Africa’s tallest building earmarked for Centurion

JOHANNESBURG – The lid has now been lifted on how the proposed tallest building in Africa, earmarked for Centurion will be funded and the city of Tshwane has assured residents it will not be coming out of the municipal coffers.

Mayor Kgosientso Ramokgopa’s announcement of the ambitious project last month has drawn both criticism and praise from a number of quarters, including business, architects, scientists and sceptics.

A consortium of promoters, have clarified their position on what the R17bn development, dubbed the will entail in terms of cost and implementation. Welcome to email willem@propx.co.za for more info.

“What has been done is a desk top study based upon extensive research. A number of the results of this research still has to be verified. There is a fair amount of work to be done between the conception of a development and the actual implementation.”

One of the major concerns raised so far has been the dolomitic nature of the proposed site on and around the Centurion Lake located between the Ben Schoeman Highway and the N1 Highway corridor adjacent to the Gautrain station.

Mayor Kgosientso Ramokgopa announced last month that the tallest tower will reach 110 storeys and will be flanked by two highrises of 80 and 60 floors each. The total height of the tallest tower will be 447m.

A technical survey is yet to be conducted to test the integrity of the ground earmarked for the development’s foundation. He added that geologists and engineers involved hope to have concluded their technical survey by September 2012.

Critics have said the foundation for a building higher than 100 storeys would have to be extremely deep, costing an exorbitant amount. In order to obtain yield from this, landlords would have to charge in excess of R200 per m².

The construction of the foundation will be a challenge. “I don’t know how far down we will have to dig, but it will be a small mine.”

He says depending on the outcome of the technical survey and other studies, the concept in its current form might have to be shelved.
Source. moneyweb.co.za (amended by OfficeForSale)

Sandton Gauteng Offices for Sale

We are proud to offer you a unique property opportunity to own your own offices or invest in the heart of Sandton, Gauteng, South Africa.

The new office development will be situated on a prime site in the Sandton CBD, only 50 meters from the Sandton Gautrain Station.

The completed building will consist of 8 floors of offices and 2 floors of exclusive residential apartments. There will be 6 levels of basement parking below ground, providing a generous parking ratio of 4 bays per 100m² for the offices.

Completed office and residential units will be sold on sectional title and the anticipated completion date is November 2013.

There will be 45 office units, ranging from 120m² to approximately 1000m². Individual units can also be combined per floor measuring aproximitaly 2500 m². Priced at just over R31, 000.00 per m², including parking, storerooms and balcony the investment provides scope for strong capital appreciation.

The 7 residential penthouse apartments will offer the ultimate in exclusive, luxury living with generous spaces and top of the range finishes to go along with spectacular views and of course the ease of access to the Gautrain.

Options are available from 119 square meters at R3.95mil with parking and storage included. Alternative sizes are also offered from 250’s, 400’s, 500’s, 700’s or 2500 square meters per floor.

Welcome to give me a shout on 084 491 1123 or international +27 (0) 84 491 1123 or willem@propx.co.za to have a quick consult per phone, Skype i.e. willem.tait or arrange a meeting to view the offices.


Alternatively, please click here and complete the quick contact form.

Please note that we also offer alternative commercial purchase, lease and sale options in the Sandton area as well as Gauteng, South Africa and Africa.

Get a copy of the new Property Sector Charter (effective 1 June 2012)

Kindly take note that the Property Sector Charter came into effect on 1 June 2012.

The objectives of the Charter is, amongst others, to:

-Promote economic transformation in the property sector in order to enable meaningful participation of black people including women, the youth and people with disabilities; 

-Unlock obstacles to property ownership and participation in the property market by black people; 

-Promote property development and investment in under-resourced areas which enhances basis infrastructure, encourages investment and supports micro and small enterprises and; 

-Enhance entrepreneurial development and increase the number of B-BBEE firms and SMMEs providing services and products to the sector whilst promoting sustain able growth of such firms.

For your ease of reference CLICK HERE to download the Property Charter

Rates shock with new property valuations

Municipalities countrywide are making preparations for the next large-scale property valuation, which could impact property owners' pockets.

The lifespan of the initial valuation rolls in terms of the Municipal Property Rates Act is nearing at close. The rolls have to be adjusted every five years, which period can be extended by one year.

Espach explains that although the act came into force in 2006, most municipalities drew up their valuation rolls between 2007 and 2009.
This was the first time that both land and improvements were taken into account and farm land was included on a broad scale, ignoring the former sliding scale.

Cape Town is already using a second roll, but most other municipalities, including Johannesburg, Ekurhuleni, Tshwane, Nelson Mandela Bay and Mangaung will only compile a new one next year. eThekwini is starting to use a new roll this year. 

Municipalities begin preparations at least a year ahead of time. Tshwane's valuations start in February so that they can be published for comment in January next year. Johannesburg's tenders for the valuation work closed late last year. 

We advise property owners to establish what the schedule is for the municipality in which their properties are situated. 

Statutorily the authority concerned must inform the owner of the new valuation, but this does not always happen. If the permissible period has expired without an owner registering an objection, it becomes more difficult to correct faulty valuations and an owner could for the next five or six years be saddled with a high rates account. 

Many property owners received a severe shock in the previous round. Many municipalities appointed new assessors who did not know the area and many mistakes ensued. 

In a case the valuation of a shopping centre was reduced by the appeal board from R555m to R323m by the appeal board. Some of these issues are still outstanding. 

If, after an objection, a valuation is adjusted by more than 10%, the law determines that it must be reviewed by the appeal court. None of Johannesburgs reviews have yet been finalised. 

The law allows a minimum of 30 days for objections, but many municipalities extend this to 60 or 90 days. 

Source: Sake24

New Real Estate Investment Trust (REIT) legislation

The new Real Estate Investment Trust (REIT) legislation has been earmarked for finalisation in 2013.

The internationally recognised REIT structure exists in countries such as the US, Australia, Belgium, France, Hong Kong, Japan, Singapore and the UK, explains Estienne de Klerk, REIT Committee Chairman of the Property Loan Stock Association (PLSA), which is spearheading the SA initiative to establish a best of breed REIT vehicle. Introducing the REIT structure will bring SA listed property investment in line with international norms.

Over the past 10 years, listed property has become the most active sector on the JSE in terms of new listings, mergers and acquisitions. It has shown resilience and relevance. It has also grown, matured and volunteered an extremely high level of stakeholder transparency.

Presently the listed property sector comprises five Property Unit Trusts (PUTs), but about 20 Property Loan Stocks (PLSs), the largest of which are major counters on the JSE: Growthpoint Properties, Redefine Properties and Hyprop Investments. These numbers reflect the industry preference for the PLS structure. PLSs have also been responsible for the sectors growth, and represent its most thriving counters.

The listed property sector has been working with National Treasury for over five years to formalise REIT legislation in South Africa. Neither of the current structures, PLS or PUT, offers the uniformity and simplicity to facilitate international investment. In addition, there has been some potential for tax uncertainty, which is in itself enough to deter some international investors. 

The REIT structure typically provides for the flow-through of net rental to the investor, after expenses and interest. This income is ultimately taxed in investors hands, as is normal, says de Klerk. 

REIT legislation discussions were initially slow as a result of the various industry complexities and a number of immediate issues facing National Treasury, highlighted by the global financial crisis. 

However, the April 2011 tax legislation amendment bill raised the priority of REIT legislation, particularly the proposed Section 8G which deals with debentures with no specified termination date. 

Had it not been willingly suspended by National Treasury, this section would have resulted in the debenture interest distributed out of PLS companies being taxed as a dividend, notes De Klerk. This would have destroyed significant value in the listed property sector. 

The proposed amendment was never intended to have a negative effect on the sector and was, in fact, designed to prevent tax leakage in other structured finance transactions. National Treasury suspended Section 8G until the successful completion of REIT legislation, which it has stated is a priority and is intended for finalisation by the end of 2012 or early 2013. 

De Klerk reports that considerable progress is being achieved with the potential proposed REIT regulations, as well as seeking an appropriate regulatory framework and efficient REIT structure for South Africa. National Treasury has committed a vast deal of time to understanding the listed property industry and defining areas to benefit from regulation and excluding those that will not. 

The sector, through the PLSA, Association of Property Unit Trusts (APUT) and appointed REITs advisors, has had various productive meetings with the National Treasury Tax Policy Unit as well as the JSE Limited and Financial Services Board. In December 2011, National Treasury met with UK and European experts including representatives of the European Public Real Estate Association (EPRA), and a KPMG experienced UK revenue services specialist to learn about best of breed practices in the UK and globally. 

It is expected that internally and externally managed REITs will be included in the legislation. De Klerk points out that while providing flexibility in management structure, the worldwide trend is for investors to favour an internally managed company, however local REIT factors are considered. 

We anticipate a governance framework consistent with modern best practice, says de Klerk. Investors should be able to vote on large transactions and appoint or remove those vested with management power. De Klerk further points out that additional governance protection results from being listed on the JSE, ensuring the transparent, effective, professional management essential to protect 
investors. 

The new legislation should also give companies currently in the listed sector the opportunity to access the new SA REIT structure, with no entry charge. This structure should also deal with the unique variations and competitive differences of the sector component companies, without stifling operational efficiency or having unintended consequences and inhibiting the ability to respond appropriately to changing circumstances and conditions. 

The new SA REIT structure should provide tax certainty and efficiency relating to distributions. It should also cure anomalies in the availability of tax deferral or roll over relief for mergers and acquisitions, says de Klerk. 

A single unified umbrella body for listed property in SA is also expected to emerge in the near future with the PLSA and APUT merging. 

Source: PLSA 

Vacant office space pressure landlords

The number of To Let signs outside vacant or partially vacant buildings is a reflection of growing desperation on the part of landlords says analysts.

In an effort to let space and reduce nagging vacancies, landlords are being forced to be more liberal with broker commissions, tenant installation allowances and rent-free periods.

Office vacancies are rising in cities as the economy struggles to start humming again, and a recovery is not expected soon.

While most of the increases in vacancy rates are marginal, they confirm a trend that should concern landlords and developers.

According to South African Property Owners Association-IPD (Investment Property Databank) research for the fourth quarter of last year, national office vacancies increased to 10,4% from 10,2% in the third quarter.

Across the country, P-grade space, which is top-quality, modern property, and A-grade space, property not older than 15 years, are performing much better than lower-grade stock.

The A-grade office vacancy rate is 8,5% and P-grade offices have a vacancy rate of below 3%.

Should the rising vacancy rate trend continue, it is expected to damp rental-income prospects and affect valuation rates.

Stanlib property funds head Keillen Ndlovu said yesterday that the number of To Let signs on Rivonia Road had to be seen to be believed. Here you can easily find two to three big To Let signs outside each of the vacant or partially vacant buildings. This is a reflection of desperation

The oversupply of office space in the past few years was a result of liquidations of small companies, he said.

The higher the vacancies, the lower the rental income, which leads to a lower property valuation. Mr Ndlovu said vacancies were a cost to landlords due to the opportunity cost of sitting with a vacant or partially let building.

Higher vacancies mean landlords are paying rates even for vacant space. They are also paying for services like security, gardening, not to mention paying for interest costs if the property is funded with debt without full rental income. 

Meago asset manager Thabo Ramushu said office sector recovery would depend largely on the growth in employment in the financial services sector. 

Demand is expected to emanate for the A-grade market with B-and C-grade space likely to suffer further. Decentralised office nodes are expected to show the best growth potential, while central business districts are likely to suffer further. 

Mr Ramushu said the industrial market was expected to continue to perform well with minimal vacancies, which fell to 4,2% by year-end. 

However, the smaller and mid-tier industrial units are taking longer to fill up, while the big box, logistic space outlook remains optimistic with limited supply as the underpin. 

Optimism in the building industry remains weak with low levels of building plans passed. Speculative development will remain subdued and should be supportive of the absorption of vacancies, Mr Ramushu said. 

via I-Net Bridge 

3000 Property state leases, tenders to be policed

Finance Minister Pravin Gordhan announced steps on Wednesday to fight corruption in the procurement pipeline, notably a review of all government property leases.

The minister of public works and I have agreed to undertake a joint review of the validity and cost effectiveness of all government property leases, he said in delivering his 2012/13 Budget in the National Assembly.

Pressed for a timeline for the review of 3 000 contracts, Gordhan would say only that it would take roughly a year.

His announcement comes in the wake of the 2011 police headquarters lease scandal and the national government intervention in Limpopo, Gauteng and Free State. 

Gordhan said one of the lessons learned from placing several provincial departments under administration was the need to clean up tender systems.

We need stricter oversight of supply chain management processes.

He told a media briefing on the budget that the Treasury would play a key role in policing the tender process and preventing nefarious abuses by what he insisted was a minority of civil servants.

The Treasury is going to be a key part of making sure that there is both expeditious facilitation of these processes of procurement on the one hand, but on the other hand to keep an eye on making sure that we get the right value for money.

Gordhan said his department would draft a price referencing system to make it easier to detect tenders that exceeded acceptable levels.

There were instances, he said, where contractors had factored bribes into the prices charged to the state.

The Treasury would also appoint a chief procurement officer to monitor tender processes across all levels of government. There would be strict vetting of all procurement officers and a review of the skills requirement for people in those positions. 

Finally, the tax clearance system would be strengthened to bar fraudsters from doing business with the state. 

The former head of the Special Investigating Unit, Willie Hofmeyr, estimated last year that corruption cost the state up to R20bn a year. 

Public Works Minister Thulas Nxesi said that as the review of government leases progressed, he would take landlords holding unlawful contracts to court to reclaim rent the state had paid them. 

Nxesi replaced Gwen MahlanguNkabinde, who was sacked in the police headquarters scandal. 

He said coming to office against a backdrop of lease scandals had alerted him to widespread problems surrounding leases, including a lack of capacity in his department. This also raised the real possibility of fraud and corruption on a grand scale. 

Nxesi said he had no choice but to turn to the Treasury to provide public works with procurement training and oversight: I have conceded that the department lacks the capacity to turn around the problem with the leases," he said. Treasury does have capacity to assist and indeed we have been working closely with the Treasury technical assistance unit. 

Source: Fin24

E-tolling set to affect property decisions

The proposed tolling of the freeways around Johannesburg is expected to have a negative influence on the property market, with companies taking into account the possible effect of tolls in their choice of location. According to Willem Tait, from PropX, the opposite could also apply i.e. sliding into the gap that will be left by the tolling system.

According to property experts the proposed tolling is coupled with reported additional taxes for properties situated along public infrastructure corridors such as the Gautrain, a factor that will place increased pressure on consumers, affecting the retail and industrial markets.

Transport issues are also increasingly affecting the commercial property market with regard to choice of location, with the Gautrain stations a key positive factor. 

The opening of Gautrain routes as well as the implementation of the bus rapid transit routes has increased demand for properties close to those routes. The opening of the Sandton Gautrain station has opened up the Sandton retail precinct to a wider consumer market to the north, which now has easier access. 

A new trend in the marketplace is that due to the lack of new stock coming on to the market, older buildings are in demand and can be acquired at competitive prices. 

In addition, landlords driven by the need to fill vacant space are prepared to accept lower initial rentals. However, in such instances escalations tend to be higher than in the last few years. 

Source: Business Live (amended)

Building index climbs most in nine months. Investors are seeing opportunity

Construction stocks gauge rose the most in nine months on expectations that the outlook for the industry is improving.

The ten member FTSE/JSE Africa Construction and Building Materials index climbed 2,5% to 44,81 at the close in Johannesburg, its biggest increase since June 7. Pretoria Portland Cement Co led gains.

The construction sector may have bottomed after the index fell 26% last year, Henre Herselman, a derivatives trader at Nedbank Group BoE Stockbrokers in Johannesburg, said by phone. Investors are seeing opportunity.

President Jacob Zuma announced plans for a massive infrastructure drive in his February 9 state of the nation speech to help spur investment and support growth in the continents biggest economy. The Treasury allocated R844,5 billion to telecommunications, energy, transportation, housing and water projects in the three years through March 2015. 

Pretoria Portland Cement, biggest cement producer in South Africa, rallied 4,1% to R31,35, bringing its gain this year to 14%. Murray and Roberts Holdings, the second largest construction company, rose 3% to R29,25. Group Five added 1,7% to R27,72 rand while Aveng advanced 1,9% to R36,70. 

Source: Moneyweb(amended)

440 000 small business could be back in the market

Around 440 000 small businesses have closed in the last five years, according to the Adcorp Employment Index released today.

The group February 2012 employment index highlights with alarm the closure of 440 000 small businesses over the past five years, Loane Sharp, labour economist at Adcorp, said in a statement.

In addition, the number of new business start ups was at an all time low.

The gravity of the situation is emphasised by the fact that 68% of all South African workers are employed by small business employing fewer than 50 people, Sharp said.

There were several reasons for this, including the 2009 recession. The number of small businesses in South Africa had stagnated over the past decade. Between 2001 and 2011, there was a roughly constant number (two million) of small businesses. The number increased slightly (to 2.4 million) during the economic boom of 2004 to 2006, but has, since 2006, shrunk by 18.2%, Sharp said. 

Given that the typical small business employs 12 people (aside from the owner-manager), a revival of this sector could potentially create 5.3 million jobs. 

In 2001, around 250 000 people were involved in starting their own businesses. In 2011, only 58 000 people were trying to do so, a decline of 76%, Sharp said. 

Applying the average ratio of 12 workers per small business, the reduction in entrepreneurial activity over the past five years has reduced the economy job creation potential by around 2.3 million jobs. 

Sharp said if the recession were the only factor to blame, then this trend should reverse as the economy recovered. However, regulatory issues were not helping.

The World Economic Forum Global Competitiveness Report for 2011 cited labour problems , weak public education, restrictive labour laws, and a poor work ethic, as among the most problematic factors for doing business in South Africa, Sharp said. 

Small businesses offer the only real prospect of large-scale job creation in South Africa, yet conditions for small businesses have deteriorated markedly. The number of people trying to start their own businesses is a critical indicator to watch in the coming months. 

Source: City Press (amended)   

Property and the Constitutional Court

The background to this case is that a property developer bought a rundown, old fashioned block of apartments in Braamfontein, Johannesburg, an area which is much in demand by tenants, especially students, on account of its strategic position.

The developer then made known to the tenants his plan to renovate and upgrade the units - as a result of which, he said, rents would have to be raised 100 to 150%.

This was shattering to the tenants concerned because they had been paying very low rents, some of which were said to be under R1 200 per month. Furthermore, some of the tenants had lived there for over ten years.

The tenants appealed in court against this decision claiming that such huge rent increases were oppressive and unfair and contrary to the Rental Housing Act.

The case ended up at the Supreme Court of Appeal, which ruled in favour of the landlord who, it said, was entitled to a fair profit from his investment (he had claimed he was actually losing money on it) and he had no tenants on long leases all such long leases had expired and all his tenants were, therefore, leasing on a one month notice basis.

The tenants then took their case to the Constitutional Court arguing that they had a constitutional right to housing and that evictions were not acceptable unless similar quality accommodation at the same price in the same area was available.

The Constitutional Court then ruled that the Supreme Court judgement should be set aside and the eviction notices given to tenants should have been stayed.

 This court also however recommended that the tenants should approach the Rental Housing Tribunal for a decision on whether the landlord action had been fair or unfair in terms of the Rental Housing Act and the court supported the landlord's right to appeal to the Tribunal as to whether increasing the rents was fair or unfair. 

In addition, the Constitutional Court issued an order allowing any of the parties to lodge a complaint in terms of the Rental Housing Act (by 2nd May). If such a complaint is lodged the parties are granted permission to apply to the Gauteng Rental Tribunal for a ruling. The court said that if this was not done within two weeks the tenants' case would be dismissed. 

Source: IOL (amended)