south african property review october 2014

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PROPERTYR E V I E W

October 2014

South African P

roperty Review

Property and Facilities M

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ctober 2014

Broll: Africa’s sought-after regions

WORLD SERIESBrazil: own goal or prosperity?

ENERGY The cost of keeping

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FACILITIES MANAGEMENTWho holds the purse strings?

Tanzania: untapped and opportunistic

The Africa series:

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8 SOUTH AFRICAN PROPERTY REVIEW

P R O P E R T Y F U N D

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PROPERTYR E V I E W

October 2014

1 From the CEO6 From the Editor’s desk9 SAPOA’s new appointments10 News18 Education, training and development20 Legal update Financial Intelligence Centre Act (FICA)22 Councillors in conversation24 Theme leader Outsourcing of FM services in SA26 Africa uncovered Tanzania30 Eye on the world Brazil36 Cover feature Broll: Real estate investments in Africa40 Feature The case for SDMV42 Feature The cost of energy utilities44 Electrifying metering46 Feature Property watch dogs48 Health and hygiene: an untapped opportunity in SA’s property market50 Feature Property products at the forefront of technology52 Time to put your footprint down54 Feature Changing SA’s cycology56 UIA Congress60 Statistics62 East London Golf Day63 What’s on: SAPOA’s upcoming national events 201464 Off the wall Dubai’s world wonder


PROPERTYR E V I E W

October 2014

South African P

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anagement O

ctober 2014




the lights on



The Africa series:

our monthly

country-by-country

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ON THE COVERThe General Electric building (11 180m²) in Midrand is an Investec Property Fund building, managed by Broll Property Group (Pty) Ltd

Editor in Chief Neil Gopal Editorial Advisor Jane Padayachee Managing Editor Mark Pettipher Editor Candace King Copy Editor Ania Rokita Production Editor Dalene van Niekerk

Designer Dirk Knoesen Sales Riëtte Stevens Finance Susan du Toit Contributors Martin Ferguson, Eugenia Makgabo, David A Steynberg,

Denise Mhlanga, Anne Schau� er, Frank Cotton Photographers Michael and Danieta Glenister, Mark Pettipher, Luca Barausse, Johan van Loggerenberg

DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA).

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

Designed, written and produced for SAPOA by MPDPS (PTY) Ltde: [email protected]

Published by SAPOA, Paddock View, Hunt’s End O� ce Park, 36 Wierda Road West, Wierda Valley, SandtonPO Box 78544, Sandton 2146

t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 e: [email protected]

FOR EDITORIAL ENQUIRIES email [email protected] or [email protected].

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contents

JHI_SAPOA_IFC_Sep 2014.indd 1 2014/09/02 11:25 AMContents Review_OCT_SUBBED.indd 8 2014/09/22 9:25 AM

1SOUTH AFRICAN PROPERTY REVIEW

from the CEO

Questions are being raised about the efficiency of South Africa’s three-year-old

business rescue legislation, and SAPOA has added its voice to the debate to spotlight critical risks from the perspective of property owners and investors.

SAPOA believes that the commercial and industrial property industry has been – and continues to be – negatively affected by business rescue processes.

Business rescue legislation in the Companies Act allows financially distressed companies to place themselves in business rescue. After that, no legal action can be taken against the company, and a practitioner is appointed to develop a business rescue plan, which creditors vote on.

If creditors veto the plan, the company goes into liquidation. But landlords – unlike other creditors – cannot prevent a tenant in business rescue from continuing to occupy leased space.

“Most other creditors can refuse to provide services to a company in business rescue,” says Desirée Nafte, Chair of the SAPOA Legal Committee. “However, the law does not give the landlord such rights – and the landlord must allow the tenant to remain in the leased premises during the business rescue process, without any security of being paid its rental and utilities.

Salvaging business rescueIn light of outdated business rescue legislation, SAPOA CEO Neil Gopal addresses the negativities that stem from business rescue processes,

serving as a critical risk for property investment

As a result, the landlord generally finds itself in an impossible situation.”

She says that, with an economic slowdown in South Africa, the number of companies going into business rescue will likely escalate in the short-to-medium term.

A recent case in point is Ellerines, the furniture retailer, which went into business rescue in early August 2014.

“Ellerines’ businesses include not only the furniture retailer but also Dial A Bed, Wetherlys and Furniture City, impacting shopping centre owners and investors throughout South Africa,” says Nafte.

The ranking of claims is an ongoing concern for SAPOA because it means that the secured creditors in most cases get paid in full. Banks are a good example. However, other creditors – landlords included – then have to compromise on remaining claims.

For example, damages claims for future loss of rental are restricted and paid at the dividend pay-out ratio. That could be as low as 20 cents on the rand.

SAPOA is in good company in terms of its concerns around loopholes in business rescue legislation.

Other bodies scrutinising the issue include the Department of Trade and Industry, the Special Committee on Company Law Chaired by Michael Katz, and the Companies and Intellectual Property Commission.

Almost 1 400 companies have started business rescue proceedings since 2011, but reports have put the success rate at as little as 12%.

It is obvious that the business rescue process does not really work in the South African context and is in need of some serious reconsideration.

In this regard, SAPOA, representing about 1 250 companies in South Africa, is calling on the Minister of Trade and Industry, Dr Rob Davies (MP) to meet with the property industry in order for the industry members to express their concerns.

Neil Gopal, CEO

Property rates and SDMV updateAt a recent SAPOA Board meeting, a Self-

Determined Municipal Valuations (SDMV)

report was presented in an effort to obtain

the Board’s approval in principle for the

concept of SDMV, and to obtain the Board’s

approval for SAPOA (together with Rates

Watch (Pty) Ltd) to identify a municipality,

preferably a metropolitan municipality, to

implement a pilot programme for SDMV

in conjunction with SAPOA.

The Board approved the concept in

principle and recommended that SAPOA,

in conjunction with Rates Watch (Pty) Ltd,

continue with further investigations in

respect of a viable funding model and

institutional arrangements for discussion

at the next Board meeting.

As a follow-up from last month’s article

on the recent property rates meeting, this

issue features a more in-depth look at the

concerns around property rates and the

ongoing case for SDMV.

CEO Review_OCT_SUBBED.indd 1 2014/09/11 8:48 AM


from the CEO’s desk

2

29 July 2014

Honourable President Jacob ZumaThe PresidencyRepublic of South AfricaPrivate Bag x 1000Pretoria0001

Dear Honourable President Zuma,

Re: SECTION 60 OF THE SPATIAL PLANNING AND LAND USE MANAGEMENT ACT NO 16 OF 2013(SPLUMA)

The South African Property Owners Association (SAPOA) is a non-pro� t organisation that represents

almost 90% of commercial property owners in South Africa. Our members own and control

approximately 90% of all commercial, o� ce and industrial property in South Africa. Such commercial

property owners equate to 1125 companies in South Africa. Our membership includes also property

managers, property developers, property brokers and varied professionals in the commercial, retail

and industrial property sector. SAPOA is further a member of Business Unity South Africa (BUSA) which

has a seat within NEDLAC.

While our strategic focus is to ensure that we are the voice of the commercial property sector, it is our

mission that we achieve that through creating a platform of networking for our members. SAPOA is

also focused on the strategic lobbying of various stakeholders in the property sector which includes

government at national, provincial and local level. We endeavor at all times to consult with an intention to

seek an amiable solution to issues that infringe on or prejudice the mutual interests of our membership.

We would like to extend our gratitude to the Honourable President for further engaging with SAPOA

regarding the impact that SPLUMA will have on the economy of the country and further seeking clarity

with regards to the contribution that will be made by the property sector. We believe that it is these key

imperatives, namely job creation and economic growth that will lead to the implementation of Section

60 of SPLUMA as well as the Act in its entirety, making a signi� cant di� erence for our country.

LOBBIES FOR

YOU

Neil's Letters October.indd 2 2014/09/11 8:51 AM




SAPOA is in support and cognisant of the objectives of SPLUMA. We speci� cally recognise that SPLUMA

intends to do the following amongst others:

• Provide a framework for spatial planning and land use management in the republic;

• Specify the relationship between the spatial planning and the land use management system and

other kinds of planning;• Provide for the inclusive, developmental, equitable and e� cient spatial planning at the di� erent

spheres of government;• Provide a framework for the monitoring, coordination and review; and

• Address past spatial and regulatory imbalances.

A. THE IMPACT OF THE IMPLEMENTATION OF SECTION 60 OF SPLUMA

a) We have endeavored to obtain information from our members with regards to the overall impact

that the non-implementation of SPLUMA has had and the inevitable jobs that may be created in the

event that it is implemented.b) Due to time constraints in terms of collating the information, we were unable to get the majority

of our members’ responses but have been able to get an adequate sample to re� ect the standing

position. The statistics revealed the following:

• The total value of the reported development pipeline is in excess of R20-billion.

• The reported job creation is in excess of 30 000 jobs.

• The average completion period of this reported pipeline is approximately 24 months which is an

indication that approximately 50% of the value of the pipeline is lost per annum due to excessive

planning periods.• The overall impact using the input-output analysis, including direct, indirect and induced impacts

is approximately R9.5-billion.• The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated

at approximately 16 000 permanent jobs.• The inclusive � gure in terms of job creation also includes temporary jobs during the construction

phase of these projects, while the permanent are created mostly in the real estate sector.

c) It is from the aforementioned results that it is evident that SPLUMA will vastly improve the

development timeline of developers and fundamentally have a signi� cant positive impact on the

economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the

total number of developers in South Africa is large.

B. THE SPLUMA IMPLEMENTATION DATE

a) We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the

Honourable President to have the following materialise:

The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated

The inclusive � gure in terms of job creation also includes temporary jobs during the construction


It is from the aforementioned results that it is evident that SPLUMA will vastly improve the




We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the










Honourable President to have the following materialise:We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the



We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the

The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated











The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated The overall impact on the GDP is estimated at approximately R3.3-billion and job losses calculated

We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the







phase of these projects, while the permanent are created mostly in the real estate sector.The inclusive � gure in terms of job creation also includes temporary jobs during the construction

phase of these projects, while the permanent are created mostly in the real estate sector.The inclusive � gure in terms of job creation also includes temporary jobs during the construction

phase of these projects, while the permanent are created mostly in the real estate sector.phase of these projects, while the permanent are created mostly in the real estate sector.

It is from the aforementioned results that it is evident that SPLUMA will vastly improve the It is from the aforementioned results that it is evident that SPLUMA will vastly improve the

development timeline of developers and fundamentally have a signi� cant positive impact on the It is from the aforementioned results that it is evident that SPLUMA will vastly improve the


economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the It is from the aforementioned results that it is evident that SPLUMA will vastly improve the




economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the economic output, GDP and job creation in excess of the numbers mentioned due to the fact that the


Honourable President to have the following materialise:We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the

LOBBIES FOR We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the

LOBBIES FOR We do note that e� orts were made by Minister Nkwinti in bringing forward a proposal to the


LOBBIES FOR Honourable President to have the following materialise:

YOU

Neil's Letters October.indd 3 2014/09/11 8:52 AM




• On 1st of July 2014 Sections 1 to 32 and 53 to 61 of SPLUMA would come into operation.

• On 1st of September 2014 Sections 33 and 52 of SPLUMA would come into operation.

b) It has however come to our attention through the various benefi cial forums that have been

established by the Department of Rural Development and Land Reform that various provinces and

municipalities have challenges with the set implementation date for SPLUMA which is 1 September

2014. These challenges are due to issues such as a lack of capacity and the fact that some provinces do

not have by-laws in place. The suggested implementation date by the provinces and municipalities

for SPLUMA is 1 February 2015.

c) It was suggested, which we are in support of, in principle that a Diff erentiation Model be considered

where most of the metropolitan municipalities can implement SPLUMA in its entirety on the set date

as they do not have capacity problems and are better positioned to implement SPLUMA. Further,

that it could serve as a cross-learning exercise where the other municipalities would learn from the

metropolitan municipalities in terms of implementation challenges and successes.

d) However, should this not be a possibility, we are of the view that should a new date be set for

municipalities readiness, such time should not be in the distant future as this would certainly not be

in the best interests of the country.

e) In light of the aforementioned recommendation we are of the view that Section 60 of SPLUMA

should be prioritised and implemented as a matter of urgency due to the negative impact it has for

both the public and private sectors and essentially the country.

f ) We humbly refer you to the transitional provisions provided for, more specifi cally Subsection (2)

which states that “all applications, appeals or other matters pending before a tribunal established in

terms of Section 15 of the Development Facilitation Act, 1995 (Act No. 67 of 1995) at the commencement

of this Act have not been decided upon or otherwise disposed of must be continued and disposed of in

terms of this Act.” It is the implementation of this very provision that will begin to aid both sectors in

making a contribution towards the economy.

We thank you for your assistance herein and look forward to hearing from you.

Yours faithfully,

________________________Neil GopalChief Executive O� cer

c) In light of the aforementioned objectives we have had concerns from of our members in

their capacity as property owners regarding certain aspects of the implementation of the Act.

We would therefore like to highlight our concerns regarding the prejudicial effect or

unintended consequences on the commercial property industry as a result of such

implementation which in essence have social and economic ramifications.

d) We note that Part 7 of the Act states the following:

“In considering the application a responsible authority may require additional information

from the applicant, and may also require the applicant to undertake an environmental or

other assessment, which assessments may be subject to independent review.”

Although we are in agreement with the abovementioned section it is our understanding that

the issuing of Water use Licenses (WULAs) which are required for any activity which occurs

within 500m of a watercourse has become problematic. This process has been proven to be

complex, lengthy and uncertain. There seems to be an issue of potential over regulation as

despite having an Environmental Impact Assessment approval and planning approval

construction activity is suspended if one does not have a WULA. Further the timing to get

approval is often lengthy and this directly has a major impact on development and being able

to meet timeframes required by tenants and occupants.

e) We would kindly like clarification on the issue of the river reserve determination as we

have been advised by the eThekwini municipal officials that the municipality is unable to

obtain approval for any new water treatment works or for any expansion of an existing works

as the Department have decided that they want to now do river reserve determinations for all

the rivers between the Mvoti and Umkomaas and that until this is completed the Department

will be unable to approve any activity which changes the flows in any of the rivers. This will

negatively impact property owners, developers and farmers.

We would like to establish how long the process will take and get an understanding of the

extent of the ecological requirement for the aforementioned process.

We shall appreciate being provided with three (3) alternate dates to choose from on which

you will be available to meet with the SAPOA delegation in order to find amicable solutions

to issues which essentially contribute towards disincentives towards investment in

Ethekwini. We thank you for your assistance herein and look forward to hearing from you.

Yours faithfully,

______________________ Mr Neil Gopal Chief Executive Officer


It is the implementation of this very provision that will begin to aid both sectors in



We thank you for your assistance herein and look forward to hearing from you.We thank you for your assistance herein and look forward to hearing from you.We thank you for your assistance herein and look forward to hearing from you.We thank you for your assistance herein and look forward to hearing from you.We thank you for your assistance herein and look forward to hearing from you.

It is the implementation of this very provision that will begin to aid both sectors in It is the implementation of this very provision that will begin to aid both sectors in It is the implementation of this very provision that will begin to aid both sectors in








It is the implementation of this very provision that will begin to aid both sectors in It is the implementation of this very provision that will begin to aid both sectors in It is the implementation of this very provision that will begin to aid both sectors in

We thank you for your assistance herein and look forward to hearing from you.We thank you for your assistance herein and look forward to hearing from you.We thank you for your assistance herein and look forward to hearing from you.

LOBBIES FOR

YOU

LOBBIES FOR

YOU

Neil's Letters October.indd 4 2014/09/11 5:19 PM



Neil's Letters October.indd 5 2014/09/11 5:19 PM


from the Editor’s desk

From unsettling earthquakes and Ebola outbreaks to the rampant theft at Apple

iStores and the Meyersdal Eco Estate construction collapse mayhem, the question now raised is: how safe are our properties and the people who inhabit them?

South Africa was shaken after a 5.5 magnitude earthquake was felt across the country. At the epicentre of it all, Orkney – the gold-mining town in the Klerksdorp district – one person died and more than 600 homes were damaged. Shortly after, another 4.6 magnitude earthquake hit, occurring 12km west of Orange Farm, a township south of Johannesburg.

Another concerning natural phenomenon is the Ebola virus outbreak that’s feared to be spreading across the African continent. Having originated in West Africa, the virus has killed thousands and is being closely monitored around the world. In South Africa, reports have emerged that growing fear of the deadly virus is beginning to impact the country’s tourism industry.

With crime on the rise, security measures are being taken up by property owners. With the recent robberies of several Apple iStores, I wasn’t surprised when I saw the iStore at The Glen Shopping Centre in the south of Johannesburg close most of its grand glass shop-front doors after it was hit in the same week as the Cresta Shopping Centre branch.

Taryn Hyam, a spokesperson for the Core Group, the official representative of Apple products in South Africa, recently noted that extensive security measures have been put in place and that all devices stolen from iStores will be deactivated and locked irreversibly, rendering them worthless for use and resale.

The Meyersdal Eco Estate, situated in the south of Johannesburg, has come under a lot of scrutiny in recent months – especially as a result of the recent tragic construction collapse, where several workers were killed and injured when part of a house that was being renovated collapsed, and the death of one giraffe that was being transported via the N1 highway from the estate.

According to the Occupational Health and Safety Act (OHSA) No 85 of 1993, as amended by the Occupational Health and Safety Amendment Act, No 181 of 1993, the aim is:

How safe are we?With the recent flare-up of natural and man-made setbacks, health, safety and security measures in the real estate sector

should be taken more seriously

“To provide for the health and safety of persons at work, and for the health and safety of persons in connection with the use of plant and machinery; the protection of persons other than persons at work against hazards to health and safety arising out of or in connection with the activities of persons at work; to establish an advisory council for occupational health and safety; and to provide for matters connected therewith.”

While legislation is in place and the OHSA is enforced, it is evident that accidents do occur due to negligence, non-compliance and illegal conduct.

Shocked over the Meyersdal incident, the Construction Sector Charter Council says that there’s an increasing trend of companies not complying with health and safety regulations. The council has called on the Department of Labour to monitor this more closely.

According to an online IOL article titled “Building industry needs wake-up call on safety”, John Graham of home inspection services company HouseCheck said that “Our building regulations are among the finest in the world but the enforcement of these regulations is abysmal. Compounding the problem is the dearth of proper on-site supervision and the concomitant collapse of the apprentice training system.”

It’s apparent that new and highly advanced technology can greatly assist commercial property owners in combating various issues such as the ones discussed. For example, Airports Company South Africa (ACSA) notes that new thermal scanning machines can detect whether passengers have a high fever. ACSA is working closely with the Department of Health and the Civil Aviation Authority to ensure South African airports are protected from the Ebola virus.

“At OR Tambo, we have thermal scanners that are managed by Port Health, which is a subsidiary of the Department of Health,” says ACSA spokesperson Unathi Batyashe-Fillis.

Apart from technology implementations, stricter policing in the construction sector is greatly needed, as is ethical monitoring. According to a PricewaterhouseCoopers report, safety is becoming a key concern, with the construction industry, the government and trade unions placing increasing focus on occupational safety. This can be seen in recent initiatives such as the Construction Health and Safety Accord of 2012.

There has also been an increase in awareness for the need for greater discussion of safety matters in companies’ annual integrated reports, increasing rigorous safety inspections by the Department of Labour, and safety stoppages. On the security front, according to Clinton Phipps, CEO of Enforce Security Services (a member of Excellerate Property Services Group), globally, the future of commercial property security lies in a greater integration with technology.

“With recent global events having made us very aware of the importance of security in shopping centres and other highly patronised commercial spaces, we see the trend moving from a relatively inconspicuous to a far more visible security presence,” says Phipps. “Going forward, we believe it will be essential for companies that offer multiple security disciplines to be able to effectively bridge the gap between technology and manned security. Many commercial property owners are not yet taking full advantage of the technology currently available, despite the fact that this is becoming more affordable and is cost-effective in the long run.”

Candace King, Editor

Ed's Letter_SUBBED.indd 6 2014/09/11 9:16 AM


from the editor’s desk

Ed's Letter_SUBBED.indd 7 2014/09/12 12:42 PM



Abland

Abreal

Oilgro


PROPERTYR E V I E W

October 2014



PROPERTYR E V I E W

October 2014

South African P

roperty Review


anagement O

ctober 2014




the lights on



The Africa series:

our monthly

country-by-country

focus







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





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Contents Review_OCT_SUBBED.indd 8 2014/09/12 1:54 PM


SAPOA congratulates…SAPOA would like to congratulate Eugenia Makgabo, Lekgolo Mayatula

and Beryl Tshaka on their new appointments with the organisation

SAPOA new appointments

Eugenia Makgabo, Acting Legal ManagerThe SAPOA Legal Department was previously responsible for all town planning, legal and company secretarial matters. With immediate effect, the SAPOA Legal Department will now only manage legal issues as well as company secretarial duties.

The Legal Officer, Eugenia Makgabo, who is an admitted attorney with a four-year LLB degree, has taken over these responsibilities and will be acting as the Legal Manager.

Lekgolo Mayatula, SAPOA Town Planning and Development ManagerSAPOA has appointed a professional planner to proactively advise and guide members and key stakeholders of the association on trends,

implications and changes in the commercial, retail and industrial property industry.

Typical outputs from this position will include contributing to, producing and coordinating the production of research papers and publications, information and trend analysis (across the municipalities on strategic themes and topics), and programmatic monitoring and evaluation as well as supporting, convening of and participation in knowledge sharing and learning events (workshops, reference groups, etc).

Beryl Tshaka, Membership Relations CoordinatorSAPOA has promoted Beryl Tshaka to Membership Relations Coordinator. She will be responsible for the management and maintenance of the entire membership database for SAPOA.

The role will also include the soliciting of membership (new and renewals), coordinating and implementing strategies to retain existing members, and minimising resignations and encouraging resigned members to rejoin the association.

The position will provide a high level of customer service and support to existing members, including building sustainable relationships with members, non-members, sponsors and others.

Tshaka will identify pertinent issues in relation to membership, such as recurring problems that may require attention/change for clarification. Tshaka will also be responsible for national membership statistics.

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0235_MDA277x56.pdf 1 2014/04/22 4:53 PM

New Appointments_SUBBED.indd 9 2014/09/12 11:47 AM


industry news

Owner management vs outsourced property management

A snapshot of consumer shopping habits

industry news

Buying property has long been considered a solid investment

– but following the market crash in 2008 and the financial crisis that continues to plague the market, owners have had to tighten their belts in the management of these assets.

This doesn’t mean owners need to take on the responsibility of managing their property portfolio single-handedly. With the right outsourced property management company on their side, companies can ensure profitability and healthy returns for investors.

“Outsourcing of property management seems to take place in three- to five-year cycles,” says Mark Souris, Managing Director of property management company Periscopic Masingita, which manages shopping centres and industrial and commercial properties.

“Larger properties, many of which are owned by listed funds, prefer to have outsourced management companies involved, primarily because of the expertise and professionalism these companies offer.”

In the past decade, outsourced property management has evolved along with the financial climate to better suit property owners of today. It now effectively serves as a drive-thru, allowing owners to choose the outsourced services they need. These include financial management, paying creditors, accounting, leasing and lease-renewal negotiations, and implementing property management software and systems.

Owners can, therefore, control the strategic aspects of their property portfolio without dealing with the day-to-day administrative functions.

Apart from clean and safe shopping centres,

South African consumers want an overall experience of visiting the shopping destination. This is according to the Broll Property Group Retail Consumer Survey 2014, launched at the 18th Annual Congress of the South African Council of Shopping Centres in Cape Town.

The survey was conducted by a third party, IPSOS, and was based on a sample size of 1 000 individuals sampled throughout South Africa in order to understand the retail consumer market in the country. Of those surveyed, 38% strongly agree that an overall shopping experience is important when thinking about where to shop,

while some use social media to keep up to date on special offers, events and new shops at shopping centres.

“Security is a major aspect in shopping centres, because when a robbery takes place, for example, shoppers are weary of visiting that centre and may not visit the centre for a while, thus impacting on centre foot traffic,” says Elaine Wilson, Divisional Director of Research and Marketing at Broll Property Group, which is part of the CBRE affiliate network.

Wilson explains that when it comes to shopping, consumers are spoilt for choice. Whether they choose to visit a regional or community shopping centre remains a matter of

Redefine concludes acquisition of Macsteel’s property portfolio and de-risks 90 Grayston developmentRedefine Properties recently announced two significant events that advance its growth strategy. Redefine Properties has agreed to acquire a portfolio of 28 industrial properties from leading steel supplier Macsteel for R2,7-billion with a 12-year triple net lease. It has also secured a lease with IBM South Africa for approximately 10 300m² of offices in Redefine Properties’ newly completed green office building at 90 Grayston Drive in Sandown, central Sandton.

Commenting on these transactions, Marc Wainer, Executive Chairman of Redefine Properties, says, “These deals further our objective of accommodating leading businesses in a diversified portfolio of larger property assets with low-risk, high- quality, inflation-beating income streams. We are pleased to add Macsteel and IBM to Redefine’s stellar list of quality tenants.”

The Macsteel transaction represents an attractive initial yield of 8,7% for Redefine Properties, escalating at eight percent per annum, with a further five-year renewal option. The Macsteel portfolio covers a total rentable area of 560 000m², with a small office component of about 12% of this area. The buildings are located across eight of South Africa’s provinces, with 75% of the space concentrated in Gauteng.

“This transaction will transform Redefine’s industrial portfolio, increasing it from approximately R5-billion to R7,7-billion, lifting the weighted average lease period from 2,5 years to 5,5 years, and bolster the defensive component of the portfolio,” says Wainer. This acquisition boosts Redefine Properties’ exposure to industrial property, better balancing its diversified commercial property portfolio. The acquisition is subject to approval by the competition authorities and is expected to be effective by 1 November 2014.

At Redefine Properties’ newly redeveloped premium-grade 90 Grayston office property, IBM will occupy (from 1 April 2015) over 55% of the 16-storey building on a 10-year lease. A further 1 500m² has also been let resulting in confirmed occupation of 66%. Strategically placed in the heart of Africa’s business hub, Redefine Properties’ redevelopment of this property has earned it a Green Building Council of South Africa 4-Star Green Star SA rating, which has positioned it among South Africa’s most innovative and recognisable buildings. “90 Grayston is ideally suited to multinational businesses such as IBM and will provide it with many unique advantages,” says Wainer. “This building is now de-risked and is one of Redefine’s largest office developments to date – and it is tailored to meet our portfolio strategy.”+27 (0)11 283 0000, Redefine.co.za

News Review_OCT_SUBBED with obit.indd 10 2014/09/12 12:00 PM


industry news

A fully scaleable open-access fibre network has officially launched at Paardevlei, Somerset West in the Western Cape, with the first

clients already utilising the connectivity system. Paardevlei, a mixed- use node managed by Paardevlei Properties (previously known as Heartland Properties) on behalf of AECI, spans about 730 hectares between Somerset Mall, Somerset West, Strand and False Bay.

With its proximity to golf courses, restaurants and shops, beaches and wine farms, a short 10- to 20-minute drive from Strand and Stellenbosch, and only 40km from the Cape Town CBD, Paardevlei is poised to offer companies the perfect premises both in terms of location and systemic benefits.

Regional Manager of Paardevlei Properties Mark Bezencon notes that just under two-million square metres of bulk is designated for development across all sectors at Paardevlei. Apart from numerous commercial and industrial entities already operating on site, two state-of-the-art medical facilities are earmarked for completion by year’s end. For this already commercially established area, the addition of the fibre network adds immense value in terms of infrastructure. Rand for rand, fibre networks offer the most efficient, affordable and reliable connectivity technology available in South Africa, and are a must for any future-driven business. Paardevlei has entered into an agreement with Frogfoot Technologies to operate the network, which, according to Frogfoot Project Manager Hannes Pieterse, “can meet any and every foreseeable IT requirement for both private users and business owners”. It has been designed to carry future demand for a completely developed mixed-use node.

Fibre networks are also the most highly available. “Chances of going offline are therefore very close to zero,” Pieterse explains. The network has two routes back to Cape Town where it physically terminates at the Teraco Data Centre, the largest vendor-neutral data centre in the country. This provides a number of advantages for consumers. Firstly, says Pieterse, it ensures a very quick turnaround for those wishing to connect. “Users can be connected to the system within less than a month of signing contracts. In addition, the fibre network’s circular route creates geographical diversity, meaning there will always be two routes for connecting to the grid, ensuring constant connectivity.”

Connection to the data centre is also an advantage for businesses with branches in Johannesburg and/or Durban, since they can all link up directly via the highly reliable fibre network. Because the network is open-access, companies and private users will also not be tied into using one service provider exclusively, leaving them freedom to negotiate. Fibre is the fastest and most efficient connectivity technology currently available. “Comparing 3G mobile technology or Wi-Fi or ADSL technologies to the lightning-fast speeds provided by fibre networks is rather like comparing a cheetah’s speed with that of a tortoise,” says Pieterse. The fibre network offers users quadruple play services, which include seamless internet speeds, extremely high- quality voice calls, real-time video and other low-latency services such as gaming and online trading. “It’s a must-have for any future-minded business, while simultaneously offering private residents fantastic high-speed and hassle-free connectivity,” says Bezencon. +27 (0)21 852 1154, Paardevlei.co.za

New open access fibre network at Paardevlei, Somerset West

industry news

This also takes the pressure off owners – they no longer need to be familiar with landlord/tenant laws, nor suffer the time and expense of visiting the property, taking responsibility for repairs, maintenance and tenant screening, or dealing with difficult tenants. Nor do they need to learn to use property management software, which allows rental payments, credit checks and criminal checks to be done online.

“Property management companies have become very professional, and with the advent of hi-tech electronic communication, they can manage more properties effectively and produce better results than ever before,” he says. “Technology has also allowed property managers to analyse and investigate data relative to the property industry, which allows for more intelligent decision-making. Some property managers have found niche markets and have become extremely knowledgeable in these market segments.”

Looking ahead, Souris says it will remain vital for property management companies to stay relevant in an uncertain economy. “The challenge remains to be cost-effective in managing clients’ properties without compromising on the quality of management services provided,” he says. “In striving to achieve these goals, property experience, expertise and knowledge, together with an effective electronic management system, will remain key in the property management arena.”+27 (0)11 202 0300, Periscopic.co.za

Mark Souris, Managing Director of property management company Periscopic Masingita

personal preference. For example, while consumers want clean and safe shopping centres (factors that rank high when considering where to shop), South African consumers also want shopping centres that offer ample parking, a range of product and service offerings, presence of independent shops, and entertainment facilities, among others.

Furthermore, the report shows that consumers have seen improvements in most frequented centres over the past three years, with 36% noting that these centres have got a lot better, while three percent did not use the same shopping centre over the past three years.

Survey respondents note five areas in which improvements were noticed. These are renovation of centres

(47%), the size of the centre increasing (with more shops to open) (39%), more/ better catering facilities (29%), the addition of new international brands (28%), and more entertainment facilities (18%).

In terms of “shopping research”, South African consumers make use of online methods when browsing for products, looking for something specific, or when checking prices or product details. However, notes Wilson, the majority of consumers still prefer to visit the physical bricks and mortar to buy and compare product prices.

According to the survey, online shopping is expected to increase in the near future as consumers get used to the idea. +27 (0)11 441 4000, Broll.co.za



industry news

South African REITs have delivered higher total returns than other asset classes over

10 years. In addition, they also represent lower risk over 10 years. Mark Stevens, SA REIT Association Marketing Committee Chairman, notes that REITs are structured to be lower-risk investments, and most have clearly defined investment strategies specifically designed to mitigate risk and optimise investor value.

When it comes to managing risk, REITs start with a diverse portfolio of properties. “Most SA REITs are diversified across various types of commercial property, such as offices, malls, warehouses, factories, hotels and even apartment blocks,” says Stevens. “These properties are often spread across different cities and provinces. They can also be spread across different grades of property. Their income comes from numerous leases with creditworthy tenants that expire at different times.” This means that if one sector, region or lease under-performs, its effect is muted because the other investments in the portfolio bolster performance.

Stevens explains that, like all stocks, REIT shares will fluctuate in price. But capital growth isn’t the only benefit to a REIT investment. The total return that REITs create for investors comes from both the

capital growth of its properties and regular dividends that REITs pay out from a significant portion of their profits. Both generally keep pace with inflation. In South Africa, REITs must pay at least 75% of their taxable earnings available to investors as dividends each year, giving investors certainty that net income will be distributed. Many pay out even more; most pay almost 100%.

A REIT’s growth in dividends comes from the growth in rental from its property assets, thanks to escalating leases. These leases make it relatively easy to predict future earnings for investors and provide a relatively stable income stream, which adjusts upwards annually thanks to built-in escalations – currently about eight percent on average for commercial property.

For investors, risk is mitigated by being able to trade out of listed REIT shares quickly. Investors can also spread risk by investing in multiple REIT companies, rather than holding a single direct property asset. Risk is further mitigated because listed REITs are regulated by legislation that requires excellent governance and reporting. REIT directors are accountable to the JSE or FSB, depending on how each REIT is structured, as well as to auditors and other external

verifiers of performance. “The South African REIT dispensation also restricts how much gearing, and the minimum level of retained funds, a REIT may have,” notes Stevens. “This provides investors with a good level of comfort that this risk is well-managed.”

The SA REIT Association represents South Africa’s listed REIT sector. SA REIT members include all listed SA REITs and represent about R250-billion worth of real estate assets. The quality of the local REITs influences our economy and the quality of people’s lives. REITs may be part of investment portfolios for a broad range of investor types, and are most suitable to investors who want exposure to property investments without the large initial capital outlay. “REITs’ unique characteristics make them a great investment portfolio diversifier,” says Stevens. “They combine the liquidity and accessibility of investing in the stock market with the stability and tangibility of owning real estate, and provide the potential of reduced portfolio risk with increased portfolio returns.”+27 (0)11 783 2201, Sareit.com

REITs have the potential to reduce risk and increase returns in an investment portfolio

Nedbank unveils its fourth green building

Mark Stevens, SA REIT Association Marketing Committee Chairman

The official opening of another Nedbank

4-Star Green Star Rated building, this time in Roodepoort, is set to reinforce the organisation’s already well-established reputation as South Africa’s truly “green” bank even further.

Nedbank Lakeview, which serves as the banking group’s campus in the west of Johannesburg, is the fourth occupied Nedbank building to achieve the sought-after 4-Star Green Star Rating from the Green Building Council of South Africa.

According to Charl de Kock, Head of Group Property Services at Nedbank, the new

Lakeview building symbolises Nedbank’s commitment to growing its sustainability journey. “The new office space represents a tangible extension of Nedbank’s vision to be a sustainability leader in South Africa,” he says.

The A-grade Lakeview development saw the consolidation of a multitude of buildings in the West Rand, with a capacity to house almost 2 000 staff. The building features an auditorium, a restaurant with a view of the lake, preferential parking for “efficient” travellers, and fully equipped pause areas on each floor where staff

can refresh and engage. Nedbank’s three other Green Star rated buildings are Nedbank Sandton Phase II in Johannesburg, Nedbank Ridgeside in Durban, and Nedbank Menlyn Maine

in Pretoria. Nedbank will be unveiling its fifth and sixth Green Star rated buildings in Newtown by the end of 2015. +27 (0)11 294 4274, Nedbank.co.za



industry news

Experian and TPN team up to bring credit and rental data together for the first time in South AfricaExperian South Africa recently

announced that it has signed an exclusive partnership with Tenant Profile Network (TPN) Credit Bureau, the largest rental bureau in South Africa, specialising in vetting tenants for rental properties.

This means that, for the first time in South Africa, people who live in rented accommodation and pay their monthly rent on time will see their positive payment behaviour being made accessible to participating credit providers, helping to open up access to more affordable credit. Information about mortgage payments in South Africa has always been recorded on credit reports, enabling mortgage holders to build a positive credit history and gain access to more finance deals.

Until now, people living in privately rented properties who meet their rent payments on time have never seen this positive information included on their credit reports. The partnership will provide Experian South Africa with access to a comprehensive rental payment database. Including rental history in credit files will enable greater financial inclusion, especially for those among South Africa’s under-banked population.

The move will allow consumers to build or rebuild good credit profiles by paying rent on time, to enable them to qualify for appropriate new leases or other financial products. The partnership’s benefits include access to more affordable credit (the inclusion of rental-payment data will help strengthen an individual’s credit history); a boost for first-time buyers (to provide a welcome boost to the credit histories of people looking to get onto the property ladder for the first time, as lenders will be able to more easily verify their full borrowing history); and easier identity verification (many financial organisations rely on electronic identity checks based on credit reports). Stronger credit reports will help more people successfully satisfy these checks, avoiding the need to resort to slower, paper-based methods.

This unique partnership offers a secure and compliant way to include a tenant’s payment history in their respective reports, strengthening their credit history and helping them qualify for more (and lower-cost) credit deals. This enhanced view of an individual’s repayment history will also improve the ability of lenders

to treat customers fairly with more accurate lending decisions based on a deeper understanding of the customers.

“This exclusive partnership will not only support our ongoing efforts to capture the total picture of a consumer’s payment record and give lenders in South Africa a better view of what a person can reasonably afford, but it will also play a valuable role in helping to tackle financial exclusion in this country,” says Michelle Beetar, Managing Director of Experian South Africa. “There are millions of people who struggle to access affordable credit because they are non-credit-active, cash-based consumers and, therefore, have a poor credit rating. The partnership between TPN and Experian South Africa to bring credit and rental data together is a ground-breaking win for people who rent, and gives participating credit providers a more comprehensive view of their applicants so that they can make more responsible lending decisions. Consumers and lenders in the UK and the US have already seen huge benefits thanks to similar partnerships Experian has undertaken there.”

The proposed affordability guidelines mean that credit providers will be required to conduct a thorough assessment of a consumer’s affordability to determine their disposable income – after servicing the necessary and statutory expenses, as well as their current credit agreements.

Rental data will enhance the credit provider’s ability to determine the expenses in the affordability assessment, thus providing a clearer indication of the discretionary income. The information will be shared via a reciprocal relationship between the participating credit provider, Experian South Africa and TPN, which means that TPN’s clients, the property managers, landlords and rental agencies will also gain a more accurate and complete picture of renters.

“TPN focuses on the collection of rental payment behaviour,” says Michelle Dickens, Managing Director of TPN Credit Bureau. “The partnership with Experian allows both credit providers and landlords to see a more complete picture of the consumer.”+27 (0)11 799 3400, Experian.co.za; +27 (0)86 187 6000, Tpn.co.za

In memory of Zenzeleni “Nick” Ndlovu“Nick is no more”Hamba kahle8 May 1980 – 9 September 2014

Nick Ndlovu sadly passed away at the age of 34, after

he was involved in a motorcar accident on his way back from a site visit. He is survived by his wife and two daughters.

His bubbly personality and mischievous smile would light up any environment. Nick was always happy and often sang or whistled while he worked.

The phrase many will remember him by is “No problem”. Nothing was too big or too small for him to carry on his broad shoulders.

Nick was fondly known as “The King” because of his personality, character, vision and drive for success.

He studied architecture at the University of Johannesburg and joined The Creative Axis Architects as a junior technologist while he was still a student. His passion for design and his commitment

and desire to make a difference in society saw his appointment as a director of the firm’s Free State regional branch.

Nick interacted with people from all walks of life, and has touched the hearts of many. The relationship he had with his colleagues, clients, family and friends was genuine. His family was the source of his strength; his backbone. Nick spoke of his wife with great pride and joy; she meant everything to him.

His passing has left a void at The Creative Axis Architects. He was a gifted man, a different man – and the world is a poorer place without him. Our condolences go to his family.




industry news

Waterfall Mall in Rustenburg, North West, is undergoing a R33-million refurbishment that will enhance its shopping experience, ensure it is well positioned for a bright future, add new services in the mall, and create welcome opportunities in the local economy.

The 50 000m² regional shopping centre with a 10 000m² Value Mart is owned and managed by Growthpoint Properties Limited. Its decision to invest in the future of the mall is also an investment in the future of the region, which has been hit hard by the recent mining strikes. “Waterfall Mall’s refurbishment will boost our shopping experience with sparkling new tiles in the malls and passages, fresh new bathrooms and a contemporary new design for our bulkheads,” says Marlene Bouwer, Centre Manager of Waterfall Mall. It will also help bring a welcome boost to our local economy. Wherever possible we are using local contractors, which helps create jobs in the area.”

The mall’s thoughtful approach to ensuring its refurbishment results in the best benefits to its community means it has also established a charity platform to donate the fixtures it is replacing, such as basins, toilets, urinals and about 7 000m² of tiles, to charity and community organisations that can use them. “We’re thrilled to be undertaking this refurbishment for our shoppers, who will be able to enjoy their shopping in a refreshed, modernised setting,” says Bouwer. “We are enhancing the shopping experience and we’re excited for the future of the mall. We have great confidence in the future of Rustenburg and its surrounds, and our investment in Waterfall Mall’s refurbishment shows our commitment to the community.”

Thanks to this refurbishment, Waterfall Mall shoppers will also enjoy a new information kiosk, which will be installed near Cape Town Fish Market. In addition to information about the mall, the new kiosk will also provide visitors with information about local tourism and accommodation within the North West region, supporting the travel and tourism industry in the area.

To help shoppers find the stores and services inside the mall, it will also provide three new digital touch-screens with information and directions. The refurbishment work is already under way and scheduled to be complete by December this year. Most work is taking place at night to minimise inconvenience to shoppers and retailers, and the centre’s trading will continue as normal. At the same time, Waterfall Mall is also refreshing its brand and will introduce a new logo and eye-catching artwork.

Waterfall Mall first opened in September 1998. Since then, it has gained strong support from the community, becoming its shopping destination of choice, with between 550 000 and 650 000 shoppers visiting the mall each month.

Driving the mall’s popularity is its passion to ensure that shoppers in this region can enjoy a world-class shopping experience with all the latest brands, trends and innovations in 135 shops, anchored by Woolworths, Game, Edgars, Pick n Pay and Ster-Kinekor. It also provides unique shopping tailored to local consumers’ needs. The mall is located at the heart of a region that is strongly connected to its natural resources. As part of this community, Waterfall Mall recently installed solar panels on its roof to take best advantage of Rustenburg’s sunny climate and ensure it minimises its own dependence on the area’s energy resources. The services of the mall’s original architect, VDO Consulting Architects, have been retained for the refurbishments, and Mont Blanc Construction has been appointed as the contractor for the project. “We believe this project will be great for our mall and our community,” says Bouwer. +27 (0)14 537 3598, Growthpoint.co.za

Rustenburg’s Waterfall Mall enjoys a R33-million refurbishment

The fund acquires six shopping malls for R425-millionContinuing its strategic

growth, Dipula Income Fund recently announced it will acquire a portfolio of six rental income-producing retail properties from Redefine Properties for R425-million.

The portfolio includes Soweto shopping centres Meadowpoint Shopping Centre, Proteapoint Shopping Centre, Dobsonpoint Shopping Centre and Pimville Square; as well as Kudube Hammanskraal Centre and Kudube Kopanong Centre (both situated in Hammanskraal in the North West province).

“The acquisitions further Dipula’s strategic investment focus on retail assets in under-

serviced areas, giving it unique access to the dense Soweto and Hammanskraal market,” says Izak Petersen, Chief Executive Officer of Dipula Income Fund. “For Dipula, these shopping centres are a great match and enhance our portfolio.”

The purchase consideration will be settled by 25% cash and 75% through the issue of Dipula Income Fund A- and B-linked units. The transaction is subject to meeting certain conditions, including Competition Commission approval.

Dipula Income Fund is a JSE-listed REIT that is distinguished for the exceptional B-BBEE credentials of the fund

and its asset manager. The fund originated from two majority black-owned property funds, Mergence Africa Property Fund and Dipula Property Fund.

Dipula Income Fund’s diversified property portfolio comprises 179 retail, industrial and office properties consisting of 577 000m² of lettable area located countrywide. By size, Dipula Income Fund’s portfolio is 71% concentrated at the centre of South Africa’s economic activity in Gauteng. It is also weighted towards retail property, which comprises 55% of its portfolio.

“This transaction furthers our growth through good

acquisitions, and also ensures sustainable growth in the long term for investors,” says Petersen. +27 (0)11 325 2112, Dipula.co.za

Izak Petersen, Chief Executive Officer of Dipula Income Fund

News Review EXTRA PAGES OCTOBER_SUBBED.indd 14 2014/09/12 12:11 PM


industry news

Freedom kicks off new residential developments to meet SA’s demand for quality housing

industry news

registration information

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saPoa has developed an e-learning training method for its members. this training platform includes the

filming and production of video content which enables saPoa to manage the delivery of training material to audience groups, who will be able to access training

material on their desktops, tablets and mobile devices.

Newly listed Freedom Property Fund recently announced it has launched several major projects, including two residential property developments, which will boost its portfolio of income-generating rental stock. It is also unlocking capital by releasing residential properties for strategic sale to the market.

In Burgersfort, Limpopo – South Africa’s fastest-growing town, driven by mining – Freedom Property Fund has kicked off the development of the Tubatse Resident Estate, which will include a mix of 3 700 residential units with various housing options and communal facilities.

“There is a tremendous demand for accommodation in this area,” says Tyrone Govender, Chief Executive Officer of Freedom Property Fund. “The thriving local economy is experiencing significant growth resulting from the investment from the majority of mining corporations over the last few years, as well as increased activity in the retail sector by the likes of Redefine and Resilient which responds to this. The mines estimate the need for housing in the area at around 20 000 units right now, and this demand spans the entire economic spectrum.”

Tubatse Residential Estate is a natural extension of the town that will create a quality residential community consisting of about 2 000 full title units that average about 220m² and 1 700 sectional title units with an average size of 76m².

The sectional title units, which form the first phase of the estate, are being developed by Freedom Property Fund and will be held for lease. The development benefits from a 12-month rental guarantee. However, with the strong levels of demand in the town, Govender

says the units are expected to be leased as they become available.

On a prime site in Tshwane, Freedom Property Fund is also developing 90 residential units at Montana Residential, at a yield in excess of 12%. This medium-cost secure residential estate is in the highly accessible, high-demand node adjacent to the popular Colonnade Shopping Centre and the Zambezi Country Estate.

The units will be held as part of Freedom Property Fund’s income- generating rental stock, and rolled out in high-density blocks. The development benefits from a rental guarantee for the first 12 months after completion, and Govender confirms there is already a waiting list of tenants for these homes.

Unlocking capital for further development projects within Freedom Property Fund, it has started with its strategic sale of 261 services residential stands in Miami Village, in the St Helena Bay area of the Western Cape west coast. It has already concluded sale agreements on 35 of the ready-to-develop stands, which average about 500m², at R150 000 a stand. “The fully serviced gated estate is in an established neighbourhood in this picturesque part of the country, which is a favourite destination among South Africans for its beautiful and tranquil setting,” says Govender. “We’re seeing demand in the area picking up for both residential and holiday homes. Freedom will continue to optimise the development of our property portfolio and unlock value and new opportunities. We’ll continue to develop our excellent pipeline of opportunities to build a portfolio with a strong weighting in high-demand residential property held for lease, to drive the best value for our investors.” +27 (0)10 0038 451, Freedompropertyfund.com

News Review EXTRA PAGES OCTOBER_SUBBED.indd 15 2014/09/15 11:28 AM


opinion

3087 SAPOA Courses AD (21-08-2014).indd 1Peter Townshend_SUBBED.indd 16 2014/09/12 12:46 PM


opinion

2014/08/26 12:45 PMPeter Townshend_SUBBED.indd 17 2014/09/12 12:46 PM


education, training and development education, training and development

According to Indoor Air Facts by the Environmental

Protection Agency, “A 1984 World Health Organization Committee report suggested that up to 30% of new and remodelled buildings worldwide may be the subject of excessive complaints related to indoor air quality. Often this condition is temporary, but some buildings have long-term problems. Frequently, problems occur when a build is operated or maintained in a manner that is inconsistent with its original design or prescribed operating procedures. Sometimes indoor air problems are a result of poor building design or occupant activities.”

In order to evaluate these facts, best practice requires that the services of a registered occupational hygienist be obtained to investigate and evaluate the actual conditions against legal compliance before embarking on costly interventions.

The traditional approach to health hazards in the workplace is to rely on an occupational hygiene practitioner to recognise, evaluate and control the occupational hygiene risks. The modern approach is to initiate a health conservation programme whereby occupational hygiene risks are identified by an occupational hygienist and by training and empowering dedicated personnel to evaluate the efficiency of implemented control measures in their

own workplaces on an ongoing basis, thus moving the emphasis and resources to preventative action.

Every employer, employee, landlord and tenant as well as the public in South Africa look to the Occupational Health and Safety Act and Regulations as administered by the Department of Labour for their legal compliance and protection.

A question raised is: can you, as an employer, claim that you work within all the regulations of the law? A few examples of where compliance is required are listed below.

According to the Environmental Regulation for Workplaces as promulgated under the Occupational Health and Safety Act, 1993, Regulation 5 – Ventilation:

An employer shall ensure that every workplace in his undertaking is ventilated either by natural or mechanical means. The Regulations go on to address safety of air breathed, levels of carbon dioxide, exposure limits for airborne substances and lower explosive limits.

SANS 10400: the application of the National Building Regulations: Part O: Ventilation:

4.3.1 Where, for the purposes of natural ventilation, a room is provided with an opening or openings, the total openings shall not be less than five percent of the floor area.

4.3.2 In the absence of natural ventilation then artificial ventilation should be introduced to a general office area for example, at the rate

of two air changes per hour and at 7,5L/s air supply per person.

The practice of occupational hygiene comprises three main steps: the recognition, the evaluation and the control of occupational hazards.

Recognition The recognition of hazards in the work environment is usually carried out during the initial survey or characterisation, which will allow the occupational hygienist to develop some possible fundamental steps in an occupational hygiene study and in making an informed decision beforehand as to which hazards have to be evaluated.

Inadequate ventilation: which may occur if heating, ventilating, and air conditioning (HVAC) systems do not effectively distribute air to the people in the building and is thought to be an important factor when building occupants experience ill-health and discomfort that appears to be linked to time spent in the building.

Chemical contaminants from indoor sources: for example adhesives, carpeting, upholstery, formaldehyde from manufactured wood products, printing machines, pesticides and cleaning agents that may emit volatile organic compounds.

Chemical contaminants from outdoor sources: for example, motorcar exhaust fumes, plumbing vents and extraction systems from adjacent buildings.

Martin Ferguson, SAPOA’s HR, Education, Training

and Development Manager, collaborates

with thought leaders in South Africa’s property sector

Sick building syndrome: myth or fact?General Manager of Health and Safety Compliance Practitioners ComSaf (Pty) Ltd (a subsidiary of the ComPrac Holdings Group) Frank Cotton provides insight into occupational hygiene risks and evaluations, and the legal regulations and implications in question

HR_OCT_SUBBED.indd 18 2014/09/11 9:47 AM


education, training and development

General Manager of Health and Safety Compliance Practitioners ComSaf (Pty) Ltd (a subsidiary of the ComPrac Holdings Group) Frank Cotton

Biological contaminants: bacteria, moulds, pollen and viruses are types of biological contaminants that can breed in stagnant water and on damp organic materials. Insect infestations, animals and birds can be a source of biological contamination.

Evaluation Evaluation will confirm the presence of the suspected hazardous agent and will help assess the potential magnitude of exposure. The levels of hazardous agents recognised in the environment during the preliminary survey are determined qualitatively and quantitatively using various scientific laboratory analysis techniques.

Biological agent contamination is a growing

concern in today’s indoor environments. A thorough evaluation may be necessary to positively confirm its presence because contamination may be hard to detect by sight or smell. Evaluation may involve collection of bulk air samples and swab samples, followed by analysis at a microbiological laboratory.

Volatile organic compounds: a huge volume of hydrocarbons is produced and used annually worldwide. They are present in building environments principally as solvents, cleaning fluids and aerosol propellants. Exposure occurs over relatively short durations but levels may be sufficiently high to have potential for adverse irritating health effects. Evaluation usually involves collection of bulk

air samples, adsorbing the hydrocarbon on activated charcoal and an analysis by gas chromatography.

A correct evaluation of hazards should be based on accurate and precise procedures for the measurement of environmental agents, for air sampling and analysis, as well as for the treatment of data obtained. This is best achieved by engaging with a competent occupational hygiene organisation geared to deal with all possible eventualities.

ControlThe ultimate objective in the practice of occupational hygiene is the control of health hazards in the working environment, which can be achieved through adequate preventative measures.

royalhaskoningdhv.com/za

Welcome to the future – a future of Mwangaza We are all writing a part of the script which tomorrow’s society will play out. At Royal HaskoningDHV we would like the title to read: ‘Welcome to the future’ - and for our chapter in that script to read ‘Mwangaza’ - a Swahili word which means ‘light’. Together with our partners and clients we consider how we can create a welcoming future - developing efficient and smart living.

Whether switching on a light, travelling to work or drinking a clean glass of water - the solutions and work of our engineers surround us, making lives better and brighter. Our work contributes to the sustainable development of communities. Together, we deliver innovative sustainable answers to today’s challenges.

Royal HaskoningDHV is an independent, international engineering and project management consultancy.

HR_OCT_SUBBED.indd 19 2014/09/11 9:47 AM


legal update

Estate agents have an obligation towards their clients, and in so

doing need to adhere to clients’ instructions and achieve the mandate given to them. While achieving such mandate, it is imperative for estate agents to be cognisant of legislative compliance. The Estate Agency Affairs Act 1976, (Act No 112 of 1976) and the Financial Intelligence Centre Act (FICA) are among the imperative pieces of legislation that an estate agent must abide by.

A. Accountable institutions under FICAa. Accountable institutions are

defined in FICA under schedule 1 and include, among others, the following:

● An attorney as defined in the Attorneys Act, 1979 (Act No 53 of 1979);

● A board of executors or a trust company or any other person that invests, keeps in safe custody, controls or administers trust property within the meaning of the Trust Property Control Act, 1988 (Act No 57 of 1988);

● An estate agent as defined in the Estate Agents Act, 1976 (Act No 112 of 1976);

● A financial instrument trader as defined in the Financial Markets Control Act, 1989 (Act No 55 of 1989);

● A management company registered in terms of the Unit Trusts Control Act, 1981 (Act No 54 of 1981); and

● A person who carries on the “business of a bank” as defined in the Banks Act, 1990 (Act No 94 of 1990).

b. Estate agents in accordance with FICA are regarded as accountable institutions and therefore have to be guided by the provisions in FICA.

c. The head office, each of its branches and each franchise holder of an estate agent will be regarded as a separate accountable institution and will be required to register separately with the Financial Intelligence Centre.

d. In the event that there is non-compliance with FICA by an estate agent, there are attached penalties. Accountable institutions have a duty to identify clients, a duty to keep record and advise institutions, and to advise the Centre of clients, among other things.

B. Who is regarded as a client?a. FICA does not provide a

definition for the term “client”. However, the Financial Intelligence Centre provides

guidance with regards to the definition of a client, which is contained in a Public Compliance Communication (PCC). According to the PCC, a client is defined as follows:

“The client of an estate agent is the person who provides the estate agent with a mandate, and such client has to be identified and verified in terms of the FIC Act and the relevant Regulations to the FIC Act.”

b. There is reference that is being made to the Code of Conduct for estate agents issued in terms of Section 8 (b) of the Estate Agency Affairs Act, Act 112 of 1976.

c. In accordance with the PCC it is stated that Section 1(c) of the Code of Conduct defines a client of an estate agent as a person who has given an estate agent a mandate, provided that, should an estate agent have conflicting mandates in respect of a particular immovable property, the person whose mandate has first been accepted by the estate agent is considered the client of the estate agent.

d. The Code of Conduct goes further in imposing an ethical duty on estate agents to not

Eugenia Makgabo, Admitted Attorney of the High Court and Acting Legal Manager at SAPOA

Estate agents mandate defined in accordance with FICAIn light of the stringent legalities of the Financial Intelligence Centre Act (FICA), estate agents need to be fully cognisant of all the implications in line with their clients’ instructions

Legal_SUBBED.indd 20 2014/09/11 4:40 PM


legal update

only protect the interests of their clients at all times but also to have due regard for the interests of all other parties concerned with a particular transaction.

e. The mandate given to an estate agent is imperative and directs the estate agent’s responsibilities, and extends to who the estate agent has a duty towards and therefore determines who is regarded as a client. It is essential for an estate agent to receive a mandate from either party that is seller/lessor/purchaser/lessee.

A seller, for example, may give a broker a sole mandate; such mandate must be in writing. The seller is under no obligation to give a sole mandate and may choose to give an open mandate. The estate agent can only act in terms of instructions. This would be the definitive factor in defining who the client is.

According to the PCC, where a conflict of interest exists the client would be the one who first gave the mandate.

f. Section 21 of FICA states:

“An accountable institution may not establish a business relationship or conclude a single transaction with a client unless the accountable institution has taken the prescribed steps.”

g. The aforementioned prescribed steps relate to the identification and verification of a client. Further, exemption 2 of the exemptions to the FIC Act made in terms of Section 74 of the FIC Act relaxes the prohibition by Section 21 of the FIC Act, by allowing accountable institutions to accept a mandate from a client to establish a business relationship or to conclude a single transaction, or take any similar preparatory steps with a view to transacting with the client, before completing the

verification of the identity of that prospective client.

The estate agent will thus be prohibited from performing the mandate until he or she has obtained the verification documents and the identity of the client is properly identified.

C. FICA exemptionsIt is important for estate agents to be aware of the exemptions that are applicable in accordance with FICA, which are however subject to certain conditions.

Exemption 11 of the Exemptions to the FIC Act in terms of Section 74 of the FIC Act provides that estate agents as defined in the Estate Agency Affairs Act are exempted from the following:

● Duty to identify clients; ● Duty to keep record; and ● Measures to promote compliance

by accountable institutions of Chapter 3 of the FIC Act.

Estate agents can only rely on this exemption in certain instances and in respect of that part of their business to which those services relate.

In order for the aforementioned exemption to be applicable, estate agents must render services referred to in the Estate Agency Affairs Act 1976, (Act No 112 of 1976).

These services are specifically where an estate agent is collecting or receiving:

● Money payable by any person to or on behalf of a developer or a body corporate in terms of the Sectional Titles Act, 1986 (Act No 95 of 1986), in respect of a unit or proposed unit; and

● Money on behalf of a share block company payable by the holder of a share in such company or his nominee.

D. ConclusionEstate agents need to be cognisant of various FICA requirements, and need to adhere to them diligently. Non-compliance with FICA provisions will result in a hefty fine or imprisonment.

As a fully integrated commercial property company, Milestone Property Group considers every transaction as a step towards being able to compete fearlessly in the growing commercial office space markets. With an excess of R400 million in deals concluded as well as a presence in three provinces, we are proud of our milestones and continue to punch above our weight.

For more information, contact:[email protected]+27 (011) 463 8071

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Legal_SUBBED.indd 21 2014/09/11 4:42 PM


SAPOA National Councillors

Q

QQ

QWho is John Jack?I work for Galetti Knight Frank, heading up the Johannesburg office for the company. My role at SAPOA as Chairman of the Brokers Committee is to encourage dialogue in the brokering sector and advise on any conflicts that are brought to SAPOA within my ambit.

What are your future plans with SAPOA? What would you like to achieve at or for the organisation?As I mentioned, our main focus is to encourage dialogue and achieve better reporting on leasing activity nationally. Very little of this information is shared and collated; as a result, nobody has access to up-to-date information. The best effort to date is the Office Vacancy Survey Committee, which meets once a

CouncillorsWe speak to our National Councillors about their role at SAPOA and their future goals at the organisation

By Candace King

in conversationquarter to compile office vacancies. We would like to emulate this committee for industrial property.

When did you join SAPOA? What are your thoughts about

the organisation?I joined SAPOA in 2006. Given the size of the market in Johannesburg, the functions and communication within the organisation are far more

involved up here, which has several benefits for landlords.

What have been your greatest achievements at SAPOA so far?Our greatest achievement is yet to come. We are going to release a new publication aimed entirely at brokers and landlords; it should be released during the final quarter of this year.

QQ

the Chairman of the National Property Developers Forum.

When did you join SAPOA? What are your thoughts about the organisation?iProp has been a member of SAPOA since before I joined the company in 1997. SAPOA is a member-driven organisation focusing on the needs and responsibilities of its members. Over the years, it has grown in stature and is now recognised as a significant organisation in South African – and to a growing extent international – commerce and industry.

Who is John Martin?I’ve been lucky enough to have had two wonderful careers – in

the construction industry and in property – spanning the

best part of 40 years. The last 17 of these have been with iProp. iProp develops townships on land that was used for mining and is now excess to the mining

company’s requirements. The townships are designed

for industrial, commercial and residential use and are situated

on the mining belt stretching from Roodepoort to Springs. My role at SAPOA is that of

Councillors_OCT_SUBBED.indd 22 2014/09/11 10:02 AM


SAPOA National Councillors

Q

Q

Q

Q

QQAs part of your portfolio with SAPOA, what are the current industry challenges and how can these be solved? How can SAPOA assist with these?One of the industry challenges currently being faced is the request for proposal process. Given international best practice and suggestions from national stakeholders, we are starting to refine a process that is, to date, little understood by certain parties – and largely abused by the market.

Who is Nicole Baumgarten?I’m the Operations Director for Finlay and Associates. I joined the company in 2002 as the Marketing Manager and later took on the role of Marketing Director. Finlay and Associates has been in operation for 31 years; we manage portfolios for some of the largest listed property companies. The company specialises in the management of shopping centres and has been involved in the leasing of several large- scale retail developments.

Our services span a number of areas, including due diligence, project management, tenant relocations and tender management for private companies, parastatals and local government. The company has offices in Johannesburg, Nelspruit and Polokwane, and recently opened an office in Mozambique. I have remained involved with SAPOA over the years, serving on various committees.

When did you join SAPOA? What are your thoughts about the organisation?The organisations I have worked with have always been members of SAPOA, so I’ve been involved with SAPOA one way or another since 1996. The organisation has changed immensely since then and remains relevant, addressing issues that affect its members at the moment.

What have been your greatest achievements with SAPOA so far?I have served on several committees over the years, including the Marketing Committee, Convention Committee and National Council and, more recently, the Sustainability Committee, and Property and Facilities

Management Committee. As Chairperson of the Property and Facilities Management Committee, I look forward to addressing the various challenges facing this sub- sector. Finlay and Associates’ involvement with SAPOA dates back many years as our CEO, Lynette Finlay, was the first female President of SAPOA.

As part of your portfolio with SAPOA, what are the current industry challenges, and how can these be solved? How can SAPOA assist with these?There are many issues facing the Property and Facilities Management Committee. Some of the more pressing issues are municipal billing, addressing challenges in advocacy and compliance (including the impact of pending legislation such as the Protection of Personal Information Act), and the rising cost of running and maintaining buildings. We’ll be working alongside the Sustainability Committee to address operating cost issues. The Committee’s Past Chairperson Gerard Kirchner compiled the Service Guidelines for Property Management, which will be published this year.

What are your future plans with SAPOA? What would you like to achieve at or for the organisation?Because of the increase in running costs, which places further pressure on rentals, leasing and yields, I believe the pressure will be on to innovate more cost-effective solutions for sustainability measures in buildings. Sustainability is finally meeting mainstream demand, but the retrofit costs on project viability are still prohibitive. So we face exciting times ahead as efforts to reduce costs in a more sustainable way become more cost-effective to implement.

QQ

Q

which the organisation has now proved to be successful in.

What are your future plans with SAPOA? What would you like to achieve at or for the organisation?I will use my position in the National Developers Forum to grow the communication between the public and private organisations populating the property industry. In doing so, we will explore opportunities for cooperation and problem-solving. Hopefully we will have a bit of fun along the way.

Considering the diverse backgrounds of the parties, this is a major achievement, and it provides a platform for continuing dialogue in a spirit of mutual respect and trust.

What have been your greatest achievements with SAPOA so far?I don’t have any track record with SAPOA, this being the first time I have held an office here. My best recollection is going with the SAPOA delegation to MIPIM when it was SAPOA’s first visit there; this was SAPOA’s first step in internationalising itself,

As part of your portfolio with SAPOA, what are the current industry challenges, and how can these be solved? How can SAPOA assist with these?The current challenge facing the property industry is balancing the needs and responsibilities of the members in the industry with those of the community as represented by public bodies, labour organisations and community leaders. This will be solved by ongoing dialogue between these parties. SAPOA has facilitated this dialogue to a stage where the parties are now understanding one another.

Councillors_OCT_SUBBED.indd 23 2014/09/11 10:03 AM


theme leader

Outsourcing of FM services in SA

Growth in the facilities management sector is

set to be mainly driven by infrastructure development and

the increased need by end-users to outsource this function

By Denise Mhlanga

Sulayman Abdullah, Chief Executive Offi cer of Excellerate Facilities Management, a company in the Excellerate Property Services Group

Andries Smit, Managing Director of Motseng-Selmec, a facilities management and infrastructure maintenance company in the Motseng Investment Holdings Group

Facilities Management (FM) is rapidly emerging as an important factor that plays

a major role in boosting the income streams of property assets.

Now more than ever, the integration of e� ective FM in the commercial property sector plays a relevant role, not only addressing energy saving and waste recycling and minimising the use and pollution of water, but also with regards to green issues during both the construction and use phase of a building, explains Sulayman Abdullah, Chief Executive O� cer of Excellerate Facilities Management, a company in the Excellerate Property Services Group.

Furthermore, he says that by reducing operating costs, landlords have the potential to achieve a higher rental net income while retaining tenants.

FM services in the property sector According to Andries Smit, Managing Director of Motseng-Selmec, a FM and infrastructure maintenance company in the Motseng Investment Holdings Group, the growth trend of FM outsourcing in South Africa has been a fast one compared with the growth of FM itself.

“The outsourcing of FM services has become a strategic business tool used by organisations to plan their future, beat their competitors and minimise the risk attached to the rapidly changing world climate,” he says. “Even though in the South African context it is still in the developing stages, the use of outsourcing has gone beyond

the basics of cost cutting.” Also, says Abdullah, they believe that a one-size-� ts-all approach does not work because di� erent organisations have di� erent facilities needs and solutions.

In South Africa, an integrated approach is adopted to manage facilities in line with prime property management objectives such as leasing, rental collection, tenant liaison and general administration. These are described as “hard and soft services”. Hard services are those elements that form physical parts of the building, such as the structure itself, exterior and interior � nishes, plumbing, mechanical and electrical installations, o� ce installations, maintenance and refurbishments. Soft services focus on issues such as security, cleaning, pest control, hygiene and landscaping.

In some instances, FM services can be extended to incorporate additional services such as � eet, mail and cafeteria management, says Abdullah.

According to Smit, with � nancial constraints a major concern for businesses and property owners, it has become critical for them to look at ways in which they can improve shareholder value by making existing assets work harder while minimising expenditure.

“In our experience, organisations that achieve the most value are those that realise that their built assets are not just bricks and mortar, but also an opportunity for generating improved business e� ciencies,” he says. The key is in understanding the direct contribution that built assets bring to

Revenues (ZAR Million)

Revenues (ZAR Million)

Revenue Growth (%)

Revenue Growth (%)

Revenue Growth (%)

Revenues (ZAR Million)Revenues (ZAR Million)

Revenue Growth (%)

5.86.06.2

6.46.66.8

7.07.27.4

Reve

nue

Gro

wth

(%)

Reve

nues

(ZAR

Mill

ion)

05,000

10,000

15,00020,00025,000

30,00035,00040,000

2011

6.3 6.5 6.7 7.0 7.2

2012 2013 2014 20152010

24,814.4 26,389.2 28,110.1 30,001.6 32,116.4 34,428.4

South African FM market: Market revenues and growth rates, 2010-2015

Source: Frost & Sullivan (Note: All fi gures are rounded; the base year is 2010)

Theme Leader_OCT_SUBBED.indd 24 2014/09/11 10:06 AM

theme leader

25SOUTH AFRICAN PROPERTY REVIEW 25SOUTH AFRICAN PROPERTY REVIEW

business revenues and the effective delivery of services.

Once you make that link and are able to benchmark the performance, you can identify how your assets could be better managed to generate greater revenue, or where efficiencies could be identified to save you money, explains Smit.

FM industry growth and performance Frost & Sullivan conducted a study that shows that the FM sector revenue in South Africa was valued at substantial monetary subsistence.

The study showed that approximately 70% of that total market revenue was generated by the in-house FM market segment, says Chris Aslett, Director: Technical at Broll Facilities Management, a division of the Broll Property Group. It is against this backdrop that Broll FM believes that the FM market is anticipated to achieve a growth rate of approximately 6,3% in 2015 and 2016, with further steady growth to reach 7,2% in later years.

“We also think that growth in the market will mainly be driven by infrastructure development and the increased need by end-users to outsource their FM functions, thus allowing companies to focus on their core operations,” says Aslett.

Smit notes that, according to a study done by the Copenhagen Institute for Futures Studies in 2011, it is predicted that the FM industry in 2020 will be very different from what it is today. The industry is becoming more professional while new technologies, regulations and customer requirements reshape the face of business.

“Sustainability will continue to be an important trend over the next decade, while global warming, environmental challenges and resource scarcity remain topics of great interest for the FM and services industry,” he says.

According to Abdullah, FM as an industry profession is still in its infancy stages. However, growth levels have been experienced where clients have come to the conclusion that the experience brought by a specialist FM services provider allows them to focus on their core business.

“A concern is that, in the coming years, if further economic strain is placed on the business sector, organisations may attempt to undertake the FM role themselves,” says Abdullah. “This would be unfortunate and self-defeating because it would not take into account the indirect costs associated with poor FM versus the savings of efficient and cost-effective FM.”

Current FM trends Smit says there is increased focus on energy management and green building technologies. This has been a major driver for FM services in South Africa through the Green Buildings Council of South Africa, which aims to promote “savings” in the property sector. The concept of green buildings is a developing initiative in South Africa, and most companies align FM with energy saving by making their facilities managers undertake sustainability management functions as well, he says.

“We believe that the appointment of a single supplier significantly reduces the total cost of outsourcing to the property owner,” says Smit.

Abdullah points to three main trends: computer-aided FM, energy efficiency and strategic facilities solutions.

Meanwhile, Aslett says linking FM to business strategy is key, as is preparing for emergencies in the workplace (safety and security, for example) and sustainability, including environmental responsibility, energy management, and investing in high-performance systems such as indoor air-quality issues.

Property companies and FM challenges Smit notes that some institutional property owners prefer in-house FM services instead of outsourcing to third parties, because they want to be “hands-on” and have more control over the outcome of the FM services.

FM in South Africa has been well- received in the constant drive for efficiency, effectiveness and optimal building performance, says Abdullah. However, there are some challenges because in many cases, FM plays a reactive role. The goal will always be to shift to a more proactive role. “One of the challenges is to convince property owners of the reality that FM supports their core business functions – and that, as such, it is an essential part of their business.”

A survey Frost & Sullivan conducted on the South African FM industry in 2012 revealed that companies face many challenges, including the fact that there is limited recognition of the industry, lack of appreciation of FM services by end-users (most cost-cutting initiatives) and lack of competition within the market.

The South African outsourced FM market is dominated by a few major companies that offer their services to major end-users in the commercial and industrial sectors – and according to Abdullah, the presence of large companies inhibits market penetration by smaller FM operators.

Chris Aslett, Director: Technical at Broll Facilities Management, a division of the Broll Property Group

“One of the challenges is to convince property owners of the reality that FM supports their core business functions – and that, as such, it’s an essential part of their business”

Theme Leader_OCT_SUBBED.indd 25 2014/09/11 10:07 AM


eye on Africa


The Africa series:

our monthly

country-by-country

focus

Tanzania

▼ Population 49,25-million (2013)▼ Major cities Dar es Salaam (3-million),

Mwanza (1,2-million), Arusha (0,5-million), Dodoma (0,3-million)

▼ Currency Tanzanian shilling (TZS)▼ Total area 947 300km²▼ GDP growth 7% (2013)▼ Key industries Agricultural processing;

diamond, gold and iron mining; salt, soda ash; cement; oil re� ning

Tanzania at a glance

Africa uncovered

While many African countries have experienced internal strife for years,

Tanzania has been relatively unscathed. The east African state is politically stable and has, over the past 10 years, experienced good economic growth.

After gaining independence from British colonial rule during the early 1960s, Tanzania became what it is known today, after the mainland Tanganyika merged with the island of Zanzibar to form one nation in 1964. The political union between Tanganyika and Zanzibar has endured more than four decades of change.

Throughout its history, Tanzania was still infantile in terms of trade and agriculture, with few exportable minerals and a primitive agricultural system.

In an e� ort to change this, Tanzania’s � rst president, Julius Nyerere, introduced the 1967 Arusha Declaration, which called for self-reliance through the creation of cooperative farm villages and the nationalisation of factories, plantations, banks and private companies.

However, a decade later, this intervention programme resulted in failure despite � nancial and technical support from the World Bank and other countries. This was the result of ine� ciency, corruption, internal resistance and the rise in the price of imported petroleum.

Tanzania’s economic distress worsened in 1979 and 1981 because of a pricey military intervention to overthrow President Idi Amin of Uganda. Nyerere’s successor, Ali Hassan Mwinyi, attempted to boost productivity and attract foreign investment by eradicating government control of the economy.

After multi-party politics was introduced in 1992, single-party rule concluded in 1995 with the � rst democratic elections held in the country since the 1970s.

After much change, Tanzania’s growth and stability has been commendable. It is close to being a fully integrated, liberalised market economy as government still retains a presence in sectors such as telecommunications, banking, energy and mining.

Although its past has been relatively stable with decent economic growth, Tanzania still

has a long way to go, with infrastructure and poverty as its key concerns

By Candace King

Its annual growth rate has averaged 6,7% since 2006 – one of the best in sub-Saharan Africa. The country’s natural-resource o� ering is intriguing – gold earnings have been increasing and the discovery of a major o� shore gas � eld is promising.

Constituting more than one-quarter of GDP, agriculture is a prime sector of the economy that provides 85% of exports, and employs about 80% of the work force. The Tanzanian government has increased spending on agriculture to seven percent of its budget.

The country has attracted foreign investment and has a booming tourism industry, which serves as a crucial revenue earner – apart from its prized Kilimanjaro, Africa’s highest mountain; Tanzania boasts many national parks, including the Serengeti.

Health, education and other basic services have been improved over the past decade, with more than 90% of children now going to primary school. Private sector growth and investment has been boosted after recent banking reforms, resulting in the expansion of the � nancial sector – foreign-owned banks account for about 48% of the banking industry’s total assets.

Africa Tanzania_SUBBED.indd 26 2014/09/11 10:11 AM

eye on Africa

27SOUTH AFRICAN PROPERTY REVIEW 27SOUTH AFRICAN PROPERTY REVIEW

eye on Africa

Tanzania



eye on Africa

Dar es Salaam prime rents and yields

Prime rents Prime yields

Offices US$21/m2 per month 9%

Retail US$30/m² per month 10%

Industrial US$6/m² per month 10%

Residential US$10 000 per month* 6%

Source: Knight Frank LLP * Four-bedroom executive house – prime location

Population by millions

Sum(Population (thousand))

110 - 1,400

1,400 - 1,830

1,830 - 3,900

Sum(Population (thousand))

110 - 1,400

1,400 - 1,830

1,830 - 3,900

The twin towers of the Bank of Tanzania as seen from Dar es Salaam's coastline

Despite its success, Tanzania remains one of the poorest countries in the world, with most of its population living below the World Bank poverty line – 30% of its people live on less than £7 (about R125) a month.

While its GDP growth has steadily increased, growth has occurred in sectors with low employment and productivity rates. Tanzania’s employment-to-population ratio sits at 80%; however, 36% of those employed live below the nationally defined poverty line.

Other issues include gender bias as well as ritual attacks. Women are paid lower wages than their male counterparts – the average monthly income among employed males is almost twice as high as that of female workers. Recently, there has also been a spike in ritual attacks and killings of people with albinism in Tanzania.

Looking ahead, Tanzania will continue to stimulate growth. Spurred by transport, communications, manufacturing and agriculture, and supported by public investment in infrastructure, the economy is projected to grow by about seven percent in 2014 and 2015.

The government is expected to maintain fiscal consolidation aimed at expenditure and debt management, as well as a tight monetary policy to anchor inflation. Furthermore, the preparation of the new constitution is in its final stages – it is expected to be in place before the next general election in 2015.

The Tanzanian property industryProperty development, especially in terms of infrastructure, is key to Tanzania’s quest to strengthen its economy and stimulate growth.

However, the country’s local and regional economy is being hampered as a result of serious infrastructure challenges that it currently faces.

According to the 2013-14 Competitiveness Index of the World Economic Forum (WEF), Tanzania has a score of 3,2 out of 7 on quality of overall infrastructure, ranking 124th out of 148 countries.

The country’s infrastructure is plagued by the poor state of its transport, energy, water and port facilities. Furthermore, the power sector faces high demand coupled with limited supply – only 24% of the population has access to electricity. It scored 2,3 out of 7 in the WEF Competitive Index on quality of electricity supply, ranking 131st out of 148 countries.

The Africa Infrastructure Country Diagnostic (conducted in 2010) estimated that 1,3% of Tanzania’s improved growth performance during the 2000s can be attributed to infrastructure improvements, especially in the area of information and communication technology.

The Tanzanian government has identified infrastructure as a key concern and has thus made it a priority – infrastructure is top of the agenda in the National Strategy for Growth and Reduction of Poverty, the government’s five-year development plan. Moreover, the government has established a public-private partnership policy in order to guide the participation of the private sector in financing infrastructure. The World Bank, the International Monetary Fund and various bilateral donors have also provided funds to rehabilitate Tanzania’s ageing economic infrastructure.

Retail marketTanzania’s retail market is poised for growth, especially in Dar es Salaam. Large retail schemes and small retail centres are cropping up, particularly in up-market residential areas such as Oyster Bay, Msasani and Mikocheni.

Opened in November 2006, the 19 000m² Mlimani City is Tanzania’s biggest purpose-built shopping centre and the country’s first indoor air-conditioned mall. Other developments include the Quality Plaza, Viva Towers and Uhuru Heights. Further new retail space is expected to be developed in the city centre.

ABOVE The harbour at Dar es Salaam


eye on Africa


The Local Authority Pension Fund is also developing shopping malls in the Kirumba area of Mwanza and the Kaloleni area of Arusha, both on a joint venture basis with the local city authorities.

There appears to be latent demand for a large modern retail development in the prime “retail triangle” of Dar es Salaam. However, such a scheme is yet to be developed.

Industrial and o� ce marketTanzania’s industrial sector is dominated by owner occupiers and is mainly focused on the provision of warehousing space and light industrial activities. While new stock has become available in the industrial area on Nyerere and Mandela Roads as a result of the redevelopment of older warehouses,

Real GDP growth

%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(e) 2014(p) 2015(p)2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(e) 2014(p) 2015(p)0

1

2

3

4

5

6

7

8

9

10

Real GDP growth (%) Africa (%)Eastern Africa (%)

Source: AfDB, Statistics Department AEO; Estimates (e); projections (p)

the Millennium Business Park remains the only major industrial development in Dar es Salaam.

The o� ce sector is gaining momentum, garnering particular existence and growth in Dar es Salaam, where most of the country’s o� ce market activity is situated. Several signi� cant new developments have recently been completed, which illustrates the sector’s viability. While developments are taking place, the strength of recent leasing activity shows that there is still signi� cant pent-up demand for quality o� ce space in the city. There are also emerging o� ce markets in the cities of Mwanza and Arusha, where the availability of quality space remains limited but increasing development activity has been observed.

BELOW Dodoma, the offi cial capital of Tanzania

Residential marketRemaining highly diversi� ed, the residential market is experiencing the highest rents by beach-facing properties in Oyster Bay and the Msasani Peninsula in Dar es Salaam, and on the Lake Victoria shore of Capri Point in Mwanza.

The majority of the housing stock in the prime residential areas of Tanzania comprises older government houses that are being redeveloped into good-quality, modern single- and multi-occupied houses.

In order to meet rising demand, increased development is being experienced outside the traditional prime residential areas.




Brazil: brave new worldWhile the 2014 FIFA Soccer World Cup

was somewhat of a blunder for Brazil – construction mishaps, social unrest and widespread protests, and the worst World Cup defeat of seven goals to one by Germany – the tropical football paradise still has much to celebrate in the form of its future growth and opportunity. However, the nation will need to up its game.

Although local government in Brazil reported that the football tournament was an economic success, with São Paulo’s city hall having estimated the event injected a billion reals (US$450-million) into the local economy, the World Cup’s economic impact on Brazil has been a mixed bag of reviews – and it has yet to be fully realised.

What is certain is Brazil’s existing stance as one of the world’s fastest-growing developing markets. Brazil in the global economy today is ranked seventh among the world’s largest by GDP and seventh in global FDI in� ows. Its share in global non-oil resource exports rose from � ve percent in 2002 to nine percent in 2012.

The country is ranked 43rd in McKinsey Global Institute’s (MGI) Connectedness Index; 114th by the World Economic Forum for quality of infrastructure; and 124th by the World Bank for ease of trading across borders. According to MGI’s report, “Connecting Brazil to the World: A Path to Inclusive Growth”, through greater global connections Brazil could realise a 1,25% potential boost to annual GDP growth.

As the largest country in both South America and the Latin American region, Brazil is the world’s � fth-largest country, both by geographical area and by population – about 200-million people live in Brazil.

During the 1500s, the Portuguese arrived and claimed the land. After more than three centuries under Portuguese rule, Brazil gained its independence in 1822. For more than half a century, it was under populist and military government rule – until 1985, when the military regime came to an end.

Brazil’s bold emergenceToday, Brazil is Latin America’s economic powerhouse and is regarded as one of the world’s largest democracies. It forms part of the emerging BRICS nations along with Russia, India, China and South Africa. The country is expanding into the world market: according to Goldman Sachs, the growth in Brazil could overtake Russia, India and China in the next few years.

Macroeconomic stability has improved since 2003, with the country having built up foreign reserves and reduced its debt pro� le. While there remains a large void between the rich and the poor, Brazil has been praised by the World Bank for its progress in the reduction of social and economic inequality.

Furthermore, over the past few years, Brazil has raised millions out of poverty – as a result of expansion of the social safety net

While it’s the fi rst emerging market to form part of the BRICS acronym, Brazil appears to have lost its way – yet there remains

the greatest potential

▼ Population 203-million (2014 est.)▼ Major cities São Paulo, Rio de Janeiro,

Brasília, Salvador, Porto Alegre▼ Currency Brazilian real (BRL) ▼ Total area 8 514 877km²▼ GDP growth 2,3% (2013)▼ Key industries Agriculture and food

production, mining, manufacturing, services

Key facts

The

WORLD series ● our monthly country-by-country focus ●

By Candace King

Figure 1: Brazil is among the top 10 countries with the highest in� ows of foreign direct investment – but it has minimal out� ows

Average FDI 2008-2012US$ billion

Position in world ranking

Source: MGI’s report “Connecting Brazil to the World: A Path to Inclusive Growth”, May 2014

FDI in�ows FDI out�ows

China

United States

Brazil

Russia

India

Mexico

Chile

253 1

3

7

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Eye On The World_OCT_SUBBED.indd 30 2014/09/11 10:40 AM


eye on the world

Figure 2: Poverty has fallen across Brazil but it remains heavily concentrated in the north and northeast regions

and falling unemployment, the o� cial poverty rate has been cut in half.

Having stabilised the rate of HIV infections and achieved the reduction in the number of Aids-related deaths, Brazil’s HIV/Aids programme has become a commendable example for other developing countries.

Brazil boasts well-developed agricultural, mining, manufacturing and service sectors, and utilises its natural resources and large labour pool. It’s home to a rising middle class (estimated at 118-million in 2013, up from 66-million a decade earlier) that’s serving the country well in its economic and social development.

Brazil also features an expanding consumer market, ranking � fth globally in the number of internet users (99,3-million) and fourth in the number of mobile phones in use (271-million). It also boasts the most mature � bre infrastructure and best connectivity in Latin America in relation to the US.

Its natural resources, especially iron ore, are revered assets among manufacturing nations.

With the discovery of o� shore oil reserves, it has also become self-su� cient in oil. In light of this, there is opportunity for elevation into the top ranks of oil-exporting countries.

While it continues to engage in industrial and agricultural growth and development, Brazil su� ers from various internal problems, including high income inequality, poverty, social upheaval and crime.

Another pressing issue is the exploitation of its prime natural draw card – the Amazon rainforest is experiencing deforestation. In 2005, the government reported that one-� fth of the Amazon forests had been cleared by deforestation. Other problems include high and complex taxes, duties and customs taxes, and skilled labour concerns.

Moreover, Brazil’s economic growth has experienced a slowdown in recent years. As rising global demand for resources led to an export and consumption boom, Brazil was full of optimism. Its GDP hit 7,5% in 2010, but this slowed signi� cantly in 2012 and now sits at a

What is certain is Brazil’s existing stance as one of the world’s fastest-growing developing markets. Brazil in the global economy today is ranked seventh among the world’s largest economies by GDP and seventh in global FDI infl ows

Population below poverty line1

% of population in the state


1 Offi cial regional poverty line defi ned by IPEA; about US$4 per day per person

2002 2012

<5% 5–10% 10–20% 20–30% 30–40% 40–50% 50–60% >60%

Figure 3: Brazil’s income growth has lagged behind the global average for decades


Brazil China India Chile Mexico

Globalaverage

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eye on the world

low of about two percent. Income growth has lagged behind the global average for decades.

“In the next two decades, Brazil needs to average 4,2% annual GDP growth in order to lift half of the still vulnerable population solidly into middle class – and our estimates show that expanding its global ties could get Brazil roughly a third of the way to this goal,” notes the MGI.

Despite recent moderate economic growth, unemployment is currently near historical lows, and public and private infrastructure investment has pushed the economy into recovery. GDP growth forecast is set to average between two and four percent from 2014 to 2016.

BRICS and mortarWith its natural beauty, vibrant people, rich culture and football prowess, Brazil is an exciting destination – and a key property investor haven. It’s a prime location, especially for US and European investors.

With the recent hosting of the FIFA World Cup and the upcoming 2016 Olympic Games, Brazil has injected great e� ort and funding into infrastructure development, and has experienced an increase in property investment interest. With a steady economy, stable democracy, heightened development and foreign investment, and a strong currency, property is a crucial sector for Brazil.


As a result of the booming economy and the introduction of mortgages to overseas nationals, it’s been predicted that property in Brazil will appreciate by 200% over the next decade. The cost of living in Brazil is now around one-third of the UK and Europe. Unlike India and China, foreign entities are permitted full property rights in Brazil, a key di� erentiator among emerging markets.

In terms of sector performance, earlier this year Brazil’s market received a major boost from a 31,5% increase in real estate companies. In 2013, Forbes magazine listed Hong Kong, Dubai and Brazil as the hottest property markets in the world.

4.22.4

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Business as usual GDP growth

Average labor productivity growth, 1990 –2012

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Figure 4: To lift half of the still-vulnerable population solidly into middle class, Brazil needs to step up productivity

Driven by additional workers joining the workforce due to demographics; employment rate assumed constant at 2012 level


Figure 5: Brazil outpaced the global average in per capita GDP for most of the 20th century, with strong gains from 1968 to 1980

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Military takes over government

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90

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eye on the world



eye on the world

During the World Cup, real estate was boosted as millions of jobs were created. Having generated around US$15-million in revenue, the tournament attracted investors and developers alike. Overseas investors are targeting undeveloped beachfront land on Brazil’s northeast coast, where the property value has doubled.

According to commercial real estate services firm Cushman & Wakefield, the two sectors to watch in Brazil are office and retail. Despite rising vacancy rates, office has been a good property sector for some of the smaller players to enter into in the long term.

The office sector has experienced a recent reduction in the number of corporate development launches, with the new inventory expected to be absorbed over the next few months, which will leave the remaining spaces to become scarce and thus drive future demand.

After robust growth prior to 2012, there has now been a stabilisation in the retail and consumer segments. The World Cup attracted a recent entry of new retail brands to the market. The long-term forecast is positive in light of the growth potential of shopping malls on a national scale.

Shopping centre development in Latin America has boomed over the past few years – during 2012 and 2013, 168 new shopping centres containing nearly 5,3-million square metres of gross leasable area (GLA) were delivered in the six primary Latin American markets of Brazil, Mexico, Colombia, Peru, Argentina and Chile.

Over this period, Brazil drove the retail activity, with 2,4-million square metres added.

MGI’s report, “Connecting Brazil to the World: A Path to Inclusive Growth”, provides seven major priorities that could allow Brazil to restore growth, become more competitive and sustain broad-based prosperity:

l Shift the focus of economic development to investment;

l Reorient trade policy to achieve closer integration with major markets;

l Redesign growth policies to compete in a more global and knowledge- intensive economy;

l Build 21st-century infrastructure that integrates Brazil’s economy and connects it to the world;

l Improve competitiveness by lowering the “Brazil cost”;

l Make the public sector more productive; and

l Focus on education and training to develop human capital.

Building on Brazil

Figure 5: Latin America shopping centre growth (million square metres)

Source: Cushman & Wakefield report: Latin America Shopping Center Development, April 2014

“Although the economy and real estate market may face some near-term challenges, the fundamentals of their economy are strong enough to warrant a recovery in the near future. This turnaround is expected as early as 2016 but cycles are getting shorter, and some immediate benefits of the World Cup may take hold even sooner than that”Cushman & Wakefield

The country is expected to remain a development leader, with São Paulo expected to capture the largest share of the new GLA through 2016.

The industrial market outlook appears muted as the economic slowdown may further contribute towards the imbalance between supply and demand for durable goods, accentuating the drop in investments and capital goods, and making industrial production more expensive. However, the expansion of the food industry may help to absorb part of this contingent and minimise the negative results for the next period.

In terms of the residential market, Cushman & Wakefield highlights that “On the back of strong price growth, Brazil’s housing market has been named as one of the hottest markets on the planet. Right now, the residential market is primarily focused on low-income housing where the demand is immediately evident, but master-planned communities that represent all income classes are becoming increasingly popular.”

According to the Knight Frank Global Price Index, housing prices have increased 12,1% between the first quarter of 2013 and mid-year 2014, placing Brazil sixth in worldwide annual price growth.

“Although the economy and real estate market may face some near-term challenges, the fundamentals of their economy are strong enough to warrant a recovery in the near future,” states Cushman & Wakefield. “This turnaround is expected as early as 2016 but cycles are getting shorter, and some immediate benefits of the World Cup may take hold even sooner than that.”

Forecast

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Forecast



eye on the world

CHARITY BEGINS AT HOMESAPOA’s combined December/January issue of South African Property Review is

where we feature leading companies that are making a di� erence in people’s lives.

We invite you to advertise how your company is making a di� erence. Whether it is a CSI or an educational programme contact, us and let us help you gain

maximum exposure and showcase your initiative.

T H E VO I C E O F C O M M E R C I A L P RO P E RT Y

Paddock View, Hunt’s End Offi ce Park, 36 Wierda Road West, Wierda Valley, SandtonP O Box 78544, Sandton 2146

SAPOA offi ces: t: +27 11 883 0679 - f: +27 11 883 0684 - e: [email protected]

Paddock View, Hunt’s End Offi ce Park, 36 Wierda Road West, Wierda Valley, Sandton

SAPOA offi ces: t: +27 11 883 0679 - f: +27 11 883 0684 - e: [email protected]

Call Riëtte: t: +27 (0)11 465 4731 / 4032 c: +27 (0)71 877 5520

Don’t miss this opportunity to promote your CSI’s

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CHARITY BEGINS AT HOMECHARITY BEGINS AT HOME

Eye On The World_OCT_SUBBED.indd 35 2014/09/12 1:42 PM

cover story


Real estate investments in Africa With Africa’s population estimated to reach 1,069-billion people in 2014 and GDP growth rates expected to exceed seven percent in 2015, no wonder investors want a slice of the once-dark continentBy Denise Mhlanga

Broll Property Group has Africa covered: it has a presence in South Africa, Nigeria, Namibia, Ghana, Malawi, Lesotho, Rwanda, Zambia, Kenya and the Indian Ocean (Mauritius, Madagascar and Seychelles), with openings expected this year in Uganda and Tanzania, and in 2015 in countries including Zimbabwe, Mozambique, Botswana, Ethiopia and Angola

Broll Cover Feature_SUBBED.indd 36 2014/09/11 10:51 AM

cover story


For more than a billion people estimated to be living in Africa, the continent is home;

for many others, Africa is a sought-after investment destination and tourist attraction.

According to World Population Statistics, based on the projected population by 2050 and the previous population, Africa’s population is estimated to reach 1,069-billion people this year. As a result, it remains the second-most populous continent in the world, making up around 15% of the entire world population.

Some analysts point to factors such as Africa’s growing population (in Nigeria particularly) and positive demographics as a driver for retail developments on the continent. Economic growth numbers look positive in some regions in Africa, with West Africa showing growth of more than seven percent in 2014 and 2015, according to the “African Economic Outlook 2014” report released by the African Development Bank Group.

The report shows that West Africa’s GDP is expected to reach 7,1% in 2015 (7,2% in 2014), East Africa 6,2% (six percent in 2014), Southern Africa 4,4% (four percent in 2014), sub-Saharan Africa excluding South Africa 6,9% (6,8% in 2014), and sub-Saharan Africa 5,9% (5,8% in 2014).

Africa real estate To get a sense of what it is about Africa’s story that has the world talking, South African Property Review caught up with Broll Property Group, one of Africa’s leading commercial property services group. Africa’s story is the talk of the town right now, and it is a sought-after real estate investment destination, says Malcolm Horne, Group Chief Executive Officer of Broll Property Group.

“We are currently seeing a number of property developments and, notably, mixed-use developments in Kenya – for example,

there’s a booming retail sector in Nigeria – while international retail brands are also eyeing various locations on the continent,” says Horne.

Broll Property Group has Africa covered: it has a presence in South Africa, Nigeria, Namibia, Ghana, Malawi, Lesotho, Rwanda, Zambia, Kenya and the Indian Ocean (Mauritius, Madagascar and Seychelles), with openings expected this year in Uganda and Tanzania, and in 2015 in countries including Zimbabwe, Mozambique, Botswana, Ethiopia and Angola.

Whether you’re looking to invest in Nigeria, Kenya or Ghana, each of these countries are different. Thus investors have to look at each country individually, and not Africa as a single unit. Broll Property Group gives us a peak into some of the regions.

Retail in West Africa Market pundits expect the West Africa region to continue its rapid growth, with many countries achieving growth rates of more than seven percent in 2014 to 2015.

In Nigeria, for example, Broll Property Group is bullish about the retail property market as a result of the growing population and changing demographics in that country, says Leonard Michau, Broll Property Group’s Director and Head of West Africa Operations.

Based on the current pipeline of new retail developments, this sentiment is shared by investors who plan to develop approximately 170 000m2 (GLA) of formal retail space over the next 24 to 30 months. In addition, developments that are currently at the conceptual phase exceed 300 000m2 (GLA) and, depending on viability, will come onto market over the next 24 to 36 months.

Whether you’re looking to invest in Nigeria, Kenya or Ghana, each of these countries are different. Thus investors have to look at each country individually, and not Africa as a single unit. Broll Property Group gives us a peak into some of the regions

ABOVE Delta Mall located in Warri, Nigeria, with a GLA of 15 000m2, is scheduled to open in March 2015

cover story


cover story


However, Michau says that while he suspects the consumer story in Nigeria would be sustainable, it does take time for people’s habits to adjust from informal to formal trading in the form of new sophisticated malls now being built. “As long as the macroeconomics remain solid, with a stable GDP growth and growing consumer base, retail looks positive,” he says.

But before jumping on the bandwagon with a cheque book, basic investment rules for dummies have to be followed, points out Gavin Cox, Broll Property Group Nigeria’s Retail Property Executive. For an investor looking to enter the Nigerian retail market, he explains that Nigeria definitely has vast untapped retail development opportunities both in the coastal cities and inland. However, the critical part of tapping into these opportunities and/or mitigating the investment risk is finding the right land in the right location at the right price that is suitable for retail development in order to realise the investment return.

Cox says that, with construction costs being higher than anywhere else in Africa and the high cost of land and energy, investors need to do their homework on the total costs and the potential return from the retail market before investing. Furthermore, he says it is important to understand the Nigerian law and trade bans (for example), conducting credible market research and feasibility studies on the relevant markets to justify the investment.

“New retail developments in Lagos and Abuja and inland have quadrupled in the last five years, albeit off a low base,” he says. “The stage is set for this to continue for the next five years and beyond.”

Up until seven years ago, there wasn’t any formal retail trading in Ghana – until Shoprite and other South African retailers came into the market, ultimately changing the retail landscape, says Moses Luri, Broll Property Group Ghana’s Head of Retail Leasing.

Demand for formal retail is driven by the growing middle- to upper-income classes. Buoyed by the success of retailers such as Shoprite, many South African and other international retailers are eyeing the country’s retail sector. For example, Luri says many international retail brands currently enter the country via franchising methods.

Mixed-use developments in KenyaJonathan Yach, Broll Property Group Kenya’s Chief Executive Officer, says substantial investment into the real estate sector comes from local sources, state pension funds and private investors.

According to Broll Property Group Kenya research, Kenya is a strategic commercial and infrastructural hub within the African continent and the East African community, which includes Kenya, Tanzania and the republics of Uganda, Rwanda and Burundi.

Yach reports an increase in commercial property activity, with new builds being seen in locations such as Nairobi, the country’s capital. Broll Property Group Kenya has been awarded the management and leasing contract for Two Rivers in Nairobi, the largest mixed-use development currently under construction in East Africa. Once complete, the premium lifestyle development will measure 851 000m2, including retail, residential, offices, three- and five-star hotels, and entertainment facilities. The retail component is scheduled to open in October 2015.

Nigeria definitely has vast untapped retail

development opportunities both in the coastal cities and inland. However, the

critical part of tapping into these opportunities and/or mitigating the investment

risk is finding the right land in the right location at the right price that is suitable

for retail development in order to realise the

investment return

BELOW Garden City Mall, located along the Thika superhighway in Nairobi, is being built in two phases. Phase one is 35 000m²; phase two will open in 2016, taking the mall to 47 000m². This is part of Garden City, set to become Kenya’s first integrated development



cover story


The Hub Mall, located in Karen Nairobi and measuring 31 000m2 will open in July 2015. This is part of The Hub, a mixed-use precinct that will include offices as well as a medical and wellness centre.

Garden City Mall, located along the Thika superhighway in Nairobi, is being built in two phases. Phase one is 35 000m2; phase two will open in 2016, taking the mall to 47 000m2. This is part of Garden City, which is set to become Kenya’s first integrated development. Within this estate, modern townhouse units are set to be priced from US$451 213 (as at 8 September 2014, KSh40 000 000), rentals are expected to range from US$1 860 (as at 8 September 2014, KSh165 000) with yields of between five and seven percent expected, according to Broll Property Group Kenya.

Mauritius, Malawi and NamibiaWith a stable economy and government, and a strong financial sector, Mauritius appeals to European and African property investors, whereas the tourism market is slowly shifting towards Asia through a declining European market, according to Rhoy Ramlackhan, Broll Property Group Indian Ocean’s Managing Director.

He explains that, following the realisation of a number of large-scale projects between 2008 and 2012, the property market in Mauritius is going through a period of stabilisation, with new sizeable property developments only expected to commence or be announced towards the end of 2014.

Medine Ltd, a Mauritius Stock Exchange-listed company that focuses on property developments, leisure and agricultural activities with substantial prime real estate on the west coast, and the CIM Group (another Mauritius Stock Exchange-listed company), the Indian Ocean Real Estate Company and Enatt are some of the major property investors in Mauritius.

Closer to home, Malawi and Namibia are countries worth investing in. Malawi, like any other third world country, has an agro-based economy. Land is the most basic resource, which plays a very crucial role towards sustainable political, socioeconomic and cultural development. Tobacco earnings contribute largely to the national GDP, says Ricky Kantema, Broll Property Group Malawi’s Chief Executive Officer. “The property market is just coming of age here,” he says. “Major investors in the property sector include the government, institutional investors, the Asian community, and foreign and local property companies.”

Furthermore, he points out that the Malawi Housing Corporation has partnered with a Chinese company investing in property.

Institutional investors such as Old Mutual, Press Properties and NICO Life Insurance Company Limited are major investors in the residential, retail and commercial markets, while the Asian community invests in all categories of property lately, with a few Chinese companies (such as SEGOCOA) having invested in retail, hotel and residential property developments.

“Considering the economic and political factors and the eagerness of government to incentivise prospective investors who are willing to invest in the country, the property sector will grow substantially in the next five to 10 years,” says Kantema.

Namibia has a fairly active property development environment overall, with developments mainly taking place within the central, northern and western parts of the country, says Ronel Judin, Broll Property Group’s Divisional Director of SADC Operations. Property developers are mainly corporates and private investors, but some listed property funds have also developed over the past few years.

Property growth and prices According to Kantema, demand for property acquisition is high for all categories of properties. As such, property prices in the two major cities in Malawi will grow. However, he says Lilongwe will likely experience higher growth than Blantyre because of the presence of government headquarters, headquarters of international and donor communities, and diplomatic missions.

Marco Wenk, Broll Property Group Namibia’s Managing Director, points out that commercial property stock is limited and many developers and property owners are reluctant to sell, especially in Windhoek. As a result, it is in the northern part of Namibia (Oshakati, Ondangwa, Rundu), which is showing substantial growth and possible sale opportunities for potential investors, that the most lucrative property deals can be had.

Asked about property price growth, Wenk says based on their commercial portfolio, they see annual growth of six to 10%, occasionally more. Property prices will most definitely increase, particularly because Namibia is similar to South Africa but has less stock and thus has a higher demand for such stock. “From a South African investor’s perspective, Namibia is low-risk and therefore a prime investment opportunity.”

Closer to home, Malawi and Namibia are countries worth investing in. Malawi, like any other third world country, has an agro-based economy. Land is the most basic resource, which plays a very crucial role towards sustainable political, socioeconomic and cultural development. Tobacco earnings contribute largely to the national GDP

ABOVE Broll Property Group Kenya has been awarded the management and leasing contract for Two Rivers in Nairobi, the largest mixed-use development currently under construction in East Africa



feature

The case for SDMV

By Candace King Photographs by Michael Glenister

The debacle surrounding property rates and valuations has been a long-standing

one – a key issue that was addressed at this year’s 46th Annual SAPOA International Convention and Property Exhibition in Cape Town.

In his presentation, “Property Rates: Making Cents of It”, Rates Watch (Pty) Ltd Director of Valuations Ben Espach got to the “meat and potatoes” of the matter as he covered the problems affecting the property industry on a large scale.

He noted that, while the Municipal Property Rates Act (MPRA) is essentially a good Act, there are massive loopholes, including the poor quality of municipal valuations, poor standard of administration and implementation, imbalances between under- and over-valuations, and unrealistic time-frames to compile rolls.

“The problems are endless,” said Espach, “The objections do not defer payment of rates and there are long delays in the processing and completing of the objection process. The negotiation process does exist, but only at the objection stage, which is far too late. Municipalities are in a state of administrative collapse and they act in breach of the law. In light of this, the municipalities don’t understand the process.”

Espach added that the biggest curse is under-valuations, and that the lodging of appeals is a tedious process. “There’s a total lack of valuation monitoring as well as an incorrect implementation of the rates policy,” he said, noting that the valuation roll is the key to correct and fair rating, and that property owners must take control of the process.

The discussion continuesThe discussion continued at a meeting held in August at the Hyatt Hotel in Rosebank to further flesh out the ongoing issue of property rates and its impact on property owners, and to discuss the way forward.

Espach likened the property rates saga to an iceberg. The water level is the correct valuation level, over-valuation appears above water and under-valuation below. The latter is the biggest chunk, and the most problematic.

SAPOA members want to pay, and they’re willing to pay the correct amount, said Espach at the well-attended meeting. There’s no reluctance. “The admin is what’s adding to your frustration,” he said. “In these

difficult economic times, it’s challenging to budget.”

According to Espach, there is a major need for accurate data. Data is a key factor in the compiling of correct municipal valuations but the current standard of data collection is very poor.

According to Section 42 of the Rates Act, owners are compelled to provide information to the municipal owner, but property owners are delinquent in doing so and thus data is currently not being properly managed.

“If we don’t solve the data issue, then we won’t get correct valuations,” said Espach. “We need to work on providing the right information. In Australia, data is available on a provincial level – I believe this is a plausible way forward.”

Until accurate data is provided by all property owners, objections and inaccurate valuations will persist, along with unrealistic rate hikes.

A suggestion raised at the meeting would be to get IPD and SAPOA to collate actual data and formulate sound research that can be used to determine quality and correct valuations.

Apart from inaccurate data, the objections process is also problematic: it includes objecting, appealing and reconciling rates accounts, which is lengthy and tedious.

Rates Watch (Pty) Ltd Director of Rates Kokkie Herman said that at the moment there is a huge backlog of appeals, and that the Johannesburg Valuation Appeal Board is still hearing appeals against the 2008 roll (in light of the new 2013 roll that’s in existence!).

Tackling the property rates and valuations iceberg via the

proposed implementation of Self-Determined Municipal

Valuations (SDMV)

Ben Espach, Director of Valuations at Rates Watch (Pty) Ltd

Kokkie Herman, Director of Rates at Rates Watch (Pty) Ltd

“If we don’t solve the

data issue, we won’t

get correct valuations.

We need to work on providing

the right information. In

Australia, data is available

on a provincial level –

I believe this is a plausible

way forward”

Property Rates_SUBBED.indd 40 2014/09/11 11:11 AM


feature

“The new roll generally did not take into account the objection results from the previous roll – the whole process is repeated,” explained Herman. “All of this takes time to resolve in order to get a correct rates account.”

The solution? Self-Determined Municipal Valuations (SDMV).

Melting the iceberg with SDMVIn light of all the ongoing issues, including incompetent municipal valuers, the lack of continuity from one roll to the next, the disregard of valuer’s decisions, appeal outcomes, and court rulings, disproportionate rates increases, and major time delays to resolve objections, something has to give.

“Integrity and trust are lacking in the current system – there is no integration between internal departments and systems,” said Abakon Property Valuations (Pty) Ltd Managing Director Werner Sarvari. “The municipal valuation roll is not about the technicalities; it’s about the understanding and political will of mayors and municipalities.”

Sarvari noted that if we as an industry don’t take action, the current situation will continue to get worse – thus the case for SDMV is a strong one.

The definition of SDMV describes them as a process whereby property owners are proactively involved in the municipal valuation of their own properties by providing comprehensive property information to a central valuation agent acting on their behalf, who would value the property according to the MPRA and submit this valuation, on behalf of the property owner, to the municipal valuer for consideration and inclusion in a valuation roll.

The objectives of SDMV include obtaining the participation of all non-residential property owners, achieving economies of scale to bring about a positive effect on the rates tariffs, obtaining accurate and dependable data and establishing a world-class database, obtaining the trust and confidence of all municipal valuers as well as municipalities, and obtaining the support from parastatals such as Eskom, Rand Water Board and SANRAL.

“SDMV will develop a model that’s easy to use, and create a simple, easy methodology

for all members to submit data,” noted Sarvari. “It will measure industry norms and provide critical data back to the members regarding expense ratios, property vacancies and so on.”

SDMV will achieve market valuations for all properties of the same category, eliminate under-valuations, create a stable rates base and control annual rate hikes, and avoid the whole objections process. Municipal values will be known as at 1 July of implementation.

The way forwardThe goal is to establish a valuer’s office that will monitor municipal valuation rolls and standards of participating panel valuers, and negotiate municipal values. The office will collect data and develop a practical and workable commercial model. The office will also compile annual internal valuations for municipal purposes.

“The valuer’s office will monitor rates policies as well as discuss such policies with the various municipal offices as and when required,” said Sarvari. “It will provide education and assistance, and will also establish the mechanism and controls to compel members to supply accurate data. Above all, it will win the trust of all the relevant stakeholders.”

He added that this will only succeed if there’s a strong endorsement by commercial property owners and by SAPOA, which has already set the tone via its various campaigns (including the Meet the Mayor series).

“We need the mayors and the various municipalities’ buy-in, and the approval from the Minister of Finance and the Department of Corporate Governance and Traditional Affairs,” said SAPOA’s Chief Executive Officer Neil Gopal. “It should come from such bodies first. It needs to come from the highest level.”

Sarvari also noted that the office we are proposing shouldn’t become a government office – it needs to be a privately run, self-administered office. In time, the whole country will be involved, including residential property owners. Hopefully, we will see a pilot valuer’s office initiated by 1 July 2015.

Johannesburg appeals case study (still for the 2008 roll)• Numberofcurrentappeals:20• Valuepervaluationroll:R151-million• Valuebymunicipalvaluerafterobjections:R146-million• RatesWatch(Pty)Ltdvalue:R75-million• ValuesplacedbyVAB:R83-million• ReductionsmadebyVAB:R68-million(54,61%reduction;%variancebetweenRatesWatch(Pty)LtdandVAB:ninepercent)• Totalmonthstoresolve:76(6,3years)

Werner Sarvari, Managing Director of Abakon Property Valuations (Pty) Ltd

Neil Gopal, Chief Executive Officer of SAPOA

Property Rates_SUBBED.indd 41 2014/09/11 11:12 AM


feature

The cost of energy utilities

As commercial property landlords battle to contain municipal rates and taxes, electricity tariffs continue

to increase, and are unlikely to stabilise or come down

any time soon By Denise Mhlanga

In South Africa, commercial property owners and property managers point to increasing

cost of utilities and changes in tariff structures as a huge challenge in property management. This puts pressure on margins and increases the total cost of occupation for tenants.

Werner van Antwerpen, Sustainability Development Manager at Growthpoint Properties Limited explains that air-

Sulayman Abdullah, Chief Executive Officer of Excellerate Facilities Management, a company in the Excellerate Property Services Group

conditioning systems are the largest consumer of electricity in their buildings. “We did a research benchmark study to identify the most energy-efficient split, console and cassette air-conditioning units,” he says. “When air-conditioning units come up for replacement, they are replaced with more energy-efficient units.”

Meanwhile, Sulayman Abdullah, Chief Executive Officer of Excellerate Facilities Management, a company in the Excellerate Property Services Group, notes that over the past five years, the most significant increase in property rates related to properties that were re-valuated by the local municipalities. “These proved to be either too high or even duplicated with regards to the remainder portion of a particular property,” he says. “Unfortunately, the landlord is expected to pay these increased amounts while the objections are processed and attended to.”

Furthermore, he says price increases in rates and utilities are largely beyond the control of tenants and landlords, and are running higher than inflation. This places strain on tenants’ abilities to pay, thereby exerting downwards pressure on rentals.

Counting the cost of energy Operating costs, including high electricity tariffs, keep rising, and there is no relief in sight. According to power utility Eskom, electricity prices have gone up sharply over the years and are not likely to come down or stabilise any time soon.

Eskom says the electricity tariff approved by the National Energy Regulator of South Africa in 2013 resulted in lower revenue than they had applied for, which has serious consequences for the business and future sustainability. “We have now launched the business productivity programme, which aims to reduce cost, increase productivity and enhance efficiencies – but the revenue shortfall cannot be addressed through cost savings and efficiencies alone,” says Eskom.

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According to Eskom, between 1 April 2009 and 2010, tariffs increased by 31,3%; and by 24,8% between 1 April 2010 and 2011. In 2011/2012 this went up to 25,8%; 2012/2013 saw a 16% increase; and the increase in 2013/2014 and 2014/2015 was eight percent.

Eskom encourages all its customers to use energy efficiently by switching off geysers and pool pumps during peak hours (5pm to 9pm), switching off non-essential lights, and using heating efficiently.

Sustainability watch Michelle du Toit, Technical Manager at the Green Building Council of South Africa (GBCSA), points out that water, waste and electricity are the main culprits when it comes to municipal rates and taxes. “Buildings where property managers are aware of sustainability and engage in active greening measures display a greater awareness of these primary areas,” she says.

This includes things such as implementing localised meters, which allows for better measurement. For example, she says buildings designed, developed, built and/or managed using sustainable practices demonstrate a reduced demand for water and power, a decrease in peak power demand and a decrease in overall demand on the grid. Recycling solutions also result in lower refuse removal costs and less waste to landfill.

Asked about government initiatives to reduce energy crises, she says a few years ago, the government set benchmarks for companies to reduce electricity demand. Many corporates and large power users responded favourably. The government also introduced incentives such as Eskom rebates in the commercial sector and the solar rebates for HWC in the residential space, for example.

Currently, the government is also looking to incentivise independent and small-scale power producers through the introduction of feedback tariffs, which will see these producers earning for their energy production.

What can property owners do? Du Toit says property owners can get involved in a number of ways, from simple lifestyle changes to investing in sustainable solutions.

Retrofitting of light bulbs to ensure energy- efficient or LED lights and HVAC equipment is a quick, easy and popular change step people have taken.

Growthpoint Properties Limited is striving to decrease tenant electricity and water consumption across the portfolio in the coming years, which will reduce the total cost of occupancy and increase the desirability of the company’s properties, says Van Antwerpen.

For example, most inefficient lights on most of their buildings have been replaced, a project implemented over three years that resulted in a saving of more than 78,5-million kWh, with a reduction of 77,7kt CO2. “This is enough energy saved to power 21 527 houses per month.”

According to Abdullah they account for all energy aspects on site. From a metering and billing perspective, they ensure that their clients are on the correct tariffs, and they advise clients to install check meters to monitor the accuracy of the council’s billing.

Van Antwerpen says dual-flushing toilets have been installed in some new developments, and waterless urinals have been installed in selected office buildings in the Western Cape, Gauteng and KwaZulu-Natal.

Growthpoint Properties Limited, along with Eskom, sponsored the GBCSA’s Energy and Water Benchmarking Tool, now called the WEBdex rating, which allows property owners to measure energy and water consumption against industry benchmarks.

“We are taking corrective action in our office buildings where consumption is higher than the benchmark,” says Van Antwerpen. “This will also lower occupation costs for tenants.”

Abdullah explains that municipal meter readings are generally accurate when they are done; however, it becomes more of a challenge when estimates are applied over several months before the next actual reading.

While some municipalities have begun changing over to online metering or even prepaid systems, it still remains the responsibility of the landlord to ensure that he/she is billed according to the correct tariff.

“A tariff change will only be effected once applied for or when the municipality decides to replace existing tariffs with new ones,” says Abdullah, adding that the greatest challenge is to have incorrect billings corrected or amended, and newly installed meters linked to the municipality’s billing systems.

Michelle du Toit, Technical Manager at the Green Building Council of South Africa

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editorial

Electrifying meteringNetVendor’s ground-breaking new electricity meter – a first

for South Africa – is set to shake up metering solutions

By Candace King

Photograph by Danieta Glenister

Durban-based smart prepaid intelligent utility metering solutions company

NetVendor has launched the country’s first real-time residential Time of Use, currency-based prepaid or post-paid (automatic meter reading (AMR)) electricity meter.

“We believe we have a solution to alleviate the pressure on our country’s power grid for both residential and commercial users,” says NetVendor’s founder, co-owner and Managing Director Dennis Ellerman.

The solution incentivises end-users not to consume electricity during peak or standard periods, hence providing relief on the electricity grid without requiring intervention from the municipality as the meter controls this internally. Over and above this feature, the electricity meter allows for load-shedding of up to eight loads per household (for example geyser, air con, pool pump, etc.)

The STS-compliant water meter that the company also launched can operate in either prepaid or post-paid mode, and uses

the same communication infrastructure as the electricity system.

NetVendor has spent two years developing this technology, which Ellerman says will integrate into its existing vending platform on offer to its national and international clients for the past 10 years, which includes purchasing from retail outlets, point-of-sale devices, and internet and cellphone vending, and remotely loads the STS token directly into both electricity and water meters if configured in the prepaid mode.

“Basically, it means anyone can manage their electricity and water usage online or from their cellphone, whether out of the country or in the building, by remotely controlling their electrical load or water meter valve,” says Ellerman.

NetVendor’s new intelligent AMR metering solution extends the existing smart metering model that is currently being used in the commercial and industrial sectors by allowing an affordable solution to the residential sector of the market. The solution allows for complex tariffs and load-shedding control, and has a tamper alarm allowing a control centre to dispatch the relevant personnel to investigate the alarm.

Ellerman says the electricity meter could also be disconnected remotely, while the water meter can have the valve remotely controlled for a trickle feed by controlling the percentage the valve will open.

During the 2013 European Utility Week in Amsterdam, the city was unveiled as a Smart City, and a pilot encompassing more than 7 000 meters and more than 70 data concentrators was used to present the advantages of “smart” technology.

During the pilot, an independent company audited the three main communication technologies available on a smart grid: G1-PLC, Zigbee RF and G3-PLC. The audit report reflected that G1-PLC was only 43% efficient and Zigbee RF communication only 73%, while G3-PLC was more than 90% efficient on both retrieving data from the meters and controlling the meter. Based on the huge advantage of this technology, NetVendor has standardised on G3-PLC as a communication medium for its metering solutions.

“As a result of the unpredictability of the GSM networks and to ensure the integrity of the metering technology, NetVendor has implemented all intelligence on the meter and has reserved the function of the server to act as a data repository only,” says Norman Mollentze, Managing Director of NetVendor Technologies. “This is crucial to ensuring that meters can operate independently from the server during periods of no communication, allowing the intelligent meter to utilise the TOU tables stored locally to both manage the meter credit and load control.”

FROM LEFT Dennis Ellerman, founder, co-owner and Managing Director of NetVendor; Werner van Antwerpen, Sustainable Development Manager at Growthpoint Properties Limited; Bruce Barrett, co-owner of NetVendor; Renee Basson, NetVendor Western Cape Sales; Mary-Ann Le Roux, NetVendor Sales and Marketing; Norman Mollentze, Managing Director of NetVendor Technologies

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editorial

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NetVendor_SUBBED.indd 45 2014/09/12 1:09 PM


feature

Property watch dogs

By Candace King

With crime on the rise in South Africa, commercial property owners are beefing up on security

A recent survey by Crime Stats South Africa indicates that there has been a general

decrease in total crime from 2004 to 2013 of more than 4 485 000 cases. But when comparing 2004 figures with those in 2013, there has been an annual increase in robbery, with violent intent and coercion, at non-residential premises of 12 677.

“There’s no doubt that crime is on the increase and it’s occurring across the country, especially violent crime,” says Roy Alves, Regional Business Development Manager at Axis Communications, a market leader in network video and a driving force behind the shift from analogue to digital video surveillance. “The coastal cities that we thought were safe are now being hit. In fact, it’s happening all over the world.”

With the recent Alexander Forbes building bomb scare in Sandton and the robberies of several Apple iStores in a short space of time as examples, commercial property crime is indeed on the rise and has increased by 35 631 incidences since 2004, while residential theft has increased by 8 587. These figures indicate that while certain crime sectors are being controlled to an extent, particular key theft areas need increased attention.

“We have seen a significant crime reduction in suburban and business areas that are built up and where cameras have been installed,” says Alves. “With domestic and business property there’s an insurance requirement that dictates buildings must be secured.”

In light of this and as a result of rising demographic patterns and rapid development in technology, South Africa has been identified as a Top 20 Country for Growth by the British Government department UK Trade and Investment.

The South African government has embarked on a capital expenditure programme worth approximately R2,7- billion per year over the next eight years, with the majority of the spending taking place in the areas of public infrastructure and power generation.

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Honing in on securitySouth Africa is investing heavily in security, safety and fire infrastructure to support its growth and the accompanying trends including crime. The South African security market is an estimated R55-billion. Investment in CCTV tech is set to grow by 7,1%, access control by 7,2%, fire detection systems by 7,1%, and intrusion-detection systems by eight percent.

“Economic and social trends will have an impact on the health and security industries in 2014 and beyond. What we do in the next four years will determine the future of South Africa,” says motivational speaker, business consultant and trainer, and Programme Manager: Bachelor of Technology (Logistics) at the University of Johannesburg, Dr Craig Voortman, adding that security will be a key focus into the future with particular trends influencing the industry.

“We are moving away from protecting assets and shifting towards business continuity,” he says. “Smarter, advanced security technology services will replace human services such as guards. Risk management is coming to the fore, and selling the business case for security will be the name of the game going forward.”

“The guard component in the security industry is being replaced by cameras,” says Alves. “Cameras do not fall ill and are not prone to inside jobs. There are definitely more cameras nowadays than human guards.”

He also points out that technological security solutions are becoming highly intelligent, especially in security cameras and surveillance. “We have seen an increased

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interest and a boost in education on the usage of cameras, as well as the stepping up of quality and use of particular camera types,” he says.

Prices are coming down for such technology, says Alves – as new technology and innovation enters the market it becomes more affordable for property owners. Products are becoming more sophisticated and thus installers need to be up to date in terms of training.

Alves notes that camera products have become vandal- and tamper-

proof, a product trend now seen in the retail sector.

Another trend is the ability to monitor in video

surveillance. “We are also moving towards cameras that provide colour information in

low-light conditions and can manage

scenes that are over-exposed – this is

important for identifying suspects,” he says.

Turning up the heatWith cost reductions, thermal-

imaging cameras are gaining popularity in South Africa.

Thermal-imaging cameras record images of the infra-red radiation (heat)

being emitted by the skin to determine threats. The image produced by these cameras consists of a range of colours, with hotter areas represented in red, cooler areas appearing in blue and lukewarm areas in orange or yellow.

These cameras have a number of advantages over conventional CCTV security cameras, including being able to detect threats in extremely low light (or even complete darkness), during unfavourable weather conditions, or in thick vegetation in the area being surveyed.

In addition, thermal cameras provide a much clearer image compared with conventional imaging solutions, and have a considerably longer threat-detection range when compared with lower-resolution surveillance cameras that make use of conventional optics.

“Despite an entry-level thermal-imaging camera costing in the region of R30 000, the overall return on investment comes across in the total cost of a company’s security solutions,” says Alves. “This is because low-

cost thermal cameras can cover long distances of between 300 and 400 meters, whereas a company would need up to eight conventional surveillance cameras to cover the same area at an inferior image quality with devices that are more susceptible to a range of environmental factors and conditions. And because thermal cameras look at people’s heat signatures, they are able to detect whether someone has a fever. This can be used to alert the authorities to someone who may have been infected with the Ebola virus at crucial junctures such as airports, bus stations and border crossings.”

Securing the futureAlves says that the security sector will only become more intelligent and advanced. A defining trend is the move towards mobile and smart devices and the use of apps, which can have a major impact on security in the future. In the next five years, apps that run on a camera will be a big trend, he believes.

Another trend is the design of products that are quick to install in order to reduce costs. Going forward, Alves says the main trends will lie in better-quality cameras, product price decreases, higher frame rates (seeing cameras with 60 frames per second), more intelligent analytical cameras (cameras making decisions) and on-board storage.

LEFT AND BELOW Security cameras and surveillance have become major trends in the commercial property sector

Dr Craig Voortman, motivational speaker, business consultant and trainer, and Programme Manager: Bachelor of Technology (Logistics) at the University of Johannesburg

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editorial

Health and hygiene: an untapped opportunity in SA’s property marketWith rising health concerns currently sweeping the globe and the increasing need for a more efficient property industry, the hygiene sector is garnering great attention as a key attraction

Dylan Ross-Kent, founder and Chief Executive Officer of Hygizone

As South Africa’s property market evolves, property developers, owners and

managers look to property designs that will enhance property value and attract the most interest from potential tenants.

One such avenue is in health and hygiene. According to a recent survey conducted by the Building Owners and Managers Association (BOMA International), health and hygiene amenities were identified as a latent opportunity for property developers and owners.

The BOMA International 2013 Global Tenant Survey indicated that health and hygiene features correlated strongly with tenant satisfaction, offering an opportunity to increase property value – especially since hygiene amenities are often rare in buildings in South Africa.

This, together with the finding that South African tenants are the least satisfied out of all the countries surveyed, sheds some light on the importance of designing and developing a property that speaks to the current needs of users.

According to Hygizone, the South African innovator in toilet design, bathrooms are very often the least considered spaces in building design. “The BOMA Survey confirms that tenants across the world and in South Africa are looking for spaces that take account of their changing wants,” says Dylan Ross-Kent, founder and CEO of Hygizone. “The unlikely space in any building – the bathroom – is now seen as the ‘trump card’ in enhancing the value proposition of properties for developers and owners alike.”

Eighty percent of all tenants surveyed consider customer service reputation as a priority factor in selecting a space to occupy, while 66% of respondents indicated that environmentally sustainable building operations are important to them.

“We are seeing an increase in appetite for our odourless and bacteria-reducing toilet system across commercial and residential developers,” says Ross-Kent. “Major developers that have included the system in property projects across the country include Atterbury Properties, Growthpoint Properties Limited and Redefine Properties. Furthermore, we are currently involved in the 90 Grayston Drive upgrade.”

As current tenants expect an increase in headcount in the next year (almost 25% of the survey respondents), property developers and owners should have the foresight to prepare for possible lease opportunities in the coming year by generating value through property enhancements that match tenant desires.

Rating area Correlation with overall satisfaction

Property management overall 0,780

Overall quality of property 0,740

Property management communication 0,697

Maintenance/engineering 0,678

Building’s health and hygiene features 0,670

Leasing process 0,658

Accounting 0,639

Property amenities 0,630

Heating and A/C 0,614

Lobbies and common areas 0,609

Restrooms 0,608

Waste removal 0,607

Building’s “green” practices 0,588

Exterior appearance 0,582

Security 0,563

Recycling 0,559

Cleaning/janitorial 0,554

Elevators 0,526

Service features Health/Sustainability featuresPhysical features

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editorial

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feature

Property products at the forefront of technologyThe vast array of technological applications in property management and ownership has the potential to give managers and owners a competitive advantage while enhancing the value and appeal of a place. We investigate how some well-known companies are using technology to deliver unique and modern solutions for their customersBy David A Steynberg

The invention of high-quality and durable building materials has seen

the world construct any purpose-built structure a person or company needs at any given time. And the technological advancements have by no means only taken place in bricks and mortar. There have been improvements in security, mobility, accessibility, sanitary ware, paint, air- quality control, parking, communications and marketing.

Technology is never-ending in the property industry – from applications in your home to your office, right up to the retailers you frequent. There are the ones you notice, such as signage and parking management

ABOVE Gateway Theatre of Shopping, one of the largest assets under the surveillance of Enforce Security Services BELOW The men’s bathroom at the Harpa Concert Hall, fitted with Duravit products (Photograph © Christopher Lund)

Air conditioning is central to ensuring human beings are kept comfortable and healthy when in any given environment – from the office to the mall.

Mitsubishi Electric plays in this sphere, providing air-conditioning solutions to residential, commercial and industrial applications. One of the company’s recent innovations is the only two-pipe simultaneous heating and cooling system in the world. It is claimed to not only be cheaper to install, but is also durable, reliable and energy-efficient, providing superior levels of control accuracy.

“The secret of City Multi Heat Recovery Systems lies in the branch control (BC) controller,” says Mitsubishi Electric National Sales Manager Eric van der Merwe. “The BC controller houses a liquid/gas separator, allowing the outdoor unit to deliver a two-phase mixture of hot gas for heating and liquid for cooling – through a single pipe. Three-pipe systems allocate a pipe to each of these phases. When this mixture reaches the BC controller, it is divided and the correct phase is delivered to each indoor unit depending on the individual requirement of either heating or cooling.”

The kitchen and bathroom is often an afterthought in many offices around the country – especially in older properties. But they are as central to a company as the IT system. Unattractive kitchens and bathrooms have the potential to depress workers and influence whether or not patrons will return to your shopping centre.

This is where Duravit comes in: the company’s philosophy is “living bathrooms“, reflected in its sanitary ceramics, bathroom furniture, shower trays and bathtubs, whirl and wellness systems, shower-toilets, kitchen sinks, and accessories.

“Duravit supports the property industry to work creatively within the confines of the infrastructure and room layouts to come up with cost-effective and attractive product solutions,” says Karen Robyn, General Manager of Duravit South Africa. “The Duravit Soundsystem, for example, is an innovative acoustic device cleverly integrated inside a range of mirror cabinets with LED technology. The speakers are embedded in

systems, and those that you don’t – like air conditioning and background music emanating from the basins in the bathrooms. Then there are the technologies that assist in the actual construction process, from weather prediction to ensuring the correct quantities of materials are used.

Those you don’t noticeCool or warm environments are only ever noticed when they significantly differ from what you would expect when entering a space. A hot office on a hot day is unexpected as much as a cold bathroom on a cool day.

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Clinton Phipps, Chief Executive Officer of Enforce Security Services, a member of Excellerate Property Services Group

BELOW The Corobrik app

the base of the cabinets and provide outstanding audio quality that fills the entire room, removing the need for a separate music system in the bathroom.”

Those you do noticeThere is no doubt South Africans love their cars more than they do car guards. Car-guarding services can also cause potential visitors to avoid your centre. This is why pay-parking solutions are very popular – they ensure cars are safe and eliminate the need for patrons to interact with security personnel.

HUB Parking Technology’s new ZEAG parking revenue control system product range is one of the best known and applied technologies in the country.

ZEAG’s automated pay-stations now offer new touch-screen displays and LED illumination that guide the user effortlessly through the parking process. The technology also allows customers to pay using the latest recycling bill acceptor or with the new generation of chip and PIN credit- card terminals.

Contract parking is also sorted thanks to the latest 2D barcode readers or licence plate recognition cameras.

ZEAG’s automated pay-stations also incorporate a large media screen to enhance and improve business performance through customised digital signage, providing parking information, picture, video, advertising, audio and text announcements. It can even display RSS feeds and tell customers about the weather.

Those that straddleGlobally, the future of commercial property security lies in a greater integration with technology, according to Clinton Phipps, Chief Executive Officer of Enforce Security Services, a member of Excellerate Property Services Group.

“This is one of the key trends we have highlighted and adopted at properties where we provide security services,” he says. “While many commercial sites may have CCTV and access-control systems, they lack full integration, which is crucial to successful implementation. Going forward, we believe it will be essential for companies that offer multiple security disciplines to be able to effectively bridge the gap between technology and manned security. Many commercial property owners are not yet taking full advantage of the technology currently available, despite the fact that this is becoming more affordable and is cost-effective in the long run.

“With recent global events having made us very aware of the importance of security in shopping centres and other highly patronised commercial spaces, we see the trend moving from a relatively inconspicuous to a far more visible security presence. A major challenge in the security sector is to identify the criminal element among legitimate visitors, and control access while still ensuring free flow of both pedestrian and vehicular traffic. And although shopping centres are private property, visitors need to be treated as though they are on public property, especially when the centre offers public facilities, such as post offices.”

Phipps adds that, with global trends undoubtedly driving towards achieving a reduction in operating costs – including security – this should not in any way be to the detriment of capability and efficiency.

“In fact, the objective should be to provide the same or better service for less,” he says. “This is achieved by the genuine integration of technology with fewer (but in some cases slightly more qualified and more competent) personnel, and needs to be coupled with multi-skilling. As a result, there is a shift towards offering not just a single service but a range of integrated soft services under one roof – such as parking, cleaning and facilities management – thereby achieving cost efficiency.”

Those that ensure you get noticedCellphone technology has revolutionised the way we do business, and the use of apps for a multitude of functions has simplified our work. It’s no different with the construction process, thanks to a new app by bricks and pavers supplier Corobrik.

One of its functions is a pocket manual that contains technical expertise on a range of topics, including foundations, surface beds, brickwork, waterproofing, clay paving, site organisation, and compliance.

The Brick Calculator allows users to plan the quantity of bricks or pavers needed for a specific project, provides an accurate estimation of the amount of sand and cement required, and determines how thick the plaster needs to be.

“We envision that the primary users of the Corobrik app will be builders and paving contractors, although it should prove a useful tool, both in the office and on site, for architects, quantity surveyors and others working in the building industry,” says Peter Kidger, Corobrik’s Director of Marketing. “The app is compatible with iPhone, iPad and iPod Touch.”

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opinion

Time to put your footprint downPeter Townshend, Managing

Director of Know More Waste, the environmental consultancy

division of Know More, provides insight into the real meaning

behind the glorifi ed carbon footprint

The saddest aspect of sustainability consciousness is not that we are destined

to destroy our only habitable planet, but rather that there is so much ignorance around sustainability issues and global warming.

This point was again highlighted when I was recently � lling the gaps of my own ignorance by attending a carbon footprint analyst course. Carbon footprinting is one of the catch phrases to come out of the green movement, and most people would probably claim to have a fairly solid understanding of what a carbon footprint is.

For example, people understand that the footprint part of the phrase is abstract, and

that one does not need a tape measure to measure it. What many people don’t know, however, is that a carbon footprint is, in fact, an abstract concept in pretty much every way, and what they think is a fairly simple concept is somewhat complex – and worse, it means something vastly di� erent to what they think it does.

The confusion, as is so often the case, is in the name, which makes us think that our impact on the environment is solely about the amount of carbon (dioxide) that we emit. On the contrary, methane gas is far more dangerous as a greenhouse gas (21 times more so over 100 years) and is of a greater

Peter Townshend, Managing Director of Know More Waste, the environmental consultancy division of Know More

What a carbon footprint actually is – and I use the

standard defi nition here – is a measurement of the total greenhouse gas emissions

caused directly and indirectly by a person, organisation,

event or product

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opinion

threat to our existence than its celebrified cousin, carbon (dioxide).

A carbon footprint really has little to do with carbon, and is really not a footprint. What a carbon footprint actually is – and I use the standard definition here – is a measurement of the total greenhouse gas emissions caused directly and indirectly by a person, organisation, event or product.

Now, the astute reader will quickly notice that carbon doesn’t get a mention in the definition – the key words are “greenhouse gas emissions”. A carbon footprint is rather a greenhouse gas footprint.

So why call it a carbon footprint? Well, carbon dioxide (CO2) is one of the six Kyoto Protocol greenhouse gases, the others being methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6), all identified as being harmful to the atmosphere and significantly contributing to global warming.

It is also the gas that we use as the standard measurement in carbon footprinting. By this, I mean that in order for us to measure our impact on the environment, based on our greenhouse gas emissions, and to get a single comparable figure, we convert all greenhouse gas emissions to carbon dioxide. A carbon footprint therefore measures tonnes of emissions as carbon dioxide equivalent (CO2e).

Carbon dioxide equivalence is therefore the equivalent amount of CO2 that would have the same global warming potential over a specific period to the emissions of another greenhouse gas.

So what is a global warming potential? By asking this question, it is probably even more apparent that our ignorance is pervasive and that a carbon footprint is looking increasingly more obscure.

A global warming potential is a relative measure of how much heat a greenhouse gas traps in the atmosphere. The global warming potential is what allows us to convert the possible effects of a gas on the atmosphere to carbon dioxide. It compares the amount of heat trapped by a certain mass of the gas in question to the amount of heat trapped by a similar mass of carbon dioxide.

For example, the 20-year global warming potential of methane is 72, which means that if the same mass of methane and carbon

dioxide was introduced into the atmosphere, that methane will trap 72 times more heat than the carbon dioxide over the next 20 years. The science behind this calculation is far too complicated for here and, of course, is not exact.

All we have done here so far is define “carbon footprint” – and we have not even begun to look into how one actually calculates a footprint, which is where the real confusion comes in. Calculating a carbon footprint accurately is impossible because of the large amounts of data required and the subjectivity about what to include or not.

Although we have numerous guidelines and conventions, such as the Intergovernmental Panel on Climate Change, the reality is that it is impossible to completely track the entire spectrum of emissions of a company’s activities or the life cycle of a product.

Thankfully, however, unless you are using a carbon footprint as a benchmark to compare your emissions to other companies, you really don’t need to – and this is not where its strength lies. While some companies, for example, will include the emissions of their staff in getting to work, others choose not to, arguing that it is beyond their scope.

A carbon footprint analysis forces a company to take a look at its activities and implement measures to reduce it. Once you have clearly defined what you are going to include in your footprint, you can measure it – and as long as you stick to a constant methodology that compares like data, you can actively work towards lowering your carbon footprint and implementing an effective environmental management plan.

By tracking emissions and implementing reduction plans, we can ensure that we are minimising impact and reaping all the significant benefits that come with a sustainable operation.

So while carbon footprinting is rolling off tongues as regularly as the global temperature is rising, and misunderstandings and miscommunication such as this undermine the sustainability movement, the reality is that we have an effective tool that helps us control and reduce our own emissions and offers a guideline that helps us measure one aspect of our impact on the environment. We should all be taking out our abstract measuring tapes.

Know More is the research and consultancy arm of workplace

specialists Giant Leap. We believe that an effective work environment makes people happy, and happier people work better. Through our extensive research department and collaborations with international partners, Know More has become South Africa’s knowledge leader on workplace issues. We use this knowledge in parallel with in-depth research on our clients’ organisations and ways of working to develop effective workspaces that reduce cost, improve staff satisfaction, retention and well-being, and heighten performance. We do this with a close eye on environmental impacts and how best to facilitate change. We challenge business processes and operations to bring about positive, possible and profitable change.

Knowing Know More

By tracking emissions and implementing reduction plans, we can ensure that we are minimising impact and reaping all the significant benefits that come with a sustainable operation

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feature

Changing SA’s cycology

By Candace King

As urbanisation and private commuting rises, the need for alternative modes of transport is greater than ever. Welcome the green mobility movement

Jarrod Lewin, Business Development Manager at the GBCSA (Photograph by Michael Glenister)

While commuting to your place of work or returning home after a busy day,

have you ever paused to think that you are not in traffic, you are traffic? This is the reality-check campaign of Decongest, a collaborative organisation that’s rallying behind South Africa’s green mobility revolution. As the only organisation and collaboration of its kind in South Africa, Decongest raises awareness and access to green mobility in urban South Africa through activations, campaigns and research.

Decongest was founded by green mobility and electric bicycle consultancy Cycology, South African green built environment leader the Green Building Council of South Africa (GBCSA), and sustainable built environment consultancy Solid Green Consulting.

Central to the campaign is the Urban Commuter Research Project that gathers data on the physical and economic factors that make cycling such a green, healthy and economically sustainable mode of transport within the Sandton area.

The research will use a new tool developed by the World Health Organisation. Known as the Health Economic Assessment Tool, it assists in making an economic assessment of the health benefits of cycling by estimating the value of reduced mortality that results from specific amounts of cycling.

Awareness and education around viable alternatives to the personal vehicle are key.

It’s noted that crime is an ongoing South African problem, but Decongest and its partners have taken this on board upfront, and have integrated safe-guarding measures and plans in all discussions with private and public sector stakeholders.

“There is the proverbial safety in numbers and we have no doubt that, by unlocking the real potential of bicycle commuting, the safety of a critical mass will debunk the fears of alternative transport means,” says Jarrod Lewin, GBCSA’s Business Development Manager.

Solving the problem“South Africa’s current congestion, particularly in Sandton and Cape Town, cannot be explained using any other term but gridlock,” says Lewin. “This trend is set to continue and grow significantly, with an especially high number of new high-rise developments within the Sandton district.”

He notes that currently an estimated 17 000 users are coming through the Sandton Gautrain station, and more than 9 000 cars stream into the area on a daily basis. All modes of transport considered, there are more than 100 000 commuters moving around Sandton each day, with a projected increase of 27 000 more commuters in the next two years. These trends are similar (if not worse) in Cape Town, ranked as South Africa’s most congested city.

“Congestion, and the undeniable frustration that accompanies it, is set to worsen,” says Lewin. “We at the GBCSA, Cycology and Solid Green Consulting are passionate about the transformative power of sustainable interventions – the more efficient and responsible, the better.”

In May 2014, the three founding partners launched a collaboration to bring a series of experiential electric bicycle tours through the Sandton City district, which will soon be expanding to other key South African cities.

Green mobility is well accepted and adopted in European cities such as Amsterdam, Barcelona, Copenhagen and London, as well as in major metros and cities in the US and China.

“The journey is geared at connecting you to the people, places and passions that will

leave you inspired and informed about the latest developments in green building and green mobility,” says Lewin.

“There is a traffic and congestion crisis in Sandton, and we realised that there needs to be a huge behavioural shift,” says Orlando Vincent Truter, a charismatic cross-disciplinary creative director, social entrepreneur, and owner of Cycology. “Cycology was born out of a passion for green mobility. The job was to inspire people and to create a green mobility lifestyle. It’s a cultural movement that invigorates a ‘life on two wheels’.”

Cycology imports finely-tuned electric bicycles and designs exquisite bicycling accessories. The company creates bespoke green mobility experiences, aimed at inspiring citizens to explore green mobility.

“No-one wants to change their behaviour and expect the landscape to change. E-bikes are an answer,” says Truter, adding that it’s easy, sustainable, stress-free, and a great form of exercise for busy businesspeople.

Energising e-bikes in South AfricaE-bikes hold the potential to be a key transition vehicle in a bigger move to alternate modes of transport. The conventional bicycle is familiar to most, and the electric bicycle simply offers a development thereof – a more comfortable, sturdy and effortless (on fully

Orlando Vincent Truter, owner of Cycology

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feature

BELOW E-bikes are economically viable and socially beneficial, connecting individuals in communities and at places of work

electric models) version of our childhood and recreational favourite.

“Electric bicycles offer commuters a relaxed and hassle-free mode of movement that’s significantly cheaper and less time-consuming than driving in bumper-to-bumper traffic,” says Lewin. “Electric bicycles are set to expand quite significantly in South Africa as users realise their ease of use and efficiency. We foresee fully functional networks of electric bicycles and bicycle stations across South Africa, used extensively by corporates, government and the general public.”

Cleaning up South Africa’s energy mix and demand patterns are crucial. To this end, the campaign will be incorporating solar-powered charging stations into the Decongest network, and will work closely with the South African National Energy Development Institute to determine how best to operate Decongest with energy efficiency as a key operating pillar. Cycology is in the last stages of developing South Africa’s first e-bike.

Riding on the corporatesIn order to get the campaign elevated, Truter says they needed to kick-start the revolution within the corporate culture, which is already well on its way. “After several months of establishing the initiative, the interest has been phenomenal,” he says. “Currently about 760 unique corporates are keen to get on board, support and find ways to get involved.”

“Corporate South Africa has been overwhelming in its response to Decongest and electric bicycles,” says Lewin. “Daily, we’ve been met with praise on the timing, concept and potential of Decongest. Furthermore, several significant players in the South African property industry have stepped forward to integrate their operations with Decongest. We have entered into advanced discussions with a large property owner, a facilities management company, a financial institution, a property development company, and several state entities to host electric bicycle stations – starting in Sandton and expanding nationally.”

The benefits for corporates include a strategic differentiator to clients/tenants; a tangible demonstration of a commitment to sustainability; more staff productivity; reduced travel claim expenses; lower operating costs of logistics/travel expenses; and healthier and happier staff. Truter and Lewin note that Ernst & Young (EY) have boldly offered advisory support to the Decongest campaign and have committed to an ongoing relationship with the movement, signalling that the reach of Decongest is set to be significant.

“EY is assisting in the Urban Commuter Research Project, which the company has already given structure and drive to,” says Truter. “Leading property developers have allocated space and resources for Decongest to erect solar-powered charging stations for e-bikes and small e-vehicles.” He also says that Decongest approaches corporates and provides them with the ultimate cycling experience.

Truter believes that a bicycle ride is democratic and inspires everyone from the cleaner to the CEO. “The ride does three things to you: it invokes both a mental and physical gear shift; it makes you become more sensitive to the environment; and it connects you with other people within a community. It’s the real social network,” he says.

Moving things alongNot only are the private corporates on board – or more aptly on pedal – but the public sector has also showed interest and has joined the movement.

Decongest has recently entered into a partnership discussion (which is ongoing but fruitful) with the National Department of Transport to proactively link progress and green mobility demand and implementation in the private sector, with public sector imperatives, plans and policies. Green mobility is within the goals of the City of Johannesburg. Executive Mayor of the City of Johannesburg, Councillor Mpho Parks Tau, says that Johannesburg is going to become a progressive cyclist city. “Over time, we will eliminate the need for private vehicles as the city progressively moves towards an effective public transport system, cycling lanes and pedestrian walkways,” he says.

From one mayor to another, Gustavo Petro, Mayor of Colombia’s capital, Bogotá, says that “A developed country is not a place where the poor have cars – it’s where the rich use public transportation.”

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UIA Congress

Their African dreamThe world’s architects focused on solutions to challenges on our developing

continent at the recent 25th International Union of Architects World Congress of Architects, UIA 2014 Durban

By Anne Schauffer Photographs by Luca Barausse

Global warming, natural disasters, a shortage of resources and widespread

human displacement were key concerns at the recent 25th International Union of Architects World Congress of Architects, UIA 2014 Durban.

Some of the greatest innovators and social engineers of their generation – architects including Cameron Sinclair (the UK), Rahul Mehretra (India), Susanna Drake (the US) and Diébédo Francis Kéré (Burkina Faso) – held almost 5 000 delegates spellbound as they outlined innovative strategies for an architecture of the future that is more equitable and functional, and improves the lives and livelihoods of those who inhabit our cities and settlements.

Finding workable, affordable solutions to challenges on the African continent was a strong focus at the Congress. Themed “Architecture Otherwhere”, the event was designed as an acknowledgment, said organisers, of the built environment as a major force that could be harnessed towards designing a better life for all.

Opening the Congress, Albert Dubler, President of the International Union of Architects (UIA), expressed the hope that solutions to global crises would originate in Africa. “Humanity has its origins in Africa,” he said. “Modern art and architecture have been inspired by Africa. This Congress is the key to building the next modernity that the planet urgently needs to survive climate change. Jo Noero, the famous South African architect, once stated that ‘The Western world has invented all the crises humanity faces today; the solutions will come from Africa.’ What an extraordinary hope!”

Sindile Ngonyama, the President of the South African Institute of Architects, said that the organisation had “made a commitment to the people of this country that out of this Congress would flow a lasting legacy that would give direct credence to the transformation of our profession and to the strategic development goals of our country.”

Architects Sinclair, founder and former Chief Executive Officer of Architecture for Humanity,

and Kéré, founder and Chair of Kéré Architecture, received great acclaim for their presentations at the Congress. Both men are doing pioneering work among the least-privileged members of society, with a focus on projects in Africa.

Africa’s architectureSinclair, who is also the coauthor of Design Like You Give A Damn, has helped redesign infrastructure in some of the world’s worst disaster zones. He is currently the Executive Director of the Jolie-Pitt Foundation, focusing on projects in Namibia and Ethiopia.

“There is a complexity about Africa,” he said. “The first time I came here I learnt that not all of Africa, or even South Africa, is the same. It is hyper-local in terms of the culture and the ability to get things done. Some call it challenging but I find it to be the opposite – when one is bound by constraints, one has the freedom to imagine, to interpret and to invent.”

The architect’s first partnership in South Africa was with Durban-based East Coast Architects, a firm that focuses on social architecture and community building. “Together we built 20 youth centres around Africa, using only local architects,” he said. “They built contextually relevant buildings that are some of the best of their kind in the world.

“Architects have a bad reputation, generally, for overdeveloped egos – but in Africa the opposite is true. Here, architects are

The UIA 2014 Durban Congress was attended by architects, engineers, designers, technologists, planners, thinkers and writers from around the world

Albert Dubler, President of the International Union of Architects (UIA)

Sindile Ngonyama, President of the South African Institute of Architects

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very humble. Unfortunately, that often means that international architects, fired by volunteerism and foreign donor funding, scoop projects up from under their noses.

“It was frustrating for me at first to see that all the architects and developers in Africa seemed to be foreign – but we’re working hard at changing that. Yes, Africa is full of complexity but it is also the richest, and most resourceful and joyous part of the world.”

Sinclair said he was enthralled by the continent, and drawn to South Africa in particular. “South Africa is exceptional,” he said. “It has become the benchmark around the world for overcoming a seemingly insurmountable challenge. South Africans should be incredibly proud of how the world sees them. Every country has schisms but it also has ambassadors, and I’m proud to be one of South Africa’s.”

In each of the projects that his team has been involved in, said Sinclair, they committed to a long-term relationship with the beneficiaries of their buildings. “There has

Cameron Sinclair, founder and former Chief Executive Officer of Architecture for Humanity, and Executive Director of the Jolie-Pitt Foundation

been a separation of the industry into those creating objects, and those serving communities,” he said. “The real challenge of our generation is getting architects to use their professional skills to make a difference in the world.”

Sinclair’s method is to employ as many local people as he can on projects, focusing on skills transfer and long-term job creation. “You also need to be sensitive about protecting cultural heritage,” he said. “One way in which we do that is by integrating local art and crafts in the buildings. The materials and labour are sourced locally, and there is a transfer of ownership to the community at the end of the development.” Since 1999, Sinclair has been involved in numerous southern African projects, including the provision of 2 000 mobile HIV/Aids health clinics and the building of 20 combined-use sporting and recreational facilities as part of the FIFA Football for Hope Campaign in the wake of the 2010 FIFA Soccer World Cup. All of the projects serve disadvantaged communities, and are multi-purpose in design.

“There is a huge role for the adaptive architect, and the formulation of a shared architecture,” he said.

Building Burkina FasoFounded in 2005 by Kéré, Kéré Architecture is a Berlin-based architecture firm with an affiliate in Burkina Faso. Its focus is to innovate architecture through the use of local and sustainable building materials, with community participation in planning and construction. In collaboration with various funds and organisations, the firm also strives to support the educational, cultural and sustainable needs of communities in Burkina Faso and around the world.

Kéré was raised in impoverished Burkina Faso but became the first child in his village, Gando, to complete his tertiary education. He studied architecture in Germany on a bursary, and now devotes all the time he can spare from international projects to building schools, clinics and universities in his home country.

“Nothing much has changed in my country since my childhood,” he said. “There is little infrastructure and schools are primitive and generally built using sheets of tin. I sat in a classroom just like that with a hundred other children, in temperatures above 40 degrees. I was determined to build better schools.”

Burkina Faso is one of the poorest countries in the world with a very low literacy rate. Lack of infrastructure and access to fresh water, and extreme climate all contribute to

very difficult living conditions. Resource poor, the architect in Burkina Faso uses chiefly the materials that are to be found on site for his buildings, including river stones and clay.

“In Africa, we have clay buildings that have stood for centuries,” he said. “I wanted to start by building a school in my village but I had to convince the village elders that it was not necessary to build using expensive materials such as glass and steel, as they do in rich countries. We could build a wonderful school with natural cooling systems, using what we found around us.”

The result – the Kéré Primary School – is a long, rectilinear building made from compressed clay bricks that keep classrooms cool. Narrow openings in the perimeter wall allow for the free flow of air. The building’s roof is a gentle slope of curved corrugated iron on reinforced steel supports, which allow air to move under the metal and flow through the building to cool it.

In a particular stroke of genius, the architect used the ubiquitous clay water pots of the region to provide natural ventilation for the school library roof.

The school’s simple yet supremely functional design won Kéré the Agha Khan Award for Architecture in 2004.

“As an architect, I focus my energy on trying to maximise all potential resources,” said Kéré. “Sustainability is not just about the physical environment; it is about education, culture, community and tradition. I want to continue to use my knowledge and experience of construction and architecture to expand opportunities for others. My focus is always towards Burkina Faso.

“If you give 100 years of education to the people of Africa, you’ll be surprised at the potential of this continent.”

Diébédo Francis Kéré, founder and Chair of Kéré Architecture

International artist Faith47 created six large- scale public murals of local traders in Warwick Junction as part of the UIA Fringe programme



UIA Congress



statistics

Tech transforms real estate transparencySource: Jones Lang LaSalle’s Global Real Estate Transparency Index 2014

Source: JLL, LaSalle Investment Management


According to the eighth edition of Jones Lang LaSalle’s (JLL) Global Real Estate

Transparency Index 2014, real estate is raising the bar as data disclosure and technology lift transparency levels in various countries across the world.

Covering 102 markets worldwide, the Index shows continued progress in the transparency of commercial real estate around the world, with more than 80% of markets having registered improvement since 2012.

The key drivers of enhanced transparency are: ● A rising trend among governments

and business to encourage a culture of “open data”, supported by technological advancement.

● An increasing acknowledgement by governments that poor transparency not only hampers investment � ows but also a� ects the quality of life of its citizens and their relationship with local authorities responsible for taxing and regulating real estate.

● The occurrence of several high-pro� le corruption scandals and building accidents that have put the international spotlight � rmly on real estate transparency and led to a series of reforms in a diverse group of countries.

● The further rise in cross-border investment, with multinational corporations and international real estate advisors extending their global footprint, is accelerating the pace of change.

● The return of stronger economic growth and improving market fundamentals, which is enabling governments and the real estate industry to refocus on transparency issues that were put on the back-burner during the global � nancial crisis.

● The rising expectations from the “Millennial” generation for more transparency and accountability of governments and commercial organisations, strengthened by the power of social media.

● The wider adoption of sustainability tools, such as minimum energy standards, green building rating systems and � nancial performance measurement of sustainable buildings.

4 Global Real Estate Transparency Index 2014

Ghana Nigeria

Algeria

Qatar Kenya

Zambia

Mauritius

Sub-Saharan Africa Middle East and

North Africa

Europe

Ireland

Colombia

Peru

Recognition of impacts by governments on FDI and quality of life

Renewed economic growth and more robust real estate markets

Media spotlight on transparency following corruption scandals / building accidents

Kazakhstan

Serbia

Romania

Hungary

Latin America

Asia Pacific

Top Transparency Improvers in 2014

Key Drivers of Transparency Improvement

India Tier 1 cities

Global Real Estate Transparency Index, 2014

Growing expectations of market transparencyThe world’s dominant commercial real estate markets are in better shape than at any time since the Global Financial Crisis of 2008-2009. Levels of capital markets activity are returning to pre-crisis levels and real estate investors are moving up the risk curve into new geographies and property types. Meanwhile, corporates are now executing long-term portfolio strategies and selectively extending their footprints into emerging markets.

As momentum builds across the global real estate markets, investors, developers and corporate occupiers are demanding (and expecting) ever greater levels of real estate transparency - in terms of legal and regulatory enforcement, disclosure, fairness of transaction processes and access to high-quality market data and performance benchmarks.

At the same time, there is a growing recognition by governments, particularly in emerging economies, that poor real estate transparency not only hinders inward investment but also has deep impacts on the quality of life of its citizens and their relationship with local government. Corruption scandals (often involving the permit process for real estate development) and several building accidents are forcing governments to pay much greater attention to regulatory enforcement. In addition, ‘open data’ policies, aided by technological advances, are playing a greater role in boosting transparency levels across the globe.

Average Change in Transparency Score, 2004-2014

Global Overview: Key Findings in 2014

Improvements stall due to Global

Financial Crisis

Increasing cross border investment

boosts transparency

Steady transparency improvements as real estate markets recover

Improvements stall due to Global

Financial Crisis

Steady transparency improvements as real estate markets recover

0%

2%

4%

6%

2004 to 2006 2006 to 2008 2008 to 2010 2010 to 2012 2012 to 2014

Medi

an C

hang

e in

Tran

spar

ency

Sco

re


The Index highlights that the world’s most transparent markets are still dominated by anglophone markets, including the UK, the US, Australia and New Zealand. However, France and Finland, which are at the forefront of “open data” initiatives, have consolidated their positions in the top ranks. Ireland has moved into the top tier of transparency as a result of new REIT-enabling legislation.

The top improvers in 2014 are dominated by countries in sub-Saharan Africa, as transparency pushes into the frontiers of global real estate. Five of the global top 10 improvers are in the region – Kenya, Ghana, Nigeria, Zambia and Mauritius. However, while progress is being made across the continent, much still needs to be achieved.

Top transparency improvers in 2014

Average change in transparency score 2004-2014

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statistics

Making it Happen togetHer www.itHala.co.za

With more than a million square metres of lettable space, Ithala’s diverse property portfolio is the second largest in KwaZulu-Natal, following the Provincial Government.

With 22 retail centres, 3 industrial estates and 13 light industrial complexes ideal for SMME businesses, Ithala is sure to have the property to meet your unique business requirements.

Isn’t it time you spoke to us about your property needs?

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sHouldn’t you be talking to one of kzn’s largest landlords?

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Stats_OCT_SUBBED.indd 61 2014/09/15 9:40 AM


First place winning team with SAPOA East London National Councillor Zoe Chagadama

Nearest to the pin winner with SAPOA East London National Councillor Zoe Chagadama

Third place winning team with SAPOA East London National Councillor Zoe ChagadamaGolf day team

East London golf day

ABSA lucky draw winners with SAPOA East London National Councillor Zoe Chagadama Golf day team

Attending golfers receiving their golf shirts

Longest in two winner with SAPOA East London National Councillor Zoe Chagadama

EL Golf Day_SUBBED.indd 62 2014/09/12 12:36 PM

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what’s on

SOUTH AFRICAN PROPERTY REVIEW

SAPOA’s upcoming national events 2014

Region Date Event

Gauteng 4 to 7 November 2014 ICPP Training Course

Gauteng 6 November 2014 Legal Power Hour

KwaZulu-Natal 11 November 2014 Gala Dinner

Gauteng 12 and 13 November 2014 NSMP Training Course

Gauteng 13 November 2014 Networking Evening

Gauteng 14 November 2014 Brokers’ Seminar Day 2

Gauteng 17 to 21 November 2014 FMP & IAMP Training Courses

Polokwane 20 November 2014 Council Meeting Lowveld

Gauteng 20 November 2014 Brokers and Legal Update

Western Cape 21 November 2014 Delivering the Property Development Workshop

Polokwane 25 November 2014 Gala Dinner

October

November

Region Date Event

Gauteng 2 October 2014 Legal Power Hour

Western Cape 10 October 2014 Raising Finance for Developments Workshop

Gauteng 14 and 15 October 2014 NSMP Training Course

Gauteng 17 October 2014 Research Breakfast: Industrial Vacancy Report

KwaZulu-Natal 20 October 2014 Tongaat Hulett-sponsored Breakfast

Gauteng 24 October 2014 Brokers’ Seminar Day 1

Gauteng 27 to 29 October 2014 ICPP Training Course

Polokwane 28 October 2014 Lowveld Golf Day

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Dubai seems to be aiming high these days, constantly churning out boundary-

pushing modern megalithic structures that keep moving the global goalposts of built-environment brilliance.

It’s home to a number of record-breaking buildings, including the world’s tallest skyscraper (Burj Khalifa), the world’s biggest shopping mall (Dubai Mall), the world’s largest fountain (the Dubai Fountain) and the world’s tallest hotel (Rose Tower).

Once focused on trade and oil for economic growth, the cosmopolitan desert city in the United Arab Emirates (UAE) is now a booming construction oasis and is one of the fastest growing cities in the world.

With a knack for developing cities within a city – Dubai Internet City, Dubai Media City, Dubai Maritime City – Dubai’s next big thing is the Mall of the World, a world-first temperature-controlled integrated pedestrian city that will house the globe’s largest mall, largest indoor family theme park, cultural theatres and wellness resorts, with a capacity to host more than 180-million visitors annually.

Developed by global investment company Dubai Holding, the 4,5-million square metre city will feature a seven-kilometre pedestrian promenade street network connecting all facilities, and will be covered by a retractable glass dome that will be closed in summer to avoid overheating and opened in winter for the city to stay cool, providing a comfortable year-round destination for tourists.

Apart from the project’s 750 000m² shopping mall, the Mall of the World will feature a hospitality district comprising 100 hotels and serviced apartments buildings, including 20 000 hotel rooms. The project will include designated parking areas, with a capacity to host up to 50 000 cars on the ground level.

What’s said to become the hub for national and multinational cultural festivities and events in the UAE, the Dubai Cultural District will include a dedicated theatre node with a string of world-class venues set to rival the likes of London’s West End and New York’s Broadway.

The Dubai Cultural District will also include the Celebration Walk, similar to the Ramblas Street in Barcelona, which will connect the cultural district to the rest of the mall. A range of conference, wedding and celebration halls with a capacity to host thousands of revellers will also feature.

Spanning a total area of 280 000m², the Wellness District will provide wellness and rejuvenation services, offering a holistic experience to medical tourists and their families, and ensuring access to quality healthcare, specialised surgical procedures and cosmetic treatments, wellness facilities and high-end hospitality options.

The Mall of the World was officially launched by UAE Vice President and Prime Minister and Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, in July this year. “The growth in family and retail tourism underpins the need to enhance Dubai’s tourism infrastructure as soon as possible,” he said. “This project complements our plans to transform Dubai into a cultural, tourist and economic hub for the two-billion people living in the region around us – and we are determined to achieve our vision.”

Ahmad Bin Byat, Chief Executive Officer of Dubai Holding, said that the project will follow the green and environmentally friendly guidelines of the Smart Dubai model, and will be built using state-of- the-art technology to reduce energy consumption and carbon footprint, ensuring high levels of environmental sustainability and operational efficiency.


off the wall

Dubai’s world wonderIn the heart of Dubai’s desert, an enclosed, environmentally friendly mini metropolis is set to be a grand green feat, housing the world’s largest mall

By Candace King

Off The Wall_OCT_SUBBED rev.indd 64 2014/09/11 12:24 PM

40

last word last word

property developer l October 2014

3044

VA/E

For more information about our future development plans, please contact our Property Director.

Herman de BeerMobile: +27 82 460 3565 Office: +27 21 684 3519 [email protected]

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Virgin Active Red is our streamlined on-the-go gym. Designed to make gym easy, fun, fast and convenient, it focuses on straightforward, world-class fitness.

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Targeting:- Broader middle markets- Convenient suburban locations, easy access, adequate parking- Malls with lifestyle offerings (2500 m2- 5000 m2)

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Targeting:- Top tier executives and discerning individuals- Iconic locations and buildings (3500 m2- 4000 m2)

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Abland

Abreal

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PROPERTYR E V I E W

October 2014



PROPERTYR E V I E W

October 2014

South African P

roperty Review


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The Africa series:

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www.delqs.com | JHB +27 (11) 642 8751 | PTA +27 (12) 460 3304 Associated offices: GHANA | KENYA | MAURITIUS | NAMIBIA | NIGERIA | TANZANIA | UGANDA

QUANTITY SURVEYING DISPUTE RESOLUTION PROPERTY VALUATION

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QUANTITY SURVEYING

Dr Corné de LeeuwAkopo Africa Nico RoosGerhard de Leeuw

1 Head office for Ecobank in Accra, Ghana. Architects: Arc Architects

2 West Hills Mall in Accra, Ghana for a subsidiary of Atterbury Properties. Architects: Arc Architects

3 Student accommodation in Pretoria for the Feenstra Group. Architects: Boogertman + Partners

4 Vdara Office Park in Johannesburg for Bakos Brothers. Architects: Integrale Architectural Design

1 2

43

Proactive Quantity Surveying

Our track record speaks for itself. DelQS was established in 2000 and has since built up a remarkable track

record. We have provided quantity surveying services for almost all building

types ranging in construction cost from relatively small to multi-billion Rand

developments. Building and property economics is a specialty.

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