SEPT/OCT 2017
THE SOUTH AFRICAN PROPERTY INDUSTRY MAGAZINE
10
WEALTHIEST
AFRICAN CITIES
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2 017 PR O P E RTY S E C TO R CO D E R I P P L E EF F E C T:
AGENT OR AGENCY
I NT E RV I E W
AMANDA CUBA ON ENABLING REAL ESTATE ROOKIES
AFFORDABLE ACCOMMODATION
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INDUSTRY NEWS
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f you’re a property developer or agent involved in selling urban developments, you will be aware of increasing pressure from government to provide affordable housing. On page 26, Deon van Zyl sees big opportunities in being part of the solution. He says affordable inner-city residential accommodation – with commercial and retail spin offs – is the future. And it need not be at the expense of profits. In our cover story, Amanda Cuba of RE/MAX Southern Africa reminds us that real estate has always been a place where ambitious entrepreneurs find opportunities. This driven woman personifies seizing the moment. On page 18, Cuba shares her views on moulding more real estate industry “enablers”. In 2017 changes were made to the Property Sector Code. What sounds confusing is actually quite simple. Legally, an individual agent is not required to be BEE-compliant. But it could be a smart idea if you’re keen on doing business with the portion of the local economy that requires BEE compliance to contract. Read more on page 23. As always, we value your input in the online debate at propertyprofessional.co.za or sign up to our e-newsletter by clicking on the newsletter tab.
SAPOA’S NEIL GOPAL: CHANGING CITIES
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TOOLS OF THE TRADE
Kim Maxwell PUBLISHED BY THE CREATIVE GROUP 6 Beach Road, Old Castle Brewery, Woodstock 7925 087 828 0423 facebook.com/PropertyProfessional twitter.com/Property_Prof
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THE 2017 PROPERTY SECTOR CODE UNPACKED
18 26
RE/MAX Southern Africa’s
AMANDA CUBA on barriers to entry
Five home staging solutions to sell that property
36
How servitudes affect values and access
THE CREATIVE GROUP MANAGING DIRECTOR Terence Hewitt terence.hewitt@thecreativegroup.info Editor Kim Maxwell Content business manager Catherine Davis Creative director Leah de Jager Copy editor Kirsty Wilkins Group digital editor Lauren Joubert
ADVERTISING Sales and marketing manager Michèle Jones michele.jones@thecreativegroup.info | 084 246 8105 Advertising, production and subscriptions Jackie Maritz jackie.maritz@thecreativegoup.info Printing Paarl Media | Disclaimer: the publisher of this magazine gives no warranties, guarantees or assurances and makes no representation regarding goods or services advertised within. Information correct at time of printing. © Copyright The Creative Group. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from the publisher. The publisher is not responsible for unsolicited material.
16/08/2017 11:22
LOCAL NEWS
LOCAL INDUSTRY NEWS RENTAL PROPERTY DEMAND INCREASES
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ncreasingly low confidence levels and mounting affordability pressures among South Africans indicate increased demand for rental properties. The PayProp Rental Index, which outlines trends on a quarterly basis in the residential rental market, reported that in the past quarter the weighted average national rental exceeded R7,000 for the first time. Johette Smuts, head of data and analytics at PayProp, says that South Africa is in a technical recession for the first time since 2009. Says Smuts: "And it doesn’t help that our unemployment rate is at its highest level in 12 years." The spike in rental growth towards the end of 2016 was temporary, most likely a result of holiday rentals. “The weighted average year-on-year growth rate in Q2 2017 (6.87%) is lower than in Q1 (7.62%) and more in line with previous growth rates.” The weighted national rental average for Q2 2017 was R7,080. The Western Cape is the only province with a (slight) upward trend over the past four quarters, she says. It is the most expensive province to live in as it attracts the highest rent. There has been a “semigratory” influx of people from other provinces, leading to higher rental prices in the Gauteng region. Says Smuts: “We expect this trend to continue and Western Cape rents to continue their doubledigit growth, at least in the short term.” On the flip side, a downward trend has been tracked in the Eastern Cape, Free State and KwaZulu-Natal. This could indicate an oversupply in rental properties in those areas.
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Buying property isn’t about just picking a location and doing the paperwork. So many steps along the way require a human touch — but that human touch has to be delivered by a properly trained professional who understands not just the property-buying business, but the financial implications for all the involved parties as well
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What’s in a complex name
Sectional scheme estates
6,729
Registered freehold estates South Africans love living in townhouse complexes and residential estates, yet it seems difficult to find original names for them. Lightstone Property recently pulled a national list of the
top 20
complex names, the number of repeat occurrences and the average value of a unit in each complex. Taking joint first place for complex names was PANORAMA (the average unit value was R1,300,354) and KIEPERSOL (averaging at R863,742 per unit). Their names were both used 21 times. SUMMER PLACE, SILVER OAKS and CAMELOT were in joint second place — each naming 20 complexes — with Summer Place taking the highest unit value of the three at R1,262,443.
Stephan Cross, sales manager, Seeff Properties in Hout Bay and Llandudno
THE PALMS and CASA MIA were the chosen names of 19 residential complexes, while CASABLANCA and MELROSE PLACE had 16 hits apiece.
PROPERTYPROFESSIONAL.CO.ZA
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17/08/2017 05:29
90% of property shoppers start their search online. * According to the Private Property customer survey of February 2017
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LOCAL NEWS
INCLUSIVITY CAMPAIGNER “There are about 46,000 agents in the country. In my opinion, real estate has been marginalised by the bigger players in the industry. By teaching people and giving them the skills, we can drive new business and get more people involved.” Choprop CEO Yusuf “Choppee” Essa’s rise from humble beginnings in Laudium, Pretoria, has made him determined to bring more property professionals from emerging markets into the industry. He says there are about 15-million unemployed people and that they “can learn the business, work for themselves and earn a good income”. Choprop is 100% black-owned. An agency with branches countrywide, it covers the full spectrum of residential, commercial and industrial property. Essa grew up in a home where money was tight. After several business ventures, including a stint as a hotdog salesman, he found his niche in 2007 when he and wife Shazia launched Choprop from his garage. Choprop boasts a number of awards, including the 2014/15 Best Property Consultancy, International Property Awards — Africa. Essa won the 2016 World Sustainability Congress Real Estate Super Achievers Award. He recently published a book, The Choppee Journey.
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Commercial property app
ew Instant Property real estate app aims to transform the sourcing, renting and management of commercial property. The platform, optimised for mobile, is tailored to provide a network suited to the needs of multiple users: landlords, tenants and brokers, says Instant Property director Wayne Berger. The platform grants landlords free access to list vacancies and promote them to a network of specialist brokers and tenants. From November 2017, landlords will be able to list properties for sale or auction and buy properties online. Tenants can locate and compare more than eight million square metres of business space and contact brokers, and landlords can find tenants. The app gives brokers access to branded brokerage tenant management and vacancy mailing systems.
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• Sign up at propertyprofessional.co.za • Click on the NEWSLETTER tab
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17/08/2017 05:29
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WHAT’S ON
All you need to know to stay plugged in to the property industry in South Africa
SEPTEMBER
28 28
WHAT IEASA NQF MODULE 3 WHERE H B Forum Building, Val de Grace, Pretoria CONTACT bit.ly/2tU9Iuf
WHAT SAPOA WESTERN CAPE GOLF DAY WHERE King David Mowbray Golf Club, Cape Town CONTACT bit.ly/2tTOixE
OCTOBER
9-11 25-26
WHAT GBCSA CONVENTION WHERE CTICC, Cape Town CONTACT bit.ly/2sUdC2e
WHAT AFRICAN REAL ESTATE & INFRASTUCTURE SUMMIT WHERE Sandton Convention Centre, Johannesburg CONTACT bit.ly/2tYJN13
NOVEMBER
1-2 10
WHAT IEASA PDE 5: EXAM PREPARATION WORKSHOP WHERE HB Forum Building, Val de Grace, Pretoria CONTACT bit.ly/2sO4OQh
WHAT IEASA INTERN LOGBOOK WORKSHOP WHERE HB Forum Building, Val de Grace, Pretoria CONTACT bit.ly/2tU4izJ
Add to your diary now THE PROPERTY BUYER SHOW will be held from 27 to 29 October at the Sandton Convention Centre. This exhibition is the perfect platform to reach first-time buyers looking for their new home as well as property investors. The layout will allow potential home owners to walk through the buying process. There are also three seminar theatres for talks by industry professionals. propertybuyershow.com
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PROPERTYPROFESSIONAL.CO.ZA
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BRIDGET MCNULTY
PROPERTY TREND: SHARING ECONOMY
The sharing economy is still in its infancy in South Africa, but services such as Uber and Airbnb have shown phenomenal growth, with the potential to impact the property market
T
he sharing economy focuses on sharing possessions and services, rather than owning fixed assets. So how does it impact property? There has been a lot of discussion lately about how the success of Airbnb has negatively affected long-term tenants being able to find suitable space, particularly in popular areas such as Cape Town’s City Bowl and Atlantic Seaboard. Private Property reports an increase in “Airbnb potential” being used to market apartments in Cape Town and notes that buyers often ask whether the building’s body corporate allows short-term rentals. Cape Town is perhaps a unique example: it is the biggest Airbnb destination in Africa and home to more than half the total listings in South Africa. Landlords could make two to three times more on Airbnb compared with a long-term rental. This results in less stock for renters and prices being driven up further. But investing in a property purely for Airbnb purposes isn’t as simple as buying an apartment and watching the income roll in. Potential investors need to take into account area-specific Airbnb data such as occupancy rates, number of rentals in the area, average prices and seasonal price shifts. It is also important to be aware of all the legalities and expenses involved, and the necessity to be more hands-on due to the constant turnover of guests. Says Simon Bray, CEO of Private Property: “Another important factor to consider is city regulation. Airbnb may become less attractive for hosts in South Africa if there is a pushback against the platform like we’ve seen internationally. Many cities have started regulating short-term rentals due to the way it has adversely affected supply and prices.” As for other sharing economy businesses and how they might affect property, ride-sharing company Uber has already started to impact where people choose to live because parking, commutes and poor public transport links are no longer as absolute an issue. It is a trend worth watching.
17/08/2017 05:29
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wealthiest African cities AfrAsia Bank and New World Wealth reviewed the 10 wealthiest cities in Africa by “total wealth�, referring to the private wealth held by individuals in each city. It includes property, cash, equities and business interests, less any liabilities.
3 CAPE TOWN Total wealth held of $135bn. Home to 8,200 millionaires, 440 multimillionaires and two billionaires. Major sectors: real estate, financial services, retail and tourism. Also a second-home hotspot with more than 1,500 multimillionaires in the city during peak holiday months.
4 LAGOS Total wealth held of $120bn. Home to 6,800 millionaires, 360 multimillionaires and four billionaires. Major sectors: real estate and construction, telecoms, transport, financial services and basic materials.
7 DURBAN Total wealth held of $46bn. Home to 3,200 millionaires, 130 multimillionaires and one billionaire. Major sectors: real estate, finance, healthcare, construction, retail and transport. 

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PRETORIA Total wealth held of $42bn. Home to 2,600 millionaires and 110 multimillionaires. Major sectors: basic materials, manufacturing and financial services.
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2 CAIRO Total wealth held of $140bn. Home to 8,900 millionaires, 480 multimillionaires and five billionaires. Major sectors: real estate and construction, financial services and basic materials.
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6
LUANDA Total wealth held of $48bn. Home to 4,100 millionaires, 240 multimillionaires and one billionaire. Major sectors: real estate and construction, transport, and oil and gas.
9 CASABLANCA
10 ACCRA
JOHANNESBURG Total wealth held of $245bn. Home to 18,200 millionaires, 970 multimillionaires and two billionaires. Major sectors: financial services, professional services, construction and telecoms.
NAIROBI Total wealth held of $55bn. Home to 6,800 millionaires and 280 multimillionaires. Major sectors: financial services, real estate and construction, retail, tourism, fast-moving consumer goods, telecoms and basic materials.
Total wealth held of $40bn. Home to 2,300 millionaires, 110 multimillionaires and two billionaires. Major sectors: basic materials, manufacturing and financial services.
Total wealth held of $35bn. Home to 2,300 millionaires and 100 multismillionaires. Major sectors: basic materials, manufacturing and financial services.
17/08/2017 06:40
LOCAL NEWS
Ask the expert: G safety features
ood security is an asset in any home and can add value to your clients’ property. Trellidor platinum sales consultant Steven Matthews offers pointers. FIT PRODUCTS INSIDE
Security products inside a door or window are a far greater deterrent against burglars. Once intruders have broken a window or door, the four golden elements they need – time, tools, noise and privacy – are compromised by the slower process of breaking through bars or gates.
SECURE STAIRCASES
Retractable, roller-style doors installed horizontally at the top of stairs – in line with the landing – can be used to secure almost any staircase despite difficulties with walls and bannisters. CREATE A SAFE ROOM
Retractable roller-style doors can also create a safe room in one part of the house. The roller function ensures it won’t be noticed when not in use.
BETTER-LOOKING PRODUCTS
More attractive security products include aluminium security shutters, barely visible polycarbonate bars, see-through stainless steel protective screens and roller-style doors.
PLAN AN EXIT
Sliding security affixed to at least one window in a safe area can be used as an escape route in the event of a fire or intrusion.
4 REAL ESTATE VIDEOS FOR YOUR BRAND As a real estate professional, let The Creative Group help you market your business and listings with video A walk-through of a property mimics the experience of virtual reality. The viewer has a true sense of the property and its layout. Or consider an alternative: an upmarket, high-production video gives the viewer a feel for the home while showcasing the best aspects of the property. It includes drone footage.
SELL YOUR AREA Our suburb videos show off an area and its best amenities, exploring positive aspects
of a community and highlighting good schools. Ideal for marketing your stock to its best potential, these videos will position you as the local expert and instil a sense of trust with your buyers and sellers.
PROPERTYPROFESSIONAL.CO.ZA
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Custom video uses considered editing with development marketing in mind. It includes an interview on the property with a development representative and drone footage.
TELL YOUR BRAND STORY A profile video is a professionally edited interview with a real estate professional. It could be the company CEO, a principal or an agent, and it includes a branch profile. Use it to create strong brand awareness to result in more leads.
THE CREATIVE GROUP can help you to create high-impact, consistent messaging and brand awareness for the right media platforms, with cost efficiencies in mind. All our videos are crafted towards increasing our clients’ sales and bottom line. Chat to us about your requirements: e-mail michele.jones@thecreativegroup.info
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MARKET YOUR DEVELOPMENTS
Watch this showreel of some of the work we’ve produced for our clients bit.ly/TCG_showreel
IMAGES: iSTOCK BY GETTY IMAGES, SUPPLIED
PROMOTE YOUR PROPERTY
17/08/2017 05:29
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2017/08/08 1:53 PM
International news
TECH SPIN-OFF FOR US AGENTS
S
eattle-based real estate tech company Zillow has announced it is expanding a test of an initiative for home sellers named Instant Offers, Kurt Schlosser reported on GeekWire in August. Zillow Instant Offers serves as a marketplace for iBuyers, hi-tech investors who use technology to make quick offers on homes and close in days, either reselling the properties or converting them into rentals. Launched in May 2017 in Las Vegas and Orlando, Florida, the product connects home owners to investors as well as to a comparative market analysis from a local real estate agent. Since market analysis valuations are likely to be higher than investor bids, some sellers are tempted to list with the featured agent, leading to a rich source of leads for that agent, says Zillow chief operating officer Amy Bohutinsky. In an “encouraging sign” for agents, most Zillow Instant Offers users who take action choose to use an agent, she says. Because Zillow Instant Offers users are likely to be motivated to sell, agents who receive leads from Instant Offers are enjoying “double-digit conversion rates like nothing we’ve seen”. Zillow Group CEO Spencer Rascoff says Zillow has designed a product “to keep the agent involved in every part of the transaction, most notably by giving them the opportunity to secure new listing agreements”.
Sub-Saharan Africa as an investment destination? W
hile real estate occupiers and investors have been accustomed to high growth rates above global averages, economic and political headwinds could signal change in 2017. “It is often in the diversity and complexity of a situation that the solution is to be found. Faced with potentially turbulent times, the journey will not be easy. But if the correct direction is charted, Africa will remain a continent of diverse opportunity,” says Malcolm Horne, group CEO of leading commercial property services company Broll Property Group. “Sub-Saharan Africa will need to be able to deal with the dynamic of having its average growth rate equal to or less than the global average for the first time since 2001.” From 2001 to 2008 Africa had a growth rate of 5.9%, dropping to 4.1% from 2009 to
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2016. Since 2013 there has been an average year-onyear decline. Horne says that in the retail sector, many operators are adopting a wait-and-see attitude in countries affected by the commodity price downturn. Technology is evolving in all sectors of the property market and role players should adapt. Some malls across the continent have implemented Wi-Fi and apps while online shopping is becoming popular. "Lower smartphone prices and data costs are driving the digital revolution in Africa,” says Horne. “To create sustainable property investment and development opportunities across Africa, we need to collaborate, share experiences and knowledge and navigate the unique challenges the continent presents to investors and developers together.”
17/08/2017 06:41
AGENTS ARE EXPERT PROBLEM SOLVERS
Negotiating is a tricky business and contracts can be problematic. Are you familiar with legalities or how to ensure that a contract protects you? Registered estate agents are licensed professionals with experience of moving transactions forward smoothly.
Another good reason why you should use an estate agent
REAL ESTATE BUSINESS OWNERS OF SOUTH AFRICA
www.rebosa.co.za
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TOOLS OF THE TRADE
4
GOODIES AND GADGETS FOR WHEN YOU’RE ON THE GO
Office furniture has evolved to become highly stylised, and ergonomic designs mean comfort is a priority. Try these brands on for size
HELEN GRANGE
SPITFIRE YOU NEED IT BECAUSE These handmade pieces will transform any office into an interesting, conversational space. THE NITTY GRITTY Spitfire furniture is handmade using Brazilian leather and aluminum, and fuses contemporary design with a classic look. The Banshee Egg Chair and Dakota 5 Drawer Desk are available in three colours: oxblood, vintage black or vintage brown. THE X-FACTOR Bespoke furniture makes a bold statement. From R23,600 (chair) and R39,900 (desk); spitfirefurniture.co.za
WEYLANDTS YOU NEED IT BECAUSE An ottoman is perfect for seating or as a space for magazines. THE NITTY GRITTY Weylandts’ Cuban Tufted Ottoman is made of luxurious leather and deep buttoned by hand. It comes in a variety of colours from anthracite to toffee. Or you can select your own fabrics. THE X-FACTOR Leather works well in an office because it’s easy to clean. R18,995; weylandts.co.za
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PROPERTYPROFESSIONAL.CO.ZA
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16/08/2017 11:38
HERMAN MILLER AND NAUGHTONE YOU NEED IT BECAUSE Large offices with lots of human traffic need seating hubs that emulate a cutting-edge corporate or the reception of a swanky hotel. THE NITTY GRITTY Furniture company Herman Miller has partnered with contemporary British design company Naughtone to offer a range of beautifully designed and well-crafted furniture. This is epitomised by seating options such as the Always Lounge, Busby chair (pictured here), which emulates a luxurious booth, and Pollen, small hexagonal furniture pieces that can be used as seats, tables or side tables. THE X-FACTOR You’ll find this furniture in the offices of companies such as Google, Barclays, BMW and Coca-Cola. From R23,683; alloffice.co.za
IMAGES: SUPPLIED
DAUPHIN
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YOU NEED IT BECAUSE Dauphin office furniture is mobile and works in a small or large workspace. Dauphin’s seating, storage and desks function as standalones or together. THE NITTY GRITTY Stilo chairs work best in hot desk or flexible work environments. The Bonito range by Zuco for Dauphin includes comfortable handmade wooden-shell chairs in oak or walnut. There are a variety of colours, fabrics, wood finishes and types of leather. The Fiore range of all-rounder chairs is available in variations from cutting-edge polypropylene in various colours, to classic beech and swivel or fixed frames. THE X-FACTOR These high-perfomance chairs and desks are comfortable and ergonomic. From R3,500; dauphin.co.za
16/08/2017 11:38
AGENT DEVELOPMENT
SOLE MANDATE?
WHY CHOOSE A
PRIVATE PROPERTY OFFERS TIPS ON HOW TO CONVINCE SELLERS THAT A SOLE MANDATE IS BETTER THAN AN OPEN MANDATE
If you’re trying to convince someone to choose a sole mandate, clearly explain the advantages using concrete statistics. For example, stats show that a sole mandate property tends to sell for more than an open mandate SIMON BRAY, CEO, PRIVATE PROPERTY
Why a sole mandate? Sellers often think that more is better: surely, they argue, if five agents are working on your property, you’ll get five times the response? But a sole mandate protects the seller best because it is a contractual agreement: it ensures the agency’s commitment and guarantees a requisite level of service. There are fewer people to communicate with (the seller doesn’t have to field calls from a number of agents) and fewer interruptions to daily life. The seller benefits from greater advertising exposure, more show days, increased marketing spend and a listing on the agency’s website as well as on portals such as Private Property. Says Simon Bray, CEO of Private Property: “If you’re trying to convince someone to choose a sole mandate, clearly explain the advantages using concrete statistics. For example, stats show that a sole mandate property tends to sell for more than an open mandate.” The end result? A quicker sale for a better price.
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Extra perks Reasons a sole mandate is better 1 An agent is able to give more
2
3
4 5
attention to the sole mandate because they know they only have it for 90 days. Research shows that agents spend three to four times longer on sole mandates. It is easier to keep track of offers as there is only one point of contact for buyers. The property is not overexposed. There is no risk of conflicting prices resulting in lower offers.
Client still not convinced? Try offering a seller these additional benefits: • Reduced commission. • More exposure on Private Property: professional HD photos, a walk-through video and a high visibility advert in the listing. • Social media exposure for the property.
Find more useful training and industry advice on propertyprofessional.co.za – click on Tools of the Trade in the top navbar
PROPERTYPROFESSIONAL.CO.ZA
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16/08/2017 11:12
Dream of changing your life, or the lives of others, for the better?
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Real estate rookies need financial support to help them through the first six to 12 months
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16/08/2017 11:16
COVER STORY
FLYING Amanda Cuba’s entrepreneurial family background taught her to look for opportunities. This is her journey
HIGH DEBBIE HATHWAY
R
E/MAX Southern Africa chief operating officer Amanda Cuba has always been fascinated by the property industry, studying newspaper advertisements to learn about areas, properties and prices. “At 14 years old I wanted to go and do my own thing, be independent, but I had to wait and go through university first,” she says. After Cuba graduated and was working in management consulting, she reached a point when she wanted to diversify and contacted a few real estate agents via email. “Nobody came back to me. It was the strangest thing ... Now it is one of the things I watch out for in our business. When there is an enquiry somebody attends to it, especially when it is about joining the industry.” Cuba is a “Cape Town girl”, who was born in Gugulethu. “I’ve had this beautiful, exotic surname throughout my life. You actually pronounce it with a soft C, the Xhosa way.” Married with three children, her maiden name is a conversation point as she has no links with the Caribbean island
many will associate her name with. Cuba says she retains it for practical purposes because changing surnames is an onerous administrative process. Born into an entrepreneurial family, Cuba says she has always known where she was heading. “I actually wanted to be a pilot but I am too short. Option two was getting into management consulting where I could have the opportunity to execute strategy, not just formulate it, with the hope that I could get into property.” As it turned out, she did not have to work her way to the top as she had expected. SEIZING OPPORTUNITIES
Opportunity knocked when she heard that RE/MAX Southern Africa founder Peter Gilmour was looking for an empowerment partner who would not be just an investor but somebody able to grow the business. Cuba and her Z Capital Properties partner and sister Yolanda proved to be the perfect fit. Once US franchisor RE/MAX LLC approved the proposed agreement, Z Capital
set about sourcing funding for the 45% ownership deal finalised in December 2014. Cuba was appointed nonexecutive director with RE/MAX Southern Africa, effective 1 January 2015. A year later she was appointed an executive director. “From day one it’s been a fantastic organisation to be with and the experience has been great so far. Although it has been a huge learning curve, being a former consultant means that it is not that difficult to deal with the amount of information coming my way.” Cuba’s role as chief operating officer is to lead a team that supports the RE/MAX broker owners, drive their objectives and grow their business. There are close to 160 RE/MAX offices across South Africa as well as in Namibia, Swaziland and Botswana. “I have seen real estate agents succeed (and fail) in different environments. For aspirant property professionals that result is influenced more by personality and communication skills than a university degree. This is a relationship-building game.”
SEPTEMBER/OCTOBER 2017
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16/08/2017 11:16
Amanda Cuba’s thoughts on …
COVER STORY
Urbanisation To think that in 1960, 47% of the population lived in urban spaces … By 2016 that number had grown to 65%. There is growing demand for people to be able to live closer to where they work but space is scarce in urban areas and properties are not geared up for huge populations. Affordable housing Not only are there challenges around finding affordable housing in cities but in financing it. Government has initiatives where they try to help subsidise potential buyers. The issue for me is a lot of people try to buy the homes, and use the schemes, but struggle to get the money they need to access, to help them along. It is expensive to purchase a home. Yes, government has decreased the charges for registering properties costing less than R750,000 but there are still expenses such as lawyers’ fees. South Africa has a poor savings rate but there is also not a lot of excess cash for people to save. For me – and this is my personal opinion – when people think about affordable housing in an urban space, they imagine a small, cheap apartment block or house, but it is not necessarily that. In some countries, it might be a block of apartments, well managed, rather than run down just because someone who does not have lots of money lives there. That is a fundamental thing. Barriers to entry These are not excessive. The biggest
CREATING ENABLERS
Real estate is an industry that offers tremendous opportunity for ambitious entrepreneurs but Cuba stresses the need to create “enablers” as well. RE/MAX supports the concept of interns and there is the Estate Agency Affairs Board (EAAB) One Learner – One Estate Agency programme, which places rookies at a registered estate agency for 12 months of mentorship while they work towards the necessary industry qualifications. Offices that have a proper support structure for interns often see rookies getting to the point where they are selling. But in an environment where people are driving sales, a full-status agent may not have sufficient time to focus on someone who is starting out. “It is a Catch-22 scenario when we are looking at how to build and transform this industry,” says Cuba. “When you get it right it can be a successful career. It allows flexibility for those who want that in their lives and those who become disciplined, strong, consistent, tenacious individuals tend to succeed.” Although an industry challenge is its commission-based payment structure, there is a growing trend globally for the provision of some form of basic pay. This has already taken effect in the Philippines, with Australia starting to realise it too. Cuba believes there will eventually be an expectation to offer agents a basic salary in South Africa.
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Development of assets At the recent SAPOA annual convention, EFF leader Julius Malema said commercial real estate owners and managers should include black people in the development of retail assets and offices. A lot of points he mentioned are pertinent to a country such as ours with its history but I don’t fully agree with his method. When you look at the demographics it is imperative that we shift to a point where there is some form of redistribution of wealth. But the question is how? It is about providing opportunities for people to get into environments that allow them to be educated, to earn and to shift to the next level from where they started. This will create an enabling environment for the next generation. Even if it is from a zero base, it is a huge step forward. Racism Racism is a reality in our country and we have experienced incidences. At RE/MAX, we encourage tolerance and acknowledgment of the differences we have as people.
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challenge is that the industry is commission based. Real estate rookies need financial support to help them through the first six to 12 months.
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3Verse/1416/FS
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CRACKING
THE
PROPERTY CODE F
or estate agents and agencies, the words BEE compliance and the 2017 Property Sector Code are frequently heard, but they may as well be Greek. Yet whether you’re an estate agent, a franchisee or franchisor, unpacking the concept of BEE and the Property Sector codes is important. Fact is, they may not affect you – in other words, particularly as a residential estate agent, you probably have no need to concern yourself with BEE compliance. Still, understanding why BEE was introduced, why the laws pertaining to it were amended, what it means and why it matters to the country as a whole, does matter. The first law around economic transformation in South Africa – the BEE Act – was introduced 10 years after our democracy was born. The government looked at international models from Canada to Malaysia and chose a system that encouraged people to transform the economy, rather than imposed an obligation on them to do so.
The 2017 Property Sector Code replaces the B-BBEE Property Sector Code. But how does the amended Code impact your agency? Webber Wentzel partner Adam Ismail unpacks the legal issues
COMPLIANCE FOR GOVERNMENT CONTRACTS
The BEE law works like this: if you want access to government spend, rights or contracts with any business that is dependent on government spend or rights, you need to be BEE-compliant. You need to tick a range of clearly specified boxes in terms of racial transformation in your business. For that, you accumulate points on a balanced scorecard and build up to levels of compliance. But if you are not compliant, there are no criminal sanctions or fines; there is nothing punitive. You just won’t have access to a portion of the economy that requires BEE compliance to contract. If you like, government can be considered to have used its power in a responsible way to encourage rather than to enforce it. When the law was introduced, it had to be determined how BEE would be measured. That’s when the codes of good practice were introduced. The first set of generic codes was set in 2007 and after that,
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LEGAL
There is no law that obliges an estate agent or estate agency to comply with BEE. It is entirely optional but it’s the right thing to do amended in 2015. Various sector codes were established for different sectors of the economy. If there’s a sector code that governs the economic sector you’re in, then apply those rules; if there isn’t a code for your sector, then apply the generic code. REVISING THE PROPERTY SECTOR
The property sector has its own code, which was put in place in June 2012. The revised property code is essentially the same law, only with a few changes in calculations. The principles all remain the same. So there is no new law being put in place; rather a revision of an existing law. The 2007 generic codes were reviewed in 2012, and that resulted in the amended generic codes currently effective in 2015. The 2017 Property Sector Code replaces the B-BBEE Property Sector Code, which was published by the Department of Trade and Industry on 1 June 2012. Why were they reviewed? Government saw that the BEE rules were not achieving the transformation objective in the required timeline (initially 10 years) – they weren’t seeing the deliverables they intended. They tightened up, and made it a little tougher to become BEE-compliant. But the principles remain the same. There is no law that obliges an estate agent or agency to comply with BEE. It is entirely optional but it’s the right thing to do. Unless, for example, you were sourcing rented premises for government. You will not get that government mandate unless you have an acceptable level of BEE.
LEGAL STANDPOINT
What about estate agents? There is no legal obligation for an estate agency to be BEE-compliant, and if the agency works in a space where its clients/customers do not require any BEE compliance, from a purely legal perspective it does not need to worry about BEE. To use an analogy: anyone who sells products or services directly to the public need not be compliant. Customers walk into a retail store because it’s convenient or the price is right – they are not concerned about your BEE credentials. As a residential estate agent, clients come to you for your expertise or experience in a particular area and perhaps because your commission structure is favourable – you are selling your services to an individual, so there are no drivers for BEE compliance. Essentially, if an estate agent is an employee, service provider or consultant to the franchisee or franchisor, there is no requirement to work towards any kind of BEE compliance. The agent piggybacks off the BEE compliance of the agency for which they work – it’s about the BEE credentials of the person who sends out the invoice. And that won’t be the estate agent but the agency. But if that agency is going to derive a substantial amount of income either from government or corporate South Africa, in order to be competitive, it’s probably going to be necessary for the agency to be BEE-compliant. THE RIGHT THING TO DO
THE RIPPLE EFFECT
But BEE has a second tier. Other companies look to comply with BEE because their business either depends on government or depends on people who are dependent on government. In building their BEE scorecard, they want to procure services from businesses that are BEE-compliant. Take a law firm – it doesn’t necessarily need to be BEEcompliant because it is not dependent on government for any work, but rather because it has clients who want to be BEEcompliant. Those clients will not use that legal firm as a service provider unless it is BEE-compliant. There is a ripple effect of BEE compliance – it can go very far down the chain to, say, the business that supplies the stationary used by that law firm.
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BEE compliance will never just be about business in South Africa, given the large gap between rich and poor. It’s about an inclusionary economy, where the playing fields are levelled as far as possible. Many businesses are BEE-compliant because it’s beneficial to their business model. But many are simultaneously working towards a business model representative of the country’s demographics. Many businesses and industries, including the property sector, have understood that it’s the way to build South Africa. Equally, there’s still a long way to go, and it’s not purely about codes, it’s about intention and inclusion. It also makes business sense to transform as the black middle class grows. Those agencies that are first to transform may just have a competitive advantage over competitors who are slower.
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LEGAL
Codes for agents To minimise red tape and administration for small businesses, the government created a range of different thresholds for BEE compliance. Small businesses are automatically deemed compliant, in other words Level 4, which indicates 100% compliance. Ordinarily a small business has a turnover of less than R10m (exempted micro enterprises) in terms of the generic codes. But, for the property sector, the government recognised that property service businesses such as estate agencies, brokers and property valuers that don’t have large revenues, but are crucial players in the transformation game in the sector, should be involved in transformation of the sector. Annual revenue thresholds were lowered in this regard; these service businesses with an annual turnover of less than R2,5m are deemed to be BEE-compliant. Any property services business with an annual turnover of more than R35m has to comply with the full scorecard to be compliant – between R2.5m and R35m turnover, compliance with the qualifying small enterprise scorecard is required.
BEE: GOOD FOR BUSINESS? IF AN AGENT WANTS ACCESS TO GOVERNMENT SPEND, RIGHTS OR CONTRACTS WITH ANY BUSINESS THAT IS DEPENDENT ON GOVERNMENT SPEND OR RIGHTS, THIS IS HOW IT WORKS:
Agent sourcing rented premises for government (required)
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Income from government or corporate South Africa (required)
Agent selling products or services directly to the public
No legal obligation
Legal obligation
Estate agency (optional)
Residential estate agent
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NEWSWORTHY
HOMES FOR THE MISSING MIDDLE
Affordable accommodation: who could the target market be?
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Urban developers and estate agents need to change their mindsets and provide affordable accommodation for the missing middle, says Western Cape Property Development Forum chairperson Deon van Zyl
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change in attitude by developers and estate agents can provide appropriate affordable accommodation in CBDs to commuting workers, making for a resilient urban economy. The “affordable housing” label should change to “affordable accommodation” so the industry can provide the correct type of housing to match different phases in tenants’ lives. This will provide developers with real business opportunities and boost their bottom line. Adapting mindsets will help meet local government challenges in a changing economic and political scenario and deliver a necessary housing service to commuting urban workers, who can shift their spending from transport to urban rentals. The Western Cape Property Development Forum is a voluntary organisation of developers and property consultants that operates in the Cape Town metropolitan area and the Western Cape. The forum focuses on the production line of property
Central city office worker
Teacher
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development, for example the statutory processes that lead to developers breaking ground, and procedures that affect giving occupation and transfer to end users. ENSURING RESILIENCE
Understanding trends and identifying new development opportunities is critical to the developer looking for return. Predicting market forces and trends is essential, bearing in mind it can take years to move through the quagmire of statutory processes. The danger is: will the market need to exist or remain the same in a fastchanging environment? And if that environment is a successful CBD created by attracting investment and development, how do we ensure its resilience? The ancient Greek philosopher Heraclitus is credited with saying “the only thing that is constant is change”. In politics and business, the inability to predict or pre-empt with reasonable certainty is referred to as risk. ONGOING CHANGE
The past year has been interesting for the property development industry – perhaps more of a Chinese curse than a blessing. Not only must it deal with the effect of the changing international context, it must try to understand the impact of the recent cabinet reshuffle and downgrade to junk credit rating status. At the same time, developers need to deal with ongoing changes to planning legislation, zoning regulations and new policies, not least the implications in Cape Town of Transit Oriented Development and an anticipated policy on inclusionary housing. Everything is in flux – what do we do?
Bank clerk
Shop manager
If you think it can be business as usual, even if you believe the local residential boom will continue, take note: the political context has changed THE REALITIES
The people who work in the Cape Town city centre find it difficult to live there. They feel excluded from the economy. Professor Francois Viruly, associate professor at UCT’s Urban Real Estate Research Unit, coined the phrase 40 x 40 x 40 — 40% of income spent on 40km of travel to live in a 40m2 house. Figures collated by Cape Town’s Central City Improvement District (CCID) show the average residential sale price per square metre across the first six months of 2017 is R35,700, not the R60,000 or R70,000/m2 sometimes quoted in the media. The bulk of rentals are less than R20,000 a month. If anything, sales prices are stabilising and there is not much movement in rentals. Lifestyle choices make the CBD attractive, but salaries are not supporting growth in rental prices. WHERE IS THE MARKET?
Are we chasing a sustainable market or are we heading for a bubble? Developers aiming to bring new residential property into the CBD market need to be aware of where that market lies, what it can afford and what it is prepared to pay.
Young professional
Junior government official
There is a need to define “affordable”. Tough decisions are being made because it cannot be business as usual. If you think it can be business as usual, even if you believe the local residential boom will continue, take note: the political context has changed. Grassroots murmurs inform us there is a change in the political mood. But there is also opportunity. RESIDENTIAL SECTOR BOOM
The golden goose of the past few years has been the residential sector, specifically refurbishments of commercial buildings into residential, and new construction supported by a change of view on densification. However, there are hard questions: • What happens when only a few can afford commercial space in the CBD? • If you refurbish all commercial buildings for residential, where will office users go when market demand increases? If you sectionalise buildings for residential, what are the chances such buildings will ever be redeveloped? • What happens when the cost of maintaining sectionalised buildings becomes excessive, leaving multiple owners unable to agree, for example, on a lift refurbishment? I think there is an incredible opportunity staring us in the face – affordable accommodation. Joe Cortright, writing for citylab.com, says the sum of accommodation and travel expenses tends to be constant: the less you spend on accommodation, the more you tend to spend on travel, and vice versa.
Call centre staffer
Down-sizer choosing an urban lifestyle
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But here is an opportunity: if you provide affordable accommodation close to work, you could charge a larger chunk of a resident’s available money for accommodation
HOSPITALITY SERVICES
But here is an opportunity: if you provide affordable accommodation close to work, you could charge a larger chunk of a resident’s available money for accommodation. Nothing prevents you from adding hospitality services in the form of laundry and catering. You could in fact increase the pot of money by delving into non-accommodation and non-travel-related expenditures. This type of accommodation and service provision is already happening in places such as Du Noon, Cape Town, where rental for boarding house products exceeds R200/m2. And in the Cape Town CBD, Student at Home in Long Street is providing a highend product – small, quality spaces close to opportunity – all on a rental basis. Future Cape Town’s urbanist and consultant Rashiq Fataar, investigating how one accommodates the missing middle income earners, is working on an 80:20 split of the open market and affordable accommodation. PERMANENCE V OPPORTUNITY
The difference between affordable housing and affordable accommodation is permanence v opportunity. The rental product I advocate indicates access to economic opportunity,
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while housing signifies permanence. We need to start with opportunity and allow it to develop into permanence. Cape Town city councillor Brett Herron has reiterated the city’s commitment to affordable housing. It is seeking to enter into partnership agreements with companies accredited with the Social Housing Regulatory Authority. Land is scarce and expensive in the City Bowl. Herron has promised the process of releasing city land for social housing will be improved as an incentive to the private sector. Either way, an opportunity awaits: affordable and well-managed rental accommodation. UNTAPPED MARKET
A look at the CCID stats and the South African Property Owners Association data shows the refurbishment of Class C office buildings remains attractive, specifically for the rental market. Providing a vibrant, quality after-hours lifestyle at ground level will supplement lower housing income with commercial rentals. This is an untapped market which, if only people could live closer to work, will have the money saved from high transport costs available to spend on affordable accommodation and a vibrant urban lifestyle.
Cape Town shake-up In May, Cape Town mayor Patricia de Lille told the Western Cape Property Development Forum: • The city has begun the largest restructuring process since the creation of the single municipality of Cape Town. • Eight planning districts will be collapsed into four. • The planning and transport departments have been combined. • City-initiated projects are required to make affordable accommodation available. • Town planning and building plan application periods are being reduced — halved in certain instances.
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URBAN SHIFT ANNE SCHAUFFER
South African Property Owners Association CEO Neil Gopal is the frontman for an organisation that affects the face, functionality and future of cities and its people
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eil Gopal is not a loud man, yet his impact on the South African Property Owners Association (Sapoa) has been just that. Vocal, with a voice that carries far. It has to; the messenger and figurehead of this influential sector of the South African economy is no small role, but it is one for which Gopal is well equipped. Sapoa members own and control about 90% of the country’s commercial property – shopping centres, office parks, industrial parks – and are the largest contributors to rates and taxes in metropolitan business districts. They are a force to be reckoned with, and are undoubtedly the brains trust of the local property world, major players in the crucial flow and flavour of our cities. From the outset, Gopal charted a path that would lead him to play a significant role in the broader property picture. After school, he translated his interest in architecture and planning into a Bachelor of Science in town and regional planning at the University of the Witwatersrand.
He graduated in 1994 and immediately took the high road: “I headed up the property division at Intersite Property Management Services.” He spent nearly 10 years there, also leading the marketing and new business department, where he and Intersite MD Jack Prentice played a key role in establishing the Joburg Property Company in 1998-99. PLANNING TOWNS
Gopal was invited to join Sapoa in 2004 as chief operating officer, and the following year took on the role of CEO. He brought a diverse range of skills to the position, but considers his town planning experience to be his strongest suit: “Issues of urbanisation, safety and security, environment and others, are crucial facets of everyday life which impact each one of us as South African citizens. As a town planner, I’ve built up a good sense of the complex challenges faced by both the public and private sector. This understanding has been vital.”
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PROFILE
We’ve partnered with the cities of Joburg and Cape Town to address the concept of inclusionary housing
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are party to creating the urban landscape. Of course, we can’t do this alone as the policy decisions in this regard are established by government.” But that does not mean Sapoa simply toes the line. Much of its work is examining government or municipal processes and decisions, and debating them rigorously. Gopal says: “A partnership approach with the public sector is healthy, but that doesn’t mean we have to agree on everything.” Sapoa is a section 21 nonprofit association established in 1966 by property investment organisations to unite all role players in the commercial property field. It is, in essence, the representative body and official voice of the commercial and industrial property industry in South Africa, and acts as a platform for property investors, a sector with a combined portfolio of more than R1-trillion. As CEO, one of Gopal’s primary functions is consultative, principally with government structures. He says: “A large part of my role involves advocacy, meeting with government departments and officials, and communicating the role of – and the impact of legislation and policy on – the commercial property industry. Sapoa is held in very high esteem by the relevant sectors and we’re consulted on all matters pertaining to the property industry. We have representation on key South African bodies such as Busa, Nedlac, the Services Seta, the Property Sector Charter
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Council, National Treasury steering committees and the chambers of commerce.” Sapoa is also strongly represented on local and provincial planning structures, and maintaining effective relationships with key local authorities is critical: “In order to have a healthy, functioning property sector, we need an efficient and effective local municipality, and vice versa. We’re always involved in a number of initiatives with regards to addressing new pieces of planned legislation, bills, policies and other platforms.” URBAN LANDSCAPE
About Sapoa’s current focus, he says: “We’ve partnered with the cities of Joburg and Cape Town to address the concept of inclusionary housing. We’re studying international examples and this, together with consulting developers, will assist in formulating policy measures. “While Sapoa members may be building buildings, in effect, we build the urban centres and
GAME-CHANGER
He is responsible for all day-to-day management decisions at Sapoa and for implementing the organisation’s business plan. Sapoa’s stated objectives revolve around relationships, education, advocacy and leadership, but the mandate probably closest to the CEO’s heart is the bursary fund: “We established this four years ago and, to date, we’ve placed close on 70 students at universities around the country, studying fouryear degrees related to the property industry. I’m convinced this will be a game-changer for the future of our industry.” As CEO, Gopal is fully cognisant of the responsibility to South Africans entrusted to Sapoa. Commercial and industrial property is not simply about big business in South Africa; it is a complex economic cornerstone that affects everything, from residential property to inner-city regeneration to international investment. It affects individuals. That includes you.
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230X274 HIRES AD.pdf
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AGENTS MOVE TRANSACTIONS FORWARD
No home is a perfect fit – not for the seller, not for the buyer. Registered estate agents know how to overcome objections on price, date of occupation, and all the nitty-gritty elements that make up a property transaction. Registered estate agents have the experience to move the transaction forward.
Another good reason why you should use an estate agent
REAL ESTATE BUSINESS OWNERS OF SOUTH AFRICA
www.rebosa.co.za
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TO P T I P S LUCY LE ROUX
5
things agents can learn from home stagers
Staging a property to improve its presentation will help sales even under tough market conditions. Try these strategies when preparing to sell a client’s home
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n South Africa, a few key property trends are driving the need for innovation when selling. One of these trends is the high number of home owners in Gauteng who are moving to the Cape. Not only are there more homes coming onto the market in Gauteng but there is also a smaller pool of interested buyers. This semigration trend means that as Gauteng estate agents you need to do more than place a “for sale” sign outside a property. These strategies will help you get a good return on your client’s investment.
1 A GOOD FIRST IMPRESSION
Tough market conditions means buyers have their pick of properties. Your stock needs to impress buyers before they walk in the front door. If painting the whole house is not an option, give a fresh coat of paint to the outside wall, garage and entrance areas.
2 FOCUS ON PRESENTATION
Advise your clients to remedy anything that will put buyers off, such as dirt and odours, stained carpets, cracks, leak damage and clutter. Minimal light is also an issue.
3 DO YOUR RESEARCH
What is the competition like? If homes in a suburb are mostly renovated, an unrenovated property either needs to be priced realistically or renovated to meet the area standard. No amount of staging can fix a property that misses the mark.
y or
4 AVOID OVERPRICING
Overpricing to secure a sole mandate is the number one reason why a sale will stall. Present your client with two options: price A is the house as it stands with no effort made to improve its presentation. Price B is possible if the seller is willing to stage their home.
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5 USE A HOME STAGER
Lucy le Roux has a background in marketing. She founded Illuminate Home Staging in Johannesburg in 2014. It offers rental furniture and styling services to property sellers
Bring in an objective third-party professional instead of giving sellers negative feedback on their property yourself. A home stager is able to provide advice, rent furniture to ensure your seller’s property is ready to impress or source accessories. My fees start at R5,000 for a property report, and from R15,000 (flats) to R25,000 (houses) for furniture rental. SEPTEMBER/OCTOBER 2017
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LIFE HACKS ROY BREGMAN
rospective property buyers will sometimes ask: is there a servitude? The presence of a servitude can affect the value of a property for both buyer and seller, if an owner is unable to fully exercise his or her ownership over the property. A servitude is defined as a registered right that someone (the servitude of the servient holder) has over the immovable property owned by another person, which places limitations on the right of ownership and constitutes a burden on the property in question. It must be registered against the title deeds. There are two types of servitudes, praedial or personal. Each depends on whether it benefits a particular piece of land or a particular person:
PRAEDIAL SERVITUDE
Here the benefit favours land, and, regardless of the identity of the owner at any given point, successive owners will benefit from the interest in the servient land, in perpetuity. The servitude is registered against the title deeds of both pieces of property. There are two types of praedial servitudes: urban (where land is used for habitation, trade or industry) and rural (say, giving one farmer a right of way over another’s land, or a water or grazing servitude). Thus a person has a limited right of use of his neighbour’s land. Two farmers may have a registered agreement regarding the maintenance of the servitude. For example, farmer B maintains
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the road to his farm if farmer A contributes to maintenance, proportional to his use of the road. In this case, an interested buyer of the property should be alerted to this right.
PERSONAL SERVITUDE
This favours one specific person and not successive owners, so it terminates when that person dies or moves on. An example would be the right of the owner of a panhandle property to use an access road on the neighbouring property at the front. It is only registered against the title deed of the servitude holder.
COURTS ARE FLEXIBLE
In the case of Linvestment CC v Hammersley (2008), the Supreme Court of Appeal had to decide if a property owner could vary the terms of a registered servitude without the consent of the holder of the servitude. The court found that although current law held that a registered servitude could not be changed without the mutual consent of both property owners, it was in the interests of justice, and in line with international trends, to follow a more flexible legal approach. The court found that as the proposed change was reasonable, it ruled to modify the terms of a registered servitude without the consent of the property owner who enjoyed the servitude benefit. The effect of this judgment? If there is a registered servitude that unreasonably prejudices a property owner, he or she
Why being informed makes sense if a seller’s property has a servitude may turn to the court for help. This would be an exceptional case, however. A service provider such as a municipality or Eskom may have a servitude on a piece of land that prevents or limits activities that may affect their operations, such as stipulating no tall buildings or trees within the servitude. An example would be land for the erection of power lines. This would affect the selling price. The presence of a servitude will be in the title deeds and surveyor-general’s diagram. It is wise to access both documents, so both seller and buyer are fully informed of their rights.
If there is a registered servitude that unreasonably prejudices a property owner, he or she may turn to the court for help Roy Bregman is a senior partner at Bregman & Moodley Attorneys, which focuses on commercial, insolvency, labour and family law, wills and trusts, deceased estates and alternative dispute resolution. He is a Small Claims Court Commissioner and has practised law for 43 years.
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Stay up to speed about servitudes
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70% of property shoppers are women. * According to the Private Property customer survey of February 2017
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R2 400 000 PARKLANDS
3 bed 2 bath
R2 200 000 PARKLANDS
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R2 300 000 PARKLANDS
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