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All rights reserved. No portion of this publication may be reproduced or used in any form without prior written consent and permission from Reale Media. The publisher gives no written guarantees or assurances and makes no representation regarding any goods or services written or advertised within this edition. Prospective investors should always consult their attorneys, advisors or accountants. Copyright © Reale Activation. Pty (Ltd)

PUBLISHERSREALE ACTIVATION (Pty) LTDTel 021 761 3848Fax 086 627 2400Email [email protected] Unit 11, No.4 , Perth Road, Maitland, Cape Town, 7405, South AfricaPostal PO Box 858, Howard Place, 7405Website www.reimag.co.za

06 Property Advice

08 Master Investor

12 Feature Article

TRENDING

18 Education Series: Part 7

20 Selling Your Property

21 Renovation

22 Estate Living

24 Amenities

26 Technology

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52 Junk Status

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32 Inner City

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Authorised � nancial services and registered credit provider (NCRCP15).The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). Moving Forward is a trademark of The Standard Bank of South Africa Limited. SBSA 230709 – 1/16

In the real estate sector you need a partner with fortitude, experience and know-how to see you through. With our capabilities and deep local sector insights we have innovative solutions to meet your needs. Let us be your partner for wherever your ambition takes you.

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Technology is impacting business in a big way and the real estate market is no exception. The digital transformation of

real estate is dynamic and moving at a rapid pace. The advent of Uber, AirBnb and IBM Watson is moving the business landscape away from traditional operators. Investors, agents, brokers, managers and property professionals who fail to embrace technological change could face failure and extinction if they don’t adapt.

Major transformation in real estate f irst started with the arrival of multiple property listing portals (such as Private Property and Property24 in South Africa and Zillow.com and Trulia.com in the USA and Rightmove and Zoopla in the UK) improving access to multiple property listings at a click of button.

Many local portals are linked to services such as lightstone.co.za to determine online property appraisals and valuations. When Google maps came along in 2005, the game changed once again. Users are now offered a web mapping service with satellite imagery, providing panoramic views of street maps. It provided context to properties in terms of location, imagery and opened easy access to addresses on most properties on the planet through zooming in on any property anywhere in the world.

The emergence of video to display and market properties also improved the imagery and professionalism of the industry. The advent of Social media to interact and source both buyers and sellers of property has streamlined property marketing signif icantly. Facebook, in particular, has spread awareness of real estate and created more loyalty to brands. The growth in use of smartphone and tablets, in conjunction with app technology, has aided all of these services making

them quickly accessible online.The next big thing to arrive is Virtual Reality

(VR) with Matterport offering a 360-degree view with unlimited access to view a property in the palm of your hand. It is a totally immersive experience, making you feel as if you are walking through and interacting with the property. This was closely followed by Augmented Reality (AR) which can overlay a real world print, product or object with your branding. This offers an excellent opportunity to enhance your experience and brand recognition in front of your computer.

What are the future tech developments that will impact real estate? There is currently a big pushback on escalating costs of ownership, leasing and utilities. Landlords and investors are f inding that the search for good yield takes harder work and more creativity. There is likely to be a disintermediation in real estate in sourcing, listing and marketing properties, which is currently expensive, ineff icient and unproductive.

Technology is already providing solutions reducing the use of intermediaries by allowing investing directly while removing the need for the middleman or intermediary from transactions. Just look at Propertyfox.co.za, attorneyrealtorhub.co.za, houseme.co.za and homebid.co.za to name few disruptors. At REIM we are introducing our ‘Re Tech’ section as a regular feature to keep investors up to date with all the latest trends in real estate. Enjoy the read and successful investing

EDITORIAL VIEW

NEALE PETERSENFOUNDER & PUBLISHER

“We’re are taking a long-term bet that immersive, virtual and augmented reality will become part of people’s daily lives.” MARC ZUCKERBERG

The Disruptive Impact of Technology on Real Estate

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PROPERTY ADVICE A&Q A&Q

Q What advice can you give to commercial property investors in the current market?

Q We have inquiries from foreigners wanting to rent, is this more complicated than renting to a local person and what is needed?

If you look back not so far in our history, i.e. to 1998, 2001 and 2009, at times when we also experienced economic slumps, those with the smart money were buying, looking for opportunities and making savvy property acquisitions - and today is no different. If you can buy and raise money for sound investments, later you will be able to look back

and enjoy the profits of the challenges faced in today’s market. My advice is to focus on position and quality of the property when you are deciding to invest and you will be greatly rewarded. Every property has a value and the well positioned properties will only improve and become more in demand.

Admittedly, sometimes you may only be able to afford properties which are on the periphery of a high-demand area, but don’t stay out of the market. Rather divest of properties which are vacant and a cash burden and buy better properties now that will show resilience even through the next economic slump. Bear in mind that nothing lasts forever, including the bad times.

There are increasing numbers of tenants who SAProperty.com deal with (particularly in the Cape and Gauteng areas) who are foreigners, and while it is fairly straightforward to formalise a lease with a foreign tenant, it has to be remembered that the person

renting property must have a legal temporary residence permit or a permanent residence permit that has been approved by the Department of Home Affairs.

Foreigners living and working in South Africa are not regarded as non-residents by the SA Reserve Bank, but become residents for the time that their work permit is valid. If they do not have a valid permit, however, and a landlord decides to rent to them anyway, it is aiding and abetting an illegal foreigner and is classified as a criminal offence, in terms of the Immigration Act.

The Immigration Act provides for various temporary residence permits to be issued to foreigners, such as a visitor’s permit; a work and entrepreneurial permit; or a retired person permit. If the person applying to rent a property has any of the these, they can legally rent (or buy) property in South Africa. Landlords should ask for proof of the prospective tenant’s residency documentation before signing a lease.

NORMAN RAAD, CEO OF BROLL AUCTIONS & SALES

MICHAEL BAUER, MANAGING DIRECTOR OF SAPROPERTY.COM

BUSINESS I FAMILY I PROPERTY We look after your interests

Unit 12, Harfield Village Centre, 48 2nd Ave, Claremont, 7708Mobile: +27 (0)83 440 8979 Email: [email protected]

www.duplessiscurran.co.za

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8 www.reimag.co.zaAUGUST 2017 SA Real Estate Investor

MASTER INVESTOR

Jozi8 www.reimag.co.zaAUGUST 2017 SA Real Estate Investor

Golden opportunities for investment

Reborn

9AUGUST 2017 SA Real Estate Investor

HERMAN MASHABA

The economic centre of the country, Johannesburg faces many challenges in rising to the occasion. With all eyes on him,

Executive Mayor Herman Mashaba seems clear in his reasoning: in order to build the city to what it can be, problem areas need to be addressed.

A humble startHerman Mashaba grew up in rural Hammanskraal,

in a single‒parent household lacking any of the stability a young child would normally require ‒ something that instilled a strong sense of personal independence from a young age.

While he may be best-known for his business‒savvy and subsequent success, the Mayor is all too

familiar with the perils that accompany an instable household. After the death of his father, two‒

year old Mashaba and his mother were thrust into a situation that many

South Africans are forced into. As a domestic worker, his

mother was unable to provide a home to her family. This, Mashaba says, meant that they were forced to move from one house to the next ‒ usually belonging to migrant workers who left home to work in the city. Mashaba’s own mother was oftentimes away from her son for months on end, having to live in Johannesburg to earn a living.

It doesn’t come as much of a surprise, then, that

the Mayor has placed such a premium on improving the

living conditions of the poor in his city. Speaking to us about

his 10 point plan for the City of Johannesburg, Mashaba makes

it clear that his move into the political sphere was one inspired by his own past ‒ and the will to “use political office to give young South Africans the same opportunities that [he] had, to make a success of themselves.”

While many may have been sceptical of this list, making it out to be little more than empty promises, the subsequent months showed promising results. At the State of the City Address in May of this year, nine months after taking office, Mashaba pointed to specific steps that had been taken to improve matters in the City. His office’s aim, the Mayor says, is “to be in tune with the people they serve.”

Social changeThis month, it has been a full year since Mashaba took office as Mayor. From the outset, it was clear that this administration would be focused on bringing about sustainable change to those who need it most, or as the Mayor puts it, be “pro‒poor.” The emphasis has been squarely placed on providing much‒needed, and better utilised, funding to those most vulnerable to economic shocks. This starts with two core issues: unemployment and education.

As Mashaba points out, the issue of education is not wholly within reach of local government, but steps can be taken to bring about meaningful change within the City. This involves the improvement of Early Childhood Development, in partnership with the Hollard Foundation. Admitted to the University of the North in 1979 to study a degree in public administration and political science, Mashaba is passionate about growth and the fact that “education was the key to making a better life” for himself. It is this yearning to learn and grow that led to him establishing his successful business, Black Like Me, in 1985.

THE CITY OF JOBURG’S 10 POINT PLAN:1. Ensure that the entire City adjusts its mind-set to the

environment of a new coalition government2. Run a responsive and pro-poor government3. Achieve a minimum of 5% economic growth in

Johannesburg by 20214. Create a professional civil service that serves the

residents of Joburg with pride5. Ensure corruption is public enemy number one6. Produce an official housing waiting list7. Produce a list of all semi-completed housing units8. Fast-track the delivery of title deeds9. Initiate a pilot project for a clinic to operate for

extended hours10. Revitalise the inner city of Johannesburg


Within six years, the company grew from being operated from a 200m² factory, to a specially‒built 6000m² facility in the Mabopane Township. Well‒acquainted with the pitfalls of starting one’s own business, Mashaba didn’t reach economic success overnight. After a full 30 months of working for other people, he resigned in 1982 to start his own business. Selling everything from insurance, crockery, and linen out of the back of his car, he soon realised that he wanted to focus on haircare products. The birth of Black Like Me came about with the help of a R30 000 loan and the support of four business partners. Somewhat symbolically, the company was based in Ga‒Rankuwa, in the then homeland of Bophuthatswana.

In order to bring about the change needed in Johannesburg, drastic measures need to be taken regarding infrastructure and service delivery. Nowhere is this more apparent than in the townships around the city ‒ “181 informal settlements have mushroomed

across the city, more than half of these have no basic services” the

Mayor revealed in his May speech. In response to this, the City’s 2017/18 budget is allocating R40 million to enhance sanitation in these informal settlements, compared to the R17 million allocated last year. R162.7

million is also being made available

MASTER INVESTORfor the provision of additional electricity and water in informal settlements ‒ an increase of R42.7 million from the previous year. Ten informal settlements are due for upgrades within the 2017/18 fiscal year, followed by the upgrading of 20 more the year after.

In order to make these improvements sustainable and meaningful, it must go hand in hand with employment opportunities. Here, Mashaba is aiming to get Johannesburg to work. As reported in his May speech, there are 862 000 unemployed people in the City, with the youth facing an unemployment rate of over 50%. In order to reach the aforementioned goal of 5% economic growth by 2021, it’s clear that more needs to be done to facilitate employment.

An entrepreneur in his own right, the Mayor places much emphasis on the importance of creating opportunities for yourself. This, he believes, is best achieved through the support of small businesses. In May, Mashaba revealed that the 2016/17 fiscal year saw the City of Johannesburg assisting 7 374 SMME (Small, Medium and Micro‒Sized Enterprises) with the help of its SME Hubs. A staggering 50% increase was seen in the amount of SMME being assisted, when compared to the year before.

According to Mashaba, the 2017/18 budget sees R16 million being invested in SME Hubs across the city, extending its footprint from seven to 14. The goal of these hubs is to “create an enabling environment for small businesses to flourish and thereby become employers of our people.” According to the City of Johannesburg’s official statement, these hubs aim to offer both start-up and seasoned entrepreneurs a “one-stop” shop where they can receive all the advice, funding application support and training they need to start or grow their businesses.”

This growth is not only focused on the CBD, but also extends to townships. An example of this is the R12 million being set aside for the commissioning and operations of the Alex/Marlboro Hub and the Alexandra Shared Industrial Production Facility. Furthermore, R10 million is being invested in artisan development training programmes. These initiatives, along with the aforementioned upgrades and provisions of infrastructure and services, aims to empower the poor to become more successful.

“Corruption will be enemy number one.”


The rebirthThe Johannesburg CBD has long been a headache for those who need to make use of the space. Mashaba explained it well in May when he said that “the Johannesburg inner city has suffered from gross neglect, with crime, drugs and filth becoming commonplace.”

In a comprehensive effort to turn this around, the City is allocating R131 million towards an increased JMPD visibility ‒ particularly in those areas that have been identified as crime hotspots. Upon entering office, the Mayor discovered that the City was operating with a JMPD shortage of 1 500 officers. R31 million was then allocated towards recruiting and training officers to make up for this.

Inner‒city housing is another key factor in revitalising the CBD. R9.5 million is being spent on providing shelters for the displaced and poor, while a target of 2 000 has been set for the construction of rental accommodation units in the 2017/18 fiscal year. Another 5 000 mixed‒housing development units are also being planned.

The Johannesburg Social Housing Company (JOSHCO) oversees the provision of “affordable housing to families who would otherwise be unable to afford a home.” Commonly referred to as “gap” housing, this refers to households who earn between R3500 and R7500 a month. In order to do this, the City plans to not only build new developments, but also to “purchase inner‒city buildings and undertaking repairs and maintenance of City hostels and flats.” This is being supported by a commitment of R219 million in the adjusted budget announced in May.

A global trend in inner‒city redevelopment and rejuvenation has shown us that a CBD cannot be revived with housing alone. The aforementioned SME Hubs have a major role to play, with the JOSCHCO plans to redevelop existing infrastructure providing much‒needed affordable commercial spaces. The SME Hubs’ goal is to assist in excess of 2 000 SMMEs a month by the end of Mashaba’s term. This will result in a four‒fold increase in the current size of the programme.

JOSHCO is allocated an operating budget of R152 million and a multi‒year capital budget of R1.9 billion, with the aim of providing these affordable solutions. The Site and Service Housing Development Approach is also receiving attention, with plans to provide beneficiaries with fully serviced plots on which to build their own homes. This is made possible with a R66 million allocation in the 2017/18 budget.

A call for efficiencyAll of these plans are in vain if not coupled with increased efficiency. One way in which Mashaba is looking to achieve this, is through skills audits. The first phase showed “massive potential within the City to develop

individuals with the skills necessary for a competent and professional staff capable of delivering quality services to residents.” In conjunction with this, the Mayor’s office has also launched a full‒fledged attack against corruption. As at the 30th of June 2017, 1 920 cases of corruption has been reported. 314 People have been arrested, over 100 employees suspended, 12 resigned, and 7 were dismissed. The internal investigations unit of the City has, to date, exposed and prevented fraud and corruption estimated at over R2 billion.

The Mayor admits that, in order to reach the targeted 5% economic growth, unnecessary red tape must be cut. 20 Key performance standards have been identified, including the fast‒tracking of building plan approvals, rezoning applications, the installation of new meters, and clearance certificates. R3.6 million was allocated to Development Planning, allowing these points to be addressed.

The City’s fight against potholes has been well‒documented. Over the past year the City has fixed 117,483 potholes, resulting to a significant increase of 26,945 or 22% more pothole repairs compared to the previous period (2015/2016).

An additional R88 million in funding was allocated to the Johannesburg Road Agency in the adjusted budget. In line with this, R51 million was also earmarked for the purchase of new busses for Metro Bus, with an additional R5 million being spent on the refurbishment of the current fleet. As the Mayor explains, road infrastructure is a vital part of improving the city, since “road and transport infrastructure is a way for people to access jobs, a way for businesses to access markets and one of the ways we create connected and integrated communities.”

The city of opportunityAs we have seen in cities like Cape Town, an effort to rebuild a city brings about many opportunities for investors and developers. An example of this is Propertuity. With the aim of creating affordable, inclusive, and sustainable residential and commercial spaces in South Africa, the developers are making strides in bringing life back into city centres in Johannesburg and Durban.

There is a worldwide movement towards more sustainable and collaborative cities, with a renewed focus on the importance of integrated transport, residential, and commercial sectors. In order to do this, however, drastic measures need to be taken.

While it remains to be seen if the City of Johannesburg will be able to rise from the ashes, the Mayor’s passion for change is infectious. This kind of thinking is what will, in time, drive investors to the city.

SOURCES

City of Johannesburg

HERMAN MASHABA


FEATURE ARTICLE

Going Green is Going MainstreamInvesting in sustainabilityBY TRACY BARTLETT


In the 20th century the concept of “green building” was a members-only club dominated by Birkenstock-wearing tree-huggers and

environmental activists. But influencers of global warming at the beginning of the noughties rapidly engaged prosperous early adopters, who have in turn initiated a flood of mainstream market acceptance in the past decade as drought and the growing energy crisis have begun to hit home – and the bottom line.

Energy-efficient buildings consume about a third less electricity and half the amount of water than un-retrofitted older builds, which not only significantly reduces monthly utility costs but also impacts long-

Energy-efficient buildings consume about a third less

electricity and half the amount of water than un-retrofitted

older builds

term financial returns, especially in the commercial sector. Recent research has revealed that energy-efficient buildings enjoy higher occupancy levels and higher net incomes and income growth than their older or unrenovated counterparts.

Long-term advantageAccording to the 2015 IPD South Africa Annual Green Property Indicator released by MSCI in August last year, commercial properties in South Africa with top-quartile energy efficiency delivered a total return of 12.5%, 140 basis points (bps) above the balance of the sample which delivered an 11.1% total return for the same 12-month period.

The Indicator’s three-year report also ending December 2015 reflects a cumulative total return outperformance of 5.3% and a 2.1% higher net income. This was driven largely by superior capital growth as a result of higher occupancy rates, lower discount rates and a lower level of capital expenditure in energy efficient buildings.

Although “green” building is still a matter of choice in South Africa, revised building regulations promulgated in 2011 stipulate that all new buildings must be constructed in accordance with a list of energy-efficient specifications that cover aspects such as roofing, insulation, water heating and lighting.

Joff van Reenen, Lead Auctioneer and Director of specialist property auctioneers The High Street Auction Co. (HSA), says in recent years there has been a marked increase in the trend towards energy-efficient and eco-friendly conversion of older

buildings, especially in Johannesburg’s most sought-after business nodes.

“The majority of the commercial and industrial buildings HSA auctions are at least 30 years old and, of these, 60% to 70% have been or are in the process of being completely refurbished and retrofitted by the new owners.

Moving off the grid“Standard eco-friendly upgrades include replacing halogen lighting with LED lights, replacing old windows with UV resistant, double glazed glass, installing low water consumption plumbing and, increasingly common, the installation of smart building management systems with features such as passive infra-red technology that negates the need for light switches, which could number as many as 5 000 in a 10-storey building.”

Van Reenen adds that he is witnessing a growing number of rebuilds specifically designed to operate completely off the grid, with power supplied by energy sources such as solar panels and gas generators. Most buildings designed in this manner usually have the capacity to switch over to mains power as a back-up to ensure productivity is not lost, but if their systems are high quality, this is seldom if ever necessary. He attributes this design trend to the fact that eco-friendly construction has become a lot more affordable in recent years.

“According to the Green Building Council of South Africa (GBCSA) Guide to Costs and Trends Report, energy-efficient buildings now have an average cost premium of only around 5% compared to conventional construction, which means the additional outlay is quickly recovered, then investors only have substantial savings on running costs to look forward to down the line.”

Jack Bass and Rob Odendaal, Directors at Lew Geffen Sotheby’s Commercial & Industrial based in Cape Town’s Southern Suburbs say that although green building is still an emergent trend in the Peninsula, there are a number of companies and developers who have embraced the initiative and are setting the bar.

“With energy costs rising steeply and water an increasingly scarce commodity, landlords are beginning to realise that it is well worth the capital outlay to refit older buildings with key elements like eco-insulation, energy-efficient lighting, water-saving devices.

“We are also seeing a marked increase in mixed-use developments that are not only energy-efficient but also reduce individual carbon footprints by enabling people to live, work and play in one neighbourhood, with most amenities within walking distance.”


It starts at homeThe sky-rocketing cost of electricity and the deepening water crisis in parts of the country have also forced South African consumers to become more conscious of their personal consumption levels and look at ways to reduce costs at home. Energy-efficient features are therefore increasingly common priorities on prospective buyers’ wish lists.

This is according to JP Van der Bergh, founder of Propscan, South Africa’s next-generation property search engine app, who says that these features are becoming compelling marketing points and, in some cases, can swing a deal.

“It’s becoming clear that these features not only reward home owners with significant short-term returns, but will also add value to their investments in the long term. If buyers are weighing up two properties they love equally – one with no energy-efficient modifications and one that’s got all the bells and whistles – the choice is a no-brainer.”

Compared to many First World countries, in South Africa it may still be “early days”, but there is no doubt that the green movement’s forceful advancement is set to continue.

Founded in 2007, the Green Building Council South Africa certified only one green building project during its entire first year of operation, but just a decade later their website lists 248 certifications. The Council also works in conjunction with The IPD South Africa Annual Green Property Indicator that was launched in 2014 to release an annual report tracking the significant benefits of energy-efficient (water and power usage) buildings for investors.

Now in its third year, the Indicator clearly demonstrates a fast-growing understanding that sustainability parameters are a vital consideration for long-term financial performance.

SOURCES

GBCSA, Propscan, Lew Geffen Sotheby’s, HAS, MSCI

It’s never too lateAlthough the best and most cost-effective results are achieved if energy-efficient elements are part of the initial construction rather than modifications to an existing house, Van der Bergh says there are many steps home owners can take to make their homes more energy efficient and less costly to maintain in the medium to long term. These include:

• Installing window shutters, awnings or screens to cool rooms during summer;

• Adding skylights to allow natural light into the house on sunny days, thereby eliminating the need for artificial lighting;

• Using natural materials such as stone, timber, thatch and clay (often obtained locally) which are excellent at regulating temperature;

• If you have a tin roof, insulate it and paint it white to retain heat in winter and ensure your home is cool in summer;

• Install a solar water heater to save substantially on your electricity bill as geysers can amount to 50% of a home’s electricity usage;

• Install solar (photovoltaic) panels on the roof to provide electricity to run low consumption appliances such as the TV, radio, lights and fridge;

• Landscape with drought-resistant or indigenous plants that retain moisture and require less frequent watering;

• Add motion sensor lights to save electricity;• Plug air leaks, which are the equivalent of

leaving a window open all year; and• Install double-glazed windows with low-

emission glass to allow maximum light and efficiently regulate temperature.

FEATURE ARTICLE


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RESIDENTIAL

SHAUN RADEMEYERCEO OF BETTERBOND The statistics show that the average home price in the year to end-June was R1,095m, which is 3,6% higher than in the previous 12 months, and that the average approved bond size in the year to end-June was R868 000, or 4,2% more than in the previous 12 months.

JOHETTE SMUTSHEAD OF DATA AND ANALYTICS AT PAYPROP“It’s been great to return to PayProp in such a challenging and dynamic portfolio. The up-to-date rental data available to us has enabled PayProp to take a market-leading position in South Africa, and I’m excited to add value to our business by exploring our data potential even further.”

LEW GEFFENCHAIRMAN OF LEW GEFFEN SOTHEBY’S INTERNATIONAL REALTYFlat rentals in Johannesburg were again the best performer as rentals here showed growth of roughly 7%. This was followed by Cape Town and Pretoria at 6% and Durban at 5%. Over the same period, consumer prices - excluding owners’ equivalent rent - showed growth of 7%, so in Johannesburg nominal rentals were able to grow at the inflation rate.

First Time Home Buyer’s Guide to

Property Investment

EDUCATION SERIES PART 7

8 Step Investment Road MapGetting StartedGetting Financially FitMaking a PlanFinding Your PropertyAcquiring Your Property

Closing the DealMoving In

Maximising Your Investment

BY MONIQUE DU TOIT

Moving into your first property is, quite possibly, the most exciting part of this entire process. Without the necessary planning, however, it

can quite easily turn into a nightmare.

Before the big day Once you’ve signed the papers and taken ownership of your property, the real fun can start! An essential part of this is knowing who you’re going to trust with your possessions and move. In the same way that knowing who you’re dealing with when buying a property is essential, you need to know that those you entrust with your move won’t let you down.

Again, technological advances and the wide reach of the internet is your friend in this process. A quick search for moving companies in your area will provide you with several options. From there, it is essential to do your own digging. When selecting a moving company, look for one with recent and strong referrals or recommendations. Speak to friends and family who have made use of a mover in recent times.

Once you’ve found the ideal mover, make sure you reserve your moving day well in advance. The process of moving is already a stressful one, since you’ll have a limited period to move out of your current home. As anyone in property will tell you, giving yourself sufficient time to plan your move is essential. This gives you time to iron out any issues, ensuring you don’t have any nasty surprises at the last minute.

Don’t rush to fill it upDuring the period after you’ve received your property keys, but before you’ve started moving in, you have the

ideal opportunity to take a closer look at your property. Without furniture and decorations to hide it, you’ll be able to see possible problems involving floors or walls. Use this time to get the necessary repairs done and, while you’re at it, be sure to clean in all the hard-to-reach places.

This is also an ideal time to evaluate what you’ll need to fill the space. Don’t fall in the trap of over-furnishing your first property. Rather, take the time to live with the basics for a while, taking the opportunity to see what you’d like to purchase.

Moving dayOn the day of your move, be sure to keep a separate box or bag with essentials (such as keys, wallet, documents, one day’s clothing, and toiletries) separate from the rest of your move. Especially in cases where you’re embarking on a long-distance move, this will ensure you’re not left stranded without your important belongings were something to go wrong with the move.

In any case, it’s also a good idea to have an overnight bag packed for your first night in your new home. After a long day of unpacking and moving boxes, you’re unlikely to have the energy to rummage through countless boxes in search of a toothbrush.

Your moving day will, more than likely, be a little chaotic. It’s always a good idea to introduce yourself to your neighbors before the big day. You don’t want to start off on the wrong foot, so ensure that they are aware of any possible disruptions related to your move. If you’re lucky, you might even be offered a welcoming meal!

For more information and help with buying your property, visit mybondfitness.co.za.


Step 7: Moving in

SOME THINGS TO LOOK FOR IN A GOOD MOVERThe following things are important to keep in mind when selecting someone to take charge of your move.

THE TRUCKS The first thing to look for when selecting a mover is the quality of trucks being used. Depending on your needs, you’ll either look for a mover with closed trucks, or possibly smaller open ones. Regardless, ensure sufficient protective measures are taken to keep your belongings safe.

LOCATIONWhen selecting a mover, make sure they operate within your area. In the case of a long-distance move, look for a company with operations in both locations. This not only saves time, but also money.

SPECIAL REQUESTSItems like pianos, large cupboards, or other unusual furniture often require additional movers or even specific vehicles. When choosing a moving company, ensure they have the necessary equipment to handle these situations.

INSURANCEA reputable mover will have sufficient insurance. This will provide you with peace of mind, and also come in handy if something does go wrong.

CHECK THE DETAILSWhen selecting a mover, take note of what is included in the initial quote. When asking for a quote, be sure to include any unusual items or requests that need to be accommodated in the move.


The residential property market is competitive, with economic and political conditions making buyers cautious about purchasing. Well‒priced

homes are selling, but some sellers are enlisting multiple agents. This, according to Debbie Justus‒Ferns, divisional manager of Renprop Residential Sales, is due to the pressurised trading conditions currently being experienced in the market. This, she claims, is a mistake that can lead to a wide range of complications.

Creating the wrong impressionWhen many agents are selling one property, invariably each agent will use a different photo and price the property differently. “This sends out the wrong message to the buying market,” says Justus-Ferns. “Aside from confusing buyers, it creates the impression that the seller is desperate and therefore will be likely to accept any cheeky offer. Listing one property with multiple agents will therefore more than likely lower the price that the market will be willing to pay for the property.”

Double commission claimsJustus-Ferns says that the danger of sellers being liable for double commission in a situation where many agents are marketing a home is real.

Buyers may have seen the property with one agent, but then discover that another agent has it listed at a better price. Buyers will then naturally make an offer with the agent who has the property listed at the lower price.

Justus-Ferns explains that the agent who introduced the buyer to the property initially has just as much right to claim full commission on the sale of the property as the agent who took the offer that was accepted by the seller. Therefore the seller will be left in a situation where they are legally obliged to pay two agents full commission on the sale of their property, which can be exceptionally costly and means the seller walks away with less from the sale.

Legal action around false expectations“Many sellers are not properly informed about the binding nature of accepting an offer to purchase, and don’t understand that they have signed legally binding document,” says Justus-Ferns.

SELLING

Sole MandateThis can open the seller up to legal action in the

case where multiple agents are marketing one property should the seller accept two offers from two different agents. Justus Ferns cites an example where a seller accepts an offer on their property from one agent that has suspensive conditions like a bond that needs to be granted or another property that needs to be sold first. The offer to purchase stipulates a time frame in which the suspensive conditions need to be met. Another agent then comes with a cash offer which is more appealing to the seller as they don’t have to wait for any suspensive conditions to be met. They accept and sign the cash offer thinking it means the first offer falls away. This is not the case.

“The first offer always takes precedence,” says Justus-Ferns, but explains that the agent with whom the seller signed the second offer to purchase can sue the seller for the full commission should the suspensive conditions on the first offer be met. “Furthermore, in this case the purchaser who made the second offer can also sue the seller for creating false expectations.”

It is the sellers obligation to make sure they have a copy of the first offer they signed in order to determine the terms and conditions attached thereto, and to be upfront with all the agents marketing their home about any offers they have accepted.

Danger of a breach in securityOpening up your home to strangers on a show day or by appointment with an agent is always a security challenge, and the onus is on the seller to ensure all valuables are secure and locked away. However with multiple agents marketing a property, the security risk becomes even higher, according to Justus-Ferns who also points out that not all agents are conscientious about accompanying potential buyers around the home or even meeting them there for a viewing.

Justus-Ferns says that sellers need to remember that buyers are not loyal to agents and that all agents are in essence tapping into the same pool of buyers. “This means that an open mandate won’t necessarily mean accessing more potential buyers. Sole mandates really do work best for selling a home at a good price in a reasonable amount of time, and cut out the hassle of dealing with many different people and opening the seller up to all sorts of risk.”

The pitfalls of multiple agents


Doing any improvements on your house or investment properties is a sound financial investment, provided you don’t over capitalize.

The best way to do this is to use a good contractor. When times are tough, though, there are other ways to improve the perceived value of your property.

One way to immediately add value without spending money when either selling or renting a property is to:

• Change light bulbs to brighter lighting• Declutter and remove furniture items – the less the

better• Paint touch ups on walls and ceilings• Move beds around• Rearrange shelves to look neater and show storage

space• Remove carpets • Add photographs• Mow the lawn and clean the front of the house

RENOVATION

How to increase the value for selling and renting

BY NEALE PETERSEN

Fast Property Makeover and Fixer Upper tips

• Consider home‒staging if selling• Do any basic repairs• Add a carport for an extra car• Bring in plants

With a very tight economy, property owners are spending more on looking after the smaller things on their properties especially if they want to sell or rent it out. In general, it’s been found that we prefer holding off on major projects for better times.

When it comes to larger projects, such as solar panels, the retiling of bathrooms and kitchens, painting rooms, replacing plumbing, and adding new electrical fittings, first draw up a list of “must haves”. Be sure to include your budget in this list ‒ and stick to it.

While these big-ticket items can do wonders for the value of your home, small updates and changes must not be underestimated.


In a flagging property market, lifestyle estates appear to be one of the only areas that continue to pique investors’ interest. Small wonder, then, that

there’s enormous pressure to differentiate. Few have managed to do this as well as Steyn City.

This is thanks largely to the developers’ insistence that all infrastructure should be ready even before the development was launched to market. This meant that purchasers were able to see what, exactly, they were buying into. Consequently, Steyn City investors knew from the outset the calibre of the facilities on offer ‒ a far cry from buying into a dream that simply doesn’t live up to the developer’s promise.

All-important amenitiesAny worthy lifestyle estate offers residents a wide range of amenities: Steyn City is no different.

Take the Nicklaus-design championship golf course, for example, which is fast becoming one of the most sought after in Johannesburg. The nineteenth hole is undeniably one of the highlights of the course. This is hardly surprising, considering the Clubhouse has won numerous international awards for excellence

ESTATE LIVING

In the Lap of LuxuryLifestyle estates set the bar high

in design. The Clubhouse is also home to the superb XIX (Nineteen) Restaurant, managed by one of the bastions of the South African food scene, the Saxon. Guests are treated to dishes prepared with exquisite care, as well as exciting themed evenings (such as wine pairings) – but the lifestyle resort has also provided a deli option for those seeking a quick bite.

While the golf course has, of course, attracted strong interest from golfing enthusiasts, Steyn City Parkland Residence also appeals to the horse set, thanks to its world class Equestrian Centre. Boasting several innovative features, which ensure that horses receive the best possible care, the centre is managed by a former Springbok showjumper, Johan Lötter. It is also serviced by a fully-equipped Clubhouse, offering residents a place to unwind with a beverage or hot dish from the new Italian eatery after a ride along one of the lifestyle resort’s many horse trails.

One of the most exciting developments to take shape at the estate is the establishment of Steyn City Schools. This offering completes the developers’ objective of


ADVERTORIAL

providing a complete lifestyle ‒ a city within a city ‒ as residents’ children can receive an outstanding education without having to venture beyond the lifestyle resort. Scheduled to begin classes next year, the campus caters to all levels of education, from Early Childhood Development to college, and boasts a faculty headed by one of South Africa’s most highly regarded educators.

Completing the offering is the Steyn City Commercial Park. This project has been keenly awaited, particularly as there is a marked shortage of AAA Grade office space in the area. With the recent road upgrades facilitating quick and easy travel between Gauteng’s northern city nodes, the commercial park will be ideal for businesses seeking a central location. Developers are planning to break ground within the next two months.

Looking aheadNext on the list is the launch of the City Centre which will provide yet another venue within the lifestyle resort for recreation, including retail and dining as well as a residential offering.

In the more immediate future, Steyn City welcomes two new residential developments. The first of these, 65 on Park, is ideal for property purchasers seeking a convenient lock-up-and-go cluster option, and is showcased to great effect through the purpose-built show house which may be viewed throughout the week.

Added to this, Steyn City’s complement of apartments will be expanded with the addition of 105 new units, which will break ground within the next two months – an excellent choice for those wishing to enter this dynamic development, which is so rapidly gaining acclaim.



AMENITIES

BY ALASTAIR SINCLAIR

Diving In

In an increasingly competitive market, real estate developers are having to find new and innovative ways to set themselves, and their developments,

apart. One of the most effective ways to do this is through amenities that not only improve the lifestyle of residents, but also tick the sustainable and environmentally‒friendly boxes that have become mandatory.

These amenities are playing an increasingly important role in the decision to buy a new property.

Exploring water-wise amenities

What brings a sense of shared identity and belonging in a community is engagement, and this is where amenities can play a crucial role.

Outfitting your projects with a feature that has the potential to attract interest is no longer as easy as it used to be; with modern amenities going far beyond the once-typical golf estate or wellness centre. They’re blurring the line between everyday living and a luxurious holiday; eliciting the level of investment and attention that developers crave.


Exploring water-wise amenities

A sense of securityIn Africa particularly, rising levels of urbanisation and a growing middle-class have led to an interest in and demand for attractive lifestyle options, one of which is the concept of housing in secure lifestyle estates.

People tend to want the security offered by these lifestyle estates, which offer cluster-type housing and green spaces in walled, protected environments. They are generally centred around a feature such as a golf estate or a reserve with wild game.

Relatively new to Africa is the lifestyle estate with a focal point of a large body of water which can be used for water sports like paddle boarding, sailing and kayaking, and which offer a beach lifestyle. Many of those making up the new middle class will find the lifestyle benefits of these projects very appealing – certainly more so than living in high-rise apartment buildings with no open spaces and green areas.

The man-made lagoons aren’t just for private use, however. A new business model was recently launched where crystal-clear Caribbean-style lagoons will be offered to the public as an amenity for the first time ever. Crystal Lagoons in the USA announced the first of these public-access lagoons when they signed a partnership with ESJ Capital Partners, the new owners of Jungle Island, an 18-acre landmark attraction in Miami, Florida.

The move opens the door to exciting new opportunities, for both existing venues and vacant land. Public lagoons have the capability to dramatically increase the visitor numbers for venues such as amusement parks, aquariums and even zoos ‒ while also presenting an opportunity to generate profit from untapped areas.

International trendThe Resort at Diamante, Cabo San Lucas in Mexico, signed a deal with Crystal Lagoons to include an enormous, man-made lagoon to the development. Ken Jowdy, CEO of Legacy Properties, says of the decision: “The Lagoon opened up a new demographic for us. We used to be a golf-centric sales organization, but having family amenities that attract the full spectrum of luxury buyers, whether golfers or not, has allowed us to market and sell to visitors that we could not convert previously.” If recreational bodies of water can do this for resorts, imagine the impact they could have on residential developments.

An important issue relating to choosing a man-made water facility is that their impact on water resources must be limited ‒ especially in drought-stricken countries like South Africa. We’ve seen that sustainability has become the norm in new developments. Simply building houses with a couple of green features in a development isn’t enough. In

order to set themselves apart to potential investors developers must meet the demand for a sustainable lifestyle and recreational amenities that communities can take root around.

A valuable resource“Green” features were previously thought to be excessively costly, but the Green Building Council South Africa (GBCSA) recently revealed that the green cost premium “over and above the cost of conventional construction” is actually around 5 percent or less (even “as low as” 1.1 percent).

In their Green Building in South Africa: Guide to Costs and Trends Report, GBCSA found that this “apparent green premium” is the primary reason many developments and buildings that could be going green have not yet chosen to take the plunge.

GBCSA’s chief technical officer Manfred Braune says green buildings in South Africa yield a higher return on investment – “a very strong business case for green buildings to developers, property owners and corporates”.

Man-made lagoons can be created almost anywhere – one does not need to be near the sea to create a coastal area of one’s own. They can use any kind of water including brackish from underground aquifers, eliminating the need to consume valuable fresh water resources. They also use just 2% of the energy required by conventional swimming pool systems.

In addition, amenities such as these provide a drawcard for developers who are looking for a new and ‘innovative’ feature for their project. When included in major property developments, man-made lagoons exponentially increase the prices of real estate projects to figures never seen before, speeding up sales rates by between 30% and 70%, and increase project density.

One example of such turnaround is the San Alfonso Del Mar resort in Chile, which was originally planned as just 400 residential units but later increased to 1400 units owing to increased demand created by the addition of a Crystal Lagoon. The eight-hectare lagoon continues to attract visitors from around the world.

In South Africa, Balwin Properties signed a deal to bring the first Crystal Lagoon to South Africa, at The Blyde, Balwin’s first development in Riverwalk. CEO Steve Brookes said that they decided to feature a crystal-clear lagoon in the project in order to differentiate their product. “This will be a maiden Crystal Lagoon in sub-Saharan Africa and offers buyers a one-of-a-kind lifestyle. These initiatives are what gives us an edge over our competitors and drives demand for our apartments,” he said.

Alastair Sinclair is the Regional Director Africa for Crystal Lagoons.


Self‒proclaimed provider of the “new way to rent”, HouseMe has set out to revolutionise how the rental market is run in South Africa. For anyone

who’s ever had to endure the stress of being either a tenant or landlord: keep reading.

With fewer and fewer people able to afford to buy a property, the rental market has become more competitive than ever before. There’s big money to be made in this market ‒ if you go about it in the right way. There aren’t many of us who can commit the necessary time and effort to running our rental property ‒ never mind the time it takes to find the ideal tenant.

The concept of HouseMe came about when the founders, Ben Shaw and Kyle Bradley, set out to create a viable solution to Cape Town’s fractured property rental industry. The trafitional methods of renting, it turns out, just aren’t working for most tenants and landlords. Instead, this product aims to improve communication between those who own the property and those who want to live in it.

The traditional rental market could be equated to the children’s “broken telephone” game: one person tells me one thing, I don’t hear all of it and end up repeating incorrect information to the next person, until we’re all confused about the original content of the message. Traditionally, the property owner would approach a letting agency with instructions. The letting agent then goes out to advertise the property and attract potential renters. Finally, the tenant is approved and the property is occupied.

Ofcourse, nothing is ever this simple and all these steps are bound to lead to confusion, frustration, and unnecessary paperwork. With our lives busier and

RE TECH

RewritingBY MONIQUE DU TOIT

Rentals Simplifying the game

more rushed than ever, it’s a good thing we now have these timesaving tools at our disposal.

The tech benefitAs with many other industries ‒ such as hospitality and transport ‒ the use of apps has drastically changed the relationship between provider (in this case, landlord) and user (tenant). HouseMe offers a service whereby potential tenants and landlords receive ratings based on previous interactions or contracts. The benefit of this goes both ways: tenants are assured of a fair landlord, while landlords are able to avoid unreliable tenants.

Taking things one step further, an online bidding process is also used to secure a property. This leads to increased transparency between tenant and landlord ‒ as well as incorporating the aforementioned rating system to ensure highly‒rated tenants and landlords get the best possible deal.

Priding itself on being a comprehensive solution, HouseMe also includes services such as property marketing, photography, tenant screening, property management, and legal coverage. Possibly most enticing is the fact that they offer landlords a guarantee on full and punctual rent payment. Even more, they are able to offer landlords a free quarter‒year rental guarantee.

With the property market constantly shifting, it’s essential to make use of the best tools at our disposal to make the most of our investments. Pair this with the growing demand for the use of technology in increasing convenience, and you have a winning combination.

SOURCES

HouseMe

Sustainable Solutions



SOURCES

Berman-Kalil Housing Concepts, Home Times, Huffington Post.

AFFORDABLE HOUSING

Sustainable Solutions

A quick look around the Mother City and one begins to understand the problem with housing in South Africa ‒ and the environment to

boot. Overpriced and undersized apartments, hour‒long commutes, and wasted land combine to create a perfect storm for a housing crisis. Add to this an ever‒growing tourism market, and it’s no wonder many are left scratching their heads for a solution.

Cape Town isn’t alone in this struggle. A global housing crisis has emerged, with a dramatic increase of those looking to move to urban areas. This has led to some interesting innovations ‒ and a shift in how accommodation is approached. One such example, popular in Europe, is the conversion of shipping containers into houses. An ideal low‒cost housing solution, recent years have seen it become a bit of a trend amongst the wealthy.

Customisation is keyThe possibilities are endless, according to local container‒conversion specialists Berman‒Kalil Housing Concepts. As Alicia Kalil explains, they’ve provided converted containers to several high‒earning clients to be used for everything from AirBnB solutions, guest accommodation, to primary family homes.

With several customisation options, including stacking more than one container to create a larger dwelling, adding various levels of luxurious finishes, and the possibility of taking your conversion completely off the grid, it’s not difficult to see why this is becoming so popular. This last point is particularly relevant in South Africa, where national power supply and natural resources aren’t always as reliable as we’d like it to be.

Practical considerationsIn most cases, you’ll have to get planning permission from your local municipality prior to placing your

converted container on your property. Kalil reassures us that many municipalities are already on board, having realised that this solution offers a realistic alternative to traditional homes.

The convenience of having a fully‒completed home, kitted out with your personalised specifications, is what will draw many customers. It’s also good to know the full cost of the home up‒front, removing the inevitable frustration that accompanies conventional building projects.

For those concerned about living in a metal box in famous South African summers: fear not. Container conversions have excellent insulation, meaning you probably wont event realise that you’re not living in a brick house.

The eco-elementMerely by converting a container, rather than letting it rust into oblivion, you’re recycling 3000kg of steel. It doesn’t end there, however. Kalil explains that any materials cut out to create windows or doors are used in other places in a conversion. Examples include steel‒framed decks, wall panels, and even extended roofs. Steel also offers the advantage of being fire‒resistant, with all materials used having received a good fire rating.

We’re only just scratching the surface of opportunities for container‒homes in South Africa. With a critical shortage of affordable housing, there is a clear opportunity to create a sustainable, affordable, and attractive solution. Kalil claims that, after three years in the market, they’re experiencing increased interest from low‒income households.

Containers prove their worth


South African students and their parents have great difficulty in finding suitable accommodation ‒ a place where facilities are

safe, modern, and convenient. The process of finding suitable accommodation, dealing with multiple letting agencies, finalizing paperwork, and moving in can be extremely stressful and time‒consuming.

Says Leon Howell, MD of CampusKey: “Educational institutions throughout South-Africa are facing the ever-increasing shortage of accommodation for their students. Many of these have already reached student accommodation crisis levels.”

According to Howell, studies have shown that students staying far away from campus or in unsafe, overcrowded or unhygienic conditions will have a much higher chance of dropping out, especially in their first year. “It’s widely agreed that the severe shortages of student accommodation at educational institutions is compromising educational outcomes in South Africa. There is much written about the crisis in this sector, with social, political and economic aspects playing a role.”

Howell adds that this environment has changed

STUDENT ACCOMODATION

A New Asset Class for Investors

BY MONIQUE DU TOIT

Exponential growth in student market

dramatically over the past 20 years. “Student numbers have grown to over a million students at 26 institutions. With the further decline in city spending in this sector, further pressure is put on universities. One thing is clear - student numbers continue to grow, leading to an increase in the demand for student housing.”

According to statistics from the Department of Higher Education, out of a student population of approximately 530 000, there is currently only enough student accommodation for 100 000 students. According to the Department of Higher Education’s Ministerial Review of South Africa’s University accommodation, less than 10% of first-year university students can be accommodated.

Various challenges in addressing the major student accommodation shortfall in South Africa stand in the way. Howell continues: “High maintenance costs, ageing residence buildings and inadequate space on campus are some of the main contributors why educational institutions are not building more student residences on campus. This has created the opportunity for private developers and investors to get involved.


Leon Howell, MD of CampusKey

SOURCES

CampusKey, Department of Higher Education.

However, private student accommodation is currently still unregulated in South Africa. In many cases this results in exploitation and exposure of students to various levels of risk. Furthermore, there is the perception that students are not heard and their needs aren’t being attended to. This is evident in the disruptive student protests which we’ve seen last year and early this year.”

Demand far outweighs supply and the private sector can play a large role in alleviating the shortage. Howell explains: “The rapid growth in student numbers and the increase in the number of international students attending South African universities have created

a unique new asset class for investors. This niche market provides attractive returns to investors with some protection against economic fluctuations and diversification of their property portfolios.”

Founded in 2009, CampusKey Student Living has a national footprint in South Africa with student accommodation in Cape Town, Bloemfontein, Pretoria, Port Elizabeth, Potchefstroom and Stellenbosch. As a young dynamic company, they are constantly adding new campuses to their portfolio with the University of Johannesburg being completed by the end of next year.

CampusKey will be one of the first housing companies to deploy Customer Relationship Management (CRM) software. This will allow students to book accommodation online and communicate any mainternance issues. Additionally, a central, 24/7 manned central control room will be used to make all builings more secure. A 24‒hour number will also be available for students to get assistance with any imaginable emergency. Howell emphasizes the importance of focusing on and implementing long‒term goals.

Some of these goals include further expansion. The company is currently building a luxury facility in Summerstrand, Port Elizabeth with 306 beds for the 2018 intake. Further construction is on schedule in Hatfield, Pretoria where 160 beds will be completed by the end of this year. An additional 112 beds next to the current facilities in Bloemfontein will also be completed later this year. Once complete, CampusKey will have 3 769 beds available nationwide by January 2018.

CampusKey also has plans to expand the brand. “Our students are between the ages of 17 and 25 and as such also need other services and products in their

everyday lives. We have plans in the pipeline to work with selected partners to offer these to our students and govern it under our trademark. Furthermore, there is a great need, especially for young people, to take affordable vacation breaks for short periods of time. Our facilities are perfect for this and we’ll roll out affordable short term stays in both Port Elizabeth and Stellenbosch during December this year, after which we will take it to other cities.”

Howell believes the CampusKey model will work well in other countries. “We’ve seen several opportunities in both the United Kingdom and Eastern Europe to roll out the CampusKey model internationally. Our goal is to offer about 8 000 beds by 2020 or early 2021.”

Howell reckons working with students is extremely management intensive. “I’ve seen on many occasions that it is one thing to develop a building, but a totally different matter to understand students’ human behaviour and to manage such behaviour. Understanding students’ and their parents’ needs are very important. These needs change over time and must be addressed pro-actively. Other factors such as a shorter lease cycle than traditional leases (less than 12 months) and a higher turnover rate-with students leaving throughout the year is also important differences to residential or commercial property.

As the CampusKey model clearly shows, there is much opportunity for innovation and growth within the student housing market. By focusing on the importance of an all‒inclusive lifestyle solution, investors are able to unlock a world of potential.

Less than 10% of first-year university students can be accommodated.


COMMERCIAL

PORTIA TAU-SEKATICEO OF THE PROPERTY SECTOR CHARTER COUNCILWhile it makes business sense that the property sector targets investment opportunities at areas with relatively high income, we hope the future direction will lead the sector to match this with a portion of investment into the poorest areas, those that are completely under-resourced, and where development is needed the most.

SEAN PAULEXECUTIVE DIRECTOR OF SPIREIn an era of increased specialization, probably no practice in commercial real estate has received as much interest as that of tenant representation. The tenant rep process begins by evaluating and refining the tenant’s requirements, which vary widely but are always complex, often requiring an analysis of a company’s entire portfolio and determining market conditions.

MXOLISI MGOJOCEO OF EXXAROThe new location and style of the building is aligned with our strategy on innovation and consideration for carbon emissions reduction. Hence, creating a working space with ease of access, which will enable interactivity, collaboration and creativity among our employees and business partners, was an important consideration in the design of the building.


INNER CITY

Along with Durban, Cape Town recently joined the Rockefeller Foundation’s international 100 Resilient Cities (100RC) project, which

seeks to empower cities to withstand the chronic stresses and acute shocks that could lie ahead, even in thriving downtown areas.

The 100RC project defines urban resilience as the “capacity of individuals, communities, institutions, businesses and systems within a city to survive, adapt and grow no matter what kinds of chronic stresses and acute shocks they experience”.

Having attended a 100RC workshop earlier this year, the Cape Town Central City Improvement District (CCID) is taking the definition to heart with regards to the Mother City’s downtown area. Tasso Evangelinos, CEO of the CCID, notes: “Cape Town’s participation in the 100RC programme is obviously a citywide, holistic one that covers the entire metropole, but we’re looking very seriously at how we can also bring the concept of resilience down to the microcosm of the Central City – the traditional CBD of Cape Town – so that we can prepare for future stresses or shocks that could affect our own area.”

While the 100RC programme identifies 11 shocks, from a nuclear incident to civil unrest, the one that stands out for Evangelinos in terms of a vibrant downtown is the possibility of “financial and/or economic crisis”, while possible stresses (from a list of 37) could include aging infrastructure, crime, homelessness, lack of affordable housing, traffic congestion, uncontrolled urban development and an undiversified economy.

In turn, the 100RC programme identifies seven qualities that a resilient urban area should develop to mitigate against the shocks and stresses. These include the need to be:

• Reflective and resourceful: the ability to learn from the past and use these learnings to inform future decisions, while also finding alternative ways to use existing resources better.

• Robust, redundant and flexible: robust, for example, in terms of developing infrastructure that will not fail catastrophically when design thresholds are exceeded; redundant in terms of purposively creating spare capacity to accommodate disruption; and flexibility in terms of an ability to adopt alternative strategies in response to changing circumstances.

• Inclusive and integrated: ensuring broad consultation, engagement and involvement while at the same time bringing together systems and institutions and the pooling of knowledge and resources.

Says Evangelinos: “In other words, how can we look at all the lessons of the past that have helped us create a successful downtown area, and use the data we’ve collected and trends we’ve identified over the past few years, to create the best possible strategies for the CBD’s future resilience?”

The data and trends Evangelinos refers to have been collated since 2012 primarily for the CCID’s annual investment guide, The State of Cape Town

BY BRENT SMITH


Central City Report. Explains the author of the publication and communications manager for the CCID, Carola Koblitz: “This guide has always looked back at the economic climate of the CBD in terms of being a ‘barometer’ for investors, but the extent of our information gathering and the consequent analyses we now do has begun to enable us to forecast areas of potential growth and business opportunity.”

Although the report is only published once a year, research and analysis is ongoing throughout the year. Explains Koblitz: “For example, six months into 2017, we know that commercial and retail vacancy rates are still relatively stable, while the unprecedented year-on-year increases we’ve seen in the prices of residential property are beginning to show a stabilisation. Having come off a low base a few years ago, when we saw an escalation of 30.86% from 2014 to 2015, and 15.06% from 2015 to 2016, the first half of this year has shown an escalation of 5.2%, with the average R/m2 of R33 921 (December 2016) now sitting at R35 700/m2.”

This bodes well, she believes, for ensuring that residential property in the CBD remains within realistic levels, and will hopefully also begin to encourage developers to take cognisance of the need for more affordable units that could accommodate those in the CBD workforce who find themselves in the “missing middle”.

Koblitz explains: “These are people who do not qualify for government subsidies but who can spend up to 40% of their income just on transportation. For example: bank clerks, shop assistants, social

workers, teachers or call centre staff. And it speaks to a provision of more rental stock as well, and not just sectional title units.”

The latest report, published in April this year and looking back at 2016, also dissected the four precincts that exist within the CCID’s boundaries with regard to the businesses that base themselves in each precinct, the type of retail and entertainment options that exist, and the residential communities that make each precinct their home.

“Again,” says Koblitz, “opportunities for the future are quite evident when you layer these breakdowns within a precinct.”

For example, the report revealed that the Foreshore area of the CBD, which was also the home of the Cape Town International Convention Centre, was the most densely populated in terms of large residential buildings, major hotels and many of the CBD’s largest corporate offices, but yet had only 13% of the CBD’s retail outlets and only 14% of all its eateries. Likewise, the older East City area had many of the CBD’s public access buildings and largest educational institutes with huge student populations, but offered very little daytime retail experiences when compared to the volumes of daily visitors in and out of the area.

Concludes Evangelinos: “It’s time for us as a CBD, to take a holistic view of our downtown strengths and weaknesses and work out how we can create a strong core to take us forward and create urban resilience that stretches from our business communities to our residential and visitor economies.”

Futureproofing a CBD


The Single-Stop

BY GARRY HAMILTON

Turning the key to your new office space

Building Solution

Trusting your appointed property developer to take care of every element within the design, development and construction of your office

building can be difficult. A turnkey development approach, however, is the right kind of ticket for a no-fuss, efficient development.

Turning the KeyAs the world of business constantly demands efficient, effective solutions to business problems, so too does the property development sector. The turnkey development approach, that sees clients hand over the reins to an appointed developer that manages and oversees every element of the process, enables companies to focus on their core business. Being able to do this with confidence, of course requires a well-established relationship and finding a development partner that’s experienced, well-resourced and equipped to manage large-scale projects, at every step of the way.

The Right Kind of DeveloperGarry Hamilton, Director of Development at Durban property development and investment company, Hodari Properties, has overseen multiple construction processes for the company’s diverse clientele. Entrusted with developing premises for many well-known names in the corporate world, including PWC, Aspen Pharmacare, Big Foot Logistics and more, Hodari Properties has a portfolio that’s shaping skylines across the African continent.

In Full ControlAs many of Hodari Properties’ clients turn towards adopting the company’s turnkey development

approach, Garry has found that: “Our clients benefit from our turnkey development approach, as it puts us fully in control of every aspect of construction, making it easier for them to focus on what they need to do, and not worry about the intricacies of ensuring they’ll have their office ready in time. We’re able to meet their tight deadlines, while equipped to effectively allocate resources and trusted with making the right choices, at the right time, for their development. A close working relationship with our clients is essential, as this makes it easier for our team to fully understand, and act on, an extremely detailed brief, ensuring that our development responds to their unique specifications. Our multi-skilled team and extensive experience enables us to develop for any sector, client requirement, or design need.”

Saving Essential TimeThe world of business moves fast, and office moves are always complex processes. Moreover, as new business districts spring up across urban areas across South Africa, the need to relocate offices, or expand premises to accommodate growing teams, becomes a time-urgent company priority. As more and more companies move further north from the centre of Durban, for example, larger commercial districts have been created in Umhlanga, Ballito and near King Shaka International Airport. Hodari Properties’ portfolio reflects this, with the developers playing a key role in designing and constructing numerous buildings in these areas. Hodari Properties’ turnkey development approach solves time-related complexities for companies, with short time construction periods being commonplace for this company. Garry explains:


“Very often, our clients need to move fast, as buildings are sold, or their teams grow very quickly in a short space of time. By choosing our turnkey approach, they can be assured that we’ll deliver on time. We’ve never missed a deadline, and we always deliver on budget.”

Right from the StartBut being able to deliver on time and within budget, isn’t as simple as it seems. That’s why the turnkey development approach rests heavily upon the creation of a solid, sustained relationship between client and developer. For Hodari Properties, that begins from the very first conversation, as Garry outlines: “The success of turnkey development begins with its foundations: clearly defined requirements. Detailed costings are shared with the client, upfront, but clearly defining a client’s needs is paramount to success. The art of asking the right questions, to get the right answers, is something our team is very skilled at doing, and it’s the foundation of a solid working relationship with our clients. Relationships are the true foundations of the buildings we develop.”

An Assurance of QualityDesigning and developing an efficient building using a turnkey development solution isn’t, however, just a cost and time-saving exercise. In fact, clients can feel more assured of better quality construction, as developers retain full control of every aspect related to the building process. Building to unique specifications and not having to rely on unknown suppliers, or unexpected variables makes the Hodari Properties team more effective at every turn and, as Garry outlines: “We’re not just able to keep costs down this way for our client - we’re also able to ensure quality and adhere to exceptional standards at every level.”

Handing Over the KeysOnce construction is complete, all that’s left to do is hand over the keys and move staff in, as clients are handed a completed building, fit for purpose, and built to cater for their company’s precise needs.

OFFICE



Outsourcing is not a term that should make any business feel uncomfortable, or unsure. A common practice globally, it can be an

effective cost-saving tool and can even ensure best practice for certain functions, such as soft Facilities Management (FM) services.

Before you can decide whether you are going to outsource your FM, you need to understand what outsourcing is ‒ and if it could be of benefit to your business. Recently, the practice of outsourcing has come under fire in South Africa. While there are several reasons for this, the finer details of outsourcing is of less importance here. Rather, we want to focus on what exactly outsourcing is.

Outsourcing – a definitionJames Bucki writes on the business website The Balance, that outsourcing “is a business practice used by companies to reduce costs or improve efficiency by shifting tasks, operations, jobs or processes to an external contracted third party for a significant period of time. The functions that are contracted out can be performed by the third party either onsite or offsite of the business.”

In the case of FM, a company may decide to contract some or all of their soft, hard and technical FM services out to companies that specialise in these fields. This can be done so that the company doing the outsourcing doesn’t have to find, train and employ their own in-house FM providers, allowing them to focus on their core business. It can also be because there is a skills shortage in South Africa, making skilled professionals hard to find and sometimes expensive to employ. A specialist FM company understands the needs of the industry, often provides their own training, and should provide skilled and knowledgeable managers to oversee the services they provide, ensuring quality

FACILITIES MANAGEMENT

Before you take the plunge, find out exactly what it means

of work and best practice.FM‒outsourcing ranges from cleaning and canteen

services, maintenance, IT functions, and more. You coud choose to outsource individual services, or bundle them together. There are several large FM service providers in South Africa you can approach for tender, but it is also possible to engage the services of an FM advisory service, in order to determine what it is your business really needs. Is it really the cheaper option?The recent South African Facilities Management Market Quantification and Analysis Study undertaken by SAFMA and African Response showed that, at an overall level and pertaining to industry users only, preference is more of a driver for outsourcing than any real cost-saving. It also showed that smaller or growing businesses often cannot justify the cost of outsourcing their FM services at such a small level, and is something to take into consideration.

The key to successWhilst a company that offers a holistic FM solution might not have intimate knowledge of the day-to-day happenings and challenges of your specific industry, an in-depth knowledge and comprehensive understanding of the FM industry and what is required, paired with trained staff and managers, means your business won’t suffer from any change management hiccups and your FM needs will be met as discussed and as expected.

SOURCES

www.safma.co.zawww.thebalance.com

BY ANN BAKER-KEULEMANS

Debunking Outsourcing


About TÜV Rheinland Group South Africa TÜV Rheinland Group South Africa has been in opera-tion in South Africa for over 40 years. South Africa is such a dynamic country with a rich tapestry of different cultures and different needs. Operating from 4 different offices around the country we are able to reach a wide base of clients - Centurion, Port Elizabeth, Cape Town and Secunda.

Contact Details: Tel: +27 (0) 12 667 7700 Email: [email protected]

As an owner, or managing agent, of a building with an elevator or escalator you have inherited duties and re-sponsibilities as a “User” from the Lift, Escalator and Passenger Conveyor Regulation. The department of labour has set strict regulations to be followed by the “User”. The regulation states that that no person shall permit the use of a lift or escalator unless that person is in possession of a valid comprehensive report (e.g. Annexure B) issued by an Authorised Inspection Authority. As an owner of an elevator or escalator you have to ensure that each one is inspected by an authorised inspection authority. This is where TÜV Rheinland can help.

As an Authorised Inspection Authority, we can ease your mind by performing the following required inspections:

Before such lift or escalator is put in use for the 1st time

After any modification has been made After any failure has occurred Whenever there has been a change in the lift service

provider At intervals not exceeding 24 months thereafter, or at

shorter intervals according to a in-house risk assessment

Keep your Lifts going up. What are your responsibilities regarding the in-spection of your elevators.

For operators of lift systems there are rules. Using a powerful partner lies in his obligations and also the opportunity to reduce costs.

You can depend on TÜV Rheinland. We act inde-pendently and provide an objective view of your lifts. And all this with the best service and the experienced know-how of a traditional company What particularly distinguishes us is our specially trained staff. Because when inspecting highly sensitive installations demand supervision from real professionals.

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Most of human existence has been associated with a rural lifestyle. Within the first 1800 years, less than 4% of the world lived in

cities - by the 1900s this grew to almost 15%. 2009 was the first time in history that more people lived in cities than in rural areas. If current urbanisation rates prevail, 2050 will see 70% of the world’s inhabitants urbanised. This global phenomenon spells trouble for most cities around the world, as most were never designed to cater for these volumes of inhabitants.

The way forwardCity/Business Improvement Districts (CID) are now commonplace worldwide, with more than 1,000 in the United States alone. Former New York City mayor Rudy Giuliani was a great supporter of improvement districts, so much so that he based his urban regeneration strategy for Manhattan firmly on this concept. Currently, there are in 74 improvement districts in New York with a total budget exceeding $134m.

In South Africa, depending on where you are located, these initiatives are known as CIDs (Gauteng), Urban Improvement Precincts or UIPs (KwaZulu-Natal) and Special Ratings Areas or SRAs (Cape Town). During 2016, CID’s in Johannesburg collected more than R130m in levies. Almost 85% of these funds were spent on security and cleaning initiatives. These precincts have attracted private sector investment exceeding R42bn.

The Excellerate Precinct Management team, a division of Cushman & Wakefield Excellerate, has been at the forefront of creating and managing almost all of the 18 legislated CIDs within Johannesburg. Excellerate has a demonstrated track record of taking a holistic approach to urban regeneration and place marketing; managing some of Johannesburg’s premium destinations including Sandton Central, Rosebank, Braamfontein and The Retail Improvement District (adjacent to Bank City).

PRECINCT MANAGEMENT

The Power of

The key to successEvery node has its own story and a unique identity. Excellerate Precinct Management’s MD, Ryan Mathew, suggests a collaborative approach is key. “We partner with our stakeholders to create a vision for the area. Once this is captured in a business plan, a detailed operations programme is created to address service delivery requirements. Besides addressing the basics of ‘crime and grime‘, particular emphasis is allocated to place-making interventions aimed at extracting the essence of what makes that area special.”

There are numerous success stories across Johannesburg where the city has partnered with the CID’s to improve infrastructure by co-funding projects. Main Street Mall, Gandhi Square and the Braamfontein Alleyway Upgrade are all initiatives that have been facilitated through their respective improvement districts. During 2015, the City of Johannesburg together with the Sandton Central Management District (SCMD) hosted the global Ecomobility Festival. With pedestrians and public transport given priority in Sandton Central, and much of it off-limits to private motorised transport for an entire month, the success of this festival hinged on the SCMD’s ability to facilitate and coordinate activities with the city.

City improvement districts offer a real-world mechanism to deal with widespread urban challenges that impair private property values. There is empirical evidence that shows these areas are significantly better placed to deal with the coming challenges of global urbanisation. Finally, private property owners have an effective means to halt and, in most instances, roll back the effects of urban degeneration.

Excellerate manages and services City Improvement Districts across South Africa with precincts in KwaZulu-Natal, Cape Town and Gauteng.

Success stories of urban renewalCommunity Cooperation


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There’s the “big question” about property investment that everyone seeking expert guidance asks before opening their wallets,

which is: “What type of property is likely to deliver the best return on investment?”

The answer is simple enough if you sell property in volumes great enough to determine buyer trends, as we do, and you stay on top of the latest industry data and economic indicators.

Right now, based purely on number-crunching, the answer would probably lean towards warehouse-type industrial properties. This is underpinned by various data sources, not least of all the IPD South African Property Index for 2016 that noted industrial property (with a total return of 13.6%) surpassed the traditional frontrunner – retail – by 100 basis points.

But it’s only a fraction of the bigger question that investors should be asking which affects all industry players, from behemoth listed entities to REITs, portfolio managers to private investors and that answer is far more complicated.

The answer is complicated, because while in many respects technology is making life infinitely simpler, it’s also bringing about the most rapidly evolving transformation in consumer behaviour the world has ever seen. And while increasingly twitchy professional trend forecasters update their predictions, then update them again, the truth is nobody is quite sure what the business landscape will look like 10 to 15 years from now.

It’s a scary concept for any investor contemplating the long game, but we’re not alone in this. It’s a global investment challenge; not specific to South Africa.If you’re a pessimist, you’d call that bad news.

Opportunity KnocksKnowing which trends to followBY LANCE CHALWIN-MILTON

Not all doom and gloomBut on the flip side, the good news is we do at least have some insight into where technology will take us as we approach the early to mid-2020s – and consumer lifestyle trends are already altering the built urban environment to accommodate these technology-driven changes.

So as one hand might remove a few opportunities from traditional 20th century legacy of businesses that have not been willing or able to move with the times, the other will deliver a host of exciting new prospects in the commercial and industrial real estate sectors. The new millennium’s economic drivers influencing commercial and industrial property buying patterns are too numerous to mention, but all investors should take note of a few stand-out trends I believe will be a firm feature for years to come.

Mix it up as you work, play & stayIt’s predicted that by 2050, more than 1.3 billion Africans will live in cities. It’s undeniable that we’re already seeing rapid densification in South Africa’s metros, with concurrent increases in traffic congestion and longer commuter times.

This is the primary driver behind ever-growing numbers of city dwellers opting to live close to their places of work. From an investment opportunity perspective, the rise of the mixed-use development is undoubtedly the gift that’ll keep on giving.

In Johannesburg, Rosebank’s pedestrian friendly environment is ideal for these developments, while many areas of Cape Town also embody the global trend of urban upcycling, including the CBD which now has an estimated residential population of 7 000,


INDUSTRIALthe Sea Point Main Road corridor and the Salt River, Woodstock and Observatory area.

In a nutshell, more and more people are opting to sacrifice a bit of suburban space for the convenience of being able to walk between where they live, work and play. There’s no doubt South Africans have embraced the global “live, work, play” culture and for investors currently seeking projects the mixed-use development potential is limitless.

Old Dogs, New TricksThe main protagonists of the “live, work, play” ethos are Millennials, who were born in the digital age.

Their business approach is often diametrically opposite to traditional corporate methodology as a result of growing up “connected” and they collaborate rather than isolate. They are the “me” and the “now “generation and they build their companies around delivering adaptable, instant solutions to clients who demand immediate results.

In 2015, according to the Pew Research Centre, Millennials surpassed Gen X to become the largest share of the US workforce. South Africans aged 11 to 31 at the time of the 2011 census comprised some 40% of the population and about half were in their 20s. Instantaneous service delivery requires lean, mean business machines, which is why so many Millennials are creating and working in micro start-ups that can quickly adapt to market changes.

The lucrative property investment opportunity here is in remodelling B-Grade buildings into offices the new business generation tends to prefer - light and airy, energy-efficient spaces with super-fast internet that are shared with a host of collaborative entrepreneurial minds. Anything over and above that is probably a waste of start-up capital.

Co-working spaces are growing in popularity across SA. There are already around 30 in Cape Town and developers in other metros are catching on fast. In an interview with Fin24, Flux Trends founder and analyst Dion Chang predicted that one of the most disruptive national business rebirths in the near future would be the edging out of legacy companies by start-ups with a lifespan of approximately 15 years.

My view is that legacy companies open to adopting new technologies will always have a place in the

national economy, but their role must adapt to new consumer behaviour.

Rewriting the Location Rule BookNeedless to say, the third commercial/residential real estate opportunity that’ll become increasingly pressing also stems from the Millennial playbook.

The rising generation is one that expects instant gratification. It’s unsurprising, considering they’ve been exploring the world remotely since they were toddlers and with the advent of apps and proliferation of online shopping portals they can conceivably have anything from a Teacup Yorkie to a mega-yacht delivered to their doors within hours.

Online retailers who can’t offer that instant gratification through a same-day or 24-hour delivery turnaround will fall by the wayside unless they create regional distribution hubs and, in fact, the most sought-after core business nodes will be those that combine commercial and industrial space.

Across South Africa, scores of industrial redevelopment sites are ripe for the picking and the investor or developer who plans strategically will incorporate executive offices into their plans from the get-go. As a tenant, choosing between a site that offers lush offices adjacent to a light, modern, airy warehouse or one with a retrofitted prefab office squashed into a corner is a no-brainer. And rental returns will be substantially higher.

Also, if you’re thinking of purchasing a redevelopment property for this purpose, don’t forget to include a reasonably-sized, hazard-free drone landing area in your design. Drone parcel deliveries are already a reality overseas so it’s not a question of if they’ll be rolled out here, but when.

Whitney’s EncoreAs a veteran commercial property specialist, I understand how financially risky it sounds to be suggesting that an investment in a non-traditional office retrofit in the right location could offer lucrative returns.

But to slightly mangle the words of the late, great Whitney Houston, I strongly believe the children are our future and we have taught them well. Like it or not in the next 10 to 15 years they will be leading the way, reshaping the business landscape in which we’ve grown so comfortable.

They grew up very differently – plugged into a world that previously didn’t exist. Millennials are our future clients, suppliers and economic partners in a technology-driven world. We need to decide now whether we’re going to be the ones to build the business infrastructure they’ll need, or whether someone else will walk away with the spoils.

It’s predicted that by 2050, more than 1.3 billion

Africans will live in cities.

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OFFSHORE

LAURENCE RAPPCEO OF VUKILEThe Spanish economy currently provides one of the most attractive growth rates in the Eurozone region with GDP growth of 3.2% in 2016 and 2.2% forecast for 2017 compared with 1.5% for the Eurozone – an outperformance trend set to continue for the next decade. Declining unemployment is spurring robust economic growth and increasing consumer spend.

TONY SMEDLEYHEAD OF CONTINENTAL EUROPEAN INVESTMENT AT SCHRODER REAL ESTATE INVESTMENT MANAGEMENTOver 80% of [our] portfolio is located in Europe’s fastest growing locations by GDP growth. We are well positioned to focus on generating long term shareholder value, as we look at the available options to grow the Company over the medium-to-long term.

COBUS VAN HEERDEN ATTERBURY PROPERTY DEVELOPMENTThe city of Pemba has enormous economic potential and we are proud to invest in its future with this key development. Doing business in Mozambique, and in Pemba specifically, has been an immensely positive experience.


UNITED KINGDOM

The commencement of Brexit negotiations last month is good news. After all those years of the UK dragging its heels, refusing to

join in, seeking to delay progress to political union and declining to be part of the Euro, they can at last sort out a strong and positive relationship that works for them both.

The Financial Times reported earlier this year, “The majority of economists are just as pessimistic about Brexit’s likely effect on Britain’s longer-term economic prospects as they were a year ago and have not been reassured by the resilience of the UK economy after the referendum or the plans of government.”

Before the referendum last June, many economists produced gloomy forecasts which have since been proved wrong. Consumers’ confidence has not suffered and the UK economy grew by more than previously reported.

I personally see this Brexit change as a massive “window of opportunity” to invest in residential real estate with the United Kingdom.

I share my reasoning by evaluating the fundamental drivers behind the residential real estate market within the United Kingdom:

Housing Supply & DemandThe UK faces a critical shortfall in housing supply. What governments have failed to do is to tackle capacity in the housebuilding industry and the planning sector.

Despite the positive figures of 147,960 completed homes in 2016-2017, house building is still well below the demand level of 250,000 homes per annum.

A recent report from the Land Registry and Office for National Statistics (ONS) shows that any uncertainty about the election had little effect on UK house prices. House prices rose by an average of 5.6% in the year to April 2017.

Given that sellers will continue to dominate the negotiation, this will simply mean that house prices will continue to rise. This is exceptionally good news for a real estate investor who is looking for capital growth exposure over the long term.

Rental Yields & Interest RatesThe United Kingdom market offers the unique opportunity to generate substantial cash flow from your real estate investments given the wide gap that exists between rental yields and interest rates, when compared to many developing countries, like South Africa.

Investors will earn a stronger rental yield in the north of

BREXIT:

BY WARREN BRUSSE

THE REAL ESTATE INVESTMENT OPPORTUNITY


the UK. While in the south of the UK, higher demand has pushed up prices, resulting in high capital requirements to enter the market and weaker rental yields.

Most investments that we target have rental yields ranging from 8% to 12% per annum for buy to lets investments (single tenant houses, usually for families) or 15% to 20% per annum for houses of multiple occupation investments (shared tenant housing, usually for young professional, students or blue collar workers).

The mortgage lending interest rates that we put in place on our investment properties varies between 3% to 6% per annum. This interest rate is subject to credit history of your limited company, asset base within your limited company and status relating to the directors and shareholders of the limited company.

This is great news for a real estate investor who is looking to generate cash flow in both the short term and the long term.

Mortgage LendingThe UK mortgage market is one of the most innovative and competitive in the world. This has led to a wide range of mortgage lenders and types of mortgages. There are primarily two type of mortgage lending products available in the market.

Firstly, residential mortgages for home buyers or first time buyers. This lending market is driven on providing mortgages based on income and affordability criteria.

Secondly, and most importantly, investment mortgages for investors. This lending market is driven on providing mortgages based on asset security and rental income criteria.

This is very good news for a real estate investor who is looking to expand their property portfolio and wants to invest in an asset based lending investment market and does not want to be constrained by their personal affordability.

Currency WeaknessThe Pound Sterling commonly known as the Pound, is the official currency of the UK. The Pound is the fourth most-traded currency in the foreign exchange market.

The Pound fell dramatically after the Brexit vote last year. Many foreign investors have been acquiring real estate assets within the UK at 10% to 15% lower entry costs.

This is exceptionally good news for a real estate investor who is looking to diversify their capital base into a global currency, such as the Pound.

Warren Brusse is the CFO of United Kingdom Property Partners

Be fearful when others are greedy and

greedy when others are fearful

WARREN BUFFETT


The high net worth (HNW) landscape and movement of wealth are changing, driven by the lure of residency-by-investment programs

for tax efficiency and lifestyle opportunities. With 74 countries around the world offering residency-by-investment programs, there are endless opportunities for those willing to put their money where their mouths are. Other than the clear benefits for investors, these programs are also important economic drivers in the countries of investment, oftentimes creating local business and contributing to cultural research.

Considering this, it can be expected that there will be an increase in countries offering these programs, in a bid to take advantage of HNW investors’ wealth. As a result, investors are presented with a marketplace of sorts, with a wide variety of programs to choose from. Due to this increased competition, programs that prove to be ineffective or unattractive will either be updated or suspended.

An example of this is the UK leaving the EU. It can be expected that this will bode well for countries in the trading bloc. Similarly, the bond program in Hungary closed in April 2017, proving that those that aren’t sufficient in bringing about an economic benefit will fizzle out.

According to our Global Wealth Market Analytics,

the world’s HNW population exceeded 8.5 million in 2016, pointing to a rapid growth of this once‒elusive market. It is anticipated that countries will explore the creation of tiered programs, whereby greater investments yield expedited residency.

For example, a $1m investment may enable an individual to obtain residency in five years while a $2m investment may constitute residency in three years. These tiered programs will pique the interest of HNW individuals who have the desire to obtain residency quickly and have the assets to qualify.

Regardless of the required investment or whether they are tiered, wealthy investors from emerging markets will continue to drive the residency-by-investment trend. As emerging markets tend to experience political and economic instability, individuals from countries such as China and South Africa will explore opportunities for obtaining residency in markets abroad.

Looking ahead, residency will become an integral component of HNW portfolios and a useful factor for measuring market confidence. In short, the movement of people will become a stronger indicator of the movement of wealth.

Nicole Douglas is a Wealth Management Analyst at GlobalData

RESIDENCY-BY-INVESTMENT

High Net Worth HobbiesBY NICOLE DOUGLAS

Trends on the rise

Plans by the Kenyan government to increase the formal supply of affordable housing have so far not been successful, a report released by the

World Bank in April shows. The report, titled “Housing and Housing Finance

in Kenya – Unaffordable and Unavailable”, says Kenya has an estimated accumulated housing deficit of over 2 million units, with nearly 61 percent of urban households living in slums.

At least 244,000 housing units in different market segments are needed annually to keep up with the country’s demand for housing, yet the current production is less than 50,000 units.

Kenya’s first medium term plan under its Vision 2030 blueprint aimed to provide 200,000 housing units between the years 2009-2012, but only 3,000 units were provided during the period. The second medium term plan running between 2013-2017 has a similar target of housing units, focusing primarily on the lower income households.

The report predicts a steady growth of the country’s housing needs up to year 2050, from where they will begin to level. It further says that while the demand for housing is currently higher in rural areas than in cities and towns, the reverse is expected starting from 2018, when majority of new housing will be needed in urban areas.

Kenya’s urban population is currently growing at the

rate of 4.4% per year, which is higher than the average 3.6% across Sub-Saharan Africa. The report points to a drop in investment in both government and the private sector in meeting their respective housing targets.

As an example, the country’s capital city, Nairobi, has a public target of developing 150,000-200,000 housing units annually, but planning applications were only 15,000 units in 2013.

Property prices in the formal market have been increasing, with Nairobi ranked as the highest priced city in Africa, adds the report. This has only served to widen the affordability gap, in a country where the cheapest house formally built by a developer was Ksh 1,342,106 (approx $15,300) in December 2012.

The report cites low or informal incomes, combined with high financing costs, as some of the reasons holding back the demand for housing finance. Currently, the cheapest formally built property costs Ksh 1.8 million ($17,315), but only about 10.2% of urban households could afford the cheapest priced house in 2015. Despite limited supply of housing finance, the country’s mortgage market has been growing at 30% annually, according to the Central Bank of Kenya.

With this shortage of affordable housing and the country’s tourism opportunities, investors would be wise to consider the development of Kenya’s property market.

AFRICA

Kenya’s Housing MarketOpportunities for investment

BY JOSEPH MAINA

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Property Management is the foundation block of all cash flow houses. Living in South Africa, it would be impossible to manage from a distance.

Even those who live in the US and do everything right, can still fail miserably with the wrong property manager. That’s why we spend time with you based on your needs as an investor.

When we first circled the wagons around Atlanta 6 years ago, we tried a local property manager out of Fayetteville. After 30 days, we fired them. They simply didn’t care about our money as much as we did. Then, we tried another company. Worse! After 45 days they didn’t even have signs on the houses!

That’s when we knew we had to run it all internally and thus, we set up shop in Atlanta with our very own property manager, Anthony Salmeri and National ERA Servicing.

The high demand for cash flow houses in the U.S. has sparked the development of new property management companies throughout the country. As a result, there are many novice managers in the business. All I can say about that is: nothing takes the place of experience in this business. We have had to cut our teeth in this business since 1979 and we’ve learned our hard lessons with our money. You see, back then we only managed our own properties. Thus, every bit of wisdom we attained through our experiences was on our dollar. After managing thousands of tenants over the last 35 plus years, we’ve continued to modify our approach and systems to accommodate investors like you.

I would never give my money to a young stockbroker who doesn’t have any money in the stock market, no more than I would give it to a property manager that doesn’t own property.

Experience is the greatest teacher and it’s the systems and know how that govern a company’s behavior that will determine the profitability of cash flow houses for the investors they serve.

Property managers need to be book smart, but more importantly they have to be street smart.

A few distinctions between our property management and our competitors:

RJ Palano is a turnkey operator in Atlanta, Georgia, an author and marketer and is an invited speaker for the Information Management Network (IMN) Conferences for hedge funds and family offices. His new books, The Buy Sell Machine will be released in the 3rd Quarter of 2017 and No BS Retirement Account Investing in the 4th Quarter.

ATLANTA

Managing Your Property

BY RJ PALANO

1. Our tenants are on 3-year leases, not one year.2. Our tenants have an option to purchase the

property for significantly more than an investor paid for it.

3. We collect a non-refundable option payment to purchase the house from the tenant instead of a security deposit.

4. We never mark up a fee or service.5. We have our proprietary Landlord Protection

Plan (LLPP), which provides various benefits for our investors.

6. Our Portfolio Managers always visit the home of perspective applicants to see how they care for their current property.

One of my favorite lines in business is: “Don’t expect what you don’t inspect.” This is so true when it comes to property management.

Resources and more info• GoTourHome.com – This shows our current

available houses for rent. There are videos and pictures for each of them.

• NationalERAServicing.com – This is the property manager’s website for investors.

Cash flowing properties in Atlanta professionally managedInvestment Offshore


Selecting your next property investment isn’t an easy process, and the possibility of purchasing property in another country can seem

overwhelming. While exploring your next move might feel tedious or off-putting, property markets in various regions abroad offer South Africans an interesting range of exciting opportunities with which to expand their property portfolio.

Living it up, island styleWhile Mauritius remains a highly favoured holiday destination, the island’s spectacular economic growth and favourable facilities for foreign investors have quickly made it far more than just next year’s vacation spot. Property Investment in Mauritius serves investors well, with residential, business, and tax, benefits aplenty. Peter Todd, Director at Osiris Corporate Solutions in Mauritius, tells us that: “Various schemes on offer within Mauritius have proven to be very attractive over the years, and a considerable number of them have been heavily marketed to South African and European audiences.”

Smart Cities in MauritiusThe Smart Cities Scheme (SCS) is a new, sustainability-focused, concept that creates highly appealing live-work-play opportunities. Focused on consolidating the island’s global business and financial districts,

the Smart Cities Scheme also aims to invigorate technological and innovation-driven industries within the Republic, while enabling foreign investors to enjoy significant tax benefits as a result of their purchase. As Peter explains: “investing in the development of a Smart City, or one of its components, exempts investors from the payment of certain taxes and duties, for up to eight years, providing certain conditions are met. Locals benefit too, as first-time Mauritian property buyers, and buyers under the Mauritian Diaspora Scheme, do not have to pay registration duties for their properties within the Smart Cities Scheme. Non-citizens can obtain a Mauritian residence permit for themselves and their family, so long as they purchase a unit for USD500,000 or more. Foreign buyers are also permitted to purchase units for rental or resale, with no restrictions applied. And, if an investor is looking to acquire a great property to retire to, they may be able to acquire life rights under the Smart City Scheme.”

Real Estate and Integrated Resort Schemes While the Real Estate and Integrated Resort Schemes have been around for much longer than the Smart Cities Scheme, demand from foreign property investors remains high. Offering similar residential permit benefits to the Smart Cities Scheme (SCS), the Real Estate Scheme (RES) and Integrated Resort Scheme (IRS) have recently been expanded, with

MAURITIUS


2016 Mauritian legislation being amended, allowing foreigners to purchase apartments in condominium developments at least two levels above ground, so long as the Republic’s Board of Investment grants the necessary approvals. Big BusinessOf course, luxury living is the name of the game for property investors in Mauritius, but corporate opportunities have begun coming to the fore recently too. Companies operating in Mauritius are permitted to purchase commercial property within Mauritius for own use. Peter tells us that: “larger commercial players, for example Mara Delta, have just recently staked their claim in Mauritius by purchasing the Barclays head office as well as several hotel investments, but it should be noted that all commercial property opportunities are subject to the approval of the Prime Minister’s office. Nonetheless, commercial property investors should keep their eye on Mauritius as new possibilities for expansion and investment come to light.”

The BVI beautyIf Mauritius isn’t for you, the British Virgin Islands, located in the Caribbean, could be the island opportunity you’re looking for. While space is at a premium, and therefore property prices can seem quite high, it is possible for foreign investors to scoop up

New Horizons AheadBY PETER TODD

a little spot of the island life, by obtaining an Alien Landholding License. This non-transferable license grants property buyers the ability to own a specific property, and is subject to high levels of scrutiny and strict adherence to quite stringent conditions. While the regulations surrounding foreign property investor activities in the Virgin Islands can be quite odious at first glance, the exceptional setting and tropical lifestyle quickly make it all worthwhile.

Closing the deal in the Cayman IslandsAlso situated in the Caribbean, the Cayman Islands are a playground for the well-heeled, but it’s also a foreign property investor’s dream come true. Foreign ownership of land is welcomed, with zero restrictions placed on investors, and no taxes levied too. As most land within the Cayman Islands is privately owned, a comprehensive Land Registry exists, whereby government undertakes close record-keeping, to provide full-scale, historical property data for interested buyers.

Don’t do it aloneMaking the right choice for your money starts, however, with finding the right type of collaborator and guidance. Pick an investment broker who is not only knowledgeable of the region you’re looking to purchase property in, but well-versed in the regulations and benefits attached to your purchase.

for Your Offshore Investment


Isn’t it amazing, how time and again, when the news is about the worst it can get, that the Rand pulls a fast one against everyone’s expectation?

Will anyone forget the last week of March this year when, after days of rumours, Zuma decided it was time to throw all caution (and what was left of the country’s international standing) to the wind, and pull out his big guns in the now infamous midnight #CabinetResfuffle?

Rating agencies were not slow in realizing the implications of this self-serving action, and within the next few days all three ratings agencies had downgraded South Africa to Junk Status.

This is what everyone had been fearing since #Nenegate, and what ex-ex-Finance Minister Pravin Gordhan and his deputy had been doing their utmost since that time trying to avoid.

And now it had happened. This was the end - the Rand was finished! Rational thinking and common logic dictated it must be. And yet, against all expectations, look what happened?

The Rand actually peaked 2 days after the last downgrade, and has not looked back since.

And now, just 2 months later, here it is below 13, sitting at pre-CabinetReshuffle levels.

Make any logical sense? I don’t think so either.

So, how do we explain this irrational behaviour? Well, having been in this game for over 20 years, I have learnt to expect the unexpected when it comes to the markets.

So the first thing I did when #JunkStatus hit and many clients were saying that this must change our outlook for the Rand, was to look at what effect such an action has had on other currencies.

And who better than two of SA’s ‘BRICS buddies’ - Brazil and Russia who had been downgraded in early 2015 and 2016 respectively. To say the least, the results were interesting.

As can be seen from this chart, the Russian Ruble weakened significantly in the months leading up to being downgraded.

CURRENCY

The Rand, #JunkStatus and Market IrrationalityBY JAMES PAYNTER


But, following the actual event, the currency turned and strengthened for the next 6 months. Although it then pushed higher than Downgrade levels in late 2015, this was short lived, and the Ruble has strengthened since early 2016 to back below pre-Junk levels.

Still not convinced? Let’s take a look at Brazil…

Similarly, Brazil weakened consistently for well over a year leading up to being downgraded in late 2015/early 2016.

And what happened once the last of the 3 rating agencies pulled the plug? The Real strengthened - and continued to do so for the next year! No economist would have been able to explain - or predict this! And yet, our Elliott Wave model, which uses the patterns of mass psychology in the market to predict future movement, had seen this coming.

SO, WHAT CAN WE LEARN FROM THIS?More often than not, the market will do the opposite to what common sense would tell you.

Test out these theories based on Economics 101 to see whether they have any historical validity (you will be surprised at what you find)

When you are thinking to yourself, “Can the news get any worse than this for the Rand?” … the answer is more often than not “No, it won’t” (even when everyone around you is feeling the opposite).

Skeptical? I don’t blame you if you are, as this model’s uncanny ability to forecast reactions to major shock events still amazes me after 12 years of following it.

Here was our outlook on the Dollar/Rand for next few weeks published on 3 April 2017 (with the Rand at 13.40), which anticipated a move up into the 13.64 to 14.15 area before topping out and falling…which it duly did by hitting 13.9550 a week later, before reversing sharply.

Pretty amazing stuff, when market sentiment at face value suggested the opposite!

Ensure that you have an objective, scientific based view of the market that enables you to make informed and objective decisions, especially at times of extreme volatility, when panic decisions tend to take over.

For more info on the Rand and the way forward from here, visit www.forexforecasts.co.za/go/weeklyreview

James Paynter is the Director and Head Analyst at Dynamic Outcomes Inc.


To those who have never visited, the African continent is usually viewed as one plagued by famine, poverty, and crime. Not to mention

lions roaming the streets. Speak to a tourist and they’ll most probably tell you about the warmth and friendliness of the people, the spectacular sunrise, and diverse natural beauty.

Ask an African and be prepared to hear at least 54 different perspectives ‒ each distinctly influenced by the 54 diverse nations that call the continent home. Each of these nations is at some stage of the process of figuring out how democracy in Africa is supposed to work. How do we balance the tensions between the haves and the have nots, between the countless cultures, customs, and religions? How do we find a happy medium between tradition and modernisation?

Africa at a glanceMost countries on the continent only gained independence from the 1960’s onwards. That’s less than 60 years ago. And this is the first perspective that’s lost when one views the continent through “first world” eyes: it’s not western. It’s African. And Africa is not a country – it has countless facets and overlays forged by its tumultuous history.

Despite its splendour and resources, Africa remains a harsh continent. But from adversity, ingenuity is born. In a complex and dynamic environment, opportunity abounds for those with the insight and tenacity to spot and pursue prospects.

But what does this mean for real estate investment and property development on the continent? It means considering 54 different investment jurisdictions,

African

BY BRONWYN CORBETT

Investing in development

Opportunities


sifting through a multitude of tax and treaty regimes. It means connecting with informed and reputable local counterparties and appointing local tax and legal experts.

It means being acutely aware of the socio-economical and geo-political nuances that can only be truly understood by spending enough time in-country, peeling the layers from what you think you understand.

In Grit’s relatively short history of just over 3 years, we’ve grown from owning two assets in two countries to a portfolio of 19 assets valued at over US$600 million across five different jurisdictions. It’s been by no means easy, but through collaboration and never accepting “no” for an answer, we’ve been able to mitigate currency, concentration and expatriation risk to a large extent, drawing on more than 45 years’ collective experience on the continent.

Unexpected opportunityWe are seeing definite opportunities around corporate accommodation, offices, shopping malls and distribution centres, but there is also a promising investment case for schools, hospitals and hospitality assets depending on the size and growth of the node. In this regard Mozambique (despite their own internal challenges), Rwanda, Uganda, Kenya and Ghana stands out, although they may not seem as obvious as other markets.

Macro-economic challenges, high inflation and, subsequently, high interest rates impact all business owners in-country. The efficient asset management and tenant optimisation in especially retail centres can also prove challenging. It’s also important to understand the longer-term strategy of key tenants.

Grit mainly transacts in hard currency (Euro and US$) on the continent. The real estate market is also not deep enough for sector specialisation; hence we are asset agnostic and base investment decisions on the quality of the tenant, the quality of the macro economics, and the quality of the asset. As a result, we’ve been able to negotiate a number of sale-and-leaseback transactions across industries.

We also maintain a good working relationship with the respective Central Banks, keeping them updated on the timing of expected capital movements.

WOMEN IN PROPERTY

In a man’s worldBeing a woman in the listed property sector remains a challenge. We’re not only breaking down walls around perceptions on Africa, we’re also challenging beliefs on women in senior positions. Complaining about it is not enough – we must actively address the issue. Grit leads the way in this regard with its Chief Operating Officer and Chief Integration Officers both being female. Three females are also represented on the board.

African growthThe United Nations predicts that in a little more than 30 years, one in four people globally will live in Africa.

On top of that, according to the International Monetary Fund, real GDP growth in sub-Sahara Africa averaged 4.7% annually over the last 20 years (as reported in 2016), compared to 4.2% in the Middle East and North Africa (MENA) and 2.1% for so-called advanced economies.

Combined with its young and growing consumer base and continued urbanisation (urbanization is expected to drive over 50% of Africans to cities by 2050, compared to 40% today – African Economic Outlook) Africa is indeed the last frontier for growth.

Despite these fundamentals, attracting capital for investment into the continent remains a challenge. Several of the large infrastructure investment projects on the continent are currently in a deployment phase, resulting in smaller investment opportunities that don’t meet the minimum investment quantum of the larger international funds.

Having said that, several frontier and emerging market funds have realised that chasing exorbitant IRR rates are neither achievable nor sustainable. A case for sustainable, hard currency distributions at a risk adjusted rate is slowly gaining traction.

Whilst Africa remains the undeserved Cinderella of real estate investment, it offers attractive opportunities for those with the know-how, tenacity and patience to look further than skin-deep.

Bronwyn Corbett is the Chief Executive Officer of Mara Delta Property Holdings, the largest pan‒African focused real estate fund listed on the Johannesburg Stock Exchange and in Mauritius. Corbett is married with two daughters and enjoys stand‒up paddling and travelling to the lesser explored parts of Africa.


In 2000, Mel Gibson entertained audiences in “What Women Want” as he had the power to hear what women think. He then used these ‘insights’

to gain an upper-hand in the workplace.Fund managers and investment analysts would yearn

for this inside perspective when advising their female investors, to help them understand exactly what drives women when making investment decisions.

“The world’s most successful investor, Warren Buffett, says he invests ‘like a girl’,” says Steven Cronin, the Founder of Wise, a non-profit community that assists expats to invest wisely. “Studies show that women outperform men in personal investing over the long-term. The flipside of this cautious approach is women often don’t start investing early enough and don’t take enough risk in those earlier years.”

SA Expat, Anna Heystek who’s founder of BOTH Holdings UAE and goBlue International says, “You can’t predict the future and always need to consider the downward risks. So it’s critical to invest in different asset classes to minimise the market impact of a fall or big loss.”

“I usually decide on my own, however I don’t make decisions until I have spoken to those people who’ve been successful at investing in the asset classes in which I’m interested,” she says “I keep track of trends as well as research economists and financial experts to determine what and how I should invest.”

Cronin also says women generally spend more time researching investment options before committing their cash and trade less frequently.

The importance of personal responsibility is something that property investment firm IP Global’s Ilana Van Huysteen-Meyer agrees with. “Find a role

model or a mentor who will guide you,” she says. “Do not become dependent on them, but rather use their guidance to acquire the knowledge that you need to make your own decisions.”

Younger women are more in control of their investments than older women, but the gender gap still prevails, according to research her company released earlier this year. In the survey of among 6,007 women over 18, younger women are more likely to invest in stocks and shares than older women are, although overall women are less likely than men to invest.

In Van Huysteen-Meyer’s view, the debate around whether or not women are better investors than men is not a useful debate. “There may be research to prove this statement one way or another and no doubt it changes every time a new study is completed,” she shares. “But smart investment decisions are not gender based – they’re determined by how much effort you put into you research and your willingness to learn from those around you.”

She says the investment industry itself is cloaked in jargon and predominantly a male environment. More could be done to bring female advisors on board and better engage female clients, she believes.

INVESTING

Tailoring the investment world

SOURCES

IP Global, Wise, BOTH Holdings UAE, goBlue International

WhatWomen Want

Established global property markets have long been popular with South Africa-based investors, but are you looking in the right places?

Join us for a panel discussion with leading economists and property investment experts, to find out where to focus your strategy in 2018 and beyond.

SPEAKERS

Hanna ZiadyInvestment Writer, Business Day and Financial Mail

Ian SigmundInvestment Manager, IP Global

George RadfordHead of Africa, IP Global

IP Global is a full-service property investment company that helps high net worth investors find and

capitalise on property investments, often in new, undiscovered pockets within stable global markets.

Inanda Club, Forrest Rd & 6th Ave Inanda, Sandton, 2196 South Africa

VENUE

SEMINAR

BOOM OR BUST WHERE NEXT FOR GLOBAL PROPERTY MARKETS?

WEDNESDAY 27 SEPTEMBER6.30PM

To register for this event, please visit events.ipglobal-ltd.com


Last month I interviewed Robert Kiyosaki, author of the no.1 personal finance book of all time ‘Rich Dad Poor Dad’ for the fifth time. Each

time I do, he shares some new information ‒ nuggets of real-time wisdom that every investor can use.

One of the things he told me was that the most important thing for real estate investors to advance to be successful is to be more professional. While this statement is vague on its own, he immediately elaborated on what he meant. Real estate is one of his favourite asset classes, mainly because of the ability to leverage finance and minimize taxes no matter where you are in the world. What you’ll find here is some of the ideas he shared, as well as some highlights from our discussion with reference to his books on real estate (specifically The Real book of Real Estate).

Real estate investing is a business and should be run like a business. Many people fall into the trap of thinking that it is like buying a house and therefore only about lifestyle. When buying cash flowing properties that are going to give you long-term financial freedom, they need to be run on the correct business principles. Here are some of the key principles and steps to consider when you have acquired your property.

Run your Real Investments Like a Business

INVESTOR INTELLIGENCE

BY NEALE PETERSEN

Professional investing the only way to go


SOURCES

Rich Dad Poor Dad; Real book of real estate; Financial IQ

Business Principle #1 - StrategyDevelop a systematic plan of action designed to accomplish specific goals. The seven simple steps to creating a successful strategy are:

Step 1 - ImagineImagine where you would like your real estate investing to take you. It might be to spend time on a beach location with lots of sun, maximum time with the family or even working with your favorite charity.

Step 2 - Financial goalsDefine what it will take to realize those dreams in wealth and cash flow. Commit to a date for accomplishing this goal.

Step 3 - Cash flow targetCalculate what you currently have in cash flow and assets less liabilities now, which is your current net worth.

Step 4 - Current wealthIdentify where you are today. List liquid cash available such as savings, credit card balances for investment, home loan access bond amount available, shares, policies that can be cashed in, etc. In terms of long-term real estate, business or any royalties earned, etc. Do not list your cars and jewellery ‒ only money available to invest.

Step 5 - Vision, mission & valuesMake a specific plan to reach those dreams. Be specific about the type, area and price range of the real estate you will be buying and your criteria for choosing those investments.

Step 6 - Investment nicheYou need to identify if you are going to invest in residential properties (such as flats, townhouses, freestanding houses, estates, city apartments, and land or family homes), or commercial. If you invest commercial then you need to decide industrial, hospitality, offices or retail.

Step 7 - Investment CriteriaThis is the final and most important part of your strategy and needs time. It will save you from making costly mistakes. Here are a few examples of criteria that you need to consider:

Minimum gross yield 15%; Minimum capital appreciation per annum 10%; Minimum cash on cash return 20%; Price range R500, 000 – R900, 000; Minimum deposit R100, 000; Maximum time

commitment per week 1 hour; Location of investment, Western Cape, South Africa.

Business Principle #2 - TeamYou need to have a group of individuals that can help you build your team. For example, you need an estate agent, property manager, attorney, accountant, structure specialist, quantity surveyor, architect, construction specialist, etc.

Business Principle #3 – Accounting• Good accounting leads to good reporting, which

leads to good decisions.• Purposeful accounting – accurate and useful• Accurate bookkeeping – income and expenses,

detailed data entries, journal entries.• Consistency – same entries monthly• Frequency – don’t fall behind, a weekly report is

good for updates.• Online Banking – check income and expenses

weekly

Business Principle #4 – ReportingAll professional investors understand the importance of managing their business by metrics of day-to-day measures such as:• Statement of Cash Flows – activities • Ratio analysis – Cap rates and Return on Investment

(ROI)• Comparison reports – Comparative Market

Analaysis (CMA) reports and rental reports, including fees, expenses, levies, rates and taxes, etc.

Business Principle #5 – TaxesTo make an immediate impact on your real estate portfolio, you need to play close attention to the tax laws.• Tax strategy – get a good adviser• Entity and Structures – Pty, Trust, etc.• Expenses – travel, meals and entertainment• Depreciation• Documentation

Kiyosaki says one key tip is patience. Investment is all about patience and there is absolute no need to rush into any investment in any market despite all the pressures that agents, brokers, attorneys and financiers put on you.


Powdery white beaches, warm blue waters and Monet-worthy sunsets… the similarities between Southeast Asia and the Caribbean don’t end here.

Both regions have also introduced foreign-investment programmes as a means of driving economic growth and attracting wealthy and talented individuals to their crystalline shores. And investors are diving in.

St LuciaArguably the most beautiful of the Windward Islands, St Lucia offers the region’s newest citizenship-by-investment (CBI) programme – one of the most competitive in the world. Amongst the investment routes to gaining St Lucian citizenship is a property purchase of USD 300,000, which must be held for five years. Benefits of citizenship:• Unrestricted access to 127 countries (including the

EU’s Schengen area, UK, Singapore, and Hong Kong• No residence requirements• Citizenship can be passed to future generations

Unsurprisingly, the CBI programme has significantly boosted St Lucia’s real estate market, with foreign investors and developers all vying for the handsome returns to be made on island property. The higher-end residential market is the strongest and larger apartment prices have risen from the USD 2 million maximum in 2011, to more than USD 3 million in recent months, according to Global Property Guide.

Offering citizenship to foreign investors is clearly working for the diminutive island made famous by its dramatic scenery and lively culture. After years of recession, St Lucia’s economy rose by 1.6% in 2016 and the International Monetary Fund predicts it to grow by 1.9% this year.

GrenadaLast year, real estate transactions on the so-called “Spice Isle” surpassed USD 50 million, and, at a growth of 23%, set a new high. Foreign buyers accounted for 20% of the total property sales, the average value of their purchases amounting to just on USD 225,000, nearly three times the overall market value. Sales of development properties also saw strong growth ‒ thanks to investment by developers seeking to exploit the combination of potential attractions of the country’s CBI programme and the generous tax concessions that

CARIBBEAN

Riding the Offshore Wavethese projects receive. Benefits of citizenship:• Visa‒free access to the largest consumer markets

(including the UK, Schengen area, and China)• Granted in four months• Transferrable by descent• Holds an E‒2 Investor treaty with the US• Acquired for a USD 350,000 property investment (to

be held for three years)

ThailandMarket interest shown by foreign groups in the Southeast Asian country, combined with cautious domestic bank lending, has created a favourable environment for increased activity from overseas investors and a clear catalyst for greater inbound investment in the Thai property market – so much so that the Bank of Thailand forecasts economic growth of 3.2% this year.

Besides its aesthetic beauty, affordable cost of living, and recent sustained growth, Thailand offers some of the most alluring tax benefits of any nation to its affluent residents. Foreign-sourced income is tax free as long as it is not remitted to Thailand in the same tax year in which it is earned.

If substantial tax savings aren’t enticing enough, the new Thailand Elite service will almost surely do the trick.

Specifically tailored to affluent people looking to take up residency in the country, it’s the first programme of its kind in the world, and offers unlimited access to the jewel of Southeast Asia as well as a number of complimentary concierge services, from hospitality and government assistance to free golfing and even spa treatments.Benefits of residence• Right to live in the country for up to 20 years• Application fee ranges from USD 15,000 to USD 60,000• Lower cost of luxury living

Be it for tax savings or as a route to obtaining a second citizenship, countries like St Lucia, Grenada and Thailand prove that there are more reasons to covet that beachfront villa than white sands and palm trees swaying in the sea breeze.

SOURCES

Henley & Partners

BY NIGEL BARNES

Hosted by

RODE-REIM REAL ESTATE

2017CONF

EREN

CE Zuma

BOOK NOW @

JOHANNESBURG: Wednesday, 30 August 2017 (08h30 – 15h30) | Registration starts 7h30.

Venue: The Shed, Steyn City, Fourways

CAPE TOWN: Tuesday, 5 September 2017 (08h30 – 15h30) | Registration starts 7h30.

Venue: Spier Wine Estate, Stellenbosch

DURBAN: Thursday, 7 September 2017 (09h00 – 14h00) | Registration starts 8h30.

Venue: Wavehouse Gateway, Umhlanga

SOUTH AFRICA AFTER

HEADLINE SPONSOR SUB SPONSOR

www.rode.co.za | www.reimag.co.za

07:30 - 08:30 Registration08:30 - 08:35 Introduction and overview – MC: Kura Chihota (Chief Property Investment Officer at the National

Social Security Authority of Zimbabwe).08:35 - 08:45 Giuseppe Plumari, CEO, Steyn City: Address by headline sponsor.08:45 - 09:30 Siphamandla Mkhwanazi, Economist, Standard Bank CIB: SA and world economic scenario.09:30 - 10:00 Andrew Rissik, MD, Sable International: Prospects for the rand - the impact on property investment.10:00 - 10:30 Panel discussion (including Q & A): Hedging your wealth offshore - Diversification or deworsification?

Facilitator: Kura Chihota Andrew Thompson, Director, eLan Property Group George Radford, Regional Director, IP Global Mike Smuts, MD, Smuts & Taylor Ltd Keillen Ndlovu, Head of Listed Property Funds, Stanlib Andrew Walker, CEO, Investing North

10:30 - 11:00 Tea & networking11:00 - 11:15 Neale Petersen, Founder, Real Estate Investor Magazine: Trends and Disruptors of Real Estate

Investment.11:15 - 11:45 Panel discussion (including Q & A): Meet the new disruptors of Real Estate.

Facilitator: Neale Petersen Ashley James, COO, Property Fox Ben Shaw, CEO, HouseME Meyer de Waal, Director, MDW Inc. TBC

11:45 - 12:30 RW (Bill) Johnson, Best-selling author of How long will South Africa Survive?: How South Africa can survive the current crisis.

12:30 - 13:00 Panel discussion (including Q & A): South Africa after Zuma, where to next. Facilitator: Kura Chihota RW (Bill) Johnson, Best-selling author of How long will South Africa Survive? TBC, City of Johannesburg Leon Louw, Executive director and co-founder, Free Market Foundation TBC

13:00 - 14:00 Lunch & networking14:00 - 14:45 Intro and panel discussion (including Q & A): Vision for the city of Johannesburg - future of property,

urbanization, urban regeneration, transport and technology. Facilitator: Kura Chihota Giuseppe Plumari, CEO, Steyn City TBC, City of Johannesburg Domenico Deidda, COO, Go Metro TBC

14:45 - 15:30 Erwin Rode, CEO, Rode & Associates: The prognosis for property in turbulent times.15:30 Tour of Steyn City (delegates need to book for the tour as space is limited to the first 100 delegates to

register - indicate yes/no on registration form below).

Hosted by

RODE-REIM REAL ESTATE

2017CONF

EREN

CEDate: Wednesday, 30 August 2017

Time: Registration from 07:30 for 08:30; proceedings close at 15:30

Venue: The Shed, Steyn City, Fourways

Programme

KURA CHIHOTA Chief Property Investment Officer at the National Social Security Authority of Zimbabwe

GIUSEPPE PLUMARICEO, Steyn City

SIPHAMANDLA MKHWANAZI Economist, Standard Bank CIB

GEORGE RADFORDRegional Director, IP Global

ANDREW WALKERCEO, Investing North

BEN SHAWCEO, HouseME

LEON LOUWExecutive director and co-founder, Free Market Foundation

ANDREW THOMPSON Director, eLan Property Group

KEILLEN NDLOVUHead of Listed Property Funds, Stanlib

ASHLEY JAMESCOO, Property Fox

RW BILL JOHNSONBest-selling author of How long will South Africa Survive?

ERWIN RODECEO, Rode & Associates

ANDREW RISSIKMD, Sable International

MIKE SMUTSMD, Smuts & Taylor Ltd

NEALE PETERSENFounderReal Estate Investor Mag-azine

MEYER DE WAALDirector, MDW Inc.

DOMENICO DEIDDACOO, Go Metro

SPEAKERS AND PANELISTS


So, you have heard that buying and investing in Commercial & Industrial Property is a sure thing, but before you rush out there to buy up

factories, office blocks and retail outlets, here are 5 important points to consider from Len Pears, Director of Quagga Property Buyers.

1. Upfront and ongoing costsWhen buying an industrial or commercial property you will either have to pay VAT or transfer duty on the purchase price; which you will have to pay is dependent upon the sellers VAT status. If, as the purchaser, you buy a vacant property into a Vat Vendor Company, Close Corporation or Trust, you can claim the VAT or transfer duty back from the Receiver of Revenue in your next VAT cycle. If you purchase the property with an existing tenant into a Vat Vendor Company, Close Corporation or Trust, the VAT, if applicable, can be zero rated and the transfer duty does not apply.

On an ongoing basis it is important to include municipal rates and taxes into your budget. If the property is part of a commercial and industrial sectional title complex you will also have to pay monthly levies.

2. Location ConvenienceLocality to the majority of your customers is key, ensuring they are able to get to your premises easily. It is also important to consider easy access to major routes for dispatching products.

LAST WORD

Buying Commercial Property

3. Business Growth Potential This is an important point as it can affect you in many ways. We always advise clients not to buy premises that are either too big or too small, but to rather start out with just enough space for your current business needs, with room for between 20 & 30% initial growth.

4. Area ZoningIt is important to buy a property that is zoned correctly for a business’s needs; Commercial zoning for offices, Industrial zoning for factories and Retail zoning for shops and retail outlets. There are costs and other factors to consider when attempting to get a property rezoned.

5. Avoid placing a tenant in their personal nameIf you buy a commercial or industrial property for the purpose of investment, avoid placing a tenant in their personal name and rather ensure it is a Close Corporation, Company or Trust. For in the unlikely event that you need to evict them as a tenant it is a far easier process if they are a CC, Company or Trust than an individual person. When placing a CC, Company, or Trust as a tenant you must ensure that personal surety is given by the directors, members or trustees.

It is always important, especially more so with commercial and industrial property, to work with a qualified, proven agent, they will be able to help you navigate your way through purchasing the perfect property for your needs.

Your top 5 tips

A member of the National Auctioneers Association (NAA)

APPRECIATINGPROPERTYINVESTMENT

Tel. 011 684 2707 I www.highstreetauctions.com

Appreciating Property Value

Ensure that you maximise the investment returns on your nextproperty transaction.

Contact the international award winning property specialists today.

NAA GLOBAL WINNERS

A member of the National Auctioneers Association (NAA)

APPRECIATINGPROPERTYINVESTMENT

Tel. 011 684 2707 I www.highstreetauctions.com

Appreciating Property Value

Ensure that you maximise the investment returns on your nextproperty transaction.

Contact the international award winning property specialists today.

NAA GLOBAL WINNERS

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