South African Property Review August 2019

PROPERTY SOUTH AFRICAN PROPERTY REVIEW - LogoTreatment.pdf

1

2016/08/25

REVIEW

August 2019

11:31 AM

The voice for the industry

Innovative Excellence Awards And the winners are…

Convention roundup Highlights from the SAPOA Annual Convention & Property Exhibition

Sable Park

The gateway to Century City

Your new President Meet David Green

INNER LL W ERA OV

from the CEO

Concern over the rising operational costs by the commercial property sector Last year, SAPOA members invested four times more internationally than in South Africa.

Domestic acquisition volume fell more than 50% between 2017 and 2018, and international investors have stayed away, leading to a double whammy locally

A

ccording to a recent study by Real Capital Analytics, “South Africaheadquartered investors placed US$4,9billion overseas in 2018, of which more than 60% was invested in retail, and nearly 20% each into the office and industrial sectors. All the cross-border investment for the year took place in Europe, with 30% focused on Poland and 17% on the UK.” Contributing factors such as rising municipal rates and taxes, site invasions, municipal inefficiencies, delays in zoning application approvals and low growth levels have led to a slowdown in the commercial property sector.

SAPOA members contribute significantly to the rates base, with rates and taxes being the secondfastest-growing operating cost item for property owners and investors. As a sector, commercial and industrial property wants to contribute in a positive way towards the efficient functioning of municipalities, but there is an increasing amount of evidence indicating that the continuous overinflationary increases in property rates are leading to sustainability problems in the industry.

We believe it to be in the interest of both commercial property investors and municipalities to resolve this matter to avoid a continuing trend, as it is increasingly influencing investment decisions in the property sector.

The property sector is also concerned about the implementation of how municipalities levy the rate in the rand on the value of the property. The rate

is reset annually to cater for inflation but should be reset back to original levels once the properties are re-valued (approximately every five years). If this isn’t done, inflation is being provided for twice, which results in super-inflation for the property owner. This is important as we aim to ensure that municipal tariffs are being reset in each new valuation year.

SAPOA has, in the past, been vocal in challenging the legality of increased municipal rates charged to its members.

Rising operating costs threaten the sustainability of net returns across the spectrum of commercial and industrial property investment. Since the sustainability of the property sector is a key focus for SAPOA, we have been vocal in challenging the basis and consistency of municipal rates charged to our members.

Consequently, the tougher trading environment is making it increasingly challenging for landlords to deal with the additional tax burden.

We acknowledge that rates are necessary to fund municipal service delivery and outputs, but these must be levied correctly. Our Constitution and laws are clear that rates and taxes must be levied in a just and equitable way, and this should be done by accurately determining the value of properties. As an industry body, SAPOA is committed to ensuring that rates are being levied from a correct base, and are not being overcharged. We believe this is essential to further an enabling environment for business and the commercial property sector in South Africa, and to help ensure the sustainability of our economy.

However, as much as SAPOA has been vocal about this matter, it is evident that municipalities are not really heeding the call.

Acquisition volumes have fallen sharply in South Africa, and overseas acquisitions by SAPOA members have increased sharply the past five years.

Unfortunately, by using property rates as a tool to try to balance their books, municipalities will eventually become victims of their own success.

Higher rates mean fewer developments, which will translate to a contracting rates base. This dangerous – and unsustainable – process has already started to gain momentum.

Best regards, Neil Gopal, CEO SOUTH AFRICAN PROPERTY REVIEW

3 1

contents

PROPERTY SOUTH AFRICAN

REVIEW

1

South African Property Review Journalism & Excellence Awards, Convention report back

2

The voice for the industry

PROPERTY SOUTH AFRICAN PROPERTY REVIEW - LogoTreatment.pdf

1

2016/08/25

11:31 AM

OVERALL WINN ER

REVIEW

Innovative Excellence Awards

The voice for the industry

ON THE COVER 1 Discovery Place was the Overall winner of the SAPOA Property awards for Innovative Excellence and the winner of the Corporate Office developments award

And the winners are…

Your new President Meet David Green

Convention roundup Highlights from the SAPOA Annual Convention & Property Exhibition

Sable Park

The gateway to Century City

August 2019

3

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

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

4

SOUTH AFRICAN PROPERTY REVIEW

4

3 From the CEO 6 From the Editor’s desk 10 Meet the President An opportunity to set South Africa on a course of greater democratic and inclusive change 14 SAPOA Board Meet the new SAPOA Board 18 Legal update The legal effect of the Commission’s Grocery Retail Market Inquiry Report 22 Property Sector Charter Lasting transformation

and progress in the property sector 26 Education and training SAPOA and UJ honour classes of 2018 28 Education The first CPM courses take place at Wits Enterprise 30 Opinion Investors plow capital into Europe 32 Entrepreneur one-on-one Energetic sustainable engineering 34 Convention ‘19 report back 52 Excellence Awards Discovering excellence 64 Building excellence Sable Park: the gateway to Century City 68 Howmuch.net The cost of living around the world in 2019 70 Social 72 Off the wall Simultaneous production of fresh water and electricity FOR EDITORIAL ENQUIRIES, email mark@mpdps.com Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 Editor in Chief Neil Gopal Editorial Adviser Jane Padayachee Editor Mark Pettipher Copy Editor Ania Rokita Taylor Public Relations Officer Maud Nale Production Manager Dalene van Niekerk Designer Fanie van Niekerk Sales Pieter Schoeman: pieter@mpdps.com Finance Susan du Toit Contributors cosmosmagazine.com/technology, Johan Coetzee, Maud Nale, Nature Communications/nature.com/articles, Raul Amoros/howmuch.net, Simon Mallinson, Stuart Strachan, The Property Portal SA/ propertyportalsa.co.za, Thsepo Tshabalala Photography Mark Pettipher, Xavier Saer DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA).

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

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

e: philip@rsalitho.co.za

August 2019

3

10

18

22

38

THINK OUTSIDE THE CUBICLE.

Don’t let limited space, limit business.

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

52 SOUTH AFRICAN PROPERTY REVIEW

5

from the Editor’s desk

Post-Convention

After yet another successful SAPOA Annual Convention & Property Exhibition, this edition brings you an overview of the proceedings

E

gavin.c@thevaluator.co.za T: 0861 659 659 C: + 27 82 900 5385 www.thevaluator.co.za

6 4

SOUTH AFRICAN PROPERTY REVIEW

very year after the Convention, Property Review brings you a roundup of the proceedings. Those who are reading this edition online can turn to the Convention pages to revisit the plenary sessions by clicking on the video links. Those who are reading in print will find the magazine’s home page at www. southafricanpropertyreview.co.za; from there, you can navigate to the videos.

The impact of the SAPOA Convention & Property Exhibition should not be underestimated. It’s an important annual event that provides members and nonmembers with an opportunity to network, listen to and participate in discussions on topics that are trending, and gain valuable insights into what their peers and colleagues are up to.

Its also an opportunity to welcome the association’s new President, David Green – no stranger to the industry.

While the Convention gets our property leaders together in one place, it also gives the industry an opportunity to honour the people and teams that are making a difference in the sector.

This year, the Lifetime Achievement Award went to Saul Gumede, a stalwart of the industry who is always striving to lift the country’s professional standards, ensure that there is a code of conduct to adhere to, and push towards adopting international best practices.

SAPOA also recognises and gives accolades to the teams of hard-working individuals who can go largely unseen when it comes to iconic buildings that are changing the country’s skyline. The SAPOA Awards for Innovative Excellence, accompanied by a coffee-table book, provide lasting recognition for those teams. This year, 46 entries once again re-set the bar for excellence in property development, with 1 Discovery Place taking top honours.

As important as it is for the buildings and companies that make up the industry to be acknowledged, it is as important for the journalists who report on the

sector to get recognition. Joan Muller of Financial Mail was rewarded as Journalist of the Year, with Glenda Williams of Finweek awarded the Feature Journalist accolade, SA Property Insider taking the website honours and newcomer +Impact winning Publication of the Year.

Education and transformation continue to be two of SAPOA’s major pillars, with outgoing President Ipeleng Mkhari also announcing during the gala dinner that 43 candidates would be placed in various internship positions for a year. This further illustrates SAPOA’s commitment to working with the government to bring about change in South Africa.

Heading into the last months of the year, we find ourselves asking where our economy is headed. As predicted by Nicky Weimar during Convention, we have already seen a lending-rate reduction of 25 basis points, and the SARB has kept interest rates unchanged. Meanwhile, Eskom’s continued bailouts are hurting the country, as reported by the Daily Maverick: “Fitch kept South Africa’s longterm foreign and local currency debt on BB+, the first notch of sub-investment grade (or junk status). But it has downgraded the country’s outlook from stable to negative, citing concerns about the government’s financial support of Eskom and low economic growth.”

Mark Pettipher, Editor and Publisher

Ready-to-use O�ces, Coworking, Meeting Rooms, Virtual O�ce & Flexible Working Plans regus.co.za

Work your way

meet the President

An opportunity to set South Africa on a course of greater democratic and inclusive change David Green is known to many for his tireless chairmanship of the Excellence Awards Committee, and being the CEO and founding shareholder of ProAfrica Property Services.

He was previously the managing director of a leading property brokerage and property service organisation, headed up the fund and asset management division at JHI Property Services, and held the role of Executive Director for Marriott Property Group, where he was responsible for the national property services operations. With 20 years of experience in real estate, he has chaired organisations such as the SA Listed Property Association, Rosebank Management and Forum, and the SAPOA Convention Committee. He is also an admitted advocate with an LLB degree

F

SAPOA President David Green

10

SOUTH AFRICAN PROPERTY REVIEW

irst, I would like to thank our sponsors, in particular our principal sponsor GladAfrica, as well as all the delegates and exhibitors. Without you playing the part of benefactors of this Convention, we would not have been able to come together to examine the challenging times we are in, to continue the dialogue, to understand the issues of the day, and to be able to plan for the future.

Having been part of SAPOA for more than 27 years, I’ve been privileged to watch it grow from strength to strength.

Today I stand before you not as the Chairman of the Convention Committee but as your President.

I want to thank the SAPOA executives for placing their faith in me, and I welcome this opportunity to lead the association – an association which I am pleased to call my own. Taking ownership of the challenges that you as a dynamic and diverse industry place before me is truly humbling.

I am proud to say that, as a non-profit and member-driven association, SAPOA is nationally accepted and internationally recognised as the voice for the commercial property industry in South Africa. During my tenure, I shall endeavour to ensure it continues to be so.

Today, more than ever before, SAPOA’s role in the property industry is to take on the issues that our speakers and panellists have so eloquently spoken about and debated during the Convention.

meet the President We should never forget the principles on which the association was founded.

In 1966, SAPOA was established to represent, protect and advance our members’ interests within the property industry in terms of ownership, management and development.

Championing principles As President, I look forward to championing those principles, to drive free enterprise, to fight for the inalienability of property ownership and to endorse South Africa’s competitiveness on the world stage.

Yes, we need to go back to basics.

As an industry body, we have deep collective knowledge. We encourage you, our members – the guardians of that expertise – to take a more active role in sharing that valuable resource.

SAPOA CEO Neil Gopal and Ipeleng Mkhari go through the motions of handing over the presidential regalia to newly installed President David Green

Education a key pillar We have heard from our speakers and panellists how very important it is for the government to take a leading role in the up-skilling and education of our youth, and to create jobs. But the government cannot do it alone. A large number of our members are already involved with education and skills-development schemes, and we applaud them for their contribution. SAPOA’s Education Committee works closely with member organisations and corporates. Through education alliances, direct partnerships, internships and apprenticeships, we can all continue to contribute and make a difference in today’s society.

In addition to the Committee’s activities, SAPOA is on hand through the SAPOA Bursary Fund to be the conduit that manages and helps to deliver on that promise through professionally designed education programmes and fund management.

Over the years, our Presidents have focused on SAPOA’s pillars of education, advocacy and transformation. Today, we as an industry have fostered significant relationships with the government and parastatal bodies. As the voice for the industry, we remain politically unbiased; we simply want what is best for our members and for South Africa.

Industry watchdog To help grow our nation’s economy, it is our responsibility as an industry sector to remain transparent and to continue to be the country’s watchdog when it comes to how our municipalities are performing, how they are spending the taxpayers’ money and how they are instituting service delivery. SAPOA is there to work with them and to promote world-class best business practices.

We know the elections have placed a huge responsibility on President Cyril Ramaphosa. He has been mandated to bring South Africa out of a deep depression, and he is calling on South Africans to be inclusive, open and transparent, and to work for the betterment of all. It also means that his ruling party needs to sort out the

country’s infrastructure and energy crisis.

We can no longer take a wait-and-see back-bench approach. Now is the time for action, and for putting our trust in a future that will be better. We have been told during this conference that five years is not enough time to turn our economy around – but we can all take charge of what we are doing, and we can build firm foundations on which to grow and to make a difference.

Major contributor to the economy The property sector is unique. It has great potential and contributes significantly to the economy. I echo the industry’s sentiment: we are a highly innovative sector and we continue, despite what is thrown at us, to deliver world-class, international standard-setting buildings, SOUTH AFRICAN PROPERTY REVIEW

11

meet the President facility management, attractive funds and career prospects.

For the economy to grow, we need stability and clarity on policy. Property is a long-term asset class: historically, we have seen downturns in our market, from which we have recovered. Regardless of economic downturns, the property industry has always responded quickly and positively. It is constantly evolving; it is embracing change by adopting new technology, and reacting to office trends such as collaborative workspaces and the challenges brought about by tenant retention.

As SAPOA, we have tools to help us monitor what is happening in the commercial property industry. SAPOA’s research committee delves deep into big data, and we ensure through our industry, office vacancy and retail research reports that we are able to gauge the trends in our country. We present them and other important information to you via our website, www.sapoa.org.za, and through the monthly South African Property Review.

Information is key, and the sharing of that knowledge keeps the association relevant to the industry.

As we embark on – and contribute towards – the country’s “new dawn”, our challenges remain the same. We need to go beyond political rhetoric; our narrative needs to change. Transformation is essential to our future, and in order to secure it, we must be mindful of the need to retain institutional knowledge.

I will be working closely with SAPOA’s CEO Neil Gopal to drive the introduction of younger players into the industry.

In addition, we will be encouraging the mentorship of entrepreneurs. Over the past few years, we have seen the emergence of greater industrial bonds with universities and technical colleges; now we are forging relationships with skills development agencies to empower youth participation and ensure they are better equipped for the labour force.

critical agendas such as greener and more sustainable buildings, smarter cities and inclusive, affordable housing.

Central to inclusive housing is the land debate. We have submitted our thoughts on the recent countrywide engagement, and SAPOA will be keeping a keen eye on future developments. More importantly, while the government focuses on greater volumes of houses needed, perhaps we need to think slightly differently. As a sector, and through our property developments, we have an opportunity to take small chunks out of the country’s housing predicament. As developers, we can look at smaller numbers of units and take advantage of government incentives to include those homes in our plans for inner-city rejuvenation or new mixed-use developments.

SAPOA has already conducted research on the matter. Through future networking sessions, we will be engaging municipalities to help draft policy and frameworks that can be applied to projects on a case-bycase basis.

As a property professional, I am encouraged by the quality of the built environment and the standards that our industry is setting. This is evidenced by the recipients of our annual Excellence Awards. My congratulations go to all the winners: long may you lead South Africa

Continued advocacy SAPOA’s ties with like-minded associations continue to grow in importance. Through ongoing collaboration, we drive home 12

SOUTH AFRICAN PROPERTY REVIEW

SAPOA President David Green

and continue to showcase our ability to play on the world stage.

Winds of change Ipeleng’s presidency coincided with many important national developments. She hands over the reins to me at a time that can only be described as exciting. We have an opportunity to set South Africa on a course of greater democratic and inclusive change. I believe that, as our economy grows, so will our prosperity.

With that comes great responsibility and even greater privilege, and we should take our cues from President Ramaphosa’s Cabinet changes.

It is our privilege to guide our future leaders, as demonstrated by the life of Dr Corné de Leeuw. His passion for our industry and his dedication to imparting knowledge and excellence is an outstanding epitaph and an example for us all to follow.

I invite you all to take an active role in our sector by participating in networking opportunities and by joining our committees, and to pursue transparency and advocacy as well as mentorship to strive for a better future. These principles are intrinsically entwined in what we do as businesses; as such, we all should be ready to take up the challenge and drive our common goal of making our industry the industry that can facilitate change and prosperity.

13619

IN THE SPIRIT OF PARTNERSHIP

RMB ASSISTS ATTERBURY AND TALIS IN CEMENTING THEIR STRATEGIC PARTNERSHIP. When Atterbury Property Fund introduced Talis as strategic shareholder and business partner, selecting a like-minded companion was the main priority. That’s why they chose RMB to be the sole funder and structuring bank. Using Solutionist Thinking to create a platform for inclusive growth in the property sector.

RIYAAD KHAN riyaad.khan@rmb.co.za +27 11 282 4135 DEBBIE GRUNDLINGH debbie.grundlingh@rmb.co.za +27 11 282 8419

Search RMB Deals Rand Merchant Bank is an Authorised Financial Services Provider

Corporate and Investment Banking

SAPOA Board

Meet the new SAPOA Board DAVID GREEN (President) CEO : ProAfrica Property Services David Green is the CEO and founding shareholder of ProAfrica Property Services. He has been a prominent, highly respected figure in the South African real estate industry for the past 30 years, and is the current President of SAPOA. With a BA LLB degree from the University of the Orange Free State, he is an Admitted Advocate in the Supreme Court of South Africa. He held the position of Chairman of SA Listed Property Association between 1998 and 2001, and is the current Chairman of the JSE-listed Acsion Property Fund. He was the recipient of a Lifetime Achievement Award for Property Management and Facilities Management at the SA Professional Services Awards held earlier this year.

ANDREW KÖNIG (President Elect) CEO: Redefine Properties Andrew König, who is a qualified Chartered Accountant with more than 25 years of commercial and financial experience, was previously Redefine’s Financial Director. He is responsible for the day-to-day management of Redefine, for ensuring the board’s strategy is implemented, and for all aspects of regulatory compliance, corporate activity and reputation management. He is supported by three Executive Directors and mentored by the legendary Marc Wainer, Redefine’s former CEO and former Executive Chairman.

Neil Gopal Chief Executive Officer of SAPOA

IPELENG MKHARI (Immediate Past President) CEO: Motseng Investment Holdings Ipeleng Mkhari established the first black woman-owned CCTV business, before founding Motseng Investment Holdings in 1998. She is now the company’s CEO. She has a bachelor’s degree in social science, has completed the Executive Development Programme at Wits Business School, and is an Archbishop Tutu Fellow. She is currently a non-executive director at KAP Industrial, Nampak, Attacq and SAPOA.

PETER LEVETT Managing Director: Old Mutual Property Peter Levett has been a Director at Old Mutual Property since 2000, and the Managing Director since 2011.

He is responsible for property investment and business strategy at Old Mutual, with property assets of about R20-billion. He is a qualified Chartered Accountant and has several degrees, including an MBA and a master’s degree in commerce.

ZOLA MALINGA Co-founder and Executive Director: Jade Capital Partners Zola Malinga is the Executive Director of Jade Capital Partners, a 100% women-owned investment company that she co-founded in 2013. She is a qualified Chartered Accountant, and was a Director in Property Finance at Standard Bank, a senior manager in the BEE Finance and Investment Division at Standard Bank, and Corporate Finance Consultant at Investec Bank. She serves as a non-executive director on the boards of Sappi Limited, Grindrod Limited and Grindrod Bank. She is also an exco member of the Property Sector Charter Council, and past Chairperson of the Gauteng chapter of the Women’s Property Network.

14

SOUTH AFRICAN PROPERTY REVIEW

SAPOA Board

NOEL MASHABA Executive Chairman: GladAfrica Group Noel Mashaba has more than 16 years of experience in business management, business negotiation, deal making, brand building, acquisitions and business development, all at an executive level. In 2017, he was appointed Chairperson of the SAPOA Ethics Committee. Prior to establishing GladAfrica, he participated in the establishment of businesses in the petroleum industry and consulting firms, constructing unique teams to manage complex projects. As the owner and founder of GladAfrica Group, Mashaba started as the Group CEO before becoming the Executive Chairman of the Group’s board.

VUYANI HAKO Acting CEO and Executive Head: PIC Vuyani Hako boasts 23 years of property industry experience, of which 12 have been spent in executive management. He’s had exposure to the public and the private sector, and has worked as Managing Director at Metropolitan Property Services, CEO at Momentum Property Investments and Executive Director at Eris Property Group. His current role at PIC is that of Executive Head responsible for unlisted property. He is currently also the Acting CEO at PIC. He holds a BSc in Town and Regional Planning from Wits and an MBA from the Stellenbosch Business School. In addition to SAPOA, he serves on the boards of the V&A Waterfront and Gateway Delta.

MALOSE KEKANA Group CEO: Pareto Limited Malose Kekana was the lead promoter during the acquisition of a 24% shareholding in Pareto Limited by Belelani Capital, and subsequently assumed the Group CEO position in the company. With more than 23 years of experience in the finance and banking industry, he started his career with Standard Bank, later joining Rand Merchant Bank. He was the founding CEO of the Umsobomvu Youth Fund. In 2016, he was appointed to the Pareto Board. He is currently serving as Chairman of Ithala SOC Limited, and has received several industry and professional association awards.

NNEMA BYRD Portfolio Manager: STANLIB With 19 years of industry experience, Nnema Byrd is responsible for identifying, analysing and structuring equity and quasi-equity investments in retail, commercial and mixed-use developments in key sub-Saharan African markets. She sits on the board of SAPOA and chairs SAPOA’s Risk and Audit Committee. She also sits on the advisory board for the Wits School of Construction Economics and various STANLIB investee company boards. She is a member of the CFA Institute, the CFA Society of South Africa, and the South African Asset Management Association. She has a degree in architecture and an MBA from MIT, and is a CFA® charter holder.

KHOTSO MATSAU Managing Member: Lalela Properties Khotso Matsau has been involved in the commercial property sector for more than 20 years. He started off as a trainee broker with the Mortimer Group, and later joined Colliers RMS as a fully fledged broker. In 1999, he completed SAPOA’s Property Development Programme, then a postgraduate diploma in property development at Wits. In 2003, he co-founded Lalela Properties, specialising in commercial, industrial and retail leasing transactions. He is the firm’s sole member. In addition, he is the Chairperson of the SAPOA office vacancy reporting committee (OVS) for the Johannesburg region. He continues to be of assistance to some SOEs, and mentors emerging property practitioners.

WERNER MULDER COO: Energy Partners Werner Mulder is currently the COO of Energy Partners, a company that builds, owns and operates core energy utilities. He was previously responsible for sustainability at Attacq, and for the planning and development of Waterfall City and its infrastructure as a smart, urbanised, integrated city. His career began with Gencor in 1989 as an electrical engineer; now his experience in large construction projects – first for Gencor and later for a leading retail bank where he established and managed the full real estate value chain – spans 20 years. Mulder is a registered professional engineer and holds a GCC. SOUTH AFRICAN PROPERTY REVIEW

15

SAPOA

National Council

Regional Council East London Regional Councillor: Johan Burger JB Consulting Africa PROPERTY REVIEW - LogoTreatment.pdf

Secretariat: Glynis Heger e: sapoa.el@sapoa.org.za

Port Elizabeth Regional Councillor: Mark Bakker Bruce McWilliams Industries

Secretariat: Catherine Ossher e: sapoa.pe@sapoa.org.za

Western Cape Regional Councillor: Simon Nicks CNdV Africa

Secretariat: Farah Begg e: wc.sapoa@sapoa.org.za

Limpopo Regional Councillor: Paul Altenroxel Knottrox Property Trust

Secretariat: Zendi Scholtz e: sapoa.limpopo@sapoa.org.za

KwaZulu-Natal Regional Councillor: Bernadette Khumalo AKTIV Property Development

Secretariat: Helen Seymour e: sapoa.kzn@sapoa.org.za

Mpumalanga Regional Councillor: Derek Todd Kellaprince Properties

Secretariat: Annemarie de Jager e: lowveld@sapoa.org.za

16

SOUTH AFRICAN PROPERTY REVIEW

1

● David Green ProAfrica Property Services SAPOA President ● Neil Gopal Chief11:31 Executive Officer 2016/08/25 AM SAPOA ● Liliane Barnard Metope Investment Managers SAPOA REIT Committee ● Londiwe Mthembu Abland SAPOA Education, Training & Development Committee ● [Vacant] SAPOA Government Liaison Committee ● Stephanie Ainsworth City Property Admin SAPOA Legal Committee ● Elaine Wilson Broll Property Group: Divisional Director Research SAPOA Research Committee ● Nicole Baumgarten SAPOA Property and Facilities Management Committee ● Marita Meyer Niche Properties Commercial SAPOA Brokers Committee ● David Green ProAfrica Property Services SAPOA Convention Committee ● Zinon Marinakos DSA Architects International SAPOA Awards Committee ● Werner Mulder Energy Partners SAPOA Sustainability Committee ● Richard Bennet iProp Proprietary Limited SAPOA National Developers Forum Committee ● Musa Ngcobo Thelma Ngcobo & Associates SAPOA Property Charter Alignment Committee ● Nnema Byrd STANLIB SAPOA Elected Board Member

legal update

The legal effect of the Commission’s Grocery Retail Market Inquiry Report The Competition Commission (“Commission”) has recently published its preliminary Grocery Retail Market Inquiry (“Inquiry”) report (“Report”), in which it found that there is a combination of features in the South African grocery retail sector that prevents, distorts and restricts competition

By Stuart Strachan, Associate and Johan Coetzee, Partner, Fasken Attorneys

T

hree particular areas of concern for the Commission were identified in the Report: ● Long-term exclusive lease agreements and buyer power; ● Competitiveness of small and independent retailers; and ● The regulatory landscape.

To address these concerns, the Commission has recommended in its Report (released for comment and further consultation with stakeholders, at this stage) a number of remedial actions to be taken. Some of the remedial actions recommended by the Commission will have a material impact on property owners, and include: ● National chains should immediately cease enforcing exclusivity provisions against specialty stores, including restrictions on store location, size and product range; ● No new leases or lease extensions may include exclusivity provisions or restrictive clauses on competing retailers; and ● Existing exclusivity against other supermarket chains must be phased out within three years after the final report has been published.

This article discusses the legal effect of the Commission’s Grocery Retail Market Inquiry final report (which is expected to be published towards the end of this year) and, in particular, discusses the legal effect of the Commission’s 18

SOUTH AFRICAN PROPERTY REVIEW

final recommendations, especially with regards to the types of recommendations highlighted above.

Given the specific reference to the Inquiry in this article, it is important to note that the Report is a preliminary report. In market inquiries, a preliminary report is generally published for further comments by stakeholders and, only once the final comments of stakeholders have been considered by the Commission (and subject to some limited further investigation by the Commission), a final report will be published. Under the Competition Act No. 89 of 1998 (“Competition Act”), as well as under the Competition Amendment Act No. 18 of 2018 (“Amendment Act”), the preliminary report, its findings and its recommendations are generally of no effect in law. (In other words, they cannot be relied upon or enforced.)

The final market inquiry report, its findings and its recommendations, on the other hand, have a legal effect, as we discuss further below. The extent of its legal effect, at least pertaining to this Inquiry and the likely timing of the final report, however, differs on whether the Commission relies on the provisions contained in the Competition Act or the Amendment Act (which has been signed by the President but is yet to become effective).

The Competition Act In terms of the Competition Act, the Commission must publish its final report

in the Government Gazette, and must submit the final report to the relevant Minister. Once the report is received by the Minister, it is tabled before the National Assembly. The findings in the report are final, and the recommendations made by the Commission, if any, are non-binding.

Under the Competition Act, the final report has legal effect in that the findings made by the Commission are binding on stakeholders. These findings may be judicially reviewed (if such grounds exist). While the report may have legal effect in this sense, we note that: ● The Commission is unable to enforce its recommendations, given the powers it has under the Competition Act; and ● The Commission’s recommendations are unenforceable with regards to stakeholders. In respect of the Inquiry, the recommendations by the Commission in the Report (provided they remain the same in the final report) will not be enforceable vis-à-vis landlords and national chains.

Therefore, under the Competition Act: ● The Commission’s findings may be reviewed to the extent that the report is reviewable under the Promotion of Administrative Justice Act or the principle of legality; and ● The Commission’s recommendations are non-binding, and unenforceable.

legal update This means that, if the relevant stakeholders were to ignore the recommendations made by the Commission in the final report in the Inquiry, then there would be no recourse available to the Commission or any stakeholder.

However, having stated the above, it is important to note two further considerations, which have an indirect impact on the effect of the Commission’s report and its findings: ● First, if the Commission’s recommendations are not adhered to by stakeholders, it is open for the Commission to investigate and refer a complaint to the Competition Tribunal.

A third-party complainant could also lodge a complaint with the Commission in this regard. However, the Commission or a complainant would have to rely on the current restricted practices provisions contained in the Competition Act to sustain a complaint. ● Second, the Commission’s recommendations may have political influence, and non-adherence may lead to political interference and, possibly, regulations.

The Amendment Act As an overall comment, the amendments to the market inquiry provisions in the Amendment Act are seemingly aimed at giving the Commission more power to enforce its recommendations. All of this ties in with the earlier comment regarding the extent of the final report’s legal effect, and whether the report is published under the Competition Act or the Amendment Act. Under the Amendment Act, the Commission must also publish a final report of its inquiry in the Government Gazette, and must submit the final report to the relevant Minister. In terms of the Amendment Act, once the report is submitted to the Minister, the Minister must table the report in Parliament.

A key inclusion made by the Amendment Act is the “adverse effect” test in the market inquiry provisions.

20

SOUTH AFRICAN PROPERTY REVIEW

This test requires the Commission to investigate whether there is a feature in a market that restricts or distorts competition within that market. If there is such a feature, then there is an adverse effect.

Where the Commission has found an adverse effect, the Amendment Act places a duty on the Commission to mitigate such effect. This would be done by the Commission taking action “to remedy, mitigate or prevent the adverse effect”. Any action taken by the Commission must be in line with the findings in its report, as well as reasonable and practicable, taking into account the following factors (which are not exhaustive): ● The nature and extent of the adverse effect on competition; ● The nature and extent of the remedial action; ● The relation between the adverse effect on competition and the remedial action; ● The likely effect of the remedial action on competition in the market that is the subject of the market inquiry and any related markets; ● The availability of less restrictive means to remedy, mitigate or prevent the adverse effect on competition; and ● Any other relevant factor arising from any information obtained by the Commission during the market inquiry.

The findings and proposed actions to be taken following a report conducted under the Amendment Act will be binding. This is evidenced by the fact the market inquiry provisions introduced by the Amendment Act specifically provide for an appeal to the Competition Tribunal (“Tribunal”).

Therefore, under the Amendment Act: ● The Commission’s findings may be reviewed to the extent that the report is reviewable under the Promotion of Administrative Justice Act or the principle of legality; and ● The Commission’s recommendations are binding, and their remedial actions are enforceable.

Even though provisions contained in the Amendment Act give the Commission more power to enforce their recommended remedial actions, these recommendations would still not be enforceable vis-à-vis stakeholders and, with regards to the Inquiry and the recommendations listed above, landlords and national chains.

Practically, however, it is difficult to understand how the Commission will enforce its recommended remedial actions, unless it were to approach the Tribunal for an order of non-compliance.

The Commission is not meant to act as a regulator, nor does it have the resources to act as such. This would suggest to us that any action taken “to remedy, mitigate or prevent the adverse effect” would amount to binding findings in the final report, which should be carried out by persons affected by that, failing which an approach to the Tribunal may be made by the Commission.

Of course, the possibility of the Commission initiating a complaint, or a third party lodging a complaint against non-complying stakeholders, will remain; and the likelihood of reputational damage will also be possible.

Conclusion Overall, it is clear that a final report published under the Amendment Act has more legal consequences and effects – the findings are binding, and the remedial actions to be taken are enforceable by the Commission (regardless of whether, and how, they can be enforced practically).

It would not be surprising if the Commission were to rely on the provisions of the Amendment Act – if they are in force and effect at the time of the Commission publishing the Inquiry’s final report. Of course, this would lead to questions regarding procedural fairness, and may be reviewable. But it is clear that there is at least some incentive for the Commission to have this argument.

AUCTIONS

CALL US TO GET YOUR PROPERTY SOLD ON OUR NEXT AUCTION YOUR PARTNER OF CHOICE FOR COMMERCIAL PROPERTY AUCTIONS

Through a passionate approach, commitment to unrivalled service, we are the leaders in the sale of commercial property across South Africa, Broll Auctions & Sales is a logical choice when partnering with a commercial property company

AUCTIONS

TENDERS

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

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

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

PROPERTIES SOLD Tiger Brands Meadowdale

SOLD FOR

48.3 Million

SS Federal Building Cape Town

SOLD FOR

61.5 Million

ABSA House Cape Town

SOLD FOR

87.1

Million

John Ross House Durban

SOLD FOR

44

Million

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

Property Sector Charter

Lasting transformation and progress in the property sector This year has been an eventful one for the Property Sector Charter Council (PSCC).

The council, which monitors and evaluates transformation in the South African property sector, has embarked on several collaborative projects that expand its scope significantly. At its annual seminar held on 11 July, the PSCC released its 2019 State of Transformation of the Property Sector report, and announced a new intervention for addressing transformation challenges in the sector as well as several other exciting initiatives

“T

he quality of our engagement with the many participants in the property sector this year has shown a tremendous improvement,” says newly appointed PSCC Chairman Dr Sedise Moseneke. “Overall, we are seeing more collaboration in almost every area. This is important for us to work effectively and synergistically as a sector. We are very encouraged, because it allows us all to do more.”

State of Transformation report

“

Being Chairman of

the PSCC will allow me

to give back to the industry, to contribute to the process of making meaningful changes in transformation, and to help drive change to address the gaps that exist

22 20

”

SOUTH AFRICAN PROPERTY REVIEW

PSCC Chief Executive Officer Portia TauSekati presented the findings of the 2019 State of Transformation report, which shows a mixed picture of the sector’s B-BBEE performance over the past year. Transformation remains a key element of the overall economic transformation in the country, especially given the contribution that the sector makes to South Africa’s overall GDP. Yet progress towards certain transformation milestones is still limited and slow.

The 2019 report is based on two pieces of legislation: the 2012 Property Sector Code, and the 2017 Amended Property Sector Code. The report reveals that the property sector is at Level 5 in terms of its transformation B-BBEE recognition level, dropping from Level 4 in the 2018 report. Although this is not the best performance, it was a reasonable effort considering the changes in recognition levels that took effect during the year – these could have resulted in the sector dropping to Level 6 had no exertion been put behind this and had changes to legislation not taken place.

“Although it is encouraging to see the continued transformation efforts in the sector, progress in certain areas has been slow,” says Tau-Sekati. “We believe that the situation is still less than ideal.”

Analysis based on key elements of the 2012 Property Sector Code reveals that the Ownership score, which has an overall weighting of 20 points on the scorecard, shows that the industry improved overall from a score of 16,67 to 17,04 weighting points – a change from 83% to 85% in this category. “While this is encouraging, funding models still need to be further considered and reviewed, as the long nature of the process translates into limited progress,” Tau-Sekati explains.

Encouraging results were seen in the category of Employment Equity, where the industry showed an improvement from a very poor 33% in 2018 to a 49% performance achievement against target in the 2019 report.

In the areas of Skills Development and Management Control, results were much the same as last year, with the industry’s performance in these areas being rated at 65% and 56% respectively.

“We are pleased that even in the areas of the scorecard where performance is poor, the overall direction is still positive,” says Tau-Sekati. “However, much more needs to be done.”

The report forms one of the cornerstones of the PSCC’s work, since the PSCC is the industry body responsible for measuring and monitoring transformation. It is widely

Property Sector Charter acknowledged by the industry as an important tool in this respect, as evidenced by its generous sponsorship

by SVA Architects. “We are proud and honoured to be the sponsor of the 2019 State of Transformation of the Property Sector report,” says SVA Architects’ Managing Director Sandi Mbutuma. “This is an important partnership in the property sector, and shows how committed we at SVA are to transformation.”

New Minister and Chairman introduced The seminar also saw the introduction of two new appointees crucial to the role that the PSCC plays in the industry.

The first is Dr Sedise Moseneke, who stepped into the role of PSCC Chairman on 1 March. Moseneke took over from industry veteran Saul Gumede, who was the PSCC’s founding Chairman, and who has done sterling work to advance transformation in the industry in this role. “Being Chairman of the PSCC will allow me to give back to the industry, to contribute to the process of making meaningful changes in transformation, and to help drive change to address the gaps that exist,” says Moseneke.

The second introduction was that of the new Minister of Public Works and Infrastructure, Patricia de Lille. Her appointment came after the recent government restructuring by President Cyril Ramaphosa, which saw the combining of the departments of Public Works and Infrastructure in an effort to reduce the government’s wage bill.

In this new role, Minister de Lille will be the line minister which the PSCC reports to, and the leader of the industry from the public sector’s point of view.

Property Sector Skills Foundation launch An exciting component of the 11 July seminar was the official launch of the Property Sector Skills Foundation. The aim of this Foundation is to enhance the overall level of skills in the industry, building a pool of talent that provides a more-than-adequate

resource for property companies in South Africa to draw from.

The project is something that new PSCC Chairman Sedise Moseneke has highlighted as critical to the process of transformation going forward. Excellent work has already been done to promote property careers among school-leavers and students. What is needed now is to assist new entrants into the industry, nurturing talent and future growth by developing the right platforms to allow them to advance their career, and to prepare them for senior roles.

This is important, given that there is still a glaring lack of black as well as female representation at ownership, control and participation levels in the industry.

The PSCC believes that the Property Sector Skills Development Foundation can lead the change that needs to take place.

“We believe that through taking a holistic, structured and integrated approach, we can comprehensively address skills development in the industry,” says Tau-Sekati. “There is power in collaboration – we can do it better if we do it together.”

An industry first: Property Portal SA In a first for the property industry in South Africa, the PSCC will also be launching the Property Portal SA – a digitally driven platform that will function as a single resource for industry information.

“With so many different sources of information available, it can be confusing for anyone to know where to begin,” says Tau-Sekati. While all the original sources of information will remain, the Property Portal SA is intended to be a first point of reference, which will then direct users in their search process to the appropriate platform. With a tagline of “Your platform and gateway to everything property in South Africa”, the one-stop-shop portal will enable access to relevant industry content with ease and simplicity.

The Property Portal SA can be accessed at https://propertyportalsa.co.za.

“

Encouraging results were seen in the category of

Employment Equity, where the industry showed an improvement from a very poor 33% in 2018 to a 49% performance achievement against target in the 2019 report. In the areas of Skills Development and Management Control, results were much the same as last year, with the industry’s performance in these areas being rated at 65%

”

and 56% respectively SOUTH AFRICAN PROPERTY REVIEW

23 21

­

­

­

­

­

­

­ ­

­

­

­ ­

­

­

­

­

­

­

­

­

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

education and training

SAPOA and UJ honour classes of 2018 SAPOA, in partnership with the University of Johannesburg (UJ) College of Business and Economics, held a certification ceremony to recognise recipients who successfully completed various property programmes

By Maud Nale

A

ccording to SAPOA’s Education Officer Mafonti Morobi, one of SAPOA’s key driving forces is to contribute towards the advancement of its members’ commercial property interests within the industry.

“As a professional association, SAPOA’s educational efforts are aimed at increasing the knowledge and skills among property industry employees, and ensuring that the content of the programmes, workshops and other educational interventions is aligned with industry needs, thus raising the competence and employability of the professionals in the industry,” says Morobi.

André Kruger, Programme Manager: Property Valuation and Management at UJ, congratulated certificate recipients at the ceremony. “This day has finally arrived, and it is a celebration that you deserve for having completed the programme,” he said. “It is the result of all your hard work. Look back at this day with pride and achievement, and reflect on your journey – it is a rewarding one. Celebrate your hard work and dedication, and be very proud of what you have accomplished. Congratulations on your achievement!”

26 24

SOUTH AFRICAN PROPERTY REVIEW

ABOVE AND BELOW Recipients who successfully completed a property programme were honoured at a certification ceremony

Kruger also used the opportunity to announce the introduction of an online platform from January 2020. He said that the university is excited about this development, in line with the rising demand for online courses. “There is a huge demand for online courses that are more financially viable, and this our first step towards providing for that need,” he said. “Our rollout will commence with the Advanced Diploma in Real Estate, which will be an e-programme from 2020. We are excited

about developing the programme, because we have ‘gamified’ one of the modules aimed at using the latest innovations in technology to bring the course to life.”

Kruger concluded by highlighting the long-standing relationship between the university and SAPOA. “Thank you for the support and for partnering with UJ. We hope that we can build on this and make it a success going forward, so we can do more with the industry. It’s very important to us.”

GROUP

BOTSWANA

W

SO L

T H

GR

P

A

R T N E

R

R

W

GR

W

R T N E

R

AZILAND

UT

GR

A

R T N E

R

UT

R T N E

R

GR

P

SO L

UT

S

Cape Town

T H

N IO

O

P

W

A

R T N E

R

W

T H

SO L

UT

S

A

N IO

O

S

GR

O

SO L

A

N IO

P

T H

SO L

UT

S

P W

T H

SO L

N IO

O

P

T H

GR

R T N E

S

A

N IO

O

S

GR

O

UT N IO

P

SO L

S

W

T H

UT N IO

O

NAMIBIA

MOZAMBIQUE

A

R T N E

R

education

The first CPM courses take place at Wits Enterprise The first in a series of four blocks of courses for candidates interested in becoming Certified Property Managers took place at Wits Enterprise from 1 to 4 July. The course was led by Shannon Alter, one of the experienced instructors with the Institute of Real Estate Management in the US

By Thsepo Tshabalala

BACK ROW, FROM LEFT Mfanufikile Machi (Department of Public Works),Cyril Midaka (Johannesburg Housing Company), Themba Shihlongonyane (Goldfields Mine), DJ Oosthuizen (Boshoff Visser Property Group) and Derrick Dlamini (ACSA) MIDDLE ROW, FROM LEFT Annette Bokwathile (ACSA), Barnabas Dube (Encha Property Services), Shannon Alter (IREM) and Dimple Patidar (Wits Enterprise) FRONT ROW, FROM LEFT Palesa Maboya (ACSA), Innocentia Mbele (Oracle), Ashika Kusseal (Transnet Property), Marchele Chaman (ACSA) and Adelaide Mashoene (Wits Enterprise)

T

his follows two previous examination and certification sessions for graduates of the Postgraduate Diploma (Property Development and Management) and BSc (Property Studies) who were fast-tracked to do only the fourth block of courses in 2017 and 2018. The exam sessions led to the largest increase in Certified Property Managers and candidate Certified Property Managers in South Africa, which led to the formation of the first African chapter of the Institute of Real Estate Management (IREM) in South Africa in 2018.

According to the executive programme coordinator for real estate courses at Wits University Professor Samuel Azasu, “The usual outcome of these developments is that those who do not have time to acquire the relevant degrees can find themselves on the outside, looking in. It was therefore important for Wits to obtain a licence to provide courses that give an alternative entry point for certification to people currently in industry.”

This development will also accelerate the professionalisation of a sector that has lagged behind quantity surveying, planning, construction management, engineering and architecture in the sense of not having a prescribed educational and certification requirements, with far-reaching consequences on the quality of decisions of market players.

The next round of the now-annual Winter School of examinations and professional certification will take place at Wits Enterprise in August. Sponsorship for the Winter School has doubled with the addition of Attacq Foundation to current funders Pareto Group, which will result in double the number of candidates participating in the 2019 examinations.

28 26

SOUTH AFRICAN PROPERTY REVIEW

The instructor remains Fred Prassas of the University of Wisconsin – Stout.

This will be followed by Block 2 (for non-property-degreeholding attendees) in October.

Measures are in the works to ensure that both the local Chapter of IREM and the university provide a support structure for the inaugural group by providing supplementary tuition support in financial mathematics, for example, before the next block commences.

The goal is to ensure consistency in participation and preparation for the certification, and that the balance between work and studies does not create challenges that impair course attendees’ chances of success.

“We recognise that some of the attendees have been away from a study environment for a while, and may need support to get back into ‘school’ mode,” says Azasu. “As a university, we stand ready to offer that type of support, especially because we have seen similar needs among our regular, full-time postgraduate students.”

“It is important that all students feel included in a circle of like-minded professionals as soon as they pass the first block of the certification course, so they can immediately experience what being a CPM will eventually entail,” said Saul Gumede, the inaugural IREM Gauteng Chapter President who was behind the multi-year effort to professionalise property management in South Africa.

Although Block 1 of the course has already taken place, it is still possible to register for Block 2. (Completing Block 1 is not a prerequisite for Block 2 registration. ) Block 2 Registration: https://bit.ly/2Yn3jrc

education

Wits partners with IREM The Postgraduate Diploma programme in property development and management at Wits has been accepted as an education equivalency for the Certified Property Manager (CPM) designation requirements by the Institute of Real Estate Management (IREM). An affiliate of the US National Association of Realtors, IREM is a key player for property management professionals, serving both the multi-family and commercial sectors

Achieve the world’s most sought-after professional status RICS is the professional home for all built environment professionals demonstrating quality of service and integrity.

The IREM partnership was brokered through the efforts

“RICS maintain the highest educational and professional standards, protecting clients and consumers via a strict code of ethics. RICS is a benchmark of professional excellence in the built environment.”

of Saul Gumede CPM, co-founder of the Dijalo Property

TC Chetty, Country Manager, RICS South Africa

Group and a board member of the South African Institute of Black Property Practitioners (SAIBPP), on behalf of SAIBPP. This was in conformity with SAIBPP’s stated intention of using skills development as a means of broadening access to the real estate sector, in ways that

Benets of RICS: • Professional status • Stand out – work to the highest ethical standards • A genuine competitive advantage • A range of professional development • A network of over 118 000 professionals worldwide • Access to global employment opportunities

transform the demographics of the sector.

According to Professor Samuel Azasu, who is the designer and coordinator of the postgraduate and executive programmes in real estate, a benefit of the IREM partnership is that it enables the postgraduate diploma programme in property development and management to become the conduit for accelerated training of professional property managers for the South African market. It also increases the international credibility of South African graduates in the international real estate job market. Wits University hosted the first of what will become annual CPM preparatory classes, consisting of the first three cohorts of graduates from the PG Diploma programme in August 2017. A licensing agreement to this effect was signed between Wits University, IREM and SAIBPP on 18 August 2017 at the Professional Development Hub at Wits University.

Funding for the classes and the examinations for the pilot group came from Pareto Limited. The long-term aims for the partnership agreement are to foster the

Contact us: T: +27 (0)11 467 2857

E: handrews@rics.org

M: +27 (0)83 288 6998

W: rics.org

development of a South African chapter of IREM and professionalise the property management business once a critical threshold of candidates have passed through the certification programme.

SOUTH AFRICAN PROPERTY REVIEW 4063_RICS_HALF PG ADVERT_VSN1.indd 1

29 27

2017/05/04 3

opinion

Investors plow capital into Europe The sale of Riverbank House in London for £390-million was one of the largest transactions in the UK capital last year. The deal was also the largest single asset acquisition by South African investors in 2018, highlighting the appetite of these players for commercial real estate acquisitions outside their domestic market

By Simon Mallinson First published on 25 June 2019 on Real Capital Analytics – www.rcanalytics.com

I

n fact, the gulf between investment activity in South Africa and overseas spending by South African investors has never been greater. These players invested about four times as much internationally as was spent in their home market during 2018. On the back of weaker-than-expected domestic economic growth in the first quarter of 2019, it’s likely that investors will continue to explore overseas exposure.

International activity overtook domestic investment in 2016, and since then the gap between overseas and domestic spending has widened significantly.

Domestic acquisition volume fell by more than 50% between 2017 and 2018 as listed entities pulled back and became net sellers. Institutional investors, meanwhile, have remained net acquirers, and international players have stayed away.

(Spending by cross-border investors in South Africa remains negligible, typically making up less than five percent of annual investment activity.)

30 28

SOUTH AFRICAN PROPERTY REVIEW

Investors with headquarters in South Africa placed €4,3-billion overseas in 2018, of which more than 60% was invested in retail, and nearly 20% in each of the office and industrial sectors. All the cross-border investment for the year took place in Europe, with 30% focused on Poland and 17% on the UK.

Listed entities were the top overseas buyers last year, with Redefine, Vukile and NEPI Rockcastle topping the list.

The largest deal was the purchase of a Spanish retail asset portfolio by Vukile Property Fund for €489-million from Unibail-Rodamco.

The acquisition of the Riverbank House office property in central London

South African investors plow capital overseas

opinion

was the biggest single-asset deal – Oxygen Asset Management purchased the property on behalf of South Africa’s Zeno Capital.

Back in the home market, given slowing transaction activity and the shrinking economy, cap rates may rise

and present buying opportunities.

Investors will be reassured if the government can fulfil its objective of boosting economic growth while consolidating the country’s fiscal position. For now though, the capital flows are outbound.

South African investors’ activity at home and overseas

Biggest contraction

Simon Mallinson Executive Managing Director EMEA & APAC e: smallinson@rcanalytics.com

Based in London, Simon Mallinson joined Real Capital Analytics in January 2013. He has Board-level responsibility for EMEA and APAC, with a particular passion for the continued development of RCA’s industry-leading client service and capital markets analytics.

Mallinson’s previous positions include that of Senior Director leading European research at Invesco Real Estate, and a number of roles with IPD (now part of MSCI) in the UK and the US. As Head of US Services, based in Chicago, he established IPD’s first North American office.

He is a Board Member of US association NCREIF and a member of RICS, and is active across several other global real estate associations.

He holds degrees from both Leeds and Manchester University. He has set foot in 48 US states – and is looking for an excuse to visit Maine and Alaska…

SOUTH AFRICAN PROPERTY REVIEW

31 29

entrepreneur one-on-one

Energetic sustainable engineering When it comes to sustainable engineering, Richard Ramplin leads his team in delivering projects that require mechanical, wet services and fire engineering

By Mark Pettipher

I

f you’re looking for an engineering consultancy that promises to deliver and is an outcome-centred organisation, give Richard Ramplin a call. RRC is a recipient of Property Point’s entrepreneur development initiative – but that’s not where it ends. Speaking to Ramplin, we discover a company that is diverse and forward-thinking, and a product of hard work and determination.

“RRC Mechanical & Fire Consulting Engineers is a 100% black-owned consulting firm that specialises in air conditioning, ventilation, refrigeration, vertical transportation and wet services designs,” says Ramplin. “I started my education in the South African navy, which allowed me to obtain a National Diploma in Mechanical Engineering – but it did not satisfy my need for knowledge. So I approached my commanding officer and persuaded him to help me. The navy offered me a four-year training opportunity through UCT, where I studied a degree in electro-mechanical engineering.

“My break came when my lecturer recommended me to KV3 Engineering, a company that subsequently ‘bought’ me out of the navy. And so my formal training began. At KV3, I was mentored

by Eric Smit; what he instilled in me still resonates in what I do today.

Through KV3, I became a registered mechanical engineer.

“From there I moved to Hilti, a diverse company that’s best known for its power tools. At the time, Hilti was looking at ways to penetrate the industrial sector.

I was part of a South African contingent that was set up as part of its global strategy. Our objective was to think outside the box and challenge the triedand-tested engineering sales methods.

It was a different world of thinking, a way of thinking more strategically.

“At the same time, I was finalising my engineering management master’s degree

32 30

SOUTH AFRICAN PROPERTY REVIEW

Richard Ramplin

at UCT. The programme led to a paradigm shift in my thinking, which combined with the experience at Hilti in a positive way. I was being exposed to different and challenging opinions, which made me realise that I should build my own company – a company that combines the strengths of structured discipline and the grey area of strategy.

“I left Hilti, completed my studies, and went back to mechanical consulting engineering, where frustration ruled as a result of new experiences gained outside the industry. So in 2015, I formed RRC. “Later I teamed up with Shaba Green Building Solutions, who had a different

approach to the market and worked in the niche sector of green building engineering. At the time, the market was entering a difficult period and going into decline. I believe the market was not ready for the green offering we were presenting, outside of the green engineering concept.

“We didn’t get the traction we needed to sustain two different divisions of the company, so I separated from Shaba and returned to my traditional pillars. This is where we still are today: developing mechanical engineering systems for the built environment, as well as offering fire engineering services.

entrepreneur one-on-one “By applying my different experiences and the out-of-the-box thinking I’d learnt in my formative years, we are able to grow. The knowledge we have allows us to talk about sustainable engineering with a certain amount of authority; it also gives us an advantage over other growing SMMEs in our sector.

“We’ve done our research, and the proof of our work is out there. What we have noticed is that while many building owners want a ‘green building’, they do not necessarily want the expense of being green-certified. Our knowledge provides our clients with the comfort of being able to enjoy the benefits of ‘green’ systems, energy efficiency, sustainability and longterm benefits, without the perceived price tag that’s attached to green buildings.

“One of our biggest challenges is not yet getting involved at the early stages of a buildings life cycle. Our appeal to the industry is to ensure sustainable, energyefficient engineers get involved at the grassroots stage of a building’s design.

“Traditionally, a building owner will start out with either an architect or a quantity surveyor. The challenge is that, by the time engineers get involved, our best solutions to the building might not suit the budget or the concept. Earlier involvement becomes important when it comes to talking about cost-effective green or sustainable design, because I believe solutions can be less expensive and can be incorporated more easily into a building’s DNA. “Any young person who wants to get into this side of the property industry needs to gather as much knowledge as possible in addition to experience – and one or two seasoned campaigners to back them. You need to understand the subtleties, risks and business models, as well as where you have leverage and how to use it, be it in a stakeholder relationship or a design philosophy.

“I encourage young people to enter the profession because I believe that young minds may give us fresh ideas. If we temper those ideas with experience, we can change the widely accepted standard of ‘business as usual’.

“What I’d like to see is an improvement in the way the industry handles debtors

Dube TradePort in Durban

and cash flow, because the lack of it is detrimental to SMMEs. Many companies won’t even look at an invoice until it hits 30 days – if you’re lucky! Government project invoices usually take more than 90 days. If the government truly wants to encourage entrepreneurs, we need a smoother, more timely and more efficient way of releasing funds. A small business that has to wait three months or more for payment is likely to be out of business by the time settlement of invoices happens.

“Businesses often use time sheets as a way of measuring productivity. RCC’s philosophy is different: we employ people who want to learn, allow flexi-time and allow individuals to feed back into our project-management meetings. We have strong project managers who take responsibility for their team. We know from the outset that our business requires cooperation and interaction; these are the specifics that make projects run smoothly. You could say we’re more outcome-driven than time-driven.

“RCC’s future will depend on employing more people and setting up profitable, independent offices in all major centres in South Africa. Each office will offer the full range of our services. By 2024, we need to have a national footprint with independent profit centres.

“Being an outcome-based company with happy employees and happy clients will be achieved only if we stay true to our principles of delivering excellence on time and on budget. Being diligent in our work will get us the recognition and

Big Save Superstore in Marble Hall

profit that we strive for. To bring in that profit doesn’t mean we have to have big projects – a greater number of smaller projects in which we can shine and be recognised is just as valuable.

“Getting access to the market is important, and I’m incredibly grateful to Property Point for taking us under its entrepreneurship wing. The initiative was a catalyst in the smooth division of Shaba Ramplin. We are two completely separate companies with two different directions, but we are not in competition with each other. In fact, we still complement each other well.”

Richard Ramplin t: +27 (0)60 625 1324 e: richard@rrca.co.za w: www.rrca.co.za

SOUTH AFRICAN PROPERTY REVIEW

33 31

SAPOA’s lobbying effort During the CEO’s dinner, SAPOA CEO Neil Gopal presented a slide on of the advocacy efforts that the organisation was involved in. We expand on some of the bullet points

SAPOA CEO Neil Gopal

Property Practitioners Bill Since 2013, SAPOA has engaged with the EAAB and the Department of Human Settlements to bring about changes to the Act. Over the past six years, we submitted comments on nine versions of the Property Practitioners Bill. Although all our comments were not considered, in 2018 we managed to get nonexecutive director exemption, renewal of the FFC every three years, the introduction of an Ombud, and consideration of appointing directors with commercial property experience to the Board. SAPOA has also been extended an invitation to be part of the task team to draft the Regulations.

Companies Amendment Bill: Business rescue provision One of SAPOA’s main arguments is that a tenant’s rental, from the time the tenant goes into business rescue until the time the business rescue process comes to an end, is post-commencement finance.

SAPOA met with the Specialist Committee on many occasions and requested the Committee to amend the Act to provide for this. Although the Committee was sympathetic towards SAPOA, it indicated that the government was reluctant to change the Act. This provision was brought 34 32

SOUTH AFRICAN PROPERTY REVIEW

into existence in the Companies Act in 2008, and continued to be a hindrance to rent and services collection by landlords.

SAPOA brought a declarator on 13 October 2016. The court decided that SAPOA was not entitled to the declaratory relief sought. Judge Janse van der Westhuisen said interpreting the Act in the way we wanted would defeat the purpose or aim of business rescue intended in Section 128(1)(b), and would “elevate an obligation prior to commencement of business rescue proceedings to a preference over other creditors not provided or contemplated by the provisions of Section 135 of the Act”.

SAPOA met with Professor Michael Katz of the Specialist Committee, which is advising the Minister on the Companies Act, on 13 February 2017, and raised its concerns. Katz confirmed that he would submit SAPOA’s concerns to the Specialist Committee, which he did on 13 March 2017. We were advised that the Committee was looking at amending Chapter 6 of the Companies Act.

On 22 August 2018, Cabinet approved the Companies Amendment Bill to be gazetted for public consultation. The Bill was published for comment on 21 September 2018, and SAPOA submitted comments. After comments were received, the Department of Trade and Industry (DTI) met with SAPOA to address SAPOA’s comments, and subsequently called a meeting of stakeholders. At that meeting, the DTI explained why SAPOA’s comments on Section 135 were being accepted.

SAPOA then redrafted Section 135 and submitted it to the DTI. The Bill seeks to, among others, amend Section 135 of the Companies Act regarding business rescue.

City of Johannesburg (CoJ) outdoor advertising Early in 2017, the CoJ published its new Outdoor Advertising By-Law for public comment. SAPOA submitted comments, and the City adopted and approved the Outdoor Advertising By-Law on 20 March 2017 without taking SAPOA’s comments into consideration. It stated

that the by-law would be promulgated on 31 May 2018.

SAPOA’s view was that the promulgation of the new by-laws would immediately and retrospectively criminalise hundreds of private property owners with unapproved advertising signs on their properties without affording the affected property owners the opportunity of arranging their affairs in such a manner as to ensure compliance with the new by-laws and legitimisation of the affected advertising signs.

The city, as a commercial role-player in the outdoor advertising arena, is likely conflicted between its regulatory function and its commercial interests. Because of the above, and from a constitutional perspective, the regulatory control over the process should ideally be divested to an impartial decision-making body and not to any particular city official.

The enforcement measures, which are severe, can be imposed arbitrarily by the officials playing the role of investigative, prosecutorial, adjudicative and sheriff ’s functionaries. This is in contravention of the rule of law.

The parties went to court in October 2018 and again in April 2019, and the promulgation of the by-laws has been suspended pending the outcome of the judgment.

City of Cape Town Drought Charge and Water Amendment Bill During December 2017, the City of Cape Town put out two pieces of legislation for public comment: the City of Cape Town Drought Charge and the Cape Town Water Amendment Bill. The notice and invitation for comments were issued in December, at a time when the city knew full well that the property industry, and the city at large, has shut down for the festive season. Comments on the Water Amendment Bill were due on 6 January 2018. SAPOA wrote to the city, and the city extended the deadline to 15 February 2018.

With regards to the drought charge, SAPOA submitted comments strongly objecting to the proposed drought charge, and lobbied the Mayor. The drought charge was cancelled, but the

city stated that it would be imposing heavy penalties for excess water usage.

Competition Commission Retail Market Inquiry On behalf of its members, SAPOA lodged a complaint with the Competition Commission in 2012, and requested that the Commission re-open its investigation into exclusivity clauses in order to provide a definitive ruling with regards to the anti-competitive nature of exclusivity clauses in leases once and for all. The inquiry began on 27 November 2015. The Commission aims to complete the inquiry by 30 September 2019.

In the meantime, the Commission released its preliminary findings on 30 May 2019.

On exclusive leases, the inquiry has so far recommended the following: ● As of the date of publication of the final report, the incumbent national supermarket chains (Shoprite, Pick n Pay, Woolworths and Spar, including their subsidiaries and their successors) must, with immediate effect, cease to enforce exclusivity provisions, or provisions that have a substantially similar effect, in their lease agreements against speciality stores.

● This also applies to other provisions that serve to restrict product lines, store size and location within the shopping centre for speciality stores. ● No new leases or extensions to leases by the incumbent national supermarket chains may incorporate exclusivity clauses (or clauses that have substantially the same effect) or clauses that may serve to restrict product lines, store size and location of other stores selling grocery items within the shopping centre. ● The enforcement of exclusivity by the incumbent national supermarket chains (including their subsidiaries) and their successors in title as against other grocery retailers (including the emerging challenger retailers) must be phased out within three years of the date of the publication of the final inquiry report. ● These recommendations permit the phasing out of existing exclusive agreements where appropriate, while setting the platform for a future where such agreements do not exist to restrict entry and expansion by specialist and emerging retail chains into shopping malls nationally.

Optimistic outlook Standard Bank Group CEO Sim Tshabalala took the podium as a guest speaker at the CEO’s dinner on the first evening of SAPOA’s Annual Convention & Property Exhibition

S

im Tshabalala opened his talk by acknowledging everyone present, including Neil Gopal and government officials. He alluded to following the footsteps of those who had gone before him when speaking to the gathered leading property industry representatives in South Africa.

He outlined the topics he would be touching on, including an anarchist slogan; why printing money is not a bad idea; why empathy, patience and discipline are rewarded; paraffin lamps; migration; and why shiny buildings are being sanctioned.

Anarchist slogan: Property is theft There is evidence that well-defined and enforceable property rights are central to economic development and human wellbeing – but that the old slogan “Property is theft” still packs a punch.

In a highly unequal society, many people reach an inevitable natural conclusion: in their eyes, the current distribution of income and assets is unfair and feels unsustainable. For them, it seems obvious that the solution to our nation’s social ills must include nationalisation and radical redistribution of wealth.

SOUTH AFRICAN PROPERTY REVIEW

35 33

are sensible people, they agree that printing money is destructive.

South Africa has the world’s highest rate of unemployment and the most unequal income distribution, which comes from centuries of systematic disposition.

It isn’t a surprise that, for large numbers of people in our country, “Property is theft” sounds like common sense, and that simple justice is called for.

Advocacy While driving change, we should not become partisan, but should follow SAPOA’s example of discipline, patience and empathy when it comes to fighting for the rights and betterment of society.

Printing money is not such a bad idea Printing money is obviously a fabulous idea. The government is short of it, and owns the printing press. But the idea of simply printing more money will lead to hyper-inflation and deeper poverty.

Wisdom tells us we should not dismiss the thought out of hand, but we need to appreciate how powerful the arguments are. They don’t seem crazy at face value; and they will not go away any time soon.

The first thing to do is not to lose patience or empathy. We need to keep explaining that sound money benefits everyone, especially the poor, and is necessary for inclusive economic growth and development. And stable property rights lie at the heart of the economy.

In South Africa, we have two positives: 1) The political culture is open to listening because we live in an opinion democracy.

2) Our political and legal institutions are receptive to established law and hard evidence.

As an example of our government listening to us, let me share a personal anecdote. Two years ago we were called to the government to explain why the banking sector was slow to reform; why there shouldn’t be a big, state retail bank and an outright nationalisation of banks.

CEOs of four large banks spent two days explaining how banking works. We also pointed out that the Constitution, the laws and the regulatory guidelines are in place to constrain us. In the end, we also pointed out that we are committed to growth and transformation.

Being called to account is a good thing – but what should we do about the debates on land expropriation without compensation (EWC), monetary policy and the Reserve Bank’s mandate?

In acknowledging the EWC debate, we must understand that each set of issues needs to be approached with respect of 36 34

SOUTH AFRICAN PROPERTY REVIEW

Paraffin lamps

Standard Bank Group CEO Sim Tshabalala

the experiences and perspectives of the dispossessed and the current land owners.

Our Constitution says, “We, the people of South Africa, recognise the injustices of our past; honour those who suffered for justice and freedom in our land; respect those who have worked to build and develop our country; and believe that South Africa belongs to all who live in it, united in our diversity.”

The land, restorative justice, fairness, dignity, national identity and social cohesion all matter a great deal. We need a constitutional, coherent, sincere and defensible position on each of them.

EWC threatens new investment and the stability of the property industry and the financial sector, and will damage the economy as a whole. Think of what has happened in Zimbabwe and Venezuela.

We should not mince our words: we should say that a terrible idea is a terrible idea. Good intentions are never enough; we need to show that the capacity of the state to implement land reform efficiently is cardinal.

Lives will not improve if we do not get much better at transfers post-settlement and give better support. There is an opportunity here to encourage and implement private-public partnerships.

In short, there are several good reasons not to print more money: 1) The idea is a quick fix, and is not sustainable.

2) There is logical and precise evidence that economic health must come from a clear economic policy. 3) The government must not catastrophise and succumb to moral panic. And since most politicians

I use the example of paraffin lamps in the context of climate change. They are used by the poor, they are expensive to fill, they smell, and they are dangerous. South Africa has signed the Paris Agreement; it is up to us to take climate change seriously.

Banks are considering their stance on funding fossil fuel-fired power stations – but we are mindful of the energy crisis.

Any outcome will be a balancing act.

Migration The past decade has certainly given the country political turbulence and for many this has resulted in migration, a search for certainty, better prospects and a safer way of life. Tshabalala encouraged people to have faith that the country is on an upward trend, there are signs of recovery, but it may take a while to filter down to the man in the street.

Shiny buildings New buildings springing up in the major metros can be seen as indicative of optimism. Developers are looking to the country’s medium-term prosperity.

While there has been a lot of negative sentiment towards both the global economy and South Africa’s economy, our prospects are relatively bright.

South Africa possesses entrepreneurial talent and skills that are being developed, and there is capital to invest. But for that capital to be unlocked, the country must demonstrate that our institutions have quality economic governance.

To this end, we are turning a corner: many state-owned enterprises have new boards, corruption is being exposed, the National Prosecuting Authority has been overhauled, SARS is being cleansed and a special investigative directive has been established. There is hope for the future.

REGISTER SAPOA PROPERTY

2018-2019

AVAILABLE ONLINE

One of SAPOA’s services to its members, is the “Dissemination of Information.”

SAPOA is pleased to inform you that the

PROPE

RTY REVIE

W - LogoT

reatm

ent.p df

1

2016/

REGIS TER SAPO

A PR OP

08/25

11:31

AM

2018-2019 REGISTER is now available.

ERTY

2018-2

As part of SAPOA’s effort in decreasing the carbon footprint,

019

all of our publications will be available on the online platform.

This includes the 2018-2019 REGISTER. Note that we have added your companies web address as part of your contact details. This is an added-benefit.

Online business directories have immense benefits such as: ● Amplify Your Online Presence ● Improve Your Local Visibility ● Get Discovered More ● Use Word of Mouth ● Strengthen Your Business Reputation ● Increase Brand Awareness ● Boost Your SEO ● Show Up on Google To access the Register visit: https://bit.ly/31zl3i2 df

1

2016/08/25

11:31 AM

EACH YEAR WE ACCEPT a large number of listings and advertisements REGISTER 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.

- LogoTreatment.p PROPERTY REVIEW

top tier firm

top tier firm

team of the year

top tier firm

top foreign law

top tier firm

firm

elite law firm

client service

recommended

firm

OPERTY SAPOA PR

NORTON ROSE

2017-2018

FULBRIGHT

SMITH TABATA BUCHANAN BOYES P.O. Box 23355, Claremont, 7735, Western Cape t: +27(0)21 673 4700 f: +27(0)21 673 4701 www.stbb.co.za

15 Alice Lane, Sandton, 2196 P.O. Box 784903, Sandton, 2196,

Association -

Norton Rose House,

Property Register

Private Bag X10,

8 Riebeek

Roggebaai,

T: +27 (0)21 405 1200 F: +27 (0)21 418 6900

Durban 3 Pencarrow Crescent, Ridge, KwaZulu-Natal, La Lucia 4051 P.O. Box 5003, Pencarrow Park, 4019, South Africa

T: +27 (0)31 582 5600 F: +27 (0)31 582 5700

Law around the world nortonrosefulbrigh t.com/za

SCHNETLER'S INC P.O. Box 433, Century City, 7446, Western Cape t: +27(0)21 552 4844 f: +27(0)21 552 4549

STRAUSS SCHER INCORPORATED P.O. Box 786473, Sandton, 2146, Gauteng t: +27(0)11 883 9798 f: +27(0)11 883 6661 www.straussscherattorneys.co.za VZLR INC 1st Floor/ Block 3, Monument Office Park, 71 Steenbok Avenue, Monument Park, Pretoria, 0105 Gauteng t: +27(0)13 752 2065 t: +27(0)12 435 9444 www.vzlr.co.za

WERKSMANS ATTORNEYS Private Bag 10015, Sandton, 2146, Gauteng t: +27(0)11 535 8000 f: +27(0)11 535 8600 www.werksmans.com

AUCTIONEERS

TM

7

PARTNERS

2017

2016

Property Owners

AND

top tier firm

EIGN FOR S TOP FIRM LAW

South African

AL

GLOBbers cham

ICA L FUNDS AFR GLOBA Awards

ESS BUSINNAL INDIA JOUR LAW 2017

ng Managi tual Intellec y Propert

ACG ARCHITECTS CC P.O. Box 70, Woodstock, Saltriver, Cape Town, 7915, Western Cape t: +27(0)21 448 6615 f: +27(0)21 448 6621 a www.acgarchitects.co.z

& ADENDORFF ARCHITECTS INTERIORS CC P.O. Box 40301, Walmer, Port Elizabeth, 6065, Eastern Cape t: +27(0)41 581 4765 f: +27(0)86 618 2183 www.adendorffarchitects.co.za LTD AEVITAS GROUP (PTY) 16 Holt Street, Parkmore, Johannessburg, 2196, Gauteng t: +27(0)82 496 6983 a www.aevitasgroup.co.z

WHITE & CASE LLP P.O. Box 784440, Sandton, 2146, Gauteng t: +27(0)11 341 4000 www.whitecase.com

AMA ARCHITECTS (PTY) P.O. Box 1299, Gallo Manor, 2052, Gauteng t: +27(0)11 807 7505 f: +27(0)11 807 7509 www.amagroup.co.za

SHEPPERSON ATTORNEYS P.O. Box 14289, Hatfield, 0028, Gauteng t: +27(0)12 362 8872/4688 f: +27(0)12 3627829

SHEPSTONE & WYLIE ATTORNEYS P.O. Box 7452, Roggebaai, 8001, Western Cape t: +27(0)12 362 8872/4688 f: +27(0)12 362 8709 www.wylie.co.za

’s largest law firm

www.amagro

2017 - 2018

For advertising opportunities and rates contact Pieter Schoeman t: +27 (0) 21 856 1276 c: +27 (0) 82 790 6909 e: pieter@mpdps.com

up.co.za

ARCHITECTURAL DESIGN ASSOCIATES P.O. Box 87076, Houghton, 2041, Gauteng t: +27(0)11 880 0600 f: +27(0)11 880 0603 www.ada.co.za CHANGE ARCHITECTURE FOR A 22 Davy Road, Industria North, Johannesburg, 1719, Gauteng t: +27(0)11 477 8738 www.a4ac.co.za

Rivonia, Sandton 131 12th Avenue, 5 1 807 750 tel: +27 1 amagroup.co.za email: adrian@

20

ARP ARCHITECTS & INTERIORS 74 Shortmarket St, Cape Town City Centre, Cape Town, 8001, Western Cape t: +27(0)21 423 5884 eriors. www.arp-architects-int

2017 - 2018 SAPOA Proper t y Register

SAPOA Proper t y Register 2017 - 2018

ENSafrica.com

PRETORIA: Johan de Bruin Cell: +27 82 820 6669 Tel: +27 11 283 1500 E-Mail: mlcjhb@mlc.co.za CAPE TOWN: Graham Haldane Cell: +27 82 880 7377 Tel: +27 21 673 5800 E-Mail: info@mlcct.co.za

business.site

BOTSWANA: Len Holder Cell: +267 7 120 3743 Tel: +267 395 1310 E-Mail: mlc@mlcqs.co.bw MAURITIUS: Yusuf Nabeemeeah Cell: +230 5 497 9997 Tel: +230 452 9106 E-Mail: admin@mlcmauritius.com DUBAI: Paul Miller Cell: +971 50 558 2057 Tel: +971 4 341 8843 E-Mail: information@mlcqs.com

MAKHOBA VOLBRECHT ASSOCIATES P.O. Box 38100, Eshowe, 3894, KwaZulu-Natal t: +27(0)35 474 4545 f: +27(0)35 474 2443 MANZI QUANTITY SURVEYORS P.O. Box 474, Cape Town, 8000, Western Cape t: +27(0)21 418 1809 f: +27(0)86 677 3885 MASEGELA QUANTITY SURVEYORS P.O. Box 435, Thornhill Plaza, 0882, Limpopo t: +27(0)15 223 6808 f: +27(0)15 223 3994

MULTI QUANTITY SURVEYORS (PTY) LTD

Unit AG01, Block A, Grosvenor Square, Park Lane, Century City, Cape Town, The Western Cape, 7441 Suite 407, 4th Floor, The Point, 76 Regent Rd, Sea Point, Cape Town, The Western Cape, 8005

t: +27 (0)87 740 5270 f: +27 (0)86 596 7554 e: info@multiqs.co.za

w w w. m u l t i q s. co MMPA QUANTITY SURVEYORS .za PROJECT MANAGERS (PTY) & LTD P.O. Box 19325, Tecoma, 5214, Eastern Cape NONKU NTSHONA & ASSOCIATES t: +27(0)43 721 0077 P.O. Box 669, Rivonia, 2128, f: +27(0)43 721 0082 Gauteng www.mmpaqs.co.za t: +27(0)11 803 2291 f: +27(0)11 234 2078 MBATHA WALTERS & SIMPSON www.nnaqs.co.za P.O. Box 211, Gallo Manor, 2052, Gauteng NORVAL WENTZEL STEINBERG t: +27(0)11 802 1525 QS P.O. Box 55048, Northlands, f: +27(0)11 802 3626 2116, Gauteng www.mbathawaltersand KEEVE SPRONG CC T/A simpson.com t: +27(0)11 804 6122 LENHLE QUANTITY SURVEYORS QUANTICOST f: +27(0)11 804 4038 MLC QUANTITY SURVEYORS (PTY) LTD 10 Fourways Golf Park, SA www.nws.co.za (PTY) LTD Postnet Suite 585, 1016 Roos Street, Sandton, P.O. Box 41111, Craighall Private Bag X43, Park, P.O. Box 71312, Bryanston, 2068, O'MAHONY PEEL ROWNEY 2024, Sunninghill, 2021, Gauteng CONSULTING QUANTITY Gauteng 2157, t: +27(0)11 705 2505 SURVEYORS t: +27(0)11 283 1500 Gauteng f: +27(0)11 705 2508 P.O. Box 41199, Craighall, f: +27(0)11 788 9015 t: +27(0)11 023 9900 2024, Gauteng www.mlc.co.za KGA QUANTITY SURVEYORS t: +27(0)11 325 0610 LESEDI QUANTITY SURVEYORS P.O. Box 84602, f: +27(0)11 325 0743 MULTI QUANTITY SURVEYORS P.O. Box 712, Mondeor, Greenside, 2034, www.opr.co.za (PTY) LTD 2110, Gauteng P.O. Box 471, Century City, Gauteng t: +27(0)11 486 0853 PENTAD QUANTITY SURVEYORS Cape Town, 7446, t: +27(0)11 025 4817 f: +27(0)86 551 9468 (PTY) LTD T/A RIDER LEVETT Western Cape f: +27(0)86 510 3425 BUCKNALL ZA (PTY) LTD t: +27(0)87 740 5270 www.lemay.co.za KOOR DINDAR MOTHEI P.O. Box 67922, Bryanston, f: +27(0)86 596 7554 QUANTITY SURVEYING 2090, Gauteng www.multiqs.co.za LETCHMIAH DAYA MANDINDI P.O. Box 42044, Fordsburg, T/A t: +27(0)11 548 4000 LDM HOLDINGS (PTY) Johannesburg, 2033, LTD f: +27(0)11 465 1439 NARKER POUGNET KRIEL P.O. Box 19233, Gauteng T/A www.rlb.com ETHIQS QUANTITY SURVEYORS Dormerton, 4015, t: +27(0)11 689 5400 Private Bag X115, KwaZulu-Natal f: +27(0)11 689 5401 PLM QUANTITY SURVEYORS Bryanston, 2021, t: +27(0)31 207 1340 www.kdm.co.za AND VALUERS CC Gauteng f: +27(0)31 209 9441 20 Bonza Bay Rd, Beacon t: +27(0)11 463 1100 www.ldm.co.za LAKHANYA QUANTITY East London, 5205, EasternBay, f: +27(0)11 463 3728 SURVEYORS Cape t: +27(0)437482710 MAHLATI QUANTITY SURVEYORS P.O. Box 13532, www.plmqs.co.za NDIDALI QUANTITY SURVEYORS (PTY) LTD Humewood, Port Elizabeth, 6013, Voortrekker Street, P.O. Box 12456, Eastern Cape PULANA BAXTER & ASSOCIATES Polokwane Central, Mill Street, 8010, t: +27(0)41 373 6659 CC P.O. Box 19694, Tecoma, Polokwane, 0699, Western Cape f: +27(0)41 373 9351 East London, 5214, Eastern Cape Limpopo t: +27(0)21 4619 5656 www.lakhanyaqs.co.za t: +27(0)43 721 0984 t: +27(0)15 297 0103 f: +27(0)21 461 5644 f: +27(0)43 721 0984 www.ndidaliqs.co.za SAPOA Proper t y Register www.pba.co.za 2017 - 2018 DURBAN: Romano Valenti Cell: +27 82 553 1927 Tel: +27 31 940 7783 E-Mail: mlc@mlckzn.co.za

ARCA ARCHITECTS & DESIGNERS P.O. Box 12975, Hatfield, 0028, Gauteng t: +27(0)12 346 4061 f: +27(0)86 689 9235 .za www.arca-architects.co

LTD

Quantity Surveyors

www.mlcqs.com JOHANNESBURG: Charl van Wyk Cell: +27 83 272 1923 Tel: +27 11 283 1500 E-Mail: mlcjhb@mlc.co.za

ACTIVATE ARCHITECTURE (PTY) LTD P.O. Box 321, Saxonwold, 2132, Gauteng t: +27(0)11 788 8095 f: +27(0)11 788 8097 www.activate.co.za

SHANDU ATTORNEYS INCORPARTED Ground Floor, Building 3, Commerce Square, 39 Rivonia Road, Sandhurst, Sandton, 2196, Gauteng t: +27(0)10 035 2142 www.shanduattorneys.co.za

ENSafrica | Africa

Architects

ARC ARCHITECTURAL (PTY) LTD CONSULTANTS PRETORIA P.O. Box 13399, Hatfield, 0028, Gauteng t: +27(0)12 362 7350 f: +27(0)12 362 7349 www.arc.co.za

AA PAPAGEORGIOU ARCHITECT & ASSOC INCORPORATED P.O. Box 11288, Randhart, 1457, Gauteng t: +27(0)11 907 2015 f: +27(0)11 907 2020

SWAZILAND: Gavin McEwan Cell: +27 72 632 4024 Tel: +268 7 834 9806 E-Mail: mlcswd@realnet.co.sz

ABU DHABI: Gerhard van Rooyen Cell: +971 50 398 1277 Tel: +971 2 418 9100 E-Mail: information@mlcqs.com

MONTENEGRO: Simon Bezuidenhout Cell: +382 6 717 6001 Tel: +382 3 135 5300 E-Mail: simonb@mlcqs.com

63

Challenging times, understanding the issues, planning the future True to its promise, SAPOA put together another conversation-starting Annual Convention & Property Exhibition at the Cape Town International Convention Centre. Hosted by award winner Iman Rappetti, the Convention facilitated deliberation on imperative issues, the state of the economy and the social conditions that affect not only the property industry but the country as a whole

By Mark Pettipher and David Steynberg

Lord Peter Hain

Opening keynote address Lord Peter Hain, UK Member of Parliament and Cabinet Minister in the House of Lords

P

eter Hain was brought up in South Africa, and went into exile in 1966.

He became known as “Hain the pain” because of his activism towards stopping the Springbok tours of the 1960s.

Referring to the recent Gupta wedding in the Himalayas, Hain stated that the international financial system is culpable for the money laundering that’s taken place over the past decade. He said the financial system should track down the money that had been looted from Eskom, Transnet, SARS and SAA, and repay it to the South African Treasury. He also pointed out that companies and veterans of the freedom struggle didn’t sacrifice so much to have their legacy looted.

Together, all South Africans have to reclaim and rekindle the Mandela values of integrity, good governance, social justice, equality and democracy.

38 36

SOUTH AFRICAN PROPERTY REVIEW

No global corporate must have anything to do with corruption, whitewashing corruption or getting fat fees from corruption. It was “alright” for them to take part in corruption under the Zuma government and the Gupta brothers. When this was confined to domestic media and politics in South Africa, they got away with it; but when it went global, the damage was done.

When Hain named Bell Pottinger and asked the government to take action against the company for its “vile” racist campaign on behalf of Zuma and the Guptas, Bell Pottinger went bankrupt a week later.

In November last year, he contacted the finance ministry in the UK to take action to stop the systematic transnational financial crime network facilitated by the Guptas and Jacob Zuma. He gave the Estina Dairy project as an example of robbing the poor to feed obscene luxury. The story was picked up by international papers – then Hain named the British institutions that were facilitating the related money laundering through Hong Kong and Dubai. They were exposed globally.

Hain put it to the delegates that in today’s world of scrutiny and transparency, you simply cannot afford to be associated with state capture or corruption without running the risk of damaging your bottom line. There needs to be a war against corruption, against organised and financial crime, against tax evasion. The international business and financial community should be cooperating and supporting the South African Revenue Service and the Treasury, utilising their collective

knowledge to aid that task with top legal, accounting, investigative and intelligence capabilities. The international community needs to work with South African businesses to help the government – and the President – rescue the economy and the country from the mire.

The main conduits for money laundering have been Dubai and Hong Kong – therefore they should help in recovering the money. Bank auditors and consultants should be using their expertise, their artificial intelligence and their technology to help.

Hain is of the opinion that we need to end the current obsession of world institutions for shrinking the state.

More state-owned enterprises should be privatised. South Africa needs an entrepreneurial, active government to provide an active public sector, an active health service, and decent schools and universities. It needs to support businesses and allow them to innovate and grow, thereby providing much-needed employment. A strong, properly funded public sector is required to support the business community – that is the lesson from the most successful modern economies.

And yes, it means paying more taxes.

South Africa is not insulated against global competition. Every year, China produces 7,5-million new university graduates, and India produces sevenmillion, two-thirds of whom are in the fields of science, engineering and technology. South Africa produces 180 000 graduates, so proportionately speaking, we are only producing half of those millions of graduates. Our costs are much too high, and quality

and skills are too low. And we are being undercut not just by these two economic superpowers, but by many other countries as well.

The only way that South Africa can prosper in the global competitive race is by developing and encouraging high skills and high investment in new technology, especially because we’re facing the fourth industrial revolution of robotics and artificial intelligence.

Hain is appalled by the state of schools and the failure rate of millions of students in South Africa as a result of bad governance. He said that, at one point, the ANC used to spend more on education than any other emerging nation. School attendance has doubled since apartheid, but out of 140 countries indexed by the World Economic Forum’s Global Competitiveness Index, South Africa was ranked 138th in terms of school performance.

Hain lauded President Ramaphosa for his credentials, saying that few candidates in the world have his skills.

He called for South Africa’s business community and civil society to take the lead in supporting the economic transformation that the country needs.

He told us that in order to succeed, economic transformation has to go down well bellow board level and into the business sector – and that if that doesn’t happen, there will be an increasing collision of dissatisfaction with expectations and opportunity.

Without economic growth, we are simply redistributing poverty.

Democracy and good governance are the oxygen of economic growth and prosperity. Ten years of bad governance has meant that there has been a deterioration of confidence, and South Africa has gone form hero to zero.

International investors were keen to help the country in the early days of democracy, but the Zuma years destroyed that.

South Africa has great infrastructure, a good system of business and financial regulation, a good banking structure, energy and talent, and a country people love to visit. We need to reclaim the Mandela legacy.

Address by outgoing SAPOA President Ipeleng Mkhari, CEO of Motseng Investment Holdings

Ipeleng Mkhari, SAPOA’s outgoing President, addressed the delegates, saying “Ndaa” in acknowledgement of South Africa’s President Cyril Ramaphosa. She also recognised SAPOA’s past Presidents, members of the media, captains of industry and delegates. Summing up Lord Hain’s speech, Mkhari said, “Seeds of growth cannot be planted in soil that is infested with pesticides. In order to succeed, optimism and realism need to be bedfellows.” She then reviewed the past year at SAPOA. Her farewell speech can be found in the July issue of the South African Property Review.

Principal Sponsor address Noel Mashaba, Executive Chairman of GladAfrica

N

oel Mashaba told us that it has been an honour and a privilege to have had three years of successful partnership with SAPOA, and of sponsoring the Annual Convention & Property Exhibition.

He thanked past Presidents Nomzamo Radebe and Peter Levett and outgoing President Ipeleng Mkhari for being available for discussion and support.

Mashaba believes in history: he believes it’s too serious to be left to historians. He lives his life in such a way that the decisions he makes will eventually be recorded for history to judge him. All of us who hold a position of responsibility create history or participate in it, whether intentionally or unintentionally. When signing the agreement in 2016, Mashaba was aware that whatever happened, history would be made.

Mashaba gave credit to those who have made the past three years a success.

He announced that GladAfrica has agreed to endorse another three years of principal sponsorship, and thanked the SAPOA Board for showing confidence in what has been achieved through the partnership. He spoke about GladAfrica’s achievements, telling us about the pride of being involved in a 15-year project of building the University of Mpumalanga.

Noel Mashaba

GladAfrica has begun to deliver five facilities worth R8,8-billion; the project will be completed in 2028. He also announced that in January this year GladAfrica was contracted to build a biomedical research facility for Stellenbosch University – the first of its kind in Africa.

The facility is due for completion in 2023 at a cost of R1,1-billion.

When the spatial development framework was approved in 2008, a public transport infrastructure grant was created for the purpose of improving public transport in South Africa’s main cities. Cape Town tasked GladAfrica to deliver its first Bus Rapid Transit (BRT) system – and many of the delegates at the Convention probably used this system. The BRT system was handed over to the city in 2015 at a cost of R5-billion.

SOUTH AFRICAN PROPERTY REVIEW

39 37

These three projects were given as examples of what GladAfrica has delivered to the built environment in the country. The company currently runs more than 300 projects nationwide. The size of these projects demonstrates that GladAfrica enjoys a great deal of trust

Bandile Zondo

What does 2020 hold for the listed property sector?

Bandile Zondo, Executive Head of Financial Sector Equity Research at Standard Bank Group Securities

Z

ondo gave an overview of the property sector, saying that South African REITs offer attractive yields and are fairly priced, but that their performance this year reflects an underlying weakness.

There are limited upside catalysts beyond the Cyril Ramaphosa reformdriven agenda to get the country back on its feet. GDP growth is projected to be 0,6% in 2019, and forecast to be 1,8% in 2020, which means any real growth in the economy will remain weak, and recovery will be protracted. Mediumterm growth is expected to improve, but is dependent on policy certainty.

Sixty percent of the property sector is accounted for by retail, and 60% of our GDP is driven by the consumer.

Trading density growth is averaging about 2,5%, but smaller shopping centres are holding up better than larger ones, which reflects global trends.

Retail vacancies currently stand at 4,2%, with a long-term average of three percent. South Africa has the third-

40 38

SOUTH AFRICAN PROPERTY REVIEW

within the industry, and is delivering world-class, competitive projects and contributing to South Africa’s economy.

In closing, Mashaba confirmed his commitment to serving on SAPOA’s Board and meaningfully contributing to the property sector.

highest retail exposure per unit of GDP outside of the US and Canada.

Structurally, it is being questioned whether we have too much retail supply, especially since changing consumer habits will impact negatively on retail even if the economy begins to recover. It is indicated that about 500 000m2 will come into the market over the next two years, including the Fourways Mall in Johannesburg and Cornubia in Durban.

Edcon’s liquidation is being managed for now, but the risks remain. Landlords and banks have agreed to refinancing terms. Edcon amounted to 1,8% of the South African Listed Property Index (SAPY). We are seeing some landlords agreeing to a 41% cut in rentals for a two-year period, while others have opted to capitalise the impact by taking equity shares so as not to compromise rent and avoid setting precedence towards other retailers that may be struggling. Some REITs have taken back space, amounting to about 20% of Edcon’s space.

The office sector is sitting relatively flat at 11%. In Q1 of 2019, vacancies accelerated across all grades of stock, with the exception of B-grade offices.

Prime vacancies recorded the largest quarterly deterioration – two percent over Q1 of 2019 – mainly due to new stock becoming available in Sandton.

But a flat rental growth actually means negative growth, because landlords have to offer much higher incentives to retain occupants. In real terms, there has been a 10% decline over the past 10 years. A large threat to the office sector is the entry of coworking or flexible office space into the market. The sector will remain under pressure as new office stock comes on stream. Landlords are arguing that to keep ahead of the curve, new and better

office stock is needed as a form of defence against cherry-picking tenants.

Looking at the past 10 years, much of the stock has not been absorbed. Even the trend of converting office space into residential units hasn’t been able to counter the vacancy trend.

It is estimated that about 100 000 jobs are needed to fully absorb the vacant space, which raises concerns that 56% of new supply stoke is in three nodes in Johannesburg – Sandton (25%), Waterfall (16%) and Rosebank (14%). There is a distinct possibility that Sandton office vacancies could rise to as much as 20%, with further pressure placed on the historical core of Fredman Drive, Grayston Drive, Wierda Valley and Sandown.

South Africa’s economic growth is too weak to turn the current tide – economists agree we need GDP growth that’s higher than two percent.

Property prices are reasonably fair, but the investor market is suffering from a confidence crisis, and is looking for policy reform and clarity as well as good governance. Mergers and acquisitions opportunities are possible but likely to remain muted for the same reasons.

“Governance is improving in South Africa,” said Zondo in conclusion. “There are commissions of enquiry, and there is exposure of corruption. To help with setting indicators and counters, the REITs Best Practice Recommendations second edition has been released.”

Zondo’s presentation was followed by a panel discussion chaired by Craig Smith, Head of Research and Property at Anchor Stockbrokers. The panellists included Sandile Nomvete, CEO of Delta Property Fund; former SAPOA President Estienne de Klerk, CEO of Growthpoint Properties; Anton de Goede, Fund Manager at Coronation Fund Managers; Evan Robins, Property Manager at Old Mutual Investments; as well as Zondo.

When Smith asked for observations, De Klerk mentioned that we are facing the toughest economy anyone has faced

FROM LEFT: Evan Robins, Anton de Goede, Sandile Nomvete, Estienne de Klerk and Bandile Zondo

in their career in the real estate sector.

Nomvete added that some of the issues and risks are self-inflicted, which is driving away investment. Political risk is a major deterrent, banks are becoming shrewd with funding, and debt financing is becoming very expensive.

De Goede spoke about the lack of GDP growth, and the further risk of rising vacancies should lacklustre growth continue. Robins expressed that it is difficult to understand why CAP rates are as high as they are.

Q A

Smith: How is property as an asset class viewed?

Robins: Generalists have been sceptical of the property sector. Governance hasn’t helped. While it makes sense form a company perspective to go offshore, it doesn’t fill generalists with confidence, given that South Africans don’t have a great track record offshore.

A

De Goede: Listed property is compared with bonds. The sector gave dividends of six percent in the 1980s, and eight percent in the past 10 years. Last year, it was five percent; the year to date is between one and two percent.

Without dividend growth, fund allocators will not look at the sector.

Capital liability within the sector is also a deterrent: most companies are REITs that pay out 100% of earnings, meaning that the adjusted earnings to maintain the property are not being taken into account.

Q

Smith: South African prices vs the rest of the world – the themes playing out globally are also playing out in South Africa…

As a landlord, De Klerk spoke about the South African REITs standardised reporting framework (best practice recommendations), and the need to set such in order to help investors and analysts find a common ground to compare like with like. The sector is looking to deliver predictable returns.

A

Zondo: Picking up on the REITs BPR and talked distribution of earnings, there is a requirement that an auditor signs off on recon from cash flow earnings to what you declare as distributions. Property doesn’t trade on International Financial Reporting Standards earnings.

Q

Smith: Let’s turn to property fundamentals – the REIT sector and its exposure.

A

De Goede: It is important to look at the quality of the earnings that the listed property counter will deliver. There needs to be a continued rebasing of the counter over the next couple of years. Because there are grey areas where earnings can be ramped up, the focus must be on the pure fundamentals of the counter.

A

Robins: The risk profile is changing. The market is more sceptical when looking at the numbers, and the international acquisitions are adding risks that weren’t there before. Concerns are

Craig Smith

that if international interest rates raise, there will be pressure on the market.

Q A

Smith: Are alternative asset classes a growing trend?

De Klerk: Growthpoint looked to capitalise on opportunities and leverage existing stock. We have gone into collaborative work spaces, the health sector, as well as storage space. All are growing and trending locally and internationally.

A

Nomvete: On growth projections, we have had to spend capex on properties.

The current environment shows potential to consolidate on sovereign underpinned space. What do you do with vacant innercity buildings? We are looking to perhaps convert them to low-income student accommodation.

A

Zondo: Potential mergers and acquisitions need more investor participation. The listed property sector has done well to date, but once we get policy clarity and certainty, we will get real investment.

In order to get that investment, we need the political will to create an investmentfriendly environment.

A

De Klerk: Cape Town and Durban are solid markets. Listed property returns are predicable and will continue to provide good numbers. Skills sets in the sector are really strong. South Africa has people that can operate in the most complex environments.

SOUTH AFRICAN PROPERTY REVIEW

41 39

university. Only six get a university certificate, and only four will get a degree within six years of finishing matric.

He demonstrated that 78% of Grade 4 children cannot read for meaning, which shows that our literacy rate is failing the country.

He closed his talk by saying that we cannot build a decent, competent society or grow a strong economy unless we can fix the education system.

Professor Jonathan Jansen

Intellectual capital remains the future of skills Professor Jonathan Jansen, Faculty of Education at Stellenbosch University

T

he future of our profession is dependent almost entirely on who comes through the schools, technikons and universities. The term “human capital” comes from economists.

There are two things that are very clear in the South African situation with regards to human capital. First, the social rate of return on investment in human capital is among the highest in the world. In other words, society benefits enormously when you invest in human capital. But, and this is the second point, the individual rates of return are also among the highest in the world. The individual who gets a degree and who studies further gets much more out of it. That’s huge, and that’s why education is so sensitive in the country.

There is a problem: the government doesn’t realise there is a problem.

The present doesn’t explain itself.

History has to be taken into account when explaining where education is South Africa is at the moment.

In explaining where the problem lies, Jansen pointed to inequality and the two school systems – one for the wealthy and one for the poor. He also pointed to the inefficiency of South Africa’s school system, citing statistics to show a strong correlation between funding and the outcomes. For every 100 learners who start Grade 1, 60 write matric, 37 pass matric, and 12 go to 42 40

SOUTH AFRICAN PROPERTY REVIEW

Professor Jansen’s presentation was followed by a discussion facilitated

by François Viruly, Associate Professor in the Department of Construction Economics and Management at UCT. The panellists included Dr Sedise Moseneke, Executive Director of Vukile Property Fund; Nonhlanhla Mayisela, CEO of Izandla Property and Chairperson of the Women’s Property Network; Rapelang Rabana, founder and Chairperson of Rekindle Learning; as well as Professor Jansen.

Q

Prof Viruly: There is lot of education that happens in the property sector, but we’re fragmented.

A

Dr Moseneke: The sector went through a phase of transformation, which needed BEE scorecard points. Everyone was interested in getting points and ticking the boxes; what we are seeing now are ramifications of that. What we want to do is breed quality professionals to bring into the industry who have a similar type of thinking in order to close the skills gap.

From a Property Sector Charter perspective, our aim is to work with the many bursary schemes to create a skills development foundation and establish best practices around dealing with people who want to contribute to bursaries, get internships and develop entrepreneurship. The time has come for us to work together. There are indicators from the industry to achieve this.

A

Mayisela: The industry has experienced tremendous growth in the past 15 years, and we have done fairly well with formal education. We have seen a significant influx of students and women coming into the sector. But once we integrate graduates

at foundation level, we come unstuck in integrating them at other levels.

There is a massive gap at mid-, seniorand executive-level management. We need to do a thorough skills-gap analysis to understand what the picture looks like. Skills development, eradication of inequality, gender and racial diversity, and staying competitive are not mutually exclusive. As an industry, we separate the strategies in terms of skills development.

The need is to integrate the skills that have come through at graduate level into different segments of the sector, where the real impact is required.

Q

Professor Viruly: To do well in property, what should I study in the fourth industrial revolution?

A

Rabana: Challenges in the property sector are similar to other sectors.

Traditional learning has been set on content learning; the new trend is developing mind-sets, behaviours and values by crafting quality life experiences over time. We keep providing content and not understanding the exposure and experience that a young person will need to respond to a new job. How do we measure and define the intelligence framework that is not content-based?

A

Dr Moseneke: I have a problem with Property 4.0. We need to be aware that extrapolating the statistics that Professor Jansen has given, 70% of people don’t have the know-how to even get to Property 1.0!

A

Rabana: As more things are automated, other countries will put themselves ahead of us if we do not adopt the technologies.

We cannot stop the industrial wave; we need to keep up.

A

Mayisela: The industry still relies very much on human capital. The question is, how do we dovetail new technologies and innovations with the current workforce and current skills set?

A

Professor Jansen: We need three things to make the system work. First, we need to build the foundations. Then we need

to think about education differently – to train people to have the ability to think on their feet, to be brave and ask difficult questions, to be able to work with a team, to know when to speak and when not to speak, to be able to fail. Finally, we need to stimulate opportunity. Part of our task is to fix the basic things children need – but it is also to pump into them the idea that they can succeed. We also have to fix the environment in which people live, and create safe communities.

The ailing economy: What are our prospects?

Nicky Weimar, Senior Economist at Nedbank

S

outh Africa’s story is a painful one, and our economy is still struggling. In the first quarter, GDP shrunk by 3,2% quarteron-quarter, and long-term growth has dipped to 0,8%.

A perfect storm hit us. The weakness was widespread; all potential sources of growth have faltered. Since 2012, we’ve been sliding downwards.

What can the future bring us, and where will the growth come from? Can government drive growth and job creation? The short answer is no – because they are out of money. They have been running budget deficits of more than three percent of GDP for a decade, and have estimated that they will be running at -4,2% this year. What this means is that they have been running a shortfall, and have had to borrow more to finance consistent shortfall. Government debt, which used to be 30%, will rise to just short of 60% in 2022. (If you add the debt of SOEs, the government is actually above 70%.) The danger is that they will have to borrow more money just to pay the debt.

The government needs to contain and slow debt accumulation. They can make sure that there is policy certainty to create an environment for the private sector to thrive.

Fixed investment is the key to faster growth and job creation because it’s all about the future. President Ramaphosa

FROM LEFT Associate Professor François Viruly, Nonhlanhla Mayisela, Dr Sedise Moseneke, Rapelang Rabana and Professor Jonathan Jansen

knows this, which is why he has started an investment drive of attracting more than a trillion rand and new expansionary investment over the next five years.

The government isn’t in a position to drive growth, and thus not in a position accelerate infrastructure spending in any meaningful way. If you want to attract the one-trillion rand, you have to attract private investors and companies that are willing to expand operations. That is what fixed investment is.

The expected return of investors must exceed the expected risk by an attractive margin.

Past growth performance is not helping. South Africa’s economic climate shows that we have weak growth, limited scope for monetary stimulus, and no reserves. We are red tape-heavy when it comes to doing business, and we have misguided economic policies, a dysfunctional labour market and unreliable infrastructure. South Africa is not getting off the first base.

Looking at the risk side of investing in South Africa, you have to take in the country’s social dynamics, high level of unemployment, inequality, crime, corruption and poor service delivery.

These all amount to a high risk, and are driving investors to think long and hard about taking a chance on South Africa.

We need policy and infrastructure certainty, otherwise fixed investment will continue to remain weak.

Can the consumer help our economy?

Disposable income drives consumer spending. Under the current climate, the ability to spend income is the result of

Nicky Weimar

employment and wage growth. The private sector doesn’t have the luxury to employ people unless they need them.

You don’t need people unless you are going to expand operations – so, again, fixed investment is key to employment growth. It’s unlikely that we will see growth in fixed investment, and therefore employment and household spending will be curtailed.

Consumer spending may be increased if we have a favourable financial environment, steady low inflation and steady low interest rates. Inflation is contained at 4,4% – but what will it do over the next three years? Food prices are increasing and we have volatile fuel prices; there is always the likelihood of the rand weakening.

Business needs to pass its cost of production onto the consumers. With growth of less than one percent, it’s difficult for firms to pass those costs onto consumers without hurting their volumes.

Weimar predicted that the Reserve Bank would cut interest rates by 25 basis SOUTH AFRICAN PROPERTY REVIEW

43 41

FROM LEFT Iman Rappetti, Dirk Ackerman, Mike Schüssler, Pali Jobo Lehohla, Thabi Leoka and Nicky Weimar

points. Because we have a weak outlook, interest rates will remain flat for a period of time to help consumer spending, which is expected to rise at less than two percent per annum.

Will exports help us? Exports are a function of world growth, but the global economy has lost momentum. Markets remain nervous and there is fear that the world is heading towards a recession.

An easing in US interest rates may prop up sentiment over the short to medium term: the US is the only country that can add stimulus to the world economy.

Many countries’ interest rates are almost at 0%, giving little scope for stimulus.

MC Iman Rappetti facilitated the discussion, introducing a panel of former Statistician-General Dr Pali Jobo Lehohla; economist Thabi Leoka of Argon Asset Management; Mike Schüssler, Chief Economist at Economists.co.za; Dirk Ackerman, Chairman of IQ Group Holdings; as well as Weimar.

Q A

Rappetti: Where are the safe havens in South Africa?

Leoka: Beyond employment or unemployment, the demographic dividend isn’t going to occur – it can only come about by productivity, and that productivity doesn’t happen in South Africa. Labour absorption is bad and exports are not doing well. There is a setting of whatever resources are in the country. The answer is not short-term: it’s a 30-year-horizon issue when you factor 42 44

SOUTH AFRICAN PROPERTY REVIEW

in the demographics. The government needs to understand that this is the worst crisis South Africa has ever had. Over the past 17 years, the per-capita income has been at one percent – and there’s no hope to raise it in the next five years. The labour market hasn’t seen employment growth in the 15-to-24 age group in 15 years.

A

Schüssler: We can’t put more money into the economy. We are in a crisis; if the government understood the same, they could do something to manage it. They have to create confidence and lift red tape. They need to look hard at what is good for us.

A

Ackerman: You can’t fix something until you admit it’s broken. Policies are up in the air. The government has assets that they are not using properly. The SOEs owe about R1,2-trillion. If you look at the balance sheet, take out the productive elements of the parastatals and put competent individuals into those elements, you will see delivery returns of the 700 or so SOEs.

A

Leoka: South Africa needs someone who is tough on labour, understands the issues and is uncompromising. I’ve spent my career looking at the sophisticated part of the economy. It doesn’t give us a solution to South Africa’s problems.

South Africa has a Third World problem.

We are a country that is growing structurally. The fastest-growing sector is finance: it employs highly skilled labour.

Mining, agriculture and manufacturing are not growing – take that 40% of the

15-to-25 age group who are not in employment, education or some sort of training, and make them the future of South Africa. The current economy cannot employ the 40%, because it only employs highly educated people. This means we need to focus on how we can grow the economy through manufacturing. The continent needs rudimentary things that South Africa is capable of producing.

Based on the African Continental Free Trade agreement, something could happen. Policy-makers are not looking at what people consume. In Africa, we have a pathway to growth and value chains.

A

Schüssler: Our high-value-added manufacturing products are seeing the best growth in Africa. But these are hampered by delays that could easily be fixed by sorting out the bureaucracy.

We need to manage situations better.

We need to be efficient, and implement what we say we’re going to do.

Q

Ipeleng Mkhari asked the last floor question: What are the solutions to the unemployed 40%?

A

Leoka: The inequality problem relates to the structure of the economy. Highly skilled workers are also the highest earners in the economy – the rest are left behind. This economy in the past 10 years has seen a big divergence between the super-rich and the very poor. The solution is to focus on the poor. We never talk about educating and training the poor, or about how we will bring manufacturing to the poorer areas. We need to.

Day 3: Retail battles for relevance in a changing market So how does the retail sector achieve this? Barnes said we don’t have to look too far to see: “The many neighbourhood markets popping up around the cities tell us there is a desire for this type of experience – one that combines variety with a social focus.”

Andrew Barnes

P

eople, and more specifically consumers, have not changed fundamentally in their wants and needs: they have always been social, they have always sought experiences and they have always longed for a brand story that reflects who they are.

The retail sector has experienced a period of prolonged growth and demand, only experiencing a hard-stop in the past few years. All the growth in retail developments, however, has also meant that consumers have buckets of choice when they want to shop.

This means that retailers have a new problem: the battle for relevance. And more specifically, consumer relevance.

This is according to Andrew Barnes, Head of Strategy at Ebony+Ivory Integrated Advertising Agency. “In the past, retail was competing on consumer preference and dependence,” he said. “Now that consumers have so much choice, retailers need to position themselves as relevant to consumer needs.”

And relevance is not only playing out in the bricks-and-mortar environment, but online too. In the online environment, the traditional linear sales funnels are complicated by online activity, comments, influencers and engagement.

“Retail has successfully used technology to simplify the transaction – now it needs to use technology to collaborate and create what people actually want,” Barnes said.

What do people want? They want a brand story and an experience. “All our malls are the same; we have the exact same anchors too,” said Barnes. “Our retail sector should be changing the narrative of people saying, ‘I have to go to the mall’ to ‘I want to go to the mall’.”

Ignore the impact of online at your own peril

D

ion Chang, trend analyst and founder of Flux Trends, a company that looks specifically at consumer trends and behaviour, said that retailers who ignored the impact of online on their business did so at their own peril.

“Online purchasing should not be viewed as two or three percent of the country’s population; it should be seen as two or three percent of the taxpayer base of 12% to 15%,” he said, noting that many people were researching online before purchasing from a physical store.

“We have conducted research using shoppers’ heat signatures, which shows that consumers will park at the closest entrance to the store they want to buy from, then go to at least one other store before leaving the mall. The so-called racetrack is simply not being used.”

Globally, consumers are demanding more from their retail experience. The world is not simply physical or online any more: it is omni-channel. The challenge for retailers is that different generations want different things. While Gen Z is the next generation of shoppers and employees, this demographic pushes brand loyalty, transparency and value.

Looking internationally at developed markets provides South Africa’s retail sector with a glimpse into the realities that await it.

“In the US, landlords have changed their tenant mix from predominantly apparel to more food and beverage, and entertainment,” said Tiffany Jones, senior analyst at Catalyst Fund Managers. “Gone is the world where you either compete online or in the physical world. The lines between online shopping and the physical experience are blurred.”

Shopping centres need to become customer-centric, according to Itumeleng Mothibeli, Managing Director at Vukile Property Fund Limited. “The technology is there to count feet and use heat maps, but we need to better understand our shoppers,” he said. “It’s not simply about demographics; it’s about behaviour, and about finding or creating solutions to that behaviour.”

Barrie Swart, Head of Operations at Gumtree SA, a classifieds ad platform, said that many sellers were looking to use classifieds to drive feet to their stores so they could drive further upsell.

“Our selling clients have made adaptations to their physical space,” he said, noting that they were seeing a greater need to have more smaller stores, as opposed to one big store in a single mall. “Many brick-and-mortar stores are moving online, and they see the necessity for this hybrid model.”

Dion Chang

FROM LEFT Andrew Barnes, Barrie Swart, Itumeleng Mothibeli, Tiffany Jones and Dion Chang

SOUTH AFRICAN PROPERTY REVIEW

45 43

Sizwe Mpofu-Walsh

An era of political ambiguity: What we can do to create direction certainty

S

outh Africa is maturing into a robust and contested political country, but it’s also more of the same, according to Sizwe Mpofu-Walsh, an author, musician and activist who likens the political landscape to “a new house with an old scent”.

“We are entering an era of uncertainty, ambivalence and ambiguity,” he said, noting that while the ANC continues to wield power, it has never had less control than it does now. “President Ramaphosa has neither been a new dawn nor a catastrophe. My feeling is his presidency will be a lot of two steps to the left and two steps to the right.”

The DA is also going through a period of ambiguity, as the soul and direction of the DA is contested. “The EFF has a similar battle, but different,” said Mpofu-Walsh.

“It performed well in the recent elections but it now has double the caucus, and we should expect increased contestation in leadership positions.”

Ambiguity comes at a time when our economy has little to no wiggle room, offering a possible solution to increasing economic wiggle room. “Government’s property portfolio might be a way out of the crisis or, at the very least, a solution,” he said. “Does anyone actually know what the consolidated portfolio amounts to? If we can get clarity on this and sweat it as an asset, we could generate four percent of GDP in government’s property portfolio.”

Ebrahim Fakir, Director of Programmes at the Auwal Socio-Economic Research

46 44

SOUTH AFRICAN PROPERTY REVIEW

Institute, said that calling the current state “political ambiguity” was too kind.

“It’s actually fundamental contradiction,” he said. “In government, there are polar opposites in beliefs. And factions are not based on ideas – they are based on primary mercurial interests.”

Fakir said that, as a society, we have become complicit. How can we expect active citizenship when 17-million people depend of social grants? He said that economic polarity was also a problem that needed to be addressed.

Political analyst, author and journalist Max du Preez asked why we as a society were so pessimistic, despite many things going right. “I think all of us, including the Ramaphosa grouping, underestimated the damage of the Zuma era,” he said, focusing specifically on the last five years.

“About R1,6-trillion of damage was done.

Our social culture has been damaged because at least six portfolio committee chairs belong in jail, not in Parliament.”

Du Preez also said that in terms of the land debate, property owners should embrace the process as something that has to happen. “This is the original sin and this is one step in solving it,” he said.

We should learn to map the patterns of uncertainty, said Ralph Mathekga, founding partner of Clear Content.

“There is no such thing as policy certainty in the White House, or in the case of Brexit,” he said. “It’s par for the course in modern politics.”

Political and economic analyst Ongama Mtimka said that, as South Africans, we must take comfort in the resilience of our institutions amid a chaotic, crisis-ridden political and economic system. “In an economy where vacancy rates are high, we can either allow them to collapse or ensure that those at the helm ask what we can do differently,” he said. “We have these assets, but what can we do? Perhaps we should put informal traders in to curb vacancies – and see what happens.

“We did a study for the Coega EDZ and found that where locally grown businesses are expanding, they tend to have a greater multiplier effect in the economy because they grow with the supply chain.”

The people leading the conversation about an alternative economic system do not have the political bona fides to be trusted with that conversation because they are the looters – the ones who have incapacitated the economy, said Karima Brown, a political analyst and TV presenter.

She asked whether after 25 years of democracy our business models were correct and how we measure GDP. “These conversations cannot be held by Ace Magashule or Julius Malema.”

There is no sense in saying uncertainty is global and something we have to live with, said Fakir. “Everywhere else where there is uncertainty, there are sufficiently robust institutions,” he said. “Europe has major crises, but it has resilient institutions and a much less predatory capitalism and business elite.

“Our problem is we can’t speak of a resilient political economy when we have a political economy that has been built fundamentally on agriculture and mining. We have greater diversification, but not enough to grow our economy.”

Mpofu-Walsh said that, as a society, we should stop handing President Ramaphosa a blank cheque and using the tough job he has to explain his lack of action.

“Our politics only works when society holds politicians accountable for what they do,” he said. “The longer we stand back and give Ramaphosa a window of opportunity, the longer we fail to play our social role – our key democratic role – by actually holding politicians to account and making them feel they are under pressure so they have less wiggle room to compromise.

“I think that, so far, we have failed in that responsibility.”

It’s okay for people to hope that Ramaphosa has something to offer, because he does have something to offer, according to Mtimka. “The ANC’s manifesto shows an organisation that has grown over time. It affirms the need for a private sector that plays a role and a state that plays a role. Here we have a national consensus.

“Beneath this, we do have a crisis of who has a stake and who does not, and how to open up.

“In times of crisis, one of the things to keep in mind is that in a country with so much unemployment, people are still living. They are doing something right.

“In development we have something known as asset-based community development, where communities have built assets over time. We can come in as professionals and leverage what works in this country. We need to work together to ‘massify’ them.”

Barnaby Fletcher

South Africa is a great investment destination, but fails to tell this story

S

outh Africa’s free press may be one of its greatest achievements, but it also means that global perceptions are influenced by the stories we tell.

A strong and free press is integral to a fairer society, but when we focus almost exclusively on the plagues of corruption, crime and political instability, foreign investors need more education and convincing that their money is safe here.

This is the view of Barnaby Fletcher, senior analyst for Southern Africa at Control Risks, a company that has operated in every one of Africa’s states, assessing the risks and rewards for potential foreign investors.

“South Africa needs to get better at telling its own story,” he said on Day 3 of the SAPOA Convention.

“Compared to the rest of the continent, it is the most advanced economy,

FROM LEFT Ongama Mtimka, Ralph Mathekga, Iman Rappetti, Sizwe Mpofu-Walsh, Max du Preez, Karima Brown and Ebrahim Fakir

with the strongest infrastructure and concentration of expertise. This is the story South Africa should be telling the world.”

South Africa’s property market is also two decades ahead of many other African states, according to Preston Mendenhall, Executive Vice President of Rendeavour.

“Our view is that South Africa is overpriced for our model of Waterfallstyle developments in the economies we are focusing on,” he said, emphasising that while South Africa has massive talent and experience in property development, the country’s growth is still slower than that of the markets where Rendeavour operates. “We are an early-stage investor, and while the ease-of-doing-business barometer and economic transformation are improving year-on-year, we are experiencing a mismatch between the perception and reality of risk.

“In South Africa, we feel that political risk may have actually increased.”

David Cohen, Managing Director of Signatura Property Developments, is an American who lives and works in South Africa, and who has the view that South Africa is incredibly self-critical: when things are good, they’re great; but when they’re bad, they’re horrible.

“It’s not always just about the deal and the growth; it’s also about the risk of investment,” he said, noting that South Africa’s judiciary is incredibly strong. “Having said that, we develop residential and mixed-use property in Cape Town – the same as what’s being done in the US and Europe – and we’re seeing even higher returns!”

Evan Robins, portfolio manager at Old Mutual Investments, admits that while the local environment in South Africa is tough and performance has slowed, growth remains.

“In South Africa, you can still get rental growth; internationally it’s becoming much more difficult,” he said. “In South Africa you will also get pretty good capital growth.

“Property is a long-term investment so investors should look at it from that point of view.”

Fletcher said there are three factors that would help South Africa in how it positions itself to international markets.

The first point is that South Africa cannot be seen and sold as a hub into Africa. Perhaps into sub-Saharan Africa, but certainly not the whole of it. The continent is too complex and too big.

The second point is that the gradual withdrawals of trade barriers in subSaharan Africa – although slow – will help South Africa to open its economy to more partners and opportunities, thus making it more attractive.

The third is talk by the JSE’s CEO seeking to link with stock exchanges in other African countries to give international investors the ability to list locally but still have access to worldclass expertise on the JSE – thus reducing investors’ risk.

South Africa rates reasonably well on Control Risks’ risk-reward scale, said Fletcher – and there is an element of risk in every country.

“In 2018, foreign direct investment in Africa increased by about 11%, while globally this figure was down,” he said.

“While this is just one year, and is not SOUTH AFRICAN PROPERTY REVIEW

47 45

enough to show that Africa is bucking its trend of foreign investment leaving the continent, it does seem to show that foreign investors are getting more comfortable with Africa, and are becoming better informed in general.”

South Africa is an exciting investment destination, said Fletcher.

“The simple fact is that Africa is one of the most exciting regions in the world: trade barriers are opening (albeit slowly), populism in the political sphere is decreasing while it’s increasing in other developed states, and the risk profile of South Africa remains lower than other African markets, including global destinations.”

Benoît Le Roy

Ignored for too long: SA’s water crisis needs serious attention

S

outh Africa is considered a semi-arid country, with just 490mm of rainfall on average. This is compared to a global average of 800mm.

We are have an evaporation rate that is three times as high as our rainfall, which, according to Benoît le Roy of Water Shortage SA, means we should not still be storing our water on the surface.

In 1982, our country’s water picture changed. This was the turning point where we went from a “wetter than average” to “dryer than average” country.

48 46

SOUTH AFRICAN PROPERTY REVIEW

FROM LEFT Preston Mendenhall, David Cohen, Evan Robins and Barnaby Fletcher

Fast-forward to 2025, and we are staring a water deficit of 2 000-million cubic metres (on average) in the face.

“We have no coherent national policy in response to this,” said Le Roy, noting that we have until now simply relied on rainfall. “Demand-side management is trying to control a certain supply that used to be available, and that is simply no longer the case.

“Reusing and reducing is not bad, but you need water. And we have not done anything significantly since 1982.

Cape Town is the only city that produces its own potable water; all other cities in South Africa get their water from the water boards.”

Countrywide, across many towns, the water situation has been worsened by failed distribution networks and augmentation, water losses through leaks, theft and poor management, plant shut-downs in response to community unrest and unhappiness, undermanagement of groundwater polluted by mining activities and the breakdown of sewage-management networks.

“This is not a cause for the water situation, but rather a symptom of government and institutional collapse,” said Le Roy. “It will cost us R1-trillion to get water resilience. We spend R100million a year on water and sanitation, but the fiscus is not able to pay the R1trillion. We have been underfunding our water sector for the past 25 years.”

While the situation is serious, Le Roy does believe that there are solutions. But these solutions will have to come from business and private citizens, and that we should not wait for government to institute them.

“Property owners can do something about both demand-side and supplyside management,” he said, listing examples of where certain precincts in the Western Cape have recycled and reused their wastewater.

“In Pinelands at Old Mutual’s Mutual Park, wastewater is being converted to drinking water at a rate of 450m3 per day,” he said, “while Growthpoint’s Woodstock office and retail complex treats spring water to make it potable at 45m3 per day.”

On the demand side, property owners have solutions in the form of aerators in taps and showers, water automation in shopping malls, water pressure optimisation, converting to smallervolume toilet-flush systems, waterless hand sanitisers, air-cooled air-conditioning systems, water-wise gardens and heightened awareness through social engineering interventions.

“We need the water narrative out there,” he said. “We have not treated it as a national priority for 25 years! Property owners and companies need to bear in mind that all water-use licenses, barring those in the North West, are coming from someone else.”

Convention dinner

To see all the images from the SAPOA Annual Convention and Property Exhibition visit: https://bit.ly/2KhkoKf

The home of award-winning, responsible development

With more than 450 stores, 80 eateries, 10 hotels and 600 residential units, the V&A Waterfront has been transformed into a desirable retail, leisure, commercial, residential and entertainment destination that caters to the 24-million local and international visitors who choose Cape Town as their travel destination every year. Twenty-two thousand people work at the V&A Waterfront.

The creation of new districts and additional commercial space has created a new business dynamic that sees blue-chip companies coexist with trendy co-working hubs, budding tech industries and start-ups. The principles governing new developments are that they should sit comfortably alongside historically preserved buildings, while setting design and environmental benchmarks for energy and waste management, water usage and community wellbeing. A total of 12 Green Star-rated buildings make the V&A Waterfront one of the greenest precincts on the continent. It also proudly showcases its provision of access to and facilities for walking, cycling and use of waterways as alternatives for transport through its design.

Set in South Africa’s oldest working harbour and surrounded by iconic city landmarks, the V&A Waterfront is a bustling, ever-evolving, cosmopolitan neighbourhood that reconnects the City of Cape Town with the sea

The V&A Waterfront of today is a major contributor to the competitiveness of Cape Town as a leading tourist and business destination, a leading waterfront, and an extraordinary neighbourhood for people to work, shop, stay and play.

SOUTH AFRICAN PROPERTY REVIEW

49 47

Lifetime Achievement Award

FROM LEFT: SAPOA CEO Neil Gopal, Saul Gumede, Convention Dinner compare and past President Kevin Roman, Past President Dr. Sedise Moseneke and SAPOA President David Green The objective of the Lifetime Achievement Award is to honour and celebrate the exceptional contributions made by an individual who has changed the face of South Africa and the property sector.

The Award is given every three years, and this year’s went to Saul Gumede.

Many of our members will know Gumede through his long-established connection with SAPOA. He was the Vice-Chairman of the Gauteng Provincial Council from 1996 to 199 and, a National Council Member from 1997 to 1998, and he was elected as National Honorary Treasurer from 1998 to 1999 and as National Vice President in 1999, resigning his post in 2000.

However, Gumede is probably better known for being one of the founding members and the founding President of the South African Institute of Black Property Practitioners (SAIBPP), as well as being Group CEO of Dijalo Property Group.

Gumede became South Africa’s first Institute of Real Estate Management (IREM) Certified Property Manager in 1999, and has since been the driving force behind establishing an IREM Chapter in South Africa.

50 48

SOUTH AFRICAN PROPERTY REVIEW

Journalism Awards To keep abreast of the changing journalistic environment, SAPOA revamped this year’s judging criteria in the Journalism Awards for Excellence to be more contentdriven, as opposed to aesthetics- and platform-driven Chairman of the Journalism Awards Committee Brian Azizollahoff said journalists play a pivotal role in ensuring the public is kept well informed about the issues affecting the property sector.

“Your dedication and commitment to your craft has not gone unnoticed,” he said. “The SAPOA Journalism Awards for Excellence serve to encourage you to continue striving to achieve the highest standards.” At the helm of the Journalism Awards Committee for the past six years, Azizollahoff said that the calibre of these awards keeps growing from strength to strength.

Nomzamo Radebe, Chief Executive Officer of the JHI Group and

sponsor of the awards, said it was a pleasure for the organisation to be partnering with SAPOA in hosting this year’s awards.

“The importance of your role cannot be overstated, as we face ever more turbulent times,” she said. “It is thanks to quality journalism that our press continues to uphold the principles that make any democracy – and any society – function. In South Africa, this is more important than ever. This is why it is a great honour for us at SAPOA to play a role in supporting the media.

Never lose sight of the value of your work, and how it is contributing to our society. We applaud you.”

The accolades were awarded as follows: 1

2

3

4

1 Property News Journalist of the Year ● Winner: Joan Muller / Financial Mail ● 1st runner-up: Ray Mahlaka / Moneyweb ● Special mention: Alister Anderson 2 Property Feature Journalist of the Year ● Winner: Glenda Williams / Finweek ● 1st runner-up: Mary Anne Constable / +Impact ● Special mention: Joan Muller / Financial Mail 3 Property Publication of the Year ● Winner: +Impact ● 1st runner-up: Earthworks ● 2nd runner-up: Architect & Builder 4 Property News Website of the Year ● Winner: SA Property Insider ● 1st runner-up: Property Wheel ● 2nd runner-up: Property 360

Sponsored by:

SOUTH AFRICAN PROPERTY REVIEW

51 49

xxxx

52

SOUTH AFRICAN PROPERTY REVIEW

xxxx Excellence Awards

Discovering excellence

The annual Property Development Awards for Innovative Excellence acknowledge and recognise some of the most innovative developments that contribute towards the enhancement of our built environment. In acknowledgement of this contribution, SAPOA received 46 entries of projects that set the bar of excellence high and showcased superior technical expertise

T

he SAPOA Awards Committee constantly interrogates the categories and improves the judging criteria to ensure all building types are acknowledged.

This year, the entry categories included Corporate Office Development, Commercial Office, Industrial Development, International Development, Mixed-use Development, Residential Development, Large Retail Mall,

Small Boutique Retail, Rural & Small-town Development and Other Development.

Last year we introduced categories for Refurbishments, and the Innovative and Interiors Awards. The Overall Awards include the Transformation Award, the Heritage Award, the Green Award and Overall Winner.

The awards presentation and ceremony was a highlight of this year’s Convention

thanks to the tireless efforts of the SAPOA team. The SAPOA Awards Committee extends its gratitude to the judges who contributed time to assessing each entry, travelling far and wide to experience and inspect the shortlisted properties, and to the sponsors, suppliers, entrants and all stakeholders for their role in the success of the awards.

SOUTH AFRICAN PROPERTY REVIEW

53

xxxx Excellence Awards

L WINNER OVERAL

Overall Winner and Corporate Office Developments 1 Discovery Place (Joint Venture)

D

iscovery Place represents a paradigm shift in South African commercial property development.

Although it was initiated on the trusted RFP method, with developers invited to submit proposals on a very detailed tenant brief, the final result is one that transcends the typical compromises of the development process.

The sheer scale of the space meant it would be an extraordinary undertaking.

What separates it from other recent megadevelopments is the buy-in on both sides around a single driving directive – that this building would be the physical manifestation of Discovery’s core purpose, “To make people healthier, and to enhance and protect their lives.” This principle permeated through all decisions around the design, finance and execution, and the

54

SOUTH AFRICAN PROPERTY REVIEW

commitment to realising it is embedded in the final product.

The Discovery head office, developed in joint venture by Growthpoint Properties and Zenprop Property Holdings in Sandton, houses almost 7 500 people over 112 000m2 of GLA in an eight-storey structure above a nine-storey parking basement (which accommodates 5 667 cars). Each floor plate is approximately 12 000m2 in size.

Vertical circulation is handled in the central concourse spaces that stitch the adjacent wings together, while circulation in the office towers is managed with 15 destination-controlled elevators, an eight-storey stack of escalators and two eight-storey communication stairs, each deliberately placed to encourage various movement options. Basement vertical movement is handled by 14 shuttle lifts that deposit staff and visitors onto the ground floor. Security lines are monitored at ground and first-floor level, with restricted staff-only access to the second floor and above.

DE ICE OFF

VELOPMENTS CORP ORA TE

Developers Zenprop Property Holdings and Growthpoint Properties (JV) Owner Zenprop Property Holdings and Growthpoint Properties (JV) Architects Boogertman + Partners Architects Interior designers Paragon Interface Civil engineers PURE Consulting Electrical engineers Claassen Auret and Conscius Electrical Consulting Engineers (JV) Fire consultants TWCE Green consultants Aurecon Mechanical engineers Aurecon Principal contractor/s Tiber and WBHO (JV) Project managers Morta Project Managers Quantity surveyors RLB Pentad Quantity Surveyors Structural engineers Sotiralis Consulting Engineers

xxxx Excellence Awards

OVERALL GREEN

Overall Green 78 Corlett Drive

B

y setting ambitious targets for more sustainable construction practices – and backed by Legaro Properties, a client who believes in fundamentally changing the way buildings in South Africa are created – 78 Corlett Drive demonstrates sector leadership in considering context, environment and occupant wellbeing, and redefines the way people work and experience their built environment.

78 Corlett Drive is an innovative office development located on a brownfields site in the heart of Melrose North in Johannesburg. The project is leading the local green building sector into a new phase of evolution by achieving a Net Zero Carbon Level 1 Certification as well as a World Leadership 6-star Green Star Office v1.1 Design Certification.

The architectural principles of the design are embedded in the philosophy that high-performance architecture and cost-effective solutions should go hand in hand. This benefits the users of the space as well as the stakeholders, because an energy-efficient solution future-proofs a design by maintaining consistently low running costs and taking the various energy-based taxes into consideration.

The building’s design incorporates strong minimalist geometry, with a simplified rectilinear floor plate that’s elevated on columns to provide sheltered tenant parking. The building interfaces with the ground plane through a glass-fronted lobby, which houses the reception and main circulation core. Elevated above is an array of fixed modular shading louvres, which act as a dynamic façade treatment and a very efficient passive shading system.

Developer Legaro Properties Owner Legaro Properties Architects Daffonchio & Associates Electrical engineers RWP Taemane Consulting Engineers Fire consultants IFESA Green consultants Solid Green Mechanical engineers Graeme Page Consulting Engineers Other consultants Imbewu Design, Raven Town Planners Principal contractor/s Legaro Properties Project managers Daffonchio & Associates Quantity surveyors Legaro Properties Structural engineers Kantey & Templer Consulting Engineers

SOUTH AFRICAN PROPERTY REVIEW

55

xxxx Excellence Awards LL HERITAGE OVERA

Overall Heritage Battery Park

B

attery Park is a 12 000m urban park situated at a key entranceway to one of Africa’s most visited tourist destinations – the V&A Waterfront.

Developed as the nucleus of a larger urban vision for the district, the site includes a park and a piazza that conceal a 1 206-bay parking facility, as well as new pedestrian routes to invigorate the precinct with activity. The site is of archaeological importance as it contains the remnants of one of the city’s oldest structures – the Amsterdam Battery. This provided a unique opportunity to pay homage to the historic landmark while incorporating a parking facility and providing spaces for leisure and recreational activities.

56

2

SOUTH AFRICAN PROPERTY REVIEW

The aim was to create a publicly accessible park that lies at the nexus of many new pedestrian routes that stitch the new district into the surrounding urban fabric. During construction, archaeological excavations revealed former datums, which were used to inform the design.

Various architectural and landscaped elements reflect the battery’s original footprint, giving visitors an authentic sense of its former size. An axial visual connection to Cape Town’s Noon Gun on Signal Hill has also been retained, preserving the site’s historic sightline.

The intention was to facilitate a new hub of activity in the V&A district while being respectful to the heritage of the Amsterdam Battery – once a place of exclusion and incarceration, and now a public space designed to support and engage the Cape Town community.

Developer V&A Waterfront Owner V&A Waterfront Architects DHK Electrical engineers Element Consulting Engineers Fire consultants Solution Station Mechanical engineers Element Consulting Engineers Other consultants Planning Partners, Mackenzie Hoy Consulting Acoustic Engineers, Solution Station, Nicolas Baumann, ACO Associates, Solutions for Elevating (S4E), Joubert & Brink Surveys, GIBB, Urban EQ Consulting Engineers Principal contractor/s Group Five Project managers Igual Quantity surveyors BTKM Structural engineers LH Consulting Engineers

xxxx Excellence Awards Overall Transformation CTICC

RALL OVE

TRANSFORMAT ION

C

TICC 2 is a 32 000m² expansion of the existing Cape Town International Convention Centre (CTICC 1). The facility provides 15 000m² of multipurpose event-hosting space across six exhibition halls and various meeting suites that are accessible from a large concourse area. The concourse, in effect an “urban room” measuring 90 metres by 45 metres and approximately 23 metres high, is intentionally transparent and as accessible as possible. The transparency of the concourse is in juxtaposition to the structure containing the 10 000m² of exhibition halls on two levels.

The development can function as an independent facility or combine with CTICC 1 for large international events.

The building is linked to CTICC 1 by means of a lightweight steel-frame, fully glazed bridge, which spans over Lower Heerengracht Street. A below-ground service tunnel links the CTICC 1 and CTICC 2 basements.

The event spaces are designed for maximum flexibility and robustness, and the generous circulation concourse

Developer Convenco Owner Convenco Architects SVA International, Van der Merwe Miszewski Architects, Makeka Design Lab Electrical engineers WSP Group Africa Fire consultants WSP Group Africa Green consultants Arup Mechanical engineers WSP Group Africa Other consultants WSP Group Africa, Sutherland Engineers Principal contractor/s Aveng Grinaker-LTA Project managers Target Projects Quantity surveyors Mbatha Walters & Simpson Structural engineers Sutherland Engineers

supports the CTICC’s core purpose of “connecting people”. The facility is regarded as an important contributor

to GDP growth, tourism growth and job creation in the Western Cape. The building carries a 4-star Green Star rating.

Judging Panel

Zinon Marinakos

Andries Schoeman

Anthony Orelowitz

Christian Roberg

John Truter

Ken Reynolds

Craig Sutherland

Dean Narainsamy

Hashim Bham

Itumeleng Mothibeli

John Williamson

Lianie Minny

SOUTH AFRICAN PROPERTY REVIEW

57

xxxx Excellence Awards R DEVELOPMENT S OTHE

Developer Village Trust Owner Village Trust Architects DHK Electrical engineers Converge Consulting Fire consultants Ekcon Engineers & Project Managers Green consultants Ecosense Mechanical engineers Ekcon Engineers & Project Managers Other consultants Freshwater Consulting Group (ecology), Planning Partners (town planning), Keith Kirsten Horticulture International (landscaping), Pamboukian Lightdesign, Subsonic Designs (acoustics), Tony Vroom (land survey), Reddeco, Space Lift Designs, Black Canvas Principal contractor/s WBHO Quantity surveyors NWS Quantity Surveyors Structural engineers Ekcon Engineers & Project Managers

Other Developments Norval Foundation

N

orval Foundation is a modern pavilion for art, set against a mountain and vineyard landscape on the slopes of the Constantiaberg. The architectural design is a pure expression of form: a bold rectangular mass delineating a heavy-

walled enclosure and light over-sailing roof. It is constrained by a linear site between a busy road and an existing wetland. The linear circulation spine is positioned along this edge, with the galleries and public spaces facing the natural landscape and capturing framed views of the wetland, vineyards and mountains. The building sits in an elevated

position and shields the wetland, creating a private space for the sculpture garden.

The selected materials palette is raw and honest, comprising primarily precast concrete, natural timber, granite and glass.

Externally, the concrete is finished with a chamfered tartan grid, which draws the eye upwards and lengthways, and emphasises the scale of the building.

Refurbishments 33 Baker Street

T

hirty-three Baker Street’s commercial office building was developed in the 1960s for Sasol Pension Fund. When the Sasol Group moved out of Rosebank, it was necessary to rejuvenate the dated asset to accommodate a large corporate tenant.

Although the existing building had a strong exposure on the corner of Oxford Road and Baker Street, its outdated architecture and diminutive scale compared to the new Standard Bank offices to the south, the Rosebank Mall precinct and other adjacent buildings demanded a new architectural expression. The brief required that existing retail tenants remain trading throughout, therefore a strategy of creative and lateral thinking around a refurbishment of this scale in a live environment, using existing structure and height limitations, was devised.

58

SOUTH AFRICAN PROPERTY REVIEW

T DEVELO PME ISHMEN URB NTS REF

Developer Sasol Pension Fund Owner Sasol Pension Fund Architects SVA International Interior design TC RPv Architects Civil engineers Sutherland Engineers Electrical engineers WSP Group Africa Fire consultants SFT Mechanical engineers Wingrove Consulting Principal contractor/s WBHO Project managers IN-TPM Project Managers Quantity surveyors Matla Quantity Surveyors Structural engineers Sutherland Engineers

xxxx Excellence Awards Commercial Office Development Sable Park Century City

LOPMENTS COMM DEVE ERC ICE IAL OFF

S

able Park is a modern commercial development, featuring 16 646m2 of green office space within Century City’s Bridgeways precinct. It consists of two office buildings of four storeys above ground, with two basement parking levels beneath.

With cinematic inspiration in design, angled boxes are stacked on top of each other, slightly offset against one another.

The vertical split of each building into two uneven blocks, twisting the cubes to maximise light and mountain views and create outdoor terraces, gives the buildings a 360-degree orientation.

Internally, the buildings have two wings, with a central core and full-height atrium bringing light into the centre of the expansive floor plates.

Awarded a 5-star Green Star Office Design v1.1 rating, Sable Park combines

various energy- and water-efficient methodologies into its design and life cycle. These include the façade and internal atrium that allows for natural daylight in most of the office spaces, reducing the use of electrical lighting and promoting productivity and a sense of wellbeing. Smart LED lighting with daylight and occupancy sensors, shading

structures and internal blinds assist with glare reduction and heat-gain control.

The performance of the buildings in terms of energy, water and waste management is measured through automated monitoring systems, and targets are set to improve them, in addition to treated and recycled water being used.

Developer Rabie Property Group Owner Rabie Property Group Architects DHK Civil engineers Aurecon Electrical engineers QDP Lighting & Electrical Design Fire consultants Solution Station Green consultants PJCarew Consulting Mechanical engineers BVI Other consultants Ekcon Engineers & Project Managers, DHALE, DHK Thinkspace, Eppen-Burger & Associates, Cogent Development Principal contractor/s WBHO Project managers Rabie Property Group Quantity surveyors RLB Pentad Quantity Surveyors Structural engineers Aurecon

L DEVELOP ATIONA MEN ERN TS INT

International Hilton Garden Inn

T

he Mbabane Hilton Garden Inn is an eight-storey hotel situated in the heart of the developing city. The primary spaces of the hotel are designed to create vertical separation and privacy between public and private/guest amenities. With its swooping and undulating feature façade, the tower portion is architecturally differentiated from the base of the building, and is solely dedicated to hotel guestrooms and hotel facilities.

Developer Public Service Pensions Fund Owner Public Service Pensions Fund Architects Paragon Architects Civil engineers ED Simelane & Associates Electrical engineers MA Dlamini Consulting Engineers Fire consultants MA Dlamini Consulting Engineers Mechanical engineers VMG Consultants Other consultants Source IBA, Sutherland Engineers Principal contractor/s ADR and Hilton (JV) Project managers APM Consulting, Crane Construction Consultants Quantity surveyors QuanTec Structural engineers ED Simelane & Associates

SOUTH AFRICAN PROPERTY REVIEW

59

xxxx Excellence Awards Innovative Witklipfontein Eco Lodge

IVE DEVELOPME OVAT NTS INN

B

uilt from soil, stones and mud, and with sustainability innovations such as thermal mass, rammed earth and sandbag walls, natural paint, green roofs and a natural pool, Witklipfontein Eco Lodge is completely off the grid. It’s designed to blend into its surroundings.

The architecture is a combination of traditional vernacular building techniques and modern minimalistic design.

Overlooking the plains, panoramic views blur the boundaries between the interior and the surrounding nature, allowing for a unique bush-living experience. With large daily thermal variances of up to 20°C, the Free State climate lends itself to the use of the principle of thermal mass temperature modulation instead of mechanical air conditioning. The thermal mass flattens temperatures throughout the year by using thick stone walls, earth

walls (rammed earth, adobe brick and sandbags) and the green roof.

Other innovations and unique features include a shutter system that regulates heat gain and loss, recycled granite offcut floors, a subterranean dome, a waste-water treatment plant, solar water heating and photovoltaic electrical production, homemade “Swedish” paint and scaffolding-plank

floors. The result is a unique home that breathes in tune with the surroundings.

Developer Xavier Huyberechts Architects GLH Architects Principal contractor/s Damien Huyberechts Quantity surveyor Xavier Huyberechts Structural engineers PURE Consulting (Craig Thompson)

Developer Zenprop Property Holdings INTERIORS

and Growthpoint Properties (JV) Architects Paragon Interface Electrical engineers Claassen Auret and Conscius Electrical Consulting Engineers (JV) Fire consultants TWCE Green Consultants Aurecon Mechanical engineers Aurecon Other consultants Boogertman + Partners Architects, RLB Pentad Quantity Surveyors, Sutherland, Morta Project Managers, SRL Principal contractor/s Tiber and WBHO (JV)

Interiors 1 Discovery Place Interiors

T

he decision to consolidate all of Discovery’s premises into 1 Discovery Place was based on the company’s commitment to keeping its people together and to creating open spaces that foster Discovery’s values.

The new working environment has been designed to provide optimal space 60

SOUTH AFRICAN PROPERTY REVIEW

for creativity, connection and growth, and to inspire innovation. Uniting all employees – who were previously housed in five separate buildings – under a single roof, the premises was built to cater for future growth. It is also a more cost-effective option for the Group.

The central atrium allowed Paragon Interface to explore the concept of a concourse, driven by Discovery’s

Project managers Baseline Project Management Quantity surveyors MLC Structural engineers Sotiralis Consulting Engineers

requirement for the building to be “active”. This was not only translated effectively into a dynamic design aesthetic, but also into an active public street, populated with seating areas, cafés, streetlights and tree canopies.

xxxx Excellence Awards

Judging Panel IAL DEVELOPME USTR NTS IND

Pieter Engelbrecht

Nonku Ntshona

Rudolf Nieman

Industrial Developments Cummins Southern Africa Regional Office

L

ocated between Johannesburg and Pretoria, Waterfall is one of the largest urban developments, housing a concept that connects and integrates lifestyle and business. Featuring high-quality purpose-designed buildings with a focus on mixed-use precincts, this area is already home to notable corporate beacons such as PwC, Deloitte, Dimension Data, Amrod and the BMW Group SA. In the heart of the Waterfall Logistics Precinct, the new Cummins Southern Africa regional office building rises from its prominent site alongside the N1 highway off Allandale Road. The aim for this mixed-use site was to deliver a unique and iconic modern design that not only functions with integrity, flexibility and efficiency within the warehouse and office structures that surround it in the precinct, but that also delivers a visually arresting and fascinating experience for vehicles on the N1 as an iconic structure from all elevations.

While every aspect of the facility was guided by the Cummins international design standards with local adaptations, Empowered Spaces Architects has moulded these ideas into a marvel of design, making use of different colours and materials to accentuate the profile of the office and the warehouse.

Sam Silwamba

Developers Attacq Waterfall Investment Company, Truzen 129 Trust Owners Attacq Waterfall Investment Company, Truzen 129 Trust Architects Empowered Spaces Architects

Sandi Mbutuma

Interior designers Plae Interiors Civil engineers DG Consulting Engineers Electrical engineers Quad Africa Consulting Fire consultants WSP Group Africa Mechanical engineers WSP Group Africa Other consultants Daniel Rebel

Stuart Gibbs

Landscape Architects Principal contractor/s Group Five Project managers Capex Projects Quantity surveyors Schoombie Hartmann Structural engineers DG Consulting Engineers

Wessel van Dyk

SOUTH AFRICAN PROPERTY REVIEW

61

xxxx Excellence Awards Residential Developments Embassy Towers

TIAL DEVELOPME NTS IDEN RES

T

his 12-storey residential building occupies the high point of Sandhurst overlooking Sandton. It consists of 90 apartments made up mainly of two- and three-bedroom units over 10 typical floors, with larger simplex and penthouse units on floors 11 and 12. The ground floor is a multi-tenanted public floor.

The building is a timeless blend of elegant proportions and fresh, modern glass expanses, creating a city icon.

Generous windows allow ample light into the building, while extensive use of marble introduces elements of grandeur and permanence. Five independent lifts and large 8,6m column grids have allowed for spacious, open apartments that enjoy both north and south views.

Apartment interiors are sleek and minimal, allowing the views and light to bathe the spaces.

Developers New City Group, Concor Owners New City Group, Concor Architects GLH Architects Civil engineers MVW Consulting Engineers Electrical engineers OneZero Consulting Fire consultants TWCE Mechanical engineers Adaptive Resource Engineers Other consultants Cairnmead Industrial Consultants, Interdesign Landscape Architects, Linspace, Solutions for Elevating (S4E), Sutherland, Harald Wattrus Landscape architects Insite Landscape Architects Principal contractor/s Concor Project managers SIP Project Managers Quantity surveyors CDL Structural engineers MVW Consulting Engineers

Retail Refurbishment Developments – Large regional mall Eastgate Redevelopment

SHMENT DEVE URBI LO REF E RETAIL MALL PMEN AIL LARG TS RET

T

he design approach for this makeover was to create a contemporary aesthetic with new physical spaces.

A major focus was to create a centre court, which involved moving the existing cinema complex to the roof. This allowed the existing food court and external piazza to be connected to the entertainment components, consisting of a new, state-of-the-art cinema and IMAX complex with destination retail below. Entrances were also upgraded with double-volume glazed exteriors to allow in more natural light and foster an open, transparent visual connection to the surrounding landscape.

62

SOUTH AFRICAN PROPERTY REVIEW

Developer Liberty Two Degrees Owner Liberty Two Degrees Architects Batley Partners Civil engineers Aurecon Electrical engineers MNS Consulting Engineers Fire consultants Building Code Consultants Mechanical engineers Spoormaker & Partners Other consultants TERM Project Management Principal contractor/s Stefanutti Stocks Building Project managers Focus Quantity surveyors NWS Quantity Surveyors, Azzaro Quantity Surveyors Structural engineers Aurecon

Old pre-cast façades were upgraded and solid façades were reconfigured.

Additional floors of parking were also

added to compensate for the additional 15 000m2 of retail space, which involved modern and interactive signage features.

xxxx Excellence Awards

SHMENT DEVE URBI L REF SMALL BOUTIQUE OPME NT AIL S RET

Retail Refurbishment Developments – Small boutique Flamingo Shopping Centre

F

Developer Nevada Group Owner Nevada Group Architects Paragon Architects Civil engineers De Mesquita Twilley & Associates Fire consultants Fenco Fire Engineers and Consultants Other consultants Cottontree, BMS System Consultancy, GE Town Planning Consultancy Principal contractor/s Nevada Group Structural engineers MMA Posten Engineers

lamingo Shopping Centre is situated in a residential area of Modderfontein.

Adjacent to a woodland, the site overlooks a lake and a wetland. The shopping centre itself forms part of a larger neighbourhood development, which encompasses an outdoor park with new restaurants and recreational facilities. Phase 1 opened at the end of August 2018.

Circulation of people and the location of different types of shops is a critical factor in strip-mall design, for both shoppers and tenants. Foot traffic between the anchor tenants, the restaurants and the circulation cores provides retail opportunities for smaller shops, so a strip-mall design has to strike a careful balance between the need for different-sized shops and easy access for shoppers.

Rural and Small-town Developments Thavhani Mall

T

havhani Mall is a two-level 50 000m² GLA regional shopping centre. It is located in the centre of Thohoyandou in northern Limpopo, and has been carefully planned since its inception to offer substantial and meaningful benefits for the local economy.

Situated on a prominent site at the junction of the R524 (road to Makhado) and the new Giyani road (linking Giyani to Sibasa), it is also close to the town centre, which makes it easily accessible to pedestrians. There is a large taxi rank nearby, and a longterm bus terminal is being built next to the taxi rank.

The shopping centre was designed for owners Flanagan & Gerard, Thavhani Property Investments and Vukile Property Fund. It is anchored by four major tenants – Superspar, Pick n Pay, Woolworths and Edgars – and

MALL-TOWN DEVELO ND S PME AL A NTS RUR

Developers Flanagan & Gerard, Thavhani Property Investments, Vukile Property Fund Owners Flanagan & Gerard, Thavhani Property Investments, Vukile Property Fund Architects MDS Architecture Civil engineers L&S Consulting Electrical engineers RWP Taemane Consulting Engineers Fire consultants SFT Mechanical engineers QMech Consulting Engineers Other consultants Chris Kyle & Associates, GauFlora Principal contractor/s WBHO Project managers Orion Quantity surveyors NWS Quantity Surveyors Structural engineers L&S Consulting

supplemented by tenants, including

other national Truworths and

Foschini, as well as several upmarket niche fashion brands.

SOUTH AFRICAN PROPERTY REVIEW

63

building excellence

Sable Park:

the gateway to Century City Rabie Property Group set out to create an iconic front face for their blossoming mixed-use precinct. This new neighbourhood comprises a mix of lifestyle and commercial functions, creating a 24-hour atmosphere and a solid context for new office and residential complexes

T

he building’s composition was inspired by shuffling forms that operate independently and adapt to their immediate surroundings. Originally dubbed the “macro-chip shuffle”, the building was intentionally designed to appear as a single, large complex and simultaneously as four small, independent volumes in symphony – depending on where it’s viewed from. The four volumes are further broken down into thirds: a double-height layered mass and a single-height crystalline cube. Each of these thirds shifts and jumps on the horizontal and vertical planes to achieve maximum views and optimal orientation.

On an abstract level, the spaces are duplicated, and the volumes are inverted.

This simple application was the method for the complexity of the resultant macro-articulation, which forms a setting for a series of tableaux with a mountain backdrop. In effect, this complex was set out in scenes that take inspiration from aspects of cinematography and film.

64

SOUTH AFRICAN PROPERTY REVIEW

Design Sable Park is a pair of twin blocks orientated inwards to Bridgeways Road, where both entrances are located. Each of the buildings is split into two wings separated by a large quadruple volume.

These two spaces are connected by a series of bridges spanning across the atrium at the edge of the main core. The core was conceived as a parody of a “service block”, and was satirically designed as a large solid concrete cube shoved between the two glass wings. It is a standalone element that is exposed on both sides of the building. From the rear, this concrete cube protrudes and is visible from more than a kilometre away.

In the front, at the foyer, it is clad in oaktimber panels, with the lift doors visible from the street and neighbouring blocks.

It forms the proverbial heart of the building, circulating people from left to right, up and down, and into different chambers in the building.

To the right of the atrium, the concrete cube is completely separated from the office wing, leaving a large open slot that cuts through the building, connecting the front to the back and creating a significant visual vista of Table Mountain in the distance. This space, along with a first-floor lounge, is just one of the many pause points designed to facilitate human interaction in the building.

building excellence There is a series of terraces on all four sides of both blocks, designed as winter and summer gardens. These five gardens were carefully positioned to integrate with the overall form while being independent spaces relating to specific parts of the precinct, thus creating optimal outdoor lounges for all seasons.

The building mass expresses different characteristics from different vantage points. Viewed from Sable Road to the south, the blocks take on a sober, linear articulation, maximising the views of Table Mountain and creating a robust edge to the road. From within the precinct on the north end, the masses all shift and turn, moving towards and away from the site boundary to create a more permeable edge, and resulting in a series of habitable forecourts that encourage pedestrian activity.

Structural approach A large part of the building’s concept was manifested in its structure. Creating distinct floating boxes that veer off and cantilever beyond one another was one of the biggest challenges. The engineers and designers worked closely together from the early concept phase in order to put the pieces in place to achieve this.

The most challenging aspect of the project was the buildability of a “shadow gap” between the boxes to make it seem as though they are hovering above one another. To achieve this, a complex double slab component was introduced.

The gap is achieved by a perimeter concrete downstand beam projecting into the ceiling void below, and extending outwards to form a protruding flange (or architectural slab) to echo the plan of the floor slab below.

The “shadow gap” occurs at every instance where the two distinct boxes come into contact, which is just below the second floor (when

the layered double-height mass is on top), or just below the third floor (when the glass cube is on top).

Façade In accordance with the shifting floor plates, two systems of glazed façade have been installed over the three levels of offices. A deliberate yet playful interchange of these systems further contributes to the aesthetic complexity of the building.

The façade activity is borne out of both the north and south blocks being inverted to create a set of four similar yet unique blocks. The atrium is contained by full-height double-glazed curtain walls on both the entrance and the rear face of each block. These vertically link the alternated façade typologies of the office floor plates. The result is that one wing of each building is clad with a single level of curtain wall, positioned below two levels of deepcilled shopfront, which in turn is located behind the aluminium brise-soleil.

The curtain wall is divided into a two-metre-wide module, while the shopfront is a smaller 1,2-metre module.

The brise-soleil is specifically modulated to match the shopfront, with

SOUTH AFRICAN PROPERTY REVIEW

65

building excellence

200-millimetre-wide extrusions offering 16% to 20% cover to the area of glazing.

It is face-fixed onto the protruding slab edges of the shopfront façades and spans over the double level of the shopfront zones.

Both the flush-glazed curtain wall façade and the shopfront façade incorporate spandrel panels, up to desktop height (750mm), below the vision sectors of the respective panels. These are single-glazed and are insulated with mineral wool and nutec backing panels.

Solar-E high performance glazing is utilised in the curtain wall system.

The vision panels are double-glazed with clear solar coating and a frit pattern, which reduces from 90% at the curtain wall head to 0% at eye level on the outer panes. The inner panes are toughened to resist thermal stresses because of the proximity of internal blinds and potential cold air from the perimeter cooling system.

The vision panels in the shopfront are grey, body-tinted and double-glazed, 66

SOUTH AFRICAN PROPERTY REVIEW

which matches the spandrel below. The top of shopfronts also incorporates a compensating channel that allows for expansion and contraction of the aluminium as well as differential vertical deflection between floor slabs (the result of the large cantilevers). This distinction in glass type and colour, albeit risky, proved successful in creating distinct volumetric components in the finished product.

The ground floor of both office blocks is enclosed by full-height shopfronts.

As a scaling device, a perimeter “eyebrow” canopy wraps around the perimeter of the building at 2,8 metres above the ground. It was formed in steel and clad in aluminium to match the brisesoleil. The “eyebrow” is suspended from the underside of the first office level and extends around each block, terminating upwards over the entrances to form signage panels at the entrance of the building.

Sustainability Sable Park has achieved a 5-star Green

Star SA Design office certification, as administered by the Green Building Council South Africa, and is currently targeting an equal As-Built certification.

To create a lower environmental footprint without compromising comfort, various approaches have been adopted.

The double-glazed external building envelope was designed to allow increased levels of daylight to penetrate the floor plate, at the same time providing views towards Table Mountain.

All the shopfronts in the building are set back 700mm and protected by an outer brise-soleil to allow for passive solar control. Further to this, internal blinds on all windows contribute to glare reduction. The façade is therefore able to contribute to the enhancement of the occupants’ comfort and productivity.

The maximised duration of daylight, along with LED light fittings and daylight and occupancy sensors, reduces electrical consumption by lowering internal lighting requirements. Externally, lighting has been designed to avoid light pollution into the sky. An energy sub-metering system, which tracks building energy usage and promotes optimum performance has also been applied.

Water-efficient fittings have been installed, and treated recycled water is used for toilet flushing, as well as in the HVAC Slim Line Cooling Towers.

Smart water meters allow the user to understand – and therefore reduce – unnecessary municipal water consumption. Low volatile organic compound finishes have been used throughout, providing a comfortable and healthy indoor environment. Carbon dioxide monitoring and control sensors ensure that the building occupants always breathe clean air.

In the parking basements, fuelefficient parking bays have been allocated, giving tenants an opportunity to incorporate these in their own green transport strategies. This is further enhanced by the access to public transport and easily accessible local amenities.

The building also includes facilities designed for those who want to cycle to work.

building excellence HVAC: ventilation Air conditioning of Sable Park is provided via a central chilled water system, consisting of two chillers located on the lower parking level and two closedcircuit cooling towers located on the roof of the north building. The chilled water plant serves both the north and south towers by supplying chilled water to the fan coil units located on every floor, as well as to the outdoor airhandling units and the atrium airhandling units. The cooling towers are supplied with grey water from Century City’s treated effluent.

The lower basement parking level is mechanically ventilated, with the extraction system doubling up in case of fire. The basement extraction system is installed with variable speed drives and CO sensors to optimise energy usage. The upper basement parking level is naturally ventilated.

In order to meet the 5-star Green Star rating requirements, outside air is supplied at 150% of the National Building Regulations requirement. The air is pre-cooled to 22°C and supplied from air-handling units located at roof level to individual fan coil units.

The outdoor air-handling units are CO2 controlled. The ablution facilities located in the “concrete cube” are mechanically ventilated.

The north tower also uses a dedicated BMS, which controls and monitors all mechanical installations, such as the HVAC system, the server room, the greywater system and the lifts.

Landscape architecture The landscaping philosophy seeks to create an environment where the built form is enveloped by a green structure that reaches across the neighbourhood to create a unified urban garden. Tree species such as Vachelia xanthophloaea (fever tree) were used for their striking architectural form, while their “see-through” canopies provide a foil to the dynamic architectural creations beyond.

With much of the site occupied by a super-basement, the landscaping on podium level is housed in a series of

structured planters; these fragment the podium level, creating a green fringe to the building. The main entrances to the two buildings created north-facing, wind protected pockets where large specimen Celtis trees have been planted into larger structured planters to create inviting spaces.

The use of free-standing troughs planted with fast-growing hedge material along the north and western façades of the buildings provides an additional layer of heat and glare

amelioration to the ground-floor offices.

Planting along the southern boundary of the site (Sable Road) takes the form of a mixed thicket grouping of large shrubs and a variety of tree species arranged informally to provide a densely vegetated edge.

Samantha Kerr Communications and Marketing Manager c: +27 (0)79 904 8885 e: sam@dhk.co.za SOUTH AFRICAN PROPERTY REVIEW

67

howmuch.net

The cost of living around the world in 2019 The Economist Intelligence Unit recently released its 2019 Worldwide Cost of Living report, which compares 400 individual prices across 160 products and services in 133 cities around the world

By Raul Amos https://howmuch.net/articles/comparing-the-cost-of-living-around-the-world-2019

H

owMuch’s latest visualisation takes 20 of these cities, as provided in the free version of the report, and compares the cost of four different products or services (bread, beer, a suit and a haircut).

To more accurately compare global cities, all of the following amounts have been converted from US dollars to rand.

According to The Economist, this is the first time that three cities claim the title of the world’s most expensive city – Singapore, Hong Kong and Paris.

The cities with the highest cost of living tend to be located in Western Europe or East Asia, while the cities with

68

SOUTH AFRICAN PROPERTY REVIEW

the lowest cost of living are in South Asia, Central Asia and South America.

For the most part, the more expensive cities by cost of living had higher prices across all four products/services.

For example, among the cities in the visualisation, bread was the most expensive in Seoul (R252) and the least expensive in Damascus (R9,70). The exception to this general trend is beer, which is most expensive in Bangalore (R67). New York was the most expensive city when it came to buying a two-piece suit (R44 123) or getting a haircut at a ladies’ salon (R3 394).

Cities with the highest cost of living

1. Paris, France Hong Kong, China Singapore, Singapore 2. Zurich, Switzerland 3. Geneva, Switzerland Osaka, Japan

Cities with the lowest cost of living 1.

2.

3.

4.

5.

Caracas, Venezuela Damascus, Syria Tashkent, Uzbekistan Almaty, Kazakhstan Bangalore, India

PROPERTY SOUTH AFRICAN

REVIEW

The voice for the industry

Each SAPOA member is a leading player and decision-maker in the commercial property arena, they use the South African Property Review as a way to gain important peer exposure and recognition.

With a South African property market value in excess of R5,7-trillion, SAPOA members control about 90% of South Africa’s private sector

commercial land and buildings stock, and manage the majority of property funds listed on the JSE. Open to all commercial property professionals, advertising in the online South African Property Review is an ideal way to reach these important decision-makers.

137 739 ● Interactive reading and rich media

6552

● Downloadable connected digital data links and much more ● Reader engagement through

00:10:27

websites and e-mail hot links ● Interactive advertising ● Call to action opportunities ● The stories behind the stories ● One-on-One interviews ● On Show showcasing properties ● Linkedin and Facebook following

May 2018 / May 2019 Total page views Total sessions

Average time spent (minutes)

For advertising opportunities and rates contact t: +27 (0)21 856 1276 / e: pieter@mpdps.com For editorial enquiries contact e: mark@mpdps.com

According to Google an average time spent on a website blog is 4min.

South African Property Review’s average read time per month is 10min 27s, 2.5 times the average online retention rate.

networking

European real estate cycle, and the role of South African capital SAPOA held a well-attended seminar on real estate investment with a South African fund focus at the end of June. Sponsored by Quoin Online and hosted by UCT’s Urban Real Estate Research Unit, it was followed by an opportunity to network with fellow property professionals

By Mark Pettipher

F

rançois Viruly began the seminar by introducing Tom Mundy from JLL, a professional services and investment management company, and putting the seminar in perspective: “We have to understand that South Africa is competing against properties and investors at a global level. It’s not so much whether we are going to a country to invest – it’s more about the sector in which to invest.”

Mundy took us through a presentation that dealt with real estate in general terms, before focusing on the companies

that are currently investing overseas – and into which sector.

He explained that there is a great deal of disruption in the UK as a result of Brexit uncertainty and the change in leadership, and that there are quite a number of opportunities to “snap” up properties at discounted rates.

He also explained a change in trends: “Real estate investors are migrating from being real estate specialists towards becoming generalists,” he said. “Real estate investment is becoming an extension of investment banking.”

South African investors into Europe (top buyers and sellers) Rank

Buyer

Past 24 months (US$)

All time (US$)

1

NEPI Rockcastle

2 726 256 802

5 290 661 987

2

Redefine (REIT)

1 386 166 250

5 683 800 227

3

Vukile Property Fund

727 645 685

1 426 628 586

4

Hyprop (REIT)

561 759 763

1 312 924 985

5

Investec Property Fund (REIT)

481 982 227

1 184 876 793

6

MAS Real Estate Inc

462 737 202

865 584 186

7

Equites Property Fund

110 124 719

398 948 843

8

JT Ross

83 158 069

102 115 976

9

Blend Property Group

23 380 077

79 067 944

10

Tradehold Ltd

17 884 389

937 242 565

Rank

Seller

Past 24 months (US$)

All time (US$)

1

Ares Management

1 376 707 211

16 466 198 298

2

Rockcastle

1 316 266 491

1 437 544 808

3

AXA Group

1 157 563 857

36 955 329 887

4

RIDA Development

1 157 563 857

2 796 332 454

5

Unibail-Rodamco-Westfield

571 659 305

23 095 031 799

6

Evans Randall

526 571 444

6 599 937 486

7

Lone Star

372 376 475

41 497 385 430

8

CC Real

349 403 521

627 832 625

9

Lanebridge

336 204 599

677 691 256

10

Panattoni Development

228 602 393

10 455 612 619

© 2019 Jones Lang LaSalle IP, Inc. All rights reserved

66 70

SOUTH AFRICAN PROPERTY REVIEW

An interesting point to note is that South African investments outside of South Africa (mostly in Europe) amount to about US$4-billion per annum, which is equivalent to 15% to 25% of European volumes. These investments are mainly in Poland, the UK, Spain, Germany and Croatia. Fringe markets such as Serbia and Montenegro are also looking attractive.

Retail leads the way, followed by industrial, and the office sector is third on the list. However, there is a turn towards alternative investments such as healthcare, student accommodation and parking.

Mundy also pointed to a growing trend in shared flexible office space, quoting that it makes up seven percent of the European market space led by London, Amsterdam and Dublin. He also indicated the effects that technology was having on the retail sector, saying those retailers who are in the right location will continue to be successful – but that those outside major centres will continue to struggle. He spoke about the Americas as an example of where shopping centres are lying vacant.

The question is, why are South African’s investing in these markets? And the answer lies in the maths. Places such as Poland have a robust economy with strong GDP growth. The cost of finance in east-European countries is low, and rentals are offering between seven percent and 7,5% returns. Comparing this to South Africa’s negative growth and high cost of finance means that the larger players in the property sector can safeguard their income by investing outside of South Africa’s shores.

Watch the full seminar here: https://bit.ly/30MuyZU

networking

FROM LEFT Tom Mundy, Lara Schenk and Professor François Viruly A graduate of Oxford and University College London, Tom Mundy heads up JLL’s sub-Saharan Africa research and strategy group. He is a former Director in JLL’s EMEA Capital Markets team in London, and has served as the chief strategist at Russia’s largest private bank and as an equity strategist for Renaissance Capital’s top-ranked emerging market strategy team based in Moscow. Prior to that, he was instrumental in the development of a leading emerging market hedge fund, and involved in all areas of the fund’s development, including capital raising and structuring.

He has also given policy advice to the central bank and the government of Russia and Kazakhstan.

SOUTH AFRICAN PROPERTY REVIEW

71 67

off the wall

Simultaneous production of fresh water and electricity Energy shortage and clean water scarcity are two key challenges for global sustainable development. Nearly half of the total global water withdrawals are consumed by powergeneration plants, while water desalination consumes a lot of electricity First published in Nature Communications – www.nature.com/articles/s41467-019-10817-6 and Cosmos – cosmosmagazine.com/technology/electricity-and-water-can-be-a-good-combination

C

onventional wisdom dictates you should keep water and electricity far away from each other.

But now, Saudi Arabian researchers say they’ve created a two-in-one solarpowered device that purifies water while producing electricity from sunlight – tech that could help solve a pair of global crises.

Tier one According to the team’s study, which was published in the journal Nature Communications, the device consists of a standard solar panel positioned horizontally, with several tiers positioned below it.

When salty or contaminated water runs from a container through those tiers, the waste heat from the solar cell warms the uppermost tier of

water, causing it to evaporate through a membrane.

The now-clean water is then fed into a collection container, and the heat released during the evaporation process warms the next tier of water – and so on.

Waste not The researchers say that after water runs through their device, its levels of lead, copper, sodium, calcium and magnesium all fall below the World Health Organization’s safe-for-drinking maximums – meaning it could help the world meet its need for clean energy and clean drinking water.

“The uniqueness of the device lies in its smart and effective use of the waste heat of the [photovoltaic process] as a resource, which leads to its high

Schematic illustration of the integrated photovoltaic-membrane photovoltaics-membranedistillation distillation(PV-MD) (PV-MD)devices. devices.Operate Operateinin a dead-end a) dead-end mode mode (in(in thisthis mode, mode, thethe source source water water is wicked is wicked into into thethe evaporation evaporation layer layer in the in the direction direction of the of the red arrow andarrow red the condensed and the condensed water flows water out from flowsthe outcondensation from the condensation layer in thelayer direction in theof direction the green of arrow) the green andarrow); b cross-flow and b) cross-flow mode (in mode this (in mode, this the mode, source the source water flows watertoflows the evaporation to the evaporation layer inlayer the direction in the direction of the red of the arrow and the arrow red condensed and the water condensed flows outwater from flows the condensation out from the layer condensation in the direction layer inofthe thedirection green arrow) of the green arrow)

72 68

SOUTH AFRICAN PROPERTY REVIEW

efficiency in both electricity and fresh water production,” researcher Peng Wang of the King Abdullah University of Science and Technology said in an interview with Cosmos magazine. “In a sense, it utilises solar energy to a much fuller capacity.”

Wang and his colleagues developed a three-stage device that captures and recycles the heat generated by photovoltaic (PV) solar panels to produce clean water using multi-stage membrane distillation.

“The PV panel generates a lot of heat, and the heat is considered a headache in PV,” Wang explains.

Recycling this heat several times within the membrane distillation system leads to a high water conversion rate while not compromising the generation of electricity, the researchers say in Nature Communications.

Tests have shown that one square metre of solar panels can produce more than 1,64kg of fresh water per hour from sea water, contaminated groundwater or industrial waste. The researchers calculate that if the device were installed on the fourbillion square metres of land needed to generate global solar power capacity, expected to increase to 969 gigawatts by 2025, about four-billion cubic metres of fresh water could be produced each year – equivalent to 10% of the total global drinking water consumption in 2017.

This could help make clean water more affordable and more accessible to the more than two-billion people worldwide who struggle to access safe drinking water.

AUGUST 2019

SEPTEMBER 2019

­

OCTOBER 2019

3

INNOVATIVE AND APPROPRIATE SERVICES 4 1

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

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

related to the following: •

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

•

Extensive building contract expertise and quality contractor procurement systems

•

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

•

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

•

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

•

Expertise in almost all building development categories

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

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

www.delqs.com