Housing in Southern Africa May 2016

Settlements

Infrastructure

in Southern Africa

OPPORTUNITIES 4,3 MILLION HOUSING

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may 2016

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H O U S I N G in Southern Africa CONTENTS

NEWS

7

2 4 5 4 6 6 8 9 7

Ed’s Notes cidb Enlists Help of SIU

Student Housing Infrastructure Programme New Development Bank Approves First Loans Eskom on Solid Ground Home Improvements Growth in US Mitchells Plain Property Market South African Property Returns Stabilise R333 million for upgrades

HOUSING

8

10 12 14

4,3 million Housing Opportunities Renovating in Sectionals Leratong City – A New Mega Development

ENERGY EFFICIENCY, GREEN BUILDING & IBTs Residential Energy Solution Growthpoint’s Solar Farms SolarAfrica Targets Sectionals 19 18

20

INFRASTRUCTURE & MIXED USE City Honours Colin Eglin Gugulethu Serviced Sites on Track The City’s Budget 21 21

10

22

CEMENT & CONCRETE AfriSam SAIA Awards

24 24

Call for Fulton Awards Nominations

INDUSTRY BUZZ Safety First

27 27 28 26 26

SAICS Tariffs and Mediation A Change of Direction Commission Raids PG Bison and Sonae Stamping Out Corruption

14

May 2016

H O U S I N G in Southern Africa

ED’S NOTES

It is clear that government’s newmessage emphasises the 4,3 million houses that have been delivered since South Africa’s first democratic government was elected. Housing, security and comfort

THE TEAM

EDITOR Carol Dalglish housing@crown.co.za ADVERTISING Brenda Grossmann brendag@crown.co.za DESIGN Karen Smith PUBLISHER Karen Grant DEPUTY PUBLISHER Wilhelm du Plessis DIRECTOR Jenny Warwick Colin Mazibuko CIRCULATION

T he Minister of Human Settle- ments, Lindiwe Sisulu, is on target to deliver a number of Catalytic Projects during her tenure. And in an election year, even amunic- ipal one, this is an achievement the government is deservedly proud of. The handover of housing tobenefi- ciaries at the fully integrated human settlement inMalibongwe andCosmo City, northwest of Johannesburg, has been a huge success. The joint venture between the Gauteng De- partment of Human Settlements, the City of Johannesburg and developer, Basil Read, has rolled out a variety of housing opportunities – affordable, rental and fully subsidised. The de- velopment is still one of the best of its kind in the country. Initially hailed as a blueprint for human settlements, other stakeholders have still to beat some of its design concepts. Every integrated human settle- ment development clearly adapts and makes changes in order to over- come previous shortfalls and chal- lenges, and introduces new ways of doing things. Travelling overseas recently, I was asked about the crime, corrup- tion and what it is really like to live in South Africa. People are usually gobsmacked when they hear how many houses have been delivered to the poor and low income earners for free; and howmuch government has achieved in providing housing for 20 million people, the social subsidies, free housing and affordable rentals. Sadly, we say farewell to Jeff Lawrence fromNedbank who is retir- ing and leaving the housing sector. We wish him well in his new private venture with his wife Sue. Jeff has been instrumental in a number of green initiatives at Nedbank. One example is sourcing funding from international development finance agencies to introduce solar, by pro- viding grant funding for new afford- able housing home owners. The likeable banker will really be missed in the sector. We welcome Des Hughes back to the affordablehousing sector. Hughes retired from Basil Read where he

played an integral part in establishing and developing the province’s first blueprint for an integrated human settlement at Cosmo City. He returns to the residential sector as Acting Chief Executive of RBA to manage the beleaguered housing developer’s turnaround and get them back on a firm footing. We also bid farewell to Mongezi Mnyani, NHBRC’s seasoned housing CEO, as hemoves on to newpastures. In the interim, Chairperson of the NHBRC, Abbey Chikane, has assumed the position of Executive Director un- til a suitable candidate can be found to take over the day-to-day running of the huge regulatory authority. There is somuch happening in this vital sector – exciting, dynamic and always interesting. Share your opinions, your own stories or weigh in with your com- ments. We welcome your feedback.

PUBLISHED MONTHLY BY: Crown Publications cc Crown House Corner Theunis and Sovereign Streets, Bedford Gardens 2007 P.O. Box 140

Bedfordview 2008 Tel: (011) 622 4770 Fax: (011) 615 6108

email: housing@crown.co.za www.housinginsamagazine.co.za

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All rights reserved. No part of this material may be reproduced, stored in a retrieval system or transmitted in any formor by anymeans, without prior permission from the publisher. Disclaimer: Crown Publications can- not be held responsible for any errors or omissions whatsoever.

Carol Dalglish • Editor

AVERAGE CIRCULATION (FOURTH QUARTER 2015) 3 743

Govan Mbeki Awards 2014 - Best Media - Housing in Southern Africa

May 2016

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News

cidb enlists help of SIU

Khumalo, said that the Register of Contractors plays a very critical role as a macro-risk management tool for public sector clients procuring construction goods and services. Persistent allegations of fraud and corruptionwithin the cidb undermine industry and public confidence in this role. “The cidb will do everything in its power to co-operate with the inves- tigation and drastic measures will follow against any employees found to be implicated,” said Khumalo She has however, assured clients and the industry of the reliability of the Register of Contractors, saying that the sporadic allegations of fraud and corruption cases though unfor- tunate, should not cast doubt on the capability of contractors registered with the cidb. “Fraud and corruption not only un- dermines the country’s economy and transformation efforts, it also has the potential to put the lives and safety of ordinary citizens in danger as a result of poor quality infrastructure. The cidb simply cannot afford to ignore the potential risks associated with any fraud allegations related to its Register of Contractors,” concluded Khumalo. The cidb registers and grades contractors according to capability to carry out construction projects based on financial capability and track record. Public sector clients are compelled to only award con- struction contracts to cidb registered contractors. The investigation by the SIU will start immediately. ■

The Construction Industry Development Board (cidb) has enlisted the help of the Special Investigating Unit to probe persistent allegations of fraud and corruption within the organisation.

I n a bid to protect the integrity of the Register of Contractors the cidb board has thrown its weight behind this initiative. The board has obtained a Presidential Proclamation strengthening its authority to carry I llegal occupants of government subsidised housing in Markana have to vacate the properties im- mediately. The Rustenburg local municipality filed an urgent application to evict the illegal occupants at the North West High Court. An interim eviction order in February and the recent ap- plication is for other illegal occupants fromoccupyingBreakingNewGround fully subsidised houses in Marikana Extension 2. The Acting MEC for Local Govern- ment andHuman Settlements, Fenny Gaolaolwe has appealed to occu- pants to respect the court’s decision. The interimcourt order states that illegal occupants be restrained and prevented from occupying houses whether under construction or com- pleted; or from gaining access to the property or site. ■ Illegal occupants

out investigations into various claims. The proclamation empowers the SIU to probe allegations of improper and unlawful conduct by officials of the cidb as well as unlawful or im- proper conduct by any person dating back to January 2006. Welcoming the proclamation cidb’s Chairperson, Lufuno Nevhuta- lu, said that this was a significant step towards cleaning up the organisation, if there was any wrong doing. “The cidb has a duty to act in the best interests of the industry and the public, and impropriety on the part of staff, whether perceived or real, only detracts focus from the enormous challenges of construction industry development and the mandate of the cidb.” Acting cidb CEO, Hlengiwe

Student Housing Infrastructure Programme

H igher Education and Training Minister Blade Nzimande says that hewill launch the Student ousing Infrastructure Programme this year to address the challenges of student accommodation. Nzimande added that the depart- ment will outline its long term sus- tainable programme using funding models and innovative building tech- nologies to provide secure and afford-

able residences when it convenes the Student Housing Symposium in June. “In the meantime, we are working with the Minister of Public Works, Thulas Nxesi, to identify underutilised or unused government buildings suit- able for conversion into affordable and comfortable student housing for both universities and TVET (technical and vocational education and train- ing) colleges,” said Nzimande. ■

May 2016

News

New Development Bank approves first loans

T he NDB recently announced tha t i t s Boa rd o f D i rec- tors has approved loans of US$811 million to be disbursed in tranches, supporting 2 370 MW of renewable energy capacity. The NDBwas established by BRICS (Brazil, Russia, India, China and South Africa) to finance infrastructure and sustainable development projects. The projects were presented at the fifth Board of Directors. Veteran Indian banker and NDB’s President, Kundapur Vaman Kamath says, “This is an important milestone for the bank and we are delighted to have met the goals and the time sched- ules envisioned by the leaders of the BRICS countries. With this, we embark The New Development Bank (NDB) has approved its first set of loans worth US$811 million, whichwill go towards supporting renewable energy initiatives.

the projects will collectively provide additional generation capacity of 2 370 MW of clean energy. This will lead to a reduction in greenhouse gas emissions by nearly four million tonnes per year. Each loan modality is different, based on project specific features and borrower preferences, government approvals, where neces- sary, will be sought as part of follow- up procedures. ■

on a journey to provide speedy assis- tance to projects across developing nations. We are also pleased that the projects deal with green and renew- able energy and hope they will act as catalysts for development in our member states.” In accordance with its core focus, this first set of projects being financed by NDB is in the area of green and renewable energy. It is estimated that

May 2016

News

Eskom on solid ground

T he state energy supplier has decreased the usage of diesel from R800 million to R40 mil- lion in five months due to improved performance of its base-load fleet. The utility will continue with its rig- orous planned maintenance without implementing load shedding while also minimising usage of the OCGTs. With regards to the Generation Sustainability Strategy, the utility aims to achieve 80%plant availability, 10% planned maintenance and 10% unplannedmaintenance over theme- dium term. The adherence to regular scheduled maintenance is managed through the Tetris planning tool, which schedules outages based on forecasted demand andmaintenance requirements. According to Eskom, a key aspect of this includes having a strict winter and summer maintenance budget that comprises 8.5 GW for winter and 11.5 GW for summer. Whileworking on

Eskom’s board of directors’ said that the reduction in unplanned outages contributed to improvements of plant availability, and the sharp reduction in the usage of open cycle gas turbines (OCGTs).

the performance of the existing ageing fleet, Eskom has also fast tracked the building of new generating capacity. In March, Unit 3 of the Ingula Pumped Storage Scheme was syn- chronised to the national power grid, marking a key milestone towards the full commercial operation of the unit, ahead of the scheduled deadline of January 2017. Unit 3 is the first of four units at the Ingula Pumped Storage Scheme to be connected to the national grid. Once completed, all four units of Ingula will produce a total of 1 332 MW and this will go a long way to meeting the country’s rising electricity demand. The capacity expansion pro- gramme will be completed within the next five years and will increase

Eskom’s generation capacity by 17 384 MW; transmission lines by 9 756 km; and substation capacity by 42 470 MVA. This will enable Eskom to provide security of electricity supply to South African homes and busi- nesses, poweringeconomic expansion and extending electricity to millions of residential households, who cur- rently rely on other energy sources for domestic usage.

Eskomhas successfully completed 5 620 self-funded electrification con- nections as well as 1 080 farmconnec- tions during the course of the 2014/15 financial year. In addition, together with Department of Energy, Eskom has connected more than 4,6 mil- lion households to the national grid since 1991. ■ Home improvements growth in US H ome improvement spending is expected to increase by 8,6% by the end of 2016 and reach US$325 billion nationally by early 2017.”

“Our recalibrated indicator fore- casts a broader segment of the nation- al residential remodellingmarket that includes home improvements and maintenance activity for the owner- occupier housing market,” says Abbe Will, a research analyst in the Remod- elling Futures Program at the Joint Centre. “With this re-benchmarking, the Leading Indicator of Remodelling Activity, now more accurately sizes the remodellingmarket and continues to anticipate major turning points in home owners spending.” ■

then accelerate to 9,7% by the first quarter of next year. According to the Remodelling Futures Program at the Joint Centre for Housing Studies of Harvard University, “Ongoing gains in home prices and sales are encour- aging as more homeowners pursue larger-scale improvement projects this year,” says Chris Herbert, Manag- ing Director of the Joint Centre. “On the strength of these gains, the level of annual spending for remodel- ling and renovations is expected to

May 2016

Mitchells Plain property market

especially in the five years since 2010. Grobbelaar expects that growth

He says that in most areas, the average prices have strengthened very nicely over the last 10 years,

prices vary drastically across the area, fromvery affordable tomiddle-class,” says Grobbelaar.

sales, to the combined value of just over R648 million. This translates to an average sales price of around R279 096. In reality though,

ket transactions for the last year stands at around 2 322

Lentegeur, Woodlands, Weltevreden Valley, Colorado Park, Mandalay and Watergate Phase 2. The western half is home to a wealthier population. “The total property mar-

It comprises of a number of sub- areas such as Westridge, Portland, Tafelsig, Eastridge, Beacon Valley,

mately 700 000 residents and has a sizeable property market of about 88 000 predominantly freehold homes.

Affectionately known as the ‘flats’ or Cape Flats, it is home to approxi-

are also close by andMitchells Plain is very much the heartbeat of the area.

children and a swimming pool. According to Grobbelaar, the popular coastal areas of Muizenberg, KalkBay, FishHoek andSimon’s Town

can often be seen casting their lines. There is also a developed area for beachgoers with a playground for

way to the coast and includes a beautiful coastline where fishermen

M itchells Plain is located on the False Bay coast, bound by the R300 and M7 motor- ways and lies between Muizenberg and Khayelitsha. It stretches all the

‘The average price of a house at the lower end of the market was R85 000 in 2005, it will now cost R230 000 in 2016.’

Although the area is faced with significant socio-economic there is a strong community spirit and

also translates to about 270%growth over ten years and about 150% up since 2010.

the scale, the average price is up from R254 000 to R680 000, which

R85 000 in 2005, it will now cost R230 000 in 2016. At the top end of

Where the average price of a house at the lower end of the market was

area has nonetheless delivered excel- lent growth over the last few years and this certainly bodes well going forward.

In line with the performance of the propertymarket over the past two years, in particular that of the former ‘township’ andmore affordable areas, prices in Mitchells Plain are on the up, says Gary Grobbelaar of Seeff.

will now stall in view of the poor economic outlook for this year. The

do and jazzmusician, Benjamin Jeph- ta. 20SK8, South Africa’s best known skate collective has its roots in the Cape Flats. ■

don October, Idols 2002 runner-up, the rapper ‘AKA’, the artist Dion Cupi-

Schoonraad, South Africa’s first chess grandmaster, Kenny Solomon, Bran-

clude Lynne Brown, Minister of Pub- lic Enterprises, comedienne, Kurt

first time buyers with three bed- room units ranging from R300 000 to

False Bay coast. Mitchells Plain a nice stepping-stone area for lower income

upgrade. Even then, it tends to be to the more upmarket suburbs of the

people are reluctant to move out of the area unless they are looking to

over the years. These in-

area home at some point

Africans have called the

mark. Many famous South

the R600 000 to R800 000

lished larger houses around

R400 000 and more estab-

News

May 2016

May 2016

capital growth ticked up to 4,4% – up 40 basis points from the year before. Capital growth was driven by a 5,2% growth in base rental while yield compression also contributed 1%. However, a negative income residual, an in- dication of sentiment, of -1,8% reflected a cau- tious attitude among val- uers and detracted from overall capital growth. The latest IPD South Africa Annual Property Index, sponsoredbyNed- bank, is based on asset level data collected from a sample of 1 524 proper- ties with a total capital value of R292 billion at the end of December 2015. This represents ap- proximately two thirds of professionally managed investment property in South Africa. Stan Gar- run, Executive Director, MSCI, comments: “The latest IPD South Africa An- nual Property Index shows solid and stable results in 2015. This is despite economic and social headwinds that prevail and have negatively impacted other assets. Good property funda- mentals continue to underpin perfor- mance with relatively strong rentals, stable occupancy and lower cost to income ratios. As a result, net income to the sector overall increased substantially on 2014. “Property outperformed eq- uities, bonds and cash over the period, reflecting the value of this asset class in volatile times. Over a five-year period, direct property maintains its reputation as a hybrid asset class, delivering a total return between the MSCI SA Equities Index and bonds at a lower volatility.” He adds, “The headline figures show that the property sector is treading water. Although prospects for absorbing excess market supply in a low-growth environment remain; economic andpolitical shocks present serious downside risk to confidence and investment appetite.” Aggressive asset and property

News ews A n increase of 50 basis points on the previous year. Income return remained steady at 8,7%, while

South African property returns stabilise

management remains a key theme in the year’s results where tenant retention was a priority. Although basic rental growth was similar to the year before, operating costs declined as a percentage of gross rentals. At a sector level, retail property was the top performing sector during ‘Property outperformed equities, bonds and cash over the period, reflecting the value of this asset class in volatile times.’

At a property segment level, CBD and decentralised offices counted

supply in specific property segments and geographies continue toweigh on base rental growth.

three major sectors trended broadly sideways during the year, but excess

of significant income return, which stood at 9,8%. The vacancy rate of all

though it still managed a respectable 12% total return, mainly because

at 14,2%. The office sector continued to underperform in a difficult market,

the year with a total return of 14,3%, marginally outperforming industrial

MSCI, global research service information, indexes and analytics provider, recently released the Investment Property Databank South Africa (IPD) index showing that the South Africa investment property sector delivered an ungeared return of 13,5% in 2015.

among the worst performing seg- ments for the year. Regional shopping

environment, characterised by low GDP growth and increasing cost pres-

as the leading provider of commercial mortgage finance to the SA property industry.” ■

our confidence in and experience of the sector fromNedbank’s perspective

sustainable growth and consistent returns over time. The results endorse

commercial property an attractive asset class for investors looking for

the professionalism of asset man- agement in the sector, which make

sures. This is a consequence of the quality of the property portfolios and

yield impact and minimal income Robin Lockhart-Ross, Managing

segments for the year after a slight value correction in 2014. A positive

centres, with a total return of 13,6%, counted among the most improved

rican investment property sec- tor in the face of a challenging economic and socio-political

for 2015 have demonstrated the resilience of the South Af-

Executive of Nedbank CIB said, “Once again the index results

News

R333 million for upgrades

T he approval of the Draft Budget for the next two financial years requires community consulta- tion to identify the projects. In the 2016/17 budget the directorate will spend R134million on backyarder and informal settlement upgrades, across the city, including in 8 ste Laan (Valhalla Park) Kalkfontein (Kuils River) and Sweet Homes (Philippi). This forms part of the Director- ate’s R1,7 billion allocation for the current financial year. It also includes proposed allocations for new housing projects expected to start in the latter part of the year and the upgrade and maintenance of rental housing stock. The city aims to increase the roll- out of services to backyard dwellers and upgrade of informal settlements over the next two years. This will depend on the co-operation of the communities and the support of beneficiaries. In addition, the city’s Electricity Services Department plans to spend approximately R105 million on the provision of electricity services for backyarders residing on council prop- erty and informal settlements.

The City of Cape Town Human Settlements Directorate plans to spend more than R333 million for backyard informal settlement upgrades across the metro over the next three years.

Since the first pilot Backyarder Pro- gramme projects in Factreton and Hanover Park, the city has rolled out ablution facilities, electricity and dust- bins to thousands of householders living in the backyards of city rental stock. “There are approximately 45 000 backyard dwellers residing on council property and we are doing everything in our power to extend basic services to these residents and improve their living conditions,” says Benedicta van Minnen, Mayoral Committee Member for Human Settlements. “The city is the only metro in the country that has a programme to extend services to backyard dwellers living on council-owned properties. The housing need is acute. It is clear that the current deliverymodel, which consist mostly of costly traditional brick and cement housing is unsus- tainable. This is a fact recognised across the country. The increased

focus on backyard dwellers, the up- grading of informal settlements and the expansion of services are therefore key shifts that are taking place in the human settlements sphere.” According to the report on ‘Housing from a human settlement perspec- tive: in-depth analysis of the General Household Survey data 2002 to 2014’ released by Statistics South Africa in April 2016, the number of residents residing in backyards in Cape Town increased from 4,3% in 2001 to 7% in 2011. Almost 13,5% of households in Cape Town reside in informal settle- ments. “The consolidated city spend on lower-income areas in Cape Town comprises 67% of the total budget. The will and the commitment is there from the city however this is dependent on the buy-in and col- laboration with our communities,” said van Minnen. ■

May 2016

difficulties and challenges in this environment, and this is

a shining example of the great things we can achieve when

we put ourminds together. The good thing we have as South

Africans is the energy to unite around an idea and it then

feels as though we can move mountains.” Acknowledging that there have been many

difficult times in the housing sector, which are likely to persist, Sisulu is confident that things will turn around. “There is nothing more gratifying

from the construction industry to the banking institutions. The sector came

alive and just look where we are now. This has been a great example of good collaboration. We are all aware of the

than to see our dreams – so wonder- fully matured, especially at a time

us in our approach.’

received numerous international ac- knowledgements, confirming that we

were indeed Breaking NewGround. All the stakeholders rose to the challenge,

a house may take for granted how it feels to have a house of your own.

“We look at the period of 2004-2009 as the golden age of the housing sector. An age where the developing world

lauded, encouraged and supported us in our approach. An age where we

‘We look at the period of 2004 to 2009 as the golden age of the sector. An age where the developing world lauded, encouraged and supported

word or two or to take selfies with the popular cabinet minister.

No matter where the Minister of Human Settlements, Lindiwe Sisulu, goes with her entourage, dignitaries, stakeholders and media clamour to have a

S isulu’s recent visit to the prov- 4,3 MILLION HOUSING ince and the City of Johannes- burg’s blueprint for an integrat- ed human settlement at Cosmo City and Malibongwe Ridge, north west of Randburg on Malibongwe Drive, was no exception. The occasion: the 4,3 mil- lion housing opportunities that government has deliv- ered since the advent of the new democracy. Sisulu says that the 4,3 million housing opportunities is a real mile- stone for the country. “This is a celebration of investing

Housing

in our commitment to construct a different future. It is also a celebra-

tion of the collaboration between government, the private sector and

banks.” She adds that some of us who are privileged enough to own

May 2016

Housing

OPPORTUNITIES

dependent on government. All new development projects should encom- pass some element of sustainability and create financial streams for ben- eficiaries. Most housing beneficiaries are apprehensive about using their newasset to access finance and grow their wealth base. In the past, Absa’s housing gurus, Dr Gert Dry and Joe Kondos, had a number of ideas on how fully subsi- dised units could be developed. The Basil Read innovationwas first moot- ed over eight years ago by Kondos. He suggested double storey units that would provide the beneficiary with a house on the lower level and tenants living in the self-contained upper level. This would provide ben- eficiarieswith an extra income aswell as relieve the demand for housing. The 4,3 million housing oppor- tunities’ campaign, which has pro- vided homes for over 20 million people, includes 2,8million RDP fully subsidised units; 986 000 serviced sites; 360 000 Enhanced Extended Discount Benefit Scheme units, 68 640 Community Residential Units, 121 000 social housing units and 6 000 Finance Linked Individual Subsidy Programme homes. ■

Human Settlments, Paul Mashatile, the Basil Read team, her advisors, the newly appointed head of the Social Housing Regulatory Authority, Rory Gallocher, Chairman of the National Home Builders Registration Council, Abbey Chikane, First National Bank’s developer finance and building loans specialist, Marinda Barnard and her counterpart on end user finance, Francois Strydom, the formidable Calgro team, Ben Pierre Malherbe and Derek Steyn, as well as provincial stakeholders. The Basil Read team hosted the Minister and was keen to show her all the work that has been achieved in order to provide sustainable, fully subsidised housing at Malibongwe Ridge and Cosmo City. The innovative residential units at Malibongwe Ridge all have additional units/rooms and facilities. This provides beneficiaries with an additional source of income, as these rooms can be rented to Zan- dspruit informal settlement dwellers. Originally the fully subsidised units were developed to house all the Zandspruit residents. But those who do not qualify for free subsidised housing still have the opportunity to live in decent, affordable hous- ing. This is one of the most exciting housing developments; it provides low income earners with not only a free house, but the additional income makes them less financially

when the clouds of economic gloom hover above our heads with remark- able obstinacy. It is perhaps fitting that we remind ourselves of themany wonderful things currently taking place in our beautiful country.” Cosmo City was chosen to launch the celebration campaign as it is the most advanced of the department’s projects and has all the inclusive housing elements. “Cosmo City is representative of what human settlements should be,” said Sisulu. Cosmo City is one of the initiatives that the Department of Human Settlements has undertaken since 2004. Other key projects include the N2 Gateway housing project in Cape Town and Cornubia in Durban. The campaign celebrates an achievement which has seen more than 20 million people benefitting fromgovernment housing. The recent launch held at the Cosmo City Multi- purpose Complex coincided with the 10 th anniversary of the development. Cosmo City has 12 500 residential units including fully bonded, par- tially and fully subsidised units and social housing and is home to 70 000 people. A decade down the line, the community of Cosmo City has its own schools, clinic, shoppingmall, library and a fire station currently under construction and due for comple- tion later this year. The Minister’s entourage included Gauteng MEC of

May 2016

Housing

Renovating in sectionals

A ccording to sectional title spe- cialist, Michael Bauer of IHFM, alterations to a unit is not permitted without the prior consent of the trustees of the body corporate and the local municipality. This applies to improvements that involve structural changes, an exten- sion of a section or an alteration to the external façade of the building, or any major building work. If electrical work is involved, a qualified electrician must be used and a compliance certificate needs to be issued. The same thing applies if plumbing work is required: the plumber’s compliance certificate has to be issued on completion of the work. “These requirements are often overlooked, especially by home owners undertaking kitchen and bathroom renovations. Although, the changes may appear to be minor it sometimes can have serious con- sequences and result in damage to other units,” said Bauer. Proceedingwith renovations with- out first applying for approval is a breach of the scheme’s rules of conduct. These rules should be filed with the Deeds Office and included as an addendum to the Deed of Sale. This can vary fromscheme to scheme but owners should make a point of reading them carefully. This should be done before completing the sales agreement. The most common building al- teration problems relate to material deliveries and the increased risk of theft, noise, dirt and rubble, which can severely disrupt the lives of other residents. “Typically, a new owner will take transfer of a unit and two or three days later start a major makeover – without the trustees’ consent. This includes jackhammers, grinders and floor sanders. It can also mean building rubble being moved from an upper unit to the ground floor and using the lifts in the building. If the plumbing has to be revamped, this can mean cutting off the water sup- ply for a few hours. Matters can get even worse if the renovations causes damage to the structure, common property or neighbouring units.” Bauer says that the new home owner should apply to the body corporate for permission and then

Problems often arise when an owner of a sectional title unit plans to make changes to the property but has not followed the correct procedure.

corporate. Delivery vehicles are also a hazard and can cause damage to common property, however, this should be covered by the insurance policy of the principle contractor. It is important to photograph the areas before work is carried out, and also on completion. This can be pro- duced as evidence, in the event of an insurance claim or if the contractor over-claims. “The trustees have the right to ask the owner for a deposit and to stipulate what hours the contractors will work – and to ban any evening, earlymorning or weekendwork. They can also ban the use of the scheme’s common property for vehicle parking or rubble collection,” says Bauer. “Sectional title members have to be aware at all times that what might suit them does not always suit other members – and these matters are governed by the conduct rules, which no member can ignore. If the conduct rules do not pro- vide for a strict process, then the trustees should amend the conduct rules as soon as possible to cover the body corporate and the owners’ responsibilities during this process,” concludes Bauer. For further information email: michael@ihfm.co.za ■

approval from the municipality, be- fore appointing the contractor. They must also ensure that the contractor’s employees are listed with the body The home owner should apply to the body corporate for permission, then approval from the municipality, before appointing a contractor, and also ensuring that the contractor’s employees are listed with the body corporate. ‘ ‘

May 2016

Housing

New housing stats show strong growth

A ccording to Jacques du Toit, Absa Home Loans Property An- alyst, the volume of activity in the construction phase of new hous- ing showed relatively strong growth comparedwith a year ago, whichwas the result of a sharp improvement in one segment of themarket on a year- on-year basis since the start of the year. These trends are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing. ‘The number of flats and townhouses reported as being built increased In January to February this year the number of new housing units for which building plans were approved increased by 3,2%year-on-year (y/y), or 271 units, to 8 806 units over this two-month period. The construction phase saw the number of newhousing units built in- creasing by 28,1% y/y, or 1 443 units, to 6 575 units in the first two months of the year. This growth, however, was the result of extremely strong growth in the segment for flats and townhouses. The number of flats and town- houses reported as being built in- creased by around 122% y/y, or 1 507 units, to a cumulative 2 739 units in by around 122% y/y, or 1 507 units, to a cumulative 2 739 units in January and February.’

Year-on-year growth in the volume of building activity in the planning phase of the South African market for new housing remained in the low single digits in the first two months of 2016.

January and February. The sharp increase in housing units built in this segment of the market compared with a year ago may be attributed to reporting trends. The real value of plans approved for new residential buildings was down by 2% y/y, or R113,5 million, to R5,52 billion in the two months up to February. The real value of residential buildings reported as completed increased by 15,9%y/y, or

R491million, to a cumulative value of R3,58 billion in January and February this year. These real values are calcu- lated at constant 2010 prices. The average building cost of new housing constructed came to R6 403 per square metre in the first two months of the year, which was 8,7% higher than the average cost of R5 890 per squaremetre a year ago. The aver- age building cost per squaremetre in the three categories of housingwas as follows in January andFebruary 2016: • Houses of 80 m² R3 964 m² • Houses of 80 m² R6 459 m² • Apartments and townhouses R7 425 m² The South African economy is ex- pected to experience tough times in 2016, with growth forecast at a much subdued 0,6%, while inflation and interest rates are in an upward cycle. Consumers are facing increased fi- nancial strain, with confidence levels set to remain low. Against this back- ground, residential building activity may see some downward pressure in the rest of the year. ■

May 2016

Housing

Leratong City

– a new mega development

T he joint venture development between McCormick Property Development, Calgro M3 and Sasuka Logistics Services is located near the existing Leratong Hospi- tal. The first phase will consist of 15 000 residential units, an intermo- dal transport hub, a government pre- cinct as well as a 30 000 m² regional mall. The development extends over 400 ha and construction of the bulk infrastructure is expected to com- mence by June 2016. Located on two major regional movement routes that form part of the primary movement network of Gauteng Province, the Leratong City project has been selected as an area for Neighbourhood Development Partnership Grant (NDPG) invest- ment. It forms an integral part of a larger regional node set in the context of a previously disadvantage town- ship area, which has the potential

The R6,2 billion Leratong City integrated nodal development in Gauteng is set to get under way in Leratong, Mogale City.

To complement the housing and oth- er facilities, essential social amenities such as crèches, a community centre, educational facilities and healthcare facilities will be developed. Other amenities will include mixed-use business centres, religious sites, various recreational parks and green spaces, as well as public sports facili- ties. Proximity of the residential units to the amenities has been taken into consideration in the spatial arrange- ment. The development is close tomajor arterial road linking to Mogale City, Soweto, Randfontein, Merafong, Roodepoort, Florida and Johannes- burg. Leratong City is well located to job opportunities and this is further

to transform into a high intensity regional node. The project will include the following units: • 4 200 fully subsidised BNG units • 8 300 GAP, FLISP and Social Hous- ing units • 2 500 freehold affordable housing units Units will be available for families qualifying for fully subsidised units to families earning over R15 000 a month, resulting inahousing solution based on a wide range of financial capacity. Affordability and a variety of products were important consid- erations during the design process.

May 2016

Housing

breaking development. The project is aimed at transforming a disadvan- taged former mining area into amore vibrant community where housing, shops, schools and places of work are integrated in a single, mixed-use neighbourhood,” says Thamsanqa Mfundisi, Executive Chairman of Sasuka. “This development will focus on quality walk-ups with a secure at- tractive living environment. It will

strengthened by the significant de- velopment of commercial precincts within the area. The project will provide for the construction and improvements of major road upgrades, as well as opening up critical links to connect- ing suburbs. This also includes major sewerage andwater supply upgrades. A new electrical substation will sup- port the development and surround- ing areas. Calgro M3, together with local partner, Sasuka, has assumed a va- riety of roles in the project, including that of implementing agent, turnkey developer, contractor and marketer. “The project is facilitated by Cal- gro M3’s turnkey business model, where the work involved will be per- formed in-house, which keeps costs contained. A wide range of quality, well-priced residential products will be offered to a range of income earn- ers,” explains Calgro M3 Managing Director, Wikus Lategan. In addition, the implementation of this project will stimulate the local economy through the participation of the local community in the different phases of the project, in terms of Cal- gro M3’s local community-based em- ployment philosophySouth Africa’s steadily rising population, combined with an influx of people from rural to urban areas, as well as a general in- flow intoGauteng, means it is increas- ingly challenging to provide sufficient housing. Leratong City will go some way to meeting that demand. “Sasuka, a Mogale City-based black-owned and managed property development company is delighted to partner with Calgro M3 and Mc- Cormick Property in this ground-

thousands of families, but also pro- vide increasing support to our devel- opment of the Leratong City Mall. The retail precinct forms the cornerstone of this exciting development,” notes JasonMcCormick, Managing Director of McCormick Property. The project heralds a new area within the West Rand region by pro- viding a creative human settlement solution that is strategically aligned to National and Provincial Govern- ment policy framework. It further seeks to positively impact on socio- economic transformation challenges not only by providing employment and entrepreneurial opportunities, but also revitalising industry within the region. “Housing is central to a person’s existence and quality of life,” adds Lategan. “Shelter is one of the most basic humanneeds. Stable, quality housing is essential to raising and educating future generations. We see this as an opportunity and at the same time a responsibility to ending the cycle of poverty, and are proud to be associ- ated with this initiative.” Established in 1995, Calgro M3 is a Johannesburg-based company that provides mixed-use/integrated residential developments across the income spectrum – from fully subsidised housing and subsidised rental units to gap housing, afford- able housing, sectional and full title developments. As a black-empowered residential project developer, Calgro M3 has consistently delivered end-to-end so- lutions in high growth nichemarkets. Calgro M3 is listed on the Johannes- burg Stock Exchange. ■

‘A new electrical substation will support the development and surrounding areas’

capitalise on the location and be- come a trendsetter in a very large residential and commercial develop- ment project along the newMain Reef Corridor. The McCormick Property, Calgro M3 and Sasuka partnership has an unquestionable pedigree to deliver within the set timeframes,” adds Mfundisi. The project also aims to revive the Chamdor Industrial area, making it accessible and attractive to potential investments. This will create more jobs, converting the unemployed into income earners and providing a market for rental and bonded hous- ing units. “McCormick Property is pleased to have partnered with Calgro M3 and Sasuka for the roll-out of this significant housing development that will not only provide housing for

May 2016

Housing

Affordable hous

According to the Pam Golding Residential Property Index, house price inflation in the lower-price segment of under R1 million has been outperforming all other price categories since early-2015.

T his has continued into 2016, with an increase in prices in this category of 9,4%. During 2015, this category recorded an increase of 7% – compared to the national average of 5,8%. However, within the affordable sector – defined by Lightstone as homes valued at under R250 000 – house prices have risen by a stagger- ing 28,5% during the first 10 months of 2015. AndrewGolding, Chief Executive of Pam Golding Properties group, says there is robust growth in former town- ships. The group’s quarterly property index reports house price inflation in these areas rose by 10,7% in the third quarter of last year. This is almost double the house price inflation rate recorded by the overall major metro areas during the same period. House price inflation in the former townships has nowoutperformed the major metros for five consecutive quarters. Despite the robust growth in

house prices in the former township areas remains the most affordable area in the housing market, with an average estimated house price of R300 000. With a young population, a large portion of whomhave not yet entered the housing market as potential buyers, there is still considerable potential growth. This is likely to underpin the local housing market – particularly in the affordable price bands, during the years ahead. House prices continue to strength- en in the Western Cape. During the course of last year, house price infla- tion in the Cape accelerated from 8,2% in late-2014 to 10,4% in De- cember 2015 – bringing the average for the full year to 9%, which is more than 3% above the national average. House price inflation continued to accelerate in early-2016, with prices rising by 10,6% above year earlier levels in January. Says Golding: “Interestingly, un-

like the other major provinces, in the Cape the strengthening in house prices is relatively broadly-based and is not limited to the lower-price band, as is the case in both Gauteng and KZN. Another regional housing market which is bucking the national trend of slowing house price inflation is the Eastern Cape. Looking at the overall regional performance, the Eastern Cape is showing signs of a slight slowdown – with total regional unit sales during the first half of the year declining by 12,6% from year earlier levels. How- ever, sales within the region’s two largest metros – Port Elizabeth and East London – remained relatively resilient last year. “It is thus the resilient metro

May 2016

Housing ng prices rose by 28,5%

substantial increases in real income.” There has also been a significant increase in the number of property purchases by black buyers. Agents in East London estimate that black property buyers accounted for be- tween 60% and 80% of total sales last year. The impact of new entrants into these metro markets is evident in Port Elizabeth, whichhas experienced particularly strong levels of activity among first-time buyers. These buyers have been most ac- tive in the lower-price band below R1 million. According to Lightstone data, approximately 56% of all sales in Port Elizabeth last year were priced at R800 000 or less. Although house price inflation in KwaZulu-Natal as a region is

markets which appear to be driving the rebound in the regional housing market. House price inflation in Port Elizabeth accelerated to 7,4% in the final quarter of last year. While in East London house prices increased by 15,2% from the previous year,” says Golding. “Housing demand in these met- ros has been fuelled by an influx of people from surrounding rural areas. However, analysts believe that strong housing demand in themajor metros is primarily due to the growingmiddle class in the region. The burgeoning middle class in the area is at least partially attributable to increased employment in the public sector. In recent years, public sector workers’ remuneration has increased more rapidly than inflation, resulting in

losing momentum, it is slowing from a relatively high base and continues to marginally outperform the na- tional average. House price inflation in the province averaged 6,5% last year – exceeding bothGauteng (5,1%) and the overall South African housing market (5,8%). Among the major metro areas, Durban is experiencing the slowest growth in house price inflation – ris- ing by just 5,4% in October. Unlike South Africa’s other major provinces, the housingmarket in KZN is not being driven by strong growth in the major metro region. Instead, it is growth nodes along the north coast – including Durban North and beyond – which are behind the still high levels of housingmarket activity in the region. ■

May 2016