South African Property Review
PROPERTY SOUTH AFRICAN
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MEET THE PRESIDENT 2016/08/25
A story of growth
Focus on development and retail
RETAIL Online and in store
Alive and well in South Africa
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South African Property Review
PROPERTY SOUTH AFRICAN
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MEET THE PRESIDENT 2016/08/25
ON THE COVER South African retail and real estate REITs ride the storm as economic pressures bite
A story of growth
Focus on development and retail
RETAIL Online and in store
Alive and well in South Africa
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From the CEO From the Editor’s desk Meet the President SAPOA: turning full circle Legal Good and bad news in the Property Practitioners Bill Legal update Review of the draft City of Johannesburg Land Use Scheme 2017 Industry news Planning and development Industry participation in the review of the Nelson Mandela Bay Metro’s integrated development planning process 2017/18 Education Property Development Programme: intense, objective and successful KZN development Cato Ridge intermodal moves ahead East London development overview Buffalo City poised for growth Retail focus: Gauteng Springs Mall marries ecological sensitivity with good design Retail Rucks and malls Retail opinion Consolidating, protecting assets and staying relevant SA REITs REITs alive and well in South Africa International developer SAFland is deﬁning Namibia’s retail environment Investment Investing in the alternative side of real estate Industry event Social What’s on Upcoming events Retail Six ways shopping centres are getting creative with their space Off the wall Look, Ma – no hands! FOR EDITORIAL ENQUIRIES, email firstname.lastname@example.org 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 Robbie Pansegrauw e: email@example.com Finance Susan du Toit Contributors André Fiore, Despina Harito, Martin Jonker, Shaun Madumbo, Mumtaz Moola, Emily Perryman, William Polk, Phil Ruimte 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: firstname.lastname@example.org
from the CEO
The integrated development planning process 2017/2018
s required by the Municipal Systems Act (Act No. 32 of 2000), each municipal council must adopt a process set out in writing to guide the planning, drafting, adoption and review of its Integrated Development Plan (IDP). This is a five-year strategic document that is reviewed on an annual basis. It includes a vision for long-term development based on an assessment of existing levels of development and developmental and operational strategies, as well as a financial plan with capital and operational budgets. Disaster management plans are prepared to address the identified risks, and key performance indicators and performance targets are set to measure and monitor achievements. The vision is centred on six key pillars: the well-run city, the opportunity city, the caring city, the inclusive city, the safe city, and the forward-thinking city. SAPOA appointed town planners to assist the regions with active participation in the IDP process. The aim is to ensure that members’ concerns are submitted to the municipalities, and that these are addressed in the final IDP report and monitored over a five-year period. The core components of the IDP in terms of the Municipal Systems Act are: ●● The municipal council’s vision for the long-term development of the municipality with special emphasis on the municipality’s most critical development and internal transformation needs; ●● An assessment of the existing level of development in the municipality, which must include an identification of communities that do not have access to municipal services; ●● The council’s development priorities and objectives for its elected term, including its local economic aims and its internal transformation needs; ●● The council’s development strategies, which must be aligned with any national or provincial sectoral plans and planning
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requirements binding on the municipality; ●● The spatial development framework which must include the provision of basic guidelines for a land use management system for the municipality; ●● The council’s operational strategies; ●● Applicable disaster management plans; ●● A financial plan, including budget projection for at least the next three years; and ●● The key performance indicators and performance targets determined in terms of Section 41.
City of Johannesburg Through its participation in the development and preparation of the City of Johannesburg IDP, a greater understanding has been realised by SAPOA of the complexities faced during the development and management of a major urban complex such as Johannesburg. While preparing 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 the 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 economic growth of five percent by 2022. In recognising the importance the city has placed on economic growth and the need for collaborative partnerships with the private sector, business, investors and developers, SAPOA has made a strong submission to the city that confirms its willingness and support to collaborate and partner with the city to address the challenges and support the priorities the Executive Mayor has identified.
eThekwini Municipality SAPOA KZN has taken responsibility for “organising” the private sector so that there could be a constructive interface between the city and property owners in whose hands lies the opportunity of establishing new UIPs both in the inner city and elsewhere. To give effect to this, SAPOA KZN has: ●● Established a Precinct Management Forum; ●● Registered a non-profit company to provide a platform for engagement between property owners and the city;
●● Participated in the national dialogue initiated by the National Treasury with a view to developing a cohesive policy on partnerships in urban management.
Nelson Mandela Bay Municipality Nelson Mandela Bay Municipality’s IDP has been compiled with the intention of making Nelson Mandela Bay a place of rising opportunity, where people want to live, work and play. The crafting of the IDP was done with the intention to place the city on a pathway of growth and development that will see an increase in employment, improved delivery of services and eradication of corruption. The municipality will be transformed during this period into an efficient service-delivery machine that is responsive to the needs of its residents, with a strong emphasis on the six pillars.
Polokwane Municipality The Polokwane Local Municipality IDP’s 2017/ 2018 review process commenced in July 2016. A key requirement of the IDP process is to achieve integration with the initiatives of other spheres of government, the alignment with projects and programmes of other spheres of government and compliance with legislative requirements of sectoral legislation. Integration of projects and programmes with other spheres of government, e.g. Capricorn District Municipality, adjacent local municipalities and provincial and national programmes take place during Phase 5 (the integration phase).
Buffalo City Buffalo City Metropolitan Municipality’s (BCMM) IDP sets out the long-term vision of the municipality as: ●● A city that re-invented itself from a divided and fragmented past; and ●● A successful, prosperous and dynamic modern city: enterprising, green, connected, spatially integrated and well-governed. BCMM’s IDP also details the: ●● Development priorities and objectives, which contribute towards achieving this vision over the council’s elected term; ●● Strategies – the means by which these objectives will be achieved; and ●● IDP programmes and projects that link to the strategies and contribute to the achievement of the objectives. Neil Gopal, CEO
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from the Editor’s desk
On a positive note Retail, REITs and education: all these elements, while seemingly unrelated, come together in this edition of Property Review
ith so much negative sentiment flying around – from votes of no confidence in our President to an economic recession being announced – one wonders whether there is anything positive to say about the country we live in. But we should take a REIT outlook on life, and assume a long-term view. The property industry works in cycles (as does economic history), and it’s these cycles that I allude to. Speaking to Izak Petersen, Dr Sedise Moseneke and Andrew Konig, I could not help thinking that all was not doom and gloom. Yes, there’s a recession – but the interviews with these industry players give us a positive outlook. Earlier this year, we were excited about developers beginning to show investor confidence – but we all know what happened in March. Things may have been put on hold, but the planning did not stop; introspection began and the leading players started to consolidate, diversify and look to the future. Some rid themselves of properties that were not working for them; others put their sights on offshore investments and in places where South African funds and assets offer stability and sustainable returns as long as they’re managed properly (as our REITs article shows). Late in July, SAPOA and the University of Cape Town’s Graduate School of Business put delegates from the property industry through their paces. We report back on the two-week PDP course, which culminated in a prize-giving dinner at the One&Only hotel in Cape Town. As is our quarterly custom, we take a look at developments in South Africa. This quarter, Property Review has chosen to focus on East London, where we met with SAPOA’s newly elected East London Chairman Johan Burger. During the visit, we touched base with earlier initiatives that the Border-Kei Chamber of Business (through Drayton Brown) is heading up. To get an overview of the sentiment, we spoke to two local developers – Noel Nyemba and Sindile Ngonyama – and discovered that positivity abounds in East London.
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I was also able to speak to Mduduzi Dlamini, Cato Ridge logistics hub consortium’s Chief Operating Officer, to get an update on what is poised to be South Africa’s largest inter-modal logistics development to date – a development that will greatly benefit the economy, and the local communities and residents of KwaZulu-Natal. While the economy is going to have an effect on the tills, the majority of our articles this month reflect what is happening in the retail industry. We address online shopping, and discuss ways to make our shopping centres into “destinations”. Springs Mall gets a mention – opened in March, it’s proud of its marriage of ecological sensitivity with good design. Looking outside of South African’s borders to neighbouring Namibia, I had the good fortune to run into Kallie van der Merwe, Chief Executive Officer of SAFland Properties Namibia, who gave me a brief overview of what his company is about. Once the dust had settled after SAPOA’s amazing 51st Annual Convention and Property Exhibition, we gave new President Peter Levett time to catch his breath before cornering him for a “Meet the President” interview. This gave us a chance to find out his thoughts on SAPOA and the people involved in the organisation. Education and research will be our theme in the October issue. We look forward to reflecting on SAPOA’s role in encouraging young professionals to take advantage of our educational courses, look at the importance of knowledge of our industry through research, and get some insights from our research associates. Student accommodation will also be featured. There is a positivity in our industry – we just need to know where to look. It all bodes well for South Africa’s outlook! Enjoy the read this month. Mark Pettipher, Managing Editor
the SAPOA Annual Convention & Property Exhibition ﬁgures face to face
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EACH YEAR WE ACCEPT a large number of listings and advertisements from SAPOA professionals and service providers across the entire spectrum of property activities. Don’t miss out on this well-used, popular industry resource. SAPOA aims to provide added value by offering the basic listings free of charge to all members. In this respect, we hope that we are assisting you in your marketing endeavours to some extent. We thank you for your support in previous years. In an effort to improve the look and ease of usage, we have redesigned the directory layout to a four-column grid and have made available certain entries that will stand out from the norm.
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meet the President
SAPOA: turning full circle South African Property Review speaks to SAPOA’s new President Peter Levett, Managing Director at Old Mutual Property, about the people behind SAPOA and their valuable contribution to South Africa’s commercial property industry
Peter Levett, Managing Director at Old Mutual Property and President of SAPOA
ore than 50 years ago, SAPOA was started through a collaborative effort between Old Mutual and Sanlam – a partnership that proved fruitful then. “As the Managing Director at Old Mutual Property, I feel we have now come full circle,” says Peter Levett. “With renewed vigour and a sense of purpose, I am very grateful for the opportunity to be at the forefront of SAPOA as its President in its 51st year. “Having personally met with each member of SAPOA’s current management
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team, I’m impressed by how this small group of 16 people ensures that the SAPOA machine is well run on a daily basis. “It is worth noting that the senior management team – other than Neil Gopal, our CEO, of course – consists only of women, and the senior and the broader team are well diversified. Transformation is very important for the industry – and important for SAPOA as an organisation. “It is important for us to acknowledge and get to know who those management
stalwarts of the SAPOA team are and what they contribute. Jane Padayachee is the Marketing and Services Manager, managing the marketing portfolio at a national level. This includes the membership, events and public relations functions, as well as all of SAPOA’s branding, publications and planning of national events, such as our annual Convention. “Mumtaz Moola, who was previously the Legal Executive at Liberty Properties, is SAPOA’s Legal Consultant, ensuring that the legal risks prevalent in the commercial property industry are mitigated for the protection of the mutual interests of SAPOA members. These strategic goals ensure that open dialogue between SAPOA and the various government departments takes place, and that SAPOA’s inputs are taken into consideration when clauses of legislation are published for public comment. “The Education and Training department is responsible for the development and delivery of a coherent education, training and development strategy that not only supports the professionalisation of the commercial property sector in South Africa but is also aligned to SAPOA’s educational strategy and objectives. These are aimed at: ●● increasing knowledge of the property industry among employees within the industry; ●● ensuring that the content of programmes, workshops and other educational interventions is aligned to industry needs; and ●● raising competence of the practitioners and professionals in the industry. “In order to fulfil the above, our industry requires an organisation that is financially sound and adequately resourced. SAPOA is indeed financially sound, with current reserves of R12-million. It gives me a great deal of comfort to know that the SAPOA finances and operations are capably and soundly managed by Susan du Toit and her team.” As a member-driven organisation, SAPOA promotes the interests of its members by: ●● representing them on matters affecting the property industry on national and local government levels;
meet the President ● providing a continuous programme of educational activities; and ● providing a platform to enable members to engage and network on key matters. SAPOA’s membership represents all aspects of the industry, from agents and brokers to owners, property professionals and other players. As a member-driven organisation, SAPOA acknowledges that its members are the core of the organisation, and it strives to deliver a world-class service.
Education and advocacy “SAPOA provides continued growth and development opportunities to its members and the property industry at large by hosting informative, crucial and current seminars and workshops on the latest industry developments,” says Levett. “One of our aims for the remainder of 2017 and going into 2018 is to provide professionally designed, globally competitive educational programmes, to introduce prospective students to the commercial and industrial property sector, and to empower working professionals with tools to forge ahead in their companies. “SAPOA achieves this goal of increasing the pool of well-equipped industry professionals by providing study opportunities through its accredited flagship educational programmes, which are offered in collaboration with leading universities across the country. Some of the universities SAPOA partners with include the University of Cape Town Graduate School of Business, the University of the Witwatersrand and the University of Johannesburg. SAPOA continues to forge strategic relationships to address the scarce and critical skills shortage in our country. “The SAPOA Bursary Fund aims to attract motivated school-leavers to the commercial property sector and increase the skills pool. “In an effort to address transformation and promote the property sector to prospective students, SAPOA focuses its Bursary Fund by providing deserving university students with bursaries. Together with its member companies, SAPOA manages the Bursary Fund and seeks to award only the most promising and deserving candidates. The past year’s statistics show that 85 students have benefited from the programme, with an encouraging pass rate of 98%. “I appeal to more of our member companies to participate, where possible, in extending the reach and depth of the Bursary Fund, be it through financial contribution, mentorship or vocational work opportunities, thereby enabling the Fund to assist more students and graduates.”
Advocacy continues to be a strategic pillar Advocacy has been, and will continue to be, one of the main strategic pillars of SAPOA. In the past year, SAPOA has submitted comments on a variety of pieces of legislation affecting our members. The 50 listed below are some (but not all) of the legislation and regulations that SAPOA keeps abreast of in the interest of members: 1. Spatial Planning Land Use Management Act 2. Expropriation Bill 3. Infrastructure Development Bill No. 99 of 2013 4. Gauteng Planning and Development Bill 5. Mpumalanga Planning and Development Bill 6. Western Cape Land Use Planning Bill 7. Property Practitioners Bill 8. Subdivision of Agricultural Land Amendment Repeal Act 9. Preservation and Development of Agricultural Land Policy 10. Consumer Protection Act No. 68 of 2008 11. Value Added Tax Act 12. Policy for Engineering Services Contributions for Roads and Stormwater 13. Restitution of Land Rights Amendment Bill 14. The City of Johannesburg Supplementary Valuations Roll 15. Carbon Tax Policy 16. Carbon Tax Offsets Paper 17. Draft National Appeal Regulations 18. Built Environment Policy 19. Promotion and Protection of Investment Bill 20. Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 1998 21. National Building Regulations and Standards Act, 1977 22. National Water Act, 1998
23. Municipal Property Rates Amendment Act, 2000 24. Companies Act, 2008 25. Property Practitioners Bill 26. Draft Policy on Preservation and Development of Agricultural Land 27. Municipal Systems Act 28. Property Valuation Bill 29. SPLUMA 30. National Building Regulations and Standards Act 31. Occupational Health and Safety Act 32. City of Tshwane Incentive Policy 33. National Home Builders Registration Manual 34. National Water Act 35. Deeds Registries Amendment Act 36. Magistrate Court Rules 37. Competition Act 38. Sectional Titles Act 39. Electricity Regulation Act No. 4 of 2006 40. Community Schemes Act 41. Insolvency Act No. 24 of 1936 42. Financial Intelligence Centre Act No. 38 of 2001 (FICA) 43. National Environmental Management Act No. 107 of 1998, (including the Environmental Impact Assessment Guidelines) 44. National Environmental Management: Air Quality Act No. 39 of 2004 45. National Environmental Management: Biodiversity Act No. 10 of 2004 46. National Environmental Management: Integrated Coastal Management Act No. 24 of 2008 47. National Environmental Management: Protected Areas Act No. 57 of 2003 48. National Environmental Management: Waste Act No. 59 of 2008 49. Protection of Personal Information Act No. 4 of 2013 50. Estate Agencies Affairs Act No. 112 of 1937
PERCENTAGE OF SAPOA MEMBERS PER CATEGORY
FACILITIES PROPERTY MANAGEMENT
PROPERTY OWNERS ASSET MANAGERS DEVELOPERS LISTED SECTOR
REGISTERED EDUCATIONAL INSTITUTIONS
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meet the President monitoring SAPOA’s performance and progress in delivering new growth and value to the property industry,” says Levett. “To this end, I look forward to a successful year ahead.”
“I would like to thank all our members, friends and colleagues for their continued confidence in SAPOA” Networking “As a member-focused association, we strive to create as many networking opportunities as possible by hosting various networking functions, breakfasts and golf days across the country’s various regions,” says Levett. “SAPOA also attends and participates in externally hosted industry events, most notably the BOMA International Conference, which I was privileged to attend with Neil this year.” Neil Gopal is the Chairperson of the International Regional Council.
SAPOA Board “Having served on the Board for a number of years, I’m pleased to be able to work with and lead the Board, and continue
SAPOA aims to improve the eﬃciency and effectiveness of its communication across all regions. “There is so much activity that we get involved in nationally, that it has become critical for us to streamline our communication and the accessibility of SAPOA-related information,” says Levett. “With the modern trends in online communication, our recently improved website goes some way towards achieving that objective. The website serves as a onestop shop for all SAPOA-related information, from membership to events and training programmes, and will also contain our research reports, as well as legal and townplanning matters. We continue to produce our monthly international-standard Property Review magazine, which gets mailed to our members and is also available online through the website.” Levett goes on to recognise the media industry. “We acknowledge that SAPOA would not be as visible as it is today without the outstanding reporting work done by the members of the media,” he says. “We look forward to receiving your submissions for next year’s Journalist Awards, where we recognise and honour your craft. We are forever grateful for the positive image that the media portrays about SAPOA – and I am personally looking forward to meeting all of you and interacting with you during my tenure.”
SAPOA’s continuing mission “The past year has been a positive one for SAPOA, as we marked 50 years of serving the commercial property industry. Our 50th anniversary under the stewardship of Nomzamo Radebe, CEO of JHI Group, added a great deal to the credibility of SAPOA. It proves our longevity and success as the property industry body. I will seek to continue the great work Nomzamo has carried forward from her predecessors. “As members of SAPOA, our mission is to be committed to actively and responsibly representing, protecting and advancing your commercial property interests within the industry. We cannot be complacent in this area. We face the challenge of providing a more eﬃcient, value-driven service against the backdrop of growing fiscal pressure. As an industry body serving the interests of its members, we recognise the importance of strengthening partnerships between us and the public sector. “We realise that effective collaboration is required to shape a sustainable future. We are committed to refining and fine-tuning processes to ensure that we give you, our members, the best possible value. You are a part of our success. You and I, together. We are SAPOA. “I would like to thank all our members, friends and colleagues for their continued confidence in SAPOA. As a member-driven organisation, I can tell you that we do not take this confidence for granted. We are motivated and inspired by the opportunities that you provide us with to help us succeed as an industry body. Delivering results that exceed your expectations is our top priority. You are SAPOA.”
SAPOA’s CONTRIBUTIONS TOWARDS THE INDUSTRY R 1,700.000
R 1,000,000 ADVOCACY FUND
R 2,200,000 R 10,300,000 SPENT ON ADVOCACY SINCE 2008 BUSINESS AGAINST CRIME INITIATIVE
R 225,000 10
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SPENT ON RESEARCH SINCE 2008
Good and bad news in the Property Practitioners Bill “Proposed changes to the use for which Fidelity Fund Insurance can be used could increase risks to consumers wanting to buy and sell property.” This is the view of Bradley Hancock, SAPOA KZN Regional Broker Sub-Committee’s Chairperson, commenting on the Property Practitioners Bill of 2016, which is scheduled to be promulgated before the end of 2017
ccording to Hancock, Fidelity Fund Insurance Is currently used to settle claims against all estate agents. The Bill makes provision for these monies to also be used to pay claims for the misappropriation of trust monies by licensed agents. In addition, the Bill states that Fidelity Fund Insurance money should be channelled towards grants for black empowerment and education. “These funds would have to be closely monitored to ensure they go to those who really want to become estate agents, not just to anyone who happens to qualify for a Learnership 18.2 bursary in terms of current Services SETA criteria,” Hancock says. The Services SETA qualifying criteria require the recipient to be black, unemployed and under the age of 33. Hancock maintains that there are many eager would-be estate agents wanting to join the industry who do not fall within the current qualification requirements for a learnership bursary, but who would excel in the industry and be a benefit to an employer. The Bill, which will replace the longstanding EA Act No. 112 of 1976, was circulated for public comment by the Minister for Human Settlements Lindiwe Nonceba Sisulu. These comments are currently being considered before the Bill is re-tabled in Cabinet for introduction in Parliament in the forthcoming sitting. Despite his specific concerns, Hancock says the Bill contains good provisions and is overdue in many respects. He agrees with Advocate Debra Vial of the Estate Agents Affairs Board (EAAB) that, given the size of the property market (its value is estimated at R7,9-trillion and it contributes about eight percent to the country’s GDP) it is essential that the entire property sector is transformed. Vial says the Bill would promote consumer education and empowerment; and would also professionalise the real estate industry. According to Janet Alexander, CEO of online real-estate training company PropAcademy,
Bradley Hancock, SAPOA KZN Regional Broker Sub-Committee’s Chairperson
“It’s important to note that the EAAB has an excellent database that keeps track of agents who may be non-compliant with the conditions required for their ongoing registration as estate agents” education of estate agents will continue to be regulated by the EAAB. “Education includes all verified and non-verified continued professional development (CPD),” she says. Alexander says the process of becoming a fully qualified estate agent could take between two and three years. The EAAB requires any person entering the property industry – an intern – to produce a log book
that is a record of their first 12 months in the industry. This ensures the intern is able to perform functions required to professionally deal in property. During this 12-month period, the intern must also study to obtain the South African Qualification Association (SAQA) NQF4 qualification. This course takes about six months; thereafter, a certificate of competency is issued by the Services SETA. Once this has been earned, the intern must write the Professional Designated Exam Level 4 (PDE4), which is set by the EAAB. Only then does the individual obtain full-status Fidelity Fund Certification (FCC.) “It’s important to note that the EAAB has an excellent database that keeps track of agents who may be non-compliant with the conditions required for their ongoing registration as estate agents,” Alexander adds. “For example, this could include not keeping abreast of their CPD requirements. As a result, non-compliant estate agents may find their applications for their next FFC automatically blocked – and noncompliant selling or leasing agents are not entitled to receive commission from sellers or landlords.” Other important aspects of the Bill include the broadening the definition of an estate agent to include all persons who deal in property for gain, including bond originators, bridging financiers and valuers. However, the Sheriff of the Court and Candidate Attorneys who may be involved in property transactions are specifically excluded. The categories of people who are excluded from becoming estate agents has been broadened to include non-citizens or unlawful residents, persons found guilty of contraventions of the Act in the preceding five years and those not in possession of a tax clearance certificate. The Bill also makes provision for the appointment of an ombudsman, who will hold office for five years and have powers of mediation and adjudication over a range of matters, including inter-agent disputes. SOUTH AFRICAN PROPERTY REVIEW
Review of the draft City of Johannesburg Land Use Scheme 2017 By Mumtaz Moola
1 Introduction: 1.1 The need for the City of Johannesburg to prepare a Land Use Management Scheme arises from Section 24 of the Spatial Planning and Land Use Management Act No. 16 of 2013 (SPLUMA), and the Johannesburg Municipal Planning By-Laws 2016, which require that the municipality adopt a single land use scheme covering the entire municipal area within a period of five years. 1.2 The City published and adopted the Municipal Planning By-Laws in September 2016, and has used this legislation for all new applications from that date. However, the existing Town Planning Schemes, of which there are 16 in operation, remained in operation. 1.3 The Town Planning and Townships Ordinance (15 of 1986), the Division of Land Ordinance (20 of 1986) and the Gauteng Removal of Restrictions Act (Act No. 3 of 1996) have not been repealed, and hence are still used in conjunction with the new legislation for the processing of applications undertaken in terms of these ordinances.
2 The current town planning schemes 2.1 The municipal area of Johannesburg, which stretches for more than 100km from Diepsloot in the north to Orange Farm in the south and from Mogale City (Krugersdorp) in the west to the East Rand (Ekurhuleni) in the east, is a consequence of having amalgamated a large number of municipalities into a so-called megacity or “metropolitan area” post-1994. 2.2 The previous municipal areas – which included Johannesburg, Randburg, Sandton, Roodepoort, Midrand, Modderfontein, Lenasia, Soweto and others – all had their own Town Planning Schemes, which have remained in operation ever since. This has created a very cumbersome land use management
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environment; therefore, in that context, a single Land Use Scheme for the greater Johannesburg is to be welcomed. Furthermore, the metropolitan area is also divided into seven regions, which are unrelated to the jurisdiction of the Town Planning Scheme areas. 2.3 As previously mentioned, the new Land Use scheme will aim at combining the jurisdiction of 16 different Town Planning Schemes into a single document.
3 SPLUMA and the general purpose of the Land Use Scheme 3.1 Before the adoption of SPLUMA in 2013 and the subsequent Johannesburg Municipal Planning By-Laws in 2016, the compilation and operational elements were done under auspices of the Town Planning and Townships Ordinance (15 of 1986) and other similar ordinances. The essence of these ordinances, and the resultant town planning schemes was primarily one of development control. The function of such schemes was to determine certain fundamental elements pertaining to the area of jurisdiction of the relevant town planning scheme and, in simple terms, the following: ● Categorised zoning of land (e.g. Business 1, 2, 3 and 4; Residential 1, 2, 3, 4 and 5; Industrial 1 and 2; etc); ● Controls linked to each category of zoning (floor area ratio, coverage, height, density, etc); ● General requirements detailing aspects such as parking ratios, building lines, building restrictions, use of land, site development plans and general aesthetics; ● Scheme clauses and schedules that detailed the above, clearly defining every element; and ● Maps that detailed the zoning of each property throughout the area of
jurisdiction. These maps are formally adopted and promulgated, and form an integral part of the town planning scheme. These elements together comprised the town planning scheme and were specific to its area of jurisdiction. 3.2 It is significant that the Draft Land Use Scheme seeks to amend only the scheme clauses, and not the scheme maps. This we see as potentially problematic going forward; therefore the city should be required to create new maps to be read with the revised clauses. Retaining the current zoning maps should therefore be seen as an interim solution. 3.3 It is important to understand that the essence of the town planning schemes, as detailed above, was to facilitate and direct the implementation of development proposals, whether these be new townships, rezoning of older property, subdivision of erven, or applying for other related consents. Such controls also form the basis upon which building plans are considered and approved. 3.4 Town planning schemes have never acted as “planning documents” at all in the past. Planning for future land use patterns was done in the realms of, inter alia, “development plans”, “precinct plans”, “master plans”, “structure plans”, “urban development frameworks” and other similarly described plans or policies. These documents amount to policy plans that depict a desired land use outcome for the area for which they are compiled. 3.5 The new legislation, namely SPLUMA and the Johannesburg Municipal Planning By-Laws, includes a new dimension, which includes elements of city planning and policy, and which is an unusual component for a Land Use Management Scheme. In this regard, both SPLUMA and the new draft Land Use Scheme now state the following as the general purpose of the scheme:
legal update The purpose is stated to give effect to the city’s spatial development framework in order to promote: a. Economic growth; b. Social inclusion; c. Efficient land development; d. Minimal impact on public = health, the environment and natural resources; e. Guaranteed right to sustainable cities, understood as the right to urban land, housing, environmental management, urban infrastructure and service delivery, transportation and public services, work and leisure for current and future generations; f. Democratic administration by means of participation of both the individual property owner and representative associations of the various segments of the community in the formulation, execution and monitoring of urban development projects, plans and programmes; g. Cooperation between governments, private initiatives and other sectors of society in the urbanisation process, in service of the social and economic interest; h. Planning and sustainable development of the municipality, through the management and coordinated promotion of growth across the city along with the desirable development, in order to correct the distortions of historical planning systems and their negative effects on the environment, without negating the complexities of the city; i. Supply of urban and community equipment, transportation and public services adequate for the interests and needs of the population and the local characteristics; j. Management of land use, in order to enable and facilitate: ● Efficient, effective and compatible urban development that is desirable and also accommodates the identified socioeconomic needs of the city; ● The coordination of urban growth, which includes land use change, new development and subdivisions, with the availability of infrastructure and social amenities; ● An accessible, responsive environment that is integrated with the transportation network and promotes public transportation; ● The upgrading and rejuvenation of certain areas in the city through
innovative developmental scenarios; ● Effective environmental management in support of the strategic direction of the city. Fair distribution of the benefits and burdens resulting from the urbanisation process; Adaptation of tools of economic, tax and financial policy, and of public spending to the objectives of urban development, in order to give priority to investments that generate wellbeing and the fruition of the goods by different social segments; Simplification of the legislation concerning subdivisions, land use, occupation and building regulations, in order to permit a reduction in costs and increase in the supply of lots and housing units; Equality of conditions for public and private agents in the promotion of developments and activities related to the urbanisation process, serving the social and economic interest. Not only is it a concern whether the Land Use Scheme can achieve many of the above-mentioned purposes – in particular aspects such as “social inclusion”, “sustainable cities”, “democratic administration”, “supplying urban equipment” and “fair distribution of benefits” – but also whether the new scheme as drafted even begins to address these elements. There is very little reference to these matters, and more specifically how they are to be achieved and addressed, in the new scheme clauses.
5 Concluding remarks 5.1 The intended outcome of having a single document controlling land use management is a positive one. However, because it will become a legally binding, promulgated document, it is essential that it is meticulously drafted. The current version displays too many errors and ambiguities, which will create problems of interpretation if they are not rectified. 5.2 The scheme will still need to be approved by the City Council Mayoral Committee, after which it will be advertised in the Provincial Gazette for comments and objections. It is at that stage that detailed and specific comments or objections can be submitted.
4 General comments on the Land Use Scheme 4.1 It is extremely important that a Land Use Management Scheme be compiled with great care assigned to the meaning of every component, because it is this scheme that ultimately confers rights to land. Rights, in turn, directly affect how (and what kind of ) development can take place on that land, which also the affects the value of property. 4.2 With this in mind, all aspects relating to how zoning and its related components are expressed and defined must be compiled in clear and unambiguous terms. Little should be left for injudicious interpretation of the scheme and the associated clauses. In our view, the draft Land Use Scheme has a number of problems in this regard. SOUTH AFRICAN PROPERTY REVIEW
industry news Enjoy a quality lifestyle during your retirement years
Morningside Shopping Centre adds new retail, extra convenience and even more to enjoy
xciting new stores and added convenience are keeping shoppers cosy this winter at Morningside Shopping Centre. Coffee aficionados and lovers of good food can rejoice as The Naked Kitchen & Coffee Bar officially opened its doors to pair the finest-quality coffee with a delicious menu of topnotch café delights. The Naked Kitchen & Coffee Bar can be found on the upper level next to Exclusive Books. Also coming soon to the chic and stylish tenant mix at Morningside Shopping Centre is whisky speciality store Whisky Brother, boasting an everchanging range of the world’s leading whiskies from the wellknown and loved to limitededition rarities and collectables. Since June, a brand-new Telkom kiosk has been offering
shoppers all the benefits and services of a fully fledged store – this includes mobile deals, data top-ups and account payments. And Tashas Morningside is still offering visitors extended hours to enjoy delicious food by staying open for dinner seven days a week. In addition to excellent new stores, Morningside Shopping Centre has added even more convenience with complimentary WiFi access and the option to pay for parking via debit or credit card at the Tashas entrance, at lower level parking and at the Woolworths entrance. The automated sliding doors by the passenger lifts at the Exclusive Books entrance make getting in and out even easier for shoppers with trolleys and prams.
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he Amdec Group has announced its next building phase of brand-new apartments at Evergreen Broadacres, a popular retirement lifestyle estate in the northern suburbs of Johannesburg. The development comprises a 4 000m2 lifestyle and care centre with features such as a bistro and bar, an indoor heated swimming pool, a residents’ lounge, and a library. In terms of accommodation, the new phase brings modern apartments to market in the form of two-bedroom/ two-bathroom and onebedroom/one-bathroom units. This phase of the construction project will see the first 24 apartments being built, along with the completion of the village’s lifestyle centre with its resort-style features, and the 32-bed frail-care facility in the care centre. In addition, the two-hectare green-belt area within this eight-hectare
development is perfect for long walks through the natural surroundings in a secure environment. Since the concept of the retirement lifestyle village caters for individuals’ needs in older age to settle within a community of like-minded people so as to limit isolation and loneliness, it is ideal for ageing in place. For younger retirees who may move in in perfect health (and able to live totally independently), a free-standing three-bedroom home is perfect. With a garage and open space, life can be the same as in a suburban family home: the retirees can drive wherever they wish to, create a garden, entertain friends and family, and even have grandchildren stay over. New residents have a perfect opportunity to make friends at the village by joining one of the many clubs or exercise groups. The starting price for the life rights for these apartments is R1,2-million.
Nigeria’s steady economic recovery signals opportunity for property sector
hile Nigeria’s economic downturn created adverse conditions for international companies operating in the country, leading construction and property solutions company Profica adopted an astute approach to doing business that enabled it to weather the storm. Now it is well-situated to take advantage of an anticipated economic recovery. Profica committed to Nigeria five years ago, with a dedicated team on the ground offering project management, tenant coordination, development management and construction management services. Offices were set up in Lagos and followed by the deployment of a team to Port Harcourt and Abuja. The result has been a Nigerian operation that has quickly grown to become a respected industry leader. Profica Nigeria has also recently been appointed by First Development Investment Company to project-manage a mixed-use development in Ilubirin on Lagos Island. The Ilubirin development is part of a major drive, initiated by the Lagos State Government, to develop the area into a prime residential, leisure, recreation and tourism destination. This current activity clearly signals a new wave of opportunity in Nigeria.
Step up, clean up!
xecutive Mayor of the City of Johannesburg Councillor Herman Mashaba is facilitating the launch of a monthly volunteer campaign focused on cleaning the city – but also going beyond this. “On a trip to Rwanda a few years ago, I was taken aback by this kind of campaign, which runs every month,” he says. “Every resident – including the President – cleans the streets and neighbourhoods. The result is one of the cleanest countries in the world.” On 30 September 2017, Johannesburg will hold its first clean-up, supported by councillors and ward committees as well as businesses across the city. Plastic bags and gloves will be distributed at walk-in centres, clinics, libraries and at participating businesses. “Bags will then be collected on the same day to ensure that we have a cleaner city,” says Mashaba.
Erratum In the August edition of South African Property Review, we were proven not to be infallible as an editorial team. On behalf of everyone involved in the production of the magazine, as the publishers we would like to apologise to Noel Mashaba, Executive Chairman of GladAfrica Group, and Mike Deighton, Managing Director at Tongaat Hulett Developments. We erroneously ran Mike’s profile in place of Noel’s in our “Meet the Board” spread in the August issue. The online edition has been corrected; sadly, we are unable to recall the print version. Noel’s profile should have read as follows:
Noel Mashaba (Elected) Executive Chairman of GladAfrica Group Noel Mashaba has more than 14 years of experience in business management, business negotiation, brand building and business development, all at a senior level. Prior to establishing GladAfrica, he participated in the establishment of businesses in the petroleum industry as well as consulting firms, constructing unique teams to manage complex projects. He is the founder of GladAfrica Group (Pty) Limited and the Executive Chairman of GladAfrica Group’s board. SOUTH AFRICAN PROPERTY REVIEW
planning & development
Industry participation in the review of the Nelson Mandela Bay Metro’s integrated development planning process 2017/18 The development of the Nelson Mandela Bay Municipality’s new ﬁve-year Integrated Development Plan (IDP) for the period 2017-2021, and the required public participation, commenced in September 2016. This IDP is the ﬁrst of the new administration following the municipal elections of 2016 Compiled by Shaun Madumbo & Martin Jonker
The 16th edition of the Nelson Mandela Bay Municipality’s IDP covers the ﬁve-year period from 2017 to 2021, and has been compiled with the intention of making Nelson Mandela Bay a place of rising opportunity, where people want to live, work and play.
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hapter 5 of the Local Government Municipal Systems Act (MSA), Act No. 32 of 2000, requires all municipalities to develop an IDP every five years, then review it annually to update and amend the plan if and where necessary. All other sector plans are aligned through this process to ensure development takes place in an integrated manner. As the municipality’s principal strategic planning instrument, the IDP guides and informs all planning, budgeting, management and decision-making. The IDP is thus a legislative requirement that guides all development at local government level. The 16th edition of the Nelson Mandela Bay Municipality’s IDP covers the five-year period from 2017 to 2021, and has been compiled with the intention of making Nelson Mandela Bay a place of rising opportunity, where people want to live, work and play. The crafting of the IDP was done with the intention to place the city on a pathway of growth and development that will see an increase in employment, improved delivery of services and the eradication of corruption. It is anticipated that the municipality will be transformed into an efficient service-delivery machine that is responsive to the needs of its residents, with a strong emphasis on the following six strategic focus areas: opportunity city, safe city, caring city, inclusive city, well-run city and forwardthinking city. The final IDP document identified clear objectives for each of the aforementioned six pillars. During the process as rolled out since September 2016, SAPOA Eastern Cape Region registered as an important stakeholder, representing the property industry in the Nelson Mandela Bay municipal area. SAPOA has, in terms of this process, been actively involved through,
among others, the attendance of public participation meetings and the IDP representative forum. The Eastern Cape Region’s comments, suggestions and concerns were conveyed in both verbal and written form to ensure the members’ concerns and needs are addressed. Throughout this process, SAPOA has emphasised that it’s concerned about the lack of public parking in the central business district of Port Elizabeth, particularly along Govan Mbeki Avenue. The Municipality introduced its rapid bus transit system a number of years ago with the construction of median bus lanes along Govan Mbeki Avenue and other roads. This resulted in the loss of public parking, which has impacted negatively on business and land owners in the area. SAPOA implored the municipality to revisit the implementation of the bus rapid transit system and suggested that a solution be found, possibly with the formulation and introduction of a parking policy and plan for Govan Mbeki Avenue. The possible reintroduction of the bus rapid transit system provides a major opportunity to address issues around parking along Govan Mbeki Avenue and adjacent areas, and should be included in its process going forward. The frequency of waste removal in the business and industrial areas was another point of concern raised by SAPOA. Waste from households and businesses is not collected regularly, which has in some instances lead to illegal dumping on vacant land. SAPOA therefore requested that the frequency of waste collection be improved, and policing of illegal dumping be planned for. The municipality’s municipal-wide “War on Waste” campaign is ongoing and intends to eradicate illegal dumping across the municipal area.
planning & development This should, however, be supported by adequate policing and law enforcement by the municipality to reinforce the campaign’s overall objectives. Of utmost importance to SAPOA is the municipality’s backlog in infrastructure maintenance and upgrade, particularly in respect of storm-water management and road maintenance and repairs. An assessment contained in the IDP confirms that funding constraints are a severe limitation to expanded infrastructure upgrade and maintenance that is, in turn, exacerbated by increasing levels of urbanisation. The current drought in the region has also brought the water loss in the reticulation system to the fore. The water loss is an issue that the municipality must prioritise as urgent to expedite plans to manage significant water loss. A key step towards water-loss management would also entail improved response times to complaints on leaks and burst pipes. SAPOA believes response times to complaints can improve significantly and, moreover, an effective system should be set in place to manage feedback to the public on this and other complaints lodged at the municipality. Emergency services is another area that displays poor response times, particularly emergency fire and rescue services. These issues should ideally be a key performance area against which SAPOA and other stakeholders can measure its performance. This is an element considered under the municipality’s “well-run city” and “caring city” pillars, which seek to reform current operations to ensure efficient and effective delivery of services. The cost of electricity in Nelson Mandela Bay has escalated significantly in recent times and has become an increasing burden to local businesses. During the IDP stakeholder process, SAPOA has reemphasised the development of a clear policy on electricity tariffs that would instil stability and confidence in tariff-pricing policy going forward, and must be an issue that is addressed in the IDP as the strategic document of the municipality. There is, furthermore, no clear policy on how the municipality will deal with possible water and electricity supply issues in times of crisis such as the current drought, or the use of renewable energy resources to augment current supply. The growth of business and the local economy is dependent on the reliable supply of water and electricity, and the formulation of contingency plans would go a long way in alleviating the concerns of
investors and developers looking to invest in the municipality. Further concerns raised by SAPOA relate to the municipality’s strategies to realise its vision emanating from its six strategic focus areas. The IDP did not establish a clear linkage between its strategic focus areas and its key projects that intend to deliver on its vision. This same principle applies to the municipality’s Spatial Development Framework (SDF) which is the spatial representation of the IDP.
SAPOA also highlighted the disparity in property taxes and tariff pricing between Nelson Mandela Bay Municipality and other metropolitan municipalities, and will actively campaign for the formulation and implementation of a municipal tax regime that compares favourably with its municipal peers, and encourages investment and sustainable economic development as well as improved service delivery on a municipal level SAPOA also highlighted the disparity in property taxes and tariff pricing between Nelson Mandela Bay Municipality and other metropolitan municipalities, and will actively campaign for the formulation and implementation of a municipal tax regime that compares favourably with its municipal peers, and encourages investment and sustainable economic development as well as improved service delivery on a municipal-wide level. The introduction of the Metro Police is a welcome addition to law enforcement in the municipality. However, SAPOA and other stakeholders have not been properly engaged on its role and functions. SAPOA proposes that the municipality engage with business and industry to establish areas of cooperation and discussion on the Metro Police’s role.
Another issue highlighted by SAPOA relates to the broader role of the municipality, which is to establish Port Elizabeth and its surrounding area as the preferred investment destination. SAPOA raised concerns regarding the slow processing of land use applications, site development plans and building plans, which is a major deterrent for development in the city. SAPOA suggested that a specialpurpose vehicle be established to address all the real issues in the various NMBM departments that affect investment and speedy development. The municipality thus fulfils its role as a catalyst for investment by improving all service delivery aspects under its control. The final IDP document was approved by the Municipal Council on 26 May 2017. Projects identified by wards have been listed and prioritised in Annexure A of the IDP; however, it should be noted that not all the wards rated or prioritised the projects they identified. The NMBM indicated in the final IDP that it has aligned the listed and prioritised ward projects (in IDP Annexure A) with the 2017/2018 ward-based budgets, and “will look to fully entrench the ratings system into all public participation engagements going forward”. In an effort to continually engage Nelson Mandela Bay Municipality on these and other issues, and to ensure the inclusion of its issues in municipal governance processes, SAPOA will implore the municipality to (a) establish a forum with scheduled engagements that would allow the organisation to raise issues in the formulation of the IDP and the evaluation and monitoring of service delivery; (b) engage with the Directorate of Budget and Treasury on the IDP’s listed project and programme items to ascertain funding time frames for implementation; and (c) and actively engage with the municipality to discuss policy issues raised in the current concluded IDP process, as well as how these issues will be addressed going forward. SAPOA considers continuous feedback on municipal projects and programmes as highly important, and believes that the municipality should make information readily available on a much broader level. Compiled by: Shaun Madumbo Plan 4 SA (Pty) Ltd Professional Planners & Project Managers e: firstname.lastname@example.org
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Property Development Programme:
intense, objective and successful
SAPOA’s oldest education course puts property professionals through their paces. The class of 2017, made up of 70 delegates, took part in two weeks of seminars, long nights of preparation and socialising, before delivering a presentation Words and pictures by Mark Pettipher
ABOVE AND BELOW Winning concept image
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APOA’s annual two-week Property Development Programme (PDP), which is run in conjunction with the University of Cape Town’s Graduate School of Business), got under way on a cold Sunday in the second week of July. Sponsored by Standard Bank, first-place sponsor Hamlyn Gebhardt, secondplace sponsor SVA International (Pty) Ltd and third-place support sponsor SAPOA, the programme culminated in a gala prize-giving dinner on 28 July. “SAPOA is pleased that the PDP programme has grown over the years, and developed into a well-known programme that’s recognised as a brand in the property industry,” says SAPOA Chief Executive Officer Neil Gopal. “Year after year, the programme continues to attract outstanding participants in the industry, and supports development of young professionals locally and internationally. Delegates can be assured that the programme is of the highest quality, and that it’s presented by industry experts.” As is customary, registration began with the usual fresh-eyed enthusiasm, nervous anticipation and eager participant jocularity. Photos taken and registration completed, the delegates entered the lecture theatre, where they were welcomed by SAPOA’s Marketing Manager Jane Padayachee. She thanked the delegates for “braving” the course, and informed them that SAPOA and the Graduate School of Business are celebrating the 48th anniversary of the PDP. After a brief on “rules and regulations” presentation by Shireen Brown of the University of Cape Town’s Graduate School of Business, programme coordinator François Viruly, the university’s Professor of Urban Economics, Property Development and Portfolio Management, outlined what the delegates should expect from the course, promising “robust debates, tested relationships, hangovers – and no sleep”. The delegates were the directed to their course “goodie” bag, in which they found their information pack.
education This year’s winners came up with a project they called “Lighthouse”. According to the group’s presentation, Lighthouse derives its name from being a beacon within the city, signalling the important entryway from the Foreshore and harbour up the social corridor of Long Street to Kloofnek pass, and access to Table Mountain. It is also historically relevant – the site sits on the edge of the old shoreline. The project team set themselves nine very clear objectives:
This year’s property development project was a parcel of land sold by the City of Cape Town to Growthpoint Properties Limited by way of a public auction held on 4 November 2016, at a price of R98,61-million. The project site is currently empty and being used as a parking lot. Its location offers prime office, retail and residential opportunity because of its proximity to the city’s business and tourist centres. The site is 3 932m2 in size, with a 10m servitude that is a right of way in favour of the general public to allow for pedestrian and vehicular thoroughfare. As such, no buildings or structures are to be erected within or over the servitude area without the prior consent of the transferor. Before getting to the practical aspect of the course, delegates were required to participate in a series of lectures. These covered the full gamut of the property development cycle, property law, valuations and finance, investment, development, marketing and management. Afterwards, the delegates were split into eight groups,
with each group made up of members who had a particular area of expertise. This year, judges Henry Chitsulo, Tony Gebhardt, Norman Griffiths, Johann Marnitz, Simon Nicks, Clive Shepherd, Leanne Sowray and Yanda Tolobisa identified a clear winner in Group 7, saying, “This group was particularly outstanding and thorough, and presented a solution that was well above the others.” “We use a highly sophisticated assessment framework with a clearly defined set of criteria for judging the submissions,” says Leanne Sowray, SAPOA’s PDP Chairperson. The criteria include: ●● Urban planning and architectural design ●● Market analysis ●● Social equity/ownership ●● Legal structure ●● Building cost and programme ●● Financial viability ●● Financial structuring ●● Presentation – the submitted project, an executive summary and an oral presentation.
What was your experience of the PDP course in 2017? The enthusiasm and bonds formed in so little time was far beyond what I expected. I think this was demonstrated by the pure glee of my group when we took top prize! What value would you attach to the PDP course? Beyond the invaluable industry knowledge imparted, this course helps you form a professional network in a fortnight that could normally take decades. Would you recommend the PDP course to your colleagues? Why? I would undoubtedly give my recommendation for the unparalleled experience of this course. However, it would be accompanied by a fair warning about the lack of sleep they should expect! Katrine Lategan, Project Creation | Buildings & Cities Africa, Arup
OBJECTIVE 1 Ensure that development contributes positively to the urban structure of the city, to create integrated and legible places and neighbourhoods. OBJECTIVE 2 Ensure that development contributes to improved quality of the public realm and public spaces. OBJECTIVE 3 Ensure that development contributes to the creation of safe and secure communities. OBJECTIVE 4 Ensure opportunities and amenities are accessible, and that people can move about easily and efficiently. OBJECTIVE 5 Promote development intensity, diversity and adaptability. OBJECTIVE 6 Ensure enclosure and positive interfaces onto the public realm. OBJECTIVE 7 Recognise informality and respond to it appropriately. OBJECTIVE 8 Protect, value and enhance the natural environment through sustainable design. OBJECTIVE 9 Respect and enhance the heritage, character and unique identity of the city and its neighbourhoods.
The awards evening Held at the One&Only hotel at the V&A Waterfront in Cape Town, the PDP awards dinner was a magnificent affair. After the introductions, formalities and speeches given by SAPOA President Peter Levett and PDP Chair Sowray, as well as a welcoming address by Ian Raeburn on behalf of the programme’s principal sponsor Standard Bank, Viruly set the tone for the evening by offering up hilarious anecdotes that were linked to the group’s WhatsApp, which he had kept on his iPhone. SOUTH AFRICAN PROPERTY REVIEW
Sibongile Vilakati Director: Property Development, Swaziland National Housing Board
Hilarity and laughter followed as we were regaled with the virtues of the course in between courses. Sowray mentioned that she had taken part in the course in 2010, saying, “Apart from the whole learning experience, the networking alone pays dividends for years to come. It’s one of those courses where the benefits last forever – to the point that I’ve developed business as a result of the continued friendships and connections made.” During the two weeks, a forfeiture system is in operation for a variety of misdemeanours. This is worth mentioning, as this year the
cash collected reached R5 445 – a record collection. The money collected was donated to the people of Klein Akker in Kraaifontein, a “shack” community of about 120 people. The money will be used to provide 30 to 35 schoolchildren with school clothes, shoes, books and writing instruments. To crown the evening, we had among us the very talented Zweli Mabaso from the PIC, who received huge applause for his singing when he took us through a repertoire that included both religious music and opera. He could easily be on the stage full time!
What was your experience of the PDP course in 2017? I enjoyed the course as it presented a holistic view of the property development industry through quality content, lectures and delegates. What value would you attach to the PDP course? The networks and exposure are priceless. Would you recommend the PDP course to your colleagues? Why? Yes. It is a perfect platform to sharpen your understanding of the industry, as well as of current trends and thinking.
For those members contemplating taking part in the course, book now: the SAPOA PDP is often over-subscribed, and spaces are very limited.
BACK ROW, FROM LEFT JB Belgrove, Siviwe Mdunyelwa, Werner Vester, Oliver Reeves, Vinodh Bedesi, Rudolf Esterhuyse, John Holley, Jans Ryan, Shaun Gaylard, Welcome Mashinini, Hanler van Eck, Zweli Mabaso FIFTH ROW, FROM LEFT Brendon Stoffels, Sibongile Vilakati, Ann-Maree Tippoo, Johannes du Plessis, Matthew Lilley, John Zedomi, Mike Russell, Miguel Tavares, Pieter Venter, Pieter Pieterse, Jeffrey John van Damme Jalink, Marc Christopher van Dyk FOURTH ROW, FROM LEFT Mulalo Colin Tshivhase, Nqabanhle Manana, Andries Oelofse, Tafadzwa Muzorewa, Siyabonga Xaba, Matthew Cheney, Johan Redelinghuys, Trenley Tilbrook, Travis John Lester, Nkululeko Khumalo, Ray Harli, Ilham Gabier THIRD ROW, FROM LEFT Mehul Ranchhod, Olivia Kilian, Johann Human, Ahmed Shaikjee, Nozipho Reve, Katasi Fiona Nakalanzi, Lynette Ntuli, Bertha Moagile, Thobelani Maphumulo, Mosiapoa Nelson, Mary-Anne da Costa, Alison Ahmad SECOND ROW, FROM LEFT Katrine Lategan, Portia Tau-Sekati, Chirsti Loots, Neo Sekhantso, Tanzeem Razak, Phetsile Khoza, Letsholo Tiny, Farhana Russell, Justine Saloman, Sarah van Tichelen, Anthony Ngcezula, Terrel Prawlall FRONT ROW, FROM LEFT Herman Berry, Jurgens Schoeman, Lloyd Anderson, Frandri Smith, Angela Cox, Noel Thijs, Professor François Viruly, Donovan Bald, Carmen van Vuuren, Pinto Makgopela, Elaine Human
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FIRST-PLACE WINNERS FROM LEFT PDP Chairperson Leanne Sowray, Sibongile Vilakati, Donovan Bald, Justine Saloman, first-prize sponsor Tony Gebhardt, Trenley Tilbrook, Katrine Lategan, Rudolf Esterhuyse, Ryan Jans, Siviwe Mdunyelwa and Herman Berry
SECOND-PLACE WINNERS FROM LEFT John Holley, Adriaan Mentz, Welcome Mashinini of second-place sponsor SVA, Alison Ahmad, Johann Human, Carmen van Vuuren, Nozipho Rave, Matthew Lilley, Leanne Sowray, Jason Reeves and Mehul Ranchhod
THIRD-PLACE WINNERS FROM LEFT SAPOA President and third-place sponsor Peter Levett, JB Belgrove, Elaine Human, Jeffrey John van Damme Jalink, Thobelani Maphumulo, Leanne Sowray, Katasi Fiona Nakalanzi, Noel Thijs, Frandri Smith, Johannes du Plessis and Neo Sekhantso
Peter Levett, Managing Director at Old Mutual Property and President of SAPOA
Leanne Sowray, Chairperson of the PDP Committee
Kumeshnee West, Director of Executive Education at UCTâ€™s Graduate School of Business
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Henry & Violet Chitsulo
FROM LEFT Nqabanhle Manana, Vinodh Bedesi, Terrel Prawlall, Ray Harli, Ann-Maree Tippoo, Mulalo Colin Tshivhase and Sibongile Vilakati
Portia Tau-Sekati, CEO of the Property Charter
FRONT ROW (from left) Olivia Kilian, Carmen van Vuuren, Alison Ahmad SECOND ROW (from left) John Holley, Trenley Tilbrook, Matthew Lilley BACK Herman Berry
FROM LEFT Marc Christopher van Dyk, Tafadzwa Muzorewa, Mike Russell, Miguel Tavares and Travis John Lester
Adriaan Mentz with first-prize sponsor Tony Gebhardt
FROM LEFT Welcome Mashinini, Lloyd Anderson, John Holley, Farhana Russell, Katrine Lategan, Olivia Kilian, Donovan Bald, Trenley Tilbrook and Matthew Cheney
Bertha Moagile with Tiny Letsholo
SOUTH AFRICAN PROPERTY REVIEW
SOUTH AFRICAN PROPERTY REVIEW
intermodal moves ahead South African Property Review catches up with Mduduzi Dlamini, Cato Ridge Logistic Hub Consortium Chief Operating Ofﬁcer, to get an update on what is poised to be South Africa’s largest intermodal logistic development to date By Phil Ruimte
Putting Cato Ridge into context, the Trade and Investment KwaZuluNatal (TIK) website claims that the “Port of Durban is the leading seaport in the Southern African Development Community (SADC) region, and the premier trade gateway between South Africa and the Far East, Europe and the US, as well as East and West Africa”
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ato Ridge Logistics Hub Consortium’s (CRLHC) vision is to develop reliable, efficient and effective integrated economic projects that alleviate the current capacity constraints experienced by the Durban port and enable efficient logistics to emanate from Cato Ridge. The development is the brainchild of Sibusiso Mazibuko and Mduduzi Dlamini, who started thinking about ways of uplifting and developing the Cato Ridge community in 2008, later the consortium, a collaboration between Inkanyezi Yesulu and the AmaXimba Community and Lord Trust Developers was officially formed in 2015. Putting Cato Ridge into context, the Trade and Investment KwaZulu-Natal (TIK) website claims that the “Port of Durban is the leading seaport in the Southern African Development Community (SADC) region, and the premier trade gateway between South Africa and the Far East, Europe and the US, as well as East and West Africa. It is a focal point in South Africa’s transport and logistics chain, with 60% of all imports and exports passing through the port, and it, therefore, assumes a leading role in facilitating economic growth in South Africa. In 2016, cargo which passed through the port of Durban was valued at R648-billion.” The problem is that the port of Durban can no longer expand, and the city itself cannot continue to handle the huge volumes of trucking required to move in and out of the port. The CRLHC, as the land developer, has strategic partners that are key to this development. Each of the partners has specific responsibilities: Transnet will provide rail infrastructure and rolling stock; KZN DoT and Ethekwini Municipality will be responsible for freight plan proposals; SANRAL is to provide national road infrastructure; and the KwaZulu-Natal Department of Economic Development, Environment and Tourism will
look after economic development projects. These players are all linked to the KwaZuluNatal Provincial Growth and Development Strategy, and the project as a whole is in line with South Africa’s National Development Plan. Taking a long-term view – over at least 25 years – the project, which is estimated to cover about 800 hectares, will provide a stimulus for regional, provincial and national growth, and will aid in job creation, education and skills development, which will in turn uplift the immediate local community and generate a base for further entrepreneurial development within the community as well. The AmaXimba Development Trust has been set up to take care of the AmaXimba community. This trust will work closely with the Department of Small Business Development. This legal framework is important to the project because it will encourage participation from other SMEbased government departments, which in turn will aid the development of educational and training programmes, and stimulate business development. The CRLHC has initiated discussions with key stakeholders in the training sector, including Transnet, who already has a variety of training courses and educational programmes available locally that can aid in artisan training and other skilled labour development facilities. Four main areas of development in Cato Ridge have been identified – industrial, commercial, strategic manufacturing and social projects. By partnering with Transnet, it is proposed that Transnet provides the operational capability and capacity and the associated superstructure required for the efficient operation of the Cato Ridge intermodal facility. The CRLHC proposes to develop and provide the support infrastructure that has initially been planned to handle
KZN development 250 000 containers, with capacity to grow in the interim to 500 000 and eventually to 750 000. The CRLHC will also develop support facilities such as car terminals, a mega truck stop, cold storage and warehouses facilities, and a multipurpose tank farm. The latter will be pipeline-linked to the port and will allow for bulk refined petroleum products storage, as well as for future unrefined products storage. At the beginning of the project, land adjacent to both the north and the south of the N3 was identified, with only the south being looked into. However, of the 200 hectares in the south, only 35% was discovered to be usable after the results of environmental impact studies (EIA) were released. Now feasibility studies as well as environmental investigations are being carried out on the land north of the N3 – this has been confirmed by the Ethekwini Municipality to have fewer EIA restrictions upon it. From an investor point of view, investors are waiting on the results of the “bankable” feasibility studies, which are being carried out at the moment and should be completed within the next three months. It is the CRLHC’s intention to break ground this year – even if it is late in the year.
The consortium is looking to encourage both private and government investment, as well as investment through departments such as the Department of Trade and Industry, Department of Economic Development, DBSA, IDC, NEF, PIC and TIK, whose mandate it is to attract foreign investment to the province. The project has been identified as a catalytic project for the province, so investors can benefit from the “fast-track catalytic project” advantages of the province and Ethekwini Municipality’s one-stop shop, which was set up in response to the challenges experienced by investors and developers who want decisions to be taken speedily to fast-track development. Like the province, the CRLHC is looking to attract nine prime manufacturing activities for inward investment: textiles and clothing, plastic products, chemicals, fabricated metal products, automotive components, wood and wood products, footwear, machinery, and appliances. In addition to this massive industrial development, the CRLHC has also earmarked a number of commercial and manufacturing projects to form the backbone of community development: office parks, a shopping mall, a hotel, residential developments, a hospital,
The consortium is looking to encourage both private and government investment, as well as investment through departments such as the Department of Trade and Industry, Department of Economic Development, DBSA, IDC, NEF, PIC and TIK, whose mandate it is to attract foreign investment to the province schools, a FET College, as well as a sports academy. This project is truly massive and, in the end, will become a self-sustainable city, which will have a huge impact on the lives and economy of not only the inhabitants of KZN but of South Africa as a whole.
SOUTH AFRICAN PROPERTY REVIEW
East London development overview
Buffalo City poised for growth Our quarterly developer review looks outside of the major metros. This time, we turn our attention to East London, and speak to Johan Burger, SAPOA’s newly appointed regional Chairman. Kreason Naidoo gives us an update on SAPOA’s Integrated Development Plan (IDP) initiative, while Border-Kei Chamber of Business’s (BKCOB) Drayton Brown ﬁlls us in on a number of pressing issues and gives us feedback on the Call2Action initiative. To get a developer’s perspective, we also speak to Sindile Ngonyama and Noel Nyemba By Mark Pettipher
t’s 8.15am on 2 August when my flight touches down in East London. As I reflect on what had been discussed in the March issue of South African Property Review, I wonder what progress has been made with the Call2Action initiative to clean up the city, whether Kreason Naidoo has made any headway with East London’s IDP, and how my very first meeting with SAPOA regional Chairman Johan Burger will go. In addition, two independent property developers have promised to meet up with me as well. It’s going to be a busy day. The Eastern Cape is the second-largest province in terms of land area in South Africa, covering about 169 580km2. According to Statistics South Africa, it has the country’s third-largest population at 6,4-million people (or 14,1% of the total population). As described in an earlier Buffalo City Metropolitan
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Municipality (BCMM) annual report, “Buffalo City consists of a corridor of urban areas, stretching from the ‘port city’ of East London to the east, through to Mdantsane, and reaching Dimbaza in the west. East London is the primary node, while King William’s Town is the secondary. It also contains a wide band of rural areas on either side of the urban corridor. Both King William’s Town and East London have important functions: the first functions as a regional service centre (Bhisho is the provincial administrative hub and contains the provincial government), while East London is the dominant economic hub. “Buffalo City is broadly characterised by three main identifiable land-use patterns: 1. The dominant urban axis of East London, Mdantsane-King William’s Town-Dimbaza, is where most activities are centred around industrial and service centres.
2. The second area comprises the fringe peri-urban and rural settlement areas, made up of the Newlands settlements that previously fell under the former Ciskei Bantustans. There are also the Ncera settlements located west of East London. 3. The commercial farming areas form a distinctive type of area, predominantly in the north-eastern and south-western coastal sectors of the Metro. The area is characterised as extensive land use with certain areas being irrigation-based intensive farming.” The first impression I get when driving into the CBD from the airport is that the streets are cleaner and the roads are being repaired. First impressions matter. Not much has changed at the Port of East London – but across the
East London development overview Buffalo River and up the hill into the CBD, I hit roadworks. Fleet Street is being reconstructed. The municipal buildings that can be seen en route to SAPOA’s offices in Beacon Bay are getting a face lift. It’s all very encouraging.
Integrated Development Plan My first meeting is with Kreason Naidoo. Positive and upbeat, Naidoo is happy to report that the Buffalo City IDP draft has been completed, the council has adopted it, and it is being implemented, with a review coming up this month. Importantly, the overview concludes that the BCMM needs to focus on its direction for the city and where it’s going. Encouraged by the fact that the city has a new manager, Andile Sihlahla (a post that had been unfilled for a number of years), Naidoo feels a “new broom-sweeping-clean” approach appears to have been initiated. In relation to the city’s Spatial Development Framework, Naidoo believes it will also be reviewed later this year or early in 2018. However, some elements of the 10-year plan have been developed: for example, the local spatial development framework for Beacon Bay has experienced an 80% uptake, with many offices being created along the Bonza Bay Road, and a number of business parks and shopping centres having been developed. This has had an adverse effect on the Nahoon River bridges. Traffic congestion has
become the norm and the road infrastructure is under pressure. Having said that, the BCMM is moving forward with a link road and a bridge to create accessibility between the city’s two largest suburbs – Beacon Bay and Gonubie – which will ultimately relieve the congestion on the N2 and N72 access into those two nodes.
Johan Burger on East London Burger qualified with a BSc degree at the University of the Witwatersrand and has worked for various private and public firms in the built environment, operating in the property development and property management arena, as well as in maintenance and facilities management. He has a well-grounded background in the built environment, having spent the earlier years of his career in the general building, civil engineering and construction industry, before migrating across to project management and construction management at South Africa’s major banks (first Barclays, then Standard Bank). For more than 14 years, Burger has been with the East London Industrial Development Zone (ELIDZ), a hi-tech industrial park that covers approximately 400 hectares and features fully serviced light industrial sites. Together with 30 staff, including civil engineers, technicians, environmentalists, business development specialists and electrical engineers in a property development/project management and facilities management capacity, he developed the zone from greenfield state to its current stage of development. During his tenure, his achievements include the completion (over an 18-month period) of a R500-million Auto Suppliers Park within the ELIDZ, as well as attracting hi-tech industrial warehousing set-ups and manufacturing businesses. As an independent consultant, Burger now chairs SAPOA’s East London Committee. “There appears to be an exciting new impetus both, from the developers and from the city,” he says. “The exciting thing about East London is that it’s made up of some well-established commercial offices (mostly low-rise) in new decentralised areas such as Beacon Bay that attract rentals comparable to Illovo in Gauteng, and industrial factories – and now we’re attracting a large number of new players too.” Several East London companies have their head offices here, with satellite offices in Port Elizabeth and other cities such as Durban. Mercedes-Benz, for example, is gearing up to build the new C-class model and expand its
Johan Burger, SAPOA’s regional Chairman
factory. This will support many industries that supply parts for the automotive industry. “With the roads being improved in and around East London and Grahamstown, we will see an increase in tourism,” says Burger. “We have been informed that there will be an upgrade to the airport. What is also very exciting is the impetus being given to the N2 Wild Coast toll road, which will open the eastern part of the Eastern Cape up to tourism when completed in about 10 years’ time.” The Buffalo City Metro Development Agency will be making major inroads to developments in the city: there are plans to release a large number of tracts of municipal land. An area known as the Sleeper site, which used to belong to Transnet, will be released for development as well, which should help in terms of potential student accommodation for the universities of Walter Sisulu and Fort Hare. “There are no longer any speculative developments,” says Burger. “There is still a lot of movement within the retail sector, and some redevelopment of some of the outlying shopping centres. The city’s improvement development sector is discussing putting in a rapid transport system along the lines of Cape Town’s MyCiti buses and Jo’burg’s ReaVaya – and we will be looking at the possibility of certain roads in the CBD being closed and pedestrianised as a result.” There are different pockets of development, and I’m told the IDZ is going to have a special export zone license by 2018/2019, which will encourage further investment in the city. “There is big spend on infrastructure within the city,” says Burger. “Over the next three years you’ll see a huge push of business and residential development, especially in Gonubie and the Beacon Bay triangular land parcel described as the future diamond for potential developments.” SOUTH AFRICAN PROPERTY REVIEW
East London development overview Call2Action Drayton Brown is pleased to say that a phenomenal R1-million has been raised from donations towards the Call2Action initiative. South African Property Review first reported on it first in the October 2016 issue (pages 42 to 44), and again in the December 2016/ January 2017 issue (pages 30 and 31). Four pilot projects were initially identified: Settlers Way, which is the main road that leads from East London’s airport into the CBD; the small business area of Southernwood; the Western Avenue “Vegas strip” that leads down to the beachfront; and Quigney (which is the actual beachfront).
Drayton Brown, Head of Communications at Border-Kei Chamber of Business
The money has enabled two of the four projects to get underway, namely pilot 1, Settlers Way, this will be the landmark site for the city, Site offices are under construction, the office site will be where meetings can be held and equipment can be stored, and the fourth scheme, Quigney area, which started mid June. The Call2Action is growing, a communication strategy is being further developed, the aim is to make people aware that there is value in waste - Trash equals Cash - the awareness campaign will target residential and businesses in the Quigney area with the message that the municipality will buy back the trash. The buy back centre is a municipal asset that has been given to the initiative, there has growth month on month to 45 tonne collection, which is then re-sold to recycling companies. DNF Waste and Environmental services is handling the bulk of the recycling process.
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An interesting development is that a group of women from the impoverished community of Buffalo Flats have seen an opportunity to earn additional income from the buy-back initiative. They have formed an entrepreneurial initiative and have created an enterprise that will ultimately become self-sustaining. The buy-back campaign is also being rolled out in 32 schools: recycle bins have been allocated to the schools, with DNF Waste & Environmental Services collecting the recyclables monthly. At the end of the year, school support in the form of books or maintenance will be provided to the value of the amount received for that particular school’s recyclables. “The Call2Action campaign has become symbiotic, and is taking on a life of its own,” says Brown. “As a result, we will be looking at enterprise development, so we can move away from our donation model to one that encourages manufacturing and sustainability. “For further growth of the Call2Action initiative, we are finding out how donation companies can benefit from the B-BBEE code, where we can align the donation either through enterprise development or as a CSI contribution. As far as Settlers Way is concerned, the next development after the initial clean-up will be street-scaping, to create a welcoming environment for those entering the city. The parks department and a number of landscapers are getting involved. We are in discussion with the city to ensure that whatever street-scaping is done is in line with the city’s plans for Settlers Way.”
Invest Buffalo City Invest Buffalo City is a multi-stakeholder initiative between the BCMM, BKOCB, ELIDZ and the Eastern Cape Development Corporation (ECDC), with additional support from the Eastern Cape Metro Development Agency and the Small Enterprises Development Agency, and the University of Fort Hare intellectual property. The enterprise consists of four projects: 1. Call2Action 2. Schools The schools project has been developed to find ways to increase capacity. It is much the same for all schools in East London – they all have waiting lists, so there is an urgent requirement to expand or develop more state schools. 3. Buffalo City business incentive This is an investment incentive to allow access to national incentives through the DTI, and to develop Buffalo City-specific incentives.
4. Investment conference Once all initiatives are in place and the city is clean, there can then be a conference to announce Buffalo City “open for business”. The enterprise is now moving from a strategic marketing phase to implementing investment incentives. The aim is to show off efficiencies for both property development and private sector business. The initiatives will also involve advocacy to ensure that planning and by-laws are promulgated.
What the independent property developers think Sindile Ngonyama is a Director at Ngonyama Okpanum & Associates, a firm of architects, project managers, urban designers and interior designers founded in 1997 by Ngonyama with partners Innocent Okpanum and Tim Hewitt-Coleman. The firm, with its headquarters in East London, also has offices in Port Elizabeth, Cape Town, Johannesburg and Abuja. Ngonyama’s first development was the office of the Auditor General in East London. Since then, government and parastatal developments have formed the bulk of the firm’s work, which set it on a course to create a property development entity in 2004. “Moving into property development has afforded us an opportunity to diversify away from architecture into complementary areas,” says Ngonyama. “A further progression was our involvement with syndicates, where we can share technical input as well as the financial involvement. “East London is a very good place to be in, with loads of potential in the property development market. Strategically, because East London is positioned where it is, it allows
Sindile Ngonyama, Director at Ngonyama Okpanum & Associates
East London development overview for the city to service areas such as Mthatha and Bhisho. “While the East London CBD is a little rundown, I see that as an opportunity to begin inner city rejuvenation and plan for future development. Focusing on the inner city is an opportunity to bring people back to the city – especially the younger people. If we can clean up the inner city, we will be able improve the safety aspect, which will encourage people to stay there.” There are two universities in East London – Fort Hare and Walter Sisulu. These two universities have the potential to help uplift the community and allow developers to bring residential stock in the CBD onto the market, which in turn will bring in secondary supply businesses such as restaurants, small shops and recreational facilities. “With a bit of creative thinking, we can carve out a niche for the firm,” says Ngonyama. “Currently our focus is on commercial development and accommodation – mostly flats to help the student market. We have developed three office blocks, which we’ve already rented out. “Having done a survey of NGOs in East London, I see that there is an opportunity to provide smaller office spaces. Starting with small, manageable developments will help us get a foot in the door of the property market. “We’re working with the municipality and relevant government departments to help them understand the need to work with us – the businesspeople – and to create professional partnerships that ensure we can make our settlements liveable and humane, with services that will satisfy the requirements of the communities. “We as businesspeople need to work together with the municipality to integrate our communities and transform our society and our cities. The cities need to reflect the people and the communities who live there; as such, we need to unpack the political agenda and see where we can work together within our areas of expertise. We need alternative solutions, innovative ideas and an open mind. The IDP should become a master plan that can be developed over a longer period of sustained implementation that goes beyond a five-year election term. Policy needs to be consistent with long-term cooperation and advocacy through bodies such as SAPOA.
Opportunity lies in East London Noel Nyemba and his business partner and friend Carl Kossatz are the brains behind Grand Select, a “new-generation” property group.
Nyemba started out in IT, building up a successful business that he then sold to buy residential properties to rent out on the advice of his brother. A bank advisor, in turn, made him realise there was even greater potential to grow by getting involved with commercial property. Armed with business books, he devised a plan to move ahead, selling a number of his residential properties to finance his commercial endeavours. As a privately owned property company, Grand Select is becoming a driving force in East London’s property and urban regeneration programme. To quote the company’s website, “As a new-generation property group, Grand Select is committed to bringing another dimension to property management, property investment, and related property services. In effectively managing investments for the benefit of our stakeholders, we acknowledge the challenges of participating in the South African property arena, and have committed ourselves to adding value and extracting performance from our assets, while responding proactively to shifting market conditions and the evolving needs of all our stakeholders.” “Our unique philosophy is built upon our goal of owning and managing the properties we develop,” says Nyemba. “Unlike developers who complete one project, ‘cash in’ and move on to the next, we are committed to the creation of permanent assets for our portfolio. “Property and partnership are our keywords. They describe both the way we’ve structured the company – most of our activity is carried out in partnership with other investors, be they institutional investors or other property companies – and the positive approach we’ve nurtured in every aspect of our business with investors, tenants and suppliers.” Nyemba believes that East London and the BCMM as a whole both hold tremendous promise. As long as there is cooperation with the municipal authorities and private businesses such as Grand Select, the city can grow. He says that, in order to grow, there is a necessity for community involvement – which ultimately leads to ownership and true empowerment. “The municipality is now working towards city improvement,” says Nyemba. “With the new city governance, we can see there is progress. Roads and bridges are being repaired, and municipal buildings are getting a face lift. “East London’s retail centres appear to be doing well. East London is all about location, and with the opportunities here I’ve sold off
Noel Nyemba, Managing Director of Grand Select
80% of our assets in Port Elizabeth to finance our opportunities within the CBD. “We’re excited about the possibility that the current council will be able to aid in the release of the Sleeper area and the rejuvenation of the Quigney beach area, where we can develop tourist-destinationtype facilities. We should be working towards and maintaining Blue Flag status for our beaches, and encouraging the keeping of events such as the Half Iron Man.” “The East London toll road is going to make a huge difference by making the city more accessible and encouraging investment in both tourism and the private sector. With the conscientious focus on development within Buffalo City, we as developers are excited about the progress that is being made with an open-minded council.” On a negative note, Nyemba is concerned that one of his competitors – East London’s biggest developer Jean du Plessis – has retrenched about 300 workers as a direct consequence of municipal administrative development costs being punitive. This resulted in a number of Du Plessis’s projects being put on hold. “The quality of life in East London is amazing,” says Nyemba. “Nothing is far from anywhere else, and opportunities abound, with new land access, development of retirement complexes, schools and business parks poised to come online. For example, the area between King William’s Town and East London is equally exciting, with opportunity for mixed-use and residential development, a shopping centre, a hospital and office facilities, a R3-billion development PPP plan has gone out, and proposals have being submitted.” SOUTH AFRICAN PROPERTY REVIEW
retail focus: Gauteng
Springs Mall marries ecological sensitivity with good design Springs is a town steeped in history, and is also the last town in the east of the Witwatersrand before entering Gauteng’s platteland. It now boasts a new 50 000m² shopping centre, Springs Mall, which is located alongside ecologically sensitive wetlands By Despina Harito
prings Mall opened its doors in March 2017. The retail centre was developed by Flanagan & Gerard, and designed by MDS Architecture specifically to take its environment into account. Pierre Lahaye, a partner at MDS Architecture, says the location of the shopping centre alongside a wetland became a catalyst for the design, which includes contemporary interpretations of tactile timber, stone and other natural materials.
Site conditions Springs Mall has been specially designed to accommodate the dolomitic site conditions. According to Lahaye, this required specific riskmitigating measures, including designing the ground-floor structure to be a self-supporting slab to potentially span over any voids that could form due to the dolomitic conditions. The column foundation pads are 4m x 4m wide, and are linked by ground beams that essentially create a massive integrated raft structure. “The site conditions resulted in a number of complexities,” says Lahaye. “For example, underground services such as drainage are attached to the structure, and are not buried in the ground – this will prevent them from breaking should any part of the
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ground fall away. At some point, because of the falls required, the drainage needs to drop below the level of the ground floor. To accommodate this, a service tunnel has been created, which serves as a spine along the entire length of the building. This houses the main drainage line onto which all other individual shop lines connect.
Scale Springs Mall is a two-level structure, split to allow access to the building on both the upper ground and lower ground levels. Despite its size, from a distance, the building seems to blend into the landscape. “We broke the scale of the building down by designing landscape-inspired patterns onto the plaster work, and by using tactile material such as glass, timber and off-shutter concrete,” explains Lahaye.
Entrances The four prominent entrances at the two-level Springs Mall are an area of focus. They evoke a sense of arrival, with covered walkways leading up to porte-cocherès. The entrances have been designed individually to relate to what is happening inside the shopping
centre, so the experience starts as you arrive at the building entrance. There are two retail entrances, an entertainment entrance and a food-court entrance. While the retail entrances are quite tactile and feature timber and steel, the entertainment entrance has a more glamorous feel, with animated lighting, natural stone and quartz. The entrance near the food court is more open and permeable, featuring a glass curtain wall animated with geometric lighting lines, evoking a feeling of tree trunks that tie the two levels together. “The upper level houses a gym with different lighting requirements to the ambient light of the restaurants below,” says Lahaye. “These geometric lights bring the focus forward and serve to unify the façade that would normally be split by the different tenant types.” Unique dog leg entrances were designed at Springs Mall to create a wind break, removing the need for expensive revolving doors. “It was a challenge to create the axes of the entrances in such a way that the wind can’t get around the dog legs, but we’re happy with the outcome,” says Lahaye. “I love the fact that the entrances are all different, yet all speak the
retail focus: Gauteng same design language. In the past we have tended to be purist and keep all entrances uniform, but now the entrances have become different spaces relating to the different spaces within the building.”
Interiors As with most MDS Architecture designs, natural light features prominently through clerestory windows and skylights in the mall and court areas. The abundance of natural light greatly impacts people’s mood during the day, making them feel happier and want to stay longer inside the building. The changing sunlight also changes the way the building is perceived during different times of the day, creating interest, helping with orientation and giving a sense of time. The main east-west axis of the building allows for all the roof lights to face south, which is considered to be the best source of natural lighting as there is no glare. The main court’s skylights are dynamic and sculptural pyramid shapes with triangular vertical glazing that seem to scoop natural light into the double-volume interiors. They form part of Springs Mall’s striking roofscape, and are visible from all angles when approaching the mall. This is especially evident at night, when the interior lighting of the courts accentuates the form of the shapes on the main roof. The roof is additionally designed to accommodate photovoltaic cells with a view to making the shopping centre more self-sustainable and as energy-efficient as possible in the near future. Interior spaces are permeable and encourage discovery along the mall. The colour palette is a combination of cool and warm greys, and earthy timbers. In keeping with the ecological basis of the development, tactile materials such as glass, timber, steel and offshutter concrete were selected. Textured limestone tiles with timber inserts create shadows and evoke blades of grass. In all the areas of transition, flooring patterns have been used to create interest and highlight changes in direction. The concealed lighting throughout the building minimises glare and creates a warm and inviting ambience, with accent lighting emphasising pockets of interest (and used creatively to mimic the trunk of a tree). The lighting design has been mirrored in some of the flooring detail for greater emphasis, while layered sandstone cladding in different striations on the walls represents the earth. LED lighting has been used throughout for greater energy efficiency. In a further break from the norm of standardised shopfronts for the line shops, various options have been introduced to
allow for individual expression, with many opening up completely to create a permeable, welcoming feeling. “In this age of mass production, we believe people are increasingly looking for unique and individualised experiences,” says Lahaye. “We are trying to bring elements of the high street back into the shopping centre.” The retail and restaurant area is sophisticated and elegant, but with playful lighting creating tactile theatre. While Lahaye says it took some convincing for retailers to buy into the concept of the individuality within the overall design ethos of the shopping centre, ultimately many pushed the boundaries and have created interesting and individualised stores without compromising their brands.
Creating a platform for local artists At the onset of the project, Lahaye conceived that the quality spaces and lighting created would not only serve to enhance the display of the retail goods on offer but could also act as a gallery that could be a platform to display local artwork. The need for positive exposure is vital to ensure that the amazing talent of artists in our country does not go unnoticed. The idea of exposing local artists to the public by exhibiting their works in a shopping mall became reality at Springs Mall. The developers and architects, together with local curator Mariapaola McGurk of The Coloured Cube, created a much-needed platform for local artists to exhibit their works. Not only was original local artwork sourced for the mall, but local artists were also commissioned to produce original art to be displayed, rather than commercial pieces that have very little artistic value. Lahaye hopes that future similar projects could empower local communities in more than just visual arts, and create a way forward to develop this very essential part of our society.
Landscaping Springs Mall features indigenous landscaping that does not require a lot of water, and has been carefully planned and integrated into the design of the building. Given the dolomitic conditions, no landscaping was allowed to be planted directly into the ground within five metres of the building envelope to avoid the irrigation softening the ground and compromising the foundations. Greenery abounds in pots, and a layer of planting along the edges of the building gives the impression of it growing up from the base of the structure. Springs Mall offers a great tenant mix, secure parking and easy access from the N17 highway. “Its design is fresh, exciting and contemporary – but it still pays homage to the ecological sensitivity of the context in which it is situated,” says Lahaye. Professional team Client Blue Crane Eco Mall Developers Flanagan & Gerard Architects MDS Architecture Quantity surveyors Norval Wentzel Steinberg Structural and civil engineers Civil Concepts Electrical engineers Quad Africa Consulting Engineers Mechanical engineers QMech Consulting Engineers Fire consultants Specialised Fire Technology Traffic consultants Civil Concepts Tenant and time management Orion Project Managers Landscaping Berta Wium Landscape Design, Insite Landscape Architects Wet services consultants CKR Consulting Engineers Main contractor Giuricich Bros Construction Leasing Flanagan & Gerard Health and safety officers Bitline Environmental consultants W&L Dolomite risk consultants Dolrisk Town planning Deon van Zyl SOUTH AFRICAN PROPERTY REVIEW
Rucks and malls In the current economic downturn, is online shopping a kind of retail line-out? By André Fiore
hile the US, with its estimated 2,4m2 of retail per capita as opposed to 0,25m2 per capita in Europe, is in the throes of what analysts call the retail apocalypse (this year estimates are that 8 600 stores in the US will close in concordance with the great mall die-off ), South Africa, with the sixth-highest number of shopping malls in the world (close to 2 000 countrywide) is still building. Is online shopping throwing a lifeline to traditional stores as we know them? Is South Africa, too, on the brink of a retail apocalypse? Are we standing on the sidelines of the game change? Despite a decline in trading density since the start of 2017, the major retailers claim that their e-commerce is not replacing their traditional stores, space or staff component: their growing and innovative online offerings are a complement and a way of keeping the game on track, rather than a substitute. “Woolworths’ investment in e-commerce has resulted in a strong food and fashion business online – one that continues to grow rapidly,” says Liz Hillock, Head of Online at Woolworths. “However, our technology investments are not focused only to the e-commerce experience, but also to the instore experience.” “Growth has been complementary to growth across other formats since we launched online shopping in 2001 as an additional service for our customers,” says Pick n Pay’s Head of Online Michael Cotterell. “We have found that customers will use the format that suits their needs at a particular time, using online to help them in their busy life. Those customers who shop across multiple formats (online and in store) typically spend more than those who only shop in store.” Pick n Pay has invested in two dedicated online distribution centres (Cape Town and Johannesburg) for this fastest-growing division of its business, and is committed to building an advanced, convenient and simple omni-channel shopping experience for its customers. Pick n Pay’s innovations include the relatively new (and currently free) Click n Collect service that allows customers to place an order online so Pick n Pay can prepare it, then come to a store to collect it. It’s ideal for customers who are coming in anyway
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but want to save time, and those who would rather collect an order than wait for a delivery. Pick n Pay’s recently launched upgrade to its mobile app (which recorded more than 10 000 downloads within 24 hours of release) offers practical updates that enhance the Pick n Pay shopping experience both online and in store. It includes barcode scanning, instant shopping lists, purchase history, personal discounts, weekly specials, access to statements, recipes, faster check-out, electricity, data and airtime purchases, and a Smart Shopper functionality. The upgraded website will shortly carry a number of new features and be accessible on mobile devices. For Pick n Pay’s online customers in Cape Town and Gauteng, where the distribution centres are located, there’s even more. First, availability improves as online customers are not competing with customers in store for products. Second, freshness improves as the supply chain is shortened and the integrity of the cold chain is enhanced, with products moving directly from their distribution centre to the customer for an improved shelf-life. Third, there’s a significant increase in the range of products on offer: Pick n Pay’s Gauteng facility, for example, holds almost three times the number of product lines as a regular store. The aim is to offer online shoppers the widest range possible from Pick n Pay. Woolworths, in turn, recently launched free WiFi to more than 100 stores countrywide, and is continuing roll-out. The new Woolworths app has also just launched, and customers can scan products in store, get rewards and vouchers, and check their store-card balances. Just months into its e-journey, Holdens Kwikspar in Durban has launched a tuk tuk – “the five-buck tuk” – which delivers for only R5 to anywhere in its area. “Online is a necessity. People want convenience, and it’s our job to embrace change in an ever more competitive market to give ourselves the edge,” says James Arbuthnot. “We are simply adding another service to our grocery store – but it is an exciting chapter, and the response has been incredibly positive.” While it’s experiencing consistent growth, Holdens Kwikspar is actually returning
to what it was once known for: “delivery with a real personal touch”. “Keeping our delivery charge to an absolute minimum has had a massive impact on how the public has perceived the value of our new service,” says Arbuthnot. “There tends to be a perception that a grocery delivery has to be of a certain quantity, which puts many people off. This is about convenience, not about pressuring the customer to spend. It’s also a great answer to our severe parking shortage. Another positive is that we are gaining new customers and not losing the existing ones who are now ordering as well as coming into the store.” Interestingly, in a less traditional space, younger-generation traders have a different view. “We started our business online,” says Paul Rabinowitz of Arkivio, an online bespoke furniture design site. “We now have a steady and growing stream of business. We recently opened a physical gallery to offer shoppers a ‘physical online store’ (pop in, see the goods, then order online), but it hasn’t been a success. We will use the space for a while as advertising and to increase our Instagrammability – but not for long. We’ve realised online is a far more effective space for selling niche products.” While Rabinowitz and his partner Lance Surgeson are not paying traditional rental for their cyberstore, they need to spend significantly on cyber-promotion of their business. “As people become increasingly less apprehensive of shopping online, online marketing is increasingly competitive,” says Rabinowitz. With the growth and development of e-commerce, there seems to be every sign that “traditional shopping” will be kicked into touch within a decade. But with the buying power of the emerging middle class buoying mass retail in South Africa, the game is currently still on. www.picknpay.co.za www.woolworths.co.za www.facebook.com/holdensspar www.arkivio.co.za www.electus.co.za
Consolidating, protecting assets and staying relevant With fluctuations in South Africa’s currency, an announced recession and greater retail competition, South African Property Review talks to Andrew Konig, CEO of Redefine Properties, about the retail side of the company’s portfolio By Mark Pettipher
ith REIT assets valued at R84-billion, Redefine’s portfolio sits in the top three in South Africa and is made up of 80% local assets and 20% offshore assets. “To put retail in context in South Africa, we hold 42% of our local portfolio in retail, 38% in office and 19% in industrial,” says Andrew Konig, Chief Executive Officer of Redefine Properties. “The bulk of our retail assets is located in Gauteng, with the largest asset being the Centurion Mall, worth about R5-billion. The remaining assets are in the Western Cape – and we also have a small exposure in KwaZulu-Natal, and a few in outlying areas.” With the concerns raised by the recession, Konig says that Redefine is in a long-term asset class. “We need to look through cycles and take long-term views,” he says. “For us, locations are fixed – there’s not much we can do about them through astute asset management. A centre’s ability to retain and grow its relevance is dependent on understanding the shoppers’ needs as well as the centre’s ability to consistently meet those needs through tenant mix and centre design. In this market, it is all about preserving market share, and defending and protecting what we have. It’s about being relevant to the communities in which we operate.” Asked about over-saturation, Konig says that while there is a significant supply coming onto the market, there is a certain amount of fragmentation and cannibalisation that’s in existence in the retail market. “For us, remaining relevant is crucial,” he says. “We’re focusing on differentiation through our tenant mix, and on providing a one-stop facility that is convenient to the retail customers by looking at parking tariffs, security and cleanliness. We aim to promote dwell time. “Each of our centres operates on an assetspecific strategy that is designed to ensure maximum relevance to the community it serves.
Andrew Konig, CEO of Redefine Properties
Andrew Konig was appointed as Financial Director (and to the Board) in 2011, and elected as CEO of Redefine in August 2014. A qualified chartered accountant (BCom, BAcc, CA (SA)) with 25 years of commercial and financial experience, 50-year-old Konig was previously Group Financial Director of Independent News and Media. He is now responsible for the daily management of Redefine, for ensuring the Board’s strategy is implemented, and for all aspects of regulatory compliance, corporate activity and reputation management. COMMITTEE MEMBERSHIP He is Chairman of the Executive Committee and a member of the Investment Committee. EXTERNAL APPOINTMENTS Konig is an alternate Director to Marc Wainer on the Redefine International PLC (UK-focused) Board, and non-executive Director on the boards of Cromwell Property Group (based in Australia) and Echo Polska Properties (operating in Poland).
We look at the demographics around each centre and, depending on the area, we tailor our offering of a matched tenant mix. By doing so, we hope to encourage customer loyalty. “Outside influences such as Brexit have not affected our domestic South African business. However, we have seen a significant effect on our Redefine International UK real estate business, where uncertainty caused by Brexit is its biggest enemy. REITs are a capitalintensive business – and because of that uncertainty we are being affected. “The weakening rand, however, is definitely having an impact on our local developments. Approximately 20% of the components required for a new build are imported, so naturally the rand weakness has an effect. We do have a significant development pipeline in South Africa that we are servicing, and we are not on an ‘investment strike’. In fact, we are currently spending R1,4-billion just on retail properties – mainly to protect, expand and improve our existing properties. “We are still investing offshore – particularly in Poland, where we are continuing to expand our retail portfolio, and in Australia, where we’re investing in student accommodation.” When it comes to investing in Africa, Konig says that Redefine has no plans to invest in the rest of the continent at present. “Our investment criteria are pillared on local partner representation, and the risk-reward relationship in Africa is not compelling enough for us,” he says. “Also, scale is a challenge in that the markets are quite small and the cost of establishment is high. Africa is not for the faint-hearted. We would prefer to stay in countries where we can understand the local laws. However, over time, we would like to develop our offshore assets to 30%.” SOUTH AFRICAN PROPERTY REVIEW
REITs alive and well in South Africa With South Africa officially in recession, a natural question is that of what is happening to investment in the country, and in particular the real estate sector. South African Property Review got in touch with Izak Petersen, SA REIT Association’s newly appointed Chairman, and Dr Sedise Moseneke, Chairman of the Property Sector Committee, to find out By Mark Pettipher
Izak Petersen, Chairman of the SA REIT Association
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n June, Izak Petersen, Chief Executive Officer of Dipula Income Fund, was appointed as Chairman of the SA REIT Association, taking over from Laurence Rapp, Chief Executive Officer of Vukile Property Fund. “The sector has advanced significantly under Laurence’s leadership,” says Petersen, “and we thank him for his meaningful contribution to the SA REIT Association in the past three years.” In a press release announcing his appointment, Petersen says that REITs have consistently delivered inflation-beating returns over the long term, with quality income streams and lower risk. “Over time, they have outperformed physical property by a long shot and outclassed other sectors on the JSE,” he says. “REITs offer investors regular income distributions as well as long-term capital appreciation.” Qualifying the statement, Petersen told us, “REITs have held up fairly well relative to the entire stock market. Looking at performance up to the end of July, we are up about 6,7%, and we are expecting average growth in distributions of between five and seven percent. On an individual basis, REITs are reporting distribution growth of between -2% and double digits of 15% or more.” This is running against the trend, he says. “There are a few dynamics affecting the REITs. Earlier in the year, from a share-price performance, we saw South African-focused REITs outpacing all the REITs with foreign exposure – but from April onwards, we are seeing a reverse in the trend. We are seeing funds with significant, good-quality offshore exposure with a promise of good distribution growth being favoured more than some South African-focused funds that are reporting relatively slower growth.” This may be in anticipation of rand weakness. In spite of the slower income growth compared to prior periods by South African REITs, their performance is still
SA REITs solid. One can attribute the solid income growth performance to property companies signing long-term leases (as is their nature), which shields them from adverse effects of short-term movement and sentiment. The other factor is that South African REITs are well-diversified. “Some of us are investing in offshore markets, which also give us a greater diversification,” says Petersen. “A significant portion of the income of South African REITs is now coming from these offshore markets. “With the easing of the reaction to Brexit (although there is some exposure to the inward listings on the JSE), there was bit of panic movement – but there has not been a marked effect on South African REITs. “REITs are still a relatively safe investment. Over the past 15 years, there has been phenomenal growth in the sector, and most of it has been quality growth. As a sector, we are spoilt for choice in the number of REITs that can be invested in. The exciting trend to watch is that we are seeing specialist funds coming onto the market – funds such as storage, residential, healthcare and industrial.” Petersen sees the sector continuing to play a key role as a leader in transforming the South African economy, which also speaks to its sustainability. In addition, the association will continue to build positive partnerships to ensure that it remains at the forefront of good governance, innovation and international best practice. “What I’d like to see is a greater interaction of stakeholders in the economy, to see in which areas we can utilise the very strong capital base of REITs to create even more product for the market going forward,” he says. “There is a lot of appetite for seeking solid income offerings, as well as some upside from share price performance. “As a registered REIT fund, the Dipula Fund has been positioning our portfolio in a defensive way. We’ve been divesting our office exposure to 15%, and have aggressively gone into retail, increasing our offering to 70% by looking at markets that are under-supplied. Our retail offering is focused into non-discretionary areas – mostly rural and township, with some urban – where our retail centres cover the basic requirements of food, clothing and services. Our expansion has been a story of remarkable growth. We started with an initial investment of R1-billion, and we now stand at R7-billion. “The economic downturn is going to affect us all. However, while we cannot control the economy, we as REITs can work with the assets
we have. By diversifying and taking good care of them, we can be more flexible and ride out the downturn storm.”
Advocacy and representation Dr Sedise Moseneke, Chairman of the SA REIT Property Sector Charter Committee (PSCC), Director of the Vukile Fund, and a Past President of SAPOA, continues his involvement within the greater commercial property sector. In his role as Chairman of the PSCC, his responsibility is to liaise we the Property Sector Council, and to assist members with issues that they may face as members of SA REIT.
Dr Sedise Moseneke, Chairman of the SA REIT Property Sector Charter Committee
“We have a policy at Vukile: we should be involved in the various sectors of the property industry,” he says. “Involvement in associations such as SAPOA, SA REIT and the South African Council of Shopping Centres allows us to be able to aid where we can. Through the various associations, we help develop and advocate for policy that effects us all. “Working with Izak Petersen’s mandate of further promoting SA REITs, there has been some crossover between being the Chairman of the PSCC and my role as the Government Liaison Officer for SAPOA. Given that integration and transformation of the property industry is driven by government, my two roles allow me to be involved with advocacy work at both the national and the municipal level. “My aim in both roles is to be the catalyst for the development of strong public- and private-sector relationships with the various government bodies. This is something that has been carried over from my time as the President of SAPOA. Much time was spent
on developing government relationships, and it is a natural progression of those relationships that enables me to garner support as Government Liaison Officer.” Turning to the economy and its effect on the present state of the retail property industry, Moseneke believes that there are people who feel South Africa is over-shopped. “However, there are retail pockets, where the scale and size – a little bigger than convenience stores – can be developed specifically to those areas,” he explains. “There is a great opportunity to transform rural areas, where community-based convenience centres can be established. “In an economy such as South Africa’s, investment in retail is not easy, especially in the major centres. However, we can see that there is substantial scope for investment in rural and township areas. It does make a lot of sense to have formal centres that include governmental facilities – such as places where one is able to renew driver’s licenses, buy electricity and apply for a new ID and/or passport – in addition to having places to eat and shop for groceries.” But what will these centres look like? “Shopping centres are going to have to be more recreational than they currently are,” says Moseneke. “They are going to need to be places of entertainment in addition to being practical places to shop and pay one’s bills. They are going to need to take into account the Millennials – the younger generation who prefer to shop online and have things delivered to them or to collect them when they’re ready. “Online shopping also has its challenges. What hasn’t really been taken into account is the ‘returns’. At the moment, the retailers are absorbing those costs. As online shopping increases – South Africa is not there in any great way as yet – we may see different ways of paying, and the need for physical cash may decrease. Apps such as Zapper stand to become an answer to payment options in rural areas.” Reflecting on the Vukile Fund, Moseneke says that the current economy is tough for consumers and retailers alike. “As a fund, Vukile is not really seeing a negative impact at the moment – but we do expect to see some effects starting to show if the economy continues on its downward trajectory,” he says. “As a property fund, we have a long-term view – as do many associated REITs. We have lease agreements that will weather this cycle, which gives us both sustainability and stability.” SOUTH AFRICAN PROPERTY REVIEW
SAFland is defining Namibia’s retail environment South African Property Review speaks to Kallie van der Merwe, Chief Executive Officer of SAFland Properties Namibia, Namibia’s property development company that’s responsible for the establishment of 12 of the nation’s major shopping malls By Mark Pettipher
Kallie van der Merwe, CEO of SAFland Properties Namibia
“Be on the ground, be among the people, be involved. Immerse yourself in society, and success will follow” 36
AFland is a property services group that aims to provide customer-led solutions to national retailers, financial institutions, property funds, large property-owning groups and the government, according to the company website. Kallie van der Merwe’s property career began in 1987 at Habitat 2000 Commercial Properties, where he moved through the ranks to become Managing Director in 1990. In 1992, he left Habitat to start SAFland Properties in South Africa. His first employee was Miranda (who is now his wife). In the early days, the business concentrated on retail property, later evolving into retail property development and developing showrooms for various motor companies, including facilities for auto cities, Associated Motors and Kia dealerships. In 2007, SAFland completed its last development in South Africa – the Imposto Centre in Pretoria North. The centre was later sold to Old Mutual. During 2006, Van der Merwe began exploring opportunities outside South Africa. His strong business instinct told him that developing properties further afield in Africa was the way to go. During that time, after a visit to Walvis Bay, he seriously considered opening for business in Namibia – a decision that was spurred by the financial crash of 2008, which affected a large number of property development
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companies in South Africa including SAFland. “Although the company was healthy, SAFland’s acquired wealth was wiped out,” explains Van der Merwe. “We were able to continue operating – but as a developer, chasing cash and trying to obtain funding was almost impossible.” This was just the impetus he needed to focus on looking for business outside of South Africa. The end result was SAFland moving its headquarters to Windhoek. “The timing was impeccable – we arrived in Namibia at the right moment,” says Van der Merwe. “As an aspirational country, Namibia was in need of the products and services we brought in. In addition, access to funding was easier and available.” In 2010, SAFland entered into an agreement with the Government Institution Pension Fund of Namibia (GIPF) to start a property fund known as Frontier Property Trust. They developed a number of properties, including The Grove Mall of Namibia, Ballot Place, The Gwashamba Mall, Otjiwarongo Town Square and Zambezi Mall. Going from strength to strength, SAFland started a second property fund – SAFColl Property Holdings – in conjunction with the Collins group in KwaZuluNatal in 2012. They undertook several big developments, including the Rundu Shopping Mall, Gobabis Shopping Mall and MegaCentre and Mutual Platz in Windhoek, as well as
the West Port Industrial Hub in Walvis Bay, several Total filling stations, Dunes Mall, Virgin Active, The Steps Mall, Station Plaza, Ondangwa and the Oasis Mall in Oshakati (which is due for completion in October this year). In 2014, the fund was sold to Tradehold Limited. SAFland continued as a property development company, providing complete developments to the different funds while also retaining some shareholding in most of the funds.
Expanding the SAFland footprint The company is now looking to expand its footprint into Africa and already has some investment in Zambia. “We’re also looking at some smaller developments in Botswana,” says Van der Merwe. “We were working hard to get into Angola, but the country’s economy is not stable. Angola’s national budget is dependent on oil prices in the region of US$70 a barrel; currently, the price is at only US$40, so the country is in dire straits. I don’t think we will ever enter into a country with a dollar-based economic strategy because we can’t – and won’t – stake investors’ money on a country with its own currency. “Wherever we are involved, as a developer or as an investor, we are risking capital. I’ve visited a number of African countries, and although there is much talk of companies expanding into
optimal engineering Africa and investing money, very few companies have done so because of the huge risks and challenges. “As it is, construction, contracting and development companies wanting to set up here in Namibia think it’s easy and straightforward. They don’t understand the challenges of land ownership, bringing people across the border, obtaining work permits and finding good sub-contractors. In greater Africa, this is an even more diﬃcult process, with each country presenting its own set of challenges.” SAFland continues to partner with other property developers on projects in other countries in Africa, but Van der Merwe says there is still a fair amount of animosity towards South Africans in some countries. “I’d like to investigate opportunities in Europe; it’s partly where I see myself in the future. Through the holding company Tradehold, we’re exposed to the UK markets, with a large portion of our asset base in the UK. We are looking towards growing that, but I’m not directly involved as my main focus is on the developments in Namibia,” he says.
SAFland’s Namibian success story According to Van der Merwe, SAFland has been very successful in Namibia, and he credits most of this success to the move of the company’s headquarters from South Africa to Namibia. “We took the plunge, lifted our roots and planted them firmly in Namibia,” he says. “SAFland became (and remains) an integral part of the country. We understand the challenges; we know the culture; and we’ve integrated with the local community. From the onset, we made it our business to know every town and every retailer in it. “However, there is no longer as much potential in Namibia for large retail developments.
From the start, our strategy was to own a shopping centre in every town. Now there are only three towns where we don’t own the retail space. We could try to buy our way in, but from a retail perspective, I think we probably have about three to five years left in Namibia. Then our objective will have been achieved. “I am confident that other opportunities in other areas of property development will arise – for example in logistics. Then there’s the upgrade of the Walvis Bay harbour and the development of the Walvis Bay/Trans-Kalahari corridor for trading into Botswana, Zambia, Angola, Zimbabwe and South Africa. I would like to see us become more involved in these areas, especially on the logistical side. “Another area of great interest is dealing with the water crisis in Namibia. We have ideas and solutions, and I believe SAFland could make a valuable contribution in this area, but we are acutely aware of the complications of politics and political agendas.” The company is looking into listing on the Namibian Stock Exchange in the near future, but would first need to have more projects in the pipeline to increase its value. “As a property development company, it is diﬃcult to determine our true value, but in terms of current projects, our value amounts to about N$3-billion,” says Van der Merwe. SAFland is committed to the Namibian people and, as a socially responsible company, gets involved in various community initiatives. “We sponsor the Windhoek 7s, support soccer at various levels and assist students with bursaries – but we are not linked to any specific cause,” says Van der Merwe. “We try to plough back directly to the various communities when and where the need arises.”
Capital M Nairobi, Kenya
STRUCTURAL, CIVIL, MECHANICAL, ELECTRICAL, AND FAÇADE ENGINEERS. CT - JHB - DBN - NAIROBI sutherlandengineers.com
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Investing in the alternative side of real estate Demand for properties outside of the domain of traditional commercial real estate has seen phenomenal growth in recent years By Emily Perryman; first published on JLL Real Views
rom carparks to self-storage, the combined effect of demographic changes and urbanisation is beginning to pay dividends for savvy investors who have spotted potential in the “alternative” properties. According to research by JLL, transaction volumes rose from 10% of the overall commercial property market in 2010 to 29% in 2016, which marked the sector’s most successful year to date. JLL’s Head of Alternatives Ollie Saunders explains why the drivers for the alternatives sector as a whole will remain positive going forward.
Why is the alternatives sector thriving? Much of the demand for alternative property stems from the emergence and subsequent maturing of new asset types, accelerated by changing demographics and the way in which we use our cities. For instance, an ageing population has resulted in a much greater need for assisted living facilities. The fact is that more of us are living longer and in poorer health. Alongside this, increasing numbers of people can’t afford to get onto the property ladder, which has led to the emergence of a specialised build-to-rent subsector. In addition, increased global mobility, changing lifestyle patterns and technological changes are all contributing to heightened interest in the alternatives sector.
Which are the key sub-sectors to watch? Over the past year, there has been continued growth in the more mature alternative subsectors such as student accommodation, which was the largest sub-sector in terms of total investment at £3,2-billion in 2016, along with care homes and build-to-rent. A newer sector to watch out for is retirement living, which has been big in Australia and is now increasing in prevalence in Europe.
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Another important sub-sector is self-storage. Self-storage is embedded into the culture of north American cities and has recently been expanding in Europe. This is because there has been a huge wave of urbanisation – more and more people are moving into cities and living in smaller accommodation, so they’re putting their belongings in storage units.
Will any other sub-sectors emerge? An exciting area is data centres, which were previously dominated by the financial services sector – there’s growing demand from tech companies, particularly cloud operators. IBM estimates that 90% of all data today was created in the last two years, and the growth is exponential. The increase in demand is driven by business and personal devices, which rely on computing power and connectivity, now held within the cloud and the data centre facilities that house it. Another emerging sector is carparks. There has been an increase in electric cars, meaning more people are going to carparks and sitting there for an hour while their car charges. There is a real opportunity for technology to improve the customer experience – for example with pre-booking, payment and space-allocation technology.
When does a sector mature out of being an “alternative”? A sector is usually regarded as mature when it
has a high deal volume and a transparent market. Student housing and leased hotels are now established sectors because they offer scale and transparency and are relatively liquid. Care homes, hospitals and surgeries will probably become mature in about two years.
What’s in it for investors? The growth in the alternatives sector offers investors an opportunity to align their investments with changing economics and demographics. It’s linked to inflation and the end-user, who pays on an inflation-linked basis. The sector provides good income returns, which are expected to continue to outperform. In time, yields could fall, thus increasing capital values. With proactive management, there is an opportunity to increase yields because the operator is much closer to the lease. There is also scope for better risk-adjusted returns and more defensive income characteristics than traditional real estate.
What are the challenges? Increasing development costs, land values and restrictive planning policies are key challenges. There is also the possibility that some sub-sectors will reach capacity. Another challenge is finding the best operating partner for the assets – often a fundamentally important factor in successful investment in alternatives.
Report back on the SAIBPP Annual Convention & Property Indaba 2017 The South African Institute for Black Property Practitioners (SAIBPP) Annual Convention & Property Indaba was held in Johannesburg last month, providing a lively platform for riveting and open discussions to explore contentious issues around the current state of the property industry in South Africa
President of SAIBPP Nkuli Bogopa and Journalist & Radio Personality Iman Rappetti
SAIBPP CEO Vuyiswa Mutshekwane
The SAIBPP Convention & Property Indaba took place in Johannesburg last month
he two day convention kicked off with a full day development site tour of Johannesburg commencing at Kgoro Central on day one. The second day of plenary sessions was held at the Houghton Golf Club and featured a speaker line-up of key role-players representing both the private and public sector. Duma Gqubule, founder of KIO Advisory Services, discussed the topic of “Defining radical economic transformation in the property sector”. This was followed by an indepth analysis of the state of transformation within the sector, presented by Mashilo Pitjeng. In addition, there were two powerful panel discussions: one on enterprise and skills development (facilitated by Dineo Molomo); the other on the topic of real estate and infrastructure development as a catalyst of inclusive economic growth (moderated by journalist and radio personality Iman Rapetti). Guest speakers included Minister of Public
Works Nkosinathi Nhleko and Gugile Nkwinti, Minister of Rural Development & Land Affairs University of Cape Town’s Professor François Viruly presented research findings under the topic “What is next in the South African commercial property market?” According to SAIBPP Chief Executive Officer Vuyiswa Mutshekwane, the convention focus was on addressing current economic growth challenges, and the role the industry can play in stimulating and driving development. “The SAIBPP is taking a more forward-thinking role in interrogating existing policies that have not been working in the private and public sector, and developing new ones to find solutions and collaborative efforts to work towards actively transforming the current dynamics of the property industry in South Africa,” she said. The convention closed off with a gala dinner and awards evening to honour those who are leading transformation in the property sector.
Former SAPOA President and current Board Member Dr Sedise Moseneke
Professor Francois Viruly from the University of Cape Town
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Gauteng Women’s Day Breakfast The SAPOA annual Women’s Day Breakfast, in partnership with Sanlam, was held at the Sanlam ofﬁces in Sandton, Johannesburg
nder the theme “Be inspired. Be motivated”, the setting was the perfect backdrop for a morning of conversation, re-evaluation and celebration of the phenomenal women we are, and of recognition of the pivotal role that we play in society. There were inspiring talks by two very dynamic women. First, Lebo Monyatsi, who is the Head of Group Market Development & Stakeholder Relations at Sanlam, spoke about how financial planning for the future is critical to our long-term security as women. The keynote address was delivered by Elvéne Coetzee, the current South African champion in rally racecar navigation, and one of only a handful of women in a very maledominated industry. Some of the key lessons that she has learnt – ones that have given her the competitive edge in the motorsports industry – include: ● “It is important to put in the hard work. When you are one of the only women among so many gentlemen, you always have to be at the top of your game.” ● “As a racecar navigator, you are the leader of the team. The team looks to you for direction – not only of the driving path, but about their daily activities too.” ● “With being a leader comes the need to also be a very committed team member. Everyone in the team needs to play their part to ensure the best overall functioning of the whole.” ● “Owning your territory and pushing your limits is crucial. As women, we do not know our limit until we are pushed to it.” Coetzee concluded her address with a quote by former US First Lady Michelle Obama: “There is no limit to what we, as women, can accomplish.” The event was indeed a morning of inspiration and motivation.
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FROM LEFT Lebo Monyatsi from Sanlam, Maud Nale from SAPOA and guest speaker Elvéne Coetzee
FROM LEFT Lindy Ras, Khanyisa Mabale and Matshidiso Moeti
FROM LEFT Sarah van Tichelen, Katrine Lategan, Tanzeem Razak, Olivia Kilian and Mary-Anne da Costa
FROM LEFT Grace de Fava, Tashlin Naidoo and Lindo Msomi (all from Sanlam)
Tandi Jacobs with Thuli Zulu
FROM LEFT Vanessa Jackson, Marelize Ellis and Marianka Victor
Nelly Mahlangu with Sarah van Tichelen
FROM LEFT Meryl Bessesar, Carina van Vuuren and Marcelle Kingsley
Bev Esterhuizen with Karen Henning
In partnership with
FROM LEFT Firoza Sallie, Melissa Huntley, Adele Maritz and Helen Markides
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Port Elizabeth Golf Day
Even the windy Port Elizabeth weather did not dampen the spirit of the players, who were all decked out for a round of golf at the Port Elizabeth Golf Club. SAPOA PE hosted its Golf Day in collaboration with the Construction Management Department of the Nelson Mandela University
FROM LEFT Leandre Nel, Stacy Schnablegger, Bryan Wintermeyer (SVA) and Mark Bakker
FROM LEFT Wessel Vosloo, Loyisokazi Xanywa and Mark Bakker
The main objectives of the collaboration between SAPOA and Nelson Mandela University were: ● To strengthen the relationship between SAPOA and the university; ● To serve as a platform for students to gain exposure to current employment opportunities within the property industry; and ● To provide a networking opportunity for students to meet industry professionals, and for captains of industry to recruit possible graduates. It was a close call as to who would get top honours – but in the end, the winners were announced as follows: First-place winners: Leandre Nel and Stacy Schnablegger Second-place winners: Ryan Fourie and Jannie Wagenaar Third-place winners: Owen and Travis Kaschula. We would like thank the sponsor of the Halfway House, SVA International, for its valuable contribution, and for making the day such a great success.
FROM LEFT Sihle Makwedini, Loyisokazi Xanywa and Mark Bakker
FROM LEFT Ru Muringi, Loyisokazi Xanywa and Mark Bakker
FROM LEFT Brett Grant, Loyisokazi Xanywa and Mark Bakker
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FROM LEFT Jacques Wessels, Kevin Chree and Jeremy Bosman
FROM LEFT Donevin Lesch, Sihle Makwedini, Shaun Norris and Mongezi Kubukeli
FROM LEFT Ian Knott, Duann Marais, Dave Martin and Mark Connett
Wesley Norris with Albert Nyamana
FROM LEFT Marsha Goliath, Evan Klopper, Loyisokazi Xanywa, Luke Howard, Matshidiso Nkadimeng, Jaco Visser, Sarel Steenekamp and Rosette Sihlangu
George Efstratiou with Mike Palframan
Halfway House sponsored by
FROM LEFT Pieter Vorster, Wesley Norris and Mike Palframan
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Western Cape Seminar: The Urban Design Policy of Cape Town SAPOA Western Cape Regional Council, in partnership with the Urban Design Institute of South Africa (UDISA), hosted a breakfast seminar on the topic of the urban design policy of Cape Town
FROM LEFT Paul Olden (Urban Dynamics) , Simon Nicks (CNdV Africa) , Marise Potgieter (Urban Concepts), Khalied Jacobs (Jakupa Architects) , Simmy Peerutin (Peerutin Architects)
Refqah & Imraan Ho-Yee
FROM LEFT Adrian Read, Riaan Munnik, Western Cape Regional Chair Marlon Parring, Dave Williams-Jones, Ian Sutherland and Craig Armstrong
Raynard Haupt with Chris Bam
The panellists included Marise Potgieter of Urban Concepts, Paul Olden of Urban Dynamics, Simmy Peerutin of Peerutin Architects and Julian Raxworthy of the University of Cape Town. The panel discussion was facilitated by Western Cape Regional Council member Simon Nicks, who also serves as the urban designer and town planner at CNdV Africa. The seminar was thoroughly enjoyed by all 120 delegates in attendance.
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Barend Engelbrecht with Geoffrey JĂ¤ck
Marc Cohen with Peter Golding
Western Cape Seminar:
Digitisation of the Property Sector
SAPOA Western Cape, in partnership with the University of Cape Town’s Nedbank Urban Real Estate Research Unit (URERU), hosted the third instalment of the popular seminar series at UCT
Professor Carsten Lausberg from Nürtingen-Geislingen University
FROM LEFT Jerry Iwegbuna, Angelo Brandon Jephtha and Gregory George Alkana
FROM LEFT Professor Carsten Lausberg, Adrian Read, Wayne van der Vent, Stan Garrun and Professor François Viruly
Among the expert panellists were Professor Carsten Lausberg of Germany and François Viruly, Associate Professor at UCT, sharing insights on the digitisation of the property sector and how digital transformation will affect the industry. The presentations were followed by a panel discussion presented by Wayne van der Vent of Quoin Online and Stan Garrun of URERU. The seminar was followed by a lively networking session, which provided the perfect platform for students in the Faculty of Property Studies to mingle with the captains of industry. The seminar was thoroughly enjoyed by all 120 delegates in attendance.
Naseegh Long with Cheryl Walters
Emmerencia Cornelius with Candy Williams-Jones
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UPCOMING EVENTS & TRAINING PROGRAMMES SEPTEMBER TRAINING PROGRAMMES 01
Method for PROPERTY Measuring Floor Areas REVIEW - LogoTreatment.pdf in Buildings (MOMFA)
Negotiation Skills Masterclass Programme (NSMP)
SANS 10 400
Negotiation Skills Masterclass Programme (NSMP)
Introduction to Brokering Seminar Day 1
Lease Agreement Workshop
OCTOBER TRAINING PROGRAMMES 02-06
Introduction to Real Estate
Introduction to Brokering Seminar Day2
Negotiation Skills Masterclass Programme (NSMP)
Property Finance Workshop
NOVEMBER TRAINING PROGRAMMES 03
Commercial Lease Seminar: Tenant Areas
Dates are subject to change. Please see Sapoa.org.za for regular updates.
SEPTEMBER EVENTS 1
Broker Cocktail Networking Evening
NOVEMBER EVENTS TBC
Six ways shopping centres are getting creative with their space While online shopping offers convenience, there are some things about visiting a physical retail space that can’t be replicated on the internet. As the retail industry continues to evolve, shopping centres across the US are seizing new opportunities to move beyond housing bricks-and-mortar stores into activity hubs
“One opportunity lies in the maximisation of vacant retail space” says Tracey Hatley, Director of Specialty Leasing at JLL Retail. “Shopping centres have always looked to make the most of their space and generate revenue, but with store closings becoming more frequent, the space they leave behind is being filled by a new type of tenant.” Here are six ways shopping centres are maximising space in today’s retail environment.
Seasonal activities such as pumpkin patches, boat or car shows, Christmas-tree lots, summer carnivals and garden centres can generate additional foot traffic and revenue for shopping centres. “At different points of the year, your neighbourhood nursery might lease space to get additional sales and traffic,” says Hatley.
Events are springing up across US malls as consumers start to spend more of their disposable income on experiences rather than on goods or clothes. “Anything that’s entertainment-based or experiential is becoming increasingly popular with consumers looking for more than just a shopping trip when they go to the mall,” says Hatley. Escape rooms are taking over vacant department store space in malls across the country. Shopping centres have also hosted special five-kilometre runs, where runners race around during the night. The Mall of America, for example, hosts more than 400 events, from cupcake decorating for kids to meet-andgreets with pop stars.
Vacant spaces are great for destination uses such as exercise classes or healthcare facilities. “In order to drive traffic, you want something in those side spaces where people don’t usually walk. Anything service or destination-oriented where people need to make appointments, such as hairdressers or nail salons, is great to fill vacant space,” says Hatley. Healthcare facilities such as dentists or screening centres are also popping up in malls; they benefit from the visibility and higher footfall, while consumers often find them to be in a more convenient location.
Office space is becoming more prevalent as an option for vacant shopping-centre space. From insurance offices and call centres to co-working spaces, new office space comes in many shapes and sizes. Take Bespoke, for example – a coworking, demo and event space provider. It set up space in Westfield, San Francisco two years ago and is credited with bringing in 100 000 new visitors in its first year. In Orlando, the West Oaks mall is welcoming a 6 300m2 Bed Bath and Beyond call centre.
By William Polk; ﬁrst published on JLL Real Views
Working with cellphone companies
Rooftop antennas can be found on many shopping centres around the world. “A two-storey mall in a suburban market might be the highest point in that area,” Hatley says. “In order to boost cellular signal, cellphone companies are putting antennas on shopping-centre roofs because they’re good sites to do that.”
“Last-mile fulfilment is a great use to target,” says Hatley. Unused space, particularly within areas that have a large population, can be transformed to house packages from online purchases. Storing of those goods in vacant shopping-centre spaces would speed up the logistics and reduce costs for the last “mile” of delivery – one of the most expensive stages of package delivery. In order to maximise vacant space, shopping centres must keep their merchandising mix in mind. “You don’t need or want several jewellery stores, for example,” says Hatley. “The goal is always to add occupancy to the property and generate revenue for the bottom line – but you try to complement existing stores within the shopping centre, and to add an element of excitement as well.”
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off the wall
Look, Ma – no hands! A host of companies are developing self-driving cars – but what about self-driving trucks? Uber is probably the biggest player in this nascent ﬁeld, thanks to its 2016 acquisition of start-up Otto. But a Swedish company called Einride hopes to give Uber and other competitors a run for their money by taking the concept of self-driving trucks to a new level Compiled by Phil Ruimte
wedish tech start-up Einride has built a full-scale prototype of its T-Pod – the electric autonomous transport vehicle it hopes will eventually replace smaller heavyduty trucks. The T-Pod features remotecontrol operation and a 200kWh energy capacity, and has a maximum range of about 200 kilometres. Einride’s T-Pod does not have room on board for a human driver: it is a windowless box on wheels, powered by electric motors. The truck is about seven metres long and can carry 15 standard cargo pallets, according to Einride. It weighs 20 tons when fully loaded. The Einride T-Pod is unique in its design (as you can see), but it’s designed from the ground up for remote human operation and driver-less functioning – meaning you don’t need the traditional crew cabin, and can instead build a vehicle tailor-made exclusively for transporting goods in the most efficient way. The T-Pod will be put into service first on a route between Gothenburg and Helsingborg by 2020 in Sweden, with 200 T-Pods traveling the route (which will be outfitted with charging stations).
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The overall T-Pod network will be able to move up to two-million pallets of goods per year, which Einride says will contribute about the same CO2 emissions as 400 000 passenger cars traveling the equivalent distance. Einride also says it might expand the route further earlier than planned, given the strength of client demand. These T-Pods are an interesting alternative to autonomous retrofit and conversion of
semi-trucks. The remote-control mechanism is also interesting, and Einride says it adds “human flexibility and decision-making” alongside the vehicle’s autonomous capabilities, with one driver able to control multiple T-Pods at once. Even without a human driver on board, though, the T-Pod will not be autonomous all of the time. It will drive itself unassisted on highways, but a human operator will take over via remote control in cities and other more complex environments where the truck’s systems might not be up to the job. The Swedish company is far from the only company looking to bring autonomous trucks to the highways of the world. Industry giants Waymo, Uber and PACCAR have all recently made waves with self-driving trucks, while smaller start-ups such as Embark are also staking their claim on the highways of the future. Volvo is testing autonomous commercial trucks as well, including a selfdriving garbage truck. All autonomous vehicles face regulatory questions – and those questions will be even more pointed in the heavily regulated trucking industry. Truckers themselves might also oppose autonomous vehicles as a potential threat to their jobs, creating an additional challenge for the companies trying to deploy them.
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