Property Developer Feb 2014

DeveloperPRO

PER

TYFebruary 2014

Modderfontein metropolisShanghai Zendai’s city plan

Towering feat: a catalyst for investment38

Cornubia: Durban’s mixed-use marvel35

Cover_FEB_SUBBED.indd 1 2014/01/15 10:03 AM

from the CEO1

The Spatial Planning and Land Use Management Act (SPLUMA), No 16 of 2013,

seeks to bridge the racial divide in spatial terms and to enable the transformation of the settlement patterns of this country 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; spatial development frameworks that must be prepared by national, provincial and local government; land use schemes that must manage and facilitate land use and land development; and land development management procedures and structures for dealing with land development applications.

SAPOA has actively been involved in issues relating to the development and amendment of some of the statutory provisions pertaining to spatial planning and land use management in our country. Being fully aware of the challenges facing developers, it was party to the constitutional court application that resulted in the suspension of the invalidity of chapters V and VI of the Development Facilitation Act, No 67 of 1995. The draft Spatial Planning and Land Use Management Bill was met with the same scrutiny and involvement by SAPOA and other stakeholders until the enactment of SPLUMA.

We deemed it our earnest duty to ensure the further protection of our members by keeping the communication channels between the National Department of Rural Development and Land Reform and SAPOA open, transparent and amicable to ensure regular updates in terms of the readiness by the three spheres of government in ensuring a transition to the new regime. The issue of capacity, from human and systems point of view at local government level, has always been one of dire concern for our members. A meeting held between SAPOA and the National Department of Rural Development and Land Reform towards the end of 2013 highlighted key concerns of our members and the need for the Department to keep the industry informed of developments after the enactment of SPLUMA. It was characteristic of the integrity of the Department, which SAPOA has come to respect, to agree to continuous communication with the industry and the public – an aspect that was part of its plans for 2014.

It must be noted that the Department has prepared an Implementation and Change Management Plan for SPLUMA that “will guide the transition from the current planning system, rooted mainly in the provincial ordinances and remaining apartheid legislation governing former Black areas, to the new planning system ushered in by SPLUMA”.

The Department further reported that a core component of the Implementation and Change Management Plan is the ability of government to implement the Act. The Department advised that it is working closely with national and provincial government departments to ensure their readiness to implement the Act. However, the priority of the Department is to ensure that

local government is ready to implement SPLUMA. The Department is therefore assessing the state of such readiness, and is preparing various support measures to assist and guide municipalities in the implementation of the Act. It is the Department’s contention that the level of readiness of the local government sphere, in particular to implement SPLUMA, will be the key to determining the commencement date of the new Act. SAPOA was assured that the expectation was that municipalities, with the support of national and provincial government, will have the necessary action plans in place to enable SPLUMA to be brought into operation in the second half of 2014.

SAPOA is satisfied with the Department’s acknowledgement that the successful enactment of SPLUMA may largely be ascribed to the extensive process of consultation with government, civil society and private sector stakeholders, as these role-players helped shape the structure and content of the Act. This includes an agreement reached at our meeting with the Department during the latter part of 2013 that breakfast sessions will be held between the Department and SAPOA members during the first quarter of the 2014 year for the purpose of highlighting the plans already in place to ensure that SPLUMA is eventually implemented as the law relating to spatial planning and land use management. We encourage our members to take part in these important sessions, which will be held on such dates as will be published.

It remains our duty throughout the process to ensure that critical issues are highlighted to government and to ensure the continuous protection of our members’ interests.

Neil Gopal, CEO

Keeping up with the SPLUMA Spatial planning and land use management in South Africa are strategies intended

to address historical realities through various government policies that were adopted post-1994

February 2014 l property developer

CEO's Message_FEB_SUBBED.indd 1 2014/01/16 11:55 AM

chairman’s message2

property developer l February 2014

Tata Madiba taught

us the power of

action – so let us

share our fears and

miscalculations in

order make positive

progress. The power

to become a more

powerful and

prosperous nation

as well as a loving,

respectable society

that is non-racial,

non-sexist and

non-prejudiced

is in our hands

Positivity, unity, prosperityWith a heavy year behind us, SAPOA National Property Developers Forum chairman Lionel Kisten looks towards prosperity in 2014

2013 was a tough year filled with mixed emotions and a host of negativities that dominated the headlines for the year, including slow economic growth, unemployment, corruption, e-toll woes, poverty, political shenanigans, as well as a lack of decisiveness, optimism, confidence and guidance from our leadership.

Then on 5 December 2013 our nation – and the world – came to a standstill to mourn the sad passing of former president Nelson Rolihlahla Mandela: the father of our nation and a messiah figure to the world; a monumental hero of humility, forgiveness and compassion; and the type of true icon that the world will likely never experience again.

“During my lifetime I have dedicated myself to this struggle of the African people,” he once said. “I have fought against white domination, and I have fought against black domination. I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die”.

We must reverberate this inspiring and sincere message by following in his footsteps. We need to continue his legacy through the emulation of his beliefs, morals and ethics, and we must celebrate his life via the realisation of his dream – to live in harmony and unite and flourish as one nation. Tata Madiba taught us the power of action – so let us share our fears and miscalculations in order to make positive progress. The power to become a more powerful and prosperous nation as well as a loving, respectable society that is non-racial, non-sexist and non-prejudiced is in our hands.

As we usher in 2014, let us lead by Madiba’s example – preach and practise positivity, honesty, integrity, equality and confidence in our places of work and overall industry. This will help us to remove all obstacles that are hindering economic growth, and will give the public and private sector the opportunity to align and join forces and get our economy firing on all fronts.

Our country has immense potential and it can achieve greatness. Let’s stop talking and complaining – the time has come to effect positive change by fixing the structural challenges, and ensuring quality education, skills development and infrastructure development. As Madiba once said, “Everyone can rise above their circumstances and achieve success if they are dedicated to and passionate about what they do.”

I wish you all good health, happiness and good fortune in 2014.

SAPOA National Property Developers Forum chairman, Lionel Kisten

lionel's message_feb_subbed.indd 2 2014/01/15 12:23 PM

Contact Tim on: +27 32 814 0000, Email: [email protected] or visit: city.dubetradeport.co.za

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Untitled-1 1 2014/01/15 11:53 AM

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.

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

contents6


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 Sales Riëtte Stevens Finance Susan du Toit

Contributors Advocate Portia Matsane, Martin Ferguson, Eugenia Makgabo, Nicky Manson, David A Steynberg Photographer Michael Glenister

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

February 2014

Modderfontein metropolisShanghai Zendai’s city plan

Towering feat: a catalyst for investment38

Cornubia: Durban’s mixed-use marvel35

Cover_FEB_SUBBED.indd 1 2014/01/15 10:03 AM

DeveloperPRO

PER

TY

8 News

14 Legal matters

16 Energy effi ciency in the hot seat

18 Interview: Dr Naledi Moyo

20 Enter the Modderfontein metropolis

29 Eskom enlightens stakeholders

30 Collaboration is key: GPF funding

32 SAARDA: back in business

35 Cornubia: Durban’s mixed-use marvel

38 A towering feat

40 Last word: Complex density

Cover development: The proposed Modderfontein metropolis, to be developed by Chinese property-developing giant Shanghai Zendai

Printed by

e: [email protected]

Contents_SUBBED.indd 6 2014/01/15 12:33 PM

SAPOA Annual ConventionPrevious thought-provoking speakers

John C Cushman III Chairman, Cushman & Wakefield

Tokyo Sexwale Former Minister of Human Settlements

Elias Masilela CEO of Public Investment Corporation

Mamphela Ramphele Former MD of the World Bank

Thuli Madonsela Public Protector

Sir Ken Livingstone Former mayor of London

Meet the leading players in the property-industry at the annual SAPOA Convention and Property Exhibition. This event celebrates all things property-related, and has a stellar line-up of speakers.

For three days every year, attendees have unsurpassed access to internationally and nationally renowned speakers, the latest trends in commercial property, and a unique forum to learn about developments within South Africa’s government and private sector that affect the property industry as a whole.

Parks Tau Mayor of Johannesburg

Thabo Mbeki Former president of South Africa

FW de Klerk Former president of South Africa

Judge Dikgang Moseneke Deputy chief justice of the

Constitutional Court of South Africa

Gill Marcus Governor of the Reserve

Bank of South Africa

Thoko Didza Former Minister of Public Works

Patricia de Lille Mayor of Cape Town

Tony Leon SA ambassador to Argentina

Richard Quest Convention facilitator and MC

Save the date: 10 to 12 June 2014, CTICC

www.sapoaconvention.co.za

on record8


Developers shrug off sluggish growth in 2014 Despite a recent

PricewaterhouseCoopers (PWC) report pointing towards an ailing South African construction industry, a few developers, such as Johannesburg-based Krisp Properties, have astounded the market by defying the trend. As part of the Nu-Hold Group, Krisp’s portfolio was boosted in 2013 by increased interest in Johannesburg’s planned OR Tambo Aerotropolis, with high-profile companies such as Michelin SA moving its headquarters to Krisp’s state-of-the-art R500- million Clearwater Office Park across the road from the aerotropolis. Meanwhile, the implementation of e-tolls in Johannesburg has seen the company’s planned 9 000m² neighbourhood shopping centre and 114-unit residential development along the R55 (12 hectares of land called Olievenhoutbos Ext 47) – a popular new alternate route for motorists avoiding e-tolling – substantially gain in value.

Krisp Properties executive director Jordan Mann says the company has fared very well despite the challenging economic conditions highlighted in the PWC Construction Survey, and was looking forward to even greater growth in 2014. “We have found that there is increasing demand for top-class developments with carefully plotted locations. We pay careful attention to where we position our developments,” says Mann.

Michelin SA moved its 120- strong staff complement into the

new AAA-grade purpose-built headquarters at Clearwater Office Park at the end of last year. The new headquarters is convenient for staff, says Michelin, because of lifestyle amenities such as a restaurant, gym and tennis courts available at the office park. But the proximity to the aerotropolis is also a major draw card.

Michelin joined other tenants at the 20 000m² (GLA) office park, including Discovery Health, Old Mutual, Absa and Imperial Air Cargo. Given the demand, Mann says the company is planning a third phase: 28 000m² of office space set for development in the second half of 2014.

In Cape Town, Krisp’s 5 000m² pedestrianised shopping centre alongside the busy Langa train station also received the green light last year. The station is rated 16th nationwide by the Passenger Rail Agency of South Africa.

On average, about 43 000 passengers pass through the station daily. “The railway has been upgraded and is a First World station. Langa Junction is a very nice fit for the station itself,” says Mann, adding that he hoped to have the centre completed by the second half of 2014. “Given the strong demand for our developments last year, we are anticipating solid growth during 2014 as the industry begins to recover along with the economy, and as many of our developments begin to come to fruition.”+27 (0)11 789 3334,

Nuway.co.za

Rand Merchant Bank to fund major Nigerian development

Rand Merchant Bank (RMB) has committed the joint funding of a US$182-million

A-grade office development in Lagos, Nigeria. Located on Victoria Island between

Lagos Island and the Lekki Peninsula, the Wings Oando development, consisting of

two high-rise office towers, saw the first ground turned at a ceremony in Lagos on

4 December 2013. RMB, together with another funder, has committed to a US$100-

million development and long-term debt funding for the 25 500m² office development.

Each of the two office towers will offer space of more than 12 000m², one of which will

be let to Oando, the largest indigenous oil company in Nigeria.

“Providing debt funding for the Wings Oando development is part of RMB’s

ongoing strategy of working closely with local and international clients in order to

provide financial solutions for real-estate projects across sub-Saharan Africa,” says

RMB real estate investment banking head Simon Fifield. “Over the past three years,

we have funded more than 10 high-profile property developments in six sub-Saharan

countries, with a total commitment of more than US$200-million. Our expertise in Africa

and knowledge of local real-estate markets means we have been presented with many

other opportunities.”

“This development represents our commitment to use our expertise and resources

to support landmark projects in Nigeria,” says RMB Nigeria chief executive Michael

Larbie. “With the launch of RMB Nigeria we expect to structure and fund more projects

in real estate as well as across other sectors of the Nigerian economy.”

Wings Oando will be developed and managed by RMB Westport Real Estate

Development Fund. The building is expected to be completed in March 2016.

+27 (0)11 282 8000, Rmb.co.za

Corobrik builds on a steady recovery

Corobrik’s performance in 2012 was pleasing despite the setbacks caused

in the building industry by the Marikana incident and civil unrest.

Despite the destabilising factors and constrained macroeconomic fundamentals, the building industry is bouncing up off its low base, albeit at fairly low levels.

Overall, prospects are improving as government spending on infrastructure raises expectations that 2014 will be a better year than 2013.

This is the view of Corobrik managing director Dirk Meyer. “Architects are reportedly busier than before, and the qualitative and quantitative indicators show a general recovery in the building industry,” he says. “The number of commercial

building plans being passed appears to be on a gradual upward trend, and government spending on low-cost housing and new or extended schools is also picking up. After three years of intensive product development with impressive market-share gains, our focus will be on consolidation and re-investment in the business in 2014. Capital has been committed to a number of planned projects to upgrade facilities, drive efficiencies and introduce robotics to automate brick handling systems.”

Meyer notes that Corobrik will also invest in further research to understand the comparative value of its clay products as produced and in application, towards minimising environmental impacts and energy usage of buildings. Furthermore, Corobrik is eager to continue converting more factories from coal-fired to gas- fired operations.

Meyer believes that a lack of artisan training is a national issue that needs serious attention. “Everyone thinks it is someone else’s responsibility but we need to train more artisans.” Looking forward, Meyer says that Corobrik will continue to produce high-quality products and aim to achieve much more in 2014.+27 (0)31 560 3233, Corobrik.co.za

news_feb_subbed.indd 8 2014/01/15 12:02 PM

9

on record


Building plan approval delays cause concern

The sudden stoppage of building plan approvals

in the Nelson Mandela Bay municipality caused serious concern in the commercial and industrial property sector.

Building plan approvals at the metropolitan municipality came to a grinding halt at the end of last year, largely as a result of shortages of technical staff in the building control department. “The impact of these delays on SAPOA members is significant, and as an industry we are concerned about the increased financial risks of longer property development holding costs,” says SAPOA CEO Neil Gopal.

SAPOA’s Port Elizabeth regional chairman Mark Bakker decided to escalate the issue to SAPOA’s head office because of its urgency for members. “The delay in approvals has a ripple effect on developers and investors,” he says. “Without approved plans, financing cannot be secured and construction cannot commence. For the local economy, there is an equally detrimental effect on the number of jobs created by construction projects.”

The municipality aims to appoint a plan examiner as soon as possible but no hard deadline has been set yet.+27 (0)11 883 0679,

Sapoa.org.za

Savanna City launched

R egarded as the second-largest mixed-income project in Gauteng and the largest privately initiated urban lifestyle development of

its kind in South Africa, the R24-billion mega-integrated housing lifestyle development Savanna City was officially launched at the end of last year, with construction now underway.

Situated 35km south of Johannesburg’s CBD and adjacent to Orange Farm, Savanna City is a sustainable, integrated mixed- use development containing all the necessary amenities to offer a quality lifestyle.

With Basil Read Developments in charge, the development follows in the successful footsteps of the Cosmo City model and is being funded by the Housing Impact Fund of South Africa, a R9-billion fund formed by Old Mutual, as well as Basil Read, DBSA, GEPF and Eskom. Further funding will be provided by national government and the Gauteng Department of Human Settlements.

Gauteng premier Nomvula Mokonyane launched the ground-breaking ceremony, which was attended by dignitaries from the government, the private sector, community and the media.

The 1 462-hectare development will provide 18 399 integrated housing units complying with the government’s “Breaking New Ground” strategy and the Financial Sector Charter.

The site is to be developed as follows: 5 517 fully subsidised houses; 2 635 rental apartments; 5 518 FLISP/GAP houses; 4 729 bonded houses; 16 educational facilities; 32 institutional sites, clinics, crèches, churches, parks etc; and nine retail/commercial sites. Fully subsidised houses will make up more than 30% of the development.

The aim is to place suburban home ownership in the hands of many South Africans previously unable to own homes. Savanna City will assist in responding to the urbanisation facing the broader Gauteng city region, and will stimulate further economic development in southern Gauteng (as compared to the north, where investment has traditionally gone).

The development will have a total economic impact of R28,4-billion during construction and R12,7-billion post construction. The total employment that will be created during construction is 54 900, with 12 700 post construction. Savanna City will be completed over a 10-year period. +27 (0)71 854 2346, Savanna-city.co.za

McCormick and KwaThomseni break ground at Mandeni Plaza

At the end of last year, joint-venture partners

McCormick Property Development and

KwaThomseni CC broke ground of the proposed

12 257m² Mandeni Plaza.

With its opening scheduled for late September

2014, construction of Mandeni Plaza has begun.

Promising more than 12 000m² of retail to the

surrounding community, the project was first

envisioned in 2006 and has now become a reality.

Approximately 450 workers will receive gainful

employment during the construction of the project,

with an additional 450 permanent positions created

once the project is complete through tenant

employment opportunities.

Mandeni Plaza will bring a new level of design

and elegance to the area, with a modern layout

that includes an external food court with top-line

finishes to complement a fantastic mix of national

tenants. The mix already includes Shoprite, Capitec

Bank, Roots, Mr Price, Sheet Street, Jet, Rage, KFC

and Nizams – all accessible from two well-planned

entrances off the P459 main road.

Mandeni Plaza promises to contribute to the

upliftment of the CBD while assisting the local

municipality’s objective of creating investment

and growth opportunities in the corridor between

Durban and Richards Bay.

“Owing to the rapidly growing areas around

Mandeni, this development will satisfy the needs

of the local consumers by offering a First World

experience,” explains managing director

of McCormick Property Development Jason

McCormick. “We are confident that the project

will contribute to the overall image of Mandeni

and encourage the upgrading of existing facilities

in neighbouring areas.”

+27 (0)12 654 6330, Mccormick-property.com


on record10


The official opening of the Bridge City Station and Rail

Link Project by President Jacob Zuma in KwaMashu, Durban at the end of last year was a proud milestone for the team at Crowie Projects. The private property development company was appointed by the Passenger Rail Agency of South Africa to lead the consortium that delivered on this key infrastructure project for KwaZulu-Natal.

“It has been a privilege to be part of the largest rail infrastructure development project in the Durban area,” says Crowie Holdings’ chief operating officer Fred Pietersen. “Bridge City Rail Link integrates the residents of Phoenix and Inanda, Ntuzuma and KwaMashu (INK) with the Durban metro, catering for high volumes of commuters via a new-generation inter-modal public transport system.”

The R1,3-billion project involved the construction of a basement railway station and ground-level railway concourse. Pietersen says that the project required building 3,5km of dual rail link and included three viaducts, three aqueducts and one road crossing. A multilevel bus and taxi interchange is also currently being developed by the eThekwini Municipality as part of its Integrated Rapid Public Transport Network to create a complete transport hub at Bridge City.

“The new underground Bridge City station is impressive,” says Pietersen. “It’s all about convenient access, so its location allows commuters travelling by

train the opportunity to pop up and shop at a quality shopping mall, then head back down to the platform to catch a train to their destination.”

The Bridge City Shopping Centre, completed by Crowie Projects in 2008, has a strong tenant mix of national, franchise and regional tenants. Plans are afoot to extend the centre by a further 14 000m². This is in addition to the already-approved plans to develop 730 residential apartments above the existing centre, with construction set to commence this month (February 2014). Work on a R2-billion 450-bed regional hospital in close proximity to the station will be completed by the end of 2015.

“The passenger rail link service connects the mixed- use Bridge City development node with the existing multi-use rail line at Duffs Road station in Durban, bridging the INK communities and linking them into the urban system,” says Pietersen. “Apart from the significant employment opportunities this project presented and the improved access to services for the INK communities, it is satisfying to be steering a project that is leading long-term development in the area. The Bridge City commercial hub represents a highly accessible location along this rapidly developing northern coastal corridor.”

The Bridge City Rail Link Project is expected to act as a catalyst for economic and social enhancement throughout the INK community. The official launch formed part of a government roll-out of key infrastructure projects during October Transport Month.+27 (0)31 312 2091,

Crowieholdings.co.za

Crowie delivers largest rail infrastructure project in Durban

Waterfall Business Estate growing fast

Development is progressing at pace at Atterbury Property Developments’ most ambitious project so far – the Waterfall Business Estate.

“Two prime convenience centres will open early in 2014, and new offices are coming to market and being snapped up by blue-chip businesses,” says Atterbury Property Developments’ director Coenie Bezuidenhout. Bezuidenhout confirms a further four deals have been concluded on bespoke premises for quality tenants – Premier Foods, Dräger, City Lodge and Westcon Group. Situated on a prime retail site on the corner of Maxwell Drive and Woodmead Drive, the impressive Waterfall Corner will feature Woolworths and Checkers as anchor tenants.

“We’re excited to welcome these leading retailers,” says Bezuidenhout. “Woolworths will operate in 1 571m² and Checkers in 3 402m² of this exciting retail opportunity.” Ideally positioned to serve the large catchment areas of Woodmead, Kyalami and Midrand, Waterfall Corner will make it easy for shoppers to pop in for their daily needs from April 2014.

It also features a generous piazza at its heart – a vibrant public space buzzing with activity, creating a lively, family-orientated shopping, eating and relaxing destination. Prominent health-club brand Virgin Active will lead Waterfall Lifestyle Corner, a sport-focused retail value centre in 4 250m². Set to open in March 2014, the entire Waterfall Lifestyle Corner will span 9 000m².

Furthering the development of office space at Waterfall Business Estate, Atterbury broke ground on the second phase of the A-grade Maxwell Office Park in August last year. This phase includes 8 000m² of office space in two buildings. Both are due for completion in June 2014. Already, Premier Foods has confirmed its take-up of the entire 4 000m² in one of these office buildings, and it will be in good company – tenants in the first phase of Maxwell Office Park include Golder & Associates, Cipla, Attacq and Atterbury Property Group itself.

Atterbury is also developing a new facility for international company in the fields of medical and safety technology, Dräger, in Waterfall Commercial District. Spanning a prime 4 600m² right on the K101, it includes 3 175m² of offices and a 1 500m² warehouse, and will be ready for occupation in November 2014.

In Waterfall Logistics Precinct, Atterbury is developing 7 500m² of tailor-made space for Westcon Group. Set for occupation in September 2014, the facility incorporates a 4 000m² warehouse and 3 500m² of offices.

Finally, supporting the rapid commercial development at Waterfall Business Estate, as well as the precinct’s buoyant residential growth, Atterbury is developing a 150-room hotel for City Lodge. The 6 180m² hotel in Waterfall City will be ready for occupation in November 2014. +27 (0)11 706 1176, Atterbury.co.za


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on record


Developers of the R1,7- billion Baywest Mall in

Port Elizabeth are preparing for a bumper 2014, with work having already commenced last month (January) on the laying of the double-storey centre’s 7,5-million bricks.

The development, undertaken by Billion Group and Abacus Asset Management, is on track to open its doors in March 2015. It is proposed that, by mid-2014, about 2 000 workers, from carpenters to bricklayers, will be feverishly working on the site.

Basil Read, which was awarded the tender for developing a R300- million road network around the mall by the South African National Roads Agency Ltd, has also started working on its major project.

The network includes building an off-ramp from the N2 freeway to the mall and connecting Walker Drive in Sherwood with Old Cape Road in Rowallan Park.

Principal contractor Murray & Roberts has already commenced with laying the concrete slabs which form the base of the mall. When complete, about 60 000m³ of concrete will have been thrown.

This month (February), work on the mall’s roof will commence, with 65 000m² of roof sheeting in total. About 5 000 tons of reinforcing steel will be used on the centre, and a further 1 000 tons of structural steel. Come October 2014, work on the final stages of the mall will be under way. The landscaping is scheduled to start by the end of that month while the 250 shops start being fitted.

With 87 500m² of mall size excluding parking, Baywest Mall will boast about 3,5km of shop-fronts and a mammoth 35km of electrical cabling.

“We are extremely excited to be able to bring what will be a unique shopping experience in South Africa to the Eastern Cape,” says Baywest MD Gavin Blows. “Before we know it, Baywest will be open for business – and changing the way people think about the Eastern Cape.”

He adds that the community’s excitement ahead of the mall’s opening and the contribution to the local economy by creating 3 000 direct jobs and up to 7 000 indirect and induced jobs, make Baywest an invaluable asset. The mall forms the first phase of the larger Baywest City precinct, which Blows says could become “the Century City [Cape Town] of the region”. +27 (0)21 886 5262,

Baywestmall.co.za

Big box warehousing remains in demand

Big box warehousing will continue to offer

the most lucrative opportunities to industrial

property investors for the year ahead, according

to leading property group Galetti Knight Frank.

Given the current projected growth in

this market in South Africa, most of the

deals concluded are likely to come from

consolidation, as the trend appears to be

moving towards more efficient warehousing,

the group says. Gauteng has seen huge uptake

of speculatively built distribution centres (DCs)

over the past few months, with Improvon,

Intaprop and Capital Property Fund staking

the biggest claims.

Already, their strategies appear to have

paid dividends. Spec builds by Capital Property

Fund in Raceway Park in Germiston include

an 11 000m² DC that secured tenancy upon

completion from the South African Police

Service; a 23 000m² space already let

to Montesanto upon completion; and

a 40 000m² DC for which construction

has begun.

John Jack, Galetti Knight Frank’s Gauteng

director, is confident of securing a tenant

before the keys are in the door. “Efficiency

is paramount to this segment of the industry

and new builds such as those currently going

up at Raceway are designed specifically to

offer maximum storage options,” says Jack.

“That’s why we think old-style warehousing,

typically with low roofs and difficult layouts,

will experience some vacancy over new builds,

especially with the cost of refurbishment now

nearing that of a brand-new building.”

Meanwhile, Meadowview Business Park,

next door to Longmeadow and developed

by Intaprop, is seeing leading companies

sign up, no doubt attracted by the tailor-

made combinations of offices, warehousing,

laboratories and logistics facilities for clients.

Galetti Knight Frank most recently concluded

a deal with leading road-freight distribution

company, Triton Express, for a 13 000m²

DC at the park.

Other new builds at the park include

a completed 35 000m² DC for UTI, and

still under construction is a 5 000m² build

for Esco Corporation, a 10 000m² build

for Premier Foods and a 20 000m² build

for Gold Leaf. Galetti Knight Frank’s Justin

Thom, who concluded the deal with Triton,

maintains that the park offers unbelievable

value for those companies looking for a prime

location in Gauteng.

+27 (0)11 783 1195, Galetti.co.za

Baywest prepares for a bumper 2014


on record12


Nedbank expands portfolio

Nedbank Corporate Property Finance has extended its property portfolio base with a R150-million investment into property investment development fund

Pivotal Property Fund. The investment saw Nedbank acquire 12 000 ordinary shares, giving the bank a 15% shareholding in the fund. The shares were part of a new issue by Pivotal Property Fund aimed at raising funds to acquire a 40% undivided share in Cradlestone Mall, the new 76 000m² regional shopping centre in Mogale City.

According to Ken Reynolds, regional executive of Nedbank Corporate Property Finance in Gauteng, the R150-million investment forms part of the bank’s commitment to supporting, and participating in, the growth of South Africa’s promising listed property sector.

“Despite a relatively muted 2013 for most of South Africa’s property sectors, property funds have generally continued to go from strength to strength, and Pivotal Property Fund is no exception, with its enviable property portfolio making it a highly appealing investment opportunity,” Reynolds explains.

He also points to the reason behind the additional shares made available by Pivotal as a key reason why Nedbank chose to invest in the fund. “The fact that Pivotal used the money it raised from the share issue to acquire Cradlestone Mall demonstrates that it shares Nedbank Corporate Property Finance’s optimism about, and commitment to, the SA property sector as a whole,” he says. “Any such efforts to expand its already excellent commercial and retail property portfolio should build Pivotal’s capacity to continue to increase the returns it has thus far provided its investors well into the future.”

According to Reynolds, the fund’s recent decision to include dividend distributions along with its historic capital growth value proposition to clients is further evidence of the excellent growth and steady evolution of this increasingly important role player on the SA property fund landscape.

“Pivotal’s stated intention to steadily increase its property portfolio through direct acquisitions combined with direct participation in greenfields developments means the fund affords Nedbank a unique opportunity to further extend its established competitive advantage, which we will, in turn, leverage to the advantage of our current and future clients,” says Reynolds. “In addition to its diversified portfolio and quality underlying assets, Pivotal boasts a very reputable executive management team, a strong asset pipeline, and a well diversified portfolio – all of which is perfectly rounded off as a compelling investment opportunity by the fund’s stated intention to list as a REIT within the next five years.” +27 (0)11 294 4444, Nedbank.co.za

Hammarsdale Junction a hit

Having opened in May 2013,

the 19 239m² Hammarsdale

Junction in Mpumalanga’s New

Town Centre in KwaZulu-Natal is

trading successfully and is 98% let,

reports Rob Moran, KZN regional

director at JHI Properties, the

company that handles the letting

and management of the centre.

“Hammarsdale Junction is well

positioned within Mpumlanga’s

New Town Centre, particularly as

further development is planned

for the area neighbouring the

retail centre,” he says.

According to JHI’s senior portfolio

manager Rubecca Khan, the centre’s

average footfall is 467 000 per

month, with shoppers drawn from

Hammarsdale and surrounding

neighbourhoods such as Cato

Ridge, Camperdown, Cliffdale,

Inchanga, Sakontsha, Mophela

and Ntshongweni. Easily accessible

from the MR385, this R194-million

development is a joint venture

between developers Eris Property

Group and centre owners Vukile

Property Fund, in conjunction with

landowners Ingonyama Trust, the

eThekwini Municipality and the

National Treasury.

“Hammarsdale Junction is

a community centre that focuses

on convenience and caters for

all the customers’ shopping

needs under one roof,” says

Khan. “Anchored by Spar,

which occupies 2 819m²,

and Pick n Pay, occupying

2 319m², the centre houses

other national tenants such as

Jet, Pep, Mr Price, Exact, KFC,

Debonairs, Fishaways, Joshua

Doore, Russells, Barnetts, Lewis,

Edgars Active, Vodacom, MTN,

Totalsports, Markham, Electric

Express and several banks.

“This is a highly appealing single-

storey centre with a contemporary,

relaxed ambience and world-class

quality aesthetics. It has attractive

stone finish pillars on the exterior,

wide interior walkways with

abundant natural light through

the mall areas and food court,

and an air-conditioning system

that is air-cooled – thereby

eliminating water usage. An

interesting decor feature is

a skylight with a leaf mobile.

“The centre has 570 free parking

bays and an integrated taxi rank.”

+27 (0)31 534 2500, Jhi.co.za

One-stop-shop services bundle reduces operating costs Challenging economic trading conditions of the

past several years, coupled with significantly

increased energy and other costs such as municipal

tariffs, have placed a high priority on the reduction of

operating costs from a commercial property owner’s

perspective, says Marna van der Walt, CEO of

Excellerate Property Services (EPS).

“As a result, we’ve seen the concept of a bundled

service offering for landlords, particularly investors

with large property portfolios, rapidly emerging as a

means of achieving maximum cost-effectiveness,”

she says. “Increasingly, role-players in the industry are

looking for reputable service providers to provide such

a ‘one-stop’ service. EPS has already implemented this as

a strategic focus in growing the business and delivering

a full spectrum of quality property-related services to

existing and potential clients, including property

owners, property managers and occupiers of space.

The advantage is meaningful in that a single source of

knowledge and management support, together with

substantial cost savings is created.

“As an example, Sterikleen, together with other

companies in the EPS group, recently put together a

bundled services proposal comprising property

management, repairs and maintenance, security,

parking management, cleaning, hygiene, pest control

and gardening services for a complex comprising

eight commercial buildings. As a result, an annual

saving of R1,5-million was achieved, representing a

meaningful 10% reduction in operational expenses

for the landlord.”

“Sterikleen, which provides services for more than

1 000 buildings in South Africa and on the African

continent, has experienced significant growth as part

of a bundled service offering by JHI Properties,” says

Rudolf Nieman, MD of Sterikleen. “A case in point is

the substantial value added from a cost as well as an

operational point of view to the recently established

Arrowhead and Matlotlo property portfolios. It

stands to reason that a single point of responsibility,

accountability and communication for all service

offerings for a property portfolio is created. In

addition, significant cost savings are achieved for

the client by removing layers of management and

consolidating support services.”

+27 (0)11 699 8604, Epsgroup.co.za

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Untitled-1 1 2014/01/15 12:42 PM

legal matters

14


It’s all in the Act

SAPOA takes a look into the acts that will affect developers in their daily business

By Eugenia Makgabo, admitted attorney of the High Court and legal officer at SAPOA

The onus to pay commissionIt is essential for a broker to receive a mandate from the seller. A seller may give a broker a sole mandate to sell property (i.e. a vacant land or building), and such mandate must be in writing. The seller, however, is under no obligation to give a sole mandate and may choose to give an open mandate. The length of the mandate, as well as when it may be cancelled, that is before the expiry of the mandate period, must be agreed on at all times. It is imperative for the mandate to be certain and for consensus to be had.

It is crucial to highlight the perspective of the market or industry standard. This essentially entails that it is crucial for a broker to agree on a commission amount with regards to a sale agreement. However, this is not a “standard” that is cast in stone and absolute; this would effectively be in contrast to leasing. In terms of common law and standard practice, a seller is ultimately liable for payment of sales commission. Should there be a condition that states that the purchaser must pay for the sales commission, the purchaser must be made aware of this. The purchaser therefore has no liability here unless informed in writing. However, it is not unusual for the seller to agree to pay commission but not specify an amount or even sign a formal mandate. This is in fact common within the listed sector or among large private landlords.

From a legal stance, the position for the broker who has not agreed on a commission is fraught with difficulty and often has detrimental consequences for the broker. An attorney would firstly want to see the mandate. Such instances would likely be referred to court and extrinsic evidence would be considered to determine whether a mandate exists. The courts would consider various factors, such as the fair value of the property and the area in which it is situated. It is therefore highly advisable for brokers to act on a mandate that is in writing.

POPI further protects the right to privacyThe Protection of Personal Information Act, 2013 hereinafter referred to as “POPI” was published in the Government Gazette on 26 November 2013 and has been signed by the President of South Africa. POPI is a law that is not yet effective. It will take effect on a date still to be announced by the President. “Responsible Parties” will have a year to comply with this law

once the President announces its effective date; this law regards “Responsible Parties” as public or private bodies, or any other person who alone or in conjunction with others, determines the purpose of and means for processing personal information. This may entail that a landlord, property owner, property developer, property manager, business, etc. may have to implement measures to protect confidentiality of private information.

POPI essentially aims to protect the right of privacy of individuals in South Africa. According to section 14 of the Constitution of the Republic of South Africa, “everyone has the right to privacy”. POPI will achieve this by regulating the processing of people’s personal information, for example, names, identity numbers, addresses, phone numbers, financial history of the person and the name of the person if it appears with other personal information relating to the person or if the disclosure of the name itself would reveal information about that person.

POPI requires “Responsible Parties” to implement measures to protect confidentiality of private information. It also requires them to have an in-house information officer who will monitor compliance with POPI.

POPI is based on eight principles, which address how personal information is to be collected, what it may be collected for, the manner of retaining and dealing with the information, and how it is to be dealt with at the end of a relationship with a person.

An architect is now being defined as “a person registered as an architect

in terms of section 19 of the Architects Act, 1970 (Act No 35 of 1970) a professional architect in terms of section 18(1)(a)(i)

of the Architectural Profession Act, 2000 (Act No 44 of 2000) read

with section 19 of that Act, and who has met the requirement set out in section 5(2) of this Act”

A developer is now being defined “for the purposes of sections 4(3), 10 and 15B(3)(c), also the agent of any such person or his or her

successor in title, or any other person acting on behalf of any of them”

Legal Matters_SUBBED.indd 14 2014/01/15 10:03 AM

legal matters

15


In 2013, the Minister for Rural Development and Land Reform published the Sectional Titles Amendment Bill for public comment.

The Bill, which was signed by the President of South Africa on 14 December 2013, gives more clarification on significant issues, and it is known as the Sectional Titles Amendment Act, 2013 (Act No 33 of 2013).

This law governs apartments, flats, town houses, office blocks and other building blocks where multiple owners hold a type of property ownership. It is intended to do the following:

u further regulate notification of the intended establishment of schemes and the sale of units to lessees;

u provide for the cancellation of registered sectional plans in a prescribed manner;

u regulate the issuing of the certificate of registered sectional titles in respect of a fraction of an undivided share in a section;

u provide for the registration of a transfer of a part of a common property with the consent of the owners of the sections and the holders of registered real rights;

u provide for the endorsing of title deeds to reflect amended participation quota schedules;

u regulate the alienation of a portion of land over which a real right of extension or part thereof is registered;

u provide for the consent of holders of registered real rights over exclusive

use areas to the alienation of common property;

u provide for the cession of a mortgage real right of extension and a mortgage real right of exclusive use area;

u provide for the cancellation of part of a section pursuant to an expropriation;

u provide for the consent of bond holders with the registration of a sectional plan of extension;

u provide for the issuing of more than one certificate of real right of extension and more than one certificate of real rights of exclusive use areas; and

u provide for matters connected therewith.

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Further regulation of sectional titles

legal matters_subbed.indd 15 2014/01/15 11:30 AM

launch16


Energy efficiency in the hotseatColossal energy efficiency announcements set to change the business landscapeBy Candace King Photographs by Nokuthula Sonile

Addressing both the media and key business stakeholders in December 2013, the Department of Energy

(DoE) in association with the National Business Initiative (NBI) released two major energy efficiency announcements: the release of the Section 12L Regulations on Energy Efficiency Savings Allowance and the launch of the Private Sector Energy Efficiency (PSEE) project.

At the media briefing, DoE director general Nelisiwe Magubane noted that in May 2013, during the budget vote speech, the DoE indicated that energy efficiency is one of the areas in which the country is not performing as well as anticipated and acknowledged the need to prioritise action.

In an effort to address all the shortfalls and also intensify the collective role of all the stakeholders in the energy efficiency value chain, the DoE officially made a public announcement of the promulgation of the Regulations on the Allowance for the Energy Efficiency Savings in terms of Section 12L of the Income Tax Act, 1962 as inserted by Section 27 of Taxation Amendment Laws (Act No 17 of 2009), amended by Act No 7 of 2010 and substituted by Section 29 of the Taxation Amendment Act (Act No 22 of 2012), which came into operation on 1 November 2013.

“This legislation makes provision for the Minister of Finance in consultation with the Ministers of Energy and Trade and Industry to develop energy efficiency regulations.

The allowance for energy efficiency savings will provide tax incentives for energy efficiency improvements, as outlined in the regulations for businesses, based on measured and verified energy savings through registration with the South African National Energy Development Institute (SANEDI),

ultimately linking to the tax process by the South African Revenue Services (SARS),” explained Magubane.

She added that SANEDI will assist the DoE with the administration of the technical component of the energy efficiency savings tax incentive. Furthermore, the DoE –

NBI CEO Joanne Yawitch

FROM LEFT Cecil Morden, chief director of National Treasury; Nelisiwe Magubane, DoE director general;

The PSEE project seeks to support companies towards achieving:

l Increased awareness of energy efficiencyl Energy savingsl Energy intensity reductionsl Operational reliabilityl Implementation of projects, which will

result in the reduction of GHG emissionsl Improved economic competitiveness

through resource and process efficiencyl Investment leveraged from the private

and public sectors through capital investment in energy efficiency projects

l Indirect social benefits such as job creation, job retention and skills development relating to energy efficiency services

psee_subbed.indd 16 2014/01/15 10:01 AM

launch17


“The allowance for

energy efficiency savings

will provide tax incentives

for energy efficiency

improvements, as outlined

in the regulations for

businesses, based on

measured and verified

energy savings through

registration with the South

African National Energy

Development Institute,

ultimately linking to the

tax process by the South

African Revenue Services”

Nelisiwe Magubane,

DoE director general

Mokgadi Modise, chief director of the Clean Energy Directorate; and NBI CEO Joanne Yawitch

together with National Treasury, SANEDI and SARS – will roll out national workshops until March 2014 in order to assist businesses with the understanding and acquainting themselves with the registration process and overall implementation.

“Businesses are therefore encouraged to take this opportunity to continuously scale up or intensify their energy efficiency improvement measures to take full benefit of this tax incentive,” said Magubane.

PSEE plugs in The DoE (in conjunction with the NBI) also launched the PSEE project, which will support companies both commercial and industrial, irrespective of their size, through the provision of various services to identify energy efficiency savings measures. Financially supported by the UK government via its Department for Foreign International Development, the PSEE project will contribute to the South African government’s strategy for reducing energy demand, and will be aligned with the implementation of the above-mentioned regulations as well as the proposed policies that will stem from the National Climate Change Response White Paper that was promulgated in 2011 to address the challenge of climate change.

Through the implementation of the PSEE project, not only will companies reduce their carbon emissions, but they will also stand to benefit in terms of competitiveness, innovation and improved business productivity, and will have access to energy efficiency financial subsidies and tax incentives.

Magubane stated that government has reaffirmed its commitment to accelerating the deployment of energy efficiency by developing a National Energy Efficiency Strategy in 2005, which is now ready for submission to Cabinet. “The strategy sets out an overall national target of energy intensity reduction of 12% by 2015,” she added. This overall target is based on several subsectors including residential (10%), mining and industry (15%), power generation (nine percent), commercial and public buildings (15%), and transport (10%). An Energy Efficiency Target Monitoring System has also been established in order to assist the DoE in accurately reporting on achievements on the Strategy by 2015.

PSEE_SUBBED.indd 17 2014/01/14 4:10 PM

interview18


Durban’s doctor doing justiceWe speak to Dr Naledi Moyo, the deputy city manager of eThekwini Municipality, about her past achievements, the future plans for the City of Durban, as well as how cities can become smarter

By Candace King Photograph by Val Adamson

By 2030, eThekwini will be Africa’s most caring and liveable city. This is the city vision of Durban – and

it’s a bold but believable one. The coastal metropolis is already a renowned destination and forms part of KwaZulu-Natal – rated as one of the “big three” provinces that rule the South African roost. Stipulated on the official City of Durban website, this vision will be achieved by growing Durban’s economy and meeting people’s needs so that all citizens enjoy a high quality of life with equal opportunities in a city that they are truly proud of.

The driving force behind this vision is the no-nonsense activist executive Dr Naledi Moyo, the deputy city manager of eThekwini Municipality, who takes immense pride in her role. With extensive experience in strategic management and innovative leadership attributes, Moyo’s skills lie in local government development planning, economic development, renewable energy operations, education policy development, community development, foreign direct investment and domestic investment. A team player and a people’s person, she applies a dynamic hands-on approach to business and life, ensuring that everything that she undertakes is successful.

Moyo completed her DPhil in Social Sciences at Edinburgh University, Scotland. She has played a comprehensive role in civil society as well as the NGO sector, the private sector and government. She’s worked towards promoting South Africa as an investment destination, connecting local business to global markets.

She was the CEO of Trade and Investment KwaZulu-Natal, during which time the organisation facilitated the injection of millions of rands into the local economy. She was at the helm of the World Association of Investment Agencies as its vice president based in Geneva, where her portfolio rested in renewable energy. In May 2006, she was

appointed goodwill ambassador to Rendsburg in Germany as a gesture for her efforts in establishing cooperation between German businesses and South African entrepreneurs.

Smart cities, smart choices“A century ago, fewer than 20 cities around the world had populations in excess of one-million people,” Moyo says. “Predictions are that by 2025, there will be two-billion people living in cities. Therefore cities are economic and technological powerhouses; hubs of global integrated services; as well as national assets defining and directing public policy. They have a greater influence – and greater responsibilities.”

She adds that a country reaches the urban tipping point when 50% of its population lives in urban areas, resulting in the transformation of a country into an upper-middle-income one. South Africa clearly reflects the economic structure of a middle-income country with a diversified and globally integrated economy. However, urban growth also brings increasing levels of non-renewable-resource consumption, inequality and environmental damage, trends which are evident in many South African cities.

“Becoming a smarter city is a journey, not an overnight transformation,” explains Moyo. She says that in order for cities to be smart, they need to put in place a next-generation system that works in entirely new ways. Cities must develop integrated systems and balance planning challenges. Regulatory requirements and the need to reduce costly administrative overheads should be in place. The development of transportation systems and management of related costs is important, as is communication, connectivity and the ability to meet the needs of citizens and businesses. Systems to retain essential resources such as water and energy need to be implemented while alternative sources of such resources are developed.

North

l Infrastructure (Tongaat/Phoenix/Umdloti, Waste Water Treatment Works (WWTW), South African National Roads Agency (SANRAL), eThekwini Transport Authority (ETA) roads, water supply, electricity)

l Environmental, and Act 70/70 (agricultural land conversion) aspects

Central

l Public participationl Intergovernmental partnerships

South

l Infrastructure (Eskom and Durban electricity, Umkomaas, WWTW)

l Act 70/70

Inner/Outer West

l Infrastructure (SANRAL and ETA roads, Hammarsdale, WWTW plus Links)

l Intergovernmental partnershipsl Environmental aspects

Key focus areas in Durban

Interview Moyo_FEB_SUBBED.indd 18 2014/01/14 4:20 PM

interview19


Currently, this next-generation system is being implemented in the City of Durban with a strong focus on infrastructure development, natural resource management, agricultural and environmental aspects, and public participation and intergovernmental partnerships. There is also a focus on promoting investment in priority nodes and corridors, and township development.

In the words of Wellington E Webb, former mayor of Denver, Colorado, “The 19th century was a century of empires; the 20th century was a century of nation states. The 21st century will be a century of cities.”

Private sector projects

Estimated construction jobs: 3,3-millionEstimated permanent jobs: 436 674

Public sector projects

Estimated construction jobs: 207 292Estimated permanent jobs: 57 768

Private/public projects

Estimated construction jobs: 224 736Estimated permanent jobs: 136 568

Project values

Private sector projects: R328-billionPublic sector projects: R143-billionPrivate/public projects: R36-billion

Estimated rates payments

Private sector projects: R6,895-billionPublic sector projects: R1,297-billionPrivate/public projects: R445,7-million

Job creation, project value and

rates payment estimates

Interview Moyo_FEB_SUBBED.indd 19 2014/01/14 4:20 PM

development20


Like a colossal futuristic African kingdom in its prime that towers over the vegetation and neighbouring cities, the much-talked-about

Modderfontein mini-city looks like it originated in a science-fiction novel or a Steven Spielberg blockbuster. With its “sci-fi Sun City” appearance, the proposed Chinese-led project, if it comes to fruition, will dominate the landscape of Gauteng.

Widespread discussion about this new city began after it was announced that the South African explosives and specialty chemicals group AECI sold the bulk of its surplus property assets in Modderfontein, Gauteng on 5 November 2013 to

Shanghai Zendai, a top Chinese property developer listed on the Hong Kong Stock Exchange.

Valued at more than R1-billion, the deal is one of the largest bulk urban property transactions in South Africa and highlights a resounding vote of confidence in the country’s attractiveness as an international investment destination. The price, R1 061-million to be exact, is for approximately 1 600ha of land and buildings, as well as the Heartland property development business, which is being sold as a going concern. Currently used for manufacturing, the area is situated in a prime location 15 kilometres east of Sandton and the same distance west of OR Tambo

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development21


Enter the Modderfontein metropolisChinese property developing giant Shanghai Zendai plans to set up shop on the African continent,

starting with its proposed behemoth city plan on Johannesburg’s doorstepBy Candace King

International Airport. It is also located on the expected extension route of the Gautrain.

The deal has been in the pipeline for the past three years, with negotiations having begun just over 12 months ago. AECI had been trying to sell the land for nearly two years, saying it had become surplus to its operational requirements. The company had considered listing its property arm separately or unbundling it to investors. In the end, Shanghai Zendai’s acquisition of the land was considered a better deal for AECI shareholders.

AECI chief executive Mark Dytor says the sale is aligned with the group’s stated strategy regarding

its legacy land holdings, and is fairly valued. “AECI’s property assets reflect the history of industry in South Africa,” he says. “When the original explosives factory was opened in 1896 to support the burgeoning gold mines in Johannesburg, Modderfontein was a two-day ox-wagon ride away from the rapidly growing city!

“Over the past 118 years, the process of manufacturing explosives has evolved and the requirements for maintaining vast tracts of open land around manufacturing facilities has declined accordingly. All zoned serviced land was sold in the ordinary course of business and we were going


development22


to have to continually invest in bulk infrastructure to make more land available.”

Shanghai Zendai’s offer to buy the zoned unserviced land presents a unique opportunity to create shareholder value, enable the founding of a fully integrated world-class urban node, and deliver positive socioeconomic benefits. It’s regarded as a strong expression of confidence in the local real estate sector.

City slickersAs the company’s first development in South Africa, Shanghai Zendai plans to create a live, work and play hub with residential, commercial, light industrial and retail components. The Hong Kong-based company’s vision for the acquired land is for it to become the future centre of Johannesburg. “It will become the future capital of the whole of Africa,” said Dai Zhikang, founder and chairperson of the Shanghai Zendai group, at a press conference last year. “This will be on par with cities such as New York in the US or Hong Kong in the Far East.”

As one of the pre-eminent listed property developers in the People’s Republic of China (PRC), Shanghai Zendai has developed homes, hotels and offices in 12 Chinese cities, mainly along the eastern seaboard. Among its flagship projects are two five-star hotels in Shanghai: the Himalaya Complex and Radisson Blu. The Himalaya Complex includes a shopping mall, offices and a centre for fine art and the performing arts. Similarly, the Zendai Thumb Plaza has become a model of community development in the PRC. The company has been

As the company’s first

development in South Africa,

Shanghai Zendai plans

to build a live, work and play

hub with residential,

commercial, light industrial

and retail components.

Valued at more than R1-billion, the deal is one of the largest bulk urban property

transactions in South Africa and highlights a resounding vote of confidence in the

country’s attractiveness as an international investment destination


development23


rated in the Top 100 Listed Property Development Enterprises in China for three consecutive years.

Shanghai Zendai’s strategy is to diversify its business internationally. In 2011, the company’s first overseas project was launched near Auckland in New Zealand. The decision to invest in South Africa involved three years of extensive research and analysis. The PRC’s policy framework regarding South Africa and the emergence of BRICS as a global economic force both helped to pave the way. Relations between China and South Africa have strengthened over the past decade, and trade between the two countries has increased to such an extent that China is now one of South Africa’s largest trading partners.

Zhikang says that Modderfontein was identified specifically because of its size and strategic locality

in the development corridor between OR Tambo International Airport and the Sandton CBD. “It’s also a stepping stone should we choose to grow our footprint in South Africa and the rest of Africa.”

As part of its strategy, Shanghai Zendai concentrates on developments in first- and second-tier cities in China with high urbanisation rates, requiring not only residential accommodation but also business and cultural facilities. Large land parcels are acquired to achieve the necessary economies of scale for these multiuse developments. The objective is to optimise the combination of commercial, industrial and quality residential properties with functionality and aesthetics. A conscious effort is made to ensure that development styles complement the given environment. The Modderfontein development will follow a similar model.

The objective is to optimise the combination of commercial, industrial and quality residential properties with functionality and aesthetics


development24


Shanghai Zendai intends to place its future African headquarters in Johannesburg, and the Modderfontein project is seen as the ideal starting point for realising this strategy.


development25



development26


The city will be developed based on several core focus areas, including finance and trade; light industry (warehousing and manufacturing); education, training and associated skills transfers; sports and recreation; art, culture and tourism; and community. The city will feature strong retail and leisure components, including an exhibition and conference centre as well as an African-heritage theme park.

The buildings will be designed around South African aesthetics, while embracing the latest green technologies and trends. At the same time, the environmental, heritage and recreational spaces will be protected to shape a balanced lifestyle experience.

“Although we’re in the early stages of planning, we envisage developing the land in three ways: independently as Shanghai Zendai; through joint ventures and/or partnerships; and by selling the land to other developers,” says Zhikang. “A local management team will work alongside local contractors and local employees to deliver the vision.”

A recent high-level economic impact study by the Bureau for Economic Research (BER) at the University of Stellenbosch indicated that the implementation of Modderfontein’s previously approved spatial development framework will cost about R77-billion. Over a 15-year project life cycle, there is capacity to build 33 000 houses and create 22 000 jobs, 65% being semi-skilled and unskilled. While R1-billion will be generated in local government rates and taxes, direct and indirect benefits for the national economy will be R14-billion. The development will support the local construction industry, as well as emerging entrepreneurs and SMMEs.

“The expected development offers a good opportunity for small, medium and micro enterprises and the employment of semi-skilled and unskilled individuals,” the BER stated. “Given the large number of low- to medium-skilled people the industry employs as well as the linkages to other industries downstream (such as retail, commercial or public infrastructure), the industry is an important economic driver for South Africa. Furthermore, the investment would go a long way to support the construction sector, which is currently still under significant pressure.”

Opinion that packs a punchThe Economic Freedom Fighters (EFF) were “disgusted” after hearing news of the “continued selling of our country and people’s land to private local and foreign hands”. Such negative sentiments were expressed in a statement issued by the EFF on 7 November 2013.

The statement noted that this deal had occurred within a context of increasing concern among the people about the slow pace of land reform and redistribution in South Africa, following centuries of land disposition of the native population.

It fervently went on to state, “So South Africans must be happy because they are going to get 20 000 jobs, working as foreigners in their own land? How much of the country are we willing to sell, and for how much, just so we can get jobs? We cannot be so desperate for jobs – we cannot guarantee that they will change the lives of our people or simply launch them into deeper levels of precariousness. South Africa should be pursuing a different

The buildings will be designed

around South African

aesthetics, while embracing the

latest green technologies

and trends. At the same

time, the environmental,

heritage and recreational

spaces will be protected to

shape a balanced

lifestyle experience


development27


developmental path that relies as much as possible for such infrastructure development on local labour, skills and ownership.”

The EFF believes that the important development of another CBD should be a state-led developmental project together with mainly local companies, and that such development must happen within the context of state-owned land that only gets leased to developers.

Full steam aheadDespite the opinions of naysayers and critics, the Gauteng government has given the project the thumbs up. “We are extremely excited by the news of this investment, which has been long in the making,” said Gauteng premier Nomvula Mokonyane. “We believe this is a definite sign that we are doing something right in Gauteng; something that investors such as Shanghai Zendai appreciate.”

Mokonyane noted that the property development is a vote of confidence in the Gauteng region, saying that the expected job creation will help to reduce unemployment and enhance economic activity in Gauteng. “We are thankful that Shanghai Zendai chose to bring its business to Gauteng, and assure the investors that we as the Gauteng provincial government will continue to work with them to ensure that their vision of building a major business and tourism hub becomes a reality,” she said.

Once all the conditions are fulfilled, including the transfer of land to the value of R513-million by the first deadline of 31 July 2014, AECI will

receive the full payment of R1 061-million in cash. The remaining land will be transferred over a two-year period.

AECI will retain approximately 1 300ha of the land for future disposal and AEL Mining Services’ operations, as well as the 275ha Modderfontein Reserve, which is zoned as private open space. The group’s property assets in Somerset West (Western Cape) and Umbogintwini (KwaZulu-Natal) will not be affected. Employees engaged in Heartland’s development activities will be transferred to Shanghai Zendai in accordance with section 197 of the Labour Relations Act.

“AECI is proud to leave the development at Modderfontein in the capable hands of Shanghai Zendai,” says Dytor. “We remain a large property owner in the area and will work closely together. As a leading industrial player in South Africa and the rest of Africa, we’re pleased to have played such an important role in securing a major foreign direct investment that gives real meaning and practical effect to the BRICS philosophy of partnering for growth.”

Shanghai Zendai intends to place its future African headquarters in Johannesburg, and the Modderfontein project is seen as the ideal starting point for realising this strategy.

The company plans to invest a further R80-billion over 10 to 15 years, and aims to create tens of thousands of jobs in the process. “A long-term commitment is being made to the community, country and continent,” says Zhikang. “We’re looking forward to being part of Africa’s emerging success story for many years to come.”

Despite the opinions of naysayers and critics, the Gauteng Government has given the project the thumbs up


w w w. s a p o a c o n v e n t i o n . c o. z a

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One of SAPOA’s primary objectives

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property industry

results presentation29


Eskom enlightens stakeholdersRe� ecting on its recent results, Eskom aims to achieve its goals and successfully transform into an improved energy supplier

By Candace King

Eskom noted that the business results reflect the impact of the 16% tariff increase granted by NERSA for 2012/13 (originally 25,9%) and the declining demand for electricity due to lower economic growth and industrial unrest. The profits are reinvested in full in Eskom’s business, helping to fund the capacity expansion programme and to service debt. With regards to funding, Eskom secured 82,9% of the funding required for the capacity expansion programme. Furthermore, credit rating downgrades highlight the need for Eskom to be financially sustainable.

Eskom further presented that safety has improved but still continues to be a primary focus. Eskom highlighted that there has been no load-shedding since April 2008, despite an extremely tightly balanced power system. Severe winter weather impacted the supply to customers in some provinces but Eskom’s preparedness helped to mitigate the risk. A tight power system meant that Eskom did not do as much maintenance as required, although more was done than in the previous year.

In terms of MYPD 3 determination, it emerged that Eskom needs to re-engineer the business to work within the revenue allowed by NERSA. In relation to its capacity expansion programme, Eskom installed 261MW of additional generation capacity, 787km of high-voltage transmission lines and 3 580MVA of new transformer capacity during the year up until March 2013. Furthermore, significant challenges remain with Medupi.

Going forward, Eskom has identified three big agendas: ensure sustainable business and keep the lights on; effectively deliver on its new build; and maintain business productivity. Eskom also aims to close the R225-billion gap and reopen the tariff discussion with NERSA.

Eskom will soon reach its 100-years-old mark, and it appears that the company is investing in the future as well as looking ahead to provide the electricity South Africa needs to power growth and development.

Eskom’s strategic pillars support our purpose

6

25 November 2013

at Hyatt Regency Hotel – Rosebank

Gauteng Stakeholder

presentation

Eskom’s strategic supporting pillars

At a Gauteng stakeholder presentation held on 25 November 2013 at the Hyatt Regency Hotel in Rosebank,

Eskom released its integrated results for the year ended 31 March 2013. It was highlighted that Eskom has the advantages and challenges of all large-scale enterprises, and that the company is working on improving all facets on its agenda.

For the year ended 31 March 2013, electricity sales of 216 561GWh (2012: 224 785GWh) and electricity revenues of R126,7-billion (2012: R113-billion) were recorded.

As at 31 March 2013, the following fi gures were refl ected:● 46 266 group employees (2012: 43 473)● 5-million customers (2012: 4,9-million)● Net maximum generating capacity of

41,9GW (2012: 41,6GW)● 373 280km of cables and power lines● 17,1GW of new generation capacity by

30 September 2018, of which 6GW has already been commissioned

Eskom_SUBBED.indd 29 2014/01/14 4:23 PM

feature30


Brickfields social housing project

Collaboration is key

GPF_SUBBED.indd 30 2014/01/14 4:21 PM

feature31


Aiming to inject investment into the affordable housing market, the Gauteng Partnership Fund

(GPF) is seeking noteworthy investors in order to share the risks and to stimulate growth in the sector.

“Over the years, we have seen that the private sector would like to share the risks on projects with government,” says GPF acting CEO Boni Muvevi. “GPF is a provincial platform created to enable such partnerships. Government resources are not sufficient to fund and address all housing needs, therefore a partnership approach is more sustainable. We play a role similar to a middleman, translating government’s needs, understanding the risks associated with housing projects and mitigating those risks with the private sector.”

Due to the economic crisis, some of GPF’s funding partners have lost interest in funding the affordable housing sector, which left GPF in the position of turning its attention to development finance institutions to co-fund – which Muvevi says is not enough. “We are seeking to partner with institutions that can provide senior debt funding,” he says.

Amid rising concerns about delays from government in the processing of payments, GPF aims to ensure that its payment turnaround times are within 30 days — as required by legislation. “The investors and external parties can be assured that we have efficient processes and governance structures that comply with legislation and best practice. GPF promotes transparency in its controls and processes,” says chief financial officer Komathie Govender.

GPF generally funds projects that involve inner-city refurbishments and residential buildings. Other projects include the conversion of offices into residential units and greenfield developments for affordable housing. To date, GPF has facilitated investment into more than 22 000 units, having leveraged more than R2,4-billion worth of external funding.

A noteworthy project is the Brickfields social housing project in Newtown, which has had a major effect on the Newtown/Johannesburg inner city, leading to further development growth interest in the node.

“At GPF, we know and understand the quantum of the housing need and the challenges associated with housing,” says Muvevi. “So we decided to broaden the ownership of the problem in terms of finding sustainable solutions. Apart from funding partnerships that we are seeking, we also would like to initiate dialogue with the private sector (developers, investors, funders, and corporates) with a view to seeking viable housing solutions. GPF would like to explore new funding approaches to housing solutions with various partners so that we are not limited to traditional banks. Therefore we are open to suggestions on possible solutions to the housing finance challenge.”

In its effort to hone in on the affordable housing demand, the Gauteng Partnership Fund (GPF) appeals for investor partnerships

By Candace King


GPF acting CEO Boni Muvevi

Due to the economic crisis, some of GPF’s funding partners have lost interest in funding the affordable housing sector, which left GPF in the position of turning its attention to development finance institutions to co-fund – which is not enough

GPF’s Jabulani housing project

GPF_SUBBED.indd 31 2014/01/14 4:22 PM

feature32


SAARDA: back in

businessAmid the challenges in

the affordable housing sector, revived association SAARDA aims to correct the issues by bridging the gap between

the public and private sectorsBy Candace King

After years of stagnancy, the South African Affordable Residential Developers Association (SAARDA)

has been resurrected and is ready to take on the many challenges that the growing affordable housing sector faces. Formed in 1982, SAARDA lost traction after many of the developers left the industry during the mid- to late 1990s. In April 2013, a group of about 20 industry players came together to revive the association, which has started gaining momentum once more.

SAARDA is an industry representative association for developers operating in the affordable housing sector. With a membership base of more than 50 mixed-sector players, SAARDA aims to address the concerns as an industry collective in order to tackle the challenges that the affordable housing market is plagued by – including the current shortfall of 400 000 housing units in Gauteng alone.

SAARDA’s focal goal is to act as a mouthpiece for the entire industry and to mend the broken relationship between the public and private sectors. SAARDA also aims to represent its members during negotiations with several stakeholders; these include local, national, and provincial government, the National Home Builders Registration Council, the Gauteng Department of Agriculture and Rural Development, Eskom, and the Department of Water Affairs.

The Jekyll and Hyde of affordable housingCurrently the biggest challenges that the industry faces are the colossal inconsistencies, and the number of channels and regulations that industry players face when dealing with government and other key industry-related organisations. “Government at all levels and various institutions are unfortunately holding up the process in terms of the delivery of housing,” says SAARDA chairman and managing director at Kiron Properties Harry Gey van Pittius.

“In the past five to six years things have drastically changed in local government,” explains Barry Stegmann, SAARDA committee member and director of business development at RBA Holdings Limited. “The speed and efficiency of service delivery has worsened and developers nowadays can’t plan projects ahead because of delays from local government, which always pushes the cash-flow out. These issues make it very difficult to develop, and there is a lot of uncertainty among developers in the industry because of this. You can’t sell before you have

Windmill Park Ext 12

SAARDA_SUBBED.indd 32 2014/01/14 4:03 PM

feature33


a serviced stand any more, which leads to developers having to build in buffers. The knock-on effect on one’s capital resources is huge. It has become a challenging industry.”

Gey van Pittius notes that the expertise in local government in recent years has decreased. Another problem, he adds, is bulk services of which availability, future planning and installation by local authorities is lacking. Local authorities demand unreasonable bulk contributions from affordable housing developers, which contribute to the increase of cost to the end user.

Currently, only a handful of developers active in the industry are developing from greenfields to build-up townships. One of the reasons for this is that the market is so difficult and the entry barriers into it are tight. “In 2008, there were about 64 major affordable housing developers operating in Gauteng – now there are only about 16 left, which equates to, on average, about 5 000 houses that are developed per year,” says Gey van Pittius.

On top of this, the housing backlog keeps on growing and job opportunities

SAARDA

is an industry

representative

association for

developers operating

in the affordable

housing sector


feature34


are lost because of the incompetence, inefficiencies, and bureaucracy of council authorities that developers have to deal with. On average, 20 000 houses should be developed every year in Gauteng alone; however, only about 5 000 are erected. In 2008, about 60 000 people were employed by the affordable construction industry and various related industries in Gauteng. This figure is now down to an estimated 6 000 people employed.

Despite the issues, there are positives, including the growing support of financial institutions. The four major banks as well as companies such as SA Home Loans and Old Mutual are providing end-user finance, which is a huge plus for the industry. “End-user finance is a positive,” says Stegmann. “We have more end-user finance available today than ever before. The banks have come to the party.”

Aside from everything else, there is a huge demand for the affordable housing product, which in itself is a positive outcome. During the 2007/2008 recession, the affordable housing sector never faulted or lost its demand, which is now greater than ever. Stegmann and Gey van Pittius both agree that the ability to improve the lives of the community is the kind of triumph that the industry desires to be responsible for.

Other positives include improved product offering for home buyers; the increase of South Africans eligible for home ownership; and the use of new, sustainable technologies such as solar power. Of course, the reinstatement of SAARDA is a major accolade as this association will find and create solutions along with the public sector in order to correct the challenges.

Getting the sector’s house in orderSAARDA wishes to satisfy the market by developing 60 000 houses in Gauteng and 250 000 houses nationally year on year, which will help alleviate the huge affordable housing backlog. “We want to assist government, local authorities and industry-related institutions in the improvement and enhancement of the standard of services, and to stimulate employment growth. The public and private sectors need to work in harmony in order to fix the problems and develop more houses,” says Gey van Pittius.

Stegmann says that, going forward, SAARDA aims to establish a strong footprint in Gauteng, then eventually expand its reach nationally. It also hopes to gain more members. This battle needs to be tackled head on as a collective, with all industry players, the government and all the major institutions involved.

SAARDA chairman and managing director at Kiron Properties Harry Gey van Pittius

SAARDA committee member and director of business development at RBA Holdings Limited Barry Stegmann

SAARDA aims to establish a strong footprint in Gauteng, then

eventually expand its reach nationally. It also hopes to gain more

members. This battle needs to be tackled head on as a collective,

with all industry players, the government and all the major

institutions involved

On average, 20 000 houses should be

developed every year in Gauteng alone;

however, only about 5 000 are erected. In 2008,

about 60 000 people were employed by the

affordable construction industry and various

related industries in Gauteng. This figure is now

down to an estimated 6 000 people employed


interview35


Cornubia: Durban’s mixed-use marvel

We chat to Tongaat Hulett, the developer masterminds behind Cornubia, about the colossal project and its fruitful mark on future developments

By Candace King

Regarded as the development jewel of KwaZulu-Natal, Cornubia is a mixed-use phased development project that is

strategically located between Phoenix/Ottawa and Umhlanga, bordered by the N2 freeway, M41 arterial and the Ohlanga River. The development comprises a total of 1 200ha, of which 450ha is unusable land and 750ha is developable land consisting of 25 000 residential units (15 000 are low-income), 70ha of industrial platforms, 50ha of mixed-use developments, and 1 200 000m² of commercial bulk including offices, retail and so forth. The Cornubia project will be developed over several phases spanning about 20 years.

Cornubia is a bold undertaking by Tongaat Hulett and the eThekwini Municipality. It sets out the commitment to national ideals, and defines and creates benchmarks for similar initiatives. The project aims to apply, leverage, assemble and systematically align multiple institutional, financial,

human and managerial resources in a creative and innovative manner, covering aspects such as informal settlement eradication, inter- and intra-settlement integration, urban restructuring and renewal, densification, tenure diversification, improved settlement design, better quality shelter, poverty eradication, and greater responsiveness to livelihood strategies.

How is Cornubia coming along?Tongaat Hulett Developments launched the first developable phase, known as the Cornubia Industrial and Business Estate (CIBE), in March 2012 and received an exceptionally good response from the market. The first phase of the public sector housing is progressing well, with approximately 482 units having been completed and occupied. There’s also Cornubia Retail Park, a high-quality retail precinct situated on an earmarked 34ha, which intends to complement the mixed-use nature of Cornubia.

The Cornubia project will be developed over

several phases spanning about 20 years

The development

comprises a total of

1 200ha, of which

450ha is unusable

land and 750ha

is developable land

consisting of 25 000

residential units

(15 000 are low-

income), 70ha of

industrial platforms,

50ha of mixed-use

developments, and

1 200 000m² of

commercial bulk

Cornubia_SUBBED.indd 35 2014/01/14 4:24 PM

interview36


Cornubia is

the first of

its kind, with

a vision to

establish an

integrated and

sustainable

settlement

within the

parameters of

the National

Department

of Human

Settlements’

Breaking

New Ground

initiative


interview37


The first phase of this precinct will see a development of 80 000m² GLA of a value destination shopping centre; it is anticipated that construction on this centre will commence in July 2014. Cornubia phase two, which is currently undergoing the EIA approval processes, consists of 63ha of industrial land, ±600 000m² of commercial bulk, 12 000 subsidised units (to be developed by public sector), and 10 000 affordable housing units.

Who is Cornubia targeting? The development is aimed at both private- and public-sector parties, including: l Institutional investors, local and international,

looking to diversify their portfoliosl Retailers and corporates seeking a footprint

in the growing Durban urban marketl Diverse users for the different land uses,

ranging from commercial and retail to industrial and residential, in a work, play, live urban environment

l Private equity funds and investors seeking opportunities in prime property

How will Cornubia transform the surrounding area?Cornubia is widely regarded as a potential key project in the quest for the integrated human settlement goal. A key objective, therefore, is the need to accommodate housing. The Spatial Development Framework depicts the thrust of the IDP indicating the City’s intentions and development management approach. To this end, Cornubia is considered a major investment node because it has the potential to deliver on a range of current metropolitan development objectives, such as district integration, pursuing integrated human settlements and building a dynamic region. To fulfil the objective of a fully integrated human settlement, a range of housing typologies has been planned. These include subsidised housing as well as affordable housing for those who earn between R3 500 and R15 000.

Why are mixed-use developments so important today?The scarcity of resources almost enjoins us to re-look at the way we develop. Mixed-use developments not only shorten the length of time required to provide physical infrastructure but also contribute in the quest of preserving the world – which, as we are told, is increasingly challenged by our actions.

What has been the biggest challenge thus far in the development of Cornubia?The huge infrastructure requirement is the single most daunting challenge in unlocking the potential of Cornubia.

How will the environment be taken care of during the development of Cornubia?As has already been indicated earlier on, Cornubia is being developed in phases; thus EIAs for different precincts are being undertaken and approvals for some have been obtained already. In the Cornubia framework plan, ±450ha is considered to be undevelopable land, which will be zoned open space such as wetlands/buffers, floodplains and steep slopes. This presents an opportunity to establish green linkages or corridors with the existing open-space systems that are rather fragmented (apart from the Ohlanga River, which provides the major east-west corridor).

What are the benefits of Cornubia?More than 100 000 new sustainable jobs will be created, with more than 96 000 short-term construction jobs. The community will benefit from the development of market-related housing, comprising predominantly gap, middle and limited high income residential development. The proposed development will also have a major impact on the rates base of the city over time, bringing in millions in rates revenue per annum for the eThekwini Municipality.

Is Cornubia the future of development? We believe that Cornubia sets the benchmark for future developments.

Cornubia is the first of its kind, with a vision to establish an integrated and sustainable settlement within the parameters of the National Department of Human Settlements’ Breaking New Ground initiative (BNG).

BNG’s strategic focus includes ensuring the delivery of affordable housing in sustainable and habitable settlements. Its strategic priorities are to accelerate housing delivery, improve the quality of housing products and environments to ensure asset creation, and restructure and integrate human settlements.

More than 100 000 new sustainable jobs will be created,

with more than 96 000 short-term construction jobs

In the

Cornubia

framework

plan, ± 450ha

is considered

to be

undevelopable

land, which

will be zoned

open space

such as

wetlands/

buffers,

floodplains

and steep

slopes


feature38


A towering featWith its doors now open, the highly anticipated Tower Mall goes beyond providing superb retail, acting as a catalyst for investment in an underserviced communityBy Candace King

Having opened on 25 October 2013, Tower Mall has been eagerly welcomed by the underserviced

community that this key retail development resides in. Situated in the growing Jouberton area in the City of Matlosana, Tower Mall offers 15 400m² of quality retail to this community and to consumers in the surrounding western suburbs of Klerksdorp.

Owned by JSE-listed property company Dipula Income Fund and developed by BEE property development company Landmark Real Estate Services, the R155-million Tower Mall has not only created a modern, quality shopping environment but has also been designed to be a retail and economic asset to its community.

“This is the largest-ever private investment into this community and among the largest in the City of Matlosana in recent years,” says Izak Petersen, CEO of Dipula Income Fund. “Our investment goes beyond providing a quality mall and excellent retail for this community. It is also an investment in the community that boosts employment and skills. Tower Mall is a financially feasible development that meets Dipula’s strategy of investing in quality assets in underserviced areas. We believe Tower Mall will also be a catalyst for more investment in the area. We believe that this helps restore the dignity of these once forgotten people of our country. Landmark did a sterling job in the design and development of this centre. This is an asset for the people, and we are

delighted that we can be part of this.”Dipula is one of the highest black

shareholdings in the South African listed property sector, and is managed externally by Dipula Asset Management Trust – a 100% BEE Manco. Dipula’s investment portfolio comprises more than 180 retail, industrial and office properties valued at more than R4-billion.

The potential for Tower Mall was originally identified by Landmark, which purchased the land five years ago. Landmark specialises in developing shopping centres across South Africa in previously disadvantaged areas, rural areas and small towns. Among its many

successes are Makhado Crossing in Louis Trichardt, Bara Mall in Soweto, Naledi Mall in Vosloorus, Shoprite Centre in Thokoza and Metropolitan Centre in Ennerdale.

“Tower Mall is the first shopping centre in this area, and will definitely be the impetus to further commercial development and local economic growth,” says Lionel Kisten, executive director of Landmark and SAPOA National Property Developers Forum chairman. “Keeping it local is at the heart of Tower Mall. From using a local contractor and subcontractors from the area to boosting local employment, we all really want Tower Mall to have the biggest and best benefits for its community.”

This is the largest-ever private investment

into this community, and among the largest

in the City of Matlosana in recent years

Izak Petersen, CEO of Dipula Income Fund, with

Lionel Kisten, executive director of Landmark and

SAPOA National Property Developers Forum chairman

Tower Mall_SUBBED.indd 38 2014/01/14 3:56 PM

feature39


Tower Mall is prominent, with excellent visibility and accessibility for residents. There is also a planned bridge across the N12 highway, which will further facilitate ease of access for the neighbouring communities of Alabama and Manzil Park. (These communities form part of the primary catchment area, which consists of more than 250 000 people.)

Kisten notes that through a steering committee, the community has played a vital role in assisting Landmark to make this investment a reality. The team also received excellent support from the municipality. Landmark worked closely with local government and is now helping

the mall’s tenants to employ local people as far as is practically viable, creating benefits for the local economy that will endure in years to come.

Importantly, Tower Mall has created an attractive, contemporary and vibrant one-stop retail centre in an area that research shows to have very poor and limited retail facilities. Providing a tenant mix especially selected to meet local shopper needs, Dipula and Landmark worked closely with the shopping centre’s leasing agents Citynet to ensure that Tower Mall would be a perfect fit for the community.

“We’re pleased to invest in a quality retail asset that supports the sustainable performance for our investors and supports the sustainable progress of its community,” says Petersen. And Kisten adds, “We hope that the mall will continue to empower the local community in a way that is sustainable in the long term.”

Fast factsl Tower Mall’s name was inspired

by the water towers alongside the shopping centre.

l Tower Mall is funded by Absa and designed by VH+S Architects. Its leasing consultant is Citynet.

l Effectively fully let, Tower Mall’s retailers are led by anchor store Shoprite.

l Major retailers include African Bank, Capitec Bank, FNB, Old Mutual Bank, Standard Bank, Vodacom, Clicks, Cashbuild, Bears Furnishers, Ellerines, OK Furnishers, Lewis, Morkels, Jet, Pep, Mr Price, KFC, Fish n Chips and Debonairs Pizza.

We hope that the

mall will continue to

empower the local

community in a way

that is sustainable

in the long term

Tower Mall_SUBBED.indd 39 2014/01/14 3:56 PM

last word40


last word40


Complex densityOur urban centres are densifying, and the security estate

plays an important part in this processBy David Steynberg


It’s complicated. It’s congested. It’s convenient. It’s claustrophobic. It’s complex living. Fact is, living in a security estate – whether it’s a duplex, simplex, sectional

title, semi-detached or free-standing – is quite a complex situation. Noisy neighbours, yapping dogs, screaming babies, Friday balcony parties, Saturday braais and Sunday gospel music come with the territory.

This is South Africa’s reality. Well, in the cities at least – for now. Land is a pricey commodity in a country that still needs to find the best answer to the land question. Sprawl is out; concentration is in. This will improve service delivery, facilitate connectivity and lead to greater economic emancipation for all residents.

The old suburbs, with their neatly mown front lawns and low fences, are a thing of the past. Acres of land for a single three- or four-bedroom home will only be a possibility for those wealthy enough to access two mortgages: one for the land and one to finance the building of their own homes. Still, these homes are also found behind electrified fences and protected by sophisticated access-control points and on-site guarding services. Residents’ levies pay to water the golf course or the shared gardens, while children play in the park and enjoy the same safe existence their parents did. Bodies corporate dictate what can and cannot be permitted on the common property, and issue warnings and fines like power-hungry police rookies.

This is complex living. Housing developers are coining it in our larger cities. What were once single stands in the old ’burbs are now cluster homes and apartments. But this is development. This is progress. Corners are cut, and cheap materials installed and wired up. Building restrictions are

bent and quality is compromised. Walls are skew and, after the first rains, rising damp hugs the plaster.

Fine, there are exceptions. And we know who they are. But shame on those developers who cram in as many people as they can on 500m² of land.

Blame cannot be apportioned on developers alone. Municipalities, too, have to balance the books with the needs of their residents. Three 120-unit estates cannot be built around a single cul-de-sac, serviced by a single-lane road – and Johannesburg’s West Rand is experiencing this as I write. Homes pop up like mushrooms but the roads stay the same. Private transport is required to access unreliable public transport. Commuting time increases year on year, and millions of hours of time are wasted, costing the country money in the process.

Complex living means safety in numbers. But, really, the only people we know by name are the security staff – if we care to get to know them. Crimes occur whether your house is on the street, in the sticks or behind high walls guarded by ADT.

There are positives, some of which have already been mentioned. But possibly the biggest thumbs-up is the fact that complex living is affordable for just about anyone who has a job. Estates are generally found off main roads, rentals are cheap (depending on where you can afford to live), and they still offer a sense of

community (if you choose to partake). So while estate living may be a little cramped and at times uncomfortable, our cities do need to densify. It is one of the only ways to provide equal access to job opportunities and improved municipal services to a city’s residents. And to achieve this, land in and around our urban centres needs to be developed and occupied. Complex living is here to stay, whether we like it or not.

The old suburbs,

with their neatly

mown front lawns

and low fences, are

a thing of the past.

Acres of land for a single

three- or four-bedroom

home will only be

a possibility for those

wealthy enough to

access two mortgages

Back Page_FEB_SUBBED.indd 40 2014/01/14 4:28 PM

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Property Developer Feb 2014