Business Day HomeFront 20 April 2018

HOMEFRONT 13 OCTOBER 2016 WWW.BDLIVE.CO.ZA 20 APRIL 2018 WWW.BUSINESSLIVE.CO.ZA

MUST READ

Janse & Co raises bar in Kloof Street PAGE 2

Barcelona attracts investor attention PAGE 4

How the VAT hike impacts property PAGE 14

Thirst for solutions Office leasing: flexible hub trend

Water-sensitive building innovations are now more widespread PAGE 8

PAGE 18

We know the ins and outs of every neighbourhood

#RealPartners

HOMEFRONT FOOD AND DESIGN

Sensory sophistication Opening in a Cape Town inner-city stretch, Janse & Co has taken the area’s dining and décor up a notch WORDS: JULIA FREEMANTLE :: PHOTOS: JESSAMY HINDLE AND KIM MAXWELL

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reviously of The Kitchen at Maison in Franschhoek, chef Arno Janse van Rensburg recently opened the eponymously named Janse & Co in Kloof Street. Raising the bar of the traditionally casual Kloof Street scene with this stylish new eatery, Janse van Rensburg and his partner, pastry chef Liezl Odendaal, have created a welcoming and inviting yet progressive dining experience that illustrates their commitment to cuisine and quality.

The food Underpinning every aspect of the food is an ethos of respect and responsibility. The origin of the ingredients is given equal weight to the cooking process and presentation of the final dish, with ingredients sourced seasonally and dishes conceived simply so as to show off the produce to best advantage.

Van Rensburg’s approach is to build relationships with producers and support sustainable practices, highlighting fresh ingredients rather

“Minimal, but earthy, the interiors reflect the same sort of balance and attention to detail that is present in the food”

than camouflaging them with lots of frills. “We try to source everything locally. Most of the pork, chicken and beef comes from Glen Oakes in the Hemel en Aarde Valley,” says Janse van Rensburg, by way of example.

That said, the dishes are not overly simple. Van Rensburg’s technical skill is inherent in his knowledge of classical cuisine, use of ingredients and exploration of new techniques, building the foundation for a unique dining experience.

Van Rensburg calls the concept “casual fine dining” — he’s taken the traditionally lengthy tasting menu format and offered smaller permutations — at dinner you can order three courses if the larger end of the spectrum is too much of a mouthful. But for those with the appetite, dinner options go up to seven.

Lunchtime choices range from two to four courses.

Guests select the courses they prefer from the menu, so as a diner you’re encouraged to be adventurous and experience new flavours, textures and combinations.

A big (and entirely ontrend) emphasis on

HOMEFRONT

vegetables means the menu also offers a lot of variety for non-meat eaters.

Seventeen savoury dishes and four sweet/ cheese courses make it hard to narrow down your selection. But there are a few house favourites — such as the leek served with beurre noisette, smoked almond and crème fraîche.

Plating is exquisite but not fussy — composed rather like an artwork.

The Interiors Minimal, but earthy, the interiors reflect the same sort of balance and attention to detail that is present in the food. Near

a window, an elegant, circular Houtlander chair seats four or five people.

Dining chairs are by James Mudge; bar seats in leather were created by Dark Horse.

The simple furniture and industrial textures (concrete accents and exposed piping) by Source IBA come off with a surprisingly polished feel thanks to a sophisticated palette and simple but elegant table arrangements — the whole effect is more a ScandiZen hybrid than a roughand-ready warehouse.

The generous space is divided into different areas, each with its own appeal.

At night a cluster of tables

PRODUCED BY BLACKSTAR PROPERTY PUBLISHING 1st Floor, Block H, Sable Square, Cnr Bosmansdam and Ratanga roads, Milnerton, Cape Town 021 447 7130

with a street view gives way to a dramatically lit harvest table that seats a large party of 18.

Down a small flight of steps are the kitchen-facing tables that allow diners to watch the action. Weather permitting, these lead on to a charming walled terrace with built-in seating and a profusion of edible herbs and plants and twinkly lights — a beautifully appointed inner-city oasis.

Table-side, the aesthetic is considered and curated.

Clever touches such as individual wooden boxes of cutlery for each diner (for multiple courses) are an indication of the level of A

EDITORIAL TEAM Editor: Kim Maxwell Designer: Samantha Durand

thought that has gone into everything. Service follows suit — warm, efficient, but not claustrophobic.

As with the food, the emphasis of the wine list is on uniqueness. Boutique brands, less usual varieties or wines made by small independent winemakers are favoured. But if you’re not a wine drinker, fear not — the nonalcoholic drinks offering also leans to the creative side — kombucha and artisanal tonics cater to a variety of palates.

The restaurant is open for lunch from Wednesday to Saturday and dinner from Tuesday to Saturday. janseco.com PUBLICATION ADVERTISING SALES

Managing Editor/Copy Editor: Michael van Olst Production: Joanne le Roux

Michèle Jones Susan Erwee

michele.jones@thecreativegroup.info susan.erwee@thecreativegroup.info

084 246 8105 083 556 9848

HOMEFRONT INTERNATIONAL

Spanish acquisition A stable government, strong economic growth and competitive property prices … Barcelona ticks all the boxes for foreign investors WORDS: JOCELYN WARRINGTON :: PHOTOS: SUPPLIED

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ool, quirky and cosmopolitan, the Catalan capital has caught the attention of those seeking a sound investment in Brexitflustered Europe. Spain may have been extremely hard hit by the financial crisis of 2008, but the country now boasts some of the highest economic growth in the region and, with property prices still very attractive compared to the likes of London or Paris, Barcelona makes a compelling case for a little offshore speculation.

In 2017, Spain became the world’s second-most popular tourist destination, surpassed only by France and overtaking the US. Catalonia was the most visited region in Spain, making it an obvious destination to invest in the holiday lettings market.

ECONOMY “Falling unemployment, low interest rates and a strong economy have all contributed to the growth in the Barcelonan property market, with transactions reaching pre-crisis levels in some areas,”

says Alexander Vaughan, co-founder of Lucas Fox International Properties.

“However, prices remain significantly below those of other European cities, offering attractive commercial opportunities for investors, coupled with a lifestyle arguably unrivalled in the rest of the world.”

Mark Stücklin of internet portal Spanish Property Insight says a pre-2008 bubble sent Spain’s housing market into immediate free fall in the financial crisis, a situation that took until at least 2013 to begin turning around.

The country has a twospeed market, with little inland activity, but property prices in Barcelona, Madrid and along the popular Mediterranean coast have almost doubled since 2013.

“Barcelona and the south of Spain, in particular, are very popular with South African investors,” Stücklin says.

Paradoxically since Brexit, British interest in Spain is also on the up.

“Last year was a key turning point for the Spanish residential property market,” says Vaughan.

A development for sale in Barceloneta “During 2017, half our sales were for new or newly renovated homes.”

He says there is still strong demand for centrally located turnkey properties, particularly from foreign buyers who prefer a lockand-leave home that “offers good short-term rental yield and long-term capital appreciation”. Vaughan says rental yields in prime areas of Barcelona range between about 4% and 5.5%.

According to data from leading Spanish real estate internet portal Idealista, the average property price in Barcelona showed an annual increase of 10% at the close of 2017, ending the fourth quarter on €4,284/m2 (about R63,707/m2). “International buyers accounted for 69% of all Lucas Fox sales in 2017,” says Vaughan.

POPULAR AREAS

Apartments in Eixample’s Left area

Demand exceeds supply in a city hemmed in by the ocean and with nowhere to grow. Vaughan believes the central residential districts of Eixample, Barcelona Old Town and Diagonal Mar on the Barcelona beachfront have seen the most growth.

“We are now beginning to see more development

on the outskirts of the city, such as at Badalona Beach, which is a 10-minute drive to the CBD, and has recently undergone major regeneration.

“Areas such as Diagonal Mar have seen huge capital appreciation in the past 10 years and we now expect these outlying areas to experience the same kind of growth in the next few years,” he says.

Stücklin agrees that when it comes to getting bang for your buck, the outskirts of the city warrant attention, but prime delivers best.

RENOVATED “If you can find one, a fully renovated apartment of 90m2 to 100m2 in Eixample will set you back in excess of €500,000,” he says.

The buying process is not very transparent and there are pitfalls. Stücklin advises would-be buyers to seek good legal counsel before embarking on their property purchase.

Opening the door to thousands of potential investors looking to benefit from the country’s low property prices and lifestyle benefits, the Spanish government introduced its Golden Visa programme in

“Last year was a key turning point for the Spanish residential property market” Alexander Vaughan, co-founder, Lucas Fox International Properties

2013. “It may not have had a significant effect nationally, but the law, which grants non-EU citizens automatic residency when they spend €500,000 or more on property or land in Spain, has boosted Barcelona’s attraction to foreign investors,” says Stücklin.

Key features of the Golden Visa programme include: Investors may stay in Spain for an initial period of two years; T hey can travel without a visa within the Schengen area; Investors can obtain a further five-year residency visa, renewable every five years as long as the investment threshold of €500,000 is maintained; T hey are required to travel to Spain once during each residency period; A fter five years of residency, investors are entitled to apply for permanent residence and after 10 years can apply for citizenship; T he right to work in Spain is included; and A ll an investor’s ascendants and descendants can obtain residency visas, regardless of their age.

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HOMEFRONT PROPERTY TREND

Thirst for solutions

Water-sensitive building innovations are now more widespread WORDS: MIRIAM MANNAK :: PHOTOS: SUPPLIED AND SHUTTERSTOCK

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Evergreen Lifestyle, Muizenberg

Val de Vie, Paarl

ape Town is not the only South African city with water problems.

Property developers are taking note of the situation by implementing water-wise design and reducing the consumption of water during construction.

Some have taken entire developments off the municipal water grid.

The Mother City has been able to avert Day Zero this year, but is not out of the woods. Dam levels remain low and winter rains could again disappoint.

Western Cape Property Development Forum chairman Deon van Zyl says developers have already changed tack: “We are seeing house design incorporating storage tanks from the outset.

We are also seeing new approaches by technology companies, which are looking at water filtration and scrubbing systems.”

Van Zyl expects this take-up to increase.

“The provision of water technology will become a marketing angle to offer differentiation on

a product and therefore an increase in sales.”

Water-wise building design Among developers taking proactive steps at the design stage, or implementing additions to existing builds, is Balwin Properties, which has fitted water meters and other water-wise features at several of its projects such as Kikuyu in Waterfall, Johannesburg.

Horizon Capital has connected the units of luxury Camps Bay apartment development The Azure to its own well point water supply system. “The water will first pass through an ultra-violet sterilisation unit and residents can switch between municipal and well point water.

This supply will be supplemented with potable water storage tanks,” says Horizon Capital Residential MD David Sedgwick.

“A soak-away system is also being installed where natural storm water is directed through a system of trenches allowing the replenishment of the aquifer, with only the overflow being directed into the

city’s storm water system.

A grey water system has been incorporated where shower, bath and laundry water is filtered, stored and used in the subsurface irrigation system.”

Developer Calgro M3 employs water-wise design, energy and water solutions for its housing projects Rainwater harvesting has been incorporated at developments including La Vie Nouvelle, Broadacres and Summerset Place, Midrand.

HARVESTING Power Construction has also embarked on a waterwise design policy. “We are installing water-efficient taps and shower heads in all our developments. We are also planning to install small rain harvesting tanks,” says director Percy Knight.

Most of the company’s residential projects are in the Western Cape.

“During the planning phase of our developments, we try, where possible, to install a borehole for garden use.”

Blok has adopted a similar approach in its residential projects in Cape Town. MD Jacques van Embden says about its Eightonn residential development in Sea Point: “Nature itself is telling us to be more efficient. It is with this in mind that we have included into the design of the building a rainwater harvesting system and a borehole connection and filtration system which connects to water tanks.”

Developers in Stellenbosch, Franschhoek and Paarl have also joined the water-wise movement, says Engel & Völkers licence partner in the Winelands region Kobus Taljaard. Val de Vie was disconnected from the municipal water grid in December 2017. The estate has built a private purification plant for groundwater that supplies residents with water for household consumption.

“The switchover took place just before Christmas last year when the newly installed purification plant took effect,” says Taljaard.

“Water restrictions still apply as enforced elsewhere in the province, but that the

HOMEFRONT

taps will not run dry is used as a marketing positive.

New development phases will continue as planned and property prices will not be affected.”

Arabella Country Estate, a lifestyle and golfing residential estate

near Kleinmond, has in the past 20 years put in place sustainable plans for water usage and its immediate environment.

Its water solution incorporates boreholes, a water-purification plant, wastewater treatment for

recycling and re-use, and storm-water harvesting.

A recent study by Parsons & Associates Specialist Groundwater Consultants, which has monitored Arabella’s groundwater for more than 20 years,

showed management and monitoring of the groundwater supply scheme at the estate has resulted in groundwater successfully meeting the estate’s water demand, with no apparent negative impacts.

Results of the monitoring from October 1997 to October 2017 suggest that Arabella is using its groundwater resource sustainably in spite of three successive years of belowaverage rainfall.

RESOURCES

The Azure, Camps Bay

“We realised early on that a lack of appreciation for our resources, one being water, would negatively impact on the estate’s sustainability and future value,” says estate manager Dirk Uys. “Our aim is to ensure that at Arabella we do our utmost to reduce our demands on the Western Cape’s precious water supplies and keep our estate functioning at the highest standards.”

The retirement villages of Evergreen Lifestyle, a division of Amdec, boast rain and grey water harvesting systems, water-

“The provision of water technology will become a marketing angle to offer differentiation on a product and therefore an increase in sales” Deon van Zyl, chairman, Western Cape Property Development Forum

Waterfall Country Estate, Midrand

wise gardens and water efficient fittings. “We will also provide each home with a 1,000l slimline water tank to collect rainwater to be used by residents,” says development director Cobus Bedeker.

Evergreen’s Bergvliet, Diep River, Muizenberg, Noordhoek and Val de Vie (to open in December this year) estates will provide treated borehole water as drinking water.

FILTRATION Property developers in other regions have also responded. Century Development Properties in Gauteng has been fitting grey water filtration systems to ensure the landscaping is sustainable in estates such as Waterfall Country Estate in Midrand.

“We recently partnered with Molok Deep Waste Collection services for our refuse removal. This environmentally friendly process requires very little water for cleaning, rather than washing wheelie bins on the pavement,” says head of operations, sales and marketing Jessica Hofmeyr.

Hofmeyr says Century’s architectural guidelines include rainwater catchment systems and supplier contact details to encourage residents to harvest as much rainwater as possible.

Units in all estates have been fitted with water-wise shower heads, taps and toilets. “Only 6l are used in a full flush and 3l for a half flush, helping reduce the strain on the water supply.”

Johannesburg’s level one water restrictions are being enforced, despite the

fuller dams. These rules are to prevent history from repeating itself: in October 2016, levels of the Vaal Dam dropped to 27% of its total capacity, plunging the city into a water crisis.

EXTRA MILE Some Gauteng-based developers are going the extra mile. Legaro Properties, with Solid Green Construction, is building one of Africa’s first Net Zero-verified developments, 78 Corlett Drive in Johannesburg.

This Green Building Council of South Africa certification goes to projects that are deemed to have reduced their impact on the environment to zero.

The three-storey project near Melrose Arch will feature submetering technology for major water systems and low-flow fittings — over and above other sustainability features.

Legaro wants the complex to be the first of many. “We are committed to driving green building innovation in the property sector, through leading by example with projects like 78 Corlett Drive, 41 Melville Road and 54 on Sixth Road Hyde Park,” says project director Roger Brookes.

INNOVATION Amdec MD Nicholas Stopforth says waterwise processes make more than sense. “Water scarcity affects the entire country. As developers, we must create a concrete strategy,” he says.

“There are innovative solutions and technologies available that we can use to combat the issues we

HOMEFRONT are facing.” A key focus of Amdec’s R10bn Harbour Arch precinct near central Cape Town — due to open in August 2019 — will be sustainability.

Amdec developments use green building initiatives including rainwater harvesting, water-saving devices, low-energy LED lighting and refuse recycling.

These will be core features of the Harbour Arch precinct.

“There is huge benefit in executing watersaving measures at the construction stage, rather than retrofitting,” says Stopforth. “Not only is it better to have systems in place at the start, but it saves money in the long run.”

Eightonn, Sea Point

Lower construction footprints

Besides focusing on the finished product, property developers are starting to look at reducing their construction water footprint.

During the development phase Power Construction uses recycled water from municipal water treatment works. This makes business sense, Knight says. “If Day Zero ever arrives, it is going to have a huge negative effect on the company, which will directly affect our profitability.”

Blok is doing the same.

Its Eightonn development in Sea Point has a substantially lower construction water footprint than conventional projects. “We used treated wastewater sourced from the City of Cape Town

and rainwater instead of drinking water,” says Van Embden.

Using water responsibly during construction has become standard at Evergreen. “We are using treated effluent and borehole water during the construction phase of our projects,” says Bedeker.

“The treated effluent water is collected by the appointed contractor at local municipal water treatment plants and is safe to use for construction and irrigation purposes.” Evergreen is investigating water-saving building systems from the UK, US and China for future projects.

“I believe that waterless construction is the future of the construction industry in SA,” says Bedeker.

WATER WISE

Water tank responsibility: tenants or landlords?

The ins and outs of installing extra water systems if you are in a sectional title scheme WORDS: STAFF WRITER :: PHOTO: SHUTTERSTOCK

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ome owners are increasingly installing rainwater tanks and grey water systems to help them meet restrictions. But what of freehold tenants, and residents in sectional title properties? And if tanks are installed, who approves the process?

Sectional title Intersect Sectional Title Services MD Martin Bester says this is a complex issue as there are different rules that apply to different aspects of sectional title schemes.

“For instance, the Sectional Titles Schemes Management Act and regulations differentiates between common property, common property with exclusive use rights and sections.

Each of these aspects attracts different rules.”

In broad strokes, should any owner within a sectional title development wish to install a water tank, an application must be made to the body corporate.

The landlord (owner) would be responsible for any application. It will determine the location where the tank is proposed

and then apply the necessary rule, says Bester.

Depending on the nature of the water tank, further consideration may also be required about how water is supplied to units within the scheme.

“Each application would be considered based on its individual merits as water tanks can be installed for various reasons, can differ in size, may differ in appearance and may be fed by various means, such as rainwater, grey water, potable and nonpotable water supply.” Again, each of these may attract different rules, says Bester.

The application should spell out the purpose, placement, size and feed mechanism so that the body corporate may determine if the approval of the trustees or of the members is required, says Bester.

Michael Bauer, MD of property management company IHFM, says that if the installation is deemed as nonluxurious (which in Cape Town at present it is), a special general meeting would have to be called over a water tank installation and a special resolution passed.

“If, for argument’s sake, it is just one resident who

wants to install a grey or rainwater tank system, they would still need body corporate approval as everything outside of their unit is common property, such as the downpipes, gutters, and so on.”

Bauer says if the sectional title block is considering individual or communal water tank systems, a consideration is the logistics and plumbing involved that “could run into hundreds of thousands of rands to adjust plumbing to allow for another water source”.

Many schemes’ plumbing will not allow for a secondary water supply and this will incur a major cost to refit.

Freehold tenants If a tenant living in a freestanding home pays for a water tank and its installation, there are considerations about whether they may take it with them when they vacate the property.

Johan van Bosch, principal estate agent at Just Property Claremont, Cape Town, says the nature of an installation determines whether it is considered to be a fixture.

“A rainwater tank is normally placed on a flat

“Many schemes’ plumbing will not allow for a secondary water supply and this will incur a major cost to refit” Michael Bauer, MD, IHFM

surface and the weight of the water acts as an anchor.” In theory it should be permissible to remove the tank once it is empty, but this will require the tenant to restore the area where the tank was placed and all subsequent piping.

“However, if the piping from the tank is integrated with the existing system in the house, the whole rainwater tank and piping will be deemed a fixture,” says Van Bosch.

Tenants should obtain permission from their landlord before any

installation of this kind is made. “The two parties can then agree as to what will be required at expiry of the lease, says Van Bosch.

“All agreements should ideally be in writing and possibly made as an addendum to the lease.

Most leases were drawn up prior to the current level of the drought,” says Van Bosch. “However since residential leases are normally valid for 12 months, we expect to see parties inserting clauses in the leases going forward to deal with this issue.”

A R A B E L L AC O U N T RY E S TAT E .C O. Z A

Cnr Maxwell & Pretoria Main Road, Waterfall

HOMEFRONT TAX

Five ways the VAT hike affects property With the VAT rate increased to 15%, what knock-on effect could this have on residential sales and rentals?

WORDS: GEORGINA GUEDES :: PHOTO: SHUTTERSTOCK

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n his 2018 budget speech, former finance minister Malusi Gigaba announced that Value Added Tax would be increased from 14% to 15%.

The new rate is now in place, as of April 1 this year.

However, in the property sector many people are unaware of when VAT does and does not apply to property transactions.

Which purchases or services are exempt from this charge?

1. New homes are not subject to VAT, unless purchased from a VAT vendor “VAT only applies to newly built homes purchased from a developer or a builder, or to pre-owned homes that are being sold by a commercial owner such as a company or a trust rather than an individual,” says BetterBond CEO Rudi Botha.

“In other words, the seller of the property must be what is known as a VAT vendor for VAT to be added to the purchase price.” This means that in most cases, those who purchase preowned homes will not have to worry about VAT. They will instead pay transfer duty calculated on a sliding scale, depending on the cost of the property.

Properties costing less than R900,000 are exempt from this tax, which then begins at 3% and caps out at 13% for properties of more than R10m. Buyers will always pay VAT or transfer duty, never both, and VAT takes precedence.

If a first-time home buyer is buying into a development, they might find that the costs have risen slightly since the higher VAT rate came into effect.

“The effect of the VAT

increase impacts on the prices of the lower market mainly, because the threshold for transfer duty is R900,000 and then goes in increments to a maximum of 13% for private persons.

VAT at 15% is calculated on the entire price.

Developers have always had to cost this in,” says Laurie Wener, Pam Golding Properties senior executive for developments in the Cape region.

To illustrate, a newly developed R1m property with 14% VAT added would have cost R1.4m, while a newly developed R1m property with 15% VAT will cost R1.5m — bearing in mind that the quoted price would always include VAT. In terms of the impact on affordability, Wener says financial institutions assess mortgage loans on newly developed properties on the VATinclusive price, whereas they do not include the transfer duty payable in the affordability calculation. This

means people buying in developments might find it slightly more difficult to have a bond approved than previously.

It is possible that some developers might absorb the VAT increase themselves to continue marketing properties at pre-15% VAT prices.

2. Development purchases concluded before April 1 taxed at the old rate If the purchase of a property was concluded before April 1, certain provisions may exempt a buyer from paying the additional one percentage point in VAT. Botha says Section 67A(4) of the VAT Act provides that, subject to certain conditions, the VAT rate in force on the date that a written sales agreement was concluded will apply to the sale of a fixed property, even if there is an increase in the VAT rate after that, and even if the transfer of the property takes place after the VAT increase date.

“In the case of real estate transactions, commission is usually paid on or slightly after the date that the actual transfer of the property is registered” Rudi Botha, CEO, BetterBond

The conditions state that:

• The property must be a residential dwelling; • The price to be paid

for the property must be stated in the written agreement; T he agreement must have been signed by both buyer and seller before the VAT increase date; and T he actual supply (transfer) of the property is scheduled to take place on or after the date of the VAT increase.

A dwelling includes a property bought offplan which is still to be constructed, or a partly completed residence, says director of Property Law Publications John Gilchrist.

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3. Agent’s commission is subject to VAT at the current rate Botha says most residential property sales are concluded through estate agents who charge commission.

Since most estate agents are registered for VAT,

SARS TRANSFER DUTY TABLE

Value of property

Rate

Up to R900,000

0%

R900,001 - R1.25m

3% of the value above R900,000

R1,250,001 - R1.75m

R10,500 + 6% of the value above R1,25m

R1,750,001 - R2.25m

R40,500 + 8% of the value above R1,75m

R2,250,001 - R10m

R80,500 + 11% of the value above R2,25m

R10,000,001 and above

R933,000 + 13% of the value above R10m

most commissions will be subject to a one percentage point increase in VAT since April 1.

However, the impact will not be significant in most cases. For example, if the commission on a residential property sold for R1m is 7.5% or R75,000, the one percentage point increase in VAT on that commission amounts to R658 extra — bearing in mind that agents often negotiate on commission.

“It is important to note that VAT on services is generally payable on the actual date that payment for that service is rendered,” says Botha.

“In the case of real estate transactions, commission is usually paid on or slightly after the date that the actual transfer of the property is registered.”

This means that home sellers whose transfers register on or after April 1 will most likely be liable to pay VAT on commission at the 15% rate — even if their agent obtained the mandate to market the property before that date, and even

HOMEFRONT “It is possible that some developers might absorb the VAT increase themselves to continue marketing properties at pre-15% VAT prices”

if the sale agreement was signed before that date.

4. Residential rentals are VATexempt, but some services may not be Residential rentals are a service exempt from VAT, so the VAT increase will not affect people renting property to live in. Just Property accountant Natasha Kapp says VAT on commercial property rental is a standard supply. VAT should have been charged at 15% from April 1, but only if the owner is registered for VAT purposes.

The exception: Things become complicated if developers temporarily let units until they are sold. “SARS has always taken the position that the temporary letting of residential units by a developer constitutes a ‘change of use’ and VAT then becomes payable on the open market value of the unit at the date the

property is let,” says Kapp.

In January 2012 temporary relief was given to developers, allowing them to let residential units for 36 months from the date of concluding a lease agreement, without incurring a VAT liability. This temporary relief ceased to apply on January 1 2018.

“This means residential property developers are now faced with a dilemma: they are required to account for VAT to SARS in the January 2018 tax period on the open market value of all the unsold residential units which they temporarily let as dwellings. The VAT is payable even though some of the units may not have been let for a full 36 months,” says Kapp.

The other exception:

If a letting agent or property manager works for a company that is registered for VAT, their fees will include VAT at

the standard rate and will be subject to the increase.

“Vendors may generally recover the price increase as a result of the rise in the VAT rate from their customers,” says Just Property franchisee Pieter Janse van Rensburg.

However, if there is a written agreement that the price cannot be raised in the event of a VAT increase, the rise in the VAT rate cannot be recovered, he says.

5. Your disposable income might be affected FNB household and property sector strategist John Loos says the VAT increase will have an indirect impact on property buyers by lifting the prices of many consumer items, “crowding out” disposable income available for instalment payments on home purchases.

“On its own the impact will probably not be too

noticeable. But when added to the total impact of some years of increase in the effective income tax rates, along with municipal rates increases being above general inflation too, the overall tax impact of the past decade or so becomes significant,” he says.

However, it may be a case of swings and roundabouts — at least in the short term — with a repo rate cut having taken place at the end of March.

Seeff Properties chairman Samuel Seeff says that although the rate cut was largely expected, it is a welcome reprieve for consumers and property owners who face higher living costs due to the VAT increase.

“This will provide much-needed stimulation for the market and, after a very flat 2017, will hopefully be an energy boost to encourage buyers and investors,” he says.

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HOMEFRONT COMMERCIAL PROPERTY

Office hubs

Businesses are embracing the cost-cutting benefits of small, flexible bases, with a knock-on effect on commercial property leasing models WORDS: MIRIAM MANNAK :: PHOTOS: SUPPLIED

The Perch, Rosebank, Johannesburg

T

he world is changing fast, and so is the way we work. Traffic congestion, growing operational costs and the benefits of staff being closer to clients are pushing more companies out of large central offices in the CBDs into smaller premises in shared

EXPANDING GLOBAL WORKSPACE OPERATOR IWG

314 new office buildings in 2017 — 511,000m² of

added

workspace. Its new global office space surpassed

4,645,152m².

This is the equivalent of:

116 Wembley Stadiums 261 Sydney Opera Houses

3,718 Olympic swimming pools Source: IWG Regus, Pietermaritzburg

spaces on the periphery.

Many companies are opting for premises in shared business hubs to save costs and increase productivity.

Others are opening satellite offices in a shared business setup to have staff closer to clients, says Pam Golding Commercial Africa MD Mark Latham.

“Significant changes are under way in how we are working due to rising occupancy costs, the use of technology, changing preferences regarding our workplace, and innovative players offering new options to corporates and start-ups,” he says.

“Untethering employees from their desks and

encouraging people and teams to come together in common areas while providing quiet areas for those who need them have become important.”

APPETITE International Workplace Group (IWG), a global operator for leading workspace providers, is expanding in Africa, the Americas, Europe, the Middle East and Asia Pacific. The company has seen increased appetites for flexible workspaces.

“Businesses around the world are increasingly recognising that flexible workspace can create a competitive advantage,” says IWG founder and CEO Mark Dixon.

Dixon says this growth is a reflection of business leaders seeing the benefits offered — he believes 2018 could be a tipping point in global attitudes to work “It cuts costs, boosts productivity and helps attract and retain talent.”

IWG is the parent company of Regus which will open its second business centre in Westville, Durban, on May 1 to capitalise on local and international businesses moving to the larger Durban area.

Located in Pharos House,

“It makes sense to move staff such as sales teams closer to their clients rather than occupying expensive space in the CBDs” Mark Latham, MD, Pam Golding Commercial Africa

HOMEFRONT

“The Durban and Umhlanga areas are on the cusp of becoming globally recognised, economic engines of SA” Joanne Bushell, Regus country manager for SA

The Perch, Rosebank, Johannesburg The Business Exchange serves 50 corporates including Doha Bank and the sales team of Etihad Airlines, and 500 local high-growth start-ups such as digital marketing firm NonZero Africa and IT consulting company Command Quality.

“Corporates are realising that they don’t need office spaces that offer 15m2 to 20m2 for each employee and that 8m2 is good too.”

The demand for sharedoffice setups is growing, Seinker says; hence four more branches are on the cards in Midrand, Bryanston and Nairobi.

LEASES

The Sett, Umhlanga, Durban the flexible work centre will offer co-working and virtual office spaces, meeting rooms and furnished offices.

ECONOMIC ENGINES Says Joanne Bushell, Regus country manager for SA: “The Durban and Umhlanga areas are on the cusp of becoming globally recognised economic engines of SA. It is an exciting time for us to be supporting the business growth in the area.”

Tyson Properties

Gauteng regional director Jonathan Davies says having a large central office is no longer seen as a non-negotiable.

“Offices are still required, but to a lesser extent — for instance the storage of documentation, especially in terms of contracts of sale and leases,” Davies says, taking his own estate agency industry as an example. He says many modern industries use an office as a base but are happy to also work from a coffee shop

or a cellphone without needing full-time space.

Latham agrees that with technology and the ability to work anywhere, some businesses no longer need to be tethered to one office.

CLIENTS “It makes sense to move staff such as sales teams closer to their clients rather than occupying expensive space in the CBDs,” he says.

The Business Exchange in Gauteng offers four branches in Rosebank and Sandton, subdivided into

an assortment of offices, ranging from singledesk rooms to spaces that accommodate 20 or more people. Besides desks and chairs, the venture offers all amenities typical of conventional offices, from Wi-Fi, conference rooms and boardrooms to cleaning, receptionist service and teleconferencing facilities.

“This allows companies to save up to 70% on office costs by leasing premises in a shared space,” says CEO David Seinker.

Another key drawcard for The Business Exchange is the company’s shorter lease offering, with rates for private offices beginning at R9,500 a month. “We offer leases from three months.

This works for bigger and smaller companies because no one knows where they are going, due to the economic climate.”

Besides serving as a main base, some businesses use The Business Exchange as a satellite office to allow employees to work closer to home and clients.

“Technology allows you to work from anywhere,” Seinkel says.

The Perch marketing and community manager Mia da Camara agrees.

Grapnel Property Group founded this Rosebank, Johannesburg coworking space. Sole entrepreneurs occupy most of its 80 spots, but more people employed by companies

are also using the centre.

“They use our space as their office away from the office to get work done.

We give them a break from day-to-day work situations,” Da Camara says. Rates vary from R250 for a day pass to R1,000 a week, with monthly packages beginning at R1,875. “Many are after the convenience factor.

Rosebank is central and we are a short walking distance from the Gautrain station.”

TRAVELLERS Travis Gale, founder of The Sett coworking space in Umhlanga, Durban, says that besides freelancers and self-employed professionals, his firm attracts local employees and business travellers from Johannesburg and Cape Town. “They like The Sett as a break-away space from the office where they can get work done without being distracted by colleagues.”

Some firms have resorted to buying small homes where employees can sleep and work in cities where they have clients and operations. “They have converted those into offices to cater for employees who travel frequently for extended periods of time,” says Davies.

“Rather than paying high hotel costs, this allows staff members who travel for two weeks a month or longer to use the converted home as an office.

“The savings on hotel bills and renting small offices cover the mortgage and the property’s running costs,” says Davies.

URGENT PRODUCT RECALL

TAL GROUT SEALER C Customer safety is of vital importance to TAL and as a precautionary measure, we have taken the decision to voluntarily recall our TAL GROUT SEALER h alternatively known as TAL GOLDSTAR GROUT SEALER. There have been a tthree isolated incidents over the last 6 months where the product was not u used in accordance with the prescribed directions i.e. with a face-mask and in a well-ventilated area. TAL has, therefore, decided to investigate the possible rreformulation of the product as our first consideration is to safeguard customers.

All existing stock has been removed from our stockists’ shelves.

A IIf you have purchased TAL GROUT SEALER, please return it to us and contact 0860 000 825 for a full refund. You do not require a receipt.

0 No other TAL products are affected. TAL would like to apologise to our customers N ffor any inconvenience caused.

For any further queries please contact our technical advice centre F 0860 000 825 or visit www.tal.co.za for any information.

0

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HOMEFRONT PROPERTY NEWS

Is the Atlantic Seaboard bubble bursting?

C

ape Town’s Atlantic Seaboard is in a buyers’ market phase. Agents say it now takes almost twice as long to sell a property — the time on the market has stretched from six weeks last year to more than 11 weeks currently.

Seeff Atlantic Seaboard and City Bowl MD Ian Slot says the area generated almost R1bn in sectional title sales by early April 2017, but has managed only just above R600m this year. The price gap has almost doubled from 5.4% to 10.2% with recent sales concluded between 10.7% and 28.6% below the asking prices.

Slot says recent Propstats data show that

the sectional title sector of the market is down year on year by about 34% in value and 41% in volume for the first few months to early April.

The latest FNB Property Barometer also points to a weak Cape market.

Sectional title property on the Atlantic Seaboard has been considered an excellent investment and has achieved some of the best capital appreciation rates during boom times.

However, Seeff luxury sectional title specialists Adrian Mauerberger and Cecily Sher note that while stock has increased notably, sellers are still not dropping their prices sufficiently to encourage buyers.

Seeff reports that only 88 sales have been recorded on Propstats for this year to early April.

The demand in the luxury sector is mostly in the R5m-R10m range, say Mauerberger and Sher.

Seeff agents Bryan Ginsburg and Hilary Biccari, who specialise in sales below R4.5m, report a substantial slowdown in this market. A notable increase in stock levels is giving buyers much more choice: recent concluded sales in the area show price cuts from 12.8% to 20.4%.

Mauerberger and Sher say the flipside is that buyers pushing too hard for a bargain may miss the boat.

R30m sales in a week for Umhlanga estate

S

Woodstock apartments on rental market

T

he first rental apartments in mixeduse development The Iron Works in Woodstock, Cape Town, are on the market. Rentals are R10,500 a month for a small one-bed unit and R13,500 for a large onebed. A two-bedroomed unit is renting at R14,500.

The ground floor

comprises a retail level.

There are three levels of parking and five levels of apartments. The complex has 24-hour security with CCTV cameras and secure parking. Finishes include epoxy floors, designer kitchens with gas cooking facilities and trendy bathrooms. It also has fibre optic Wi-Fi.

ales at the Enigma Private Estate in Umhlanga Ridgeside reached R30m in one week, says Rainmaker Marketing CEO Stefan Botha.

Launched nine months ago and with construction set to begin at the end of April, Enigma Private Estate is the “fastestselling estate in the greater Umhlanga area”. Botha says the response to the 90 stands at “Umhlanga’s definitive gated address” since the beginning of the year has been one of the

most successful sales phases to date.

“With the market generally being more positive, and on the back of construction commencement being confirmed as soon as April, the sales have skyrocketed.

“The confirmation is proof that Enigma Private Estate is a solid investment and will soon be a reality.

We are confident that in a short space of time Enigma Private Estate will be sold out,” says Botha.

Umhlanga Ridgeside is

undergoing substantial growth and includes the introduction of two premier international hotels.

Umhlanga has been the top second-home hotspot for the wealthy from Johannesburg since the 1970s, says the Afrasia/ New World Wealth 2018 SA Wealth Report.

The report says the area has become a significant business hub for wealthy residents to live and work, and lists apartments on Lagoon Drive as some of the most expensive in the country.

Seeff Southern Suburbs rental agent Natheema Tymowicz says the complex on the corner of Main and Ravenscraig roads offers city and mountain views. It is on the MyCiti bus route, close to the CBD and has easy access to the N1, N2, UCT and the Cape University of Technology.

Banks compete for home loan business

B

anks are competing for new home loan business and prudent home buyers are benefiting, says bond originator BetterBond CEO Rudi Botha.

“According to our latest statistics the average

approved bond size in SA is 6.05% higher than it was 12 months ago, even though the average house price has risen only 2.85% in the same period.”

Botha says there has been a drop in deposit levels from

about 22.5% of the purchase price at the end of February 2017 to an average of just below 20% now.

“This makes it easier and more affordable for home buyers to qualify for a home loan — and

has helped to boost our average bond approval rate from 75% to 80% over the past 12 months.”

Botha says BetterBond statistics show that the average home buyer’s household income has risen

by about 4% in the past year, so there is more disposable income available to cover a monthly bond repayment.

This does not mean banks are relaxing credit qualification criteria.

Households are still

vulnerable to sudden cost increases or emergencies.

“Lenders know this and are careful not to make hasty bond approval decisions that would put borrowers and themselves at risk.”

SHIFTING PERCEPTIONS. DRIVING ASPIRATIONS.

YOUR PROPERTY DEVELOPMENT PARTNER

Undertaking groundbreaking developments and driving investment in infrastructure and services, Tongaat Hulett is helping to realise the vast commercial, industrial, retail, leisure and residential potential in the primary growth corridors of KwaZulu-Natal. www.thdev.co.za

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