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PROPERTY

South African Property Review

SOUTH AFRICAN

June 2017

legal up

date

REVIEW

Land re f developorm: Version 2 ment o f agricu of the preser va ltural la T nd framtion and ework legal update

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2016/08/25

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he Sub division of Agri By Mum was pas cultural taz Moo sed in Land A la subdivis 1970 to ct nat ion of io p re n al ve g nt agricult overnm unecon the ex ural la omic la en t has th ecutive nd unit nd in e that la au legislati thority to per s. The nd that ve and to see Act pro forman historica of Sched to the area of ce by vided lly fell effective ule 4, a munic functio municip outside or into ns in re ipality al functio it be sub ie th s spect of or a to e by the mor nal area of thei divided w re m n e spec gulating r is of mun atters in could n withou Ministe ific lis icipal p th t Sc ot te e exerci the con hedule d in Pa r of Agri th lanning ei se r 4, se ex rt culture. by mun nt of th ecutive which Constit B of Sc In 1998 ic au e ip ut alities of thority ional Cou hedule 156(1). , Parliam re fe 4. The rt began However rred to interpre ent pas the Sub in sectio , regulat ting the sed a la its analys division does n n rura w repea functio ing thei is not b of Agricu ot leav the imp ling nal area l develop y r author e room ltural La lementa authorit of “urban ment” b ity th n fo d ti r y A on ct us ut rather bee or intrud and e funct , but of this urping ional ar by interp and au law has By Mumtaz Mo n brought in ing into their ola to th ea n re w or eff th ot of h ti it ich it wen ect. ng eir fun y. This is yet 41 In the G municip ctions overnm t on to fin also clea (1)(f ), w al plan to app ent G ning, 2016, th hich pro r from d did in rove ap 1 Backgrou section clude th vides th govern nd e Minister of azette of 2 Septem plicatio e power ment an at of al la n rsion 2 l b n A s er The revisedVeGu sp d and th griculturand d all or for the heres of each sp ideline of the use of natura e estab gans of e pub rezonin Dped elo hces The pur ere wh raft wit l resour lished Preserva is dev lishmen aim of rem State g Pohlicthe mus posive in inding and ilet also SPL y andpro tion gui t of tow not asdon ting justifiaor ithin anddin nctnom e through w Bimo terpreta blefueco sum ll on Dgevdev nships. ion icexand and investLa elopers dev the inclusre q UMA el e ui ndon th op ti re an ors ce e on . Chow ion s m soc y elo p th of omm ent of A t thial pment for in of the sc sustain at aabl bui development power ldin te os en re the gs e rm e (res st ben g ts co h commercia s ide ri ri efit crea con ed of of on th ntial, futurecultural ctive m ditionsto tha due ferred in ules thpre dev l and e Csen t and devnelo on 30ma t eldriv generations. eaning Policy an onst opm e en acturing) esho them the itution. Onuf per to thin tes ctob Althoug be ascrib a co be design t so d Cha k differe uld er 2016 Bill pte tontly thed, h Sched wer exand ed e Sudev ercise r e1 of ag . The Bi intehgrate as to enable bdelo NEM ule 4, sustainability principles in ivisped ope ricuA,ltur each sp the Environ is power rated, ll isMa allo herent TBacwit kghro a an ion and to view to red the me of Pa b re nag e nta dev y h em p rt s withou ere the otelopment. laent Agricult d its ai ucing environ ce Prinncip One of A, the cati a nct l nd enh he rrisks, uand les, Subsecas assi er spher menta obj url al (aLato t interf m is to atio gnect tion 2, fu efor s ivescoofh the guihdel nal nalto ar 3 and io o ancing soc es r), er n 4 refe . d en p n Th m U rs p ea ro to n dev ine le A an ce ial er is restrict the principles eloof is ct, co bentect and es wit o d p bet rtun el gis financialofsus func o tercurr a fo of sus proevinci ricultdev ive app mp enper tainabl y, the Bi efits ag ompabiat elopment, suc t form ural ldin hthath e en ctain del theing bui roach tion wers a f for S lativThe aliver env ll goes fa land. h etence, it doe t e function lexlity. hedulgs legiron virorent sta islamevental efficiesc ironme al schem g erasn that env management s nta r beyon es,tha and notl em ncies nme te tial P cur of most develo wthich but arepow men muov also cost-efftiect d this. the s betw nd Land Upaund st place in mun e of coent W n laake t pm ve h t peo ert to a n er n st ple ive s t icipdes s specifi flict needs at the nin n gin the and is apro national . Whether intrthe al co (ND poli se M ir e g ud it n ri ie vin affo st in fore ign e cu ce s. e rda c it fron ing is a (S g leg on theble homes or hig lturathal la t of ut powers nd t the an Ligkesed itsio demand con nalcerco n,m and h-end apartm islatsical, psy ex nP 2y0?1are1). the ir phy emth,eand petser adm tical a n remPLUMcon old the ) in S a-ba envece whot ents, on log ion upcho Acty, do Theedinto or clusive mun tak icalic t thenot ouera , dev sid Thcee cobui hicels nd lantionenthe ains h is con resorts, offi ipalelo inist al, com itiepm nstldin rodu cultural and insoc efficiency tin hBiellter includ efiinntes gsti or s bent areschour th Adfrto it mercial ferrest u curr reial y Spdams ed ic e inte Pa sp ag c o al r res a a ec rt n t abl l ri ts of ces s la a io ish cu ll a d t B e paof l dim nLdaouts tial P Also,nltothe me c ecints eto n ur ngwetha ly. conof sio, n-mresaour l be tia munequ n. sht ipwil ide the elopm serSc f al devb ndur ised icipitab la n vinhgeddes d Uing mpelo uleign4s will The . It thenutil al p mustl pla of a ompon tive to the let codev kince-g with ensions of pment ,m bennsoc se Mof a pnro lexin in aimmenta elowent maun env fundelctiveiornsustain ing. s ingially,lannbui naic it to eigand Ng.orises operaticate anded lly anag clgiron gaprin en respect and econom geipmal pla mun e ap or infr fr 16ses al areabl cy ociplesy is pla peaast ndgla ldinAgs ical differen on opha The nabl riculteur ttrht ly sus nninog. nain rsructur enttain of .2ag es. a mal f f athree ofagre The ib eni o S e. Se en inte ng f t n e h icipa ts sysamework inte Th . u P m the ntio cl ct 0 ta n d la T GD a buildin t d unicipal p to the ion 41 13 (S t Ancd inn of this guiLdel he e sashse ag UisMine uilsARD inclisudes cials will use andgratedgu not egsrasare latri t lt eugh A ) of the sesve naectwh se landoffius ear to endPin term lyocu the ND e auto this (fgui lanning al (wh hasaligned Lg lity w tems andpla lddeep th itth UM reno potden P y ur s inath is C del visi en zo r m is on of ine up en d on a eng b n the 203 st A p agi n l ti in on e r g itution ng with stakehomy of enalsabui nt g of la ldinin a nChapte) w eritwn categ ere u of con pransc are dra in sp0, asfuton in rm dantain confirm laonun old ea n ht environ inin tiontheg la ised mepned main nedw Lanr 5. This techa tto s ratia keScl icebs e ed up)orto mental dass stipulat ers suchchassphere in s the me to im sed asimp fo oauas ouhtem isSP taltoc gabsc d a si usepteof l pLU ulr plaenv. iron ded onththe of gover hatigheffi thseani Micat instact es and essment inpra sfr1ngf g th ed la A -pot plem me to cieen h A to at ctit n nta and ncy n s n ion l 3 a r g n sus m n ad on in dev of ers u ment b tainleabilality n ng elopers, whoany p ic . g is defi ing opntgean tial gcrlethe buildin e spher an, awh of th entduringcam engrati te y s d ap must ow us It is the in an pro geich naptio the nd e may n mo tor emesc on. incer useedof Sou the ope inng laan tes s is e pr orpor d lanrecom ed in cl pla op anth pro orate h t em d m the h ve me to ot fu p Afr d nda e e e ica’ n , n o p o a tion as s as an n v fo ction of The dits en t. S o srich thosthe filarsntd s into sume se 4into ious It m is alicieiu eral con d fun teim ow e copla ● Trepar mend nts co g la8wis ldand into me rdes sm-pot cernouthastninc nni the oth tire g v edgen nfe ign of or ticaipme tran and rrng he r to apun sitior tegr d thefram anyartyp o al ed en ea orp on efi ew t ernbui er ora sp f ti of th mplexit greoen n e t ting a on al of at ed n h ex dev e C low agrincu atbeedy, bui ks th t rbo onelo cept at c ecoto iteat -ca mldin them in pmtio nom ew inclu stitu ent. eviselop ya Fr n ial dIt is ent.gwdesignin ra io lturla mnce arne bin alnlacos ilie envm Plldanres n. The lim terms of d intion, om isag h fos llo Swil rly s ened ndt . leaand confi regulato escnala nin climtate oul thlead pto t tha dinde: on of th nin ganTrdto effi atun cha byt com ited scop ich at lin ecre nge ws, it e oal the ts ate consum ib oneplia ry fr stru g sy rme Afrnts ctciewh h the e , g Gau ten MgunPro spnce fm e for inte ecyof wil ss uto is n herewit tdet vin ica.cl buyaing requirewerheraw s te m d icip roderu clie or arenes fro m intour on S le mr th ea tainable Dev alce Sus in the aff anyesoot em theent nicip beh dev T rv driv d avi elo en h our co . c pm Bi at patia in the W suebwd al oiv elo or Imp tio e e cha u nt ll h pm A rkiswio the d nge(l.and n nicip for e andwd A ithneand auent imp in hic ent airs of anot h rov Ct M l Pla daatl ed alities erlem thatio ingec Use / tct haThe wrersp oritny Guideline evelopm dev man ach exp Pex-sho theasn e Ping / curan dt treinfr her is th uld w s object nnin it ren esp plan to m start h Man th a pla A ea zo to s at ive nni en e e p is ast the s p ch ng m n ruc of M lo p t e o ak in th sta o un this e owers dec g an moreco ge,C ere thesphertehe ning and r nst anag gui e a tla e any agem ex c g htur ofere. delpm re nsin Pap ib it wit ioennare ag e oMo conferr itutare app d La peo ple rif cu mus , rovals eme isine ot er o uting h the pro ioffinal oenthnedplawh te becein tin hercial n t oft the ie ural illine golt elo rms dev , laalso om ed ethto aware b th pm p vin n e d io e s th la em n SP ent (the t la la d n on of w e v co e n env n a t W ns t env e iron p re th n cing canertbake d Su cien rome strued. it appat Act or formare und la)tiisme atenitsu faof rnsoc hit iron visinta LUM l udbum ncgonta m ioecon sean onlss and Th e t nom Neither eco re lls stra and ic risk islaore licag M autteg , 2 develoeth tyiolenngbef tioninis lodto iesicm t omicch tion giv pof imp tcsehand nicpla e foulenof and rnto exwit atiaSe rlanasn caexARD of pinegCan eveld ged houn ipual erpcihlise ion su15 ot suc on t ns, in edd, dpla act o 011).of e itself GD sta6(ins1)offfecthe ritie l pect alian ePlp oninfr tive Gautenotgher n op he tur st asts ruc ent.a hrie ap l rip nne ec.utSpa lannt iss res Clim nsin rs mare the pow ate s oange in , aban ivetial gouTr ic Cha tsibtaun vaau e th nsirtveB, in theituut keyght t eiomn as tha ation n fsfirs Mitieiga municip ing ourceor le dStra h 41 stato s Afric develo f apinte ar tPa h er li t keh it d (f re ie c teg old d r ) n ad y, er a ad al lon e the w a a y h t anifidcant have ae may ting Ecotinnom g nrun al power sd hereb pme gen eid nfut meinisand thGau inasn a is h can ten age. Thewit dh la an at t sig p m n g e is Sc te y t ot t a a m era r h ic ure h e u s is n in c m r Dev is tion n m infl m ed nce akre or the alleco vide p at t t of author of clients nwh unic d Pla cons elopm uln, e nt nsi icun e je reen ll lacendon the adevdelo ipoicl iplalbe 4then Gau ● lm esAwuen of Sou ity in re nt in hom er n h inuiri ecis g If t wisittehnorent devTten sh Ene trgy aetio pm ecehst w it av spacitieacq theng heop el Sec r iththinetypthee ipal affairs. tand nmsin in tha spec ofawil nand h a sp exes exaec eS eiorent anurit protvince ineffi p tategtmyisunicatipthe Afrthe esm etstru e utivthe icie isa ten mun atiaplainedoccAupying toffi fram l ysror/esStra aen nfallsfowbyit loo &p tly m e Gau g Gre kin ces bEco con cien t is disc bei isict. e ralren anten litsh cdom cur ic ip ca arc lsoal dsp l alerted to mor ethg Republic of So atial ctio nffi n a hnom yew ysty. neeneg and k. b rimin ng Stra e a t, u n h la m e teg co s t u fu in g c n hite p the W g s e n lly o w ctu a e e ld o in f ral a m sub t uth n fe ow bael some mhou plans e jurisd eq ly, atact env.ironmentamang, as ted is ro orTh The enteativ s PriisPtolanisncinpinlesition ofeMd.tTahndis st s; amit al. r it ys, e of Billine is de and this ual andimp tion for appBrov inStr me ffic h nt pien t esbuia ewill unicipnalithy,asand th ictional area ablyThisl Aliagn aud conom g sTrco s teurp tia d tth eply ldin nstiteno ings. fuin tofillhsus prob nicip inform The integration pionanLisralatnm phe n lo app e on lu t e ut ib h s P b e s D e sus tain io la e nt r th eff w 201 t tai abi re d e e e le th s a like e na lity re n ls ted ect o tal tion winh the at cip U rcclusive ble m 15 co isls saop ningor souex h etain origns ofaupro attrnact ench 1). T thles rma prin ioanvel tlyosme pto tnde thopos trnume ntarlm Met nd go 1) calofibre rifo he euree des ty is anen uve ed (N a cer6( costve ld aapitals eeedexclusive exec f the edandev rwraenicdet gmoaure tinhin and weafut 6:orEns dh er SDGth of uurb d ad icrn betw d in aPtBeilth nwit elo roincent iparilab eand ten agce s aCure ava ete the pro irem s bysus DPmun pmpm ndona socio apar the m s bashed waant auioelo utive aip istrsatio sn ldev on lie ceucan se'snst ope nicnot tienility toableceeon lo nd datem m relsid rati n pmaaent ic ipn ca id sp the requvin stain seSectdev n confe a alallo sttm e has l cos teitsdutionenrt couon s wil tt alitie io itw e t sav t ie e e and n W elo o e of rs ing e s a d c per wa h s. inv io c ter s n fu rr atcon w in im d t and prov conom est n t t o e e id and ed upo t n ors it Se r eitat tctoio ncte oionnapsan PIfartaBll iaplartrib dev ato teion respect e rs SDG nedthe n 2neA15 da w e itah non-res ic le tnh w6(oa1)tthpos rminfor.all; en n nhalsive t,eutio e itivfe u n ra aons 7:thEns eloacc plonptolalinctak ctht at gazenv eeirrpon are ure e to laaffo approach eany iron t inin a co to agri meunt. o h h t a nldrda ess p e t m th t d s g T a p o e vel in difficult gacyp m p o e ro r u . h e f t t The e m d cu ger vi w te s 2 t t n s h e c , reliablae,tionenv only at.bTthe h ense ofmuthe sop mo nntceapin rPejeble ltural tfe 0 3 uUn , me authoritAfrica g unedVis tainrabl 20r1r3e dessus nicipal , in ip sett to onal all t oInciteehand as thion ic yathin1rno ion atfor ittealdiron plirgy iodnto eadoinexp areas w p 5itAyrue rt terfer lem ,ex nt.e n ene has 206 tionder ype the SAD We is . 3 and m A ) th s nee c s re c ly a o e b e a ed A e n sp C y f all; n n e n SDG Tre S ill s u L g s S su a ec n ec ca aty nts. pt best practic with ad of ust ( WUutive 9: Buidldau not tpoaof oinister, d Lanodm sigm citie tio foser thofruc Ceioenn ned a ledenvironbject dm hfo ugle pres tby tan s s chedwit ia, l Pan S ou all dme pla to0 d s, to 4rgib refe gro eilie nmb e tb et rs to Asus decisio es , but will bec th alsitnts infrast th me cR th A e intas 1 e ers reMe ,It cecabl l and soc csts. tain rtur loca wn lusive motes ol ibuite,nyproof ri inc alatnio aand nefit nin eUsegM still ial ben ome an garigcu ou oPa s s,by th cm ted psus and fric isat liaion uecetuMind implem ato eJoshinan tain aner g ura9lg9ht ●nd atgrabl p is sAtthe ame lutil 8and ure requ s and s nes res tpin n rcescortenand b sen pov D e Minis ritoycion m. lt bourtghent icoip entnat B ofeffe Thter gemof reun rial The paallsisat thtepra elova se in ettle a’s Th our 1 m fos mf at s tust e opaa Sc ire r bes e ev t inA , d ctiv 1 c n h to re inn o m t te wil e at te d ed o o t d t e ctic l pro n o en r be J o io rs tion e es tec ul ena e n u v e m 6 n estr be of nal gove ; t cd tGauten bled by an obligation se eCd velo eo4pto ly 20 Schme 3 oft the SDG flect ent enveiron ,tion Luic ecrtath uc tu eTrapibaun ul ouke ingMa pm as one egnt llocathe is rt citi on the part of cit al, th th tioenConstito ksn ut ss11: 5t. e of reAobj prin hm enti1a UsReed le ad erand ring s m develog thrnement. laetm esato Tthe ntdoet on ect hen per The Bply anm ; mitea Const ives.eThe Afr atica hum w utrio ciple e prior shth io tenrswUn an yset sahtrtTio d in fienlo f aer lnW inc .usive in PLUditi utional to com su s to Vis aion ents ofitthe itie elisreion ea inlie tlem ates alca s sm ral gm uiedSeecon clunts anda g ov fasp ,pres gAons finilalliinwit s,csafe achthe overnm lus M whet io roilie SPLhas o s Environ e gdanzto an tte206 thteoalso is One & hap r ve e o a tha iv r s xc n 15 h iv ernm of a dem s and e irat sus me h ex g er s ap t w ion tain nta th lu 5(t,6)2(aN m e en by U w it e t l te abl e p v th Aut si e m SDG il la in ttethe nt MAset ou Belo t 13: lanat ing, wh ve el pinc l ad instion 0)1an isat ● hor unlaicTak ss focr tact lic en ow redoent oc goisn env wil s w urg h dions foe;r o 5 adn (73,e key p ceer ironmee ledct Eco itusttihoeocich cono hb ecosys Se ton coromSus sectio nnipdaelian com eion fo c ntst.inand e rezoPnro lude the tdhl c).be io cha etnh niallatolewinsist list io ontem climth upgtain n2315 tpio obj f the unighlighted t. The chall ratic and ty westa e n amehea nem ehtelyabl ate Dev ange tir meent bat guidel a3 rseOwil lthy nince ingineof icsapm th sMo6(aucrpre hand itact s sug ghuss.plalis ordis osfmaelo aesisbitsroimp of town ll ent tho hpro ges servived eer 4 wilSl 0be toroe andr7) ted below ctbac t,hth egc: ia Rad Th des in – ip u p teinrby ow ontion re e The :ovretstmemunyic sh p s e p a r a fu beked iff p sp of th ectives initiaresolved deabove remaenges 1eco stip ip g at c r e o n g ula o s r e a a ia e ct t SPOLU e m l fe li TH t ct r rath io sn of this ru lgui s ll into Cialist deoveflomutnneticrinnlaa motiteinsg ime of e initial foc nal ar ec eAcom AFR2IC 01A5N clim nra ioe UM h Sreorc nsin tial td icip een eveluop n-resilient tebe arndenf cnom ic c lause 9(e2)re pinme ipanldplarnal t oPfROPtate ofis h the st“urb oheiestand us fo ed L e ed al t” delineeaTmu m 2 creamu niti. es. dur Ob a p e ing jec to p e Act is and ontives by thespite variouins s s w t a the E tiv an W r h R es app , p e r rea TY ietes a stalin nt a inte nning rovw e tdeer U pro Section nt 24 d e ob and pof theW alhof v REVIEoW e icpro gu e o. f SP implem h r lig ide site t h b h pos e a at p dev rovid din is n t it a ed li e e a of es v g ll v elo f o lis d re c s n d pm elo over e of th hinisg a every wer o ocat the Sou ent h loc To use the Loc .pare nci esW inh erel, can p plans at pec Constit elrSite h mdun s ann ma ioned byth Africain sunttebdmin● Pa al governme tlev n D utio liicvipealreitydeve LUMA was ntation ess suffi rtliAcational Cou thain rtyericu ag e tivealso ment e opro and d fukes g h et w e f a ● a ob c t lt a un e for legisiblaiting effore key challenment, probtec e p Dev it v ur ie lo in n visi je , S elo bntctor elop p pment Pla on t to pm ond for ct in th al w patia the process of d Sppro een of manctio a iv e o se e es t the n tion h Ap a ir h t e b m s e lice of issu t e t t n e u t val nce e the t n y ia i s n ing b). s from l he p environ form for tive en is tha ges thradoug pla s (v th ent y all s, eaut lly,e ed -laews a t of m nt Fhor o, r la wasterper eff min me reqting and –pes o tn segatm r thEIA ra isations and permits aded planndsmrar thre u eceiv n.ofTh hisleg a e mit n traisla iccah hreegosp oramtgeovpro pos ewo for tsissi of ed p elompm cthar tivetive ic rebsseinen arke,et; inter il loth Bcroaliand ateher eres ander me com ective a , landspatial planvironment t the l Mbuenic d the apponicipal rks.s The inte porem on liceansi ernm e sdev ent asu he mueco s fosprattces secaure d an al g th that cau ads y Dir mptain niclog ntn is tore use nin se ealte int ialsesn e ich wTrib ia, ipal P p n to h an in tran n rna reys o 0-d y ng pro ip ical sus oorit

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Q&A

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Stephen Jennings eline for on African implementati o n o f s u s ta inable develo The pment development Dep

evel Droapft meG nt auteng: guid

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artm & La n e the d Refo nt of R imp rm’s ural lem Dev p r o enta tion gress u elopme p n of S PLU date on t MA

All eyes on the Mother City

Convention build-up

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ONE on ONE

Daniel Silke’s state of the nation

s s e e s c r u ion pro e t a W at s i r o auth

planning and development

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al ation N a was was There oject that in st Pr he pa nd t n i n rtake National a s : unde the Step 4 ation which cial Oper d in n e Provi ces work ith fi f w o deal o t n Lu A alityAuthnent u rehe d emo t, n uir f trod a una t patt d sta amtaino g and syst Wof14U of 6 datfoe fromatio q t wh erns enpeo , and s enls (MPT lanning ment ainr ce s with d enqorms nsiv llalerb by d tionn e limit s un agemen g on rin ur al DLR a m fur t la eDssRm s). Th artil utphe ●in Envrirm ampconditions n aevelopards gupidpe licantliving r , in g t efor kloThe objective l d usctnewis heeida herited n Assto plan cindividuals ntin undesirable heenable of sp coe to gain islat li ll p e e a r m a p r e m m (D e a g o p io g ; e a u e iv d o t r h j c m im n a n c ed. T eb n is ing ena re roes regu e Pre- vRidDLeR s201t3h) eent prinhcipthe Catc ent Olen fficer wthilelccounmUensteallAy p– pb lica AC), fowr thheiciciphalitisieens.swuraccess h viro tha arae decis ponsible lators wtep 1: use ing and atial fragtchh nme e his p c te r o o m ho ere r t les. n r it alanUAA S nee atertry’s s ions nt. to im h e forrental affordable accommodation p T T io c w s t man t t h p a o land ex mentat ised by ns a d a e e e e le c c m f te ocio ( W ing app ady s wit men hn e SdP don laa deveakTinhg is stagdisjoyincthoangeenfrgomag A) / Proto-C step is bled a●t theinevcWiroa e li h thittee age te n c e tation m ose of conoamricecomsem vera L,UMtAh men andisp lopm SOU ,u ieco aiontwiitoh t facidloeif tapapcetaatelsioans andnddd ta Afr curM l innit e Serryv Cnomm r This TH A tusnpaittia tedgapepnrocy (C rent oftel f multip he enp in tdhatio r s ispo iativ ndertoo t a p ). ice d ntal csoend, fo o o e t A is ir FRIC n n g v v s e p l u n le s e e M a e k ache func aa elo hd t serv ingo eliAvleb q table f tsh C inst tlaAnninLekgolo , as d laa m n enpand AN ws By Rirhandzu tion he dup w atio land John Martin decisev oo ipa ry e ys t(P- Mayatulao re oseut & A aanddPsu-upCnpM comm PRO ag li s ca geam l ionpsm.eOennlet aKhoza, PER ppli ggeann c o licant wh feS used cation n m icoer,rtinAgAin–Aim Cprorvein n; Tthhee CEO n the right tailed Manasystem eem TY R catios a oblje of ntentAto the d laanp t r u du by p MhAistoarnicdasltoegrveicthW n . pse g to a imm U C frast EVIE o w a n o m n c e i d o s t e a d a t iv is f d o e e r r f r e . h d W atetdype a naallel aapnrdopvidpe folerisacouf athetAictht eiskey Maonfasapgnwataatl.ershOesndplyinousetdhineinSttPheLgerp p remaaotlion l nroeloqnnuqgeirdurthebirdeeySli.aysbtelencmfoFeosoTcfAehlltrcheotitfefiirliwthmecScaaeinpteafiltenguioamnntiicneclhianithltisayeedliavfor,etryrwainitariaerutdcivcoteumsr.e m●ethfonerdStPhacLetoUioimmMnApmlediameteennfodtacatuiotsioarenca,se te thuet AUMA o d co m nifo e p detvio ial plan abo r o r h r p m is p r a r il a r e o fo f n e r h o e r r P u p n are a al onffi t e , w f E lopmce or y in of ee h ingo on cotifo ra U-M.CTAhMe A iorrt t ebtsLw Act a s cleae e Psta s fo neartsionn CEO's stabliN an enr wc shmtion th t int andalannd a ce rty ratteo ob alodtA hde/eSbPtsThis there en tranesnsivfe systffemectoiivfae l aTnghoue didiao atpoli ento llowsa: ter etghue a thp Sonu of the anoRoption social and economic value of provides d grau ouipC e re ue fr m ubnric t l PLUM e e Fin propa d-a M io a e la g t ip te th m t r ip a h a m h t d t, p tand ors, ainntcohf L: anW Africaindic ege ame c to nic t into n rAebce vetr vhorisoppo Ac ld e d C u n t d th d h s e n a e b t t m i io e s U c li in o te a t s sitteakteha . Ra ope e sib app Br cludin g bmit ● of thau iew o e le ov eme aplipca future Depar Up ratio ithisho rates b a r y eal currently ly p epnrovid the atto twh fnthdeegrm suute e Ac D current industrial nodes, residentia members had inp tme community Dev P to eveb auth espgoMnPsT ofed n la is ty ly n e d p s , u d t r t p t e n t n c r e ju e . lo io s p opfo Rue dis ndat and g enpmtehnte, c Rorities; ke s the from Su prheuanicdipal t.ACATrmeceanytreceleocuvtratsntlipdtyrooiswvnisactsioeunnstlossyteeeantr.tioStlufcfththhpeeroSpcysoatetemmaspnAdlecdid not ap inReformlo(DpmRtDhengetraisrneetdliving to th ralro ly me ustoma em e thazettinover-let opportunities with essential Larnred h lac g int, undesirable, d c e m t o n l r o e p e is t a m in il a g c ia l ) e a L s M k a atio fina fi c th as ip nsiv giv Rr) utie plian l) w o en ion) mar ld thatA unic rteefidnaans tps 118(1the certi ondulat(P en wite fac tse conefo par nderrteospe nhseto118(3) oferTphreoepg ertamunicf SPoLUfMto T ertyaArhd e a -laewn ti gents 3 ty● rb-yG o the m nn Ath i e r Rokundignified t urban amenities should be conditions hand ] Thh keyees n th sultea. tTio s; an n fonr. ip l SC w that pr rtheesee r held thcis a o [2 io o t il o a ti m e s t r th t N D t l t a s m w w h c ip a . c n r d s eleg kech e akbeet auSe Inve TIO etwh ofire n rD antio rec mum Ope SECIifi nc n s foiprsoperty.uTntapinro’sepveierrtynceriaalteyseafogr. uthIt pfue dorthantee smofubaebprpmMli ountain’s o thca ionnicon onldtearins thoiooursitowyne(ibeinto m s, ta n and divisio d as anUsafe, dpino nsecure . sepromoted close by. This allows cen riff ecirotr eripMaoliutieAuretrelocate 19 : ppf li t nio U e Terr on their ber Mo thew r t v a t io e . o c ia c r t s r t s r in n it A o e a s im e ioer, P inal F : ss 1t5he al a in term Amtsbhpoenssibthe pawareer ty deecislm offi dreebint forlceidcpAaamymnenttatorsft of theeafirnsaprecel,edininfavour of inistmreasure heir Wat icip a ationn t 03 s rowell-managed nnu ap l 87d57, Wa hheOen theAndmhousing. ts d y fi s and oLftdth, weotSv.PaLbilleitiefipsn emenfor shorter commuting times ea :vAerpnmpelinctn:intMAuccot 5r6pooftor2a0atpeprsovecbtauio pc ext p ion in . Tt et 2 ceive t on the the twoo aprep f dgn anag p UM f Er f io mr e ap o t t y,). SPtLyUtM n o o r e a th e t p r im o o A t in s e p nt m r, e d e S n due ad is G A rim age is a tion M r d d. ec e er info ro m p en se ent: eae s tie l p e r in e s p y u r t is a a o and me h g g l is h s e a e . d r u in p a u a r m ic e n for people working in industrial lem ist mm n rc satn m (th y ’s re m e p e citoed ncia dis o ary ormatio n e Reeg ld th th Lim un,ttrhy& f up te tation ainfo y ctibnecccgordinglyfull judge ation This mMmisusndioicgipenta,folitr easocitjehetcfihtneaed reWvenUnuleLevAfoels ttoeardctrahomtef : for applyEinlietzseagpbdoenthdenrtCity CMA. esocaopredr (Ptyin) rtaoeprtmeiorstn c o a the cro ole ss f tahrean ftJe nrua A / P- nodes. Importantly, this housing of scr M e tprJohannesburg is y io b t r r c fo h a t u C f r s k conta anReyad tihne fNoT rm t u in a p y c c s b a S o s d e f e e e e b 201t7h dm ro rat hehre ove A of ompilinactluiodinnagsed olyn cinonllatlirsoeddbuecfoeerrnmeimnt:e(tlihme it allo nJoobtuerrge tradevelopmental ia nsfe ys. ed a nd tof t he ncrtitevria quirm, a 118 nt, tli . ca agenda should include a majority of low44 da c r bnewbe fi for a JUDGMpE roegress ov e t2000 s t to B efo nt reste of s yeaa n ellaapp , (the e is 1 tretr m a cacleG. Th p nde Sy ter ms tah g of e o t to p o a is L in y e 2 t p o t : n e s g 3 s e . l d in li e a is upon itself o th ue p ebts te, ck t rteher tificaThe icip for thit thReeportoa:b576/2c01a6 tions Ther bafiuntdaenrcuialsyeel aSlirycsteemsaAifycictsa.teItisisissim omt has income units that are affordable at, frcity g ’s b M unmtaken al d ted a it y c t y n c ip li A i a in B e liicipa it y s nic d er t uly se N n f mu ubm for a w Muenicpipisa A1ct4) 6: c d gencystemn MTanhdeelathim t u re pplier between: mun s on 1 J t cahouseholds afor regar theirCaa develop affordable housing by earning the city t stems in resspecat rodeue, nsot fu c y teonthte . A SNelsoto h T e t s ce ). s n y e s is e e t t e g t h h m c t a ali sta pgoelim alid (1t) ion come Y to t Sy p em 8a icip com 0 Juneealt ypro andS is final s 1li1c ear A BA be 3 li In th mun Mraatneas nd inv ns.

Urban embrace: innovative rental accommodation in Johannesburg Live Easy: move in, move up able developm ent

SOUTH AFRICA

N PROPERTY

14

REVIEW

tive planning from investors and developer s in the provin ce, and it will be

sform the manner in which infrastruc ture and buildings dev elopment is und ertaken in the province;

June 2017

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26

SOUTH AFRICAN PROPERTY REVIEW


contents

June 2017

PROPERTY SOUTH AFRICAN

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

June 2017

legal upd

ate

REVIEW

Land ref developorm: Version 2 of ment of agricultu the preservat ion ral land framewoand rk

PROPERTY REVIEW - LogoTreatment.pdf

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1

2016/08/25

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he Subdivi sion of By Mumtaz Agricult was passed ural Land Moola in 1970 subdivis ion of to prevent Act nationa agricult the executivl government has the land units. ural land e authorit that land legislati into ve and y to see perform that historic The Act provide of Schedu area of ally fell d function ance by municip to the effectiv a municip outside e function le 4, or into s in respect alities ality or be subdivid the by the more of their al area of matters regulati ed without a town could of municip specific is listed Ministe ng the exercise in Schedu not their the consent al plannin r of Agricult in Part le 4, executiv by municip g which Constitu B ure. of the e authorit In 1998, alities of tional Court of Schedule 156(1). Parliam y referred 4. The Howeve interpre ent passed began its the Subdivi to in section r, regulati ting the does not analysis a law repealin sion of function not by rural develop Agricult the implem leave room ng their authorit al area of g authorit ural Land ment” but entation “urban y the for usurpin y or intrudin Act, but been brough and of this rather by function g their and authorit law has By Mumtaz Moola g into al area interpre t into not yet which it their function of municip ting y. This is In the Governm effect. went on 41(1)(f ), also clear al plannin s to to find did which ent Gazette 2016, the approve from section g, provide include 1 Background governm of Ministe applicat s that the power r of Agricult 2 September of land ent and ions for all The revisedVersion spheres and the all organs 2 of each sphere andpublish Guideline the rezonin ure use of natural of The the Draft is developed establis of State Preserv resources must with aim of reminding purposi g hment Policy the promoting ed ation SPLU also or function while not assume and Bill ve interpre of townsh and guiding done through within justifiable and Develop developers economicexcept requires and investors on the Land. ips. and social any the inclusion MA ment development onComme that a restricti tation of the of sustainable how buildings those conferre development power for in theterms nts on (residential, of Agricult schedul benefit commercial create conditionsto that of of due and present the ve develop the Policy future generations. ural es meanin and developerd in them on 30manufacturing) Constitu drive ment theso Octobe g be ascribed Althoug to think differently a coh tion. s Bacbe designed, Bill were r 2016. should and Chapter to exercise the Subdivi h Schedu developed and and integrate as to enable 1 of agricult The Bill NEMA, the Environmental his powers le 4, sustainability with principles in the each sphere sion of operated, alloca erent The kgro a and isManagement to replace view to reducing ure as Part by the development. Agricult without Principles, One of A, the its aim other spheres environmental assigns risks, und nationaSubsectiona2, function objectives of refor tion and enhancing interfer is to protect ural (aLand 3 and 4 alto area to r), refers the guideline l coheres . ence This m Unfortu social po to develop legis Act, and the is benefits restricti of principles functi financial sustainability. current nately, the agricult wers of with the and development, compet a lativ provincdeliver of better-performin ve approac buildings that ural land. such as ence,of sustainable e envi complex ial the gschedul Bill goes for Spat The function environmental on it does that environmental legislati an current ronm state of al scheme h efficiencies management governm es, which and far beyond not empow ve in ial PlanWhat are also cost-effective. most developments must place ent the s betwe d Land Useundertaken ent this. confl municip but that vests specific of to and er nationa ningin the is agricu Whether designing intrude ictinneeds at the forefront their affordable alities. constitu people (NDP politi province en l Man Like and is that (SPL demand-based, g legis on the homes or ltural powers of itstional they 2011 concern, are agem UM) high-end compet land? their physical, theand exclusiv latio psychological, apartments, admi cal an upon municip and serve hotels or ence which in Sout Act, do The into). ent old they e office resorts, n consideration thenot The constit developmental, land intro cultural and Billtake is conferre d remains aresources alities by the efficiency nis h Afric to include buildings or the defines commercial insocial duct utiona in terms respect chall Spat interests equitably. d decisio agricult spat ion the B of Schedu establishments, that awill be all land Also, com trative tocurrent com townsh ofialmunicip Part conserving enge outsideial of Land resource- l dimensions ofural development n-mak ip. It thenutilised below, manmust during plan ofPlan designs al plannin le 4 will development of a a ning po Use the plexinto . The ing the of be ning municip environmentally categor deliver sustainable socially, functio and operation Man proclaim ity is eight No.phases. g. As appears anded plannin agemal plannin and economically munic nents framewolegaprinciples nal area with respect to or infrastructures. and buildings 16ises cy of agricult attrib differen The agem ofg.SPLU sustainable. ent. of 2013 greening The ural the of munici Section athe of entails intention thas ent This include uted the buildings classes land The gland GDARD agricult use landofficials will ipality systems rk integrated Act in of this 41(f ) of heraare MA is aligned and regu depend not (SPL latorenough seveguideline use early toUMA use this terms the NDP vision has s enac the Constitu pal planning potentia guideline dispthe lded in ing when y ural (when zoningengaging with autonom of town upon andplansitsthat inheis categor brouthe tmen 2030,ral were ensa l building tion confirm are drawn of contained y of each t of land a new rited up) to stakeholders in spat asfund in terms Chapter) 5. This inght environmental used practices tionthe land. ameplannin ised in such assphere make stipulat chapter of ial a meaningful inSout to bethat Land scheme ntal gabou to impl classes for environmental asimpact isSPLUMA dedicated of governm s the high-po plan t use the instr on h Afric s and assessment ing asustainability, 1 to 3 plan chanand developers, efficiency that one to practitioners single sing tential man which ningto adopt ofcroppin ume ning ent by defined land ges sphere of the ementduring categor a. It isthe lethe building and approve whoany agem nts ised mustpower use scheme and recommendatio promotes the incorporate the operation. may not is the use of South g land, and to or function prev plan national land mos in classes the ent. Africa’s prepare assume The ns into It polic those first is a general ning t impo endowments and and its entire Som fordesign land the to fund the conferre ies -potent 4 tolaw ● The rich of the municip planning and concernout com ious govemedium 8 is defined integ framew e of transition other except of anyarea incorporating rtan al spatial d on them type of Constitu to a low-carbon of this plexitygreen rnme that ial that a new orksreite building development. agricult t inclu economy, torated develop designsin will From be build clear ratio nt. what and tion. The It is envisaged man tothat in terms resilience are binding plan Plannin ment that compliance Sout leadural to land. ly sets confi regulator escalation, cost and ineffi which dateclimaten change, limited follows, of the de:Gauteng ning g Tribuna of by one on Municip rmed cien y framstructur Afric consumer deter hclients of ls whe awareness intro it syste create required spherewith the scope for interven the Province ecyof will mun oricipa from on Spat re in the buying into development al Sustainable duce isa.clear in the affairs anysole the Bill ewo to behavioural m The that drive context Development other Implementation change. rk was the develop dexpanding/ andwith (land or mun for each Act mandat Whitsubdivis ial Plan improving icipa ed lities authorit Guideline newrespect inA. of another tion ion Use which has P-CM and rezonin e Papethe deve should The objectives l plan to make y each / current resp start Man ment the planning ning infrastructure. is to sphe at is the man the to of lopm powers onsi the any unconst this decisionare ning and r agem guideline More inbiliti where thesphere exec g of re andmore Pape a stage, agem agricult conferre landCMA itutiona approvals ent,in also the of , themust are other terms development ent the theLandpeople of the r on goveural line eswith the provincial be constru them plac law l ute to aware land d on efficbecoming ent) land of thatto (Wh environmental relating SPLU can by of rnm aretion itted ensu ing environmental ientin that socioeconomic undertaken rma Act orplans Suchstrategies ite provisions and andusean ed. Neither it re The legislati falls mun is conc M, 2011 ent before economic application and risks of Section land develop ion info Municip auth spat to exercise developing effecfoul erne on give of is lodged rttosubm plans, such of of on the impact withlicat ial plan ssusta the of an infrastructure ing oritieandallicipa GDARD. ). the Constitu itself the 156(1) Plannin other ment. executiv lities gas d, planners Spatial app Climate inaband tive, Gauteng of intensive that tand s of repo inva use are a the is resourcetion authorit Change ning power e right key as nica municip Tribuna Part as le 41(f stakeholder Afric developm apar Mitigation first in the long lidat ies may Strategy, man read with outshave als and to adminis ) thethat theid B, whereb and can and insta run. a ing agemThe and ther the any Economic para mun not istech Schedu ter municip al powers or the y municip land tedsignificant inconsis isnsist inco isGauteng influence ncemake patt is evident ent generation Plan, whe of llel ent future icipa alities e Development of authorit le 4then Gauteng who the tent ● of a landonwithin Sout developments decision ines All ern mec y inclients in the is rejec thetype al affairs. develop Energy be acquiring ther with l spac have The If tatio in homes respect will entartmunicip Security that rminAfrica hani h occupying the province and executiv ineffi and the Gauteng esta Strategy ment framew Sani the Republi of municip e. t forby looking is discr a spatexplaine sms/ at the offices l repo e falls al dete construction cien cien ial alerted is currently d more spatial Economy comGreenblish A new being ork. syste al & withinbe also c plannin age and t, uneq imin men Strategy. architectural cost to the fully below. positechnica Water suffi of and ld plans negative the jurisdic of South ms; e submitted for some g, as ly, atorThe BillThe t and stag of environmental isapproval. tion Plan shou ality, Princip y, of inefficient entera Alignment it municip is deep and this ual andimpacts tion Spat intrudes bly man lesTribu MunThis this toisning ed. constitu artm buildings. of of hasand the tional area integrationBill rmaThe ther ial Plan will be prob interpr phenomenon ainathe appe Land icipa This sustainable clos of sustainability tional s and there 2011 ly entr tion is likely that suston etation nals als l info in the designs principles Use compet is struc ningor development exclusiv he Dep or whe urce ench lema 156(1) the exclusiv effect of the an overlap to to ). The tion and itted where certain mun Manattract deter ofauthori ence rwhich proposed and dofwasfuture tyrma calibre info ed SDG e Ensure inuethe ired and of Billthe govern ture goals and developments agem reso icipa e executi betwecont adminis subm within date tenants s bysustainable proceed socio apar theid (NDP asse province wate municip Constitu auth6:orisa the municip lities matter and availability and tration Pres ent on Section operational ve to en and cannotalities erment man willdevelopers nted tionbased requ econ has coston's alities. iden use development deci and savings Wat of water s in Partalllocal r confers ionallow with respect deteess theinvestors and prov nati to the andto time conferred upon omic spatcontribution Section t on de on positive sanitation ial to land deve functio and proc take licat the SDG wate nal rminfor all; en a non-responsive to the on 7:the within 2 Augu 156(1) unra as lega part,ect Ensure If Bapproach anyapp environment. that gaze lopm landareas to agricult compe access tos,sustainable theirrnal the inte The provide vel in difficult cyprot ofe nation tted The African municip with tence 2013augh st 2013 entto affordable,ted. only at.be authorit the expense municip reliable, ural The ess. rred settl inicati onality all type to appl al , the Welonger rejec environment. opti asUnion Part yand interfer of the al areas itted refe In and ,executivinproc has and 2063 thro in respect sionto adopt eme the Vision energy the SADC A subm themodern ons need ly5 Aug for ed with, will not ys. SDG 9: and Treaty Schedu s of LA) Spat subject ons case nts. adminis onsall;of best ust (WU for the citie practices appe Landsigned with of, mon resilient dontoeter, 0 da e Build by and tangible of been but will all members ulati infrastructure, s, town South Metrop environmental 4 a deci refers Citypromote decision thecom als struc the rightinclusive crea Act. Use ial Plan glefor e is 1to tribu sustainable ion Reg local and social become of Johann olitan Agricult Afric ning still and out in Part s by the utilisation ted sustainable and implementstag Manlicatof It cam governm nals essin and to ● TheDevelop Municip ure in the benefits, requ s and a’s resources base ageture esburg industrialisation agementnatural proconess, this them. These B ofeffective App and Ministe e into 1998and man ality , will be fosterdeve matters s to Schedu best practices d on nationa to refle ire restr settleme innovation; ment tobeproc of to protection nce r of The Schedu1 July enabled by an v ated to setused 36entof 4 to the Tribuna l governm capa the SDG Lice lopm ised nts environment obligation on 2015 leoper sing Regu uctu ct the asmention le ationConstitu 11:Court l, thealloc theGauten one Act, g Make city; the of prin ent. had rks Use part the le cities . ent ring developer er on The the The latio objectives. of The mar and matters to ofhuman settlements and prior Africanwere ciple s the Billinwith limit Constitutional to comply The tion. ewo isati Union nsWat final use safe, inclusive, intrud local governm sum listed inclu determi a Vision ities theSPLU ne whethe of the s of toalso conditions approve gove resilient onal to the achie MAates has e es SPLU Environmental gaze anfram is atosche One sive & final and andas on aspiration entmun a dem that, 2015 rrog 155(6)(a sustainable; extent gexclusi applicat will the Nati rnm me ess r the power by ving Authorisation, SDG 13:land lativ 2063, tted MAset out Below land ve inte ) and ● constit Takeand theon environment for the ions for ent. ocra will include urgent of the highlight d with which assis key proc the icipa legis action to combat and(7). Section s.inand ecosystems t The utiona hly Econ tic compe section establis the rezonin Sustainable Processinthe follol 23156(7) ciate the on lity with change entir cam emp omic on 30 will climate tion obj urce be ehealthy Marc and its hment wing ed abov challeng the unre asso impacts. ulati g thoroug tence e and preserved, hasis ally inve Development intoreso of munici of townsh guidelines broader Octo hprovides orisa and willare 14 spec in respec below: rts – prom stme be on Reg e ofsuggested The stipulations backed spec: ialist The initia auththatdiffe e rema es ber rby oper SOUTH of the ectives initia solved desp ipsstag palitie repo wate ial gal SPLU mun offunction fell into ntrnal t oflopm rent ruralordevelop ation 2015 climate-resilient AFRICA this economies the s time of the l focu Sect in land oting nsin munici guideline areamust in icipa MAcommunities. tives iated Lice ialist 9(2)deve be and Clause andenforced N. of cohe the of “urban inte PROPER 2 Objectives crea s for during l which This by the ite vario to pro Act is and one the apprthement”, impl Watofer rent estab ent pal planni approval reobligate TY REVIEW of theWhe tes a Section andspec view of proposed guideline deve us er Use site development and oach internal ng of 24 allocof pow is listed ●itted . SPLU ementati readiness lishin san prepare over of the governm resp To use the Local Wat vid inhib ers and ationthe South by the certa ereddeve isg suffievery municip Constitution MA African the anSite submin Part ion. Council ectiv lopmplans e on ent at local government agricult level, and iting key A makes was in Deve betw ent, inty of deliv licat ality a e also ● aged objectiv cien ther a un e for legislativ func provision Development chal , of in theuralto sector Spatin the process bet effor on the to lopm with lopm Spat een of mantions app protection Plan es the bylicences, leng Approval, ired of issuing ial by-la ent ted for thethe environment iallythese iform, for adm EIA, rtsland plan. the the waste permitting authorisations es eff e envi ts is that all thre ent ived polit ch (ves from harm – Fram Thews and of mun inistlegislative plans rece segr through repo and permits ate). spat are requ and atmospheric proposed icalother are,et; inter of Mun rativ Bran ewo the egat addressin mark for gove of a e sphe and rts developments. ial plan ronment the be icipa the appo icipal emission licensingfor and measures com ective an e com rks The intent land mun secure rnm Director alia, g the that cause res ecological and been processes edhas ays spat h will Tribu use ning is repo icipa ent, intm

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Stephen Jennings velop Draft meGaute ng: guideline nt on African implement ation of susta for inable developme development The Depa nt &

BUILD-UP

Land rtmen t of Re the impl form’s Rural emen De pr tatio ogress velopm up n of en SPLU date on t MA

All eyes on the Mother City

Convention build-up

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deve g and

plannin

Q&A

unecon legal update omic

ON THE COVER Disruption is the order of the day, we talked to some of the key note speakers for SAPOA’s coming convention.

ONE on ONE

Daniel Silke’s state of the nation

s roces r use Wate risation p autho

plann ing an d de velop ment

planning and development

T

nal Natio s was a wa There oject that in Pr past d n in the rtake National an unde tions the Step 4: Opera d in which ncial Provi ces worke h offi al wit to de introLA ion ialtion pone and l Plan uneq whic an patte man nals systemprehensi d rema norm ent lity,Authority uirys of stan of 60-ddate duce nts from rt ual agem and on WU rmaapar rns repo (MPT ning DRD with enq boinsrat s a new and furth by deve of14 limit inhe ssmLR,ent unre iondard land s). The ent The objective up s vellalegis theida Envi rited the ●info plann licantlivingntin undesirable inis Asse of spa co is to erenable individuals to form log licat pile use t lopm guid mungain lativ ensu access ronmconditions ed (DRD are resp ; hme jec regu regime ed. h lities icipa ring legealall er will is char eba envi ck lication forwhic Onc the comenta theentapp Pre-app LR 2013 lator pro that onsi ronm The App deci acte use ing and tial fragm the Catc s who 1: ides ) principle is ent – bala ble . were read Uselly offic needcoun ent to sion rised Step ertry’s for affordable rental accommodation s. prov Th AAAC),of thethe impl The with mana tchm ncin s . land existthe enta on at mak eme by appl s with socioecon Wat (WU age g y o-Ca endation stagedisjo change tiontions ntati icati d land deve ing is case ed at the envi thos ee gem mm ca seve SPLUMA, ence / Prot with omic ons on from ate ronm mitt to eng This of appe step ● ri ca SOU and , the of mult the tabl Af unde curre A) enta e of for a reco in ral initia ent and often nityinted Serv Com (CM spat pli TH AFR appr als agai disp ation rtoo l consd, facilit ncy nt MA). This deve d lopment ortuman the tives ial Age iple isory ice deliv base ap oach end func the table ICAN lopm erva an , as deta k lawss nst landosingopp requiresuth es (P-C entplan dupl wa tions & Adv andP-CM of the tion;mm supp Alery – impr reco By Rirhandzu John Martin andningLekgolo el deci ent Khoza, PRO agem icati ncy to Mayatula and caus appl sion ortin CEO on the right iled PER and municipa t who syste on of ent l lev So and ed by s. One icati Managem r use TY REVI theimm obje to the land use ricalservither, gAAC infra oving to The m as naprov . ent Age on CMA para ns ctive applican of of WUA histo toge ce struc d EW edia . te had a wate espoused forThe it deliv s of tio theinteg ardeture for the read ery initia al waterequeriredbe liable wing rated n, ation catheofActtheiskey Manofisagem focu a nalleltio and ide Act imp impl rshe year, forw e untilcialis atio in SPLU type Follo s area pli for the ms pe spat l. Only d in eme tivesmmend ficat lem the end . of SPLU ap tion ona Syste ion to ial s the ntati . long certi finan com a unifo the MA enta mm uiry Ap plan abouthisto deve MA the ance of licat h hadtion rma will noenq opti the ● Estab rm, red t a reco on of e preh SPLU ore ning lopm for effec app 's recolishmareona cour ry info fer s whic ensiv rsion Act and clear Prior as l offic MA A start and The ance to entrt of bethebrou owne e syste tive nce l debt s. The the/ P-CM licat land in Sout and the CEO theref en trans Regu ws: er Natienttoof folloWat tofrom guid Fina erty rates SPLU that the icipa social and economic value of This provides an option app l debt ram tion thelator ght an over ou ipt of mun CMA h Afric preto icipainto oppo e are s, inclu rece and ch:Land Use Cdiagvieworisa bein aindicateds Act, old me dueied to the prop ncm ofial e nMA ionethemun stag site ke oper itted Dep Upo appe Bran of the beca ly appl auth t has a.the Rate this ding ble current industrial nodes, residential ● Deveby licat prov of theerta ation gsubm members artm community had be m Provi em men rates plain to futurDeve onsi MPT auth Act. und of d atto withh is n lopm al currently e app , ute contsionsides erty plet led lopm ent of rt disp s t judg oritie Resp apply atioand ents propcom Rura usse ent, Refo ms Act ent repo fro Suprhead nt courant provi l ACTmay not entitSuch did not gaze the disc to the l mm ly end custo s; e the opportunities with essential rm the andliving theSyste was year. of and over-let icipaet. A rece relev mak largein undesirable, comthentting misa inten (DRDLR) theThe Munmark g riseaLand reco and l ) of the ficate cial the ects lity as of will part tion sivegivinfor unde ies are ondent, ion by-la pliant 118(1the certi thatAsp icipae finan with facts cons mun SPLUMApart nseto118(3) of reg eral) ulat ertyard rtoo the fina urban amenities should be 3 (Pty) held the munentir respkundignified ented that s n for ws; The key the ultatThe icipa of to tioTh and conditions nts -Gen n. ● Dele SCA [2]mak that for the er held icatio and ipt or Reg een stake e. ion pres the prop l will stme of ctor The ’s. fors TIONthi Sect betw hold e mun caus bmissio Inve rece (Direas and gatio er erty. ntain’s view rates It furthn su Opera SEC ntain n ns, ers to mon of their own ion icipa ntain prop division Usepromoted close by. This allows erty re the date of appl ority tariff n and . Inficonnews com relocate into safe, er Mou inter secure 19 : ious tion nce lities Mou prop cial year. upo their er Mouthewe ribed . Upo Auth im ratios er applicatresperonsi prev descsion l Fina ss 15 to initia finan eding r of Amb er, Port officeTerri the awarerty debt orced Ambnts : inistmea ion the biliti icipa ent of the r Wat the al in term Amb sure prec in favou ca le deci licat , Walm On theAdm entfor shorter commuting times prop s. paym start of years ce es well-managed housing. atesove annuet and s ofLtd,thewas al, pli nt: Mun 56 of 2003 in thei App ived SPLUlefina the SPLU next page ovab apreinf Erf 8757 , . The rnme appr budgn Act rpor tionis rece not on thein the twooffi Managemsent the appe erty) erty to r of immrt. MA. MA inco sion s to Step 2: Gove e ent ectio nt l repo impl inde deci a sumtion prop prop year, the informa issed nt: due ad and me he is for people working in industrial dutie cial insp agem curre nica eme istra coun stag (the rema ted. mary : for tech tion Man lity’s the the ly dismjudgeme ntati beco finan Limi Reg site try beth ng in term the nueA to date rma A. icipa sold rd(Pty) &up to on infoof Eliza ntreco cti rding applying full ation This mun n,for each cted reve s erty, er WUL sn / P-CMnodes. Importantly, this housing Janutheacro of theance of for onde City level issioet ratio ss d the crap ofprop resp clear form ated CMA conta acco Rea inform the Johannesburg inist proje abover ary 2017 of the ction redstart eaft rg SkysAdm y NT ding on colle duce e critevia the fer of ion of subm budg a rates ther befo nt: limit alloc Jobu trans of the inclu d t ria. ired and ised intro rnme re developmental (the s 118 , the agenda 44 days. should include a majority of lowbase ly final requem, for anJUDGMEpro s to note gress . compilat Befo nt s of be llant l Gove 2000 yeara new Syst applican The time e is 1 termnt (the term et to appe : Locace. 32 of d inortas ble theonde thetheicipality, this stag e, in to licen imp year ns There isbudg issue at resp ficat The city has income units that are affordable 2016 ms Act . eItisis use from for it upon itself l debt rcial back Mun taken Reporta certi 576/ catio lity’s ing the finan icipa itted ficat l Syste days Bay limit No: ms Act, delatime icipa 1 July in e icipa 146  : certi for a wate subm of mun Syste Man een: Agency futur the Mun isAct) on The The munaffordable regard theirCaseappli to develop housing by e that forcan households earning the city not on stepms in respectare ces y to er betw entlid. Nels lity). men the 1) ions me due, agem matt polic to this Systes 118( process final stag icipa com licat andSOUis rates and inva ons. A BAY beco Man 30 Juneeal lity In the mun year

Urban embrace: innovative rental accommodation in Johannesburg Live Easy: move in, move up

Type of suppo rt provid Devel opme ed of mode nt Detai l by-law ls s The DRD mod LR supp KwaZ el by-la ws orted Mpu ulu-Natal, in six the deve most malanga, Easte provinces lopm insta Gaut rn Cape , whic ent of to custo nces eng h mun mise , supp and , Limpopo,included Devel ort was North delay icipalities these by-la counc opment also West. In . This il notice of gener legal ed in some prov proc ws on capa s ic areas ess was,behalf ided city Whe of with beca Fundi in those use however, prov re the need ng for of munic of ided the gazet mun a lack to ensu gene was ipal by-law icipa of ting re that ric noticidentified lities s Many . proc es/co , the esses uncil DRD budg municipa were resol LR also DRDL et to gaze lities not ution did delay s for thisR made tte their not ed. Devel an amou final have purp this opme guide budg ose. by-la suffic lines, nt of mun How nt of R20-m ws, ient and system tools icipa et was utilis ever, only illion and the s In orde lities in the ed beca abou available finali unde r to ensu t 45% use the rtake their re mun sation of of delay of requ s by has func icipalities their by-la deve irem ws. of SDFs lope ents of tions in are and d guid the Act, accordanable to The eline depa corri the guid depa ce with s for rtme dor Traini sche elines for nt is in developmthe deve rtment ng progr amme deve mes. Furththe devethe proc ent guidlopment lope d to er to this,lopmentess of deveelines. The facili DRD tate a porta of land loping Afric LR, in infor use mati l has been prov an Loca conju on shari l Gove nctio gove incial depa rnme n with ng. nt prog rnment, rtme the nts of Associatio Sout impl ramme has unde to prep rtakecooperati n andh 2 700ementatio are n ve 12 monofficials n of SPLUmun a joint icipa train a cont ths. Thehave been MA. lities ing Appr inuo on mem oxim for the us training train bers basis and will ed in the ately of MPTs will be prov first also ided . be focus on of app App DEL lity’s in cial ends on mun icipa regi Act the is the h haveent ed kenfinan process, that isTH AFRICAN icipa that whic MAN Y the the untiless tchm vires d in proc s : mun ultra WULA PRO l and year. The eal underta NELSON g a year base of rates party is PER ICIPALIT bein in the ent Proto-Cadebt rary wing h are TY REVI Project l Provincia An app for briefly MUN ELLANT follo year, or any cont whic onal rn Cape Loca beth cial ertaken and EW ition to ired paym , as licant APP offices was a Nati : Easte onalEliza nce): tion requ und a cond e.an its finan The app 15 Nati t, Port decision eal process , as insta bora . of be by end Cour firstcolla 2010 certificat ThereORDER al from h the final ated d the the High whic t of in the lications30 June initi ked , any and for the nt The app inappe On of the wor . l shing lity presente NTAIN ) LTD d byunt A app ion esg as cour WULcosts above. s. However l levefurni icipa the past Divis rievean accoThe resp4onde sittin ER MOU S 3 (PTY with agg in do so ns Offic ki J limit AMB STMENT log on nationa beemun est, nt with 68. in Step issed n onde ratio (Tshi must . 014, the Bay dism r prot At time ined ts d at a INVE DENT resp outl e. the back dela Ope al is undehave tmen R2 281 appeal decision ficat with1 The appe facilitate ions had n Man Inves thesum of amosunt,not certi ondent’s RESPON ts to deal Nelso ntain ived the ns to paid thedoe in the ion: ect wasNT applicat resp wan , er Mou 36 the who ng rece ral citat v Amb A Operatio ets wereorder to obtaon ent, GMEe (Cachaliaumiel JJA ro This proj JUDefor to the of havi of Neut lity ZASC paym pers koro incia JA ness sum of g): rmin lican ther icipa [2017] Moc on the Prov urrinrd app L Tshi dete of 30fordays Mun nt says 6) tiontime al indebted Therfrom and and and ent /201 2017) onde conc upon to buza sale rma withinwas buza Khosa, (576 d h the info mela rega Dam Dam sferred . Itactu icipality68. The respan overpaymla, lity TB Marc erty on, uponany In this t is callee for (29 AJA tran icipa athu e.Mole prop lications mun Ther and 482, tituted May wing cour mun entitled the apprates mela alia, Offic 214 Offic follo This the d r R1 erty, cons d Mole total was this [1] Heather, was g s to Hea m: Cach and the propof thei h it . for theect g whe ovableress ation whic pay JJA Cora that ed proj Licensin e to oblig for malo umie rmin imm prog this liabl N Khu contacting the Use 532, Moc of its rates er is and 066 ed. h 2017 thatdete the own n ulation Water d erty burs Marc of R1 prop . erty is or only actio reim d: 7 the note regardin be on ateEastern or Reg 2014 prop year er the uted h 2017 Hear ctor to be of this of cial ld: in the Porter Sect Marc emb Direlity s: ome tion until nt instit t, Wat Novlated d: 29 outc : Rateshou preta onde infinan ch: year icipa Cour on the vere resp l cial pleted ority d. The the inter calcu mun , Bran d High Deli Loca ferre l auth tion eede a finan com [3] The on st the oritythe the of erty rma trans turns d for s of again Auth ion of er proc out in y: Loca al l Prop info levie ral part mar s Act), WULA Cape Divis. The matt facts set of the appe g provision icipa the Sum rates an integ ther Rate us est ed Mun la all (the erty beth Screenin toge requ agre the of vario ssesnt: icipa rates Prop Eliza read of rnme of 2004 ion ms of the e. At the ted that sole ng of asse ess. 6 Gove to be system Syste pilatnt: Mun levyi basis the nt : stage (the s Act comrnme et proc : Acts r Usent [2] abovcour t direc that ther : nt: Rate l Gove of 2000 tion Wate and budg para ‘whe of currel Governme This rnme 2000 Act viathethe Loca 32 pretats for es, the rated was: part Locafor ent Gove 32 of ’ : itted remen Inter parti be sepa : ation form ms Act Local e nt2017 agem s Act subm s rmin Thes Syste Man the t’. rnme dural Requi Rate as they in March ‘as from issue nce Act). they and nmen erty 2017ses : for dete is shedgove l PropApril for Proce Fina nce s Act) l gover as rate phra local publi cial issue m Fina 1s and ation the icipa (the ther icipa finan of local s will be Mun toge 15 nt syste Mun n that of the The Regul 8. word effect from system 2003 and read d curre para new Application ation with s 13(1) : d to mea perio 56 of EW t be 26, 27 arises (SCA) to the for the 1 REVI mus the IEWss 12, Licence prete rates effect (1) SA 420 Acts ERTY basis nt. inter implement with with TY inREV erty gives the nme PROP ble PER that 157; 2013 : prop ) read form over CAN paya A ation PRO cal g to pay cial year s once : s 13(1 H AFRI ] ZASC of legisl of lo year ation date finan ent arise SOUT s [2012 suite AFRICAN the oblig of the of a & other 28 : e paym rmined l SOUTH ral part ipality start integ n Munic to mak has dete : Loca at the is an due ation Act polita lity unt this oblig icipa rg Metro amo reas mun and nesbu : ‘Whe the ent reads v Johan ms Act iation of paym sustainable development

SOUTH AFRICAN

14

June 2017

2 4 6 14 16

T

22 24 26 28 32 34 36 40 42 44 45 46 48 52 55 56

to alternative planning from investors and developers in the province, and it will be

to transform the manner in which infrastructure and buildings development is undertaken in the province;

providing social housing. Most Step 5: importantly, it has created an enticing environment for private developers to come to the lead of housing provision through establishing spatial frameworks that deal with the challenges faced. One such spatial framework is the Kew, Marlboro, s: Wynberg Author Framework Urban Development (2009), which seeks to deal with S: illegal building and DWoccupation informal settlements at the interface of Kew and Alexandra. Furthermore, it seeks to capitalise on the proposed bus rapid transit system link. The Johannesburg Spatial Development Framework 2040 states that industrial nodes will focus on future job creation, as well as diversification of land uses. In order to maximise the

median of approximately R3 500 a month (2011 prices). Alternatively, it should include affordable housing for households earning between R3 500 and R7 000. This housing should not be located in areas of noxious industries that would be harmful to residents.

From the CEO From the Editor’s desk News Legal update SARS ruling on restructuring of a property portfolio under the corporate rules Legal update Bodies corporate to establish separate bank accounts for reserve and administration funds Legal update Insight into the Regulation of Agricultural Land Holdings Bill Legal update Do your commercial drone insurance policies have adequate cover? Education, training & development Transforming the commercial property industry through the bursary support programme Convention build-up Putting a positive spin on Disruption Convention build-up Sentiment suffering Digital future African businesses are on a digital journey – are you on board? Convention build-up Interviewing the interviewer Convention build-up Meet one of Africa’s largest urban land developers Convention build-up Adding wealth to municipalities Western Cape property forum Western Cape property forum turns spotlight onto affordable accommodation Education 2017’s Greenovate Awards Programme goes big Property investment In uncertain times, property remains a real, tangible asset Retail The death of retail as we know it Profile Changing landscape in compliance obligations Meet the mayor What’s on Upcoming events Finance Junk status: what it means for the construction industry Off the wall It’s child’s play his month, we celebrate 23 years of democracy, and as we continue to grapple with challenging issues, we need to find innovative and sustainable solutions. One of the challenges experienced by the country relates to spatial integration, which needs to be tackled through various strategically interconnected approaches. As South Africans, we’re known for not shying away from confronting our challenges head-on, and the magnitude of the challenge does to seem 14 to deter our desire to succeed. We go out there with a winner’s mind-set, aiming to achieve great results. The provision of affordable inclusionary housing is one of the key ingredients the country can use to transform the spatial dynamics – this requires commitment, dedication, innovation and support by all the role-players in the property development value chain. SAPOA has responded to the essential need for spatial transformation through its

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PROPERTY REVIEW

research on inclusionary housing, with the aim of participating actively in the process and sharing the industry’s learnings with the various role-players, such as the municipalities and provincial and national government. SAPOA, through its involvement in the inclusionary housing dialogue, has embraced Step 3:the opportunity to be exposed to collaborative initiatives undertaken by developers in the affordable housing market in strategic areas in the city of Johannesburg. The lack of affordable lowincome rental accommodation in well-located of the city has Systeareas rs Assoc of the Owne ble rty pream Prope encouraged the developers of The African South Live Easy to take one of the first leaps in providing affordable rental housing in a well-located area. A development of this nature guarantees that tenants are residing in good proximity to economic opportunities, public transit and social amenities. The developers have ensured that Live Easy is an affordable housing brand that aims to shape and transform the housing market.

Live Easy

Against the backdrop of the city’s strategies, it is evident that Live Easy is an innovative affordable residential development where a warehouse facility has been repurposed and redeveloped into affordable residential homes. Live Easy is located in an industrial node in Kew, close to Linbro Park, Wynberg, Sandton, Rosebank and the Johannesburg CBD.

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SOUTH AFRICAN PROPERTY REVIEW

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 Designers Eugene Jonck Sales Robbie Pansegrauw e: rob@mpdps.com Finance Susan du Toit Contributors Berné Burger, Gaye de Villiers, Joloudi Badenhorst, Lisa Swaine, Mareli Treurnicht, Maud Nale, Marguerite Lithgow, Phil Ruimte, Portia Mkhabela, Zunaid Rawoot Photography Mark Pettipher DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA). All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material. Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com

e: philip@rsalitho.co.za

CREATING INTEGRATED PRECINCTS FOR SOUTH AFRICANS TO BREAK NEW GROUND


from the CEO

Welcome to the

SAPOA Annual Convention & Property Exhibition Regarded as South Africa’s premier property conference of the year, the Convention will once again present an exceptional forum for both local and international property professionals and practitioners to refresh their knowledge base and explore the innovations in disruptive technology in real estate

T

he Conference will strive to offer plenty of networking opportunities, providing you with the chance to meet and interact with top property professionals, industry leaders, friends and colleagues, as well as sponsors and exhibitors. The three-day event will be hosted from 20 to 22 June 2017 at the Cape Town International Convention Centre. The theme of the 2017 Convention, “Disruption”, will underpin the need for us to change the way we think about and use technology in reshaping the property industry. It’s all about collaboration and cooperation between individuals from a wide range of professional backgrounds. SAPOA has again selected a line-up of thoughtprovoking local and international speakers to share their expertise and knowledge. In the face of further global economic and political uncertainty, the Convention will provide the perfect platform for commercial players to gain new knowledge with regards to the role and impact of the commercial property sector. Once again this year, our Master of Ceremonies Eusebius McKaiser will host the proceedings. A major highlight of the threeday Convention – and part of the property focus – is the presentation of two muchanticipated awards: the SAPOA Property Journalism Awards for Excellence and the SAPOA Property Development Awards for Innovative Excellence. The Journalism Awards for Excellence will again recognise and honour South African

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SOUTH AFRICAN PROPERTY REVIEW

property journalists who have made a noteworthy contribution to the commercial and industrial property industry through quality media coverage of the property industry in broadcasting. The Property Development Awards for Innovative Excellence will showcase the outstanding contributions from world-class owners, developers and built environment professionals who create smarter and more beautiful buildings every year, significantly enhancing the industry. The SAPOA Convention is a premier gathering place for industry leaders. We trust that the many issues raised, discussed and debated – and our well-informed speakers’ views and opinions – will be of great value to your experience at this event. The threeday gathering promises to be the ultimate networking event for property professionals, offering unrivalled opportunities to engage with industry leaders. SAPOA would like to extend a warm note of thanks to all its sponsors and the SAPOA Convention Committee, as well as to every member of the SAPOA Executive Board and staff who make this annual event a huge success. We hope that you enjoy the Convention, and we wish all delegates an insightful and delightful event. We hope you will join us for a symphony of outstanding real estate discussions, and take a little extra time to enjoy the spectacular and unique beauty of the Mother City. Neil Gopal, CEO


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from the Editor’s desk

Convention build-up As SAPOA members turn their sights towards the Mother City, we take a look at some of the exciting topics that will be on offer over the three days of the annual Convention

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One should not see disruption as only a negative thing. On the contrary, it’s giving us as an industry an opportunity to generate healthy and interesting discussion 4

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s South African Property Review’s Editor, I find myself in the privileged position of being able to talk to several of the keynote speakers who will be presenting their thoughts at the Annual Convention. Uppermost in everyone’s mind is this year’s topic of “Disruption”. One should not see disruption as only a negative thing. On the contrary, it’s giving us as an industry an opportunity to generate healthy and interesting discussion. Both from a business and a political perspective, SAPOA’s Convention provides an exciting platform for events and discourse, and once again offers our members an opportunity to engage with the industry’s leading players, to network with colleagues to and make new friends. There are many unsung heroes when it comes to putting an event of this nature together. While we all know David Green, SAPOA’s Convention Committee Chairman, we decided to have an in-depth chat with him and have discovered that he’s been involved in the Convention as a participating delegate for 25 years – and as the Committee Chairman for the past six. In his capacity as the CEO of ProAfrica, he provides us with insights to Africa’s future development. Many of you will also know Eusebius McKaiser from his show on Talk Radio702, but he may be more familiar to you as SAPOA’s returning Convention MC. In his interview, he highlights the importance of SAPOA’s Annual Convention and what it means to him to be its facilitator. The Convention would not be complete without some sort of political and economic insight. To this end, I secured an interview with Daniel Silke, one of South Africa’s wellknown political commentators. In the hour we spent together, we talked about many issues concerning South Africa, as well as our government’s apparent lack of stable economic policy. He paints a turbulent picture for South Africa going forward, all based on South Africa’s ruling party’s infighting and the effects it is having on the country’s ability to maintain a stable agency rating.

Looking beyond our borders, we caught up with one of our keynote speakers, Stephen Jennings, the CEO of the Rendeavour Group, and posed a number of questions to him about investing in real estate on the African continent. Some of his answers may end up triggering a further conversation with him at the Convention. Closer to home, we take a look at the exciting developments with regards to student bursaries and reiterate the SAPOA Bursary Fund’s objectives, as well as welcoming Moeketsi Moshata to the Bursary Fund team. In the past month, SAPOA has continued to engage with two of our country’s mayors – the Executive Mayor of the City of Tshwane Councillor Solly Msimanga, and the Executive Mayor of the City of Jo’burg Councillor Herman Mashaba. Both of the “Meet the Mayor” dinners were well attended, giving SAPOA members an opportunity to discuss in person some of the ongoing issues that surround the new mayors. The events further highlighted the importance placed on each city’s ability to engage with SAPOA as well as the many benefits of SAPOA’s networking events. The July edition of South African Property Review will be published earlier than usual. We are pulling out all the stops to get it ready in time for the Convention, and would like to thank those individuals and companies that have supported our magazine in the past year. Your contributions are important to us and help keep our members informed about what’s going on the industry – so please continue sending your news to me. I, for one, am incredibly excited about attending this year’s Convention, and touching base with many of the people that I have interviewed in the past year. I’m also looking forward to meeting some of our members for the first time. I hope to see you all there.

Enjoy reading this issue! Mark Pettipher, Managing Editor


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industry news Century City office vacancies drop to 7,4%

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he continued strong take-up of offices at Century City has resulted in almost all new stock being mopped up and overall vacancies dropping to 7,4% in April from just under 10% in January this year and 12,1% in the fourth quarter of last year. Jason Elley of Rabie Property Group, the developers of Century City, says of the 45  000m² of new office space that had come on stream in the precinct since November 2015, only 1  040m² remained to be let. He said the total lettable area of offices at Century City is just under 350  000m², of which only 25  800m² is currently vacant. “Most of this vacant space is in older buildings, with 11  000m² in one building – the old PricewaterhouseCoopers premises – where options are being explored that don’t involve offices,” says Elley. “If this building is taken out of the office equation, it will reduce vacancies to 4,6%.” Recent lettings of new premises in Century City include the entire fourth floor in the Apex building in Century City Square to Mastercard and 446m² in the same building to Storetech. “This building, also home to Thomson Reuters, Derivco, Norfund and Nocks Oil, has only 296m² out of 8  100m² left to let and this is under offer,” says Elley. The other new buildings in Century City Square are the Matrix and the Annex. Of the 24 sectional title offices in the Matrix , only two – each of 122m² – remain to be let while the Annex is fully let. Tenants include Rabie Property Group, Glad Africa, Tal Insurance, IT Lab and Xzibit. Elley says other new office space that had come in Century City recently has also been snapped up. “At Mayfair Square, where 18 units totalling 3  050m² were bought to the market, only one measuring 159m² remains to be let. At Grosvenor Square, only two units – one of 212m², the other of 192m² – are still available.” He says a 300m² architect-designed studio office which had been custom-built for Chris Bam Architects had also recently been completed in the Manhattan Park precinct. “Demand is strong and shows no signs of letting up,” he says. “We are now in the process of bringing additional stock to the market, which will be available from the middle of next year.”

George property market

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lan Phillips, an 18-year veteran of the property industry and the manager of the new Chas Everitt International office in George, says the city has traditionally been a popular destination for active retirees because of its mild climate, mountain views, proximity to the sea, excellent retail and medical facilities – and a variety of homes that are secure, low-maintenance and well-priced. “But in recent times, there has been a marked increase in the number of middle-aged buyers from Johannesburg and other large cities who are typically seeking a slower-paced lifestyle and more security for their families but still want to live in a sizeable centre with easy access to good schools and modern amenities,” he says. Figures from property-data company Lightstone show that the biggest cohort (37%) of buyers in George right now is people aged 36 to 49, and that the number of residential property sales in the city rose by 25% in 2016 compared to 2015. “The properties most in demand have been freehold homes in the R800 000 to R1,5-million range, and estate homes priced from R1,5-million to R3-million. Sectional title flats in the R400  000 to R800 000 range also sold well.”  The key attractions for family buyers, he says, are the excellent schools and tertiary education institutions in George, and the Category 8 airport with daily flights to Johannesburg, Cape Town and Durban that facilitates business travel. “This influx of new residents is good for local property sales and prices, which have risen by an average of about six percent in the past year, while new business ventures and professional practices started by many of the new residents, and the increased consumer spend as a result of their arrival, are boosters for the local economy.” George is the hub of what has come to be known worldwide as the Golf Coast, with a string of estates such as Fancourt, Kingswood and Oubaai. “This brings in international golf tourists and visitors every year, and an increasing number are buying holiday homes here – along with local expats targeting apartments and townhouses as buy-to-let investments that deliver excellent returns,” he says.

“Junk status” no cause for panic in the property market

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hile disappointment has been felt at the news of the credit downgrade by S&P and Fitch ratings agencies, the threat of a downgrade has been looming for the past 18 months. “Although the latest political and economic shifts have been negative, the downgrade has in many ways already been priced into the current trading markets,” says Samuel Seeff, Chairman of the group. He says while it is natural to speculate what impact – if any – the aftermath may have on the property market, which is in many respects confidence-driven, the Seeff Group believes there is still confidence in the market. “It’s business as usual, and we expect

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the market to hold firmly for the foreseeable future,” says Seeff. “Our branches in Centurion and Pretoria agree there is no reason to panic. Any effects will take time to filter through,” says Steve van Wyk, Managing Director of Seeff Centurion. “To echo this positive sentiment, the Seeff Group, for example, concluded a record month during March, with overall turnover of R1,427-billion – the highest in the agency’s more than 50-year history.” Van Wyk says demand for property across the suburbs of Centurion continues unabated. “It is only overpriced properties that are not attracting interest,” he says. “As we have seen with

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the economic shift over the past 18 months, buyers are becoming more particular about what they will pay. If you are overpricing, then you are likely to lose out.” Gerhard van der Linde, Managing Director for the Pretoria East area, agrees, saying that the shift will now be towards marketrelated pricing as buyers will be looking for affordability. “There is still plenty of positivity in the market, and we see this reflected on a daily basis as buyers, investors and sellers continue going about the daily business of buying and selling,” says Van der Linde. “Any economy goes through cycles, and we have seen this in

Samuel Seeff, Seeff Chairman

South Africa as well, with booms and busts,” adds Van Wyk. “Regardless of the state of the economy, there are always opportunities. Irrespective of  ‘junk status’ or the economic conditions, there are always people buying or selling. Selling prices and turnover may be affected – but sales still continue.”


industry news

Innovation and appreciation of cultural diversity wins Architectural Student Award

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usa Shangase, Corobrik Commercial Director, presented prizes to architectural students of the University of the Witwatersrand. The regional winner of R8 500 was Katherine Dewar, with Samantha Aserman receiving the R6  500 second prize and Robert Dos Santos taking home the third prize of R4  500. The prize of R4  500 for the best use of clay was won by Chamismoyo Parirenyatwa. Katherine Dewar will represent Wits at the final awards in Gauteng. Her thesis, entitled “Hyperembodiment”, is an approach to discussing the interface between spaces for women in Johannesburg’s inner city and jewellery as a connector of the body to place. She proposes the jewellery hub be situated in New Doornfontein, a space that is maledominated and where women are present but seem to be largely excluded, unsafe and vulnerable, but that is also full of vibrancy and activity. This area has the potential for a positive and radical cultural change but currently remains disconnected and uninclusive. “By looking at spaces for women, as well as jewellery being a ‘location’ between the body and architecture, I aim to take an architectural design approach that solves issues of making space for women, and for jewellery practices in Johannesburg,” says Dewar.

Mixed-use One on Mutual uses face brick

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evelopers involved in inner-city projects are looking to establish buildings that will remain intact for decades to come. “We don’t want to begin another urban renewal a few years from now, which is one of the primary reasons for face brick being selected,” said Musa Shangase, Corobrik’s Commercial Director. A face-brick exterior requires no maintenance, and its durability and resilience allows it to withstand the harshest elements. The brick also minimises heat retention in hot months while keeping the building warm in cooler months. An excellent representation of the face brick finish is the One on Mutual apartment block in the Pretoria CBD. Completed by GASS Architecture Studios and developed by City Property Administration as part of its urban renewal project, the building forms part of the organisation’s vision to bring new life into the cities. The R161-million development comprises 142 studio, onebed and two-bed residential units with access from Mutual Street. It also offers 400m² of office and 1 550m² of retail space, with safe parking for 210 vehicles. “Face brick is both aesthetically pleasing and hard-wearing, especially beneficial for city living,” says Georg van Gass of GASS Architecture Studios, explaining that the building façade was constructed using the Silvergrey Satin and Silvergrey Travertine face bricks in a mixture of stack and Flemish bonds in a random 5050 pattern. “The Flemish bond with voids was used in the parking levels to allow for ventilation,” explains Renato Lopes of GASS. “The mix of both types of face brick also gave a subtle contrast between the bricks and the façades and, to make the construction somewhat more complex, the patterned wall also had a combination of 82 000 Silvergrey Satin Solids combined with the face bricks.”

The University of the Witwatersrand winners for the regional awards of the Corobrik Architectural Student of the year (FROM LEFT): Professor Paul Jenkins of Wits, winner Katherine Dewar, Chamismoyo Parirenyatwa (best use of clay brick), Samantha Aserman, Robert Dos Santos, Musa Shangase of Corobrik and Dr Hilton Judin of Wits

Three multi-storey connected buildings on the main pedestrian route on Albertina Sisulu Road will be used for the hub and community centre. The ground floor will offer community spaces and jewellery galleries, and the floors above will house classrooms and workshops that embrace and introduce a space for women to learn, create and engage with each other.

Octodec sees steady returns

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ctodec has released its figures for the six months to the end of February. Its R12,7billion portfolio comprising 316 properties realised like-for-like growth of 5,5% in rental income, while the ratio of net property expenses to rental income remained unchanged at 29,6% owing to a continued focus on cost control. “In this challenging environment, our diversified portfolio has shown resilience which we believe is the result of our quality, value-for-money offering aimed at the growing middle market,” says Jeffrey Wapnick, Managing Director of Octodec. “We made good progress on our developments under construction, with three of them set to significantly enhance the value of a key strategic node in the Tshwane CBD. These developments are also ideally situated to benefit from the launch of the new council building, Tshwane House, which is nearing completion and will house more than 1 500 employees.

“We are particularly excited to have completed One on Mutual. Our decision to pilot a more up-market offering has proved successful, with demand exceeding our expectations.” Octodec continued with its strategy to improve the quality of the portfolio by disposing of non-core and non-performing assets. Twelve properties were sold for a total consideration of R87,1-million during the period. Octodec is in the planning phase of two residential property developments – Reinsurance House and Van Riebeeck Medical Building – which are situated in prime locations in the Johannesburg and Tshwane CBDs. The total cost of these developments is expected to be approximately R240-million. The commencement of these developments will depend on required hurdle yields being achieved. Another 42 non-core properties with a carrying value of R263-million and an average carrying value of R6,3-million have been identified for sale to further optimise the portfolio.

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industry news How traffic and transport costs are reshaping property markets

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raffic jams are a daily challenge in Cape Town and Jo’burg, and the desire to avoid them is informing many current property-buying decisions in the two metros. “We can clearly see three different preferences emerging among home-buyers,” says Gerhard Kotzé, Managing Director of the RealNet estate agency group. “The first is the growing demand among young buyers for apartments and townhouses in areas close to their workplace, and preferably close to a variety of shops, restaurants and entertainment and sports venues.” The second group of buyers, he says, are those with families who want to live close to their children’s schools. With both

parents working, the logistics of getting children to and from school are a huge consideration in their choice of home. “This is driving a strong demand for homes in older, central suburbs that are well supplied with schools within walking or minimal driving distance of home. There is also a demand for homes in estate developments that incorporate their own schools and amenities.” The third group, Kotzé says, are lifestyle buyers for whom the new public transport systems such as the Gautrain or the MyCiti network have created the opportunity to work in the city centre but live at the beach, or in a more affordable suburb where they can buy a house rather than an apartment.

Boom time for commercial Winelands

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ommercial property prices in the Winelands have been rising, with a consistently active market seeing values increase by up to 15% a year in the most sought-after nodes. According to Detlef Struck, Commercial Property Specialist for Lew Geffen Sotheby’s International Realty in Stellenbosch and Somerset West, one of the key driving forces has been the continued influx of interest from upcountry which has driven up demand for office and retail space. “Stellenbosch has a higher concentration of retail and office space with only a few light industrial buildings on the outskirts,”  he says. “Demand is high in the historical town centre with little stock available. There have also been few commercial property sales in Stellenbosch in recent years because existing landlords get rental returns of up to R300/m² and are hanging on to the properties.” Kobus Conradie of Lew Geffen Sotheby’s International Realty in Paarl says that although demand for commercial space has been increasing, it spiked in 2016. The biggest demand has been for light industrial properties, especially units of between 200m² and 300m². However, more and more national and international players are building factories and depots close to the N1 and other major routes. “The retail sector has also seen growth,” says Conradie, “with national brands opening in new malls and on busy intersections in Paarl centre.“ “Somerset West is becoming known as a prime location to buy commercial space as an investment,” says Chris Cilliers, CEO and principal for Lew Geffen Sotheby’s International Realty in the Winelands. “With prices still 20% cheaper than Cape Town, the boom time in the commercial capital of the Helderberg Basin looks set to continue.”

Dipula beats tough economy, maintains dividend growth

Izak Petersen, CEO of Dipula Income Fund

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SE-diversified REIT Dipula Income Fund has reported strong interim growth, with 9,5% increase in distributable earnings on the prior period. This has resulted in a 6,3% dividend increase per combined share for the six months to February 2017, despite a limping economy – for A-shareholders this was five percent; for B-shareholders 7,9%.

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Dipula Income Fund has continued to successfully extract value from its existing property portfolio through re-development initiatives, recording organic growth. Dipula Chief Executive Officer Izak Petersen says the company had also bolstered its team during this period with highly experienced people who are qualified to steer it through this tough era. Vacancies in the R7-billion portfolio stabilised at 9,2%. Office sector vacancies were up from a prior 11,7% to 15,1%; retail vacancies were marginally up from 7,6% to 7,9%; and industrial vacancies improved to 8,8% from 11.5%. “Increasing occupation costs with turnovers growing at a slower pace causes increasing tenant drop-off in all property sectors,” says Petersen The REIT will conclude several acquisition deals that are worth more than R500-million,

and will spend R200-million on strategic revamps in the next six to 18 months. “To rebalance our portfolio, we have disposed of 28 non-core properties worth R400-million,” says Petersen. Dipula will also be seeking further growth opportunities from selective acquisitions, refurbishments and possible corporate action, focusing on reducing vacancies and on keeping arrears in check. “We have appetite for residential rental stock,” says Petersen. Dipula Income Fund’s interest hedge rose from 48,2% in the prior period and 70,6% at the end of February 2017 to 82,1% of all debt. Dipula forecasts a dividend increase of five to 6,5% for the full year to August 2017, subject to macro-conditions and tenant resilience not worsening materially.


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industry news

Residential, retail developers must look to groundwater for irrigation

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arge residential and retail developments face growing constraints on their use of water for irrigation purposes. As the drought in the Western Cape and Northern Cape leads to sterner water restrictions and rising water prices, part of the answer lies under the ground. “Using treated municipal effluent for irrigation of parks in residential developments – or green areas in retail malls – is not always feasible because of quality and quantity constraints,” says Leon Groenewald, principal hydrogeologist at SRK Consulting. “Property developers and managers now need to be considering the judicious use of groundwater to augment their supplies – in fact, we find many already are.” According to Groenewald, growing use of groundwater for irrigation helps to ensure that all water sources are used in a more appropriate and sustainable manner. For example, by utilising untreated – and therefore potentially cheaper – groundwater for irrigation, the dwindling supply of potable water can be more efficiently distributed for drinking and household purposes. When used for irrigation, groundwater can also be blended with treated effluent to improve the quality and increase the quantity of treated effluent available for irrigation. “At the same time, care must be taken in how groundwater use is managed, as this is not an infinite resource,” he says. “To establish whether groundwater is an option for any residential or retail development, a detailed feasibility study needs to be conducted to determine whether groundwater is available, and whether yields and quality are appropriate for the intended use.” The boreholes have to be correctly sited using scientific geophysical methods, and a competent contractor must be appointed to drill and test each borehole. “When groundwater is intersected during the drilling process, correct pumping tests and scientific methods need to be employed to analyse the test data to establish the sustainable yield of the borehole,” says Groenewald. “If the decision to proceed is positive, the groundwater resource must be correctly managed within the parameters of its yield and the water level in the borehole. This requires that groundwater levels and abstraction volumes be closely monitored, so that these levels are kept within the recommended limits. Also important are compliance requirements: the Department of Water and Sanitation (DWS) is tasked with the responsible management of the nation’s groundwater resources, so its usage must be monitored and controlled as prescribed by regulations. If the daily use of the borehole is between 10 and 20 cubic metres, then the groundwater use must be registered with the DWS. If the daily abstraction exceeds 20 cubic metres, then a Water Use Licence – also from the DWS – must be obtained. “The various stages in developing, managing and protecting groundwater resources demand a range of specialised skills which are well established at SRK Consulting,” he said. “Our specialist teams of geologists, hydrogeologists, hydrochemists, environmental practitioners and engineers undertake all aspects of groundwater studies, from liability assessments, site works, project management, impact assessment, licensing, design and implementation to numerical modelling.”

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Eastern Cape landmark asset goes under the hammer

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he former Star Bakery building in Walmer Estate in Port Elizabeth has been decommissioned and will be sold at auction on 19 June 2017. Situated close to the international airport and a mere five kilometres from the port, the industrial property will be auctioned on site. According to Greg Nafte, Co-Director of Nexus Property Group, this auction gives property investors with a chance to invest in a landmark asset in a growing, central node that’s currently experiencing commercial and retail growth. “The property, which extends over 7 785m², consists of a large paved yard and has a gross lettable area of 3 061m²,” says Nafte. “This currently includes offices, storerooms, warehouses, wash bays and

workshops. The property also offers great frontage onto Heugh Road – a prominent thoroughfare linking the airport with the PE CBD.” Viewing of the sought-after property is by appointment only, and all interested parties will be required to submit an Expression of Interest – a document outlining their intended use for the property. “To participate in the auction, an Expression of Interest form, available on request, must be completed and submitted, together with a R50 000 refundable deposit, by 5 June 2017,” says Nafte. Should the Expression of Interest be approved, the purchaser will need to register for the auction and submit a R50 000 refundable deposit along with FICA documents.

December is the best month for retailers

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rading density data from Broll SA-managed shopping centres points to December as the top performing month over the past three years. According to the Broll Retail Snapshot Q1: 2017, most South Africans continue to spend a lot more in December. This can be attributed to the festive season trade. However, certain retail categories – such as eyewear and optometry – perform better in January. Black Friday and back-toschool specials don’t appear to have a huge impact on the market when compared to the festive trade, although slight differences were evident in November 2016 for certain retail categories. Black Friday has been growing in popularity; once more retailers take part in this one-day promotion, changes will become evident, says Elaine Wilson, Divisional Director: Research for the Broll Property Group. According to the report, the best-performing tenants in December were in the accessories, jewellery and watches category, followed by the food and electronics categories. Sportswear and outdoor tenants have been recording increasing trading densities in December, an indication of fitness becoming more predominant. “High-ticket items still remain popular as consumers rely on December bonuses to ‘reward’ themselves,” says Jill Turnbull, Divisional Director for Property Management at Broll Property Group. “It would appear that Black Friday in November 2016 affected the trading performance in food as well as health and beauty – marginal growth showed in these categories when compared to November and December turnover data.”


industry news

Human Settlements Bank launched

Lindiwe Sisulu

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he new Human Settlements Development Bank has been launched to create a single government home finance entity, Minister Lindiwe Sisulu has said. The Minister of Human Settlements told a media briefing in Cape Town that the new bank should facilitate faster access to home financing for the poor, and give a boost to plans for mega government-led integrated housing projects in metropolitan areas. There are 46 of these so-called catalytic projects in the pipeline; 14 are located in Gauteng. Sisulu said she hoped the private sector would eventually invest about R150-billion in projects of this kind, which are underpinned by a policy of undoing apartheid era spatial divides and bringing the poor closer to economic centres. The projects will see the allocation of about 10 000 stands, where beneficiaries will build their houses and

industry news

ZEITZ MOCAA

Museum of Contemporary Art Africa

V&A Waterfront Cape Town

have a need to secure finance. The Minister said that the National Treasury has for years actively encouraged the establishment of the new bank. “In fact, the Treasury has been at pains to push us to get to this point, over the past six years, because it did not make sense to them that we should have three different development finance institutions. The National Housing Finance Corporation, the Housing Loan Fund and the National Urban Reconstruction and Housing Agency will be integrated to form the new bank. The CEO of the Housing Finance Corporation will act as the CEO of the bank, said Human Settlements DirectorGeneral Thabane Zulu. “The Treasury felt that if we combined these institutions into one entity, we’d have greater returns,” said Zulu. “This move comes at a time when we ourselves would like the bank to play a different role, especially in supporting the catalytic projects.” Zulu also said that a law establishing the entity should be introduced to Parliament by the end of September. “What we are busy with at the moment is the first stage, which is operational innovation,” said Zulu. “We are working on the Bill… We will get that bill out by September at the latest, but what we have launched is the operational integration aspect of that bank.”

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industry news Pay a little more towards your home loan and get big rewards

Brick supplier Corobrik wins Diamond Arrow Award

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ust because most home loans are approved with a 20-year repayment term does not mean you have to spend that long paying for your home. So says Shaun Rademeyer, CEO of BetterLife Home Loans, South Africa’s biggest bond originator, who notes that on a R1-million home bought with a 90% loan, buyers could save more than R700 000 in interest by paying off the loan in 10 years instead of 20. “Over 20 years and at the current prime rate of 10,5%, they would pay about R1,257-million in interest, taking the total cost of their home to R2,257-million. However, if they paid the same loan off in 10 years, they’d pay only R554  000 in interest and thereby substantially lower the total cost of the property,” he says. The way to do this, he explains, would simply be to pay an additional R3  200 a month off the capital portion of the home loan. “What is more, the total of the additional amounts paid over 10 years would only be R384  000 – or just over half of the R700  000 saving in interest – so this would be really a good investment, especially when you consider that at the end of that period you would own a home that was fully paid for. And R3  200 a month is not such a huge amount – many families are spending that much a month on a second car, for example, and might consider doing without that or without certain other purchases in order to pay their home off in a shorter time.” For those on a really tight budget already, the good news is that there are substantial savings to be made even if you can only pay an additional R300 towards your home loan each month. “Just that amount will cut your loan term on a R1-million home down to 18 years – and save you R148  000 in interest. “That represents a whopping 128% return on the additional R64  800 you would be paying into the home-loan account, which in investment terms is a guaranteed return of significantly more than you could hope to earn at this stage by putting that money in savings or a money market account – or investing it in the stock exchange.”

orobrik has received the PMR Diamond Arrow Award for the seventh year running. The score is attained after respondents rank their perceptions of Corobrik across 11 attributes and is a public acknowledgement of excellence. “We’re proud to receive this award as the research tells us our clients value our service, something we constantly strive to improve,” says Corobrik Managing Director Dirk Meyer. “This year Corobrik received a mean score of 4,3 out of 5.” To arrive at the final score respondents in the industry rate suppliers across 11 attributes: ability to meet orders, BEE, competitive pricing, deliveries meeting promises, flexibility, environmentally friendly solutions, range and quality of products, response to queries, reputation, and sustainable development practices. “We’d like to thank everyone in the industry for the honest evaluation,” says Meyer. “The results confirm the consistency

in our performance. We’d also like to pay tribute to our staff – without their dedication this award would not have been achieved.” The company constantly aims to improve manufacturing processes to meet world-class standards, and is continually working towards improving ISO accreditations. Currently, of the 15 factories, 14 have an ISO 9001 rating, with eight achieving the ISO 14001 and OSHAS 18001 environmental accreditation. Ten factories have received SANS 227 mark. Product testing is done through ISO-IES 17025 SANASaccredited testing laboratory number T.0158 in accordance with the accredited schedule. “Constant investment in research has allowed us to reduce the environmental impact of our products from manufacture to use, and to reduce the energy consumption in buildings constructed from our bricks,” says Meyer.

Facilities managers as enablers of positive experiences

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acilities managers around the world celebrated the World FM Day on 17 May under the theme “Enabling positive experiences”. Over the years, the role of facilities managers has evolved from managing and coordinating workspaces for clients to enabling positive customer experiences. Richard Flame, Director for Facilities Management at Broll Property Group says that delivering customer service that exceeds expectations starts with understanding what good service is from the customer’s point of view. Facilities managers’ roles are multifaceted because they

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are no longer just concerned about the coordination and functionality of the space they manage. Their management strategies should enable positive experiences for both the space occupiers and the client. In fact, Flame says the sole aim should not be simply to meet the client’s expectations: facilities managers should aim to exceed customer service. According to Flame, there are many ways in which facilities managers can develop a positive customer attitude. These include: ●● Avoid negative input and always have solutions for problems ●● Be proactive with the customers

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●● Encourage positive self-talk among teams ●● Inspire confidence and encourage team collaboration often ●● Listen more and speak less ●● Promote a positive attitude within teams ●● Remain positive, with high expectations ●● Recognise attitude as a matter of choice ●● Strive to improve one’s attitude towards customer service ●● Use positive language Facilities managers need to understand that the design and management of a building can positively and negatively

impact on productivity and staff morale. As a result, it becomes important that managers also align their work facilities strategies with the client’s workspace needs. Employees need to work in spaces that offer comfort. If they have control and adjustment of conditions within the space they occupy, this then reduces health and safety risks and ultimately increases productivity. Flame adds that wellness is increasingly becoming an important factor for many organisations, and companies who are able to include wellness services in their business are able to attract and retain talent.


industry news

industry news

RICS seeks input on new property measurement standard A

s part of its aim to professionalise the property industry more broadly, the Royal Institution of Chartered Surveyors (RICS) is updating its global property measurement standard to ensure it incorporates new internationally agreed benchmarks for residential property management. The new edition will also reflect the views and opinions of professionals from around the world, as well as their clients. “RICS Property Measurement 2nd Edition, which is an update to the original professional statement, will ensure that RICS professionals provide consistent property measurements to their clients,” says TC Chetty, RICS Country Manager for South Africa. “It will enhance transparency and enable greater comparability across property markets.” In so doing, RICS is inviting input from anyone undertaking, commissioning or using property measurement information to share their insights, which will be invaluable in

TC Chetty, RICS Country Manager for South Africa

helping to shape a new standard that will inform the way property measurement is undertaken. “The updated standard will ensure that the profession responds to the changing nature of the property market, which is increasingly international,” says Chetty. “The development and use of globally benchmarked standards such as RICS Property Measurement 2nd Edition is a major step in professionalising surveying practices,” says Alexander Aronsohn, RICS Director: Technical Standards. “It ensures that our professionals are at the forefront of new measurement practices and in step with evolving professional trends that instil confidence in global markets. “We are working with other organisations internationally, including SAPOA in South Africa, to develop and introduce common standards for property measurement that enhance transparency and comparability in the marketplace. In doing so, we’re elevating the status of the profession in the markets in which we operate.” A three-month consultation period has been provided to seek as much feedback as possible from professionals, stakeholders and partners across the industry. The consultation is available on the RICS i-Consult online portal until 31 July 2017. RICS Property Measurement 1st Edition became mandatory for RICS professionals last year. Following the feedback received on that standard, RICS has updated and simplified guidance on the mandatory nature of the 2nd Edition, which is set out in the consultation draft. The RICS Property Measurement 2nd Edition incorporates International Property Measurement Standards (IPMS), a globally agreed set of rules on property measurement. IPMS is a set of internationally agreed property measurement standards created by the IPMS Coalition (IPMSC). It is a group of more than 80 professional, industry and not-for-profit organisations from around the world, working together to develop and implement international standards for measuring property SOUTH AFRICAN PROPERTY REVIEW

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legal update

SARS ruling on restructuring of a property portfolio under the corporate rules On 11 April 2017, the South African Revenue Service (SARS) issued a new Binding Private Ruling (BPR 270), setting out the tax consequences of a restructuring of the unlisted property portfolio of a long-term insurer in terms of Section 42 of the Income Tax Act, No. 58 of 1962 (ITA) By Mareli Treurnicht, Cliffe Dekker Hofmeyr

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PR 270 considered the application of sections 25BB(4) (the taxation of Real Estate Investment Trusts (REITs)), 29A (the taxation of long-term insurers), 40CA (the acquisition of assets in exchange for shares or debt issued) and 42 (asset-for-share transactions) of the ITA, and paragraph 20(1) (a) of the Eighth Schedule to the ITA (base cost of assets) to the facts in question. It further ruled on the application of Section 9(1)(l)(i) of the Transfer Duty Act, No. 40 of 1949 (TDA) (exemptions from transfer duty) to the facts. The parties to the transaction were as follows: ●● The applicant is a listed company incorporated and resident in South Africa (Applicant). The Applicant carries on business as a long-term insurer. ●● The first co-applicant is a company incorporated and resident in South Africa and is 100% owned by the Applicant (First Co-Applicant). ●● The second co-applicant is a corporate REIT to be listed on the Main Board of the Johannesburg Stock Exchange (Second Co-Applicant).

The background to the transaction was as follows: The Applicant held unlisted prime real estate with the objective of delivering long-term returns and matching policyholder liabilities. The Applicant owned a 100% undivided interest in certain of the properties, and less than 100% in the others. The First Co-Applicant owned a 25% undivided interest in a property described as “Property X”. The Applicant’s funds established and maintained in accordance with Section 29A of the ITA exposed to the property portfolio were: ●● the untaxed policy-holder fund; ●● the individual policy-holder fund;

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The Applicant held unlisted prime real estate with the objective of delivering long-term returns and matching policy-holder liabilities. The Applicant owned a 100% undivided interest in certain of the properties, and less than 100% in the others ●● the risk policy fund; and ●● the company policy-holder fund. The Applicant and the First Co-Applicant proposed to transfer a portion of their undivided interests in the property portfolio and Property X respectively to the Second Co-Applicant. The proposed transaction steps were as follows: ●● The Applicant would dispose of a portion of its undivided interest in the property portfolio, which included associated letting enterprises, to the Second Co-Applicant in exchange for units in the Second Co-Applicant (the REIT). ●● As the Applicant and Second CoApplicant would become co-owners of the property portfolio, they would,

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in instances where they own a 100% undivided interest in properties, create a separate unincorporated joint venture for the purposes of conducting the letting enterprises of the property portfolio. The First Co-Applicant would dispose of a portion of its undivided interest in Property X, including the associated letting enterprise, to the Second Co-Applicant in exchange for units in the Second Co-Applicant. As the Second Co-Applicant would become a co-owner of Property X, the Second Co-Applicant would be integrated into the pre-existing unincorporated joint venture for the purposes of conducting the letting enterprise of Property X. The units in the Second Co-Applicant would be proportionally allocated by the Applicant to the relevant funds in accordance with Section 29A of the ITA. The First Co-Applicant had not claimed any of the allowances referred to in Section 25BB(4) of the ITA prior to the proposed transfer of a portion of its undivided interest in Property X to the Second Co-Applicant.

SARS issued the following ruling in connection with the proposed transaction: ●● The disposal of the portion of the undivided interest in the property portfolio (including the rights attaching to the property portfolio and the letting enterprises) by the Applicant to the Second Co-Applicant will qualify as an “asset-for-share transaction” as defined in paragraph (a) of that definition in Section 42(1) of the ITA. However, Section 42 will not apply insofar as it relates to the untaxed policy-holder fund. ●● Insofar as the disposal of the portion of the undivided interest in the property portfolio relates to the untaxed policy-


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holder fund, the Second Co-Applicant will obtain a base cost for the relevant portion of the undivided interest in the property portfolio (including the relevant portion of the rights attaching to the property portfolio and the letting enterprises) equal to the market value of the Second Co-Applicant’s units issued to the Applicant immediately after acquiring the portion of the undivided interest in the property portfolio. Insofar as the disposal of the portion of the undivided interest in the property portfolio relates to the untaxed policyholder fund, the Applicant will obtain a base cost for the units acquired in the Second Co-Applicant equal to the market value of the relevant portion of the undivided interest in the property portfolio (including the relevant portion of the rights attaching to the property portfolio and the letting enterprises) disposed of. The Second Co-Applicant will not be liable for transfer duty as Section 9(1)(l)(i) of the TDA (which exempts a company acquiring property in terms of an asset-for-share transaction in terms of Section 42 of the ITA from transfer duty) will apply to the acquisition of the portion of the undivided interest of the Applicant in the property portfolio. However, the public officer of the Second Co-Applicant must make a sworn affidavit or solemn affirmation confirming that the transaction complies with the section. The disposal of the portion of the undivided interest in Property X (including the rights attaching to the property and the associated letting enterprise) by the First CoApplicant to the Second Co-Applicant will qualify as an “asset-for-share transaction” as defined in paragraph (a) of the definition of “asset-for-share transaction” in Section 42(1) of the ITA. The Second Co-Applicant will not be liable for transfer duty as Section 9(1)(l)(i) of the TDA will apply to the acquisition of the portion of the undivided interest of the First CoApplicant in Property X. However, the public officer of the Second CoApplicant must make a sworn affidavit or solemn affirmation confirming that the transaction complies with the section.

BPR 270 is valid for a period of two years from 29 March 2017. SOUTH AFRICAN PROPERTY REVIEW

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legal update

Bodies corporate to establish separate bank accounts for reserve and administration funds In terms of the Sectional Titles Schemes Management Act, No. 8 of 2011 (STSMA), a body corporate must establish and maintain administrative and reserve funds, respectively By Joloudi Badenhorst, Cliffe Dekker Hofmeyr

The purpose of the reserve fund is to ensure that there are sufficient funds for any future or unexpected costs in respect of the maintenance, repair or replacement of common property, with the focus being on major capital items such as lifts, electrical systems, heating and cooling systems, etc

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he purpose of each of these funds is found in Rule 24 of the Rules as contained in Annexure 1 to the Regulations of the STSMA (Rules). In terms of this Rule, the administrative fund must be utilised by the body corporate to fund its operating expenses. Such operating expenses include, inter alia: ●● any payments of rates and taxes and any other charges for the supply of electricity, gas, water, fuel, sanitary or other services to the building or land; ●● any payments of any insurance premiums relating to the building or land; ●● any costs of the repair, maintenance, management and administration of the common property; and ●● any costs of the discharge of a duty of fulfilment or any other obligation of the body corporate. The reserve fund, on the other hand, must be utilised for the implementation of the maintenance, repair and replacement plan as referred to in the Rules, which provide for costs of any future maintenance, repair and replacement of common property. The question that now arises is whether the body corporate is obliged to establish and maintain these funds in two separate bank accounts. Rule 26(1)(b) clearly states that the body corporate must keep separate books of account and bank accounts for its administrative and reserve funds. Notwithstanding the clear and unambiguous wording of Rule 26(1)(b), the obligation of the body corporate to keep these funds in separate accounts is supported when due regard is given to the purpose of these funds, the minimum amounts required to be contributed to these funds, the requirements for any payments to be made out of these funds, and the

financial records to be provided in respect of each fund. As stated, the purpose of the administrative fund refers to the day-to-day management of a scheme and the operating costs associated therewith. The purpose of the reserve fund is to ensure that there are sufficient funds for any future or unexpected costs in respect of the maintenance, repair or replacement of common property, with the focus being on major capital items such as lifts, electrical systems, heating and cooling systems, etc. At every annual general meeting, the budgets for each of the funds for the next financial year are to be approved in accordance with the provisions of the Regulations. Payments out of the administrative fund may only be made if such payments are in accordance with trustee resolutions and with the approved budget. However, payments out of the reserve fund may be made at any time in accordance with trustee resolutions and the approved maintenance, repair and replacement plan, or if the trustees resolve such payment to be for the purpose of an urgent maintenance, repair or replacement expense. In terms of Rule 26(1)(c), the body corporate must prepare annual financial statements for presentation at the annual general meeting, which statements must include an analysis of, inter alia, the amounts due to the body corporate in respect of contributions as well as the amounts available in the reserve fund. Furthermore, these financial statements must be audited by an independent auditor. In light of the above, bodies corporate must ensure that they have established an administrative and reserve fund, each in a separate bank account, and that the requirements relating to each fund are adhered to.


legal update

Insight into the Regulation of Agricultural Land Holdings Bill On 17 March 2017, the Minister of Rural Development and Land Reform published the draft Regulation of Agricultural Land Holdings Bill for public comment. The Bill is aimed at progressing land reform within the agricultural sector, and will have far-reaching implications for current and future owners of agricultural land By Zunaid Rawoot

In summary, the Bill aims to improve the land reform process by: ●● Prohibiting the outright sale of agricultural land to foreign persons, and only permitting the registration of long-term leases in favour of a foreign person; ●● Requiring all owners of agricultural land to register their land and ownership structures with a Land Commission to be established in terms of the Bill. The requirement to notify the Land Commission extends to current owners of land and also to persons who are in the process of acquiring ownership of land; ●● Requiring all foreign persons intending to sell their agricultural land to first offer their land to the Minister to purchase. If the Minister, within 90 days, refuses such offer or does not respond to the offer, only then can the foreign person advertise the land for sale to citizens. It should be noted that the definition of a “citizen” excludes foreign persons, but does include any foreign person who has permanent resident status in terms of the Immigration Act No. 13 of 2002; ●● Setting ceilings or capped ownership parameters on agricultural land. Any land holdings in excess of those ceilings are regarded as “redistribution agricultural land”. The owner of the redistribution agricultural land, irrespective of whether the owner is a foreigner or a citizen, must offer the land for sale first to black people (as defined in the Employment Equity Act No. 55 of 1998, essentially being Indian, African and coloured citizens) and thereafter to the Minister; and ●● Granting the Minister the right to expropriate the redistribution agricultural land should the Minister and the land owner not be able to reach agreement on the purchase price of the land. It should be noted that any expropriation process must be done in accordance with the expropriation legislation in force at the time of the expropriation.

Zunaid Rawoot, a partner at Webber Wentzel

The Webber Wentzel Real Estate team has carefully considered the Bill and has submitted substantial comments on the Bill to the Minister for his consideration While it is not unheard of for countries to restrict foreign ownership of land (Hungary, Denmark, Brazil, India, Ireland and Morocco do so in some form), the current draft of the Bill does give rise to a number of concerns about its practical implementation. Some of the concerns are as follows: ●● The reference in the Bill to concepts of an “offer” and “a right of first refusal” may result

in confusion. The Bill purports to attempt to grant the Minister a right of first refusal but places an obligation on a foreign owner to “offer” the right of first refusal to the Minister. In our view, it would be preferable if the Minister were rather granted a clear legislative right of first refusal; ●● It is unclear whether a sale agreement subject to a suspensive condition and the sale of controlling interest in a juristic owner of land would be regarded as acquisition of ownership, which would trigger a requirement to notify the Land Commission of the transaction; ●● The Bill does not adequately deal with leases in favour of foreign persons with lease periods below 30 years and in excess of 50 years, which would ordinarily be capable of registration at the Deeds Office in terms of the Deeds Registries Act No. 47 of 1937; and ●● The Bill attempts to categorise agricultural land as (a) land that falls within the ceilings of capped or ceiling ownership requirements; and (b) redistribution agricultural land, which is the land in excess of the capped ownership requirements. The current wording of the Bill appears to provide the Minister with both a legislative obligation to purchase the redistribution agricultural land as well as the discretion to refuse to buy agricultural land, which would include redistribution agricultural land. As such, it would seem that the Minister has both a compulsory obligation as well as a voluntary obligation to purchase redistribution agricultural land. The Webber Wentzel Real Estate team has carefully considered the Bill and has submitted substantial comments on the Bill to the Minister for his consideration. The closing date for the submission of public comments has been extended to 13 June 2017. SOUTH AFRICAN PROPERTY REVIEW

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legal update

Do your commercial drone insurance policies have adequate cover? Incidents involving drones can be minor and slightly humorous, or have extremely dire consequences, from a kiss-cam drone cutting off a piece of a person’s nose or a drone spying through the president’s bedroom window, to extreme cases such as an engineering drone flying into a crane operator who knocks down a portion of an under-construction building, dropping weapons or bombs into a prison or flying into the propeller of a 500-passenger airplane. In addition, automated drones that have entered the market bring a new type of risk: they are currently typically used to follow and record action sports such as windsurfing or mountain biking without the control of the sportsperson By Berné Burger and Lisa Swaine of Webber Wentzel

much wider than intended (in relation to the insurer) or much narrower than intended (in relation to the pilot). There are numerous types of risks that will need to be taken into consideration when underwriting or taking out insurance for a drone.

Third-party liability Damage to property

Berné Burger, Webber Wentzel

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he new drone regulations, which came into effect on 1 July 2015 and form part of the Civil Aviation Regulations, place an obligation on those with commercial drone licences to obtain third-party liability insurance. The risks associated with drones are significant and can lead to far-reaching monetary claims beyond the anticipation of both pilot and insurers. Accordingly, pilots need to insure, and insurers need to underwrite and provide adequate exclusions to limit their exposure. Does the insurance policy provided aim to merely cover the pilot for physical damage caused to third parties and their property, or does the policy also aim to cover any consequential damages? Depending on the wording of the policy, protection can be

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The pilot could be liable across the spectrum, from an event such as colliding with a vehicle’s windscreen and having to replace it, to grounding a plane by flying into its propeller. For example, when grounding a plane, beyond obvious massive property damage, the insured could also face personal injury claims from the passengers (should they survive the incident) or loss-of-support claims from their families (if they don’t survive), as discussed below.

Personal injury The pilot could potentially be held liable for any physical or mental injuries that a person may suffer as a result of a drone incident. Resulting from such injuries could be claims under various heads of damages, such as loss of income or earning capacity, general damages, and past and future hospital and other medical expenses. Depending on the type of injury, the quantum of such claims could be crippling. If a drone incident causes death, there may be loss-of-support claims from the deceased’s dependants that must be taken into consideration.

Invasion of privacy Data protection in South Africa is currently regulated by the common law, the Constitution of the Republic of South Africa, the Protection of Personal Information Act (the POPI Act) and the Electronic Communications and Transactions Act. In terms of the common law and the Constitution, the right to privacy is a fundamental right that is protected both generally in terms of South Africa’s common law as well as by Section 14 of the Constitution. Section 14 of the Constitution provides individuals with the right to have their private or personal information protected against disclosure by other persons. This protection of privacy will be extended further once the POPI Act has come into force, which strictly regulates how information is to be collected, processed, stored and shared. Currently the POPI Act has no effective date announced yet, but it is expected to be announced soon, now that the office bearers of the “Information Regulator” – the regulator created by the POPI Act – have been appointed, with effect from 1 December 2016. It is possible for drones to be flown into areas that allow them to take pictures or videos of private events and occurrences. An obvious example is flying a drone to the window of the president’s bedroom and producing a video recording. Celebrities or people of stature also have image rights, which may be violated depending on how the recordings, photographs or information are used. There are numerous ways in which a drone could potentially invade the privacy rights


legal update of individuals (both in terms of common law and the POPI Act, when it comes into force) which could lead to civil claims against the pilot.

Criminal sanctions There are numerous unforeseen criminal sanctions that pilots may face, depending on how their drones are used. When looking at the numerous criminal charges which can be brought against a pilot, it will become vital for the pilot to consider whether the insurance policy covers the pilot’s defence costs and the possible fine; and similar to many third-party liability insurance policies, whether the insurer retains the right to determine the way forward in criminal proceedings.

National Key Points or Critical Infrastructure The apartheid-era National Key Points Act (the NKP Act) provides that any person who “furnishes in any manner whatsoever” information regarding security measures at a “National Key Point” without being legally obliged to do so, is guilty of an offence. This could lead to a fine up of up to R10  000 or imprisonment of no more than three years, or both. One should further consider the draft Critical Infrastructure Bill (the CI Bill), which will repeal the NKP Act. The CI Bill has the same prohibition as discussed above, as well as numerous other prohibitions such as the prohibition on photographs and videos of “Critical Infrastructure”. The penalty for such offences is imprisonment of up to 20 years or a fine, or both. There is currently no maximum amount determined for the fine. Because the CI Bill is currently drafted, all current National Key Points will be deemed to have been declared as Critical Infrastructure. The reality of the NKP Act and the CI Bill is that one can take a photo with a drone of President Jacob Zuma’s residence and have to pay a fine of R10  000 in terms of the NKP Act, or a higher fine in terms of the CI Bill. On the other hand, these restrictions are justified if one considers, for example, the possibility of a drone dropping weapons or bombs into a prison.

the Civil Aviation Regulations, specifically the new drone regulations (part 101), may also occur. Depending on the type of offence and the number of transgressions, pilots who commit an offence can face a fine of between R5  000 and R32  000, and organisations can face a fine of between R10  000 and R160  000. Offences range from failing to have a firstaid kit or fire extinguisher nearby and flying in weather conditions that obstruct other air users’ view of the drone, to something as severe as failing to give a manned aircraft right of way.

The reality of the NKP Act and the CI Bill is that one can take a photo with a drone of President Jacob Zuma’s residence, and have to pay a fine of R10 000 in terms of the NKP Act, or a higher fine in terms of the CI Bill. On the other hand, these restrictions are justified if one considers, for example, the possibility of a drone dropping weapons or bombs into a prison

The POPI Act Further to third-party liability in terms of the POPI Act, there are administrative fines which the “Information Regulator” may implement if a responsible party commits an offence in terms of the POPI Act. A fine in terms of the POPI Act may go up to an exorbitant R10-million, in addition to the possibility of imprisonment for certain offences.

In conclusion Importantly, two issues must be considered: ●● Has the pilot taken sufficient steps to insure all of the risks to which he may be exposed? ●● Has the insurer considered the far-reaching risks and limited its liability accordingly? When the pilot and the insurer agree on a policy, there needs to be a clear understanding on the manner in which the pilot intends to use the drone, so that relevant restrictions regarding use and location can be agreed upon. This will ensure that the pilot is not underinsured and that the intended use is not restricted (unless deemed necessary in the eyes of the insurer, depending on the nature and extent of the risk). With the above approach in mind, pilots can ensure they are adequately covered for all the risks that could possibly occur within the ambit of their intended commercial use of the drone. Insurers should take sufficient proactive steps to understand the business of the pilots and the intended use of their drone. This will ensure that insurers provide adequate cover and do not leave themselves open to endless liability because of a lack of foresight of the possible risks, for both minor (kiss-cam drone) and exorbitant (plane crash) incidents.

Civil Aviation Act Non-compliance with the licensing and other requirements in the Civil Aviation Act and SOUTH AFRICAN PROPERTY REVIEW

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education, training & development

Transforming the commercial property industry through the bursary support programme By Portia Mkhabela

National Agenda The National Development Plan, as stipulated in the white paper for post-school education and training, outlines three main functions of universities: ● To educate and provide people with high-level skills for the labour market. ● As dominant producers of new knowledge, they assess and find new applications for existing knowledge, and they validate knowledge and values through their curricula. ● To provide opportunities for social mobility and strengthen social justice and democracy, thus helping to overcome the inequities inherited from our apartheid past.

Contact: Portia Mkhabela, Education & Training Manager at SAPOA t: +27 (0)11 883 0679 e: education.manager@sapoa.org.za

SAPOA Bursary Fund students

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Furthermore, the national skills development Strategy iii, Goal 4.2: Increasing access to occupationally‐directed programmes further stipulates South Africa’s pool of intermediate skills, especially artisanal skills, is too low to support national and sector development and growth, and the university sector is still not producing enough appropriately skilled and qualified people in disciplines central to social and economic development. Based on the above analysis by DHET, SAPOA through its key stakeholders under the guidance of the board of trustees has taken a conscious decision to address the current challenges facing South Africa. SAPOA Bursary Fund’s mission is “to be committed to actively and responsibly represent, promote and protect the interests of our members’ commercial activities within the property industry”.

SAPOA is committed to searching for the most talented people who will add value to its members and the industry by providing tertiary educational support through the SAPOA Bursary Fund.

Objectives of the SAPOA Bursary Fund ● To transform the commercial property industry demographics to reflect the population demographics in South Africa. ● To redress the past by offering black people property-related education and entrance to the commercial property industry. ● To promote the commercial property industry at both school and tertiary level to ensure growth into the future. ● To address the current and future skills shortage in the commercial property industry. In support of these objectives, our member company the Abcon Group Foundation, a non-profit organisation through which the corporate social investment activities of the Abcon Group of companies are organised and funded, has come a long way since its establishment in 2013. The Foundation provides B-BBEE advisory services and facilitates opportunities to invest in skills development and training, enterprise/supplier development and socioeconomic development both within the group and to its strategic partners.

Abcon Group Foundation supporting the objectives of the Fund The Abcon Group Foundation, through its contribution to transforming the commercial


education, training & development property industry, has contributed a total of R1,96-million towards the SAPOA Bursary Fund on a co-funding model to sponsor a total of 19 students, of whom three have successfully graduated with Bachelor of Science Honours degrees and degrees in property studies, quantity surveying and construction management In terms of the skills development and training mandate, which is one of the three pillars of the Abcon Group Foundation’s activities, the Foundation facilitated about R2,2-million worth of training during 2016, including bursaries, artisan training and learnerships within Abcon Group companies. The Abcon Group Foundation Managing Director Londiwe Mthembu says that these activities will be expanded to suppliers outside of the group during 2017 as well. “One of the important focus areas of the Foundation is to have more black women represented in the built environment, particularly in scarce skills industries,” says Mthembu. “The year 2016 proved to be a tremendously successful one in terms of these various activities, and the Foundation looks forward to building on these successes during the course of 2017.” Last year saw 21 students attending tertiary institutions, including the University of the Witwatersrand, the University of Cape Town, the Cape Peninsula University of Technology, the University of Pretoria and the University of Johannesburg, by means of AGF funding. Of these, 19 were funded through partnership with SAPOA. Regarding the opportunity to further their studies, the recipients of the bursaries are grateful for the opportunity that the SAPOA Bursary Fund has afforded them. Not only has the Fund assisted them in achieving a qualification they may have otherwise not been able to afford, it has also exposed them to the property industry. Some have been able to secure vacation work, and have gained valuable experience from the exposure they have received at the

companies at which they worked. SAPOA is grateful to all the member companies who have opened their doors to students obtaining vacation work, and welcome more organisations to be part of this initiative in the future.

Improving the success rate of bursary holders through a structured mentorship programme sponsored by SAPOA

ExcelAtUni is a bursary-support service wholly funded by SAPOA, which aims to provide a significant increase in graduation and employability rates of SAPOA Bursary Fund students. This is achieved by using four accountability pillars of support-as-a-service, providing desirable ROI on bursary spend as follows: ● Pillar 1 – Support students through private tutorial sessions on areas of development; ● Pillar 2 and 3 – conduct personal senior-peer mentorship as well as academic monitoring; ● Pillar 4 – Professional Development Workshops. This programme ensures that students receive personal support in all areas of their life, and workshops are conducted focusing on study methods and examination techniques. As SAPOA, our role is to ensure that students are supported and assisted where necessary, and to ease the burden of student challenges through project managing the service provider and ensuring that project outputs are implemented through a close monitoring system.

New Bursary & Career Specialist at SAPOA SAPOA is proud to announce the appointment of Moeketsi Moshata to the position of Bursary & Career Specialist. Moshata joins SAPOA with an extensive background in learning and development across various industries. He has experience in learnerships, internships, graduate programmes, policies and workplace skills plans, annual training reports, employment equity reports and broad-based black economic empowerment audit compliance issues with relevant bodies. Holding a Skills Development Facilitator Certificate and previously being a recipient of a learnership himself, Moshata believes the opportunities he has been presented with have prepared him for this new role. As the Bursary & Career Specialist, Moshata will manage the Bursary Fund, and be responsible for: ● Strengthening relationships with the various stakeholders; ● Marketing the property industry as a career of choice and attracting deserving students; ● Regular engagement with students to monitor progress and address challenges; and ● Negotiating vacation work opportunities with our member companies. He will be an asset to the education department and the SAPOA team, and we wish him well in his new role. Moshata can be contacted on 011 883 0679 or bursaryfund@sapoa.org.za.

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convention build-up

Putting a positive spin on Disruption David Green, CEO of ProAfricaProperty Services, SAPOA Board Member and Convention Committee Chairman, has been attending the Convention for 25 years, and has been the Commitee’s Chairman for the past six By Mark Pettipher

“F

“Gone are the days of cellular offices. From an efficiency perspective, open-plan buildings fall well within the green building environment. Savings can be more measurable, and the level of awareness is now much improved. We are certainly living in interesting times. There are many new developments coming up, both here and beyond our borders – and I look forward to being a part of them for years to come” 24

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or me, each year’s Convention has been very different,” says Green. “I remember being involved for the first time with the 45th Convention, and leading up to last year’s 50th anniversary Convention. I’m always amazed at how each Convention comes together; this is largely thanks to the hard work of the SAPOA management team, lead by Neil Gopal and Jane Padayachee. We are always looking to introduce something new and innovative. “Disruption means different things to different people. What we’ve tried to draw out is not only the negative influence of disruption, but also the measures that can be put in place to combat a disruptive environment, as well as the forward-looking attributes that can be used to get out of it. “Before you can put measures in place, you have to understand what disruption means, and where we are at. An essential part of this Convention is to place everyone on the same level of disruption. We are looking at a snapshot of what disruption means, and we are taking a look at it in broader terms – in terms of the economy, each of the sub-markets within the real estate sector, how deep the disruption is at the moment (and how deep it will still get), and how can we get out of it. “We are impacted by global norms as well, so while South Africa is pivotal, we do need to look at outside factors. It’s always exciting to be in the kind of stimulating environment that we are facing right now. There are some real challenges ahead of us in 2017, and we look forward to being able to provide the insights and tools to cope with those challenges. “An added benefit of the Convention is, of course, the number of networking opportunities that are available, the meeting of new people in the real estate market, and the catching up with old friends.

“When we were choosing disruption as a theme, there had not yet been a status downgrade. Brexit was only potentially on the cards, and the US election hadn’t yet taken place. Now we know all too well about the fallout of the recent events. “You ask me about my take on where we are at,” says Green. “It’s interesting to look at our economy in light of what had been predicted previously, and there is definitely going to be negative fallout as a result of what

“As ProAfrica, we are involved in projects throughout subSaharan Africa. South Africa serves as a good barometer of things to come, but there are other countries to look at as well – such as Nigeria, which has a similar economy but a larger population. has happened. We’ve all been in the market long enough to know that there are cycles in economies. The economic roller coaster of the past 20 or so years shows us that the property sector generally lags behind the rest of the economy. In the past, the lag was about 18 months – but it may be just a few months before we see the effects of the current downgrade. “We are only at the beginning stages of what might happen. What is being predicted is that the downgrade will affect the lower


convention build-up CONVENTION BANNER HIRES.pdf

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strata of our society, seeping through to the middle class. The lower-to-middle income society will feel the effects more strongly, inasmuch as that there will be business closures resulting in job losses that will have predicable knock-on effects for the rest of South Africa. “These business closures and job loses will have a direct effect on the retail market. An early indicator of this is generally reflected in food spend; another barometer is in the automobile sector. “Having said all that, the sentiment in South Africa seems to be that things will ‘come right’. We can only hope that the negative cycle will not be too deep, and that it will be short-lived. South Africans are hugely resilient – which is where the optimism comes from. “Our country is a very diverse one, with a diverse population. We must remember that we were self-sufficient in the past in terms of commerce, manufacturing and food production – and we still can be. There is much criticism of the government – that service delivery is not as good as it should be, and that it is more difficult to do business in South Africa; however, we are likely to see reforms on many levels. “For an emerging market such as South Africa, there are many positives. We see that there are a large number of development projects happening so, on the outside, it looks as though things are going well. This is clear from the number of cranes that can be seen in the skylines of our bigger cities, and is indicative of the planning that was carried out years ago. “As ProAfrica, we are involved in projects throughout sub-Saharan Africa. South Africa serves as a good barometer of things to come, but there are other countries to look at as well – such as Nigeria, which has a similar economy but a larger population.

“If we look at the current earning capacity of sub-Saharan Africa, half of the region’s population is below 20 years of age – which means that, by percentage, this potential income generation capacity paints an interesting picture. Future African countries could be the food basket of the world. If we look at the enormously vast resources that we have as sub-Saharan African countries, we can see the important role that South Africa can play in developing the entire continent, in

“Headline countries such as Nigeria, Kenya and Ghana are showing good growth. The next decade will be a very interesting time. I predict a mini-renaissance, because if we are coming off a low base, it is much easier to demonstrate progress. addition to contributing to food security not only for Africa but for the rest of the world. “Taking on a leadership role as a developed agricultural player will not only benefit South Africans, but also our neighbours. It will help boost our economy – and the economies of the rest of countries in subSaharan Africa. “Headline countries such as Nigeria, Kenya and Ghana are showing good growth. The next decade will be a very interesting time. I predict a mini-renaissance, because if we

are coming off a low base, it is much easier to demonstrate progress. “Our immediate challenge in the real estate market will be the sustainability of our investments and our bottom line. We are looking at maintaining the margins as best we can. Fundamentally, the bulk of our costs is made up of mortgage debits and municipal charges, and there is a lack of significant upward movement on rental income. The challenge is to work smart on the operating costs and find out where cuts can be made to expenditure without lowering standards. “Changing trends in the office market are beginning to manifest themselves, in that large companies such as Sasol, Discovery, Deloitte and PricewaterhouseCoopers have already consolidated – or are busy consolidating – their office requirementsinto single corporate head office buildings. These developments are linked to lease terms, and are the result of the companies’ ability to be agile in the environment in which they operate. “Trends such as hot-desking, encouraging working from home and using technology to fulfil deliverables are all playing a part in the changing landscape of South African offices. A lot less formality seems to be the main trend, and we are being encouraged to have more open communication within open-plan environments. “Gone are the days of cellular offices. From an efficiency perspective, these openplan buildings fall well within the green building environment. Savings can be more measurable, and the level of awareness is now much improved. “We are certainly living in interesting times. There are so many new developments that are coming up, both here and beyond our borders – and I look forward to being a part of those developments for years to come.” SOUTH AFRICAN PROPERTY REVIEW

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Sentiment suffering Fresh from his travels abroad, Daniel Silke spent some time with South African Property Review and broadly chatted about the ‘state of the nation’ By Mark Pettipher

Daniel Silke

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ith the Convention coming up, and the topic being Disruption, I will be taking a macro view of our politics, the disruptive effects of in-fighting within the current government and the effects of the recent economic ratings downgrade,” says Daniel Silke, kicking off our discussion. “Many countries are talking about disruption, whether it’s technological or leadership. However, in the South African context, politics is the big disruption – and politics really leads the discussion. “Our decline in economic growth shows that we are getting poorer as a nation – our income per capita has fallen to 2013 levels. One of the core issues is that we are not growing our investment base for South Africans. South Africans are ever more in debt while still wanting to maintain their lifestyle, and are not putting enough aside for retirement and are pulling back from accumulating wealth in South Africa. “Foreign direct investment has been under pressure in the last 24 months – and

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South Africa is certainly under a great deal of pressure in terms of competition form our neighbours, who would appear to have clearer economic policies than us. We are, however, still an attractive proposition: according to a recent index of ‘Best African places to invest’ we are tied second. Kenya and South Africa sit behind Morocco, whose government is using its proximity to Europe as a unique selling point to be an entry point to Africa. Because we have a well-established infrastructure, both in manufacturing and agriculture, we are (broadly speaking) still an attractive investment destination. Having said that, we are losing our grip because there is complete economic policy confusion. We should be a lot stronger than we are. In fact, we are still a world leader in agriculture. “Our factional in-fighting and the dysfunctionality of the broader ANC alliance offers no idealogical cohesion. There is nothing that says, ‘This is our economic policy for the next five years.’ It is almost all made up on the fly – some of it for political ends – and much of it is rhetoric. There is enough uncertainty to create uncertainty in South Africa, which of course is not good for business or the country. “The only plus at the moment is that the interest-rate cycle that was on a declining trend line has been arrested for the time being. With the Moody’s decision hanging over us – we could have a two-notch downgrade – there is a risk of a substantial outflow of capital (upwards of R150-trillion), which will obviously hurt us deeply. “The holding of South African bonds could be severely compromised, and that would cause the capital outflow. However, the rand has been buoyed recently because the interest rate makes it reasonably attractive for foreign investors to purchase South African bonds. But if the ratings agencies dictate that one cannot purchase

those bonds, the result will be entirely different. Until we can resolve our political issues at the end of the year, we will continue to be in limbo. We find ourselves in a year long stalemate: this year so far is a writeoff, and the lack of policy movement for 2017 has created a backwards sentiment, which stagnates our drive for growth in the economy, business development and global outreach. “I would say that we now have a six-month period until the end of the year to effect a meaningful change in our political environment. We are at a critical period in our history, perhaps the most crucial since the end of the Mandela era in terms of trying to reboot and reinvigorate not only the African National Congress, but also credibility in governance and leadership. “We can live with a degree of political instability, but we need economic-policy clarity. We may well have better leadership towards the end of the year – leadership that could be more favourable towards a renewal of South Africa – but it will not end the political instability. If we can have a policy that is stable and encourages investment into South Africa, we may see an improvement coming through. “South Africa now has a choice. We need a leadership that will understand global conditions to help us grow. When we look at our economic performance, we have consistently under-performed in every sector – apart from a short period during the Thabo Mbeki’s administration, where we actually had a short-lived period of GDP growth. “Being an oil-importing nation, we should have been able to take advantage of the drop in oil prices. But we simply have not been able to capitalise on the benefits that came from a reduction of the cost of fuel and the advantage of reduced input costs. This is largely because of the drop in exchange rates.


convention build-up “Property is a medium- to long-term investment. If we are able to get a sentiment shift as a result of a positive leadership change, this would ultimately encourage future investment into South Africa. We would like to see a stable finance ministry to drive a stable fiscal policy. “Things can be turned around – but we are in for an interesting and turbulent six months. South Africa will need to tighten its collective seat belt. If we do not right our ‘ship’ within these next six months, we will unfortunately be in for a protracted period of deep economic uncertainty. “On a positive note, South Africans in general are resilient and innovative, and we need to feel that we are valued and wanted. We should be working together to stop making things political, and we need to be made to feel a lot better about the near future. We have enough know-how in this country, and we can piggyback on world best practice. We have a huge amount of philanthropy in South Africa, and there is an underrated understanding of the need for social upliftment – but it needs an inclusive style of political leadership to take those initiatives forward. “There is a large amount of local capital in South Africa, but until sentiment has shifted, local investments will sit on the sidelines. They will only reinvigorate local investments once they can see some sort of stability in our fiscal policy. Investors are shying away from the agri business, simply because of inflammatory statements being banded about on agricultural land grabs. “The reality is that we have simply disappointed ourselves – and for South Africa to get back on track, we will need a political reboot.”

Daniel Silke is an independent political analyst, author and keynote speaker specialising in South African and international politics. He has a specialist interest in political parties and elections, and is a renowned futurist lecturing widely on issues surrounding global change, volatility and the future of the world. He is regarded as one of South Africa’s leading political commentators and most passionate public speakers. Silke holds a master’s degree in South African and international Politics from the University of Cape Town. He served six years in publicly elected office between 1995 and 2001, having faced three elections. He has served four years as a Member of Parliament in the Western Cape Provincial Parliament after being re-elected in 1999. He has also held the Chair of the Parliamentary Standing Committee of Economic Affairs, which includes the portfolios of Economic Development, Tourism, Agriculture and Transport, and has been Chief Whip for his political party. He is also a former city councillor in the City of Cape Town, having served on that city’s Economic Development Portfolio Committee.

Silke was attached to the Institute for the Study of Public Policy at the University of Cape Town, where he tutored students for five years. Since 2003, Silke has been the director of the Political Futures Consultancy in Cape Town. He currently lectures widely on contemporary South African and global issues. He’s lectured at St Mary’s University in San Antonio, Texas, and completed a semester at Lynn University in Boca Raton, Florida, where he participated in the Dialogues of Innovation lecture series. He was the Rooney Visiting Scholar at the Robert Morris University in Pittsburgh, Pennsylvania. He has enjoyed three seasons as guest speaker at the South Palm Beach lecture series in Florida, and has presented to the Financial Planners Association of Australia in Sydney. He has lectured to the prestigious World Affairs Council in Washington as well as the American Committee on Foreign Relations. He has presented for CISCO, SunGard, Oracle and Microsoft and has delivered presentations at Duke University (North Carolina), Macquarie University (Sydney, Australia), Transylvania University (Kentucky), Washburn University (Kansas), and the Philadelphia Bar Association.

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digital future

African businesses are on a digital journey – are you on board? African businesses are on an exciting and transformative digital journey. As more services and products move online, new business models are unfolding across the continent – at the heart of which is connectivity Article thanks to Liquid Telecom’s AfriCAN Insight newsletter

Greater access online will have a profound effect on the way Africans live and work, and will transform the way the business community operates and delivers services to customers. This digital transformation is taking place across the continent right now, and there are a number of key trends that businesses should already be paying attention to

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en years from now, business in Africa will look unrecognisable from today. By 2025, internet penetration is expected to reach 50% of the continent, with the number of smartphone users rising to 360-million, according to McKinsey & Company. That’s double the current number of smartphone users in the US. Greater access online will have a profound effect on the way Africans live and work, and will transform the way the business community operates and delivers services to customers. This digital transformation is taking place across the continent right now, and there are a number of key trends that businesses should already be paying attention to.

Money on the mobile Mobile banking is a major trend that is currently disrupting traditional business models in Africa. The region, in fact, has the highest levels of mobile money penetration in the world. According to GSMA Intelligence, it accounted for more than half of the 255 live mobile money services across the globe in 2014, and more than half of African mobile operators have already launched mobile money services. As well as the obvious benefits to customers who previously had no access to banking services, mobile money is fostering an ecosystem for mobile money providers, telecoms operators and third-party organisations to facilitate transactions to different industry verticals. Take utilities as an example. Mobile money users in the region could receive their salary into a mobile money account, and in turn use it to pay a utility bill digitally because the funds are already available in electronic form. This provides a more convenient and more secure platform for businesses and their customers to exchange payments.

Countries such as Nigeria and Kenya have become powerful examples to the world of how mobile money can deliver services to huge unbanked populations, seriously disrupting traditional banking and retail models in the process. Successful mobile money platforms are prompting the traditional banking sector in Africa to up its game. High-cost branches cannot survive in their traditional form, and so a new focus on customer experience has led organisations to experiment with different models, such as assisted self-service, in-store branches, full-service branches, community centres and flagship stores. This, in turn, is also driving the need for more reliable and secure connectivity across the region.

Advertising in the digital age Other digital services are also playing a part in transforming business across Africa. Digital advertising, for instance, is helping to make up for traditionally low advertising spending levels across Africa. Social media is taking centre stage for many brands. Facebook claims that it has 100-million people coming to its site every month across the African continent, and the social media giant has targeted advertising partnerships in the region. In 2015, it opened its first African office in Johannesburg to expand its business across the continent and, in particular, to tap into the large market for the social network to earn advertising revenue. As Africa becomes a mobile-first continent, a big push is expected from businesses into mobile advertising. In fact, the market for mobile advertising via SMS and apps has been developing fast, and is expected to become a considerable component of total advertising in Africa in the coming years. Businesses are being urged to


digital future focus marketing budgets on mobile-enabled campaigns rather than traditional desktops and personal laptops – adjusting their abovethe-line (ATL) digital ad spend accordingly. According to Informa Telecoms and Media, African telecoms firms are expected to generate US$1,3-billion in advertising revenue by 2016. The research firm expects mobile operators to generate these revenues from the likes of SMS, MMS, mobile apps, downloads and streaming advertisements. More sophisticated digital marketing practices will also help hook a new generation of African consumers online.

An e-commerce ecosystem Mobile banking and digital advertising are also helping to fuel innovation and growth in African e-commerce. According to McKinsey & Company, African e-commerce sales are expected to reach an impressive US$75-billion by 2025. A combination of increased spending power and internet access is driving the payments for goods and services online, as well as inspiring a new generation of start-up e-commerce businesses. Countries such as Senegal, Mozambique, Nigeria, South Africa and Kenya are leading

the way in developing vibrant e-commerce markets. Online retailers and start-ups in these countries are finding new ways to bring both local products and popular US and European brands to consumers across the region. Jumia, for example, is the largest online retailer in Nigeria and is making serious headway across the rest of the region since its inception in 2012. Aiming to become Africa’s answer to Amazon, it now operates in nine countries; its parent company, Africa Internet Group, secured more than US$300-million in its latest round of funding. This includes backing from the MTN Group and Goldman Sachs. Disruptive digital start-ups such as these can only thrive with more sophisticated connectivity in place.

The tech trend of the decade There are other, more technology-driven trends on the horizon that will also have a major role to play in the development and advancement of African businesses. One of these, which is already gaining major traction in other regions and is perhaps the mosttalked-about technology trend of the decade, is the Internet of  Things (IoT).

With 50-billion devices expected to be connected globally by 2020, the potential for IoT is enormous, and nowhere more so than in Africa. In fact, International Data Corporation predicts Africa that will be home to one-billion connected devices by 2020 With 50-billion devices expected to be connected globally by 2020, the potential for IoT is enormous, and nowhere more so than in Africa. In fact, International Data Corporation predicts that Africa will be home to onebillion connected devices by 2020. IT has the ability to transform industries as far and wide as utilities, defence, agriculture, power and mining, helping them to drive efficiency, control inventory and track assets. From connected cars and mines through to connected vineyards and cargo containers – you name it, and businesses are finding ways SOUTH AFRICAN PROPERTY REVIEW

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Developing datacentre facilities to international standards is the logical next step for the market, helping to improve quality of internet services, bring down costs and further attract major content players to the region to expertly connect it. Home to some of the region’s most advanced networks, South Africa looks set to lead the way in Africa and is expected to have an IoT market worth more than US$2-billion by the turn of the century. In Johannesburg, for example, there have been trials of smart metering that uses a load-limiting model, which is designed to ensure that households maintain power supply during rolling national blackouts. This demonstrates how there can be a very powerful business case for IoT across the region, which can help overcome the limitations of basic infrastructure.

Clouds on the horizon Businesses in Africa are also pushing ahead with the migration of services to the cloud. Cloud traffic is expected to grow by 83% in the Middle East and Africa by 2019, according to the Cisco Global Cloud Index. Enterprise cloud computing on the continent has so far been driven by large enterprises and multinational organisations expanding their presence across the region. By migrating more of their IT infrastructure, applications and processes into the cloud, companies are recognising that it can help drive efficiencies and reduce costs. Growing confidence from enterprises and governments in trusting the cloud with their mission-critical data looks set to tip cloud adoption into the mainstream. Early adoption could give businesses a competitive edge, helping to reduce costly infrastructure and increase data-driven decisions. Equally integral will be the development of more sophisticated data-

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centre facilities. Investment in local datacentre facilities is rising across the region, as telecoms providers aim to improve internet access and open up new opportunities in cloud services. A minority of content accessed in Africa is currently stored locally. Accessing content stored overseas increases latency, which slows down services such as video streaming and drives up pricing for customers. Developing data-centre facilities to international standards is the logical next step for the market, helping to improve quality of internet services, bring down costs and further attract major content players to the region. Data centre hubs are beginning to emerge across the continent. Kenya is one of the region’s more advanced markets, and experienced early investment in its data-centre facilities.

According to Frost & Sullivan, the 10 most valuable startups globally are estimated to have a value of US$172,7billion – and all of them have embraced a digital-platform business model. Africa will be next. Be it across mobile banking, digital advertising or e-commerce, more digital businesses and innovation are on their way across Africa – and enterprises of all sizes must get on board to stay ahead The country is a financial and manufacturing hub for the region and therefore experiences considerable demand from enterprise customers for data-centre services. The East Africa Data Centre – part of the Liquid Telecom Group – was opened in 2013 and has already played an important role in

supporting banks, mobile network operators, ISPs and cloud solutions providers in the country and beyond. In 2014, the facility was chosen by the Telecommunications Service Providers Association of Kenya to host the Kenya Internet Exchange Point, helping Kenya’s ISPs to easily exchange traffic within the country without the need of multiple international hops.

Networks critical for Africa’s digital transformation Africa’s digital transformation can only happen if the region’s telecoms infrastructure keeps up with the pace of innovation. More reliable, secure and sophisticated forms of connectivity will only help African businesses grow faster. Liquid Telecom has played a major role in deploying advanced fibre networks across Africa, building the continent’s largest independent cross-border fibre network, which today stretches over 21  000km. This is providing an IP backbone that is truly helping to keep regional traffic within the continent, reducing latency and improving the enduser experience. In African cities, businesses are looking for higher broadband speeds, as well as greater network resiliency and security. Through deploying more metro networks, Liquid Telecom is already helping companies in nine major African cities, including Nairobi in Kenya, Harare in Zimbabwe and Kampala in Uganda. All this additional infrastructure is bringing the opportunity to deliver services using the latest standards and equipment, providing African enterprises with cost-effective, resilient and secure connectivity. It is empowering African business with dedicated and scalable bandwidth, which can be used to offer advanced services such as co-location, SIP, network security and cloud. While Western companies wrestle with how to repurpose or overhaul legacy IT infrastructure, African businesses have an opportunity to leapfrog ahead with mobile, cloud and IoT adoption. According to Frost & Sullivan, the 10 most valuable start-ups globally are estimated to have a value of US$172,7-billion – and all of them have embraced a digital-platform business model. Africa will be next. Be it across mobile banking, digital advertising or e-commerce, more digital businesses and innovation are on their way across Africa – and enterprises of all sizes must get on board to stay ahead.


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Convention build-up

Interviewing the interviewer Eusebius McKaiser – political analyst, broadcaster, lecturer and writer – speaks to South African Property Review about facilitating SAPOA’s Convention for the fourth year By Mark Pettipher

E

usebius McKaiser enthusiastically opens the conversation with, “SAPOA is one of my favourite annual clients. The organisation has the ability – through its annual Convention – to be able to get the social compact together, an element that is much needed to grow South Africa and its commercial property sector. “The biggest value of SAPOA’s annual Convention is the opportunity it provides to rub shoulders with South Africa’s commercial property’s senior and leading players. It brings people together for three days, and sometimes the most beautiful conversations tend to happen over a coffee or a beer – or in passing in a corridor, in between plenary sessions. The spontaneity that happens when like-minded people are gathered together is incredible. “The biggest commercial return is the ability to find 10 CEOs in a single space, and to be able to network with all of them.” “A downside of having me as the Master of Ceremonies for the SAPOA Convention is that I’m by no means an expert in the area. However, after three years of facilitating the event, I have a good general knowledge of the industry. I’m a quick study, and I can ask big-picture questions and hold the energy together. I’m an outsider looking in, which means I can provoke controversial conversations and ask the difficult questions that, as stakeholders, members may not be able to push because of their company’s or personal interests. “The way an organisation such as SAPOA gets its conference right is by getting someone like me – a generalist – to comment on politics and the economy and to hold things together. When a specialist topic arises, SAPOA gets me to introduce the panellists as well as the panel’s leader as the specialist facilitator of that particular topic.

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Eusebius McKaiser, political analyst, broadcaster, lecturer and writer

“SAPOA’s delegates are hugely influential. The assets they control (and the incredible power they have) have an understated potential for influence. This, combined with their specialist skills sets can make a huge difference in the civil society”

“One of the upsides of having me return for the fourth time is familiarity. During the previous Conventions, I have been fortunate enough to get to know a number of SAPOA’s members. This allows me to ask questions that I might not have been able to ask otherwise. I am able to better engage with the audience – and perhaps get an intervention during the course of a discussion. “Being a talk-show host, I also take something away from each SAPOA Convention that I facilitate. After hosting the event, I can often ‘join the dots’ and make sense of topics such as SPLUMA, or pass comment on our country’s continued debate on land reform or about some of the disruptive tactics our politicians are using to score points. “SAPOA’s delegates are hugely influential. The assets they control (and the incredible power they have) have an understated potential for influence. This, combined with their specialist skills sets, can make a huge difference in the civil society. “The government doesn’t engage enough with SAPOA members and could do a lot more to get the private sector to contribute through inclusionary participation in issues such as town planning, enterprise development and localised business procurement. “I’m looking forward to emceeing this year’s Convention on disruption in the property industry. We have some interesting commentators and speakers line up, and there will certainly be plenty of opportunity to take home a greater insight into the property space. “The property space is one that is forever changing. There is a dynamism in the industry that promises to keep giving us the energy and excitement that have sustained the Convention over the years.”


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convention build-up

Meet one of Africa’s largest urban land developers An economic transformation is taking place that is global in scale and in scope. Nowhere is this more evident than in Africa, where the opportunity is greater than anywhere else – not because Africa is different but because the potential for catch-up and convergence is greater, and is likely to be fulfilled more rapidly

Working in partnership with world-class experts, local developers, governments and local communities, Rendeavour creates largescale mixed-use, mixed-income satellite cities. Rendeavour’s developments are designed as integrated live-work-play urban environments, free of the infrastructure deficits of neighbouring city centres, and act as catalysts for growth along the corridors that connect them to the city. South African Property Review posed some questions to founder and CEO Stephen Jennings By Mark Pettipher

How is Brexit affecting your investments in Africa? In the aftermath of the Brexit vote, we have started to see more focus by the British government on trade outside the EU. SubSaharan Africa, as one of the fastest-growing regions in the world, is a natural place for the UK to seek trading partners. While it is still early days, Brexit could have a positive impact on trade growth between the UK and Africa.

What criteria do you use when deciding to enter an African country?

Stephen Jennings, founder and CEO

A

n economic transformation is taking place that is global in scale and in scope. Nowhere is this more evident than in Africa, where the opportunity is greater than anywhere else – not because Africa is different but because the potential for catch-up and convergence is greater, and is likely to be fulfilled more rapidly.

Where is Rendeavour based? Although Rendeavour does not have a corporate headquarters, our business is in our markets – Kenya, Nigeria, Ghana, Democratic Republic of the Congo and Zambia. This is where our teams of experienced international and local development managers, engineers, lawyers and other professionals are based.

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Our business model is built around economic and population growth, as well as rapid urbanisation in sub-Saharan Africa. When we enter a market, we look for large conurbations that require nodal developments outside the

In the aftermath of the Brexit vote, we have started to see more focus by the British government on trade outside the EU. SubSaharan Africa, as one of the fastest-growing regions in the world, is a natural place for the UK to seek trading partners


convention build-up

city centres, in order to ease the burden of urbanisation and create a more economically and socially conducive living environment with good land title, planning and infrastructure. We also focus on countries where we believe governance will improve over the medium term. Rendeavour invests in land with good transport links, rezones it for mixed-use development, and puts in all the infrastructure that is required to build a city, essentially creating a risk-free platform on which other developers – residential, retail, commercial and industrial – can build their businesses alongside us. However, as an early-stage investor, we face challenges typical of our markets – but our strong local teams and 20-year investment timeline are assets in overcoming them.

What is Rendeavour’s single largest investment Our largest investment so far is Tatu City, our 2   000-hectare inclusive development near Nairobi, Kenya. We have invested more than US$120-million in land and infrastructure. Today at Tatu City, construction projects have started that will provide more than 5  000 homes (out of a total of 30  000 homes) catering for all sectors of the community. Tatu City is set to become the second CBD to Nairobi, similar to what Sandton became to Johannesburg over the last 30 years. Tatu City’s industrial area is home to multinationals such as Unilever and regional champions such as Chandaria Industries, Dormans, Kim-Fay and Maxam. As East Africa’s largest mixed-income urban development, Tatu City is providing – and will continue to provide – tens of thousands of job opportunities to Kenyans, and specifically to the local community. All contractors at Tatu City are required to hire significantly from the local community, and we have formed a partnership with a number of businesses and contractors at Tatu City to provide skills training to this growing workforce.

Our largest investment so far is Tatu City, our 2 000-hectare inclusive development near Nairobi, Kenya. We have invested more than US$120-million in land and infrastructure. Today at Tatu City, construction projects have started that will provide more than 5 000 homes, (out of a total of 30 000 homes) catering for all sectors of the community. Tatu City is set to become the second CBD to Nairobi, similar to what Sandton became to Johannesburg over the last 30 years What CSR activities does Rendeavour get involved with? The four pillars of Rendeavour’s corporate social responsibility are community, conservation, education and healthcare. We are active in all these categories in local communities. We are particularly proud of our work with the Tatu Primary School, a government-run institution within the Tatu City development. We provide daily meals for students (which has led to a doubling in enrolment) as well as other materials and activities, such as a rugby club.

Do you have any plans to invest in South Africa? As an early-stage investor, we view South Africa’s property-development sector as significantly more advanced than our current markets of Kenya, Nigeria, Ghana, Zambia

and Democratic Republic of the Congo. So rather than considering South Africa as an investment destination for Rendeavour, the country represents a source of experience in the property sector and a source of human capital. Therefore, we seek partnerships with South African investors and companies looking to move into the markets in which we operate.

What advice would you give to someone wanting to start investing in African property development? Investment in African property development is long-term. While a five-, seven- or 10-year return could be achieved, these markets are emerging, and will face economic shocks and other events over the next 10 to 20 years. Do we know what Nigeria’s property market will be in exactly five years? Not really. But over a period of 20 years, Nigeria will grow into one of the most populous countries in the world and an economic engine of Africa, with improved governance and a continuing requirement for foreign investment, which is already welcome today. Stephen Jennings studied economics at Massey University and the University of Auckland in New Zealand. Between 1983 and 1992, he worked at Credit Suisse First Boston in New Zealand and in the New Zealand Treasury, consulting for the governments of New Zealand and Australia on issues of privatisation. In 1995, Jennings and his partners founded the Renaissance Group, which grew into an investment banking, securities sales and trading, asset management and consumer finance business across central and eastern Europe, Asia and Africa. In 2008, we began building Rendeavour’s land portfolio in sub-Saharan Africa. In 2012, Rendeavour separated from the Renaissance Group. Today, Jennings focuses solely on Rendeavour’s satellite city developments in sub-Saharan Africa. SOUTH AFRICAN PROPERTY REVIEW

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Adding wealth to municipalities Director of Bayete Capital George Smith chats to South African Property Review about Bayete’s innovative and professional approach to generating real wealth for the public sector. He also shares his positivity about the company’s ongoing and future management projects, including the exciting new gated Bedford City, a large mixed-use, full-spectrum township development currently under way in historic Umtata in the Eastern Cape Interview by Mark Pettipher Words by Marguerite Lithgow

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convention build-up

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s a respected property development expert, Bayete sees developments through from inception to completion. “We render a turnkey programme management service,” explains Chief Executive Officer George Smith. “One of our key creative strengths is taking a project right from the crucial pre-concept stage (before the owner/ developer has even decided how best to develop a piece of land) through every stage to project completion. It is common knowledge that most municipalities don’t have the finance to support the spend involved, but we understand what is needed to enhance a balance sheet, and we generate the funding they require. “Furthermore, once we have done the feasibility study for a project, we know fairly quickly whether it is going to work or not. Thus one of the distinctive advantages we offer to our clients is that we do not merely hand over a report – we finalise the development feasibility inclusive of the funding model, which results in a bankable development.”

A municipal case study “In a typical municipal case scenario, we would engage with the municipality and familiarise ourselves with its current municipal Integrated Development Plan and all the related strategy documents. Thereafter, we see the project through from conception to completion. “First, we identify the specific needs in a particular node. After doing the market demand assessment, we identify the urban designers and architects to provide us with conceptual designs for the development. The services of a knowledgeable town planner also cannot be understated – land ownership, land rights and zonings are critical to development site identification. Once the ideal site has been identified and secured, concept designs are prepared together with initial engineering-services reports in terms of services availability for the development. “At this point, indicative costings are provided by the quantity surveyor, after which the funding model is developed. Access to funding is a common stumbling block at this point for many developers, and is the reason why many developers go as far as obtaining a concept design from an architect but are then unable to take the project further. At this stage, we have determined future revenue streams. “We test the market with the local banks, in the knowledge that banks typically grant

75% loan to value. We then look at ways to enhance the balance sheet, to come up with a funding model around it and, thanks to the value we will have created within the project, with a 75% loan to value, the client will usually need to raise only about 25%. We assist municipalities to secure development leases with, among others, private sector investors and developers. “In a nutshell, we have the relevant experience and we are already in place, having already gone through the red tape of governmental bureaucracy.”

“The key factor to ensuring success in turnkey programme management is the development cycle. Most municipalities typically don’t have anything like the kind of spend they require for growth if they need, for example, new offices, inclusive of a public square and forming part of a larger mixed-use development. Bayete brings to the table a proven and workable model that incorporates the public square into an overall mixeduse development” The public square archetype “The key factor to ensuring success in turnkey programme management is the development cycle. Most municipalities typically don’t have anything like the kind of spend they require for growth if they need, for example, new offices, inclusive of a public square and forming part of a larger mixed use development.

“Bayete brings to the table a proven and workable model that incorporates a public square into an overall mixed-use development. While public squares take up valuable developable land, the benefits may outweigh the cost associated thereto. The benefits of incorporating the whole live-work-play array and ensuring that we uphold our benchmark principle of ‘place making’ should not be underestimated. The benefit of ‘place making’ maintains that if you offer people a minimum of 10 different things to do in a suitable venue, it will be a success. “The first aspect of a successful town square as a customer services-orientated setting will be its position and accessibility in terms of the road network and public transport routes for taxis, buses and trains. The second aspect we consider is the wants of the man in the street, to ensure that the location provides for a full mix of both public and private sector needs – such as the government service business facilities of Home Affairs and SASSA, and retail, entertainment, residential, office rental space, hospitality, sport, etc. Our vision for the whole also includes pleasant shady trees, comfortable benches, and so on. “With a carefully planned, mixed infrastructure, the private sector will be bringing in value in the form of rental to the municipality, and will thus successfully cross-subsidise the municipal requirements such as the new offices it must build. In this way, we are able to generate a guaranteed income for the municipality. The residential component is the only component that will be sold off; the rest is done on a development lease basis, whereby a lease agreement is signed with the local authority for a certain number of years (perhaps 30 to 60), after which the asset returns to the local authority. “Whether used for a big municipality or a small one, this model creates wealth and empowerment across the board – and it grows the balance sheet. We envisage implementing this highly successful and workable model wherever appropriate in our future developments. “Furthermore, Bayete is able to render the same service, using the same workable model, to any other government absolutely anywhere in Africa. If, for example, the Nigerian government came to us and asked us to do this for them, our response would be that we could replicate this version of our operation for them, in their own country, from concept to completion.” SOUTH AFRICAN PROPERTY REVIEW

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convention build-up Developing for the private sector “When a private developer comes to us, for example with a plot of land in a country setting, our major preparatory groundwork also takes place at the all-important preliminary stage, essentially before consulting an architect (because an architect draws plans according to the specifications handed over). “Utilising our market demand assessment and related town planning knowledge, we carry out all the preliminary investigations, starting with the market demand assessment and looking into road infrastructure and the urban design framework, before extracting all relevant information in a full feasibility study, and garnering all the support we can for the development before handing it over to an architect. Again, should we be appointed on a turnkey basis, we see a project through to completion, inclusive of development funding. “Being property investors and developers ourselves, we have our own core professional team of development managers, project managers and quantity surveyors. That said, we do outsource project-specific professional team requirements – such as architectural requirements – preferring to have access to the different styles that are available. “As funders who understand property, we have also the opportunity of interacting with World Bank representatives to, for example, look at various ways to access structured funding and value capture finance. On behalf of our clients, we come forward with solutions

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around long-term planning for a project, with a view to long-term investment returns, usually with an excellent rate of return.

Utilities management There are many ways that our utilities management company looks at water, electricity, and rates and taxes in order to save money on behalf of clients. Whether the saving is implemented administratively by doing an account analysis, or whether it is implemented through on site intervention by, for example, installing a tri generator to generate your own electricity, while the initial outlay for a client might be more, in the long term an often-staggering amount is saved on behalf of a landlord. The option of going for a Green Star rating depends on the client, and it always saves money over the long term. Our utilities management company can generate R1-million in a year for a client – which, capitalised over 12 years at 10%, can be worth R120-million on a balance sheet.”

“The Resident” brand for student accommodation “From an investor’s point of view, there is a huge deficit of decent, affordable student accommodation in South Africa. Under its new ‘The Resident’ branding, Bayete has acquired some properties with the purpose of converting them into suitable accommodation, although it is generally more difficult to convert than to

build new. In addition, we are also looking at new builds for student purposes. From the perspective of the municipalities, it must be kept in mind that there is a threshold beyond which the municipalities cannot go in terms of cost of student accommodation. However, the project has been successfully activated and is currently under way.”

Bedford City On one of the last few remaining farms in historic Umtata in the Eastern Cape, a gated community is being developed, in phases, by Bayete Capital, who has already done the urban design framework. Bayete Capital is currently busy with the town planning, and is looking at which of the project’s components are going to be activated first. The city will have everything in it, including hospitality, education, residential, retail, a component of industrial, and so on. Begun two years ago, Bedford City is a very exciting 15-to-20-year project on a couple of thousand hectares. Although Bayete has a wealth of expertise internally to call upon and would normally carry out all its own project management, asset management and facilities management in house, the facilities management of this development will be largely outsourced. Bedford City is likely to be one of the few Eastern Cape developments thus far to have state-of-the-art town engineering and town planning underpinning it.


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Western Cape property forum

Western Cape property forum turns spotlight onto affordable accommodation The property industry in the Western Cape was not yet clear on the concept of what could be deemed affordable in terms of residential property. This was according to Deon van Zyl, Chairman of the Western Cape Property Developers Forum (WCPDF) Source: CCID website

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Deon van Zyl, Chairman of the Western Cape Property Developers Forum

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peaking in May at the organisation’s annual conference, Van Zyl noted that the industry had not moved much closer to understanding the differences between affordable accommodation and lowcost housing. “We still feel threatened by the misconception of small boxes on small erven, a concept that property economist Professor François Viruly calls the 40x40x40 rule – a 40m² house situated 40km from work and with transport costing up to 40% of a household’s income,” he said. Referring to the recent Tafelberg School incident as “a wake-up call”, he asked, “Can we really afford not to use strategically located state-owned land for affordable accommodation – in other words, for the creation of accommodation for people who

are active in the economy but who cannot pay market prices?” Tasso Evangelinos, CEO of the Cape Town Central City Improvement District (CCID) and an attendee at the conference, echoed Van Zyl’s commendation of the city’s proposed Foreshore Freeway Precinct project, which could see thousands of affordable units incorporated into its design. “Cape Town’s traditional downtown accounts for 25% of the metropole’s entire economy and more than 30% of its workforce,” he said. “As the CCID, we’ve worked incredibly hard with our various public partners to turn the CBD away from the urban blight it was experiencing nearly two decades ago. As a result, we now have a growing residential community and, along with it, a high demand for the apartment stock that is available, which


Western Cape property forum in turn has driven prices up as one would see in any high-demand, low-supply chain. “This has meant, though, that for most of its workforce, the downtown lifestyle is not something they can afford in terms of residential property. Yet a diverse residential community in which all economic groups have a stake is vital to the vibrancy of a

CCID chairperson Rob Kane added that this was essential for the Cape Town Central City to be recognised as being a forwardthinking downtown. downtown if it is to have a life beyond its office hours. The Foreshore Freeway Precinct project is the first public-private partnership that has been put on the table to create affordable options in the CBD. With the amount of government land, from municipal to national government level, that currently still exists in and directly bordering onto the CBD, we hope that this will be the first development of its kind and that others will follow.” Challenging the development industry to start engaging with organisations such as Ndifuna Ukwazi around the concept of affordable accommodation, Van Zyl added, “The industry needs to break through the fear factor. There are developers in Johannesburg and Pretoria who’ve already found the business opportunity in affordable accommodation.

Western Cape developers stand to lose out if we do not educate ourselves on this opportunity.” Elaborating that the real opportunities surrounded the provision of rental units that were not intended to be “forever homes” where “people would one day retire”, Van Zyl felt it was time for Cape Town to step up its game in terms of the global trend towards what downtowns abroad referred to as nano units: apartments often no larger than small bachelor flats with community-shared facilities such as kitchens, dining rooms and recreational areas. CCID chairperson Rob Kane added that this was essential for the Cape Town Central City to be recognised as being a forwardthinking downtown. “We already know that vibrant downtowns are becoming drawcards for the millennials – aged between 25 and 34 – and the Cape Town CBD is also experiencing this draw,” he said. Indications of this appear in the CCID’s latest annual investment guide, “The State of Cape Town Central City Report – 2016: A year in review”, which contained the results of a dipstick survey conducted with CBD households in which more than 43% of respondents noted they fell between the ages of 25 and 24. “Johannesburg already sits in 16th place out of 55 cities on the YouthfulCities index, a global index founded by consultancy firm Decord, in terms of affordability,” said Kane. “This also means that Johannesburg has been ranked as the most affordable of all the sub-Saharan African cities on the index.

Rob Kane, CCID Chairman

“We are, therefore, very heartened by the messaging being put out by the WCPDF, and would also like to call on developers to investigate properly and engage with affordable accommodation initiatives as viable opportunities in terms of global developmental trends.” “Affordable accommodation is not charity: it’s a business opportunity, just like student housing became an opportunity when universities could not provide sufficient accommodation,” said Van Zyl in conclusion. “When affordable accommodation is able to net prices of around R200/m², and you place these figures before developers, suddenly the penny begins to drop. And yes, there will be teething problems – but is our industry not about risk and reward in any case?”

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education

2017’s Greenovate Awards Programme goes big Engineering students can now achieve green glory too. Inspiring and encouraging university students to discover, explore and invent ways to live more sustainably, the hotly contested Greenovate Awards Programme is taking environmental innovation even further this year by introducing a new category to the awards for engineering students Extract from Propertywheel.co.za

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Rudolf Pienaar, Growthpoint Properties Divisional Director: Office Sector

Rudolf Pienaar, Growthpoint Properties Divisional Director: Office Sector and Chair of the GBCSA, says, “We are thrilled to introduce the Greenovate Awards for engineers to the programme. It widens its reach to more universities, and students with a passion for our environment who want to find more sustainable ways to live. It gives an outlet to innovation that will make our world a better place” 42

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he Greenovate Awards Programme, founded by Growthpoint Properties with the Green Building Council of South Africa (GBCSA), sets students of the built environment on a quest to find more sustainable ways of living. It stimulates green building thinking and rewards excellence in its application. In a first of its kind in South Africa, the University of Cape Town, University of the Witwatersrand and the University of Pretoria piloted the flourishing programme for the built environment in 2015 in the property studies and construction faculties of these universities. Last year, students of these faculties at the University of the Free State and the Nelson Mandela Metropolitan University joined the pursuit to find new ways to support more sustainable living. Now in its third year, the Greenovate Awards Programme has been extended to create a new category to include students from another high-impact stream – engineering. The competition is now open to students of the electric, electronic, mechanical and civil engineering fields. An inspiring eight leading South African universities are contending the Greenovate Awards this year to show their groundbreaking environmental achievements. Two more innovation-leading universities have joined the programme: Stellenbosch University and the University of the North West at its Potchefstroom Campus, both from the engineering faculties. Embracing the challenge on all fronts, the University of Cape Town, winner of the Greenovate Award in the property and construction studies category for two years running, will now also compete in the engineering category, effectively competing in both categories this year.

Embracing the challenge on all fronts, the University of Cape Town, winner of the Greenovate Award in the property and construction studies category for two years running, will now also compete in the engineering category, effectively competing in both categories this year Rudolf Pienaar, Growthpoint Properties Divisional Director: Office Sector and Chair of the GBCSA, says, “We are thrilled to introduce the Greenovate Awards for engineers to the programme. It widens its reach to more universities, and students with a passion for our environment who want to find more sustainable ways to live. It gives an outlet to innovation that will make our world a better place.” “It is exciting to see South Africa’s future industry leaders showcase their understanding of the importance of preserving our natural environment as they address sustainability in our urban fabric,” says Head of Sustainability at Growthpoint Werner van Antwerpen. “Greenovate has already generated significant and meaningful impacts on our environment today – but also for tomorrow. Growthpoint is proud to


education include the Greenovate Awards among the initiatives that further our business commitment to sustainability and climatechange mitigation.” Dorah Modise, Chief Executive Officer of the GBCSA, says that the organisation is excited about the extension of the Greenovate Awards Programme into the engineering faculty. “The Greenovate student awards have exceeded our expectations, and have received wide acclaim from the growing list of participating universities as well as the built environment,” she says. “Pitting our universities and students against each other in healthy competition, the awards have had the effect of lifting the bar and exposing students to practical industry implementation. Now, recognising and rewarding engineering students too will pave the way for these awards to further change the way the world is designed, built and operated for the sake of our environment and future generations to come.” So how does the Greenovate Awards Programme work? The challenge is set for final-year and honours university students to come up with ideas that result in a research project that promotes a more sustainable built environment. It can be any idea that makes the way we live greener and our environmental footprint lighter. These ideas can apply to any aspect of a building – design, development, planning, construction, materials, or a collaboration across different areas. The same goes for the engineering awards, including electric, electrical, mechanical and civil engineering. For both streams, round one of the competition is internal. Each university’s panel will select the top two projects

“The built environment has a major impact on the environmental sustainability of the planet and on the health and wellness of people, and Greenovate is inspiring the next generation to create a built environment in which the people and the planet thrive”

submitted by individual students or groups. In the second round, students from each university’s two top projects get to interact with professional mentors before they face off against one another in front of judges. Then, the finalist from each university will present his or her ideas to an external judging panel of industry experts. The last round takes place in November, after university exams. There’s a big stack of greenbacks for the best green ideas – R110  000, to be exact. The winning team from each of the two streams – property and construction studies, and engineering – will take home R30  000. The winners will also present their research to leading built environment professionals at the esteemed annual GBCSA Green Building Convention the following year. Second and third prizes for the two streams are R15  000 and R10  000 respectively, as well as tickets to the GBCSA Convention. The young green stars will also have access to an exciting platform to introduce their talent to the industry. “We see the Greenovate Awards Programme as a source for potential Growthpoint graduates and internships, as well as a way of opening up doors to many of the other business leaders attending the awards dinner and the GBCSA Convention,” says  Van Antwerpen. “It supports Growthpoint’s recruitment of students who have a good understanding of sustainability, which is a priority for us.” In addition to the prospect of shining as a leader the areas of climate change and the environment, each university taking part gives their students an opportunity to complete the Green Star SA Accredited Professional Programme (GSSA AP) at discounted student group rates. This qualification affords them a prized professional recognition in the green building arena. “The built environment has a major impact on the environmental sustainability of the planet and on the health and wellness of people, and Greenovate is inspiring the next generation to create a built environment in which the people and the planet thrive,” says Modise. “We are proud that last year, Greenovate won the prestigious Excellence Award for Innovation from the South African Property Owners Association, and we thank Growthpoint for its incredible ongoing support of this initiative.” “Everyone wins when we invest in green thinking and nurture sustainability,” says Van Antwerpen. “Greenovate encourages future industry leaders who are passionate to create better and more sustainable communities and cities.”

Dorah Modise, CEO of the GBCSA

Dorah Modise, Chief Executive Officer of the GBCSA, says the organisation is excited about the extension of the Greenovate Awards Programme into the engineering faculty. “The Greenovate student awards have exceeded our expectations, and have received wide acclaim from the growing list of participating universities as well as the built environment. Pitting our universities and students against each other in healthy competition, the awards have had the effect of lifting the bar and exposing students to practical industry implementation”

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property investment

In uncertain times, property remains a real, tangible asset Property is often included in an investment portfolio as it has a low correlation with other assets such as bonds and equities, and thus diversifies the risk in a portfolio By Gaye de Villiers

Sandra Gordon, Senior Research and Market Analyst at Pam Golding Properties

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egarded as having higher risk and return than bonds but lower than equities, property is favoured during times of economic and political uncertainty because it is a real, tangible asset, says Sandra Gordon, Senior Research and Market Analyst for Pam Golding Properties. “Not only does it offer potential capital appreciation, it also generates a steady income stream, which is particularly welcome during uncertain times,”she says.“Current international developments raise questions about the outlook for global growth, trade, inflation and interest rates and, of course, safe-haven currencies. These uncertainties are reinforcing perceptions of property’s role as a safe haven. “An extreme example of property as a safe haven is the surge in wealthy foreigners (notably from Silicon Valley) buying selfsufficient bolt-holes in New Zealand. While

the country’s remoteness was previously seen as a weakness, in the current global environment of uncertainty its relative isolation is now perceived as a major strength.” Here in South Africa the Cabinet reshuffle and downgrade to junk status is causing significant upheaval that may impact on the local property market. Will foreigners still buy? Will locals delay purchasing decisions? Will interest rates rise? “Our housing market has been slowing for several years as it faces economic headwinds of subdued growth, rising inflation and interest rates, prompting some analysts to caution that property is not a good investment because, once adjusted for inflation, real prices are falling from yearearlier levels,” says Gordon. “But this is an oversimplification – as the regional housing markets have shown extremely divergent performances in recent years. This highlights the need to research before deciding what segment of housing market to invest in.” According to Pam Golding Properties’ strategic partner Savills, three metrics have the greatest influence on housing markets: demographics, affluence and the availability of land or housing. When all three factors are positive, growth in house prices will exceed the inflation rate. In the absence of one or more of these variables, markets are likely to stall – or even decline. “South Africa has a young population, with two-thirds not yet 34 years old – which is the average age of a first-time buyer,” says Gordon. “This means this is going to be a major growth market over the next decade.

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The raising of the level at which transfer duty is payable to R900 000 means that housing is more affordable for the first-time buyer. “When there is economic growth and job creation, there is generally a vibrant housing market. As populations urbanise, so cities are becoming increasingly independent of their countries. So if you wish to find a promising housing market, you need to identify a vibrant growth node – for example, KwaZulu-Natal’s North Coast Corridor.” She says that even though the country’s economy has been extremely subdued for several years, there are several growth nodes in which activity remains particularly buoyant. Major metro markets are the dominant housing markets, with coastal markets currently leading the way. “While people from across South Africa are relocating to the Western Cape – attracted by the lifestyle offering and a well-run province – it would not be surprising if Cape Town became saturated and Durban, including its easily accessible coastal areas, became preferable because of its proximity to Gauteng and great lifestyle offerings, space and relative lack of congestion,” says Gordon. “It’s no coincidence that Durban has been declared by The Mercer 2017 Quality of Living Survey to be the best city in South Africa in terms of lifestyle offering for the third consecutive year,” adds Carol Reynolds, Pam Golding Properties’ Area Principal for Durban Coastal. “This is evidenced by the fact that we continue to see strong demand from buyers in areas like Johannesburg who are seeking to relocate, but who do not wish to be too far away from the Gauteng business hub. “KwaZulu-Natal offers an easy commute to Johannesburg and a far better year-round climate than the Western Cape. Schools are also excellent and facilities are easily accessible. Notably, for the first time since I have been in the property industry, we are seeing Cape Town developers looking for opportunities in KwaZulu-Natal because the northern coastal belt has become so popular and sought-after among home-buyers.”


retail

The death of retail as we know it US retailers are closing stores and filing for bankruptcy at rates not seen since the recession. The industry’s decline isn’t just a phase or a temporary trend: it’s the new normal, according to a report released by asset management company Cohen & Steers Source: Business insider

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arren Buffett says that in 10 years’ time, the retail industry will look nothing like it does now. “The department store is online now,” the billionaire investor said at Berkshire Hathaway’s annual meeting in Omaha, Nebraska, as Business Insider’s Bob Bryan reported. “I have no illusion that 10 years from now will look the same as today, and there will be a few things along the way that surprise us,” he said. “The world has evolved, and it’s going to keep evolving – but the speed is increasing.” Charlie Munger, Berkshire Hathaway’s vice-chairman, added, “It would certainly be unpleasant if we were in the departmentstore business.” Buffett isn’t just sounding off about the demise of traditional retail: he has been pulling his money out of the industry as well. Berkshire Hathaway fired a warning signal for the retail industry in February when it sold off US$900-million of Walmart stock, choosing instead to invest billions in airlines. The sale left Buffett with nearly no shares of Walmart at a time when world’s largest retailer is investing billions in the battle to catch up to Amazon. In an interview with CNBC after the sale, Buffett said retail was “too tough” as an investment, especially in the age of Amazon. “I think retailing is just too tough for me, just generally,” Buffett said. “We bought a department store in 1966, and I got my head handed to me. I’ve been in various things in retailing I bought Tesco over in the UK and got my head handed to me. Retailing is very tough, and I think the online thing is hard to figure out.” Buffett’s comments come at a time of massive upheaval for the retail industry.

Warren Buffett

US retailers have been closing stores and filing for bankruptcy at rates not seen since the recession. Brick-and-mortar retailers in the US have announced more than 3  200 store closures so far this year, and Credit Suisse analysts expect that number to increase to more than 8  600 before the end of the year. For comparison, 6  163 stores shut down in 2008, the worst year for closures on record. Stores are closing because of the rise of e-commerce and shifts in how people spend their money. Shoppers are devoting bigger shares of their wallets to entertainment, restaurants and technology, and spending less on clothing and accessories. Department stores such as Macy’s, Sears and JCPenney have been hit the hardest by these trends – since 2001, department stores have lost half a million jobs. Buffett isn’t the only investor who thinks that these trends are permanent. The asset management company Cohen & Steers

recently released a report supporting that theory. “We see this retail weakness, which is occurring despite a relatively healthy economy, as part of a permanent evolution in how and where Americans spend their money,” the firm, which manages US$58,5billion in assets, said in the report. “We expect the paradigm shift taking place to dramatically alter the retail landscape, with potentially significant implications for real estate investors.” The 3  200 store closures so far this year are squeezing real estate investment trusts (REITs) that own regional malls and shopping centres. For these REITs, “the threat of increased vacancies and the rising costs for redevelopment and re-tenanting caused declines of 14,6% and 11,5%, respectively, in the 12 months ended 31 March 2017,” the report states. Excluding these sectors, the rest of the REIT index produced a healthy 8,2% total return in that period. When so-called anchor stores such as Macy’s or Sears go out of business, malls must find new tenants to replace them or risk losing rent payments. Class A malls, which are the most profitable shopping centres, will have little trouble attracting new tenants when stores close. But class B and C malls – which represent the majority of shopping malls in the US – will have a harder time finding lucrative replacement tenants. “Generally speaking, their future is much cloudier and we expect to see loss of market share,” the report states. “We believe much of the efforts to refurbish properties may do little to create actual value.” SOUTH AFRICAN PROPERTY REVIEW

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people in profile

Changing landscape in compliance obligations Lucia Erasmus is a Director at the Johannesburg real estate practice of Cliffe Dekker Hofmeyr, focusing mainly on commercial work. Her enthusiasm about the role CDH plays in introducing innovative ideas to solve legal real estate problems is very obvious

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ucia Erasmus began her career as a Candidate Attorney at Van Wyk De Vries in 1982. Thereafter she practised for about four years at two smaller firms, where she was the only conveyancer and gained valuable experience. She joined Cliffe Dekker and Todd (now Cliffe Dekker Hofmeyr) as a Director in 1990. Over the years, she has assisted numerous property developers in the retail, commercial, industrial and residential market. She has extensive experience in structuring of commercial transactions, property development, township establishment, sectional title registers, sectional title arbitrations and commercial bonds. “Market circumstances, increased interest rates, lack of funding, administrative delays, town planning issues and tax implications continue to be the main factors that we focus our attention on when working with developers,” she says. Commenting on the recent downgrade and whether or not CDH’s business will be affected, she says that when circumstances change, the demands change – and new opportunities arise. The developers will still identify needs in the market and, focusing on those, they’ll come up with innovative ideas. “We are often involved in the restructuring of transactions,” she says. “While trends have been to develop motor cities, offices and large retail centres, retail in the rural areas and smaller and convenience centres as well as mixed-use

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developments are now receiving more attention. There also seems to be a need for industrial and business parks in certain areas. On the residential side, affordable housing and student accommodation offer development opportunities. It is important to get the timing and location right to ensure that a specific area is not over-catered for in the various sectors. “Outside of South Africa’s borders, I’ve been involved in a variety of projects in Namibia, from retirement villages and affordable housing to resorts and mixeduse developments. Some of these projects are still ongoing. I am also advising on the structuring of a mixed-use development in Gaborone, Botswana, comprising retail, offices, a hotel and apartments. There is also an opportunity to advise on the development of a tourist resort in Victoria Falls, Zimbabwe. Locally, I am advising on the development of a few mixed-use schemes, two sectional title schemes and two industrial parks”. “In general, current issues we’re working on include increased deliverables brought about by the implementation of the new town planning legislation and ever-changing policies, complicated in some cases by a lack of municipal understanding and governance. Among the problematic deliverables are delays brought about by objectors failing to differentiate between the obligation of the municipalities to provide, maintain and upgrade services, and the developer’s obligations and the prescribed processes to be followed to deal with the objections. “Municipalities have introduced higher densification policies requiring a variety of land uses. A mixed-use scheme is therefore required to include a residential component that supports a range of user groups and income levels. A developer focusing on the development of retail and office buildings is now forced to include a residential component in a mixed-use development, notwithstanding that the developer has no previous experience or expertise in residential. This is further complicated by the inclusionary policy, where lower income levels must also be catered for. Feasibility, marketability, affordability and conflicting interests are factors that should be considered when these policies are imposed.

“Another issue is the implementation of the third generation of sectional title legislation. The original Sectional Titles Act was promulgated to alleviate the housing shortage in the early 1970s, but various schemes with other uses have been developed on the basis of sectional titles. The third generation of legislation separates the management of a sectional title scheme from the establishment of the scheme or the provisions that relate to land matters. The management provisions are now incorporated into the Sectional Titles Schemes Management Act No. 8 of 2011, but the prescribed management rules do not cater for mixeduse developments. Although the developer is entitled to amend certain of the rules when opening the sectional title register, amended rules must be approved by the Chief Ombud before the sectional title register is opened. Only some rules may be amended, and it is questionable whether the Chief Ombud will have the capacity to peruse the rules, bearing in mind that one of the main functions of the Chief Ombud is to provide a dispute resolution mechanism for community schemes.” Erasmus has met with the Chief Ombud to discuss the practical problems created by the Sectional Tiles Scheme Management Act in the context of a sectional title resort operated on a time-share basis. “While the Chief Ombud is very approachable, she is an advocate with extensive experience in arbitrations, and acknowledges that the Ombud Service and the private sector will have to work together to find solutions to problems,” she says. “We welcome an open dialogue with the Ombud Service, and look forward to setting a clear path to solving issues brought about by developers and owners alike.”

t: +27 (0)11 562 1082 lucia.erasmus@cdhlegal.com www.cliffedekkerhofmeyr.com


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.

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meet the mayor

Partnering towards an inclusive, modern and diverse city “We need you to join us in helping to make South Africa succeed – because we believe that a Johannesburg that works is a South Africa that works.” These were the closing remarks of the Executive Mayor of the City of Jo’burg Councillor Herman Mashaba at the SAPOA Meet the Mayor dinner held in Johannesburg

FROM LEFT SAPOA President Nomzamo Radebe, Executive Mayor of Jo’burg Councillor Herman Mashaba, SAPOA CEO Neil Gopal, Robin Lockhart Ross (Nedbank Property Finance) and Noel Mashaba (GladAfrica)

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APOA Board Members, senior executives and captains of industry engaged with the Executive Mayor and his administration team for the first time since his appointment nine months ago. As part of his welcome address, SAPOA CEO Neil Gopal acknowledged the importance of mutually beneficial partnerships such as these. “Mutually beneficial partnerships with the cities are sometimes fraught with challenges – challenges that can be avoided through better understanding,” he said. “Our ongoing engagement with the city is necessary to bridge the gap between these two sectors. We are inseparable, and it is important that we work together.” SAPOA President Nomzamo Radebe, echoed this sentiment. “Our members are significantly invested in the metros, so it is important for us to sit here today and talk to the people who are running the City of Jo’burg,” she said. “Cities are at the heart of where our investments lie and where we can jointly make a difference. The potential

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for growth and success in our cities will be huge – but we need to do this together.” According to the Executive Mayor, the strategic focus of his administration is to make the City of Johannesburg a business-friendly environment. “Our vision for the inner city is to make it the inclusive, modern and diverse heartbeat of Johannesburg. In this regard, we are already making substantial progress,” he said. Although Councillor Mashaba recognises the ongoing challenges that the city is facing in realising its vision, he believes that the city’s success is completely dependent on engagement and negotiations between all stakeholders. “I would like to extend an invitation to you, our partners and business community, to join me and my administration as we find viable and sustainable solutions to make this city and its people realise their full potential,” he said. The SAPOA Meet the Mayor dinner was sponsored by GladAfrica Group.


meet the mayor

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meet the mayor

Partnering towards building a world-class capital city “The Capital City is open for business!” These were the opening words of the Executive Mayor of the City of Tshwane Councillor Solly Msimanga at the SAPOA Meet the Mayor dinner held in Tshwane. The Executive Mayor, who was appointed in August last year, engaged with SAPOA Board Members, senior executives and captains of industry at the annual event

FROM LEFT Executive Mayor of Tshwane Councillor Solly Msimanga, SAPOA President Nomzamo Radebe and SAPOA CEO Neil Gopal

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he “Meet the Mayor” initiative, which is one of SAPOA’s key endeavours to strengthen partnerships, dialogue and collaboration between the commercial property sector and the government, was attended by SAPOA President Nomzamo Radebe, SAPOA CEO Neil Gopal, SAPOA Board Members and representatives of the City of Tshwane, among other key government and property stakeholders. During her welcoming address, Radebe highlighted the importance of such events to an industry body such as SAPOA. “A key issue for us as SAPOA and business is the issue of intergovernmental relations,” she said. “We acknowledge that mutually beneficial partnerships and a joint working relationship with government is at times fraught with challenges that could be avoided through better understanding. The reality is that we are inseparable, and we have to work together.” She further pointed out that as the urban conversation advances

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between SAPOA, the property industry at large and the government, South African cities would begin to progress and evolve to compete on a global scale. “Cities and how they are governed and managed must be at the heart of the national economic, job-creation and growth debates if we are to have any hope of reaching our employment targets,” she said. “The ongoing concerns from the private and the public sector surrounding the challenges that we both face require that both parties become more actively involved with each other. We need to engage in meaningful dialogue and work together to improve business and the infrastructure in South Africa.” Top on the list of priorities for the Executive Mayor is to ensure that the capital city succeeds by getting the basics right. “Last year, we tried as hard as we could to do the basics right,” he said. “Running water, electricity, cleanliness and safety have been

a top priority for us, while we also tried to rebuild the capital city to become an attractive destination for investment.” Councillor Msimanga acknowledged that the work that he, together with his MMC team, have done and the work that still lies ahead, encouraged SAPOA and the captains of industry to partner with the City for growth. “It is important for us as government to partner with the industry to ensure that this city is able to generate as much revenue as it possibly can, and that we are able to invest into the city to make it what we know it can be,” he said. “We are hoping that you will join us in transforming the capital city into a world-class city. In that, we can ensure that your businesses will endure and grow, because that will be the only way that we will be able to succeed as partners going forward.” The SAPOA Meet the Mayor dinner was sponsored by GladAfrica Group.


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UPCOMING EVENTS & TRAINING PROGRAMMES

2017

JUNE 07

Cape Town

Lease Agreement Workshop

19-23

Gauteng

Strategic Corporate Real Estate Management (SCREAM)

20-21

Gauteng

Negotiation Skills Masterclass Programme (NSMP)

23

Gauteng

Conveyancing for Non-Conveyancers Workshop

26

KwaZulu-Natal

Sectional Title Workshop

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

JULY

31 Jul-4 Aug Gauteng

Introduction to Real Estate (IRE)

AUGUST 01-02

Mpumalanga

Negotiation Skills Masterclass Programme (NSMP)

4

Gauteng

Occupational Health and Safety (OHS) Workshop

15

KwaZulu-Natal

Method of 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


JUNE EVENTS 20-22

Western Cape

Annual Convention & Property Exhibition

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Western Cape

Convention Golf Day

20

Western Cape

Convention Township Tour

21

Western Cape

Convention Welcome Cocktail Function

22

Western Cape

Women’s Breakfast at the Convention

22

Western Cape

Convention Gala Dinner & Awards Evening

29

Port Elizabeth

Networking Evening

30

KZN

Broker Cocktail Networking Evening

TBC

Gauteng

Research Breakfast

JULY EVENTS 20

East London

Breakfast Presentation

AUGUST EVENTS 08 18

Gauteng East London

Women’s Breakfast Golf Day

22

Gauteng

Research Breakfast

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


SAPOA events

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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 26 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


finance

Junk status:

what it means for the construction industry South Africa’s downgrade by international rating agencies is likely to have a significant impact on the construction industry as the cost of credit rises, particularly in existing contracts. As a result, the already high risk of non-payment is set to escalate further. This is according to Chris Bennett of MDA Attorneys, a specialist advisory practice for the construction industry Words supplied

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he first to feel the pain of more expensive credit will be the employers, as lenders raise interest rates. This places pressure on employers to fund their projects, and reduces their returns. The fact is that there are not many projects built from the employer’s cash reserves, and this will mean that more

About Chris Bennett, Director at MDA Attorneys Chris Bennett, an Admitted Attorney, is a Director at MDA Attorneys. He provides commercial and contract advice, and has advised on numerous major infrastructure projects. He also has extensive disputeresolution experience, and deals with many adjudications and arbitrations. His clients include major South African and international employers and contractors, a number of whom are listed companies both in South Africa and abroad.

expensive credit will be a widespread blow. State construction projects are likely to be the first to be affected, ranging from municipal projects and reaching all state-owned enterprises’ projects. Already, the controversial nuclear build has been placed in doubt on account of the affordability factor. However, other infrastructure projects are also being

At MDA Attorneys, we see many matters where employers are not able to pay their contractors either on time or at all. This places many contractors in a difficult position, as most contractors will be unable to finance a project beyond 30 days. Those contractors then also take out loans to keep funding the works in anticipation of payment placed on hold, including those in crucial areas such as water infrastructure. Aside from delaying or blocking new builds, the effect on employers already engaged in projects is significant. They must keep funding them, cancel or suspend them, with the associated results of doing so. At MDA Attorneys, we see many matters where employers are not able to pay their

contractors either on time or at all. This places many contractors in a difficult position, as most contractors will be unable to finance a project beyond 30 days. Those contractors then also take out loans to keep funding the works in anticipation of payment. Most at risk are the smaller-to-medium enterprises, which is particularly devastating for development. Non-payment or very late payment of contractors is already a major problem, particularly in the public sector. MDA has experienced contractors simply being told by state entities that there is no money left to pay them. We anticipate seeing more of this as a result of our junk status. Unfortunately, we also anticipate seeing more business rescue and insolvency proceedings in the construction sector. Making sure that one has contracted with a party that can pay (as a contractor) or finish the job (as an employer) and that the contract has sufficient protections has never been more critical. Despite being out for comment for a number of years, regulations to ensure prompt payment and rapid dispute resolution have not yet been promulgated. The absence of the regulations, however, does not mean that contractors are without rights. So long as the contractors have complied with their contracts, they should be in a position to make and prosecute their claims. Parties should not be afraid to exercise their rights and pursue the contractual dispute procedures and judgment for payment certificates, make demands under guarantees, or even terminate the contracts and proceed to recover damages. Importantly, payment of certificates or demands under guarantees, and which are not paid, can be recovered legally quite rapidly from a legal perspective. Once judgment is obtained, execution against assets may proceed to recover the debt. SOUTH AFRICAN PROPERTY REVIEW

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off the wall

It’s child’s play Go , a board game

Sometimes when you have to clear out that closet in your mother’s house, you come across a game you played as a child. Blowing off dust from a worn and familiar game, I wondered where those board games we played as children originated. Thanks to Google, I was able to find a few of our favourites Compiled by Phil Ruimte

Go

Illustration of alquerque being played, from Libro de los juegos (13th century)

Roman backgammon board (Ludus Duodecim Scriptorum) from the 2nd century

This is considered to be the oldest game that is still played today in its original form. Go was seen between 2  500 and 4  000 years ago, and contrary to its simple look, requires a lot of strategy. The board is a simple flat square, and the pieces are elegant, smooth, black or white rocks. Black pieces always go first when playing Go; after that, the idea is to place pieces one after another to surround “territory” or the other player’s pieces. Go is a strategy game that originated in China. The earliest reference to Go has been found in the Zuo Zhuan, one of the earliest examples of Chinese narrative history, in 548BC. Go was one of the four arts that Chinese scholar gentleman were expected to learn. (The other three arts were calligraphy, painting and playing the qin, which is a musical instrument.)

Backgammon It’s pretty amazing to consider that a game played on every continent in the modern world may have been around for about 5  000 years. Backgammon artefacts (or, rather, precursors to backgammon) dating from about 3000BC have been excavated from Shahr-e Sukhteh, Iran, making it one of the oldest two-player games still in play today. Various people have been credited with the game’s invention at later dates, but its exact time of origin is unknown.

Chess

Checkers

Jain version of Snakes & Ladders, called jnana bazi or Gyan bazi, from 19th-century India

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The game-play of checkers has likely evolved quite a bit over time, but the basic premise of this simple game has been around for thousands of years. An archaeological dig in Ur (modern-day Iraq) revealed an early form of checkers dating back to about 3  000BC, but many believe modern checkers comes from alquerque, which originated in the Middle East. Versions of the game eventually spread around the Western world – checker-boards have been found in Egyptian tombs, mentioned in the works of both Plato and Homer, and made their way into

northern Europe by means other than the Romans (a substantial feat during that time).

Chess Chess is one of the most popular and wellknown games in the world today, but did you know it’s believed to be nearly 2  000 years old? Historians think it was developed somewhere between AD280 and AD550 in Eastern India. Known back then as chaturanga (four divisions of the military), the pieces consisted of infantry, cavalry, elephants and chariotry – still represented by today’s pawn, knight, bishop, and rook. The game became popular in the Muslim world after the AD633 to AD644 Islamic conquest of Persia, and spread throughout Europe by AD1000. The Persian influence on chess remains evident today in its terminology – for example, “checkmate” originates from the Persian shāh māt, or “the king is left helpless”.

Snakes and Ladders Also known as Chutes and Ladders, this childhood classic is based on an ancient Indian game called Moksha Patam. Moksha Patam was much more than a simple race around the board – it was a complex morality lesson intended to teach children about good and evil. Navigating the board represented the journey of life, and philosophies of karma (destiny) and kama (desire) were incorporated in order to give lessons on good versus bad deeds. The ladders represented virtues such as faith and humility, while the snakes represented vices such as lust and anger. Snakes outnumbered ladders in this version of the game in order to serve as a reminder that the path of good was more difficult to take than the path of evil. After the game was brought to England, Victorian ideals replaced the original virtues and vices, with ladders representing, for example, thrift and industry, and snakes representing indulgence and disobedience. The Victorians also decided to use equal numbers of snakes and ladders.


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