Commercial Property - May 2021 Edition

ART

COMMERCIAL

MAY 2021

PROPERTY

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› Reimagining office and retail space design › opportunities for offshore investment › DIGITAL TRENDS IN CONSTRUCTION › MEDICAL REAL ESTATE INVESTMENTS

Capital Park, Steyn City

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EDI T ORI A L COMMEN T

SHIFTING PERSPECTIVES

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n this issue of Commercial Property, we take a look at the impact of technology on a changing landscape.

On page 9, our experts share that COVID-19 has placed greater emphasis on the “health” of a property. What this means is that there are now several software innovations to help manage your property portfolio more efficiently.

These innovations are not done in isolation.

We also chat to trends forecasters and building design specialists who tell us that the

Contents 6

FINANCE

Opportunities for investment; and why offshore investment still produces good returns

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PROPERTY MANAGEMENT

Technology and the impact of 4IR on managing property; and a new look at office design trends

13 ARCHITECTURE Reimagining the retail space

PUBLISHED BY

Picasso Headline, a proud division of Arena Holdings, Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za EDITORIAL Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Gareth Griffiths, Dale Hes, Anél Lewis, Nia Magoulianiti-McGregor, Puseletso Mompei, Thando Pato Copy Editor: Brenda Bryden Content Co-ordinator: Vanessa Payne Digital Editor: Stacey Visser vissers@ businessmediamags.co.za DESIGN Head of Design: Jayne Macé-Ferguson Senior Design: Mfundo Archie Ndzo Advert Designer: Bulelwa Sotashe Cover Image: Capital Park, Steyn City

reimagining of commercial spaces is now more imperative than ever. On page 11, John Jack, CEO of Galetti Corporate, says “the industry needs a perspective shift. We need to start looking at offices with the goal of experience rather than functionality.”

These shifts in thinking and managing portfolios within the commercial real estate sector are not necessarily groundbreaking or seismic shifts, but they are essential for the continued survival and growth of the sector.

Raina Julies

16 MEDICAL REITS Unpacking the fundamentals of investing in medical real estate developments

18 INDUSTRIAL DEVELOPMENT Profiling Lanseria Smart City

19 CONSTRUCTION Working to overcome the challenges of 2020

20 MIXED-USE DEVELOPMENT Understanding the upsurge of this development class

SALES Project Manager: Merryl Klein merrylk@picasso.co.za | +27 21 469 2446 PRODUCTION Production Editor: Shamiela Brenner Advertising Co-ordinator: Johan Labuschagne Subscriptions and Distribution: Fatima Dramat fatimad@picasso.co.za Printer: CTP Printers, Cape Town MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager, Magazines: Jocelyne Bayer

COPYRIGHT: Picasso Headline. No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Commercial Property is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials and promotions have been paid for and therefore do not carry any endorsement by the publisher.

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F IN A NCE Stanbic Heights in Ghana is part of Lango Real Estate’s Africa portfolio.

HOW TO SPOT THE RIGHT OPPORTUNITIES FOR INVESTING Given the instability of many economies worldwide, it takes considerable foresight to invest in a commercial property development or asset that has yet to establish a solid track record. PUSELETO MOMPEI reports

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s is so often seen in uncertain markets, a common investment response has been “a flight to quality, with more mature and less risky income-producing real estate assets in key locations in capital cities with top-tier international tenants better positioned to weather the increased uncertainty and disruption”, says Thomas Reilly, managing director of Lango Real Estate (formerly Growthpoint Investec African Properties).

Reilly notes that globally we see the property sector regrouping and reinforcing value from its existing real estate investments rather than being openly aggressive, and sub-Saharan Africa is no exception.

The current emphasis for most participants in the sub-Saharan African real estate market is to ensure operationally

optimised assets, and tenant interaction here has been key. “Landlords have had to be highly proactive in managing their tenant base,” explains Reilly, “staying close to what is happening on the ground and assisting tenants where possible and where it makes sense. These have always been important factors in the property sector, but the pandemic has undoubtedly intensified management’s focus,” he says.

Ensuring that the capital structure of an asset or a broader real estate portfolio is sound has been a key management focus,

with numerous debt financing transactions being restructured to manage risk accordingly.

Investors with capital to invest are arguably in a strong position right now. Reilly says that they are likely to favour proven, mature assets with a tried-and-tested track record, which supports the investment case through a proven ability to perform during the current uncertainty and beyond.

“In our view, exciting opportunities in the industrial and logistics real estate sector lie ahead.

Furthermore, the prime office sector has also shown itself to be particularly robust in key capital cities,” Reilly concludes.

ENSURING THAT THE CAPITAL STRUCTURE OF AN ASSET OR A BROADER REAL ESTATE PORTFOLIO IS SOUND HAS BEEN A KEY MANAGEMENT FOCUS, WITH NUMEROUS DEBT FINANCING TRANSACTIONS BEING RESTRUCTURED TO MANAGE RISK ACCORDINGLY.

OFFSHORE PROPERTY IS A GOOD INVESTMENT CLASS

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are being done purely for investment purposes, not for residency or citizenship.

Stock market volatility, low interest rates and poor dividend payouts all make the case for investing in property offshore in more stable economies, offering an attractive proposition for investors seeking stable long-term growth and better returns. Returns over 10 to 20 years in the property market can generally outperform many other investments. Funds can be used for an investor’s children’s education or as part of their retirement planning.

Earning a hard currency income is a key driver of international property investment for African investors, claims Bendall. “Having a

hard currency in British pounds or euros is very compelling. There is also the attraction of a tangible, stable asset class and the ability to leverage the property at low financing costs in terms of small, fixed-rate mortgages,” he says.

Much of the success in global property investments will depend on the market in which you invest and due diligence.

Purchasing, financing and managing an international property portfolio can be overwhelming, and there are many legal and tax implications, which is why investors should always seek the services of a professional advisory firm.

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ome people worry about property’s lack of liquidity. But, in times like these, it’s a strength because property is less volatile than most other investment options, says Bradd Bendall, group sales director at Carrick Wealth.

“Offshore property is outperforming other products on the market and producing very good returns,” he says. He adds that many of his clients are increasing their property holdings in strong, international investments and, in certain circumstances, are selling some of their local property portfolio to do so.

He explains that many of these transactions

Offshore property investments are producing good returns, writes PUSELETO MOMPEI

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PROPER T Y M A N AGEMEN T

TECHNOLOGY AND INNOVATION What software innovations exist for property management in a more resilient and responsive future commercial space? asks ANÉL LEWIS

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OVID-19 has forced property companies to rapidly embrace digital technologies. “Previously a slow adopter of technology, commercial real estate has evolved from thinking ‘location, location, location’ to ‘location, experience, analytics’,” says Talia White, Galetti Corporate Real Estate technology strategist.

The company has developed reBASE Core, a proprietary real estate analytics system (proptech), that uses real-time analytics to map out vacancies in commercial nodes and update ownership information in realtime.

David Seinker, founder and CEO of The Business Exchange, adds that software

COVID-19 has necessitated the uptake of new technology such as virtual reality within the commercial real estate space.

can also be used to manage foot traffic and track unused space. The pandemic has placed greater emphasis on the “health” of a property, and there are several software innovations that monitor the use of resources such as water and electricity, says Sheldon Friedericksen, chief financial officer of financial services provider Fedgroup. “These include wellness applications and checks, particularly in light of COVID-19, to active monitoring of the use of resources such as electricity and water. It is becoming crucial for property owners to measure in real-time the impact their building is having on sustainability measures, providing this

verified and supported data to their investors, regulators and listing platforms.”

White says that physical property viewings are no longer practical. Proptech is encouraging virtual viewings, with drone footage allowing for a virtual feel of a building or area. Virtual lease agreements and the digitalisation of documents makes it easier for property deals to be concluded quickly and efficiently. “Findings suggest that property companies that wish to implement online property management must follow a comprehensive digitalisation strategy that is designed and planned efficiently and innovatively with the end-users’ and company’s goals in mind,” explains White.

4IR AND ITS IMPACT ON MANAGING PROPERTY Education and training within the commercial real estate sector is undergoing significant changes, reports ANÉL LEWIS

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hile the fundamentals of property management have not changed, the transition to the fourth industrial revolution (4IR) has seen a rapid advancement in the use of technology in the property sector, says Paul Jackson, chief executive officer of TUHF, a specialised commercial financing company.

Training for a career in property management now includes the use of the internet of things (IoT) and smart apps for maintenance and the logging of repairs for asset management, the digital management of rental repayments and electricity and monitoring of utilities. “Property managers would do well to stay abreast of these kinds of developments to ensure both property owner and tenant benefit,” says Jackson.

“That said, training in key 4IR skills such as technology and analytics is not all that property managers should develop. At TUHF, we believe in a hands-on approach and, although we don’t manage properties

ourselves, we have seen the difference this makes to successful property management,” he explains. “Good property management is undoubtedly the distinguishing factor for resilience in our space.”

TUHF offers a Programme for Property Entrepreneurship (TPPP), a comprehensive in-house property training programme developed and delivered jointly with the University of Cape Town.

The University of Witwatersrand’s Wits Commercial Enterprise unit, has modified its property management course to create awareness of the possibilities of

technology, says Professor Samuel Azasu, course convener and educational developer.

“However, we have plans to create a stand-alone course in proptech to cater for not just property management, but also valuation, brokerage, sales and market analysis.” Azasu adds that the pandemic created unexpected levels of distress mostly across the retail, office and, to some extent, housing subsectors. “Conventional property management has thus morphed into distressed property management.” Wits Prof Samuel Commercial Enterprise is Azasu therefore launching a new course in Management of Distressed Properties to ensure those in property management roles can reposition their assets as investment grade assets.

“WE HAVE PLANS TO CREATE A STAND-ALONE COURSE IN PROPTECH TO CATER FOR NOT JUST PROPERTY MANAGEMENT, BUT ALSO VALUATION, BROKERAGE, SALES AND MARKET ANALYSIS.” – PROFESSOR SAMUEL AZASU, WITS COMMERCIAL ENTERPRISE COMMERCIAL PROPERTY

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A NEW TAKE ON

OFFICE DESIGN THANDO PATO and ANÉL LEWIS speak to the experts about the future of office space design and infrastructure

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he COVID-19 pandemic has changed our working lives by altering where we work from. Remote working and working from home has introduced us to a new normal that requires businesses to quickly rethink and transform existing office space to accommodate the new reality.

Trends analyst and founder of Flux Trends Dion Chang says that remote working is here to stay, but that does not mean the end of offices. “Offices are not going to disappear. There will still be offices, but they will be for a staggered workforce. Following vaccinations, by 2022 we will see a hybrid workforce made up of remote workers and those based in the office.

You won’t have offices filled to capacity as before.”

Consultancy Deloitte Dion Chang Africa smart real estate

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leader Dr Marco Macagnano says that the notion of an office as merely a place to work has become obsolete. “With technology, it is possible to work anywhere,” he says. “Therefore, the office must become a high-performing environment that allows employees to perform a certain activity there better than anywhere else.”

This involves collaboration between landlords and tenants, and access to services that enhance work performance. “Just because we can work from home, doesn’t mean that we should,” says Macagnano.

Chang adds that companies may also have to relook the idea of a head office and consider several strategically placed satellite offices instead of a big central office.

Decentralising the workforce means fewer people in one building so that social distancing can be adhered to. It will also be beneficial to employees, who will have to commute less.

So what are the key areas in office design and infrastructure that need to be reconsidered to accommodate social distancing, good physical and mental health and remote working?

Landlords and tenants must reimagine the office floorplan to accommodate the shifts in office safety protocols.

IT’S ALL ABOUT VENTILATION Chang says that ventilation in office buildings is one of the key areas that must be examined in the new normal, whether it is re-engineering air conditioning systems or allowing for natural airflow like open windows.

Derick Henstra, executive chairman of dhk Architects says: “Air conditioning systems have to be far more specialised.

We also have to look at natural ventilation and how we can facilitate that,” he says.

Ventilation will be particularly important in spaces where people congregate like kitchens and canteens.

Henstra says that the design of office kitchens should be more spaced out to allow for social distancing. He also adds that what is becoming increasingly popular is bringing the outdoors into a building structure by having an open-air courtyard or pause area, where employees can enjoy the outdoors without necessarily leaving the building.

“Just because we can work from home, doesn’t mean that we should.”

– Dr Marco Macagnano, DELOITTE Africa

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PROPER T Y M A N AGEMEN T

MAKE SANITISATION STATIONS THE NORM Both Henstra and Chang agree that sanitisation stations are here to stay and should be spread out throughout the office space to allow easy access for employees. Besides sanitisation stations, office design is also going to have to incorporate contactless technology in areas like elevators, printers and entrances to minimise contact.

Open-plan office design must be reimagined.

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IS IT THE END OF OPEN-PLAN OFFICES? Perhaps one of the most popular office configurations is the open-plan office, but in this age of social distancing, is it a thing of the past? “No, it is not,” says Henstra, “but acres of open-plan office space filled with hundreds of employees is no longer desirable. Part of it is social distancing, and part of it is that teams want to be closer together. So there is going to be more compartmentalisation and fewer people per square metre of floor space,” he explains.

Chang says that social distancing requirements will put an end to a football field of open-plan office space packed with 1 000 people sitting shoulder-to-shoulder. John Jack, CEO of Galetti Corporate Real Estate, agrees and says: “The industry needs a perspective shift.

“We need to start looking at offices with the goal of experience rather than functionality.

“Position it as a safe space to work productively,

but also a place to build a company culture that prioritises innovation – without packing employees into the smallest space possible.”

Henstra says that going forward, desks will be socially distanced, and workspaces will include spaces or pods to take phone calls and host virtual meetings, so employees can enjoy some semblance of privacy. While most meetings may still be virtual, he doesn’t think boardrooms will be done away with completely. Instead, existing boardroom sizes will allow for social distancing by allowing fewer people into the room.

RESPONSIVE MANAGING Tenants must also consider whether their leases are necessarily the best fit. Flexible lease agreements may be more practical as businesses evolve to remain relevant.

Macagnano advises landlords to demonstrate how their properties can add value. Instead of John Jack

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the traditional approach of providing a “white box” of basic infrastructure, commercial landlords and property owners should invest in creating smart environments that will allow new tenants to “hit the ground running”. The landlord is an enabler who ensures that tenants have access to a more efficient working environment. “Service, and not the square meterage of a building, is being recognised as a commodity of value,” explains Macagnano.

For commercial buildings to remain viable, it’s important to generate and interrogate data about how they are being used. As Macagnano points out, it can take up to five years for a building to be completed. By the time it is ready for occupation, the needs of the tenants may have changed. He recommends the use of performance-based metrics, looking at factors such as how spaces are being used, by whom and why. This information must be shared among tenants and landlords to ensure the best possible fit.

Amelia Beattie, chief executive of Liberty Two Degrees, adds that a key component of responsive managing is being adaptive and flexible. “You must be as adaptive and as flexible as possible in your approach to retain tenants, making bold decisions while responding with empathy.” Creating flexible retail spaces, for instance, Beattie adds, to attract tenants that have traditionally been online and are now experimenting with brick-and-mortar retail, is a a key example of responsive managing.

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A RCHI T EC T URE

Retail centres such as Ferndale on Republic in Johannesburg offer a mix of open-public spaces and external-facing stores.

REIMAGINING THE RETAIL SPACE The COVID-19 pandemic and the subsequent boom in online shopping have changed our shopping habits. THANDO PATO finds out how this will affect the design of retail spaces

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nline shopping, social media and now the COVID-19 pandemic have changed how and where we shop and how we socialise. Large shopping malls that were once “one-stop shops” filled to capacity over weekends are now experiencing less foot traffic as consumers opt to visit smaller localised shopping centres or enjoy e-commerce shopping from the comfort of their homes.

But while retail spaces, particularly large malls, are experiencing a decline in foot traffic, they are not doomed relics, say the experts.

Landlords need to rethink how to best meet consumer’s needs.

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HOW ARE CONSUMER HABITS INFLUENCING DESIGN TRENDS? Jason McCormick, CEO of Exemplar, says that the impact of COVID-19 has been and will continue to be felt not only in the retail space, but also in all public spaces. However, design trends not related to the pandemic are being introduced to retail spaces. “From a purely retail point of view, early indications are that the open-air retail spaces and convenience centres have bounced back quicker than the larger, more confined enclosed malls, as consumers appear to feel more comfortable in spacious, well-ventilated areas.

“From a design perspective, there has been a collective shift towards increasing natural light and creating a feeling of large, voluminous space,” he explains. “This trend, while already in existence pre-pandemic, has been strengthened. There is also a continued focus on creating engaging, dynamic (increasingly digital) experiential spaces within nongross leasable areas such as walkways and courtyard spaces.

This is a trend that holds immense potential to change the existing retail landscape.”

SHOPPING DIFFERENTLY Sean Pearce from MDS Architecture says: “In the retail space, we are seeing that consumers want to shop differently; they are also looking for greater speed and efficiency. The trend

towards ‘click and collect’ where people order online, park in designated bays and collect their purchases, will likely become a more common feature of shopping centres in the future. Touchless technology will also start to become the norm. Online tenants are also looking for physical space in malls to add to the customer’s experience and provide more flexibility. Pick-up and drop-off lockers have also become new tenants in malls, allowing people without proper addresses to collect their orders and ‘experience’ the mall’s convenience factor.”

INNOVATIVE THINKING “I think tenancy is going to dictate some of the design trends we will see in the next few years, says Pearce. “Tenants want greater flexibility and developers/landlords are also catering for smaller businesses with more flexible leases. Pop-up stores, for example, allow tenants to get on their feet before committing to longer leases.”

He says that retail spaces like Ferndale on Republic and Riverside Shopping Centre in Johannesburg are examples of centres that incorporate both open-public space and external-facing stores.

The V&A Waterfront’s Collect Drive-Through service allows customers to place online orders with multiple V&A Waterfront stores and then collect their parcels themselves.

HOW TO KEEP UP WITH THE CHANGING LANDSCAPE Jason McCormick, CEO of Exemplar, says retail developments are by their very nature organic, living spaces that have to be constantly updated to tender to an increasingly discerning and conscious customer base. “Ideally, any retail space should be in a constant state of flux, allowing for sufficient change around its core offering of essentials to alter the customer experience and keep them coming back for more.”

He believes pop-up stores will play a far larger role in retail spaces in the future. “Given their short-term tenure, the use of pop-ups will add a new dynamic to retail spaces. This may also help create a wave of emergent local retail brands – a very exciting prospect for anyone watching the space. Existing examples of this are evident at the Kasi-CoLAB at the Mall of Thembisa and Egg at Cavendish Square.”

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A DV ER T ORI A L

TRANSPARENT REPORTING HELPS CHANGE USER BEHAVIOUR

OPTIMISING PROPERTY MANAGEMENT FOR MAXIMUM RETURNS Implementing the new regulations for commercial properties may be challenging, but they offer long-term benefits

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he current economic outlook is both challenging and complex. If you own or manage commercial property, this is the type of economy that asks you to consistently reinvent processes and approaches to maximise returns while reducing operating costs and improving efficiencies. If 2021 was defined by uncertainty, then 2021 should be defined by optimisation. Commercial properties are facing numerous hurdles including new regulations and a growing need for improved return on investment (ROI). Such, a challenging outlook means that owners and managers must focus on solutions and approaches that will deliver quick wins and long-term sustainability.

“The new regulations will soon expect commercial buildings to publicly display their energy consumption, a move that will put immediate pressure on commercial property owners and influence customer decision-making,” says Michael Franze, managing director at Citiq Prepaid. “All nonresidential buildings in South African that are more than 2 000m2 will require certifi cates. They must record the building’s energy performance as defi ned by the net energy consumed in kilowatt-hours per m2 annually.”

While new regulations can initially be complex and time-consuming, the long-term results will be immensely beneficial to commercial property owners and tenants.

“The new regulations will soon expect commercial buildings to publicly display their energy consumption, a move that will put immediate pressure on commercial property owners and influence customer decision-making.”

– Michael Franze, managing director, Citiq Prepaid.

The United States Environmental Protection Agency has found that commercial buildings can waste up to 30 per cent of energy.

A staggering figure that hits the bottom line of tenant and commercial property owner alike. This energy wastage, when added to the regulatory burden, has made it critical for owners and managers to engage with tenants in shifting how they approach energy consumption.

“Managing energy consumption in a commercial property is not a simple undertaking, yet one of the most effective ways to optimise costs and improve ROI is to reduce wasted energy expenditure,” says Franze. “Understanding consumption is essential and property owners and managing agents should use the regulatory changes as an opportunity to better understand their building consumption patterns and to cut their electricity expenses.”

“One of the most effective ways to ensure long-term consumption changes is to get the buy-in of building tenants. The only way to achieve this is if those tenants are aware of their usage,” explains Franze. “This is where our prepaid solution makes all the difference, providing detailed reports via an online portal and allowing transparent access to information for both tenants and building management.

“This heightened awareness as a result of transparent measurement has resulted in incremental user changes. Studies done in the UK show that bills are reduced by between five and nine per cent when user data is made available. In much the same way that a smartwatch empowers users with data that can influence their daily behaviour, prepaid meters empower tenants with information that can impact their consumption behaviour,” he says.

GREATER ENERGY-EFFICIENCY MANAGEMENT DURING A PANDEMIC ECONOMY More than just a cost-saving opportunity, managing energy is now even more important as we enter an uncertain 2021.

It will be many months before South Africa will see the full benefits of the COVID-19 vaccines, and commercial properties will be operating with variable occupancy rates for the foreseeable future.

“We are all eager to get back to business as normal. The reality is that many companies will continue to implement work-from-home policies. Good business sense dictates that we adjust our energy and water consumption in the intervening period. Commercial buildings, in particular, should be finding ways to manage their operational costs when they have lower occupancy. However, the challenge is that things could change from region to region and as regulations and company behaviour shift in response to the pandemic. Remaining fluid and responsive will be key. Achieving this will require an agile energy management plan. This starts with responsive energy measurement,” advises Franze.

For more information: 087 551 1111 Citiq Prepaid, Mahai Close, Howick Gardens, Waterfall Park, Midrand www.citiqprepaid.co.za

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MEDICA L REI T S Growthpoint Healthcare’s Cintocare is the first 5-star-rated green hospital in Africa.

FAST FACT

The Benchmark Group has invested in facilities such as the Knysna Medical Centre and Vergelegen Medical Centre among others.

THE PULSE OF MEDICAL REAL ESTATE INVESTMENTS Medical real estate investments may have a stable pulse, but you need to know your way around this asset class for optimum financial health. By NIA MAGOULIANITI-MCGREGOR

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IT with healthcare, that are taking this niche enchmark Group CEO Hennie market to new levels.

Bezuidenhoudt believes that “There is a massive transformation in “healthcare is an essential service. It’s healthcare,” Bezuidenhoudt says. “Artificial also an emotional service that people intelligence, 3D printing, stem cell technology are prepared to pay for”. Bezuidenhoudt and genome sequencing bring incredible is also chair of OrbVest, a company that benefits to diagnostics and therapy and will specialises in the US medical property market. have a major impact on longevity.”

He believes in putting his money where his Already, he says, baby mouth is for a few reasons: boomers are living longer on healthcare is a “growing, average – “improved nutrition, sizeable” industry for which new drugs and advances in there is a strong demand. technology lead to longer life”.

“It’s a stable industry and has With those over the age of 65 shown growth for years,” he tending to seek out medical says, “certainly, spending treatment five times more on healthcare has increased frequently than before, “this globally. Even in challenging requires more specialised times, people are supported by Hennie Bezuidenhoudt healthcare treatments medical insurance.” and facilities”.

And, he adds, you are Bezuidenhoudt says the looking at a low-risk real estate healthcare industry “acceleration” is only category where leases are long – medical accelerating further. “There’s a move away from professionals rarely hop around, and now, with old-style hospitals towards specialised, dedicated specialised, heavy equipment that is difficult medical facilities.” Aesthetically pleasing day to relocate, are even less likely to do so. Also, hospitals or super-specialised medical premises as licencing rights rest with the facility and not where professionals congregate in the same the doctor or staff, there is further incentive to facility in a symbiotic way, sharing pathologists, stay put. for example, have benefits that include a But it is events outside of the traditional real decreased risk of infection. estate domain, such as the intersection of

“THERE’S A MOVE AWAY FROM OLD-STYLE HOSPITALS TOWARDS SPECIALISED, DEDICATED MEDICAL FACILITIES.” – HENNIE BEZUIDENHOUDT, BENCHMARK GROUP

“We are moving from reactive healthcare to preventative and increasingly to predictive care, which comes with genome sequencing,” explains Bezuidenhoudt. “This transformation will lead to more personalised medicine based on your personal health profile. Soon, we will be able to predict, say, a heart attack, years in advance.”

It’s a revolution, he says. “Demand for facilities of the future will only increase going forward.”

Dr Linda Sigaba, fund manager of Growthpoint Healthcare Property Holdings, agrees that demand will continue to be sustained in the near future as an “ageing population living longer increases the need for more specialist facilities”.

Already evident in the US and Europe, Sigaba says that increased incidents of lifestyle-related disease are now also emerging in South Africa.

Further, South Africa has high fertility rates and this will provide an underpin for utilisation of healthcare facilities.

“The healthcare market is defensive in nature,” he says. “Assets tend to maintain their earnings and revenues during market downturns, allowing them to perform better than the broader market during a market correction or a bear market accompanied by a recession.”

Still, every investment comes with a component risk, says Sigaba. “The brain drain of medical professionals, once an issue, has now improved. The affordability of private healthcare and the introduction of the NHI is another risk consideration, but we believe medical funders will remain innovative in developing new funding models that will ensure the long-term viability of private healthcare. While the NHI has been flagged as a risk to the sector, it is potentially an opportunity if its implementation results in improved access by those that currently have limited access to healthcare as new healthcare facilities will be required.”

Sigaba says the “black swan” event of COVID-19 and the resulting hard lockdown “did not spare any sector, including the property and healthcare industries. But, there was a quick recovery and performance was unscathed in the second wave, boding well for any future similar issues.”

Bezuidenhoudt sums it up: “Healthcare is an in-demand emotional service; it makes medical real estate a future-proof investment.”

Dr Linda Sigaba

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MEDICA L REI T S

Envision Centre for Sight is one of Giflo’s medical real estate developments.

A COMPLEX INVESTMENT NIA MAGOULIANITI-MCGREGOR investigates the pros and cons of medical real estate developments in South Africa

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ften the benefits and pitfalls of medical real estate in South Africa are two sides of the same coin, says Ivan Makkink, Giflo’s medical director. This commercial and medical property developer has recently redeveloped Cormed Private Hospital in Vanderbijlpark next to its Envision Centre for Sight, a new ophthalmological facility.

Makkink says the barriers to entry are formidable. Obtaining a licence from the

Department of Health can be “cumbersome and is highly regulated”.

But, he says, what can feel like a clunky bureaucracy is also a “sophisticated process with intricate technical and zoning requirements and specifics”, which discourages fly-by-nights in this sector. “The level of detail is high. Much is regulated, including the size of an operating theatre, the need for a constant electricity supply – even passage widths. It’s a niche operation

“MUCH IS REGULATED, INCLUDING THE SIZE OF AN OPERATING THEATRE, THE NEED FOR A CONSTANT ELECTRICITY SUPPLY – EVEN PASSAGE WIDTHS. IT’S A NICHE OPERATION AND I’VE SEEN LOTS OF MISTAKES MADE BY ONCE-OFF DEVELOPERS.” – IVAN MAKKINK, GIFLO

NOT A SOLO VENTURE To invest in offshore medical developments you need a combination of the right information and partners, discovers NIA MAGOULIANITI-MCGREGOR

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s it easy for South African investors to invest in offshore medical developments? “Sure, it’s easy,” says Scott Picken, CEO of real estate investment platform Wealth Migrate, “as long as you don’t try to do it alone. You need two things: the right information and the right partners.

“You cannot succeed without a partner on the ground,” he explains. “No matter how big your balance sheet, you are treated as a newbie. In the USA, you’re literally called an ‘alien’.” As a US citizen,

you can borrow at about 3–3.5 per cent. As a South African with no track record, you’ll be getting rates from around 6 to 10 per cent.”

The trend, he says, is the same, whether you’re looking at investing in Australia, USA or the UK. “You need a local track record, local expertise and access to banking. You have to know whose hands to shake.”

Taking it as a given that Scott you need a local partner that Picken you trust, Picken says that you have to ask yourself, “do they put in their own capital? Do they have experience in that industry and are they niche-focused?”

and I’ve seen lots of mistakes made by once-off developers.

“It’s also a balancing act to find a feasible site.

A needs analysis is critical, and research must include factors such as sourcing the correct property and beds already available in that area. Development issues include ensuring it is erected to exact specification.” A licence to operate will be subject to final inspection.

You may also, says Makkink, find a great area with the right demographic – the LSM may be excellent – but for this investment to work, you are dependent on clinicians to support and use the facility by referring patients. “This is a huge driving force. The lifestyle, including good schools and other facilities in the area, must work for medical specialists and their families if they’re going to partake and participate.

“There may be a patient base, but if there are no specialists, the pitfalls are insurmountable. Ultimately, clinicians are your biggest resource.”

So, you need both a decent LSM in the area and doctors who will support it. “One out of two won’t work. The complexity of satisfying this delicate mix is often underestimated,” Makkink says. However, once that balance is right, you have an established and long-term investment that becomes a magnet for its own growth.

“Once you are satisfying a requirement and need, you have an investment that is resilient, stable and long-term,” Makkink concludes.

He says developers can jump on a plane and scout around for partners, but Wealth Migrate specialises in finding “quality” partners overseas in a kind of digital marketplace that is safe and simple. “For investors, it cuts out the middle man so returns are higher,” he explains.

Picken believes in diversification.

“It’s about wealth protection,” he says.

“It’s a case of investing in a first-world economy, into first-world assets in a first-world currency. It’s about diversifying across countries, assets, partners and currencies and hedging your bets so as not be exposed politically and economically.”

He is also a believer in the buoyancy of medical real estate. “People still need to do their due diligence, but there’s always a need for doctors.” As in South Africa, licences stay with the buildings, not the tenants. “Also, doctors are not accountants, so they sign favourable long-term leases, giving you long-term reliable, economically resilient tenants.”

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INDUS T RI A L DE V EL OPMEN T

FOR A SMART FUTURE The Lanseria Smart City aims to provide a home for 350 000–500 000 people by 2030. GARETH GRIFFITHS speaks to the role players and industry leaders

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resident Cyril Ramaphosa, in his 2021 State of the Nation Address, reported that the draft master plan for the Lanseria Smart City was completed in November 2020 and is at the public comment stage.

The Greater Lanseria Master Plan study area is located on the north-western quadrant of the City of Johannesburg towards the Lanseria International Airport. The study area is a vast 53 311ha, loosely based on a 25-minute drive time from the Lanseria International Airport.

Erky Wood, a director at GAPP Architects and Urban Designers, who was commissioned to lead the design of the new smart city and its infrastructural requirements over the next 15 years, comments: “We need to recognise that smart cities are not simply ‘tech-heavy’ applications to structurally-flawed

The study area including the primary and inner focus zones.

WHAT MAKES A SMART CITY? Andre Gouws, managing director of Intaprop, says: “A successful smart city offers a powerful link between a precinct and the community interacting within it. A highly integrated and sophisticated IT backbone supports the holistic operation of the precinct’s buildings, the public environment, surrounding nodes and amenities and transport linkages. A smart city should be able to adapt within a constantly evolving environment.”

It appears, however, that designs for any smart city should be based on the realpolitik of the development world.

“Currently, the property market, in general, is a buyers market and provides clients with exceptional value for money. Buyers and tenants are looking for good quality, not only of the internal space they occupy, but also the precinct, public space and proximity to amenities. Our clients are more interested in the quality of lifestyle than the size of the building. It offers a human-scale development that is diverse and bespoke,” he adds.

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Michelle Ortlepp, an urban planner at GAPP Architects and Urban Designers, says: “The study area incorporates nodes such as Fourways, Northgate, Cradlestone Mall, Steyn City, and commercial expansion around the Lanseria International Airport. It also comprises a marginalised periphery of Diepsloot, Zandspruit and Cosmo City.

“A significant portion of the study area is green fields, and thus a primary focus zone has been identified at the crossing of the N14 and the Malibongwe Drive Activity Spine (linking Joburg CBD to Hartbeespoort Dam via Lanseria Airport), aimed at stitching the marginalised sprawl into a growth node of consolidation and urban prospect. This is where the new Smart City will be established.”

cities; smart cities are also not just ‘green’ cities with ‘gizmos’ of sustainability, and most significantly, we must grasp the nettle of the social and economic inclusion of the vast number of people who have never really been part of South African cities.

“So, many of the advantages to be derived from the smart city initiative at Lanseria are the things that are the opposite of what is wrong with many existing urban systems, which people have been excluded from historically.”

So, just what is envisaged for this smart city?

Wood says that a car should not be a prerequisite for being able to access opportunity. By living, working, learning, praying and playing all in the same place, you reduce the need, cost, congestion and inconvenience of commuting. Indeed, safe walking or cycling will be the default movement system. If the inhabitant needs to move beyond the immediate neighbourhood or district, a choice of safe, integrated, affordable, convenient, predictable and reliable public transport should be readily available.

“The focus in city life is on the quality and role of the public environment in providing dignity for all and permits complex patterns of economic integration to emerge across a broad socioeconomic profile, without resorting to social engineering,” explains Wood.

“People choose to live urban lives in compact complexity not only because that is a foundation of urban sustainability, or because they can’t afford the ‘suburban dream’, but also because they get so much more from that choice,” he concludes.

IMAGE: SUPPLIED

A SMART CITY

LANSERIA SMART CITY PLANNING

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CONS T RUC T ION

DIGITAL TRENDS IN CONSTRUCTION

INNOVATIVE MEASURES KEEP THE INDUSTRY ALIVE

Companies in South Africa’s construction industry have had to work harder than ever to overcome the immense challenges posed to them over the last year, writes DALE HES

IMAGE: ISTOCKPHOTO.COM

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mid the challenges and fallout presented by the coronavirus pandemic, somewhat incredibly, the construction industry in South Africa grew at a rate of 11.2 per cent in the fourth quarter of 2020, according to Stats SA’s latest gross domestic report. This outcome is proof that the measures initiated by companies to weather the storm have been successful.

GVK-Siya Zama – one of the biggest privately owned national construction companies in South Africa – is a stellar example. GVK-Siya Zama CFO John de Sousa says that the company has kept new business flowing in through proactive engagement with customers.

“It is extremely important to build relationships and to be proactive about maintaining contact at a time when people need it most,” De Sousa points out. “Being responsive to client requirements is also critical, and we need to be accommodating about revised budgets.”

De Sousa adds that GVK-Siya Zama is used to the ebb and flow of construction work.

“We have to be goal-driven to recover lost time on projects, and we were in the fortunate position of being able to maintain payment commitments to suppliers. What stood out the most was our constant contact with all stakeholders – from clients, employees and suppliers to bankers and insurers.”

Marlize Fourie, group HR executive at GVK-Siya Zama, says that the company also embraced a people-centric approach. “The industry is known for being able to unlock employment potential and is therefore well placed to embrace progressive people practices and upskill employees.”

COROBRIK INCREASES PRODUCTION AND REDUCES COSTS Meanwhile, Corobrik is thriving, having just produced the first bricks from its R800-million new high-tech Kwastina brick-manufacturing facility in Driefontein, Gauteng.

Believed to be the most technologically advanced and environmentally friendly brick-manufacturing plant in Africa, Kwastina will reportedly slash brick-manufacturing

“IT IS EXTREMELY IMPORTANT TO BUILD RELATIONSHIPS AND TO BE PROACTIVE ABOUT MAINTAINING CONTACT AT A TIME WHEN PEOPLE NEED IT MOST.” – JOHN DE SOUSA, GVK-SIYA ZAMA

The pandemic has highlighted just how effective digital innovation can be for construction companies.

Andrew Skudder, CEO of software company RIB CCS, says that digital trends in the industry include: • Cloud computing: large cloud companies can provide construction companies with access to powerful computing at a lower cost than they can do themselves.

• Mobile technology: enables anyone with a mobile device to access information from wherever they are.

• Building information modelling (BIM): combines as much design, estimation and planning information as possible preconstruction, achieving optimal design and programmes for particular assets.

• Virtual reality: allows digital technology to simulate the real world. For example, HoloLens, which allows users to look at a BIM model or design while in a building under construction.

• Data analytics and AI: organisations that use cloud AI and data analytics are better able to make predictions and recommendations on construction plans.

costs by 50 per cent and will be capable of producing 100 million bricks a year.

Corobrik CEO Nick Booth says that the company has had to adjust to the size of the market, closing down four factories. He explains that Corobrik doesn’t believe in cost cutting, but rather in streamlining business activities.

“The concept of cutting costs is dangerous.

We prefer to improve our business efficiency in all aspects, squeezing more value out of the business in the same amount of time. We’ve also had a look at our IT structures to see how they can be used to improve efficiency,” Booth says.

To keep new business flowing in, Corobrik also split its sales team into three different pillars, focused on different customers and stakeholders such as government, contractors, developers and architects.

Booth says that being people-centric and adopting an open stance with employees has also been critical. “We visit all eight of our factories every six months, updating the staff on the current business situation and the plan going forward. Keeping staff informed is crucial for the success of our business.”

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MIXED-USE DE V EL OPMEN T Capital Park, a commercial park located within Steyn City, offers beautiful AAA-grade premises within a green and conducive environment.

WHY THE UPSURGE?

GARETH GRIFFITHS talks to the professionals and discovers that work-home connection, location, social inclusion, investment and growth are all part of mixed-use development

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ixed-use precincts are a logical approach to densification and a way to address urbanisation problems, says Landseer Collen, the director and founder of BPAS Architects.

Collen’s firm has been intimately involved in the design of several mixed-use precinct developments in the Cape and East Africa.

“We recently designed a mixed-use co-living development in Cape Town’s Northern Suburbs and are currently busy with a large-scale precinct in Kenya, which will blend residential, commercial, retail and hospitality offerings.

“From a sustainability point of view, the provision of co-workspace can reduce a company’s carbon footprint due to the need for less property space and less commuting by employees.

“More opportunity for interaction is offered and this establishes neighbourliness and a sense of ownership within a community. Other factors to consider include safety and security, scale and walkability, convenience, connectivity, and health benefits,” he says.

However, Collen believes that consideration needs to be given to the integration of the living space occupant with the immediate

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and surrounding environment. A mixed-use development should not stand on its own, as it loses the principle of activated space and therefore is no longer a “democratic environment”.

“The mixed-use development should form part of a larger precinct and urban framework so that the ‘island’ approach is at least incorporated within a larger framework planning, thereby allowing a more inclusive development.

“As architects, we are also broadening our knowledge of mixed-use precincts and hybrid hospitality and, currently, we are researching ‘tools’ such as parametric building configurators, augmented reality (AR) and others to enhance our value-add on such projects,” he concludes.

Lambert Bezuidenhout, sales manager at Steyn City, a mega residential development north of Fourways, Johannesburg, confirms that long before the pandemic, Steyn City had created “a hub that offered every service you could possibly yearn for, negating the need to leave the parkland residence.

“This hub consists of homes to suit all needs, the Steyn City School, a forward-focused educational facility accommodating learners

from Grade 000 to 12 and world-class offices that present the option of walking to the office from home,” explains Bezuidenhout.

“With these facilities on site, the commute becomes a thing of the past. Steyn City’s iconic 2 000-acre parkland means that residents step out of the office and into nature to take a break. Then there are a host of recreational amenities minutes from the doorstep, including kilometres of well-lit promenade for walking or jogging; a 55km MTB trail; outdoor yoga stations; children’s play nodes; a gym fitted with the latest equipment; an indoor aquatic centre; resort pools; a choice of restaurants; an equestrian centre, and an 18-hole Nicklaus-designed golf course with award-winning clubhouse.”

The Steyn City development has caught the attention of the global market also. As an award-winning luxury residential and mixed-use development, it was ranked the leading lifestyle estate in Gauteng, according to New World Wealth.

Meanwhile, another significant mixed-use property development, Oxford Parks, is an extension of Rosebank, north of Johannesburg, reporting healthy growth in demand, comments property manager, Jennifer Hepburn-Brown.

“The first phase of Oxford Parks consists of four completed office buildings with ancillary retail on the ground floor and a Radisson hotel to be completed in June 2021. Phase two commenced early in 2021 with the construction of a 6-star-rated green office building of approximately 7 600m2 for one of South Africa’s blue-chip companies, and will further include residential developments and offices.

“Although the current property market is depressed, we have seen healthy demand in the Oxford Parks precinct, which may well result in the third phase commencing shortly,” Hepburn-Brown adds.

IMAGES: CAPITAL PARK, STEYN CITY - RENDERING BY STEYN CITY

MIXED-USE DEVELOPMENTS

Oxford Parks is a 300 000 m2 mixed-use precinct comprising 200 000 m2 commercial space (including ancillary retail) and 100 000 m2 residential space.

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