HOMEFRONT 13 OCTOBER 2016 WWW.BDLIVE.CO.ZA 1 JUNE 2018 WWW.BUSINESSLIVE.CO.ZA
MUST READ
Woodcraft and tech set new benchmark PAGE 2
Residential market ticks up PAGE 4
Six themes driving SA’s next boom PAGE 10
Less is more New compact urban microliving units are catering to Central Cape Town property snapshot millennials and those looking to downsize and simplify their lives PAGE 6
PAGE 12
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HOMEFRONT DESIGN
Seeing the wood for the trees
Woodworking for the modern age is all about tradition meeting innovation in elegant homeware. Three contemporary artisans share their love of the craft WORDS: JULIA FREEMANTLE :: PHOTOS: SUPPLIED
“Wood is such an amazing material and most people tend to have a positive and almost emotional response to it” Phillip Hollander, Houtlander
Phillip Hollander and Stephen Wilson
Interdependence bench by Houtlander
Houtlander With a business making and selling furniture that began in his dad’s garage a few years ago, Phillip Hollander entered a small business incubation programme and met Stephen Wilson, who became his business partner. The two-man Houtlander team has been creating functional design pieces and making a name for the simplicity and elegance of their work. They won a Best Furniture Design award for the Coronation Bench at 100% Design South Africa in 2017. “Our approach is to create designs that are timeless rather than trendy or clever,” Hollander says.
Workmanship is an integral part of this — the lines and craft of each piece are carefully considered. “Working with your hands is a rewarding way to spend your time,” says Hollander. “Wood is such an amazing material and most people tend to have a positive and almost emotional response to it.” Despite this connection to and affinity for the handmade, and a focus on traditional joinery techniques, Hollander and Wilson have savvily grasped how innovation can move their business forward. By integrating state-of-the-art technology into their design process, Houtlander keeps quality
high and the price point competitive. The synergy between technology and traditional techniques facilitates a fluid manufacturing process. Through technology the duo has created some remarkable pieces, including a take on a traditional love seat for the recent Southern Guild Extra Ordinary collective show, which blurs the line between art and furniture. “We don’t try to be artists, but we have had the opportunity to step into that grey area a couple of times,” says Hollander. “I would classify our pieces as collectable design rather than art.” houtlander.co.za
Table, diner chair and server by Houtlander
HOMEFRONT
Minima A background in architecture and a fascination with buildings constructed from curved wooden components cut via computer numerical control (CNC) led Jacques Cronje to implement this technology in SA. “Knowing I would struggle to find clients who would embrace this on such a big scale, I decided to start smaller with furniture and lighting,” says Cronje. He had always used timber in projects, so a familiarity with the material and a desire to push it further using technology made him one of the first designers in SA to embrace
Serene and Aura lampshades, and a Flow Bench, all by Minima
David Krynauw An experimental approach underpinned by a deep love of carpentry and a childhood spent helping his father in his workshop culminated for David Krynauw in a career path that he ultimately could not deny. “I studied agriculture and tried working the job for a while but I couldn’t get woodwork and the desire to make things out of my blood,” he says. It led to his decision to return to the farm where he grew up and start his design business. As Krynauw’s product line grew, from small bowls to lampshades, a chandelier (his first commercially successful and now iconic piece) and large-scale
installations, so did the team around him. Now based in Johannesburg, he continues to push the boundaries of his work, and what is possible. “The best design, in my opinion, successfully marries functionality and art,” says Krynauw. “It is always my ambition to produce pieces that incorporate both. The exciting thing about both functionality and art is that neither is stagnant.” But rather than referring to his competitors and colleagues he looks at his own progression. “I try to keep my focus on the process and not the product. In this way, as my processes grow
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and evolve, so does my work,” says Krynauw. “I tend not to look at the industry or fellow makers for inspiration, but rather at nature, previous eras and at other disciplines.” Celebrating traditional motifs via updated silhouettes, Krynauw’s pieces are entirely recognisable as his. This strong sense of identity is courtesy of his design ethos. “I would like to believe that my work is a reflection of who I am. I also think that everyone has been given the ability to create something unique if they can stay true to themselves,” he says. davidkrynauw.com A
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digital fabrication. Despite having a strong technological bent for the role this can play in opening up design possibilities, Cronje always has a sketchbook close at hand. He believes that the handmade element of their work is what sets many local designers apart. “South African designers, due to lower volumes and smaller businesses, tend to be makers — more than their European counterparts. I think this designer-maker culture, through the positive impact this feedback loop has on design process and the increasing quality of products, is leading to the growing recognition of South African design.”
Cronje’s respect for craft, and wood in particular, is elevated rather than reduced by digital technology. “Few of my products would have been possible to manufacture in a commercially viable way without this. It allows for finer and much more intricate detail in the design.” Wood also answers the present imperative of conscious design and sustainability. “One of the original materials used by man to create objects is now being made relevant again thanks to evolving technology. So an ancient material has become new,” says Cronje. minima.co.za
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HOMEFRONT BAROMETER
Five reasons why SA property is on the up From significant growth in bond approvals reflecting an increased lending appetite to an upward trend in prices fetched, there is reason to be upbeat WORDS: STAFF REPORTER :: PHOTO: SHUTTERSTOCK
R
ecent banking statistics show an upturn in SA’s residential property market for Q1 2018 as business sentiment picks up. HomeFront found five healthy recent indicators of new optimism and growth in the residential property market:
1 First house price increase in three months The Standard Bank house price index shows the price of homes edged up in April, led by KwaZulu-Natal and Gauteng. KwaZulu-Natal recorded year-on-year growth of 7.1%, up from 6.8%. Gauteng was on 6.3%, up from 5.9%. BetterBond CEO Rudi Botha says nationally, house
price growth improved to 5.3% year on year in April, compared with 2.62% in January, 2.85% in February and 2.94% in March. Standard Bank figures show the Western Cape and Eastern Cape continue to decelerate. The Western Cape eased to 3.2% year on year in April, down from an upwardly revised 4.2% in March. The Eastern Cape grew just 2.1% year on year in April, lower than the downwardly revised 3% recorded the previous month. “Building and purchasing activity, which were relatively subdued in the past year, will likely benefit modestly from the upswing in business and consumer sentiment,” says Standard Bank’s property economist Siphamandla Mkhwanazi.
2 Loan approvals are up In Q1 2018 bond originator ooba recorded its highest home loan approval rate in the nearly 12 years since the National Credit Act was implemented, says CEO Rhys Dyer. The total approval rate is 76.9% — an increase of 4.9% over Q1 2017. “Banks are increasingly willing to lend the full value of a property without requiring a deposit,” says Dyer. Botha says the upturn in the property market is not only being driven by greater demand, but by banks competing for new bond business. “Our approval
rate has been above 80% for the past four months — the highest sustained rate since the 2008-09 recession.”
3 More buoyancy in first-time buyers’ market BetterBond reports year-onyear growth in the average home price of 9.2% at the end of April, compared with 6.6% in January, 7.3% in February and 7.7% in March.
4 Boost for mid-level homes Middle-price-spectrum homes (from R650,000 to R1.6m) continued a solid upward trend nationally, according to Standard Bank. These properties account
for more than half of all mortgage transactions in SA. They saw growth of 7.2% and 10.7% respectively in April. Freestanding homes outperformed townhouses and flats.
5 Market turning in favour of sellers The market has begun to favour sellers. Botha says figures from the most recent estate agent survey by First National Bank show that the average time a property spends on the market has dropped from about 17 weeks to 14 weeks. The percentage of sellers required to drop their price to make a sale has fallen from 95% to 91%.
SA PROPERTY IN NUMBERS
7.1% — KwaZulu-Natal April 2018 year-on-year house price growth
6.3%
— Gauteng April 2018 year-on-year house price growth
0.16% — average interest rate above prime Q1 2018
0.35%
— average interest rate above prime Q1 2017
R1,167,242 — average purchase price Q1 2017
R1,206,519 —
average purchase price Q1 2018 (3.4% total increase) Statistics: Standard Bank house price index; ooba
HOMEFRONT MICROLIVING
Less is more New compact urban microliving units are catering to millennials and those looking to downsize and simplify their lives
T
hinking big and designing small, fast-growing cities globally are reinventing their urban residential design. Growing demand for accommodation in New York has generated the rise of the so-called skinny skyscrapers. Oslo is one of the fastest-growing cities in Scandinavia and Europe, creating a need for new office solutions and residential housing. Call it compact living, microliving or nanoliving, the inner cities of Johannesburg and Cape Town are also considering urban rejuvenation and repurposing of existing industrial and commercial spaces for accommodation.
WORDS: LAUREN GROENEWALD AND MIRIAM MANNAK :: PHOTOS: SUPPLIED
DESIGN Urban design is the glue that holds a city together. It is a way of not just looking at individual buildings, but seeing them as part of a precinct, as part of a greater whole. One solution is innercity microapartments — cleverly designed, self-contained units that typically measure between 20m 2 and 55m 2,
No. One Eloff, Johannesburg
featuring living, dining and sleeping spaces for one or two people, including a bathroom and kitchen. The key demand is in Cape Town, Johannesburg and Durban, says IP Global Head of Africa George Radford. “Younger demographics including students, young professionals and startup entrepreneurs find microapartments attractive because they are more concerned with getting out and exploring new places than spending time indoors,” he says.
DEMAND Younger city dwellers choosing to use public transport and services such as Uber are playing a role too. “More people are able to live and work in CBDs, allowing them to commute to work using public transport,” says Spire Property Management executive director Sean Paul. “More urbanites are turning against the car, congestion and parking issues. As many as 56% of New York households don’t have a car.” While the microliving trend is driven by millennials, Pam Golding Properties Johannesburg development manager Peet Strauss says smaller apartments are attracting a cross-section of buyers. “This includes people who previously owned spacious homes on large stands who choose to downscale for lifestyle and security reasons as well as reduced maintenance costs.”
CONCEPT
No. One Eloff
Park Central, Rosebank, Johannesburg
Another brand of microliving just introduced to the South African market is the FWJK Developments Lil’ Apple concept, which will be launched first in Sandton with a 600-unit development, followed by planned launches in Bryanston, Umhlanga and Cape Town CBD, totalling a further 1,200 apartments. Rhys Rocke, regional director of FWJK Developments in Gauteng, confirmed that the first Lil’ Apple development
HOMEFRONT “More urbanites are turning against the car, congestion and parking issues” Sean Paul, executive director, Spire Property Management
FWJK’s Lil’ Apple, Sandton
Sandton Skye, Morningside in Sandton
No. One Eloff
in Sandton would be launched during Q3 2018. The designs of the apartments are based on architecture typically found in Manhattan, New York, where the market has served demand principally from young professionals. Prices for Lil’ Apple apartments will start at less than R800,000. “The affordability levels in parts of the inner city of Sandton, Umhlanga and the Cape Town City Bowl have become prohibitively expensive and this needs to be addressed,” says FWJK’s CEO Dave Williams-Jones. “The only way to address it is to design more affordable and compact apartment living in order to bring down prices. “Our developments incorporate a living experience within the development, which will include lifestyle facilities
and amenities such as a restaurant, co-working spaces, curated retail outlets, boutique coffee brewery and roof terraces where residents can relax and meet friends.” This is what is happening in major South African metros:
Johannesburg
OKA Architects principal Odile Kgaswe says he has seen a move toward compact living in Johannesburg for economic reasons, but also because people have realised that city living can be enjoyable. It requires limited transport time and is convenient. “Historically, most people would live outside the city and mind-sets are difficult to change,” he says. “Slowly, we see people with better incomes moving to town by choice, not by necessity.” OKA has focused on
the growing demand for well-designed large-scale residential and commercial conversion projects in the Johannesburg CBD. It works closely with property management company and developer of No. One Eloff Molten Black. The development is a bright blue and yellow 1950s building, formerly a retail centre and garage storage facility. Molten Black converted it into 300 loft-style apartments and retail outlets, restaurants, parking and a jazz club on the roof.
LOFT LIVING These “New York-style” loft apartments are made for young professionals earning between R10,000 and R15,000 a month, combining affordable loft living with carefully designed space. “The units are compact, but great care has been taken in the planning to maximise the limited number of square metres,” says Kgaswe. “Urban living means staying in limited space with amenities such as shops, schools, restaurants and transport within walking distance,” says Kgaswe. “At No. One Eloff we have tried to provide tenants with all of the above, hoping to improve their quality of life and make it a pleasurable, exciting experience to live here.” Molten Black co-founder Geoff Jardine says its buildings are keeping up with rapid inner city changes. “Molten Black is proud to be part of the drive to rebuild Johannesburg. These properties form part of a precinct being developed as Joziburg, which will offer eat, drink, sleep, work, play, create
and hangout spaces for Johannesburg’s innercity inhabitants.”
POPULAR Other developments popular in Johannesburg that offer microapartments include Park Central and Capital on Bath in Rosebank, Sandton Skye in Morningside, One97 in Hyde Park and Capital on Park in Sandton. “Prices start from R946,000 for a unit measuring 29m 2 in Capital on Bath and from R1.915m for a 31m 2 apartment in Park Central,” says Strauss. The latter has private sky gardens, a rooftop pool and decks. “There are unique innovative funding options available to purchasers. First-time buyers can pay the deposit in instalments while Park Central reaches completion, scheduled for July 2019,” he says.
ENTRY LEVEL The Live Easy concept of entrepreneurs Jeffrey Froom and James Huff addresses the needs of entry-level or mid-level salary earners, a largely untapped market. Live Easy 15m 2 nanounits provide 24-hour biometric security with controlled access, CCTV cameras and high fences. “Many of our tenants have come from a shared space environment,” says Huff. “The benefit of having their own secure lock-up-and-go apartment is important. The units include an en-suite bathroom and kitchenette.” A feature of Live Easy is common areas such as a café, playground areas, free Wi-Fi and DStv access, braai areas, a gym, crèche and hot-desk office space. Huff says space is not at as much of a premium in
HOMEFRONT of communal amenities including a laundromat and heated pool. Entry level units are priced from R799,000 to R945,000, including transfer duty. The development is expected to be complete for Q1 2020.
EXPENSIVE
One97, Hyde Park in Johannesburg Johannesburg as in Cape Town. The size of units is driven by economics. “By introducing a smaller floor space we are able to charge reasonable rentals and also ensure that overletting doesn’t become a problem,” he says. “Our business model is based on young professionals wanting to be closer to economic opportunities. Our accommodation is close to transport nodes.” Live Easy’s flagship development is in Kew. The converted warehouse was launched in September 2016 and the first phase of 136 units was pre-let a month before the opening date. Phase two (under
development) comprises a further 123 nanounits. Two Johannesburg suburbs facing rising demand for nanoapartments are Rosebank and Sandton. The proximity of Melrose Arch and the Gautrain, and people’s desire to be more flexible in terms of time, are key drivers. “As people relocate to cities for work opportunities they seek to stay close to the workplace, reducing travel time and hours wasted in traffic congestion,” says Strauss.
Cape Town
Densification is taking hold in Cape Town as space becomes more limited.
1 on Albert, Woodstock in Cape Town
Cape Town Central City Improvement District chairman Rob Kane says the average size of residential units in the CBD has decreased from 71m 2 in 2016 to 52m 2 in 2017. Microliving will soon be a reality with the development of 1 on Albert in Woodstock. In a collaborative partnership between Dogon, AJ Developers, Power Construction and GPS Property Solutions, units range from 21m 2 studios to 75m 2 two-bedroom flats, all featuring topend finishes, appliances, TVs and uncapped fibre, plus access to a range
“By introducing a smaller floor space we are able to charge reasonable rentals and also ensure that overletting doesn’t become a problem” James Huff, Live Easy
“Cape Town is an attractive city where housing is becoming more expensive and commuting distances are becoming greater,” says Louis Karol Architects CEO Eitan Karol. He says younger first-time buyers are after small, welldesigned flats close to the CBD (for cycling) or public transport, where digital access means they can work and shop from home. Dogon Group Properties MD Rob Stefanutto speaks about “integrated living solutions” whereby residents need not even leave the building. Blok’s communications officer Colin Wardle agrees. “Microliving is a trend that we consider applicable to the Cape Town market and we see its potential,” he says. “Our smallest apartment size currently is 38m 2 at FORTY ON L in the Bo Kaap, which starts at R1.925m.” Construction is under way. “We held our official ground-breaking event in the first week of May. The open market units are now being sold off-plan with the inclusionary units scheduled to follow in due course.”
COMMUNITIES Observatory, Salt River and Woodstock are close to Cape Town’s CBD and thus also attractive for development. Karol says it should be remembered that Woodstock and Salt River not only have industrial buildings but also established and tight-knit residential communities,
1 on Albert
which need to be “respected, and enhanced rather than removed”. One of Salt River’s latest microapartment developments is SALT, marketed by Seeff. On completion the development will comprise 184 oneand two-bedroomed units starting from 55.4m 2 priced between R1.29m and R2.23m. The Iron Works in Woodstock, also marketed by Seeff, offers rental units from 47m 2. Besides five floors of apartments, the development comprises one floor of retail space and three levels of parking.
Durban
While the demand for microapartments in Umhlanga is on the rise, Carol Reynolds, Pam Golding Properties area principal for Durban Coastal region, indicates that the market in the rest of Durban is harder to read. “It is still very much uncharted waters here. Given that KwaZuluNatal offers good value, homeowners have grown accustomed to generous properties,” she says. “I would imagine that as ticket prices increase and become unaffordable for first-time buyers, a concept such as microliving might be welcomed to enable newcomers into the market.” IP Global’s Radford notes that the microliving trend will grow. “As hotspot cities continue to attract those keen to be close to work, transport links, popular restaurants and the attractive rental yields these smaller spaces offer, the demand from the rental market translates into a trend that is only in its infancy.”
HOMEFRONT PROPERTY TRENDS
Heads up for change From residential changes to urban planning and development, here are six property takeouts for national application WORDS: MIRIAM MANNAK :: PHOTOS: SHUTTERSTOCK
S
hopping malls and business parks are out, large mixeduse residential developments are in and access to transport are forces driving SA’s next property boom. This was the message at the Western Cape Property Developers Forum 2018 conference in Cape Town last month. Key conclusions were: shopping malls as we know them are sliding into irrelevance and resource efficiency will become a bigger priority among endusers and investors. Convenience, access to public transport and improved mobility are having a knock-on effect. New opportunities exist in SA’s less-developed markets, from township property and the
repurposing of old office buildings to growing a nighttime economy. If industry commentators are to be believed, these six property themes are on their way:
1 Office demand is waning
Property economist Francois Viruly says developers in the Western Cape and elsewhere should keep in mind that demand for suburban business blocks, office parks and shopping centres is declining. This is because the way people live and work is changing. “Our economy has moved on because society has moved on, from people living in rural areas to people living in cities. And today we also live on and in the internet,” he says, noting that this too influences our built
“Redundant office buildings can be repurposed to provide accommodation” Neil Gardner, CEO, Gardner Property Solutions
environment. “The Urban Land Institute in the US has put out a fascinating study about where people will be developing. Suburban offices and business parks are at the bottom of that list. There is no value in the office sector,” says Viruly. The latest Office Vacancy Report April 2018 by the South African Property Owners Association confirms Viruly’s statements. The data show that SA’s national office vacancy rate stands at 11.5% for Q1 2018, just off the 12-year high of 11.8% recorded in mid 2017 and “indicative of the current low growth environment coupled with an excess supply”, according to research company MSCI.
2 Repurposing
Gardner Property Solutions
CEO Neil Gardner says that revamping old innercity buildings instead of developing new assets is a growing opportunity. The focus is not to knock down buildings and build new assets, but to repurpose them. “Redundant office buildings can be repurposed to provide accommodation,” says Gardner. “This was done with Mutual Heights,” he
says, referring to the former insurance company office turned apartment block in the Cape Town CBD. “If you have an office building that produces R100/m2 and you break it up into apartments of, say, 50m2, with rent averages of R15,000 a month for 50m2, you can yield R300/m2. Obviously, there is money to be spent in between, but with the office market dying
HOMEFRONT
“There will be a move towards new developments requiring features such as grey and dual water systems” Alan Winde, Western Cape MEC
this is a great opportunity.” In Johannesburg, Propertuity has led the redevelopment of the formerly derelict eastern fringe of the inner city into a thriving junction of residential buildings, art galleries, restaurants, boutiques and commercial spaces. This old-turnedfashionable regeneration area is known as The Maboneng Precinct.
3 Mixed use and low cost
Other property opportunities are logistics, warehousing, self-storage, student accommodation, retirement property and large mixed-use residential developments. Investors have been hearing this for a while. “That is where the global market is going,” says Viruly. “This is where developers see the value. In terms of mixed-use residential developments, we have to build at scale. This means large tracts of land need to be made available. There is serious money in the residential market.” Rabie Property Group director John Chapman says this is where mixeduse precincts such as Century City in Cape Town come in. “The success of
Century City is due to its certainty, probability and predictability. Rabie is building its most expensive residential development, The Axis, due for completion towards the end of the year. It has sold 65% of the development at between R40,000m2 and R56,000m2. “Last year a retired senior advocate from Johannesburg came to do some shopping at Canal Walk. He saw no litter, crime and grime, and it was green. He ended up buying seven units at The Axis and an office. That shows you the success of mixeduse developments such as Century City.” An untapped market is the low-cost and affordable residential market, which poses growing opportunities. “Rental stock in Khayelitsha yields 30% a year. This means we need to expand links with developers in the townships,” says Western Cape Property Developers Forum chairman Deon van Zyl. “Township property has a huge untapped potential.”
4 Transport and mobility
Public transport, mobility and connectivity will in part drive the next property boom. Viruly says there have been three property booms in SA. “The one
in the 1960s was driven by industrialisation. The 1980s boom was due to decentralisation and the car, and the 2005 property boom resulted from good economic growth. Public transport will be a major driving force of the next.” He notes the trend of living in city centres and that cars have become less essential. Gardner confirms this. “More people want to be carless thanks to services such as Uber and Cape Town’s MyCiti bus system,” he says. “We are involved in the facilitation of 1 on Albert, a block of microapartments in Woodstock. Some 50 units have been sold — but only 25 parking spaces.” Peter Ahmad, manager of Cape Town’s metropolitan spatial planning department, says future developments need to consider mobility and access to public transport. This makes sense for both people and the city’s economy. “There are 500,000 people in Cape Town who can’t access affordable public transport. This is hampering growth and development.”
5 Night-time economy
Viruly says helping to grow SA’s urban night-time
economy could be another untapped opportunity for the property developer sector. “When we say there are no opportunities, we say there are no opportunities after 5pm.” During a sabbatical Viruly travelled across Africa. “I was amazed by the night-time economy in Nairobi, Kampala and other places,” he says. The digital age will be one driver of such an economy, changing how, when and where people work, and with that the built environment. “As a result, standard working hours have and will become even less important.”
6 Resource efficiency
Resource efficiency, particularly from a water and energy perspective, will become a key priority. “There will be a move
towards new developments requiring features such as grey and dual water systems,” says Western Cape MEC for economic opportunities Alan Winde. “We need to redesign our cities and our developments, from roads and pavements to roofs, to facilitate the reuse of water, including storm water and rainwater.” City of Cape Town director of water and sanitation Peter Flower says resource efficiency must go beyond water-wise applications inside residential units. “We need to think of using fewer hard surfaces, allowing rainwater to seep into the ground and recharge our aquifers. We also need to use rainwater and storm water on estates.” Developers may have to use small onsite domestic wastewater treatment systems, says Flower.
HOMEFRONT CITY SNAPSHOT
Inner city hub The Cape Town Central City Improvement District has just released its State of Cape Town Central City Report 2017, offering a snapshot of property movements in a defined area of Cape Town’s CBD. If proposed projects go ahead, an estimated R23.954bn will have been committed since January 2017 PHOTO: CTICC
1,048,023m²
— total commercial (office) space in the Central City.
9.9% — office vacancy rate in Q4 2017. 268,239m² — total retail space in the Central City. 7% — retail vacancy rate in Q4 2017.
VALUE OF CENTRAL CITY PROPERTY
HOTELS AND EXHIBITION SPACE
R30,628,149,724 — total 2016-2017 municipal
STUDENT ACCOMMODATION
nominal property valuations in the CBD from the City of Cape Town’s most recent property evaluation.
60 — establishments in the CBD ranging from hotels to budget/backpacker venues.
With 84 educational establishments in the Central City and only eight CBD buildings providing student accommodation, demand for affordable accommodation is extremely high. Monthly rentals range from R3,550 for a shared double room to R7,750 for a studio apartment.
R3.548bn — value of property (conservative
5,300 — Cape Town’s estimated
estimate, not officially assessed) opening its doors in the Central City during 2017.
total bed capacity, after three new hotels opened in the Central City. It increased from about
COMMERCIAL AND RETAIL SPACE
R4.55bn — value of property (conservative
4,600 beds (end 2016).
estimate) under construction.
2017 — Cape Town International
R1.63bn — value of property (conservative
Convention Centre opened the CTICC 2 east wing.
estimate) in planning phase.
31,148m² — space added to existing 109,707m² available within CTICC 1.
R14.226bn — value of property (conservative
RESIDENTIAL SPACE
estimate) proposed to begin construction by 2020.
59 205
residential complexes in the Central City.
units sold (transferred to owners) during 2017.
MULTIFUNCTIONAL SPACES
R41,287/m²
Prediction: Retailers in downtown areas such as the Central City will increasingly become multidimensional environments.
average m² price transferred during 2017.
R2,768,806
average unit price transferred during 2017.
51.92m²
average unit size transferred during 2017.
Water Cape Town’s water crisis has forced companies to find alternative water sources. A prime example is ground water that seeps into the basement levels of buildings, and normally collects in underground sumps. Once the sumps are full, the water is released into the storm water system and lost out to sea. This water
has now been flagged as an asset to be used.
CASE STUDY Reusing basement water: The Towers, Hertzog Boulevard During a recent upgrade of The Towers building by Redefine Properties, the reuse of basement water was incorporated into various systems. The Towers collects between
90kl and 100kl of basement water daily, for use in the building’s ablution facilities and air-conditioning system. There are 4,500 employees. In addition to reusing basement water, the building harvests rainwater on its parking deck. The payback for the business was three years (excluding the building’s sewage costs).
CAPE TOWN’S WATER USAGE IN NUMBERS
64.5%
residents of houses, flats and complexes.
12.8%
retail and offices.
4.2%
industry.
3.6%
residents in informal settlements.
HOMEFRONT PROPERTY NEWS
New headquarters for Barloworld Logistics
W
ork has begun on the new headquarters of Barloworld Logistics in Irene, south of Pretoria. Barloworld will vacate their Sandton offices to occupy the site, a mixeduse precinct named Irene Boulevard, developed by Abland with Giflo Developments and architectural services company Skidmore, Owings & Merrill. Abland says the precinct will comprise a lifestyle and 16,000m² shopping
centre. Barloworld Logistics headquarters will be a four star green-rated building. It will make up 5,500m² of the property. “We broke ground mid-March 2018 and are aiming for completion of the Barloworld Logistics headquarters in April 2019,” says Abland development director Thinus Delport. The mixed-use precinct on Alexander Road just off the Botha Avenue interchange is close to the N1 highway. There are
plans for a Gautrain station in the vicinity. “Barloworld Logistics’ new headquarters is a physical embodiment of our vision for the company — modern, future-focused and fit-for-purpose,” says CEO Kamogelo Mmutlana. Abland says phase two of the development will begin in Q3 2018. This will offer retail and lifestyle amenities that include a leading national grocer, new and existing restaurants, and beauty and health facilities.
Townships hold off on e-commerce
W
hile the global perception is that e-commerce is causing the biggest disruption to retail, the township market in SA is reacting differently. Lemok Group founder Lebogang Mokubela says the biggest disruption from a township perspective is a shift in power. The township consumer is now more educated and more aware of buying decisions — “and therefore, the power now lies with them”. Mokubela told delegates at the 2018 South African
Council of Shopping Centres annual research conference in Sandton that most of the township market is reluctant to make online transactions, partly due to security concerns. “Most importantly, this market is big on instant gratification — they want to buy something and get it now, which e-commerce does not provide as an option. “In the beginning it was about promotions and tenant mixes, but these days, despite the promotions, consumers do
not buy. Bringing a cash and carry into your mall is not the answer. The point is to build initiatives and spaces that give consumers a real reason to come,” Lebogang said. Speaker Steven Burnstone, Eighty20 Consulting CEO and head of analytics, highlighted the importance of loyalty programmes in retail. “Partnering with the right brands offers customers a sense of added value by providing tangible incentives such as fuel discounts.”
Western Cape estate lures younger investors
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rabella Country Estate near Hermanus is attracting renewed buyer interest, especially from younger families. Mike Bisset, Pam Golding Properties branch manager at the estate, says it remains one of the most sought-after in the Western Cape. This is thanks to a 44% house price appreciation between 2010 and 2017,
a wide range of sporting attractions include a topranking championship golf course and the introduction of fibre optic cable. Other features include floodlit tennis courts, a children’s playground, a putt-putt course and jogging paths. “Arabella is certainly no longer viewed as a lifestyle estate solely for the older resident,” says Bisset. However, Arabella remains
a popular choice for mature investors. Lightstone property data show that almost 60% of buyers in 2017 were between the ages of 50 and 64. Homes on the luxury estate are four- and fivebedroom properties in the R4m to R9m price range. Recent sales by Pam Golding Properties include two homes, one for R8.2m and the other R7.9m.
Australia named safest country for women
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ustralia is the safest country for women globally. A report from AfrAsia Bank and New World Wealth has found that the next four safest countries
for women are Malta, Iceland, New Zealand and Canada. The AfrAsia Bank Global Wealth Migration Review 2018 says most countries in the top five are popular
destinations for migrating high net worth individuals. Also, most have undergone strong wealth growth in the past 20 years. The safest countries
for women in Africa are Mauritius, Botswana and Namibia. The report finds that big European cities such as London and Paris have over
the past few years become less safe for women. The least safe countries include Somalia, Sudan, Iraq and Syria. Notably, most of these markets have
performed poorly in terms of wealth growth over the past few years. Of the world’s 195 countries, the report says only 58 have reasonably reliable crime statistics.
HOMEFRONT
COMMERCIAL
Business as usual? Investment in the South African commercial real estate market reflects new confidence in developer activity in spite of a slowdown in 2017 WORDS: MICHAEL VAN OLST :: PHOTOS: SHUTTERSTOCK
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ommercial real estate is shaping up to be a solid option thanks to new developer confidence in industrial, commercial and retail activity, and a more stable investment climate. A recent report by real estate consulting firm Jones Lange LaSalle (JLL) showed SA is coming off a low commercial property base for 2017. The JLL 2017 investment review says the improved political climate in 2018 has swung investor sentiment. “We are certainly moving into a climate where commercial real estate remains a solid option,” says JLL head of research for SA Zandile Makhoba. Commercial property is also showing signs of picking up. “Market sentiment has definitely improved in 2018, with both occupier and investor demand on the increase with all major centres showing signs of
growth,” says Pam Golding Commercial Africa MD Mark Latham. While performance in the sale of existing assets was lacklustre in 2017, JLL says it would be remiss to interpret this as a lack of confidence from investors, who are interested in large-scale greenfield developments such as Aeroton Business Park in Gauteng. Instead of acquiring existing assets, investors are building hi-tech projects from the ground up and in some cases are catering to the specific requirements of pre-let occupiers.
BUOYANT Tongaat Hulett Developments commercial head Chris du Toit confirms there has been buoyancy in the market. “We have seen an increase in demand with commercial inquiries in the past two to three months in KwaZulu-Natal, particularly in the Cornubia
“We are certainly moving into a climate where commercial real estate remains a solid option” Zandile Makhoba, head of research for SA, JLL
HOMEFRONT and Ridgeside, Umhlanga, projects. “While Tongaat Hulett sells only greenfield developments, we can say that between 70% and 80% of our clients build for tenant occupation. In most cases the developer has already secured and sold to the end-user before our transaction is even complete,” says Du Toit. “Overall, 2018 is seeing an end user-driven demand in the commercial property market.” Latham says the emergence of new areas such as Brackengate Business Park in Brackenfell, Cape Town and Cornubia in KwaZuluNatal are generating strong investor demand from occupiers requiring modern industrial warehousing and logistics facilities. “This is, however, at the expense of older industrial areas which run the risk of obsolescence due to ageing stock, infrastructure and lack of land for new development.”
OFFICES The JLL review says South African Property Owners Association figures show the national office development pipeline is estimated at 690,000m 2 . Similar trends are visible in the retail and industrial sectors. The R5.8bn-worth of new office buildings completed in 2017 highlights the increased demand for new higher-quality office accommodation over existing stock, says Makhoba. Latham says demand for premium-grade office space should continue across all major markets, in line with economic recovery. “In Johannesburg we are
seeing strong demand in the Sandton CBD and Waterfall markets, in Umhlanga in KwaZuluNatal and in the V&A Waterfront and Southern Suburbs in Cape Town.” Latham says these areas are seeing rental growth corresponding to the increased levels of demand.
FLEXIBLE SPACE Global office space provider Regus is soon to open its second business centre in Westville, Durban, to cater for a growing need in the area for flexible work space. Located in Pharos House, the centre will offer co-working spaces, meeting rooms, virtual office space and furnished offices. The development will supplement Regus’s current Westway Office Park Centre. The JLL review points to a growing interest in both nontraditional and foreign property assets. Reits that are usually active in the office, industrial and retail space showed greater interest in student housing, residential accommodation and hotels. Several South African Reits also invested in or considered opportunities in Europe, Australia, the US and other parts of Africa. Chief development and investment officer Rudolph Pienaar says the main long-term investment focus for Growthpoint Properties remains retail, office and industrial property. Growthpoint recently announced its intention to launch Growthpoint Healthcare Property Holdings Limited, which is a property investment fund focused on healthcare assets such as hospitals. The company says it
“Market sentiment has definitely improved in 2018, with both occupier and investor demand on the increase with all major centres showing signs of growth” Mark Latham, MD, Pam Golding Commercial Africa
will raise capital from institutional investors and aims to grow the fund to R10bn in assets. A pan-African real estate investment business named Growthpoint Investec African Properties (Giap) recently began operations in select cities across Africa. Giap will invest in incomeproducing commercial real estate assets across the continent. The venture with Investec Asset Management, in partnership with the International Finance Corporation
and several institutional and international investors, has secured capital commitments in excess of $212m from several institutional and international investors, with Growthpoint committing $50m. Diversified property group Fortress Reit plans to grow its logistics-focused properties to two-thirds of its total portfolio by 2020 as it forges ahead with new developments worth a combined R1.5bn. The Johannesburg-based
Reit owns 100 logisticsfocused properties, comprising about 42% of its total portfolio. “All our logistics facilities are state-of-the-art structures. Offering the latest facilities allows our tenants to maximise efficiencies,” says Fortress CEO Mark Stevens. Fortress believes logistics and rural retail spaces offer the best opportunity. “This is a reflection of where we envisage growth in the foreseeable future,” says Stevens.