South African Property Review September 2016

South African Property Review

PROPERTY SOUTH AFRICAN

September 2016

REVIEW

Sibaya Coastal Precinct Eco-friendly and biodiverse

A tale of three cities

PDP

Keeping perspective

in the property industry

s●

series D L

●

monthly cou n Our

Th e WOR

Focus on South African property development

Property development

by-country focu try-

September 2016

Australia From the land down under

SAPOA events

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contents

September 2016

PROPERTY SOUTH AFRICAN

Abland

REVIEW

South African Property Review

PROPERTY SOUTH AFRICAN

September 2016

REVIEW

Sibaya Coastal Precinct Eco-friendly and biodiverse

A tale of three cities

PDP

Keeping perspective

in the property industry

s●

LD

series

Abreal

●

monthly cou n Our

The WOR

Focus on South African property development

Property development

ON THE COVER Our regular quarterly property development focus keeps three provinces – Gauteng, KwaZulu-Natal and the Western Cape – in perspective

by-country focu try-

September 2016

Australia From the land down under

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12 14 16 22 28 30 33 40 48 50 55 56

From the CEO From the Editor’s desk Industry news Education, training and development SAPOA Mpumalanga partners with Penreach to promote property careers Legal update Competition Commission: Massmart complaint Planning and development Introspective city planning Future property development Exciting times ahead: where is large-scale development in South Africa headed?

Eye on the world Australia Mixed use development Sibaya Coastal Precinct: bringing the vision of connected living to life Energy efficient development Sasol’s new Sandton corporate office PDP Keeping perspective in the property industry On show A walk on the wild side Company in profile Events What’s on Upcoming events Off the wall Turning heads: the world’s first rotating tower

Oilgro

FOR EDITORIAL ENQUIRIES, email mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Managing Editor Mark Pettipher Copy Editor Ania Rokita Production Manager Dalene van Niekerk Designers Wade Hunkin, Eugene Jonck Sales Robbie Pansegrauw e: rob@mpdps.com; Riëtte Stevens e: sales@sapoa.org.za Finance Susan du Toit Contributors Brenda Bryden, Chris Reid, James Aling, Lekgolo Mayatula, Louise Hunt, Maud Nale, Mumtaz Moola, Phil Ruimte, Stanley Karombo, Stephen Langbridge , Photographers Johan van Loggerenberg, Jabu Nkosi, Karabo Sepharatla, Lenny K Photography/Flickr.com, 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

P R O P E R T Y

F U N D

from the CEO

Urban embrace

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nclusionary housing is a tool designed to make home ownership and rental accommodation accessible to low-income households.

Discussions on inclusionary housing started in South Africa in 2005, aiming to incorporate the private sector into actively contributing to the delivery of affordable housing, and promote greater integration by including affordable housing within higherincome housing developments.

There have been multiple strides to redirect development to ensure that an inclusive city is born through various mechanisms. One of the many tools that have been used to promote inclusive development is policy.

Policy is the guiding mechanism that drives transformation. Through the implementation of policies such as the Breaking New Ground Policy, people have been brought closer to employment opportunities and other services.

However, this change has often been slow and not inclusive enough.

Minister of Finance Pravin Gordhan echoed the need for spatial transformation of the apartheid city at the South African Institute of Architects (SAIS) We Design Conference 2016 in Durban. “The national spatial revolution is designed to change everything about apartheid and ensure that all South Africans enjoy a better life, a new nationhood and new sense of citizenship, as well as a new environment in our cities, towns and villages in which our children can grow up and future generations can thrive.” Inclusionary housing promises the delivery of inclusive neighbourhoods through the provision of affordable accommodation, and the creation of public spaces that are integrated and inclusive of different income groups and races for future generations.

Adopted by council in June 2016, the Spatial Development Framework 2040 (SDF)

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for the City of Johannesburg is a metro-wide spatial framework. The framework addresses major issues in the city’s spatial and social landscape, including the city’s Inclusionary Housing Policy. As mandated by the SDF, the City of Johannesburg Inclusionary Housing Policy is in the early phases of being reviewed.

As specified in the city’s interim Inclusionary Housing Policy, the policy incentivises private developers to incorporate the allocation of a minimum percentage (currently proposed at between 10% and 30%) of the total number of units of their development to the construction of affordable housing (currently defined as housing targeting all households falling within the affordable-housing range of R3 500 to R7 000 monthly income).

Further aims include achieving a conscious and better balance of race and income groups in areas that are well located and well serviced by jobs, social services and public transport, thus providing lifestyle and accommodation opportunities for people in areas from which they might otherwise be excluded because of the dynamics of the land market.

Nationwide, many projects have started to take an inclusionary nature, the “Jerusalem” Precinct in Newtown, Fleurhof mixed-income development and the Steenberg development in Tokai, Cape Town being among the first.

For inclusionary policies to be successful in South Africa, the policies should be sufficiently flexible to accommodate different contexts, and partnerships between the private and public sector need to be strengthened. The Department of Human Settlements points out the possible negative effects that income cliffs could have on developments. Lowerincome groups living in affluent areas could face problems with the cost of food, transport, schools, hospitals and other services in these areas. In this way, instead of benefiting lowerincome groups, inclusionary housing in poorly chosen areas could cripple them.

Internationally, inclusionary housing has proved largely successful. Countries such as the UK, the US, the Netherlands and Malaysia implement the principle of inclusionary housing in most new housing developments, the US having done so for four decades.

Felipe Leal, the past Minister of Urbanism for Mexico City, described at the SAIS We Design Conference how Mexico City is constructed

from a basic repetitive scheme of a local market, a square, a park, a church, a school and commercial activity, with continuous housing above and between all of these key public elements. In every community, from the poorest to the wealthiest, the market is the most direct illustration of an “open economy”.

In poorer areas, he noted that investment in public space triggers almost immediate small commercial activity, taking advantage of increased numbers of customers arriving in the area as a result of the improvement of the public space.

In the US, inclusionary housing programmes have resulted in the creation of many benefits for low-income households, including reduction of travel costs and absenteeism from work, as well as improved air quality, less traffic congestion, a diversified labour market, and shorter commutes. The US Supreme Court in 1979 stated there “can be no question about the importance to a community of promoting stable, racially integrated housing”. The benefits of eliminating residential racial segregation also include the creation of better communities and more tolerant and educated citizens.* In order to address the problems of affordability and accessibility in the housing market in China, cities have opted for a homeownership-oriented public policy aimed at the development of affordable housing. This policy is designed for lower-middle and middle-income urban residents, and involves government subsidies, profit caps for developers and units that are generally smaller in size than commercial apartments in order to maintain affordability. The quantity of affordable housing now reaching the market is substantial.* While an Inclusionary Housing Policy has not yet been legislated in South Africa, it could be a catalyst in the transformation of South African cities from fragmented environments into positive, integrated spaces. The City of Johannesburg has invited the private sector to collaborate and work with the city in the formulation of the policy so we find a solution as partners in the development process rather than the city imposing requirements.

I encourage our industry to involve itself with government at all levels to debate and influence Inclusionary Housing Policies.

Neil Gopal, CEO

* Information courtesy of the Journal Of Land Use And Environmental Law (1996), Dan Smit Development Capacity

“The challenge of urban spatial transformation in South Africa is really a broader challenge of how we work together to ensure that urbanisation and the accompanying growth of our towns and cities bring with it potential for faster, more inclusive growth” (Pravin Gordhan, 2016)

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SOUTH AFRICAN PROPERTY REVIEW

91

from the Editor’s desk

Optimism in the development sector In this issue and our quarterly developers’ focus, we speak to a number of developers about South Africa’s changing development landscape. What is encouraging is that each of the provinces we focused on (Gauteng, the Western Cape and KwaZulu-Natal) has at least one metro that’s working towards an easier and lessbureaucratic application system. Take a look at our lead article – there are exciting times ahead!

T

he property industry is a major player when it comes to creating jobs. New developments, precincts, ports and transport hubs all have the potential to employ a local workforce. SAPOA is taking the lead in promoting ease of doing business, and advocating the streamlining of the application and approval processes.

The country’s biggest stumbling block when dealing with property development is that many of our municipalities still continue to work in silos, and it is left up to provincial governments to create a unified and cohesive strategy to aid our developers.

That said, the City of Cape Town appears to be running its city like a business and understands the need to be competitive in order to attract investors. In a similar vein, the City of Johannesburg is said to be easier to deal with, as there is more open land available with fewer complicated environmental issues.

It’s predicted that we will see more commercial and industrial nodes springing up between Johannesburg and Pretoria, and perhaps there will be a merging and greying of those municipal boundaries.

Over in KwaZulu-Natal, we see the Aerotropolis initiative at Dube Tradeport, which is close to Durban’s airport. There is also an exciting transport hub development breaking ground at Cato Ridge. As for influencing the eThekwini Municipality, we

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are pleased to say that SAPOA has a seat on the city’s planning commission.

Like Cape Town, Durban is open for business and has developed a one-stop shop for catalytic projects (worth R500-million or more) that aim to stimulate the economy, create jobs and energise social upliftment.

The catalytic hub is designed to cut across red tape, and will be an investor’s gateway to the city.

Still in KZN, Tongaat Hulett Developments has begun work on its Sibaya Coastal Precinct, a project that is set to be both uniquely environmentally friendly and biodiverse. At the same time, it will be a powerful anchor for the Durban Aerotropolis.

Our annual Property Development Programme was once again a resounding success. We spoke to some of the delegates and got their opinion about the two-week course – and we welcome its new committee Chairperson Leanne Sowray, who has taken over the reins from Tony Gerhardt.

In our next edition we talk to SAPOA’s committee leaders and focus on the importance of education and research within the property industry.

Looking ahead to November, our theme will be “Green and the Environment”. We will look at what it means to be green and focus on the sustainability issues that go into the making of green buildings. We’ll also focus on bankers, and facilities and property managers.

Further ahead, our December/January edition will once again look at commercial property brokering and auctioneering (with a special focus on CSIs), as well as tackle another developers’ edition with a look at Port Elizabeth and East London.

With the municipal elections behind us, I hope that the new Mayors will continue to work with us and find ways to aid our industry’s growth. I look forward to seeing whether or not “new brooms” really do sweep clean.

Mark Pettipher, Managing Editor

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industry news

Development at Izinga gathers momentum Operations Manager Petrina Shunmugam and Estate Manager Theo Potgieter in the newly completed office at Izinga Park Community Centre

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zinga, the up-market residential development to the north of Durban’s vibrant Umhlanga commercial and retail centre, is forging ahead with strong sales and a new Izinga Park Community Centre that is due to open this month.

Development Executive for Izinga Andile Mnguni says more than 65% of the 2 000home development has been sold, with occupancy standing at 50% in active phases. The next milestone is the official opening of the new Izinga Park Community Centre, which is virtually complete with a few remedial items being attended to.

The Community Centre was created as the administrative heart of the entire development.

It consists of a security control room and an office which will be open on weekdays from 8am to 5pm. This will be manned

by Operations Manager Petrina Shunmugam, as well as newly appointed Estate Manager Theo Potgieter, who has an office upstairs.

This office – which was developed by Tongaat Hulett Developments using a BEE level one contractor – will be handed over to the Homeowners Association. It will handle any queries about the building code, estate rules, contractor’s protocol, and environmental and security matters.

The Community Centre will also include recreational

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facilities specifically for Izinga Park residents, with an openplan community centre room opening onto the grassed children’s play area and adjacent swimming pool.

The Community Centre was designed by Sagnelli Architects and conforms with the strict architectural code of the Izinga development. The area is being landscaped with 100%-indigenous plants.

Mnguni says that because Izinga is targeted at discerning purchasers looking for the tranquillity of coastal life in a rich natural environment, it is important to carefully control and monitor the architectural style and landscaping. The designs, which extend from the individual residential homes to the Community Centre, combine an earthy African colour palette with Mediterranean and Balinese forms. These are interspersed with open spaces in Izinga that are 100% indigenously planted using low-water-use plants. Private homes are required to have 80% indigenous planting and 35% soft landscaping.

Mandatory sustainability measures on all houses within Izinga are the use of only lowenergy/CFL light bulbs, solar energy for external lighting, solar thermal hot-water heating, timer switchers and geyser blankets on conventional geysers, and use of dual-flush toilets.

Sales are progressing well, with many families relocating from Gauteng to take advantage of the Durban lifestyle as well as the good security and convenience of Izinga relative to surrounding amenities.

Because Izinga is in close proximity to the King Shaka International Airport, many

SOUTH AFRICAN PROPERTY REVIEW

breadwinners are able to commute to major financial centres while their families benefit from living in Durban where the climate, facilities and close proximity to leading Model C and private schools in Umhlanga are major attractions.

Izinga is just two kilometres from Umhlanga beaches, the Umhlanga commercial and town centre and the Gateway Theatre of Shopping, and to corporate offices in both Umhlanga and La Lucia Ridge.

Commercial, educational and several different worship sites (which also fit in with the design code) complete the development.

Izinga is predominantly a residential development although provision has been made for a convenience centre with more commercial facilities in the estate in the near future.

Mnguni says captains of industry and some of KZN’s foremost executives and business leaders have made Izinga their home, emphasising both the quality of the area and the lifestyle it provides. The first homes were occupied in 2010.

Tongaat Hulett Developments estimates it will be fully built within five years. The efficient functioning and quality of the

environment is closely monitored by Potgieter who recently relocated from Gauteng, where he’s had 10 years’ of experience in running residential estates, to take up the position. He heads up a strong ground team that also oversees maintenance of the green open spaces. There are five kilometres of popular exposed aggregate concrete pathways that wind through the Izinga open spaces. These are patrolled 24/7 and are safe for children to ride their bicycles as well as for joggers, people walking their dogs and adult cyclists.

Potgieter says Izinga is a beautiful open suburb that is, at the same time, secured by an innovative and unobtrusive security system that provides perfect peace of mind.

Security guards patrol the development to ensure that it is crime free. Access points to the estate are strictly monitored to ensure that all vehicles entering and exiting are recorded in the system. Izinga is also closely monitored by security cameras.

Stand-by generators ensure that the control room, access gates and cameras work uninterrupted in the event of an electricity outage.

Residents of Izinga enjoy walking along the five kilometres of pathways that wind through the Izinga open spaces

industry news

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industry news

industry news

New Majuba FET College campus sets a new standard

C

Development Management

Quantity Surveying Leasing Tenant Co-ordination

+27 (12) (12) 346 4744 | www.illungile.co.za 8

SOUTH AFRICAN PROPERTY REVIEW

onstruction of the new Majuba FET College’s Dundee campus is providing thousands of higher-education-seeking youth with an opportunity to study in a state-of-theart college environment.

The campus comprises a gatehouse, administration offices, two double-storey lecture blocks measuring 2 200m² each, an exam centre, a resource centre, a student centre and walkways.

Demand for education facilities in Dundee has increased drastically over the past few years, with the growth in population and rising unemployment levels.

To address this imbalance, Majuba FET College partnered with Endumeni Municipality to establish Dundee campus at Mpati.

Students from Dundee, Glencoe and Nquthu would previously have had to travel to Newcastle to attend courses.

However, an interim venue followed by the newly constructed FET College has provided local students with convenient campus access.

As part of the Umzinyathi Community Education Project, Endumeni Municipality donated land to Majuba FET College at the entrance of Dundee for the establishment of the Dundee Technology Centre.

To ensure the most relevant courses were selected, research was conducted into available opportunities that would enable the community to become economically active. Courses will include management assistant, business management, electrical engineering, mechanical engineering and human resources management.

“The soil was particularly rocky, which proved tricky

at first,” says Tjaart van der Walt, head architect at LVDW Architects. “But the engineers managed to break through for construction, which commenced in March 2014. We opted for a conventional design in an effort to save on costs.

Brick construction with face brickwork fulfilled all the requirements of this college infrastructure. The neutral colours of the face brick blended in well with the surrounding environment.”

The bricks were laid in a conventional stretcher bond pattern, while the sturdy herringbone pattern was selected for the pavers.

Pattern work was included in areas of the face-brick façade to express its African context.

The brickwork included combinations of Corobrik’s range of Nebraska Travertine and Country Classic Travertine face bricks for the maintenancefree façades, with Champagne and Burgundy pavers used to complement the building’s aesthetic and surrounds.

According to Musa Shangase, Corobrik’s Commercial Director, “The choice of colours and textures works particularly well in the environment. The lifetime cost-saving benefits of the face bricks are just one of the many attributes that will serve this project well into the future.

“It makes a lot of sense that we should build infrastructure to serve communities for hundreds of years with little maintenance, so that scarce resources can be better spent on providing new facilities and other improvements.

Brick construction provides a unique proposition in facilitating that opportunity.”

industry news

Emira rejects Arrowhead’s expression of interest

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he Board of Directors of Emira Property Fund has rejected Arrowhead’s unsolicited, non-binding, highly conditional expression of interest to acquire all of Emira’s issued share capital on the basis that it has no benefit to Emira’s shareholders.

“The Board has considered Arrowhead’s expression of interest and we believe it’s not in the best interests of Emira shareholders,” says Emira Chairman Ben van der Ross.

“There are many reasons for this.

The proposal is very opportunistic.

The very low share-swap ratio proposed represents a discount to Emira’s current price and Emira has also traded at a premium to the ratio for the vast majority of the last 12 months. The ratio is also at a substantial discount to Emira’s net asset value.”

“Not only is the proposal opportunistic but it would also leave Emira shareholders with shares in Arrowhead, an entity with a quality of portfolio that Emira itself would not invest into,” says Geoff Jennett, Chief Executive Officer of Emira. “We believe there’d be limited, if any, synergies between the two companies, their assets or their strategies. We are very different businesses, focusing on different sectors of the property market.”

Emira, established in 2003, offers investors a straightforward REIT structure. Over more than a dozen years, it has established a track record of good governance, shareholder engagement and transparency. Emira has a diversified portfolio of South African commercial real estate, a long-term offshore investment in Growthpoint Properties Australia (GOZ) with a total asset value of R14-billion, and benefits from greater diversification in funding sources thanks to its DMTN programme. In addition, Emira has a much larger average rand

value per property, a portfolio of meaningfully higher quality, and a significantly greater total asset value. Supporting this, Emira has a strong, experienced team of asset managers with an ability to create value from its asset base.

In contrast, Arrowhead listed in 2012 and has a complex structure with several piecemeal minority stakes in local counters, limiting its diversification. In its own portfolio, Arrowhead has a meaningful exposure to smaller, lower-grade office buildings.

Arrowhead intends moving a large portion of these smaller assets into a separately listed vehicle with further non-core office assets of other funds, but Arrowhead’s investors would still be exposed to the economics of the lower-quality office-building sector through a significant interest in the new entity.

Emira has been strengthening its portfolio composition over the past few years by reducing its exposure to lower-grade offices, and it continues to rebalance its portfolio to ease its office exposure. A transaction with Arrowhead would be completely counter to this strategy, and Emira believes that increased exposure to the office market is inappropriate at this time, given the forecasted continuing weakness in the office market. Emira will be augmenting its existing strategy with additional initiatives planned to further rebalance the sectoral exposures into the other, more defensive sectors.

“Emira has built its portfolio, structures and strategy to provide the best value for its shareholders in a sustainable long-term investment,” says Jennett. “With this in mind, we have rejected Arrowhead’s expression of interest on the basis that it does not benefit Emira’s shareholders.”

industry news

Palazzo Façade Nairobi, Kenya

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industry news

Atterbury kick-starts development at landmark Richmond Park

Gerrit van den Berg, Head of Atterbury’s Western Cape operations

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tterbury has broken new ground with the commencement of internal works at Richmond Park for the first of two property developments on the site of the biggest land restitution in the Western Cape.

“We’re thrilled to announce the first two developments at Richmond Park will be for CTM and Cape Fruit Coolers,” says Gerrit van den Berg, who heads Atterbury’s Western Cape operations. “These deals have triggered the start of the internal services installation and allowed us to appoint Burger and Wallace as the contractor for this portion of the work in Richmond Park.”

Richmond Park is a multibillion-rand mixeduse property development in Milnerton, Cape Town, by major shareholder and leading South African property investor and developer Atterbury, and partners the Richmond Park Communal Property Association (CPA), Qubic 3 Dimensional Property and Bethel Property.

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One of the largest property developments in Cape Town, Richmond Park’s 300 000m² of greenfields development rights are on an 84-hectare site that’s part of the milestone land restitution settlement.

The land is owned by the Richmond Park Community, who were forcibly removed from it between 1972 and 1984.

In 2014, the land transferred back to the community – about 401 families representing 5 300 people spanning five generations.

The Richmond Park Community leased the land to the Richmond Park Development Company, and has a 25% shareholding in the development company.

“It has been an eight-year journey since winning the tender, and we are delighted that development at Richmond Park is entering its next phase and that this vision is becoming a reality,” says Van den Berg.

“The project has enjoyed tremendous support at metropolitan and provincial level and, of course, from the CPA. Together we have worked tirelessly for this ambitious project to take shape.”

The Cape Fruit Coolers site spans 3,5 hectares, on which a 17 000m² facility will be developed in phases to expand its business.

Richmond Park provides the ideal location for its additional facility, with easy four-lane road access from both the N7 and N1 highways, and the ability to accommodate the trucks essential for the operations of this service provider to the fruit-exporting business.

CTM, the well-known tile, taps and bathroom brand, has acquired 9 500m² of land at Richmond Park.

Its new 5 000m² retail and distribution centre keeps it close to customers, with the benefit of superb visibility from its N7 highway frontage and excellent access.

The preparation of both sites began on 1 August, for completion in March 2017. The top structures are expected to be completed

by November 2017 and May 2018 respectively.

The deals, which are among only a handful of sales opportunities at Richmond Park, are expected to be a catalyst for further development, and have assisted the developers in achieving important targets.

“Now that the ball is rolling, we expect Richmond Park to develop rapidly,” says Van den Berg. “There are

An aerial view of Richmond Park in Milnerton, Cape Town

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already a number of deals in the pipeline that we hope to be able to announce soon.”

In the current economic climate, many businesses are focussed on becoming more productive and seeking greater efficiencies from their offices, showrooms, warehouses and facilities.

Richmond Park is perfectly timed to support this.

Richmond Park provides businesses with an iconic, superbly located, top-quality commercial park with retail, light industrial, offices, logistics and warehousing development.

Plus, it is the dominant business site on the N7 highway with the best access.

“What’s more, it’s a great story where the community benefits,” says Van den Berg.

Job creation is just one of the ways in which the Richmond Park community will benefit. Over the next five to 10 years, during its construction, Richmond Park’s development should create about 15 000 jobs.

Already, 120 people have graduated with new skills as part of the Richmond Park Treasury Trust skills development programme.

In addition, more than 30 employment opportunities have been created so far.

2016

education, training and development UPCOMING

EVENTS SAPOA Mpumalanga partners with Penreach to August promote property careers

Region

Date

REGISTER EACH YEAR WE ACCEPT a large number of listings and advertisements from professionals and service providers across the entire spectrum of property activities. Don’t miss out on this well-used, popular industry resource.

SAPOA aims to provide added value by offering the basic listings free of charge to all members. In this respect, we hope that we are assisting you in your marketing endeavours to some extent.

We thank you for your support in previous years. In an effort to improve the look and ease of usage, we have redesigned the directory layout to a four-column grid and have made available certain entries that will stand out from the norm.

Event

SAPOA Mpumalanga has partnered with Penreach East London 11 August East London Golf Day as part of its Careers Day to promote career Gauteng 11 August SAPOA Women’s Breakfast opportunities in the property sector 11 and 12 August

Negotiation Skills Masterclass Programme (NSMP)

Mpumalanga

17 and 18 August

Negotiation Skills Masterclass Programme (NSMP)

Port Elizabeth

18 August

PE Networking Event

Gauteng

22 to 24 August

Property Financial Programme (PFP) Intermediate, University of Johannesburg

Gauteng

26 August

Introduction to Brokering Seminar (Day 1)

ecom.

The Western Cape, 7705 t: +27 (0)21 448 2666 f: +27 (0)21 448 2667

2014/08/01

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Directors: Edward Brooks: Michael Magner:edward@activate.co.z a michael@a Reon van ctivate.co.z der Wiel: a reon@activ ate.co.za

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Managers

CHAMELEON

P.O.Box 4063, ARCHITECTS Tygervalley The Western , Cape, 7536 t: +27 (0)21 949 2530 f: +27 (0)21 945 4183

and administr ators

P.O.Box 12932, CHRIS OWTRAM ARCHITE Eastern Cape, Centrahil, Port Elizabeth, CTS CC P.O.Box ARCHITECTURE 1926, Pinegowrie 6006 t: +27 (0)41 Gauteng, , 373 4340 2123 f: +27 (0)41 t: +27 (0)11 373 4324 022 6260 f: +27 (0)86 2:14:36 PM 648 8262 BATLEY

DESIGN

PARTNER

S ARCHITE

CO-ARC INTERNA

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& ARCHITE P.O.Box 52685, TIONAL CTS Saxonwold Gauteng, , P.O.Box 52604, INC 2132 Saxonwold t: +27 (0)11 Gauteng, , 326 5000 2132 f: +27 (0)11 t: +27 (0)11 326 5002 447 1344 f: +27 (0)11 447 1343 BENTEL ASSOCIA TES INTERNA P.O.Box 87619, TIONAL CONSULT THREE ARCHITE Gauteng, 2041 Houghton, P.O.Box 71671, CTS t: +27 (0)11 Eastern Cape, Central, Port Elizabeth, 884 7111 f: +27 (0)11 t: +27 (0)41 6006 884 7110 585 0086 f: +27 (0)86 513 2278 BILD ARCHITE P.O.Box 95664, CTS (PTY) LTD CSAR 3 Gauteng, 0145 Waterkloof, Pretoria, P.O.Box 52673, t: +27 (0)12 Gauteng, 2132 Saxonwold, Rosebank, 346 1295 f: +27 (0)12 t: +27 (0)11 346 1249 880 2466 f: +27 (0)11 447 3441 BLACKSH

&

EEP

DESIGN 223 Tribella, 166 Gauteng, 2192 Rivonia Road, Morningsid e, t: +27 (0)87 700 8291 f: +27 (0)86 225 6665 BNM 3 BHISHO

P.O.Box 5, Bhisho, Eastern Cape, t: +27 (0)40 5605 635 1951 f: +27 (0)40 635 1961

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DAVID CRAIG

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P.O.Box 153, CC Louis Louis Trichardt, Trichardt, Makhado, Limpopo, 920 t: +27 (0)15 516 2460 f: +27 (0)86 524 3827

DBM 3 JHB

(PTY)

LTD P.O.Box 69535, Gauteng, 2021 Bryanston, Johannesb urg, t: +27 (0)11 467 5299 f: +27 (0)11 467 6067 DBM ARCHITE

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AUCOR PROPER TY

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BALSHAW

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Block Ad.indd P.O. Box 13936, Mowbray, 1

ADENDORFF INTERIORS ARCHITECTS &

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Mpumalanga Cocktail Dinner

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Ranked as the #1 design engineer firm ing Engineeri by revenue in magazine ng News-Record rankings, ’s annual industry AECOM fully integrate is a premier, and support d infrastruc broad range services firm,ture operation of markets. with a AECOM’s s in Africa 1,900 people boast with a proud more than delivering solutions excellence and history of industry for our clients developing across sectors. all

Contact

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R REGISTE

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Research Breakfast: Latest Office Property Trends

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DEVELOPERS

Gauteng

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SAPOA Proper ty

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2014 - 2015 40 2014/10/09

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Belmira Chirwa, Mpumalanga Regional Secretariat KwaZulu-Natal 8 September KZN Breakfast Seminar

Mpumalanga

A

15 September Mpumalanga Breakfast Seminar

ccording to 15 James About the partnership and KwaZulu-Natal September Introduction to Brokering

Aling, the Regional what this meansProperty for SAPOA and 27 to 30 Essential Commercial Gauteng September Programme (ECPP), Wits University Chair of SAPOA Mpumalanga, for Mpumalanga, Aling said, this particular collaboration “WeCommercial are proud Property to partner with 27 to 30 Essential KwaZulu-Natal September has been ongoing for about Programme Penreach in promoting exposure three years. Its objective learners in these schools is to Poweramong Gauteng TBC Hour Breakfast who may not have reach schools in previously Gauteng TBC Gauteng Networking Eventheard about opportunities in property as disadvantaged areas in an a career option. For now, we efficient manner. Penreach, October will continue to partner the the country’s biggest Region Date Event biggest educational outreach educational outreach Limpopo is a 7nonOctober Limpopo Breakfast Session programme, programme in the country. profit in-service skillsTogetherWorkshop we will explore ways Mpumalanga 13 October Green Building development of extending our reach in the programme Gauteng 14 October Gauteng Golf Day province. This is in line with aimed at improving the Limpopo 20 October Limpopo Golf Day quality and accessibility SAPOA’s vision and commitment, 24 to 25in Negotiation Master ofKwaZulu-Natal education available whichSkills extends to educating October Programme(NMSP) disadvantaged communities future generations of South Africa, resulting in benefits around and Please see Sapoa.org.za Dates areMpumalanga subject to change. for regular updates. such as empowerment, the surrounding areas. education and training.”

SAPOA targeted Grade 12 learners from the following schools on the Lowveld in which to promote the property sector as a career of choice: ●● Mandlesive Secondary School ●● Cyril Clarke Secondary School ●● Mayibuye Secondary School ●● Gedlembane Secondary James Aling, SAPOA Mpumalanga School Regional Chair ●● Mhlume Secondary School

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For advertising opportunities and rates contact Robbie Pansegrauw t: +27 (0)21 856 0321 e: rob@mpdps.com or Riëtte Stevens t: +27 (0)71 877 5520 e: sales@sapoa.org.za SOUTH AFRICAN PROPERTY REVIEW

63 11

legal update

Competition Commission: Massmart complaint

By Mumtaz Moola

T

he Competition Commission received a number of complaints regarding exclusivity clauses in the industry. As a result of these complaints, the Commission elected to conduct a market inquiry into the grocery retail sector. Massmart chose not to wait for the conclusion of the retail market inquiry but rather to take its complaint against Shoprite, Pick n Pay and Spar to the Competition Tribunal. In other words, because the issue is of great significance to Massmart’s plans to expand in the grocery market in South Africa, it was not willing to wait for the outcome of the Commission’s market inquiry, and has chosen to ask the Tribunal to make a decision about the lawfulness (alleging anticompetitive behaviour) of these clauses.

SAPOA has been cited as fourth respondent to the proceedings

SAPOA’s role as a respondent Massmart states in the pleadings that SAPOA is cited in the complaint merely for the “interest” that it and its members have in the matter. Importantly, no relief is sought against SAPOA or any of its members; i.e., Massmart asks for no action to be taken by the Tribunal against SAPOA or its members.

However, if Massmart is successful in its complaint, SAPOA’s members may well be affected in respect of new lease agreements that are to be negotiated or concluded, and possibly with regards to existing lease agreements that contain exclusivity provisions.

Existing leases will need to be evaluated on a lease-by-lease basis, and it is possible that, should Massmart be successful in its complaint, the exclusivity clause in an existing lease may be rendered void.

On 11 June 2015, Massmart officially referred its complaint against Shoprite, Pick n Pay and Spar (retailers) to the Competition Tribunal, following the Commission’s decision to “non-refer” the matter because of the market inquiry.

Exceptions The retailers each argue that the substance of Massmart’s complaint referral does not meet the strict procedural and content

12

SOUTH AFRICAN PROPERTY REVIEW

requirements to allow the respondents to deal with the complaint.

In response to Massmart’s complaint referral, Shoprite, Pick n Pay and Spar (“the other respondents”) have all filed pleadings known as “exceptions”. The exceptions set out arguments as to why the substance of the complaint referral to the Tribunal by Massmart does not meet the strict procedural and content requirements to allow the respondents to deal with the complaint.

In short, the other respondents make this request “in the interests of justice” and on the basis that: ● The Massmart complaint is extremely broad and has not been brought on an urgent basis; ● The key issues set out in the complaint overlap significantly with those that are included in the terms of reference of the market inquiry; ● Massmart seeks relief at the same time as the market inquiry is to be conducted; ● The Commission has indicated that its preferred means of investigating long-term exclusive leases is by way of a market inquiry; ● Spar and other respondents are required to duplicate their efforts in responding simultaneously to both the complaint and the market inquiry; and ● It is in the interests of justice that the Competition Tribunal stay the complaint referral due to the overlap of issues and likelihood of pre-emption and inconsistent findings by the Tribunal and Commission’s market inquiry team.

Massmart has filed a combined answer to the separate exceptions because all three substantially raised the same grounds. One of the important points raised by the other respondents, which is of particular relevance to SAPOA’s members, is that “Massmart failed to join the necessary parties” (the landlords) to the proceedings. The landlords should, they argue, have been called upon to answer the claims of anti-competitive behaviour themselves because they are party to the affected agreements.

In response to this point, Massmart has responded as follows: ● It is at this stage impossible for Massmart to identify every landlord with whom the excipients hold exclusive leases, and this was one of the reasons that Massmart cited SAPOA as a respondent. ● The landlords will not be prejudiced by a finding that the rights to exclusivity are unlawful. ● SAPOA represents the vast majority of the landlords and the landlords are therefore properly represented before the Tribunal through their representative body, and can intervene in the event that they wish to oppose the relief sought by Massmart. ● SAPOA has itself lodged a complaint with the Commission about the very same conduct. ● Massmart also includes a request directed at the respondents for details of the names and addresses of the applicable landlords and a copy of the relevant lease agreements.

Important for SAPOA members As a result of Massmart citing SAPOA as a respondent and the response above to the non-joinder complaint, it is important that all SAPOA members are made aware of and kept up to date on this matter as though they were direct respondents to the proceedings.

However, as mentioned by Massmart, any one or more of SAPOA’s members may at any appropriate time and on an individual basis seek the Tribunal’s permission to intervene in the event that they wish to oppose the relief sought by Massmart.

Massmart conceded that its pleadings need to be improved in respect of the abuse of dominance allegations. However, Massmart argued that it makes out a proper case in terms of Section 5, regarding vertical restrictive agreements.

The focus of Massmart’s allegations of vertical restrictive agreements was clarified as being a “network of exclusive lease agreements” in South Africa, which together

legal update

have the effect of substantially lessening or preventing competition by impeding Massmart from competing in the national market for fresh groceries. Although the principle of a network of agreements has been recognised in European case law, there was some debate as to whether this type of case fits within the parameters of Section 5 of the Competition Act. Counsel from both sides submitted that where pleadings are found to be defective, the usual position is to grant the party an opportunity to rectify its pleadings, and only where pleadings are irremediable should they be struck out.

It is likely that the Tribunal’s order will be to uphold the exceptions on the basis that Massmart be granted an opportunity to remedy its pleadings.

Stay application Spar and Shoprite also argued that the proceedings should be stayed (suspended) pending finalisation of the Commission’s Grocery Retail Market Inquiry.

They explored the legal and practical implications of running a complaint referral in parallel to a market inquiry, which would cover the same broad subject matter, as well as the possibilities of pre-emptive and conflicting findings.

It is difficult to predict whether the Tribunal will elect to stay proceedings.

For policy reasons and considering that it is likely that these proceedings will not be completed before finalisation of the market inquiry, it is possible that the Tribunal may be reluctant to grant the stay application.

A stay of proceedings would create a precedent that would have a significant impact on the prosecution of prohibited practices before the Tribunal during the course of market inquiries. In our opinion, this is a precedent the Tribunal may wish to avoid.

Joinder of necessary parties (landlords) Relevant to SAPOA is the issue of non-joinder of the landlords.

As was set out in the heads of argument, the retailers argued that joinder of SAPOA as an industry body is insufficient because the relief sought affects SAPOA’s members directly.

Massmart asserted that no relief is sought against SAPOA or its members, and that interested parties with a material interest are entitled in terms of the Competition Act

legal update

to participate in the hearings and to enter proceedings at any stage.

We expect that if the Tribunal had serious concerns about the landlords’ involvement in the proceedings, it would have asked SAPOA for further detail on the practicalities of citing each landlord individually. The Tribunal did not ask to hear from SAPOA on this issue, which can be interpreted as an indication that the Tribunal is probably comfortable with how Massmart has dealt with the landlords’ participation.

However, through the hearing, the importance of evidence and participation from the landlords was highlighted. In due course, it is likely that representatives from SAPOA’s members may be required to give evidence at the hearing of the matter.

Therefore, regardless of the approach that the Tribunal takes on this issue at this preliminary stage, it is important that SAPOA and its members anticipate the role that they are likely to have to play in the matter, and begin to work on formulating a position with regards to the issues raised

by Massmart.

Impact on market inquiry submissions It has become clear that the terms of the exclusive lease agreements that exist will be fundamental to a proper analysis of the effects of these agreements.

It is also clear that significant evidence of effects will certainly be required. This may, for example, be in the form of correspondence or complaints by smaller retailers to landlords.

We acknowledge with thanks the information supplied by Stephen Langbridge of Fasken Martineau Attorneys.

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

SOUTH AFRICAN PROPERTY REVIEW

13

planning and development

Introspective city planning T

Lekgolo Mayatula is SAPOA’s Planning and Development Manager

The rapid growth in urbanisation is a global phenomenon.

This has forced the planning profession – and various other professions – to investigate and develop solutions that would promote sustainable urbanisation systems 14

he municipal elections are done and dusted, and the citizens of the country have made their voices heard.

But the questions remain: is anyone listening? Is anyone paying attention? Is there going to be a difference?

The answers lie in our ability to take an introspective view on what we have done up to this point, and what we need to do in order to build a united country. Is this even a possibility?

My opinion is a resounding yes.

Yes, it is possible for us to continue with determination and vigour on the belief that a united, thriving, multi-racial and equitable South Africa should – and can – be achieved.

But how do we go about this?

The planning profession is one of the key professions to assist with crafting the path towards reaching this reality.

The rapid growth in urbanisation is a global phenomenon, and this has forced the planning profession – and various other professions – to investigate and develop solutions that would promote sustainable urbanisation systems.

According to Gabriela Rico (Urbanisationafrica.net), Africa as a whole has been urbanising rapidly between 1950 and today, with an increase of urban residents from 14% to 40%. This is expected to reach 50% by mid-2030. The “African Economic Outlook 2016: Sustainable Cities and Structural Transformation” report highlights that the trends, pace and shape of urbanisation in Africa differs from one country to the next but the continent is performing well with regards to economic, social and governance issues,

SOUTH AFRICAN PROPERTY REVIEW

and has encouraging prospects for the future.

Evidence attesting to the positive future prospects of the continent are reflected in last year’s real GDP average growth of 3,6%, which was higher than the global average growth of 3,1% (and more than double that of the Euro area). Africa is the second-fastest-growing economy in the world (after emerging Asia), with countries such as Egypt, South Africa and Tunisia at an advanced stage of urbanisation.

The positive prospect of sustained economic growth in Africa is a great reason to celebrate – but it also requires commitment, dedication and hard work, which in turn need to translate into the development and implementation of sound regulatory policies, effective public-service delivery systems and effective urban poverty alleviation strategies, among other structural reforms. The successful implementation of these reforms and systems will definitely boost Africa’s competitive edge and this requires every country to take stock of their current policies and systems.

South Africa has a hierarchical multi-polar urban system with eight metropolitan municipalities, and its cities – which are considered to be the most unequal on the continent – are the centres of economic activity. The rising costs of intermittent energy and water supply, inadequate education policies that lead to skills shortfalls, transport congestion and the rapid

growth in demand for well-located housing are just some of faced by South African cities. The planning profession, in partnership with other professions, is able to play a crucial role in addressing these challenges.

Policies such as the Urban Development Framework, the Neighbourhood Development Programmes, Spatial Development Frameworks (at national, municipal and regional level), Integrated

The positive prospect of sustained economic growth in Africa is a great reason to celebrate – but it also requires commitment, dedication and hard work, which in turn need to translate into the development and implementation of sound regulatory policies, effective public-service delivery systems and effective urban poverty alleviation strategies, among other structural reforms

planning and development Human Settlements Strategies, Integrated Development Plans and Precincts Development Frameworks place the responsibility of creating transformed and sustainable cities on the doorstep of the planning profession.

The task for the profession is to take an introspective view of what it has managed to achieve thus far, and what still needs to be done. The profession needs to listen attentively to the voices of the people, and develop solutions that not only address their immediate needs, but also ensure that the needs of the future generations are taken care of.

The Sotho proverb that states “Motho ke motho ka batho” (“I am because you are” eloquently expresses the indisputable fact that we all need each other in order to survive. The question is whether the planning profession has managed to create cities that respond to the symbiotic relationship between the people, the economy and the environment.

The planning profession needs to assess whether the building blocks (the blueprint) of our cities have been designed to bring people together or to keep them apart. Have our cities embraced diversity or rejected it? How has this blueprint translated in terms of actual infrastructure on the ground? What needs to be done to change this blueprint for our cities, taking into consideration the additional pressures of urbanisation, global warming and the volatile global economic climate?

Collaboration and innovative actions respond to the questions raised above. Some suggestions in this regard include: ● the upgrading and maintenance of urban water infrastructure to prevent a water crisis;

● supporting alternative energy initiatives. This has the potential to create 98 000 “green” jobs in the next two years, 255 000 in the medium term and 450 000 in the long term; ● the inclusion of societies (especially the poor) in urban development initiatives through their active participation; ● the promotion of economic development through higher agricultural productivity, industrialisation, more productive urban services and foreign direct investment in urban corridors; ● providing cost-effective transport systems, safer housing, social safety nets, social businesses on a large scale and safer cities; ● the building of high-rises in the central city in order to prevent urban sprawl and the affordability of these units for the poor and marginalised. This needs to be taken into consideration: the proposal has the potential to relocate them to the urban periphery; ● developing management systems that support local solutions used to address urbanisation challenges (e.g. back-yard dwelling, which provides an alternative accommodation option within the urban environment); ● using technology to create accessible and affordable learning and employment opportunities; ● understanding the actual impact of climate change on cities. This requires the development and implementation of inclusive strategic environmental risk management plans, so government needs to radically review the manner in which it operates and how it responds to predictable as well as unpredictable events; and

● the facilitation and inclusion of women and the youth as active participants within the economy.

Spatial planning models are one of the tools (or languages) the planning profession has at its disposal. If used effectively, they will radically change the development patterns of the country. The current reality as highlighted in the article “Realities confronting urban transformation in South Africa” (Aurecongroup.com) emphasises that the development patterns of our cities have not fundamentally changed (i.e., they are mainly single-function land uses with decentralised neighbourhoods linked through personal carbased transport). Some of the reasons for this include the lack of enforcement of spatial plans, inconsistent linkages to infrastructure planning, a lack of deep understanding of economic potential and the drivers of growth, and the lack of appropriate skills in sufficient quantity.

The rapid rural-urban migration taking place in the country (with the majority of this transition being executed by young people in search for better living opportunities) has placed pressure on planners to interrogate their familiar spatial models in order to create spaces that directly respond to the needs of the poor (and, in most instances, people with low levels of educational qualifications).

The challenge is whether the planning profession is bold enough to experiment with various measures to reduce urban inequalities and be comfortable with the fact that it will not always get the planned results – but the effort, commitment and dedication will deliver different results. These results will not only change the development patterns of our cities as they strive to be more compact and multifunctional from a land-use

perspective, they will also create a different culture – one that is united, that thrives economically, that is equitable and multi-racial, that embraces diversity and that is respectful.

All this is possible. However, markets do play an important role in guiding location, and therefore the public sector needs to continuously and actively engage with the private sector when compiling the various policies (or respective legal frameworks and strategies).

SAPOA’s recent participation in a workshop organised by the Gauteng City-Region Observatory on understanding the role of urban developers is an initiative the illustrates how planners are actively exploring ways of engaging with the spatial frameworks, and investigating innovative ways of dealing with the various challenges that impact the development patterns of our cities. In this particular case, the City of Johannesburg’s Spatial Development Framework was used to contextualise the city’s development vision, and the audience included the public and private sector, academia and community organisations.

Such engagements are crucial in changing the future of our country, and other municipalities should take direction from this initiative to create similar platforms.

However, these should be target-focused and resultsdriven. Municipalities have started on their internal Integrated Development Planning processes, and press adverts for public engagements will most likely start appearing in your local newspapers from next month. The private sector is reminded to participate in this process actively so that we collectively determine the future of our country and its development patterns. Let’s create an urban pattern that will authentically display the colours of a rainbow nation.

SOUTH AFRICAN PROPERTY REVIEW

15

future property development

Exciting times ahead: where is large-scale development in South Africa headed?

SAPOA weighs in on the future of property development in South Africa’s three main metros, and the effect of national and regional legislation Interview by Mark Pettipher Compiled by Brenda Bryden

R

ecent legislative changes, such as the soon-to-be-redundant Act 70 of 1970 (The Subdivision of Agricultural Land Act) and the pending implementation of the Spatial Planning and Land Use Management Act (SPLUMA), are redefining the responsibilities of provincial and local government in terms of development planning decision-making. SPLUMA makes it very clear that planning permissions and development rights are basically a municipal function.

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SOUTH AFRICAN PROPERTY REVIEW

The lie of the land in Cape Town “The property development industry, a major wealth creator, now has to deal only with local municipalities in terms of land use rights,” says Deon van Zyl, Chairman of the Western Cape Property Development Forum (WCPDF). “The province is no longer involved in deciding appeals.

The Western Cape Land Use Planning Act provides the legislative framework for the province, and municipal by-laws define how each municipality grants development rights.

“But it’s one thing to have the statutory framework in place – the real question is whether there is political and bureaucratic willpower to make the legislation work for or against investment. Political decisionmakers and senior officials can use the legislation either to facilitate economic development or prevent it. We are starting to see some municipalities competing with one another to attract investment. These tend to be the metros. Sadly, many of them continue to operate in old silo structures.

future property development In some areas, there is also an overlap of economic zones between different municipalities. This is the area in which the provincial government should act as a discussion facilitator between municipalities.”

Generally, there is interest and political willingness to support and facilitate property development in the province and in the City of Cape Town. At a national level, Cape Town is seen as a successful economic node and a well-governed city.

The property development and investment market wants predictability, safety and security. It views the Cape as a safe investment environment providing all these things, so the scene is set for growth in this industry.

The goal of the WCPDF is to build relationships with Western Cape decisionmakers in order to ensure greater facilitation and faster decision-making. At city level, explains Van Zyl, “our mayor understands that bureaucratic processes need to improve if the city wants to attract investment and be competitive.

“The City of Cape Town is becoming an active supporter of the property industry. For example, the City of Cape Town has implemented a world-first system – an electronic development application management system that will halve timelines.

However, some refinements still need to be made before the system works seamlessly.

The WCPDF is actively working with the city to address the teething problems.”

Future development potential in the Cape In Cape Town’s city bowl, readily available developable land is no longer, well, readily available. Prices are soaring as a result of the space constraints set by the sea and the mountain. Brownfield development is taking place, bringing with it its own complexities such as heritage factors and the all-too-oftenheard “not in my back yard” brigade.

The port of Cape Town is being constrained by the lack of handling space and traffic congestion. It appears that mooted port expansion will have far-reaching marine implications impacting on wave action. Port activity is also weather-dependent, causing delays at times. The pressure on the port’s logistics capacity is illustrated by the number of container storing areas that appear on the horizon as and when land can be sourced in an ever-growing radius around the harbour, competing directly with other land uses.

“The most logical place to create more capacity is to focus on the large-scale port in Saldanha – the deepest port in South Africa,” says Van Zyl. “Saldanha’s port is perfectly positioned to be a major transport hub. It has the space to accommodate the commercial trading of all the other ports in South Africa, the depth to accommodate mega-ships, and the capacity to put in a railway line and move goods around the country.

“From an international-trade-route point of view, it makes perfect sense to turn Saldanha into a big bulk-breaking destination.

This will require intense cooperation between the Department of Trade and Industry, the Western Cape provincial government, Transnet and other relevant authorities.”

According to Van Zyl, opportunities abound in the Paarl/Wellington area, positioning it to become a potential growth node. A large number of families have already relocated there to enjoy the luxury lifestyle currently on offer. But by far the greatest growth potential for a metropole is the northern extension – the link between Paarl and the Northern Suburbs. Some distribution centres have already set up along the N1 and the R300. He speculates that this route is set to become the “Ben Schoeman Freeway” of the Cape.

“Moving further afield, Malmesbury will also make good sense for investment because it is well situated in relation to other centres such as Wellington, Paarl and Stellenbosch,” he says.

“It has vast swathes of agricultural land that may or may not be productive. But the key to releasing agricultural land for rezoning is in the hands of national government. If the Minister of Agriculture doesn’t buy into this vision, the lack of available land escalates – as does the cost of land. The Western Cape is so much more expensive than anywhere else in the country. We don’t have enough supply of land, and that means that the intrinsic value capture here is just going to naturally continue. It will become a very expensive province.”

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

What is the future of Cape Town’s CBD? While 70% of the Western Cape’s economy is located in the metropole of Cape Town, Van Zyl believes that as a result of a lack of land, real estate prices, and transport and congestion issues, the CBD may see an exodus similar to that of the late 1980s and early 1990s, of businesses that cannot tolerate traffic congestion.

“In time, we will see Cape Town absorbing places such as Stellenbosch, Malmesbury and Paarl, moving closer to becoming a city-state of multiple nodes, and housing close to 85% of the province’s economy within an hour’s radius of Cape Town,” he says.

The Cape Town CBD will continue to optimise the lifestyle opportunities and urban components and will focus on the optimisation of land, the densities, converting existing commercial property into residential property and creating taller buildings to accommodate demand.

“Real concern exists around the continued viability of the Port of Cape Town because there is little room for expansion.

But if the Port of Saldanha’s potential is unleashed, some of the existing harbour area could accommodate an extended V&A Waterfront,” Van Zyl says.

SOUTH AFRICAN PROPERTY REVIEW

17

future property development Big things ahead for Durban In KwaZulu-Natal (KZN), the eThekwini municipal area and Durban City is where most of the big development is taking place, although other developments are on the go in other areas. The KZN MEC for economic development Sihle Zikalala is very pro-development, seeing it as a way of creating jobs and growing the economy, and lending his support to the industry. eThekwini Municipality has implemented the necessary steps for SPLUMA, and it is hoped that this will speed up the entire development process. The Act has played a large role in streamlining the processes for smaller developments but because Durban has masses of agricultural land that needs to be rezoned in accordance with Act 70 of 1970, some problems are being encountered.

Other troublesome issues include the length of time it takes to conduct and process environmental impact assessments and the existing legislation around water-use licences.

“In Durban, no development can be undertaken within 500 metres of a wetland, effectively removing the potential for any development along the coastline,” says Edwin van Niekerk, SAPOA‘s KZN Chairman.

“The Act hasn’t taken this into account, and while it may work elsewhere in the country, it doesn’t work in Durban. Here you have to go through a special application process to get a water-use licence and the land released.”

Initiatives to streamline project development Durban has lots of vacant land, and a huge study for urban regeneration is currently being conducted by the city. In addition, several big initiatives have been put in place to help promote and manage potential development projects.

Durban has developed a city planning commission – the first in the country – on which SAPOA holds a seat. This commission is looking at an overall development strategy for the city. “This will be a great initiative,” says Van Niekerk. “At the moment, we have the normal spatial development plan and other planning strategies, but they don’t speak to each other, with the result that each strategy is running in total isolation and is fragmented. From an investment promotion point of view, we need one cohesive strategy that can be communicated with a consistent message to the market. A potential investor needs to know what KZN’s competitive advantage is and where is the one place they can go to find all this information.”

18

SOUTH AFRICAN PROPERTY REVIEW

One of the municipality’s greatest initiatives is its recently implemented onestop shop for catalytic projects. “A catalytic project is defined as a project that meets the city’s criteria – creating jobs, stimulating the economy and providing social upliftment,” explains Van Niekerk. “This catalytic hub, located in the Lion Match building, has a very modern approach to business. It’s designed to cut through red tape and improve processes. This onestop shop addresses environmental, town planning and electricity issues, as well as offering practical advice. A developer or investor is assigned a project manager who will walk them through the process and make sure it all happens quickly. The onestop shop is a developer’s entry into the city, and all the opportunities can be assessed and viewed from there. Once you decide where you want to be and you have a clear understanding of what you need, you go back to the one-stop shop – they will assist you every step of the way.”

Currently, the catalytic hub is only looking at projects worth R500-million or more, but is planning to widen its base in the future.

Following conversations with developers and other interested parties, the workings of the one-stop shop are being refined to break the silo operating method of various divisions that are hindering the processes.

The Aerotropolis strategy, funded and put into place by the KwaZulu-Natal province, focuses on the airport and areas within a one-hour driving radius (which includes Pietermaritzburg, Ballito and all of eThekwini). This strategy aims to cut through municipal boundaries, eradicating the current problems many developers face.

According to developers, the municipalities appear to be in competition for the same development or industrial stock, making getting planning permissions and other necessary authority very difficult. The strategy has identified 300 projects in that broad geographical boundary that it will be focusing on.

Opportunity and value in the CBD “Durban offers a unique opportunity to developers and to investors in the city itself,” says Van Niekerk. He says that SAPOA is spearheading a precinct management programme that aims to roll out urban improvement precincts or city improvement districts that will see the value of property increase dramatically, making it more inviting for investors and developers to return to the city.

With the forthcoming Commonwealth Games to be held in Durban in 2022, world focus is going to be on the city, offering a unique value proposition for developers. Now is a great time to invest. When the UIPs are in place, property values will increase quickly.

The future looks bright for new developments There is still plenty of land available for development within eThekwini’s boundaries, and some exciting developments are already under way or in planning.

The biggest development hotspot at the moment is Cato Ridge, where there is talk of developing a dry port to accommodate container storage and distribution. This 25year project aims to align with and contribute to the business corridor development of KwaZulu-Natal.

“Durban has a port and the infrastructure to transport goods around South Africa, but is there enough scope within the port to expand, and can it accommodate the deep vessels?

These are the questions many developers and planners are asking,” says Van Niekerk. “Durban is spending a lot of money on the port, dredging out the harbour to create capacity, but moving the products out of the harbour is becoming a challenge – there are very few access routes, especially for trucks, resulting

future property development in massive traffic congestion. So the idea is to make Cato Ridge a distribution hub and Durban’s main logistics point with all cargo being ferried by rail from the harbour to Cato Ridge.”

Warwick Lord, Chairman of the SAPOA National Developers Forum, says international best practice is to have a distribution point within a 100km radius of the port, providing better access and routes, and a more open infrastructure. “In other countries, container hubs have proved to be the quickest way of moving cargo from harbours to inland,” he says. “Functional exit and entrance points to logistics, warehousing or industry are of paramount importance for the effective functioning of a distribution hub. A large emphasis must also be placed on alternative access/egress roads in case of accidents, road upgrades or any other delay-causing event.”

SAPOA is working closely with Transnet, municipalities, the local community and other affected parties to ensure the development is in line with South Africa’s national economic objectives. A full transport hub offers opportunities for many forms of businesses – manufacturing, workshops, truck stops and distribution. Linking the Cato hub to the east/ west as well as the north/south corridor of the province is also under discussion. The project is located on the N3 and along the Natcor line

(Durban harbour to Rietvlei, Gauteng), where the rail and road converge, making it an ideal location for a logistics/distribution hub.

Close to Durban’s airport is the Dube TradePort, a designated Special Economic Zone and one of South Africa’s top 10 investment opportunities. Situated on government land up for lease, Dube TradePort is geared to promote foreign and local investment. Many big multi-nationals, such as Cipla, are already setting up offices, factories and warehouses there. And Dube TradePort has just bought thousands of hectares of farm land around the airport as part of its 60-year master plan.

A new development in Hammarsdale is set to provide many opportunities. With the new interchange under construction, it is an ideal location for a distribution centre, especially if transporting goods to Johannesburg and Durban – it is located just 30km from the port.

“There are real propositions to be had here,” says Van Niekerk. “If developers come to this area now, they’ll be in the enviable position of being able to pick and choose their location.”

Meanwhile, in Clairwood, the old racecourse is being developed for logistical factories and warehouses. This will be convenient for both ports. In addition, lowkey development is taking place in outlying areas such as Ladysmith, Port Shepstone, and Newcastle.

Edwin van Niekerk, SAPOA KZN Chairman

SOUTH AFRICAN PROPERTY REVIEW

19

future property development

SPLUMA

Purpose of the act > To provide a framework for spa0al planning and land use management in South Africa that provides for inclusive, developmental, equitable and efficient spa0al planning at the different spheres of government.

OBJECTIVES of the Act: ü Provide for a uniform, effec1ve and comprehensive system. ü Ensures that spa1al planning promotes social and economic inclusion.

SPATIAL PLANNING AND LAND USE MANAGEMENT ACT NO 16 OF 2013

may prescribe an alterna1ve or Sec1on 2(2) : No other legisla1on parallel mechanism, measure, ins1tu1on or system on spa1al planning, land use, land use management and land development in any way inconsistent with the Act. This makes SPLUMA the most relevant and important piece of legisla<on in spa<al planning.

CATEGORIES OF SPATIAL PLANNING Municipal

Control and regulate the use of land through IDP’s, Land use Scheme’s and SDF’s.

Provincial

Monitor compliance by municipali<es with SPLUMA Compile, approve and review Provincial SDF and other policies.

Making and review of na<onal policies designed to monitor other spheres Compile, approve and review Na<onal SDF .

ü Provide for development principles, norms and standards. ü Provide for sustainable and efficient use of land. ü Provide for coopera1ve government and intergovernmental rela1ons.

To redress the imbalances of the past and to ensure that there is equity. ü To

National

SP RES ATIAL ILIE NCE

N OD GO RATIO T INIS

ADM

Support and Monitor Mun c pa other spheres and provincial and municipal differen<a<on – each ac<vi<es and priori<se municipality is unique. priori<se na<onal provincial interests. interests.

SPATIAL SUSTAINABILITY

ALIGNMENT OF AUTHORISATION PROCESSES on policies and legisla0on impac0ng on land development applica0ons and decision making processes.

MUNICIPALITIES AS AUTHORITIES OF FIRST INSTANCE. Reitera0on of the sole mandate of municipali0es where municipal planning is concerned.

ESTABLISHMENT OF MUNICIPAL PLANNING TRIBUNALS AND APPEALS STRUCTURES by municipali0es to process land development applica0ons.

PREPARATION OF RESPECTIVE SDF’S by all three spheres of government, based on norms and standards guided by development principles. by all three spheres of government, based on norms and standards guided by development principles.

DEVELOPMENT OF A LAND USE SCHEME Single and inclusive for the en0re municipality with emphasis on municipal differen0a0on.

Single and inclusive for the en0re municipality with emphasis on municipal differen0a0on.

STRENGTHENED INTERGOVERNMENTAL SUPPORT through enforcement, compliance and monitoring processes.

NEW DEVELOPMENT APPLICATIONS made in terms of SPLUMA and municipal by-laws.

Legislation repealed by SPLUMA

FREQUENLTY ASKED QUESTIONS

Removal of Restric<ons Act 84 of 1967 Physical Planning Act 88 of 1967 LLess Formal Township Establishment Act 113 of 1991

1. What happens to pending old order Ordinance applica1ons now that SPLUMA has

Physical Planning Act 125 of 1991

been enacted as of 1 July 2015? Depending on which phase the applica<on is in, the municipality can either process the applica<on in terms of the old legisla<on and

Development p Facilita<on Act No 67 of 1995

transi<onal measures, or request that a new applica<on be lodged.

a) Who can appeal? Any person whose rights are affected by the municipal tribunal decision

2. What happens to the former Development Facilita1on Act applica1ons that have not

b) What can be appealed? Appeal against (i) En<re decision, (ii) Condi<ons, (iii) Appeal based on process review applica<on, and (iv) failure to make a decision

applica<ons into their respec<ve municipality and these will then be handed over to

been finalised by the province? The Gauteng Province is categorising all DFA the municipality to process.

c) How does one go about a_aining intervener status? Submit a pe<<on to the MPT with an affidavit proving that no collusions are evident. d) When granted intervener status, pe<<on to intervene is lodged. When is intervener status granted to objector? When an applica<on is submi_ed an interested person can at any point in <me, but should apply within 7 days of becoming aware of proceedings, be granted intervener status by the tribunal or authorized official. e) Theore<cally, how long does the appeal process take? Appeals are to be lodged within 21 days of decision. Pre-hearing process should be completed within 150 days of no<ce to appeal. Appeal is submi_ed within 14days ader comple<on of pre-hearing process.

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SOUTH AFRICAN PROPERTY REVIEW

3. Can the municipality accept development applica1ons in terms of the old Ordinances

subsequent to the 1st of July 2015? The old ordinance remains in opera<on un<l the municipal by-laws have been adopted. However, development applica<ons shall be lodged in terms of the old Ordinance AND in accordance with SPLUMA.

Created by : Urban-Econ Development Economists

future property development Spotlight on Gauteng’s commercial and industrial space In Gauteng, most of the development centres around commercial and industrial space, and the development of new nodes. There are fewer barriers to entry, and more availability of flat land at good rates.

According to Lord, Gauteng presents fewer issues for developers than areas such as the Western Cape and KwaZulu-Natal.

“It is a lot simpler to develop here because there is more open land and none of the restrictions of sea, mountain and coast as in the other provinces,” he says. “Gauteng also doesn’t have the complications of environmental protection, like eThekwini’s Durban Metropolitan Open Space System.

And the cost of land here is half the price of land in Cape Town or Durban, making it a desirable place to invest.”

New industrial and commercial nodes are springing up in outlying areas, building on the theme of the eventual merging of Johannesburg and Pretoria. Some years ago, many big businesses left the CBD to take up commercial space in Rosebank and Sandton.

Shortly after that, the first Midrand node was created and others soon sprang up alongside it and near it, decentralising the former business district.

Lord predicts that the business exodus from Johannesburg will continue for some time – and as more and more CBDs are created outside of it, Gauteng will end up with a São Paulo-type model, with 11 or 12 CBDs creating one mega-metropolitan node.

Legislative issues slowing progress Gauteng’s industrial space market has a backlog of ready-to-build-on land because of the time involved in complying with

legislative requirements. “The varying implications of SPLUMA mean that land is taking longer to get on the market,” says Lord. “SAPOA is engaging with the various municipalities and national government to get this streamlined. Fortunately, government is aware that development creates jobs and kick-starts growth, and is pushing for better processes and practices.

“Because SPLUMA is new legislation, it is taking a while for all the parties concerned to get their heads around it. There are some sections of the Act that are open to interpretation by the municipalities who interpret it in different ways. SAPOA is pushing the issue with municipalities and at a national level for an actual interpretation from government.

“SPLUMA is a good strategy, provided it gets properly implemented. It will ultimately cut through silos and empower local municipalities to make their own decisions.

The main outcome of SPLUMA is that it is standardised across the country. Once fully implemented, it will level the playing field and give developers a much broader picture.

“However, there are still three main issues of concern to developers – the environmental process, Act 70 of 1970, and the amount of time it takes for plans and approvals to be processed. In terms of agricultural land, Act 70 of 1970 requires a developer to obtain ministerial consent in order to buy land, rezone it, sub-divide it, put in services and then develop it, but the process takes far too long. In my opinion, all land inside an urban edge should be excluded from Act 70 of 1970 – this is not really a big issue in Gauteng, which has less arable land than Cape Town or Durban, but it can still cause unnecessary delays.”

Warwick Lord, Chairman of the SAPOA National Developers Forum

Because SPLUMA is new legislation, it is taking a while for all the parties concerned to get their heads around it. There are some sections of the Act that are open to interpretation by the municipalities who interpret it in different ways. SAPOA is pushing the issue with municipalities and at a national level for an actual interpretation from the government

SOUTH AFRICAN PROPERTY REVIEW

21

erie

s●

monthly cou n Our

Th e WOR

eye onLD thes worlds ●

by-country focu try-

From the land down under South African Property Review’s “Eye on the World” series continues its exploration with opportunities in the world’s only country that is also a continent – Australia, a land of stability and growth 22

SOUTH AFRICAN PROPERTY REVIEW

eye on the world

The flag of Australia is a defaced Blue Ensign: a blue field with the Union Jack in the canton (upper hoist quarter), and a large white sevenpointed star known as the Commonwealth Star in the lower hoist quarter. The fly contains a representation of the Southern Cross constellation, made up of five white stars – one small fivepointed star and four larger seven-pointed stars.

The flag’s original design (with a sixpointed Commonwealth Star) was chosen in 1901 from entries in a competition held following federation, and was first flown in Melbourne on 3 September 1901, the date proclaimed as Australian National Flag Day. A slightly different design was approved by King Edward VII in 1903. The seven-pointed Commonwealth Star version was introduced by a proclamation dated 23 February 1908.

The dimensions were formally gazetted in 1934, and in 1954 the flag became recognised by (and legally defined in) the Flags Act of 1953 as the “Australian National Flag”.

Key facts

Melbourne, Australia (Photograph © Lenny K Photography/Flickr.com)

t Capital Canberra t Population 23,6-million t GDP (PPP) US$1,1-trillion, 2,7% growth in 2014; five-year compound annual growth 2,7%; US$46 433 per capita t Unemployment 6%

t Inflation (CPI) 2,5% t FDI inflow US$51,9-billion t Public debt 34,3% of GDP t Currency Australian dollar t Anthem “Advance Australia Fair” t Queen Elizabeth II SOUTH AFRICAN PROPERTY REVIEW

23

eye on the world

A

ustralia is a stable, democratic and culturally diverse nation with a highly skilled workforce and one of the strongestperforming economies in the world. It is the world’s sixth-largest country in land area, and is the only nation to cover an entire continent. Being the world’s 12th-largest economy, it is also one of the wealthiest in the world. In 2014, Australia had the world’s fifth-highest per capita income.

With the second-highest human development index globally, Australia ranks highly in many international comparisons of national performance, such as quality of life, health, education, economic freedom, and the protection of civil liberties and political rights. Australia is a member of the United Nations, G20, the Commonwealth of Nations, ANZUS, the Organisation for Economic Co-operation and Development, the World Trade Organization, the Asia-Pacific Economic Cooperation, and the Pacific Islands Forum.

This Antipodean nation has a vibrant freemarket democracy, and has recorded impressive economic progress without undergoing a single recession for almost 25 years. In addition to its abundant natural resources, the economy has benefited from lasting entrepreneurial development facilitated by an effective system of government, a well-functioning legal system, and an independent bureaucracy.

It is internationally competitive in services, technologies and value-added manufactured goods. Mining and agriculture are important sources of exports.

Australia is one of the Asia–Pacific’s wealthiest nations, and it continues to be an attractive and dynamic investment destination, with almost all industries open to foreign competition and a skilled workforce readily available. It emerged from the 2009 global recession relatively unscathed, but stimulus spending by the previous Labour government generated a fiscal deficit.

Rule of law Australia’s judicial system operates independently and impartially. Property rights are secure, and enforcement of contracts is reliable. Expropriation is highly unusual. The stable political environment supports transparent and well-established political processes, a strong legal system, competent governance, and an independent bureaucracy. Anti-corruption measures are generally effective in discouraging bribery of public officials.

Regulatory efficiency Australia’s regulatory environment, one of

Australian Economythe world’s most transparent and efficient,

Economy

SNAPSHOT

Economic

is highly conducive to entrepreneurship.

6 July 2016

Inflation

Growth

1.3

Cash Rate

1.75 %

per cent

3.1%

Unemployment Rate

=

5.7

A$1

US$0.7517

per cent

Population

23.9 million

1.4 %

Average Weekly

Earnings

$1 146 Household Saving

Ratio

annual growth

Average Price of

Residential Dwellings

$614 000

8.1 %

Employed

11.9 million Industry Share Services of Output key sectors 58% 5%

Retail Trade

Mining

7%

9% 7%

Manufacturing

Construction

Data are the latest available as at 5 July 2016

Source: www.rba.gov.au

24

SOUTH AFRICAN PROPERTY REVIEW @RBAInfo

www.rba.gov.au

It takes only two days to launch a business.

The flexible labour market facilitates dynamic employment opportunities. In 2015, the conservative government ordered the taxpayer-funded AUS$10-billion Clean Energy Finance Corporation (CEFC) to cease any new investments in wind-power projects.

Open markets With a 1,8% average tariff rate, low nontariff barriers, and few limits on foreign investment, Australia has some of the world’s most open trade and investment policies.

The government screens large foreign investments. The well-developed financial sector is highly competitive and sound; all banks are privately owned. Since late 2010, banking reforms have fostered greater transparency and competition.

Education Education starts in the years before formal schooling, with many child-care services and preschools receiving government funding.

Students participate in formal school education from the age of five or six to about 18, with many going on to tertiary education.

The public and private education sectors are working together to close the gap on indigenous disadvantage and improve outcomes in indigenous education.

Australia’s vocational education and training system provides students with the skills required in a modern labour market, and delivers competency-based training that is practical and career-orientated. The Australian higher-education system has both public and private universities. Some universities have campuses in other countries. There are Australian branches of overseas universities and other higher-education providers as well.

Healthcare The health system is world-class in its effectiveness and efficiency: Australia consistently ranks in the World Health Organization’s best-performing group of countries for healthy life expectancy and health expenditure per person.

Medicare is Australia’s public health system, providing free public hospital care and subsidies for primary care. It ensures that all Australians have access to a broad range of quality health services at little or no cost.

The Australian Government provides significant financing for the health system, working closely with the state and territory governments with responsibility for on-theground delivery of hospital services. A private health sector complements the public system.

ORA

R 245 G 13 B 32 F582

Transport and logistics sector driving demand

eye on the world The Royal Flying Doctor Service One of Australia’s best-known, most-respected

RAPHS to keep to same height and width. W18.2cm x H7.4cm institutions the Width RoyaltoFlying Doctor Service.

Area no more than 2” height (same as this textisbox), page margin) d: at the bottom The Flying Doctor is a charity that operates a Title: Futura BdCn BT, 9.5pts, Refreshing Green Text: Futura LtCn BT, 10pts fleet of more than 63 planes from 21 bases Lines: ¼ pts, 50% Black

around the country. Every day doctors, nurses paramedics fly large distances to attend to patients or2014. conduct clinics in small towns e: Futura Lt BT, Italic, 7pts [ Source: Name, Q#, ] or on remote properties. Often they escort patients back to larger centres for hospital and medical treatment. The Royal Flying Doctor Service began in 1928 and every year has more than 290 000 patient contacts a year Body text on each page ends here – the equivalent of one every two minutes.

rs: Use Rsearch Colour palette and

R0 G 16 B 87 00A6

Industrial stock average annual growth Chart 15: Industrial stock average annual growth 2.5%

NEU 100

Dec 05 to Dec 13

Dec 13 to Dec 15

Dec 15 to Dec 17

2.0%

100% R 219 G 21 B 191

1.5% 1.0% 0.5% 0.0% NSW

VIC

WA

SA

QLD

NATIONAL

Source: CBRE Research, February 2016.

Media and communications Australia has a number of media outlets.

There are two national radio, television and online broadcasters that receive public funding – the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS).

ABC is Australia’s national public broadcaster. Founded in 1929, the ABC provides television, radio, online and mobile services across the country. Through its international charter, it also provides radio and television services to overseas audiences.

SBS broadcasts programmes in English and a range of other languages, and covers news from around the world. SBS also manages the National Indigenous Television channel, which broadcasts programmes produced primarily by Australia’s indigenous people.

Australia also has three commercial freeto-air television networks, an indigenous commercial television station, hundreds of pay television channels, and many print, radio, digital and online media outlets.

Investment in Australia Australia’s highly skilled workforce, robust economy, trusted legal system and stable society make the country an attractive location for foreign investors. The stock of foreign investment in Australia was AUS$2,5trillion at the end of 2013.

A large number of foreign companies are registered in Australia, and many have developed close links with local firms. This has generated cooperation on research and development and resulted in Australian companies becoming an integral part of regional and global supply chains.

One of the world’s largest biotech companies, AMGEN of California, invests about AUS$35-million in local research and development in Australia annually, and has been conducting clinical trials in Australia for more than 20 years.

9.

REF GRE

Source: CBRE © CBRE Ltd. 2016 Research, February 2016 AUSTRALIA REAL ESTATE MARKET OUTLOOK 2016

CBRE RESEARCH

30

Growth Economic growth, driven by the private sector and supported by trade liberalisation, is a key objective of Australia’s engagement with the world. Strong economies are an important shaper of prosperity, security, stability and peace. Australia’s aid programme promotes sustainable economic growth and poverty reduction in developing countries. Aid investments help expand the capacity of countries to trade, encourage economic growth to create jobs, and empower women and girls to better participate in the economy.

Domestically, Australia is working to reduce government debt, remove unnecessary taxes, and cut regulations and costs for business. This will ensure Australia remains an attractive destination for international investment so its economy can continue to grow and develop new industries.

Australia and the G20 As a member of the G20, Australia influences decisions relating to the global economy. Its strong financial sector and effective system of financial regulation means Australia is well placed to make a strong contribution to the G20’s work. Through its membership, Australia is also strengthening its engagement with the world’s major economies.

The real estate scene Sydney and Melbourne recorded the strongest property performance in 2015 – a trend that CBRE Australia expects to continue in 2016, notably with some improvement in Brisbane and stability in Perth.

The impact of Australia’s lower interest rates has been directly felt in the retail and residential property sectors, while also benefiting office and industrial further downstream. The lower Australian dollar will increasingly factor into investment and

consumption decisions, improving the economy at a broader level.

Increased offshore demand punctuated investment markets in 2015, with Australia’s higher interest rate to yield structure supporting attraction of capital to all sectors.

The improved prospect for rent growth in most sectors is supportive of the investment outlook as it provides potential for capital value stability (rather than decline) in an environment of rising debt costs and higher required returns, which is expected to emerge before the end of 2016.

There is also an aspect of Australia’s economy becoming more closely aligned to Asian economies, and in that regard emerging as a core market within the Asian region rather than a standalone market.

For a risk-averse investor, Australia’s highly transparent and relatively liquid real estate markets provide an advantage over other Asian markets.

Not only has real estate been a recipient of this demand but over the past seven years CBRE Australia also observed: ●● A material shift in investment flows into Australia to equity and direct investments, mostly aligned with mining; ●● Australian commercial real estate capturing five percent of transaction activity in the last five years, well above Australia’s weighting of two percent in global GDP; ●● Rising holdings of Commonwealth Government bonds by foreign investors (holding 70% of bonds on issue versus 50% in the early 2000s), supported by higher yields and AAA-credit rating.

Australia’s real estate turnover activity lifted strongly in 2013, with a record AUS$25-billion of assets exchanging. In 2014 it also ran at high levels, albeit 10 to 15% below the levels of three years ago.

SOUTH AFRICAN PROPERTY REVIEW

25

eye on the world Domestic players dominated transaction activity but the increase in foreign investment was important as it represented incremental new funding for the sector. Foreign investors accounted for 25% of activity over the past year and have averaged 16% of turnover since 2007 (rising from less than five percent).

The net result of those investment trends on commercial property portfolios is that foreign investors have increased their balance sheet exposure to Australia by AUS$18,8billion over the past nine and a half years.

This follows a period in which the position was balanced as investors were neutral on allocation to Australia.

Approximately 68% of these flows has been into office assets, with retail another significant area of investment accounting for just over 29% of activity.

in a number of these established markets still remain below their pre-GFC peaks.

The outperformance of Sydney office market rents has been key in supporting the flow of investment into the market from abroad. The indexed rent profile of the Melbourne CBD is largely in line with the Sydney market, while the strong rent profiles of Brisbane and Perth are even more pronounced, driven by solid income growth in both Queensland and Western Australia.

According to CBRE’s “Global Prime Occupancy Cost Survey”, three of Australia’s office markets saw material shifts in the position of prime rents against office markets globally over the last six years.

Most significant was the movement in rank of the Sydney CBD from 43rd to 17th over the period. Perth’s position also improved, moving from 35th in 2010 to Prime office rents in a global context 27th in 2014. Brisbane was not present Consistent with Australia’s rising income in the global index in 2010 but entered relative to the rest of the world and the higher at 43rd in the world in 2014. Interestingly Australian dollar, Australian prime rents have over the same period, seven of the top 10 Asia been re-rated in a global context. Over the Pacific cities in 2010 remained within the top 10 R E AoffiLce rents E S TinAthe TE M A in R K2014.

E T London O U T LWest O OEnd K and Hong last decade, prime Sydney AUSTRALIA CBD have doubled, with most of this gain Kong remained the most and second-most attributed to the last five years. In comparison, expensive cities respectively.

E C O NO MY many other GDP established markets around Interest the Rates Other Considerations Growth world saw less significant growth over the SMEs dominating the office sector •Higher growth in service sectors 2.5% 2.6% to sit2.9% for office space across same period between 0% and 50% A 22% surge in •demand China slowdown 2.4% 2.0% 2.0% major Australian markets has been trend recorded higher than a decade ago.

Prime offi ce rents • AUD continues downward 2014 2015 2016 2014 2015 2016 CONTRIBUTION TO ECONOMIC GROWTH IN 2016

Real estate market outlookHousing Consumption

OFFICE

Business Investment

RETAIL

INDUSTRIAL • Manufacturing as car production winds down

•High vacancy in secondary stock in Brisbane / Perth

•Margin pressure on retailers due to lower AUD

• Structurally higher tenant incentives

• Rising competition • Slowing housing construction from foreign brands • Residential encroachment - particularly in Sydney

• Global uncertanity impacting decision making for expansion plans in Australia

RESIDENTIAL •Oversupply risks in Melbourne / Brisbane •Rising interest rates and stricter lending criteria •Affordability in Sydney and Melbourne

Net Exports

CAPITAL MARKETS •Rising asset yields globally •Upward pressure on return expectations • Competition domestic vs foreign capital

CHALLE NGE S OP P OR TU NITIE S

• Tenants lock in rents / incentives near bottom of cycle • Redevelopment / refurbishment - Secondary stock and backfill - Student accommodation / hotels / residential • Low vacancy in Sydney

• Redesign shopping centres to capitalise on shifting consumer preference

• Improving efficiency of consumer goods distribution and delivery

• Rising importance of shoppers' experience 'Retail-tainment'

• New infrastructure and growth corridors

• Sydney remains undersupplied • Brownfield development opportunities

• Growth in Asianborn population with different shopping expectations

• Yield convergence prime vs secondary in Sydney / Melbourne office • Strong demand from overseas investors • Owner / Occupier divestment opportunities in industrial

Source: CBRE Research, February 2016.

CBRE RESEARCH This report was prepared by CBRE Australia Research Team, which forms part of CBRE Research—a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate.

Source: CBRE Research, Q1 2016

© CBRE Ltd. 2016 Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

26

SOUTH AFRICAN PROPERTY REVIEW

off the back of increased activity among small businesses, according to new data from Colliers International.

According to Colliers International’s latest Office Demand Index, a total of 621 156m² of demand was recorded in Q2 2016 – a 22% increase from Q1 2016.

Enquiries by small businesses looking for sub-1 000m² office space rose by 85% in Q2 2016 compared to Q1 2016. This sector also recorded a 51% year-on-year increase in enquiries from Q2 2015 to Q2 2016.

In the current market, small businesses are driving a significant amount of enquiries for office space nationally, compared to this time last year. Small businesses are also catering for more than 80% of the number of deals that have been transacted this year so far.

Small businesses are currently most active in the Sydney market, where there has been almost triple the amount of space enquired for in the second quarter of 2016 compared to the first quarter.

The amount of space enquired for in the Melbourne market also more than doubled in Q2 2016, compared to Q1 2016.

Small businesses were also increasing their enquiry in Brisbane and Adelaide, recording quarterly rises of 25% and 15% respectively.

The report found activity in larger markets was also being driven by mid-sized businesses (1 000m² to 2 999m²), which enquired for 18% more space in Q2 2016 than in Q1 2016. This quarter, there have been more small business enquiries for office space than ever previously recorded; however, this doesn’t mean large business activity has stopped.

The second quarter of 2016 has seen large businesses increase their enquiries for 3 000m²-plus space by 23%, compared to the same period last year. While small businesses are currently the most active in terms of demand and transactions, we expect to see larger businesses increasing their transactional activity into the second half of this year.

Nationally, Colliers International data found the amount of space leased at June year-to-date (YTD) 2016 was up by almost 40 000m², a 17% increase year-on-year compared to the same time last year. The Melbourne market had seen the greatest number of 3 000m²-plus deals negotiated.

In the Sydney market, the greatest numbers of small business moves were recorded.

The number of businesses moving into spaces more than 1 000m² increased 27% from June YTD 2015 to June YTD 2016, with a 22% increase in the number of leasing deals being conducted by this larger group.

eye on the world Office demand ●● Adelaide saw an increase of 15% in the 0m² to 999m² demand segment from Q2 2016 to Q1 2016, and a 59% increase from Q2 2015. ●● Brisbane saw an increase in all demand segments in Q2 2016 from Q1 2016.

The 3 000m²+ segment almost doubled in demand size. ●● Canberra has seen a big increase in demand for 1 000m² to 2 999m², with a 58% increase in Q2 2016 from Q1 2016. ●● The Melbourne market saw a large increase in demand for small businesses looking for space under 1 000m² from Q1 2016 to Q2 2016 – 160% increase. ●● Perth saw an almost 72% increase on demand on small businesses looking for space under 1 000m² from Q2 2015 to Q2 2016. ●● Sydney saw an increase in all size segments when comparing Q2 2015 data to Q2 2016 data, including a 111% increase in the sub-1 000m² segment, five percent in the 1 000m² to 2 999m² and 11% in the 3 000m²+ segment.

Industrial overview Conditions across the industrial sector improved in the latter stages of 2015, following an extended period of weakness that started in 2012. Annual output growth increased to 1,3% in Q3 2015, the highest growth since the last quarter in 2012.

A slowdown in construction, resulting from the completion or advanced progression of several mining projects in Queensland and Western Australia, and the continued decline in the manufacturing sector are the main causes of weaker industrial growth since 2012.

The wind-down in the mining construction sector will continue to drag GDP growth in 2016 and 2017; however, 2015 saw some recovery in non-mining sectors such as transport and warehousing as well as the wholesale trade – a trend that is expected to continue to the end of 2016.

Growth in retail sales is a result of a booming residential construction factor. This too will remain firm till year-end.

Industrial employment was down 1,7% year-on-year at December 2015, caused mainly by a reduction in manufacturing jobs – this has had a knock-on effect in industrial rents, which have been in decline since mid-2014.

Perth and Adelaide markets have recorded the largest rental declines in 2015.

Another factor adding to the decline is new supply. Nationally, the level of new supply in industrial stock has been higher over the past two years than in the eight years prior. Melbourne showed that there were high levels of supply, resulting the largest decline among the eastern states.

According to CBRE Australia, while rental decline in Brisbane has been moderate, it has seen above-average supply over the past two years. Sydney was the only market to record growth (2,4%) in sub-prime rents in 2015.

CBRE Australia predicts that the supply pipeline will moderate over the next couple of years. Continued improvement in the economy of the industrial sectors will encourage rental growth towards the end of 2016. (Regional differences support a preference for Sydney.) However, those regions that are facing stronger economic headwinds – Perth and Adelaide – will see moderate to flat rental returns, with a potential to fall.

Population and size

Industrial demand ●● Australia’s economic growth was close to the long-term trend, growing 3,1% y-o-y (at Q1 2016). ●● Industrial GDP continued to grow, recording 0,5% annual growth to Q1 2016. ●● Industrial rent growth was flat across most markets, with Sydney the only market to show positive rent growth. ●● Rents are close to the bottom of the cycle. We would expect stability from the second half of 2016. ●● Yields remained flat in all markets except Perth. ●● Yields in secondary assets are forecast to compress further in 2016 (although at a lower rate) before stabilising towards the beginning of 2017.

Retail overview The past six years have been characterised by a growing divergence in the historical relationship between retail trade growth and shopping centre rent growth. Rents have averaged 1,1% compound growth over this six-year period, while retail trade has averaged a stronger 3,7%, compared to average growth between 2000 and 2010 of 4,2% and 5,1% respectively. A range of cyclical and structural factors are contributing to this divergence, which CBRE Australia predicts to continue into the medium term.

Factors that are holding back retail rental growth include:

Source: Mccrindle.com.au

●● A decline of 25% in the Australian dollar that has worked against the cost of goods sold, seeing retail margins fall by about five percent since 2013, which has had a knock-on effect in retailers being able to pay or commit to higher rents; ●● Online retailing, which accounts for 7,5%, taking footfall out of the retail space; ●● Low inflation and price deflation across many of the retail sub-classes undermining the warranting in increases in rent and further hampering rents growth; and ●● Many retailers being part of “parent groups”, which means the bigger chains have greater lease-negotiating power.

Landlords are placing more value on retaining those tenants, thereby constraining rental increases.

Retail outlook According to CBRE Australia, many shopping centres are working through various issues that have led to a divergence between retail sales and rent growth – but they maintain the worst has passed. CBRE predicts that rents will recover, and forecasts a growth of 1,8% in 2016 and a high return of 2,2% over 2017.

Compiled by Mark Pettipher. Sourced from Colliers International, the Reserve Bank of Australia, JLL Australia and CBRE Australia.

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mixed use development

Sibaya Coastal Precinct:

bringing the vision of connected living to life Planning Director at Tongaat Hulett Developments Rory Wilkinson answers pressing questions based on the launch of KwaZulu-Natal’s newest place-making endeavour, the Sibaya Coastal Precinct

By Louise Hunt and Chris Reid

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ibaya spans over 1 000 hectares of coastal landscape on KwaZulu-Natal’s lush North Coast. Heading the Tongaat Hulett Developments team for Sibaya, Planning Director Rory Wilkinson says, “Currently, the site is characterised by the sugar-cane fields this area has traditionally been known for. It is a key objective of Tongaat Hulett to activate the potential of its land-holdings through residential, commercial and other development projects to create value for all its stakeholders.”

This area of the KZN coastline is a soughtafter destination for discerning investors and residents for a number of reasons. “The natural environment is largely unspoiled here, with a combination of coastal forest, beach and rolling hills unique to this part of the country,” Wilkinson explains. “The fact that this breathtaking landscape exists mere minutes away from the thriving centre of Umhlanga and the King Shaka International Airport, and just a short drive from the Durban city centre, means it offers residents the best of the coastal lifestyle and urban amenities, side by side.”

In deference to the landscape here, 60% of the visionary Sibaya concept plan is made of up green space. This includes existing coastal forest but also rehabilitated landscape.

When completed, Sibaya will see what is currently sugar cane returned to its natural state as a valuable biodiversity asset. Linking all of this green space is 75km of paths, trails and boardwalks. This includes access down to the pristine stretch of beach that this area is renowned for, as well as potential linkages

Sibaya Coastal Precinct

between Umdloti and Umhlanga. According to Wilkinson, the coastline here has been largely inaccessible to most visitors until now, and the Sibaya Coastal Precinct will unlock about 6,5km of beach, reaching from the Ohlanga river estuary to the Mdloti river estuary. ”An integrated approach to getting around means that individuals will be able to explore the precinct almost wholly on foot or bike, should they choose to,” says Wilkinson. “This also makes the quality of life here second to none for residents. The central thoroughfare has been considered with the same environmental sensibility. It takes the form of a green boulevard treated as a horizontal park, with significant greening and cycling lanes for further eco-accessibility.”

Looking at the development from the air, the existing Sibaya Casino and Entertainment Kingdom sits centrally within the site as it stands. In total, Sibaya will encompass seven different nodes, released over a period of time commensurate with investment demand and development timelines. Each node will have its own character, but they will all be inspired by a common development vision. With this framework, Sibaya will ultimately link up the Umhlanga community (and ultimately the Durban promenade) with communities further north, such as Umdloti and beyond, providing a seamless and secure experience up the North Coast for residents and visitors.

These opportunities will be made available to the local communities as part of Tongaat

Hulett’s Socioeconomic Sustainability and Innovation Programme (SSIP). The SSIP is primarily geared around skills development, local procurement, enterprise development and job placement for local community residents, ensuring that the legacy and value creation of places such as the Sibaya Coastal Precinct is not only in the built environment, but also in the positive upliftment of the surrounding, marginalised communities.

Q Can you provide insight

into property development opportunities for developers interested in Sibaya Coastal Precinct?

The vision to create a new urban identity through the combination of residential, commercial and tourist opportunities, integrated within a natural coastal environment of unmatched beauty makes for a compelling and attractive investment opportunity for developers. Tongaat Hulett has unlocked the first of seven nodes within Sibaya Coastal Precinct, and the market’s response to the first three developments that have been launched has confirmed the massive demand that resides within the precinct as an investment opportunity for both the developer and end-user.

On completion, Sibaya Coastal Precinct will provide a powerful anchor to the emerging Durban Aerotropolis, and will add value to the surrounding region by offering new economic and employment opportunities, with an estimated 30 000 KING SHAKA INTERNATIONAL AIRPORT 7km

DURBAN CITY CENTRE 23km

N

TO VERULAM

LOCATION: NORTH COAST, KWAZULU-NATAL, SOUTH AFRICA

N2

NODE

7

IZINGA NODE

4

KWAZULU-NATAL

RICHARDS BAY

NODE

3

PATHWAYS / BOARDWALKS

BALLITO

SIBAYA CASINO & ENTERTAINMENT KINGDOM

SIBAYA

M27

DURBAN

NODE NODE

2

HAWAAN FOREST

NODE

5

NODE

1

6

PORT SHEPSTONE

UMHLANGA 2km FOREST 31

OHLANGA ESTUARY

M4

MHLANGA FOREST

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EMDLOTI VILLAGE

UMDLOTI ESTUARY

BALLITO 20km

mixed use development permanent jobs and an estimated total investment value of R21,7-billion being injected into the local economy.

This is an opportunity for developers who seek to not only contribute towards creating a place like no other in the South African context, but who also seek the opportunity to benefit from the substantial return on investment that comes with an initiative of this scale and scope.

Q How does investing in Sibaya

translate for the potential developer?

There are few comparative opportunities that offer the mix of location, accessibility and a host of physical attributes (sea views, beach access, amenities, protected forest, etc.). We see Sibaya Coastal Precinct catalysing the link of two significant growth nodes in the region – that of the greater Durban area and the fast-growing Ilembe District.

The long-term vision for this area is in excess of 50 years. Tongaat Hulett offers the experience and gravitas that comes with the group’s 150 years of being in business.

Tongaat Hulett Developments has an unequalled reputation and track record, offering developers the peace of mind that their investment resides within a development framework and vision that has been deeply considered, and which has the backing and support of industry leaders.

Q Explain the costs and

benefits of coastal development.

There is a well-documented value appreciation offering on this Durban-to-Ballito ribbon. It is low-risk in terms of return, with limited opportunities, offering prime land such as the Sibaya Coastal Precinct. We enjoy a healthy partnership with the eThekwini Municipality in collaborating to unlock infrastructure and development opportunities.

Q How does Tongaat Hulett

Developments support new investors?

BAY

Tongaat Hulett’s professional team spends a considerable amount of time and resources undertaking research into areas and identifying market sectors that drive demand.

Tongaat Hulett Developments operates as a partner throughout the development process, seeking to jointly identify development opportunities and turn these into a reality. We provide the long-term, overarching vision, and the framework for development to happen in a planned, deliberate manner. With the land opportunities we have, we actively work around the positioning of this region and its

market sectors to increase the pace of investment and developments, in order to create value for all stakeholders – with a joint outcome seeing success for the developer, success for Tongaat Hulett Developments and success for the region.

It is anticipated that development of the Sibaya Coastal Precinct will take about 15 to 20 years from breaking ground to the completion of the final phase. Following construction activity that will generate many thousands of work opportunities and significant economic activity, Sibaya will ultimately be home to more than 25 000 jobs.

industry professionals to deliver a world-class destination, and the relationship between the eThekwini Municipality and Tongaat Hulett will eventually translate into significant socioeconomic benefits and regional infrastructural improvements.

Q Explain the relationship

between Tongaat Hulett and the eThekwini Municipality.

We enjoy a healthy, collaborative partnership with the municipality. The eThekwini Municipality enables development because it provides the founding infrastructure and support for the development, and creates the environment for us to develop with confidence. The municipality sees the merit in this mutually beneficial relationship, with each new land-holding contributing significantly to rates and taxes and increased job creation opportunities down the line.

Q Is Sibaya a direct result

of the municipal “fast-track/ one-stop-shop” programme?

Rory Wilkinson, Planning Director at Tongaat Hulett Developments

Q What advice do you have

to offer first-time developers/ interested investors?

The property development sector is certainly outperforming other sectors in our economy at the moment, with particular reference to the Durban and northern regions. The future looks optimistic, with demand increasing in most areas of development – commercial, industrial and residential. We are definitely seeing an increase in the level of interest. However, for a first-time developer, my advice would be to conduct research, know your market, have a good, professional development team, and find an appropriate financial partner early on.

Q What has gone into the

Sibaya planning process to get the precinct to this point?

The Sibaya Coastal Precinct has been on Tongaat Hulett Developments’ radar for more than 10 years, and we have carefully considered the crafting of this development into what it is today. While there is an overall concept plan and a clearly defined vision in place, we have taken a phased approach where development rights are sought and secured on a node-by-node basis. We have partnered with leading

Sibaya is not a direct result of this programme because it has passed the planning phase, and is already in the implementation phase.

However, two of Tongaat Hulett’s projects are a result of this programme: these are Cornubia and Inyaninga. There are also other projects due to come on stream soon. As a group, we applaud this new programme, and we see it as a fantastic opportunity to accelerate and facilitate new investment and development while placing Durban firmly on the map.

Q Is Sibaya’s launch a direct

result of pressure applied by SAPOA members and developers?

Sibaya’s release is as a result of pent-up demand for land and product in a prime location on KwaZulu-Natal’s North Coast.

Q How does Sibaya fit into

the King Shaka International Aerotropolis picture?

Sibaya Coastal Precinct is part and parcel of the emerging Aerotropolis. It provides an opportunity for a range of activities and uses in support of the complementary Aerotropolis vision and objectives around economic growth and development that leverage off the airport platform. For example, Sibaya will be able to offer solutions to holiday and tourist opportunities, permanent- and secondhome markets, retirement opportunities, education facilities and retail components.

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energy efficient development

Sasol’s new Sandton corporate office Sasol’s new corporate office is ideally situated in the heart of an exciting new business precinct that is set to change the face of Sandton’s skyline

By Stanley Karombo and Brenda Bryden

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Gregory Sacks, CEO of Alchemy

outh African chemical and energy company Sasol will officially open the doors of its R2-billion new Sandton-based headquarters in November. Under construction since 2013, Sasol’s 67 000m² headquarters in Wierda Valley is situated in a node earmarked to be Sandton’s next business district.

The 11-storey office block with seven basement levels, situated at 2 Katherine Street, is expected to house between 3 000 and 4 000 Sasol employees, currently scattered around 17 buildings across Johannesburg.

“We’re proud and excited about this project,” says Gregory Sacks, Chief Executive Officer of Alchemy, the project development company. Alchemy worked in collaboration with the Sasol Pension Fund to develop and jointly lease the building to Sasol.

“It’s a tough financial climate and budgets could easily creep over a three-year build, especially with the rand’s fluctuations,” Sacks says. “We’ve seen huge increases in building costs over this time, but are fortunate to have been able to keep costs under control and remain within the budget.”

Paragon Architects, known for the iconic Norton Rose Fulbright building design, designed the building, which matches modern sustainability standards.

On completion, Paragon Architects will apply to the Green Building Council of South Africa for five-star rating in both the design and as-built categories.

“The building management system remotely regulates lighting, air conditioning, water usage, escalators Designed for sustainability and elevators inside The S-shaped building addresses a number crucial environmental issues. “The standard the building, while the of issues, such as collection of rainwater, automated blinds control recycling of grey water and the filtration run-off water in the parking areas to the internal shading of remove pollution, have all been designed of the building” to meet Green Star criteria,” explains Sacks.

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“Challenging aspects such as reducing glare and heat inside the building have broken new ground.”

According to Sacks, landscaping to create natural beauty is currently under way: local ecosystem habitats to attract various species of small wildlife, insects, and birds will be created on top of the decks and other parts of the building as well as in the surrounding grounds.

“Everything about the building, from its S-shape and materials used to its construction methodology, enables a socially responsible larger precinct”

energy efficient development

“Everything about the building, from its S-shape and materials used to its construction methodology, enables a socially responsible larger precinct,” he says. “At the same time, cladding the building in glass enables the sky and natural landscape to be reflected, increasing the building’s aesthetic contribution to its surroundings.

The cantilevering of the top floors over the lower ones gives the building a sense of lightness and integration with its surroundings rather than imposing on the environment,” says Sacks. “The interior is as beautiful as the outside and hosts a range of value-adding facilities – restaurants, canteens, art galleries, coffee shops and an iconic Sasol One-stop Shop. “The building management system remotely regulates lighting, air conditioning, water usage, escalators and elevators inside the building, while the automated blinds control the internal shading of the building.”

Positioned for further growth Wierda Valley’s close proximity to the Sandton CBD, the Gautrain station (just 500 metres

away) and the M1 motorway positions it to play a pivotal role in Sandton’s development plan, which involves a move away from the original, traditional business area centred around Grayston Drive.

With the onset of other large developments in the area, such as the new 85 000m² global head office of financial services group Discovery and the Katherine Street precinct, Sacks believes that the area is poised to uplift and change the face of Sandton. Alchemy is also involved in developing 17 000m² of land between the Sasol building and the Discovery building.

The Katherine Street precinct will provide a connected office, restaurant, retail and landscaped environment, as well as additional amenities such as comprehensive backup, storage and management services, and advanced security features. Located close to Sandton City, the Gautrain and other mixed-use amenities, the entire area will be made pedestrian-friendly through the construction of several pedestrian bridge networks above ground.

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PDP

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PDP

Meet Leanne Sowray We speak to SAPOA’s new Property Development Programme (PDP) Chairperson about her background and experience of the course, and look forward to her adding value to the PDP Words and photographs by Mark Pettipher

L

eanne Sowray, Sector Head: Commercial at Growthpoint Properties, has taken on the role of Chairperson of SAPOA’s Property Development Programme. Run by SAPOA in conjunction with the University of Cape Town’s Graduate School of Business, the programme is South Africa’s premier management programme on property finance, valuation, law, negotiation, investment, development, marketing and management. The two-week course attracts a very high calibre of participants; consequently, the standard of instruction is pitched at senior and potential senior management.

Sowray has been in the property industry for more than 20 years, starting her career at Fedsure Properties. She moved to Nedbank as National Leasing Manager; this was followed by a move into property management for Investec in Jo’burg, before she moved to Cape Town to look after the Investec regional portfolio. She is now back in Jo’burg with Growthpoint. Initially looking after a commercial portfolio of R3,5-billion, she was promoted into property portfolio management. Sowray has grown tremendously within Growthpoint and is now part of a team that works on the company’s R24-billion commercial inland section, of which she oversees a property management portfolio worth just over R14-billion.

Sowray’s portfolio is fairly exclusive. Aided by three managers who report to her as well as a team of about 60 professionals, she looks after what is known as the “south region” (classified as the south from Sandton to Newtown), which includes prestigious Alice Lane properties and managing the expectations of international and national blue-chip clients. Each portfolio runs as a business unit, with responsibilities ranging from returns on property, rental collections, maintenance plans and capital expenditure to redevelopment, refurbishment, customer relations and ensuring positive stakeholder returns on investment.

Sowray herself attended the PDP course in 2010, and says she learnt a lot. “It’s one of those courses where the benefits last forever,” she says. “The networking alone pays dividends for years to come – to the point that I’ve developed business as a result of the connections made.

“After the course, I was invited by then-PDP Chairperson Tanya Jeffery to join the Committee.”

Being on the Committee has been a huge learning curve for Sowray. She pays tribute to her fellow Committee members Professor François Viruly, Tony Gebhardt, Henry Chitsulo, Clive Shepard, Marvin Nair, Norman Griffiths, Otto Dreyer and Yanda Tolobisa. “Many of these members have been in the industry for years,” she says. “It’s an honour to be among my peers and industry leaders – and it is quite daunting to now be the Chairperson. But it’s wonderful to be able to impart knowledge and give back to the industry. We all learn so much in the corporate world, we are helped along the way,

and it is our responsibility to help educate new property practitioners with the knowledge we have learnt over the years.

There is a saying that ‘knowledge is power’; I believe it should be changed to ‘imparting knowledge is power’.

“In 2011, I was also asked to be on the panel of judges. My nature and background means I can’t just take a part of the projects submitted. I have to read each line, look at each element; only then can I formulate an opinion. It’s something we have to do here at Growthpoint before we take on a project – we have to look at each project holistically. Being on the Committee and the judging panel has SOUTH AFRICAN PROPERTY REVIEW

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PDP helped me in the way that I conduct my dayto-day business for Growthpoint – another lasting benefit of the programme.

“My advice to anyone considering the course is to do it. Take plenty of vitamins and be prepared for long hours: it’s intense but fun and highly informative. PDP covers almost everything you need to know when developing a property: an overview of South Africa’s economy, financial management, marketing, viability, feasibility and valuation, contracts and tenders, town planning, property management, property law and taxation, and how to think strategically.

“Group dynamics is something else you learn on this course. You learn to work with other personalities in other disciplines, and while working on the project you get to tackle a variety of issues. You get to put into practice everything you have learnt in the first week of the course.”

Going into her new role, Sowray is looking forward to being able to add value to the programme and hopes to introduce new positive dynamics, such as international trends in property management. She is also very pleased to note the addition this year of keynote speakers – all industry experts in their individual fields.

Sowray is passionate about development of competitive sustainability in the property industry as a whole, and in giving back to the industry as a result of encouraging positive insights in sustainability issues and education.

She is an advocate of education within the industry as well as transformation – both subjects that are part of SAPOA’s mandate, and are close to SAPOA President Nomzamo Radebe’s heart. “In my current business position I see a huge skills gap – I think we all do,” says Sowray. “It is important to train young people so they can be ready to take up positions when they become available.”

Encouraged by young people benefiting from the SAPOA Bursary Fund, Sowray says that – like JHI and Motseng – Growthpoint has taken on three SAPOA Bursary students and enrolled them into its internship programme.

One of the students, Nomazwi Ngcungama, has been taken into the valuations division as a permanent employee.

“The property industry is constantly changing, so it’s important that we at SAPOA continue to look for ways of keeping up with industry trends and legislation,” says Sowray.

“The PDP course is one such way of keeping ourselves current and relevant, and it is my aim to make a positive contribution to the course as well as to the property business over the next few years.”

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Property Development: taking education to the industry

SAPOA’s Property Development Programme continues to grow from strength to strength. The class of 2016, made up of 75 students, has made it to the end of this year’s intensive two-week course

By Mark Pettipher

Newlands location

PDP

A

fter 48 years of existence, the SAPOA Property Development Programme (PDP) is still going strong. SAPOA, in conjunction with the University of Cape Town’s Graduate School of Business successfully ran 75 delegates through their paces this year. This intensive two-week programme, sponsored by long-standing sponsors Standard Bank, first-place sponsor Hamlyn Gebhardt and second-place sponsor SVA International (Pty) Ltd, got under way on 17 July. The PDP is the annual highlight of SAPOA’s education programme, and is considered to be South Africa’s leading property industry course.

“Over the years, the programme has become a yardstick for delegates to measure their performance against other property professionals, engage in robust debates on sectoral issues and form networks and relationships that go beyond the lecture rooms,” says SAPOA Chief Executive Officer Neil Gopal. “SAPOA values the sponsors of the PDP and their commitment to the sector. Their involvement makes it possible to host this world-class programme.

“I found the course to be exceptionally well organised.

The schedule is time-consuming, so well done to the organisers on getting that right. I also noted that the most lively lectures were placed at the end of each day to help us finish on a positive note. Prof Viruly was really entertaining throughout the course – but his final speech was priceless!”

John Jack, Galetti Knight Frank

Similarly, SAPOA thanks the lecturers involved in the PDP, who play a crucial part in the programme and contribute largely to the esteem the programme enjoys. To the PDP delegates: this programme is one that extends beyond the formal two weeks you spend in the lecture rooms.”

The course covers a great variety of relevant industry topics, and this year the Committee also included keynote speakers in the programme. There were 25 lecturers and speakers, including Professor François Viruly, Dave Duarte, Rob Wesselo, Nicola Robins, Guy Nicolson, Shevira Bissessor, Sanett Uys, Pieter Engelbrecht, Rudolf Pienaar, Phil Barttram, Johann Marnitz, Colin Devenish, Steve Sutcliffe, Richard Thomson, Helgo Schomer, Norman Griffiths,

Clive Shephard, Henry Chitsulo, Tony Gebhardt, Derek Chittenden, Clifford Hayim, Barry Standish, Portia Tau-Sekati, Phillip Haupt and Terri Wills.

The PDP’s outgoing Chairman Tony Gebhardt welcomed the delegates with an inspiring speech. “The PDP experience has typically been enriched by delegates from as far as India, Egypt, Mauritius and the SADC countries, and this year is no exception,” he said. “Industry leaders are sourced far and wide to present lectures in their fields of expertise. It is this infusion of the diversity of minds in various disciplines that makes the PDP a value-added experience for each delegate. This year, Chief Executive Officer of the World Green Building Council Terry Wills will grace us with a lecture that will expose our delegates to the cutting edge of worldwide sustainability experience.

“Over these two weeks, you will enjoy wellprepared presentations that will provide you with new perspectives on our industry. Be prepared to learn, unlearn and re-learn as you engage with this range of professionals, for it is through opening our minds that real edification occurs.”

As in preceding years, the delegates were handed a pack of information that contained a practical property development project in Cape Town. The 2016 class was required to consider the potential redevelopment of the Newlands public swimming pool.

The project involved the development of the Newlands swimming pool into a viable international aquatic centre that is capable of funding its own capital upgrade costs and ongoing operating expenses.

The development, which needed to meet the standards of an international Olympic swimming centre, was to be able to host world-class events. There were a number of considerations that needed to be included, among them the ability to retain the western gardens, which should continue to allow for public access.

During the first week of the programme, the delegates participated in a series of lectures focusing on a full property development cycle, which included aspects of property finance, valuation, property law, negotiation skills, investment, development, marketing and management.

Every delegate was then assigned to a group, ensuring that each group member was from an associate property industry discipline.

“Unbelievable.

Going through it was painful, tiresome and somewhat rushed… but looking back, it was an amazing experience. I definitely recommend it. We will send two new recruits next year as well. The networking and meeting so many new people in the industry was the biggest highlight.”

Ajay Mistry, Focus Project Management

At the end of the practical, the judges – Johan Marnitz, Clive Shepard, François Viruly, Henry Chitsulo, Tony Gebhardt, Leanne Sowray, Norman Griffiths, Nonku Ntshona, Keith Cattell and Simon Nicks – were tasked with rigorously assessing each submission.

The PDP has developed a sophisticated assessment framework with a clearly defined set of criteria. These include: ●● Urban planning and architectural design ●● Market analysis ●● Social equity/ownership ●● Legal structure ●● Building cost and programme ●● Financial viability ●● Financial structuring ●● Presentation – the submitted project, an executive summary and an oral presentation.

“In a nutshell, the course’s popularity is testament to how extremely well it’s run. Learning the ropes about property finance, valuation, law, negotiation, investment, marketing, development and management – all key elements associated with our industry – is in itself is more than enough to gets one’s head around in a short space of time. And the course conveners managed just that. The fact that it had to be intense illustrates how precisely the practicalities of all the elements were so expertly dovetailed into a reallife situation to be handled from the perspective of a randomly, chosen diverse team with a spread of differing experiences.”

Amanda Chiume, Investec Bank SOUTH AFRICAN PROPERTY REVIEW

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PDP The PDP, as always, concluded with an awards ceremony attended by sponsors and VIPs, Committee members and lectures.

Chairman Tony Gebhardt opened the proceedings, followed by a brief welcome

by SAPOA President Nomzamo Radebe, who had taken part in the course in 2008.

“The programme has not only achieved monumental success, it has helped develop some of the sector’s most highly skilled and influential leaders,” she said in her address. “SAPOA is immensely proud of the programme’s success, and its impact on delegates and the institutions they represent.

“It is appropriate to reflect on the wise words of Benjamin Franklin: ‘An investment in knowledge pays the best interest.’ SAPOA recognises the role that the PDP plays in the advancement of the sector and its contribution towards meeting the vision of various individual institutions. We always endeavour to provide excellent educational

programmes that are up-to-date and on par with global standards.

“It is a tool for greater success in the various institutions, and a stepping stone to a broader view that extends beyond the delegates own role as a professional. Some of the former PDP graduates have even become SAPOA Presidents subsequent to their attendance of this prestigious programme!

“Together with the PDP Committee, SAPOA continues to strive to improve the PDP and make it a success and of benefit to the industry.”

“This course is a must for anyone who is considering a career in property development. From a professional point of view, if you find yourself already in this sector I highly recommend you attend this programme – you will bring a more holistic opinion and approach to the property development table”.

Roy Davy, Interk

“For me personally, the biggest highlights of the course were the information sharing among the team members as well as the participation from inception. Winning was a team accomplishment from all the group effort, including the late hours we had to put in. Working together as a team to achieve the bigger picture and really putting egos aside will also remain with me. I would definitely want others to experience the course.”

Mfundo Gxaba, Westgate Shopping Centre

BACK ROW (from left): Nicholas Oliphant, Ashok Prasad, Ashley Moodley, Daniel Barnard, John Jack, Noel Puta, Tony Maloney, Andrew Russell, Keshav Ramandh SIXTH ROW (from left): Paul Nel, Danie de Beer, Gerhard Joubert, Nick Cretikos, Vusumzi Mdwara, Stuart Williams, Dean Message, Pierre Swanepoel, Nico Singh, Zaheer Akoodie, Matt Rich FIFTH ROW (from left): Brendan Raubenheimer, Sunel Botha, Dean Boniface, Roy Davy, Byron Eckersley, Hermanus Lemmer, Josh Drobis, Jacques Blaauw, Cecil Maswanganyi, Christine Joubert, Allistair Langson, Bongekile Dlekedla FOURTH ROW (from left): Guy Macquet, Wayne McIntosh, Charles Smal, Zukiswa Ntlangula, Lorryn Steenkamp, Tankiso Mothebe, Wisani Hosana, Mvula Seroto, Lethu Marambana, Ria Smit, Anesh Hansjee THIRD ROW (from left): Dakalo Raphunga, Justin Arendse, Josie McVitty, Francis Kununka, Nazeem Osman, Zanele Mabathoana, Sandra Ruiter, Emmanuel Nemamilwe, Kerwen Francis, Zane Pyoos, Makhado Nesengani SECOND ROW (from left): Alexander Adjei Grant, Nadia Titus, Antony Marks, Gillian Maiketso, Jean Page, Olivia Ngcingwana, Reyhana Satar, Pamella Thubeni, Nompumelelo Lukhele, Amanda Chiume FRONT ROW (from left): Paul Mkhonza, David Adams, Marlize Pretorius, Mfundo Gxaba, Nur-ud-din Tolker, Norman Griffiths, François Viruly, Kgabo Mpyana, Adam Masonganye, Ian Manson-Kullin, Zameka Lebona, Ajay Mistry

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SOUTH AFRICAN PROPERTY REVIEW

PDP

PDP Chairman Tony Gebhardt

PDP Course Facilitator Professor Franรงois Viruly

SAPOA President Nomzamo Radebe

FROM LEFT Course delegates Reyhana Satar, Anesh Hansjee, Dean Message and Zaheer Akoodie

Ian Raeburn of Standard Bank

FROM LEFT Course delegates Cecil Maswanganyi, Noel Puta, Emmanuel Nemamilwe and Makhado Nesengani

Director of Executive Education Kumeshnee West

FROM LEFT Course delegates Nicholas Cretikos, Zaheer Akoodie, Joshua Drobis, Anesh Hansjee and Vusumzi Mdwara

Course delegate Sunel Botha

SOUTH AFRICAN PROPERTY REVIEW

37

PDP

FIRST PRIZE (from left): PDP Committee Chairman Tony Gebhardt, Gerhardus Johan Joubert, Amanda Chiume, Ajay Mistry, Pierre Swanepoel, Zukiswa Ntlangula, Professor François Viruly, Roy Davy, Jonathan Jack, Mfundo Gxaba, Lorryn Steenkamp and Charles Smal

SECOND PRIZE (from left): Sponsor SVA’s Adriaan Mentz, Makhado Nesengani, Keshavi Ramandh, Dakalo Raphunga, Noel Puta, Bongekile Dlekedla, Paul Nel, Daniel Barnard, Professor François Viruly, Sunel Botha and Hermanus Lemmer

THIRD PRIZE (from left): SAPOA CEO Neil Gopal, Vusumzi Mdwara, Maria Smit, Knowledgia Kgabo Mpyana, Nompumelelo Lukhele, Nicholas Cretikos, Guy Macquet, Professor François Viruly, Ashok Prasad and Anthony Marks

T H A N K S TO O U R S P O N S O R S

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SOUTH AFRICAN PROPERTY REVIEW

PDP

FROM LEFT Mfundo Gxaba, Gerhardus Johan Joubert and Alexander Grant

Nompumelelo Lukhele and Thembalethu Marambana

Robin Lockhart-Ross with partner, SAPOA President Nomzamo Radebe and SAPOA CEO Neil Gopal

Daniel de Beer and Nicholas Oliphant

FROM LEFT Marlize Pretorius, Christine Joubert, Andrew Russell, David Adams and Kerwen Francis

Vusumzi Mdwara and Tankiso Mothebe

FROM LEFT Knowledgia Kgabo Mpyana, Wisani Hosana and Bongekile Dlekedla

Mvula Seroto and Makhado Nesengani

FROM LEFT Brendan Raubenheimer, Dean Boniface, Matthew Rich and Emmanuel Nemamilwe

SAPOA Western Cape Regional Committee members Sanette Uys and Dave Russell

SOUTH AFRICAN PROPERTY REVIEW

39

on show

A walk on the

wild side And now for something completely different…

“The diagonal tubular steel structure and the industrial farm aesthetic have pushed the limits in respect of getting the project completed within a feasible capital spend. We are proud to have been part of the team that has brought this interesting and challenging project to fruition”

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on show

SOUTH AFRICAN PROPERTY REVIEW

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on show

WATERFALL

MANAGEMENT AND OPERATING COMPANY

www.waterfall.co.za

www.waterfallwilds.co.za

Ad Outpost Building, Woodmead North Office Park 54 Maxwell Drive, Jukskei View, Sandton, 2191 42

SOUTH AFRICAN PROPERTY REVIEW

on show

W

aterfall Wilds is the new kid on the block in the expanding region of Waterfall, and offers a refreshing twist on the usual shopping centre concept. Waterfall Wilds is located on the corner of Woodmead and Maxwell Drive in Midrand, opposite Waterfall Corner and close to the Waterfall Valley Estate.

The developer of the project is Maximix (Pty) Ltd – together with Gothic Construction, EthiQS Quantity Surveyors and Krynauw Nel Associates, it has created a unique leisure destination.

Every project has its challenges and Waterfall Wilds was no different, says Hedley Pougnet of EthiQS Quantity Surveyors. “What makes our professional life interesting is that every project is different – a different team, a different site, a different design. This project has certainly demonstrated that in several ways. Unusual challenges included the slope of the

site requiring the substantial gabion walls and the work being completed under three separate contracts.

“The diagonal tubular steel structure and the industrial farm aesthetic have pushed the limits in respect of getting the project completed within a feasible capital spend. We are proud to have been part of the team that has brought this interesting and challenging project to fruition.”

Designed by the awardwinning architects Krynauw Nel Associates, Waterfall Wilds consists of 2 900m² of retail space and has been created to cater specifically for families.

The company believes that all architectural endeavours should focus on the harmonious integration of the site and the building, focusing on the human experience of this integration.

Waterfall Wilds is no different.

“Getting appointed on a wetlands area project, on a challenging site on the green belt of the Jukskei River,

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on show

Proud to be involved in the Waterfall Wilds development

083 260-8116 info@fabtec-skylights.co.za

fabtecskylite.co.za 44

SOUTH AFRICAN PROPERTY REVIEW

required thinking in a different way,” says Krynauw Nel. “Having a site located on the fourth corner of this intersection, with the other three having been developed already, posed challenges. How could we compete with much larger developments and yet integrate with the natural site on a green belt?”

The answer was not to compete but to provide an opposite to the others by constructing a simple, shed-like building in a colour that would blend well with the Highveld’s green summers and brown winters. The colour originates from the shades of tree bark.

The architect’s intention was to create a low-impact building in a scale that constantly reduces to human scale on the exterior.

This was done with a simple steel double-column structure.

The visual impact of the interiors is fully exploited, as they reveal a surprisingly spacious area.

“We also wanted to produce a farm-feel and -style building to refer back to the original

Waterfall farm,” explains Nel. “The lines of the profile of the building are produced to either suit the strong horizontal lines of the commercial developments around it or some small-scale patterns to integrate with the smaller scales of the retirement village. Terraces, balconies and every window to the Jukskei also maximise the views and the river experience, making it a place where one can enjoy the river and wetlands without leaving the city fabric.”

The space offers two familyfriendly restaurants, a furniture and decor shop, and a place for kids to play. Diners can choose between steaks from Turn & Tender Steak House or Greek delights from Nostimo by Mythos, which has a children’s play area as well as an arts and crafts room.

After lunch, a spot of shopping is easy thanks to Private Collections, a furniture store specialising in hand-crafted Burmese teak furniture, ethnic carved doors, unusual decor

on show and lighting features. But Artitots is really where it all happens: an activity centre for kids, it’s a great space filled with creativity and fun.

It may also draw in the grownups with hi-tech 3D printers that anyone can experiment with. The centre will also have an exclusive gym run by Bodytec, which works with clients on a one-on-one basis.

Even the parking spaces are family-friendly and have deliberately been made wider than usual to make it easy for parents with prams and for the elderly.

EagleWood Sundecks specialise in quality design and the installation of timber balustrades, staircases, pergolas, sun decks and timber frame structures. They were responsible for the centre’s balustrades. “We design, build and install for the residential and commercial industries,” explains EagleWood’s

JP Nell. “With a flexible design approach, we provide a unique design to accommodate specific requirements for each project.

Balustrades are important structural components that provide safety and functionality, and surrounding features have to be taken into account for the balustrade to either blend in or stand out. To harmonise with the low visual impact of the natural environment of Waterfall Wilds, and to simultaneously display grace, elegance and luxury, we installed a profiled oval Rhinowood top rail on the steel balustrade, which blends in sublimely with the aesthetic features of the surrounding area of the retail centre.”

Waterfall Wilds aspires to have a low environmental impact and to present a green space to the public, says the centre’s Chief Executive Officer Willie Vos.

“The design of the building is a little less conventional than you will find in the rest of Waterfall,” he says. “The idea is that the building itself will blend in with the environment so a number of large indigenous trees have been planted.”

This mantra is shared by its core anchor, the Keith Kirsten Nursery. The store offers more than 7 500 plants, shrubs and trees, and includes an extensive outdoor area within an attractive landscaped environment designed by Ray Hudson and Keith Kirsten. “Our store brings a new-generation garden centre to the area, which will not only offer quality, range and value to customers who love their home and garden, but also a unique South African gardening app for gardening information and ideas to your fingertips,” says Keith Kirsten, who will also be on hand to

www.eaglewood.co.za

Timber Sundecks Pergolas Balustrades Staircases Timber Frame Structures Mezzanine Levels

Waterfall Wilds aspires to have a low environmental impact and to present a green space to the public, says the centre’s Chief Executive Officer Willie Vos

TimberSunDecks

0860 33 25 46

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on show Light was an important aspect of the build too, especially when it came to the interaction between indoor and outdoor spaces

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give lectures on sustainable gardening, growing herbs and vegetables, landscaping, and planting to attract butterflies and birds. “It has a modern look and new positioning, and has undergone a brand overhaul in anticipation of the expected growth of the gardening franchise.”

The nursery’s design was as important as the shopping centre itself. “We want this to be an outdoor centre with a South African look and feel, so we used different types of materials and cladding from the usual,” says Vos. “We have shade netting on the outside of the nursery, which hasn’t been seen in nurseries up until now.

We have gone for a lot of design features that are quite new as far as retail outlets are concerned.”

Light was an important aspect of the build too, especially when it came to the interaction

SOUTH AFRICAN PROPERTY REVIEW

between indoor and outdoor spaces. Here skylights come into play, as they provide natural light yet prevent heat loss. Waterfall Wilds made use of a dual mono pitch or ridge pyramid shape skylight (18m wide by 1,5m for each leg) from Fabtec Skylite. “What makes our skylight very special is that it was double-glazed, utilising the outstanding properties of high-performance low “E” glass as one skin resulting in an R value of only 0,476 (msqK/W) with a light transmission of 72%,” explains Fabtec’s Mark Kopel.

“This allowed the architect to meet the stringent design parameters for thermal insulation. We can even offer lower R values with any of our skylight designs in a wide range of laminated safety glass colours, giving the feel of natural sunlight without the heat.”

The considered design of the building further takes into account the environmental features of its setting, surrounded as it by grassland on three sides, with a view of the Jukskei River.

“Much has been done to try to make it blend in with this natural environment,” Vos says.

Contact ●● ●● ●● ●● ●● ●● ●● ●●

Active Jointing Activejointing.com Advance Fenestration Advancefen.co.za Eaglewood Eaglewood.co.za EthiQS Quantity Surveyors Ethiqs.co.za Fabtec Skylite Fabtecskylite.co.za Fellows Consulting Fellows.co.za Krynauw Nel and Associates Krynauwnel.com Waterfall Management Company Waterfall.co.za

krynauw nel associates

on show

www.krynauwnel.com 011 788 9549 91 Ninth Street, Parkhurst, Gauteng

Proud to have been the Quantity Surveyors on this prestigious project

www.ethiqs.co.za info@ethiqs.co.za 011 463 1100 Private Bag X115, Bryanston, 2021

011 027 7401 scotch@fellowsdube.co.za 6 Bristol Close, Waterford Estate West Maroeladel, Fourways, Gauteng

Aluminium Windows & Doors

www.advancefen.co.za info@advancefen.co.za 011 452 1977 Unit 4, 18 Plantation Road, Eastleigh Edenvale, Gauteng SOUTH AFRICAN PROPERTY REVIEW

47

company in profile

Commercial lease agreements: aspects that remain problematic in property litigation

C

ommercial and retail leasing is big business in South Africa, with the majority of business enterprises operating from rented rather than from privately owned premises.

It is a well-known fact that commercial lease agreements fall within the ambit of the Consumer Protection Act, No 68 of 2008 (“the CPA”).

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SOUTH AFRICAN PROPERTY REVIEW

To a large degree, Turner Inc deals with commercial and retail property litigation.

Despite the fact that the CPA has been around for some time, we still find that landlords and property managers are not incorporating CPA requirements in their leases and demand procedures. This can lead to protracted and expensive litigation.

The landlord is a service provider under the CPA, and the leasing of the property is considered to be within the ordinary course of its business. The CPA applies to all commercial leases that have been concluded with natural or juristic persons with an annual turnover or asset value of less than R2-million. It is important for landlords and property managers to know their tenants prior to signing lease agreements.

Under the CPA, a tenant who falls under the threshold is entitled to cancel a lease immediately and without providing any reason, subject to the requirement that the tenant will have to give the landlord or agent 20 business days’ notice. The landlord becomes entitled to charge a reasonable cancellation penalty.

The term “reasonable” is not defined in the CPA but it is understood to mean a reasonable time within which the landlord expects to find a new tenant.

The landlord therefore cannot charge for the remainder of a fixedterm contract (such as the remaining nine months of a two-year lease) when the possibility of him finding a new tenant in three months is very likely. The period claimed has to be reasonable, and the reasonableness must

be proven. Knowing whether a tenant falls under the threshold will allow landlords and property managers to structure the lease in a way that protects the landlord’s investment.

When drafting any commercial leases, one also needs to bear in mind sections 48 to 51 of the CPA, and in particular the impact of these sections on unfair, unreasonable and unjust contractual terms. When entering into a lease agreement, the landlord needs to bring to the notice of the tenant any term or clause of the agreement that limits the risk or liability of the landlord, or that assumes the risk or liability of the tenant, or imposes any obligation on the tenant to indemnify the landlord. Any landlord entering into an agreement with terms and clauses conflicting with these provisions of the CPA must ensure that prior to signing the agreement all these terms are brought to the attention of the tenant, and that the tenant accepts these terms and signs next to each one that could be in conflict with these sections of the CPA. It could even be worthwhile for the landlord to have the tenant sign a further declaration stating that all the terms were brought to his or her attention, and their nature and consequences were explained and understood.

If any term falls foul of sections 48 to 51 of the CPA, the tenant will be entitled to approach the court to request the terms are declared void and that such terms are severed from the agreement. The necessity of having the tenant acknowledge the existence of all such clauses is therefore of vital importance for the landlord to legally avoid liability (and the damages claims that flow from them).

When it comes to managing delinquent tenants who fail to pay rentals, it is important for landlords and property managers to understand that their letters of demand must incorporate a section 129 demand.

This section of the CPA alerts the tenant to the fact that it may refer the lease to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties

company in proďŹ le

resolve any dispute under the lease or develop and agree on a plan to bring the payments under the lease up to date. Further, the tenant is called on to respond to the notice within 10 business days from date of delivery thereof. If a tenant remains in default for 20 days after the default started, then the landlord or property manager may proceed with the issue of summons for the collection of the arrears rentals and charges. Although the lease agreement may provide in its breach clause that legal steps may be taken seven days after demand, it must be noted that section 129 has basically, statutorily, changed the demand period to 10 days. If a landlord decides to cancel the lease, they can proceed with the cancellation on day eight after demand if the tenant is still in arrears. No summons or application may be issued until day 11 after demand, and if the tenant is still in default.

In our experience, property managers send out monthly letters of demand to defaulting tenants, but the demands do not include a section 129 demand. Accordingly, if the tenant still does not pay and the landlord hands the matter to attorneys, the matter is immediately delayed by an additional 10 days because a section 129 demand first has to be sent out before any steps can be taken.

In some cases, the arrears are not large and may not justify the cost of litigation.

In those instances, it would be valuable for landlords to include in their section 129 demands a further warning to the tenant that they may be listed with a credit bureau if they do not pay after 20 days. This warning is issued in terms of Regulation 19(4) of the Regulations to the CPA. If the tenant remains in default on day 21 after receipt of the notice, the landlord may list the tenant with a credit bureau. This listing does not entitle the landlord to any payment â&#x20AC;&#x201C; but it is a highly effective tool where the claim amount does not warrant litigation. Businesses need a clear credit record if they are to obtain credit from financial institutions and service providers, so the listing may lead to payment of arrears.

Where the Landlord wants to recover the money, the most effective way is to institute action with a rent interdict summons. This summons contains an interdict prohibiting the tenant from removing any assets from the premises. Once the summons is served, the landlordâ&#x20AC;&#x2122;s hypothec is perfected and no one may remove anything from the premises until the Sheriff does so with a warrant of execution. It is important that the attorney, when securing service of the summons, instructs the Sheriff to do an inventory

of the goods on the premises. This has psychological value (the tenant believes the goods are being attached) and is a way of keeping record of what is on the premises.

If the landlord decides to terminate the lease as stated above, he may do so on day eight after demand if the lease provides for a seven-day notice). Once the lease is cancelled, the tenant can be asked to vacate the premises in three days. If the landlord is pursuing the arrears claim, it is crucial the attorney serves the rent interdict summons together with the letter of cancellation via Sheriff. This secures the hypothec so the tenant may not remove anything from the premises.

If the tenant does not vacate within the (suggested) three days, an application for eviction can be launched.

One of the biggest problems we encounter is frustrated landlords who gave instructions to attorneys to recover arrears and evict tenants.

The attorneys try to save time and costs by proceeding with one action or application for both arrears and eviction, and generally out of the Magistrates Court. If arrears are claimed with an eviction, it opens the gate for factual disputes, which can bring the wheels of justice to a standstill. Arrears and eviction must never be brought in the same application.

Moreover, although applications in the Magistrates Court are theoretically cheaper and faster than High Court applications, in reality the opposite is true. The safest, most effective (both in time and cost) method to approach a money claim and an eviction is to issue a rent interdict summons out of the Magistrates Court to secure the hypothec; to serve the summons with a letter of cancellation that requests the tenant to vacate in three days; and then to issue a separate eviction application out of the High Court. The eviction application cannot fail if demand was done properly in terms of section 129 of the CPA, and cancellation was done properly within the terms of the lease.

t: +27 (0)11 028 8140 bianca@turnerinc.o.za / lisa@turnerinc.co.za www.turnerinc.co.za

THIS PAGE Bianca Turner OPPOSITE Lisa Sutherland is currently finalising her articles with Turner Inc, and assisting Bianca Turner with property litigation matters

SOUTH AFRICAN PROPERTY REVIEW

49

events

Celebrating phenomenal women SAPOA, in partnership with the Green Building Council of South Africa, hosted its annual Women’s Breakfast at the Hyatt Regency in Johannesburg Photographs by Jabu Nkosi

SAPOA Marketing Manager Jane Padayachee with SAPOA President and CEO of JHI Properties Nomzamo Radebe and GBCSA Chief Marketing Officer Jessica Govender

Invites enjoy companionship at the annual Women’s Breakfast

Keynote speaker Rianette Leibowitz is an author, a TV and radio presenter, an accredited PR consultant and a cyber-safety activist

Sam Dreyer, owner of Colouring HQ, enticed the ladies with colouring books for adults

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events

East London Regional Council hosts golf day Photographs by Johan van Loggerenberg

Closest for Two 18th: Mike Goddard, Kempston Group

First place: ELIDZ – Robin Knott, Zethu Myeki, Lwazi Gqira and Ndileka Lande

Nearest to the Pin on 10th: Naas Wait, Charteris & Barnes

Second place: Bax Kaplan Russell Inc – Glenn van Heerden, Brent Thorpe, Mike Francis and Richard Ferrant

Nearest to the Pin on 17th: Graham Hardy, Pearlstone

Third place: Godlyn Rentals – Mike Allam, Harry Keogh, Cecil Godfrey and Sinclair Warner

It was amateur golf at its finest, and the perfect day for a round or two.

East London Regional Council (with Robin Knott as Chairman) hosted a golf day at the East London Golf Club.

A big thank you to all players for attending and making the day such a success.

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events

SAPOA President honoured at celebratory dinner Nomzamo Radebe’s recent appointment as the first black female president of SAPOA on the 50th anniversary of its existence is a historical milestone in the property industry. Industry friends and colleagues honoured her at a glitzy celebratory dinner at the Marion on Nicol in Johannesburg Compiled by Maud Nale Photographs by Karabo Sepharatla

I

t was heart-warming to hear industry colleagues describe Nomzamo Radebe as “a committed colleague and co-Board member, candid client, passionate and leading woman in property and, most importantly, a mother”.

“I am ready to stand on mountains, ululating,” said fellow Board member and Chief Executive Officer of Motseng Investment Holdings Ipeleng Mkhari. “We’re all aware that in this industry, on this continent and in this world, literally cracking glass ceilings is almost impossible. So as you rise, remember that not only are you following women who’ve come before you, but more importantly that you’re leading thousands – if not millions – more behind you.”

Chief Executive Officer of Property Sector Charter Council Portia Tau-Sekati shared her experience of what Radebe’s appointment means for women in the property industry.

“As females in the industry, we have a renewed sense of belonging laid down by other female Presidents of SAPOA,” she said. “As black women, we have further gained extended assurance of acknowledgement of our ability and courage, and that we have what it takes.”

Marna van der Walt, Chief Executive Officer of Excellerate Property Services, only had words of praise for Radebe. “Nomzamo is so many things to so many people,” she said.

“Whichever role she chooses to play, she ends up being the pillar of strength in the room.

As she brought us all here tonight, let the diversity in the room reflect her passion and endearing nature for humankind. When you spend time with her, allow her sharp mind to challenge you to be the best you that you possibly can be.” Her closing words of advice?

“We are all proud to know you, to call you our friend and to have witnessed your growth.

Remember to enjoy life. You have arrived – enjoy the destination!”

Humbled by the acknowledgment of her accomplishments, the woman of the moment had a few words to share with all present.

“Being elected as the President of SAPOA is by far the highest accolade of my career.

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SAPOA President Nomzamo Radebe

It fills me with pride and deeply pleases my soul. I am excited and humbled, and I take this new responsibility very seriously. I’m completely committed to upholding the high standards that SAPOA members have become accustomed to. I am pleased to be at the helm of such a prestigious organisation, and I look forward to the year ahead.”

Radebe thanked to her special friends, and the colleagues who have supported her,

given her sound advice and helped her navigate through the “corporate jungle that we all love very much”. She also thanked her family for their unwavering understanding, saying that without them this would not have been possible. “A girl couldn’t ask for better cheerleaders than you!”

The celebratory dinner was sponsored by Delta Property Fund, Dipula Income Fund and Mara Delta Property Holdings.

FROM LEFT Fundi Mazibuko, Bronwyn Corbett and Kgaogelo Mamabolo

events

FROM LEFT Ipeleng Mkhari, Fundi Mazibuko, Nonkululeko Ntshona, Kgaogelo Mamabolo, Zola Malinga, Portia Tau-Sekati and Felicia Sao

FROM LEFT Nonkululeko Ntshona, Merafe Moloto and Vuyiswa Mutshekwane

FROM LEFT Lebogang Shole and Bukelwa Bulo

FROM LEFT Lionel Kisten, Siyabonga Mbanjwa and Rowan Crowie

FROM LEFT Tshepo Matlala and Shadrack Mthethwa

FROM LEFT The Radebeâ&#x20AC;&#x2122;s: Mthenjwa, Mrs Nombulelo and Nomzamo Radebe

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events

Ladies leading the pack WPN hosts “Meet the CEO” breakfast

Photographs by Xavier Saer

Marna van der Walt, CEO of Excellerate Property Services with SAPOA President Nomzamo Radebe, CEO of JHI Properties

The Women’s Property Network (WPN) held a “Meet the CEO” breakfast in Johannesburg, where the ladies got to meet and interact with two CEOs: ●● Marna van der Walt, the CEO of Excellerate Property Services, and ●● Nomzamo Radebe, the CEO of JHI Properties and SAPOA President.

An enjoyable morning was had by all as the CEOs were quizzed about issues such as the most significant barrier to female leadership, how to keep re-inventing yourself after being in the industry for so many years, and how they encourage creative thinking within their organisations.

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UPCOMING

EVENTS

2016 September

Region

Date

Event

Gauteng

1 September

Consultation on CIDB Project Assessment Scheme and Best Practise Fee

KwaZulu-Natal

8 September

KZN Breakfast Seminar

KwaZulu-Natal

8 September

Lease Agreement Workshop

Gauteng

8 to 9 September

Negotiating Skills Masterclass Programme (NSMP)

Mpumalanga

15 September

Mpumalanga Breakfast Seminar

Gauteng

TBC

Power Hour Breakfast

Mpumalanga

TBC

Mpumalanga Cocktail Dinner

Gauteng

TBC

Gauteng Networking Event

Gauteng

23 September

Introduction to Brokering Seminar (Day 1)

Gauteng

26 to 28 September

Property Financial Programme (PFP) Intermediate, University of Johannesburg

Gauteng

27 to 30 September

Essential to Commercial Property Programme (ECPP), Wits University

Gauteng

30 September

Introduction to Brokering Seminar (Day 2)

October Region

Date

Event

Limpopo

7 October

Limpopo Breakfast Session

Gauteng

14 October

Gauteng Golf Day

Limpopo

20 October

Limpopo Golf Day

KwaZulu-Natal

24 to 25 October

Negotiating Skills Masterclass Programme (NSMP)

November Region

Date

Event

KwaZulu-Natal

8 to 11 November

Essential to Commercial Property Programme (ECPP), Wits University

Gauteng

10 November

Gauteng Networking Event

Gauteng

10 to 11 November

Negotiating Skills Masterclass Programme (NSMP)

Gauteng

14 to 16 November

Essential to Commercial Property Programme (ECPP), University of Johannesburg

East London

15 November

East London Networking Event

Gauteng

17 November

Gauteng Research Breakfast

Port Elizabeth

17 November

Port Elizabeth Golf Day

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

off the wall

Turning heads: the world’s first rotating tower In an ever-changing world where imagination meets reality and science fiction seems to come to life, Italian architect Dr David Fisher has a dynamic vision: one of buildings that function as “machines for living”.

We take a look at an architectural marvel that – once built – will quite literally “turn heads” Compiled by Phil Ruimte

T

he idea of a rotating building is not new.

The world’s first rotating building is the 15-storey Suite Vollard, completed in 2001 and located in the Ecoville District in Curitiba, Brazil. It was designed by Bruno de Franco of DiBari and Associates and finished in 2001.

Fast-forward to June 2008, and we saw Dr David Fisher’s proposals for the world’s first rotating tower come to light. “My buildings are unique because they are the first that will be dynamic and change shape at every moment, the first to be built in a factory and the first to be completely self-powered,” Fisher said in a New York press conference.

Eight years later, the Dynamic Tower – which is proposed to be located in the United Arab Emirates city of Dubai – is still on hold.

When built, the tower is supposed to be 80 storeys high, with floors that will be able to revolve individually, each adjusted to complete full 360° of rotation in a time of one to three hours.

The tower will be 420m tall, which would make it the second-tallest building in Dubai, as well as the second-tallest

residential tower in the world after New York’s 432 Park Avenue, which stands at 425,5m. It will also be the world’s first prefabricated skyscraper, with Fisher saying that up to 90% of the tower, excluding the central column, could be built in a factory, then shipped to the construction site. The floor space is projected to cost US$3 000/m², Fisher said.

The top 10 floors will be whole-storey apartments, complete with swimming pools and specially designed lifts for residents’ cars, which will improve security and convenience for the residents. Lower floors will be mixed-use, incorporating hotels, retail, leisure and apartments in the manner of standard tower blocks.

Between floors, wind turbines will be sandwiched horizontally, making for a total of 79 turbines, using the high winds that often plague skyscrapers in the tower’s favour rather than just shoring up the structure’s resistance to them.

The Dynamic Tower, Fisher has said, will produce enough energy via its component wind turbines and external photovoltaic

David Fisher is an Italian-Israeli architect based in Florence. He is known for designing the Dynamic Tower, a rotating skyscraper proposed for construction in Dubai, and is the founder and Chairman of Dynamic Architecture Group

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panels to sell the excess to the city around it. Although the solar panels are only about 15% efficient at best, the Dubai rotating tower’s large surface area will mean maximum solar exposure. It has been reported that the turbines may generate 1,2-million kilowatt hours every year in Dubai.

“For the first time, man will have a building in four dimensions,” Fisher said. “You can have breakfast facing the sunrise and dinner against the sunset without moving from one room to another. And our buildings are so smart that they will produce energy for themselves.”

The world’s first rotating building is the 15-storey Suite Vollard, completed in 2001and located in the Ecoville District in Curitiba, Brazil

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