Commercial Property: February 2021

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EDI T ORI A L COMMEN T

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Adapting to a new business environment

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n this issue of Commercial Property, we take a look at the key differentiators that have allowed commercial property developers to grow despite a very sluggish economy.

We share insights into better property management, why offshore investment is a growth area, how South Africa is a key entry point for developers looking to invest in Africa, why traditional business parks are morphing into integrated precincts, and how the retail sector needs to keep adapting to a changing business environment in order to stay open for business.

Raina Julies

Contents 5

PROPERTY MANAGEMENT Further training is key to better management; why consultants play a critical role in managing your portfolio; the power of technology; and why delighting the customer makes good business sense

15 FINANCE The growth of medical REITS; why sub-Saharan Africa remains a viable option for developers; offshore investment opportunities; and finding new ways to mange investments

18 CO-DEVELOPMENTS A new way to invest in commercial property

19 BUSINESS PARKS How the traditional park is morphing into integrated precincts

20 MIXED-USE DEVELOPMENT Why the live, work, play concept is a development win; and projects in the pipeline worth noting

Picasso Headline, a proud division of Arena Holdings, Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za EDITORIAL Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Beth Amato, Samantha Barnes, Trevor Crighton, James Francis, Dale Hes, Levi Letsoko, Anel Lewis, Denise Mhlanga Copy Editor: Brenda Bryden Content Co-ordinator: Vanessa Payne Digital Editor: Stacey Visser vissers@businessmediamags.co.za DESIGN Head of Design: Jayne MacĂŠ-Ferguson Senior Design: Mfundo Archie Ndzo Cover Image: Alice Lane, Sandton Redefine Properties SALES Project Manager: Merryl Klein merrylk@picasso.co.za | +27 21 469 2446 PRODUCTION Production Editor: Shamiela Brenner Advertising Co-ordinator: Johan Labuschagne Subscriptions and Distribution: Fatima Dramat, fatimad@picasso.co.za MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager, Magazines: Jocelyne Bayer

23 RETAIL How the retail sector has adapted to a changing business environment

25 INTERIOR TRENDS

Key interior design concepts and trends to accommodate our new realities

27 INDUSTRIAL DEVELOPMENT Why South Africa is still a gateway into Africa

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COPYRIGHT: Picasso Headline. No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Commercial Property is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials and promotions have been paid for and therefore do not carry any endorsement by the publisher.

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TRAIN TO

MANAGE Industry knowledge and solid training in several skills is needed to become a successful property manager, writes ANÉL LEWIS

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PROPER T Y M A N AGEMEN T

he way a property is managed has a direct and significant impact on its long-term value, so it stands to reason that having certain sought-after skills and knowledge will enhance a career in this dynamic field.

Neil Gopal, CEO of the South African Property Owners’ Association (SAPOA), recommends executive courses in property development and commercial property management. There are also short courses, covering topics such as real estate finance, that provide the skills needed. While most property management companies require a matric certificate when considering a candidate for a position, having a university qualification would certainly “carry weight”, says Gopal.

SAPOA partners with several universities for real estate courses to ensure that the content is “relevant to industry and internationally recognised, allowing graduates to readily find top positions with good companies”. Gopal adds: “The educational efforts of SAPOA are aimed at increasing knowledge and skills of the property industry among employees and ensuring that the content of programmes or workshops and other educational interventions are aligned to industry needs.”

SAPOA also offers numerous webinar sessions on relevant topics.

Often, “experience is more important than education”, says Heinrich Ehlers, managing director of Devmark Property Management.

Attributes such as tenacity and problemsolving will certainly count in a candidate’s favour when applying for a position as a property manager, he explains. “We like to look for someone who has experience in maintenance or construction on a senior management level as we have found that many property managers are lacking

when it comes to the management of utilities and maintenance.” A candidate with excellent communication skills and who can obtain the best results from suppliers and contractors will also have an advantage, he adds.

ONLINE, SHORT, DIPLOMA AND DEGREE COURSES

Heinrich Ehlers

That being said, some institutions are offering excellent courses in property management, says Ehlers, who recommends online options such as UCT’s GetSmarter short course in property management. Wits University also offers short courses in commercial property management, via the Wits Commercial Enterprice unit, and it is the only university outside of America to offer the internationally recognised Institute of Real Estate Management (IREM) commercial property management (CPM) certification.

The University of Pretoria offers BSc Real Estate, which includes a property management module, while the University of KwaZulu-Natal includes property management in its BSc in Property Development. Unisa also offers an undergraduate diploma in real estate that ensures students understand property management. IREM has a strong relationship with Wits, which also offers degrees and diplomas in real estate.

Tumelo Ramushu, president of IREM South Africa (Gauteng Chapter 123), says that 20 years ago there were very few formal qualifications available to pursue a career in property. The property industry was dominated by people with qualifications in

accounting, engineering and even law. “Property was never recognised as a separate discipline.”

IREM South Africa Gauteng Chapter, established in 2018, recognises property management as a distinct field, aimed at enhancing the proficiency of the real estate management sector with qualified, regulated property professionals. Skills required for property management include finance, law, and an understanding of the built environment, as well as credit management, client services and communication. “It is a multidisciplinary career,” adds Ramushu.

While a degree will certainly “propel” an aspirant property manager up the career ladder, especially when it comes to middle and senior management, it is not enough to guarantee success, says Ramushu.

A combination of qualifications and experience is recommended. IREM supports ongoing professional development by encouraging members to complete short courses in an array of subjects, from communication skills to professional etiquette.

“When a person is continually enhanced, they learn more to manage better,” concludes Ramashu.

Neil Gopal

“When a person is continually enhanced, they learn more to manage better.” – Tumelo Ramushu, president, IREM South Africa (Gauteng Chapter 123)

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PROPER T Y M A N AGEMEN T

LEAVE IT TO THE EXPERTS Investing in the services of a property management consultancy will save an owner much time and expense, writes ANÉL LEWIS

AN AFRICAN FOOTPRINT Broll Property Group has fully fledged operations in Cameroon, Ghana, Indian Ocean Islands, Ivory Coast, Kenya, Mozambique, Namibia, Nigeria, Swaziland, Uganda and Zambia and provides services in a number of other countries. The lack of a formalised approach to property management and maintenance in these countries opened the door for Broll to replicate its South African offering elsewhere on the continent, bringing a wide scope of its specialised services and unique capabilities to those markets.

SHOPPING CENTRE PORTFOLIO

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SERVICES, BROLL

knowledge and expertise,” she says, adding that this does not imply that the “trade secrets” of the respective funds are also shared. “It merely gives us the intel we need to better manage our properties.”

Building close relationships with tenants is key for property managers, adds Bogopa.

It is those relationships that ensure tenant retention and keep occupancy rates high.

“It is also easier for a property consultant to manage occupancy costs more closely, especially during challenging economic times.” Risk management is another important function performed by property management companies, she says.

Iggy Sathekga, brand, marketing and PR manager at Mowana Properties, a Broll client, concurs, adding that the use of a consultancy also ensures that property management is no longer left to chance. “Instead, it is a discipline that is thorough and which will, ultimately, improve and enhance a property’s value. The introduction of professional building

Mimosa Mall, Bloemfontein

management systems, such as Archibus, removes the guesswork and human error in property management.”

Bogopa adds: “The wealth of knowledge and collective expertise that a property management company has in one basket is incomparable to trying to do it all in-house, especially if you want to maintain or grow a building’s value.”

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“IT IS ALSO EASIER FOR A PROPERTY CONSULTANT TO MANAGE OCCUPANCY COSTS MORE CLOSELY, ESPECIALLY DURING CHALLENGING ECONOMIC TIMES.” – NKULI BOGOPA, MANAGING DIRECTOR: INVESTOR

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he return on a commercial property investment depends largely on how it has been managed and maintained.

However, dealing with the day-to-day details of every aspect of managing a building, or a portfolio of properties, can be time-consuming and even costly.

Nkuli Bogopa, managing director of Investor Services at Broll, says one of the key advantages of using a consultancy is that its specialists have the level of skills required to effectively manage built assets. “It is not only about the bricks and mortar; you have to understand the underlying asset in a building and how it operates effectively.”

Appointing an agency also means that a property owner no longer needs to appoint additional employees to manage the differing day-to-day building management functions.

“If a building owner needs to employ staff to manage everything from credit control to managing rental income, the cost implications can be more than the budget allows,” says Bogopa.

She emphasises the importance of experience, be that a staff maintenance controller, or an agency such as Broll. Broll has managed innumerable funds and can tap into a vast network of services to identify Nkuli Bogopa trends. “We are very open to sharing our

Mowana Properties manages two large portfolios worth a total of R40-billion.

The first portfolio under management is owned by Pareto Limited, a shopping centre owner with assets such as Cresta Shopping Centre, Menlyn Park Shopping Centre, Mimosa Mall, The Pavilion Shopping Centre, Southgate Mall, Southgate Value Market, Tygervalley Shopping Centre and Westgate Shopping Centre, with a total GLA in excess of 848 000m².

The second portfolio under management is owned by the Government Employees Pension Fund (represented by the Public Investment Corporation SOC Limited). This is a mixed-use portfolio boasting 152 properties inclusive of offices, industrial, residential and retail.

PROPER T Y M A N AGEMEN T

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he past year can easily be described as momentous. It saw the start of a global pandemic and had a seismic impact on the South African commercial property market. In addition to the echoing chambers and hallways of organisations, retail outlets were empty of people for a large part of the year and rental properties faced complexities that could never have been prepared for.

The sector is now looking ahead to a year that presents a mixed bag of challenge and opportunity. Reduced tenancy rates, a slowgrowing economy and limited visibility into a vaccine strategy means that there is still uncertainty around investment into property development, low-cost student housing and Eskom. While the outlook is not as bad as perhaps 2008, it still puts pressure on the commercial property market to ensure a sustainable financial future.

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RENTERS’ MARKET According to the PayProp Rental Index for Q3 2020, rental growth saw a stark drop for two quarters, recording new lows in September 2020. The market will take time to recover and things are still not yet 100 per cent. The index found that quarterly growth year-on-year was halved from Q1 to Q2, measuring just 1.5 per cent, “the lowest it has been since the index was launched in 2012”.

It is a renters’ market that puts the tenant in control, so property owners need to find alternative routes to engaging in tenant delight so that they keep the right people and profits. “The tenant has the power of veto and choice,” says Michael Franze, managing director at Citiq Prepaid. “They want more from their landlords and property managers. They want to feel engaged and heard. They want their needs reflected in the decision-making and they want to know that their investment in the property is valued. If the costs are too high, the rules too rigid or the systems too complex, tenants will vote with their wallet and go somewhere else.”

Tenant delight is the key to thriving in a complex market. It’s the hook that holds the tenant in a market that’s clamouring for their attention.

And it’s a complex trick to master when so many commercial properties have stunning resources and features on offer.

DELIGHTING THE TENANT WITH

GOOD BUSINESS PRACTICE The commercial property market is under pressure and property owners need to find smart ways to keep their tenants happy, writes MARISKA BURGER

STREAMLINE THE ADMIN “One of the most solid and appreciated foundations upon which to build tenant delight is minimal admin,” says Franze.

“Tenants appreciate having to deal with less admin in their lives, so if your property can provide that service, then you’re already ahead of the game.”

One of the areas where admin can be easily minimised and streamlined is in utilities. Water and electricity can be costly for both the estate and the tenant. If the utilities are shared, if there’s a water leak, or if a tenant misuses a utility at the expense of the others, then this can result in a disputed bill and expensive time spent on resolving the situation. It also can cause a breakdown in the relationship with the tenant and between tenants, which is not ideal.

“Prepaid utility meters are a reliable way of mitigating the utility billing challenge,” concludes Franze. “They improve utility administration, cost management, payments and usage, plus they provide much-needed visibility into energy and water consumption. With prepaid sub-metering solutions, the body corporate can hand the control back to the tenant while engendering transparency and improving accessibility to essential services.”

A Citiq Prepaid meter.

This reduces the admin involved for the business as the property manager no longer has to collect payments from the tenants or deal with disputes around payments or amounts. With Citiq Prepaid, funds collected from the tenants are kept in a trust account and then transferred to the landowner by the second business day. The landowner then pays the municipality or Eskom directly.

For a minimal service fee, there is no billing conflict, funds are stored in a secured account, the tenant gets control over their spend, and everybody’s admin is reduced.

It is a seamless way of avoiding the complexities of property rental and introducing a reliable and appreciated layer of tenant delight.

Michael Franze

“IF THE COSTS ARE TOO HIGH, THE RULES TOO RIGID OR THE SYSTEMS TOO COMPLEX, TENANTS WILL VOTE WITH THEIR WALLET AND GO SOMEWHERE ELSE.” – MICHAEL FRANZE, MANAGING DIRECTOR, CITIQ PREPAID

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PROPER T Y M A N AGEMEN T

THE POWER OF PERFECT TECH By effectively harnessing technology, commercial property managers can ensure a healthy, profitable portfolio, generating immense value for themselves and their clients, writes DALE HES

FIND AN END-TO-END SOLUTION Van der Merwe suggests that when commercial property managers are looking to adopt new software systems they should be focused on finding an end-to-end solution that provides automation, intelligent reporting and integration. “For example, does the solution address the four core pillars of rental portfolio management – tenant vetting, account management, lease management, and inspection and maintenance management?

Does the solution provide intelligent dashboards that summarise the KPIs of my portfolio in one place for better management?

Does the technology help to unlock every possible income stream and automate that

“COMMERCIAL PROPERTY MANAGERS NEED TO BUILD THE PERFECT ECOSYSTEMS FOR ULTIMATE EFFICIENCY AND BE ABLE TO DO MORE WITH LESS. ” – JOHANN VAN DER MERWE,

MANAGING DIRECTOR, WECONNECTU

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unlocking as much as possible? Can the solution help me to communicate my value as a property manager better to my clients?”

BEING TECH-ENABLED IS A MUST During these current turbulent times becoming tech-enabled is a non-negotiable for commercial property managers, comments Van der Merwe. “To survive, commercial property managers need to build the perfect ecosystems for ultimate efficiency and be able to do more with less. Client demands are only going to become greater in the future, and online portals and automation will be key elements in the commercial space,” he concludes.

Andrew Schaefer, managing director of Trafalgar Property Management, agrees that technology is essential for effective property management. He highlights that technology now has the ability to gather and analyse information about aspects such as vacancies and letting activities, rental arrears, maintenance tasks, budgets and administrative activities.

“Integrated property management information systems typically cover all of these functionalities. Automation enabled by technology innovation improves client service effectiveness, productivity and turnaround times, and allows property managers to manage larger portfolios to enhance their margins.

“It is essential for commercial property managers to be aware of the latest innovations and technologies available, particularly automation, to harness the opportunities concerned,” explains Schaefer.

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“I like to describe property managers not just as property managers, but rather as asset managers. We need to remember that landlords are investors in an asset class called property. They expect property managers to manage their assets and report on areas beyond just rental income. Property managers should be communicating on yield, capital growth and return on investment, just like their counterparts in financial markets.”

WeconnectU has developed three fully integrated property management solutions, focused on community property management, rental asset management, and inspection and maintenance management. “Our rental asset management solution is the only one in South Africa that helps property managers to reposition themselves as commercial asset managers.

It addresses all of the pillars needed to create a healthy portfolio.”

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ohann van der Merwe, managing director of intelligent property software management company WeconnectU, says that an integrated technology ecosystem can take care of the most crucial challenges of commercial property management. He identifies these as compliance, portfolio manageability, scalability and profitability.

“The manageability of a portfolio is always a challenge for commercial property managers,” says Van der Merwe. “To build a healthy portfolio you have to focus on a few key performance indicators (KPIs) such as financial management, arrears management, lease management and compliance to name few. In an ideal world, commercial property managers would have one single dashboard that can track all of these KPIs.” Andrew He explains that Schaefer developments in software have allowed commercial property managers to scale up their portfolios while saving on costs such as expanding staff complements.

“In most cases, more properties in a portfolio equals more people who have to manage these properties. However, we have now developed amazing technology that can help to not only deliver better service, but also allow commercial property managers to manage more properties with the same core team.”

Van der Merwe stresses that technology can also address what he describes as a major “missing link” in the commercial property space – the nature of the relationship between commercial property managers and clients.

Johann van der Merwe

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A DV ER T ORI A L

THE VALUE OF COLLABORATIVE ENGAGEMENT Investing wisely in solutions and partnerships will ensure the property sector’s future profitability Installing prepaid meters minimise the risk of unpaid bills for building owners.

Prepaid sub-meters provide a great utility management solution.

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he past 12 months could hardly be described as “business as usual”, yet businesses have continued despite the restrictions imposed due to the pandemic. The varied shifts in lockdown regulation and ongoing compliance limitations have put pressure on the property sector to maintain value, ensure liquidity and keep tenants safe while remaining compliant.

It was a complex maze to navigate, one which continues to impact on the sector in a fragile 2021. However, it is not the same space that the property market entered into at the start of 2020 – lessons have been learned, steps have been taken and plans have been made.

As Deloitte points out in its analysis of the impact of COVID-19 on the real estate sector, there is one word that defines how companies should approach the new year and the market in 2021 – resilience.

“Resilience is not just the ability to shift approaches and strategies to meet changing needs and markets, it is also about investing in solutions and approaches that are capable of allowing for greater flexibility and business agility,” explains Michael Franze, managing director at Citiq Prepaid. “The real estate sector must focus on building

resilient foundations that can handle whatever challenges lie ahead.”

This doesn’t mean that organisations should be approaching the future with fear and trepidation. Quite the opposite. The past 12 months were a series of curveballs that taught organisations new tricks and new ways of embedding resiliency into their strategies and planning. They have also emphasised the value of partnerships.

“Collaboration is a key component of most business success stories,” says Franze, “working with partners that can provide solutions and support and can help future-proof investments and property. This is where Citiq Prepaid comes in. We offer the real estate sector a trusted and ethical partnership that ensures that properties remain on top of one area that can present significant problems down the line, especially in uncertain times – utilities.”

Utilities are often a hidden issue that only emerges after a tenant has left or when a company wants to sell. Unpaid bills – which can run into thousands of Rands – are suddenly sitting on the table. The municipality won’t issue a clearance certificate for a property unless all charges are paid. So, the

property owner has to either hunt down the person who incurred the charges or take the financial hit. For many, tracking down the tenant who left the bills unpaid is an almost impossible task as they’ve moved on, changed their name or possibly even left the country.

And, if found, it’s unlikely they will consider paying a bill that could seriously affect their financial status.

“Unfortunately, unpaid municipal bills are a far more common problem than many companies realise,” says Franze. “Then, when it comes time to sell a property, they’re stung by a massive charge that will impact their profits. Fortunately, this can be avoided. One of the most reliable ways of minimising the risk of unpaid municipality bills or fraudulent activity is to install prepaid sub-meters. If these are of the right quality and installed to the right standards, they will ensure that tenants receive consistent utility supply without unexpected charges and that property owners don’t end up with unexpected bills.”

Citiq Prepaid is one of South Africa’s leading providers of prepaid sub-metering solutions.

It has access to a vast network of accredited electrical contractors that understand exactly how to install and activate the meters for tenants and owners. The company is known for its high-quality solutions, low-cost and visible charges, and exceptional call centre support as well as its vast network of recharge points and online recharge options that allow for tenants to manage their payments without personal risk. Partnering with Citiq Prepaid ensures that utilities are always tightly managed, bills always paid, and a property is prepared for whatever may lie ahead.

For more information: +27 (0) 87 55 111 11 sales@citiqprepaid.co.za www.citiqprepaid.co.za

“THE REAL ESTATE SECTOR MUST FOCUS ON BUILDING RESILIENT FOUNDATIONS THAT CAN HANDLE WHATEVER CHALLENGES LIE AHEAD.” COMMERCIAL PROPERTY

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A DV ER T ORI A L

WHERE DO INVESTORS FIND VALUE IN TIMES LIKE THESE? South Africa along with the rest of the world is trying to come to grips with the effects of COVID-19. In a crisis like this, investment arenas suffer, portfolio values fall, investors are fearful and panic sets in, resulting in huge distruption of the investment sector

Investments Performance 2015 - 2020.

invest in the real estate sector and earn high fixed returns without the hassles associated with owning physical assets. Investors get to be part of the value that is extracted from developing and, because the projects are funded solely by their private clients, the clients hold all the development assets as security until they are repaid.

Opportunity Private Capital does not ever handle investor funds. All investor capital is paid into the attorneys trust account and the investment proceeds on exit are also paid by the attorneys, making for a seamless, diligently managed process.

“I’ve been investing with Opportunity Private Capital since August 2017. They have, without a doubt, provided me with absolutely incredible service and I have found that the investment processes are structured and very professional,” comments Ross, another investor.

in 2020 despite the severe ramifications caused by the pandemic.

“Opportunity Private Capital is the ‘peace of mind’ option for any investor. Coming from a high-risk high-reward investment arena, I felt reassured to know that this ‘safe bet’ option in my portfolio has well above average returns too!” says serial investor, Genevieve.

Opportunity Private Capital has now opened its latest investment window with projected fixed returns to clients from 15 per cent per year. This is for the funding of a project in another high-demand middle-income suburb of Cape Town – an area that is seeing strong sales and rental demand due its safety and proximity to amenities. The projected length of this particular investment is 12 months with options to rollover (reinvest) into subsequent investment cycles thereafter. The retention rate of clients is well over 80 per cent currently, which is a firm indication that Opportunity Private Capital is finding value for its investors, even in times like these.

GOOD RETURNS FOR INVESTORS

For more information:

New Cape Town development to be funded by private investors.

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uring these trying times, investors must rethink the way they invest.

They need to look for vehicles that protect and preserve their capital with structures that are geared to weather the short- to medium-term implosion and fluctuations we are currently experiencing.

For investors looking for value, it’s time to change the way they invest. Opportunity Private Capital offers an investment product with a proven formula that encapsulates high fixed annual returns, fixed asset-backed security and secure structures to protect investors.

“I’ve been taking up investment opportunities with Opportunity for well over 12 years now and I will most certainly continue to do so for many more years to come. My investments have grown and created muchneeded financial stability. It always gives great comfort to know that there are multiple layers of security created in an effort to protect and preserve investors’ funds,” says Charles, a long-standing investor.

Opportunity Private Capital is a Cape Town-based boutique investment company that enables private investors to participate in the financing of residential property developments. It offers the opportunity to

The company has established a secure assetbacked investment structure to ensure that investors get great value while having all the necessary protection against any downside.

With a good track record, its clients continued to earn fixed returns of 18 per cent per annum

+27 (0) 21 919 9944 invest@opportunity.co.za www.opportunity.co.za

OPPORTUNITY PRIVATE CAPITAL OFFERS AN INVESTMENT PRODUCT WITH A PROVEN FORMULA THAT ENCAPSULATES HIGH FIXED ANNUAL RETURNS, FIXED ASSET-BACKED SECURITY AND SECURE STRUCTURES TO PROTECT INVESTORS. COMMERCIAL PROPERTY

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De Waldorf Lifestyle and Retirement Estate, Stellenbosch

A HEALTHY INVESTMENT OPTION

New-look medical real estate developments offer investors a profitable alternative, writes SAMANTHA BARNES

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nvestors in medical real estate developments are looking at new ways to incorporate healthcare facilities into communities and reap the benefits of the sector’s stability and growth that is driven by an increasingly high demand for medical care.

While the need for expert medical care is a given, investors in hospitals, day facilities, specialist care and frail care centres are adopting a fresh approach.

INVESTING IN SUB-SAHARAN AFRICA Sub-Saharan Africa continues to be a viable proposition for both large and small investors.

By SAMANTHA BARNES

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omentum Africa Real Estate Fund (MAREF) has multiple pipeline projects across its targeted countries while Emerging Africa Infrastructure Fund (EAIF) mobilises private capital to support economic development in Africa.

MAREF describes itself as a conservative investor. “We aim to mitigate a significant amount of risk before investing,” says David Lashbrook, director and fund manager at MAREF. “MAREF can only present an investment for approval when we have legally binding lease commitments for at least 60 per cent of a development. Additionally, all developments are completed by our sister company and dedicated developer, Eris Properties, which has delivered more than 120 developments in Africa over 30 years.”

Target countries are Cote d’ Ivoire, Ghana, Kenya, Nigeria, Mozambique, Rwanda,

F IN A NCE

“A shared vision is extremely important to our company’s success,” says Dirk Engelbrecht, CEO of Safari Investments, “and a clear and proper strategy to ensure that assets perform well under economic pressure.”

These elements are a lot to deliver on, but achievable. The Soweto Day Hospital project is the only medical facility in Safari’s portfolio of nine commercial properties. Advanced Health handled the concept and design of the hospital with Safari Investments responsible for acquisition.

“With part of our strategy involving property investment in low LSM peri-urban areas, we believe medical facilities can, ultimately, be a value-added service,” says Engelbrecht. “Our market relies heavily on public transport.

“A one-stop destination for service offerings, such as shopping, offices, medical care facilities, health clubs and libraries, significantly strengthens our nodes and supports our communities’ needs.

“Soweto Day Hospital provides stateof-the-art medical facilities, including a specialised opthamology facility, in a previously disadvantaged area and contributes to the provision of advanced healthcare to the community,” explains Engelbrecht.

De Waldorf Lifestyle and Retirement Estate in Stellenbosch is the brainchild of the HDK Property Group. The project is breaking the mould in terms of integrating community with medical care and differentiates De Waldorf from other lifestyle estates on the market in the area.

“By including medical facilities, we ensure that once residents move to De Waldorf Lifestyle Estate they never have to move again,” says Pieter Horn, managing director of HDK Property Group.

“Medical services – for a wide array of needs – are not restricted to the medical centre itself and can be provided in residents’ homes.”

Once complete, De Waldorf will include a frail care centre, memory care clinic, assisted living apartments and assisted living care packages, all managed by medical services provider, Medwell SA. Assisted living facilities are planned for Durbanville, Strand, Paarl and Wellington.

“COVID-19 has shown us that health, safety and medical care is of the utmost importance,” Soweto Day Hospital explains Horn.

Uganda, Tanzania and Mauritius. MAREF will also consider projects with strong tenant agreements in other countries.

“We invest in and develop Grade A commercial real estate,” says Lashbrook, “including offices, logistics, light industrial, healthcare and student accommodation in sub-Saharan Africa, excluding South Africa.”

Flagship properties include Omicane’s head office in the Mon Tresor Business Gateway.

Omnicane produces 40 per cent of Mauritius’s sugar cane and one-third of the island’s power. Mon Tresor Business Gateway was Winner of the Best Green Building in Africa at the 2019 API Awards.

to support economic development in Africa by mobilising private sector capital to fund infrastructure. New infrastructure usually lifts economic activity and over time should help to improve asset values in property,” explains Kroos.

The fund’s projects are diverse and include an affordable housing project in Kenya. “Our first property transaction was in Kenya in 2019. We backed a bond note issue to finance the building of green, safe, and affordable accommodation for 5 000 students,” Kroos says.

EAIF has supported over 20 renewable energy projects and currently has clients that are building a hydro project between Uganda and Tanzania, a solar plant in Mozambique, and another hydro project in Cameroon.

“As a well-capitalised public-private partnership, EAIF has a two-decade track record of success,” says Kroos. “The loan book is currently over $1-billion, so we are a significant presence in African infrastructure project finance.”

FUNDING INFRASTRUCTURE FOR ECONOMIC GROWTH “As a debt fund supporting private sector infrastructure projects we are what is known as a ‘patient lender’,” says Martijn Kroos, director at Ninety One, which manages the EAIF. EAIF has an established presence in 18 African countries. “Our primary role is

DID YOU KNOW?

Agahoza Shalom Youth Village, Rwanda

The 8.5MW solar power plant at Agahozo Shalom Youth Village in Rwanda was developed by Gigawatt Global and was EAIF’s first solar project. Completed in 2015, it was financed, built and operational in just over a year and supplies the equivalent of 15 000 homes.

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F IN A NCE

Sainsbury in Swansea, UK is among 14 properties held by the UK Fund of Investec Property Fund; the supermarket portfolio has been a strong performer, having achieved several lease extensions with Sainsbury.

Offshore property is a winner reports SAMANTHA BARNES, with some properties performing better than expected

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nvestors who have included offshore property in their investment portfolios believe that this is a solid asset class offering growth and strong performance.

Tower Property Fund identified Croatia as the first country in its offshore property investment strategy. The fund first invested there in 2015 and that investment has exceeded expectations. “Our partners, VMD, were the most important decision when investing in Croatia,” says Marc Edwards, CEO of the fund. “Without strong, honest partners, we would never have invested.

FINDING NEW WAYS TO MANAGE INVESTMENTS

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ne of South Africa’s real estate investment trusts (REIT), Redefine Properties, has a portfolio of revenue-generating retail, office and industrial assets in South Africa and Poland. Geographic diversification has been a key strength in managing its investments during the economic challenges resulting from a global pandemic.

Andrew Konig, CEO of Redefine Properties, explains: “An offshore asset base valued at R15.6-billion and diversified local property assets valued at R65.4-billion provide Redefine with geographic diversification.”

With COVID-19 prompting a changed approach, Konig says: “Our top priority is to address the group’s loan-to-value (LTV) ratio. Our LTV improvement initiatives – which included being the first SA REIT to implement a dividend payout policy and exiting non-core investments in the UK and Australia – resulted

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They are a large reason we have done well overseas.”

Tower Property Fund has purchased five additional properties since 2015 – four retail and one industrial – and recently sold two non-core retail properties. “We would like to increase our offshore investments, particularly convenience retail assets,” Edwards confirmed.

Outside South Africa, Investec Property Fund has investments in the UK and Europe with a Pan-European logistics portfolio in France, Germany, Italy and Poland. Gross asset value is around Eur1bn (R19.5bn).

Alice Lane in Sandton is one of Redefine’s well-located assets occupied by a high-quality tenant.

in us concluding property disposals in 2020 totalling R13.4-billion.

“On the operational front, we have adapted to flexible working policies for our people, embedded our company values and introduced a stronger focus on tenant experience management.”

Konig acknowledges the role of Environmental, Social, and Corporate

Governance (ESG) in measuring the sustainability and societal impact of investments. “COVID-19 has accelerated the execution of our strategic priorities.

We have worked very hard at deepening engagement with intensified collaboration, and heightened our focus on ESG.” Redefine was the first local REIT signatory to the UN global climate change compact.

Redefine will continue to leverage opportunities to expand through the development of well-located assets occupied by high-quality tenants.

“Over the next five to seven years, we will be looking to increase our Polish industrial assets to up to two million m2 in size and target EUR1-billion in gross asset value,” Konig states. “Poland is a prime location for the logistics sector due to its position in central Europe. It is a liquid real estate market with high investor appeal and hard-currency-free Andrew Konig cashflow,” he says.

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A WORLD OF OPPORTUNITY

Investec has a 65 per cent equity stake.

“Focusing on Europe and comprising almost 50 per cent of balance sheet, fundamentals are very strong,” says Andrew Wooler, joint CEO, Investec Property Fund. “This is underpinned by strong demand drivers (like online retail and shifting supply chains) and supply factors; limited new stock – most new developments are pre-let – and land and planning constraints.

“Vacancy rates are low and high demand is driving rental growth. Investment money wanting to enter the sector is driving valuations up. The fund’s European strategy is valueadd, with assets managed by UREP (owned

by Investec Property), spearheaded by Paul Rodger, who has over 20 years experience across European logistics and light industrial.”

Hoppegarten Logistics Park in Berlin is a key asset, comprising over 80 000m2 with plans to develop a 20 000m2 facility. The United Kingdom forms a small part of the portfolio.

Given the fairly large exposure to supermarket assets, risk has been limited. Light industrials have a wide tenant base, mitigating risk.

Investec Property Fund has stuck to developed markets where it has a deep understanding of market drivers, achieving success over time.

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CO-DE V EL OPMEN T S

Maponya Apex in Johannesburg is a project created in partnership with FWJK and Maponya Development.

WHAT’S THE

Co-development at cost doesn’t provide the safety cushion given by a financial institution. The upside is more profit, explains Howard Matheson, director of Sinai Developments. “One of the ways to avoid the raising fees, which is effectively just pure profit for the bank, is to create this co-development environment where we do not go through a lending institution and have to pay that enormous raising fee. The other reason why this is appealing from a developer’s perspective is that it avoids the stringent criteria that the bank imposes upon the developer before they prepare to issue the bond.”

Co-development can take on different forms, but essentially it enables investors to get in early at cost, assume the initial risk and, ultimately, stand to profit more generously.

MANY POSSIBILITIES Yet the devil is in the details. A successful co-development collaboration hinges on a project management company/developer that knows its stuff, and for stakeholders to clearly understand their risks as well as what the Co-development is an project will entail. Matheson points out that exciting way to invest in zoning, pre-sales, and building codes can property. But it has its risks, significantly impact a project’s deliverables.

Could this model appeal to austere South writes JAMES FRANCIS Africa? Kaempfer says that since the model spreads risk across more co-investors, it can mobilise more capital for productive purposes, benefitting job creation and the In other words, if you need R40-million, economy at large. you could find 40 investors with a million each.

Matheson agrees: “As a developer, I’m The balancing act is managing such a project limited to my resources. So I can only do ‘X’ and keeping everyone on the same page. number of developments annually. If I had According to Kaempfer, the developer/ access to co-developers, I could potentially project management company is often increase the number of developments that also a co-investor, taking a nominal fee for I’m doing on an annualised basis because professional services and banking on the now the next project is funded through my same payout as the other investors. co-development arrangement as opposed to KNOW THE RISKS my resources.”

However, he adds, arranging “Investors should not see the approach as equivalent to a such projects isn’t easy and turnkey procurement method, investors – often due to lack where the price to acquire a of experience – can get cold property asset is fixed and feet. More can be done to investors simply receive keys connect potential investors with to the property at the end of developers. “This is something the development,” comments that’s evolving. For example, Kaempfer. “Co-development property investment networks exposes investors to development should start building pools of risk, the co-developers’ reward for investors that feel comfortable Klaus Dieter bearing this risk is in the form of with development and could make Kaempfer developer profits.” money out of the exercise.”

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roperty investment can bring terrific returns. Yet an investor needs substantial amounts to participate in property investment and developers often must lean heavily on banks for initial funding and absorbing early risks.

MANY HANDS MAKE LIGHTER INVESTMENT Co-development opens the doors to more participants. According to Absa’s head of Commercial Property & Equity Investments, Klaus-Dieter Kaempfer, co-development’s advantage is that it offers investors access to developments at inception stage. “But it’s risky, individual investors do assume significant development risk because they are not buying the completed end-product, but are investing at the beginning of the development and are obliged to take delivery of and pay for the end-product.”

A group of investors thus join a property developer at the inception of a development project. According to co-development specialists FWJK, the co-development-at-cost model involves “gathering multiple investors (up to 40) as the ‘co-developers’, which allows them to make the developers profit while FWJK undertakes the professional services on the development”.

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“CO-DEVELOPMENT EXPOSES INVESTORS TO DEVELOPMENT RISK, THE CO-DEVELOPERS’ REWARD FOR BEARING THIS RISK IS IN THE FORM OF DEVELOPER PROFITS.” – KLAUS-DIETER KAEMPFER, HEAD OF COMMERCIAL PROPERTY & EQUITY INVESTMENTS, ABS

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APPEAL?

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BUSINES S PA RKS

FROM PARK TO

PRECINCT Recent trends in business park development indicate a swing to business precincts with an integrated offering, GARETH GRIFFITHS finds out more

Aspen Business Park, Johannesburg

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emphasise opportunities for engagement and interaction, notwithstanding social distancing, and reduce the focus on dedicated individual workspace if concentrated individual work can be better accomplished at home.”

Briggs explains that the original office park concept suggested a stand-alone office development, usually on the urban fringes, accessible only by car.

This is a hangover from the zonal land use planning of the 20th century.

So what does this mean for the 21st century office park?

Briggs says that the “office park” needs to be reconfigured as an “office precinct”, that is: • located centrally rather than peripherally • integrated into the surrounding urban environment • inclusive of other uses – effectively creating a mixed-use environment • provide a diversity of workspaces – ifferent office types for different business types • provides access to or includes services and amenities – shopping, restaurants, places of worship, parks and public spaces.

“In short, the design of an office precinct needs to reject the sterility of 20th century THE ARCHITECTS TAKE spatial planning and embrace the complexity Guy Briggs, partner and head of urban design for dhk Architects, shares his thoughts on design of the city,” says Briggs. trends. “We have to consider trends in office and workplace design in general. Currently, BALANCE AND LOCATION TOP PRIORITIES the most apparent trend is to occupy office Nicholas Stopforth, managing director space as little as possible! While this trend is of Amdec Property Developments – in line with the pandemic, it may be temporary. the developer behind Melrose Arch in The last ten months have revealed how much Johannesburg – agrees, adding that we can do remotely from home, but have also companies are now looking at their employees highlighted the limitations. These include the holistically: “They don’t want their staff just logistical difficulties of carving out a workspace, to have better work lives, they want them to a growing sense of isolation, fewer opportunities have better lives overall. Less time spent in for meaningful collaboration, and a loss of team traffic, more time with their families, and a effectiveness. In contrast, office spaces need to work environment that not only delivers quality

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usiness park development needs to be future-looking and responsive to the changing business world, says Michael Stylianou, CEO of the Dimension Property Group.

“Our Aspen Business Park offers futuristic, sophisticated and elegant designs that complement the ever-evolving South African business community. The park is on prime land in the south of Johannesburg, 10km from the city centre, close to the Johannesburg CBD, Alberton and the northern suburbs of Johannesburg freeways. Aspen is in the beautiful Klipriviersberg Nature Reserve region and is close to another Dimension Property Group development, Aspen Nature Estate, offering nearby residential opportunities.

“Construction is well underway on our second phase. Amenities include comprehensive security features and abundant secure parking spaces for staff and visitors. We have placed great emphasis on landscaping and greening, which makes this a beautiful and stimulating place to work and visit on business,” Stylianou concludes.

desktime, but also quality downtime away from the desk.

“One of the many features that make new urban precincts vibrant after hours is the balance they create between nature and the built environment. Along with greenery and urban landscaping, there are public squares and walkable precincts where people can relax and gather, free of traffic and exhaust fumes.”

Location of a new precinct is also key to business. “We chose the site for our upcoming Harbour Arch development in the Cape Town CBD because it lies at the confluence of the N1 and N2 highways, offering good access to public transportation depots downtown.

Another example is our Yacht Club development located in the Roggebaai canal precinct adjacent to the Waterfront and major highways,” concludes Stopforth.

35 Lower Long, Cape Town

“In short, the design of an office precinct needs to reject the sterility of 20th century spatial planning and embrace the complexity of the city.” – Guy Briggs, partner, dhk Architects

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MIXED-USE DE V EL OPMEN T S

Developments for 2021 and beyond

Mixed-use developments continue to grow in popularity in South Africa – and there are plenty more in the pipeline for 2021 and beyond.

By TREVOR CRIGHTON

CORNUBIA, KWAZULU-NATAL SANDTON GATE, JOHANNESBURG Phase One of the Sandton Gate development has been completed, with the second of six phases set to rollout shortly. The first phase includes 15 500m2 of commercial space, 13 000m2 of premium-grade office space and a 2 500m2 Planet Fitness gym positioned on the piazza level of the building.

The Green Building Council of South Africa (GBCSA) has also earmarked the R3-billion eco-city as a pilot project for one of the first green-rated precincts in South Africa.

Abland MD Jurgens Prinsloo is quoted as having said that the project won’t ignore road upgrades, due to its size. “Abland undertook extensive traffic impact assessments to get an idea of the traffic impact once the project is complete. Ultimately, there are seven substantial upgrades that we’re doing ranging from the Peter Place intersection, Republic intersection, Mattie intersection, Sandton Drive and William Nicol,” he said.

Cornubia is a strategically located development in the northern corridor of Durban, approximately 17 kilometres from the CBD and 7 kilometres south of King Shaka International Airport along the N2 highway.

The project was spearheaded through a partnership between eThekwini Municipality and Tongaat Hulett Developments.

Already under development with significant investment (total investment value R25-billion), this urban node is a 1 300-hectare mixed-use, mixed-income development, incorporating industrial, commercial, residential and open space uses. It includes the provision of social facilities to service the residential neighbourhoods.

Phase one of the housing is complete expect for social facilities, which are currently under construction, and some commercial and retail developments have been completed. Phase two of the housing is currently in planning.

Sir Lowry Square, Cape Town The construction of Sir Lowry Square from May 2021 will deliver a 22 000m2 mixed-use development to knit together Woodstock and the Cape Town CBD with 5 000m2 of retail shops, a Radisson Hotel and 204 apartments.

This R800-million development will encompass an entire city block between Sir Lowry Road, Russel Street, Francis Street and Basket Lane, with apartments and a Radisson Luxury Hotel sitting atop two floors of retail, including Pick n Pay, Clicks, local boutiques, restaurants and coffee shops.

It will house a fitness and yoga studio, laundromat facilities and secure basement parking. There’ll be a pet-friendly, tree-lined central courtyard, and on the fifth floor, a rooftop terrace with a lap pool, lounge, snack bar and panoramic views of the city, serviced by the Radisson Hotel, for both guests and residents.

Durban’s Point area is getting a major development boost with a R270-million mixed-use co-development, Wharfside. Situated within walking distance of the newly commissioned beachfront promenade, uShaka Marine World, and pending MSC Cruise Liner passenger terminal and “Durban Eye” Ferris wheel attraction, the 7 500m2 mixed-use development delivers 111 apartments and a ground floor retail space.

FWJK director: developments Daniel Gardener says that Wharfside will play a crucial role in uplifting the Point area, aligning with the City’s planned revival of the precinct. “The development will respond to a healthy growing demand for contemporary, secure accommodation within the Durban Point Waterfront and offer property investors a unique opportunity to invest at cost price into a flagship residential property development in the area.”

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Wharfside, Durban Point

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LIVE, WORK, PLAY

Century City, Cape Town

CENTURY CITY, CAPE TOWN Waterfall, Johannesburg

South African mixed-use developments continue to set continental standards for a new type of lifestyle, combining international trends with local adaptations to create prime locations for people to live, work and play. By TREVOR CRIGHTON

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WATERFALL, JOHANNESBURG The sprawling 2 200 hectare Waterfall development in Northern Johannesburg was named African Property Awards’ Best Mixeduse Development in South Africa for the seventh consecutive year in 2020/21 – and it’s easy to see why.

Waterfall blends the ideal location – accessible from Pretoria, Sandton and Johannesburg via major routes and just four kilometres from the Midrand Gautrain station – with an array of amenities including eight secure residential developments, two retirement villages, multiple office parks, a logistics hub, two private schools, a hospital, four hotels, a heliport, multiple parks, fitness centres, Waterfall Market and over 60 restaurants, as well as a number of shopping centres, including the Mall of Africa.

The CBD, Waterfall City, features safe pedestrian walkways and dedicated cycle lanes with parkrun and green spaces like the 1.2 hectare Waterfall Park. Its residential estates include over 35km of hiking and biking trails, fishing dams and a 20km mountain bike track.

Attacq chief development officer Giles Pendleton says that Waterfall’s key differentiator is its ability to stay on par with global best practice while ensuring the implementation of relevant aspects needed for the African market.

“Africa is not a homogenous place and what may work in Kenya or Morocco won’t necessarily translate in South Africa. Even Waterfall, to a certain degree, has a slightly different macroclimate to Midrand or Sandton, subtle, but it is a difference. These nuances matter and impact how we design the City,” he says.

“The dream of Century City was ‘born’ in 1997 when a 250-hectare wasteland alongside the N1 in Cape Town was rezoned from residential to mixed-use development,” says Chris Blackshaw, CEO of Century City Property Owners’ Association. “In 1998, Ratanga Junction was opened, followed two years later by Canal Walk Shopping Centre.”

In 2004, the remaining undeveloped land and associated rights were acquired by the Rabie Property Group whose first development was the residential Island Club. Since then, Century City has grown into a coveted precinct with about 4 000 front doors, smaller retail nodes in addition to Canal Walk, showrooms, hotels, the Century City Conference Centre and 370 000m2 of prime office space owned by various landlords such as Old Mutual, Growthpoint, Absa, Rabie and Spire.

Century City is South Africa’s first Smart City with pioneering initiatives and a track record in urban precinct management, environmental, connectivity and communication, safety and security as well as community engagement.

Jewel City, Johannesburg

JEWEL CITY, JOHANNESBURG Offering the Maboneng precinct its second new lease on life since its first redevelopment in 2009 is Divercity’s Jewel City, a R1.8-billion six-block development in the heart of the Johannesburg CBD. Named for the area’s historical tenants – the city’s diamond trade – the development was officially opened on 24 September 2020 and now houses about 1 500 residential units, 10 000m2 of office space, a Curro High School and an array of retail outlets in converted office buildings and warehouses. Two new residential blocks were also constructed. “We would like to encourage other developers to see the CBD’s potential and join us in uplifting and upgrading it to make it a safe place for people to live and work,” says Atterbury Gauteng head of development, Derrick Pautz.

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ADAPT OR DIE

To survive a changing landscape and global health pandemic, the retail sector has had to adapt and innovate, writes DENISE MHLANGA

Dobsonville Mall, Soweto

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ike most industries heavily affected by the coronavirus pandemic, the retail sector experienced financial losses as many tenants could not trade during last year’s level 5 lockdown. Some shops closed permanently, forcing retailers and landlords to innovate to stay in business.

RESILIENCE IS THE NEW AND URGENT PRIORITY – THE NEED FOR ADAPTABILITY, SCALABILITY AND THE VALUE OF INVESTING IN THE RIGHT PROPERTIES AND PEOPLE HAS NEVER BEEN GREATER.

FOCUS ON SUSTAINABILITY JSE-listed specialist retail real estate invest trust Vukile Property Fund responded to the crisis by seeking symbiotic solutions that ensured the sustainability of the value chain. This strategy has paid off, enabling the fund to find new ways to drive continuous value within the portfolio.

Vukile has

Itumeleng Mothibeli

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remained “comfortably solvent and liquid”.

Vacancies have held steady while the collection rate is up to 95 per cent of billing.

Itumeleng Mothibeli, Vukile Property Fund’s managing director for Southern Africa, says that they granted concessions to tenants to ensure a sustainable value chain.

“In the year ahead, we will continue to work closely with our tenants to help them pivot and reposition their business for future success where required.”

However, he says, this will be different and may entail downsizing, relocation,

revamping, and upgrading of suites, for example, to the extent where it is commercially viable.

Mothibeli says Vukile’s operational strategy has always been centred around operational efficiency, stakeholder engagement and alignment, a firm commitment to innovation, and prudent balance sheet management.

“We’ve achieved this through creative leasing strategies, focused energy and water management initiatives, redefinition of how soft services are delivered within the mall context, and fully delivering on our capital expenditure programme to ensure that our malls are fit for purpose.”

Meanwhile, Redefine Properties forked out as much as R222.6-million on rental relief packages to support the sustainability of its retail tenants last year.

The company has also offered rental discounts amounting to R82-million for 2021 to cushion the prolonged impact of the ›

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Kyalami Centre’s Click N Collect facility.

Nashil Chotoki

pandemic, says Nashil Chotoki, Redefine Properties retail national asset manager.

He says the company’s active retail portfolio vacancy rate rose by a percentage point to 5.6 per cent in 2020 while the tenant retention rate was 92.2 per cent (94.1 per cent a year ago).

TECHNOLOGY

Mothibeli says customer-centricity is key to the industry: understanding what drives customers is fundamental for aligning service offerings. “Innovation and technology will be vital for achieving this,” he says. “Investing in these technologies will ensure survival.”

Vukile has rolled out free Wi-Fi access across 14 of its malls, with an opt-in database of some 2.4 million unique shoppers, enabling direct communication with customers.

Mothibeli says these 2.4 million users on the Wi-Fi landing page have opened up new, alternative revenue streams for digital advertising. Furthermore, data will be used to inform leasing strategies.

REDFINING THE SHAPE OF RETAIL SPACE

“We anticipate that touchless technology will start to become the norm, though South Africa still has a large cash-based consumer base. Design elements need to incorporate technology. Bulkheads, for instance, serve as interactive flat digital screens for direct advertising and signage, while open shopfronts blur the lines between the retail and public spaces.

“Artificial intelligence has provided a greater understanding of customer preferences and retailers are aiming for greater direct engagement,” says Lahaye.

FUTURE-PROOFING Function and fun, says Lahaye, are likely to both have a role in the retail design of the future. “But making that work together requires flexibility. The more flexible the design is, the more easily you can adapt to what will happens in the world. Outdoor lifestyle offerings will be important to facilitate social interaction, and accessibility will be key.”

The rise of e-commerce trade through this pandemic and certainly before it, is rapidly challenging the traditional retail experience.

Retailers in some areas, within a matter of weeks, shifted their focus to offering more contactless shopping experiences, allowing consumers to purchase products online from local retailers, drive to the store, and have employees deliver the products straight to their cars.

“We see the need to focus on planning for a future that meets both the immediate and long-term needs of our tenants and maximises the ‘experiences’ of our customers.” – Nashil Chotoki, retail national asset manager, Redefine Properties 24

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THE EVOLUTION OF RETAIL With the pandemic still very much present, businesses have had to adapt to a changing landscape. Chotoki and Mothibeli concur that retail is evolving and that retailers and landlords need to adjust to these changes to stay relevant.

“We see the need to focus on planning for a future that meets both the immediate and long-term needs of our tenants and maximises the ‘experiences’ of our customers,” says Chotoki.

Resilience is the new and urgent priority – the need for adaptability, scalability and the value of investing in the right properties and people has never been greater.

Chotoki says Redefine is in advanced negotiations to fill big-box vacancies, which has created opportunities for new entrants.

“We are adjusting our tenant mix to improve value offering and convenience at some of our properties.”

Furthermore, he says that lockdown has accelerated the growth of online shopping, forcing retailers to develop and enhance online platforms.

Redefine Properties is facilitating Click N Collect; this is already operational at Kyalami Corner in Johannesburg.

Pierre Lahaye, a retail architecture expert and partner at MDS Architecture, adds that historically, retail space was designed to entice customers further in and encourage them to spend more time in the space. “In my view, experiential retail will benefit when the in-store experience shifts to fast purchasing because greater flexibility will be required in the design of the spaces. Streamlined and uncluttered stores will ensure that there is more room for customers to distance and move around.”

While people’s desire to socialise is unlikely to change, Lahaye says, consumers want to socialise differently now. “Before COVID-19, customers were increasingly looking for retail stores to provide them with greater experiences. The pandemic has now seen the pendulum swing the other way. It may be that speed and efficiency is going to overtake browsing in terms of importance when visiting shopping centres.”

Pierre Lahaye

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T REND S

INTERIOR DESIGN FOR A BRAVE NEW WORLD

What key interior design concepts and trends should be implemented to accommodate our new realities? BETH AMATO finds out

Joanina Pastoll

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he business world has been toying with the idea of working from home long before the COVID-19 wave hit global shores and accelerated a change in the way we work. It is now undeniable that the “To Let” and “For Sale” signs adorning South Africa’s once vibrant economic hubs are clear indicators that workspaces are changing and working away from the office is now a reality.

So, do we scrap offices altogether and let those workspaces become like shipwrecks and museum relics? Not so fast, says futurist and economist Bronwyn Williams, partner at Flux Trends. She says that while the pandemic has changed the way we use and design buildings, offices are critical spaces for innovation and connection.

“We used to think that the office led to distractions and lost productivity. But the conversations sparked at the coffee station, or in an impromptu chat with a colleague, often result in innovation,” she says.

Williams refers to research conducted by Yale University’s Department of Economics about the effects of alcohol prohibition on human invention. “It’s a fascinating insight into how in-person communication is important for the creation of new ideas,” she says.

Other research published by The Economist suggests that people work longer hours when they work from home and that email communication is often not as effective or productive as people hoped.

Joanina Pastoll, creative director and owner at Studio Stirling, says that COVID-19 has changed the way we think about office interior design. In particular, office furniture will have to be multifunctional and mobile to save money and promote hygiene.

“As office interior designers, we have to ask ourselves whether a piece of furniture can be used as a meeting table, a conference table, or a socially-distanced lunch table. The height of a table, for example, could also change Will innovative office pods become the for a standing meeting, and then revert to a new norm in interior office design? seated work station,” says Pastoll. Standing desks are popular for quick, efficient meetings, and promote health and safety, especially as exposure to people for longer periods increases the risk of viral droplet spread.

For aesthetic purposes, Pastoll suggests BRONWYN WILLIAMS, PARTNER, FLUX TRENDS customised multifunctional furniture that, when adapted, fits harmoniously into a space.

“We also need to start thinking about Nevertheless, we can’t go back to ventilation and light,” she says. “How do we open-plan, close-contact, air-conditioned get air to move in an office? Do we need to office spaces. We have to nurture innovation think about having more outdoor spaces, by encouraging connection and meaningful especially in a country like South Africa? Does in-person engagement without spreading an office worker take a new collapsible ‘desk’ disease. Even with the arrival of the COVID-19 with shade and anti-glare solution and set vaccine, employers will still have to ensure up anywhere they deem safe and hygienic? extra health and safety measures.

There are many questions around this. We have to WHAT CAN WE EXPECT? think outside the box to “We’ll begin to see office redesign office space and spaces that are more modular, human interaction.” with smaller ‘pods’ in which She suggests designing to work,” says Williams. These “nesting” spaces in offices. modular spaces are not the “The pandemic has shown private room offices seen in us how important it is to find traditional offices; they allow quiet time to destress. There for more containment without is plenty of research pointing being completely closed off and Bronwyn Williams to the benefits of meditation, can be used for small meeting mindfulness and rest for groups. They can also be productivity.” Pastoll adds that these nesting portable and remodelled to fit requirements. spaces with appropriate furniture could also be Williams says that the hot desking system, placed outdoors. whereby desk space is allocated to workers on “Office interior designers have to embrace a rotational basis, is probably the most viable multifunctionality and be open to radical system for these times. Workers can spend changes and shifting needs. It’s daunting yet a portion of their working time in the office, exciting,” she says. ensuring easier adherence to safety measures.

“WE’LL BEGIN TO SEE OFFICE SPACES THAT ARE MORE MODULAR, WITH SMALLER ‘PODS’ IN WHICH TO WORK.” –

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AF IN DVAER NCE T ORI A L

BUYERS’ MARKET FOR THE

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yrone Varga, director of Newpoint Property Group – one of Johannesburg’s leading property brokerages focusing on sales, rentals, investments, management and new developments in industrial property – points out that demand in the industrial property market has not diminished in the face of the coronavirus pandemic.

“The industrial property market continues to do well as businesses still need to manufacture, store and distribute products, leaving the industrial market in high demand for owner-occupiers and investors.”

Varga says that the financial constraints faced by property owners are resulting in lower prices for listed properties, while property funds are also looking to sell off older properties at affordable prices.

“Due to factors such as financial difficulties, immigration and investors needing their capital, more owners are wanting to sell their properties.

This results in a flood of properties coming onto the market, forcing sellers to drop their prices. Property funds are also wanting to sell their older stock and move into newer logistic nodes and logistical warehousing, further amplifying the number of properties being sold.”

Varga points out that Newpoint Property Group is achieving impressive returns for investors who are taking advantage of the prevailing market conditions.

Now could be the perfect time to invest in industrial property as sustained high demand combines with lower property prices to create a buyers’ market in the sector “We are achieving yields of up to 16 percent for investors because sellers are dropping their asking prices but rental prices are remaining strong and still escalating. This has created favourable market conditions for investors. The current low interest rate has also encouraged business owners and investors to look at Tyrone Varga purchasing property.”

TIPS FOR INVESTING IN PROPERTY IN THE CURRENT MARKET Varga, who has more than a decade’s experience in the industrial and commercial property sector, recommends several factors that investors should take into account when looking to invest in industrial property. These include the quality of the tenant and the potential future yield of the property.

“Although the length of lease is important, quality of tenant in today’s market is more important to secure the investment,” Varga explains. “Investors should also look at the

“DUE TO FACTORS SUCH AS FINANCIAL DIFFICULTIES, IMMIGRATION AND INVESTORS NEEDING THEIR CAPITAL, MORE OWNERS ARE WANTING TO SELL THEIR PROPERTIES. THIS RESULTS IN A FLOOD OF PROPERTIES COMING ONTO THE MARKET, FORCING SELLERS TO DROP THEIR PRICES.” 26

future yield of the property, not necessarily the yield the property is achieving right now. Some tenants may have been in the property for many years with an escalating rental, driving their rental higher than the current achievable market rental, thereby showing a yield that will not be sustainable.”

Investors should also not be afraid to negotiate with sellers; this is where the true value of a property broker can be harnessed.

“Negotiation is very important in today’s market, many sellers are negotiable, hence the importance of using a broker. The broker has experience on what is a fair price in the current market or area of choice and is aware of the seller’s position in terms of what the lowest possible price will be,” Varga explains.

“The broker can also advise on what the going rental in the area is, ensuring the current tenant is paying the correct rental, and can also ensure that proper due diligence is done on the property.”

He suggests that investors should look at purchasing property in areas with high rental demand and consider physical characteristics that will make the property appealing to tenants.

“Areas with high rental demand include those around airports and ports, for example.

In terms of the property’s characteristics, investors should be looking at what tenants would need such as good yard space, reliable power, good racking height, multiple roller doors and good security,” Varga concludes.

For more information: +27 (0) 10 035 4431 www.newpointproperty.co.za

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An African gateway The South African economy has a dual opportunity to self-sustain while serving as the blueprint for growth for other economies within the continent. By LEVI LETSOKO

WHY SOUTH AFRICA? The South African economy has a dual opportunity to self-sustain while serving as the blueprint for growth for other economies within the continent. To achieve this, South Africa has to lead the way in scaling its own (and international) commercial opportunities into the continent. Tyrone Varga, director of Newpoint Property Group, says that South African companies that operate in the warehousing space are preparing for the opportunities that lie ahead in the sector. While international companies remain vigilant of trading conditions amid COVID-19, the prospects for growth in African markets remain attractive.

Varga is impressed with the increase in the construction of warehousing facilities and infrastructure across the country.

He points out that the increase in new facilities also speeds up the demand for high and steady supplies of electricity and water to guarantee a smooth operation of these facilities.

“The properties are being built mainly for storage and distribution of imports into South Africa and neighbouring countries,” says Varga.

“It is still important to bolster the manufacturing sector and increase the export of South African products. For this to happen, South Africa would need to increase manufacturing capabilities,” he adds.

The increase in the building of these facilities has automatically broadened the scope and expanded the participation of various companies and suppliers within the value chain.

Abland Property Developers’ Grant Silverman is very optimistic about the projects that his company is undertaking in 2021. His company’s key focus is pricing development on various projects that are lined up for commercial uses ranging from business and residential to retail occupation.

“THE GROWTH OPPORTUNITY IN AFRICA IS TREMENDOUS. SOUTH AFRICA IS STILL THE GATEWAY INTO AFRICA, WITH GLOBAL CORPORATES LOOKING TO GROW MARKET SHARE ON THE CONTINENT.”– GRANT SILVERMAN, ABLAND PROPERTY DEVELOPERS Some of these projects include the S & J Industrial Estate in Germiston, the RiverStone Industrial Park in Kempton Park and the Atlantic Hills Industrial Estate in Cape Town.

“Within the precinct and industrial parks, we further focus on the cost of occupation for our tenants. How can we make it worth their while to move and what will their monthly saving be on their cost?” explains Silverman.

“There has been a focus on data centres, distribution centres and warehousing facilities.

Further focus will be on renewable energy as a power source for the industrial spaces,” adds Silverman.

Varga says that many developers are not hesitating to grab the opportunities in this sector as most of them have funded and kick-started major construction projects without securing tenants beforehand.

This directly speaks to the competitiveness and rise in demand for warehousing facilities.

Despite the opposing views raised by various corners of the business community regarding China’s impact on the local manufacturing sector, Varga has a different stance.

“Products being manufactured at lower costs by foreign countries such as China have increased local and our neighbouring countries’ demand for these products. This, in turn, has increased the demand for space needed for storage and distribution,” says Varga.

The big trend in this sector is the acquisition of land for commercial and industrial use. South Africa is currently wrestling with its own land issue challenges.

The land question across the continent still demands Tyrone Varga

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tailored solutions for each region. The boom in the warehousing sector and an increase in the demand for warehousing facilities to be built has indirectly brought this issue back on the agenda for many African countries.

Silverman emphasises that another important resource to secure the prospects around the continent is the consolidation of energy supply.

“We have teamed up with our solar partners to offer tenants an opportunity to optimise energy use through alternative energy sources,” he says.

“The growth opportunity in Africa is tremendous. South Africa is still the gateway into Africa, with global corporates looking to grow market share on the continent,” concludes Silverman.

FREE TRADE Fifty-four African Union nations have committed to the African Continental Free Trade Area (AfCFTA) agreement, which is aimed at cultivating trade between African states and paving a way for a consolidation of trading prospects between the various states.

South Africa’s dedication to and investment in improved infrastructure is key in positioning the country as a bridge between ambitious ventures in the logistics sector and the continental market. The local logistics facilities have enabled a seamless exchange of goods (products) across the country and over its borders.

Group CEO of Super Group Peter Mountford believes that the effectiveness of the country’s roads, rails and harbours continues to place SA in an advantageous position. He says that the country should sustain its investments and focus on emerging opportunities presented by new ways of facilitating trade across the continent. ›

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and making it easier for African businesses to trade with each other and grow their reach on the continent and globally,” he explains.

LOGISTICS PLAYS A VITAL ROLE “In the physical realm, a gateway must provide access to other regions. We seem like the obvious choice for foreign companies to set up a base for further African growth, but if you look at the many attempts by South African companies to venture into the rest of Africa, our record is not that good,” says Mhlambi.

Intentional efforts to bolster the manufacturing and industrial sector (in the midst of and) post-COVID-19 is vital for maximising output intended for the broader region. The logistics sector has, over the years, managed to spread its reach and create reliable bases in other African countries.

Technology is expected to have a huge impact on how the future of the logistics industry will look on the continent. Multiple innovations have ushered in new trends.

According to Mountford, warehousing management systems, internet of things, drones and robotic artificial intelligence technologies are expected to be adopted in

“STAYING ABREAST OF TECHNOLOGICAL DEVELOPMENTS WILL ALWAYS BE IMPORTANT IN CEMENTING OUR STRATEGIC POSITION AS A GATEWAY.” – PETER MOUNTFORD, GROUP CEO, SUPER GROUP

the logistics sector across the continent in an effort to align with the trends taking form in developed markets. “Robotic warehouses are increasingly the trend. However, there is an obvious need to consider the cost efficiency hereof in relation to traditional people-focused environments,” says Mountford.

“In African markets, it would be ideal to have a mix of costeffective solutions that are headed by people.

The reality is that heavily machined warehouse solutions have a huge capital cost. A balance Thuso between the appropriate Mhlambi technologies and labour can still represent a cost-effective outcome.”

Mhlambi’s immediate goal is to position his company as a preferred carrier in the country. “We have had successful discussions and participation at AUDA (African Union Development Agency) in our capacity as the African Shipowners Association,” he says.

“There is still a lot of work to be done to get African business owners (in the logistics sector) to be ready for the envisioned trade, but we believe now is the time,” he concludes.

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“We should expand our product representation (as a country and as businesses) and focus on the huge exports opportunity in Africa,” says Mountford.

“Staying abreast of technological developments will always be important in cementing our strategic position as a gateway,” he says.

The commencement of the AfCFTA agreement on 1 January 2021 signifies an important phase in the broader landscape of African countries strengthening intra-Africa trade.

The trade agreement has the potential of boosting the continent’s regional income by $450-billion by 2035. It is expected to ease the burden of poverty and improve the lives of an additional 30 million people.

Linsen Nambi’s co-founder Thuso Mhlambi believes that the idea of South Africa as a gateway applies to the flow of ideas, goods and skills. He indicates that the country should use its expertise and infrastructure to make an impact on the broader region.

“Most of AfCFTA’s income gains are likely to come from measures that cut red tape and simplify customs procedures (tariff liberalisation and trade-facilitation measures), lowering costs

“There is still a lot of work to be done to get African business owners (in the logistics sector) to be ready for the envisioned trade, but we believe now is the time.”– Thuso Mhlambi, co-founder, Linsen Nambi 28

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