Business Day Home Front 03 June 2016

Bishopscourt, Cape Town Asking R29 millionContemporary north facing home with exceptional indoor / outdoor flowand panoramic mountain views. Easy flow from airy reception rooms withopen-beamed ceilings, fabulous chef’s kitchen to outdoor entertainmentareas and 50 meter surrounding pool. 4 En-suite bedrooms plus separateself-contained flatlet. Barbara Manning 083 407 3656 Web ref: 1706243

Douglasdale, Sandton Asking R4.9 millionThe original farmhouse in the area set in a gated & secure area on ±3325m².5 Beds, study, 3 baths. Farm style kitchen & laundry. Large open plan dining & family room, separate lounge. Covered patio, pool, lush garden,irrigation & borehole. 3 Room staff acc. Double garage & carport. Contact:James Christelis 082 416 5343, Ryan Rodda 076 979 4330 Web ref 1621745

Fourways Gardens, Sandton Asking R4.699 million Designed with comfort and style in mind & offering excellent indoor /outdoorflow. Entrance hall, kitchen with state-of-the-art Smeg gas oven, formallounge, dining room, family room, opening onto covered patio, study, 4 beds, 2½ baths, staff suite, double auto garage & carport. Contact: JanetSapire 083 344 4065, Pamela Diedericks 083 680 6771 Web ref: 1644905

Rondebosch, Silwood, Cape Town Asking R14.95 millionGracious n/facing Victorian residence circa 1898. A magnificent home with 5original fire places, high ceilings & Oregan floors. Wonderful indoor entertain-ing in a baronial dining room open plan to “Chefs” kitchen. Large covered patiowith bar & pizza oven, overlooking garden & pool. Separate large gym / gamesroom, staff acc & double garage. Lesley Payne 082 455 4808 Web ref 1680752

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HOMEFRONTBusin ess Day FRIDAY, JUNE 3 2016

THE WOMEN SHAPING OUR INTERIORS

PAGE 2

CELEBRATING CIRCLES IN DESIGN

PAGE 6

IS BUY TO LET STILL A SURE THING?

PAGE 14

THE APPEAL OF HIGH-DENSITY LIVING

PAGE 13

Are dollar millionaires ducking or diversifying?

More dollar millionaires may be moving their assets offshore. But the face of foreign

buyers in SA is also changing. Wealthy African citizens are buying a greater share of South

African properties

CONTINUED ON PAGE 10

WORDS: LEA JACOBS AND KIM MAXWELL :: PHOTOS: NOVOS GROUP

DESIGN Friday June 3 2016

Creative minds

“Fashion requires me to be out there — it has certainly afforded me a different and strong point of view about interiors”Londiwe Mbhele, LSZ Primelux

Four of SA’s female interior designers are dynamically transforming homes, corporate and commercial spaces

LONDIWE MBHELE, LSZ PRIMELUX

What prompted your change in career direction? I’m still the editor of ifashion.co.zaso now I manage both fashion and interiors in Rivonia. I was introduced to interior design in my early teens where we learnt the basics such as colour, balance and proportion. I was sold. Maybe I have returned to a true love.

How would you describe your aesthetic? It’s a juxtaposition of the old and new or the bygone and contemporary. I enjoy designing something layered, which is an extension of us as humans — we are complex. And because I dabble in product design, mainly in ceramics, I can say it is contemporary.

What makes fashion a good fit with interiors? I started out in fashion, which is a fast-paced and audacious industry, so it allowed me to inform my design approach with bravery. Both industries cross paths

very often, which is how I have connected with people and made myself known for my interior design work as well. Fashion requires me to be out there — it has certainly afforded me a different and strong point of view about interiors.

Who in the industry do you admire? Philippe Starck. For his long-standing career and the fact that he’s really pushed boundaries in design and has made incredible and unforgettable objects.

What would be your dream commission? I love food and there’s something about coming together and breaking bread in a convivial atmosphere. So designing a restaurant would be great — the Social Kitchen & Bar in Hyde Park would be a good example. It merges things I love — food and books — in an industrial, contemporary space. [email protected]

WORDS: JULIA FREEMANTLE PHOTOS: SUPPLIED

What’s the most challenging aspect of what you do? Working with unskilled labour, industry constraints and tight budgets, while trying to achieve an international standard of work.

The one thing you wish you’d known from the beginning? Project management is always a large component of our work, even if you have a dedicated person filling this role. If you want your designs to be executed as you’ve envisioned, you need to nurture them throughout the process — factors change throughout, from site conditions to budget constraints, so a design is ever changing from concept through to completion. You need to keep a close eye on the details.

Single greatest visual inspiration? We draw inspiration from all over: following artistic blogs, travelling, design fairs and our local surrounds, as well as industry trends.

Londiwe Mbhele, LSZ Primelux

International designers, specifically Diane von Furstenberg, who’s also a strong female creative business icon, give us energy to do great things.

Who in the industry do you admire? Beatty Vermeiren Architects. Their symbiotic style complements the exterior and interior beautifully. Tracy Lee Lynch is a creative punch in the face. Her dynamic style and ability to balance African aesthetic at a European level is exciting and inspiring.

Which object/piece of furniture/space do you wish you’d designed?Hayley Turner: Coming from a textile background, the Climbing Leopard rug by Diane Von Furstenberg for The Rug Company. Nicola Orpen: The Juicy Salif lemon squeezer by Philippe Starck for Alessi, who said, “It’s not meant to squeeze lemons, it’s meant to start conversations.” I wish I had his bravado.bonestudio.co.za

Nicola Orpen and Hayley Turner, Bone Design

Busin ess DayA PUBLICATIONPUBLISHED BY THE CREATIVE GROUP IN ASSOCIATION WITH TMG Unit G4, Old Castle Brewery, 6 Beach Road, Woodstock, 7925021 447 7130

EDITORIAL TEAMEditor: Catherine DavisCreative Director: Mark Peddle

ADVERTISING SALESMichèle Jones [email protected] 084 246 8105Susan Erwee [email protected] 083 556 9848Yvonne Botha [email protected] 082 563 6685

Designer: Craig D’OliveiraEditorial Consultant: Bridget McNultyManaging Editor: Kim Maxwell

The Creative Group CEO: Shaun Minnie [email protected] Busin ess DayA PUBLICATION

DESIGN Friday June 3 2016

“You need to keep a close eye on the details”Nicola Orpen and Hayley Turner, Bone Design

NICOLA ORPEN AND HAYLEY TURNER, BONE DESIGN ADRI VAN ZYL, ATELIER INTERIORS

The most rewarding aspect of designing spaces? Definitely seeing your drawings come to life.

Residential or commercial jobs: which do you prefer? I like both, actually — commercial has a quicker turnaround time, which keeps you on your toes, plus it’s rewarding. Domestic projects tend to be more personal and because of that, special.

What is your approach when outfitting interiors? We try to use talented local suppliers and manufacturers and design specific items for specific projects. Inside Cape Town restaurant Mulberry & Prince, the marble and timber tables are manufactured specially by Pedersen and Lennard, the leather and steel barstools by Stokperd. Conrad Van der Westhuizen helped bring to life our vision for the lighting, custom copper tables and stained glass features.

Adri van Zyl, Atelier Interiors

Who in the industry do you admire? Trevyn and Julian McGowan — I’m a huge fan of how they’re constantly pushing the boundaries of South African design and endorsing local collaboration while simultaneously being the country’s biggest design advocates abroad. They are a showcase for how to be approachable, inclusive and highly successful within an industry that is too often about individuals.

What’s the most enjoyable project you’ve worked on? I’m really loving one of my current Cape Town ventures. It’s a hotel called the Gorgeous George, situated on Greenmarket Square. George has a bit of an eccentric side!

Which object/space do you wish you’d designed? Sketch restaurant and art gallery in London — the entire place is dusty pink and completely bourgeois. atelierinteriors.xyz

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TREND Friday June 3 2016

WORDS: CHRIS REID PHOTOS: SUPPLIED

Circles in, lines out

The design world has suffered from the tyranny of straight

lines and sharp corners for too long and we’re on the verge of seeing a more curved approach take over. At least, that is according to Li Edelkoort, the pre-eminent trend forecaster. In a recent trend report, she identified the circle as a key metaphor for interior and product design in the coming seasons. And while we don’t expect this to be the end of corners as we know them, it signifies an interesting shift in approaches to design.

The circle is a simple shape with many associations. Circular shapes can help people to feel included in a space — no lines mean no one’s stuck in a corner. It’s also a shape with associations of wholeness and balance.

Circular objects feel inherently held together and

Since listing on the JSE in July 2011 Curro has been one of the most

talked about shares in the country. The company, which runs affordable private schools across SA, has grown its share price by more than 700% over this period.

It has been a remarkable growth story, not only because of how incredibly lucrative it has been for investors but thanks to what the company does. Schooling hardly seems like a sexy business, but thanks to the leadership of a passionate CEO, Chris van der Merwe, Curro has proved to be the right idea at the right time.

Providing affordable, quality education is without doubt SA’s biggest challenge, and Curro has shown that it’s not simply a problem that should be left to the state to solve. There are real opportunities for the private sector to become involved, not simply out of charity, but because it makes good business sense.

Curro’s story, however, began long before it became a listed company. Van der Merwe started Curro as a school of 28 pupils in the hall of the NG Kerk Bergsis in Durbanville. The experiment nearly didn’t survive because he failed to meet his targets for growing pupil numbers and he was paying teachers out of his bond. But he had a vision and he refused to be told that it wouldn’t work.

Van der Merwe later built the first Curro school himself with 10 bricklayers and 30 labourers. It began the journey that led his company to own 115 schools across SA, where about 42,000 children are educated.

It is a remarkable example of how a business can be enormously profitable and serve society at the same time. Consider that about 30,000 of Curro’s 42,000 pupils come from previously disadvantaged communities. Across all its schools, Curro maintains a matric pass rate of more than 99%.

Curro employs 5,000 staff members, of which 2,700 are educators, and 38% of those are black. It also assists the state in the professional development of teachers.

Those are what Van der

Merwe calls the “untold stories” — the meaningful way in which the company is contributing to the future of this country. The telling thing is that these cannot be separated from the success of Curro as a business. It is such a great company precisely because of what it does. And that is a great lesson to all entrepreneurs.

Analyse it

The Curro success story

WORDS: PATRICK CAIRNS

“Van der Merwe later built the first Curro school himself with 10 bricklayers and 30 labourers. It began the journey that led his company to own 115 schools across SA, where about 42,000 children are educated”

“In recent international trade shows such as Ambiente and Maison et Objet, circular rugs and other pieces of decor were given a lot of attention by buyers seeking something new for clients”

they lend themselves to being gathered in clusters and constellations.

This circular focus is starting to filter into retail already. In recent international trade shows such as Ambiente and Maison et Objet, circular rugs and other pieces of decor were given a lot of attention by buyers seeking something new for clients. Locally, retailers such as Lim draw on this trend with items including the Walnut Veneer and Copper table, pictured.

Some perceptions around these items need to change before the circle really does become the shape of the moment. For many it can be just a little too old-school in the design, smacking of the retro-futurism of the 1960s.

It will be interesting to see how this evolves in the coming seasons, and whether people embrace living in the round.

Straight lines are making way for curvier forms in the world of design

The Curro success story

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Are dollar millionaires ducking or diversifying?

INVESTMENTS Friday June 3 2016

CONTINUED FROM PAGE 1

the ultra rich also declined from $168bn in 2007 to only $159bn in 2015.

DOLLAR MILLIONAIRES AND BILLIONAIRESBy the end of 2015 there were 2,030 multimillionaires — individuals with net assets of $10m or more — in SA, of which 620 were ultra high net worth individuals owning net assets of at least $30m. That figure includes seven billionaires, 91 centimillionaires (net assets worth $100m to $1bn) and 522 affluent millionaires (net assets worth $30m to $100m).

It was a particularly bad year, with the number of high net worth individuals falling by 18%. At the end of 2015, cash and bonds held the lion’s share (35%) of their invested asset classes, but real estate formed 18% of their investment allocations.

Although the number of high net worth individuals decreased during the past eight years, their change in wealth wasn’t only due to South Africans migrating.

“By the end of 2015 there were 2,030 multimillionaires — individuals with net assets of $10m or more — in SA, of which 620 were ultra high net worth individuals owning net assets of at least $30m”

A depreciating rand and falling equity markets were also responsible. There was a movement of funds offshore during this period, but the change was negligible — at the end of 2015, South African high net worth individuals held 21% of their wealth overseas, compared to 20% overseas in 2007. The majority hold their wealth in private banks and trusts in the UK’s Channel Islands, Switzerland, Luxembourg and Mauritius.

The question: if the super-wealthy invest offshore, are they merely making the world’s markets work for

them? Some may simply be shifting their assets, and their homes, for a while. Says Amoils: “We have period figures showing 4,800 people have left since 2007. But these people have not necessarily immigrated officially; they are either working or living overseas. So some could return in theory.”

FLEEING OR BUYING?Andrew Golding, CEO of Pam Golding Properties, says rather than seeing high net worth individuals fleeing the country, the company saw a sales improvement by as much as 30% at the top end

of the market (properties at R10m or more) in recent months.

RE/MAX Living sales associate Rainer Kloos agrees, saying despite concern surrounding the political situation, social stability and exchange rate risks, his recent business dealings in India and China indicated a keen interest for high net worth individuals to invest in the South African property market.

Seeff Properties chairman Samuel Seeff isn’t as sure. “A snap survey of our top-end areas certainly supports the notion that wealthy South Africans, especially those with young families, are looking to hedge their bets overseas. A number of our branches have reported an uptick in listings due to emigration,” he says.

Seeff puts this down to government policies around land ownership, a looming junk status downgrade and additional financial burdens levied on certain sectors of the market, higher transfer duty and capital gains tax, making the top end of the market think twice about investing in property.

MAURITIUS ON THE MAPAccording to the New World Wealth 2015 Migration Survey, SA lost just more than 4,800 high net worth individuals to emigration since 2007. Of those who left: 42% went to the UK, 14% to Australia, 10% to the US, 8% to Canada, 5% to Mauritius, 4% to New Zealand and 4% moved to Israel.

The number of South African high net worth individuals living in and/or emigrating to Mauritius has increased by 160% since 2007 — in 2015 there were 3,200. This figure is expected to increase by 130% during the next 10 years — attractive tax rates, lifestyle and a growing financial services sector are some of the appealing factors in Mauritius.

OVERSEAS SECOND HOMESFor a high net worth individual, money does open doors around the world. For ease of travel with the “right” passport, there are a number of Caribbean destinations such as Antigua, St Kitts and Nevis and Grenada offering investment for citizenship programmes. For a European passport, choices include the UK, Portugal, Greece and Cyprus.

New World Wealth research shows that 38% of SA’s dollar millionaires owned second overseas homes at the end of 2015. They tend to buy in London, New York, Geneva, Paris, Sydney, Melbourne and Mauritius.

The top destinations for the world’s wealthy, according to the Knight Frank Wealth Report 2016, are London and New York, followed by Singapore, Hong Kong and Dubai. Property in

South African double-digit millionaires in 2015 – distribution by city

City Multimillionaires % of country

Johannesburg 970 48%

Cape Town 360 18%

Durban 120 6%

Pretoria 110 5%

Other 470 23%

Total SA 2,030 100%

Note: Rounded to nearest 10.

Source: The SA 2016 Wealth Report

If news headlines are a good indicator, SA’s high net worth individuals

are fleeing the country. Considering the financial benefits the super-wealthy bring to the country’s economy and its tax table, this is a concerning development. Andrew Amoils, head of research at global wealth data capturer New World Wealth, estimates that 950 dollar millionaires left SA in 2015, up from 600 in 2014.

Who are they? The SA 2016 Wealth Report, published by New World Wealth, counted 38,500 dollar millionaires in SA in 2015. Those numbers decreased by 10%, dropping from about 42,800 dollar millionaires in 2007. The collective personal wealth of

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INVESTMENTS Friday June 3 2016

SA’S ULTRA-WEALTHY

Real estate and construction is the main industry from which South African multimillionaires acquired their wealth — it is the primary wealth source for 20% of them.

Johannesburg is home to most of (44%) SA’s high net worth individuals .

Mauritius is the fastest-growing destination where South African dollar millionaires choose to live.

Source: The SA 2016 Wealth Report

Foreign investment in South African real estate 2007–2017

Origin 2007 2015 2017 (projections)

UK 35% 22% 18%

Germany 27% 19% 16%

Africa 7% 24% 30%

Other* 31% 35% 36%

Total 100% 100% 100%

*Other buyers mainly from Switzerland, France, China, India, Russia and UAE

Source: The SA 2016 Wealth Report

some high net worth individuals are purchasing luxury seaside residences or other ‘lifestyle properties’. These not only provide a holiday destination or a second or third home, but, given the weak rand, this represents an excellent means of diversifying their property portfolios and securing a sound long-term investment.”

Gauteng and Cape Town have long been an international drawcard for property, and business prospects exist for those who show entrepreneurial savvy. Some of SA’s ultra-wealthy will shift their assets on a permanent basis in 2016 — let’s view it as an opportunity to attract new wealth.

these regions doesn’t come cheap. Knight Frank’s Prime Residential Index in 2015 explored what $1m can buy in luxury property. In London your hard-earned money will buy 22m2 of property, in New York it fetches 27m2 and in Hong Kong it’s 20m2. But in Monaco $1m will buy only 17m2 of real estate.

Foreign property ownership has always held wide appeal for the wealthy, and SA has a weaker rand and some spectacular locations. New World Wealth identified the hotspots for wealthy foreign buyers in SA. Foreign buying patterns were significantly lower in 2015 compared to 2014, thanks to stricter visa requirements for foreigners visiting SA. Yet despite this decline, wealthy foreigners continued to buy South African properties, particularly at the top end.

MORE AFRICAN BUYERSThe type of foreign property buyer has also changed between 2007 and 2015. Significantly, wealthy African citizens made up the largest share of foreign property buyers in 2015, increasing considerably since 2007.

Golding says Africans are purchasing local property for a variety of reasons. “Some are seeking investment properties or personal residences that provide access to an upmarket lifestyle. More traditionally,

“The type of foreign property buyer has also changed between 2007 and 2015. Significantly, wealthy African citizens made up the largest share of foreign property buyers in 2015, increasing considerably since 2007”

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PROPERTY TREND Friday June 3 2016

HIGH DENSITY, HIGH END

Interestingly, while high-density living is often touted as an affordable option for first-time buyers and young professionals, a similar move towards centralisation and convenience is also being observed at the luxe end of the market — individuals are selling up larger properties and moving into high-density luxury apartments, which in many cases sell for the same prices as their larger homes.

According to the FNB Property Barometer Home Buying Estate Agent Survey Q1 2016, financial pressure is not the primary reason people sell to downscale. The report showed that just 13% of sellers during the first quarter of 2016 were selling in order to downscale due to financial pressure.

The Cape Town Densification Strategy report says densification can contribute to quality, efficient and sustainable urban environments in various ways:

■ Reducing the consumption of valuable or nonrenewable resources

■ Supporting the development of a viable

other metros around the country.

HIGH-DENSITY APPEAL “High density and low cost aren’t mutually exclusive, and in our case, high density refers to the scale of urbanisation, and how this will impact the urban fabric,” says Jacques van Embden, MD of Blok. In Cape Town Blok has developed TWO16ONHL, a block of 22 apartments selling from R2.2m, and NINEONS, 23 apartments with starting prices of R2.5m.

One of the biggest driving factors for the increasing popularity of high-density developments is that the affordable property ownership proposition attracts first-time buyers who otherwise would

Densification is the new buzz word in cities hard-pressed

to provide services to booming populations. While many consider the notion of high-density living to be unpalatable, in fact it provides many advantages — security and convenience not the least among them. And, for many young people hoping to gain a foothold on the property ladder, affordable apartments are often the only way to do that.

According to the Cape Town Densification Strategy report, densification is “the increased use of space both horizontally and vertically within existing areas/properties, and new developments accompanied by an increased number of units and/or population thresholds”.

“This has typically been driven by urban sprawl as inner cities went through decay,” says David Sedgwick, MD of Horizon Capital. “People wanted to live in huge properties in suburbia. But in Cape Town, there has been a very conscious effort to reduce urban sprawl and reduce the strain on the city.”

He explains that densification reduces the operating costs of the metropolitan, because it is able to deploy resources more effectively in a smaller area. Similar strategies are being implemented by the City of Johannesburg and in most

not be able to gain a foothold on the property ladder.

Says Sedgwick: “The Eden, our development in Observatory, is attracting young professionals who could not afford to buy a free-standing first home. In the City Bowl there is a massive capital growth explosion, and it is unaffordable for most young professionals to get a foot in the market even with a double salary. Houses start at R4m-R6m. We’ve just sold a two-bedroom, R2m unit to a young couple — an accountant and a doctor.”

BEYOND FINANCIAL CONSIDERATIONS However Sedgwick believes financial reasons aren’t the

“People wanted to live in huge properties in suburbia. But in Cape Town, there has been a very conscious effort to reduce urban sprawl and reduce the strain on the city”David Sedgwick, MD, Horizon Capital

High density in demand

WORDS: GEORGINA GUEDES PHOTOS: SUPPLIED

PRO-DENSIFICATION CAPE TOWN

public transport system

■ Making a city more equitable

■ Facilitating economic opportunities and supporting services provision

■ Improving housing patterns and choice of housing type

■ Contributing to urban place-making and improving safety

Casting off the negative perceptions of overcrowding, densification is instead presenting an affordable, safe and convenient housing alternative for many

only considerations. He lists lifestyle benefits including the convenience of lock-up-and-go apartments, easy access to infrastructure, security (at the forefront of South Africans’ accommodation decisions) and an increased focus on the importance of community as compelling reasons in favour of high-density homes.

Emdben adds that high-density developments also have transport and accessibility advantages.

ESTATE LIVING COUNTSLess centrally located developments such as MSP Developments’ Buh-Rein Estate are attracting a lot of attention. Lightstone research on estate living in SA shows that Buh-Rein has enjoyed the fourth-highest number of property transactions within an estate in the past five years, with 797 properties sold.

Says Riaan Roos, CEO of MSP Developments: “As we know, buyers are drawn to the Western Cape in particular. They are also drawn to four major factors offered by estate living: security, convenience, lifestyle and value for money.”

INVESTIGATION Friday June 3 2016

WORDS: ANNE SCHAUFFER PHOTOS: SUPPLIED

Banking on buy to let?Is the light at the end of SA’s buy-to-let property tunnel flickering? Profit may not be a foregone conclusion but doing your homework can still yield good results

So far 2016 is shaping up as the year of the financial yo-yo,

with economists trailing movements by local politicians and credit rating services and struggling to deliver solid long-term investment advice. The potential impact on the property market is unnerving at best.

What about the buy-to-let investor? Is the outlook bleak, is there another side to this coin, or are there “better, cheaper and smarter ways to make money from property investments” as

Magnus Heystek, director and research head at Brenthurst Wealth Management, unequivocally suggests? And is it telling that he describes himself as the “original residential property market bull many years ago”.

Heystek’s recent Moneyweb article titled Buy to let has become buy to regret elicited a vociferous response, most respondents concurring or adding their own experiences.

Says Heystek: “A perfect storm has now hit the buy-to-let market and literally tens of thousands

of buy-to-let investors countrywide, perhaps with the exception of the Western Cape, are according to one buy-to-let owner ‘slowly being squeezed to death by a giant financial anaconda’. Rates and taxes have been rising on average at almost double the inflation rate per annum over the past five years and more.”

Heystek is of the view that under current economic and political conditions in SA, buy to let could prove to be “very costly” to your personal wealth.

“The property in which you are thinking about investing may not be the type that attracts tenants: too expensive, wrong area ...”Samuel Seeff, chairman, Seeff Properties

INVESTIGATION Friday June 3 2016

BUY TO LET INVESTING TIPS FROM MYLES WAKEFIELD

■ Buy only where there is a constant and keen demand. Is there a factory nearby, a college, great transport routes? There is a vast emerging market looking to rent or buy first homes in so-called entry-level suburbs.

■ Speak to rental agents Ask about actual figures achieved for similar apartments in the block/area. Make sure there’s a match between purchase price, achievable rentals, and rental demand in that area. Otherwise walk away.

■ Do your sums thoroughly. Work out mortgage bond figures: will the rental cover all your costs, with a little residue for emergency expenses and possible increases in the bond rate? Keep a strict record of all expenses for tax purposes.

■ Be cashflow positive from day one. Include a steady annual increase in rent. And have a fully vetted tenant.

■ Remember it’s about the numbers; you’re not going to live there. Cover your costs, manage the investment well, and long term — provided the bond rate doesn’t increase sharply — chances are good that capital appreciation will come into play.

property values themselves, both in real terms and in some cases nominal terms, decline. Since 2008 the residential property market has declined by about 20% in real terms and is still firmly in a bear market. The outlook for the residential property market on the whole is decidedly negative.”

DO YOUR HOMEWORKSo, is there any good news here? When it comes to investing in buy-to-let property there are numerous variables but two factors are crucial; one controllable — that is, the extent of your pre-purchase homework. The other is not — the bond rate.

Seeff chairman Samuel Seeff advises caution. “While property is one of the best investments you can make and it carries an inherent propensity to deliver capital growth, investing purely for the buy-to-let market should be done with great care. There is no one solution that fits all, and while there is usually significant demand for rental accommodation — especially

for investors: “Buy a property that is most ‘lettable’ (has the biggest tenant market). Two-bedroom houses/flats appeal to the widest range of potential tenants — avoid large family homes. Don’t restrict yourself to your immediate area but research nearby where rental yields may be markedly better and ensure the area has a healthy market for tenants — convenience and accessibility (transport links, schools, retail) are priorities.

“Using a mortgage makes your money work harder — whether interest-only or repayment is your personal decision, but a rental income high enough to cover a repayment mortgage is a good indicator that you are getting things right. Take out a fixed rate if you are uncomfortable about the chances of interest rates rising, although you will pay a premium.”

ASSESS RENTAL GROWTHHeystek’s unbundling of the topic is food for thought. He references the Rental Monitor Q4 2015 report on credit bureau Tenant Profile Network’s website, the upshot of which is that 30% of tenants typically pay late or not at all — an uncomfortable statistic. He says this gets to the heart of the current problem: “Rental growth has been slowing for almost three years, and in some parts of the country has gone hugely negative. Apart from the Western Cape, property prices and rentals are not rising but costs and the hassle factors are.

“Listed property investments have been the best investment class over the past 10 years, returning almost 20% per annum year after year. The difference in net wealth over the same period between a buy-to-let investor and JSE-listed property investor or, even better, a global fund, must be enormous today.”

Myles Wakefield, CEO of Wakefields Real Estate, has a clear-cut, analytical approach to investing in buy to let. “Capital growth isn’t the focus, it’s the bonus. The focus is on covering your costs

“Capital growth isn’t the focus, it’s the bonus. The focus is on covering your costs from day one”Myles Wakefield, CEO, Wakefields Real Estate

W I N T E R

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SLAM-DUNK INVESTMENT?Historically in SA, buy to let has been considered a good investment: buy a rental property with a small deposit and large mortgage. Then rent it out, the tenant pays off your mortgage, and with regularly increased rentals, covers all your costs and more. A decade or two later, the bond’s paid off, and you can either live off the rent or sell for a tidy profit. What’s not to like?

During the 2002-2008 residential property boom buy to let moved from a fringe investment vehicle to a near trend. Says Heystek: “Such was the allure of buy to let that at the peak of the market in 2008, almost 25% of all South African residential property sales were in the buy-to-let category, according to FNB.”

Today he estimates that figure to be less than 6% (commercial banks tightening on granting bonds), and very likely to reduce further in months ahead. Adds Heystek: “And as properties get older, maintenance costs rise while

from day one. But it’s also about reviewing the concept of location,” he says.

Just as the country’s demographics alter, so too the property market: there is a vast emerging market looking to rent or buy first homes in so-called entry-level suburbs. According to Wakefield, these are the areas experiencing the highest letting and sales interest and volumes.

While not everybody agrees on the value of buy to let as a long-term investment, there is consensus that buy to let is not for amateurs.

during challenging economic times — not all properties or areas experience the same level of demand. The property in which you are thinking about investing may not be the type that attracts tenants: too expensive, wrong area ...” he says.

Importantly, unless you are in the business of rentals, you should not consider investing in the buy-to-let sector unless you have carefully considered your options.

Says Seeff: “If you are looking to diversify your investment portfolio to add property into the mix, then it may make sense, but don’t expect stellar returns as a matter of course. With the economic decline we are seeing now, the rental returns (yields) are likely to again dip, not just in the non-Cape markets but even in the Cape.”

BUY A LETTABLE PROPERTYClearly, the more pressurised the property and financial landscape, the more thorough the homework required. Paul Stevens, CEO of Just Property, offers these pointers

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KZN’S AEROTROPOLIS BOOSTING PROPERTY GROWTH

Africa’s first purpose-built aerotropolis is significantly impacting on north coast property patterns as the ease of access prompts investors to acquire second homes in the region. Dube TradePort’s King Shaka International Airport is at the centre of this aerotropolis.

Dube TradePort Corporation’s acting CEO Hamish Erskine says new flights originating to and from Durban form part of the implementation of KwaZulu-Natal’s economic and tourism development plans. These include stimulating manufacturing, warehousing and logistics as new facilities are established at Dube TradePort and the Tongaat Hulett Developments at Cornubia and RiverHorse Valley.

Says Erskine: “Dube TradePort takes advantage of its prime location as the only facility in Africa combining an international airport, dedicated cargo terminal, warehousing, offices, retail, hotels and agriculture.”

According to Tongaat Hulett Developments director Rory Wilkinson, one sound example of the impact that boosted economic development on the north coast has had on the property market is the sell-out of the Ocean Dunes in Sibaya within a short period. “All these factors count towards adding value and increasing the demand for property on the north coast,” he says. There are also more property buyers from Gauteng and abroad.

In 2015 King Shaka’s network was boosted by four new airlines. In the past year international cargo volumes from Dube Cargo Terminal increased 12% to 8,000 tons, with the facility handling 6,400 tons of domestic cargo.

Erskine says the organisation has concentrated efforts on driving cargo volumes by developing key infrastructure including the state-of-the-art Dube Cargo Terminal.

Wilkinson believes the increased economic activity from King Shaka International Airport and Dube TradePort speaks to the appreciating value of the surrounding property and the investment potential. Prime residential, commercial and industrial land on the north coast is critical to boosting economic growth and development in the region as the airport and Dube TradePort anchor trade opportunities.

PROPERTY NEWS Friday June 3 2016

“The pace of green building in Africa is accelerating, not only in SA but across the continent”Brian Wilkinson, CEO, GBCSA

“It is estimated that by June 2021, about 1,000 CBD buildings will be connected with fibre” Tasso Evangelinos, CCID chief operating officer

urban sprawl.Reports Manfred Braune,

GBCSA’s chief technical officer: “This project scored very high results in key areas of its rating including energy consumption, water management, emissions and transport. It boasts several impressive sustainable building features.”

They include the building’s ability to provide dehumidified fresh air, solar panels and on-site water treatment. Its façade is a tribute to the building’s green inner workings, with mesh that allows for plant growth and shading. The building’s waste management plan even includes an on-site composting facility.

In Namibia, African consultancy firm Emcon Consulting Group operates in the energy, electricity, building services and project management sectors, so it set green goals for its offices in Klein Windhoek.

Green building is gaining rapid momentum in Africa with office

buildings in Rwanda and Namibia both receiving six-star Green Star ratings certified by the Green Building Council of SA (GBCSA).

In Kigali, Rwanda, the Nobelia Office Tower was awarded the country’s first Green Star rating— a six-star SA-Rwanda office design rating for its shell and core. In Windhoek, Namibia, Emcon Consulting Group’s offices received a six-star SA-Namibia existing building performance tool rating as the second Namibian building to get Green Star certification.

Says Brian Wilkinson, CEO of GBCSA: “The pace of green building in Africa is accelerating, not only in SA but across the continent.”

Founded in 2007, GBCSA has awarded 161 Green Star SA certifications. The GBCSA’s Green Star SA rating tools were developed specifically for the South African context but are also a natural touch point for green building movements and councils in other parts of Africa.

Says Wilkinson: “Africa has

The Cape Town Central City is being transformed by

the scale of its property investment. In 2016 seven new developments or redevelopments have been confirmed, with at least three having a combined value of about R270m.

According to Cape Town Central City Improvement District (CCID) chairperson Rob Kane, the CCID keeps tabs on the game changers transforming its downtown area through its annual investment guide The State of Cape Town Central City Report, published since 2012. The latest report went to print at the end of 2015.

Property values in the CBD have increased substantially. “In 2006 the City’s official valuation of the downtown area was just more than R6.1bn. By the 2014-15 financial year this official valuation had risen to close to R24bn,” says Kane.

“By the end of 2015, we estimated conservatively that another R8.2bn would be added to this figure over the next five years, with a total valuation close to R32bn by 2020 across 26 projects. But since January 2016, we’ve heard of at least another seven development projects coming on board. We do not yet know what they will

Rwanda’s first six-star green building rating

Property changing Cape Town’s CCID

Previously a private residence, Emcon’s six-star Green Star office building’s green performance was boosted with a solar power plant, more natural light and daylight control, plus an energy-efficient evaporative cooling system to provide 100% fresh air — cooling and humidifying Windhoek’s hot, dry air. This helped make it 79% more energy-efficient than the industry average. It has an intelligent energy- and water-monitoring system, a live on-screen energy and water usage display, and a Xeriscape garden with an artificial turf putting green.

Concludes Wilkinson: “Results in the US, Australia and now Africa clearly show there is no significant difference between the costs of green buildings compared to conventional buildings. However, green buildings show the potential to achieve better investment returns and higher valuations.”

already made great strides in green building, and these are only its first steps in the significant green building journey of a continent bearing the brunt of the negative effects of climate change.”

The Nobelia Office Tower in Kigali has set its sights

on being a leading green building in Rwanda and the wider Central East African region. The 19-storey tower will have 16 floors dedicated to office space, adjacent to commercial, residential, recreational and retail zones. It is constructed on previously developed land to prevent

add to the R32bn, but it does illustrate how intensively the CBD is changing.”

Commenting on the rise of the Foreshore node since 2012, report editor/co-author Carola Koblitz notes that in 2012, the CCID’s first report noted an investment value into the area of about R3.2bn. At the time that figure included the development of projects such as Portside, Touchstone House, 22 Bree, Atlantic Centre, the Civic Centre update and the CTICC expansion.

Koblitz says investment into the Foreshore only since 2012 totals just less than R8bn. They include developments such as Roggebaai Place, 33 Heerengracht, the Media24 upgrade, The Towers redevelopment, the Parkalot building, the upgrade to Southern Sun Waterfront, the KPMG building, the redevelopment of Triangle House by Signatura and the new Christiaan Barnard Memorial Hospital.

The report identifies the Bree Street economy as a node to watch, labelling it the CBD’s “first true 24-hour economy” with daytime retail and businesses and popular after-work venues. Also of interest is the V&A Waterfront’s recent developments.

Another large transformer

of the CBD’s economic landscape is the roll-out of the City’s fibre optic broadband network. With R1.7bn spent by the City throughout the metro to connect its own buildings alongside those of the Western Cape Government, the network is now robust and extensive enough to install cables to private buildings. A pilot project rolled out by the City’s telecommunications branch in the CBD has resulted in 50 private buildings being connected.

Says Tasso Evangelinos, CCID chief operating officer: “It is estimated that by June 2021, about 1,000 CBD buildings will be connected with fibre.”

By Q4 2015 commercial vacancies decreased dramatically to 10% on average. Retail also fared well, with an overall occupancy rate during 2015 of 95%. Residential property values increased on average from R1.4m in 2013 to just more than R2m by the end of 2015.

PHOTO: CCID

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