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South African Property Review

PROPERTY SOUTH AFRICAN

July 2017

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

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2016/08/25

11:31 AM

Annual SAPOA International Convention and Property Exhibition

Rewrite the rules, reshape the industry, reinvent the game

WATERFALL CITY

Planning from the ground up July 2017

DIGITAL RETAIL

Trends in online shopping

NOMZAMO RADEBE

Retrospective on 2016/2017 Presidency


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contents

July 2017

PROPERTY SOUTH AFRICAN

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

July 2017

REVIEW

PROPERTY REVIEW - LogoTreatment.pdf

1

2016/08/25

11:31 AM

Annual SAPOA International Convention and Property Exhibition

Rewrite the rules, reshape the industry, reinvent the game

ON THE COVER Outgoing SAPOA President, Nomzamo Radebe, talks to South African Property Review and reflects on the many successes, challenges and highlights of her 12-month tenure as the first black female elected to the SAPOA Presidency

NOMZAMO RADEBE

Retrospective on 2016/2017 Presidency

WATERFALL CITY

Planning from the ground up

July 2017

DIGITAL RETAIL

Trends in online shopping

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35 40 44 48 50 52 54 57 60 65 70 74 76

From the CEO From the Editor’s desk President farewell Nomzamo Radebe bids a gracious farewell News Education, training & development White Paper on post-school education and integration: how it can be incorporated in the commercial sector Property education The School of Construction Economics and Management earns accreditation for all its property degrees from the South African Council for the Property Valuers Profession (SACPVP) Planning and development SAPOA participates in the review of the integrated development planning process 2017/18 Legal update Regulation of Agricultural Land Holdings Bill (the Bill) Legal update SAPOA comments on the Property Practitioners Bill, 2016 Legal update Clearance certificates: sellers no longer held ransom for future municipal debts Legal update Getting infrastructure disputes right Finance Inspiring greater confidence in the tax system Property development Speaking of Waterfall City… Planned with foresight, rolled out wisely Profiles Digital retail Catching on to online retail shopping International opinion Three themes for real estate investors Events What’s on Upcoming events Off the wall Kenya begins Africa’s tallest building project FOR EDITORIAL ENQUIRIES, email mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Eugene Jonck Sales Robbie Pansegrauw e: rob@mpdps.com Finance Susan du Toit Contributors Mark Clacy-Jones, Marguerite Lithgow, Maud Nale, Mumtaz Moola, Attie Pretorius, Phil Ruimte, John Webber Photography Mark Pettipher, Xavier Saer

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: mark@mpdps.com

e: philip@rsalitho.co.za


from the CEO

Embracing Disruption in a technologydriven environment For a very long time, the commercial and industrial real estate sectors have been in a pretty safe, comfortable space, managing to escape the tides of technological disruption and innovation. Now, because we are integrated into the networked global economy, the industry – both globally and in South Africa – continues to face disruptive forces. As the world continues to evolve, driven by the waves and intersections of technology, demographics and globalisation, business as usual is no longer an option

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e are already seeing how digital disruption is beginning to seep into commercial and industrial property markets around the world. The South African commercial and industrial real estate markets have embraced disruption and its ability to work for us in streamlining processes, but there is still much more that needs to be done. The planning, delivery and management of property requires a long-term vision, which is difficult to establish in a rapidly changing world. With all of these changes, and a volatile economic and political climate locally, players in the real estate space clearly need to think differently, assessing both the weak and strong signals in the market that spell change, as well as making bets on future opportunities. This is the main thread that underpins the theme of this year’s conference. The onset of disruption will require each of us to change the way we think and the way we use technology in reshaping the property industry. Digital disruption, as a result of the influence of digital technology, has now become a huge buzzword in South Africa, and this will be discussed in greater detail during the keynote address and panel discussion on the subject. It is causing massive upheavals to industries, and shaking up business models, value chains, processes, innovation and organisational structures across the real estate sector. It is evident that the real estate sector will need to quickly adapt to this digital revolution, evolve and possibly reinvent itself to meet the demands of digital customers in a disruptive world.

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Increasingly, we now require space that is flexible, on demand, communal, user-centric and experiential, and that can be easily configured for multiple use. This is true across offices, retail and even industrial spaces. The home-mover experience has also evolved. One can now view a property online, negotiate with the financial-service provider and eventually make the purchase without the usual face-to-face contact. The commercial property industry can be proud of the progress it has made in keeping abreast with this ever-evolving concept. The buildings that are being constructed nationally are testimony to the fact that SAPOA members are embracing disruption. Property investors and developers are now understanding the role that technology, innovation and design play in a modern work environment and grabbing the opportunity to innovate and modernise office spaces. Disruption as a whole presents an opportunity for us as a sector to innovate and disrupt our way of thinking and doing things. It’s all about collaboration and cooperation of individuals from a wide range of professional backgrounds. The real estate sector is now in a position to better anticipate the future state and consciously adopt new ideas, with success depending on the ability to proactively shape and transform the property market and drive future demand. Neil Gopal, CEO


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from the Editor’s desk

Rewrite the rules, reshape the industry, reinvent the game SAPOA’s members control approximately 90% of all commercial and industrial property in South Africa. These property investors and role-players have the ability to reshape our industry – and, through dialogue, they can rewrite the rules and reinvent the property game

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ith SAPOA’s Annual Convention and Property Exhibition happening right now, and with the topic being Disruption, the event promises to give our delegates a full and meaningful insight into many issues that affect their day-to-day working lives. Disruption means different things to different people, so to put everyone at the Convention on the same page, the organising committee has developed a pretty impressive schedule that covers a variety of topics. Interestingly, the tour this year will take our delegates into Langa, Gugulethu and Bonteheuwel, giving them an opportunity to experience a little of township life. Of course there is our usual golfing afternoon at the Atlantic Beach Golf Club – not too disruptive, we hope! In terms of the Convention itself, registration opens at 7am on 21 June at the Cape Town International Convention Centre, with the opening ceremony scheduled to commence at 8.30am, followed by Cape Town’s Mayor Patricia de Lille, welcoming you all to the Mother City. Eusebius McKaiser will kick off the proceedings, followed by SAPOA’s President Nomzamo Radebe, Chief Executive Officer of the JHI Group, handing over to our Principal Sponsor Noel Mashaba, the Executive Chairman of GladAfrica Group. Topics under discussion will include offshore versus local investments, digital disruption, diversification in emerging property sectors, a conversation with Daniel Silke about South Africa’s political sentiments, as well as an insight into the disruptive effects on the future of South Africa’s property market. During the course of the Convention we will hear from incoming President Peter Levett, Managing Director of Old Mutual Property, and we will have the very exciting opportunity to see this year’s submissions in SAPOA’s Excellence Awards for Journalism as well as the entries for the Property Development Awards for Excellence. Day three’s sessions will end at about 3.15pm on

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22 June; thereafter, we all look forward to the gala dinner and awards evening, where, clad in our “Black Leather”, SAPOA will once again “rock you”. On a publishing note, this edition of the South African Property Review is my 50th as the magazine’s managing editor. As ever, I would like to thank you – our readers – for your continued following. Our online statistics and readership profile give testament to how important the South African Property Review is to the industry. The online presence gives us an international standing and allows us a wider global following. Naturally, without the support of our clients, we would not be able to produce the magazine – so to all of you who have faithfully contributed to advertising in this edition and the previous 49, my sincere thanks. To all our members, old and new, the publication promises to continue to be a great platform for you to showcase your achievements, either at a company level or through what you are achieving in terms of new developments, industry reform or through your corporate social initiatives. We also offer an opportunity to provide exposure and recognition to the people behind your organisations by positioning them in our “People in Profile” pages. Once again, thank you for your editorial contributions – please keep them coming, be it your short news snippets or suggested topical articles. Enjoy SAPOA’s annual Convention and the social networking – and watch this space: the August issue of Property Review will feature the Convention report back, which will include recognising the award winners. Also featured will be Women in Property, so please let us know who the women are in your circles who are helping to rewrite the rules, reshape the industry and reinvent the game. Enjoy reading this issue! Mark Pettipher, Managing Editor


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President’s farewell

Nomzamo Radebe bids a gracious farewell Outgoing SAPOA President Nomzamo Radebe talks to South African Property Review and reflects on the many successes, challenges and highlights of her 12-month tenure as the first black female elected to the SAPOA Presidency Interview by Mark Pettipher Words by Marguerite Lithgow Photographs by Xavier Saer

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President’s farewell

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t has been a fast-paced year, packed with many very visible events that started immediately after my inauguration with a five-day visit to Washington with Neil Gopal, to attend the BOMA Conference. It was refreshing to see how SAPOA has maintained contact with BOMA and remains very involved – Neil is the Chairman of the International Regional Council. This was the first event I attended as SAPOA President, and it brought home to me that, much as SAPOA is a South African organisation, we really do reach out to international organisations of similar interests, which was good to see. It’s also great to see that what SAPOA has achieved is well-respected internationally.

Advocacy Soon after this, the municipal elections were held in August 2016. As part of our advocacy initiatives, we establish important links with the mayors of the various municipalities. This year, we’ve also experienced a few of the metros changing their mayors, so we’ve spent the greater part of the year ensuring that we form and maintain these relationships. This is a critical initiative for our industry, as rates and taxes form a significant portion of the revenues of the municipalities. During the past year, we have managed to touch base with several city mayors on quite a few different occasions, hosting mayoral dinners and meeting formally with, among others, the Mayor of Johannesburg, the Mayor of Tshwane, and Patricia de Lille, the Mayor of Cape Town, with whom we maintain a strong relationship. We have also successfully established ties with the Mayor of eThekwini and the Mayor of the Nelson Mandela Bay Municipality. Unfortunately, we received a last-minute cancellation for our dinner with the Mayor of Limpopo, but we have initiated contact with the Mayor of Nelspruit’s offices which will be followed up.

“During the past year, we have managed to touch base with several city mayors on quite a few different occasions, hosting mayoral dinners and meeting formally with, among others, the Mayor of Johannesburg, the Mayor of Tshwane, and Patricia de Lille, the Mayor of Cape Town, with whom we maintain a strong relationship” I think that, for all of us in the industry, it is very important that SAPOA continues to be visible in the big metros, and that the property owners’ interests are not only attended to but also prioritised. That we have successfully managed to have a significant impact on the various metros is incredibly helpful. Also, in the line of important networking, it was very interesting to meet with the inspiring President of RICS, Amanda Clack, at the RICS summit in Johannesburg, which I attended with Neil. We were fortunate to be able to arrange a formal meeting with her, to establish just how it would be in our best interests to enhance our existing relationship with RICS. Clack’s invaluable mandate of bringing women into the property arena has had some parallels to mine, the difference of course being that she is doing it on an international scale, and not just in the United Kingdom. Hearing about the volume of travelling she has had to do was astonishing, but her company granted her what seemed to be almost a sabbatical year, which allowed her

to devote herself virtually unstintingly to RICS for the duration of that year. On this note, I would like to mention that I am very grateful to Cushman and Wakefield Excellerate, who have been understanding and generous to me, enabling me to participate in SAPOA and spend the time that was required on SAPOA’s various initiatives. They have accommodated me not just from the executive level – my team members have also been tremendously loyal and hard-working, enabling us to forge on our company objectives despite my presidential tenure. It would have been impossible to achieve what I have achieved this year without the support of my company and family. I have also been fortunate to have a very capable and trustworthy personal assistant Nonkosi Tshangana, on whom I have been able to rely completely. She has assisted me tremendously in terms of planning my time and managing my diary, always working closely with Neil’s assistant Rechelle Jevon to ensure we get to where we need to be, and that the presidency was effective and successful. A highlight for me, as part of the advocacy, was to attend some of the SAPOA affiliate events, such as the Women’s Property Network and Green Building Council of South Africa functions, the dinner of the South African Conveyancers’ Association and the SAIBPP’s annual conference. These events made SAPOA visible, and I was able to do important networking on SAPOA’s behalf.

“A highlight for me, as part of the advocacy, was simply to attend some of the SAPOA events, such as the Women’s Property Network and Green Building Council functions, the dinner of the South African Conveyancers’ Association and the SAIBPP’s annual conference”

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President’s farewell As a result, I have come to realise that the property industry consists of many different parts – quite like the pieces of a puzzle – and it’s important to recognise all the different pieces which, when assembled, make up a powerful combined force that is able to succeed as a whole.

Education Education has been a particular area of focus for me over the past 12 months. We recently hosted a few US-based MBA students at a dinner in Johannesburg; they were in South Africa to complete the practical part of their studies. It was interesting to hear what they do, and heartening to see how interested they were in our country, our practices in the property sector and what we have achieved. SAPOA has continued with its Bursary Fund, and we have continued to strengthen our relationship with the Services SETA and the EAAB. In this area we’ve had some successes. But there are also certain issues still pending – for example, our discussions regarding the changes expected in the Estate Agency Affairs Act No. 112 of 1976, for which there is still a commentary process under way. SAPOA has been involved in the public commentary process, giving its views while the process is still open. The Bursary Fund has been a success, but I should mention here that the student disruptions experienced in the past two years have to some extent had an effect on the students. However, in an effort to elevate the work that we are doing for the Bursary Fund, we have launched a mentorship programme to try to provide the students with the additional support they need. We have recently hired a Bursary Specialist at SAPOA to give extra attention to the students’ affairs; this is in addition to the training manager, Portia Mkhabela, whom we already have on board. Currently, we are looking more deeply into SAPOA’s short-term training courses to make sure that we are still offering the best. In particular we are checking the short-term courses on offer because we wish to ensure that the one-day and twoday courses are still up-to-date. Another important matter we are revisiting is the fee model that we follow, to see whether it is still relevant, especially in these difficult economic times. It is important that SAPOA continues to offer value to all its members – especially now. According to our statistics for the past year, 85 students have gone through the programme, with a pass rate of 98%.

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President’s farewell All in all, our education initiatives and focus have clearly been positive, gaining momentum and definitely worth continuing as they offer a very real benefit to the people who receive them and, as a result, to the industry as a whole. Worth noting is that SAPOA has been fortunate enough to be awarded a large contract by the Department of Public Works (DPW) to train certain members of its staff. I believe that the more we invest in skills development and formal education, the better the output delivery of the service, which would benefit the whole industry. Therefore this opportunity to provide training to the DPW nationally is something that we are very excited about. SAPOA has spent a fair amount of time interacting with the DPW – in particular with Paul Serote, the head of its property management arm. In addition to the positive outcome of the training programmes, we also believe it is very important at this stage to maintain our close liaison with the Department. We are in the process of enrolling DPW employees into the different courses, which involves doing an assessment of their skills and levels of education, so we can provide training that is pertinent to their needs. While working with institutions such as Wits, the University of Pretoria and UCT to place all members into existing courses and training programmes already on offer, we are also investigating the kinds of customised programmes that we should be putting in place. I’m looking forward to making sure it all happens, and am very

“In addition to the positive outcome of the training programmes, we believe it is important to maintain our close liaison with the Department of Public Works. We are busy enrolling the DPW members into the different courses”

excited about seeing it through to the end. I’m sure it will be something to celebrate when we see the improvements that come through in terms of content and delivery.

Leadership It is common knowledge that the DPW has sent out a policy, which was supposed to be effective from 1 April 2017, and the implementation of which was to be staggered over some time. This policy discusses how the government plans to procure space going forward, and what criteria they wish to meet, with the intended objective being to promote black economic empowerment. SAPOA has, in turn, provided commentary, which we know will have a significant impact on our industry and on the members we represent. These interactions will be ongoing. This initiative is, overall, very positive, because through it more black property owners will be introduced into the industry. The industry simply needs to better understand the mechanics of how we achieve this initiative. In a bid to eliminate poverty and to upscale the previously disadvantaged through the DPW, the government has plans of better utilising a lot of the public land it owns by releasing projects for development, essentially inviting partnerships from both the public and private sector, rather than driving for new procurement. The government will have criteria in place, whereby it will not be simply about choosing to develop a particular building because of its suitable spec, but rather about enabling an influx of previously disadvantaged black owners to enter the property market, and entrenching this in the industry over time. The scheme focuses on the development of office space, and has echoes of the successful TUHF fund initiative, which enables inner city rejuvenation of residential letting space. This concept for empowerment through collaborative development is in its early stages, but during my tenure, SAPOA facilitated a discussion with the Minister of Public Works and the banks, to try to make sure everyone has an opportunity to talk the ideas through. This has been very interesting. Working with our CEO, Neil Gopal, and his team, has been a really pleasant surprise. They are a friendly, jolly team, and despite being a team of only 15, they get through a tremendous amount of work. It has been a privilege to witness this aspect – I have really enjoyed my time with them.

“For the next 12 months, we will have some new Board members coming in, while others will be continuing in office because they have a two-year term. It is important that we have continuity, but it is equally important that we continue to attract new members to the Board as an injection of new blood” Working with the Board and making sure financial matters were being dealt with satisfactorily was also a positive experience – even from an external-audit point of view we have had a favourable review of our finances and the controls that are in place. We have once again had a clean audit, which is of course very gratifying because it is not something to be taken lightly. The Board exercises an oversight on how the finances have been utilised, and these matters have worked out quite well.

Looking Forward For the next 12 months, we will have some new Board members coming in, while others will be continuing in office because they have a twoyear term. It is important that we have continuity, but it is equally important that we continue to attract new members to the Board as an injection of new blood. Part of our mandate is to encourage transformation in the industry, and will now perhaps have an opportunity, with the one or two new places becoming available, to introduce more people of colour – which I think is significant because it will mean the promotion of transformation within SAPOA itself. We are looking into the issue quite carefully because new members bring fresh ideas into the organisation, and they will make sure it continues to thrive. On that subject, we are very pleased to introduce Nnema Byrd, a dynamic and knowledgeable member who joined the Board last year, and who comes with international experience. Something I have been fascinated to observe at Board meetings and particularly at National Council meetings during this year is SOUTH AFRICAN PROPERTY REVIEW

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President’s farewell the sheer volume of work that goes on behind the scenes of the powerful SAPOA machine. I realise now that it is unfathomable how we would manage without being able to rely on SAPOA when it comes to going through the legislation that affects the industry, the town planning issues, marketing and the education. I truly have huge amounts of admiration for the people who volunteer their time, and share their knowledge and expertise for the benefit of the greater good of the industry through the SAPOA committees. Some of the committees do not even sit on the board, and unless we go out of our way to acknowledge them, no-one would ever know of their involvement. It has been enriching to work with National Council members, and I want to extend a special thank you to the committee members for their generous contribution. Following in my footsteps will be Peter Levett, who will take the reins as President in June. I feel very excited for him. I wish him well, and I hope he has an excellent tenure. Fifty years ago, SAPOA was conceptualised and started up by Old Mutual and Sanlam members; now that it is going into its 51st year, it almost appears to be coming full circle. We seem to be going into the first year of a new era once again with Old Mutual – a momentous occasion with Peter Levett. What I noticed as a new President was that it can all seem like a very huge task – but I think once you define your focus areas, life becomes a whole lot easier because it is impossible for one person to be all over the place. I think, therefore, that my advice to Peter Levett would be along the lines of, “SAPOA is a good ship with a very good engine that works, so it is just a matter of tweaking the direction and the focus, and making sure that this is followed through during your tenure. On a much lighter note, perhaps also stock up on energy drinks while you’re at it!” As mentioned earlier, my number-one focus has been on education, and although I would have loved everything to happen all at once (which unfortunately cannot be), I know we have definitely made inroads in what we have achieved for the Bursary Fund, enhancing staff support, and the mentorship programmes. I think these all have long-term gains, and are the means to introduce new talent and new skills into the industry. It was gratifying to attend the graduation of the Property Development Programme (PDP) at the UCT Graduate Business School as well as the Property Management Programme at Wits, and to

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see experienced property people enhancing their skills and their knowledge through the programmes we offer. Moving forward will require making sure that we don’t lose momentum, and doing some tweaking to our programmes to make them more effective and more attractive, so that people continue to participate.

Something that I will take away with me is all the insight I have gained here. I have learnt a great deal in my year, which I would not have been exposed to or been aware of ordinarily in my capacity as a CEO. I have been amazed at the amount of legislation under way that has a potentially significant impact on our industry; in fact, I am much more aware of the different types of legislation that are coming through, whether they affect town planning or something different.

“My number-one focus has been on education, Networking and although I would have Another reward I take away with me is the relationships I have had the opportunity to loved everything to happen form during my term here, and which I would like to continue to nurture. I have met and all at once (which cannot forged links with a couple of CEOs of other property companies, which has been a good be), I know we have thing, and there has been much prospect definitely made inroads in for broadening my circle. That aspect in itself highlights the true importance of SAPOA – what we have achieved for and no-one should underestimate the credibility of the SAPOA Convention, at the Bursary Fund, enhancing which you might find 10 or 12 CEOs attending with whom you are going to have staff support, and the the opportunity to open a discussion and to mentorship programmes” network. This opportunity arises even more Facilities Management is a course that we need to forge ahead with because there is a dire need within the industry to have good, well-skilled facilities managers. We tend to view that skill lightly – but it’s not just about managing self-services such as cleaning and security. One needs a very good knowledge of the plant and of the machinery required to make a building run, and it is important to promote preventative maintenance rather than reactive maintenance. Serving as President has been extremely insightful, not to mention exciting, but it’s not something that one could continue to do over an extended period. I know I join most of my predecessors in understanding that the time comes when it makes sense to be very grateful for the experience, yet to also look forward to handing over to the next President. Currently, I am the Chairman of the Bursary Fund Trust but, having filled that particular role for a few years already, it is probably time to consider calling on someone new to take that over too. Coming back as the Immediate Past President and participating on the Board in the capacity of a Nonexecutive Director sits very comfortably with me – it will allow me to oversee the projects I started and in which I was very involved, to make sure we don’t lose that focus and to try to see them through to completion.

as President. The networking opportunities at the Convention are vast, and the interesting people you meet can give you a lot of insight. These are not people I would necessarily bump into on an ordinary working day, so networking is certainly something I now firmly believe in, and would continue to encourage people to participate in for their own benefit. During the current economic times many companies are tightening their belts and cutting back on the numbers of staff members who attend SAPOA conferences, but I feel this opportunity is not something to be taken lightly. Many do still participate, and we greatly appreciate the support that we continue to see.

Thank you Something I have felt humbled by was the recognition of my peers as someone who was fitting to be the President of such an awe-inspiring organisation. It has been a great honour, and the fact that I was the first black female President during SAPOA’s 50th anniversary has also been of huge significance. The professional recognition has encouraged me to push even harder for women in property – very much so – and hopefully impart the strength for a great many more women to build on.


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industry news

Abland completes iconic Alice Lane Precinct, changes Sandton skyline

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bland, one of South Africa’s leading property developers for more than 25 years, is pleased to announce the completion of the third and final building of its Alice Lane project – the new home of law firm Bowmans – located in the heart of the richest square mile in Africa, Sandton. Number 11 Alice Lane was originally a two-storey financial services building, 11  500m² in size, with two basements. The building’s total bulk now is 70  000m², with seven levels of basement housing 3  200 cars. The project, which took only six years to complete, is a premiumgrade property boasting three new office towers that were awarded a 4-star Green Star rating by the Green Building Council of South Africa for the design. These are linked by a central landscaped piazza – a pedestrian-friendly, public, open environment. This is the second building that Abland has developed for Bowmans. “The piazza is a real differentiator for this project – Abland wanted it to be easily accessible to the public of Sandton,” says Janet Glendinning, Development Manager at Abland. “Originally, access to the piazza was planned through the office cores from the basement, which were security-controlled. As we rolled out each building it came to our attention that we had to provide lifts and escalators to get the public onto the piazza without the hassle of going through security, incorporating convenience and service retail. For us timing is key and we believe that one has to be in the market at the right time to attract blue-chip tenants such as Bowmans.” With every big construction project come development challenges that need to be dealt with cautiously. For this project, it was keeping the original bank intact and occupied while contractors commenced with work. Insufficient parking during Phase 1 for two years into the project, as well as the excavation of bulk earthworks, were other challenges Abland had to work around. “The location to amenities such as financial and legal services as well as the convenience of food outlets plays a significant role in achieving the Green Star SA rating, because it makes transport and access to the building more efficient,” says Glendinning. “Abland is dedicated to developing property in the natural environment, and enhancing the quality of life while making sound business sense.”

Alice Lane

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Rising tide for Strand Beach in Sea Point

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he new Strand Beach Sea Point has been designed to achieve a balance between luxury and contemporary appeal while offering residents all of the benefits of living on one of South Africa’s most desirable stretches of coastline. The innovative design opens up each apartment to natural light and views over the Atlantic, while elegant, contemporary finishes add a special touch to what will likely be a sought-after address in upper Sea Point. “We recognised the potential of this property and are very excited to start work on realising Berman Brothers Group’s (BBG) vision for it,” says Paul Berman. “The property’s elevated position on the slopes of Signal Hill allows for sweeping sea views and wind protection, while its position in the middle of the Atlantic Seaboard gives

easy access to the city and to Cape Town’s popular beaches.” Once complete, Strand Beach Sea Point will offer 34 contemporary one- , two- and three-bedroom apartments in a secure, access-controlled perimeter. Ground-floor flats will each have their own private garden and pool, in addition to the communal entertainment deck and pool area. “Sea Point has enjoyed a successful renaissance over the past 10 years,” says Berman. “Testament to this is the increase in commercial and residential property values on the back of a safer and cleaner urban environment, and strategic property developments such as The Point Mall – a BBG and HCI Properties rejuvenation – which has attracted a variety of new businesses and boosted the local micro-economy.”

Attacq appoints new COO

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SE-listed capital growth company Attacq has appointed a new Chief Operating Officer. Jackie van Niekerk joins the team with more than 14 years of property experience. After starting out as a property manager, she worked her way up to her most recent position as the CEO of Pivotal. “Attacq is fortunate to strengthen its management team with the appointment of Jackie, who has a proven operations track record in the property industry,” says Attacq CEO Morné Wilken. “Her experience in property and the business world will add real value in her new leadership role.” Wilken explains that the role will lead the asset management, business operations, human capital and risk management teams. Van Niekerk will provide strategic support and advise the Executive Committee on matters pertaining to profitability and strategic initiatives. “I’m excited about the appointment as COO of Attacq,” Van Niekerk says. “I’m confident I can add real value, and strengthen and grow the South African property portfolio to the benefit of shareholders and stakeholders. I look forward to working with the strong and capable leadership team already in place at Attacq. I received a warm welcome from everyone here and have already hit the ground running!” Van Niekerk is a revered leader and a pioneer for women in the property sector. She is also a wife and a mother. “Attacq is a fast-growing, JSE-listed company – and as we grow, so must our team’s skills set,” says Wilken. “As the developers and owners of  Waterfall City and the Waterfall logistics hub, we require a range of skills – and Jackie definitely adds to our skills pool.”


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Spear REIT Limited continues on acquisition path

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pear’s regionally focused strategy is looking at all asset types – commercial, industrial, retail, residential and hospitality – with the latter category marking a major win with the acquisition of the five-star 15 on Orange Hotel in Cape Town. This has doubled the company’s hospitality assets, which also include the four-star Double Tree by Hilton at Upper Eastside in Woodstock. The investment into hotel assets is part of the Spear investment strategy to obtain diversity across asset types as a regionally focused business. “We are particularly satisfied with the R298million acquisition price of 15 on Orange, given that it cost the original developer more than R750-million to build,” says Mike Flax, Chief Executive Officer of Spear REIT Limited. “This demonstrates to our investors Spear’s credentials as a value-investor, seeking out acquisitions in the market that we believe hold excellent future value or value-added potential through skilled asset management.” The Group took transfer of two Tygervalley properties after year-end, namely Selective House and the Werksmans Building, for R13,2-million and R41,2-million respectively. As demand in the Cape Town CBD grows, Spear has stamped its presence commandingly with the R389-million acquisition of an iconic property, 2 Long Street. Mega Park in Bellville, acquired in March for R379million, increases Spear’s industrial assets in Cape Town and added 85 000m² of lettable space to the portfolio. The George

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Virgin Active building acquisition, for R22-million, is envisioned to have simple daily management as the high-quality building has just one tenant in Virgin Active. “The property is situated in close proximity to strong residential nodes and within close proximity to the picturesque Fancourt Golf Estate. This gym is currently the only Virgin Active gym in George,” Flax says. The company’s greatest focus for the next year is to achieve the updated distribution guidance announced during its results presentation of between 76c and 78c dividend per share. “This will talk directly to one of our founding strategies, which is to continuously focus on growing our income and ensuring distribution growth is achieved on an annual basis,” says Spear Managing Director Quintin Rossi. “To effect this, we would need to remain proactive in the areas of asset, property and financial management to ensure that occupancies remain at high levels across the portfolio.” At year-end 28 February 2017, assets under ownership were R1,46-billion – and after taking transfer of the assets mentioned above, this will increase to more than R2,6-billion. “This is an 83% increase in asset value and a 77% increase in gross lettable area in a period of just seven months,” says Rossi. “These are growth figures that we are incredibly proud of, and our team is working hard at sustaining the growth already achieved as we continue on our mission to be the leading Western Cape-focused REIT.”


ATTACQ IS DEVELOPING GAUTENG’S NEW INTEGRATED CITY THAT WORKS Attacq is developing Waterfall City, a new integrated city in the heart of Gauteng, where people can work and play – with offices, malls, homes, recreation and amenities completing the picture. Waterfall is currently Attacq’s core development and has been planned and designed according to new urbanism principles to include the centrally located 1.3ha Waterfall Park, the worldclass Mall of Africa, various office developments, Waterfall is set to pedestrian-friendly landscaped sidewalks and lead the market in much more. terms of environmental sustainability in Gauteng. Attacq has adopted strict urban design principles in Waterfall to guide the development of new buildings, and remain in line with international best practices. Many of the buildings in Waterfall City can be said to be sterling examples of environmentally sensitive design principles. The energy and water ratings of all buildings are constantly measured, as is best practice in terms of transparency and provides guidance on where we can improve most efficiently. During construction, more than 27 000 jobs will be created in Waterfall and upon completion around 60 000 people will work in the city and surrounds.

We live in a tough economic climate and businesses need to find clever ways to cut costs without cutting corners. Several large businesses have realised the value of relocating their regional offices to Waterfall City with the business benefits that corporate consolidation brings. The Waterfall development pipeline for the next 10-15 years holds significant investment opportunities and will add real value to the province and the country’s attractiveness as an investment.

DEVELOP ATT House, 2nd Floor, Maxwell Office Park 37 Magwa Crescent, Waterfall City T +27 10 596 8892 | T +27 87 845 1136 | F +27 86 242 9247 reception@attacq.co.za | www.attacq.co.za

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industry news Emira Property Fund announces R364-million BEE transaction

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mira Property Fund has announced a transaction that will see five percent of its shares in issue being owned by strategic black partners. The transaction furthers Emira’s commitment to transformation. Letsema Holdings and Tamela Holdings, through their 100%-owned subsidiaries, will both subscribe for 2,5% each, amounting to 26  133  364 Emira shares in total. The combined five percent will have a market value of R364,2-million. Emira CEO Geoff Jennett explains that this transaction secures a strategic, sustainable and commercially driven BEE shareholding, which underscores Emira’s commitment to achieving sustainable BEE ownership. “Emira is serious about transformation and empowerment,” he says. “With this transaction, our new shareholders and BEE partners will add valuable strategic input to Emira at board level. Both parties are making a significant investment in Emira, and they’re as invested as we are in improving Emira’s share price and business for the benefit of all stakeholders. They’re committed to remain invested in Emira for at least five years.” As an added benefit, the transaction will also strengthen Emira’s balance sheet through the issue of new shares at an undiscounted price. It will also lower Emira’s gearing ratio.

Geoff Jennett Emira Property Fund CEO

Tamela is a black-owned and managed investment, corporate-finance advisory and fund management company founded by Sydney Mhlarhi and Vusi Mahlangu in 2008. Mahlangu is also a nonexecutive Director of Emira, making this a related-party transaction. As such, a fairness opinion has been compiled by an independent expert. Letsema Holdings is a privately held investment holding company founded by Isaac Shongwe and Derek Thomas in 1996, with interests in management consulting, third-party investment management and proprietary investments. The proposed BEE transaction constitutes a specific issue of shares for cash in terms of the JSE Listings Requirements and, as an ordinary resolution, requires the approval of 75% of Emira shareholders.

Vukile delivers 7,1% full-year distribution growth

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ukile Property Fund reported 7,1% growth in dividends per share for the year to 31 March 2017, delivering on its market guidance and advancing its track record of unbroken growth in dividends since listing in 2004. Laurence Rapp, CEO of Vukile Property Fund, notes this has been a momentous year for Vukile, which has successfully repositioned itself as a defensive and conservatively geared and managed retail REIT. To boost its retail assets, Vukile acquired Synergy Income Fund’s R2,5-billion portfolio of assets, a 25% stake in the newly opened Springs Mall in Gauteng, and the remaining 50%

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of Pine Crest in KwaZuluNatal. It also completed the revamp and extension of East Rand Mall and sold its R1,2-billion sovereign property portfolio. “Retail property has proven the best and most defensive sector through the cycle in South Africa,” says Rapp. Vukile has a R1,5billion war chest, which creates a springboard for its increased international growth. It thus invested a further £10.7-million in UK-focused Atlantic Leaf, growing its stake to 29,6%. “Our growing international investment strategy is focused mainly on developed Europe and the UK,” says Rapp.

“It responds to the difficult domestic property fundamentals and diversifies our risk away from local challenges. It also provides us with exposure to global tenant profiles.” JSE-listed Vukile is now a leading internally managed retail REIT, with total assets of R15,4-billion. About R13,3billion, or 85%, of this is invested in direct property assets, and the remaining 15% is invested in strategic indirect property assets. Retail property assets make up 91% of Vukile’s direct portfolio. Its indirect portfolio includes an investment in Gemgrow Properties and Atlantic Leaf, as well as an investment in Fairvest Property Holdings.


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New life for Windhoek’s CBD

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indhoek has seen some significant developments over the past few years, including the construction of FNB’s head office and the Hilton Hotel. Addressing a business forum in September last year, Mayor Muesee Kazapua said, “These mixed developments in our central business district are clear testimony that our business community is responding well to the city’s call to revitalise the CBD.” Other key developments in the area are the mixed-use 77 on Independence Avenue and the multimillion-dollar phased refurbishment of Gustav Voigts shopping centre. 77 on Independence, which offers a combination of retail, residential and office space, links Independence Avenue to the Old Breweries Craft Market, a precinct that already boasts some high-quality retailers, businesses and service providers, a gym and an art gallery. The three-level Gustav Voigts complex, located beneath the four-star Avani Hotel and Casino, was the country’s very first mall in the 1970s. “We’ve undertaken this refurbishment partly as a result of the growing demand for upscale inner-city shopping, driven by the

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professionals in the surrounding offices, banks and government buildings,” says Carel Fourie, CEO of Oryx Properties, the owner of the centre. The Avani Hotel and Casino has similarly seen an increase in patrons over the last year, according to general manager Rudie Putter. “We recently revamped the casino, and now offer a bigger, more modern salon privé.” Ronald Uwukhaeb, marketing manager of the Hilton Windhoek, says, “In 2011, Hilton Windhoek became Namibia’s first five-star accommodation establishment. Since then, Windhoek has certainly become a hub for retailers and professionals. There are many plans for the revival of the CBD, which are greatly supported by the locals and the retailers.” The city is putting its money where its mouth is, too. “Council stands ready to avail land for developments that it deems will make positive impacts in the livelihood of our people, particularly in the western suburbs of the city,” Kazapua said last year. The City has also committed to operational upgrades to improve traffic flow as well as improved park maintenance.


industry news

Atterbury gets top honours at international VIVA Awards

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tterbury Property’s development of the iconic Mall of Africa secured its place among top honourees from around the world at the highly coveted international VIVA (Vision, Innovation, Value, Achievement) Awards, announced in Las Vegas in May this year. The VIVAs are an initiative of the International Council of Shopping Centres (ICSC) and are the most recognised achievement for professional excellence in the global retail real estate industry. They honour the most outstanding examples of shopping centre design and development, sustainability, retail store design and marketing worldwide. Finalists first have to go through a rigorous regional round before they can be considered for the awards.

As a gold winner of the South African Council of Shopping Centres’ (SACSC) Retail Design and Development Awards, the ICSC’s regional awards programme, the Mall of Africa was automatically entered in the prestigious VIVA awards. The Mall of Africa holds the honour of being the only mall on the African continent to achieve in the awards in this category this year. Mall of Africa is South Africa’s largest shopping mall ever built in a single phase. With more than 130 000m² of retail space, it is home to more than 300 shops, restaurants and services. The mall’s unique architectural appearance is inspired by Africa’s geological features and iconic landscapes, leading the way for its achievement in the VIVA design and development category. Cobus van Heerden of Atterbury Property Development says the Mall of Africa was inspired by leading international trends in design elements and underpinned by solid retail property fundamentals. “As developers of the Mall of Africa, Atterbury is thrilled it has received international recognition among the most esteemed shopping centres across the globe,” says Van Heerden. “From conception to design and development, the mall was envisioned to create a world-class mall with a unique shopping experience unlike anywhere else. Every detail of the Mall of Africa caters to delighting its customers, supporting the trade of its retailers and being an asset for its community. To receive recognition in the VIVA Awards reaffirms our commitment to delivering exceptional developments that offer designs and experiences that are second to none.”

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Understanding the terms of your rental deposit is critical

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ne of the most common areas of conflict between letting agents and tenants is around the refund of the tenant’s deposit. A particular area of concern is the time it takes the agent or landlord to pay back the deposit, as many tenants want to use these funds for a deposit for their new rental. “Fortunately, this conflict is easily avoided by carefully reading the lease agreement and taking special note of the contractual obligations you are agreeing to upfront,” says Paul Stevens, Chief Executive of Just Property. Specifically related to the repayment of deposits, lease agreements usually stipulate that an outgoing inspection will be carried out within seven days of the termination of the lease,

and if no damages are discovered, that the deposit will be refunded within the seven-day period. However, if damages do need to be repaired, the landlord or letting agent is usually permitted another 14 days to complete the repairs, provide the ex-tenant with the invoices as proof of the costs, then pay back the difference in the deposit. This means that it is possible that the repayment period could stretch to 21 days in total, in keeping with the terms of the lease. Many tenants do not fully understand this clause, and that is where the potential for conflict arises. “If you feel that these obligations or restrictions are in any way onerous or unreasonable, the time for

negotiation is before you’ve signed the contract,” says Stevens. “If you understand what is expected of you over the term of your lease, it makes for a far easier and less complicated relationship between all parties.” These are some of the types of clauses that relate to the handling of deposits that you should be aware of: ● The deposit may be used by the landlord/rental agent to cover the costs of any repairs or damages for which the tenant is liable when he/ she vacates the premises, or to cover any outstanding payments due by the tenant. ● The damages deposit will be increased each year in proportion to the rental increase. The tenant must pay the top-up amount to the deposit in at the same time as

their first increased rental payment in the next year. ● The agent must keep the deposit in an interest-bearing trust account for the duration of the lease. ● The tenant may not at their own discretion use the deposit in place of any month’s rental, including the last. If the agent has to use the deposit to cover a month’s unpaid rental, the deposit immediately becomes owing to the agent. “As you can see, there are clauses that protect both the tenant and the landlord or agent,” says Stevens. “Be sure you have fully understood the requirements of your lease, have queried any problem areas, and have entered into an agreement with your agent or landlord that is satisfactory to you both.”

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industry news

Riverfields: growth at the heart of the Aerotropolis developed by JT Ross. Multinational brands such as DHL, DB Schenker, John Deere, Teraco and Bosch already call Riverfields home. “Riverfields Development Company has invested R450-million in infrastructure,” says Erasmus. “To realise the full potential, another billion rand will be invested in infrastructure as part of the Aerotropolis roll-out. We are also in discussions with public sector partners to unlock further investment in roads, power supply and other bulk services.” Emphasis is also being placed on a total integrated development. Walkways, bike lanes, non-motorised transport and internet/fibre connectivity are being planned. Riverfields Management Association together with EMM will oversee security, architectural standards, maintenance of public areas and other urban management services in an integrated manner. A wetland will form a central conservation area with leisure benefits for the community. Planned project pipelines include a regional shopping centre, neighbourhood retail facilities, institutional users (schools/medical services), a four-star hotel and conference venue, and corporate offices. In addition, Riverfields will cater to the full spectrum of residential market requirements in line with an inclusionary housing ethos and a commitment to more compact and efficient land use.

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mixed -use retail residential

iverfields is a new-generation mixed-use development that forms an integral part of the Ekurhuleni Aerotropolis. It is a planned community where sustainable principles are ingrained in the design, positioned less than 15 minutes’ drive from OR Tambo International Airport with immediate access to the Albertina Sisulu Freeway and the R23. “Riverfields is the prime investment address in the Aerotropolis and Albertina Sisulu Corridor – a strategic investment area that has been prioritised as a leading future economic growth node in the greater Gauteng city region,” says Lardus Erasmus, director of Riverfields Development. “To unlock this potential we are working closely with authorities to ensure the necessary infrastructure is in place and that we exceed investor expectations. “The total development potential is between six- and eight-million square metres of bulk. The nett present value on completion will be between R50-billion and R80-billion. Up to 300  000 permanent jobs will be created, and potential income from rates and taxes will be R950-million per year as the development matures. Guaranteed power supply, superior design and security features are just some of the standard features we offer investors.” Riverfields is also home to the state-ofthe-art Plumbago business and logistics park

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Heidelberg Mall undergoes exciting changes for fantastic new retail

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eidelberg Mall is setting the stage for bigger, better and more convenient shopping as it undergoes changes to welcome even more fantastic retail options at the centre. Over the coming months, several retailers will be moving to different locations in the mall, starting with firm favourite Don Amare Butchery, which will relocate across the passage into larger new premises. Shoppers can also look forward to enhanced banking as Absa undergoes an expansion, opening in a new, bigger branch that offers full-on banking from 1 July. Absa’s expansion comes as clientele and demand for more services continue to grow. In addition, the ever-popular Verimark will have a new home as it moves next to Mugg & Bean on 1 July. These changes will complement the wide assortment of top-notch retailers that have joined the Heidelberg Mall line-up in the last two months, including the delicious Asia Wok at Entrance 3 and the introduction of Capitec ATMs near Entrance 1. Fashion-forward Studio 88 and Gadget Paradise also opened their doors recently and can be found at shop 60 and at Entrance 1 respectively. Heidelberg Mall is delighted about being able to offer shoppers more choice than ever before. General Manager of Heidelberg Mall Clinton Janse van Rensburg says the changes and additions ensure the mall continuously improves its offering with the very best brands and retail variety. “We’re absolutely thrilled that Heidelberg Mall is in a strong position to bring shoppers new, bigger and better stores that enhance its outstanding mix of more than 120 stores,” he says. “This will, as always, be complemented by easy access, generous parking and the great service our shoppers have come to expect.”

Anton de Jongh ants@arc.co.za 082 446 3626 Mo Phala mo@arc.co.za Madi van Wyk madi@arc.co.za 235 Grosvenor Street Hatfield Pretoria Tel: +27 12 362 7350 arcpta@arc.co.za www.arc.co.za SOUTH AFRICAN PROPERTY REVIEW

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industry news

Signalling the end for Sandton Central traffic woes

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he Sandton Central Management District (SCMD), in conjunction with Johannesburg Metropolitan Police Department and Traffic Freeflow, continue to work towards significant improvement to traffic signals and traffic flow in Africa’s financial hub. According to the Johannesburg Road Agency (JRA), on average about 50 of Johannesburg’s 2 135 intersections experience signal downtime every day. Ageing signal infrastructure and lack of secure electricity supply account for about 25% of faults reported daily. Addressing the oftenintermittent electricity supply to traffic signals, Sandton Central has sponsored six uninterrupted

power supply units for traffic signals at key intersections. “We have invested in measures to ensure that key traffic signals in the district are always on,” says Elaine Jack, City Improvement District Manager for SCMD. “Also, we have partnered with the JRA on a number of key initiatives, including a traffic signal forum where we actively engage with both the JRA and Eskom technicians in order to reduce the time during which traffic signals are down. “We will work closely with JRA management and traffic engineers to re-look traffic signal timings to ensure the best traffic flows as well.” SCMD is also thrilled by the City of Johannesburg’s recent announcement that it will be

allocating an additional R200-million over the next three years to improve traffic management, paying special attention to traffic lights and the replacement of copper cabling at key intersections. Looking ahead, SCMD would like to see all CID traffic signals resynchronised – but the imminent arrival of the Rea Vaya Bust Rapid Transit System in Sandton Central will require the timings to be changed again, which according to the JRA could prove to be a costly exercise. “There has already been a great improvement,” says Jack. “We are experiencing less traffic signal outages within Sandton Central as all our traffic signals have been re-cabled and upgraded.

Elaine Jack, CID Manager for SCMD

Going forward, we hope to engage with the JRA in order to open additional road access into Sandton Central, which is currently restricted to the five core entries and exits.”

Billion Group opens R130-million, four-star Mthatha hotel

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frican property development company Billion Group celebrated its inroads into hotel development with the opening of the fourstar, R130-million Mayfair Hotel in Mthatha, adjacent to the company’s R1,4-billion BT Ngebs City regional mall. Billion Group founder Sisa Ngebulana, who grew up in Corana just outside Mthatha, was on hand for the opening. Business leaders and dignitaries – including Eastern Cape Premier Phumulo Masualle and SA Tourism CEO Sisa Ntshona – saw the 96-room hotel at full capacity for the event. The opening launches Billion Group’s phased precinct development around the major South African malls it has developed in recent years. The three-storey hotel boasts a three-room penthouse suite, a two-room presidential suite, executive suites, normal suites and several conferencing halls. It will bring world-class entertainment to the region when ground is broken on a casino and entertainment complex – construction on the next phase of the BT Ngebs City development is scheduled to start in the latter part of this year. Ntshona described the hotel as a coup for tourism in the region. “Tourism is the new gold, and its impact goes far beyond the establishments themselves,” he said. “It is not just about leisure, but increasingly about business and conferences. Business tourism is becoming increasingly relevant.” About 750 direct and indirect jobs were created during the hotel’s two-year construction phase, with a further 70 permanent positions during its operational phase. This excludes downstream employment, such as laundry and other outsourced services. Aside from providing much-needed accommodation for business travellers, Ntshona said the hotel offered conferencing facilities for up to 120 delegates.

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Showcase for the world’s fastest-growing green building economy

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outh Africa is at the forefront of green building technology, and Tshwane is leading the pack. Not only has its new headquarters received a 5-Star Green Star SA certification, but Tshwane is one of only four international cities to participate in a new partnership between the World Green Building Council and the World Resources Institute-led Building Efficiency Accelerator in a bid to double the rate of energy efficiency in buildings by 2030. Dorah Modise, Chief Executive Officer of the Green Building Council of South Africa and a keynote speaker at the annual Green Building Conference hosted recently by Tshwane as part of its Sustainability Week, said, “The environmental benefits of green building are beyond dispute. With the construction and ongoing operation of building consuming 40% of total energy usage worldwide and generating one-third of all carbon emissions, green building is a major part of the solution to addressing climate change and scarcity of resources. “South Africa has the highest green building share in the world, trumping countries such as the UK and the US, China, Singapore, Germany, and the historical green building market leader Australia. One

can attribute this to a number of factors, but most notable are the glaring resource constraints and escalating utility prices. Electricity shortages and, most recently, the drought that’s been with us for the past two to three years have increased the levels of awareness across the board. The property sector is just one of the sectors that are beginning to show leadership in sustainability thinking.” According to the Green Building Council of South Africa’s “Green Building in South Africa” report, the average cost premium of building green over and above the cost of conventional construction was just five percent at the end of 2014. Modise purports that costs will inevitably come down. “In the South African property industry, the question that is now being asked is, ‘What is the price of not building a green building?’” she says. “A certified green building creates a differentiated product in the market, which is viewed as being technologically advanced as well as socially and environmentally responsible (where these claims have been independently verified. These attributes can be positively linked to the company brand and image of the owner and/or the tenant.

“While the private (commercial sector) is in the lead on Green Star-certified buildings, in recent years we have seen an exponential growth in public sector takeup. We have certified 13 buildings owned by national, provincial and local government and state-owned enterprises. What is even more encouraging is that the growth in green buildings within the public sector is across the board (i.e. from environment to economic and socialbased departments). “Local government remains the largest sector of government where there is maximum potential for green building, and we have been encouraged by the commitment of the South African Local Government Association to take action in this space, as well as by the commitment from the City of  Tshwane, which is part of our Green Building Leader Network.”

FROM LEFT Manfred Braune, Alex Phakathi, Lisa Reynolds, SAPOA CEO Neil Gopal, Nkosinathi Manzana, Colin Devenish, GBCSA CEO Dorah Modise, Rudolf Pienaar, Faieda Jacobs, Seana Nkhahle, Anthony Stroebel and Brent Wiltshire (Not present for the photo: Deen Letchmiah)

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education, training & development

White Paper on post-school education and integration: how it can be incorporated in the commercial sector The White Paper, as developed by the Department of Higher Education and Training to guide its delivery mandate, seeks to set out strategies to expand the current provision of education and training in South Africa, to improve its quality, to integrate the various strands of the post-school system, and to set out modalities for ways in which employers in the public and private sector can play a role in the creation of a skilled labour force

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he White Paper sets out policies to guide the Department of Higher Education and Training and the institutions for which it is responsible to contribute to building a developmental state with a vibrant democracy and a flourishing economy. It sets out a vision for: ● A post-school system that can assist in building a fair, equitable, non-racial, non-sexist and democratic South Africa; ● A single, coordinated post-school education and training system; ● Expanded access, improved quality and increased diversity of provision; ● A stronger and more cooperative relationship between education and training institutions and the workplace; ● A post-school education and training system that is responsive to the needs of individual citizens and of employers in both public and private sectors, as well as the broader society.

The current state of the property sector according to the Property Charter research on skills development According to the 2016 State of Transformation Survey, the property sector skills development target is proving to be a challenge in achieving. The property sector achieved an overall poor score of 69% (10,14 points against the 15 points score) against target. According to the Property Charter analysis, the key concern on lack of achievement on this element is because the sustainability and future of transformation is reliant of skills development. Creating the pool of people who will in the future carry on the base of what was development can only be driven under skills development.

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The role of skills development in transformation, according to the Property Charter ● To support economic growth that results in employment creation and poverty eradication. ● To address the skills shortage challenges and encourage development of core, critical and scarce skills among black employees, with critical and scarce skills identified as such by any SETA. ● Core refers to skills that are adding value to the activities of a business in line with its core business and industry (broadly). ● Core skills are areas of measured business that cannot be outsourced, generally within the production/operational part of measured business value chain, as opposed to supply side services or downstream operations. ● There is an emphasis on developing core technical skills and competencies among black employees to ensure that training and skills development initiatives ultimately makes suitably qualified black employees available to fill the strategic leadership and operational positions. ● Foundation of skills development elements of B-BBEE codes is based on provisions of SD Act No. 97 of 1998, SDL Act No. 9 of 1999 and NSD strategy.

SAPOA’s role in supporting the transformational agenda of the property sector SAPOA’s education department’s mandate in responding to the current skills development challenges sets out to: ● Increase knowledge and skills of the property industry among employees within the industry;

● Ensure that the content of programmes/workshops and other educational interventions is aligned with industry needs; ● Raise employability and competence of the practitioners and professionals in the industry.

SAPOA Education and Training department realises these aims through the implementation of the following projects ● Pareto Bursary project (in partnership with our company members and the Services SETA); ● The Blue Print for Real Estate Education courses (In partnership with Wits); ● Project Management for Property education courses (Department of Public Works, Joburg Property Company); ● Management of workshops implemented to update the industry on the latest information in collaboration with specialists in various fields; ● Customisation of training requirements while ensuring quality assurance with our institutions of higher learning; ● The implementation of work integrated learning (WIL) with our bursary funders, and ensuring that our graduates are afforded the opportunity to attend structured vocational work and 12month internship programmes after they have completed their qualification. Contact: Portia Mkhabela, Education & Training Manager at SAPOA t: +27 (0)11 883 0679 e: education.manager@sapoa.org.za


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education, training & development Western Cape Career Evening As part of opening up doors to our future leaders in the property sector, the Western Cape Regional Council, in partnership with Growthpoint and the Association of Built Environment Students, hosted 40 students for an evening of networking. The event was attended by SAPOA Bursary students from the University of Cape Town who are studying towards a BSc in Property Studies, funded by the Services SETA. Students were exposed to captains of industry who gave input to their current studies and shared their insights into current trends in the industry. This is another effort of collaboration with SAPOA and its key strategic partners to ensure sharing of best practices with our students and our industry. FROM LEFT Western Cape Regional Chairman Marlon Parring, Lauren Turner and David Stoll of Growthpoint, Robyn Campbell of UCT/ABES, Professor Franรงois Viruly of UCT

SAPOA held the following training programmes: Property Management Programme (PMP) The Property Management Programme took place between 22 and 26 May 2017 at the University of Johannesburg. This course responds to distance-learning needs for delegates who are not able to attend weekly classes in Johannesburg. The programme is designed for employees or employers who operate in the property management environment. The objective of the course is to provide participants with a comprehensive overview of the processes and decisionmaking involved in a property management work environment. Delegates for the Property Management Programme, in partnership with the University of Johannesburg

Western Cape Workshop: Method of Measuring Floor Areas (MOMFA)

Delegates for the Western Cape MOMFA Workshop, facilitated by Rodney Alport of Genesis Concepts

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The 20 delegates who attended the Cape Town workshop were a mixed group, ranging from architects to land surveyors, property owners and facilities managers. The lecture was presented by Rodney Alport, Managing Director of Genesis Concepts, a company that develops CAD and facilities management software. The course was presented using live data from current building floor plans to explain the meaning of the definitions and visually show how they are applied to the various building types. This allowed for everybody to participate and ask questions. Delegates left with a clearer understanding on how to implement and maintain the SAPOA Method of Measurement document to calculate lease areas.


One Sasol / One Paragon Paragon Architects Paragon Interface

See the Sasol story at www.paragon.co.za

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property education

The School of Construction Economics and Management earns accreditation for all its property degrees from the South African Council for the Property Valuers Profession (SACPVP) The School of Construction Economics and Management has received accreditation from the South African Institute for the Property Valuers Profession (SACPVP), a statutory body established on 1 January 1983 as the South African Council for Valuers, which was replaced by the SACPVP, established by Section 2 of the Property Valuers Profession Act, 2000

“The Wits program is comprehensive in its coverage and distinctive in its inclusion of training in entrepreneurship and leadership” Prof. Karen Gibler Georgia State University Executive Director, International Real Estate Society

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ACPVP’s evaluation of the property degrees included a thorough review of the teaching and learning facilities at the school and the quality of the programmes as shown in the different external reviews done since the programmes started in 2013. SACPVP interviewed staff and students, and conducted a review of programme documents, including sample student work. “Receiving accreditation is a significant achievement, one that recognises outstanding performance by the academics in the programmes,” says Samuel Azasu, an Associate Professor at the school who designed and launched the new programmes in 2013. “The academics in the programme, especially Dr Kola Akinsomi who coordinates the undergraduate programmes and Professor David Root who heads the school, should be commended for their commitment to providing quality education to the South African property market. Professor Root

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in particular deserves commendation for fostering an atmosphere of innovation as well as providing the resources necessary to get this done.” Established in 1983, the SACPVP sees itself in partnership with the state and the valuers profession to promote a high level of education and training of practitioners in the property valuers profession so as to facilitate full recognition of professionalism in the valuers profession, both locally and abroad. It enjoys full autonomy, although it is accountable to the state, the profession and the public for the fair and transparent administration of its business in the pursuit of its goals. The School runs BSc, postgraduate diplomas, MSc and doctoral degrees in real estate as well as a range of executive courses, supported by a staff complement of six PhD holders educated in Sweden, the UK and Singapore, three lecturers educated in Sweden and South Africa and a few session lecturers, making this the strongest academic team in real estate in South Africa. “We are extremely pleased to have achieved this designation,” says Azasu. “Accreditation is a rigorous process, but one that we welcome as a continual quality improvement mechanism. Earning the SACPVP accreditation is another measure of our excellence as a leading provider of real estate education in South Africa, and reflects our commitment to

SA Council for the Property Valuers Profession (SACPVP) is one of six councils operating in the built environment. The others are: ●● Council for the Quantity Surveying Profession (SAQSP) ●● South African Council for the Architectural Profession (SACAP) ●● Engineering Council of South Africa (ECSA) ●● South African Council for the Landscape Architectural Profession (SACLAP) ●● Project & Construction Management Council (SACPCMP)

Michael Lacour-Little

providing world-class skills to a maturing real estate market and serving as an agent of transformation in the property market. We also owe a debt of gratitude to international academics such as Karen Gibler (Georgia State University) and Michael Lacour-Little (California State University, Fullerton), who helped with the programme design and reviewed the early versions once the programmes were implemented. The last reviews before accreditation were done by Gibler, David H Downs (Virginia Commonwealth University) and Anthony Owusu-Ansah (Ghana Institute of Management and Public Administration). Their early and critical feedback was instrumental in ensuring the programmes became competitive.”

The council’s main functions are: ●● The registration of professional valuers, professional associated valuers and candidate valuers; ●● The maintenance of their integrity; ●● The enhancement of their status; ●● The improvement of their academic and other qualifications, and of the standard of services rendered by them; ●● The protection of members of the public in their dealings with registered persons; ●● The drawing up and keeping up to date a register of all registered persons.


property education

Real estate at Wits

Lebogang Shole, Executive Head for Facilities at Vodacom

Taz-Wynne Superman, Senior Architectural Technologist at Paragon Architects

Amy Hills, Investment Analyst at Nedbank

Taz-Wynne Superman, Senior Architectural Technologist at Paragon Architects Why did you choose the programme? We work with a number of property developers. Knowledge in this industry gives you the edge over your competition. Conveying the knowledge that you will obtain in this course in the property industry (while being an architect) will give you that competitive edge.

What was your experience studying here? The course is hard work. The quantity of work is challenging – but it is worth all the time you will put in.

How have your studies prepared you for work? In today’s economy, it is an advantage to gain knowledge. For example, as architects, we need to make the building design scheme work together with the developer in order to make it feasible. Market studies in particular allow us to match project design to tenant attributes and needs. The Wits programmes include market analysis, which provides specific tools that allow you to generate insights to improve your design solutions. These and other skills allow me to participate more meaningfully in the development process beyond architectural design.

Real estate describes land, buildings and the rights attached to them. Its role cuts across every aspect of South African society. Businesses need the services of commercial property in the form of offices, shops and factories in order to do business. Workers need housing and hotels as well as recreational facilities. The property firms developing and managing these assets are an important source of employment. The assets themselves constitute enormous wealth and contribute to economic growth. These assets make our cities liveable – and when developed sustainably, they limit the environmental consequences of our development activities. If you decide to study at Wits, you will develop working knowledge of the tools and processes at the cutting edge of the discipline, giving you the skills to navigate a maturing South African market and beyond. You will encounter a mix of young and senior faculty members who are educated around the world and passionate about teaching and research. You will also interact with guest speakers and colleagues from the industry, enabling you to extend your professional network at the heart of Johannesburg, the biggest and the most vibrant real estate market on the continent. We form the strongest academic team in the country and we are the only department in the country whose real estate programmes have been consistently benchmarked against the best programmes in Europe and North America. Our design of the BSc programme is an international case study and was published in the Journal Of Real Estate Literature, an American Real Estate Society journal, in 2016. Our postgraduate diploma programme is also the only nonUS university programme that has been approved to satisfy part of the requirements for the Certified Property Manager designation. I invite you to join a cutting-edge programme at the heart of the largest real estate market in Africa for a worldclass educational experience. Samuel Azasu, Coordinator of Postgraduate and Executive Programmes

What advice would you give to anyone looking to study here? Pick the brain of the lecturers. The knowledge they possess is plentiful. Try to extract as much as you can from them while working as hard as you can. Take in as much as you can – although it is a lot! SOUTH AFRICAN PROPERTY REVIEW

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planning and development

SAPOA participates in the review of the integrated development planning process 2017/18 As required by the Municipal Systems Act No. 32 of 2000, each municipal council, within a prescribed period after the start of its elected term, must adopt a process set out in writing to guide the planning, drafting, adoption and review of its Integrated Development Plan By Mumtaz Moola

A municipal council must review its IDP annually. IDP review is the assessment and evaluation of the IDP and municipal performance. The review of the 2017/18 IDP will inform the municipal Performance Management System (PMS) and the Medium Term Expenditure Framework (Budgets). As indicated, the IDP is a strategic plan and the PMS is a monitoring tool. The municipality will also prepare a Service Delivery and Budget Implementation Plan as an implementation tool, as stipulated in the Municipal Finance Management Act of 2003

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ccording to Section 34 of the Municipal Systems Act No. 32 of 2000, every municipality is required to prepare an Integrated Development Plan (IDP). This is a five-year business plan for the municipality to address developmental priorities and objectives through economic and social initiatives, as well as planning capital investment in physical and social infrastructure. It includes a vision for longterm development based on an assessment of the existing levels of development, 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. A municipal council must review its IDP annually. IDP review is the assessment and evaluation of the IDP and municipal performance. The review of the 2017/18 IDP will inform the municipal Performance Management System (PMS) and the Medium Term Expenditure Framework (Budgets). As indicated above, the IDP is a strategic plan and the PMS is a monitoring tool. The municipality will also prepare a Service Delivery and Budget Implementation Plan (SDBIP) as an implementation tool as stipulated in the Municipal Finance Management Act of 2003. The SDBIP means a detailed plan approved by the Mayor of the municipality in terms of Section 53(1)(c)(ii) for implementing municipal services and its annual budget. The core components of the IDP as indicated in Section 26 of the Municipal Systems Act No. 32 of 2000 are: a) 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;

b) 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; c) The council’s development priorities and objectives for its elected term, including its local economic aims and its internal transformation needs; d) The council’s development strategies, which must be aligned with any national or provincial sectoral plans and planning requirements binding on the municipality; e) The spatial development framework, which must include the provision of basic guidelines for a land use management system for the municipality; f ) The council’s operational strategies; g) Applicable disaster management plans; h) A financial plan, which must include a budget projection for at least the next three years; and i) The key performance indicators and performance targets determined in terms of Section 41. Section 28 of the Municipal Systems Act No. 32 of 2000 requires the following from each of the municipalities: 1. Each municipal council, within a prescribed period after the start of its elected term, must adopt a process set out in writing to guide the planning, drafting, adoption and review of its integrated development plan. 2. The municipality must through appropriate mechanisms, processes and procedures established in terms of Chapter 4, consult the local community before adopting the process. 3. A municipality must give notice to the local community of particulars of the process it intends to follow. SOUTH AFRICAN PROPERTY REVIEW

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planning and development City of Johannesburg SAPOA has for a number of years recognised the importance of participating in the business planning process of the City of Johannesburg, with a view to building a meaningful strategic and operational relationship. Through the participation of SAPOA in the development and preparation of the City of Johannesburg Integrated Development Plan, a greater understanding has been realised of the complexities faced in developing and managing a major urban complex such as Johannesburg. A particularly important component is the Spatial Development Framework (SDF) which sets out the city’s plans and priorities to manage urban growth and development. The City of Johannesburg undertook an extensive process of preparation, in which SAPOA actively participated, for the development of the Jo’burg SDF 2040, which was approved last year. In the preparation of the Jo’burg IDP 2017-2022, the city identified a number of challenges, including slow economic growth, poor 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 referred to as a “pro-poor budget”. However, to address the challenges, the city is focusing on growing the economy and creating jobs with a target of five percent economic growth by 2022. In recognising the importance that 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, which confirms our willingness and support to collaborate and partner with the city to address the challenges and support the priorities that the Executive Mayor has identified. SAPOA has an ongoing active involvement with the city through the Johannesburg Business Forum, which meets on a regular basis to further build this collaborative partnership and develop the working relationship with the city.

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.

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To give effect to this, SAPOA and some local property owner companies have made funding available. To date, SAPOA KZN has: ● Established a Precinct Management Forum, which includes a number of so-called management associations. (These, associated with greenfield developments in the northern areas of the city, have similar objectives in terms of precinct management, but a different levy-payment structure which has no involvement of the municipality); ● Registered a not-for-profit company, called Strategic Urban Management, to provide a platform for engagement between property owners and the city. (The objectives of SUM are set out in the addendum); ● Participated, and will continue to do so, in the national dialogue initiated by the National Treasury with a view to developing a cohesive policy on partnerships in urban management; ● Engaged regularly with city officials – the heads of strategy, economic development and area-based management in particular. Currently, SAPOA KZN, together with the Municipality’s EDIPU, is providing guidance and support to people located in areas of eThekwini who have expressed an intention to engage in the process leading to application for the establishment of a Special Rating Area (SRA): Considering the municipality’s commitment to Area Based Management and the Inner City Regeneration Strategy, the IDP will contain reference to urban and precinct management. It is the view of SAPOA KZN that the role and importance of private sector investment in the inner city, and other areas within the city, via additional rate payments following the establishment of Urban Improvement Precincts, should be encouraged as being complementary to the municipality’s strategic and operational intentions.

Lessons learnt from the IDP commenting process The IDP process is really about the documentation of processes. It usually represents programmes that have been carefully thought out but, more importantly, discussions and planning associated with such programmes are usually already completed (e.g. flagship programmes, budgets, future projects). The eThekwini municipality is considered to be among the

relatively well resourced municipalities, and a lot goes on behind the scenes during preparations. These are undertaken by numerous departments in consultation with the private sector and other key stakeholders. For example, during member engagement, it came out that there is a lot on which the municipality has already partnered with certain SAPOA members, such as TongaatHulett’s Dube Tradeport culminating in the Gateway Development, King Shaka airport, etc. There are also numerous planned programmes reflected in this IDP. Furthermore it is hoped that the IDP will also reflect the desirability of a strong and constructive partnership between the municipality and SAPOA, to ensure that the private sector appetite for investment in the economic and social development of precincts is whetted and that UIPs are developed in areas that, constituting important economic development nodes, are considered strategic, and therefore desirable, by the municipality.

Nelson Mandela Bay Municipality The Constitution of South Africa requires all municipalities in terms of the provisions of the Municipal Systems Act No. 32 of 2000, to develop and review their IDPs, which is a strategic planning instrument for local authorities to guide and inform all planning, budgeting, management and decision-making. The IDP is thus seen as a strategic business plan of which implementation is guided over the short and medium term. The 16th Edition of the Nelson Mandela Bay Municipality’s Integrated Development Plan (NMBM 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. 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 following six strategic focus areas: opportunity city; safe city; caring city; inclusive city; well-run city; and forwardthinking city. During the process as rolled out since 19 September 2016, SAPOA Eastern Cape registered as an important stakeholder


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planning and development

The Draft 2017/2018 Integrated Development Plan (16th Edition) and Draft 2017/18 Budget will be finalised and will serve at the full council meeting for deliberation and adoption. A follow-up article with a detailed summary will be published in this magazine

representing the property industry in the NMBM area, and has through the process been actively involved in the attendance of public participation meetings and the IDP representative forum. The Eastern Cape region comments, suggestions and concerns were conveyed in both verbal and written form to ensure the members’ concerns and needs are raised in accordance. The Nelson Mandela Bay Municipality published its Draft 2017/2018 Integrated Development Plan (16th Edition) and Draft 2017/18 Budget on 5 April 2017 for comments and final inputs of all interested parties, stakeholders and communities. SAPOA took part in this process and conveyed its comments on critical issues such as the provision of parking along Govan Mbeki, bulk infrastructure, additional lighting in unsafe areas, illegal dumping, response times to emergencies, and so on. The Draft 2017/2018 Integrated Development Plan (16th Edition) and Draft 2017/18 Budget will now be finalised, and will serve at the full council meeting for deliberation and adoption. A follow-up article with a detailed summary will be published in this magazine.

Polokwane Municipality

An extensive public participation process in all municipal clusters forms part of the Integration Phase. The sixth and final phase is the Approval Phase, during which the IDP Steering and Technical Committees consider all community and stakeholders’ inputs, and make the necessary amendments and additions to the IDP before submitting the final draft IDP to the relevant municipal structures for consideration and approval 38

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Section 153 of the Constitution of the Republic of South Africa (1996) stipulates the developmental duties of local authorities, namely that a municipality must structure and manage its administration, budgeting and planning processes to give priority to the basic needs of communities, and to promote the social and economic development of communities and participate in national and provincial development programmes. The Polokwane Local Municipality’s Integrated Development Plan 2017/2018 review process commenced in July 2016 and consists of six phases. The first phase is the Preparatory Phase where stakeholders and/ or structures are established and sources of information identified. A municipal IDP Review Framework & Process Plan is drafted in terms of Section 28 of the MSA to guide the annual IDP and budget review process. The second phase is the Analysis Phase, during which the municipality analyses the legal framework, spatial, social, economic, basic services and infrastructure development, environmental, financial, good governance and institutional aspects of the municipality. During the third Strategies Phase, the municipality formulates strategic priorities

and goals, and revisits the municipality’s vision and mission statement. The strengths and weaknesses of the municipality are determined by means of a SWOT analysis, and the municipal priorities/goals are aligned with, inter alia, the National Development Plan, Limpopo Development Plan and the Medium Term Strategic Framework. The formulation and review of objectives and short- (one to five years), medium- (five to 10 years) and long-term strategies (10 to 15 years) for the municipality conclude the third phase. The fourth phase is the Projects & Budget Phase, during which the municipality identifies and details all municipal projects (operational and capital) and their funding sources. The multi-year municipal budget is drafted for the next three financial years and indicated as such in the IDP document. 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. The integration of projects and programmes with other spheres of government, e.g. Capricorn District Municipality, adjacent local municipalities and provincial and national programmes takes place during phase five, i.e. the Integration Phase. An extensive public participation process in all municipal clusters forms part of the Integration Phase. The sixth and final phase is the Approval Phase, during which the IDP Steering and Technical Committees consider all community and stakeholders’ inputs, and make the necessary amendments and additions to the IDP before submitting the final draft IDP to the relevant municipal structures for consideration and approval. The final IDP and budget will be submitted to the Joint Portfolio Committee, Audit Committee and Mayoral Committee for consideration before finally being submitted to the municipal council for adoption. The final adopted IDP and budget is announced by public notice in local newspapers, and the final documents are placed on the municipal website for public scrutiny. The final IDP and budget is usually adopted and announced by the end of May each year, whereafter the annual review process of the IDP commences again in July. Comments provided by: Gabhisa Planning, Andrew Barker Development Consultant, Plan 4 SA and Pieterse Du Toit & Associates.


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legal update

Regulation of Agricultural Land Holdings Bill (the Bill) Purpose of the Bill and land ceilings The stated objectives of the Bill are aimed to redistribute agricultural land more equally by race and class, raise agricultural output and food security, and advance social justice and political stability by promoting employment and income to poor and efficient small-scale farmers. SAPOA is supportive of these objectives. However, SAPOA’s view is that the mechanisms in the Bill – namely, the imposition of “ceilings” on ownership of agricultural land – are not an effective means to achieve them. SAPOA’s view is that the consequences of imposing such ceilings, which will be perceived in many ways to be arbitrarily determined, will in fact undermine the objectives that are sought to be achieved.

Foreign owners SAPOA does not exclude foreign owners of South African property from its membership. Rather, its constitution allows for any person who owns property in South Africa to apply to be a member. SAPOA’s view is that a blanket prohibition on the ownership of land by foreign persons fails to take into account the nuanced nature of property investment and the manner

Further, foreign entities may require controlling rights in return for investment in an agricultural enterprise. The Bill in its present form fails to consider that a South African land owner may acquire significant capital investment in order to operate and expand agricultural activities 40

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in which financing is structured in order to facilitate investment in property and its development. One instance of this is the provision of security by way of mortgage. It is unclear from the Bill whether South African owners may obtain financing from foreign lenders by offering to register a mortgage over agricultural land. This thereby limits the forms of security that can be offered to potential investors, and discourages investment. Further, foreign entities may require controlling rights in return for investment in an agricultural enterprise. The Bill in its present form fails to consider that a South African land owner may acquire significant capital investment in order to operate and expand agricultural activities. The Bill in its present form would prohibit the land owner from selling a 51% interest in the land to do this, notwithstanding the fact that the land owner would retain 49%. In this way, the Bill limits the options available to small-scale farmers who may require capital investment to operate.

The Bill may, in this way, operate to introduce uncertainty in a manner that is contrary to its stated aims.

The land register SAPOA supports the creation of a land holdings register to capture the ownership profile of private agricultural land and public agricultural land. It is important, in SAPOA’s view, that the government has a clear and accurate picture of ownership of agricultural land, which is used to inform its policies with regards to the equitable distribution of land.

The racial classification of the owner of land

The Bill contemplates that a register should be maintained categorising, among other things, the race, gender and nationality of the owner. The provisions in regard to ownership are vague

The Bill contemplates that a register should be maintained categorising, among other things, the race, gender and nationality of the owner. SAPOA notes that the provisions in regard to ownership are vague and confusing, and do not engender legal certainty. One instance of this is the reference to a trustee being deemed to be the owner. This is patently wrong in terms of the law applicable to trusts: the trustees are the fiduciaries of a trust and, in most cases, have no beneficial interest in the trust. It is also often almost impossible to determine the ownership of a trust (as to race or to gender) where the trust is a discretionary trust. Further, the Bill is not clear as to what is meant by “own” or “control” with regard to juristic persons. It will in many cases be difficult, if not impossible, to determine the race or gender of companies such as large listed companies or private companies with complicated holding structures. It is simply not practicable for large organisations to indicate their race or gender.

SAPOA acknowledges that Section 25 of the Constitution of the Republic of South Africa (1996) requires a proportionate balance between protecting existing private property rights as well as the public interest of land reform. SAPOA has not objection to this being effected through the auspices of a public body such as the proposed Commission. This being said, there is a need to ensure that the information supplied to the Commission is used in a system that protects private information, in similar ways to the treatment of information provided to the Competition Commission and SARS. Only the statistical or general data provided should be subject to access by individuals as this otherwise would be a breach of privacy. The categorisation will also be meaningless unless the ultimate black ownership, using the flow-through principle, is recorded as a percentage as opposed to an all-or-nothing approach whereby 50% is regarded as 100%


legal update

How will “land be available for acquisition The blanket right of the then to inform measures that may be adopted pursuant to Section 25(8) of the Constitution, to citizens”? Is the foreigner obliged to follow Minister contained in then information about all land which is truly a tender process? The provisions are confusing, vague and would be struck down on the basis Section 1(1)(d) to exclude agricultural land should be obtained. The blanket right of the Minister contained that they are void for lack of legal certainty. certain land should not be in Section 1(1)(d) to exclude certain land permitted. What should should not be permitted. What should be Categories or ceilings excluded is land that is in the process of being A simple prohibition on owning large tracts be excluded is land converted to non-agricultural land, which of land would be unconstitutional. Therefore which is in the process should be done by reference to municipal if any private right to property is to be planning, i.e., land which a municipality has impacted, the justification for this needs to be of being converted to earmarked for conversion as part of its long- so as to redress unequal distribution of land non-agricultural land, in South Africa. term municipal planning. The factors set out in Section 25 of the Bill The unrestricted power afforded to the which should be done Minister to exempt certain land from the do not reflect this. In order to comply with by reference to municipal provisions of the Bill is vague to the point that the Constitution, the prime considerations planning, i.e., land which it is unconstitutional. should be: ● The current land holdings of private and a municipality has Public and private land public property within an area and sector; earmarked for conversion The disclosure of ownership by private ● The extent to which there has already been a redistribution of property in as part of its long-term owners is more onerous than the disclosure of ownership of a publicly owned land. This order to redress the results of past municipal planning differentiation is unfair and could be regarded racial discrimination; as unconstitutional. and 49% is regarded as 0. The flow-through principle is already effectively applied in the BEE Codes of Good Practice. The same argument applies to a foreign person. If a foreign person holds more than 50% of the shares of a company and black persons hold 49%, then they will not be counted, which is not logical. In pursuing the objectives of the Bill, SAPOA suggests that an incremental approach should be followed. This involves, firstly, an analysis of the data obtained as a result of the registration process. Secondly, this is used to inform policy decisions and legislative interventions regarding agricultural land, ownership by foreign persons and redistribution, rather than these decisions being taken at the time that the register is in the process of being developed. It must be pointed out that most of the privately held agricultural land is held by large corporate structures, most of whom have already, to a greater or lesser extent, introduced empowerment structures where their black ownership is 26% or more. Introducing restrictions without this information and without it being rationally justifiable in terms of Section 25 and Section 36 of the Constitution would be unconstitutional.

The definition of agricultural land If meaningful information about the holdings of agricultural land is to be obtained, and it is

Ownership and leases of foreign-owned land The blanket prohibition on foreigners owning agricultural land, of any size, type or in any area, is a crude measure that is unlikely to achieve the objectives of the Bill. It will simply prevent foreign investment and the creation of jobs. A foreign person is, however, allowed to conclude a long-term lease which is defined to be a lease of between 30 and 50 years. What is the position with regard to a lease less than 30 years? Is that also permitted? Is it intended that the foreign person can be the lessee or the lessor? What is the position should a foreign person acquire the shares of a company or control a juristic person and thereby acquire, indirectly, ownership? The current simplistic provisions are easily overcome. Section 19(2) is nonsensical in that a company controlled by a black person would not be a foreign person, as defined.

Right of first refusal in respect of disposal by foreign person What is the position if the State or the “citizens” do not agree to purchase the foreign-owned land? This would then be a form of expropriation. If the foreigner cannot find a purchaser to purchase the land at market value, then the State should be obliged to.

● Whether legislative measures are required to further redress the results of past racial discrimination, or whether this can be achieved without legislative measures; ● Whether the imposition of ceilings, having regard to land capability factors, capital requirements and the other factors referred to in Section 25 of the Bill would achieve the objective of further redressing the results of past racial discrimination having regard further to the need to raise agricultural output, food security and employment.

A foreign person is, however, allowed to conclude a long-term lease, which is defined to be a lease of between 30 and 50 years. What is the position with regard to a lease less than 30 years? Is that also permitted? Is it intended that the foreign person can be the lessee or the lessor? SOUTH AFRICAN PROPERTY REVIEW

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legal update

Redistribution agricultural land Section 26 contemplates that a property owner will have to notify the Commission of its portion of excess land above the ceiling (redistribution agricultural land) and then offer it for sale to black people. SAPOA submits that this provision will have an effect that is contrary to the aims of the Bill. Currently, it would not be possible to offer land that is not subdivided and forming part of a separate title deed, for sale. The Bill does not deal with subdivision, preparation and approval of survey diagrams, or the taking out of a separate title. It also does not prescribe who should bear the costs of these processes. It also states that the land must first be offered to “black people”. These are natural persons. It makes no mention to the fact that, in practice, the land would most likely be acquired by juristic persons, whose race or gender would – as discussed previously – be difficult or impossible to identify accurately. The land must be offered for sale “within a prescribed period and in the prescribed manner”. That contemplates that the Minister may set out periods and conditions for sale. This effectively removes the land owner’s entitlement to negotiate the sale on terms that are in its best interests, and weakens its bargaining power in a manner that may amount to an unlawful limitation on its rights. The owner is then obliged to offer the land to the State, and if the Minister and the owner cannot reach agreement on the purchase price, the Minister may expropriate the land.

Currently, it would not be possible to offer land that is not subdivided and forming part of a separate title deed, for sale. The Bill does not deal with subdivision, preparation and approval of survey diagrams, or the taking out of a separate title. It also does not prescribe who should bear the costs of these processes 42

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Expropriation may only take place for a public purpose or for the public interest as required by Section 25 of the Constitution.

Deprivation or expropriation Arguably, the provisions of the Bill requiring foreigners to sell their land to the State and/or to citizens and requiring large land holders to sell their redistribution agricultural land to citizens and the State constitute expropriation without proper compensation, and are therefore unconstitutional.

In order for the deprivation to be lawful, the Constitutional Court has held that there must be sufficient reason for the deprivation, and there must be a rational and proportional balance between the rights lost and the value contained in the Constitution that is sought to be advanced If the provisions are treated as a deprivation as opposed to an expropriation, then the Bill, as currently drafted, provides for arbitrary deprivation which is not proportional or rationally connected to the competing constitutional values. In order for the deprivation to be lawful, the Constitutional Court has held that there must be sufficient reason for the deprivation, and there must be a rational and proportional balance between the rights lost and the value contained in the Constitution that is sought to be advanced. This was expressed in paragraph 49 of the Reflect-All 1025 vs MEC for Public Transport, Roads & Works judgment, which states: “Central to the arbitrariness enquiry is the relationship between the law in question, the end it seeks to achieve and the impact restrictions have on the use and enjoyment of property. In some instances, a deprivation will escape arbitrariness if a rational connection between the means adopted and the end sought to be achieved is present.

In other cases, however, the means adopted will have to be proportional to the ends in order to justify the deprivation in question. Marginal deprivations of property will ordinarily not be arbitrary if they are rationally connected to a legitimate purpose. More severe deprivations would ordinarily have to be shown to be proportionate.” Requiring a land owner to sell its land would be a severe deprivation. At present, there is no mechanism to ensure that the impact of the deprivation on land owners’ constitutional rights is proportionate to the benefit that the Bill seeks to achieve. Unless there is a factual basis that the imposition of a ceiling is the least restrictive means of advancing the measures set out in Section 25(8) of the Constitution, then the provisions, and the implementation thereof, are unconstitutional.

Conclusion The Bill in its present form is vague and unconstitutional. Significant revision is needed to elucidate the mechanisms that the Bill uses to achieve its aims. The link between the ends the Bill seeks to achieve and the means by which it seeks to achieve them is not apparent from the Bill itself. In the sense that the Bill limits the constitutional rights of land owners – even if it is to give effect to other constitutional objectives – the Constitution requires that such limitation is proportionate. There is insufficient evidence shown in the Bill and the explanatory memorandum that accompanied it that the Bill will achieve its aim of redistributing agricultural land to black people in a meaningful way, and thereby increase agricultural output and food security.

This legal opinion is only a guide and should not be copied with the expectation that it will serve specific individual circumstances. Most of these recommendations have not been tested in our courts. SAPOA cannot guarantee any success in any court if any of these recommendations are put to use.


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2017/04/25 2:51:04 PM


legal update

SAPOA comments on the Property Practitioners Bill, 2016

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he Bill was published on 31 March 2017 in the Government Gazette 40733, and is intended to replace the current Estate Agency Affairs Act of 1976 (“EAA Act”) in its entirety. Over the past few years, SAPOA has dedicated time and support, through providing commentary and drafting capacity, to the previous iterations of the contemplated draft Bill. However, it appears that the fruits of these engagements, comments and submissions on earlier versions of the draft Bill have not been taken into consideration. Save for one addition, the current version of the Bill does not reflect the significant engagement between SAPOA and the EAAB, and therefore appears to be largely unaltered. In the main, this comment serves to provide suggestions aimed at strengthening clarity to the important concepts in the Bill so that its application is clearly defined. The South African Property Owners Association (SAPOA), on behalf of the commercial property industry, has hereby submitted formal comments for consideration as part of the public participation process.

Definitions SAPOA has recommended that the following definitions be amended: The same threshold determinations as found in the CPA should also apply to “Consumers” as contemplated in the Bill; The structure of the definition of “Property Practitioner” (PP) should be amended so as to clarify the ambit of the definition and remove the ambiguities referred to in paragraph 2.4.1 above; The concept of consumer PP in subsection (a) (in its restricted form as alluded to in paragraph 2.3 above) should be brought into this section; It is our suggestion that the words “on behalf of any other person” should rather read “on behalf of any consumer” so that large commercial property transactions will fall outside the ambit of this section. SAPOA also suggested that the word “indirectly” be removed because it creates considerable uncertainty as to the exact ambit of application of the section. Including the word “indirectly” may bring within the ambit of application of the legislation

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persons and transactions the regulation of which are inappropriate under the Bill. For example, it may be argued that the sale of shares in any company that owns immovable property is an indirect sale of immovable property. If this interpretation were to be adopted, the number of transactions that would fall within the ambit of the legislation would be too immense to be properly regulated, thereby placing too great a burden on the Authority. If one considers those property-owning entities which have their shares listed on the JSE (such as REITs), any stockbroker which purchases and sells those shares on behalf of clients would have to be registered as a property practitioner. We are also of the view that an appropriate carve-out for intra-group transactions needs to be incorporated into Section (a). When one company performs property practitioner functions for another company within the same group, such transaction should fall outside the ambit of the Bill. We set out further comments in this regard below. The definition of “Property Practitioner” in Subsection (a)(i) and the inclusion of the words “or any business undertaking” in addition to the word “property” is problematic, and we ask that the words “or business undertaking” be removed so as not to create the impression that the sale of businesses which has nothing to do with property (such as the sale of an IT business, for example) does not fall within the ambit of the Act. The definition of “Property Practitioner” in Subsection (a)(iv) when coupled with the word “indirectly” in subsection (a): the ambit of application of this subsection is vast and uncertain, resulting in a number of inappropriate property role-players falling within the ambit of the definition of property practitioner. To name a few, it could be argued that where a holding company provides financial assistance or issues a corporate guarantee for a subsidiary in order to enable that subsidiary to purchase property, that holding company is “indirectly” is engaging in the acquisition of property for its own gain when that is self-evidently not the function being performed; the services

rendered by corporate finance and transaction structure advisers would arguably fall within the ambit of this subsection; and where a holding company negotiates a sale of property with the right to nominate a subsidiary as the purchaser, the holding company is arguably an indirect facilitator of the agreement of sale on behalf of its subsidiary, thereby requiring that holding company to be a property practitioner. On our reading of the provision in its current form, it appears that the legislature intends to regulate persons or entities engaged in specific activity directly for gain, or reward. As we have illustrated above, there are a variety of circumstances in which entities are broadly associated with the acquisition of property but who do not derive any reward or “gain”, and who do not perform any of the specified activities. The requirement that each director of a property practitioner company be registered as a property practitioner has been brought forward from the EAA Act. We are, however, of the opinion that this requirement is no longer appropriate. While we acknowledge that it will be important for those directors who are actively involved in the day to day running of the property practitioner business to be registered as property practitioners, we are also of the opinion that a blanket registration requirement is too restrictive because it does not allow the industry to draw on the skills and expertise of other areas – such as expertise in law, banking, construction or environmental scientist. Today, we see huge property practitioner companies operating within the property sector. These entities require diverse boards with a variety of specialised skills sets to adequately govern and direct such companies. Creating a closed profession stifles competition and restricts efficiency and development in the industry because it would exclude ancillary fields. This in turn may possibly reduce employment and drive up costs for the consumer. Allowing environmental, civil, regulatory, legal and financial experts to partner with property experts on the boards of property practitioner entities will not only be in the


legal update

company’s best interests but also in the public’s best interests as those boards will be able to ensure better service delivery on a holistic basis. The definition of “Property” is a key definition in the Bill, and we recommend that the ambit of the term be clarified. The current definition of “property” states that it means “immovable property, and any interest, right or duty associated with it as contemplated in Section 2”. Section 2 then provides that the Act applies to “the marketing, promotion, managing, sale, letting, financing and purchase of immovable property, and to any rights, obligations, interests, duties or powers associated with or relevant to such property.” If one considers the definition of property read together with the farreaching wording contained in Section 2, one cannot pinpoint what exactly constitutes “property” for the purposes of the Bill. Any “right or interest” in immovable property has far-reaching applications and may include servitudes and shares in a company that happens to own immovable property. We are of the opinion that extending the ambit of the definition of property to include shares in propertyowning companies will result in certain practical difficulties, especially when the shares in those property-owning entities are listed on the JSE, as is the case with REITs. Given the pivotal role the definition of “property” plays in the legislation, we urge legislature to consider amending the definition to clearly state what exactly the legislation is intended to govern. Including a catch-all phrase to cover anything that may otherwise have been omitted does not create legal certainty and opens the door to litigation. We suggested that the definition of property be amended as follows: “Property means (i) immovable property as defined in Section 1 of the Deeds Registries Act No. 47 of 1937, (ii) any unit as defined in Section 1 of the Sectional Titles Act No. 66 of 1971, (iii) any share in a share-block company as defined in Section 1 of the Share Blocks Control Act No. 59 of 1980, (iv) any timesharing interest as defined in Section 1 of the Property Time-Sharing Control Act No. 75 of 1983, and (v) any housing interest as defined in Section 1 of the Housing Development Schemes for Retired Persons Act No. 65 of 1988.”

Section 4: Exemption from the Act Section 4 makes provision for any person to apply to be exempted from compliance with any specific provision of this Act. While the inclusion of the section is commendable, we recommend that provision be made to group exemptions that could apply to a specified class of persons. This will lessen the burden placed on the Authority to consider multiple applications from the same industry players who are facing the same issues. Section 4(6)(a) provides that the exemption period may not exceed three years. We are of the opinion that the exemption should apply for a minimum of five years, with the applicant being allowed an opportunity to apply for an extension that is deemed to be granted if the Authority does not respond within 90 to 180 days. This will alleviate unnecessary administrative burden being placed on the Authority in instances where the exempted sector continues to meet the exemption criteria. Section 4(9)(a) provides that any person may at any time in writing request the Minister to review an exemption granted in terms of this section. We are of the opinion that this section should be amended so as to allow an appeal to be requested in respect of any decision taken in terms of this Section 4, thereby also covering a decision to reject the exemption application or to withdraw, suspend or amend an existing exemption. Furthermore, we do not think that it will be appropriate to allow simply any person to request the Minister to review an exemption that has been granted or a decision that has been taken. This may give rise to frivolous or vexatious requests. We recommend that only those persons whose rights have been materially and adversely affected by the decision be allowed to request an appeal. Section 4(10) provides that the Authority may on good grounds amend, suspend or withdraw an exemption. We are of the opinion that should the Authority wish to withdraw an exemption, the considerations set out in Section 4(5) should be reconsidered, and that such withdrawal must be preceded by an appropriate notice period. The withdrawal of an exemption should also be accompanied by an appropriate transition period during which the affected persons can take the

necessary measures to ensure compliance with the Act at that point in time when the exemption is lifted (for example, applying for fidelity fund certificates and opening trust accounts).

Section 7: Composition and appointment of Board ● Section 7(1) and (2) We note that, currently, in terms of Section 3 of the EEA Act, the Board consists of at least five members from the estate agents’ industry. The Board accordingly comprises one-third estate agents. We recommend that one or two members have at least 10 years of experience in the property sector, to deal with the concern about maintaining experience in the Authority. Sufficient representation by experienced property practitioners is essential in order to ensure that cognisance is taken of the practical effects of decisions taken by the Board. Furthermore, given the fact that the residential property industry and commercial property industry operate in vastly different manners, representation from both sectors of the industry must be ensured. ● Section 7(3)(a) In terms of section 7(3)(a), members of the public are allowed an opportunity to nominate appropriate persons to serve on the Board. This right is currently, in terms of the EEA Act, only afforded to associations and organisations within the estate agency industry. We recommend that this requirement be brought forward in the Bill so that the nominations that are made reflect the views of the majority within the industry. Nominations by associations and organisations operating within the industry will ensure that the nominees put forward are appropriately qualified and supported. The appointment of inexperienced property practitioners who are not supported by the industry will not aid the effective functioning of the Board in the context of what is a very complex industry, nor will it serve the broader public interest.

Section 23: Lodging of complaints We are of the opinion that individual persons should be able to approach the Ombud SOUTH AFRICAN PROPERTY REVIEW

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directly in the event of urgent or exceptional circumstances, and not only after “he or she has exhausted all the internal remedies of the Authority.” This will allow for more expeditious resolution of urgent issues given the mediation process at the Ombud’s disposal. We also recommend that the alternative dispute-resolution processes set out in Sections 23 to 25 be extended to cover complaints against the Authority. Property practitioners may disagree with certain decisions taken by the Authority (such as the removal of a fidelity fund certificate) or the failure to act (such as the failure to issue a new fidelity fund certificate timeously), which decisions or omissions have far-reaching consequences for the property practitioners concerned. In the absence of these alternative dispute-resolution mechanisms, the relevant property practitioner’s only means of challenging the decision would be to approach the courts to have the decision reviewed, which is neither timenor cost-efficient. Section 23(4)(a) states that the Ombud may “deal with the matter himself or herself”. This seems to suggest that there is a third dispute-resolution procedure available over and above the mediation process referred to in Section 23(4)(b) and the adjudication process referred to in Section 23(4)(b). As discussed above, delegation of power must not be so broad or vague that the authority to whom the power is delegated is unable to determine the nature and the scope of the powers conferred as this may well lead to the arbitrary exercise of the delegated power. The legislation must therefore either be amended so as to stipulate constraints within which the Ombud may “deal with the matter himself or herself” – or alternatively delete Section 23(4)(a).

Section 24: Mediation We are of the opinion that it would be helpful to stipulate guidelines as to when it would be most appropriate for a complaint to be resolved through mediation, including detailed time frames in respect of each process.

consequences of an adjudicator’s order, we recommend that an appeal procedure be adopted.

Section 28: Powers of inspectors to enter, inspect, search and seize A number of the later subsections of Section 28, which currently only apply to those inspections conducted pursuant to a warrant, should equally apply (in amended form) to warrantless inspections conducted in terms of Section 28(1). We note that the inspector is given the power to enter and inspect any business premises of a property practitioner without a warrant. Given the fact that certain property practitioners have multiple businesses, some of which are entirely unrelated to their business as a property practitioner, we are of the opinion that the inspector’s warrantless search and seizure powers should be limited to business premises in respect of which the inspector has reason to believe (i) any person there is performing an act as a property practitioner, (ii) it is connected with an act performed by a property practitioner, or (iii) there are books, records or documents to which the provisions of this Act are applicable. We recommended that the person concerned should only be compelled to produce books, records or other documents if there are reasonable grounds for believing that such articles have a bearing on the inspection. The seizure powers should be subject to reasonable suspicion. “Any premises” is too wide. This should be qualified, and only those premises in respect of which the inspector has reason to believe (i) any person there is performing an act as a property practitioner, (ii) it is connected with an act performed by a property practitioner, or (iii) there are books, records or documents to which the provisions of this Act are applicable. The inspector should only be empowered to request information about any article, document or record in respect of which there are reasonable grounds for believing such information has a bearing on the inspection.

Section 25: Adjudication

Section 34: Primary purpose of the fund

We recommended that a time period within which the Ombud must allocate the matter to adjudication should be stipulated so as to prevent delays in the commencement of the adjudication process. Given the far-reaching

We are of the view that the position currently contained in section 18 of the EAA Act should be retained, and section 34(1) of the Bill should read “theft of trust money committed by a property practitioner”.

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Section 46: Application for fidelity fund certificate The annual re-registration of estate agents’ fidelity fund certificates currently places an overwhelming administrative burden on the Authority each year. This administrative pressure will be further exacerbated under the new Act because of the numerous new role-players within the property market that will fall under the ambit of the Act. It is questionable whether the Authority will have the necessary capacity to cope with the increased numbers. We are of the view that a property practitioner’s fidelity fund certificate should, subject to payment of the annual fee and compliance with the Act, remain valid indefinitely until withdrawn by the Authority. If the aforesaid proposal is not adopted, we urge the legislature to consider extending the validity period to three years from the date of initial registration. This will ensure that the registration of the fidelity fund certificates is at least staggered, thereby making it easier for the Authority to cope with the numbers.

Section 48: Mandatory time period for issuing certificates Section 48(3) makes provision for the deemed approval of an application for a fidelity fund certificate. Notwithstanding the fact that the Authority is supposedly compelled to issue the fidelity fund certificate to the applicant concerned under the circumstances contemplated in Section 48(3), the Authority may nonetheless fail to do so. We are of the view that for so long as the application is deemed to have been approved in terms of Section 43(3), the property practitioner concerned should be deemed to be in possession of a fidelity fund certificate for the purposes of this Act until such time as the Authority actually issues the certificate in terms of Section 48(3).

Section 49: Disqualification from issue of a fidelity fund certificate Section 27 of the EAA Act currently contains a proviso in relation to qualifications pertaining to the issue of fidelity fund certificates, which reads “provided that if in respect of any person who is subject to any disqualification referred to in this section, the board is satisfied that, with due regard to all the relevant considerations, the issue of a fidelity fund certificate to such person will be in the interest of justice, the board may issue,


legal update

and on such conditions as the board may determine, a fidelity fund certificate to such person when he or she applies therefor.� We are of the view that this provision should be brought forward in Section 49 in order to afford the Authority with the discretion to issue a fidelity fund certificate where it is fair and reasonable to do so. Section 49(b) effectively provides that if any director or member of management of a property practitioner entity contravenes any part of the Act, that property practitioner entity will be prevented from operating. No similar provision is found in our company law, and a company is not compelled to cease operating in instances where a director has breached a law. We are of the view that this provision will hinder the objectives of the Act insofar as they relate to promoting participation in the property sector.

Section 53: Trust account The Bill currently provides that every property practitioner must open and maintain a trust account. Bearing in mind the ambit of the definition of property practitioner, various role-players within the property sector will constitute property practitioners but are, as a matter of course, not required to handle money on behalf of the public as part of their operations as property practitioners. We are of the view that only those property practitioners which in fact hold money in trust on behalf of the public should be required to maintain trust accounts. The wasted costs associated with holding a trust account and having same audited every year even where that trust account remains unused places a further hurdle in the way of promoting participation within the property sector. We recommend that a distinction be drawn between those property practitioners which actually require trust accounts and those which do not, and the fidelity fund certificate issued to those property practitioners which are permitted to hold trust accounts should then contain an endorsement to that effect. We note that Section 53 does not cover the manner in which interest earned on trust accounts should be dealt with. We are of the view that the current position under Section 32 of the EAA Act should be brought forward, and interest accrued on the balances in trust accounts should be paid to the fund.

We note that in terms of Section 53(10), if the circumstances stipulated in subsections (a) to (d) arise (such as the withdrawal of a fidelity fund certificate), the property practitioner concerned must immediately wind up the trust account and pay out the amount standing to the credit of any such account to the person entitled to it. In practice, this will be impractical as the funds held in trust accounts are more often than not held in escrow pending the happening of a certain event. For example, the purchase price in respect of the sale of property will be held in the trust account pending registration of transfer of the property. It will be improper to transfer the funds to either the seller or the purchaser prior to registration of transfer. We are of the view that the Authority should maintain a trust account for purposes of receiving money in trust in instances where the circumstances stipulated in Section 53(10) provided the parties to whom the trust money relates are notified thereof

Section 54: Duty of property practitioner to keep accounting records and other documents We are of the view that it will be impractical to require property practitioners to retain the advertising or marketing material related to the carrying on of the business of a property practitioner for a period of 10 years. This should be limited to a sample thereof.

received a good-quality service from the property practitioner notwithstanding the fact that he or she was, for whatever reason, not in possession of a fidelity fund certificate at the time of the transaction or payment. It would not be equitable in such circumstances for the seller to be repaid the commission and such commission should rather be forfeited to the fund.

Section 60: Code of conduct for property practitioners The adoption of the code of conduct and advertising standards should be subject to prior consultation with property practitioners within the industry.

Undesirable practices Section 62(3) provides that a property practitioner is not entitled to remuneration or other payment in respect of any property purchase transaction prior to transfer of the property and registration into the name of the purchaser. We are of the opinion that this section should be deleted, given the fact that, in practice, registration of transfer may be prevented as a result of breach of agreement by the seller or the purchaser. An estate agent which has discharged his or her duties and was the effective cause of the sale should be entitled to commission in such circumstances notwithstanding the fact that registration of transfer was not effected.

Section 55: Property practitioner not entitled to remuneration in certain circumstances

SAPOA hopes to have further engagement with the EAAB .

It is unclear whether a conveyancer who has not received a certified copy of the fidelity fund certificate in question would be obliged to pay the amount to which the property practitioner would otherwise be entitled, to the seller (being the party who is normally liable for the commission of the property practitioner) or to the Fund. We suggest that a similar approach to that which is set out in Section 55(3) be followed, namely that the remuneration be paid to the fund, whereafter the consumer or the property practitioner may submit a claim for such amount or a portion thereof if equitable under the circumstances. If the unavailability of the fidelity fund certificate was through no fault of the property practitioner (for example through an administrative error on the part of the Authority), then it would be equitable for the property practitioner to be reimbursed those funds. Furthermore, the consumer may have

Comments were provided by Attie Pretorius of CDH Attorneys

This legal opinion is only a guide and should not be copied with the expectation that it will serve speciďŹ c individual circumstances. Most of these recommendations have not been tested in our courts. SAPOA cannot guarantee any success in any court if any of these recommendations are put to use. SOUTH AFRICAN PROPERTY REVIEW

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The SCA held that having regard to the fact that the Rates Act defines financial year as “the period starting from 1 July in a year to 30 June the next year”, the section could only be interpreted to mean that the rates are payable within the period of the financial year, and not on 1 July

Clearance certificates:

sellers no longer held ransom for future municipal debts The courts have come to the rescue once again, clarifying and confirming a seller’s duty to settle outstanding municipal debt prior to receiving a property rates clearance certificate. In short, municipalities can no longer hold a seller ransom by refusing to issue a clearance certificate until the rates have been paid up to the end of the municipality’s current financial year

Cliff Dekker Hofmeyr

The municipality claimed that once its financial year commenced, the seller became liable to pay the rates fixed for that financial year, and that it was entitled to withhold the rates clearance certificate until it had received payment of the rates for that financial year 48

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In terms of Section 118 of the Local Government Municipal Systems Act No. 32 of 2000 (Systems Act), a seller requires a rates clearance certificate before transfer of the property to the purchaser, which certificate must be lodged in the Deeds Office with the transfer documents. The recent judgment in Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd (576/2016) [2017] ZASCA 36 (29 March 2017), provides much-needed clarity regarding the issuing of clearance certificates and ensures that many sellers will save thousands, if not millions, of rand during the sale of their properties. In this case, the Supreme Court of Appeal (SCA) was asked to make an order that the municipality refund the seller a sum of R1 066 532 for overpayment of its municipal rates obligations to the municipality. The seller had made the payment, albeit reluctantly, in a dire need to receive a property rates clearance certificate. The municipality claimed that once its financial year commenced, the seller became liable to pay the rates fixed for that financial year, and that it was entitled to withhold the rates clearance certificate until it had received payment of the rates for that financial year. The SCA was not quick to dismiss the municipality’s claim, and took into serious consideration the fact that

municipalities mainly rely on rates for income in order to render the necessary services to their communities, and that the court had a duty to consider the relevant legislation and laws which the municipality relied upon. In doing so, the SCA paid particular attention to the Local Government: Municipal Property Rates Act No. 32 of 2000 (Rates Act) emphasising that in terms of Section 13(1)(a) a rate becomes payable “as from the start of a financial year” and not on a particular date. The SCA held that having regard to the fact that the Rates Act defines financial year as “the period starting from 1 July in a year to 30 June the next year”, the section could only be interpreted to mean that the rates are payable within the period of the financial year, and not on 1 July. The SCA also noted that, in terms of the Rates Act, the owner of the property is liable for the payment of the municipal rates. Following its interpretation of the Rates Act and taking into consideration other relevant legislation, the SCA firmly held that Section 118 of the Systems Act is clear and unambiguous that a clearance certificate is issued in respect of municipal debts which have become due in the two years preceding the date of application for the clearance certificate, and does not apply to future municipal debts when the seller is no longer the owner of the property.


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legal update

Getting infrastructure disputes right Complex infrastructure disputes often turn on the strength of expert evidence. Carefully managed experts win cases – and carefully considered expert evidence is equally a powerful driver of settlement By Michelle Wright of Baker McKenzie

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ithout adequate guidance and a clear idea of the legal framework into which their evidence feeds, even the most seasoned expert may come unstuck under crossexamination or rack up expenses pursuing irrelevant avenues of enquiry. Lawyers can do a lot to actively engage with experts to ensure that they are properly project-managed, and stay within budget and scope.

Points upfront ● Pick your battles. Do you need expert evidence at all? If you’re respondent on a complex matter, is it more sensible to avoid the time and cost associated with expert evidence altogether, and to simply pick holes in the other side’s expert testimony? Remember also, and given no formal rules of evidence find application in an arbitration, it is often permissible (and much cheaper) for experienced factual witnesses to offer opinions. ● Fix fees. Try to manage fees upfront by agreeing fixed fees for discrete stages of proceedings, or per draft report produced. ● Do your homework. Proceed judiciously with every appointment. Be as clear and detailed as possible about the information you request from your expert on conflicts, credentials, and cost. ● Interview candidates. There is no reason an expert appointment cannot be competitively let. This will reduce costs. ● Canvass availability clearly. It is useful to have a separate chain of correspondence at the outset regarding an expert’s availability, including an indication of the number of hours of commitment required. It is not helpful to appoint experts who have limited capacity to meaningfully assist. ● Carefully crystallise issues for expert evidence. Remember that it is difficult to adduce expert evidence in reply, when it was an issue that should have been traversed in a positive case. Such a failure may cause interlocutory scuffles on admissibility and further delay. ● Start early. Engagement with expert witnesses occurs optimally when it is

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run in parallel to an engagement with factual witnesses and the drafting of witness statements. ● Consider the appropriate format for expert evidence. In international arbitration, complete expert reports are often delivered simultaneously with pleadings. The South African High Court rules, on the other hand, require notice of the introduction of an expert to be given as well as summaries of the evidence to be provided. These procedural formalities must be clarified at the outset. ● Be clear on duties. While expert instructions are not disclosable in a South African context, it is prudent in any briefing documentation to carefully set out the expert’s primary duty, namely to provide the court with an objective and unbiased opinion.

Drafting the report ● Be clear about deadlines and drafting stages. Allow enough time for review and comment from the legal team and witnesses. ● Agree a report framework. It is often helpful to ask the expert to put together a framework or outline for their report, so as to ensure alignment on the report’s focus, and to avoid wasteful distraction. ● Control document review. To control costs, try at the outset to understand from the client and expert what categories of documents are essential and which are less relevant, and guide your expert accordingly. Dumping irrelevant documentation on your expert is a sure way to rack up costs. ● Be clear on privilege. Depending on the jurisdiction, it might be sensible for lawyers to provide a short briefing note to their expert on issues of litigation privilege and disclosure obligations as applicable in the relevant forum. ● Qualify and supplement, if necessary. If an expert’s opinion cannot be finalised given insufficient information, then this ought to be expressly clarified with an indication

that the opinion is no more than a provisional one. Further, an expert might change his mind on an issue after filing a report, particularly where new evidence comes to light thereafter. If anything changes the expert’s mind on an issue, they should draft a short further written report. As long as reasons for the change in the expert’s view are properly articulated, this can be seen as a sign of strength and credibility, not as a sign of weakness.

The hearing ● Prepare. If a matter proceeds to a hearing, experts need to be properly prepared to answer questions from the court or tribunal and be cross-examined by opposing counsel. In larger matters, consider appointing specialists who can assist you in providing trial readiness and cross-examination skills training, particularly where your expert has no trial experience. ● Take ownership. Encourage the expert to be proactive and to take ownership of their views. They are not guaranteeing their opinion, but need to be convinced that – on a balance of probabilities with reference to the facts on hand – their view is the right one. Experts should be encouraged to elaborate or debate their answers (or any qualifications to their answers) within reason, so as to engage the cross-examiner on his views. One-word answers are seldom helpful. ● Make concessions. Depending on extent, this is often a sign of credibility. ● Do not stray. Warn the expert that they should not give their opinion on matters of law (as that is for the tribunal to decide). They should also avoid speculating as to the facts, and/or giving views on matters outside their expertise. In summary, active engagement with experts – as part of the broader legal team – is vital to ensure that they stay within budget and scope, and are clear on their duties to present a credible, objective and balanced opinion to the court or tribunal.


OXFORD PARKS LOCATE INVEST SUCCEED ENJOY!

Oxford Parks’ unique location between the established nodes of Rosebank and Illovo, means that it is responsive to the needs of corporate, residential and retail tenants - the precinct is designed to thrive on the energy and interaction of modern urban living. This location attracts strong A Grade tenants, including destination retail and service providers, as well as being the preferred residence for high nett worth individuals. The area attracts and sustains an integrated and cosmopolitan community and is surrounded by a world class public transport offering for easy access. Specific focus has been placed on the design of a public environment that is pedestrian and cycle friendly, providing transportation options for tenants and visitors. By creating a safe, cohesive, walkable precinct that is sustainable and environmentally resilient, Oxford Parks is investing in transforming the culture of the neighbourhood, to make it inclusionary and future oriented. In the Oxford Parks precinct, all buildings should achieve a minimum of 4-star Green Star SA rating. These green buildings will enrich the eco-friendly environment and enhance potential utility savings for tenants. The precinct will be managed by the Oxford Parks Property Owners Association (OPPOA), ensuring that all development goals are achieved and standards adhered to, as well as undertaking all maintenance, safety and security, refuse management, traffic control, place marketing and recycling for Oxford Parks. Fast Facts • Oxford Parks is a vibrant and modern space for urban living • It is Rosebank's new integrated mixed use precinct • Community needs are key – The Property Owners Association is fully focused on developing the precinct • Over 300 000m² mixed use development with P Grade commercial and high-end residential space will be developed. • Involves a 138 000m² land assembly • A safe, cohesive, walkable precinct that is sustainable and environmentally resilient • Privately managed public environment For more information contact: Carollyn Mitchell at Intaprop 011 731 1900 082 330 9709 carollyn@intaprop.co.za www.intaprop.co.za

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SOUTH AFRICAN PROPERTY REVIEW


finance

Inspiring greater confidence in the tax system The Office of the Tax Ombud was officially launched in April 2014 as an independent and impartial institution, aimed at resolving disputes between taxpayers and the South African Revenue Services (SARS). Part of its mandate is to review and address any service, procedure or administrative-related complaints directed at SARS by taxpayers in an informal, fair and cost-effective manner Interview by Maud Nale

The process of lodging a complaint with the Office of the Tax Ombud

Advocate Eric Mkhawane, CEO at the Office of the Tax Ombud

S

outh African Property Review spoke to Chief Executive Officer and Advocate Eric Mkhawane about the role of the Office of the Tax Ombud and how taxpayers can utilise its services. In the time that has passed since his appointment as its Chief Executive Officer, impartiality and fairness have been the hallmark of the Office’s operations, providing taxpayers with a capable, free and speedy avenue to deal with complaints that could not be resolved through the internal processes of the South African Revenue Services (SARS). The aim of the Office, according to Mkhawane, is to deliver a high-quality, proactive service, inspiring greater confidence in the tax system and improving the level of tax compliance in South Africa. He believes that, as more people get to know about the Office and the service it provides, the number of complaints it receives will grow. “Our services are available at no cost to all taxpayers, whether you are the small man on the street, an SMME or a multi-listed organisation,” he says.

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SOUTH AFRICAN PROPERTY REVIEW

●● It is critical that the complainant fully understands the mandate of the Tax Ombud. Thus the complaint must relate to service, procedural and administrative issues. ●● It is imperative that taxpayers raise the issue with SARS first. It is only after the available resolution mechanisms at SARS have been exhausted, and SARS has failed to resolve the issue (within 21 days), that one can approach the Office of the Tax Ombud. ●● A Complaints Form, available on the website, must be completed and sent to the Office via e-mail, fax, post or by hand. ●● The Office will acknowledge receipt of the complaint and a thorough investigation will commence once it is established that it is an issue that falls within the Office mandate. ●● Based on the findings, the Office will make recommendations to SARS on how to resolve the issue. ●● The findings will then be communicated to the complainant. According to Mkhawane, this process can take up to 15 working days. Depending on the complexity of the complaint lodged, the process may take longer – but the Office will strive to resolve the matter as soon as possible. Throughout the process, taxpayers can be assured that the matter will be handled timeously, systematically and fairly. He has this advice for taxpayers who lodge complaints with the Office: “It is imperative that the taxpayer gives the Office as much information as possible. Attach copies of all communication with SARS to better facilitate the process of mediation. Also, do not ignore correspondence received from SARS because this can lead to further problems in the future.”

As the person responsible for driving the strategy of the institution, Mkhawane’s vision for the next five years is to see the Office becoming one of the most efficient government institutions. “If you look at SARS and where it came from, it is a world-class organisation. The Tax Ombud oversees a world-class institution – and, as such, we cannot be seen to be ineffective. As an institution, we want to add value to SARS

“There are many things that we can still do. Many of our global counterparts have been around for many years. For an institution that has only been in office for a few years, we’re not doing too badly. We will continue to excel in all respects” as well as to taxpayers. People must have confidence in this tax administration.” Mkhawane acknowledges that there is still a long road ahead. “There are many things that we can still do,” he says. “Many of our global counterparts have been around for many years. For an institution that has only been in office for a few years, we’re not doing too badly. We will continue to excel in all respects.” For more information about the Office of the Tax Ombud, visit Taxombud.gov.za.


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SOUTH AFRICAN PROPERTY REVIEW


property development

Speaking of Waterfall City… Planned with foresight, rolled out wisely In a recent interview, South African Property Review’s Mark Pettipher spoke to the CEO of Attacq Morné Wilken about his vision for a vibrant Waterfall City and Mall of Africa, and the thriving role this development has been positioned to play in the retail economy of today and tomorrow Words by Marguerite Lithgow

Morné Wilken, CEO of Attacq

W

ith South Africa’s more than two thousand shopping malls, a not uncommon perception (and arguably an accurate one) is that we are at risk of being “over-shopped”, begging the question whether adding to this total by building another large new centre is sustainable in a real sense. According to Morné Wilken, Chief Executive Officer of Attacq, the answer depends on whether the developer has done the essential specific research before going ahead with a project. “Overall, it is possibly true that there is too much retail in South Africa – but when I look at particular areas in the country, I don’t think this is the case,” he says. “When we did our feasibility, urban and demographic studies for the Mall of Africa, everything stacked up to determine the ideal size of mall that we designed and built at Waterfall City. It is a 130  000m² mall, with the flexibility to seamlessly extend to 150  000m² without affecting the flow of

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SOUTH AFRICAN PROPERTY REVIEW

traffic in and out of the mall. It is indeed the biggest first phase mall developed in South Africa – however, Sandton City is about the same size, and Menlyn Park is larger than the Mall of Africa. “The Mall of Africa’s future is positive despite the current business uncertainty facing us, which could affect the public’s disposable income. In trading terms, the mall is doing very well with a footfall of about 1,1-million per month, and a trading density of about 2  700 in its first year – very good for a mall of this size. “To date, on what was the original 220hectare Waterfall farm, Attacq has developed 677  000m² out of the total available land of 1,8-million square metres, with about 1,2million square metres still to be developed. In this unique project, the full mix of a livework-play environment is being designed and created around the already established nucleus of the Mall of Africa and Waterfall City Park, as the completely new Waterfall City. “We are creating something completely unique in Waterfall City. We really want to develop an integrated city that works, and have planned the infrastructure to support the current requirements and future development pipeline. “Other land parcels owned by Attacq at Waterfall are clean industrial and are on the eastern side of the N1 highway. These are conveniently located, with easy access to major transport routes in Gauteng, the economic hub of South Africa. Corporate consolidation is another major theme when determining the real value of Waterfall City. The central location is a key advantage for any business when relocating their corporate headquarters. Being within a 25-kilometre radius of Pretoria, Johannesburg, Ekurhuleni and other high-density business precincts means that it makes financial sense for any business with several offices spread across

multiple locations in Gauteng to consolidate them in such a prime location with easy access to Gauteng, South Africa and the rest of Africa. Companies who have already benefited from relocating to Waterfall City include PwC, Premier Foods, Novartis, Group 5 and Cell C. “Starting the Waterfall project from scratch made it difficult for prospective tenants to imagine a complete city and logistics hub, when all we could show them was farmland. It wasn’t until the Mall of Africa opened that the real benefits of locating to Waterfall City became apparent. With up to 15-million people visiting the city, we became a lot more visible. Nevertheless, there came a point in the project at which we had to take a leap of faith and invest in certain aspects of the Waterfall City infrastructure, such as an entrance, a gatehouse, and so on. “Our focus now is to design and develop the city in a similar manner, creating a proper model and roll-out plan, so people can visually see what is going to be built and where, relative to their location. Security has


property development been a priority from the beginning, and we already have a full control room and have installed our own CCTV cameras. Everything is state-of-the-art, as we wanted to create a safe and secure city for visitors, residents and those working in the city.” Attacq plans to build and phase in a total of about a thousand residential units in Waterfall City. In the meantime, Century and Baldwin have already built a fair number of residential properties. Baldwin is currently building 1  500 units opposite the equestrian centre, which is very close by, and plans a further 15  000 across the road. “The current visitor footfall trends for the Mall of Africa ensure that trading densities are high at the weekends and lower during the week,” says Wilken. “However as we complete more buildings in the city, the weekly trade as well as the overall trade will pick up significantly. Once PwC opens its offices in early 2018, there’ll be an additional 3  500 people within walking distance of the mall who will visit during the week, to buy lunch and do more general shopping.” Drawing a parallel between the current financial crisis and 2008-2009, Wilken said, “I think we in South Africa were spared to some extent in the 2008-2009 financial crisis, relative to other places. But the recent downgrading will be felt more acutely, and it will have a highly negative impact on the country. Moody’s could still make a decision, perhaps in June or July, to downgrade the local rating again; if this happens, there is the potential that some pension funds could pull out. This could have a further negative impact on the rand, resulting in a negative influence on inflation, weakening the rand further and resulting in a zero growth rate. If this happens it could set up a vicious cycle,

which could result in a recession.” Reflecting on the future prospects for prosperity, Wilken added, “Just before this current climate, there were signs of an economic turnaround into positive growth. Obviously, the challenge now will be to address the potential for entering a difficult time of no growth. Attacq has a very positive approach – we are very much a ‘glass half full’ company, always preferring to look for what we can do to pinpoint the new opportunities, which always do rise out of chaos, rather than worrying about things that we can’t change. It’s important to remember that time will pass, and there will be growth again. “Overall, Attacq is at an advantage in that most of our malls are well situated in locations with strong Living Standards Measure (LSM) groups. Our Garden Route Mall, as an example, is well positioned in a strong business node, with little opportunity for a competitor to enter the market and open their doors.” Wilken, who joined Attacq in 2009, describes his company’s general strategy for safeguarding its assets by saying, “We spread the balance sheet risk through our diversified exposure across South Africa, Europe and Africa. That being said, ironically we now have Brexit, a new US president, and our home-grown problems! But we also ensure our investment portfolio is spread across commercial, retail and industrial sectors, all of which go through cycles. “Attacq’s strong portfolio has four key, top-quality focus areas: our South African base, which includes long-term leases with strong corporates and our dominant regional shopping malls and convenience centres located in higher-LSM areas, which

are able to see through an economic downturn; our Waterfall City development rights; our retail investments in Africa held jointly with Atterbury and Hyprop (retail being defensive as it caters for the middletier business, in the market) and finally our 33% shareholding in international investments through a listed European company, which focuses on various investments throughout central, western and eastern Europe. “First World countries are currently also feeling some strain; it’s not just the case in Africa and South Africa. For a company to succeed anywhere, it is essential for its management to identify its core competencies and to focus on them, which is what we are doing. Attacq is committed to South Africa, and we feel very excited about our plans and investments here – we have a very big pipeline of work in the country, and we take a long-term view. “At Waterfall City, I think our access, our visibility and the location of our light industrial land are a real advantage to Attacq. At the same time, I think the timing is right and it is economically sound for big companies to prioritise corporate consolidation, for which Waterfall City is ideal from every point of view. In these tough economic times, it makes sense for corporates to have everyone under one roof, eliminating the duplication of operating costs in a new and energy-efficient green building, which will lower their utility costs and reduce their carbon footprint by being centrally located. And all of this is in an environment that already has well-planned infrastructure and excellent security. “We are looking forward to exciting times and new opportunities.”

SOUTH AFRICAN PROPERTY REVIEW

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SOUTH AFRICAN PROPERTY REVIEW


people in profile

PROFILES

Gavin Commins Group CEO The Valuator Group

Gavin Commins grew up in Cape Town and attended St Andrews College in Grahamstown. He was a keen sportsman, earning full colours in cricket, rugby and athletics. After completing his army service, he graduated with an honours degree in finance from UCT. His initial career path was in construction, where he built up and ran the Marmoran Group, which manufactured and supplied specialised architectural coatings for nearly 20 years, covering Africa, the Middle East, southeast Asia and China. Commins established The Valuator Group 10 years ago. Today, it is one of the most respected asset valuation companies, covering South Africa, Africa and the Middle East via its new office in Dubai. The Valuator Group offers valuations for both insurance and market purposes, and has specialist divisions that cover property, plant, machinery, equipment and technical assets, as well as fine art, antiques, jewellery and contents. Over the years, the company has become an expert in the agricultural sector, mining, hospitality, manufacturing and heritage assets for all sectors of the economy, including the government. Key to its success has been its “one stop shop� for all the main asset valuation services, giving clients peace of mind that for both market and insurance purposes values are accurate and that insurers are unlikely to challenge claims when applying the average clause. The Valuator Group offers a costeffective five-year long-term assistance plan for insurance valuations.

+27 (0)861 659 659 / +27 (0)82 900 5385 gavin.c@thevaluator.co.za www.thevaluator.co.za SOUTH AFRICAN PROPERTY REVIEW

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people in profile

Are you looking for a property equity partner? I

nvesting in property is a capital-intensive and time-consuming exercise. While commercial banks will provide funding to property ventures, they generally require a substantial equity contribution from the developer or investor. Few developers or investors have the equity required to implement the opportunities that they have identified. Sasfin Capital’s Property Equity division is perfectly placed to fulfil this need and become the equity partner of choice to the property sector.

Our service offering

Barry Chapman, Head of Property Equity at Sasfin Capital

In addition to being an equity partner, Sasfin Capital’s Property Equity division provides a range of solutions to clients across the property spectrum, including mezzanine funding, debt raising, deal structuring, risk assessment and the ultimate exit of an investment. Property Equity also has a network of partners and associates who can ensure the opportunity in a transaction is maximised. The division operates across various sectors of the property market, including: ● Residential developments and rental schemes ● Retail ● Industrial ● Office ● Student accommodation ● Specialised properties, e.g. the healthcare sector.

58

Specific focus areas for Property Equity are: ● Residential rental schemes specifically aimed at the affordable end of the market and at students. The rising interest rate cycle, densification of cities and cost of transport are all driving the demand for affordable residential accommodation in close proximity to major metropolitan areas. Student accommodation is also in high demand at all of South Africa’s tertiary education institutions due to explosive growth in student numbers and a historical under-supply; SOUTH AFRICAN PROPERTY REVIEW

● Properties with good-quality tenants on long-term leases; ● Short-term residential developments on an opportunistic basis. Developments which serve as a primary residential dwelling and are priced to cater for a large segment of the market will be considered. Property Equity’s primary focus is on the mid-market property investor with transactions between R50-million and R200-million, although we can consider larger opportunities. The division considers each opportunity on its own merits. Recent transactions that have been concluded and implemented include the following: ● A substantial multi-phased residential scheme aimed predominantly at students. The scheme is in close proximity to one of South Africa’s major universities and includes a private gym for residents; ● Assembling an inner city residential portfolio focused on the Johannesburg CBD. Five separate buildings have been identified and purchased to date. Four of these buildings are redevelopment opportunities; ● Two separate acquisitions of large industrial properties that are tenanted by corporate users on long-term leases. Sasfin has its own in-house legal, credit, administration and deal-making resources to ensure an efficient and effective assessment and implementation of your transaction.

t: +27 (0)11 531 9196 Barry.Chapman@sasfin.com www.sasfin.com


company in profile

Taking the real estate reins A Director at Cliffe Dekker Hofmeyr for 14 years, John Webber steps up to take more of a leading role as National Practice Head for Real Estate

John Webber, National Practice Head for Real Estate

J

ohn Webber moved from Bloemfontein to Johannesburg to join EFK Tucker as the head of the firm’s conveyancing department. In November 2000, he joined Hofmeyr Herbstein and Gihwala (now Cliffe Dekker Hofmeyr/CDH) as an Associate; he was promoted to Senior Associate in 2001 and became a Director in 2003. He’s acted on behalf of both the provincial government of Gauteng as well as private developers in the delivery of RDP houses, and has attended to more than 12 500 transfers to beneficiaries of new houses in terms of the RDP housing-subsidy scheme. “Property law is an evolving and extremely complex field, and the highest levels of cross-functional expertise are needed as demand for sophisticated transactional arrangements increases,” says CDH Chairman Attie Pretorius. “Our real estate practice is highly sought-after as we continue to assist clients with successfully navigating these complexities, with strong leaders like John at the helm to drive growth

and innovation,” says CDH Chief Executive Officer Brent Williams. “I wish him well in his new role, and I look forward to CDH further enhancing its reputation as one of the top firms in the country, placing client interests at the heart of everything it does. “John’s responsiveness and dedication to our clients, together with his commercial mind-set and innate leadership abilities, make him a natural choice to succeed Attie as National Practice Head. We know he will continue to make significant strides and build on the prodigious legacy created by Attie. As a firm, we express our immense gratitude to Attie for his pioneering leadership, acumen and grit.” Webber specialises in new real estate developments relating to both sectional title and township development. He’s been extensively involved in the affordable housing market, attending to the establishment of more than 75 new townships, which include more than 34 000 erven. Affordable housing is the real growth component for the real estate market because of the tremendous demand for housing at the lower end of the market. Additionally, the new townships include all of those created in the Waterfall mixeduse development in Midrand. A significant portion of  Webber’s time is spent on the Waterfall development, which is the single biggest development he has ever been involved with. “We had to find a way to commercialise the land without it being sold,” he says. “Eventually, we put together a document that would govern all the residential properties. Initially it was just the development of free-standing housing units with no sectional title components – but now that sectional title developments are coming, we have tweaked these agreements. “The leasehold model we created provides an alternative way for developers to access large tracts of land, and will make a difference to their financing costs. As the model also has the benefit of an annuity-type income,

it is ideally suited for the development of community-owned land. After 16 years of involvement in this ground-breaking initiative, at CDH we really know what we’re doing. We know that it can be repeated elsewhere, specifically in the context of the development of land held by tribal communities and local, provincial and national government. “Taking an overall view of the property industry in South Africa, Webber says that it’s hard to believe we are in a recession when looking at all the building that’s going on at present. “As for taking on the reins as National Practice Head for Real Estate, I look forward to continuing the great work we’ve become known for,” he says. “As is the case with any ship that’s been on a journey of excellence, there are elements that can be improved upon. We know that ships need time to turn, and that some of our practices and procedures will need to be modified to help them become more efficient. “We will also be looking at how we can better utilise our existing workforce and try to streamline some of the more regular documentation processes.” Part of that process is taking a deeper look at how people can follow clear career paths within CDH. “By following worldwide best practice disciplines and embracing more of today’s modern technology, I’m certain that CDH will grow further, and we will maintain our most sought-after representation position,” says Webber.

t: +27 (0)11 562 1444 john.webber@cdhlegal.com www.cliffedekkerhofmeyr.com SOUTH AFRICAN PROPERTY REVIEW

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digital retail

Catching on to online retail shopping The Head of Listed Property Funds at Stanlib Keillen Ndlovu shares his insights on the positive global trend towards online shopping and the increasingly quantifiable impact this is having on regional retail shopping outlets worldwide Interview by Mark Pettipher Words by Marguerite Lithgow

Keillen Ndlovu, Head of Listed Property Funds at Stanlib

O

nline shopping is very topical internationally, and proving to be a growing retail phenomenon. The total retail sales figures for 2016 reflect that e-commerce makes up more than 14% of total retail sales in the UK, more than 10% in the US and more than 14% in Europe, also revealing that China and South Korea, at more than 16%, are strongly leading the way. Africa, including South Africa, is getting off to a slower start, with e-commerce accounting for less that one percent of total retail sales. This could perhaps be pointing to the possibility that the overall population across Africa does not, as is the norm, access the internet or use smartphones and credit cards, which is generally a prerequisite for conducting online shopping. In the US, where e-commerce is rapidly gaining ground, big companies such as Simon Property Group and General Growth Properties are seeing their shares tumble on the regional side of retail, and are underperforming in the sector mainly because of this shift in the purchasing profile.

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SOUTH AFRICAN PROPERTY REVIEW

With marketing becoming more contentwise, the numbers show that people are going less and less to regional shopping centres to do their shopping, choosing instead to do it via the internet. Also specific to the US, specialist department stores such as, for example, Macy’s seem to be the biggest victims of the e-commerce advance (although this under-performance is jointly attributed to the stiff competition currently coming in from popular European retailers such as H&M and Zara as well as the Japanese Uniqlo. With the combined factors thus having a profound impact on department-store sales figures). Many malls have responded to the trend by converting floor space previously set aside for retail into openings for leisure, food, beverages and entertainment, with the leisure component showing the greatest growth in 2016. Across the UK, the US and Europe, the regional shopping malls are likewise adapting to this development in retail style

by pioneering various ground-breaking ways to increase footfall in the malls. By reshaping themselves into multifaceted retail outlets, they are increasingly offering the public not only the brick-and-mortar shopping experience together with the online shopping facility, but are also redefining their image as sought-after entertainment venues, purposely attracting the entire family to spend more leisure time “at the mall”. Modern technology is proving a very useful resource that innovative landlords have turned to to make themselves attractive and thereby draw the public into the malls. In a universal campaign that’s proving very attractive to smartphone users, mall landlords in the UK, the US and Europe now offer a variety of mall-specific apps to their increasingly tech-savvy customers, creatively using the apps to improve the quality of the shopping experience, and encouraging shoppers to spend longer periods in the malls.

Global E-Commerce Sales Projected to Grow by 162% Between 2015 and 2020 Modern Logistics Space

%

Square Feet, Millions

14

4.5 4.0

12

3.5

10

3.0 2.5

8

2.0

6

1.5

4

1.0

2

0.5 0.0

2010

2011

2012

E-Commerce Sales (L) Source: Prologis March 2017

2013

2014

2015

2016E

2017F

2018F

2019F

2020F

0

E-Commerce as a % of Total Retail Sales (R) 28


digital retail Embracing technology is critical for retail landlords, because it develops so fast. The determination to take an omni-channel approach to augment the shopping centre experience includes the “Click and Collect” that’s more custom to malls, with activity centres such as gyms in line with the Virgin Active branches, yoga classes, cookery classes and the like, as well as social venues

such as good restaurants and up-market coffee shops. Introducing these lifestyle elements into malls will be increasingly complemented by the provision of electricalcar charging facilities, which – although not yet prevalent in South Africa – are definitely on the cards because so much investment is currently going into them here. Charging an electric car can take up to an hour,

Online shopping as a % of total retail sales across the world 0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

China South Korea United Kingdom Asia Pacific USA North America Germany World Western Europe Japan France Australia New Zealand Eastern Europe India Russia Brazil Spain Italy Latin America Canada Mexico Indonesia Middle East & Africa 4

Source: Bank of America Merrill Lynch , Euromonitor June 2016

US Industrial Vacancies at All-Time Lows U.S.

Square Feet, Millions

%

350

10 9

250

8 7

150

6

50

5 4

(50)

3 2

(150)

1 (250)

Completions (L)

Net Absorption (L)

2016 2017E 2018F

2015

2013

2011

2009

2007

2003

2001

1999

1997

1995

1993

0

1991

Research has revealed that shoppers tend to find it unpleasant having to look for parking, find their way to the shops they want, look for the friends they’re supposed to be meeting in the mall, and find their cars afterwards. To assist shoppers in overcoming all of these inconveniences, companies such as Unibail-Rodamco – the biggest mall landlord in Europe – are developing great apps for their malls to provide help. These apps include the “Smart Park” app that finds vacant parking bays, memorises the spot in which you park and finds the car afterwards; the “Smart Map” app that directs shoppers to any store, also giving information about discounts available in the mall; the “Meet my Friends” app that helps shoppers find the friends they’re meeting for coffee, provided they’re all connected online; and the “List Ease” app, which shows your shopping list and tells you which stores stock the items you need. Worth mentioning here is the incredibly popular “Pokémon Go” app, which big malls seem to be using a lot. It is a clever concept – not a game to be played at home alone, sitting on a couch, but one designed to encourage social interaction. A few shopping malls have acquired exclusivity for some of the Pokémon in the app, with landlords making some of the specific spawn spots available in their malls. All in all, “Pokémon Go” draws in people to participate in the dual activities of sport and socialising, encouraging players to spend more time in the mall. The longer the game time, the greater the potential for somebody to purchase something – and to return at another time. It has proved to be a highly successful drawcard. Interestingly, research has found that people tend to habitually follow the same route in and out of a mall. Thus as the shoppers walk in past the doors, the app feature that informs them where they can find discounts can simultaneously give them directions that will steer them to use specific routes through the centre, thus cleverly influencing the circulation patterns of the shoppers. These are just a few examples of the stimulating and fun-to-use apps that are being developed by enterprising landlords to attract shoppers and to reduce their frustration. By registering on the apps, customers make it easy for the mall to capture their details, thereafter understanding their profile, offering discounts and communicating with them directly.

Vacancy Rate (R) 26

Source: Prologis March 2017

How Consumers View Internet Versus Physical Shopping for Different Aspects Refunds

47.5

14.2

Trust in Retailer

32.1

18

Customer service

18.4

Product quality

18.5

44.4 28.9

Enjoyment

29.9

36.9

33.8

Speed of purchase

49.3

17.2

Product info

Regular store shopping is better

15.9

Browsing

The internet is better

59.2 67.2

14.4

Convenience Range

8.6

Price

8.1

70.6 73.1 73.8

6.3

Easy to compare prices

0

10

80.7 20

30

40

50

60

70

80

90 7

Source: Bank of Merrill Lynch Real Estate Industry Overview, June 2016

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digital retail which provides both the opportunity and the time for the owner to go into the mall for a cup of coffee – so installing charging ports where customers are able to park and recharge for a nominal fee is a good way to attract people. The initiative for this is also coming from the motor manufacturers, such as BMW and Nissan, who would very likely partner with malls offering these charging points. Thus it would not be just the mall doing the funding for this. BMW and Nissan are planning to invest in South Africa in the near future, so this development is not unlikely here. In Europe and the US, most malls are rolling this out – it is a particularly growing phenomenon in the US, where there is huge interest in electric cars. Unibail figures for the 2016 fullyear period revealed an availability of 224 electric-car charging stations at their malls, including four sites with Tesla chargers, with 20 sites targeted for 2017. Free Wi-Fi certainly attracts shoppers into the malls in Europe, especially because there is no cap on the amount of data you can use. Unfortunately, this relatively simple perk continues to remain unavailable in South Africa, where the shopper is limited to a tiny amount of about 50MB free – and the hoops he or she has to jump through just to log in are more of a hassle than that 50MB is worth. There is still a lot to be done by South African landlords to catch up on this element; however, it is a trend that will definitely increase. It might become more readily available in the newly built malls where fibre and new technology can be installed as part of the infrastructure from the outset. Probably one of the biggest challenges to online shopping is prompt delivery. People usually want their orders delivered overnight, or within two days at most. In the UK, deliveries take place mostly overnight, while

Westfield: Leisure Component of Retail Sales Experienced the Highest Growth Speciality Retail Sales Flagship

Period Ending 31 December 2016

Regional

12 months

3 months

12 months

3 months

3.5%

5.5%

0.5%

3.0%

Specialities

By Category Fashion

2.2%

3.5%

(1.2)%

Jewellery

1.9%

3.0%

5.1%

5.3%

Leisure

5.1%

8.9%

(1.3)%

6.0%

1.4%

3.4%

1.3%

2.7%

(3.9)%

1.4%

6.4%

Food Retail General Retail

(0.8)%

11

Source: Westfield Corp Full Year Results Presentation 2016

in the US, online shoppers expect delivery as soon after placing the order as possible. Distribution centres are located very close to warehouses, with the delivery going directly from the warehouse to the customer. The cost implication of this is a challenge faced in particular by the industrial sector. Drone delivery is a very modern phenomenon; it is hoped that at some stage everything will be delivered in this way. Experimentation using drones is under way in the UK, where they are already being used for deliveries – but these are mostly in the countryside where there is more space and, consequently, fewer restrictions. There are several challenges that still need to be solved before drones can be used universally, not least of which is the many legal restrictions in place regarding their use. People are concerned about invasion of privacy; there is potential for interference with surveillance cameras and security sensors; and air right issues are potentially problematic. In South Africa, we could possibly anticipate a problem with security matters too. It is too soon to tell

Problems Encountered When Buying Online Fraud Foreign retailer did not sell in my country Final Costs higher than indicated Complaints difficult Difficulties in finding information on legal rights Wrong or damaged goods delivered Technical failure of website during ordering or payment Speed of delivery slower than indicated 0%

2%

Source: Eurostat 2016

62

SOUTH AFRICAN PROPERTY REVIEW

(0.1)%

4%

6%

8%

10%

12%

14%

16%

18%

22

whether this will have an impact on South African shopping centres. Anything to do with online shopping, including drone delivery, will involve a largely tech-savvy population where the norm will be for the majority to have access to internet, smartphones, credit cards and formal sector shopping. In South Africa, the occupancy rate at retail outlets such as shopping centres and malls remains stable, and on average 95% of rental is in the retail space. There is so much retail, in virtually every space you can find, in South Africa that it has become a lot more competitive. In time, we may find that retailers need to rationalise their stores, but so far it’s been good. As mentioned above, it is mostly in the US department stores that space is being replaced by other types of retail. In South African malls, where sales growth used to be about seven or eight percent, main branches now reach levels of three to four percent, probably as a result of a combination of saturation and a weak economy. Using the Mall of Africa as an example, the trend is for stores to become more specialist. The Mall of Africa Woolworths branch is a classic example of a flagship Woolworths outlet, offering more across all categories – and the brand has created a different direction for it. This is a solid concept, and it is going to be the trend for South Africa. Exclusive Books, for instance, which has redefined itself as not only a book store but also a reading store and a place to enjoy a cup of coffee, exemplifies the idea of encouraging the shopper to enjoy his or her shopping experience. The Mall of Africa – with more coffee shops, good restaurants and flagship stores – is a centre where you can enjoy your shopping. This concept of the shopper enjoying their shopping experience is where our future lies.


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SOUTH AFRICAN PROPERTY REVIEW


SAPOA events

PROPERTY REVIEW - LogoTreatment.pdf

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firm

R E T S I G E R

South African

recommended

ROPERTY SAPOA P

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2016-2017

Association

PROPERTY

t.pdf

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For SAPOA members

ister

- Property Reg

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.

m

2016 - 2017

2016-11-29

BOOKINGS 2018-2019 OPEN FOR SAPOA MEMBERS

12:38:11 PM

● 40 categories, full - and part-category page sponsorship ● Highlighted data entries ● Data entries with logos ● Affordable small advertisements (half- and quarter-page) ● Boxed columns and part columns

For advertising opportunities and rates contact t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: sales@sapoa.org.za 30 54 50

SOUTH SOUTH AFRICAN AFRICAN PROPERTY PROPERTY REVIEW REVIEW

Booking deadline: 21 September 2017 Material deadline: Logo entries 5 October 2017 Column entries 5 October 2017 Display adverts 2 November 2017


international opinion

Three themes for real estate investors Low yields across real estate and fixed income is leading investors to balance and broaden their views of appropriate investment assets By Mark Clacy-Jones, Head of Data and Analytics at Knight Frank

E

very time the global economy is on the verge of returning to a normal interest rate environment, it is buffeted by an unforeseen shock. The latest chain of events in the EU will keep interest rates lower for longer, and leave real estate investors grappling with innovative ways to build successful portfolios.

Pricing and portfolio rebalancing Commercial real estate has benefited from major capital inflows in an environment of low interest rates and loose monetary policy across many major global economies. Any interest rate increases in advanced economies (other than the US) are on the back burner, following the UK referendum vote to leave the EU. It appears that we

“THE CROSS-FERTILISATION BENEFITS BETWEEN INFRASTRUCTURE AND PROPERTY ARE VERY REAL.” have moved from the “lower for longer” environment into the “even lower for even longer” environment, with 10-year bond yields negative in Japan, Germany and Switzerland, and under one percent in the UK, France and Hong Kong. Intermittent volatility in equity markets has bolstered real estate’s favoured status, as investors search for assets that deliver yield with some degree of certainty over the long term. Consequently, real estate yields have fallen, leaving pricing at historically high levels but with sensible risk premiums still in place. (See graph on page 68.)

Despite real estate in many large global markets being perceived as late cycle, there are a number of factors that make it unlikely that we will see yields rising dramatically. Going forward, a muted supply pipeline and low vacancy rates in many cities are likely to keep property yields low. There has been far less reliance on debt finance in the current cycle when compared with the previous one. With the major pricing correction of 2007 to 2009 still in the minds of many investors, these contradictory pricing signals are leading owners and managers to consider the balance of their portfolios while maintaining a solid asset allocation to real estate in the region of seven percent to 10%. This portfolio rebalancing exercise should keep liquidity in the market in the short term, as investors trade higher-risk assets for lowerrisk, long-income assets, including healthcare and food stores. Global investment strategies can also benefit from volatile currency markets, provided that the transactions are well timed. For example, the recent fall in the value of the UK pound following the EU referendum will be a factor influencing the timing of investment decisions into the UK, particularly from capital sources outside Europe.

Real estate to real assets Property has always vied with many other asset classes in competition for capital, but over the last 10 years definitions have shifted. Property has grown in scale from a small number of core sectors to cover a wide range of asset types under the real estate banner. Now real estate is often viewed by investors as an asset type that sits within real assets alongside infrastructure, which incorporates toll roads and bridges, airports, railway lines, power stations, telecoms networks, and a myriad of other physical assets.

Infrastructure benefits from many of the same characteristics that make property attractive to investors. It is scalable and provides a steady income, which is perfect for asset-liability matching. It is local, but portfolios can be diversified globally, and it exists in a physical sense. Because of the lowyield investment environment, allocations to infrastructure are rising. A BlackRock survey of European, Middle Eastern and Asian (EMEA) institutional clients in early 2016 showed that infrastructure was the asset class investors were most likely to increase exposure to, followed by property. In July 2016, Brookfield raised US$14-billion for the largest infrastructure fund ever, proving there is huge appetite for the asset class. The cross-fertilisation benefits between infrastructure and property are very real, with infrastructure in many ways acting as the lines that join up the real estate dots. Neither can excel without the other. This can create a virtuous circle of investment and return as the built environment benefits. Global infrastructure investment should be a driver of real estate investment going forward.

A BlackRock survey of European, Middle Eastern and Asian (EMEA) institutional clients in early 2016 showed infrastructure was the asset class investors were most likely to increase exposure to, followed by property SOUTH AFRICAN PROPERTY REVIEW

65


CROSS-BORDER REAL ESTATE INVESTMENT

international opinion

CAPITAL FLOWS FOR REAL ESTATE INVESTMENT – 12 MONTHS TO JUNE 2016

Asia to United States

$36.4bn

Middle East to United States

$16.1bn

United States to Latin America

$0.52bn

Asian Investment United States Investment Middle East Investment

Source: Knight Frank, Newmark Grubb Knight Frank, RCA

Compared to 2009, cross-border commercial real estate investment has increased more than five-fold to U.S.$320 billion in the 12 months to June 2016. Negative interest rates, volatile currencies, and portfolio diversification mean that this upwards trend will continue 66

SOUTH AFRICAN PROPERTY REVIEW


international opinion

Asia to Europe

$21.6bn United States to Europe

$51.1bn Middle East to Europe

United States to Asia

$6.1bn

$5.4bn

Middle East to Asia

$2.5bn

Asia to Australia / NZ

$9.1bn

United States to Australia / NZ

$4.7bn

THE CITIES THAT DRAW THE MOST OVERSEAS CAPITAL

Manhattan $26.5

London $25.0

Paris $7.4

Sydney $7.0

Shanghai $6.9

Los Angeles $6.2

Madrid $5.6

Berlin $5.4

Singapore $4.4

Sales to foreign investors - U.S.$ bn 12 months to June 2016

Source: Knight Frank, Newmark Grubb Knight Frank, RCA

SOUTH AFRICAN PROPERTY REVIEW

67


international opinion

Residential investment is moving into the mainstream in countries where it has not been in the past, through growth of the private rented sector Buildings with beds The days of building balanced portfolios around the tripartite of retail, office and industrial assets are over. Residential investment is moving into the mainstream in countries where it has not been in the past, through growth of the private rented sector. Additionally, understanding a multitude of temporary and permanent accommodation options is becoming a necessity for large investors, as both demographics and globalisation support the demand for hotels, student housing, senior living and healthcare. Demographics favour investment in housing

for those at the beginning and end of their adult life. University draws many people to new cities, increasingly in new countries, for the first time in their lives, and the trend of increased enrolment into tertiary education doesn’t seem to be abating. A lack of appropriate product in many cities has drawn interest from developers and investors in recent years, creating a new institutional property asset class that is large enough to feature in balanced portfolios and specialist portfolios alike. This phenomenon is particularly obvious in Europe (where housing stock is older and typically built for single-family use rather than the modern apartment blocks that are a better fit for student purposes), but is also seen on the other side of the globe in Australia and many cities in between. At the other end of the demographic spectrum, senior living and care home assets are experiencing very similar supplyand-demand dynamics, as large ageing populations in the largest economies in Europe, North America and Asia-Pacific have the financial means to demand better accommodation and care as they grow older.

The United Nations’ world population projections predict a 12% increase in the number of people over 75 between 2015 45 and 2020, and another 18% growth by 2025. Real estate needs to meet the demands H E M A R K Etravelling T CYCLE of the growing number ofT people for business and for pleasure with a range of hotel products to suit all budgets (from new hostels in Europe to six-star resorts in the Middle East) and duration (from basic, single-night business hotels to longer-stay apart-hotels). IATA forecasts suggest that global passenger numbers will increase by about five percent per year for the next five years, and the hotel sector in gateway cities should continue to benefit from this increase in travellers.

The United Nations world population projections predict a 12% increase in the number of people over 75 between 2015 and 2020, and another 18% growth by 2025

10.00

Office Yield (%)

Yield Spread

Note: Bond yields reflect pricing at the end of Q2 2016

1.54

1.96

3.06

3.64 -0.24 Tokyo

3.76

3.63 -0.13 Munich

1.69

3.51

4.03

0.76

0.19 Hong Kong

Paris

-0.51 Zurich

0.24 Stockholm

Singapore

-0.13 Berlin

Madrid

-0.13 Frankfurt

London

1.04

1.22

1.02 0.25 Vienna

Taipei

2.78

4.38

3.23

2.91 1.49 San Francisco

2.30

3.00

3.25

3.25

3.40

3.50

3.60

3.75

3.90

4.00

4.25

4.25

4.40

4.40

4.40 2.91 1.49 New York (Manhattan)

3.17 1.33 Milan

4.15

3.28 1.22 Barcelona

Boston

Amsterdam

0.09

1.49

1.91

SOUTH AFRICAN PROPERTY REVIEW

Brussels

Seoul

Warsaw

0.18

1.46

1.49 Los Angeles

Shanghai

4.66

3.41

4.82

3.30 1.98 Sydney

3.74

3.37 1.98 Melbourne

2.53 2.97

4.01

2.86 2.84

4.51 1.49 Chicago

Beijing

Mumbai

4.50

4.50

4.75

4.90

5.00

5.20

5.28

5.35

5.50

5.50

5.70

6.00 6.20 2.84

3.36

7.58

8.31 Moscow

68

Source: Knight Frank, Real Capital Analytics, Newmark Grubb Knight Frank, Sumitomo Trust Research Institute

10 Year Govt Bond Yield

2.42

1.69

10.00

GLOBAL OFFICE MARKET MONITOR - Q2 2016


30

SOUTH AFRICAN PROPERTY REVIEW


events

Port Elizabeth AGM breakfast session SAPOA PE Regional Council held an AGM breakfast seminar, sponsored by First National Bank. The topic for the morning was “South African Property Economic Outlook – 2017 and Beyond”

FROM LEFT John Loos, Mark Bakker, Charl de Coning, Councillor Retief Odendaal, Jackson Ngcelwane and Roelf Weyers

Ian Whittal

Maartje Weyers

Ivan Edelson

The first guest speaker, FNB economist John Loos, discussed whether retail could continue to be the top performer through tough economic times. Other speakers included Councillor Retief Odendaal, Jackson Ngcelwane (Director of Budget & Treasury) and Roelf Weyers (Assistant Director: Valuations), all from the Nelson Mandela Metropolitan Municipality. The breakfast session was thoroughly enjoyed by all 60 delegates who attended. FROM LEFT Johan Jansen van Rensburg, Charmaine Jansen van Rensburg, PJ Duffy and Kenneth Potgieter

70

SOUTH AFRICAN PROPERTY REVIEW


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SOUTH AFRICAN PROPERTY REVIEW


events

Western Cape Breakfast Seminar SAPOA Western Cape hosted a breakfast seminar entitled “The Conversion of Commercial Property to Residential Property”

FROM LEFT Western Cape Regional Secretariat Jehan Adams, Deon van Zyl of WCPDF, Refqah Ho-Yee, Caroline Coates, David Cohen of Signatura Homes, Western Cape Regional Councillor Marlon Parring and Riaan Munnik of Growthpoint

As part of his welcome address, regional Chairman Marlon Parring gave delegates some feedback on the region’s recent engagements with the public sector. He also highlighted the various exciting social and inclusionary housing reports that delegates could look forward to receiving at SAPOA’s upcoming annual Convention in Cape Town. Guest speaker David Cohen of Signatura Homes presented a concept of converting commercial property into residential as well as the findings along the way. It was a very informative breakfast session, enjoyed by all 130 delegates in attendance. The breakfast session was sponsored by Growthpoint.

72

SOUTH AFRICAN PROPERTY REVIEW


RAINBOW JUNCTION ROLLING OUT REVOLUTIONARY RETAIL IN NEW NODE OF ABUNDANT LIVING Rainbow Junction: A cutting-edge and exciting mixed-use property development in South Africa is taking shape in Tshwane, on a prime 140ha greenfield site in the northern foyer of the CBD.

Experience Abundance... Anchoring the mega project is a 92,000m 2 super-regional mall in another league, with an iconic 75m-high Viewing Tower as a major ‘Third Place’ attraction, together with a vibrant public piazza. Surrounding the catalytic mall, Rainbow Junction is developing further

convenience retail, high density residential, full life-cycle schools, and integration with the A Re Yeng bus rapid transit system and modal interchange of bus, metrorail, taxis, Gautrain links and Wonderboom Airport shuttle. Further phases of office and commercial nodes, with an international convention centre and a variety of exciting hotels are in various

stages of planning. All development faces a magnificent 4km-long green belt along the Apies River. All these unique aspects enhance Rainbow Junction’s competitive edge as an exceptional property and business investment.

Phase 2 under way The progressive Rainbow Mall has: •

Secured retail giants Checkers and Pick ‘n Pay as anchor tenants

200 local and international retail tenants in final negotiation

One-of-a-kind ‘Kids World’

First-of its-kind lifestyle rooftop: Open-air markets, sports amenities, medical day clinic, gym, hotel office and residential

New generation retail evolution with emphasis on fun, food, fashion, lifestyle, entertainment and great attractions for all ages.

Set apart from traditional mall offerings, not only in terms of its retail mix and ‘placemaking’ attractions, but also its green-conscience, sustainable, climate-sensitive design. Rainbow Tower: •

An unprecedented beacon in the Capital City

Houses a viewing deck, fine-dining restaurant and champagne bar

Boasts incredible views of the Magaliesberg Mountains through to the CBD.

Rainbow Square: •

Tantalizing mix of restaurants, coffee shops and entertainment venues

ww.rainbowjunction.co.za

Buzzing focal point in a new generation mall

Hang-out hotspot for shoppers, business people, residents and tourists. SOUTH AFRICAN PROPERTY REVIEW

Retail enquiries: Gavin Tagg Retail Network Services Tel: +27 (0)11 807 6995

30

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UPCOMING EVENTS & TRAINING PROGRAMMES

2017

JULY 20

East London

East London Breakfast Presentation

TBC

Gauteng

Gauteng Networking Event

TBC

Gauteng

New Members Cocktails

AUGUST 08

Gauteng

Women’s Day

18

East London

East London Golf Day

22

Gauteng

Gauteng Research Breakfast

SEPTEMBER 08

Gauteng

Gauteng Breakfast Session

18

East London

Broker’s Networking Session

Dates are subject to change. Please see Sapoa.org.za for regular updates.


JULY 06

Mpumalanga

SANS 10 400

16-28

Gauteng

Property Development Programme (PDP)

17-18

Gauteng

Property Finance Programme (PFP) Basic

19

Port Elizabeth

Property Finance Workshop

31-04 Aug

PROPERTY REVIEW - LogoTreatment.pdf

Gauteng

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Introduction to Real Estate (IRE)

AUGUST 01-02

Mpumalanga

Negotiation Skills Masterclass Programme (NSMP)

04

Gauteng

Occupational Health and Safety Workshop

15

KwaZulu-Natal

Method for Measuring Floor Areas in Buildings (MOMFA)

18

Gauteng

Sectional Title Workshop

21-23

Gauteng

Property Financial Programme (PFP) Intermediate

31

Gauteng

Conveyancing for Non-Conveyancers Workshop

SEPTEMBER 01

Gauteng

Method for Measuring Floor Areas in Buildings (MOMFA)

15

Gauteng

SANS 10 400

19-20

Gauteng

Negotiation Skills Masterclass Programme (NSMP)

22

Gauteng

Introduction to Brokering Seminar Day 1

29

Gauteng

Conveyancing for Non-Conveyancers Workshop


off the wall

Kenya begins Africa’s tallest building project Carlton Centre in Johannesburg, South Africa, is Africa’s tallest building. The 50-floor, 223-metre building was completed in 1973, and no building has surpassed it since. But not for much longer: in three years’ time, the tallest building on the continent will be The Pinnacle, currently under construction by Hass Petroleum at the junction of Upper Hill Road and Haile Selassie Avenue Compiled by Phil Ruimte

T

Facts Official name

The Pinnacle Tower

Name of complex

Pinnacle Tower

Other names

Jabavu Village Tower 1, Nairobi Tower 1, Hass Tower 1, Hass Towers

Structure type

Building

Status

Proposed

Country

Kenya

City

Nairobi

Street address

Upper Hill Road

Building function

Residential/office/hotel/retail

Structural material

Concrete

Proposed

2015

Construction start

2017

Completion

2020

Companies involved Developer

Hass Petroleum; Jabavu Village Ltd; White Lotus Group

he Pinnacle Tower, encompassing two giant towers, is being developed by Hass Petroleum and White Lotus Group. The project is a 70-storey skyscraper with a 45-storey second tower. The tallest tower will mainly be an office tower, while the second tower will serve as a luxury hotel tower for the worldrenowned Hilton Group. This mega development, designed jointly by Archgroup and Meinhardt Group and being constructed by Chinese company China State Construction Engineering Corporation, is projected to be completed by December 2019, although the 255-room hotel may be completed earlier. Pinnacle Tower will have a helipad at over 800 feet – the highest on the continent. The idea is to have rich people fly directly to the hotel to beat Nairobi’s hectic traffic. Once completed, the US$194-million Pinnacle Tower will be almost of the same height as the famous Eiffel Tower in Paris, France. The Upper Hill tower will stand at 300m (980ft) once completed; Eiffel Tower is 324 metres (1  063ft). Pinnacle Tower will include five floors of shopping, entertainment and restaurants plus a health spa, a gym and an infinity pool. There will also be 200 residential houses run by Hilton Hotel. These will include onebedroom, two-bedroom and three-bedroom fully furnished luxury apartments.

Design

Archgroup Consultants

Figures

Architect of record

Sketch Studio

Height: Architectural

320m/1 050ft

Design

Meinhardt

Height: To tip

320m/1 050ft

Engineer of record

Metrix Integrated Consultancy

Floors above ground

67

Main contractor

China State Construction Engineering Corporation

Floors below ground

4

Quantity surveyor

BECS Consultancy

Number of hotel rooms

255

76

SOUTH AFRICAN PROPERTY REVIEW

The building will also house three floors of basement parking, a gaming zone and a luxury mall spread across three floors. Hass Petroleum Group is a regional oil marketing company with significant presence in East Africa and the Great Lakes region. It has invested heavily in storage facilities and retail station networks with a strong supply chain infrastructure. Its headquarters is in Kenya. White Lotus Group is a US vertically integrated real estate development firm that optimises design, financing, implementation, delivery and operation of complex or repurposed real estate assets.

Africa’s tallest residential building to date Ponte City apartments stands at a height of 173m (568ft). Ponte City apartments is the tallest residential building on the continent. It was first opened in 1975 and has 54 floors. It is cylindrical in shape. At the top of the building there is a neon sign, which is the largest sign in the southern hemisphere.


REAL ESTATE

FROM POWERFUL PARTNERSHIPS COME POWERFUL SOLUTIONS In the complex world of property law, it makes sense to partner with a leader in their field. Whether you’re a real estate investor, developer or corporate end-user, you won’t find a partner with more legal experience and expertise than Cliffe Dekker Hofmeyr. We offer a full range of services and legal advice covering every aspect of the real estate industry and work with our clients to find solutions that are both groundbreaking and practical. Cliffe Dekker Hofmeyr. The real estate legal partner for your business.

cliffedekkerhofmeyr.com

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