South African Property Review May 2019

PROPERTY SOUTH AFRICAN

May 2019

REVIEW

The voice for the industry

PROPERTY REVIEW - LogoTreatment.pdf

KwaZulu Natal roundup Fast track Durban

One-on-one

Essential supply chain partner

State of City Finances Sustainability and equity

Tech focus

Augmented Reality App Smart water metering

1

2016/08/25

11:31 AM

from the CEO

The Property Practitioners Bill The Property practitioners Bill was published on 31 March 2017 in GG 40733, and is intended to replace the current Estate Agency Affairs Act of 1976 (“EAA Act”) in its entirety. SAPOA submitted comments and attended the public engagement workshops hosted by the EAAB and the Department in 2017

S

APOA recognises and supports the policy imperatives and the legislative objectives of ensuring the protection of consumers against the complexities that permeate most business transactions Against this background, SAPOA has over the past five years dedicated a great deal of time, effort and resources to assisting the EAAB with redrafting and providing comments to all previous versions of the Bill, so that the objectives outlined above can be met. Through its various committees – including the brokers, legal, government liaison, and multi-stake holder group committees – SAPOA has conducted several engagements with the EAAB to find common ground.

Prior to this final version of the Bill being published for comment, SAPOA was privy to nine previous versions of the Bill, and in 2015 also assisted with the redrafting of one of the versions of the Bill that was sent to the Department of Human Settlements for consideration.

The intention was to make sure that the commercial property sector is not over-regulated and that exemptions and exclusions that are applicable to the commercial property industry are ultimately included in this Bill.

SAPOA closely monitored the Portfolio Committee on Human Settlements’ (National Assembly) clause-by-clause deliberations on the Bill, and in particular the public submissions and responses to inputs received during the stakeholder engagements. Of the numerous comments submitted and presented, the committee totally disregarded all the comments received

from stakeholders except for a very few, such as the addition of the Ombud, exemptions in respect of Trust accounts and the three-year validity period of the Fidelity Fund Certificates.

The Bill does, however, provide for Non-Executive Director exemptions as this is an initiative that was undertaken

by SAPOA in June 2016.

The proposed amendments released by the Portfolio Committee on Human Settlements failed to address the more serious issues in the Bill. The Bill fails to address the issues raised by various stakeholders, including the listed property sector, which is already overregulated by legislation such as the Companies Act, the Property Charter, IFRS, SANS, FICA, JSE regulations, CPA, POPIA, CSOS Act, King IV, etc. This will have serious unintended consequences on the industry and the economy as a whole.

The main purpose of the Property Practitioners Bill is to protect the public and ensure transformation and corporate

governance. The fact that a REIT is a listed entity means the REIT must comply with the JSE regulations, which are fundamentally in place to ensure the public is protected. As such, the persons who manage these REITs are already bound by regulations that ensure that public money is protected, corporate governance is paramount, and reporting is transparent. The commercial property sector is overseen by the Department of Trade and Industry, and it is concerning that the EAAB is desirous to govern the commercial property.

SAPOA attended public hearings in Durban and Pietermaritzburg as well as at three of the Gauteng venues. At all the public hearings, SAPOA highlighted its many concerns and went through its submissions in detail.

SAPOA also addressed a letter to the President highlighting its concerns, and once again raised the issues that will impact the industry negatively. SAPOA then met with the Director General of Human Settlements and again raised its concerns, highlighting the issues that will impact the industry negatively.

The Property Practitioners Bill was adopted and passed by both houses of Parliament with all political parties voting in favour of the Bill. The most critical and fundamental process thereafter is the development of the regulations under this Bill. Parliament has given the Department of Human Settlements six months to develop the regulations in consultation with the relevant stakeholders.

Best regards, Neil Gopal, CEO SOUTH AFRICAN PROPERTY REVIEW

1

contents

PROPERTY SOUTH AFRICAN

1

The voice for the industry

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

May 2019

REVIEW

The voice for the industry

PROPERTY REVIEW - LogoTreatment.pdf

1

2016/08/25

11:31 AM

The Moses Madiba football stadium built for the 2010 football world cup stands as an iconic landmark in the city of Durban.

In this issue focusing on technology we look at an App that could be a major disruptor in the property sector.

Technology focus and Innovation

2

KwaZulu Natal roundup Fast track Durban

One-on-one

Ease of access to information and data is becoming second nature in our daily life. We invite you to go to

Essential supply chain partner

page 28 and follow the links to download the App to

State of City Finances

experience augmented reality first hand.

Sustainability and equity

Tech focus

Augmented Reality App Smart water metering May 2019

3

1 BCX Head Office. Architects: SVA International 2 Akwa Hotel. Architects: SAOTA 3 Menlyn Learning Hub. Architects: Boogertman + Partners 4 West Hills Mall in Ghana. Architects: ARC Architects

4

1

From the CEO

4

From the Editor’s desk

10 Legal update The Property Practitioners Bill 18 Regional roundup – KZN Unified buy-in for Durban vision 24 Entrepreneur one-on-one On point with Property Point 26 Entrepreneur one-on-one Passionate about project execution 28 Tech review Putting the “real” in real estate 30 New member one-on-one Your essential turnkey supply chain partner

Leaders in Quantity Surveying and Property Valuation OUR SERVICES: • Quantity Surveying • Management • Dispute Resolution • Property Valuation Associated offices: BOTSWANA | GHANA | KENYA | MAURITIUS | NAMIBIA | NIGERIA | TANZANIA | UGANDA Johannesburg: +27 (11) 642 8751 Pretoria: +27 (12) 460 3304 WWW.DELQS.CO.ZA

2

SOUTH AFRICAN PROPERTY REVIEW

33 New member – tech focus Smart tech aids control water usage 34 Retail reports An ever-evolving retail property market 37 State of city finances Sustainability and equity: the tariffs story 45 Howmuch.net Which countries have the biggest crude-oil reserves?

47 Social 52 Off the wall Eco bikes made from bamboo 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 Editor Mark Pettipher Copy Editor Ania Rokita Taylor Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Fanie van Niekerk Sales Pieter Schoeman: pieter@mpdps.com Finance Susan du Toit Contributors John Bradford, Lyse Comins, Maud Nale, Mumtaz Moola, Raul Amoros/howmuch.net, SAPOA’s Retail Research Report – December 2018, State of City Finances 2018, Tshepo Tshabalala Photography Mark Pettipher, Xavier Saer DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA).

All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA. The publishers are not responsible for any unsolicited material.

Printed by Designed, written and produced for SAPOA by MPDPS (PTY) Ltd e: mark@mpdps.com

e: philip@rsalitho.co.za

May 2019

31

10

NO ROOM, LEAVES NO ROOM FOR BUSINESS GROWTH.

18

24

26

Don’t let limited space, limit business.

Visit abland.co.za to view our groundbreaking portfolio of space for commercial, industrial, retail, motor and mixed-use precincts.

52 SOUTH AFRICAN PROPERTY REVIEW

3

from the Editor’s desk

Buying into the bigger picture This month I feel more buoyed than I have for a long time, largely as a result of visiting KwaZulu-Natal to focus our roundup on the province's largest city, Durban

K

waZulu-Natal is the seventh-largest province in South Africa, but second in terms of density: at 94 361km², its population is estimated to be 11 384 700 (2018). While its administrative capital is Pietermaritzburg, you could be forgiven for thinking Durban is taking the lead.

I’ve titled this note “Buying into the bigger picture” because having visited the land of a thousand hills to compile the KZN roundup, I’ve come back buoyed by a positive feeling.

Clearly there is a vision for Durban, and there is public and private-sector buy-in to get things done. My thanks go to everyone who assisted me in gathering this information – there was plenty to write about, and I hope that you will enjoy reading about Durban’s positive growth trajectory.

From the Mayor, through to eThekwini Municipality’s investment unit heads, Dube TradePort and private sector CEOs, everyone I spoke to understands the “bigger picture”.

Sure, there are grumblings from some, but if those business leaders did not strive to better the development and infrastructure projects, question and raise concerns over legislative proceedings or express their passion about the projects they are driving, Durban’s visibly changing landscape would not be as obvious – or, indeed, possible.

For me, having had the privilege to visit Durban every year for the past six, the first noticeable difference is the completion of the Umhlanga interchange.

(Thanks, guys – I took the wrong turn on my way to meeting Philip Sithole!) Getting into Durban itself and heading to the Point, you can see the beginnings of a clean up, and the Promenade is getting more than just a “lick of paint”.

And it might be just my imagination, but the area around the International

4

SOUTH AFRICAN PROPERTY REVIEW

Convention Centre seemed remarkably clean as well.

What is really impressive is that, when you head out to Cornubia and Sibaya, you are enveloped in green – but you are also aware of swaths of land being transformed and made ready for mixeduse and residential nodes.

Last year, when I attended SAPOA’s Annual Convention & Property Exhibition in the city, one of the highlights for me was the city tour. It took in the almost completed Bridge Town and Sibaya’s first phase of development, as well as Nedbank Square.

Having time on my hands between interviews, I retraced the route, and I was amazed at the difference 11 months can make to projects.

The vision for Durban is to put the city well and truly on the map as a destination to visit – so much so that British Airways, Turkish Airlines, Emirates, Qatar Airways and Air Namibia all now have direct flights to King Shaka International Airport.

With a capacity of 7 500 000, the airport handles more than 5 200 000 passengers per year.

It’s Africa’s “Riviera” – or it soon will be, given the path Durban is taking.

Apart from the KZN/Durban roundup, we’ve taken the opportunity to speak to a couple of SAPOA’s new members, including Reinier van den Bergh, CEO of the Essential Group, which is in the process of developing a 360-degree, cross-industry partnership initiative.

Even though we’ve had some rain recently and a good proportion of the country’s dams are in better shape than they have been, another one of our new members – Utility Systems – has a tech answer to water metering, monitoring and delivery.

On the subject of technology, there are many systems and technical and data-gathering advancements coming to our industry. In this issue we have focused on one that could aid property brokers and marketers. Our focus requires you, the reader, to participate in order to get the full benefit of the article: download the Dreemar app to experience augmented reality first-hand.

Entrepreneurship is part of our industry’s lifeblood. Over the next few editions we will bring you interviews with some of Property Point’s upcoming professional talent. We kick off with a conversation with Shawn Theunissen, Head of Corporate Social Responsibility at Growthpoint Properties and the founder of Property Point; this is followed by an interview with Eddy and Emily Mokobodi about their entrepreneurial journey.

This month we continue with extracts from the South African City Network’s “State of City Finances” report. Retail reports get a look-in as well. Our legal update looks at the Property Practitioners Bill, and our Off the Wall feature focuses on an eco-friendly bamboo bike.

Enjoy the read.

Mark Pettipher, Editor and Publisher

MONEY TALKS. 83% of businesses use flexible workspace to cut costs.

It’s time to rethink the office.

CHOOSE A REGUS OFFICE TODAY.

Visit regus.co.za, download our app or call +27 21 300 2742 Offices / Co-working / Meeting Rooms

THE SAPOA ANNUAL CONVENTION & PROPERTY EXHIBITION CAPE TOWN ICC 18-20 JUNE 2019

A highlight in the real estate industry calendar and regarded as the premier property conference of the year, the Convention will once again present an exceptional forum for both local and international property professionals and industry leaders to refresh their knowledge base.

What to expect from the EXPERTS?

  ����

 �

�� � � ­ € � ‚ � ‚

ƒ„ …

‚ €  † �‡ � ˆ † € ‰ „ €

Š

� ‹  † € €  �Œ

Š

Â?

ˆ�

†€ Ž ‘€ ‰ Œ

Š

� ‰ € „ ‡ ’

€ „ ‡ ’

“ ” ‡ “ ˆ

„ „

• † ��

Â?

Â?

 ­ € ‚

ƒ

„

ƒ

�„

Facilitator: �Associate Prof Francois Viruly, Department of Construction Economics and Management, UCT Panel: �Prof Jonathan Jansen, Faculty of Education, Stellenbosh University �Pali Jobo Lehohla, Former Statistician General �Dr Tashmia Ismail-Saville, CEO, YES Foundation �Dr GS Moseneke, Executive Director, Vukile Property Fund �Nonhlanhla Mayisela, CEO, Izandla Property & President of WPN �Rapalang Rabana, Founder & Chair, Rekindle Learning “‰ “ ‡

„

‚ – ­€

€ ­€ ��…†

‡

Â

�� �‡ “ ‚†… Š €

‚ Š € “  † �  † € ‚ Š ’ ‡ ’ Š

�‡ † ‚ „ �

€ • ‚ Š € ‚ Š � † ‚†

Š € Š € — ‰ „ � ’

‡ †

Â

†

„

ˆ  ­€ ‰ € Š €‹ ‰�­ŒŽ‹

ˆ

Œ �� † ƒ„ �

Panel: Dion Chang, Trend Analysts and Founder of Flux Trends Barrie Swart, Head of Property, Gumtree SA

˜ “ “  „ • ‚ • ‚

Â…

• � ‚ � „ ‚

Â…  ‰ € ‹ Â

‡

†

� � ™Œ ‡ •„š � € „ € ‡„ ‚ ‚ ‹

�� �‡ „

™€ � ‚ � �… € ˜ „ � › „

� ™Œ ‡ •„š � € „ € ‡„ ‚ ‚ ‹ � ’ Š ‡ Š† € � ‚ � ‚ Š ‚ �… �  Š † €

‚ • ’ ŠŠ € „Œ � ‚ š ‚ Š ‚

‚ „

� � ‡ ’ † € „ ’

€ �

�ˆ Š  Œ € � ‚ � �… � ‹

‹ ‰  Œ Œ

Š ‘ ’ ­€

ÂŒ ˆ “ Â

�� �“

…€ „ ‡ ’

•

…€ ‡ Š „Š ‹ Š

Â?

‡

��€ ‚„ ‹ œ ‚

€

‹ „

€  ˆ —› Â? Â?Â

…€ €

Â’

­

­

­

­

­

­

For the detailed programme and more about the Convention, Log onto: www.sapoaconvention.co.za

legal update

The Property Practitioners Bill The Property Practitioners Bill was published for comment on 31 March 2017. It is intended to replace the current Estate Agency Affairs Act of 1976 (“EAA Act”) in its entirety

S

APOA recognises and supports the policy imperatives and the legislative objectives of ensuring the protection of consumers against the complexities that permeate most business transactions.

Against this background, SAPOA has over the past five years dedicated a great deal of time, effort and resources to assisting the EAAB with redrafting and providing comments to all previous versions of the Bill, so that the objectives outlined above can be met. Through its various committees – including the brokers, legal, government liaison, and multi-stake holder group committees – SAPOA has conducted several engagements with the EAAB to find common ground.

SAPOA closely monitored the Portfolio Committee on Human Settlements’ (National Assembly) clause-by-clause deliberations on the Bill, and in particular the public submissions and responses to inputs received during the stakeholder engagements. Of the numerous comments submitted and presented, the committee totally disregarded all the comments received from stakeholders except for a very few, such as the addition of the Ombud, exemptions in respect of Trust accounts and the three-year validity period of the Fidelity Fund Certificates.

The Bill does, however, provide for Non-Executive Director exemptions as this is an initiative that was undertaken

by SAPOA in June 2016.

The proposed amendments released by the Portfolio Committee on Human Settlements failed to address the more serious issues in the Bill. The Bill fails to address the issues raised by various stakeholders, including the listed property sector, which is already overregulated by legislation such as the Companies Act, Property Charter, IFRS, SANS, FICA, JSE regulations, CPA, POPIA, CSOS Act, King IV, etc. This will have serious unintended consequences on the industry and the economy as a whole.

10

SOUTH AFRICAN PROPERTY REVIEW

A consolidation of the comments submitted by SAPOA follows: ● That the EAAB applies for the property industry’s exemption from the application of the provisions of Section 14, 16 and 56 of the CPA. ● The requirement that each director of a property practitioner company be registered as property practitioner has been brought forward from the EAA Act. We are, however, of the opinion that this requirement is no longer appropriate. While we acknowledge that it will be important for those directors who are actively involved in the day-to-day running of the property practitioner business to be registered as property practitioners, we are of the opinion that a blanket registration requirement is too restrictive because it does not allow the industry to draw on the skills and expertise of other areas, such as expertise in law, banking, construction or environmental science. Today, we see huge property practitioner companies operating within the property sector.

These entities require diverse boards with a variety of specialised skills sets to adequately govern and direct them. Creating a closed profession stifles competition, and restricts efficiency and development in the industry because it would exclude ancillary fields. This in turn may possibly reduce employment and drive up costs for the consumer.

Allowing environmental, civil, regulatory, legal and financial experts to partner with property experts on the boards of property practitioner entities will not only be in the company’s best interests but in the public’s best interests too, as those boards will be able to ensure better service delivery on a holistic basis. ● SAPOA notes that while the draft Bill intends to regulate more

stakeholders within the property industry as defined through the definition of a “property practitioner”, the composition of the board focuses on the professional expertise and/ or experience required. While such is important, it is even more important that the Board should be representative of the various regulated sub-sectors of the property industry. It is vital for the required expertise and experience to be available to enable the Board to make policy and strategic decisions after consideration of implications on various regulated property practitioners. SAPOA believes the Board must constitute members who represent the commercial property sector in the composition and appointment of the Board. ● Section 37(2) empowers the Minister, in consultation with the board, to limit the amount that may be paid from the Fund in respect of any category of claims. We are of the view that such a limitation is unjustified and may very well lead to a loss of confidence on the part of the public in dealing with property practitioners. ● The Bill currently provides that every property practitioner must open and maintain a trust account.

Bearing in mind the ambit of the definition of property practitioner, various role players within the property sector will constitute property practitioners but are as a matter of course not required to handle money on behalf of the public as part of their operations as property practitioners. We are of the view that only those property practitioners who in fact hold money in trust on behalf of the public should be required to maintain trust accounts.

The wasted costs associated with holding a trust account and having

AUCTIONS

CALL US TO GET YOUR PROPERTY SOLD ON OUR NEXT AUCTION YOUR PARTNER OF CHOICE FOR COMMERCIAL PROPERTY AUCTIONS Through a passionate approach, commitment to unrivalled service, we are the leaders in the sale of commercial property across South Africa, Broll Auctions & Sales is a logical choice when partnering with a commercial property company

AUCTIONS

TENDERS

AUCTIONS SEND A CLEAR AND DEFINED MESSAGE TO THE MARKET HIGHLIGHTING THE CERTAINTY OF A SALE.

TENDERS GIVE SELLERS THE OPPORTUNITY TO CONDUCT A CONTROLLED AND PRECISE TRANSACTION.

ONLINE MARKET PROPERTY GLOBALLY REDUCTION IN SALE CYCLE STREAMLINE SALES PROCESS LEGALLY COMPLIANT REDUCTION IN MARKETING COSTS

PROPERTIES SOLD Tiger Brands Meadowdale

SOLD FOR

48.3 Million

SS Federal Building Cape Town

ABSA House Cape Town

SOLD FOR

SOLD FOR

61.5 Million

87.1

Million

John Ross House Durban

SOLD FOR

44

Million

AUCTIONS | PRIVATE TREATY SALES | TENDERS visit broll.com or call us on 087 700 8289

legal update same audited every year even where that trust account remains unused places a further hurdle in the way of promoting participation within the property sector. We recommend that a distinction be drawn between those property practitioners who actually require trust accounts and those who do not, and the Fidelity Fund Certificate issued to those property practitioners permitted to hold trust accounts should then contain an endorsement to that effect. We note that Section 53 does not cover the manner in which interest earned on trust accounts should be dealt with. We are of the view that the current position under Section 32 of the EAA Act should be brought forward, and interest accrued on the balances in trust accounts should be paid to the Fund. ● Listed property owners are already highly regulated and have to comply with, inter alia, the listing requirements of the JSE, the Companies Act (Act No. 71 of 2008), the Property Transformation Sector Charter, to the extent applicable Real Estate Investment Trust legislation, the Income Tax Act (Act No. 58 of 1962), to the extent applicable the Financial Intelligence Centre Act (Act No. 38 of 2001), Employment Equity Act (Act No. 55 of 1988), and the Banking Act. Non-listed commercial property owning companies are also highly regulated companies, having to comply with similar legislation to listed companies.

SAPOA also submits that nonlisted property owners should also be exempt from being classified as a property practitioner. For the reasons stated above, SAPOA strongly recommends that property owners with established subsidiary management property companies of their listed holding company, listed property owners and general commercial property owners should be exempt from the definition of “property practitioner” in the Bill.

14 12

SOUTH AFRICAN PROPERTY REVIEW

● Neither the Act nor the Bill has provisions relating to exclusions from the Act. Exclusion provisions differ from exemption provisions in that in respect of the latter, the Act is applicable to a person or entity that is under regulation but can on such grounds as are provided in the Act, apply for any or all provisions of the applicable Act not to be applicable.

Exclusion provisions state that the Act or some of its provisions are not applicable to a person or legal entity. ● SAPOA submits that where decisions of a subsidiary company are made by the holding company, then in such circumstances the EAAB should not regard the subsidiary company, which manages properties owned by the holding company, as brokers to be registered with the EAAB. In this instance, the subsidiary company should be exempted from being classified as a property practitioner. ● Section 4 of the Bill makes provision for any person to apply to be exempted from compliance with any specific provision of this Act. While the inclusion of the section is commendable, we recommend that provision be made for group exemptions that could apply to a specified class of persons. This will lessen the burden placed on the Authority to consider multiple applications from the same industry players facing the same issues. ● Section 48(3) makes provision for the deemed approval of an application for a Fidelity Fund Certificate. Notwithstanding the fact that the Authority is supposedly compelled to issue the Fidelity Fund Certificate to the applicant concerned under the circumstances contemplated in Section 48(3), the Authority may nonetheless fail to do so. We are of the view that for so long as the application is deemed to have been approved in terms of Section 43(3), the property practitioner concerned should be deemed to be in possession of a Fidelity Fund Certificate for the purposes of this Act until such

time as the Authority actually issues the certificate in terms of Section 48(3). ● We note that the inspector is given the power to enter and inspect any business premises of a property practitioner without a warrant. Given that certain property practitioners have multiple businesses, some of which are entirely unrelated to their business as a property practitioner, we are of the opinion that the inspector’s warrantless search and seizure powers should be limited to business premises in respect of which the inspector has reason to believe (i) any person there is performing an act as a property practitioner, (ii) it is connected with an act performed by a property practitioner, or (iii) there are books, records or documents to which the provisions of this Act are applicable. ● In as much as the provision has been amended to provide for a Fidelity Fund Certificate to be renewed every three years, this is in conflict with Clauses 40 and 46 of the Bill that require a property practitioner to apply every year for a Fidelity Fund Certificate and to pay the fee yearly. We have raised this with the Department and have not received a response. ● The Bill needs to provide clarity on how Management Agents will be governed as there is confusion and overlap between this Bill and the Community Schemes Ombud Service Act. SAPOA addressed a letter to the President highlighting its concerns, and once again raised the issues that will impact the industry negatively. SAPOA then met with the DG of Human Settlements and again raised its concerns, highlighting the issues that will impact the industry negatively.

The Property Practitioners Bill was adopted and passed by both houses of Parliament with all political parties voting in favour of the Bill. The most critical and fundamental process thereafter is the development of the regulations under this Bill. Parliament has given the Department of Human Settlements six months to develop the regulations in consultation with the relevant stakeholders.

­

­

­

­

­

­

­ ­

­

­

­ ­

­

­

­

­

­

­

­

­

Mafonti Morobi Education Officer T: +27 (0) 11 883 0679 F: +27 (0) 86 276 1865 E: eduofficer@sapoa.org.za W: www.sapoa.org.za University of Johannesburg (UJ) Dumisani Ndumo T: +27 (0) 11 559 2427 E: property2@uj.ac.za

RS

-

LY

14 JU

9-2 019 19 6 50 YEA

SE

P

EK

UR

A

D

Y 201 9 > 2 W E

CO

SAPO P

PDP

26

L JU

A DYNAMIC & REFRESHED COURSE FOR THE WORKING PROFESSIONAL COURSE PROFILE & OBJECTIVES

­

­

­

­ ­

­ ­ ­

­

­

­

­

­ ­ ­

­ ­ ­

­ ­ ­ ­ ­

­

­ ­ ­

AREAS OF STUDY

­

QUALIFY FOR CPD POINTS TO ATTEND THE PROPERTY DEVELOPMENT PROGRAMME AT A 10% DISCOUNTED RATE!˚

DELEGATES QUOTES

­

­

­

­

­ ­

­ ­

GENERAL INFORMATION

COURSE FEE

¡

regional roundup – KZN

Unified buy-in for Durban vision Property Review visited Durban for an overview of the latest developments and to follow up on the progress of key initiatives that aim to transform Durban into the “Riviera” of Africa and the business gateway to southern Africa

By Mark Pettipher

T

o put this roundup together, I visited Durban and spoke to six stakeholders: SAPOA’s Regional Chairperson and partner at Rokwil Property Development Bernadette Khumalo, eThekwini Deputy City Manager Phillip Sithole, Dube TradePort Corporation Chief Executive Officer Hamish Erskine, Invest Durban Head Russell Curtis, Cato Ridge Consortium Chief Executive Warwick Lord, and Tongaat Hulett Developments Planning Director Rory Wilkinson.

Continued relationships My first conversation was with Bernadette Khumalo, who took over SAPOA’s regional reins from Edwin van Niekerk. “I’ve spent a number of years working with Edwin, which makes it easier for me to continue the relationships SAPOA has built up over time with the eThekwini Municipality and its developmental agencies,” said Khumalo. “It’s important for our members to get to know who’s responsible for the departments and to have good working relationships with them.

“Over the next three years, Durban will experience continued clean-up and infrastructure development. We’re seeing huge investment in the CBD, the Waterfront, the development of logistic hubs and the Aerotropolis, and mixed-use development 18

SOUTH AFRICAN PROPERTY REVIEW

along the northern coast and along the transport corridors to the west.

“SAPOA is being proactive in getting stakeholders – city officials, developers and service providers – together through open forums. We discuss and outline the city’s procedures, and work with ward councillors and businesses in the communities to bring about change in people’s lives. The initiatives help everyone deal with the issues – key for collaboration and understanding of community associations – and look at fine-tuning structures to encourage development, employment opportunities and economic inclusion. We understand that inclusion needs to happen in the right way and are sympathetic to the changing phases of development. We look at ways in which SMEs can be included, up-skilled and trained, and to ensure that all paperwork is in order. As developers, we want to see SMEs commit to project opportunities.”

We spoke about the problems in the construction industry, with some of South Africa’s bigger companies going into liquidation and closing. Saddened by the demise of companies such as Basil Reed, Group Five and NMC, Khumalo has learnt lessons through observation. “In order to survive in South Africa’s current economic climate, we’re being careful with

cash flow,” she said. “We have developed a company ethos, which includes the commitment to working closely with local communities and empowering them to be self-sustainable.

“Rokwil Property Development was founded by my business partner Rod Stainton. Before partnering with Rod, I was with Investec for just over three years, Ithala Development Corporation for four years, and Standard Bank for six.

Rokwil is an entrepreneurial property development company with diverse specialties, including development of commercial, industrial and retail properties, property management and civils. When I partnered with Rokwil, I was thrown into an accelerated learning experience: for 10 months I lived and breathed the Keystone logistics development.”

Keystone Park is KwaZulu-Natal’s only custom-designed logistics, warehousing and light-industrial precinct on a 152hectare greenfield site in the western corridor, 46km from Durban’s port on the N3. Making use of its unique location, Keystone is home to some of South Africa’s major retail store distribution centres, such as Mr Price, Pepkor, Malda Pack and Ackermans. It is also an intermodal hub, and will benefit from its proximity to the Cato Ridge break bulk intermodal hub.

regional roundup – KZN of Team Durban and Invest Durban’s “step change” strategy have begun in earnest, and according to Sithole, “The strategy will help generate new revenue streams for the city, and aid in job creation, skills development and economic transformation.”

Taxpayers’ money put to visible use

Part of Rokwil’s cash-flow monitoring is the division Rokwil Civils. “We realised the Keystone distribution hub was akin to a ‘mining’ operation, so it made sense to acquire the plant to move 1,4-million cubes of soil for the bulk infrastructure,” said Khumalo. “Fifty percent of our civil work comes from in-house projects. We follow the same strict approval processes, and have bought in the best know-how to prevent short cuts. Lessons learnt from the Keystone project are being put to good use. We are currently involved with Phase 2 earthworks of the Dube TradePort Aerotropolis development.”

The path to greater prosperity After SAPOA’s 2018 Annual Convention & Property Exhibition, we briefly spoke to eThekwini’s Deputy City Manager Phillip Sithole. This year he was able to outline the progress made since we last spoke.

As part of promoting Durban as an investment and tourism destination, eThekwini Mayor Zandile Gumede decided she needed a sounding board and established Team Durban – a 12-member council of business leaders, including representatives from pharma giant Aspen, FNB, ABSA and Toyota, among others – whose task is to advise city leadership, Invest Durban and the public sector on ways to improve the local investment environment. In August 2017, the city adopted the Durban Investment Promotion Strategy. The former Durban Investment Promotion Agency has evolved into Invest Durban, with the objective to promote and facilitate Durban as Africa’s premier investment destination. The advisory roles

There are some major partnerships under way, says Sithole. “We have partnered with Tongaat Hulett on the Ntshongweni development, and R300-million is being provided by the council, which will be spent on Phase 1 infrastructure,” he says.

“The Ntshongweni project is a 20-year development that commenced with the 85 000m² Mall of the West, which will unlock the core for a high-intensity mixed-use development.

“Almost R700-million has been set aside for the Midway Crossing Development; R250-million from the council, the rest by a private developer. This will establish a new township along the C3 North Durban Route and will encompass a Sizakala (Help) Centre, a Go!Durban transport facility and a shopping centre.

We have also formed a deeper inner-city partnership with a group of more than 2 000 business and community leaders, entrepreneurs who want to work with the city and private-sector companies who have an interest in rejuvenating the city centre. This initiative will ramp up participation in the Point Precinct and our Waterfront development programme.”

The Durban Point Waterfront project is a joint venture between the eThekwini Municipality, lead by Sithole’s Economic Development and Planning Cluster, including Invest Durban and the Catalytic Projects Unit, and headed by the Durban Point Development Company (DPDC) partnership with Malaysian property group UEM Sunrise. “Progress has been made with the installation and upgrading of the bulk infrastructure in response to the Point’s development and the greater inner-city regeneration plan,” says Sithole.

“About 378 000m² of bulk infrastructure has been developed to date. A number of interested developers have approached the DPDC to purchase land for a hotel and a retail mall. Our Malaysian partners will soon be launching the first residential

29-storey tower. The Point development has an estimated value of R5,6-billion, which amounts to a construction value of R2,7-billion. Last year, the partnership sold 67 000m² of land to a BEE developer for prime offices near uShaka; we expect to see demand rise once the Promenade is completed and fully launched.

“The construction of the first water and sewer reticulation works was completed in October 2017; plans are in place for a water-main upgrade along Anton Lembede Street and Mahatma Gandhi Road. This upgrade, with a budget of about R350million, will see the replacement of ageing asbestos pipes with an 800mm-diameter steel pipe to service the development of densification in the inner city.

“The Promenade is progressing well – R300-million has been spent and we are in Phase 2, which should be completed in time for the festive season. Part of the rejuvenation process is to pedestrianise the area around Mahatma Gandhi Road, River Town and the ICC and along the beachfront. A further R30-million is being spent on upgrading public facilities.”

To create a safer, more accessible city centre and beachfront, the city is increasing policing: 300 additional police-service members have been employed, and 100 have been deployed to take care of the beachfront. A beachfront management company has been given a budget of more than R10-million for maintenance and upkeep. The city is also upgrading and repositioning CCTV cameras.

Addressing concerns over dilapidation and disintegration of buildings in certain areas of the inner city, an audit and analysis have been carried out, and the city has outlined the action that needs to be taken. Some buildings will be demolished, legal action will be taken against landlords, and illegal land use and illicit drug trade will be curbed.

Durban is increasingly able to attract new foreign direct investment (FDI) from international players – including Kerry Foods, Mara Group, CCI Contact Centres and others – as well as locally expanding giants such as Toyota, Unilever and agriprocessing group Sappi. Heeding the call to increase FDI is one of the key pillars in Durban’s (and KZN’s) future.

SOUTH AFRICAN PROPERTY REVIEW

19

regional roundup – KZN Invest Durban: taking the lead “Invest Durban, an initiative supported by the National Treasury and the World Bank, emerged from a strategic process housed in the National Treasury City Support Programme, which works with all eight metros and deals with public and private sector investment issues,” said Invest Durban Head Russell Curtis.

“A team of international advisers, skilled in investment and promotion facilitation and global best practices, was appointed; after two years, key recommendations were presented to Durban business leaders and the city’s leadership.

“The city needed to make a major ‘step change’, so a whole new strategy has been workshopped and a new organisational structure identified. Invest Durban is set to more than triple in size to facilitate its resources and impact.

“Invest Durban works closely with the Department of Trade and Industry, Trade and Investment KZN, the Durban Chamber of Commerce and Industry, the KZN Growth Coalition, and state-owned enterprises such as Dube TradePort, the Development Bank of Southern Africa, and the Industrial Development Corporation. Key partners include South Africa’s largest banks, audit and advisory firms, and sector-based organised business bodies, all working together to promote investment in Durban. Similarly, the diplomatic community has been engaged, informed and partnered with for mutual investment benefits. These partnerships will be further formalised and implemented via the newly established Team Durban Advisory Forum. As an external advisory team, Team Durban will advise city leadership on how to attract investment and improve the cost of doing business. “eThekwini has many advantages, including being home to one of the

20

SOUTH AFRICAN PROPERTY REVIEW

continent’s biggest ports. The port has been undergoing an optimisation programme and can take the largest vessels under construction. Transnet is matching its capital expenditure to global demand, and although there has been a slowdown, it has provided the time to deliver on requirements to that demand.

“Invest Durban covers the area from the Durban Metro all the way to Zimbali, Scottburgh and Cato Ridge – about 2 500km², which amounts to two-thirds of the entire provincial output – and has a four-part mandate: 1. Investment, promotion and marketing; 2. FDI identification, attraction and facilitation through to ribbon cutting; 3. FDI aftercare, retention and expansion, which includes the development of fourthgeneration hybrid hard and soft services as set out by the Global Network of Investment and Promotion Agencies, put together by the United Nations and the World Bank; and 4. Investment policy and advocacy, feeding back into the system and developing market intelligence to build improvements to what will impact investments.

“As Invest Durban increases its capacity, it is proactively getting what Durban needs,” says Curtis. “Last year saw the largest ever business-and-government-led mission to the UK, where 45 executives had 65 faceto-face business meetings over four days.

We have recently returned from the UAE, where we attended the 9th Annual Investment Meeting in Dubai and the Bloomberg Invest Abu Dhabi summit.

We had two significant outcomes – a commitment by a leading Egyptian manufacturer willing to invest in South Africa, and a promise of a business mission

visit through the Chamber of Commerce set to take place at the end of May.”

Logistics in the limelight The September 2017 issue of Property Review carried an interview with Mduduzi Dlamini about the development of Cato Ridge. This time around, we spoke to Warwick Lord, CEO of the Cato Ridge Consortium. “Economically, KwaZuluNatal is small compared to Gauteng, but it is punching above its weight,” he said.

“The key focus is the Durban port, which is central to South Africa’s economy, and the port services Gauteng and the SADC region. Because the port is working close to capacity and there is a high amount of congestion, there was a huge requirement for more warehousing and distribution facilities. This led to the development of the Cato Ridge intermodal logistic hub.

“Cato Ridge has been in planning for the past 15 years. We’re developing it as a private sector participation (PSP) project, which falls under the government’s Strategic Integrated Projects plan – the SIP2 Durban-Free State-Gauteng logistics and industrial corridor. We approached the government for help in facilitating the development of this hub. The aim of SIP2 is to strengthen the logistics and transport corridor between South Africa’s main industrial hubs and to improve access to Durban’s export and import facilities.

“As a PSP project, Cato Ridge’s longevity and intelligence lies with us as the developers. We are able to develop and aggressively attract investment, and create the technological overlay needed as the project proceeds. Because we are the master developer, we understand that real jobs and development come from client relocation. In order to attract like-minded participants, we have set out property guidelines, much like a ‘homeowners association’. Cato Ridge is a one-stop package, and potential participants are encouraged to buy into the full project.

Transnet has already bought into the project and developed the CatCon terminal, which is proof of concept – but there are no storage facilities yet, and we are starting to extend the proof of concept to allow for commercial expansion.”

regional roundup – KZN Land security “The footprint that we are developing is 850 hectares,” said Lord. “We have secured 385 hectares, and are in negotiations with landowners to purchase additional land on an incremental basis. We are set to break ground on 1 July, and have active government support. The KZN MEC is enthusiastic about the project, which will bring a much-needed economic boost and upliftment opportunities to the area. As the master developer, we look forward to being instrumentalin providing employment and skills development. Because this is a 20-year project pipeline, we see the potential for an ongoing stream of labour opportunities, as well as for enhancing SMEs and entrepreneurship through collaboration with the local TVET College and the development of our own Skills College. Both educational institutions will service innovation and provide maintenance of both the rail and the logistic activities that will come out of this project.”

The future of logistics “Technology is going to play a large part in the lifetime of this project, so we are looking at international best practices,” said Lord. “Speed and turnaround are going to be major factors in the success of the node. To this end, the consortium needs to be more than just a developer: we are morphing into a logistics company with a strong IT development base to bring a more efficient system to market.

We are examining the logistic connectivity between Durban’s port, the route along the N3, the NATCOR (Natal Corridor) Rail line and the multi-product pipeline. (and ultimately through to Gauteng).

“Big data is going to be key to our efficiency – we will have to make use of ‘smart port’ technology so we can track goods from as far away as possible, and tell a trucker that his slot for unloading or collection will be ready at a certain time.

For this we are going to have to link into datasets that are outside our control – third-party data such as SANRAL’s toll system, and individual tracking systems such as those used by Amazon, DHL and other courier companies. We will need neutral data to give us pre-determined, calculated timing. Once a ‘box’ arrives it

can be stacked, and drone technology can be used on pre-described routes to scan codes and determine where goods are.

“This logistics offering requires the use of forward-thinking technology. It needs us to be innovative and develop hi-tech distribution capabilities. We can leapfrog some of the problems that have been encountered in other parts of the world by observing their systems and procedures, and ‘cherry-picking’ and adapting them to South Africa’s needs.”

●

●

One-stop shop: Dube TradePort Corporation According to the Dube TradePort Corporation (DTPC) CEO Hamish Erskine, the national government supported the establishment of the DTPC – and a new international airport – as a public-private partnership (PPP) as far back as 2004. The DTPC opened officially in 2012, and the first private sector investment into the Dube TradeZone was secured in 2013.

The DTPC website describes the TradePort as being strategically located on the east coast of South Africa, linked to two of Africa’s major seaports and major national roads, and home to King Shaka International Airport. Dube TradePort is thus positioned at the intersection of local and global intermodal transport routes.

Dube TradePort’s master-planned airfreight and passenger hub consists of five business zones: ● Dube TradeZone – a prime, fully serviced industrial precinct of 77 hectares, growing to 300 hectares,

●

●

for electronics, pharmaceuticals and aerospace manufacturing, assembling and distribution; Dube Cargo Terminal – a stateof-the-art cargo-handling facility with digital tracking and secure cargo flow through on-site statutory bodies, which prides itself on 0% cargo loss since inception in 2010; Dube AgriZone – an advanced agricultural precinct that provides world-class facilities and technical support for propagating, growing, packing and distributing high-value perishables and horticultural products through an efficient supply chain; Dube City – a 12-hectare premium business and hospitality precinct just three minutes from the passenger terminal; and Dube iConnect – a cutting-edge telecommunications platform and premier cloud-service provider, servicing the Dube TradePort precinct and KwaZulu-Natal’s only locally hosted cloud service, making it the premier offering for regional data recovery.

Durban Aerotropolis Having attained Special Economic Zone (SEZ) status in 2016, Dube TradePort was involved in the formulation of integrated regional spatial planning and development for the Durban Aerotropolis, in conjunction with local land owners, municipalities and state entities. The master plan came out in January 2018.

SOUTH AFRICAN PROPERTY REVIEW

21

regional roundup – KZN In the DTPC’s strategic plan for 2015/ 2016, we see the thinking behind this development. “In a globalised world, the role of airports as attractors for growth and investment is increasing,” it states.

“This has given rise to the concept of an Aerotropolis, which recognises the role airports play in driving growth. The KZN Provincial Growth and Development Plan, which was developed in response to and in alignment with the National Development Plan, has therefore listed the implementation of Durban’s Aerotropolis as a key intervention to facilitate the development of airports and achieve its strategic goal of providing infrastructure for the social and economic growth of KZN. This provides a framework for attracting FDI as well as national and local investment to maximise growth opportunities in the region.”

The DTPC is part of the government’s SIP2 mandate. The intention is to build a city using best practices, planning and the very best thinking. Land south of the airport was bought and consolidated to ensure land security for the project – and to increase the ability to drive investment.

The DTPC remains mindful of the environmental impact the development may have. To retain the integrity of the area’s ecosystem, the corporation worked with the eThekwini Municipality and Tongaat Hulett to develop a climate-resilience map projected to the next 100 years. This map will ensure that all development in the area can work from a common base.

Durban as a city has a population of more than 3,9-million. Projected numbers for the Aerotropolis indicate the new city will be home to about 1,5-million people.

The global trend is densification and better utilisation of city infrastructure.

The government has realised it cannot

22

SOUTH AFRICAN PROPERTY REVIEW

do it all and is encouraging PPPs as a way forward, to open up opportunities for local businesses to benefit from the economic growth in the region. The DTPC is the implementing agent for the Aerotropolis, and while it hasn’t officially been launched, work is under way with the earthworks platform – the biggest of its kind in KZN and possibly South Africa.

Erskine encourages an open working environment, where planning together to address concerns and problems is the rule of thumb. The DTPC as the landlord doesn’t sell the land; it allows for longterm leases, which then puts sustainable revenue streams in place. He has also encouraged private-sector developers to take up opportunities within the zone to drive momentum and hopefully be part of South Africa’s economic recovery.

Tongaat Hulett: KZN’s land-development catalyst Rory Wilkinson, Planning Director at Tongaat Hulett Developments, is aware that eThekwini’s population is expected to grow to 4,4-million by 2030. This growth continues to sustain demand in the residential sector across all income groups. The unprecedented migration of those seeking a better life through the urban promise underpins Tongaat Hulett’s principle of new city development – of creating compact, intense mixed-use environments that enable and promote economic, social and spatial inclusivity.

Bridge City Tongaat Hulett sponsored a city tour during last year’s Convention. This took in Bridge City, now a functional, vibrant new urban precinct that combines retail, commercial, business and residential uses with public-sector facilities, services

and infrastructure in the heart of the Inanda, Ntuzuma, KwaMashu and Phoenix communities. Identified as a Presidential Project, Bridge City is now a thriving precinct established in partnership with the eThekwini Municipality.

Cornubia Cornubia, spearheaded in collaboration with eThekwini Municipality, is located in the northern corridor of Durban.

Transforming the landscape of the region, it consists of Cornubia Town Centre (370 000m² mixed-use), Cornubia Business Hub (170 000m² general business, retail and commercial), Cornubia N2 Business Estate (160 000m² commercial, warehousing and business), Cornubia Industrial and Business Estate (80ha industrial), Umhlanga Hills (2 100 affordable homes, new schools), Blackburn (1 700 affordable new homes) and Marshall Dam (620 000m² mixed-use and 1 100-unit residential).

Ridgeside Ridgeside is a four-precinct development that will complete Umhlanga Ridge. The 140-hectare site lies between Umhlanga Rocks Drive and the M4, and will link La Lucia Ridge, Umhlanga Ridge and Umhlanga Rocks. A ribbon of coastal forest runs along one boundary while a natural valley runs through the land – this asset is being preserved as green space for the benefit of the surrounding communities and users within Ridgeside. Precinct 1 houses FNB’s corporate HQ, Nedbank’s regional head office, Illovo’s head office and Holiday Inn Express. Precinct 2 is a mixed-use precinct that includes a 640unit retirement village based on a liferights ownership model, owned by Amdec and PSG. Precinct 3 is the Ridgeside Office Park, a fully sold-out business precinct

regional roundup – KZN and home to multinational and blue-chip companies such as Investec, Vodacom and Shepstone & Wylie. Precinct 4 is a 90unit freehold private estate. (Phase 2 will see a further 500 apartments developed.)

Sibaya Coastal Precinct Located between the natural boundaries of the Ohlanga and Mdloti river estuaries, and stretching from the N2 highway to the Indian Ocean, Sibaya Coastal Precinct incorporates seven nodes and spans more than 1 000 hectares of beach, forest, river and hilltop land, of which 600 hectares will remain open. Node 1 includes the Ocean Dune development and the soonto-be-completed Pebble Beach and Coral Point apartment developments as well as Shoreline retirement housing and the exclusive Signature residential estate.

Construction in Node 5 is progressing rapidly with the likes of Belize, Saxony, Gold Coast and new ADvTECH school in various stages of implementation.

The airport region ● oThongathi AeroDistrict (formerly Inyaninga) is an integrated humansettlement development. At its core lies a large-scale industrial/logistics platform with rail access, supported by business activities in conjunction with a range of residential, commercial and social facilities. Between 8 500 and 10 000 residential units in a range of types will be developed; a multimodal 250-hectare industrial/logistics hub will complement 500 000m² of commercial floor areas. ● Compensation Industrial and Business Estate is one of the few tracts of largescale flat land with direct rail and road access. The site has industrial and logistics potential close to the airport.

● Ushukela Drive is situated at strategic location and inherent natural the LAND northernDEVELOPMENT end of King Shaka PORTFOLIO assets, Tinley Town is perfectly positioned NOVEMBER 2018 International Airport’s 3,7km runway. to present a significant opportunity With national- and provincial-road for accelerated tourism and economic exposure and access, this site is development on the KZN North Coast. superbly positioned for logistics, “Tourism has been identified as both warehousing and business-park uses. a national and provincial priority and, together with its associated ancillary economic activities, will have a significant Ntshongweni Urban Development Situated between low-density residential impact on socio-economic growth and suburbs and formal and peri-urban development in the region,” said Tongaat settlements, it presents an opportunity Hulett Developments Managing Director to create a unique, integrated urban Michael Deighton in a press release. “To been working closely environment in a prime location to this end we have LAND DEVELOPMENT PORTFOLIO 1 service an array of different communities with the local and provincial government in Durban’s under-resourced Outer West to present the opportunity to solicit area. The first phase of development is national and international brands looking the recently launched Mall of the West, at opportunities to establish themselves an 85 000m² regional retail offering set in KwaZulu-Natal.”

The strategic objective of Tinley Town to start construction this year that comes with substantial local-empowerment is to create enhanced value in the surrounding assets, which will benefit ownership. from proximity to the resort and higher pricing premiums as destination value Tinley Town Tinley Town is aligned with the provincial takes hold in the area. Acting as an government’s Tourism Master Plan, which economic driver, Tinley will transform calls for development of key iconic projects the region as real estate and other throughout KwaZulu-Natal. Given its economic growth opportunities soar.

SOUTH AFRICAN PROPERTY REVIEW

23

entrepreneur one-on-one

On point with Property Point Property Review speaks to Shawn Theunissen, Head of Corporate Social Responsibility at Growthpoint Properties and the founder of Property Point. Launched by Growthpoint in 2008, Property Point has established a decade-long track record of successfully developing sustainable small businesses. Over the past 10 years, it has changed the small-business landscape in the property sector and has facilitated market opportunities worth R1,4-billion for more than 168 small medium enterprises (SMEs) that have taken part in its two-year enterprise and supplier development programmes. It has also created more than 2 465 full-time jobs. Over the coming months, Property Review will be showcasing some of the businesses that Property Point has taken under its wing

By Mark Pettipher

T

owards the end of 2018, Property Point won a number of accolades, including Accelerator of the Year for its exemplary programme. By association – and in his personal capacity – Theunissen won the Aspen International Award for Development Entrepreneurs Member of the Year.

The Accelerator of the Year award recognises and encourages best practices in the enterprise development space. Winning the award encapsulates the heart of the enterprise development ecosystem. Its categories consider a variety of programmes that have benefited from various Small Enterprise Development Agency (SEDA) and Department of Small Business Development (DSBD) initiatives.

“Key to Property Point’s approach is creating partnerships with government,” says Theunissen. “Previously, the private sector focus was on ‘ticking boxes based on corporate social initiatives’.

Through partnering first with the DSBD and now with SEDA, we are better able engage with the government to extend our hand to welcome new SMEs, and to be able to develop meaningful and positive economic development as a result.

“The businesses that will be highlighted in the coming months are businesses that have come from the intake that was done with SEDA. Property Point is the recipient of the Enterprise Incubation Programme; as such, we have received ‘ground funding’ for three years. We are in the second year of going through the process.

“Core to our initiative is to open up market access opportunities and to engage with the property sector market.

Ultimately we want to see that the businesses grow, that they are able to 24

SOUTH AFRICAN PROPERTY REVIEW

Shawn Theunissen, founder of Property Point

create jobs, that they are sustainable and that they add value to the market supply chains.”

Theunissen explains how Property Point’s association with SEDA came about. “I was part of a delegation that was invited along with government representatives by the Danish Embassy to visit Denmark and take an ecosystem tour of the country, to see how it engages with businesses,” he says. “The Director General of Small Business Development and the CEO of SEDA were also part of that tour.

“That was the first time we were able to engage with SEDA and demonstrate Property Point’s programme. After the tour, we were invited to apply for SEDA’s Enterprise Incubation Programme. In a sense this is testament to the government seeing the bigger picture of us as an organisation being able to support small businesses.

“Through partnerships and various stakeholders, Property Point is a self-

funding, self-supporting organisation that has a synergy with the government’s agenda of supporting small businesses.

By looking at the bigger picture, which goes beyond BEE, we are able to effectively support those businesses in order to have a positive effect on growing South Africa’s economy.

“It is critical that both Property Point and government look at how to identify small businesses, how to support them effectively in the marketplace, and how to grow them and create the jobs that we’re speaking about.

“In executing and positively engaging with both private and government stakeholders, we enhance our appeal and attractiveness as a business incubator partner when we interact with companies that want to make an impact and invest in our country.

“We identify SMEs in a number of ways.

Through Entrepreneurship To The Point, our exciting entrepreneurship network hosted monthly by Property Point, small businesses are invited to attend our seminars – and we channel our efforts to find suitable businesses through networking. Through SEDA, we identify market opportunities and generate a call to action aimed at interested parties.

“We do all the ‘legwork’ beforehand.

During the selection process, we identify a business’s growth potential as well as the willingness of the individual involved.

We have a Property Point culture and a way in which we do business, so we want to make sure that the individual will ‘fit in’ with that. We asses the individual’s attitude and their willingness and ability to take advice.

entrepreneur one-on-one “Following the initial assessment, we engage industry experts to interrogate the interviewee as a panel to get a deeper understanding that involves the stakeholder in the development process. This legwork allows us to mitigate the risk of failure.

“The process is more rigorous than going through a procurement process: it allows for confidence to be built, it ensures that the supply-chain owner is in sync with funding, it examines the businesses challenges and how to build capacity, and it ultimately plots out how to execute the business.

“In essence, while working with Property Point, a business is vetted, trialled and bettered.”

As if more than 10 years of helping businesses grow isn’t enough, Property Point is also in the process of putting the final touches to a detailed report on evaluating its own progress. “We have adopted international best practices and have used a results-measurement base,” says Theunissen. “Theory tells us that SMEs are key to stimulating economic growth.

Our study is a comparison between small businesses that have gone through our programme and those that have not. We examine the growth journey to see the level of growth as well as the variables that may have influenced that growth.

“Having created R1,4-billion worth of market access, we are able to show that there is a cost funding ratio of R14 for every rand invested.

“This adds to the attraction for companies to be able to account for their BEE spend under Enterprise and Supplier Development. They can see a positive return through our support development, mentorship, coaching and industrybased exposure systems and processes, as well as our proven track record of encouraged growth.”

What Agrizzi’s state capture testimony means for entrepreneurs The small business sector is vibrant, and entrepreneurs are passionate, focused and capable of building the kind of companies that will grow our economy. We see it every day at Property Point, a business-performance programme that has been running for 10 years

By Shawn Theunissen (First published by Eyewitness News on 29 March 2019)

I

t is the dream of every entrepreneur to stand on his or her own feet. It’s their right to pursue the business of their choice. They have the right to fight on a level playing field; they have the right to succeed and fail on their own terms.

However, corruption’s shackles are holding the entrepreneurs back as they face an increasingly inescapable moral dilemma: pay the bribe for the lucrative tender or opt for legitimacy.

It was cutting to watch former Bosasa Chief Operating Officer Angelo Agrizzi’s testimony before the Zondo Commission into state capture. When millions were allegedly kept aside for bribes every month, the ease with which it was done seemed almost farcical. What message does it send when a substantial business at the top of the food chain clearly believes that bribery and corruption is the only way to get ahead?

What chance do small business owners and entrepreneurs stand in a game that is so rigged against them?

Entrepreneurs we spoke to were gutted by the testimony at the commission of inquiry. The experience of watching the video of bundles of cash for bribes being counted was harrowing.

The business owners told us it made them feel foolish for doing things the right way. They felt they were only legitimising an illegitimate process by doing things on the up and up. People who are putting in the hours to build their business should not be made to feel this way for doing the right thing.

We know many entrepreneurs put an enormous amount of time into formulating a tender. All too often it involves compliance issues, copies, stacks of hand-written forms, certified

documents, and a heap of regulations that are onerous on small firms.

Any small oversight on your tender response will get it disqualified. Above all, it takes the businessperson out of the business for days to prepare the documents. It is a massive unrecouped cost in time, particularly in a system that now appears to be mostly rigged.

The Bosasa revelations – and there are many similar incidences of such corruption – mean that the temptation to short-cut the system is always there.

While most of the entrepreneurs we have interacted with shy away from the corrupt path, we cannot blame them for being tempted by a seemingly easier route.

Corruption circumvents principles for quick riches and short-term gains.

Too often entrepreneurs are easy targets for the corrupt – with school fees to be paid and wages due, it is easy to see an entrepreneur cave in to the pressure by participating in the world of the proverbial brown envelopes.

South Africa is standing at the edge of a moral precipice. Entrepreneurs are at risk of bowing to the system of corruption or being bullied out of it. They need our protection – or the much-vaunted economic recovery, on the back of the rise of SMMEs, that South Africa is so desperate for, will be nothing more than a pipe dream.

Corruption goes against the principles of reputation, risk and relationship that we teach entrepreneurs at Property Point. These values should govern the way entrepreneurs build their business.

Being in business is more than cash flow and a snazzy marketing pitch – it is an expression of ideals, where how we make the money is as important as making it.

SOUTH AFRICAN PROPERTY REVIEW

25

entrepreneur one-on-one

Passionate about project execution In the first of seven face-to-face interviews, Property Review talks to Eddy and Emily Mokobodi about their entrepreneurial journey, their passion for the industry they service and their achievements thus far

By Mark Pettipher

T

Eddy Mokobodi

Emily Mokobodi

“ 26

We always look for

”

ways to cross-sell

SOUTH AFRICAN PROPERTY REVIEW

alking to Eddy Mokobodi, you get a sense of maturity – an understanding that the drive to succeed is more than just words. Hiseko, derived from the Xitsonga word for passion or a strong feeling or emotion, is true to what Eddy and his wife Emily hold dear to their heart.

Born out of necessity, self-funded Hiseko came about after Eddy found himself out of work. He is a BSc Honours graduate, trained at Wits University in construction management. Using his personal overdraft, Eddy started Hiseko because he was familiar with the space.

“We focus on offering our clients services within the general building and construction space as well as the civil engineering works sector,” says Eddy. “Our scope of work focuses on construction, project management and the execution of construction works. Our clients are from the private sector, and are mainly in commercial buildings and construction.

A large component of our activity revolves around maintenance contracts.”

Aged 28 at the time, Eddy thought the property industry was for older people. Today his level of maturity defies that notion. There are two fulltime people employed by Hiseko – Donovan Pentz (sales and marketing) and Eddy himself (construction management) – along with six regular temp staff. “Personnel gets bulked up as work comes in,” says Eddy.

Eddy’s management team graduated from Wits and the University of Johannesburg – Donovan has an LLB, while Emily Mokobodi has a BCom in economics. “Our collective skills base covers basic construction and project management, construction project lifecycle management, business sales and marketing, cost forecasting, tendering and procurement, as well as on-site quality control.”

To become a reliable and competent business partner in engineering and the built environment is a key driver in the Mokobodis’ journey. “I was told about the Property Point Incubator Programme by two separate people, one an alumni of it,” says Eddy. “Their passion and proof of success is what brought me to Property Point. The selection process is rigorous; you need to demonstrate a willingness to learn and be mentored, and have a good knowledge of what your business is.

“There are two sides to our business.

Hiseko focuses on construction, facilities management and quantity surveying; Sakisa Lighting complements the work of Hiseko by concentrating on lighting and lighting supplies.”

BCom graduate Emily has always been drawn towards the “artistic” side of the property industry. “Lighting forms an integral part of interior design,” she says. “The lighting side of our business uses locally sourced and manufactured components. We work directly with original equipment manufacturers. Working with electrical engineers or directly with our clients, we take the specifications and find the best solutions possible.”

Sakisa Lighting is a player in the LED and energy-efficient lighting space. “We understand that LED lighting requires technical knowledge, so we’ve invested a significant amount of time in equipping the sales team with a working knowledge of solutions that could potentially meet our customers’ brief,” says Emily. “Our modern lighting systems are based on complete smart, electronic luminaries with adaptable fittings where necessary.

We offer all sorts of lighting solutions for commercial, retail, hospitality, residential, architectural and industrial applications.”

“We always look out for ways to cross-sell,” says Eddy. “Maintenance and lighting go hand in hand. From accent

entrepreneur one-on-one

Erection of scaffolding to install industrial pipework

lighting to industrial and urban lighting solutions, we have locally sourced products manufactured by original equipment manufacturers to meet most of our clients’ needs.”

Driven by Eddy’s passion to succeed, and sales and construction management skills, and tempered by Emily’s strategic and financial acumen, both companies are sure to grow. The couple’s ambition is to grow the business and its offshoots into a medium-sized family entity with multiple income steams – all related to the property industry. They want an entity that offers long-term sustainable jobs, employing a younger, similarly aged workforce.

A look at the two brands’ websites, hiseko.com and sakisa.co.za, you can clearly see the Mokobodis’ ambition of “passionately executing results” and the intent of becoming a key player within their respective space.

Every word on the Hiseko website tells a story. The name itself means passion, which indicates that the company is passionate about everything it does. The aim is to transfer this passion to all the people involved in (and with) their teams.

The engineering space and the built environment are both based on the successful execution of projects. Hiseko has adopted the philosophy that all projects undertaken need to be executed in a manner that meets and exceeds the client’s needs and expectations.

Tile work on the floor of a bar and lounge area for a hospitality group

Completed renovated dealership for a multinational brand

Hiseko believes in showing positive results in everything that it undertakes.

This is of the utmost importance. The company is committed to the continuous benchmarking of its results within three measurable constraints: time, cost and quality.

A 100% black-youth-owned company, Hiseko has already picked up some impressive contracts: Hyundai: A dealership renovation that included tiling, electrical work, painting and office remodelling.

Sun International: The Maslow is an ongoing contract that involves carpentry and restoration of hotel room furniture. In the past, Hiseko was also involved with the Maslow roof cleaning and roof-tile installation, its gym renovation, various flooring projects (including road marking), and electrical upgrades to the conference facilities, laundry and main bar areas.

Radisson Blu Gautrain hotel: Office partitioning work and smaller maintenance works to the hotel.

Enza construction: Ceiling and electrical fittings as well as the installation of downlights.

Paarl Media, Linbro Park: Partition wall for offices in various areas, gutter installation, storage area gate upgrade (including gate fabrication and painting), as well as structural steel and brickwork for a warehouse extension that included sheet cladding of the exterior.

SOUTH AFRICAN PROPERTY REVIEW

27

tech review

Putting the “real” in real estate With rapid advancements in technology, consumers across the board are being presented with unique services that are capable of making their lives easier and more convenient.

Almost all businesses have found this to be extremely beneficial, and have begun incorporating these innovative technologies into their service offerings

By John Bradford/Dreemar Africa

W

hen you think of real estate and technology, our horizon does not seem to extend further than the Internet.

Few real estate agencies in South Africa show properties that incorporate video and possible 360-degree views together with a walk-through of the home.

What is augmented reality?

We’ve all been exposed to 3D movies, and our minds are blown away when we experience such a production, during which most of our senses have in some way have been stimulated. The experience is ultimately surreal, leaving you feeling very much “part” of something despite this not being the case.

With the development of augmented reality (AR), we are now able to bring a product or service to life by combining digital information and flat print into a single space when overlaid onto the actual physical world.

AR has the ability to provide a unique service to the real estate professional by showcasing properties, buildings, lifestyle estates and apartment blocks like never before.

With more and more consumers having access to smartphones and tablets, and

How to use the Dreemar app 1. Download the Dreemar app from store.

2. Scan the images on these pages.

3. Watch them come to life!

For more information, email John Bradford at thepropertynavigator@gmail.com.

28

SOUTH AFRICAN PROPERTY REVIEW

with the continual development of apps, the explosion of AR could not have come at a better time.

AR in real estate So how is AR likely to revolutionise the real estate industry in South Africa?

Extensive research has already been undertaken in the US, which has led experts to believe that AR will have a huge impact over the next few years.

Some indications show that as many as 2,5-billion users will be searching for real estate in this way by 2025. Whether it is servicing a potential client looking for a property, a realtor showcasing a location or a construction company visualising changes to blueprints, AR will have a lasting and sustained impact on how business is done in the real estate sector.

AR is able to achieve the following: 1. Engage users through visual interactions.

2. Bring clarity about the product (in this case, a property) or service (such as financing schemes) being offered.

3. Create a great deal more publicity.

4. Capitalise on the fact that it is fully mobile.

5. Be able to reach a great deal more consumers.

6. Offer much greater costeffectiveness than, for example, having to take up large spaces in the printed media.

7. Increase brand loyalty.

8. Incorporate calls to action.

9. Offer accessible, accurate analytics – 24/7.

10. Allow buyers and renters to view properties without the intimidation of a sales or rental agent.

What will AR aim to change in real estate?

1. AR tours will put the “real” in real estate This technology will be highly proficient in unlocking the international investment potential within the world’s real estate markets.

Because AR is able to reach buyers on a global basis and create an increase in foreign investments, the technology will allow buyers to look at properties in Mauritius while they’re sitting at a dinner table in Cape Town.

tech review 2. It adds reality to what seems otherwise intangible It’s often difficult for a buyer or client of a property developer or architect to visualise the end product.

With AR, the developer/architect will be able to show prospective buyers and clients what the end product will be, adding a concrete level of tangibility and increasing the ability to pre-sell projects.

3. It will save real estate agents and clients time The first change that real estate agents will welcome is making the homeshowing process easier and more seamless for their clients.

AR is going to be a game-changer, allowing potential buyers to “experience” a home at another level, and better filter out the properties they do or don’t like, thus also saving agents time.

4. Buyers will narrow their options with fewer showings Prospective buyers will be able to get a much better feel for a home without physically going inside and looking.

This will allow buyers to narrow the pool to a smaller selection without too much effort.

How simply does AR work for the property broker and the consumer?

Realtors, developers, architects and auctioneers can benefit hugely from using this technology. They can contact us at Dreemar Africa, and we will assist with producing the required content

for our clients, or will work alongside the client to obtain the relevant material.

Our clients pay an initial administration fee, which allows us to set up their profile and capture all relevant data pertaining to their company as well as each consultant – such as telephone/mobile numbers, email addresses, social media profiles, and physical addresses (we use Google Maps).

Dreemar Africa is able to “create” the client’s experiences. We use video and photography, as well as 360-degree videography and photography. In addition, we will work jointly with architects and developers to create the appropriate plans for 3D experiences and video content from their highquality renderings.

Our clients have the option to either white label our app or integrate it into their existing app (if they have one), or to use the standalone Dreemar app. The costs for white labelling and integration vary, as they are largely dependent on the level of complexity.

Each clients’ consumers are able to download the Dreemar app at no cost from Google Play on (Android devices) or from the App Store (iOS devices). Once they have successfully downloaded the app, they need to allow their device to use the built-in camera as this is essential for scanning purposes – and they are good to go.

We advise our clients to use our AR icon – this will indicate to the consumer that the imagery in front of them may be scanned with their smart device. Once

they have downloaded and opened the app, all they need to do is follow the prompts to have their own AR experience. In most cases, we supply our clients with an instruction template that can either be used electronically or incorporated in their printed material.

Consumers are able to scan printed media and digital imagery by opening the app, holding their device over the relevant image or graphic and tapping to scan.

The visual experience will appear on the screen with the play icon. Next to this, we will also display Dreemar’s key differentiator: the “Calls to Action” icons.

This allows the consumer to tap the respective icons in order to call the service provider, email them directly or visit their website, view the service provider’s social media pages, or find them on open Google Maps.

Every scan and call to action is recorded for analytics. We allow our clients 24/7 secure access to this information, as it is vital to measuring the success of their marketing endeavours.

We have inserted some AR examples on this page for you to scan, so that you can experience our app and the ways in which it can work for you.

We know that augmented reality will not completely remove or replace the showing process – after all, it’s difficult to sense natural light, smells, sloping or spongy floors, exterior sound and other issues. However, it will offer your existing and prospective clients a tool to make their lives easier.

SOUTH AFRICAN PROPERTY REVIEW

29

new member one-on-one

Your essential turnkey supply chain partner While bigger developers and construction groups have well structured supply chains, one needs to think about the smaller developer – that small-medium enterprise (SME) that has been awarded a development contract and needs access to the gamut of services and products required to complete a project. This however in return opens partnering or outsourced opportunities for the larger players in the property or infrastructure sectors, considering new challenges faced within the South African property space. Reinier van den Bergh of The Essential Group tells us more about the company’s partnership initiatives.

By Mark Pettipher

T

o know how the Essential Group has got to where it is today, is to have an understanding of the South African property development and maintenance supply chain environment.

Essentially, the group was founded in 2005 to partner with independent, community-based, owner-run hardware stores as a national buying group. This quickly evolved (by member demand) into a national brand, which became known as Essential Hardware. Soon thereafter, a series of value-adding services was brought into the offering to include high-quality operational science and marketing support.

“The company is moving beyond being a hardware retail-buying group – it is morphing into a solutions-based entity,” says Group General Manager Reinier van den Bergh. “In February last year, we began an extensive analysis of our industry and developed an 18-month implementation plan to establish The Essential Group as a 360-degree cross-industry partner that can integrate seamlessly with both large and small companies, with a key focus to support entrepreneurial SMEs through multiple enablers.

“Although the independent retailer has outperformed that within the building and hardware market within the last year, at the moment, the building and hardware market has definite signs of over saturation. In order to keep up with South Africa’s current demands, we looked at how The Essential Group can play a key role in supporting smaller SMEs, as well as enabling solutions to align these SMEs with larger property and infrastructure role players by becoming a 30

SOUTH AFRICAN PROPERTY REVIEW

Reinier van den Bergh, Group GM at Essential Group

“

The solutions we offer are scaleable; it’s not a case of ‘one solution fits all’.

We consistently seek synergies between solutions and value systems through engagement with our suppliers, consultants and network members

”

solutions-based partner to these larger infrastructure role players, for example: developers, property groups, facilities management groups, or occupiers of space.

There is a need for a holistic overview to find ways to help those SMEs gain access to business analytics, competitive pricing on material and product, essential training and skills development, marketing services, operational systems and procedures, compliance knowledge, quality management and control mechanisms. For this we had to implement specific enablers, focused channels and bespoke technology.

“Our position is to enable and focus on business-to-business transformational partnerships, which will leverage the advantages enjoyed by being associated with a group with a national retail footprint of more than 300 members as well as hundreds of supply partners. By utilising our services and initiatives, a developer, facilities manager or an SME can benefit from our sustainable, consistent and industrycompliant buying capabilities. When it comes to purchasing, our buying channel, procurement and sourcing expertise allows for economies of scale; at the same time, all quotes and purchases are linked to our regulation-compliant and app-supported buying solutions software.

“When we partner with organisations or individuals, we offer a number of BEEcompliant services. We unpack each project using an eco-system model, and assess the requirements of the funder/developer, the main contractor, the subcontractor and the labour force. Labour may need to be upskilled; to that end, our business and training centre – while not an incubator unit – offers an essential one-stop shop, providing expertise and putting together the required training, systems, procedures, capital and funding guidance, quality and quantity controls, as well as determining a community’s involvement.

“In order to assist with enterprise development, we ‘cherry-pick’ the very best of our customised solutions – whether that’s buying, infrastructure support, supply or marketing. The solutions we offer are scalable and customised; it’s not a case of ‘one solution

new member one-on-one

Sourcing analytics

Procurement transformation -

-

Hypothesis-led diagnostic Sourcing assessment Opportunity identification Goal-setting Programme establishment Cross-functional team facilitation Project management Change management Transformational support Transformational execution Goal delivery/fulfilment Procurement training

Strategic analysis Stakeholder analysis Category analysis Product selection Supplier analysis Supplier selection criteria Pricing analysis Supply chain analysis Operational model analysis Risk and compliance analysis Process mapping Total cost of ownership Cost-benefit analysis

Supply chain optimisation

Focused categories -

Retail Infrastructure Property IT and systems Operations Professional services

A substantial preferred supplier network

-

Delivery methodology Procurement processes Purchasing models and precesses Pricing strategies Supplier strategies Finance Bulk buying Compliance Supplier vetting Negotiation Process re-engineering Inventory management Inbound logistics Outbound logistics Warehousing Distribution Integrated solutions Communication Supplier development Training

B-BBEE status regularly updated

340+ retail members across southern Africa Contracts and trading agreements through group-buying power

Partnering and accreditation with developers and contractors nationally

fits all’. We consistently seek synergies between solutions and value systems through engagement with our suppliers, consultants and network members.

“The Essential 360-degree Growth Solution is about changing mind-sets as well. Our approach pursues bridging trust, building mentorship programmes and retaining industrial and institutional knowledge. Typically, we have a good knowledge of a project’s structure and facility maintenance programmes, as well as the disciplines required to achieve the end result; as a result, we draw on industry professionals and expert advice through our partnership model – and we know how to attain results.”

The Essential Group’s head office, on Booysens Road in Johannesburg, houses the company’s first enterprise development business centre, Site 66, which will be mirrored across the country. The space includes two training rooms, a 200m² exhibition area, a pause area, six meeting rooms, three practical training rooms, exterior “wet work” training areas, coworking spaces, a canteen and a Bureau Net area. Van den Bergh is quick to emphasise the cooperation value of such a unit. “SMEs and individuals can utilise the facilities in any number of ways,” he says.

“We have considered each element that is needed when running a property development project, a maintenance project, small contractor business, retail business, as well as all the skills and knowledge required. Whether you need to hold progress and stakeholder meetings in a common place, perform specific product demonstration, fulfil specialised training requirements or just need a quiet space to compile a tender document and generate the bill of materials, Site 66 has been designed with the end user in mind.”

Negotiations and businessdevelopment managers are fully integrated into daily operations Corporate social investment (community) Enterprise development

www.essentialgroup.co.za SWITCHBOARD: 011 434 2362 SOUTH AFRICAN PROPERTY REVIEW

31

new member – tech focus

Smart tech aids controlled water usage In conversation with Shannon Vermaak, Marketing Manager of Utility Systems, we learn about taking water management to a new level with smart prepaid water management devices

C

urbing municipal water losses should be a priority, not only because there won’t be enough water to go around in a few years, but also because of the financial and economic implications.

South Africa spends R7-billion a year on water losses – money that could be used to upgrade infrastructure and build more catchment facilities.

Aside from their ability to alert municipalities to leaks, prepaid meters also drastically reduce government’s admin costs.

Collecting data from prepaid meters is also more efficient than the manual collection required for post-paid meters.

A radio-link receiver can be fixed, vehiclemounted or carried by municipality personnel. Data is transmitted to the receiver as soon as it is within signal of the meter, which means that meter readers don’t ever need to enter the property. This facilitates walk/drive-by meter reading and the capturing/navigation of routes.

Sectional title management companies can bill more accurately with prepaid systems, instead of splitting consumption equally between units within a complex.

What is “prepaid water”?

Prepaid water means that the consumer purchases water credit in the form of a prepaid water token. When entered into the user interface unit (located in the consumer’s home), the token instructs the water management device to allow a certain amount of water through the meter before closing. Consumers can track usage, load credit remotely and decrease the possibility of bill shock as a result of leakages or incorrect monitoring.

A pulse output meter can also be used to limit the water flowing to a particular area. This helps municipalities and property owners to control the amount of water used at certain outputs, and prevents wastage in low-income households that can’t afford to pay for excess use of this basic need.

They can make payment in smaller, frequent increments. This prevents them falling into debt, which can compound in a post-paid arrangement.

If you’re a developer or an estate body corporate, visit the Utility Systems website – utility-systems.co.za – where you’ll find a list of approved distributors.

Who can access this technology?

How is it beneficial to municipalities?

This is completely dependent on the municipality. So even if you’re feeling inspired to install a smart water management device to enable prepaid water, you may not be able to – based on where you live or work.

That being said, most municipalities are beginning to embrace prepaid water management technology. So it may just be a waiting game. To find out your eligibility for prepaid water, approach your municipality and ask.

If you have a garden cottage, however, you can add an additional meter and smart water management device to the building, to ensure that your tenants don’t rack up huge bills in your name – and then refuse to pay, or leave.

Prepaid systems are a cost-effective solution to more sustainable water management in that they have a low cost of acquisition – and, by curbing water usage, capital recovery is possible within months. The systems are also able to distribute water equally, based on free-water quotas, water balancing and fluctuating demand.

In addition to their ability to alert municipalities to leaks, prepaid water meters can also drastically reduce government’s admin costs. This is because municipalities don’t need to chase bad debt or budget for legal fees on unpaid accounts. Public sector cash flow is immediately improved.

How does it affect rental properties and bodies corporate?

No – this is a myth. Prepaid and post-paid water cost exactly the same. (It is illegal to sell municipal water above the municipal tariff rate declared.)

The bottom line is that even the simplest smart water management device can provide the tools to track and control water usage. Prepaid water meters are smart tools with the potential to revolutionise water-conservation efforts and revenue management worldwide.

But it’ll be a while before every South African household is able to benefit from this enormous potential.

The implications for rental properties and bodies corporate are significant.

Prepaid metering reduces admin to a minimum while removing the risk and frustration of late or non-payment of water bills. This is why housing estates are swiftly moving to prepaid water, as they did with prepaid electricity.

Gone are the days of splitting an entire estate’s water bill by the number of units. Prepaid metering means that users pay for their consumption only.

Is prepaid water cheaper?

SOUTH AFRICAN PROPERTY REVIEW

33

retail reports

An ever-evolving retail property market Competition in South Africa’s retail market is intense, with more than 25-million square metres of formal retail space currently, in excess of 2 000 existing shopping centres and close to three-million square metres of formal retail space in the pipeline. Broll Property Intel’s latest report “The Evolution of Retail” looks at how the retail property sector is evolving and highlights some of the changing retail, consumer and technology trends

“I

n the face of increased competition, shopping centre owners, developers, managers and retailers need to be alert to and agile in responding to the latest trends, consumer behaviour and technology in a fast-paced, ever-evolving industry,” says Elaine Wilson, Director at Broll Property Intel and Chairperson of SAPOA’s Research Committee.

According to the report, competition in the South African retail market is rife.

“As such, new offerings within centres, new retailer products and unique experiences for customers are vital in order to attract market share. The retail market is changing and evolving at a rapid pace, with innovation being one of the key success factors to survival.”

The report looks at Retail Trade Sales and Consumer Confidence levels in the country over the past 10 years, which provides insight into the growth of the industry, but also into how, in recent years, both retailers and consumers have been coming under increasing pressure. In this context, the report questions whether layby sales options are the way to go for retailers.

Layby sales options in the country were investigated in the report. It also zones in to the trend of international retailers and luxury brands coming into the South African market, as well as those that have exited. In addition, it highlights the future “Gen Z” consumers (those born between 1995 and 2009), and all things online that retailers need to consider, from the growth in online retail to social media and influencer marketing.

The wide-ranging report also tracks changes in the retail and shopping 34

SOUTH AFRICAN PROPERTY REVIEW

Elaine Wilson, Director at Broll Property Intel

centre environment itself, such as the growing trend of experiential stores and the growth of cashless payment systems.

On the consumer front, Theresa Terblanche, a Divisional Director at Broll, says that South African consumers are anticipated to become more mindful of spending, focusing more on needs and less on wants. “This may begin to negatively affect retailer turnovers, which could result in store closures, consolidation and downsizing,” she says.

According to the report, with consumers under continued financial pressure, retailers are feeling the ramifications. “This is evident in the number of retailers – including Hamleys – recently going into business rescue, and others closing their doors, as was the case with Stuttafords, Nine West and Mango,” it says.

Looking into layby sales, the report asks whether this could be a way for retailers to sell goods to cash-strapped

consumers, instead of offering credit that in certain instances is to a retailer’s own detriment.

Broll Property Intel undertook an investigation into the various layby terms offered by retailers. This included layby cancellation fees. “The research showed that certain retailers prescribed a minimum spend… Furniture retailers tend to allow a 12-month layby period, while clothing and other retailers offer periods of between three and six months,” the report notes.

Meanwhile, in terms of international retail brands operating in the country, the report states that over the past few years South Africa’s retail market has seen the entry of a number of international retailers, be it luxury brands that play on consumer’s aspirations or middlemarket retailers (such as H&M) that consumers have been hyped up about.

“Noteworthy in the retail market has also been the exit of various brands, including the likes of Nine West, Mango and Dunkin’ Donuts. This raises the question of whether international retailers understand the South African consumer, or whether our market is being misjudged.”

“The South African retail market cannot be approached with a ‘cookie cutter’ model,” Broll Portfolio Executive Marion Plint explains in the report.

“Pricing and offerings need to be tailored to suit our unique consumers.”

“The challenge in South Africa for luxury brands is that the shoppers who can afford them often opt to purchase these items during their overseas trips at cheaper prices, instead of at home for an inflated price,” Terblanche adds.

retail reports Layby sales options in the country were investigated in the report. It also zones in to the trend of international retailers and luxury brands coming into the South African market, as well as those that have exited. In addition, it highlights the future “Gen Z” consumer On the online shopping front, the report notes that not all retailers have jumped on the online train, with some still offering a single-channel shopping experience either in bricks-and-mortar stores or online only. The question then is whether these retailers are losing out on potential customers.

“Retailers cannot afford to miss out on the opportunities that omnichannel presents,” says Terblanche. “With the increase in comparative shopping occurring online as well as via social media, omnichannel has become the order of the day for all retailers.”

In terms of social media and the growth of influencer marketing, the report notes that the Global Web Index shows around 30% growth in people using social media to research/find products to buy. “Retailers and brands need to evolve as consumers demand digital integration, whether it be chatting with friends, tracking daily health activities, reading the news or finding your soul mate,” it says.

Meanwhile, the report observes that retail stores are becoming experiential to draw in customers: “Experiential stores are becoming more profound within the market, and the growth of such stores is envisioned to continue.”

SAPOA on retail trends South African shopping centre trading performance, as measured by the IPD Trading Density Index, recorded its first positive year-onyear growth in six quarters. (The previous quarter, initially positive, was revised down to -0,6% y/y following additional data received.)

The improvement was driven by a recovery in trading density of super-regional centres (malls with a GLA in excess of 100 000m²) Extracts from SAPOA’s retail research report - December 2018

T

he index is based on data collected by MSCI Real Estate’s Retail Performance Benchmarking Service, which quantifies sales performance as well as other key retail performance metrics across 24 merchandise categories in more than 100 retail centres, covering in excess of four-million square metres.

Trading density growth came in at +1,4% year on year (y/y) in current price terms for the quarter ending September 2018, up from a revised -0,6% recorded for the quarter prior. The 1,4% y/y increase in trading density was a function of a positive two percent sales growth and a 0,6% increase in the amount of occupied trading area.

On an aggregate level, trading density growth of +1,4% comprised a two percent growth in sales, while occupied trading area was up 0,6% (i.e. a dilutionary impact).

Looking at it from another perspective, trading density growth was a function of spend per head increasing by 7,7% while aggregate foot-count per square metre declined by an estimated 5,8%.

While the amount spent per shopper is growing at a rate above inflation, footcounts haven’t increased in line with gross lettable area (GLA) as many malls extended trading area in the past few years.

The South African consumer remains under pressure as a result of higher fuel prices and rising interest rates, but there have been signs of recovery since June with trading density growth back into positive territory.

Particularly encouraging has been the continued growth of trading density in the super-regional segment. For the year ended September 2018, it was the topperforming segment at +3,4% y/y after growth bottomed out at -6,6% in July 2017.

The recovery in community centres has been equally encouraging after a sharp decline in 2017 driven by a softening occupancy rate. The segment ended Q3 2018 with a growth of +2,8% y/y, well off the -3% low recorded at December 2017.

Retailers’ cost of occupancy, measured by the ratio of gross rental to sales, continued its upward trend with a 43bp y/y increase to September 2018. This was the result of a two-percent growth in overall sales and a 6,7% y/y increase in aggregate gross rental.

Though the aggregate rent to sales figure was up half a percent y/y, there was some variation in the quantum of increases across different retail segments.

While cost of occupancy in the superregional segment remains the highest (11,2% as at September 2018), the largest increase was seen in the small regional segment (+100bps y/y to September 2018).

The current retail sector vacancy rate of 4,4% is above its long-term average of 2,8%. The latest period saw quarter-onquarter increases in the vacancy rate of the three larger retail segments, while the community and neighbourhood segment saw vacancy rates improve by 10bps and 20bps respectively. The superregional segment recorded an increase of 40bps to 6,3% over the last quarter, meaning that its vacancy rate is now more than triple its long-term average of 1,8%.

Among major merchandise categories, apparel and health/beauty have gained market share. For the three years to September 2018, health/beauty increased its share of sales by 5,9% while apparel increased by 2,2%. This has mostly come at the expense of food and department stores categories, which saw their share of sales decline by 3,1% and 3,4% respectively.

SOUTH AFRICAN PROPERTY REVIEW

35

­ ­

­

state of city finances

THE SAPOA Sustainability and equity: ANNUAL CONVENTION the tariffs story & PROPERTY EXHIBITION 2019

Cities use income from property rates, service charges and other fees, as well as the local government equitable share and other grants, to cover their costs. When setting property rates, service charges and other fees, municipalities need to consider two principles, according to the National Treasury (2011): the benefit principle and the ability-to-pay principle We extend our thanks to the South African Cities Network for the following extracts. Click on the cover image above to download the entire report.

SACN. 2018. State of City Finances Report 2018. Johannesburg: SACN ISBN: 978-0-6399215-2-5. © 2018 by the South African Cities Network.

The State of South African Cities Report is made available under a Creative Commons Attribution – Non-Commercial – Share-Alike 4.0 International Licence. To view a copy of this licence, visit creativecommons.org/licenses/by-nc-sa/4.0.

I

n this chapter, the tariffs charged by metros are compared to household income using four standard household types that are defined based on property values, electricity and water consumption, and frequency of solid waste removal. The progressiveness of municipal bills in all nine cities is then analysed by comparing the cost of a Type A package to a Type D package. The costs of the different service packages are also compared over an eight-year period (2010 to 2017) to assess whether the cities have restructured their tariffs, and to identify the sources of growth in the cost of service packages.

Finally, the chapter looks at the affordability of municipal bills, and changes since 2010, using a paymentincome ratio and an affordability threshold of 10%, and then concludes with some recommendations to improve the progressiveness of municipal bills.

This chapter asks whether cities are “pricing themselves out of the market” by imposing increasingly unaffordable municipal service charges on households, and analyses how progressive (or regressive) municipal bills are relative to households’ incomes. The unaffordability of municipal bills, especially for lowerincome groups, is a threat to the sustainability of city finances, as noted in the 2015 State of City Finances (SOCF) report (SACN, 2015).

Affordability is not a straightforward concept, especially when dealing with city services. For example, it is reasonable to expect households to curtail their consumption so they can afford to pay

Between 2015 and 2017, increased electricity and water costs accounted for 73% of the growth in municipal bills, but real growth in the cost of municipal services Date: 18 June has slowed. Most metros have regressive tariff 2019 structures, i.e. households with Venue: Atlantic Golfon Course lower incomes pay proportionally greater sharesBeach of their income tariffs than those with higher incomes. To improve the progressiveness of bills, cities can eliminate basic levies or monthly connection fees, and make use of inclining block tariffs. A debate is needed about whether or not the national and provincial governments are leaving sufficient tax room for local government to raise revenue alliance, to fund servicesFormat: such as environmentalFour-ball health and safety, storm water management, better 2 scores public parks, and building and maintenance of infrastructure.to count

> Prizes:

Top 3 four-balls

increased municipal bills. However, this Household incomes Nearest to the Pin is not really an option when household and municipal bills Longest Drive incomes and per capita consumption The tariffs charged by metros are Hole-in-One levels are already low, and many compared to household income using Lucky draws households are struggling to cope in four standard household types. The the prevailing economic climate. With sample consists of households that Prize Giving: 16h00 at the Clubhouse. the ever-rising cost of living, which pay tariffs, and so the analysis does Early dinner to be served affects the ability of households to pay, not include indigent households. The & full bar facilities for the household collection rates will continue chapter does not delve into costduration of the prize giving. to be under pressure and may even recovery issues, which are covered in decline. And, as essential services become Chapter Four.

Sponsorship available for 2 holes unaffordable for many households, the The household types are defined Contact Jane Padayachee: willingness to pay is likely to weaken. according to four key characteristics: marketingmanager@sapoa.org.za Cities use income from property rates, ● Property values; for more information. service charges and other fees, as well as ● Electricity consumption (monthly the local government equitable share and consumption in kilowatt hours/kWh); Booking Enquiries should be directed to other grants, to cover their costs. When ● Water consumption (monthly Puseletso Dube at events@sapoa.org.za setting property rates, service charges and consumption in kilolitres/kl); and or book online: www.sapoaconvention.co.za/ other fees, municipalities need to consider ● Frequency of solid waste removal registration/delegate-registration two principles (National Treasury, 2011): (of a 240-litre bin). ● The benefit principle, which simply means that customers must feel they Standard service packages are getting “value for money” for the First, using the same methodology as Golf day sponsor taxes and charges they pay; and for the previous two SOCF reports, four ● The ability-to-pay principle, which refers standard “baskets of services” or service to beneficiaries paying taxes according packages for household types A to D are to their income-generating capacity. identified (Table 12).

SOUTH AFRICAN PROPERTY REVIEW

37

state of city finances Then, to calculate a “total municipal bill”, the following charges, which are taken from the cities’ annual tariff tables, are added to these standard packages. ● Sanitation: the methodology may vary across municipalities, but the charges are generally linked to water consumption. ● Other standard monthly service charges added to household bills. ● VAT on service charges (i.e. excluding rates).

In addition, when calculating the municipal bill for each type of household, the following assumptions are applied: ● That the rates and service charges are residential tariffs applicable to formal settlements; ● That the rates and service charges are for “normal households”, and do not take into consideration pensioners, and child-headed and indigent households; ● That the water charges are for directly metered connections to the municipal water reticulation system, with no flow restrictions or water consumption management meters; and ● That the electricity charges are residential tariffs for customers with single-phase 230V or multi-

phase 400/230V connections with a capacity of up to 80A per phase. Household types A and B are assumed to have pre-payment meters; types C and D are assumed to have credit meter arrangements.

Benchmark household incomes The affordability of service charges needs to be measured in relation to household income. Therefore, the distribution of household incomes from the 2011 Census is used to create benchmark household income categories. The assumption is that households in these income categories consume the corresponding service packages. Figure 11 illustrates the different distributions of household income for the nine cities. ● Income bands 0-4 (households with income below R3 200 per month in 2011) make up about 53% of all city households. Based on the indigent policies of the cities, most of these households would not be liable for any municipal taxes and service charges, provided they keep within specified consumption limits. ● Income bands 5-8 (households with income of R3 200-R51 200 per month in 2011) make up 42% of all city households. These households are liable for rates and service charges.

Table 12: Standard service packages

Figure 11: Household income profiles by city (Census 2011)

38

SOUTH AFRICAN PROPERTY REVIEW

● Income bands 9-11 (households with income of above R51 201 per month in 2011) make up just five percent of all city households and can certainly afford to pay their municipal bills.

Figure 11 shows the household income distributions for each city, highlighting bands 5 to 8. It illustrates how the distribution of household income differs widely across cities – and so each municipality needs to tailor its revenueraising strategy to its circumstances.

Buffalo City faces the greatest revenueraising challenge because 65% of its households fall within income bands 0 to 4.

A benchmark household income for each of the income bands 5 to 8 is then associated with the appropriate service package.

Table 13 (on the next page) shows the 2012 benchmark incomes associated with each service package (SACN, 2013), which are adjusted for inflation using the average metropolitan inflation rate to obtain benchmark incomes for 2015 and 2017.

Composition of municipal bills The composition of households’ municipal bills depends on how a city structures its rates and services charges, and the relative prices and quantities of the different services consumed by households. Table 14 (on the next page) shows the average composition of the municipal bill for each of the service package types, based on the bills charged in the nine cities.

state of city finances ● Electricity charges (including the basic levy) account for the largest percentage of municipal bills in all cities and for all package types, ranging from 42% (38% + 4%) for Type B to 49% (48% + 1%) for Type D. ● Water charges (including the basic levy) are the second-largest item, accounting for between 15% for Type D and 22% (21% +1%) for Type A and B. ● Property taxes are generally structured as a progressive tax, as their share of municipal bills increases across the package types, from 2% for Type A to 14% for Type D. ● The way in which cities structure sanitation and solid waste removal charges varies widely, although their share of the municipal bill tends to decline from Type A to Type D. Some have progressive tariff structures, while others use flat-rate tariffs, fixed charges or declining block tariffs that are regressive in their impact.

In 2017, only Johannesburg, eThekwini and Buffalo City charged electricity basic levies, and only Nelson Mandela Bay, Mangaung and Msunduzi charged water basic levies.

These basic levies are uniform connection charges that all households pay and are regressive, i.e. they represent a larger percentage of poorer households’ bills than of wealthier households’ bills.

These average bills hide significant variations between cities. As a comparison, Johannesburg and Nelson Mandela Bay show the “progressiveness of bill” is the total bill for a Type A, B or C package as a percentage of a Type D package. ● Property taxes: these taxes represent a significantly larger share of the municipal bill in Nelson Mandela Bay than in Johannesburg. Rates have a more progressive structure in Johannesburg, where in 2017 households received a rates rebate of R200 000, than in Nelson Mandela Bay, where households received only the R15 000 rebate required by statute. ● Electricity: Johannesburg charges all households an electricity basic levy of R452, which represents 31% of Type A bill and nine percent of the Type D bill, showing the highly regressive nature of this charge.

Nelson Mandela Bay does not charge an electricity basic levy. As a result, electricity charges represent 61% in Johannesburg but only 33% in Nelson Mandela Bay for the Type A package.

Table 13: Monthly income distribution and benchmark household incomes

Table 14: Average composition of municipal bill by package type (2017)

● Water: Johannesburg does not charge a basic levy for water, whereas Nelson Mandela Bay charges all households a levy of R44. However, although this charge is regressive in nature, its impact is relatively insignificant – it represents just four percent of the Type A package in Nelson Mandela Bay (compared to one percent for Type D). ● Sanitation: Johannesburg charges a fixed fee for sanitation, of R172 for Type A households and R335 for Type B, C and D households.

Nelson Mandela Bay charges all households a flat rate of R14,93 per kilolitre based on 60% of the household’s water consumption.

Both charging approaches are regressive in their impact, but Johannesburg’s is more so. ● Solid waste: Johannesburg has a progressive solid waste removal tariff (R0 for Type A but R195 for Type D), while Nelson Mandela Bay charges a fixed tariff of R111 to all households, resulting in solid waste removal representing nine percent of the Type A package but just two percent of the Type D package.

Therefore Nelson Mandela Bay has a more progressive billing structure than Johannesburg – i.e., it is more pro-poor.

Table 16 shows the progressiveness of municipal bills in all nine cities (without the detail of Table 15 because of a lack of space), ranking the cities from most progressive to least progressive. A city is more progressive when its Type A package represents a lower percentage of a Type D package. ● Ekurhuleni has the most progressive billing structure, with Type A, B and C households paying between 13% and 35% of what Type D households pay. The biggest jump is from Type C to Type D households because electricity prices increase steeply between the highest block consumed by Type C and the block in which a large proportion of electricity is consumed by Type D households.

SOUTH AFRICAN PROPERTY REVIEW

39

state of city finances Ekurhuleni is the only city where the municipal bill for Type C households is less than 50% of the municipal bill for Type D households. ● Johannesburg has the least progressive billing structure: Type A households pay 32% of what Type D pay.

● The billing structure for eThekwini and Cape Town are equally progressive. Although eThekwini’s tariffs for most services are slightly more progressive, this is offset by the basic electricity levy that it charges.

Table 15: Composition of municipal bill by package type for Johannesburg and Nelson Mandela Bay (2017)

● The main cause of Tshwane’s poor performance is flat solid waste and cleaning charges, and sanitation charges that use a declining block tariff linked to the water bill.

Increasing cost of municipal bills In 2009 and 2010, electricity tariffs increased rapidly, affecting service charges. Since then, the growth in property taxes and service charges has stabilised but has consistently been above the inflation rate across all cities.

In certain cities, the increase varies across service packages, suggesting a deliberate restructuring of the city’s revenue-collection strategy.

Comparative costs of service packages

Table 16: Progressiveness of municipal bills

Table 17: Monthly cost of packages A to D 2015 and 2017, ranked by city (2012 R)

40

SOUTH AFRICAN PROPERTY REVIEW

Table 17 ranks the nine cities based on the real cost (in rands in 2012) of the different service packages charged in 2015 and 2017. The percentage spread – i.e. the difference between the highest and lowest cost package – is shown (“Highest as % of lowest”), together with the comparative results from the 2014 and 2010 analysis that were included in the 2015 SOCF report.

The cost of the service packages varies considerably across all package types and cities, but the extent of this variation decreased considerably between 2010 and 2017. The difference between the lowest- and highest-priced Type A package fell from 238% in 2010 to 161% in 2017. However, the difference in rand terms is considerable: in 2017, a Type A household in Ekurhuleni paid R754 compared to R1 213 in Buffalo City, which is a large difference for this income level.

Table 18 (on the next page) ranks the cities based on the deviation from the average price for each service package in 2015 and 2017. The spread is again shown, together with a comparison for 2010 and 2014 from the 2015 report.

Between 2010 and 2017, the variation in the cost of Type A and Type B packages declined, from 91% to 47% for Type A and from 72% to 40% for Type B. However, the variation in the cost of Type C and D packages increased, from 27% to 30% for Type C and from 30% to 57% for Type D.

state of city finances This points to significant variation in the structure of tariffs across the service packages within and across cities. As highlighted in the 2015 SOCF report, Ekurhuleni has a deliberately progressive billing policy that favours poorer households and taxes the wealthier households. Its Type A and Type B packages are 23% and 33% below the national average, and its Type D package is 38% above the national average.

Table 18: Percentage variation from average cost of packages A to D in 2014, ranked by city

Growth in the cost of service packages When looking at the affordability of municipal services, the real growth in cost needs to be considered.

To obtain the real growth numbers, the CPI Urban Series (2012 = 100) was used to deflate the nominal cost of the service packages in each city. Up to the end of 2016, the CPI Urban Series gave a per-city inflation rate, which is a better measure of household inflation in the different cities than the national CPI. For 2017, the CPI per province up to the end of September was used, as it was the most recent CPI data available at the time of writing.

To understand the increases that households saw on their municipal bill, the average annual CPI rate is added to the relevant real growth rate per city.

For example, in Cape Town the cost of the Type A package grew at an annual average real rate of 5,46%. However, between 2015 and 2017, households would have seen a 13,6% nominal increase (8,3% + 5,3%) in their municipal bills each year. The highlighted cells in Table 19 show the service packages with a greater growth than the average annual growth.

As Table 19 and Figure 12 show, between 2015 and 2017, the cost of all service packages increased in all cities, with the exception of Nelson Mandela Bay (Type D) and Mangaung (Types A and B). Cape Town increased the cost of all its service packages at well above the average growth for the nine cities, although the city still has one of the more progressive tariff structures (Table 16). This increase was driven by higher charges for water combined with the abolition of the free 6kl for non-indigent

Table 19: Average annual real growth in the cost of service packages by city between 2015 and 2017

Figure 12: Average annual real growth in the cost of service packages by city between 2015 and 2017

households, which had a greater impact on Type A packages, as these households consume proportionally more water.

Sources of growth in the cost of service packages Higher electricity charges continue to contribute the most to the increase in costs of the service packages. To understand what is driving these increases, the changes in the cost of each item are analysed, taking into account

the relative importance of that item in households’ municipal bills. As Table 20 shows, between 2015 and 2017, higher utility charges (electricity and water) contributed the most to the increased costs of the service packages in all cities.

Cape Town and Msunduzi stand out for the increases in the cost of water. As mentioned already, in Cape Town this is driven by water restrictions and the abolishment of the free 6kl per month for all households except indigent households.

SOUTH AFRICAN PROPERTY REVIEW

41

state of city finances Table 20: Sources of growth in the cost of service packages between 2015 and 2017

In Msunduzi, the overall growth of all service packages has been slow, with water charges growing more than other charges.

Electricity (not water) is the biggest contributor to growth in service packages of all cities except for Cape Town and Msunduzi. The monthly electricity service charges include the basic electricity levy that Johannesburg, eThekwini and Buffalo City charge. The Type D package in Nelson Mandela decreased because in 2017/ 2018 the highest block tariff became the same as the block below.

In most cities, sanitation charges are linked to water consumption, i.e. as consumption increases, the cost per kilolitre decreases. Therefore, sanitation contributes more to the growth in cost of the Type A package than the higher packages. In Mangaung, sanitation charges are linked to the value of the property, and so the decline is a result of the city increasing the rateable value of properties excluded from R70 000 to R80 000 per property.

As solid waste removal charges are not directly linked to levels of consumption, they contribute more to the growth in cost of Types A and B service packages.

Johannesburg and Cape Town do not charge Type A households for solid waste removal, while eThekwini does not charge Type A and B households.

Between 2016/2017 and 2017/2018, Tshwane increased the value of properties not included in the ratings calculation from R75 000 to R120 000. As a result, the contribution of property rates fell for Type A, B and C packages. In Cape Town, the cents in the rand rate was reduced for Type C and D packages, resulting in a decrease in contribution. In Mangaung, as explained, the value of properties excluded from the rating calculations increased, which affects the contribution to Type A bills.

42

SOUTH AFRICAN PROPERTY REVIEW

Affordability of municipal bills The affordability of municipal bills depends on the rates and charges (as discussed) as well as household income. As Figure 10 has highlighted, cities have different household income profiles and different compositions of ratepayers and customers (including households). This means that each city faces unique challenges in structuring its tariffs to ensure the municipality is funded, while keeping municipal bills affordable for the full spectrum of ratepayers and customers.

Setting tariffs within a municipal context is a complex and complicated exercise, while managing tariff structures so that municipal bills remain affordable is a dynamic process. Households have different economic circumstances, and cities have different economic growth rates that affect household incomes.

Over a given period, income will grow in some cities but decline in others. When annually reviewing their tariff structures, cities need to consider changes to the income and the impact of increases of other charges on the disposable income of households.

Furthermore, affordability of municipal bills cannot be viewed in isolation. The local government cannot be held solely responsible for municipal bills being unaffordable, if the revenue-raising activities of national and provincial government do not leave enough room for municipalities to raise their fair share of revenue. This is particularly pertinent given rising bulk tariffs for electricity and national government’s increases to personal income tax rates and VAT.

Cost of service packages relative to household income To assess changes in the affordability of municipal bills, the cost of Type A to D service packages in each city is compared

to the benchmark household real income (in rands in 2012) for each type. Ekurhuleni has the lowest percent value for Type A and Type B packages in 2017, Mangaung for Type C and Msunduzi for Type D. The report has found that: ● Ekurhuleni has the most affordable Type A, B and C packages and the least affordable Type D package, reflecting the city’s progressive tariff structure, and very large increases in solid waste removal and electricity tariffs at higher levels of consumption. Solid waste removal and electricity tariffs for Type D households have increased faster than other household types since 2010, which is why the affordability of Type D packages has decreased. ● Mangaung provides the secondmost-affordable packages across all types. The affordability of Type A and B packages has remained at a similar level, but Types C and D have become more affordable, suggesting that the city’s tariff structure has become more regressive. ● Between 2010 and 2017, Msunduzi’s tariff structure became much more progressive, with the affordability of Type A and Type B packages being better than average and the cost of both service packages reducing significantly, from 22,8% to 11,3% of the household income. ● All packages in Nelson Mandela Bay saw small increases in affordability, which suggests no meaningful changes to the progressiveness of the tariff structures. ● Cape Town and eThekwini are the only metros where the cost of Type A and B service packages as a percentage of income has increased (worsened). In Cape Town, this is mainly the result of changes to the water tariffs, which have also affected the sanitation tariffs. ● In Tshwane, although all service packages except for Type D are less affordable than the average, the affordability of all packages has increased since 2010, especially for Types A and B.

state of city finances ● The City of Johannesburg has also seen improved affordability of Type A and B service packages, although they are still the secondmost-unaffordable of all the cities.

The affordability of Type C and D packages has increased slightly.

The relative changes in affordability can be attributed to changes in the water tariffs. ● Buffalo City has the least affordable Type A, B and C service packages of all the cities, although the affordability of Types A and B has improved marginally. ● The average value decreased, or improved, for all types of service packages between 2010 and 2017.

However, the averages for Type A and Type B in 2017 are 12% for each service type compared to seven percent and six percent for Type C and Type D, which suggests that, overall, metros have a regressive tariff structure as in aggregate their tariff structures favour wealthy households.

Table 27: Payment income ratios in 2017

Figure 14: Cost of packages Type A to D as a percentage of benchark household incomes (2015 to 2017)

Progressive/regressive nature of cities’ municipal bills As explained earlier, progressive tariff structures are those where higherincome households pay proportionately higher municipal bills than lower-income households, whereas regressive tariff structures result in poorer households paying a greater percentage of their income than wealthier households.

Figure 14 and Table 27 illustrate the progressive/regressive nature of each of the cities’ municipal bills, as well as the trends in affordability for the four different packages.

Table 27 gives the “payment-income ratio”, which is the difference between what households with Type A, B and C service packages spend on their municipal bills and what households with Type D packages spend, based on their income. This ratio provides an indication of how progressive or regressive the relevant city’s tariff structures are. The “change in ratio” shows how the payment-income ratio has changed between 2010 and 2017.

A negative value means that the ratio decreased between 2010 and 2017 – in other words, the proportion of household income spent on municipal bills is closer to that of Type D households.

Therefore, a decrease in the ratio indicates increased progressiveness.

In general, cities have regressive tariff structures. ● Ekurhuleni remains the most progressive metro and has become more progressive since 2010. ● Despite becoming more regressive, as shown by the 15% change in ratio for Type A, Cape Town still has the second-most-progressive tariff structure of the nine cities.

Like Cape Town, eThekwini has one of the most progressive tariff structures but appears to be continuing with its strategy of reducing the progressiveness of its tariffs.

● The metro where the progressiveness of tariff structures reduced the most was Mangaung, where changes to threshold values at which charges change disproportionally favoured the more expensive package types. ● Despite relatively large improvements in progressiveness, Msunduzi continues to have the second-most-regressive tariff structure in the country. In 2015, Msunduzi had the most regressive tariff structures but has since been eclipsed by Johannesburg.

Identifying municipal bills that are unaffordable The affordability of a standard household municipal bill depends on many variables, including the household’s financial circumstances and the willingness to prioritise payment of municipal bills over other expenditure. In other words, affordability is linked to households’ willingness to pay, and the municipal SOUTH AFRICAN PROPERTY REVIEW

43

state of city finances leadership’s willingness to enforce such payments. As yet, government has not proposed an objective affordability threshold for a standard household municipal bill.

The lack of an affordability threshold works against the interests of poorer households, as there is no objective standard against which to measure the equity of municipal tax and tariff structures and the resultant municipal bills. Municipalities can, therefore, impose unreasonable bills and enforce the tariff structures by implementing service cut-offs.

The 2015 SOCF first proposed that 10% of household income can be seen as a reasonable affordability threshold for a typical, standard household municipal bill as defined by the four services packages in relation to the specified benchmark incomes. Since then, the Statistics South Africa Living Conditions Survey 2014/2015 suggests that 10% is a reasonable benchmark.

The survey has a category – “housing, water, electricity, gas and other fuels” – which includes “household consumption expenditure on housing and basic services, such as water, electricity, gas and other fuels” that amounts to 6,5% of household consumption. Although the survey does not refer specifically to property rates, the item “other services relating to the dwelling” (which equals 1,2% of consumption) is assumed to include property rates and other municipal services. Together these two items amount to 7,7% of household consumption. According to the survey, the average household consumption is R103 293 and the average income is R138 168: so R138 168 × 7,7% = R10 638, which is 10,3% of R103 293. Therefore, 10% benchmark is a reasonable figure to use.

1 Most growth in municipal bills is from increased electricity and water costs

4 Most cities have regressive tariff structures

Between 2015 and 2017, increased electricity and water costs accounted for 73% of the growth in municipal bills, followed by sanitation costs – except for Type C packages, where property rates contributed more than sanitation to the increases. As the 2015 report pointed out, the growing cost of services is squeezing out municipal property rates in the service packages.

Conclusion

3 Ekurhuleni has the most progressive tariff structures

In general, the structure of tariffs in cities is regressive when compared to household incomes, which means that poorer households are paying relatively more for municipal services than wealthier households. The charging of a flat-rate connection and/or service fees are the main factors for bills being regressive.

The three cities with the most regressive tariff structures are Johannesburg, Buffalo City and Tshwane, which charge uniform fixed charges for electricity (Johannesburg), flat rates for solid waste removal (Buffalo City) or declining stepped tariffs for sanitation (Tshwane). It is surprising that these types of charges still exist. Between 2010 and 2017, tariffs become more regressive in eThekwini and Mangaung across all service packages. In the City of Cape Town, the tariffs for Type A households become more regressive, but the tariffs for all other package types across all cities became more progressive.

To improve the progressiveness of bills, cities can eliminate basic levies or monthly connection fees, especially to lower-income households; make use of inclining block tariffs that increase progressively especially for very high levels of consumption; and offer special service packages to indigents (that cap consumption). These seemingly simple changes require increased administrative capacity to implement them.

In addition, as highlighted in the 2015 report, a national debate is needed on whether or not national and provincial governments are leaving sufficient tax room to enable local government to raise revenue through alternative means. This revenue is needed to fund services that do not appear on the municipal bill, such as roads, public transport, environmental health and safety, stormwater management and public parks, and the building and maintenance of infrastructure. National government controls any increases in bulk tariffs for electricity and water, which are driving most of the increases in municipal bills. There is thus a direct link between national government pushing up these bulk tariffs and the unaffordability of municipal bills.

The nine cities have adopted different tax and tariff strategies in response to different mixes of business and domestic customers, and of low-, middle- and high-income households. Despite this diversity, several general conclusions can be drawn from the analysis: 44

SOUTH AFRICAN PROPERTY REVIEW

2 Slower real growth and increased affordability Between 2015 and 2017, the average cost of municipal bills grew annually by 2,13% (Type A), 1,68% (Type B), 1,55% (Type C) and 1,19% (Type D), compared to 5,6%, 5,1%, 6,1% and 7% respectively for between 2010 and 2014. Based on the 10% of household income affordability threshold, in general municipal bills are becoming more affordable, although eight out of the nine Type A service packages remain unaffordable.

In 2010, Type A service packages represented between 9,6% and 22,8% of household income, compared to between 9,5% and 15,3% in 2017, suggesting increasing affordability of municipal bills for lower-income households. This has been the general trend for all service packages, with the exception of the City of Cape Town, where higher water prices have driven an increase. However, despite Nelson Mandela Bay facing similar pressures, the affordability of their service packages improved. The average increase in affordability ranged from between 0,3% for Type D packages and 2,1% for Type A packages. Between 2015 and 2017, only four of the service packages have become less affordable, compared to 16 between 2010 and 2014.

In 2017, Ekurhuleni had the most progressive tariff structures of the nine cities, largely driven by the increased cost of the Type D service package as a result of the city’s electricity tariffs, which have a stepped structure.

howmuch.net

Which countries have the biggest crude-oil reserves?

Crude oil is a fossil fuel derived from marine plants and animals that died millions of years ago, before the dinosaurs. In its liquid form, crude oil can be found underground in reservoirs, sedimentary rocks and tar sands

By Raul Amoros / howmuch.net/articles/worlds-biggest-crude-oil-reserves-by-country

C

rude oil has been used to produce petroleum products such as petrol, waxes and plastics. It has also been heavily used in the manufacturing industry, industrialisation as a whole and transportation. Since crude oil is found in certain geological areas, some countries are more likely than others to be sitting on large oil reserves.

Our new visualisation shows how much oil is in each country’s reserves.

Oil reserves are measured in Gbbl (billion barrels). Our data comes from the CIA Factbook. About half of the countries in the top 10 list are located in the Middle East/North Africa region.

Six of the countries – Venezuela, Saudi Arabia, Iran, Iraq, Kuwait and Libya – are members of OPEC (Organization of Petroleum Exporting Countries).

Interestingly, there seems to be no clear correlation between a country’s size and the amount of oil reserves it possesses. For example, Kuwait, which has a landmass of 17 818km², has 101,5 Gbbl in oil reserves, while Russia, whose landmass is almost 10 times larger, only has 80 Gbbl in oil reserves.

While the products created with crude oil can – and do – make our life and work easier, the costs to wildlife and the environment can be negative as a result of issues such as pollution and oil spills. The varied amounts of oil reserves in each country can also lead to an imbalance of energy imports and exports.

Since the US hosts only about 36,5-billion barrels of the world’s crudeoil reserves and imports almost eight-

million barrels per day, finding alternate forms of energy has become more important than ever.

10 countries with the biggest crude-oil reserves 1. Venezuela: 300,9 Gbbl 2. Saudi Arabia: 266,5 Gbbl 3. Canada: 169,7 Gbbl 4. Iran: 158,4 Gbbl 5. Iraq: 142,5 Gbbl 6. Kuwait: 101,5 Gbbl 7. UAE: 97,8 Gbbl 8. Russia: 80 Gbbl 9. Libya: 48,4 Gbbl 10. US: 36,5 Gbbl SOUTH AFRICAN PROPERTY REVIEW

45

THE SAPOA ANNUAL CONVENTION & PROPERTY EXHIBITION 2019

Date: Venue:

18 June 2019 Atlantic Beach Golf Course

Format:

Four-ball alliance, better 2 scores to count

Prizes:

Top 3 four-balls Nearest to the Pin Longest Drive Hole-in-One Lucky draws

Prize Giving:

16h00 at the Clubhouse.

Early dinner to be served & full bar facilities for the duration of the prize giving.

>

Sponsorship available for 2 holes Contact Jane Padayachee: marketingmanager@sapoa.org.za for more information.

Booking Enquiries should be directed to Puseletso Dube at events@sapoa.org.za or book online: www.sapoaconvention.co.za/ registration/delegate-registration

Golf day sponsor

social

Gauteng Networking Evening SAPOA Gauteng hosted its first networking evening for 2019 in Bryanston Photography by Xavier Saer

The networking evening was held at the Scuderia South Africa (Pty) Ltd showroom in Bryanston, Johannesburg

S

APOA Gauteng’s first networking evening for 2019 was held in partnership with Scuderia South Africa (Pty) Ltd – the official Ferrari dealer in South Africa – at the showroom in Bryanston, Johannesburg.

More than a hundred guests attended the first SAPOA Gauteng networking event of 2019

Sponsored by

Chanelle Zackey, National Marketing Manager of Scuderia South Africa (Pty) Ltd

SOUTH AFRICAN PROPERTY REVIEW

47

social

What’s next for student housing in Cape Town?

A well-attended seminar on the changing face of student accommodation took place at the University of Cape Town on 16 April, and was followed by a networking gathering. Sponsored by Quoin Online, the seminar was attended by more than 80 delegates, including industry professionals and students from the university

By Mark Pettipher

FROM LEFT Speakers Nigel Haupt and Giancario Lanfranchi with seminar facilitator Professor François Viruly

U

niversity of Cape Town’s Associate Professor François Viruly got the proceedings under way, then introduced the first speakers: Giancarlo Lanfranchi of Equites Property Fund and Swish Property Group and Nigel Haupt, Director of Properties and Services at UCT. Viruly gave a short presentation on benchmarking in the property market, which included changing escalation values, a look at the 30 tech companies that claim to be leading disruptors in the property industry and an overview of Urban Land Institute’s Emerging Trends, highlighting top sector investment and co-living and student housing as being among the top six. He observed that there are two important things on the

48

SOUTH AFRICAN PROPERTY REVIEW

list: seven of the top 10 companies on the list deal with residential property (not commercial), and they are heavily biased towards facilities management.

When it was his turn, Lanfranchi outlined what students actually need – convenience (close proximity to campus), communication (Wi-Fi and technology) and interaction with fellow students (pointing out that good communication contributes to the feel-good factor) and comfort. The days of group sharing and bunking are gone – students want their own room, their own bathroom and kitchen, and most importantly safety in the campus environment.

He said that student accommodation for accommodation’s sake is no longer

a way to make a quick buck. Students are looking for a more integrated co-living environment where they can have both flexibility and stability, and freedom to move about and share common areas in a modern, aesthetically pleasing building.

Haupt then told us that UCT is celebrating its centenary this year. The university’s capacity in 1929 was 15 000 students; today, it is supporting a student population of 29 000, of which almost 6 760 live in res.

He explained the importance of firstyears living in res, and said that being in res in first year increases students’ likelihood to conclude their university term. Haupt plans to have at least onethird of students in housing.

social Haupt is therefore looking at new builds on university property, longterm leases off campus, possible infill developments within the university precinct and developed accommodation through public-private partnerships, in addition to looking at governmentfunded student accommodation.

Haupt’s has a three-tier housing strategy. The first tier is for first-years only – on-campus residences that include dining facilities. Second- and third-years are to be accommodated off campus.

There are specific guidelines for offcampus accommodation: it must not be more than 500 metres from the university’s transport route and pick-up points, and no more than 300 metres from a convenience store. There is also a private developer lease option, where 10 months’ rental is paid upfront. This option means that UCT doesn’t need to spend its capital, and student rental income can be utilised as long-term lease agreements, which provides sufficient time to make money back.

Haupt has identified infill opportunities, challenged developers to take on the opportunity and contact him for more information. The infill would involve highdensity four-storey residences, enabling the university to use under-utilised spaces that can developed into a student village, with a spaza shop, restaurant facilities and a gym.

He has also identified two properties that could accommodate students; he is in talks with the Social Housing Regulatory Authority, the Department of Higher Education and Training, and the Department of Human Settlements to fund the initiative. His idea is to sign a memorandum or agreement to hand over rent as soon as the university receives it as a guarantee against the loan with a long-term payback.

He closed his presentation by saying that difficult times requires us to think differently – but also to be bold.

Students and industry professionals had a chance to network at a UCT seminar

FROM LEFT Kim Pfaff-Karg, Mark Kleynhans, Marlon Parring and John McMahon

SOUTH AFRICAN PROPERTY REVIEW

49

social

SAPOA KZN Brokers’ Breakfast Forum Durban property brokers, agents and service providers mingled over a leisurely breakfast in Umhlanga, taking in expansive views of the morning ocean and, most appropriately, the rapidly developing urban skyline as residential and commercial developments continue apace on the North Coast

by Lyse Comins

FROM LEFT Guest speaker Andrew Miller, Reiner Stenzorn and Di Frank

B

usiness Partners and In2Assets hosted guests at the recent SAPOA Brokers’ Breakfast Forum on the ridge at Strauss Daly’s office premises. A light buffet breakfast in the firm’s well-appointed entertainment lounge presented guests with a generous spread including muesli and yoghurt “shots”, fresh mini-croissants, fruit kebabs, pastries and warm, bitesized sausage and bacon treats.

Guests were free to mingle on the elevated balcony and enjoy the ocean view, providing the perfect opportunity to catch up and network.

Byron Jeacocks, Regional General Manager for Business Partners – which has assisted 103 entrepreneurs with R245-million in funding over the past

50

SOUTH AFRICAN PROPERTY REVIEW

year, and facilitated 349 jobs – urged guests to get involved with developing entrepreneurs through mentorship.

“SME development is a future growth industry, and I strongly believe we should target the government: it needs to recognise the entrepreneurs in our midst and do something more for them,” he said. “We look at entrepreneurs and only see the end-product of those who are successful. We don’t see the trials and tribulations they have gone through to get there.”

According to Jeacocks, Business Partners has actively assisted entrepreneurs with additional finance so that they could approach banks to bond worthwhile property investments.

Guest speaker Andrew Miller, a leading South African auctioneer and the founding partner of In2Assets, highlighted the current commercial property climate, noting that Durban was outperforming Johannesburg and Cape Town despite the poor economic indicators. He justified his positive outlook for Durban by listing the city’s myriad global achievements and developments.

“Durban is one of the New7Wonders Cities of the world, and is South Africa’s top-performing city for the growth of millionaires since 2000, according to the New World Wealth Report,” Miller said. “It was also the number-one city for quality of living in Africa for three years (2015 to 2017) according to Mercer Consulting,

social and it featured at number seven on the top 52 Places to Go in 2015, according to the New York Times.”

Additional attributes were its rating among the top 10 coastal metro port cities in the world (according to National Geographic), its number-one position on British Airways’ list of “Must See Destinations for 2019” and, not least, its ranking as the number-one city in Africa, and among the top 50 globally, for return on investment on residential property.

Durban’s property development market is booming, with projects such as the Point Waterfront development and Phase 2 of the Dube Tradeport development – a highly sought-after business investment destination on the continent. Plans for the Point Waterfront development include a 55-storey skyscraper, a residential tower, a retail mall and hotel.

However, Miller said the construction industry was taking strain nationally, with four out of the top 10 construction firms currently under business rescue. “This has a knock-on effect on subcontractors such as tilers, plumbers and kitchen fitters,” he said. “Properties are becoming vacant because small businesses are no longer able to operate and honour their leases. Conversion to online shopping is compounding vacancies in retail centres.”

Miller also said the middle-income market of households earning R60 000 per month, which net approximately R40 000, was also under pressure as people did not have disposable income after paying for high costs of living expenses such as school fees.

Similarly, the agricultural property sector was under pressure, and farm prices had dropped by more than a third as a result of the threat of land expropriation without compensation. The technical economic recession, rising petrol prices and inflation, a weakened currency and drought had also hit farmers.

Focusing on Johannesburg, Durban and Cape Town’s commercial property outlook for office space, Miller said economic indicators showed that Durban’s performance outstripped the other centres.

Cape Town’s office space market remained fairly stable, with a small

FROM LEFT Thrivern Naidoo, Younica Sewpaul, Avinash Sanichur and Eric Meyer

FROM LEFT Marc van Dyk, Rowena Moodley, Jacques Opperman and Sunhail Khan

development pipeline, of which 80% comprised speculative developments.

Johannesburg was suffering from an oversupply of office space, particularly in Sandton, with the industrial development pipeline focusing on midi-units.

“Office space is under serious threat at the moment, and investors in the Sandton area are sweating big time,” he said. “One of the major banks is eliminating its outlying branches so vacancies are happening around country.”

Shopping malls were also impacted by online shopping. “The conversion to online shopping around the world is compounding the vacancy problem in retail centres – but one of the sectors that is thriving as a result of online demand is the logistics sector,” said Miller. “Durban has a great number of logistics hubs – and this is a very strong market at the moment.”

According to Miller, demand for prime office and industrial space in the city was improving. “Durban far outstrips any of the other centres in terms of performance – but the main challenge here is the

Business Partners Regional GM Byron Jeacocks

municipalities’ turnaround in getting zoning applications through,” he said.

In the end, he described Durban as “a gem of the African continent”. “These are all positive things that are taking place in the province and the city,” he said. “As brokers, we tend to see the negative on television and social media.

But Durban really is one of the gems of the African continent – and if we take that passion out to the world, soon a wave of optimism will take place. It needs to start with us.”

SOUTH AFRICAN PROPERTY REVIEW

51

off the wall

Eco bikes made from bamboo Booomers is a social enterprise founded in 2014 by Kwabena Danso with a mission to produce high-quality, affordable bamboo products that have economic and social benefits to customers around the world. Since its launch, the company has delivered more than 2 500 bike frames and thousands of bamboo accessories, from bicycle baskets to children’s tricycles

By Tshepo Tshabalala

B

amboo is a unique alternative to traditional bicycle frames. It is far lighter than steel, more comfortable than aluminium and cheaper than carbon fibre.

Bamboo has a higher specific tensile strength than steel and a higher specific compressive strength than concrete. This means it’s strong enough to carry loads such as shopping or camping equipment but also has good vibration control for a smooth ride and good stability.

The Booomers factory is in Apaah, Ghana, and provides on-the-job training and a steady income for may rural Ghanaians. The team totals more than 50 young people aged between 18 and 29.

Booomers also indirectly employs about 20 people during harvest and 200 farmers who cultivate bamboo.

The Booomers journey began in 2009, when frame-building pioneer Craig Calfee introduced Kwabena Danso to the special properties of bamboo for bicycle frames. Danso saw an opportunity to help young people in rural areas of Ghana develop new skills by crafting a high-performance hand-made product using local sustainable materials.

The company developed a range of frames and their partner, MyBoo, submitted them for testing in Germany, Taiwan and Australia to receive quality certifications. In 2015, Booomers started to export bamboo bike frames to Germany; it now has happy customers across countries in Australasia, North America and Europe.

As cyclists around the world enjoy their bamboo bicycles, the company 52

SOUTH AFRICAN PROPERTY REVIEW

wants to make sure that locals can enjoy them too, and has gifted 150 bamboo bicycles to local schools in partnership with UNESCO. Furthermore, the company supports 400 school children through scholarships and fund libraries as well as computer labs across the region. All revenue comes from product sales, and profits are reinvested to employ more people and fund education projects in rural communities.

The work of Booomers and its founder has been recognised and supported via local and international programmes, such as the YouthActionNet programme, the ENGINE Project of the UK Department for International Development, the African Entrepreneurship Award, and the Tony Elumelu Foundation Entrepreneurship Programme. Most recently, Danso was selected for the Obama Foundation Leaders: Africa programme for 2018.

Production process STEP 1: BAMBOO HARVESTING AND TREATMENT

STEP 4: FRAME WRAPPING

STEP 2: BAMBOO SELECTION

STEP 5: FILING AND SANDING

The process starts with harvesting well-tended bamboo plants that have reached maturity.

A chemical and heat treatment is applied to protect the shoots from insects.

After treatment, carefully selected dried bamboo pieces are chosen to meet the necessary weight and strength requirements for a strong frame.

STEP 3: FRAME ASSEMBLY

After cutting the bamboo to the required dimensions, they are assembled on welldesigned jigs, which ensure good symmetry and correct alignment of the frame.

The tacked frames are wrapped with local sisal fibre soaked in a plant-based eco-resin epoxy.

This ensures the joints are strong enough to hold the frame together and withstand shocks.

The frame wrapping is filed and sanded so that it is smooth and shows the beauty of the organic materials.

STEP 6: QUALITY CONTROL

A strict three-stage quality control process ensures every product meets international safety and quality standards. After inspection, the frame is coated with a high-quality polyurethane coat to protect it against rain and direct sunlight.

MAY 2019

JUNE 2019

­

­

­ ­

JULY 2019

­

­

­ ­ ­

­

­

­

­

­ ­

­

3

INNOVATIVE AND APPROPRIATE SERVICES 4 1

2 1 Menlyn Learning Hub. Architects: Boogertman + Partners 2 West Hills Mall. Architects: ARC Architects 3 & 4 Studios @ Burnett. Architects: Boogertman + Partners

While adequately and timeously providing traditional quantity surveying services and utilising the best that technology can provide, DelQS identified certain services as being vital to the bottom line of property developers and investors To this end it has researched the needs of its clients and has developed expertise and systems

related to the following: •

In-house developed financial viability analysis, including detailed estimates of construction cost, acclaimed to be precise and logical in presentation

•

Extensive building contract expertise and quality contractor procurement systems

•

In-house developed cost control system that proactively tracks past and potential future construction cost decisions and provides a precise audit trail

•

Ensuring that final settlements with contractors are based on the conditions of contract leaving, with recommendations, any other settlement decisions to the client

•

Expertise and a track record of dealing with projects elsewhere in Africa and beyond

•

Expertise in almost all building development categories

Associated offices: GHANA | KENYA | MAURITIUS | NAMIBIA | NIGERIA | TANZANIA | UGANDA

JHB +27 (11) 642 8751 | PTA +27 (12) 460 3304

www.delqs.com