Category Archives: Society

George Clooney

– for Le Kap Magazine by Matthew Campaigne-Scott

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If we asked you to identify a celebrity who started out selling ladies shoes, whose face was paralysed with Bell’s palsy in high school, dropped out of two Universities, whose mother was a beauty queen and whose maternal great-great-great-great-grandmother, was the half-sister of Nancy Lincoln, mother of President Abraham Lincoln you may be a tad flummoxed.

George Clooney, it turns out, is a wealth of fascinating trivia: Born in Lexington, Kentucky he is now a house-hold name, candid pictures of whom fetch a fortune. Women, and even men have been feasting their eyes over this man’s man ever since the days of his appearance on Television’s medical drama ER, although he has been treading the boards since 1978.

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Yep, George wasn’t always so suave.

Many may not know that Clooney has a dog he named Einstein. “Einstein has been studying acting for many years now as you can imagine. I think he’s concerned that I am in his shot and he thinks that perhaps you can airbrush me out if it. That’s his hope.” said Clooney in a photo shoot with Einstein for Omega where he sports an OMEGA Seamaster Aqua Terra wristwatch. He is currently an OMEGA brand ambassador.

Going back in time George has had some roles he would prefer us to forget: everything from a simpering supporting role on the trashy sitcom Roseanne, a down to earth handy man on the more respectable: The Facts of Life and a role on a sitcom that took a nasty dive with the prophetic name of E/R.  (Not to be confused with ER!) George has certainly paid his dues.

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As Doug Ross in ER

Then came along that famous episode of ER, one of the most viewed on US TV history, where George’s character Doug Ross emerges from a flooded storm-water drain carrying a hypothermic boy under the glare of lights, cameras and howling helicopter blades over head. Fellow ER actress Gloria Ruben is quoted as saying that every women watching was wringing her hands, crying out: “oh George, SAVE ME, let it be me!” He received two Emmy Award nominations for Outstanding Lead Actor In A Drama Series in both 1995 and 1996 as well as three Golden Globe Award nominations for Best Actor – Television Series Drama in 1995, 1996, and 1997 for his role in ER.

It’s been happy hunting for George since then – in more ways than one. Scripts began falling into his lap, most famously and lucratively the Ocean’s Eleven trilogy. He got started in movies with some not so Thespian: Return of the Killer Tomatoes (1988) to the commercially pleasing Batman and Robin in 1997 – a movie that he openly advises people not to watch. In later years he displayed his maturity as an actor in movies like the critically acclaimed war satire: Three Kings.

The Facts of Life

…and with Mullet in THE FACTS OF LIFE George Clooney as George Burnett — Photo by: Ron Tom/NBCU Photo Bank

In 2002 George decided it was time to sit on the opposite side of the camera as director of the movies Confessions of a Dangerous Mind and the political drama Ides of March. Last year he directed/produced and starred in The Monuments of Men which grossed $155 million at the box office, receiving mixed reviews.

The 2000’s through to the present have been kind to George.  He is the only person ever to be nominated for Academy Awards in six categories. He received Best Actor in a supporting role for Syriana, a 2005 geopolitical thriller loosely based on the Robert Baer’s work See No Evil. Then in 2012, as producer received Best Picture Oscar for Argo -the political thriller about the iconic Us embassy in Tehran debacle and it’s political fallout . Both very challenging movies showing a depth to George Clooney’s greater than just charm and good looks.  Other Oscar nominations were for Best Director for Good Night , and Good Luck as well as Best Original Screenplay. He was nominated for Best Actor in Michael Clayton’s, Up In the Air and The descendants. He was also nominated for Best adapted Screenplay for the Ides of March.

George-Clooney the wise

The world’s got problems, but I can handle them.

As if this wasn’t enough there is a great deal more to George Clooney than just the movie industry. The CFR or Council for Foreign relations is an august body that influences US foreign policy. It’s fellows include CIA directors bankers, lawyers and senior politicians and one George Clooney. They have clearly had their eye on George and his political activities.

George Clooney has been vocal about a few issues. He has also made it clear that he was anti the War in Iraq and pro Barak Obama and pro Gay Rights (for example Clooney took an auction winner out to lunch to benefit the Gay, Lesbian and Straight Education Network (GLSEN)in September 2001.)

George has found his political voice with the Not On Our Watch Project, a body that was co-founded with Matt Damon, Brad Pitt, David Pressman, and Don Cheadle. In this capacity he has raised donations for the 2010 Haiti Earth Quake victims and has been on a fact- finding mission to Chad and drawn world attention to human rights violations by Burma’s (Myanmar) brutal military regime. The organisation says on their website “Our mission is to focus global attention and resources towards putting an end to mass atrocities around the world”. [1]

Clooney and human rights activist, John Prendergastco initiated the Satellite Sentinel Project (SSP), after an October 2010 trip to South Sudan. SSP monitors armed activity for signs of renewed civil war between Sudan and South Sudan, and to detect and deter mass atrocities there.[2]

Clooney spoke at a Save Darfur rally in Washington, D,C, when he and his father returned from Darfur after having made a  documentary, “A Journey to Darfur.” exposing the Darfur refugee crisis.

George the activist

George the Activist

In March 2007 Clooney sent an open letter to German Chancellor Angela Merkel calling on her to use her influence with the European Union to take “Decisive action in Darfur.” Also in 2007 he narrated and was co-executive producer of the 2007 documentary Sand and Sorrow. Clooney appeared in the documentary Darfur Now, with the view to activating people the world over to help stop the human rights abuses in Darfur.

Clooney and Don Cheadle received the Summit peace award from the Noble Peace prize Laureates in Rome in December 2007. But Clooney expressed how much he felt his and other’s efforts were for naught in his acceptance speech:  “Don and I … stand here before you as failures. The simple truth is that when it comes to the atrocities in Darfur … those people are not better off now than they were years ago.[3]

In March 2012, he whet his theatre acting appetite by starring with actors Martin Sheen and Brad Pitt in a performance of Dustin Lance Black’s play, 8, a re-enactment of the US trial that overturned California’s ban on same-sex marriage. The production raised money for the American Foundation for Equal Rights.  In the same month Clooney was arrested for civil disobedience during a protest outside the Sudanese Embassy in Washington, D.C. The man gets around.

It’s no wonder  George Clooney was included on Time Magazine’s top 100 “Most Influential People in the world.”

Speaking of getting around, George has had his fair share of exotic beauties on his arm, from the talented Talia Balsam and Italian stunner Elisabetta Canalis to popular actresses Kirsta Allen and Renee Zellweger. But 53 year old George has shown his class and his pecking order by landing 37 year old British-Lebanese human rights lawyer Amal Alamuddin. They recently did a ‘royal tour’ of the Italian countryside visiting the Chianti Hills on a vintage Vespa Piaggio. George, who has a passion for motorcycles as well as beautiful women, took his bride for further tours on an assortment of bikes throughout Italy last month.

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Leisure time

But movies is what most of us love about George, so we look forward to his latest offerings.

This year saw the launch of a science fiction adventure: Tomorrowland. The movie is all about memory, destiny and time, so he appropriately dons a masterpiece of retro timekeeping: the vintage 1958 Omega Automatic Chromometer in his role as Frank Walker. Regarding time, Clooney’s character says: “With every second that ticks by, the future is running out.” Profound words from the man who’s made good use of his time.

What does George have in store for us in the future? He is currently working on two productions: a comedy with Josh Brolin, Channing Tatum, Tilda Swinton, Alden Ehrenreich, and Ralph Fiennes called Hail Caesar. He has also teamed up with Jodie Foster  and Julia Roberts to make a thriller called Money Monster. You can’t keep a good man down. So George continues to do what he is arguably best at, making movies and keeping us entertained.

View the article with vivid and unique pictures at Le Kap online magazine. http://www.lemagpublications.com/LeKap5/LeKap5.html

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Landlords Are Back With a Vengence

shoppingIf anyone thought bricks & mortar retailers were going to lie down in the face of an online invasion they are very much mistaken. Likewise any retail landlord who hasn’t heeded the ‘adapt-or-die’ writing on the wall, is in for a shock.

South Africa’s traditionally big names have learnt to have an online presence to supplement their physical shop experience. Woolworths and Pick n’ Pay have online shops. While Look n’ Listen, for example, has become so integrated online it’s basically a hybrid retailer. Kalahari and Spree remain purely online vendors.

The next phase of integration is being previewed in places like the UK, from whom SA retailers can learn a great deal in this regard.  Enter the “Student Lock in”: some of the UK’s largest shopping centres are using this marketing tool to draw in younger clientele,

Students-from-across-the-north-west-participated-in-a-mock-protest-before-doors-opened-to-the-Lock-In-PRESS-SHOT-670x457After weeks of promotion on social media sites such as Facebook and Twitter, shopping centres close at the normal time, and then reopen from 9pm until 11pm for the ‘Student Lock-in’, only admitting shoppers who can show a valid National Union of Students (NUS) card.  The events are intermittent and planned long in advance.  Special offers, entertainment, food and music all add to a festival atmosphere. One of the UK’s largest shopping centre owners is  Land Securities(LS). Events like ‘Student Lock-ins’ at LS shopping centres in Cardiff and Dundee have raked in the sales.

Other Student lock-in events revolve around online media promotions of film events. For example Gok Wan’s “How to look Good Naked” was promoted on line and shot at the Hammerson mall, packing in the crowds with retail benefits all round. Combining online promotion and social media with fashion, restaurants and leisure seems to be a way of keeping up with the attraction of online stores. People come to shopping centres for the vibe, to eat and be entertained.

But there’s more: in the US, Land Securities has brought the convenience of online shopping into seven of its malls, where Amazon.com collection lockers have been installed. Customers who cannot be at home, or are ordering things too bulky to fit through a letter box, are sent a code and date to pick up their parcel from the shopping centre. When customers collect in store, or return an item it’s another sales opportunity.

A MasterCard survey indicated that the number of people who make use of mobile phone access and thus using their phones to do online shopping in South Africa has increased hand over fist. Growth of mobile smart phones and iPads allows shoppers to shop anytime or anywhere. This can’t be ignored, so if-you-can’t-beat-‘em-join-‘em. Enter the QR Code.STD

A QR code (or Quick Response code) is a kind of barcode popular due to its large storage capacity and quick readability. QR Codes make it easy for a person to perform a certain action by scanning a code on their smart phone. The use by retailers to market products to consumers is obvious.  Every Smart-phone owner is a potential user. More and more retailers are adding QR codes to their merchandise adding a further dimension to their shopping experience.

qrcode.23545541This allows shoppers to scan products via a QR code reader on their smart phones, and order and pay for the product directly without needing to do the transaction at a point of sale. Of course this is just one of many ways of shopping in a multifaceted shopping experience. Woolworths South Africa made use of this technology during its last big sale earlier in the year. Standard Bank is making big waves with its QR ‘Snap Scan’ for purchasing without cash or card.

Another UK innovation that emerged this year was “click and collect.” Department store House of Fraser moved its pick up facility from the back to the middle of the store reporting that customers are more likely to purchase items in addition to their online purchases they had come to pick-up. Being present meant that online customers are able to try on and exchange goods whilst in the shop.

The concept developed further into House of Fraser “virtual department stores”, a fraction of the size and cdownloadost of a full department store – which can get virtually any products on next day delivery. The stores consist of a customer services area, and many change rooms, making it easy for customers to pick up, try out, pay for or return items.

Innovations like this have brought out a creativity and an aggressive response to the so-called onslaught of on-line shopping, blurring the lines between worlds.

Interestingly there are even online-only and catalogue retailers who have started opening small shops to improve their customers shopping experience and to compete with finer tuned bricks and mortar customer service. What’s certain though is that shopping centre landlords are getting creative, innovative and fighting back by taking on the online retailers at their own game.

Life Rights, are Reverse Bonds an Alternative?

images (2)Making up for lost time during the Second World War, many soldiers returning home to Europe, North America and the colonies establishing families, the children of which are embarking on their retirement years round about now. Unfortunately this collective has been described as largely asset rich and cash poor.

Given that most people retire later than expected, still working long after retirement age, and having not planned adequately for their sunset years, choosing where to live is arguably the next biggest decision in the retirement process. Faced with the prospect of selling one’s property with the view to purchasing a retirement home, there are some options to consider.

Broadly speaking the options are Life Rights, share block, freehold or sectional title. The latter three are thoroughly marketed and explored. But ignorance regarding Life Rights continues.

Life Rights is the most widely used retirement home model worldwide. Life Rights offers the lowest purchase price relative to product. The fact that there is neither transfer duty nor tax payable is an attractive boon.

download (1)It is important to be appraised of the following facts:

The purchaser does not have ownership of the unit. The ownership of the unit is retained by the development/complex and is not transferred to the individual as with sectional title. The purchaser has a right to live in the unit for the remainder of his or her life. In essence it’s like paying a lifetime of rental in advance. (This usually extends to a spouse or life partner upon the death of the other.) The unit though may not be bequeathed.

When the remaining party dies or chooses to leave the unit they or their estate are paid on the basis that the capital sum paid is returned plus 25% of the profit after costs. The percentage will differ from one development scheme to another and the amount or percentage is usually linked to the period of occupancy.

An additional benefit of entering into a life right scheme is that accommodation costs remain fairly stable, especially if the development offers a fixed for life levy.
images (1)Which bring us to Reverse Bonds or Reverse Mortgages.
It has been suggested by Rob Lawrence of Rawson Finance that some senior citizen consider a Reverse Mortgage. A Reverse Mortgage may be the answer to some who have paid up properties and no or little income to either maintain the properties or provide for themselves. The Reverse Mortgage is a loan paid in a lump sum, or monthly, to a recipient by the bank, against the security of a mortgage bond. No bond repayments are required and the funds advance can be used to purchase a pension or any other asset that can increase income. Alternatively, the proceeds themselves can be paid out as an income.

A reverse mortgage is an arrangement with some of the rules reversed while maintaining the basic principle of a mortgage. It’s still a loan secured by your real estate, but you don’t have any deadlines on payments as long as you live in your home or on your property. With a reverse mortgage, you basically convert the value or the equity of your home into cash.

Although Common in the USA, UK and Australia for many years, there are only two institutions currently that will offer this facility in South Africa: Nedbank and Senior Finance.
Some conditions usually include: 1) the bank, not an independent evaluator, will value the property, 2) the percentage bond advanced on the value of the property is dependent on the purchaser’s age, 3) the mortgagee has to be over 65 years old, and 4) any change in the ownership of the property automatically makes the sum advanced fully repayable.

cartoonLooking at the downside: What if the value of the loan plus interest exceeds the value of the property by the end of the loan period. This means that the borrower or his/her estate may need to sell assets in addition to the house to pay off the loan.

Upon the death of the borrower the surviving spouse may have to repay the debt, which could result in the need to sell the house in the process. A reverse mortgage could undermine your intention to leave an inheritance for your children and others, instead leaving a legacy of debt.

Conventional wisdom would have it that it’s risky business to borrow money to fund living expenses where the interest rate is linked to the prime rate.

The Reverse Mortgage is really aimed at the asset-rich/income-poor senior citizen who isn’t planning to live for decades and decades. A 65 year old taking out a loan and living to 85 has accumulated twenty years of debt plus interest. That’s quite a legacy.

After having spent ones whole life making monthly payments to this or that and worrying about debts perhaps living out ones retirement years under the obligation to ‘keep it short’ or pay up just may make Life Rights seem a lot more attractive.

Visit the Waterfall Community Retirement and Eldercare Page.

A Man and His Butcher are not Easily Parted

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The ever helpful and courteous Emil from Waterfall SuperSpar Butchery

There’s something very masculine about meat, isn’t there? The immediate image that comes to mind is the braai. Generally and mostly it’s men standing around advising other men about how often to turn the meat, what adjustments the fire needs for different meat and so on. That’s why male vegetarians aren’t really complete men- kind of like missing a testicle.

This is not to ignore the fact that it is actually mostly women that prepare and cook meat but without the fanfare and drama that male meat interaction seems to involve.

An example is the poitjie. Men who wouldn’t know how to boil an egg for dinner and practically strain themselves to find the cereal or burn themselves making toast become experts on all matters culinary when preparing meat for the potjie, its tenderisation, the slow cooking of, flavouring, what spices and herbs to apply, the works.

In fact rarely does one see the high level of sophistication men embrace when it comes to meat outdoors. Wives who try to solicit an ounce of assistance with the evening meal preparation during the week are met with nonplussed expressions and glazed eyes when asked to: “just toss the salad while I:- go to the loo, shift grandpa, change this nappy, move the house to the left.”

Then there’s biltong – do women and children eat it, sure. But who’s the expert on what biltong is the best, most flavoursome and assuming the correct shape – the man. If a woman offers an opinion on biltong, men assume embarrassed looks or bow their heads, and that’s the polite response. What could a woman possibly know about biltong? And let’s not get started on the intricate equipment that men have invented to cut, shave, slice and dry biltong in the luxury of their own home.

This possibly explains something: men and butchers. Men may not be able to find the right deodorant, two-ply loo-rolls, a ripe avo or correct baby formula at the supermarket, but they can be found congregating around the butcher on a Saturday morning. Dozens of them standing around discussing the length of their boerewors, different flavours, contents and uses. (This is the same butcher that housewives have been consulting nonchalantly during the week.)

One may venture that in our society a truly masculine man knows his local butcher – this is the closest men get to hunting in the 21st century. Butchers are the druids or medicine men of the modern western culture. Butchers are greeted with special reverence. Various cuts of meat are discussed, advice is sought and opinions are given. “Would it do better in the Weber, should I debone them before putting them in a potjie, is sixteen table spoons of salt too much, what percentage of fat is optimum in a good wors,” questions that any housewife would come up with a common sense answer for. But men respect the views of their butchers.

So meat is very important to men, it’s a reminder of those cavemen days when bringing home a carcass ensured hugs from small children respect from adolescents and long romantic evenings with Mrs Caveman. Today even bringing home the paycheque is obsolete never mind bringing home the bacon. It’s all done over the net. So ladies give your man a break, when you see him lurking about the butchery for that exciting moment when the butcher comes out, don’t nag, let him enjoy being as close to the kill as he’s ever going to get.

British Council of Offices Conference- the Ripples Continue

B_B_BCO-BIM-Research2013British Council of Offices Conference Challenges Outmode Approach to Office Space.

The British Council of Offices (BCO) Annual Conference brought together the BCO’s membership – a mix of senior figures in organisations responsible for designing, building, owning, managing and occupying offices in the UK. (Although now done and dusted it is still worth reflecting on in anticipation of May 2014.) Approximately 450 delegates attended the Conference in Madrid, considered to be one of the property sector’s premier events.

The BCO Annual Conference  opened with a warning to representatives that much of the existing London commercial property market was becoming outmoded at a far greater pace than previously thought. Even some properties as young as 20 years were not keeping up with the modern office occupier requirements.

Lord Myners, a former chairman of Land Securities, was addressing the delegates at the first plenary session, ‘A Brave New World’, put forward that growing density requirements and hindrances caused by the antiquated planning obligations of section 106, and a need for on-going  enhancements to basic office functions such as high speed lifts and green-type air conditioning challenged the sector to keep abreast of customers wants and needs.

It was also emphasised by Lord Myners that the sector would need to adapt to a whole new office specification in order to continue attracting this new customer base since increasing demand from the Far East investors for commercial property in London was rising.

Another speaker, Sir Stuart Hampson, called on delegates to continue developing buildings of quality and resist the temptation to prioritise space over specification. He advised that sustainability shouldn’t just be a slogan, neither should energy efficiency; austerity would show up any high energy costs and make buildings seem prohibitively expensive to let if designers did not keep up with the times. Hampson argued that the public space around workplaces is equally as important as the interior –this would require investment in infrastructure and support from local authorities for public transport links to office developments. Hampson concluded by maintaining that it was necessary to treat tenants as customers, working hard to keep them engaged in order for office owners to become worthy landlords.

Research released in 2012 by the BCO found that building owners are underestimating the extent of obsolescence if existing valuations are used.  Those valuations suggest only 6% of UK offices are obsolete. However further interviews done by BCO with investors suggested that figures are more likely to be up to 15%. This suggesting that an even greater proportion of office stock won’t meet their future requirements.

The BCO has managed to identify an opportunity for developers and investors alike to assist in ensuring offices are suitable for the purpose of their occupiers, thereby reducing the proportion of offices classed as obsolete in future, and has previously called for office investment strategies which give as much importance to asset quality fundamentals and location as possible returns.

Next Conference

14- 16 May 2014
ICC, BIRMINGHAM

“The 2014 BCO Annual Conference is taking place in Birmingham, which is one of UK’s most vibrant, cultural and dynamic cities.

The 2014 Conference will focus on discovering new ways to create modern and innovative environments for people to work in. We’ll also be hearing from industry leading professionals on how changing certain elements of the working environment would help increase productivity and wellbeing. There will be topics and discussions on sustainable buildings with the session titled ‘On the Tin’, talks on ‘The Evolving Office’, how information technology is evolving, also how ‘Future Cities’ are re-inventing themselves and much more.. 

Birmingham has its stigma of being the industrial city, but with the investment and time put into reinventing its hub the city has become an exciting and innovative place for modern architecture and design. This conference will provide an excellent opportunity for delegates to visit projects showcasing energy efficient buildings and large campus headquarters.

Make sure you don’t miss out on this exclusive 2014 BCO Conference!” (From the BCO.org Website)

Airport Offices, Conference and Meeting Places – what to expect

 

Fraport's the Squaire mixed-use development

With the advent of the aerotropolis many business people are expressing an interest in office and conference accommodation at airports. Terms bandied about include serviced offices, turnkey premises and virtual office. But how close to the airport can you get?

As it turns out pretty close, but often with no cigar. When searching across the globe for serviced office accommodation at airports the directories, internet or otherwise are all smoke and mirrors. A cursory scan of office space at airports on Google or Yahoo gives you blatant statements like “Serviced Office at Heathrow” or “Turnkey facilities at O R Tambo.” With further investigation you discover that there is a helpful little map with direction on how to get to the said facilities from the airport – not in the airport!

images (1)So don’t be deceived you may not be able to pick up your luggage and push it to your office at the airport. What you can do is take a short taxi or shuttle ride to one of numerous facilities offered close to airports. Of course this isn’t new by any means but the prevalence of ‘designer’ type offices specialising in accommodating ‘on-the-hop’ business people who want to slip in and out to have a meeting with clients in meeting facilities or a conference room, is on the increase.

Having said that there are many airports that do offer virtual offices in the actual airport. Schiphol Airport, Europe’s 4th busiest, is located in Amsterdam. For $130 a month you can have the key to a very basic but functioning office with electricity, shared ablutions, Wi-Fi and a desk.  These seem to be typical.

download (1)So why are serviced office facilities necessary? Minimal capital outlay: In the serviced office, you have the choice of bringing your own furniture and office equipment or renting these items from your landlord. According to serviced office providers, the cost of using a serviced office, with or without conference facilities, is approximately 40 to 50 per cent of the cost of setting up and staffing a comparable conventional office. In a Virtual office you bring nothing at all, just your key and WiFi is mandatory.

So what is a Turnkey or Virtual operation? When you rent a serviced office, you don’t have to waste your time designing an office, installing electric and phone lines, recruiting staff, and taking care of all those other details. With a turnkey you make one call today and have a fully functioning office tomorrow.

The difference with these facilities at an aerotropolis is that your facilities are designed for ease of use from the airport and the airport is seen as the centre of the universe with all its tentacles slipping seamlessly out from it into the world around it. Again there is nothing new in this as hotels and conference facilities have been sidling up to airports for years. But the relationship has now become somewhat symbiotic.

Looking more at the conference facilities in particular most hotels either point you to facilities adjacent to or within close proximity to the airport. Like offices most advertised facilities for airport conference rooms are actually not at the airport itself, in fact the advertisements on the internet are particularly misleading in this regard.

imagesWhere there are conference facilities and meeting rooms at airports, the model, if there is one, is one of outsourcing. Looking at South Africa as an example: The O R Tambo International Airport has the Intercontinental Sun running upmarket and fully serviced conference and meeting facilities. Boasting seven boardrooms and two conference rooms, facilities cater for between 10 and 100 delegates and can accommodate up to 140 guests for cocktail functions in the private Savuti Restaurant.

Looking abroad, Munich Airport has the Kempinski Airport Hotel located at the centre of the airport beside the terminals. The Munich Airport Academy and training centre specialises in conference facilities and meeting places for business people right beside the airport.

The two above examples seem typical of many airports that seem to have handed over the conference model to the professionals

Airport Meeting Places is big business. There are organisations like Alliance Virtual offices. This international network offers both turnkey facilities and meeting rooms for across the globe. Many of these in airports. Typically these networks’ facilities offer:download

  • Wi-Fi Internet: Most locations will offer wireless internet access for free, or for a minimal charge.
  • They promise “Friendly welcome”: All venues are staffed by a professional team who will be ready and waiting to receive you and your guests. Many venues will also offer additional receptionist support such as administrative services.
  • Presentation facilities: Most meeting room venues will have presentation facilities on offer such as screens, projectors, wide-screen monitors and whiteboards.
  • Video conferencing: Many venues now have video or audio conferencing capabilities, perfect for long-distance meetings with remote teams or board members.

Airports and aerotropolis business culture is more than ever focused on the world of networking and connecting people using facilities that are both hospitable and convenient. The important thing is if you really want to meet at an airport make sure the facilities you require are actually at the airport.

REITS: Internal Verses External Property Managment.

They’re like non-identical twins, opposite sides of the same coin – internal and external management of REITs seems to be very much a case of “what you lose on the swings you gain on the round-abouts.’

Generally, REITs are either internally managed, with management as employees of the  REIT/operating partnership, or “externally managed” pursuant to a management contract with no direct  employees. Usually, private REITs and registered-but-not-traded REITs are externally managed for a fee by a related party manager. The related party fees for these types of vehicles can be significant and will vary based on the underlying investment premise and effort involved (e.g., “core” investment portfolio strategies typically have lower fee arrangements than those of more “opportunistic” vehicles).

In a REIT with an internal management structure, the REIT’s own officers and employees manage the portfolio of assets. A REIT with an external management structure usually resembles a private equity style arrangement, in which the external manager receives a flat fee and an incentive fee for managing the REIT’s portfolio of assets. The debate over which management method is preferential is favouring the internal management model. The controversy has centred on which method of management produces higher returns for investors, with some arguing that conflicts of interest underpinning compensation arrangements for external managers create incentives not necessarily in the best interest of the shareholders. Internalising management has emerged as the conventional wisdom for removing any conflict of interest between management and investors.

An external manager will typically receive a flat fee and an incentive fee. Generally, the flat fee is based on the asset value under management, which gives the manager incentive to purchase assets, while the incentive fee is based on the returns from the sale of assets. Most incentive fees for external managers are structured with a high water mark. Therefore, external managers will receive incentive fees only when the net asset value of a REIT increases above its highest historical net asset value.

External structures can create governance risks (at least when compared to REITs that are internally managed) and these governance risks can translate into credit risks. The central governance risk is that the external manager uses its control to extract value from the REIT to the detriment of shareholders and bondholders.

Curiously, data is not supportive of the thesis that internally managed vehicles outperform externally managed vehicles, despite popular opinion to the contrary. The potential for conflicts of interest are still greatest in externally managed vehicles and thus will continue to be actively debated. Ensuring maximum alignment of interests between investors and managers seems to be the key to regaining investor trust and support for externally managed REITS.

Having said that the following benefits for external management have emerged:

  • An external manager has larger scale than the individual REIT, so it can provide services at a more economical cost than managing the REIT internally.
  • With regards to management succession, externally managed REITs have a broader set of employees from which to select senior executives, thereby broadening the skills and experiences available to the REIT.
  • When external manager service agreements are specific and outline strict performance criteria, boards of REITs are better placed to oversee the manager’s performance. (Source: Moody’s)

On the other hand the external manager uses his/her influence over the REIT to further his/her own interests over those of the REIT’s shareholders or bondholders; external management representation on boards limits the board’s capacity to independently oversee the external manager and there are few, if any, independent control structures.

As South Africa is still feeling its way into the REITs market it may be worth our while examining what the trends are internationally: The US has typically internally managed, with a few externally managed REITs. External managers are often controlled by owner managers and may manage multiple and related REITs. In the United States, most REITs have now adopted the structure of internal management.

Australia seems to value both internally and externally managed REITs however a large portion of REITs have transitioned to internal management structures over the last few years.

Canada has some externally managed REITs but most are internal as are European, Hong Kong and Singapore.

Good governance is essential for the continuing success of the REIT, as the market places a premium on this attribute. The market needs to be made aware of the REIT’s commitment towards a strong corporate governance mandate.

Clearly the advantages and disadvantages speak for themselves and there’s no doubt that internal management is the favoured option around the world. South Africa is already following that trend it seems as emerging REITs are internally managed.

Aerotropolis KZN – putting King Shaka on the World Stage.

King Shaka departures Hall - courtesy Marc Forest

King Shaka departures Hall – courtesy Marc Forest

The Airport Cities World Conference and Exhibition for 2013 has come and gone at the end of last month where Dube Tradeport Corporation unveiled plans for Aerotropolis: KZN.  South Africa’s bigger player on this field, O R Thambo International, had to share some of the limelight as ambitious plans were unveiled for South Africa’s third biggest airport.

Despite the fact that the term aerotropolis has its origins in the late 1930’s and mainstreamed in 2000 by academic and air commerce expert  Dr. John D. Kasarda, one may be forgiven for a lack of familiarity with the word. One definition has it as: an urban plan in which the layout, infrastructure, and economy is centred on an airport, existing as an airport city. In September 2011, the Ekurhuleni Metropolitan Municipality officially announced its intention to transform the municipality into a functioning Aerotropolis with OR Thambo at its hub sending local real estate soaring.

The logic behind the Aerotropolis concept is that airports offer connectivity to suppliers and customers across the globe. Many of the businesses around airports can often be more dependent on distant suppliers or customers than on those locally. The aerotropolis encompasses a range of commercial facilities supporting both aviation-linked businesses and the millions of air travellers who pass through the airport annually.

Growing numbers of firms and service providers are gathering around airports. The aerotropolis is emerging as strategic urban destination where visitors and locals can conduct business, network, shop, even  eat, sleep and play with no need to travel more than a quarter of an hour from the airport. With 7.5 million passengers annually, Aerotropolis KZN plans to be one such destination and has already set its course.

Dube Trade Port

Dube Trade Port

Aerotropolis:KZN – the heart of which is Dube TradePort and King Shaka International Airport  is considered to be becoming a major trade and business hub in Sub-Saharan Africa right on the doorstep of KwaZulu-Natal’s biggest city and primary manufacturing centre, Durban.

What surfaces here is a highly competitive business operating environment, with all the necessary infrastructure in place. All of which gives the area an advantage in accelerating business efficiencies and enhancing the global supply chain. All this potentially sending local commercial property skyrocketing.

The Aerotropolis:KZN  website stipulates that there is a 60-year Master Plan and expresses the belief that airport city is “poised to become South Africa’s business gateway to South Africa, Southern Africa… and the world.” Admittedly there are some components that set Aerotropolis: KZN apart, arguably affording it a competitive advantage over other South African and African destinations.

  • It is a freight-orientated development with world-class cargo facilities, managed by a single handler and considered the most secure in Africa;
  • It is being purpose-built, in particular that which is within a radius of 7,5km of Dube TradePort;
  • It seems  that it is one of few such developments around the world utilising a Greenfield site, with an additional 32 000 acres, ready for planning and development.

Given its unique location between two of Africa’s major seaports of – Durban and Richards Bay – its 32 000-acre ‘Greenfield’ site and the longest airport runway at sea-level in South Africa  (3.7km), capable of accommodating the largest aircraft in the world, King Shaka made its presence felt at the Airport Cities conference.

Finally the development provides for public and private cooperation, co-ordination and alignment with Government planning, ensuring both direct and indirect involvement in its development and growth by not only the Provincial Government, but also attendant Local Government structures, organised business and the private sector.

It’s worth noting that such a strong public-private relationship is rare in the growth of aerotropolis developments anywhere else in the world.

Dube logistics - Ready to Roll

Dube logistics – Ready to Roll

A criticism levelled at aerotropolises in general has been the belief that there is an overstating of the number and types of goods that travel by air. While many types of high-value goods, like electronics, tend to travel by air, larger, bulkier items like cars and grain do not. Those who point this out suggest that the relationship between seaports, airports, and rail facilities should be studied in more depth.

“Airports will shape economic activity and urban development in the 21st century as much as highways did in the 20th century, railroads in the 19th, and seaports in the 18th.” So Dr John Kasarda, says.

Whatever the case may be, Aerotropolis KZN seems very much on track with private sector and government backing. The knock-on effect on local commercial property is worth watching. It’s clear that King Shaka will be the spear in the hand of the people of Kwazulu-Natal in the foreseeable future.

Green Construction – What’s left after the hype?

Green OfficesBack in 2011 regulations were put in place that officially launched South Africa into the world of green buildings. Of course there had been those who had pioneered a path years before but it’s since then that South Africa has chosen to walk in step with the much of the world on the green buildings front.  In fact between the 16th-18 of October this year will see Cape Town play host to the “Green Leaders for the World GBC Congress” at the 6th annual Green Building Convention.

Internationally much of the hype has died down and a vast body of people in the industry are knuckling down and getting on with the business of building better quality buildings. Many of those previously sceptical players in the building industry have realised that Green construction isn’t all that different from the conventional kind. Both need to be vigilantly organized and both need skilled labour to be brought to the table. The difference is that conventional construction doesn’t take the welfare of the environment into account nearly as much as green construction does. A building with certain green guidelines will even see construction of mechanisms whose sole purpose is to greatly reduce the overall impact the building has on the environment. Conventional construction often doesn’t have any such additional mechanisms.

images (35)Current technology facilitates buildings getting a significant allotment of their energy from clean/renewable sources. Green guidelines have the wherewithal to demand that a building receive a given portion of its energy from solar or wind power sources. The infrastructure for such energy delivery would have to be put in place during the early stages of construction.

Inevitably the issue of construction costs of green buildings surface regularly, but these have come down significantly, making green buildings more affordable. Dr. Prem C. Jain, Chairman – Indian Green Building Council says that in India the construction costs of a green building which is about 3-5 per cent higher for Platinum rated green building than a conventional building, the incremental cost gets paid back within 3-4 years with substantial reduction in operational costs.

The conventionally held view is that the initial or capital cost of energy efficient and green buildings is higher than that of other buildings. However, it is well established in studies done in the US, UK, Australia and India that when considering the total costs over the life of a building, including capital and operational costs, energy efficient and green buildings are typically more economical than conventional buildings. Specifically, the Intergovernmental Panel on Climate Change (IPCC) has noted that the energy consumption in both new and existing buildings can be cut by an estimated 30 to 50 per cent without significantly increasing investment costs with proven and commercially available technologies. The IPCC further notes that this potential for greenhouse gas emission reductions from buildings is common to developed and developing countries.

images (2)Some construction that follows international green guidelines merely involves using the most efficient equipment possible. Take central air conditioning for example; previously used units weren’t nearly as efficient as many of the units currently available. Certainly, a building could still be fitted with a less than efficient unit. Green guidelines, though, would most likely stipulate that the building be equipped with an efficient Energy Star compliant unit. Measures would have to be taken to ensure no leakage of heat from the building. A unit working overtime to keep a building at a desired temperature would defeat the whole purpose of getting an efficient unit in the first place. The best way to make sure heat doesn’t easily escape from, or enter into the system, is to make sure the building is sealed and the ducts don’t leak, which is best accounted for during construction- which is the whole point.

Coming back to South African standards: in 2011 government in South Africa put forward the National Building Regulations, SANS 10400 which includes requirements for energy usage in buildings. Now mandated, SANS 10400 is mandatory on all new buildings and major renovations requiring building plan approval.

Energy regulations such as SANS 10400 are important components in energy efficiency of buildings, and energy use equal to or less than that of SANS 10400 is also a minimum requirement for a Green Star SA rating. Extra points are then awarded in the rating system for exceeding the minimum requirements of SANS 10400X. However, Green Star SA goes beyond the requirements of only energy efficiency, addressing other environmental and human health impacts of buildings.

green-building1Furthermore, in its current form, SANS 10400X can only be applied in the design of new buildings and major renovations, and does not specify requirements for the operation or “in-use” phase of buildings – whereas Green Star SA rating tools are being developed for the operation or “in-use” phase of buildings. (Source: CIDB)

According to the Green Building Council of South Africa (GBCSA), an independent body, the country has seen a massive increase in the Green Star SA rating of buildings. Based on the Green Building Council of Australia’s Green Star rating system, it is the official green certification measure for buildings in South Africa, authorised by GBCSA. The first few examples of Green Star rated building in South Africa were; the Nedbank phase-two head office in Sandton;  Xenprop’s Ridgeside project in Umhlanga,  The Villa Mall, in Pretoria and more recently Standard Bank’s Rosebank Office. Many more have followed.

downloadA building development can receive either a 4-star rating signalling that it has employed “best practice”; a 5-star rating which recognises “South African Excellence”, or the coveted 6-star rating indicating that the project is a world leader.

Green guidelines are about trying to save energy and resources, with the ultimate goal of saving the environment. Towards that end, every little bit helps. The sample guidelines above are some of many new initiatives in the construction industry, many more come on to the table as this process rolls out. Time will tell how many were constructive and what failed to make an impact in drive for sustainability and the reduction of the carbon footprint.

Affordable Housing Lessons from Chile

imagesDespite both Chile and South Africa battling with the problem of housing, each country has its own unique circumstances, whether historical factors, political, financial or geographic influencing the character of their housing challenge in a singular way. To quote a specialist in the field – “There is no such a thing as a successful recipe which must be learned and then applied everywhere.” De Souza (2003). But this doesn’t stop South Africans learning a few lessons from Chile, among others.

Section 26 of Chapter 2 of the Constitution enshrines a citizen’s right to adequate housing. The South African Government in an effort to realise this right for all South Africans has built over 3 million subsidised housing units since 1994. Current estimates of the backlog stand at about 2.1 to 2.5 million units. It is estimated that approximately 12 million people were still without adequate housing.

Affordable housing is housing deemed affordable to those with a median household income as rated by country, province (state), region or municipality by a recognized Housing Affordability Index. (Bhatta, Basudeb (2010-04-15). Analysis of Urban Growth and Sprawl from Remote Sensing Data. Advances in Geographic Information Science. Springer. p. 23.)

In Australia it’s: “…reasonably adequate in standard and location for lower or middle income households and does not cost so much that a household is unlikely to be able to meet other basic needs on a sustainable basis.” As it turns out most countries in the world have their own tailor-made definition.

A commonly accepted guideline for housing affordability is a housing cost that does not exceed 30% of a household’s gross income. In Canada that’s 25% and India  40% for example.

chile049Chile had the first, and best known, example of a capital subsidy scheme for housing. It was first introduced in 1978, and was subsequently widely replicated by other countries in Latin America, for example, Costa Rica (1987), Colombia (1991), Paraguay (1992) and Uruguay (1993). South Africa’s housing subsidy scheme introduced in 1994 was also partially based on the Chilean model. There are problems with the capital subsidy model, but generally the experience of developing countries that have implemented this is that it has been considerably more successful than the public provision of housing in the past and that “the capital subsidy model  a la Chile and Costa Rica continues to represent current best practice” (Gilbert, 2004: 16)

The biggest weakness with capital subsidies and a good lesson for South Africa has been that the whole rationale behind choosing this type of easily-budgeted-for subsidy, as opposed to the open-ended subsidies associated with public rental housing, is generally to restrict government expenditure. As a result, resources allocated are generally inadequate, which means that too few subsidies are delivered and the subsidies are of insufficient size to provide good quality housing on well-located land. Only where housing has been made a priority and has been adequately resourced, as in Chile, has there been success in reducing housing backlogs.

Chilean housing policy is widely regarded as being successful: “Chilean housing policy is exemplary. It is meeting many of the goals set by all developing countries, such as bringing an end to the illegal occupation of land, providing housing solutions for all families that need them (including the poorest), and making basic services available almost to the whole population” (Ducci, 2000). Two of the many policy success stories in short are: sustainable allocation of resources and having a range of subsidy options and subsidy types. Worthwhile lessons for any country.

green_housing_onpageOn the down side Chile’s housing policy has been criticised for its many poor locations of its housing projects. For example on the edges of cities with it’s obvious transport and facilities shortages among other things.

Social Problems there are increased problems of violence and insecurity in the new housing estates and low levels of community cohesion and participation.

Lack of an integrated development approach: Due to a housing-only policy emphasis, there is a lack of economic activity in new housing projects – they are basically dormitory suburbs.

2010'S BRIT INSURANCE DESIGN AWARD FOR ARCHITECTURE WENT TO ELEMENTAL'S AFFORDABLE, AND ADAPTABLE, HOUSING PROJECT IN MEXICO, SKIPPING OVER BIG SHOTS LIKE ZAHA HADID AND JAMES CORNER. USED TO BUILDING IN CHILE, THIS WAS THE FIRST TIME FOR THE COMPANY TO BUILD IN MEXICO.

2010’S BRIT INSURANCE DESIGN AWARD FOR ARCHITECTURE WENT TO ELEMENTAL’S AFFORDABLE, AND ADAPTABLE, HOUSING PROJECT IN MEXICO, SKIPPING OVER BIG SHOTS LIKE ZAHA HADID AND JAMES CORNER. USED TO BUILDING IN CHILE, THIS WAS THE FIRST TIME FOR THE COMPANY TO BUILD IN MEXICO.

The dominating role of big construction companies in Chile has resulted in a lack of participation by communities, which in turn has resulted in new subsidised housing that sometimes does not meet the real needs of low-income people, especially in terms of location.

There has been government reluctance to evict beneficiaries for fear of a political backlash, so there are high arrears (over 60% of loans are in arrears of over three months); so many loans effectively end up being converted into grants (Rojas, 1999)

In South Africa on the other hand, challenges included a slow standard of delivery. Something Chilean homes are never accused of.  Homes have had to have been demolished or repaired due to poor workmanship. This is not only inconvenient for government and residents but causes demoralisation among both communities and local government.

It’s not news that ownership creates civic pride which ultimately raises the value of an area as people attend to their own homes. So encouraging a system where homes are affordable and not just as a result of a grant continue to be a worthwhile model to continue with down the road.

Typically Chilean

Typically Chilean

Integrated developments as seen in the Chilean challenge above are vital to avoid projects from becoming merely dormitory like nodes with no sense of community. Retail needs to be mixed into communities to encourage local secondary markets to thrive returning investment into the community.

Chilean official realised early on the need to meet with local communities. History has shown that target groups reject the final product when they are not consulted. Government feels the work they have done is unappreciated and thus consults even less. This vicious cycle results in civil unrest and endless delays in creating communities of affordable housing.

There seems to be conspicuous absence of any substantial dialogue and engagement between government and civil society around the shape and content of housing policy and its practical application.  In order for affordable housing to thrive in South Africa we would do well to learn from those who have pioneered the way before us. Chile has not got it all right but where they’ve done well we can learn from and where they have failed should be adequate warning for us.

Indigo Skate Camp – Skate and Create

Indigo Skate Camp

I was asked by Ian Wittenbur and Patrick Cummings of US online magazines Again Faster and Evolve to visit a little village in the Valley of 1000 Hills and experiance a fascinating project started by South African skateboading supremo Dallas Oberholzer that started with some skateboads and ramps and has blown up into a full on community enrichment project. Read on.

Indigo

Driving through rural KwaZulu Natal is a reward in itself. Travelling through the rambling beauty of the Valley of thousand Hills comes with a boxer’s bob and weave type of driving through dips and around bends that are loaded with surprises from docile cows to 100 ton trucks.

A cool autumn day presents itself with fat little cumulous clouds floating toward the distant horizon. Colourful wild flowers line the narrow roads.  I feel a sense of excitement at the prospect of the novelty of my intended destination of Isithumba village.

The Indigo Skate Camp is my target amidst all this rural beauty. The skate camp is the brainchild of Dallas Oberholzer, South African skate boarding icon. With the intention of giving back to a community that would almost certainly have never heard of skate boarding, over eleven years ago he put down some roots in the humble yet idyllic surrounds of the village of Isithumba, named after an imposing and impressive rock overlooking the life-giving Umgeni River.

Indigo Skate Camp has giant ramps and a ‘kidney bowl’ structure you would see at any urban skate park. The children from the surrounding area learn skate boarding and other life-skills brought to the camp by overseas tourists who come for a skateboarding holiday. Here the tourist is treated to Zulu hospitality of good food, story-telling and bush walks. Indigo Skate Camp was the beginning and now foundation stone to the Indigo Youth Movement (IYM) which is the road show, if you like, of what’s been happening at Indigo Skate Camp for years.

images (6)Driving into the deep valley toward Isithumba the road is lined with school children on their way home. Friendliness is one of the first things that greets an outsider. People smile and wave as you drive tentatively between goats, cows and curious pedestrians and potholes. I’m a little lost so I stop and ask some mischievous looking primary school children where Indigo Skate Camp is. “Lift, lift, can we have a lift?” The spokesman chances. I say “sure, just show me where Indigo is please.” My dinky Toyota which normally takes four adults is now filled to the brim with possibly as many as 12 under twelve’s’. We travel a kilometre or so and they stop me and hop out. “Is this Indigo?” I point to a driveway. “No” they chorus with shiny impish faces surrounding sparkling white teeth. “Indigo is that way.” They point to the opposite direction. Rascals. Every South Africa urban dweller’s nightmare is being hijacked. I’ll be able to tell my friends about the friendliest hijackers in the country!

Upon arrival at Indigo the impression is not of a scintillating establishment transplanted into the midst of poverty. Though the area is poor it’s neither derelict nor slumish. It’s rural, simple and peaceful. The ‘camp’ is reflective of the community in which it resides. A collective of the traditional Zulu rondavels and other out buildings around the ‘elephant in the room’. I refer to the enormous skateboard ramp, skate pool (kidney bowl) and other ramps. It’s totally out of character with the rest of the scene.

images (5)Wading through the long grass I see a slim, athletic looking man in his mid-forties. He greets me with friendly surprise. He introduces himself as Dallas. Hooray, I’ve caught the big fish in his natural habitat first try. Despite being very hospitable, Dallas is very busy with his financial advisor and doing financial transfers over the phone- not quite aware of the incongruousness of the scene of high tech business world juxtaposed to the rural African backdrop. My appointment is with G. But G is still on his way so I’m privileged to eaves drop on Dallas’ financial meeting cum skateboard lesson on one of the ramps.

I meet a couple of overseas visitors who’ve come to hangout and help-out at the camp. We chat casually about the camp and how impressive the structures are and how beautiful the area is. Helle is from Denmark and is travelling around South Africa to: “Get a feel of the place, to be exposed to other cultures and people.” Indigo welcomes her with open arms and puts her up for a few days while she helps with odd jobs about the camp. Surprisingly she has no interest in skating just learning about how another people live.

It’s now after four in the afternoon and seemingly out of nowhere emerge little bunches of children, some primary school age, other’s well into their teens. Let the skating begin! Some seem content at first to play with their own inertia as they use a little exertion to get their skate boards up one side of the ramp and then up the other. Then comes the madness, four or five kids on the big ramp chase each other in a circle up and down the curves creating a whirring that’s almost manic. Their faces a mixture of intense concentration and abandoned joy. One takes a tumble – the board flies in the air and smacks one of the spectators on the shoulder. He dives to the ground in mock agony, or is it? Everyone laughs as he waves his finger smiling, telling the culprit that he needs to learn to skate. There’s anuproar of laughter and gestures. Then everyone joins in the skating. It’s crowded and it’s difficult to see what’s going on- some kids are practicing tricks others seem content with the rhythm of going up and down at either end of the ramp. The girls look on.

images (7)I approach a stand where about fifteen girls sit. They come from the village after school to watch the skating they say. I ask them: “So why aren’t you skate boarding?” There’s uproarious giggling. “No, no, no not for me.” says a 13 year old. “How, I am too scared to do that” says another. They all laugh and dismiss my challenges to them as foolishness. I make a mental note to myself to ask G about this. While I wait for G to arrive I chat to one of the other leaders of the camp, T. T, short for Thabang, comes from the village and makes it clear that Indigo Skate Camp has provided him with a hope and future that he believes would not others wise be there.  He goes on to explain that as many as 50 kids come and participate in the activities at the Skate camp. On a skating note T reckons that some of the kids have become so practiced that they are more adept than he is on the ramps.

With that I meet G who has arrived after his long trip by minibus taxi having had errands to do in Durban. G is a friendly easy-going young man, although when among the kids he has a very discernible sense of authority. He is naturally hospitable. We settle down under the canopy of some thorn trees upon some makeshift benches made from branches. I switch on my recording device and ask what I know people from outside are bound to want to know.  There is an elephant in the room – a skateboard park in rural Kwazulu-Natal, what is that all about?

images (10)G nods and smiles, he knows exactly what I’m talking about. “It started with the skate camp in 2001 for the guys who came from the cities to come and visit Indigo, we used the tourism centre near the primary school where we used to have our skate camps during the school holidays, bringing the kids from the cities and different provinces to interact with the village kids.

We use skate boarding for social change to stop drugs and alcohol and to talk about life and also to learn more English.  So Indigo, I can say, is a beautiful place and I’m sure you wouldn’t expect to find a skateboard park here.  It is so beautiful, we are surrounded by the mountains of the valley of a thousand hills and the Umgeni River which flows into the sea and usually in January or February we have the Duzi canoe marathon comes past the camp.

From my side, Indigo made me what I am today.  I have learned things in school but I can say I’ve learned more here because I’ve learned things from tourists and courses, learning how to communicate with different people and experience different things.  For me, I am doing the right thing because I love the kids and I love being around the kids seeing them progressing, that was one of my dreams.  Now one of the guys here is better than me, which is quite amazing.”images (3)

I asked about some construction work going on below us.  G explained: “At the moment as you can see we are upgrading the place – we are building some chalets so that when we have a skate camp we will have more accommodation for our guests. “

Dallas had expressed to me earlier that day that he didn’t believe anyone could take what there is at Indigo and plant it, replicate it, elsewhere since what is here is unique. “So G how would you take the concept, at least, of Indigo to say, Tanzania?”

G is unfazed: “Well what I can say is that it is not about me and my ambition but it’s about the camp itself.  You plant a seed and then the seed starts to nurture and becomes a tree.  I feel that we need more youth leaders and role models because we are lacking in role models for the kids (in the community).  Some of the kids drop school at an early age and some of the young girls get pregnant.  We can’t wait for the government to do something, it is our village and we need to do something to make better lives.  For my life it’s not about having fancy clothes and what, what, it’s about my village and making it a better place, that is my main mission.”

G then got pensive and shared his thoughts: “To go into Africa , I think it will be quite a challenge because first I need to get some connections with other people before I leave South Africa.  Luckily we have another project, I think in Kenya, which is funded by the Laureus Foundation.  If I can get connected with them, then maybe they can make a suggestion of where I can start a project for them.  You wouldn’t know what you are going to meet along the way but as long as you are passionate about what you are doing then anything is possible.”

images (9)Wanting to get back to skate boarding for a moment I asked G if he was familiar with the concept of a Holy Grail. I likened it to surfer searching for the perfect wave or the fisherman and the fish that didn’t get away. “What is the Holy Grail for you as a skate boarder? Is there a moment in a skate boarder’s life when you say: ‘ah that was perfection.’”

G took me straight back to Indigo, as if trying to emphasise his main passion and the passion of Indigo Skaters:  “it’s not about skateboarding but how skateboarding can change a life.  This project started out just being about skateboarding but now it’s about changing people’s lives.  To me it’s about people who get trained to build some life-skills, to up-grade peoples knowledge and of course the kids.  Indigo up-graded my knowledge and now it’s time for me to give back to the kids.  I feel that if I wasn’t skateboarding I wouldn’t be having the life I’m having.  I was born in a township, not here, but I came here 15 years ago.  Whenever I go back to that place I see life differently.  I see the guys that I grew up with smoking and taking drugs.  I don’t think they have a future.  They used to be ahead of me but I thank skateboarding that it made me into a better person because I didn’t know what I wanted to be after matric.  We’ve got people around, people who have done matric but they are doing nothing.  There are fewer job opportunities and this is like bread to me because even at home I am the bread-winner, I am the one that is supporting and putting bread on the table since I do this project.”

I’m distracted by an ever-growing commotion behind us. Uproarious laughter, jumping up and down and very cheerful faces. T,  is leading a group of about 30 to 40 children ages, ranging from 8 to 18, in a game of Simon-says Zulu style. Although in Zulu it’s immediately recognisable to me as the children squirm, straighten and flap in response to the key words. Everyone is involved, no one is on the side lines and those who are ‘out’ are cheering on and laughing with those who are in. The little boy in me immediately wants to play too, but instead I take photos and enjoys watching the action catching the vibe of the crowd. Apparently each day there are activities like this or something similar to include all the local children and not just skaters in the camp’s activities.

I chat to an older woman who is watching from the side-lines vicariously taking part. She introduces herself as Kosi. I know everyone calls her Mama Kosi. We chat about the children and she tells me that she was very pleased the day Indigo came to the village. She lives adjacent to the property. Mama Kosi gives me a wide toothy grin and tells me how she cooks for the guests. I ask what she enjoys cooking for the foreign visitors. She responds with no hesitation:” Mngqusho en Mbotyi,” that’s samp and beans in English, it’s a traditional Zulu dish. The samp is made from crushed mealie kernels and the beans are usually sugar beans. Mama Kosi is a lady of few words but clearly likes it when there are guests to cook for.

I call it a day and we agree to continue the interview tomorrow. I drive on up out of the valley under a grey sky but with a spring in my step as some of the spirit of the camp has rubbed off on me.

On day two of my sojourn at the Indigo Skate Camp I  arrived on a fresh sunny morning with just the faintest wisp of cloud in the otherwise deep blue sky. The ramps are empty and quiet given that the children are all at school. The little collection of rondavels are not quite as silent as people are preparing for a day of work, smartening up the site and building the next rondavel.

G emerges and politely smiles and greets me. He is natural hospitality with a warm friendly face immediately putting one at ease. After some small talk I asked G if Dallas was on his own when he started this endeavour – or if there was a partner involved? G answers: “Actually, I can say that it was him (Dallas) from the start and I feel that I am living his dream I can say thank you to him for the partnership, because this is something that he wanted to do with the community and I think it worked out very well.  He had to eventually get funds from somewhere; ‘Element’ and then we used to be funded by the sports trust ”Laureus Sports For Good Foundation” now fund much of Indigo Youth Movement’s road show as well as some of the day to day running of the Skate Camp. The skate camp ensures up to 40 people for the village receive stipends and over 50 local children are learning to skate. The activities also include life-skills, exposure to reading, music and dance too.

Aware of how one can’t just buy and build on land in rural Zululand I asked if Dallas had to get permission from the local authorities and the chief. G explains: “To get this piece of land we spoke to the headman of this village and after the headman agreed you still have to go to the Chief. They give us permission to build this park on the land because they know it is for the good of the community.”

Having read up on the net that 74 per cent of skateboarders are male I relate my questioning of the girl spectators becoming skaters to G, also how they found that an hilarious concept.  G:”Ja, I can say that a couple of years back we had some ladies who tried on skating, and they skated good, it was just that they grew up and felt that they cannot skateboard anymore.  So now we are just grooming these small ladies but we have a special day to teach them.  We teach them how to balance and stuff– we’re still going to bring a balance board. It will take time but we’ll get there.”

I ask G if he has a story of someone who stands out for him that epitomised the Indigo Skate Camp?” G doesn’t hesitate: “There is, like my own story – I was born in 1988 in Mpumalanga Township and I grew up there as a township boy playing in the street and doing all those rough things.  We didn’t have a chance as children, we were always on the street, running around, breaking the rules.  But since I came here it was quite funny because we went down to the river and I didn’t know how to swim.  I couldn’t experience what they had experienced.  But strangely I gelled together with the life here and I think I came here at the right time because that’s the time Dallas came also with the idea of starting the skate camp and then it was easy for me to make new friends because we were all beginners by then.  I knew about skateboarding but I wouldn’t have tried if he hadn’t come around here, I thought it was dangerous and I thought it was for white people only.  I came here as a random normal child and they groomed me to be like a role model, but it wasn’t easy though, I had to go through some tough times.  There will always be moments when you have to come out of your shell and share your experience with other people.

But when I look back into my life I think that if I wasn’t skate boarding I would be in jail because that is where most of my friends are at the moment.  We all make decisions and sometimes it is hard to judge but I would like all of us to walk in the same pathway I am walking to try and change the world, although we can’t change all of it but to start from places like this valley of a thousand hills and then to take it to the next level.”

Many missionaries and churches and government programmes try to make a place for themselves, seeking acceptance in the Valley of a Thousand Hills. So I ask G what sort of opposition they have encountered from the community toward the camp.

G:”I remember about 8 or 9 years ago there was a guy who was good at skating and he was skating around here on the street and he had an accident and he was killed by a car so they wanted to stop everything.  They couldn’t stop it though because we were passionate about it and we told them that we weren’t going to skate in the street and that it had been an accident.”

Dallas was telling me that he wants this to be more than just a skate park, that he wants more activities and programmes. I ask G about the life skills programmes.

G: “All I can say is that it’s not just about skateboarding but what we want is maybe like 10 computers in our clubhouse and teach some IT skills to the kids while they still young so that they can grow up with some knowledge. We do also have our own life-skills manual where we teach the kids to work amongst the people and to work together as a group.  We talk about drugs and alcohol abuse.”

“We play games like icebreakers and we do these energizing things after stretching exercises, then we have a chance to include everyone. After lunch everyone can go crazy if it’s a skating day, everyone can do what they want, but if it’s the life-skills day, then after eating we will sit down and learn.”

“Normally, it’s not only me who does the life-skills we also have other skate coaches like T who also teaches life skills,  I am good with the older guys and T is good with the younger kids.  So we know what they want, and we know how to create fun amongst them, we know how to make them laugh.”

Matt: “What role do the people from overseas play – I see you have 2 young ladies here from overseas.  How often do you get people here from abroad?”

G: “We don’t often get people from overseas, and my own dream is to have this place filled with people.  These people that are coming here they have something that they have learnt back home and they want to take it to Africa. For example we have an art teacher like Natalie, she will be doing some classes with the kids soon.  It depends on the interest that you have something that you want to teach the kids and then we will create some space for you and then you do it with the kids.”

I explain the impression I got from the website (http://www.indigoskatecamp.co.za/) that the Skate Camp offers a skateboarding holiday, experiencing African culture, the bush, the food. Did I understand the Website correctly?

G:” You’ve got it right but it’s something more like a day trip where people come from the cities or from overseas, stay in town and can come visit us. For example: you see if you walk along the river you can see over this hill – the village and we will talk about the village because you can see a big rock, which is called ‘Isithumba Rock.’ The village is named after the rock, and we normally have some interesting stories which we tell them.  We introduce the visitors to the headman because he is living more like the style of the 80’s or the 60’s.  Most of the guys are more traditional here.  I have a friend who is a healer and I normally take them to him. And we tell them about the ancestors and why we have ceremonies where we have to slaughter goats and cows, that sort of thing.” Apparently skate camps are for kids aged 9 and 18 where they can stay for a few days at a time. There is often survival training and exposure to Zulu culture as well as visits to skate parks in surrounding towns.

I put it to G that skateboarding is perceived in South Africa as a pastime mostly for white teenage boys. What is Gs take on this? “Have you ever been under pressure from your peers to be spending time doing something more traditionally Zulu?”

“It doesn’t matter to me what I do, it only matters that I know my roots where I’m from.  It doesn’t matter who I hang out with, I can go and stay in London, but so long as I don’t lose my culture, my roots and where I from. I know this mentor from ‘Laureus’. He’s like the African Project manager who runs the ‘Laureus Sports For Good Foundation’.  He lives in London, but you can see he has never lost his roots, he knows where he is from, whenever he phones me he doesn’t appreciate speaking in English, and he speaks in Zulu. I don’t want to lose my ground and lose who I am, and when it’s time for my ancestors, I have to act traditionally, I have to act as I was born.  I know that we have some different destination, and they (the ancestors) know I have a different destination and they understand and are happy that I’m doing this, they know I’m getting something out of it as long as I respect them and know that they exist and know that they are still around making sure that I always go safely and do what I ought to do.”

I can see G is eager to get back to work. Dallas arrives in his pickup with cement and supplies for the day’s work party. I can see that he too is in work mode and I don’t want to disturb his rhythm. We chat briefly. I can see everyone is motivated and ready to labour.

I catch up with Dallas later and he explains all the activity: “We’ve had a push for more accommodation, to develop more hospitality skills.” The intention is to build more rondavels for the planned increase in accommodation for visitors and similar buildings to facilitate Dallas’ drive for hospitality training.

Dallas is animated as he tells me how volunteerism is the key to the future of Indigo: “We need more volunteerism. Locals enjoy interacting with the visitors. It enlightens and encourages the locals and they are amazed that these outsiders show an interest in their lives. So the big push is going to be for more structured interaction with volunteers so that they can feel directly engaged in the community’s life. “

Then there’s tourism. Dallas is focused: “everything from day trips to month-long stays. I see us developing trails, mountain biking and so on. We’re more than just the niche market of skateboarding, we’re also a playground. We want to create a kind of park and play situation… to be a place where you can park your car, ride your bike, have food – we can spray down your bike and so on, to be a hub of outdoor fun.”

Looking further into the future, Dallas considers the English language, IT, Internet studies and communication playing a role. One of the buildings I see being worked on is planned as a computer centre where volunteers can train local children in computer skills. But language is a key component of Dallas’ dream: “We can create something unique. Some people want the African experience – lets create a unique destination where you can learn English, sitting among African people. I’m trying to find ways of benefitting the community and also to create another reason for a person to visit, creating reasons beyond just skateboarding. Initiating a language centre can do that.”

Asked if there are more ‘Indigos’ down the road, Dallas explains that the situation at Indigo is unique and not likely to be replicated, however he does say: “I might consider the whole model elsewhere in Africa. We have considered Mozambique or maybe Uganda.  Of course we want to finish getting this thing (Indigo) running fully on its own. We want to see it generating its own revenue. I believe in two years’ time we’ll be there.”

images (11)Watching the skaters fly in the air and glide up and down the ramps I had to ask what the future holds for the guys who are just here to skate.  Dallas offered these thoughts: “I’m sure a few of them will become standout skateboarders and a few will be the next instructors, some will run the facility. The skateboard community needs to provide jobs for skateboarders and skateboarders need to run the skateboarding fraternity. I’m on a mission to create jobs. Guys will never stick with skateboarding if they are forced to go and sell hotdogs at the race track. I’m trying to create jobs that will keep them in skateboarding. I couldn’t find a job in skateboarding.  I created this place to create jobs and somewhere down the line guys will see me as a role model having created this entity. Skate and Create is what we’re doing, that’s what this is about -skating and creating.” As an afterthought he adds: “That should be the name of your piece!”

The Modern Office, Where Space Counts

Home Office

Home Office

“Size isn’t everything,” goes the saying but apparently size is everything according to a recent report from the British Council of Offices (BCO). Everything seems to be getting smaller and supposedly more efficient and South African remarkable similar.

Looking at how office space is carved up, it’s up to the business decision maker to find a balance between ‘too much’ and ‘not enough’ space in order to facilitate productive, heads-down, focused work and supply a variety of team spaces that foster collaboration.

77% of the properties sampled by the BCO had a density of 7-12 sqm per workstation, 5% between 5 and 7 sqm (now that’s a squeeze,) and 18% had 14-38 sqm.

The skewed distribution around the 11.8 sqm mean indicates that occupiers are generally driving space hard, with the exception of the legal profession which sits at 20.9 sqm, probably indicating the continued reluctance by some in the profession to relinquish their personal offices.
What’s universal is the missing element of how much the individual workstations are used and, therefore, the efficiency of the overall floor space.
Employees today often feel as though the walls are closing in around them. And, the truth is: they are. Workstations are shrinking, technology is smaller and sleeker, collaboration is the new buzzword, and it’s now possible for employees to work from home. These changes have had a dramatic effect on how and where people work, as well as the allocation of space in the modern office.

The PC has shrunk; Computers no longer determine the formation of workstations.

“What is bigger than a bread box, smaller than your office chair, and weighs the same as an average 5-year-old child? If your guess is a PC monitor from 1990, you’re right.” Michael Schirnig

In the short amount of time that the PC has been around, it has changed dramatically (not just in terms of its capabilities, but in terms of its appearance, too). Slimmer flat screens and the proliferation of laptops and iPads means workstations don’t have to be as deep or as large, in particular if workers don’t have to have access a huge amount of filling/“stuff” around them.

Increasing privacy and collaboration in open-plan offices; More team space is designed into office space – sometimes at the expense of individual-workstation size.

The notion of collaboration is more in vogue, as is the amount of space devoted to it and some companies have reduced individual workspace size in order to facilitate the team spaces within the same overall size premises.

The result of increased workstation densities and employees working in closer proximity is communication – much to the benefit and bane of workers. More interaction facilitates collaboration, synergy, and brainstorming, but it also creates distraction.

Aside from designated rooms for collaboration, designers are factoring in comfortable furnishings to the places where people naturally congregate – outside lift lobbies, stairwells, kitchens and copy/fax/printer stations to facilitate informal, short-term collaborations.

The increasingly mobile Employee; Alternative office strategies mean smaller drop-in workstations, satellite centres, and an overall reduction in real estate.

Studies done on workstation usage typically indicate relatively little time is spent by staff at their desks – perhaps 40% on an average day. The balance is spent in meetings, discussion groups, sales calls etc – but essentially away from their workstations.

While not a huge factor in SA yet, in the UK and USA where office rental rates can be 10-12 times higher than in SA, this has been quite widely adopted – Sun Microsystems’ iWork programme has a target of reducing their ratio of desks-per-employee to 0.8, and has already saved them $50 million/annum on their way to a savings target of $140 million/annum.

Although it’s not possible to predict future workspace design changes, the interest in designing offices as efficiently as possible is not likely to wane.

When workspaces don’t work, employees can’t work, either.

Durban’s Playground Continues to Expand

An aerial view of the Natal Command site and surrounds.

An aerial view of the Natal Command site and surrounds.

The Durban Beachfront will never be the same as 2013 sees yet more changes to the landscape of the holiday city. A local Movie producer won his court case over the Natal Command headquarters last year and the Save Vetch’s Association called a truce with developers over water front developments recently. 2013 will see Durban’s playground getting a little bigger.

A legal dispute had been underway for over 9 years over the Army’s old Natal Command site, where many a young Durban man coveted a posting during his national service. In short the city sold the land in 2003 to local movie producer Anan Singh’s Videovision Entertainment, now Rinaldo Investments, for R15million. At the time the plan was to build a film studio.  The 21 ha of land is currently valued at R400million.

The dispute with Pietermaritzburg entrepreneur Sunny Gayadin has recently been resolved. This isn’t the only legal fracas in which Gayadin has been involved of late; he is also disputing the sale of a property adjoining the Pietermaritzburg’s Liberty Midlands Mall.

An aerial view of the Natal Command site.

An aerial view of the Natal Command site.

Durban ratepayers have been up in arms for some time about the neglect of the Natal Command site and the fishiness of the transaction.  The deal was criticised as being political, rate payers claim to have lost out due to the land not being sold for its true value. In the end the Constitutional Court made a unanimous, comprehensive judgement by the full bench of the 11 judges in Singh’s favour, dismissing an appeal against a decision of the Supreme Court of Appeal (SCA).

Right from the outset, apart from a film studio, a hotel has been planned. The land is perfectly positioned.  The site is across the road from popular Sun Coast Casino and near the Moses Mabhida Stadium.

The Singh’s Video Vision website reports that they would have to revisit plans for the site since some time has lapsed since the original concept. Some are speculating that an experience like Universal Walk in Universal studios or other theme park ideas could come to fruition. Singh has made it clear before how the project had the support of the city making it a viable option all along.  Tourism and entertainment will be the biggest spinoffs for the city.

Latest from Video Vision is that the development should take five to six years. At the time of the initial sale the development was reported to the press as R1.5billion. It seems no one is speculating as to how much the final cost will be.

The ratepayers association has made it clear that it has little confidence that the city could run such an operation and that it would be best if Singh just got the movie studio going, paid rates and created jobs.

There’s no doubt that a theme park would complement the current Beach Front Walk, Moses Mabhida Stadium and uShaka Marine World as well as the Sun Coast Casino.

This brings us to another dispute. The Durban Point Development Company (DPDC) an equal partnership with Malaysian based Rocpoint group and the eThikwini Municipality, the Save Vetch’s Association (SVA) and the Durban Paddle Ski Club have made a combined press statement to say they have “ceased hostilities” and have come to a compromise settlement on how the Vetch’s Beach is to be developed as part of the on-going Point Waterfront Development.

SVA and the Paddle ski Club fought the development on the basis that they believed it would shut out the community from the beach and destroy the diving reef. The compromise plan should save about 200m of the beach in question and still allow the DPDC to go ahead with its ‘super basement’ which will form part of the phase one of the development.  The new club site will have direct access to the beach, with 4×4 vehicles and trailers will be able to park on it. The public will have access to the beach and Vetch’s Pier with all the marine life remaining unaffected.  No hotel will be built alongside Vetch’s Pier. All categories of sailing craft will be able to launch, either from the beach or from a hard and sheltered slip-way. Not everyone is entirely happy but not everyone is entirely dissatisfied – such is compromise.

Developing Durban continues to be in line with the city’s claim to being South Africa’s playground. But not every development is easy to set in motion as the above investors have discovered.

Latin Lessons in Retail – Africa Take Note

Screen shot 2011-10-11 at 3.21.32 PMWith the death of Hugo Chavez dominating news a while back many commentators continue speculating on the future of Venezuela’s property and retail markets, Will the current Latin Socialism continue? But despite the spread of so called Latin Socialism, Latin America is experiencing free market forces not unlike those influencing much of Africa. Have emerging markets of Africa and Latin America anything in common when it comes to the development of retail space for their growing middle classes.

Africa in general and South Africa in particular has much in common with Latin America’s labour force. Although Asia’s, for example, current competitiveness relies considerably on its working-age population, Latin America and Africa’s outlook for labour force growth is much stronger, as young inhabitants set to join the labour force make up a higher percentage of those continents’ populations.

Like Africa, Latin American consumer demand is rapidly growing and the expanding middle class currently represents about 60% of the total population and approximately 40% of total purchasing power. With demand for newer retail infrastructure increasing, opportunities exist for developers and retailers who seek to expand their consumer base.

However, people are asking questions about whether the emerging African middle class is as big as the experts believe. Rapid urbanisation rates are pushing up potential consumer numbers but not necessarily incomes. These factors, among many others, are inhibiting the intention of developers and retailers to build critical mass quickly in African markets. It may still be a while before their high expectations manifest in the real world.

In Latin America however, development is increasing shopping centre space. In most of the region’s countries, traditional high street retail has gradually deteriorated as retail markets mature, with retailers migrating toward shopping centres. This has for some time been considered one of the drawbacks of the shopping centre invasion. Small businesses are seen to suffer and local decay of commercial real estate creeps in. This seems to be universal, with stark examples in both Africa and Latin America.

Latin American supermarkets have already seen notsable expansion and, among retailer types, they are expected to expand the most quickly—with new developments anchored by Wal-Mart, Carrefour and strong local players such as Commercial Mexicana (Mexico) , Pao de Acucar (Brazil) and Jumbo (Chile & Argentina).

By way of comparison, international brands such as Nike and McDonalds and KFC do currently have a presence in shopping centres in Africa. But an international study of retailers by South African property management company Broll, indicates very few players are prepared to commit. Out of over three hundred companies surveyed, scant few were considering African markets at all. There is evidence of interest in SA and North African countries but little attention has been paid to markets that South African companies are eyeing like Kenya, Nigeria and Mozambique and Zambia.[Broll]

Enter the Power Centre. A power centre is an unenclosed shopping centre with 23,000 m2 to 70,000 m2 of gross leasable area that usually contains three or more big names retailers and various smaller retailers, usually located in strip malls, with a common parking area shared among the retailers. [Wiki]Power Centres seem to have less of an appeal in Africa in that big retailers get behind the big conventional mall developments or not at all. Also the Power Mall presupposes a culture of one-shopper-one-car. Not a common African phenomena.  In Latin American markets, Power centres have increased their footprints, with larger areas leased to specialized retailers. Power centres are also beginning to play a more important role in second-tier cities, targeted at lower income groups.

Changes in local government policies in Latin America as well as attractive yields and moderate risk have encouraged major international developers to focus more on commercial development in the region, and local investors to expand their operations to neighbouring countries. Companies such as BR Properties, Westfield and Brookfield began to invest extensively in retail property development nearly four years ago, and they have grown their retail asset portfolios across the region.

Alas in Africa problem-free land title is one of the challenges. Litigation from multiple claimants remains an ever-present threat. Disproportionately high costs of land and obtainability of large parcels of it in choked-up urban areas is a huge challenge.  Similarly, Africa is challenged by the limited availability of long-term debt and a relatively low level of interest by international institutions in African property funds. Electricity outages and all sorts of other elements in the supply chain push up costs hence high rentals are required in order to achieve a reasonable return.

In 2012, retail commercial real estate transactions in Latin America represented 37% of the region’s total volume of U.S. $12 billion, and 25% of the number of deals. [Source CBRE] The lack of adequate supply, especially in secondary locations, and consumer fundamentals such as credit availability, will continue to be key drivers for retail expansion, regardless of the specifics of each country market. Africa lacks a certain sophistication compared to its Latin rivals for foreign direct investment. Both these developing markets are hungry for attention from international developers and investors. Local government legislation and infrastructure may play a more important role than the emergence of a middle class with spending power to release the funds and set the wheels in motion for African retail space.

Aveng Grinaker-LTA, Shows Clean Hands and is Ready to Work

Stadia+2010+FIFA+World+Cup+3APHlxny1WDlSA Construction Industry May Need to Wash their Hands before Going to Work.

Avenge Grinaker-LTA has been twiddling its thumbs waiting for the government to stop sitting on its hands. CEO Roger Jardine has a few choice words to say about the future significance of government infrastructure spend and corruption in the sector too.

Roger Jardine - courtesy IOL

Roger Jardine – courtesy IOL

“South Africa is on the verge of one of the most significant infrastructure rollouts in our country’s history. A growing economy needs a strong and vibrant infrastructure and engineering sector. It is important that the procurement process around infrastructure projects be handled with integrity and transparency. Public money matched with private sector capacity can deliver an ambitious vision to grow our economy, create jobs and develop our people. For us to deliver sustainable value for all South Africans, each and every stakeholder needs to clean up all elements of the industry and its relationship with its government and private sector clients.” Announced Aveng Grinaker LTA CEO Roger Jardine on the company website recently.

This comes as South African construction companies wait with baited breath for government to get a move on with its many promised infrastructure projects. The announcement by Jardine is not an exaggeration as time immemorial has seen how government infrastructure projects in history have either been stunning swan dives providing jobs and attending to a country’s failing infrastructure or disappointing belly-flops of red tape, white elephants and corruption. We could be faced with one or the other. Hopefully not the latter, especially in the light of possible investigations by the Hawks and the National Prosecuting Authority into allegations of fraud and corruption in the construction industry.

Since 2008 the South African government’s public infrastructure spend has decreased significantly. Despite ambitious plans announced by government in the 2012 National Budget totalling R844.5 billion, the construction sector has not seen this impact on the order book and only expect this to impact results in the next 18-24 months

Aveng Grinaker -LTA Event Pic 10Aveng Grinaker-LTA is active in the commercial, industrial and retail sector and has an extensive track record of successful contracts in all types of buildings. The Group’s capabilities encompass design, engineering, material selection, procurement and construction. Though last year the firm announced that while most of Aveng Grinaker-LTA business units delivered improved results, a number of problem contracts in Australia and South Africa, combined with the continued challenging construction market in South Africa, negatively impacted the headlines earnings which are down by 58%. .

In Roger Jardine’s press release he said: “We have a big thorn in the side of our economy. Collusive and anticompetitive behaviour, which appears to have been entrenched in the construction and other sectors of the South African economy, has left our country with a disgraceful economic and ethical legacy that must be rooted out as a matter of urgency. We need not only the right skills but also the right ethics and values if South Africa is to thrive and jobs are to be created. It is not only the responsibility of elected politicians to foster trust and integrity in our society. The private sector has a vital role to play. This goes to the heart of the society that we want to build.”

It’s clear that Jardine is taking the allegations very seriously and steps have been taken within the firm to create transparency even including anonymous hotlines for whistle-blowers. In its SENS announcement on the Aveng website the firm advised the market that a provision had been raised for a potential penalty by the Competition authorities.

It’s clear that Aveng Grinaker-LTA are not taking the corruption in the sector allegations lying down, but it’s also evident from Jardine’s statements that he is neither unaware nor doubting the truth of those allegations. South Africa’s construction industry is going to have to wash its own hands before putting them to work.

 

Boutique Hotels -there goes the neighbourhood

Grand Dédale Country House

Grand Dédale Country House

Boutique hotels in South Africa are showing an inclination to follow international trends, focusing less on luxury and more on unique niche themes like culture or IT convenience. The use of property by Boutique hotels is unique in that old buildings are often focused for restoration as opposed to building brand new structures. Each individual hotel has the potential to both reflect the status of its neighbourhood and influence the character of the adjacent real estate in a specific locale.

In 1984, Ian Schrager opened Morgan’s Hotel on an unremarkable stretch of Madison Avenue in Manhattan, New York. Together with a number of other hotel properties and subsequent Schrager projects, the hotel is credited with ushering in a new design milieu and launching the era of the boutique hotel.

Now, over 28 years later, the influence of the boutique hotel has permeated every facet of the hospitality industry. Boutique, no longer the sole province of the rich and hip, is now big business, and its impact is increasingly felt, from once-forlorn airport hotels to luxurious urban resorts.

Last year saw two South African Boutique hotels winning awards at the World Luxury Hotel Awards at Pan Pacific Kuala Lumpur in Malaysia: the Upper Eastside Hotel located in Woodstock and the Robertson’s Small Hotel in the town of Robertson.

Most South African boutique hotels are up-market; in fact they litter the five start alliance list of 41 best hotels. In South Africa boutique hotels caught on like anywhere else but up until now it remains the domain of the upmarket and luxurious, renovating old buildings like the Rosebank Post Office in Rosebank or transforming old Mansions with rising

The Winston- Melrose

The Winston- Melrose

rates and pricey upkeep, the Winston in Melrose for example. The influence on an area is marked. Where a boutique hotel has moved into an area there has been a discernible up scaling effect on the location as a whole.

Similarly there is an influence from the outside in. Many boutique hotels, particularly those in buildings that have undergone adaptive reuse, draw their uniqueness, brand character and guest experience from the place and underlying building fabric in which they are located. The neighbourhoods, civic realities and historical context are all highly influential in the design themes of many boutique hotels thereby making them one-of-a-kind, memorable experiences that are targeted at a specific kind of audience.

An international trend that has seen its mark in South Africa is the movement towards the budget boutique hotel. Some may argue that by definition budget is not boutique. A rudimentary perusal of the web reveals many a budget hotel marketing itself as boutique these days. In 2013 we will probably see increased conversion and consolidation as less successful hotel businesses get scooped up or shut their doors. There is likely to be a continued lack of financing for both early and late stage hotel businesses without a clear road to profitability. We may expect an ultra-cautious approach to first-time hotelier entrepreneurs with little track record on the back of continued economic uncertainty.

Since the 2007-2009 recession, independent hotels have been more open to joining a larger entity to gain access to a larger customer base through global reservation systems and marketing campaigns. Established hotel operators have used their “conversion” brands to grow and capture high entry-barrier sites despite restricted debt and stifled new developments.

In South Africa there is a clear movement to take what used to be the bigger B&B’s and expand properties, creating boutique hotels with the view to up scaling the class of clientele and raising capital expenditure to increase profits in the long run. This narrows the gaps between upmarket B&Bs and the conventional boutique hotel. This trend shows a further influence on suburban areas and commercial nodes alike. Not unlike the canary in the bird cage, if the local boutique hotel closes down it’s bad news for the neighbourhood.

Sea Five Boutique Hotel Camps Bay

Sea Five Boutique Hotel Camps Bay

Boutique hotels around the world have an authenticity going for them. They are particularly suited to conversions of historic or interesting buildings. By doing this with sensitivity to the materials used and the original structure, they can be among the most sustainable and authentic hotels in terms of the built environment. The influence on local real estate proves to be a positive one and South African’s are keeping up with world trends. If you want to get started in the industry you can pick up a five star boutique hotel in Camps Bay for R31 million, on the market this month.

Social Grants – How They Influence Rural Retail.

Social grants queues in Vosloorus.photo by Simphiwe Mbokazi

Social grants queues in Vosloorus.photo by Simphiwe Mbokazi

Keillen Ndlovu, head of Property Funds for Stanlib has been widely quoted of late, saying: “When it comes to retail property investment, the lower income market is still the place to be. It is where the population is and where the growth is. There are still opportunities for smaller retail centres with a convenience element.”

For small town and township retail, food and fashion are basic ingredients. Proximity to public transport is a further need. Banking facilities: branches and ATMs also contribute, given low Internet penetration and a preference to transactions in cash.

Shopping centres in this subsector show a monthly shopping cycle. Pronounced spikes in shopping at month ends and early stages match payments of government social grants and salaries for the growing working middle-class, less reliant on discretionary spend, providing more stable trading densities.

Someone else to weigh in on the subject is Marc Wainer, chief executive officer of  Redefine Properties, in an interview with Denise Mhlanga from property 24 said “with interest rates expected to remain low for a while, consumers appear to be spending more than in previous years and rural shopping centres are benefiting from the Government social grants.”

Marietjie Oelofse of the Aida Lichtenburg office says “This is in stark contrast to the situation five years ago, when many retail shops in town centres stood empty. But minimum wage payments and better distribution of social grants have increased disposable income, creating a demand especially for clothes and furniture.

As a result, there is strong demand for space from retailers catering to this growing buying power.

Clearly social grants paid by the state are helping retailers in township shopping centres weather tough economic conditions.

Two Shoprite stores owned by Futuregrowth’s community property fund, Diepsloot Mall and the other in Tembisa, enjoyed the highest turnover per square metre of any Shoprite outlet in SA over the past two years.

Futuregrowth portfolio manager James Howard told Business Day Briefing that the fund’s shopping malls in Diepsloot and Tembisa were consistently rewarding despite “harsh” economic conditions, thanks largely to the social grant money that was being spent by the two communities. The centres improved turnover even during the credit crunch since few community members were in the market to borrow.

Shoprite has a long history of investing in township and rural property even before returns looked promising. Howard said: “Shoprite has backed rural development for the past 15 years, before these areas were seen as investment hotspots. We have seen land in places that are considered ‘no-go areas’ develop into attractive stores.”

The influence of social grants is even more visible when looking at the payout points themselves. But there are pro and cons.

Talking to the Mail&Gaurdian, Andrew Mills, director of Boxer Superstores, part of the Pick n Pay group, said spending on social-grant payout day at the 95 Boxer outlets in South Africa was bigger than it was on payday. He said recipients who lived in remote areas often did all their shopping after collecting their grants at a store to save on transport costs.

The recipients are encouraged to spend 10% of their grants on goods in the store before the remainder is withdrawn as cash from the tills. Mills added that Boxer consumers were “wise” and the stores tried to offer promotions on pension-payout days to discourage people from shopping elsewhere.

Mike Prentice, Spar’s group marketing executive also talking to the M&G, said its supermarkets also experienced “massive spikes” in sales on social-grant day and the days that followed. “It’s definitely the biggest trading day of the month. It changes the entire complexion of the store over that time.”

Spar has 850 stores throughout South Africa and, like Boxer; almost half are located in rural areas. Many Spars are payout points for the grants, although the biggest spikes in spending that Prentice speaks of, are seen in rural areas. Preparation for payout days involves extra staff at certain stores. Shelves are restocked with top-selling items such as rice, maize, long-life milk and airtime. Social-grant payouts totalled close to R100-billion in 2012. More than half was for child support and the remainder was largely for old-age pensions and disability grants.

But not everyone is happy, “Retailers acting as payout points for social grants are problematic” said Social Development Minister Bathabile Dlamini in a public statement. Dlamini said the department was concerned that those drawing their money from retailers were not given the full amount and were obliged to buy a certain amount of goods at these stores.

“The retailers are only interested in money, not the quality of food our people eat. We don’t mind communities coming to this kind of agreement, but not when they are forced into it.”

Back to Mills, who says customers were encouraged, not obligated, to spend 10% in the store at the month’s end. “They do their shopping at the same time, because it is more cost-effective for the customer and saves in transport costs.”

Mike Prentice, Spar’s group marketing executive, said its customers were not expected to buy in the store. “It is not even implied,” he said. “People just tend to do their shopping there anyway.” The fees cost each store 0.25% of the total payout, he said, but the resulting revenue surge more than made up for it.

Social grants are an important source of cash income for households with eligible members. While these are important for poor and vulnerable households and individuals, there is a disturbing trend – the number of people (households and individuals) dependent on social grants as major or only source of income is increasing.

According to Booysen and Van der Berg (2005) HSRC paper, the number of beneficiaries increased between 1998 and 2003 from 2.8 to 5.8 million, which represented an annual growth of 15% or an increase from 67 to 125 grants per 1 000 of the South African population. However, the increase in 2003 could be attributed mainly to the introduction of the CSG (Child Social Grant) and the increase in public awareness of eligibility for grants. Nonetheless by 2009, the number of beneficiaries was estimated to be 13 million (22% of the population) and, rightly so, the government has started to get concerned about this high dependence on social grants. The social grant system transferred about R78 billion in cash grants (DBSA 2009) and has continued to grow, putting enormous pressure on the fiscus.

Depending on what measures government chooses to take, to reign in the growth of social grants, will determine the level of reliability dependence those social grant will be on influencing secondary market spend trends. An entire commercial and retail industry may be dependent on the outcome.

Opportunity Knocks in SAn Rural Areas

ShopRite2Shopping Centres in rural areas are becoming more sophisticated and formalised; it’s the place to do business rurally.

Some towns have up to 600 000 people, and consumer demand for convenience as well as steady population growth offers major prospects for retailers.  In South Africa, people living in rural areas and townships (or second economy locations) spend more than R 308 Billion annually, representing 41 per cent of total consumer spending. [The Retail Lab]

The similar research shows that South African Shopping centre development trends are moving towards an oversupply situation in urban areas, yet retailers are still cautious when it comes to considering the opportunities within township and rural areas.

Some of South Africa’s most successful retailing operations have ploughed this field for some time. Shoprite is a prime example.   Shoprite had the foresight well ahead of their competitors. Shoprite has over 1500 stores, making it Africa’s largest grocery chain and in a prime strategic position not only in South Africa but on the African continent.

Other retailers active in this arena include cell-phone retailers, some of the banks and clothing outlets who trade in areas where there is currently little competition.   Opportunities abound for retailers, especially franchises and stores in fast food, groceries, fashion, mobile, electronics, financial services, furniture and hardware.

Secondary Market shoppers are brand conscious, no-name knock-offs don’t impress. Those in the market encourage interaction with the community, becoming involved in community life is essential. One must find ways to of make goods and services relevant and be seen to be socially active and responsible.

Retail in South Africa’s rural areas or “emerging economic areas” is growing and this success is evident in the retail sales and trading densities in these centres. Statistics show that the last decade has seen a significant increase in the number of retail centres being developed in townships and rural areas in South Africa.

“Townships and rural areas in SA have emerged as a new market for national retailers as we see an upward movement amongst township communities in terms of expendable income. This progressive movement has resulted in a considerable increase in shopping mall development in these previously untapped areas.” Said Marc Edwards of Spire to Cyberprop recently.

Edwards goes on to advise partnering with experts in the field; to appoint strong community based centre managers; to stay close to the community and to ensure the centre is valued; to ensure public transport is available to shoppers; to sponsor community events; to cater for bulk buying and above all carefully research what the needs of the community are.

“Rural areas offer a real cash economy and well marketed tenants who have done their homework will be successful,” concludes Edwards.

 

 

The Latest from the US on E-commerce effect on ‘Bricks and Mortar’ Shopping Centres

1-1258209737k5bGSouth African commercial property trends may differ in some respects to the US, but we still take many cues from that influential country and South African trends are certainly affected by American ebbs and flows. No less so in the realm of e-commerce shopping’s influence on how we build our retail centres.

It’s undeniable, for some time online shopping has had both a complimentary and supplementary influence on the retail industry. E-commerce has altered how consumers shop and retailers do business. The knock-on effect has been an influence on how stores are designed and a long term transformation of how retails centres are built.

But what about right now, do shopping trends confirm or deny the shift, what could be coming our way here in South Africa? Well if the 2012’s holiday shopping is anything to go by; it’s more of the same. Abigail Rosenbaum, senior economist for CBRE reports that online sales are on track to outperform brick-and-mortar holiday sales for the fourth year in a row.

Rosenbaum reports that “Taking core retail sales (total sales, ex auto and ex gas) as a gauge for brick-and-mortar sales, a performance comparison against online retailers shows e-commerce’s impact to be undeniable.” It seems that consumers are ‘choosing sides’ if you will. Outside of a two-quarter span during the recession, e-commerce sales growth has consistently beaten core sales. And the momentum seems to be in e-commerce’ favour. As of the last data point (Q3), growth was 17.3%—its best rate since 2011Q1. Core retail sales growth, on the other hand, has decelerated to around 4%, its lowest rate in several quarters.

According to ICSC, sales growth among chain stores went into the red in November (down 0.1% compared to one year ago). According to ShopperTrak, sales at brick and mortar stores decreased by 1.8% on the day after Thanksgiving (a high watermark for US shopping). However, IBM saw online sales on that same day increase by 20.7%, which seems to indicate that consumers favoured shopping online on the day after Thanksgiving.

NRF’s Stores Magazine, consumers’ 10 favourite online retailers are 1. Amazon.com, 2.Walmart.com, 3.eBay.com, 4.BestBuy.com, 5.Kohls.com, 6.JCPenney.com, 7.Target.com, 8. Macys.com, 9.Sears.com, 10.Google.com.

So, you may ask, how is this strong e-commerce performance translating into changes at retail centres—specifically with regard to their development?  As Rosenbaum has looked at the pipeline of projects currently under construction or in the phases of planning or final planning, she has picked up a discernible trend. It seems there are a significant number of examples of retailers announcing reductions in the size of stores due to the increasing popularity of sales growth, but the trend seems to extend to shopping centres as well.

In the US smaller centres tend to be anchored by a grocer or smaller convenience-stores, and tend to comprise of tenants whose focus is on daily necessities, not unlike South Africa. The retailers of daily necessities tend to be more resilient to the impact of online shopping; between 1999 and 2010, e-commerce’s share of food and beverage sales in the US  climbed from 0.1% to 0.4% while clothing climbed from 0.8% to 14.6%.

On-line retail sales are continuing to improve and strengthen, not only in the US but here in South Africa too. Rosenbaum believes the trend is here to stay.

Consumers are recognizing the opportuneness and the more robust inventory of shopping online. It seems that certain retailers, grocery stores and other daily necessities stores, for example, are somewhat invulnerable, though no retail should consider itself immune. These tenants and the centres that accommodate them appear to be the current focus of retail centre developers. Brick-and-mortar retail is certainly not vanishing due to increases in online retail, but some changes are coming; retailers and retail centre developers are adjusting to focus on smaller store formats and centres that are more resistant to e-commerce expansion. It will be interesting to see if/when these trends are taken up by South Africa shopping centre designers, if not already.

This last Christmas, whilst shopping for CDs/DVDs, like I have done for years, yes I’ve been slow to buy music online; I noticed the amount of CD/DVD shops closing had increased, yet further. Even bookshops are fewer, scaled down and not as important as they used to be. However, it’s more likely that we should look in the direction of how retail centres are designed and refurbished as influenced by e-commerce rather than trembling at the prospect of vacancies increasing. On-line shopping is making its mark and will not be ignored. It seems it will change how we build not whether we build shopping centres.

Eskom Under Fire in Cape Town and Beyond

Courtesy Engineering News

Courtesy Engineering News

We’ve just seen credit ratings agency Fitch downgrade the ratings and outlooks of two of the country’s most significant state-owned enterprises, Eskom and Transnet. This as business, the City of Cape Town, trade unions and a host of civil society organisations opposed Eskom’s request for an average annual increase of 16 per cent over five years at Nersa’s hearings on Eskom’s tariff application.

The Cape Town Chamber of Commerce made damning statements about Eskom’s management stating that its fundamental thought processes were flawed and outdated. It put up front that “the proposed increases are unaffordable and will have a devastating effect on the economy and small business in particular.”

The chamber expressed what it called “grave” concerns about the management of Eskom. “We believe that maintenance was neglected in the good years to improve the bottom line and we are now paying the price for this in an expensive catch-up operation.”

In terms of the government’s electricity pricing policy, Eskom was required to revalue its assets by a multiplier of five so that it could generate sufficient cash flow. Its desired rate of return would be calculated on these revalued assets. This, together with the use of depreciation replacement cost of accounting, meant the provision for depreciation has soared from R10bn in Multi Year Price Determination2 (MYPD2) to R43bn at the end of the next five years. Nersa allows Eskom’s tariff to cover its operational costs, which include depreciation.

A number of business and other parties have postulated that there was something very flawed in Eskom generating profits for its sole shareholder, the Government. There is a broad body of thought that believes that Eskom, as a utility company, should operate on a non-profit basis in the interests of the country and the Government should be content with its VAT income from electricity sales.

Another issue the Cape Chamber took with Eskom was the policy of keeping electricity flowing to the domestic market whilst cutting or rationing supplies to major industrial customers such as the mines and through buy-back schemes. The point made that since mines and industry are the backbone of the country they should have preferential treatment. Of course rationing electricity to the domestic market would be very unpopular politically.

Other issues raised were: the alleged abuse by municipalities in the passing on of Eskom tariff increases to the consumer; under investing in electrical infrastructure and 13 reasons why gas powered power stations are superior to coal.  This in the light of world-class gas discoveries off the coast of Mozambique and Tanzania.

What’s interesting to note is Eskom’s regarding gas as unimportant. By contrast the National Development Plan produced by Minister Trevor Manuel and Cyril Ramaphosa does see gas as very important and a more affordable alternative to Nuclear power.

On matters of depreciation of Eskom’s assets, other parties made their voices heard: City of Cape Town director of electricity Les Rencontre told the hearing that Eskom’s revaluation of assets and its use of depreciated replacement cost had added R64bn, or over 2 per cent, to the depreciation charge. He urged that the “adjustment” in the value of the assets be disallowed as it added to the increase in tariffs.

Business day quotes Independent Democrats-Democratic Alliance (DA) MP Lance Greyling as saying that the return on equity and depreciation costs reportedly comprised 34 per cent of the “unreasonable” tariff increase applied for and should be “thoroughly interrogated”.

On a more populist note the National Consumer Forum branded Eskom a “parasitic institution” for wanting to increase the price of electricity by 16 per cent, and suggested that electricity be tax-free like brown bread and milk.

Liz McDaid of the Southern African Faith Communities’ Environment Institute criticised the power utility for prioritising its revenue over service delivery.eskom

In short Eskom’s proposal, if accepted, is for a five-year determination for MYPD3 to ensure a predictable, longer-term price structure.  The increase would take the price of electricity from 61 cents a kilowatt hour in 2012/13 to 128 cents a kWh in 2017/18 – more than doubling the price over five years.

The Cape Argus reports  Eskom chief executive officer Brian Dames and chief financial officer Paul O’Flaherty on Tuesday told the hearings the application supported investment by independent power producers and by Eskom. An average annual increase of 13 per cent is intended to meet Eskom’s needs over five years, plus 3 per cent to introduce new independent power producers. Eskom boss Brian Dames told Nersa he believes the company has struck an optimal balance.

The hearings are continuing around the country.

 

 

Oh Wither are we Bound?

fghjklRemember those old printer’s trays that young girls, mostly, now a little older, used to put on their bedroom walls filled with the most hideous useless junk. I think the trays then moved to more sumptuous parts of the home and became centre pieces for more ornate and tasteful knick-knacks as the girls grew up. If you have printers trays in the house you now know what to buy for Christmas at the end of this year and if you were the recipient of some irksome little trinkets last Christmas, you know where you can put them now.

Well, as a pre-Christmas chore I found myself chipping and scouring away the layers of paint, especially from the corners, from my daughter’s printers trays that she inherited from my wife, that she had as a teenager back in the, never-mind. Clearly instead of their beautiful virgin wood, paint was applied with whimsy and little skill to the trays as often as a new fashionable colour got their attention. Alas the burden of restoration is a heavy one. If you find yourself being asked if you think the current colour of the printer’s trays is suitable, whatever you do gush madly at its beauty in order to avoid hard labour.

This got me thinking about when I was a library prefect at King Edward VII School. I had an unorthodox and engaging library master called Mr Sandom. He encouraged us to read all manner of works from the classics to the then, recently in vogue, fantasy literature.

Just before the Christmas holidays Mr Sandom took us library geeks, as we would be called today I suspect, to the then arty-farty suburb of Melville where we visited a house with a ye-olde genuine printing press, cabinets with draws similar to the printer’s trays that people used to put up on their walls in the 80’s. They were full of letters, numbers, punctuation, and many other characters, as well as space blocks.

We all got into the spirit of the occasion and learned from the Mr Sandom how to create a page that we would print and place into our hardcover books that we had manufactured out of old maps as Christmas gifts the previous week. I distinctly remember that I had Iceland on the back and Nyasaland on the front. We didn’t just learn the rudimentaries of what it took to create a page of text the manual way we came away with a sense of achievement that a print out from our state-of-the art dot-matrix couldn’t do for us.

Which causes one to reflect, wither are we bound? Elsewhere in this magazine you will have read that inkjet technology exists that can produce droplets smaller than bacteria. Talk about sending the ‘flu a message. Then some Japanese guy had the bright idea while putting on his deodorant one morning: “if inkjet printing is just firing liquid at a surface why not spay stuff with perfume and other smells.” So maybe you’ll receive Christmas card smelling of roast turkey. And to think we got all excited in the 80’s about scratch-n-smell.

Whether it was yesterday, today or tomorrow, in the printing world higher and higher resolution seems to be that holy grail or fleeting horizon, reaching ever further, to working harder to produce clearer and better images and text, faster and faster, with less and less, in narrower and smaller spaces, cheaper and cheaper, with fewer and fewer people, using the fewer calories and lower wages, during reduced hours and….okay I’ll stops now.

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.

Cape Town – Making the City Work

Cape Town CBD

Cape Town CBD

Cape Town’s CBD, the business hub of the South Africa’s second biggest city, is working hard on its image as a functioning and healthy city centre where things work and business gets done. Investment, infrastructure upgrades and improved systems all reveal a sober and progressive approach to making Cape Town’s heart functional and competitive.

In the last four years the Cape Town CBD has been the target of nearly R5 billion’s worth of upgrades and development. A recent survey commissioned by the city’s Central Improvement District values CBD property at about R22.3 billion.

Recent or current developments in the city include:

Cape Town Convention Centre

Cape Town Convention Centre

The R690 million expansion of the Cape Town International Convention Centre (CTICC) which is in its planning stage. This redevelopment will see the venue double in size. The completion date is set for July 2015.

The R138m Provincial Government building upgrade in Dorp Street is to be completed in July.

The R1.6bn 32 floor (tallest in the CBD) Portside Building between Bree, Mechau, Hans Strijdom and Buitengracht streets. This is an enterprise by FirstRand Bank and Old Mutual Properties aimed at completion in 2014.  The building will be the provincial headquarters of First National Bank, Rand Merchant Bank and Wesbank.

The R32.8mil Civic Centre refurbishment has begun, the completion date is still uncertain.

The R1.4bn Cape Town Station upgrade, phase one is underway and phase two is still in the planning stage. The date for completion is not certain.

Port Side Building

Port Side Building

Ingenuity Property Investments are redeveloping the Atlantic Centre in Christiaan Barnard Street to the tune of R160m and should be completed early 2013.

The R80m development of Touchstone House on the corner of Bree and Mechau Streets is in its planning phase.

The R150m upgrade to Newspaper House in St George’s Mall is to be completed this year.

The Cape Town City Hall is also due for refurbishment. It is estimated that it will take R20 million to upgrade the historic building. A variety of repairs as well as major upgrades to the roof and auditorium are required if the building is to remain functional. The timeline is likely to be between two to three years.

The Cape Argus refers to a “turnaround strategy” that was put into place for the building back in 2009. Since then R4m had been spent on repair projects. This includes R1m to refurbish toilets and R500 000 to restore woodwork. Portions of the ceiling have been repaired, light fittings replaced and walls painted. But major repairs are still required.

Cape Town City Hall

Cape Town City Hall

By way of justification for all this expense, is the offering of City Hall as a nucleus for the city’s arts community. The intention is to position the venue as a location for various creative activities. Clearly this is already the case. Between January and September, more than 70 events were held at the City Hall. The Cape Argus reports that another 40 are planned up until the end of this year. The city has been meeting with the Cape Town Partnership and the arts sector with the view to working on arrangements to secure events until 2015.

From art to infrastructure. Cape Town’s foreshore dead-ends and unfinished freeway are finally to be looked at with a creative eye. The City of Cape Town, with the help of University of Cape Town (UCT) engineering students, is hoping to find a viable design to complete the structures.

Students from the university’s engineering and built environment faculty will be asked for draft innovative design proposals for the incomplete freeway in a way that will improve access to the city. It has remained incomplete for many years due to lack of funding.

Unfinished Flyovers

Unfinished Flyovers

For some they have been a blot on the landscape for others an icon, regardless the unfinished flyovers are to be examined and considered for more constructive use. Proposals include; creating parking beneath them, a museum and even providing viewing spots of the city.  One main focus is on how to use the structures to help ease access to the city centre, and in this way improve working and living conditions for residents.

The project would start in January and the tenders would go out in early 2014. One possibility mooted is for an international consortium to be responsible for the construction work. This would be a long term project that would change the landscape of the city.

CCTV cameras - CBD

CCTV cameras – CBD

There’ s a great deal of attention being paid to crime and grime issues in the CBD too and people seem to be  enjoying their work environment. The aforementioned survey commissioned by the City’s Central Improvement District (CCID) reveals that 82.6 per cent of people feel safe in the streets and eighty-three per cent of businesses also rated the CBD the safest in the country.

The report found that over the past three years property investment in the central city brought in R4.6 billion and a GDP contribution of R1.5bn was generated from events hosted in the city. According to the survey between 2001 and 2010, the residential population in the city had increased by 76 per cent. A further 79.3 per cent of the people interviewed felt the city was clean and orderly while the remainder said cleaning could be improved.

Just over 85 per cent said they felt safe in the city at night and 90 per cent of businesses were satisfied with the overall services of the CCID. The CCID reported that crime rates fell by half in the central city. In social development, the CCID said they were working with 16 social service providers to help homeless people. Evidently of the CCID’s budget of R37.5m, more than half would be spent on safety and security.

Golden Arrow Busses

Golden Arrow Buses

Finally, improved transport is very much in the vision of the city. Cape Town is moving closer to gaining complete control over Cape Town’s public transport operations. It will see the city managing the subsidies of the Golden Arrow Bus Services, which currently fall under the provincial government. In 2011, Golden Arrow Bus Services received a R600 million subsidy. It has more than 1 000 buses on 900 routes across the metro. Now the city is applying to the national government for the contracting authority functions to be taken over by the city.

At the moment, rail services are managed by the national government while the MyCiTi service is city-run. Eventually these will fall under the Transport Authority. Going forward, the goal is a single payment method for all modes of transport. This can be done with the myconnect card. It will also affect scheduling of services, allowing for a shared timetable. The entire integrated public transport system is expected to be complete in the next five to seven years.

Cape Town seems to be focused, industrious and committed, as people in the CBD make their city work.

South Africa is Part of Africa, but will it Take Part in Africa?

The World Bank has likened the doubling of African manufacturing output over the last decade to China’s position thirty years ago. Emerging Markets Investment firm Actis’ real estate director Louis Deppe believes that South African investors who ignore the potential in African markets do so at their own peril.

Ivor Ichikowitz, founder of Paramount Group, a privately owned defence and aerospace company, believes South Africans have looked to Asia and the West for the best ideas and viewed them as their natural competitors, as opposed to our African neighbours.

Louis Deppe of Actis

Louis Deppe told Moneyweb at an Africa Property Investment Summit in Sandton. “You have no choice not to care about Africa. It’s on your doorstep. Some significant economies are going to overtake South Africa in a very short space of time. They’re growing faster and have far more potential to grow.”

An example Deppe probably has in mind would be Ethiopia, their economy is expanding at 7.5% annually and that’s not just traditional industries like mining and agriculture, it’s also manufacturing. An example on the periphery of Addis Ababa is Chinese shoe maker Huajian, which has built a factory employing around 500 workers.

An economist at the World Bank who recently wrote a report on light manufacturing in Africa cites this as an example of how Africa could overtake Asia to potentially become the world’s next manufacturing hub.  Low labour costs, the availability of natural resources, and preferential access (duty-free and quota-free access) to the US and EU markets are all some of the advantages of operating in Africa.

It is predicted that Nigeria, with a growth rate of 7% should overtake South Africa by 2015. Louis Deppe warns that up until now, South Africa, being, arguably, the most democratic and stable country on the continent, has been able to attract foreign direct investment (FDI), often getting the lion’s share compared to other African countries. Once other countries also start fulfilling some basic requirements, this will no longer be the case.

South Africa used to be the gateway to the rest of Africa. If foreign investors wanted to set up and go into Africa, the FDI would come to SA first, before moving up north. This is no longer happening and foreign investors are now moving directly into Africa from China, Europe and the United States.

Nairobi – an “African Tech Hub”

By 2035, the continent’s work force will be greater than any individual state on earth.  Nigeria and Ethiopia will add over 30 million workers by 2020, whereas South Africa is looking at adding 2 million.

However, it’s not just manufacturing that Africa is excelling in and challenging South Africa. The Economist recently (August 2012) named Nairobi an “African tech hub” because of the hundreds of start-ups that have sprung up in the last few years. Kenya’s exports of technology related services have risen from $16m in 2002 to $360m in 2010. It is also a world leader in the adoption of mobile payments technology – and is far ahead of China and India.

According to Ivor Ichikowitz, within a few years Kenya could soon emerge as a world leader in mobile payments and export the technology to countries across the world.

He also refers to the African film industry. The Nigerian movie industry, which has overtaken South Africa’s to become the strongest on the continent worth £500m and producing more films than Hollywood every year. The films may not be international blockbusters, but they have huge appeal across Nigeria and Africa, and prove that Africans have the creativity to compete in non-traditional industries.

Nigerian Movie Industry Worth R6Billion in 2011

Clearly we need to be at least aware of what our neighbours are doing if our market is shrinking or stagnating and the world around us is getting bigger, we risk becoming less relevant in the grand scheme of things. Alas it seems the South African economy is sliding backwards while the rest of the continent is in first gear. Most African markets that Louis Deppe’s Actis group invests in are experiencing 7% GDP growth. “Despite claims of corruption, a lot of that money still filters down into the economy, there’s a lot of economic drive and growth.” he said. He added that on the development side, Actis was getting returns of between 13% and 14%.

But Ivor Ichikowitz has a positive spin on this: “it’s a positive opportunity for us to export our products and knowledge and generally expand trade with other African nations, which in turn will generate jobs for the youth of our country.”

South Africa has some great assets – its infrastructure, mature private sector, well developed services sector, stock exchange – that give us the opportunity to provide a range of goods and services to help grow our own economy, but we can work harder to maximise these advantages.

IVOR ICHIKOWITZ

Ichikowitz says that countries like Ethiopia, Kenya and Nigeria are rushing forward and emerging as serious competitors for destinations of foreign capital.

This is pressuring our government and business leaders to look more closely at their policies and approach to business. The harsh reality is that if South Africa is to retain its position as the leading economy on the continent it can’t for a minute ‘rest on its laurels’.

Ichikowitz doesn’t see South Africa as being in competition with the rest of Africa, but rather in a position to learn from and impart learning to neighbouring states, which is why it is essential that we share technologies and collaborate to build strong regional industries that bolster inter-Africa trade.

Deppe looks more into the nitty-gritty glancing back to what he refers to as a watershed year for property investments in South Africa, 2010, after the World Cup. “We had all these infrastructural projects, the economy had withstood the 2008 global recession. Then suddenly: what’s next in SA? There’s not much left in South Africa, we are a saturated market.” Deppe said by way of illustration that vacancy rates had increased in many shopping centres across the country. As a result, investors’ returns at 7% or 8%, which were not great to begin with, are shrinking and are likely to be impacted further. He said with GDP growth in South Africa being below 3%

New South African Bank Notes

“you’re not even going to get out of the starting blocks. You’re actually going backwards in real terms.”

The troubling dynamic among South Africa investors is their reluctance to invest in Africa stems from an unfounded conservatism. “With the South African base not as strong as it was, it’s forcing people into a mind-set to look abroad. I don’t think they have a choice.” Deppe said.

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

3 Renewable Energy Fallacies

Three Renewable Energy Fallacies

So it’s the 21st century and we can watch TV on our phones and be informed about anything and everything via the internet. Though sometimes what we consider a blessing can also be a curse. An abundance of information means we require discernment to judge between truth and fiction.

This brings us to a world in transition. We currently find ourselves suspended between two eras: a time dependent on fossil fuels such as oil and coal, and a future potentially dominated by renewable energy sources. Not everyone is on board though. Options vary on just how dependable some of these renewable energy sources are, as well as how well they’ll be able to sustain us in a post-fossil fuel era, if there is such a thing.

Such hesitation gives birth to fallacies, misconceptions and even blatant falsehoods. Below we’ll ignore the conspiracy theories and obvious tomfoolery and focus on what seem to be the fallacies that have been given credence of late.

Solar Power is Impotent

Okay so your kids can have sparkly calculators that can get by on solar power and yet the latest formula one racing cars use fossil fuels. This doesn’t help the image of solar power very much.

Even if solar electricity, also known as photovoltaics (PV), was only capable of energizing our low-power gadgets many experts identify the statement “little steps can’t make a difference” as a major myth surrounding the green movement.  While such gadgetry may seem to make little difference to global energy consumption, it’s a small change that forces others to think about the ecological matters at hand and possibly make both small and substantial changes in their sphere of influence.

PV power may not be in a position to solve all our energy problems this year, but its potential for the future is great. Think for a moment, we are referring to acquiring energy from a gigantic star — one that drives our solar system, our atmosphere and pretty much all life as we know it. The United States Department of Energy (DOE) estimates that the solar energy resource in a 100-square-mile (259-square-kilometer) area of Nevada could supply the United States with all its electricity.

South Africa is one of the best located regions for Concentrated Solar Power (CSP) with some of the highest levels of Direct Normal Irradiance (DNI) in the world. The Northern Cape region of the country experiences levels of more than 2 900 kWh/m2, significantly more than some of the other CSP hot spots such as Spain and Southern California in the USA and the Department of Energy’s (DoE) Integrated Resource Plan allows for 1 GW of CSP of a total of 18 GW to be delivered from renewables by 2030.

Initial research by the University of Stellenbosch’s Centre for Renewable and Sustainable Energy Studies (CRSES) indicates that there is a short term potential of 262 GW for viable CSP taking factors such as DNI, land slope, dispatchability, land use and water availability into account, and 311  GW in the medium term with further transmission infrastructure upgrades.

Now that could blow the numbers out of your calculator.

Cleaner Coal Will Make Solve Everything.

Clean Coal is an oxymoron. In short coal is filthy stuff. Scientists argue that the coal mining process alone prevents it from ever being “clean,” without even considering the other pollutants.

South Africa’s energy resource is almost solely dependent on coal. For every unit of electricity produced and consumed, nearly 1 kg of carbon dioxide and pollutant by-products are released into the atmosphere.

Coal-fired power plants spew out sulphur dioxide, carbon particles as well as carbon dioxide (CO2). But coal continues to play a vital role in global energy production, and it would be unreasonable to expect people to return to pre-Industrial Revolution days either. Clean coal technology theoretically mitigates the impact of coal pollution until a better option is found.

However there are a great deal of clean coal technology centres around capturing and storing pollutants that would otherwise be released in the burning process. This involves either pumping the gas down wells or into deep-ocean depths.  Not only can the latter option potentially endanger marine ecosystems, but also they both require care and monitoring to prevent polluting the environment anyway. Some scientists insist that these measures amount to a redirecting of pollution, not a true reduction of it.

The fallacy of clean coal solving everything is easy to unveil. We may have to put up with it for a while but we should never be fooled into believing that it is either green or renewable. It certainly isn’t inexhaustible.

Wind Power Kills Birds and Deafens Humans

Wind farms are accused of being bird deboning and feather-plucking plants. Alas this is not entirely untrue, wind turbines do kill birds. One may argue that so do many other things do too: vehicles, buildings, pollution, poison, transmission lines, communication towers and the introduction of invasive species into their habitats. Despite the daunting sight of a field of wind turbines the statistic for bird deaths is low, that’s 1 in 30 000 according to the U.S. Department of Energy.

As for noise, modern turbine technology keeps turbines relatively quiet- essentially no more than the soft, steady call of wind through the blades. In Canada the Ontario Ministry of Environment breaks it down like this: If 0 decibels is the threshold of hearing and 140 is the threshold of pain, then a typical wind farm scores between 35 and 45, sandwiched between a quiet bedroom (35) and a 40-mile-per-hour (64-kilometer-per-hour) car (55).

Regarding the cost: research indicates that the average wind farm pays back the energy used in its manufacture within three to five months of operation (source:BWEA). Since wind farms depend on variable weather patterns, day-to-day operating costs tend to run higher. Simply put, the wind isn’t going to blow at top speed year-round. If it did, a wind turbine would produce its maximum theoretical power. In reality, a turbine only produces 30 per cent of this amount, though it produces different levels of electricity 70 to 85 per cent of the time. (source:BWEA)

This means that wind power requires back-up power from an alternative source, but this is common in energy production.

Wind power has huge potential as a renewable energy resource.

Something worth noting when examining such fallacies is that while renewable energy certainly offers the prospect to reduce carbon dioxide emissions, regrettably, solar and wind power requires substantial parcels of land to deliver relatively low volumes of energy relative to fossil fuels. By way of an example, a natural gas well producing 60 000 cf per day generates more than 20 times the energy per square meter of a wind turbine. Transferring to renewable energy will result in a substantial “energy sprawl” that will pose challenges for the conservation of bio diversity.

Sources: Rainharvest; Energy Find; How Stuff Works; CIA Factbook; New York Times; The Sustainable Energy Society of Southern Africa)

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.

Unorthodox Renewable Energy Ideas

In every sphere of life there are eccentrics. Why should renewable energy be any different. Rather than wait for the oil wells to run dry and coastal cities to disappear beneath rising sea levels, many people are looking ahead to cleaner alternative sources of energy. Some of the unorthodox examples that follow have been tried and are already catching on whilst others are very much in the minds’ of some very lateral thinkers. Here are some Unorthodox Renewable Energy Ideas.

Mudstones

Ancient Mudstones

300 million-year-old mudstones could one day reduce our dependence on conventionally-obtained fossil fuels, according to researchers at the University of Leicester. Shale gas can be found in the stones, much as it’s been found in sandstone for many years. But mudstone yields up to four times as much gas as sandstone. However, extracting the gas from the stones could be challenging since the stones aren’t consistent in their gas retention.

Balloons in space

Balloons in Space

Orbiting Mirrors to Transmit Solar Energy, does that sound like a Bond movie? A fleet of balloon like satellites, which would inflate once in orbit. That’s the brainchild of Massachusetts Institute of Technology engineering professor William F. Schreiber. Once inflated and orbiting, and as the Earth’s position changes with respect to the sun, the spherical mirrors would be adjusted continuously to catch and focus solar energy and transmit it in concentrated beams to receiving stations on Earth. At those receiving stations, that solar energy would be used to heat water into steam and drive turbines to generate electricity.

While Schreiber’s idea for using giant shiny balloons may sound a little eccentric, scientists increasingly have been looking at the possibility of using satellites to harvest solar power and transmit it to Earth. At the International Academy of Astronautics in Paris a statement was released to this effect: “It is clear that solar power delivered from space could play a tremendously important role in meeting the global need for energy during the 21st Century.” Similarly U.S. Air Force Col. Michael Smith, the director of the Pentagon’s Centre for Strategy and Technology, was quoted as saying that the concept has the potential to supply safe, clean energy to earth if it can be made to work.


Tornadoes

Tornadoes are usually seen as very destructive forces, but one Canadian engineer believes that we can one day harness the power of the tornado to power entire cities. Louis Michaud believes that by pumping warm, humid air into his Atmospheric Vortex Engine (AVE), a chamber 200 meters wide with 100 meter tall walls, he can create an artificial tornado. The rotation of the tornado would then power wind turbines at the chamber inlets, creating enough electricity to power a small town. Michaud proposes using waste heat from power plants since they typically reject more than half of the heat they generate. He admits that the tornado would probably cause some extra precipitation in the surrounding area, but says that the whole setup would be inherently safe.


Save Energy – buy a cow: Bagging Methane Discharges from Cattle

We humans are notoriously poor at taking responsibility for our actions. So it should not come as a surprise that cows farting, excreting and belching is being blamed by some for climate change. In all seriousness though a 2006 United Nations report estimated that cows, along with other livestock like sheep and goats, contribute about 18 per cent of the greenhouse gases that are warming the planet — more than cars, planes and all other forms of transportation put together.

This is not without good reason since bovine discharges  are rich in methane, a gas that’s 21 times more efficient than carbon dioxide at trapping heat in the atmosphere. {Source: LA Times}

Researchers have developed a means of acquiring methane from cattle excrement and converting it to a biogas fuel that’s of a quality that can be fed into a standard natural gas pipeline. In Kern County, California, a company called Bioenergy Solutions uses that method to produce 650,000 cubic feet (18,406 cubic meters) of biogas from manure, enough to power 200,000 households. [Source:Levinson}

Argentina is one of the world’s leading beef producers. Herds amount to over 50 million cattle, outnumbering the human population. Scientists have created a special bovine backpack that captures a cow’s emissions via a tube attached to the cow’s stomach, and discovered that the animals produce between 800 and 1,000 litres of gas each day {Source:Zyga}

One might even call it a kind of wind energy.

Dancing Bodies

When was the last time you made the world a better place by clubbing all night? Sustainable Dance Club was formed in the Netherlands with the idea that dancing bodies could create enough kinetic energy to actually power a building. Lots of music festivals have turned to bicycle generators to power their concerts. And some hipster bars are even making customers pedal for a few minutes to get their pitchers of perfectly blended margaritas. Rotterdam was the first to install the Sustainable Dance Floor, but SDC is looking forward to taking their technology all over the world to other clubs, festivals, and wherever there are people willing to dance for the good of the Earth.

Projects range from permanent installations at museums in Miami and Philadelphia to pop-up events around the globe in Vancouver, Shanghai, Salvador and Abu Dhabi. Their mission statement is “To create personal experiences where sustainability and fun are combined. To inspire (young) people worldwide to adopt a more sustainable lifestyle.” They hope to spread the knowledge that living a greener lifestyle isn’t all about sacrificing the things you love.

Gym Power

Several innovative gyms are popping up that convert human energy into useable electricity. One of them, in Hong Kong, has exercise machines that look perfectly ordinary from the outside, but have generators inside that create energy from movement. So while you’re busy sweating it out, your efforts are creating electricity to power the exercise console and supplement the electrical juice it takes to keep the overhead lights on. The owner of the gym maintains that the average person can generate about 50 watts of electricity per hour on the machines. {Source “Blume”}.

Then there’s the Pedal-A-Watt bike stand, which works by powering a generator with the movement of the bike’s rear wheel, comes with an optional PowerPak that stores the energy you create for later use. The PowerPak has an outlet where you can plug in and power any appliance that runs on less than 400 watts of electricity. For a frame of reference, a large television uses around 200 watts, a stereo 20 watts, a desktop computer 75 watts and a refrigerator 700 watts {Source: Convergence; Tech 3; Inc.;HTW}

Clean and healthy energy is starting to catch on in U.S. gyms. There are now converters on exercise equipment in more than 80 locations in North America, including My Sports Clubs in New York City and Washington.

The Green Microgym, a 3,000-sq.-ft. (280 sq m) gym has more than 200 members, is doing so well that owner Adam Boesel has started franchising. The gym doesn’t generate enough electricity to be carbon-neutral yet, but if all the equipment gets used at one time, it can produce twice as much as it needs to run the facility at any given moment. {Source: Time}

Wind and Solar Energy Trivia for the Enquiring Mind

Two of the most prominent renewable energy sources besides hydroelectric power, are wind and solar energy. Read on to discover some facts to satisfy your curiosity and broaden your general knowledge.

Wind Power

Wind power is one of the oldest renewable sources of energy. As its speed doubles, its capability can produce an eightfold increase of power generation.

There’s nothing new about wind power, from time immemorial people have used the wind to pump water.

How does wind power work? The rotor blades of a wind turbine work like the wings of an aeroplane. As air passes over the specially designed blades, “lift” is created. This lift, in turn, sends the blades spinning in a circular motion, which drives an electric generator. When winds reach about twelve Km per hour, the rotor is engaged and the wind turbine begins producing power.

These days one modern turbine can produce enough electricity to support up to 290 homes.

As of April 2010, U.S. wind capacity reached more than 35,000 megawatts, achieving in 2010 alone what had previously taken two decades – the installation of more than 10,000 MW of wind power capacity. Currently 35,000 MW of wind energy will prevent an estimated 62 million tons of carbon pollution annually, which is equivalent to taking 10.5 million cars off the road.

According to a U.S. Department of Energy study released in 2009, wind energy could provide 20 per cent of U.S. electricity by 2030.

Currently, Denmark, Spain and Portugal meet between 12 per cent and 20 per cent of their electricity needs from wind energy. By contrast, wind power supplies about two per cent of the US’s current electricity needs. America’s wind resource is the largest in the world.

Solar and wind power systems have 100 times better lifetime energy yield than either nuclear or fossil energy system per tonne of mined materials.

At the end of 2007, worldwide capacity of wind turbines in operation was just over 94 Gigawatts.

The world’s largest wind turbine is currently the Enercon E-126 with a rotor diameter of 126 meters. The E-126 produces 6 megawatts, enough to power approximately 5,000 European households.

By 2010, Europe was leading the world in the development of offshore wind power.

Wind power makes up 40 per cent of new generating capacity installations in Europe and 35 per cent in the USA.

Solar Power

It would take only around 0.3 per cent of the world’s land area to supply all of our electricity needs via solar power.

With 4% of the world’s desert area, photovoltaics could supply the equivalent of all of the world’s electricity. The technology of Photovoltaics is the conversion of sunlight into electricity – also called “solar cells”.

The area of roof space available in Australia is enough to provide all of the nation’s electricity, using solar panels.

Weight for weight, advanced silicon based solar cells generate the same amount of electricity over their lifetime as nuclear fuel rods, without the hazardous waste. All the components in a solar panel can be recycled, whereas nuclear waste remains a threat for thousands of years.

The invention of the solar cooker challenged the consumers of the new millennium. In some places of the world, solar cooking is popular usually in large cities where the renewable heat of the sun generates enough energy. When sunlight hits a space with an area of 1 square meter, there is about 1,000 watts of energy from it on that surface which is hot enough to run the solar cooker.

Solar power is capable of providing many times the energy demanded by the world but it is an intermittent energy source as it is not available at all times. The amount of sunlight is dependent on location, time of day, time of year, and weather conditions. A large surface area is therefore required to collect the energy at a practical rate.

Experts believe that sunlight has the potential to supply 5,000 times as much energy as the world currently consumes.

Leonardo Da Vinci predicted solar industrialization during the late 15th century.

Horace de Saussure, a Swiss scientist, invented the world’s first solar energy collector or ‘hot box’ in 1767.

Albert Einstein won the Nobel Prize in 1921 for his experiments with solar energy and photovoltaics.

The amount of energy that goes into creating solar panels is paid back through clean electricity production within anywhere from 1.5 – 4 years, depending on where they are used. This compares with a serviceable life of decades.

The theoretical limit for silicon based solar cells is 29% conversion efficiency. Currently, polycrystalline and monocrystalline solar panels generally available have efficiencies anywhere from 12% to 18%. With the addition of solar concentrators, the efficiency of photovoltaics is eventually likely to rise above 60 per cent.

The Earth receives more energy from the sun in an hour than is used in the entire world in one year.

Germany has nearly half the world’s installed solar cell capacity, thanks to a generous subsidy programme. In 2006, the country installed 100,000 new solar power systems.

Global annual photovoltaic installations increased from just 21 megawatts in 1985, to 2,826 megawatts in 2007.

Solar energy prices have decreased 4% per annum on average over the past 15 years.

Manufacturing solar cells produces 90% less pollutants than conventional fossil fuel technologies

The solar industry creates 200 to 400 jobs in research, development, manufacturing and installation for every 10 megawatts of solar power generated annually.

A world record was set in 1990 when a solar powered aircraft flew 4060km across the USA, using no fuel.

The worldwide production of solar cells increased by 60% in 2004. However production has been hampered in the past years due to limited supply of silicon.

The Mojave Desert in North America houses the world’s largest solar power plant. It covers 1000 acres (4 km²) of solar reflectors.  It produces 90% of the world’s commercially produced solar power.

Africa’s Sahara desert, using 15% efficient solar cells, could generate more than 450 Terawatt per year.

About half of worldwide production of solar panels is consumed by Japan. Their purpose is mostly for grid connected residential applications.

Solar and Wind energy are viable and renewable alternatives to filthy coal, oil and other fossil fuels. We ought to encourage every effort by business and local government in pursuit of programmes that seriously encourage their use. One example is Eskom’s solar Geyser programme where people are encouraged to make use of the subsidy or discount that Eskom and insurance companies are offering to replace ordinary geysers with solar powered ones. You can make a difference.

 

(Sources: Iberdrola Renewables, American Wind Energy Association, Global Wind Energy Council) Energy Matters; Wikipedia; Professor Andrew Blakers; SolarBuzz; Worldwatch Institute; Science Daily; The Four Green Steps.)

On your marks, get set…Africa! SA Business moves into Africa.

On your marks, get set…Africa!

In the face of declining world markets and the lack of prospects in the West, Africa is looking more and more like a place to do business.

Africa, with all its angst and chaotic history and struggle with social upheaval is showing a resilience and sense of survival at which we can marvel.

The International Monetary Fund anticipates emerging economies in general and Africa in particular will expand by 4.5% this year and 4.8% in 2013. An interesting indicator has been residential property values, which, on average, rose by 8% in 2011. (AFDB Statistics)  Economic growth is expected to continue despite recessionary trends in some parts of the world.

Although income disparities exist across Africa an authentic middle class is evolving. It is estimated that sixty million African households have annual incomes greater than $3,000 at market exchange rates. By 2015, that number is expected to reach a hundred million.

Urbanisation is pushing up demand for all kinds of real estate:  office space, retail complexes and of course, housing. The growth of, and potential for, infrastructure projects abounds. This has the positive spins off for labour too.

South African business, it could be said, is scrambling. Recently Resilient, known for its successful serial development of non-metropolitan shopping malls outside of the major urban nodes, expressed dissatisfaction with local red tape and revealed it would spend more than 1 billion rand building 10 shopping malls in Nigeria.  The malls, 10,000 square meters and 15,000 square meters in size, will be built over the next three years in the capital, Abuja, and the city of Lagos respectively, the main commercial hubs. Shoprite, Africa’s largest food retailer, will be the major tenant.

Wal-Mart-owned Massmart last month said it would invest in African growth and hoped to grow its food retail business from about R7bn to about R20bn over the next five years. But it’s South African food retailers Shoprite and Pick n’ Pay’s whose sites are firmly set on Africa. Pick n Pay has increased its African growth, using R1,4bn from the sale of Franklins in Australia.

Shoprite, which has only about 123 stores in Africa compared to about 1730 locally, says another 174 stores will be added in Africa next year.  Pick n’ Pay on the other hand is aiming to expand into Malawi and the DRC within the year. The food retailer has over 93 stores in Africa North of South Africa. Zambia and Zimbabwe are on the cards for expansion. Woolworth, not to be outdone has opened 14 stores through its Enterprise Development Programme  in Nigeria, Uganda, Zambia, Kenya, Mauritius, Tanzania and Mozambique. Woolworths currently has a presence in 12 countries with nearly 60 stores across Africa, excluding South Africa.

Further investment in the African playing field could come in the form of buy-outs of South African food retailers by the likes of Tesco, Carrefour and Metro. Wal-Mart’s consumption of Massmart has already been well publicised.

On a slightly different tack, Don’t Waste Services (DWS), the largest on-site waste management company in South Africa, has publicized their intention to open affiliates in Botswana, Kenya, Zambia, Mauritius and Swaziland. The company – is active in the mining, retail, hospitality, healthcare and large industry markets and currently provides waste minimisation services to 300 corporate clients across their portfolios of sites. Having recently expanded into Mauritius, the company is keen to duplicate their successful model in other African countries.

On the real estate front JHI Properties Zimbabwe has added another 15 properties to its portfolio of over 50 since it is to manage unlisted property investment fund, Ascendant Property Fund (APF). JHI has already expanded from its South African home base into Zambia, Ghana, Namibia, Botswana, Lesotho and Nigeria. This further expansion comes as Zimbabwe is experiencing exceptional growth in the retail market at a rate of some nine per cent plus year on year. APF CEO Kura Chihota anticipates actively pursuing growth in Zimbabwe. “With Zimbabwe’s anticipated economic growth rate of nine per cent per annum, prospects look promising.” said Chihota recently.

JHI Properties was also appointed as the leasing agents for Joina City, a new upmarket ‘urban city’ in Harare incorporating four floors of retail with 18 floors of offices. Anchor tenants include big South Africa names Spar and Edgars.

Bringing us to Bigan. Bigan, that brought us Mombela Stadium in Nelspruit, Olievehotbosch Ministerial housing projects, the Oliver Tambo International Pier Project and ESKOM Coal Hauleage Road Repair, is negotiating partnering with Ghanaian real estate companies to build affordable houses for the poor and middle income earners.

Ghana’s housing deficit stands at about 1.5 million units. Bigan believes it has the capacity to deliver and help reduce Ghana’s housing deficit. Based on their experience in South Africa, Bigan’s Emmanuel Kere believes that the company can “support not only the (housing) sector in Ghana but infrastructure development in general.”

Bigan claims to build 30 000 houses in South Africa annually and has a lot to offer Ghanaian companies. Chairman of Bigen Africa, Dr Iraj Abedian said that the company was attracted to Ghana because of the country’s stable political environment and friendly business atmosphere. Bigan makes no apology that it intends to use Ghana as a springboard to launch operations into Senegal, Liberia, Nigeria and Sierra Leone.

The South African government is not exempt from taking an active role in the scramble for Africa either. The Public Investment Corporation (PIC), which manages over a trillion rand on behalf of civil servants, which accounts for 10% of SA’s JSE market capitalisation, is looking for potential private equity partners.  10% of the portfolio is to be invested outside South Africa, R50 billion is reserved for African investment.  60% of that, about R30 billion, will go to private equity according to PIC CEO Elias Masilela in an interview with Reuters. The PIC is likely to be a player in infrastructure investments as countries on the continent build and revamp their roads, dams, hospitals and power stations, he said.

Public Investment Corporation which has a presence in 18 African countries weighs in on infrastructure. In an interview with Goldman Sachs’s Hugo Scott-Gall, Sim Tshabalala deputy CEO of the Standard Bank Group said: “in most of sub-Saharan Africa infrastructure has all but collapsed, or is limited. It has to be rebuilt, so there are massive opportunities in project finance. A lot of infrastructure will be refurbished, mainly with support from the Brazilians and the Chinese. The link we have with ICBC (Industrial and Commercial Bank of China) also helps us identify opportunities and execute on them. In our case, ICBC is a 20% shareholder.”

Standard Bank, as a South African player in the African market has positioned itself well as a go between or conduit for other BRICs partners wanting to interface with the continent. Standard Bank has a cooperation agreement for example, to identify Chinese corporates and SOE (State owned enterprises) that are looking for opportunities on the continent.

Standard Bank has its work cut out for it as Intermediaries for foreign capital since it is estimated that Africa needs about US$90 billion a year to deal with its infrastructure backlog and currently is raising about US$70 billion. This is coming from a combination of sources: taxes, the banking system, and a large amounts coming from outside – risk capital. The banking system in individual African countries does not have the capacity to fund all of the necessary infrastructure activities, so there will be a lot of reliance on international capital markets and the international banking system.

Standard Bank is not alone in its growing presence in Africa, ABSA has received regulatory approval to start a greenfield insurance business in Zambia, bringing to four the number of sub-Saharan countries where the Barclays-owned bank will have insurance operations.  First National Bank (FNB) has revealed plans to invest nearly R2bn over the next 12 months as SA’s third-largest bank by customer numbers, to expand its footprint in SA and Africa. It is believed to be considering an acquisition in Nigeria and has sent scouting missions to Ghana. The bank, which operates in eight countries in Africa including SA, has about 7 -million customers in SA and 1,1-million in Africa. FNB Tanzania was its most recent addition, while its Zambian unit has already announced plans to have a nationwide branch network by 2016.

There’s no doubt that some South African companies are viewing Africa with a greater sense of urgency. The European Union’s financial troubles have revealed South Africa’s vulnerability to European troubles. More than 25% of South Africa’s bilateral trade is from the EU. If GDP in Europe declines that indicates fewer goods being shipped from Africa. This does not bode well for South Africa. Expansion and investment into Africa can broaden South Africa’s horizons not to mention its vulnerability.

But in the words of Standard Bank’s Sim Tshabalala: “As a South African I would love to believe in the sustainability of the country’s national competitive advantage as an entry point to the African continent. Increasingly, people are able to go directly to Kenya and Nigeria, for example, without going through South Africa, because these countries are building the necessary hard infrastructure and the required financial and legal infrastructure.”

So it seems that South Africa’s competitive advantage is diminishing as the rest of the continent develops. In the meantime many companies are seeing the gap and heading into the fray. It seems that the future really is now.

So I asked my 85 year old dad…“what do you think of when I say ‘Green’ dad”.

So I asked my 85 year old dad: “what do you think of when I say ‘Green’ dad”. There was a brief crackle on the phone and then came: “mould.” The generation gap on matters Green is clear.

I have to admit that as a 43 year I too didn’t think of the practice of making modern day sacrifices in order to conserve the rapidly depleting fossil fuels, when the word Green came up. Rather I would think of someone new on the job, who parks in the bosses bay on the first day, a ‘Green-horn’ if you will, it’s best not to mix those two words up.

Or perhaps “Green Fingers”. I used to have “Green Fingers” when I was more involved in our garden or is that having a Green Thumb? It means the difference between getting anything to grow and creating a micro-desert.

But the search for a Green definition remains elusive: The movement to green has been nearly a thirty year process beginning in the 1970’s with the solar-energy craze.  Early in the 1990’s for example, the green building movement began to take hold.  Expanding our thinking and consideration for the larger picture of the total environmental impact, thus driving demands for materials, commercial and home designs offering reduced long term costs, healthier living, greater efficiency and sustainability.

But for me Green is for gunge: Gangrene from war stories, brave soldier who fought in the trenches and got the Dreaded Lurgy. Then there’s the sludge down on Zoo Lake before the big clean-up of whenever-it-was.  Then there’s beautiful, wonderful mucous. Oh yes, oh quivering parent – there were those nappies that….never mind. Green gunge is every little boys early fascination until puberty hits then green becomes just another colour.

One mini Green definition I heard somewhere, went something like is this: “meeting the needs of the present without compromising the ability of future generations to meet their needs.” A little whimsical with a touch of daisy and shoo-wah, but pleasantly unimposing.  I rather like it.

Depending on where you are applying the term Green, ‘sustainable design’ may be a good substitute. True sustainability embraces a commitment to see the world as interconnected, to understand the impact our actions have on others and our environment, and to nurture the offspring of all species that will inherit the planet. To become truly sustainable, it is vital to equally address social sustainability, economic sustainability, and environmental sustainability like three legs holding up a stool. Okay, a little preachy.

The truth is, the Green movement is now orthodoxy, mainstream, convention if you like. It’s no longer the fringe realm of hippies and New Ages or people with pony-tails in general. For example, Green construction is huge in South Africa now and Green Stars are a coveted reward.  It reminds me of my children when they were of the age when a gold star on the forehead for good behaviour was the most coveted award in preschool. Now we have pinstriped executives scurrying around fulfilling the requirements of the Green Buildings Council so as to acquire more Green Stars for their buildings.

As if Green building isn’t enough we have green nappies, green fuels and green political parties. But a new interesting one I discovered is “green-hypocrisy”. Green campaigners argue that cheap short-haul flights have fuelled a massive hike in carbon emissions over the past few years. Celebrities in particular are criticised for struggling to reconcile their well-meaning efforts to develop green credentials and the demands of the modern world.  Sienna Miller and Chris Martin preach the importance of being ‘green’. They recycle obsessively, insist on green nappies and compost every scrap of organic vegetable peeling and they’re not slow to tell you about it. Yet they jet set the world over producing a carbon foot-print bigger than the rest of us.

It’s tough at the top. Looks like you can’t get away with anything these days. Did I say Carbon Footprint, let me tell you what my 85 year old dad said when I asked him what he thought of when I said Carbon Footprint….

 

Being Prepared to Pay the Price of Going Green

One may argue that ‘going green’ is not a sacrifice but rather an investment. Currently, green expenses are concealed. In the pursuit of all matters Green do we consider the concealed expenses? Let’s look at some common and not so common sense examples.

Home is Where the Heart is: the Micro Level

Seeking out the concealed expenses of going green requires common sense and no shortage of balance. A for instance:  if you change from disposable nappies to towelling nappies you may preserve some trees; then again, you must now acquire a solution to cleanse those nappies without inflicting harm on the environment somewhere else. Similarly you will need to consider the environmental impact of producing the towelling nappy.

It’s all about research and how much effort you are prepared to put into this process. Then you need to stay the course, unlike those guys who menacingly change lanes on the highway and end up reaching the same destination as everyone else milliseconds sooner. Not finishing what you started may just increase your expenses. So pick a lane and stick with it.

A few practical examples.

Concealed expenses exist in so-called ‘green’ plastics; we do not see the waste in the manufacture of the product, or the disposal of it. Glass is still a far better choice, no matter how ‘green’ the newer, lightweight plastic bottle is said to be.

Preparing a compost unit for kitchen scraps and other household waste seems like a good move. But there are hidden expenses if you don’t research building it correctly. Creatures are attracted by the tiniest scent of decaying food. Rats, dassies and stray cats can move into your garden and home before you know it. It’s worth investing in an animal-proof compost bin, it will save on the concealed expenses of damages and presence of the abovementioned vermin.

Purchase the best and sturdiest recycle bins for your Mondi bags, (or whatever they have in your area.)  If these heavy plastic bins are damaged the impact is severe on the environment since heavy duty plastic is a land fill’s permanent resident. Metal cans are best since they will break down. The concealed expense is the heavy plastic to the environment.

Planting trees seems unlikely to have concealed expenses, but when you consider the long term damage potential to water pipes, septic tanks and sewerage pipes, not to mention building foundations in just a few years of a poorly positioned tree, one can see why some common sense research is required. It may be the difference between gutters filled with fruit or lovely shade on a summer’s day.

There are concealed expenses to growing your own crops too. It’s important to factor into the equation the watering of crops, cost of tools and whether you’re prepared to do the labour yourself. Of course physical exercise is a plus on this scale. The rewards of healthier, fresher and more convenient food goes without saying, but it’s not free.

Finally products: Many consumers are prepared to pay a higher purchase price for green products. As many of these products have been marketed for relatively short periods of time, demand and supply for them is still limited and prices are higher due to a lack of significant economies of scale that are there for truly mass products.

Additionally the technologies entrenched in these items are new, keeping manufacturing costs high until companies figure out more efficient and cheaper ways of building these novel products. So the concealed expense is present but it seems it’s also understood by the consumer. Similarly, upkeep and repair costs will be higher than for conventional products, for the same reasons that product purchase prices are.

At the Macro Level

Most areas in South Africa average more than 2 500 hours of sunshine per year, and average solar-radiation levels range between 4.5 and 6.5kWh/m2 in one day. Solar power is a viable option for the future of power at the macro level, an ultimate green dream. But there are concealed expenses.

While it may seem like a wonderful notion to never have to pay for electricity again in favour of free, natural energy forms such as wind and solar power, the actual process of switching to this green living lifestyle can be exorbitantly expensive. While over time, these energy saving installations would pay for themselves and save you money in the long run, many people cannot afford these installations. Solar panels for example are incredibly expensive to the point where only the wealthy can afford them.

One redeeming situation is the Eskom Solar Geyser initiative whereby home owners are encouraged to replace their geysers with solar powered units subsidised by Eskom. The window opportunity closes in 2014 though.

Other rumblings are coming from Cosatu since many local firms producing solar power components have closed down due to cheap foreign imports. The resulting job losses are a not so concealed expense of going green.

On the wind power front, the Cape seems to be leading the way: applications for at least 88 wind farms have been received by the Eastern and Western Cape authorities and some of these wind farms are expected to have as many as 600 turbines located on them. Each wind farm application has to be accompanied by an environmental impact assessment. Each turbine is between 80 metres and 120 metres tall, the height of a 20-or 30-storey building.

While there has not been much public response to the wind farms, some communities have already lodged objections against the planned wind farms and one project, in Brittania Bay, has been delayed because of opposition from residents of the town. Elsewhere in the world objections are raised due to the harm caused to the environment, sound pollution and tarnishing of the natural scenery. Hence there is a concealed expense to consider there too.

So there are many ways to go green in the  world but a word to the wise is to do it right, do the research and use common sense and weigh up what you’re prepared to spend/sacrifice when you’ve calculated the concealed expenses.

On the one hand we can save money by taking shorter showers instead of long baths to reduce water consumption, turn off appliances, cell phones and computers when not in use and to conserve battery power (subsequently reducing the need to charge them as often.) On the other hand there is a price to pay for “going green” whether it’s capitalising poor communities to acquire solar powered geysers or compromising the beauty of nature with wind farms.

The Environment has one fundamental code that nothing is squandered, and all is a nutrient for something else in the cycle of life.  It’s also true that, there’s no free lunch.

Western Cape Tourism on the Offensive

According to Tourismrsa.com the Western Cape only brings in 13% of South Africa’s domestic tourism revenue or R2,8 billion. That compared to KwaZulu-Natal with 26% of revenue or R5,7billion. But tourism in general grew by 5% in the Western Cape in 2011 contributing 10 per cent to the province’s gross domestic product (GDP) creating 70 000 jobs over five years.

The Western Cape Tourism department is mindful of the need to “encourage our locals to travel more within our cities. We need to reinvent our tourism sector and rethink the way we are doing things” Tourism MEC Alan Winde is reported to have said recently.

Mossel Bay and Plettenberg Bay are among coastal areas under pressure to refurbish, renovate and develop. Western Cape government’s Tourism department has announced a seafront development plan incorporating and connecting Kalk Bay, Muizenberg and Gordon’s Bay among others.

Previously disadvantaged communities seem to be targeted to become involved both as tourists and as proponents of tourism in their greater areas. Areas intended to benefit from upgrades to their tourism and entertainment infrastructure include Masiphumelele,  Ocean View and Mitchells Plain.

Fish Hoek will be paired with Masiphumelele and  Ocean View residents with the intention of making it a friendlier tourist destination. Formal stalls for craft work and displaying art in general will adorn the beach front.

Kalk Bay’s Main Road is to be revamped connecting communities previously effected by the Group Areas act. Muizenberg’s old retail and culinary district is to be refurbished and developed too.

Recently Tourism MEC Alan Winde referred to projects in Lambert’s Bay and Cape Agulhas as model examples of where communities previously excluded from decision making  were given the opportunity to become part of the process in the upgrading of their surroundings. An area like Monwabisi is to be similarly the target of investment.

“We need to encourage our locals to travel more within our cities. We need to reinvent our tourism sector and rethink the way we are doing things,” Winde said to the Cape Times.

The knock-on effect to properties in these areas is expected to be very positive. As upgrades take place for infrastructure and retail spaces, commercial nodes will increase in demand. Subsequently residential properties will find themselves on the up and up as areas improve and demand increases.

Meanwhile at the other extreme of the province next to the Eastern Cape Border, Plettenberg Bay’s ten-year-old plans to build a small boat harbour may be coming to fruition with an invitation to residents and interested parties to take part in an environmental impact assessment.

In March, Bitou council put pressure on Western Cape Marina Investments to take the small boat harbour project forward or lose the contract. WCM which won the tender in 2002, has finally  released  a document detailing designs to build the harbour in the Piesang River mouth, besides the Beacon Isle Hotel.

The development includes construction of residential blocks on either side of the river with a commercial zone to replace the derelict edifice which accommodates the Moby Dick restaurant and its adjacent buildings. The intention would be to transform Plettenberg Bay’s Central Beach area into a modern waterfront with a broad tourist friendly appeal.

The Central Beach is to be developed, becoming the site of a number of residential and commercial properties some of them multi-storey buildings which will completely change the look and feel of the beachfront . Dredging of the shallow Piesang estuary  will be mandatory  if it is to be deep enough to accommodate boats and moorings, and the harbour is to be flanked by buildings up to seven stories high in some cases on the northern and southern banks of the river mouth. The proposed small boat harbour  should also assist the operators of Plettenberg Bay’s whale and dolphin watching as well as charter fishing operations.

The overall expectation is that the whole enterprise will be the much needed shot in the arm to the struggling local economy with regard to construction contracts as well as job and tourism opportunities. The overall value to the local property market  is easy to underestimate given the long term nature of the developments.  Though tourism may suffer in the short term those who get into the market early will benefit as the dust settles and beach front occupancy climbs.

Looking at another example of development of Western Cape beachfronts we turn to Mossel Bay. A few important developments  in their area are likely to draw substantial capital as well as many people to Mossel Bay. Firstly Petro SA’s offshore latest drilling operations have received the go-ahead and work has  started.

Another project is the refurbishment of The Point precinct. This is the pivot of Mossel Bay’s tourism industry. The Point is about to be confirmed as a Provincial Heritage Site. The intention is to see it become a World Heritage Site within the next five years. In the refurbishment plan a public square is in the offing  as well as little carriageways and a museum.

A further development is to follow the successful model of the Victoria and Alfred Waterfront in Cape Town by creating a much anticipated waterfront. The Mossel Bay Harbour, the smallest of fully functioning harbours in South Africa is to be transformed into a tourism focused node with retail development a top priority.

Local government seems very much on-board . Minister Alan Wilde spoke to a local estate agency assuring them that growth in the Mossel Bay was a priority. An estate agent at the meeting said: “His message was that people needed to bring tourism and business together to move forward and reach for new goals.”

Some astute investors are already buying up property suitable for renting here, in the knowledge that demand for such properties will increase. With Petro SA’s new projects will come new staff needing rental accommodation.  This is expected to grow at 7% a year. The influx of professionals for this and the developments at the waterfront and harbour are expected by one estate agency to be a market that will grow by 4% a year, renting or buying. Also a 5% increase is expected for the conventional property market, including retirees and locals.

It’s clear that the Western Cape Provincial government is following the state’s lead in investing in local infrastructure. The CBD of Cape Town had a boost in infrastructure development in time for the 2010 world cup, now it’s the rest of the province’s turn.

Are South African Hotel Rooms Oversupplied and Overpriced

The hospitality industry which boomed in South Africa in 2010 has admittedly had some post World Cup benefit. The industry has also shed some of its fly-by-nighters. However the debate continues as to whether hotel rooms are overpriced and over accommodated. Regardless, the question remains, aren’t hotels a property industry problem and therein lies the root dynamic behind the quantity and price of rooms.

Stepping back and looking at tourism in general we are reminded of what valuable foreign currency it brings into the country. The hospitality industry provides coveted direct employment too. The potential for growth is huge and its knock-on effect on the commercial property world worth taking seriously.

South African tourists, who make up the largest section of the market, have to bear the brunt of the high hotel room rates which are often aimed at the overseas tourist. Despite the belief that foreign tourists are ‘loaded’ there is some resistance to our higher room rates. By comparison Brazil, which is similar to South Africa in some respects, is geographically closer to most of the same source markets that we rely on for inbound visitors. Upscale hotels in the major cities of Rio de Janeiro and Sao Paulo reported average room rates of between $300 and $400. Although the South African equivalent is around $190 at current exchange rates, the difference can arguably be absorbed by the cost of travelling to South Africa, a destination which is generally regarded as a long-haul destination.

Here’s the rub: High room rates have the knock-on effect of an oversupplied market. Customarily this should lower daily room rates as a result of market forces of supply and demand. However what has been observed is a reduction in occupancy rates. In some parts of the world various solutions are formulated to deal with oversupply. On the other hand other governments have not interfered and left it to market forces. It is important from the outset to ascertain where this oversupply exists and to quantify its extent.

One intervention by hoteliers is to discount room rates. The down side to this is the unintended message that the value has decreased too. To then return to the higher rate becomes a negative movement. Another strategy, instead of dropping rates, is to add value, offering two-for-one deals where visitors get one night ‘free’ on top of the original booking, extras such as free bottles of wine with a dinner in the hotel restaurant or vouchers for various entertainment in the city are supplied.

Countering this there is the school of thought that sees this as only a temporary solution whilst hotels engage in a price war of undercutting rates. The visible nature of hotel rates means short-term occupancy gains are quickly offset as competitors rapidly follow suit in cutting rates. This leads to a lower priced hotel market yielding lower revenues in the face of normally unchanged demand, proving that rate discounting alone does not induce additional hotel demand.

Looking at the big picture, some would encourage government intervention for the tourism industry in general. A more competitive ZAR/dollar exchange rate will help make hotel rates more affordable for the inbound tourist market. The Department of Transport could relook at increasing the number of airport slots for international airlines. This would help bring more visitors  and bring down costs through competition.

One country whose government hasn’t been shy to intervene in the tourism industry is Ireland. A country very dependent on tourism. In the wake of the Global Financial Crisis Ireland’s NAMA (National Asset Management Agency)  took control of over a 100 hotels with the intention of circumventing bankruptcies of the operators through paying out the creditors and then removing the remaining stock from the market. As a result, competition in the market was reduced and room rates were stabilised for the entire market. Although the removal of competition is seldom seen as beneficial in a market economy, especially when taxpayers’ money is involved, such drastic action is a further indication of the seriousness of the hotel room oversupply problem and the extent to which some countries will go to protect their tourism industries.

Coming round to property, many would point out that hotels are, in essence, in the property industry, and construction costs are the capital outlay that hotel incomes and profits have to provide a return on. For the last decade, tender price escalation, as an indication of construction costs, has averaged 12%, indicating that hotel returns are diminishing.

One may argue that new investments in the hotel industry should only have been introduced into the market if the potential for the market was there to ultimately sustain the room rate. By 2008, most market commentators had already forecast the “property bubble” bursting. The SA Reserve Bank Governor issued warnings to businesses and consumers to reduce debt and to forgo acquiring more. Most hotels that entered the market without taking into consideration those warnings, perhaps should not have been built in the first place.

The higher-than-inflation building costs whilst South Africa is experiencing deflationary conditions are similarly to blame for the high average daily room rates. The materials, labour and overheads are also to be considered. Recently the rise in cost of materials has been much more than inflation and other building cost indicators. The largest construction companies were also recently investigated by the Competition Commission for anti-competitive behaviour. Some of them have come clean and have been penalised.

To quote Hotel commentator Makhudu in his online blog article: ‘Hotel Oversupply’: “For the investor, the opinions that room rates are greater than normal means that hotel properties are currently overvalued. Some bankers have gone further than conducting debt reviews. Instead of recalling loans they have on hotel properties they have gone and interfered with the market dynamics by unilaterally dropping rates. Established hoteliers have bitterly criticised the actions of so-called ‘zombie hotels’ which have been taken over by banks and are undercutting rates for the sector in general.”

Reading the market with the wisdom that many of the most experienced hoteliers have, acting with owners who resist the skittishness that has come upon many investors of late, decisions about room rates will hopefully be made with sober judgement and a steady hand. It makes little sense to kill the goose that lays the golden egg. We should cherish every tourist that comes our way and reward them with reasonable rates. History may just remember us according to how well we cared for our golden geese.

Business Process Services/Outsourcing – a brave new world for South Africa.

To some Business Process Services may sound like yet another convoluted and ostentatious label applied by self-important people who may not otherwise be defined due to lack of substance, product or identity. Quite the contrary.

Business Process Services or Outsourcing, when it delivers, has the potential to genuinely lower administrative and operating costs, more quickly provide new services, improve customer satisfaction, and enhance focus on core business activities. Very simply, these

are the people that allow business people to focus on their core business whilst the likes of human resources, finance, accounting, contact centres. Document Management Services, Healthcare are taken care of by outsourcing to a third party

 

Without getting bogged down in detail, it’s sufficient to say that there are many divisions of BPS: there’s the back-office, like human resources; front-office, like call centres, there’s offshore and onshore BPS and even further breakdowns including IT based ITES-
BPO (Information Technology Enabled Service) and LPO – legal process outsourcing.

Looking at the big picture: the global industry is said to be growing by 40% per annum.  India is the world’s biggest player in the industry with revenue of US$10.9 billion from offshore BPS. It has a 6% share of the BPS industry in general but a 63% share of offshore BPS. On the other hand the South African call centre industry has grown by approximately 8% per year since 2003 and it directly employs about 54 000 people, contributing 0.92% to South Africa’s gross domestic product. Dwarf size compared to India but the potential is huge.

 

The South African Government’s upscaled Industrial Policy Action Plan (IPAP 2) has identified Business Process Services (BPS) as a key sector for investment attraction and job creation. The South African Government implemented a BPS or Business Process Outsourcing and Offshoring (BPO&O) incentive programme from July 2007. It is claimed that during the period July 2007 to March 2010, the incentive resulted in the creation of at least 6 000 new jobs and attracted R303 million in direct investment.

 

Since then, after negotiation with the private sector a further proposition has been made with the Monyetla Work-Readiness Programme, a dedicated investor friendly set-up process, and a

programme to improve industry service standards, in order to position South Africa as a preferred location for BPS operations.

 

Monyetla, which means ‘opportunities’, was launched in 2008 by the Business Trust, the Department of Trade and Industry (dti) and BPeSA as a pilot project to provide the unemployed youth of South Africa with employment through the BPO industry. The pilot project was a success story,  over 1,000 learners registered.  Due to its success the second phase was launched in July 2010, with 3,400 learners joining. Further phases continue to date. To become a certified employer of cho

ice on the project there are two criteria: Take on a minimum of 60 learners; and offer employment to 70% of them upon their successful completion of the programme. For every six learners employed, one team leader must be trained. So there’s a very specific outcome pursued here.

 

BPS leaders BPeSA,  Western Cape CEO Gareth Pritchard is reported to have said “With South Africa rapidly growing as a BPO provider both locally and abroad, it is imperative that we build our employee base, allowing South Africa to move from a reactive talent development strategy to a proactive one,” In the last decade, SA has built u
p a reputation as a world-class customer service destination that is able to deliver results for a number of the UK’s biggest brands, including ASDA, Virgin Mobile and TalkTalk.

South Africa has also attracted many top international call-centre outsourcers, including Aegis BPO, Fusion, Genpact, Stream, Sykes and Teleperformance, as well as IBM and Deloitte, which provide a variety of services in English, Dutch and Flemish for customers worldwide. Most recently, the Economics spokesman at the SA High Commission in London, Yusuf Timol, forecasted that there would be huge opportunities looming for capturing India-based BPO work in 2012 and beyond.

 

To emphasise whether South Africa has a future in this industry Frost & Sullivan’s business unit leader, ICT Africa, Birgitta Cederstrom says “Africa is increasingly popular as a preferred destination of contact centres; South Africa specifically has been a natural choice for contact centres due to its large and articulate English-speaking population and service-oriented business culture. Another strength is its expanding broadband connectivity, thus ensuring that the latest unified communications and collaboration tools will run efficiently.”

 

During Trade and Industry Minister Rob Davies’s Budget Vote in the National Council of Provinces (NCOP) in Parliament he said “To date, 23 applications for the BPS incentive scheme have been approved, potentially leveraging R4.1 billion worth of investment and 15 149 jobs over three years,”

 

“Close to 3 400 young trainees were trained under the second phase of the Monyetla Work-Readiness Programme, 70 per cent of whom were placed directly into employment.”  said Davies

 

This brings us to ‘where’.  A couple of years ago South Africa’s Call Centre Nucleus group was fully acquired by Aegis, India’s business process outsourcing arm of the diversified Essar group. The company purchased CCN as part of its st
rategy to invest R500 million in the next three years and create 5000 jobs in South Africa. Currently they are situated in two locations: Woodmead and Sunninghill, both in Johannesburg. The total seating capacity of over 1,300 seats.

Inc. (Nasdaq: ININ) is a global provider of contact centre automation, unified communications, and business process automation software and services.  Interactive Intelligence has more than 4,000 customers worldwide. In other words, a major player in the BPS world. Interactive Intelligence is about to occupy one of ATIO’s buildings in down town Johannesburg, which will now function as its regional headquarters serving all of Africa.

 

Amazon, America’s largest online retailer, has expanded its customer service operations into Cape Town, claiming to have created 600 jobs in its first two years of operation and an additional 400 seasonal jobs during holiday season.

 

A R125-million, 1 500-seat call centre integrating, training, office and recreational space has been constructed to enhance the global competitiveness of the Coega Industrial Development Zone outside Port Elizabeth. The Business Process Outsourcing (BPO) Park, covers five hectares and includes training facilities, lounges, a cafeteria and a restaurant, is the first of its kind in South Africa. The BPO Park is situated in Coega’s business service precinct, next to workers’ residential areas, and replaces a 200-seater call centre already in existence.

 

Then came Fusion, another world player in the BPS industry. Fusion Outsourcing’s headquarters, Fusion House at Century City, Cape Town; and the new Gauteng premises in the Johannesburg CBD are modern, state-of-the art contact centre facilities, from where  almost 1500 agents and support staff deliver customer services. In 2011 Fusion won the national industry awards for the 3rd consecutive time for both the Best Offshore BPO Centre of the Year, and the Best Offshore Customer Service Centre of the Year.

 

The market for such centres seems unpredictable. Anticipating the market for contact centres a while back, construction giant Grid, built a luxurious and state of the art built-for-purpose call centre in Mount Edgecombe next door to Umhlanga Rocks.  It’s fully occupied. On the other hand a cursory glance through the free on-line classifieds Gumtree, revealed an advertisement for “Call centre property to let or for sale in Kent Avenue, Randburg. Total GLA 6500m², 350 – 500 work stations, and 185 parking bays. Asking rental R60/m² net or for sale at R49 mil excl VAT if applicable. Available immediately.” So there are some surprises out there from a real estate point of view.

 

Not that long ago A 27,000sqm call centre in the Jo’burg CBD was sold, through a negotiated deal, for R97,5m. The seven-storey facility situated at Laub Street was sold on behalf of a major retailer and was snapped up by City Properties. The property was sold with a ten year triple-nett Edcon lease in place and in effect is a sale and leaseback transaction.

 

So it would be incorrect to say that BPS is not having an effect on property since they are definitely players in the market. But the extent that there is any ripple may call for some speculation.

 

BPS certainly is an industry worth monitoring from a commercial real estate perspective, currently as a growing number of international firms choose to set up shop locally and large numbers of staff will be required in specialised or converted to spec facilities.

Chinese Retail Booms in Durban

Dotted all over Southern Africa the little Chinese spaza-type shop is now part of the landscape. But in the cities many Chinese traders congregate in what is known as China Towns or China Malls. Although not new to South Africa, China Malls are booming in South African cities and are now flooding Durban, for some noteworthy reasons.

The Chinese community in South Africa can trace its origins back to the 1800 when labourers came to work on the mines in Johannesburg. During apartheid days Chinese were referred to as non-whites except for those from Taiwan who were given the dubious classification of ‘honorary whites’. Visas were tight in the pre 1990 days but now we have what’s being called the Shin Qiao (New Chinese) migrating and working here.

Johannesburg has been associated with the South African Chinese community for some time. But recently Cape Town and Durban have seen growth in Chinese traders in their retail districts. In Cape Town a third China Town shopping centre has opened in Voortrekker Road in Parow recently. There are another two in Ottery and Sable Square. This makes up just less that 200 shops with more planned in phase two at Parow.

It is estimated that there are as many as 50 000 ‘new Chinese’ in Durban as well as up and down the coast running shops of various kinds. Two new Chinese owned-and-run malls opened in Durban in 2011: China city in Springfield Park housing 150 shops and the extensive Oriental City Mall in the city on the corner of Anton Lembede and Mahatma Gandhi.

As early as 2010 the old and dilapidated The Wheel shopping Centre was re-opened as a China Mall. What was just a string of Chinese shops has now taken over two floors with every kind of ware available for the bargain hunter. Management is eyeing the third floor now for even more expansion.

Anthony Lee, manager at China City, quoted in Business in Durban Magazine Autumn 2012, says the port is a big draw. “Goods arrive here in Durban. They used to go to Johannesburg. More and more Durban is being seen as the place to do global business. “

Yinbiao Hao, spokesman for Durban’s Chinese Consular General, quoted in Business in Durban, said “Security is better. (In Durban) The police service is better. There is less bribery here.” Hao says awareness of Durban’s better governance has made the city a viable business option among Chinese businessmen.

Those in the office of Durban’s Chinese Consular General’s office believe events like the 2010 world cup and Cop17 have put Durban tourism and business on the map of Chinese commerce. Many Chinese hadn’t heard of Durban before these events and now marvel at the city’s reputation among the Chinese community in South Africa for its good governance.

Chinese Journalists covering Cop17 developed the motto: “Durban the perfect city for people to live and stay.” Now that’s publicity that’s hard to buy!

Going Green: So I asked my 85 year old dad…

So I asked my 85 year old dad: “what do you think of when I say ‘Green’ dad”. There was a brief crackle on the phone and then came: “mould.” The generation gap on matters Green is clear.

I have to admit that as a 44 year I too didn’t think of the practice of making modern day sacrifices in order to conserve the rapidly depleting fossil fuels, when the word Green came up. Rather I would think of someone new on the job, who parks in the bosses bay on the first day, a ‘Green-horn’ if you will, it’s best not to mix those two words up.

Or perhaps “Green Fingers”. I used to have “Green Fingers” when I was more involved in our garden or is that having a Green Thumb? It means the difference between getting anything to grow and creating a micro-desert.

But the search for a Green definition remains elusive: The movement to green has been nearly a thirty year process beginning in the 1970’s with the solar-energy craze.  Early in the 1990’s for example, the green building movement began to take hold.  Expanding our thinking and consideration for the larger picture of the total environmental impact, thus driving demands for materials, commercial and home designs offering reduced long term costs, healthier living, greater efficiency and sustainability.

But for me Green is for gunge: Gangrene from war stories, brave soldier who fought in the trenches and got the Dreaded Lurgy. Then there’s the sludge down on Zoo Lake before the big clean-up of whenever-it-was.  Then there’s beautiful, wonderful mucous. Oh yes, oh quivering parent – there were those nappies that….never mind. Green gunge is every little boys early fascination until puberty hits then green becomes just another colour.

One mini Green definition I heard somewhere, went something like is this: “meeting the needs of the present without compromising the ability of future generations to meet their needs.” A little whimsical with a touch of daisy and shoo-wah, but pleasantly unimposing.  I rather like it.

Depending on where you are applying the term Green, ‘sustainable design’ may be a good substitute. True sustainability embraces a commitment to see the world as interconnected, to understand the impact our actions have on others and our environment, and to nurture the offspring of all species that will inherit the planet. To become truly sustainable, it is vital to equally address social sustainability, economic sustainability, and environmental sustainability like three legs holding up a stool. Okay, a little preachy.

The truth is, the Green movement is now orthodoxy, mainstream, convention if you like. It’s no longer the fringe realm of hippies and New Ages or people with pony-tails in general. For example, Green construction is huge in South Africa now and Green Stars are a coveted reward.  It reminds me of my children when they were of the age when a gold star on the forehead for good behaviour was the most coveted award in preschool. Now we have pinstriped executives scurrying around fulfilling the requirements of the Green Buildings Council so as to acquire more Green Stars for their buildings.

As if Green building isn’t enough we have green nappies, green fuels and green political parties. But a new interesting one I discovered is “green-hypocrisy”. Green campaigners argue that cheap short-haul flights have fuelled a massive hike in carbon emissions over the past few years. Celebrities in particular are criticised for struggling to reconcile their well-meaning efforts to develop green credentials and the demands of the modern world.  Sienna Miller and Chris Martin preach the importance of being ‘green’. They recycle obsessively, insist on green nappies and compost every scrap of organic vegetable peeling and they’re not slow to tell you about it. Yet they jet set the world over producing a carbon foot-print bigger than the rest of us.

It’s tough at the top. Looks like you can’t get away with anything these days. Did I say Carbon Footprint, let me tell you what my 85 year old dad said when I asked him what he thought of when I said Carbon Footprint….

 

Urbanisation is slower than expected – but there’s no room for complacency

Over a hundred Years ago, it’s estimated that 95% of people living south of the Sahara were engaged in cattle nomadism, hunting & gathering, farming and fishing, leaving 5% of Africa’s population in urban settlements.  Prior to the growth of independence movements in the 1950s, 15% had become urbanised. According to UN figures of 2002 that increased to 37.2 with a projection of approximately 3.5% per annum the figure will look more like 45.3% by 2015.

There has been a mixture of dread and concern both politically and in sociological circles as to the outcome of the expected growth figures. Will Africa’s cities cope given that they have neither been built for such growth nor seem capable of accommodating increased infrastructure even if the funds were available?

So what do we make of some of the talk in research circles about urban populations growing slower than has been projected? In South Africa, Durban and Johannesburg have been bracing themselves for a tsunami of rural migrants only to find that there has been nothing like the rate of growth expected.

The late 80’s saw the scrapping of the Group Area’s act and the pass laws in general. People were allowed freedom of movement overnight. There was huge concern about cities becoming swamped. Johannesburg and other cities certainly have grown but not to the extent predicted while others haven’t at all.

In a paper published on the UN’s humanitarian affairs website IRINNEWS.org it is opined that with little access to the formal job market, most rural people lack the resources to live in cities for long periods. They often maintain homes and families in rural areas and return there for marriages, burials and when they fall on hard times.

It seems this ‘circular migration’ is muddling the conventional assumption that Africa’s urbanizing so quickly. Based on latest census material there are more and more countries ‘urbanising‘this way. There are also more countries that are showing evidence of de-urbanisation.

In a paper released by the Africa Research Institute in February, researcher Deborah Potts, a reader in human geography at King’s College London, makes the case that the high standard of living and poor employment opportunities in African cities has created an air of economic insecurity in urban areas. The gap between rural and urban living standards has narrowed in some cases not making it worthwhile to venture into towns.

In South Africa for example Social grants for the elderly, children and the disabled can support a family living in a rural area where the cost of living is comparatively low. This has even kindled the growth of cash economies in some areas.

Then there’s what’s being termed ‘hidden migration’. It seems that many households have multiple locations given that some family members live in informal settlements and others at a rural location and there is movement between them. People keep moving until they find a reasonable standard of living.

Given that in South Africa’s case the previous census was over 10 years ago and figures for 2011 are still pending, there is a lot of guess work going on. However the Independent Electoral Commission uncovers a very mobile population, “People are drawn to areas of greater economic opportunity, but also where infrastructure and housing is provided”  says the commission.

Fears about urbanization can hardly be dismissed given that overpopulation has played a major role in the lack of basic services, high unemployment and a general sense of hopelessness and political dissatisfaction. High crime and service delivery protests are a worrying knock-on effect.

Interestingly there are other dynamics at play elsewhere in Africa. Local traditional authorities in some countries provide the stability of access to land. In such communities people are at least assured of the opportunity to grow their own food for the extended family.

An example cited by Potts is Malawi, a profoundly rural country. Due to the lack of jobs and the high cost of living in urban areas people don’t settle in the towns but rather engage in very basic subsistence farming in the rural areas.  Some remain mobile and move from place to place traveling, moving with the food as it were.

None of this suggests that sub-Saharan African villages and cities are dwindling. The urban population continues to increase, however so does the rural population. There is still a general move towards urban life, but it is a slow shift, not a tsunami.

Eduardo Moreno, head of the Cities Programme at UN-Habitat, says “It is very clear that urbanization is slowing down, and African cities are not growing as fast as they were 10 or 15 years ago. But when you compare it with Asia or Latin America, Africa is still experiencing the highest rate of urbanization of the entire developing world.”

The warning in all this, is not to become complacent. Although the floodgates haven’t opened and the cities haven’t been swamped to the extent anticipated, negligence of the country’s urban poor would be huge mistake. Expectations of those who seek better lives in the cities and towns have been largely dashed. People with nothing to lose are a powder keg waiting to explode.

This isn’t to be melodramatic; civil disobedience around South Africa is arguably at an all-time high.  But no country in history has been lifted out of poverty by remaining rural. China, in its five-year plans says that urbanization is its driver of development.

A hiatus in the urban growth rate should, if anything, give those in authority a moment to catch their breath to deal with maladministration and corruption so that improving infrastructure and creating jobs can be brought up to speed. If not we will reap the urban whirl wind originally feared.