Property Developer August 2014

DeveloperPRO

PER

TYAugust 2014

DSA Architects InternationalCreativity with universal appeal

Face to face: Katherine & West14

Modderfontein taking to the future34

Cover_AUG_subbed.indd 1 2014/07/18 1:45 PM

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Untitled-1 1 2014/07/21 9:31 AM

from the CEO1

A call for Section 60In light of the SPLUMA regulations that have a profound effect on the property industry, SAPOA CEO Neil Gopal stresses SAPOA’s concerns over the implementation of Section 60 and provides comment on the way forward

SAPOA is eagerly lobbying for the implementation of Section 60 of the

Spatial Planning and Land Use Management Act (SPLUMA), which will solve the backlog of property development projects that have been halted.

More than R12-billion in property projects nationally across the board are being held up because of the failure of the Minister of Rural Development and Land Reform Gugile Nkwinti to use his discretionary power to discharge certain provisions of Section 60 of SPLUMA. This has resulted in permit applications and appeals under the Development Facilitation Act (DFA) – which is essentially being replaced by SPLUMA – unresolved, which has led to an impact on the industry.

To provide a bit of background, the Spatial Planning and Land Use Management Act, No 16 of 2013 (SPLUMA) was signed into law in August 2013. It seeks to bridge the racial divide in spatial terms, and to enable transformation of the settlement patterns of South Africa in a manner that gives effect to the key constitutional provisions, by the introduction of a new approach to spatial planning and land use management, through development of principles, norms and standards that must guide spatial planning, land use management and land development.

Minister Nkwinti recently published the draft regulations made in terms of Section 54(1) read with Section 54(2)(b) of SPLUMA for public comment. The regulations intend to regulate procedures to resolve and prevent inconsistencies that emerge from spatial plans and development frameworks while focusing also on policies of different spheres of government. They further seek to regulate land use management, preparation and content of land use schemes, land development applications and appeals.

SAPOA members have raised concerns regarding the pressing need for Section 60 of SPLUMA to be implemented. Section 60(2), being the most crucial, 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.”

SAPOA has escalated the matter to the Minister’s office in an effort to expedite the implementation of the aforementioned Act. A letter was sent to the Minister in April 2014, and we were pleased to have received a letter in May 2014 from the Minister, in which he advised the following:

a) On 1 July 2014 Sections 1 to 32 and 53 to 61 of SPLUMA will come into operation. These sections deal with aspects such as the resolution of pending Development Facilitation Act applications, the establishment of tribunals and the preparation of national, provincial and municipal Spatial Development Frameworks.

b) 1 September 2014 is set as the date on which Sections 33 and 52 of SPLUMA will come into operation. These sections deal with aspects such as municipal land use planning and the fact that all land development applications must be submitted to a municipality as the authority of first instance, and how development applications affecting national interest should be dealt with by the Minister.

“We acknowledge the burden imposed on your members by the fact that the said section is not yet in operation, yet the need to engage in wide-ranging consultations before bringing the said section into operation cannot be understated,” said Minister Nkwinti in his letter. The Minister noted that only the President can bring the various sections, including Section 60(2), into operation.

Unfortunately, Sections 1 to 32 and 53 to 61 of SPLUMA have yet to come into operation and we await 1 September 2014 for the next set of promised amendments. In the interim, SAPOA continues to advocate for the implementation of Section 60(2) of SPLUMA, and will make comments with respect to the aforementioned regulations.

Neil Gopal, CEO

SAPOA CEO Neil Gopal

“More than R12-billion in

property projects nationally

across the board are being

held up because of the

failure of the Minister

of Rural Development and

Land Reform Gugile Nkwinti

to use his discretionary

power to discharge certain

provisions of Section

60 of SPLUMA”

CEO Developer_AUG_subbed.indd 1 2014/07/18 9:57 AM

on record2

property developer l August 2014

THERE’S MONEY TO BE MADEIN COMMERCIAL PROPERTY…BUT ONLY IF YOU CAN GET FINANCE.

FEDGROUP GUARANTEES A DECISION IN PRINCIPLE WITHIN 48 HOURS ON

ALL PROPERTY FINANCE APPLICATIONS.

FedGroup is an authorised financial services provider. Terms and conditions apply.

Fed group pg 2 and 3.indd 2 2014/07/18 3:37 PM

on record

August 2014 l property developer

3

Diversifying risk and extending cash flow are two of the benefits that lure South Africans to property as an asset class. And, while it makes good business sense to invest in commercial property or own the property from which you operate, many investors are deterred because of the struggle that they face in the finance application process. FedGroup Property Consultant, Slento Little discusses the issue of accessing finance and the alternative to approaching bank finance.

A scenario experienced by many investors, sees property finance applications being sent from one institution to the next, with little to no feedback. Despite promising to transform dreams into a reality, these lenders fail to deliver a timely commitment; with feedback often received a month after an application is submitted. By this time, investors have been forced to back out of the deal. According to Little, a significant amount of FedGroup’s property finance applicants share a similar sentiment – investing in property is attractive, but procuring finance through the banks is difficult, if not out of reach. The reality of the scenario; is that demand for finance exceeds supply. This is especially true with regards to commercial property, where high rentals have led to increased interest in the commercial property market. “This has resulted in a niche appetite for lending, where the ‘big deal’ from the well-known developer receives finance and the ‘smaller deal’, from the average investor does not”, says Little.

Fortunately, for the average investor looking to finance the ‘smaller deal’, there are alternative lenders. Although governed by strict regulation, these lenders are still in a position to tailor property finance to meet an investor’s individual need. They also boast various benefits that other lenders cannot compete with. At FedGroup, these benefits include direct access to decision makers and a decision in principle within 48 hours, says Little.

He goes on to explain, that while these benefits may not be a priority for the banks, they form a core focal point for FedGroup. “Direct access to decision makers ensures transparency. It enables investors to have direct involvement in both the application of their property finance and the duration of their payment plan. Having direct access to decision makers also speeds up the application process - a FedGroup property finance applicant is able to receive a timely commitment. The two day turnaround time (which is something the market does not compete with) ensures that investors are never in a position where they may lose a property deal due to finance application delays”.

Whether a development or purchase of an income-generating property for investment purposes, or the acquisition of business premises for your own occupation, property is a secure and well balanced investment. “Investors should not be deterred by the struggles of applying for finance. There are alternative lenders within the market and investors should take advantage of the benefits that they offer”, concludes Little.

For more information call Slento on 011 305 2321

The Alternative to Bank Finance

Slento Little FedGroup Property Consultant

Fed group pg 2 and 3.indd 3 2014/07/18 3:38 PM

contents4


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

Abland

Abreal

Oilgro

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, Nicky Manson, David A Steynberg

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.

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].

DeveloperPRO

PER

TY

August 2014

DSA Architects InternationalCreativity with universal appeal

Face to face: Katherine & West14

Modderfontein taking to the future34

Cover_AUG_subbed.indd 1 2014/07/18 1:45 PM

DeveloperPRO

PER

TY

6 News

13 Legal matters

14 Face to face: Katherine & West 18 Retail ruling the roost

24 Beach, bush and booming property development

30 Cover story: What DSA does best

34 SA’s fountain of opportunity

37 Driving the demand

40 Last word: The SKA’s the limit

Cover development: DSA Architects International’s Horizon Residence and Offi ce Towers in Maputo, Mozambique. This prominent 74 000 m² mixed-use development, a highly visible landmark in the capital city.

Printed by

e: [email protected]

Contents Developer_August.indd 4 2014/07/18 2:15 PM

When it comes to choosing fl exibility,strength, beauty and quality...

It has to be stainless steel

The ‘cross and balls’ quality promise is backed by the Southern Africa Stainless Steel Development Association (Sassda), who are developing the industry through the technical advice, training and regulation that they provide to both its members and the public.

®

Questions? Email [email protected]

Stainless steel comes with a promise. A promise that you’ve

chosen quality that you can trust. Choosing stainless steel for

architecture, building and construction means choosing the

long-lasting, robust material that brings your project to life.

It is visually appealing, with high corrosion resistance, easily

maintained and offers cost effective solutions. DW

FCOL

L SA

S517864

South African manufacturers of stainless steel products for the

architecture and interior design industries have a long-standing

reputation for supplying world-class quality goods, as well as

providing a high level of after sales service. Go to www.sassda.co.za

or phone Sassda on +27 11 883 0119 for more details on South

African stainless steel manufacturers.

®

Visit www.sassda.co.za for more information. Tel +27 11 883 0119Terms and Conditions apply 1964 - 2014

®

Untitled-2 1 2014/07/18 11:29 PM

on record6


Developers of the R300-million Baywest road network, the largest road project in

the Nelson Mandela Bay region in more than 10 years, recently began meticulously

placing the first of the 70-tonne concrete beams that make up the bridge linking two

sides of Port Elizabeth across the N2 freeway. The double bridge was specifically designed

to reduce construction time while ensuring maximum safety for the contractor and road-

users during the construction period. Basil Read, which was awarded the tender to

construct the road network by the South African National Roads Agency Limited last

year, is set to complete the bridge in record time.

The faster build means N2 motorists will be inconvenienced for a third of the usual

time – four months as opposed to the 12 months conventional building methods would

take. According to AECOM engineer on the project, Gerrie Albertyn, all 12 of the 70-tonne

concrete beams that make up the bridge were precast in a controlled area, off site. This

meant that the beams could be laid six at a time, closing off each side of the N2 for just

two months (four months in total). Usually, the concrete is cast in-situ (on site), with

scaffolding needed under the bridge to support the slab while it cured, resulting in

each side of the N2 being closed for up to six months. “The added benefit of this system

is that the beams have been cast in a special yard set up for casting concrete in

controlled conditions,” he says. “In the past, casting all the concrete in-situ resulted

in the work being exposed to the elements, which made it more difficult to achieve

the tight tolerances.”

The project required absolute precision, says Albertyn. Each 70-tonne beam could be

out of position by no more than 10mm when laid on the bridge bearings. With 230

employees working feverishly to complete most of the network in time for Baywest

Mall’s opening in March next year, it was all hands on deck, says Albertyn, adding that

the network would reduce rush-hour traffic in the city’s western suburbs. “At the moment

there is a lot of congestion around the Makro interchange along Samantha Way and

Frikkie Kotze Drive,” he says. “This network will give people a link onto the N2 and later

up to Cape Road.” The extension of Walker Drive and the road circling Baywest Mall, as

well as the two on-ramps and two off-ramps between the mall and the N2, are set for

completion by next March.

The connection to Cape Road – the first phase of the long-awaited Redhouse Chelsea

arterial route – will be completed by October next year, says Albertyn. Baywest MD Gavin

Blows welcomed the milestone, saying it prepared the area for the future growth of the

city, in line with the municipality’s 2020 vision. “This road network has been a long time

coming and will help unlock economic growth in the city’s western suburbs,” says Blows.

“It’s a project that we are very excited about, and which is being overseen by the top

experts in the industry. This bridge represents a critical link between two sides of Port

Elizabeth. More importantly, it points towards the start of exciting and much-needed

economic growth in the city.”

+27 (0)21 886 5262, Baywestmall.co.za

Engineering feat sees Baywest N2 bridge up in record time

New oncology unit for Paarl’s innovative medical centre

New Protea Hotel Fire & Ice! ignites the Menlyn skyline

Construction on the second phase of a successful medical

facility in Paarl, due for completion in September this year, has commenced. It will comprise a state-of-the-art oncology centre and a sub-acute facility.

The medical centre, which was developed by Annenberg Property Group (represented by Dudley Annenberg) in conjunction with Chianti Property Developers in 2012, currently offers excellent services, which will be further enhanced by the addition of the oncology unit and the sub-acute facility. The existing property is currently fully let and is predominantly occupied by Cure Day Clinic, which currently offers three minor theatres and 30 beds, National Renal Care, well-

known gastroenterologist Dr Stephen Schmidt, and Ampath.

Cure Day Clinic is a leading specialised ambulatory care facility that owes its success to offering affordable same- day surgery procedures in a hi-tech medical facility. The BEE group’s first clinic opened in 2008 in Gauteng; it has since expanded to six clinics, including the Paarl branch. The Paarl clinic is Cure Day’s first day hospital in the Western Cape, and offers top-notch care in a modern, aesthetically pleasing environment.

Well-established, and with good management and corporate governance, the group has already secured licences to open clinics in Pietermaritzburg, Wilgeheuwel, Blaauwberg, Somerset West

Even the construction crew is having a ball at Protea

Hotel Fire & Ice! Menlyn, where they’ve raised the roof on what is set to be the hottest property in Pretoria. But the real party will start in early 2015, when the hotel team will throw open the doors to welcome the first guests and conference delegates.

The six-storey designer hotel is going up in Summit Place, a new commercial precinct that’s being developed opposite the popular Menlyn Park Mall. Pretoria’s “Cool Central” will have 178 rooms, of which 10 are suites and 40 are inter- leading rooms, a restaurant, designer bar and lifestyle spaces, stylish conference centre, feature swimming pool and approximately 250 underground parking bays.

Protea Hotels Director of Sales, Marketing & Revenue Danny Bryer says the physical structure of the designer building is complete and work on the plumbing, reticulation and other first-fix items for the rooms levels is under way.

“Work is flying along,” he says. “We have a couple of months of essential build ahead of us before the fun starts with creating the edgy look and feel of the property. There’s no doubt in my mind that this hotel and meetings, incentives, conferencing and exhibitions (MICE) market dream space is going to take the cool factor of Protea Hotel Fire & Ice! to a whole new level.”

Conferencing is going to be a huge element of the new Protea Hotel Fire & Ice! Menlyn. “We’ve built a double-storey stand-alone conference centre adjacent to the hotel that’s going to be Pretoria’s premier MICE destination,” says Bryer. The ground floor is massive and screams “extravaganza”; this alone can accommodate up to 500 people (and has drive-in access for vehicle unveilings).

“Upstairs there are two 150-seater conference rooms, and a variety of boardrooms that are going to be where everyone who’s anyone will want to meet, seal deals and be seen,” says

News Developer_AUG_subbed.indd 6 2014/07/18 3:00 PM

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7

Salt River, a gritty yet energetic area of Cape Town with a rich industrial and residential history, is undergoing rejuvenation with building redevelopment and safer common

areas. One such project is the redevelopment of 95-97 Durham Avenue, known as the Pals building (as it previously being the home of the clothing manufacturer of the same name). Here, three buildings are undergoing a revamp by Johannesburg developer Dawie Swart, financed by Construct Capital and designed by Boukuns Architecture and Design.

With a tenant list that includes Nando’s, BrandsEye, Red & Yellow Advertising School, Zando and Quirk, it is clear that big brands are seeing the value-for-money potential in Salt River. Facilitating the conversion of the Pals building into a commercial property is a new 5 400m² development including a 600m² retail aspect and undercover parking bays. “The parking is catering to the increased parking requirements generated by the change in use of these properties, while the retail services the significant foot traffic generated by the Salt River train station,” says development manager Ryan Wintle of Construct Capital.

The upgrade to the Pals building forms part of a wider upgrade scheme known as the Salt River Village Upgrade Project, which is an official World Design Capital 2014 project. Across the road from the car park, Swart is also responsible for redeveloping an old industrial property into residential units. Opposite Pals is the Cornerstone Institute building, which was revamped by the same development team last year. This building was purchased in 2011 and converted to a purpose-fitted educational facility. “It has been tough to get financing for the development of this node; it’s taken significant efforts and negotiations on our part to get the funding necessary to complete this precinct,” says Wintle, who believes that the Pals development has kick-started redevelopment in Salt River. “When Dawie began the redevelopment of the area in 2011, the effects of the financial crisis were still fresh in everyone’s mind. Funders were wary of funding developments in areas such as Salt River, preferring to focus on more established nodes. Additionally, many could not see the value in investing this kind of money in Salt River. All three of the properties making up this project are now 100% let, with high-calibre tenants.”

Thanks to efforts by the developers, Salt River is now a City Improvement District, which Swart believes will help create a positive identity for the area, something he has witnessed with Johannesburg’s Maboneng Precinct where he’s developing entry-level housing. “Like Maboneng, Salt River is very cosmopolitan – but it has had a bad reputation,” he says. “There is a mixture of long-time residents and new businesses coming together, hoping to create a village atmosphere. Because of its location and proximity to the CBD, it was only a matter of time until Salt River was revitalised. Cape Town has a shortage of commercial property. We have had no problem in renting out the newly refurbished spaces.”

The area around the building will be turned into a paved pedestrian walkway, building up the district for the many people who use Cecil Road as a thoroughfare from the Salt River train station to Victoria Road. A park and public square have been incorporated into the design to make the area more usable for the public and workers. Architect Etienne Britz used the existing urban fabric and its history to define his design principles for the project. “We realised we could create a really dynamic community within this space, and harnessed community support for our work to get residents to buy into the project,” he says. “We have received excellent feedback from our neighbours – the residents in the area are excited about the redevelopment and the creation of a mixed-use node.”

Contradictory to most security-conscious developments, burglar bars on the building have been removed to open it up to the outside world. Solar panels, funded by the Industrial Development Corporation, ensure the building complies with green regulations. Property economist and professional valuer at Rode & Associates, Erwin Rode, said modern buildings in the Salt River area could “potentially start a long process of regeneration, hitching onto the Woodstock area, which is slowly being gentrified”. The refurbishment of the three properties and surrounding areas is expected to be completed this month.+27 (0)82 445 0271, Saltrivercommercial.weebly.com

Salt River rejuvenation piggy-backs on revival of trendy Woodstock

(under construction), Bellville, Bloemfontein (under construction) and Polokwane.

“Nedbank has been involved with this development from the beginning, when we facilitated the primary loan of R18-million for the first stage,” says Richard Thomas, Regional Executive of Nedbank Corporate Property Finance for the Cape. The bank has further funded the company close to R32-million for expansion into this next phase.

Ditau Health Solutions has been procured as a tenant and will occupy 736m², with a 10- year lease which commenced in July 2014. Ditau Health Solutions offers various services to government and the private sector, focusing on improving access to quality healthcare on the African continent. The company was founded by Dr Victor Litlhakanyane in 2011;

it provides healthcare infrastructure, health advisory services, social infrastructure, medical equipment manufacturing and health facilities management.

Headquartered in Johannesburg, Ditau Health Solutions is looking to establish a presence in the Western Cape. “Obtaining affordable and quality medical care is a priority for South Africans, and this cutting-edge medical facility and its expansion will benefit the people of Paarl and the Western Cape,” says Thomas. “Despite a difficult economic operating environment, Nedbank Corporate Property Finance continues to be the market leader in the sector and is renowned for creating innovative solutions for quality clients such as Annenberg Property Group.” +27 (0)21 416 7000,

Nedbank.co.za

Bryer. “The conference centre is entirely Fire & Ice! in feeling – it isn’t just another anonymous meeting space that could be anywhere in the world. It’ll also have the latest technology and audiovisual services.”

While the conference centre is an integral part of the chic hotel, Bryer says the property will have a unique style but still be identifiable as a Protea Hotel Fire & Ice!

“Without giving too much away, let’s just say we’re creating the ultimate indoor/outdoor urban environment to see and to be seen in – ideal for chilling with your besties at the bar, enjoying the hip business breakfasts,

conducting high-level meetings or simply putting your feet up with an iPad and catching up on emails,” he says. “All the entertainment areas are on one level, so the vibe and energy of the experience will be felt from check-in till check- out. The pool deck is the main focal point. It will contain private pods with fireplaces ideal for cool couples wanting a bit of heat, and there will be a large outdoor restaurant component as well.”

Bryer says Protea Hotel Fire & Ice! Menlyn will be a magnet for young-at-heart travellers who enjoy being amid the energetic vibe of city life. +27 (0)21 430 5000,

Proteahotels.com


on record8


The Concrete Manufacturers Association (CMA) warns that millions of rands are being wasted on concrete block paving (CBP) roads that fail because of

poor specification. In many instances, paving is simply specified as being 25MPa without any reference to the SABS mark. One of the CMA’s technical consultants, civil engineer and independent paving consultant John Cairns, says that many of the engineers and landscape architects who design paved roads are not aware of the most important specification criteria when using CBP.

“I participate in regular paving seminars and workshops and am amazed at how many professionals don’t know that the new CBP standard, SANS 1058:2012, is based on tensile strength and abrasion resistance rather than the old standard of compression resistance,” says Cairns. “Some are not even aware that the standard has changed. Therefore it is hardly surprising that so many professionals are still specifying for CBP projects based on compression strength. In most instances, pavers fail either by cracking and then splitting, or through surface abrasion due to factors such as particle distribution and binder percentages. These properties are addressed in SANS 1058:2012. The old standard, SANS 1058:2006, was based solely on a single compression test, which measures resistance to crushing. Paving blocks never crush under load, which is why the compression test is not a good performance indicator. In fact, pavers can have a very high compressive strength but poor abrasion resistance. This is why the standard was changed.

“This lack of awareness is resulting in failed CBP installations and unnecessary remedial expense. For instance, I was recently asked to submit a report on a new car park paved with CBP at an East London shopping mall. Serious abrasion had taken place even though the paved surface was barely six months old. The reason for this was that the pavers were simply specified on the basis of compressive strength rather than the SABS standard.”

Cairns says most paving failures occur in shopping centres, office parks and housing developments, where paved surfaces tend to be regarded as simple, not requiring an engineering design. “By contrast, industrial CBP surfacing is generally designed correctly, especially where the paving provides a critical functional element such as the working surface of a container yard or steel mill,” he says, adding that CBP roads can also fail when they are not designed for construction loading. “This often occurs on housing estates where roads are designed to handle light traffic only. What normally happens is the roads are built before other construction takes place. This means they must then handle the heavy-duty trucks and other construction equipment while the estate is being built; this obviously causes damage. Further damage is caused by spillage of sand and stone, especially at traffic circles where most of the braking and turning takes place. One way around this problem is to build road bases to handle the construction and early resident traffic and only pave them once the estate is close to completion. Not only will this save the pavers from unnecessary wear but it will also ensure the road base is constructed properly. In instances where it is necessary to install complete roads before construction commences, they should be built with pavers that can handle heavy-duty traffic. Once built, the contractor should ensure that the roads are kept free of sand and stone. Then, if damage occurs, responsibility for repairs will fall on the contractor.”

CMA Director Wally Armstrong notes that most CMA producer members hold the SABS mark. This means they do regular batch testing and manufacture with a recognised quality assurance system in place. “Some of our members and other CBP producers comply with the standard but don’t actually hold the mark, which is also acceptable,” he says. “However, holding the mark is obviously first prize, especially if there are comebacks due to poor specification. Most South African paving producers manufacture pavers with two layers. The bottom, thicker layer provides the required strength, and the top layer can be coloured with pigments for enhanced aesthetic appeal. Now that the new standard measures abrasion resistance, this topping layer is also being designed with excellent surface-wear properties. Even lower-grade blocks with a good topping layer can offer high abrasion resistance, proving that topping layers do more than just offer colour variation.” +27 (0)11 805 6742, Cma.org.za

Lanseria Corporate Estate forges ahead, with first phase nearly sold out

Poor paving specification costs millions

Visual notes steady growth of retirement property investment and development

South Africa is seeing a steady

growth of retirement property

investment and development. This

is according to Visual International

Holdings, which recently listed on the

JSE AltX. Visual International Holdings

develops mixed-use residential suburbs

for the middle-income market – the

fastest-growing residential property

market segment in South Africa. In

doing so, it creates much-needed

quality housing for aspirant young

families – and also houses people

at all life stages, including retirement.

Charles Robertson, Managing

Director of Visual International Holdings,

says the growth of retirement property

is a definite global trend, particularly

in countries with an ageing population.

While South Africa has a relatively

young population, there is a solid

demand for quality retirement

property investment options,

for owner-occupiers and own-to-let.

Robertson adds the local proliferation

of retirement developments responds

to the market’s need for retirement

property. And, as our young population

ages, demand for retirement

accommodation is going to grow.

Robertson cites Visual

International Holdings’ Stellendale

Lifestyle Retirement Village, located

in Cape Town’s northern suburbs, as

an unusual but socially beneficial

way of meeting the growing need

for retirements estates. “The

Stellendale Lifestyle Retirement

Village forms part of the larger

residential component at Stellendale,

a self-contained suburb complete

with a school and shops,” he says.

“This means that Stellendale is

more than a retirement estate

– it is an important part of

the community.”

Prime land in excess of 240 000m²

has already been sold in the first

phase of Lanseria Corporate Estate,

which has spurred the pace of

development in this secure

industrial and office estate.

The ultra-modern, eco-

sensitive Lanseria Corporate

Estate flanks Lanseria International

Airport, with excellent access from

Malibongwe Drive. Development

on 127 000m² of the land – for

warehousing, factory and office

space – has either already been

completed or is under way

at the commercial estate.

The success of Lanseria

Corporate Estate is largely the

result of its ability to offer flexible,

built-to-purpose development in

an excellent location with plenty

of power and easy, toll-free road

access. Importantly, the estate

is an attractively designed,

environmentally friendly and

eco-sensitive development with

strong development controls. It

features a green park-like design


on record


9

In June, Airports Company South Africa (ACSA) and developers BusaMed signed a 30-year lease for a 20-hectare site at Bram Fischer International Airport in Bloemfontein. BusaMed will begin construction of an R300-million sub-acute

private hospital facility at the airport site this month. The development is a significant milestone for ACSA, being the first hospital development at any of its airport sites. “We’re very excited about it,” says Haroon Jeena, ACSA Group Executive: Commercial (pictured below right). “It shows that we’re not only into the traditional commercial developments. We’ve done many warehouses, distribution centres, hotels and offices; this development shows our flexibility in utilising our land to meet market demand.” He adds that the hospital development fits in with the aerotropolis concept that is seeing airports around the world develop into cities in their own right.

ACSA is accelerating the development of the country’s major airports, opening up a host of commercial development opportunities. BusaMed Chief Executive Dr Diliza Mji (pictured below left) says they decided on the airport site for the hospital because of demand in the area. It was also the best solution given the difficulties with other sites. The hospital will be a step-down facility housing five wards: maternity, medical, paediatric, surgical and sub-acute. It will also house four theatres, a casualty department, doctors’ rooms, a pharmacy and a coffee shop. Step-down or sub-acute hospitals cater for patients who don’t need intensive- or high-care treatment, and are gaining popularity throughout the world as a cost-effective alternative. Patients typically include those recovering from surgery, those needing treatment for chronic illness and those requiring observation. Mji says that beds of an acute nature may be included at the Bram Fischer hospital site because of its proximity to the N8 and N1, and the incidence of accidents on these roads.

Jeena and Mji hint at future associations: “We hope to have an understanding about further engagements at other airports,” says Mji. This is one of four hospital projects currently being undertaken by BusaMed, with other hospitals sites in the Western Cape, Harrismith and Johannesburg. The planned roll-out nationally marks the first private-sector, project-financed hospital development. It is also the first hospital development in South Africa in the last 20 years, says Mji. +27 (0)11 723 1400, Airports.co.za

ACSA and BusaMed sign lease for hospital development at Bram Fischer International Airport

and extensive indigenous landscaping.

It also uses recycled water for irrigation

and for flushing of toilets.

Cash Converters is one of

the leading businesses that has

chosen Lanseria Corporate Estate

as a strategic business base. The

group has located its Gauteng head

office and main distribution centre

here in a tailor-made development.

Several more privately led large

developments in the estate include

new warehousing and distribution

facilities, with many more companies

having invested in the development

precinct. Purchase options in the

estate range from stands to

complete turnkey packages.

Once fully developed, the

estate will comprise 150 stands.

With its many benefits for

business, it is little wonder that

Lanseria Corporate Estate has

been enthusiastically welcomed

by the market. It’s ideally positioned

in a prime location, in a growing

area that is gaining popularity

and prominence. Contributing to

this is the recently upgraded runway

at Lanseria International Airport, which

has led to a big increase in the number

of domestic flights by both Kulula and

Mango airlines. Lanseria Corporate

Estate also enjoys excellent access

to the N14 Krugersdorp highway,

which is toll-free.

In addition, the rapidly developing

estate benefits from ample power

for large power users supplied by

Eskom at a substantially cheaper

rate than that offered by City Power.

Lanseriace.co.za

South Africans are also increasingly

looking towards investing in buy-to-let

property as part of their retirement

savings strategy. Robertson says the

primary advantage of this approach

is that it allows people much greater

control over the benefits they would

like to receive when they retire. He

notes the popularity of investing in

buy-to-let properties is also the result

of the opportunity for ordinary salary-

earning South Africans to steadily build

a portfolio of property that can deliver

a more defined benefit at retirement,

as opposed to fixed monthly

contributions in which benefits

at retirement have the potential

to be somewhat uncertain.

To this end, Visual International

Holdings builds quality housing and

develops mixed-use suburbs in strategic

high-growth nodes across South Africa.

It identifies land that is suitable for its

developments, near jobs/infrastructure,

and includes retirement estates as

an integrated part of the model.

+27 (0)21 919 8954,

Visualinternational.co.za


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Echo Prestress hollow-core concrete slabs, in combination with structural steel frames

and raft foundations, were used to fast-track construction of a new office development

at Clearwater Estate in Boksburg. Built in two phases, the first phase comprising a gross

lettable area (GLA) of 3 100m² and the second 3 700m², the project was the initiative of

local property developer Krisp Properties. “We had a lease agreement with Michelin Tyre

Company South Africa for Phase 1 before the first sod was turned, which meant we only had

seven months to erect the building,” says Jordan Mann, Executive Director at Krisp Properties.

Francois Marais of Francois Marais Architects says the construction of the buildings

embraced new energy-efficiency legislation rather than being restricted by it. “The design

uses overhangs above all the windows and doors to minimise the impact of the sun and

to reduce the escape of heat from the buildings,” he says.

Completed by end November 2013, Phase 1 comprises two double-storey buildings,

each measuring 1 550m² (GLA), linked by a central atrium. “We deployed hollow-core slabs

for the first floors as well as the roofs; this helped us reduce construction time by several

weeks,” says Mann. “Hollow-core slabs in the roofing allow the necessary support for the

installation of photovoltaic power generation units in future. The roofs have also created

ideal catchment areas for harvesting rain water, which is to be stored in subterranean tanks.”

Echo Prestress’s hollow-core slabs were specified by PDS Civil and Structural Engineers,

and slabs totalling 3 100m² were used for phase one. Phase two will make use of 3 750m²

of Echo Prestress slabs. Slabs up to 10m were deployed on the first-floor sections, with

slabs of between five and seven metres installed on the roof. Both the first-floor and roof

panels were topped with steel-reinforced screeds, and a bitumen coating was used to

waterproof the roofs. In addition, Echo Prestress supplied nine-metre H-shaped universal

steel columns to provide slab support for the internal cantilevering.

According to structural engineer Spiros Sdralis of PDS Civil and Structural Engineers,

Echo Prestress’s role involved considerably more than simply supplying the slabs. “We

provided Echo with a set of drawings; they prepared a layout which took all the servicing

requirements into account,” he says. “Echo’s engineer Daniel Petrov was involved from

the outset. He was always on site when we needed him, particularly to solve specific

on-site challenges. For example, some of the slabs had to be modified so that the upper

section of steel skeleton could be anchored to the first floor on a solid platform. This

meant that the hollow-core end sections of some slabs had to be packed with concrete

to provide the solid base. Echo filled the voids with concrete according to our specifications

– this enabled us to drill out the holes for the bolt anchor sleeves in the same way we

had done on the ground floor. The builders were able to begin the assembly of the upper

level steel frame as soon as the slabs had been installed; this was the primary advantage

of using hollow-core slabs. If in-situ flooring had been used it would have delayed completion

dates on both buildings by several weeks. Extensive use was made of cantilevering on

this development, both internally and for the shade overhangs, and Daniel assisted with

redesigning some of the cantilever sections on Phase 2. He also helped us with changing

the direction of some of the slabs.”

Echo Prestress also allowed for service ducts based on the architectural plans, and

suspended ceilings were created 600mm below the soffits of the roofs and first floors to

accommodate electrical, plumbing and air-conditioning services.

+27 (0)11 789 3334, Nuway.co.za

Echo hollow-core slabs fast-track office development

SAPOA applauds Polokwane’s innovative rates policy, with some provisos

Redefine’s acquisition of Fountainhead gets the go-ahead

F ountainhead Property Trust has agreed to sell

all of its assets, including the Fountainhead property portfolio, to Redefine Properties, in exchange for 82 Redefine shares for every 100 Fountainhead units held.

As part of the transaction, Redefine Properties will assume all of Fountainhead Property Trust’s liabilities, including its interest-bearing debt. The transaction will be effective from 1 September 2014.

Details of the transaction were announced in a joint statement by Fountainhead Property Trust, which is managed by Fountainhead Property Trust Managers Limited (FPTML), and Redefine Properties. Redefine Properties’ board and the independent board committee of FPTML have agreed that a merger of Redefine Properties and Fountainhead Property Trust makes strategic sense.

“We welcome this agreement and are pleased to be taking this transaction forward,” says Marc Wainer, CEO of Redefine Properties.

Redefine Properties is the largest unit-holder in Fountainhead Property Trust, at 65,9%. It is also the owner of FPTML, which controls the assets of Fountainhead Property Trust. The transaction is subject to the fulfilment of the usual conditions, including approvals from Fountainhead Property Trust unit-holders, the Financial Services Board and Redefine Properties shareholders.

FPTML’s independent committee has endorsed the transaction and has recommended that Fountainhead Property Trust unit-holders, excluding Redefine Properties, which is a related party, do the same. For Fountainhead Property Trust investors, the transaction will provide exposure to a diverse portfolio of property assets valued at R44,5-billion with a focussed portfolio strategy, access to lower costs of capital and the benefits of economies of scale and cost savings thanks to synergies between the property portfolios. It will also unlock greater ease of trade through the more liquid Redefine Properties shares.

The South African Property

Owners Association

(SAPOA) has applauded

the city of Polokwane for

introducing innovative

proposals in its recently

released Draft Rates Policy

2014/15, including a new

rate for illegal uses and

rebates for high-value properties.

The organisation, which

represents the South African

commercial and industrial

property industry, is concerned

about a proposal to increase

ratios on vacant land.

SAPOA’s comments

are based on a report

commissioned by the

association from specialist

consultant Rates Watch

(Pty) Ltd, which was

appointed to analyse

municipal budgets for the

coming year – with a focus

on property-related costs

such as rates and taxes.

“Rising municipal rates

and taxes are a hot-button

issue,” says SAPOA CEO

Neil Gopal. “We believe

it to be in the interest


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11

For Redefine Properties shareholders, the transaction means strategic portfolio growth and diversification through the increased exposure to retail property.

The Fountainhead Property Trust property portfolio (worth more than R12-billion) comprises 66 properties covering 935 355m² of lettable space.

Retail properties represent more than 70% of the property portfolio by value.

Once the transaction is finalised, Fountainhead Property Trust will be de-listed from the JSE. Its unit-holders will receive the final distribution for the six months ending 31 August 2014. Their first distribution as Redefine

Properties shareholders will be for the six months ending 28 February 2015.

“For Redefine, this is another important milestone in expanding the local property portfolio and in aligning the interests of investors,” says Wainer. +27 (0)11 283 0000,

Redefine.co.za

of our members to partner

with municipalities such as

the city of Polokwane to

find effective solutions.”

In a bold step, Polokwane

is proposing the creation of

an “Illegal Use” category,

allowing penalty rates to

be levied by the municipality.

“This is an innovative

suggestion to discourage

the illegal use of properties,”

says Gopal. “Furthermore,

SAPOA is happy to assist

the municipality in identifying

these properties.”

Another suggestion

is to levy a lower rate on

land forming part of the

remainder of a township.

“This is likewise a positive

step because it reduces the

holding costs for developers,”

explains Gopal.

A further positive

aspect of the draft policy

is relief for high-value

properties. “Business or

industrial properties with

a value greater than R50-

million will receive a rebate

on a rising scale,” says Gopal.

“The higher the value of

the property, the higher

the percentage rebate.”

Properties valued at more

than R500-million, for

example, will receive a

40% rebate. Rebates on

other types of properties

– such as sectional title

schemes where owners

maintain their own internal

municipal services – are

also on the cards. SAPOA

is clear, however, that a

higher rate for vacant

land – proposed to

increase from 2,0 to

4,5 – will do little more

than penalise vacant land.

The city argues that a

higher ratio will deter land

grabs and illegal use, as well

as encourage development.

Not so, says Gopal, pointing

out that high rates will not

force the development of

vacant land. “SAPOA is

pleased with the positive

progress we are seeing on

these issues and looks forward

to a continued partnership

with the city of Polokwane.”

+27 (0)11 883 0679,

Sapoa.org.za

Redefine Properties’ Chief

Executive Officer Marc Wainer


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Ensuring long-term viability and competitiveness of commercial property in the Sandton office market has seen the recent revamp of two prominent office buildings owned by

Sanlam Life Insurance and asset managed by Vukile Property Fund. These are Norwich Place (previously called 66 Grayston) and The Forum office complex, both of which are managed by JHI Properties, a member of the Excellerate Property Services group of companies.

Carried out at a total capital investment of approximately R118-million, the projects were completed by JHI Project Management. “In today’s competitive trading environment, Sandton remains a prime hub, highly sought-after among corporate tenants who seek a prestigious address in this convenient, central location,” says Beukes van Heerden, a project manager at JHI Project Management, who was involved in the upgrades. “But with an increase of appealing P-grade and A-grade stock on the market in the area, enhancing and protecting rental income over the medium to long term for improved return on investment is a priority among property owners, particularly with regards to existing B-grade and A-grade buildings, in order to realign them with market conditions and expectations. This was the main objective for the extension and upgrade of Norwich Place, situated in Norwich Close in Sandown, which enjoys direct exposure to busy Grayston Drive.

“The existing development consisted of two separate office buildings, a shared parking garage and open parking on a site of 14 075m². There were 421 parking bays providing a ratio of 3,1 bays per 100m² GLA, which was too low given the demand in the area for a minimum of four bays per 100m² GLA.” The project provided a new parking deck structure, a modern façade treatment, upgraded central entrance and lift lobby with additional lift, and multi-volume glass enclosure and closing up of the atria in the building to increase and create more user-friendly lease space. In total, the offices were extended by 1 417m², and 283 further parking bays were provided. An improved air-conditioning system was also installed and electrical system upgraded. The capital outlay of the entire project was R98,2 -million.

Van Heerden says a key focus was not only to improve the parking ratio but also to allow for easier access to and egress from the parking decks. Internal traffic flow was also greatly improved, and entry and exit lanes were doubled. The new façades achieved an economical but bolder and more contemporary look while the new lobby created a central area with easier access for tenants and visitors. “In Sandton, gross office rentals up to R190/m² are currently being achieved in newer developments,” he says. “The rentals required to justify this project are much lower at R155/m². Coupled with this, Norwich Place now offers 4,5 bays per 100m² GLA, which is higher than most of the buildings in the vicinity, making this a highly effective and marketable property. The upgrade to electrical and mechanical systems will result in lower energy and maintenance costs over the long term, ensuring the property’s competitive edge in the marketplace. The redesigned façades and materials substantially enhance the management of heat loads in the building to achieve a more efficient air-conditioning system, saving on consumption over time, while new low-energy consumption electrical components contribute positively to the overall efficiency of the building.”

The second office block in Norwich Place also received a complete revamp of all common areas to replace outdated previous installations and create a modern, light feel. With an upgrade completed at a capital investment of approximately R20-million, The Forum office complex is well positioned adjacent to Nelson Mandela Square, close to the intersection of Maude Street and 5th Avenue and about 300m from Sandton City Mall. “The Forum common areas have long been in need of an extensive revamp to enable the building to successfully compete with other office complexes that have been developed in the catchment area,” says Van Heerden. “The scope of work carried out includes upgrading of the main entrance and the reception area, revamp of all lobby areas including floors, ceilings and lights, complete revamp of all bathrooms, painting of the external façade of the building and a new security system. There has also been a major improvement in the electrical system, including the implementation of green energy saving measures wherever possible. As a result, the building portrays a more contemporary, revitalised appeal, which will take it forward into the future.” +27 (0)11 911 8000, Jhi.co.za

Sanlam revamps prominent commercial buildings in Sandton

Pareto Limited has internalised

its management to optimise

performance and boost capacity

to create positive relationships

with its clients and partners,

and to deliver improved service

at its shopping centres. Pareto

Limited is South Africa’s premier

shopping-centre investor and

one of the country’s leading

retail property players.

“We are reclaiming our

communication lines to ensure

the best experience for everyone,

from shopping-centre retailers and

customers to retailers at corporate

level, our service providers and our

own team,” says Pareto Limited CEO

Marius Muller (pictured below),

adding that Pareto Limited’s

internalised management will drive

long-term shareholder value and

sustainable portfolio performance.

“It’s about improving the value of

our assets for our stakeholders.”

Pareto Limited owns an

unmatched portfolio of regional

and super-regional shopping

centres. It is the full owner of

Cresta Shopping Centre, The

Pavilion in Durban, Mimosa Mall

in Bloemfontein, and Southgate

Mall and Value Market and

Westgate Regional Shopping

Centre in Gauteng. In Cape Town

it owns Tyger Valley Shopping

Centre and has a 50% stake in

Cavendish Square. It also has

a 50% stake in Menlyn Park

Shopping Centre in the east

of Pretoria and holds 25% of

Sandton City and its surrounding

assets, including the Sandton

Convention Centre and three

hotels (the Sandton Sun, the

InterContinental Johannesburg

Sandton Towers and Sandton

Garden Court).

The group manages all five

of its wholly owned centres and

will take over management of

Tyger Valley Shopping Centre

in September. It has geared

up its capacity to put this

new model in place, both

at head-office level and at

its malls, over several years.

“As part of our move to internalise

the management of our properties

to optimise performance, we

realised that Pareto employed

people in certain positions over

and above what we expected a

property manager to deliver,”

explains Muller.

This was the catalyst for Pareto

Limited to set up an in-house

management team. Its head-office

management model duplicates its

mall management structures, with

clear channels of communication

and information flow. “This way,

our strategic intention and our

execution are aligned,” says

Muller. The new structure allows

Pareto Limited to benefit from the

insights gleaned from its aggregated

information, and advances quality

performance, professionalism,

good execution and standardisation.

“We want to deliver the best

service possible,” says Muller. “We

believe our new structure supports

this. It also creates an environment

that fosters excellence and supports

every member of our team to be

the best they can be at what they

do.” He adds that Pareto Limited’s

strength lies with its people. “Our

management model puts us in a

better position to empower people

and give them a chance to shine.”

While cost-cutting for its retail

property management isn’t the

aim of adopting the new structure,

Muller expects there will be some

savings because of the change.

“Any savings will be reinvested

into our shopping centres through

our head-office support structure.”

+27 (0)11 258 6800,

Pareto.co.za

Pareto benefits from its innovative new internal management structure


13


legal matters legal matters

The scrutiny of environmental parameters

By Eugenia Makgabo, Admitted Attorney of the High Court and Legal Officer at SAPOA

With environmental and sustainability legislation coming to the fore in South Africa, the property industry needs to be kept up to speed with its scope and implications

A s a country, we have entered into an era where there has been immense focus on

environmental health. The property sector in particular is required to comply with a plethora of legislation. It has been said by some that perhaps the property industry has been highly regulated. However, there is a need for the industry to be aware of the environmental sensitivities with the continuance of much-needed developments in South Africa.

Section 24 of the Constitution of the Republic of South Africa, 1996 states the following:

“Everyone has the right to an environment that is not harmful to their health or wellbeing; and to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that prevent pollution and ecological degradation; promote conservation; and secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.”

The legislation – which requires compliance by entities or individuals in order to give effect to the constitutional right – includes the National Environmental Management Laws Second Amendment Act, 2013 (Act No. 30 of 2013); National Environmental Management Waste Amendment Act, 2014 (Act No. 26 of 2014); Carbon Tax Policy and the Environmental Impact Regulations. Non-compliance with the aforementioned legislation is associated with hefty fines and imprisonment, and therefore cannot be ignored.

Implications of environmental violationsIn the case of the State v Nkomati Anthracite (Pty) Ltd (case number 412/13), Nkomati Arthracite, hereinafter referred to as the accused, pleaded guilty to eight charges, which were in direct contravention of the National Environmental Management Act, 1998 (Act No. 107 of 1998) and the National Water Act, 1998 (Act No 366 of 1998).

The charges included the impeding or diverting of the flow of water in a watercourse; the disposing of water in a manner which may detrimentally impact on a water resource; and the construction of roads and infrastructure without the necessary permit or licence, among others.

It was held that “everyone in South Africa has a constitutional right to have the environment protected for the benefit of present and future generations”, and that the offences are serious – which is reflected in the legislature’s punitive prescription of fines.

The National Environmental Act provides for a fine of R5 000 000 or imprisonment for a period of 10 years, or both such a fine and imprisonment for the aforementioned charges; while the National Water Act provides for a fine or imprisonment not exceeding five years, or for both a fine and such imprisonment for the charges.

Both Acts reflect the magnitude of the impact that non-adherence to environmental laws can have. It was further held that, for the purposes of all the charges, the accused was sentenced to a fine of R1 000 000, which is suspended for a period of five years – provided that the accused is not convicted of contravening section 24F of the National Management Act, which relates to activities that state the prohibitions relating to the commencement or continuation of listed activities, and section 21 of the National Water Act, which relates to the purposes of water usage.

The accused was also ordered to pay a remedial measure of R4 000 000 within 14 days from the date of the sentence to the Environmental Management Inspectorate of the Department of Environmental Affairs. A clear message was being sent in this case – that environmental laws are pivotal and that future violations will be dealt with accordingly.

There is, therefore, a conscious effort and responsibility that must be taken to guard against the infringement of environmental laws. There should, however, also be focus on the securing of ecologically sustainable developments. SAPOA will continue to monitor the environmental laws and make comments in an effort to ensure that measures that are required be taken by the property industry in complying with the various legislation are reasonable and practical.

As US politician Mike Huckabee said, “The most important thing about global warming is this: whether humans are responsible for the bulk of climate change is going to be left to the scientists – but it’s all of our responsibility to leave this planet in better shape for the future generations than we found it.”

Legal Developer_AUG_SUBBED.indd 13 2014/07/18 3:09 PM

14


face to face face to face

Living next door to Katherine & West

14

Developing in prime busy nodes might be a daunting task but the rewards are sweet, with Katherine & West picking all the tasty, highest-hanging fruit. With iconic buildings popping up left, right and centre, and companies moving shop into Johannesburg’s key hubs of activity, we speak to the guys behind Sandton’s latest concrete charmer Katherine & West, Mark Uhlmann of Barrow Properties and LYT Architecture’s Guy Steenekamp and Clive Jearey about developing in congested business nodes and why it’s the latest crazeBy Candace King

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Face to Face_SUBBED.indd 14 2014/07/18 5:06 PM

15


face to face

Q Why develop in busy nodes?

Uhlmann: Busy would mean popular, and this relates to prime, thus prime real estate. As the fi nancial hub of Africa, Sandton is a key example of a prime node – there is still a healthy appetite in Sandton for prime real estate. Katherine & West (K&W) is sectional title, so the development presents an opportunity for people to own their own slice of the Sandton pie.

Steenekamp: Tenants want to be in high-end nodes. It’s all about the clustering phenomenon – companies want to compete in one node. One can achieve greater rights in these nodes, and residual values are also greater and better. The smaller tenant tends to get lost in high-density nodes where giant corporates take most of the space. K&W gives the small guys the opportunity. This building is unique.

Jearey: Clustering leads to greater synergy, which is defi nitely building. Cross fertilisation of creativity and business is favoured in the modern city.

Q How is Sandton coping with all the recent development and increased fl ow of people and vehicles?

Steenekamp: Sandton is an island, in a way, which is fed by six main arterial feeder routes – this is where the bottlenecks are. But once you’re in, the traffi c fl ows. There’s micro-transportation within the node, such as tuk-tuks, the Gautrain, the BRT system, etc. The Johannesburg Road Agency is set to introduce connector roads on the main arterial routes; however, the problem is walkability and pedestrianisation – there are studies under way to improve this.

Jearey: Furthermore, a bicycle study is also being conducted at the moment, which could revolutionise Sandton.

Uhlmann: I like to refer to the headline and the trendline. The headline is that Sandton is a nightmare due to congestion, while the trendline is that one needs to think about the future of the node and look at alternatives – how to improve our lifestyle and not sit in traffi c. Achieving the trendline will require all stakeholders to get involved. I believe that more people is a positive as there is safety in numbers. The trick is to get synergy between cars and pedestrians. We are looking into good residential solutions for people to live closer to their place of work. What will drive a major change is the cost of getting people to work. With fuel costs sky-rocketing, this will change our ways and get us to use public transport. All nodes are essentially under pressure; we are not that different from, say, Los Angeles, which is also vehicle-heavy.

Q What were the construction challenges at Katherine & West?

Jearey: I think the biggest challenge was that we had to provide a lot of parking, so the basement dig was quite diffi cult. Getting rid of the rock underneath was daunting – we had to destroy it.

At the same time, we had to be mindful of K&W’s neighbour, the Radisson Blu Gautrain Hotel, and had to take into account their space vs our space, the noise of construction, etc. Basically, their building held up our building, so we had to place anchors to keep the soil from collapsing where the basement was dug – the basement is situated near Radisson’s basement parking entrance road.

Getting the shape of the building right was also challenging – we had to use a specifi c piece of glass that catches the changing light and refl ects several adjacent objects.

Steenekamp: To add onto what Clive has said, the fundamental lack of confi dence in the market is public transport. People understand the concept but it’s not part of our culture, thus there are high parking ratios. I think perceptions will change in the next 10 years. If not, then it will mean that there’s a lack of effi ciency in our public-transport systems.

Uhlmann: The façade was challenging – a lot of thought was placed into this to make it work. And it was challenging to get the shape of gentle waves right, so the choice of glass was very crucial. It was all worth the premium!

Q Were there any time constraints/delays during the development process as a result of congestion?

All: We were on time – and on budget.

Q How can developers and architects best deal with working on developments in busy nodes?

Steenekamp: My advice is to get a really good architect and the right team in place. The developer plays a hugely infl uential role on the building and the outcome, so there needs to be a fundamental trust among the team. Opinions should be respected and teams shouldn’t be afraid to try new things.

The industry is evolving quickly because of globalisation, and we in South Africa are limited in building tall because of parking requirements. This all needs to be taken into consideration – as does the cost and time.

Uhlmann: There are three primary risks: delivery, sales and fi nancial.

Mark Uhlmann of Barrow Properties

Guy Steenekamp of LYT Architecture

Clive Jearey of LYT Architecture

15

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16


face to face16

Jearey: Today we have very different-looking buildings in Sandton. The market is changing and is dictating this uniqueness. Developers are being brave to build memorable, quality buildings.

Steenekamp: Adding to this, the current redevelopment in nodes today is because tenants want energy-effi cient buildings.

Q Is Rosebank catching up with Sandton in terms of new developments, retail redevelopments, and key corporates taking up offi ce space in the node?

Uhlmann: Yes. Rosebank is possibly the best form of new urbanism – there is a natural coexistence, where people drive more slowly and there’s more pedestrians walking about. The doom and gloom of Rosebank never materialised.

Q Are there any upcoming nodes that we can expect to see?

Uhlmann: Barrow Properties has identifi ed Sandton, Rosebank and Bryanston as the current key nodes. Johannesburg is becoming a city within a city, and is being defi ned by various nodes. The revitalisation of Hillbrow would be an interesting node redevelopment. The ability to recognise nodes relies on infrastructure. Melrose Arch works because it has everything in one small area and is pedestrian-friendly.

Q Where do you expect Sandton to be in the next fi ve years?

All: The next wave of development will be the refurbishment of buildings. The goal is to make less desirable space more attractive because good space still does better. Over the past fi ve years the question has been, why shouldn’t we be in Sandton?

face to face



17


face to face face to face

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sector focus18


Retail ruling the roostWhile the economic indicators are pointing towards negative times ahead, the retail sector continues to defy the current gloomy landscape with cautious optimismBy Candace King

While South Africa’s economy is down in the dumps, the cost of living is rising

on a monthly basis and sector strikes are scaring investors off, the country’s retail property market appears to be strong and stable as one of the top-performing sectors in commercial property, representing more than half of the listed property on the JSE.

Over the past few months, the retail industry has generally performed well in comparison to its sector counterparts, and has the potential to drive the overall industry as a key economic market in the South African economy. Released in March of this year, the IPD South Africa Annual Property Index report recorded that retail’s overall investment return performance for 2013 was 16,8%, beating offices (13,6%) and just behind industrials (17,1%).

With renovations taking place across the board and new malls mushrooming around the country, the sentiment is that we will continue to see this trend in 2014. In addition, consumer confidence appears to be increasing.

The First National Bank/Bureau for Economic Research’s Consumer Confidence

Index report stated that consumer confidence unexpectedly rose in the second quarter of 2014 from -6 in Q1 to 4 in Q2 – the index’s highest reading in two-and-a-half years.

In light of the current boom in South Africa’s large-scale metropolitan and suburban retail sector, stimulated by a sharp rise in international interest and investment across the country’s retail sectors, several positive and negative trends have been identified. “There has been no slowdown in growth in terms of large-scale mall developments,” says Mark Souris, Managing Director at Periscopic Masingita, one of the country’s leading commercial property development and management companies. “In fact, one could argue that development in this sector has picked up significantly, with quite a few large centres having being completed over the course of 2013, and more in the pipeline to open throughout 2014. Many of these are regional and super-regional malls, which can range in size from 50 000m² to 80 000m², and up.”

Souris notes that there appears to be an ebb and flow in current tenant mixes. “This is actually a benefit for shopping centres

ABOVE Mark Souris, Managing Director

at Periscopic Masingita

BELOW Wonderpark Shopping Centre in Pretoria


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because there is always something new in terms of tenant mix, and as consumers tend to get bored quickly that draws people back,” he says. “Another attractive benefit offered by large-scale centres is the ability for consumers to shop comparatively with a variety of product options and versions in one space.

“As technology speeds ahead, so follow many other industries. Shopping centres are certainly no exception. It’s up to the malls to manage their buildings and tenant mixes to keep up with these proliferations.”

Souris points out that another significant trend that’s growing is the stand-alone store, such as fast-food chains, big-brand convenience stores and supermarkets, and newcomer international brands such as Burger King.

“We’re seeing more opportunities for stand-alone developments, where one store occupies the entire building rather than being part of a larger centre – and we’re expecting to see a gain in momentum in this area,” he says.

On the downside, Souris says that cannibalism is a major issue in the market. “In the current environment we’re seeing a large number of same-brand anchor stores within very close proximity to one another, which doesn’t necessarily assist them with attracting more customers; it dilutes their current customer base.

“Unfortunately many brands are facing a ‘damned if you do, damned if you don’t’ scenario, as opportunities in these areas will be taken by competitors if they don’t act.

James Templeton, Chief Executive Officer

of Emira Property Fund

Their challenge is to find a way to open new stores in these areas without cannibalising their other stores’ customer base.”

The retail roll-outDespite the cautions of over-saturation and fear of Hannibal letting loose on the market, the retail industry continues to find and secure space, and develop great retail offerings in key nodes.

Having been completed in April 2014, the second phase of JSE-listed Emira Property Fund’s R540-million expansion of its flagship Wonderpark Shopping Centre in Pretoria is doing exceptionally well, with the third phase of the current expansion set to be completed by November 2014.

“This is the biggest expansion yet at Wonderpark Shopping Centre, and it also represents the group’s biggest capital expenditure on the most valuable asset in its property portfolio,” says James Templeton, CEO of Emira Property Fund. “The opening of the second phase marks another milestone in this significant expansion project. It gives the centre an exciting and more extensive tenant mix, with an enlarged Game and Edgars, as well as a brand-new Dis-Chem, among others, opening to the public in April.”

Driven by a strong demand from existing and new retailers wanting space in the shopping centre, the overall expansion will result in the size of Wonderpark Shopping Centre reaching 90 000m² – a whopping increase from the 63 000m² it covered when the upgrade began. Templeton

notes that this expansion and substantial redevelopment will transform it from a regional shopping centre to a “super-regional” in Pretoria.

“When the expansion is complete, our flagship property will be worth about R1,4-billion, thus increasing the value and quality of our portfolio,” he says. “The project is already delivering results at Wonderpark Shopping Centre, having been well received by both tenants and shoppers.”

In terms of Emira Property Fund’s portfolio, Templeton says the fund is seeing continued positive demand from national retailers for space in its centres. “Emira is exposed to all three commercial sectors – retail, office and industrial – with retail performing best on a like-for-like growth basis, with net income growing by between 4,5% and five percent,” he says. “Turnover at our centres is growing in line with inflation, with foot counts showing marginal growth year on year. However, we have seen a noticeable slowdown in the number of centres for development being brought to Emira to purchase in 2014.”

About the overall retail sector, Templeton says that there is still good potential for new retail developments in certain areas, although he believes this has slowed in 2014. “This is probably due to a slowdown of growth in consumer spending, as well as the fact that feasibilities are under pressure – construction costs are rising and rentals aren’t rising at the same rate to compensate developers for the higher costs.”


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Templeton notes that the sector’s biggest challenges include slowing consumer spending, the long-term threat from online retail as seen overseas, relaxed town planning, and the allowing for multiple centres in certain areas, which also poses a threat to existing centres. “We have seen international retailers entering South Africa for some time,” he says. “Existing national retailers are diversifying their product offerings to grow their top line with Game, for example, going into food. We have seen the emergence of new anchor tenants, such as Dis-Chem.

“Centres need to become more entertainment-focused, not only to counter the online threat but also to ensure their dominance as the equivalent of the old ‘town centre/high street’, and being the major meeting place for people in a community. We have seen bigger centres being developed in smaller towns, continuing to take away from the old ‘high streets’.”

Templeton thinks that over-saturation is definitely a possibility, and advises new centres to focus on being tenant-driven, with appropriate rental to projected turnover ratios.

While over-saturation is indeed a threat, developers continue to open new malls in a very short space of time. A good example of this is Atterbury Property Developments’ ambitious roll-out of eight retail projects in 2014 – before the end of October 2014, it will have opened eight new shopping centres in South Africa, Namibia and Ghana.

“Opening eight shopping centres in less than a year is no easy feat,” says James

Ehlers, Managing Director at Atterbury Property Developments. “Our team is up to the task. Many of these projects have been planned over several years to create quality assets for Atterbury and our partners. Besides developing top-notch shopping centres to benefit retailers and shoppers alike, completing these retail assets also creates new property income streams for Atterbury and our co-investors.”

The first to open, on 10 April 2014, was Waterfall Corner, a prime 10 294m² neighbourhood convenience centre in the landmark Waterfall Business Estate in Gauteng. In the same month, on 24 April, Atterbury opened The Club Shopping Centre in Hazelwood, Pretoria. Atterbury’s full redevelopment of The Club began in January 2013, and it is creating a contemporary, up-scale 6 788m² retail and leisure destination. Then, on 28 June, Waterfall Lifestyle Centre opened across from Waterfall Corner.

September and October 2014 are going to be busy months for Atterbury Property Developments, with the opening (in South Africa) of Newtown Junction and Bela Mall and the launch of the upgrade and expansion of Flamwood Walk and Value Centre.

In Namibia, Atterbury Property Developments will open The Grove, a 55 000m² mall that will constitute the largest commercial property investment ever within Namibia. And in Ghana, Atterbury Africa, which is jointly held by Attacq, Atterbury and Hyprop, will open West Hills Mall in the country’s capital, Accra. At 27 700m², West

ABOVE West Hills Mall

BELOW James Ehlers, Managing Director

at Atterbury Property Developments



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Hills Mall will become the largest single-phase modern shopping centre in the city.

Apart from this vigorous line-up, Atterbury Property Developments is also working on the colossal 130 000m² Mall of Africa in the heart of Waterfall. Comprising about 300 stores, Mall of Africa is to be the largest single-phase mall yet to be constructed in South Africa, and is set to open in April 2016.

“We are looking forward to the successful completion of these projects, many of which are ground-breaking and set to become landmarks in their cities,” says Ehlers.

Servicing everyoneThe development of retail in under-serviced and rural areas is a major trend at the moment. With retail popping up in the usual, highly popular nodes, development in the sector is now spreading to other areas that are lacking retail.

Having opened in November 2013, the 76 000m² super-regional Cradlestone Mall has brought a fresh and much-needed retail experience to Krugersdorp. Owned and developed by Sasol Pension Fund, Pivotal Property Fund and Retail Africa, Cradlestone Mall was the winner of SAPOA’s Innovative Excellence in Retail Property Development Award 2014.

“We are delighted that Cradlestone Mall has earned such a prestigious tribute,” says Andries Schaap, General Manager of Investment at Sasol Pension Fund. “So much has gone into making Cradlestone Mall a success, starting with a real need for quality retail and the vision to develop a world-class mall inspired by the World Heritage Site of the

Cradle of Humankind. Thousands of people have played a role in conceiving, developing and building Cradlestone Mall. They can all be immensely proud of their contribution to the mall – and to winning this sought-after award.

“Cradlestone Mall’s alluring shopping, unique and fresh design, easy access, entertainment, leisure and total experience all come together to create a complete leading-mall package.”

Another regional in our midst is Springs Mall at Blue Crane Eco Park. Having officially broken ground just recently, the R850-million 52 000m² Springs Mall will bring much-anticipated retail for shoppers in the greater Springs area of Ekurhuleni in the east of Gauteng. Set to open in 2016, Springs Mall is the vision of Springs businessman Franco D’Arrigo. The D’Arrigo family has lived in Springs for three generations and is passionately invested in the future of the city. When it opens, it is expected to become the region’s dominant mall with an exciting mix of comprehensive, quality retail variety. The mall will also create an enduring legacy of positive social and economic impacts in the city and the region for many years to come.

“Springs Mall is a superb answer to the shopping needs of a growing community that is underserved by retail,” says Patrick Flanagan of Flanagan and Gerard, the developers of Springs Mall. “With excellent location, access and visibility, it will make comprehensive one-stop shopping easy for the aspirant and up-market residents of the area.”

“Local employment is a priority for Springs Mall,” says D’Arrigo. “We’re working very hard to ensure the Springs community benefits from the mall’s construction and the operation of its retailers. During its construction, the mall is estimated to create between 500 and 700 new jobs. After it opens, it will create a further 1 200 to 1 500 sustainable jobs.”

Rural areas are also getting their fix of retail. JHI Properties has been involved in two new projects which have recently been launched into the marketplace: the opening of the 40 000m² Soshanguve Crossing mall (owned by a consortium comprising Resilient Property Income Fund, Moolman Group and Falcon Forest) north of Pretoria in Gauteng, and the opening of the 18 000m² Dayizenza Plaza (which is owned by Norah Fakude and Tobie de Flamingh) in White River, Mpumalanga. Both shopping centres are managed by JHI Properties.

“From a JHI Properties perspective, the shopping centres that we manage are quite stable, our anchor tenants are solid, and we are not seeing deterioration in occupancy levels,” says Johan Engelbrecht, Retail Director at JHI Properties. “We are pleased to report that these retail centres remain sustainable and are trading successfully, despite volatility in the market in general.”

On the retail sector, Engelbrecht says that it is experiencing incremental growth, which is underpinned by inflation – in other words, retail turnover growth is modest and only just keeping pace with inflation.

The 76 000m² super-regional Cradlestone Mall


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We chat to Theresa Heath, Retail Analyst at STANLIB, about the retail sector from

a retailer tenant and consumer perspective.

Q What is the current overall performance of the retail sector in South Africa?From a tenant point of view there’s still a signifying appetite across the board in the roll-out of space with the average target space growth sitting at five percent, and the bulk of it in South Africa.

There is currently a lot of tenant demand as well as huge competition from internationals.

South African retailers underestimate the internationals, with the likes of Cotton On and Zara as prime examples. Cotton On has opened 100 stores in a period of two years! There is concern that there doesn’t seem to be a strong consideration about how sustainable this level of growth is – over-expansion and over-saturation are a risk. However, everyone is laying down space at high pace right now.

Q What are the biggest challenges for the sector?Taking space for competitive reasons is challenging and risky – getting caught up in a space race and then not getting the expected returns is a concern. And with food retailers who take longer leases, it’s an even bigger risk. Currently the argument is for smaller stores and retailers looking for a convenient format.

Another challenge is how to approach online stores and shopping. Online has moved very quickly in relation to the way physical store establishment takes a long time.

Q What are the latest trends in the retail sector?Online is currently a trend and is great for repurchasing research. Smartphones have driven this, not broadband. Stock/new product replenishment is happening fast as consumers demand new products more often.

This is driven by a greater need for the latest trends, fashion, technology, etc.

In terms of food, the trend is towards convenience and smaller formats. Traditional media spaces – such as book and music stores – are dying.

Landlords want to reduce cinema space and replace with apparel these days. A big trend is that shopping centres have become entertainment hubs.

Q Is there a possible over-saturation of the market? If so, how can developers be cautious?Over-saturation is difficult to measure. The best thing to look at is “like-for-like” sales. It’s difficult to get a read on how stores are performing. Retailers do expect some cannibalisation to occur.

Q What is the outlook for the retail sector in the coming months?At the moment consumer spending is not looking great and other sectors are negatively impacting it (think of the latest mining strikes, for example). Furthermore, cash apparel sales are strong and food retailing is okay yet very competitive. Personally, I see nothing on the horizon to make us excited, really…

However, he notes that the sector is being negatively impacted by stricter criteria being applied regarding the provision of credit – and credit sales have taken a knock. “It is evident that, in the current economic trading environment, a large portion of sales is cash- as opposed to credit-driven, and that there is a major emphasis on perceived value among consumers, who are demonstrating an appreciation for quality over price,” explains Engelbrecht. A further trend, he says, is that having seen a shift out of CBDs some years ago, we are now seeing a shift back into the CBDs, albeit with a different demographic of shopper or market.

Thinking ahead and keeping afloatEngelbrecht says JHI Properties is cautiously optimistic regarding the retail sector in the coming months. “While maintaining stability in JHI Properties-managed retail shopping centres, we are continuing to grow the retail property sector of the business and so we are positive regarding the future as we see opportunities in the marketplace,” he says.

Engelbrecht notes that seasonal demands and school holiday periods are opportunities for increased trading. He adds that JHI Properties believes that value offerings remain crucial for retailers, particularly with regards to goods being purchased on a cash basis. “There is always a need for caution with regards to over-supply of space,” he says. “With South Africa having reached a relatively high level of retail development, this is driving a trend towards expansion into African markets as well as jumping further borders into Europe.”

Templeton isn’t too optimistic, however. “With the economic growth continuing to slow down, we think retail sales will follow a similar trend for the remainder of 2014,” he says.

In keeping abreast of trends, Souris advises potential investors to pay close attention to the level of innovation a particular retail development demonstrates. “It’s important that you can see a centre that is consistent in growth, evolution and refurbishment,” he says. “This is the only way for a large commercial retail centre to stay competitive in the current market.”Johan Engelbrecht, Retail Director at JHI Properties


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Beach, bush and boomingLimpopo, Mpumalanga and KwaZulu-Natal are more than just wildlife- and seaside-holiday destinations – they are transforming into important economic and development hubsBy Candace King

While Gauteng and the Western Cape have long been the economic stars of

South Africa, the country’s less financially viable provinces are beginning to gather steam in terms of economic strength, development and opportunity.

Limpopo and Mpumalanga are the places to spot the Big Five on bush holidays, and KwaZulu-Natal is the popular beach destination. But these regions are proving to be more than this, with infrastructure and development earmarked for the provinces on an attractive scale.

Limpopo: land of the baobab and opportunityDespite it being the province with the highest levels of unemployment, poverty and HIV/AIDS, Limpopo is a developing area with a strong focus on mining, agriculture and tourism.

Limpopo’s mining landscape is one that is thriving. The province is rich in mineral deposits, which include the platinum group metals, diamonds, copper and coal. In October 2013, De Beers began construction of a new underground mine under its open-pit Venetia mine in Limpopo. The R20-billion

Sumari de Ridder, General Manager of the super-

regional Mall of the North in Polokwane and SAPOA

Limpopo Region Chair

investment is set to extend the life of Venetia beyond 2040 and replace the open pit as South Africa’s largest diamond mine. With underground production expected to begin in 2021, the mine will support more than 8 000 jobs directly and 5 000 through the supply chain.

Agribusiness is an essential sector in Limpopo, with tropical fruit, tea and coffee, and forestry being key agricultural markets. Adding to its tourism sector, Limpopo is also a game-hunting hotspot and a haven for nature enthusiasts.

However, aside from mining, agriculture and tourism, the region has identified new game-changing industries in the form of infrastructure development, industrialisation and manufacturing. In light of this, Limpopo has set an economic growth target of five percent by 2019 with the provincial government to focus on accelerating infrastructure development programmes to unlock the economic potential in the province in next five years.

In terms of property development, Sumari de Ridder, General Manager of the popular super-regional Mall of the North in Polokwane and SAPOA Limpopo Region Chair comments that, in the current market, there isn’t as much development as she would like to see – but this may improve in future. “With the moratorium on commercial development finally being lifted, we expect several developments to finally proceed,” says De Ridder. She stresses the importance of continued development in the province to ensure economic growth and employment.

De Ridder explains that massive demand for housing in the province is driving most development activity in the residential sector. There is also a healthy call from retailers to enter key locations in the Limpopo market. “Kurt Geiger and Scoin recently opened at Mall of the North, and Icon will be expanding its offering to its customers by increasing the size of its store,” says de Ridder. “We are seeing demand from several well-known national and international retail brands to enter the mall. We’re also considering adding a bigger variety of entertainment to the mall, to meet shopper needs.”

She says the province’s biggest challenges lie with its services and infrastructure, where there is room for improvement. Mall of the North has cemented a close relationship with the Polokwane Municipality to ensure that Polokwane lives up to the potential and expectations of not only the developers but also the city’s residents.

Apart from the Mall of the North, other retail developments are coming to light in Limpopo. In the heart of citrus country, 55km from Polokwane, the latest brainchild of property developer and founder of the Masingita Group of Companies Mike Nkuna, Zebediela Plaza, was unveiled to the public on 26 June.

This 15 000m² shopping centre is focused on improving the lives of the rural community of Zebediela who previously had to travel 27km to get to the nearest retail centre.

“One of my many objectives in building Zebediela Plaza was to ease the living costs for the community, particularly the high cost of transport,” says Nkuna. “I also wanted to add value to their lives by bringing a high-quality, convenient and affordable shopping experience right to their doorstep.”.

Nkuna’s idea for Zebediela Plaza originated in 2005. He collaborated with the Department of Rural Development and Land Reform to allow Masingita Property Investment Holdings (MPIH), a subsidiary of the Masingita Group of Companies, to develop the site in Zebediela. A long lease agreement was entered into and, after conducting demographic and feasibility studies, construction began in June 2013.

Zebediela Plaza is the first shopping centre of its kind in the area and promises to bring upliftment to the rural community of Zebediela. Retail developments such as Zebediela Plaza are testimony to the opportunities in Limpopo.

Mpumalanga: bushveld and blossoming propertyWhen it comes to its citizens, the economy, dealing with the natural environment, urban growth and general governance, as well as infrastructure accessibility and quality, the Mpumalanga province is quickly improving on all fronts.

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THIS PAGE Mall of the North in Polokwane

property development

Over the years, Mpumalanga has seen a population increase, changing demographics and living patterns. According to census stats, the provincial population increased by 1,95% (4,04-million people) between 1996 and 2011, and latest forecasts estimate the population for 2014 at 4,25-million. In 2013 the estimated average unemployment rate for all people aged 15 to 64 was 27,1%.

Contributing approximately 6,3% towards the national economy in 2013, the region’s economic pillars are manufacturing, mining, finance and business services, and trade.

Mpumalanga is highly accessible, with a network of excellent roads and railway connections, as well as a number of small airports, including the Kruger Mpumalanga International Airport. Mbombela, previously Nelspruit, is the provincial capital – and the administrative and business hub of the Lowveld.

eMalahleni, previously Witbank, is the centre of the local coal-mining industry; Standerton in the south is known for its large dairy industry; and Piet Retief in the southeast is a production area for tropical fruit and sugar.

A large sugar industry is also found at Malelane in the east; Ermelo is the district in South Africa that produces the most wool; Barberton is one of the oldest gold-mining towns in South Africa; and Sabie is situated in the forestry heartland of the country. Tourism is bustling in Mpumalanga, with the famous Kruger National Park a major draw-card for the area.

The Maputo Development Corridor links the province with Gauteng and the port of Maputo in Mozambique, acting to release the economic potential of the land-locked parts of the country.

Sustainable development is part of the Mpumalanga provincial government’s mandate to steer provincial economic growth

activities and to ensure the preservation and protection of the environment, in order to speed up economic growth and create decent work and sustainable livelihood for the people of Mpumalanga.

The manufacturing sector represents the dominant economic sector in the province, followed by the mining sector. The finance and business-services sector represents the third-largest contributing sector, followed by the trade sector in fourth position.

The property market in the region is seeing positive growth. “The property sector is thriving within Mpumalanga and is being driven by government’s increased spending on infrastructure and private sector investment,” says James Aling, Managing Director at HL Hall & Sons Properties (Pty) Ltd, SAPOA board member and SAPOA Mpumalanga Region Chair. “It is evident that the mining, manufacturing and transport sectors are strong pillars within the provincial economy, reflecting positive growth. These sub-sectors all serve as proxy for the industrial and warehouse property market. The finance and business-services sector is also performing strongly, serving as proxy for the office property market. The trade sector is also performing strongly, serving as proxy for the retail property market.


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property developer l August 2014property developer l May 2014

James Aling, Managing Director at HL Hall & Sons

Properties (Pty) Ltd, SAPOA Board member, and

SAPOA Mpumalanga Region Chair

“Developments are not just focused on major infrastructure undertakings such as that of Sasol, Sappi and various mines. Private sector development is aimed at shopping malls, industrial/business estate developments, residential estates, and to a lesser extent towards offices, private medical facilities, and more.”

Aling notes that government expenditure is focused on housing, educational facilities (with emphasis on the new provincial university), and medical facilities in the form of new hospitals and refurbishment projects.

Based on research undertaken by Demacon Market Studies, a private company that specialises in a broad spectrum of real estate and related economic research services, a total of 4,6-million square metres of building floor space has been completed between 2004 and 2013 in the province.

With reference to buildings completed between 2004 and 2013, the largest segment of floor space is allocated towards residential buildings (64%), followed by non-residential

buildings (18,1%), and additions and alternations to existing buildings (17,9%).

Residential estates are popping up across the region. One of these is The Rest, a low-density nature estate spanning 340 hectares, owned by Sanlam Properties. Situated to the south of Nelspruit and only five minutes away from the city centre, The Rest Nature Estate is experiencing major investment.

Sanlam Properties is investing a substantial amount of new capital in the estate to improve the infrastructure and amenities, including security, master-planning for additional phases, and the introduction of several new, attractive house styles to suit most tastes and budgets. In addition, working closely with Birdlife SA, a bird sanctuary is also being established on the estate.

Sanlam Properties is confident residential property will continue to perform well in the Nelspruit region. With excellent schools, medical facilities, and shopping, sports and recreational facilities, Nelspruit draws home-



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ABOVE KwaMnyandu Shopping Centre

LEFT The Rest Nature Estate, Nelspruit

OPPOSITE, FROM TOP Riverside Park,

Mpumalanga’s premier property node; The Rest

buyers from a wide catchment area – not just from the Lowveld but from Mozambique and Swaziland as well.

In terms of non-residential buildings, the dominant performers in the province include industrial and warehouse space (53,1%), followed by shopping space (26,9%), and office and banking (20%).

Aling says the strongest interest is towards the following municipal areas and towns in specific: Mbombela Local Municipal Area – Nelspruit, with emphasis on the Riverside Node Precinct; eMalahleni Local Municipal Area – Witbank, with emphasis on the Highveld Mall Node Precinct; Govan Mbeki Local Municipal Area – Secunda, with emphasis on the town itself; Steve Tshwete Local Municipal Area – Middelburg, with emphasis on the Middelburg Mall Precinct; and Msukaligwa Local Municipal Area – Ermelo, with emphasis on the town itself.

These towns are located along important development corridors – the national freeways of the N4, N11, N17 and N2. “The province is characterised by high-quality transport and infrastructure networks,” says Aling. “It is effectively connected to surrounding provinces and countries via road, rail and air. It is also characterised by a number of power stations, both new and refurbished. The province also has a good telecommunications network.” He believes that the province will go from strength to strength if it capitalises on its position, and exploits its linkages and synergies with Gauteng, Mozambique and Swaziland.

KwaZulu-Natal: sun, sea and serious developmentWith the chilly Drakensberg Mountains, meandering midlands and subtropical beach-

fronts, KwaZulu-Natal is a mix of geographical, cultural and developmental significance.

Durban is the province’s powerhouse, and is regarded as one of the busiest ports in Africa. Newcastle and Ladysmith serve as the region’s industrial hot spots, and ecology tourism serves as an important sector in the province.

Currently, infrastructure in the province is getting a major injection with a lot of emphasis being placed on development opportunity. “The municipality has recently commissioned an industrial land strategy to address the perception that there is a scarcity of developable land in eThekwini,” says Edwin van Niekerk, Commercial and Industrial General Manager at Maxprop Durban and SAPOA KwaZulu- Natal Region Chair. “The findings are that, actually, there is an abundance of developable land. The challenge is having a clear strategy to channel infrastructure and development.”

Van Niekerk says that the focus is in the North around the King Shaka International Airport, which has industrial development zone status and will be one of the new “special economic zones”. He adds that there has been significant development in the Dube Trade Zone with the need to launch the second phase. Cornubia has also traded well, and the first factories are out the ground and trading.

In the south, the development is being driven by the brown fields project of the back of port and the increase in capacity of the Durban Harbour, says Van Niekerk. The dig-out port on the old airport site, although a longer-term project, has the potential to change the face of Durban with the associated development that will

be stimulated by this project. SIP2 and a possible dryport in Cato Ridge are driving demand for land in the west. Shongweni and Hammersdale have industrial parks that are in the final stages of zoning.

“Durban being a port city has great potential to increase its manufacturing capacity,” notes Van Niekerk. “Uptake of land has historically been approximately 40ha per annum. Proximity to market and labour are major driving factors in terms of demand for location.”

In terms of which sector is performing the best, Van Niekerk says that industrial seems to be leading the pack with retail following. Offices, particularly B-grade, are sluggish and residential remains challenging because of the banks’ lending criteria and indebted consumers not qualifying for bonds. The exodus from the CBD to Umhlanga (for A-grade offices) seems to be continuing.

Retail developments are on the rise in the region, including areas of less economic importance. Nedbank Corporate Property Finance is funding the R360-million KwaMnyandu Shopping Centre in Umlazi, a township south-west of Durban. Developed by KwaMnyandu Shopping Centre (Pty) Ltd over a period of 18 months, the 23 000m² mall is linked to the KwaMnyandu railway station in Umlazi, the second-busiest station in KwaZulu-Natal.

This location will ensure that the mall enjoys maximum foot traffic, while at the same time providing commuters convenient access to shopping.

“Nedbank Corporate Property Finance is excited about the potential for further growth within KwaZulu-Natal,” says Anand Joseph, Regional Executive at Nedbank Corporate Property Finance in KwaZulu-Natal.


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“As a bank, we have invested in various initiatives in the region, including the recent financing of the new Lion Match head office in the Point Waterfront area. The launch of the Go!Durban transport network – a significant infrastructural investment – may very well position the KwaZulu-Natal region for increased sustainable growth in the medium term.”

The Liberty Group is also invested in the area and recently announced its significant plans to further entrench its Liberty Midlands Mall investment as the lifestyle centre of choice for tenants and shoppers in the Pietermaritzburg area. The R380-million investment will see the development of a new lifestyle centre – including retail and office components – adjacent to the existing mall. Upon completion, the extension will increase the entire complex floor space by an additional 19 000m² to a total GLA of more than 75 000m².

This is the third phase of Liberty’s vision for Liberty Midlands Mall. “This significant investment emphasises the viability of this asset in the KwaZulu-Natal interior,” says Amelia Beattie, Chief Investment Officer of STANLIB Direct Property Investments, the asset manager for Liberty Group. “We consider Pietermaritzburg a stable commercial environment with good economic growth predicted in the future.

“The expansion project is in line with Liberty Group’s strategy to augment its existing world class retail developments with mixed-use offerings to create a landscape for optimal success.”

An additional R4,2-million will also be invested in upgrading the immediate road infrastructure around the mall to improve traffic flow and reduce congestion to the mall and surrounding areas. Phase 3 will

bring further growth, development and quality to the Pietermaritzburg community. The development is anticipated to be completed by mid-2015.

With regards to which nodes are the most popular, Van Niekerk says that Durban remains the frontrunner, with the areas previously discussed still being the most popular. “As the second harbour in the province, Richards Bay has massive potential that still needs to be realised,” he says. “Pietermaritzburg as the capital and Umsumduzi municipality will benefit from the SIP2 strategy and the developments on its borders in the Lion Park area and Umlaas Road.”

However, the province faces challenges. “Zoning timelines are unacceptably long – and a major stumbling block to development,” says Van Niekerk. “Many international investors get discouraged by the process and move to provinces where the process is more streamlined. This is being addressed and we hope that the timelines will soon be radically reduced.

“There are also conflicting pieces of legislation with The Act 70 of 70 (being the agricultural subdivision act) throwing a massive spanner in the works when it comes to converting agricultural land to commercial or residential land.”

Looking ahead, Van Niekerk says that the region is looking very positive and there are some great developments in the pipeline, as well as a clear strategy that’s emerging from the eThekwini Municipality. “The north is the priority, with the west and the south following closely behind,” he says. “There is great potential to be unlocked in the next five to 10 years. Anyone with a long-term view would do well to invest in eThekwini now.”

Edwin van Niekerk, Commercial and Industrial

General Manager at Maxprop Durban, and

SAPOA KwaZulu-Natal Region Chair

THIS PICTURE Durban harbour and CBD

BOTTOM Liberty Midlands Mall



interview29

May 2014 l property developer

Riverside Park: Mbombela’s success story continues to growRiverside Park, Mpumalanga’s premier regional property node, is developing from strength to strength.

Riverside Park, conceived and planned by property developers HL Hall and Sons Properties (Pty) Ltd in the early nineties, has grown into Mpumalanga’s

premier regional node with a wide range of retail, office, leisure, residential and automotive developments.

This exciting urban development is situated in the North West of the capital city of Nelspruit and alongside the magnificent Lowveld Botanical Gardens.

Wide boulevards, extensive landscaping and pavements characterise this pedestrian-friendly precinct, which is anchored by the Mpumalanga Provincial Government complex and a number of regional developments including the Riverside Mall (one of Old Mutual Properties’ flagship regional malls and the Standard Bank regional head office.

Whilst enjoying tremendous demand over the last 5 years in all sectors, the light industrial/logistics client has been insatiable and it appears that, with the launch of Nelspruit’s first ever office park, that this will absorb the pent up demand in this market.

Situated on the one of the busiest arterial roads in the country, the Nelspruit-White River R40 corridor, it was inevitable that the Riverside Park precinct would attract the major motor dealerships in the region.

The first casino in Mpumalanga, Emnotweni Casino is located in Riverside Park, and the Emnotweni Sun and Stay Easy hotels cater for both tourist and business travelers.

The Grove shopping centre provides a further 35,000m² of destination and convenience retail attractions to complement the offerings with 98% national tenants, making the Riverside node the leading retail destination in the region. The wide variety of retail experiences and pleasant shopping environment attract shoppers from the wider region, including Swaziland and Mozambique. Makro’s arrival in 2011 consolidated the retail offering and ensured that the boom continues at Riverside Park.

Mpumlanga UniversityAn exciting game changer for Mbombela and specifically Riverside Park is the location on the Mpumalanga University next to the node. In time it envisaged that 18,000 students will find an academic home here which will significantly increase the need for residential and retail offerings in Riverside Park.

C

M

Y

CM

MY

CY

CMY

K

Halls SAPOA Advert.pdf 1 2014/07/10

The precinct not only offers work, shopping and leisure experiences, but also integrates residential living as part of the mixed use experience. Carefully planned and situated alongside the beautiful Botanical Gardens, the various housing developments offer modern units in secure complexes with breathtaking views – and all with the convenience of being part of the work-live-shop-play precinct.

The greenfield opportunity afforded to Halls Properties as township developers, allowed them to carefully plan the regional node with a combination of thoughtful precinct plans and appropriate urban design controls. This planning framework continues to be implemented and managed through the Riverside Park Precinct Association, a registered Not For Profit Company that has established a City Improvement District (CID) in Riverside Park to manage its public spaces in partnership with Mbombela Local Municipality.

Halls Properties values collaboration. Throughout the planning and development of the precinct, they have fostered a number of joint ventures that have contributed towards its success. These partnerships include working with the Mbombela Local Municipality for the planning and installation of services, and the service level agreement between the CID and city, as well as JV arrangements with local and national developers such as KPP Property Group, Intaprop, Eris, Improvon, AKA Capital and other black empowerment groups.

Halls Properties strives to create great urban landscapes and make a difference to the community.

The master planning together with urban design controls and management at Riverside Park have resulted in an attractive yet functional mixed use node that does the capital city of Nelspruit proud and continues to contribute towards Nelspruit’s strong economic growth.Halls Properties believes the recent challenges in the global property industry present great opportunities for those who have learned the lessons of the past but whose eyes remain firmly focused on the future. Halls have assembled a team with a depth of expertise and experience that is unmatched in the Lowveld.

Halls properties.indd 29 2014/07/18 5:21 PM

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With a history spanning almost 30 years and a reach that is modern and international, DSA Architects International is placing itself on the global map, one project at a time

What DSA does best

DSA Architects International is a leading architectural practice with a passion for creative architectural design,

with offices in South Africa, the UAE and Portugal. Its dynamic international design teams have extensive experience in regional and international projects, and the ability to deliver landmark, signature projects from inception to handover.

DSA Architects International was founded in 1985 with the establishment of Ridler Shepherd Low Architects (RSL Architects) in Johannesburg, South Africa. In 2001, RSL Architects established DSA Architects International as its international practice, with offices in Johannesburg, Dubai and Lisbon. The head office is situated in Johannesburg and is led by Clive Shepherd (Group Managing Director) and Pierre Deckers (Group Financial Director).

DSA Middle East and DSA Europe are well-established, independent and self-sufficient branch offices of DSA Architects International. The offices are managed independently but are mutually supportive and collaborative, sharing experience, expertise and resources. The Johannesburg office is managed by Zinon Marinakos (Deputy Managing Director, South Africa), Rob Low (Technical Director), Beata Kaleta (Design Director) and Ian Manson-Kullin (Sustainability Director), with a staff compliment of 40.

The past 29 years have seen the practice progress in scale, scope and architectural expertise, designing and completing projects in 28 countries around the world. This confirmed DSA Architects International’s status as a global architectural practice.

Global exposure to a broad spectrum of projects has developed its skills base to encompass numerous market sectors, which now include:

◆ Hospitality and leisure (business, luxury and resort hotels)

◆ Mixed-use developments ◆ Entertainment and casino complexes ◆ Safari lodges ◆ Urban housing and luxury residential estates ◆ Restoration and refurbishment projects ◆ Commercial developments ◆ Retail developments ◆ Industrial projects ◆ Private residences and luxury villas

cover story30

The Johannesburg office serves north and sub-Saharan Africa and the Indian Ocean islands, with projects ranging from commercial mixed-use developments and luxury resorts to luxury safari camps, business hotels, casino and entertainment complexes, and refurbishments such as the Four Seasons Hotel Westcliff in Johannesburg and the Mount Nelson Hotel in Cape Town.

The Dubai office serves the Middle East the Asian subcontinent, as well as Iran and Azerbaijan. The Lisbon office operates within the European architectural context, which is rich in building conservation and sensitive to the requirements of cultural heritage.

DSA Architects International has progressed from a focus on hospitality to include large mixed-use commercial, residential and hospitality projects such as the recently completed 30-storey twin-tower complex, Oberoi Towers, in Business Bay in Dubai.


DSA Architects_subbed.indd 30 2014/07/18 5:14 PM

cover story31


cover story31



cover story32


Oberoi Towers, Dubai, UAELocated at the entrance of Business Bay, the commercial and hotel towers reflect a contemporary design. They are situated in the same neighbourhood as the world’s tallest building – the Burj Khalifa – and surrounding prestigious developments. The luxurious five-star Oberoi Hotel embodies the modern face of Dubai and

its urban precincts. It is one of the first hotels in Dubai to be awarded an “A” grade by the Dubai Municipality within the first six months of opening. The 27-storey/252-key hotel is juxtaposed against the 33-storey commercial office tower, linked by a four-level common podium.


cover story33


◆ Lead consultancy and project management services (only offered in the Dubai office).

In order to offer its clients a complete spectrum of specialist design and engineering services, DSA Architects International has well-established associations with numerous international and local consultancies.

DSA Architects International has aligned itself with internationally recognised green building organisations and practices that share a common vision of “promoting and developing sustainable architecture and developments”.

With a carefully selected group of specialist consultants, DSA Architects International strives to create designs that deliver optimal solutions for its clients, and enhance the long-term integrity of the environment and the sustainability of its clients’ projects.

Its offices are members of the Emirates Green Building Council and Green Building Council of South Africa (Green Star) networks. Through this affiliation, DSA Architects International is able to collaborate with recognised industry specialists and accredited professionals to deliver complete green building solutions that are both pioneering, and complementary to its clients’ vision.

By applying a holistic approach to solving sustainability challenges, and understanding a client’s environmental objectives and operational requirements, DSA Architects International strategically evaluates sustainability, building performance, operational dynamics and the budget, thereby developing clear, bespoke and sustainable solutions. By employing the latest green-building and energy-efficiency standards, it is able to ensure overall best practice, utilising the guidance of rating systems as an integral part of the design process.

DSA Architects International believes that quality architecture, designed and delivered passionately and with responsibility, contributes to a better environment.

FROM LEFT Group Financial Director Pierre Deckers, Group Managing Director Clive Shepherd, Design Director Beata Kaleta, Technical Director Rob Low, Deputy Managing Director Zinon Marinakos and Director Ian Kullin

As award-winning architects, DSA Architects International is recognised for creating unique and exciting hotel and resort experiences around the world.

DSA Architects International brings a unique blend of creativity, innovation and technical excellence to the projects it delivers, and is committed to delivering exemplary design and appropriate state-of-the-art technology and service, thereby reinforcing its standing as a leading international architectural consultancy.

Its teams of highly qualified, experienced and creative architects and technicians nurture innovative thought, design flair and technical excellence while maintaining empathy and respect for the environment by embracing green and sustainable design principles.

DSA Architects International’s technical and construction documentation capabilities have been developed in the international arena, with projects completed in South America, Africa, the Indian Ocean islands, Europe and the Middle East.

Its strong in-house design management teams facilitate and guide the design process, information flow, programme management and the client-consultant interface. This allows the design and production teams to focus on actual design and production, thereby ensuring that the project is delivered within programme while fulfilling the client’s vision and expectations.

The highly experienced site management teams ensure a smooth transition between pre- and post-contract services. The site management experience is developed from major, multi-faceted international projects.

Services offered include: ◆ Master planning and urban design ◆ Concept design ◆ Design development ◆ Technical documentation ◆ Design management ◆ Contract administration ◆ Site supervision services

t: +27 (0)11 779 1600e: [email protected]


development34

property developer l February 2014

SA’s fountain of opportunityWhat was initially thought to be an over-adventurous development idea is now a serious

venture with several stakeholders on board. Zendai Modderfontein is on the horizonBy Candace King

When the first far-fetched renderings surfaced, the property industry was astounded, with many saying that it would

never happen, some even shunning it as a foreign take-over of our country and its resources.

Now officially dubbed Zendai Modderfontein, the mega city project proposed by Chinese property developer giant Shanghai Zendai was announced at the end of last year, when all the juicy development details were still relatively under wraps. Now the cat is out of the bag and there’s reason to start taking this development more seriously.

Zendai Modderfontein is set to put the “zen” back into South Africa as a key economic and investment opportunity. “Shanghai Zendai’s commitment to South Africa, and Gauteng specifically, is significant,” says Anthony Diepenbroek, Chief Executive Officer of Zendai Heartland, formerly Heartland Properties.

“When people saw the first images published the first reaction was ‘pie in the sky’. Far from being far-fetched, it’s a model with slightly denser nodes but it’s a model that has been around for five years – the intention and the plan was always there.

“As part of the acquisition, Shanghai Zendai took over the property development team of what was previously known as Heartland. Twenty-two staff members are now part of the new Zendai Heartland company.”

The plan of Zendai Modderfontein is to build a new urban district, which encompasses all multi-functions of a city, including finance, trade, logistics, commerce, exhibition, hi-tech industry, education, healthcare and housing.

With well-designed infrastructure and living facilities combining seamlessly with local culture and historical heritage through

34

development


Zendai Modderfontein_SUBBED.indd 34 2014/07/18 5:18 PM

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February 2014 l property developer

an ecofriendly developing path, Zendai Modderfontein will become a city which can make business and social responsibility go hand in hand.

Zendai Modderfontein is believed to be the next Johannesburg, and is set to overtake Africa’s richest square mile, Sandton. In the next 15 years, an estimated total investment of R84-billion is planned to be pumped into the project. Situated in the Modderfontein area in Johannesburg, the project will be located 20 kilometres from the old city centre of Johannesburg, seven kilometres from Sandton and eight kilometres from OR Tambo International Airport, making it a true access hub of convenience.

Comprising 16km² of development land and 6km² of a wetland park, Zendai Modderfontein is

set to be a “harmony city of dreams”, according to the brochure.

Based on the principles of greening and sustainability, economic prosperity, and convenience, the city will boast nine functional areas or zones, including a central business district, an international conference and exhibition centre, a theme entertainment centre, a silver industry and retirement community, an international residential community, an education and training centre, a sports centre, a business, trade and logistics park, and a light industry park.

Zendai Modderfontein will feature a transportation network with railway and express roads. The city will also be connected to the Gautrain system with a station to be housed in the new city. With a total floor area development of 12 000 000m², the city will be a bustling metropolis, catering for 100 000 residents and creating 200 000 jobs.

“The city will be based on a higher-density model with high-rise building development and 20 to 30

35

development


The plan of Zendai Modderfontein is to build a new urban district that encompasses all multi-functions of a city,

including finance, trade, logistics, commerce, exhibition, hi-tech industry, education, healthcare and housing


development36

property developer l February 2014

With a total floor area development of 12 000 000m2, the city will be a bustling metropolis, catering for

100 000 residents and creating 200 000 jobs

units per hectare, which will eliminate urban sprawl,” says Diepenbroek. “This resonates with the city of Johannesburg’s Corridors of Freedom development project.”

Diepenbroek says that the development demonstrates the confidence of Chinese businessmen who are utilising South Africa as a gateway into the African continent. “In China, they don’t own land; they operate on a 70-year lease,” he says. “Zendai Modderfontein is an opportunity for them to own land and develop. They wish to share their expertise for the benefit of South Africa. They are in the country to sell to South Africans. They would like to bring innovative thinking to the market.”

However, Diepenbroek says that there are several challenges, with the biggest being

that the Chinese need to understand how our market works – including the time it takes to develop, the long processes and

approvals, and so forth. He adds that the local guys’ concerns will be resolved over time as Zendai Heartland still intends to sell land to others and also look into joint ventures.

Currently, the Gauteng government is very much involved and supportive of the development. “The government will obviously see this as a great opportunity. I think this can be a very positive thing for the country,” says Diepenbroek.

“Johannesburg established out of a mining boom, and the land where Modderfontein is now has been sleeping for 100 years. It’s time for it to wake up,” said Founder, Chairman and Chief Executive Officer of the Shanghai Zendai Group, Zhikang Dai, earlier this year at the Modderfontein investor briefing. “I promise that this development will be better than New York,” he said. “It will be one of the greatest destinations in the world in the next 20 years. I have confidence in the land of Mandela; I love this country and its people. This dream needs hard work – and action.”

36


development


feature37


Driving the demandWith demand outstripping supply in the South African a� ordable housing market, private sector support is greatly needed in this burgeoning sectorBy Candace King

Due to massive urbanisation, the housing backlog in South Africa is swelling, with demand for affordable housing continuing to outstrip supply.

The current fi gures in the market are illustrating this divide. In 2012, the housing backlog stood at 2,1-million total units, including 610 000 gap units. The Gauteng population alone, for example, could increase by a further 10 million over the next three decades.

In the advent of an insuffi cient supply of dwellings required for the urbanised and urbanising middle class, government cannot do this alone. Thus leadership, funding and development from the private sector is essential in the supply of well-located affordable housing for both rental and ownership.

Taking on the challenge is Nedbank Corporate Property Finance’s Affordable Housing Development Finance Unit, as well as International Housing Solutions (IHS), a private equity fi rm focused on the development of residential housing.

According to Manie Annandale, Head of Affordable Housing Development Finance at Nedbank Corporate Property Finance, the growing low- and middle-class segment in the country is creating a robust demand for affordable homes. However, there is not enough stock to meet this demand.

“There is a growing shortage of suitable housing stock, and it is therefore crucial that the private sector plays a role in identifying and supporting developments that deal with this issue to ensure that we are able to house all of our citizens in sustainable living environments,” says Annandale. “Affordable housing development is defi nitely on the rise. The urbanisation of the general population is increasing monthly – South Africa is estimated to be 70% urbanised by 2030. Thus it’s imperative to fund the affordable housing market as well as support players such as IHS.”

The Nedbank Affordable Housing Development Finance Unit disbursed more than R1-billion towards new affordable housing developments across South Africa in 2013, with more than 12 000 new home opportunities created. Nedbank recently provided fi nancing of R548-million to acquire 1 423 affordable housing units in fi ve separate developments in Gauteng.

“It is crucial that we have a well-developed and coordinated strategy between all stakeholders that presents viable solutions to the country’s lack of affordable housing, as well as the allocation of developments,” says Annandale.

Main reason for moving here Percent Yes

Better job prospects 22 4%

Better access to place of work 108 21%

Nicer environment 78 16%

Closer to schools 50 10%

Safer environment 75 15%

Better access to recreation facilities, parks green 12 2%

Cheaper than previous accommodation 40 8%

More expensive but better than previous 28 6%

Better opportunities/access to develop my knowledge and skills 25 5%

Better access to public transport systems 4 1%

Better access to hospitals and healthcare 0 0%

Better access to public infrastructure such as water and electricity 3 1%

Other 55 11%

Reasons for moving to development

Work commute time

Transport used by non-students

Up to 90min 7%

Train 1%

> 90min 4%

Motorbike/scooter 1%

Don’t know 1%

Other 1%

< 15min 17%

Walk 6%

15-30min 37%

Taxi 26%

30-60min 32%

Bus 10%

Car 55%

Affordable Housing_subbed.indd 37 2014/07/18 5:28 PM

feature38


In the current housing sector, there has been a particular increase in demand for rental stock, which IHS aims to address. “The current signifi cant housing shortage puts us in a great position as it’s a positive environment to invest in,” says Rob Wesselo, Managing Partner at IHS.

A social study undertaken by IHS, the University of Cape Town and Professor Francois Viruly on residential units provided by IHS reveals the direct and indirect benefi ts that tenants and owners receive from occupying these houses. Dubbed “Accessing Opportunities through the Housing Market: A Report on the Second Annual Social Impact Audit of IHS Residential Units”, the study shows that the provision of housing goes well beyond the provision of shelter, and that quality and well-located housing can have a signifi cant impact on the access that households have to social amenities and overall welfare.

This can be achieved by the fact that 100% of IHS units obtain clean title deeds as compared to the current rate of only 50% for subsidised units, as reported by the Department of Human Settlements.

According to Absa’s March 2013 House Price Indices report, small houses (80-140), which are the majority of IHS units, have the highest price appreciation, with a 17,5% nominal growth for 2013. This potential equity build-up and strong ownership rights have the potential to boost opportunities for obtaining funding for further education, entrepreneur activity and other economic benefi ts to homeowners.

Due to the legacy of historic planning in South Africa, there is a continuation of discrimination in terms of, for example, transport spend. The IHS affordable housing model ensures better location in terms of access to transport, enabling homeowners to have greater disposable income and the ability to save and invest in property.

Likelihood of recommending the development

Very unlikely 8%

Unlikely 9%

Neither 22%

Likely 20%

Very likely 41%

Percentage of income spent on transportation

AbidjanAccra

Addis AbabaDakar

Dar es SalaamDouala

Gauteng

KampalaKigali

KinshasaLagos

Nairobi

Ouagadougou

10,1%

6%

3,3%4,3%

11,6%

4,6%

21%

7,4%

4,4%2,8%

13,8%

10,1%

5,5%

Source: OECD

* About 61% likely to recommend development


feature39


“We are providing people with safer, healthier and better environments to live in,” says Wesselo. “We are also bringing people closer to their places of work – in Gauteng, 21% of disposable income is spent on travel/commuting. We are also stimulating social upliftment and development.”

Job creation is another major potential. “The housing construction sector is an important employer with one of the highest employment multipliers in South Africa,” says Wesselo. “It is estimated that IHS fi nancing has created more than 50 000 direct and indirect employment opportunities, with 60% of these opportunities for unskilled workers. The management of the housing stock creates 5 000 continuous skilled and unskilled employment opportunities on an annual basis. “In addition to these benefi ts, and of value to the affordable housing market, the study showed the importance of providing diversity in the housing segment thus making fi ltering from one sector to the next possible.”

Nedbank and IHS are not alone. “We are starting to see the listed funds and other institutions becoming involved in the affordable housing market,” says Wesselo. “There’s massive demand here thus it’s attractive. Don’t believe the stigmas that this market is risky. Our bad debts and arrears are signifi cantly lower.”

TOTAL WELFARE IMPROVEMENT ACROSS ALL RESPONDENTS

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Salary

Access to recreational facilities

Quality of life for your children

Employment opportunities

Access to education

Health

Social life

Leisure time

Much worse Worse No change Better Much better

Only 3% of respondents indicated quality of life had worsened to somedegree, while majority 72% felt things had improved to some degree

Total welfare improvement across all respondents

Construction employment Direct Indirect Total

Full time/per annum 18 500 27 750 46 250

Operating expenditure 5 312

Total 51 562

Employment creation

www.sapoa.org.za

S O U T H A F R I C A N

PROPERTYR E V I E W

May/June 2013

Welcome to the 45th SAPOAInternational Convention

and Property Exhibition

EAST AFRICALand of promise?

REITs FOR THE UNLISTED SECTORWe speak to SAPOA’s incoming president

URBAN REGENERATION

Capital in, profits out


PROPERTYR E V I E W

July 2013

SHINE ON, SAPOAOur Convention report back

PROPERTY EYE CANDYExcellence winners announced

SA REITsThe dream becomesa reality

THE TALENTED MR NOMVETEDelta’s rise and rise

South African P

roperty Review

Architects in focus July 2013


PROPERTYR E V I E W

August 2013

Heritage, where the heart is

SASOL’s SANDTON HQAlchemy brings the magic

WALKING ON BROKEN GLASSWomen shatter the ceiling

VUKILE’s NEW WUNDERKIND

Why Dr Moseneke made the move

South African P

roperty Review

Wom

en in property August 2013


PROPERTYR E V I E W

September 2013

Inspired, innovative and independentBroll’s multi-disciplinary property services

ARROWHEADAlways on target

ALL-STAR ASSETSA listed property in the lead

THE PRECINCT EFFECTThe rise and rise of trendy nodes

South African P

roperty Review

Attorneys in focuos Septem

ber 2013


PROPERTYR E V I E W

October 2013

South African P

roperty Review

Project m

anagers October 2013

Showing off modernityHertford office park

INVESTMENT FUNDINGVunani’s quest for true value

FACILITIES MANAGEMENT

It’s all about integrated service

SANDTON CITY MOVES UP A GEARMuller mulls over retail offerings

PROPERTYPROPERTYPROPERTYThe Africa series:

our monthly

country-by-country

focus


PROPERTYR E V I E W

September 2013

Inspired, innovative and independentBroll’s multi-disciplinary property services

ARROWHEADAlways on target

ALL-STAR ASSETSA listed property in the lead

THE PRECINCT EFFECTThe rise and rise of trendy nodes

South African P

roperty Review

Attorneys in focuos Septem

ber 2013


PROPERTYR E V I E W

November 2013

South African P

roperty Review

Engineers & quantity surveyors N

ovember 2013

Banking on green investmentsMore than just finance

CAPE TOWN CBDCity development open for business

ECOFRIENDLY MASTERPIECE

Efficiently showing off engineering and

design aesthetics

GOING THE EXTRA GREEN MILEA very real passage towards sustainability

PROPERTYS O U T H A F R I C A N

PROPERTYR E V I E W

December 2013 / January 2014

Alice Lane on showA wonderland of aesthetic excellence

AFRICA SERIESNamibia in focus

BANKING ON DESIGNSetting new standards in interiors

South African P

roperty Review

CSI and interior design D

ecember 2013 / January 2014

PROPERTYs

ssssss

ssssss

ssssss

sssss

MEET

THE MAYORS

Parks Tau

Patricia de Lille

CSIAre you doing

your bit?


PROPERTYR E V I E W

February 2014

ArchitectureNew-age aesthetics

AFRICA SERIESBotswana: from rags to riches

EMERGING MARKETSAffordable housing and student accommodation

South African P

roperty Review

Architects and architecture February 2014

GAUTRAINUnlocking the property pipeline

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PROPERTYR E V I E W

March 2014

Taking ‘Atvantage’ of great project management

AFRICA SERIESZimbabwe:

time to play the market

THE WORLD UNDER CONSTRUCTIONConstruction management:a pillar of development strength

South African P

roperty Review

Construction m

anagement M

arch 2014

REPORTING ON AFRICATaking a constructive approach to Africa’s future

Cover With Spine_SUBBED.indd 1 2014/02/06 10:40 AM


PROPERTYR E V I E W

April 2014

South African P

roperty Review

Attorneys, brokers and auctioneers A

pril 2014

AMAzing contemporary architecture

RICSA female-

president fi rst

AFRICAMozambique: more than

prawns and beaches

THE BIG DEALThe point when growth changes the way of doing business

Cover with spine_APR_SUBBED.indd 1 2014/03/07 8:42 AM


PROPERTYR E V I E W

May 2014

South African P

roperty Review

Urban design and regeneration M

ay 2014

Commuter AXIS to Jo’burg’s rail network

NEW LEASE ON LIFEUrban regeneration and

spatial transformation change the game

EYE ON AFRICAMauritius:

sun, sea, sand and citizenship

DEVELOPING AGAINSTTHE GRAIN

Harvesting studentaccommodation

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Getting your brand noticed by the leading decision makers in South Africa’s commercial property industry - you know it makes sense

Contact R iet te Stevens - 0 7 1 8 7 7 5 5 2 0 - e mai l sa les@ sapoa.o rg . z a

SAPOA’s, SOUTH AFRICAN PROPERTY REVIEW in-hand and on-line, the magazine has a far

reaching appeal, not only does the print version get mailed to a 2000+ targeted database,

it also enjoys a monthly online impression rate of over 3675 hits, with an average read of

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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 www.sapoa.org.za

half page promo advert.indd 1 2014/07/08 3:31 PM


last word40


The SKA’s the limitNot only is the MeerKAT radio telescope project taking small steps towards placing

South Africa on the engineering map, it’s simultaneously contributing towards making a giant global leap for science

By Candace King

Perhaps you’ve heard about MeerKAT already. No, not the furry creature that features in the Disney classic The Lion King: MeerKAT

is a South African radio telescope that’s currently being developed in the dusty Karoo – a project that has already illustrated the country’s excellent science and engineering skills.

Originally dubbed the Karoo Array Telescope (KAT), the project was renamed MeerKAT (meaning “more of KAT” in Afrikaans, as well as being the name of the animal that lives in the Karoo region) after the South African government increased the budget to allow the construction of 64 receptors. (Initially there was to be only 20 receptors.)

Currently being built about 90km outside the small Northern Cape town of Carnarvon, the MeerKAT telescope forms part of the greater Square Kilometre Array (SKA) Project, an international effort to build the world’s biggest radio telescope with a square kilometre (one million square metres) of collecting area.

Once operational, SKA will take science to another level. Co-located in South Africa and Australia, and proposed to be developed in two phases from 2018 onwards, the SKA telescope will one day in the near future have the power to be part of new scientific discoveries. The SKA will be so sensitive that it will be able to detect an airport radar on a planet 50 light years away.

According to the SKA website, “Deploying thousands of radio telescopes in three unique configurations, it will enable astronomers to monitor the sky in unprecedented detail, and survey the entire sky thousands of times faster than any system currently in existence.”

Serving as a pathfinder to the SKA – and a precursor to the full SKA system – MeerKAT is grabbing the attention of the scientific community, with more than 500 international astronomers (58 of them from Africa) having submitted proposals to do science with

MeerKAT once it is complete. Currently, the first seven dishes, KAT-7, are complete.

Not only is MeerKAT significantly contributing towards science, it is also bettering the skills of a large group of young scientists and engineers, which will be beneficial in the next 10 to 20 years. Since 2005, the African SKA Human Capital Development Programme has awarded about 600 grants for studies in astronomy and engineering from undergraduate to post-doctoral level, while also investing in training programmes for technicians. Furthermore, astronomy courses are being taught as a result of the SKA Africa project in Kenya, Mozambique, Madagascar and Mauritius.

MeerKAT will be integrated into the mid-frequency component of SKA Phase 1. The final SKA core will be developed on the same site as MeerKAT. International teams of radio astronomy scientists and engineers over the next few years will work together to scope and finalise the design of the SKA.

So move over Mark Shuttleworth – MeerKAT is set to become South Africa’s biggest space star.

Timeline for MeerKAT construction

● March 2014: First antenna installed ● Mid-2014: First antenna qualified and critical

design review completed ● End 2014: Four MeerKAT receptors will be

fully assembled, integrated and verified ● End 2015: Array of 16 antennas commissioned

and ready to do science ● End 2016: All 64 antenna positioners will be in place ● Mid-2017: Full array ready to do science

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Property Developer August 2014

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