South African Property Review
PROPERTY SOUTH AFRICAN
October 2016
REVIEW
PROPERTY REVIEW - LogoTreatment.pdf
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2016/08/25
11:31 AM
Penreach
Taking education to the community
Education, student accommodation, research
Student accommodation At what cost?
Research
s●
L
D series
Call2Action ●
monthly cou n Our
Th e WOR
Digging into data
by-country focu try-
October 2016
United Kingdom Focus on Brexit
Taking charge in East London
SAPOA events
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SOUTH AFRICAN PROPERTY REVIEW
from the CEO
GICS change elevates the position of real estate The importance of the sector in the global economy acknowledged
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he Global Industry Classification Standard (GICS) has experienced a major change since 1 September 2016. Based on an extensive consultation process involving clients and industry analysts, and as a result of the evolving investment landscape, real estate has been added as a new sector. The announcement was made at the MSCI South Africa Real Estate Investment Conference in August. This change has elevated the position of real estate from under the financials sector, bringing the number of GICS sectors to 11. They cover energy, materials, industrials, consumer discretionary, consumer staples, healthcare, financials, information technology, telecommunication services, utilities – and now real estate. This is the first time a new sector has been created under the GICS structure since its inception in 1999, and the update acknowledges the importance of real estate in the global economy. According to MSCI and S&P Global Market Intelligence, the creation of the new real estate sector will benefit investors by helping them keep up with the evolving
investment landscape, recognising the position of real estate as a distinct asset class and a foundational building block of a modern portfolio. In 1999, MSCI and S&P Global Market Intelligence developed the Global Industry Classification Standard (GICS), seeking to offer an efficient investment tool to capture the breadth, depth and evolution of industry sectors. GICS is a common global classification standard used by thousands of market participants across all major groups involved in the investment process. According to David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, “When GICS was introduced in 1999, we committed to keeping the structure up to date as the global economy evolves. The creation of an 11th sector recognises the growing importance of real estate in the world’s equity markets.
This is the first time a new sector has been created under the GICS structure since its inception in 1999, and the update acknowledges the importance of real estate in the global economy “The decision to add a real estate sector was based on extensive comments from investors and analysts as well as in-depth analysis and discussions between S&P Dow Jones Indices and MSCI.” “This is the first significant structural change to GICS sectors since its inception, and it reflects the position of real estate as
For more than 40 years, MSCI’s research-based indices and analytics have helped the world’s leading investors build and manage better portfolios a distinct asset class and a foundational building block of a modern portfolio, rather than an alternative,” said Remy Briand, Managing Director and Global Head of Research at MSCI. “GICS was developed as a means of standardisation that would keep up with the evolving investment landscape.” For more than 40 years, MSCI’s researchbased indices and analytics have helped the world’s leading investors build and manage better portfolios. Clients rely on its offerings for deeper insights into the drivers of performance and risk in their portfolios, broad asset class coverage and innovative research. MSCI’s line of products and services includes indices, analytical models, data, real estate benchmarks and ESG research. But what does this mean for the South African commercial property market? “Over the last 20 years, there has been a clear trend of global asset owners increasing allocations to real estate and other alternatives,” said Phil Barttram, Executive Director for Real Estate at MSCI South Africa. “Investor appetite for real estate’s specific risk and return profile has also driven the substantial growth and diversification of the South African listed property sector. With the GICS changes, we can expect increased interest as the sector gets recognised as a distinct component of a portfolio.” Neil Gopal, CEO SOUTH AFRICAN PROPERTY REVIEW
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from the Editor’s desk
Tell me and I’ll forget; show me and I may remember; involve me and I’ll understand This Chinese proverb is one that sums up education for me. We have all sat in a classroom or lecture room and been told things that have made us fall asleep in sheer boredom. Then the lecturer suddenly began a demonstration and our interest was piqued, and we remembered what the class was all about. The next thing was participating in the lesson: those are the lessons that have resonated long into my career – and my life…
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he theme of this month’s edition is student accommodation, education and research. What is interesting about South Africa is that the government has been mandated through the Constitution to educate its people. Nelson Mandela, the father of South Africa’s modern democracy, set this down. He understood the value of education, and used quotes such as, “Education is the most powerful weapon that you can use to change the world”, “Without education, your children can never really meet the challenges they will face. So it’s very important to give children education and explain that they should play a role for their country” and “No country can really develop unless its citizens are educated.” It is not surprising that one of SAPOA’s pillars is to build and transform young minds, and to afford them opportunities of growth and self-fulfilment. This SAPOA does through its Bursary Fund, building relationships with educational institutions and offering courses such as the PDP course, as well as offering participation in learning through its online e-learning programmes. These courses and programmes all have one goal: to lead participants to a career in property. There are many factors that will influence a student in his or her success or failure to attain the best grades possible. This issue is dedicated to looking at various aspects of education, which is why we had the good fortune to speak to Andile Ncontsa, Chief Executive Officer of the Penreach outreach programme, an initiative that SAPOA has joined. Penreach encourages education of children from an early age and voluntary participation in early childhood learning, and welcomes South Africa’s property industry to contribute to it success. We talk to our new Education Committee chairperson Bernadet Hartley, who gives us an outline of SAPOA’s education mandate, and also look at student accommodation. Research is linked to education. Informed industry players being given clear insight about changing policies and what those
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SOUTH AFRICAN PROPERTY REVIEW
policies may mean is a topic critical to the property industry’s growth. We explore SAPOA’s overview on the subject, talk to research analysts Kobus van der Vyver and Bianca Smith, and get an insight of what is required in property research from the coordinator of the postgraduate studies in real estate, Professor Samuel Azasu of Wits University’s School of Construction Economics and Management. Three months after the Convention, the dust has had time to settle –and so have our three new Board appointees. Peter Levett, an existing Board member, was elected President Elect. Pieter Engelbrecht, whom many of you know has been the Excellence Awards stalwart, is now on the Board. We also welcome Nnema Byrd – not only to the Board, but to South Africa as well. Our regular offering “Eye on the World” delves into the much-talked-about Brexit. Rather than jumping in when the referendum results were first broadcast, we decided to let things lie for a while to see what our contacts in the UK would say. We’re reliably informed that until a decision is taken on how the exit strategy will be formed and when, it’s pretty much business as usual on the commercial property front in the UK. There is, however, some interesting information that we’ve complied from various sources. Looking at the topics in our upcoming editions, the November issue of South African Property Review will focus on green building and the environment, and our industry focus will be on bankers, green energy, and facilities and property managers. The December edition will include our quarterly look at property development in South Africa, with a particular interest in East London and Port Elizabeth. CSIs get a look-in as well, as does commercial property brokering and auctioneering. Happy reading – and remember that we are also online. Mark Pettipher, Managing Editor
VACANCY SAPOA events BULLE TIN EXCITING OPPORTUNITIES FOR PEOPLE WHO WANT TO MAKE A DIFFERENCE
DEPARTMENT OF TRANSPORT AND PUBLIC WORKS PROVINCIAL PUBLIC WORKS CHIEF DIRECTOR: HEALTH INFRASTRUCTURE – CAPE TOWN Salary: R1 068 564 – R1 277 610 per annum (Salary level 14) - CTE • Ref no. TPW 2015-232 HH Job purpose: Provide strategic, managerial and business leadership to the Health Infrastructure Chief Directorate as implementing agent to drive the planning, procurement and construction of Health infrastructure assets in the Province. Qualifications and experience: Undergraduate qualification NQF 7 as recognised by SAQA with a minimum of 5 years’ senior management experience; A valid Code B driver’s licence. Recommended: Built sector qualification and/or a proven track record of a leadership role in an infrastructure delivery management function. Key performance areas: • Strategic capability and leadership • Programme and project management • Financial management and corporate governance • Human resource management, people development and change management.
DIRECTOR: PROPERTY ACQUISITION – CAPE TOWN Salary: R898 743 – R1 058 691 per annum (Salary level 13) - CTE • Ref no. TPW 2015-329 HH Job purpose: Rendering of professional functions and duties in property environment. This is a senior management position and the successful candidate will be required to manage the acquisition of immovable property. Qualifications and experience: Undergraduate legal qualification NQF 7 as recognised by SAQA with a minimum of 5 years’ middle/ senior management experience • A valid Code B driver’s licence. Recommended: LLB or post-graduate Law Degree • Admission as an Attorney/Advocate. Qualified Conveyancer • Experience in Property Management. Key performance areas: • Acquisition and disposal of immovable assets and related functions • Management of the directorate • Land exchanges and transfer of immovable assets in terms of the principle of assets • Oversight and management for all financial resources/aspects of the directorate and all performance requirements related to the PFMA and corporate governance.
DIRECTOR: INFRASTRUCTURE POLICIES, STRATEGIES AND SYSTEMS: HEALTH – CAPE TOWN Salary: R898 743 – R1 058 691 per annum (Salary level 13) - CTE • Ref no. TPW 2015-326 HH Job purpose: Formulation and management of strategies, policies, systems, plans and build documents related to infrastructure delivery on behalf of the Provincial Department of Health. Qualifications and experience: Undergraduate qualification NQF 7 in the building environment as recognised by SAQA with a minimum of 5 years’ middle/senior management experience • A valid code B driver’s licence. Recommended: A proven track record of a leadership role in an infrastructure delivery management function. Key performance areas: • Strategic capability and leadership • Programme and project management • Financial management and corporate governance • Human resource management, people development and change management.
DIRECTOR: PROJECTS AND PROGRAMME INFRASTRUCTURE DELIVERY: EDUCATION – CAPE TOWN Salary: R 898 743 – R 1 058 691 per annum (Salary level 13) • Ref no. TPW 2015-327 HH Job purpose: Infrastructure delivery and the oversight of implementation of capital, scheduled maintenance and emergency maintenance projects. This will include preparation of project execution plans, signing off and payment of invoices, procurement, contract and cash flow management. Qualifications and experience: Undergraduate qualification NQF 7 in the building environment as recognised by SAQA with a minimum of 5 years’ middle/senior management experience • A valid Code B driver’s licence. Recommended: A proven track record of a leadership role in an infrastructure delivery management function. Key performance areas: • Strategic capability and leadership • Programme and project management • Financial management and corporate governance • Human resource management, people development and change management.
Enquiries: Mr G Kode, tel: 021 483 2593, gavin.kode@westerncape.gov.za Notes: These posts have previously been advertised and have now moved into a targeted recruitment phase. There is therefore an extended closing date for applicants and the posts will be filled as soon as suitable and qualifying candidates are found. Only shortlisted candidates will be contacted. All shortlisted candidates will be subjected to a technical exercise that intends to test relevant technical elements of the job, the logistics of which will be communicated by the Department. Following the interview and technical exercise, the selection panel will recommend candidates to attend a generic managerial competency assessment (in compliance with DPSA directive on the implementation of competency based assessments). The competency assessment will be testing generic managerial competencies using the mandated DPSA SMS Competency Assessment tools.
Applications are to be submitted online via www.westerncape.gov.za/jobs The WCG is guided by the principles of Employment Equity. Disabled candidates are encouraged to apply and an indication in this regard would be appreciated.
Closing date: 31 December 2016
SOUTH AFRICAN PROPERTY REVIEW 91 128474 PR ayandambanga.co.za
SAPOA events
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SOUTH AFRICAN PROPERTY REVIEW
contents
October 2016
PROPERTY SOUTH AFRICAN
Abland
REVIEW
South African Property Review
PROPERTY SOUTH AFRICAN
October 2016
REVIEW
PROPERTY REVIEW - LogoTreatment.pdf
1
2016/08/25
11:31 AM
Penreach
Taking education to the community
ON THE COVER Education and Research form a major part of SAPOA’s mandate.
Education, student accommodation, research
Student accommodation At what cost?
Research
Abreal
s●
LD
series
Call2Action ●
monthly cou n Our
The WOR
Digging into data
Taking charge in East London
by-country focu try-
October 2016
United Kingdom Focus on Brexit
1 2 6 8 10 12 14 20 27 29 34 42 48 50 56
From the CEO From the Editor’s desk Industry news Legal update The legal position on annual structural inspections Planning and development Is there a need to review urban planning academic programmes? SAPOA Board members Putting SAPOA’s best foot forward Far-reaching education Educational outreach programme empowers young South Africans to change the world SAPOA on education An overview of education in South Africa Real estate endorsement The Estate Agency Affairs Board announces a ground-breaking consumer protection and compliance initiative Eye on the world United Kingdom Property research SAPOA in search of data Taking charge SAPOA joins Call2Action Method for measuring floor areas SAPOA is blazing an international trail with MOMFA Events Off the wall Keeping up with the Flintstones
Oilgro
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 Production Manager Dalene van Niekerk Designers Wade Hunkin, Eugene Jonck Sales Robbie Pansegrauw e: rob@mpdps.com; Riëtte Stevens e: sales@sapoa.org.za Finance Susan du Toit Contributors Brenda Bryden, Bryan Chaplog, Lekgolo Mayatula, Maud Nale, Phil Ruimte, Samuel Azasu, Stanley Karombo Photographers Charmaine Rowe, 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.
P R O P E R T Y Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com
e: philip@rsalitho.co.za
F U N D
industry news
Emira achieves strong 8,8% full-year distribution growth E
mira Property Fund Limited has reported distribution growth of 8,8 % per share for its full-year ended 30 June 2016, meeting its market guidance with a strong set of results for Emira investors. Geoff Jennett, CEO of Emira Property Fund, attributes the solid performance for 2016 to contractual escalations across most of its portfolio, benchmarksurpassing occupancy levels, tight cost controls, effective recycling of capital and Emira’s strong balance sheet. In addition to posting inflation-beating total distribution growth, Emira closed the year with moderate gearing, with a loan-to-value ratio of 35,4% and 93,1% of its interest rate exposure fixed. What’s more, income from Emira’s listed investment in Growthpoint Properties Australia (GOZ) grew 22% as a result of increased distributions from GOZ, the lower dividend withholding tax and the rand depreciating against the dollar. “Emira’s revenue increased by 5,6% during the year because of the effect of past acquisitions and organic portfolio growth,” Jennett says. “Besides top-line growth, we also kept expenses contained and improved recoveries of municipal expenses. In general, we’ve made good leasing progress, and vacancy levels match or better industry benchmarks.” In June, Emira took the unusual and transparent step of announcing its distribution outlook for the 2017 financial year before releasing its yearend results. Emira forecasts negative growth of two percent in distribution per share for its year to 30 June 2017,
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projecting a total dividend for that year of 143 cents per share. This is a result of increased vacancies in its office portfolio, the oversupply of offices in the market, and expected negative rental reversions resulting from the weak macroeconomic environment. Jennet explains that despite good overall leasing numbers Emira was hit with 30 000m² of sudden vacancies in eight office buildings, five of which are in Pretoria. “We have clear operational and strategic steps in place to address this,” he says. “Emira has been strengthening its portfolio composition by reducing exposure to lowergrade offices for a few years. We will continue to rebalance the portfolio and responsibly lower our office exposure to better align it for this persistently tough market. “With this strategy and our focused, proactive asset management and aggressive leasing, we expect to be on track for real distribution growth in the 2018 financial year.” Emira is a medium-cap diversified JSE-listed REIT that’s invested in a quality balanced portfolio of office, retail and industrial properties. Its assets comprise 144 properties worth R12,9-billion. Emira is also internationally diversified through its direct interest in ASX-listed GOZ, worth R940,4-million. During the year, occupancy across all sectors of Emira’s portfolio outperformed or matched national standards. Its overall vacancies increased slightly from four percent to 5,3%. Office vacancies were on par with SAPOA’s national level of 10,5%; retail stood at 2,8% and well below the national
SOUTH AFRICAN PROPERTY REVIEW
average of 5,3%; and industrial vacancies were 2,4% – better than the national benchmark of 3,4%. Emira achieved tenant retention of a notable 75% by gross lettable area. The fund is also efficiently recycling its capital by concluding beneficial disposals of non-core properties and reinvesting the proceeds in upgrades, improvements and acquisitions. It has also secured a meaningful capital expenditure pipeline to support its strategic growth. Emira acquired four properties for a total investment of R244,4million and a blended yield of 7,9%. This includes a 50% share of Mitchells Plain Town Centre in the Western Cape, the remaining 40% share of Ben Fleur Boulevard in Emalahleni in Mpumalanga, the greenfield site at 1 West Street opposite the Centurion Gautrain Station and a 50% stake in the five buildings of Summit Place, the P-grade commercial development in Menlyn, Pretoria. “We’ll continue to find suitable ways to grow and achieve our strategic portfolio balance. To this end, we hope to announce a new strategic alliance with an unlisted rural retail portfolio soon,” says Jennett. Emira also undertook projects to modernise, extend and redevelop a number of its buildings, supporting their best use, quality and performance. A leading example of this is Emira’s R85-million major upgrade and refurbishment of Kramerville Corner, successfully transforming ageing B-grade offices into prime showroom space. Responding to letting demand, Emira extended the scope of the project. It will be completed by the end of this month, with a total
investment of R220 million and a first-year yield of 9,5%. Emira also signed a sevenyear agreement with WSP|Parsons Brinckerhoff for 5 800m² of head office space, triggering the first phase of Emira’s R813,8-million total redevelopment of Knightsbridge office park in Bryanston. Work began in November 2015 on the first of seven buildings at the primelocated park, which will more than triple the size of the offices at Knightsbridge to 29 419m². The second phase will kick off shortly upon signature of a 10year lease with an international tenant. The office park is being built for a minimum 4-Star Green Star SA rating from the Green Building Council of South Africa. Emira continued its strategy to dispose of noncore buildings, selling and transferring three properties totalling R284,5-million at a combined forward yield of 6,5% and a premium to combined book value of 49%. It has also identified a further 18 properties, worth R835million, to sell to further reduce its office exposure, rebalance its portfolio and ensure sustainable earnings for its investors. Jennett says the disposal funds will be put to best use, including on-market buy-backs of Emira shares. “We have great confidence in Emira’s prospects relative to its share price,” he says. “The present divergence between Emira’s equity value on the stock exchange compared with its book value creates the opportunity to execute this strategy. We’ve already started the share buy-back programme and will expand it where feasible.”
industry news
industry news
An essential guide for the safe, efficient and cost-effective running of any facility
Sandton City still changing the face of South African retail
t the heart of one of Africa’s richest square miles lies Sandton City, a glittering beacon of commerce that’s been attracting shoppers and retailers from all over the country and around the world for more than 40 years. This project saw more than 30 000m² of new retail space being added to the centre, which now measures almost 146 800m², and enabled it to further expand its exceptionally diverse offering of fashion, food, decor and leisure outlets while also increasing its appeal for consumers of all ages and income groups. On the fashion front, Sandton City has entrenched its position as the capital of Afro-cosmopolitan glamour and style by being the first to accommodate global brands Zara, H&M and River Island (previously unrepresented in South Africa) alongside the best local offerings. This makes it the first choice for Johannesburg fashionistas who #cometothecity to have direct access to the hottest international trends as well as the flair and talent of this country’s best designers. Then there’s Diamond Walk, a spectacular new section of the mall that houses international super-luxury brands such as Prada, Dolce & Gabbana, Giorgio Armani, Burberry, Ermenegildo Zegna, Billionaire Italian Couture, Jimmy Choo, Versace, Gucci and Louis Vuitton. Created last year at a cost of R185-million, this
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stunning showcase adds another dimension to Sandton City’s reputation as a premier retail destination, enabling local consumers to find the same coveted brands on their doorstep that any global high-flyer would expect to find in London, Paris, New York or Dubai. However, the centre is not just about high fashion for the fortunate few. The thinking behind the recently launched #cometothecity campaign is to reinforce that it is also a great place to do your regular weekly shopping, take the kids to a movie, take your overseas visitors to look for the best souvenirs, spend a day out with friends, and find the perfect accessory or decor item for your home, no matter what your budget. What is more, Sandton City’s food and beverage offerings are as varied and exciting as its other stores. Including the fresh new restaurants on the redeveloped Nelson Mandela Square, there are literally dozens of options here for a quick lunch bite, a quiet coffee while you put the finishing touches on that all-important business proposal, a mouth-watering pastry while you stop a while to people-watch, a tall cocktail to sip on after work, a romantic pasta dinner or a lazy Sunday lunch. All of this helps to explain why Sandton City continues to attract millions of visitors a year, – although a big part of its popularity is the result of increasingly easy to access from the surrounding office precincts, other parts of the city and OR Tambo International Airport. For those who drive, 2 500 new parking bays were added in the recent revamp. For those who prefer public transport, the centre is just a short walk from Gautrain’s Sandton Station – and also readily accessible by bus, taxi, tuk-tuk or bicycle.
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SOUTH AFRICAN PROPERTY REVIEW
7
legal update
The legal position on annual structural inspections I
s it legislatively stipulated that an annual inspection be carried out by a professional, such as a structural engineer, to certify the structural soundness of a building? The National Building Regulations and Building Standards Act No. 103 of 1977 provides for the promotion of uniformity in the law relating to the erection of buildings in the areas of jurisdiction of local authorities; for the prescribing of business standards; and for matters connected therewith. Section 17(1)(b) of the Act provides that the minister may, after consultation with the council, make regulations, to be known as national building regulations (b) to provide for inspections and tests in respect of buildings, whether before or during the erection or after the completion of the erection thereof, including the powers of building control officers in that regard, and the steps to be taken in order to prevent any nuisance which may occur before, during or after the completion thereof; and 17(1)(d), regarding the strength and stability of buildings. Section 18(2) provides that the council may, at the request in writing of the owner of any building or any person having an interest therein and after consultation with the local authority in question, in respect of the erection of such building or the land on which it is being or is to be erected, in writing permit a deviation or grant an exemption from any applicable national building regulation relating to the strength and stability of buildings The Regulations define “inspection” as the general inspection by a competent person of a system or measure or installation of a building, or part thereof, at such intervals as might be necessary in accordance with accepted professional practice to enable such competent person to be satisfied that the design assumptions are valid, the design is being correctly interpreted and the work is being executed generally in accordance with the designs, appropriate construction techniques and good practice but shall exclude detailed supervision and day-to-day inspection. “Structural” means relating to or forming part of any structural system. Section 15 2(b) of the Regulations provides that the owner of any building shall ensure that pursuant to these regulations or pursuant
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SOUTH AFRICAN PROPERTY REVIEW
to any building by-law that was in operation prior to the coming into operation of the Act, (a) the structural safety performance (behaviour of buildings under all actions that can be reasonably expected to occur) is maintained. There is no stipulated requirement for an annual structural inspection in the National Building Regulations and Building Standards Act. There is no requirement under this Act or the National Building Regulations that structural inspections of a building be carried out on an annual basis or other regular basis by a professionally qualified person. Since the recent earthquakes that have occurred, damaging some buildings (for example in Pietermaritzburg) and other incidents have been possibly taken to court, precedence may have been established for this (or not), as a requirement going forward An owner will always have common law duties (especially where the public makes use of the building in question) to ensure that such building is maintained properly so as to guard against the risk of an incident occurring which may cause harm. This common law duty will be governed by considerations of reasonableness, and will depend on the circumstances of each case. A similar maintenance duty is imposed by the Construction Regulation under the Occupational Health and Safety Act of 1993 which we now consider. Regulation 11 of the Construction Regulations of 2014 promulgated under the Occupational Health and Safety Act of 1993 governs the health and safety requirements relating to “Structures”, which are broadly defined under the Construction Regulations as essentially any building, steel or reinforced concrete structure (not being a building) … earth retaining structure or any structure designed to preserve or alter any natural feature, and any similar structure. Regulation 11(2) governs the owner’s obligations in respect of a structure and states that: An owner of a structure must ensure that – a. inspections of that structure are carried out periodically by competent persons in order to render the structure safe for continued use;
b. that the inspections contemplated in paragraph (a) are carried out at least once every six months for the first two years, and thereafter yearly; c. the structure is maintained in such a way that it remains safe for continued use; d. the records of inspections and maintenance are kept and made available on request to an inspector. Therefore, the owner of a structure must ensure that the structure is inspected by a competent person at least once every six months for the first two years after its construction; thereafter it must be inspected on an annual basis. A “competent person” is defined as one who: a. has in respect of the work or task to be performed the required knowledge, training and experience and, where applicable, qualifications, specific to that work or task; provided that where appropriate qualifications and training are registered in terms of the provisions of the National Qualifications Framework Act of 2000, those qualifications and that training must be regarded as the required qualifications and training; and b. is familiar with the Act as well as with the applicable regulations made under the Act. There are currently no specific qualifications or training registered under the National Qualifications Framework Act for the “competent person” required to inspect structures in terms of Regulation 11(2). Therefore the “default” requirements for competency to conduct the necessary inspections are that the individual must have knowledge, training, experience and any relevant qualifications to conduct the inspections. In our view, a qualified structural engineer should meet all these requirements and is therefore seen as competent to conduct the inspections. On the basis of what is set out above, there is a duty on owners to carry out bi-annual (for the first two years) and then annual inspections in respect of any structure. This is in addition to an owner’s common law and statutory duties of maintenance.
SAPOA events
SOUTH AFRICAN PROPERTY REVIEW
91
planning and development
Is there a need to review urban planning academic programmes? I Lekgolo Mayatula is SAPOA’s Planning and Development Manager
The reason for developing the competencies and standards for planning was to set out areas of knowledge rather than a set of competencies. These would then need to be aligned with the various categories of planners. 10
n our 20 years of democracy, there has been a flurry of changes that the country has had to adapt to and respond to. The education system is one of the rapidly changing environments; it feels as though we continue to have to play catch-up with what the rest of the world has been or is now doing. Figuratively speaking, it’s as if the country’s education system is trying to jump onto a moving train. Unfortunately this time it can’t afford to jump on board without its luggage. The luggage refers to our past, which needs to be appropriately addressed in order to ensure that the education system produces world-class citizens who are able to stand their ground in an ever-changing and competitive global environment. The question to be asked is whether our current education system is producing sought-after, qualified, skilled, confident technical and professional graduates. The response is not a yes or a no: it is a complex matter that requires continuous research, monitoring and evaluation. Events such as the #FeesMustFall campaign, the call for re-circulation and a new qualification mix at universities of technology by the Council for Higher Education and Higher Education Qualifications Committee, as well as the South African Council for Planners’ Consolidated (SACPLAN) “Report on Competencies and Standards” (approved on 18 September 2014) are just some of the signs alluding to the fact that there’s an enormous amount of work taking place within the educational environment, especially at institutions
SOUTH AFRICAN PROPERTY REVIEW
of higher education. The roleplayers include government, tertiary institutions, potential employers and students. As compared to the past, where students may have been perceived to have a muffled voice in terms of the offerings and operations of higher education programmes/courses and outcomes, the #FeesMustFall campaign has highlighted that students are becoming much more vocal about what they believe is of benefit to their future and their survival in an ever-changing and competitive world. The majority of students currently enrolled at various educational institutions have access to technology that allows them to constantly stay engaged. They seek instantaneous responses and are more aware of themselves and their surroundings (locally, nationally and internationally). The question is whether our educational programmes are responding to their needs – and if not, what the implications of non-responsiveness from the institutions entrusted with the overwhelming responsibilities of developing well-rounded citizens are. In response to the above, various institutions of higher education have been assessing their academic programmes/ offerings to ascertain whether they are responding to the needs of the relevant industries as well as those of the students. For example, the Cape Peninsula University of Technology Urban Planning School/Department embarked on an almost decadelong investigation that took into consideration the various educational programmes offered,
and assessed whether these were indeed responding to the needs of the employer (i.e. development industry), the end-user (i.e. society and student) and the profession (i.e. SACPLAN). In response to its findings, the institution developed a new diploma route which will commence in 2017. In 2009, SACPLAN commissioned a consortium to undertake research into the process of preparing new competencies and standards for the planning profession. Following the compilation of a number of reports, a consolidated report was approved in September 2014. It provides a comprehensive overview on the planning profession and the role it plays in the South African development context. The report also provides the following guidelines: (a) guidelines for competencies and standards for the planning profession; (b) guidelines for registration of planners; and (c) guidelines for job profiling for planners. The reason for developing the competencies and standards for planning was to set out areas of knowledge rather than a set of competencies. These would then need to be aligned with the various categories of planners. As mentioned, the role and skills sets of planners have changed dramatically. In the past, planning was widely viewed as a technical activity concerned with township layout, infrastructure design and control of land, and built form and master plans, township layouts and townplanning schemes were the primary instruments.
planning and development in their courses instead of just reviewing their courses, such This translated into a narrowly provided insight on what being in class and taking notes; as whether the assessment focused output, where planning the industry expects from it encourages critical thinking strategies should be inwardwas done through a somewhat the planning profession. One skills, and the students become or outward-looking. An inwardpredictable “paint-by-numbers” report was a collaborative much more involved in finding looking assessment strategy approach, which was in most venture between the South workable solutions to a number focuses on factors that have a instances quite exclusionary African Cities Network and of challenges, which could be direct impact on the assessment and unsustainable – especially SAPOA, titled “Developing presented in the form of either strategy, whereas an outwardin the South African context. This a Collective Approach to individual or group assignments. looking assessment strategy uses also created the assumption Mixed-Use Development in Lastly, it instils the need for factors that are influenced or are that planners had access to Transit-Oriented Development collaboration between various a response to the assessment data that covered every aspect Precincts; the second report disciplines, which in the past was strategy. (See Figures 1 and 2 of the built environment, and was “The Role and Impact not something that was instilled below for illustration of the that planning schools taught of the Commercial Property in the planning curriculum. two assessment approaches.) and evaluated students in Sector in Gauteng Province”. a manner that limited the In essence, both reports Figure 1: Inward looking assessment strategy (source B Vester) students’ critical thinking emphasised (among other Figure 1: Inward-looking assessment strategy (Source: B Vester) and problem solving abilities. aspects) the need for planners Fast-forward to 2002, when to have a much more holistic Demands from the Planning Profession Act approach to development, Figure 1: Inward looking assessment strategy (source B Vester) profession was enacted with the aim which means they must to realign the profession understand that their Demands from so it could become much decisions need be strategic profession Course Objecdves more responsive to the in nature so they become needs of a democratic society. true catalysts of change Course Objecdves This required more than a set and facilitate economic approach, and forced planners growth and sustainable Teaching & Learning Teaching & Learning Methodology Methodology to engage with and respond to development. The need international concepts, and for capacity building was become more inclusionary also mentioned in both in their approach in order to reports; this is ultimately Assessment Strategy fundamentally change the South linked to SACPLAN’s mandate. African landscape. Planning as The publication and approval Assessment Strategy defined by the UN-Habitat (2009) of the consolidated report on “is a self-conscious collective competencies and standards (societal) effort to re-imagine (2014) is just one of the keys Figure 2: Outward looking assessment strategy (source B Vester) a town, city, urban region or to unlocking the envisioned wider territory and to translate changes that are to be facilitated Figure 2: Outward-looking assessment strategy (Source: B Vester) the results into priorities for by the planning profession. area investment, conservation The winds of change require Figure 2: Outward looking assessment strategy (source B Vester) measures, new and upgraded decisive action, and there is no Quality of the areas of settlements, strategic better time than the present • Urban planners as change graduate makers. • Used to idendfy important • Impact on quality of life elements in the curriculum. infrastructure investment and for planning schools, planning • Graduate ajributes that is • Challenge students to develop expected by profession. skills in the "hidden curriculum" - • Aktudes, skills, disposidon, principles of land use regulations. students, the public and the soh/enterprise skills. knowledge needed. Planning is now viewed as private sector to work together a largely strategic activity.” in order to change the South Assessment Impact on Strategy society The change from planning African development landscape. being an almost “predictable” There is evidence that work is Quality of the science to it being a strategic being done towards addressing • Urban planners as change graduate makers. • Used to idendfy important activity is of vital importance, the planning curriculum elements in the curriculum. • I mpact on quality of life • Graduate ajributes that is Challenge students to develop Opportunities to include In view of the above and given and requires planning• schools to shortfalls. The challenge is expected by profession. skills in the "hidden curriculum" - • Aplanners ktudes, skills, disposidon, technology such as Google the strategic role that review their curriculumsoh/enterprise skills. and their that these changes need to knowledge needed. Docs and Twitter might also be are required to undertake, student assessment/evaluation take place at a much faster to the advantage of the planning it seems obvious that the processes. A research paper pace before we miss out on schools, especially given that Impact on the best results to be explored compiled by B Venter, “Urban Assessment another opportunity to bring students are already familiar with by planning schools when Planning Curriculum: Reviewing Strategy about tangible transformation society such technology environments reviewing their programmes/ Assessment Strategies as a and grow our human capital. and would find them much courses should be an outwardsLearning (And Not a Testing) We can no longer afford to more relevant. looking assessment strategy. Tool”, provides insight on the miss out on opportunities. In June this year, SAPOA The output of this strategy forces challenges that planning schools South Africans need our released two reports that students to actively participate need to take into account when education system to work. SOUTH AFRICAN PROPERTY REVIEW
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SAPOA Board members
Putting SAPOA’s best foot forward markets. He joined Old Mutual in 1997 as part of the corporate finance team, later moving to the asset management side of the business as Chief Operating Officer, and then to Old Mutual Properties as managing director in 2011. He has been close to property for the past 15 years, being on the Board and Investment Committee. Prior to joining Old Mutual, he was an investment banker in London. He is a CA by training and obtained his MBA from the University of Cape Town’s Graduate School of Business.
Growth of the property industry
Interesting times ahead for the property industry
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resident-elect Peter Levett spoke to South African Property Review about his work at Old Mutual, his new role at SAPOA and property in general. SAPOA’s latest President-elect Peter Levett is the Managing Director of Old Mutual Property Fund, which administers about R20-billion’s worth of retail and officeindustrial properties for its investors. Old Mutual Property Fund has been a leader in the property area for many years, and is responsible not only for managing the properties but also for ensuring a healthy return on investment in terms of capital growth and distributions. Levett says he is honoured by his appointment as President-elect of SAPOA, especially considering the extensive list of impressive property people who have made a difference and could have been considered for the position. “I am excited about it,” he says. “I think it’s a great opportunity to make a difference outside of my normal business, and an opportunity for me to learn and to meet a different group of people, different participants in the industry. “I am mindful of the fact that SAPOA represents a broad section of stakeholders across the industry, and that each of the stakeholders needs to be considered. There are about 1 100 members representing different categories in the property industry – and all of them are role-players!” Levett has extensive experience in the corporate finance, property and investment
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“The property industry has an enormous amount of assets, of which, I think, broadly 40% is with government or state-owned enterprises,” says Levett. “Another 40% is in the listed sector, and 20% in private institutions such as Old Mutual. There has been substantial development across the country, with the fastest growth experienced in the major economic nodes, which means local economies are growing faster than the average gross domestic product (GDP) growth. With this development comes a need for more infrastructure, so overall there has been massive growth in property across the country over the last 20 years. This growth is bound to slow down as development in some areas has matured, be it office, retail or even industrial. “Fifty-odd years ago, there was no listing sector, just the private sector. The big institutions were the major players, the ones with the big assets, and Old Mutual has been involved in developing many of the big assets in South Africa – office space as well as industrial parks. Old Mutual still provides substantial funding for the sector and is also involved in the broader market funding for infrastructure.”
Importance of strong relationships “I am mindful that the sector needs to build strong relationships with stakeholders across the board, which include local, provincial and national government, tenants and users of properties, and many other interest groups,” he says. “Where these parties are able to work together effectively and efficiently, great impacts can be made as we can see in the case of the strong development in some of the major economic nodes in particular. SAPOA has a major role to play to build relationships, and to facilitate growth and development for the industry.”
A love for property from early childhood
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nema Byrd, Investment Principal for STANLIB Africa Direct Property Development Fund, says she is honoured to serve on the Board of SAPOA, an organisation she first became involved with two years ago when she took her position at STANLIB. “I was invited to join the National Council and then the Board, and I hope to make a valuable contribution to SAPOA,” she says. “I am greatly interested in seeing what coalitions can be made with the rest of the continent, their industry participants and the roll-out of organisations such as SAPOA, which can advocate for the strengthening of the property industry across Africa.” This is an area closely aligned to Byrd’s function at STANLIB, where she focuses on investment opportunities in key African markets. “We’re looking at developing institutionalquality office and retail properties in Ghana, Nigeria, Kenya and Uganda,” she says. “We are targeting countries with large – and growing – economies, and where there is a shortage of the type and quality of properties we aim to develop. We’re also building a diverse portfolio – across commodity exporting and importing countries in East and West Africa – to help smooth out volatility. We know some markets are facing challenges, but expect these to resolve over the medium-term. We will tactically look at other markets as well, such as Rwanda, Tanzania, Cameroon and the Ivory Coast.” The other area within SAPOA that intrigues Byrd, an advocate for educating professionals in South Africa, is the transformation of the industry and the SAPOA Bursary Fund. “Providing scholarships, bursaries and economic assistance to students is key because a significant number
SAPOA Board members of those students securing the assistance are female,” she says. “It is a great opportunity to help increase the pool of qualified women in the industry by providing them with the means to undertake property-related studies.” This is a cause close to her heart as her career trajectory was influenced strongly by her parents’ dedication to education and her professional mentors in the industry. “I applaud the South African property industry for the number of women already in it, especially those leading companies. Much headway has been made regarding the education and inclusion of women – but there is still more that needs to be done.” Byrd’s passion for the industry is rooted in its ability to bring about economic change. “The property industry is a positive reinforcing cycle,” she says. “First, we’re unlocking the value of land for local landowners; second, through the development process, numerous jobs are created and income levels increased, which improves the tax basis and economics of the communities in which development occurs. From architects to structural engineers, leasing professionals and construction workers, jobs are created through construction. When a building becomes operational, additional jobs are created for the maintenance crew, security and salespeople (in retail properties), helping to increase the earning and spending power of the people in the communities involved. To see young people in these jobs, making a living and developing their work ethic and experience, is a wonderful thing.”
Attracted to property from an early age Byrd has been interested in the built environment since she was a child. Growing up on a university campus in Nigeria, with a Nigerian dad and an American mother, she became curious about the differences she saw between urban and rural environments (and on travels to the US, the cities there versus those in Nigeria). “I was intrigued as to why certain places looked the way they did, why cities were vastly different. This raised questions in my young mind,” she says. “When I was about five years old, my dad decided to build a family house. We visited the architect’s office, a woman with lots of knowledge and experience. It must have been something about being in the office, filled with the scent and sight of the blueprints, or the mere fact of seeing the architect so selfassured in her craft, but I was smitten at that point. And it turns out that I could actually interpret the plans!”
Creating space to thrive
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ew SAPOA board member Pieter Engelbrecht is a passionate, out-of-thebox thinker whose extensive experience in property development will be well utilised in the organisation. Engelbrecht has a quantity-surveying background and has been in the property development industry for the past 30 years. He heads up Growthpoint Properties’ Office Development division, where he and his management team are pushing the boundaries of cutting-edge development. “At Growthpoint, we are privileged to deal with innovative clients for whom we are currently implementing new developments,” he says. “We customise the workplace strategy to our clients’ needs, and offer a holistic end-to-end solution. We aim to achieve the optimum balance between aesthetic design, operating efficiencies, cost effectiveness and creating space to thrive for our clients. “One of our most exciting new projects currently under way is our partnership with Discovery to develop its prestigious new head office in Sandton.
We are aiming for a five-star Green Star rating, which will showcase all the latest workspace trends and technologies. Growthpoint currently has the most certified greenrated buildings in the country, and the team is passionate about sustainability and the implementation of the Green Building Council of South Africa and Well Building Standards in all our developments.” Engelbrecht will bring this dynamic mind-set to his portfolio as head of SAPOA’s Innovative Excellence Awards Committee. “SAPOA has had great success with the Innovative Excellence Awards, with a recordbreaking 52 submissions received for this year,” he says. “The awards seek out developments that capture the wider public imagination and that enhance, develop and re-energise our cities, recognising exceptional craftsmanship and the commitment to an enriched landscape. “This year’s awards looked beyond the structural excellence to include the newly added Interiors category, which acknowledges high-performance spaces that are not only attractive but that also maximise productivity and encourage best practices for clients. We have now included all sectors of the industry, highlighting the remarkable work that’s done by architects, engineers, artists, visionaries and designers.” The SAPOA Board consists of leaders and specialists of the building and property industry. “My attitude is that we, as SAPOA, should be visionaries and constantly see how we can innovate our services and adapt to the changing market conditions to stay relevant,” Engelbrecht says. “There is a wealth of knowledge on the Board, and through that – and through shared experience – we can grow the Board from strength to strength.”
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far-reaching education
Educational outreach programme empowers young South Africans to change the world The Penreach outreach programme works tirelessly, wielding the weapon of education to ensure that South Africa’s youth are given the tools to change their lives and the world. Andile Ncontsa shares the story behind this successful initiative with our editor, Mark Pettipher
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Andile Ncontsa, Chief Executive Officer of Penreach NPC
“With 36% of the people who should be working and productive being unemployed, the story of intergenerational poverty becomes a reality” 14
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ducation is the most powerful weapon you can use to change the world,” said Nelson Mandela – and everything Penreach does is an endorsement of that philosophy.SAPOA shares this philosophy through its education programmes by promoting property as a career. SAPOA has teamed up with Penreach on their career days to reach a number of schools and scholars from previously disadvantaged areas to share information on property as a career, as well as, handing out bursary application forms for the SAPOA bursary schemes. Andile Ncontsa a former Chief Executive Officer of the Old Mutual Foundation, is now Chief Executive Officer of Penreach NPC. “I’ve always had a dream to contribute, to pay my dues to society, to spend five years of my life contributing to something that is of great concern to me – the status of the education system in South Africa,” he says. “This led to my involvement in the Penreach.” Penreach operates from a central base at Penryn College in Nelspruit and shares the college’s resources. Penreach is determined to change the lives of young South Africans in the significantly under-resourced and disadvantaged communities of Mpumalanga, Limpopo and Northwest Province through diverse, quality education initiatives at all levels. “Education is the basis for skills development,” says Ncontsa. “We need young people to study maths and science, especially at high-school level, to secure the kind of graduates required by industry and business – actuaries, economists, accountants. These are key skills in society, and we aim to propagate them. “It is not just about education and the right skills – it’s about a holistic approach to education, part of what we do involves sport and arts and culture. We share the centres of excellence at Penryn College with the community schools with which we work and with the Department of Arts and Culture, where we play a big role at provincial level in promoting the choir and the exchange of college students as well as our community school choirs, through participation in the various competitions.”
What does it mean to have SAPOA come on board? “It’s a fantastic opportunity for Penreach and for SAPOA,” says Ncontsa. “One of Penreach’s critical strategic areas is to broaden our stakeholder group, our partners, in the work that we do. We don’t only see it as people contributing funds to what we do – we see strategic relationships. For instance, the Riverside Park development in which the whole school is involved has adopted some of the programmes, such as our toy library programme. They recently held a fun run to raise funds for the building of a toy library in an informal settlement close to their community. That is the type of richness of relationship that matters to us. It’s not just SAPOA – although this type of education drive is becoming relevant to SAPOA – but with all our stakeholders and customers.”
A passion for education, training and skills development Training and skills development are Ncontsa’s passions, and he champions and lives out former president Nelson Mandela’s dedication and commitment to education. “A while ago, I spent five years working on a special presidential project in the East Rand during the time that area was destroyed in the lead-up to South Africa’s first democratic elections in 1994,” he says. “Conflict between the ANC and self-defence units, as well as the IFP and the ISD, saw infrastructure being destroyed. The East Rand became a no-go area. Nelson Mandela and Jay Naidoo tasked us not only to build the infrastructure but also the people. We worked on developing housing and the roads; on building police stations, community halls, sporting facilities and even cemeteries; and on integrating what was called “the lost generation” –17-to18-year-olds who had no chance in life and had missed out on getting an education. I was responsible for finding opportunities to equip them with skills for part-time work and to aid them to study part-time to obtain their matric. Now, some of them are in the SAPS,
far-reaching education and some are in the Ekurhuleni metro and the Tshwane metro. There were about 2 500 young people involved in that conflict, and we were able to successfully place them one way or another. I was given a special award by Nelson Mandela for my efforts and achievements in this project. “This focus is part of what Penreach does today. The most critical thing for me is seeing the fruit of one’s labour – not for myself but for the young people who were going in the wrong direction or had no direction. Being able to steer them to take a more positive direction has been the most rewarding. To see young people with no hope in life find a path for themselves augurs well for the future. “When it comes to education, I always say that we are not building scientists or engineers, or creating doctors, but we are creating responsible human beings who will become responsible parents, who in turn will impart that responsibility and citizenship to their own children, thereby ensuring success. As the adage says, ‘It takes a village to raise a child’.”
Starting at grassroots level “Our aspiration for the work we do is to start from conception – but we are not there yet, as the most critical time of a child’s development is the first 1 000 days,” says Ncontsa. “But we start work during early childhood development (ECD) by providing qualifications for all ECD practitioners. “We work with a number of ECD centres to train the practitioners and mentor them on how to operate an effective ECD centre. The current issue in South Africa is not so much access to early childhood learning, it’s the quality that we are grappling with – the quality of early childhood development. Skilling people in that area is critical. As you may know, early childhood development has been identified as one of the critical components of the National Development Plan (NDP), so the work we do starts from there and goes on to the next level – what we call the ‘foundation phase’ at primary school. At that level, we concentrate on numeracy and literacy. “Several studies have indicated that learner achievement in Grade 4 is the predictor of what is going to happen in Grade 12. Thus we put a lot of emphasis and effort on that rather than concentrating on the Grade 12s. If you catch them at the foundation level and ensure the building blocks of numeracy and literacy are in place, you can predict Grade 12 outcomes. We also have a slightly lesser
involvement in mentoring in the more senior phases, concentrating on maths and science. “The third component of what we do is leadership. We encourage leadership. We work with the school principals and the school management teams as well as heads of department to drive a vision for excellence in leadership, managing the curriculum and the system, planning for success, ensuring that the school has a teacher and children in the classroom, and that everyone is playing their part.”
Are South African rural families more stable now? “I think the rural space is actually less stable than it was before – not in a negative way, but in a positive way,” says Ncontsa. “This is especially true in places such as Mpumalanga, Limpopo, Eastern Cape and KwaZulu-Natal, where there were strong traditional leadership roles, but where there is now a democratic system of local government. At this stage, the two have not effectively gelled. Communities in the rural space are more aware of their rights, and they are not afraid to take action and stand up for their rights. In certain instances, like in Limpopo where schools have been burnt, it has been done irresponsibly – and while this is unacceptable, at least the communities are standing up. I believe that it’s a transition that will inform and evolve some kind of democratic social economic system. “I believe in the saying ‘the better the education of the mother, the better the education of the child’. Of the people attending our Saturday teacher development workshops, almost 90% are women – women who are running ECD centres, women who are being trained to become ECD practitioners and teachers, and female teachers in the foundation phase of primary school. They have such passion for their own selfdevelopment, and they are motivated. So yes, it takes a village to raise a child – but it’s the villagers who win. “The trend where the family unit was split because of the men going to seek work elsewhere is lessening. There are fewer people leaving to work in the mines now, so you actually have more young men unemployed in the communities. The problem now is not the absent male but a present male who is not really present in the sense that he is unemployed, and feels undervalued because he is not playing a role or adding value. This leads to some of the risky behaviour we find in society. But no-one can ever say it was better before than it is now. It has never been this great to be a South African.
SAPOA has teamed up with Penreach on their career days to reach a number of schools and scholars from previously disadvantaged areas to share information on property as a career as well as hand out bursary application forms for the SAPOA bursary schemes.
From humble beginnings Andile Ncontsa’s own education started in Cala in the Eastern Cape, in a mud school with no electricity. After he finished primary school, his family moved to East London. He completed his secondary education in Alice after being shot and detained during the 1985 uprising. He went on to study at and graduate from Wits University with a BCom in finance and philosophy. He has completed several short courses in marketing, project management, communication and media, and is an alumnus of the University of Cambridge’s Business & The Environment Programme. SOUTH AFRICAN PROPERTY REVIEW
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far-reaching education There are more opportunities available; what is required is to skill people and change their mind-set. With 36% of the people who should be working and productive being unemployed, the story of intergenerational poverty becomes a reality. “If a child has a father who has never had a job, and that father is raising the child, that child does not have a reference point of what it is like to be a working parent. This gives you an idea of what is going to happen in the next generation. “At Penreach, we put the focus on that child. We do everything we possibly can to catch them at inception and give them the foundations of a quality education, while also supporting those who are involved in their education, partnering with the Department of Education and the Department of Social Development to make sure that we arrest future longterm unemployment.” Ncontsa references the story of Thandi, which forms parts of narrative of the National Development Plan. It effectively says, “If we do nothing to educate Thandi from Khayelitsha or Bushbuckridge or anywhere in our country, if we don’t do something about the quality of her education at the beginning of her life, the only job Thandi will have is as a maid, and the only time she will earn a living wage is when she receives a state pension.” “That’s the gravity of the situation,” he says. “The only time an uneducated person will have a living wage is when they claim a state pension. And, of course, the taxpayers cannot be expected to maintain that. This is why partnerships with corporates and institutions such as SAPOA are critical for us to arrest that cycle from the beginning – otherwise we are all going to pay for it, one way or another. The best place to make an investment is right at the beginning. That’s what we are doing at Penreach – taking the long-term approach, rather than doing what has been done for the past 22 years, where the emphasis was on matric results, which have no relevance to the success of this nation. It’s the Grade 4 results that tell us what will happen in matric. Less than 50% of learners who start Grade 1 complete matric. There is high access to education in the foundation and primary phases, but in Grades 8 and 9, we lose children as they drop out of the system, leaving them with no prospects. If less than 50% of learners continue until matric, what percentage will complete a higher education qualification? It is these learners that we must be concerned
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about, before they become part of the 8,9million unemployed and unemployable. “It is a serious but fantastic challenge. When we understand the nature of the challenge, it becomes easier to know what to do. If we ask the right questions, we will start getting the right answers. I think we’ve been asking the wrong questions all along. ‘Why are our matric results not what they are supposed to be?’ is the wrong question.
“Education is the basis for skills development. We need young people to study maths and science, especially at high-school level, to ensure the kind of graduates required by industry and business – actuaries, economists, accountants. These are key skills in society, and we aim to propagate them” The right questions are in fact, ‘Why are the Grade 4 results not what they are supposed to be?’, ‘Why are 29% of Grade 5 learners still illiterate after five years of learning?’, ‘Why are about 76% of Grade 5 children unable to answer a simple Grade 2-level mathematical question?’ First, they cannot read or comprehend the sentence, and second, they can’t do sums because they can’t read. “I think the country is moving in the right direction, and corporates are beginning to understand that quick-fix solutions are not actually going to help. What is needed is an investment in property – and a longterm investment, not just for today. We have to be there for the long haul, for 18 years of a child’s development, and the bulk of our investment has to go towards the beginning stages of his or her development. That’s where we will find a return on our investment. “For example, we have a mobile lab at Penreach College to promote science because many of our schools don’t have a science lab (and those that do have no equipment or materials). We take our mobile lab to ECD centres because a three-year-old needs to know what a scientist looks like
and what that scientist does. They can readily relate to a scientist as a person wearing a coat and doing experiments, although it is more about visual effects and creating awareness around safety and fire. That’s where you build their thinking skills and expose them to opportunities. “So, we start at that level; then, in Grade 4, we say it is important for you to be doing arithmetic because it’s linked to those opportunities and employment – not only as an employee but also as an artisan or an entrepreneur creating employment.
Ensuring long-term benefits “Our motto at Penreach is ‘Educational excellence for one and all South Africans’,” says Ncontsa. “The various programmes we offer benefit more than half a million children in the public education system, and the work we do at school level directly benefits the scholars at Penreach College. And what we are doing for one of those children at Penreach College, we are doing for any other child in the education system for the overall long-term benefit of the country. “Our programmes focus on ensuring that the children of today are not going to follow the same path as their parents. We are not here to solve today’s problems; we are here to solve the next generation’s problems. If the current generation’s children are given hope and education, they will have opportunities – and our investment at grassroots level will have paid off.”
Largest outreach programme in southern Africa Founded in 1991, Penreach is the largest outreach programme in southern Africa. It focuses on core interventions to address South Africa’s educational challenges. It is a major catalyst for improving the quality of education from early childhood through to matric, starting at daycare centres and following the same learners through to primary phase and high school. Self-funded, Penreach relies on social investment partnerships to reach its beneficiaries and make an impact on the targeted education landscape. Through several projects in 2015, Penreach had a direct impact on: ●● 332 schools ●● 430 principals ●● 8 680 teachers ●● 267 993 learners ●● 10 488 parents
far reaching education far-reaching
Changing their world through education Meet the dedicated team of professionals behind Penreach, southern Africa’s largest non-governmental organisation that’s wholly committed to uplifting a cluster of disadvantaged communities in Mpumalanga through diverse, quality education initiatives
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ducation is the most powerful weapon you can use to change the world,” said Nelson Mandela, and everything Penreach does is an endorsement of that philosophy. Penreach is determined, via education at all levels, to change the lives of South Africans in the under-resourced and disadvantaged communities of Ehlanzeni, Bohlabela, Bushbuckridge and Nkangala in Mpumalanga. Since 1991, Penreach has been providing quality educational interventions to learners, teachers and school leaders. As the largest NGO in the southern hemisphere, Penreach is a major catalyst for improving the quality of education from early childhood through to matric. Its interventions are strategically selected to ensure quality education starts at daycare centres and follows the same learners through to primary phase and high school. Self-funded, Penreach relies on social investment to reach its beneficiaries. Penreach has focused its efforts on core interventions to address the educational challenges. It achieves its goals with a layered approach, recognising that in underprivileged communities weaknesses lie at every level of the education system. Every aspect needs attention to achieve a quality outcome. The cornerstones of Penreach’s initiatives include developing quality early childhood development (ECD) practitioners with holistic child development initiatives; increasing professional development and pedagogical content knowledge of teachers; increasing academic learner performance; and empowering school leadership to effectively run schools. In essence, the Penreach model is based on its three core areas of impact: ECD, teacher development and learner support, and management and leadership development. The latter programme is designed to fast-track development of critical skills required by school principals and their management teams. Although Penreach works predominantly within rural schools, it does so from a central base at Penryn College in Nelspruit. The voluntary Saturday workshops for teachers take place here. Services are shared with
Penryn College, enabling Penreach to focus on its core business of teacher development and learner performance. Teachers and learners either travel to Penreach, or are served by local “cluster” activities in the 15 000km² rural areas. ●● At least 1 400 educators from more than 600 schools attend Penreach annually. ●● Penreach reaches between 300 000 and 500 000 learners indirectly each year. ●● Through several projects in 2015, Penreach had a direct impact on 332 schools, 430 principals, 8 680 teachers, 267 993 learners and 10 488 parents. Penreach’s impact on the targeted education landscape is substantial, with innumerable ongoing initiatives supported by Penreach’s partners. There are many CSI opportunities for co-funding with each of the Penreach projects; those who get involved are given impactful branding opportunities. The Penreach Mobile Science Laboratory in the Ehlanzeni District is one example – 5 800 learners from 0 to 18 years benefit. The cost of science equipment and materials, along with a lack of teaching skills, has not only hampered learner performance but also any enthusiasm towards related career opportunities. The Mobile Science Laboratory programme has given learners the opportunity to interact with science through practice. Teachers can book the lab to enable classes to complete prescribed practical science experiments while building their own confidence and skills in presenting these classes with the correct resources. Science shows are conducted at ECD centres and schools, and in communities. The initial start-up costs per lab is R500 000 – with annual operational costs starting at R500 000, depending on the number of schools. Penreach currently operates two labs with the support of its partners: the Department of Science and Technology, SAASTA, Vodacom, Export Credit Insurance Company and Bayer South Africa. The Mobile Book Banks and Reading Camps is another powerful initiative, volunteerdriven with a current target audience of 1 620 children aged six to 10. These beneficiaries are currently served by 62 Penreach Reading Camps.
Part of the integrated approach to successful early literacy is to increase the availability and use of reading materials in the classroom, home and community through mobile Book Camps and Reading Camps. Community members open up their garages, homes and gardens to host groups of up to 30 children on weekday afternoons for extra reading opportunities. Initially intended as a two-days-per-week programme, most Reading Camps operate five days a week. The initial setup cost of R2 500 per Reading Camp includes the cost of volunteer training, an initial Penreach Book Bank, and other reading resources. Annual costs amount to R1 000 per camp. The current 62 camps are funded locally by organisations such as TRACN4 as well as national CSI. As a CSI opportunity, an additional 50 camps can be added immediately, serving another 1 500 children, at a cost of R125 000 with an annual support grant of R50 000 thereafter. Penreach Teacher Development workshops indirectly affect 70 000 learners. The Saturday workshops have been an institution at Penreach for more than 20 years, developing and empowering teachers and ECD practitioners with skills and knowledge. They furthermore serve as a platform for sharing, learning from one another, networking and socialising, and also assist with practical skills development among teachers from Grade 00 to Grade 9. Attendance is voluntary, and teachers come from far and wide to attend what are considered “legendary” classes. Current partners for these workshops include Transnet Foundation, Barloworld Trust, RCL Foods and ApexHi. The cost to deliver in-service training to 1 500 educators is R1,4million per year, and numerous sponsorship or funding opportunities from R250 000 exist. The dedicated professionals at Penreach are driven by their credo, “Educational excellence for one and all South Africans”. They work tirelessly to wield the weapon of education, breaking intergenerational cycles of poverty so that thousands upon thousands of young South Africans are given the tools to thrive – and ensure a South Africa where we do not have 8,9-million unemployed citizens. SOUTH AFRICAN PROPERTY REVIEW
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accommodation SAPOA on education
Firmly in the driver’s seat and steering SAPOA’s education drive Bernadet Hartley, SAPOA’s new Chairperson of Education, is on a mission to make quality education available to anybody in the property industry By Mark Pettipher and Brenda Bryden
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ducation is one of SAPOA’s main income drivers. An entire education committee works to ensure that the various training courses are not only a source of income, but that training is enhanced, promoted and of the highest standard. The more input SAPOA has into training property professionals, the better it can meet the needs of the entire industry. With a background in social psychology and human resources, Bernadet Hartley is well placed to lead this enthusiastic team. “Our aim is to have an industry with trained professionals, qualified to the same level,” she says. “SAPOA’s role is to make sure that quality education is available to anybody in the property industry field, particularly commercial, professional industrial and retail. There are some good training providers, but also a lot of fly-by-nights, and sometimes the training is not practical,” she states. “From SAPOA’s side, we want to ensure quality education – that’s why we work closely with reputable institutions and various universities.” According to Hartley, one of the biggest criticisms levelled at SAPOA is that the courses can be very expensive in comparison to other courses. “One of the reasons for this is that our courses are done in conjunction with some of the universities,” she explains. “So a large part of the income actually goes to the tertiaryeducation institutions. “Working with an accreditation partner, SAPOA has introduced e-learning modules that have really taken off. It’s a flexible and affordable model that allows students to do the training as and when it suits them. One of the biggest complaints from the brokers is that their time is money, and that they’re not working, they’re losing money. To send them on a three-day course is not a practical
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because the more input SAPOA has, the more we will be able to meet the needs of the industry. We also have representation on the committee from the South African Council of Shopping Centres – it’s good to have these different viewpoints.”
Bursary funding for property-related studies
Bernadet Hartley, SAPOA’s new chairperson of education
option, but e-learning is; they can work at night – as early or late as they want – or in the early hours of the morning. It won’t interfere with their business and they won’t have to spend any time out of the office. “Our short courses are well priced, compared to others in the market. I always recommend that although there are several different suppliers for training, certain kinds of subject matter – for example, the negotiation processes in the property market – are very specific, so it follows logically that training from the organisation that knows and works with all the property companies should be the best. “We’ve recently begun a recruitment drive for more member companies to participate in the education committee. We have all the major players – Growthpoint, JHI, Eris, Abland and PRASA – but it would be nice to have a broader spread of companies,
“SAPOA also offers bursaries to entice new entrants to study,” says Hartley. “For example, equity brokers are hard to come by. So, we can either complain that there aren’t any candidates out there – or we can actually grow the candidates ourselves. We run a very successful equity graduate programme; this year about 50% of the students were employed before finishing their graduate year. The programmes or learnership provide hands-on training in a fostering environment. “The bursaries can be used for any property-related field, even finance – anything with a property slant. This is what SAPOA is looking to build. Obviously we would like to build more, and SAPOA is largely dependent on contributions from the industry to do so. The Bursary Fund works brilliantly: it’s a solution for many companies as to what to do with their training spend or corporate social investment budget. It’s a brilliant vehicle – many companies want to spend, but they don’t have the time or the resources to manage a bursary scheme, so this is a great solution. They pay the Bursary Fund, we train the students, and then that new, young, skilled and qualified person becomes available to their organisation. Companies don’t need a dedicated resource running a bursary programme; SAPOA can run it for them. And the companies are actually contributing to making education available to students who might otherwise not have had the opportunity.
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accommodation
How to apply for a SAPOA bursary ● Visit www.sapoa.org.za ● Click on the Education & Training tag to open a drop-down menu ● Select the SAPOA Bursary Fund option ● Click on the link under “Application Process” For those with no access to the internet, the best option is to get in touch with Fiona at the SAPOA head office for further assistance: t: +27 (0)11 883 0679
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University has never been more expensive. Tuition fees have risen to about R69 000 per year – but with living costs included, a three-year degree could set you back as much as R200 000, depending on the university By Stanley Karombo STUDENTS
SAPOA Gauteng 39 Western Cape 24 Kwa-Zulu Natal 19
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“The property industry is an ageing industry, and it’s important to get new young blood in to avoid the industry becoming stagnant,” says Hartley. “We have several initiatives to address this. “We are aiming to establish a SAPOA student council at various universities, where we can engage with students and encourage them to attend our induction programmes run during the June/July holidays. These programmes cover areas such as dealing with stress, the professional working environment and the practicalities of negotiation and dealing with leases, as well as interacting with colleagues. When these applicants enter the job market, they are better equipped to deal with it.” SAPOA has also conducted several successful outreach programmes to various schools in conjunction with universities to enlighten young learners about careers in the property industry. “We also appeal to them on a different level, by portraying the industry not just as a career but as something lucrative, interesting and ‘sexy’,” she says. “Then they see it in a different light. If we can instil this attraction into school-going children, we’ll be building the fresh, new young talent the industry needs. Starting at grassroots level is a fabulous way to develop a real connection to property. “I would like to see more companies getting involved in our SAPOA initiatives and participating on the education committee. We need their input to help spark an interest in and a connection to all things property.”
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“We are very excited about this programme and the contributing companies that have pledged towards the bursary schemes. We encourage all companies that are not already members of SAPOA to become members.”
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any universities offer scholarships and bursaries to lessen the financial burden. But these are hugely oversubscribed, so it is well worth casting the net a little wider.
SAPOA Bursary University fees have been under the spotlight since the latter part of 2015, when students rose up in protest against the restrictive costs of studying. Following weeks of protests in October and November 2015, President Jacob Zuma eventually declared that there would be no fee increases at universities in 2016. To absorb the loss of revenue, government set aside R6,9-billion in additional funding for universities. Prospective students at universities and universities of technology have since 2009 had the opportunity to apply for study bursaries from the SAPOA Bursary Fund, where approximately R5-million has been reserved to provide financial assistance to students. According to SAPOA’s Education Manager Fiona Kahn, the fund helps students to pay for part or all of the fees needed to study. “Twenty-seven students were awarded SAPOA bursaries in the 2016 academic year,” she says. In terms of the selection process, she says, “Applications go through a rigorous selection
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process, during which each application is reviewed by a panel of two or three members of the HR, Education and Training Development Committee, as well as myself. We usually set aside half a day or more, depending on the number of applications. Each panel member goes through each application thoroughly and either approves the application or not – the panel member must give a clear reason for rejecting an application.” As part of its social responsibility, SAPOA hands out a limited number of bursaries to students who enrol at academic institutions in South Africa and pursue studies in propertyrelated fields, she adds. She says that there are 60 disadvantaged students who received qualifications from the programme since the SAPOA Bursary Fund started. “Since the inception of the fund, SAPOA has awarded more than 80 bursaries to previously disadvantaged students with the aim of addressing the country’s skills shortage and supporting a fund in the commercial property industry,” she says. According to Kahn, students awarded bursaries could study in a number of fields such as architecture, BSc Property Studies, BSc Urban and Regional Planning,
accommodation BSc Construction Studies, BCom Accounting and Finance, BSc Quantity Surveying, BCom Property Valuation and Management, BSc Town and Regional Planning, legal studies, BSc Real Estate, and BSc Property Management. SAPOA takes the time to track every student’s performance while he or she is at university, and encourages students to attend networking events involving them and the SAPOA staff.
Looking forward The SAPOA Bursary Fund has grown in leaps and bounds since 2015. Kahn says that in future, the fund plans to canvass for more funding in order to assist more students. “The SAPOA Bursary Fund is also investigating a formal mentoring programme for bursary students,” she says. Before the completion of the studies, SAPOA and its members offer mid-term and year-end vacation work. According to Kahn, upon successful completion of the degree programme, students are placed in six-month or one-year internships.
Services SETA A multimillion-rand carrot was dangled in front of Grade 12 students who started their studies in 2016 to encourage them to choose property as a career. SAPOA approached the Services SETA for bursary funding and was granted R40million for bursaries. The Services SETA has partnered with SAPOA to sponsor 100 students with bursaries for a four-year degree in property-related studies. This opportunity goes some way towards addressing the skills shortages in commercial property nationally. To qualify for SETA, applicants must be first-year undergraduates in 2016 only – and the Services SETA Kahn says, “will not allow us to recruit new and/or additional students beyond 2016”. SETA will be applicable for full-time studies, and only the degrees that fall within the scope of the Services SETA will be funded. These are ND Real Estate: Cape Peninsula University of Technology; BSc Property Studies: University of the Witwatersrand and University of Cape Town; BSc Real Estate: University of Pretoria; BSc Property Development: University of KwaZulu-Natal; BCom Finance with Property Valuation and Management as a major: University of Johannesburg. The bursary opportunity is aimed at current first-year students, says Kahn.
SA universities struggling to find student residences Universities are struggling to find accommodation for record numbers of students, according to union leaders, and are under pressure to find rooms for increasing numbers of first-years
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shortage of accommodation at the university of Cape Town (UCT) is one of the things that led to last year’s disruptive student protests. The University of Cape Town has more than 24 000 students, but can only offer accommodation in a university residence to 6 000 of them. This means that there is heavy demand for accommodation. UCT is also host to more than 4 500 international students. The majority of them stay off-campus, so the demand for accommodation is high and by far exceeds availability. Last year, a group of disgruntled students affiliated to the “Rhodes Must Fall” and #FeesMustFall movements protested on the university’s main campus to show anger over the accommodation shortfalls. During the protest, students erected a shack on the university’s main campus at the foot of the iconic Jammie steps to draw attention to what they called a housing crisis. “UCT says it only has about 6 000 beds to accommodate 27 000 students,” says Jonathan Mitchell of UCT’s accommodation section. The university is appealing to well-wishers and communities in the vicinity of the university to help place students in need of accommodation or those living in temporary placement. Meanwhile, the University of the Witwatersrand (Wits) says an accommodation shortage has now been resolved after private developers leapt into action earlier this year. The university does not envisage any accommodation shortage in the 2017 academic year, says Robert Sharman, the Wits Director of Campus Housing & Residence Life, adding that they have few students on the accommodation waiting list, but “we have several vacancies that we are unable to fill”. Wits will be extending two of its existing residences in preparation for the 2018 academic year. “We are considering leasing one or two new private developments in the vicinity of the university for 2017,” says Sharman.
Wits provides state-ofthe-art student accommodation The R490-million Parktown student accommodation consists of 700 bachelor, two-bedroom, three-bedroom and four bedroom units, and can host a maximum of 1 200 students. The newest (and most astonishing) student accommodation, the Wits Junction has been affectionately dubbed “Sandton” by students. It provides state-of-the-art facilities and fully furnished, self-catering apartments. Medical students are excited at the opening of a new residence close to the Medical Campus in Parktown. Wits Junction opened its doors on 1 July 2011. The residence also provides fully furnished rooms, each with a telephone line, dial-up internet and a TV port. “All a student has to bring are his or her pens and clothing,” says accommodation manager Carol de Wit. Blessing Vava, an MA degree student in journalism and media studies who stays at a residence says he likes the fact that the res is walking distance from his campus. He describes the complex as peaceful. “If I want to party, I go out and enjoy myself. I don’t want to bring the party home with me,” says the Zimbabwean student. Another student at the medical campus, Sibongile Moyo, describes the area as “quiet and conducive to studying”. Residents say safety is also a plus. Tsholofelo Mputle, a first-year dramatic-arts student, says she “feels very safe” compared to her old res. “Born Free at Braamfontein was a nightmare, with huge safety issues,” she says. According to Mputle, the R3 800 rent is worth the extras one is receiving. Despite the peaceful atmosphere, some residents still have mixed feelings. Precious Msweli, a social work student who’s been living at Wits Junction for a year, feels the room space is not big enough for SOUTH AFRICAN PROPERTY REVIEW
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accommodation four people. She says her old living quarters had more cupboard space. Another student echoes her sentiment, also saying that the accommodation fee is too steep. “A student has to be on a bursary to survive in this residence,” he says. He feels the residence should have been fully constructed before opening. The community centre, a facility where students can play games and eat, is not yet finished.
Another landmark student residence Noswal Hall, Zenprop’s landmark student accommodation development, accommodates 399 residents across 19 floors. Approximately 170 flats are configured into bachelor units, two-bed sharing units, three-bed sharing units and four-bed sharing units. Noswal Hall is situated directly across the road from the main campus of the University of the Witwatersrand. Its close proximity to the university makes it an attractive offering for Wits students seeking affordable, modern, easily accessible accommodation. Each unit has a kitchenette equipped with an integrated mini fridge, microwave and two-plate stove. The building’s distinctive Mondrianthemed façade has become an icon across Braamfontein’s skyline. Noswal Hall was developed as Zenprop’s first landmark student accommodation, and won SAPOA’s overall innovative merit award in 2014. New student residence to open on Empire Road, the Yale Village is also about to inspire a student community project.
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Yale Village on Empire Road will open its doors at the beginning of 2017 for students at Wits, the University of Johannesburg and other campuses in the Braamfontein area. The new student residence project is a joint venture between Respublica and Redefine Properties, and will be developed in two phases. The first phase, according to the officials, will offer 330 beds for students to occupy, with the completed second phase bringing an additional 1 000 beds into play. “Yale Village is an extension of Respublica’s vision in creating state-of-the-art student accommodation that also incorporates world-class amenities and facilities,” says Respublica Chief Executive Officer Craig McMurray. “This is the standard that discerning students who aspire to live in a vibrant student community environment conducive to learning and living have become accustomed to.” The Yale Village project is expected to cater for students with various needs. The residence will offer a variety of accommodation options to meet students’ differing needs in terms of affordability, privacy and luxury. Room types vary from shared rooms and apartments for up to eight students, to single rooms with en-suite bathrooms and access to a wellequipped shared kitchen. Regardless of what they choose in terms of accommodation, students’ residence fees
include access to all of the facilities on site, which include unlimited Wi-Fi broadband access throughout the building, as well as the gym, swimming pool, study rooms, computer lab and common areas that have become synonymous with Respublica’s residences. Yale Village is strategically located on the Wits doorstep to maximise the convenience for students. The residence complex includes landscaped outdoor areas, creating the feel of a village green and expanding residence common areas to flow smoothly between the indoors and the outdoors. “At Respublica, we know that the students’ environment (outside of their lecture environment) plays a massive role in their academic success,” says McMurray. “This is why we create secure facilities with a holistic approach to taking care of all they need to achieve academic success.” Respublica’s portfolio of residences includes Saratoga Village and The Fields, which provide accommodation exclusively for students who attend the University of Johannesburg, the Central Johannesburg College and Wits. In Midrand, Pearson International Midrand Campus services students from Pearson International (ex MGI). In Pretoria, West City, Urban Nest and Eastwood Village accommodate students from the Tshwane University of Technology and the University of Pretoria.
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Demand for purpose-build student accommodation in sub-Saharan Africa is set to exceed 500 000 beds the next five years
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he latest research from JLL indicates that the demand for new purpose-built student accommodation in sub-Saharan Africa is set to exceed 500 000 beds over the next five years. With continuing public sector budget constraints, private investors will have an important role to play in meeting this demand. JSSA’s economic prospects are improving, with a number of macro trends creating an urgent need for better real estate infrastructure. In this environment, student housing is a vital component, and in certain parts of the continent it is set to emerge as an attractive new asset class (similar to the UK and the US). “There’s been an unprecedented increase in the number of student enrolments across sub-Saharan Africa,” says Philip Hillman, Head of Student Housing for JLL EMEA. “In the period 2000 to 2014, the tertiary gross enrolment ratio rose from 4,3% to 8,2%. This trend, when coupled with a growing tertiaryaged population, suggests that demand for purpose-built student housing should grow rapidly over the medium term. The analysis of the impact on demand for purpose-built student accommodation should subSaharan Africa tertiary gross enrolment rise from 8,2% to 10,8% over the next five years (a conservative estimate) indicates that: ●● The number of tertiary-aged young adults (18 to 25) in sub-Saharan Africa will increase to just under 100-million by 2020. ●● About 15% would prefer and afford purpose-built student housing (a cautious percentage considering 41% of the UK market stays in student accommodation). ●● Only 19% of the tertiary-enrolled student population that applied for student
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accommodation could be accommodated in 2011, highlighting growing demand. Based on these assumptions, well over 500 000 beds would be required. It will cost around US$3,6-billion to fund the construction of this deficit. Given constrained government education budgets, there is minimal room in which to increase public expenditure in subSaharan Africa, creating a substantial student housing funding gap. It is in this setting that the private sector could play a pivotal role by addressing the increasing needs of the market. Hillman says that while there are a number of challenges in the purposebuilt student accommodation market, the opportunities are strong. Buoyant demand is expected to continue, exacerbating the chronic shortage. There are many on-campus development opportunities, due to the limited funding capacity of universities to start new student projects. There is a need for operational expertise in this niche sector. Under-served markets present valuable first-mover advantages.
“The global market has evolved and investors now have a greater variety of vehicles and structures at their disposal, with many now available in sub-Saharan Africa,” says Hillman. “The direct ownership method is currently the most popular, with private developers providing the vast majority of student housing. Private developers who directly own their developments carry the largest
risk but pocket the greatest rewards, as they are in a position to earn the highest yields and rentals that the market can afford.” Public Private Partnerships (PPP) and joint ventures also allow for direct ownership in developments and mitigate the risk exposure of owners. The PPP vehicle enables universities to access private funding in a transparent and low-risk manner while keeping their focus on education, preserving debt capacity, and benefiting from the third party’s experience in building facilities in an operationally cheaper and faster manner than universities are capable of doing. Universities in Kenya and Ghana have recently concluded large PPP agreements for the provision of student housing. South Africa has only implemented one to date. In more mature markets such as southern Africa, private players with property management experience and the balance sheet to invest could focus proportionally more on converting, upgrading and maintaining existing building stock, provided there is existing infrastructure close to universities in these markets. In East and West Africa, outside densely populated urban areas, a greater focus needs to be placed on new developments. There is also a significant need for PPPs across the continent because of the large amount of on-campus development opportunities that are still available. “There is substantial evidence within the current landscape that the private sector will become progressively more involved, because student housing projects in subSaharan Africa are not only viable – they are among the most attractive investments one can make on the continent,” Hillman says.
Innovations key in new student village Construction of the R800-million mixed-use Hatfield Square student village in Pretoria is under way, with the 11 740m² (on schedule and on budget) set to open in January 2017
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he first phase of the development, which includes the retail component, will be ready for occupation for the next academic year, with the remainder opening a year later. This is according to Craig McMurray, Chief Executive Officer of Respublica, which is a student accommodation provider. “The redevelopment of Hatfield Square is focused on meeting the needs of students while providing a rejuvenated space for the public.”
The redevelopers are working hard to make Hatfield Square a student hub. Sensitive to the role of Hatfield Square in Pretoria’s student lifestyle, McMurray adds, the original square will be retained for public enjoyment – but meeting the needs of students will be the main focus in this precinct. The 2 200 students at the new residence will enjoy a social meeting place that offers convenience stores, coffee shops and
restaurants as well as other facilities, including a weekly cleaning service, a canteen, a rooftop gym with a running track, computer rooms, games rooms, a swimming pool, laundry and study spaces. Access to Wi-Fi, with 1GB free data per student per month, will also be provided. A joint venture between Redefine Properties and Respublica Student Living, the project is located within walking distance of the University of Pretoria’s main campus. SOUTH AFRICAN PROPERTY REVIEW
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accommodation The development is part of student accommodation solution – it provides students with a luxury environment to entice even the most discerning of people, while the building is both a great investment piece and a smart living environment. “It is with this in mind that we briefed Paragon Architects to design a safe, accessible environment where students can live, study and play,” says McMurray. At the same time, the redevelopment pays homage to the site’s heritage as the heart of Pretoria’s student culture. It was an end of a memorable era when the original Hatfield Square, a place to see and be seen for the city’s student population, was demolished last year. “This is the first student accommodation project we have worked on as an architecture firm, and we enjoyed creating a village type environment which includes public space and promotes the sense of a student community,” says Anthony Orelowitz, Director at Paragon Architects. The four main buildings in the complex are being built using Hebel autoclaved aerated concrete – a revolutionary material that offers a unique combination of strength (while being lightweight), thermal insulation, sound absorption, fire resistance and ease of construction. Cut and shaped like wood with simple hand tools, it is naturally smooth, requiring a skim coat, thereby eliminating the need to plaster conventionally. This system has contributed to the clockwork-timing of Hatfield Square, as a two-man team working with it can build up to 25m² a day, allowing for the speed of construction that is faster than that of conventional building. The entire construction will feature a complete intelligent wireless network that will allow each user to connect multiple devices, offering easy access to online courses, distance learning, social media and video streaming. The complex will feature a biometric access control system, complemented by a CCTV system that will monitor all entrances and exits, as well as the perimeter. As a ground-breaking project that sets new standards in student accommodation, Hatfield Square will have energy-efficient lighting and control systems fitted with LED lighting. All common areas will be fitted with occupancy sensors to switch on lighting when movement is detected. Installed generators will provide lighting and run all essential systems throughout the buildings in the event of a power outage.
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Students will have easy access to the variety of retail outlets in approximately 700m² of purpose-designed space for 2 sit-down and quick-service restaurants, fashion outlets and technology stores. These have all been chosen to ensure that students will not have to travel far to meet their basic needs. Each of the four buildings in the development has been designed to create smaller neighbourhoods within the precinct, with common areas in and around
them to encourage interaction and movement. Intimate courtyards will offer smaller, more private spaces, while an abundance of breakaway rooms and study areas will provide the peace and quiet that is necessary to study. Saratoga Village and The Fields in Doornfontein, which provide accommodation exclusively for students at the University of Johannesburg, Central Johannesburg College and Wits University, form part of Respublica’s portfolio.
real estate endorsement
The Estate Agency Affairs Board announces a ground-breaking consumer protection and compliance initiative In July 2016, the Estate Agency Affairs Board (EAAB) launched a new initiative designed to assist consumers in distinguishing between illegal operators and legitimate estate agents. This initiative aligns with the EAAB’s key mandate of regulating estate agents in the interest of protecting property consumers
What is a Privyseal?
Bryan Chaplog, CEO of EAAB
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t is essential that landlords only deal with registered estate agents who can be trusted to provide expert and professional advice and who, moreover, act in the best interests of their clients.
What does the EAAB wish to achieve? By partnering with PrivySeal, the EAAB hopes to assist property owners and others in distinguishing between registered estate agents and illegal operators, while encouraging property consumers to deal only with registered and professional estate agents.
Introducing PrivySeal PrivySeal issues a digital seal of authenticity (“Privyseal”) and hyperlinked verification certificate, which confirm the current registration status of estate agents in real time. A Privyseal is only displayed once the EAAB membership database has confirmed that the estate agent concerned is fully compliant and duly registered, and has been issued with a valid fidelity fund certificate. The EAAB has mandated that all registered estate agents access and embed their Privyseal into their email signature and digital media, such as websites and social media profiles.
A Privyseal is an up-to-date seal of authenticity that is displayed in emails, and on websites and social media. The Privyseal summarises professional credentials and enables members of the public to check that the person they are dealing with is, in fact, a registered and suitably qualified estate agent. The Privyseal indicates the name of the estate agent concerned, that person’s title, the registration status of the estate agent, and the date and time when the information was last verified by the EAAB. It also invites the viewer of the message to click on the Privyseal to “View Details”. When the Privyseal is clicked, a hyperlinked Verification Certificate opens on the PrivySeal website. SAPOA has welcomed the Privyseal initiative, and recently met with the EAAB and PrivySeal to discuss its roll-out. SAPOA was advised that the PrivySeal value proposition assists registered estate agents in good standing by: ●● distinguishing them from unregistered estate agents; ●● recognising and rewarding them for being compliant; ●● acting as a verified and always up-to-date business card; ●● being used within the PrivySeal Digital Signature to sign documents; ●● incentivising them to update their contact details at the EAAB; and ●● enhancing the awareness of the existence of (and the functions performed by) the EAAB.
How does Privyseal help solve the problem? Only duly registered estate agents will have access to an EAAB Estate Agent Privyseal. The EAAB will ensure that property owners are not only made aware of this fact but that
they are also encouraged to view the estate agent’s Privyseal before dealing with any estate agent. In time, if an estate agent is unable to display their Privyseal, consumers will validly become suspicious of that person’s authenticity and, indeed, demand that the estate agent concerned obtain such a Privyseal.
Where will the Privyseal be displayed? Consumers will expect to see the Privyseal in the estate agent’s e-mail signature, as well as on their social media and website.
How can estate agents obtain their Privyseal? Estate agents should first check that their details are correctly recorded on the MyEAAB portal. Using the same name, e-mail address and mobile number as those recorded with the EAAB, all estate agents should then sign up free of charge at www.privyseal.com. After a successful signup, the EAAB Estate Agent Privyseal will be automatically issued. Privyseal is a visual way of confirming that persons are registered estate agents who are in good standing with the EAAB. Estate agents should insert their Privyseal into all e-mail signatures and enterprise websites to distinguish the firm and persons concerned from unregistered operators. All property practitioners and registered estate agents are required to obtain their Privyseal from www.privyseal.com before the EAAB’s national advertising campaigns begin on 1 October 2016.
Privyseal public launch A pilot project designed to test PrivySeal’s consumer protection service commenced on 1 June 2016. Privyseals will be introduced as a mandatory requirement for all estate agents from 1 October 2016. SOUTH AFRICAN PROPERTY REVIEW
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BREXIT Now that the initial outcome of the referendum on whether the UK would be leaving the European Union is long past, we take a look at the effect that Brexit has had on the commercial property sector in that country Compiled by Mark Pettipher
W
The Union Jack,or Union Flag, is the national flag of the United Kingdom. The flag also has an official or semi-official status in some other Commonwealth realms; for example, it is by law an official flag in Canada and known there as the Royal Union Flag. Further, it is used as an official flag in some of the smaller British overseas territories. The Union Jack also appears in the canton (upper left-hand quarter) of the flags of several nations and territories that are former British possessions or dominions.
hen one thinks of England, one’s thoughts go immediately to weather, Wimbeldon, sometimes the British Lions and (when on tour) the Barmy Army. But it’s not cricket we’re taking a look at; it’s the effect that the Brexit has had on the UK’s commercial property market. Opinions differ as to what the economic impact would be now that the UK has voted to leave the EU. The majority opinion is that a Brexit would have an adverse impact on the economy and that this would be worse in the first two (or more) years after the vote, when there would be major uncertainty over the eventual relationship with the remainder of the EU. Most of the published analysis on the impact of a Brexit has focused on the UK economy as a whole, or on financial services.
Property implications What is good for the economy tends to be good for property, and vice versa. If jobs do leave the UK, the demand for office space,
particularly (but not solely) in London, will fall and rents will be lower than they would be otherwise. Lower rents would lead to less development, so rents might eventually recover back to previously predicted levels – but occupation levels would still be lower. Although the occupiers most at risk appear to be office occupiers, any hit to the economy would inevitably affect retail and industrial sectors too. Property investors are concerned about the possible implications, as evidenced by the responses to this year’s CBRE Investor Intentions Survey. More than 70% of investors who responded thought that a Brexit would make the UK a less-attractive location for investment. In a follow-up survey, the majority of respondents thought a Brexit would be bad for the UK but good for the rest of the EU, while a substantial minority thought that a Brexit would produce a loselose outcome. If the UK successfully negotiates a reasonable trade deal with the rest of the EU
SOUTH AFRICAN PROPERTY REVIEW
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eye on the world – which will guarantee reasonable access to EU markets for services as well as goods – econometric analysis by CBRE shows that central London office rents might actually be higher after five years than in our published forecasts. This is because the initial bout of uncertainty and depressed economic activity leads to a considerable amount of early stage development projects being put on hold or being cancelled altogether. This helps to improve the demand-supply balance in the market once occupier markets start to recover as uncertainty dissipates. Even in a worst-case scenario, where negotiations with the EU do not go well, rental growth expectations – rather than rental levels – could soon be higher than in the base case. This is partly because of the impact on development and because of the changed profile of occupier demand, which would still be much weaker in the short term than in the longer term.
Impact on commercial property investment In order to fend off the risk of a recession following the EU referendum vote, stimulus from the Bank of England is likely to comprise a looser monetary policy, with a cut to the base rate also a possibility. Ultimately, the decision is for the Monetary Policy Committee to make, but Mark Carney (the Governor of the Bank of England) has emphasised the need to support growth and lower borrowing costs rather than stabilise inflation. His fear is a deferment of
consumption and investment, as well labour market weakness. Parliament member George Osborne is planning to cut corporation tax from 20% to 15%, making it the lowest rate among major economies. The objective is to attract business investment, which has been adversely affected by the EU referendum result and the ensuing uncertainty. The move is part of a new five-point plan, which also includes intensifying efforts to attract investment into the northern powerhouse, attracting investment from China, support for bank lending and preserving fiscal credibility. Further, the Government Property Unit has announced a programme of civil service consolidation, largely driven by HM Revenue & Customs, which could generate demand for just under 465 000m² of office space in the English regional office markets by 2023. Evidence of various referendum-related interruptions to the real estate deal flow are unequivocal; equally, evidence of deal continuity is also unequivocal, especially in core and annuity type assets. Momentum in both the investor and occupier markets has continued post referendum vote, but this may not be a realistic indicator of short-tomedium-term activity. The UK property universe is diverse and the risk spectrum very broad, defined by a combination of sector, geography and quality. At present, income is king; pricing is expected to remain firm for core and low-risk assets.
Key indicators Latest¹
End July
End June
End May
UK GDP (% q/q)
0,4
0,4 (3rd est.)
0,4 (3rd est.)
0,4 (2nd est.)
UK PMI (weighted average)
47,4
52,9
51,9
53
EURO PMI (composite)
52,9
52,9
53,1
53,1
UK CPI (%)
0,6
0,6
0,5
0,3
UK RPI (%)
1,9
1,9
1,6
1,4
UK BASE RATE (%)
0,25
0,25
0,5
0,5
UK 10YR GILT (%)
0,62
0,86
1,04
1,55
GBP 3M LIBOR (% )
0,39
0,54
0,56
0,57
Sources: ONS, Markit, FT, EIA
78
79,6
80,4
86,2
GOLD (USD)
1 346
1 342
1 324
1 215
OIL BRENT (USD)
50,8
43,2
49,2
49,7
FTSE 100
6859
6721
6360
6225
IPD all property IY
5,14
5,14
4,96
4,92
IPD all property EY
6,25
6,25
6,09
6,06
¹ 19 Aug (data and revisions)
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The exception may be Central London offices, where the high value and large lot size limits the buyer pool, and concerns over financial services employment raise a question over future occupier demand. The small-scale quality end of the market looks like business as usual, with private buyers much in evidence. CBRE also expects renewed interest in alternatives, such as hotels, student housing and build-to-rent, where the occupational markets remain strong. Beyond core and bond-type assets, pricing is likely to adjust to new levels over time. A number of open-ended property funds (eight to date) has blocked redemptions. These funds had already seen outflows pre-EU referendum, and the leave vote resulted in a further sharp upturn in withdrawals, which cash buffers have been unable to satisfy. UK property stocks (REITs) fell back to their post-referendum lows as negative sentiment followed the announcement of fund “gatings”. While there has been some recovery, at the time of writing share prices for the major REITs were down between five percent (INTU) and 24% (Workspace) since 24 June, which suggests that the market is pricing in a potential fall in capital values.
Weight of capital The key defining feature of the real estate investment market is the weight of capital, coupled with the general lack of leverage. UK property will find powerful support from an undiminished – and growing – weight of global capital and an increasingly desperate international search for yield. A conservative estimate of global funds under management across all asset types, by institutions, sovereign wealth funds and private equity, amounts to about US$36-trillion. The search for yield in a world characterised increasingly by negative bond rates has caused institutional and other funds to increase weightings to property. Allocations to property have risen from an average of 8,9% of total funds under management in 2013 to 9,9% in 2016, and are set to exceed 10% by 2017. This trend is set to endure, and new equity raised for property funds globally continues unabated. A one percent increase in funds is equivalent to US$360-billion, or about onethird of global property investment volumes in 2015.
eye on the world UK safe haven status intact Despite a downgrading by rating agencies, the UK market looks to have retained its safe-haven status. Credit-default swaps and the cost of insuring against UK bond defaults rose modestly, but 10-year bond yields have fallen by about 50bps after the referendum. Part of the fall is attributed to expectations of weaker economic growth, lower interest rates and more quantitative easing, but part of it is also in response to greater demand for UK gilts. Domestic funds seeking to hold liquid assets may have been driving much of this demand, but global equity funds have seen large outflows, reflecting a general pivot towards safety. For commercial property, there is no evidence that UK gilt yields will exert much pressure on property yields in the foreseeable future.
Lack of leverage and cash buffers The UK financial market is not as overleveraged and over-engineered as it was in 2007 and 2008. The market is currently led by equity. Despite the headlines about fund-redemption pressure, banks, large UK property funds and several REITs are in strong cash positions. This is no accident: prior to the referendum, the Bank of England (through its property forum) suggested that funds should hold large cash positions to mitigate the impact of possible redemption pressure. The adequacy of these cash holdings is being tested. Some funds have already conducted sales over the first half of the year in anticipation of possible fund redemptions. In May, a net £360-million was withdrawn by UK investors from property funds – direct and indirect – or less than two percent of the estimated £25-billion total funds (Bloomberg, 5 July 2016).
Impact on commercial occupier markets Initial post-referendum evidence suggests that retail and leisure operators are in business-as-usual mode. Even top-end fashion operators with large import components are still looking for space in London. Retail sales proved buoyant in July, beating most expectations of weak growth post-referendum. Retail sales volumes (expetrol) grew by 5,4% year-on-year in July, with both food (4,1% year-on-year) and non-food (5,6% year-on-year) growing healthily. Part of the increase can be attributed to the sunnier
weather compared with a wet June, but also to an upsurge in tourist numbers and spending, the result of a weaker pound. When combined with an ultra-loose monetary policy, low inflation and record low unemployment, a weak sterling has proved a strong supportive cocktail for the retail sector. Nevertheless, the usual pressures still persist. Prices continue to be cut in order to attract customers, and margins remain squeezed. Although tepid prime rental increases emerged across the country in the first half of the year, overall growth has yet to gain any traction. Indeed, IPD All-Retail annual rental growth actually slowed from 1,1% in June to 0,8% in July. Industrial leasing also looks generally unfazed. Large distribution deals (internet and food) are progressing, and the demand for retail warehousing remains firm, particularly from bulky goods, although trade counters focused on the building trade are exercising caution. The manufacturing PMI remained in contraction territory in July, with the uncertainty prior to and after the referendum having an adverse impact on output and new orders. The index was revised downwards in July from a flash estimate of 49,1 to 48,2, reaching its lowest point in more than three years. Sterling depreciation did aid export growth, which rose for a second consecutive month, but it was not enough to counteract weakness elsewhere. Nevertheless, sterling’s downward trajectory is set to benefit exporters in the months ahead as the currency reached its lowest point since 13 July against the euro. Irrespective of recent business surveys, the rental growth outlook for the sector is expected to be relatively more positive than other sectors, with the tight supply on offer eclipsed by strong demand. IPD All-Industrial rental growth slowed in July, but it remained positive on an annual basis at 4,6%. London offices look to be the most vulnerable post-referendum, but vacancy rates are at historic lows (about three percent), which will provide some support to rents. At present, regional office agents report both deals being completed and deals going ahead. Central London: Although the latest RICS survey points to marginally higher availability post-Brexit, A-grade supply remains constrained in many core sub-markets, with “unique” product set to resist downward rental pressure. Overall vacancy is at three percent, well below the 10-year average of 6,8%.
A significant share of schemes on the drawing board is unlikely to be “greenlighted”, helping to dilute rising vacancy. Oversupply is not currently a concern and there is no evidence yet of leakage of “grey space” onto the market. However, while demand for space from occupiers appears relatively healthy and on trend for a typical July/August, there are good reasons to think that rental growth will slow. Regional: IPD rental uplifts in the regions were positive in July, although annual growth in the rest of the southeast slowed from six percent year-on-year in June to five percent. However, the rest of the UK showed no such slowdown, with growth unchanged at 2,5% and better leasing activity in cities such as Manchester.
Medium term occupier outlook Most European markets saw no impact on leasing from pre-referendum uncertainty, and we expect activity to remain robust for the rest of 2016. While there has been greater hesitancy in the UK, JLL estimates suggest that the majority of transactions are still proceeding, with only a small fraction withdrawn. Any potential strategic relocation decisions are unlikely until there is greater certainty on the UK settlement and associated trading, legal and operating considerations. Given the complexity of these, we believe that current warnings about impacts in London may be exaggerated. The impact of Brexit will vary considerably between sectors. Much of the initial focus has been on financial services. Potential changes to “passporting” rights of the companies to sell into Europe or to trade in euro-denominated instruments from London will be influential in long-term location and portfolio strategy. But these decisions will not be finalised until there is greater clarity. Other sectors, including life sciences, energy and consumer goods, which experienced less attention, report limited impact in the short term. All sectors will, however, be watching for greater clarity on the operational implications, and adjusting their strategies accordingly. Outside of offices, increasing employment, rising real incomes and low interest rates have supported consumer demand and driven retail sales in Europe. Retail sales are forecast to rise by 2,4% this year and at a rate of just over two percent a year on average thereafter. All countries barring Greece and Russia are expected to see growth, with CEE, the Baltics, Ireland and the UK strongest. SOUTH AFRICAN PROPERTY REVIEW
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eye on the world International retailer demand remains concentrated in Europe’s top-tier cities. JLL expects Brexit will reinforce resilience in prime and new retail pockets, as the “ripple effect” continues in larger cities. European logistics witnessed another quarter of above-average occupier activity in Q2, driven by the ongoing shift towards omni-channel distribution. Although Brexit has heightened the downside in one of Europe’s largest markets, an increase in takeup remains in prospect. There is an ongoing need for corporates to restructure their supply-chain networks to remain competitive, and this should support occupier demand for European logistics in the future. Back with corporates, while the political environment remains pretty fluid, the announcement of a planned reduction in UK corporation tax rates (from 20% to 15%) marks the beginning of a wider policy to attract and retain international business – one that has also been seen in other European capitals. Inward investment agencies in many of the European centres are already becoming active in pitching to international companies. Companies are also reviewing market conditions with interest, expecting more occupier-favourable conditions in the UK as markets adjust – although it should be noted that availability is currently low by historical standards in most major centres. Flexibility was already becoming more critical for corporates. We expect that lease terms will increasingly adjust to incorporate greater flexibility, allowing occupiers to
markets. As the sterling corrected, REITs saw discounts to their net asset value widen to almost 30% – on a market capitalisation weighted average – from eight percent prior to the vote. This sell-off has been partially reversed, but it implies a downward revision in capital values and a small yield expansion. As we move beyond the vote, markets have become more settled. There remains uncertainty over the nature and timing of the UK’s exit from Europe, but the shock of the vote and the uncertainty of domestic politics have eased. The consensus is that the pound probably has further to fall against the US dollar but, with improved visibility, it is easier to price the extent of that dislocation. As risk aversion has receded, REIT stocks have recovered ground lost immediately postvote, and property funds are starting to see inflows again. It is too early to be able to quantify impacts on the UK’s direct commercial property investment market with any precision. Most UK deals in negotiation prior to Brexit are progressing, with only a small portion withdrawn, and the impact on pricing has been mixed. Some segments are seeing discounts relative to prereferendum levels, but others have yet to see any. The picture is likely to be extremely nuanced and vary by sector and by region. Product that offers long-dated income will outperform shorter income in the current environment.
respond timeously to the evolving political and diplomatic situation.
UK market swiftly re-prices post-Brexit The vote to leave the EU has very quickly impacted real estate investment in the UK, with valuations immediately adjusted, yields moving out for the first time since the global financial crisis and rental growth expectations tamed. It is clear, though, that the adjustments made are built on a fundamentally different basis to the 2007-2009 period. That is to say that the current issues are seen by the market as contained to the UK, with limited risk of financial contagion. Following years of scrutiny by European regulators and more risk-averse conduct by market participants, there is limited excessive leverage within real estate, and after years of very weak supply response to improving demand, occupier markets are tight. Therefore, while pressure is expected in the UK, at this stage (barring some major demand shock) it appears to be contained. Most importantly, the yield shift required by investors to accommodate the extra uncertainty of Brexit is not applicable to the European context. As a result of developments proceeding at a rapid pace and because of the shifting sands of UK politics, the best way to look at the impact of Brexit is indirectly through equity markets. The UK REITs market has been efficient at pricing an increase in political uncertainty, which has also been keenly felt in currency
Sourced from CBRE UK, JLL UK and Colliers international.
UK property yields versus goverment bond yields: attractive in a low-interest-rate environment
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10-year UK government bond yield
2005
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2003
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IPD All Property Index yield
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1992 32
1994
Spread
% 11 10 9 8 7 6 5 4 3 2 1 0 -1
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property research
SAPOA in search of data South African Property Review talks to SAPOA’s Research Committee Chairperson Elaine Wilson By Mark Pettipher
Elaine Wilson
B
earing in mind that SAPOA’s role is to keep its members informed as to current trends and statistics, Research Committee Chairperson Elaine Wilson says the committee will continue to commission its reports – Office Vacancy, Industry Vacancy, Cap and Discount Report, Operating Costs, Rates and Taxes and the Retail Trends report. There will also be the specific GDP and Municipal reports. These are part of the membership package, which can be downloaded from SAPOA’s website www.sapoa.org.za. Wilson is the head of research at Broll, and is well placed to make decisions about the kinds of reports that will be relevant to SAPOA’s members. She is mindful of the need to be current with information, and is aware that reports may be outdated by the time they come out. SAPOA’s role in research is to complement reports that are already in play. Reports such as the Office and Industry reports are relevant as they are not produced by other research houses and are aimed specifically at SAPOA’s members. On the whole, SAPOA is not a research house – so the organisation outsources the research and reports to institutions such as University of Pretoria, Urban Econ and MSCI. “We need to ensure that our reports are relevant, and while we will have the usual reports, we will need to be flexible in our approach and aware that there’s a need for
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ad hoc reports as well,” says Wilson. “Reports are important to our members because a number of them are decision-makers in the industry. Our reports need to be analytical as well as factual; for example, in terms of Office reports, statistics change on a regular basis, so while the base report will be the same, the statistics and trends will vary on an on-going basis. “Trends, topicality and relevance: these are the key factors that dictate what SAPOA needs to keep in mind. We also need to be aware of what reports have been issued by other bodies. There is little point in bringing out a report that has already been commissioned and released.” As elections come and go, so do mayors and their committees. “With the change in mayors, you will find the city and municipal reports are usually the same in terms of statistics but that the scope may change,” she says. “Each mayor has his or her own ideas and priorities, and this has a huge influence on a city’s planning. We need to be aware of those personnel changes and be prepared for the differences in the dynamic of a city’s governance. The differences may come about because you get a new head of town planning, for example, whose interpretation of the city’s requirements may differ from the previous planners. And so plans change. “The sad thing is that there are many plans that have been produced based on research, and many ideas that are brilliant, that simply don’t get off the paper they are planned on. We could have really great cities if the plans saw the light of day.” Wilson is a perfectionist when it comes to producing reports. She insists that all reports must flow, that each report must tell a story, and that every statement made must be qualified. “There must be answers to everything that we say in our reports,” she says. ”Our reports are about giving information to our members – so we have to have those reports presented in a clean and concise way.”
Kobus van der Vyver and Bianca Smith of Urban Econ discuss the relevance of research in the property industry By Mark Pettipher
I
n terms of property industry research there are two areas that are important: strategiclevel research and project-specific research. Strategic-level research helps with the comparisons of South Africa with other African countries. It’s important to understand what is happening on a macro scale so we can position ourselves in a wider context. It’s also important to have an understanding on a baseline level of the similarities of issues among our metros. From there we can drill down into project-specific requirements. Armed with this kind of knowledge, companies can then better position their projects. “There is movement in government policy, and we need to understand the impact of that policy on the property industry when it gets enforced,” says Van der Vyver. “For example hot topics such as inclusionary housing, TODs and the Corridors of Freedom in the City of Johannesburg will have significant impact on the property industry. In this regard we’re working closely with SAPOA and its Research Committee to examine the effects these policies will have on SAPOA’s members.” “South Africa is a unique environment,” says Smith. “Because we have a changing political landscape, we have a property industry that’s evolving at a tremendous pace, which is creating an opportunity to develop unique research – not only research that can be compared with international data, but new local research as well. There is a huge gap and there is a hunger for information that is new and crisp, that explores new ideas and new information.” “There is a lot of data available, so a key requirement in our industry is well-trained analysts,” says Van der Vyver. “Then there is the sharing of information: we are a bit behind. We don’t utilise ‘big data’ to its full potential. As result of the lack of big data analytics (and the understanding of individual requirements), we see developments such as shopping centres beginning to be the same, both in approach and look. It’s a case of whatever works, so keep using the same formulae. “However if we actually look at the individual needs, we find there would be better integration with the communities, which leads to us talking about the needs of the unique project. We tend to build projects that have worked internationally,
property research
Research and the property industry but is this right? We should be talking to the local needs. For example, a western-style shopping centre doesn’t really work in the rural areas and locations. There, for example, we see an individual need for easy access, usually on foot, as opposed to the urban approach where there are roads and public transport is easily available or where most users have some form of transport.” “There is a need to develop research that has a South Africa-specific approach, and move away from the research that has already worked in the US or Europe,” says Smith. “Culturally we don’t really understand who the buildings of these centres are for.
Kobus van der Vyver
We need to develop a research model that is unique to South Africa. We should develop an understanding – through research – of what is required culturally. By doing this, we can benchmark requirements from a community perspective and have a better understanding of the unique needs of each of our local provinces, cultures and demographic breakdown.” “Property development research almost needs to have an anthropological approach,” says Van der Vyver. “On one level it would give us the cultural understanding that we require; on another it would greatly influence the aesthetics of the built environment that is being proposed. “Our company is often commissioned only after a developer has assigned an architect and put a project team in place. We are then commissioned to go through the motions of the required building regulation research, after which the project manager is in a position to simply ‘tick the boxes’. It is almost as though research requirements are an afterthought.
However, our reports and our research go much deeper than the scope of the original briefs – there is greater context. In this regard we would like to think that a developer would want to go deeper into the requirements of the local community. With greater insight, he would better understand the impact that the development may have. “We do like to present our reports. Often, we tend to present an interim report, which allows both the client and us to see where relevant information may affect the development of the project, and to find out whether or not we need to alter the report’s direction and scope. By engaging with the developer, project manager and the quantity surveyors, a project ensures all stakeholders have an understanding of the impact of the development.” “Our depth of research in the case of local shopping centre development would look at public participation,” says Smith. “Some would say to stay away from it – but we believe that by engaging properly and educating the leaders in the community as to what outcome we are looking for, we gain very valuable insights.” “We have found through local community leaders that a specific need could be in existence,” says Van der Vyver. “For example, the request could be for a Starbucks. The correct interpretation of that request might be that the community is looking for a place to meet, which would throw up the question of how to address the underlying need specifically. The solution would go a long way towards encouraging the community to accept and use the development in a more positive and interactive way. “This greater understanding of what is required comes about by better interpretation of the research, a willingness to keep an open mind to the subject, and the requirements of the end-users’ interaction with each of the projects. We look for valued interaction, both by the community and the developer, as well as the project managers and quantity surveyors.“ Whilst Urban-Econ uses a consistent methodology, the company does use standard methods, and where it has clients with regular specific needs, those standards are upheld. This provides an opportunity for consistent analysis that can be interpreted over time. According to Smith, Urban-Econ always looks to add value to its reports; where there are changes in trends, it will add that information as a matter of course.
“Each project and client has unique needs, so we adjust our methodology accordingly,” says Van der Vyver. “It is important to us that we think out of the box, and look at each requirement and change our methodology to drill down deeper. For example, we were recently asked to generate a report for the Rustenburg Municipality. Had we used a standard methodology, we would have missed important things such as the effect of slightly diminished purchasing power of the local population. We needed to find out what happened to the families of the miners who had lost their jobs, the knock-on effect of that, whether or not they joined the informal sector, and what happened to their accommodation after the movement of the people as a result of retrenchment.” “As researchers, we have a responsibility to educate our clients and developers to look at research in new ways,” says Smith. “We should encourage them to be courageous and develop new models and new aspects towards their development.” It is important for developers to engage in research as early as possible, prior to starting their projects, and to understand the depth of the data that has been mined and interpreted. It is also important to the outcome of the aesthetics of the built environment in which we live that greater consideration is being given to the needs of the local communities. After all, buildings are being left as a legacy of what we decide today and they generally have a life expectancy of more than 20 years – so we need to get our planning and development right!
Bianca Smith
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SAPOA-WITS today OPEN DAY for EXECUTIVE Course EDUCATION
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8 November 2016
SAPOA and the Wits School of Construction Economics and Management are jointly hosting an open day on 8 November, 2016. This event presents an ideal opportunity for prospective students and learning and development managers to explore the wide range of shortcourse study options available at the university. The SAPOA-Wits Open Day gives prospective students a chance to find out exactly what courses are available and which career options these courses lead to. It will also allow you to attend some of the lectures and experience what it’s like to take these courses. It will also allow you to ask any questions you might have about studying at Wits and the courses that would be suitable for you.
Time 8:30am to 12pm (midday) Venue The Professional Development Hub, University of the Witwatersrand HOW DOES IT WORK?
Lecturers include Our courses are designed Professor Samuel Azasu, to reflect cutting-edge knowledge, and and Dr Kolapractices, Akinsomi, technical requirements. Dr Yomi Babatunde. Courses are provided on a block release basis to enable you slot it into your busy schedule.
world arning ith the ies to y skills project nt.
property research
Real estate market research One of the most ubiquitous documents used by real estate professionals is the market study report, the end result of a systematic process of investigating and measuring the income potential of a prospective investment, acquisition or development at both the broader market level and within the immediate surroundings of the specific asset By Samuel Azasu, Associate Professor and Coordinator of Postgraduate Studies in Real Estate at Wits University
Professor Samuel Azasu
M
any acquisitions and developments fail because the income potential of the asset is not ascertained before the decision is made to pursue the investment. For example, an investor could have decided a few years ago to build a shopping mall in a mining area without determining how long the mines would remain open or what the future prices of the specific minerals would be. The problem is that the mines provide the jobs and generate the income that enables people to patronise the mall. As a consequence, now that mineral prices have depreciated due to lower demand for commodities, mining jobs will likely be lost, incomes will decline, and retailers will struggle to sell. The mall owner would not receive the necessary rents for the mall to remain a viable investment.
Another example: a developer may find that there is the need for an office building in the market, which creates an investment opportunity. He then mobilises resources and develops an office complex. However, the office is built in an area that’s difficult to reach because it is far away from most major transportation routes and other businesses, in a not-so-glamorous location. An alternative scenario is that even though there is demand for office space, there were too many projects in the pipeline that came onto the market at the same time as the development in question. In either case, few businesses would rent the offices, leading to a failure of the development from the high vacancies in the building. A third example is one of a housing complex whose owner is struggling to sell the units in the complex because the complex is not only too expensive but also far from schools, hospitals and shopping centres, and is adjacent to a high-crime neighbourhood. A developer may build a block of one/two-bedroom flats in an area dominated by families with children. Even though families need homes, the attributes of their preferred homes would differ from those of empty-nesters. As a result, the finished apartment project could fail. A high-end shopping centre could also be developed in a neighbourhood dominated by low-income residents In all of these cases, a systematic market analysis would have highlighted some of the problems associated with each development, leading to the investor not going ahead with the project, or modifying it by, for example, building the office in a more accessible location, closer to other businesses. In the case of the office
Master of Science in Building
http://www.wits.ac.za/cem Contact Professor Samuel Azasu t: +27 (0)11 717 7676 e: samuel.azasu@wits.ac.za
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SOUTH AFRICAN PROPERTY REVIEW 2015/02/23 8:16 AM
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property research development, even though there was a need for an office in the market area, in one scenario it was built in the wrong neighbourhood, while in the other scenario, there was just too much competing supply (which a market analysis would have picked up). For the retail development, a market analysis would have uncovered the income levels and spending patterns of the shoppers in the trade area, enabling the development of a shopping centre that met their needs. Market research thus enables the developer to determine not only whether there is demand for office space but also to ascertain the most suitable neighbourhood in which to build one. Market analysis also enables the developer to determine how much specific groups of buyers are willing to pay for a specific housing unit. It also enables the developer to determine which neighbourhood attributes would make the units attractive to buyers. It enables a retail developer to decide which type of development would succeed in a trade area, and which product lines should be targeted based on the shopping habits of shoppers within the trade area. Real estate market analysis runs counter to the belief that supply of a building creates its own demand. Many developers, investors and property owners, especially those who have been successful in the past, are tempted to believe their successful decisions in the past guarantees successful investment and development decisions in future. The fundamental assumption behind this attitude is that whatever conditions led to past successful investments remain going forward. In particular, excess demand for the prospective investment is assumed to remain positive at the level of the market area of the investment, and within the vicinity of the project. The risk is that conditions may have changed in the sense that demand may no longer exist, or too many projects that serve the same need as the particular project are in the pipeline and will be ready at the same time as the prospective project. Consequently, if the investor were to go ahead with the project, he/she would find the project has few or no buyers or renters. What market analysis does is it enables the developer or investor to seek evidence to determine, with a reasonable degree of certainty, the income-producing prospects of a development at the level of both the market area and the neighbourhood of the project beforehand. It thus contributes to informed decision making and prevents
market participants from basing decisions on beliefs or past successes. Real estate market analysis has three components, representing the different stages of analysis: ●● an analysis of growth in the metropolitan area in which the prospective investment is being contemplated ●● an analysis of the excess demand for the asset class(es) favoured by the type of growth in the metro (demand gap analysis) within a defined market area ●● an analysis of the site and neighbourhood of the specific project.
In all of these cases, a systematic market analysis would have highlighted some of the problems associated with each development, leading to the investor not going ahead with the project or modifying it by, for example, building the office in a more accessible location, closer to other businesses The process is sequential in the sense of one stage feeding into the next. The first component of a market analysis has the metro as the unit of analysis. It covers the roots of growth in the metro and analyses the results of metro growth in terms of output, population, employment and incomes. Metro growth analysis draws attention to the asset classes likely to benefit from the dominant consequences of the growth in the metro. This means, for example, if wealth growth is the dominant growth consequence, it would spell good news for high-end residential and retail real estate. If, on the other hand, population and employment are growing faster than incomes, low-to-mid-range retail and residential property would benefit. The residential market is also likely to be dominated by renters rather than owner-occupiers. The second component of the study focuses on the market area for the different asset classes. It looks for and measures the level of excess demand for the asset classes
identified in the previous step. For retail real estate, this stage measures excess spending potential, over and above what current facilities account for. This is termed the unrealised sales potential, and its size is an important determinant of a possible investment in a new retail facility. For residential property, a key component of this is the growth in the number of households in the market area relative to existing units and competing projects in the pipeline. Using information on excess demand, the analyst then proceeds with the third component – an analysis of the proposed project site and of its immediate neighbourhood. The goal is to use this analysis to derive information on the most marketable project characteristics, achievable prices/rents and speed with which it could sold or rented out. Practically every player in the real estate market must rely directly or indirectly on some market analysis for decision-making. Users of market analysis include architects, developers, investment analysts, lenders, property managers and valuers. Market analyses provide inputs for development feasibility studies. A feasibility study compares the cost and the value of a project under consideration, for example an office building. If the cost exceeds the value of the office, the proposal is not feasible.
Contribution to decision-making Market analysis replaces excessive reliance on intuition and complacency resulting from past success in real estate decisionmaking. There is a mistaken notion that supply of new developments creates its own demand. In everyday language, some market players believe that if they “build it, they (buyers/renters) will come”. This attitude to real estate developments can lead to costly failures such as empty shopping centres or office buildings. The problem with this approach is that intuition replaces a systematic search for evidence that there is demand for an apartment complex, office building or shopping centre before resources are mobilised to develop it. Given the large sums of money and bank loans that people use for these projects, failure to establish evidence of demand for an asset would lead to problems for the developers, banks and investors alike. Market analysis thus protects developers, investors and property managers from costly investment and development failures. SOUTH AFRICAN PROPERTY REVIEW
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property research However, if the sales revenue is projected to exceed the cost, the proposal is feasible. As a result, development proposals submitted to banks for financing have to be grounded in sound market analysis. This is because the bank needs assurance that a proposed development for which funding is sought is profitable so that the borrower can repay the loan with interest when the development succeeds. Investment proposals designed to evaluate potential acquisitions of real estate also require market analyses. This enables investors to make sound investment decisions. Valuations of commercial real estate also require market analysis because assumptions about future demand, rentals, growth projections and cap rates need to be supported by market analyses. A property management plan – an operating plan developed to maximise a property’s potential and support the owner’s objectives – requires market analysis to support inferences about market rental rates for the subject based on demand gaps in the market area as well as the attractiveness of the property relative to competing properties. Market analyses are thus useful for the property manager when it comes to planning how to maximise an asset’s investment potential on behalf of the owner. The South African property market has matured over time, making glaring investment opportunities harder to find. STANLIB wrote a document a few years ago, detailing the failures of several retail developments in the Johannesburg metro. Some of the failures highlighted should have been uncovered by a solid market analysis. Recent retail developments have once again resurrected the discussion about whether there are too many retail developments in the Johannesburg metro. With the economy stagnating, people are wondering whether the number of office developments in the pipeline in Johannesburg would be matched by growth in white-collar employment as the engine of growth of the metro. Answers to these questions cannot be a matter of opinion. Funding institutions can no longer approve deals based on investor’s track records. Every new funding or investment or development proposal must be based on a solid analysis and a rigorous evaluation of a project’s profit potential. It is fair to say the South African real estate market is now an analyst’s market.
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Up-and-down trend in office vacancy rates Positive signs underlying a slow improvement
Although there has been growth year on year, there has been little momentum, with businesses taking on a wait-and-see approach Compiled by Maud Nale
Nicola Mundell, Pieter Strydom and Madelaine Tymvios
T
he office vacancy survey for Q2 of 2016 shows that the national office vacancy rate was 10,5% – 40bps down from the previous quarter. In square-metre terms, an aggregate of 143 000m² was let during the past quarter while 75 000m² of stock was added to the survey sample – a positive net absorption of about 68 000m². The latest quarter also saw asking rentals continue the above-inflation trend by posting a year-on-year growth of 9,1% – up from 8,6% in the quarter before. The rise, however, is more a product of supply-side dynamics than it is demand-driven. Current asking rentals are based on a better-quality sample than a year ago, with several prime office developments having come online in the last year. The latest uptick in rental growth needs to be put in context. On an inflation-adjusted basis, office rentals are down more than 10% over the past five years, having grown at only half the rate of inflation recorded over this period.
Economic drivers of office sector Recent data suggests that the fundamentals underlying the office sector recovery are becoming fragile. The latest economic growth and employment data suggests a stagnant,
flat growth environment, while business confidence and capital investment slumped worryingly in their latest reporting periods. The latest business confidence number declined to 32 (from an already pessimistic 36), implying an overall negative sentiment among business executives that’s likely to see industry decisionmakers maintaining an increasingly selective approach to capital allocation – especially expansionary. Business and financial services capital investment – a leading indicator of office vacancy rate – declined by more than seven percent y/y to March, implying office vacancy rates could deteriorate first before improving. The current cycle remains similar in many ways to the period 2000/2001, when both office sector and macroeconomic fundamentals were at a similar crossroads. External factors weighed on the South African economy (much like today) leading to the office vacancy rate eventually peaking more than two years later in 2003. A sustained improvement in the office vacancy rate relies on a strengthening of these macroeconomic drivers. In summary, the office sector still faces a range of headwinds, not least of which is economic growth and job creation.
property research A sustained improvement
Economic drivers of office sector: Little momentum; business taking a wait-and-see approach
in the office vacancy rate
Economic drivers: office sector 1990-present
relies on a strengthening of macroeconomic drivers.
Jobs growth: private sector (year-on-year)
Real GDP growth (year-on-year)
0 -0,20 1993
1998
2003
2008
2013
1993
Capital investment: business and financial services (year-on-year growth)
1998
2003
2008
In summary, the office sector still faces a range
2013
of headwinds, not least
Business Confidence Index 100 – extreme optimism
of which is economic
Indexed
growth and job creation 32
-7,78% 1994
1999
2004
2009
2014
1993
1998
2003
2008
2013
Sources: South African Reserve Bank, StatsSA
Vacancy trend by location and grade The latest quarter saw a 1,1% improvement in the level of A-grade vacancy rate, while the prime and B-grade vacancy rate softened slightly. At 4,9%, the prime office vacancy rate is still high in historical terms, having increased from below two percent since the end of 2013. The vacancy rate of secondary offices – while still high – has improved significantly over the past two to three years. In some nodes this is the result of offices being converted to residential units, while in others evidence suggests that tenants may be trading down the quality curve as business confidence remains at a level below 50. It is, however, important to note that the improvement in vacancy rates wasn’t broad-based – 17 of the 53 nodes surveyed actually saw occupancy rates slide (many by about one percent q/q). This underlines the importance of nodal selection for property fund and asset managers in the current market, with location playing a similarly important role as office quality and other characteristics, such as floorplate size and accessibility.
(-1,7%). On a weighted basis, the City of Johannesburg contributed the most to the overall improvement with its 70bp strengthening contributing 40bps to the aggregate change. Tshwane and eThekwini recorded positive shifts of 60bps and 20bps respectively – a combined weighted contribution of about 10bps to the overall move. See Figure 1 on page 40.
Nodes driving change on vacancy rate On a nodal level, there is significant variance – both in terms of absolute vacancy rates and the direction of their recent trends up or down. The graphic on the following page (Figure 2) illustrates the top five nodes in terms of positive and negative impact on the overall vacancy rate. During the quarter ending June 2016, the Sandton node had the
Juan Herrero and Keith Skinner
Office vacancy & rental growth by grade On a municipal level, the lowest office vacancy rate at the end of a quarter was recorded for the City of Cape Town with 7,8% – this is 70bps up from the previous quarter. It was the only metro office market to record a declining office occupancy rate. Nelson Mandela Bay, which is a relatively small market, saw the largest improvement
Debbie Chellan and Michael Ian Mortimer
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property research Figure 1
Vacancy Rate June 2016 14,4% 11,6%
9,2%
7,8%
City of Cape Town
10,7%
City of Johannesburg
City of Tshwane
eThekwini Municipality
Nelson Mandela Bay Municipality
Vacancy rate trend: 01/03/1990 to 01/06/2016 20%
Vacancy rate (%)
15%
10%
5%
0%
Stan Garrun from MSCI
largest positive impact by recording an improvement of 1,2%, thereby contributing around 10bps to the overall decline. Other notable contributors to the overall improvement were Randburg, Jo’burg CBD, Umhlanga and Fourways. All other nodes had a combined contribution of 20bps to the overall decline in vacancy rate. Century City and Pinelands had the largest negative impact on the overall office vacancy rate, with upward shifts of 2,7% and 2,2% respectively contributing a combined 15bps to the shift in the national figure. See Figure 2.
1993
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SOUTH AFRICAN PROPERTY REVIEW
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2008
2013
Weighted contribution to vacancy shift: June 2016 Region Nelson Mandela Bay Municipality 0,7%
eThekwini Municipality
11,6%
55,8%
8,0%
City of Tshwane
-0,7%
0%
-0,6%
9,2%
-0,1%
7,8%
14,1%
0%
150%
10%
Weight
0,1%
0,7%
10,5%
100%
Grand total
-0,4%
-0,2%
10,7%
21,3%
City of Cape Town
0%
14,4%
City of Johannesburg
In conclusion As far as development activity and total vacancy rate (including new developments) are concerned, the office sector is currently mid-way relative to historical levels on both these measures. The office sector is still firmly entrenched in its “recovery” phase – which is becoming increasingly fragile as a result of the sector’s macro-drivers. Recent up-and-down trends in vacancy rates and stabilisation of rental levels across most office grades are positive signs underlying a slow improvement. Future trends depend on the strength of growth drivers – most notably financial and business services, employment growth and capital investment. An absence thereof could see the sector’s momentum stagnate, leading to a deterioration in the vacancy rate, pressure on rentals and a worst-casescenario drop back into recession.
1998
-0,4%
20%
-2%
Vacancy rate (%)
0%
0,5%
Vacancy shift (q/q)
0%
Weight contr to vacancy shift (q/q)
Figure 2
Which nodes drove the change in vacancy? Some Jo’burg nodes driving improvement Weighted contribution to vacancy rate shift By node Century City Pinelands Waterfront Berea CBD Durban All other nodes Fourways Umhlanga/La Lucia CBD Johannesburg Randburg Sandton
Grand total
2,7% 2,2%
-3,0%
-4%
0,1% 0% 0% 0% 0%
4,1% 3,2%
0,4% -3,0% -2,3%
June 2016
-0,4%
-0,2%
-0,4%
-1,2% -0,4% 0% -2%
-0,4% 2%
Vacancy shift (q/q) Source: SAPOA Office Vacancy Survey
4%
0% 0% 0% -0,1% -0,1%
-0,5% -0,4% -0,3% -0,2% -0,1%
0%
Weight contr to vacancy shift (q/q)
0,1%
SAPOA events
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taking charge
SAPOA joins Call2Action East London is set to get a major clean-up. We talk to SAPOA Regional Chairman Robin Knott about this exciting initiative By Mark Pettipher
W
ith development approvals taking up to a year to be obtained from East London’s municipality, it is understandable that there is a feeling of immense frustration among East London’s property and business development stakeholders. On 29 August, 15 interested parties in the Call2Action initiative – driven mainly by Border-Kei Chamber of Business – held a meeting with the Buffalo City Metropolitan Municipality (BCMM) to map out a way forward. The interested parties were: ●● Association of SA Quantity Surveyors ●● Border-Kei Chamber of Business ●● Black Management Forum ●● Border-Kei Institute of Architects ●● Buffalo City Metropolitan Municipality ●● Buffalo City Ratepayers Forum ●● Business Network Initiative ●● Businesswomen’s Association ●● Consulting Engineers South Africa ●● Eastern Cape Socio Economic Consultative Council ●● Master Builders South Africa ●● National African Federated Chamber of Commerce ●● South African Property Owners Association ●● Waste Management Institute of South Africa ●● Mercedes-Benz
SAPOA Regional Chairman Robin Knott
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The engagement with BCMM was successful. The meeting was chaired by Executive Mayor Xola Pakati and attended by relevant portfolio councillors as well as the entire senior management team of the city. SAPOA’s Regional Chairman Robin Knott received positive feedback from the city, thanking the Call2Action members for a solutionsorientated approach. The BCMM is in support of this initiative and has agreed to provide the group with feedback after further internal discussions. The Call2Action was formulated with the intention of examining issues that affect business, and to not only bring those issues to the city’s attention, but also to find a consensus on proposed solutions for working
taking charge with the city, and to find a common vision for East London’s future. The main objective is to align the proposed road map towards a green, sustainable, wellgoverned, productive and innovative city that follows Buffalo City’s Metro Growth and Development strategy. It further aims to develop a Clean and Green City programme in four pilot areas. Pilot area one – Settlers Way – is the main road that leads from East London’s airport into the CBD, taking the road to Oxford Circle. Pilot area two is the industrial area Southernwood. Pilot area three includes Western Avenue, leading down to the beach-front, while pilot area four is the actual beach-front. Putting these four areas into context, it is felt that competitive local industry is critical to
the sustainability of the BCMM, and that sustainability directly affects local employees’ livelihood and the growth of the communities. “If we do not do anything to fix the issues that we are faced with, we will not be able to continue to expand and conduct viable business,” says Knott. “Our aim is to make East London attractive to investors by cleaning up the city and tidying the streets, and to do that we need to improve the city’s security by encouraging better policing, reducing and eradicating crime, stabilising labour relations, and providing an affordable transport system and affordable housing. At the same time, we will develop a reliable infrastructure with efficient administration and improve relations with the BCMM.
BCMM Strategy
BCMM strategy
BUFFALO CITY METROPOLTIAN MUNICIPALITY
A productive and innovative city
METRO GROWTH DEVELOPMENT
STRATEGY VISION 2030
BCMM has developed the Metro Growth and Development Strategy which outlines the vision for BCMM 2030.
A wellgoverned city
Metro Growth and Development Strategy
A connected city
A green city
A spatially transformed city
Working towards one vision A productive and innovative city
Inclusive and sustainable economic growth
A wellgoverned city
Invest
Sound financial and administrative capabilities
World-class logistics
Work
A spatially transformed city
Invest Buffalo City
World-class infrastructure and utilities
MGDS
Live
High quality of life for the BCMM community
A connected city
Play
An environmentally sustainable city
A green city
“ The business objectives are clear: we need to attract industries that are not only internationally competitive, but sustainable as well. To do that, we are looking for new investment within the Buffalo City Metro, which will aid in the retention as well as the creation of new jobs. Developing East London into a cleaner, safer city with affordable housing and transport will provide us with greater social stability and a happier and more engaged labour force. Once established, we can then continue to work on education within the work environment, developing leadership skills and ultimately creating new jobs through enterprise development.” It’s not all “doom and gloom”, though. The Call2Action committee aims to work with (and build on) the Invest Buffalo City initiatives (Investbuffalocity.com) to help look after existing and new business in East London. The Call2Action collaboration embraces Buffalo City’s mantra of Invest, Live, Work and Play, and is looking to develop a coordinated and holistic investmentpromotion services one-stop shop for the city – not unlike the Western Cape and KwaZulu-Natal’s initiatives. There is already buy-in from Border-Kei Chamber of Business, the BCMM, the Buffalo City Metropolitan Development Agency, East London IDZ, Eastern Cape Development Corporation and Mercedes-Benz. The BCMM is the second-largest metropolitan municipality in the Eastern Cape. It is also the largest coastal city that serves the hinterland of the former Transkei. 10The BCMM Metro Growth Development Strategy Vision 2030 is already in place; it is open for exploration and also forms part of the Call2Action objectives by looking at opportunities to develop along the lines of a productive and innovative city that is wellgoverned and connected, as well as being green and spatially transformed. The long-term goals are to enhance the quality of life of the BCMM community by promoting arts and culture and preserving its local heritage. It is looking forward to encouraging community participation through sports and recreation, and promoting equal opportunities through inclusion. “There are a number of ways to achieve these goals,” says Knott. “By improving and developing opportunities in manufacturing, construction and tourism, the BCMM will be able to encourage job creation and SMME development, and by working with the Call2Action’s team, it will be able to promote a more diversified export trade. SOUTH AFRICAN PROPERTY REVIEW
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taking charge This, in turn, will lead to industry-focused skills development and business competitiveness, which will ultimately result in a better, more innovative and more knowledgeable local economy. “In order to improve on the governance of the city, the group aims to encourage sound financial and administrative capabilities
and graffiti and develop the city’s branding and communication channels. Through communication we can link up with the Adopt-a-Spot concept and generate anti-litter campaigns. We can also promote an ‘all hands on waste’ awareness programme to help with, for example recycling.”
Long-term plans: precinct improvements
The Call2Action committee is currently developing a communications strategy to ensure all stakeholders are kept abreast of the latest updates about this initiative. This will be done through various media platforms on a monthly basis
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Greening & beautification
Maintenance
Safety & security
Physical upgrades
Clean-up Park development Landscaping & planting Landmarks & features Playgrounds Public open spaces Street furniture
Painting of road markings Fixing of potholes and general road maintenance Repair of pavements and pedestrian walkways Repairing and maintenance of street lights
Visible patrolling Car guards/monitors CCTV
Visually appealing upgrades Bulk infrastructure Street lighting Pavements
within the municipality. This means looking into growing institutional and administrative capabilities, and pushing for greater accountability of the political administration and its office bearers. By improving the city’s corporate governance, encouraging community participation and aligning the city’s planning and implementation strategies, the city will become more open to the implementation of effective business partnerships. “Our request is to improve the channels of communication between East London’s business community and the Mayor’s office, to improve town-planning turnaround times, to be able to participate in the supplymanagement chain, and to get involved with transparent budgeting and the use of the city’s funds – all of which needs to be enforced by law. “Call2Action has identified the four pilot projects. These will be driven by business and the BCMM, and each will be implemented through a phased approach, with the aim of sustainably keeping East London clean and green. “In order to promote an environmentally sustainable city, we need to reduce waste generation, reduce air pollution, manage biodiversity, improve land production and look at climate change mitigation as well as enhance our disaster management preparedness. We can improve our ‘greenness’ by picking up litter, having separate collection bins for waste recycling and waste collection, embrace simple objectives such as sweeping our roads and clearing the roadside gutters, clearing away vegetation and bushes, and grass cutting. To enhance our city’s beauty, we will need to remove the illegal posters
Going forward, Call2Action will appoint an implementation agent who will be qualified to manage the programme in each of the four pilot areas. The committee will sign MOUs with the Buffalo City Metropolitan Municipality and the Buffalo City Metropolitan Development Agency, and set up a dedicated bank account at the Border-Kei Chamber of Business. Finally, the parties will set up all operations to deliver the pilot projects as well as monitor each one’s progress. “It is proposed that each pilot area will have a team leader and six labourers, who will be funded by business pledges,” says Knott. “It must be emphasised that the labourers and team leaders responsible for each pilot area (precinct) are not there to replace the municipal workers or take on their responsibilities; rather, they are there to provide supplementary services and act as environmental and anti-littering ambassadors. Each pilot area has been allocated a proposed budget of just over R900 000, which will cover wages, PPE, equipment, office and storage space, training, insurance of staff, equipment and indemnity, as well as marketing and communication of the projects and the project administration.” The Call2Action committee is currently developing a communications strategy to ensure that all stakeholders are kept abreast of the latest updates about this initiative. This will be done through various media platforms on a monthly basis. For more information about the project and how to get involved, contact Saskia.haardt@giz.de
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advertorial
Housing with a heart and a conscience MS Development is a successful property developer that’s not only challenging the existing residential housing market but is also making a significant contribution to South Africa’s energy and environmental challenges by helping people live in homes that ensure greater sustainability
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SOUTH AFRICAN PROPERTY REVIEW
S Development is a high-end property developer and local construction firm with a difference – in fact, several differences. This innovative company, run by Chief Operating Officer Konstantina Markova and owned by entrepreneur M Shishkov, develops homes that are energy-efficient, environmentally friendly, and sustainably built to house generations of families. Using the best sustainable design and construction techniques, MS Development aims to build homes that address the issues the company is most passionate about – environmental causes, especially global warming, and a reduced reliance on energy from the local power suppliers. In the past, the company has developed and built a number of technologically advanced, ecofriendly houses in Europe but only entered the South African market two years ago. “In Austria we developed wooden houses that consume less electricity, heat up quickly and cool down slowly, negating the need for air conditioning,” says Markova. “When we came to South Africa, our market research revealed that the cost of building wooden houses was just too high for the South African property market, so we focused on the conventional style of building but with a number of differences. Working with companies that had the knowledge, expertise and technology, we installed double-glazed windows, put insulation in roofs, used different types of finishes to help preserve furniture inside the house, put in batteries and generators, and added special kinds of lighting – all aimed at helping homeowners rely less on Eskom and City Power. “When we first started our development projects, we sought a location in an area that people wanted to buy into and then set about becoming involved with the construction of each home on a highly personalised level. I believe that we are not just building houses for people to live in; we are creating homes for
future generations, homes where families can live together and create lasting memories and live sustainably. “Our first housing development was Atholl Capital Estate in Sandton. All the houses were built with solar geysers and energy-efficient LED lighting throughout, as well as being equipped with generators or batteries according to the client’s preferences. We also encouraged buyers to install gas cookers as an alternative form of energy. The market was very responsive and the development was sold out quickly.” Buoyed by the success of its first development, MS Development undertook another ecofriendly up-market housing project in Rivonia and is currently busy with a third project in booming Bryanston. The company is also looking at the possibility of developing residential apartments in Camps Bay in Cape Town. “We envisage these apartments as being small but exclusive and hope to introduce smart home automation as a unique offering,” says Markova. The Bryanston project, situated close to the Bryanston Mall, involves the construction of 24 houses in a security-controlled estate. The company includes a comprehensive facilities management concept whereby it consults and advises on how to take environment-friendly, sustainable living to a new level. “All the houses will have a wine cellar built into the kitchen, a vegetable garden next to the kitchen and a rooftop garden with flowers,” says Markova. “Other low-maintenance energy and water-efficient systems such as a green water installation and water recycling system will also be installed.” Prices are in the R5-million+ range, and each house is built according to the most stringent quality and design criteria, using top-end appliances and finishes. MS Development’s unique selling point is it allows each buyer to customise the home.
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“We advise our clients on everything down to the choice of electrical appliances, without pushing our own preferences, and let them make the final decision,” says Markova. “Our clients can add bedrooms or bathrooms and change colours, tiles and flooring. They can have whatever they want because, for the amount of money they are spending on the house (and given that they will probably be paying off a bond for 20 years), I want them to get exactly what they want, regardless of the number of changes or the cost. I don’t want them to look back in five years’ time and think ‘I wanted to have this but the developers wouldn’t allow it.’ We want our clients to walk into their home and say ‘This is what I created; this is what I made.’” MS Development uses the services of a team of architects, interior designers and other consultants and preferred suppliers to help the company give clients what they want – and it does so with little extra cost to the buyer. “We don’t charge more for our houses even though they are more expensive to build than other houses in the same area,” says Markova. “Most of the extra cost is covered by our own investment capital. We absorb the cost because we’re passionate about introducing up-market, technologically advanced, ecofriendly homes to South Africa, and we are committed to exceptional customer service. All this helps us stand out in a very competitive market.
“Our clients include both cash buyers and those who have negotiated a home loan agreement with one of the lending banks. We do not lend money to prospective buyers to enable them to purchase, but will assist in helping them find the necessary finance. We work closely with FNB, and are pre-approved by this bank and other banks, which makes taking out a bond over one of our houses a lot easier – but clients can elect to use any bank they choose. And we use the investors’ money purely to develop housing estates.” A Russian investor recognising the need for housing and more sustainable luxury living in South Africa currently provides capital for MD Development’s projects. For now, the company is focusing on providing upper-class housing in highvalue areas, but won’t dismiss the middleclass housing market if a good opportunity and an investor is found. MS Development’s current aim is to build strong, energyefficient houses in well-placed locations, and to provide services and products to clients that are superior to anything else. The company attributes its success to offering something unique, maintaining tight budget controls, the right pricing structures, on-time delivery, strong client relationships, and working with partners who are trustworthy and share MS Development’s vision.
The personalities behind the business Both Markova and Shishkov have a background in law and trade, and hold several professional qualifications. Shishkov is a qualified attorney and a businessman. Markova holds three degrees, including a law degree, and comes from a strong marketing and sales background. MS Development is a combination of their skills, qualifications and passions. Shishkov has been in the construction arena for the last 10 years, while Markova cares deeply about environmental issues and promoting green living concepts. Together they have built MS Development into a successful property development company that is providing homeowners with the opportunity to live in homes that are ecofriendly.
t: +27 (0)72 311 5875 ceo@ms-development.co.za www.ms-development.co.za SOUTH AFRICAN PROPERTY REVIEW
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method for measuring floor method areasfor measuring floor areas
SAPOA is blazing an international trail with MOMFA SAPOA’s Method for Measuring Floor Areas (MOMFA) has attracted the attention of the World Bank and the international property industry in its creation of an International Property Measurement Standard (IPMS) By Mark Pettipher and Brenda Bryden
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Anthony Gebhardt, Managing Partner at Hamlyn Gebhardt Quantity Surveyors
“A lot of energy has gone into having regular conference calls with representatives from around the world, but it’s difficult to wordsmith and design a document over the phone. To make it work, we have to get together for faceto-face discussions” 48
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nthony Gebhardt, Managing Partner at Hamlyn Gebhardt Quantity Surveyors, spoke to South African Property Review about the recent international interest in MOMFA, and the forthcoming IPMS Standard Setting Committee meetings in Johannesburg. “MOMFA has been a standard in South Africa for a few decades, and SAPOA’s Committee is working on a revised and updated edition,” he said. “We were initially contacted by the Royal Institution of Chartered Surveyors, which is helping to coordinate an international initiative to write a method of measurement acceptable worldwide. This request came from the World Bank and resulted in the forming of a coalition (of which SAPOA Chief Executive Officer Neil Gopal is a member) for the International Property Measurement Standard (IPMS). Reporting to this coalition is a Standard Setting Committee (SSC), which consists of about 20 representatives. I represent SAPOA and am presently the only representative from Africa. “In South Africa, our MOMFA method addresses four asset classes: offices, industrial, residential and retail. The IPMS covers the same four. A lot of energy has gone into having regular conference calls with representatives from around the world, but it’s difficult to wordsmith and design a document over the phone. To make it work, we have to get together for face-to-face discussions. So there have been several week-long meetings – in Brussels, Dubai, Florida, India and Australia. “As a result of those initial calls and meetings, the IPMS published its Offices Standard, which has already been out for consultation worldwide. We are now at the consultation stage for the final Residential Standard and are working on the Industrial Standard. We are about to start drafting the Retail Standard.”
method for measuring floor method areasfor measuring floor areas South Africa to host meetings in October “During October, SAPOA will be hosting the next series of meetings at its headquarters, where representatives from Germany, Belgium, the United States, China, Russia, Australia, the United Kingdom and South Africa will be working on the Retail Standard,” says Gebhardt. Our property institutions in South Africa are already using the SAPOA method of measurement, but the longer-term intention is to encourage migration towards the IPMS Standards. IPMS Standards will provide for areas to be measured in a series of defined component categories, which may be grouped comparably to the same categories in a comparable MOMFA measurement. This will enable international investors and measurement professionals to bridge between them and make objective comparisons between assets measured using diverse national methods of measurement. “There is already some convergence toward the IPMS Standards worldwide, but it is going to take some years, so the process is starting now,” says Gebhardt. “For the first time at these meetings, our South African MOMFA Committee will be introduced to the SSC. I have the privilege of being the common person between the two organisations, so it’s exciting to bring the two together and explore common interest between our local method and the new IPMS Standards.”
When you talk about measurement, is it how big a space is? “It’s not about construction measurement in the quantity surveyor’s sense; rather, it’s the measurement of the areas of buildings,” explains Gebhardt. “SAPOA’s Method for Measuring Floor Areas tends to focus mostly on the area basis for revenue/value. This is the reason the property institutions in South Africa are interested: they want to make sure they are educated thoroughly about MOMFA, a method that is used pretty widely in South Africa to determine both revenue and value. These areas are arrived at by the conventions that MOMFA describes. “The problem is that MOMFA is quite short and architects’ imaginations are quite big, so devising method that suits everybody has not been easy. However, we now seem to have some workable principles, which represent the way that our market prefers to operate.
The IPMS has taken a broader view than ours: they argue that a standard ought to address all property area measurement purposes within a single standard (i.e. to evaluate design and construction for approvals, for revenue and value). So that’s where the whole idea came from: the World Bank was experiencing problems with international clients such as Vodafone who have properties worldwide. When comparing their property assets, they discovered that different countries measured them using diverse methodologies, which could vary by as much as 24% from one to another, making these assets difficult to compare.
BRIDGING THE GAP THROUGH ECONOMIC & REAL ESTATE MARKET INSIGHT
SAPOA’s Method for Measuring Floor Areas tends to focus mostly on the area basis for revenue/value. This is the reason the property institutions in South Africa are interested “Our document aims to set down a series of principles that can be used to interpret a particular design or situation so as to come up with comparable areas. For example, if you represent a company with assets in both India and South Africa, the existing national measuring methods differ. So what the IPMS has sought to do is to apply some general principles and allow for a means of bridging those two existing national methods. The people measuring the areas compile them in space components such as “office working space”, “hygiene areas”, etc. Once measured, the respective assets in each country may be compared by compiling both assets’ areas using like components. “We are looking forward to our global meeting with IPMS – and from now on when we run workshops, we will include an IPMS presentation. As SAPOA’s MOMFA begins to migrate towards an international standard, we will be guided by our market in making incremental shifts over a number of years.” In South Africa we are very fortunate, because the new IPMS Standards and SAPOA’s MOMFA are thankfully not vastly different.
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events
Breakfast in the Mother City 85 guests were welcomed to the River Club by SAPOA’s Western Cape Regional Chairman Marlon Parring of Par-Brokerage Services, for “Breakfast with the Mayor” By Mark Pettipher
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Cape Town Mayor Patricia de Lille
Cape Town Executive Deputy Mayor Ian Neilson
Fatgie Moos with SAPOA Western Cape Regional Chairman Marlon Parring of Par-Brokerage Services
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he well attended breakfast, sponsored by Growthpoint Properties and organised by SAPOA, was held on 16 September. After the initial welcome and formalities were concluded, Cape Town’s re-elected Executive Mayor Patricia de Lille took the podium. She expressed her gratitude to have an opportunity to continue the hard work the city had begun five years ago, and outlined the DA’s next five-year development plan for the City of Cape Town. Following her outline, Ian Neilson, Cape Town’s Executive Deputy Mayor, continued with the overview, reiterating many of the points discussed by De Lille. The session concluded with a question-and-answer opportunity, during which both De Lille and Neilson confirmed their openness to being available at all times. De Lille believes that transport will lead the way forward over the next five years. One of the city’s key development frameworks is the Transport Orientated Development (TOD) framework. This will go a long way in addressing issues of previously disadvantaged people spending up to 40% of their income travelling to and from work. “The TOD will be the primary informant of the city’s future built environment plans,” she said. “The council adopted the strategy in March 2016. It will address the spatial inequality issues, urbanisation and the high cost of transport, and ultimately stimulate economic growth. “Four objectives have been identified: to create a city where urban space is compact and well connected, where developments are conducive to economic and social efficiency, where residents have easy access to affordable and efficient transport, and where living and breathing becomes easier as shorter travel distances reduce carbon emissions. “We are essentially reimagining Cape Town in order to create a city that works more efficiently and effectively for all its residents. We must balance the creation of economic development with high-density affordable housing that is located close to public transport and amenities.
“As the city, we will be the catalyst investor in these projects. In order to spur on other investment in projects that will unlock our TOD strategy, we will invest in transport and residential development so that business can follow suit and create more employment.” Two examples of the city’s investment are Maiden’s Cove and the unfinished freeway bridges. The former’s objective was to connect all the people of Cape Town in an inclusive city so that everyone could enjoy the beauty of the Atlantic coastline. The development facilitation fees from the Maiden’s Cove development would be used to build affordable housing in the city centre, providing accommodation for people who would otherwise live in Mitchells Plain or Khayelitsha. The unfinished freeway bridges – the city’s eyesore – have become a collaborative project between the city and the University of Cape Town’s engineering faculty, asking students to come up with ideas to utilise the bridges. Both developments reflect the city’s commitment to free up city-owned land. By making city-owned land available to the private sector, the city sets out two conditions for the plan: the inclusion of affordable housing and (in the case of the bridges) ways to alleviate congestion in the city. De Lille said that the city is leading the way in solving the problem of congestion. At the Waterfront and in the bottle necks in the north and the south, the city has invested R750-million to deal with the issues arising from congestion, and it is encouraging the private sector to join the city to utilise land that has been made available for the relief of congestion. “An integrated city must include the opinions of all stakeholders; its residents and its municipalities,” said De Lille. Five main development areas have been identified and earmarked: Bellville, Philippi East, Athlone, Pardevlei and the Cape Town CBD. The city will invest in the improvement of the existing public transport infrastructure, and it will develop new public infrastructures that will hopefully ignite economic growth in those areas.
events While the city will lead the way with investment in existing transport infrastructure and improve its long-term sustainability and encourage long term land development along inclusive TOD principles, it expects the private sector to aid the development. The city is currently reviewing its spatial development framework to bring it in line with SPLUMA. There is a Municipal Planning Tribunal made up of private and pubic people that assists with development applications, with an appeal process channelled through the Mayor or Deputy Mayor. The city is promoting, and incentivising urban growth, through compact high-density living, intensification of land use, and diversification of right locations and transport development. The city is prioritising Cape Town’s transport corridors, with a particular focus on the Voortrekker Road corridor. The city has admitted upfront that they cannot develop the city alone, so it is making it easier for the private sector to partner with the city to make planned developments come to life. De Lille, touched on the new trend of inclusive social housing across the city, saying that the city is working with SAPOA in conducting research on the subject. While SAPOA may talk of inclusive social housing, the city calls it affordable social housing. The City of Cape Town is planning largescale affordable housing projects set to commence in 2017. A total of R250-million has been set aside for these projects, and 1 000 hectares of city-owned land has been reserved for housing. However, the city is continuing to look for land that can be made available for housing – in particular land that is close to transport hubs. De Lille proudly said that when she became the Mayor five years ago, there was a need for 400 000 houses – and that to date, the backlog has been reduced to 258 000. She believes the way to reduce the backlog further is by investing in nodes of affordable density housing that’s close to public transport. She is prepared to make city-owned land available to the private sector to develop high-density rental stock, which should also be managed by the private sector – a plan she has called the Integrated Human Settlements Framework. Mixed-use developments are paramount to this. De Lille gave Pardevlei as an example of private-sector collaboration; it will be a mixed-use project that’ll go some way towards addressing the “gap” market in rental stock for people earning R3 500 to R15 000. In a bid to become more efficient, the city has reduced its directorates from eleven to 10.
FROM LEFT Francois Kriel, Lara Schenk and Ryan Joffee
Dacre Hattingh
Rob Kane with Michelle Couzyn-Rademeyer
FROM LEFT Jehan Adams, Maggie Rowley, Leigh Metcalf, Chris Blackshaw, Raynard Haupt and Mariska Auret
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events
Ielhaam Abrahams
Tim Hughes
Narriman Taliep
One of these is a new directorate that’s been mandated to find a way to utilise the city’s assets better. It is known as the Assets and Facilities Management Directorate. Cape Town has also developed a directorate to deal with energy and the effects of climate change. Cape Town plans to generate electricity, and has set itself a target of 20 to 30% of the city’s energy needs to come from renewable energy in the next 10 years or so. Again, De Lille has said that the city will work with the private sector to encourage this growth. Transport and Urban planning is also being combined, as part of the macro plan. De Lille went on to encourage developers to use the Ecam system, the city’s ground breaking research and policy support initiative, Economic Areas Programme, which monitors, tracks and routinely assess the markets performance long term growth. The city’s land-release programme is progressing well. Twenty-two properties have been auctioned since the beginning of 2016 – with offers made on 19, a further 21 properties will be auctioned in the second quarter – between October and December 2016, and another 27 will be ready for auction between April and June 2017. Properties sold and yet to be auctioned off total 66, of which 41 are zoned for residential use, 16 for business use and nine for open public spaces. Ian Neilson, Cape Town’s Executive Deputy Mayor, spoke of the challenges that the new mayors of Tshwane, Johannesburg and Nelson Mandela Bay were facing. He drew parallels between them and what the City of Cape Town faced 10 years ago, highlighting issues such as taking over of municipal
FROM LEFT Rob Kane, Marlon Parring, Ian Neilson, Refqah Fataar Ho-Yee, Patricia de Lille and Steve Sutcliffe
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departments and getting the basics in place, as well as getting to grips with a fundamental change of policy. He pointed out that Cape Town’s response was quite different, meaning that in a few years’ time, Cape Town would be faced with major investment competition from those three cities. He pointed out that, as a city with 10 years under the current political party, Cape Town runs well. It has over the past five years spent about R25-billion on getting the infrastructure in place and getting it working efficiently. An annual R3,8-billion is spent on maintenance. The city has grown by 30% in the last 10 years, from three-million to four-million people. The infrastructure has been grown, but he estimates that a further million people will come to Cape Town in the next 10 to 15 years, and that significant requirements will need to be addressed – half a million houses, a million square metres of office space and four-million square metres of industrial space. He is cognisant that the city needs to be aware of the needs of economic growth and the development of the land-use pattern. Currently, the city is a low-density long commuter city – an inefficient model that needs to change, so focus will be on the transport corridors and the intensification of densification throughout the metropolis. Neilson’s key message is that the city will grow through the densification within the footprint of the city, and a mind-shift must be from greenfield development to brownfield. He believes there is great opportunity in working with the city and the land release, focused on TOD framework development. The city needs to be able to shift as many people off the roads as possible to a public transport system that is safe and efficient, and that will encourage people to leave their cars at home. Neilson reiterated that the city is restructuring its utilities portfolios, splitting energy and water/sanitation/refuse removal into separate departments. He is aware that water will become a serious issue, and there is a need to use the current dams and water supply networks in more efficient ways. This will need significant input from the city so the city can be densified to utilise the existing infrastructure more efficiently. Neilson is proud of the city’s financial position. It has had an unqualified clean audit, and has a AAA credit rating. He is also proud of the programmes that have been initiated, which have all been funded by the city itself, and looks forward to approaching the private sector to come on board with the city’s development plans.
events
SAPOA Port Elizabeth hosts networking event SAPOA Port Elizabeth Regional Council held a networking evening sponsored by Investec. Members got to mingle while regional chairman Mark Bakker showcased the new SAPOA logo. He also gave an update on the region’s activities and strategy for 2016 Photographs by Charmaine Rowe
FROM LEFT Chairman of SAPOA PE Regional Council Mark Bakker, Regional Secretariat Caroline Ritson, Cindy Dickson and Velda Derrocks of Investec
Dewald Harmse and Deon Gerber
Rob Edelson
Donovan May and Mark Williams
Jade Muller
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SAPOA KZN hosts annual broker networking evening KwaZulu-Natal Regional Council hosted its annual broker cocktail networking event, sponsored by Growthpoint Properties Photographs by Val Adamson
FROM LEFT Di Franks, Chairman of the KZN Brokers Sub-Committee Bradley Hancock, Warren Fielding, Yianni Parlou and Sancha Malan
FROM LEFT Robin Evans, Paul Izzard, Grant Boonzaier and KZN Regional Chairman Edwin van Niekerk
FROM LEFT Wesley Greenaway, Craig Davis of Growthpoint Properties and Grant Smith
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Regional Chairman Edwin van Niekerk outlined the progress made by the region on the UIPs and the new SAPOA KZN consultant, Andrew Layman, who will be building relationships within the city. Bradley Hancock, Chairman of the Brokers Sub-Committee, highlighted projects that the committee is rolling out. They include: ●● Assisting the city with the new outdoor advertising bylaws, now available for public comment, and ●● The efforts at working, in conjunction with the Estate Agents Affairs Board, to prevent illegal property practitioners from operating, and discouraging working with unregistered ones. Craig Davis of Growthpoint Properties thanked all members for attending and held the businesscard lucky draw.
events
Gauteng “Meet the Media” SAPOA President Nomzamo Radebe and Chief Executive Officer Neil Gopal hosted a media lunch in Gauteng
FROM LEFT Joan Muller (Financial Mail), Stanley Karombo ( MPDPS) and SAPOA President Nomzamo Radebe
FROM LEFT Elma Kloppers (Beeld), Maud Nale (SAPOA) and Kelebogile Nondzaba (SA Home Owner)
Alistair Anderson (Business Day Live) with Roy Cokayne (Business Report)
Nicolas Rama from Business Report with Anine Kilian from Engineering News
Ray Mahlaka (Moneyweb) with SAPOA CEO Neil Gopal
Gauteng-based property journalists had the opportunity to meet and mingle with the two SAPOA executives, as Radebe shared her plans for her tenure. SOUTH AFRICAN PROPERTY REVIEW
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off the wall
Keeping up with the Flintstones One-thousand hours, more than R3-million and 70 tonnes of excavated stone later, the modern Flintstones enter the era of the hobbits Compiled by Phil Ruimte
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he Rockhouse is a unique luxury romantic cave retreat, hand-sculpted from a Triassic sandstone escarpment near the Wyre Forest in rural Worcestershire in the UK. It is said, according to geological survey reports, to be about 250 000 000 years old; archaeological architects believe it was around in its earliest form nearly 800 years ago. Set in 12 140m² of woodland on the banks of Honey Brook, the cave – which has been in its current four-bedroom form for 300 years – was abandoned in the late 1940s and had been falling into disrepair ever since. It is part of a row of caves considered to be the oldest inhabited rock houses in the whole of Europe. It is believed the Rockhouse was first handcarved more than 700 years ago, with each of its rooms showing pick-axe marks from its ancestors. Like any conventional home, over time it has been adapted by its occupants. Its current form shows vaulted ceilings, an inglenook fireplace, shelving and ornamental nooks. The UK’s first contemporary rock house, this is an authentic cave home and secluded retreat, offering a peaceful haven where you feel miles from civilisation. As much a sculpture as it is a dwelling, the Rockhouse has been carefully planned out and features stylish creature comforts such as underfloor heating, rainforest shower and clever ambient lighting for a nurturing, natural atmosphere. Father of two Angelo Mastropietro, 38, who returned to the UK in 2010 after more than a decade of living in Australia, first came across the cave in 1999 when he and some friends were forced to find shelter during a rainy bike ride. He spent eight months and R3million (£160 000) turning this 250-millionyear-old cave into his dream house. Carving, cutting and drilling into the sandstone hillside, he excavated 70 tonnes of stone by hand to make his dream a reality. The cave is cut into 15-metre high sandstone cliffs in an area that apparently inspired JRR Tolkien to create Middle Earth and its famous fictional creatures.
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From the outside this rocky dwelling looks pretty normal; inside it has all the furnishings of a regular house. Mastropietro spent 1 000 back-breaking hours transforming the cave. The real-life Fred Flintstone had a highflying life as the head of a successful recruitment company in Australia when he was diagnosed with multiple sclerosis in 2007. His condition led to him being temporarily paralysed, and inspired him to seek a simpler lifestyle. “My life before I became a caveman was really quite different,” he says. “Like most people, I had aspirations to work in a corporate world. “I had a lapse that left me essentially paralysed, which was a catalyst to review where I was and where I was going, as well as my lifestyle.” He sought solace in nature, and the project gave him something to focus on. Now he has one of the most unique homes in the world. “I love a challenge. Coincidentally, my surname actually means Master of the Stones, so maybe it’s in my blood,” he says. “The rock house came along, and without a shadow of a doubt I was as passionate about that as I was about setting up my company.” The sandstone cliffs where his cosy home is located are said to have inspired JRR Tolkien when he was writing The Lord Of The Rings. Inside, his cave abode features running water, WiFi and underground heating.
The house, which was featured on British Channel 4’s Grand Designs in September last year, is currently being rented out as a holiday home. “I think when you’re actually here and you see it in person, you get a feel for the place,” said Mastropietro. “People have literally been in tears, so I feel incredibly happy, very proud, very honoured – it’s been a very inspiring chapter in my life. “It’s in a beautiful location, it’s uplifting, it makes you feel good, it’s very relaxing. While you are a mile from the nearest pub or supermarket, you’re also a thousand miles back in history.”
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Specialised Knowledge and Expertise 3
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1 Medical facility for 200 Rivonia Road in Morningside, Johannesburg. Architects: Geyser Hahn Architects. 2 The Union office development for Eris Properties in Accra, Ghana. Architects: Boogertman + Partners. 3 & 4 Head office for Business Connexion for BCX HQ Offices Co-ownership JV in Centurion, Pretoria. Architects: Stauch Vorster International. QS services in JV.
Whilst timeously and adequately providing traditional quantity surveying services DelQS identified and developed certain services vital to the bottom line of investors • Elemental construction cost estimating • Financial viability analysis (in-house developed program : precise and logical in presentation) • Building contract expertise • Final settlement with contractors • Cost control and reporting (in-house developed program: proactive and audit trail) • Africa projects (expertise and track record) • Specialised developments (retail, hospitality, healthcare, student housing, etc)
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Gerhard de Leeuw Akopo Africa
Corné de Leeuw
Christine Larson
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