South African Property Review November 2018 by SAPOA

South African Property Review

PROPERTY SOUTH AFRICAN

November 2018

REVIEW

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Green and the environment

EPCs

Displaying Energy Performance CertiďŹ cates

New members one-on-one Diphetlho Masemola and Neo Malefane

Sustainability initiatives

Old Mutual, Serra and Waterfall City

Green-minded entrepreneurs Sibulele Kweyama and Vere Shaba

November 2018

SOUTH AFRICAN PROPERTY REVIEW

from the CEO

SAPOA welcomes Jobs Summit framework aimed at stimulating economic growth and improving high unemployment rate At the Jobs Summit held in Johannesburg last month, President Ramaphosa assured delegates that the government is determined to implement plans and initiatives aimed at stimulating economic growth and lowering the high unemployment rate. According to Ramaphosa, the two-day gathering was the ﬁrst phase of an e tensi e process to impro e economic growth and protect e isting jobs

ome of these interventions include a commitment by large corporations and government to buy local products, a more aggressive approach to increasing exports, interventions in the agricultural value chain – especially fruit, grain and livestock – and support for small and medium enterprises. Ramaphosa also highlighted plans to reduce employment from 27% to six percent by 2030. SAPOA, on behalf of the commercial property industry, welcomes this commitment by the public sector to create an enabling environment where the many challenges facing the country can be addressed. We have been engaging with BUSA on an ongoing basis, in support of the YES initiative. In addition, SAPOA runs its own Bursary Fund. These opportunities will have a positive impact in years to come, for both the property industry and for the country. The framework agreement had a strong focus on SMME interventions, and this is very encouraging for SAPOA. We would like to appeal to the industry to take this as an opportunity to contribute towards employment. The property industry is contributing through skills development and bursary programmes, but capacitybuilding initiatives aimed at ensuring sustainability and growth for SMMEs are still a development area. Business, as part of the Social Partners of the Framework Agreement, agreed that everything possible must be done to avoid retrenchments. SAPOA also believes that the support of SMMEs will improve and stimulate the economic growth and, in turn, increase and secure job opportunities.

The property industry should aim to support industry-related SMMEs with not only capacity-building initiatives, but also through resources and tools that will improve efficiency in meeting the needs of their clientele. The industry can look at practical solutions as mentioned by the President that can be implemented immediately to deal with the slow economic growth and high unemployment rate. The Framework Agreement further outlines a clear opportunity for the property industry to support SMMEs and enable them to participate in the 635 000 housing projects across the country that the government is aiming develop by 2019. These projects will consist of mixeduse spaces (commercial, residential and retail), which will allow residents to work, participate in recreational activities and live in a single area. The significance of supporting SMMEs and ensuring their sustainability will potentially exceed the five percent targets

made by the Property Sector Codes towards skills development. SAPOA is urging member companies to play the role of the catalyst in leading the change and reducing unemployment from its all-time high. SMMEs have a role to play in growing the country’s economy, and it is up to the industry leaders to extend a hand and support their stability and growth, and in turn secure additional jobs. Although the highlight is on SMMEs, the property industry is not only limited to that – every possible initiative and all innovative ways of improving the unemployment conditions of our country are welcome. As an industry, we are not oblivious to the fact that a significant amount of red tape and legislation is not businessfriendly, impeding entrepreneurial and economic growth. This, coupled with rising taxes, a weak rand, continuous fuel-price increases, rampant corruption, a slowdown in economic growth and the cost of labour, all plays a negative role and contributes to unemployment. These factors all need to be addressed. Business stands as one of the Social Partners for change, and the property industry has a major role to play. SAPOA would like to urge each company to heed the call and engage its teams in coming up with innovative ways to stabilise and grow the economy. We also urge the government to think carefully when implementing policies and legislation that are business-unfriendly. Best regards, Neil Gopal, CEO SOUTH AFRICAN PROPERTY REVIEW

contents

November 2018

PROPERTY SOUTH AFRICAN

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

November 2018

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

11:31 AM

Green and the environment

EPCs

ON THE COVER Green is more than just a color, in the comercial property context it means sustainability, care for the environment and creating buildings that put people first.

Displaying Energy Performance Certiﬁcates

New members one-on-one

Diphetlho Masemola and Neo Malefane

Sustainability initiatives

Old Mutual, Serra and Waterfall City

Green-minded entrepreneurs Sibulele Kweyama and Vere Shaba

November 2018

1 4 7 12 14 18 20 24 26 29 30 32 33 34 36 38 42 48 50 52 60

From the CEO From the Editor’s desk Career day A decade in and still going strong: committed to making a difference through the SAPOA Bursary Fund Energy legislation How energy efficient is your building: Energy Performance Certificates Legal update Expropriation without compensation Legal one on one Fasken’s focused and personalised services V&A Waterfront Buildings and pedestrianisation at the heart of V&A thinking GBCSA annual convention The race was on… Greening initiative Green principles at the centre of business Green one on one Sophistique: shaping life through design Green one on one Green engineering and green buildings: one and the same Sustainability initiative Old Mutual shows the way to sustainability Off-grid Renewable energy brings power and jobs to Clanwilliam SAPOA Board one on one Sustainability: a WWET definition Member one on one Leano mandated to rendering solutions Doing business in South Africa World Bank takes a pragmatic view of Doing Business in South Africa MetroWatch Your right to know: Gauteng Metro, Tshwane in figures GDP – Gauteng The role and impact of the commercial property sector Howmuch.net Where does your medicine come from? Social Off the wall Hyperloop: the revolutionary technology that could change transport forever

FOR EDITORIAL ENQUIRIES, email mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684

Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Taylor Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Eugene Jonck, Fanie van Niekerk Sales Pieter Schoeman: pieter@mpdps.com Finance Susan du Toit Contributors Anmar Frangoul, Craig Miller, Derek Todd, www.doingbusiness.org/ southafrica, Lyse Comins, Marika Truter, Maud Nale, Moeketsi Moshata, Mumtaz Moola, Kate Pallett, Raul/howmuch.net, Tshepo Tshabalala, Wesley Grimm Photography Mariola Biela, Mark Pettipher, Val Adamson 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

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60 SOUTH AFRICAN PROPERTY REVIEW

from the Editor's desk

Year-end countdown I don’t know about you, dear readers, but for me this year seems to be ending before it’s begun. Yet here I am, speaking to you in our November edition and just December/January to come…

or me, the highlight of the past month has been my invitation to the 11th Green Building Convention in Cape Town. Whilst GBCSA CEO Dorah Modise praised her team in her concluding address, kudos cannot be taken away from her – her drive and her passion for this critical aspect of the built environment shine through clearly. I was fortunate to be in two of the breakaway sessions that she facilitated, and I found that her hands-on energy draws you in, leaving you wanting to make a difference. Of particular interest for me was James Law’s “Alternative solutions to the global housing problem” presentation, not least because of the Off the Wall article published in the February edition of Property Review, in which we gave you an alternative, “tongue in cheek” option for inner city accommodation. And now here was Law in Cape Town, telling the assembled convention delegates about his OPods and AlPods… A touch of déjà vu, perhaps? This month, we focus on green issues – in particular, on sustainability in the commercial property sector. To do this, we needed to get opinions from across the sector; but limited by the number of print pages we have available, we had to be strategically selective. Nonetheless, we caught up with one of SAPOA’s new board members, Werner Mulder, at the Green Building Convention, and he gave us his opinion of what sustainability means to SAPOA’s Sustainability Committee, of which he is the Chairman. In July, Minister of Energy Jeff Radebe gazetted the drive to have Energy Performance Certificates displayed on public and private buildings over a certain size. So we spoke to Lisa Reynolds of the Green Building Design Group, and Des Schnetler of the Thermal Insulation Products and Systems Association of Southern Africa, to get an understanding of what this means to us.

SOUTH AFRICAN PROPERTY REVIEW

There are many SAPOA member companies that are driving energy efficiencies and sustainability within their organisations. We highlight in particular Serra, which is almost off-grid; Old Mutual’s Mutual Park in Pinelands, Cape Town, which is totally off-grid as far as water usage is concerned; and Waterfall City, which is making a difference to the Gauteng electricity grid after having installed a significant array of photovoltaic cells at the Mall of Africa. Even in the small town of Clanwilliam, we find that Cedar Mill Mall has gone the photovoltaic route to supplement Eskom’s power supply. In his message, SAPOA CEO Neil Gopal talks about the government’s drive to get SMMEs off the ground, and of SAPOA’s support through the SAPOA Bursary Fund. The Property Review editorial team is proud to say that, in our own small way, we are also driving awareness of entrepreneurs and SMMEs by seeking them out and giving them coverage on our editorial pages. In this edition, thanks to SAPOA member Property Point, we interview two entrepreneurs – Sibulele Kweyama and Vere Shaba – who provide us with their unique perspective about the issues surrounding the sustainability of buildings when it comes to engineering and interior design.

Because SAPOA is a member-driven organisation, it is incredibly important to us that we celebrate new members when they join the association. In this respect, we speak to new members Diphetlho Masemola and Neo Malefane about their journey in the property industry, and we welcome them to the SAPOA network. Young, energetic members such as these two are the future of the organisation, and through them the advocacy that SAPOA brings to the table will continue to remain relevant, and to drive change in the industry. As we come ever closer to the end of the year, we also report back on several networking events that have taken place in the build-up to this edition. Networking is one of the many reasons why members join SAPOA, so we encourage you all to take advantage of the activities organised by the various regional secretariats. Looking to next month’s issue of Property Review, we will again be focusing on new members – and because the December-January edition is also a “Developer” edition, we will take a look at what the Mother City is up to, and speak to the Western Cape Developers' Forum, the CCID and Western Cape Committee member Steven Sutcliff, to get an overview on the city. We will also be talking to Tebogo Mogashoa about the gentrification of the Johannesburg CBD and his role as the Chairperson of some of South Africa’s leading property development funds. We’d love to talk to new members about their journey, in particular those young entrepreneurs and SMMEs who are just getting onto the first rungs of the property sector. Please contact me at mark@mpdps.com and we’ll set something up! Enjoy the read. Mark Pettipher, Editor and Publisher

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career day

A decade in and still going strong: committed to making a difference through the SAPOA Bursary Fund The SAPOA Bursary Fund has been in existence for ten years; and to date, over R15 million has been in ested towards property related ualiﬁcations with graduates successfully absorbed by the industry. In relation to the R5.8 trillion market; the industry still has a long way to go. The goal of promoting our dynamic industry through the provision of tertiary educational support to deserving students has not yet been reached. We cannot stress how critical the partnerships and valuable contributions from our member companies have been in assisting the Bursary Fund reach and achieve its mission. Compiled by Moeketsi Moshata Edited by Maud Nale

estimonies from current and former beneficiaries who have benefited from the Fund continue to ignite and drive the need to participate in the advancement of the property sector and the economy. Below are the thoughts of three of the students who have benefited from the educational support provided by the SAPOA Bursary Fund:

Menzi Gumede, a third-year student of the Real Estate Diploma at the Cape Peninsula University of Technology I’d like to extend my gratitude for the support I continue to receive from SAPOA. During the SAPOA Annual Convention in Durban this year, I got the opportunity to network with industry leaders, most notably executives from Spectrum Valuations and Asset Solutions based in Westville, Durban. After this fruitful engagement, I am pleased to say that I was offered employment as a Candidate Valuer, and started working on 1 October 2018. This amazing opportunity was all made possible by the SAPOA Bursary Fund. I am grateful for the financial assistance the Fund has provided, from paying for my tuition and books, to giving academic support by providing a mentor and allowing me to network with property professionals at industry events. What you are doing is adding a tangible value to our lives, and I hope that you will be able to assist other students in the future. Keep up the great work!

Orifha Masevhe, a student in BSc Property Studies at the University of the Witwatersrand In 2015, following a year of financial difficulties while completing my first-year tuition, my lecturer recommended that I apply for educational assistance through the SAPOA Bursary Fund. In January 2016, I received the call that changed my life: I was informed that my application with the Fund was successful. My experience with the Fund has been a fruitful one. We were offered mentors who support and help us in our personal and academic journey. In addition, we have access to tutors for various courses, and workshops that aim to build us academically, professionally and personally. During the mid-term break, we are given an opportunity to go to various property companies for vacation work. This provides practical experience to students in our chosen career paths, which, I believe, is a very critical component. I would like to express my sincere gratitude to the SAPOA Bursary Fund for affording me this opportunity to further my education and prepare for the working world. The ongoing support I have received is unsurpassed.

Nelisa Magwa, a third-year student in BSc Property Studies at the University of the Witwatersrand Thank you so much for giving me an opportunity to be a part of the bursary programme. This has not only allowed for my academic fees to be paid for, it has also given me exposure to the property industry. I now understand what real estate entails in a practical sense: I’m learning the detailed process of what led to some of these beautiful buildings we see and about the different people involved. The property industry remains stable regardless of market volatility. Any sound information about how real estate works is, therefore, a great asset and investment on its own. My experience with the SAPOA Bursary Fund has not only been informative but has also been a blessing. SAPOA is focused on improving the property industry – but it also prioritises decreasing the unemployment rate of South Africa, specifically by helping graduates who are struggling to secure work in the industry. I was fortunate to secure vacation work with Abland, where I had the privilege of learning all the aspects of the property industry. I am grateful for organisations such as SAPOA, who are willing to open the doors of opportunity for young people such as myself to learn and better themselves.

These stories are incredibly encouraging – and they should also encourage industry leaders, principals and investors to come on board and help us reach even bigger milestones. SOUTH AFRICAN PROPERTY REVIEW

career day

Exposing learners to property as a career choice The Property Sector Charter Council hosts its annual Career Week

Property professionals from public and private sector entities exposed learners to the property industry as part of the Property Sector Charter Council (PSCC) and Construction Sector Charter Council Career Week More than learners from arious high schools around Gauteng attended the annual event, now in its seventh year, with the aim of being introduced to career opportunities within the property industry By Maud Nale Photography Mariola Biela

Portia Tau-Sekati, CEO of the Property Sector Charter Council

rogramme director Portia Tau-Sekati, who is the Chief Executive Officer of the Property Sector Charter Council, encouraged the learners to use the career day as an opportunity to learn from the various resources at their disposal, and to map out a bright future for themselves. “The purpose of this annual event is to show learners that there are many exciting opportunities within the property sector, and that they can access them if they are in possession of the information to assist in decision-making,” she said. 8

SOUTH AFRICAN PROPERTY REVIEW

Various property professionals, companies and industry bodies (including SAPOA) as well as several government representatives addressed the high-school learners about the various career options available in real estate. Moeketsi Moshata, SAPOA’s Bursary & Career Specialist, highlighted the SAPOA Bursary Fund as a study opportunity to qualifying learners. “As a member-driven organisation, we are very passionate about the SAPOA Bursary Fund, which is funded by our member companies,” she said. “To date, the Fund has assisted a considerable number of students in pursuing various career opportunities in the built environment. Although there are very strict qualifying criteria when it comes to being considered for a bursary, I encourage all of you to make use of this once-in-a-lifetime opportunity.” This year, PSCC partnered with Abland and the Abcon Group Foundation. “For us as an organisation, the advancement of transformation in the industry is a key driver,” said Londiwe Mthembu, Managing Director of the Abcon Group Foundation, about their involvement. “As an entity, the Abcon Group Foundation recognises the importance of marketing the property industry to youth, especially those from remote areas and disadvantaged communities. Opportunities within the property development value chain do

exist – and we are here to help the youth access these.” The property organisations and associations that participated on day one of the Gauteng leg of Career Week included the Department of Public Works, the University of Johannesburg, the University of the Witwatersrand, the Estate Agency Affairs Board, SAPOA, the Department of Human Settlements, the South African Facilities Management Association, the Services SETA and the Women’s Property Network.

Londiwe Mthembu, Managing Director of the Abcon Group Foundation

career day

More than 250 students across various schools in Gauteng attended the three-day Career Week

Quinneth Molapisi of the Department of Public Works

Moeketsi Moshata, SAPOA Bursary & Career Specialist

Dumisani Ndumo of the University of Johannesburg

Margie Campbell of the Estate Agency Affairs Board

Kim Veltman of the South African Facilities Management Association

SOUTH AFRICAN PROPERTY REVIEW

career day

e eﬁne Pro erties Facilities Management Course Real estate in estment trust Redeﬁne Properties held an in-house Facilities Management Course at its headquarters in Rosebank, Johannesburg

he intensive five-day course, which was facilitated by UK professor Brian Atkins, from the University of Witwatersrand (Wits), aimed to enable employees already in the facilities management space to develop an understanding of the theory of facilities management, as well as the principles and practice of facilities management, by showing how it should be performed to support the core business functions of client organisations (primarily business owners).

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EVERY YEAR, WE ACCEPT a large number of listings and

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● 40 categories, full- and part-category page sponsorship ● Highlighted data entries ● Data entries with logos ● Affordable small advertisements (half- and quarter-page) ● Boxed columns and part-columns

advertisements from SAPOA professionals and service providers across the entire spectrum of property activities. Don’t miss out on this well-used, popular industry resource. SAPOA aims to provide added value by offering the basic listings free of charge to all members. In this respect, we hope we are assisting you in your marketing endeavours to some extent. We thank you for your support in previous years. In an effort to improve the look and ease of usage, we have redesigned the directory layout to a four-column grid and have made available certain entries that will stand out from the norm.

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Booking deadline: 16 January 2019 Material deadlines: • Logo entries 23 January 2019 • Column entries 23 January 2019 is a a erts an ar

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energy legislation

How energy-efficient is your building: Energy Performance Certificates One of the programmes identified to unlock et ero carbon cities is the impending implementation of the mandatory Energy Performance Certificates EPCs in go ernment and commercial facilities to align with new national energy efficiency strategy of achie ing energy sa ings in public and commercial buildings by Property Review talks to isa Reynolds of the Green uilding esign Group Green G and es Schnetler of the Thermal nsulation Products and Systems ssociation of Southern frica T PS S to get a better understanding of what this means By Mark Pettipher inister of Energy Jeff Radebe gazetted for public comment draft regulations for the mandatory display and submission of energy performance certificates for buildings. The draft regulations were published in the Government Gazette under section 19(1)(b) of the National Energy Act in July 2018. Energy Performance Certificates are used extensively around the world to enhance energy efficiency of buildings – and are slowly being introduced in South Africa. It is anticipated that the EPCs for the relevant public and private sector buildings will align with the South African National Standard (SANS 1544) requirements. Public buildings are those that are owned, operated or occupied by the Department of Public Works. Green BDG’s Lisa Reynolds interprets the document: “Simply put, private sector buildings with a total net floor area of more than 2 000m2 and public sector buildings with a net floor area of more than 1 000m2 will be mandated by this new legislation to display and comply with the EPC regulations.” An EPC will be displayed in a prominent place clearly visible to the public on these buildings. “The owners of the buildings will have two years to implement measures to obtain the certification, which will have a five-year shelf life from date of issue,” Reynolds explains. “The owner of the building will be required to submit a certified copy of the EPC to the South African National Energy Development Institute (SANEDI), who will maintain a National Building Energy Performance Register.”

SOUTH AFRICAN PROPERTY REVIEW

Format of the Energy Performance Certificate A Government Building Light House 23 Energy Street Anytown 12345

Certificate Number 123-456

This certificate is issued in terms of SANS 1544 2019 Standard for Energy Performance Certificates for Buildings, and indicates how much energy is being used to operate this building. The energy performance of the building is based on measured energy consumption, and compared to the maximum energy consumption provided for in SANS 10400 XA 20XX

Energy Performance Certificate

Very energy efficient

Energy Performance 280kWh/m2/a

Energy Excluded 34kWh/m2/a

B C D E

Energy Performance

F G

Total Performance

Not energy efficient

Building Information Owner: Property Portfolio (Pty) Ltd Occupancy Class/es: G1-Office Number of Floors: 12 Nett Floor Area: 2 730m2 Year of Construction: 1955

Administration Information Accredited Body: Energy Auditors Inc Accreditation No: SANS 98765 Assessor Name: A N Assessor Date of Issue: 1 July 2013 Valid Until: 31 June 2018

“An EPC itself will not save energy,” says TIPSASA’s Des Schnetler. “What it will do is assist in mandating better and more sustainable energy-saving methods and designs.”

“As it stands right now, there is not enough knowledge of the amount of energy that is being used by buildings, and this compliance will go a long way towards giving a sense of where building

energy legislation stock is, where its energy usage stands, and where it should be,” says Reynolds. “We anticipate that, with this knowledge, a minimum Energy Rating for Public Buildings will be made mandatory in the future. These buildings will then have to be retrofitted to achieve this minimum.” “Since the publication of the Energy Efficiency Regulations in November 2011, it has become mandatory to install thermal insulation in all new buildings and extensions, obviously to save on operational energy,” Schnetler points out. “To make South Africa’s buildings more sustainable and to decrease energy usage, National Building Regulations had a new part added to it and to SANS 10400. SANS 10400-X deals with environmental sustainability in buildings and SANS 10400-XA deals with energy usage in particular.” SANS 10400-XB will refer to water efficiency in buildings. This is in process.

What SANS 10400-XA Says As with all national standards, SANS 10400-XA has a number of definitions. A few of the important ones that relate to this particular part of the standard are: ● Building envelope: Elements of a building that separate a habitable room from the exterior of a building or a garage or storage area. ● Competent person: A person who is qualified by virtue of his or her education, training, experience and contextual knowledge to make a determination regarding the performance of a building or part thereof in relation to a functional regulation, or to undertake such duties as may be assigned to him or her in terms of the National Building Regulations. ● Fenestration: Any glazed opening in a building envelope, including windows, doors and skylights. ● Fenestration area: Area that includes glazing and framing elements that are fixed or movable, and opaque, translucent or transparent.

Requirements of SANS 10400-XA The requirements of this new national standard cover:

● ● ● ●

Hot water supply; Energy usage and building envelope; Design assumptions; and Building envelope requirements.

There is a table of values for maximum allowable energy consumption in SANS 10400-XA for different building types. These values form the mid-point for the EPCs. The introduction of the mandatory display of Energy Performance Certificates for buildings in the near future could affect the value of the property based on energy performance. A question arises as to who is going to inspect the buildings and ensure compliance. Certified energy auditors who are employed by the South African National Accreditation System (SANAS) accredited companies must be appointed. “It’s important to note that the auditors must be independent from building owners, facility managers or building managers,” says Reynolds, who serves on the SANAS specialist technical committees for accredited energy auditors and measurement and verification professionals. “Those managers need to gather the information based on realtime energy usage, found on their utilities bills, for input into the EPCs. That information needs to be verified by an energy auditor. “There is an energy-efficiency tax incentive (Tax 12L), which covers a potential tax rebate for energy-efficiency projects. So it is important to remember as a building owner that energy-efficient projects can claim tax incentives. Those incentives are audited by independent assessors prior to being submitted to SARS. It’s possible for both the EPC and the tax audit to be carried out by the same auditor, as long as they have the correct certification.” The cost of obtaining an Energy Performance Certificate is estimated to be between R10 000 and R20 000. The certificate will be valid for five years. SANAS’s main task is to create an impartial and transparent mechanism for organisations to independently demonstrate their competence, and facilitate the beneficial exchange of

goods, services and knowledge; and to provide a service that is recognised as equitable to best international practice, while reflecting the demographics of South Africa in all that it does. SANAS developed an accreditation programme for energy efficiency measurement and verification bodies that are tasked with verifying the savings of companies who wish to apply for tax incentives. The verification process is needed to ensure that companies are implementing the energy-savings initiatives as they claim to be doing. A similar exercise has been performed for the EPC Energy Auditor. As the South African accreditation body, SANAS has also been tasked with ensuring that energy efficiency measurement and verification and the EPC auditor agencies are competent in performing their measurement and verification tasks. “With the passing of the EPC regulations and legislation, we are seeing an opportunity to create jobs,” says Reynolds. “To become an accredited auditor in the energy-efficiency space, a person will need to have certain qualifications and training. The SANAS requirements can be found in the SANAS Accreditation Tool Kit (online at http://www.sanas.co.za/). You can also get specific training through independent organisations such as Green BDG.” SOUTH AFRICAN PROPERTY REVIEW

legal update

Expropriation without compensation President Cyril Ramaphosa has said the process of restoring land to previously disadvantaged South Africans will be conducted with great care. “We will accelerate our land redistribution programme not only to redress a grave historical injustice but also to bring more producers into the agricultural sector and to make more land available for cultivation,” he said during his State of the Nation Address By Mumtaz Moola

e said the government will pursue a comprehensive approach that makes effective use of all the mechanisms at its disposal, which will include the expropriation of land without compensation as guided by the resolutions of the 54th National Conference of the African National Congress (ANC). During April 2018, the Joint Constitutional Review Committee, set up to review Section 25 of the Constitution to make it possible for the State to expropriate land without compensation, called for written public submissions. The committee was instructed by the National Assembly and the National Council of Provinces to review Section 25 of the Constitution and other clauses where necessary, to make it possible for the state to expropriate land in the public interest without compensation, and to propose the necessary constitutional amendments. As part its constitutional obligation to facilitate public participation, the committee has invited written submissions from all stakeholders on the necessity of, and mechanisms for, expropriating land without compensation. In addition to the written submission, the public was urged to indicate its interest in making an oral presentation to the committee. The committee had until 30 August 2018 to report back to Parliament.

Expropriation without compensation vis-à-vis International Law Customary International Law does not countenance expropriation without compensation. In terms of Section 232 of the Constitution, Customary International Law forms part of South African law – unless it is inconsistent with the Constitution or an act of Parliament. 14

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The question is thus whether the Constitution or an act of Parliament can be adopted or amended to provide for expropriation without compensation, while still conforming to International Law. Expropriations are indeed lawful in International Law if for a public purpose and without discrimination against foreign nationals, and if compensation is paid promptly.

Expropriations are indeed lawful in International Law if for a public purpose and without discrimination against foreign nationals, and if compensation is paid promptly It must however be stressed that the subjects of International Law are sovereign states and international organisations with legal personality. Private individuals or companies benefit from the protection of International Law on two levels: (a) Through diplomatic protection of their state of nationality if the host state acted in breach of the minimum international standard applicable in the case of expropriation of property of a foreign national; and (b) Through international arbitration in terms of treaties, should the host state expropriate property without compensation and in breach of the treaty.

Quantum of Compensation under International Law (a) The traditional measure of compensation, which was accepted as Customary International Law until about 1974,

was adequate or effective compensation that was equated to full compensation or at least market value of the expropriated property. Full compensation means an amount that, insofar as money can do so, will restore the expropriatee to the same financial position in which he/ she was before the expropriation. This is still the measure insisted upon in International Law by certain countries such as the US, the UK and most of the European countries in BITs. This was also the state practice of the Republic of South Africa in a large number of BITs. (b) The basic principle underlying payment of full compensation is that of equality in the bearing of public burdens. It is on the basis that where one or more individuals has to bear a sacrifice in the form of the loss of property for the common good, their individual and excessive burden should be compensated by the community. That burden should not partially or wholly be imposed on expropriated land owners. The equality principle does not allow nominal compensation, nor (as a rule) does it justify less than market value. (c) However, various countries had deviated from the traditional full compensation concept and require in their constitutions just or fair compensation. Fair compensation is an amount that will redress the imbalance caused by the expropriation between the public interest and the interest of the expropriated land owner. Fair compensation can be equal to full compensation, but it may also be less.

legal update (d) The South African circumstances and imperative for land reform may give rise to an internationally acceptable formulation of measures of compensation in individual specified cases. In various international arbitrations, a wide margin of appreciation has been allowed for necessary social and economic reforms in applying International Law when quantifying compensation on expropriation. (e) The measure of compensation in Section 25(3) of the Constitution is a very flexible instrument, which may in some circumstances give rise to full compensation and – if just and equitable – to less than full compensation (and even very little or none in very exceptional cases). It is premised on a just and equitable balance of interests. Justice and equity may under very restricted circumstances have the result that very little or no compensation will be payable, for example where the expropriated property has been abandoned by the owner prior to expropriation. It is important to note that the expropriatee, even if no compensation is payable under these circumstances, is not the victim of a confiscation, because he is under Section 25(2) and (3) of the Constitution entitled to just and equitable compensation, which may then conceivably be none. In applying Section 25(3), the principle of equivalence, whereby the expropriatee should not bear the burden on behalf of the society at large, remains important and will be inherent in the concept of just and equitable compensation, even though it may be minimal. (f ) As background – and whether Section 25(3) is acceptable in terms of International Law – Article 16 Paragraph 1 of the Charter may not be ignored. It provides that it is the right and duty of all states, individually and collectively, to eliminate colonialism,

apartheid, racial discrimination and the economic and social consequences thereof as a prerequisite for development. This section of the Charter is not part of the International Law controversy. If evaluated against this background, Section 25(3) read with Section 25(4)(a) and Section 25(8) of the Constitution provides for legislation, such as an expropriation act, to be adopted or amended so as to provide for the application of Section 25(3) in order to eliminate the consequences of apartheid by taking into account all relevant circumstances, and to provide for a comprehensive formula that is acceptable in international terms as an exception to the traditional full compensation measure. (g) However, a statutory provision for blanket expropriation without compensation in respect of all expropriations is from an International Law perspective totally unacceptable.

An ambitious plan was announced by the Deputy Minister of Public Works Jeremy Cronin, who stated the intention to publish the redrafted bill by the end of the year – mainly to signal to the many different groups concerned about expropriation without compensation the exact process government will follow in expropriating land without compensation The government wants to withdraw the Expropriation Bill, which has been stuck in Parliament for years, and to reintroduce it with provisions that will guide the process to follow in expropriating land without compensation. An ambitious plan was announced by the Deputy Minister of Public Works deputy minister Jeremy Cronin, who stated the intention to publish the redrafted bill

by the end of the year – mainly to signal to the many different groups concerned about expropriation of land without compensation the exact process government will follow in expropriating land without compensation. The current bill‚ which was passed by Parliament in 2016‚ provides for the expropriation of land for a public purpose such as building a road or a dam‚ erecting a power line and for land reform‚ but it does not provide for expropriation without compensation – but rather with just and equitable compensation. It is mainly about the process the and sequence that should be followed to ensure an administratively just process. Former president Jacob Zuma had sent it back to Parliament on the grounds that the public participation had been inadequate. Cronin told MPs in the Portfolio Committee on Public Works that the government wanted to send a clear signal to both those who thought expropriation without compensation meant there would be white genocide and to those who were frustrated by the slow land reform process. Cronin said the government wanted to take everyone into its confidence with regards to what it was trying to do‚ following US President Donald Trump’s tweet‚ the campaign by AfriForum and the hostility from the institute of race relations, and to address “characters from the other side”. He stated that this can be done by embodying in the current bill certain additions that would indicate the conditions under which it will be just and equitable for there to be no compensation at all. Cronin said the additions to the redrafted bill would provide clarity in legislation as to the kind of boundaries of such a limitation. He said the Department of Public Works couldn’t move on this because the bill was now the property of Parliament, but that its withdrawal or rejection by Parliament would enable the department to bring about the new changes. The committee agreed to write to Speaker Baleka Mbete to withdraw the bill from Parliament. SOUTH AFRICAN PROPERTY REVIEW

legal update

National Treasury hopes to clarify anomalies relating to taxing REITs soon The taxation of real estate investment trusts (REITs) was discussed at the recent National Treasury Workshop on the 2018 draft Taxation Laws Amendment Bill, held on 4 September in Midrand. The correct tax treatment of certain anomalies, including the taxing of commercial lease deposits, was raised By Wesley Grimm, Associate and Craig Miller, Director at Webber Wentzel

ommercial lessors typically hold significant deposits from tenants, both in number and value. A view has emerged among certain officials at SARS that commercial tenant deposits comprise gross income where such amounts are not deposited into a separate bank account. It is trite law that a taxpayer may not be subject to tax on amounts received by them for the benefit of another. Though commercial lessors receive tenant deposits, such deposits are not received by them on their own behalf or for their own benefit.

In the case of Omnia Fertilizer Limited v CSARS 65 SATC 159, the court held that the accounting treatment of amounts by a taxpayer evidences the intention of the taxpayer. Factually, where commercial lessors treat tenant deposits as a liability for accounting purposes, they do not intend to receive such amounts on their own behalf and for their own benefit within the meaning of gross income. This is supported by the fact that lessees reflect deposits paid by them as assets in their financial statements In the case of Omnia Fertilizer Limited v CSARS 65 SATC 159, the court held that the accounting treatment of amounts by a taxpayer evidences the intention of the taxpayer. Factually, where commercial lessors treat tenant deposits as a liability for accounting purposes, they do not intend to receive such amounts on their own behalf and for their own benefit within the meaning of gross income. This is supported by the fact that lessees reflect deposits paid by them as assets in their financial statements. In essence, not every obtaining of physical control over money or money’s worth (i.e. an asset with a monetary value) constitutes a receipt for the purposes of the definition of gross income. Money obtained and banked by someone (as an agent or a trustee for another) does not receive that money as gross income. I.e. tenant deposits are not “received by” commercial lessors within the meaning of gross income. Rather, tenant deposits are provided by lessees to commercial 16

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lessors as security for the fulfilment by tenants of all their obligations. A tenant deposit, so received, does not belong to the commercial lessor; ownership remains vested in the lessee and must be refunded to the lessee in terms of the relevant lease agreement. In Pyott v CIR 1945 AD 128, the amounts received by the taxpayer were set aside as a provision for allowances on containers returnable to Pyott, but the deposit amounts were not deposited into a separate trust account and were utilised for the general purposes of the business. By contrast, tenant deposits received by commercial lessors are meticulously recorded and kept separate, often in call accounts. SARS’s purported reliance on the Pyott case is for this reason, and others, therefore factually incorrect. It is not disputed that where deposits are available to a taxpayer, to do with as they please, then such deposits would, and should, be included in that taxpayer’s gross income and may, consequently, be subject to income tax as the deposits are received by that taxpayer for their own benefit. In MP Finance Group CC (in liquidation) v CSARS 2007 SCA 71, the Court held that an amount will be “received by” a taxpayer for the purposes of the definition of gross income if it has intended to receive such amount for its own benefit (our emphasis). Upon receipt, commercial lessors have no intention to receive the tenant deposits for their own benefit for the ordinary purposes of their business. When the deposit,

In MP Finance Group CC (in liquidation) v CSARS 2007 SCA 71, the Court held that an amount will be “received by” a taxpayer for the purposes of the definition of gross income if it has intended to receive such amount for its own benefit (our emphasis). Upon receipt, commercial lessors have no intention to receive the tenant deposits for their own benefit for the ordinary purposes of their business. When the deposit, or a portion thereof, is applied by a commercial lessor, it would only constitute gross income in the commercial lessor’s hands at that point in time

legal update or a portion thereof, is applied by a commercial lessor, it would only constitute gross income in the commercial lessor’s hands at that point in time. In Special Board Decision No. 166 (Germiston Special Board), dated 18 March 2002, similarly to the decision in C v COT 46 SATC 57, individual lessors received rental deposits, which were reflected as current liabilities and refundable upon the expiry of the respective leases. The lessors in that case were entitled to deduct from the deposits to be refunded any amounts owing to them by the respective lessees at the end of the lease period. The board held that there was no contingency attached to the taxpayer’s obligation to refund the deposits. The mere fact that lessors may apply the right of set-off did not render the taxpayer’s obligation to repay the deposits conditional and, by extension, could not cause the deposits to be included in the lessor’s gross income. This feature alone, so it was held, was enough to distinguish the case from those like Pyott.

For SARS to seek to impute different legal consequences to commercial lease agreements, other than what was expressly agreed between the parties, undermines the sacrosanct principle of legal certainty

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The inescapable conclusion is that commercial lessees intend to deposit money with commercial lessors in such a way that the deposits should be kept separate from the commercial lessors’ own funds. This is consistent with the view expressed by SARS on its website, on the page titled Tax on Rental Income, which we agree with and which is repeated below: “The receipt or accrual of a rental deposit by a lessor need not be included in the lessor’s gross income at the stage of receipt or accrual if there is an unconditional obligation on the lessor to refund the deposit at a later stage. It will only become gross income when the deposit is applied by the lessor…” For SARS to seek to impute different legal consequences to commercial lease agreements, other than what was expressly agreed between the parties, undermines the sacrosanct principle of legal certainty. Commercial lessors and lessees are agreed, in fact and in law, as to the treatment of the tenant deposits, and SARS may not unilaterally re-imagine the legal effect of the terms of the lease agreements (CSARS v Cape Consumers Proprietary Limited 61 SATC 91). Commercial tenant deposits are akin to a loan with a definite and unconditional liability to refund it to the relevant lessee. Consequently, such deposits should not be included in commercial lessors’ gross income because there is an absence of a beneficial receipt by commercial lessors, and such deposits are received on capital account. National Treasury stated that it hopes to clarify the taxation of REITs, including anomalies in relation to taxing commercial tenant deposits, in the 2019 legislative cycle.

E: handrews@rics.org

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2017/05/04 3:03 P

one on one

Fasken’s focused and personalised services nternational business law ﬁrm asken has acted on behalf of S PO in se eral instances ohan Coet ee a partner at asken and head of its real estate team speaks to Property Re iew about renewable energy projects and his role in the legal landscape of real estate Interview by Mark Pettipher

ohan Coetzee, a partner and Head of Real Estate at international business law firm Fasken, qualified as an attorney, conveyancer and notary almost 30 years ago. He spent the first part of his career working mostly as a commercial attorney, but in the past 15 years his work has evolved into the property sector. From Cliffe Dekker Hofmeyr to a smaller firm that dealt mainly with property clients, he migrated into competition law and was involved in large merger filings and approvals (such as the V&A Waterfront on behalf of Growthpoint, and the Fourways Mall for Accelerate) at the Competition Commission and Competition Tribunal. That’s when the challenge at Fasken came up. Coetzee has been with the firm for almost 18 months as head of a small but focused team – still doing some competition work, but now mostly involved in property and real estate. More than a decade ago, Canadian firm Fasken (previously Fasken Martineau DuMoulin) was one of the first international firms to start doing business in South Africa. It now boasts 10 offices worldwide: in Johannesburg, London and throughout Canada. In 2013, Fasken merged with Johannesburg’s Bell Dewar. The 33partner-strong firm is known for its work in mining, labour and business law. Its other focus is on renewable energy projects, with additional work in construction law and a corporate commercial department (of which competition law forms a part). Coetzee’s real estate team services the entire firm. “We have a good mix of clients,” says Coetzee. “Mining is one aspect of our portfolio. Then there is renewable energy

SOUTH AFRICAN PROPERTY REVIEW

Johan Coetzee, a partner at Fasken and head of its real estate team

and its real estate-related business, as well as the work usually associated with property funds and REITs, which includes property developments and conveyancing. We’ve also acted on behalf of SAPOA for its members as landowners in the ongoing Retail Market Inquiry. This matter originated from a complaint made by SAPOA to the Competition Commission against supermarkets with regards to exclusive lease provisions, which is one of the aspects being investigated by the Retail Market Inquiry. “We also acted for SAPOA in the case of Massmart against Shoprite and other supermarkets, in which SAPOA was the fourth respondent. The combination of property and competition law is interesting, and I’m fully enjoying my role at Fasken. “In the past couple of years, we’ve been involved in numerous renewable energy projects. During the last round

that closed at the end of July, we advised on the financing of 11 projects (almost half of all projects during this round). The value of these projects totals more than R29-billion and will result in 1,2GW of electricity from wind and solar suppliers. “Something like a wind turbine (which is usually erected on farmland) brings about various legal issues – issues of approvals and servitudes, environmental factors, and so on. Such projects are financed by registering a notarial lease – a long-term lease of more than 10 years – over that portion of land, with additional access rights over the farm. But that portion is also seen as a subdivision of land, and there are restrictions involved in terms of the Subdivision of Agricultural Land Act (Act No. 70 of 1970).” From a real estate perspective, a registered lease agreement or notarial lease has the same security value as immovable property, and is legally defined as such in the Deeds Registries Act (Act No. 47 of 1937). This means that a mortgage bond can be registered in relation to the notarial lease over the leased area. “But wind turbines can be more complex,” says Coetzee. “Often, you’re looking at more than one farm, and more than one farmer wanting to continue to use his or her land for farming purposes. It’s not as straightforward as building a cellphone tower on a farm, where a servitude would be sufficient. Renewable energy projects are capital-intensive and require a proper system to secure funding, which could include a general notarial bond that’s registered over movables

one on one (usually at the same time as the first mortgage bond over the registered notarial lease). “Once a project is completed, there’s a further security step: the registration of a special notarial bond. This has the same value as a mortgage bond over land, but a material requirement is that, as a notary executing the special notarial bond, one has to properly identify and describe the specific equipment as movables being secured (for example the wind turbine). If the lender wants to execute its security in terms of that bond, the specially secured equipment must be adequately and properly identifiable. Eskom is usually also a party in a project, because the electricity that’s generated will be supplied to them. This means, for example, that substations need to be built – and so a servitude will be necessary and power line servitudes will have to be registered. “A lot of land is needed for all this infrastructure, and sometimes that land

falls over different farms. There are instances in which the farms are on the border between two provinces – which means dealing with two different deeds offices. Registering one notarial lease can link five properties, because one has the turbine, one has the servitude, one has the substation…”

“A lot of land is needed for all this infrastructure, and sometimes that land falls over different farms. There are instances in which the farms are on the border between two provinces – which means dealing with two different deeds offices In a time where many businesses do their “mundane” work with the help of data processing and AI, Fasken’s services remain more focused – and more personalised. “Automation is essential when you’re working with huge volumes of information, such as

the transfer of, say, a thousand properties simultaneously,” says Coetzee. “We don’t do that at Fasken; our practice is more specialised. Confidentiality and privilege of information are important when it comes to documentation – but the processes are changing, and information is easily accessible. For example, we are using FileSite – an internationally recognised file and information management system that’s easily accessible to our professionals. This system effectively makes the old ‘paper file’ of an attorney almost redundant. “The public availability of real estate information has also changed dramatically over the years since I’ve been in practice. Our first port of call is usually WinDeed, an online research tool for individual, company and property information. A copy of a title deed can usually be obtained online, as can diagrams and plans from the Surveyor-General’s office. The access is there – and there are no excuses for delays.”

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. Sibongile Shikwambana is the Managing Director of Sandwind Coating which offers painting services in the newly built environment and renovations and maintenance services. “I decided to start my own business because I felt underutilised at my job at the time. I wanted financial freedom and I wanted to build a business that I could one day pass down to my kids’’ explains Sibongile. Sibongile and her partner managed to secure their first client quickly but securing more Sibongile Shikwambana, Managing Director of Sandwind Coatings

clients after that proved difficult as they did not have a long service history. However, even with the challenges, her confidence in herself continued to improve and this is what made all the difference. “The more confident I became in my new role, the better I became” she explains.

Sibongile joined the Property Point programme in 2014; the most exciting parts of this journey have been her trip to Israel and watching her company grow from nothing into a multimillion Rand business. ‘’We have been in business for six years now and a key lesson I would share is that it’s very important to build relationships with different people, not just the decision makers but also the low-level employees. Anyone can be a valuable ally when you least expect it.’’ Property Point is a Growthpoint Properties initiative which provides entrepreneurs with the skills and personal development support they need to develop their businesses into fully independent companies. For more information on Sandwind Coatings , info@sandwind.co.za

SOUTH AFRICAN PROPERTY REVIEW

V&A Waterfront

Buildings and pedestrianisation at the heart of V&A thinking Property Review talks to Mark Noble, V&A Waterfront’s Development Director, about the thinking behind the award-winning Silo District, Zeitz MOCAA and Radisson RED. At the SAPOA Property Development Awards 2018, Grain Silo and Zeitz MOCAA were joint winners in the Refurbishments and Overall Heritage Categories respectively. Radisson RED won the Other Developments, whilst Zeitz MOCAA were also announced as the Overall Award winners. By Phil Ruimte

s you walk around the Silo District, it’s difficult to imagine that the precinct is only just over seven years old. It started in 2011 with the construction of the 18 500m² Allan Gray head office building in No.1 Silo, which achieved the first 6-star Green Star rating in South Africa. It was the overall winner at SAPOA’s Innovative Excellence Awards in 2014, and was also the winner of the corporate office development category and the overall green award. The Silo District consists of No.1 Silo, a commercial building and the corporate head office for Allan Gray; the No.2 and No.3 Silo, with 31 and 79 residential units respectively; the No.4 Silo, which houses the province’s first state-of-the-art Virgin Classic Health Club; the No.5 Silo, which is a 14 500m2 commercial office building (and winner of SAPOA’s Best Commercial Building and

The Silo District focuses on creating spaces in which people can live, work, play, eat, sleep and stay

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Best Green Development) and home to PwC, Werksmans and Nedbank; and the No.6 Silo, home to the new 252-key Radisson RED Hotel. No.2 Silo, the precinct’s first residential development that was completed in 2013, received a 4-star rating and shares many green features with the adjacent Allan Gray head office. It also won the SAPOA award for Best Residential Development. Among No.1 Silo’s most notable green features is the building’s high-performance, fully glazed, double skin glass façade, which ensures optimal use of natural lighting, and an advanced cooling system that uses cold Atlantic seawater to cool the building. Heat from the IT server room provides under-floor heating in the reception area. In an effort to reduce water wastage, No.1 Silo was built with a greywater system designed to save potable water. Waste water from hand-wash basins and showers is collected and treated within the greywater system, and reused for flushing the toilets. “Development at the Silo District focused on creating spaces in which people can live, work, play, eat, sleep and stay,” says V&A Waterfront’s Development Director Mark Noble. “The new district has also set new sustainability benchmarks with its 6-Star As-Built rating by the Green Building Council South Africa for No.1 and No.5 Silos, and a 5-Star, custom hotel design rating for the No.6 Silo.” At 65 metres, the old Grain Silo, originally built in 1920, is the tallest building at the V&A. The V&A Waterfront’s R500-million refurbishment of this historic Grain Silo into a fit-for-purpose home for the Zeitz MOCAA is a work of art in itself. The refurbishment required converting more than 100 27-metretall concrete silo tubes, each with a diameter of up to five metres, into a functional space to house the not-for-profit museum. The museum is more than 9 500m2 in total, with more than 6 000m2 dedicated to exhibition gallery spaces to showcase the art. The remainder of the elevator building above the museum was used to create the Silo Hotel, a 29-key luxury boutique hotel.

V&A Waterfront Concrete and facebrick form an integral part of the architecture, giving the hotel a robust contemporary aesthetic and ensuring low maintenance at the same time. “The hotel brand was chosen for its youthful vibrancy,” says Noble. “It contains 252 ‘hard-working’ rooms. Each room is 24,5m2, and features a large picture window to allow for as much natural light as possible and the best possible views of the harbour and Table Mountain. The floors are pre-stressed concrete slabs that have been highly polished, further enhancing the hotel’s minimalistic contemporary industrial feel.” The hotel is described as “a new hotel philosophy that connects with an ageless Millennial mind-set through art, music and fashion”. This blends perfectly with the V&A’s aim of creating accessible and sustainable spaces for the local and international visitors as well as for Capetonians out with their families. “With sustainability and the environment in mind, the hotel is integrated with the district’s seawater cooling and heating system, and energy costs are augmented with photovoltaic panels,” says Noble. “The hotel also aims to be the first hotel in South Africa to grow its own vegetables on the roof.” A rooftop garden is planned for installation before the end of the year. The Zeitz MOCAA, with the Radisson RED Hotel beside it

The 80 000m2 Silo District encircles the Zeitz MOCAA to form a public plaza. Its aesthetic pedestrianised space invites visitors to meander along the working harbour, with its ships, cranes, gantries and other technology.

The Radisson RED Hotel The development of the No.6 Silo, which houses the Radisson RED Hotel, won SAPOA’s 2018 award for the Best “Other” Development. The surrounding industrial and warehouse setting of the Grain Silo (Zeitz MOCAA) and the working harbour have been incorporated in the design of the building.

Something for everyone The V&A Waterfront started life in the late 1980s with the maxim to make it “a very special place for Capetonians” – a series of public spaces and buildings that create a unique place for people to explore and enjoy. From the original development of the Victoria Wharf shopping centre and the developments in the Pierhead, to the new developments in the Silo and Canal districts, a focus on creating buildings for people – and at a human scale – has been at the very centre of all decisions. This, together with the long-term investment strategy of the shareholders, has allowed the V&A to create a series of neighbourhoods throughout the property, each one with its own identity and its own surprises. These neighbourhoods ensure that there is always something for everyone at the V&A

The Silo District encircles the Zeitz MOCAA to form a public plaza

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V&A Waterfront – from the large-corporate blue-chip tenant to the weekly shopper, the fisherman on shore leave and the tourist from a cruise ship.

Pedestrianisation

The new urban park in the Canal District (opening in November this year) will create an exciting new pedestrian linkage through to Green Point and a much-needed new urban green lung in the heart of the city

ABOVE AND BELOW The urban park in the Canal District will open in November

The entire V&A “complex” is grounded in pedestrianisation principles. Easy walking access to international retail brands at the Victoria Wharf shopping centre from hotels such as the V&A Hotel, the Table Bay Hotel, the Cape Grace, the City Lodge and the One&Only, leads visitors, local residents and entertainment seekers to a variety of amenities, complimented by the new mixed-use Silo District. The Silo district keeps things local, with a leasing policy of attracting “best in class” local businesses to complement the international aspiration brands of the Victoria Wharf centre. “We are working hard at making the districts (V&A and Silo as well as the new Canal District) part of an extension to the city,” says Noble. “The new urban park in the Canal District (opening in November this year) will complement this and create an exciting new pedestrian linkage through to Green Point, as well as a much-needed new urban green lung in the heart of the city. “The Silo District has its own heart, with art and culture at its core. It compliments the Victoria Wharf shopping centre and the original phases of the V&A development. But the district also has its own identity, born of the very essence of Cape Town – art, culture and, of course, the best places to get a coffee or a great meal.”

The long-term investment strategy of the shareholders has allowed the V&A to create a series of neighbourhoods through the precincts, each with its own identity and surprises

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V&A Waterfront

Engineering re ects design Arup provided façade and structural engineering to the new concept Radisson RED Hotel, as well as sustainability consulting. Arup’s integrated engineering design approach enhanced the raw aesthetic of the building, and helped to make the project both economical and sustainable

“N

o.6 Silo is a counterpoint to the largely glazed buildings in the rest of the Silo District, responding directly to the industrial feel of the V&A Grain Silo Complex building,” says Tessa Brunette, Arup façade designer on the project. The large V-columns at ground floor extend the industrial feeling internally with their exposed concrete finish. Arup’s structural engineers proposed the V-columns to allow an efficient room layout over the hotel floors, given the structural grid of the pre-existing mega-basement underneath the building. The V-columns redistribute the grid so that columns could fall in the walls of the hotel rooms from the second floor up, without the need for transfer beams. This also enabled an additional back-of-house level to be provided within the height restriction of 32m above sea level. “The V-columns were initially conceived as a functional way of unlocking the site’s potential, but they soon became a celebrated part of the architecture of the building,” says Richard Lawson, Arup Associate Director and the structural engineer involved in the project. The diamond-polished suspended slabs on the hotel room levels are another structural feature that complements the look and feel. They give a durable, robust and attractive finish without any screed. The strict accuracy requirements of these floors were challenging, and the design team worked with the contractor to implement added quality-control measures. The façade team allowed for maximum utility and quick glass replacement of the windows and their surround by using readily locally available materials and fabrication techniques. The windows are double-glazed, with performance glass, and provide the best possible unobstructed view out of the hotel rooms while maximising natural daylight and minimising heat gain. The expressed aluminium “picture frame” surround of the windows creates a sophisticated crisp offset to the rough industrial-aesthetic brickwork. The bespoke designed, manually operated pivot windows for the ground-floor restaurant space strengthen the industrial aesthetic with their “crittal”-style panes and expressed machinery. Functionally, they allow the restaurant space to open out towards Silo Square while still providing protection during inclement weather. Arup sustainability consultants worked with the Green Building Council South Africa to create the first custom hotel Green Star SA rating tool for the Radisson RED Hotel. The simplicity of the building meant light touch in terms of materials, and the designers achieved a 51% reduction in the absolute quantity of cement and a further 3 792 tons saving in materials such as screed and brickwork. The team also attained a 91% post-consumer recycled content of the steel reinforcing. Photography © Tessa Brunette/Arup

SOUTH AFRICAN PROPERTY REVIEW

GBCSA annual convention

The race was on… The Green Building Council South Africa held its 11th Green Building Convention at the Century City Conference Centre in Cape Town. The event, held from 3 to 5 October, attracted more than 700 delegates and featured 26 exhibitors. Property Review editor Mark Pettipher was there to witness the proceedings By Mark Pettipher

GBCSA CEO Dorah Modise

’d pre-downloaded the programme, but I was spoilt for choice – so although I would have loved to attend all the breakaway sessions, decisions had to be made. There were seven sessions in the morning of day two (Thursday), and five after lunch, with another seven on Friday after the refreshment break. The first afternoon’s opening plenary was MC-ed by Lynette Ntuli. Outgoing Chairperson Faieda Jacobs and GBCSA CEO Dorah Modise reflected on the work that’s been done over the past year. The latest stats show that 400 certifications

MC Lynette Ntuli

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have been completed since 2009. This amounts to 5,7-million square metres of certified space and R143-billion of greencertified property, which means that 570million kWh/year and 530-million litres/ year of drinking water will be saved. Main sponsor Belgotex’s CEO Edward Colle addressed the delegation, outlining Belgotex’s drive to green and sustainable manufacturing. Paul Hawken, the day’s keynote speaker, opened our minds to how climate change may be reversed, and presented reasons why it matters. Many of his proposed solutions are in his book Drawdown: The Most Comprehensive Plan Ever Proposed To Reverse Global Warming. (https://www.drawdown.org) At the evening cocktail function, the Department of Public Works, represented by Nkosazana Khubaka, launched its Green Building Policy to provide strategic leadership in green building sector.

Day Two Lynette Ntuli again opened day two’s plenary session, which began with James Law, a Chinese architect based in Hong Kong, giving us alternative solutions to the global housing problem. Edward Garrod, followed with a UK perspective on creating Net Zero Buildings, while Maria Pastore demonstrated how greening buildings through urban forestation is reducing buildings’ carbon footprint. Dr Luyanda Mpahlwa brought us back to South Africa – specifically to Cape Town. His topic, “Who owns the city?”, highlighted the continued difficulties of reversing the ills of spatial planning, and how even today’s municipalities are not helping to break the legacy. Of the seven breakaway sessions that followed, I chose “Trendspotting with global sustainability leaders”.

Developed countries seem more in tune with what needs to be done, which was evident in Victoria Burrows’s presentation on Net Zero and the World GBC trends. The response panel – May Yusuf (Sudan), Chisambwe Katengo (Zambia) and Muddy Ramrakha (Kenya) – highlighted that their respective countries had a long way to go, and that African governments need to have a paradigm mind-set shift towards accepting and implementing international green building standards. Ghanaian Dennis Quansah, Green Building Lead in the Climate Business Department, welcomed the opportunity to talk about funding and aid through the International Finance Corporation. The afternoon sessions were equally fascinating, and I decided to attend “Building inclusive, resilient cities”. Helen Botes, CEO of Joburg Property Company, said they are taking heed and putting people at the centre of transforming their portfolio, which falls directly in line with GBCSA and world trends. From Dr Amira Osman, Professor of Architecture at the Tshwane University of Technology, we heard about aspirant communities. She talked about “visions of Wakanda”, where communities aspire to high-rise glass-and-steel structures, and how these are being constructed with African-inspired materials, colours and textures – a complex problem of indigenous culture clashing with First World aspirations. Khalied Jacobs brought a sense of South African reality, as did Luyanda Mpahlwa: both expressed the difficulties and challenges faced by negotiating what should be best city practices, of putting people first, and of working with the reality of what they called “ill-informed officials” within local government.

GBCSA annual convention

FROM LEFT Sudan Sustainable Building Council Chair May Yusuf; Green Building Lead at the Climate Business Department of IFC Ghana Dennis Papa Odenyi Quansah; Zambia Green Building Council Chair Chisambwe Douglas Katengo; Project Manager: Advancing Net Zero Project of the World Green Building Council Victoria Burrows; GBCSA CEO Dorah Modise; and Member of the Board for the Africa Yoga project and the Kenya Green Building Society Muddy Ramrakha

Palesa Sibeko, co-founder of the Good Work Society, ended the session on a positive note. She was optimistic that urban resilience would grow from understanding how we can all benefit from the adoption of technology and innovation within the built environment. Day two’s session were followed by the gala dinner, which honoured property owners and accredited professionals, and recognised leading green projects in South Africa. This included the Highest Rate Building, Best Quality Submission, Edge Innovative Housing Project and the Net Zero Innovative Project Award. Gamechangers in the built environment were also acknowledged in the Established and Rising Green Star categories. During the event, outgoing GBCSA Chair Faieda Jacobs handed over the reins to incoming Chair Nathi Manzana, who said he will be focusing on building more collaborative partnerships when his term commences.

Day Three Opening the New Urban Form plenary session on day three, Dr Makhosi Khoza, Executive Director of the Local Government Programme at the Organisation Undoing Tax Abuse (OUTA) talked about “The future South African city: The role of local government”. She emphasised every South African citizen’s right to challenge local government, and encouraged delegates to contact OUTA to put cases forward. Dr Anne Kerr, Global Head of Cities at Mott MacDonald in Hong Kong, spoke about smart and sustainable cities: in the dawn of an information age and the rise of a “cyber” age, how do we maintain citizencentricity while enhancing resource efficiencies in a developing economy? Reitumetse Molotsoane, Director of Climate Change Monitoring & Evaluation at the Department of Environmental

Affairs, facilitated a panel discussion on climate change policies. Panellists included Gregor Schmorl, the Project Director for Energy Efficiency in Public Buildings and Infrastructure Programme (NAMA Support Project); Grahame Cruickshanks, Managing Executive for Market Engagement at the GBCSA; and Andrew Motha, Control Environmental Officer: Municipal Waste Support at the Department of Environmental Affairs. Of the seven breakaway sessions that followed, I was particularly interested in “Green isn’t just a colour – it’s a promise”, with Dorah Modise as facilitator. Notable industry leaders such as Lynette Ntuli (Chief Executive Officer of Innate Investment Solutions), Jess Cleland (Director Strategy: Occupier Services at the Broll Property Group), Portia Tau-Sekati (Chief Executive Officer of the Property Sector Charter Council), Amelia Beattie (Chief Executive Officer of Liberty 2 Degrees), and LeeAnne Singer (founder of the Singer Group) gave their opinions on the Race to Zero, and insight into their personal journey in the property industry. On the whole, they came to similar conclusions. Change happens when longterm decisions are made in which the human element is considered first and return on investment second. Buildings and the climate in which we work should be oriented around human wellbeing. It’s the small gestures that make the greatest impact on individuals’ lives.

The final plenary session began with an address by incoming Chairman Nkosinathi Manzana as he launched the GBCSA Smart Home Campaign, promoting greater awareness of sustainable energy-saving actions and devices that the “man in the street” can utilise. Professor Robert Peña, an Associate Professor of Architecture at the University of Washington Center for Integrated Design, talked about the Bullitt Center as an example of an optimised, integrated green building. Dr Morne du Plessis, Chief Executive of the World Wide Fund for Nature South Africa spoke about the importance of “Listening to nature” and pointed out the magnificence of how creatures in nature build their homes, incorporating strength, protection and a sense of community.

Nkosinathi Manzana, Incoming Chair of the Green Building Council South Africa

To end off the session, we heard again from Paul Hawken, who gave us pointers as to what we as humans should be doing to address global warming and to promote greater humanitarian awareness of the effects that continued climate change would have on all of us. To conclude, Modise thanked the sponsors and the team who helped put the convention together, and announced the theme for 2019: “Beyond: Shaping Cities of Tomorrow”. Lock in your diaries for 2 to 4 October 2019 in Cape Town!

FROM LEFT GBCSA CEO Dorah Modise, Innate Investment Solutions CEO Lynette Ntuli, Director Strategy: Occupier Services at the Broll Property Group Jess Cleland, Property Sector Charter Council CEO Portia Tau-Sekati, Liberty 2 Degrees CEO Amelia Beattie, and founder of the Singer Group Lee-Anne Singer

SOUTH AFRICAN PROPERTY REVIEW

greening initiative

Green principles at the centre of business How many of us walk into a washroom facility and pump the hand soap dispenser, and stop to think about where it comes from? Chances are that it’s produced right here in South Africa. Property Review talks to Serra’s Marketing Director Paul Thomaz – not about Serra’s products, but about the measures the company is taking to ‘do no harm’ in the manufacturing process By Mark Pettipher

Paul Thomaz, Serra Marketing Director

n Serra’s website you will find a number of interesting facts – such as that Serra has an enviable record with many landmark projects, and holds many “firsts” in the southern African washroom industry. Its range of high-grade stainlesssteel washroom dispensers demonstrates the company’s capability not only to strive ahead, but also to compete on the international stage. Its washroom dispensers and hygiene systems have been successfully exported to First World markets as well as local African markets. The Serra brand can be found in facilities from Auckland and Hong Kong to Sydney, London, Windhoek and Cape Town. Part of the company’s success is its constant striving to adhere to the core principle of “do no harm”, and have minimal impact on the environment in which it operates. “You cannot operate in First World markets and not be aware of your company’s carbon footprint,” says Serra Marketing Director Paul Thomaz. 26

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“Our clients – both international and domestic – need to understand that, from a manufacturing, removal and disposal perspective, we are promoting a ‘green’ product. “Serra is a family business, started in 1985, which has proven that the difference between our products and those of our competitors is in the quality we produce. To be able to produce the quality, we need to look at the facilities in which we manufacture those products. “Prior to 2016, we were facing operational challenges in our premises on a daily basis. We would have failure of one or all three of the supplied facilities – water, electricity or telephone. We had grown over time, taking on more units at the park in which we operated, breaking through walls and effectively migrating all our divisions under one roof. Apart from manufacturing, we had to leave the office and admin buildings and walk to an adjoining building. “Because we are a multi-disciplined, fully integrated operation, we faced a unique challenge – we needed to find premises that would be big enough and flexible enough to house all our needs under one roof. After looking at several buildings, we came across a Growthpoint-owned building that had been built on speculation for a logistics company.” “The challenge for the team (and for Growthpoint) was to develop a clear understanding that we’re not a singleoperation company. The premises that we eventually found is 7 500m2, with 1 000m2 being used as office space, and

the rest utilised as warehousing, laundry and manufacturing facilities. “What really ‘sold’ us on this building was the meeting of minds between ourselves and Growthpoint. Our message to them was that we operate under ‘best practice’ principles, and we treat the building as if it were our own. What is more, when we visited the building, we understood from the finishes and the attention to detail right down to the finish in the bathroom facilities that Growthpoint was also serious about ‘green’ building standards. The bathroom facilities were of a standard that we would expect our products to be in ‘Grade A’ class – we could showcase

greening initiative our own world-class products in our own facilities! “We were looking for a complete endto-end integrated solution for all our divisions, and for us to go forward and be competitive in our microcosm of operating in Johannesburg and South Africa as well as being an international exporter, we needed to become selfsufficient. The new building fitted in well with our strategic drive of adherence to our core principle of empowering people and delivering quality products. This building offered us the opportunity to take control of all the elements that were previously damaging our long-term sustainability and brand foundation. “We were able to take the shell of the building and create a bespoke intelligent workable space that is both energy- and water-efficient. There were a number of elements that were already ticking the energy-saving boxes, such as energysaving lights triggered by motion sensors. However, we as the tenant have invested a considerable amount to take the greening of the building much further.” “Ironically, even though the premises has 1Mva of power coming into the building, we wanted to be as selfsustainable as possible and have installed

about 120 photovoltaic (PV) panels on the roof, with the intention to increase this to 230 units next year. “In order to harvest the energy, we initially linked the PV panels up to two banks of lithium-ion batteries. Now we operate on three banks, which allows us to be fully functional in the office component in the event of a power failure. We’re starting to see significant savings on our power usage. We harvest the sun’s energy during the day, and bleed and utilise the power from the batteries for about three hours at peak times in the mornings between 6am and 9am. This runs everything – the air conditioning, IT and office lighting. By using our augmented system, electricity from the grid only kicks in when the solar is unable sustain the office demand; by doing this we are saving upwards of R40 000 per month.” He goes on to tell us about Serra’s laundry services. “Water is also key to our operation, because part of what we have here is a fully automated industrial laundry. To make us less dependent on municipal supply, we have invested in a gas plant, and a rain-water harvesting and recycling system. The result is that we can run for at least 10 months of the year without being a burden to the water grid.”

The system stops just short of greywater reticulation for the office component. “We need to balance reality with sustainability,” says Thomaz. “The number of employees we have does not warrant greywater reticulation – but that’s not to say we would not consider it in the future. “As for our actual products, we work in the realm of sanitation services, so we partner with companies that are able to vouch for the safe disposal of our products. We are also working towards setting standards to move away from the use of single-use plastics, and are endeavouring to make sure our plastic products are retrievable and recyclable where possible. “We strongly believe that we can’t manufacture quality products such as ours without adhering to our core principles. We are proud to have both the ISO 9001:2015 and the Proudly South African certification for Serra. With our ‘green’ principles and our drive to work towards a GBCSA-rated building and work environment, we are hoping to achieve at least a 4-star Green Star endorsement for the building, while continuing to look for opportunities to reduce our environmental footprint going forward.”

SOUTH AFRICAN PROPERTY REVIEW

The Difference Is In The Quality The Difference Is In The Quality

FOR ALL YOUR HYGIENE AND FLOORING SOLUTIONS FOR ALL YOUR HYGIENE AND FLOORING SOLUTIONS

CMY

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

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green one on one

Sophistique: shaping life through design Sibulele Kweyama, founder and Director of Sophistique, is passionate about architecture, art and interior design. She believes people connect emotionally with – and through – spaces By Mark Pettipher

ophistique is a dynamic, black womenowned interior-design company that was founded in 2015. Working as a quantity surveyor (QS) at the time, Sibulele Kweyama realised that “After having my children, I needed to be fully involved in their early childhood – but at the same time, I needed to be able to make a living. I reached the conclusion that a nine-tofive job simply wouldn’t work for me.” Kweyama has been meticulous from a young age, helping family members with home decor. Her love of buildings and spaces sprung from those early passions – and while starting her career as a QS gave her an insight into the costing of interiors and buildings, she had little or no creative input into those interiors and buildings. She soon realised there was a gap in the market: interior design was not well represented in the built environment, so there was an opportunity to make a difference to the environment in which people interact, live, work and play. Now, after eight years in the built environment, Kweyama says one of her goals is the “practical beautification of spaces, where people can have an emotional response and be affected in a positive, uplifting way”. Kweyama’s personal and business goals run “hand in glove”. As a mother, she wants to see her children grow well; as a businesswoman, she wants to see her business grow without compromising her beliefs. Her long-term aspiration is to better herself, and to be a supportive mother, an effective church member and a leader in her business. She also wants to be able to mentor people who are passionate about the industry, and help wherever possible in their career path. Recently, Kweyama was part of an architectural delegation trip to Denmark, at the invitation of the Royal Danish Embassy and sponsored by Property Point. Her observations there resonate

Sibulele Kweyama, founder and Director of Sophistique

with her “green” beliefs. “The Danes have a passion for life,” she says. “They encourage people to interact with nature, and they integrate open spaces unrestricted by fences and borders into their buildings. People are encouraged to understand the importance of life and adopt sustainable policies that will preserve the environment for generations to come. “We all have a responsibility to make conscious ‘green’ decisions when it comes to developing buildings. The knowledge that the world is changing and the need for ‘greener’ workspaces are becoming a universal requirement. That is what is driving the built environment. “As interior designers, we are privileged to be able to create happy and creative environments, and it is our responsibility to break all barriers in order to achieve such. At Sophistique, we’re already utilising elements that we discovered on the trip – elements such as using natural lighting, incorporating plants, and encouraging employee eye contact while in the work environment.” Entrepreneurship – from starting out with one employee in 2016 to now employing nine (six of them part-time on a project-to-project basis) – has had its challenges. “It’s important to stay focused

on the positives and find ways to push through barriers,” says Kweyama. “You have to believe in what you’re doing, and find ways to make sure the business is able to survive in the current economic climate. My entrepreneurial journey has taught me a great deal about myself: I’ve discovered that I may not always agree with clients or colleagues, so I’ve had to mature quickly and allow others to have an opinion.” When it comes to transformation issues, Kweyama doesn’t define them in political, gender or race terms. “The property industry is not an easy industry to get into. It’s slow to change, no-one owes you anything and you have to add value to the teams you become part of,” she says. “I always look at situations and consider how I will transform myself to be able to make changes. Transformation starts with one’s own self – how you can integrate and respond to the challenges of the changing environment. “Green issues in the built environment need to be tackled at concept stage. We need to understand the client’s objectives fully and find sustainable solutions as a team. At the same time, we need to be realistic, grow with the client and discuss practicalities at inception. “Going forward, part of Sophistique’s aim is to attain real goals, establish a national footprint in South Africa, and be able to leave a good legacy. It’s part of my advice to other entrepreneurs setting out on their journey: be real, follow your passion, be patient with yourself and never lose sight of the vision. “I’ve been fortunate to be inspired by a number of phenomenal women, with my late mother being the one who set the precedent for the type of women I look up to. I also find Khanyisile Kweyama (Chairperson of PRASA), Busi Nzo (Lakhanya Quantity Surveyors) and Althea Peacock (Lemon Pebble Architects) incredibly inspirational.” SOUTH AFRICAN PROPERTY REVIEW

green one on one

Green engineering and green buildings: one and the same Vere Shaba speaks to Property Review about her entrepreneurial journey in the property industry. She was the lead Green Star SA Accredited Professional of Newton Junction’s winning team, which won SAPOA’s 2015 Innovative Excellence in Property Development Awards for Overall Transformation and Best Mixed-Use Development, and was the Overall Winner The ofﬁce component achie ed a star Green Star S rating from the Green uilding Council South Africa By Mark Pettipher

“W

Vere Shaba, Director Green Buildings & Engineering at Shaba Green Building Design & Engineering

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hen I was in Grade 12, I had to decide between law and engineering as my first choice for university studies,” says Shaba. “I came across a NASA map that showed a satellite image of the world at night. The image indicated that Africa is dark at night, and my first thought was: ‘But how are the children in Africa reading?’ If education is the greatest weapon that we can use to change the world, how will we ever be empowered as a continent if the education of African children stops when the sun sets? “I was further intrigued about green buildings when I won a tender as a student at university. I had entered an International Design Competition in 2010. The competition was to design a carbon-neutral, zero-institute in Nairobi, which the WSP-dhk-LUC team won.” Aged 30, Shaba is the founder of Shaba Green Building Design & Engineering, South Africa’s only Level One B-BBEE, black women-owned green engineering and buildings SMME. She is a holder of a BScEng (Hons) Mechanical Engineering degree from the University of Cape Town. Shaba’s CV reads like an honours list. She is a Green Star SA Accredited Professional with the Green Building Council South Africa, a Green Star Accredited Professional with the Green Building Council of Australia and a LEED Accredited Professional with the United States Green Building Council. As an award-winning mechanical engineer – and having worked for multinational engineering consulting

green one on one firms for several years in building services – Shaba has extensive experience in commercial, retail, hotel, healthcare, education, residential and theatre projects. She has also developed specialist skills in green building designs on the African continent, having authored the Green Star local context reports for Kenya, Nigeria, Rwanda, Uganda and Zimbabwe. Shaba is a faculty member and assessor for the Green Building Council South Africa where, as a mechanical engineer, she facilitates Green Star courses and assesses Green Star submissions for New Buildings, Existing Building Performance and Interiors. In 2013, she was selected as one of South Africa’s Top 100 Women in Business, featuring as one of the 10 Top Women in Engineering. In 2017, she was selected as one of the Mail & Guardian’s 200 Young South Africans, one of the Kingdom of Netherlands Inspiring Fifty South Africans, and as the national winner of the Women’s Property Network’s South African Women in Property awards. This year, she was selected as the winner of the Gauteng Premier’s Young Women Achiever of the Year award, and one of Forbes Africa’s 30 Under 30 in Business for her work in green buildings and engineering in South Africa. “The World Energy Council’s definition of energy sustainability is based on three core dimensions: energy security, energy equity, and environmental sustainability,” says Shaba. “These three goals constitute a ‘trilemma’, entailing complex interwoven links between public and private actors, governments and regulators, economic and social factors, national resources, environmental concerns, as well as individual behaviours. “Having understood what energy sustainability entails, we still need to redefine what sustainability actually means for buildings and cities within the African context. It’s about economic ideals. Waste is actually a sign of inefficiency – which means that wasting energy and water as well as the amount of solid waste are a visible indication to property owners about the need for

green buildings. By adopting green building parameters, we have seen Green Star buildings in Johannesburg achieve a 12% increase in profitability. “Sustainability starts from the inside. It begins with the type of fittings that you install and continues through to the type of glass placed in the windows. It’s about changing perceptions and changing mind-sets.

“I’m humbled by the awards I have received. The awards are recognition for the hard work that needs to be put into making a difference in the green building sector. They help me to push myself to continue being at the forefront of green buildings, because I believe my work defines me” “Sustainability is also very much about optimisation. I approach it in a specific way. Our integrated approach towards green building services provides both engineering and green building service offerings. This translates into a significant technical and economic competitive advantage on all of our clients’ projects. It also capitalises on the significant energy and sustainability savings that exist between these services throughout the project life cycle.” Putting “green” into practice, Shaba proudly tells us about the work her company did on the old Hillbrow Hospital, built in 1937. “It consists of 26 buildings that cover an area of 75 000m2,” she says. “This project goes to prove that sustainability elements can be retrofitted. The hospital will be the first government hospital targeting Green Star Custom Healthcare certification. In addition to the sustainability improvements, we have also been awarded the mechanical work. The client also saw the value in an integrated engineering design approach. That I, as a green building consultant, am

also a qualified engineer with six years of experience sets Shaba apart as a green building consulting firm – because our approach goes down to first principles in engineering. “As an emerging company, we have never relied on funding. Our work has proved its worth, and our projects are what has sustained us. We definitely aim to grow our team – we are already part of SMEC South Africa and, as such, we are already expanding our footprint in Africa. I look forward to seeing a consistent turnover year-on-year, and I look forward to welcoming more highprofile clients to our portfolio of work who understand and value the fact that green engineering and green buildings are one and the same. “I’m humbled by the awards I have received. The awards are recognition for the hard work that needs to be put into making a difference in the green building sector. They help me to push myself to continue being at the forefront of green buildings, because I believe my work defines me.” Shaba has invaluable advice for young women who want to get involved in the property industry, and in green building in particular. “Your credibility is key,” she says. “Don’t be afraid to push the envelope. If your ‘why’ for looking to start up does not compel you, it will likely not compel anyone else. Clients pay for solutions, so always make sure that you are solving your clients’ greatest challenges and that you are constantly at the forefront of all changes in the property sector, specifically in green buildings. “It has been difficult to break into the sector because most consultants have relationships with the clients. But the local and international awards are an indication that Shaba Green Building Design & Engineering is doing something right.” Both Sibulele Kweyama, Director of Sophistique and Vere Shaba, Director of Shaba Engineering & Green Buildings , are part of the Property Point programme, which is an award-winning enterprise development initiative founded by Growthpoint Properties.

SOUTH AFRICAN PROPERTY REVIEW

sustainability initiative

Old Mutual shows the way to sustainability It all started with changing a light bulb – but that wasn’t the real need. Old Mutual has been implementing sustainability initiatives long before “sustainability” became a buzz word. Property Review talks to Khiyam Fredericks, Old Mutual’s National Technical Manager, about the initiatives that have taken Old Mutual Park off the grid By Mark Pettipher

hile Old Mutual’s sustainability journey (OM) began with looking at energy-saving lighting solutions, that wasn’t the top concern: it was Mutual Park’s air-conditioning system that was the biggest consumer of energy at 60 to 70%. Each building had its own system, and there were 23 coolers that had been reduced, over a period of time, to work off a centralised system (which operates using five coolers). The South African energy crisis of 2015 focused OM’s resolve to become more energy-efficient. (But even before a solar solution was commissioned, OM had been awarded a 5-star GBCSA certification.) A 1.3-MW solar setup was commissioned to address OM’s needs. The solution is able to produce more than 12% of Mutual Park’s total energy demand during peak solar production periods. The installation was completed by Sola Future Energy in two separate phases, and consists of a solar carport, as well as part of OM’s West Campus building roof. The phases were completed in December 2016 and April 2017 respectively; the project is one of the largest of its kind on a single erf in the Western Cape. The unit consists of 3 600 photovoltaic panels covering an area of 14 500m2, and weighs 170 tons, including the weight of the purpose-designed carport structure. Tilted panels over the carport provide shaded parking, while at the same time catching maximum sunlight during the day, when the office experiences its peak electricity consumption. About six to eight percent of the office park’s electricity consumption is being provided by solar. Over the next 20 to 25 years, this initiative should result in about a R3,8-million monetary saving per year; a return on investment of the solar system should be seen in four to five years. 32

SOUTH AFRICAN PROPERTY REVIEW

Self-sufficient sustainable water

About six to eight percent of the office park’s electricity consumption is being provided by solar

Water-filtration plant

Employee #WaterWise awareness campaign

● A comprehensive communication campaign was launched to increase awareness of the water crisis, and urge employees to support the efforts to conserve water at work and at home. Keeping employees aware is critical to encouraging action. ● Electronic meters were installed in critical water-use areas to track misuse and trends, and to proactively manage any leaks.

Ablution, cleaning and washing facilities as well as air-conditioning

● Aerators were installed on taps and shower heads to reduce usage. ● Water pressure was optimised to reduce the length of flush time for all toilets. ● Additional waterless hand sanitisers were installed in all bathrooms.

Old Mutual has been an advocate of saving water since 2016. Through its water-saving initiatives, the company has managed to reduce water consumption at Mutual Park by 30%, even before the launch of the filtration plant. Now OM boasts ownership of the largest privately owned Waste Water Treatment plant in South Africa. “Our water filtration plant, which has undergone rigorous testing, was certified SANS 241-compliant by both the national and local government, making the filtered water drinkable,” says OM’s National Technical Manager Khiyam Fredericks. “It is Mutual Park’s main source of water and has the capacity to produce between 650 000 and 800 000 litres a day. Mutual Park’s average daily consumption is about 450 000 litres. “This is a long-term initiative. The savings we are making should see a ROI in three to four years, with a sustainable benefit for the next 20 years. We are also able to return about 15-million litres of water back into the municipal grid, which will benefit the community.” ● A grey-water system to flush toilets was installed at the on-site crèche at Mutual Park, Greens’cool. ● The air-conditioning system was upgraded so its wastewater flushes the toilets, leading to savings of about 40% (approximately 20 000 litres) of water per day in summer. ● Air-conditioning units in the data centre were upgraded to air units. ● Buckets were placed in showers and the water reused for cleaning floors. ● A waterless car wash was introduced. The water-based car wash was upgraded with a water-recycling plant that has reduced its water consumption by 80%.

Mutual Park irrigation

● A treated effluent water feed was introduced for irrigation of the sports fields and gardens. ● Locks were installed on external taps.

off grid

Renewable energy brings power and jobs to Clanwilliam Businesses in South Africa are increasingly seeking ways to generate and use their own power as state utility Eskom struggles to maintain its authority in an increasingly difﬁcult economic environment By Kate Pallett

lanwilliam’s first retail shopping centre has shown how renewable energy is aiding economic development in small towns with limited access to the national grid. This is according to Dominic Wills, CEO of SOLA Future Energy, which installed a solar photovoltaic (PV) system that provides the additional power for the Cedar Mill Mall that Eskom can’t supply. Eskom’s tariffs have increased sharply over the past decade, averaging 9,2% annually over the past five years. Despite a 5,2% increase in 2018, consumers might face further increases in the near future, as Eskom claims its approved Regulatory Clearing Account application from NERSA. “As a result, businesses are increasingly turning to self-generation to wean themselves off Eskom’s patchy, expensive power,” Wills says. He says the retail industry has been proactive in mitigating the risks Eskom’s price increases would have on the sector. “The cost benefits have lead several large retail centres to install solar PV systems in varying sizes. It’s become evident that serving efficient power to the retail sector can be done quickly using localised, independent power installations.” Wills notes that an initial trickle of interest in independent power production, particularly solar PV, has grown steadily to the point that self-generated power is regarded as an affordable and reliable option, especially in areas with partial or intermittent connection to the national grid. Installing an average-sized PV plant takes three months, adding to their appeal. In the case of Cedar Mill Mall, during the connection application, Eskom indicated it was able to supply 250kVA of continuous power due to constraints on the grid.

To get the project off the ground, the mall’s developers, Noble Property Group, needed at least double what Eskom was able to approve: 500kVA. “The solution was to utilise the mall’s roof space to install 2 580 solar panels with a capacity of 851kW. In addition to this, a 696kWh lithium-ion battery was installed to store excess power in times of excess and discharge in times of need,” explains Wills. “Incorporating a microgrid into the centre was a financially attractive solution considering how much energy could be harvested and stored from solar PV,” said Mario Dos Reis, Director of Leasing at Noble Property Group. The shopping centre, which is expected to create 300 permanent jobs, promises to be a boon for traders, economic activity and job creation in the town. Thanks to the solar PV and battery system, electricity can also be supplied to the mall independent of the central grid. This will make the centre resilient to power outages. The solar PV system is expected to save the mall 1,1-million kWh electricity per annum, resulting in a 982 tons carbonemissions saving for at least 25 years.

“We salute the developers of Cedar Mill Mall for not allowing energy supply problems to derail their project, thereby ensuring the creation of important new jobs and contributing to the Clanwilliam economy,” says Alan Winde, Western Cape Minister of Economic Opportunities. He adds that when businesses invest in renewable energy, they also decrease their long-term risks. Solar PV has been an attractive shield against Eskom’s annual increases for a few years – an average rooftop system can reduce electricity required from the grid by 30% to 40%. The cost of lithium-ion batteries fell by almost 80% between 2010 and 2018. According to Bloomberg New Energy Finance, the levelised cost of electricity for solar PV dropped 18% in the first half of 2018, as did the cost for onshore wind. “These falling costs have started to make the business case for solar PV, appealing to a wider market,” says Wills. “There is no doubt that we’re in the middle of an unstoppable revolution led by property owners and developers to reduce their reliance on a central grid.”

Cedar Mill Mall

SOUTH AFRICAN PROPERTY REVIEW

SAPOA Board one on one

ustainability: a

E deﬁnition

Property Review talks to SAPOA board member Werner Mulder, graduate of the University of Pretoria and the University of Cape Town and Head of Sustainability at Attacq, about what sustainability means in the commercial property context By Mark Pettipher

Werner Mulder, Head of Sustainability at Attacq

ustainability has – both fortunately and unfortunately – become a bit of a buzzword. “It is unfortunate when something as important as sustainability becomes ‘fashionable’, and it results in organisations paying lip service to the concept and only superficially supporting

The Mall of Africa

SOUTH AFRICAN PROPERTY REVIEW

it, thereby reducing its importance to ‘eco bling’,” says Mulder. “Because of the growing appreciation of the importance of being sustainable in the way we operate and do business, we should believe that all of us personally need to be sustainable. “I believe that even among those less enthusiastic about the concept there is a growing realisation that sustainability is becoming more and more important to tenants, customers and consumers. “Furthermore, in the commercial property industry, there is a need for sustainability to be understood and somehow supported or incorporated in what we do. The impact of a host of collectively unsustainable actions over time has manifested in increasing pressure on the environment – and together with a growing burden on our natural resources by ever more users, that impact has resulted in events such as the threat of the recent water crisis – and Day Zero – in the Western Cape.

The economic impact of such an event is unsustainable in behaviour, and has become a harsh economic reality. “Given the very broad scope of sustainability, there is no standard definition for the concept and its execution. But the definition that breaks sustainability down into its key components for me is WWET: waste, water, energy and transport. “In terms of scope and focus, the definition touches on efficiency (using resources as wisely as possible and wasting as little as possible), resilience (which is the capacity to continue operations during curtailed or constrained supply of waste, water and energy services) and the carbon footprint of some of our actions in the adoption of best practices in our sector.” So what can we do? What can our colleagues and peers do? “It begins with organisations that adopt best practices, and companies in the property industry that understand the importance and

SAPOA Board one on one

The Mall of Africa

value of sustainability in their buildings, their designs and their operations,” says Mulder. “Where companies recognise and appreciate the value placed on sustainability, that value translates into an investment in sustainable designs, and a quantifiable return on operations and – in the long term – the bottom line. It also reflects in the organisational structure of the company as well as the roles and responsibilities of the sustainability professionals. A growing number of organisations worldwide have appointed Chief Sustainability Officers. It’s about a mind shift towards leaving a better legacy for those who will come after us.”

As an example, let’s look at the way in which the Mall of Africa, one of Attacq’s properties, is looking at sustainability: the Mall is citing a world-first in integrated renewable energy systems. This recordbreaking project not only features the largest rooftop solar photovoltaic (PV) system of its kind in the southern hemisphere (and 10th-largest worldwide), but as far as it can be established, the system is also the world’s largest integrated rooftop PV/diesel hybrid solution. The 4755kWp installation covers most of the available mall’s roof space, an area of approximately 45 000m2/4,5 hectares. The energy generated will be used to help power the mall’s daily operations. Attacq is well known for its focus on sustainable buildings, especially with its flagship Waterfall development. This project will see the mall produce enough power to supply a meaningful part of its day-to-day electricity requirements while also decreasing its overall carbon footprint by more than 8 000 tonnes, leading to less reliance on the national electricity grid. Furthermore, the project created about 50 temporary jobs (and two full-time). “SAPOA has always been an incredibly powerful organisation to me, especially in my capacity as the Chair of Sustainability Committee,” says Mulder. “It allows practical opportunities to engage with colleagues and professionals in the industry. In the Sustainability Committee the members, although they represent competing businesses, share a common goal.

“We all manage the sustainability components in our companies, and we have all been tasked with successfully navigating an ever more complex legislative environment in this regard. Engaging collectively as well as individually in a coordinated manner with municipalities, NERSA and Eskom has been incredibly valuable to the industry as a whole. “As a SAPOA Board member, the opportunity to engage at board level on matters of sustainability is invaluable. As a group of professionals making up the Sustainability Committee, we all share a common passion for improving building performance and efficiency – because this is what will ensure that we are running our individual businesses in a sustainable manner.” “At a board level, the engagement with like-minded property professionals who share a common passion for the property industry and for finding winwin solutions with the city councils and the various arms of government that property owners and the industry need to with is really energising. There is a real sense, in my experience, of being in a position to make a significant difference in the industry. Much of this comes from the level at which we can engage with key decision-makers as representatives of SAPOA. This includes discussions with mayors, ministers and other legislators.” SOUTH AFRICAN PROPERTY REVIEW

member one on one

Leano mandated to rendering solutions Neo Malefane, CEO of Leano Construction talks to Property Review about his early beginnings in marketing and the his transition to the property industry By Mark Pettipher

“I

was fortunate to have attended three great learning institutions: I went to Grey College and the University of Johannesburg (UJ), and I went through three years with Raizcorp as well,” Chief Executive Officer of Leano Construction Neo Malefane says. Destined to be an entrepreneur, Malefane graduated from UJ with a National Diploma in marketing. “My first asset was an old Pentium 4 computer,” he says. “In fact, I started my first business venture from my dorm room at university. At the time, the university was transitioning from the Rand Afrikaans University, and merging with Technikon Witwatersrand and campuses of Vista University to become the University of Johannesburg. “I was awarded the project to market the new UJ – and having delivered and implemented the plan successfully, I realised that I could make a business out of marketing. I opened my first office close to the UJ campus in the Brixton Protea Centre and hired my first employee. “So at the age of 19, I was juggling university life, studies and socialising with my marketing business. After graduating from UJ, I went on to complete a Certificate Course in Media Management through the AAA School of Advertising, after which I started to get involved in promotional gifts and the import of products from China. “During a trip to China, and while I was learning the intricacies of import and export into South Africa, I bumped into a fellow South African in a hotel in. We spoke for a while, but I didn’t think much about the meeting. Six months later, I had a chance meeting with him again while at a car wash on a Sunday. This time we got talking about what we did for a living – and he explained that he was in construction.

SOUTH AFRICAN PROPERTY REVIEW

Neo Malefane, CEO of Leano Construction

“My marketing company was doing well, so I was in a cash-positive situation and had my own capital. I mentioned that I would be interested in investing should the opportunity arise – but I had no expectations. “Soon afterwards an opportunity did arise – I was given a chance to get involved in a project in Potchefstroom. I was subcontracted to renovate and redevelop an old warehouse at the military base. It was a simple enough project: break down existing walls, create new partitions, carry out some structural changes. I was hooked! “Having delivered on our first project, I went out looking for others – and I soon discovered that I could not juggle the marketing business as well as the construction business. So I decided to give up marketing and concentrate on the property business. “Six financial periods later, we find ourselves in the enviable position of looking to diversify our portfolio. At present, our portfolio consists of mainly residential rental stock; we also have a commercial building in Bloemfontein. “Just under 10 years after the start of our first project – and thanks to a steady income from the rental stock – we have set up a residential prosperity trust,

the Leano Property Trust. Through the fund we are looking to increase our rental stock and eventually set up a ‘property business’ to manage the properties and income. “We have 43 permanent employees working out of two offices (in Jo’burg and Bloemfontein). Depending on the projects we have on the books, we have seasonal casual staff whom we take on as required. This complements our vision of creating jobs and enhancing empowerment by transferring efficient project management skills and experience to small and emerging entities so they too can provide a good-quality service.” Going forward, Malefane is looking to identify strategically located parcels of land, which he intends to purchase from either the municipalities or through private owners. Because of the levels of uncertainty surrounding the current land reform policy, he is holding back from committing the company’s funds – but he has already identified property that’s been held by municipalities for a number of years. “South Africa has great potential,” he says. “I am always looking for companies with similar outlooks, because I want to develop a synergy. To quote the Leano website, ‘Relationship building with our clients is the livelihood of our business, and we are committed to ensure that we engage in community projects and skills transfer initiatives to eliminate the frontiers of poverty.’ I travel quite frequently, and I’ve realised that having a South African passport unlocks the potential in the rest of Africa. “We cannot ignore the politics in South Africa. I believe we’re now being lead by a businessman whose first focus is to get the country working. In the next five to 10 years, we will see growth opportunities being unlocked – I look forward to being part of the ‘new dawn’.”

member one-on-one

Architecture driving sustainable spaces From a desire to study interior design, Diphetlho Masemola found her passion being honed into being the architect of her own direction. Now she combines rigorous design with construction management to form a rare experience that leads to distinctive design processes and end products that are aesthetically, intellectually and ﬁnancially informed By Mark Pettipher

iercely independent, Diphetlho Masemola has always had a passion for the built environment. Initially wanting to study interior design, she believes there is no substitute for hard work. “I was raised by a single mother,” she says. “I’d sell sweets in primary school rather than ask my mother for money. After I matriculated from Florapark Comprehensive High School in Polokwane, I found myself in Pretoria, commuting from home to the Tshwane University of Technology. After graduating, I went back to Polokwane and worked as trainee for a year. “My plan was always to get a master’s degree. Even though my mother was paying for my studies, I worked at a number of jobs to make extra money. “My first break came while I was studying for my master’s – I managed to get into a three-year professional programme with the Department of Public Works.” Masemola’s master’s degree was in green building – trying to find alternative ways of heating and cooling; her dissertation was the “Comparative study of the exterior and interior climates of a building fitted with a conservatory: a Drakensberg mountain retreat case study”. The degree fired Masemola’s belief that, as an architectural professional, she needed always to consider the occupants of the buildings and put people first. “Buildings are about the people who use them,” she says. “There is a modern trend towards the use of natural light, pure air ventilation, a greater understanding of the usage of space and materials, and the integration of spatial relationships.” Since graduating in 2009, Masemola has worked on several interesting projects, including the design of SANRAL’s e-toll retail store, the City of Jo’burg’s visitor

Diphetlho Masemola, architectural technologist and project management consultant

centre, a prominent private residential homes, some corporate offices, as well as a hotel. “I enjoy working on commercial buildings, and I especially enjoy the challenge of optimising spaces while ensuring that my buildings work to Green Building Council South Africa (GBCSA) standards – standards that I’m closely acquainted with as I’m soon to gain my GBCSA Professional Accreditation,” she says. Her biggest project to date is the one she is currently working on: the Civic Centre. The aim is to refurbish the entire building, upgrade it to current GBCSA standards and retrofit the space without extensively changing its exterior. Because it’s a public building, Masemola has to find a middle ground for improving the Civic Centre’s heating and cooling systems, while at the same time ensuring that there is an ease of maintenance that should cover a five-year cycle. Being aware of budget restraints, she needs to ensure that the fitout installation carries a maintenance clause in the post-fitout contract. “The post-fitout clause will have the added advantage of creating jobs by ensuring that local SMMEs are included in the contract,” she says.

Transformation in the property industry, while slow, is happening. “My greatest challenge (apart from the usual breaking through of old stigmas) is proving that my qualifications are good enough, and thereby building trust,” says Masemola, “There is nothing more rewarding than seeing a client’s change in attitude, and building a relationship with them. “Changing mind-sets is never easy. We have to rise above gender and race, yet we have to face the challenge of reticence to allowing for inclusion, where clients have previously had bad experiences. Potential clients shouldn’t use a blanket approach of previously bad experiences – but they do.” “My advice to other young black women architects is to stay determined, always work to the best of your ability, and build your own name and reputation of excellence. Then people will find you. Try not to rely solely on other people, because they will end up disappointing you. Decide what you want to do, and take the time to study and keep up to date with trends. “From one success another will come. Time goes by very quickly when you’re dedicated, and hard work really does pay off. There is nothing fun about having doors closed in your face – but remember that the industry is always changing, and that your determination and hard work has to change along with the times. You need to stay focused in order to build your own legacy and make a difference. “Joining SAPOA has provided me with an opportunity to network, especially through programmes such as the PPP and the PDP. I look forward to building lasting relationships as well as finding mentorship opportunities.” SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa

World Bank takes a pragmatic view of Doing Business in South Africa n this the ﬁrst of se eral e tracts, Property Review deli ers a series of e tracts from the World ank Group s recently released oing usiness report oing usiness in South frica focuses on business regulations and their enforcement across ﬁ e oing usiness areas t goes beyond ohannesburg to benchmark eight other South frican urban areas across four regulatory areas t also measures the process of trading across borders through four of South frica s maritime ports t contains data current as at May , and includes comparisons with other economies based on data from oing usiness : Reforming to Create obs oing usiness measures aspects of regulation that enable or hinder entrepreneurs in starting, operating or e panding a business and pro ides recommendations and good practices for impro ing the business en ironment Extracts from http://www.doingbusiness.org/southafrica

ape Town leads on two indicators and Mangaung on two others. However, none of the nine urban areas performs equally well across all indicators. That leaves room for all locations to learn from each other’s good practices. Compared globally, South African locations’ performance on the quality indices lags on most indicators. Because regulatory quality depends greatly on national instruments and actors, the central government can play a key role in improving local business conditions. Over the past three years, five locations implemented reforms that DOING BUSINESS IN SOUTH AFRICA 2018 make it easier to do business. Most reforms focused on getting electricity,

TABLE 1.1

with one related to registering property. The pace of reforms has been slow, but the successful reforms are notable for their significant impact. Good practices can be found in South Africa. As locations continue to engage in peer learning and take on new regulatory reforms, projects that address certain issues across indicators – such as internal coordination within the municipalities – will improve the prospect that reforms will bear fruit.

Main findings The results show that business regulations and their implementation vary across the locations, and no location

does equally well across all areas measured. Six locations (Cape Town, eThekwini, Johannesburg, Mangaung, Msunduzi and Tshwane) make the top third of the ranking in two areas measured, yet they are also in the bottom third on at least one indicator. Buffalo City and Nelson Mandela Bay are in the middle of the ranking for three indicators and lag on the last. Meanwhile, Ekurhuleni is in the middle of the ranking across all indicators. Uneven performance across indicators points to opportunities for peer learning. However, some top performers do stand out. Cape Town leads on two indicators – dealing with construction

Doing Business in South Africa 2018—where is it easier? Dealing with construction permits

Location

Distance to frontier score (0–100)

Ranking (1–9)

Getting electricity

Distance to frontier score (0–100)

Ranking (1–9)

Registering property

Distance to frontier score (0–100)

Enforcing contracts

Ranking (1–9)

Distance to frontier score (0–100)

Ranking (1–9)

Buffalo City (East London)

71.66

59.40

57.81

ñ 51.48

Cape Town (Cape Town)

75.48

ñ 79.81

54.69

54.71

Ekurhuleni (Germiston)

71.81

52.09

58.48

55.58

eThekwini (Durban)

73.65

ñ 69.40

54.58

55.74

Johannesburg (Johannesburg)

ñ 68.16

ñ 68.77

59.68

54.10

Mangaung (Bloemfontein)

ñ 71.25

59.82

ñ 59.73

59.01

Msunduzi (Pietermaritzburg)

ñ 73.17

ñ 47.59

52.78

58.78

Nelson Mandela Bay (Port Elizabeth)

ñ 71.70

ñ 42.19

57.93

54.85

Tshwane (Pretoria)

ñ 66.25

51.24

59.39

56.14

Source: Doing Business database. Note: Rankings are based on the distance to frontier score (DTF), which shows how far a location is from the best performance achieved by any economy on each Doing Business indicator. The score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). Arrows indicate an improvement in the DTF score between 2015 and 2018. For more information, see the chapter "About Doing Business and Doing Business in South Africa 2018" and the data notes.

Mandela Bay are in the middle of the rankSOUTH AFRICAN PROPERTY REVIEW 38 ing for three indicators and lag on the last. Meanwhile, Ekurhuleni is in the middle of the ranking across all indicators. Uneven

Every location has something to share with its peers, and good practices can be found even in lower-performing locations. This means that top performers also have room

E The second subnational report of the Doing Business in South Africa series

D doing business in South frica permits and getting electricity – and Mangaung on the other two, registering property and enforcing contracts. In terms of the construction permitting process, Cape Town continues to lead because it is the fastest place to obtain construction approvals and is among the four most procedurally efficient locations. It is also at the top of the getting electricity ranking, followed by eThekwini in second place and Johannesburg in third. These are the only locations to score any points on the new quality measure for this indicator – the reliability of supply and transparency of tariffs index. Mangaung leads on registering property, narrowly outperforming Johannesburg and Tshwane. In these three locations, as in Ekurhuleni, it takes only seven steps to transfer property. Mangaung is also among the fastest locations, along with Nelson Mandela Bay, Buffalo City and Johannesburg. And Mangaung keeps its first-place standing in enforcing contracts. It is where attorney fees are lowest for commercial litigation. Like Msunduzi, it also remains one of the places where contract enforcement takes just under 16 months – the fastest in the country. Every location has something to share with its peers, and good practices can be found even in lower-performing locations. This means that top performers also have room to improve and learn. For example, Tshwane brings up the rear on construction permitting. However, obtaining a construction approval there is less expensive than in Cape Town. Similarly, Buffalo City is in the middle of the ranking on getting electricity, yet it is the fastest place to obtain a connection. Requiring only 76 days to connect to the power grid, it is two weeks faster than the next-fastest location, Cape Town. A few additional observations complement the rankings. First, against a global backdrop, South African locations’ performance varies widely within each area measured. This is especially true for the two areas where municipalities have the most authority – dealing with construction permits and getting electricity. With some South African locations performing on par with OECD

Five Doing Business indicator sets covering areas of local jurisdiction or practice Dealing with construction permits

Registering property

Records the procedures, time and cost required for a small or medium-size domestic business to obtain the approvals needed to build a commercial warehouse and connect it to water and sewerage; assesses the quality control and safety mechanisms in the construction permitting system.

Records the procedures, time and cost required to transfer a property title from one domestic firm to another so that the buyer can use the property to expand its business, use it as collateral or, if necessary, sell it; assesses the quality of the land administration system; includes a gender dimension to account for any gender discriminatory practices.

Getting electricity

Enforcing contracts

Records the procedures, time and cost required for a business to obtain a permanent commercial electricity connection for a standardized warehouse; assesses the reliability of the electricity supply and the transparency of tariffs.

Records the time and cost for resolving a commercial dispute through a local first-instance court, which hears arguments on the merits of the case and appoints an expert to provide an opinion on the quality of the goods in dispute; assesses the existence of good practices in the court system.

Trading across borders

Records the time and cost (excluding tariffs) to import and export goods. Three sets of procedures are assessed— documentary compliance, border compliance and domestic transport—within the overall process of exporting and importing a shipment of goods.

urban areas

Buffalo City (East London), Cape Town (Cape Town), Ekurhuleni (Germiston), eThekwini (Durban), Johannesburg (Johannesburg), Mangaung (Bloemfontein), Msunduzi (Pietermaritzburg), Nelson Mandela Bay (Port Elizabeth), Tshwane (Pretoria)

Advantages and limitations

maritime ports

Cape Town, Durban, Ngqura, Port Elizabeth

Doing Business does not cover:

high-income economies and others global economies, behind Eswatini and ✗ Reliance on expert respondents Focus on the law and practice This gap is mostly lagging among the bottom 20% globally, just ahead of Namibia. ✗ ✗ erences in procedural there is a need to share and replicate local the result of diff ✗ Focus on domestic and formal sector and✗ the time required complexity Use of standardized case scenarios good practices. This will not only improve individual locations’ performance but to obtain approval of a building ✗ will make the whole of South Africa more plan. Municipalities with fewer preconstruction approvals and better globally competitive. The uneven performance among internal coordination among the relevant locations is best illustrated by the departments perform better. The gap is even wider for getting distance to frontier measure, which shows how far a location is from recorded electricity. Nearly 40 percentage points global best practices – the “frontier”. For separate the top and lowest performers’ example, in construction permitting, distance to frontier scores. This puts Cape Town and eThekwini’s distance them worlds apart. In the global to frontier scores (75,48 and 73,65 distribution of 190 Doing Business respectively) place them among the economies, Cape Town would rank 60th top 25% of economies globally. Cape and Nelson Mandela Bay would be 107 Town performs as well as Belgium and places below it. Performance is widely outperforms the average for OECD high- varied across all components of this income economies. Conversely, Tshwane’s indicator. For instance, while it takes score places it in the bottom half of two-and-a-half months to connect to the grid in Buffalo City, it takes nearly four months longer in Nelson Mandela Bay. Mangaung leads on The South African average performance registering property, narrowly (58,92 points) is equally telling – it outperforming Johannesburg places the country among the 40% of and Tshwane. In these three lowest performers globally. This is largely because more than half of the country’s locations, as in Ekurhuleni, nine urban locations do not monitor it takes only seven steps to electrical outages using internationally transfer property. Mangaung recognised methodologies. is also among the fastest Differences in performance are not as large in the indicators on registering locations, along with Nelson property, enforcing contracts and trading Mandela Bay, Buffalo City across borders. However, there are still and Johannesburg good practices to be found in these areas SOUTH AFRICAN PROPERTY REVIEW

doing business in South Africa across South African locations. These are also the indicators for which locations are collectively furthest from global best practices – mostly because of relatively high costs and lower scores on the quality indices for registering property and enforcing contracts. In these regulatory areas in particular, adopting global good practices is also key to increasing South Africa’s overall competitiveness. A second observation on the rankings: the quality of regulation has a strong national component and is an area of potential improvement for South Africa. Locations perform uniformly on the quality indices for registering property and enforcing contracts, which are managed by national departments. Even in those areas where municipalities tend to have greater authority, national regulation plays a large role. For example, the national building code has significant influence over local regulatory quality for dealing with construction permits. South Africa’s average performance lags behind that of the BRIC economies (Brazil, the Russian Federation, India and China) and OECD high-income economies for all the quality indices, save for dealing with construction permits. Because the instruments that determine regulatory quality are largely national, this also points to the key role national departments can play in improving the local business environment and helping South African locations converge with international best practices. Third, a close look at the efficiency metrics reveals that South Africa is relatively competitive in terms of time across three indicators, and the main challenges are in streamlining processes and reducing costs. More specifically, the South African average either outperforms or performs close to the average for OECD high-income economies on the time it takes to obtain construction approvals, transfer property and enforce contracts. In some cases, the best performance in South Africa is among the best globally. For instance, the 88 days to obtain building plan approvals places Cape Town among the 30 fastest global economies on this indicator. 40

SOUTH AFRICAN PROPERTY REVIEW

However, the time to get an electricity port handling costs are high connection remains a constraint, linked on a global scale. Durban, the country’s to the number of time-consuming largest port in terms of volume handled, inspections required. On average, South is its slowest and most expensive. South A close lookwait at the metrics reveals that efforts continue to focus on African businesses one efficiency month Africa’s upgrading port infrastructure longer for a permanent electricity South Africa is relatively competitive in terms of time and connection than their counterparts in moving towards electronic transaction across three indicators, and the main challenges are in systems across agencies involved in the the BRIC economies. streamlining processes and reducing costs. value chain. Procedural complexity and the cost trade to complete regulatory processes are generally obstacles for South The wayinforward FIGURE 1.4stillIn three areas measured, average times South Africa are better than or African across indicators. Although some locations have advanced close toentrepreneurs the OECD high-income average Time (days) For example, South Africa’s average towards best practices, there is still 661 performance on transferring property – significant room for improvement across 577.8 eight steps costing 7,6% of the property the country. Overall, while locations value – puts it among the 40 most should continue streamlining 546.7 regulatory procedurally complex and 44 most processes, they must also start improving 469 expensive economies globally. the quality of regulation. Moreover, Beyond the four regulatory areas advancement hinges on national and measured across the nine urban local policy-makers’ ability to address locations, maritime trade is an equally some cross-cutting issues. important development vehicle for As a first order of business, local South Africa. It represents the vast authorities should increase coordination majority of the country’s exports, to streamline service delivery for 190and 179 South Africa’s ports form a major businesses. Across nearly all indicators, 154.6 corridor 124.7 for regional trade. there is evidence that authorities’ lack of 114.2 Yet in 88 a global comparison, the76time needed79.1 internal coordination makes processes 63 31.7 to comply with port and documentary more burdensome for entrepreneurs. 20 22.3 requirements remains a key barrier for For example, in four urban locations – Dealing with Getting Registering Enforcing traders across all four ports assessed. Johannesburg, Mangaung, construction permits electricity property contracts Nelson South Africa’s border compliance costs Mandela Bay and Tshwane – people Fastest time Averagehigh time Longest time OECD high income for exports are also comparatively applying for construction approvals in South Africa in South Africa in South Africa across the ports, and more expensive are responsible for circulating their than the average for OECD high-income application to the various departments Source: Doing Business database. economies export byon sea. This isdata for involved in the pre-construction approval Note: The OECDthat averages are based economy-level the 33 OECD high-income economies. because customs clearance fees and process. In other locations, however, FIGURE 1.5 On average, exporting through South African ports is nearly twice as expensive as through OECD high-income economies that export by sea OECD high income

325

390

Ngqura

451

506

Port Elizabeth

451

506

Cape Town South Africa average BRIC

503

576

666 623

Durban Cost to export: Border compliance (US$)

60 124 1,257

726 747 55 1,312

Cost to export: Documentary compliance (US$)

Source: Doing Business database. Note: The OECD averages are based on economy-level data for the 13 OECD high-income economies that export by sea. The BRIC averages are based on economy-level data for Brazil, Russia, India and China, all which export by sea.

WHAT HAS C

Following the first D Africa study in 20 locations assessed implement reforms service delivery and tion. South Africa program to suppo reform efforts, em of economies like M (box 1.2).11

Over the last three urban locations m duced one reform. undoubtedly slow, recorded are notew Cape Town, eThe and Nelson Mand mented reforms i while Mangaung m registering property

Most reforms focus ity. In 2018 Cape Johannesburg bec pioneers in calcula frequency of electri methodologies: the ruption duration in system average in index (SAIFI). Replic good practice, they Doing Business eco these critical input improving the quali This improvement locations to score p of supply and transp and improve their o the getting electric now collectively at for this indicator.

Beyond the quality Town also improv and reduced costs t connection. It stre cesses for issuance connection works, nearly a week. It als

doing business in South Africa Similarly, local entrepreneurs require reliable electricity supply for their daily operations. Systematic monitoring of outages would provide utilities the information they need to undertake remedial action to improve the quality of supply the application is circulated internally, streamlining the process. Similarly, at local ports, a lack of coordination between government agencies can result in redundant processes. For example, the South African Revenue Service and Border Police sometimes investigate the same consignment several times, at various stages of the logistics chain. This adds three days on average to maritime import and export processes. Locations need not look far to see the potential benefits of better internal coordination and how it can be achieved. Mangaung’s property registration reform is a prime example: the municipality facilitated coordination with the electricity utility through automation, creating a onestop-shop experience for clients. Second, while municipalities still have significant room for improving on their own, collaboration with the national government would increase the range of areas improved. The obstacles firms face extend beyond mere process efficiency. Businesses also depend on good-quality regulations to protect their interests. Because the quality of business regulation affects local entrepreneurs but is mostly beyond the purview of local government action, there is a need for better collaboration between the levels of government. Drawing national departments into the conversation on local improvements would allow national decision-makers to better understand local needs and implement changes, improving conditions across the country. For example, adopting legislation to address who bears responsibility for post-construction latent defects and

mandating liability insurance to cover losses would be a step towards greater protection for local entrepreneurs. However, this improvement depends on national legislative action. Similarly, local entrepreneurs require a reliable electricity supply for their daily operations. Systematic monitoring of outages would provide utilities the information they need to undertake remedial action to improve the quality of supply. Cape Town, eThekwini and Johannesburg have led by example, as they recently started monitoring outages using the internationally recognised SAIDI and SAIFI methodologies, which focus on the impacts of outages on individual users. Yet the authority to require all local utilities to use this monitoring method rests with the National Energy Regulator of South Africa. The two levels of government can work together to achieve more holistic and comprehensive improvement across all locations. Third, municipalities argue that a lack of resources, specifically staff resources, has constrained their ability to improve service delivery. Authorities could conduct a study of how to better streamline processes to use existing resources more efficiently. Process mapping could subsequently help them determine whether resources should be redistributed or added. Lastly, municipalities should ensure the implementation process is properly executed for improvement efforts to produce real results. Authorities should consider making the intended users part of the implementation process and publicising reforms. Staff training is also important for proper implementation, especially where electronic platforms are involved. To reap the benefits of going electronic, municipalities must ensure their staff are well trained and systems are backed with proper technical support. Moreover, during the rollout of electronic platforms, municipalities need a contingency plan to avert loss of efficiency. South African locations are already engaging in peer learning, facilitated by the Cities Support Programme and also

on their own initiative. The way forward is to redouble these efforts and maximise opportunities to share good practices. Municipalities can also learn from each other’s reform experiences. Most of the improvements so far have been driven by the municipalities, and successful reforms generally occurred within their areas of competence. Additionally, reforms were successful where they were supported by effective local leadership, strong coordination among municipal departments and sufficient capacity to ensure proper implementation. Yet as local authorities continue to reform, collaboration with national departments will help them achieve broader and deeper local improvements. South Africa finds itself at a crossroads. Amid renewed optimism in its economy, the country must find ways to sustain growth and ensure it is inclusive. In the latest State of the Nation Address, the South African President noted that small businesses are the key to sustained economic growth. He vowed to work with social partners “to build a small business support ecosystem that assists, nourishes and promotes entrepreneurs” and to “reduce the regulatory barriers for small businesses”. The country must seize on this momentum to drive the regulatory reform effort, in support of its national development goal of attaining full employment by 2030.

In the latest State of the Nation Address, the South African President noted that small businesses are the key to sustained economic growth. He vowed to work with social partners “to build a small business support ecosystem that assists, nourishes and promotes entrepreneurs” and to “reduce the regulatory barriers for small businesses” SOUTH AFRICAN PROPERTY REVIEW

MetroWatch

Your right to know:

Gauteng Metro, Tshwane in ﬁgures South Africa’s 257 municipalities spent a total of R88,6-billion in the quarter ended June 2018 – 18% more than the R75,1 billion spent during the quarter ended March 2018. Municipal revenue was down, however, falling by six percent over the same period, from R87,6-billion (March quarter) to R82,6-billion (June quarter). Statistics South frica s latest uarterly ﬁnancial statistics of municipalities report provides an updated breakdown of municipal expenditure and revenue. The largest expenditure item in the quarter ended June 2018 was employee-related costs, contributing R24,1-billion

(or 27,2%) to total municipal spending. Many municipalities buy electricity from Eskom that they then resell to various customers. Municipal purchases of electricity were the second-largest expenditure item, contributing R18,2-billion (or 20,6%) to total spending. In terms of revenue, the largest source was sales of electricity, followed by government grants and subsidies. Property rates contributed 19%. Other revenue (which consists of ﬁnes, licences and permits, interest recei ed and rental of facilities and equipment, public contributions and donations) accounted for 9,3%.

What do municipalities spend money on?

Contribution to total municipal expenditure for the quarter ended June 2018

TSHWANE

Metro municipality in Gauteng Population

2 921 488

6 310,2

square kilometres

463 people per square kilometre +27 (0)12 358 7911 www.tshwane.gov.za Isivuno House Corner of Lilian Ngoiyi & Madiba Street Pretoria, 0002

Where do municipalities get their money from?

MAYOR/EXECUTIVE MAYOR

Solly Msimanga +27 (0)12 358 3520 SollyMsimanga@tshwane.gov.za

Secretary

Sally Motebele +27 (0)12 358 3520 SallyM@tshwane.gov.za

MUNICIPAL MANAGER

Moeketsi Mosola +27 (0)12 358 4901 Citymanager@tshwane.gov.za

Secretary

Ninette Botha +27 (0)12 358 4904 NinetteB@tshwane.gov.za

CHIEF FINANCIAL OFFICER Umar Banda +27 (0)12 358 8100/1 UmarB@tshwane.gov.za Source: Quarterly financial statistics of municipalities, June 2018

SOUTH AFRICAN PROPERTY REVIEW

Secretary

Adolphina R Sehlakgwe +27 (0)12 358 8295 AdolphinaS@tshwane.gov.za

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

2015 Unqualified – Emphasis of Matter items

2014 Unqualified – Emphasis of Matter items

2013 Unqualified – Emphasis of Matter items

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

SOURCE: Municipal Audit Reports

Unqualified Opinion

No findings

Emphasis of Matter items

The Auditor-General can state without reservation that the financial statements of the municipality fairly represent the financial position of the municipality and are in line with generally recognised accounting practices.

Same as an Unqualified Opinion with no findings, but the Auditor-General wants to bring something particular to the attention of the reader.

Qualified Opinion

Adverse Opinion

Disclaimer of Opinion

The Auditor-General expresses reservations about the fair presentation of the financial statements. There is some departure from the generally recognised accounting practices, but it is not sufficiently serious to warrant an adverse opinion or disclaimer of opinion.

This is expressed when the Auditor-General concludes that the annual financial statements do not present the municipality’s financial position, results of operations and cash flow in line with generally recognised accounting practices.

The Auditor-General does not have all of the underlying documentation needed to determine an opinion. For example, the lack of underlying documentation and the amounts in question may be so great that it is impossible to give any opinion at 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 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 one-quarter of the cash balance for similar municipalities in Gauteng: R4 369 765 000 About two-fifths of the cash balance for similar municipalities nationally: R3 088 912 098

Good

Positive balance

Bad

Negative balance

An Outstanding Opinion This 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 the 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’ worth of cash cover.

Cash coverage July 2016-June 2017 Not available Months of operating expenses that can be paid for with the cash available. About two-fifths of the coverage for similar municipalities in Gauteng: 1,3 months About one-quarter 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 municipality 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 significantly overspends its operating budget this is a sign of poor operating controls or something more sinister. Overspending by up to five percent is usually condoned; overspending in excess of 15% 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 10% higher than similar municipalities in Gauteng: -6% About 20% higher than similar municipalities nationally: -5,6%

Good

Up to 5%

Average Bad

Between 5% and 15% More than 15%

Reference: Over- and underspending 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 such as 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% of their capital budget. Failure to spend even 85% is a clear warning sign.

Spending of capital budget July 2016-June 2017 Not available Difference between budgeted capital expenditure and what was actually spent. Less than a fifth of the underspending or overspending for similar municipalities in Gauteng: -4,1% Less than 10% of the underspending or overspending for similar municipalities nationally: -10,425%

Good

Up to 5%

Average Bad

Between 5% and 15% More than 15%

Reference: Over- and underspending 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 eight 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. About the same as similar municipalities in Gauteng: 4,21% About 10% higher than 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 7,58% Unauthorised, irregular, fruitless and wasteful expenditure as percentage of operating expenditure. More than double the expenditure for similar municipalities in Gauteng: 2,74% About 1,5 times 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 municipal department’s function. An example is using municipal funds to pay for un-budgeted projects. Irregular expenditure is spending that goes against 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) to its shortterm liabilities (creditors, loans due, and so on). The higher the ratio, the better. The normal range of the current ratio is 1,5 to two (the municipality has assets more than 1,5 to two times its current debt). Anything less than that, and the municipality might struggle to keep up with its payments.

Current ratio July 2017-June 2018 Quarter 2 0,77 The value of a municipality’s short-term assets as a multiple of its short-term liabilities. About 90% of the ratio for similar municipalities in Gauteng: 0,83 About half of the ratio for similar municipalities nationally: 1,555

Good Average Bad

More than 1,5 Between 1 and 1,5 Less than 1

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

Liquidity ratio July 2017-June 2018 Quarter 2 0,24 The municipality’s immediate ability to pay its current liabilities. About the same as similar municipalities in Gauteng: 0,24 About one-third of the ratio for similar municipalities nationally: 0,69

Good

More than 1

Bad

Less than 1

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

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

SOUTH AFRICAN PROPERTY REVIEW

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

Current debtors collection rate July 2017-June 2018 Quarter 2 133,49% The percentage of new revenue (generated within the financial year) that a municipality actually collects. About 1,4 times the rate for similar municipalities in Gauteng: 97,7% About 1,4 times the rate for similar municipalities nationally: 95,845%

Good

95% or more

Bad

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 TSHWANE 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 and electricity, rates, licenses and 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 to 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 46

SOUTH AFRICAN PROPERTY REVIEW

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

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%

Formula: = Wages & Salaries + Social Contributions / Actual Operating Expenditure = Income & Expenditure item codes 3000, 3100, Audited Actual / Income & Expenditure item code 4600, Audited Actual Did You Know? Private contractors are sometimes needed for certain work, but they are usually more expensive than municipal staff. This should be kept to a minimum, and efforts should be made to provide services in-house where possible. This measure is usually between two and five percent of total operating expenditure.

Contractor services July 2016-June 2017 Not available Costs of contractor services as a percentage of operating expenditure.

Within norms up to 5% Outside norms more than 5%

Formula: = Contracted Services / Actual Operating Expenditure = Income & Expenditure item code 4200, Audited Actual / Income & Expenditure item code 4600, Audited Actual

What is money spent on?

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

Planning and Development Health

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

GDP – Gauteng

The role and impact of the commercial property sector Urban-Econ Development Economists were appointed by SAPOA to investigate the commercial pri ate property market in the Western Cape with speciﬁc reference to Cape Town , wa ulu atal eThekwini , Gauteng ohannesburg, Tshwane, Ekurhuleni and Mpumalanga Mbombela O er the ne t four issues, Property Review brings you a concise illustration of the ﬁndings

GDP R49,4-billion Jobs 346 215 Tax revenue R2,5-billion

he first objective in this regard is to investigate the impact of the property sector on various provincial economies, with applied variables that include its contribution in terms of gross domestic product (GDP), employment creation, and broadening the tax base of the public sector (tax revenue generation). The second objective is to analyse the economic impact of possible delays in property development applications in the various identified municipalities. Property development applications include land use management (LUM) applications (township establishment, rezoning, subdivision, etc) and building plan applications, with the analysis being focused on identifying the prescribed application time frames, as well as determining the efficiency ratio (portion of the applications finalised within the prescribed time frames)

New business sales The process in which labour and assets are used to transform inputs of goods and services into outputs of other goods and services.

GDP Gross domestic product refers to the market value of all final goods and services produced in a country in a given period of time.

Primary reasons for delays ● ● ● ● ● ● 48

Application admin Interdepartmental relations Delayed decision making Capacity issues Accountability issues Technical issues

SOUTH AFRICAN PROPERTY REVIEW

for the various municipalities. The third objective is to identify the specific challenges inherent to the property development applications in the municipalities.

Methodology An important aspect of the investigation is analysing the economic impact of delays in the property development application process. In analysing the impact, an integrated development and impact evaluation is undertaken via the SAM Modelling Technique. The aggregate impact of applications is quantified through four indicators: new business sales, GDP, income and job creation. As applications are delayed, so too is the potential positive impact of property development on the local and provincial economy, as reflected in the various variables.

Employment opportunities Opportunities to increase the working population that forms part of the total local labour force.

Income generated The income generated by the project refers to wages and salaries earned by those employed directly in the project and the suppliers of goods and services.

GDP – Gauteng The economic model incorporated into the impact simulation is based on 100 commercial property developments, each 1 000m2 in size. Certain property development assumptions are utilised in the impact simulation, including the average CAP rate in the various municipalities; commercial property rental income per month; annual rental escalation; average construction cost; average operational income and expenditure per month; maintenance cost per month; total rateable property value; and total loan repayment per annum.

The impact assessment seeks to illustrate the impact of this developmental injection on the local economy and subsequently translates this impact in terms of the delay of a single property development application. Accordingly, the eventual outcome of the complete impact assessment defines the economic contribution that cannot be made as a result of the fact that the application is delayed.

The commercial private property sector contributes substantially to the provincial economy of Gauteng in terms of GDP, employment opportunities and tax revenue for the public sector. Therefore, delays in the application process have a substantial economic impact. New business sales, GDP, income and job creation are all affected by processing delays. With less than 35% of LUM and 55% of building plan applications processed within the respective application time frames, specific challenges inherent to the process may be identified, including capacity, accountability and technical issues.

This data has been updated for all the GDP reports and is relevant to 2017.

Economic impact (application delay) 30-day delay

1-day delay

New business sales

R2,8-million

R90 000

Gross domestic product (GDP)

R770 000

R25 000

Income

R530 000

R17 000

Jobs

2 per month

PROPERTY SOUTH AFRICAN

REVIEW

Getting your brand noticed by South Africa’s leading property industry decision-makers PROPERTY REVIEW - LogoTreatment.pdf

2016/08/25

11:31 AM

Each member is a leading player and decision-maker in the commercial property arena – and they use the South African Property Review as an extension of the SAPOA website and information platforms. With a monthly average exposure of more than 5 000 readers, the South African Property Review is a growing and recognised news platform and go-to source of important industry information, interviews as well as in-depth African and regional reports. With a South African property market value in excess of R5,7-trillion, SAPOA members control about 90% of South Africa’s private sector commercial land and building stock, and manage the majority of property funds

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listed on the JSE.

August 2018 The South African Property Review is mailed directly to the association’s leading members, and is also available to the general public, both internally and online via www.southafricanpropertyreview.co.za. The online version is an exact copy of its printed original and has, on average, more than 3 675 impressions a month, with an average read of more than six minutes per issue, giving a monthly reader exposure of more than 5 000.

September 2018

Average Time Spent (minutes)

Total Sessions

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

howmuch.net

Where does your medicine come from? Drugs and medicine are big business. In 2016, there was a 1,5% global decline in the total value of drug and medicine exports. Even with that drop, the industry’s players exported US$318-billion, making drugs and medicine one of the world’s top industries. But where do all those pills, serums and creams come from We wanted to ﬁnd out and Howmuch.net dissected the data from 2016, and broke it down by continent, country and export totals By Raul - https://howmuch.net/articles/world-map-of-drug-exports-2016

Who gets all the medicine money? For most of the world’s population, medicine comes from somewhere else. This is most true for the residents of the southern hemisphere. As the map reveals, there is a big disparity between the industry’s export totals in the north and the south. The northern hemisphere exports 55 times more drugs and medicine than the southern hemisphere. While Europe holds a dominating 79,2% market share, the entirety of Central America, South America, Africa, and Oceania export only 1,8% of the world’s drugs and medicine. Africa exports the fewest (0,2%), despite having 15% of the world’s population. In Africa specifically, the disparity feels dubious. Africans are plagued by disease and illness, but have no significant market for drugs and medicine. That means that they need

SOUTH AFRICAN PROPERTY REVIEW

to import them all. Impoverished and dependent on foreign nations for medical support, Africans are in a bad spot.

America’s role in the drug market In 2016, the US exported drugs and medicine worth US$22,5-billion. That is more than every other country in the world, except for four: ● France (US$22,8-billion) ● Belgium (US$26,5-billion) ● Switzerland (US$39,9-billion) ● Germany (US$48,6-billion) The US edged out the UK’s sixth-place spot by a mere US$500-million. In the western hemisphere, the US has no rival in drug and medicine exports. Canada comes closest, at US$7,4-billion. Mexico exported US$1,2-billion. No nation in South or Central America has joined the billionaires’ club.

Market trends In Europe, it’s obvious that all the cool kids are exporting drugs and medicine. The concentration of knowledge, training, medical manufacturing and infrastructure that must cause (and result from) this huge market it makes it unlikely that the Europeans will see their market share disappear to another part of the world. In fact, European countries are still seeing impressive growth. Switzerland and the Netherlands in particular have seen notable increases. South Africa and Egypt – two of Africa’s three biggest economies – have developing drug and medicine export economies, but the numbers remain low. While it will probably be these two nations that lead the way in African medical development, they still have a long way to go before they become major players.

SOUTH AFRICAN PROPERTY REVIEW

social

Mpumalanga breakfast and networking session SAPOA Mpumalanga hosted a breakfast and networking session on 13 September at the P S Chartered ccountants ofﬁces in elspruit Economist and political speaker Dr Roelof Botha presented on the topic “Economic Property Environment: Economic Prospects with and without Land Reform” Compiled by Derek Todd Edited by Maud Nale

FROM LEFT Derek Todd, SAPOA Mpumalanga Chair and representing Kellaprince Properties (sponsor); Craig McFadyen, SAPOA Mpumalanga Deputy Chair and representing Oriprops CC (sponsor); guest speaker Dr Roelof Botha; Gugu Mkhatshwa, SAPOA Mpumalanga Council Member and representing Mashinini Trading (sponsor); Keith Kellar, SAPOA Mpumalanga Council Member and representing Kellaprince Properties; and Dumisani Mabusa, General Manager: City Planning and Development at the City of Mbombela

otha presented interesting economic data and statistics on the subject, rejecting, for example, the idea of a technical recession. According to Botha, “One cannot compare quarter-on-quarter growth statistics because of seasonal fluctuations. These should be year-on-year statistics, to compare apples with apples.” His greatest bugbear is the Reserve Bank’s policy of maintaining some of the highest real interest rates in the world. “This is nominal interest rates less the inflation rate. Although South Africa’s debt to GDP has risen markedly in the last decade, we are still in a pretty good place compared to some countries.” Botha quoted results of surveys in more than 30 countries, and highlighted that South African citizens, like most other world citizens, do not necessarily want farms or land. Employment, goodquality education, healthcare and housing are bigger priorities. He believes that land expropriation without compensation 52

SOUTH AFRICAN PROPERTY REVIEW

Delegates who attended the breakfast and networking session

will be as disastrous in South Africa, as it has been in every other country in the world that has attempted it. The example of Zimbabwe was cited. Botha continued to highlight that, together with several other property professionals in Cape Town, he is developing a model that will quantify the negative effects of expropriation of land without compensation. The session provided interesting insights on the

matter that has been a hot-button issue in recent months. There were 36 delegates in attendance, among them prominent businessmen and businesswomen, including some members of local government. Special thanks to Kellaprince Properties, Mashinini Trading, Oriprops CC, Mathatha Trading and PBS Chartered Accountants for their valuable contribution in making the event a success.

social

SA Women in Property Awards and Gala Dinner Female captains of industry from around the country gathered at the Inanda Club on the 23rd October, Johannesburg, for the 4th annual SA Women in Property Awards organised by Women’s Property Network (WPN) and in partnership with Airports Company South Africa (ACSA). The awards recognise deserving women from the private and public sector who have excelled in the areas of leadership, inspiration, vision, and innovation within their organisations.

he national event is a culmination of the regional awards which took place in August in Cape Town, Durban and Johannesburg where 91 entries were received across the three regions. Sandi Mbutuma, WPN Chairperson, says that the challenge of gender parity in the property sector is not different from other industries and that one of the greatest obstacles to access and advancement in the sector is education. “It is commendable that SAWIPA honours extraordinary women who, despite obstacles of general access and advancement in the sector, continue to give diligently to the industry,” Mbutuma further highlighted that, besides celebrating the achievements of women in the sector, the main aim of the gala dinner is the raising of funds towards the WPN Education Trust, which awards bursaries to deserving female students towards property-related qualifications. “The Education Trust has managed to award more than 100 bursaries to well-deserving female students pursuing property related studies since 2008, she says. The Young Achiever award, which highlights the outstanding achievement of a young female professional under 35 years who has contributed to the organisation’s positive success and performance through innovative strategies and solutions was awarded to Tshepiso Kobile, Commercial Executive: Infrastructure at Tongaat Hulett Developments. The Business Woman of the Year: Entrepreneur award is reserved for exceptional performance by a female entrepreneur or businesswoman who has shown leadership, business acumen and strategic foresight. Marloes Reinink, Owner of Solid Green Consulting took top

honours this year. The Professional of the Year: Private Sector is awarded to that female who has displayed strong leadership skills and strategic decision-making ability. She has also been involved in CSI initiatives, either through the organization or in her personal capacity, including mentoring and coaching of the youth. This year, Charmaine Schwenn, Founding Partner of Schwenn Inc Attorneys and Conveyancers was awarded this honour. The Professional of the Year: Public Sector is reserved for a female within the public sector, who have excelled in the areas of leadership and strategic decision-making ability. She too has been involved in CSI initiatives, either through the organization or in her personal capacity, including mentoring and coaching of the youth. The recognition was awarded to Gisela Kaiser, Executive Director: Informal Settlements, Water and Waste from City of Cape Town. A special award, the Lisa Blane Award, in honour of the late Lisa Blane was awarded to Dr Thandi Ndlovu, Executive Chair: Motheo Construction Group in recognition of her contribution to the advancement of women in property and the property industry.

The national judging panel included ● Peter Levett, SAPOA Immediate Past President and Managing Director, Old Mutual Property ● Amelia Beattie, SAPOA Past President and Chief Executive Officer, Liberty Two Degrees ● David Green, SAPOA President Elect and Director and Founding Shareholder, ProAfrica Property Services ● Jackie van Niekerk, Chief Operating Officer, Attacq Former SAPOA President and Board member, Dr Sedise Moseneke presided over the evening as Master of Ceremonies.

YOUNG ACHIEVER FROM LEFT Sandi Mbutuma, WPN Chair; the national winner in the category Tshepiso Kobile – Commercial Executive Infrastructure, Tongaat Hulett Developments and Zinhle Ntanzi, Senior Manager Infrastructure and Property Development, ACSA.

BUSINESS WOMAN OF THE YEAR – ENTREPRENEUR FROM LEFT Sandi Mbutuma, WPN Chair; the national winner in the category Marloes Reinink – Owner, Solid Green Consulting and Zinhle Ntanzi, Senior Manager Infrastructure and Property Development, ACSA.

PROFESSIONAL OF THE YEAR – PRIVATE SECTOR FROM LEFT Sandi Mbutuma, WPN Chair; the national winner in the category Charmaine Schwenn – Founding Partner, Schwenn Inc Attorneys and Conveyancers and Zinhle Ntanzi, Senior Manager Infrastructure and Property Development, ACSA.

PROFESSIONAL OF THE YEAR – PUBLIC SECTOR Gisela Kaiser – Executive Director, Informal Settlements, Water and Waste, City of Cape Town

Lisa Blane winner, Dr Thandi Ndlovu, with Portia Tau-Sekati, Chief Executive Officer, Property Sector Charter Council and 2017 recipient of this award.

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KZN’s R1-trillion aerotropolis set to reinvent Durban as a top manufacturing hub ew greenﬁeld commercial and industrial property de elopments on the wa ulu atal orth Coast are planned to attract foreign in estors and fuel economic growth within the R trillion urban erotropolis that centres around ube Tradeport and ing Shaka nternational irport By Lyse Comins Photography by Val Adamson

A total of 94 delegates attended the breakfast, held at the Moses Mabhida Stadium

waZulu-Natal members of the South African Property Owners Association (SAPOA) were privileged to have a sneak peek into the contents of the 50-year master plan for the aerotropolis at the organisation’s recent breakfast and networking event at the Moses Mabhida Stadium Presidential Business Club. The informative event, preceded by a breakfast spread of fresh fruit, yoghurt and muesli as well as continental and hot options, was sponsored by Tongaat Hulett Developments. Dube Tradeport CEO Hamish Erskine and KwaZulu-Natal Department of Economic Development, Tourism and Environmental Affairs economist Mark Hempson presented a bird’s-eye view of the plan, with just enough detail to reveal the huge growth potential for property in the region. The world-class aerotropolis, which will be located around the airport between the ports of Durban and Richards Bay, is projected to include 42-million square metres of development on 32 000 hectares that will create 750 000 permanent jobs and be home to R1,5-million residents.

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Hempson said that the aerotropolis development planners had embarked on an international benchmarking study to analyse best practices for the concept around airports such as Amsterdam, Frankfurt and Belo Horizonte in Brazil. “Cities develop around modes of transport – along a river, a railway line or a highway,” he said. “Durban developed around the port because people wanted to be as close to the port as possible. We are planning the same concept for the aerotropolis; we’re looking at fast, high-value goods that need to move within 24 hours.” Key sectors planned for the attraction of private sector investment are those of advanced manufacturing; health and pharmaceuticals; aviation and aerospace; tourism; agriculture and agro-processing, and electronics and electrical components. The plan for the development includes locating these industries in proximity to the airport and the establishment of town centres with buildings of 20+ storeys (eight percent); urban nodes with six- to 10-storey buildings (33%); urban neighbourhoods consisting of four- to six-storey commercial/residential

developments (32%); two- to four-storey development parks (12%) and one- to two-storey eco-developments (16%). Hempson said the development opportunities around the aerotropolis included medical tourism, where patients could fly in and check into specialised medical facilities (such as knee- or hipreplacement hospitals) and fly out without needing to rent a vehicle. “There are also opportunities around the new cruise ship terminal,” he said. “We want to link international tourists to the cruise terminals so there will be airport and seaboard synergy. We might also want to offer tourists on-shore activities and fly them to Mkhuze, take them on safari and then back to the cruise ship terminal as a value-add to their tourist package.” He said the aerotropolis will be built as a smart city concept to accommodate innovations of the fourth industrial revolution, such as electric autonomous vehicles that would need charging points. According to Erskine, Dube Tradeport, which forms the heart of the aerotropolis, had already attracted R3,2-billion in private sector investment, including international

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The address by the various speakers was followed by a panel discussion. Panellists included Mark Hempson, Hamish Erskine and Rory Wilkinson

FROM LEFT Mark Hempson, Ayanda Somagaca, SAPOA KZN Regional Chair Bernadette Khumalo and Hamish Erskine

FROM LEFT Sipho Hlongwe, Mpume Langa, Allan Nyathikazi, Di Franks and Barry Sparks

investors in electronics, pharmaceutical, agro-processing and other sectors, which have created direct jobs and have the potential to grow downstream opportunities in research and development. As a special economic zone, the tradeport aims to attract foreign investors by offering a highly competitive proposal with major tax incentives such as a corporate tax rate of 15%; the opportunity to offset 100% of the capital cost of investing in building, and an accelerated building allowance write-off. It was also offering a customs-controlled area that translated into zero VAT payments to improve cash flow, as well as various tariff rebates. “What the government is saying is that it is prepared to forfeit tax benefits for the long-term development of the country,” said Erskine. “What we have noticed about investors coming in is that they are here to serve the Southern African Development Community market, some as far north as Kenya and Tanzania and the rest of sub-Saharan Africa. We ask what products are going to be the drivers of those markets for the next 30 or 40 years, and we then look at our zoning around air and sea connectivity. “We have immediate traction in electronics, pharmaceuticals and agroprocessing, and we have a second wave coming in now with the new generation of clothing manufacturing around the world, which we want to catch. We’re also looking at bringing in the aviation sector in the next 18 months. It is all about how Durban re-establishes itself as a major manufacturing hub for the country.” Erskine said Trade Zone One had been sold out, and Trade Zone Two was currently attracting investors. An automotive cluster will be opening in August 2021 in Trade Zone Three, which is located on a 1 000hectare site south of Durban. Hempson said the plan for the Durban Aerotropolis would be officially launched and showcased at an investor conference next year. BREAKFAST SESSION SPONSORED BY Tongaat Hulett Developments

FROM LEFT Mohsin Shaik, Thandekile Sibiya and Greg Veerasamy

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Getting on par at the SAPOA Western Cape golf day The icy wind that swept through the Mother City did not deter the golfers keen for a round. The Western Cape Regional Council hosted its Annual Golf Day at the King David Mowbray Golf Club in Cape Town on 27 September

Caroline Coates and Dave Russell with members of the first-placed Plascon Fourball: Rudi van Schalkwyk, Tyron Oosterberg and Glen Martin

n 18-hole pitch meant that there would be a close call for top honours – but it was the Plascon Fourball who clinched the first prize. Second prize was awarded to NTI Security Solutions, and Nedbank took third prize. We would like to thank our sponsors for their support in making the day a massive success: ● DoubleTree Hotel – Hole 1, lucky draw prize ● Cliffe Dekker Hofmeyr – Hole 18 ● ABE Construction Chemicals – Hole 2 ● Smith Tabata Buchanan Boyes – Hole 6, lucky draw prizes ● SFI Group – Hole 9, lucky draw prizes ● PG Bison – Hole 10, lucky draw prize ● Swindon Property – Hole 16, lucky draw prizes ● V&A Waterfront – lucky draw prizes: ● Eris Property – Prizes from fourth to 10th place

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Caroline Coates and Dave Russell with the second-placed NTI Security Solutions Fourball of Igtishaam Jardine, Craig Green, Marlon Parring and Hannes Mouton

Caroline Coates and Dave Russell with the third-placed Nedbank Fourball of Keith Muirhead, Mike Russell, Ton van Vlaanderen and Charles Saaiman

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STBB Fourball and staff : Anton McElhone, Michael McElhone, Heidi Muller, Christine Mischker, Allan White and Biff Lewis

Swindon Fourball: Peter Noctor, Clinton van Niekerk, Kurt Dreyer and Marcus de Vaarwerk

CDH Fourball: Daniel Fyfer, Mike Collins, Jonathan Syfret and Derek Immelmann

V&A Waterfront Fourball: Deon Sloane, Vivian de Million, Koos Van Rooyen and Clinton Sandmann

Eris Property Fourball: Martin Rippon, Dylan James, Gareth Cook and Andrew Kendall

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SAPOA Western Cape networking event S PO Western Cape hosted speakers on Recent trends in property ﬁnance as well as an industry networking session on September at the rban Real Estate Research nit at the ni ersity of Cape Town By Marika Truter

Robert McGaffin (URERU), Suleiman Titus (Nedbank), Jacques Labuschagne (TUHF), SAPOA Western Cape Past Chair Marlon Parring and David Stoll (Growthpoint)

acques Labuschagne, Portfolio Manager at the Trust for Urban Housing Finance (TUHF) Ltd, delivered an overview of TUHF and its focus on downtown commercial property finance. TUHF provides finance and entrepreneurial support for its clients to purchase, convert or build rental housing property in inner cities. Labuschagne said, “Our hands-on approach and specialised knowledge of the complexities of inner cities enables us to provide support, guidance and risk management for new entrepreneurs. We pride ourselves on our unique ability to spot potential in people from all walks of life to become property entrepreneurs.” In its 13 years of existence, TUHF has financed more than R4-billion in inner city residential rental property. Its loan book currently holds more than 20 000 residential units. “There are hundreds of successful property entrepreneurs who are now running sustainable residential rental businesses, and providing decent and affordable living spaces in our inner 58

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cities thanks to TUHF’s commitment to support, grow with and develop people,” said Labuschagne. TUHF’s financing has three separate “legs”: mortgage and construction finance, the Intuthuko Equity Fund, and bridging finance. Suleiman Titus, Credit Executive at Nedbank Corporate and Investment Banking (NCIB) Property Finance, gave a banker’s perspective on financing different asset classes. He looked at listed funds, self-storage facilities, student accommodation and hotels, as well as the typical finance structures involved in each. “Student accommodation provides for an interesting dynamic,” he said. “Its proximity to campus and the developer’s expertise are critical – but it also has to have timeous delivery, to ensure takeup by students during the planned academic year.” There is a wide array of property finance structures available at NCIB, such as

monthly, quarterly and annual (arrears and advance) repayments, as well as structured repayments based on escalating rental income. Other options are fixed-rate funding structures, deferred payments (aka “roll-up” loans), bullet payments or residual balances, and interest-only facilities. A lively question session was followed by networking and mingling, during which the speakers were in high demand to continue the discussions. The event was sponsored by Divercity and Growthpoint.

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East London introduces SAPOA to local Rotary Club S

APOA East London Regional Chairman Johan Burger was invited by the Gately branch of Rotary Club as one of the speakers to address its members on the future of property development in the region. Burger used the opportunity to introduce SAPOA to the Club, and highlighted some of the amazing work that the Regional Committee has been doing to advance the interest of its members in the region. 178X130 HIRES CONVENTION AD.pdf

FROM LEFT Daily Dispatch Editor Sibusiso Ngalwa, Butch Coetsee, Jacquie Mauer and SAPOAâ&#x20AC;&#x2122;s Johan Burger

10/17/18

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off the wall

Hyperloop:

the revolutionary technology that could change transport forever From high-spec electric cars to lightning-fast trains, the way we get around is changing – and rapidly so. As technology develops, innovative modes of transport are being proposed. One example is hyperloop, a radical idea that could dramatically cut travel times between cities By Anmar Frangoul- Published 14 September 2018 on CNBC.com https://www-cnbc-com.cdn.ampproject.org/c/s/www.cnbc.com/amp/2018/09/14/hyperloop-the-revolutionary-tech-that-could-change-transport-forever.html

irgin Hyperloop One is one of a number of businesses (the others include Hyperloop Transportation Technologies, which was set up in 2013) developing a hyperloop system. So far, it has received US$295-million in funding. Investors include the Virgin Group, GE Ventures and SNCF. So what exactly is hyperloop? It’s a form of transportation that Virgin Hyperloop One says uses magnetic levitation to float vehicles above a track. Electric propulsion accelerates the vehicle through a low-pressure tube, with the vessel capable of gliding for long distances at “airline speed” thanks to ultra-low aerodynamic drag. The potential of hyperloop is, according to the company, considerable. It says that the fully autonomous and enclosed system would produce no direct carbon emissions – and it would cut the travel time between Los Angeles and San Francisco to just 43 minutes. “When we look at the technology that we’re developing, when we look at the progress that we’ve made, when we look at the fact that we’ve built a proof of concept already … I think we are going to change people’s lives,” Rob Lloyd, Virgin Hyperloop One’s Chief Executive Officer, told CNBC’s “Sustainable Energy”. “I think we’re going to improve the lives of people around the world,” Lloyd said. “It’s not just going to be for people who have a lot of wealth or people in

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wealthy areas; we’re going to dramatically change how people live. We’re going to increase opportunities for jobs, we’re going to change relationships, we’re going to change their expectations of how commerce is conducted.” While the company’s ambitions are grand and far-reaching, its origins are humble, having started out in a Los Angeles garage in November 2014. “The goal was to create the fifth mode of transport,” Josh Giegel, Chief Technology Officer of Virgin Hyperloop One, said. Progress has been relatively quick since then. In 2017, the company announced that its first-generation pod, the Hyperloop One XP-1, had accelerated for 300 metres and glided above the track using magnetic levitation. The pod was able to apply its brakes and come to a gradual stop.

Malcolm McCulloch is an associate professor in engineering science at the University of Oxford. Looking at the bigger picture, he outlined what would be important in the mobility sector in the years to come. “There will be three new technologies that we’re going to need in the near term, the medium term and the long term,” he said. “In the near term, it’s going to be cheaper and more compact batteries for electric vehicles. In the medium term, it’s going to be autonomous driving and making sure that it works to an acceptable level.” In the long-term, McCulloch said that the focus would be on looking at alternative fuel sources for long-distance travel. “One of the interesting ones is going to be ammonia, which is basically a better form of carrying hydrogen.”

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