Highrise

Highrise Take your investments to new heights

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Property The hottest aparthotels to invest in right now

Investment

Lifestyle

Use your would-be tax money to buy property with government’s Section 12J incentive

Interior design updates that add value to your investment property

THANK YOU SARS

USE YOUR TAX TO INVEST IN YOUR LIFE AND YOUR FAMILY.

USE THE QR CODE TO SPEAK TO ONE OF OUR INVESTMENT CONSULTANTS.

welcome to the first edition of our property and investment magazine, Highrise, where we show you how to use your tax to make smart investments.

Are you ready to save a massive amount of tax while investing in an asset class of your choice, while making a real difference to the future of our country?

The Anuva team is dedicated to creating prosperity for investors, entrepreneurs and the country as a whole. We enable tax payers to take advantage of government’s generous Section 12J tax break by investing in South Africa’s promising entrepreneurs and businesses. It’s our area of expertise.

Highrise has been specifically curated to share our knowledge of the Section 12J sector with you and to show you how you can take advantage of the unique opportunities this incentive provides. In the coming pages, we will tell you everything you need to know about Section 12J and the various possibilities this incentive opens up to South African taxpayers.

We also unpack our Anuva Equity Fund portfolio of companies including where and what to invest in, and we explain how the SARS Section 12J incentive works and what it costs the fiscus.

Neill Hobbs Chief Executive Officer Anuva Investments neillh@anuvainvestments.co.za

My personal passion is job creation and this is how we can really change the future of this nation; a future we can create by our actions today. By investing in Section 12J, you are investing in small or medium-sized enterprises and creating jobs. In doing so we are in fact stabilising this country and taking away the threats of unemployment and poverty.

I hope to share this passion with you as you enjoy our first issue of Highrise.

Neill

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welcome to the first issue of Highrise, our new magazine dedicated to illuminating how you can cut your tax bill while investing in property and other asset classes.

If you are serious about making the most of your hard-earned money and looking for intelligent and innovative ways to increase your asset base, Highrise is for you.

In this edition, we show you how to get a massive tax break while climbing the property ladder with SARS’ Section 12J incentive. You will also learn about our various aparthotel investment opportunities in and around Cape Town utilising the Section 12J tax break and see how commercial city spaces turned into short-term accommodation solutions become profitable long-term prospects. And, that’s only for starters.

Who we are: Flyt Property Investment is a Cape Town-based property development and investment team committed to finding opportunities that challenge the status quo. With a proven track record since 2011 across all property sectors, Flyt is dedicated to shaping the landscape, elevating the city, and connecting businesses for progress while setting the benchmarks of tomorrow.

Our passion for the Section 12J tax incentive as a unique opportunity to save money and procure property is clear in all the stories and articles we have put together for Highrise.

I hope you share in our excitement!

Zane De Decker Managing Director Flyt Property Investment zane@flytproperty.co.za 079 525 1045

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Enjoy Highrise and I look forward to being in touch.

Zane

contents property

06

Start your aparthotel journey here with our newly launched WINK Aparthotels, our view on short-term lets and why small is the new big.

investment

12

Learn about Section 12J specialist fund manager Anuva Investments and how they help you to save tax and make money by investing in successful, small businesses.

lifestyle

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A showcase of brilliant architecture, the latest home office design trends and value-adding renovations.

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A WORD FROM

Andrew Friedmann Head of Anuva Investments’ new Affiliate Programme

Section 12J of the Income Tax Act was introduced in 2009 to encourage South African taxpayers to invest in local small businesses, and, in turn, receive a 100% tax deduction on the amount invested. While Section 12J investments have received much attention with South Africans having invested over R10 billion into the sector to date, there are still many people who are unaware of the enormous benefits this tax incentive offers.

Welcome to Highrise, a uniquely South African overview of the property, tax and investment landscape punctuated by feedback and insights from those in the know in the financial sector and property industry.

Anuva Investments and Flyt Property via their high-performing Section 12J funds in equity, income and property, are playing a significant role in the rebooting of the South African economy – creating employment opportunities and saving businesses, along with facilitating the significant tax benefits to investors that Section 12J offers. By engaging with tax practitioners, fund managers, wealth managers and accountants, via our Affiliate Programme, we hope to make this extraordinary opportunity more widely-known and accessible to South Africans.

This presents real opportunity for our affiliates to elevate their clients’ tax strategy based on their risk profile, and reduce their income tax liability, using one of our three Section 12J investment funds to save significant tax and put their clients’ hard-earned money into tangible, reliable investments.

This magazine and our website clearly outline and explain the workings of our 12J offerings, more about the funds that are available and the various developments within our portolio – the benefits and prospects are hard to ignore.

Why wouldn’t you want your clients to eliminate their tax bills, knowing their money is going towards a responsible, stable investment that will afford them great returns, and in the process help to create jobs, alleviate poverty and unemployment, and bolster the economy?

Time to get with the programme, the Affiliate one, that is!

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AFFILIATE TS

N

AN

ONS OMSKEP JOU KLIËNTE SE U BELASTING IN V E A M T I NVES WINSGEWENDE BELEGGINGS.

WE TURN YOUR CLIENTS’ TAX MONEY INTO LUCRATIVE INVESTMENTS.

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property

A towink the future 6

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Flyt Property Investment recently launched an innovative new hospitality group, WINK Aparthotels.

The talk on the hospitality street is all about how the industry is going to adapt to the new normal. While our borders are open, analysts expect a slow recovery in international travel, making the domestic market a key driver in hospitality recovery. Which begs the question what is the post-COVID guest - both local and international - looking for in terms of accommodation?

An upside of the lockdown is that it has allowed for some re-thinking and re-invention from the hospitality sector – behind closed doors much has been deliberated and carefully considered and, despite the odds, the industry has rallied and risen from the ashes – they are ready to open their doors again and offer the excellent service that has become synonymous with the hospitality sector in South Africa.

Enter WINK Aparthotels, an exciting new hospitality group launched

by Flyt Property Investment, who have pooled their existing and ever-growing property portfolio into a hospitality offering that ticks all the boxes in terms of innovation, functionality, affordability and accessibility, perfectly positioned to offer short- and long-term accommodation solutions in Cape Town.

Zane de Decker, MD of Flyt Property Investment, says that their offering aims to provide guests with the convenience of apartment living combined with the luxury and comfort of a hotel. “Pre-COVID we already saw a turn towards aparthotels, self-catering apartments and Airbnb type accommodation – more and more people are opting for aparthotels versus full-service hotels as they prefer that homeaway-from-home atmosphere which allows them more flexibility, privacy and/or a fully-serviced option.”

WINK Foreshore and WINK Eaton Square in Cape Town’s Southern Suburbs both feature fully-furnished, self-catering apartments and studios with kitchens and kitchenettes for short- and long-stay rentals.

A meal delivery service is available to guests and tenants, as well as a daily or weekly cleaning service in line with National Health and Safety requirements. There is fast, stable Wi-Fi connectivity and on-site facilities include a concierge and innovative common areas, along with the newly launched WINK Café that is open throughout the day for a healthy fix.

Head of Hospitality, Lauren Barnard says that they have created a bespoke, contemporary accommodation solution that caters to domestic and international business and leisure travellers, digital nomads and migrant workers: “There is something for everyone.”

A third aparthotel, Quivertree, will open in Stellenbosch soon. Watch the press for the latest news on Quivertree, Flyt Property’s exciting new addition to the WINK fold.

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Short-term lets

Flyt incorporates attractive lifestyle amenities in student accommodation and apartments for shortterm lets, presenting both investors and lessees with new opportunities.

THAT MAKE LONG-TERM SENSE WORDS Heléne Meissenheimer

South Africa had a big shortfall in affordable student accommodation even before COVID-19 – in 2013 the Department of Higher Education & Training (DHET) found a shortage of at least 300,000 beds. Despite government’s allocation of billions of Rands, it was estimated that the deficit would take at least 10 years to overcome.

During the lockdown students adapted to learning remotely. A lack of internet access and stable electricity supply made this a challenge for many. That is why full-time online tertiary education is not the firstchoice for many South African students. In addition, lockdown-related loss of income has had an impact on accommodation affordability with implications for the future design of these facilities.

PANDEMIC PRO-ACTION COVID-19 has caused a review of student housing design as reduced student densities and communal amenities with less contact have to be considered.

Residences offering online study is essential as are fibre and Wi-Fi, charging stations for devices and free, uncapped internet.

Sharing a rental apartment is another popular choice among students and other young people. Urban rental apartment communities in key suburbs throughout the country offer excellent investment and affordable, flexible rental opportunities, says Flyt Property Investments Development Manager, Sebastian van Greunen.

TAX BREAK Investing in a well-designed unit near a tertiary institution can deliver

excellent return on investment either as quality student accommodation or a co-living short-term rental option.

Investments into these types of developments could also qualify for a substantial tax break via the SARS Section 12J initiative, provided they meet the qualifying criteria. The minimum investment is R1m, which has to be held for at least five years. Investors can invest their own cash or opt for a financed product such as Flyt Property Investment developments, which include WINK at Eaton Square in Diep River.

Investing in one of these Flyt’s developments affords up to a 100% tax reduction plus a rental yield guarantee for the first two years of 6.5% after costs (including rates and levies).

LONG-TERM BENEFITS During lockdown, student accommodation providers suffered financial losses. It will take time to recover, as most tenants can’t afford rental increases now.

Yet, with the number of students in South Africa increasing, good quality accommodation will always be in demand.

So investors can be sure of a good tenant supply.

SECTION 12J FUNDS 101

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WHAT IS SECTION 12J?

HOW DOES IT BENEFIT THE INVESTOR?

Section 12J of the Income Tax Act is a SARS initiative introduced by the government to incentivise and stimulate investment in businesses that create jobs and grow the economy. t is currently set to expire in June 2021.

By investing in a registered Section 12J entity, investors can reduce their taxable income by the full value (100%) of their investment, reducing their tax liability. This means SARS will finance up to 45% of the investment, depending on the investor’s marginal tax rate. Anyone is eligible: individuals, trusts and companies.

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big

SMALL IS THE NEW

property

Marie Kondo, the organisation guru, showed us that living with less stuff can bring more happiness. No wonder the tiny home movement is on the rise.

A growing demand for accommodation in South Africa’s urban areas is seeing a concomitant growth in the market for compact, well designed environments. The benefits of smaller apartment living are escalating in attractiveness to countless homeowners and tenants.

LOCATION & PRICE The estate agent mantra – location, location, location – rings true, and properties are priced accordingly. Replacing a large single family home with several smaller apartments allows for more people to occupy well positioned property in cities, places that would otherwise be priced out of reach. This means better access, for many more people, to services and amenities that cities offer.

COST OF LIVING & MAINTENANCE Having less to take care of equates to spending less. This rings especially true for apartments for which utility costs are lower. Building insurance and maintenance costs, also much lower than for single family homes, are covered by levies.

Apartment buildings typically have caretakers on site to handle all those nuisance maintenance tasks that erode our weekends.

SECURITY Apartment buildings generally have better

Sebastian van Greunen, Development Manager at Flyt Property Investment

access control and CCTV surveillance for the property as well. Many new developments even employ manned security for an extra level of protection not found in traditional housing. More occupants and activity in close quarters also mean less opportunity for would-be criminals.

AMENITIES & SENSE OF COMMUNITY Living in closer proximity to others brings people closer on other levels.

Apartment living typically includes common facilities such as swimming pools, gyms, braai entertainment areas and laundry facilities. These are locations where we mingle and meet others, cultivating friendships.

ENVIRONMENTALLY FRIENDLY Doing our bit for the planet is imperative. Denser living allows more of us to share the same infrastructure, reducing urban sprawl. Living in smaller environments also reduces consumption, thereby minimising waste generation.

BETTER INVESTMENT All the reasons above are making small spaces a much more attractive option for an enlarging sector of our population. With a higher demand for property, we can be more selective about our tenants and achieve a better rental return while facing only minor, more contained maintenance issues.

PEACE OF MIND Peace is hard to quantify but very valuable. Mies van der Rohe famously stated “less is more”. This is true in life and property. Having less space allows us to focus on other more enjoyable things lofe has to offer. Living lock-upand-go lifestyles means you can go on quick getaways with less planning.

We have more freedom to spend when there are less finances sidelined into a property.

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CO-LIVING AS A POST-COVID-19 RENTAL SOLUTION WORDS Sebastian van Greunen

Co-living, a relatively new form of global accommodation, may just be the innovative model we need for a new way of living - one that’s affordable, accessible and functional.

Although one might conjure up visions of the hippie-type seedy communes of the 1970s, modern co-living brings a smart and appealing solution to a new-found, progressive property market, be it for investor or resident, and particularly now, for tenants who find themselves unable to honour their rentals during the COVID crisis.

I think we should see this upgrade of communal living enjoying a re-surge of popularity in South Africa, providing a postCOVID living option which will also bridge the gap for urban residents looking for homes that provide secure micro-spaces, shared living areas and common spaces at affordable prices, as well as providing slightly larger private areas for independent living too.

Ironically, whilst we live in a connected world, there is a feeling of isolation - social distancing, if you will, and as such young professionals, millennials, digital nomads, creatives entrepreneurs and students are moving towards accommodation that embraces a sense of community and a shared economy, but in a safe haven. This concept also works well for remote workers looking for temporary, short-term accommodation or a few nights a week when in town on business. These ‘global citizens’ are looking for a place that feels like home, which is private and cultivates a sense of security, that creates continuity in terms of community, while also being inclusive.

There has definitely been an increase in rentals in the co-living space, with millennials representing the largest share of the market – their particular, flexible lifestyles of living, working and playing, shaping the industry as a whole, followed by the aging population whose rising healthcare costs are nudging them to consider the co-living model too.

You’ll find these urban rental apartment communities popping up in key suburbs throughout South Africa, providing excellent investment and rental opportunities that are affordable and flexible.

These well-designed models, like Eaton Square in Cape Town’s southern suburbs for instance, deliver innovative common spaces, restaurants and coffee shops, and compact, efficiently designed apartments which have their own kitchen and living areas.

Additionally, flexible rental options allow residents the freedom to choose how long they wish to stay, whether it’s a few days, a few months, or longer; and the fully-serviced aspect allows for ramped-up hygiene and sanitation standards, along with more frequent and improved housekeeping and cleaning practices.

Across all age groups, this co-living concept will prove to be a popular option which, along with affordability and the latest technology, will soon become the real estate investment preference in alternative living.

In a fast-paced world with a constantly changing landscape, co-living provides the perfect “plug & play” model so that you can afford to pay your rent, and get on with living. We may even throw in a free coffee!

property

Ryan Flowers unpacks owning vs renting a property in postlockdown South Africa.

In the wake of, and - I hate to use the C-word (AND in shouty capitals) – the COVID pandemic, the property market at large, much like the rest of the economy, has taken some serious strain. So, where does this whole situation leave tenants and prospective buyers - should you keep renting or should you be looking at owning a buy-to-live property right now?

Even in a stable market there is often debate around this topic and the answer is not so cut-and-dried. That said, the current state of affairs, believe it or not, does present some real opportunities for those on both sides of the fence.

A BUYER’S MARKET Hat’s off to the Reserve Bank which has cut the prime interest rate to 7.25%.

This low interest rate environment (likely to persist for at least another three years) gives direct cashflow relief and interest savings to those with home loans. This mean improved affordability for new homeowners, making it cheaper to own a home or afford something previously out of reach.

To quote a crazy old property economics lecturer of mine, “You make money when you buy property, not when you sell it”. Given the current market and the low repo rate, it couldn’t be more apt, with the present situation lending

knocks

OPPORTUNITY

itself to making good buying decisions that will increase the prospect of capital growth in the future. Furthermore, you are getting good value for your buck, with a well-priced, bigger property pool to choose from (with a pool, nogal!).

THERE AIN’T NOTHING GOING ON BUT THE RENT Understandably both landlords and tenants are worried about the coming months, perhaps even years. Although some respite has come in the form of reduced bond repayments, there has been a definite shift in the rental landscape. Flexibility has become a necessity when it comes to rental payment plans with existing tenants as hanging on to good quality tenants becomes the name of the game.

However, the drop in the repo rate means bond repayments have come down enabling landlords to reduce their rentals for existing tenants (albeit a short-term necessity), which is also fortunate for people seeking new rental opportunities who can possibly negotiate on rentals during this time. Some landlords may even consider foregoing deposits to help pave the (path)way, provided tenants tick the necessary boxes when it comes to affordability and credit-worthiness.

What’s important now is for landlords and tenants to communicate with each other and be open to a different approach – to try and reach a mutually beneficial occupational / lease agreement.

WHEN OPPORTUNITY KNOCKS Ryan Flowers, Fund Manager at Flyt Property Investments

This unique boiling-pot of macro-economic factors is enough to give one a Corona-ry but take a deep breath and clear your mind, because it actually presents a real opportunity for those looking to take their first step onto the property ladder - not only is there opportunity for buying well, it is also more affordable than ever to do so. And, if owning a property is still not within your means then plot a sustainable way forward with your landlord now.

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INVESTING FOR

healthy returns

Anuva’s Section 12J fund injects R20m into a company providing COVID-19 health products.

Anuva Investments has come to the rescue of health and wellness product manufacturer Biodelta, through a R20m capital injection. The company, which produces and distributes health and wellness products, has since the outbreak of the pandemic become a crucial supplier in the fight against COVID-19, extending its product range and manufacturing focus to deliver much needed COVID-19 key products. Virus test kits, three layer surgical masks, sanitisers and immune booster supplements have now been fasttracked in their production output thanks to the capital advanced to fund the worldwide critical short supply.

The timeous investment has provided the working capital to implement dedicated production lines to cope with the additional volumes of the COVID-19 key products while non-key offerings have been scaled down.

“Not only are we keeping our staff employed during these trying times, says Biodelta CEO Leon Giese, “but because we are gearing the factory up to increase its output 10 fold, we will be employing additional staff and will be working three shifts on some of the lines.” The company is set to produce 100 000 litres of hand sanitizer per week, 20 tonnes of Vitamin C per month and provide 3.5 million surgical masks.

CEO of Anuva Investments, Neill Hobbs says that the investment is a credit to the Section 12J structure and a supreme example of how taxpayer money has been used to respond rapidly to the needs of our country and its people.

By weighing in with a smaller pharmaceutical company and boosting its capacity in producing the products the country needs right now, is arguably the best socially responsible thing to do for any South African in the current climate. Potentially, millions of lives could be saved through this initiative.

Biodelta has also undertaken to distribute ten percent of the production volume to the most vulnerable communities at no charge and there is an emphasis on fast-tracking distribution to facilities for the aged, medical and care workers. The IDC’s disaster relief effort has been pivotal in the distribution of the products to these recipients through non-governmental organisations such as Gift of the Givers.

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investment

In bed with SARS

- MAY BE COMPLICATED, BUT IT’S MIND BLOWING

Feel a little cheated by SARS? Know this: Government has encouraged investment and stimulated job creation by introducing some forward-thinking tax incentives.

Delving into these incentives with a few noteworthy bean-counters has been a revelation for me as an investment specialist. I’ve been left astonished, and questioned our findings as they slotted into the “if it sounds too good to be true, it probably is” bracket.

But as you will uncover below (if you’re like me you may have to read a few scenarios twice) we’ve taken what’s on offer and put all the possibilities in bed together. The result could be described as orgasmic, but we won’t go that far.

GOOD OLD SECTION 12J If you haven’t heard about Section 12J investing, you’ve been living under a rock (not a lock). So for those rock-spiders out there, Section 12J of the Income Tax Act was introduced in 2009 to encourage South African taxpayers to invest in local companies and receive up to a 100% tax deduction on the value of their investment. You read that correctly - 100%! That means, if you purchase a unit via a Section12J fund - let’s work on a purchase price of R1.8m - you can be refunded by SARS as much as 45% of your investment amount (depending on your tax bracket). On a R1.8m purchase, that’s R810k saving as you walk through the door.

HOW DOES THAT WORK, YOU ASK? The investor gets a share and tax certificate, allowing the invested amount to be deducted from the investor’s taxable income, in the year the investment is made. To date, South Africans have invested an estimated R10bn into the Section 12J

VAT REFUND VIA SHORT-TERM LETTING STRUCTURE The short-term letting aspect of our fund is structured to claim the VAT back on the purchase price of the unit. So, if you pay R1.8m for your unit, the holding company in whose name the property is purchased via the Section 12J fund, will qualify for a R235 000 VAT claim, resulting in a total purchase price of R1 565 000.00. Easy as that.

SECTION 13QUIN 13quin, the twin sister of the much talked about 13SEX (which has done the rounds in the residential property space), allows 55% of the purchase price of a commercial unit to be written off for tax purposes. It’s broken down into 5% per year for 11 years, but, in total, this is a significant saving. Say, for instance, you purchase a unit at R1 565 000, R78 000 of that can be deducted per year for 11 years. But if you make the most of the tax savings available when you file your tax return, LEGALLY, R78 000 per year (based on the purchase price of R1.5m) qualifies as tax-free income. If you’ve financed the investment via a bond, you can also throw in your interest paid on your bond.

Let’s assume achieving a conservative 6.5% rental income on the unit for the first year, which equates to roughly R100 000. Now you have probably bonded the property at 70% (R1.26m) which means an interest expense of around R90 000. So your profit for the year is R10 000. Under normal circumstances, you would have to pay tax on the R10 000 profit. But now in this clever Quin set up, you have another R78 000 to write off, which brings your “income” to a R68 000 loss (without losing) and that’s just in the first year. If you continue with the calculation at a 6% annual inflation, you essentially will not be paying tax on your property investment for 13 years. And that’s just the Mighty Quin side of things; need I remind you of the Section 12J upfront refund?

sector.

Purchase price:

R1.8m

Section 12J tax saving:

R810K

VAT Refund:

R235K

13quin:

R860K (over 11 years)

Total tax benefit:

R1.905m

Look it this way: up to 45% of your invested amount is an upfront tax saving; then, you get a 15% VAT refund on your purchase price; and finally, 13quin gives you 55% tax-free earnings, granted over a period of time. But time flies when you are having fun.

Zane De Decker MD Flyt Property Investment

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Section 12J a lifeline for the hospitality and tourism industry The tourism industry, which pre-COVID represented 9.8% of South Africa’s total workforce, has been the worst-hit sector as a result of the national lockdown that was instituted after the pandemic hit our shores.

The Tourism Business Council of South Africa (TBCSA) issued a report earlier this year showing that by May 2020 more than R68 billion (about US$4 billion) had been lost in tourism revenue and that as many as 600 000 job losses had been reported due to national lockdown. The closure of restaurants, B&Bs and hotels is becoming increasingly ubiquitous as the tourism and hospitality industry finds itself on its knees.

Government’s COVID-19 tax relief measures dried up almost overnight and insurers skirted business interruption claims, leaving many businesses in this sector with nowhere to turn for assistance funding. Fortunately, for those ‘in the know’, there has been an unsung hero picking up the pieces and providing not only a glimmer of hope, but also solid funding for projects to continue or for businesses to remain trading. Section 12J, government’s tax incentive introduced in 2009 to stimulate job creation, has been the reason that many a hotel employer has remained, not only able to re-open their doors and keep a workforce employed, but, more importantly, to continue with development projects that without funding would have come to a halt.

Section 12J incentivises tax-paying investors by offering a 100% income tax deduction on the money invested into qualifying venture capital companies. The hospitality sector is included as a qualifying sector in which these funds may be invested.

According to Neill Hobbs, CEO of Anuva Investments, of the R9 billion invested in the Section 12J sector, R2 billion has reached the hotel-keeping sector via Section 12J investments.

Anuva Investments, through their partnership with the Flyt Property Investment’s Hospitality Fund, has invested R157 million into their Section 12J hospitality fund which recently facilitated the

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launch of hospitality group, WINK Aparthotels.

The launch of WINK’s two Cape Town properties, WINK Foreshore and WINK Eaton Square, has created jobs for an entire new team of hospitality, marketing and sales professionals, many of whom had lost their income earlier this year. Hospitality Manager Lauren Barnard says that 13 new positions have opened up in the group in the last 6 months with an estimated additional 25 vacancies expected to become available as the business continues its growth projection.

According to research from PwC, for every R1 invested into tourism, an additional R1.26 of GDP activity is generated, and for every R1m invested into the sector, 7 jobs are created. Hobbs emphasises that “the Section 12J tax incentive has never been more important as South Africa attempts its economic recovery.” Hobbs urged high-net-worth taxpayers to consider the 100% tax break given to investors in a Section 12J fund as a lifeline for the vitally important tourism sector.

ABOUT ANUVA INVESTMENTS One of the country’s first and most established Section 12J funds, with an outstanding track record since inception, Anuva Investments is an FSBregulated and FAIS Act-compliant Venture Capital Company, formed in 2014 by a combined team of tax and investment specialists. Anuva invests in smalland medium-sized companies where the opportunity exists to significantly enhance profitability through a management involvement process. Higherrisk investments are balanced by investments into well-established businesses with proven profitability and stable cash flows.

The positive cash flows that result from a well-structured VCC investment are unmatched. The investor can potentially receive a full tax deduction on the funds invested as well as substantial dividends from the investment on an ongoing basis. An investment in Section 12J carries no personal tax risk for the investor.

investment

PAYING IT

forward

An investment in Flyt Property’s 12J fund creates new jobs in the face of a gloomy economic forecast.

Flyt Property Investment’s Hospitality Fund is more than just a tax break, it’s an opportunity to stimulate South Africa’s struggling economy and participate in Government’s policy of job creation – a worthy and important challenge as the country attempts to recover from the economic impact of the COVID-19 pandemic and subsequent lockdown.

Flyt’s 12J Investment Fund has successfully followed through on its promise of job creation with the launch of its WINK Aparthotels, a new, modern hospitality group brand based in the Mother City that provides travellers and guests with the convenience of apartment living combined with the luxury and comfort of a hotel.

To date the company has launched WINK Foreshore in the Cape Town city centre and WINK Eaton Square in the leafy southern suburbs, along with two stunning in-house WINK Cafes. Not only has this created a new experience for guests seeking to enjoy all that Cape Town has to offer, it’s also created jobs for a group of new employees who cover everything from marketing to sales and making delicious cups of coffee.

THE IMPORTANCE OF JOB CREATION

WINK Foreshore duty manager Evan Sampson

For every R1m invested in a 12J fund, 4.1 jobs are created, an incentive that is even more important in a pandemic year that has seen South Africa’s economy shrink by an annualised 51% in the second quarter.

This is the worst quarterly decline in at least a century, and has seen the loss of an estimated three million jobs over the lockdown period (representing an 18% decline in employment) according to a study published the National Income Dynamics Coronavirus Rapid Mobile Survey (NIDS-CRAM).

As the WINK team continues to grow with the expansion of two in-house WINK Cafes and new aparthotel locations on the horizon, Flyt’s job creation efforts have afforded new employees the opportunity to build a new, modern brand that contributes to the hospitality and tourism sector and offer visitors a unique and enjoyable experience.

(Left to right) WINK employees: Viwe Sona, Quade Mitchell, Tafadzwa Mukurazhizha and Cleo Simons

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Tax deductible investments

S12J VS RA We look at various flexible options to get your money working for you.

Neill Hobbs, CEO ofAnuva Investments

While Retirement Annuities (RAs) have their place, especially in terms of monthly savings and providing a cash lump sum upon retirement, there is a similar, but much more exciting option available to investors who are looking for an attractive tax deduction while growing their portfolio – a Section 12J income fund.

Neill Hobbs, CEO of Anuva Investments Limited, says that many investors are sold on the RA option but have been overlooking a much more flexible investment option with a Section 12J company. Acknowledging that an RA is an investment specifically for retirement planning, Hobbs says: “It is astounding that many retail investors have yet to take advantage Section 12J tax deduction. Although an RA and a Section 12J investment both offer a tax deduction, 12J trumps an RA on many accounts,” says Hobbs.

When comparing an RA to a S12J income fund, these are the stand-out differences: • An RA is limited to a maximum annual tax deduction of R350 000 compared with R2.5m for a Section 12J investment. This way some investors eliminate their tax liability completely.

• With a Section 12J income fund, returns can begin immediately, while with an RA, the investor is eligible for returns only from the age of 55.

• In recent years, RA returns have been very pedestrian, some funds even losing capital value.

In contrast, some Section 12J funds are achieving consistent returns of up to 10% per annum.

• Returns from a Section 12J fund are taxed either as dividends (20%) or as a capital gain (18%), whereas an RA is fully taxed (up to 45%) when

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paid out, generally when you can least afford it.

• As with an RA, the 12J investor can choose the asset type. With Anuva Investments, for example, the investor can choose between equity, property or income funds, depending on risk appetite.

An overview of how an RA compares to a S12J income fund:

Retirement Annuity

Section 12J Investment

Investment cap

R350 000 per annum

R2.5Million per annum R5 million per company

Deductible portion of taxable income

27.5%

Unlimited

Annual Costs Tax on Returns Tax on withdrawal Exit

3-6% Income Tax – up to 45% Income Tax – up to 45% 55 years of age

Regulation Investment Status

FSCA Members of an RA

2-3% Dividends Tax – 20% Capital Gains Tax – 18% 5 years from date of investment FSCA Shareholding

The recent restriction on emigration withdrawal, changes to retirement annuity rules and the threat of government’s prescribed investment policy should see smart investors looking elsewhere to invest their cash. Section 12J is a tax break and opportunity to grow and boost our SMEE sector.

As the Section 12J opportunity is better understood, says Hobbs, “Many investors are withdrawing their allowed one-third of their RA or provident fund and re-investing into Section 12J funds. This provides them with a refund on the obligatory tax charged on the funds withdrawn. The wonderful thing about Section 12J is that, instead of paying tax, the taxpayer can choose exactly where and with whom to invest this would-be tax money.”

investment

FLYT SECTION 12J INVESTMENT

options

I want a 100% tax break when making an investment into sectional title apartment-hotel units across multiple projects. Low risk and high reward, in other words!

FLYT HOSPITALITY FUND Our Flyt Hospitality Fund is a low risk and high reward opportunity. You get a massive tax break and our property gurus find you a completed sectional title unit under R2m, which is professionally managed for you. We use a Section 12J company for your investment which means you get up to 45% tax back.

HERE’S WHY IT’S HIGH REWARD • •

• • •

A moderate 11.75% per annum compounded total return is forecasted.

Your returns are increased to 26% per annum compounded total return by using the full tax benefits of Section 12J. Up to 45% of your investment is refunded by SARS. There are attractive exit options after 5 years, or you can choose to earn an endless passive income.

You get the benefits of leverage without the hassle - we arrange for bank funding within the fund!

FLYT SELECT FUND Our Flyt Select Fund gives you a massive tax break and you become the owner of a pre-approved aparthotel unit. You can finance it yourself or get up to 95% funding if approved.

I want a massive tax refund to put towards my own investment property unit.

HERE’S HOW YOU MAKE MONEY • • • •

You get a tax refund, which you use towards the purchase of your unit.

The balance is paid for by a bond you apply for.

The aparthotel income is used to service the bond.

All profit (income and capital) goes to you, the investor.

If you made use of Flyt’s bridging loan: • upon transfer your bond amount is used to repay the original loan from Flyt.

• upon receiving the refund from SARS, any balance due to Flyt is repaid and you keep the surplus.

FLYT PARTNERSHIP FUND

I wish I could save some tax so that I can finally start investing in

property.

Our Flyt Partnership Fund gives you a massive tax break and we become your 50:50 property partner in a private property investment holding company. We finance your shares upfront and, depending on your tax profile, you get a tax refund of up to R450k per share.

HERE’S HOW FLYT BECOMES YOUR PARTNER • Shares at R1m each are available (max R300m).

• • • •

You or a group can buy as many shares – or part thereof – as you like.

Each share gives you a R1m tax deduction.

Flyt contributes 65% (R650k per R1m) and you contribute 35% (R350k per R1m).

You pay your portion in cash or borrow it from Flyt (you can use your tax refund to repay it).

• Individuals can invest up to R2,5m each (2,5shares) and companies up to R5m each (5 shares).

Half shares are available.

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Anuva Equity Fund

investment

Take advantage of the Section 12J tax break by investing in these promising businesses.

Our Equity fund’s objective is to partner with high-margin companies that show strong potential for accelerated growth.

By providing both financial and strategic management resources to these companies, our team helps them reach their full potential.

With our support they expand their products, grow their operations, explore new competitive landscapes and increase shareholder value. By combining these successes with the Section 12J tax savings and following a diversified investment approach, our investors have achieved remarkable returns over the past five years. We endeavour to continue building a portfolio of companies that create jobs, are socially responsible and deliver robust returns to our investors.

Our Portfolio of Investments Sexy Socks Famous for their fun designs, Sexy Socks is a fashion sock brand made from bamboo – which is not only kinder to the environment, but also antibacterial, anti-odour, hypoallergenic and soft. Their range now also includes premium combed cotton socks and Sexy Jocks, bringing their fun attitude to wardrobe staples. Sexy Socks believes in good business and cares about every aspect of production – from conceptualisation to product design, yarn selection and fair businesses practices. Through their one-for-one model, a pair of school socks is donated to a child in need with each pair of Sexy Socks sold.

buysexysocks.com Biodelta Anuva Equity Fund owns 10% of Biodelta Biodelta Pty Ltd operates as a contract manufacturing business and serves the health and food industry. The company develops and manufactures nutraceutical products such as capsules, tablets, powders, granules, effervescent sachets and tea. Biodelta has recently extended its product range and manufacturing focus to deliver much-needed COVID-19 key products, such as virus test kits, three-layer surgical masks, sanitisers and immune booster supplements.

biodelta.net Cape Mohair Anuva Equity Fund owns 46% of Cape Mohair Limited Established in 1991 and based in Cape Town, Cape Mohair is a proudly South African manufacturer of mohair socks. Their range includes medical, outdoor, workwear and leisure socks.

Cape Mohair takes pride in manufacturing a product that is not only technologically advanced, but also creates jobs, supports local farming communities and treads lightly on the earth.

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MasterCare Anuva Equity Fund owns 65% of MasterCare (Pty) Limited Established in 1974 as Early Bird, MasterCare is a proudly South African company and the leading name in home appliance repairs and maintenance. Their services encompass the installation, servicing and repair of home appliances. They also service the retail trade in and out of warranty period, providing end-user maintenance care plans as well as valueadded products to leading brands and retail chains.

mastercare.co.za NuMobile Anuva Equity Fund owns 50% of Suliware (Pty) Limited and 50% of Mastercare Mobile Coastal (Pty) Limited which operate under the NuMobile brand Founded in 2008, NuMobile is a leading smartphone provider to low-income workers in South Africa. With the aid of the employer, NuMobile provides employees with reliable and affordable smartphones. This gives them the necessary smart mobile technology for effective communication with their employers and colleagues.

numobile.co.za Mastercare Enterprises Anuva Equity Fund owns 49% of Mastercare Enterprises (Pty) Limited Mastercare Enterprises supplies medical orthopaedic and prosthetic products throughout South Africa. Their quality, custom-made range is fast making them a preferred supplier in their field. They specialise in orthopaedic bracing, bespoke manufacturing, prosthetic suspension technology, rehab/ therapy products, compression / support garments, icing and recovery products and foot orthotic technology.

mastercareenterprises.co.za ARA Anuva Equity Fund owns 4% of Ara Indigenous (Pty) Limited ARA is a soap manufacturer on a quest to make traditional practices and medicine more accessible and current. The company has a unique approach – they use indigenous medicinal plants as the key ingredient in their soap formula, which is specifically developed for South African skin. ARA’s current range of quality Imphepho soap products targets the local mass market and they engage small-scale farmers to grow and become long-term suppliers of Imphepho.

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investment

IS SECTION 12J THE UNSUNG

Hero?

Tax incentive funds assist business where government and banks have failed.

Section 12J tax incentive venture capital companies could prove a valuable source of much-needed funding during this critical survival phase for many small-, medium-, and micro–sized entities (SMMEs). According to one of South Africa’s leading Section 12J fund managers, Anuva Investments, entities within their investment portfolio who have had little or no success with government relief funding – or have seen no rationale in bank COVID-structured loans – have relied on the group’s Section 12J capital and knowledge base as critical to the survival of the businesses and retention of their work force.

A recent report by the Section 12J Industry Association clarifies that as at February 2020, the total assets under management within the Government’s Section 12J tax incentive structure are in excess of R9bn, which at closer inspection is largely invested

by South African high-net-worth individuals. The report, titled “An analysis of the impact of the incentive on SMMEs and the associated benefits to the South African economy”, finds that to date Section 12J capital has benefitted more than 360 SMMEs and created or sustained an approximate 10 500 jobs.

Debt and equity funding into SMMEs have reached rock bottom thanks to the COVID-19 paralysis many businesses have found 20 Issue 1

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themselves in. Company owners and directors have relied on challenged government relief measures such as the Temporary Relief Fund, the Unemployment Insurance Fund, and various specialist industry measures set up as the South African government rallied to support an already stressed economy.

Private sector funding schemes dried up almost overnight as “panic-funding” gripped most South African business owners at the onset of lockdown.

Cape-based pharmaceutical supplier Biodelta Industries found themselves on the verge of a glowing opportunity, without any funding to see it through. CEO Leon Giese investigated Section 12J companies as a funding option and turned to Anuva Investments. “We were fortunate that the investment committee at Anuva took us seriously and recognised our call for funding as urgent,” he says, The R20m invested allowed the company to act swiftly and turn its focus onto the supply of in-demand COVID-19 products. “Instead of waiting for banks, dealing with red tape or endless back and forth, Anuva completed their due-diligence in a matter of days,” he says.

The company was able to retain its full workforce and ramp up production to become a crucial supplier in the fight against COVID-19, extending its product range and manufacturing focus to deliver much-needed key products. Surgical masks, sanitisers and immune booster supplements were fast-tracked in the production output, thanks to the capital advanced to fund the strategy.

Wesley Rabie, CEO of appliance repair firm MasterCare, who form part of Anuva Investments’ equity portfolio, says not only was the funding crucial to the survival of their seven branches nationwide, but so was the mentorship and guidance that was immediately forthcoming as the crisis hit. “We learnt that many of our investors are successful business people and entrepreneurs with a wealth of experience. Their guidance has been critical emerging from business rescue and more recently as we have negotiated the COVID pandemic,” he says.

Dino Zuccollo, chairman if the Section 12J association of South Africa, says, “COVID-19 has left the economy vulnerable. Given the importance of the role that SMMEs play in job creation and economic growth, the existence of the Section 12J incentive could not be more important and relevant.”

investment

SECTION 12J

what it’s costing the fiscus The Section 12J tax incentive, introduced by SARS in 2009, has grown exponentially in the last five years.

Investors and tax payers have finally picked up on SARS’ efforts at stimulating economic growth and job creation by investing via the 100% tax incentive offered to venture capital companies and investors. To date over R9.3 billion of taxpayers’ funds has been invested into various SMMEs via the sector, creating approximately 10 500 jobs. But what is this costing the fiscus and does this have an impact on revenue?

According to a report published via the Section 12J Association of South Africa, “An analysis of the impact of the incentive on SMMEs and the associated benefits to the South African Economy”, the Section 12J legislation will cost the economy significantly less than the up-front tax deductions afforded to investors. Figures derived from a survey facilitated by the association indicate although R9.3bn has been raised into Section 12J funds, the cost to the economy is calculated at R1.3m, only 14% of the total deductions allowed.

The report also indicates that at any given time, Section 12J may be able to generate more tax revenues than the initial deductions allowed. National Treasury estimates that the cost to fiscus is R1.3 billion, but Section 12J supporters believe that this is mitigated, for example, by capital gains tax due upon exit of the investment, corporate tax on income of the underlying investment, VAT on revenue generated and PAYE in respect of staff costs.

The report cites significant economic upsides too, including: 1. A large portion of investment into Section 12J companies is considered “impact” investment into renewable energy, student accommodation, agriculture, schooling, etc.

2. Anchor investors often have an interest in the start-up or SMMEE and provide a knowledge base, mentorship and guidance to ensure success.

3. Section 12J VCCs have created an excess of 10 500 jobs countrywide.

4. The underlying investments have generated in excess of R1.5bn in turnover.

5. Investors are locked in for a period of 5 years, boosting the local economy.

Respondents to the survey agree that as much as 82% (R7.6 bn) of the capital raised via Section 12J would not otherwise be invested in similar initiatives if not for the attractive tax relief offered. R5.5 billion has been invested into more than 360 SMMEs across the country. Neill Hobbs, CEO of Anuva Investments, reports that most of the capital raised from high-net-worth individuals, trusts and companies could very well have been destined out of South Africa. Speaking to investors, Hobbs acknowledges that “Section 12J has been efficient in keeping investment local, despite a weakening economy. Naturally, this has a knock-on effect as many businesses have found it extremely difficult to access funding, be it debt funding or equity raising as banks and institutions become increasingly cautious.”

Commenting on the report, Dino Zuccollo, chairman of The Section 12J Industry Association of South Africa, says, “In the wake of COVID-19, the South African economy is vulnerable and our fiscal deficit is widening.

Given the importance of the role SMMEs play in job creation and economic growth, the Section 12J incentive could not be more important and relevant.”

Forecasts in the association’s report indicate, given time, South Africa could follow in the successful footsteps of the UK’s similar tax incentive scheme, the Seed Enterprise Investment Scheme (SEID). Section 12J has the potential to create more tax revenues for the fiscus and generate valuable proceeds while fulfilling government’s intention of creating jobs and stimulating the SMME sector.

SHARE & TAX CERTIFICATE

ACQUIRE SHARES

TAX PAYERS

UP TO 45% RETURN IN TAX SAVED

ANUVA SECTION 12J VCC

DIVIDEND FLOWS

INVEST IN

QUALIFYING COMPANIES

INVESTMENT GROWTH

Neill Hobbs, CEO Highrise

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Looking for a new tax-efficient supplement to your investment portfolio?

Government’s Section 12J incentive will save you tax and boost the SMME sector.

In the past, RAs have been the most common option to save tax, but since extended limitations have been put in place, i.e. investment into a RA is limited to 27.5% of taxable income at a maximum of R350 000.00 per annum; a new tax-smart alternative has emerged.

Government’s Section 12J incentive is finally receiving the interest it deserves.

That’s according to Neill Hobbs, founder of Anuva Investments. Hobbs says investments into a Section 12J VCC are a tax-efficient supplement to an investment portfolio. Unlike a retirement annuity, investment into this relatively new tax-effective structure is (a) unlimited in terms of the amount one can invest, and (b) you don’t have to wait until you are 55 years old to get returns. Furthermore, if you hold the investment for more than five years, you will pay capital gains tax only on the disposable dividend; unlike an RA, that stipulates that any returns above the threshold are taxed as regular income.

“This is attractive to taxpayers who want to maximise their deduction come tax year-end. Salary earners are able to get a refund on all PAYE,” says Hobbs. He warns, however, that an investment into a Section 12J vehicle must fit into your investment portfolio as it falls into the high-risk bracket and it is illiquid for a minimum of five years. Section 12J is also suited to taxpayers who have realised a capital gain during the year; if they invest 40% of that capital gain into a Section 12J Fund, they will pay no capital gains tax.

tax

MORE WAYS THAN ONE TO SAVE

The government’s Section 12J incentive is targeted at people who are in a high income tax bracket and have cash to invest, and is also appealing to corporate executives who are cashing in their share options. Not only does this type of investor suit this fund, but often has a lot to offer a Section 12J fund in terms of dealings and investment experience. Unlike most structured investments, a significant investor in a Section 12J fund is in a position to have input into how the fund is managed. Generally these funds are in the hands of a small group of investors making decisions on behalf of the businesses. Through Section 12J, wealthy business people can invest financial and intellectual capital into SMMEs and, according to Hobbs, this is exactly what government had in mind to boost and support that sector.

Although defined as high-risk, there are many checks and balances in place. The fund is accountable to the FSB and must have an FSB-approved fund manager and compliance officer. The directors must take up professional indemnity insurance and SARS continues to oversee the VCC.

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The first investor that invested R1m in Anuva has saved more than R600,000 in taxes, received R412,150 in dividends and capital growth of R111,762. The actual annual dividend yield over 5 years was 8% and the growth rate over five years was 2%. Hobbs identified the Anuva VCC strategy as investing into promising, wellmanaged small-to-medium companies which are securely established and have a proven track record but are under-capitalised.

investment

TAKE A tax breather Flyt Property Investment’s Partnership Fund offers investors R300m in loans to benefit from Section 12J tax relief.

The Flyt Partnership Fund, which is restricted to R300m, allows investors to take part in the fund on a 95% loan basis. The R300m has been made available as loan capital to investors to participate as partners in the fund.

A minimum investment of R1m is required; however, an investor needs to only contribute 35% (i.e. R350 000 per R1m), with Flyt Property Investment contributing the remaining 65% on the investor’s behalf. To add to the offering, Flyt may also extend a loan for the 35% required to qualifying investors.

In essence, investors can make a R1m Section 12J investment by putting down only R350 000, which will be returned to individuals via their SARS tax refund (subject to investor’s own tax rate). The company has also incorporated a bridging loan facility for qualifying investors who would like to borrow the 35% portion while waiting for the SARS refund.

Comparing South Africa to a global tax haven, Zane De Decker, MD of Flyt Property Investment, describes the opportunity as “a fantastic way to get your tax back via Government’s Section 12J incentive and invest it into property.” De Decker reports that his team tested the market with their Partnership product in February 2020 and raised R24m via word of mouth within a few days with investors showing huge interest. “We increased our capacity to provide funding for this product and expect a keen uptake before the SARS Section 12J cut-off in July 2021,” he says.

Section 12J investments have caught the eye of many South African investors, with government having had to do an about turn and limiting the amount permitted to be invested to R2.5m per annum. Section 12J of the Income Tax Act was introduced in 2009 to encourage South African taxpayers to invest in local companies and receive a 100% tax deduction of the value of their investment. The investor receives a share certificate together with a tax certificate, allowing the invested amount to be deducted from the investor’s taxable income, in the year that the investment is made.

To date, South Africans have invested an estimated R10bn into the Section 12J sector.

The fund, which is managed by Section 12J specialist investment firm Anuva Investments, holds assets in hotel apartment developments or “aparthotels” in Diep River and the Foreshore.

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WORK

it!

A home office by Deborah Garth Interior Design

From bold and bright to calm and cool, these considered home office spaces score full marks.

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Home offices come in all shapes and sizes. Whether your work space is colourful and creative or quiet and contemplative, the right environment will make the world of difference to your productivity. We look at some of the design elements that make these spaces a success.

New Heights

Elevated above the surrounding living areas,

this home office by ARRCC Interior Design Studio (below) has magnificent views of the ocean, bringing an element of calm to the work space. The office has a table for small group gatherings as well as a desk large enough for one-on-one meetings. The placement of art behind the desk creates an inviting backdrop for visitors. Soft lighting contributes to a comfortable atmosphere throughout the room, whereas the desk area benefits from enhanced lighting.

Serenity Now

If you need quiet, calm surroundings

while you work, the warm, darker hues of this home office (above) might be just what the doctor ordered. The space is restful and serene, with a sound-absorbing carpet that adds to the sense of serenity. Voile curtains separate the office from the rest of the house and its activity. Designed by Jenny Mills Architecture in collaboration with Studio Parkington, the home office incorporates well-planned lighting (a must for video conferencing) that is adaptable for various types of work. “Uncluttered spaces promote focus and productivity.

For documents, data and electronic equipment, storage that is practical and easy to use and pack away out of sight is another important consideration in design,” says Mills.

Comfortable and Classic

As people begin to

create a division between their living spaces and work areas at home, Kevin Frankental of design studio Lemon believes many will invest in high-quality essentials. He suggests collecting furniture and accessories gradually and buying pieces that you love rather than filling the gaps quickly on the cheap. “Add to the space over time. It should have a calming effect – this is created through good lighting, warm textures and quality furniture,” he says. If you can’t devote a whole room to your office, he suggests using a screen for privacy and demarcating the area further with wallpaper to create the feeling of a separate zone.

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lifestyle

Curves in all the right places WORDS Sarah Marjoribanks PHOTOS Adam Letch

Inspired by the Bauhaus architecture of Tel Aviv, this bold, sculptural home in Fresnaye turns heads and leaves (almost) everything to the imagination.

“It’s rare to find an enlightened client with a yen for good architecture and the confidence to realise something eccentric and out of the box in an aesthetically conservative neighbourhood,” says architect Robert Silke of Robert Silke & Partners, who was commissioned to design this sophisticated 600m² home on Cape Town’s Atlantic Seaboard.

Owned by a family of blue-chip property developers, the house is located on a 700m² corner plot on busy Ocean View Drive. While a convenient, central location, it naturally presented an issue of privacy and the owners wanted to make sure that their family’s daily lives were kept away from prying eyes. But they also wanted an extroverted home, one that expressed their style and articulated their passion for architecture.

INWARD FACING The resulting home balances these two contradictions beautifully. The house faces inward, its curved façade giving passersby a small taste of what’s inside, but its solid, reserved exterior revealing very little. Once through the door, though, the interior opens up, with generous, soaring volumes and space to show off the building’s smooth, sculptural form.

The house falls over two levels, with the living and entertaining areas on the ground floor, including the large covered wraparound terraces, pool and lawn. A dramatic stairwell reaches up from the entrance floor and connects both floors. “The entrance hall and staircase have the most exciting

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lifestyle

volumes and spaces, as one has long views across the split-level living areas and up through the double volume,” says Robert.

CLEVERLY ROOTED “This part also has the most dramatic light and shadow effects as the day passes, with jungle shadows creeping slowly across big white walls.

There’s even a terrarium-like window into the tropical forest at the bottom of the stairs.”

It’s this “jungle” of established trees that led the owners to select the plot in Fresnaye, and Robert was tasked with retaining as many of them as possible – a decision that directly informed the design. “The building had to twist and dance around the roots and branches, which ultimately enhanced the drama of its sculptural form,” says Robert.

One of the standout architectural elements that he feels best expresses what his clients wanted is, surprisingly, the guest shower. “It’s cathedrallike in its proportions and is simultaneously the most public and the most private element of the house,” he says.

“The 4m high-volume shower floats another 5m up in the air and makes a solid and powerful half drum shape on the façade towards the busy main approach of Ocean View Drive. From the outside it makes for head-turning sculpture, and internally the double volume makes the shower truly experiential. A cleverly-placed vertical strip window allows the street to see nothing, while the guest sees ‘everything’.”

DREAM SPACE On the second level you’ll find the family’s four bedrooms and their shared terrace, with views over the suburb outside and down to the ocean.

However, one area is just for the adults – a rooftop vegetable garden, accessed via an outdoor spiral staircase, is safely kept away from the kids by lock and key.

The home’s interior furnishings and fittings are quite simple, with the ethereal building doing most of the talking. “To achieve a certain otherworldliness, the house could have no umbilical cords, and show no evidence of its own creation,” says Robert. “So we constructed the façade entirely in white smooth plastered concrete to obviate the need for joints or weepholes or other evidence of ordinary construction.”

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lifestyle

TRUE colours

Either keep it simple or add drama to your living areas with wallpaper, a fresh coat of paint or wooden floors for warmth.

WORDS Sarah Marjoribanks PHOTOS Supplied Would-be buyers on the hunt for a new home are spoilt for choice in the current buyer’s market. We look at some of the best ways to update your walls and floors – do it right and you could be adding a breath of fresh air to your living environment and value to your property.

Tile stories

Tiles give a room personality,

with the added benefit of being easy to clean and maintain. Neutral options abound, but consider expanding your horizons with textured tiles that beg to be touched. Inspired by the decorative inlays crafted by Italian artisans in the 13th and 14th centuries, the Intarsi range of ceramic tiles from Ceramica Sant’Agostino combines the contrasting looks of marble and wood. Also from Sant’Agostino, the slender porcelain Colorart tiles evoke weathered timber planks (below). Both ranges are distributed by Italtile and suitable for walls and floors.

Colour of courage

Extensive trend research by AkzoNobel

and other paint experts around the globe has revealed Brave Ground (code CF21) as the 2021 Dulux Future Colour of the Year. Considering that 2020 has been characterised by constant upheaval owing to the COVID-19 pandemic, it makes sense that Brave Ground imparts strength and serenity. It can be combined with a range of palettes and techniques to bring balance, stability and courage into our surroundings. “This warm, natural colour provides a strong foundation for embracing change,” says Dulux SA colour expert Palesa Ramaisa. “Brave Ground stands on its own as a beautiful, powerful neutral hue and can be used in a way that allows other colours to shine.” Dulux has put together four colour palettes, each of which takes the shade in a different direction: Expressive, Timeless, Earth and Trust (above), featuring complementary earth tones from around the world.

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lifestyle what’s hot this season

Simple yet striking

Hardwood flooring is a timeless addition to any home. Looking out onto the Kromme River estuary,

this summer retreat (above) in St Francis Bay took its design cues from Cape farm architecture and a fisherman’s cottage. The home’s natural palette is the ideal backdrop for colourful furniture and statement objects, whereas the warm wooden floors by Oggie Hardwood Flooring provide a sense of cohesion.

Cool contrast

A designer client of Jenny Mills Architecture

and Interiors decided on a dark interior for one of his properties. To achieve the look, the walls were chipped back to expose raw brick and the ceiling was painted black, with parts given a rusty colour. In contrast, one wall was painted using a palette inspired by Ndebele art, accompanied by an eccentric take on an exposed electrical box (below). “The home is set in a conservative Constantia enclave, so it’s an amusing and refreshing break to open the doors to this warm, dark interior,” says founder Jenny Mills.

No wallflowers here

“Wallpaper allows the

discerning homeowner to create drama without expensive art or framed prints,” says Cara Saven of Cara Saven Wall Design. “It can be used to dominate a space or give it depth, and always lends value to a home. The bedroom is an oasis in this glamorous home and the owner’s husband had no problem with the use of oversized pink floral design over their bed,” says Saven. The pink and grey colour scheme is pulled together by the wallpaper (above). “The concrete background in the wallpaper contrasts with the soft flowers and creates an effect they won’t tire of in a hurry.”

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investment

A HOPEFUL

future

The Savills Prime Index: World Cities Report says that properties in Cape Town are well-valued due to record-low interest rates.

WHERE DO VALUES CURRENTLY STAND? Despite seeing prices falls since June 2019, Hong Kong remains the most expensive city in the world for prime residential property, with values 78% above second ranked New York, and 99% above third ranked Tokyo as of June 2020.

Geneva ranks fourth and is the highest valued European city in the index, 9% above London in fifth place and 23% above Paris, which ranks seventh.

Kuala Lumpur and Cape Town are the best value cities in the index, and the only cities where prime values are under $300 per square foot. Madrid and Barcelona offer value at a European level, where prime prices are 64% and 66% below Geneva, respectively.

Seoul and Moscow recorded the strongest price rises in the first half of the year, with an increase of 5.5%. South Korea largely avoided a lockdown and hence any significant associated disruption to the market. Seoul’s housing market has been on an upward trend for the past few years, driven by historically low interest rates and government policies that have also limited new supply further driving price increases.

In Moscow, the prime residential market is driven predominately by domestic demand and fluctuations in prices are influenced by domestic factors. COVID-19 caused the price of oil and the value of the Russian ruble to fall sharply, driving capital into the property market which is viewed as a secure investment. The fall in the ruble also provided a good opportunity for Russian buyers who hold other currencies to purchase property.

In Europe, the best performers were Berlin, Amsterdam and Paris. These European capitals have seen high levels of demand and limited supply in recent years, driving price growth even during the pandemic and associated lockdowns.

In China, pent-up demand and credit easing from

Prime capital value growth December 2019 to June 2020 6.0%

Price Index Change

4.0%

2.0%

London Has seen a significant recovery in activity since reopening in May, supported by pent-up demand that accumulated during lockdown. However, buyers’ budgets have generally fallen, meaning the market remains price sensitive

New York Badly impacted by the virus over this period, while the city is also dealing with oversupply in the prime market

0.0%

Berlin Up 3.1% in the first six months of the year.

The city has seen high levels of demand in recent years and this helped maintain positive price growth, while supply remains limited

-2.0%

-4.0%

-6.0% s r i n l i o k n d o u e u a n ai ong on ney ele bai ris rk am ky he ho na ri ha ou pu isc jing am don ev ow ho ow rli or ko b K isb yd ng i Pa c ei Yo elo ad ap ng Du n m Se osc Be terd To T gz nz gz ang n n um e u M g M e c o S L e a a g w A n B s L n r G M L M B in s on Fr Sh Ha Sh m ap ua Ne Ba la S o H A a C n L G Ku Sa Source: Savills Research

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investment the Chinese central bank (PBoC) saw values in some Chinese cities rise marginally in the first six months of the year, with Shenzhen, Hangzhou and Shanghai experiencing marginal price rises over this period.

Meanwhile, Beijing and Guangzhou saw minimal price falls. Beijing was disproportionally hit by lockdown measures, while prime values in Guangzhou had already started to plateau prior to the crisis, having previously seen some fast gains.

Tokyo was the only other city in Asia to see positive price movement in the first six months of the year, driven by tight supply and domestic demand.

PRICES FALL FASTEST IN MUMBAI Mumbai saw the largest decline over the first half of 2020, down 5.8%. The Indian city is grappling with oversupply in the prime market and has been badly impacted by lockdown measures.

Elsewhere in Asia Pacific, Sydney, Hong Kong and Bangkok also experienced the next largest falls for the first six months of the year, as the impact of COVID-19 weighed on the market.

Prior to the crisis, Sydney’s market had been performing well, supported by lower interest rates, increasing immigration, and growth in demand. Meanwhile, Hong Kong and Bangkok had seen price declines due to political uncertainty and oversupply respectively.

WEAKENING DEMAND CHARACTERISES US CITIES In the US, Los Angeles experienced the largest falls in the first six months of the year. The city was badly impacted by the coronavirus pandemic over this period, and unemployment rose to 20.6% in May, up from just 4.6% in February. New York was also badly impacted by the virus over this period, while the city is also dealing with oversupply in the prime market and values had already been moving downward over the past few years as a result. Miami and San Francisco saw comparatively smaller falls. Florida had initially been less impacted by the pandemic, compared to California and New York in the first half of the year, while supply remains tight in San Francisco.

MIXED PICTURE IN EUROPE While Berlin, Amsterdam and Paris continued to see price rises in the first half of 2020, other cities recorded falls. Lisbon saw the largest decline in the first six months of 2020. As well as the impact of COVID-19, there had been uncertainty over the city’s continuing participation in the country’s golden visa programme, although due to COVID-19 the changes to the scheme have been put on hold. In Spain, prime prices in Madrid

and Barcelona fell by 2.1% and 1.8% respectively over this period. Spain was hard hit by the pandemic and stringent long-lasting lockdown measures, but prime supply in both cities remains scarce, preventing larger price falls.

London and Geneva experienced similar, albeit marginal, price falls over this period. The market in Switzerland is generally stable and sellers in Geneva held steady on price, despite a fall in international demand.

In London, some certainty had returned due to clarity over Brexit.

The market there has seen a significant recovery in activity since May, supported by pent-up demand that accumulated during lockdown.

However, buyers’ budgets have generally fallen, meaning the market remains price sensitive.

CAPE TOWN: The market was already adjusting to weaker economic realities prior to the crisis, leaving the outlook for the rest of the year weak. While the economic outlook longterm is uncertain, interest rates are the lowest in nearly 50 years and prime property is well-valued.

Outlook by city for the next five years Forecast

City Amsterdam Lisbon Berlin Paris Miami San Francisco Geneva Moscow Kuala Lumpur Sydney London Madrid Barcelona Singapore Shanghai Beijing Shenzhen Guangzhou Hangzhou Tokyo Los Angeles New York Cape Town Mumbai Seoul Dubai Bangkok

Hong Kong Source: Savills Research

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van der Poel MEET THE BROTHERS

Two investment professionals who understand the value of SARS’12J tax incentive and have a heart for Cape Town.

DARRYN Investment Consultant darryn@flytproperty.co.za 083 258 6316 Darryn is an experienced built environment professional. He sources, assembles and closes out real estate transactions for listed capital, private equity and ultra-high net-worth clients across all property sub-sectors – from retail shopping centres to industrial, commercial, residential and student accommodation assets, including new projects.

After completing a Bachelor of Commerce degree in Finance and Economics, Darryn has been involved in unique commercial projects in the financial advisory, property and corporate consulting sectors, focusing on asset management and long-term client value protection.

He was a director at his family’s boutique property firm, structured investment deals for FirstRand clients, and worked on Carbon Credit and Renewable Energy consulting projects.

Darryn is excited to be part of the Flyt team as an Investment Consultant, building shareholder value for investors through his knowledge, expertise and global business network.

JUSTIN Investment Consultant justin@flytproperty.co.za 076 095 2846 Inspired by his family who managed a substantial, residential property portfolio coupled with a go-getter attitude, Justin found his passion for the industry from a young age.

After completing his Bachelor of Commerce degree in Marketing Management in 2015, Justin assumed the role of portfolio manager, managing the residential portfolio in the family business. In 2016, along with two partners, Justin founded SVDP property group, a boutique-style property and investment brokerage. His excellent people skills and an innate understanding of the property space have enabled him to build an impressive client base through securing attractive property opportunities for his clients.

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