sincerely N Gopal Chief Executive Officer

SOUTH AFRICAN PROPERTY REVIEW

IT TAKES MORE THAN CONCRETE TO BUILD A HOME. HEREâ&#x20AC;&#x2122;S TO THE BUILDER IN YOU.

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Creating Concrete Possibilities

convention build-up

The SAPOA Convention and Property Exhibition 2018 all roads lead to Durban

As our speakers confirm their participation, in this and the June editions of Property Review, we begin to highlight our speaker line up and once again welcome Eusebius McKaiser to the podium, in addition we outline profiles of leading international property personalities John Salustri and Lisa Stanley

Eusebius McKaiser Returns as Master of Ceremony

Eusebius McKaiser, Returns as Master of Ceremony

“the biggest commercial return is the ability to find ‘ ten’ CEOs in a single space and to be able to network with them.”

SOUTH AFRICAN PROPERTY REVIEW

Eusebius McKaiser is a best-selling author, broadcaster, political analyst, lecturer, columnist and public speaker. He has previously won both the national universities debate championship, and the world masters debate title in 2011. He coaches debate and public speaking locally and abroad. He has written two bestselling books, A Bantu In My Bathroom and Could I Vote DA? A Voter’s Dilemma. Eusebius has hosted a number of radio and television shows focusing on current affairs at the SABC and on both Talk Radio 702 and Power FM. He holds a masters degree in philosophy (with distinction) and is an associate at the Wits Centre for Ethics.He’s been a columnist for The New York Times previously but currently writes weekly for the Independent Newspapers group. McKaiser comments,” The biggest value of SAPOA’s convention is one’s opportunity to rub shoulders with South Africa’s commercial property’s senior and leading players. They bring people together for three days, and sometimes the most beautiful conversations will be found over a coffee, or a beer or in passing in a

corridor whilst between plenary sessions, the spontaneity that happens when like minded people are gathered together is incredible.” McKaiser goes onto say, “the biggest commercial return is the ability to find ‘ ten’ CEOs in a single space and to be able to network with them.” “How SAPOA gets it’s conference right, is they get someone like me, who is generalist, as someone who can comment on politics and the economy, to hold it together, and when there is a specialist topic, they get me to introduce the panellists leader as the specialist facilitator of that particular topic. One of the plus sides of having me return for the fifth time, is familiarity. During the previous conventions I have fortunate to be able to get to know a fair number of SAPOA’s members, and as such it allows me to ask questions which otherwise I might not have been able to, I am able to better engage with the audience and perhaps get an intervention during the course of a discussion. I’m looking forward to MCing this year’s convention on Technology in the property industry, we have some interesting commentators and speakers and there will certainly be a great opportunity to take home a greater insight in the property space.

convention build-up

John Salustri, editor-in-chief of Salustri Content Solutions

John Salustri editor-in-chief of Salustri Content Solutions John Salustri has written extensively about the built environment for more than two decades. He is editor-in-chief of Salustri Content Solutions, a consultancy focused on enhancing the web and print content of a roster of international clients and boasts BOMA International, CBRE, EY and the Institute of Real Estate Management amongst them. He leverages more than 25 years of professional journalism for the benefit of companies seeking enhanced content for their websites, industry reports, bios and other media presentations. A four-time recipient of the National Association of Real Estate Editors’ Award for Excellence in Journalism, Salustri was founding editor of GlobeSt.com, the first and leading commercial real estate news website in the US. For 12 years in that role, he managed the national and international news, features and blogs of that website, overseeing the output

of a nationwide team of reporters. Prior to launching GlobeSt.com, Salustri was editor of Real Estate Forum and Facilities Design and Management magazines. He is a frequent speaker at a variety of industry events, including Institute of Real Estate Management and Society of Industrial and Office Realtors and has provided voice-over support for many of their video presentations. In addition to business writing, his essays and fiction have appeared in the New York Times, St. Anthony Messenger and The Critic. His first book, The Liquid Office, is due out in 2019. As SAPOA heads towards its convention, Salustri is preparing to discuss emerging trends and technology, in particular the disruptors that we as an industry are facing.

Lisa Stanley CEO of OSCRE International Lisa Stanley is CEO of OSCRE International, a member-based organization focused on transforming the way digital information drives your real estate business. Stanley drives strategy for the organization, and works with a variety of constituents in corporate real estate, investment firms, service providers, software developers, consulting firms and other memberbased associations. She brings over 20 years’ experience in the real estate industry in asset and property management, strategic planning, real estate operations, brokerage, compliance and advocacy. Stanley believes that constructive

collaboration on standards development and effective data governance are critical to address the transformational change these emerging technologies will have on the real estate industry. Exploring Emerging Technologies: “Are You Ready?” asks Stanley, Blockchain and other emerging technologies are advancing faster than you may think – are these disruptive technologies or a mandate for foundational change? Stanley will explore the impact blockchain is having on how information is collected, shared and analyzed within organisations, and some real world applications of this technology. It’s about smart contracts, smart platforms and smart skill sets to master this transition. We’ll discuss the steps you need to take today to prepare for implementation and how to be a transformational change leader within your organisation and with your business partners. Let’s explore the possibilities

Lisa Stanley, CEO of OSCRE International

SOUTH AFRICAN PROPERTY REVIEW

education & training

Certificate for the Commercial Property Practitioner certification ceremony The certification ceremony for the 2017 CCPP took place on 12 March at the CSIR Conference Centre in Pretoria. A total of 44 delegates received certificates for successful completion of the course. The guest speaker was Malcolm Horne, Chief Executive Officer of the Broll Property Group and President of the South African Council of Shopping Centres

he ceremony was also attended by SAPOA Chief Executive Officer Neil Gopal and Fredah Maseko, Deputy Director of Human Resources Development at the Department of Public Works (DPW). Wynand van Jaarsveld from the DPW received the prize for the best student, while Ntombenhle Nhleko (also from the DPW) received the prize for the second-best student and Stephen Pyper for third-best. All three received their certificates with distinction. Over the past few years, guest speakers at the certification ceremony have included Pieter Feenstra (Chief Executive Officer of the Feenstra Group), Professor Kevin Wall (an academic in engineering) and Dr Kelvin Kemm (present Chairperson of the Nuclear Energy Corporation of South Africa). This popular course was offered for the 23rd time in 2017. It was attended by a record number of delegates, including 50 students from the DPW. As part of an

The best student prize went to Wynand van Jaarsveld from DPW

SOUTH AFRICAN PROPERTY REVIEW

agreement between SAPOA and the DPW, the DPW has enrolled another 75 delegates for the 2018 Certificate for the Commercial Property Practitioner (CCPP). To date, 785 participants have successfully completed the CCPP, out of a total of 1 481 participants who’d registered for the course over the years – the ratio of successful completions is therefore about 53%. The year-long CCPP was introduced in 1996 as a joint undertaking between SAPOA and the University of Pretoria. The CCPP is South Africa’s premier qualification for practitioners and brokers involved in office, retail and industrial leasing, selling, management and investment. Experienced academic staff as well as leading figures in the industry provide a strong functional base to the programme. The objective of the course is to provide the necessary skills and knowledge for property practitioners, property financiers and commercial brokers to function effectively, efficiently

Nthombenhle Nhleko from DPW received the prize for the second-best student

and successfully in the commercial and industrial property sectors. Participants in the CCPP will find their skills and knowledge sharpened not only by the practical instruction and case studies, but also by the interchange of ideas with the lecturers and their colleagues in the threeday block session. The CCPP is open to all brokers and property practitioners, whether independent or employed by institutions. Entrance qualification is a minimum of matric, with mathematics at matric level being desirable. This course has been recorded with the South African Qualifications Authority. The approved rebate may be claimed from the relevant SETA on the cost of the course, thereby making it more attractive to employers for staff training. This course also carries CPD points for built environment practitioners. In addition, participants who have passed the course are exempted from the Estate Agency Affairs Board exam for estate agents.

Stephen Pyper from DPW was awarded third best student

education & training

FIRST ROW Tondani Nevhutalu, Jacqueline Visser, Mpho Boya, Zisanda Ditshego, Prf B Zulch (HOD), Ms F Maseko (DPW Representative), Prof C Cloete (Course Leader), Sipho Mtimkulu, Lee Bartlett, Ntombenhle Nhleko, Nomfundo Mfiki. SECOND ROW Bridget Trytsman, Lebogang Morake, Eric Phahlane, Wynand van Jaarsveld, Toni-Leigh van der Berg, Lungile Dlamini, Werner Fitton, Bafedile Sakuneka, Julia Setlhoke, Karen Hunter. THIRD ROW Thabisho Kgabi, Karabo Mavhungu, Mukundisi Mashimbyi, Mohlabe Letsoalo, Elizabeth Wasserman, Thandokazi Mngeni, Sherleene Minné, Singatha Maholwana, Thato Matlala. FOURTH ROW Zodwa Gumede, Idowu Adegulu, Madalene Smit, Vickey Moodley, Sandile Sojini, Debbie Hall, Stephen Pyper, Nicole Stock.

When private-public partnership works! Meet the entrepreneurs who benefit. The Department of Small Business Development (DSBD) and Property Point have joined forces to take 16 small to medium-sized, black-owned, businesses, through a life-changing enterprise development programme. This programme will provide bespoke business interventions and facilitate access to markets in order to catalyse business growth and sustainability. Meet Thabiso Makgoka, Managing Director of Mokibelo Investment Holdings. Started in 2012, Mokibelo is a construction company and general building maintenance company which holds a level 6 CIDB rating. Thabiso is a qualified Quantity Surveyor with 10 years of experience in the construction sector and a heart and passion for her community. ‘’ This business was started because of a long-standing desire to work for ourselves and a lifelong passion to improve the livelihoods of the people in our community’’ explains Thabiso, ‘’My husband and I both come from tough backgrounds and so we both understood that we had to work hard and be enthusiastic about everything that we do. This is why we do not take for granted our responsibility to give back to our community." This go-getter attitude is what made the difference in Thabiso’s business when it came time to take the risk to start, Thabiso and her husband both tapped into their personal savings and put the money towards starting the business. However, the business still faced challenges, ‘’ I realised how important it was to have skilled people in the business and also, working in the public sector taught us a lot about managing our cash flow.’’ Today, the business has grown from 4 employees to 22 permanent and 135 contracts staff since it started. The turnover has increased from R1mil to almost R20mil and the couple has managed to venture confidently into the private sector. The goal now is to grow towards sustainability by securing more private sector contracts. Property Point is a Growthpoint Properties initiative which provides entrepreneurs with the skills and personal development support they need to develop their enterprises into fully independent companies. For more information on Mokibelo Investment Holdings, contact Thabiso on thabiso@mokibelo.co.za

SOUTH AFRICAN PROPERTY REVIEW

education & training

SAPOA and the University of Johannesburg honour the Property Management class of 2017 The certification ceremony, in partnership with the University of Johannesburg, took place on 23 March 2018 in Johannesburg. The course is the result of an ongoing collaborative effort between SAPOA and the university

FROM LEFT Langanani Mathala, Emogen Mohoahle, Halati Mulaudzi, Nomsa Nkosi, Regan Leeuw, Mark Donson, Laura Goncalves, Property Valuation and Management Academic Clerk Dumisani Ndumo , PMP Course Facilitator Marno Booyens, Lecturer and Programme Manager: Property Valuation and Management Andre Kruger, SAPOA Education Officer Mafonti Morobi

ccording to SAPOA’s Education Officer Mafonti Morobi, one of SAPOA’s key driving forces is to contribute towards the advancement of the members’ commercial property interests within the property industry. “As a professional association, SAPOA’s educational efforts are aimed at increasing the knowledge and skills of the property industry among employees in the industry, ensuring that the content of the programmes, workshops and other educational interventions is aligned to the needs of the industry, thus raising the employability and competence of the professionals in the industry,” she says. Andre Kruger, Lecturer & Programme Manager for Property Valuation and Management, had many congratulatory words for the recipients of the certificates. “Today is a celebration of having completed the programme,” he said. “It is the end result of all your hard work.

Look back on this day with pride and reflect upon your journey – it will be a very rewarding one. Celebrate your hard work and dedication, and be very proud of what you have accomplished. Congratulations on your achievement.” He also thanked SAPOA for its support and for partnering with the University of Johannesburg. “We hope that we can build on this and make it a success going forward, and do more with the industry because I think that’s very important,” he said

Andre Kruger of the University of Johannesburg

SAPOA Education Officer Mafonti Morobi

PMP Course Facilitator Marno Booysens

SOUTH AFRICAN PROPERTY REVIEW

legal update

City of Johannesburg’s general valuation process for objections and appeals: GV 2018 Must ratepayers pay the increased rates pending an objection or appeal? The city deals with this question on the FAQ page of its website. It refers to section 50(6) of the Local Government: Municipal Property Rates Act No. 6 of 2004 (“MPRA”) and concludes as follows: “Therefore the account must still be paid until the objection process has been finalised.” It is significant to note that the City of Cape Town has reached a different conclusion. In a circular released by it as part of its GV 2015, it posed the following frequently asked question: “Do I still need to pay the new rates if I am in disagreement with the value and my objection is still unresolved?” It then supplied the following answer: “You will need to pay rates until the objection is resolved. The rates need not be based on the new valuation but must at least resemble the amount you are currently paying.” Section 50(6) of the MPRA reads as follows: “The lodging of an objection does not defer liability for payment of rates beyond the date determined for payment.” Section 54(4) deals with the position pending an appeal, and reads as follows: “An appeal lodged in terms of this section does not defer a person’s liability for payment of rates beyond the date determined for payment.” The question therefore is, what is meant by the ratepayer’s “liability for payment of rates”? Does it extend to the portion disputed by the ratepayer (“the disputed amount”)? It appears that the MPRA itself provides an answer to this in Chapter 3, which is headed “Liability for Rates”. The very first section in that Chapter 18

SOUTH AFRICAN PROPERTY REVIEW

(Section 24) is headed “Property rates payable by owners”. Section 24(1) reads as follows: “A rate levied by a municipality on a property must be paid by the owner of the property, subject to Chapter 9 of the Municipal Systems Act.” It is therefore necessary to look at the said Chapter.

“Chapter 9 of the Municipal Systems Act No. 32 of 2000 (“Systems Act”) is headed “Credit Control and Debt Collection”. Section 102, which falls within that Chapter, provides in Subsection (1) that a “municipality may … implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts…” Chapter 9 of the Municipal Systems Act No. 32 of 2000 (“Systems Act”) is headed “Credit Control and Debt Collection”. Section 102, which falls within that Chapter, provides in Subsection (1) that a “municipality may … implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts…” However, Subsection (2) provides that “Subsection (1) does not apply where there is a dispute between the

municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality from that person.” Clearly, where there is a dispute, a municipality may not implement its debt collection measures – at least not in relation to any disputed amount. Thus it appears clear that the legislature was of the view that the ratepayer’s “liability for payment of rates” does not extend to amounts disputed by the ratepayer.

Interpretation of statutes Francis Clerke of DKA Attorneys says it is his opinion that, on a proper application of the rules pertaining to the interpretation of statutes, the term “liability for payment of rates” does not include disputed amounts.

Is the City entitled to cut off services such as electricity if ratepayers fail to pay disputed rates? The answer to this question is no. The reason has already been referred to above; we will deal with it in more detail here. This aspect is governed by Chapter 9 of the Systems Act. Section 102, which falls within that Chapter, provides in Subsection (1) that a “municipality may … implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts…” However, Subsection (2) provides that “Subsection (1) does not apply where there is a dispute between the municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality from that person.”

legal update

What “debt collection and credit control measures” are provided for in Chapter 9? Section 104(1)(f )(i) (which forms part of that Chapter) provides that the actions that may be taken by municipalities to secure payment of accounts that are in arrears include “the termination of municipal services or the restriction of the provision of services”. Thus municipalities are prohibited from terminating municipal services in relation to amounts under dispute. The judgment of the Supreme Court of Appeal in the case of Body Corporate Croftdene Mall v Ethekwini Municipality [2012] 1 All SA 1 (2012 (4) SA 169) (SCA) is key to this matter. The court confirmed that section 102(2) prohibits a municipality from terminating services in relation to disputed rates. It then considered what is meant by the term “dispute”, and noted that the Systems Act does not define the term. The judge then set out his understanding of the term in Paragraph 22 of the judgment: “It is thus, in my view, of importance that Subsection 102(2) of the Systems Act requires that the dispute must relate to a ‘specific amount’ claimed by the municipality. Quite obviously, its objective must be to prevent a ratepayer from delaying payment of an account by raising a dispute in general terms. The ratepayer is required to furnish facts that would adequately enable the municipality to ascertain or identify the disputed item or items, and the basis for the ratepayer’s objection thereto. If an item is properly identified and a dispute properly raised, debt collection and credit control measures could not be implemented in regard to that item because of the provisions of the subsection. But the measures could be implemented in regard to the balance in arrears; and they could be implemented in respect of the entire amount if an item is not properly identified and a dispute in relation thereto is not properly raised.”

The court then stated further in Paragraph 23 that “whether a dispute has been properly raised must be a factual enquiry requiring determination on a case-by-case basis.” Based on the above, it is clear, in our opinion, that if a ratepayer lodges a proper objection to a municipal valuation, which will include what the ratepayer believes is the correct valuation, then there will be a dispute between the ratepayer and the municipality regarding the disputed amount, and the municipality may not terminate or restrict the provision of services in order to enforce payment of such amount. The same will apply in the case of an appeal.

It is interesting to note that in its Credit Control and Debt Collection Bylaws of 2004, the city purports to bestow on itself the right to terminate or restrict the provision of services in these circumstances. It adopts the contents of Section 102(1) of the Systems Act virtually verbatim (see Section 8(2) of its bylaw), but conveniently omits any reference to Section 102(2). It then grants itself the “power to terminate or restrict provision of municipal services” in Section 15 of its bylaws It is interesting to note that in its Credit Control and Debt Collection Bylaws of 2004, the city purports to bestow on itself the right to terminate or restrict the provision of services in these circumstances. It adopts the contents of Section 102(1) of the Systems Act virtually verbatim

(see Section 8(2) of its bylaw), but conveniently omits any reference to Section 102(2). It then grants itself the “power to terminate or restrict provision of municipal services” in Section 15 of its bylaws. Clearly a municipality is not entitled to change the laws that govern it, and the offending provisions of its bylaw are “ultra vires” and of no force and effect.

Is interest payable on any shortfall payable by the ratepayer on finalisation the objection or appeal? The city sets out its answer to this question in its FAQ referred to previously, and states that interest must be added at the prescribed rate. The city misquotes the relevant provision of the MPRA, namely Section 55(2). That section, in fact, provides in 55(2)(b)(i) that where there is a shortfall payable by the ratepayer, the municipality “must” recover the shortfall from the ratepayer “without adding interest” thereon. It is only when the municipality is required to refund surplus rates paid by the ratepayer that interest “must” be added. In response to these issues raised by SAPOA through DKA Attorneys, the Mayor issued a statement on 16 April stating that he has taken steps to ensure property owners who have objected to their property valuations in the 2018 General Valuation Roll (GV 2018) will receive further support from the city. This support will take the form of ensuring that those who have objected to their property valuations will continue paying what they have been paying historically until the objection process is finalised. SAPOA would like to see that the city implements GV 2018 as per the MPRA as announced by the Mayor, and that the objections are finalised in the shortest period of time. There should also be no threats to disconnect services, and no backdating of interest charges on finalisation of the objections. We acknowledge, with thanks, the above contribution by Francis Clerke of DKA Attorneys. SOUTH AFRICAN PROPERTY REVIEW

one-on-one: project management

When projects are king When it comes to project management, the property industry looks for expertise, experience and on-the-ground knowledge. Property Review talks to Tim White, Chief Executive Officer of Profica, to find out what gives his company the edge By Mark Pettipher

Tim White, CEO of Profica

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rofica originated from an idea that Johannesburg-born Tim White conceptualised with a friend while working in London. Using their exposure to professional project management experiences in the United Kingdom, they closely examined what was available to the South African property industry. On their return to South Africa, White and his friend joined forces with two other partners, forming Profica in early 2005. Today, only White remains of the original co-founders. Since its formative days, Profica has grown into one of Africa’s leading construction and property-solutions companies, largely as a result of the strength and commitment to the company’s core beliefs of openness and integrity, of always striving for customer satisfaction, of excellence, of consistent dedication to encouraging foresight when taking on new projects, of working together as a closely knit a team, and of sharing the knowledge gained from each experience to enhance the team’s skills. “We like to think that we are the glue that holds the project teams together, and that we can ‘see around corners’,” says White. “We use our processes, the lessons learnt, knowledge sharing and mentoring to arm our guys with the knowledge and ability to look ahead and see what’s coming before it happens. We’re about being proactive, not reactive. As each project runs smoothly and efficiently, this is appreciated by our clients. Because we have sound plans in place, we’re able to mitigate against any risks that could cause issues.

“With nine offices in Africa, it is critical that we keep on top of all our projects. We have stringent processes that align all our offices in terms of what we call our ‘service realisation’, which is an ISO9001-certified quality management system. We also have a bespoke, Web-based document control and project management system implemented throughout our projects. This provides real-time feedback and allows us to quickly review the ‘health’ of each project even when we are not on site or in a particular country.” In keeping track of its projects, Profica combines true innovation with tried-and-tested, internationally certified processes to deliver bespoke solutions, including complete property development and construction solutions, construction management, design and build solutions, as well as turnkey fit-out solutions. Further to these, Profica also offers programme/ portfolio management as well as tenant coordination. At its core is the delivery of projects, from start to finish. White believes that the company’s greatest asset is its award-winning team. Each project manager has a great attitude; but above all else, each of them has a willingness and ability to be adaptable, with excellent people skills to manage diverse teams. “We straddle the property and construction industries, with clients in the property sector and project teams in the construction industry,” he says. “The company needs to manage those interfaces and the different individuals involved therein – flamboyant architects, conservative engineers, concerned

one-on-one: project management quantity surveyors and contractors – and lead the team to get us over the line together. As project managers, we all need to be front-facing. There’s no behind-the-scenes work such as design or measuring; it’s all about managing people, being in the front and leading teams. So our team needs experience.” Profica offers more than just project managers: it offers great African insight, and it understands the diverse African market, having experience in more than 30 countries on the continent. It has delivered projects in English-, French- and Portuguese-speaking countries. In so doing, Profica has grown to become about more than just project management, offering development facilitation, development origination and support, as well as design and build solutions throughout a project’s life cycle. While each project has its own complexities, the project team’s makeup depends on the specific project’s demands as well as its clients, region and services offered. “One of our major strengths is that we capture our knowledge from lessons learnt, which get presented to all and which are available on our database,” explains White. “There are also monthly knowledge-sharing sessions with themes that are relevant at that point in time in the industry.” Given that project management is constantly evolving, Profica has had to diversify and become an entity that provides the full gamut of property and construction solutions as its core. “The biggest challenges have been in relation to the people – in growing Profica’s professional team, which has evolved with us,” says White. “We have had a number of people that have made the eight-to-10-year mark, which is great; but while they’ve stayed, we’ve grown and built a bigger business without losing the hands-on entrepreneurial DNA that we started with. A continuing challenge is to combine the essence and attitude of a start-up with conceptualising opportunities on the continent and delivering process-driven services.”

Headquartered in South Africa, Profica constantly demonstrates its strong service capabilities through permanent teams across Africa. It has registered offices in south, east and west Africa, comfortably servicing more than 30 countries. Profica also delivers projects in the Middle East and eastern Europe. In South Africa, Profica has established offices and teams in Jo’burg, Durban and Cape Town.

“I was involved with the new Old Mutual headquarters in Sandton since 2010. It’s been a long road, and a challenging project with many facets, phases and a multitude of bids that we did for the site over the years. A lot of hard work with a great team was needed to get it to where it is” When asked what advice he’d give to anyone contemplating venturing outside of South Africa’s comfort zone, White says, “The best advice is not to be arrogant in your thinking about the rest of the continent but rather to embrace the local culture and try to understand how things work in the different regions. We have brought back many lessons from west and east Africa and applied them in South Africa. Take the time to listen, and be a facilitator of greatness and a team leader, not a ‘thump the table’ type of person all the time. “Obviously, each country has its own challenges, but I would say that Angola was the most difficult to operate in, mostly because of the language constraints, payments and getting the materials in.”

Of the many projects that Profica has been involved in, covering all aspects of the property industry (including offices, residential complexes, retail developments, the hospitality industry, mixed-use projects, healthcare facilities, public and institutional infrastructure projects as well as industrial and logistical sector parks and facilities), White is especially proud of the new Old Mutual headquarters in Sandton. “I was involved with the project since 2010. It’s been a long road, and a challenging project with many facets, phases and a multitude of bids that we did for the site over the years. A lot of hard work with a great team was needed to get it to where it is.” Winning awards such as the SAPOA Excellence Award for Office Interiors and the SAPOA Overall Green Award for the Google building in 2016 is testament to Profica’s commitment to excellence. Of the accolades closest to White’s heart is the winning for the first time in 2011 of the best Project Manager rating by the PMR (and again in 2013). “We had had a tough year that year, and it was unexpected,” says White. Since then, Profica has gone on to be rated the best Project Managers in 2016 and 2018 by the industry. In an industry in which there is a push for social upliftment, Profica puts great “store” in using local labour, as well as in skills development and community involvement. “We have it built into our on-boarding process and our continuous improvement – not just for BEE reasons but for business growth,” says White. “We have also in the past provided our skills to building a crèche at Cosmo City and other such projects, and we’ve done our best to support industry organisations with training for graduates and bursaries.” Apart from ensuring that the client – and project – is king, White believes in Richard Branson’s 2014 adage of, “Train people well enough so they can leave; treat them well enough so they don’t want to. Train people. If you look after your staff, they’ll look after your customers. It’s that simple.” SOUTH AFRICAN PROPERTY REVIEW

technology in property

Virtual reality:

visually moving through property Science fiction comes to life almost every day. Armed with nothing more than a computer and a Vibe VR headset, Steve Pinto and Niekie van Niekerk set off on an incredible journey to create a NewReality – virtual reality home-grown in Johannesburg By Mark Pettipher

ntrepreneur Steve Pinto, Director at NewReality, got very excited six years ago. While travelling in Europe, he walked into a Lego store in Berlin and was amazed to see an augmented reality (AR) programme showing kids what the results could be of building with those famous blocks. Pinto returned to South Africa and developed an AR studio. “But six years ago, we were too early for the South African market,” he says. “Then, about 18 months ago, I met with Nicky van Niekerk and decided to specialise in bespoke virtual reality (VR) solutions.” “Eighteen months ago, VR was only really available in China and the US. A friend of mine was coming to visit from China, so I asked him to bring a Vibe headset with him. We tested it and were sold on the idea of VR. “With the entrepreneurial spirit of a start-up, we contacted everyone we knew who could open the door to VR. Our mission was to identify and explain the potential of VR to as many potential customers as possible. We could see the possibilities and the future.

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“Our job is to take the customer out of the present reality to one that is better – to envelop the user in a believable scenario. We understand that if we can control the five senses, we can transport you to another world. “VR can teleport you to wherever you want to be. There are no limits – and your experience can be so much more.” Now, 18 months down the line, NewReality has carried out work for VW South Africa, a mining company and three pharmaceutical companies. Taking VW as an example, NewReality has created a virtual showroom for the brand, in which potential customers are taken on a micro-experience. They can sit in the cars, and change the interior, colours and feel of the vehicles; they can even “drive” the car without leaving the premises. In this case, VR can capture the customers’ imagination, while at the same time allowing the sales personnel a sales opportunity – because customer preferences are captured as they travel the VR journey.

“Our modus operandi is to build solutions that are the most technically challenging,” says Pinto. “We believe that we are true out-of-the box thinkers, and we work extremely hard to build projects with our clients with the view that it’s an end-to-end strategy. We study the project and gain a full understanding of the ‘business case’, of how the user will experience the ‘journey’, and we look for the easiest way that the customer will interface with the project. “Our job is to develop the ‘true illusion’. VR can give us that. What is more, you can transport a VR station in a bag to any environment – be it an exhibition, a mall space or an office – which allows for a maximum return on investment.” Headsets deal with pretty much everything – your visual and hearing preceptors – while the controllers (mostly hand-held) deal with touch. Analytics also comes into play. Every movement, every touch can be recorded and monitored. Once a customer becomes immersed in the product, you realise there is simply no distraction, which

technology in property makes VR an extremely powerful sales tool and creates huge advantages when it comes to training. Given the cost of development, the property industry can use VR to demonstrate how buildings will look, what the surroundings could be like and what the office environment will be. Taken a step further, VR can be used to enhance and develop company culture – a CEO’s voice can be added to communicate with a company’s employees, or to share the values and objectives of a new office build or a change in the working environment. Already we see VR being used to demonstrate walk-throughs in buildings, offering the potential for changes to colour schemes, texture of walls and types of furniture, as well as how they will look in a particular configuration and how the space can be used. Going forward, NewReality is looking to develop fully integrated training modules, which will offer a consistent message. “While demand is fairly limited in South Africa, we are aiming to build a worldwide company, with clients coming to South Africa for the production,” says Pinto. “We want to build on the local expertise when developing our team, with satellite offices in the Far East and Europe. “South Africa offers the right work ethic and some of the best untapped talent in the world. It’s also a very costeffective place in which to get things done – the film industry is a great example of this. “We are developing a pipeline of external work – global development built locally. We are raising funds to allow us to obtain and deliver the global approach that we need to keep the business sustainable. We believe that content is king – and we produce the best there is, so people will always want more.” To find out more, visit http://newreality.co.za/

Video links: https://youtu.be/7vDd7ohoLwQ https://youtu.be/njdJxWInm_U

Taking mapping to a new dimension Eton Price, Director of Koolcon Holdings and Wayne Jacobs, Director of Advance 3D, talk to Property Review about Advance 3D’s latest technology. Building mapping has never been so advanced. Advance 3D is a digital 3D scanning solution provider, using the latest in LiDAR indoor mapping technology to capture indoor spaces By Mark Pettipher

ton Price described the synergy between Koolcon and Advance 3D as “an added arrow in the quiver”, enhancing the holding group’s diversified turnkey contracting business. The group offers specialist corporate refurbishments, boasting Absa, Standard Bank and Vodacom amongst its corporate clients. Koolcon’s geographic footprint includes Kenya, Mozambique and Botswana. Locally, Koolcon has offices in Umhlanga, Port Elizabeth and Cape Town. “We integrated various deliverables required by our contracts into a single solution,” says Price of the company’s philosophy. “Where our competitors subcontract aspects of their work, we don’t. We value our core principles of honesty, integrity and passion; at the same time, we adhere to our foundation of safety, reliability and sensitivity towards our client base, always actively supporting transparency and accountability in all our undertakings and communication. “By taking everything in-house, we control the quality, the timing and the level of expectation – which means that our turnkey solutions incorporate electrical and mechanical engineering, ventilation, shop-fitting, and reusable glass and aluminium walling systems. We deliver time and again, mindful of timeliness and of our promise to develop unique solutions within budget. “Partnering with Advance 3D gives us an edge in a competitive industry. Wayne had already mapped 150 FNB branches when he presented his technology to us – technology that dovetails perfectly with our refurbishment offerings.”

“Through three-dimensional scanning, we are able to map a building space of any size,” says Jacobs. “Whether it’s commercial, industrial, retail, residential or leisure, we can accurately capture space size to within 2mm over a range of 0,6m to 330m.” “Often when a fit-out is required, our clients cannot find the original building plans. When alterations to a premises have previously been carried out, we find technical issues that can cause delays –both costly and inconvenient in live environment projects,” Price explains.

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technology in property “In the retail environment, this technology can be used to scan merchandise on shelves,” says Price. “They know how their products are stacked. By regularly scanning the aisles, they can see which products are moving, how point-of-sale material is positioned, and whether or not the correct products are positioned in the high-volume traffic areas. “This technology can be used as an aid in monitoring assets, helping to build up information of the current assets and keep a record of those assets. It can save time when surveying sites. The output is virtual and 100% accurate, allowing civil engineers, architects, town planners and interior designers greater efficiency in mapping and measurements. The possibilities are endless.” “With the 3D mapping technology, we can – in a fraction of the time – deliver 100%-accurate indoor mapping and floor plans, which means we do not have to rely on occupation certificates or the ‘as built’ building plans signed off by the various councils.” “We have the only indoor mobile scanning system currently available in Africa,” says Jacobs. “The technology is German. We are able to offer full-colour, panoramic images from which accurate measurements can be taken. This is done by scan-capturing a walk-through of the facility, office or building space. 360-degree reference points are captured of every square metre of a facility, creating a 3D point cloud. Every point is an X, Y, Z coordinate. “From the captured data, we are able to generate accurate floor plans, recreate full architectural 3D ‘as built’ Revit renderings and supply fully documented condition assessments, and we are able to measure between 20 000m2 and 50 000m2 of floor space a day. “The output is multifaceted and can be tailored to different customer needs with our NavVis smartphone app. Imagine going to a hospital, shopping centre, conference facility or even the airport, and wanting to find your way from your current location to point A – our app can 24

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give you that navigation function. It’s like Google Maps, but for the indoors. “This technology will enhance customer experiences. The data we generate is fully integrated in SAP, Archibus, Korasoft, CAD and AutoCAD. It can be integrated into any client’s software, allowing for a bespoke platform to be set up.”

To get an idea of the 3D capabilities, visit www.advance3D.co.za

Links to videos: https://youtu.be/RuPE-o-Vi9A https://youtu.be/ts-GSAK1hPw https://youtu.be/Pb9Hf0Y6gv8 https://youtu.be/oL5kjfLszks

Fast facts M3 Trolley

●● Capture Indoor environments with panoramic images and 3D point clouds ●● Indoor digitisation at scale – cut cost per m2 by factor of 100 ●● Scan the environment with integrated laser scanners in a range of 30 metres ●● Create inch-perfect 3D environments ●● Capture high-resolution panoramic images for a brilliant Vidal quality ●● Easy and intuitive to use – only minimal training required

Indoor Viewer

●● Explore and interact with the virtual environment – integrate interactive features ●● Browser-based viewer to access and explore your buildings in 3D on any device ●● Interact with points of interest and connect them to real-world objects ●● Powerful API to integrate IndoorViewer into your SAP, facility management tools, or any other existing infrastructure ●● Measure distances and volumes ●● Share your location and points of interest via mail or Facebook

NavVis app

●● Indoor navigation talked to the next level: metre-accurate, view-angle sensitive and without infrastructure ●● First indoor navigation app that does not require infrastructure ●● Metre-accurate thanks to patented computer vision-based algorithms ●● Highly scalable because of extremely low setup costs ●● Virtual reality interface for easy orientation ●● An ecosystem for third-party location-based services

SOUTH AFRICAN PROPERTY REVIEW

app technology

Putting tenant, landlord and broker in the fast lane Property Review discusses the latest developments in disruptive technology with Instant Property’s Director Wayne Berger and Chief Operating Officer Philip Berelowitz – property technology experts, and first in the field to produce mobile app technology for commercial property Interview Mark Pettipher Words Marguerite Lithgow

Wayne Berger, Director of Instant Property

“A

s a company, we’re technically very strong. Being a Fidelity Fund Certificate holder, we understand the property world, and we have the educational background to support,” says Instant Property Director Wayne Berger. “I have an international MBA, investment honours degree and an informatics undergrad, while our group has an international master’s in artificial intelligence, Ivy League master’s in computer-human interaction and multiple master’s in computer science.” Berger, who runs iShack Ventures (the proptech holding company), explains the company’s philosophy. “Our mantra is to make life easier for the various players in the property sector, accessing software engineering and our online marketing proficiency to enrich the industry,” he says. “Our constant engagement with property industry players since 2012 revealed that many have spent a fortune on developing software solutions for 26

SOUTH AFRICAN PROPERTY REVIEW

their real estate business, only to conclude years later that their solutions did not work, their assumptions were wrong or maintenance and innovation of their solutions were too difficult and too costly to manage. Many of them have licensed third-party software solutions that have proven to be more of a headache than a value-add. “From these pain points, we recognised the many inefficiencies in the sector, and we saw an opportunity for our software solutions to reduce sunk innovation costs and alleviate a large part of the admin work, making these companies more efficient and their staff more effective, and ultimately increasing their bottom line. “An example of our ground-breaking innovation in action was our partnership with the Capital Property Fund (later the Fortress Income Fund). It was the first REIT to license our commercial and industrial vacancy mobile app (later the Fortress Income Fund Vacancy app) and introduce our technology to the brokering industry, giving brokers instant access to their vacancies and the ability to use geo-location to search vacancies on the move.” Instant Property’s other clients include Abland, Growthpoint, Barnes International, JLL, High St Auction Co, TUHF and Trafalgar. “A solution for the leasing industry that we’ve built is the Instant Property leasing platform,” says Berger. “Our dynamic data team captures commercial, industrial and retail vacancy information from listed funds and private landlords, with no listing fees charged – only a request to landlords to keep their vacancy information accurate and up to date. We currently have more than nine-million

square metres of business vacancies around the country. Instantproperty.co.za is absolutely free for the tenant to use to browse vacancies and add properties to their viewing short list. Once they check out, we arrange a specialist broker to make contact with them and arrange site visits.” For the leasing broker, Instant Property’s vacancy leasing solution saves clients hours of admin and design work by giving them a branded vacancy brochure mailing solution that empowers them to service their business clients looking for space – within a few minutes (or even seconds) of receiving their client’s business space specifications.

“Another valuable solution is our ‘Deal Management Solution’,” says Berelowitz “Another valuable solution is our ‘Deal Management Solution’,” says Berelowitz. “It enables landlords and brokerages to digitise, organise and manage all business leads, making contact with their business through a multitude of channels and capturing the information in a big data framework. This solution includes an operations dashboard, empowering management with an overview of their business operations and the ability to export detailed customised reports on their business activities. This is especially useful for companies with large teams and a big property portfolio or real estate business that operates in multiple territories. All interactions are time- and date-stamped, and all documentation is uploaded and stored on the system,

app technology

facilitating a transparent audit trail on all engagements.” From a property-sales perspective, in February 2018 Instant Property launched its online auction and sales platform, available on web and mobile apps. The company is proud to expedite two value-adds to its sales industry. First, instead of the 10% commission usually paid by buyers at auctions, Instant Property charges only five percent, positively influencing the investor’s yield. Second, it facilitates transparency in buyer-broker and seller-broker transactions, enhancing the brokers’ effectiveness as well as the turnover of their brokerage business. Say Phil, a broker, has a property for sale and he’s been unable to sell it. He has shown it to his buyers but it doesn’t match their specs. He will be able to list it on Instant Property’s platform; Instant Property will market the property for sale to its broker and investor networks. If it closes the sale, the seller-broker will earn 30% of the broker’s commission and the buyer-broker will earn 30% of the broker’s commission – just for bringing the winning buyer to the platform. “We offer the landlords an auxiliary sweetener to list their properties for sale with us,” says Berger. “We forgo the usual marketing expense that all other auctioneers charge. This means we implement all the landlords’ marketing for them as long as they sign an exclusive mandate with Instant Property for the pre-auction and live auction period. “In relation to the facilities management and tenant communication components of property management,

we are thrilled with our ‘Smart Building’ technology. This mobile app solution was initially built to be a simple, direct communication tool between the tenant and the property manager, while putting important community contact numbers and a maintenance request reporting tool at the fingertips of the tenant. However, after feedback from our early adopter clients and the excitement about the possibilities around this technology, our feature base has grown considerably.” Today, Smart Building has numerous useful features for both landlords and tenants, such as facilities booking, asset registry, security company panic button integration, preventative maintenance scheduling, a big data maintenance management dashboard, maintenance

audit trails, building documentation storage and various alerts on expiring insurance certificates. “To keep abreast with the latest technology and trends, we closely follow the influence of Singularity University, a Silicon Valley institution that focuses on technologies such as robotics, 3D printing, biotech, nanotech, autonomous vehicles, augmented reality/virtual reality, the internet of things, artificial intelligence and blockchain. We offer consulting services to real estate companies on how these technologies will affect their business or how they can leverage these technologies to grow their business in the future. “Internally, we’re integrating two of the latest exponential technologies into our proptech solutions: artificial intelligence/ machine learning and blockchain. We are in the final phases of testing bots to help automate the property sales and leasing processes, collect FICA documentation, and service tenants with maintenance and information requests. “We have already incorporated blockchain technology into our Smart Building solution, and clients who have an additional need for security when it comes to storing their building documentation can access the encrypted blockchain-plus version of Smart Building and enjoy being at the cutting edge of the real estate technology.”

SOUTH AFRICAN PROPERTY REVIEW

security

Keeping your assets safe When it comes to securing commercial property, there are many avenues to take – but it’s about more than just having a guard at the door. Property Review talks to SAPOA member Stallion Security to get an overview By Mark Pettipher

itting around the table are Stallion Security’s Sales and Marketing Director Tiziana Hayward, Guarding Sales Manager Ancha Maritz and Technical Managing Director Kevin Monk. The company was established in 1991 and has grown organically to a workforce of about 7 500 employees, operating in South Africa, Botswana, Ghana and Namibia. There is a high level of expertise on offer. Stallion Security goes beyond just putting a man on the ground, offering guarding for domestic, hospitality, retail, mining, industrial and commercial services. These are backed with sound integrated technical solutions, which encompass access control, CCTV surveillance, remote site monitoring as well as bespoke project deployment. Specific fields of expertise lie with security offerings for business parks, office buildings, precincts and shopping centres. For special operations, crowd control, events security, investigations, armed response and VIP protection are also available. Investigation services also include corporate intelligence assessment, criminal and credit checks, truth verification and – if needs be – undercover agents. To add credibility, Stallion Security is accredited by the Private Security Industry Regulatory Authority (PSIRA) and the Safety and Security Education and Training Authority. Through its training academy, Stallion Security is also able to provide training to other forward-looking security organisations.

The Stallion Learning Centre boasts a dedicated group of professional education, training and development practitioners, who provide learning opportunities via facilitation and assessment programmes, and interface with operations in order to provide workplace learning and development.

“Our solutions usually work around a combination of human and technical interfaces. There is a trend of moving towards higher levels of technical security as a result of the advanced levels of intelligence on offer” “We take a two-phase approach when dealing with new customers,” says Monk. “First we need to identify the client’s requirements and examine any standard operating procedures that accompany the request. Then we assess the risk element. There are several types of risk to take into account, such as demographics and location. But we also take into consideration all the access points, whether the premises is close to major highways, whether it is in a built-up area, and the type of transport used to get to and from the facility.

“Our solutions usually work around a combination of human and technical interfaces. There is a trend of moving towards higher levels of technical security as a result of the advanced levels of intelligence on offer. “All members of our ground personnel have been equipped with the latest communication devices, which are linked to central monitoring control rooms. Take retail security as an example: most retailers require us to be nonconfrontational in our approach, and because of that we need to be seen to be passive.” “Being passive means that our ground personnel are trained to higher levels of engagement with technology,” says Hayward. “Technology, and in particular artificial intelligence (AI), doesn’t take out the human element – what it means is that once a situation is detected through AI, there needs to be human intervention and understanding of what is required.” “In the past, we were selling a large number of guarding solutions,” says Maritz. “That approach has changed: our clients are beginning to understand the importance of a combination of manpower and technology. Minimising manpower also minimises the risk of bribery and corruption – and, of course, the cost of manpower is relatively high, and grows year-on-year. We only employ South Africans, and are governed by the PSIRA remuneration rates as well as government-stipulated pay structures. SOUTH AFRICAN PROPERTY REVIEW

security This compliance is taken into account when we put proposals together.” “Putting a comprehensive proposal together can take as long as a week,” says Monk. “It involves understanding and utilising building plans as well as site visits – these are critical for us to be able to visually identify trouble areas, blind spots and hazards that may affect security, including health and safety. We need to know where we can deploy vehicles and where the best access points are for our personnel. All our vehicles have surveillance capabilities. “Taking into account our client’s standard operating procedures, we tailor our offering to include engagement with local law enforcement. Generally when a situation is detected, the first phase is to alert the controller, who will assess it. A response team will be sent, then – as a final resort – there will be engagement with the police. We always start from a non-aggressive place, and we are always mindful not to put our personnel’s lives at risk. “These days, surveillance equipment is highly sophisticated, and many of the systems can be integrated into marketing solutions. CCTV is thus no longer just a security tool – added functionality includes AI that can be converted into data, which can in turn be utilised by marketers.” In a retail environment such as a shopping mall, technology through CCTV can now offer information such as heat mapping – because where crowds gather, heat increases. This mapping can be examined to determine movement and the reasons behind it. Sophisticated information such as demographics can

SOUTH AFRICAN PROPERTY REVIEW

now be extrapolated; footfall and traffic through a mall can also be monitored and mapped. These devices can also be used to protect and monitor “hazardous” areas such as escalators, lifts and stairs. From a health-and-safety perspective, CCTVs have paid for themselves, offering proof in cases against claims of falls.

According to Monk, facilities managers should rather engage with companies that can deploy a full gamut of solutions. On new builds, it’s advisable to get security companies involved at projectplanning stage, generally through an electrical engineering consultancy, who will know where to route the cabling and wiring for surveillance equipment Shopping-centre car-park monitoring offers added security through numberplate recognition. Most tickets are embedded with the number plate, time of entry and when the customer pays for the parking, which also helps in cases of lost ticket claims. According to Monk, facilities managers should rather engage with companies that can deploy a full gamut of solutions.

On new builds, it’s advisable to get security companies involved at projectplanning stage, generally through an electrical engineering consultancy, who will know where to route the cabling and wiring for surveillance equipment. With the changing trends in how business parks, shopping centres and precincts are being designed, Monk predicts that more and more sophisticated equipment will be deployed, with greater reliance on AI becoming the norm. To keep up with the trends in equipment, Stallion Security engages on a weekly basis with its suppliers; these solid relationships enable the company to keep up with new developments in technology. Many developers and suppliers also hold quarterly update meetings. As a company, Stallion Security usually attends at least one international security tech exhibition in Europe or the US, bringing back current knowledge that is relevant to the South African market. There is a great deal of talk about smart cities, but the trend towards smart cities in South Africa is still embryonic. Much of the data surrounding buildings and precincts is held in property management silos. “Stallion Security is able to offer the latest equipment and monitoring services as well as maintenance through a rental process, either as a CAPEX or OPEX, making Stallion Security’s turnkey solution costeffective,” says Monk. “This allows our clients to be able to upgrade to the latest equipment at very low (or no extra) cost. We also offer a full backup solution, offsite monitoring and full duplication as a 24/7 control centre.”

smart cities

5G could ignite smart city development in South Africa Recent studies suggest that 70% of the world’s population will be living in cities by 2050. Experts have been working on a solution to effectively evade issues surrounding mass global urbanisation. A promising solution is a smart city municipality, which utilises a holistic approach to improve quality of life. This will be achieved by ensuring that government, business, community groups, universities and hospitals are seamlessly connected through cutting-edge technology. A smart city municipality would form part of an intricate ecosystem of other smart cities, ultimately providing a clean, sustainable environment for citizens By Irene Bailey

he term “smart city” is coming up more frequently in real estate and investment circles. Cities either claim to be or are aspiring to be smart. Although there is no set definition for what this entails, cities that come close to achieving this ideal usually exhibit a strong degree of technological integration, environmentally friendly policies and solutions, and an intelligent approach to town planning and the delivery of transport infrastructure. Global spending on smart cities is projected to reach US$34,35-billion by 2020. With South Africa’s population steadily increasing, and looming mass urbanisation, the rollout of 5G infrastructure – a key enabler for smart cities – can’t come soon enough. “So-called smart cities around the world represent a compelling investment opportunity,” says George Radford, Director of Africa at IP Global. “They are the places where people want to live,

SOUTH AFRICAN PROPERTY REVIEW

work and play, and the well-thought-out approach to their expansion means they will continue to flourish as they grow.” In South Africa, both Johannesburg and Cape Town aspire to become smart cities. At present, their focus is most keenly observed in the delivery of forward-thinking transport routes, and these are definitely delivering investment opportunities in new areas. The spike in development around the Gautrain station in Rosebank, Johannesburg and the additional station planned for Waterfall Estate are examples of how this kind of infrastructure can make a difference in the future of an area. The multiple transport routes in Woodstock, Cape Town (including a MyCiti bus route, a railway station and cycle lanes) have also contributed to the suburb’s thriving development, including various mixeduse structures, that allow residents to live, work and play right there.

Cities integrating technology into services Looking ahead, 5G infrastructure that supports futuristic applications such as augmented reality and driverless cars will be rolled out commercially as early as 2019 in South Africa. On the back of this advanced network, smart solutions will really begin to flourish locally. The integration of digital solutions with local services is a significant contributor to cities being smart. For instance, according to “Empowering Cities”, a report by The Economist, Singapore’s system of privately operated buses uses the Beeline app, a technology that allows residents to book seats on buses run by private operators in areas that are not served by public transportation. The app not only helps citizens to get around and allows them to suggest future bus routes, it also allows the Government Digital Services team at Singapore’s Infocomm Development

smart cities

Authority to predict demand to improve bus schedules and routes. Another city highlighted, Barcelona, uses Urban Lab Dynamic Traffic Forecasting to combine video and analytics and provide real-time data on parking availability. This information is transmitted through the city’s Wi-Fi infrastructure, providing information to end users and the local authorities. The Economist’s report also states that citizens say digital technology has transformed their lives in many ways, including telecoms (36%), transportation (31%), crime prevention (21%), and social services such as healthcare and education (21%).

New smart cities can alleviate population influx Some smart cities are built from the ground up, rather than being retrofitted for the purpose. “As we are seeing more and more people moving into cities, existing infrastructure is struggling to cope with the influx,” says Radford. “What some governments are doing is focusing on infrastructure growth in new areas, and giving people a reason to settle in these zones.” In China, the government announced it would establish a new administrative region called Xiongan New Area near Beijing. The area would be modern, green and smart, which would alleviate

some of the strain on services in the capital. The government has displayed its commitment to the development of the new area by relocating some of its functions and people out of Beijing, and supporting the development of green and hi-tech industries there. Radford points out that this type of focus means Xiongan New Area will be launched with an existing consumer market and economy, which means that other people, services and businesses will follow. “This is ‘smart’ in its simplest form – laying the groundwork now for the solution to problems in the future.”

Smart cities focus on sustainable power “Green” solutions also form a significant part of the definition of smart. “Around the world, city authorities are encouraging citizens to install sustainable power solutions, lessening their reliance on the local grid and, in some cases, even selling power back to the municipality,” says Radford. “In many cases, smart cities don’t just provide the services citizens want: they provide an incentive for citizens to solve problems for themselves, and use their solutions to support government.” These types of cities are showing the way to the future. Radford believes they represent excellent investment potential because they will enjoy sustainable growth in the decades to come while ensuring

their citizens’ quality of life is maintained, and economic participation is assured. Whether locally or internationally, as new infrastructure enables the development of cities of the future, investors should look out for the opportunities they present. “The smart future of South Africa is looking up,” says Radford. “Whether you’re investing in property around smart nodes here or looking to smart cities on the international landscape, you can’t go wrong with investing in these forwardthinking locations.”

The world’s smartest cities These are the smartest cities in the world, according to the IESE Cities in Motion Index 2017 (Blog.iese.edu/ cities-challenges-and-management/ 2017/05/25/164/): 1 New York 2 London 3 Paris 4 Boston 5 San Francisco 6 Washington, DC 7 Seoul 8 Tokyo 9 Berlin 10 Amsterdam

SOUTH AFRICAN PROPERTY REVIEW

opinion

Smart cities in Africa:

it’s not just about ICT

As mass urbanisation continues across Africa, putting in place the fundamental infrastructure needed to build smart cities has never been more important. Smart cities are emerging in Zambia, Ghana, Mauritius and Kenya. For all, the first hurdle is installing the information and communication technology (ICT) infrastructure, but the capabilities required to kick-start smart city services and efficiencies reach beyond ICT By Eckart Zollner, Group Business Development at Jasco

mart cities don’t just deliver cost savings and efficiencies: creating a sustainable enabling environment can impact economic potential and growth. In Africa, a dearth of infrastructure provides a greenfield opportunity to get it right first time. However, strategic planning will be key to success. ICT may be the core upon which smart cities are built, but getting buy-in from stakeholders to deliver smart services means building relationships, putting in place processes and integrating systems, and implementing the right controls, security and management systems. This requires an ICT partner with more than just technology skills. A broad knowledge and experience of industry sectors (from utilities to public sector service delivery, manufacturing value chains, industrial operations and corporate processes) will be essential to coordinate, synchronise and integrate systems and technologies as they converge within a single intelligent city hub.

UN studies and other research offer alarming predictions: by 2035, the

majority of Africa’s people (more than 50%) will be urbanised, more than doubling current urban populations in 34

SOUTH AFRICAN PROPERTY REVIEW

Eckart Zollner, Group Business Development, Jasco

some countries. By 2030, six of the world’s 41 megacities will be in Africa. By 2050, Africa’s slum population will have tripled. Governments will be highly pressured to keep pace with urban development.

Who drives smart city development? At present, smart city and smart community developments are being driven by developers and through public-private partnerships (PPPs). Governments recognise the need for smart city development and are building

it into development policies. However, they face a number of challenges: ●● They must upgrade existing legacy systems to function in a smart city environment. ●● Smart city infrastructure is costly to implement. ●● Service delivery and revenue collection systems must be developed. ●● Services need to be rolled out tactically and in a phased manner to secure a return on investment and ongoing revenue to ensure the expansion and sustainability of services. In terms of minimising cost, new greenfield developments remain optimal, with fibre being put into the ground alongside civil infrastructure (water, sewerage pipes, etc). This is also optimal in terms of determining the distribution of infrastructure for mobile and Wi-Fi providers. Cost can nonetheless stymie progress, which is where PPPs are useful. Developers are more commercially minded than governments and are able to target high-income customers, combining infrastructure development

opinion with security to secure revenue. This often results in exclusive gated communities. However, in PPP arrangements, developers are extending these benefits in a phased manner with support from government to other segments of the community.

Key elements of smart cities’ success The underlying ICT infrastructure is a key element of smart cities’ success. Open access networks will be essential in the long term. Instead of tight network control by individual infrastructure owners, or the complexity that results when many providers attempt to manage their own physical networks and service delivery, an open access network is open to any ISP or service provider. Centrally managed, open access networks facilitate ease of connection to the network, improved controls and high-quality services. A big plus? Open access networks maximise use of the network, maximising revenues and minimising expenditure. Fully managed data centres will be important. From the infrastructure layer upwards, smart city services are usually provided independently. These services include utilities, security, Internet of Things or machine-to-machine services, and analytics. In bigger and more developed countries, multiple data centres will facilitate interconnection between providers at local and international level. However, at every level (because everything is powered by technology and connectivity), data centre control must be provided. How these technologies are deployed and aligned to customer needs will determine their success. For example, utilities are already under pressure to deliver. With no smart meters rolled out, they are finding it difficult to manage demand, integrate and manage clean energy sources (such as PV and wind energy), and deliver services. As they move towards upgrading their

systems, utilities need to identify highusage clients and align their services to meet these customers’ needs first. This will assist them in delivering lean, optimal and efficient services, which can be integrated with other services as intelligent smart city capabilities expand. The ICT provider will play a broader role, implementing ICT infrastructure but also coordinating between service providers. By ensuring that services run on an integrated platform and providing suitable analytics or user apps (or access to these apps on hosted platforms), smart services become available. For example, by integrating electricity, water, sewage and waste collection on a single hosted platform, city dwellers can gain a smart view of service use and rates and taxes. Similarly, with traffic and security data (and possibly IoT and big data) on a single platform, users can identify congestion and optimise their travel schedule.

Implement, manage, orchestrate As infrastructure is rolled out, citizens connect and services go live, cities will become smarter. To put the fundamentals in place, smart governments and developers will choose partners with strong technical and technology expertise but also broader integration, orchestration, strategic and management capabilities.

Look for partners who: ●● Have broad industry experience, with an understanding of the operations and priorities of different sectors and stakeholders; ●● Can create strong collaborative relationships across and between sectors; ●● Can do strategic planning and service roll-outs based on customer needs and stakeholder readiness; ●● Can offer data centre, interconnect and international connectivity; ●● Can facilitate open-access models, providing network control, management and maintenance; ●● Offer smart city stakeholders integrated, shared and hosted platforms to flight their services; ●● Have the data and analytics capabilities to enable multiparty services; and ●● Can facilitate service provision and revenue collection.

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch

Municipal Money is our money, spent in our name As citizens, we should know how this money has been spent and also have a say in how money is spent in the future to better our lives. Why does Municipal Money exist? Municipal Money is an initiative of the National Treasury, which has collected extensive municipal financial data over several years and would like to share this information with the public. The aim is to make this data widely available in order to increase transparency, strengthen civic oversight and promote accountability.

What is Municipal Money? Municipal Money is a web-based tool designed to inform citizens on their local authority’s financial performance and allows comparisons between municipalities. The website is designed to present key municipal financial information to the general public audience, who do not necessarily have any financial background or knowledge. This is done by using a variety of visual elements and tools - including interactive maps, charts, graphs and short videos. We have also provided different levels of detail in explaining key financial concepts, so our audience can select the amount and level of information they want access to. This tool draws on the raw data from the Municipal Money API website – www.treasury.data.gov.za and is a clear

City of Cape Town Metro municipality in Western Cape

example of how that raw data can be utilised to enhance civic education and oversight.

Population

Why is Municipal Money important?

2 446.4

The South African system of local government is contingent on active citizens and organised civil society vigilantly exercising oversight and holding their municipalities accountable. Municipal Money aims to promote transparency and citizen engagement through the visualization and ‘demystification’ of information about municipal spending. In sharing one of its most strategic datasets through Municipal Money, National Treasury is demonstrating its commitment to improving transparency and to the cause of open data. While there is already a vast amount of municipal financial data available through various sources, the reliability and consistency of that data may be questionable. In addition, the time and effort required to learn where to look for different pieces of information, and how to interpret what is found, may be substantial, and potentially off-putting. Municipal Money empowers financial and non-financial audiences alike, by taking complex amounts of financial and nonfinancial data, extracting pertinent information, summarizing that information and presenting it in a user-friendly manner.”

3 740 031

square kilometres

1 528.8 people per square kilometre 021 400 1111 http://www.capetown.gov.za Civic Centre 12 Hertzog Boulevard Cape Town 8001 MAYOR/EXECUTIVE MAYOR Ms Patricia De Lille 021 400 1300 mayor.mayor@capetown.gov.za

Secretary Mrs Deirdre Borman 021 400 1322 deirdre.borman@capetown.gov.za

DEPUTY MAYOR/EXECUTIVE MAYOR Mr Ian D Neilson 021 400 1306 ian.neilson@capetown.gov.za

Secretary Ms Karen Haskell 021 400 2963 Karen.Haskell@capetown.gov.za

CHIEF FINANCIAL OFFICER Mr Kevin Jacoby 021 400 3265 kevin.jacoby@capetown.gov.za

Secretary Ms Tarryn Bell 021 400 5021 tarryn.bell@capetown.gov.za

MUNICIPAL MANAGER Mr Lungelo Mbandazayo (Acting) 021 400 2151 lungelo.mbandazayo@ capetown.gov.za

Secretary Ms Lucinda Carstens 021 400 5011 lucinda.carstens@capetown.gov.za

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch FINANCIAL PERFORMANCE Audit outcomes 2016 Unqualified - No findings

2015 Unqualified - No findings

2014 Unqualified - No findings

2013 Unqualified - No findings

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

SOURCE: Municipal Audit Reports

Unqualified Opinion

No Findings

Emphasis of Matter Items

Qualified Opinion

Adverse Opinion

Disclaimer of Opinion

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

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

Cash Balance July 2016 - June 2017

Not available

Cash balance at the end of the financial year. About 25 percent higher than similar municipalities nationally: R 3 088 912 098

good

Positive Balance

bad

Negative Balance

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

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

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

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

Cash Coverage July 2016 - June 2017 Not available

Months of operating expenses can be paid for with the cash available. About 80 percent of the coverage for similar municipalities nationally: 1.9 months

good average bad

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

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

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

Spending of Operating Budget July 2016 - June 2017 Not available

Difference between budgeted operating expenditure and what was actually spent. About 90 percent of the underspending or overspending for similar municipalities nationally: -5.6%

good

Up to 5%

average bad

Between 5% and 15% More than 15%

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

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

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

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

good

Up to 5%

average bad

Between 5% and 15% More than 15%

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

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

Spending on Repairs and Maintenance July 2016 - June 2017 Not available

Spending on Repairs and Maintenance as a percentage of Property, Plant and Equipment. More than double the spending for similar municipalities nationally: 3.885%

good

More than 8%

bad

Less than 8%

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

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch Fruitless and Wasteful Expenditure July 2014 - June 2015 0.0%

Unauthorised, Irregular, Fruitless and Wasteful Expenditure as a percentage of operating expenditure. Less than 10 percent of the expenditure for similar municipalities nationally: 5.16%

good bad

0% More than 0%

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

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

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

Current Ratio July 2017 - June 2018 Quarter 2 2.12

The value of a municipality’s short-term assets as a multiple of its short-term liabilities. About 1.4 times the ratio for similar municipalities nationally: 1.555

good average bad

More than 1.5 Between 1 and 1.5 Less than 1

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

Liquidity Ratio July 2017 - June 2018 Quarter 2 0.95

The municipality’s immediate ability to pay its current liabilities About 1.4 times the ratio for similar municipalities nationally: 0.69

good

More than 1

bad

Less than 1

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

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

SOUTH AFRICAN PROPERTY REVIEW

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

Current Debtors Collection Rate July 2017 - June 2018 Quarter 2 96.41%

The percentage of new revenue (generated within the financial year) that a municipality actually collects About the same as similar municipalities nationally: 95.845%

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

bad

95% or more Less than 95%

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

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

1. Money Generated Locally

2. Money from National Government

Not available

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

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

July 2016 - June 2017

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

Where money comes from

Source: Income & Expenditure Audited Actual and Original Budget 40

SOUTH AFRICAN PROPERTY REVIEW

MetroWatch SPENDING - How money is spent Staff Wages and Salaries July 2016 - June 2017

Not available

Staff salaries and wages as a percentage of operating expenditure.

within norms 25% to 40% outside norms less than 25% or more than 40%

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

Formula: = Wages & Salaries + Social Contributions / Actual Operating Expenditure = Income & Expenditure item codes 3000, 3100, Audited Actual / Income & Expenditure item code 4600, Audited Actual

Contractor Services July 2016 - June 2017

Not available

Costs of contractor services as a percentage of operating expenditure.

within norms up to 5%

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

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

What is Money Spent On?

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

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

howmuch.net

The Ultra-Wealthy by Country

Individuals Worth More Than US$500-million in 2017 It’s difﬁcult to visualise what US$500-million looks like in real life. Imagine giving away US$100 000 to charity every week for the next 50 years, and there would still be hundreds of millions left over. People with this kind of money are the captains of global capitalism. They can afford to live wherever they want, and undoubtedly own several properties around the world. We created a graph to better understand which countries are the most likely to be called home by holders of such unimaginable personal wealth By Raul/Howmuch.net

he data comes from Knight Frank, a real estate and property consulting company that publishes an annual Wealth Report, analysing the property, location and attitudes of the extremely wealthy. Knight Frank counted the number of individuals with more than US$500-million in personal wealth who live in each country. Each piece of our modified pie chart corresponds to the number of ultra-wealthy people with their primary residence in each county. We colour-coded every country by continent, creating an easy-to-understand snapshot of the distribution of the ultra-wealthy around the world. The US immediately stands out as the most popular, with 1 830 individuals worth more than US$500-million. That’s more than four times as many half-billionaires as the second-placed country, China (490). A quick note on methodology: we separated Hong Kong (320 people) from mainland China for counting purposes. Although Hong Kong has officially been part of China since 1997, the situation remains complicated. Even if we combine mainland China with Hong Kong (810 people combined), it still wouldn’t be even half of the US number. Germany takes third place in the rankings with 490 people, followed by Japan in fourth at 390. Special mention should be made of Switzerland: this small, landlocked country in the middle of Europe is home to 250 half-billionaires. We suspect the country’s notoriously private banking laws are the main reason so many of the 0,001% call it home. Our chart clearly demonstrates that the ultra-wealthy are concentrated on three continents: North America, Asia and Europe. What is it about these places that makes them so hospitable to multi-millionaires?

SOUTH AFRICAN PROPERTY REVIEW

There are a few possible explanations. Every country with 100 or more of these super-rich individuals is a democracy with the rule of law. The two exceptions are China (which just passed a law allowing its president to remain in power for life) and Russia (which recently held an election widely seen as a sham by outside observers). Natural resources also allow countries such as Saudi Arabia and the UAE to make the list, but the wealth isn’t shared among nearly as many people.

Let’s take a step back. Here’s a list of the top 10 countries ranked in order of the number of people with more than US$500-million in personal wealth: 1 US (North America): 1 830 people 2 China (mainland, Asia): 490 people 3 Germany (Europe): 430 people 4 Japan (Asia): 390 people 5 Hong Kong (China, Asia): 320 people 6 Canada (North America): 270 people 7 Switzerland (Europe): 250 people 8 France (Europe): 230 people 9 Russia (Europe/Asia): 220 people 10 UK (Europe): 220 people Studying the high end of the wealth spectrum reveals a lot about the global economy. People with that kind of money have the resources and financial freedom to live anywhere in the world, but they have often chosen to make their home in a few select countries. By this measure, the United States seems to remain far and away the best place to live for the ultra-wealthy.

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This graph shows where the ямБlthy-rich live in the world

SOUTH AFRICAN PROPERTY REVIEW

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Western Cape Seminar & Networking Session SAPOA Western Cape Regional Council, in partnership with the Urban Real Estate Research Unit, held the second instalment of the seminar networking sessions entitled “Is logistics the new retail sector?”

FROM LEFT David Stoll, Sean Godoy, Niall Boyle, Bram Goossens and Professor François Viruly

Sarah Tshirunga with Yusrah Abrahams

peakers included Professor François Viruly of the University of Cape Town, Niall Boyle from Nucleus Logistics and Bram Goossens from Equites Property Fund. The seminar was held on the University of Cape Town campus and was followed by a networking session, where students from the Faculty of Property Studies were given the opportunity to network with captains of industry.