South African Property Review
PROPERTY SOUTH AFRICAN
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EDUCATION Your career gateway Education and research
STUDENT ACCOMMODATION A new asset class?
Latest “buzz” word
Mbombela in focus
SOUTH AFRICAN PROPERTY REVIEW
PROPERTY SOUTH AFRICAN
South African Property Review
PROPERTY SOUTH AFRICAN
PROPERTY REVIEW - LogoTreatment.pdf
EDUCATION Your career gateway
ON THE COVER SAPOA, Leading the way in educating the next generation of property professionals.
Education and research
STUDENT ACCOMMODATION A new asset class?
Latest “buzz” word
Mbombela in focus
From the CEO
From the Editor’s desk
Legal update Long-awaited Constitutional Court ruling on payment of historical municipal debt
Legal update What tenants need to know about bodies corporate
Planning and development City of Johannesburg: Integrated Development Plan 2017-2022
SAPOA education Commercial property: a plethora of career opportunities
Property law workshop A practical approach to commercial property rental
Technology and education The EdTech revolution
Educational property developments ADvTECH properties on growth strategy to supply growing demand in education
Student accommodation A new asset class in sub-Saharan Africa
Property on air Presenting a strong case for real estate education
Mpumalanga research Mbombela in review
What’s on Upcoming events
Off the wall Out of thin air FOR EDITORIAL ENQUIRIES, email email@example.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Eugene Jonck Sales Nkepile Setshedi: firstname.lastname@example.org Finance Susan du Toit Contributors Tom Bremner, Lyse Comins, Mumtaz Moola, Deirdre Moore, Tshepo Tshabalala Photography Mark Pettipher
DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material. Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: email@example.com
from the CEO
A busy few months at SAPOA As a member-driven organisation, SAPOA promotes the interests of its members by representing them on matters affecting the property industry at national- and local-government levels The court ruled that, to avoid unjustified arbitrariness in violation of 25(1) of the Bill of Rights, Section 118(3) must be interpreted so the charge it imposes does not survive transfer to the new owner. As such, the ConCourt said it did not need to confirm the High Court ruling, but granted the applicants a declaration that the charge does not survive transfer.
ugust brought with it interesting and challenging outcomes in case law and legislation. From a case-law perspective, great relief was brought to the property industry in areas that SAPOA has long been actively lobbying for our members.
Historical municipal debts On 29 August 2017, the ConCourt ruled that new home-owners are not liable for historical debt taken over from previous owners. Municipalities such as Tshwane, eThekwini and Ekurhuleni – as well as the cooperative governance minister – argued against a High Court judgment in 2016, which made a similar ruling. The High Court application saw property owners take on Tshwane and Ekurhuleni for cutting municipal services to new home-owners who had inherited historical debt. “The applicants complained that they faced darkness, having no electricity, and other inhumane conditions because they bought property whose previous owners failed to meet their obligations to the municipality,” the court explained in a media briefing. The municipalities had argued that it was lawful for them to attach and sell a newly purchased property to extract money for debt owed to them. In a unanimous judgment, the court ruled that the provision in Section 118(3) of the Local Government: Municipal Systems Act of 2000 is well capable of being interpreted so that the charge does not survive transfer. “The court held that a mere statutory provision … that a claim for a specified debt is a ‘charge’ upon immovable property does not make that charge transmissible to successors in title of property. Public formalisation of the charge is required to give notice of its creation to the world.”
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In the matter of Mokone (lessee) v Tassos Properties CC (lessor), the ConCourt ruled that pre-emptive rights need not comply with the formalities set out in the Alienation of Land Act of 1981 (ALA). The implication of this decision is that such rights may be enforced against a property owner even if they were granted verbally. The ruling overturns Hirschowitz v Moolman, where the Appellate Division held that pre-emptive rights must be in writing and signed by the parties to the agreement, as required by Section 2(1) of ALA, to be valid and enforceable. The ConCourt, albeit in a footnote, also indicated that similar considerations apply regarding option contracts. In this case, Mokone entered into a written one-year lease agreement with the Tassos in 2004. The lease agreement incorporated a right of pre-emption, giving Mokone the right to purchase the leased property if Tassos wished to sell. The parties renewed the lease by oral agreement for a further year, then agreed to a further extension, which was endorsed on the first page of the lease: “Extend till 31/5/2014, monthly rent R5 500”. Tassos signed the endorsement; Mokone did not. Tassos then entered into an agreement of sale with Blue Canyon Properties 125 CC (Blue Canyon) in 2009, and the property was transferred on 1 March 2010. After becoming aware of the sale, Mokone notified Tassos in writing that she wished to exercise her right of pre-emption and tendered payment of an amount equivalent to Blue Canyon’s purchase price. The High Court applied the common law as it stood at the time, and found that Mokone did not have a valid right of pre-emption to enforce. Mokone approached the Constitutional Court for relief. The ConCourt held that it has the inherent power to develop the common law if necessary, and that from now on collateral agreements
– such as options or rights of pre-emption – are automatically extended when a principal agreement such as a lease is renewed. In the area of legislation, SAPOA was involved in the following matters:
City of Johannesburg draft land use management scheme 2017 The City of Johannesburg published its Draft Land Use Management scheme for comment on 21 August 2017. Comments are due later this month, and we will share our submission with members.
City of Johannesburg draft outdoor advertising SAPOA submitted comments on the draft bylaws, and raised the following concerns with the MMC of Development & Planning: ●● Private property owners are specifically targeted in enforcement proceedings, while the City Council is excluded from these provisions. ●● The new provisions will make criminals of property owners where billboards are already erected in contravention of the by-laws. ●● The imposing of an additional levy on private property ownership to the exclusion of public ownership is placing an undue burden on private property owners. ●● The introduction of an additional penalty levied on rates and taxes in terms of the proposed Section 37 of the draft by-laws falls outside the powers vested with the City Council in terms of the Constitution read with the Municipal Systems Act of 1998. ●● The draft by-laws amplify an already existing situation in which the City Council, being player and referee, is conflicted in the regulatory process. ●● The ostensibly wide powers afforded to officials in terms of the enforcement proceedings imply that the officials are becoming both prosecutor and judge in their own case in terms of the powers afforded to them. We will keep members updated as we receive feedback from the City. Neil Gopal, CEO
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from the Editor’s desk
Research, education and training: the building blocks for future property professionals Mandated to keep abreast of the trends in the commercial property industry, SAPOA has partnered with some of South Africa’s leading universities to develop an education platform that works for the novice property practitioner right through to the consummate property professional
ast month we reported back on SAPOA’s longest-running Property Development Programme; this month, in our Education Department overview, we touch on the handover of items of clothing and stationery that came about from the “fines” imposed during this course. This goes to prove that, even though the course was filled with fun and laughter, there was also a charitable outcome to it. I went along with Hanler van Eck, who participated in the course, to hand over the packages to the people of Klein Akker in Kraaifontein in the Western Cape – a “shack” community of about 120 people. While we’re on the subject of education, many members may already know about the commitment that SAPOA has shown in raising awareness of the opportunities for education as well as various careers in the property industry. This month, Property Review speaks to the team behind the Education Department to find out what is involved in the day-to-day running of this important aspect of SAPOA’s activities. We learn about Bernadet Hartley’s drive as Education Committee Chairperson; SAPOA’s Bursary and Career Specialist Moeketsi Moshata’s huge responsibility in managing two bursary schemes; and how Mafonti Morobi, SAPOA’s Education Officer, is responsible for the smooth running and facilitation of all the workshops and short courses. Student accommodation looks to be an asset class that is on the rise. We publish an extract from a recent research report by Jones Lang Lasalle, “Student housing: a new asset class in sub-Saharan Africa”. While the report looks at sub-Saharan Africa, we have focused specifically on South Africa to keep the context relevant for our readers. The report seems to echo the sentiments voiced when we visited the Eastern Cape and discovered that student accommodation is in great demand. In addition to the findings, we did a little research of our own and found the top-listed universities in South Africa and
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where they are located, then asked the question: “How much does a student have to pay, on average, for accommodation in the areas surrounding the universities?” Research reports play a huge role in helping SAPOA’s members make informed decisions. They can be found on SAPOA’s website, Sapoa.org.za/research. In this edition of Property Review, we also take a look at a report that was commissioned to delve into the GDP of Mpumalanga – more specifically, Mbombela. As with the
We welcome Nkepile Setshedi as the new SAPOA Sales Representative. For all advertorial sales and queries, please contact her on firstname.lastname@example.org or 011 883 0679
student accommodation report, we have extracted a number of salient points and findings from this one. As South Africa once again heads towards summer, we are still facing drought conditions in many parts of the country. How do we “conjure up water out of thin air”? On a slightly serious note, this month’s Off the Wall feature looks at how other countries have managed water scarcity, in some cases literally relying on the air we breathe. It’s hard to imagine that we’re in the last quarter of the year already, and that there are only two more editions of Property Review to go before we close for the festive break. I, for one, reflect on the year to date and wonder whether you, our readers, have experienced a fast paced year as well. November is traditionally the month in which we look at the green environment, covering energy efficiency, water conservation and green buildings. I’m looking forward to attending the Green Building Council of South Africa’s convention this year: it’s being held in the Cape, and I will no doubt catch up with some of our regular readers there once again. We may also touch on bankers, as well as facilities and property managers. Early in October, I’m planning a visit to Mbombela and a talk with SAPOA’s Regional Chairman James Aling to get the lowdown on commercial property development in the area – so to use an old cliché, watch this space. Looking further ahead to the December/ January edition – and getting this particular request in early this year – we’re asking for information on your CSI initiatives. Keeping in mind SAPOA’s drive to help transform the commercial property industry, we want to know what you are doing and what you have achieved over the past year. Email me at email@example.com and let’s chat! Enjoy the read this month. Mark Pettipher, Managing Editor
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Creating Concrete Possibilities
2017/04/11 2:55 PM
Broll wins silver for facilities excellence
Broll FM team (FROM LEFT): John Veldon, Executive for Specialised and Technical Services; Alain Morard, Director Africa Operations; and Mel Barends, Divisional Director for New Business
roll Facilities Management (FM) got Silver for Facilities Excellence at the 2017 PMR Golden Arrow Awards, having previously won a Gold award in 2013 and 2015, and a Bronze award in 2014. “We work hard to provide our clients with excellent customer service – and a huge thank you has to go to all our clients for their continued support,” says Richard Flame, Director for Facilities Management at Broll Property Group. The purpose of the PMR Awards is to enhance excellence, set a benchmark in the industry, and discover a company or division’s competencies.
The awards are the culmination of a research process, whereby companies and institutions are rated based on respondents’ perceptions (with a strong focus on evaluating and measuring customer service and customer satisfaction). Furthermore, the awards represent competitiveness, effectiveness, excellence, leadership and resilience. According to Flame, despite the fact that in some parts of sub-Saharan Africa specialised facilities management services are still in the process of evolving, there is increased demand for FM, and the sector provides untapped growth opportunities.
ongaat Hulett has signed a deal with education group ADvTECH to develop the first new school in the Umhlanga region in more than 14 years. The 2 000-student facility, located in the Sibaya Coastal Precinct, is scheduled to open in 2020. “We are pleased to be working with ADvTECH, which has entrenched its position as a leading player in the education market,” says Sithembiso Mthembu, Head of Development Execution for Tongaat Hulett Developments. “The company clearly sees value in the opportunity, and as the developers of Sibaya Coastal Precinct we’re excited
to be able offer this type of amenity to residents in the precinct and surrounding region.” Mthembu says the decision to construct the new school follows a period of identifying market demand and potential, followed by intensive engagement and negotiations with educational institutions. The school is being developed in Node 5 of the 1 000-hectare Sibaya Coastal Precinct, on which construction of civil infrastructure commenced last year. The first phase of the project is expected to be completed later this year, with plans to build about 10 000 residential units by the time the project is completed.
Walvis Bay gets ready to welcome Dunes Mall
Rising disposable income opens the door to more home sales
he 27 500m2 Dunes Mall, developed by Atterbury and Tradehold, is in the final stages of completion and set to open on 26 October. “We have designed and built a shopping centre that would stand out anywhere,” says Development Manager for Atterbury Evert Kleynhans. “There will be no need for locals to leave Walvis any more: they will have a quality shopping centre on their doorstep.” Dunes Mall benefits from a prime location at a major intersection close to the city’s airport and the iconic tourism area of Swakopmund. It is anchored by a 3 500m2 Checkers, a 2 700m2 Pick n Pay and a 1 700m2 Woolworths. Fashion retailers are well represented, with retail offerings by Cotton On, Truworths, Mr Price Group, Foschini Group and Pepkor Group. The mall also features a food court with a children’s play area. Dining options include Spur, John Dory’s, Mugg & Bean and Col’Cacchio, all with outdoor seating areas. The mall, which will be managed by Atterbury, will be the largest in the area and the second-largest in the country after The Grove Mall of Namibia, also developed and managed by Atterbury. “On completion there will be about 80 shops, all of which will be employing local people, creating a positive impact on the local population,” Kleynhans says.
he average approved bond size has increased by 4,5% in the past year, while the average house price has increased by just 2,2%, according to the latest statistics from BetterBond. “These figures correspond to a decline in the average percentage of purchase price being paid as a deposit in the year to end August, from 22% to 20%,” says BetterBond CEO Shaun Rademeyer. The overall picture seems to be of increasing home affordability as a result of improvement in disposable income, which the BankservAfrica Disposable Salary Index shows as having increased for the fifth consecutive month in July. “It means many prospective home-buyers now have more of their take-home pay available to put towards a monthly bond repayment,” says Rademeyer. “This is great news for the real estate industry, because it makes the banks more likely to approve home loans – and to lend a bigger proportion
of the purchase price. Taken together with the drastic slowdown in house price growth over the past 12 months from 9,9% to just 2,2%, this definitely opens the door to more successful home sales.” But neither buyers nor agents should take this to mean that the banks are likely to relax their strict credit qualification criteria any time soon. “The economy is fragile and there is a higher risk that borrowers could suddenly become unemployed, so caution prevails,” says Rademeyer. “About 25% of home loan applications submitted are still being declined outright because of credit record problems. What’s more, only 36% are receiving immediate approval by the first bank to receive the application – which means that prospective borrowers who are applying for home loans on their own only have a very slim chance of their application being approved.”
School boost for Sibaya
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KZN appointment to SAIBPP National Board
ndile Mnguni, an executive at Tongaat Hulett Developments, has been appointed to the national board of the South African Institute of Black Property Practitioners (SAIBPP). This follows his appointment as committee chair of the Institute’s KwaZuluNatal chapter in January. Mnguni has more than 17 years of experience in the property and construction sectors. His tertiary qualifications include a BTech in
Andile Mnguni, an executive at Tongaat Hulett Developments
quantity surveying from the Durban University of Technology and an MBA from the University of KwaZulu-Natal. After working as a quantity surveyor for Aveng Grinaker-LTA, he joined Tongaat Hulett Developments, where he has led development and served as a director and chairman of property management associations at Izinga, Umhlanga Ridge Town Centre and Ridgeside. He is currently responsible for the development and execution of Tongaat Hulett Developments’ Outer West landholding strategy. “The SAIBPP does great work,” says Mnguni. “I’m pleased that – thanks to the experience I’ve gained and the support of Tongaat Hulett – I will be able to contribute to the development of the property sector, and provide a KZN perspective on national issues facing our industry.”
Offshore property investment
outh African investors are showing unprecedented interest in buying property offshore. However, making decisions without the correct advice can place them on the back foot. “It’s quite onerous to accumulate all the information needed,” says George Radford, Africa head of global property investment firm IP Global. “Given current levels of economic volatility and uncertainty, there are more variables to consider prior to making any property investment, meaning you need to do more research.” Many investors feel they have the answers at their fingertips in an increasingly online world. But it can be risky to rely on online research. The number of companies trying to sell property abroad has increased threefold in the last few years, and many of the claims of guaranteed high returns are unlikely. “Selecting the best investment for your strategy is just the beginning,” says Radford. “You still have to manage the property, source and manage tenants, and keep a handle on ongoing costs.” An independent study by Savills identified indicative values of IP Global developments launched between 2009 and 2013, showing an average total return of 29,5% leveraged and 11,4% unleveraged across projects. In this time period, IP Global’s 45 projects in London proved to be safe-haven investments on the back of a strong, stable economy, increasing population and housing supply shortfalls. Germany remains a promising investment opportunity. IP Global has four projects in its Berlin portfolio, which have shown a 16,1% unleveraged and 35,1% leveraged total capital growth since the first development was launched in 2014.
Facebrick makes for healthy living at the University of Zululand
he University of Zululand is celebrating the opening of a R40-million state-ofthe-art residential upgrade at its main KwaDlangezwa campus. According to director of facilities management Richard Dlongolo, the university has struggled with a problem that plagues most local tertiary institutions: lack of good res accommodation. The new 288 unit facility comprises fourand six-sleeper combinations. These come with hot water, bathroom facilities, furniture and kitchens (equipped with refrigerators, stoves and individual lockers for students to store their groceries). Creature comforts include a lounge area and television. The upgrade is part of a combined R70-million investment in infrastructure that will go some way towards creating a good teaching and learning environment for both students and staff, according to the university’s Vice Chancellor Professor Xoliswa Mtose. This includes the complete rebuild of the campus electricity substation at a cost of about R26-million to address the frequent and protracted electricity outages that have plagued the university.
According to Dlongolo, this upgrade was actually an extension of existing residential facilities that were completed in 2008. Construction of the residential units began in November 2015, and took a year. The units were finally completed in May this year, with “very excited” students taking occupation in July, when the new term began. Although the longevity and low maintenance of buildings constructed using clay brick played an important role in its selection for this project, Corobrik sales director for KwaZulu-Natal and Eastern Cape Allin Dangers says the reduction of noise, natural thermal regulation, energy conservation and other safety and health advantages made it the perfect choice for student accommodation. The density of clay brick provides maximum insulation against noise and minimises the transmission of airborne sound while also reducing the impact of external noise. This is important when large numbers of students are living in close proximity. The thermal mass of clay brick is widely recognised for moderating indoor temperature as well. Clay brick has the ability to absorb
heat during the day and release it at night, thus reducing the need for artificial heating in winter and cooling in summer. “Research has shown that clay brick is one of the few man-made building materials whose mineral properties meet all necessary requirements for healthy living,” says Dangers. “The inorganic or inert qualities of fired clay release insignificant or minuscule volatile organic compounds (VOCs). Most importantly for Zululand, clay brick has a natural propensity to absorb and release humidity from the atmosphere to help keep humidity at the 40-to-60% level required for healthy living.”
The University of Zululand has opened a R40-million state-of-the-art residential upgrade at its main KwaDlangezwa campus
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Long-awaited Constitutional Court ruling on payment of historical municipal debt On 29 August 2017, the Constitutional Court ruled that new home-owners couldn’t be held responsible for historical debt accumulated by previous owners. The ruling will provide relief to home-owners who have been held accountable for historical municipal debt, often stretching as far back as 20 years. Property owners were denied municipal services until the debts had been paid By Mumtaz Moola
The case that created the trend of municipalities claiming rates and taxes from owners who were not the owners of the property when the liability for rates and taxes was incurred is City of Tshwane Metropolitan Municipality v Thomas Mathabathe, a decision in the Supreme Court of Appeal under Case No. 502112 (“the Mathabathe case”)
he Constitutional Court upheld a November 2016 High Court ruling in favour of property owners. Municipalities including Tshwane, Ekurhuleni and eThekwini brought the application to the Constitutional Court to appeal that finding. The case that created the trend of municipalities claiming rates and taxes from owners who were not the owners of the property when the liability for rates and taxes was incurred is City of Tshwane Metropolitan Municipality v Thomas Mathabathe, a decision in the Supreme Court of Appeal under Case No. 502112 (“the Mathabathe case”). In the Mathabathe case, Mathabathe purchased a property at an auction and, as required, the conveyancer applied for a rates clearance certificate from the municipality. The amount payable was excessive; when queried, it transpired that the municipality was claiming debts that occurred beyond the two-year period. Mathabathe sought an order from the High Court, directing the municipality to limit the amount required for the clearance certificate
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to only the rates and taxes for the preceding two years. The order was granted by the High Court but was appealed by the municipality to the Supreme Court of Appeal (“the SCA”). While the appeal was dismissed, the principles of Section 118(1) and 118(3) were clearly set out. The municipality accordingly could not require payment of amounts beyond the two-year period set out in Section 118(1) for the purposes of obtaining a clearance certificate under that section. The court further said that “The municipality failed to draw on the distinction that Subsection 3 is not an embargo provision but a security provision. The municipality was plainly wrong in its contention that upon registration (of transfer) … (it) loses its right under Section 118(3) of the Act.” The municipality has security for the historical debt. That is where the judgment ended. The judgment was not extended to suggest that the municipality in holding its “charge”, which has been interpreted to be a lien, may be enforced against a successor in title to the property, who was
Section 118(3) simply creates a preference in favour of a municipality over any mortgage bond registered against the property. In the absence of a link and proportionality as set out in the Mathabathe case, it does not create a debt due by a successor in title to a property not the debtor and liable for the charges against the property at the time they were incurred. Section 118(3) simply creates a preference in favour of a municipality over any mortgage bond registered against the property. In the absence of a link and proportionality as set out in the Mathabathe case, it does not create a debt due by a successor in title to a property.
At best, that security is enforceable against other creditors even in the case of successors in title. The security cannot create a new debt due by a successive owner. The practical consequences of the interpretation by the municipalities were that: ● Property owners never had peace of mind, when taking transfer of a property, that all rates and taxes have been paid to date – or if they had not, that they were immune from the municipality proceeding against them for debts incurred by a previous owner; and ● Lenders who were securing debts by way of mortgage bonds would also not have the security of all rates and taxes having been fully paid, or – if not paid – that the municipality would not proceed against the current owner of the property for debts incurred by a previous owner. This is now all settled by law. The Constitutional Court found that upon transfer of a property, a new owner is not liable for old municipal debt. The Constitutional Court handed down judgment in an application for confirmation of an order by the High Court of South Africa, Gauteng Division: Pretoria (“High Court”) that declared Section 118(3) of the Local Government: Municipal Systems Act of 2000 to be constitutionally invalid. This section provides that an amount due for municipal services rendered on any property is a charge upon that property and enjoys preference over a mortgage bond registered against the property. Tshwane, Ekurhuleni and eThekwini municipalities contended that a proper construction of Section 118(3) was that the charge survives transfer. They argued that,
for municipalities to properly fulfil their constitutional duties of service delivery, they needed extraordinary debt-collecting measures. This meant burdening new owners with responsibility for historical debts. This contention they followed through both in the High Court and the Constitutional Court. They, however, conceded that nothing prevented them from enforcing their claims for historical debts on the previous owners. The municipalities conceded further that their powers included interdicting any impending transfer to a new owner by obtaining an interdict against the old, indebted owner until the debts were paid. The social housing organisation TUHF Ltd (TUHF), the Banking Association of South Africa (BASA, an association with 32 member banks), and the Johannesburg Attorneys Association also joined the case as amicus curiae (friends of the court). TUHF and BASA associated themselves with the applicants in challenging the meaning the municipalities ascribed to Section 118(3). They advanced further arguments, including that Section 118(3)
The social housing organisation TUHF Ltd, the Banking Association of South Africa (an association with 32 member banks), and the Johannesburg Attorneys Association also joined the case as amicus curiae (friends of the court)
permitted arbitrary deprivation of not just the new owner’s property rights, but of real security rights the new owner confers on any mortgagee who extends a fresh loan on the security of the property post-transfer. The Constitutional Court weighed the historical, linguistic and common law factors bearing on how the provision should be understood, plus the need to interpret it compatibly with the Bill of Rights. The Court held that the provision is capable of being interpreted so that the charge does not survive transfer. The Court held that a mere statutory provision, without more, that a claim for a specified debt is a “charge” upon immovable property does not make that charge transmissible to successors in title of the property. Public formalisation of the charge (e.g. registration in the Deeds Registry) is required to give notice of its creation to the world. Section 118 does not require this public formalisation process. In any event, the Bill of Rights prohibits arbitrary deprivation of property, which would happen if debts without historical limit were imposed on a new owner of municipal property. Therefore, to avoid unjustified arbitrariness in violation of Section 25(1) of the Bill of Rights, the Court held that Section 118(3) must be interpreted so that the charge it imposes does not survive transfer to a new owner. In the result, the Court held that, because Section 118(3) can properly and reasonably be interpreted without constitutional objection, it is not necessary to confirm the High Court’s declaration of invalidity. For clarity, the Court did grant the applicants a declaration that the charge does not survive transfer. The Court further held that the Bill of Rights prohibits arbitrary deprivation of property, and Section 118(3) must be
Municipalities will immediately have to desist with the practices of imposing and trying to collect historical debt, which they omitted to collect from a previous owner, from the new owner. This practice of municipalities is now finally declared invalid, and new owners can justifiably refuse to pay such historical debt of a previous owner interpreted to the effect that the historical debt of a previous owner does not pass to a new owner. Interestingly, the Court did not declare Section 118(3) invalid, due to the fact that the Section 118(3) can be interpreted without constitutional objection. The ruling of the Constitutional Court to the effect that new owners cannot be held liable for the historical debt of a previous owner is a victory for property owners and financial institutions alike. Municipalities will immediately have to desist with the practices of imposing and trying to collect historical debt, which they omitted to collect from a previous owner, from the new owner. This practice of municipalities is now finally declared invalid, and new owners can justifiably refuse to pay such historical debt of a previous owner.
SOUTH AFRICAN PROPERTY REVIEW
What tenants need to know about bodies corporate The Rental Housing Act Excessive noise, inconsiderate parking, oil stains on paving,
satellite dishes put up in the wrong place, overcrowding at units,
No. 50 of 1999 only deals barking dogs… Bodies corporate have to deal with a wide range complaints. But when the occupier of a unit is a tenant, with disputes between of what is the correct procedure for dealing with complaints? bodies corporate and Here are four key questions, along with clarifying answers
owners, or between owners and other owners. This is
Words by Deirdre Moore
an area that highlights Can a body corporate why it’s so important to have a good letting agent who can facilitate the process if a dispute arises
If the tenant does not rectify the breach after a warning
declare a dispute with a tenant? The Rental Housing Act No. 50 of 1999 only deals with disputes between bodies corporate and owners, or between owners and other owners. This is an area that highlights why it’s so important to have a good letting agent who can facilitate the process if a dispute arises. “If the body corporate has a dispute with a tenant, it is addressed to the owner,” explains Natasja Vincent, manager of the Port Elizabeth Just Property rentals business. “As managing agents, we investigate the matter on behalf of the property owner, liaising with the body corporate to understand the matter and to explore appropriate remedies, including warnings and penalties.” Samantha Craddock of Kaplan Blumberg Attorneys elaborates: “If the tenant does not rectify the breach after a warning notice, the body corporate can impose a fine/penalty due each and every month, as added to the owner’s levy account, until the breach is remedied. The owner can, in turn, civilly recover the loss and/or evict the tenant.”
notice, the body corporate Can a tenant be evicted
or charged levies if their
can impose a ﬁne/penalty landlord has stopped paying them? due each and every month, as added to the owner’s levy account, until the breach is remedied. The owner can, in turn, civilly recover the loss and/or evict the tenant 10
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“No,” says Vincent. “If a landlord neglects to pay his/her levy, the body corporate cannot take action against the tenant as they are not the registered owner.” Legally, the landlord is responsible for the levies, and the body corporate must take this up with the owner. Craddock notes that as long as the tenant’s rental is up to date, he/she is not in breach and is entitled to occupy the leased premises until the expiry of the lease term.
What happens if the tenant is responsible for levies in terms of his lease but neglects or refuses to pay? A tenant cannot be charged for levies, says Vincent. “The tenant can only be invoiced for amounts billed by the body corporate for utilities, garden service and/or any such charges if stipulated in the lease,” she says. “However, the owner remains ultimately responsible. The same applies to municipal accounts: the account holder (owner) is responsible for all payments regardless of whether the tenant has agreed to pay or not.”
Tenants often don’t know what the rules of the body corporate are. Who is responsible for educating tenants? “The Rental Housing Act requires a landlord of a sectional title unit who has reduced a lease agreement to writing, to attach a copy of the scheme’s rules to the lease agreement,” says Vincent. “We make it the managing agent’s responsibility to ensure that a copy of the rules is attached to the lease agreement when it is given to the tenant for signature. Best practice would be for the tenant to sign and acknowledge that they’ve received, read and understood the rules.” Remember, disputes that arise with the body corporate will always be brought to the owner of the unit – the owner is ultimately responsible for dealing with the tenant and ensuring he/she adheres to the rules. A good rental agent can help alleviate this burden by taking ownership of the responsibility to inform the tenant of the rules. Being able to prove that a tenant has read and understood the rules can help bring clarity to disputeresolution efforts.
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planning & development
City of Johannesburg: Integrated Development Plan 2017-2022 SAPOA has a greater understanding of the complexities faced in developing and managing a major urban complex as a result of its participation in the City of Johannesburg Integrated Development Plan (IDP) Words by Mumtaz Moola
n preparation of the Jo’burg IDP 2017-2022, the city identified a number of challenges, including slow economic growth, service delivery, poverty and inequality, environment decay, corruption, inadequate police visibility, social disconnect and informal economy. In response to the challenges, the city prepared what Executive Mayor Herman Mashaba has openly admitted is a “pro-poor budget”. However, to address the challenges, the city is focusing on growing the economy and creating jobs, with a target of five percent economic growth by 2022.
management to bring about innovation and investment in priority transformation areas; ● The practical and balanced implementation of integrated transportation systems, and ensuring adequate resources and infrastructure for all modes of transportation; and ● The management of urban sprawl, and containment of public and private development expansion of urban areas into open space and environmentally sensitive areas;
Establishment of a collaborative strategic and working relationship with the city
SAPOA recognises that national and provincial policies and strategies have to be taken into account and considered as part of an IDP for the city. Of concern is the imposition of spatial and infrastructural developmental imperatives and priorities by Gauteng Province on the city. These would appear not to be in alignment with a number of the city’s strategies and priorities, particularly with respect to the SDF. This dissonance between different spheres of government regarding developmental priorities establishes uncertainties regarding the long-term investment and development of property. To create an enabling environment that will attract and retain investment and development for the city, there is a need for greater integration of strategies and policies between the different spheres of government through inter-governmental forums and working teams, with the involvement of private-sector investors and developers. A recent case study of South African transitoriented development (TOD) established a framework of guidelines to improve the effectiveness of TOD implementation, which included: ● Integration of urban form and public transport; ● Changing ridership patterns; ● The need for appropriate precinct plans; ● Private development facilitation; ● Releasing strategic public-owned land for TOD institutional structure and procedures;
SAPOA believes the focus should be on making the city a great place for all the citizens in the realisation of a resilient, sustainable, liveable, safe and secure city environment. The particular focus of SAPOA’s members to the strategic and working partnership and collaboration with the city would be to contribute to the sustainable and equitable spatial, economic, social and environmental transformation and development of the city through their interests in the commercial, industrial and residential property sectors, in terms of investment, development, ownership and management.
Spatial Development Framework SAPOA was an active participant in the review and preparation of the Spatial Development Framework 2040 (SDF). However, there are a number of issues that we believe still need to be addressed through the IDP. These include: ● Building capacity to manage and implement the policies and interventions relating to spatial development and land-use management in the city; ● Recognition by the city that its assets include the citizens, investors and developers, and their diversity in addressing the wide variety of spatial, economic, social and environmental transformational opportunities; ● Ensuring adequate resources and
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● Capacity building and awareness creation and cooperation between transit operators, municipalities and landowners; and ● Urban management. SAPOA believes that these guidelines should be incorporated into the IDP for the promotion and growth of TODs throughout the city, to bring about spatial transformation and integration through investment and development to improve economic growth. This also requires a collective and collaborative approach involving a wide range of role-players and partners to achieve mutually beneficial and agreed outcomes.
Pillar 1: Grow the economy and create jobs City and regional partnership structures SAPOA recognises and supports the plan to elevate the city’s economic real growth to five percent per annum by 2022. In view of the short time period available to achieve such growth, it is imperative that partnerships should be established and regular meetings held to discuss developmental needs and requirements, projects and programmes, social and services infrastructure, and service delivery issues emanating from the communities and from the city. Conducive business environment for investment and development Additional budget and additional resources have been applied by the city to build capacity in development planning and the adoption of 20 key performance standards as a Customer Charter for assisting investment and development to take place in the city. The city still needs to take a more aggressive stance with regards to improving and securing the enabling environment that is required for business to be more successful, and to attract, support, maintain and retain new and existing investments and developments.
planning & development Pillar 2: Enhance quality of life by improving service and taking care of the environment Urban management The city intends to implement the proposed initiatives relating to improved service delivery, the Customer Charter and enhanced compliance and enforcement through increased number of JMPD officers and through the establishment of municipal courts. City Improvement Districts (CID) and establishment of Special Rating Areas In response to the legal challenge to CIDs, SAPOA has been party with the city, the National Treasury and the Johannesburg CID Forum to investigate and research the development and establishment of legally recognised and formal urban management structures and districts through the establishment of Special Rating Areas (SRA) in a soon-to-be approved city by-law. These structures will assist the city, and provide supplementary services and improved benefits for business and residential communities wherever they are established. Protect, promote and enhance the value of natural assets and biodiversity The city has a wealth of natural assets in its biodiversity and ecological systems and services. These natural assets should be recognised as a valuable contribution to and influence on urban growth and development. Many stakeholders actively work towards achieving various requirements and standards of the Green Building Council of South Africa, particularly regarding the management of water, sanitation, energy and waste in new developments (and where possible in building upgrades and renovations). It is important that initiatives and innovations by the city should be considered in the form of appropriate incentives, rates and tax rebates, or offsets to encourage wider adoption of sustainable development practices in projects.
Pillar 3: Advance pro-poor development that provides meaningful read rates Pro-poor development strategy SAPOA recognises the importance of contributing to the city’s spatial, economic and social transformation agenda, and has indicated to the city its willingness to support projects and initiatives that would realise and encourage spatial, economic and social transformation and integration to address inequality through affordable and appropriate
housing models, economic inclusion and entrepreneurial development and social infrastructure development. SAPOA is undertaking research and investigating opportunities for inclusionary housing.
Pillar 4: Build caring, safe and secure communities SAPOA members have an important role to play in ensuring safe and secure spaces, and planning for disaster management. In liaison with development and building owners and managers and established urban management structures such as CIDs and SRAs, added security resources and infrastructure could be integrated into the city systems and processes to increase capacity and ability to provide safe and secure environment for communities.
Pillar 5: Institute an honest, responsive and productive government Enabling an efficient and professional public service SAPOA members are equipped with a wide range of professional, managerial and specialist expertise, knowledge and skills. Community participation and recognition of the business sector SAPOA supports – and is an active participant in – the Johannesburg Business Forum and its associated subcommittees. Process and value of stakeholder participation and contributions to the IDP review The first opportunity to meaningfully engage with the city regarding the review of the growth and development strategy and the IDP was after the intensive (and extensive) internal processes and engagements held between November 2016 and the end of March 2017 to formulate the IDP and prepare the budgets according to the internally identified priorities and needs. SAPOA recommended that suitable processes for engaging with communities and the business sector are designed and implemented in the future so priorities and needs of citizens can be raised at the beginning of the IDP and budget-review process. 1. Capital infrastructure maintenance and service delivery SAPOA supports the city’s concerns regarding the lack of management and maintenance of the capital infrastructure, and the need for extensive investment in addressing the massive infrastructure backlog, with a particular emphasis on addressing the needs of poor communities.
The city recognises a growing need regarding water and energy security and distribution, and that the management and maintenance of the sourcing, storage, supply and distribution of water and energy is a high priority for sustained economic growth and development, particularly in view of the desired targets. SAPOA recommended that integrated resource management strategies be prepared by the city for both water and energy. The strategies should incorporate recognition of the opportunities for integrating renewable resources and green infrastructure, and (where appropriate) include waste management and recycling. The preparation of these strategies should be undertaken in collaboration with investors and developers to establish opportunities for partnerships to assist the city in the planning, installation, management and maintenance of required capital infrastructure through property development initiatives. 2. Capital Investment Framework (CIF) SAPOA supports the main objectives of the CIF, particularly with respect to improved management of the city’s existing infrastructure and in relation to directing future public and private investment. Development and investment in the city is often hampered by inadequate bulk services in areas of future growth. This particularly relates to the establishment of commercial, industrial and retail investment for job creation opportunities. Such areas should be identified and included as priority areas for the CIF. CIF identifies and prioritises capital projects for the city. However, SAPOA believes it is important to establish priority areas for budget allocation for adequate bulk and other infrastructure that will also attract and retain private investment and development for economic growth and job creation, and to improve revenue generation through rates and taxes. 3. Free basic water and the Expanded Social Package The cancellation of the city-wide free basic water of 6kL per household, and the fact that only indigent households registered on the city’s Expanded Social Package Programme will receive free basic water in future, will be particularly difficult to administer and manage in multipledwelling developments such as blocks of flats and sectional title developments. SOUTH AFRICAN PROPERTY REVIEW
Commercial property: a plethora of career opportunities The commercial property industry in South Africa is an ever-expanding source of career and employment options. SAPOA’s commitment to help transform the industry is in the capable hands of its Education Committee, headed by Bernadet Hartley. The Education and Training Department is managed by Bursary and Career Specialist Moeketsi Moshata, while workshops and training courses are taken care of by Education Ofﬁcer Mafonti Morobi By Mark Pettipher
Bernadet Hartley, Chair of the SAPOA Education Committee
ost SAPOA members know about the Education and Training Department – but for those readers who aren’t members and who may not have heard about the energy generated by SAPOA’s promotion of education in the property industry, we take a closer look at SAPOA’s commitment to transformation of what was a relatively closed sector. If you take the commercial property industry at face value, what you see is a series of buildings. However, if you think about what is actually involved – the sequence of events that a building needs to go through to come into being – the sector is alive with a variety of career opportunities. This is where the SAPOA Education Committee and the Education and Training Department plays an important role. “Irrespective of the economic downturn that South Africa is facing at the moment, it is important for us as an industry to understand that education, training and skills development should not be put on the back burner,” says Bernadet Hartley, HR Manager at Eris Property Group, and SAPOA’s Education, Training and Development Committee Chairperson. “We know that, in trying times, one of the first budgets to be cut is training and development. From an HR perspective, whether you’re in the property industry or
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not, training and staff development need to be taken care of, as they aid in staff retention and motivation, and enhance employee engagement. This also means that, given the right targeted courses, individuals and the companies they represent will benefit from being exposed at various operational levels to the latest trends and cutting-edge technology. “SAPOA has partnered with a number of South Africa’s leading universities and organisations to ensure that a career in property is possible. Together with the University of the Witwatersrand, we have developed a structured guide that can be used to either start or enhance your career in property. You don’t have to be in the industry to begin with: the guide demonstrates the follow-on courses, the time frames, the outcomes and the costs. All property-sector career opportunities are covered.”
This is where the SAPOA Education Committee and the Education and Training Department plays an important role. “Irrespective of the economic downturn that South Africa is facing at the moment, it is important for us as an industry to understand that education, training and skills development should not be put on the back burner”
Property is a resource that will always be in demand; therefore job opportunities at all levels in both the public and private sector are greatly varied. They include opportunities in the fields of finance, asset management, leasing and brokering, property development, valuations, as well as corporate real estate and facilities management. “By partnering with accredited institutions, our courses and workshops are in-depth and are recognised for the benefits and quality knowledge they provide,” says Hartley. “They are also, therefore, recognised by officiating bodies such as the Estate Agency Affairs Board (EAAB), Services SETA, the South African Property Charter and the National Home Builders Registration Council, all of which are SAPOA affiliates. “As a committee made up of SAPOA members – Abland, Attacq, Broll, Eris, Hyprop, JHI and Redefine – our responsibility is to assess the input, trends and requirements of the property industry as a whole. SAPOA is the voice of the commercial property industry, and as such we aim to deliver a unified objective towards training and development. We aim to guide our members towards our graduate programme and the courses and workshops we offer, as well as offering career guidance to up-and-coming property professionals. “We are always looking at ways to achieve a balance between what is required as skills training and what the regulatory bodies such as the EAAB would need; by working with those regulatory bodies we develop our workshops accordingly. We also invite and actively encourage companies to participate in our Bursary Scheme and courses. “We are aware that we do not have enough talented people entering the property industry, so it is important for us to make students and learners aware of ‘property as a career’ at an early stage. SAPOA, in collaboration with the Property Charter, is reaching out to schoolchildren through career
SAPOA education days, so that potential property practitioners can be informed about career choices within our industry.” Hartley is particularly excited about the “Excel at Uni” programme with which SAPOA is involved. The programme provides coaching and mentoring services with the objective of helping students to bridge the gap between a structured home environment and a “free”, unstructured student life, which is fraught with the many temptations of being away from home for the first time. The “Excel at Uni” programme is part of the Bursary Scheme. It ensures a report back on each of the students benefiting from the scheme, and allows companies investing in the SAPOA Bursary Scheme to know – through a structured monitoring process – how each student is doing and where they are in their particular path.
SAPOA education: training courses and workshops SAPOA’s property education programmes are available to everyone (not just students), and are run in collaboration with some of South Africa’s leading property minds. Each year there are various education courses and workshops offered; some are repeated two or three times during the course of the year to allow for those practitioners whose timetable may not allow them to join a particular course. Mafonti Morobi is the Education Officer responsible for the smooth running and facilitation of the education, training courses and workshops that SAPOA offers. “We run courses and workshops that are open to members and non-members alike,” says Morobi. “These consist of five-day short courses, two-week courses, and the longer one-year (part time) and one-year (distance learning) courses run with various universities. We also look into offering workshops that vary from half-day workshops to full-day workshops and seminars. “Together with the University of the Witwatersrand (Wits), we run a five-day Introduction to Real Estate (IRE) course, which is a combination of our original two intro courses and a further learning course. The aim of this course is to introduce participants to real estate as an asset, a bundle of rights and an industry. It will also introduce them to institutions that make up sectors or whose activities affect the real estate sector. We run this course at specific times during the year, with three or four dates, which allows potential participants some flexibility when planning their diaries. We are also able to assist with offering in-
Mafonti Morobi, SAPOA Education Officer
● The Intricacies of Sectional Title and Lease Agreement Workshop (Gauteng) ● Commercial Tenant Arrears Workshop (Gauteng) ● Property Finance Workshop (Gauteng) ● Introduction to Real Estate (KZN) ● Negotiation Skills Masterclass Programme (KZN) ● Negotiation Skills Masterclass Programme (Cape Town) ● Real Estate Market Analysis (KZN) ● Commercial Lease Seminar: Tenant Areas (Limpopo) ● Commercial Lease Seminar: Tenant Areas (Gauteng)
Bursary and careers house training to member companies who require it. “Also through Wits, we offer a one-year part-time Property Management (PM) course, where participants attend classes every Thursday from 2pm to 5pm. This course is very popular; its main aim is to provide delegates with in-depth exposure to the principles of property management in South Africa. “Then we have our popular Property Development Programme(PDP), a two-week intensive course that we refer to as the miniMBA. It has been running for 48 years. We offer this course in partnership with the University of Cape Town’s Graduate School of Business. This is South Africa’s premier management programme on property, finance, valuation, property law, negotiation, investment, development marketing and management. Delegates attending the PDP will find their skills and knowledge sharpened not only by the practical instruction and case studies, but also by the interchange of ideas with their course colleagues, resulting in extended knowledge in the principles and practice of property investment, development, marketing and management. “For those in outlying areas, we offer the Certificate for Commercial Property Practitioners (CCPP) – a one-year correspondence or distance-learning course run in conjunction with the University of Pretoria. This is our second-oldest course, which has been running for 19 years. It consists of modules and assignments available online, and culminates in a three-day block session that allows delegates to interact with the lecturer in preparation for a final four-hour examination at the end.” Looking at the rest of the year, there are still a number of courses and workshops that can be attended:
As an industry body, SAPOA’s education, training and development objectives are clearly defined as: ● Identifying the current and future education, training and development needs for the commercial property industry; ● Identifying and discussing solutions that can be used by SAPOA (through strategic partnerships) to address the education, training and development needs; ● Discussing education, training and development strategies that should be implemented in order to professionalise the commercial property industry through SAPOA; ● Representing the commercial property industry at the Services SETA; and ● Giving effect to the Property Charter principles around skills development and training. The specific responsibilities are: ● Determining the skills gap and need for new courses for the industry; ● Ensuring that SAPOA is effectively facilitating and monitoring education courses and workshops, and that these are aligned to the SAPOA business strategy and national skills development strategies; ● Promoting property industry at school, FET and university levels; ● Promoting and creating an awareness of different careers in the property industry; ● Active participation in the skills development objectives indicated in the Property Transformation Charter; and ● Participating with the EAAB and with services structures such as the Property Chamber Board. SOUTH AFRICAN PROPERTY REVIEW
SAPOA education ● BSc Architecture ● BSc Property Management
Moeketsi Moshata, SAPOA Bursary and Career Specialist
More specifically, SAPOA’s mission is to be committed, actively and responsibly, to represent, promote and protect the interests of its members’ commercial activities within the property industry. SAPOA is committed to searching for the most talented people, who will add value to its members and the industry, by providing tertiary educational support through the SAPOA Bursary Fund. Moeketsi Moshata, SAPOA’s Bursary and Career Specialist, was appointed to the role in May this year to oversee and manage the Bursary Schemes. According to Moshata, the department’s objectives are as follows: ● To actively participate in the transformation of the property sector in line with the objectives of the Amended Property Charter codes to reflect the demographics of the country; ● To increase the participation of those previously disadvantaged through property-related education and entrance into the commercial property industry; ● To promote the commercial property sector at both school and tertiary level to ensure growth into the future; and ● To address the current and future skills shortage in the industry. SAPOA offers bursaries to full-time students who are studying through some of the leading universities in South Africa. The qualifications SAPOA focuses on include: ● BSc Property Studies ● B Urban and Regional Planning ● BSc Construction Studies ● BCom Finance/Accounting ● BSc Quantity Surveying ● BCom Property Valuation and Management ● B Town and Regional Planning ● Diploma in Real Estate
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“My role is to work with our stakeholders and manage both the SAPOA Bursary Fund and the Services SETA scheme, and ensure that the objectives of the organisation are met,” says Moshata. “This involves ensuring each student’s fees are paid, addressing their queries and supporting them through the mentoring programme; and timeously reporting to the Trust, SAPOA Board and to the bursary sponsors. Most of our sponsorship focuses on second-year students and above – although, through the Services SETA scheme, learners from matric were considered in 2016 and are now in their second year of study. To qualify, a student must have attained the highest grades and academic passes, and must have secured a place at a university (if they are not already a student). The selection process is very thorough to ensure that opportunities are given to deserving students. In applying for bursaries, students have to ensure that mandatory documentation is submitted, as that forms part of the short-listing process before they can be interviewed. “Once the interviews are conducted and the selection is made, successful students will be formally notified and contracts will be prepared for them to sign. Regret letters are also sent to students who were not selected for the bursary programme. Contracts signed between us and the students govern the relationship and further the responsibilities of the student – they are a performance indicator of sort. This is also a way of introducing them to the industry they are (or will be) studying towards. “What is important for students and bursary sponsors to know is that no actual money is handed over to students. SAPOA is accountable to the sponsors/partners who contribute to the Bursary Fund; thus we ensure good governance in how the resources are managed. Our finances are audited on an annual basis, and from time to time the Risk and Audit Committee also looks at the audited statements to ensure that everything is in order. “The Services SETA scheme has allowed SAPOA to support and reach more students, in turn allowing them pursue their goal of participating in the property sector as qualified professionals. Through the scheme, students are sponsored for tuition, books and accommodation. “Beyond the relationship the Bursary Fund has with sponsors and students, we are also building relationships with universities that
offer property qualifications to ensure all the dots that lead to the success of the bursary programme are linked and in constant communication. We also believe in active relationships with our sponsors to ensure that when students need vacation work (or once complete their qualifications), the industry is ready to absorb them. These relationships not only form a bridge between all the stakeholders involved in the bursary programme; they also enhance commitment and support for the benefit of the students and the advancement of the industry. Ultimately, we would like our bursary programme to be given priority to allow our students to register seamlessly, easily access university facilities and study material, and for them to build peermentorship and tutoring relationships with one another. Accommodation is also a priority in this chain: whether that accommodation is provided by the university or sourced privately, it has to be conducive for students to be able to focus on their studies. Our success is also dependant on constantly evaluating how we do things, and improving the areas that need to be managed differently or in a better way.
“What is important for students and bursary sponsors to know is that no actual money is handed over to students. SAPOA is accountable to the sponsors/partners who contribute to the Bursary Fund; thus we ensure good governance in how the resources are managed. Our ﬁnances are audited on an annual basis, and from time to time the Risk and Audit Committee also looks at the audited statements to ensure that everything is in order”
SAPOA education Benefits of partnering with the SAPOA Bursary Fund SAPOA’s relationship with the industry allows for involvement in the development of the skills pool and the placement of graduate candidates when it comes to securing employment or internships for the students. By partnering with SAPOA, companies can determine the skills shortage, and have an input in specifying the qualifications required to address that shortage. Thus: ● Partners actively contribute to the advancement of the industry; ● Partners get the first opportunity to employ qualified professionals once the students graduate; ● Partners can offer vocational work and provide practical experience, which in turn serves as skills transfer; and ● The SAPOA Bursary Fund will furnish partners with a B-BBEE certificate to claim points and also benefit from tax rebates. “Apart from helping young people gain the necessary qualifications to enter the property workforce, partner sponsors also get the chance to employ the ‘cream’ of the crop,” says Moshata. “Those companies that work with us are safe in the knowledge that employee candidates are properly vetted and trained, and have the right qualifications for the job.” Property companies that have recognised career paths within their organisation can confidently hand over the management of their bursary funds to SAPOA. SAPOA is fully accountable for the management of the funds and receives a clean audit year after year. SAPOA effectively acts as the “pivot” between university bursars, company bursaryfund contributions, and the administration, recruitment and placement of students into courses, internships and eventual full-time employment (as and when member companies have the capacity to absorb graduates). SAPOA is thus a full turnkey training and development facilitator, aiding the transformation of the property industry.
Cash collected as “ﬁnes” during this year’s PDP course reached a record of R5 445. The money was used to purchase clothing and school stationery to be donated to the people of Klein Akker in Kraaifontein, a “shack” community of about 120 residents
Hanler van Eck, Dimension Data Business Development Manager, hands out clothing and stationery that was purchased with the funds raised during the PDP course in July
Hanler van Ec
k with Klein Ak
ity leader Ne
For further information on how to apply for (and participate in) the SAPOA training courses and workshops, and the Bursary Fund, please visit sapoa.org.za or contact: Bursary Fund department Moeketsi Moshata t: +27 (0)11 883 0679 f: +27 (0)86 458 6955 e: firstname.lastname@example.org Workshops and training Mafonti Morobi t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: email@example.com
Contact: Hanler van Eck t: +27(0)21 486 5624 e: firstname.lastname@example.org SOUTH AFRICAN PROPERTY REVIEW
property law workshop
A practical approach to commercial property rental Marlon Shevelew talks to South African Property Review about the series of workshops that SAPOA has initiated with the intention of being rolled out into 2018. Next stop: Limpopo in October By Mark Pettipher
he primary objective of the seminar is to fully equip pivotal players in the commercial property industry – that is, managers and agents – with a broad practical understanding of the field of law. “Rental property management is rental property law,” says Marlon Shevelew. “A key aspect of the workshop is to offer insight into how best to deal with breaching tenants by addressing the various ways to anticipate and pre-empt potentially damaging contractual disputes, with particular emphasis on:
Remedies for breach
Marlon Shevelew BA LLB (UCT), Director at Marlon Shevelew and Associates Inc
●● Cancellation of leases and ejection/ eviction processes of commercial tenants ●● Claims for damages arising from breach of a commercial lease ●● Actions and applications: the distinction, and respective advantages and disadvantages, of the two types of legal proceedings
Collection of rental arrears and other lease charges
A key aspect of the workshop is to offer insight into how best to deal with breaching tenants by addressing the various ways to anticipate and pre-empt potentially damaging contractual disputes 18
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●● Letters of demand: content, purpose and methods of delivery ●● The landlord’s tacit hypothec: what it is, when it can be enforced, and how one perfects it ●● Rent interdict summons ●● Proceedings in terms of Section 32 of the Magistrates’ Courts Act
Security ●● Notarial bonds ●● The Security by Means of Movable Property Act of 1993
Suretyships ●● Importance and impact of a suretyship ●● Requirements and formalities ●● The General Law Amendment Act of 1956
The Companies Act ●● The impact of business rescue on the commercial landlord’s rights ●● The impact of liquidations
The Consumer Protection Act ●● Section 22: obligation to understand the terms of a lease placed on a landlord ●● Sections 48 and 49: unfair, unreasonable and unjust terms ●● Section 51: Prohibited transactions ●● Section 14: Fixed-term agreements
Penalties ●● Penalties that can reasonably be imposed in terms of a lease ●● The impact of the Conventional Penalties Act
Additional topics ●● The tenant’s duty to reinstate leased premises to their pre-lease condition ●● Fixtures and fittings: tenant’s right to remove these upon expiry or cancellation of a lease However, this is only an overview of the detailed seminar content. “After the four-hour pilot workshop in Mpumalanga in July, I returned to Cape Town, reflected on certain questions posed after the lecture, and evolved the material accordingly – supplying to the demand for knowledge, as it were.” Now packed with six hours of material, the goal of the workshop is to convey and instil a host of challenging legal principles as simply and practically as possible. “One must not forget,” says Shevelew, “that the majority of commercial property managers are not legally trained. I have carefully designed the seminar for the ears of a layperson – it is simplified and easily digestible.” In short, Shevelew offers seminar attendees an empowering oversight of the field of commercial property rentals, injected with practical wisdom drawn from years of experience working in and around the trenches of our legal system: the courtrooms. “Since there is no easily accessible tribunal designated to commercial property disputes, the workshop also examines how judges and magistrates have in the past interpreted and addressed an array of commercial leaserelated complaints,” he says.
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technology and education
The EdTech revolution Is it just a new buzz word – or something that demands attention? EdTech is something that demands attention. It is not replacing the educational process, but is rather using technology to enhance the delivery of this process. The concept is strongly linked with the rise in FinTech (use of technology in banking services): like FinTech, EdTech reveals modern societies’ demand for innovation and digital services. In all aspects of our life (healthcare, fashion, etc), we want things to be made easier, more accessible and instantaneous. Nothing is left untouched by the current digital revolution First published in The Occupier Edge By Tom Bremner, Graduate Surveyor: Global Occupier Services (email@example.com)
inTech was all the rage when it started gaining traction and recognition in early 2016. With all the hype surrounding it in the past year, there’s been talk that a “FinTech bubble” has been created. Is that the case? And if so, is the bubble about to burst? Unlike the ups and downs of FinTech and the financial markets, EdTech – the use of technology in the form of products, apps and tools to enhance learning – remains constant. The education field is large, yet EdTech has been completely overshadowed – until now. EdTech, “the use of technology in the form of products, apps and tools to enhance learning” encapsulates a wide spectrum of technologies that can be utilised in the process of education and training – from the simple use of desktop computers to the more cutting-edge use of virtual reality, artificial intelligence automation and gamification. The rise of this new-age education and learning world has begun receiving investments and is predicted to reach US$252-billion globally by 2020. The tangible benefits associated with the utilisation of cutting-edge technologies in the education process are causing the EdTech industry to boom, and the large investments are proof. The million-dollar question for real estate professionals is, how will the boom of EdTech impact the corporate real estate industry? Although many of the technologies are still in their infancy, a number of predictions can be made.
Space design is likely to change Since the turn of the millennium there has been an increase in both the number and the type of mobile devices used by office workers within the workplace (laptops, phones, tablets, etc). As the EdTech sector
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becomes more refined, workplace training is increasingly being undertaken on all of these devices, whether the employee in question is in or out of the office. This rise in asynchronous learning is likely to impact the design of the workspace, with a “decentralised” co-working style of office layout likely to be preferred by corporate occupiers and their employees.
The rise of this new-age education and learning world has begun receiving investments and is predicted to reach US$252-billion globally by 2020. The tangible beneﬁts associated with the utilisation of cutting-edge technologies in the education process are causing the EdTech industry to boom, and the large investments are proof
Impact on schools/teaching Craig Cassell, a Cushman & Wakefield specialist who works with education-sector clients, is observing the profound impact EdTech has had on schools and universities. He has seen EdTech provide the leading innovations in content, curriculum and platform delivery to students, all of which is helping students better prepare themselves for the workforce. Although the impact of EdTech on real estate belonging to educational institutions remains nominal, in as little as five years traditional lecture halls could become nonexistent. Schools and universities will have to learn and adapt to negotiate these changes successfully.
Corporate real estate occupiers will experience cost efficiencies As virtual “e-learning” methods (such as MOOCs, gamification, artificial intelligence, virtual reality, etc) are increasingly being adopted for workplace training, as well as being utilised on multiple mobile devices, there is no longer a requirement for bricks and mortar training rooms and in-house “training staff ”. This is likely to provide substantial cost-saving opportunities for corporate occupiers with regard to both their real estate and human resources management.
Increased investment in EdTech business start-ups EdTech start-up firms are proving to be a safe investment as a result of the fact that the education market, unlike the financial markets, is sheltered from many of the pressures associated with the broader economic/political landscape. As a result, we are likely to see a mirroring of the FinTech
technology and education
start-up phenomenon, with plenty of EdTech firms securing investment and seeking to acquire office space in the “tech districts” of major cities worldwide.
over the future direction of their career. The increased autonomy over workplace training will be a key factor in increasing employee satisfaction.
Employees will experience increased autonomy over job-related training
Opportunities to create value by interpreting big data
EdTech provides employees with the opportunity to personalise their workplace training. Learning and training in the workplace can now be tailored to an employee’s preferred learning style, in addition to their job position and rank. For example, if the employee is an interactive learner, they can choose to “gamify” their training, while they also have the option to choose the pace of their learning. Most importantly, the technology available to corporate firms allows their employees to choose the nature of their training in terms of content and topic – and with this power to effectively “guide” their own training, employees themselves have greater control
EdTech provides occupiers with greater access to (and more accurate analysis of ) data associated with the achievements, progress and nature of their employees’ training. This allows them to adapt and influence the training of particular employees if knowledge gaps are identified. Companies will also be able to utilise learning data to benchmark employees against a number of criteria. In addition, EdTech could provide opportunities to engage with the strategic consulting teams – for example, when undertaking locational analysis, it would be theoretically possible to identify where the best talent is based geographically based on their use of technology in the education process.
SCHOOLS / TEACHING
EdTech provides occupiers with greater access to (and more accurate analysis of) data associated with the achievements, progress and nature of their employees’ training. This allows them to adapt and inﬂuence the training of particular employees if knowledge gaps are identiﬁed. Companies will also be able to utilise learning data to benchmark employees against a number of criteria. In addition, EdTech could provide opportunities to engage with the strategic consulting teams
INVESTMENT IN START-UPS
6 SOUTH AFRICAN PROPERTY REVIEW
educational property developments
properties on growth strategy to supply growing demand in education In a recent conversation, South African Property Review spoke to Vongani Mbhokota, Group Executive at ADvTECH Properties, about exciting rollout plans in education properties. Education is a sector that needs an injection of growth, both in South Africa and the rest of Africa
Vongani Mbhokota, Group Executive at ADvTECH Properties
he properties division of JSE-listed ADvTECH, Africa’s leading privateeducation provider, has embarked on an aggressive growth and development strategy on the continent. “Our expansion in the schools and tertiary sectors in South Africa and the rest of Africa will further consolidate our market position as the largest provider of – and investor in – education on the continent,” says Vongani Mbhokota, Group Properties Executive at ADvTECH. The ADvTECH Group’s properties department boasts an enviable track record in school design, development, construction and facilities management, and successfully owns and operates more than 100 education facilities. The group owns nine tertiary brands across 28 sites in South Africa and the rest of Africa. Its higher-education division, the Independent Institute of Education, is South Africa’s largest and most accredited private higher-education institution. ADvTECH’s schools division consists of seven brands, with 90 schools across South Africa as well as the Gaborone International School in Botswana.
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Its 10 resourcing brands place thousands of candidates annually, assisting graduates in making the transition from the world of study to the world of work. “We have an exciting growth plan with secured land portions across the continent, which will be rolled out in the coming years,” says Mbhokota, adding that there are significant growth opportunities in the education sector not only in South Africa, but across Africa, where demand for quality education is rising from a growing middle-class market. “Whether the economy is doing well or badly, there will always be a need for schools, so our development plans take on a long-term life span. It is clear there will be a greater demand for mid-fee-range private schools in the coming years.”
Joint-venture partnerships make strategic business sense “A large portion of the planned expansion will be through ADvTECH’s own developments, joint-venture partnerships with other developers, and leasing of properties where it makes strategic and business sense,” says Mbhokota. “Given our quality offering, diversity of brands for targeted markets and unparalleled experience in the privateeducation sphere, we have a significant competitive advantage over other players seeking to enter this growth market.”
Southdowns College, Centurion
The proportion of learners attending private schools in South Africa and on the rest of the continent is still relatively modest, so there is ample room to grow the sector, Mbhokota says. “We also have sufficient balance-sheet flexibility to support an ambitious but considered growth strategy as we pursue these opportunities to supply the growing demand. “ADvTECH’s core commitment to academic excellence, and the cornerstone of the properties-development focus, is to create an environment that facilitates and optimises the learning experience for our students. Each brand in the ADvTECH portfolio has its own value proposition and ethos, which translates into specific building and property requirements. Thus creating suitable buildings and grounds that support our brand offering is a vital consideration when designing and expanding our educational facilities.”
Schools and tertiary land requirements “Those developers who would be interested in partnering with us need to keep in mind that schools and tertiary facilities need between five and 10 hectares of land – because 60% of a school is made up of facilities.” In 2018, ADvTECH will open several new schools and tertiary campuses. Some of the
educational property developments “While we remain cognisant of the pressure households are under given our challenging economic conditions, economic slowdown does not impact the demand for quality education. We have made a continued effort to investigate alternatives, identifying new market segments, exploring new channels to market, and developing new products,” says Mbhokota. “Partnering with ADvTECH is like securing a key anchor tenant. We answer a demand and offer a quality service in a catchment area that has a gap, safe in the knowledge that our facilities have longevity.” He says he is particularly excited about growth opportunities outside of South Africa, where the group has already made acquisitions and recently announced its first development outside of the country. In collaboration with Rendeavour, Africa’s largest urban developer, ADvTECH plans to start developing a Crawford International School in Tatu City, 25km outside Kenya’s capital Nairobi, in the last quarter of 2017. Mbhokota is bullish about the future and ADvTECH’s trajectory. “We have been in business for several decades, and we have managed to develop world-class educational properties: schools and tertiary brands always striving to be on time, of good quality and within budget,” he says. “This will continue to be our guiding principle as we grow the business.”
Peacanwood College, North West Province
Crawford College, Sandton
ADvTECH contact details Address ADvTECH House Inanda Greens 54 Wierda Road West Wierda Valley Sandton, 2196 Postal Address PO BOX 2369 Randburg, 2125
Rosebank College Mega Campus, Braamfontein
projects include greenfield developments in the mid-fee schools sector and megacampuses in city hubs. Mbhokota says that he has ambitious plans for ADvTECH, and wants to support student-enrolment growth plans by creating an active pipeline of projects for both the schools and tertiary divisions. In addition, ADvTECH seeks to be a leader in safe, sustainable, high-quality construction of education facilities for the future, creating environments conducive to learning. “To do this, we put a lot of focus on strategic land parcels that are secured into live projects in residential areas for communities in the LSM 6 to 10 bands,” he says.
“What is very exciting about developing schools and education facilities is that it puts us in a position – along with our development partners – to make a difference to the lives of communities and society as a whole. We continue to see numerous opportunities for growth, both at home and on the rest of the continent. In our core markets, we expect organic and greenfield growth to continue, despite the fact that more players are entering the market and the economy remains sluggish.” ADvTECH is also pursuing opportunities in new market segments and regions, which will enhance its business performance and diversify its portfolio.
Sonja van der Sandt, Executive PA to Vongani Mbhokota, Properties Executive firstname.lastname@example.org Alida Luus, Properties Project Coordinator ALuus@advtech.co.za General email@example.com t: +27 (0)11 676 8000
SOUTH AFRICAN PROPERTY REVIEW
14 Student housing: a new asset class in Sub-Saharan Africa
A new asset class in sub-Saharan Africa Demand for new purpose-built student accommodation across sub-Saharan Africa is set to exceed 500 000 beds over the next five years. Given public sector budget constraints, the private sector will have an important role to play in meeting this demand Extract from Jones Lang Lasalle’s ‘Student housing: a new asset class in sub-Saharan Africa’
he demand for purpose-built student accommodation in sub-Saharan Africa is growing rapidly, and is starting to attract interest from investors, private operators and developers from around the world. Within this environment, student housing in certain sub-Saharan African regions is set to emerge as an attractive alternative investment category.
Macro context Sub-Saharan Africa’s economic prospects are improving. A number of macro trends are creating an urgent need for improved real estate infrastructure, including student housing.
Occupational demand and supply features The demand conditions are strong.
There has been an unprecedented increase in the number of student enrolments across sub-Saharan Africa (SSA). In the 2000-2014 period, the SSA tertiary gross enrolment ratio rose from 4,3% to 8,2%. This trend, when coupled with a growing tertiary-aged population, would suggest that demand for new, purpose-built student housing should grow rapidly over the medium term.
Top 10 most desirable university cities by size of student population and concentration of top 50 ranked universities by country
Top 10 most desirable university cities by size of student population and concentration of top 50-ranked universities by country Cairo, Egypt Cairo, Egypt
Addis Ababa, Ethiopia Accra,Ghana Kampala, Uganda
Number of universities in top 50 rankings by country (Webometriks) 20 -10 9-5 4-2 1
Pretoria, South Africa Johannesburg, South Africa Bloemfontein, South Africa Durban, South Africa Cape Town, South Africa
Addis Ababa University
University of Ghana
Pretoria, South Africa
University of Nairobi
University of Pretoria
Bloemfontein, South Africa
Cape Town, South Africa
University of the Free State 39,159 35.0% R 2600 Johannesburg, South Africa Wits & UJ
Reputation: Reputable universities in city
Atmosphere: Number of students in city
Employment: Youth unemployment in city
R Affordability: Cost of 1-bed apartment in city 24
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Addis Ababa, Ethiopia
University of Cape Town & Stellenbosch University 103,810 23.9% R 7465 Durban, South Africa University of KwaZulu-Natal 85,946 37.0% R 4490
student accommodation We estimate that well over 500 000 new beds will be demanded over the next five years. SSA itself is a key sourcing region for demand. The SSA higher education student outbound mobility ratio has decreased from six percent in 2000 to four percent in 2015, which indicates that SSA universities are becoming better able to capture the growing demand for tertiary education. There is a structural undersupply of adequate student housing. Purpose-built student accommodation has not been supplied at a fast enough pace to keep up with mounting demand across SSA. If this trend continues, we predict there will be a chronic shortage of affordable purposebuilt student housing facilities. A substantial funding gap is emerging. We estimate that if governments maintain their current expenditure patterns (which is likely, given their constrained education budgets), a substantial student housing funding gap will emerge. It is within this setting that the private sector could play a pivotal role in addressing the increasing needs of the market.
Investment and development landscape Public Private Partnerships (PPPs) are new, but are growing in popularity. There have been three prominent examples of student-housing PPP developments in SSA over the past three years, and a substantial student housing PPP feasibility study is currently being undertaken by the Kenyan government. It has good yield potential (in excess of 10%). Due to a lack of data, it is not possible to make accurate generalisations about yields in the SSA student-housing market as a whole, or on a regional basis, for that matter. However, South African developers and investors have reported strong net initial yield potential in student housing. The development landscape is fragmented. The operations of most large SSA studenthousing providers are located in South Africa, where the market is fragmented, with most providers providing fewer than 10 000 beds. Three of the four largest SSA providers, however, have operations across a number of countries. The two largest providers together provide more beds than all the other top 15 providers combined, which shows that economies of scale are being utilised at the top end of the market.
The SSA student housing market is at a very early stage of its development. It is considered to be around 15 to 25 years behind mature markets in terms of providing purpose-built, high-quality student housing. The SSA market has consequently attracted interest from international investors seeking to take advantage of the benefits of early entry, along with the other, more general, appealing attributes of student housing, which include: ●● Relatively stable income and solid rental growth above inflation; ●● Resilient performance in downturns; ●● High occupation rates; ●● Constant supply and demand imbalance; ●● Low-risk profile.
To overcome these challenges, developers are increasingly recognising the importance of partnering with experienced operators who fully understand the asset class and the local market conditions Developers and investors operating in the SSA market have to weigh up these benefits against challenges, which include: ●● Short development delivery windows; ●● Short leasing cycles; ●● High turnover rates; ●● Intensive property management services. In addition, SSA poses a number of area-specific challenges, including: ●● Security concerns; ●● Infrastructure shortages; ●● Affordability constraints; ●● Limited transparency; ●● Lack of international students. To overcome these challenges, developers are increasingly recognising the importance of partnering with experienced operators who fully understand the asset class and the local market conditions.
Investment opportunities Market access Investors wishing to enter the studenthousing market have a greater variety of vehicles and structures at their disposal than ever before. These vehicles have evolved in developed markets that have been catering to the increased investment appetite for this asset class since the early 1990s. Fortunately, because of rapidly evolving legal structures in SSA, many of these advanced vehicles and structures are now available in Africa. Indirect entry through pension funds and syndicates These vehicles have very limited application in SSA, predominantly because the market is relatively immature and fragmented at the moment. Most student-housing providers do not have substantial-enough portfolios to attract large institutional investors such as pension funds, which are notoriously reluctant to make small investments or to invest in new developments. Examples of such vehicles in developed markets include the UK Student Accommodation Fund and the Campus Living Global Fund. No listed REIT focused on student housing REITs with a general real estate focus have been entering the South African studenthousing market in recent times. For example, Redefine Properties, a leading South African REIT, recently purchased 51% of Respublica, which is one of South Africa’s leading student-housing developers. Student-housing REITs are prevalent in the US market. Examples include ACC, EDR and CCG. The direct-ownership method Private developers provide the vast majority of student housing in SSA. This market is still quite fragmented, with many developers providing a wide variety of product. In South Africa, for instance, some private developers such as South Point Property Group specialise in repurposing office stock into student housing, while some developers focus predominantly on providing new stock, which consists of a purposebuilt product that typically includes 24/7 security on site (including video surveillance and card access to rooms), shared rooms with common areas, recreational services, Internet access, and sustainable building features. Examples of such providers are Respublica, CampusKey, STAG African Student Accommodation Group and the Yandy Property Group. SOUTH AFRICAN PROPERTY REVIEW
Universities in South Africa: location, ranking and average cost of accommodation
Number of rooms
Ave monthly room cost
University of Cape Town
University of Pretoria
University of South Africa
University of the Witwatersrand
University of KwaZulu-Natal
Nelson Mandela Metropolitan University
University of the Free State
Tshwane University of Technology
Durban University of Technology
Central University of Technology
Vaal University of Technology
University of Zululand
University of Venda
University of Limpopo
Walter Sisulu University
Mangosuthu University of Technology
Sefako Makgatho Health Sciences University
Stellenbosch University University of Johannesburg North-West University University of the Western Cape
Cape Peninsula University of Technology
Rating Source: Uni Rank www.4icu.org.za Rooms Source: DHET Report June 2017
University of Fort Hare
University of Mpumalanga Sol Plaatje University
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Private developers who directly own their developments carry the largest risk, but also stand to pocket the greatest rewards, as they are in a position to earn the highest yields and rentals the market can afford. PPPs and joint ventures also allow for direct ownership in developments. The partnership element of these vehicles mitigates the risk exposure of owners. These vehicles are quite desirable in the SSA market, where investors and developers are exposed to relatively more systematic risk than in developed markets. PPPs are, however, a somewhat new concept in SSA. Many governments have recently promulgated comparatively standardised PPP legislation that will no doubt go a long way to facilitate such arrangements in future. The jury is still out on whether the legislation can be effectively utilised, given the lack of ministerial resources and experience. Universities tend to favour PPPs as they typically do not have large-enough budgets to finance new, purpose-built student-housing stock or to reposition aging stock. The PPP vehicle allows them to access private funding in a transparent and low-risk manner. PPPs also permit universities to maintain their focus on education, preserve debt capacity and benefit from the third party’s experience in building facilities in an operationally cheaper and faster manner than universities are capable of doing. Universities in Kenya and Ghana have recently concluded large PPP agreements for the provision of student housing. Moreover, the Kenyan government is currently conducting a PPP feasibility study for a multimillion-dollar student-hostels development for five public universities. The project is expected to provide more than 50 000 new student beds. Surprisingly, in this context, the South African government, which has the most advanced and effective PPP legislation in Africa, has only managed to implement one PPP student-housing project for the provision of 1 100 beds.
In the South African context Globally, student-housing transaction volumes have never been higher, which demonstrates a growing investor appetite for the sector. Institutional interest in the most active markets (i.e. the UK and the US) shows that the student-housing sector is quite mature in these markets. In these developed markets, student housing has outperformed other commercial real estate sectors, delivering returns in the 11% to 15% range.
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student accommodation Data concerning the performance of the student-housing sector across SSA is lacking. We therefore focused our analysis on the South African market, predominantly because it is the most developed in terms of data gathering. The South African market categorises student housing under the broad residential category. Accordingly, residential property data was utilised to provide a broad overview of the student housing sector. Average residential property yields at the end of 2014 in South Africa were 7,5%, which was well below some other commercial property sectors. In some cases, developments focused on the conversion of office space to purpose-built student accommodation have achieved yields of more than 10%, thanks in part to tax concessions and the utilisation of economies of scale. However, student-housing yields in South Africa have been impacted by the increased number of deals taking place in the market, which has started to put downward pressure on yields. There is a view that, despite yield compression, there is still a large appetite for funds offering investors with exposure to stable income-generating housing portfolios in South Africa, especially funds that offer exposure to rental apartments in inner cities or close to universities where landlords have been able to consistently earn yields of above 10%. If yields in low-income residential areas are examined (in which student housing is often located), the findings point to higher average yields (9,4% in 2015). Higher yields are demanded in lower-income areas to compensate land owners, among other things, for the risk associated with the so-called “affordability cap” that is prevalent in low-income areas.
expect student housing to have lower occupancy rates than the residential average, given the strong demand for managed, purpose-built accommodation at its relatively competitive pricing level.
Transaction and stock exchange activity Residential stock (of which student housing forms a small part) makes up only 2,5% of the listed property sector in South Africa. In developed markets, residential stock typically makes up 15% of the listed property sector. The South African residential sector (including student housing) therefore has a long way to go before it reaches developedmarket benchmarks. Nonetheless, private equity funds and listed REITs have become active in the SSA student-housing market in a number of ways. SA Corporate Real Estate Fund and Octodec Investments were the first two prominent REITs to enter the student housing market in South Africa, albeit indirectly. Both these REITs purchased large residential portfolios, some of which comprised purpose-built student accommodation in the Johannesburg and Pretoria CBDs. In 2014, Redefine Properties, the second-largest REIT in South Africa, became the first REIT to buy directly into a student-housing development company when it bought a 51% stake in Respublica. In 2015, Indluplace Properties became the first company that focuses primarily on residential real estate to list on the Johannesburg Stock Exchange (JSE). Student housing makes up only 14% of Indluplace’s residential portfolio. Indluplace’s initial public offering was substantially oversubscribed. STANLIB, the largest institutional investor in South African listed property, purchased an eight percent stake in Indluplace. This shows the institutional market in South Africa has become more comfortable with residential housing (and by extension student housing) as an asset class. More recently, CampusKey has announced that it plans to list on the JSE. If it does so successfully, CampusKey will become the only listed JSE company that focuses solely on the provision of student housing. These transactions show that student housing is starting to emerge as a recognised asset class in South Africa.
Since data on occupancy rates across SSA is not readily available, South African residential data is used as a proxy. An approximate vacancy rate of four percent across the residential sector in South Africa is noted by researchers, which indicates that demand is outstripping supply. There is little reason to
Student housing financing In developed markets such as the US and the UK, developers and investors have generally been able to secure both debt and equity finance for acquisitions or developments of student housing assets. These markets have
Pricing activity Residential rental growth in South Africa has been strong, surpassing inflation comfortably over the past five years. Nevertheless, rental growth rates are at risk as residential consumers rely quite heavily on disposable income, which is in turn significantly influenced by interestrate movements and other macroeconomic factors. This is what creates the so-called “affordability cap”, which necessitates the capping of rental escalations in the residential sector, predominantly in lower income areas.
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typically seen strong investment activity despite weak macroeconomic conditions. Capital markets have supported this asset class, due to its strong long-term fundamentals. In contrast to the developed markets, it has been much more difficult to obtain financing for African student-housing projects. This is predominantly due to the reluctance of banks to finance speculative investment in risky parts of the world. Their reluctance is driven by the many other real estate financing alternatives that banks have at their disposal. Nevertheless, the large demand drivers of student housing have recently encouraged large commercial banks such as Standard Bank, Absa, FNB and Nedbank to partner with a number of developers that focus specifically on addressing the critical studenthousing shortage in South Africa. This should be encouraging for other local developers around the continent. In addition, development finance institutions such as the Development Bank of South Africa have played a major role in partnering with private developers and universities to provide much of the purposebuilt student accommodation that is currently on the market in South Africa. Development landscape: microeconomics, location and design At a city level, investors and developers need to understand market dynamics. They need to conduct systematic market-by-market research to ensure that new supply is aligned with market needs. The location of student housing is critical for its success. Successful student-housing developments across the globe, sought-after by investors, are more often than not located close to universities, preferably within walking distance or with easy access to public transport. Developers should note that, as a result of the fact that the SSA market is far less mature than developed markets, they need to provide a far less extensive product range than is currently being offered in developed markets. They should focus on optimising economies of scale by standardising their product and production techniques to keep construction costs as low as possible. However, within these cost constraints, it must be noted that the most sought-after student-housing assets globally have the following characteristics: ●● High quality; ●● Thoughtful and market-specific design; ●● Close proximity to universities; ●● Location in underserved markets with limited competition.
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With regard to design and size, developers should note that room sizes are generally far smaller in SSA than in developed markets. On average, sizes range from 9m2 for single undergraduate rooms to 13m2 for double rooms. Reports have emerged across the continent which identify that the majority of students are not officially allocated a “single” or “double” room. In one case, it was reported that six students inhabited a 40m2 room. Developers should come up with innovative ways to optimise space and affordability – these are far more important considerations in SSA than is the case in developed markets. Operating platform Student housing is a mix between a hotel and a rental apartment. Students expect some hotel-like services, such as laundry and security services. It is a management-intensive business with high maintenance costs and a high turnover of tenants. As a rule of thumb, fewer than 50% of students renew their leases at the end of the academic year. Leases have a short-term structure. Leases are typically structured around the academic calendar with a narrow time frame over the year-end break, putting pressure on early marketing efforts to ensure low vacancy rates. It requires well-planned marketing and leasing strategies, and active management. Amenities are a vital selling point. Connectivity is critically important to students in SSA. This is evidenced by the rapid growth of the SSA mobile economy. Wireless highspeed internet access has become the most important amenity for students. There is a trend towards students using online platforms to pay rent, apply for accommodation and communicate with building managers. They expect operators to provide various communication platforms such as Twitter, Facebook or applications designed for mobile phones, which in turn gives providers of such amenities a competitive advantage in the student-housing market in SSA. Public transport and/or proximity to campus. This is a key determinant of the attractiveness of student-housing developments, especially in SSA, which still has a relatively large rural population and often lacks reliable public transport infrastructure. Students have grown to expect student housing developments to be serviced by reliable public transport, especially in cases where developments are not located within close proximity to a university. SOUTH AFRICAN PROPERTY REVIEW
property on air
Presenting a strong case for real estate education Respected property professional and well-known radio presenter Dineo Molomo talks to South African Property Review about her role as a property specialist, and the challenges and successes in her journey to becoming a successful entrepreneur and educationalist in the property industry By Mark Pettipher
eventeen years ago, Dineo Molomo began her career in the residential property industry as a part-time estate agent. Today, the family-focused wife, mother and self-confessed patriotic South African, runs her own company, Dineo Properties – a property-investments and property-solutions company. She admits that her business has opened up many interesting opportunities for her. Her noteworthy success story began when she lost her home in the crash of 2008. Over the next two years, she discovered that she was reading about many other, very similar cases every week in the Sunday papers. Taking the bit between her teeth, Molomo approached the SABC with a proposal to present an educational programme informing the public about property. It combined residential and commercial property, and also briefed estate agents on how to give their best service to people in the property space during a difficult financial climate. She knew exactly which SABC radio station and which financial programme she needed to slot in with. Getting the green light from the SAFM 104-107 programme manager, she opened on 10 January 2010 with presenter and respected financial journalist Siki Mgabadeli. “She was – and still is – very knowledgeable about financial markets, and felt that my programme was very relevant for then and for the future,” says Molomo. “We never looked back. Eight years later, I still look forward to my weekly slot on SAFM 104-107, on Mondays at 11am.” Thus began her successful career as a radio presenter in property. “My radio career evolved along with my business – so much so that I’ve since worked at four different SABC radio stations, all discussing the subject of property, including some commercial,” she says. “I had a 6.45pm slot on Mondays on the Xhosa radio station Umhlobo FM. At some point, I was on Radio 2000 every evening, with a commercial focus on Tuesdays. For the past four years I’ve had my own show, ‘Talking Real Estate Africa-Wide’ (which favours
SOUTH AFRICAN PROPERTY REVIEW
Dineo Molomo, property specialist and radio presenter
commercial property and development) on Channel Africa, broadcasting across the African continent.” Molomo counts herself fortunate to have interviewed many interesting people in property on her talk shows. Some would be familiar to readers of SAPOA publications – figures such as Bolaji Edu of Broll Nigeria when he was first appointed Chief Executive Officer in Nigeria, just out from the UK; and Nomzamo Radebe when she first took up her position as SAPOA President. “The numberone personality for me was the Property Charter’s Chief Executive Officer Portia TauSekati,” says Molomo. “The Property Charter is an interesting subject with urgent action points in the industry in many ways.” Molomo is a successful property owner. “My business property portfolio consists mainly of residential properties, and I’m finding new, interesting and diverse ideas in the rental market with my company property investment,” she says. “I am yet to find the courage to invest in and/or own commercial property. My interest in the property market has grown
into making a contribution to education of property executives, professionals, valuers, auctioneers and estate agents. “I’ve felt for the longest time that estate agents must take themselves more seriously, and not leave their education at NQF Level 4 and 5. It is vital to qualify further and have educational backup. The view that estate agents operate at the bottom rung of the corporate ladder has never gone down well with me. An agent starting out with a degree in banking or law, or a professional valuer’s diploma, would have a better understanding of the seriousness of that offer to purchase that is signed so frequently, and would bring so much professional knowledge to their own business. I am one of them. I feel a lot can be achieved in the industry when estate agents take their qualifications to the next level. “The pace of transformation is frustrating, and has motivated me to start working for the Services SETA, managing the Chamber for Real Estate and Related Services. The Chamber is directly involved with the development of qualifications in partnership with the industry stakeholders for the real estate industry. Real estate education offers a whole spectrum of opportunities related to career development. Already acknowledged in the residential sector, it’s becoming recognised as integral to the commercial property industry too. “As a black woman coming into the property industry 17 years ago, I’ve faced challenges since day one. I’ve found the industry filled with challenges in many ways, starting as I did without the backing of a degree – which explains my passion for education. My advice to any young black woman starting out today would be threefold: first, back yourself up with a degree or equivalent diploma; second, be bold and gain as much experience as you can because this will be an education in itself; and third, network yourself well – because it is about how you shape your career, what cause you stand for in the industry and, most importantly, how well you communicate your ideas to others.”
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SOUTH AFRICAN PROPERTY REVIEW
2015/02/23 8:16 AM 2015/02/23 8:16 AM
Mbombela in review In a recent research document on Mbombela (Nelspruit) – the fourth in a series of SAPOA GDP Reports – Kobus van der Vyver and his team of researchers at Urban-Econ have uncovered some interesting facts. In this extract from the report, we look at the importance of the impact that the commercial property industry in the area has on its employment, and what recommendations can be made as a result of the overall report Extracted from “The role and impact of the commercial property sector – Mpumalanga 2017 Report” City of Mbombela Local Municipality Gert Sibande District Municipality Nkangala District Municipality Ehlanzeni District Municipality Sabi Park Lydenburg
l l Skukuza
Hazyview White River l
Jeppes Reef l
Standerton l Daggakraal
Volksrustl Wakkerstroom l
pumalanga is a province famous for being one of the most beautiful and dynamic in South Africa. The province is situated in the north-eastern part of South Africa and borders Limpopo to the north, Gauteng to the west and KwaZulu-Natal to the south. In addition, Mpumalanga borders neighbouring countries Swaziland and Mozambique to the east. The capital city of Mpumalanga is Mbombela, formerly known as Nelspruit, which is located within the Mbombela Local Municipality. As of August 2016, the Mbombela Local Municipality became known as the City of Mbombela (CoM). This came about after the amalgamation of the Mbombela Local Municipality and the Umjindi Local Municipality.
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Overview of the economic value of commercial private property in Mbombela Commercial private property is essentially defined as land or buildings that belong to a private individual or company/group of individuals, rather than the government. Private commercial property includes retail, office and industrial buildings as well as
large-scale residential property developments, and does not refer to individual private residences. The commercial private property construction performance is derived from the construction activities sub-sector comprising 57% of the construction main sector, with 8,9% of the business and finance sector also represented in the form of specialised services. The real estate activities of commercial private property management highlight the business and finance sector as the main economic roleplayer, with 18,8% of the main sector consisting of commercial private property management-related services. The estimated value of the commercial private property sector can be summarised as follows: Gross Domestic Product The private property sector contributes approximately R237-billion to the national economy (8,2%), with construction contributing approximately R152-billion and property management R84-billion. In terms of Mpumalanga, it is evident that approximately 6,2% (R14-billion) consists of private property sector activities, of which R9-billion is attributed to property construction and R3,9 billion to property management activities. On the other hand, the private property sector in the City of Mbombela contributes approximately 8,3% (R2,8billion) to the local economy, of which R1,8-billion is attributed to property construction and R1-billion to property management activities.
2016 GDP (Rand millions, constant 2010 prices)
Share of national business and finance sector
Share of Provincial Business and Finance Sector
City of Mbombela
Business and Finance Sector GDP Values, 2016 Source: Quantec Easydata – standardised regional and Statistics South Africa Data 2016
Mpumalanga research Jobs sustained Private property sustains about 1,5-million jobs within the national economy, of which 94% (1,4-million jobs) is within the property construction sub-sector, and the remaining six percent (98 368 156 jobs) is in the property management sub-sector. The jobs sustained within the private property sector take up approximately 9,4% of the national employment level. On a provincial level, it is evident that the private property sector in Mpumalanga employs about 135 320 people, of which 96% (129 319 jobs) is attributed to property construction and four percent (5 001 jobs) to property management activities. The City of Mbombela has about 26 050 people employed in the private property sector, of which 95% (24 834 jobs) is within property construction and five percent (1 216 jobs) is occupied in the property management sub-sector. Tax generated The national private property sector generated R8,3-billion for the tax fiscus during 2016, of which 41% (R3,4-billion) was generated from property construction and 59% (R4,9-billion) from property management activities. In terms of the provincial tax generated, it is evident that the private property sector has contributed about R425million, of which 44% (R185 million) was from property construction and 56% (R240million) from property management activities.
Figure 1: CMLM building plan applications
Furthermore, the tax generated in the City of Mbombela in 2016 was R101-million, with 40,5% (R41-million) from property construction and 59,5% (R60-million) from property management.
Building plan application tracking The building plan application process is followed by the approval of a land use management application and, like the land use management application process, requires participation from both private- and public-sector entities. Figure 1 indicates the average processing time for building plan applications in the City of Mbombela. As indicated, the maximum time frame to process a building plan application is 60 days (depending on the size of the property).
The average processing time for 2012 was about 106 days, nearly double the legislated time frame. In 2013 and 2014 the average processing time frame was relatively efficient, with 59 and 66 days for each year; however, application processing efficiency has decreased between 2015 and 2016 to 80 and 81 days respectively. This suggests there are some challenges in the processing of building plan applications. According to the CoM, the primary reason for delays is attributed to incomplete submission of applications. The database provided by the municipality does not indicate specifically what the reasons for delays are for each application, but responses from the private sector suggest that, in many cases, poor communication in terms of what is required is a major concern in building plan application delays.
2016 GDP Value (Rand Millions, constant 2010 prices) Main Sector
Construction Construction Construction
Business and Finance Business and Finance
Major Activities South Africa
City of Mbombela Local Municipality
Building of complete constructions or parts thereof (excluding civil engineering)
Renting of construction or demolition equipment with operators
Other business activities
Architectural, engineering and other technical services
Real estate activities
Real estate activities with owned or leased properties and on a fee or contract basis
Total commercial private property construction Total commercial private property management
Total commercial private property sector
Share of own total economy
Share of total national economy
GDP Output, Commercial Private Property Sector 2016 Source: Quantec Easydata â€“ standardised regional and Statistics South Africa Data 2016 SOUTH AFRICAN PROPERTY REVIEW
Mpumalanga research Public sector inputs on application delays Through deliberations with the relevant municipal administrators regarding the timescales of applications, numerous reasons for possible were identified. Accordingly, this section seeks to illuminate the challenges regarding the barriers public entities face in the timely processing of planning applications. Determining these challenges involved the following information-gathering exercises: extraction of qualitative data through interviews with the relevant departments in the City of Mbombela Local Municipality; and analysing a sample of applications as acquired from the above municipality. This process highlighted the following challenges faced by the municipality: Incomplete applications with outstanding information on key aspects, which result in significant delays in the application process. The responsibility lies with the applicant to ensure complete adherence to the regulations pertaining to the respective legislation; Content errors on motivating memoranda in the form of incorrect information and references, leading to unnecessary delays as the applicant is required to make amendments; Capacity issues in terms of registered town planners, which slows down the writing of evaluation reports and signing of evaluation reports, as only registered town planners can do the sign-off; Adaptability to SPLUMA, which leads to a process change with respect to the evaluation reports and approval/rejection of applications, thus lengthening the time it takes to sign off approval letters; Poor methods of communication with applicants with respect to comments and amendments required. (However, a new system is in the process of being implemented that notifies applicants immediately when new comments are made by the local authority); Applicants who are uninformed and unfamiliar with regulations causing delays, as many applications don’t comply with the regulations, and applicants then need to reapply and pay additional costs; and Backlogs caused by amalgamation with Umjindi Local Municipality, as additional applications need to be assessed by a small group of people because of the additional capacity constraints suffered by the Umjindi Local Municipality. Other reasons for application delays include: ●● Objections received, leading to public hearings; and ●● Late preparations of application advertisements by the applicants.
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Private sector perspectives To effectively gather and communicate the private sector perspectives, the following sources were consulted: ●● The circulation of an applicationtracking questionnaire to a suitable sample of private development firms relevant to the study area; and ●● Interviews with municipality-relevant private entities.
The new SPLUMA by-law lengthens to the process: the new by-law states that the municipality has 30 days to acknowledge receipt of application and to give notice to the completeness of the application. This usually takes 14 days but can take the full 30 days Private sector inputs on application delays The fundamental issues identified by private sector respondents include the following: The new SPLUMA by-law lengthens the process. The new by-law states that the municipality has 30 days to acknowledge receipt of application, and to give notice to the completeness of the application. This usually takes 14 days but sometimes can take the full 30 days. Distribution of signed approval letters is delayed, sometimes by between four and eight weeks, as all applications must be checked by a registered town planner. The CoM experiences a capacity issue with insufficient land use management staff, some of whom aren’t registered as town planners. The new by-law does not account for all scenarios, provisions and eventualities that result in delays when legal opinions are required. Delays in proclamation of two to four months are experienced as the by-law does not make provision for proclamations and town planners prefer to finalise those themselves.
Tribunals are not controlled according to legislation, as these tribunal meetings are not held 120 days after objections have been received as the by-law states. Tribunals have mostly been postponed or have never taken place. There are capacity issues in terms of tribunal members, as the tribunal members do not attend the set tribunal dates. The CoM does not make use of external members, which also adds to the capacity issues. There is also a lack in the availability of objector’s attorneys. There are technical issues within the CoM as the private sector finds the system on which the applications are submitted is not user-friendly and inadequately accessible to all parties. This leads to multiple visits to the CoM offices, delaying the application process. Comments from two internal departments exceed the allocated time frame. The majority of the private sector respondents agree that processes are delayed as a result of a delay in comments by the Electrical Engineering Department as well as the Fire Chief Department (for building plans). The other departments are effective and rapid pertaining to comments. Cooperation and communication from external departments is lacking, specifically experienced with SANRAL and the National Agricultural Department. Costing of service contribution payments is abnormally high, and there is no indication or assurance whatsoever where the payments are invested. There is poor communication and lack of accessibility to various internal departments within the CoM, as they don’t prioritise meetings with the private sector, and are rarely accessible or available should the private sector have enquiries. This causes an unreceptive relationship between the private sector and some of the CoM departments. The legality of objections is questioned by the private sector, as some objections appear irrelevant or even occur after the deadline. There are policy inconsistencies. Some private sector respondents have experienced LUM decisions being taken contrary to what has been approved in policy.
Mpumalanga research Inter-departmental communication, as well as communication between individuals in the same department is poor, resulting in poor information dissemination regarding priority and merit of applications. If communication is effective, it should logically accelerate the processing of applications. The check-list approach followed by the municipality when processing applications often has negative implications, as it does not consider the application merit in terms of the economic benefit for the community or public, or practicality in adhering to the conditions for development. This is of particular concern when an authorised official is absent and the application cannot progress as a result of this absence. Other reasons for application delays include delays in the completion of a report, which is a prerequisite for the issuing of the subdivision approval letter, and requests to submit forms that are not listed on the list of requirements for rezoning. Strengths identified by the private sector within the CoM and the application processes are: Time frames stipulated by the new by-law are considered an improvement. The majority of departments are rapid with their comments, and the process is seldom delayed due to delaying comments. General applications that encounter no objections usually take approximately three to four months to be approved. Decisions made by department heads indicate that the departments are lead by specialised knowledge and high standards. The CoM’s acknowledgment of application receipt is effective and speedy.
Recommendations The analysis of the application processing systems within the CoM has provided valuable insights in terms of the shortcomings from both the private and public sector’s perspective. As with many processes that involve numerous stakeholders, certain challenges will occur that ultimately result in frustration and development delays. The nature of the relationship between the private and public sector in the CoM is relatively good; however, there are certain areas in which both the private and public sector could improve. By acknowledging these challenges and constructively implementing ways of mitigating them, the property development sector within the municipality
can develop a momentum that will have positive outcomes on the economy of the municipality and the province. The primary issues related to the application process are summarised in Table 1. The following recommendations apply to the CoM as well as the private sector stakeholders operating within the municipal region. It should be noted that the recommendations highlighted in this section are intended to guide the municipality and private sector stakeholders towards improving the application administration process. Both the municipality and the private sector stakeholders should endeavour to respond to the presented recommendations positively, and should also explore alternative methods of improving the application administration process.
Application administration Public sector recommendations The analysis indicated a few challenges within the administrative system of application processing. The challenges identified include administrative problems with application submissions, in particular the submission of incomplete application documentation: 1. The municipality should actively promote and enforce the submission of quality and complete applications through continued engagements with the private sector property developers and applicants. 2. The pre-consultation process should be properly facilitated by the relevant departments within the municipality.
Reason for delay
3. All departments and sub-offices involved in the processing of LUM and building plan applications should follow a comparable approach when processing applications. This will enable effective, accurate evaluation of performances. 4. Information on the application processes and requirements should be more visible to the private sector as a means of ensuring that applications are complete. In addition, applicants should be notified timeously of incomplete applications. 5. Accurate records should be kept of all application files for monitoring and evaluation purposes. 6. The improvement of records management, in particular application files, should be more efficient in the municipality. Private sector recommendations In terms of the administration of applications by the private sector, it is important that all applicants acknowledge the responsibility of ensuring that the process of submitting applications is done in a manner that contributes towards the improvement of the overall administrative process to benefit the entire property development sector. The following recommendations are made in terms of improving the application administration processes: 1. Make use of pre-submission consultation methods with the municipality to understand the technical requirements of the application. Pre-consultations with the municipality enable interaction
üü Applications submitted by applicants are incomplete and often have incorrect information üü Application record files are often incomplete üü Information and data on application processing efficiency is not kept effectively to monitor finalisation timing üü System on which the applications are submitted is not user-friendly and inadequately accessible to all parties
üü Lack of personnel capacity in certain departments results in processing delays and backlogs in the application system üü Tribunals are not controlled efficiently
üü Communication gaps between external departments and local municipality üü Poor communication between the local municipality and the applicant
üü Policy implementation is not always in line with the spatial planning policies of the municipality üü Applicants do not always refer correctly to the relevant Town Planning Scheme or Spatial Development Framework üü Lack of meaningful participation between private and public sector regarding policy formulation üü Poor adaptability to SPLUMA
Table 1: Primary application processing delays SOUTH AFRICAN PROPERTY REVIEW
between private property professionals and public sector officials before the submission of applications and payments of the respective fees. The information submitted as part of the application must be accurate and updated. Memoranda should be well written and include all the relevant information in order to avoid any misunderstandings. It is vital that no information is omitted from the application. All applicants should ensure that an accurate understanding of the requirements set out in the municipal by-laws is obtained. If amendment requests are issued, quick responses to the requests are required to ensure that the process is not unnecessarily delayed. Records of all application documentation,
Primary reason for delay
including correspondence with the local municipality and other entities, should be accurately kept.
Capacity issues Public sector recommendations The outcome of the analysis indicated that there are capacity issues in a number of application processing departments. The outcome of these capacity issues results in significant application backlogs within the administration process. The following recommendations should therefore be considered by the CoM: 1. Conduct an in-depth evaluation on possible staff shortages in all departments, in particular municipal tribunals, and in response increase staff capacity where needed. 2. Provide continuous training opportunities for personnel.
Private sector recommendations 1.
2. Application administration 3. 4. 5.
Make use of pre-submission consultation methods with the municipality to develop an understanding of the technical requirements of the application. Pre-consultations with the municipality enables interaction between private property professionals and public sector officials before the submission of applications and payments of the respective fees. Ensure that the information submitted as part of the application is accurate and updated. Memorandums should be well written and include all the relevant information in order to avoid any misunderstandings. It is vital that no information is omitted from the application. All applicants should ensure that an accurate understanding of the requirements set out in the municipal by-law is obtained. If amendment requests are issued, quick responses to the requests are required to ensure the process is not unnecessarily delayed. Records of all application documentation, including correspondence with local municipality and other entities, should be accurately kept.
1. Communication 2.
Private sector recommendations In terms of the private sectorâ€™s role in enhancing capacity issues within the CoM, the private sector could possibly provide sponsorship to local municipalities in terms of training municipal officials, or provide additional resources with the aim of improving the knowledge and skills. Furthermore, it is recommended that SAPOA commits to offering the relevant basic training to the public sector at a reasonable rate to facilitate capacity and general knowledge of the property sector. Added to this, SACPLAN should play a role in terms of ensuring that qualified town planners are well versed in propertyrelated matters.
Public sector recommendations 1. The municipality should actively promote and enforce the submission of quality and complete applications through continued engagements with the private sector property developers. 2. The pre-consultation process should be properly facilitated by the relevant departments within the municipality. 3. All departments and sub-offices involved in the processing of LUM and building plan applications should follow a comparable approach when processing applications. This will enable effective and accurate evaluation of performances. 4. Information on the application processes and requirements should be more visible to the private sector as a means of ensuring that applications submitted are complete. In addition, applicants should be notified timeously of incomplete applications. 5. Accurate records should be kept of all application files for monitoring and evaluation purposes. 6. The improvement of records management should be more efficient in the municipality. 1. Conduct an in-depth evaluation on possible staff shortages in all departments, in particular municipal tribunals, and in response increase staff capacity where needed. 2. Provide continuous training opportunities for personnel. Training should include project management and administrative organising skills. 3. During the processing of applications, the responsible official should be in continuous communication with the applicant as well as the departments that the application is circulated to. This can easily be done through actively engaging through existing communication methods. 4. In cases where problems with the application have been identified, it is important that communication to the applicant is done timeously. 5. Avoid misunderstandings by communicating in a manner that is understandable to all parties involved in the processing of the application.
Training should include project management and administrative organising skills.
Private sector firms should take active steps to continuously improve their relationship with the local municipality through continuously enhancing communications methods. Applicants should respond timeously to requests made by the municipality with regards to their applications.
1. During the processing of applications, the responsible official should be in continuous communication with the applicant as well as the departments that the application is circulated to. 2. In cases where problems with the application have been identified, it is important that communication to the applicant is done timeously. 3. Avoid misunderstandings by communicating in a manner that is understandable to all parties involved in the processing of the application.
All private sector property development professionals should familiarise themselves with the municipal by-law and spatial policies of the municipality. Policy documents that specifically relate to the spatial development of the municipal area, such as the Spatial Development Framework, should be incorporated as part of the application submission process. This will enable an understanding among private sector development professionals with regard to the type of land uses and the areas they will be supported in.
1. Ensure that the municipal planning by-law is a workable document accessible to all. 2. Provide practical information-sharing mechanisms that can be utilised by the private sector as a means of obtaining any new and relevant amendments made in terms of the regulatory environment (i.e. notices on website, newsletters, etc). 3. Land use management decisions should reflect the development objectives set out in the Spatial Development Frameworks and other development policies.
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Mpumalanga research Several technical aspects involved in the application process were identified in the analysis. These include discrepancies between implementation and policies, poor adaptability to the new SPLUMA regulations and applicants not referring to the correct Town Planning Scheme or spatial policies of the municipality. Communication Public sector recommendations The processing of LUM and building applications involves extensive engagements between various departments in the public sector, as well as engagements with the private sector (applicants). To ensure that the engagements are productive, it is important that the following recommendations are considered: 1. During the processing of applications, the responsible official should be in continuous communication with the applicant as well as the departments that the application is circulated to. 2. In cases where problems with the application have been identified, it is important that communication to the applicant is done timeously. 3. Avoid misunderstandings by communicating in a manner that is understandable to all parties involved in the processing of the application. Private sector recommendations In terms of the private sectorâ€™s role in improving relations and communication, the following recommendations apply: 1. Private sector firms should take active steps to continuously improve their relationship with the local municipality through continuously enhancing communications methods. 2. Applicants should respond timeously to requests made by the municipality with regards to their applications.
Technical issues Public sector recommendations Several technical aspects involved in the application process were identified in the analysis. These include discrepancies between implementation and policies, poor adaptability to new SPLUMA regulations, and applicants not referring to the correct Town Planning Scheme or spatial policies of the municipality. To mitigate these issues, the public sector should consider the following recommendations: 1. Ensure that the municipal planning by-law is a workable document accessible to all.
2. Provide practical information sharing mechanisms that can be utilised by the private sector as a means of obtaining any new and relevant amendments made in terms of the regulatory environment (i.e. notices on website, newsletters, etc). 3. Land use management decisions should reflect the development objectives set out in the Spatial Development Frameworks and other development policies. Private sector recommendations The responsibility lies with the private sector
to make use of legislative and policy guideline documentation not only to ensure that development is aligned with legislative and policy directives, but also to contribute to the objective of achieving a collective property development approach among the private and public sector stakeholders. In terms of the technical aspects of application administration, the following recommendations can be made: 1. All private sector property development professionals should familiarise themselves with the municipal by-law and spatial policies of the municipality. 2. Policy documents that specifically relate to the spatial development of the municipal area, such as the Spatial Development Framework, should be incorporated as part of the application submission process. This will enable an understanding among private sector development professionals with regard to the type of land uses and the areas they will be supported in.
Conclusion Based on the analysis of the economic value of the commercial property sector in the city of Mbombela, it is evident that the contribution made by the sector is growing in the municipality. Itâ€™s important to consider that the city of Mbombela is relatively small in comparison to other major urban centres of South Africa; nevertheless, the commercial property sector does make quite a significant impact on the local economy. For this reason, it is essential that the processes surrounding application administration should be streamlined in such a manner that the commercial property sector can function efficiently and without unnecessary delays. The relationship between the private and public sector in the CoM is relatively good: both entities have an understanding of (or at least attempt to understand) the dynamics and shortcomings affecting the property development market. The CoM strives to ensure that the development process is working effectively, and consciously campaigns to the private sector to work in partnership with the municipality in fostering a dynamic and growing commercial property sector. Some final considerations to be made: We are all on the same team. As property developers, architects, planners, building inspectors or municipal officials, we all want the same thing: improving and fast-tracking development processes that ultimately contribute to the local economy. Development essentially results in the building of facilities that potentially provide income and employment opportunities to local communities. The private and public sectors should both aspire to develop a culture of professional cooperation. Working towards ways of enhancing the cooperation between commercial property development professionals (public or private) will ultimately contribute to the improvement of local communities. Local authorities should acknowledge their responsibility to promote development. Active steps should be taken to ensure that the local municipality understands the need for fast-tracking development processes. Furthermore, there should be a comprehensive understanding of the responsibility and role they play in development. In terms of public policy, local authorities should ensure that it also reflects the economic realities of the local municipality. Development opportunities must be targeted. The municipality and private developers should partner up to identify areas of development potential and opportunity. This will foster a bonded relationship between the private and public entities from the get-go. The public sector should use this opportunity to effectively implement spatial and economic policies by allowing the private sector to take part in the implementation thereof. SOUTH AFRICAN PROPERTY REVIEW
“Fees Must Fall”
drives South African students abroad Cover the cost of overseas tuition and living costs with UK student property income annual-travel-allowance threshold. The investor purchasing a unit will benefit from passive net income of eight percent, with the peace of mind that is underwritten by the developer for a period of three years, and immediate income because it is already completed.
Chester is another popular student town in the north-west of England, and is known for being one of England’s oldest and most beautiful historic cities. It is well connected: Liverpool can be reached in 25 minutes, Manchester in 40 and London in less than two hours. It has a buoyant employment market, with a £1,1-billion economy and more than 13 500 local businesses. This in turn provides employment for more than 95% of university students upon graduation, primarily within the creative and digital industries. Northgate Studios is a Chester student-
he United Kingdom, home to 18 of the top 100 universities in the world, has been a long-time favourite for young people wanting to study abroad. Parents are worried about how the Fees Must Fall campaign could reduce the appeal of South African universities. The typical cost of studying in the UK is about R360 000 per annum, including university fees and accommodation costs. It makes sense to fix costs and income in the same currency, so purchasing purposebuilt UK student accommodation could be a potential solution. The student property sector in the UK has been the darling of investment and pension funds. Over the past two years, institutional investors have ploughed in £5,1billion and £3,1-billion respectively. Perhaps it is the fact that it has the lowest vacancy rate – typically just one percent – and an annuitystyle income that appeals.
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Overseas students tend choose Russell Group Universities that are in the top 24 universities for intensive research – such as the University of Sheffield, which is has a high proportion of students from China. It also has a relatively low percentage of EU students (2,9%), and is thereby less impacted by Brexit.
Oakwood House (Phase 1)
is a Sheffield student-accommodation investment close to both the University of Sheffield and Sheffield Hallam University. Furthermore, Sheffield’s major attractions, pubs and shopping facilities are just a short walk or tram ride away, which allows students to experience the very essence of the city. Each room boasts an en-suite bathroom – and according to Knight Frank, students are persuaded to spend more than £160 per week on their accommodation if it offers these sorts of premium features. Units in Oakwood House can be purchased from One Touch Property for less than R1-million (£59 950), which is conveniently within each person’s
accommodation complex strategically situated close to the city centre and university campus. It is located just a 10-minute walk from the university campus and city centre bars, and Chester railway station is also easily reachable for students hailing from further afield.
consists of 150 luxury student studio apartments. These selfcontained units have become a favourite among the new wave of students who, with the increase in tuition fees, have come to expect higher standards of accommodation, and places that are conducive to study and don’t just offer a pleasant living environment. Northgate will boast a contemporary design, with high-spec features. With no other student development in Chester boasting this kind of quality, and with the University of Chester struggling to accommodate even its first year students, Northgate will provide a high standard of living unrivalled in the city.
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The pros and cons of investing in UK retirement homes
he likelihood of Jacob Zuma being ousted from power recently was very small. The vote of no confidence was perceived, by some, as a good move towards accountability; a start of eradicating the government of corruption and the misappropriation of public funds. As he’d already survived previous votes of no confidence during his eight years in power, it was always likely he would survive once again. As Jacob Zuma clings to power, the medium stability of the rand looks uncertain. It is predicted that the currency will dull for some time, and so it makes sense that people would choose to invest their money elsewhere to achieve better returns. The idea of investing in somewhere more politically stable has never looked more attractive. For the disaffected in South Africa, the United Kingdom positions itself as an attractive country to invest in. Despite the political events that have occurred there in the past year, the country’s political integrity and infrastructure remain strong and stable. One of the few negative effects has been the weakened pound, which is encouraging for overseas investors who can now get more for their money. One investment class that remains robust because of continued demand is the care-home sector and retirement properties. UK retirementproperty investments generate healthy returns
With banks offering minimal returns on your savings, are there more savvy ways to invest your money? and give the investor time to decide whether they wish to move in at a later stage or use the rental income elsewhere. This is one benefit of investing in a unit in a retirement home. To accommodate the increase in the number of over-65s living on the Isle of Wight, there is a new opportunity to invest in a luxury retirement property in Sandown. A seaside resort, Sandown is popular with retirees and holiday-makers.
Ocean View Sandown is situated on the seafront, and offers fine-dining experiences, a heated swimming pool, hair and beauty salons, a gym, a spa and beautifully landscaped gardens. The 96-bed development will be transformed into 54 studios and apartments, and will provide a mix of supported breaks, short stays and longer stays for those in later life. Prices at Ocean View Sandown start from R1,48-million (£90 000) for a studio apartment, and are currently being marketed by One Touch Investment. “The attractive returns are secured with a 10-year lease with the operator at 10% net income per annum,” says Investment Director Arran Kerkvliet. “Investors have the peace of mind that an exit strategy is in place with two buy-back options: in year 5 at 110% and year 10 at 125% of the purchase price.”
“Investing in luxury retirement property is a good idea because it is perfectly placed to accommodate the need for downsizers. Individuals gets their own room with an ensuite bathroom, help with self-care should they require it, and a plethora of social activities to take part in to stimulate their interests.” Enquire today about this luxury retirement home investment on the Isle of Wight; an area with an already substantial (and growing) number of over-65s.
Full details at www.onetouchinvestment.co.uk
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Meet the Mayor KZN
Working together in reshaping the landscape of Durban SAPOA meets the Honourable Executive Mayor of eThekwini Municipality SAPOA KwaZulu-Natal has long waited to ‘meet the mayor’, so this was a momentous occasion, ﬁlled with conversation around strategic partnerships for the creation of an inclusive city. By the end of the evening, there was a sense that this could be the start of meaningful dialogue translating into meaningful action
FROM LEFT SAPOA President Peter Levett, Executive Chairman of GladAfrica Group Noel Mashaba, the Honourable Executive Mayor of eThekwini Councillor Zandile Gumede and SAPOA CEO Neil Gopal
t’s time to talk,” said Edwin van Niekerk, SAPOA Regional Chair for KZN, to the Honourable Executive Mayor of eThekwini Zandile Gumede and the mayoral committee team. And that was the theme of the evening, as more than 60 guests, most of them SAPOA captains of industry from KwaZulu-Natal’s economic hub, seated themselves at the Hilton Hotel in Durban for a superlative dinner and what everybody hoped would be the start of something crucial to the economic health and wealth of Durban – a strong relationship between the private sector and eThekwini municipality. In getting the conversation started, Van Niekerk was entertainingly forthright about the number of times that SAPOA had tried to institute an annual Meet the Mayor occasion,
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FROM LEFT GladAfrica’s Mondli Buthelezi, Group CEO Kulani Lebese, Thembi Rosenberg and Samuel Letlape
Meet the Mayor KZN
FROM LEFT Bheki Shongwe, Sipho Kaunda and Richard Naidoo
Sipho Nzuza, City Manager of eThekwini Municipality
FROM LEFT Jeff Zidel, Maieane Nkhahle, Peter Edmonds and Rob McInerney
FROM LEFT GladAfrica Group CEO Kulani Lebese, Leon van Rooyen, and SAPOA Board members Nnema Byrd, Dr Sedise Moseneke and Zola Malinga
where the public and private sector could talk frankly about challenges and opportunities. He thanked Mayor Gumede wholeheartedly for breaking the mould and recognising the importance of this interaction. “Business confidence is at a 30-year low,” he said. “We come to you not only with challenges, but with solutions. We are not trying to take over the job of the municipality – we’re trying to enhance it.” SAPOA President and Managing Director of Old Mutual Property Peter Levett also reiterated the importance of the Meet the Mayor dinner as an annual event, and further emphasised SAPOA’s scope of influence, as well as the fact that the property sector contributes more than any other sector, and that it has a great deal to offer. Levett further highlighted the importance of intergovernmental relationships. “We are inseparable and have to work together,” he said. “It is through our interaction with the various cities and government departments that we will have the ability to solve problems collectively and jointly make a difference.”
Mayor Gumede understood the audience wanted to hear about plans to support property developers, and she and her team didn’t fail to deliver. She unpacked the details around the imminent appointment of the right person to head up the new Catalytic Projects Office, which promised, among other things, to change the way the municipality interacted with the property industry. The property industry needs acceleration and speed, and the municipality buzz words were “fast-track” and “quick wins”. There was an acknowledgement by her, the City Manager Sipho Nzuza and Deputy City Manager Philip Sithole, that investment was vital, and that, to achieve it, drastic action was needed to restore the image of the city. The Mayor described the multidisciplinary team working around the clock on just that in the inner city: “The CBD must be made attractive for investors,” she said. The City Manager and Deputy City Manager emphasised the need to prioritise economic development and create an environment that would attract investors. The key initiatives that emerged as the municipal strategy to
Phillip Sithole, Deputy City Manager at eThekwini Municipality
rekindle investor interest in Durban will be driven by two new departments: Team Durban and Durban Invest. The municipality repeatedly asked SAPOA members to get involved, and stressed that their participation was crucial to the success of these projects. “The Mayor wants to judge us by the number of cranes in the city,” Sithole said. “Currently, there are almost none. Cranes mean development. We need to get going.” The dinner was sponsored by GladAfrica Group, and Executive Chairman Noel Mashaba was very supportive of the call for a strong relationship between the city and the private sector. As Van Niekerk said, “We have the potential to make Durban the most caring, liveable city by 2030. It’s time to talk.” To view the images from the evening, visit Sapoa.org.za/media/gallery.
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KZN Breakfast Seminar South African Property Sector Charter CEO Portia Tau-Sekati shared the highlights of the Council’s 2015-2016 State of Transformation Report at a breakfast event hosted in association with Tongaat Hulett Developments at the Mount Edgecombe Country Club in KwaZulu-Natal Words by Lyse Comins
FROM LEFT Karen Pieterson, Portia Tau-Sekati and Edwin van Niekerk
uaranteed networking, a scrumptious breakfast and the promise of an expert overview of the state of transformation of the R5,8-trillion South African property sector drew SAPOA members in numbers to the upmarket Mount Edgecombe Country Club on a sunny but crisp spring morning. Members arrived to a generous spread of a full English breakfast and pastries, delicious coffee and the buzz of conversation ahead of an enlightening presentation by South African Property Sector Charter CEO Portia Tau-Sekati, who called on the industry to continue working together towards transformation. Tau-Sekati unpacked the research findings of the Property Sector Charter Council’s 20152016 State of Transformation Report for the property sector, revealing that, on average, the
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industry has scored a respectable B-BBEE Level Four recognition. But she was quick to point out that, under the new scorecard, this achievement would translate to Level Six, and that some sub-segments still require drastic improvement. For example, while the commercial sector had performed well, there are 13 000 estateagent firms and 38 000 estate agents registered with the Estate Agency Affairs Board – but only 10% of them are black. Against a backdrop of slow economic growth and an official unemployment rate of 27,7%, it was crucial to focus on “inclusive participation” in the economy to quell underlying frustration – manifested by literally hundreds of service delivery protests around the country – that threatens sustainability.
According to the report, which sampled and analysed the B-BBEE certificates of 72 companies that represent 75% of the sector, there are also widely varying levels of transformation across different categories. Excellent, above-target performance was recorded in enterprise development (115%) and social-economic development (115%), and reasonable yet below-target performance was recorded in ownership (82%) and preferential procurement (82%). Additional focus is required in the areas of skills development (69%), management control (60%), employment equity (55%) and economic development (54%). As Tau-Sekati highlighted, these slower progress areas intertwined, because without skills development it is difficult to achieve
FROM LEFT Sonya van Blerk, Aletta de Lange, Bernadette Khumalo and Paula Hunt
FROM LEFT Douglas Tatham, Julia Randles, Diane Franks and Nico Smith
Nokulunga Sithole with Simthembile Mapu
higher levels of equity and management control. The sector is then forced to look outwards to the financial-services sector to head-hunt senior candidates such as CEOs and CFOs, who tend to come with a premium price tag. Tau-Sekati’s words of advice to property professionals were to take on one or two areas of transformation, such as skills development and equity, and to focus on achieving excellent results. But she said it was also crucial to drive skills development in the sector as a whole, and to lobby universities to facilitate studies in property and construction. At present, only three universities have dedicated faculties – the University of Cape Town, the University of Pretoria and the University of the Witwatersrand.
SAPOA KZN Chairman Edwin van Niekerk encouraged members to get the word out about the significant transformation that has already taken place in the sector in order to correct some of the misinformation that is floating around in society. Tongaat Hulett Development Director: Strategy and Business Insights Karen Peterson also aptly described the current scorecard as a “living, dynamic framework” that should be seen as a guide to transformation and not as a set of prescriptive rules. Members finished off an enlightening morning with more networking and – for some – a final cup of coffee on the wide veranda overlooking the golf course that was just beginning to greet its Fridaymorning golfers.
FROM LEFT Karen Pieterson, Subashnee Moodley and Edwin van Niekerk
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Western Cape Women’s Day Event SAPOA Western Cape, in partnership with the Women’s Property Network (WPN), hosted an event to create awareness around human trafﬁcking in South Africa
BACK ROW, FROM LEFT Juanita van Heerden from S-Cape, Philippa van Ryneveld, SAPOA Western Cape Chairman Marlon Parring, Marilyn Murugweni and Major Margaret Stafford from Salvation Army FRONT ROW, FROM LEFT Singer, Linda Remke from Evolve, WPN Western Cape Chair Liezl Conradie
he event was opened by Suzanne Ackerman-Berman and Mrs Ackerman senior, who are both extensively involved in creating awareness around the crisis. Among the guest speakers were Major Margaret Stafford of the Salvation Army, Juanita van Heerden of S-Cape and Linda Remke of Evolve. All proceeds from the event will be donated to our identified charities on behalf of SAPOA and the WPN.
Wendy Ackerman and Suzanne Ackerman-Berman, both from Pick n Pay Group
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FROM LEFT Jewel Harris, David Stoll & Isabella Peens
FROM LEFT Sia Thomatos, Debbie Wall Smith and Tirzah Myers
In partnership with
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Port Elizabeth IDP Breakfast SAPOA Port Elizabeth Regional Council hosted a follow-up breakfast session, “Crafting a City Vision”, on the city’s approved Integrated Development Plan (IDP)
Cllr Annette Lovemore with Maartje Weyers
FROM LEFT Japie Strydom, Graham Boyd, PJ Duffy and Velda Derrocks
FROM LEFT Gloria Mqolombeni, Vuyokazi Malanzima, Brink Botha and Jacques Bellingan
here were two guest speakers on the morning. Maartje Weyers, Town and Regional Planner at Plan4SA (Pty) Ltd, discussed SAPOA’s contribution to the IDP in Nelson Mandela Bay. The company was appointed by SAPOA to assist the region with its submission. Councillor Annette Lovemore, MMC for Infrastructure, Engineering, Electricity & Energy at the Nelson Mandela Bay Municipality, discussed the IDP process in greater detail. Her presentation included KPIs, the Service Delivery Charter, SAPOA’s submission, the city’s long-term strategy, and the 2018/2019 budget. All 50 delegates who attended – among them quantity surveying students and construction management students from Nelson Mandela University – found the session to be extremely informative.
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Clayton Johnson-Goddard with Thomas Jachens
UPCOMING EVENTS & TRAINING PROGRAMMES
OCTOBER EVENTS 19
PROPERTY REVIEW - LogoTreatment.pdf
NOVEMBER EVENTS 9
OCTOBER TRAINING PROGRAMMES 2-6
Introduction to Real Estate (IRE)
Introduction to Brokering Seminar Day 2
Negotiation Skills Masterclass Programme (NSMP)
The Commercial Lease Seminar: Tenant Areas
Property Finance Workshop
NOVEMBER TRAINING PROGRAMMES 3
15-16 Cape Town
The Commercial Lease Seminar: Tenant Areas Negotiation Skills Masterclass Programme (NSMP)
Dates are subject to change. Please see Sapoa.org.za for regular updates.
off the wall
Out of thin air With summer fast approaching, for those of us in the Western Cape, water is going to be an issue. At the moment we are facing Level 5 water restrictions, and the Cape’s dams are at 34,2% – a little over half of last year’s reserves at this time. At the time of going to press, Gauteng dam levels showed a decrease on the Integrated Vaal River System (IVRS) at 79,3%, with Eastern Cape at 56,1%; Mpumalanga at 75%; KwaZulu-Natal at 53,1%; Free State at 80,6%; North West at 85,2%; Northern Cape at 89,5%; and Limpopo at 75,5% By Tshepo Tshabalala
ith many countries in sub-Saharan Africa experiencing rainfall that’s lower than expected, citizens, metros and governments will be looking at ways to use water wisely. As more people migrate from the rural areas to the metros, water supplies are under pressure. What is an alternative solution? A little research shows that the Incas, for example, were able to sustain themselves above the rain line by collecting dew and channelling it into cisterns for later distribution.
Fog fences Fog fences have been used to collect atmospheric water vapour via condensation. There is even an International Organization for Dew Utilization that is working on foilbased effective condensers. Furthermore, the non-profit organisation FoQuest has set up operational facilities in Yemen and Chile. It is claimed that a total of 25 countries operate fog-collection facilities, with Dar Si Hmad, a Moroccan NGO, having built the world’s largest fog-collection and distribution system in the Anti-Atlas Mountains. A project run by the Meteorological Service of Canada (MSC) in the mid-1980s constructed large fog-collecting devices on Mount Sutton in Quebec, sparking interest in Chile. Scientists from Chile’s National Forest Corporation and the Catholic University of Chile raised funds from the International Development Research Centre and – through collaboration with the MSC – the Chileans tested different designs of collection methods on El Toro Mountain. The aim was to use the water to irrigate seedlings on the hillside to help with reforestation. The project, completed in 1992, was a success, with an average production of 15 000 litres of water per day, and upwards of 100 000 litres that could be stored or piped to the village for use in drinking, bathing and irrigation.
Atmospheric water generation An alternative method to fog fences could be atmospheric water generation (AWG), which
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is a way of extracting water from humid ambient air. Water vapour in the air is condensed by cooling the air below its dew point, exposing the air to desiccants or pressurising the air. Unlike a dehumidifier, an AWG is designed to render the water potable. AWGs are useful where pure drinking water is difficult or impossible to obtain because there is almost always a small amount of water in the air that can be extracted. The two primary techniques in use are cooling and desiccants. The extraction of atmospheric water is not free of cost because a significant input of energy is required to drive some of the AWG processes. But certain traditional AWG methods are completely passive, relying on natural temperature differences and requiring no external energy source. Research has also developed AWG technologies to produce useful yields of water at a reduced (but nonzero) energy cost.
Cooling condensation In a cooling condensation-type atmosphericwater generator, a compressor circulates a refrigerant through a condenser, and then an evaporator coil to cool the air surrounding it. This lowers the air temperature to its dew point, causing water to condense. A controlledspeed fan pushes filtered air over the coil. Atmospheric water generators become more effective as relative humidity and air temperature increase. As a rule of thumb, cooling condensation atmospheric-water generators do not work efficiently when the temperature falls below 18,3°C or the relative humidity drops below 30%. New emerging technology utilises the Peltier effect of semi-conducting materials, in which one side of the semi-conducting material heats while the other side cools. In this application, air is forced over the cooling
fins on the side that cools, lowering the temperature of the air to its dew point and causing water to condense. The watergeneration capacity can be enhanced in low-humidity ambient air conditions, first by using the evaporative cooler with a brackish water supply to increase the air humidity near to dew-point condition.
Wet desiccation One form of wet desiccant water generation involves the use of salt in a concentrated brine solution to absorb ambient humidity. These systems then extract the water from the solution and purify it for consumption. A version of this technology was developed as portable devices that run on generators. Large versions, mounted on trailers, are said to produce up to 4 500 litres of water per day. A variation of this technology has been developed to be more environmentally friendly, primarily through the use of passive solar energy and gravity. Brine is streamed down the outside of towers, where it absorbs water from the air. The brine enters a chamber, is subjected to a partial vacuum, and heated. The water vapour is collected and condensed, while the renewed brine is recirculated through the system. As the condensed water is removed from the system using gravity, it creates the vacuum which lowers the boiling point of the brine.
Property Review has found a number of companies in South Africa that offer water-from-air technology: Airwater: www.airwater.co.za Air to Water: www.airtowater-africa.com Aquacello: www.aquacello.co.za Cirrus Water Management: www.cwmsa.co.za Nvskrag: www.nvskrag.co.za Rainharvest: www.rainharvest.co.za Recor: www.recor.co.za Talisa Water: www.talisawater.co.za Tsebo: www.superclean.co.za Water from Air: www.waterfromair.co.za
Innovative Solutions for an
Our experts are passionate about innovation, providing our clients with best-in-class solutions for any engineering design project. We demonstrated this passion when we took on the restoration of the iconic Kyalami Race Track in Midrand. Using state-of-the-art 3D visualisation and cutting edge engineering solutions, WSP redesigned the track to meet FIA standards. Our approach not only enhances driver experience, but improves track safety and spectator experience making for a friendlier, more exciting track-day.
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