Category Archives: Johannesburg

Confronting the Slumlords – Jo’burg Innercity Renewal

Johannesburg_HillView_2colJohannesburg ‘s inner-city is continually in the news as a place to invest in property despite the crime and grime factors at play, the City claims to have attracted R9billion in investment into the restoration of derelict buildings. With organisations like Joshco and TUHF making strides in seeing buildings restored and viable for investment one has to ask what’s being done by the City to push back the forces of decrepitude that bedevil so many of its high rise buildings.

Enter the multi-disciplinary task force that has been given the task of the seeing the inner city restored and the criminal elements ejected. On the team are the South African Revenue Service (SARS), the Johannesburg Emergency Management Services, the National Prosecutions Authority (NPA), the SAPS as well as the Metro Police.

The-Vinuchi-building-cnr-of-end-and-kerk-streets-in-the-Joburg-cbd-is-one-of-many-buidlings-that had been-taken-over: Herbert Matimba New Age.

The-Vinuchi-building-cnr-of-end-and-kerk-streets-in-the-Joburg-cbd-is-one-of-many-buidlings-that had been-taken-over: Herbert Matimba New Age.

Thirty-six properties have been restored to their rightful owners since the team began its work. But it’s not all rosy, alas a thousand building are reportedly in the hands of hijackers.  This defrauds the City of revenue from rates and taxes, pushing up costs for potential property investors.

It’s specifically on this point that culprits have been pinned down. Previously police charged building hijackers with minor offences such as trespassing and intimidation. Unfortunately complainants were informed that it was a civil matter and that they could not be helped. But with the establishment of the task team, offences related to building hijacking – which is not a crime on its own – include the more serious charges of fraud and tax evasion.

Regrettably this is a process of three steps forward, two steps backward. Since the restoration of 36 buildings restored to rightful owners seven have been re-hijacked. This is blamed on not having the resources to guard all the buildings.

William Pudikabekwa

William Pudikabekwa

Looking at the broader picture, according to William Pudikabekwa, manager of properties and investigation in the council’s development planning and urban management department:  “But from when we started, when Joburg was a ghost town, I think there has been a turnaround in that to date more than 2 000 hijacked bad buildings [this precedes the work of the task force apparently]  have been given back to their rightful owners. I am seeing the changes happening now in the inner city since we started with this process.” He said in an interview with the Saturday Star.

The Johannesburg website announced last month that the task team had arrested 50 slumlords and reclaimed 50 bad buildings from hijacking syndicates, there seems to be a lack of continuity with regards to numbers. Louis Geldenhuys, the head of the City’s Legal and Special Investigative Unit  is reported to have said that his unit had in some cases reached an agreement with the rightful owners, who had since signed compliance agreements.

PArks

Parks Tau

Recently Executive Mayer Parks Tau did a tour of the inner city. Tau and his colleagues wanted to see for themselves the challenges in Berea, Joubert Park, Yeoville, Bertrams, Fairview and Jeppestown. They visited hijacked and abandoned buildings and overcrowded houses, all of which are connected to illegal electricity supply.

In one instance, more than a dozen people were found living in a tiny shack without running water or ablution facilities. They told the delegation that they paid R200 each for electricity and that they were not aware they were living illegally. This revealing some of the challenges faced by the task team.

There are an estimated 22 000 buildings in the Jo’burg inner city. Some are the very picture of sophistication, others are in a deep state of dereliction. However it’s clear that getting from one end to the other has required hard work and high risk for the private sector. But the block by block recovery of the inner-city’s buildings from criminal elements is going to require the on-going dedication of the multi-disciplinary task force the City of Johannesburg has assembled to fulfil this heavy task.

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Hotels in Rosebank, the latest

Holiday In at the Zone

Less than two years ago saw the opening of the 4 star, 8 floors Holiday Inn joining the Zone in Rosebank. The 5 star Monarch boutique hotel was auctioned off last year. The 5 star Winston hotel was featured on Top Billing and renovations of some of big-name hotels continues.

The five-star Hyatt Regency in Oxford road, adjoin the Firs shopping centre, is to be refurbished to the tune of R100m. The hotel was established in 1995 and has had “soft” refurbishments over the years, but an extensive overhaul is now needed according to Hotel manager Michael McBain talking to MoneyWeb last month.

The hotel has been under pressure from regular local and international guests to update its technology and to bring the establishment more in

The Winston Boutique Hotel

line with global standards. One of the items on the refurbishment agenda will be the rebuilding of the walkway between the hotel and the Gautrain station about 100 metres away. The hotel’s banqueting business has soared since the Gautrain opened in October 2011.

The Hyatt Regency

Other areas for refurbishment include the guest contact areas, basic facilities of the rooms, reception area, kitchens and so on. The overall refurbishment is expected to take 2 to 3 years.  The hotel is owned by Investec and is managed by the Hyatt.

This comes on the back of the opening of the new Tsogo Sun’s, 54 on Bath, a five star boutique hotel located on Bath Avenue which opened on 9 July. Sold by Hyprop Investments Limited, the JSE listed property company that own and is expanding the Rosebank Mall next door.

This building used to house the iconic Grace Hotel and office buildings but is now owned by Tsogo Sun Holdings, one of the largest Johannesburg Stock Exchange listed companies in the hotel and tourism sector.

Tsogo Sun’s 54 on Bath

54 on Bath is Tsogo Sun’s first hotel offering in Rosebank. The company owns 14 casino properties located in Gauteng, Western Cape, Eastern Cape, Free State, Mpumalanga and KwaZulu-Natal, and over 90 hotels in South Africa, Africa and Seychelles.

54 on Bath’s featured Level Four Restaurant offers distinctive dining, classical cuisine with a contemporary twist. “The complete remodelling of the hotel redefines us as a modern yet classic, urban chic, city hotel.” Jacques Moolman, hotel manager was quoted as saying recently. He says they hand-picked significant pieces of art from the old hotel and then commissioned local photographer Ryan Hitchcock for a series of compositions of the surrounding neighbourhoods in Johannesburg.

The property boasts 60 deluxe rooms, 12 executive rooms and three executive suites elegantly styled with views over

The Monarch Boutique Hotel

the garden or the green city skyline. It also has three meeting rooms catering for up to 120 people each and a boardroom that seats 20 people.

Another breath-taking feature of this boutique hotel is the famous roof garden on the fourth level as it creates a bridge from city scape to suburban tranquillity.

The Grace Hotel which was closed down in August 2011 was sold to Tsogo Sun Hotel Group for R85 million. Between R20 million and R25 million was spent on refurbishing the property.

Announcing its six months to June results in August, Hyprop said the downturn in the hospitality industry impacted negatively on the performance of the fund’s hotels, The Grace Hotel in Rosebank and Southern Sun Hyde Park.

Rosebank Hotel Crowne Plaza

It wasn’t that long ago that the independent The Rosebank’s Hotel was the only hotel in town, beside the old Residential Oxford Hotel. The Rosebank was whisked away from the Protea group into chic international sophistication by the Crowne Plaza chain of hotels with a R254m refurbishment. Now it stands proud among Rosebank’s other 5 star hotels.  The Rosebank is the only Crowne Plaza in South Africa.

The City Lodge Courtyard

With The Courtyard and The Don representing one end of the market and The Crowne Plaza Rosebank, The Hyatt and the Holiday Inn representing the international brands, that just leaves the boutique hotel business with Tsogo Sun’s 54 on Bath, The Winston and The Monarch. Eight hotels, five of which are five stars, serving one square kilometre, Rosebank is certainly on the map for international and national visitors.

The Don Apartments

Rosebank – While you were sleeping

Looking at the Rosebank skyline one gets used to seeing cranes. As one comes down so another pops up. Although many observers are sitting up and taking notice of Rosebank as an area under redevelopment, locals will tell you how refurbishments, acquisitions and new buildings have been rumbling on for some time now.

Rosebank Skyline

According to the Broll Office Market Report, Rosebank is being revived with great retail and exciting new office developments supported by the surrounding residential nodes and the Gautrain station. Rosebank is fast becoming the city’s third high-rise business centre after Sandton and the inner city.

Artist Impression of the finished Standard Bank Complex

The cranes are certainly busy in the block bordered by Oxford Road, Baker Street, Cradock Avenue and Bolton Road.  This was the short lived address of the office building 30 Baker Street, the Lindsay Saker dealership and the Sanlam Arena. Some may remember how the Sanlam Arena was built on the site of the old Arena Theatre- hence the name. Prior to that, this was the site of the Rosebank Primary School before it moved to its current location in 1974.

Johannesburg City council relaxed its height restrictions and approved SBREI’s high-density office and retail development on the southern side of the precinct. Phase one is the construction of an 11-storey building. The bank has the rights to go up to 20 storeys but has opted for a lower building with a larger footprint. Standard Bank was one of the first companies to join the Green Building Council in 2008. As a green building, it should be more energy and resource efficient. The Standard Bank development will comprise 125,000sq m mixed-use development. The bank’s new property will cost R1.6 billion and should be finished off this year.

The property will accommodate 5 600 Standard Bank employees and is aimed at alleviating some of the stress placed on the bank’s current infrastructure. Standard Bank has over 60 000 square metres of office development and the iconic Oxford Corner is all but complete offering 9 000 square metres of premium-grade office space.

The news that has slowly unfolded over the last year has been Hyprop’s intentions for the block encompassing the Rosebank Mall, Tsogo Sun (formerly The Grace) and Cradock Heights.

On the corner of Cradock and Tyrwhitt Avenues Hyprop has purchased Cradock Heights, a commercial property with a GLA of 4,745sqm. Hyprop also purchased a 70% undivided share in the office park Nedbank Gardens on Bath Avenue directly opposite the Mall. This landmark building was demolished earlier in April this year.

The demolition of Nedbank Gardens

“Through the two acquisitions Hyprop is consolidating its presence around the Mall to maximise densities and improve connectivity to the office precinct and Gautrain station,” said Financial Director Laurence Cohen.

In short Hyprop intends on almost doubling the Rosebank Mall’s lettable area from 35 000sqm to 62 000sqm, an increase from 101 stores to 161 at a cost of R920 million. The expected yield is 7%. The extensions to the mall will span Bath Avenue and link to the former Nedbank Gardens site. Five new basement parking levels will be constructed here and will be accessible via both Sturdee and Bath Avenues for increased convenience.

The existing centre will remain accessible via Baker Street and the entrance adjacent to the Shell Garage on Bath Avenue. Construction on the 25 month project began in August and is expected to be completed by September 2014.

A number of well-known local and international brands are already secured for the new space. New tenants include retailers with household names like a full line Woolworths Platinum store, a double level Edgar’s department store, Dis-Chem, Mr Price Sports and Jet.

Existing tenants including Stuttafords, Truworths, Mr Price, Queenspark and Foschini, will all be upgraded or expanded to offer the latest new store concepts and merchandise.  Other new boutique offerings include Pringle, Ben Sherman, Kurt Geiger and Earthchild.

Rosebank is one of the few urban areas in Johannesburg with a strong pedestrian culture and a thriving street life. When asked about the new development’s influence on that, Hyprop chief executive officer Pieter Prinsloo told property24 that: “We intend capitalising on these characteristics by creating strong physical linkages with the natural urban corridors that connect the lower Rosebank office blocks to the upper retail parts and the Rosebank Gautrain Station.”

The redevelopment will also connect to the new Tsogo Sun hotel, 54 Bath, as well as create a north-south pedestrian walkway between the Standard Bank development on Baker Street and the taxi rank on Cradock Avenue.

The Tiber

But the Rosebank Mall isn’t the only mall where there is movement. Diagonally opposite the Firs on Biermanann Avenue is the Tiber on Oxford Road which is still taking occupation. After many years of contentious redevelopment applications constrained by the remainder of a half-destroyed historical building, development approval was finally given in mid-2008 for an office building at the well-known corner of Jellicoe Avenue and Oxford Road. The building is intended for offices only and measures 8,416 m² of offices over eight floors.

What’s coming to the other part of the same block housing the Tiber is the big news. Directly opposite the Firs will be “The Bierman”, the name may change, designed by GLH Architects, it will comprise two linked structures made up of glass and green walls. This will bring over 30 000 square metres of office space to let to the Rosebank office market. The Bierman will accommodate three floors of basement parking space, an atrium level, three above-ground parking levels, and 9 floors of office space. That’s 12 floors above ground.

Artist’s model of the Bierman

Although still at the proposal stage, it’s disappointing to note that there is no mixed retail component in the plans given that Rosebank is such a pedestrian friendly community. The Firs is in the heart of pedestrian movement in Rosebank which is strongly emerging as an investment node. The centre was originally built in the 1970s and underwent a multimillion rand redevelopment in September 2009.

A more recent redevelopment included a new restaurant piazza which provides synergies with the rest of Rosebank’s pedestrian and street-level shopping complexes. The restaurant piazza opens onto Cradock Avenue and is intended to create a seamless flow with the rest of the Rosebank shopping node.

The Firs itself has changed hands – Investec Property Fund has acquired the landmark, mixed use retail centre for R272m. The fund purchased the property in a related party acquisition from Investec Property as part of its intention to build its portfolio. Investec Property Fund CEO Sam Leon describes it as “a trophy asset for the fund in that it’s a high profile asset poised for on-going growth.”

Perhaps just a footnote as far as development is concerned but worth mentioning is The Rose, a development going up on the corner of Sturdee and Jellicoe Avenues. This high-end four-storey building, which offers 2,852m² of office space and 100 parking bays, is being built opposite the Rosebank Primary School.

Finally The Zone. Already a formidable presence in Rosebank with some 123 shops and a four star Holiday Inn, The Zone II is still a long way from completion. The Standard Bank building on Cradock Avenue is still to be torn down and further building to take place. The Zone Phase II offers loft offices and two floors of retail. Pedestrians can gain access from Oxford Road and Tyrwhitt Mall, and via a direct entrance to the Rosebank Gautrain station and Bus Rapid Transport system. The Zone Phase II integrates with The Zone Phase I on the south side and The Firs on the north.

The Rosebank Management District and Lower Management District have been working in conjunction with various government and private partners to reduce crime, clean up the area and increase service delivery.

“Rosebank is reviving, with great retail and new office developments which are well-supported by the surrounding residential nodes and the Gautrain station,” said Jane Parker, area specialist and commercial broker at Broll commercial property services group.

Rosebank has so much more to offer than mere office space: A pulsating African Craft Market, a Sunday rooftop market, 8 Hotels, 220 retail outlets (with more to come when The Mall redevelopment is finished and the Zone phase 2 is complete.) nearly 50 restaurants and cafes, 7 night clubs, 10 art galleries, 20 cinemas all linked with a vibrant pedestrian friendly network of concourses and walkways. It’s no wonder that there are cranes on the Rosebank skyline.

Orange Farm Steadily Moves out of the Darkness

Orange Farm, 380 000 families strong, South Africa’s largest ‘informal settlement’, a fading label, has steadily been empowered over the last few years and is now on the brink of getting its own shopping centre.

Typical Orange Farm Dwelling

Orange Farm is described by some observers as unique among South African community settlements. Its people are particularly vibrant, resilient and unusually resourceful, with a high level of political mobilisation.

Located 42 kilometres south of the Johannesburg CBD, Orange Farm has flourished to become the biggest and most populous informal settlement in the country. It is also one of Johannesburg’s most geographically isolated communities.

Well known for its high levels of poverty and unemployment challenged by the multiple needs of housing, infrastructure and economic stimulation the region has huge economic potential which has, up until recently, been largely unexplored.

Taking a step back in the story, signs of intent by the City and business became clear a few years back when Internet Solutions decided to use the Orange Farm ICT Hub as a test bed for its wireless voice over technology. The intent was to take Orange Farm from a low-tech informal settlement to a high-tech centre of modern technologies.

ICT Hub

The Orange Farm Hub – for information and communications technology (ICT) – is housed in the settlement’s library. Through the centre numerous community members have already been trained to use computers for office and administrative purposes. Students are taught various skills, from a basic introduction to computers and using Microsoft Office, to using the Internet and learning about desktop publishing. Internet Solutions erected a base station at the hub that provides connectivity to centres located within a 15km radius.

Another project that was demonstrative of the changing infrastructure was the new Ridge Walkway. Getting from one side of Orange Farm to the other became a whole lot easier. Twenty years ago when people first settled in the area – originally an orange farm, from where it gets its name – was an informal settlement, marked by a cluster of corrugated iron shacks, with a lack of sanitation or satisfactory infrastructure. The area was difficult and dangerous to navigate from one side to the other.

Using funds from the National Treasury, the Johannesburg Development Agency (JDA) spearheaded the construction of a walkway in Ward 3 of Orange Farm. The 6 meter wide walkway enables easy access for residents to social amenities, including economic and transport nodes. This has helped to curb the number of murders and rapes that were associated with the old footpath.

A sculpture of an orange picker beside the walkway.

Alongside the Walkway are a range of mosaic murals of children’s hands and a paved area that leads from a local school to a playground at the edge of the ridge, which has swings and play equipment; it is a favourite for local youngsters. Construction of the walkway took six months, and cost R7, 4-million.

The JDA’s intention was based on the belief that the walkway would improve access to socio-economic amenities, improve communal living, boost the aesthetics of the area and enhance civic pride.

The Bridge to Freedom

This lead, to the Orange Farm Pedestrian Bridge. With over a thousand pedestrians from Orange Farm crossing the N1-19 daily, the South African National Roads Agency Limited (Sanral) decided to put up a pedestrian bridge across the busy highway. During construction of the Orange Farm Bridge, job opportunities were created for local residents. Provisions were also made for cyclists and disabled people, whose crossing is also facilitated over the bridge.

With help from its partners in the NGO and private sector, the City is working towards a vision of Orange Farm as a sustainable, economically viable town and a desirable place to live. Projects include: road construction and widening, the Pikitup Garden Refuse Project, attenuation pond and storm water drainage and various school initiatives.

Orange Farm has six extensions. All have the necessary services, such as electricity, metered water, sanitation and a sewage system. Geographically displaced from the business districts of greater Johannesburg, Orange Farm is largely a marginalised dormitory, with no economic base of its own, up until now it has been dependent on Johannesburg.

From an estimated 3 000 residents in shacks in the late 1980s serviced by mostly gravel paths, today there is a modern library, many tarred roads, permanent houses in the proclaimed area, low cost housing, four clinics, an information and skills development centre with internet access, a multi-purpose community centre and some on-site government offices such as the Department of Health, Social Development, Home Affairs, Housing and Transport, and a police station.

Johannesburg’s Regional director, Mlamleli Belot was reported as saying: “We want to develop Orange Farm to become socially cohesive enough to attract middle and high income residents.”

Veggie and Flower Gardens

Reconstruction and Development Programme (RDP) houses have been renovated and many residents are extending their houses. Flower gardens and lawns are also sprouting, homes have barrier walls, streets are kept clean and have street lights, shopping nodes are more accessible and are supplemented by local spaza shops.

Infrastructural upgrades meant to boost the aesthetics of the area, improved roads and sewage and ultimately instil civic pride are on-going. A few illegal dumping sites remain.

On the commercial property front there are signs of retail moving into the area. Once Town Square Mall is open, more money will be retained in Orange Farm as people will no longer need to shop in neighbouring regions.

The National Empowerment Fund (NEF) approved R50 million to support 19% upfront community ownership of a regional shopping centre measuring 39 000m2.

The mall will be anchored by major brands such as Pick’ n Pay, Shoprite, JD Group, Edcon and Metro Cash and Carry; there will also be health, beauty and fashion stores; fast food outlets and entertainment as well as home ware stores. Thusong Services housing will be present as well as various government departments like Home Affairs, SARS and the Department of Labour. 46% of the shops will be let to black tenants in a mall whose commercial viability is based on 80% confirmed leases.

Artist Impression of the Centre

The investment is creating 750 permanent jobs and around 2000 jobs during construction. Between 20 and 30% of project value will be spent in the Orange Farm area, and retail store opportunities will be made available to hawkers and taxi owners.

The positioning of the mall, named for its central location in Stretford, takes into consideration the many pedestrian routes, such as the Ridge Walk, that lead to the site from the surrounding residential areas of Orange Farm to the station and the taxi rank.

It is also near the local clinic, conservation area, schools, residential areas, the police station, fire station, skills centre, post office, and small scale non-residential buildings.

The mall is really just another step forward in the upliftment of the area from informal settlement to a healthy functioning residential area with ever-improving infrastructure and facilities. With some assistance form private enterprise, local government and NGOs, Orange Farm residents, as they take ownership, are building a community that has a financial future improving the lives of its people and the value of its property.

Johannesburg’s Northern Suburbs Bucks the Buying-To-Let Trend

Although the FNB 2012 Estate Agent Survey indicates a slight rise in the buy-to-let buying in the market, its second quarter results show somewhat poorer general residential market demand.

Buy-to-let purchases are assessed by the survey to have increased to 11%, from 10% in the previous quarter. The growth in the percentage of buy-to-let buying is certainly more noteworthy when measured from its low point of 7% in 2010.

Having made that point it’s important to note that the percentage remains poor in comparison to the estimated 25% back in 2004 at the apex of the property surge. In addition to broad based financial pressure on households, despite interest rates being at a record low, the very ordinary performance of the rental market would also not appear to make buying-to-let a particularly exciting option at this point in time.

According to StatsSA’s consumer price index (CPI) surveys, modest rental inflation which, given current house price inflation in the region of 8.9% year-on-year according to FNB data, would probably be doing little to increase average yields on residential rental properties. The CPI for rentals in the May CPI showed 4.47% year-on-year inflation, marginally lower than the previous quarter’s rate of 4.53%. After showing some promise of strengthening in 2010 and early 2011, the CPI for rentals has thereafter shown a weakening growth trend. This does little to make buying-to-let more attractive at present.

Given that interest rates are at a record low there should be no prizes offered for predicting a weak rental market.  Low interest rates equals more first time buyers and consequently lower rate of retention of young tenants. However some aspects of the rental market have improved. According to tenant profile network, the percentage of tenants that are in good standing with regard to rental payments was 81% in the first quarter of 2012. While this percentage is unchanged from the previous quarter, it is up from 79% in the second quarter of 2011, and well up from the 71% low reached in the recession early in 2009.

With this mind it may come as a surprise when Pam Golding Properties reports that the rental market in estates like Dainfern, Fourways Gardens and Cedar Lakes in Johannesburg’s northern suburbs is more healthy than ever, making properties in these areas a plum asset that can deliver reliable returns.

For expatriates, being far from home, a sense of belonging is a high priority together with comfort , security and access to amenities. Facilities such as good schools in close proximity, a club-house, tennis courts and a golf course go a long way to making a family feel at home, which is why these specific estates are proving so popular with foreign and local tenants alike.

As a kind-of niche market this demand is at least partly attributable to the strong demand from corporations, especially multi-national companies doing business in South Africa.

Companies seeking upmarket accommodation for their senior staff members for periods of between one to three years are attracted to these homes. Properties in estates like Dainfern, Fourways Gardens and Cedar Lakes are offering excellent returns to those landlords who have an understanding of this corporate market and its unique requirements.

One advantage of letting to this market is that landlords and their agents deal with reputable companies that are financially solid and reliable. This is most reassuring for those owners who wish to rent out their prestigious properties, many of which are acquired specifically for investment purposes,” says Jason Shaw, manager of the Fourways/Dainfern office of Pam Golding Properties.

These three estates are not unique since there are a plethora of such developments in the greater northern suburbs of Johannesburg. But they exemplify a niche market in the buy-to-let market that is strikingly bucking the mediocre trend.

Johannesburg Inner city Renewal – Latest

Johannesburg’s inner city and surrounds continue to show signs of regeneration. Slowly but surely the streets really are being taken back.

BG Alexander in the inner city restored and managed by Joshco

Johannesburg inner city has nearly a quarter of a million residents living in approximately forty thousand units. Twelve per cent are in the R15 000 a month income bracket; eighty per cent earn R1500.00 or more. As many as 20% of inner-city residents are university graduates and 35% of these have technicon diplomas.

According to a survey by Trafalgar Property & Financial Services: the reasons given for choosing the inner city in which to live included affordability (22 per cent), proximity to work (11 per cent) and proximity to schools (11 per cent).

The goal of the Metro’s Inner City Regeneration Strategy is to raise and sustain private investment in the inner city, leading to a rise in property values.  One strategy is “discouraging sinkholes”, meaning, properties that are abandoned, overcrowded or poorly maintained, and which in turn “pull down” the value of entire city blocks by discouraging investment. There are two names that are certainly discouraging sinkholes in the inner-city and that’s Joshco and TUHF.

Pontebello in Hillbrow refurbishment funded by TUHF

The Johannesburg Social Housing Company (Joshco) was established in 2004 by the City of Johannesburg to provide affordable rental housing to the lower income market and to help eradicate the housing backlog.  At present, it manages more than 5 000 affordable rental accommodation units and has reduced default on payments from 87 per cent to only 6 per cent since it started operating in 2006.

In 2010 Joshco received the United Nations’ 2010 Scroll of Honour award for its holistic approach to providing shelter. It is the world’s most prestigious human settlement award; it recognises initiatives that have made outstanding contributions in various fields such as shelter provision, highlighting the plight of homelessness, and leadership in post-conflict reconstruction.

Joshco only provides rental accommodation to residents in the lower income bracket, and tenants can’t claim ownership or don’t become the legal owners of the property they’ve rented for a number of years.

The company intends expanding its housing portfolio to more than 10 000 units by June. Its aim is to develop over 11 000 housing units in Johannesburg. It currently manages about 7 600 rental units, of these, only 930 are instalment sale for ownership.

Recently eight buildings in derelict areas in the inner city have been refurbished by Joshco. Areas include: the CBD, Berea, Joubert Park, Hillbrow and New Doornfontein. These building were previously occupied by criminals and squatters.

The buildings were completely gutted and transformed into affordable communal accommodation. Rent is from as low as around R600 a month.

Casa Mia refurbished Hillbrow building by Joshco

In an interview with the Star Joshco chief executive Rory Gallocher said: “Years ago the only thing property owners wanted to talk about was selling up and getting out. However, things have changed. On the occasions that we have been in the market to buy property in the inner city, we have experienced difficulty finding buildings that are priced at a level that would allow it to work for our market because of high demand.”

The vision for individual buildings is “order and liveability” to replace “chaos and discomfort” through basic management. Joshco says it believes in proper management of buildings by implementing a well-informed and factually accurate plan, where rules are clearly stipulated.

Joshco is very mindful of the fact that inner-city residents are not middle or high income salaried people. A substantial amount are in low-wage employment and who are self-employed, either trading or doing domestic work. Many are small entrepreneurs whose activities function because of their location.

Gallocher believes that good management of buildings will attract business to the inner-city. The latest buildings are Casa Mia in Hillbrow, once a degraded residential hotel that was invaded; The Chelsea in Hillbrow; MBV in Joubert Park; La Rosabel in Hillbrow; Raschers in Loveday Street; Selby and Europa House in the CBD; and Lynatex in New Doornfontein, which is used for temporary, emergency accommodation.

On a slightly different tack is Johannesburg urban renewal property group TUHF (Pty) Ltd. TUHF provides commercial property finance to emerging and established entrepreneurs to buy and refurbish affordable rental housing residential buildings in the inner cities of Gauteng, Durban, Pietermaritzburg and Port Elizabeth.

TUHF is making a significant contribution to the purging of dereliction in the inner-city and the development of housing that is affordable and secure. So far TUHF’s footprint is R125m in equity investments.

TUHF has assisted entrepreneurs through financing and business support to purchase and refurbish 490 derelict buildings over the past nine years. The focus is on quality rather than quantity deals, to minimise the risk of bad debt.

Monis Mansions refurbishment funded by TUHF

The company has attracted equity investments from large and well respected organisations, namely the Public Investment Corporation (PIC) and the National Housing Finance Corporation (NHFC).  The NHFC’s current investment is a debt equity conversion of R75 million converting R40 million for 20% of B shares and R35 million for preference shares in TUHF.

Futuregrowth’s Development Equity Fund, on behalf of its clients, has acquired a 12.5 per cent equity stake in TUHF. TUHF, together with its investors, foresee an increase in investment in inner cities, and the stimulation of business which will lure companies to return, expecting a boon for the restaurant trade as well as eventually inspiring leading chains to scout out the area as well.

Futuregrowth was the first institutional investment manager to provide TUHF with a loan facility that has increased from R50m to R350m in a five year period. The Development Equity Fund is part of Futuregrowth’s suite of socially responsible investments.

TUHF previous success stories include: Pontebello in Hillbrow; Monis Mansions in Johannesburg’s CBD; Allenby Court in Highlands; Hollywood Heights in Hillbrow; Waverley Court in Hillbrow and Avon House in the Fashion District of Johannesburg. Most recently Dolphin Court, in Joubert Park was revamped with funding from TUHF.

Joshco and TUHF are making huge contributions to inner-city renewal in completely different ways. In essence their work is complimentary and supplementary in a diversity that tackles renewal in overlapping housing/accommodation markets. With such confidence in mind the residential market in the inner city seems unexpectedly rosy given the slowness of the economy.  One can’t help wondering how long it will take for the big banks to wake up and catch on.

Johannesburg Tariffs – More of the Same

Jo’burg Flickr

With the first of July came the beginning of the new Municipal Financial year. Alas for Johannesburg ratepayers that means digging in deeper to those shallower pockets.

Most Jo’burg ratepayers would have had untimely notice of hikes services and rates due to the postal strike ‘conveniently’ coinciding with the mail drop.

Going back a few years to the previous rates shock, was the adoption of the Municipal Property Rates Act (MPRA). Henceforth property rates are based on the combined market value of a property, as stipulated by the (MPRA). In the past, rates were based on land value only.

The value of each rateable property in the City is listed in the General Valuation Roll. The General Valuation Roll is a legal document containing the property information for each and every rateable property in the city.

The market value of houses is much debated so how the municipality can be so certain is anyone’s guess. Earlier this year Erwin Rode and Associates, property economists and produces of what has popularly become known as ‘the Rode report’ caused an almighty backlash from Estate Agents for stating that the residential market was 25% overvalued.

On the other hand there are signs that the market is picking up or at least has reason to. The average House Price Index is now at a two year high and rising at 8,6% per annum; a 12% plus decrease in civil summons in the first quarter of this year; a 42,4% decrease in liquidations and the number of 100% bonds issued has risen by over 35%.(According to the FNB Property Barometer.)

The other part of the equation once the market evaluation has been done and you minus R150 000, is to multiply that by the “rate in the rand”. The Residential  Rate in the Rand was 0.004928 and is proposed to increase by approximately 6.7% to 0.005258 in the rand. Similarly the Business/Commercial rate is proposed to increase from 0.017248 to 0.01804 in the rand, 6.7%.

EThekwini (Durban) by comparison which is the leading city for both collecting and spending its budget, by the way, has a residential rate in the rand of 0.009 and Commercial/Business of 0.0179. Both of these are higher than Johannesburg’s’ and going up this municipal financial year. EThekwini is the country’s most expensive city to work or live in according to a South African Property Owners Association (Sapoa) commissioned study.

By way of a Gauteng comparison: Tshwane (Pretoria) has a 0.00209 rate in the rand for residential and 0.00418 in the rand for Business/Commercial. This has gone up by 12% for 2012/13 and another 10% in 2012/13.

Given that inflation is established at 5.7% can the municipalities justify the 6.7% increase in the rate in the rand? It’s generally accepted that increases above inflation simply accelerate inflation, and reduce the purchasing power of the rand. They hit hardest at the most vulnerable: the unemployed and pensioners. It was suggested by an opposition party leader in an open letter to the Jo’burg city manager that “The solution to the problems is to concentrate on the collection of rates revenue from the residents. If the City could pay the requisite attention to this problem, the extra money needed to provide the shortcomings in service delivery would be found. “

Johannesburg Tariffs

The burden to Jo’burg ratepayers doesn’t end there. Refuse removal is up 6.7% too. There are also increases for water and sewage.  Increases vary from 5,7%, up to a high of 15 %. The sanitation increase is 14.5% across the board. How these above inflation figures are justified is a mystery.

Eskom’s national increase of 16% touches everyone. In Jo’burg the proposed increases have been spread across the residents and businesses so that the lifeline tariff users will see an 11 % increase , the prepaid customers will see a 13 % increase, while the domestic tariff users  and businesses are having to foot an increase in the fixed charges of 5 % and the energy charge of 13 %. This means an increase for 1000kWh monthly usage of 11% , and at 501kWh at 10.7% . The business tariff increases are effectively 12% to 13% .

In the abovementioned open letter, an opposition party  expressed that the increases (Electricity) could have been reduced to “a maximum of no more than 10% across the board, except for domestic consumers above 2000kWh where a 16% increase could have been implemented, to fund the increases , the unaccounted for losses would have to be reduced accordingly by appropriate measures .” What those measures could be were not elaborated upon.

Coming back to rates, there is another side of the coin. The municipality may justify pushing up the rate randage in order to meet its demands because merely decreasing the rates could lead to the city being crippled financially.  This means that a process of reaching equilibrium is engaged. For example, where the property value has gone down, the rate randage is increased to compensate theoretically resulting in the ratepayer paying more or less the same amount.

Arguing the issue for the eThekwini Municipality in Durban, Head of Treasury, Krish Kumar said to the Daily News that while residential property prices may have gone down, commercial property prices may have gone up. This was taken into consideration.  He said the city wanted to avoid a situation where the municipal rates were based purely on the property prices because when the prices went up, the rates also skyrocketed. And when they went down, the city would not collect enough money and would fail to function.

Tariff Increases for four South African Cities

Tshwane Cape Town eThekwini Jo’burg
Electricity 12% 11.03% 11% 11%-13%
Waste Removal 25% 7% 7% 6.7%
Water & Sanitation See Separate Items 15% See Separate Items 5.7%-15%
Bulk Water Tariff 10% 6.5% 12.5%Res-15.5% Bus Combined
Sanitation 12% Combined 6.5% 14.5%
Rates 12% 8% 6.5% 6.7%

And what of non-payment? What is troubling is that while rates increase by 6.7% Jo’burg is expecting income to increase by 18%? The explanation for this by city spokesman Gabu Tugwana to the Star is: “What has been taken into account in that year-on-year is growth and tariff (which is limited to 6 per cent).” Regrettably, failure to pay by ratepayers is expected to increase.  Jo’burg’s budget for 2011/12 estimates  debt impairment at R1.76bn. In 2012/13, this is expected to go up 17 per cent to R2.05bn. Jo’burg’s adjusted budget for 2011/12 estimated debt impairment at R1.76bn. In 2012/13, this is expected to go up 17 per cent to R2.05bn then by 12 per cent the next year and 8 per cent the year after.

This brings up the issue of municipalities broadening their rate base. There is a need to look at Jo’burg’s indigent list and tap into those many RDP home dwellers who can afford to make some contribution.  If these communities are not engaged the culture of Apartheid days’ non-payment continues and a general culture of entitlement is fostered and the ratepayer base shrinks each year.

Tragically there just doesn’t seem to be the political will to pursue these options. Many would argue that the current rates model is based on shaky business foundations and is certainly not sustainable.  Regardless the Jo’burg ratepayers are going to have to fork out more this year.

Stuttafords and Granny’s Old Piano

Johannesburg’s Stuttafords building is like granny’s piano. You inherited something that meant a great deal to somebody else and still means a lot to many others, but it may not mean anything if the history doesn’t do it for you.

 

Granny’s piano is probably out of tune and the felt hammers inside are worn, not to mention the state of those keys. To resell it would put very little in your pocket. However to restore it and make it available to the next generation could have enormous value all round.

 

Such is the situation that some of Johannesburg’s grand old buildings find themselves. The Ansteys building is a perfect example of a successful transformation of use from one generation to the next; a tired pink elephant transformed into a bright art deco mixed-use block for the stylish set.

 

Stuttafords, though is not vast the department store chain of old. A place where your mum dragged you through departments with obscure names like haberdashery, lingerie and Manchester, hopefully to reward you with a milkshake and assorted sandwiches at the self-service tea-room upstairs.  Stuttafords today is an up market, sleeked down version of its old world self. But an iconic reminder of those Grande old stores that used to dot the South African landscape remains.

 

The building fell under the Auction Alliance hammer last year. Stuttafords was established in Cape Town in 1857, and opened its first Johannesburg Store, the one on Pritchard Street, in 1893 in what was the retail hub of Jo’burg in those days. The building was conceived by Cape architect Charles Freeman, and the 10 storey building was the nearest Jo’burg had to a Skyscraper.

 

Like Granny’s piano it features a beautiful façade, but alas, also like her piano, the beautiful inside wood work has been gutted, in the building’s case, by squatters. The property is anchor tenanted by McDonalds until 2019, and only a portion of the property is occupied, with the remainder currently vacant. In fact the building has been vacant for ten years.  The property extends over an approximate GLA of 7, 787 m², and features plenty of parking.

 

It was previously reported that owners, Wayne and Renney Plit, managing directors and founders of AFHCO Holdings, owners of 62 inner-city properties, a pioneering firm in CBD renewal, were planning to build 133 apartments with International Housing Solutions (HIS).  The Greatermans building was similarly converted into 400 rental units at a cost of R80m, also with equity financing from IHS. But this was not to be.

 

Instead, the Stuttafords Building is to be fully restored and converted into a 120-room hotel. The first three floors will be occupied by the international easygroup/Lonrho hotel. The easyhotels chain markets itself as offering no frills accommodation at international standard at competitive prices. The plan though is to extend the hotel into the remaining six floors in the years to come.

 

It’s a boost for Jo’burg’s CBD to have an international hotel chain of the calibre of easyHotel put down roots.  So life will return to the old building again. The Plits are reported to have said that they have every intention of restoring the facade of the building to its former glory. So granny’s piano gets some airtime for a new generation of city slickers.

 

The City of Johannesburg in the News for all the Wrong Reasons

The City of Johannesburg seems to be in the news for all the wrong reasons, again. While the Property Owners’ and Managers’ Association (Poma) and The Johannesburg Development Agency (JDA) continue to do selfless and sterling work for the city, the council continues to dance about on thin ice.

 

Last year saw, among other things, the wrangling over The South African Property Owners Association (SAPOA) taking the City to court to set aside its budget following the city’s increase of the rate ratio applicable to commercial properties from 1:3 to 1:3.5. The additional 18% increase imposed by the City of Jo’burg burdened the commercial properties owners, and in many cases tenants, with an estimated annual over payment of R300 million according to Neil Gopal, CEO of SAPOA.

 

But the court case came to a sticky end for SAPOA in the South Gauteng High Court as the court ruled that there had been “plainly adequate publication and notification” relating to the raising of the rates in question.  Regardless, this has left a foul taste in the mouth of commercial property owners and tenants as they have to cough up the heavy increase.

 

Many developers and investors are also looking at the City of Johannesburg with a long face. Whilst pouring millions into the inner city, developers face countless red tape issues in getting plans and procedures rubber-stamped. Some developers are now holding back what they estimate that they owe in taxes, rates and services and have taken the council to court where they have cut off for non-payment. In the cases that have gone to court so far, they have not only forced the council to reconnect them but have also been awarded costs against the council. Alas, not all is well in the state of Jo’burg.

 

The Johannesburg Development Agency works like a Trojan in its visions to rejuvenate the CBD and inspire financiers to not give up on the city. “Yet their efforts are completely undermined by the [Jo’burg] council’s revenue department, which disconnects services to buildings even though accounts are paid and the courts have upheld this position.” Writes Property24’s Paddy Hartdegen.

 

The City of Johannesburg also found itself in The Constitutional Court which declared the City of Johannesburg’s housing policy unconstitutional and ordered the City to provide temporary, or ‘emergency’, accommodation to the 86 poverty stricken people living in Berea, Johannesburg.

 

The Court held that the City of Johannesburg was obligated to provide temporary accommodation to desperately poor people facing homelessness as a result of eviction. The Court also criticised the City’s failure to plan and budget for housing crises and labelled its argument that it was not legally entitled to do so “unconvincing”.

 

It seems the City feels that it is only obliged to provide temporary shelter for people it evicts from its own buildings or those deemed unsafe, not those who are left on the street as a result of legitimate private evictions. The Court declared this unreasonable and unconstitutional.

 

But on Jo’burg’s billing front a much more protracted tale of woes is playing out.  Right on the tail of Treasury and rating agencies raising concerns about The City’s financial stability, particularly regarding the low collection rates and The City’s operating margins, it was up before the National Consumer Tribunal.

 

However The City, in a bid to avoid a possible R45m in penalties, argued before the National Consumer Tribunal that complaints about inaccurate billing for water and electricity did not fall within the mandate of the National Consumer Commission.

 

The Auditor-general Terence Nombembe stirred the waters by raising concerns about the accuracy of the city’s finances in its 2010-11 audit report, based on billing discrepancies picked up during the audit.

 

Advocate Michelle le Roux, on behalf of the City of Johannesburg, said that the commission did not have valid and legal grounds to issue the city with compliance notices for 45 consumer complaints. She went on to declare that the provisions the commission relied on did not give results in prohibitive conduct as stipulated in the act. “However, if the commission had jurisdiction, then it failed to follow the required procedure before issuing the compliance notices.”

 

The point raised by the commission though was that residents were on the wrong end of rough deal and that The City has not responded in reasonable time to the resident’s queries. Delaying the issuing of transfer certificates, the point in case, has had a negative effect on the sale of property. The City admits that up to last month 109 000 enquiries remained unsettled and 56 000 of those were billing related.

 

The greatest concern in the minds of the City it seems is the criminalising of the municipality which would be referred to the National Prosecuting Authority.

 

A loud bureaucratic sounding voice came out of Advocate Ms Michelle le Roux, on behalf of the City of Johannesburg, that the service the city provided to residents ended before the invoice was issued, therefore the invoice was only a consequence of the service and could not be covered under the part of the act that deals with prohibitive conduct and the delivery of quality services. Urg, could it taste any worse: the taste of ‘pass-the-buck’ soup. The flavour of ‘not-my-responsibility’ pie. Could The City and its legal voice sound more bureaucratic, less helpful, less service orientated.

 

Ms Mohlala for the Commission summed up the attitude of The City stating that this interpretation of the act, by the city was, “superficial” and “not based on the actual reading and spirit of the act.”

 

There are 220 complaints outstanding against the City of Johannesburg, unprecedented in the history of the commission.

 

What’s next? It’s only March, it’s not a good start to the year.  Johannesburg has a long way to go before the City of Johannesburg matches the excellence and innovation of its private sector, which continues to lead the way with a disproportionately low level of help or incentive from the Metro, which has the symptoms of Apartheid era bureaucracy and Third World incompetence.

 

Jo’burg’s Housing Policy Under Scrutiny

By April this year, 86 otherwise evicted, people who live well below the breadline, should be accommodated at the behest of the Constitutional Court by the City of Johannesburg.  At the centre of this legal tussle is the matter of the constitutionality of the City of Johannesburg’s housing policy, which has been found wanting.

The Constitutional Court today declared the City of Johannesburg’s housing policy unconstitutional and ordered the City to provide temporary, or ‘emergency’, accommodation to the 86 poverty stricken people living in Berea, Johannesburg. The Constitutional Court’s unanimous judgment, written by Justice Van der Westhuizen was regarding the application of Blue Moonlight Properties to evict the occupiers from its property.

This comes at a time where Maphango and 17 others verse Aengus Lifestyle Properties comes up before the constitutional court. Those with property investments, landlords in poorer residential communities in particular, have their eyes cocked toward the outcome. The difference between the two cases though is that Maphango and the 17 are paid up lease holding flat dwellers having their leases terminated. The Berea 86 are poverty stricken families that have sought shelter in what are squalid conditions but who don’t want to move because they would be homeless and away from their sources of income.

The Court held that the City of Johannesburg was obligated to provide temporary accommodation to desperately poor people facing homelessness as a result of eviction. The Court also criticised the City’s failure to plan and budget for housing crises and labelled its argument that it was not legally entitled to do so “unconvincing”. It seems the City feels that it is only obliged to provide temporary shelter for people it evicts from its own buildings or those deemed unsafe, not those who are left on the street as a result of legitimate private evictions. The Court declared this unreasonable and unconstitutional.

Similarly prospective landlords who purchase property aware that it is occupied “may have to be somewhat patient and accept that the [owner’s] right to occupation may be temporarily restricted” in the event that the eviction lead to homelessness.

Therefore the Constitutional Court has ordered that alternative accommodation be made available in a location as near as possible to the Berea property. Having done so the occupants are expected to vacate and move to that accommodation.

Executive director of the Socio-Economic Rights Institute of South Africa (SERI) Jackie Dugard said “the City has been in a state of denial about the needs of poor and desperate people under threat of eviction by private landlords within its jurisdiction. That must now end. The Court has recognised that the state has obligations towards poor people regardless of whether a state or private entity evicts. The City must begin to engage actively with its obligations and budget to give effect to them.”

Morgan Courtenay, the occupiers’ attorney at the Centre for Applied Legal Studies (CALS) said “this is a huge victory for the poor generally and for the occupiers in particular. We call on the City of Johannesburg to immediately take steps to implement the Court’s order and to carefully consult with the occupiers and their representatives to this end”.

 

Although quite a different case, the similarities of which leaves one curious as to which way the Constitutional Court will swing with the Maphango and 17 Others v Aengus Lifestyle Properties. The consequences for landlords in particular and South African property in general would be sweeping in the event of a favourable decision for the tenants. Whatever the outcome South Africa’s Constitutional guarantee that everyone has the right to housing is being challenged on all levels.

 


PIE, Prevention of Illegal Eviction from an Unlawful Occupation of Land Act – Challenged

“If you wish to make an apple pie from scratch, you must first invent the universe.” Carl Sagan. Up until now, and some hope it continues, PIE was all you needed in dealing with an unscrupulous landlord. Similarly PIE protects landlords from unlawful occupation.

 

PIE, the Prevention of Illegal Eviction from an Unlawful Occupation of Land Act. Itis an act of Parliament which came into effect on June 5, 1998, and which sets out to prevent, among other things, arbitrary evictions.

 

This may all change if the complainants of the Maphango and 17 Others v Aengus Lifestyle Properties case before the constitutional court have their way. There are currently 11 constitutional court judges contemplating this case. Those with property investments, landlords in poorer residential communities in particular, have their eyes cocked toward the outcome.

 

PIE governed landlords rights could be permanently altered. Trudie Broekmann, commercial director for Gunstons Attorneys’, has been quoted as saying: “But community and human rights organisations representing indigent tenants are hoping that the judgement will provide extended security of tenure for the urban poor, who often “fall between the cracks” because housing law does not protect them.”

 

Aengus Lifestyle properties bought a rundown block of flats in Braamfontein with the view to renovatingit; this isn’t a slumlord at work here but a legitimate developer. In the process, Aengus has chosen not to renew tenants’ leases as they expire.  This way the building would empty in time, renovating the units as they became empty. It also means that Aengus can charge higher rentals in line with other renovated buildings in the area. This has been a common practice in the renewal movement of inner city Johannesburg and around the world.

 

However tenants are people and people have lives. As it turns out Loliebenhof, the building in question, has some very fine occupants. Firstly they are tenants of long-standing, some as long as 18 years. Secondly they are on record as being regular, prompt rent payers.  These aren’t squatters or criminals but law abiding citizens. Their argument is that they are not in a position to occupy similar accommodation elsewhere.

 

As it turns out the leases, which were fixed term, ceased to be current upon Aengus’ purchase of Lowliebenhof. The result was that the tenants were continuing to be tenants subject to either party’s right to terminate on reasonable notice. Notice was given with the offer of a new lease at rental increase of up to 150%. Under the South African law of contracts, landlords do not have to renew a lease upon expiration, although reasonable notice of termination must be given.

 

The case was then brought before Justice A.J. Van Der Riet of the South Gauteng High Court, and to quote the Southern African Legal Institute:  “First, that the respondent’s purported termination of the leases was invalid. Second, that, even if the leases were validly terminated, it would not be just and equitable to evict them from the flats. For the second ground they relied on the provisions of s 4(6) of the Prevention of Illegal Eviction from, and Unlawful Occupation of, Land, Act 19 of 1998, that generally became known as PIE.” A.J. Van Der Riet dismissed the case.

 

The Lowliebenhof tenants’ leases were validly terminated and eviction has been permitted.Currently the tenants are relying on section 26 of the Constitution, which guarantees each person’s right to have access to adequate housing.

 

The case went before the Supreme Court of appeal and was heard on the 11th of May 2011. By the 1st of June Justice JA Brand dismissed the appeal.  Justice Brand ended his judgement with:”The court held that, since the appellants raised important constitutional issues, they should not be burdened with costs. It therefore makes no order as to costs. “

 

Clearly Justice Brand sees the matter in a more serious light than just another case, but rather a case “that raised important constitutional issues” and needs to be tested before the constitution.

So the Constitutional Court will be aiming at balancing the interests of landlords and tenants. The exact nature of ones constitutional rights to adequate housing, or education and healthcare for that matter, are still being processed before South African courts. The United Nations has prescribed that ‘irrespective of the type of tenure, all persons should possess a degree of security which guarantees legal protection against forced eviction, harassment and other threats’.

 

Trudie Broekmann commercial director for Gunstons Attorneys’ has been quoted as saying: “If the Constitutional Court comes to the conclusion that it will advance access to adequate housing to grant tenants housing rights that extend even after their leases have elapsed, this case will certainly set a precedent and make landlords’ obligations more onerous.”

 

The consequences for landlords in particular and South African property in general would be sweepingin the event of a favourable decision for the tenants. Some would argue that human rights and championing the cause of the vulnerable would have won. On the other hand urban decay may be seen as having won the day with the renovation of buildings becoming more difficult and less financially viable due to deeply rooted occupants.

 

PIE may have become a redundant meal in the world of property law.

 

Randburg CBD’s slow but steady journey back to respectability.

By the early 2000’s Randburg CBD was being treated like Sandton’s ugly sister. Low occupancies, derelict buildings, squatters and an infrastructure desperately in need of renewal. Between 2000 and 2003, Randburg CBD posted the fastest growing vacancy rates compared to areas like Jo’burg CBD, Sandton and Rosebank.

After government restructuring in 2000 incorporated Randburg into greater Johannesburg, the Northern Metropolitan Local Council moved out of the civic centre and squatters invaded the building. The well-located CBD, once a model, went into steep decline.

A path of restoration emerged when Randburg CBD was declared a city improvement district in 2004. The intention was to deal with the district’s manifold problems and win back business confidence. Kagiso Urban Management was appointed to manage the area.

Following this was the official launch of the Randburg Management District (RBMD) in April 2005, a joint effort by the City and the local business community to give Randburg CBD a make-over. The RBMD borders Selkirk Road in the south, Dover Street in the north, Kent Avenue in the west and Hendrik Verwoerd Drive in the east.

Patrolling by public safety ambassadors from 7am to 7pm was introduced. Subcontractors were brought in to remove illegal posters as well as litter, to clean tree wells and dispose of refuse bags.

In 2005, two phases of a four phase plan were underway commissioned by the Johannesburg Development Agency; traffic flow into Pretoria Avenue was improved by opening up the intersection of Philips and Burke streets. New street lighting was installed, roads were resurfaced and pavements greened.

The intersections of Hill Street and Pretoria Avenue and of Hendrik Verwoerd Drive and Pretoria Avenue were upgraded. The informal traders’ market near the taxi rank was also being overhauled. Roads were widened, paving restored and street lights installed or restored. The Market was extended into the parking area of the civic centre where additional trading stalls were set up.

By 2006 the SA Property Owners’ Association confirmed that the Randburg CBD was showing a reversal of fortunes.  A and B grade office vacancies nearly halved, from 13% to 7%, in the two years to end-December 2006. Well into 2006 there were plans for a six-storey development on Hilltop Street expected to help restore Randburg CBD and boost its reputation. Randburg Chamber of Commerce and Industry newsletter announced plans to introduce the conversion of two commercial buildings into residential accommodation. Flats in the old Metro building were sold out in one weekend and Dover Towers on the corner of Dover and Hendrik Verwoerd began selling flats for between R380 000 and R680 000. It became clear to movers and shakers that those who could not afford to live in Sandton but still wanted to be close to its business hub were investing in residential property in Randburg.

But the renewal of Randburg, though steady, has been slow. By 2007, listed property fund Vukile reported a strong uptake of space in its landmark Randburg Square shopping centre and office tower (the old high-rise Sanlam Centre). Vukile reported that at the beginning of the year more than 70% of Randburg Square’s office space stood empty. By end-2007, vacancies had dropped to below 10%.

Still in 2007 African Capital Property Portfolio, a fund chaired by Zwelakhe Sisulu bought four commercial properties for close to R80m in the Randburg area: three office blocks and an industrial property. The four Randburg buildings are African Capital’s first acquisitions. JSE-listed CBS Property Portfolio has a 45% equity interest in African Capital.

A trend seemed to emerge where investors began buying and upgrading older office blocks in the Randburg area, possibly due to the growing scarcity of space in Sandton.

2010 saw projects emerge like the conversion of the old Nedbank building, which had become known as little Hillbrow due to its notorious reputation for crime and prostitution. Restoration began with the view to providing stable homes for underprivileged people. It was bought by Rembrandt Papers with the intention of converting the structure to a residential block of flats. Ward Councillor at the time Alison van der Molen said “This building can now be an asset to Randburg instead of an eyesore.”

But it seems there’s a long way to go. Currently underway Johannesburg City Council is engaged in a PPP (Public, Private, Partnership.) with the JDA to rejuvenate a whole triangle of land, between Selkirk, Bram Fischer and Jan Smuts Avenues. Dividing the triangle into a northern portion of land of 6.4Ha and a southern portion of 2.27Ha.

The Southern Portion will be developed for social housing (735units) by Johannesburg Social Housing Company (Joshco) and the Northern portion will be made up of a mixed-use property development that will be able to house municipal and social services, including the taxi rank, the Bus Rapid Transit facility, the library, the licensing department and more affordable housing.

Phase one is well underway with the demolition of the old, and recreating the new, roads and infrastructure. Phase two should commence in June. Further plans include a phased public environment upgrade by 2013, with plans to upgrade the Hill Street Mall, followed by making some of the streets in the office environment more pedestrian friendly, so that Randburg can be more of a transit hub.

It hasn’t been easy and it hasn’t been quick. Randburg still looks very much like the neglected city compared to Sandton, its glamorous sister on the next hill. But it’s clear that there is definitely steady movement from Council and plenty of intention from investors. You can do it Randburg, you can do it.

Sandton Builds a Park

It may seem hard to believe but amongst all that high priced real estate in Sandton’s CBD someone made room for a park. But it’s taken the involvement of no small amount of players for green to shine out of that grey concrete jungle.

The Sandton Central Management District (SCMD) has had the intention of creating and maximising use out of the area’s public spaces for some time now.  Johannesburg City Parks handed over a tract of land on the corner of Grayston and Sandton Drives last year and nearly forty indigenous trees were planted to seal the deal as it were.

The current name of the park is deceptive: Sandton Central Park is actually on the very edge of the CBD on the border with Parkmore. Depending on your level of fitness and the length of your lunch break, the park is within walking distance of quite a few Sandton office blocks (SA Brewries for example) and hotels. It may seem a little out of the way to some given that it’s at the bottom of quite a steep hill.

Much is being made of Sandton CBD’s carbon foot print and how much the park will bring some relief in that regard. SCMD city improvement district manager Paul Van Rooyen has been quoted as saying: “We adopted an eco-friendly approach and developed a recreational area that will not only serve as an addition to Sandton Central, but something that will also mitigate Sandton Central’s carbon footprint,”

Carbonworx CEO Mark Smith says that the initiative will put the Sandton precinct on the international map because of its providing a platform for climate change, the community and biodiversity in general.  (Carbonworx, which has its hand all matters green, is choosing indigenous trees for the project.) Ambassadors for Carbonworx, top South African rock band The Parlotones, also attended the tree planting ceremony to promote the CarbonWorx drive, which invites people to calculate their carbon footprint and buy trees to offset their impact.

Urban Genesis which claims to be a pioneer in urban management renewal,  manages  the SCMD. Its core business being the establishment and management of improved city districts.

The first phase of the development of the park will involve the important and strategic placement of trees and shrubbery. From there a very specialised sculpting of the landscape will be put in motion as well as the equipping of seating areas and a children’s recreation zone. Further to this, well paved paths and a jogging trail are planned.  For those who won’t be walking to the park from nearby offices or the adjacent residential area of Parkmore, secure parking is to be arranged.

The project is sponsored by Standard Bank and a partnership exists between Johannesburg City Parks, SCMD and marketing company Smile Media, which arranged the park’s hosting of income generating  advertisement signs. The earnings of the advertising will cover a three-year maintenance management agreement.

Johannesburg City Parks senior manager Oscar Oliphant has been quoted as saying that this open space has been due for a facelift for some time. It’s clear that the park will have a significant greening effect and be a way for business in the area to give back in attempting to reduce the carbon footprint of the CBD. The spin off for the local residential community is also a plus.

Sandton – Hard Sweet work or Sweet Hard work?

The Greek philosopher Aristotle wrote that change in all things is sweet. Scottish comedian Billy Chrystal said that change is just a lot of hard work! Witnessing the changes to the SandtonCBDskyline you may see something sweet here and there, but it’s mostly the result of a lot of hard work.

 

Much has been publicised about SandtonCity’s big R1.77bn first phase expansion. One can’t help draw attention to Sandton City’s retail space expansion to a total of 143 690m² upon completion of the first phase this month, taking the complex, which includes the Sandton hotel and office component, to 215 000sqm. But there is more happening in Sandton besideSandtonCity.

 

Part of what was once referred to as the wealthiest square mile inAfrica, the Village Walk,  these days only attracts a steady stream of JSE visitors’ vehicles seeking a parking space. Management of the once thriving collection of eateries and fashionable boutiques seemed to lose any sense of vision in the early 2000s. The once fashionable in-spot of the 90’s, sadly, has discount posters in its windows and wispy tumble-weeds of litter blowing about its courseways.

 

Having started as a rumour earlier in the year, it’s now conventional wisdom that the Village Walk will be demolished and even that 60 year old Grand Dame the Balalaika Hotel will be torn down and resurrected on the corner ofMaude StreetandRivonia Road. Of course it was never a matter of competing with its two sistersSandtonCityandNelson Mandela Square, rather it will be a matter of complementing and supplementing those enormously successful retail and entertainment venues. The current Village Walk basement will be retained and two floors of retail and some office space will be layered above. The whole development will be in four phases over eight years. Only a couple of blocks from the Gautrain station the venue has exciting potential. An international hotel is also on the cards making up the rest of the 180 000sqm of the project’s space.

 

Investors are showing enthusiasm for the acquisition of land or buildings for redevelopment close to the Gautrain station and it is envisaged that the area surrounding the station will be the centre of sustainable growth in the value of commercial property. There are even plans afoot to build above the station itself!

 

115 West Street, right opposite the station, is the future site of the Alexander Forbes head office for its approximately 2200Johannesburgstaff. The refurbished, eight storey 36 950m² office building will be embracing some green building codes with all natural light and energy efficient lighting. Throw in super fast lifts and state-of-the-art auditoriums  stuffed with all the latest technology, a gym, snazzy coffee shop and staff restaurant and you have a self contained little urban island. Nebank is putting up the R840 million funding for the development. This will become Zenprop’s Properties’ flagship of South African commercial properties. Alexander Forbes is expected to take occupation of the building on1 October 2012.

 

Characterised by a large number of owner occupied developments and with the majority of international banks, the JSE Securities Exchange, legal and management consultancies, Sandton, is widely acknowledged as the premier financial district inSouth Africa. There are currently over thirty development applications for the SandtonCBD, which includes  zoning changes  and renovations.

 

One such revamp is Southern Sun’s landmark Grayston Hotel. It’s closing its doors next month with a proposal having been lodged for the redevelopment of the building.

 

Other developments on the boil are 20 000sqm of sectional title office space on the corner of Katherine and West Streets – for occupation in 2013; 6 Sandown Valley Crescent, with a gross lettable area of 18 000sqm and a projected completion date of mid-2011; 16 000sqm at 1 Protea Place, with Cliffe Dekker Hofmeyr Attorneys as a tenant plus other smaller tenants; and Sandhurst Office Park, where 26 000sqm of office space becomes available in 2013.

 

Much of the demand for development seems to revolve around the financial sector. Developments planned over the next five years include: 9 000sqm at140 West Street; 35 000sqm for Standard Bank at11 Alice Lane; 150 000sqm on the site of the old Sandton municipal offices; and atFNBTowers, 25 000sqm of additional space.

 

One of the biggest changes to the Sandton skyline will be on the corner of West, Stella and Rivonia Roads. Insurance giant, Old Mutual, wants new headquarters inSouth Africa. Its answer is to build a multi-storey office precinct next to the Gautrain station. Old Mutual is to move their head office fromPresident Streetin Jo’burg’sCBDto where theChadrien Placebuilding stands, at the corner ofRivonia RoadandWest Street. The first 50 000 square meters will be ready for occupation by 2013, and the final product will be a 35 storey building.Chadrien Placeis currently an ageing Tudor-style block of 33 flats. On average units were valued at about R1,5m a couple of years ago. That all changed thanks to the Gautrain. Old Mutual is believed to have paid R400 million to a development consortium for theChadrien Placesite.

 

Finally on the auction front, one gets an idea of the demand in theCBD. During Auction Alliance’s September multiple auction event, two A-Grade office blocks in the heart of the SandtonCBD, offering a first rate development opportunity, were sold for R48.5 million. With A Gross Lettable Area of 2530sqm, this represents a bulk value of over R19,000/sqm.

 

There may be an economic down turn, but the future for Sandton looks set to change. For some it’s going to be sweet, for others, a lot of hard work.

Learn More about Sandton visit www.eprop.co.za

Going Potty in Jo’burg.

Do you remember all those promises about potholes in our roads being fixed at the beginning of the previous financial year: the homeless bathing in them; cars disappearing into them? Well Jo’burg’s been getting the good end of the deal thanks to the Dial Direct Pothole Brigade that made a start in August last year.

 

Yes, the name sounds like something out of Monty Python, but there’s been no slap-stick here. Thanks to a partnership between Johannesburg Road Agency (JRA) and the said Brigade, 35 000 potholes have been repaired on Jo’burg’s roads. That’s a lot of empty space to fill!

 

To fix potholes, the Dial Direct Pothole Brigade has used an innovative Jetpatcher, which is a large articulated vehicle that carries aggregate and hot asphalt for patching up or repairing potholes.

 

 A high-tech machine mounted on the chassis of a truck, it uses a high pressure compressor to blow out debris and water from the pothole. The airflow cleans out fissures in the hole to ensure that complete waterproofing is achieved. Then the aggregate and asphalt are blasted in.

 

Now that this successful pilot project has come to an end, the JRA will have to formalise procedures and incorporate the repair of potholes into a tender process.

 

The JRA is a Jo’burg City-owned entity responsible for the construction and resurfacing of municipal roads, construction of bridges, building and managing culverts and storm water drains, maintenance of road infrastructure, traffic lights, road markings and signage.

 

During the course of the project the following roads that have been patched: the M16 – Linksfield Road, M90 – CR Swart Road, M57 – Pretoria Road, R512 – Malibongwe Drive, M6 – Cedar Road, R511 – William Nicol Drive, M26 – Main Road and R562 – Olifantsfontein Road, to mention just a few.

 

The Dial Direct Pothole Brigade, is a special task force comprising provincial and local government departments and two private companies. The original intention was to deal with Jo’burg’s ever-increasing potholes. Its work was never supposed to be a permanent arrangement but rather to supplement the maintenance work already done by the Johannesburg Road Agency and theGautengprovincial government.

 

Hopefully this will render redundant the guidelines on how to repair and prevent potholes, published by the Council for Scientific and Industrial Research (CSIR) on its website. Surprised by the huge interest, the CSIR released its annual results in Pretoria this week revealing that  800 downloads for the guidelines had been made since they were first published in December last year.

 

The training courses on the causes of potholes and various repair methods for different types of potholes, held by the CSIR since February 2011, had also proved very popular. You have to hand it to the South African public for being proactive and enterprising.

 

But the merry hole-filling brigade has other fish to fry now and is moving on to the outer reaches ofGauteng. The specific areas are yet to be announced. But it’s going to be good news for somebody.

 

Sam Swaine, the media director of Heart PR, publicists for Dial Direct says motorists should now report potholes in JRA areas directly to the agency on hotline@jra.org.za.

 

However the brigade urges motorists who identify potholes onGautengroads to report them either online or by dialling *120*1551# from a cellphone and following the onscreen instructions or via the mobile site, potholebrigade.mobi.

 

The JRA will now have to resume its responsibility for dealing with eradicating potholes alone. The additional capacity through public and private partnerships has enabled the City to do so much more than it normally has the capacity to manage.

 

A mayoral committee member for transport was quoted as saying: “Believing in the importance of government working together with the private sector and civil society, we think that this partnership has enabled us to do even more in the interests of the citizens ofJohannesburg.”

 

Clearly there is some light at the end of tunnel for road maintenance in Jo’burg and lets hope the momentum doesn’t stop now as the initiative continues into the rest of the province.

 Learn more about Joburg: visit eprop.co.za

Sandton City the Queen Bee for Fashionistas

Like it or not Christmas is around the corner.

In anticipation of Christmas 2011 Sandton city is flirting, no, building, long term relationships with some of the world’s most glittering names in world fashion. So someone’s had to make some room.

SandtonCity’s much anticipated R1.77 billion first phase redevelopment is being undertaken by Liberty Properties on behalf of owners Liberty Group (75%) and Pareto Ltd (25%). There has been a shortage of retail space in the centre; despite being one ofSouth Africa’s largest. They’re hoping the 30 000sqm extension will be sufficient retail space in expectation of the flurry of high fashion tenants wanting visibility at the centre.

The development will see an additional 69 stores toSandtonCity, the resultant total will come to 360.SandtonCity’s total retail space, with the extension, will now be an extraordinary 143,700sqm upon completion of phase one. The whole complex, including offices space and the hotel, will now come to 220,000sqm!

So who’s coming to the party!

Where to begin? Let’s name drop with: Zui, Okaidi, Nespresso, Lecoqsportif, Steve Madden, Tag Heuer, Bellagio, Pandora, Democratic Republic, Ben Sherman, Hackett, Jack Friedman. That’s just a start.

Lacoste and Lacoste Live

The Surtee Group, being a cutting edge luxury clothing retailer, will be opening a breathtaking Lacoste flagship store. This concept store has only been seen on the Champs de Elysees in Paris andNew York’sFifth Avenue, as well as inHamburg. The store is expected to be a 300sqm store presenting the complete Lacoste world of products including footwear, fashion, handbags and sunglasses as well as fragrances and an entire children’s range. The store will introduce to South African Youth the dynamic Lacoste Live products and ranges.

Paul & Shark

The Surtee Group will also be showcasing Italian luxury fashion brand Paul & Shark in its own 120sqm store. Previously the brand was available at Surtee Group’s Levinson’s. The shop itself has been created inNaples,Italyand will be shipped intoSouth Africain time for the November opening. This is a replica of the Paul & Shark’s store inMilan, arguably the fashion centre ofItaly.

Guess Accessory Store

The Busby Group, which currently has 13 shops in the centre, will be adding to its repertoire a whole new exciting Guess accessory store. The Guess Accessory store will tantalisingly display an assortment of high-fashion Guess jewellery, handbags, eyewear, fragrances, watches and footwear. There is much anticipation of the designer-chic interior.

Lacroix and Nina Ricci 

The Levison’s retail group will be introducing new lines to their already chic store.  These include the highly sort after Nina Ricci and Lacroix labels.

Hugo

Said to be the avant-garde face of Hugo Boss – Hugo will open its first South African store with product lines particularly focused on men although there is a range of women’s products.

…and there’s more

Throw in Lulu Belle, Thomas Sabo, Lorna Jane, Drifters, Ordning and Reda, G-Star, Crossover, Shesha, Kitchen Passion , Kingsley Heath, Superdri, Sack’s, Maska, Fossil, Aeronautica, Addidas, Superga, Canterbury, Simply Manas, le Creuset as well as Tiger of Sweden and one is left gasping.

SandtonCity seems to have become the queen bee and all the worlds’ brands want a spot in the hive.  “The expansion ofSandtonCity adds an increased breadth of range for shoppers. The new variety and sheer size of the shopping centre will serve to draw more feet to the centre and grow overall revenue,” said one retailer.

With the introduction of the Gautrain and the proximity of the new Sandton Gautrain stationSandtonCity’s scope has broadened even further than before. Also the work done by the centre’s management, listening carefully to shoppers, on creating a customer friendly environment, adds charm to the bling of a glittering new crown of world-class status brands.

Christmas atSandtonCityis going to quite the glittering affair.

Keeping The Green Lungs Open

Johannesburgis an urban forest and arguably the largest of its kind in the world. Reports vary, but it is estimated that there are between 6-10 million trees in the city and over 2 000 parks.  Jo’burg’s City Parks (JCP) is responsible for keeping these green lungs breathing. Last month saw (JCP) win not only the Green Collar Training Award but the Agricultural Sector Education and Training Authority (AgriSETA) National Excellence Award.

Urban forests play a pivotal role in ecology of human settlements, provide shelter to birds and recreational areas for people, filtering air, water and providing protection from sunlight. Of course green is also good for the soul.Johannesburg’s forest in the city is moderating the local climate, slowing wind and storm-water, and shading homes and businesses to conserve energy. Large shade trees can reduce local ambient temperatures by 3 to 5 °C. Cars parked in parking lots with 50% canopy cover emit 8% less through evaporative emissions than cars parked in parking lots with only 8% canopy cover.

 A study done in Chicago; USA, determined that trees removed approximately 17 tonnes of carbon monoxide (CO), 93 tonnes of sulphur dioxide (SO2), 98 tonnes of nitrogen dioxide (NO2), and 210 tonnes of ozone (O3) in 1991.

JCPhas an enormous responsibility. Consider this,JCPmanages 1,6 million trees on its streets; 6 603 hectares of developed parks and arterials; 7 500 hectares of pavements; 2 343 parks; 174 hectares of water surfaces; 1 587 hectares of trails; 35 cemeteries consisting of 1 088 hectares of land; 22 nature reserves consisting of 1203 hectares; 15 bird sanctuaries consisting of 366 hectares; 7 hiking trails; 4 environmental and education centres.

The Green Collar Training Award was presented to City Parks at theBHPBilliton Achiever Awards. Falling under the Environmental Education category,JCPwas acknowledged for its programme that successfully provided 105 unemployed youth with skills development and employment.

Geoffrey Cooke, acting managing director of City Parks, said: “The project is aimed at creating decent, permanent employment in a sector that is labour intensive, and we are hopeful that this is the beginning of a programme that will be rolled out on a larger scale with support from business.” Young unemployed people were picked from the City’s Job Pathways database.

The second award picked up last month was the AgriSETA Award, recognisingJCPfor providing employment, putting people to work on maintaining the city’s green lungs.  It took the gold in the “project employed 50 percent and more learners” category. This specifically acknowledged the training of unemployed youth in ornamental horticulture as part of level one of the National Qualifications Framework (NQF). These same employees were assimilated into Johannesburg City Parks, giving them permanent employment.

This isn’t just a flash in the pan either. Earlier this year theinstituteofLandscape Architecturein South Africa (ILASA) honouredJCPwith a special award for excellence for its outstanding contribution to landscape architecture through open space development at community level. The award was presented inDurbanin May at the prestigious Corobrik-ILASA Awards for Excellence.

JCPwon the award for its contribution to ongoing development of green open spaces and parks in greaterSoweto. The award was specifically based on the development of theVlakfonteinMedicinalPark, Dhlamini Eco-Park and theOrlandoWestPark.  Further acknowledgement for theJCPwas for theirAlbertsFarmEcoParkproject, which won in the Planning and Design Project Proposals category. The adjudicators said City Parks’ achievement was all the more remarkable becauseJohannesburgdoes not have any striking natural features.  “Johannesburg City Parks does not have the luxury of a coastline, a river or any other breathtaking natural feature in which play and city life easily blend,” they said.

Other notable projects completed so far this year have been in areas such asZakariyyaPark, Vlakfontein, Orange Farm and Lenasia. (Parks were also opened in Njongo and Nxumalo in May.)

These areas were earmarked as the focus of the City’s capital projects in the south. Work on a park opened inCloveParkfor example, created 40 jobs and also ensured that there was a transfer of skills to the community during the construction phase. These rejuvenated areas form part of the City’s strategy to address the greening imbalances between north and south. Over 200 000 trees have been planted and over 23 new parks have been developed in the south of Joburg as a step in addressing these imbalances.

This positive trend began in January when JCP extended its environmental credentials by gaining its ISO 14001 certification, only the second municipality to do so. The ISO 14001 is an international standard that provides a framework for developing, implementing and continually improving environmental programmes. City Parks received its certification on 20 January, following a series of comprehensive audits by NQA  (an assessment, verification and certification body.) “It was important for us to gain ISO 14001 certification in order to demonstrate that we are fully aware of our environmental responsibilities and that we are trying our best to incorporate our environmental duties into our day-to-day business operations,” said Alter Mavunda, City Parks environmental specialist.

Johannesburg’s City Parks has proven that it is part of the solution. Revealing intent with regard to city renewal and reducing the city’s carbon foot print. Other cities must be green with envy.

Contemplating Inner City Land Reclamation

Where there’s talk of land reclamation one thinks of dykes and soggy fields and tulips perhaps. But in the centre of Johannesburg, what could anyone possibly want to reclaim. Next time you look at a map of Jo’burg notice the huge chasm between Braamfontein and the city filled with parallel black lines.

City Council and the Johannesburg Business Forum have been examining that space and similar ones around the city occupied by marshalling yards, railway lines and the big gaps between them, and they are scheming. Recently mayoral committee member for economic development Sello Lemao announced a land reclamation project that would involve the decking of the railways and environs with the view to bridging the gaps in the cityscape like the one between Braamfontein and the CBD, at the same time making use of land that currently does not generate any income for the city.

The intention is to create specific precincts that would continue the city’s ongoing regeneration projects. Offices and residential (low cost and upmarket) buildings are planned, as well as hotels and open green lungs so vital for cities. The idea of decking the railways is not a new one. In Chicago the 99 000 sqm Millennium Park was built over its rail network providing it with its second largest tourist attraction. It took seven years to build, four years longer than projected. It ended up 60% over budget which had to be picked up by business and the good taxpayers of Chicago. In Johannesburg’s case we’re looking at an estimated R2Billion for phase one of the project. Ninety percent of the bill will be picked up by private enterprise. The city will have to come to the party in terms of infrastructural development.

There is some ambiguity with regards to land rights and ownership. Head of the city’s special catalytic projects, Bokaba Maluleke, says that the land is owned by the city but “the Passenger Rail Agency of South Africa and Transnet have servitudes over the lines, so it will have to be decided who it belongs to.” This brings us to ‘air rights’. Legally the concept is quaintly wrapped up in the Latin phrase Cuius est solum, eius est usque ad caelum et ad inferos meaning “For whoever owns the soil, it is theirs up to Heaven and down to Hell.”. Originating in medieval Roman law it was notably popularized in common law in Commentaries on the Laws of England. World wide it underpins the notion that owning or renting land or a building gives one the right to use and develop the air rights to further that building above. There could be difficulties adjudicating who financially benefits from such air rights. Bokaba Maluleke brushes this ambiguity aside saying: “But either way, the land above the lines will be leased by either us, or the railway servitude owners, to the developers. “ Time will tell.

In New York, for example, building on platforms over railway lines is considered very profitable for the rail service. Recently the New York Metropolitan Transportation Authority attempted to sell air rights to the New York Jets Football team so that they could build the West Side Stadium over the West Side Rail Yard near Penn Station as part of the Hudson Yards Redevelopment Project, a project similar to the Jo’burg’s Decking of the Railways. The MTA has even proposed building a platform themselves to encourage development. In Brooklyn, the Barclays Centre is proposed to be constructed over the Atlantic Yards.

Sello Lemao a spokesman for Jo’burg’s mayoral committee for economic development said the project planned to creatively use the space above the railway lines to “develop a balanced district” improving public transport and the road network in the area advance accessibility to the inner city. Public amenities, open green spaces and resultant sustainable jobs. Proposes of the project claim an estimated 19 000 jobs would be generated initially with a possible 40 000 jobs over the longer term. Given that the project is likely to span thirty years, job sustainability seems a realistic outcome.

3000 jobs were created by the Federation Square built in Melbourne Australia. Constructed on decking over the Flinders Street railway yards. It was opened in 2002 and cost a$450 million to build. The decking on which the building and its surrounding piazza stands is supported by over 3,000 tonnes of steel beams, 1.4 km of concrete ‘crash walls’ and over 4,000 vibration-absorbing spring coils and rubber pads. Federation Square joins the Melbourne CBD to the Yarra river. The complex is home to the art and design institutes like the Australian Centre for Moving Image, The Design Institute, the Victorian Visitor Information Centre, and features concert areas, restaurants and bars.

Jo’burg council’s plan is ambitious. Initially the intention is to develop non-decked areas on the periphery of the intended decking area first, this is due to start by the end of 2011. The under-used land between Joburg’s inner city and Braamfontein will support the intended investment and automatic regeneration in the inner city.

Over the next 30 years five precincts will be targeted: the eGoli Design Centre, to the west of the M2 highway beside Fordsburg; the Newtown precinct adjacent to the Mandela Bridge. This is the location for WITS University’s science centre, which is to be surrounded by a ‘green area’ or park. Then there is the Park station transit-orientated development serving daily commuters as well as intending to be a node for tourist activity where the Gautrain gives access to OR Tambo International Airport and the Northern Suburbs. The Joubert Park precinct will be focused on the current museum which will be upgraded. Finally there is the Doornfontein transit-orientated development which will revolve around the University of Johannesburg and the Coca-Cola Park sports precinct.

Given that the city can only really move upward the plan to reclaim the space above the rail network and land pinched between marshalling yards and other development would certainly be a creative and efficient use of space and has huge potential to earn through rates and taxes.

There is no doubt that the vision for the regeneration of Jo’burg’s CBD would be given further energy and initiative through the decking project. Feasibility studies have been received by council and the project is being studied by what has been called the Decking Working Group, finalizing the first draft business plan. Council has promised a further round of consultations later this year.

Keep Your Friend’s Close…

Keep your friends close, and your enemies closer. Sun-tzu Art of War. (~400 BC)

If certain commercial property consultants are to be believed this may be the way to go for Aggrieved Residents of Dunkeld, who penned an angry public letter last month.

The letter is a reaction to the proposed plans by Intaprop to make an Illovo Boulevard type incision through Dunkeld joining up with Rosebank. Reminiscent of the 2005 Dunkeld Village Association (DVA) objections to the Gautrain’s route beneath houses built in the early part of the 20th centuary. The DVA didn’t manage to bend the line of the Gautrain but they certainly intend to bend the line of Intaprop’s boulevard which some speculate will most probably carry on through to Cradock Avenue in Rosebank. There are of course other possibilities: at one end of the spectrum evolving the Bompas Road spine and, on the other, to mischievously speculate of a much grander scheme involving the area between Melrose Arch, Illovo and Rosebank.

As it turns out Intaprop have said that they had approached the DVA as far back as 2006. Their stated intention was to create a community scheme to ensure that the development is handled responsibly, but also to ensure that everyone benefits equally. Interestingly the DVA website at the time of writing is completely silent.

In VBGD Town Planners report Oct’2010 it is taken for granted that the Illovo Boulevard precinct plan will proceed straight through Dunkeld. In section 2.1 of the report it reads ”Initial indications are that the extension ofFricker Road southwardsinto Dunkeld is a likely eventuality.”  Intprop have admitted that “additional traffic that development would bring to the area was considered and the extension of Fricker Road was a logical solution.” The DVA was an active participant in the public participation process of Council to formulate the RUDF (Rosebank Urban Development Framework) and was also in support of the Fricker road link.”

In the Aggrieved Residents of Dunkeld letter the claim is made that: “Intaprop apparently tried to influence Joburg Council Planners to adopt a new Dunkeld Precinct Plan that would link the commercial areas of Illovo with that of Rosebank through a new boulevard.” No wonder some of the residents are hopping mad though perhaps some stand to gain quite handsomely.  Intaprop has pointed out though that “pressure was already mounting on the area in 2006 and many of the properties were already being used informally for business purposes. Many of the properties were being neglected and the area was deteriorating. We saw the need to create a plan and rules to ensure that development in the area is undertaken responsibly and in a similar way to what created the Illovo Boulevard node. The residents association (strong and powerful as it is) allowed the deterioration of the properties, the general decline of the public space and the business trading from many of these properties. It was clear to all that redevelopment was on the cards to revive and improve the area.” Explained Andre Gouws of Intaprop.

One area broker believes that it would be better for residents to “get into bed with the developers” like the Illovo residents who kept their ‘enemies’ close. This way they can “manage the process” as a broker suggests. Commentators also believe Illovo Blvd is a success and that it is that way because residents are very much involved.

The Aggrieved Residents of Dunkeld have compared Dunkeld to Upper Houghton which was declared a national heritage area, as it is a similar age to that of Upper Houghton. One can’t help wondering if one were to apply similar reasoning to say, Melville or Yeoville, what sort of public sympathy would there be?

What is uncertain is the intentions of council. One ought to consider that when developments of this nature take place, the developers are required to grow the infrastructure in the forms of roads, sewerage etc. If any of the development revolves around Bompas road, and it seems it will,  one would think that this can only be for best given the traffic congestion in that area.

There is also some debate as to Rosebank’s development. Some believe the area to be overdeveloped. The Aggrieved Residents of Dunkeld would concur, claiming that,  “The Rosebank Box and for that matter Sandton and the Illovo Point area have many hundreds of thousands of square meters of spare bulk capacity.” Rendering redundant the need to look further to Dunkeld for expansion. They do have a point given some of the massive development projects and future opportunities within Greater Johannesburg overall….not to mention the fact that with the onset of Gautrain and the BRT system requiring supportive commuter densities, additional bulk has effectively been granted to the node and along the spine that underpins its route. By this town panning logic though, it would equally perhaps seem reasonable to conceive of a parallel boulevard linking Illovo with Rosebank with scaled- down rights. The feasibility of such a land parcelling exercise is of course critical and under most circumstances probably out of range for the short-term, perhaps more suited to a 10-20 year time horizon. Ultimately the onus of any proposal is for the developer to be able to prove demand and feasibility.

Some positive spin-offs cited by one broker were the presence of 24hour security that usually comes with office buildings and the beneficial prices that owners can demand for their properties.

Looking back at similar situations in Johannesburg, the residents are possibly going to have to come up with a better strategy than “Heritage” to preserve their suburb in the face of development. It is also more than just about the age of structures; and motivating such status takes a lot of time effort and resources. Thinking back to Parktown and Melrose leaves one a little discouraged; and upper Houghton has the environmental advantages of being on a ridge, not to mention Herbert Baker designs, other famous architects of the time and legendary residents.

Developers wield great power and have favour and influence in municipal circles. They know where the red tape is and who’s who in the bureaucratic machinery.

As Trinculo from Shakespear’s Tempest famously puts it, “misery acquaints a man with strange bedfellows,” This may be the time for the Aggrieved Dunkeld Residents and the proposed developers to consider working out together what seems inevitable.

For more articles like these visit: http://www.eprop.co.za

Jo’burg Fights the Monster of Inner-city Decay

Defeating the monster of urban decay.

By 2000 the last psychological blow fell. One could argue that most businesses that were going to leave inner city Joburg had left by the mid 1990s. But when the JSE (Johannesburg Stock Exchange) picked up its skirts and strutted off to glitzy Sandton that was the symbolic blow that brought home the reality that the Joburg inner city was defeated. Something else had risen up in the inner-city, a monster fuelled by crime, public filth, building vacancy, taxi violence, car hijacking, municipal mismanagement and maladministration. A visionlessness and hopelessness pervaded the city. It would take more than one heroic blow to bring down such a monster. So what was once the commercial hub ofSouthern Africa, reaching its pinnacle, in the 1980s, the inner-city was hit by the flight of business to the northern suburbs.

Ownership

Ownership has been among the blows to send the inner-city decay ‘monster’ into decline. By the time the JSE left, the mining houses and three banks (FNB, Standard and ABSA) had already resolved to stay and rejuvenate the city, this is where ownership really took root.  The Johannesburg Development Agency would be another blow to the doom and gloom providing initiative and vision. Throw in Business Against Crime and other civil initiatives and people began to believe.

By the time the Better Buildings Programme began the ownership was tangible. Alas BBP, an attempt by the city to take bad buildings and turn them into better buildings only achieved moderate success.  The process proved laborious, taking as long as two years to get one building through litigation and judgment.  Former Mayor Amos Masondo said: “It (the BBP) was hamstrung by factors such as the lengthy expropriation process, the screening of participants and the requirements to provide transitional housing to people who have been evicted,”. He said the BBP had been only moderately successful because of the lengthy expropriation process.

Now transitional housing, BBP’s biggest stumbling block, will be provided to current residents of buildings that will be refurbished by the specially formed Transitional Housing Trust (THT) which will manage the process.

The BBP has evolved into the Inner City Property Scheme (ICPS). In April this year Amos Masondo announced a new, arguably improved, scheme to deal with one of urban decay’s biggest symptoms: distressed buildings. The City ofJohannesburghas thus created a restoration solution, though driven by the private sector. A large portion of the City’s property portfolio will be transferred to the ICPS through a series of structured sale transactions. Unfortunately during the BBP years, since 2004, out of 130 rejuvenation projects in the inner city only 2% have come from black economic empowerment (BEE) investors.

ICPS plans to put this right. Again ownership is the dynamic since the ICPS plans to empower historically disadvantaged people by creating the biggest black owned inner-city property scheme inSouth Africa. The City retains ownership of properties until it is satisfied with the regeneration of those properties.  Participants in the Broad Based Black Economic Empowerment (BBBEE) transactions were selected through a Request for Proposal process, and are required to provide a minimum equity contribution of R 5 million. The city would ensure that the option to buy was exercised only once the dilapidated property had been refurbished. Watch this space.

Residential Real Estate Restoration

Another blow to the monster has been on the residential front. In a R41 million finance deal, Nedbank has backed the redevelopment of the existing nine-storey building at16 Frederick StreetinMarshalltowninto a modern residential apartment building!  Last year Nedbank provided finance for the R100 million redevelopment of an office building situated at29 Kerk Streetfor sale to Diluculo Investments on completion of the refurbishment. Although there have been swings and roundabouts.UrbanOceanfounders Alfonso Botha and Duan Coetzee had very lofty plans in 2004 buying up old office buildings with the view to turning the inner city into a stylish space to work, reside and recreate. But by early 2008, some ofUrbanOcean’s renewal efforts had stagnated, and upmarket housing diminished. But two years down the line in 2010 Aengus Property Management was administering more than 2000 trendy apartments in the city, many of these units were snapped up for the world cup last year. Most of APM’s buildings in the Braamfontein area are now being let out to young professionals working in the city and student tenants attending university at nearby campuses.

In June Jawitz Properties sold an apartment of 147m² in the historic headquarters of Barclays Bank at87 Commissioner Streetfor a cool R1,15m! CBD loft-style developments are comparatively more reasonable than the competition from the northern suburbs tempting the trendy set back to the city.

Then there is the Maboneng Precinct: opened with Arts onMain. What was originally a complex of five out-of-commission warehouses is now home to 28 sectional title studios and offices. Even the traditionally industrial south eastern node of the city is rejuvenating. Led by Jonathan Liebmann’s ‘Propertuity’ who is turning Fox Street, bordered by Main, Berea and Kruger, into a pulsating hub to live, work and play for artists, designers and other creative professionals.

And so there’s Main Street Life, a five-storey apartment building of 194 residential units, restaurants, a cinema, a theatre, a hotel and more. All very trendy and pulsing with life and activity. Liebmann is also redeveloping three other buildings in the precinct bringing the redevelopment value up to R100 million!

Investor Confidence

More recent news is the sale on auction of Entire city block (New Doornfontein) in the JohannesburgCBDfor R18.7 million. Thud, another blow bringing down the monster, investor confidence.  ABSA’s sprawling head office expansion of 50 000m² has boosted interest in the eastern side of town. This has had infrastructural improvement spin-offs for the whole area.

Infrastructure Renewal

Bringing the monster of decay to its knees has to have infrastructural initiatives: Previous sales type pitches for the city citing the proximity of rail links and the highways and buses has been met with indifference until now. The Urban Development Zone, (UDZ) covering an 18km² area east-west from Fordsburg to Jeppestown and north-south fromBellevueto the M2, has reportedly contributed R8 billion toJohannesburg’sCBDwith its proximity to transport hubs. Throw in the refurbished and new taxi ranks, Rea Vaya bus service, the Gautrain and both ends of the transport market are covered.

Of course the UDZ tax incentive is part of a national scheme to encourage inner-city renewal acrossSouth Africa, so Government must be thanked for that blow. The incentive offers tax allowances covering 100% of the total cost of property refurbishments over a period of five years, while new property developments can claim the allowance over 17 years.

Enter the Johannesburg Development Agency (JDA) and Central Johannesburg Partnership’s City Improvement Districts. CIDs are designed to improve services. Specifically geographical areas where property owners agree to pay additional levies for enhanced services, including security, cleaning and maintenance. The results are visible and office workers are remarking that they feel safer, with the new CCTV cameras and visible policing. Ellis Park,JoubertPark,Gandhi Squareand the Braamfontein Corporate Precinct have all seen impressive changes.

Fox street, from the Carton Centre toEloff Streethas undergone a stunning beautification project. Investments of this nature have got the ball rolling for further improvements and increased confidence in the inner city. Retail has picked up remarkably inKerk Streetafter its refurbishment. TheJohannesburgCity Halland theOppenheimerParkhave been appealingly upgraded reversing the wind of dereliction that had blown their way in the last decade.

It has been reported that infrastructural plans have been made for a mixed-use development to be known asStimela Squareat the corner of Sauer and Hall Streets, the historic old mining camp also known as Ferreira’s Camp. The plan is for it to be an attractive garden square with retail and residential buildings surrounding.

TheNewtowncultural precinct continues to grow asGauteng’s cultural hub. Johannesburg Metro Council has been a huge player here.  A further 35 000m² of retail space, called the Potato Sheds, as well as the 7 800m² Majestic office complex, of which The Majestic Hotel will be the last phase, are being developed in the area too. The development of Anglo Gold’s head office andAshantiare a notable presence inspiring investor and consumer confidence in the area.

Looking up toward Braamfontein, infrastructure improvements have revolved around 20 buildings in particular being converted into student accommodation for Wits university students. There has also been a spill over into Parktown where a nine block commercial development, The Hill Office Park, is currently underway. The expansion of Empire Road and the construction of the BRT station is already taking place.

So when you hear that a beautiful oldJohannesburgbuilding on the corners of Biccard and Stiemans Streets will be auctioned on the 28th of September you should expect to hear the sound of investors feet. Another is the old Stuttafords building on the corner of Pritchard and Rissik. Property is moving in the JohannesburgCBD.

On the 19th of August on the Joburg website the new Mayor of Johannesburg Parks Tau pledged to continue on the path of his predecessor and recommitted himself to the ICPS.  Time will tell if the Mayor and his co-workers have the political will to keep the momentum going, facilitating the demise of what was the monster looming over the city.

It’s clear that it’s taken many blows to send the monster packing. Now the mopping up is being done it’s clear it takes a team to get a city on its feet. Council can’t afford to sit back now. Infrastructure must never be allowed to fall into the state of disrepair of the 1990s. Maintenance with vision for even greater things is required.  With a Civil society prepared to go the extra mile and the residents of the inner city prepared to take ownership of their city, there will be investor confidence enough for Business to invest in and see buildings restored, maintained or even replaced.

JSE it’s safe now, all is forgiven, come home.

SandtonCity– in the news for all the right reasons.

When you’re getting it right the heads are up and it’s not just about size, and yes folks sometimes size does matter!

 Expanding the family

In November this yearSandtonCitywill expand by 30 000 square meters to 215 000 square meters, 144 000 being retail space.  Edgars is being upgraded as the flag ship store for Edcon to 12 000 square meters.  Edcon’s Jet Store is being reintroduced to the centre as well.

Truworths, the Foschini Group and Mr Price have acknowledged thatSandtonCity’s extension will be vital to their own growth plans. The Foshini group is doubling its trading area to 1,900 square metres. It will also be expanding American Swiss Jewellers, Markhams and adding a Donna Claire store to the line-up.

Throw in another 58 retailers and by year endSandtonCitywill have mushroomed like never before. Reinventing itself again, keeping its image fresh and exciting. The Bread Basket, Billabong, Nicci, Cameraland, Hydraulics, Marion & Lindie and Chefs n’ Icers are all recently revealing slick and sexy new store concepts and designs.

 Attracting the Glitterati.

Then just when you thought it couldn’t get better, adding to the already nearly 300 local brands represented, Sharon Swain, Centre Manager, announced that there would be an influx of international names too: Polish makeup house Inglot; Brazilian footwear brand Dumond, Italian clothing designer Carlo Pignatelli, Portuguese menswear designer Miguel Vieira and Kurt Geiger from New York. “Each of these retailers boasts a unique premium offering and their arrival brings the best of international trends to our local market.” Declared Swain.

 Investment

You may well ask who’s behind all this. “The expansion ofSandtonCityis strongly retailer-driven. We’ve worked closely with our national tenants to bring the very latest and best retail concepts and designs to shoppers,” said Julie Hillary, general manager Sandton region, for Liberty Properties.  The redevelopment is being undertaken by Liberty Properties on behalf of owners The Liberty Group, which owns 75% and Pareto Ltd, which owns 25%.

 Going Green

The headlines continued in August with the announcement thatSandtonCity’s landmark expansion is being capped with a South African first: an environmentally-friendly climate envelope roof. Yes it’s true,SandtonCityis going Green. TheProtea Courtroof has been created with a product called Texlon.

Texlon is an innovative Green technology used worldwide and is being used for the first time inSouth AfricaatSandtonCity. The reason for its selection as a roofing material is its lightweight and environmentally-friendly climatic envelope. It is highly energy efficient, comprises of environmentally-friendly technology.

 Showing some love

But it’s not just about glitz, glamour and Green. Showing its intentions back in March when Earth Hour was celebrated,SandtonCityrevealed its warmer side when in conjunction with Mr Price Home 150 quality fleece blankets were donated to the children ofAlexandraTownshipas part of the Corporate Social Initiative programme.

The recipients were the Banakekeleni and Abangani E Nkosini homes caring for orphans and the elderly. In addition as part of the annual Sandton City CSI programme, a pledge was made to supply these homes with essential hampers during the course of the year to assist with the meeting of basic daily needs.

The future looks bright for a shopping centre that’s puts its money where its mouth is as a national retail icon, mindful of the environment and the greater good of the surrounding community. The world is  watching you SandtonCity.