SA Affordable Housing May - June 2016 | Issue: 58 by Trademax Publications

May - June 2016 // Issue: 58

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MAY - JUNE 2016

ISSUE: 58

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Trademax Publications SA Affordable Housing Communities | Infrastructure | Development

Tel: 0861 727 663 Fax: 0866 991 346 Email: info@trademax.co.za www.trademax.co.za

ON THE COVER The following SAARDA members’ projects are featured on the front cover, from the top left going clockwise: Windmill Park Extension 12 by Kiron; Protea Glen Manor by Renico Construction; Sondela Village by Caliber; Savanna City by Basil Read (2); Casa Salice by Caliber; and Protea Glen Manor by Renico Construction.

CONTENTS

Postnet Suite 241 Private Bag X103 N1 City 7463 PUBLISHER: Billy Perrin billy@trademax.co.za 082 266 6976 EDITOR:

EDITOR'S COMMENTS

UPCOMING EVENTS

GOVERNMENT POLICY

COVER STORY

Celéste Perrin editor@trademax.co.za ADVERTISING SALES: Kylin Perrin kylin@trademax.co.za

CATALYTIC HOUSING PROJEC T

LAYOUT & DESIGN:

CONCRETE

craig@trademax.co.za

AFFORDABLE HOUSING FORUM

SUBSCRIPTIONS:

TRAINING

BRICKS & PAVING

READYMIX CONCRETE

HOUSING RESEARCH

CMA AWARDS

LEGISLATION

Craig Patterson

Belinda Thwesha belinda@trademax.co.za

DISCLAIMER The views expressed herein are not necessarily those of Trademax Publications. Although we have done our best to ensure the accuracy of our content, neither Trademax Publications nor SA Affordable Housing magazine will be held liable for any views expressed or information disseminated, in editorial content or advertisements, in this issue.

32 MAY - JUNE 2016

EDITOR’S COMMENTS

Taking stock As I write this, industry is waiting on Human Settlements Minister Lindiwe Sisulu to formally announce catalytic projects (more than 10,000 units each) to be developed in all nine provinces part of an initiative to achieve the delivery of 1.5-million housing opportunities by 2019.

his follows the Minister’s confirmation just a few weeks ago that we’re no longer approaching the 2-million mark in our housing backlog...we’ve surpassed it. The official number of houses needed to clear the backlog, constantly being made worse by rapid urbanization, stands at 2.1-million. And stakeholders are taking serious stock of the situation. In this edition’s features that directly address the delivery of affordable housing in our country today, you will see several common threads – starting with the acknowledgement that rapid urbanization is a seemingly unstoppable problem (worldwide). No, a crisis. Even as the past decade has seen the number of households living in informal dwellings decrease marginally, and a campaign has been launched to celebrate 4.3-million realized housing opportunities, those houses have been delivered since “the dawn of democracy,” which is a considerable time ago. The question being asked is whether a plan to “build faster” by using planning instruments to predict and then cater for the number of people flooding major towns and cities from rural areas, is enough. Certainly, proven urban policies that are commutable into local initiatives can bring several benefits to a community.

But there isn’t a template solution that can be applied to communities across the board. The need for enhanced partnerships between government and private entities remains at the top of the priority list, because opportunities abound. As Gauteng and the Western Cape continue to dominate the property market, we are now hearing about a property boom in townships like Litha Park, Khayelitsha and Mitchells Plain. Estate agents are reporting significant construction activity by private investors while they struggle to find enough houses for sale to satisfy buyers’ interest. Even as one considers the success of an inclusive housing model like Cosmo City, stumbling blocks on the path to delivering affordable housing at a steady rate remain. But, so does the dialogue towards overcoming these challenges, step by step. Welcome to the May/June 2016 issue of SA Affordable Housing, which features several different perspectives from several industry leaders and decision makers, all tackling the issue head-on. I hope you enjoy the read. Until next time, Celéste

DO YOU HAVE A GREAT PROJECT OR STORY TO SHARE WITH SA AFFORDABLE HOUSING READERS? Send your article and high resolution images to editor@trademax.co.za or call 0861 727 663 for more information.

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MAY - JUNE 2016

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UPCOMING EVENTS 3RD ANNUAL AFFORDABLE HOUSING AFRICA CONFERENCE 18 – 20 JULY 2016 | CAPE TOWN

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A-OSH EXPO SOUTH AFRICA 2016

24 – 26 MAY 2016 | GALLAGHER CONVENTION CENTRE, MIDRAND, JHB Visit www.aosh.co.za for more info

SARMA READYMIX CONCRETE WORKSHOPS WESTERN CAPE: 19 MAY 2016 EASTERN CAPE: 2 JUNE 2016 FREE STATE: 23 JUNE 2016 NORTH EAST: 30 JUNE 2016 KWA-ZULU NATAL: 21 JULY 2016

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CAPE CONSTRUCTION CONFERENCE & TRADE EXPO 11 – 12 AUGUST 2016 | CTICC, CAPE TOWN

Visit www.cape-construction.co.za for more info Cape Construction Expo is a onestop-shop networking and knowledge platform that allows the Western Cape building and construction industry to respond to changes in their environment and enhances their business opportunities. The Cape Construction Expo creates dialogue among government, policy decision makers and the building and construction sector. You can expect:

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HOUSING FINANCE COURSE FOR SUB-SAHARAN AFRICA (HFCSSA) 2 – 8 OCTOBER 2016 | UNIVERSITY OF CAPE TOWN Visit www.gsb.uct.ac.za/e.asp?c=731 for more info Or call 0860-UCT-GSB

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MAY - JUNE 2016

GOVERNMENT POLICY

South Africa will conquer

informal settlements problems This was the assurance that Human Settlements Minister Lindiwe Sisulu gave the United Nations last month.

Photo by: Valerie Hinojosa

inister Sisulu was speaking at the opening of the recent UN Habitat III conference held in Pretoria and which discussed how countries could tackle the problems of informal settlements and eradication of slums, especially in urbanized areas. She affirmed that it is possible for South Africa to eliminate informal settlements and provide an opportunity for every citizen to live in a decent house or have proper accommodation.

Minister Sisulu told the audience, which included at least 700 delegates from about 35 countries around the globe, that she was optimistic South Africa would conquer the problem. She said her confidence was bolstered during a recent trip abroad where she learnt from the Algerian Government that it had succeeded in eliminating informal settlements and expected to get rid of the last of its remaining shacks by August this year.

Minister Sisulu told the conference that the South African government was on course in dealing with the problem, citing that since 1994, government has provided at least 4.3-million housing opportunities, thereby benefiting more than 20-million people. But at the same time, the Minister acknowledged that many challenges still remain.

This was the first United Nations meeting dealing with slums and informal settlements since the adoption of the 2030 Agenda for Sustainable Development with a standalone goal to make cities and human settlements safe, resilient and sustainable. “We as the South African Government remain very committed to the development of sustainable human settlements. We have emphasized informal settlements upgrading, and whatever possible in-situ as a way to ensure to improve people’s lives where they live,” she continued.

She called on government, the private sector and especially financial institutions and communities, to work together to devise better methods of dealing with the problems associated with urbanization, including homelessness and the deepening of poverty. She said this was due to the migration of poor people moving into cities, looking for a better life and better opportunities for themselves and their families – opportunities such as jobs and access to schools.

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“We have created a national upgrading support programme to assist provincial and local governments where they may lack the capacity to implement the programme.”

GOVERNMENT POLICY

"We moved from a previous policy based on housing to a new policy which we, in the African Ministerial Conference on Housing and Urban Development (Amchud) endorsed as a policy framework for developing countries, and now we talk about sustainable, integrated human settlements." - Human Settlements Minister Lindiwe Sisulu In developing South Africa’s policies, the Minister added, the country has learnt from both national and international experiences. “Working with UN Habitat has been an extremely enriching experience. Our policies continue to be improved and adjusted to meet the locally relevant needs.” The Minister made it clear that government could not continue to give people free houses, as the fiscus could no longer cope with the significant demand. “We are offering a subsidy for those people who are able to build their own houses and we encourage them to participate in that process, as it gives people dignity and ownership and helps them feel that they are contributing to the economy,” she said. She added that government wanted to ensure that it gave people the rights that were denied them during apartheid. “We are currently dealing with challenges around whether we should build people new houses or relocate them to state-owned land, where they qualify for basic services. In terms of our law, we cannot provide basic services to people who live on private land,” she explained. Department of Human Settlements Director-General, Thabane Zulu, also weighed in. He said government had 33 programmes in place to tackle its housing backlog, the bulk of which was funded from the fiscus. “R12-billion goes to metropolitan areas, smaller municipalities receive R15-billion, and R18-billion is distributed between South Africa’s nine provinces,” he said. Zulu noted that Gauteng received the largest share because it experienced the biggest challenge with human settlements. “People come to urban centres for work so that they are able to get partial subsidies from government and build houses for themselves. The main challenge government faces is getting people out of the poverty trap,” he stated.

SLUMS IN THE CITY Also speaking at the event, UN Habitat III Secretary– General Dr Jon Clos urged the governments to prioritize planning of human settlements, because it brings value to people’s lives and improves their incomes. Dr Clos said the number of slums around the world continues to grow 10% annually. “More people have arrived to the slums than the number of people who moved out from slums.”

“After the year 2000, the slums population of the world has increased, and we now have nearly 1-million people living in slums. The rate of diminishing the slums is not enough in order to diminish the stock of people living in slums,” he said. According to Dr Clos, the proportion vision of slum dwelling is most acute in Africa at an average of 61.7% population, followed by Asia at 30%. In turn, Minister Sisulu said the South African government has worked hard to eliminate slums from cities through the adoption of the Millenium Development Goals (MDG) in 2000, which focused on eradicating slums from cities and resonated with South Africa’s urbanization plan. “We had hoped that by 2014 we would have eradicated poverty and totally eliminated slums, but we were not able to fulfil that pledge.” She lamented the threat to sustainable development of human settlements, being the reduction of investment into cities by international aid organizations and bilateral development agencies, who have slowly but surely cut their urban programmes. In addition, a sizeable amount of funding and aid supplied by industrialized countries was instead being channelled to the current Syrian refugee crisis, leaving the rest of the developing world with fewer resources to cope with the urgent demands of inequality and poverty. Gauteng Premier David Makhura also addressed the conference, saying that government has done significant work to promote more integration and densification, but admitting that the urban ecosystem still faces many challenges. In Gauteng alone, even though government has provided close to 1-million housing opportunities, accelerated urbanization was presenting serious economic challenges to the urban form. “National government recently approved the urban development policy framework, which will help us to plan and direct urbanization in a way that will ensure sustainability and enhance the livelihoods of South African citizens,” he said. He noted that while urbanization was inherently a positive force, it had negative aspects such as the exclusion of poor communities, which would put significant pressure on Gauteng if it was not managed and planned precisely. Premier Makhura added that South Africa needed a new urban vision that was in line with the United Nation’s sustainable development goals from 2015. “We have started to address the challenges of urbanization, but we still have a long way to go,” he said. Minister Sisulu confirmed government’s realization that the future prosperity of South Africa’s cities lay in investments into infrastructure and human settlements. “We will therefore continue to improve our policies and investment programmes based on good practice nationally and abroad,” she said.

MAY - JUNE 2016

COVER STORY

SAARDA - building developer capacity to meet the housing needs of South Africa "Everyone has the right to have access to adequate housing." - Extract from the Constitution of the Republic of South Africa, Bill of Rights, Cl 26 (1).

The Casa Azul and Casa Verde communities in Centurion, by developer Caliber.

onsidering the current, dire state of delivery of affordable housing in South Africa, the most urgent question that comes to mind is also the most complex, namely why we cannot meet the overwhelming market need. SAARDA, the South African Affordable Residential Developers Association, takes us on an informative journey to help find answers, both obvious and unlocked, to the crisis.

• Households living in formal dwellings rose from 73.7% in 2002, to 79.4% in 2014. (In Gauteng the percentage of households living in formal dwellings is 78.9%.)

SOME STATISTICS

• Rental housing in formal dwellings increased from 19.8% to 21.7% from 2002 to 2014, while in the informal sector, it increased from 18.5% to 35.6%.

The following data is drawn from a General Household Survey, 2014, released on 20 April 2016 and published by Statistics South Africa: • The population of 53.7-million is made up of a total of 15.6-million households. (In Gauteng the number is 4.501-million households in a population of 13-million people.)

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• The percentage of households that fully own their dwellings increased from 52.9% in 2002, to 55.3% in 2014. • 15.3% of South African households live in ‘RDP’ or state-subsidized dwellings.

• The percentage of households connected to the main electricity supply stood at 86% in 2014. The main source of energy used for cooking is electricity (in 79.8% of households).

COVER STORY

SAARDA directs its members to address the issues that either delay the process or result in additional costs to the industry, by means of interventions made through consultation with state departments and local authorities. At the same time, developers are also encouraged to consider the efficacy of their own processes, their staff and other professionals involved in the development process.

WHY WE CANNOT MEET DEMAND Why does the industry not have the capacity to build sufficient houses to satisfy the massive demand? Some of the most important factors are, quite simply: Insufficient serviced stands, too few land developers, a lack of skilled resources at public entities, a lack of bulk services and infrastructure, and the difficult task of keeping development costs low for affordability.

The Casa Salice project in Pretoria East, by developer Caliber.

SAARDA HOUSING CONFERENCE SAARDA has been hard at work, planning and coordinating a housing conference to be held in Johannesburg. Arrangements are well under way, and it is anticipated that the event will take place during the second half of 2016. The SAARDA Housing Conference will be specifically focused on the affordable housing value chain, as well as on addressing those elements that are most important to ensure a good housing delivery stream. Important stakeholders in both the private as well as the public sector will be provided an opportunity to present their interests and appetite for the market. Affordable housing is a mass, niche market with its own peculiarities and constraints, and this is what the conference will aim to address in order to provide more clarity on these issues. Details will be advertised and communicated to SAARDA members as well as all other stakeholders nearer to the conference date.

CAPACITY BUILDING There are numerous parties involved in the process of developing new townships and constructing homes, and this large number includes both private enterprises as well as local authority officials. For SAARDA to optimally facilitate the development of capacity in the industry, it has determined that the identification and resolution of bottlenecks or disruptions to this supply chain is crucial.

â&#x20AC;˘ Availability of funds: Developers are often constrained by a lack of (readily) available funds. The reality is that developments require significantly large amounts of funding in order to realize those economies of scale needed to create affordable housing products. This funding factor severely impacts the ability of aspirant new market entrants to successfully develop townships. â&#x20AC;˘ Holding costs: Land purchase costs are already high. But then one must still add to these costs a separate holding cost that gets incurred while the township application is being assessed for approval, is in the process of being approved, and while the services are being installed. On completion of servicing, and after securing the necessary certificate to allow for the transfers of stands, the house construction process can start. The amount of time it takes from when the land is purchased to the actual building phase is rarely shorter than two years. In fact, most of the time it exceeds even three years, and that is when all goes well. This is a very long time for any developer, but especially new market entrants, to hold and fund a non-performing asset! Of course, public entities (including local authorities) can assist to minimize or at least reduce the holding costs by providing the necessary approvals within reasonable time periods. One of SAARDAâ&#x20AC;&#x2122;s goals is to establish a closer working relationship with local authorities in an effort to, together, reduce the duration of the development process. It is entirely possible for the waiting or holding period to be reduced by between 30% and 50% if the process is not dogged by unnecessary delays.

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COVER STORY

The Savanna City Developments (Pty) Ltd fully subsidized housing portion of Savanna City within the Midvaal Local Municipality, by developer Basil Read. The benefits of shorter turnaround times would be multiple and impactful. For example, the larger-scale production of houses, a huge increase in the number of persons employed in the industry, as well as significant increases in skills development. • Service standards: SAARDA has identified that the standards of services need to be addressed, as these are invariably deemed to be inappropriate for the affordable residential market, with resultant higher implementation costs. While delivering high-quality services is of paramount importance, material types, road pavement design and dimensions, storm water design standards and electricity supply types need to be reconsidered and re-evaluated. Each project should be assessed on its own merits, and levels and standards of services determined based on specific variables applicable to that project. The Department of Community Development has published the ‘Red Book’ that sets recommended minimum standards for services. Local authorities should be encouraged to refer to these standards when considering the design of services in all housing projects.

ALL-INCLUSIVE DEVELOPMENT PACKAGE It is necessary for land developers to take a lead role in the holistic development of homes, and even communities.

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SAARDA members are encouraged to engage in the research of all aspects of developing the communities in which new townships are serviced. • Eco-friendly, energy-efficient housing solutions: While South Africa has made huge gains in producing electricity from renewable sources and developing energy-efficient structures, the housing industry has its challenges in implementing these measures. This can partly be attributed to the fact that salary levels determine the home loans that applicants qualify for, and those clients would, understandably and commonly, then purchase the largest house possible. But unfortunately, additional capital costs due to more expensive energy-saving devices reduce the buying capacity, even though the long-term benefits of many of these interventions would be of greater benefit to a homeowner. In a high-volume industry, developers need to apply their minds to incorporate energy-efficient design into affordable houses at the lowest cost possible. Moreover, the necessary information must be provided to potential homeowners so that the benefits of the larger capital costs of the purchase of a house are understood and appreciated, and the homebuyer can make an informed decision.

COVER STORY

The Savanna City Developments (Pty) Ltd fully subsidized housing portion of Savanna City within the Midvaal Local Municipality, by developer Basil Read.

COMMUNITY FACILITIES AND EMPOWERMENT Building houses does not build communities! The demand for houses in new townships increases markedly where satisfactory community facilities and services are provided. Among the most important of these that should be provided are: health services, security, and education.

The level of skills present in new projects is often grossly underestimated. But, when identified and utilized, it can significantly benefit both a top-structure developer as well as the community itself. The challenge, however, is often the lengths a developer has to go to, to satisfy the demands of a local community.

While government does construct schools, there is an increasingly healthy demand from the private sector for school stands in new townships. Private education groups developing schools provide exceptional quality education, which is sought after by many residents. In addition to the provision of schools, other essential facilities for the development of communities include pre-schools, parks, libraries, places of worship, and sports facilities. Developers have assumed a responsibility to facilitate the development of these facilities in large new townships and to engage with government and private suppliers to create well-rounded communities.

HOUSING TYPOLOGIES – A NEW TREND

Empowerment can also be achieved by using local labour, through stand allocations, and by utilizing small-business service and product/material suppliers. A basic requirement of developers when stands are serviced and houses constructed is that they do make use of the services of available local labour. Developers are encouraged to engage with local councillors and residents, especially in impoverished areas, so that local labour can be employed and skills developed which, in turn, provides a cash injection into the local economies.

This trend towards high-density solutions has created an added benefit to the industry: It has attracted specialist group-housing developers, with funding, who have expertise in the development of blocks of apartments – knowledge and experience they gained through servicing the higher income housing market. The opportunities presented through high-density housing have vastly increased the industry’s capacity to provide appropriate accommodation.

While the development of large townships in the past was characterized by the provision of mainly free-standing houses, this is now changing quite rapidly. The market has matured and developers are able to design a mix of housing typologies, including sectional title and higher density housing. High-density rental stock has in many instances become the solution to housing large numbers of families who often cannot afford to buy a home, or do not qualify for conventional home loans.

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COVER STORY SAARDA INITIATIVES SAARDA has embarked on several initiatives and interventions in an effort to streamline the development process. The Association has addressed numerous development issues on behalf of its members, and the industry as a whole, over the past year. These include: • Active engagement in providing input into the City of Johannesburg SPLUMA by-laws during the public participation period. While these by-laws have not yet been finalized, it is expected that they will be within the next few months. The City of Tshwane has passed and published its bylaws, while Ekurhuleni Metro has yet to invite public participation. • A close working relationship with the NHBRC has been developed. This has assisted in addressing the backlog of applications for enrolment that had built up while the SAP software system was being implemented. • The extent of the External Services Contributions for newly developed stands adds a substantial cost to a housing package. A SAARDA subcommittee is to work closely with local authorities in addressing the need for a policy that differentiates between higher and lower income housing projects. • Close liaison with the Department of Housing on the practical implementation of the FLISP housing opportunities.

The Chelsea development in Dawn Park, by developer Renico Construction.

Interior of a Protea Glen Manor home in Soweto, by developer Renico Construction.

SAARDA welcomes constructive input and dialogue from stakeholders in the industry in an effort to sustainably produce more houses of high quality at the most affordable prices.

FOR MORE INFORMATION: SAARDA (t) 011 607-8000 (e) info@saarda.co.za (w) www.saarda.co.za

Die Hoewes 218 residential project in Centurion, by developer Caliber.

The Chatty development near Port Elizabeth, by Motheo Construction Group.

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The South African Affordable Residential Developers Association is an association for developers and stakeholders, including attorneys, town planners, engineers, contractors, estate agents and mortgage originators in the Affordable Housing Sector who provide the majority of affordable housing in the current residential market. re

SAARDA has a single goal to be the voice and support body for the stakeholders in the affordable residential housing network and ultimately to provide not only environments for communities to thrive, but also to stimulate the local economy and social growth.

South African Affordable Residential Developers Association

Dedicated to providing affordable houses to the people of South Africa

CONTACT DETAILS AND MEMBERSHIP ENQUIRIES

SAARDA drives change and will continue to serve the affordable housing network by engaging local authorities and industry stakeholders on matters that affect the industry.

Tel: (011) 607 8013 Fax: (086) 602 2481 Email: info@saarda.co.za Web: www.saarda.co.za

CATALYTIC HOUSING PROJECT

Catalytic Fisantekraal setting the stage The City of Cape Town, the Western Cape Government, and residential developer Garden Cities recently handed over the first four of 38 completed units in Fisantekraal near Durbanville. Considered a catalytic housing project, it has been planned as a truly integrated settlement and promises to pave the way forward for other developments.

er town planning regulations, a total of 2,800 houses to accommodate breaking new ground (BNG), social housing and finance linked housing have been approved. The total project cost will amount to R382million over three years. While the building of bonded housing for sale to first-time buyers and middle income homeowners is part of the overall town planning strategy, Garden Cities has responded to the desperate need to house people from informal settlements, and for affordable rental stock and Gap housing. As such, the early stage of this development is concentrated on providing housing for those in the greatest need – low income residents. This first phase, built on a public and private sector partnership, comprises 868 subsidized units earmarked for completion by the end of 2017. The City’s Mayoral Committee Member for Human Settlements, Councillor Benedicta van Minnen, described Fisantekraal as a catalyst for improving the lives of those most vulnerable residents. “A truly integrated, sustainable human settlement is being constructed, with all social, economic and transport amenities. This project is an example of how the City wishes to manage its residential developments going forward – by locating future residential areas for all income groups in relation to economic and work opportunities,” she said. “We are moving towards a new delivery model. The Greenville – Garden Cities development is in line with our densification policy and our transport-oriented development and integrated human settlements frameworks which are, among others, based strongly on partnerships and innovative solutions to mitigate the challenges resulting from increased urbanization,” she stated. The City and the Western Cape Government are funding the infrastructure and top structures, and have also provided the planning, design and implementation input, the standards, specification and approvals for the development.

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Garden Cities provided the land and is the developer, headed by a project team of built environment professionals and with support for facilitation, financial and legal matters. Collaboration continues among the three stakeholders. The allocation of houses for the project has been done in strict accordance with the City’s Allocation Policy.

101 CATALYTIC PROJECTS APPROVED The Department of Human Settlements has approved 101 catalytic public–private partnership projects, valued at R340-billion, to facilitate private sector involvement in government housing initiatives and to accelerate delivery thereof. “Following a public request for submission of prospective mega projects, we have completed a detailed analysis and shortlisting of projects submitted by the private sector and by various spheres of government to be rolled out in the coming three to five years,” Human Settlements Minister Lindiwe Sisulu announced. These integrated catalytic human settlement projects are expected to trigger massive investments by the private sector – as much as R150-billion to match government’s initial R90-billion – in addition to creating many thousands of jobs. “These projects are guided by our ‘breaking new ground’ policy, which we hope will change the face of our cities while providing breaking new ground houses, Gap housing, rental and social housing, and serviced sites for the poor and middle class close to places of economic activities,” Minister Sisulu concluded.

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CONTACT THE CMA FOR MEMBERSHIP INFORMATION Address: Office 0400, Standard Plaza Building, 440 Hilda Street, Hatfield, Pretoria, 0083 Tel: (011) 805 6742 • Email: admin@cma.org.za www.cma.org.za

CONCRETE

Affordable houses built with precast products With the backlog in affordable housing growing, developers are increasingly turning to precast concrete products to speed up construction times while improving the build quality of houses.

ffordable houses today can be built almost entirely from easy-to-use precast materials – from hollowcore floor slabs all the way to walls and roof tiles. And, depending on requirements, many peripherals such as stairs, window sills, basins, counters and other precast units are adding value to the houses and lending a quality touch. Frans Minnaar, Executive Director of the Concrete Manufacturers Association NPC (CMA), also points to precast concrete products as a means of ensuring quality materials are used, thereby preventing costly repairs and rebuilds. Due to skills shortages on the ground, contractors realize that the best way of ensuring quality construction is to have units precast in a factory under controlled conditions, after which they are more easily assembled on site.

MATERIAL OF CHOICE “Whether it be hollow-core floors mated to tilt-up walls, or large masonry units that reduce bricklaying requirements tenfold, these are solutions that work. Then there are ageold traditional building products such as concrete bricks (masonry units), wall tiles, lintels, beams and a myriad of other concrete products that are commonly used throughout the construction phase,” Minnaar says. “When one looks at adjoining infrastructure and service it is also clear to see how precast concrete simplifies construction. From pipes, drains, paving and kerbs, to lamp posts, fences and retaining walls, there is hardly a single area of construction that does not benefit from factory, mass-produced concrete products,” he continues. “Can you imagine a contractor sitting on the side of the road trying to in-situ cast kerb stones? It will take days, and then the mixes have to be thoroughly controlled, and the flow of traffic and pedestrians will have to be stopped. Thanks to precast kerbs, a unit is simply lifted into place, grouted, and is ready to use in a matter of hours. The same applies to houses nowadays. Progressive developers and contractors have already adopted precast products and are using it widely on their construction sites,” Minnaar states.

BUILT RIGHT He adds that buyers also prefer houses built from precast concrete products because they are straight, structurally sound, and can be made to be virtually maintenance-free, requiring no plastering or even painting if units are coloured with pigments during the casting process. Shorter delivery times also mean that buyers have shorter waiting times, which can dramatically improve their satisfaction level.

THE ROLE OF THE CMA The CMA is actively involved with all sectors of the construction industry, including government, developers and contractors. To facilitate better quality housing, the CMA also publishes preapproved housing plans that can be Frans Minnaar, the downloaded and adapted to Executive Director of the meet developers’ or buyers’ Concrete Manufacturers requirements. The plans Association (CMA). meticulously document all the materials required to build the house. In addition, they highlight applicable SANS specifications and make allowance for local by-laws to be incorporated into the final build. Various technical publications are available from the CMA .

FOR MORE INFORMATION: Concrete Manufacturers Association NPC (CMA) (t) 011 805 6742 (e) admin@cma.org.za (w) www.cma.org.za

MAY - JUNE 2016

AFFORDABLE HOUSING FORUM

A question of spatial injustice Photograph by Todd Quackenbush

How would you like an informal settlement in your neighbourhood? That was just one of the thorny but necessary questions asked at the recent ‘Co-creating the future of housing in South Africa’ forum that was hosted by Future Cape Town. The event saw some of the brightest minds and most dedicated participants in the affordable housing arena tackle the question of ‘spatial inequality’ in our country.

apid urbanization. Crisis. Those words were repeated over and over as community leaders grappled with the question of how best to provide affordable housing to hundreds of thousands of needy, and deserving, people in South Africa. Guy Briggs, Director and Head of Urban Design at the firm dhk Architects, opened the forum with some familiar but nevertheless startling statistics: Rapid urbanization, particularly over the past 20 years, has contributed to the current housing crisis that is being felt worldwide. At home, the Western Cape alone is holding an urban population of 5.5 million, expected to rise to 7.8 million city dwellers by 2030. The current delivery backlog on approved houses for the province’s poor stands at an estimated 490,000, and one is left to ask the question: Does the answer lie in quantity or quality? Briggs pointed to some of the underlying problems in housing delivery, namely the scarcity of available land, available finance, and current delivery models. Alfredo Brillembourg, Co-founder of Urban-Think Tank (UTT) and also Chairman for Architecture and Urban Design

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- Swiss Federal Institute of Technology, Zurich (ETHZ), is known for his forward-thinking Empower Shack solution that has been installed within the BT-Section of Khayelitsha. In addressing the notion that cities have to be successfully created, Brillembourg suggested that the general reluctance to share private space is a major underlying problem and that the power to make cities should be transferred from pundits to the actual people who want to live in them. He gave an example in Mexico where a housing development was nothing more than an “island on agricultural land,” and how the people themselves changed that and altered their space by adding markets, shops, green spaces, etc. To crack this nut we’re dealing with, Brillembourg said, all involved parties have to come together, with the architect playing a fundamental role in creating a workable solution. With the architect at the core, and the goal being affordable housing backed by proper infrastructure, integrated collaboration is needed with government, nongovernmental organizations, supporting organizations, and residents.

AFFORDABLE HOUSING FORUM WHO ARE WE BUILDING FOR? In a panel discussion that explored set goals in a social context, Gavin Silber, Board Member of Ndifuna Ukwazi, emphasized that there is real power in design. He said the design function can be used as a tool to negotiate real change, and he urged architects, urban designers and engineers to figure out how best to collaborate to effect a participative design process. Silber continued on to say that communities themselves know best how to solve their problems, and that designers should focus on their skills and stick to design – design that responds to needs as expressed by the community. Khalied Jacobs, Founder of Jakupa Architects and Urban Designers, reiterated that the lack of sufficient housing is beyond serious, calling it a “crisis of spatial injustice.” Acknowledging that there are also political problems at play, he suggested there are enough architects around who are committed enough to be part of a real solution, and that we need more people input. In response, Alderman Marian Nieuwoudt, Chairperson of the City of Cape Town's Human Settlements Portfolio Committee, lamented that settlements continue to be built for the poor without asking the poor if that is what they want. Who are we building for? she asked. She also said that architects who claim to be committed to the cause should be offering their services for free. The Founder of Ikhayalami, Andy Bolnick, agreed, saying that we should constantly push the agenda of the poor, or else their voice is not heard. Bolnick also talked about the role of the architect and designer as facilitators of change, and how the design function should be flexible and be able to change in response to the needs of different communities. Bolnick also said there is a need to shift away from an “entitlement” attitude in order to make way for an enabling environment.

ROLE PLAYERS’ ROLES Briggs made the overt statement that most people cherish their private space over shared spaces and that it’s often the case that affluent communities will not let in social housing. This sparked debate on the role of other stakeholders: Brillembourg was emphatic that government should not delegate its responsibilities to developers and let them decide on important matters like the size and even cost of homes. Instead, government should take full ownership of a development, and appoint qualified researchers, urban designers and architects to finalize all aspects of the settlement before finally opening projects up to developers to build. The discussion continued around the fact that, regrettably, municipalities (the government arm that is closest to the people on the ground) have the least power as they function on a non-funded mandate.

It is the national government that passes down funding and approvals to regional government, who then authorizes local government to proceed. In addition, it was acknowledged that government does not have unlimited funds to devote to housing, and that it can only do ‘so much,’ resulting in the reality that developers do hold a significant amount of power over developments, even if it is not a popular position with every other industry player.

WHILE WE WAIT As the panel reviewed international and varied examples of human settlements, Sizwe Mxobo, Urban Planner with CORC (Community Organisation Resource Centre), reminded us of the very real problems of flooding and fires that threaten the informal settlements in South Africa. His proposal for a solution puts the concept of an ‘inclusive city’ at the centre, supported by women leaders, further augmented by the functions of data collection and information exchange, as well as a savings concept, and slum upgrades with the backing of qualified partners to effect a successful result. Mxobo drove home the point that direct dialogue with the people/community is needed in order for the professionals to be able to solve the community’s problems, which include basic needs while people are waiting on housing. He gave an example where a 450-person informal settlement was served by only 2 cold water taps and 14 chemical toilets, and said that authorities’ decisions are not always the right decisions if they are not made with input from the people who will be impacted. When people have an actual say in actions that are being taken on their behalf, and things then start to improve, they buy into that positive change and make further improvements on their own, he said. He gave another example, where the community worked with authorities on a re-blocking project. After completion, people started painting their spaces, adding balconies, and even building up.

ON THE FRINGES Why are we failing at housing delivery? The panel discussed limited success with re-blocking initiatives, but also raised the problem of building affordable housing developments on city fringes. This approach can be very problematic if not fully supported with infrastructure. (E.g. the very long time taken to commute to-and-from inner cities.) Other issues include the fact that there is such a long turnaround time on applications, said Deon van Zyl, Director with Alwyn Laubscher & Associates (AL&A) and Chairman of the WC Property Development Forum. He suggested that the huge developments being planned rather be broken down into ‘chewable chunks’ that can be implemented quicker.

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AFFORDABLE HOUSING FORUM

Bovain Mcnab, Founder of SHAC - Suburban Housing Action Campaign, also raised the point that we have to find a way to move from informal title to formal title and put a workable policy in place.

AND THEN THERE IS THE GOVERNMENT Willem Steenkamp is Advisor to MEC Bonginkosi Madikizela, the Minister of Human Settlements - Western Cape Government. Steenkamp took the opportunity to explain that, firstly, government focuses on the poorest citizens and aims to provide them with essentials like toilets and other infrastructure or services that will immediately add some dignity to their lives. Then only does affordable housing follow. He further raised the issue of introduced policies that could unintentionally cause delays in housing delivery, like the newly added requirement for a water licence that could take 300 days to satisfy. Steenkamp also admitted that, within government and partly due to government’s limited coffers, there are occasions and situations in which granting finance does not take priority. There is not always a shared sense of urgency within all government divisions. As the forum concluded, Dr Luyanda Mpahlwa from DesignSpaceAfrica made the valid point that the serious issue of providing affordable housing to South Africans is not a one-size-fits-all situation, and that a true solution will only be found through true engagement with the people who need it the most.

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In summary, some final take-away thoughts and ideas the panel shared include: • We need more professionals specifically educated and trained in housing delivery to cope with this crisis. • We should apply what we learn...only by ourselves living in an existing affordable housing ‘solution,’ will we know what affordable housing really should be delivering to our citizens. • We should focus less on redress and more on innovation. • We need a ‘networked university’ for the city. We should cohere the separate aspects of design, finance, build, etc. • We should decentralize and break our cities down into small blocks so that, on a neighbourhood level, each block can develop itself. • We should work on the ground, in and with communities. We should travel the road less travelled. SA Affordable Housing was delighted to attend this important forum, and thanks Future Cape Town for the opportunity to keep the dialogue going.

FOR MORE INFORMATION: Future Cape Town Rashiq Fataar, Founder and Director (e) hello@futurecapetown.com (w) www.futurecapetown.com

TRAINING

CPMD a prominent partner in affordable and social housing markets CPMD, The College of People Management and Development, has become a leader in the South African affordable and social housing training arena. Whilst offering a broad spectrum of property, finance and borrower education related programmes for the past 21 years, the lower end of the market is one of the niche areas the company specializes in.

PMD is an accredited training provider in the property industry and has, for a decade already, successfully been completing customized projects specifically pertaining to the affordable and social housing markets.

PREFERRED INDUSTRY PARTNER Two of CPMD’s most recent projects, awarded by tender process and due for completion by mid-2016, are to be conducted for SHRA (the Social Housing Regulatory Authority). Both projects involve the development of training material and some tuition for social housing institutions. The first is to develop and deliver property management material, and the second is to develop and deliver tenant and property management material on behalf of SHRA . These latest projects follow on CPMD’s prior experience in similar projects for the Banking Association of South Africa as well as the Housing Department (now known as the Department of Human Settlements). CPMD is currently concluding a massive four-year borrower education project on behalf of Nedbank and AFD (The French Development Agency). Graeme Jay, MD of CPMD, says, “We not only have the knowledge and expertise to conduct projects on this scale, relevant to this subject matter, but we are also passionate about providing housing opportunities and housing education for the people of South Africa.” CPMD embarks on these training projects to ensure that borrowers, investors, renters, landlords, developers, agents and all stakeholders alike, are aware of their rights and responsibilities and are given the tools to make informed decisions – both in the rental housing and home ownership process.

Through the training process, CPMD believes, it is not only helping to improve knowledge in previously disadvantaged communities, but also plays a part in building sustainable communities. CPMD has written books and other material and delivered numerous programmes for clients on the subject. The company tailor-makes their learning material for individual organizational needs. This year CPMD is celebrating 21 successful years in business. Follow them on Facebook in May and June for big prizes to be won in their 21st birthday competition.

FOR MORE INFORMATION: CPMD - The College of People Management and Development Christine Lacher (c) 083 304 3195 (e) sales@cpmd.co.za (w) www.cpmd.co.za cpmd.norwood

MAY - JUNE 2016

BRICKS & PAVING

Corobrik pavers contribute to Tembisa’s renewal More than a million of Corobrik’s Champagne PA clay pavers have been used in the second and third phases of the rehabilitation of Tembisa sidewalks in the City of Ekurhuleni, Gauteng.

he revitalization project, initiated by the Ekurhuleni Municipality, has seen the upliftment of Tembisa’s walkways as well as the construction of cycle tracks – both greatly benefiting the 463,000 citizens. The second and third phases of this programme are being handled by Liviero and Moseme Construction. Paving is being done along a 17km stretch, from the north to the south of Tembisa, on either side of the road.

Preparing the pavement for paving in Corobrik’s Champagne PA clay pavers.

“The paving has been specifically done for the benefit of the thousands of pedestrians who walk these roads daily,” explained Len Nel, Contracts Manager at Liviero. “This area has a very high traffic volume, so it is important to provide pedestrians and cyclists with a safe area away from the dangers of the road. The walkways have also been designed for easy use by people with disabilities.” The paved walkways run parallel to the City of Ekurhuleni’s Bus Rapid Transport (BRT) system – known as Harambee – which is currently under construction. Work on the first phase has begun and will see a 56km route from Tembisa Hospital to Vosloorus via Isando, Kempton Park, OR Tambo International Airport and Boksburg. This vital integrated transport system forms another important part of the urban renewal. Commenting on the paving, Nel said the 1,045,550 Corobrik Champagne PA clay pavers have been arranged in a Herringbone pattern. “This is a fully interlocking design that not only looks great visually, but promotes even load-bearing, reducing the possibility of movement within the paving system.” Corobrik’s Teboho Clement Mokoena, who liaised with contractors on the project, added: “This product will be exposed to the harsh African climate yet we can ensure the colour will remain after decades of weathering. The superior skid-resistance provided by the clay pavers will also keep the Tembisa citizens safe, even in wet conditions, while the natural elements making up the paver ensure no heat is reflected.”

Pavements in Tembisa have been paved in Corobrik Champagne PA clay pavers in a Herringbone pattern.

Mokoena said Corobrik is thrilled to be a part of Ekurhuleni Municipality’s urban renewal programme, which is already proving to be extremely valuable to the city’s residents.

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READYMIX CONCRETE

Be wary of cheap products in economic hard times In a time when cash flow is tight, competition fierce and customers unrelenting, building professionals still need to put quality first and procure only quality-assured materials to complete projects successfully, says SARMA.

ith a myriad of new suppliers offering better pricing for seemingly similar products, we must not forget the critical nature of the houses and structures that we build. Material failures can have dire consequences for inhabitants of these structures, not to mention potentially ruining the reputation of companies found to have used inferior products. Southern Africa Readymix Association (SARMA) General Manager, Johan van Wyk, says readymix concrete is a product that cannot be produced much more cheaply without cutting corners. In instances where one supplier is much cheaper than others, it is probably because the company is using inferior, non-SABS approved cement, illegal aggregates, unqualified labour, and/ or non-purpose-built equipment. “It is interesting to note that most SARMAaccredited readymix manufacturers’ prices will be within a fairly narrow band as a result of fixed input costs. These relate to raw materials, capital equipment, labour, transport and other costs, and do not differ very much from supplier to supplier. Where larger producers may gain a cost advantage over smaller operators for materials, the smaller ones may make up for these with lower capital repayments or payrolls. This ultimately has the effect of levelling the playing field and resulting in a threshold where prices are acceptable and producers remain profitable,” van Wyk says. “Where alarm bells should be sounding for building and procurement professionals is when a supplier suddenly arises that far undercuts the usual suppliers.”

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Construction in progress.

READYMIX CONCRETE

“Then the question should be asked whether the supplier is SARMA-accredited or has any other quality certification in place, such as ISO9001 or similar. While anyone can afford to buy a mixer truck and raw materials to produce concrete, not everyone does it right. And that is where certification is the only documentary proof that the supplier complies with anything,” he states.

UPHOLDERS OF STANDARDS “Not all suppliers have what it takes to produce the kind of quality concrete that is required in South Africa. Dishonest suppliers may even try to provide concrete that does not conform to specifications and which may lead to the premature failure or even the collapse of the entire structure. No matter how genuine or professional the readymix supplier may seem (or how big the company is that they represent), if they are not SARMA members and are not SARMA-accredited, the quality of their concrete can simply not be assured,” he cautions. “That is why SARMA was established – to regulate and formalize the industry, as well as accredit only readymix suppliers who comply with all the necessary requirements to produce quality concrete. We conduct stringent audits on all SARMA member plants (on an annual basis) to ensure compliance with quality standards, as well as health, safety and environmental compliance,” van Wyk continues.

Readymix concrete is the most widely used building material in South Africa, but care needs to be taken to ensure only quality manufactured products are used on our building sites.

“The plants are also operated with the safety of workers as a top priority and are meant to have a positive influence on surrounding communities. Considering the size and number of mixer trucks, road safety forms an integral part of the annual audits and helps prevent unnecessary accidents on our roads,” he concludes.

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HOUSING RESEARCH

Developing higher density, affordable housing in the inner city of Cape Town The inner city streets of our iconic Mother City have plenty to offer, except when it comes to affordable housing. In this white paper extract shared with SA Affordable Housing, we learn about the challenges in developing a viable answer that will work for Cape Town. The research findings are not only enlightening, they point towards possible solutions that warrant a closer look. Authors: Robert McGaffin, Mark Massyn, Francois Viruly and Nicole Hopkins (UCT Nedbank Urban Real Estate Research Unit in the Department of Construction Economics and Management, University of Cape Town)

Photo by: Isabel Sommerfeld

ape Town is far from unique in having a housing problem. Although (as with many other major cities) its problem is multi-dimensional and complex, it primarily comes down to three defining issues: A significant backlog in the supply of units, houses being built at too low a density to viably support city functions such as public transport, and the poor location of many settlements when it comes to access to economic and social facilities. These features, although common to many South African cities, tend to be more acute in Cape Town where the cost of well-located land, such as that found in the inner city1, is particularly expensive. Despite numerous policy intentions to address these problems, very few affordable residential units have been built in the inner city of Cape Town2. It is important to ascertain why this is the case. For housing to be developed at scale in the inner city, two imperatives must be met.

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First, the final value of new housing must exceed the cost and profits required to develop it. Secondly, this housing must be targeted at submarkets containing a large percentage of the cityâ&#x20AC;&#x2122;s households, namely low- to middle-income households. However, as household income is a function of education, skills and the state of the economy, it is unlikely that the level of effective demand will increase in real terms in the short to medium term. Consequently, any strategy aimed at increasing affordable residential development in the inner city needs to address the factors driving the costs of such developments. The inner city includes the central business district and immediate suburbs adjoining it. 2 It should be recognized that the inner city does not represent the only well-located sites in Cape Town. Other locations do exist that also provide good access to transport and economic opportunity. 1

HOUSING RESEARCH DEVELOPMENT COSTS Table 1 outlines the typical cost structure of a development, notwithstanding that these can vary from project to project.

The construction costs can be further broken down as follows:

Table 1: Breakdown of total development costs

COST CATEGORY

PERCENTAGE

Land Cost

15% - 20%

Construction Costs

40% – 45%

Professional Fees

Financing

Marketing

Contingencies

10%

Developer’s Profit

10% – 15%

TOTAL COSTS

100%

Table 2: Components of total construction costs

COST CATEGORY APPROXIMATE PERCENTAGE COST ELEMENTS Substructure

10%

Foundations, piles and basement construction.

Superstructure

45%

Building frame and the external cladding, which will include reinforced concrete structures, internal and external brickwork, the external façade and the roof structure.

Services3

30%

Civil services (water reticulation, sewage, roads, storm water, street lighting), electrical services (bulk and internal reticulation) and internal services (plumbing, lifts, escalators, air conditioning, fire protection). Lifts and air conditioning are often large cost items, especially in a multi-storey building.

Finishes

10%

Floor finishes, wall finishes, ceilings and all other specialist finishes. The wall and floor finishes are normally the largest contributors, as ceiling costs can be minimized if the underside of the floor slab is considered an acceptable finish for a hanging ceiling.

Fittings

Built-in cupboards, countertops and other such items are usually the smallest contributors to the total building costs, as they generally only apply to the kitchen and bedroom.

TOTAL

100%

TOO HIGH, OR TOO LOW? According to inner city developers, a number of factors can all significantly influence costs. These include the height of the building (which indicates density), building standards and regulations, parking requirements, ground conditions, the building type (new build versus redevelopment) as well as the current position of the property cycle. The cost of land is a relatively significant fixed cost associated with constructing a building. Therefore, notwithstanding that the building efficiency may be reduced, generally the higher the building, the lower the land cost per unit will be – and the more affordable a unit can become. However, higher buildings will also incur higher costs because of the design and building technologies needed to support such structures. However, these costs will not increase in a linear manner but rather in a stepped manner as certain heights trigger different building requirements.

Notwithstanding the above, the unit cost of a building will generally decrease as the number of floors increases, because the fixed costs will be spread across a larger floor area. This, coupled with the fact that the larger floor area should generate a greater rental income, means it is often more financially viable to develop a taller building. However, this strategy often does not materialize, as the height of a building is often determined by planning restrictions rather than optimal economic outcomes. While many building standards are designed with beneficial health and safety outcomes in mind, they can also have a significant impact on the total costs incurred, and hence on the financial viability of a building. The costs of compliance are generally passed on to the end-user in the form of higher rents and prices, which may result in the units becoming unaffordable. Clearly, a balance has to be achieved between providing safe buildings that are also affordable. It should be noted that in an inner city context, some of the bulk and reticulation services costs will be incorporated in the land price or the development contributions paid. 3

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HOUSING RESEARCH MORE COST DRIVERS Another big cost driver is parking. There is usually limited space on a site to provide open, surface parking, and the provision of basement parking adds significant costs, often making a development unfeasible. As unit sizes have become smaller, almost the same amount of space is required for parking, which in some cases can reduce the density of a development by up to 50%. The current initiatives by the City of Cape Town to apply the parking standards in a more flexible and targeted manner should therefore be encouraged and supported. Physical conditions can have a significant impact on the financial viability of a development. While the ground conditions and availability of infrastructure in the inner city is generally not seen as a major constraint to supply, the fact that the ground conditions tend to vary creates a level of uncertainty that is difficult to cost and factor into a feasibility study. In some areas, the ground conditions are sandy and unstable, while in others, large rock deposits exist. In the latter case, blasting may be required and this can create several logistical and legal issues. Furthermore, basement areas are subject to high water tables and flooding, which may require pumping on an ongoing basis. The feasibility of a development is often influenced by conditions in the macro-economy and the position of the property cycle. A rise in building activity tends to place upward pressure on the demand for material and labour, whereas it is not usual for building cost increases to rise significantly above the inflation rate during a construction boom. Unfortunately the above cost drivers further reduce investment into affordable housing because many of the costs associated with the construction of residential spaces are independent of the residential market that one is targeting. For example, many of the substructure, superstructure and servicing costs are generally the same whether one is constructing upmarket apartments or affordable units. In fact, savings can only really be made on land costs and the level of finishes, which make up approximately 20% of the total costs. Therefore, while many of the costs of building affordable or upmarket units are similar, one can earn much higher rent from the latter and therefore it usually makes financial sense to build for this market.

OVERCOMING COSTS BY REDEVELOPING The most significant cost of a building is associated with developing the substructure and superstructure and installing the services. So, it is not surprising that many developers have attempted to reduce costs by redeveloping existing buildings where these elements are, in effect, being acquired at a depreciated rate. Broadly, there are three types of redevelopment methods:

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1. A simple refurbishment of an existing residential building via minor, non-structural improvements that take the form of cleaning and painting. 2. Similar to above, but also involves a degree of internal reconstruction to convert a building from, say, a threebedroom unit to one- and two-bedroom units, which are in greater demand. 3. Greater modification â&#x20AC;&#x201C; the conversion of a commercial or industrial building into residential accommodation. Redevelopment costs are higher per unit because significant changes usually have to be made to the internal services (plumbing, electrical, etc.) and partitioning of the building. All these redevelopment costs will vary and be influenced by the size of the block, the existing configuration of the building(s) on the site, and the design (floor-to-ceiling heights, etc.) and materials (faĂ§ades, internal partitioning, etc.) of the building being converted. The redevelopment of existing buildings has been one of the main ways in which affordable housing units have been developed in cities such as Johannesburg and Pretoria. This process is illustrated here in Figure 1 where, over time, a buildingâ&#x20AC;&#x2122;s value declines due to physical, functional and economic obsolescence, which incentivizes and allows redevelopment of the site. Figure 1: The timing of redevelopment showing the relationship between residual land value and regeneration (modified from Harvey and Jowley, 2004).

At point A, the newly developed property (say an office block) has a land value that reflects the highest and best use of the site. As time progresses and the building ages, the value of an alternative land use becomes more apparent. At point B, the value of the land in its current state will have reduced to zero, reflecting the fact that the property fails to provide an acceptable return. This is typical of buildings that have been overrun by slumlords and are in a high state of neglect. Each parcel of land can, however, be put to various alternative uses. The value of an alternative use for the land will increase over time as market conditions change and the building, in its current use, becomes increasingly obsolete.

HOUSING RESEARCH At points C, an alternative use (excluding demolition costs) starts showing a positive value, but it isn’t until point D that the highest-valued alternative use of the property will provide a land value that equals that of the existing property’s function. It is therefore at this point that the potential for redevelopment of the site exists. As a result, point D represents the point at which an alternative use (say higher income residences) can start competing for the site. However, with time and assuming that no other uses have been able to compete for the site, the current use depreciates further until point E. At this stage the value of the property in its existing use has declined to a level that the development of affordable housing becomes possible.

OUTCOMES Property in Johannesburg and Pretoria was able to decline to point E in Figure 1, which made it feasible for it to be redeveloped into affordable housing stock. This situation was further aided by the fact that many of the inner city buildings were already residential in nature and therefore only incurred costs for minor refurbishments. In Cape Town however, due to the high physical amenity value of the inner city, as well as numerous urban management initiatives undertaken, the existing office and limited residential stock only declined to point D,

where it was feasible to redevelop it into higher income, higher density residential units. The difficulty of converting the B- and C-grade office space in Cape Town’s inner city into affordable residential units is highlighted by the following generalized calculation: Assuming B- and C-grade office space in Cape Town’s inner city fetches a net rental of between R45/m2 and R50/m2, this translates into a value of about R5,760/m2 at a market capitalization rate of 10% (cost of capital). However, in order to deliver a 45m2 apartment for R500,000, the costs must be limited to R11,100/m2. That implies that, after the acquisition of the property, only R5,340/m2 remains to cover the costs of redevelopment – an amount that is substantially short of current market development costs. Thus, the only way that the redevelopment from lower-grade office space to affordable housing could be viable under these market conditions is if significantly smaller units are supplied. This dynamic of developing smaller units to make a project viable is in fact playing itself out in South African cities where the values of the inner city office and residential stock have increased due to urban management initiatives and successful conversions. This increase in value of existing stock is causing developers to begin delivering residential units as small as 12m2–15m2. Another way in which developers have overcome the problem of the high costs of conversion is by creating shared ablution and cooking facilities and using internal dry walling.

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HOUSING RESEARCH

Ordinarily, the market would reject these measures and developers would find it difficult to find tenants prepared to live there; however, there appears to be some scope in student accommodation as this market is generally less discerning about accommodation requirements and has a lower need for parking.

CITATION AND ACKNOWLEDGEMENTS

With this in mind, an alternative opportunity may exist to deliver affordable units outside of Cape Town’s inner city on the Voortrekker Road and Main Road corridors of Maitland and Salt River where a greater number of depreciated commercial and residential buildings exist.

BIBLIOGRAPHY

CONCLUSION AND NEXT STEPS The state has attempted to address the low provision of affordable housing in inner cities by drafting inclusionary housing policies, releasing state land to a limited degree, encouraging the limited supply of social housing, and attempting to introduce a demand-side subsidy in the form of the Finance Linked Individual Subsidy Programme (FLISP). But despite the good intentions of many of these interventions, they have largely failed to deliver significant numbers of affordable inner city housing units. This means efforts must be made to overcome the valueversus-cost challenge outlined in this paper, so that greater private sector affordable housing units can be delivered. While no silver bullet exists in this regard, the following interventions would assist the process: 1. To start, the option to save on transport costs must be exercised by developing affordable units in better locations. 2. Higher density, smaller units must be provided to overcome the higher land costs and to make these units more affordable to lower income households. 3. Interventions that reduce total development costs should be encouraged, such as the release of public land, streamlining development rights and the transfer processes, ensuring the availability of requisite infrastructure, relaxing parking standards, accounting for the cumulative effect of onerous health and safety standards on costs, and opposing any cartel-type activities on tender processes and input costs. 4. Where possible, existing buildings should be redeveloped. 5. The development of new housing stock should not be targeted only at the affordable submarkets where it is the most difficult to make the value-versus-cost equation work. Instead, it should also be targeted at middle to higher income submarkets where existing stock in these markets can then filter down to the more affordable markets through a process of depreciation.

For more information, the co-author Robert McGaffin can be reached via email at Robert.mcgaffin@uct.ac.za.

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1. Citation: Mark William Massyn, Robert McGaffin, Francois Viruly, Nicole Hopkins, (2015) “The challenge of developing higher density, affordable housing in the inner city of Cape Town.” The paper is based on an academic paper published in the International Journal of Housing Markets and Analysis [2015: Vol.8 (3)]. 2. The research was undertaken through the University of Cape Town (UCT) Nedbank Urban Real Estate Research Unit.

Affordable Land and Housing Data Centre (2010), ‘R500 000 and below: exploring the GAP market in South Africa’, Urban LandMark Regional Conference (November 2010). Available at: http://www.alhdc.org.za/ resources (accessed 4 February 2014) Appraisal Institute (2008), ‘The Appraisal of Real Estate’. The Appraisal Institute. Illinois Balchin, P., Bull, G. and Kieve, J. (1995), ‘Urban Land Economics And Public Policy’. 5th Edition.’ London. McMillan Press Ltd Beauregard, R. A . (2005), ‘The textures of property markets: Downtown housing and office conversions in New York City’. Urban Studies, Vol. 42, pp.2431 – 2445. Belniak. S.T., Lesniak, A ., Plebankiewicz, E. and Zima, K. (2013), ‘The influence of the building shape on the costs of its construction’. Journal of Financial Management of Property and Construction, Vol. 18, pp. 90 – 102. Bertaud, A. (2009), ‘Note on spatial issues in urban South Africa’, [online]. Available from: www.alainbertaud.com [Accessed 26 November 2013] Bertaud, A . (2010), ‘Land markets, government interventions, and housing affordability’. Working Paper 18. Wolfensohn Centre for Development. Brookings Institute Cloete, C. E. (2005), ‘Property Development’. Vol 1. 2nd Edition.’ Jetline Lynwood Glen, Pretoria, South Africa Durning, A. (2013), ‘Parking rules raise your rent’, [online]. Available from: http://grist.org/cities/parking-rules-raise-your-rent/#.UjGi7Sw5IZE.email [Accessed: 15 September 2013] Galster, G. (1997), ‘Comparing demand-side and supply-side subsidies’, Housing Studies, Vol. 12, pp. 561 - 577 lahe, F. and Lee, D. (1989), ‘Microeconomics – Theory and application’. G Second Edition. Harcourt Brace Jovanovich, Inc. Orlando Goodall, B. (1972), ‘The economics of urban areas’. Urban and Regional Planning Series. Oxford. Pergamon Press Harvey, J. & Jowsey, E. 2004, Urban land economics, 6th edition, Palgrave Macmillan, Basingstoke, Hampshire Heath, T. (2001), ‘Adaptive re-use of offices for residential use’, Cities, Vol. 18, pp. 173 – 184. Khan, S. and Khan, F. (2012), ‘Provision of sustainable and liveable low income human settlements in the province of KwaZulu-Natal, South Africa – an analysis of policy contradictions and challenges’, Journal of Human Ecology, Vol. 40 Number 1, pp. 17-31 cDonald, J. and McMillen, D. (2011), ‘Urban economics and real estate: M Theory and policy’. 2nd Edition. Hoboken, NJ. Wiley and Sons, Inc. McIntosh, A . and Ellis, R. (1996), ‘City centres: do they have a future for property’. Proceedings of the Royal Institute of Chartered Surveyors –The cutting edge conference Remoy, H., De Jong, P. and Schenk, W. (2011), ‘Adaptable office buildings’. Property Management, Vol. 29, pp. 443 – 453. Remoy, H. T. and Wilkinson, S. J. (2012), ‘Office building conversion and sustainable adaption: a comparative study’. Property Management, Vol. 30, pp. 218 – 231. SERI (2011) A resource guide to housing in South Africa 1994 – 2010: Legislation, policies, programmes and practice. Socio-economic Rights Institute of South Africa. Turok, I. (2009), ‘Driving density higher: challenges for central Cape Town’, working paper, African Centre for Cities, University of Cape Town, 14 July 2009. Turok, I. (2010), ‘Deconstructing density: strategic dilemmas confronting the post-apartheid city’, Cities, Vol. 28, pp. 470-477 Venter, C., Biermann, S., and van Rynaveld, M. (2004), ‘Low-cost housing location in South African cities: empirical findings on costs and benefits’. Proceedings of the 23rd South African Transport Conference (SATC 2004). Pretoria. Yates, J. and Whitehead, C. (1998), ‘In defence of greater agnosticism: a response to Galster’s ‘Comparing demand-side and supply-side subsidies’, Housing Studies, Vol. 13, pp. 415 - 423

CMA AWARDS

CMA Awards:

Judges reward bold advances in precast concrete The results of the CMA Awards for Excellence competition, announced at a gala dinner in Johannesburg on 23 April, suggest that advances in precast concrete technology were significant influencers in the judging process.

Some of the CMA Awards for Excellence trophy winners seen here at the awards ceremony: Gert van Wyk (left), Marketing Manager of SmartStone with the Precast for Life Trophy; Musa Mkhizwana, Sales Director of Bosun with the Innovation Trophy; Gerald Blackburn of Concrete Units with the Technical Excellence Trophy, and Brian Cook of Concrete Units with the Aesthetics Commercial Trophy.

he judges had no hesitation in awarding the concrete cladding of No. 1 Silo at Cape Town’s V&A Waterfront the Aesthetics Commercial Trophy. Besides its striking visual appeal, which showcases the beauty of precast concrete construction at its best, the project also involved high levels of skilled precast concrete engineering. Similarly, the judges were unequivocal in nominating the Gouda Wind Farm concrete tower project for the Technical Excellence Trophy, which also reflects substantial levels of technical engineering input.

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It’s a project with a pronounced innovative bias, being the first time that a South African wind farm used precast concrete segments in the construction of its towers, which in this instance were 100m high. Not surprisingly, the project was also entered into the Innovation category where it prevailed as a Commendation Winner. Entries closed on 16 October last year and the judging took place on 23 November at the Johannesburg offices of PPC Cement, the main sponsor of this year’s event.

CMA AWARDS

The five judges, all leading professionals in the field of construction, comprised: • Antoinette de Beer (Landscape Architect and Director of Arla Consulting) • Hugh Fraser (Architect and Media Manager of Paragon Architects) • Malcolm Pautz (Civil Engineer and President of the South African Institution of Civil Engineering) • Abe Thela (Civil Engineer and a Director of Nyeleti Consulting) • Bert van der Heever (Quantity Surveyor and Managing Director of Bert van der Heever Bourekenaars Ingelyf) Commenting on the Aesthetic Residential category, CMA Executive Director, Frans Minnaar, said that although this year’s entry crop was generally of a very high standard, the judges felt that none of the entries in this particular category stood out sufficiently to merit a trophy award. Instead, a single commendation winner was recognized.

Over 1,000m² of precast concrete panelling was used to clad a section of the external façade of No.1 Silo, one of Africa’s most advanced sustainable buildings. Manufactured by Concrete Units, the project took first place in the Aesthetics Commercial category of the CMA Awards for Excellence competition.

“The CMA has always advocated the maintenance of high standards in the manufacture and application of precast concrete products and this year’s Awards for Excellence competition once again reflects this. Although we would have been happier had all six trophies been awarded, the absence of a trophy winner in the Aesthetics Residential category does have a positive spinoff in that it emphasizes that CMA awards are only made when they are merited. As always, the judges were briefed to apply strict appraisal criteria and not to allocate awards where they felt they were not fully justified,” Minnaar stated. “However, I am pleased to note the many other projects, especially those in the Aesthetics Commercial, Technical Excellence and Innovation categories, which were certainly good enough to have taken an award, but did not do so due to the stiff competition.”

THE WINNERS Interest in this year’s competition was very high, with a total of 117 entries received. Some projects were entered in two or more categories, the Gouda Wind Farm being one example. Apart from the Aesthetic Residential category, all other categories posted two commendation winners each.

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CMA AWARDS 1. AESTHETICS COMMERCIAL (OUT OF 47 ENTRIES RECEIVED) TROPHY WINNER • Concrete Units

COMMENDATION WINNERS

PROJECT DETAIL For casting the precast concrete panelling for No. 1 Silo at Cape Town’s V&A Waterfront

PROJECT DETAIL

• SmartStone Midrand

For supplying pavers and coping for the Thaba Moshate Hotel Casino and Convention Resort in Limpopo

• Bosun

For providing drycast paving blocks for the courtyard of BMW’s head office refurbishment project in Midrand

2. COMMUNITY UPLIFTMENT (OUT OF 9 ENTRIES RECEIVED) TROPHY WINNER • Shukuma Bricks

COMMENDATION WINNERS

PROJECT DETAIL For providing concrete pavers for the paving of gravel roads in Walmer Township, Port Elizabeth

PROJECT DETAIL

• Hydraform

For supplying concrete block-making machines for the Radway Green Housing project in the Eastern Cape

• C.E.L. Paving Products

For producing 6,400m² of paving for surfacing gravel roads in Kassiesbaai/Arniston in the Western Cape

3. TECHNICAL EXCELLENCE (OUT OF 26 ENTRIES RECEIVED) TROPHY WINNER • Concrete Units

COMMENDATION WINNERS

PROJECT DETAIL For manufacturing 782 precast concrete wind tower segments for the Gouda Wind Farm project in the Western Cape

PROJECT DETAIL

• Concrete Units

For manufacturing precast concrete rock print panels for the Mouille Point Sea Wall project in Cape Town

• Aveng Infraset

For providing non-standard portal culverts for the Tweefontein Optimisation project in Mpumalanga

4. INNOVATION (OUT OF 15 ENTRIES RECEIVED) TROPHY WINNER • Bosun

COMMENDATION WINNERS

PROJECT DETAIL For introducing the Castle Bottom Kerb

PROJECT DETAIL

• Concrete Units

For the Gouda Wind Farm towers (as noted above)

• Rocla

For casting 128 precast concrete cabins for housing photovoltaic equipment in the Free State and Northern Cape

5. PRECAST FOR LIFE (OUT OF 8 ENTRIES RECEIVED) TROPHY WINNER • SmartStone

COMMENDATION WINNERS • C.E.L. Paving Products

PROJECT DETAIL For supplying Fan Cobble paving blocks for the Waterfront at Knysna Quays project in Knysna

PROJECT DETAIL Paving for Croydon Residential Estate as well as for Houtkapperspoort Mountain Retreat Cottages in the Western Cape

6. AESTHETIC RESIDENTIAL (PRIVATE SINGLE DWELLING) (OUT OF 12 ENTRIES RECEIVED) COMMENDATION WINNER • Bosun

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PROJECT DETAIL For the large, unbevelled urban pavers at a Pretoria residence

CMA AWARDS

The Walmer Township Paving Project. In total, 25 people were hired. They showed a tremendous willingness to learn the following skills: • Laying pavers, kerbs and channels • Pricing bill of quantities for future tenders • Measurements • Management of labour • Invoicing What were once dusty gravel roads were transformed into aesthetically pleasing and practical low-maintenance surfaces using 80mm interlock pavers manufactured by Shukuma Bricks.

JUDGES’ COMMENTS

COMMUNITY UPLIFTMENT TROPHY WINNER: SHUKUMA BRICKS

The depth of involvement by the community beyond mere employment ensured that valuable skills filtered down.

PRODUCT INFORMATION

(WALMER TOWNSHIP, PORT ELIZABETH, EASTERN CAPE)

80mm interlock pavers, class 40/2.6 (grey)

PROJECT DETAILS

PROJECT TEAM

This Nelson Mandela Bay Metropolitan Municipality project formed part of the Triennial Premix Tender Works Packages and involved upgrading roads in Walmer Township. In addition to creating jobs, it simultaneously provided local community members with an opportunity to learn valuable skills.

CLIENT: Nelson Mandela Bay Metropolitan Municipality ENGINEER: Worley Parsons MAIN CONTRACTOR: Rand Civils MANUFACTURER: Shukuma Bricks

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CMA AWARDS

RADWAY GREEN Radway Green, an Alternative Building Technology (ABT) project, earned Hydraform a commendation in the Community Upliftment category. Completed near Grahamstown in the Eastern Cape and initiated by the Department of Rural Development, it enabled 27 displaced families to build their own houses using local materials while acquiring valuable building skills. In total, 126,000 blocks were made during the project, using two Hydraform block-making machines.

KASSIESBAAI ROADS Earning C.E.L. Paving Products a commendation in the Community Upliftment category, the Kassiesbaai Roads project in Arniston was six years in the making. The upgrading of the gravel roads in this quaint, historical Southern Cape fishing village required input and approval from Heritage Western Cape â&#x20AC;&#x201C; which was granted after prescribed conditions pertaining to the type of pavers used and their layout were agreed to. Another condition was the use of local labour as the area has a high unemployment rate. In total, 6,400mÂ˛ of concrete block paving, manufactured by C.E.L. Paving Products, was laid and 28 jobs (13 skilled and 15 unskilled) were created to the complete satisfaction of the residents and the client. Dust generated from the gravel roads as well as washed-out roads from heavy downpours have been virtually eliminated. For more information, visit the CMA website at www.cma.org.za.

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Conference

∙ Trade Expo

11 - 12 August 2016 | Cape Town International Convention Centre

Conference

∙ Trade Expo

CLIMBING TO NEW HEIGHTS IN THE WESTERN CAPE’S CONSTRUCTION INDUSTRY What to expect?

3500+ attendees

20+

hours dedicated networking

100+

exhibiting companies

40+

media and association partners

Conference Trade Expo



R1,5 million+ marketing coverage

Cape Construction Expo enables you to meet the entire construction value chain, and conclude several months of customer interaction in just a few days.

Join the conversation

CapeConstruction

www.cape-construction.co.za

Cape-Construction

@CT_Construction #capeconstruction

LEGISLATION

White Paper gives hope to North West The North West Department of Local Government and Human Settlements is optimistic that the White Paper on Human Settlements will help improve its provision of integrated human settlements.

he Department recently held a two-day policy consultative workshop that will contribute towards the creation of the Human Settlements Act, which is envisaged to come into effect next year. The objectives of the provincial workshop included reaching consensus on human settlements policy and legislative proposals, determining which matters still require improvement, and developing new proposals where necessary. As a result, the North West Department, along with other provincial departments, is now in the process of making proposals to the National Department of Human Settlements for the development of comprehensive human settlements policy and legislation. Workshop participants included representatives from the national department, sector departments and local municipalities. Additional targeted structures for consultation included government agencies, nongovernmental organizations, the private sector, academia, civil society and professional bodies. The Department’s Chief Financial Officer, Mandla Magwetyana, said: “Twenty-one years into the development and implementation of housing and human settlements reforms, the legislative framework, policies and programmes require new thinking and strategies that respond to the latest and emerging challenges while addressing future needs.” Various investigations, research, reviews and evaluations on human settlements policy and programmes have identified numerous shortcomings in policy, and divergence in the implementation of programmes. Among the challenges identified are: • The high cost of well-located land for human settlements development; • Inability to adequately respond to the diverse needs of low- to middle-income households; • Escalating costs of development for government; • Poor quality of construction; and • Lack of civil society involvement.

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Carletonville, North West province: Tau Tona Gold Mine, part of mining multinational AngloGold Ashanti's west Witswatersrand operations. Photo: Anglogold Ashanti, Media Club South Africa. (www.mediaclubsouthafrica.com) Other matters to be considered in the drafting of the Act are dolomitic areas, remote rural areas, economic sustainability in mining areas, bulk infrastructure, the role of municipalities, and lessons from other countries. At this time, it is hoped that the Human Settlements Act will come into effect in 2017. Source: SAnews.gov.za.

Affordable Housing 2016 Elevating Affordable Housing Delivery in Africa 20 – 22 July 2016, Sandton Sun Hotel, Johannesburg, South Africa ABOUT THE EVENT Africa has experienced slow service delivery when it comes to the provision of affordable houses. The housing backlog that exists in many African countries needs to be addressed in many innovative ways that will ensure that the delivery of good quality, affordable shelter is addressed. Effectively providing high quality Affordable Housing remains key on the agenda for both the government and private sector, due to the high demand from people who are striving to become homeowners and improving the quality of their lives. With Africa having the highest rate of urbanisation in the world, practical and manageable solutions are needed to keep up with the pace of demand for Affordable Housing on the continent. Affordable Housing 2016 aims to tackle issues such as how to deal with the bureaucracy surrounding affordable housing and how to streamline processes, sourcing project finance for large-scale affordable housing projects, AND how to deal with informal settlements and slums that have arisen as a result of slow service delivery.

KEY FOCUS AREAS

WHO SHOULD ATTEND?

1. Unpacking the legislative framework governing Aﬀordable Housing, and where it can be improved

National Government Provincial Government • Municipalities Property Developers • Mines Banks & Financial Institutions Investment Firms • Parastatals Consulting Engineers • Contractors Construction Companies • Architects

2. Delve into the various funding initiatives that have been developed to fund projects in the Aﬀordable Housing sector 3. How to address the issue of informal settlements and slums that are taking root in African cities 4. A practical and site visit presented on the 3rd day

HOW TO REGISTER? Email terrim@amc.intsa.com with your contact details and request a brochure! Sponsorship opportunities: email Angela Dube at angelad@amc-intsa.com Call +27 (0) 11 341 1000 today! Looking forward to hearing from you.

We look forward to your participation in this major event.

Please email terrim@amc-intsa.com with any questions or to register.

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